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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 19, 1997 by
and among Urohealth Systems, Inc., a Delaware corporation ("UROHEALTH"),
Urohealth Acquisition Corporation, a Delaware corporation and wholly owned
subsidiary of Urohealth ("UROHEALTH SUB"), and Imagyn Medical, Inc., a Delaware
corporation ("IMAGYN"). The parties hereto are sometimes hereinafter referred
to collectively as the "Companies" or the "Constituent Corporations," or
individually as a "Company" or a "Constituent Corporation."
WHEREAS, the respective Boards of Directors of the Companies
deem it advisable and in the best interests of their respective stockholders
that Imagyn be acquired by Urohealth, and, in furtherance thereof, the Boards
of Directors of the Constituent Corporations have approved, as applicable, the
merger of Urohealth Sub with and into Imagyn, upon the terms and subject to the
conditions set forth herein (the "MERGER"); and
WHEREAS, for federal income tax purposes, it is intended that
the Merger shall qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "CODE") and be
treated as a pooling of interests under Accounting Principles Board Opinion Xx.
00 ("XXX Xxxxxxx Xx. 00");
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of
this Agreement, at the Effective Time (as defined in Section 1.2 hereof) of the
Merger, Urohealth Sub shall be merged with and into Imagyn, with Imagyn being
the surviving corporation in the Merger (the "SURVIVING CORPORATION") and the
separate existence of Urohealth Sub shall thereupon cease. The Merger shall
have the effects set forth in Section 259 of the Delaware General Corporation
Law (the "DGCL"). From and after the Effective Time of the Merger, the
Surviving Corporation shall be a wholly owned subsidiary of Urohealth.
1.2 Effective Time of the Merger. The Merger shall
become effective upon the completion of the filing of a properly executed
Certificate of Merger with the Secretary of State of the State of Delaware with
respect to the Merger of Imagyn and Urohealth Sub, which filing shall be made
on the Closing Date after satisfaction of the conditions set forth in Article
VII. When used in this Agreement, the term "EFFECTIVE TIME" with respect to
the Merger shall mean the date and time at which the Certificate of Merger is
successfully filed.
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ARTICLE II
UROHEALTH AND THE SURVIVING CORPORATION
2.1 Certificate of Incorporation of the Surviving
Corporation. The Certificate of Incorporation of Urohealth Sub shall be the
Certificate of Incorporation of the Surviving Corporation with the name of
Urohealth Sub therein changed to Imagyn.
2.2 Bylaws of the Surviving Corporation. The Bylaws of
Urohealth Sub as in effect at the Effective Time shall be the Bylaws of the
Surviving Corporation of the Merger until thereafter amended in accordance with
applicable law.
2.3 Directors and Officers of the Surviving Corporation.
(a) The directors of Urohealth Sub at the
Effective Time shall be the initial directors of the Surviving Corporation of
the Merger and shall hold office from the Effective Time until their respective
successors are duly elected or appointed and qualified in the manner provided
in the Certificate of Incorporation and Bylaws of the Surviving Corporation, or
as otherwise provided by law.
(b) The officers of Urohealth Sub at the
Effective Time shall be the initial officers of the Surviving Corporation of
the Merger and shall hold office from the Effective Time successors are duly
elected or appointed and qualified in the manner provided in the Certificate of
Incorporation and Bylaws of the Surviving Corporation, or as otherwise provided
by law.
ARTICLE III
CONVERSION OF SHARES
3.1 Exchange Ratio. At the Effective Time, by virtue of
the Merger and without any action on the part of the holder thereof:
(a) Subject to Section 3.5 hereof, each share of
common stock, par value $.001 per share, of Imagyn (an "IMAGYN SHARE") issued
and outstanding immediately prior to the Effective Time (other than the
Excluded Shares as defined in Section 3.7 below and Imagyn Shares held by
Urohealth or any subsidiary of Urohealth, if any), shall be converted at the
Effective Time into the right to receive 1.0358 shares (the "EXCHANGE RATIO")
of common stock, par value $.001 per share, of Urohealth together with the
corresponding preferred share purchase rights associated with such shares of
Urohealth common stock as defined in the Urohealth Rights Agreement ("UROHEALTH
SHARES"). All references herein to Urohealth Shares or Urohealth Common Stock,
including the Urohealth Shares issuable in the Merger, shall be deemed to
include the associated preferred share purchase rights except where the context
otherwise clearly requires.
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(b) At the Effective Time, all Imagyn Shares
(other than the Excluded Shares) shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
certificate previously representing any Imagyn Shares shall thereafter
represent the right to receive (i) the number of whole Urohealth Shares and
(ii) cash in lieu of fractional shares, into which such Imagyn Shares have been
converted. Certificates representing Imagyn Shares shall be exchanged for (i)
certificates representing whole Urohealth Shares and (ii) cash in lieu of
fractional shares issued in consideration therefor upon the surrender of such
certificate in accordance with the provisions hereof. If prior to the
Effective Time, Urohealth or Imagyn should split or combine the Imagyn Shares
or the Urohealth Shares, or pay a stock dividend or other stock distribution in
Urohealth Shares or Imagyn Shares, then the Exchange Ratio will be
appropriately adjusted to reflect such split, combination, dividend or other
distribution.
(c) Each Imagyn Share held in the treasury of
Imagyn (or a subsidiary of Imagyn) and each such Imagyn Share held by Urohealth
or any subsidiary of Urohealth immediately prior to the Effective Time shall be
canceled and retired and cease to exist, and no Urohealth Shares shall be
issued in exchange therefor. All Urohealth Shares owned by Imagyn or any
subsidiary shall become treasury stock of Urohealth.
(d) Each share of Common Stock of Urohealth Sub
issued and outstanding immediately prior to the Effective Time shall, by virtue
of the Merger and without any action on the part of the holder thereof, be
converted into and exchangeable for one share of common stock of the Surviving
Corporation of the Merger.
3.2 Exchange of Shares.
(a) Prior to the Effective Time, Urohealth shall
select and enter into an agreement with a bank or trust company to act as
Exchange Agent hereunder (the "EXCHANGE AGENT"). No later than the Effective
Time, Urohealth shall make available, and each holder of Imagyn Shares (other
than Excluded Shares) will be entitled to receive, upon surrender to the
Exchange Agent of one or more certificates representing such Imagyn Shares for
cancellation, certificates representing the number of Urohealth Shares into
which such Imagyn Shares are converted in the Merger. The Urohealth Shares
into which the Imagyn Shares shall be converted in the Merger shall be deemed
to have been issued at the Effective Time.
(b) As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding Imagyn Shares (the "CERTIFICATES") whose Imagyn Shares
were converted into Urohealth Shares pursuant to Section 3.1, (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
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Exchange Agent and shall be in such form and have such other provisions as
Urohealth and Imagyn may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for certificates
representing Urohealth Shares. Upon surrender of a Certificate for
cancellation to the Exchange Agent together with such letter of transmittal,
duly executed, the holder of such Certificate shall be entitled to receive in
exchange therefor a certificate representing that number of whole Urohealth
Shares which such holder has the right to receive in respect of the
Certificates surrendered pursuant to the provisions of this Article III.
(c) In the event that any stock certificate
representing Imagyn Shares shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming such certificate to
be lost, stolen or destroyed, Urohealth will issue or cause to be issued in
exchange for such lost, stolen or destroyed certificate the number of Urohealth
Shares into which such shares are converted in the Merger in accordance with
this Article III. When authorizing such issuance in exchange therefor, the
Board of Directors of Urohealth may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate to give Urohealth a bond in such sum as it may direct as
indemnity, or such other form of indemnity, as it shall direct, against any
claim that may be made against Urohealth with respect to the certificate
alleged to have been lost, stolen or destroyed.
3.3 Stock Options, Warrants, Debentures and Other
Agreements. As of the Effective Time, any stock options, warrants, convertible
securities or other contractual commitments to purchase or issue Imagyn Shares
that are outstanding at the Effective Time (whether or not contingent or
otherwise requiring further stockholder approval) shall be assumed by Urohealth
and converted into an option, warrant, convertible security or other
contractual commitment as the case may be, to purchase or issue, on the same
terms and conditions (including, without limitation, the date and exercise
provisions) as were applicable prior to the Effective Time, the number of
Urohealth Shares equal to the number of Imagyn Shares subject to such stock
option, warrant, convertible security or other contractual commitment
multiplied by the Exchange Ratio, at an exercise price per Urohealth Share
equal to the former exercise price per Imagyn Share under such stock option,
warrant, convertible security or other contractual commitment immediately prior
to the Effective Time (without taking into account any anti-dilution formula)
divided by the Exchange Ratio; provided, however, that in the case of any
employee stock option to which Section 421 of the Code applies by reason of its
qualification under Section 422 of the Code, the conversion formula shall be
adjusted, if necessary, to comply with Section 424(a) of the Code. No stock
option or warrant shall be converted into an option or warrant to purchase a
partial Urohealth Share. Except as provided above, the converted stock
options, warrants, convertible securities or other contractual commitments
shall be assumed by Urohealth under their same terms and conditions, but shall
not be subject to further stockholder approval.
3.4 Dividends; Transfer Taxes. No dividends that are
declared on Urohealth Shares will be paid to persons entitled to receive
certificates representing Urohealth Shares until
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such persons surrender their certificates representing Imagyn Shares. Upon
such surrender, there shall be paid to the person in whose name the
certificates representing such Urohealth Shares shall be issued any dividends
which shall have become payable with respect to such Urohealth Shares between
the Effective Time and the time of such surrender. In no event shall the
person entitled to receive such dividends be entitled to receive interest on
such dividends. If any certificates for any Urohealth Shares are to be issued
in a name other than that in which the certificate representing Imagyn Shares
surrendered in exchange therefor is registered, it shall be a condition of such
exchange that the person requesting such exchange shall pay to the Exchange
Agent any transfer or other taxes required by reason of the issuance of
certificates for such Urohealth Shares in a name other than that of the
registered holder of the certificate surrendered, or shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
applicable. Notwithstanding the foregoing, neither the Exchange Agent nor any
party hereto shall be liable to a holder of Imagyn Shares for any Urohealth
Shares or dividends thereon or, in accordance with Section 3.4 hereof, the cash
payment for fractional interests, delivered to a public official pursuant to
applicable escheat laws.
