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AGREEMENT AND PLAN OF MERGER
AMONG
PERBIO SCIENCE AB
EWOK ACQUISITION CORP.
AND
ENDOGEN, INC.
DATED AS OF MAY 27, 1999
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Index of Defined Terms
----------------------
Affiliate.............................................................................4.6(b)
Agreement...........................................................................Preamble
Alternative Transaction...............................................................6.2(a)
Acquisition Agreement.................................................................6.2(b)
Articles of Organization..............................................................2.5(a)
Benefit Plans........................................................................4.15(a)
By-laws...............................................................................2.5(b)
Certificate of Merger....................................................................2.3
Certificates..........................................................................3.2(b)
Closing..................................................................................2.2
Closing Date.............................................................................2.2
Code.................................................................................4.15(a)
Commitments.............................................................................4.10
Commonly Controlled Entity...........................................................4.15(a)
Company.............................................................................Preamble
Company Common Stock................................................................Recitals
Company Intellectual Property...........................................................4.19
Company Preferred Stock..................................................................4.2
Company Stock Option..................................................................7.4(a)
Company Stockholder Approval.............................................................4.4
Confidentiality Agreement................................................................7.2
Dissenting Shares.....................................................................3.1(d)
Dissenting Stockholder................................................................3.1(d)
Effective Time...........................................................................2.3
Employee Stock Purchase Plan..........................................................7.4(b)
Employment Agreements...............................................................Recitals
Environmental Laws...................................................................4.12(a)
ERISA................................................................................4.15(a)
Exchange Act..........................................................................1.1(b)
Expenses..............................................................................7.7(b)
Expiration Date.......................................................................1.1(a)
Filed SEC Documents......................................................................4.8
Governmental Entity......................................................................4.5
Hazardous Materials..................................................................4.12(b)
Indebtedness..........................................................................4.6(c)
Information Statement....................................................................4.7
Intellectual Property ..................................................................4.19
Knowledge...............................................................................10.3
Liens.................................................................................4.3(a)
made available..........................................................................10.3
material adverse affect.................................................................10.3
material adverse change................................................................10.3
MBCL.....................................................................................2.1
Merger..............................................................................Recitals
Merger Consideration..................................................................3.1(c)
Minimum Condition..................................................................Exhibit A
Net Amount............................................................................7.4(a)
Offer...............................................................................Recitals
Offer Conditions......................................................................1.1(a)
Offer Documents.......................................................................1.1(b)
Offer Price.........................................................................Recitals
Option Notice...........................................................................7.10
Parachute Gross-Up Payment..............................................................4.17
Parent..............................................................................Preamble
Paying Agent..........................................................................3.2(a)
PCBs.................................................................................4.12(b)
Pension Plans........................................................................4.15(a)
Permits.................................................................................4.11
Person..................................................................................10.3
Plan.....................................................................................6.7
Post-Signing Returns.....................................................................6.3
Proxy Statement..........................................................................4.5
Release..............................................................................4.12(b)
Schedule 14D-1........................................................................1.1(b)
Schedule 14D-9........................................................................1.2(b)
SEC...................................................................................1.1(a)
SEC Documents.........................................................................4.6(a)
Securities Act........................................................................4.6(a)
Shares..............................................................................Recitals
Stock Option Plans....................................................................7.4(a)
Stockholder Agreement...............................................................Recitals
Stockholders Meeting..................................................................7.1(a)
Sub.................................................................................Preamble
Sub Shares..............................................................................7.10
Sub Stock Option........................................................................7.10
Subsidiaries..........................................................................4.3(a)
Subsidiary..............................................................................10.3
Superior Proposal.....................................................................9.1(d)
Surviving Corporation....................................................................2.1
Taxes...................................................................................4.16
Third Party Proposal..................................................................6.2(a)
Warrant...............................................................................7.4(a)
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 27, 1999 (this
"Agreement"), among PERBIO SCIENCE AB, a Swedish corporation ("Parent"), EWOK
ACQUISITION CORP., a Massachusetts corporation and a wholly owned subsidiary of
Parent ("Sub"), and ENDOGEN, INC., a Massachusetts corporation (the "Company").
WHEREAS the respective Boards of Directors of Parent, Sub and the
Company have approved the acquisition of the Company by Parent on the terms and
subject to the conditions set forth in this Agreement and believe that the
Merger (as defined below), is advisable and in the best interests of their
respective Stockholders;
WHEREAS, in furtherance of such acquisition, pursuant to this Agreement,
Parent has agreed to cause Sub to make a tender offer to purchase all the
outstanding shares of Common Stock, par value $.01 per share, of the Company
(the "Company Common Stock"; all the outstanding shares of Company Common Stock
being hereinafter collectively referred to as the "Shares") at a purchase price
of $3.75 per Share in U.S. dollars (the "Offer Price"), net to the seller in
cash, without interest thereon, upon the terms and subject to the conditions set
forth in this Agreement (as it may be amended from time to time as permitted
under this Agreement, the "Offer"); and the Board of Directors of the Company
has adopted resolutions approving the Offer and the Merger recommending that the
Company's stockholders accept the Offer and approving the acquisition of Shares
by Sub pursuant to the Offer and the Stockholder Agreement (as defined herein);
WHEREAS the respective Boards of Directors of Parent, Sub and the
Company have each approved the merger of Sub into the Company (the "Merger"),
upon the terms and subject to the conditions set forth in this Agreement,
whereby each Share, other than Shares owned directly or indirectly by Parent or
the Company and Dissenting Shares (as defined in Section 3.1(d)), will be
converted into the right to receive the price per share paid in the Offer;
WHEREAS, concurrently with the execution of this Agreement and as an
inducement to Parent to enter into this Agreement, Parent, Sub and certain
stockholders of the Company including all of the Company's executive officers
and directors are entering into a Stockholder Agreement (the "Stockholder
Agreement") pursuant to which such stockholders have, among other things, agreed
to sell or tender all of such stockholders' Shares to Sub at a cash price per
Share equal to the Offer Price, upon the terms and subject to the conditions set
forth in the Stockholder Agreement
WHEREAS, concurrently with the execution of this Agreement and as an
inducement to Parent to enter into this Agreement, Sub and certain employees of
the Company are executing and delivering Employment Agreements (the "Employment
Agreements") copies of which have been delivered to the Company; and
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Sub and the Company hereby agree as follows:
ARTICLE I
THE OFFER
1.1. The Offer.
(a) Subject to the terms and conditions set forth in this Agreement,
within five (5) business days after the date of the public announcement, which
shall occur on the date hereof or the following day, by Parent and the Company
of this Agreement, Sub shall, and Parent shall cause Sub to, commence (within
the meaning of Rule 14d-2 under the Exchange Act (as hereinafter defined)) the
Offer, which shall expire at midnight, New York City time, on the date that is
twenty (20) business days after the date the Offer is commenced (the initial
"Expiration Date," and any expiration time and date established pursuant to an
authorized extension of the Offer as so extended, also an "Expiration Date").
The obligation of Sub to, and of Parent to cause Sub to, commence the Offer,
conduct and consummate the Offer as soon as practicable after the date hereof
and accept for payment, and pay for, any Shares tendered and not withdrawn
pursuant to the Offer shall be subject only to the conditions set forth in
Exhibit A (the "Offer Conditions") (any of which may be waived in whole or in
part by Sub in its sole discretion, provided that, without the express written
consent of the Company, Sub may not waive the Minimum Condition (as defined in
Exhibit A)). Sub expressly reserves the right, subject to compliance with the
Exchange Act, to modify the terms of the Offer, except that, without the express
written consent of the Company, Sub shall not (i) reduce the number of Shares
subject to the Offer, (ii) reduce the Offer Price, (iii) add to or modify the
Offer Conditions, including the Minimum Condition, (iv) except as provided in
the next sentence, extend the Offer, if all of the Offer Conditions are
satisfied or waived, (v) change the form of consideration payable in the Offer
or (vi) amend or alter any term of the Offer in any manner materially adverse to
the holders of the Shares, provided, however, that nothing contained herein
shall prohibit Sub, in its sole discretion without the consent of the Company,
from waiving satisfaction of any condition to the Offer other than the Minimum
Condition. Notwithstanding the foregoing, Sub may, without the consent of the
Company, (A) extend the Offer (each individual extension not to exceed five (5)
business days after the previously scheduled Expiration Date), if at the then
scheduled Expiration Date of the Offer any of the Offer Conditions shall not be
satisfied or waived, until such time as such conditions are satisfied or waived,
(B) extend the Offer for any period required by any rule, regulation,
interpretation or position of the Securities and Exchange Commission (the "SEC")
or the staff thereof applicable to the Offer, and (C) extend the Offer on up to
two occasions in each case for period of not more than five (5) business days
beyond the latest Expiration Date if on
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such Expiration Date there shall have been tendered more than the number of
Shares sufficient to satisfy the Minimum Condition but less than 90% of the
Shares; provided, Parent agrees to permanently waive the Offer Conditions.
Subject to the terms and conditions of the Offer and this Section 1.1(a), Sub
shall, and Parent shall cause Sub to, accept for payment, and pay for, all
Shares validly tendered and not withdrawn pursuant to the Offer that Sub becomes
obligated to accept for payment, and pay for, pursuant to the Offer as soon as
practicable after the expiration of the Offer.
(b) On the date of commencement of the Offer, Parent and Sub shall file
with the SEC a Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1")
with respect to the Offer, which shall contain an offer to purchase and a
related letter of transmittal (such Schedule 14D-1 and the documents included
therein pursuant to which the Offer will be made, together with any supplements
or amendments thereto, the "Offer Documents"). Parent and Sub agree that the
Offer Documents shall comply as to form in all material respects with the
Securities Exchange Act of 1934, as amended and the rules and regulations
promulgated thereunder (the "Exchange Act"), and the Offer Documents, on the
date first published, sent or given to the Company's stockholders, shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation or warranty is made by Parent or Sub
with respect to written information supplied by or on behalf of the Company or
any of its stockholders for inclusion or incorporation by reference in the Offer
Documents. Parent, Sub and the Company each agrees promptly to correct any
written information provided by it for use in the Offer Documents if and to the
extent that such information shall have become false or misleading in any
material respect, and Parent and Sub further agree to take all steps necessary
to cause the Schedule 14D-1 as so corrected to be filed with the SEC and the
other Offer Documents as so corrected to be disseminated to holders of Shares,
in each case as and to the extent required by applicable laws. The Company and
its counsel shall be given reasonable opportunity to review and comment upon the
Offer Documents prior to their filing with the SEC or dissemination to the
stockholders of the Company. Parent and Sub agree to provide the Company and its
counsel any comments Parent, Sub or their counsel may receive from the SEC or
its staff with respect to the Offer Documents promptly after the receipt of such
comments.
(c) Parent shall provide or cause to be provided to Sub on a timely
basis the funds sufficient to accept for payment, and pay for, any and all
Shares that Sub becomes obligated to accept for payment, and pay for, pursuant
to the Offer.
1.2. Company Actions.
(a) The Company hereby approves of and consents to the Offer and
represents that the Board of Directors of the Company, at a meeting duly called
and held, duly adopted resolutions approving this Agreement and the Stockholder
Agreement, the Offer and the Merger, determining that the terms of the Offer and
the Merger are fair to, and in the best interests of, the Company and its
stockholders and recommending that the Company's stockholders accept the Offer,
tender their Shares pursuant to the Offer and approve and adopt the Merger and
this
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Agreement (if required); provided, however, that such recommendation and
approval may be withdrawn, modified or amended to the extent that the Board of
Directors of the Company determines in good faith, after consultation with its
outside legal counsel, that failure to take such action could reasonably be
expected to result in a breach of the Board of Directors' fiduciary obligations
under applicable law and the Company terminates this Agreement pursuant to
Section 9.1(d). The Company represents that its Board of Directors has received
the opinion of Xxxxx, Xxxxxxxx & Xxxx, Inc. ("AH&H") dated the date of this
Agreement to the effect that, as of such date and based upon and subject to the
matters set forth therein, the cash consideration to be received by the holders
of Shares (other than Parent and its Affiliates) pursuant to the Offer and the
Merger is fair from a financial point of view to such holders, and a complete
and correct signed copy of such opinion will promptly be delivered by the
Company to Parent. The Company has been authorized by AH&H to permit the
inclusion of such opinion (or a reference thereto) in the Schedule 14D-1, the
Schedule 14D-9 (as hereinafter defined) and the Proxy Statement (as hereinafter
defined).
(b) On the date the Offer Documents are filed with the SEC, or promptly
thereafter, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as
amended from time to time, the "Schedule 14D-9") containing the recommendation
described in paragraph (a) and shall mail the Schedule 14D-9 to the stockholders
of the Company to the extent required by Rule 14d-9 promulgated under the
Exchange Act and any other applicable federal securities laws; provided,
however, that if the Board of Directors of the Company determines in good faith,
after consultation with its outside legal counsel, that the amendment or
withdrawal of such recommendation is likely to be required in order for its
members to comply with their fiduciary duties under applicable law and the
Company terminates this Agreement pursuant to Section 9.1(d), then any such
amendment or withdrawal, and any related amendment of the Schedule 14D-9, shall
not constitute a breach of this Agreement. The Schedule 14D-9 shall comply as to
form in all material respects with the requirements of the Exchange Act and the
rules and regulations promulgated thereunder and, on the date filed with the SEC
and on the date first published, sent or given to the Company's stockholders,
shall not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that no representation or warranty is made by the Company
with respect to written information supplied by or on behalf of Parent or Sub
for inclusion in the Schedule 14D-9. Each of the Company, Parent and Sub agrees
promptly to correct any written information provided by it for use in the
Schedule 14D-9 if and to the extent that such information shall have become
false or misleading in any material respect, and the Company further agrees to
take all steps necessary to amend or supplement the Schedule 14D-9 and to cause
the Schedule 14D-9 as so amended or supplemented to be filed with the SEC and
disseminated to the Company's stockholders, in each case as and to the extent
required by applicable laws. Parent and its counsel shall be given reasonable
opportunity to review and comment upon the Schedule 14D-9 prior to its filing
with the SEC or dissemination to stockholders of the Company. The Company agrees
to provide Parent and its counsel any comments the Company or its counsel may
receive from the SEC or its staff with respect to the Schedule 14D-9 promptly
after the receipt of such comments.
