ANNEX A
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
XXXXXX INTERNATIONAL INC.,
BAXTER CVG SERVICES III, INC.
AND
RESEARCH MEDICAL, INC.
DATED AS OF DECEMBER 3, 1996
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TABLE OF CONTENTS
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ARTICLE I THE MERGER..................................................................................... A-1
Section 1.1 The Merger............................................................................. A-1
Section 1.2 Effective Time of the Merger........................................................... A-1
ARTICLE II THE SURVIVING CORPORATION..................................................................... A-1
Section 2.1 Articles of Incorporation.............................................................. A-1
Section 2.2 Bylaws................................................................................. A-1
Section 2.3 Directors and Officers of Surviving Corporation........................................ A-1
ARTICLE III CONVERSION OF SHARES......................................................................... A-2
Section 3.1 Merger Consideration................................................................... A-2
Section 3.2 Exchange of Certificates Representing Shares........................................... A-2
Section 3.3 Dividends.............................................................................. A-3
Section 3.4 No Fractional Shares................................................................... A-3
Section 3.5 Closing of Company Transfer Books...................................................... A-3
Section 3.6 Unclaimed Amounts...................................................................... A-3
Section 3.7 Lost Certificates...................................................................... A-3
Section 3.8 Closing................................................................................ A-4
Section 3.9 Shareholders' Meeting.................................................................. A-4
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................................. A-4
Section 4.1 Organization and Qualification; Subsidiaries........................................... A-4
Section 4.2 Capitalization......................................................................... A-5
Section 4.3 Authority.............................................................................. A-6
Section 4.4 Consents and Approvals; No Violation................................................... A-6
Section 4.5 Company SEC Reports.................................................................... A-7
Section 4.6 Financial Statements................................................................... A-7
Section 4.7 Absence of Undisclosed Liabilities..................................................... A-8
Section 4.8 Absence of Certain Changes............................................................. A-8
Section 4.9 Taxes.................................................................................. A-8
Section 4.10 Litigation............................................................................. A-9
Section 4.11 Employee Benefit Plans; ERISA.......................................................... A-9
Section 4.12 Environmental Matters.................................................................. A-11
Section 4.13 Compliance with Applicable Laws........................................................ A-12
Section 4.14 Material Contracts..................................................................... A-12
Section 4.15 Intellectual Property Rights........................................................... A-13
Section 4.16 Fraud and Abuse........................................................................ A-14
Section 4.17 Insurance.............................................................................. A-15
Section 4.18 Opinion of Financial Advisor........................................................... A-15
Section 4.19 Utah Law............................................................................... A-15
Section 4.20 Company Disclosure..................................................................... A-15
Section 4.21 Patent Opinion......................................................................... A-15
Section 4.22 Labor Matters.......................................................................... A-15
Section 4.23 WARN Act............................................................................... A-16
Section 4.24 Transactions with Related Parties...................................................... A-16
Section 4.25 Suppliers and Customers................................................................ A-16
Section 4.26 Accounts Receivable.................................................................... A-16
Section 4.27 Absence of Certain Payments............................................................ A-16
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Section 4.28 Title to Properties; Absence of Liens and Encumbrances; Condition of Equipment;
Condition of Inventory............................................................... A-17
Section 4.29 FDA Matters............................................................................ A-17
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BAXTER AND PURCHASER.........................................