3.5 No Fractional Securities. No certificates or scrip
representing fractional Urohealth Shares shall be issued upon the surrender for
exchange of certificates representing Imagyn Shares pursuant to this Article
III and no dividend, stock split-up or other change in the capital structure of
Urohealth shall relate to any fractional security, and such fractional
interests shall not entitle the owner thereof to vote or to any rights of a
security holder. In lieu of any such fractional securities, each holder of
Imagyn Shares who would otherwise have been entitled to a fraction of a
Urohealth Share upon surrender of stock certificates for exchange pursuant to
this Article III shall be paid cash upon such surrender in an amount equal to
the product of such fraction multiplied by the average closing price for a
Urohealth Share on The Nasdaq Stock Market National Market for the five trading
days immediately following the Closing Date (as defined below).
3.6 Closing of Transfer Books. At the Effective Time,
the stock transfer books of Imagyn shall be closed and no transfer of Imagyn
Shares shall thereafter be made. If, after the Effective Time, certificates
representing Imagyn Shares are presented to the Surviving Corporation, they
shall be canceled and exchanged for certificates representing Urohealth Shares
in accordance with the terms hereof. At and after the Effective Time, the
holders of Imagyn Shares to be exchanged for Urohealth Shares pursuant to this
Agreement shall cease to have any rights as stockholders of Imagyn except for
the right to surrender such stock certificates in exchange for Urohealth Shares
as provided hereunder.
3.7 Dissenting Shares. If holders of Imagyn Shares are
entitled to dissent from the Merger and demand appraisal of any such Imagyn
Shares in accordance with the provisions of the DGCL concerning the right of
such holders to dissent from the Merger and demand appraisal of their shares
("DISSENTING HOLDERS"), any Imagyn Shares held by a Dissenting Holder as to
which appraisal has been so demanded ("EXCLUDED SHARES") shall not
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be converted as described in Section 3.1, but shall from and after the
Effective Time represent only the right to receive such consideration as may be
determined to be due to such Dissenting Holder pursuant to the DGCL; provided,
however, that each Imagyn Share held by a Dissenting Holder who shall, after
the Effective Time, withdraw his demand for appraisal or lose his right of
appraisal with respect to such Imagyn Shares, in either case pursuant to the
DGCL, shall not be deemed Excluded Shares but shall be deemed to be converted,
as of the Effective Time, into the right to receive Urohealth Shares in
accordance with the Exchange Ratio.
3.8 Closing. The closing of the transactions
contemplated by this Agreement (the "CLOSING") shall take place at the offices
of Xxxxxxxx & Xxxxxxxx LLP, 00000 XxxXxxxxx Xxxxxxxxx, 00xx Xxxxx, Xxxxxx,
Xxxxxxxxxx 00000, at 9:00 a.m., local time, on the first business day (the
"CLOSING DATE") after the later of (a) the day on which the later to occur of
the stockholders' meetings referred to in Section 6.4 hereof shall have
occurred or (b) the day on which all of the conditions set forth in Article VII
hereof are satisfied or waived, or at such other date, time and place as the
Companies shall agree.
3.9 Supplementary Action. If at any time after the
Effective Time, any further assignments or assurances in law or any other
things are necessary or desirable to vest or to perfect or confirm of record in
the Surviving Corporation the title to any property or rights of any
Constituent Corporation, or otherwise to carry out the provisions of this
Agreement, the officers and directors of the Surviving Corporation are hereby
authorized and empowered on behalf of the Constituent Corporations, in the name
of and on behalf of any Constituent Corporation as appropriate, to execute and
deliver any and all things necessary or proper to vest or to perfect or confirm
title to such property or rights in the Surviving Corporation, and otherwise to
carry out the purposes and provisions of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF UROHEALTH AND IMAGYN
As used in this Agreement, (i) the term "Material Adverse
Effect" means, with respect to Urohealth or Imagyn, as the case may be, a
material adverse effect on the business, assets, results of operations or
financial condition of such party and its subsidiaries taken as a whole or on
the ability of such party to perform its obligations hereunder and (ii) the
word "subsidiary" when used with respect to any party means any corporation or
other organization, whether incorporated or unincorporated, of which such party
or any other subsidiary of such party is a general partner (excluding
partnerships the general partnership and limited partnership interests of which
held by such party or any subsidiary of such party do not have a majority of
the voting interests in such partnership) or of which at least a majority of
the securities or other interests having by their terms ordinary voting power
to elect a majority of the Board of Directors or others performing similar
functions with respect to such corporations or other organizations is directly
or indirectly owned or controlled by such party and/or by any one or more of
the subsidiaries.
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Each of Urohealth and Imagyn represents and warrants, with
respect to itself and its subsidiaries, to the other, except as disclosed to
the other in writing by letter dated as of the date hereof, as follows:
4.1 Organization. Such Company is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has the corporate power to carry on its
business as it is now being conducted or presently proposed to be conducted.
Such Company is duly qualified as a foreign corporation to do business, and is
in good standing, in each jurisdiction where the character of its properties
owned or held under lease or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified will not
have a Material Adverse Effect. Each corporate subsidiary of such Company is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization, has the corporate
power to carry on its business as it is now being conducted and is duly
qualified to do business, and is in good standing, in each jurisdiction where
the character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary, except where the failure to be
so duly organized, validly existing and in good standing, to have such
corporate power or to be so qualified will not have a Material Adverse Effect.
4.2 Capitalization. As of the date hereof, the
authorized capital stock of such Company is as set forth in Exhibit 4.2 hereto.
As of the date hereof, the number of shares of capital stock of such Company
which are issued and outstanding is as set forth in Exhibit 4.2 hereto. All of
the issued and outstanding shares of capital stock of such Company are validly
issued, fully paid and non- assessable and free of preemptive rights or similar
rights created by statute, the Certificate or Articles of Incorporation or
Bylaws of such Company or any agreement by which such Company or any of its
subsidiaries is a party or by which it is bound. Except (a) as set forth above
or, (b) as disclosed in Exhibit 4.2 hereto, there are not as of the date of
this Agreement any shares of capital stock of such Company issued or
outstanding or any options, warrants, subscriptions, calls, rights, convertible
securities or other agreements or commitments obligating such Company to issue,
transfer or sell any shares of its capital stock. As of the date hereof, no
bonds, debentures, notes or other indebtedness having the right to vote (or
convertible into or exercisable for securities having the right to vote) on any
matters on which stockholders of such Company may vote ("VOTING DEBT") were
issued and outstanding with respect to such Company.
4.3 Authority Relative to this Agreement. Such Company
has the corporate power to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement by such
Company and the consummation by such Company of the transactions contemplated
hereby have been duly authorized by the Board of Directors of such Company,
and, except for approval by the requisite votes cast by such Company's
stockholders at
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the meeting provided for in Section 6.4, no other corporate proceedings on the
part of such Company are necessary to approve this Agreement or the
transactions contemplated hereby.
4.4 Consents and Approvals; No Violations. Except for
applicable requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
0000 (xxx "XXX XXX"), the Securities Act of 1933, as amended (the "SECURITIES
ACT"), the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"),
state or foreign laws relating to takeovers, if applicable, state securities or
blue sky laws, and, as applicable, filing and recordation of a Certificate of
Merger as required by the DGCL, no filing with, and no permit, authorization,
consent or approval of, any public body or authority is necessary for the
consummation by such Company of the transactions contemplated by this
Agreement. Neither the execution and delivery of this Agreement by such
Company, nor the consummation by such Company of the transactions contemplated
hereby, nor compliance by such Company with any of the provisions hereof, will
(a) result in any breach of the Certificate of Incorporation or Bylaws of such
Company, (b) result in a violation or breach of, or constitute (with or without
due notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, license, contract,
agreement or other instrument or obligation to which such Company 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 (c) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to such Company, any of its subsidiaries
or any of their properties or assets, except in the case of clauses (b) and (c)
for violations, breaches or defaults that would not have a Material Adverse
Effect.
4.5 Reports and Financial Statements. Such Company has
filed all reports required to be filed by it with the Securities and Exchange
Commission (the "SEC") pursuant to the Exchange Act since January 1, 1994, in
the case of Urohealth, and since May 30, 1996 in the case of Imagyn, including,
without limitation, audited financial statements for the year ended December
31, 1996 (in the case of Imagyn) and for the year ended March 31, 1996 (in the
case of Urohealth) (collectively, the "SEC REPORTS"), and has previously
furnished or made available to the other Company true and complete copies of
all such SEC Reports. None of such SEC Reports, as of their respective dates
(as amended through the date hereof), contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. Each of the balance sheets
(including the related notes) included in the SEC Reports fairly presents in
all material respects the consolidated financial position of such Company and
its subsidiaries as of the respective dates thereof, and the other related
statements (including the related notes) included therein fairly present in all
material respects the results of operations and cash flows of such Company and
its subsidiaries for the respective periods or as of the respective dates set
forth therein, all in conformity with generally accepted accounting principles
consistently applied during the periods involved, except as otherwise noted
therein and
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subject, in the case of the unaudited interim financial statements, to normal
year-end adjustments and any other adjustments described therein and the
absence of any notes thereto.
4.6 Absence of Certain Changes or Events. Except as
disclosed in the SEC Reports filed prior to the date of this Agreement, since
December 31, 1996, neither such Company nor any of its subsidiaries has: (a)
taken any of the actions set forth in Sections 5.1(b), 5.1(c) or 5.1(e) hereof;
(b) incurred any liability material to the Company and its subsidiaries on a
consolidated basis, except in the ordinary course of its business, consistent
with past practices; (c) suffered a change in the business, assets, financial
condition or results of operation of such Company or any of its subsidiaries
which has had, or is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect; or (d) subsequent to the date hereof,
except as permitted by Section 5.1 hereof, conducted its business and
operations other than in the ordinary course of business and consistent with
past practices.
