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EXHIBIT 2(B)(1)
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of February 17, 1997 by and among
Substance Abuse Technologies, Inc., a Delaware corporation ("SAT"), U.S. Drug
Acquisition Corp., a Delaware corporation ("Acquisition Corp."), and U.S. Drug
Testing, Inc., a Delaware corporation ("U.S. Drug").
WITNESSETH:
WHEREAS, of the 5,221,900 shares of the common stock, $.001 par value (the
"U.S. Drug Common Stock"), of U.S. Drug outstanding as of the date hereof, SAT
is the owner of 3,500,000 shares and 1,721,900 shares (the "Minority U.S. Drug
Common Stock") are owned by persons other than SAT (the "U.S. Drug Minority
Stockholders");
WHEREAS, the Board of Directors of each of SAT and Acquisition Corp. have
each adopted, approved and authorized the execution and delivery of this
Agreement and Plan of Merger (the "Agreement") so as to implement the subject
merger in compliance with the provisions of Section 251 of the General
Corporation Law of the State of Delaware (the "GCL") and Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, because of the relationships of all three of the directors of U.S.
Drug to SAT as current directors and/or officers thereof and as securityholders
thereof, the Board of Directors of U.S. Drug has only authorized execution and
delivery of the Agreement on the condition that approval of the subject merger
by U.S. Drug shall only be effected as a result of the obtaining of consents
thereto from the holders of more than 50% of the Minority U.S. Drug Common
Stock;
WHEREAS, the Board of Directors of U.S. Drug intends to, and shall, submit
this Agreement and the subject merger to the stockholders of U.S. Drug for
approval to the extent required by the applicable provisions of the GCL; and
WHEREAS, in connection with the subject merger and the solicitation of
stockholder consents thereto, SAT has filed a Registration Statement on Form
S-4, File No. 333-4790 (the "Registration Statement"), with the Securities and
Exchange Commission (the "SEC") pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), the Registration Statement to include as Part I
thereof the prospectus and consent solicitation statement to be transmitted to
the U.S. Drug Minority Stockholders (such prospectus and consent solicitation
statement, as from time to time amended and/or supplemented, hereinafter
referred to as the "Consent Solicitation Statement/Prospectus") (a) with respect
to the solicitation of consents from the U.S. Drug Minority Stockholders to the
subject merger pursuant to Section 228 of the GCL and Section 14(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and (b) with
respect to the distribution of the shares of the SAT common stock, $.01 par
value (the "SAT Common Stock"), to the U.S. Drug Minority Stockholders in
exchange for their shares of the U.S. Drug Common Stock pursuant to the terms of
the Agreement, the subject merger, the Securities Act and the rules and
regulations promulgated thereunder;
NOW THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements herein contained, the
parties hereto do hereby agree as follows:
1. THE MERGER. Subject to the terms and conditions hereinbelow set
forth, on the Effective Date (as hereinafter defined in Section 11 hereof)
U.S. Drug shall be merged with and into Acquisition Corp. (the "Merger")
and, in connection therewith:
(a) except to the extent provided or permitted by applicable law,
the separate existence of U.S. Drug shall cease and terminate;
(b) Acquisition Corp. as the surviving corporation, shall continue
its corporate existence under the laws of the State of Delaware and
shall possess all of the rights, privileges, immunities, powers,
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franchises and authority (both public and private) of, and be subject to
all of the restrictions, disabilities and duties of, U.S. Drug;
(c) all of the assets and property of U.S. Drug of every kind,
nature and description (real, personal and mixed and both tangible and
intangible) and every interest therein, wheresoever located, including,
without limitation, all debts or other obligations belonging or due to
U.S. Drug, all stock subscriptions, claims and choses in action shall
be, and be deemed to be, vested, absolutely and unconditionally, in
Acquisition Corp. (to the same extent, degree and manner as previously
vested in U.S. Drug); and
(d) all debts and obligations of U.S. Drug, all rights of creditors
of U.S. Drug and all liens or security interests encumbering any of the
property of U.S. Drug shall be vested in Acquisition Corp. and shall
remain in full force and effect without modification or impairment and
shall be, and be deemed to be, enforceable against Acquisition Corp. and
its assets and properties with the same full force and effect as if such
debts, obligations, liens or security interests had been originally
incurred or created by Acquisition Corp. in its own name and for its own
behalf. Without limiting the generality of the foregoing, Acquisition
Corp. specifically assumes all continuing obligations which U.S. Drug
would otherwise have to indemnify its officers and directors, to the
fullest extent currently provided in Acquisition Corp.'s By-Laws and
pursuant to the GCL, with respect to any and all claims arising out of
actions taken or omitted by such officers and directors prior to the
Effective Date.
2. INSTRUMENTS OF CONVEYANCE. Without limiting the generality of the
provisions of Section 1 hereof and/or the succession provisions of
applicable law, the officers and directors of U.S. Drug last in office
shall (to the extent they, or any of them, possess and/or may exercise the
power to do so) execute, deliver and/or record such deeds and/or other
instruments of transfer and/or conveyance, and take or cause to be taken,
such other and further actions, as the case may be, as shall be reasonably
requested by Acquisition Corp. or SAT, or their legal counsel, to vest,
perfect, confirm, implement the transfer of, or establish in the name, on
behalf or for the account or the benefit of Acquisition Corp., title and/or
possession of any or all of the assets, property, property interests,
rights, privileges, immunities, powers and franchises owned and/or
exercisable by U.S. Drug (or in which U.S. Drug had an interest and/or the
power to exercise immediately prior to the Effective Date) and which was
vested, or intended to be vested, in Acquisition Corp. pursuant to the
provisions of this Agreement and the Merger.
3. CONSTITUTIONAL DOCUMENTS, DIRECTORS AND OFFICERS. On and as of the
Effective Date:
(a) The Certificate of Incorporation of Acquisition Corp. on such
date in full force and effect shall be the Certificate of Incorporation
of Acquisition Corp., as the surviving corporation, until the same shall
be altered, amended, modified, terminated or rescinded in the manner
provided by the GCL, which rights of alteration, amendment,
modification, termination and/or rescission are hereby expressly
reserved by Acquisition Corp.;
(b) The By-Laws of Acquisition Corp. on such date in full force and
effect shall be the By-Laws of Acquisition Corp., as the surviving
corporation, until the same shall be altered, amended, modified,
terminated or rescinded in the manner provided in the Certificate of
Incorporation of Acquisition Corp. and/or the GCL, which rights of
alteration, amendment, modification, termination and/or rescission are
hereby expressly reserved by Acquisition Corp.
(c) The members of the Board of Directors and the officers of
Acquisition Corp., the surviving corporation, shall consist of the
persons described on Exhibit "A" annexed hereto and made a part hereof,
each of such persons to hold such membership and/or officership as
provided in the By-Laws and/or the GCL.
(d) The Certificate of Incorporation of SAT on such date in full
force and effect shall be the Certificate of Incorporation of SAT until
the same shall be altered, amended, modified, terminated or rescinded in
the manner provided by the GCL, which rights of alteration, amendment,
modification, termination and/or rescission are hereby expressly
reserved by SAT.
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(e) The By-Laws of SAT on such date in full force and effect shall
be the By-Laws of SAT until the same shall be altered, amended,
modified, terminated or rescinded in the manner provided in the
Certificate of Incorporation of SAT and/or the GCL, which rights of
alteration, amendment, modification, termination and/or rescission are
hereby expressly reserved by SAT.
4. CONVERSION RATES. On the Effective Date the shares of the U.S.
Drug Common Stock shall be converted and exchanged into shares of the SAT
Common Stock (and warrants exercisable with respect to shares of the U.S.
Drug Common Stock shall become exercisable with respect to shares of the
SAT Common Stock) in the following manner:
(a) Each issued and outstanding share of the U.S. Drug Common Stock
shall, by virtue of the Merger and without any action on the part of the
holder thereof, be converted and exchanged into 1.62 shares of the SAT
Common Stock, provided however, that to the extent any holder of the
U.S. Drug Common Stock shall be entitled, as a result of the foregoing
conversion and exchange, to receive less than a whole share of the SAT
Common Stock, then and in any such event:
(i) no fractional share and/or fractional interest in a whole
share shall be issued and
(ii) the fractional interest of such holder shall be liquidated
for cash equivalent calculated on the basis of the closing sales
price of the SAT Common Stock on the Effective Date or on the first
day thereafter that such price is available.
The number of shares of the SAT Common Stock to be exchanged for
each share of U.S. Drug Common Stock was determined by dividing
$2.625 (which is the value of the shares of the SAT Common Stock
to be exchanged for a share of the U.S. Drug Common Stock) by an
assumed market price of $1.625 (which was the closing sale price
reported by the American Stock Exchange on February 14, 1997, the
last trading date before the date of this Agreement).
