AGREEMENT AND PLAN OF MERGER
AMONG
MAXXIM MEDICAL, INC.,
MMI ACQUISITION CORP.
AND
CIRCON CORPORATION
TABLE OF CONTENTS
PAGE
ARTICLE I The Offer .............................................. 2
SECTION 1.01. The Offer ...................................... 2
SECTION 1.02. Company Actions ................................ 3
ARTICLE II The Merger ............................................. 5
SECTION 2.01. The Merger ..................................... 5
SECTION 2.02. Closing ........................................ 5
SECTION 2.03. Effective Time ................................. 6
SECTION 2.04. Effects of the Merger .......................... 6
SECTION 2.05. Certificate of Incorporation and Bylaws ........ 6
SECTION 2.06. Directors ...................................... 6
SECTION 2.07. Officers ....................................... 7
ARTICLE III Effect of the Merger on the Capital Stock of the
Constituent Corporations; Payment of Merger
Consideration ......................................... 7
SECTION 3.01. Effect on Capital Stock ........................ 7
SECTION 3.02. Payment of Merger Consideration ................ 8
ARTICLE IV Representations and Warranties of the Company ........... 10
SECTION 4.01. Organization, Standing and Corporate Power ...... 10
SECTION 4.02. Subsidiaries .................................... 10
SECTION 4.03. Capital Structure ............................... 11
SECTION 4.04. Authority; Noncontravention ..................... 12
SECTION 4.05. SEC Documents; Financial Statements ............. 14
SECTION 4.06. Information Supplied ............................ 14
SECTION 4.07. Absence of Certain Changes or Events ............ 15
SECTION 4.08. Litigation; Investigation ....................... 15
SECTION 4.09. Contracts ....................................... 16
SECTION 4.10. Compliance with Laws ............................ 16
SECTION 4.11. Absence of Changes in Benefit Plans; Labor
Relations ....................................... 18
SECTION 4.12. ERISA Compliance ................................ 19
SECTION 4.13. Taxes ........................................... 21
SECTION 4.14. No Excess Parachute Payments .................... 21
SECTION 4.15. Intellectual Property ........................... 22
SECTION 4.16. State Takeover Statutes ......................... 25
SECTION 4.17. Rights Agreement ................................ 25
SECTION 4.18. Brokers; Schedule of Fees and Expenses .......... 25
SECTION 4.19. Opinion of Financial Advisor .................... 26
SECTION 4.20. Annual Meeting .................................. 26
SECTION 4.21. Products Liability .............................. 26
SECTION 4.22. Insurance ........................................ 27
ARTICLE V Representations and Warranties of Parent and Sub ......... 28
SECTION 5.01. Organization, Standing and Corporate Power ...... 28
SECTION 5.02. Authority; Noncontravention ..................... 28
SECTION 5.03. Information Supplied ............................ 29
SECTION 5.04. Interim Operations of Sub ....................... 30
SECTION 5.05. Brokers ......................................... 30
SECTION 5.06. Financing ....................................... 30
ARTICLE VI Covenants ............................................... 30
SECTION 6.01. Covenants of the Company ........................ 30
SECTION 6.02. No Solicitation ................................. 33
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TABLE OF CONTENTS
(CONTINUED)
PAGE
ARTICLE VII Additional Agreements .................................. 36
SECTION 7.01. Stockholder Approval; Preparation of Proxy
Statement ....................................... 36
SECTION 7.02. Access to Information ........................... 37
SECTION 7.03. State Takeover Laws ............................. 37
SECTION 7.04. Reasonable Efforts .............................. 38
SECTION 7.05. Company Stock Options ........................... 39
SECTION 7.06. Directors ....................................... 39
SECTION 7.07. Fees and Expenses ............................... 40
SECTION 7.08. Indemnification ................................. 41
SECTION 7.09. Certain Litigation .............................. 42
SECTION 7.10. Rights Agreement ................................ 42
SECTION 7.11. Notification of Certain Matters ................. 42
ARTICLE VIII Conditions ............................................ 43
SECTION 8.01. Conditions to Each Party's Obligation To Effect
the Merger ...................................... 43
ARTICLE IX Termination and Amendment ............................... 43
SECTION 9.01. Termination ..................................... 43
SECTION 9.02. Effect of Termination ........................... 45
SECTION 9.03. Amendment ....................................... 45
SECTION 9.04. Extension; Waiver ............................... 46
ARTICLE X Miscellaneous ............................................ 46
SECTION 10.01. Nonsurvival of Representations, Warranties and
Agreements ..................................... 46
SECTION 10.02. Notices ........................................ 46
SECTION 10.03. Interpretation ................................. 48
SECTION 10.04. Counterparts ................................... 48
SECTION 10.05. Entire Agreement; No Third Party Beneficiaries . 48
SECTION 10.06. Governing Law .................................. 48
SECTION 10.07. Publicity ...................................... 48
SECTION 10.08. Assignment ..................................... 49
SECTION 10.09. Enforcement .................................... 49
SECTION 10.10. Severability ................................... 49
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of November 21, 1998, by and among
Maxxim Medical, Inc., a Delaware corporation ("Parent"), MMI Acquisition
Corp., a Delaware corporation and a wholly owned subsidiary of Parent
("Sub"), and Circon Corporation, a Delaware corporation (the "Company").
WHEREAS, in furtherance of the acquisition of the Company by Parent on
the terms and subject to the conditions set forth in this Agreement, Parent
proposes to cause Sub to make a tender offer (as it may be amended from time
to time as permitted under this Agreement, the "Offer") to purchase all the
outstanding shares of Common Stock, par value $.01 per share, of the Company
(together with any associated Rights (as defined in the Rights Agreement (as
defined)), the "Company Common Stock"; the shares of Company Common Stock
being hereinafter collectively referred to as the "Shares"), at a purchase
price (the "Offer Price") of $15 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set
forth in this Agreement and in Annex A attached hereto (the "Offer
Conditions");
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have approved the Offer and the merger of Sub with and into the
Company (the "Merger") upon the terms and subject to the conditions set forth
in this Agreement and the Offer Conditions, whereby each issued and
outstanding Share, other than Shares owned directly or indirectly by Parent
or the Company and Dissenting Shares (as defined in Section 3.01(d)), will be
converted into the right to receive the price per Share paid in the Offer; and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer
and the Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Sub and the Company hereby agree as follows:
ARTICLE I
THE OFFER
SECTION I.1. THE OFFER.
(1) Subject to the provisions of this Agreement and the
satisfaction or waiver of the conditions set forth in Annex A, as promptly as
practicable but in no event later than five business days after the date of
the public announcement by Parent and the Company of this Agreement, Sub
shall, and Parent shall cause Sub to, commence the Offer. The initial
scheduled expiration date for the Offer shall be January 5, 1999. Sub shall
be obligated to, and Parent shall cause Sub to, accept for payment, and pay
for as promptly as practicable after the expiration of the Offer all Shares
validly tendered pursuant to the Offer and not withdrawn subject only to the
conditions set forth in Exhibit A (the "Offer Conditions") (any of which may
be waived in whole or in part by Sub in its sole discretion, provided that,
without the consent of the Company, Sub shall not waive the Minimum Condition
(as defined in Exhibit A)) and to the terms and conditions of this Agreement.
Sub expressly reserves the right to modify the terms of the Offer, except
that, without the consent of the Company, Sub shall not (i) reduce the number
of Shares subject to the Offer, (ii) reduce the Offer Price, (iii) add to the
Offer Conditions, (iv) except as provided in the next sentence, extend the
Offer, (v) change the form of consideration payable in the Offer or (vi)
amend any other term of the Offer in any manner adverse to the holders of the
Shares. Notwithstanding the foregoing, Sub may, without the consent of the
Company, (A) extend the Offer, if at the initial scheduled or extended
expiration date of the Offer any of the Offer Conditions shall not be
satisfied or waived, until such time as such conditions are satisfied or
waived, (B) extend the Offer for any period required by any rule, regulation,
interpretation or position of the Securities and Exchange Commission (the
"SEC") or the staff thereof applicable to the Offer and (C) extend the Offer
on one or more occasions for an aggregate period of not more than 10 business
days beyond the latest expiration date that would otherwise be permitted
under clauses (A) or (B) of this sentence, if on such expiration date there
shall not have been tendered at least 90% of the outstanding Shares.
(2) On the date of commencement of the Offer, Parent and Sub shall
file with the SEC a Tender Offer Statement on Schedule 14D-1 (the "Schedule
14D-1") with respect to the Offer, which shall contain an offer to purchase
and a related letter of transmittal and summary advertisement (such Schedule
14D-1 and the documents included therein pursuant to which the Offer will be
made, together with any supplements or amendments thereto, the "Offer
Documents"). Parent and Sub agree that the Offer Documents shall comply as
to form in all material respects with the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations promulgated
thereunder and the Offer Documents, on the date first published, sent or
given to the Company's stockholders, shall not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation or warranty is made by Parent or Sub with respect to
information supplied by the Company or any of its stockholders specifically
for inclusion or incorporation by reference in the Offer Documents. Each of
Parent, Sub and the Company agree promptly to correct any information
provided by it for use in the Offer Documents if and to the extent that such
information shall have become false or misleading in any material respect,
and Parent and Sub further agree to take all steps necessary to cause the
Schedule 14D-1 as so corrected to be filed with the SEC and the other Offer
Documents as so corrected to be disseminated to the Company's stockholders,
in each case as and to the extent required by applicable federal securities
laws. The Company and its counsel shall be given reasonable opportunity to
review and comment upon the Offer Documents prior to their filing with the
SEC or dissemination to the stockholders of the Company. Parent and Sub
agree to provide the Company and its counsel any comments Parent, Sub or
their counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments.
(3) Parent shall provide or cause to be provided to Sub on a
timely basis the funds necessary to accept for payment, and pay for, any
Shares that Sub becomes obligated to accept for payment, and pay for,
pursuant to the Offer.
SECTION I.2. COMPANY ACTIONS.
(1) The Company hereby approves of and consents to the Offer and
represents that the Board of Directors of the Company, at a meeting duly
called and held, duly and unanimously adopted resolutions approving this
Agreement, the Offer and the Merger (including but not limited to the
approval for purposes of section 203 of the Delaware General Corporation Law
(the "DGCL") hereinafter referred to as the "203 Approval"), determining, as
of the date of such resolutions, that the terms of the Offer and the Merger
are fair to, and in the best interests of, the Company's stockholders,
recommending that the Company's stockholders accept the Offer, tender their
shares pursuant to the Offer and approve this Agreement (if required) and
approving the acquisition of Shares by Sub pursuant to the Offer and the
other transactions contemplated by this Agreement. The Company believes that
each of its directors currently intends to tender all Shares (other than
Shares, if any, held by such person that, if tendered, could cause such
person to incur liability under the provisions of Section 16(b) of the
Exchange Act) owned by such person pursuant to the Offer.
(2) On the date the Offer Documents are filed with the SEC, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as
supplemented or amended from time to time, the "Schedule 14D-9") containing,
subject to the terms of this Agreement, the recommendation described in
paragraph (a) and shall mail the Schedule 14D-9 to the stockholders of the
Company. The Schedule 14D-9 shall comply as to form in all material respects
with the requirements of the Exchange Act and the rules and regulations
promulgated thereunder and, on the date filed with the SEC and on the date
first published, sent or given to the Company's stockholders, shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
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not misleading, except that no representation or warranty is made by the
Company with respect to information supplied by Parent or Sub specifically
for inclusion or incorporation by reference in the Schedule 14D-9. Each of
the Company, Parent and Sub agrees promptly to correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that such
information shall have become false or misleading in any material respect,
and the Company further agrees to take all steps necessary to amend or
supplement the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended
or supplemented to be filed with the SEC and disseminated to the Company's
stockholders, in each case as and to the extent required by applicable
federal securities laws. Parent and its counsel shall be given reasonable
opportunity to review and comment upon the Schedule 14D-9 prior to its filing
with the SEC or dissemination to stockholders of the Company. The Company
agrees to provide Parent and its counsel any comments the Company or its
counsel may receive from the SEC or its staff with respect to the Schedule
14D-9 promptly after the receipt of such comments.
(3) In connection with the Offer and the Merger, the Company shall
cause its transfer agent to furnish Sub promptly with mailing labels
containing the names and addresses of the record holders of Shares as of a
recent date and of those persons becoming record holders subsequent to such
date, together with copies of all lists of stockholders, security position
listings and computer files and all other information in the Company's
possession or control regarding the beneficial owners of Shares, and shall
furnish to Sub such information and assistance (including updated lists of
stockholders, security position listings and computer files) as Parent may
reasonably request in communicating the Offer to the Company's stockholders.
Subject to the requirements of applicable law, and except for such steps as
are necessary to disseminate the Offer Documents and any other documents
necessary to consummate the Merger, Parent and Sub and their agents shall
hold in confidence the information contained in any such labels, listings and
files, will use such information only in connection with the Offer and the
Merger and, if this Agreement shall be terminated, will deliver, and will use
their reasonable efforts to cause their agents to deliver, to the Company all
copies and any extracts or summaries from such information then in their
possession or control.