4.7 Information in Disclosure Documents and Registration
Statement. None of the information to be supplied by such Company to be
included in (a) the Registration Statement on Form S-4 (or S-1 or such other
form required or deemed appropriate by the SEC) to be filed with the SEC by
Urohealth under the Securities Act for the purpose of registering the Urohealth
Shares to be issued in the Merger pursuant to this Agreement (the "REGISTRATION
STATEMENT") and (b) the joint proxy statement to be distributed in connection
with the meetings of stockholders of the Companies to vote upon this Agreement
(the "PROXY STATEMENT"), will, in the case of the Registration Statement, at
the time it becomes effective and at the Effective Time, or, in the case of the
Proxy Statement or any amendments thereof or supplements thereto, at the time
of the mailing of the Proxy Statement and any amendments or supplements
thereto, and at the time of each of the meetings of stockholders to be held in
connection with the Merger, 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 Registration Statement insofar as it
pertains to such Company will comply as to form in all material respects with
the provisions of the Securities Act, and the rules and regulations promulgated
thereunder. The Proxy Statement insofar as it pertains to such Company will
comply as to form in all material respects with the provisions of the Exchange
Act and the rules and regulations promulgated thereunder.
4.8 Litigation. As of the date of this Agreement, except
as disclosed in the SEC Reports filed prior to the date of this Agreement and
except to the extent that individually and in the aggregate they would not
reasonably be expected to have a Material Adverse Effect: (i) there is no
action, suit, judicial or administrative proceeding, arbitration or
investigation pending or, to the best knowledge of such Company, threatened
against or involving such Company or any of its subsidiaries, or any of their
properties or rights, before any court, arbitrator, or administrative or
governmental body; (ii) there is no judgment, decree, injunction, rule or order
of any court, governmental department, commission, agency, instrumentality or
arbitrator outstanding against such Company or any of its subsidiaries; and
(iii) such Company
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and its subsidiaries are not in violation of any term of any judgments,
decrees, injunctions or orders outstanding against them. Such Company has
furnished to the other Companies in writing, a description of all litigations,
actions, suits, proceedings, arbitrations, investigations known to it,
judgments, decrees, injunctions or orders pending, or to its best knowledge,
threatened against or involving such Company or any of its subsidiaries, or any
of their properties or rights as of the date hereof.
4.9 Contracts.
(a) Each of the material contracts, instruments,
mortgages, notes, security agreements, leases, agreements or understandings,
whether written or oral, to which such Company or any of its subsidiaries is a
party that relates to or affects the assets or operations of such Company or
any of its subsidiaries or to which such Company or any of its subsidiaries or
their respective assets or operations may be bound or subject is a valid and
binding obligation of such Company and in full force and effect (with respect
to such Company or such subsidiary), except for where the failure to be in full
force and effect would not individually or in the aggregate, have a Material
Adverse Effect. Except to the extent that the consummation of the transactions
contemplated by this Agreement may require the consent of third parties, as
disclosed in writing to the other Companies pursuant hereto, there are no
existing defaults by such Company or any of its subsidiaries thereunder or, to
the knowledge of such Company, by any other party thereto, which defaults,
individually or in the aggregate, would have a Material Adverse Effect; and no
event of default has occurred, and no event, condition or occurrence exists,
that (whether with or without notice, lapse of time or the happening or
occurrence of any other event) would constitute a default by such Company or
any of its subsidiaries thereunder which default would, individually or in the
aggregate, have a Material Adverse Effect.
(b) Except as set forth in such Company's SEC
Reports (including the exhibits thereto) filed prior to the date of this
Agreement and except for this Agreement, as of the date of this Agreement
neither such Company nor any of its subsidiaries is a party to any oral or
written (i) consulting agreement not terminable on 60 days or less notice
involving the payment of more than $50,000 per annum ($200,000 per annum in the
case of Urohealth), in the case of any such agreement with an individual, (ii)
joint venture agreement, (iii) non-competition or similar agreements that
restricts such Company or its subsidiaries from engaging in a line of business,
(iv) agreement with any executive officer or other employee of such Company or
any subsidiary the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving such Company
of the nature contemplated by this Agreement and which provides for the payment
of in excess of $10,000 ($200,000 in the case of Urohealth), (v) agreement with
respect to any executive officer of such Company or any subsidiary providing
any term of employment beyond one year or compensation guaranty in excess of
$75,000 per annum ($200,000 per annum in the case of Urohealth), or (vi)
agreement or plan, including any stock option plan, stock appreciation rights
plan, restricted stock plan or stock purchase plan, any of the benefits
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of which will be increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on
the basis of any of the transactions contemplated by this Agreement.
4.10 Employee Benefit Plans.
(a) Such Company has previously delivered to
the other Company a true and complete list of each written or formal employee
benefit plan (including, without limitation, any "employee benefit plan" as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")), policy or agreement that is maintained (all of the
foregoing, the "BENEFIT PLANS"), or is or was contributed to by such Company or
pursuant to which such Company or any trade or business, whether or not
incorporated (an "ERISA AFFILIATE"), which together with such Company would be
deemed a "single employer" within the meaning of Section 4001 of ERISA, is
still potentially liable for payments, benefits or claims. A copy of each
Benefit Plan as currently in effect and, if applicable, the most recent Annual
Report, Actuarial Report or Valuation, Summary Plan Description, Trust
Agreement and a Determination Letter issued by the IRS for each Benefit Plan
have heretofore been delivered to the other Company. No Benefit Plan was or is
subject to Title IV of ERISA or Section 412 of the Code (including any
"multiemployer plan," as defined in Section 3(37) of ERISA).
(b) Each of the Benefit Plans that is subject
to ERISA is in substantial compliance with ERISA; each of the Benefit Plans
intended to be "qualified" within the meaning of Section 401(a) of the Code is
so qualified; and no event has occurred, and to such Company's knowledge, there
exists no condition or set of circumstances, in connection with which such
Company or any ERISA Affiliate is or could be subject to liability (except
liability for benefit claims and funding obligations payable in the ordinary
course) under ERISA, the Code, or any other applicable law with respect to any
Benefit Plan.
(c) All contributions or other amounts payable
by such Company or its subsidiaries through December 31, 1996 with respect to
each Benefit Plan in respect of current or prior plan years have been either
paid or accrued on the most recent financial statements of such Company made
available to the other Company. Any contributions or other amounts payable by
such Company or its subsidiaries for periods between December 31, 1996 and the
Effective Time with respect to each Benefit Plan in respect of current or prior
plan years have been or will be either paid or accrued in the normal course of
business on the books and records of such Company at or prior to the Effective
Time. There are no pending, or, to the best knowledge of such Company,
threatened or anticipated claims (other than routine claims for benefits) by or
on behalf of or against any of the Benefit Plans or any trusts or other funding
vehicles related thereto.
(d) No Benefit Plan provides benefits,
including without limitation death or medical benefits (whether or not
insured), with respect to current or former employees
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for periods extending beyond their retirement or other termination of service
other than (i) coverage mandated by Part 6 of Subtitle B of Title I of ERISA,
Section 4980B of the Code or any comparable state law, (ii) death benefits or
retirement benefits under any "employee pension plan," as that term is defined
in Section 3(2) of ERISA, (iii) deferred compensation benefits accrued as
liabilities on the books of such Company or the ERISA Affiliates, or (iv)
benefits the full cost of which is borne by the current or former employee or
his or her beneficiary.
4.11 Taxes. For the purposes of this section, the term
"TAX" shall include all taxes, charges, withholdings, fees, levies, penalties,
additions, interest or other assessments imposed by any United States federal,
state or local authority or any other taxing authority on such Company or any
of its Tax Affiliates as to their respective income, profit, franchise, gross
receipts, payroll, sales, employment, worker's compensation, use, property,
withholding, excise, occupancy, environmental, and other taxes, duties or
assessments of any nature, whatsoever. Such Company has filed or caused to be
filed timely all material federal, state, local and foreign tax returns
required to be filed by each of its and any member of its consolidated,
combined, unitary or similar group (each such member a "TAX AFFILIATE"). Such
returns, reports and other information are accurate and complete in all
material respects. Such Company has paid or caused to be paid or has made
adequate provision or set up an adequate accrual or reserve for the payment of,
all taxes shown to be due in respect of the periods for which returns are due,
and has established (or will establish at least quarterly) an adequate accrual
or reserve for the payment of all taxes payable in respect of the period
subsequent to the last of said periods required to be so accrued or reserved.
Neither such Company nor any of its Tax Affiliates has any material liability
for taxes in excess of the amount so paid or accruals or reserves so
established. Neither such Company nor any of its Tax Affiliates is delinquent
in the payment of any tax in excess of the amount reserved or provided
therefor, and no deficiencies for any tax, assessment or governmental charge in
excess of the amount reserved or provided therefor have been threatened,
claimed, proposed or assessed. No waiver or extension of time to assess any
taxes has been given or requested. Neither such Company nor any of its Tax
Affiliates has been a member of an affiliated group of corporations filing a
consolidated federal income tax return, except for an affiliate group as to
which such Company was the common parent. Neither such Company nor any of its
Tax Affiliates has ever been a party to any tax sharing agreement. Neither
such Company nor any of its Tax Affiliates has entered into any compensatory
agreements with respect to the performance of services which payment thereunder
would result in a non-deductible expense pursuant to Section 280G of the Code
or an excise tax pursuant to Section 4999 of the Code. Neither such Company
nor any of its Tax Affiliates' federal and state income tax returns have been
audited by the Internal Revenue Service or comparable state agencies.
4.12 Compliance With Applicable Law. Except as
disclosed in the SEC Reports filed prior to the date of this Agreement, such
Company and each of its subsidiaries holds all licenses, franchises, permits,
variances, exemptions, orders, approvals and authorizations necessary for the
lawful conduct of its business under and pursuant to, and the
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business of each of such Company and its subsidiaries is not being conducted in
violation of, any provision of any federal, state, local or foreign statute,
law, ordinance, rule, regulation, judgment, decree, order, concession, grant,
franchise, permit or license or other governmental authorization or approval
applicable to such Company or any of its subsidiaries, except to the extent
that the failure to hold any such licenses, franchises, permits or
authorizations, or any such violation, would not, individually or in the
aggregate, have a Material Adverse Effect.