(b) Each warrant expiring October 13, 1998 (the "Warrant") shall,
by virtue of the Merger and without any action on the part of the holder
thereof, be converted and exchanged into a warrant (the "Merger
Warrant") to purchase shares of SAT Common Stock equal to the number of
shares that the holder would have received under Section 4(a) hereof had
the Warrant been exercised immediately prior to the Effective Date. The
exercise price shall be adjusted to the product of $7.50 and a fraction,
the numerator of which shall be the number of shares of the U.S. Drug
Common Stock issuable upon exercise of the Warrant prior to the Merger
and the denominator will be the number of shares of the SAT Common Stock
issuable upon the exercise of the Merger Warrant. The expiration date
shall not be changed.
(c) Anything in this Section 4 to the contrary notwithstanding:
(i) Any and all issued shares of the U.S. Drug Common Stock
owned by U.S. Drug and held as treasury stock shall be cancelled and
retired and no shares of the SAT Common Stock shall be issued with
respect thereto;
(ii) Any and all issued shares of the U.S. Drug Common Stock
owned by SAT shall be cancelled and retired and no shares of the SAT
Common Stock shall be issued to SAT with respect thereto; and
(iii) Upon the issuance of shares of the SAT Common Stock to the
U.S. Drug Minority Stockholders in exchange for their shares of the
U.S. Drug Common Stock, there shall be credited to the capital
account of SAT an amount equal to $1.625 and, of the amount so
credited, the portion thereof in excess of the aggregate par value
thereof shall be credited to the capital surplus account.
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5. APPOINTMENT OF EXCHANGE AGENT. Prior to the Effective Date SAT
shall, subject to the provisions of Paragraph 8 hereof:
(a) Designate U.S. Stock Transfer Corporation (the "Exchange
Agent") to implement the exchange (subsequent to the Effective Date) of
certificates representing shares of the U.S. Drug Common Stock (the "Old
Certificates") for certificates representing shares of the SAT Common
Stock (the "New Certificates");
(b) engage the Exchange Agent for a period of the lesser of (i) 12
consecutive months following the Effective Date and (ii) the date on
which all of the Old Certificates held by the U.S. Drug Minority
Stockholders have been surrendered for the New Certificates; and
(c) provide to the Exchange Agent sufficient supplies of New
Certificates so as to enable a holder of an Old Certificate(s) to
surrender such Certificate(s) and receive New Certificate(s).
6. CERTIFICATE EXCHANGE. Subsequent to the Effective Date the
issuance and distribution of New Certificates in exchange for Old
Certificates shall be implemented as follows:
(a) As promptly after the Effective Date as shall be reasonably
possible, the Exchange Agent shall be directed to, and shall, notify
(the "Notification") each holder of an Old Certificate of the
consummation of the Merger, the availability of New Certificates and a
description of the procedure to be followed (and documents to be
executed and submitted) in connection with the surrender of the Old
Certificate and the issuance of the New Certificate. Upon compliance by
a holder thereof with the requirements for the certificate surrender and
issuance specified in the Notification, the Exchange Agent shall be
directed to, and shall, issue and transmit to such holder New
Certificates (representing that number of shares of the SAT Common Stock
to which such holder shall be entitled as herein provided). Until
surrendered and replaced as aforesaid:
(i) each Old Certificate shall, and be deemed to, represent and
evidence (for all corporate purposes other than the payment of
dividends and other distributions) that number of shares of the SAT
Common Stock into which the shares of the U.S. Drug Common Stock
therein referred to are convertible and exchangeable as herein
provided and
(ii) each Old Certificate shall not be transferable on the books
and records of U.S. Drug and/or SAT.
(b) From and after the Effective Date any and all dividends and/or
distributions of every kind, nature or description declared and payable
by SAT on, or with respect to, the SAT Common Stock to any holder of an
Old Certificate (collectively "Distributions") shall be paid, retained,
invested and paid over as follows:
(i) Until such time as the Old Certificate is surrendered for
replacement by a New Certificate(s) as herein provided, no
Distribution shall be paid over by SAT and/or the Exchange Agent to
such holder on, or with respect to, the shares of the SAT Common
Stock evidenced by such Old Certificate;
(ii) All Distributions payable on, or with respect to, shares of
the SAT Common Stock represented by Old Certificates shall be paid
over by SAT to the Exchange Agent and dealt in and with by the
Exchange Agent as follows:
(A) All Distributions in cash shall be deposited by the
Exchange Agent in an interest bearing account (the "Distribution
Account") and retained and disposed of as hereinbelow provided;
(B) Upon surrender by, or on behalf of, a holder of an Old
Certificate for surrender and replacement as hereinabove provided
(or satisfactory proof of loss and an indemnity in favor of, and
acceptable to, SAT and the Exchange Agent), the Exchange Agent
shall pay over and/or deliver to such holder (in addition to the
New Certificate(s) to which such holder shall be entitled) (y)
the principal amount of any cash dividends and any property
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(other than shares of the SAT Common Stock) previously received
by the Exchange Agent with respect to the shares of the SAT
Common Stock evidenced by such Old Certificate and (z) a
certificate representing any shares of the SAT Common Stock
forming part of any Distribution made prior to the date of any
such surrender;
(C) Any and all interest earned and/or credited on, or with
respect to, Distributions shall be applied by the Exchange Agent
to the payment of its fees and disbursements and the remainder,
if any, paid over to SAT upon the termination of the engagement
of the Exchange Agent.
(c) From and after the Effective Date the sole rights of the
holders of Old Certificates (except as otherwise provided by law or
Section 4(a) hereof) shall be those to which they are entitled as owners
of the SAT Common Stock into which the shares of the U.S. Drug Common
Stock evidenced by such Old Certificates shall have been converted as
herein provided.
(d) A holder of a Warrant shall, after the Effective Date, have no
obligation to exchange the holder's certificate evidencing the Warrant
for a new certificate evidencing the Merger Warrant. Whenever thereafter
a holder wishes to exercise his, her or its Warrant, the holder shall
present the Warrant, with the exercise form duly executed and with
payment of the new exercise price per share determined in accordance
with Section 4(b) hereof, to SAT and not to U.S. Drug or Acquisition
Corp. SAT shall then cause the Exchange Agent as the transfer agent for
the SAT Common Stock to issue the shares of the SAT Common Stock as to
which the Warrant is exercised. To the extent that the Warrant is not
exercised for all of the shares of the SAT Common Stock subject thereto,
SAT will issue a new certificate evidencing a Merger Warrant for the
balance.
7. TRANSFERS. If the holder of any Old Certificate desires that the
New Certificate to be issued in replacement therefor (as hereinabove
provided) is to be issued in a name other than that on the Old Certificate
which it replaces, any such issuance shall be subject to and conditioned
upon:
(a) Delivery to the Exchange Agent of the Old Certificate duly
endorsed in blank or accompanied by a duly executed stock assignment
power and otherwise in form for transfer acceptable to the Exchange
Agent; and
(b) Payment to SAT or the Exchange Agent of any and all transfer
and/or other taxes payable, in the opinion of the Exchange Agent, by
reason of the issuance and/or transfer of such New Certificate and/or
the shares of the SAT Common Stock evidenced thereby.
8. TERMINATION OF EXCHANGE AGENT. Upon the termination of the
Exchange Agent's engagement as hereinabove provided, the Exchange Agent
shall deliver to SAT the then balance of the Distribution Account and, upon
such delivery, the Exchange Agent shall have no further duties or
obligations as exchange agent to SAT, Acquisition, U.S. Drug or their
respective stockholders. Thereafter, the duties to be performed by the
Exchange Agent as described in Sections 6 and 7 hereof shall be performed
by SAT in lieu of, and instead of, the Exchange Agent. All blank stock
certificates evidencing the SAT Common Stock shall be retained by the
Exchange Agent for utilization by it in the performance of its duties as
transfer agent for, and with respect to, the SAT Common Stock.
9. SPECIAL PAYMENT. If U.S. Drug or, subsequent to the Effective
Date, Acquisition Corp. executes a definitive agreement (the "Marketing
Agreement") with an unaffiliated corporation to act as a marketing partner
(the "Partner") with respect to its drug testing products and if the
Partner makes a cash payment or payments to U.S. Drug, Acquisition Corp. or
SAT upon the execution of the Marketing Agreement (the "Special Payment"),
then:
(a) SAT will calculate the percentage (to the nearest tenth) that
the outstanding shares of the Minority U.S. Drug Common Stock on the
Effective Date constitute of the outstanding shares of the U.S. Drug
Common Stock on the Effective Date (the "Percentage") and (i) if the
Marketing Agreement is entered into on or prior to the 180th day
following the Effective Date, SAT or, if U.S. Drug or Acquisition Corp.
is the recipient of the Special Payment, Acquisition Corp. shall pay to
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each of the former U.S. Drug Minority Stockholders his, her or its pro
rata share of one third of the Percentage of the Special Payment; (ii)
if the Marketing Agreement is entered into during the period after the
180th day following the Effective Date and on or prior to the first
anniversary of the Effective Date, SAT or, if Acquisition Corp. is the
recipient of the Special Payment, Acquisition Corp. shall pay to each of
the former U.S. Drug Minority Stockholders his, her or its pro rata
share of one sixth of the Percentage of the Special Payment; and (iii)
if the Marketing Agreement is entered into after the first anniversary
of the Effective Date, the former U.S. Drug Minority Stockholders shall
receive none of the Special Payment.
