EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
COLORADO MEDTECH, INC.,
CIVCO HOLDING, INC.
AND
CMT MERGERCO, INC.
DATED AS OF MARCH 12, 2003
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TABLE OF CONTENTS
Page
ARTICLE I THE MERGER.............................................................................................1
1.01 MERGER..........................................................................................1
1.02 EFFECTIVE TIME OF THE MERGER....................................................................1
1.03 ARTICLES OF INCORPORATION AND BY-LAWS OF THE SURVIVING CORPORATION..............................2
1.04 BOARD OF DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION....................................2
1.05 CONVERSION OF SHARES............................................................................2
1.06 DISSENTERS' RIGHTS..............................................................................3
1.07 STOCK OPTIONS...................................................................................4
1.08 PAYMENT FOR SHARES..............................................................................4
1.09 NO FURTHER RIGHTS OR TRANSFERS..................................................................6
ARTICLE II CLOSING...............................................................................................6
2.01 GENERALLY.......................................................................................6
2.02 DELIVERIES AT THE CLOSING.......................................................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES.......................................................................6
3.01 REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................................................6
3.02 REPRESENTATIONS AND WARRANTIES OF BUYER AND BUYER SUBSIDIARY...................................22
ARTICLE IV CONDUCT AND TRANSACTIONS BEFORE THE EFFECTIVE TIME...................................................24
4.01 OPERATION OF BUSINESS OF THE COMPANY UNTIL EFFECTIVE TIME......................................24
4.02 SHAREHOLDERS' MEETING; PROXY MATERIAL..........................................................26
4.03 NO SHOPPING....................................................................................27
4.04 ACCESS TO INFORMATION..........................................................................27
4.05 AMENDMENT OF THE COMPANY'S EMPLOYEE PLANS......................................................28
4.06 HSR ACT........................................................................................28
4.07 CERTAIN RESIGNATIONS...........................................................................28
4.08 CONFIDENTIALITY AGREEMENT......................................................................28
4.09 OPTIONS........................................................................................28
4.10 RIGHTS AGREEMENT ..............................................................................28
4.11 INSURANCE .....................................................................................28
4.12 OTHER ACTIONS .................................................................................29
4.13 REASONABLE BEST EFFORTS; NOTIFICATION .........................................................29
4.14 SEC REPORTS; FINANCIAL STATEMENTS..............................................................30
ARTICLE V CONDITIONS PRECEDENT..................................................................................30
5.01 CONDITIONS TO THE OBLIGATIONS OF BUYER AND BUYER SUBSIDIARY....................................30
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5.02 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY...................................................32
ARTICLE VI CONDUCT AND TRANSACTIONS AFTER THE EFFECTIVE TIME....................................................33
6.01 EMPLOYEE MATTERS...............................................................................33
6.02 INDEMNIFICATION OF COMPANY DIRECTORS, OFFICERS AND EMPLOYEES...................................33
6.03 DIRECTORS AND OFFICERS LIABILITY INSURANCE.....................................................34
ARTICLE VII TERMINATION AND ABANDONMENT.........................................................................34
7.01 GENERALLY......................................................................................34
7.02 PROCEDURE AND EFFECT OF TERMINATION AND ABANDONMENT............................................35
ARTICLE VIII MISCELLANEOUS PROVISIONS...........................................................................35
8.01 TERMINATION OF REPRESENTATIONS AND WARRANTIES..................................................35
8.02 AMENDMENT AND MODIFICATION.....................................................................35
8.03 WAIVER OF COMPLIANCE; CONSENTS.................................................................35
8.04 EXPENSES AND TERMINATION FEE...................................................................36
8.05 INDEMNIFICATION ...............................................................................37
8.06 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS........................................................38
8.07 ADDITIONAL AGREEMENTS..........................................................................38
8.08 NOTICES........................................................................................38
8.09 ASSIGNMENT.....................................................................................39
8.10 INTERPRETATION.................................................................................39
8.11 GOVERNING LAW..................................................................................40
8.12 COUNTERPARTS...................................................................................40
8.13 HEADINGS; INTERNAL REFERENCES..................................................................40
8.14 ENTIRE AGREEMENT...............................................................................40
8.15 SEVERABILITY...................................................................................40
8.16 DISCLOSURE SCHEDULE............................................................................40
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger is entered into on March 12, 2003, by
and among
Colorado MEDtech, Inc., a
Colorado corporation (the "COMPANY"), CIVCO
Holding, Inc., a Delaware corporation ("BUYER"), and CMT Mergerco, Inc., a
Colorado corporation and a wholly owned subsidiary of Buyer ("BUYER SUBSIDIARY"
and, together with the Company, sometimes referred to as the "CONSTITUENT
CORPORATION").
RECITALS
Buyer desires to acquire the Company by effecting a merger (the
"MERGER") of Buyer Subsidiary with and into the Company under the terms hereof,
whereby each Company shareholder ("COMPANY SHAREHOLDER") will receive cash for
all of the outstanding shares of capital stock of the Company owned by such
shareholder.
The Board of Directors of each of the Constituent Corporations deems
the Merger desirable and in the best interests of the shareholders of the
respective Constituent Corporations.
AGREEMENT
Now, therefore, in consideration of the premises and of the mutual
covenants, representations, warranties, and agreements herein contained, the
parties hereby agree as follows:
ARTICLE I
THE MERGER
1.01 MERGER. At the Effective Time (as defined in Section 1.02), and in
accordance with the terms of this Agreement and the
Colorado Business
Corporation Act (the "
COLORADO ACT"), Buyer Subsidiary shall be merged with and
into the Company, the separate corporate existence of Buyer Subsidiary shall
thereupon cease, and the Company shall be the surviving corporation in the
Merger (sometimes referred to as the "SURVIVING CORPORATION"). At the Effective
Time, the Merger shall have the other effects provided in the applicable
provisions of the
Colorado Act.
1.02 EFFECTIVE TIME OF THE MERGER. Subject to, and promptly following
(but not more than one business day after (unless the Company and Buyer shall
otherwise mutually agree)), the receipt of the vote of the shareholders of the
Company approving this Agreement and the satisfaction or waiver of all other
conditions to the consummation of the Merger set forth in Article V of this
Agreement, the Company and Buyer Subsidiary shall execute in the manner required
by the
Colorado Act and deliver for filing to the Secretary of State of the
State of
Colorado articles of merger with respect to the Merger ("ARTICLES OF
MERGER"). The Merger shall become effective upon the filing of the Articles of
Merger with the
Colorado Secretary of State in accordance with Section 0-000-000
of the Colorado Act. The term "EFFECTIVE TIME" means the date and time when the
Merger becomes effective.
1.03 ARTICLES OF INCORPORATION AND BY-LAWS OF THE SURVIVING
CORPORATION. The Articles of Incorporation of Buyer Subsidiary in effect
immediately before the Effective Time shall be the Articles of Incorporation of
the Surviving Corporation, until amended in accordance with the laws of the
State of Colorado and such Articles of Incorporation. The By-Laws of Buyer
Subsidiary in effect immediately before the Effective Time shall be the By-Laws
of the Surviving Corporation, until further amended in accordance with the laws
of the State of Colorado, the Articles of Incorporation of the Surviving
Corporation, and such By-Laws.
1.04 BOARD OF DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The
directors of Buyer Subsidiary immediately before the Effective Time shall be the
directors of the Surviving Corporation, each of such directors to hold office,
subject to the applicable provisions of the Articles of Incorporation and
By-Laws of the Surviving Corporation, until the expiration of the term for which
such director was elected and until his or her successor is elected and has
qualified or as otherwise provided in the Articles of Incorporation or By-Laws
of the Surviving Corporation. The officers of Buyer Subsidiary immediately
before the Effective Time shall be the officers of the Surviving Corporation
until their respective successors are chosen and have qualified or as otherwise
provided in the By-Laws of the Surviving Corporation.
1.05 CONVERSION OF SHARES. The manner and basis of converting or
canceling the shares of stock of each of the Constituent Corporations shall be
as follows:
(a) The aggregate purchase price ("PURCHASE PRICE") to be paid
by Buyer as consideration for consummation of the Merger shall equal
(i) $62,500,000, plus (ii) an amount equal to the cash on hand at the
Company and at CIVCO (as defined in Section 3.01(a)) as of the
Effective Time, less (iii) the "Agreed Liabilities" (as defined in (b)
below).
(b) As used in this Section 1.05, "Agreed Liabilities" means
the aggregate of (i) all existing obligations and contingent
obligations of the Company and CIVCO as of the Effective Time other
than liabilities incurred in the ordinary course of CIVCO's business
under the following five (5) categories: accounts payable, accrued
expenses, accrued warranty, accrued salaries and wages (including
obligations of CIVCO under the "CIVCO Incentive Compensation Program FY
2003") and any payments due under that certain Stock Purchase Agreement
dated February 7, 2002 by and among CIVCO Medical Instruments, Co.,
Inc., the Company, Xxxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxxxx III, and
(ii) the amount by which the working capital balance of CIVCO (defined
for purposes of this Section 1.05(b) as accounts receivable (net), plus
inventory and prepaid expenses (other), less accounts payable, accrued
expenses, accrued warranty and accrued salaries and wages) as of the
Effective Time is less than $4,200,000.
(c) The Company and Buyer agree that they shall jointly
determine the amount of cash on hand for purposes of Section 1.05(a)
and the aggregate Agreed Liabilities no later than one business day
prior to the Effective Time. The methodology for calculating the Agreed
Liabilities shall be substantially the same as used for calculating the
pro forma balance sheet of the Company acknowledged by each of the
Company and Buyer and delivered by the Company and Buyer to each other
as of the date hereof, which
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acknowledgments reference this Section 5.01(c), it being understood
that such pro forma balance sheet is for providing an example of such
methodology only and does not include all liabilities, including
contingent liabilities, that may be included in the Agreed Liabilities
as of the Effective Time. If the Company and Buyer are unable to agree
prior to the day of the Effective Time on the Agreed Liabilities that
would be required to be accrued as of the Effective Time in accordance
with generally accepted accounting principles ("GAAP Agreed
Liabilities"), the Company and Buyer agree that (i) the Effective Time
shall be delayed for a period of ten (10) business days; (ii) the
Company and Buyer shall engage KPMG LLP to determine the GAAP Agreed
Liabilities. In such event, the Company and Buyer shall require KPMG
LLP to finally determine the GAAP Agreed Liabilities within the
foregoing ten-business day period, which determination shall be final
and binding on the parties hereto for all purposes of this Agreement.
(d) At the Effective Time, each share of Common Stock of the
Company, no par value per share ("COMPANY COMMON STOCK"), issued and
outstanding immediately before the Effective Time (other than (i)
Dissenting Shares (as defined below) and (ii) shares of Company Common
Stock held of record by Buyer or Buyer Subsidiary or any other direct
or indirect wholly owned subsidiary of Buyer or the Company immediately
before the Effective Time) shall, by virtue of the Merger and without
any action on the part of the holder thereof, be converted into and
represent the right to receive a per share amount in cash determined by
dividing (i) the Purchase Price by (ii) the number of shares of Company
Common Stock outstanding at the Effective Time (the "MERGER
CONSIDERATION"), without interest.
(e) At the Effective Time, each share of Common Stock of Buyer
Subsidiary, par value $0.01 per share, issued and outstanding
immediately before the Effective Time shall, by virtue of the Merger
and without any action on the part of the holder thereof, be converted
into and exchanged for one fully paid and nonassessable share of Common
Stock of the Surviving Corporation ("SURVIVING CORPORATION COMMON
STOCK"), which shall constitute the only issued and outstanding shares
of capital stock of the Surviving Corporation immediately after the
Effective Time. From and after the Effective Time, each outstanding
certificate theretofore representing shares of Common Stock of Buyer
Subsidiary shall be deemed for all purposes to evidence ownership and
to represent the same number of shares of Surviving Corporation Common
Stock.
(f) At the Effective Time, each share of Company Common Stock
held of record by Buyer or Buyer Subsidiary or any other direct or
indirect wholly owned subsidiary of Buyer or the Company immediately
before the Effective Time shall, by virtue of the Merger and without
any action on the part of the holder thereof, be canceled and cease to
exist, and no payment shall be made with respect thereto.
1.06 DISSENTERS' RIGHTS.
(a) Notwithstanding Section 1.05 hereof, shares of Company
Common Stock issued and outstanding immediately before the Effective
Time, if any, that are held of record or beneficially owned by a person
who has properly exercised and preserved and
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perfected dissenters' rights with respect to such shares under Sections
0-000-000 and 0-000-000 of the Colorado Act and has not withdrawn or
lost such rights ("DISSENTING SHARES") shall not be converted into or
represent the right to receive the Merger Consideration for such
shares, but instead shall be treated in accordance with Section
0-000-000 of the Colorado Act unless and until such person effectively
withdraws or loses such person's right to payment under Article 113 of
the Colorado Act (through failure to preserve or protect such right or
otherwise). If, after the Effective Time, any such person shall
effectively withdraw or lose such right, then each such Dissenting
Share held of record or beneficially owned by such person will
thereupon be treated as if it had been converted into, at the Effective
Time, the right to receive the Merger Consideration, without interest.
(b) Each person holding of record or beneficially owning
Dissenting Shares who becomes entitled, under the provisions of
Sections 0-000-000 and 0-000-000 of the Colorado Act, to payment of the
fair value of such Dissenting Shares shall receive payment therefor
(plus interest determined in accordance with Section 7-113-101(5) of
the Colorado Act) from the Surviving Corporation and/or from the
Disbursing Agent referred to below on behalf of the Surviving
Corporation under such provisions.