4.13 Subsidiaries. Exhibit 21.1 to the most recent Form
10-K included in the SEC Reports of such Company lists all the subsidiaries of
such Company as of the date of this Agreement and indicates for each such
corporate subsidiary as of such date the jurisdiction of incorporation or
organization. All of the outstanding shares of capital stock or other equity
interests of each of the subsidiaries are (i) held by such Company or one of
such wholly-owned subsidiaries, (ii) fully paid and non-assessable, and (iii)
owned by such Company or one of such wholly-owned subsidiaries free and clear
of any claim, lien or encumbrance.
4.14 Labor and Employment Matters. (a) Such Company and
its subsidiaries are and have been in compliance in all material respects with
all applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, including, without limitation,
the Immigration Reform and Control Act ("IRCA"), the Worker Adjustment and
Retraining Notification Act ("WARN"), and such laws respecting employment
discrimination, equal opportunity, affirmative action, worker's compensation,
occupational safety and health requirements and unemployment insurance and
related matters, and are not engaged in and have not engaged in any unfair
labor practice; (b) to the knowledge of such Company, no investigation or
review by or before any governmental entity concerning any violations of any
such applicable laws is pending nor, to the knowledge of such Company is any
such investigation threatened or has any such investigation occurred during the
last three years, and no governmental entity has provided any notice to such
Company or any of its subsidiaries or otherwise asserted an intention to
conduct any such investigation; (c) there is no labor strike, dispute, slowdown
or stoppage actually pending or threatened against such Company or any of its
subsidiaries; (d) no union representation question or union organizational
activity exists respecting the employees of such Company or any of its
subsidiaries; (e) no collective bargaining agreement exists which is binding on
such Company or any of its subsidiaries; (f) neither such Company nor any of
its subsidiaries has experienced any material work stoppage or other material
labor difficulty; and (g) in the event of termination of the employment of any
of the current officers, employees or agents (or, in the case of directors,
termination of service as a director) of such Company or any of its
subsidiaries, neither such Company, any of its subsidiaries, any other company,
the Surviving Corporation, nor Urohealth nor any other subsidiaries of such
Company, will pursuant to any agreement or by reason of anything done prior to
the Effective Time by such Company or any of its subsidiaries be liable to any
of said officers, directors, employees or agents for so-called "severance pay"
or any other similar payments or benefits, including, without limitation,
post-employment health (other than pursuant to COBRA) or insurance benefits.
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4.15 Insurance. As of the date hereof, such Company and
each of its subsidiaries are insured by insurers reasonably believed by such
Company to be of recognized financial responsibility against such losses and
risks and in such amounts as are customary in the businesses in which they are
engaged. All material policies of insurance and fidelity or surety bonds
insuring such Company or any of its subsidiaries or their respective
businesses, assets, employees, officers and directors are in full force and
effect. As of the date hereof, there are no material claims by such Company or
any of its subsidiaries under any such policy or instrument as to which any
insurance company is denying liability or defending under a reservation of
rights clause.
4.16 Contracts with Physicians, Hospitals, HMOs and
Third Party Providers. Such Company has made available to representatives of
the other Company copies (or in the case where no written documentation exists,
a summary) of all outstanding contracts, partnerships, joint ventures and other
arrangements or understandings (written or oral) between (a) such Company or
any of its subsidiaries and (b) any physician, hospital, HMO, other managed
care organization, or other third-party provider relating to the provision of
medical or consulting services, treatments, patient referrals or similar
activities.
4.17 Section 203 of the DGCL. The provisions of Section
203 of the DGCL will not, prior to the termination of this Agreement, assuming
the accuracy of the representations contained in Section 4.18 (without giving
effect to the knowledge qualification thereof), apply to this Agreement, the
Merger or the transactions contemplated hereby and thereby.
4.18 Ownership of Shares. As of the date hereof,
neither such Company nor, to its knowledge, any of its affiliates or associates
(as such terms are defined under the Exchange Act) (i) beneficially owns,
directly or indirectly, or (ii) are parties to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of, in
each case, shares of capital stock of another Company which in the aggregate
represent 10% or more of the outstanding shares of capital stock of any other
Company.
4.19 FDA Matters.
(a) Such Company and each of its subsidiaries
is, and the products sold by such Company and each of its subsidiaries are, in
compliance in all material respects with all current applicable laws, statutes,
rules, regulations, standards, guides or orders administered or issued by the
Federal Food and Drug Administration or any other federal, foreign, state or
local agency or governmental body ("GOVERNMENTAL AUTHORITY") having regulatory
authority over the products of such Company and its subsidiaries (the "FDA").
(b) The manufacturing operations of such
Company and each of its subsidiaries is in compliance in all material respects
with all applicable laws, statutes, rules,
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regulations, standards, guides or orders administered or issued by the FDA or
Governmental Authority relating to the methods and materials used in, and the
facilities and controls used for, the manufacture, processing, packaging,
labeling, storage and distribution of the products manufactured by such
Company, including current Good Manufacturing Practice requirements. Further,
no governmental action has been taken or is in the process of being taken that
could halt or enjoin the manufacturing operations of such Company or subject
the manufacturing operations of such Company to regulatory enforcement action.
(c) Such Company or its subsidiaries have not
received from the FDA, and none of them has knowledge of any facts which would
furnish any reasonable basis for, any notice of adverse findings, Form 483
inspectional observations, regulatory letters, warning letters, Section 305
notices or other similar communications from the FDA or other Governmental
Authority, and there have been no seizures conducted or threatened by the FDA
or other Governmental Authority, and no recalls, market withdraws, field
notifications, notifications of misbranding or adulteration, or alerts
conducted, requested or threatened by the FDA or other Governmental Authority
relating to the products sold by such Company or any of its subsidiaries.
(d) Each premarket approval ("PMA") and
premarket notification ("510(K)") submission and related documents and
information for each of the products of such Company and its subsidiaries is in
compliance in all material respects with the applicable federal statutes,
rules, regulations, standards, guides or orders administered or promulgated by
the FDA or other Governmental Authority and all preclinical and clinical
studies have been conducted with current Good Clinical and Good Laboratory
Practices in all material respects. Such Company has disclosed in writing to
the other Company a complete and accurate list of all products of such Company
and its subsidiaries indicating (i) which products are marketed under an
approved or cleared FDA authority (e.g., PMA, PMA supplement, 510(k) or IDE)
and identifying such authority, and (ii) which products are not marketed under
an approved or cleared FDA authority, and indicating why such products are
being marketed without such authority. Such listing also contains a complete
and accurate list of all PMA applications, PMA supplements, 510(k) submissions
and IDE submissions of such Company or any of its subsidiaries currently
pending with the FDA.
(e) Such Company and its subsidiaries are not
aware of any facts which are reasonably likely to cause (i) the denial,
withdrawal, recall or suspension of any products sold or intended to be sold by
such Company or any of its subsidiaries, or (ii) a change in the marketing
classification or labeling of any such products, or (iii) a termination or
suspension of marketing of any such products.
(f) None of the products manufactured, marketed
or sold by such Company or any of its subsidiaries has been recalled or subject
to a field notification (whether voluntarily or otherwise), and such Company
and its subsidiaries have not received notice
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(whether completed or pending) of any proceeding seeking recall, suspension or
seizure of any products sold or proposed to be sold by such Company or any of
its subsidiaries.
4.20 Proprietary Rights.
(a) Such Company has previously disclosed in
writing to the other Company a listing of all of such Company's domestic or
foreign federal, state and foreign registrations of trademarks and of other
marks, trade names or other trade rights, and all pending applications for any
such registrations and all of such Company's patents and copyrights and all
pending applications therefor, all other trademarks and other marks, trade
names and other trade rights or in which such Company has any interest
whatsoever, and all other trade secrets, designs, plans, specifications,
technical information and other proprietary rights of such Company, whether or
not registered, created or used by or on behalf of such Company (collectively
"PROPRIETARY RIGHTS"). Such listing (the "PROPRIETARY RIGHTS LIST") also sets
forth: (i) for each patent and registered design, the number, normal expiration
date and subject matter for each country in which such patent or registered
design has been issued, (ii) for each patent application and registered design
application, the application number, date of filing and subject matter for each
country, (iii) for each trademark, the trademark application serial number or
the trademark registration number, the trademark class of goods covered and the
trademark expiration date for each country in which a trademark has been
registered, (iv) for each service xxxx, the service xxxx serial number or the
service xxxx registration number, the service xxxx class of goods covered and
the service xxxx expiration date for each country in which a service xxxx has
been registered and (v) for each copyright, the copyright number and date of
filing for each country in which a copyright has been filed. The Proprietary
Rights listed in the Proprietary Rights List of such Company are all those used
by such Company in connection with its business. True and correct copies of
all patents, and all pending applications for patents, owned, controlled,
created or used by or on behalf of such Company or in which such Company has
any interest whatsoever have been provided to the other Company. All
references in this Section 4.20, to "such Company" shall mean "such Company and
each of its subsidiaries."
(b) (i) No person has a right to receive a
royalty or similar payment in respect of any Proprietary Rights of such Company
whether or not pursuant to any contractual arrangements entered into by such
Company. Such Company has no licenses granted, sold or otherwise transferred
by or to it nor other agreements to which it is a party relating in whole or in
part to any of the Proprietary Rights.
(ii) Such Company owns and has the sole
right to use each of the Proprietary Rights of such Company. Except for
applications pending, all of the patents, registered designs and trademarks
listed in the Proprietary Rights List of such Company have been duly issued and
all of the other Proprietary Rights of such Company exist, are registered and
are subsisting. All of the pending patent applications have been duly filed.
None of the Proprietary Rights of such Company is involved in any pending or
threatened litigation. Such
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Company has not received any notice of invalidity or infringement of any rights
of others with respect to such trademarks. Such Company has taken all
reasonable and prudent steps to protect the Proprietary Rights of such Company
from infringement by any other person. No other person (x) has the right to
use any such trademarks on the goods on which they are now being used either in
identical form or in such near resemblance thereto as to be likely, when
applied to the goods of any such person, to cause confusion with the trademarks
or to cause a mistake or to deceive, (y) has notified such Company that it is
claiming any ownership of or right to use such Proprietary Rights, or (z) to
the best of such Company's knowledge, is infringing upon any such Proprietary
Rights in any way. To the best of such Company's knowledge, such Company's use
of the Proprietary Rights of such Company is not infringing upon or otherwise
violating the rights of any third party in or to such Proprietary Rights, and
no proceedings have been instituted against or notices received by such Company
that are presently outstanding alleging that such Company's use of the
Proprietary Rights infringes upon or otherwise violates any rights of a third
party in or to such Proprietary Rights. All of the Proprietary Rights of such
Company are valid and enforceable rights of such Company and will not cease to
be valid and in full force and effect by reason of the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated by this Agreement. There are not, and it is reasonably expected
that after the Effective Time there will not be, any restrictions on such
Company's right to sell products manufactured by or for such Company which
relate to the Proprietary Rights of such Company.