ARTICLE II
THE MERGER
SECTION II.1. THE MERGER. Subject to the last two sentences of this
Section 2.01, upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the DGCL, Sub shall be merged with and into
the Company at the Effective Time (as defined in Section 2.03). Following
the Effective Time, the separate corporate existence of Sub shall cease and
the Company shall continue as the surviving corporation (the "Surviving
Corporation") and shall succeed to and assume all the rights and obligations
of Sub in accordance with the DGCL. At the election of Parent, to the extent
that any such action would not cause a failure of a condition to the Offer or
the Merger, (i) any direct or indirect wholly owned subsidiary (as defined in
Section 10.03) of Parent may be substituted for and assume all of the rights
and obligations of Sub as a constituent corporation in the Merger or (ii) the
Company may be merged with and into Sub with Sub continuing as the Surviving
Corporation with the effects set forth above and in Section 2.04. In either
such event, the parties agree to execute an appropriate amendment to this
Agreement in order to reflect the foregoing.
SECTION II.2. CLOSING. The closing of the Merger will take place at
10:00 a.m. (New York time) on a date to be specified by Parent or Sub, which
shall be no later than the second business day after satisfaction or waiver
of the conditions set forth in Article VIII (the "Closing Date"), at the
offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, unless another date,
time or place is agreed to in writing by the parties hereto.
SECTION II.3. EFFECTIVE TIME. Subject to the provisions of this
Agreement, as soon as practicable on or after the Closing Date, the parties
shall file with the Delaware Secretary of State a certificate of merger or
other appropriate documents (in any such case, the "Certificate of Merger")
executed in accordance with the relevant provisions of the DGCL and shall
make all other filings or recordings required under the DGCL. The Merger
shall become effective at such time as the Certificate of Merger is duly
filed with the Delaware Secretary of State, or at such other time as Sub and
the Company shall agree should be specified in the Certificate of Merger (the
time the Merger becomes effective being hereinafter referred to as the
"Effective Time").
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SECTION II.4. EFFECTS OF THE MERGER. The Merger shall have the effects
set forth in Section 259 of the DGCL.
SECTION II.5. CERTIFICATE OF INCORPORATION AND BYLAWS.
(1) The Certificate of Incorporation of the Company as in effect
immediately prior to the Effective Time shall be amended as of the Effective
Time so that Article fourth thereof shall read in its entirety as follows:
"The total number of shares of stock which the Corporation shall
have the authority to issue is 1,000."
As so amended, such certificate of incorporation shall be the certificate of
incorporation of the Surviving Corporation, until thereafter changed or
amended, subject to Section 7.08, as provided therein or by applicable law.
(2) The Bylaws of the Company as in effect immediately prior to
the Effective Time, shall be the bylaws of the Surviving Corporation, until
thereafter changed or amended, subject to Section 7.08, as provided therein
or by applicable law.
SECTION II.6. DIRECTORS. The directors of Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation, until the
earlier of their resignation or removal or their respective successors are
duly elected and qualified, as the case may be.
SECTION II.7. OFFICERS. The officers of the Company immediately prior
to the Effective Time shall be the officers of the Surviving Corporation,
until the earlier of their resignation or removal or their respective
successors are duly elected and qualified, as the case may be.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS;
PAYMENT OF MERGER CONSIDERATION
SECTION III.1. EFFECT ON CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
Shares or any shares of capital stock of Sub:
(1) CAPITAL STOCK OF SUB. Each issued and outstanding share of
capital stock of Sub shall be converted into and become one fully paid and
nonassessable share of Common Stock, par value $.01 per share, of the
Surviving Corporation.
(2) CANCELLATION OF TREASURY STOCK AND PARENT OWNED STOCK. Each
Share that is owned by the Company or by any subsidiary of the Company and
each Share that is owned by Parent, Sub or any other subsidiary of Parent
shall automatically be canceled and retired and shall cease to exist, and no
consideration shall be delivered in exchange therefor.
(3) CONVERSION OF SHARES. Subject to Section 3.01(d), each issued
and outstanding Share (other than Shares to be canceled in accordance with
Section 3.01(b)) shall be converted into the right to receive from the
Surviving Corporation in cash, without interest, the price per share paid in
the Offer (the "Merger Consideration"). As of the Effective Time, all such
Shares shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each holder of a certificate
representing any such Shares shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration, without
interest.
(4) SHARES OF DISSENTING STOCKHOLDERS. Notwithstanding anything
in this Agreement to the contrary, any issued and outstanding Shares held by
a person (a "Dissenting Stockholder") who objects to the Merger and complies
with all the provisions of Delaware law concerning the right of holders of
Shares to dissent from the Merger and require appraisal of their Shares
("Dissenting Shares") shall not be converted as described in Section 3.01(c),
but shall be converted into the right to receive such consideration as may be
determined to be due to such Dissenting Stockholder pursuant to Delaware law.
If, after the Effective Time, such Dissenting Stockholder withdraws his
demand for appraisal or fails to perfect or otherwise loses his right to
appraisal, in any case pursuant to the DGCL, his Shares shall be deemed to be
converted as of the Effective Time into the right to receive the Merger
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Consideration, without interest. The Company shall give Parent (i) prompt
notice of any demands for appraisal of Shares received by the Company or the
receipt by the Company of any documents or instruments with respect to
stockholder's rights of appraisal pursuant to the DGCL and (ii) the
opportunity to participate in and direct all negotiations and proceedings
with respect to any such demands. The Company shall not, without the prior
written consent of Parent, make any payment with respect to, or settle, offer
to settle or otherwise negotiate, any such demands.
SECTION III.2. PAYMENT OF MERGER CONSIDERATION.
(1) PAYING AGENT. Prior to the Effective Time, Parent shall
designate a bank or trust company to act as paying agent in the Merger (the
"Paying Agent"), and, from time to time on, prior to or after the Effective
Time, Parent shall make available, or cause the Surviving Corporation to make
available, to the Paying Agent cash in amounts and at the times necessary for
the prompt payment of the Merger Consideration upon surrender of certificates
representing Shares as part of the Merger pursuant to Section 3.01 (it being
understood that any and all interest earned on funds made available to the
Paying Agent pursuant to this Agreement shall be turned over to Parent).
(2) SURRENDER OF CERTIFICATES. As soon as reasonably practicable
after the Effective Time, the Paying Agent shall mail to each holder of
record of a certificate or certificates that immediately prior to the
Effective Time represented Shares (the "Certificates"), (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in a form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to the
Paying Agent or to such other agent or agents as may be appointed by Parent,
together with such letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Paying Agent, the holder of
such Certificate shall be entitled to receive in exchange therefor the amount
of cash into which the Shares theretofore represented by such Certificate
shall have been converted pursuant to Section 3.01, and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of
ownership of Shares that is not registered in the transfer records of the
Company, payment may be made to a person other than the person in whose name
the Certificate so surrendered is registered, if such Certificate shall be
properly endorsed or otherwise be in proper form for transfer and the person
requesting such payment shall pay any transfer or other taxes required by
reason of the payment to a person other than the registered holder of such
Certificate or establish to the satisfaction of the Surviving Corporation
that such tax has been paid or is not applicable. Until surrendered as
contemplated by this Section 3.02, each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive upon
such surrender the amount of cash, without interest, into which the Shares
theretofore represented by such Certificate shall have been converted
pursuant to Section 3.01. No interest will be paid or will accrue on the
cash payable upon the surrender of any Certificate.
(3) NO FURTHER OWNERSHIP RIGHTS IN SHARES. All cash paid upon the
surrender of Certificates in accordance with the terms of this Article III
shall be deemed to have been paid in full satisfaction of all rights
pertaining to the Shares theretofore represented by such Certificates. At
the Effective Time, the stock transfer books of the Company shall be closed,
and there shall be no further registration of transfers on the stock transfer
books of the Surviving Corporation of the Shares. If thereafter Certificates
are presented to the Surviving Corporation or the Paying Agent for any
reason, they shall be canceled and exchanged as provided in this Article III.
(4) NO LIABILITY; TERMINATION OF FUND. At any time following six
months after the Effective Time, the Surviving Corporation shall be entitled
to require the Paying Agent to deliver to it any funds (including any
interest received with respect thereto) which had been made available to the
Paying Agent and which have not been disbursed to holders of Certificates,
and thereafter such holders shall be entitled to look to the Surviving
Corporation (subject to abandoned property, escheat, or other similar Laws)
only as general creditors thereof with respect to the Merger Consideration
payable upon due surrender of their Certificates, without any interest
thereon. None of Parent, Sub, the Company or the Paying Agent shall be
liable to any person in respect of any cash delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
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(5) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
certificates evidencing Shares shall have been lost, stolen or destroyed, the
Paying Agent shall pay to such holder the Merger Consideration required
pursuant to Section 3.01, in exchange for such lost, stolen or destroyed
certificates, upon the making of an affidavit of that fact by the holder
thereof with such assurances as the Paying Agent, in its discretion and as a
condition precedent to the payment of the Merger Consideration, may
reasonably require of the holder of such lost, stolen or destroyed
certificates.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
SECTION IV.1. ORGANIZATION, STANDING AND CORPORATE POWER. Each of the
Company and its subsidiaries (as defined in Section 10.03) is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has all requisite corporate power
and authority to carry on its business as now being conducted. Each of the
Company and its subsidiaries is duly qualified or licensed to do business and
is in good standing in each jurisdiction in which the nature of its business
or the ownership, leasing or operation of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where
the failure to be so qualified or licensed individually or in the aggregate
would not have a material adverse effect (as defined in Section 10.03) on the
Company. The Company has delivered to Parent complete and correct copies of
the certificate of incorporation and by-laws of the Company and each of its
subsidiaries, in each case as amended to the date hereof.
SECTION IV.2. SUBSIDIARIES. Exhibit B to this Agreement lists as to
each subsidiary (as defined in Section 10.03) of the Company, the number of
shares of capital outstanding and the holders of securities of such capital
stock. All the outstanding shares of capital stock of, or other equity
interests in, each such subsidiary have been validly issued and are fully
paid and nonassessable and are owned directly or indirectly by the Company,
free and clear of all pledges, claims, liens, charges, encumbrances and
security interests of any kind or nature whatsoever (collectively, "Liens")
and free of any other restriction (including any restriction on the right to
vote, sell or otherwise dispose of such capital stock or other ownership
interests). Other than with respect to the subsidiaries listed on Exhibit B
and as set forth in Section 4.02 of the confidential memorandum of the
Company as of the date hereof delivered to Parent (the "Disclosure
Schedule"), the Company does not directly or indirectly own any securities or
other beneficial ownership interests in any other entity (including through
joint ventures or partnership arrangements), or have any investment in any
other person.
SECTION IV.3. CAPITAL STRUCTURE. The authorized capital stock of the
Company consists of 50,000,000 shares of Company Common Stock and 1,000,000
shares of preferred stock, par value $.01 per share ("Preferred Stock"). At
the close of business on November 20, 1998, (i) 13,440,490 shares of Company
Common Stock and no shares of Preferred Stock were issued and outstanding,
(ii) no shares of Company Common Stock were held by the Company in its
treasury, (iii) 960,881 shares of Company Common Stock were reserved for
issuance pursuant to outstanding Stock Options under Stock Option Plans (as
defined in Section 7.04) and 226,767 shares of Company Common Stock were
reserved for issuance pursuant to outstanding warrants described in Schedule
4.03 (the "Warrants"), and (iv) shares of Series A Participating Preferred
Stock, par value $.01 per share (the "Series A Preferred Stock") were
reserved for issuance in connection with the Company's Preferred Shares
Rights Agreement dated August 14, 1996 (the "Rights Agreement"). The "In the
Money Value" of a Stock Option or a Warrant means the product of (x) the
number of shares subject to such Stock Option or Warrant, multiplied by (y)
the excess (if any) of the Offer Price over the exercise price thereof. The
aggregate In-the-Money Value of all Stock Options and Warrants on November
20, 1998 was $2,680,696. Except as set forth above, no shares of capital
stock or other voting securities of the Company were issued, reserved for
issuance or outstanding. All outstanding shares of capital stock of the
Company are, and all shares which may be issued pursuant to the Stock Option
Plans will be, when issued in accordance with the terms thereof, duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. There are no bonds, debentures, notes or other
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indebtedness of the Company having the right to vote (or convertible into
securities having the right to vote) on any matters on which stockholders of
the Company may vote. Except as set forth above, there are no securities,
options, warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which the Company or any of its subsidiaries is a
party, or by which the Company or any of its subsidiaries are bound,
obligating the Company or any of its subsidiaries to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of capital stock
or other voting securities of the Company or any of its subsidiaries or
obligating the Company or any of its subsidiaries to issue, grant, extend or
enter into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. The Company is not a party to any
voting agreement with respect to the voting of any of its securities or the
securities of any of its subsidiaries. There are not any outstanding
contractual obligations of the Company or any of its subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of the
Company or any of its subsidiaries. Following the consummation of the
Merger, there will not be outstanding any rights, warrants, options or other
securities entitling the holder thereof to purchase, acquire or otherwise
receive any shares of the capital stock of the Company (or any other
securities exercisable for or convertible into such Shares).