(c) The Company shall give Buyer prompt notice upon receipt by
the Company at any time before the Effective Time of any notice of
intent to demand the fair value of any shares of Company Common Stock
under Section 0-000-000 of the Colorado Act and any withdrawal of any
such notice. The Company will not, except with the prior written
consent of Buyer, negotiate, voluntarily make any payment with respect
to, or settle or offer to settle, any such demand at any time before
the Effective Time.
1.07 STOCK OPTIONS. Immediately before the Effective Time, each holder
of a then-outstanding option or warrant (collectively, the "OPTIONS" and
individually, an "OPTION") to purchase shares of Company Common Stock heretofore
granted under any employee stock option or compensation plan of, or other
arrangement with, the Company shall be entitled (whether or not such Option is
then exercisable) to receive in cancellation of such Option, a cash payment from
the Company in an amount equal to the amount, if any, by which the Merger
Consideration exceeds the per-share exercise price of such Option, multiplied by
the number of shares of Company Common Stock then subject to such Option (the
"OPTION SETTLEMENT AMOUNT"), without interest, but subject to all required tax
withholdings by the Company. All Options shall terminate as of the Effective
Time.
1.08 PAYMENT FOR SHARES.
(a) Immediately before the Effective Time, Buyer or Buyer
Subsidiary shall deposit or cause to be deposited in immediately
available funds with Key Bank (acting with Corporate Stock Transfer) as
disbursing agent or any other disbursing agent having capital, surplus
and undivided profits exceeding $500 million that is selected by Buyer
and reasonably satisfactory to the Company (the "DISBURSING AGENT"),
cash in an amount equal to the Purchase Price (such amount being
referred to as the "FUND").
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(b)
(i) At or before the Effective Time, Buyer shall
deliver irrevocable written instructions to the Disbursing
Agent in form and in substance reasonably satisfactory to the
Company to make, out of the Fund, the payments referred to in
Section 1.05(a) in accordance with Section 1.08(c). The Fund
shall not be used for any other purpose, except as provided in
this Agreement.
(ii) In addition, if, after the Effective Time, any
person holding of record or beneficially owning Dissenting
Shares shall become entitled to receive payment for such
Dissenting Shares under Sections 0-000-000 and 0-000-000 of
the Colorado Act, Buyer shall deliver irrevocable written
instructions to the Disbursing Agent to pay either to such
person or to the Surviving Corporation the amount to which
such person is entitled, provided that the payment from the
Fund with respect to any Dissenting Share shall not exceed the
Merger Consideration, and provided further that such
instructions shall, if sums are to be paid to the Surviving
Corporation, be accompanied by a certificate of the Surviving
Corporation that any sums so paid shall be remitted by the
Surviving Corporation to the shareholder or beneficial owner
entitled thereto in accordance with Section 0-000-000 of the
Colorado Act.
(iii) Any amount remaining in the Fund one year after
the Closing Date (as defined below) may be refunded to the
Surviving Corporation, at its option; provided, however, that
the Surviving Corporation shall continue to be liable for any
payments required to be made thereafter under Section 1.05(a)
hereof or Section 0-000-000 of the Colorado Act.
(c) As soon as practicable after the Effective Time, the
Disbursing Agent shall mail to each holder of record (other than Buyer
or Buyer Subsidiary or any other direct or indirect wholly owned
subsidiary of Buyer or the Company) of a certificate or certificates
that, immediately before the Effective Time, represented issued and
outstanding shares of Company Common Stock (other than Dissenting
Shares) a letter of transmittal for return to the Disbursing Agent, and
instructions for use in effecting the surrender of such certificate or
certificates and the receipt of cash for each of such holder's shares
of Company Common Stock under Section 1.05(a). The Disbursing Agent, as
soon as practicable following receipt of any such certificate or
certificates together with a duly executed letter of transmittal and
any other items specified in the letter of transmittal, shall pay by
cashier's check of the Disbursing Agent to the persons entitled thereto
(subject to any required withholding of taxes by the Surviving
Corporation) the amount (rounded up or down to the nearest $0.01)
determined by multiplying the number of shares of Company Common Stock
represented by the certificate or certificates so surrendered by the
Merger Consideration. No interest will be paid or accrued on the cash
payable upon the surrender or any such certificate or certificates.
(d) If any such certificate or certificates shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact
by the person claiming such
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certificate or certificates to have been lost, stolen or destroyed, the
amount to which such person would have been entitled upon presentation
of such certificate or certificates.
1.09 NO FURTHER RIGHTS OR TRANSFERS. At the Effective Time, all shares
of Company Common Stock issued and outstanding immediately before the Effective
Time shall be canceled and cease to exist, and each holder of a certificate or
certificates that represented shares of Company Common Stock issued and
outstanding immediately before the Effective Time shall cease to have any rights
as a shareholder of the Company with respect to the shares of Company Common
Stock represented by such certificate or certificates, except for the right to
surrender such certificate or certificates in exchange for the payment provided
under Section 1.05(a) or to preserve and perfect such holder's right to receive
payment for such holder's shares under Section 0-000-000 of the Colorado Act and
Section 1.06 hereof if such holder has validly exercised and not withdrawn or
lost such right, and no transfer of shares of Company Common Stock issued and
outstanding immediately before the Effective Time shall be made on the stock
transfer books of the Surviving Corporation.
ARTICLE II
CLOSING
2.01 GENERALLY. Subject to Articles V and VII, the closing (the
"CLOSING") of the Merger shall occur on the same business day as, and promptly
following, the special meeting of shareholders of the Company to be called under
Section 4.02, or at such other time as the Company and Buyer may mutually agree
(the "CLOSING DATE"). The Closing shall be held at the offices of Faegre &
Xxxxxx LLP in Boulder, Colorado, or at such other place as the Company and Buyer
may mutually agree.
2.02 DELIVERIES AT THE CLOSING. Subject to Articles V and VII, at the
Closing:
(a) there shall be delivered to Buyer, Buyer Subsidiary, and
the Company the certificates and other documents and instruments the
delivery of which is contemplated under Article V;
(b) the Company and Buyer Subsidiary shall cause the Articles
of Merger to be filed as provided in Section 1.02 and shall take all
other lawful actions and do all other lawful things necessary to cause
the Merger to become effective; and
(c) subject to the right of the Surviving Corporation to
receive a refund of amounts remaining in the Fund one year after the
Closing Date under Section 1.08(b), Buyer or Buyer Subsidiary shall
irrevocably deposit with the Disbursing Agent the amount designated as
the Fund in Section 1.08(a).
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as otherwise
set forth in the disclosure schedule delivered by the Company to Buyer
concurrently with the execution and delivery of this Agreement (the "DISCLOSURE
SCHEDULE") or as otherwise described
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in the SEC Reports (as defined below) filed before the date of this Agreement,
the Company represents and warrants to Buyer and Buyer Subsidiary as follows:
(a) ORGANIZATION, STANDING, QUALIFICATION. The Company and
each of the corporations listed in the Disclosure Schedule under the
heading "Subsidiaries" (collectively, the "SUBSIDIARIES" and
individually, a "SUBSIDIARY") is a corporation duly incorporated,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation (as identified in Schedule 3.01(a) of
the Disclosure Schedule) and has the requisite corporate power and
corporate authority to own, lease and operate its properties and assets
and to carry on its business as it is now being conducted. Each of the
Company and its Subsidiaries is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, operated or
leased by it, or the nature of its business, makes such qualification
or licensing necessary, except such jurisdictions where failure to be
so qualified, licensed or in good standing would not have, individually
or in the aggregate, a material adverse effect upon the business,
operations, properties or financial condition of the Company or of
CIVCO Medical Instruments Co., Inc., an Iowa corporation, and its
subsidiary Xxxxxxx Xxxxxxxx Maroon Bells, Inc., a Florida corporation
(together, "CIVCO") (a "MATERIAL ADVERSE EFFECT"). The copies of the
Articles or Certificate of Incorporation and By-Laws or similar
organizational documents of the Company and each Subsidiary provided to
Buyer are complete and correct as of the date of this Agreement.
(b) CAPITALIZATION. The authorized capital stock of the
Company consists of Twenty-Five Million (25,000,000) shares of Company
Common Stock, no par value, of which, as of the date of this Agreement,
13,256,959 shares are issued and outstanding, and Five Million
(5,000,000) shares of Preferred Stock, no par value, none of which, as
of the date of this Agreement is issued and outstanding. All of the
issued and outstanding shares of capital stock of the Company and of
each Subsidiary have been duly authorized and validly issued, are fully
paid and nonassessable and were not granted in violation of any
statutory or contractual preemptive rights. There are no outstanding
subscriptions, options, warrants, calls or other agreements or
commitments under which the Company or any Subsidiary is or may become
obligated to issue, sell, transfer or otherwise dispose of, or
purchase, redeem or otherwise acquire, any shares of capital stock of,
or other equity interests in, the Company or any Subsidiary, and there
are no outstanding securities convertible into or exchangeable for any
such capital stock or other equity interests, except for (i) Options to
purchase up to 1,654,660 shares of Company Common Stock (as of the date
of this Agreement) at the exercise prices set forth in Schedule 3.01(b)
of the Disclosure Schedule, and (ii) the Rights Agreement dated as of
January 14, 1999, as amended, between the Company and American Stock
Transfer and Trust Inc. (the "RIGHTS AGREEMENT") under which each
outstanding share of Company Common Stock has attached to it certain
rights (the "RIGHTS"), including rights under certain circumstances to
purchase a fraction of a share of Series A Junior Participating
Preferred Stock at $55 per right, subject to adjustment. The Company
owns, directly or indirectly, all of the issued and outstanding shares
of capital stock of every class of each Subsidiary, free and clear of
all liens, security interests, pledges, charges and other encumbrances.
Schedule 3.01(b) of
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the Disclosure Schedule contains a complete and correct list of each
corporation, limited liability company, partnership, joint venture or
other business association in which the Company has any direct or
indirect equity ownership interest.
(c) AUTHORIZATION AND EXECUTION. The Company has the corporate
power and corporate authority to execute and deliver this Agreement
and, subject to approval by the holders of the Company Common Stock at
the special meeting of shareholders referred to in Section 4.02, to
consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement by the Company have been
duly authorized by the Board of Directors of the Company, and no
further corporate action of the Company, other than the approval of its
shareholders, is necessary to consummate the transactions contemplated
hereby. This Agreement has been duly executed and delivered by the
Company and, assuming the accuracy of the representations and
warranties set forth in Section 3.02, constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms, except to the extent that enforceability may
be limited by applicable bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally, and subject,
as to enforceability, to general principles of equity (regardless of
whether enforcement is sought in a court of law or equity).
(d) NO CONFLICTS. Neither the execution and delivery of this
Agreement by the Company, nor the consummation by the Company of the
transactions contemplated hereby, will (i) conflict with or result in a
breach of the Articles or Certificate of Incorporation, By-Laws or
similar organizational documents, as currently in effect, of the
Company or any of its Subsidiaries, (ii) except for the requirements
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR ACT"), compliance with the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT") and the filing of the Articles of
Merger with the Secretary of State of the State of Colorado, require
any filing with, or consent or approval of, any governmental authority
having jurisdiction over any of the business or assets of the Company
or any of its Subsidiaries, (iii) violate any statute, law, ordinance,
rule or regulation applicable to the Company or any of its Subsidiaries
or any injunction, judgment, order, writ or decree to which the Company
or any of its Subsidiaries has been specifically identified as subject,
or (iv) result in a breach of, or constitute a default or an event
that, with the passage of time or the giving of notice, or both, would
constitute a default, give rise to a right of termination, cancellation
or acceleration, create any entitlement of any third party to any
material payment or benefit, require the consent of any third party, or
result in the creation of any lien, security interest, charge or
encumbrance on the assets of the Company or any of its Subsidiaries,
under any Material Contract (as defined below), except, in the case of
clauses (ii), (iii), and (iv), where such violation, breach, default,
termination, cancellation, acceleration, payment, benefit or lien, or
the failure to make such filing or obtain such consent or approval,
would not, individually or in the aggregate, materially impair the
ability of the Company to consummate the transactions contemplated by
this Agreement or have a Material Adverse Effect.
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(e) SEC REPORTS; FINANCIAL STATEMENTS; NO UNDISCLOSED
LIABILITIES.
(i) The Company has made available to Buyer or its
counsel, in the form filed with the Securities and Exchange
Commission (the "SEC"), all reports, registration statements,
and other filings (including amendments to previously filed
documents) filed by the Company with the SEC since July 1,
1999 (all such reports, proxy statements, registration
statements and filings, other than the Proxy Statement (as
defined below), are collectively called the "SEC REPORTS" and
individually called an "SEC REPORT"). No SEC Report, as of its
filing date, contained any untrue statement of a material fact
or omitted to state any material fact required to be stated
therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they
were made, not misleading, and each SEC Report at the time of
its filing complied in all material respects with all
applicable requirements of the Securities Act of 1933, as
amended (the "SECURITIES ACT"), the Exchange Act, and the
rules and regulations of the SEC promulgated thereunder. Since
July 1, 1999, the Company has filed all reports that it was
required to file with the SEC under the Exchange Act and the
rules and regulations of the SEC.