(c) No employee of such Company or any of its
subsidiaries is, or is now expected to be, in default under any term of any
employment contract, agreement or arrangement relating to any Proprietary
Rights of such Company or non-competition agreement, or any other contract or
any restrictive covenant relating to the right of any such officer or employee
to be employed by such Company or any of its subsidiaries because of the nature
of the business conducted or to be conducted by such Company or any of its
subsidiaries or relating to the use of any intellectual property of others, and
the continued employment of such Company's and its subsidiaries' officers and
employees does not subject such Company or any of its subsidiaries to any
liability resulting from such a violation.
4.21 Owned Property; Facilities. Exhibit 4.21 lists all
of such Company's and its subsidiaries' plants, offices, manufacturing
facilities, warehouses, improvements, administration buildings and real
property (the "FACILITIES") owned or leased by such Company, indicating whether
such property is owned or leased.
4.22 Compliance With Legislation Regulating
Environmental Quality.
(a) For the purposes of this Agreement, the
term "ENVIRONMENTAL LAWS" shall mean all federal, foreign, state and local
environmental protection, occupational, health and safety or similar laws,
ordinances, restrictions, licenses, rules, regulations and permit conditions,
including but not limited to the Federal Water Pollution Control Act, Resource
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Conservation & Recovery Act, Safe Drinking Water Act, Toxic Substances Control
Act, Clean Air Act, Comprehensive Environmental Response, Compensation and
Liability Act, Emergency Planning and Community Right to Know or other U.S. or
foreign federal, state, province, or local laws of similar effect, each as
amended as of the Effective Time, and the term "HAZARDOUS MATERIALS" shall mean
any hazardous or toxic substances, wastes or materials, including without
limitation petroleum or petroleum products, defined as such by any applicable
Environmental Law or governmental agencies.
(b) Throughout the period of its ownership or
operation of the Facilities of such Company, (i) neither such Company nor any
of its subsidiaries has received any written notices, directives, violation
reports, actions or claims from or by (A) any local, state, federal or foreign
governmental agency concerning any violation by such Company of Environmental
Laws or (B) any person alleging that, in connection with Hazardous Materials,
conditions at any of the Facilities of such Company or such Company's acts or
omissions have resulted in or caused or threatened to result in or cause injury
or death to any person or damage to any property, including without limitation,
damage to natural resources, and to such Company's knowledge, no such notices,
directives, violation reports, actions, claims or allegations exist; (ii) the
Facilities of such Company and the business operated by such Company and its
subsidiaries are in compliance with all applicable state, federal, foreign and
local Environmental Laws, except where any noncompliance with Environmental
Laws would not have a Material Adverse Effect on such Company; (iii) no
underground storage tanks either are or, to such Company's knowledge, have been
located at any of the Facilities of such Company; and (iv) to such Company's
knowledge, no friable asbestos or PCBs have been located at any of the
Facilities of such Company.
(c) There has been no spill, discharge or
release of Hazardous Materials by such Company or any of its subsidiaries at
any of the Facilities of such Company; (ii) neither such Company nor any of its
subsidiaries has treated, stored, disposed of, released or transported any
Hazardous Material in a manner which would give rise to any material liability
under any Environmental Laws; and (iii) such Company and its subsidiaries hold
all necessary permits, licenses, approvals and consents to conduct their
business as currently being conducted and are not in violation of any condition
of any such permit, license or consent.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
5.1 Conduct of Business Pending the Merger. Each Company
agrees on its own behalf and on behalf of its subsidiaries that, except as
contemplated by this Agreement, during the period from the date of this
Agreement and continuing until the Effective Time:
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(a) the respective businesses of each Company and
its subsidiaries shall be conducted only in the ordinary and usual course of
business and consistent with past practices;
(b) such Company and its subsidiaries shall not
(i) sell or pledge or agree to sell or pledge any stock owned by it in any of
its subsidiaries; (ii) amend its Certificate of Incorporation or Bylaws; or
(iii) split, combine or reclassify any shares of its outstanding capital stock
or declare, set aside or pay any dividend or other distribution payable in
cash, stock or property in respect of its capital stock, or directly or
indirectly redeem, purchase or otherwise acquire any shares of its capital
stock or other securities or shares of the capital stock or other securities of
any of its subsidiaries;
(c) such Company and its subsidiaries shall not
(i) authorize for issuance, issue, sell, pledge, dispose of, encumber, deliver
or agree or commit to issue, sell, pledge, or deliver any additional shares of,
or rights of any kind to acquire any shares of, its capital stock of any class
or exchangeable into shares of stock of any class or any Voting Debt (whether
through the issuance or granting of options, warrants, commitments,
subscriptions, rights to purchase or otherwise), except that such Company may
in the ordinary course of business consistent with past practice grant stock
options and stock purchase rights (in the case of Imagyn, with respect to up to
25,000 shares under Imagyn's 1995 Stock Plan only for previous commitments to
prospective employees and with respect to 5,000 shares under Imagyn's 1996
Employee Stock Purchase Plan) under existing equity compensation plans of such
Company that have been disclosed to the other Company in writing so long as
such options are granted at fair market value on the date of grant, or, in the
case of shares issued under employee stock purchase plans at the prices
specified in such plans as disclosed to the other Company and the independent
public accountants of both Companies have reviewed such grants and determined
that such grants will not effect the proposed accounting treatment as a pooling
of interests for the Merger and such Company may issue shares required to be
issued upon exercise of existing stock options, warrants or similar plans, or
under other contractual commitments previously made, which options, warrants,
plans or commitments have been disclosed in writing to the other Company
pursuant hereto; (ii) acquire, dispose of, transfer, lease, license, mortgage,
pledge or encumber any fixed or other substantial assets other than in the
ordinary course of business and consistent with past practices; (iii) incur,
assume or prepay any material indebtedness, liability or obligation or any
other material liabilities or issue any debt securities other than in the
ordinary course of business and consistent with past practices; (iv) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person (other than
a subsidiary) in a material amount other than in the ordinary course of
business and consistent with past practices; (v) make any material loans,
advances or capital contributions to, or investments in, any other person,
other than to subsidiaries, other than in the ordinary course of business and
consistent with past practices; (vi) fail to maintain adequate insurance
consistent with past practices for their
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businesses and properties; or (vii) enter into any contract, agreement,
commitment or arrangement with respect to any of the foregoing.
(d) such Company shall use its best efforts to
preserve intact the business organization of such Company and its subsidiaries,
to keep available the services of its and their present officers and key
employees, and to preserve the goodwill of those having business relationships
with it and their respective subsidiaries; provided, however, that no breach of
this covenant shall be deemed to have occurred if a failure to comply with this
Section 5.1(d) occurs as a result of any matter arising out of the transactions
contemplated by this Agreement or any acquisition proposals made to such
Company or the public announcement thereof;
(e) such Company and its subsidiaries shall not
(i) knowingly take or allow to be taken any action which would jeopardize the
treatment of the transactions contemplated hereby as a pooling of interests for
accounting purposes or (ii) knowingly take or allow to be taken or fail to take
any action which act or omission would jeopardize qualification of the Merger
as a "reorganization" within the meaning of Section 368(a) of the Code; and
(f) such Company and its subsidiaries shall use
all reasonable efforts to prevent any representation or warranty of such
Company herein from becoming untrue or incorrect in any material respect.
5.2 Compensation Plans. During the period from the date
of this Agreement and continuing until the Effective Time, each Company agrees
as to itself and its subsidiaries that it will not, without the prior written
consent of the other Company (except as required by applicable law or pursuant
to existing contractual arrangements or other plans or commitments as otherwise
disclosed to the other Company in writing pursuant hereto or as set forth in
this Agreement) (a) enter into, adopt or amend any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation,
employment, severance or other employee benefit plan, agreement, trust, plan,
fund or other arrangement between such Company and one or more of its officers,
directors or employees, in each case so as to materially increase the benefits
thereunder (collectively, "COMPENSATION PLANS"), (b) grant or become obligated
to grant any increase in the compensation or fringe benefits of directors,
officers or employees (including any such increase pursuant to any Compensation
Plan) or any increase in the compensation payable or to become payable to any
officer, except, with respect to employees other than officers, for increases
in compensation in the ordinary course of business consistent with past
practice, or enter into any contract, commitment or arrangement to do any of
the foregoing, except for normal increases and non-stock benefit changes in the
ordinary course of business consistent with past practice, (c) institute any
new employee benefit, welfare program or Compensation Plan, (d) make any change
in any Compensation Plan or other employee welfare or benefit arrangement or
enter into any employment or similar agreement or arrangement with any
employee, or (e) enter into or renew any contract, agreement, commitment or
arrangement providing for the payment to any director, officer or employee of
such Company of
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compensation or benefits contingent, or the terms of which are materially
altered in favor of such individual, upon the occurrence of any of the
transactions contemplated by this Agreement.
5.3 Current Information. From the date of this Agreement
to the Effective Time, each Company will cause one or more of its designated
representatives to confer on a regular and frequent basis (not less than
semi-monthly) with representatives of the other Company and to report the
general status of its ongoing operations and to deliver to the other Company
(not less than quarterly) unaudited consolidated balance sheets and related
consolidated statements of income, stockholders equity and cash flows for the
period since the last such report. Each Company will promptly notify the
others of any material change in the normal course of business or in its or its
subsidiaries' properties.