SECTION IV.4. AUTHORITY; NONCONTRAVENTION. The Company has the
requisite corporate power and authority to enter into this Agreement and,
subject to, if required by law, approval of the Merger by an affirmative vote
of the holders of a majority of the Shares (the "Company Stockholder
Approval"), to consummate the transactions contemplated by this Agreement.
The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate action on the
part of the Company, subject, in the case of this Agreement, to the Company
Stockholder Approval if such approval is required by law. This Agreement has
been duly executed and delivered by the Company and constitutes a valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms. The Company Stockholder Approval is the only vote
of the holders of any class or series of the Company's capital stock which is
necessary to approve this Agreement and the transactions contemplated hereby.
The execution and delivery of this Agreement do not, and the consummation of
the transactions contemplated by this Agreement and compliance with the
provisions of this Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration
of any obligation or to loss of a material benefit under, or result in the
creation of any Liens in or upon any of the properties or assets of the
Company or any of its subsidiaries under any provision of (i) the Certificate
of Incorporation or Bylaws of the Company (each as amended) or the comparable
organizational documents of any of its subsidiaries, (ii) except as set forth
in Section 4.04 of the Disclosure Schedule, any loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement, instrument,
permit, concession, franchise or license applicable to the Company or any of
its subsidiaries or any of their respective properties or assets or (iii)
subject to the governmental filings and other matters referred to in the
second following sentence, any (A) statute, law, ordinance, rule or
regulation or (B) judgment, order or decree applicable to the Company or any
of its subsidiaries or any of their respective properties or assets, other
than, in the case of clauses (ii) and (iii), any such conflicts, violations,
defaults, rights or Liens that individually or in the aggregate would not (x)
have a material adverse effect on the Company, (y) impair the ability of the
Company to perform its obligations under this Agreement or to carry on its
business as currently conducted or (z) prevent or materially delay the
consummation of any of the transactions contemplated by this Agreement.
Neither the execution and delivery of this Agreement nor the consummation of
the transactions contemplated hereby will breach, or with notice, the passage
of time or otherwise result in a breach of, any of the Company's obligations
under the agreement dated November 9, 1998 between the Company, the Circon
Shareholders Committee and the other signatories thereto. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Federal, state or local government or any court, administrative
agency or commission or other governmental authority or agency, domestic or
foreign (a "Governmental Entity"), is required by or with respect to the
Company or any of its subsidiaries in connection with the execution and
delivery of this Agreement by the Company or the consummation by the Company
-7-
of the Merger or the transactions contemplated by this Agreement, except for
(1) the filing of a premerger notification and report form by the Company
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended
(the "HSR Act") and filings under similar laws of certain foreign
jurisdictions as may be required ("Foreign Filings"), (2) the filing with the
SEC and the Nasdaq Stock Market, Inc. of (A) the Schedule 14D-9, (B) a proxy
statement relating to the Company Stockholder Approval, if such approval is
required by law (as amended or supplemented from time to time, the "Proxy
Statement") and (C) such reports under Section 13(a) of the Exchange Act as
may be required in connection with this Agreement and the transactions
contemplated by this Agreement, (3) the filing of the Certificate of Merger
with the Delaware Secretary of State and appropriate documents with the
relevant authorities of other states in which the Company is qualified to do
business and (4) such other consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of which to be obtained
or made would not, individually or in the aggregate, have a material adverse
effect on the Company or prevent or materially delay the consummation of any
of the transactions contemplated by this Agreement or impair the ability of
the Company to carry on its business as presently conducted.
SECTION IV.5. SEC DOCUMENTS; FINANCIAL STATEMENTS. The Company has
filed all required reports, schedules, forms, statements and other documents
with the SEC since January 1, 1996 (the "SEC Documents"). As of their
respective dates, the SEC Documents complied in all material respects with
the requirements of the Securities Act of 1933 (the "Securities Act"), or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such SEC Documents, and none of the SEC
Documents at the time they were filed contained any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents complied as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles ("GAAP")
(except, in the case of unaudited statements, as permitted by Form 10-Q of
the SEC) applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto) and fairly presented the financial
position of the Company and its consolidated subsidiaries as of the dates
thereof and the results of its operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments and the absence of footnotes). Except as set forth in the Filed
SEC Documents (as defined in Section 4.07) or as incurred in the ordinary
course of business consistent with past practice since the date of the most
recent financial statements included in the Filed SEC Documents, neither the
Company nor any of its subsidiaries has any material liabilities or
obligations of any nature (whether accrued, absolute, contingent or
otherwise) which would be required under GAAP to be set forth on a
consolidated balance sheet of the Company and its subsidiaries taken as a
whole.
SECTION IV.6. INFORMATION SUPPLIED. None of the information supplied
or to be supplied by the Company specifically for inclusion or incorporation
by reference in (i) the Offer Documents, (ii) the Schedule 14D-9 or the Proxy
Statement or (iii) the information to be filed by the Company in connection
with the Offer pursuant to Rule 14f-1 promulgated under the Exchange Act (the
"Information Statement"), will, in the case of the Offer Documents, the
Schedule 14D-9 and the Information Statement, at the respective times the
Offer Documents, the Schedule 14D-9 and the Information Statement are filed
with the SEC or first published, sent or given to the Company's stockholders,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made,
not misleading. The Schedule 14D-9 and the Information Statement will comply
as to form in all material respects with the requirements of the Exchange Act
and the rules and regulations thereunder, except that no representation or
warranty is made by the Company with respect to statements made or
incorporated by reference therein based on information supplied by Parent or
Sub specifically for inclusion or incorporation by reference therein.
-8-
SECTION IV.7. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31,
1997 the Company and its subsidiaries have conducted their respective
businesses only in the ordinary course consistent with past practice, and
there has not been (i) any material adverse change (as defined in Section
10.03) in the Company, (ii) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or property) with
respect to any of the Company's capital stock (other than the Rights issued
or to be issued pursuant to the Rights Agreement), (iii) any split,
combination or reclassification of any of its capital stock or any issuance
or the authorization of any issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock, (iv) except as
set forth in Section 4.07 of the Disclosure Schedule, (w) any granting by the
Company or any of its subsidiaries to any director or officer of the Company
or its subsidiaries of any increase in compensation, except in the ordinary
course of business consistent with prior practice or as required under
employment agreements in effect as of December 31, 1997, (x) any granting by
the Company or any of its subsidiaries to any director, officer or employee
of any stock options, (y) any granting by the Company or any of its
subsidiaries to any officer of any increase in severance or termination pay,
or (z) any entry by the Company or any of its subsidiaries into any
employment, severance, termination or similar agreement with any officer,
director or employee, (v) any damage, destruction or loss, whether or not
covered by insurance, that individually or in the aggregate would exceed
$100,000, (vi) any change in accounting methods, principles or practices or
(vii) any tax election.
SECTION IV.8. LITIGATION; INVESTIGATION. Except as set forth in
Section 4.08 of the Disclosure Schedule, there is no suit, action or
proceeding or investigation by or before any court or administrative agency
or arbitral tribunal pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its subsidiaries as to which there
is a reasonable likelihood of an adverse determination that individually or
in the aggregate would have a material adverse effect on the Company, nor is
there any judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against, or, to the knowledge of the
Company, investigation by any Governmental Entity involving, the Company or
any of its subsidiaries that individually or in the aggregate would have a
material adverse effect on the Company.
SECTION IV.9. CONTRACTS. Except as disclosed in the Company's annual
report on form 10-K for the year ended December 31, 1997 and quarterly
reports on Form 10-Q for calendar quarters in 1998 (the "Filed SEC
Documents") and as set forth in item A of Section 4.09 of the Disclosure
Schedule, there are no contracts or agreements that are of a nature required
to be filed as an exhibit under the Exchange Act and the rules and
regulations promulgated thereunder. Except as set forth in item B of Section
4.09 of the Disclosure Schedule, neither the Company nor any of its
subsidiaries is in violation of nor in default under (nor does there exist
any condition, event or occurrence which upon the passage of time or the
giving of notice or both would cause such a violation of or default under)
any lease, permit, concession, franchise, license or any other contract,
agreement, arrangement or understanding to which it is a party or by which it
or any of its properties or assets is bound, except for violations or
defaults that individually or in the aggregate would not have a material
adverse effect on the Company. Except as set forth in item C of Section 4.09
of the Disclosure Schedule, as of the date hereof, the Company is not bound
by any contract, agreement, arrangement or understanding with any affiliate
of the Company that is currently in effect other than (i) agreements that are
disclosed in the Filed SEC Documents or (ii) agreements in an aggregate
amount not to exceed $150,000. Except as set forth in item D of Section 4.09
of the Disclosure Schedule, the Company is not a party to or otherwise bound
by any agreement or covenant not to compete or by any agreement or covenant
restricting in any material respect the development, marketing or
distribution of the Company's products and services.
-9-
SECTION IV.10. COMPLIANCE WITH LAWS.
(1) Except as set forth in Section 4.10 of the Disclosure
Schedule, each of the Company and its subsidiaries are in compliance with all
applicable statutes, laws, ordinances, regulations, rules, judgments, decrees
and orders of any Governmental Entity (collectively, "Legal Provisions")
applicable to their business or operations, except for instances of possible
noncompliance that individually or in the aggregate would not have a material
adverse effect on the Company or prevent or materially delay the consummation
of the Merger or the transactions contemplated by this Agreement. Each of
the Company and its subsidiaries has in effect all Federal, state, local and
foreign governmental approvals, authorizations, certificates, filings,
franchises, licenses, notices, permits and rights, including but not limited
to all authorizations under Environmental Laws (as hereinafter defined), the
applicable regulations adopted by the U.S. Food and Drug Administration and
the U.S. Food, Drug and Cosmetic Act, and the regulations thereunder
("Permits"), necessary for it to own, lease or operate its properties and
assets and to carry on its business as now conducted, and there has not
occurred any material default under, or violation of, any such Permit.
(2) The term "Environmental Laws" means any Federal, state or
local or foreign statute, ordinance, rule, regulation, policy, permit,
consent, approval, license, judgment, order, decree or injunction ("Laws")
relating to pollution or protection of the environment including, but not
limited to: (A) Releases (as defined in 42 U.S.C. Section 9601(22)) or
threatened Releases of Hazardous Material (as hereinafter defined) into the
environment, (B) the generation, treatment, storage, disposal, use, handling,
manufacturing, transportation or shipment of Hazardous Material, (C) the
health or safety of employees in the workplace environment or of persons
exposed to Hazardous Materials, or (D) any laws requiring record keeping,
notification, disclosure and reporting requirements related to Hazardous
Material or endangered species, wildlife and plants and the management and
use of natural resources. The term "Hazardous Material" means (1) hazardous
substances (as defined in 42 U.S.C. Section 9601(14)), (2) petroleum,
including crude oil and any fractions thereof, (3) natural gas, synthetic gas
and any mixtures thereof, (4) asbestos and/or asbestos containing material,
(5) PCBs or materials containing PCBs and (6) any material regulated as a
medical waste or infectious waste, pollutant or contaminant.
(3) There have been no Releases of Hazardous Material in, on,
under or affecting any of the current or previously owned or leased
properties of the Company or any of its subsidiaries or any surrounding site,
and there has been no disposal on any such properties of any Hazardous
Material in a manner that has led, or could reasonably be anticipated to lead
to a Release, except in each case for those which individually or in the
aggregate would not have a material adverse effect on the Company. The
Company and its subsidiaries have not received any written notice of, or
entered into any order, settlement or decree relating to: (A) any violation
of any Environmental Laws or the institution or pendency of any suit, action,
claim, proceeding or investigation by any Governmental Entity or any third
party in connection with any alleged violation of Environmental Laws, (B) the
response to or remediation of Hazardous Material at or arising from any of
the Company's properties or any subsidiary's properties or at any property to
which the Company transported or arranged for transportation of Hazardous
Materials or (C) payment for, response to or remediation of Hazardous
Material at or arising from any of the Company's properties or any
subsidiary's properties, except in each case for any such notices, orders,
settlements or decrees which individually or in the aggregate would not have
a material adverse effect on the Company.
-10-
SECTION IV.11. ABSENCE OF CHANGES IN BENEFIT PLANS; LABOR RELATIONS.