(ii) The consolidated financial statements contained
in the SEC Reports were prepared in accordance with generally
accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in
the notes thereto) and fairly present the consolidated
financial condition of the Company and its Subsidiaries as at
the respective dates thereof and the consolidated results of
operations and consolidated cash flows of the Company and its
Subsidiaries for the periods indicated, subject, in the case
of interim financial statements, to normal year-end
adjustments, and except that the interim financial statements
do not contain all of the footnote disclosures required by
generally accepted accounting principles.
(iii) Except as and to the extent reflected or
reserved against on the most recent balance sheet contained in
the SEC Reports (the "BALANCE SHEET"), neither the Company nor
any of its Subsidiaries or as otherwise disclosed on Schedule
3.01(e) of the Disclosure Schedule have any material
obligations or liabilities of any nature that would have been
required to be included on a balance sheet prepared in
accordance with generally accepted accounting principles as in
effect on such date; other than current liabilities incurred
in the ordinary course of business.
(iv) The Company has also made available to Buyer the
unaudited balance sheet, income statement and statement of
cash flows of CIVCO (the "CIVCO FINANCIAL STATEMENTS") as of
January 31, 2003. The CIVCO Financial Statements were prepared
in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods involved
(except as may be indicated in the notes thereto) and fairly
present the financial condition of CIVCO at the date thereof
and the results of operations and cash flows of CIVCO
9
for the periods indicated, except that interim financial
statements do not contain all of the footnote disclosures
required by generally accepted accounting principles.
(f) PROXY STATEMENT. The Proxy Statement will not, at the time
the Proxy Statement is mailed to the shareholders of the Company,
contain any untrue statement of a material fact, or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading, and will not, at the time of the
meeting of shareholders to which the Proxy Statement relates or at the
Effective Time, as then amended or supplemented, omit to state any
material fact necessary to correct any statement which has become false
or misleading in any earlier communication with respect to the
solicitation of any proxy for such meeting (except that no
representation is made by the Company with respect to statements made
in, or incorporated by reference into, the Proxy Statement based on
information furnished by Buyer or Buyer Subsidiary for inclusion in the
Proxy Statement).
(g) ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31,
2002, and except as otherwise disclosed in Schedule 3.01(g) of the
Disclosure Schedule, the Company and its Subsidiaries have conducted
their respective businesses and operations in the ordinary course and
neither the Company nor any of its Subsidiaries has (i) split, combined
or reclassified any shares of its capital stock or made any other
changes in its equity capital structure; (ii) purchased, redeemed or
otherwise acquired, directly or indirectly, any shares of its capital
stock or any options, rights or warrants to purchase any such capital
stock or any securities convertible into or exchangeable for any such
capital stock; (iii) declared, set aside or paid any dividend or made
any other distribution in respect of shares of its capital stock,
except for dividends or distributions by any Subsidiary to the Company
or another Subsidiary; (iv) issued any shares of its capital stock or
granted any options, rights or warrants to purchase any such capital
stock or any securities convertible into or exchangeable for any such
capital stock, except for issuances of shares of Company Common Stock
upon the exercise of Options; (v) purchased any business, purchased any
stock of any corporation other than the Company, or merged or
consolidated with any person; (vi) sold, leased or otherwise disposed
of any assets or properties which were material to the Company and its
Subsidiaries, taken as a whole, other than dispositions in the ordinary
course of business; (vii) incurred, assumed or guaranteed any
indebtedness for money borrowed other than intercompany indebtedness;
(viii) changed or modified in any material respect any existing
accounting method, principle or practice, other than as required by
generally accepted accounting principles; (ix) made any loans,
advances, capital contributions to, investments in, any person other
than extensions of credit to customers in the ordinary course of
business consistent with past practice; (x) paid, discharged or
satisfied any liability or obligation other than the payment,
discharge, or satisfaction of indebtedness as it matured and became due
and payable or liabilities and obligations in the ordinary course of
business consistent with past practice; (xi) made any change in the
compensation payable or to become payable to any of the Company's or
its Subsidiaries' officers, employees, agents or consultants, other
than general increases in wages to employees who are not officers in
the ordinary course consistent with past practice; (xii) made any
payments, or entered into any transactions, agreements or arrangements
with affiliates of the Company or any of its Subsidiaries; (xiii)
except for
10
this Agreement, entered into any commitment to do any of the foregoing;
or (xiv) suffered any business interruption, damage to or destruction
of its properties or other incident, occurrence or event (other than
incidents, occurrences or events generally applicable to the industry
in which the Company and the Subsidiaries operate or changes in general
economic and market conditions) that has had or would reasonably be
expected to have (after giving effect to insurance coverage) a Material
Adverse Effect.
(h) TAX MATTERS.
(i) The Company and its Subsidiaries have timely
filed (or received appropriate extensions of time to file) all
federal, state, local and foreign tax returns (collectively,
"TAX RETURNS") required to be filed by them with respect to
income, gross receipts, withholding, social security,
unemployment, payroll, franchise, property, excise, sales, use
and other taxes of whatever kind (collectively, "TAXES"). All
such Tax Returns were and will through the Effective Time be
prepared in compliance with applicable law and all Taxes due,
or claimed to be due by any taxing authority, pursuant thereto
(whether or not shown as due on any Tax Return) have been or
will be paid. In addition, all Taxes due or claimed to be due
by any taxing authority (whether or not shown on any Tax
Return), prior to or at the Effective Time for which the
Company may be liable in its own right or as a transferee of
the assets of, or successor to, any corporation, person,
association, partnership, joint venture or other entity, have
been, or will be, paid on a timely basis, or an adequate
reserve has been, or will be, established therefor. Neither
the Company nor any of its Subsidiaries is currently the
beneficiary of any extension of time within which to file any
Tax Return. No claim has ever been made by an authority in a
jurisdiction where the Company or any of its Subsidiaries do
not file Tax Returns that the Company or any of its
Subsidiaries is or may be subject to taxation by that
jurisdiction. There are no security interests on any of the
assets of the Company or any of its Subsidiaries that arose in
connection with any failure (or alleged failure) to pay any
Tax.
(ii) No Tax Returns filed by the Company or any of
its Subsidiaries are the subject of pending audits as of the
date of this Agreement. Neither the Company nor any of its
Subsidiaries has received, before the date of this Agreement,
a notice of deficiency or assessment of additional Taxes which
notice or assessment remains unresolved, and to the knowledge
of the Company, there is no basis for any such deficiency or
assessment. Neither the Company nor any of its Subsidiaries
has extended the period for assessment or payment of any Tax,
which has not since expired.
(iii) The Company and its Subsidiaries have withheld
and paid over to the appropriate governmental authorities all
Taxes required by law to have been withheld and paid in
connection with amounts paid or owing to any employee, except
for any such Taxes that are immaterial in amount and except
for self-reported employee tips.
(iv) Neither the Company nor any of its Subsidiaries
has been a member of an affiliated group (as such term is
defined in Section 1504 of the Internal Revenue
11
Code of 1986, as amended (the "CODE")) or any combined,
consolidated or similar group under any state, local, or
foreign Tax law, filing a consolidated federal income tax
return for any tax year since January 1, 1996 other than a
group the common parent of which was the Company.
(v) Neither the Company nor any of its Subsidiaries
has been a United States real property holding corporation
within the meaning of Code Section 897(c)(2) during the
applicable period specified in Code Section 897(c)(1)(A)(ii).
(vi) The Company has disclosed on its respective
income Tax Returns all positions taken therein that could give
rise to a substantial understatement of federal income Tax
within the meaning of Section 6662 of the Code. The Company is
not a party to any Tax allocation or sharing agreement.
Neither the Company nor any of its Subsidiaries, (i) is or has
ever been a partner in a partnership or an owner of an
interest in an entity treated as a partnership for federal
income tax purposes, (ii) has any liability for the Taxes of
any Person under Treas. Reg. Section 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or
successor, by contract or otherwise, or (iii) made an election
or filed a consent under Section 341(f) of the Code or agreed
to have Section 341(f)(2) of the Code apply to any disposition
of a Section 341(f) asset (as such term is defined in Section
341(f)(4) of the Code) owned by any Company.
(vii) The unpaid Taxes of the Company (i) did not, as
of December 31, 2002, exceed the reserve for Tax liability
(rather than any reserve for deferred Taxes, established to
reflect timing differences between book and Tax income) set
forth on the face of the balance sheets in the financial
statements of the Company (rather than in any notes thereto),
and (ii) do not exceed that reserve as adjusted for the
passage of time through the Effective Time in accordance with
the past custom and practice of the Company or any of its
Subsidiaries in filing their respective Tax Returns.
(viii) Neither the Company nor any of its
Subsidiaries is a party to any Tax allocation or sharing
agreement other than between the Company and the Subsidiaries.
(ix) The Company has delivered or made available to
the Buyer true and complete copies of all requested federal,
state, local and foreign income tax returns with respect to
the Company and each of its Subsidiaries.
(x) There is no contract, agreement, plan or
arrangement covering any employee or former employee of the
Company or any of its Subsidiaries that, individually or
collectively, could give rise to the payment of any amount
that would not be deductible under Section 280G of the Code.
(xi) The Company realized an ordinary loss of
$9,700,000 on the sale of certain assets to HEI, Inc. that
occurred on January 24, 2003. The net operating loss
carryforward for federal income tax purposes under Section 172
of the Code that will be available as a carryforward from the
period ending June 30, 2003 to future taxable periods will be
no less than $6 million.
12
(i) PROPERTY.
(i) Schedule 3.01(i) of the Disclosure Schedule lists
all real property owned in fee by the Company or any
Subsidiary ("OWNED PROPERTY") and all real property leased or
subleased to the Company or any Subsidiary ("LEASED PROPERTY,"
and, together with the Owned Property, the "REAL PROPERTY").
(ii) One or more of the Company and its Subsidiaries
has good and valid title to all such Owned Property, free and
clear of all mortgages, liens, security interests, charges and
encumbrances, except (a) liens for taxes, assessments and
other governmental charges that are not due and payable or
that are being contested in good faith and in respect of which
adequate reserves have been established, (b) mechanics',
materialmen's, carriers', workmen's, warehousemen's,
repairmen's, landlord's or other similar liens securing
obligations that are not due and payable or that are being
contested in good faith and in respect of adequate reserves
have been established, (c) mortgages, liens, security
interests, charges and encumbrances evidenced by any lease,
contract or agreement that is described in the Disclosure
Schedule or in the SEC Reports filed before the date of this
Agreement, (d) imperfections of title and liens, charges and
encumbrances that do not materially detract from the value or
materially interfere with the present use of the properties
subject thereto or affected thereby, (e) in the case of any
real property described in the Disclosure Schedule subject to
a title commitment, imperfections of title and mortgages,
liens, security interests, charges and encumbrances that are
shown on such title commitment or are otherwise of record, and
(f) other mortgages, liens, security interests, charges and
encumbrances described in the Disclosure Schedule or in the
SEC Reports filed before the date of this Agreement. The
Company and its Subsidiaries have sufficient title to, or the
right to use, all of their other tangible properties and
assets necessary to conduct their respective businesses as
currently conducted. Except as disclosed in Schedule 3.01(i)
of the Disclosure Schedule, the Company has not received
notice of an existing zoning violation or of any pending or
threatened condemnation proceeding or of any sale or other
disposition in lieu of condemnation, affecting any of the
Owned Property.
(iii) With respect to Leased Property, Schedule
3.01(i) of the Disclosure Schedule identifies the lessor,
rental rate, lease term, expiration date and existence of a
renewal option. The Company has made available to Buyer prior
to the date of the Agreement correct and complete copies of
the leases and subleases listed in Schedule 3.01(i) of the
Disclosure Schedule, as such leases or subleases have been
amended to date. With respect to each lease and sublease
listed, except as otherwise indicated in Schedule 3.01(i) of
the Disclosure Schedule, (w) the lease or sublease is in full
force and effect and will not be voluntarily changed by the
Company or any Subsidiary prior to the Effective Time; (x) the
Company or a Subsidiary is in possession of the leased
premises and all rental and other material obligations of the
Company or such Subsidiary are current; (y) neither the
Company nor its Subsidiaries have received written notice of
acceleration,
13
modification, breach or default, and, to the knowledge of the
Company, no event has occurred which, with notice or lapse of
time, would constitute a material breach or default or permit
termination, modification or acceleration under such lease or
subleased; (z) to the knowledge of the Company, all such
facilities leased or subleased have all requisite permits to
allow the Company and/or its Subsidiaries to operate its
business thereon as presently conducted.
(j) MATERIAL CONTRACTS. Except as set forth in Schedule
3.01(j) of the Disclosure Schedule or in the SEC Reports filed before
the date of this Agreement, neither the Company nor any of its
Subsidiaries is a party to or bound by any:
(i) employment agreement (other than those that are
terminable by the Company or any Subsidiary without cost or
penalty upon 60 days' or less notice);
(ii) lease, whether as lessor or lessee, with respect
to any real property;
(iii) contract, whether as licensor or licensee, for
the license of any patent, know-how, trademark, trade name,
service xxxx, copyright or other intangible asset (other than
non-negotiated licenses of commercially available computer
software);
(iv) loan or guaranty agreement, indenture or other
instrument, contract or agreement under which any money has
been borrowed or loaned or any note, bond or other evidence of
indebtedness has been issued;
(v) mortgage, security agreement, conditional sales
contract, capital lease or similar agreement which effectively
creates a lien on any assets of the Company or any of its
Subsidiaries (other than any conditional sales contract,
capital lease or similar agreement which creates a lien only
on tangible personal property);
(vi) contract restricting the Company or any of its
Subsidiaries in any material respect from engaging in business
or from competing with any other parties;
(vii) plan of reorganization;
(viii) partnership or joint venture agreement;
(ix) collective bargaining agreement; or
(x) any purchase, sale, or supply contract for goods
or services with a value of 10% or more of the Company's or
any of its Subsidiaries' revenues.