(b) If a cash payment is received from the Partner after execution,
but on or prior to the first anniversary of the Effective Date, and if
such payment is not based on sales effected by the Partner or some
similar criteria, SAT or Acquisition Corp. will treat any such payment
or payments as a Special Payment as if received on the execution of the
Marketing Agreement.
(c) A loan or an equity investment made by the Partner shall not be
deemed to be part of the Special Payment.
(d) On computing the Special Payment, there shall be deducted from
the payment received from the Partner the amount of any finder's fee
paid to secure the Partner or other costs related to obtaining such
payment.
(e) A transferee of the shares of the SAT Common Stock received as
a result of the Merger shall not be eligible to receive a proportionate
share of the Special Payment and SAT or Acquisition Corp. shall make
such payments only to the U.S. Drug Minority Stockholders as reflected
on the stock books of U.S. Drug on the Effective Date or, in the event
of the death of the U.S. Drug Minority Stockholder, his or her heirs or
legal representatives, in the case of the dissolution of a partnership,
to its partners or, in the case of a corporation, to its successor by
merger or other operation of law.
(f) Because SAT intends to merge Acquisition Corp. with and into
SAT if the Merger is consummated and thereafter conduct the former
operations of U.S. Drug as a division of SAT, all references to
Acquisition Corp. in this Section 4 shall be deemed to refer to SAT
after such merger.
10. THE CLOSING. The closing of the transactions contemplated by this
Agreement shall take place on such date, at such place and at such time
within five business days after the satisfaction or waiver of the last of
the conditions set forth in Sections 18 and 19 hereof as shall be
designated by SAT. The closing of such transactions shall be referred to
herein as the "Closing;" the date of the Closing shall be referred to
herein as the "Closing Date"; and the Closing Date may be the same as the
Effective Date.
11. THE EFFECTIVE DATE. Subject to the satisfaction and/or waiver of
the conditions herein described, the Merger shall become effective as at
the close of business on the date specified in the Certificate of Merger to
be filed in the manner required by the GCL or, if none, on the date of
filing (the "Effective Date"). Upon the receipt by U.S. Drug of consents
from the holders of more than 50% of the outstanding shares of the Minority
U.S. Drug Common Stock and of a consent from SAT to the Merger, U.S. Drug
and Acquisition Corp. shall cause to be filed the Certificate of Merger in
the manner required by the GCL. Subject to the provisions of Section 20
hereof, such filing shall be made on, or as soon as practicable after, the
Closing Date; and the parties hereto shall thereafter execute, acknowledge,
deliver and/or record such other and further instruments, documents or
certificates and/or take and perform such other and further actions as may
be required to effect and/or implement the Merger. If the Merger is
consummated, SAT will take such actions as are necessary to deregister the
U.S. Drug Common Stock pursuant to Section 12(b) of the Exchange Act and to
delist the U.S. Drug Common Stock from the Pacific Stock Exchange. The
Certificate of Merger shall provide for the change of name of Acquisition
Corp. to "U.S. Drug Testing, Inc."
12. THE REGISTRATION STATEMENT AND CONSENT SOLICITATION STATEMENT. In
connection with the preparation, utilization and/or distribution of the
Consent Solicitation Statement -- Prospectus to be issued and distributed
to the U.S. Drug Minority Stockholders in connection with the Merger and
the
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preparation and utilization of the Registration Statement of which the
Consent Solicitation Statement/Prospectus constitutes Part I thereof, the
parties shall follow the procedures as provided in this Section 12:
(a) The parties hereto shall cooperate in the preparation thereof
consistent with the applicable requirements of the GCL, the Securities
Act and the Exchange Act and the rules and regulations promulgated under
the Securities Act and the Exchange Act by the SEC; and, without
limiting the generality of the foregoing, each of SAT and U.S. Drug
shall promptly supply to the other any and all information and material
(relating to itself and/or the subject transaction) as may be requested
or required in connection with the preparation and filing of the
Registration Statement, including, without limitation, all information
concerning their respective officers, directors and principal
stockholders that is reasonably requested for inclusion in the Consent
Solicitation Statement/Prospectus; and each shall take and perform such
other and further acts and actions as shall be necessary or appropriate
to cause the prompt preparation, completion, filing, review,
finalization and clearance of the Registration Statement.
(b) Subject to the Registration Statement being declared effective
by the SEC, the Consent Solicitation Statement/Prospectus and any other
communication required by the Exchange Act or the rules and regulations
promulgated thereunder or reasonably requested by SAT shall be mailed by
U.S. Drug or its transfer agent to the U.S. Drug Minority Stockholders
as soon after such effective date as is reasonably possible. Subsequent
thereto U.S. Drug shall transmit to the U.S. Drug Minority Stockholders
such amended and/or supplemental consent solicitation materials as may
be necessary, in light of subsequent developments or otherwise, to
render the Consent Solicitation Statement/Prospectus, as so amended or
supplemented, not false or misleading with respect to any material fact
and so as not to omit to state any information necessary to make the
statements made, within the context made, not misleading. Prior to the
Effective Date (or earlier termination of this Agreement) neither party
hereto shall distribute any material (other than the Consent
Solicitation Statement/Prospectus as herein provided) which might
constitute, or be deemed to constitute, a "prospectus" relating to the
Merger within the meaning of the Securities Act without the prior
written consent of all of the parties hereto in each instance.
(c) U.S. Drug hereby authorizes the utilization by SAT in the
Registration Statement or in any filing with a state securities
administrator of all information concerning U.S. Drug either provided to
SAT by U.S. Drug in connection with or contained in the Consent
Solicitation Statement/Prospectus and/or contained in any filings
heretofore made by U.S. Drug pursuant to the Securities Act and/or the
Exchange Act. U.S. Drug shall promptly advise SAT if at any time any of
such information or material is or becomes incorrect, inaccurate or
incomplete in any material respect and, in connection therewith, U.S.
Drug shall provide SAT with such information and material as shall be
needed to correct any such inaccuracy or omission. SAT shall promptly
advise U.S. Drug if at any time any of the information or material
contained in the Registration Statement and supplied by SAT is or
becomes incorrect, inaccurate or incomplete in any material respect. SAT
shall cause the preparation, review, clearance, approval and
distribution of such amended or supplemented material as shall be
necessary to correct or eliminate any such inaccuracies and/or omissions
as provided in this Section 12(c).
(d) Each of SAT and U.S. Drug covenants and warrants to the other
that any and all information and/or material supplied by it to the other
and/or in connection with the Registration Statement and/or the within
transactions (i) will, at the time made and at each Relevant Date (as
hereinafter defined), be true and correct in all material respects; (ii)
will comply in all material respects with the requirements of the
Securities Act and the Exchange Act and the rules and regulations
promulgated thereunder by the SEC; and (iii) will not contain any
statement which, at the time, and at each Relevant Date and in light of
the circumstances under which it is made, is false or misleading with
respect to any material fact, or which omits to state any material fact
necessary in order to make the statements therein made not false or
misleading. For the purposes of this Agreement, the term "Relevant Date"
shall be and mean each of (x) the effective date of the
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Xxxxxxxxxxxx Xxxxxxxxx, (y) the mailing date of the Consent Solicitation
Statement/Prospectus and (z) the Effective Date. Each of SAT and U.S.
Drug specifically agrees to indemnify and hold harmless the other (and
their respective officers, directors, employees, agents and
representatives) from and against any and all costs, expenses, losses,
demands, claims and liabilities of every kind, nature and description
(including reasonable attorneys' fees) arising out of, or relating to
any breach or anticipatory breach by it of its duties and obligations
pursuant to this Section 12(d) hereof.
