EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
AMONG
THERMO CARDIOSYSTEMS INC.,
ITC ACQUISITION INC.,
THERMO ELECTRON CORPORATION,
ITC HOLDINGS INC.
AND
INTERNATIONAL TECHNIDYNE CORPORATION
_____________________________
Dated as of May 2, 1997
_____________________________
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TABLE OF CONTENTS
Page
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SECTION 1 - THE REORGANIZATION 1
1.1 The Merger 1
1.2 Effective Time 1
1.3 Closing 1
1.4 Effects of the Merger 2
1.5 Certificate of Incorporation
and By-Laws 2
1.6 Directors and Officers 2
1.7 Conversion of Stock 2
1.8 Payment for ITC Common Stock 3
1.9 Adjustments 3
1.10 Lost Certificates 4
1.11 No Fractional Shares 4
SECTION 2 - REPRESENTATIONS AND WARRANTIES OF
THERMO, HOLDINGS AND ITC 4
2.1 Organization and Qualification 4
2.2 Authority 5
2.3 Capitalization and Title to Shares 6
2.4 Subsidiaries and Other Affiliates 6
2.5 Financial Statements 7
2.6 Absence of Undisclosed Liabilities;
No Dealings with Affiliates 7
2.7 Taxes 8
2.8 Properties 8
2.9 Hazardous Materials 9
2.10 Accounts Receivable 9
2.11 Inventories 10
2.12 Purchase and Sale Commitments 10
2.13 Governmental Authorizations 10
2.14 Intellectual Property 11
2.15 FDA 11
2.16 Insurance 12
2.17 Employee Benefit Plans 12
2.18 Agreements and Documents 13
2.19 Validity 14
2.20 No Changes 14
2.21 Litigation or Proceedings 16
2.22 Compliance with Laws 16
2.23 Labor Matters 16
2.24 Recalls 16
2.25 Brokers and Finders 17
2.26 Powers of Attorney 17
2.27 No Termination of Relationship 17
2.28 All Information 17
2.29 Statements True and Correct 17
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SECTION 3 - REPRESENTATIONS AND WARRANTIES OF
CARDIO AND ACQUISITION 17
3.1 Organization 17
3.2 Authority 17
3.3 Statements True and Correct 18
SECTION 4 - COVENANTS AND AGREEMENTS 18
4.1 Conduct of Business 18
4.2 Corporate Examinations and
Investigations 20
4.3 Expenses 20
4.4 Authorization from Others 21
4.5 Consummation of Agreement 21
4.6 Further Assurances 21
4.7 Tax-Free Reorganization 21
4.8 Listing of Shares 21
4.9 Public Announcements and
Confidentiality 21
4.10 No Solicitation 22
4.11 Indemnification 22
4.12 Participation in Employee
Benefit Plans 23
SECTION 5 - CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF CARDIO AND ACQUISITION
TO CONSUMMATE THE MERGER 23
5.1 Representations, Warranties and
Covenants 23
5.2 Fairness Opinion 23
5.3 Certificate of Merger 23
5.4 Certificates 24
SECTION 6 - CONDITIONS PRECEDENT TO THE
OBLIGATION OF THERMO, HOLDINGS AND ITC
TO CONSUMMATE THE MERGER 24
6.1 Representations, Warranties and
Covenants 24
6.2 Certificate of Merger 24
6.3 Certificates 24
SECTION 7 - TERMINATION, AMENDMENT AND WAIVER 24
7.1 Termination 24
7.2 Effect of Termination 25
7.3 Amendment 25
7.4 Waiver 25
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SECTION 8 - MISCELLANEOUS 25
8.1 Notices 25
8.2 Survival and Materiality
of Representations 26
8.3 Entire Agreement 27
8.4 Parties in Interest 27
8.5 No Implied Rights or Remedies 27
8.6 Headings 27
8.7 Severability 27
8.8 Counterparts 27
8.9 Further Assurances 27
8.10 Governing Law 27
iiiPAGE
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement")
dated as of May 2, 1997 is among Thermo Cardiosystems Inc.
("Cardio"), a Massachusetts corporation, ITC Acquisition Inc.
("Acquisition"), a Delaware corporation and a wholly-owned
subsidiary of Cardio, Thermo Electron Corporation ("Thermo"), a
Delaware corporation, ITC Holdings Inc. ("Holdings"), a Delaware
corporation and an indirect wholly-owned subsidiary of Thermo,
and International Technidyne Corporation ("ITC"), a Delaware
corporation and a wholly-owned subsidiary of Holdings. Holdings
owns no assets other than 100% of the issued and outstanding
capital stock of ITC. The parties wish to effect the acquisition
of ITC by Cardio through a merger of Acquisition with and into
ITC on the terms and conditions hereof. This Agreement is
intended to be a "plan of reorganization" within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code").
Accordingly, in consideration of the foregoing and the
mutual representations and covenants contained herein, the
parties hereto agree as follows:
SECTION 1 - THE REORGANIZATION
1.1 The Merger. Upon the terms and subject to the
conditions hereof, and in accordance with the General Corporation
Law of the State of Delaware (the "DGCL"), Acquisition shall be
merged with and into ITC (the "Merger"). The Merger shall occur
at the Effective Time (as defined in Section 1.2). Following the
Merger, ITC shall be the surviving corporation (the "Surviving
Corporation") and the separate corporate existence of Acquisition
shall cease.
1.2 Effective Time. As soon as practicable after the
execution of this Agreement and satisfaction or waiver of all
conditions to the Merger, the parties shall cause a certificate
of merger (the "Certificate of Merger") with respect to the
Merger to be filed and recorded in accordance with Section 251(c)
of the DGCL and shall take all such further actions as may be
required by law to make the Merger effective. The Merger shall
be effective at such time as the Certificate of Merger is duly
filed with the Secretary of State of Delaware in accordance with
the DGCL or at such later time as is specified in the Certificate
of Merger (the "Effective Time").
1.3 Closing. Immediately prior to the filing of the
Certificate of Merger, a closing (the "Closing") will be held at
the offices of Xxxxxx & Dodge LLP, Xxx Xxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx (or such other place as the parties may agree) for
the purpose of confirming satisfaction or waiver of all
1PAGE
conditions to the Merger. The date on which the Closing occurs
is referred to herein as the "Closing Date."
1.4 Effects of the Merger. The Merger shall have the
effects set forth in Sections 259, 260 and 261 of the DGCL.
1.5 Certificate of Incorporation and By-Laws. The
Certificate of Incorporation and By- laws of Acquisition, in each
case as in effect immediately prior to the Effective Time, shall
be the Certificate of Incorporation and By-laws of the Surviving
Corporation immediately after the Effective Time.
1.6 Directors and Officers. The directors and officers of
Acquisition immediately prior to the Effective Time shall be the
directors and officers of the Surviving Corporation immediately
after the Effective Time.
1.7 Conversion of Stock.
At the Effective Time, by virtue of the Merger and
without any action on the part of Cardio, Acquisition, Thermo,
Holdings or ITC:
(a) All shares of common stock, having no par value,
of ITC ("ITC Common Stock") outstanding immediately prior to the
Effective Time, other than (A) shares held by ITC as treasury
stock or shares held by any subsidiary of ITC and (B) shares
owned beneficially by Cardio, Acquisition or any other subsidiary
of Cardio, (the "ITC Shares") shall be converted into and become
the right to receive 3,355,705 shares (the "Cardio Shares") of
common stock, $.10 par value per share, of Cardio ("Cardio Common
Stock"). The Cardio Shares are referred to herein as the "Merger
Consideration."
(b) All shares of ITC Common Stock held at the
Effective Time by ITC as treasury stock or by a subsidiary of ITC
shall be canceled without any conversion thereof and no payment
shall be made with respect thereto.
(c) All shares of ITC Common Stock owned beneficially
at the Effective Time by Cardio, Acquisition or any other
subsidiary of Cardio shall be cancelled without any conversion
thereof and no payment shall be made with respect thereto.