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(c) In connection with the Offer and the Merger, the Company shall cause
its transfer agent to furnish Sub promptly with mailing labels containing the
names and addresses of the record holders of Shares as of a recent date and of
those persons becoming record holders subsequent to such date, together with
copies of all lists of stockholders, security position listings and computer
files and all other information in the Company's possession or control regarding
the beneficial owners of Shares, and shall furnish to Sub such information and
assistance (including updated lists of stockholders, security position listings
and computer files) as Parent may reasonably request in communicating the Offer
to the Company's stockholders. Subject to the requirements of applicable law,
and except for such steps as are necessary to disseminate the Offer Documents
and any other documents necessary to consummate the Merger, Parent and Sub and
their agents shall hold in confidence the information contained in any such
labels, listings and files, will use such information only in connection with
the Offer and the Merger and, if this Agreement shall be terminated, will, upon
request, promptly deliver, and will use their best efforts to cause their agents
promptly to deliver, to the Company all copies of such information then in their
possession or control.
ARTICLE II
THE MERGER
2.1. The Merger.
Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the Massachusetts Business Corporation Law
("MBCL"), Sub shall be merged with and into the Company at the Effective Time
(as defined in Section 2.3). Following the Effective Time, the separate
corporate existence of Sub shall cease and the Company shall continue as the
surviving corporation (the "Surviving Corporation") and shall succeed to and
assume all the rights and obligations of Sub in accordance with the MBCL.
2.2. Closing.
The closing of the Merger (the "Closing") will take place at 10:00 a.m.
(Connecticut time) on the first business day after the day on which the last to
be satisfied or waived of the conditions set forth in Article VIII (other than
those conditions that by their nature are to be satisfied at the Closing, but
subject to the fulfillment or waiver of those conditions) (the "Closing Date"),
at the offices of Xxxxxx & Xxxx, Three Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxxx
00000, unless another date, time or place is agreed to in writing by the parties
hereto.
2.3. Effective Time.
Subject to the provisions of this Agreement, as soon as practicable
after the Closing, the parties shall file articles of merger or other
appropriate documents (in any such case, the
5
"Articles of Merger") executed in accordance with the relevant provisions of the
MBCL and shall make all other filings or recordings required under the MBCL and
other applicable law. The Merger shall become effective at such time as the
Articles of Merger filed with the Secretary of the Commonwealth of the
Commonwealth of Massachusetts are duly accepted for record with the
Massachusetts Secretary of the Commonwealth (the time the Merger becomes
effective being hereinafter referred to as the "Effective Time").
2.4. Effects of the Merger.
The Merger shall have the effects set forth in the MBCL. The purpose of
the Surviving Corporation shall be to engage in the business of research related
to, and the development of proprietary products for, laboratory and clinical use
and to engage in any other business activity now or hereafter permitted by the
Commonwealth of Massachusetts to a corporation organized under Chapter 156B of
the MBCL.
2.5. Articles of Organization and By-laws.
(a) The Articles of Organization of the Company (the "Articles of
Organization"), as in effect immediately prior to the Effective Time, shall be
the articles of organization of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law; provided, that
Parent shall be entitled, in its sole discretion, to amend and/or restate the
Articles of Organization simultaneously with the Effective Time.
(b) The by-laws of Sub (the "By-laws") as in effect immediately prior to
the Effective Time shall be the by-laws of the Surviving Corporation, until
thereafter changed or amended as provided therein or by applicable law.
2.6. Directors.
The directors of Sub immediately prior to the Effective Time shall be
the directors of the Surviving Corporation, until the earlier of their death,
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
2.7. Officers.
The officers of Sub and such other persons as designated by Parent
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
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ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES
3.1. Effect on Capital Stock.
As of the Effective Time, by virtue of the Merger and without any action
on the part of the holder of any Shares or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of capital
stock of Sub shall be converted into and become one fully paid and nonassessable
share of Common Stock, par value $.01 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent Owned Stock. Each share of
the Common Stock of the Company that is owned by the Company and each Share that
is owned by Parent or any other direct or indirect wholly owned subsidiary of
Parent shall automatically be canceled and retired and shall cease to exist, and
no consideration shall be delivered in exchange therefor.
(c) Conversion of Company Common Stock. Subject to Section 3.1(d), each
issued and outstanding Share (other than shares to be canceled in accordance
with Section 3.1(b)) shall be converted into the right to receive from the
Surviving Corporation in cash, without interest, the price actually paid in the
Offer (the "Merger Consideration"). As of the Effective Time, all such Shares
shall no longer be outstanding and shall be canceled and retired automatically
and shall cease to exist, and each holder of a certificate representing any such
Shares shall cease to have any rights with respect thereto, except the right to
receive the Merger Consideration, without interest.
(d) Shares of Dissenting Stockholders. Notwithstanding anything in this
Agreement to the contrary, any issued and outstanding Shares held by a person (a
"Dissenting Stockholder") who has neither voted in favor of the Merger nor
consented in writing thereto and otherwise complies with all the applicable
provisions of the MBCL concerning the right of holders of Company Common Stock
to dissent from the Merger and require appraisal of their Shares ("Dissenting
Shares") shall not be converted as described in Section 3.1(c) but shall become
the right to receive such consideration as may be determined to be due to such
Dissenting Stockholder pursuant to the laws of the Commonwealth of
Massachusetts. If, after the Effective Time, such Dissenting Stockholder
withdraws his demand for appraisal or fails to perfect or otherwise loses his
right of appraisal, in any case pursuant to the MBCL, his Shares shall be deemed
to be converted as of the Effective Time into the right to receive the Merger
Consideration. The Company shall give Parent (i) prompt notice of any demands
for appraisal of Shares received by the Company and (ii) if and after Sub shall
have accepted for payment Shares pursuant to and subject to the conditions of
the Offer (including the Minimum Condition), the opportunity to participate in
and direct all negotiations and proceedings with respect to any such demands.
The Company shall not, without the prior written consent of Parent, make any
payment with respect to, or settle, offer to settle or otherwise negotiate, any
such demands.
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3.2. Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall designate a
commercial bank or trust company to act as paying agent in the Merger (the
"Paying Agent"). As of the Effective Time, Parent shall cause the Surviving
Corporation to deposit with the Paying Agent in separate trust for holders of
the Certificates (as hereinafter defined) cash in U.S. dollars in an amount
sufficient for the payment of the aggregate Merger Consideration for the shares
converted pursuant to Section 3.1(c) (it being understood that any and all
interest earned on funds made available to the Paying Agent pursuant to this
Agreement shall be turned over to Parent).
(b) Exchange Procedure. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates that immediately prior to the Effective Time
represented Shares (the "Certificates"), (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent and shall be in a form and have such other provisions as Parent may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for the Merger Consideration. Upon surrender of a
Certificate for cancellation to the Paying Agent or to such other agent or
agents as may be appointed by Parent, together with such letter of transmittal,
duly executed, and such other documents as may reasonably be required by the
Paying Agent, the holder of such Certificate shall be entitled to receive in
exchange therefor, and the Paying Agent shall pay pursuant to irrevocable
instructions given by Sub or Parent, the amount of cash into which the Shares
theretofore represented by such Certificate shall have been converted pursuant
to Section 3.1, and the Certificate so surrendered shall forthwith be canceled.
In the event of a transfer of ownership of Shares that is not registered in the
transfer records of the Company, payment may be made to a person other than the
person in whose name the Certificate so surrendered is registered, if such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of such Certificate or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Until surrendered
as contemplated by this Section, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the amount of cash, without interest, into which the Shares
theretofore represented by such Certificate shall have been converted pursuant
to Section 3.1. No interest will be paid or will accrue on the cash payable upon
the surrender of any Certificate.
(c) No Further Ownership Rights in Company Common Stock. All cash paid
upon the surrender of Certificates in accordance with the terms of this Article
III shall be deemed to have been paid in full satisfaction of all rights
pertaining to the Shares formerly represented by such Certificates. At the
Effective Time, the stock transfer books of the Company shall be closed, and
there shall be no further registration of transfers on the stock transfer books
of the Surviving Corporation of the Shares that were outstanding immediately
prior to the Effective Time. If, after the Effective Time, Certificates are
presented to the Surviving Corporation or the Paying Agent for any reason except
notation thereon that a stockholder has elected to exercise his right
8
to appraisal pursuant to the MBCL they shall be canceled and exchanged as
provided in this Article III.
(d) No Liability. Any funds deposited with the Paying Agent that remain
unclaimed by the former stockholders of the Company for three (3) months after
the Effective Time shall be paid to the Surviving Corporation upon demand, and
any former stockholders of the Company who have not theretofore complied with
the instructions for exchanging their Certificates provided herein shall
thereafter look only to the Surviving Corporation for payment of their claims
for the Merger Consideration set forth in Section 3.1 hereof for each Share held
by such stockholder, without any interest thereon. None of Parent, Sub, the
Company or the Paying Agent shall be liable to any person in respect of any cash
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law. If any Certificates shall not have been surrendered
prior to seven years after the Effective Time (or immediately prior to such
earlier date on which any payment pursuant to this Article III would otherwise
escheat to or become the property of any Governmental Entity (as defined in
Section 4.5)), the cash payment in respect of such Certificate shall, to the
extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interests of any person previously
entitled thereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
4.1. Organization.
The Company is a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Massachusetts and has all
requisite corporate power and authority to carry on its business as now being
conducted. The Company is duly qualified or licensed to do business and in good
standing in each jurisdiction in which the property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification or
licensing necessary, except in such jurisdictions where the failure to be so
duly qualified or licensed and in good standing has not had a material adverse
effect (as defined in Section 10.3) that has not been cured and reasonably would
not be expected to have a material adverse effect or prevent or materially delay
the consummation of the Offer and/or the Merger. The Company has made available
to Parent complete and correct copies of its Articles of Organization and By-
laws, as amended to the date hereof.
4.2. Capitalization.
The authorized capital stock of the Company consists of 10,000,000
Shares. At the close of business on May 26, 1999 (a) 3,468,202 Shares were
issued and outstanding, (b) no Shares were held by the Company in its treasury,
(c) 944,450 Shares were reserved for issuance upon
9
exercise of outstanding Company Stock Options (as defined in Section 7.4) and
(d) 305,000 Shares were issuable upon the exercise of outstanding Warrants (as
defined in Section 7.4. Since such date no shares of capital stock or other
voting securities of the Company were issued, reserved for issuance, issuable or
outstanding. All outstanding Shares are, and all Shares that may be issued will
be, when issued, duly authorized, validly issued, fully paid and nonassessable
and not subject to preemptive rights. There are no bonds, debentures, notes or
other indebtedness of the Company having the right to vote (or convertible into,
or exchangeable for, securities having the right to vote) on any matters on
which stockholders of the Company may vote. Except as set forth above, as of the
date hereof, there are no securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which the
Company is a party or by which any of them is bound obligating the Company to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other voting securities of the Company or obligating
the Company to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or undertaking. There
are no outstanding contractual obligations of the Company to repurchase, redeem
or otherwise acquire any shares of capital stock of the Company (other than as
set forth in Section 7.4).
4.3. Subsidiaries.
(a) The authorized capital stock of each of the subsidiaries of the
Company (the "Subsidiaries") is set forth on Schedule 4.3. All of the
outstanding shares of capital stock of the Subsidiaries are owned of record and
beneficially by the Company, free and clear of all mortgages, liens, pledges,
charges, encumbrances or other security interests (collectively, "Liens").
(b) Except as set forth on Schedule 4.3, since December 31, 1998 no
shares of capital stock or other voting securities of any Subsidiary were
issued, reserved for issuance, issuable or outstanding. All outstanding shares
of capital stock of the Subsidiaries are, and all such shares which may be
issued will be, when issued, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. There are no bonds,
debentures, notes or other indebtedness of any Subsidiary having the right to
vote (or convertible into, or exchangeable for, securities having the right to
vote) on any matters on which stockholders of the Subsidiaries may vote. As of
the date hereof, there are no securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which the
Company or any Subsidiary is a party or by which any of them is bound obligating
the Company or any Subsidiary to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other voting securities
of any Subsidiary or obligating the Company or any Subsidiary to issue, grant,
extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. There are no outstanding
contractual obligations of the Company or any Subsidiary to repurchase, redeem
or otherwise acquire any shares of capital stock of any Subsidiary. Except for
the Company's interest in its Subsidiaries or as set forth on Schedule 4.3,
neither the Company nor any Subsidiary owns directly or indirectly any interest
or investment in the form of debt or equity in, nor is the Company or any
10
Subsidiary subject to any obligation or requirement to provide for or to make
any such investment in, any person.
4.4. Authority.
The Company has the requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby (other than, with respect to the Merger, the approval and adoption of
this Agreement by the holders of two-thirds of the Shares (the "Company
Stockholder Approval")). The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the Merger and
of the other transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Company and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or to consummate the transactions so contemplated (in each case, other than,
with respect to the Merger, the Company Stockholder Approval). This Agreement
has been duly executed and delivered by the Company and, assuming due
authorization, execution and delivery by Parent and Sub, constitutes a valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy laws or creditors' rights generally or by general principles of
equity.