All of the foregoing are collectively called "MATERIAL CONTRACTS." To
the extent Material Contracts are evidenced by documents, true and
complete copies thereof have been delivered or made available to Buyer
or Buyer's counsel. Each Material Contract is in full force and effect.
Neither the Company nor any of its Subsidiaries nor, to the knowledge
of the Company, any other party is in breach of or in default under any
of the Material Contracts, except for
14
breaches or defaults which have not had and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect.
(k) INTELLECTUAL PROPERTY. "INTELLECTUAL PROPERTY" shall mean
all intellectual property rights, including all patents and patent
applications, together with all reissuances, continuations,
continuations-in-part, revisions, extensions and reexaminations
thereof; trademarks, trademark registrations and applications, service
marks, service xxxx registrations and applications, trade names, trade
dress, logos, designs, proprietary rights, slogans and general
intangibles of like nature, together with all goodwill related to the
foregoing; copyrights, copyright registrations and applications; mask
works and all applications, registrations and renewals in connection
therewith; computer software; product plans, technology, process
engineering, drawings, schematic drawings, secret processes,
proprietary knowledge, including without limitation, trade secrets,
know-how, confidential information and formulae.
(i) Schedule 3.01(k) of the Disclosure Schedule
contains a complete and correct list of all material patents
and registered trademarks, trade names, service marks and
copyrights, and all applications for any of the foregoing, and
all material unregistered copyrights, trademarks, trade names
and service marks (collectively, "PROPRIETARY RIGHTS"), held
by the Company and its Subsidiaries.
(ii) Except as set forth on Schedule 3.01(k) of the
Disclosure Schedule, each of the Company and its Subsidiaries
is the sole and exclusive owner of, or has the valid right to
use, sell and license, free and clear of all liens or other
encumbrances, all Intellectual Property necessary or otherwise
material to the conduct of its business as conducted as of the
Effective Time. Except as set forth on Schedule 3.01(k) of the
Disclosure Schedule, one or the other of the Company or its
Subsidiaries is currently listed in the records of the
appropriate federal, state or local agency as the sole owner
of record for each owned application and registration of a
Proprietary Right listed on Schedule 3.01(k) of the Disclosure
Schedule.
(iii) Each item of Proprietary Rights listed on
Schedule 3.01(k) of the Disclosure Schedule is valid and
subsisting, in full force and effect in all respects, and has
not been canceled, expired or abandoned. There is no existing
or, to the knowledge of the Company, threatened, opposition,
interference, cancellation proceeding (stayed or otherwise) or
other legal or governmental proceeding before any court or
registration authority in any jurisdiction against the items
listed on Schedule 3.01(k) of the Disclosure Schedule or the
Intellectual Property used in the business of the Company and
its Subsidiaries as conducted as of the date hereof, or in or
to which the Company and its Subsidiaries have any right,
title or interest.
(iv) Schedule 3.01(k) of the Disclosure Schedule sets
forth a complete and accurate list of all material agreements
pertaining to the use of or granting any right to use or
practice any rights under any Intellectual Property, whether
the Company or a Subsidiary is the licensee or licensor
thereunder (the "LICENSES") and any written settlements or
assignments relating to any Intellectual Property, except for
those
15
assignments described in Section 3.01(k)(vii) hereof and
off-the-shelf applications or software licensed pursuant to a
"shrink-wrap" license. The Licenses are valid and binding
obligations of the Company party thereto and to the knowledge
of the Company, the other parties thereto, enforceable against
the Company or Subsidiary party thereto and, to the knowledge
of the Company, the other parties thereto, in accordance with
their terms, and there are no breaches or defaults under any
License by the Company party thereto, or, to the knowledge of
the Company, by the other party thereto, nor has any event
occurred which with notice or lapse of time would constitute a
breach or default by the Company or Subsidiary party thereto,
or, to the knowledge of the Company, by the other party
thereto, or would permit termination, modification or
acceleration, of any Licenses. At the Effective Time, each
License will be valid, binding and enforceable, and in full
force and effect on identical terms following the consummation
of the transactions contemplated hereby. The Company and its
Subsidiaries have not granted any sublicense or similar right
with respect to any License.
(v) No trade secret or confidential know-how either of
which is material to the business of the Company or any of its
Subsidiaries as currently operated has been disclosed or
authorized to be disclosed to any third party, other than
pursuant to a non-disclosure agreement that protects the
Company and each of its Subsidiaries' proprietary interests in
and to such trade secrets and confidential know-how.
(vi) The conduct of the business of the Company and
each of its Subsidiaries does not interfere with, infringe
upon or misappropriate any intellectual property right owned
or controlled by any third party, nor, to the knowledge of the
Company, will the Company or any of its Subsidiaries interfere
with, infringe upon or misappropriate any intellectual
property right owned or controlled by any third party as a
result of the continued operation of their respective
businesses as conducted as of the Effective Time. To the
knowledge of the Company, no third party is interfering with,
infringing upon or misappropriating any Intellectual Property
owned by the Company or any of its Subsidiaries and no such
claims have been made against a third party by the Company or
any of its Subsidiaries. Except as disclosed on Schedule
3.01(k) of the Disclosure Schedule, there are no claims or
suits pending or, to the knowledge of the Company, threatened,
and the Company and each of its Subsidiaries has not received
any written notice of a third party demand, claim or suit (a)
alleging that the Company or any of its Subsidiaries'
activities or the conduct of their respective businesses
infringe or infringed upon or constitutes or constituted the
unauthorized use of the proprietary rights of any third party
or (b) Intellectual Property rights used in the business of
the Company or any of its Subsidiaries as conducted as of the
Effective Time, or in or to which the Company or any of its
Subsidiaries have any right, title or interest.
(vii) It is the Company's policy to have all employees
and consultants of the Company who are at any time involved in
the design, development or implementation of intellectual
property for the Company or any of its Subsidiaries execute
and deliver to the Company or any of its Subsidiaries an
agreement assigning to the Company or its Subsidiaries their
entire right, title and interest in and to any such
intellectual property
16
arising from services performed for the Company or its
Subsidiaries by such persons. To the knowledge of the Company,
all present and former employees and consultants have executed
and delivered such agreements to the Company. No present or
former officer, director, employee or consultant of the
Company or of any of its Subsidiaries has any right, title or
interest, directly or indirectly, in whole or in part, in or
to any material Intellectual Property used in the business of
the Company or any of its Subsidiaries as conducted as of the
Effective Time, or in or to which the Company or any of its
Subsidiaries has any right, title or interest.
(l) LITIGATION. Except as described in Schedule 3.01(l) of
the Disclosure Schedule or in the SEC Reports filed before the date of
this Agreement, no claim, demand, order, notice of potential
responsibility, government information request, litigation, arbitration
or administrative proceeding is pending or, to the knowledge of the
Company, threatened against the Company or any Subsidiary or that seeks
to enjoin or otherwise challenges the consummation of the transactions
contemplated by this Agreement. As of the date of this Agreement,
neither the Company nor any of its Subsidiaries is specifically
identified as a party subject to any material restrictions or
limitations under any injunction, writ, judgment, order or decree of
any court, administrative agency or commission or other governmental
authority.
(m) PERMITS, LICENSES, AUTHORIZATIONS; COMPLIANCE WITH LAWS.
Each of the Company and its Subsidiaries has all licenses, franchises,
permits and other governmental authorizations ("PERMITS") necessary to
conduct its business, and neither the Company nor any Subsidiary is in
violation of or has violated or has any liability pursuant to any
Permit, except where the failure to have any such Permits, or the
existence or past occurrence of any such violation, has not had and
would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. Except as disclosed in Schedule
3.01(m) of the Disclosure Schedule, each of the Company and its
Subsidiaries is, and has been at all times since January 1, 1998, in
material compliance with each statute, law, ordinance, rule or
regulation applicable to it or to the conduct or operation of its
business or the ownership or use of any of its assets (each, a "LEGAL
REQUIREMENT"). Except as disclosed in Schedule 3.01(m) of the
Disclosure Schedule, no event has occurred or circumstances exist that
(with or without the lapse of time) may constitute or result in a
violation by the Company or any of its Subsidiaries of, or a failure on
the part the Company or any of its Subsidiaries to comply with, any
Legal Requirement. Except as disclosed in Schedule 3.01(m) of the
Disclosure Schedule, neither the Company nor any of its Subsidiaries
has received, at any time since January 1, 1998, any written notice
regarding any actual, alleged, possible, or potential violation of, or
failure to comply with, any Legal Requirement. A true and complete list
of all Permits is set out on Schedule 3.01(m) of the Disclosure
Schedule. Neither Company nor any Subsidiary has received any notice
that any Permit will be suspended or revoked or will not be renewed.
(n) NO BROKERS OR FINDERS. Except for Tri-Artisan, LLC, the
Company has not engaged any investment banker, broker or finder in
connection with the transactions contemplated hereby. The Surviving
Corporation shall be liable for all obligations of the Company under
its engagement letter with Tri-Artisan, LLC.
17
(o) RETIREMENT AND BENEFIT PLANS.
(i) Each employee pension benefit plan ("PENSION
PLAN"), as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), each
employee welfare benefit plan ("WELFARE PLAN"), as defined in
Section 3 of ERISA, and each deferred compensation, bonus,
incentive, stock incentive, option, stock purchase, severance
or other material employee benefit plan, agreement, commitment
or arrangement ("BENEFIT PLAN"), which is currently maintained
by the Company or any Subsidiary or to which the Company or
any Subsidiary currently contributes or is under any current
obligation to contribute, or under which the Company or any
Subsidiary has any current liability (collectively, the
"EMPLOYEE PLANS" and individually, an "EMPLOYEE PLAN") is
listed in Section 3.01(o) of the Disclosure Schedule and, to
the extent an Employee Plan is evidenced by documents, true
and complete copies thereof have been delivered or made
available to Buyer. In addition, copies of the following
documents have been delivered or made available to Buyer: the
annual report (Form 5500 Series) required to be filed with any
governmental agency with respect to each Pension Plan and
Welfare Plan for the most recent plan year, the determination
letter issued by the IRS with respect to each Pension Plan,
and all Department of Labor and IRS rulings, opinions or
technical advice with regards to each Pension Plan and Welfare
Plan.
(ii) The Company and each Subsidiary has made on a
timely basis all contributions or payments required to be made
by it under the terms of the Employee Plans, ERISA, the Code
or other applicable laws, unless such contributions or
payments that have not been made are immaterial in amount and
the failure to make such payments or contributions will not
materially and adversely affect the Employee Plans.
(iii) Each Employee Plan (and any related trust or
other funding instrument) has been administered in all
material respects in compliance with its terms and in both
form and operation is in compliance in all material respects
with the applicable provisions of ERISA, the Code and other
applicable laws and regulations (other than adoption of any
plan amendments for which the deadline has not yet expired),
and all material reports required to be filed with any
governmental agency with respect to each Employee Plan have
been timely filed.
(iv) There is no material litigation, arbitration or
administrative proceeding pending or, to the knowledge of the
Company, threatened against the Company or any Subsidiary or,
to the knowledge of the Company, any plan fiduciary by the
Internal Revenue Service, the U.S. Department of Labor, the
Pension Benefit Guaranty Corporation or any participant or
beneficiary with respect to any Employee Plan. Neither the
Company nor any Subsidiary nor, to the knowledge of the
Company, any plan fiduciary of any Pension or Welfare Plan has
engaged in any transaction in violation of Section 406(a) or
(b) of ERISA for which no exemption exists under Section 408
of ERISA or any "prohibited
18
transaction" (as defined in Section 4975(c)(1) of the Code)
for which no exemption exists under Section 4975(c)(2) or
4975(d) of the Code, or is subject to any excise tax imposed
by the Code or ERISA with respect to any Employee Plan.
(v) Neither the Company nor any of Subsidiary nor any
ERISA Affiliate (as defined below) currently maintains, nor at
any time in the previous six calendar years maintained or had
an obligation to contribute to, any defined benefit pension
plan subject to Title IV of ERISA, any "multi-employer plan"
as defined in Section 3(37) of ERISA, any "employee stock
ownership plan" as defined in Section 4975(e)(7) of the Code,
or any "foreign plan" as defined in Section 404A(e) of the
Code.
(vi) Neither the Company nor any Subsidiary has any
liability with respect to any plan, program or arrangement
maintained or contributed to by any ERISA Affiliate that would
be an Employee Plan if it were maintained by the Company.
(vii) For purposes of this Section 3.01(o), "ERISA
Affiliate" means (A) any trade or business with which the
Company is under common control within the meaning of Section
4001(b) of ERISA, (B) any corporation with which the Company
is a member of a controlled group of corporations within the
meaning of Section 414(b) of the Code, (C) any entity with
which the Company is under common control within the meaning
of Section 414(c) of the Code, (D) any entity with which the
Company is a member of an affiliated service group within the
meaning of Section 414(m) of the Code, and (E) any entity with
which the Company is aggregated under Section 414(o) of the
Code.
(viii) Neither the Company nor any of its
Subsidiaries nor ERISA Affiliate provides post-retirement
medical, life insurance or other benefits promised, provided
or otherwise due now or in the future to current, former or
retired employees, except as may be required by ERISA Sections
601 through 607 regarding health care continuation coverage.