(d) Each share of the common stock, $0.01 par value
per share, of Acquisition ("Acquisition Common Stock")
outstanding immediately prior to the Effective Time shall be
converted into and become one validly issued, fully paid and
nonassessable share of common stock, $0.01 par value per share,
of the Surviving Corporation.
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1.8 Payment for ITC Common Stock.
(a) At the Effective Time, the stock transfer books of
ITC shall be closed and no transfers of ITC Common Stock may be
made thereafter. Promptly after the later of (i) the listing of
the Cardio Shares for trading on the American Stock Exchange,
Inc. ("AMEX"), as contemplated by Section 4.8 below, and (ii)
the proper surrender by Holdings of such certificates
representing the ITC Shares, Cardio shall cause its stock
transfer agent to issue and deliver to Holdings a certificate for
the Cardio Shares. It shall be a condition of such payment and
delivery that the surrendered certificate(s) be properly endorsed
or otherwise in proper form for transfer and that Holdings shall
pay any transfer or other taxes required by reason of such
payment or delivery or establish, to the satisfaction of Cardio
and the Surviving Corporation that such tax has been paid or is
not applicable. The date on which all of the conditions to the
issuance of the certificate representing the Cardio Shares shall
have been met is referred to hereinafter as the "Payment Date."
(b) Notwithstanding the provisions of subsection (a)
of this Section 1.8, in the event that, notwithstanding Cardio's
best efforts to obtain the approval of its stockholders of the
listing of the Cardio Shares for trading on AMEX on or before
December 31, 1997, then, on December 31, 1997, Cardio will pay to
Holdings the sum of $75,000,000 in cash in lieu of issuing the
Cardio Shares.
1.9 Adjustments.
(a) In the event Cardio shall declare, pay, make or
effect between the date of this Agreement and the Payment Date,
(i) any stock dividend or other distribution in respect of the
Cardio Common Stock payable in shares of capital stock of Cardio,
(ii) any stock split or other subdivision of outstanding shares
of Cardio Common Stock into a larger number of shares, (iii) any
combination of outstanding shares of Cardio Common Stock into a
smaller number of shares, (iv) any reclassification of Cardio
Common Stock into other shares of capital stock or securities, or
(v) any exchange of the outstanding shares of Cardio Common
Stock, in connection with a merger or consolidation of Cardio or
sale by Cardio of all or part of its assets, for a different
number or class of shares of stock or securities of Cardio or for
the share of the capital stock or other securities of any other
corporation, appropriate adjustment shall be made in the number
of Cardio Shares to be issued in connection with the Merger as
may be required to put Holdings in the same position as if the
record date, with respect to any such transaction or transactions
which shall so occur, had been immediately after the Payment
Date, or otherwise to carry out the intents and purposes of this
Agreement.
(b) In the event Cardio shall declare, pay, make or
effect between the date of this Agreement and the Payment Date
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any dividend or other distribution in respect of the Cardio
Common Stock payable in cash or other property other than in
shares of capital stock of Cardio, then the Cardio Shares to be
issued in connection with the Merger shall be deemed to be
outstanding as of the record date with respect to any such
dividend or distribution, and the cash or other property
otherwise payable or distributable to Holdings with respect to
such Cardio Shares shall be held by Cardio for the benefit of
Holdings; and Cardio shall take all actions reasonably necessary
to prevent such cash or other property from being or becoming
subject to any lien, security interest or other encumbrance not
for the benefit of Holdings. Upon the issuance of the Cardio
Shares to Holdings pursuant to Section 1.8(a) above, such cash or
other property shall likewise be distributed by Cardio to
Holdings. In no event shall Holdings be entitled to receive
interest on such dividends or distributions. In the event that
Cardio pays Holdings cash consideration pursuant to Section
1.8(b) above, then such cash or other property held by Cardio on
behalf of Holdings shall not be paid or distributed to Holdings
and Holdings shall have no further interest therein or claim
thereto.
1.10 Lost Certificates. In the event any certificate
representing Holdings' ITC Shares shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by
Holdings, Cardio shall issue in exchange for such lost, stolen or
destroyed certificate the consideration payable in exchange
therefor pursuant to this Section 1.
1.11 No Fractional Shares. No certificates representing
fractional Cardio Shares shall be issued upon the surrender for
exchange of the ITC Shares. No fractional interest shall entitle
the owner to vote or to any rights of a security holder. In lieu
of a fractional share, Holdings will receive upon surrender of
the ITC Shares an amount in cash (without interest) determined by
multiplying such fraction by $22.35.
SECTION 2 - REPRESENTATIONS AND WARRANTIES OF
THERMO, HOLDINGS AND ITC
Except as set forth on the disclosure schedule delivered to
Cardio on the date hereof (the "ITC Disclosure Schedule"),
Thermo, Holdings and ITC, jointly and severally, represent and
warrant to Cardio and Acquisition as follows. The term
"knowledge," when used in this Agreement, shall mean actual
knowledge after reasonable investigation.
2.1 Organization and Qualification.
(a) Each of Thermo, Holdings and ITC is a corporation
duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has full corporate
power and authority to own, lease and operate its assets and to
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carry on its business as now being and as heretofore conducted.
Each of Thermo, Holdings and ITC is qualified or otherwise
authorized to transact business as a foreign corporation in all
jurisdictions in which such qualification or authorization is
required by law, except for jurisdictions in which the failure to
be so qualified or authorized would not have a material adverse
effect on the assets, properties, business, results of
operations, condition (financial or otherwise) or prospects of
ITC (the "Business of ITC").
(b) Holdings and ITC have previously provided to
Cardio true and complete copies of their charter and By-laws as
in effect on the date hereof, and neither of such corporations is
in default thereunder.
2.2 Authority. Each of Thermo, Holdings and ITC has full
right, power, capacity and authority to execute, deliver and
perform this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of
this Agreement, the filing of the Certificate of Merger and the
consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on
the part of Thermo, Holdings and ITC. This Agreement has been
duly and validly executed and delivered by each of Thermo,
Holdings and ITC and constitutes the valid and binding obligation
of Thermo, Holdings and ITC, enforceable against them in
accordance with the terms hereof. Neither the execution,
delivery and performance of this Agreement, the filing of the
Certificate of Merger nor the consummation of the transactions
contemplated hereby will (i) conflict with or result in a
violation, breach, termination or acceleration of, or default
under (or would result in a violation, breach, termination,
acceleration or default with the giving of notice or passage of
time, or both) any of the terms, conditions or provisions of the
Certificate of Incorporation or By-laws of Thermo, Holdings or
ITC, as amended, or of any note, bond, mortgage, indenture,
license, agreement or other instrument or obligation to which any
of Thermo, Holdings or ITC is a party or by which any of Thermo,
Holdings or ITC or any of their respective properties or assets
may be bound or affected; (ii) result in the violation of any
order, writ, injunction, decree, statute, rule or regulation
applicable to Thermo, Holdings or ITC or any of their respective
properties or assets; (iii) result in the imposition of any lien,
encumbrance, charge or claim upon any of Thermo's, Holdings' or
ITC's assets; or (iv) entitle any employee to severance or other
payments by ITC or create any other obligation to an employee.
Except for the filing of the Certificate of Merger and approval
by the Department of Environmental Protection & Energy of the
State of New Jersey (the "NJDEP") pursuant to the Industrial Site
Recovery Act ("ISRA"), no consent or approval by, or notification
to or filing with, any court, governmental authority or third
party is required in connection with the execution, delivery and
performance of this Agreement by Thermo, Holdings and ITC or the
consummation of the transactions contemplated hereby.
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2.3 Capitalization and Title to Shares.
(a) The authorized capital stock of ITC consists of
200,000 shares of ITC Common Stock, of which 153,700 shares are
issued and outstanding as of the date hereof. Holdings is the
record and beneficial owner of all of such issued and outstanding
shares. All of the issued and outstanding shares of the capital
stock of ITC are duly authorized and are validly issued, fully
paid, nonassessable and free of preemptive rights.