(e) SAT does hereby agree to indemnify and hold harmless U.S. Drug
and each of its directors and officers, and each person, if any, other
than SAT who controls U.S. Drug within the meaning of Section 15 of the
Securities Act, from and against any and all losses, claims, damages,
expenses or liabilities, joint or several (including, without
limitation, reasonable attorneys' fees as herein provided), to which
they or any of them may become subject under the Securities Act, any
other statute, common law or otherwise and, except as provided below,
shall reimburse U.S. Drug and each such director, officer or controlling
person for any legal or other expenses reasonably incurred by them or
any of them in connection with investigating or defending any actions
and/or claims, whether or not resulting in any liability, insofar as
such losses, claims, damages, expenses, liabilities or actions result
from a breach or alleged breach of the representations and warranties
contained in Sections 14 or 15 hereof or are based upon any untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement or the Consent Solicitation Statement/
Prospectus or arise out of, or are based upon, the omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, but only
insofar as any such untrue statement or omission or alleged untrue
statement or omission is with respect to the description of SAT or as to
the terms of its offer. Promptly after receipt by a party to be
indemnified pursuant to this Section 12(e) (the "Indemnitee") of notice
of the commencement of any action in respect of which indemnity may be
sought against SAT hereunder, the Indemnitee will promptly notify SAT in
writing of the commencement thereof and SAT shall, subject to the
provisions stated below, assume the defense of the action (including the
employment of counsel, who shall be counsel reasonable satisfactory to
U.S. Drug), and shall make payment of expenses (including attorneys'
fees as herein provided) insofar as such action shall relate to any
alleged liability in respect of which indemnity may be sought against
SAT. The Indemnitee or Indemnitees shall have the right to employ
separate counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such separate counsel shall not be
at the expense of SAT unless the employment of such separate counsel has
been specifically authorized by SAT or there is a conflict of interest
which under the canon of ethics requires the employment of separate
counsel. SAT shall not be liable to any Indemnitee for any settlement of
any action effected without SAT's consent. Notwithstanding any provision
of this Agreement to the contrary, the obligations of SAT hereunder
shall survive the consummation of the transactions contemplated by this
Agreement.
13. U.S. DRUG REPRESENTATIONS AND WARRANTIES. In order to induce SAT
and Acquisition to execute and perform this Agreement, U.S. Drug does
hereby represent, warrant, covenant and agree (which representations,
warranties, covenants and agreements shall be, and be deemed to be,
continuing and survive the execution and delivery of this Agreement, the
Closing and the Effective Date) as follows:
(a) U.S. Drug is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, with full
power and authority, corporate and otherwise, and with all licenses,
permits, certifications, registrations, approvals, consents and
franchises necessary to own or lease and operate its properties and to
conduct its business as presently being conducted.
(b) Subject only to the consent of its stockholders as required by
the GCL: (i) U.S. Drug has the full power and authority, corporate and
otherwise, to execute, deliver and perform this Agreement and to
consummate the transactions contemplated hereby; (ii) the execution,
delivery and performance of this Agreement, the consummation by U.S.
Drug of the transactions herein contemplated and the compliance by U.S.
Drug with the terms of this Agreement have been duly authorized by U.S.
Drug; (iii) this Agreement is the valid and binding obligation of U.S.
Drug, enforceable in accordance with its terms, subject, as to
enforcement of remedies, to applicable
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bankruptcy, insolvency, reorganization, moratorium and other laws
affecting the rights of creditors generally and the discretion of courts
in granting equitable remedies; (iv) the execution, delivery and
performance of this Agreement by U.S. Drug and the consummation by U.S.
Drug of the transactions herein contemplated do not, and will not, with
or without the giving of notice or the lapse of time, or both, (A)
result in any violation of the Certificate of Incorporation or By-Laws
of U.S. Drug or (B) result in a breach of, or a conflict with, any of
the terms or provisions of, or constitute a default under, or result in
the modification or termination of, or result in the creation or
imposition of any lien, security interest, charge or encumbrance upon
any of the properties or assets of U.S. Drug pursuant to, any indenture,
mortgage, note, contract, commitment or other agreement or instrument to
which U.S. Drug is a party or by which it is, or any of its respective
properties or assets are, or may be, bound or affected.
14. SAT REPRESENTATIONS AND WARRANTIES. In order to induce U.S. Drug
to execute and perform this Agreement, SAT does hereby represent, warrant,
covenant and agree (which representations, warranties, covenants and
agreements shall be, and be deemed to be, continuing and survive the
execution and delivery of this Agreement, the Closing and the Effective
Date) as follows:
(a) SAT is a corporation duly organized, validly existing and in
standing under the laws of the State of Delaware, with full power and
authority, corporate and otherwise, and with all licenses, permits,
certifications, registrations, approvals, consents and franchises
necessary to own or lease and operate its properties and to conduct its
business as presently being conducted. SAT is duly qualified to do
business as a foreign corporation, and is in good standing, in all
jurisdictions, if any, wherein such qualification is necessary and where
failure so to qualify would have a material adverse effect on the
business, properties or financial conditions of SAT. SAT has no
subsidiaries other than as set forth on Exhibit "B" annexed hereto and
made a part hereof (the "Subsidiaries"). SAT owns and has and marketable
title in and to 100% of the issued and outstanding capital stock (of all
classes) of each of the Subsidiaries, free and clear of all liens,
security interests, claims and encumbrances and rights and options of
others, except as set forth on Exhibit "B".
(b) Each of the Subsidiaries (other than U.S. Drug as to which SAT
makes no representation) is a corporation duly organized, validly
existing and in good standing under the laws of the state of its
incorporation, with full power and authority, corporate and otherwise,
and with all licenses, permits, certifications, registrations,
approvals, consents and franchises necessary to own or lease and operate
its properties and to conduct its business as presently being conducted.
Each such Subsidiary is duly qualified to do business as a foreign
corporation, and is in good standing, in all jurisdictions, if any,
wherein such qualification is necessary and where failure so to qualify
would have a material adverse effect on the business, properties or
finances of such Subsidiary.
(c) (i) SAT has the full power and authority, corporate and
otherwise, to execute, deliver and perform this Agreement and to
consummate the transactions contemplated hereby; (ii) the execution,
delivery and performance of this Agreement, the consummation by SAT of
the transactions herein contemplated and the compliance by SAT with the
terms of this Agreement have been duly authorized by SAT; (iii) this
Agreement is the valid and binding obligation of SAT, enforceable in
accordance with its terms, subject, as to enforcement of remedies, to
applicable bankruptcy, insolvency, reorganization, moratorium and other
laws affecting the rights of creditors generally and the discretion of
courts in granting equitable remedies; (iv) the execution, delivery and
performance of this Agreement by SAT and the consummation by SAT of the
transactions herein contemplated do not, and will not, with or without
the giving of notice or the lapse of time, or both, (A) result in any
violation of the Certificate of Incorporation (except possibly as
indicated in Section 17(g) hereof) or By-Laws of SAT, (B) result in a
breach of, or a conflict with, any of the terms or provisions of, or
constitute a default under, or result in the modification or termination
of, or result in the creation or imposition of any lien, security
interest, charge or encumbrance upon any of the properties or assets of
SAT pursuant to, any indenture, mortgage, note, contract, commitment or
other agreement or instrument to which SAT is a party or by which it is,
or any of its respective properties or assets are, or may be, bound or
affected; (C) to the best knowledge of SAT, after due
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investigation, violate any existing applicable law, rule, regulation,
judgment, order or decree of any governmental agency or court, domestic
or foreign, having jurisdiction over SAT and/or any of the Subsidiaries
(other than U.S. Drug as to which SAT makes no representation), or any
of their respective properties or businesses; or (D) have any effect on
any license, permit, certification, registration, approval, consent or
other authorization necessary for SAT and/or any of the Subsidiaries
(other than U.S. Drug as to which SAT makes no representation) to own or
lease and operate any of its respective properties and to conduct its
businesses or the ability of SAT and/or any of the Subsidiaries (other
than U.S. Drug as to which SAT makes no representation) to make use
thereof. No consent, approval, authorization or order of any court,
governmental agency, authority or body (other than as required pursuant
to the Securities Act, the Exchange Act and/or state securities or "take
over" statutes and the rules and regulations promulgated under any of
the foregoing and/or any party to an agreement to which SAT is a party
and/or by which it is bound) is required in connection with the
execution, delivery and performance of this Agreement and/or the
consummation by SAT of the transactions contemplated by this Agreement.
(d) Neither SAT nor any of the Subsidiaries (other than U.S. Drug
as to which SAT makes no representation) is in violation of, or in
default under, (i) any term or provision of its Certificate of
Incorporation or By-Laws; (ii) any material term or provision of any
financial covenant of any indenture, mortgage, contract, commitment or
other agreement or instrument to which it is a party or by which it or
any or its properties or business is, or may be, bound or affected; or
(iii) any existing applicable law, rule, regulation, judgment, order or
decree of any governmental agency or court, domestic or foreign, having
jurisdiction over it or any of its properties or business, including,
without limitation, all reporting obligations pursuant to the Exchange
Act and the rules and regulations promulgated thereunder. SAT and each
Subsidiary (other than U.S. Drug as to which SAT makes no
representation) owns, possesses or has obtained all governmental and
other licenses, permits, certifications, registrations, approvals or
consents and other authorizations necessary to own or lease, as the case
may be, and to operate its properties and to conduct its business or
operations as presently conducted and all such governmental and other
licenses, permits, certifications, registrations, approvals, consents
and other authorizations are outstanding and in good standing and there
are no proceedings pending or, to the best of its knowledge, threatened
or any basis therefor existing, seeking to cancel, terminate or limit
such licenses, permits, certifications, registrations, approvals or
consents or authorizations.