5.4 Letters of Company's Accountants. Each of Urohealth
and Imagyn shall use all reasonable efforts to cause to be delivered to itself
and to the other Company a so-called "comfort" letter of such Company's
independent auditors with respect to the financial statements and other
financial information of such Company included in the Registration Statement,
each such letter dated a date within two business days before the date on which
the Registration Statement shall become effective and addressed to each of
Urohealth and Imagyn, and in a form reasonably approved by the recipients prior
to delivery thereof.
5.5 Legal Conditions to Merger. Each Company shall, and
shall cause its subsidiaries to, use all reasonable efforts (a) to take, or
cause to be taken, all actions necessary to comply promptly with all legal
requirements which may be imposed on such party or its subsidiaries with
respect to the Merger and to consummate the transactions contemplated by this
Agreement, subject to the appropriate vote or consent of stockholders and (b)
to obtain (and to cooperate with the other party to obtain) any consent,
authorization, order or approval of, or any exemption by, any governmental
entity and or any other public or private third party which is required to be
obtained or made by such party or any of its subsidiaries in connection with
the Merger and the transactions contemplated by this Agreement; provided,
however, that a party shall not be obligated to take any action pursuant to the
foregoing if the taking of such action or such compliance or the obtaining of
such consent, authorization, order, approval or exemption would, in such
party's reasonable opinion, (i) be materially burdensome to such party and its
subsidiaries taken as a whole or impact in such a materially adverse manner the
economic or business benefits of the transactions contemplated by this
Agreement as to render inadvisable the consummation of the Merger or (ii)
result in the imposition of a condition or restriction on such party or on the
Surviving Corporation of the type referred to in Section 5.1(e). Each Company
will promptly cooperate with and furnish information to the others in
connection with any such burden suffered by, or requirement imposed upon, any
of them or any of their subsidiaries in connection with the foregoing.
5.6 Affiliates. Prior to the mailing to the stockholders
of each Company of the Proxy Statement, each Company shall deliver to the other
a letter identifying all persons who are,
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at the time this Agreement is submitted for approval to the stockholders of
such Company, "affiliates" of such Company, for purposes of Rule 145 under the
Securities Act. Each Company shall use all reasonable efforts to cause each
person named in the letter delivered by it to deliver to the other Companies at
least 10 days prior to the Closing Date a written "affiliates" agreement, in
customary form, restricting the disposition by such person of the Urohealth
Shares to be received by such person in the Merger, as contemplated by Rule 145
under the Securities Act and as required to qualify the Merger for pooling of
interest accounting treatment and tax-free reorganization treatment under the
Code. Certificates surrendered for exchange by any person constituting an
"affiliate" of a Company within the meaning of Rule 145 under the Securities
Act shall not be exchanged by the Exchange Agent for Urohealth Shares pursuant
to Section 3.2 until Urohealth has received such agreement described in the
preceding sentence.
5.7 Advice of Changes; Government Filings. Each party
shall confer on a regular and frequent basis with the other, report on
operational matters and promptly advise the other orally and in writing of any
change or event having, or which, insofar as can reasonably be foreseen, could
have, a Material Adverse Effect on such party or which would cause or
constitute a material breach of any of the representations, warranties or
covenants of such party contained herein. Each Company shall file all reports
required by regulation to be filed by it with the SEC between the date of this
Agreement and the Effective Time and shall deliver to the other party copies of
all such reports promptly after the same are filed. Except where prohibited by
applicable statutes and regulations, each party shall promptly provide the
other (or its counsel) with copies of all other filings made by such party with
any state or federal government entity in connection with this Agreement or the
transactions contemplated hereby.
5.8 Accounting Methods. No Company shall change its
methods of accounting in effect at December 31, 1996, except as required by
changes in generally accepted accounting principles as concurred in by such
party's independent auditors or except as required under Section 6.12 hereof.
No Company will change its fiscal year.
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ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Access and Information.
(a) Each Company and their respective
subsidiaries shall each afford to the other and to the other's financial
advisors, legal counsel, accountants, consultants and other representatives
access during normal business hours throughout the period from the date hereof
to the Effective Time to all of its books, records, properties, facilities,
personnel commitments and records (including but not limited to Tax Returns)
and, during such period, each shall furnish promptly to the other all
information concerning its business, properties and personnel as such other
party may reasonably request.
(b) All information furnished by any Company to
another Company pursuant hereto shall be treated as the sole property of the
party furnishing the information until consummation of the Merger contemplated
hereby. The parties will hold any such information that is nonpublic in
confidence to the extent required by, and in accordance with the Mutual
Nondisclosure Agreement dated as of January 24, 1997 between Urohealth and
Imagyn (the "CONFIDENTIALITY AGREEMENT") and such Confidentiality Agreement
shall survive the termination of this Agreement.
6.2 Acquisition Proposals. Each Company and their
respective subsidiaries will not, and will use their best efforts to cause
their respective directors, officers, employees, financial advisors, legal
counsel, accountants and other agents and representatives (for purposes of this
Section 6.2 only, being referred to as "affiliates") not to, initiate, solicit
or encourage, directly or indirectly, or, except to the extent required in the
exercise of the fiduciary duties of its Board of Directors under applicable law
as advised by outside legal counsel, engage or participate in negotiations
concerning, provide any nonpublic information or data to or have any
discussions with any person other than a party hereto or their affiliates
relating to, any acquisition, tender offer (including a self-tender offer),
exchange offer, merger, consolidation, acquisition of beneficial ownership of
or the right to vote securities representing 10% or more of the total voting
power of such entity or any of its subsidiaries, dissolution, business
combination, purchase of all or any significant portion of the assets or any
division of, or any equity interest in, such entity or any subsidiary, or
similar transaction other than the Merger (such proposals, announcements, or
transactions being referred to as "ACQUISITION PROPOSALS"). Each Company will
promptly notify the others orally and in writing if any such Acquisition
Proposal (including the terms thereof and identity of the persons making such
proposals) is received and furnish to the other parties hereto a copy of any
written proposal.
6.3 Registration Statement. As promptly as practicable,
the Companies shall prepare and file with the SEC the Registration Statement
with respect to the Urohealth Shares to be issued in the Merger hereunder and
use their best efforts to have the Registration Statement
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declared effective. Each Company shall furnish all information concerning such
Company and the holders of its capital stock and shall take such other action
as may be reasonably requested in connection with such Registration Statement
and issuance of Urohealth Shares.
6.4 Proxy Statements; Stockholder Approvals.
(a) Urohealth and Imagyn acting through their
respective Boards of Directors, shall, in accordance with applicable law and
their Certificates of Incorporation and Bylaws:
(i) promptly and duly call, give
notice of, convene and hold as soon as practicable following the date upon
which the Registration Statement becomes effective a meeting of their
respective stockholders for the purpose of voting to approve and adopt this
Agreement and shall use their respective best efforts, except to the extent the
Board of Directors reasonably believe is otherwise required by its fiduciary
duty, to obtain such stockholders approval;
(ii) except to the extent the Board
of Directors reasonably believes is otherwise required by its fiduciary duty,
recommend approval and adoption of this Agreement by the stockholders of such
Company, and include in the Proxy Statement such recommendations, and take all
lawful action to solicit such approvals; and
(iii) as promptly as practicable,
prepare and file with the SEC a preliminary Proxy Statement and, after
consultation with each other, respond to any comments of the SEC with respect
to the preliminary Proxy Statement and cause the definitive Proxy Statement to
be mailed to their respective stockholders. Whenever any event occurs which
should be set forth in an amendment or a supplement to the Proxy Statement or
any filing required to be made with the SEC, each party will promptly inform
the other and will cooperate in filing with the SEC and/or mailing to
stockholders such amendment or supplement. The Proxy Statement, and all
amendments and supplements thereto, shall comply with applicable law and be in
form and substance reasonably satisfactory to each such Company.
(b) Urohealth as the sole shareholder of
Urohealth Sub, in accordance with applicable law and its Certificate of
Incorporation and Bylaws will on or prior to the date of the stockholder
meeting referred to in Section 6.4(a)(i), approve the Merger.
6.5 Stock Exchange Listing. The Companies shall take
such action as may be necessary or desirable to include the Urohealth Shares to
be issued pursuant to the Merger on The Nasdaq Stock Market National Market.
6.6 Antitrust Laws. As promptly as practicable, each
Company shall make all filings and submissions under the HSR Act as may be
reasonably required to be made in
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connection with this Agreement and the transactions contemplated hereby.
Subject to Section 6.1 hereof, each Company will furnish to the others such
information and assistance as the other may reasonably request in connection
with the preparation of any such filings or submissions. Subject to Section
6.1 hereof, each Company will provide the others with copies of all
correspondence, filings or communications (or memoranda setting forth the
substance thereof) between such party or any of its representatives, on the one
hand, and any governmental agency or authority or members of their respective
staffs, on the other hand, with respect to this Agreement and the transactions
contemplated hereby.
6.7 S-8 Registration Statement. Urohealth agrees that as
soon as reasonably practicable after the Effective Time it will cause to be
filed one or more Registration Statements on Form S-8 under the Securities Act,
or amendments to any existing Registration Statements on Form S-8 covering
stock options and warrants, to register the Urohealth Shares issuable upon
exercise of the Imagyn converted options or warrants, and at or prior to the
Effective Time, Urohealth shall take all corporate action necessary to reserve
for issuance a sufficient number of Urohealth Shares for delivery upon exercise
of the options and warrants, conversion of convertible securities or otherwise
pursuant to other contractual commitments assumed pursuant to Section 3.3
hereof. The consummation of the Merger shall not be treated as a termination
of employment for purposes of any Imagyn option plan.
6.8 Public Announcements. So long as this Agreement is
in effect, each Company agrees that it will obtain the approval of the other
parties prior to issuing any press release and will use its best efforts to
consult with the others before otherwise making any public statement or
responding to any press inquiry with respect to this Agreement or the
transactions contemplated hereby, except as may be required by law or any
governmental agency if required by such agency or the rules of the National
Association of Securities Dealers, Inc.
6.9 Expenses. Except as provided in Section 8.3(d)
below, whether or not the Merger is consummated, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby and thereby shall be paid by the party incurring such expenses.