(b) Except as set forth above, there are not as of the
date hereof, and at the Effective Time there will not be, any
other shares of capital stock of ITC authorized or outstanding or
any subscriptions, options, conversion or exchange rights,
warrants, repurchase or redemption agreements, or other
agreements or commitments obligating ITC to issue, transfer,
sell, repurchase or redeem any shares of its capital stock or
other securities of ITC. To the knowledge of Thermo, Holdings
and ITC, there are no written shareholder agreements, voting
trusts, proxies or other agreements, instruments or
understandings with respect to the voting of the capital stock of
ITC. The books and records of ITC, including without limitation
the books of account, minute books, stock certificate books and
stock ledgers, are complete and correct and accurately reflect
the conduct of the business and affairs of ITC.
2.4 Subsidiaries and Other Affiliates.
(a) The ITC Disclosure Schedule sets forth all
Subsidiaries of ITC and the jurisdiction in which each is
incorporated. All shares of the capital stock of each Subsidiary
owned by ITC are owned free and clear of any charges, liens,
encumbrances, security interests or adverse claims. As used in
this Agreement, "Subsidiary" means any corporation or other legal
entity of which a party to this Agreement owns, directly or
indirectly, fifty percent (50%) or more of the stock or other
equity interest entitled to vote for the election of directors
and representations, warranties and covenants referring to ITC
contained herein shall be deemed to mean ITC and each of its
Subsidiaries, both separately and together as a consolidated
whole, unless and except to the extent expressly indicated
otherwise.
(b) There are not as of the date hereof, and at the
Effective Time there will not be, any other shares of capital
stock of any Subsidiary of ITC authorized or outstanding or any
subscriptions, options, conversion or exchange rights, warrants,
repurchase or redemption agreements, or other agreements or
commitments obligating any Subsidiary of ITC to issue, transfer,
sell, repurchase or redeem any shares of its capital stock or
other securities. There are no shareholder agreements, voting
trusts, proxies or other agreements, instruments or
6PAGE
understandings with respect to the voting of the capital stock of
any Subsidiary of ITC.
(c) Except for its Subsidiaries, ITC does not,
directly or indirectly, own any material equity interest in any
corporation, partnership, joint venture or other entity.
2.5 Financial Statements. ITC has delivered to Cardio
prior to the execution of this Agreement true and complete copies
of: the unaudited consolidated balance sheet of ITC as at
March 29, 1997 (the "Balance Sheet"), ITC's unaudited
consolidated statements of earnings and cash flows for the
three-month period ended March 29, 1997, ITC's unaudited
consolidated balance sheet as at December 28, 1996 and unaudited
consolidated statements of earnings and cash flows for the year
ended December 28, 1996 (collectively, the "Financial
Statements"). The Financial Statements have been prepared from,
and are in accordance with, the books and records of ITC and
fairly present the financial condition, results of operations,
and cash flows of ITC as at the dates and for the periods
indicated, in each case in accordance with generally accepted
accounting principles applied on a basis consistent with previous
years subject, in the case of the unaudited Financial Statements,
to normal year-end adjustments and footnote disclosures, which in
the aggregate are not material.
2.6 Absence of Undisclosed Liabilities; No Dealings with
Affiliates. As of the date of the Balance Sheet, ITC had no
material liabilities or obligations of any nature, whether
accrued, absolute, contingent or otherwise and whether due or to
become due (including without limitation, liabilities as
guarantor or otherwise with respect to obligations of others or
liabilities for taxes due or then accrued or to become due),
required to be reflected or disclosed on the Balance Sheet that
were not adequately reflected or reserved against on the Balance
Sheet. ITC has no liabilities of the type required to be
reflected or disclosed on a balance sheet in accordance with
generally accepted accounting principles, other than liabilities
(i) adequately reflected or reserved against on the Balance
Sheet, (ii) incurred since the date of the Balance Sheet in the
ordinary course of business and consistent with past practice,
(iii) that would not, in the aggregate, have a material adverse
effect on the Business of ITC, or (iv) disclosed in this
Agreement. ITC does not have any contractual arrangement with or
commitment to or from any of its stockholders, officers,
management, directors or employees (or their family members)
other than such as may have been entered into in the normal
course of employment, including, without limiting the generality
of the foregoing, being directly or indirectly a joint investor
or coventurer with respect to, or owner, lessor, lessee, licenser
or licensee of, any real or personal property, tangible or
intangible, owned or used by, or a lender to or debtor of, ITC.
7PAGE
2.7 Taxes. ITC has accurately prepared and duly and
timely filed all federal, state, local or foreign tax and other
returns and reports which were required to be filed, in respect
of all income, franchise, excise, sales, use, property (real and
personal), payroll and other taxes, levies, imports, duties,
license and registration fees, charges or withholdings of any
nature whatsoever (collectively "Taxes"), and to the extent the
liabilities of ITC for Taxes have not been fully discharged,
adequate reserves have been established on the Balance Sheet.
None of the federal, state, local or foreign Tax returns of ITC
has been audited or examined by the governmental authority having
jurisdiction. No waivers of any statutes of limitation are in
effect in respect of any Taxes. ITC is not in default in the
payment of any Taxes due and payable or on any assessments
received in respect thereof, and there are no claims pending or,
to the best of its knowledge, threatened, against ITC for past
due Taxes. All Taxes incurred but not yet due have been fully
accrued on the books of ITC or full reserves have been
established therefor; the reserves indicated on the Balance Sheet
are also adequate to cover all Taxes that may become payable by
ITC in future periods in respect of any transactions or sales
occurring on or prior to the date of the Balance Sheet. Without
limiting the generality of the foregoing, ITC has withheld or
collected from each payment made to each of its employees,
consultants or non-U.S. payees, the amount of all Taxes required
to be withheld or collected therefrom, and has paid the same to
the proper tax receiving officers or authorized depositories.
2.8 Properties. Except as set forth on the ITC Disclosure
Schedule, ITC owns and has good title to all of the assets and
properties reflected as owned by it on the Balance Sheet or
acquired by ITC since the date of the Balance Sheet (except
personal property sold or otherwise disposed of in the ordinary
course of business since the date of the Balance Sheet), free and
clear of any lien, claim or other encumbrance, except for (i) the
liens, claims or other encumbrances reflected on the Balance
Sheet, (ii) assets and properties disposed of, or subject to
purchase or sales orders, in the ordinary course of business
since the date of the Balance Sheet, (iii) liens, claims or other
encumbrances securing the liens of materialmen, carriers,
landlords and like persons, all of which are not yet due and
payable, (iv) liens for taxes not yet delinquent and (v) liens,
claims, other encumbrances or defects in title that, in the
aggregate, are not material to the Business of ITC. ITC owns or
has a valid leasehold interest in all of the buildings,
structures, leasehold improvements, equipment and other tangible
property material to the Business of ITC, all of which are in
good and sufficient operating condition and repair, ordinary wear
and tear excepted, for the conduct of its business in accordance
with past practices and ITC has not received notice that any of
such property is in violation in any material respect of any
existing law or any building, zoning, health, safety or other
ordinance, code or regulation.
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2.9 Hazardous Materials.
(a) ITC has previously made available to Cardio a true
and correct list of all Hazardous Materials (as hereinafter
defined) generated, used, handled or stored by ITC, the proper
disposal of which will require any material expenditure by ITC.
There has been no generation, use, handling, storage or disposal
of any Hazardous Materials in violation of common law or any
applicable environmental law at any site owned or premises leased
by ITC during the period of ITC's ownership or lease that could
have a material adverse effect on the Business of ITC. Nor has
there been or is there threatened any release of any Hazardous
Materials on or at any such site or premises during such period
in violation of common law or any applicable environmental law or
which created or will create an obligation to report or remediate
such release, which release or failure to report or remediate
could have a material adverse effect on the Business of ITC. For
purposes of this Agreement, "Hazardous Material" means any
medical waste, flammable, explosive or radioactive material, or
any hazardous or toxic waste, substance or material, including
substances defined as "hazardous substances," "hazardous
materials," "solid waste" or "toxic substances" under any
applicable laws or ordinances relating to hazardous or toxic
materials and substances, air pollution (including noise and
odors), water pollution, liquid and solid waste, pesticides,
drinking water, community and employee health, environmental land
use management, stormwater, sediment control, nuisances,
radiation, wetlands, endangered species, environmental
permitting, petroleum products, and all rules and regulations
promulgated pursuant to any such laws and ordinances.