4.5. Consents and Approvals; No Violations.
Except for filings, permits, authorizations, consents and approvals (1)
as may be required under, and other applicable requirements of, the Exchange Act
(including the filing with the SEC of the Schedule 14D-9 and a proxy or
information statement relating to any required approval by or meeting of the
Company's stockholders of this Agreement (the "Proxy Statement")), and (2) with
the Secretary of the Commonwealth of Massachusetts, neither the execution,
delivery or performance of this Agreement by the Company nor the consummation by
the Company of the transactions contemplated hereby will require any filing
with, notice to, or Permit (as defined in Section 4.11), authorization, consent
or approval of, any Federal, state or local government or any court, tribunal,
administrative agency or commission or other governmental or other regulatory
authority or agency, domestic, foreign or supranational (a "Governmental
Entity"). Neither the execution, delivery or performance of this Agreement by
the Company nor the consummation by the Company of the transactions contemplated
hereby will (a) conflict with or result in any breach of any provision of the
Articles of Organization or By-laws of the Company or any of its Subsidiaries,
(b) result in the creation or imposition of any Liens upon the properties or
assets of the Company or any Subsidiary, (c) except as set forth on Schedule
4.5, result in a violation or breach of, require any notice to any party
pursuant to, or constitute (with or without due notice or lapse of time or both)
a default (or give rise to any right of termination, amendment, cancellation,
acceleration or right of non-renewal or contractually require any prepayment or
offer to purchase any debt or give rise to the loss of a material benefit)
under, any of the terms, conditions or provisions of any Commitment (as defined
in Section 4.10) to which the Company or any of its Subsidiaries is a party or
by which the Company's or any of its Subsidiaries' properties or assets may be
bound, (d) violate any order, writ, injunction, decree,
11
statute, rule or regulation applicable to the Company or any of its Subsidiaries
or any of their respective properties or assets or (e) result in the loss,
forfeiture, revocation, termination or diminution of any Permit (as defined in
Section 4.11) except in the case of clauses (c), (d) or (e) for failures to
fulfill requirements, losses, forfeitures, revocations, diminutions, violations,
breaches or defaults that, individually or in the aggregate, have not had an
adverse effect that has not been cured and reasonably would not be expected to
have an adverse effect or prevent or delay the consummation of the Offer and/or
the Merger.
4.6. SEC Documents; Financial Statements; Other Financial Information.
(a) The Company has filed with the SEC all reports, forms, schedules and
statements and other documents required to be filed by it (the "SEC Documents").
As of their respective filing dates, (i) the SEC Documents complied in all
material respects with the requirements of the Securities Act of 1933, as
amended (the Securities Act"), or the Exchange Act, as the case may be, and the
rules and regulations of the SEC promulgated thereunder applicable to such SEC
Documents, and (ii) none of the SEC Documents contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements included in the SEC Documents complied, as of their respective filing
dates as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with generally accepted accounting
principles (except, in the case of unaudited statements, as permitted by Form
10-QSB of the SEC) applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly present, in all
material respects, the consolidated financial position of the Company and its
Subsidiaries as of the dates thereof and the results of its operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments). Except as set forth on Schedule 4.6 or in
the SEC Documents filed and publicly available prior to the date hereof, and
except for liabilities and obligations incurred in the ordinary course of
business consistent with past practice since the date of the most recent
consolidated balance sheet included in the SEC Documents filed and publicly
available prior to the date hereof, neither the Company nor any of its
Subsidiaries has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by generally accepted accounting
principles to be set forth on a balance sheet or in the notes thereto.
(b) All accounts receivable of the Company and each Subsidiary have
arisen from bona fide services provided in the ordinary course of business to
third parties which are not Affiliates (as defined in Rule 405 promulgated under
the Securities Act) of the Company or any Subsidiary or any of their officers,
directors or employees. All accounts receivable are good and collectible in the
ordinary course of business consistent with past practice at the aggregate
recorded amounts thereof, subject to reserves taken consistent with past
practices.
(c) Schedule 4.6(c) sets forth the consolidated indebtedness owed by the
Company and its Subsidiaries to any third party, and the Company's aggregate
consolidated cash and cash equivalents, each calculated as of May 24, 1999 in
accordance with generally accepted
12
accounting principles, consistently applied. The term "indebtedness" shall
include indebtedness for borrowed money, reimbursement obligations with respect
to letters of credit and similar instruments, obligations incurred, issued or
assumed as the deferred purchase price of property or services (other than
accounts payable incurred in the ordinary course of business consistent with
past practice), obligations of others secured by (or, for which the holder of
such indebtedness has an existing right, contingent or otherwise, to be secured)
any Lien on property or assets of the Company or any Subsidiary, capital lease
obligations, and obligations in respect of guarantees of any of the foregoing or
any "keep well" or other agreement to maintain any financial statement condition
of another person, in each case, whether or not matured, liquidated, fixed,
contingent, or disputed.
4.7. Information Supplied.
None of the information supplied or to be supplied by the Company for
inclusion or incorporation by reference in (a) the Offer Documents, (b) the
Schedule 14D-9, (c) the information to be filed by the Company in connection
with the Offer pursuant to Rule 14f-1 promulgated under the Exchange Act (the
"Information Statement") or (d) the Proxy Statement, will, in the case of the
Offer Documents, the Schedule 14D-9 and the Information Statement at the
respective times the Offer Documents, the Schedule 14D-9 and the Information
Statement are filed with the SEC or first published, sent or given to the
Company's stockholders, or in the case of the Proxy Statement, at the time the
Proxy Statement is first mailed to the Company's stockholders or at the time of
the Stockholders Meeting (as defined in Section 7.1) contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Schedule 14D-
9, the Information Statement and the Proxy Statement will comply as to form in
all material respects with the requirements of the Exchange Act and the rules
and regulations thereunder, except that no representation or warranty is made by
the Company with respect to statements made or incorporated by reference therein
based on information supplied by Parent or Sub specifically for inclusion or
incorporation by reference therein.
4.8. Absence of Certain Changes or Events.
Except as disclosed in the SEC Documents (including exhibits thereto)
filed since January 1, 1998 and publicly available prior to the date hereof (the
"Filed SEC Documents"), and except as set forth on Schedule 4.8, since the date
of the most recent audited financial statements included in the Filed SEC
Documents, the Company and its Subsidiaries have conducted their respective
businesses only in the ordinary course consistent with prior practice, and there
has not been (a) any material adverse change, (b) any declaration, setting aside
or payment of any dividend or other distribution (whether in cash, stock or
property) with respect to any of the Company's capital stock, (c) any split,
combination or reclassification of any of its capital stock or any issuance or
the authorization of any issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, (d) (i) any granting by
the Company or any Subsidiary to any officer of the Company of any increase in
compensation,
13
except in the ordinary course of business consistent with past practice as was
required under employment agreements in effect as of the date of the most recent
audited financial statements included in the Filed SEC Documents, (ii) any
granting by the Company or any Subsidiary to any officer, employee, director or
consultant of any increase in severance or termination pay, except as was
required under any employment, severance or termination agreements in effect as
of the date of the most recent audited financial statements included in the
Filed SEC Documents or (iii) any entry by the Company or any Subsidiary into any
employment, severance or termination agreement with any officer, employee,
director or consultant, (e) any damage, destruction or loss to property, whether
or not covered by insurance, that, individually or in the aggregate, has not
been cured and would be reasonably expected to have, individually or in the
aggregate, a material adverse effect, (f) any change in accounting methods,
principles or practices by the Company or any Subsidiary, (g) any delivery of a
notice of non-renewal or any other failure to renew contracts or agreements to
which the Company or any Subsidiary is a party which are material, individually
or in the aggregate, or (h) any loss of any employee who earned more than
$75,000 in the most recent fiscal year (in salary, bonus and other cash
compensation).
4.9. Litigation.
Except as disclosed on Schedule 4.9 hereto, there is no claim, suit,
action, proceeding or investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries and there
is no judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against the Company or any Subsidiary.
4.10. Contracts.
Except as filed as an exhibit to the Filed SEC Documents or set forth on
Schedule 4.10 and delivered to or made available to Parent or its counsel, there
are no (a) notes, bonds, mortgages, indentures, leases, or Permits, or (b) other
contracts, agreements or other instruments or obligations, whether written or
oral, or any amendments, supplements or restatements of any of the foregoing
((a) and (b), collectively, "Commitments") that (i) relate to real property and
involve payments in excess of $25,000 annually, (ii) relate to goods or services
provided by the Company and involve payments in excess of $25,000 annually,
(iii) relate to employees, officers, or directors of the Company or independent
contractors performing services on behalf of the Company or (iv) are otherwise
material to the business, financial condition or results of operations of the
Company and its Subsidiaries, taken as a whole. Neither the Company nor any
Subsidiary is and, to the knowledge of the Company, no other party is in
violation of or in default under (nor does there exist any condition which upon
the passage of time or the giving of notice or both would reasonably be expected
to cause such a violation of or default under) any material Commitment to which
it is a party or by which it or any of its properties or assets is bound. Each
Commitment constitutes a valid and binding obligation on the Company and/or the
Subsidiary party thereto and, to the knowledge of the Company, each other party
thereto, enforceable against such other party in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy laws or
creditors' rights generally or by general principles of equity.
14
4.11. Compliance with Laws.
The Company and each Subsidiary is in compliance with all applicable
statutes, laws, codes, ordinances, regulations, rules, Permits, judgments,
decrees and orders of any Governmental Entity applicable to its assets,
properties, business or operations. The Company and each Subsidiary has in
effect all Federal, state, local and foreign governmental approvals,
authorizations, certificates, filings, franchises, licenses, notices, permits
and rights, including all certificates of need and authorizations under
Environmental Laws (as defined below) and exemptions from any of the foregoing
(collectively, "Permits") necessary for it to own, lease or operate its
properties and assets and to carry on its business as now conducted (and the
Company and/or each Subsidiary has timely made appropriate filings for issuance
or renewal thereof). Schedule 4.11 contains a list of all Permits, and copies
thereof have been provided to Parent or its counsel. No default under any Permit
has occurred. No investigation or review by any Governmental Entity with respect
to the Company or any Subsidiary is pending or, to the knowledge of the Company,
threatened.
4.12. Environmental Matters.
Except as set forth in Schedule 4.12:
(a) the Company and each Subsidiary is, and has been, in compliance with
all applicable Environmental Laws (as defined below). The term "Environmental
Laws" means any Federal, state, provincial, regional, municipal, local or
foreign judgment, order, decree, statute, law, ordinance, rule, regulation,
code, permit, consent, approval, license, writ, decree, directive, injunction or
other enforceable requirement, including any registration requirement, relating
to: (A) Releases (as defined below) or threatened Releases of Hazardous
Materials (as defined below) into the environment; (B) the generation,
treatment, storage, disposal, use, handling, manufacturing, transportation or
shipment of Hazardous Materials; or (C) otherwise relating to pollution or
protection of health or safety or the environment;
(b) there has been no Release or threatened Release of Hazardous
Materials by the Company or any Subsidiary, or the knowledge of the Company by
any other party, in, on, under or affecting any property now or previously
owned, leased, controlled or operated by the Company or any Subsidiary or, to
the knowledge of the Company, any adjacent site. The term "Release" has the
meaning set forth in 42 U.S.C. (S) 9601(22). The term "Hazardous Materials"
means any pollutant, contaminant, hazardous, radioactive or toxic substance,
material, constituent or waste, or any other waste, substance, chemical or
material regulated under any Environmental Law, including (1) petroleum, crude
oil and any fractions thereof, (2) natural gas, synthetic gas and any mixtures
thereof, (3) asbestos and/or asbestos-containing material, (4) radon and (5)
polychlorinated biphenyls ("PCBs"), or materials or fluids containing PCBs;
(c) there is no pending, or, to the knowledge of the Company, threatened
claim, action, demand, investigation or inquiry by any Governmental Entity or
other person relating to any
15
actual or potential violations of Environmental Law or any actual or potential
obligation to investigate or remediate a Release or threatened Release of any
Hazardous Materials;
(d) neither the Company nor any Subsidiary has assumed, whether by
contract or operation of law, any liabilities or obligations arising under
Environmental Laws in connection with formerly owned, leased or operated
properties or facilities or in connection with any formerly owned divisions,
subsidiaries, companies or other entities; and
(e) there are no underground or aboveground storage tanks, incinerators
or surface impoundments owned or operated by the Company or any Subsidiary, or
to the knowledge of the Company, by any other party at, on or under or within
any property, owned, leased, controlled or operated by the Company or any
Subsidiary, except as are in compliance with Environmental Laws and no such
tanks, incinerators or impoundments have been removed from any such property;
and
(f) neither the Company nor any Subsidiary has used any waste disposal
site, or otherwise disposed of, transported, or arranged for the transportation
of, any Hazardous Materials to any place or location, except in compliance with
all applicable Environmental Laws and for any such use, disposal, transportation
or arrangement that has not had a material adverse effect.
4.13. Absence of Changes in Benefit Plans; Labor Relations.
Except as filed as an exhibit to the Filed SEC Documents and except as
disclosed on Schedule 4.13 or as expressly provided in this Agreement, since the
date of the most recent audited financial statements included in the Filed SEC
Documents, there has not been any adoption or amendment in any material respect
by the Company or any Subsidiary of any collective bargaining agreement or any
bonus, pension, profit sharing, deferred compensation, incentive compensation,
stock ownership, stock purchase, stock option, phantom stock, retirement,
vacation, severance, disability, death benefit, hospitalization, medical or
other plan or arrangement providing benefits to any current or former employee,
officer or director of the Company or any Subsidiary. Except as set forth in
Schedule 4.13 or as filed as an exhibit to the Filed SEC Documents or as
expressly provided in this Agreement, there exist no employment, consulting,
severance, termination or indemnification agreements or arrangements between the
Company and any current or former employee, officer or director of the Company.