6.10 Additional Agreements.
(a) Subject to the terms and conditions herein
provided, including without limitation those set forth in the proviso to
Section 5.5 hereof, each of the parties hereto agrees to use all reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including using all reasonable efforts to obtain all necessary
waivers, consents and approvals, and to effect all necessary registrations and
filings. In case at any time after the Effective Time any further
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action is necessary or desirable to carry out the purposes of this Agreement,
the proper officers and/or directors of the Companies shall take all such
necessary action.
(b) Subject to the terms and conditions herein
provided, including without limitation those set forth in the proviso to
Section 5.5 hereof, each Company will cooperate with the others and use all
reasonable efforts to prepare all necessary documentation to effect promptly
all necessary filings and to obtain all necessary permits, consents, approvals,
orders and authorizations of or any exemptions by, all third parties and
governmental bodies necessary to consummate the transactions contemplated by
this Agreement.
(c) Each party will keep the other party
apprised of the status of any inquiries made of such party by the Federal Trade
Commission, the Department of Justice, the SEC, or any other governmental
agency or authority or members of their respective staffs with respect to this
Agreement or the transactions contemplated herein.
6.11 Company Accruals and Reserves. Prior to the
Closing Date, each Company shall review and, to the extent determined necessary
or advisable, consistent with generally accepted accounting principles and the
accounting rules, regulations and interpretations of the SEC and its staff,
modify and change its accrual, reserve and provision policies and practices to
(a) reflect the Surviving Corporation's plans with respect to the conduct of
the Company's business following the Merger and (b) make adequate provision
(for the costs and expenses relating thereto) so as to be applied consistently
on a mutually satisfactory basis with those of the other Company. The parties
agree to cooperate in preparing for the implementation of the adjustments
contemplated by this Section 6.11. Notwithstanding the foregoing, (i) no
Company shall be obligated to take in any respect any such action pursuant to
this Section 6.11 (other than pursuant to the preceding sentence) unless and
until the other Company acknowledges that all conditions to their obligations
to consummate the Merger have been satisfied and (ii) no adjustments made
solely as a result of this Section 6.11 shall change the Exchange Ratio.
6.12 Director and Officer Indemnification. All rights to
indemnification existing in favor of the directors, officers and agents of
Imagyn (the "INDEMNIFIED PARTIES") under the provisions existing on the date
hereof of any of Imagyn's Certificate of Incorporation, Bylaws and
indemnification agreements shall survive the Effective Time for at least three
years thereafter (including any directors' and officers' liability insurance
heretofore maintained by Imagyn) and Urohealth agrees to indemnify the
Indemnified Parties to the full extent required or permitted by Imagyn under
the provisions existing on the date hereof of the Certificate of Incorporation,
Bylaws and indemnification agreements of Imagyn.
6.13 Voting Agreements. Concurrently with the execution
and delivery of this Agreement, each of the Companies shall have delivered to
the other voting agreements to vote in
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favor of the Merger executed by the five officers and/or directors of such
Company holding or representing the largest number of voting shares of such
Company.
6.14 Certain Employment Arrangements.
(a) At or prior to the Effective Time, Xxxxxxxx X. Xxxxx ("XXXXX")
shall receive a lump-sum severance payment in an amount equal to his annual
salary, such payment to be in cancellation of Executive's existing rights with
respect to severance under his employment agreement. At the Effective Time,
Imagyn and Xxxxx shall have executed a Non-competition Agreement in the form
attached hereto as Exhibit 6.14(a). Such Non-competition Agreement shall
restrict Xxxxx from engaging in a business that is competitive with Imagyn's
current business for a 12 month term after the Effective Time and provide for a
payment of $120,000 on January 2, 1998 and $120,000 on June 30, 1998.
(b) At or prior to the Effective Time, Urohealth and each of
Xxxxxxxxxxx Xxxx, Xxxxx Xxxx, Xxxxxx Xxxxxx-Xxxxxx, Xxxxxxxx Xxxxxx, X.X.
XxxXxx, and Xxxxx Xxxxxx shall have executed an employment agreement
substantially in the form of Exhibit 6.14(b) hereto. Such agreement shall
provide for the employment of such person for a 12-month term at such person's
current salary with severance for the balance of such 12-month period in the
event of termination of such person's employment by Urohealth without cause, or
termination of employment by such person for "good reason." Any of the
foregoing individuals employed by Imagyn at the Effective Time who are not
offered, or do not accept, employment with Imagyn or Urohealth following the
Effective Time shall at the Effective Time receive a severance payment in an
amount equal to his or her annual salary.
(c) Urohealth shall assume the agreements between Imagyn and each
of Imagyn's two regional managers and one director of national accounts.
(d) Urohealth shall assume the employment agreement, dated
December 12, 1996, as modified by a letter dated February 26, 1997, by and
between Imagyn and Xxxx Xxxxx. Urohealth shall assume the employment agreement
dated January 10, 1997 between Imagyn and Xxxxxx Xxxxx.
(e) Each individual listed in the disclosure letter and
referencing this Section 6.14 (e) who remains employed by Imagyn through and
including the Effective Time shall receive under a retention program both (i)
as soon as practicable after the Effective Time, an amount equal to two times
such person's current monthly salary and (ii) in the event that such person's
employment is terminated without cause within 120 days after the Effective
Time, such person shall be entitled to receive an amount equal to three times
such person's current monthly salary.
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(f) Urohealth shall satisfy Imagyn's obligations under the Special
Incentive Program for Sales Representatives, U.S. Sales Managers and
International Sales Managers, which program shall terminate at the Effective
Time.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.1 Conditions to All Companies' Obligation to Effect the
Merger. The respective obligations of all Companies to effect the transactions
contemplated herein shall be subject to the satisfaction at or prior to the
Effective Time of the following conditions, any one of which may be waived by
all, but not less than all, Companies:
(a) Any waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated.
(b) The Registration Statement shall have become
effective in accordance with the provisions of the Securities Act.
(c) This Agreement and the transactions
contemplated hereby shall have been approved and adopted by the requisite vote
of the stockholders of each Company in accordance with applicable law.
(d) No preliminary or permanent injunction or
other order by any federal, state or foreign court of competent jurisdiction
which prohibits the consummation of the Merger shall have been issued and
remain in effect. No statute, rule, regulation, executive order, stay, decree,
or judgment shall have been enacted, entered, issued, promulgated or enforced
by any court or governmental authority which prohibits or restricts the
consummation of the Merger. Other than the filing of a Certificate of Merger
with the Secretary of State of Delaware, all authorizations, consents, orders
or approvals of, or declarations or filings with, and all expirations of
waiting periods imposed by, any governmental entity (all of the foregoing,
"CONSENTS") which are necessary for the consummation of the Merger, other than
Consents the failure to obtain which would have no material adverse effect on
the consummation of the Merger or on the Surviving Corporation and its
subsidiaries, taken as a whole, shall have been filed, occurred or been
obtained (all such permits, approvals, filings and consents and the lapse of
all such waiting periods being referred to as the "REQUISITE REGULATORY
APPROVALS") and all such Requisite Regulatory Approvals shall be in full force
and effect. All state securities or blue sky permits and other authorizations
necessary to issue the Urohealth Shares in exchange for the Imagyn Shares and
to consummate the Merger shall have been received.
(e) There shall not be any action taken, or any
statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger, by any federal or state governmental entity which, in
connection with the grant of a Requisite Regulatory Approval,
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imposes any condition or restriction upon the Surviving Corporation or its
subsidiaries (or, in the case of any disposition of assets required in
connection with such Requisite Regulatory Approval, upon any Company or its
subsidiaries), including, without limitation, requirements relating to the
disposition of assets, which in any such case would so materially adversely
impact the economic or business benefits of the transactions contemplated by
this Agreement as to render inadvisable the consummation of the Merger.
(f) The aggregate amount of cash required to be
paid on account of all Excluded Shares and with respect to any cash payments
for fractional Urohealth Shares pursuant to Section 3.4, shall not exceed ten
percent (10%) of the value (determined in accordance with APB Opinion No. 16)
of the Urohealth Shares issuable in exchange for Imagyn Shares at the Effective
Time.
(g) Each Company shall have received a letter,
dated the Closing Date, of its regularly retained independent auditors, and in
form and substance reasonably satisfactory to it to the effect that the Merger
qualifies for "pooling of interests" treatment for financial reporting purposes
and that such accounting treatment is in accordance with generally accepted
accounting principles.
7.2 Conditions to Obligation of Each Company to Effect
the Merger. The obligation of each Company to effect the Merger shall be
further subject to the satisfaction at or prior to the Effective Time of the
following additional conditions, which may be waived by such Company:
(a) Each of the other Companies shall have
performed in all material respects its obligations under this Agreement
required to be performed by it at or prior to the Effective Time and the
representations and warranties of the other Companies contained in this
Agreement shall be true and correct in all material respects at and as of the
Effective Time as if made at and as of such time, except as contemplated by
this Agreement, and each Company shall have received a certificate of the
Chairman of the Board, the President or an Executive Vice President or a Senior
Vice President of each of the other Companies as to the satisfaction of this
condition.
(b) Each Company shall have received an opinion
of its outside counsel, dated as of the Effective Time, substantially to the
effect that, on the basis of facts, representations, and assumptions set forth
in such opinion which are consistent with the state of facts existing at the
Effective Time, the Merger applicable to such Company will be treated for
federal income tax purposes as a reorganization within the meaning of Section
368(a) of the Code and that such Company will be a party to the reorganization
within the meaning of Section 368(b) of the Code. In rendering any such
opinion, such counsel may require and, to the extent they deem necessary and
appropriate, may rely upon representations made in certificates of each
Company, their affiliates and principal shareholders. In addition, each
Company shall
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have received the opinion of its, and the other Companies' respective, outside
counsel dated the Closing Date and addressed to itself and all other Companies
covering the additional matters set forth in Exhibit 7.2(b).
(c) Each Company shall have obtained the consent
or approval of each person whose consent or approval shall be required in
connection with the transactions contemplated hereby under any loan or credit
agreement, note, mortgage, indenture, lease, license or other agreement or
instrument, except those for which failure to obtain such consents and
approvals would not, individually or in the aggregate, have a material adverse
effect on the Surviving Corporation and its subsidiaries taken as a whole or
upon the consummation of the transactions contemplated hereby.