(b) ITC has previously made available to Cardio copies
of all documents concerning any environmental or health and
safety matter that could have a material adverse effect on the
Business of ITC, if any, and copies of any environmental audits
or risk assessments, site assessments, documentation regarding
off-site disposal of Hazardous Materials, spill control plans and
material correspondence with any governmental authority regarding
the foregoing.
2.10 Accounts Receivable. All accounts and notes
receivable of ITC shown on the Balance Sheet and all accounts and
notes receivable acquired by ITC subsequent to the date of the
Balance Sheet have arisen in the ordinary course of business and
have been collected, or are in the process of collection and are
collectible in the ordinary course of business and in any event
within nine months from the Closing Date, in the aggregate
recorded amounts thereof, less the applicable allowances
reflected on the Balance Sheet with respect to the accounts and
notes receivable shown thereon, or set up consistent with past
practice on the books of ITC with respect to the accounts and
notes receivable acquired subsequent to the date of the Balance
Sheet.
9PAGE
2.11 Inventories. All Inventories (as defined below) of
ITC are of a quality and quantity usable and saleable in the
ordinary course of business, except for obsolete items and items
of below- standard quality, all of which are in the aggregate
immaterial to the Business of ITC. Items included in such
Inventories are carried on the books of ITC, and are valued on
the Balance Sheet, at the lower of cost or market. The value of
obsolete materials and materials of below-standard quality or
quantity has been written down on ITC's books of account to
realizable market value. The term "Inventories" includes all
stock of raw materials, work-in-process and finished goods,
including but not limited to finished goods purchased for resale,
held by ITC for manufacturing, assembly, processing, finishing,
sale or resale to others, from time to time in the ordinary
course of business of ITC in the form in which such inventories
then are held or after manufacturing, assembling, finishing,
processing, incorporating with other goods or items, refining or
the like.
2.12 Purchase and Sale Commitments. No outstanding
purchase commitments by ITC are in excess of the normal, ordinary
and usual requirements of ITC, and the aggregate of the contract
prices to which ITC has agreed in any outstanding purchase
commitments is not so excessive when compared with current market
prices for the relevant commodities or services that a material
loss is likely to result. No outstanding sales commitment by ITC
obligates ITC to sell any product or service at a price which,
because of currently prevailing and projected costs of materials
or labor, is likely to result, when all such sales commitments
are taken in the aggregate, in a material loss to ITC. There are
no suppliers to ITC of significant goods or services with respect
to which practical alternative sources of supply, or comparable
products, are not available on comparable terms and conditions.
2.13 Governmental Authorizations. ITC has all governmental
permits, licenses, franchises, concessions, zoning variances and
other approvals, authorizations and orders (collectively
"Permits") material to the Business of ITC. Such Permits
constitute all the permits which are required under all
applicable local, state, federal or foreign laws and regulations
for the operation of the Business of ITC. All such Permits are
presently in full force and effect, ITC is in compliance with the
requirements thereof, no suspension or cancellation of any of
them is threatened so far as is known to ITC, and, except for the
ISRA approval referred to in Section 2.2 above, the Merger will
not adversely affect the validity or effectiveness of, and will
not require, for retention thereof after the Merger, the consent
or approval of any party to, or any other person or governmental
authority having jurisdiction of, any such Permit. ITC has no
knowledge of any fact or circumstance which would prevent, limit
or restrict it from continuing to operate its business in the
present manner, and no new requirements pertaining to the manner
of operating its business have been issued or announced by any
governmental authority during the past year nor are there any
10PAGE
disputes pending between ITC and any governmental authority
relating to ITC's operations as presently being conducted or
actively considered. ITC has furnished or made available to
Cardio all reports and applications filed by it with any
governmental authority in the last three years.
2.14 Intellectual Property. ITC owns, or is licensed to
use, or otherwise has the right to use all patents, trademarks,
service marks, trade names, trade secrets, franchises, and
copyrights, and all applications for any of the foregoing, and
all technology, know-how and processes necessary for the conduct
of its businesses as now conducted (collectively, the
"Proprietary Rights"). A list of all such copyrights,
trademarks, tradenames and patents, and all applications
therefor, has been furnished or made available to Cardio. ITC is
not aware of any claim by any third party that the Business of
ITC as currently conducted or proposed to be conducted infringes
upon the unlicensed Proprietary Rights of others, nor has ITC
received any notice or claim from any third party of such
infringement by ITC. ITC is not aware of any infringement by any
third party on, or any competing claim of right to use or own any
of, the Proprietary Rights of ITC. ITC has the right to use,
free and clear of claims or rights of others, all customer lists
and computer software material to its business as presently
conducted. To the best knowledge of ITC, none of the activities
of the employees of ITC on behalf of ITC violates any agreements
or arrangements which any such employees have with former
employers in a way which is materially adverse to the Business of
ITC.
2.15 FDA. For purposes of this Section 2.15, the term
"Products" shall mean the Hemachron 400, 401, 800 and 801
instruments; the Activated Clotting Time, Low Range ACT,
Activated Partial Thromboplastin Time, Prothrombin Time, Thrombin
Time, HeparinNeutralizing Thrombin Time, Protamine Dose Assay,
RxDx, HDTT, d-Dimer, Quality Control and the Superserum Reagent
tests performed with such instruments; each formulation of each
such test; the Quality Control Products for such instruments and
tests; the Branded Heparin and Protamine Diagnostic/Therapeutic
Systems for use with such instruments; the Cyclone
Microhematocrit Testing Instrument and the Surgicutt, Tenderfoot
and Tenderlett incision devices and Surgicutt Bleeding Time
Blotter Paper; and all other products sold by ITC. ITC, and each
Product in current commercial distribution except the Surgicutt
Bleeding Time Blotter Paper, is currently duly registered (in
case of ITC) and listed (in case of each such Product) with the
Federal Food and Drug Administration ("FDA") under Section 360 of
the Federal Food, Drug, and Cosmetic Act (the "FDC Act"), and the
applicable rules and regulations thereunder. Each Product in
current commercial distribution except Tenderlett (which is a
Class I medical device) and the Surgicutt Bleeding Time Blotter
Paper (which is not a medical device) is a Class II medical
device as defined under 21 U.S.C. 360c (a)(l)(B) and the
applicable rules and regulations thereunder and was first
11PAGE
marketed under, and is covered by, a premarket notification
submission to the FDA in compliance with 21 U.S.C. 360(k) and the
applicable rules and regulations thereunder and each such
submission is in full force and effect and has been modified and
amended, if at all, as required by the FDC Act and applicable
rules and regulations thereunder. Each Product in current
commercial distribution is manufactured, prepared, assembled and
processed in compliance with Good Manufacturing Practice for
Medical Devices set forth in 21 CFR Part 820. ITC is in full
compliance with the recordkeeping and FDA reporting requirements
for Medical Devices Reporting set forth in 21 CFR Part 803. The
premises of ITC and its records relating to the Products were
most recently inspected by the FDA on September 10-13, 1996, and
a true and complete copy of the report of such inspection has
been furnished to Cardio. No deficiencies were noted therein.
Since September 13, 1996, the FDA has not inspected such premises
and records. ITC is not subject to any enforcement proceedings
by the FDA and, to the best of its knowledge, no proceedings have
been threatened. ITC has not introduced in commercial
distribution during the period of six calendar years immediately
preceding the date hereof any products which were upon their
shipment by ITC adulterated or misbranded in violation of 21
U.S.C. 331.