Schedule 4.13 contains a list of all amounts payable or that will or may become
payable to each director, officer or employee or former director, officer or
employee of the Company or any Subsidiary pursuant to any employment,
change-in-control, severance or termination agreement or arrangement other than
pursuant to the Employment Agreements. There are no collective bargaining or
other labor union agreements to which the Company or any Subsidiary is a party
or by which it is bound. To the knowledge of the Company, the Company has not
encountered any labor union organizing activity, or had any actual or threatened
employee strikes, work stoppages, slowdowns or lockouts.
16
4.14. Employment Matters; Affiliate Transactions.
(a) Schedule 4.14 sets forth a list of all directors, officers and
employees of the Company and each Subsidiary as of the date hereof and the
aggregate salary, bonus and other cash compensation paid as of May 14, 1999 and
the number of Company Stock Options and/or Warrants granted or issued to each
such employee, officer, and director in the most recently completed fiscal year
and paid and granted or issued to each such person from the beginning of the
current fiscal year to the date hereof. Since May 14, 1999, the Company has not
increased the annual salary, bonus or other cash compensation payable to any
director, officer or employee of the Company except as may be provided in the
Employment Agreements.
(b) Schedule 4.14 sets forth a list of all outstanding Company Stock
Options and Warrants as of the date hereof, showing for each such Company Stock
Option and Warrant: (i) the number of Shares issuable, (ii) the number of vested
Shares, (iii) the date of grant, (iv) the exercise price and (v) the holder
thereof.
(c) Schedule 4.14 sets forth a description of all transactions between
the Company or its Subsidiaries, on the one hand, and any of their respective
Affiliates, directors, officers, employees, or consultants, on the other hand,
in each case consummated at any time since January 1, 1998. Except as set forth
on Schedule 4.14, there are no agreements or arrangements between the Company or
its Subsidiaries, on the one hand, and any of their respective Affiliates,
directors, officers, employees or consultants, on the other hand, with respect
to any such transactions. No Affiliate, director, officer, employee or
consultant of the Company owns any interest in any asset or property (real or
personal, tangible or intangible), business or contract used or intended for use
or otherwise relating to the business currently conducted or proposed to be
conducted by the Company or any Subsidiary.
4.15. ERISA Compliance.
(a) Schedule 4.15(a) contains a list of all "employee pension benefit
plans" (as defined in Section 3(2) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")) (sometimes referred to herein as "Pension
Plans"), "employee welfare benefit plans" (as defined in Section 3(1) of ERISA)
and all other benefit plans, contracts, programs, policies, practices or
arrangements, whether written or oral, funded or unfunded, maintained or
contributed to by the Company or any other person or entity that, together with
the Company, is treated as a single employer under Section 414(b), (c), (m) or
(o) of the Internal Revenue Code of 1986, as amended (the "Code") (the Company
and each such other person or entity, a "Commonly Controlled Entity"), for the
benefit of any current or former employees, officers or directors of the Company
or dependents of any such person (collectively, "Benefit Plans"). The Company
has delivered or made available to Parent true, complete and correct copies of
(i) each Benefit Plan (or, in the case of any unwritten Benefit Plans,
descriptions thereof), (ii) the most recent annual report on Form 5500 filed
with the Internal Revenue Service with respect to each Benefit Plan (if any such
report was required), (iii) the most recent summary plan description for each
Benefit Plan for which such summary plan description is required and (iv) each
trust agreement and group annuity contract relating to any Benefit Plan. Each
Benefit Plan has been
17
administered in all material respects in accordance with its terms. The Company
and each Commonly Controlled Entity and all the Benefit Plans are all in
compliance in all material respects, and all Benefit Plans have been operated
and administered in all material respects with applicable provisions of ERISA
and the Code, and no "reportable event," or non-exempt "prohibited transaction"
(as such terms are defined in ERISA and the Code, as applicable), or termination
has occurred with respect to any Benefit Plan, and the consummation of the
transaction entered into pursuant to this Agreement will not result in the
occurrence of any such event.
(b) Except as disclosed in Schedule 4.15(b), all Pension Plans intended
to qualify under Section 401(a) of the Code are qualified and exempt from
Federal income taxes under Section 401(a) and 501(a), respectively, of the Code,
and no event has occurred that would adversely affect its qualification or
materially increase its costs. All amendments to Pension Plans required under
ERISA and the Code to be adopted by the Company by December 31, 1994, have been
adopted. There have been no material violations of ERISA or the Code with
respect to the filing of applicable documents, notices or reports (including,
without limitation, annual reports filed on IRS From 5500) relating to any
Benefit Plan maintained by the Company or any Commonly Controlled Entity with
any Governmental Authority or the furnishing of such required documents to the
participants or beneficiaries of such Benefit Plans.
(c) Neither the Company nor any Commonly Controlled Entity has within
the five year period immediately preceding the date hereof maintained,
contributed to or been obligated to contribute to any Benefit Plan that is
subject to Title IV of ERISA or Section 412 of the Code. Neither the Company nor
any Commonly Controlled Entity is required to contribute to any "multiemployer
plan" (as defined in Section 4001(a) (3) of ERISA) or has withdrawn from any
multiemployer plan where such withdrawal has resulted or would result in any
"withdrawal liability" (within the meaning of Section 4201 of ERISA) that has
not been fully paid.
(d) With respect to any Benefit Plan that is an employee welfare benefit
plan, except as disclosed in Schedule 4.15(d), (1) no such Benefit Plan is
funded through a "welfare benefits fund", as such term is defined in Section 419
(e) of the Code, (2) each such Benefit Plan that is a "group health plan", as
such term is defined in Section 5000 (b)(1) of the Code, complies substantially
with the applicable requirements of Section 4980B(f) of the Code and (3) except
as provided in writing in such plan, there are no understandings, agreements or
undertakings, written or oral, that would prevent any such plan (including any
such plan covering retirees or other former employees) from being amended or
terminated without material liability to the Company or any Commonly Controlled
Entity on or at any time after the Effective Time. Except as set forth in
Schedule 4.15(d), no Benefit Plan that is a welfare benefit plan provides for
post-retirement medical or life insurance benefits coverage to any current or
former employee, officer, or director of the Company or any dependent of any
such individual except as may be required by the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"), and the Health Insurance
Portability and Accountability Act of 1996; and there are no qualified
beneficiaries that have elected COBRA coverage under an employee welfare benefit
plan as of the Closing Date.
18
(e) Except as set forth on Schedule 4.15(e) and except with respect to
the Company Stock Options, no employee or director of the Company will be
entitled to any additional compensation or benefits or any acceleration of the
time of payment or vesting of any compensation or benefits under any Benefit
Plan as a result of the transactions contemplated by this Agreement. It shall be
assumed for purposes of the preceding sentence that no payments will be received
by, or accelerated to, any such employee or director as a result of the
termination of such individual's employment/service relationship by the
Surviving Corporation after the Effective Time.
(f) All contributions (including all employer contributions and employee
salary reduction contributions) which are due to each Benefit Plan which is a
Pension Plan have been timely paid.
(g) To the Company's knowledge, after due inquiry, there has been no act
or acts which would result in the disallowance of an income tax deduction that
would otherwise be available to the Company or the imposition of a tax, an
addition to tax or a penalty pursuant to Code Sections 4980B, 4980D, 4975, 4972,
6652, 6721 or 6723 or any predecessor provision thereof, or any regulations
promulgated thereunder, whether final, temporary or proposed.
(h) The Company does not maintain and has not ever maintained any
nonqualified deferred compensation arrangements, including, but not limited to,
"top-hat" plans within the meaning of ERISA Section 201(2).
4.16. Taxes.
Except as set forth on Schedule 4.16, Company has filed all tax returns
and reports required to be filed by it (which returns are true and complete in
all material respects) and has paid all taxes due and required to be paid by it
(other than such taxes as are being contested in good faith or with respect to
which the Company is maintaining reserves). The most recent financial statements
contained in the Filed SEC Documents reflect an adequate reserve for all taxes
payable by the Company or any Subsidiary for all taxable periods and portions
thereof through the date of such financial statements. Except as set forth on
Schedule 4.16, no deficiencies for any taxes which remain outstanding have been
proposed, asserted or assessed against the Company or any Subsidiary, and no
requests for waivers of the time to assess any such taxes are pending. Except as
set forth on Schedule 4.16, none of the Federal income tax returns of the
Company or any Subsidiary have been examined by the United States Internal
Revenue Service. As used in this Agreement, "taxes" shall mean all Federal,
state, local and foreign income, property, sales, payroll, employment, excise,
withholding and other taxes, tariffs or other governmental charges in the nature
of a tax as well as any interest, penalties and additions to tax.
4.17. No Excess Parachute Payments.
Not including any payments under the Employment Agreements, no amount
that could be received pursuant to the Benefit Plans or any executed and
delivered agreements between the
19
Company or any Subsidiary and any officer, director or employee thereof in
effect as of the date hereof (whether in cash or property or the vesting of
property) as a result of any of the transactions contemplated by this Agreement
by any employee, officer or director of the Company or any Subsidiary who is a
"disqualified individual" (as such term is defined in proposed Treasury
Regulation Section 1.280G-1) under any employment, severance, change-in-control
or termination agreement, other compensation arrangement or Benefit Plan
currently in effect would be an "excess parachute payment" (as such term is
defined in Section 280G(b) (1) of the Code). No disqualified individual is
entitled to receive any additional payment from the Company, any Subsidiary, the
Surviving Corporation, or any other person referred to in Q&A 10 under proposed
Treasury Regulation Section 1.280G-1 (a "Parachute Gross-Up Payment") in the
event that the 20 per cent parachute excise tax of Section 4999(a) of the Code
is imposed on such person. Except as set forth in Schedule 4.17, neither the
Board of Directors of the Company nor the Board of Directors of any Subsidiary
has during the six months prior to the date hereof granted to any officer,
director or employee of the Company or any Subsidiary any right to receive any
Parachute Gross-Up Payment.
4.18. Title to Properties; Condition of Assets.
(a) Except as set forth in Schedule 4.18, the Company and each
Subsidiary has good and marketable title to, or valid leasehold interests in,
all its material properties and assets except for such as are no longer used in
the conduct of its businesses or as have been disposed of in the ordinary course
of business. All such assets and properties are free and clear of all Liens
other than those set forth in Schedule 4.18.
(b) The properties and assets of the Company and its Subsidiaries are in
good repair and operating condition, and are sufficient for the conduct of the
business of the Company and the Subsidiaries as presently conducted.
(c) Except as set forth in Schedule 4.18, the Company and each
Subsidiary has complied in all material respects with the terms of all leases to
which it is a party or under which it is in occupancy, and all such leases are
in full force and effect. The Company enjoys peaceful and undisturbed possession
under all such leases.
(d) Neither the Company nor any Subsidiary owns any real property.
4.19. Intellectual Property.
(a) For the purposes of this Section 4.19, "Intellectual Property" means
(i) all patents, trademarks, trade names, and applications for any of the
foregoing, of any party, or to which it has rights and (ii) all licenses granted
by or to such party, and other agreements pertaining to any of the foregoing or
any inventions, trade secrets or other proprietary know-how to which such party
is a party or is bound. The Company has disclosed to Parent or its counsel
correct and complete copies of all applications, filings, licenses, agreements
and related correspondence and documents embodying the Company's Intellectual
Property.
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(b) Except as set forth in Schedule 4.19: (i) the Company owns or has
the right to use all of the Company's Intellectual Property necessary for the
Company to conduct its business as presently conducted; (ii) no proceedings have
been instituted, are pending or, to the best of its knowledge, threatened, which
challenge the Company's rights in respect of the aforesaid or the validity
thereof; (iii) none of the Intellectual Property owned or used by the Company is
the subject of any lien or other agreement granting rights therein to any third
party; (iv) the Company has not received notice of any charges of interference
or infringement of any Intellectual Property; (v) to the Company's knowledge, no
method or product used by the Company (A) infringes upon or otherwise violates
the Intellectual Property rights of others and the Company has not received any
claims of such infringements or violation; and (B) none of the Company's patents
is being infringed by others and none is subject to any outstanding order,
decree, judgment, stipulation or charge; (vi) the Company's employees and
consultants who are engaged to develop Intellectual Property are required to
sign confidentiality and assignment of inventions agreements in the form
previously provided Sub; (vii) the Company has no knowledge of any facts or
claims which would cause any of such patents, trademarks, or copyrights to be
invalid; and (viii) the Company's Intellectual Property was not developed under
a grant from any Governmental Entity or private source.
4.20. Non-Compete.
Except as set forth in Schedule 4.20, neither the Company nor any
Subsidiary is subject to any agreement, covenant or understanding that restricts
the Company or any Subsidiary from entering or conducting any line of business
in any location at any time.
4.21. Voting Requirements.
The affirmative vote of the holders of two-thirds of the outstanding
Shares is the only vote of the holders of any class or series of the Company's
capital stock necessary to approve the Merger.
4.22. State Takeover Statutes.
The Board of Directors of the Company has approved the Merger and this
Agreement, and such approval is sufficient to render inapplicable to the Merger,
this Agreement and the transactions contemplated by this Agreement, the
provisions of Chapter 110C of the General Laws of the Commonwealth of
Massachusetts to the extent, if any, such Chapter is applicable to the Merger,
this Agreement and the transactions contemplated by this Agreement and the
Stockholder Agreement. To the Company's knowledge, no other state takeover
statute or similar statute or regulation applies or purports to apply to the
Merger, this Agreement or the transactions contemplated by this Agreement.
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4.23. Brokers.
Except as set forth on Schedule 4.23, no broker, investment banker,
financial advisor or other person, other than AH&H, the fees and expenses of
which will be paid by the Company, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company.
4.24. Opinion of Financial Advisor.
The Board of Directors of the Company has received the opinion of AH&H
dated the date of this Agreement to the effect that, as of such date and based
upon and subject to the matters set forth therein, the cash consideration to be
received by holders of Shares (other than Parent and its Affiliates) pursuant to
the Offer and the Merger is fair from a financial point of view to such holders
and a complete and correct signed copy of which opinion has been delivered to
Parent (after receipt thereof by the Company).