(ix) All Welfare Plans and the related trusts that
are subject to Section 4980B(f) of the Code and Sections 601
through 609 of ERISA comply with and have been administered in
compliance with the health care continuation-coverage
requirements under Section 4980B(f) of the Code, Sections 601
through 609 of ERISA, and all final Treasury regulations under
Section 4980B of the Code explaining those requirements, and
all other applicable laws regarding continuation and/or
conversion coverage. All Welfare Plans and the related trusts
comply with and have been administered in material compliance
with the requirements of the (i) Heath Insurance Portability
and Accountability Act of 1996, to the extent applicable, (ii)
Mental Health Parity Act of 1996, to the extent applicable,
(iii) Newborns' and Mothers' Health Protection Act, to the
extent applicable, and (iv) Women's Health and Cancer Rights
Act, to the extent applicable.
19
(p) ENVIRONMENTAL MATTERS.
(i) For purposes of this Section 3.01(p),
(A) "ENVIRONMENTAL LAW" means the
Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. Section 9601 et seq.,
the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901 et seq., the Federal Water Pollution
Control Act, 33 U.S.C. Section 1251 et seq., the Oil
Pollution Act, 33 U.S.C. Section 2701 et seq., the
Clean Air Act, 42 U.S.C. Section 7401 et seq., and
any other federal, state, local or other governmental
statute, regulation, law, or ordinance dealing with
the protection of human health, natural resources or
the environment; and
(B) "Hazardous Substance" means any
pollutant, "toxic mold", contaminant, hazardous
substance or waste, solid waste, petroleum or any
fraction thereof, or any other chemical, substance or
material listed or identified in or regulated by any
Environmental Law.
(ii) Except as described in Schedule 3.01(p) of the
Disclosure Schedule or in the SEC Reports filed before the
date of this Agreement, (A) no Hazardous Substances have been
spilled, discharged, leaked, emitted, injected, disposed of,
dumped or released by the Company or any of the Subsidiaries
or any other person on, beneath, above or into the environment
surrounding any of the real property currently or formerly
owned, operated or leased by the Company or any of the
Subsidiaries; (B) there are no other facts, circumstances or
conditions existing, initiated or occurring prior to the
Effective Time; and (C) neither the Company nor any Subsidiary
has arranged, by contract, agreement or otherwise, for the
transportation, treatment or disposal of Hazardous Substances,
in each case A through C, as could result in any material
unpaid liability of the Company or any of the Subsidiaries
under any applicable Environmental Law.
(iii) The Company has furnished to Buyer copies of all
environmental assessments, reports, audits and other documents
in its possession or under its control that relate to the
environmental condition of real property currently or formerly
owned, operated, or leased by the Company or any of its
Subsidiaries, or the Company or any Subsidiary's compliance
with Environmental Laws. To the Company's knowledge, any such
information the Company or the Subsidiaries has furnished to
Buyer is accurate and complete.
(iv) None of the real property currently owned,
operated or leased by the Company or any of its Subsidiaries
contains any underground improvements used currently or in the
past for the management of Hazardous Substances, and no
portion of such property is or has been used as a dump or
landfill or consists of or contains filled in land or
wetlands. With respect to any real property formerly owned,
operated, or leased by the Company or its Subsidiaries, during
the period
20
of such ownership, operation or tenancy, no portion of such
property was used as a dump or landfill, and the Company is
not aware of any such use at any time prior to its ownership,
operation, or tenancy of such real property. Neither PCBs, nor
"toxic mold," nor asbestos-containing materials are present on
or in the real property currently owned, operated or leased by
the Company or its Subsidiaries.
(q) INSURANCE. Schedule 3.01(q) of the Disclosure Schedule
contains a list of all insurance policies maintained by the Company and
its Subsidiaries as of the date of this Agreement, together with a
brief description of the coverages afforded thereby. All of such
insurance policies are in full force and effect as of the date of this
Agreement, and neither the Company nor any of its Subsidiaries is in
default of any payment owing thereunder.
(r) BOOKS AND RECORDS. The books of account, minute books,
stock record books, and other records of the Company and each of its
Subsidiaries, all of which have been made available to Buyer, are
complete and correct in all material respects and have been maintained
in accordance with sound business practices and the requirements of
Section 13(b)(2) of the Exchange Act (regardless of whether or not the
Company or its Subsidiaries are subject to that Section), including the
maintenance of an adequate system of internal controls. The minute
books of the Company and each of its Subsidiaries contain accurate and
complete records of all meetings held of, and corporate action taken
by, the stockholders, the Boards of Directors, and committees of the
Boards of Directors of the Company and each of its Subsidiaries, and no
meeting of any such stockholders, Board of Directors, or committee has
been held for which minutes have not been prepared and are not
contained in such minute books. At the Effective Time, all of those
books and records will be delivered to Buyer.
(s) PRODUCT WARRANTY AND LIABILITY. Each of the Company's and
its Subsidiaries' standard practice is to sell each product sold by it
in conformity with all applicable contractual commitments, if any, and
all express and implied warranties of the manufacturer, if any. Except
as set forth in Schedule 3.01(s) of the Disclosure Schedule, no product
sold by either the Company or any of its Subsidiaries is subject to any
other guaranty, warranty or other indemnity beyond the applicable
standard terms and conditions of sale. Schedule 3.01(s) of the
Disclosure Schedule sets forth a list of all product liability claims
raised or asserted against the Company or any of its Subsidiaries since
January 1, 1998. Except as set forth in the Disclosure Schedule, no
third party has advised the Company or any of its Subsidiaries that it
has any liability arising out of any injury to individuals or property
as a result of the ownership, possession or use of any product sold by
the Company or any of its Subsidiaries prior to the Effective Time.
(t) RELATIONSHIP WITH SUPPLIERS AND CUSTOMERS. Schedule
3.01(t) of the Disclosure Schedule lists the ten (10) largest (in terms
of dollar volume) customers and suppliers of CIVCO (each a "SIGNIFICANT
CUSTOMER" or "SIGNIFICANT SUPPLIER", as the case may be) during each of
the two (2) immediately preceding fiscal years of CIVCO and describes
for the period beginning December 31, 2000 through the date of this
Agreement all pricing concessions or pricing changes requested by any
Significant Customers and all
21
pricing concessions or pricing changes made by CIVCO for any of their
Significant Customers. CIVCO currently has good relationships with each
of its Significant Suppliers and Significant Customers. Except as set
forth in Schedule 3.01(t) of the Disclosure Schedule, CIVCO is not
currently in dispute under any contract or agreement for the delivery
of goods or services with any Significant Supplier or Significant
Customer, and, since December 31, 2002, no Significant Supplier to or
Significant Customer has notified the Company or CIVCO that it will
stop doing business, or reduce its business, with the Company or CIVCO,
the cessation or reduction of which business would have a Material
Adverse Effect. To the knowledge of the Company, there are no facts or
circumstances related to any Significant Customer's business (other
than general economic events affecting the medical device manufacturing
industry generally that do not affect CIVCO disproportionately relative
to other similarly situated participants in the medical equipment
manufacturing industry) that would cause a material reduction or
cessation of any such Significant Customer's business with CIVCO.
(u) OPINION OF TRI-ARTISAN, LLC. The Company has received the
opinion of Tri-Artisan, LLC, dated the date of this Agreement, to the
effect that, as of such date, the consideration to be paid by Buyer
pursuant to the Merger is fair from a financial point of view to the
shareholders of the Company, a signed copy of which opinion has been
delivered to the Company. The Company hereby represents and warrants
that it has been authorized by Tri-Artisan, LLC to permit the inclusion
of such Tri-Artisan, LLC opinion and references thereto in the Proxy
Statement. Other than the fee payable to Tri-Artisan, LLC in connection
with the Tri-Artisan, LLC opinion, the Closing of the Merger and the
reimbursement and indemnification obligations of the Company to
Tri-Artisan, LLC related to the Tri-Artisan, LLC opinion, neither the
Company nor the Company's affiliates or associates has any continuing
obligation to Tri-Artisan, LLC with respect to the transactions
contemplated hereby.
(v) HEI, INC. TRANSACTION. There are no claims pending, and no
event has occurred or circumstances exist that (with or without the
lapse of time) may constitute or result in a material violation by the
Company that could give rise to a claim, under that certain Purchase
Agreement dated January 24, 2003 by and between HEI, Inc. and the
Company.
3.02 REPRESENTATIONS AND WARRANTIES OF BUYER AND BUYER SUBSIDIARY.
Buyer and Buyer Subsidiary jointly and severally represent and warrant to the
Company as follows:
(a) ORGANIZATION, STANDING, EQUITY OWNERSHIP. Each of Buyer
and Buyer Subsidiary is a corporation duly incorporated, validly
existing and in good standing under the laws of its state of
incorporation. Buyer owns all of the issued and outstanding capital
stock of Buyer Subsidiary. The copies of the Articles or Certificate of
Incorporation and By-Laws of Buyer and Buyer Subsidiary provided to the
Company are complete and correct as of the date of this Agreement.
Buyer Subsidiary was formed solely for the purpose of effecting the
Merger and has not engaged in any business activities or conducted any
operations other than in connection with the Merger.
22
(b) AUTHORIZATION AND EXECUTION. Each of Buyer and Buyer
Subsidiary has the corporate power and corporate authority to execute
and deliver this Agreement and consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement by
each of Buyer and Buyer Subsidiary have been duly authorized by the
respective Boards of Directors of Buyer and Buyer Subsidiary and by
Buyer as the sole shareholder of Buyer Subsidiary, and no further
corporate action of Buyer or Buyer Subsidiary is necessary to
consummate the transactions contemplated hereby. This Agreement has
been duly executed and delivered by each of Buyer and Buyer Subsidiary
and, assuming the accuracy of the representations and warranties set
forth in Section 3.01(c), constitutes the legal, valid and binding
obligation of each of Buyer and Buyer Subsidiary, enforceable against
Buyer and Buyer Subsidiary in accordance with its terms, except to the
extent that enforceability may be limited by applicable bankruptcy,
insolvency or similar laws affecting the enforcement of creditors'
rights generally, and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
court of law or equity).
(c) NO CONFLICTS. Neither the execution and delivery of this
Agreement by Buyer and Buyer Subsidiary, nor the consummation by Buyer
and Buyer Subsidiary of the transactions contemplated hereby, will (i)
conflict with or result in a breach of the Articles or Certificate of
Incorporation or By-Laws, as currently in effect, of Buyer or Buyer
Subsidiary, (ii) except for the requirements under the HSR Act,
compliance with the Exchange Act, and the filing of the Articles of
Merger with the Secretary of State of the State of Colorado, require
any filing with, or consent or approval of, any governmental authority
having jurisdiction over any of the business or assets of Buyer or
Buyer Subsidiary, (iii) violate any statute, law, ordinance, rule or
regulation applicable to Buyer or Buyer Subsidiary or any injunction,
judgment, order, writ or decree to which Buyer or Buyer Subsidiary has
been specifically identified as subject, or (iv) result in a breach of,
or constitute a default or an event which, with the passage of time or
the giving of notice, or both, would constitute a default under, or
require the consent of any third party under, any instrument, contract
or agreement to which Buyer or Buyer Subsidiary is a party or by which
Buyer or Buyer Subsidiary is bound, except, in the case of clauses
(ii), (iii) and (iv), where such violation, breach or default, or the
failure to make such filing or obtain such consent or approval, would
not, individually or in the aggregate, materially impair the ability of
Buyer or Buyer Subsidiary to consummate the transactions contemplated
by this Agreement.
(d) PROXY STATEMENT. None of the information furnished or to
be furnished by Buyer or Buyer Subsidiary for inclusion in the Proxy
Statement will, at the time the Proxy Statement is mailed, contain any
untrue statement of a material fact, or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading, or will, at the time of the meeting of
shareholders to which the Proxy Statement relates or at the Effective
Time, as then amended or supplemented, omit to state any material fact
necessary to correct any statement which has become false or misleading
in any earlier communication with respect to the solicitation of any
proxy for such meeting.
23
(e) LITIGATION. No litigation, arbitration or administrative
proceeding is pending or, to the knowledge of Buyer or Buyer
Subsidiary, threatened against Buyer or Buyer Subsidiary as of the date
of this Agreement that seeks to enjoin or otherwise challenges the
consummation of the transactions contemplated by this Agreement.
(f) NO BROKERS OR FINDERS. Neither Buyer nor Buyer Subsidiary
has engaged any investment banker, broker or finder in connection with
the transactions contemplated hereby except with respect to any of the
foregoing for which Buyer has sole responsibility for payment of fees
and expenses.
(g) AVAILABILITY OF FUNDS. Buyer or its affiliates have
available to them cash sufficient to enable it to consummate the
transactions contemplated by this Agreement.
(h) NO PRESENT INTENTION TO SELL. Neither Buyer nor Buyer
Subsidiary has any contract, undertaking, agreement or arrangement to
sell or otherwise transfer to any person any shares of capital stock of
the Surviving Corporation or any Subsidiary, merge or consolidate the
Surviving Corporation or any Subsidiary with or into any person, or
sell or otherwise transfer to any person a significant portion of the
assets of the Surviving Corporation and the Subsidiaries, taken as a
whole, other than sales or other transfers in the ordinary course of
business, and neither Buyer nor Buyer Subsidiary has any present plans
or intention to enter into any such contract, undertaking, agreement or
arrangement.