2.16 Insurance. ITC is not in default with respect to any
provisions of any policy of general liability, fire, title or
other form of insurance held by it, is current in the payment of
all premiums due on such insurance and has not failed to give any
notice or present any claim thereunder in due and timely fashion,
except for claims that are immaterial in both the nature of the
claim and in the amount of such claim. ITC maintains insurance
on all of its assets and its business (including products
liability insurance) from insurers which to its knowledge are
financially sound and reputable, in amounts and coverages and
against the kinds of risks and losses reasonably prudent to be
insured against by corporations engaged in the same or similar
businesses. No basis exists which would jeopardize the coverage
under any such insurance. No such insurance will be terminated
or cancelled by reason of the execution, delivery and performance
of this Agreement, the filing of the Certificate of Merger or the
consummation of the transactions contemplated hereby. ITC has
previously furnished or made available to Cardio all policies of
general liability, fire, title or other forms of insurance held
by ITC and a description of all claims pending thereunder other
than health or dental insurance claims.
2.17 Employee Benefit Plans.
(a) ITC has made available or furnished to Cardio true
and complete copies of each pension, profit-sharing, deferred
compensation, incentive compensation, severance pay, retirement,
welfare benefit or other plan or arrangement providing benefits
to employees or retirees, including both those that do and do not
constitute employee benefit plans within the meaning of Section
12PAGE
3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), currently maintained or contributed to by ITC,
Thermo or Holdings for the benefit of ITC's employees or retirees
(each, a "Plan").
(b) Except as set forth on the ITC Disclosure
Schedule, (i) each such Plan that is an "employee pension benefit
plan" within the meaning of Section 3(2) of ERISA is being
operated and administered in compliance with Section 401(a) of
the Code, a favorable determination letter has been obtained from
the Internal Revenue Service (the "IRS") for such Plan, and there
is no accumulated funding deficiency, as defined in Section
302(a)(2) of ERISA or Section 412 of the Code, with respect to
such Plan; (ii) there has been no non-exempt "prohibited
transaction" within the meaning of Section 406 of ERISA or
Section 4975 of the Code involving the assets of any Plan nor any
"reportable event" within the meaning of Section 4043 of ERISA
with respect to any Plan; (iii) all required employer
contributions to such Plan have been made (or, in the case of
contributions not yet due, have been accrued on the Balance
Sheet); (iv) ITC has made available to Cardio as to each such
Plan a true and correct copy of (w) the annual report (Form 5500)
filed with the IRS for each of the three most recent plan years,
(x) each plan, trust agreement, group annuity contract and
insurance contract, if any, relating to such Plan, (y) each
actuarial report prepared for each of the last three years for
each Plan and (z) each summary plan description distributed to
participants in each Plan and each summary of material
modifications to each Plan (as defined in ERISA); and (v) each
such Plan is, and at all relevant times has been, in compliance
with ERISA, the Code and the terms of such Plan. Neither ITC,
Thermo nor any Subsidiary of Thermo has ever participated in a
"multiemployer pension plan" as defined in Section 3(37) of
ERISA.
(c) Except as set forth on the ITC Disclosure
Schedule, ITC has no obligation to provide any welfare benefits
to retired or former employees other than continuation of welfare
benefits as required by applicable law.
(d) ITC has no liability under or with respect to any
employee benefit plans or arrangements that it no longer
maintains or in which it no longer participates.
2.18 Agreements and Documents. ITC has previously
furnished or made available to Cardio true, correct and complete
copies of each document that is referred to or otherwise related
to any of the following items referred to in this Section 2.18:
(a) each document related to interests in real
property owned, leased or otherwise used or claimed by ITC;
(b) (i) each agreement of ITC made in the ordinary
course of business which involves aggregate future payments by or
13PAGE
to ITC of more than one hundred fifty thousand dollars ($150,000)
in the case of payments to ITC (including current firm purchase
orders for ITC products), seventy five thousand dollars ($75,000)
in the case of payments by ITC, or any agreement made in the
ordinary course of business whose term extends beyond one year
after the date hereof; (ii) each agreement containing any
covenant restricting the freedom of ITC to compete in any line of
business or with any person; and (iii) each agreement of ITC not
made in the ordinary course of business which is or was to be
performed after the date hereof;
(c) all employment or similar compensation agreements
of ITC which may not be terminated by ITC without penalty within
thirty days after the Closing;
(d) all bonus, incentive compensation, deferred
compensation, profit-sharing, stock option, retirement, pension,
severance, indemnification, insurance, death benefit or other
fringe benefit plans, agreements or arrangements of ITC (or
applying to ITC) in effect, or under which any amounts remain
unpaid, on the date hereof or to become effective after the date
hereof;
(e) all labor unions or other organizations
representing, purporting to represent or attempting to represent
any employees of ITC, and all collective bargaining agreements of
ITC with any labor unions or other representatives or employees;
(f) each agreement or other instrument or arrangement
defining the terms on which any indebtedness of ITC (or a
guarantee by ITC of indebtedness) is or may be issued; and
(g) the names and addresses of all banks in which ITC
has accounts or lines of credit, and with respect to each such
account or line of credit, the names of all persons authorized to
drawn thereon.
ITC is not a party to any oral contract or agreement
which would be required to have been furnished or made available
to Cardio under this Section 2.18 had such contract or agreement
been committed to writing.
2.19 Validity. There is no default or claimed or purported
or alleged default, or basis on which with notice or lapse of
time or both (including notice of this Agreement), a default
would exist, in any obligation on the part of any party
(including ITC) to be performed under any lease, contract, plan,
policy or other instrument or arrangement referred to in Section
2.18 or otherwise in this Agreement.
2.20 No Changes. Since the date of the Balance Sheet there
has not been:
14PAGE
(a) any material adverse change in the Business of
ITC;
(b) any material damage, destruction or loss (whether
or not covered by insurance) adversely affecting the Business of
ITC;
(c) any declaration, setting aside or payment of any
dividend, or other distribution, in respect of ITC's capital
stock or any direct or indirect redemption, purchase or other
acquisition of such stock;
(d) any option to purchase ITC's capital stock granted
to any person, or any employment or deferred compensation
agreement entered into between ITC and any of its stockholders,
officers, directors, employees or consultants;
(e) any issuance or sale by ITC of any stock, bonds or
other corporate securities, or any partial or complete formation,
acquisition, disposition or liquidation of ITC;
(f) any labor union activity (including without
limitation any negotiation, or request for negotiation, with
respect to any union representation or any labor contract)
respecting ITC;
(g) any statute, rule or regulation, or, to the best
of ITC's knowledge, any government policy, adopted which may
materially and adversely affect the Business of ITC;
(h) any mortgage, lien, attachment, pledge,
encumbrance or security interest created on any asset, tangible
or intangible, of ITC, or assumed, either by ITC or by others,
with respect to any such assets;
(i) any indebtedness or other liability or obligation
(whether absolute, accrued, contingent or otherwise) incurred, or
other transaction (except that reflected in this Agreement)
engaged in, by ITC, except those in the ordinary course of
business that are individually, or in the aggregate to one group
of related parties, less than ten thousand dollars ($10,000);
(j) any obligation or liability discharged or
satisfied by ITC, except items included in current liabilities
shown on the Balance Sheet and current liabilities incurred since
the date of the Balance Sheet in the ordinary course of business
which are individually, or in the aggregate to one group of
related parties, less than ten thousand dollars ($10,000) in
amount;
(k) any sale, assignment, lease, transfer or other
disposition of any tangible asset of ITC, except in the ordinary
course of business, or any sale, assignment, lease, transfer or
15PAGE
other disposition of any of its patents, trademarks, trade names,
brand names, copyrights, licenses or other intangible assets;
(l) any amendment, termination or waiver of any
material right belonging to ITC;
(m) any increase in the compensation or benefits
payable or to become payable by ITC to any of its officers or
employees;
(n) any transaction or contract with Thermo; or
(o) any other action or omission by ITC, or the
passage of any resolution, other than in the ordinary course of
business.
2.21 Litigation or Proceedings. ITC is not engaged in, or
a party to, or, to the best of Thermo's, Holdings' or ITC's
knowledge, threatened with, any claim or legal action or other
proceeding before any court, any arbitrator of any kind or any
governmental authority, nor does any basis for any claim or legal
action or other proceeding or governmental investigation exist.
There are no orders, rulings, decrees, judgments or stipulations
to which ITC is a party by or with any court, arbitrator or
governmental authority affecting the Business of ITC.