Except as required to comply with applicable laws or to make changes which do
not, individually or in the aggregate, have a material financial impact on
the Company or the Plans (as defined below), since December 31, 1997, there
has not been any adoption or amendment (or any agreement to adopt or to
amend) any deferred compensation and any incentive compensation, stock
purchase, stock option or other equity compensation plan, program, agreement
or arrangement; any severance or termination pay, medical, surgical,
hospitalization, life insurance or other "welfare" plan, fund or program
(within the meaning of section 3(1) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")); any profit-sharing, stock bonus
or other "pension" plan, fund or program (within the meaning of section 3(2)
of ERISA); any employment, termination, severance or similar agreement; or
any other employee benefit plan, fund, program, agreement or arrangement, in
each case, that is sponsored, maintained or contributed to or required to be
contributed to by the Company or by any trade or business, whether or not
incorporated (an "ERISA Affiliate"), that together with the Company would be
deemed a "single employer" within the meaning of section 4001(b) of ERISA, or
to which the Company or an ERISA Affiliate is party, whether written or oral,
ffor the benefit of any employee or former employee of the Company or any
Subsidiary (collectively, the "Benefit Plans" and each Benefit Plan that is
subject to Section 302 or Title IV of ERISA or Section 412 of the Internal
Revenue Code of 1986, as amended (the "Code"), a "Pension Plan"). Except as
set forth in Section 4.11 of the Disclosure Schedule, neither the Company,
any Subsidiary nor any ERISA Affiliate has any commitment or formal plan,
whether legally binding or not, to create any additional employee benefit
plan or modify or change any existing Plan that would affect any employee or
former employee of the Company or any Subsidiary, except as required to
comply with applicable law. Except as set forth on Section 4.11 of the
Disclosure Schedule, (i) there exist, as of the date hereof, no employment,
consulting, severance, termination or indemnification agreements,
arrangements or understandings between the Company or any of its
subsidiaries, and any current employee, officer or director of the Company,
(ii) there are no collective bargaining or other labor union agreements to
which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound and (iii) during the last 3
years, neither the Company nor any of its subsidiaries has encountered any
labor union organizing activity, nor had any actual or threatened employee
strikes, work stoppages, slowdowns or lockouts. Except as set forth in
Section 4.11 of the Disclosure Schedule, since the enactment of the Worker
Adjustment and Retraining Notification Act (the "WARN Act"), the Company has
not effectuated a "plant closing" or "mass layoff" (as defined in the WARN
Act or any similar state, local or foreign law or regulation) affecting any
site of employment or one of more facilities or operating units within any
site of employment or facility of the Company or its subsidiaries, without
complying with the WARN Act or similar state, local or foreign law or
regulation. In addition, except as set forth in Section 4.11 of the
Disclosure Schedule, none of the Company's employees has suffered an
"employment loss" (as defined in the WARN Act or any similar state, local or
foreign law or regulation) during the ninety day period prior to the date of
this Agreement.
SECTION IV.12. ERISA COMPLIANCE.
(1) Section 4.12(i) of the Disclosure Schedule contains a list of
all Benefit Plans. The Company has made available to Parent true, complete
and correct copies of (1) each Benefit Plan (or, in the case of any unwritten
Benefit Plans, descriptions thereof), (2) the most recent annual report on
Form Series 5500 filed with the Internal Revenue Service with respect to each
Benefit Plan (if any such report was required), (3) the most recent summary
plan description for each Benefit Plan for which such summary plan
description is required, (4) each trust agreement and group annuity contract
relating to any Benefit Plan and (5) the most recent determination letter
received from the Internal Revenue Service with respect to each Benefit Plan
intended to be qualified under the Code.
(2) Except as set forth in Section 4.12(ii) of the Disclosure
Schedule, each Benefit Plan has been operated and administered in all
material respects in accordance with its terms and applicable law, including
but not limited to ERISA and the Code.
-11-
(3) No liability under Title IV or section 302 or ERISA has been
incurred by the Company or any ERISA Affiliate that has not been satisfied in
full, and no condition exists that presents a material risk to the Company or
any ERISA Affiliate of incurring any such liability, other than liability for
premiums due the Pension Benefit Guaranty Corporation (which premiums have
been paid when due and owing).
(4) Except as set forth in Section 4.12(iv) of the Disclosure
Schedule, with respect to each Pension Plan, the present value of accrued
benefits under such plan, based upon the actuarial assumptions used for
funding purposes in the most recent actuarial report prepared by such plan=s
actuary with respect to such plan did not exceed, as of its latest valuation
date, the then current value of the assets of such plan allocable to such
accrued benefits.
(5) Except as set forth in Section 4.12(v) of the Disclosure
Schedule, no Pension Plan is a Plan described in Section 4063(1) of ERISA.
With respect to any Benefit Plan that is a "multiemployer pension plan" as
defined in Section 3(37) of ERISA, (i) neither the Company nor any ERISA
Affiliate has made or suffered a "complete withdrawal" or a "partial
withdrawal," as such terms are respectively defined in sections 4203 and 4205
of ERISA (or any liability resulting therefrom has been satisfied in full),
(ii) no event has occurred that presents a material risk of a partial
withdrawal, (iii) neither the Company nor any ERISA Affiliate has any
contingent liability under section 4204 of ERISA, and (iv) such Benefit Plan
is not in reorganization and no circumstances exist that present a material
risk that any such plan will go into reorganization. With respect to any
Benefit Plan that is a "multiemployer pension plan," the aggregate
withdrawal liability of the Company and its ERISA Affiliates, computed as
if a complete withdrawal by the Company and the ERISA Affiliates had occurred
under each such Plan on the date hereof, would not exceed $500,000.
(6) All Pension Plans have been the subject of determination or
opinion letters, as applicable from the Internal Revenue Service to the
effect that such Pension Plans are qualified and exempt from Federal income
taxes under Sections 401(a) and 501(a), respectively, of the Code, and no
such letter has been revoked nor has any event occurred since the date of its
most recent letter or application therefor that would adversely affect its
qualification (unless the effect of such event is correctable under any
available IRS correction program) or materially increase its costs.
(7) Except as set forth in Section 4.12(vii) of the Disclosure
Schedule, neither the Company, nor any of its subsidiaries, nor any Commonly
Controlled Entity has maintained, contributed or been obligated to contribute
to any Benefit Plan that is subject to Title IV of ERISA.
(8) Section 4.12(viii) of the Disclosure Schedule lists all
outstanding Stock Options as of November 20, 1998, showing for each such
option: (1) the number of shares issuable, (2) the number of vested shares,
(3) the date of expiration and (4) the exercise price.
(9) Except as set forth in Section 4.12(ix) of the Disclosure
Schedule, the consummation of the Merger or the Offer will not (a) entitle
any current or former employee or officer of the Company or any subsidiary to
severance pay, unemployment compensation retention bonus or other similar
payments, (b) accelerate the term of payment or vesting, or increase the
amount of compensation or benefits due to any such employee or officer or (c)
require the Company or any ERISA Affiliate to fund or make or make any
payments to any trust or other funding vehicle in respect of any Benefit Plan.
(10) There are no pending or, to the knowledge of the Company,
anticipated or threatened claims by or on behalf of any Benefit Plan, by any
employee or beneficiary covered under any such Benefit Plan, or otherwise
involving any such Benefit Plan (other than routine claims for benefits)
which would have a material adverse plan effective on the Company or its
subsidiaries.
-12-
(11) The deduction of any amount payable pursuant to the terms of
the Benefit Plans will not be subject to disallowance under Section 162(m) of
the Code.
SECTION IV.13. TAXES. Each of the Company and its subsidiaries has
timely filed all material tax returns and reports required to be filed by it,
correct and complete, and has paid, or established adequate reserves for, all
taxes required to be paid by it. No material deficiencies for any taxes have
been proposed, asserted or assessed against the Company which have not been
fully paid or satisfied, and no requests for waivers of the time to assess
any such taxes are pending. The Federal income tax returns of the Company
and each of its subsidiaries consolidated in such returns have been examined
by and settled with the United States Internal Revenue Service for all years
through the fiscal year ended December 31, 1995. The statute of limitations
on assessment or collection of any Federal income taxes due from the Company
or any of its subsidiaries has expired for all taxable years of the Company
or such subsidiaries through the fiscal year ended December 31, 1995. As
used in this Agreement, "taxes" shall include all Federal, state, local and
foreign income, property, sales, excise and other taxes, tariffs or
governmental charges of any nature whatsoever.
SECTION IV.14. NO EXCESS PARACHUTE PAYMENTS. Except as set forth in
Section 4.14 of the Disclosure Schedule, no amount that could be received
(whether in cash or property or the vesting of property) as a result of any
of the transactions contemplated by this Agreement by any employee, officer
or director of the Company or any of its subsidiaries who is a "disqualified
individual" (as such term is defined in proposed Treasury Regulation Section
1.28OG-1) under any employment, severance or termination agreement, other
compensation arrangement or Benefit Plan currently in effect would be an
"excess parachute payment" (as such term is defined in Section 28OG(b)(1) of
the Code). No disqualified individual is entitled to receive any additional
payment from the Company or any of its subsidiaries, the Surviving
Corporation or any other person (a "Parachute Gross-Up Payment") in the event
that the excise tax of Section 4999(a) of the Code is imposed on such person.
The Board of Directors of the Company has not granted to any officer,
director or employee of the Company any right to receive any Parachute
Gross-Up Payment.
SECTION IV.15. INTELLECTUAL PROPERTY.
(1) The Company and its subsidiaries own, or are validly licensed
or otherwise have the right to use, free and clear or all liens, all patents,
patent rights, trademarks, trade secrets, trademark rights, trade names,
trade name rights, service marks, service xxxx rights, copyrights, Internet
domain names, designs, logos, slogans, and general intangibles of like
nature, Software (as defined below), "mask works" (as defined under 17 USC
Section 901), technology, trade secrets and other confidential information,
know-how, proprietary processes, formulae, algorithms, models, and
methodologies, rights of publicity and privacy relating to the use of the
names, likenesses and biographical information of real persons and other
proprietary intellectual property rights (collectively "Intellectual Property
Rights") which are used or held for use in the business of the Company
provided, however, the Company does not give any representation as to the
Intellectual Property Rights of any third party. For purposes of this
Section 4.15, "Software" means any and all (i) computer programs, whether in
source code or object code form, (ii) databases and compilations, and (iii)
all documentation, including user manuals and training materials, relating to
any of the foregoing.
(2) Schedule 4.15(b) sets forth, for the Intellectual Property
Rights owned or licensed by Company or any subsidiary, a complete and
accurate list of all material U.S. and foreign (i) patents and patent
applications; (ii) trademark registrations (including Internet domain
registrations), trademark applications, and material unregistered trademarks;
(iii) copyright and mask work registrations, copyright and mask work
applications; and (iv) all Software.
(3) Schedule 4.15(c) sets forth a complete and accurate list of
all agreements, whether oral or written, and whether between the Company or
any subsidiaries and third parties or inter-corporate, (other than licenses
of readily available commercial software programs having an acquisition price
of less than $10,000) to which Company or any subsidiary is a party or
otherwise bound, (i) granting or obtaining any right to use or practice any
rights under any Intellectual Property Right or (ii) restricting the
-13-
Company's or any subsidiary's rights to use any Intellectual Property Right,
including but not limited to license agreements, development agreements,
distribution agreements, settlement agreements, consent to use agreements,
and covenants not to xxx (collectively, the "Intellectual Property
Agreements"). The Intellectual Property Agreements are valid and binding
obligations of all parties thereto, enforceable in accordance with their
terms, and there exists no event or condition which will result in a
violation or breach of, or constitute (with or without due notice of lapse of
time or both) a default under any such Intellectual Property Agreement by (i)
the Company or any subsidiary, or (ii) to the knowledge of the Company, any
third party. No royalties, honoraria or other fees are payable by Company or
any subsidiary to any third parties for the use of or right to use any
Intellectual Property Right except pursuant to the Intellectual Property
Agreements.
(4) Except as set forth in Schedule 4.15(b) or 4.15(d):
(1) The Company or a subsidiary is listed in the records of
the appropriate United States, state, or foreign registry as the sole current
owner of record for each application and registration listed on Section
4.15(b) of the Disclosure Schedule.
(2) The Intellectual Property Rights owned by Company or any
subsidiary and, to the Company's knowledge, any Intellectual Property Right
used by Company or any subsidiary, are subsisting and are valid and
enforceable.
(3) There are no settlements, forebearances to xxx, consents,
judgments, or orders or similar obligations (other than the Intellectual
Property Agreements) which (a) restrict Company's or any subsidiary's rights
to use any Intellectual Property Right, (b) restrict Company's or any
subsidiary's business in order to accommodate a third party's intellectual
property rights or (c) permit third parties to use any Intellectual Property
Right owned or controlled by the Company or any subsidiary.
(4) To the Company's knowledge, the conduct of Company's and
any subsidiary's business as currently and heretofore conducted does not
infringe upon (either directly or indirectly such as through contributory
infringement or inducement to infringe) any Intellectual Property Right owned
or controlled by any third party.
(5) Company and each subsidiary takes reasonable measures to
protect the secrecy of its confidential technology, trade secrets, know-how,
proprietary processes, formulae, algorithms, models, and methodologies
(collectively "Trade Secrets"), including requiring its employees and other
parties having access thereto to execute written non-disclosure agreements.
To the Company's knowledge since December 31, 1997, no Trade Secret has been
disclosed or authorized to be disclosed to any third party other than
pursuant to a non-disclosure agreement. With respect to any non-disclosure
agreement relating to its Trade Secrets, the Company is not, and to the
Company's knowledge the other party is not, in breach or default thereof.
(6) With respect to the Software set forth in Section 4.15(b)
of the Disclosure Schedule which Company purports to own, such Software was
either developed (a) by employees of Company or any subsidiary within the
scope of their employment or (b) by independent contractors who have assigned
their rights to Company or any subsidiary pursuant to written agreements.