4.25. Year 2000.
The description of the Company's Year 2000 readiness under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Year 2000" in the Company's Form 10-KSB for the year ended May 31,
1998 is accurate and complete in all respects.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub each represent and warrant to the Company as follows:
5.1 Organization.
(a) Each of Parent and Sub is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to carry on
its business as now being conducted. Each of Parent and Sub is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties makes
such qualifications or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed (individually or in the
aggregate) could not be reasonably expected to prevent or materially delay the
consummation of the Offer and/or the Merger.
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(b) All of the issued and outstanding capital stock of Sub is, and at
the Effective Time will be, owned by Parent, and there are no (i) other
outstanding shares of capital stock or other voting securities of Sub, (ii)
securities of Sub convertible into or exchangeable for shares of capital stock
or other voting securities of Sub or (iii) options or other rights to acquire
from Sub, and no obligations of Sub to issue, any capital stock, other voting
securities or securities convertible into or exchangeable for capital stock or
other voting securities of Sub. Sub has made available to the Company a complete
and correct copy of Sub's articles of organization and bylaws, as amended to the
date hereof. Sub's articles of organization and bylaws so delivered are in full
force and effect and will remain in full force and effect until the Effective
Time.
5.2 Authority.
Parent and Sub have requisite power and authority to execute and deliver
this Agreement and the Stockholder Agreement, and to consummate the transactions
contemplated by this Agreement and the Stockholder Agreement. The execution,
delivery and performance of this Agreement and the Stockholder Agreement, and
the consummation of the transactions contemplated by this Agreement and the
Stockholder Agreement, have been duly authorized by all necessary action on the
part of Parent and Sub and no other proceedings on the part of Parent and Sub
are necessary to authorize this Agreement or the Stockholder Agreement or to
consummate the transactions contemplated hereby or thereby. No vote of Parent
shareholders is required to approve this Agreement or the Stockholder Agreement
or the transactions contemplated hereby or thereby. Each of this Agreement and
the Stockholder Agreement has been duly executed and delivered by Parent and Sub
and constitutes a valid and binding obligation of Parent and Sub enforceable
against Parent and Sub in accordance with its terms.
5.3 Consents and Approvals; No Violations.
Except for filings, permits, authorizations, consents and approvals as
may be required under, and other applicable requirements of, the Exchange Act
(including the filing with the SEC of the Offer Documents), the MBCL and state
takeover laws, neither the execution, delivery or performance of this Agreement
or the Stockholder Agreement by Parent and Sub, nor the consummation by Parent
and Sub of the transactions contemplated hereby or thereby will (i) conflict
with or result in any breach of any provision of the respective certificate of
incorporation or by-laws of Parent and Sub, (ii) require any filing with, notice
to, or permit, authorization, consent or approval of, any Governmental Entity
(except where the failure to obtain such permits, authorizations, consents or
approvals or to make such filings would not reasonably be expected to prevent or
materially delay the consummation of the Offer and/or the Merger), (iii) result
in a violation or breach of, require any notice to any party pursuant to, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration)
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, lease, contract, agreement or other instrument or obligation
to which Parent or any of its subsidiaries is a party or by which any of them or
any of their properties or assets may be bound or (iv) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Parent, any of its
subsidiaries or any of their properties or assets,
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except in the case of clauses (iii) and (iv) for violations, breaches or
defaults which could not, individually or in the aggregate, be reasonably
expected to prevent or materially delay the consummation of the Offer and/or the
Merger.
5.4 Information Supplied.
None of the information supplied or to be supplied by Parent or Sub
specifically for inclusion or incorporation by reference in (i) the Offer
Documents, (ii) the Schedule 14D-9, (iii) the Information Statement or (iv) the
Proxy Statement will, in the case of the Offer Documents, the Schedule 14D-9 and
the Information Statement, at the respective times the Offer Documents, the
Schedule 14D-9 and the Information Statement are filed with the SEC or first
published, sent or given to the Company's stockholders, or, in the case of the
Proxy Statement, at the time the Proxy Statement is first mailed to the
Company's stockholders or at the time of the Stockholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. The Offer
Documents will comply as to form in all material respects with the requirements
of the Exchange Act and the rules and regulations thereunder, except that no
representation or warranty is made by Parent or Sub with respect to statements
made or incorporated by reference therein based on information supplied by or on
behalf of the Company specifically for inclusion or incorporation by reference
therein.
5.5 Interim Operations of Sub.
Sub (and any other wholly owned subsidiary of Parent which may be used
to effect the Offer and the Merger pursuant to Section 2.1) was formed solely
for the purpose of engaging in the transactions contemplated hereby, has engaged
in no other business activities and has conducted its operations only as
contemplated hereby.
5.6 Brokers.
No broker, investment banker, financial advisor or other person other
than Vector Securities International, Inc., the fees and expenses of which shall
be paid by the Parent, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Parent or Sub.
5.7 Financing.
Parent has, and on the Expiration Date will have, sufficient funds
available, directly or through finance commitments, to purchase, or to cause Sub
to purchase, all the Shares pursuant to the Offer and the Merger and to pay all
fees and expenses payable by Parent or Sub related to the transactions
contemplated by this Agreement.
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ARTICLE VI
COVENANTS
6.1 Conduct of Business.
From the date hereof to the Effective Time, the Company shall, and shall
cause each Subsidiary to, carry on its business in the ordinary course
consistent with past practice and use its best efforts to preserve intact its
current business organization, keep available the services of its current
officers and employees as appropriate and preserve its relationships with
customers, suppliers, licensors, licensees and others having significant
business dealings with it. Without limiting the generality of the foregoing,
from the date hereof to the Effective Time, the Company shall not and shall
cause each Subsidiary not to (unless Parent shall otherwise approve in writing,
which approval shall not be unreasonably withheld or delayed, and except as
expressly permitted by this Agreement):
(a) (i) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, (ii) split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for Shares of its
capital stock, or (iii) purchase, redeem or otherwise acquire any Shares or any
capital stock of the Company or any Subsidiary or any other securities thereof
or any rights, warrants or options to acquire any such shares or other
securities;
(b) issue, deliver, sell, pledge or otherwise encumber any shares of its
capital stock, any other voting securities or any securities convertible into,
or any rights, warrants or options to acquire, any such shares, voting
securities or convertible securities (other than the issuance of Shares upon the
exercise of Company Stock Options or warrants to purchase Shares outstanding on
the date hereof in accordance with their present terms);
(c) amend its Articles of Organization or Bylaws or other comparable
charter or organizational documents;
(d) acquire or agree to acquire (i) by merging or consolidating with, or
by purchasing a substantial portion of the assets or stock of, or by any other
manner, any business or any person or (ii) except as set forth on Schedule
6.1(d) and as otherwise provided in Section 6.1(g), any assets except for the
purchase of assets for an amount which does not exceed, individually or in the
aggregate, $100,000;
(e) except as set forth in Schedule 6.1(e), sell, lease, license,
mortgage or otherwise encumber or subject to any Lien or otherwise dispose of
any of its properties or assets, except sales of inventory or sales of
immaterial assets;
25
(f) (i) except as set forth in Schedule 6.1(f), incur any indebtedness
(other than pursuant to existing credit agreements) or guarantee any such
indebtedness of another person, issue or sell any debt securities or warrants or
other rights to acquire any debt securities of the Company or any Subsidiary,
guarantee any debt securities of another person, enter into any "keep well" or
other agreement to maintain any financial statement condition of another person
or enter into any arrangement having the economic effect of any of the foregoing
except for short- term borrowings incurred in the ordinary course of business
consistent with past practice, or (ii) make any loans, advances or capital
contributions to, or investments in, any other person;
(g) except for the items listed on Schedule 6.1(g), make or agree to
make any capital expenditure or expenditures with respect to property, plant or
equipment which, individually, is in excess of $75,000 or, in the aggregate, are
in excess of $250,000;
(h) except as set forth on Schedule 6.1(h) or as required by law or as
consistent with past practice, make any material tax election or settle or
compromise any material income tax liability or take any action or position that
is inconsistent with the past tax or accounting practices of the Company;
(i) except as set forth in Schedule 6.1(i) pay, discharge, settle or
satisfy any claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction, in the ordinary course of business consistent with past practice
or in accordance with their terms, of liabilities reflected or reserved against
in the most recent consolidated financial statements (or the notes thereto) of
the Company included in the Filed SEC Documents or incurred thereafter in the
ordinary course of business consistent with past practice, or waive any material
benefits of, or agree to modify in any material respect, any confidentiality,
standstill or similar agreements to which the Company or any Subsidiary is a
party;
(j) except in the ordinary course of business consistent with past
practice, modify, amend or terminate any Commitment to which the Company or any
Subsidiary is a party, or waive, release or assign any rights or claims;
(k) enter into any Commitment relating to the distribution, sale or
marketing by third parties of the Company's or any Subsidiary's products or
services or enter into any contract, agreement or other commitment with any
supplier to the Company unless such contract, agreement or other commitment is
terminable upon no more than thirty (30) days notice;
(l) except as required to comply with applicable law and except as set
forth on Schedule 6.1(1), (i) adopt, enter into, terminate or amend any Benefit
Plan or other arrangement for the benefit or welfare of any director, officer or
current or former employee, (ii) increase in any manner the compensation or
fringe benefits of, or pay any bonus to, any director, officer or employee
(except for normal increases or bonuses in the ordinary course of business
consistent with past practice), (iii) pay any benefit not provided for under any
Benefit Plan (except for bonuses in the ordinary course of business consistent
with past practice), (iv) except as permitted in clause (ii), grant any awards
under any bonus, incentive, performance or other compensation plan or
arrangement or Benefit Plan (including the grant of stock options, stock
appreciation
26
rights, stock based or stock related awards, performance units or restricted
stock, or the removal of existing restrictions in any Benefit Plans or agreement
or awards made thereunder) or (v) take any action other than in the ordinary
course of business to fund or in any other way secure the payment of
compensation or benefits under any employee plan, agreement, contract or
arrangement or Benefit Plan; or
(m) authorize any of, or commit or agree to take any of, the foregoing
actions.
6.2 No Solicitation.
(a) The Company shall, shall cause each Subsidiary to and shall direct
and use reasonable efforts to cause its and its Subsidiaries' officers,
directors, employees, representatives and agents to, immediately cease any
discussions or negotiations with any parties other than Parent and Sub that may
be ongoing with respect to an Alternative Transaction (as hereinafter defined).
The Company shall not, shall cause each Subsidiary not to and shall not
authorize or permit any of its or its Subsidiaries' officers, directors or
employees or any investment banker, financial advisor, attorney, accountant or
other representative retained by it to, directly or indirectly, (i) solicit,
initiate or furnish any information in response to any inquiries or the making
of any proposal that may lead to an Alternative Transaction or (ii) participate
in any discussions or negotiations regarding any proposed Alternative
Transaction; provided, however, that if, at any time prior to the acceptance for
payment of Shares pursuant to and subject to the conditions (including the
Minimum Condition) of the Offer, the Board of Directors of the Company
determines in good faith, after consultation with its outside counsel, that
action is required by reason of the Board of Directors' fiduciary duties under
applicable law, the Company may (subject to compliance with Section 6.2(c)), in
response to an unsolicited Third Party Proposal (as defined herein), (A) furnish
information with respect to the Company to the person making such Third Party
Proposal pursuant to a confidentiality agreement that is at least as protective
of the Company's interests as is the Confidentiality Agreement (as defined in
Section 7.2) and (B) participate in negotiations regarding such Alternative
Transaction; provided, further, that nothing contained in this Agreement shall
prevent the Company or its Board of Directors from complying with Rules 14d-9
and 14e-2 promulgated under the Exchange Act with regard to any proposed
Alternative Transaction or withdrawing its recommendation of the Offer pursuant
to Section 6.2(b). Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the preceding sentence by any
director, officer or employee of the Company or any Subsidiary or any investment
banker, financial advisor, attorney, accountant or other representative of the
Company, acting on behalf of the Company, shall be deemed to be a breach of this
Section 6.2(a) by the Company. For purposes of this Agreement, a "Third Party
Proposal" means a bona fide proposal from a third party, which proposal did not
result from a breach of this Section 6.2(a) and which third party the Board of
Directors of the Company determines in good faith (after consultation with AH&H
or another financial advisor of nationally recognized reputation) to be
reasonably capable of completing a Superior Proposal (as defined in Section
9.1(d)). For purposes of this Agreement, an "Alternative Transaction" means any
direct or indirect acquisition or purchase of assets of the Company and its
Subsidiaries, taken as a whole, outside the ordinary course of business or
outstanding equity securities of the Company or any Subsidiary, any tender offer
or exchange offer that if consummated would result in any person
27
beneficially owning equity securities of the Company or any merger,
consolidation, business combination, sale of substantially all the assets,
recapitalization, liquidation, dissolution or similar transaction that would
result in the acquisition of the Company or any Subsidiary, other than the
transactions contemplated by this Agreement and other than the acquisition of
Shares pursuant to the exercise of Company Stock Options or Warrants which are
issued and outstanding as of the date hereof.
(b) Neither the Board of Directors of the Company nor any Committee
thereof shall (i) withdraw or modify, or propose to withdraw or modify, the
approval or recommendation by such Board of Directors or such committee of the
Offer, this Agreement or the Merger, (ii) approve or recommend, or propose to
approve or recommend, any Alternative Transaction or (iii) cause the Company to
enter into any letter of intent, agreement in principle, acquisition agreement
or other agreement (an "Acquisition Agreement") with respect to an Alternative
Transaction unless in connection with the taking of any such action described in
Clause (i), (ii) or (iii) of this Section 6.2(b), the Board of Directors of the
Company shall have previously terminated this Agreement pursuant to Section
9.1(d). Notwithstanding the preceding sentence, if the Company's Board
determines in its good faith judgment, after taking into consideration the
advice of its outside legal counsel, that it is required by reason of their
fiduciary duties under applicable law, the Company's Board of Directors may
subject to Section 9.1(d): (A) withdraw its recommendation of the Offer or the
Merger and the other transactions contemplated hereby, or (B) approve or
recommend or cause the Company to enter into an agreement with respect to a
Superior Proposal; provided, however, that the Company concurrently terminates
this Agreement pursuant to Section 9.1(d).