2.22 Compliance with Laws. ITC (i) has not been and is not
in violation of any applicable building, zoning, occupational
safety and health, pension, export control, environmental or
other federal, state, local or, to the best of its knowledge,
foreign, law, ordinance, regulation, rule, order or governmental
policy applicable to the Business of ITC; (ii) has not received
any complaint from any governmental authority, and to the best
knowledge of ITC, none is threatened, alleging that ITC has
violated any such law, ordinance, regulation, rule, order or
governmental policy; (iii) has not received any notice from any
governmental authority of any pending proceedings to take all or
any part of the properties of ITC (whether leased or owned) by
condemnation or right of eminent domain and, to the best
knowledge of ITC, no such proceeding is threatened; and (iv) is
not a party to any agreement or instrument, or subject to any
charter or other corporate restriction or judgment, order, writ,
injunction, rule, regulation, code or ordinance, which materially
and adversely affects, or might reasonably be expected materially
and adversely to affect the Business of ITC.
2.23 Labor Matters. There are no labor organizing
activities, election petitions or proceedings, labor strikes,
disputes, slowdowns, work stoppages or unfair labor practice
complaints pending or, to the best of ITC's knowledge, threatened
against ITC or between ITC and any of its employees.
2.24 Recalls. There is no basis for the recall, withdrawal
or suspension of any approval by any governmental authority with
16PAGE
respect to any product sold or proposed to be sold by ITC. None
of ITC's products is subject to any recall proceedings and to the
best of its knowledge no such proceedings have been threatened.
No product of ITC has ever been recalled.
2.25 Brokers and Finders. Neither ITC, Holdings nor Thermo
has employed any broker, agent or finder or incurred any
liability on behalf of ITC or for any brokerage fees, agents'
commissions or finders' fees in connection with the transactions
contemplated hereby.
2.26 Powers of Attorney. ITC has no powers of attorney or
similar authorizations outstanding.
2.27 No Termination of Relationship. As of the date
hereof, Thermo, Holdings and ITC are unaware, and have no reason
to expect, that any relationship between ITC and a distributor,
customer, supplier, lender, employee or other person will be
terminated or adversely affected as a result of the Merger.
2.28 All Information. Cardio has been furnished in writing
prior to the execution of this Agreement all information as to
the Business of ITC material to a reasonable buyer's
determination to enter into this Agreement and to consummate the
transactions contemplated hereby.
2.29 Statements True and Correct. The statements contained
herein or in any written documents prepared and delivered by or
on behalf of Thermo, Holdings or ITC pursuant to the terms hereof
are true, complete and correct in all material respects, and such
documents do not omit any material fact required to be stated
herein or therein or necessary to make the statements contained
herein or therein not misleading.
SECTION 3 - REPRESENTATIONS AND WARRANTIES OF
CARDIO AND ACQUISITION
Cardio and Acquisition, jointly and severally, represent and
warrant to Thermo, Holdings and ITC as follows.
3.1 Organization. Each of Cardio and Acquisition is a
corporation duly organized, validly existing and in good standing
under the laws of its state of incorporation and has full
corporate power and authority to own, lease and operate its
assets and to carry on its business as now being and as
heretofore conducted. All outstanding shares of Acquisition
capital stock are owned by Cardio, free and clear of any charges,
liens, encumbrances, security interests or adverse claims.
3.2 Authority. Each of Cardio and Acquisition has full
right, power, capacity and authority to execute, deliver and
perform this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of
17PAGE
this Agreement, the filing of the Certificate of Merger and the
consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on
the part of Cardio and Acquisition. This Agreement has been duly
and validly executed and delivered by each of Cardio and
Acquisition and constitutes the valid and binding obligation of
Cardio and Acquisition, enforceable against them in accordance
with the terms hereof. Neither the execution, delivery and
performance of this Agreement, the filing of the Certificate of
Merger nor the consummation of the transactions contemplated
hereby will (i) conflict with or result in a violation, breach,
termination or acceleration of, or default under (or would result
in a violation, breach, termination, acceleration or default with
the giving of notice or passage of time, or both) any of the
terms, conditions or provisions of the Articles of Organization
or By-laws of Cardio, as amended, or Certificate of Incorporation
or By-laws of Acquisition, as amended, or of any note, bond,
mortgage, indenture, license, agreement or other instrument or
obligation to which either Cardio or Acquisition is a party or by
which Cardio or Acquisition or any of their respective properties
or assets may be bound or affected; (ii) result in the violation
of any order, writ, injunction, decree, statute, rule or
regulation applicable to Cardio or Acquisition or any of their
respective properties or assets; or (iii) result in the
imposition of any lien, encumbrance, charge or claim upon any of
Cardio's or Acquisition's assets. Except for the filing of the
Certificate of Merger, the listing of the Cardio Shares for
trading on the AMEX and approval of the NJDEP pursuant to ISRA,
no consent or approval by, or notification to or filing with, any
court, governmental authority or third party is required in
connection with the execution, delivery and performance of this
Agreement by Cardio and Acquisition or the consummation of the
transactions contemplated hereby.
3.3 Statements True and Correct. The statements contained
herein or in any written documents prepared and delivered by or
on behalf of Cardio or Acquisition pursuant to the terms hereof
are true, complete and correct in all material respects, and such
documents do not omit any material fact required to be stated
herein or therein or necessary to make the statements contained
herein or therein not misleading.
SECTION 4 - COVENANTS AND AGREEMENTS
4.1 Conduct of Business. Except with the prior written
consent of Cardio, which will not be unreasonably withheld or
delayed, and except as otherwise contemplated herein, during the
period from the date hereof to the Effective Time, Thermo,
Holdings and ITC shall observe the following covenants:
(a) Affirmative Covenants Pending Closing. Thermo,
Holdings and ITC shall:
18PAGE
(i) Preservation of Personnel. Use all
reasonable efforts to preserve intact ITC's business organization
and keep available the services of ITC's present employees, in
each case in accordance with past practice, it being understood
that ITC's termination of employees with poor performance ratings
shall not constitute a violation of this covenant;
(ii) Insurance. Use all reasonable efforts to
keep in effect casualty, public liability, worker's compensation
and other insurance policies applicable to ITC in coverage
amounts not less than those in effect at the date of this
Agreement;
(iii) Preservation of the Business; Maintenance
of Properties. Use all reasonable efforts to preserve the
Business of ITC, advertise, promote and market its products and
services in accordance with past practices over the last twelve
months, keep its properties intact, preserve its goodwill,
maintain all physical properties in such operating condition as
will permit the conduct of ITC's business on a basis consistent
with past practice;
(iv) Intellectual Property Rights. Use all
reasonable efforts to preserve and protect ITC's Proprietary
Rights; and
(v) Ordinary Course of Business. Operate ITC's
business solely in the ordinary course.
(b) Negative Covenants Pending Closing. Thermo,
Holdings and ITC will not:
(i) Disposition of Assets. Sell or transfer, or
mortgage, pledge or create or permit to be created any lien on,
any of ITC's assets other than sales or transfers in the ordinary
course of business or the creation of liens under existing
arrangements disclosed hereunder and liens permitted under
Section 2.8;
(ii) Liabilities. Permit ITC to (A) incur any
obligation or liability other than in the ordinary course of
business, (B) incur any indebtedness for borrowed money in excess
of $100,000 or (C) enter into any contracts or commitments
involving payments by ITC of $100,000 or more other than purchase
orders and commitments for inventory, materials and supplies in
the ordinary course of business;
(iii) Compensation. Except as required by
applicable law or any existing employment or severance agreement,
(A) change the compensation or fringe benefits of any ITC
officer, director, employee or agent, except for ordinary merit
increases for employees other than officers based on periodic
reviews in accordance with past practices, or (B) enter into or
modify any employment, severance or other agreement with any
19PAGE
officer, director or employee of ITC or any benefit plan (it
being understood that ITC's hiring of at will employees in the
ordinary course of business shall not constitute a violation of
this covenant) or (C) enter into or modify any agreement with any
consultant, except for agreements terminable upon not more than
one year's notice that are consistent with ITC's past practices
with respect to consulting agreements.