(e) Prior to the date hereof SAT has delivered to U.S. Drug copies
of the audited consolidated financial statements (the "SAT Audited
Financial Statements") and the unaudited interim financial statements
(the "SAT Interim Financial Statements") described on Exhibit "C"
annexed hereto and made a part hereof (collectively the "SAT Financial
Statements"). The SAT Audited Financial Statements fairly present the
financial position of SAT and the Subsidiaries as of the respective
dates thereof and the results of operations, and the changes in
financial position of SAT and the Subsidiaries, for each of the periods
covered thereby. The SAT Audited Financial Statements have been prepared
in conformity with generally accepted accounting principles, applied on
a consistent basis throughout the entire periods involved. The SAT
Unaudited Financial Statements have been prepared in accordance with
generally accepted accounting principles for interim financial
information and the instructions to Form 10-Q and Item 310 of Regulation
S-K of the SEC. Accordingly, the interim financial statements may not
include all of the information and footnotes required by generally
accepted accounting principles. In the opinion of SAT's management, all
adjustments (consisting of normal recurring adjustments) considered
necessary for a fair presentation have been included. As of the date of
any balance sheet forming a part of the SAT Financial Statements and,
except as and to the extent reflected or reserved against therein,
neither SAT nor any of the Subsidiaries (other than U.S. Drug as to
which SAT makes no representation) had any material liabilities, debts,
obligations or claims (absolute or contingent) asserted against it or
them and/or which should have been reflected in a balance sheet or the
notes thereto; and all assets reflected thereon are properly reported
and present fairly the value of the assets therein stated in accordance
with generally accepted accounting principles.
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(f) The financial and other books and records of SAT and each of
the Subsidiaries (other than U.S. Drug as to which SAT makes no
representation) are in all material respects true, complete and correct
and have, at all times, been maintained in accordance with good business
and accounting practices.
(g) SAT and the Subsidiaries (other than U.S. Drug as to which SAT
makes no representation) own and have good and marketable title in and
to all of their respective assets, properties and interests in
properties (both real and personal) which are reflected in the latest
balance sheet included in the SAT Financial Statements and/or are
utilized in connection with the operation of the business of SAT and
such Subsidiaries as presently constituted and/or acquired after that
date (except to the extent any of the same were disposed of since such
date in the ordinary course of business), in all cases free and clear of
all liens, security interests, claims and encumbrances of every kind,
nature and description and rights and options of others except as
expressly set forth in such balance sheet.
(h) Except as is set forth on Exhibit "D" hereto, SAT and the
Subsidiaries (other than U.S. Drug as to which SAT makes no
representation) own all trademarks, service marks, tradenames,
copyrights, similar rights and their registrations, trade secrets,
methods, practices, systems, ideas, know how and confidential materials
used or proposed to be used in the conduct of their respective
businesses as conducted as of the date hereof (collectively the
"Intangibles") free and clear of all liens, security interests, claims
and encumbrances and rights and options of third parties (including,
without limitation, former or current officers, directors, stockholders,
employees and agents); neither SAT nor any such Subsidiary has licensed
or leased any of the Intangibles and/or any interest therein to any
person and/or entity except a Subsidiary; neither SAT nor any such
Subsidiary has infringed, nor is infringing, upon the rights of others
with respect to the Intangibles; neither SAT nor any such Subsidiary has
received any notice of conflict with the asserted rights of others with
respect to the Intangibles which could, singly or in the aggregate,
materially adversely affect its business as currently conducted or
prospects, financial condition or results of operations and SAT knows of
no basis therefor; and, to the best of the knowledge of SAT, no others
have infringed upon the Intangibles.
(i) Except as and to the extent reflected or reserved against in
the SAT Financial Statements and/or as set forth on Exhibit "E" annexed
hereto and made a part hereof, neither SAT nor any of the Subsidiaries
(other than U.S. Drug as to which SAT makes no representation) had, as
at the respective date of such SAT Financial Statements, any material
liabilities, debts, obligations or claims asserted against it, whether
accrued, absolute, contingent or otherwise, and whether due or to become
due, including, but not limited to, liabilities on account of due and
unpaid taxes, other governmental charges or lawsuits.
(j) Since the date of the most recent balance sheet included in the
SAT Financial Statements, neither SAT nor any Subsidiary (other than
U.S. Drug as to which SAT makes no representation) has, except as set
forth on Exhibit "F" annexed hereto and made a part hereof, (i) incurred
any obligation or liability (absolute or contingent, secured or
unsecured) except obligations and liabilities incurred in the ordinary
course of the operation of its business as carried on at and prior to
such date; (ii) cancelled, without payment in full, any notes, loans or
other obligations receivable or other debts or claims held by it other
than in the ordinary course of business; (iii) sold, assigned,
transferred, abandoned, mortgaged, pledged or subjected to lien or
security interest any of its material properties, tangible or
intangible, or rights under any contract, permit, license, franchise or
other agreement other than sales or other dispositions of goods or
services in the ordinary course of business at customary prices; (iv)
entered into any line of business other than that conducted by it on
such date or entered into any transaction not in the ordinary course of
its business; (v) conducted any line of business in any manner except by
transactions customary in the operation of its material business as
conducted on such date; or (vi) declared, made or paid, or set aside for
payment, any cash or non-cash dividends or other distribution on any
shares of its capital stock.
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(k) Except as set forth on Exhibit "G" annexed hereto and made a
part hereof, neither SAT nor any of the Subsidiaries (other than U.S.
Drug as to which SAT makes no representation) is in default, in any
material respect, under the terms of any outstanding agreement which is
material to the business, operations, properties, assets or condition of
SAT and/or the Subsidiaries (other than U.S. Drug as to which SAT makes
no representation); and there exists no event of default or event which,
with notice and/or the passage of time, or both, would constitute any
such default.
(l) Except as reported in the SAT Financial Statements and/or as
set forth on Exhibit "H" hereto and made a part hereof, there are no
claims, actions, suits, proceedings, arbitrations, investigations or
inquiries before any court or governmental agency, court or tribunal,
domestic, or foreign, or before any private arbitration tribunal,
pending or, to the best of the knowledge of SAT, threatened against SAT
and/or any Subsidiary (other than U.S. Drug as to which SAT makes no
representation) or involving their respective properties or businesses
which, if determined adversely to SAT or such Subsidiary, would,
individually or in the aggregate, result in a material adverse change in
the financial position, stockholders' equity, results of operations,
properties, business, management or affairs of SAT or such Subsidiary,
or which question the validity of this Agreement or of any action taken,
or to be taken, by SAT pursuant to, or in connection with, this
Agreement; nor, to the best of the knowledge of SAT, is there any basis
for any such claim, action, suit, proceeding, arbitration, investigation
or inquiry to be made by any person and/or entity, including, without
limitation, any customer, supplier, lender, stockholder, former or
current employee, agent or landlord. There are no outstanding orders,
judgments or decrees of any court, governmental agency or other tribunal
specifically naming SAT and/or any Subsidiary (other than U.S. Drug as
to which SAT makes no representation) and/or enjoining SAT and/or any
such Subsidiary from taking, or requiring SAT and/or any such Subsidiary
to take, any action and/or by which SAT and/or any such Subsidiary is,
and/or their respective properties or businesses are, bound or subject.
(m) SAT and each of the Subsidiaries (other than U.S. Drug as to
which SAT makes no representation) has filed all federal, state,
municipal and local tax returns (whether relating to income, sales,
franchise, withholding, real or personal property or otherwise) required
to be filed under the laws of the United States and all applicable
states and has paid in full all taxes which are due pursuant to such
returns or claimed to be due by any taxing authority or otherwise due
and owing. No penalties or other charges are, or will become, due with
respect to the late filing of any such return. To the best of the
knowledge of SAT, after due investigation, each such tax return
heretofore filed by SAT and each of such Subsidiaries correctly and
accurately reflects the amount of its tax liability thereunder. SAT has
withheld, collected and paid all other levies, assessments, license fees
and taxes to the extent required and, with respect to payments, to the
extent that the same have become due and payable.
(n) The authorized and outstanding capitalization of SAT is as set
forth on Exhibit "I" annexed hereto and made a part hereof; as of the
date hereof and the Closing Date, there shall not be authorized and/or
issued and outstanding any shares of capital stock of SAT and/or rights
to purchase shares of capital stock of SAT except as set forth on
Exhibit "I" or upon the exercise of outstanding warrants or the
conversion of outstanding shares of preferred stock or convertible
notes. The issued and outstanding shares of the SAT Common Stock and
outstanding warrants and other similar rights to purchase or convert
into the SAT Common Stock have been duly authorized and validly issued.