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 6.2, the Company as promptly as
reasonably practicable shall advise Parent orally and in writing of any request
for information or of any proposal or any inquiry regarding any Alternative
Transaction and the material terms and conditions of such request, proposal or
inquiry. The Company will, to the extent reasonably practicable and not in
violation of the Board of Director's fiduciary duties under applicable law,
after consultation with its outside counsel, keep Parent fully informed of the
status and details (including amendments or proposed amendments) of any such
request, proposal or inquiry.
(d) Nothing contained in this Section 6.2 shall prohibit the Company
from at any time taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from making
any disclosure to the Company's stockholders, in each case with respect to any
Third Party Proposal, if (i) in the good faith judgment of the Board of
Directors of the Company, after consultation with its outside counsel, such
disclosure is required by reason of the Board of Directors' fiduciary duties
under applicable law and (ii) the Company shall have provided Parent and Sub
with reasonable advance notice of its position and proposed disclosure under the
circumstances; provided, however, that neither the Company nor its Board of
Directors nor any committee thereof shall, except as permitted by Section
6.2(b), withdraw or modify, or propose to withdraw or modify, its position with
respect to the Offer, the Merger or this Agreement or approve or recommend, or
propose to approve or recommend, an Alternative Transaction.
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6.3 Certain Tax Matters.
(a) From the date hereof until the Effective Time, (i) the Company and
each Subsidiary will file all tax returns and reports ("Post-Signing Returns")
required to be filed; (ii) the Company and each Subsidiary will timely pay all
taxes shown as due and payable on the Company's Post-Signing Returns that are so
filed; (iii) the Company and each Subsidiary will make provision for all taxes
payable by the Company for which no Post-Signing Return is due prior to the
Effective Time; and (iv) the Company will promptly notify Parent of any action,
suit, proceeding, claim or audit pending against or with respect to the Company
and each Subsidiary in respect of any tax where there is a reasonable
possibility of a determination or decision which would reasonably be expected to
have a material adverse effect on the Company's or any Subsidiary's tax
liabilities or tax attributes.
(b) The Company shall use its best efforts to obtain from all its
employees who exercised a Company Stock Option or Warrants for which the proper
amount of payroll or employment taxes were not withheld by the Company upon the
exercise of such Company Stock Option or Warrant, a properly executed IRS Form
4669 from each such employee, in which such employee certifies that such
employee has paid in full all taxes applicable to the compensation income
attributable to such exercise.
6.4 Other Actions.
The Company shall not, and shall cause each Subsidiary not to, take or
omit to take any action, the taking or omission of which would reasonably be
expected to result in (a) any of the representations and warranties of the
Company set forth in this Agreement becoming untrue or inaccurate in any
material respect or (b) any of the Offer Conditions not being satisfied (subject
to the Company's right to take actions specifically permitted by Section 6.2 or
9.1). For purposes of this Section 6.4, "in any material respect" shall mean
that claims, demands, damages, liabilities and losses arising out of such
untruth or inaccuracy will actually or may reasonably be expected to result in
damages, losses, costs and expenses (including reasonable attorney's fees and
court costs) (collectively, "Losses") suffered or incurred by the Company,
Parent or Sub, when taken as a whole, in excess of $300,000.
6.5 Advice of Changes; Filings.
The Company shall confer with Parent on a regular and frequent basis as
reasonably requested by Parent, report on operational matters and promptly
advise Parent orally and, if requested by Parent, in writing of any material
change with respect to the Company or any Subsidiary. The Company shall promptly
provide to Parent (or its counsel) copies of all filings made by the Company or
any Subsidiary with any Governmental Entity in connection with this Agreement
and the transactions contemplated hereby.
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6.6 Financial Information.
The Company shall furnish to Parent the following financial information
(all to be prepared in accordance with generally accepted accounting principles
consistently applied):
(a) as soon as available but in any event within 20 days of each
calendar month, the unaudited consolidated balance sheets, income statements and
cash flow statements of the Company, showing its financial condition as of the
close of such month and the results of operations during such month and for the
then elapsed portion of the Company's fiscal year, in each case, setting forth
the comparative figures for the corresponding month in the prior fiscal year and
the corresponding elapsed portion of the prior fiscal year; and
(b) all documents filed with or submitted to the SEC by the Company
simultaneously with such filing or submission.
6.7 Employee Benefits
Following the Closing Date, Parent may, at its option, continue the
employee benefits programs for employees of the Company as reflected on Schedule
4.15(a) annexed hereto, or, alternatively, include such employees in Parent's or
one of its Affiliate's employee benefits programs. In such connection, Parent
agrees that for purposes of any length of service requirements, waiting periods,
vesting periods or differential benefits based on length of service in any such
benefit programs, each such employee's service with the Company shall be deemed
to have been service with Parent or such Affiliate of Parent.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Stockholder Approval; Preparation of Proxy Statement.
(a) If the Company Stockholder Approval is required by law to consummate
the Merger, the Company will, as soon as practicable following the consummation
of the Offer, duly call, give notice of, convene and hold a meeting of its
stockholders (the "Stockholders Meeting") for the purpose of obtaining the
Company Stockholder Approval. The Company will, through its Board of Directors,
and subject to such board's fiduciary duties under applicable law after
consultation with its outside counsel, recommend to its stockholders that the
Company Stockholder Approval be given. Notwithstanding the foregoing, if Sub or
any other subsidiary of Parent shall acquire at least 90% of the outstanding
Shares, the parties shall, at the request of Parent, take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after the consummation of the Offer without a Stockholders Meeting
in accordance with Section 82 of the MBCL.
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(b) If the Company Stockholder Approval is required by law to consummate
the Merger, the Company will, at Parent's request, as soon as practicable
following consummation of the Offer, prepare and file a preliminary Proxy
Statement with the SEC and will use its best efforts to respond to any comments
of the SEC or its staff and to cause the Proxy Statement to be mailed to the
Company's stockholders as promptly as practicable after responding to all such
comments to the satisfaction of the staff. The Company will notify Parent
promptly of the receipt of any comments from the SEC or its staff and of any
request by the SEC or its staff for amendments or supplements to the Proxy
Statement or for additional information and will supply Parent with copies of
all correspondence between the Company or any of its representatives, on the one
hand, and the SEC or its staff, on the other hand, with respect to the Proxy
Statement or the Merger. If at any time prior to the Stockholders Meeting there
shall occur any event that should be set forth in an amendment or supplement to
the Proxy Statement, the Company will promptly prepare and mail to its
stockholders such an amendment or supplement. The Company will not mail any
Proxy Statement, or any amendment or supplement thereto, to which Parent
reasonably objects, unless required by law, rule, regulation or the SEC staff,
in the opinion of outside counsel; provided, that Parent shall identify its
objections and fully cooperate with the Company to create a mutually
satisfactory Proxy Statement. In connection with such preliminary proxy
statement, Proxy Statement and any amendment or supplement thereto, Parent and
Sub should promptly provide all information reasonably requested by the Company.
(c) Following the purchase of Shares, if any, pursuant to the Offer,
Parent shall ensure that all such Shares purchased continue to be held by
Parent, Sub, and/or a direct or indirect wholly-owned subsidiary of Parent until
such time as the Merger is consummated. At the Stockholders Meeting, Parent
agrees to cause all Shares purchased pursuant to the Offer and all other Shares
owned by Parent or any subsidiary of Parent to be voted in favor of the Company
Stockholder Approval.
7.2 Access to Information; Confidentiality.
Upon reasonable notice, and except as may otherwise be required by
applicable law, the Company and its Subsidiaries shall afford to Parent, and to
Parent's officers, employees, accountants, counsel, financial advisers and other
representatives, reasonable access during normal business hours from the date
hereof to the Effective Time to all their respective properties, books,
contracts, commitments, personnel and records and, during such period, the
Company shall furnish promptly to Parent (a) a copy of each report, schedule,
registration statement and other document filed by it during such period
pursuant to the requirements of Federal or state securities laws and (b) all
other information concerning its business, properties and personnel as Parent
may reasonably request. Except as required by law, Parent will hold, and will
cause its officers, employees, accountants, counsel, financial advisers and
other representatives and Affiliates to hold, any and all information received
from the Company, directly or indirectly, in confidence, according to the terms
of the confidentiality agreement dated as of January 11, 1999, between the
Company and Parent (the "Confidentiality Agreement").
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7.3 Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Offer and the Merger, and the other transactions contemplated
by this Agreement, including (i) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from Governmental Entities and the
making of all necessary registrations and filings (including filings with
Governmental Entities, if any) and the taking of all reasonable steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity, (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of any of the transactions
contemplated by this Agreement, including seeking to have any stay or temporary
restraining order entered by any court or other Governmental Entity vacated or
reversed, and (iv) the execution and delivery of any additional instruments
necessary to consummate the transactions contemplated by, and to fully carry out
the purposes of, this Agreement. In connection with and without limiting the
foregoing, the Company and its Board of Directors shall (i) take all action
necessary to ensure that no state takeover statute or similar statute or
regulation is or becomes applicable to the Offer, the Merger, this Agreement,
the Stockholder Agreement or any of the other transactions contemplated by this
Agreement or the Stockholder Agreement and (ii) if any state takeover statute or
similar statute or regulation becomes applicable to the Offer, the Merger, this
Agreement, the Stockholder Agreement or any other transaction contemplated by
this Agreement or the Stockholder Agreement, take all action reasonably
necessary to ensure that the Offer, the Merger and the other transactions
contemplated by this Agreement may be consummated as promptly as practicable on
the terms contemplated by this Agreement and otherwise to minimize the effect of
such statute or regulation on the Offer, the Merger, this Agreement, the
Stockholder Agreement and the other transactions contemplated by this Agreement
or the Stockholder Agreement. Nothing in this Agreement shall be deemed to
require Parent to dispose of or hold separate any asset or collection of assets.
(b) Each of the Company and Parent shall keep the other apprised of the
status of matters relating to completion of the transactions contemplated by
this Agreement, including promptly furnishing the other with copies of notices
or other communications received by Parent or the Company, as the case may be,
or their respective Subsidiaries, from any third party and/or any Governmental
Entity alleging that the consent of such third party or Governmental Entity is
or may be required with respect to the Offer, the Merger and the other
transactions contemplated by this Agreement. Each of the Company and Parent
shall give prompt notice to the other of (i) the occurrence or non-occurrence of
any fact or event which would be reasonably likely (x) to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate at any time from the date hereof to the Effective Time or (y) to
cause any covenant, condition or agreement under this Agreement not to be
complied with or satisfied and (ii) any failure of the Company,
32
Parent or Sub, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that no such notification shall affect the representations,
warranties, covenants or agreement of the parties or the conditions to the
obligations of the parties under this Agreement.
7.4 Stock Option Plans and Warrants; Employee Stock Purchase Plan.
(a) As soon as practicable following the date hereof but in no event
later than the consummation of the Offer, the Company (or, if appropriate, the
Board of Directors of the Company or any committee administering the Stock
Option Plans (as defined below)) shall (including by adopting resolutions or
taking any other actions) take action so as to allow each outstanding option to
purchase Shares (a "Company Stock Option") heretofore granted under any stock
option, stock appreciation rights or stock purchase plan, program, arrangement,
agreement of the Company (collectively, the "Stock Option Plans") and each
outstanding warrant or other right to purchase Shares (a "Warrant") in each case
outstanding immediately prior to the date hereof: (A) to the extent then
exercisable, either (i) to be canceled immediately after consummation of the
Offer in exchange for an amount in cash, payable at the time of such
cancellation, equal to the product of (x) the number of Shares subject to such
Company Stock Option or Warrant immediately prior to the Effective Time and (y)
the excess, if any, of the price per Share to be paid in the Offer over the per
Share exercise price of such Company Stock Option or Warrant (the "Net Amount")
or (ii) to be converted immediately prior to the Effective Time into the right
solely to receive the Net Amount; provided, that no such cash payment has been
made or (B) to the extent not then exercisable, to be canceled immediately after
consummation of the Offer. The Company shall not make, or agree to make, any
payment of any kind to any holder of a Company Stock Option or a Warrant (except
for the payment described above) without the consent of Parent.
(b) As soon as practicable following the date hereof, but in no event
later than the consummation of the Offer, the Company (or if appropriate, the
Board of Directors of the Company or any committee administering the Employee
Stock Purchase Plan (as hereinafter defined)) shall take action to terminate any
open purchase periods with respect to Company Common Stock under the Company
Employee Stock Purchase Plan (the "Employee Stock Purchase Plan") and to cease
payroll deductions for such purpose, so as to ensure that all shares of Company
Common Stock that have been subscribed for have been purchased, and that no
subscriptions to purchase such shares are outstanding as of the Effective Time.
(c) All Stock Option Plans and the Employee Stock Purchase Plan shall be
terminated as of the Effective Time and the provisions in any other Benefit Plan
providing for the issuance, transfer or grant of any capital stock of the
Company or any interest in respect of any capital stock of the Company shall be
terminated as of the Effective Time. The Company shall ensure that following the
Effective Time, no holder of a Company Stock Option or Warrant nor any
participant in any Stock Option Plan or in the Employee Stock Purchase Plan
shall have any right thereunder to acquire any capital stock of the Company,
Parent or the Surviving Corporation.