ARTICLE IV
CONDUCT AND TRANSACTIONS BEFORE THE EFFECTIVE TIME
4.01 OPERATION OF BUSINESS OF THE COMPANY UNTIL EFFECTIVE TIME.
(a) From the date hereof to the Effective Time or the
termination of this Agreement in accordance with its terms, the Company
will, and will cause each Subsidiary to, exercise reasonable commercial
efforts to preserve intact in all material respects its business
organization, keep available for itself and the Surviving Corporation
the services of its present officers and key employees, and preserve
its present relationships with other persons having significant
business dealings with the Company or any Subsidiary, except as
otherwise consented to in writing by Buyer.
(b) From the date hereof to the Effective Time or the
termination of this Agreement in accordance with its terms, the Company
will, and will cause each Subsidiary to, conduct its business and
operations in the ordinary and usual course, except as otherwise
required by this Agreement or consented to in writing by Buyer, which
consent shall not be unreasonably withheld. Notwithstanding the
foregoing, neither the Company nor CIVCO shall transfer any of its
assets or liabilities to, or otherwise incur or assume any liability to
or obligation of, the other, except in keeping with the Company and
CIVCO's past practices.
(c) Except as otherwise required by this Agreement or
consented to in writing by Buyer, which consent shall not be
unreasonably withheld, the Company will not, from
24
the date hereof until the Effective Time, (i) split, combine or
reclassify any shares of its capital stock or make any other changes in
its equity capital structure; (ii) purchase, redeem or otherwise
acquire, directly or indirectly, any shares of its capital stock or any
options, rights or warrants to purchase any such capital stock or any
securities convertible into or exchangeable for any such capital stock;
(iii) declare, set aside or pay any dividend or make any other
distribution in respect of shares of its capital stock; or (iv) enter
into any commitment to do any of the foregoing.
(d) Except as otherwise required by this Agreement or
consented to in writing by Buyer, the Company will not, and will not
permit any Subsidiary to, from the date hereof until the Effective Time
or the termination of this Agreement in accordance with its terms,
(i) amend its Articles or Certificate of
Incorporation, By-Laws or similar organizational documents;
(ii) issue any shares of its capital stock or any
options, rights or warrants to purchase any such capital stock
or any securities convertible into or exchangeable for any
such capital stock, except for issuances of shares of Company
Common Stock upon the exercise of any Options or of any rights
under the Rights Agreement that might arise as a result of any
event other than the transaction contemplated by this
Agreement, or designate any class or series of capital stock
from its authorized but undesignated Preferred Stock;
(iii) purchase any capital assets or make any capital
expenditures (except as set forth in the Company's capital
expenditures budget previously delivered to Buyer), purchase
any business, purchase any stock of any corporation, or merge
or consolidate with any person;
(iv) sell, lease or otherwise dispose of any assets or
properties that are material to the Company and its
Subsidiaries, taken as a whole, except that the Company may
dispose of assets of the Company (other than the assets or
shares of CIVCO), including, but not limited to, shares of
capital stock of HEI, Inc. owned by the Company and the
promissory note dated January 24, 2003 issued to the Company
by HEI, Inc. and the Company's real property and other assets
in Boulder County, Colorado;
(v) incur, assume or guarantee any indebtedness for
money borrowed other than intercompany indebtedness or
indebtedness in the ordinary course of business and consistent
with past practice;
(vi) enter into any new employee benefit plan, program
or arrangement, or any new employment or severance agreement,
modify in any respect materially adverse to the Company or any
Subsidiary any existing employee benefit plan, program or
arrangement (except as required by law), or any existing
employment
25
or severance agreement, or, except as required under existing
agreements grant any increases in employee compensation or
benefits;
(vii) enter into any collective bargaining agreement,
except as required by law;
(viii) change or modify in any material respect any
existing accounting method, principle or practice, other than
as required by generally accepted accounting principles;
(ix) other than in the ordinary course of business,
enter into any new Material Contract, including real estate
leases and land purchase agreements), or modify in any respect
materially adverse to the Company or any Subsidiary any
existing Material Contract;
(x) manage CIVCO's working capital in any manner
materially inconsistent with the Company's and CIVCO's past
practice during the twelve months prior to the date hereof;
(xi) permit any accounts payable owed to trade
creditors to remain outstanding more than 60 days;
(xii) accelerate, beyond the Company's or such
Subsidiary's normal collection cycle, collection of accounts
receivable;
(xiii) materially increase or decrease CIVCO's
inventory beyond its historical levels consistent with past
practice; or
(xiv) enter into any commitment to do any of the
foregoing.
4.02 SHAREHOLDERS' MEETING; PROXY MATERIAL.
(a) The Company shall cause a special meeting of its
shareholders to be duly called and held as soon as reasonably
practicable after the execution of this Agreement for the purpose of
voting on the approval of this Agreement and the related Plan of
Merger. The Board of Directors of the Company shall recommend approval
of this Agreement and the related Plan of Merger by the shareholders of
the Company, unless the Board of Directors of the Company, in the
good-faith exercise of its fiduciary duties, shall determine that such
recommendation should not be made.
(b) The Company (i) as promptly as reasonably practicable
following the execution of this Agreement, shall prepare and file with
the SEC a proxy statement, together with a form of proxy, with respect
to such shareholders meeting (such proxy statement, together with any
amendments thereof or supplements thereto, being called the "PROXY
STATEMENT"), (ii) shall use reasonable efforts to have the Proxy
Statement cleared by the SEC as soon as reasonably practicable, if such
clearance is required, and (iii) as soon as reasonably practicable
thereafter, shall cause copies of such Proxy Statement and
26
form of proxy to be mailed to its shareholders in accordance with the
provisions of the Colorado Act (unless a bona fide Third-Party
Acquisition Offer that would, if consummated, represent a Third-Party
Transaction is received by the Company or its shareholders, which the
Board of Directors of the Company determines, in the good-faith
exercise of its fiduciary duties, to accept, approve or recommend).
Before the filing of the Proxy Statement and form of proxy with the
SEC, the Company shall provide reasonable opportunity for Buyer to
review and comment upon the contents of the Proxy Statement and form of
proxy. The Proxy Statement and form of proxy shall comply as to form in
all material respects with the applicable requirements of the Exchange
Act and the rules and regulations of the SEC promulgated thereunder.
After the delivery to the Company's shareholders of copies of the Proxy
Statement and form of proxy, the Company shall use reasonable efforts
to solicit proxies in connection with such shareholders meeting in
favor of approval of this Agreement and the related Plan of Merger,
unless the Board of Directors of the Company shall determine, in the
good-faith exercise of its fiduciary duties, that such solicitation
should not be made.
4.03 NO SHOPPING. From the date hereof until the Effective Time or the
termination of this Agreement in accordance with its terms, the Company will
not, and will use reasonable efforts not to permit any officer, director,
financial adviser or other agent or representative of the Company, directly or
indirectly, to (a) take any action to seek, initiate or solicit any offer from
any person or group to acquire any shares of capital stock of the Company or any
Subsidiary, to merge or consolidate with the Company or any Subsidiary, or to
otherwise acquire, except to the extent not prohibited by Section 4.01(d)(iv),
any significant portion of the assets of the Company and its Subsidiaries, taken
as whole (a "THIRD-PARTY ACQUISITION OFFER"), or (b) except to the extent the
Board of Directors of the Company shall otherwise determine in the good-faith
exercise of its fiduciary duties, in order to obtain a Third-Party Transaction,
engage in negotiations concerning a Third-Party Acquisition Offer with any
person or group, or disclose financial information relating to the Company or
any Subsidiary or any confidential or proprietary trade or business information
relating to the business of the Company or any Subsidiary, or afford access to
the properties, books or records of the Company or any Subsidiary, to any person
or group that the Company has reason to believe may be considering a Third-Party
Acquisition Offer.
4.04 ACCESS TO INFORMATION. From the date hereof until the Effective
Time or the termination of this Agreement in accordance with its terms, the
Company will give Buyer and its counsel, financial advisers, auditors and other
authorized representatives and its financing sources reasonable access to the
offices, properties, books and records of the Company and each Subsidiary at all
reasonable times and upon reasonable notice, and will instruct the employees,
counsel, financial advisers and auditors of the Company and each Subsidiary to
cooperate with Buyer and each such representative and financing source in all
reasonable respects in its investigation of the business of the Company and its
Subsidiaries. Buyer and each such representative and financing source will
conduct such investigation in a manner as not to unreasonably interfere with the
operations of the Company and its Subsidiaries and will take all necessary
precautions (including obtaining the written agreement of its respective
employees or representatives involved in such investigation) to protect the
confidentiality of any information of the Company and its Subsidiaries disclosed
to such persons during such investigation.
27
4.05 AMENDMENT OF THE COMPANY'S EMPLOYEE PLANS. The Company will,
effective at or immediately before the Effective Time, cause any Employee Plans
that it may have to be amended, to the extent, if any, reasonably requested by
Buyer, for the purpose of permitting such Employee Plan to continue to operate
in conformity with ERISA and the Code following the Merger.
4.06 HSR ACT. If necessary, each of the Company, Buyer and Buyer
Subsidiary will file all Notification and Report Forms and related material that
it may be required to file with the Federal Trade Commission and the Antitrust
Division of the United States Department of Justice under the HSR Act, will
exercise reasonable efforts to obtain an early termination of the applicable
waiting period, and will make any further filings pursuant thereto that may be
necessary or advisable.
4.07 CERTAIN RESIGNATIONS. The Company will use its reasonable efforts
to assist Buyer in procuring the resignations, effective as of the Effective
Time, of all of the members of the Boards of Directors of the Company and its
Subsidiaries.
4.08 CONFIDENTIALITY AGREEMENT. The Confidentiality Agreement between
the Company and Buyer dated October 2, 2002 shall remain in full force and
effect until the Effective Time. Until the Effective Time, or the termination of
this Agreement in accordance with its terms, the Company and Buyer shall comply
with the terms of the Confidentiality Agreement.
4.09 OPTIONS. The Company will take such actions as are necessary to
cause each Option outstanding at the Effective Time (whether or not such Option
is then exercisable) to be canceled at the Effective Time in consideration for a
cash payment by the Company equal to the Option Settlement Amount for such
Option, subject to all applicable tax withholding. The Company shall comply with
all applicable requirements regarding income tax withholding in connection with
the foregoing.
4.10 RIGHTS AGREEMENT. Before the execution and delivery of this
Agreement, the Board of Directors of the Company has adopted resolutions
providing that (a) neither Buyer nor Buyer Subsidiary will become an "Acquiring
Person" (as defined in the Rights Agreement) as a result of the execution of
this Agreement or the consummation of the Merger, (b) no "Shares Acquisition
Date," "Distribution Date," "Section 11(a)(ii) Event," or "Section 13 Event" (as
such terms are defined in the Rights Agreement) will occur as a result of the
consummation of the Merger, and (c) all outstanding Rights issued under the
Rights Agreement will expire immediately before the Effective Time. Anything in
this Agreement to the contrary notwithstanding, the Company shall have the right
at any time after the date of this Agreement and before the Effective Time to
amend, or take any other action with respect to, the Rights Agreement as deemed
necessary by the Company; provided, however, that any such further action or
amendment shall not contravene the resolutions referred to in this Section 4.10.
4.11 INSURANCE. From the date hereof until the Effective Time or the
termination of this Agreement in accordance with its terms, the Company and its
Subsidiaries will keep in force, and timely pay premium payments due in respect
of, all insurance policies currently in effect insuring the Company, the
Subsidiaries and their respective businesses, properties and assets. In
28
addition, the Company covenants to cooperate with Buyer to obtain and pay for
the insurance described on the attached Schedule 1, in substantially the terms
indicated thereon and otherwise reasonably satisfactory to Buyer. The Company
shall also use all reasonable efforts to assist Buyer in obtaining insurance in
such coverage amounts and on such terms as Buyer reasonably determines to insure
against losses resulting from the failure of any representation or warranty made
by the Company in this Agreement to be true and correct in all material respects
(the "INSURANCE POLICY").
4.12 OTHER ACTIONS. Neither the Company, on the one hand, nor Buyer, on
the other hand, shall, or shall permit any of their respective subsidiaries to,
take any action that would, or that could reasonably be expected to, result in
(i) any of the representations and warranties of such party set forth in this
Agreement that is qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that is not so qualified becoming untrue in any
material respect or (iii) any condition to the Merger set forth in Article V not
being satisfied. The Company agrees not to release or permit the release of any
person from, or to waive or permit the waiver of any provision of, any
confidentiality, "standstill" or similar agreement to which the Company or any
of its Subsidiaries is a party, with respect to any acquisition of the capital
stock or assets of the Company or its Subsidiaries, and will use its reasonable
best efforts to enforce or cause to be enforced each such agreement.