Each agreement in which the Company or any subsidiary has licensed products
containing owned software to third parties contains provisions (y) limiting
the Company's or its subsidiary's liability to the amount of the fees paid
pursuant to the agreement; or (z) disclaiming any warranties as to the
performance of functionality of the software, other than stating that the
software would perform in accordance with its documentation and/or
specifications.
(7) The Company's Intellectual Property Rights will not be
adversely affected because of the consummation of the Offer and the Merger.
(8) No claim of any infringement, misappropriation,
unauthorized use or dilution of any Intellectual Property Rights of any third
party has been made or asserted against the Company or any of its
subsidiaries in respect of the operation of the Company's or any subsidiary's
business.
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(9) To the knowledge of the Company, no person is infringing
the rights of the Company or any subsidiary with respect to any Intellectual
Property Right. Neither the Company nor any subsidiary has licensed, or
otherwise granted, to any third party, any material rights in or to any
Intellectual Property Rights.
SECTION IV.16. STATE TAKEOVER STATUTES. The Board of Directors of the
Company has approved the Offer, the Merger and this Agreement, and such
approval is sufficient to render inapplicable to the Offer, the Merger, this
Agreement and the transactions contemplated by this Agreement the provisions
of Section 203 of the DGCL to the extent, if any, such Section is applicable
to the Offer, the Merger, this Agreement and the transactions contemplated by
this Agreement.
SECTION IV.17. RIGHTS AGREEMENT. The Board of Directors of the Company
has adopted resolutions providing that the Rights Agreement shall be amended,
and the Rights Agreement shall be so amended, within two business days
following the date hereof, to (i) render the Rights Agreement inapplicable to
the Offer, the Merger, this Agreement and the acquisition of Shares by Sub
pursuant to the Offer, (ii) ensure that (y) none of Parent, Sub or any of
their respective affiliates is an Acquiring Person (as defined in the Rights
Agreement) pursuant to the Rights Agreement solely by virtue of the execution
of this Agreement, commencement and consummation of the Offer, the
acquisition of Shares by Sub pursuant to the Offer and the consummation of
the Merger and (z) a Distribution Date or a Shares Acquisition Date (as such
terms are defined in the Rights Agreement) does not occur by reason of the
Offer, the Merger, the execution of this Agreement, the acquisition of the
Shares by Sub pursuant to the Offer, or the consummation of the Merger and
(iii) provide that the Final Expiration Date (as defined in the Rights
Agreement) shall occur immediately prior to the Effective Time, and such
amendment will not be further amended by the Company without the prior
consent of Parent in its sole discretion.
SECTION IV.18. BROKERS; SCHEDULE OF FEES AND EXPENSES. No broker,
investment banker, financial advisor or other person, other than Bear,
Xxxxxxx & Co. Inc., the fees and expenses of which will be paid by the
Company, is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the Company.
The Company has furnished to Parent true and complete copies of all
agreements under which any such fees or expenses are payable and all
indemnification and other agreements related to the engagement of the persons
to whom such fees are payable.
SECTION IV.19. OPINION OF FINANCIAL ADVISOR. The Company has received
the opinion of Bear, Xxxxxxx & Co. Inc., dated the date hereof, to the effect
that, as of such date, the consideration to be received in the Offer and the
Merger by the Company's stockholders is fair to the Company's stockholders
from a financial point of view, a signed copy of which opinion is currently
being delivered to Parent.
SECTION IV.20. ANNUAL MEETING. No shareholder of the Company has given
the notice required under the Company's By-laws to present at the Company's
November 24, 1998 Annual Meeting of Shareholders any business not set forth
in the notice to shareholders relating to such meeting and as a result the
only business that may be conducted at such meeting in accordance with this
Agreement and the Company's By-laws are the items specifically set forth in
the notice relating to the Annual Meeting.
SECTION IV.21. PRODUCTS LIABILITY. (1) Except as set forth in Section
4.21 of the Disclosure Schedule, (i) there is no notice, demand, claim
action, suit inquiry, hearing, proceeding, notice of violation or
investigation of a civil, criminal or administrative nature by or before any
court or governmental or other regulatory or administrative agency,
commission or authority pending against or involving the Company or any of
its Subsidiaries (past or present) or concerning any product relating to the
businesses of the Company and its Subsidiaries (past or present which is
pending or threatened, relating to or resulting from an alleged defect in
design, manufacture, materials or workmanship of any product designed,
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manufactured, distributed, or sold by or on behalf of the Company or any of
its Subsidiaries (past or present), or any alleged failure to warn, or from
any alleged breach of express or implied warranties or representations, (ii)
since December 31, 1997 there has not been any Occurrence (as defined in this
Section 4.21 herein); (iii) during the last five years, there has not been
any product recall or post-sale warning (collectively, "Recalls") by the
Company or any of its Subsidiaries (past or present) concerning any products
relating to the businesses of the Company and its Subsidiaries (past or
present) which were designed, manufactured, distributed, or sold by the
businesses of the Company and its Subsidiaries (past or present), or to the
best of the Company's knowledge, after due inquiry, any investigation or any
action that would require the consideration by the Company's corrective
action committee, made by any person or entity concerning whether to
undertake or not to undertake any Recalls. For purposes of this Section 4.21
and Section 4.22, the term "Occurrence" shall mean any accident, happening or
event which is caused or allegedly caused by any alleged hazard or alleged
defect in manufacture, design, materials or workmanship including, without
limitation, any alleged failure to warn or any breach of express or implied
warranties or representations with respect to, or any accident, happening or
event otherwise involving, a product (including any parts or components)
relating to the businesses of the Company and its Subsidiaries (past or
present) designed, manufactured, distributed, or sold by or on behalf of the
Company and its Subsidiaries (past or present) which results or is alleged to
have resulted in injury or death to any person or damage to or destruction of
property, or other consequential damages, at any time.
SECTION IV.22. INSURANCE. Section 4.22 of the Disclosure Schedule
contains a complete and accurate list of: (i) all primary, excess and
umbrella policies of general liability, fire, products liability, completed
operations, employers' liability, workers' compensation, bonds and other
forms of insurance owned or held by or on behalf of and/or providing
insurance coverage to the Company as of August 1, 1998, including the
following information for each such policy: type(s) of insurance coverage
provided; name of insurer; effective dates; policy number; per occurrence and
annual aggregate deductibles or self-insured retentions; per occurrence and
annual aggregate limits of liability; the extent, if any, to which the limits
of liability have been invaded or exhausted; and (ii) all claims and lawsuits
in excess of $100,000 made or filed since December 31, 1997 with respect to
the businesses of the Company or its subsidiaries, and the total number and
amount of all claims and lawsuits, including the following information:
names of claimants/plaintiffs; event or accident; nature of the claim and
product involved, if any; and amount paid to satisfy, compromise or otherwise
dispose of the claim or lawsuit and the source of such payment. All current
policies set forth on Schedule 4.21 are in full force and effect, and with
respect to all policies, all premiums currently payable or previously due and
payable with respect to all periods up to and including the date of Closing
have been paid, and no notice of cancellation or termination has been
received with respect to any such policy. To the Company's knowledge, all
such policies are sufficient for compliance with all requirements of law and
of all agreements to which the Company or any of its subsidiaries is a party;
are valid, outstanding, collectible and enforceable policies; provide
adequate insurance coverage; will remain in full force and effect through the
respective dates set forth in Schedule 4.22 without the payment of additional
premiums. None of such policies contains a provision that would permit the
termination, limitation, lapse, exclusion, or change in the terms of coverage
(including, without limitation, a change in the limits of liability) by
reason of consummation of the transactions contemplated by this Agreement.
The Company has not been refused any insurance with respect to its products
or operations, nor has any coverage been limited by any insurance carrier to
which the Company has applied for any such insurance or with which they have
carried insurance during the last 3 years.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as follows:
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SECTION V.1. ORGANIZATION, STANDING AND CORPORATE POWER. Each of
Parent and Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated and
has all requisite corporate power and authority to carry on its business as
now being conducted. Each of Parent and Sub is duly qualified or licensed to
do business and is in good standing in each jurisdiction in which the nature
of its business or the ownership, leasing or operation of its properties
makes such qualification or licensing necessary, other than in such
jurisdictions where the failure to be so qualified or licensed individually
or in the aggregate would not have a material adverse effect on Parent.
Parent has delivered to the Company complete and correct copies of its
Certificate of Incorporation and By-Laws and the Certificate of Incorporation
and By-Laws of Sub, in each case as amended to the date hereof.
SECTION V.2. AUTHORITY; NONCONTRAVENTION. Parent and Sub have all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate action on the part of Parent and Sub. This Agreement has been duly
executed and delivered by Parent and Sub, and constitutes a valid and binding
obligation of each such party, enforceable against each such party in
accordance with its terms. The execution and delivery of this Agreement do
not, and the consummation of the transactions contemplated by this Agreement
and compliance with the provisions of this Agreement will not, conflict with,
or result in any violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or
result in the creation of any Lien upon any of the properties or assets of
Parent or Sub under, any provision of (i) the Certificate of Incorporation or
By-Laws of Parent or Sub, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to Parent or Sub or their
respective properties or assets or (iii) subject to the governmental filings
and other matters referred to in the following sentence, any (A) statute,
law, ordinance, rule or regulation or (B) judgment, order or decree
applicable to Parent or Sub or their respective properties or assets, other
than, in the case of clauses (ii) and (iii), any such conflicts, violations,
defaults, rights or Liens that individually or in the aggregate would not (x)
have a material adverse effect on Parent, (y) impair in any material respect
the ability of each of Parent and Sub to perform its obligations under this
Agreement, as the case may be, or (z) prevent or materially delay the
consumma-tion of any of the transactions contemplated by this Agreement. No
consent, approval, order or authorization of, or registration, declaration or
filing with, any Governmental Entity is required by or with respect to Parent
or Sub in connection with the execution and delivery of this Agreement by
Parent and Sub or the consummation by Parent and Sub of the transactions
contemplated by this Agreement, except for (1) Foreign Filings and the filing
of a premerger notification and report form under the HSR Act, (2) the filing
with the SEC of (A) the Offer Documents and (B) such reports under Sections
13(a), 13(d) and 16(a) of the Exchange Act as may be required in connection
with this Agreement and the transactions contemplated by this Agreement (3)
the filing of the Certificate of Merger with the Delaware Secretary of State
and appropriate documents with the relevant authorities of other states in
which the Company is qualified to do business and (4) such other consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under the "blue sky" laws of various states, the failure of
which to be obtained or made would not, individually or in the aggregate,
have a material adverse effect on Parent or prevent or materially delay the
consummation of any of the transactions contemplated by this Agreement.
SECTION V.3. INFORMATION SUPPLIED. None of the information supplied or
to be supplied by Parent or Sub specifically for inclusion or incorporation
by reference in (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the
Information Statement or (iv) the Proxy Statement will, in the case of the
Offer Documents, the Schedule 14D-9 and the Information Statement, at the
respective times the Offer Documents, the Schedule 14D-9 and the Information
Statement are filed with the SEC or first published, sent or given to the
Company's stockholders, or, in the case of the Proxy Statement, at the time
the Proxy Statement is first mailed to the Company's stockholders or at the
time of the Stockholders Meeting, contain any untrue statement of a material
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fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Offer Documents
will comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder, except that (other
than with respect to the Proxy Statement) no representation or warranty is
made by Parent or Sub with respect to statements made or incorporated by
reference therein based on information supplied by the Company specifically
for inclusion or incorporation by reference therein.
SECTION V.4. INTERIM OPERATIONS OF SUB. Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby, has engaged in
no other business activities and has conducted its operations only as
contemplated hereby.
SECTION V.5. BROKERS. No broker, investment banker, financial advisor
or other person, other than Xxxxxxxxx, Lufkin & Xxxxxxxx, the fees and
expenses of which will be paid by Parent, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent or Sub.
SECTION V.6. FINANCING. At the expiration of the Offer and the
Effective Time, Parent and Sub will have available all the funds necessary
for the acquisition of all Shares pursuant to the Offer and to perform their
respective obligations under this Agreement, including without limitation
payment in full for all shares of Company Common Stock validly tendered into
the Offer or outstanding at the Effective Time.
ARTICLE VI
COVENANTS
SECTION VI.1. COVENANTS OF THE COMPANY.