33
(d) The Surviving Corporation shall continue to be obligated to pay the
Net Amount to holders of any Company Stock Options or Warrants converted in
accordance with clause (y) of Section 7.4(a).
(e) The Company shall pay its portion and withhold and deposit the
proper amount of all Federal and state payroll and employment taxes required to
be paid and withheld from the Net Amount.
7.5 Indemnification, Exculpation.
(a) All rights to indemnification and exculpation (including the
advancement of expenses) from liabilities for acts or omissions occurring at or
prior to the Effective Time (including with respect to the transactions
contemplated by this Agreement) existing as of the date hereof in favor of the
current or former directors or officers of the Company as provided in its
Articles of Organization, its By-laws and the indemnification agreements set
forth in Schedule 7.5 shall be assumed by the Surviving Corporation in the
Merger, without further action, as of the Effective Time and shall survive the
Merger and shall continue in full force and effect without amendment,
modification or repeal in accordance with their terms; provided however, that if
any claims are asserted or made within such period, all rights to
indemnification (and to advancement of expenses) hereunder in respect of any
such claims shall continue, without diminution, until disposition of any and all
such claims.
(b) The provisions of this Section 7.5 are intended to be for the
benefit of, and will be enforceable by, each indemnified party, his or her heirs
and his or her representatives.
7.6 Directors.
Promptly upon the acceptance for payment of, and payment for, any Shares
by Sub pursuant to and subject to the conditions (including the Minimum
Condition) of the Offer, Sub shall be entitled to designate such number of
directors on the Board of Directors of the Company as will give Sub, subject to
compliance with Section 14(f) of the Exchange Act, a majority of such directors,
and the Company shall, at such time, cause Sub's designees to be so elected by
its existing Board of Directors. Subject to applicable law, the Company shall
take all action requested by Parent necessary to effect any such election,
including mailing to its stockholders the Information Statement containing the
information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder, and the Company agrees to make such mailing with the
mailing of the Schedule 14D-9 (provided that Parent and Sub shall have provided
to the Company on a timely basis in writing all information required to be
included in the Information Statement and Schedule 14D-9 with respect to Sub's
designees). In connection with the foregoing, the Company will promptly, at the
option of Parent, either increase the size of the Company's Board of Directors
and/or obtain the resignation of such number of its current directors as is
necessary to enable Sub's designees to be elected or appointed to, and to
constitute a majority of, the Company's Board of Directors as provided above.
34
7.7 Fees and Expenses.
(a) Except as provided below in this Section 7.7, all fees and expenses
incurred in connection with the Offer, the Merger, this Agreement and the
transactions contemplated by this Agreement shall be paid by the party incurring
such fees or expenses, whether or not the Offer or the Merger is consummated,
except that printing and mailing costs and expenses shall be paid by Parent or
Sub.
(b) In the event that this Agreement is terminated (i) by Parent or Sub
pursuant to Section 9.1(c), (ii) by Parent pursuant to and in accordance with
Section 9.1(b)(i)(x) if such termination results from the failure of the Offer
Conditions described in paragraphs (c), (f) or (h) of Exhibit A as a result of
any breach by the Company of any covenant or agreement (including, without
limitation, the covenants set forth in Section 6.2(b)) or any representation or
warranty made by the Company in this Agreement or (iii) pursuant to Section
9.1(d), in each case, in lieu of any liability or obligation to pay damages, the
Company shall promptly pay to Parent in immediately available funds a
termination fee including all Expenses (as defined herein) equal to One Million
and No/100 Dollars ($1,000,000.00). The Company acknowledges that the agreements
contained in this Section 7.7(b) are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, Parent would
not enter into this Agreement. Accordingly, if the Company fails promptly to pay
the amount due pursuant to this Section 7.7(b), and, in order to obtain such
payment, Parent commences a suit which results in a judgment against the Company
for the fee set forth in this Section 7.7(b), the Company shall pay to Parent
all costs and expenses (including attorneys' fees and expenses) in connection
with such suit, together with interest on the amount of the fee at the prime
rate of Citibank in effect on the date such payment was required to be made. If
such a suit results in a judgment against Parent and/or Sub, Parent shall pay to
the Company all costs and expenses (including attorney's fees and expenses) in
connection with such suit. "Expenses" means all out-of-pocket expenses incurred
by Parent and Sub in connection with this Agreement, the Stockholder Agreement
and the transactions contemplated hereby and thereby, including fees and
expenses of its printer, consultants, attorneys, accountants, and other
advisors.
7.8 Public Announcements.
Parent and Sub, on the one hand, and the Company, on the other hand,
will consult with each other before issuing, and provide each other the
opportunity to review and comment upon, any press release or other public
statements with respect to the transactions contemplated by this Agreement,
including the Offer and the Merger, and shall not issue any such press release
or make any such public statement prior to such consultation, except as may be
required by applicable law, court process or by obligations pursuant to any
listing agreement with any national securities exchange or national securities
quotation system. The parties agree that the initial press release to be issued
with respect to the transactions contemplated by this Agreement shall be in the
form heretofore agreed to by the parties.
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7.9 Stop Transfer.
The Company shall not register the transfer of any certificate
representing any Subject Shares (as defined in the Stockholder Agreement),
unless such transfer is made to Parent or Sub or otherwise in compliance with
the Stockholder Agreement. The Company will inscribe upon any certificates
representing Subject Shares tendered by a Stockholder (as defined in the
Stockholder Agreement) for such purpose the following legend: "THE SHARES OF
COMMON STOCK, $.01 PAR VALUE OF ENDOGEN, INC. REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO A STOCKHOLDERS AGREEMENT DATED AS OF MAY 27, 1999 AND MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED, EXCEPT IN ACCORDANCE THEREWITH. COPIES OF SUCH
AGREEMENT MAY BE OBTAINED AT THE PRINCIPAL EXECUTIVE OFFICES OF ENDOGEN, INC."
7.10 Sub Stock Option
(a) Grant of Sub Stock Option. The Company hereby grants Sub an
irrevocable option (the "Sub Stock Option") to purchase up to 690,172 shares of
Company Common Stock (the "Sub Shares") at a price per share equal to the Offer
Price payable in cash.
(b) Exercise of Sub Stock Option. The Sub Stock Option may be exercised,
in whole or in part, at any time and from time to time after the date on which
Sub has accepted for payment the Shares tendered pursuant to the Offer and
subject to satisfaction of the Minimum Condition if, but only if, Parent and Sub
agree to permanently waive the Offer Conditions; provided that there shall not
be in effect any preliminary or final injunction or other order issued by any
Government Entity prohibiting the issuance of the Sub Shares pursuant to this
Agreement. The Sub Stock Option shall expire upon the earlier of (i) the
Effective Time, or (ii) the date upon which this Agreement is terminated in
accordance with its terms. Sub may exercise the Sub Stock Option for all or some
of the Shares by sending written notice (the "Option Notice") to the Company
specifying the number of Sub Shares it will purchase pursuant to such exercise
and the price and date not less than five (5) nor more than twenty (20) days
from the date of the Option Notice for the closing of such purchase.
(c) Closing. At any closing on the date specified under subsection (b)
of this Section 7.10, (i) Sub will make payment to the Company of the aggregate
price for the Sub Shares being purchased upon exercise of the Sub Stock Option
by wire transfer of immediately available funds to an account designated in
writing by the Company and (ii) the Company will deliver to the Sub a
certificate or certificates representing the number of shares of Company Common
Stock so purchased in the denominations designated by the Sub and receipt
evidencing payment of any requisite stock transfer taxes. At any such closing
Sub shall deliver a letter to the Company agreeing that the Sub will not offer
to sell, or otherwise dispose of, any Sub Shares acquired by it pursuant to the
Sub Stock Option in violation of the Securities Act and any applicable state
securities laws.
36
(d) Adjustment. If any change in the Company Common Stock occurs by
reason of a stock dividend, split up, recapitalization, combination, exchange of
shares or the like, the number of Sub Shares and the purchase price per share
shall be adjusted appropriately.
(e) Assignment of Sub Stock Option. Sub may assign this Sub Stock Option
to any of its Affiliates. Except for an assignment to an Affiliate of Sub, Sub
may not assign the Sub Stock Option without the prior written consent of the
Company.
(f) Reservation of Sub Shares. The Company represents and warrants to
Parent and Sub that it has reserved such number of shares of Company Common
Stock as is necessary for issuance upon the exercise of the Sub Stock Option.
ARTICLE VIII
CONDITIONS
8.1 Conditions to Each Party's Obligation To Effect the Merger.
The respective obligation of each party to effect the Merger shall be
subject to the prior satisfaction or waiver the following conditions:
(a) Company Stockholder Approval. If required by applicable law, the
Company Stockholder Approval shall have been obtained; provided that Parent and
Sub shall vote all their Shares in favor of the Merger.
(b) No Injunctions or Restraints. No statute, rule, regulation,
executive order, decree, temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other
Governmental Entity or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that each of
the parties shall have used reasonable efforts to prevent the entry of any such
injunction or other order and to appeal as promptly as possible any injunction
or other order that may be entered.
(c) Purchase of Shares. Sub shall have previously accepted for payment
and paid for Shares pursuant to and subject to the conditions (including the
Minimum Condition) of the Offer.
37
ARTICLE IX
TERMINATION AND AMENDMENT
9.1 Termination.
This Agreement may be terminated at any time prior to the Effective
Time, whether before or after approval of the terms of this Agreement by the
stockholders of the Company as follows:
(a) By mutual written consent of Parent and the Company.
(b) By either Parent or the Company: (i) if (x) as a result of the
failure of any of the Offer Conditions the Offer shall have terminated or
expired in accordance with its terms without Sub having accepted for payment
Shares pursuant to and subject to the Offer Conditions (including the Minimum
Condition) or (y) Sub shall not have accepted for payment Shares pursuant to the
Offer prior to July 31, 1999; and provided, further, that the right to terminate
this Agreement pursuant to this Section 9.1(b)(i) shall not be available to any
party whose failure to perform any of its obligations under this Agreement
proximately contributed to the failure of any such condition or if the failure
of such condition results from facts or circumstances that constitute a breach
of any representation or warranty under this Agreement by such party; or (ii) if
any Governmental Entity shall have issued an order, decree or ruling or taken
any other action permanently enjoining, restraining or otherwise prohibiting the
acceptance for payment of, or payment for, Shares pursuant to the Offer or the
Merger and such order, decree or ruling or other action shall have become final
and nonappealable.
(c) By Parent or Sub prior to Sub's obligation to accept Shares for
payment pursuant to the Offer in the event of a material breach by the Company
of any representation, warranty, covenant or other agreement contained in this
Agreement which would or reasonably would be expected to give rise to the
failure of a condition set forth in Exhibit A. For purposes of this Section
9.1(c), "material breach" shall mean that claims, demands, damages, liabilities
and losses arising out of such breach will actually or may reasonably be
expected to result in Losses suffered or incurred by the Company, Parent or Sub,
when taken as a whole, in excess of $300,000.
(d) By either Parent or the Company if, prior to the obligation of Sub
to accept Shares for payment pursuant to the Offer, the Company, after complying
with the procedures set forth in Section 6.2, (i) amends the Schedule 14D-9 or
takes other action to modify its recommendation that the Offer and the Merger
are fair to and in the best interest of the Company and its stockholders and its
recommendation that the Company's stockholders accept the Offer, tender their
shares pursuant to the Offer and approve and adopt the Merger and this Agreement
or (ii) enters into an Acquisition Agreement for an Alternative Transaction that
constitutes a Superior Proposal (as defined below). For purposes of this
Agreement, a "Superior Proposal" means any Third Party Proposal to acquire,
directly or indirectly all of the Shares or all or substantially all of the
assets of the Company; provided that (A) the Board of Directors of the Company
38
determines in its good faith judgment (after consulting with AH&H or another
financial advisor of nationally recognized reputation) that such Third Party
Proposal is on terms that are more favorable to the Company's stockholders from
a financial point of view than the Offer and the Merger (taking into account all
relevant factors, including the amount and form of consideration to be received
in respect of the Shares, the relative value of any non-cash consideration, and
the timing and certainty of closing), and (B) the Board of Directors of the
Company determines in its good faith judgment (after consultation with its
outside counsel) that the failure to recommend or accept such Third Party
Proposal would be required in order for its members to comply with their
fiduciary duties under applicable law.
(e) By the Company, if Sub or Parent shall have (i) failed to commence
the Offer within five business days of the date hereof, (ii) failed to pay for
Shares pursuant to the Offer to the extent required by Section 1.1(a) hereof or
(iii) breached in any material respect any of their respective representations,
warranties, other covenants or other agreements contained in this Agreement,
which breach or failure to perform in respect of clause (iii) is incapable of
being cured or has not been cured within 30 days after the giving of written
notice to Parent or Sub, as applicable, except, in any case under clause (iii),
such breaches and failures which would not prevent the consummation of the Offer
or the Merger subject to the terms and conditions of this Agreement.
9.2 Effect of Termination.
In the event of a termination of this Agreement by either the Company or
Parent as provided in Section 9.1, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of Parent, Sub or the
Company or their respective officers or directors, except with respect to the
last sentence of Section 1.2(c), Section 5.6, the last sentence of Section 7.2,
Section 7.7, Section 9.1, this Section 9.2 and Article X; provided, however,
that, except as set forth in Section 7.7, nothing herein shall relieve any party
for liability for any breach hereof.
9.3 Amendment.
This Agreement may be amended by the parties hereto, by action taken or
authorized by their respective Boards of Directors, at any time before or after
obtaining the Company Stockholder Approval (if required by law), but, after any
such approval, no amendment shall be made which by law requires further approval
by such shareholders without obtaining such further approval. This Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the parties hereto.
9.4 Extension; Waiver.
At any time prior to the Effective Time, the parties hereto, by action
taken or authorized by their respective Boards of Directors, may, to the extent
legally allowed, (i) extend the time for
39
the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto or (iii) subject
to Section 1.1(a) and Section 9.3, waive compliance with any of the agreements
or conditions contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of those rights.