4.13 REASONABLE BEST EFFORTS; NOTIFICATION. Upon the terms and subject
to the conditions set forth in this Agreement, each of the parties shall use its
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Merger and the
transactions contemplated hereby, including (i) the obtaining of all necessary
actions or nonactions, waivers, consents and approvals from governmental
entities and the making of all necessary registrations and filings (including
filings with governmental entities, if any) and the taking of all reasonable
steps as may be necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, any governmental entity, (ii) the obtaining of all
necessary consents, approvals or waivers from third parties, (iii) the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement, the Merger or the consummation of
the transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other governmental entity
vacated or reversed, and (iv) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated hereby and to
fully carry out the purposes of this Agreement. The Company and Buyer shall
cooperate with each other in connection with the making of all such filings,
including providing copies of all such documents to the non-filing party and its
advisors prior to filing and, if requested, to accept all reasonable additions,
deletions or changes suggested in connection therewith. The Company and Buyer
shall use their respective reasonable best efforts to furnish to each other all
information required for any application or other filing to be made pursuant to
the rules and regulations of any applicable law (including all information
required to be included in the Proxy Statement) in connection with the
transactions contemplated by this Agreement. The Company shall give prompt
notice to Buyer, and Buyer shall give prompt notice to the Company, of (i) any
representation or warranty made by it contained in this Agreement that is
qualified as to materiality becoming untrue or inaccurate in any respect or any
such representation or warranty
29
that is not so qualified becoming untrue or inaccurate in any material respect
or (ii) the failure by it to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement; provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
4.14 SEC REPORTS; FINANCIAL STATEMENTS.
(a) From the date of this Agreement until the earlier of
termination of this Agreement and the Effective Time, the Company shall
deliver to Buyer, within two business days of their filing with the
SEC, any new SEC Reports filed by the Company. The Company agrees that
with each such delivery either the President or Chief Financial Officer
of the Company shall execute a certification representing and
warranting that the SEC Report so delivered (and, if applicable, any
consolidated financial statements contained in such SEC Report)
complies with the representations and warranties given in Sections
3.01(e)(i) and (ii) of this Agreement as if such representations and
warranties had been given at the time such SEC Report was filed, and
further agrees that, for all purposes of this Agreement, the
representation and warranty contained in such certification shall be
deemed to constitute a representation and warranty set forth in Article
III hereof.
(b) From the date of this Agreement until the earlier of
termination of this Agreement and the Effective Time, the Company
agrees to deliver to Buyer CIVCO Financial Statements as of the end of
each calendar month within 12 business days after the end of each such
calendar month. The Company agrees that with each such delivery either
the President or Chief Financial Officer of the Company and either the
President or Vice President of Finance of CIVCO Medical Instruments,
Co., Inc. shall execute a certification representing and warranting
that such CIVCO Financial Statements comply with the representations
and warranties given in Section 3.01(e)(iv) of this Agreement as if
such representations and warranties had been given as of the date of
such CIVCO Financial Statements, and further agrees that, for all
purposes of this Agreement, the representation and warranty contained
in such certification shall be deemed to constitute a representation
and warranty set forth in Article III hereof.
ARTICLE V
CONDITIONS PRECEDENT
5.01 CONDITIONS TO THE OBLIGATIONS OF BUYER AND BUYER SUBSIDIARY. The
obligations of Buyer and Buyer Subsidiary to effect the Merger shall be subject
to the fulfillment at or before the Effective Time of the following conditions,
any one or more of which (except for the conditions set forth in Sections
5.01(b) and (e)) may be waived by Buyer and Buyer Subsidiary:
(a) The representations and warranties of the Company
contained in Section 3.01 of this Agreement shall be true and correct
in all material respects as of the date of this Agreement, except to
the extent any inaccuracy in any such representation or warranty,
individually or in the aggregate, does not materially impair the
ability of the
30
Company to consummate the transactions contemplated hereby and has not
had and is not reasonably likely to have a Material Adverse Effect
(provided that, solely for purposes of this Section 5.01(a), any
representation or warranty in Section 3.01 that is qualified by
Material Adverse Effect language shall be read as if such language were
not present); the Company shall have performed and complied in all
material respects with the agreements and obligations contained in this
Agreement required to be performed and complied with by it immediately
before the Effective Time; and Buyer and Buyer Subsidiary shall have
received a certificate signed by an executive officer of the Company to
the effects set forth in this Section 5.01(a).
(b) This Agreement and the related Plan of Merger shall have
been approved at the meeting of the shareholders of the Company
referred to in Section 4.02 by the vote required by the Colorado Act
and the Company's Articles of Incorporation.
(c) Neither the Company nor any Subsidiary shall have, since
the date of this Agreement, suffered any business interruption, damage
to or destruction of its properties or other incident, occurrence or
event (other than incidents, occurrences or events generally applicable
to the industry in the Company and the Subsidiaries operate or changes
in general economic or market conditions) that has had or would
reasonably be expected to have (after giving effect to any insurance
coverage) a Material Adverse Effect; provided, however, that none of
the items set forth in the Disclosure Schedule shall be deemed to have
had a Material Adverse Effect for purposes of this Section 5.01(c).
(d) There shall not be pending in any litigation or
administrative proceeding brought by any governmental or other
regulatory or administrative agency or commission requesting or looking
toward an injunction, writ, order, judgment or decree that, in the
reasonable judgment of Buyer, is reasonably likely, if issued, to
restrain or prohibit the consummation of any of the transactions
contemplated hereby or require rescission of this Agreement or any such
transactions or result in material damages to Buyer, Buyer Subsidiary
or the Surviving Corporation or their respective officers or directors
if the transactions contemplated hereby are consummated, nor shall
there be in effect any injunction, writ, judgment, preliminary
restraining order or other order or decree of any nature issued by a
court or governmental agency of competent jurisdiction directing that
any of the transactions provided for herein not be consummated as so
provided.
(e) All applicable waiting periods (and any extensions
thereof) under the HSR Act shall have expired or otherwise been
terminated.
(f) No Rights shall have become exercisable under the Rights
Agreement.
(g) The Company shall have obtained all consents required
under its Material Contracts that are necessary in order to consummate
the Merger.
(h) There shall not have occurred since the date of this
Agreement a material adverse change in the business, operations,
condition (financial or otherwise), properties, assets or liabilities
of the Company or CIVCO (regardless of whether or not such events or
31
changes are consistent with the representations and warranties given
herein by the Company), except changes contemplated by this Agreement,
changes disclosed by the Company in its SEC Reports between December
31, 2002 and the date of this Agreement, and changes in the ordinary
course of business which are not (either individually or in the
aggregate) materially adverse.
(i) The Company shall have delivered to the Buyer a
certificate to the effect that the Company is not a U.S. real property
interest within the meaning of Section 897 of the Code, such
certificate to be in a form consistent with that required under
Treasury Regulation 1.897-2(h).
(j) The Company shall have obtained the insurance described in
Section 4.11 of this Agreement.
5.02 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligations of
the Company to effect the Merger shall be subject to the fulfillment at or
before the Effective Time of the following conditions, any one or more of which
(except for the conditions set forth in Section 5.02(b) and (e)) may be waived
by the Company:
(a) The representations and warranties of Buyer and Buyer
Subsidiary contained in Section 3.02 of this Agreement shall be true
and correct in all material respects as of the date of this Agreement
and immediately before the Effective Time; each of Buyer and Buyer
Subsidiary shall have performed and complied in all material respects
with the agreements and obligations contained in this Agreement
required to be performed and complied with by it immediately before the
Effective Time; and the Company shall have received a certificate
signed by an executive officer of each of Buyer and Buyer Subsidiary to
the effects set forth in this Section 5.02(a).
(b) This Agreement and the related Plan of Merger shall have
been approved at the meeting of the shareholders of the Company
referred to in Section 4.02 by the vote required by the Colorado Act
and the Company's Articles of Incorporation.
(c) The opinion of Tri-Artisan, LLC, delivered to the Board of
Directors of the Company on the date hereof, that the Merger
Consideration is fair, from a financial point of view, to the
shareholders of the Company, shall not have been thereafter withdrawn
or modified in a manner unsatisfactory to the Board of Directors of the
Company.
(d) There shall not be pending any litigation or
administrative proceeding brought by any governmental or other
regulatory or administrative agency or commission requesting or looking
toward an injunction, writ, order judgment or decree that, in the
reasonable judgment of the Company, is reasonably likely, if issued, to
restrain or prohibit the consummation of any of the transactions
contemplated hereby or require rescission of this Agreement or any such
transactions or result in material damages to the officers, directors
and shareholders of the Company if the transactions contemplated hereby
are consummated, nor shall there be in effect any injunction, writ,
judgment, preliminary restraining order or other order or decree of any
nature issued by a court or governmental
32
agency of competent jurisdiction directing that any of the transactions
provided for herein not be consummated as so provided.
(e) All applicable waiting periods (and any extension thereof)
under the HSR Act shall have expired or otherwise been terminated.
ARTICLE VI
CONDUCT AND TRANSACTIONS AFTER THE EFFECTIVE TIME
6.01 EMPLOYEE MATTERS.
(a) For a period of at least two years after the Effective
Time, Buyer shall, or shall cause the Surviving Corporation, a
Subsidiary or any other affiliate of Buyer to maintain welfare and
pension benefit plans, programs and arrangements (other than the
Company's Stock Purchase Plan, Stock Option Plan and any other plans
related to the company's stock, all of which shall be terminated at or
prior to the Effective Time) that are, in the aggregate, for the
employees as a whole who were active full-time employees of CIVCO
immediately before the Effective Time and continue to be active
full-time employees of Buyer, the Surviving Corporation, any Subsidiary
or any other affiliate of Buyer, no less favorable in the aggregate
than those provided by the Company and its Subsidiaries immediately
before the Effective Time (provided that nothing herein shall obligate
Buyer, the Surviving Corporation, any Subsidiary or any other affiliate
of Buyer to provide such employees with any stock-based compensation).
(b) From and after the Effective Time, for purposes of
determining eligibility, vesting and entitlement to vacation and
severance benefits for employees actively employed full-time by the
Company or any Subsidiary immediately before the Effective Time under
any compensation, severance, welfare, pension, benefit or savings plan
of Buyer or any of its affiliates in which active full-time employees
of the Company and its Subsidiaries become eligible to participate
(whether under Section 6.01(a) above or otherwise), service with the
Company or any of its Subsidiaries (whether before or after the
Effective Time) shall be credited as if such service had been rendered
to Buyer or such affiliate.
(c) If the Surviving Corporation or any of the Subsidiaries,
or any of their respective successors or assigns, transfers all or
substantially all of its properties and assets to any person or persons
(other than Buyer or an affiliate of Buyer), then, and in each such
case, proper provision shall be made so that the transferee assumes
(and if more than one, the transferees assume, jointly and severally)
the obligations set forth in this Section 6.01.
6.02 INDEMNIFICATION OF COMPANY DIRECTORS, OFFICERS AND EMPLOYEES. All
rights to indemnification, expense advancement and exculpation existing in favor
of any present or former director, officer or employee of the Company or any of
its Subsidiaries as provided in the Articles or Certificate of Incorporation,
By-Laws or similar organizational documents of the Company or any of its
Subsidiaries or by law as in effect on the date hereof shall survive the Merger
for a period of at least six years after the Effective Time (or, in the event
any relevant claim is asserted
33
or made within such six-year period, until final disposition of such claim) with
respect to matters occurring at or before the Effective Time, and no action
taken during such period shall be deemed to diminish the obligations set forth
in this Section 6.02. Buyer hereby guarantees, effective at the Effective Time,
all obligations of the Surviving Corporation and the Subsidiaries in respect of
such indemnification and expense advancement. The Company and Buyer agree that
the indemnification and other obligations referred to in this Section 6.02 shall
first be fulfilled pursuant to claims made against the insurance referred to in
Section 6.03 below, subject to any deductible required to be paid by Buyer, the
Surviving Corporation or CIVCO thereunder.
6.03 DIRECTORS AND OFFICERS LIABILITY INSURANCE. For a period of at
least six years after the Effective Time, Buyer shall cause the Surviving
Corporation to maintain in effect either (i) the current policy of directors'
and officers' liability insurance maintained by the Company (provided that Buyer
or the Surviving Corporation may substitute therefor policies of at least the
same coverage and amounts containing terms and conditions which are no less
advantageous in any material respect to the insured parties thereunder, in which
case Buyer or the Surviving Corporation shall promptly deliver a copy of such
policy to each individual that was covered by the directors' and officers'
liability insurance maintained by the Company immediately prior to the Effective
Time) with respect to claims arising from facts or events that occurred at or
before the Effective Time (including consummation of the Merger), or (ii) a
run-off (i.e., "tail") policy or endorsement with respect to the current policy
of directors' and officers' liability insurance covering claims asserted within
six years after the Effective Time arising from facts or events that occurred at
or before the Effective Time (including consummation of the Merger), in which
case Buyer or the Surviving Corporation shall promptly deliver a copy of such
run-off policy to each individual who was covered by the directors' and
officers' liability insurance maintained by the Company immediately prior to the
Effective Time; and such policies or endorsements shall name as insureds
thereunder all present and former directors and officers of the Company or any
of its Subsidiaries. If the Surviving Corporation transfers all or substantially
all of its properties and assets to any person or persons (other than Buyer or
an affiliate of Buyer), then proper provision shall be made so that the
transferee assumes (and if more than one, the transferees assume, jointly and
severally) the obligations set forth in this Section 6.03.