(iv) Capital Stock. Make any change in the
number of shares of ITC's capital stock authorized, issued or
outstanding or grant any option, warrant or other right to
purchase, or to convert any obligation into, shares of ITC's
capital stock, or declare or pay any dividend or other
distribution with respect to any shares of ITC's capital stock,
or sell or transfer any shares of its capital stock;
(v) Charter and By-Laws. Amend the Certificate
of Incorporation or By-laws of ITC;
(vi) Acquisitions. Make any material acquisition
of property other than in the ordinary course of the Business of
ITC;
(vii) License Agreements. Enter into or modify
any license, technology development or technology transfer
agreement between ITC and any other person or entity.
4.2 Corporate Examinations and Investigations. Prior to
the Effective Time, Cardio shall be entitled, through its
employees and representatives, to have such access to the assets,
properties, business and operations of ITC, as is reasonably
necessary or appropriate in connection with its investigation of
ITC with respect to the transaction contemplated hereby. Any
such investigation and examination shall be conducted at
reasonable times and under reasonable circumstances so as to
minimize any disruption to or impairment of ITC's business and
each party shall cooperate fully therein. No investigation by
Cardio shall diminish or obviate any of the representations,
warranties, covenants or agreements of Thermo, Holdings or ITC
contained in this Agreement. In order that Cardio may have full
opportunity to make such investigation, Holdings and ITC shall
furnish the representatives of Cardio with all such information
and copies of such documents concerning its affairs as Cardio may
reasonably request and cause their officers, employees,
consultants, agents, accountants and attorneys to cooperate fully
with Cardio's representatives in connection with such
investigation.
4.3 Expenses. Whether or not the Merger is consummated,
Cardio, Thermo, Holdings and ITC shall bear their respective
expenses incurred in connection with the preparation, execution
and performance of this Agreement and the transactions
contemplated hereby, including without limitation, all fees and
expenses of agents, representatives, counsel and accountants.
20PAGE
4.4 Authorization from Others. Prior to the Closing Date,
the parties shall use all reasonable efforts to obtain all
authorizations, consents and permits of others required to permit
the consummation of the transactions contemplated by this
Agreement.
4.5 Consummation of Agreement. Each party shall use all
reasonable efforts to perform and fulfill all conditions and
obligations to be performed and fulfilled by it under this
Agreement and to ensure that to the extent within its control or
capable of influence by it, no breach of any of its respective
representations, warranties and agreements hereunder occurs or
exists on or prior to the Effective Time, all to the end that the
transactions contemplated by this Agreement shall be fully
carried out in a timely fashion.
4.6 Further Assurances. Each of the parties shall execute
such documents, further instruments of transfer and assignment
and other papers and take such further actions as may be
reasonably required or desirable to carry out the provisions
hereof and the transactions contemplated hereby.
4.7 Tax-Free Reorganization. Cardio, Acquisition, Thermo,
Holdings and ITC agree that no party shall take any action
directly or indirectly that would prevent the Merger from
qualifying as a tax-free reorganization under Section 368(a) of
the Code.
4.8 Listing of Shares. Promptly after the Effective Date,
Cardio shall take all action necessary in accordance with
applicable law to convene a meeting of its stockholders to be
held for the purpose of approving the listing of the Cardio
Shares for trading upon AMEX in accordance with Section 712 of
AMEX's Listing Standards, Policies and Requirements. ITC
acknowledges and agrees that such meeting may be held subsequent
to Cardio's 1997 annual meeting. In connection with such
meeting, Cardio's Board of Directors shall recommend to the
Cardio stockholders the approval of the listing of the Cardio
Shares pursuant to this Agreement. Cardio shall use all
reasonable efforts to obtain all votes and approvals of the
Cardio stockholders necessary for the listing of the Cardio
Shares and all related matters under the Massachusetts Business
Corporation Law, and its Articles of Organization and By-laws.
Thermedics Inc. ("Thermedics"), a Massachusetts corporation,
subsidiary of Thermo and stockholder of Cardio, hereby agrees to
vote all of the shares of Cardio Common Stock held by it as of
the record date of any such meeting in favor of the listing of
the Cardio Shares and all such related matters.
4.9 Public Announcements and Confidentiality. Any press
release or other information to the press or any third party with
respect to this Agreement or the transactions contemplated hereby
shall require the prior approval of Cardio and ITC, which
21PAGE
approval shall not be unreasonably withheld, provided that a
party shall not be prevented from making such disclosure as it
shall be advised by counsel is required by law.
4.10 No Solicitation. Thermo, Holdings and ITC will not
(i) solicit or initiate discussions with any person, other than
Cardio, relating to the possible acquisition of ITC or all or a
material portion of the assets or any of the capital stock of ITC
or any merger or other business combination with ITC (an
"Acquisition Transaction") or (ii) except to the extent
reasonably required by fiduciary obligations under applicable law
as advised by legal counsel, participate in any negotiations
regarding, or furnish to any other person information with
respect to, any effort or attempt by any other person to do or to
seek any Acquisition Transaction. Thermo, Holdings and ITC agree
to inform Cardio within one business day of its receipt of any
offer, proposal or inquiry relating to any Acquisition
Transaction.
4.11 Indemnification.
(a) Right to Indemnification. Cardio and Thermo (as
the case may be, the "Indemnitee") shall be indemnified on its
respective demand made to the other (the "Indemnitor") for the
full amount of all damages (as defined below) suffered by it as a
direct or indirect result of:
(i) the inaccuracy of any representation or
warranty made by the Indemnitor in or pursuant to this
Agreement; and
(ii) any failure by the Indemnitor to perform any
obligation or comply with any covenant or agreement
specified in this Agreement.
For the purpose of this Section 4.11, (a) references to Cardio
shall be deemed to mean Cardio and Acquisition and references to
Thermo shall be deemed to mean Thermo and Holdings; (b) the term
"damages" shall be determined and computed by reference to the
effect of the compensable event on the Indemnitee, and shall be
deemed to include (i) all losses, liabilities, expenses or costs
incurred by the Indemnitee, including reasonable attorneys' fees,
and (ii) interest at a rate per annum equal to that announced
from time to time by First National Bank of Boston as its "base
rate" (or the legal rate of interest, if lower) from the date 30
days after notice of any such claim for indemnification is given
to the Indemnitor, or if an unliquidated claim, from such later
date as the claim is liquidated, to the date full indemnification
is made therefor; and (c) damages shall not include any amounts
for which the Indemnitee actually receives payment under an
insurance policy, excluding self-insured amounts and deductible
amounts.
22PAGE
(b) Indemnification Procedures. The Indemnitee shall
give the Indemnitor notice of any claim, action or proceeding by
a third party which is reasonably likely to result in a claim for
indemnification under this Section 4.11. The Indemnitor shall
have the right, at its expense, to defend, contest, protest,
settle and otherwise control the resolution of any such claim,
action or proceeding. The Indemnitee shall have the right to
participate in any such legal proceeding, subject to the
Indemnitor's right of control thereof, at the expense of the
Indemnitee and with counsel selected by the Indemnitee.
(c) Limitations on Indemnification. Cardio's and
Thermo's rights to be indemnified pursuant to Section 4.11 shall
survive the Effective Date of this Agreement indefinitely.
4.12 Participation in Employee Benefit Plans. Thermo,
Holdings and ITC will take whatever actions may be required to
continue in effect without interruption the participation of ITC
in the employee benefit plans in which ITC is participating as of
the Effective Date, until such time as ITC may choose not to
participate in those plans.
SECTION 5 - CONDITIONS PRECEDENT TO THE OBLIGATIONS OF
CARDIO AND ACQUISITION TO CONSUMMATE THE MERGER
The obligation of Cardio and Acquisition to consummate the
Merger is subject to the satisfaction or waiver, at or before the
Effective Time, of the following conditions:
5.1 Representations, Warranties and Covenants. The
representations and warranties of Thermo, Holdings and ITC
contained in this Agreement shall be true and correct in all
material respects on and as of the Effective Time with the same
force and effect as though made on and as of the Effective Time
(with such exceptions as may be permitted under or contemplated
by this Agreement) and there shall not have been any material
adverse change in the Business of ITC since the date hereof.