9.5 Procedure for Termination, Amendment, Extension or Waiver.
A termination of this Agreement pursuant to Section 9.1, an amendment of
this Agreement pursuant to Section 9.3 or an extension or waiver pursuant to
Section 9.4 shall, in order to be effective, require in the case of Parent, Sub
or the Company, action by its Board of Directors or the duly authorized designee
of its Board of Directors; provided, however, that in the event that Sub's
designees are appointed or elected to the Board of Directors of the Company as
provided in Section 7.6, after the acceptance for payment and payment of Shares
pursuant to and subject to the Offer Conditions (including the Minimum
Condition) and prior to the Effective Time, the affirmative vote of a majority
of the directors of the Company that were not designated by Parent or Sub shall
be required by the Company to (i) amend or terminate this Agreement by the
Company, (ii) exercise or waive any of the Company's rights or remedies under
this Agreement, (iii) extend the time for performance of Parent's and Sub's
respective obligations under this Agreement or (iv) take any action to amend or
otherwise modify the Company's Articles of Organization or By-laws.
ARTICLE X
MISCELLANEOUS
10.1 Nonsurvival of Representations, Warranties and Agreements.
None of the representations, warranties or covenants (subject to the
succeeding sentence) in this Agreement or in any instrument delivered pursuant
to this Agreement shall survive the Effective Time. This Section 10.1 shall not
limit any covenant or agreement of the parties which by its terms contemplates
performance after the Effective Time of the Merger, including Section 7.5.
10.2 Notices.
All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, telecopied (which is confirmed),
sent by overnight courier (providing proof of delivery) or mailed by registered
or certified mail (return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
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if to Parent or Sub, to c/o Pierce Chemical Company
0000 Xxxxx Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxxx, President
Telecopy No.: (000) 000-0000
with a copy to: Xxxxxx & Xxxx
Three Stamford Plaza
Stamford, CT 06911
Attention: Xxxxxxxx Xxxxx Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
and, if to the Company, to Endogen, Inc.
00 Xxxxxxxx Xxx
Xxxxxx, Xxxxxxxxxxxxx
Attention: Xxxx X. Xxxxxxx
Telecopy No.: (000) 000-0000
with a copy to: Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
High Street Tower
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxxx, Esq.
Telecopy No.: (000) 000-0000
10.3 Interpretation.
When a reference is made in this Agreement to an Article or a Section,
such reference shall be to an Article or a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Unless the context otherwise
requires, words importing the singular shall include the plural, and vice versa.
Whenever the words "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation". As used in this Agreement, the term "subsidiary" of any person
means another person, an amount of the voting securities, other voting ownership
or voting partnership interests of which is sufficient to elect at least a
majority of its Board of Directors or other governing body (or, if there are no
such voting interests, 50% or more of the equity interests of which) is owned
directly or indirectly by such first person. As used in this Agreement,
"material adverse effect" means, when used in respect of the Company, any effect
or condition that, individually or in the aggregate with any other effect or
condition, is materially adverse to the assets, properties, business, financial
condition, results of operations or prospects of the Company and its
Subsidiaries, taken as a whole and any occurrence that with notice or lapse of
time or both could reasonably be expected to result in any such effect or
condition. As used in this Agreement, "material adverse change" means, when used
in respect of the Company,
41
any change or event that, individually or in the aggregate with any other change
or event, is materially adverse to the assets, properties, business, financial
condition, results of operations or prospects of the Company and its
Subsidiaries, taken as a whole and any occurrence that with notice or lapse of
time or both could reasonably be expected to result in any such change or event.
As used in this Agreement, the phrase "knowledge" with respect to the Company,
means to the actual knowledge of the Company, its Subsidiaries, and each of
their respective directors and officers. As used in this Agreement, the term
"person" shall be interpreted broadly and shall include any person, individual,
corporation, limited partnership, limited liability company, trust, association
or other entity or business organization of any kind or division thereof.
10.4 Counterparts.
This Agreement may be executed in two or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when
two or more counterparts have been signed by each of the parties and delivered
to the other parties, it being understood that all parties need not sign the
same counterpart.
10.5 Entire Agreement; Third Party Beneficiaries.
This Agreement (a) constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof, and (b) except as provided in
Sections 6.7 and 7.5 are not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder.
10.6 Governing Law.
This Agreement shall be governed and construed in accordance with the
laws of the Commonwealth of Massachusetts.
10.7 Publicity.
Except as otherwise required by law or the rules of the Nasdaq National
Market, for so long as this Agreement is in effect, neither the Company nor
Parent shall, or shall permit any of its subsidiaries to, issue or cause the
publication of any press release or other public announcement with respect to
the transactions contemplated by this Agreement without the consent of the other
party, which consent shall not be unreasonably withheld.
10.8 Assignment.
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior
42
written consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of Sub and be enforceable
by the parties and their respective successors and assigns; provided, however,
that Sub may assign its rights, interest or obligations hereunder to any other
subsidiary of Parent without first obtaining the Company's consent.
10.9 Enforcement.
The parties agree that irreparable damage would occur in the event that
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed that
the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in any court, this being in addition to any other remedy to
which they are entitled at law or in equity.
10.10. No Personal Liability
This Agreement shall not create or be deemed to create any personal
liability or obligation on the part of any direct or indirect stockholder of the
Company or any Subsidiary of the Company, or any of their respective officers,
directors, employees, agents or representatives.
[signature page follows]
43
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
PERBIO SCIENCE AB
By: /s/ Xxxxxx Xxxxxxxxx
___________________________________________
Name: Xxxxxx Xxxxxxxxx
Title: Director, PerBio Science AB
Chief Financial Officer, Perstorp AB
By: /s/ Mats Fischier
______________________________________________
Name: Mats Fischier
Title: Director, PerBio Science AB
Chief Executive Officer, Perstorp Life Science
EWOK ACQUISITION CORP.
By: /s/ Xxxx Xxxxxxxx
______________________________________________
Name: Xxxx Xxxxxxxx
Title: President
By: /s/ Xxxxxxx Xxxxxxxxx
______________________________________________
Name: Xxxxxxx Xxxxxxxxx
Title: Treasurer
ENDOGEN, INC.
By: /s/ Xxxx X. Xxxxxxx
______________________________________________
Name: Xxxx X. Xxxxxxx
Title: President
By: /s/ Xxxxx X. Xxxxxx
______________________________________________
Name: Xxxxx X. Xxxxxx
Title: Treasurer
44
EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer, Sub shall not be required
to accept for payment or, subject to any applicable rules and regulations of the
SEC, including Rule 14e-1(c) under the Exchange Act (relating to Sub's
obligation to pay for or return tendered Shares after the termination or
withdrawal of the Offer), to pay for any Shares tendered pursuant to the Offer
unless there shall have been validly tendered and not withdrawn prior to the
expiration of the Offer such number of Shares that together with Shares subject
to the Stockholder Agreement that shall not have been tendered would constitute
two-thirds of the Shares on a fully-diluted basis (the "Minimum Condition").
Furthermore, notwithstanding any other term of the Offer, Sub shall not
be required to accept for payment or, subject as aforesaid, to pay for any
Shares not theretofore accepted for payment or paid for, and, except as
otherwise provided in this Agreement or under applicable law, may terminate the
Offer if, at any time after the date hereof and before the acceptance of such
Shares for payment or the payment therefor, any of the following conditions
exists and be continuing as of any Expiration Date (other than as a result of
any action or inaction of Parent or any of its subsidiaries that constitutes a
breach of this Agreement):
(a) there shall be instituted or pending by any person or Governmental
Entity any suit, action or proceeding (i) challenging the acquisition by Parent
or Sub of any Shares under the Offer or pursuant to the Stockholder Agreement,
seeking to restrain or prohibit the making or consummation of the Offer or the
Merger or the performance of any of the other transactions contemplated by this
Agreement or the Stockholder Agreement (including the voting provision
thereunder), or seeking to obtain from the Company, Parent or Sub any damages in
connection with the aforesaid transactions that are material in relation to the
Company, (ii) seeking to compel the Parent to dispose of or hold separate any
material portion of the business or assets of the Company, or Parent and its
subsidiaries, taken as a whole, as a result of the Offer (iii) seeking to impose
material limitations on the ability of Parent or Sub to acquire or hold, or
exercise full rights of ownership of, any Shares to be accepted for payment
pursuant to the Offer or purchased under the Stockholder Agreement including,
without limitation, the right to vote such Shares on all matters properly
presented to the stockholders of the Company, or (iv) seeking to prohibit Parent
or any of its subsidiaries from effectively controlling in any material respect
any material portion of the assets, properties, business or operations of the
Company and its Subsidiaries, taken as a whole;
(b) there shall be any statute, rule, regulation, judgment, order,
injunction or other restraint enacted, entered, enforced, promulgated or deemed
applicable to the Offer or the Merger, or any other action shall be taken by any
Governmental Entity or court that is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in clauses (i) through (iv)
of paragraph (a) above; provided, however, that each of Parent and Sub shall
have used reasonable efforts to prevent the entry of any such injunction or
other court order and to appeal as promptly as possible any injunction or other
court order that may be entered;
(c) there shall have occurred and continue to exist as of any Expiration
Date any material adverse change;
(d) there shall have occurred and continue to exist as of any Expiration
Date (i) any general suspension of trading in, or limitation on prices for,
securities on the New York Stock Exchange or the NASDAQ, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States or any limitation by federal or state authorities on the extension
of credit by lending institutions, or a disruption of or other event materially
adversely affecting the extension of credit by lending institutions, (iii) a
commencement of a war or armed hostilities or other national or international
calamity directly or indirectly involving the United States, which has and
continues to materially adversely affect the trading of securities on the NYSE
involving the United States or (iv) in the case of any of the foregoing existing
at the time of the commencement of the Offer, a material acceleration or
worsening thereof;
(e) the representations and warranties of the Company set forth in this
Agreement shall not be true and correct at the date hereof and at the scheduled
or extended Expiration Date of the Offer as though made on or as of such date
(except for representations and warranties made as of a specified date) but only
if the respects in which the representations and warranties made by the Company
are inaccurate would in the aggregate have a Company material adverse effect and
if such breaches of representations or warranties have not been cured within
five (5) business days of written notice to Company by Parent or Sub; provided,
however that in no event shall Parent be obligated to extend the Offer for more
than one five (5) business-day extension pursuant to Section 1.1(a)(A) or beyond
July 1, 1999 in order to permit Company to cure any such breach. For purposes of
this Offer Condition, "material adverse effect" shall mean that claims, demands,
liabilities and losses arising out of such inaccuracy will actually or may
reasonably be expected to result in Losses suffered or incurred by the Company,
Parent or Sub, when taken as a whole, in excess of $300,000.
(f) the Company shall have failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or covenant
of the Company to be performed or complied with by it under this Agreement and
such failure has a material adverse effect;
(g) this Agreement shall have been terminated in accordance with its
terms; or
(h) the Company's total stockholders equity as of May 31, 1999 shall not
be at least Five Million Five Hundred Thousand No/100 Dollars ($5,500,000.00) as
determined in accordance with Company's past practice consistently applied;
which in the reasonable judgment of Parent, in any such case, makes it
inadvisable to proceed with the Offer or the acceptance for payment or payment
for the Shares.
The foregoing conditions, other than conditions (b) and (g), are for the
sole benefit of Sub and Parent and may, subject to the terms of this Agreement,
be waived by Sub and Parent in whole or in part at any time and from time to
time in their sole discretion. The failure by Parent or Sub at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right, the waiver of any such right with respect to particular facts and
circumstances shall
2
not be deemed a waiver with respect to any other facts and circumstances and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time, except as otherwise provided in this Agreement.
3
May 27, 1999
Endogen, Inc.
00 Xxxxxxxx Xxx
Xxxxxx, XX 00000
Gentlemen:
This letter confirms certain understandings with respect to the
Agreement and Plan of Merger (the "Merger Agreement") dated as of even date
herewith by and among PerBio Science AB, a Swedish corporation ("Parent"), EWOK
Acquisition Corp., a Massachusetts corporation ("Sub") and Endogen, Inc., a
Massachusetts corporation (the "Company"). Each capitalized term used herein and
not otherwise defined shall have the meaning ascribed to it in the Merger
Agreement.
For the purposes of paragraph (a) to Exhibit A of the Merger Agreement,
the phrase "on a fully diluted basis" shall be defined to exclude the following:
1. All outstanding stock options issued pursuant to the Company's
1992 Stock Plan that are irrevocably terminated, consistent with
Section 7.4(a)(A)(i) or (B) of the Merger Agreement, effective as
of the time that Sub accepts for payment, and pays for, all
Shares tendered and not withdrawn pursuant to the Offer;
2. All outstanding options issued pursuant to the Company's 1993
Non-Employee Director Stock Option Plan that are irrevocably
terminated by the holders of those options, effective as of the
time that Sub accepts for payment, and pays for, all Shares
tendered and not withdrawn pursuant to the Offer;
3. A certain warrant to purchase 125,000 shares of common stock of
the Company held by Third Wave Technologies, Inc.; provided that
such warrant is irrevocably terminated by the holder thereof,
effective as of the time that Sub accepts for payment, and pays
for, all Shares tendered and not withdrawn pursuant to the Offer.
Sincerely yours,
PERBIO SCIENCE AB
By: /s/ Xxxxxx Xxxxxxxxx
-------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Director
EWOK ACQUISITION CORP.
By: /s/ Xxxx Xxxxxxxx
-------------------------
Name: Xxxx Xxxxxxxx
Title: President
Accepted and agreed to:
ENDOGEN, INC.
By: /s/ Xxxx X. Xxxxxxx
---------------------
Name: Xxxx X. Xxxxxxx
Title: President