ARTICLE VII
TERMINATION AND ABANDONMENT
7.01 GENERALLY. This Agreement may be terminated and abandoned at any
time before the Effective Time, whether before or after approval of this
Agreement by the shareholders of the Company:
(a) by mutual consent of the Boards of Directors of Buyer and
the Company;
(b) by Buyer or the Company if the transactions contemplated
hereby shall not have been consummated on or before June 30, 2003
(which date may be extended by mutual agreement of Buyer and the
Company), provided that such failure is not due to the failure of the
party seeking to terminate this Agreement (or, in the event Buyer is
seeking to terminate this Agreement, of Buyer Subsidiary) to comply in
all material respects with its obligations under this Agreement;
34
(c) by Buyer, if (i) there occurs a failure of any of the
conditions set forth in Section 5.01 other than for reasons within the
control of Buyer or Buyer Subsidiary and such condition shall not have
been waived under Section 8.03, or (ii) the shareholders of the Company
shall fail to approve this Agreement by the vote required by the
Colorado Act and the Company's Articles of Incorporation at the first
shareholders meeting called for that purpose or any adjournment
thereof;
(d) by the Company, if (i) there occurs a failure of any of
the conditions set forth in Section 5.02 other than for reasons within
the control of the Company or its Subsidiaries and such condition shall
not have been waived under Section 8.03, or (ii) the shareholders of
the Company shall fail to approve this Agreement by the vote required
by the Colorado Act and the Company's Articles of Incorporation at the
first shareholders meeting called for that purpose or any adjournment
thereof; or
(e) by the Company, if a bona fide Third-Party Acquisition
Offer that would, if consummated, represent a Third-Party Transaction
is received by the Company or its shareholders, which the Board of
Directors of the Company determines, in the good-faith exercise of its
fiduciary duties, to accept, approve or recommend.
7.02 PROCEDURE AND EFFECT OF TERMINATION AND ABANDONMENT. In the event
of termination of this Agreement by the Company or Buyer under Section 7.01,
written notice thereof shall forthwith be given to the other party and this
Agreement shall terminate and the Merger shall be abandoned without further
action by any of the parties. If this Agreement is terminated as provided
herein, no party hereto shall have any liability or further obligation to any
other party to this Agreement, except as otherwise provided in Section 8.04 or
to the extent that the termination is a direct result of a willful and material
breach or violation by such party of a representation, warranty, or covenant
contained in this Agreement.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.01 TERMINATION OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the parties set forth in this Agreement (including those set
forth in the Disclosure Schedule) or in any certificate furnished under this
Agreement shall not survive the Effective Time.
8.02 AMENDMENT AND MODIFICATION. To the extent permitted by applicable
law, this Agreement may be amended, modified or supplemented only by written
agreement of the parties hereto at any time before the Effective Time with
respect to any of the terms contained herein, except that after the meeting of
the shareholders contemplated by Section 4.02, the amount of the Merger
Consideration shall not be decreased and the form of the Merger Consideration
shall not be altered without the approval of the shareholders.
8.03 WAIVER OF COMPLIANCE; CONSENTS. Any failure of Buyer or Buyer
Subsidiary, on the one hand, or the Company, on the other hand, to comply with
any obligation, covenant, agreement or condition herein (except the conditions
in Sections 5.01(b) and (e) and 5.02(b) and
35
(e) of this Agreement) may be waived in writing by the Company or by Buyer and
Buyer Subsidiary, respectively, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. Whenever this Agreement requires or permits consent by or on behalf of
any party hereto, such consent shall be given in writing in a manner consistent
with the requirements for a waiver of compliance as set forth in this Section
8.03.
8.04 EXPENSES AND TERMINATION FEE.
(a) Except as otherwise provided in Section 8.04(b), (c) and
(d), all expenses incurred in connection with this Agreement and the
consummation of the transactions contemplated hereby shall be paid by
the party incurring such expenses. Any such expenses incurred by the
Company and not paid before the Effective Time shall be liabilities of
the Surviving Corporation.
(b) If this Agreement is terminated under Section 7.01 and if
Buyer is entitled to a Termination Fee (as defined below) under
paragraph (c) or (d) of this Section 8.04, then the Company shall, at
the same time as the Termination Fee is required to be paid under
paragraph (c) or (d) of this Section 8.04, pay Buyer an amount equal to
all reasonable, documented out-of-pocket expenses incurred by or on
behalf of Buyer or Buyer Subsidiary in connection with the negotiation,
preparation, financing, execution or consummation of this Agreement and
the transactions contemplated hereby, including reasonable legal,
accounting, travel, filing, printing, financing commitment and other
out-of-pocket expenses; provided, however, that the aggregate expenses
payable by the Company to Buyer under this Section 8.04(b) shall not
exceed $100,000.
(c) The Company shall, within five business days after
consummation of a Third-Party Transaction referenced in (iii) below,
pay Buyer a fee of $2,000,000 (a "TERMINATION FEE"), in addition to the
expenses set forth in Section 8.04(b), if each of the following occurs:
(i) this Agreement is terminated (A) by Buyer under
Section 7.01(b) or (c)(i) and the condition giving rise to
Buyer's right of termination resulted from a breach by the
Company of any of its representations, warranties or covenants
contained in this Agreement, (B) by Buyer under Section
7.01(c)(ii), or (C) by the Company under Section 7.01(d)(ii);
and
(ii) before such breach (in the case of termination
under Section 7.01(b) or (c)(i)) or the first meeting of the
shareholders of the Company called for purposes of approving
this Agreement (in the case of termination under Section
7.01(c)(ii) or (d)(ii)) (A) any person or group shall have
informed the Company that such person or group proposes,
intends to propose, is considering proposing, or will or may,
if the Merger is delayed, abandoned or not approved by the
Company's shareholders, propose, a Third-Party Transaction (as
defined below), or (B) any such person or group or the Company
publicly announces (including any filing with any federal or
state office or agency) that such person or
36
group has proposed, intends to propose, is considering
proposing, or will or may, if the Merger is delayed, abandoned
or not approved by the Company's shareholders, propose, a
transaction which, if consummated, would constitute a
Third-Party Transaction; and
(iii) within six months after such termination a
Third-Party Transaction with such person or group is
consummated.
(d) If this Agreement is terminated by the Company under
Section 7.01(e), the Company shall, within five business days after
termination, pay Buyer a Termination Fee of $2,000,000, in addition to
the expenses set forth in Section 8.04(b).
(e) As used herein, "THIRD-PARTY TRANSACTION" means the
occurrence of any of the following events:
(i) the acquisition of the Company by merger,
consolidation, statutory share exchange or other business
combination transaction by any person other than Buyer, Buyer
Subsidiary or any affiliate thereof (a "THIRD PARTY"), in
which transaction the holders of shares of Company Common
Stock immediately before the transaction receive a per-share
consideration in excess of the Merger Consideration;
(ii) the acquisition by any Third Party of 50% or
more (in book value or market value) of the total assets of
the Company and its Subsidiaries, taken as a whole, for
consideration that indicates a total value for the Company and
its Subsidiaries in excess of the sum of (A) product of the
number of shares of Company Common Stock outstanding on the
date of this Agreement multiplied by the Merger Consideration,
plus (B) the aggregate of the Option Settlement Amounts for
all Options outstanding on the date of this Agreement; or
(iii) the acquisition by a Third Party of 50% or more
of the outstanding shares of Company Common Stock, whether by
tender offer, exchange offer or otherwise, for a per-share
consideration in excess of the Merger Consideration.
(f) In no event shall more than one Termination Fee be payable
under this Section 8.04. The right to receive a Termination Fee shall
be the sole and exclusive remedy of Buyer and Buyer Subsidiary against
the Company and any of its Subsidiaries and their respective directors,
officers, employees, attorneys, agents, advisors or other
representatives with respect to the occurrences giving rise to such
payment.
8.05 INDEMNIFICATION. After the Effective Time, the Company's liability
to Buyer, Buyer Subsidiary, and their respective directors, officers, employees,
agents or advisors, or any of their respective successors or assigns
(individually, a "BUYER INDEMNITEE" and collectively the "BUYER INDEMNITEES"),
for any and all demands, claims, debts, actions, assessments, judgments,
settlements, sanctions, obligations and other liabilities (whether absolute,
accrued, contingent, fixed or otherwise, known or unknown, due or to become due
or otherwise), monetary damages,
37
fines, taxes, fees, penalties, interest obligations, deficiencies, losses and
expenses (including, without limitation, amounts paid in settlement, interest,
court costs, costs of investigators, reasonable fees and expenses of attorneys,
accountants, financial advisors and other expert, and other expenses of
litigation) incurred or suffered by them resulting from, relating to, arising
out of or constituting any breach of representation or warranty made by the
Company in this Agreement shall be limited to the amount(s) determined by the
issuer of the Insurance Policy to be payable to such Buyer Indemnitees under the
Insurance Policy following a claim by such Buyer Indemnitees in accordance with
the Insurance Policy.
8.06 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No party to this
Agreement shall issue any press release or make any public announcement relating
to the subject matter of this Agreement without prior written approval of the
other parties; provided, however, that each of the Company and Buyer may make
any public disclosure it believes in good faith is required by applicable law or
any listing or trading agreement concerning its publicly traded securities (in
which case the disclosing party will advise the other parties to this Agreement
before making the disclosure).
8.07 ADDITIONAL AGREEMENTS. Subject to the terms and conditions of this
Agreement, each of the parties agrees to use all reasonable efforts to take or
cause to be taken all action, and do or cause to be done all things necessary,
proper or advisable under applicable laws and regulations, to ensure that the
conditions set forth in Article V are satisfied and to consummate and make
effective the transactions contemplated by this Agreement (provided that nothing
herein stated shall require the Company to take or cause to be taken any action,
or do or cause to be done any things, which the Board of Directors of the
Company, respectively, in the good-faith exercise of its fiduciary duties,
determines should not be taken or done). If, at any time after the Effective
Time, any further action is necessary or desirable to carry out the purposes of
this Agreement, the proper officers and directors of each corporation that is a
party to this Agreement shall take all such necessary action.
8.08 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, effective when
delivered, or if delivered by express delivery service, effective when
delivered, or if mailed by registered or certified mail (return receipt
requested), effective three business days after mailing, to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) If to Buyer or Buyer Subsidiary, to it at:
0000 Xxxxxxxx Xxxxxx
Xxxxx Xxx, Xxxxx 0000
Xxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxx Xxxxxx and Xxxxx Xxxxxxxxx
38
with a copy to:
Xxxxxx X. Xxxxxxx
Xxxxx & Xxxxxxx LLP
One Xxxxx Center
0000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
(b) If to the Company, to it at:
000 X. Xxxxxxx Xx., Xxxx X, X.X. Xxx 000
Xxxxxxxx, XX 00000-0000
Phone: 000-000-0000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
with a copy to each of:
Xxxxx X. Xxxxxx, General Counsel
000 X. Xxxxxxx Xx., Xxxx X, X.X. Xxx 000
Xxxxxxxx, XX 00000-0000
Phone: 000-000-0000
Fax: (000) 000-0000
and
Xxxxxxxxxxx X. Xxxxxxx, Esq.
Faegre & Xxxxxx LLP
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
8.09 ASSIGNMENT. This Agreement and all of the provisions hereof shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any party
hereto without the prior written consent of the other parties. Except for the
provisions of Article I and Sections 6.01, 6.02 and 6.03, this Agreement is not
intended to confer upon any other person except the parties hereto any rights or
remedies hereunder.
8.10 INTERPRETATION. As used in this Agreement, (i) "including" means
"including without limitation"; (ii) "person" includes an individual, a
partnership, a limited liability company, a joint venture, a corporation, a
trust, an incorporated organization and a government or any department or agency
thereof; (iii) "affiliate" has the meaning set forth in Rule 12b-2 promulgated
under the Exchange Act; (iv) "business day" means any day other than a Saturday,
Sunday or a
39
day which is a statutory holiday under the laws of the United States or the
State of Colorado; (v) all dollar amounts are expressed in United States funds;
and (vi) the phrase "to the knowledge of Company" or any similar phrase shall
mean the actual knowledge of one or more of the executive officers of the
Company and its Subsidiaries.
8.11 GOVERNING LAW. The Agreement shall be governed by the laws of the
State of Colorado without giving effect to conflict-of-laws principles.
8.12 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute the same instrument.
8.13 HEADINGS; INTERNAL REFERENCES. The Article and Section headings
contained in this Agreement are solely for the purpose of reference, and are not
part of the agreement of the parties and shall not affect in any way the meaning
or interpretation of this Agreement.
8.14 ENTIRE AGREEMENT. This Agreement, including the Disclosure
Schedule and the exhibits hereto, and the Confidentiality Agreement described in
Section 4.08, embody the entire agreement and understanding of the parties
hereto in respect of the subject matter contained herein, and supersede all
prior agreements and understandings among the parties with respect to such
subject matter. There are no restrictions, promises, representations, warranties
(express or implied), covenants or undertakings of the parties, other than those
expressly set forth or referred to in this Agreement or such Confidentiality
Agreement.
8.15 SEVERABILITY. If any term, provision, covenant, agreement or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants, agreements and restrictions of this Agreement will continue in full
force and effect and will in no way be affected, impaired or invalidated.
8.16 DISCLOSURE SCHEDULE. Matters reflected in the Disclosure Schedule
are not necessarily limited to matters required by this Agreement to be
reflected in the Disclosure Schedule. Such additional matters are set forth for
informational purposes and do not necessarily include other matters of a similar
nature. A disclosure made by the Company in any Section of this Agreement or in
the Disclosure Schedule that is sufficient to reasonably inform Buyer and Buyer
Subsidiary on information required to be disclosed in another Section of this
Agreement or a Disclosure Schedule in order to avoid a misrepresentation
thereunder shall be deemed to have been made with respect to such other Section
of this Agreement or the Disclosure Schedule.
40
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
COLORADO MEDTECH, INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------
Name: Xxxxxxx X. Xxxxx
------------------------
Title: President
-----------------------
CIVCO HOLDING, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------
Name: Xxxxx X. Xxxxxx
------------------------
Title: President
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CMT MERGERCO, INC.
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
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Title: President
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