7.3 Conditions to the Obligations of Urohealth and Urohealth Sub
to Effect the Merger. The obligation of Urohealth and Urohealth Sub to effect
the Merger shall be subject to the resolution of the matter described in the
second paragraph of page eight of the disclosure letter dated the date hereof
of Imagyn, such resolution to be to the satisfaction of Urohealth and with the
prior approval of Urohealth.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated and
the Merger contemplated hereby abandoned at any time prior to the Effective
Time, whether before or after approval by the stockholders of the Companies:
(a) By mutual written consent of all of the
Companies.
(b) By any Company if the Merger shall not have
been consummated on or before September 30, 1997.
(c) By any Company if there shall have been any
material breach of a material obligation of another Company hereunder and, if
such breach is curable, such default shall have not been remedied within 10
days after receipt by the other Company, as the case may be, of notice in
writing from such Company specifying such breach and requesting that it be
remedied; provided, that such 10-day period shall be extended for so long as
the other Company shall be making diligent attempts to cure such default.
(d) By any Company if any court of competent
jurisdiction in the United States or other United States governmental body
shall have issued an order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Merger and such order,
decree, ruling or any other action shall have become final and non-appealable.
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(e) By any Company upon written notice to the
others if any approval of the stockholders of a Company required for the
consummation of the Merger submitted for their approval shall not have been
obtained by reason of the failure to obtain the required vote at a duly held
meeting of stockholders or at any adjournment thereof.
(f) By Imagyn, if it shall receive any
Acquisition Proposal after the date hereof from a third party or parties and
the Board of Directors of Imagyn shall have determined in good faith that in
the exercise of its fiduciary duties to the stockholders of Imagyn that Imagyn
must pursue such Acquisition Proposal.
8.2 Effect of Termination.
In the event of termination of this Agreement as
provided above, this Agreement shall forthwith become of no further effect and,
except for a termination resulting from a breach by a party of this Agreement,
there shall be no liability or obligation on the part of any Company or their
respective officers or directors (except as set forth in Section 6.1(b) hereof
and except for Sections 6.10, 8.3, 9.2 and 9.6 hereof which shall survive the
termination). Nothing contained in this Section 8.2 shall relieve any party
from liability for willful breach of this Agreement that results in termination
of this Agreement. Upon request therefor, each party will redeliver all
documents, work papers and other material of any other party relating to the
transactions contemplated hereby, whether obtained before or after the
execution hereof, to the party furnishing same.
8.3 Cancellation Fee.
(a) If at any time (i) Imagyn shall have entered
into an agreement, including without limitation an agreement in principle, with
respect to an Acquisition Proposal other than the Merger contemplated by this
Agreement; (ii) Imagyn shall breach any of the provisions of Section 6.2 above
or shall recommend or approve an Acquisition Proposal pursuant to Section 6.2;
or (iii) any person, entity or group of persons or entities acting in concert
shall acquire beneficial ownership of more than fifty percent (50%) of the
voting securities of Imagyn as a result of an Acquisition Proposal and, in the
case of (i) or (ii), this Agreement is terminated by Imagyn pursuant to Section
8.1(c), Section 8.1(e), or Section 8.1(f); then Urohealth shall be entitled to
be paid by Imagyn a fee in cash or immediately available funds of Three Million
Five Hundred Thousand U.S. Dollars ($3,500,000) (the "CANCELLATION FEE").
(b) Imagyn shall pay to Urohealth the
Cancellation Fee provided in Section 8.3(a) above within ten (10) days of
written demand therefor by Urohealth. The payment of the Cancellation Fee
shall be conditioned on there being no material breach of the obligations of
Urohealth and Urohealth Sub hereunder. If Imagyn fails to pay any amount due
Urohealth pursuant to this Section 8.3 when due, Imagyn shall pay interest
thereon, from the date due until the date paid in full, at the Prime Rate as
announced from time to time by Bank of America or
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any successor thereto (the "PRIME RATE") and shall reimburse Urohealth for all
reasonable attorneys' fees and other costs and expenses incurred by Urohealth
in collecting such amount from Imagyn.
(c) Notwithstanding anything herein to the
contrary, payment of the Cancellation Fee as provided in subsections (a) and
(b) of this Section 8.3 shall constitute full settlement of any and all
liabilities and obligations of Imagyn under this Agreement, except for
liabilities arising from fraud or intentional misrepresentation with respect to
this Agreement by Imagyn and except as provided in subsection (d).
(d) In the event that either Imagyn or Urohealth
terminates this Agreement pursuant to Section 8.1(c) hereof, then the
non-terminating party shall pay to the terminating party One Million U.S.
Dollars ($1,000,000) representing full payment of the terminating party's
reasonable out-of-pocket expenses incurred in connection with the negotiation,
execution and performance of this Agreement ("EXPENSE REIMBURSEMENT PAYMENT");
provided, however, that the terminating party shall not be entitled to any
Expense Reimbursement Payment pursuant to this Section 8.3(d) if at the time of
termination the non-terminating party also would have been entitled to
terminate this Agreement pursuant to Section 8.1(c). In addition, if the
stockholders of Urohealth or Imagyn fail to approve the Merger and this
Agreement is terminated by Imagyn or Urohealth pursuant to Section 8.1(e), then
the party whose stockholders have so failed to approve the Merger shall pay to
the other party thereto the Expense Reimbursement Payment; provided, however,
that no such Expense Reimbursement Payment shall be due under this sentence if
the stockholders of the party which would have otherwise been entitled to such
Expense Reimbursement Payment have previously failed to approve the Merger at
the stockholders meeting called for that purpose; and provided, further that
the Expense Reimbursement Payment shall not be payable in the event that the
Cancellation Fee is payable.
8.4 Amendment. This Agreement may be amended by action
taken at any time before or after approval hereof by the stockholders of the
Companies, but, after any such approval, no amendment shall be made which
alters the Exchange Ratio or which in any way materially adversely affects the
rights of such stockholders, without the further approval of such stockholders.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
8.5 Waiver. At any time prior to the Effective Time, the
parties hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) 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 an instrument in writing signed on behalf of such
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party. Such waiver shall not operate as a waiver of, or estoppel with respect
to, any subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 Survival of Representations, Warranties and
Agreements. No representations, warranties or agreements contained herein
shall survive beyond the Effective Time except that the agreements contained in
Sections 3.1, 3.2, 3.3, 3.4, 3.5, 6.7, 6.9, 6.13, 9.1, 9.6 and 9.7 hereof, and
all other agreements of Urohealth, shall survive beyond the Effective Time.
9.2 Brokers. Urohealth represents and warrants to Imagyn
that, except for its financial advisor Xxxxx Xxxxxxx Inc., no broker, finder or
financial advisor is entitled to any brokerage, finder's or other fee or
commission in connection with the Merger or the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Urohealth.
Imagyn represents and warrants to Urohealth that, except for its financial
advisor Xxxxxx, Read & Co. Inc., no broker, finder or financial advisor is
entitled to any brokerage, finder's or other fee or commission in connection
with the Merger or the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Imagyn.
9.3 Notices. All notices, claims, demands and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally or by telex or telecopy or mailed by registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) If to Urohealth, to:
Urohealth Systems, Inc.
0 Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: President and Chief
Executive Officer
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with a copy to:
Xxxxxxxx & Xxxxxxxx LLP
00000 XxxXxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Xx., Esq.
(b) If to Imagyn, to:
Imagyn Medical, Inc.
00000 Xx Xxx Xxxx
Xxxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: President and Chief
Executive Officer
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxxxxx X. Xxxxxxxx, Esq.
(c) If to Urohealth Sub to:
Xxxxxxxx & Xxxxxxxx LLP
00000 XxxXxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Xx.
and with a copy to all other Companies as aforesaid.
9.4 Descriptive Headings. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
9.5 Entire Agreement; Assignment. This Agreement
(including the Exhibits, and other documents and instruments referred to
herein) and the Confidentiality Agreement (a) constitute the entire agreement
and supersede all other prior agreements and understandings, both written and
oral, among the parties or any of them, with respect to the subject matter
hereof; (b) are not intended to confer upon any other person any rights or
remedies hereunder; and (c) shall not be assigned by operation of law or
otherwise.
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9.6 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware without
giving effect to the provisions thereof relating to conflicts of law.
9.7 Parties in Interest. Nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
rights, benefit or remedies of any nature whatsoever or by reason of this
Agreement.
9.8 Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed to be an original but all
of which shall constitute one and the same agreement.
9.9 Validity. The invalidity or unenforceability of any
provision of this Agreement shall not effect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
9.10 Jurisdiction and Venue. Each party hereto hereby
agrees that any proceeding relating to this Agreement and the Merger shall be
brought in a state court of Delaware. Each party hereto hereby consents to
personal jurisdiction in any such action brought in any such Delaware court,
consents to service of process by registered mail made upon such party and such
party's agent and waives any objection to venue in any such Delaware court or
to any claim that such Delaware court is an inconvenient forum.
9.11 Investigation. The respective representations and
warranties of each Company contained herein or in the certificates or other
documents delivered prior to the Closing shall not be deemed waived or
otherwise affected by any investigation made by any party hereto.
9.12 Consents. For purposes of any provision of this
Agreement requiring, permitting or providing for the consent of any or Company,
the written consent of the Chief Executive Officer of a Company shall be
sufficient to constitute such consent.
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IN WITNESS WHEREOF, each Company has caused this Agreement to
be executed on its behalf by its officers thereunto duly authorized, all as of
the date first above written.
UROHEALTH SYSTEMS, INC.
By: /s/ XXXXXXX X. XXXXXXX
------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President and
Chief Executive Officer
Attest
/s/ XXXXX X. XXXXXXX
-----------------------------
Xxxxx X. Xxxxxxx
Secretary
UROHEALTH ACQUISITION CORPORATION
By: /s/ XXXXXXX X. XXXXXXX
------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President and
Chief Executive Officer
Attest
/s/ XXXXX X. XXXXXXX
-----------------------------
Xxxxx X. Xxxxxxx
Secretary
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IMAGYN MEDICAL, INC.
By: /s/ XXXXXXXX X. XXXXX
------------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: President and
Chief Executive Officer
Attest
/s/ J. Xxxxx XxXxxxx
---------------------------
Secretary
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