All such outstanding shares of the SAT Common Stock are fully paid and
nonassessable. All such outstanding warrants and similar rights to
purchase or convert into the SAT Common Stock constitute the valid and
binding obligations of SAT, enforceable in accordance with their
respective terms, subject, as to enforcement of remedies, to applicable
bankruptcy, insolvency, reorganization, moratorium and other laws
affecting the rights of creditors generally and the discretion of courts
in granting equitable remedies. There are no preemptive rights. SAT has
no reason to believe that any holder of such outstanding shares of the
SAT Common Stock is subject to personal liability solely by reason of
being such a holder. The offers and sales of such outstanding shares of
the SAT Common Stock and outstanding warrants and similar rights to
purchase or
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convert into the SAT Common Stock were, at all relevant times, either
registered under the applicable provisions of the Securities Act and the
applicable state securities laws or exempt from such registration or
prospectus filing requirements pursuant to an exemption for which SAT
and/or such offering or sale fully qualified, or any claim arising out
of, or relating to, any such offering and/or sale are barred by the
statute of limitations. The authorized shares of the SAT Common Stock
and outstanding warrants and similar rights to purchase or convert into
the SAT Common Stock conform to the description thereof contained in the
current filings by SAT pursuant to the Exchange Act. No dividends or
other distributions of the assets of SAT have or will be declared and/or
paid prior to the Closing Date on or with respect to the SAT Common
Stock.
(o) Except as is set forth on Exhibit "J" hereto, since the date of
the most recent balance sheet included in the SAT Financial Statements,
there has not been, with respect to SAT and/or the Subsidiaries (other
than U.S. Drug as to which SAT makes no representation), except as set
forth in or permitted by this Agreement, or, in the ordinary course of
business:
(i) Any change in their respective material business, operations
or financial condition, or the manner of managing or conducting their
respective business and operations; none of which changes, if any,
has had a material adverse effect on such business, operations or
financial condition, taken as a whole;
(ii) Any change in their respective accounting methods or
practices (including, without limitation, any change in depreciation,
amortization and/or good will policies or rates);
(iii) Any damage, destruction or loss (whether or not covered by
insurance) materially and adversely affecting their respective
assets, business, operations or financial condition;
(iv) Any declaration, setting, or payment of a dividend or other
distribution with respect to the SAT Common Stock or any direct or
indirect redemption, purchase or other acquisition by SAT of any of
the shares of the SAT Common Stock;
(v) Any issuance or sale of any shares of their respective
capital stock of any class or any other securities except for the
exercise of warrants to purchase shares of the SAT Common Stock
outstanding prior to the date hereof;
(vi) Any loan by any of them to any person or entity and/or the
issuance of any guaranty by any of them for or with respect to their
own or another's obligations;
(vii) Any waiver or release of any material right or claim;
(viii) Any sale, lease, abandonment, assignment, transfer,
license or other disposition (including any agreement and/or option
for, or with respect to, any of the foregoing) by any of them of any
material real property or tangible or intangible assets, property or
rights (and/or interest therein);
(ix) Any incurrence of any material obligation or liability,
absolute or contingent;
(x) Any payment of any material obligation or liability,
absolute or contingent, except for current liabilities reflected in,
or shown on, the SAT Financial Statements and/or incurred subsequent
to the date thereof in the ordinary course of business and/or in
connection with the transactions contemplated by this Agreement;
(xi) Any labor problems and/or other events or conditions of any
character materially and/or adversely affecting, or which might
materially and/or adversely affect, the financial condition,
business, assets or prospects of any of them;
(xii) Any amendment, termination or modification of any material
agreement or license to which any of them is a party which has or may
have a material affect on the financial condition, business, assets
or prospects of any of them; and
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(xiii) Any agreement by any of them to do or perform any of the
things described in this Section 14(o).
(p) At the Closing, all of the shares of the SAT Common Stock to be
issued by SAT pursuant to this Agreement shall be, and be deemed to be,
duly and validly authorized and, when issued to the U.S. Drug Minority
Stockholders in exchange for their shares of the U.S. Drug Common Stock,
duly and validly issued, fully paid and nonassessable and free and clear
of all federal and state issuance, stock and/or company taxes, liens,
security interests, claims, encumbrances and charges.
15. ACQUISITION CORP. REPRESENTATIONS AND WARRANTIES. In order to
induce U.S. Drug to execute and perform this Agreement, Acquisition Corp.
does hereby represent, warrant, covenant and agree (which representations,
warranties, covenants and agreements shall be, and be deemed to be,
continuing and survive the execution and delivery of this Agreement, the
Closing and the Effective Date) as follows:
(a) Acquisition Corp. is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware,
with full power and authority, corporate and otherwise, and with all
licenses, permits, certifications, registrations, approvals, consents
and franchises necessary to own or lease and operate its properties and
to conduct its business as presently being conducted. Neither prior to
the date hereof has Acquisition Corp. engaged, nor prior to the Closing
Date will Acquisition Corp. engage, in any business activity of any kind
nature or description except in connection with the implementation of
the transactions herein described. Acquisition Corp. has no
subsidiaries, nor, at the present time is it, or at the Closing will it
be, a partner or joint venturer with any other person or entity.
(b) (i) Acquisition Corp. has the full power and authority,
corporate and otherwise, to execute, deliver and perform this Agreement
and to consummate the transactions contemplated hereby; (ii) the
execution, delivery and performance of this Agreement, the consummation
by Acquisition Corp. of the transactions herein contemplated and the
compliance by Acquisition Corp. with the terms of this Agreement have
been duly authorized by Acquisition Corp.; (iii) this Agreement is the
valid and binding obligation of Acquisition Corp., enforceable in
accordance with its terms, subject, as to enforcement of remedies, to
applicable bankruptcy, insolvency, reorganization, moratorium and other
laws affecting the rights of creditors generally and the discretion of
courts in granting equitable remedies; (iv) the execution, delivery and
performance of this Agreement by Acquisition Corp. and the consummation
by Acquisition Corp. of the transactions herein contemplated do not, and
will not, with or without the giving of notice or the lapse of time, or
both, (A) result in any violation of the Certificate of Incorporation or
By-Laws of Acquisition Corp., (B) result in a breach of, or a conflict
with, any of the terms or provisions of, or constitute a default under,
or result in the modification or termination of, or result in the
creation or imposition of any lien, security interest, charge or
encumbrance upon any of the properties or assets of Acquisition Corp.
pursuant to, any indenture, mortgage, note, contract, commitment or
other agreement or instrument to which Acquisition Corp. is a party or
by which it is, or any of its respective properties or assets are, or
may be, bound or affected; or (C) to the best knowledge of Acquisition
Corp., after due investigation, violate any existing applicable law,
rule, regulation, judgment, order or decree of any governmental agency
or court, domestic or foreign, having jurisdiction over Acquisition
Corp. or its assets. No consent, approval, authorization or order of any
court, governmental agency, authority or body (other than as required
pursuant to the Securities Act, the Exchange Act and/or state securities
or "take over" statutes and/or any party to an agreement to which
Acquisition Corp. is a party and/or by which it is bound, is required in
connection with the execution, delivery and performance of this
Agreement, and/or the consummation by Acquisition Corp. of the
transactions contemplated by this Agreement.
(c) Acquisition Corp. is not in violation of, or in default under,
(i) any term or provision of its Certificate of Incorporation or
By-Laws; (ii) any material term or provision of any financial covenant
of any indenture, mortgage, contract, commitment or other agreement or
instrument to which it is a party or by which it or any or its
properties is, or may be, bound or affected; or (iii) any existing
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applicable law, rule, regulation, judgment, order or decree of any
governmental agency or court, domestic or foreign, having jurisdiction
over it or any of its assets.
(d) Acquisition Corp. was incorporated on December 18, 1995 and its
sole asset is the $1,000 which SAT paid in subscription for 100 shares
of its authorized 1,500 shares of common stock, without par value, and
it has incurred no liabilities other than its incorporation costs. Prior
to the date hereof, Acquisition Corp. has conducted no business
operations and, prior to the Effective Date, its sole activities will be
in connection with the transactions contemplated by this Agreement.
(e) The financial and other books and records of Acquisition Corp.
are in all material respects true, complete and correct and have, at all
times, been maintained in accordance with good business and accounting
practices.