Thermo, Holdings and ITC shall have performed and complied in all
material respects with all covenants and agreements required by
this Agreement to be performed or complied with by them on or
prior to the Effective Time and shall have obtained all required
consents and approvals. Thermo, Holdings and ITC shall have
delivered to Cardio a certificate, dated the Effective Time, to
the foregoing effect.
5.2 Fairness Opinion. Cardio shall have received an
opinion from Cazenove Incorporated, in form and substance
satisfactory to Cardio, stating that the terms of the Merger are
fair to Cardio from a financial point of view.
5.3 Certificate of Merger. ITC shall have executed and
delivered the Certificate of Merger.
23PAGE
5.4 Certificates. Thermo, Holdings and ITC shall have
furnished Cardio and Acquisition with such certificates of public
officials and of Thermo, Holdings and ITC officers as may be
reasonably requested by Cardio and Acquisition.
SECTION 6 - CONDITIONS PRECEDENT TO THE OBLIGATION OF THERMO,
HOLDINGS AND ITC TO CONSUMMATE THE MERGER
The obligation of Thermo, Holdings and ITC to consummate the
Merger is subject to the satisfaction or waiver, at or before the
Effective Time, of the following conditions:
6.1 Representations, Warranties and Covenants. The
representations and warranties of Cardio and Acquisition
contained in this Agreement shall be true and correct in all
material respects on and as of the Effective Time with the same
force and effect as though made on and as of the Effective Time
(with such exceptions as may be permitted under or contemplated
by this Agreement) and there shall not have been any material
adverse change in the Business of Cardio since the date hereof.
Cardio shall have performed and complied in all material respects
with all covenants and agreements required by this Agreement to
be performed or complied with by it on or prior to the Effective
Time and shall have obtained all required consents and approvals.
Cardio and Acquisition shall have delivered to ITC a certificate,
dated the Effective Time, to the foregoing effect.
6.2 Certificate of Merger. Acquisition shall have
executed and delivered the Certificate of Merger.
6.3 Certificates. Cardio and Acquisition shall have
furnished Thermo, Holdings and ITC with such certificates of
public officials and of Cardio and Acquisition officers as may be
reasonably requested by Thermo and ITC.
SECTION 7 - TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any
time prior to the Effective Time as follows:
(a) by Thermo upon written notice to Cardio if Cardio
or Acquisition has materially breached any representation,
warranty, covenant or agreement contained herein and has not
cured such breach within ten (10) business days of receipt of
written notice from ITC;
(b) by Cardio upon written notice to Thermo if Thermo,
Holdings or ITC has materially breached any representation,
warranty, covenant or agreement contained herein and has not
cured such breach within ten (10) business days of receipt of
written notice from Cardio;
24PAGE
(c) by either party if any court of competent
jurisdiction or United States governmental body shall have issued
an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Merger and such order,
decree or ruling shall have become final and nonappealable; or
(d) at any time with the written consent of Thermo and
Cardio.
7.2 Effect of Termination. If this Agreement is
terminated as provided in Section 7.1, this Agreement shall
forthwith become void and have no effect, without liability on
the part of any party, its directors, officers or stockholders,
other than the provisions of this Section 7.2, Section 4.3
relating to expenses and Section 4.9 relating to publicity and
confidentiality to the extent provided therein. Nothing
contained in this Section 7.2 shall relieve any party from
liability for any breach of this Agreement occurring before such
termination.
7.3 Amendment. This Agreement may not be amended except
by an instrument signed by each of the parties hereto.
7.4 Waiver. At any time, any party hereto may (a) extend
the time for the performance of any of the obligations or other
acts of any other party hereto or (b) waive compliance with any
of the agreements of any other party or any conditions to its own
obligations, in each case only to the extent such obligations,
agreements and conditions are intended for its benefit; provided
that any such extension or waiver shall be binding upon a party
only if such extension or waiver is set forth in a writing
executed by such party.
SECTION 8 - MISCELLANEOUS
8.1 Notices. All notices, requests, demands, consents and
other communications which are required or permitted hereunder
shall be in writing, and shall be deemed given when actually
received or if earlier, one day after deposit with a nationally
recognized air courier or express mail, charges prepaid or three
days after deposit in the U.S. mail by certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to Thermedics, Cardio or Acquisition:
Thermedics Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: President
25PAGE
Thermo Cardiosystems Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: President
With a copy to:
Xxxxxx & Dodge LLP
Xxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
If to Thermo, Holdings or ITC:
Thermo Electron Corporation
00 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: President
ITC Holdings Inc.
c/o Thermo Electron Corporation
00 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: President
International Technidyne Corporation
0 Xxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: President
With a copy to:
Thermo Electron Corporation
00 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: General Counsel
or to such other address as any party hereto may designate in
writing to the other parties, specifying a change of address for
the purpose of this Agreement.
8.2 Survival and Materiality of Representations. Each of
the representations, warranties and agreements made by the
parties hereto shall be deemed material and shall survive the
Effective Date and the consummation of the transactions
contemplated hereby. All statements contained in any certificates
or other instruments delivered by or on behalf of the parties
pursuant hereto or in connection with the transactions
contemplated hereby shall be deemed material and shall constitute
representations and warranties by the person making such
statement.
26PAGE
8.3 Entire Agreement. This Agreement, including the
exhibits, the ITC Disclosure Schedule and the other documents
referred to herein, supersedes any and all oral or written
agreements or understandings heretofore made relating to the
subject matter hereof and constitutes the entire agreement of the
parties relating to the subject matter hereof.
8.4 Parties in Interest. All covenants and agreements,
representations and warranties contained in this Agreement made
by or on behalf of any of the parties hereto shall bind and inure
to the benefit of the parties hereto, and their respective
successors, assigns, heirs, executors, administrators and
personal representatives, whether so expressed or not.
8.5 No Implied Rights or Remedies. Except as otherwise
expressly provided herein, nothing herein expressed or implied is
intended or shall be construed to confer upon or to give any
person, firm or corporation, other than the parties hereto, any
rights or remedies under or by reason of this Agreement.
8.6 Headings. The headings in this Agreement are inserted
for convenience of reference only and shall not be a part of or
control or affect the meaning hereof.
8.7 Severability. If any provision of this Agreement
shall be declared void or unenforceable by any judicial or
administrative authority, the validity of any other provision
shall not be affected thereby.
8.8 Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same
instrument.
8.9 Further Assurances. Thermo, Holdings and ITC will
execute and furnish to Cardio and Acquisition all documents and
will do or cause to be done all other things that Cardio may
reasonably request from time to time in order to give full effect
to this Agreement and to effectuate the intent of the parties.
8.10 Governing Law. This Agreement shall be governed by
the law of the State of Delaware applicable to agreements made
and to be performed wholly within such jurisdiction, without
regard to the conflicts of laws provisions thereof.
27PAGE
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed as of the date first written above.
THERMO CARDIOSYSTEMS INC.
[Seal] By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: President
ITC ACQUISITION INC.
[Seal] By: /s/ Xxxxxx Xxxxxxx
Name: Xxxxxx Xxxxxxx
Title: President
THERMO ELECTRON CORPORATION
[Seal] By: /s/ Xxxxxxxx X. Xxxxxxx
Name: Xxxxxxxx X. Xxxxxxx
Title: Treasurer
ITC HOLDINGS INC.
[Seal] By: /s/ Xxxxxxxx X. Xxxxxxx
Name: Xxxxxxxx X. Xxxxxxx
Title: Treasurer
28PAGE
INTERNATIONAL TECHNIDYNE CORPORATION
[Seal] By: /s/ Xxxxxx Xxxxxxx
Name: Xxxxxx Xxxxxxx
Title: President
The undersigned hereby agrees to be bound by and subject to
Section 4.8 of this Agreement and has executed this Agreement
solely for this purpose:
THERMEDICS INC.
[Seal] By: /s/ Xxxx X. Xxxx Xx.
Name: Xxxx X. Xxxx Xx.
Title: President