(1) CONDUCT OF THE BUSINESS BY THE COMPANY. The Company shall,
and shall cause its subsidiaries to, carry on their respective businesses in
the ordinary course consistent with the manner as heretofore conducted and
use commercially reasonable efforts to (x) preserve intact their current
business organization, (y) keep available the services of their current
officers and employees and (z) preserve their relationships with customers,
suppliers, licensors, licensees, distributors and others having business
dealings with them. Without limiting the generality of the foregoing, other
than as set forth in Section 6.01 of the Disclosure Schedule or as otherwise
contemplated by this Agreement, the Company shall not, and shall not permit
any of its subsidiaries to, without Parent's prior written consent (which
shall not be unreasonably withheld):
(1) other than dividends and distributions by a direct or
indirect wholly owned subsidiary of the Company to its parent or pursuant to
the Rights Agreement, (x) declare, set aside or pay any dividends on, or make
any other distributions (whether in cash, stock or property), in respect of,
any of its capital stock, (y) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock (other than
the issuance of shares of Company Common Stock upon the exercise of Stock
Options outstanding on the date of this Agreement and in accordance with
their present terms) or (z) purchase, redeem or otherwise acquire any shares
of capital stock of the Company or any of its subsidiaries or any other
securities thereof or any rights, warrants or options to acquire any such
shares or other securities;
(2) issue, deliver, sell, pledge or otherwise encumber any
shares of its capital stock or any shares of capital stock of its
subsidiaries, any other voting securities or any securities convertible into,
or any rights, warrants or options to acquire, any such shares, voting
securities or convertible securities (other than (y) pursuant to the Rights
Agreement or (z) the issuance of shares of Company Common Stock upon the
exercise of Stock Options and Warrants outstanding on the date of this
Agreement and in accordance with their present terms);
(3) amend its Certificate of Incorporation, By-Laws or other
comparable charter or organizational documents or those of any of its
subsidiaries;
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(4) acquire or agree to acquire (including, without
limitation, by merger, consolidation or acquisition of stock or assets) any
business, including through the acquisition of any interest in any
corporation, partnership, joint venture, association or other business
organization or division thereof;
(5) sell, lease, license, mortgage or otherwise encumber or
otherwise dispose of any of its material properties or assets, other than in
the ordinary course of business consistent with past practice;
(6) incur any indebtedness for borrowed money or guarantee
any such indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or any
of its subsidiaries, or guarantee any debt securities of another person,
other than short-term bank financing in the ordinary course of business
consistent with past practice; or make any loans, advances or capital
contributions to, or investments in, any other person, other than in the
ordinary course of business consistent with past practice and in any event
not in excess, individually or in the aggregate, of $100,000 ;
(7) make any material capital expenditure, individually or in
the aggregate, in excess of $25,000;
(8) except as required to comply with applicable law (in
which case the Company will notify Parent) (A) adopt, enter into, terminate
or amend in any material respect any employment, severance or similar
contract, collective bargaining agreement or Benefit Plan, (B) increase in
any manner the compensation or fringe benefits of, or pay any bonus to, any
director, officer or employee (except for normal increases of cash
compensation or cash bonuses in the ordinary course of business consistent
with past practice), (C) pay any benefit not provided for under any Benefit
Plan or any other benefit plan or arrangement of the Company or its
subsidiaries, (D) increase in any manner the severance or termination pay of
any officer or employee, (E) grant any awards under any bonus, incentive,
performance or other compensation plan or arrangement or Benefit Plan
(including the grant of stock options, stock appreciation rights, stock based
or stock related awards, performance units or restricted stock or the removal
of existing restrictions in any Benefit Plans or agreements or awards made
thereunder), (F) take any action to fund or in any other way secure the
payment of compensation or benefits under any employee plan, agreement,
contract or arrangement or Benefit Plan or (G) take any action to accelerate
the vesting of, or cash out rights associated with, any Stock Options or
other benefits;
(9) enter into any agreement of a nature that would be
required to be filed as an exhibit to Form 10-K under the Exchange Act;
(10) except as required by GAAP, make any material change in
accounting methods, principles or practices;
(11) make any tax election, make a claim for any Tax Refund or
enter into any settlement or compromise with respect to any material tax
liability;
(12) amend or terminate any material contract in a manner
materially detrimental to the Company, or waive, release, assign or settle
any material rights or claims;
(13) hire or fire or agree to hire any officers;
(14) take any action that may reasonably be expected to result
in (i) any of the representations and warranties by the Company becoming
untrue in any material respect (ii) any breach of the Company's covenants
under this Agreement or (iii) any of the conditions of the Offer set forth in
Exhibit A not being satisfied; or
(15) authorize any of, or commit or agree to take any of, the
foregoing actions.
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SECTION VI.2. NO SOLICITATION.
(1) The Company shall not, nor shall it permit any of its
subsidiaries to, nor shall it authorize or permit any of its officers,
directors or employees or any investment banker, financial advisor, attorney,
accountant or other representative or agent retained by it or any subsidiary
to, directly or indirectly, (i) solicit, initiate or encourage the submission
of any Takeover Proposal (as defined below), (ii) participate in any
discussions or negotiations regarding, or furnish to any person any nonpublic
information with respect to, or take any other action designed or reasonably
likely to facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to a Takeover Proposal, or
(iii) except as specifically provided in Section 6.02 and provided that the
Company shall have first complied with all its obligations under this Section
6.02 and Section 7.07(b), enter into any agreement with respect to any
Takeover Proposal or approve or resolve to approve any Takeover Proposal.
Upon execution of this Agreement, the Company will cease any existing
activities, discussions or negotiations with any parties conducted with
respect to any of the foregoing. Notwithstanding the foregoing, if, at any
time prior to the acceptance for payment of Shares pursuant to the Offer, the
Board of Directors of the Company determines in good faith after consultation
with outside counsel, that such action may reasonably be required to
discharge the Board of Director's fiduciary duties to the Company's
stockholders under applicable law, the Company may, in response to an
unsolicited Takeover Proposal, which constitutes a Superior Proposal made
subsequent to the date hereof, and subject to compliance with Section
6.02(c), (x) furnish information with respect to the Company to any person
that has submitted a Takeover Proposal that constitutes a Superior Proposal
pursuant to a customary confidentiality agreement in form and substance
reasonably satisfactory to Parent and (y) participate in discussions and
negotiations regarding such Takeover Proposal that which constitutes a
Superior Proposal. Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the preceding sentence by any
director or officer of the Company or any subsidiary or any investment
banker, financial advisor, attorney, accountant or other authorized
representative or agent of the Company or any subsidiary shall be deemed to
be a breach of this Section 6.02(a) by the Company. For purposes of this
Agreement, "Takeover Proposal" means any proposal or offer from any person in
each case, in writing, relating to any direct or indirect acquisition or
purchase of a substantial amount of assets of the Company and its
subsidiaries, taken as a whole (other than the purchase of the Company's
products in the ordinary course of business), or more than a 30% interest in
the total voting securities of the Company or any tender offer or exchange
offer that if consummated would result in any person beneficially owning 30%
or more of any class of equity securities of the Company or any merger,
consolidation, business combination, sale of substantially all assets,
recapitalization, liquidation, dissolution or similar transaction involving
the Company, other than the transactions contemplated by this Agreement.
(2) Except as set forth in this Section 6.02, neither the Board of
Directors of the Company nor any committee thereof shall (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Parent, the
approval or recommendation by such Board of Directors or such committee of
the Offer, the Merger or this Agreement, (ii) approve or recommend, or
propose to approve or recommend, any Takeover Proposal, (iii) cause the
Company to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement (each, an "Acquisition
Agreement") related to any Takeover Proposal or (iv) resolve to take any of
the foregoing actions. Notwithstanding the foregoing, in the event that
prior to the acceptance for payment of Shares pursuant to the Offer the Board
of Directors of the Company determines in good faith, after consultation with
outside counsel, that such action may reasonably be required to discharge the
Board of Director's fiduciary duties to the Company's stockholders under
applicable law, the Board of Directors of the Company may, in response to an
unsolicited Superior Proposal (as defined below) (subject to the following
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proviso), (x) withdraw or modify its approval or recommendation of the Offer,
the Merger or this Agreement or (y) approve or recommend any such Superior
Proposal; provided, that in the case of this clause (y), such approval or
recommendation shall occur only at a time that is after the later of (i) the
fifth business day following Parent's receipt of written notice advising
Parent that the Board of Directors of the Company has received a Superior
Proposal, specifying the material terms of such Superior Proposal and
identifying the person making such Superior Proposal and (ii) in the event of
any amendment to the price or any material term of a Superior Proposal, three
business days following Parent's receipt of written notice containing the
material terms of such amendment, including any change in price (it being
understood that each further amendment to the price or any material terms of
a Superior Proposal shall necessitate an additional written notice to Parent
and additional three business day period prior to which the Company can take
the actions set forth in clause (y) above). All notices referred to in the
prior sentence shall include a copy of any such Takeover Proposal or Superior
Proposal. For purposes of this Agreement, a "Superior Proposal" means any
bona fide Takeover Proposal made by a third party (i) that is on terms which
the Board of Directors of the Company determines in its good faith judgment
(based on the written opinion of the Company's financial advisors as to the
financial terms of such Superior Proposal and after consultation with the
Company's legal advisors) to be more favorable to the Company's stockholders
than the Offer and the Merger and (ii) for which financing, to the extent
required, is available pursuant to definitive agreements with respect thereto.
(3) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 6.02, the Company shall promptly
advise Parent orally and in writing of any request for nonpublic information
(except requests not of a transactional or financial nature by companies with
established commercial relationships with the Company, made in the ordinary
course of business and not in connection with a possible Takeover Proposal)
or of any Takeover Proposal the material terms and conditions of such request
or Takeover Proposal and the identity of the person making such request or
Takeover Proposal. The Company will promptly inform Parent of any material
change in the details (including amendments or proposed amendments) of any
such request or Takeover Proposal.
(4) Nothing contained in this Agreement shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by
Rule 14d-9 or Rule 14e-2(a) promulgated under the Exchange Act or from making
any disclosure to the Company's stockholders if, in the good faith judgment
of the Board of Directors of the Company, after consultation with outside
counsel, failure so to disclose would be inconsistent with applicable law;
provided, however, neither the Company nor its Board of Directors nor any
committee thereof shall, except as permitted by Section 6.02(b), withdraw or
modify, or propose to withdraw or modify, its position with respect to the
Offer, the Merger or this Agreement or approve or recommend, or propose to
approve or recommend, a Takeover Proposal.
SECTION VI.3. CERTAIN ACTIONS. The Company will not take any action at
the November 24, 1998 Annual Meeting of Shareholders other than the election
of the directors set forth in the Company's definitive proxy statement dated
November 13, 1998, and the ratification of the Company's auditors. Except
for the election of those directors set forth in the Company's definitive
proxy statement dated November 13, 1998 at the Company's Annual Meeting to be
held on November 24, 1998 and as contemplated in Section 7.06 and for the
election of Xxxxxx Xxxx to the Board of Directors, should the Board of
Directors determine to do so, the Company will not take any action to modify,
change the composition or increase the size of the Board of Directors of the
Company.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION VII.1. Stockholder Approval; Preparation of Proxy Statement.
(1) If the Company Stockholder Approval is required by law, the
Company shall, as soon as practicable following the expiration of the Offer,
duly call, give notice of, convene and hold a meeting of its stockholders
(the "Stockholders Meeting") for the purpose of obtaining the Company
Stockholder Approval. The Company shall, through its Board of Directors,
recommend to its stockholders that the Company Stockholder Approval be given.
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Notwithstanding the foregoing, if Parent, Sub or any other subsidiary of
Parent shall acquire at least 90% of the outstanding Shares, the parties
shall take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after the expiration of the Offer without a
Stockholders Meeting in accordance with Section 253 of the DGCL.
(2) If the Company Stockholder Approval is required by law, the
Company shall, as soon as practicable following the expiration of the Offer,
prepare and file a preliminary Proxy Statement with the SEC and shall use its
best efforts to respond to any comments of the SEC or its staff and to cause
the Proxy Statement to be mailed to the Company's stockholders as promptly as
practicable after responding to all such comments to the satisfaction of the
staff. The Company shall notify Parent promptly of the receipt of any
comments from the SEC or its staff and of any request by the SEC or its staff
for amendments or supplements to the Proxy Statement or for additional
information and will supply Parent with copies of all correspondence between
the Company or any of its representatives, on the one hand, and the SEC or
its staff, on the other hand, with respect to the Proxy Statement or the
Merger. If at any time prior to the Stockholders Meeting there shall occur
any event that should be set forth in an amendment or supplement to the Proxy
Statement, the Company shall promptly prepare and mail to its stockholders
such an amendment or supplement.
(3) Parent agrees to cause all Shares purchased pursuant to the
Offer and all other Shares owned by Parent or any subsidiary of Parent to be
voted in favor of the Company Stockholder Approval.
SECTION VII.2. ACCESS TO INFORMATION. The Company shall, and shall
cause each of its subsidiaries to, afford to Parent and to the officers,
employees, accountants, counsel and other representatives of Parent
reasonable access, during normal business hours during the period prior to
the Effective Time, to all their properties, books, contracts, commitments
and records and, during such period, the Company shall, and shall cause each
of its subsidiaries to, make available promptly to Parent upon request (a) a
copy of each report, schedule, registration statement and other document
filed or received by it during such period pursuant to the requirements of
the federal or state securities laws or the federal tax laws, or state, local
or foreign tax laws and (b) all other information concerning its business,
properties and personnel as Parent may reasonably request (including the
Company's outside accountants' work papers). Except as otherwise agreed to
by the Company, and notwithstanding termination of this Agreement, the terms
of the Confidentiality Agreement dated May 21, 1998, between Parent and the
Company (the "Confidentiality Agreement") shall apply to all information
about the Company which has been furnished under this Agreement by the
Company to Parent or Sub.