(f) Except as set forth on Exhibit "K" hereto and made a part
hereof, there are no claims, actions, suits, proceedings, arbitrations,
investigations or inquiries before any court or governmental agency,
court or tribunal, domestic, or foreign, or before any private
arbitration tribunal, pending or, to the best of the knowledge of
Acquisition Corp., threatened against Acquisition Corp. or involving its
assets which, if determined adversely to Acquisition Corp., would,
individually or in the aggregate, result in a material adverse change in
the financial position, stockholders' equity, results of operations,
properties, business, management or affairs of Acquisition Corp., or
which question the validity of this Agreement or of any action taken or
to be taken by Acquisition Corp. pursuant to, or in connection with,
this Agreement; nor, to the best of the knowledge of Acquisition Corp.,
is there any basis for any such claim, action, suit, proceeding,
arbitration, investigation or inquiry to be made by any person and/or
entity. There are no outstanding orders, judgments or decrees of any
court, governmental agency or other tribunal specifically naming
Acquisition Corp. and/or enjoining Acquisition Corp. from taking, or
requiring Acquisition Corp. to take, any action, and/or by which
Acquisition Corp. is, and/or its assets are, bound or subject.
16. U.S. DRUG COVENANTS. U.S. Drug shall, during the period
commencing on the date hereof and terminating immediately following the
close of business on the Effective Date (or earlier, upon the failure or
refusal of the U.S. Drug Minority Stockholders to approve this Agreement
and/or the termination of this Agreement as herein provided):
(a) Take and perform any and all actions necessary to render
accurate, and/or maintain the accuracy of, all of the representations
and warranties of U.S. Drug herein contained and/or satisfy each
covenant or condition required to be performed or satisfied by U.S. Drug
at or prior to the Closing and/or to cause or permit the implementation
of the Merger;
(b) Not take or perform any action which would or might cause any
representation or warranty made by U.S. Drug herein to be rendered
inaccurate, in whole or in part, and/or which would prevent, inhibit or
preclude the satisfaction, in whole or in part, of any covenant required
to be performed or satisfied by U.S. Drug at or prior to the Closing
and/or the implementation of the Merger;
(c) Carry on and maintain its business in substantially the same
form, style and manner as heretofore operated by it; perform, in all
material respects, all of its respective obligations under all material
agreements, leases and documents relating to or affecting its respective
assets, properties and businesses; and use its best efforts to preserve
intact its business organization and the good will and relationships
with its suppliers, customers and others having business relations with
it.
(d) Not make, or permit to be made on its behalf, any announcement
to the public in general and/or within its industry and/or otherwise
with respect to this Agreement, the Merger and the current or future
business or operations of any party hereto without the prior written
consent of SAT or, in the case of an announcement required by applicable
securities laws, prior consultation with SAT; and
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(e) Immediately advise SAT of any event, condition or occurrence
which constitutes, or may, with the passage of time and/or giving of
notice, constitute, a breach of any representation or warranty of U.S.
Drug herein contained and/or which prevents, inhibits or limits or may
prevent, inhibit or limit U.S. Drug from satisfying, in full and on a
timely basis, any covenant, term or condition herein contained and/or
implementing this Agreement.
17. SAT COVENANTS. SAT shall, during the period commencing on the
date hereof and terminating immediately following the close of business on
the Effective Date (or earlier, upon the failure or refusal of the U.S.
Drug Minority Stockholders to approve this Agreement and/or the termination
of this Agreement as herein provided):
(a) Take and perform any and all actions necessary to render
accurate, and/or maintain the accuracy of, all of the representations
and warranties of SAT herein contained and/or satisfy each covenant or
condition required to be performed or satisfied by SAT at or prior to
the Closing and/or to cause or permit the implementation of the Merger;
(b) Not take or perform any action which would or might cause any
representation or warranty made by SAT herein to be rendered inaccurate,
in whole or in part, and/or which would prevent, inhibit or preclude the
satisfaction, in whole or in part, of any covenant required to be
performed or satisfied by SAT at or prior to the Closing and/or the
implementation of the Merger;
(c) Carry on and maintain its business in substantially the same
form, style and manner as heretofore operated by it; perform, in all
material respects, all of its obligations under all material agreements,
leases and documents relating to or affecting its assets, properties and
business; and use its best efforts to preserve intact its business
organization and the good will and relationships with its suppliers,
customers and others having business relations with it;
(d) Not make any announcement to the public in general and/or
within its industry and/or otherwise with respect to this Agreement, the
Merger and the current or future business or operations of any party
hereto without the prior written consent of U.S. Drug or, in the case of
an announcement required by applicable securities laws, prior
consultation with U.S. Drug;
(e) Immediately advise U.S. Drug of any event, condition or
occurrence which constitutes, or may, with the passage of time and/or
giving of notice, constitute, a breach of any representation or warranty
of SAT herein contained and/or which prevents, inhibits or limits or may
prevent, inhibit or limit SAT from satisfying, in full and on a timely
basis, any covenant, term or condition herein contained and/or
implementing this Agreement;
(f) Subject to U.S. Drug's compliance with its obligations under
Section 12 hereof, use its best efforts to have the Registration
Statement declared effective under the Securities Act;
(g) Call a Special Meeting of Stockholders to approve an amendment
to SAT's Certificate of Incorporation to increase the authorized shares
of the SAT Common Stock in an amount sufficient to permit the Merger,
the merger of Good Ideas Acquisition Corp. with and into Good Ideas
Enterprises, Inc., the conversion of all outstanding convertible notes
and shares of the preferred stock and the exercise of all outstanding
warrants; and
(h) Extend the terms of the notes due to SAT from U.S. Drug, if and
only if the consent solicitation for the Merger is still in progress on
April 30, 1997, to the earlier of (i) five business days after the
results of the solicitation are known and the results are that the
Merger has not been approved or (ii) the Effective Date.
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00. SAT AND ACQUISITION CORP. CONDITIONS PRECEDENT. The obligations
of SAT and Acquisition Corp. to implement this Agreement and consummate the
Merger are, at their respective elections, subject to, and conditioned
upon, the satisfaction (and/or waiver except as to Sections 18(a), (b), (f)
and (h) of each of the following conditions:
(a) Prior to the Closing Date the holders of more than 50% of the
shares of the Minority U.S. Drug Common Stock shall have adopted this
Agreement by consenting to the adoption of this Agreement pursuant to
the Consent Solicitation Statement/Prospectus.
(b) The Registration Statement shall have been declared effective
by the SEC and all appropriate state securities administrators and no
"stop orders" shall have been issued and/or be in effect or a proceeding
for such purpose shall have been instituted and be pending.
(c) The representations and warranties of U.S. Drug contained in
this Agreement shall be true and correct in all material respects as of
the Effective Date with the same effect as if made on and as of the
Effective Date and U.S. Drug shall have performed in all material
respects all of its covenants and obligations contemplated hereunder to
be performed on or prior to the Effective Date. At the Closing, SAT
shall have received a certificate, executed by the President and the
Secretary of U.S. Drug (effective as of the Closing and the Effective
Date) and in form reasonably acceptable to SAT, certifying as of both
the date of this Agreement and the Closing Date, the truth and accuracy
of (and the remaking of) the representations and warranties of U.S. Drug
herein contained, including, without limitation, those set forth in
Section 13 hereof.
(d) Prior to the Closing, there shall not have occurred any
material adverse change in the financial condition, business or
operations of U.S. Drug, nor shall any event have occurred or condition
exist which, with the passage of time or the giving of notice, may cause
or create any such adverse material change.
(e) Prior to the Closing, all corporate and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be in form
and content reasonably satisfactory to SAT and its counsel and SAT and
its counsel shall have received all counterpart originals or certified
or other copies of such documents and instruments as they may reasonably
request.
(f) No action or proceeding shall have been instituted and be
pending by any private party and/or governmental agency or authority
challenging the legality of this Agreement or the Merger and/or seeking
to prevent or delay consummation of the transactions herein
contemplated, which action or proceeding shall have resulted in an order
granting preliminary or permanent injunctive relief prohibiting
consummation of this Agreement and/or the Merger and which order shall
not have been vacated as of the Closing.
(g) All statutory requirements for the valid consummation by U.S.
Drug of the transactions herein described shall have been fully and
timely satisfied; all authorizations, consents and approvals of all
Federal, state and local governmental agencies and authorities required
to be obtained in order to permit consummation by U.S. Drug of the
transactions herein described and/or to permit the businesses currently
carried on by U.S. Drug to continue unimpaired in all material respects
immediately following the Effective Date shall have been obtained and
shall be in full force and effect; and no action or proceeding to
suspend, revoke, cancel, terminate, modify or alter any of such
authorizations, consents or approvals shall be pending or threatened.
(h) U.S. Drug shall have received a written opinion from Whale
Securities Co., L.P., satisfactory to SAT in form and content, regarding
the fairness, from a financial point of view, to the U.S. Drug Minority
Stockholders of the exchange ratio offered pursuant to the terms of the
Merger.
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00. U.S. DRUG CONDITIONS PRECEDENT. The obligation of U.S. Drug to
implement this Agreement and to consummate the Merger is, at its election,
subject to, and conditioned upon, the satisfaction (and/or waiver except as
to Section 19(a), (b), (c), (g) and (i)) of each of the following
conditions:
(a) Prior to the Closing Date the holders of more than 50% of the
shares of the Minority U.S. Drug Common Stock shall have adopted this
Agreement by consenting to the adoption of this Agreement pursuant to
the Consent Solicitation Statement/ Prospectus.