SECTION VII.3. STATE TAKEOVER LAWS. Notwithstanding any other
provision in this Agreement, in no event shall the Section 203 Approval be
withdrawn, revoked or modified by the Board of Directors of the Company. If
any state takeover statute other than Section 203 of the DGCL becomes or is
deemed to become applicable to the Company, the Offer, the Merger or this
Agreement, the Company shall take all reasonable action necessary to render
such statute inapplicable to all of the foregoing.
SECTION VII.4. REASONABLE EFFORTS.
(1) Upon and subject to the terms and subject to the conditions
set forth in this Agreement, each of the parties agrees to use all reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Offer, the Merger and the other
transactions contemplated by this Agreement, including using reasonable
efforts to take the following actions: (i) the taking of all reasonable acts
necessary to cause the Offer Conditions to be satisfied, (ii) 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 avoid an action or proceeding
by any Governmental Entity including, but not limited to, all filings under
the HSR Act which are required in connection with the transactions
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contemplated by this Agreement. Each party shall cooperate with the other
party in connection with the other party's filings under the HSR Act
including taking all reasonable actions to cause early termination of all
applicable waiting periods, (iii) the obtaining of all necessary consents,
approvals or waivers from third parties, (iv) the defending of any lawsuits
or other legal proceedings, whether judicial or administrative, challenging
this Agreement 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 (v) the
execution and delivery of any additional instruments necessary to consummate
the transactions contemplated by, and to fully carry out the purposes of,
this Agreement. In connection with and without limiting the foregoing, but
subject to the terms and conditions hereof, the Company and its Board of
Directors shall, if any state takeover statute or similar statute or
regulation is or becomes applicable to the Offer, the Merger, this Agreement
or any other transactions contemplated by this Agreement, use all reasonable
efforts to ensure that the Offer, the Merger and the other transactions
contemplated by this Agreement may be consummated as promptly as practicable
on the terms contemplated by this Agreement and otherwise to minimize the
effect of such statute or regulation on the Offer, the Merger, this Agreement
and the other transactions contemplated by this Agreement.
(2) The Company shall give prompt notice to Parent, and Parent
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 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.
SECTION VII.5. COMPANY STOCK OPTIONS.
(1) Each option granted to an employee of the Company or its
subsidiaries or a member of the Board of the Company (an "Optionee") to
acquire Shares ("Company Stock Option") that is outstanding immediately prior
to the commencement of the Offer, whether or not then vested or exercisable,
shall, effective as of the commencement of the Offer, become fully
exercisable subject to the last sentence of this paragraph. Upon the
commencement of the Offer, the Board of the Company or an appropriate
committee thereof shall provide notice to each Optionee that any Company
Stock Option not exercised within 15 days (10 days in the case of Company
Stock Options granted under the Company 1995 Directors Stock Option Plan)
from the date of such notice shall thereupon be cancelled. The notice may
provide each Optionee with an opportunity to avoid the tendering of the
exercise price and receiving in lieu thereof an amount per option share equal
to the excess, if any, of the Offer Price over the exercise price of the
Option. Notwithstanding anything to the contrary set forth in this Section
7.05, any such acceleration, exercise or cancellation shall be conditioned
upon the effectiveness of the Merger.
(2) Prior to the commencement of the Offer, the Company shall (i)
obtain any consents from holders of Company Stock Options and (ii) amend the
terms of its equity incentive plans or arrangements, in each case as is
necessary to give effect to the provisions of paragraph (a) of this Section
7.05 and to ensure that at the Effective Time no holder of any Company Stock
Option shall have the right to purchase or receive any Shares.
SECTION VII.6. DIRECTORS. Promptly upon the acceptance for payment of,
and payment for, Shares by Sub pursuant to the Offer, Sub shall be entitled
to designate such number of directors on the Board of Directors of the
Company as will give Sub, subject to compliance with Section 14(f) of the
Exchange Act, a majority of such directors, and the Company shall, at such
time, cause Sub's designees to be so elected by its existing Board of
Directors; provided, however, that in the event that Sub's designees are
elected to the Board of Directors of the Company, until the Effective Time
such Board of Directors shall have at least two directors who are directors
of the Company on the date of this Agreement and who are not officers of the
Company or any of its subsidiaries (the "Independent Directors") and;
provided further that, in such event, if the number of Independent Directors
shall be reduced below two for any reason whatsoever, the remaining
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Independent Director shall designate a person to fill such vacancy who shall
be deemed to be an Independent Director for purposes of this Agreement or, if
no Independent Directors then remain, the other directors of the Company on
the date hereof shall designate two persons to fill such vacancies who shall
not be officers or affiliates of the Company or any of its subsidiaries, or
officers or affiliates of Parent or any of its subsidiaries, and such persons
shall be deemed to be Independent Directors for purposes of this Agreement.
The Company shall, if requested by the Parent, also cause directors
designated by the Parent to constitute at least a majority of (i) each
committee of the Company's Board of Directors, (ii) each board of directors
(or similar body) of each subsidiary of the Company, and (iii) each committee
(or similar body) of each such board. Subject to applicable law, the Company
shall take all action requested by Parent necessary to effect any such
election, including mailing to its stockholders the Information Statement
containing the information required by Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder, and the Company agrees to make such
mailing with the mailing of the Schedule 14D-9 (provided that Sub shall have
provided to the Company on a timely basis all information required to be
included in the Information Statement with respect to Sub's designees).
In connection with the foregoing, the Company will promptly, at the option of
Parent, either increase the size of the Board of Directors of the Company,
any subsidiary or any committee thereof and/or obtain the resignation of such
number of current directors or committee members as is necessary to enable
Sub's designees to be elected or appointed to, and to constitute a majority
of such boards and committees as provided above.
SECTION VII.7. FEES AND EXPENSES.
(1) All fees and expenses incurred in connection with the Offer,
the Merger, this Agreement and the transactions contemplated by this
Agreement shall be paid by the party incurring such fees or expenses, whether
or not the Offer or the Merger is consummated.
(2) The Company shall pay, or cause to be paid, in same day funds
to Parent the sum of (x) all of Parent=s reasonable out-of-pocket expenses
incurred or to be incurred in connection with the Offer, the Merger or this
Agreement or the preparation therefor such amount not to exceed $3,000,000
(the "Expenses"), and (y) $8,800,000 (the "Termination Fee") if (i) the
Company terminates this Agreement pursuant to Section 9.01(e), or (ii) prior
to termination of this Agreement, a Takeover Proposal (whether or not such
Takeover Proposal constitutes a Superior Proposal) shall have been received
and within twelve months of such termination such proposal is consummated or
the Company enters into an agreement to consummate or approves or recommends
to its stockholders such proposal. The payment shall be made in the case of
a termination described in clause (i) immediately prior to termination and in
the case of a termination described in clause (ii) concurrently with the
earlier of any such recommendation or the consummation of any such
transaction by the Company. The Company shall pay, or cause to be paid, in
same day funds to Parent all of Parent's Expenses if Parent or Sub shall
terminate this Agreement pursuant to Section 9.01(c), such payment to be made
promptly upon such termination.
SECTION VII.8. INDEMNIFICATION.
(1) From and after the consummation of the Offer, Parent will, and
will cause the Surviving Corporation to, fulfill and honor in all respects
the obligations of the Company pursuant to (i) each indemnification agreement
in effect at such time between the Company and each person who is or was a
director or officer of the Company at or prior to the Effective Time and (ii)
any indemnification provisions under the Company's Certificate of
Incorporation or By-laws as each is in effect on the date hereof (the persons
to be indemnified pursuant to the agreements or provisions referred to in
clauses (i) and (ii) of this Section 7.08(a) shall be referred to as,
collectively, the "Indemnified Parties"). In the event of any such claim,
action, suit, proceeding or investigation (whether arising before or after
the Effective Time), (i) any counsel retained by the Indemnified Parties for
any period after the Effective Time must be reasonably satisfactory to the
Surviving Corporation, (ii) after the Effective Time, the Surviving
Corporation shall pay the reasonable fees and expenses of such counsel
PROVIDED, HOWEVER, that the Surviving Corporation shall not be liable for any
settlement effected without its written consent (which consent shall not be
-24-
unreasonably withheld); and PROVIDED, FURTHER, that the Indemnified Parties
as a group may retain only one law firm to represent them with respect to any
single action unless there is, under applicable standards of professional
conduct, a conflict on any significant issue between the positions of any two
or more Indemnified Parties. The Certificate of Incorporation and By-laws
of the Surviving Corporation shall contain the provisions with respect to
indemnification and exculpation from liability set forth in the Company's
Certificate of Incorporation and By-laws on the date of this Agreement, which
provisions shall not be amended, repealed or otherwise modified for a period
of six years after the Effective Time in any manner that would adversely
affect the rights thereunder of any Indemnified Party.
(2) This Section 7.08 shall survive the consummation of the Merger
at the Effective Time, is intended to be for the benefit of, and enforceable
by, the Company, Parent, the Surviving Corporation and each Indemnified Party
and such Indemnified Party's heirs and representatives, and shall be binding
on all successors and assigns of Parent and the Surviving Corporation.
SECTION VII.9. CERTAIN LITIGATION. The Company agrees that it shall
not settle any litigation against the Company or any of its directors by any
stockholder of the Company relating to the Offer, the Merger or this
Agreement or any Takeover Proposal made by another party whether before or
after the date of this Agreement without the prior written consent of Parent
(not to be unreasonably withheld).
SECTION VII.10. RIGHTS AGREEMENT. Except as provided above or as
requested in writing by Parent, the Board of Directors of the Company shall
not (a) amend the Rights Agreement or (b) take any action with respect to, or
make any determination under, the Rights Agreement, including a redemption of
the Rights or any action to facilitate a Takeover Proposal.
SECTION VII.11. NOTIFICATION OF CERTAIN MATTERS. The Company shall
give prompt notice to Parent, of (i) the occurrence or non-occurrence of any
event the occurrence or non-occurrence of which would cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect, and (ii) any failure by the Company to
satisfy any covenant condition or agreement to be complied with or satisfied
by it hereunder; provided however that the delivery of any notice pursuant to
this Section shall not limit or otherwise affect the representations,
warranties and covenants set forth in this Agreement or the remedies
available hereunder or under applicable law.
ARTICLE VIII
CONDITIONS
SECTION VIII.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of each party to effect the Merger shall
be subject to the satisfaction or waiver prior to the Closing Date of the
following conditions:
(1) COMPANY STOCKHOLDER APPROVAL. If required by applicable law,
the Company Stockholder Approval shall have been obtained.
(2) NO INJUNCTIONS OR RESTRAINTS. No statute, rule, regulation,
executive order, decree, temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other Governmental Entity or other legal restraint or
prohibition preventing the consummation of the Merger shall be in effect;
provided, however, that each of the parties shall have used reasonable
efforts to prevent the entry of any such injunction or other order and to
appeal as promptly as possible any injunction or other order that may be
entered.
(3) PURCHASE OF SHARES. Sub shall have previously accepted for
payment and paid for Shares pursuant to the Offer.
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ARTICLE IX
TERMINATION AND AMENDMENT
SECTION IX.1. TERMINATION. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval of the
terms of this Agreement by the stockholders of the Company:
(1) by mutual written consent of Parent and the Company;
(2) by either Parent or the Company:
(1) if (x) Sub shall not have accepted for payment any Shares
pursuant to the Offer prior to February 26, 1999 (the "Deadline Condition")
as a result of the failure, occurrence or existence of any of the conditions
set forth in Exhibit A to this Agreement or (y) the Offer shall have
terminated or expired in accordance with its terms without Sub having
accepted for payment any Shares pursuant to the Offer; provided, however,
that the right to terminate this Agreement pursuant to this Section
9.01(b)(i) shall not be available to any party whose failure (including, in
the case of Parent, a failure by Sub) to perform any of its obligations under
this Agreement results in the failure of the satisfaction of any such
conditions; provided, that if the Offer is extended pursuant to clause C of
the last sentence of Section 1.01(a) to a date later than the date of the
Deadline Condition, the date of the Deadline Condition shall automatically be
extended to the first business day following the extended expiration date of
the Offer.