(b) Prior to the Closing Date SAT shall have adopted this Agreement
by filing with U.S. Drug a consent to its adoption.
(c) The Registration Statement shall have been declared effective
by the SEC and all appropriate state securities administrators and no
"stop orders" shall have been issued and/or be in effect or a proceeding
for such purpose shall have been instituted and be pending.
(d) The representations and warranties of SAT and Acquisition Corp.
contained in this Agreement shall be true and correct in all material
respects as of the Effective Date with the same effect as if made on and
as of the Effective Date. At the Closing, U.S. Drug shall have received
a certificate, executed by the Chairman of the Board and the Secretary
of SAT and Acquisition Corp. (effective as of the Closing and the
Effective Date) and in form and content reasonably acceptable to U.S.
Drug, certifying, as to both the date of this Agreement and the Closing
Date the truth and accuracy of (and the remaking of) the representations
and warranties of SAT and Acquisition Corp. herein contained, including,
without limitation, those set forth in Sections 14 and 15 hereof.
(e) Prior to the Closing, there shall not have occurred any
material adverse change in the financial condition, business or
operations of SAT and the Subsidiaries (excluding U.S. Drug) as a
consolidated entity, nor shall any event have occurred or condition
exist which, with the passage of time or the giving of notice, may cause
or create any such adverse material change.
(f) Prior to the Closing, all corporate and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be in form
and content reasonably satisfactory to U.S. Drug and its counsel and
U.S. Drug and its counsel shall have received all counterpart originals
or certified or other copies of such documents and instruments as they
may reasonably request.
(g) No action or proceeding shall have been instituted and be
pending by any private party and/or governmental agency or authority
challenging the legality of this Agreement or the Merger and/or seeking
to prevent or delay consummation of the transactions herein
contemplated, which action or proceeding shall have resulted in an order
granting preliminary or permanent injunctive relief prohibiting
consummation of this Agreement and/or the Merger and which order shall
not have been vacated as of the Closing.
(h) All statutory requirements for the valid consummation by SAT of
the transactions herein described shall have been fully and timely
satisfied; all authorizations, consents and approvals of all Federal,
state and local governmental agencies and authorities required to be
obtained in order to permit consummation by SAT of the transactions
herein described and/or to permit the businesses currently carried on by
SAT to continue unimpaired in all material respects immediately
following the Effective Date shall have been obtained and shall be in
full force and effect; and no action or proceeding to suspend, revoke,
cancel, terminate, modify or alter any of such authorizations, consents
or approvals shall be pending or threatened.
(i) U.S. Drug shall have received a written opinion from Whale
Securities Co., L.P., satisfactory to U.S. Drug in form and content,
regarding the fairness, from a financial point of view, to the U.S. Drug
Minority Stockholders of the exchange ratio offered pursuant to the
terms of the Merger.
20. TERMINATION. (a) This Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Date, whether before or after
submission to, or approval by, the U.S. Drug Minority
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Stockholders as herein provided either: (a) by mutual agreement of the
Boards of Directors of U.S. Drug and SAT; or (b) by the Board of Directors
of either U.S. Drug or SAT if either (i) the Closing shall not have taken
place on or prior to September 30, 1997 (other than by reason of the
default hereunder by the terminating party) or (ii) there is any statute,
rule or regulation which makes consummation of the Merger illegal or
otherwise prohibited or any order, decree, injunction or judgment enjoining
SAT, U.S. Drug or Acquisition Corp. from consummating the Merger is issued
by a court of competent jurisdiction and such order, decree, injunction or
judgment has become final and non-appealable; or (c) by the Board of
Directors of SAT or U.S. Drug if, based upon the opinion of its outside
counsel, such Board of Directors determines that making a recommendation to
the U.S. Drug Minority Stockholders to adopt the Merger Agreement could
reasonably be deemed to cause the members of such Board of Directors to
breach their fiduciary duty under applicable law to its respective
stockholders.
(b) If this Agreement shall be terminated and/or the Merger
abandoned pursuant to the provisions of subsection (a) of this Section
20 hereof (other than by reason of the default of any party hereunder),
then and in that event SAT shall bear all of the costs and its special
expenses except for those of Whale Securities Co., L.P. and of counsel
to U.S. Drug and there shall be no liability on the part of any party
hereto (and/or their respective officers, directors, agents and
employees) to any other party hereto (and/or their respective officers,
directors, agents and employees).
21. COSTS AND EXPENSES. SAT shall pay all costs and expenses relating
to the transactions contemplated by this Agreement, including, without
limitation, the costs and expenses relating to the preparation of this
Agreement and the Registration Statement, such as attorneys' fees,
accounting fees, printing expenses and consent solicitation expenses,
except that U.S. Drug will pay all costs and expenses of Whale Securities
Co., L.P. and of its special counsel.
22. NOTICES. Any and all notices, requests or instructions desired to
be given by any party hereto to any other party hereto shall be in writing
and shall be either be hand delivered, delivered by express courier or
mailed to the recipient first class, postage prepaid, certified, return
receipt requested at the following respective addresses:
To: U.S. Drug
00000 Xxxxxxxxx Xxxxxx
Xxxxxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: President
With a copy to:
Rosenman & Colin LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxx, Esq.
To: SAT or Acquisition Corp.
0000 X.X. 00xx Xxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attn: Chairman of the Board
With a copy to:
Gold & Xxxxxxx, LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
or to such other address as any party hereto shall designate in a
writing complying with the provisions of this Section 22.
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00. WAIVER. Each of the parties hereto may, by written instrument,
(a) extend the time for the performance of any of the obligations or other
acts of any party hereto; (b) waive any inaccuracies of such other party in
the representations and warranties contained herein or in any document
delivered pursuant to this Agreement; (c) waive compliance with any of the
covenants of such other party contained in this Agreement; (d) waive such
other party's performance of any of such party's obligations set out in
this Agreement; and (e) waive any condition to its obligation to effect the
Merger. Anything in this Section 23 to the contrary notwithstanding, no
party hereto may waive the requirements that the holders of more than 50%
of the shares of the Minority U.S. Drug Common Stock must consent to the
adoption of this Agreement and the Merger, the fairness opinion be
delivered as set forth in Section 18(h) or Section 19(i) or the
Registration Statement be effective as set forth in Section 18(b) or
Section 19(c).
24. AMENDMENTS. This Agreement may be amended at any time prior to
the Effective Date (whether before or after the consent of stockholders of
U.S. Drug as herein provided) by a writing executed by an authorized
officer of SAT, U.S. Drug and Acquisition (upon due authorization by their
respective Boards of Directors); provided, however, that in no event may
the provisions of Sections 4 and 9 hereof be altered, amended, modified,
terminated or rescinded without the approval of the U.S. Drug Minority
Stockholders.
25. GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware applicable to
contracts executed and to be fully performed therein and without regard to
principles of conflicts of laws.
26. EFFECTIVENESS. This Agreement shall inure to the benefit of, and
be binding upon, the parties hereto and any controlling person of any party
hereof as provided in Section 15 of the Securities Act and their respective
successors, transferees, heirs, assigns and beneficiaries.
27. COUNTERPARTS. This Agreement may be executed in multiple copies,
each of which shall constitute an original, but all of which shall
constitute one and the same agreement.
28. PARTIAL INVALIDITY. If any term, covenant or condition in this
Agreement, or the application thereof to any person or circumstance, shall
be invalid or unenforceable, the remainder of this Agreement or the
application of such term, covenant or condition to persons or
circumstances, other than those as to which it is held invalid, shall be
unaffected thereby and each term, covenant or condition of this Agreement
shall be enforced to fullest extent permitted by law.
29. INTEGRATION. This Agreement (including the Exhibits hereto, the
documents and instruments delivered by the parties hereto and any other
documents executed and delivered and/or to be executed and delivered
pursuant to the provisions of this Agreement as herein provided) sets forth
the entire agreement among the parties hereto with respect to the subject
matter herein contained. There are no covenants, promises, agreements,
conditions or understandings, either oral or written, between or among the
parties hereto with respect to the subject matter hereof except as herein
and in such ancillary documents provided. This Agreement can only be
altered, amended, modified, terminated or rescinded by a writing executed
by the party to be charged.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
Plan of Merger as of the date first above written.
ATTEST: SUBSTANCE ABUSE TECHNOLOGIES, INC.
By: -------------------------------------------------
-----------------------------------------------------
Secretary Chairman of the Board
U.S. DRUG ACQUISITION CORP.
By: -------------------------------------------------
-----------------------------------------------------
Secretary Chairman of the Board
U.S. DRUG TESTING, INC.
By: -------------------------------------------------
-----------------------------------------------------
Secretary President
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