(2) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action permanently enjoining, restraining
or otherwise prohibiting the acceptance for payment of, or payment for,
Shares pursuant to the Offer or the Merger on the terms contemplated in this
Agreement and such order, decree or ruling or other action shall have become
final and nonappealable;
(3) by Parent or Sub if prior to the purchase of Shares
pursuant to the Offer, any of the material representations and warranties of
the Company set forth in this Agreement shall not be true and correct in any
material respect, as of the date of this Agreement, or if the Company shall
have failed to perform in any material respect any obligation or to comply in
any material respect with any agreement or covenant of the Company to be
performed or complied with by it under this Agreement; or;
(4) by Parent or Sub if either Parent or Sub is entitled to
terminate the Offer as a result of the occurrence of any event set forth in
paragraphs (d), (e), (f) or (g) of Exhibit A to this Agreement;
(5) by the Company in connection with entering into a
definitive agreement with respect to a Superior Proposal, in accordance with
Section 6.02(b), provided that the Company has complied with all provisions
thereof, including the notice provisions therein and that the Company has
made the payments pursuant to Section 7.07(b); or
(6) by the Company if prior to the purchase of Shares
pursuant to the Offer, any of the material representations and warranties of
the Parent or Sub set forth in this Agreement shall not be true and correct
in any material respect, at the date of this Agreement, or if the Parent or
Sub shall have failed to perform in any material respect any obligation or to
comply with in any material respect any agreement or covenant of Parent or
Sub to be performed or complied with by them under this Agreement; or
(7) By Parent or Sub if (i) a tender offer for any securities
of the Company shall have been commenced or publicly proposed to be made by
another person (including the Company or its subsidiaries or affiliates),
(ii) any person or group (as defined in Section 13(d)(3) of the Exchange
Act), other than Parent and Sub and other than any person or group which
prior to the date hereof has publicly disclosed beneficial ownership of 10%
or more of the outstanding voting securities of the Company (a "Significant
Shareholder") shall have acquired directly or indirectly beneficial ownership
of 10% or more of the outstanding voting securities of the Company or any of
its subsidiaries, whether through the acquisition of securities, the exercise
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of rights under options, warrants or similar instruments, the formation of a
group, or otherwise, or (iii) any Significant Shareholder or group that
together would constitute a Significant Shareholder shall have beneficially
acquired additional voting securities of the Company, whether through the
acquisition of securities, the exercise of rights under options, warrants or
similar instruments, the formation of a group or otherwise, representing 2%
or more of the outstanding voting securities of the Company; provided that in
Parent's reasonable judgment any such event described in clause (ii) or (iii)
makes the successful completion of the Offer unlikely or materially more
burdensome to Parent or Sub.
SECTION IX.2. EFFECT OF TERMINATION. In the event of a termination of
this Agreement by either the Company or Parent or Sub as provided in Section
9.01, this Agreement shall forthwith become void and there shall be no
liability or obligation on the part of Parent, Sub or the Company or their
respective officers or directors, except with respect to the last sentence of
Section 1.02(c), Section 4.18, Section 5.05, the last sentence of Section
7.02, Section 7.07, this Section 9.02 and Article X; provided, however, that
nothing herein shall relieve any party for liability for fraud or for breach
of the provisions of this Agreement.
SECTION IX.3. AMENDMENT. This Agreement may be amended by the parties
hereto, by duly authorized action taken, at any time before or after
obtaining the Company Stockholder Approval, but, after the purchase of Shares
pursuant to the Offer, no amendment shall be made which decreases the Merger
Consideration and, after the Company Stockholder Approval, no amendment shall
be made which by law requires further approval by such stockholders without
obtaining such further approval. This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the parties hereto.
Following the election or appointment of Sub's designees pursuant to Section
7.06 and prior to the Effective Time, the affirmative vote of a majority of
the Independent Directors then in office shall be required by the Company to
(i) amend or terminate this Agreement by the Company, (ii) exercise or waive
any of the Company's rights or remedies under this Agreement, (iii) extend
the time for performance of Parent and Sub's respective obligations under
this Agreement or (iv) take any action to amend or otherwise modify the
Company's Certificate of Incorporation or By-laws (or similar governing
instruments of the Company's subsidiaries) in violation of Section 7.08
hereof.
SECTION IX.4. EXTENSION; WAIVER. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
Boards of Directors, may, to the extent legally allowed, subject to Section
9.03, (i) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto or (iii) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of those rights.
ARTICLE X
MISCELLANEOUS
SECTION X.1. NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time or, in the case of the Company, shall survive the acceptance for payment
of, and payment for, Shares by Sub pursuant to the Offer. This Section 10.01
shall not limit any covenant or agreement of the parties which by its terms
contemplates perfor-xxxxx after the Effective Time, including Section 7.08.
SECTION X.2. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed), sent by overnight courier (providing proof
of delivery) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
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(1) if to Parent or Sub, to
Maxxim Medical, Inc.
00000 00xx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telecopy No.: 000-000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx
Telecopy No.: 212-735-2000
and
(2) if to the Company, to
Circon Corporation
0000 Xxxxxxxxx Xxxxxx
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
Telecopy No.: 000-000-0000
with a copy to:
Wilson, Sonsini, Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxx
Telecopy No.: 000-000-0000
SECTION X.3. INTERPRETATION. When a reference is made in this
Agreement to an Article or a Section, such reference shall be to an Article
or a Section of this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation". The phrase "made available" in this Agreement shall mean that
the information referred to has been made available if requested by the party
to whom such information is to be made available. As used in this Agreement,
the term "subsidiary" of any person means another person, an amount of the
voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more
of the equity interests of which) is owned directly or indirectly by such
first person. As used in this Agreement, "material adverse change" or
"material adverse effect" means, when used in connection with the Company or
Parent, as the case may be, any change or effect that is materially adverse
to the business, properties, assets, liabilities, financial condition or
results of operations of such entity and its subsidiaries taken as a whole.
SECTION X.4. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
SECTION X.5. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement and the Confidentiality Agreement (a) constitute the entire
agreement and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof, and
(b) except as provided in Sections 7.05 and 7.08 hereof, are not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder.
SECTION X.6. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware without
regard to any applicable conflicts of law.
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SECTION X.7. PUBLICITY. Except as otherwise required by law (including
Rule 14d-9 promulgated under the Exchange Act), court process or the rules of
the NYSE or the Nasdaq National Market or as contemplated or provided
elsewhere herein, for so long as this Agreement is in effect, neither the
Company nor Parent shall, or shall permit any of its subsidiaries to, issue
or cause the publication of any press release or other public announcement
with respect to the transactions contemplated by this Agreement without the
consent of the other party, which consent shall not be unreasonably withheld.
SECTION X.8. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Sub may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect wholly owned subsidiary of Parent.
Subject to the preceding sentence but without relieving any party hereof of
any obligation hereunder, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors
and assigns.
SECTION X.9. ENFORCEMENT. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the partes shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in any court
of the United States located in the State of Delaware or in any Delaware
state court, this being in addition to any other remedy to which they are
entitled at law or in equity. In addition, each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any court of the
United States located in the State of Delaware or of any Delaware state court
in the event any dispute arises out of this Agreement or the transactions
contemplated by this Agreement, (b) agrees that it will not attempt to deny
or defeat such personal jurisdiction by motion or other request for leave
from any such court and (c) agrees that it will not bring any action relating
to this Agreement or the transactions contemplated by this Agreement in any
court other than a court of the United States located in the State of
Delaware or a Delaware state court.
SECTION X.10. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect. Upon such determination
that any term other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible to the fullest extent permitted by applicable law in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to
the extent possible.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement to
be signed by their respective officers thereunto duly authorized as of the
date first written above.
MAXXIM MEDICAL, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Chairman of the Board,
President & Chief
Executive Officer
MMI ACQUISITION CORP.
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
CIRCON CORPORATION
By: /s/ Xxxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Chief Executive Officer
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EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or this Agreement, Sub shall
not be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered Shares after the
termination or withdrawal of the Offer), to pay and may delay the acceptance
for payment of or the payment for any Shares tendered pursuant to the Offer
and may amend or terminate the Offer, consistent with the terms of the Merger
Agreement unless (i) there shall have been validly tendered and not withdrawn
prior to the expiration of the Offer such number of Shares that would
constitute at least a majority of the outstanding Shares, determined on a
fully diluted basis (the "Minimum Condition"), and (ii) any waiting period
under the HSR Act applicable to the purchase of Shares pursuant to the Offer
shall have expired or been terminated. Furthermore, Sub shall not be
required to accept for payment or, subject as aforesaid, to pay for any
Shares not theretofore accepted for payment or paid for, and may, in
accordance with Section 9.01, terminate this Agreement or, amend the Offer
with the consent of the Company, if, upon the scheduled expiration date of
the Offer and before the acceptance of such Shares for payment or the payment
therefor, any of the following conditions exists:
(1) there shall be instituted or pending by any Governmental
Entity any suit, action or proceeding (i) challenging the acquisition by
Parent or Sub of any Shares under the Offer, seeking to restrain or prohibit
the making or consum-mation of the Offer or the Merger, (ii) seeking to
prohibit or materially limit the ownership or operation by the Company,
Parent or any of Parent's subsidiaries of a material portion of the business
or assets of the Company or Parent and its subsidiaries, taken as a whole, or
to compel the Company or Parent to dispose of or hold separate any material
portion of the business or assets of the Company or Parent and its
subsidiaries, taken as a whole, in each case as a result of the Offer or the
Merger or (iii) seeking to impose material limitations on the ability of
Parent or Sub to acquire or hold, or exercise full rights of ownership of,
any Shares to be accepted for payment pursuant to the Offer including,
without limitation, the right to vote such Shares on all matters properly
presented to the stockholders of the Company or (iv) seeking to prohibit
Parent or any of its subsidiaries from effectively controlling in any
material respect any material portion of the business or operations of the
Company or (v) seeking to obtain from the Company any damages that could
reasonably be expected to have a material adverse effect on the Company;
(2) there shall be any statute, rule, regulation, judgment, order
or injunction enacted, entered, enforced, promulgated or deemed applicable to
the Offer or the Merger, by any Governmental Entity or court, other than the
application to the Offer or the Merger of applicable waiting periods under
the HSR Act, that would result in any of the consequences referred to in
clauses (i) through (v) of paragraph (a) above;
(3) this Agreement shall have been terminated in accordance with
its terms;
(4) (i) the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified its approval or recommendation of
the Offer or the Merger or its adoption of this Agreement, or approved or
recommended any Takeover Proposal, (ii) the Company shall have entered into
any agreement with respect to any Takeover Proposal in accordance with
Section 6.02(b) of this Agreement or (iii) the Board of Directors of the
Company or any committee thereof shall have resolved to take any of the
foregoing actions;
(5) in the event any of the material representations and
warranties of the Company set forth in this Agreement shall not be true and
correct in any material respect, at the date of this Agreement, or if the
Company shall have failed to perform in any material respect any obligation
or to comply in any material respect with any agreement or covenant of the
Company to be performed or complied with by it under this Agreement;
A-1
(6) there shall have occurred (1) any general suspension of
trading in, or limitation on prices for, securities on the New York Stock
Exchange for a period in excess of three hours (excluding suspensions or
limitations resulting solely from physical damage or interference with such
exchanges not related to market conditions), (2) a declaration of a banking
moratorium or any suspension of pay-ments in respect of banks in the United
States (whether or not mandatory) by any Governmental Entity, (3) any
limitation or proposed limitation (whether or not mandatory) by any United
States governmental authority or agency that has a material adverse effect
generally on the extension of credit by banks or other financial
institutions, (4) any change in general financial, bank or capital market
conditions such that banks are unwilling to extend credit to borrowers
similar to Parent generally or (5) any decline in either the Dow Xxxxx
Industrial Average or the Standard & Poor's Index of 500 Industrial Companies
in excess of 20% from the close of business on the date hereof;
(7) there shall have occurred any events or changes which
constitute or which are reasonably likely to constitute, individually or in
the aggregate, a material adverse change in the condition of the Company
(financial or otherwise);
(8) (i) a tender offer for any securities of the Company shall
have been commenced or publicly proposed to be made by another person
(including the Company or its subsidiaries or affiliates), (ii) any person or
group (as defined in Section 13(d)(3) of the Exchange Act), other than Parent
and Sub and other than any person or group which prior to the date hereof has
publicly disclosed beneficial ownership of 10% or more of the outstanding
voting securities of the Company (a "Significant Shareholder"), shall have
acquired directly or indirectly beneficial ownership of 10% or more of the
outstanding voting securities of the Company or any of its subsidiaries,
whether through the acquisition of securities, the exercise of rights under
options, warrants or similar instruments, the formation of a group, or
otherwise, or (iii) any Significant Shareholder of group that together would
constitute a Significant Shareholder shall have beneficially acquired
additional voting securities of the Company, whether through the acquisition
of securities, the exercise of rights under options, warrants or similar
instruments, the formation of a group or otherwise, representing 2% or more
of the outstanding voting securities of the Company; provided that in
Parent's reasonable judgment any such event described in clause (ii) or (iii)
makes the successful completion of the Offer unlikely or materially more
burdensome to Parent or Sub.
which, in the reasonable judgment of Parent or Sub, in its sole discretion,
make it inadvisable to proceed with such acceptance of Shares for payment or
the payment therefor.
The foregoing conditions are for the sole benefit of Parent and Sub and
(except for the Minimum Condition) may, subject to the terms of this
Agreement, be waived by Parent and Sub in whole or in part at any time and
from time to time in their sole discretion. The failure by Parent or Sub, at
any time to exercise any of the foregoing rights shall not be deemed a
waiver of any right and all such rights may be asserted at any time or from
time to time. Terms used but not defined herein shall have the meanings
assigned to such terms in the Agreement to which this Exhibit A is a part.
X-0
XXXXXXX X
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Xxxxxx Xxxxxx Inc.
Circon GmbH
Circon Export Corporation
Cabot Technology Corp.
Circon S.A.
B-1