A-17
Section 5.1 Organization........................................................................... A-18
Section 5.2 Capitalization; Registration Rights.................................................... A-18
Section 5.3 Authority.............................................................................. A-18
Section 5.4 Consent and Approvals; No Violation.................................................... A-18
Section 5.5 Purchaser's Operations................................................................. A-19
Section 5.6 No Shares Owned by Baxter, Purchaser or Affiliates..................................... A-19
Section 5.7 Baxter SEC Reports..................................................................... A-19
Section 5.8 Baxter Disclosure...................................................................... A-19
Section 5.9 Baxter Financial Statements............................................................ A-20
ARTICLE VI COVENANTS OF THE COMPANY...................................................................... A-20
Section 6.1 Ordinary Course........................................................................ A-20
Section 6.2 Advice of Changes...................................................................... A-21
Section 6.3 Rule 145 Affiliates.................................................................... A-22
Section 6.4 No Solicitation........................................................................ A-22
Section 6.5 No WARN Act Activities................................................................. A-22
Section 6.6 Termination of Employee Stock Purchase Plan............................................ A-23
ARTICLE VII COVENANTS OF BAXTER AND PURCHASER............................................................ A-23
Section 7.1 Directors' and Officers' Indemnification and Insurance................................. A-23
Section 7.2 Continuation of Operations............................................................. A-24
Section 7.3 NYSE Listing........................................................................... A-24
Section 7.4 Baxter Public Information.............................................................. A-24
Section 7.5 Employee Benefits...................................................................... A-24
Section 7.6 Third Party Beneficiaries.............................................................. A-24
Section 7.7 Employment Offer....................................................................... A-24
ARTICLE VIII MUTUAL COVENANTS............................................................................ A-24
Section 8.1 Access to Information; Confidentiality................................................. A-24
Section 8.2 HSR Act................................................................................ A-25
Section 8.3 Consents and Approvals................................................................. A-25
Section 8.4 Notification of Certain Matters........................................................ A-26
Section 8.5 Brokers or Finders..................................................................... A-26
Section 8.6 Publicity.............................................................................. A-26
Section 8.7 Registration Statement................................................................. A-26
Section 8.8 Additional Agreements.................................................................. A-27
Section 8.9 Tax-Free Reorganization................................................................ A-27
Section 8.10 Pre-Closing Adjustments................................................................ A-27
ARTICLE IX CONDITIONS TO CONSUMMATION OF THE MERGER...................................................... A-28
Section 9.1 Conditions to Each Party's Obligation to Effect the Merger............................. A-28
Section 9.2 Conditions of Obligations of Baxter and Purchaser...................................... A-28
Section 9.3 Conditions of Obligations of the Company............................................... A-29
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ARTICLE X TERMINATION, AMENDMENT AND WAIVER.............................................................. A-30
Section 10.1 Termination............................................................................ A-30
Section 10.2 Effect of Termination and Abandonment.................................................. A-31
ARTICLE XI GENERAL PROVISIONS............................................................................ A-31
Section 11.1 Fees and Expenses...................................................................... A-31
Section 11.2 Amendment and Modification............................................................. A-31
Section 11.3 Nonsurvival of Representations and Warranties.......................................... A-31
Section 11.4 Notices................................................................................ A-31
Section 11.5 Definitions; Interpretation............................................................ A-32
Section 11.6 Counterparts........................................................................... A-32
Section 11.7 Entire Agreement; No Third Party Beneficiaries......................................... A-32
Section 11.8 Severability........................................................................... A-33
Section 11.9 Governing Law.......................................................................... A-33
Section 11.10 Assignment............................................................................. A-33
EXHIBIT 4.21--Patent Opinion
EXHIBIT 6.3--Rule 145 Affiliate Agreement................................................................. A
EXHIBIT 9.2(d)(i)--Company Officers Certificate........................................................... B
EXHIBIT 9.2(d)(ii)--Company Secretary's Certificate....................................................... C
EXHIBIT 9.2(f)(i)--Company In-House Counsel Opinion....................................................... D
EXHIBIT 9.2(f)(ii)--Ray, Xxxxxxx & Xxxxxxx Opinion........................................................ E
SCHEDULE 9.2(g)--Employment Agreements.................................................................... F
EXHIBIT 9.2(g).A--Employment Agreement of Xxxx X. Xxxxxxx................................................. G
EXHIBIT 9.2(g).B--Employment Agreement of Other Executives................................................ H
EXHIBIT 9.2(g).C--Retention Bonus Agreement of Xxxx Xxxx.................................................. I
SCHEDULE 9.2(h)--Stock Options............................................................................ J
EXHIBIT 9.3(d)(i)--Baxter Officer's Certificate........................................................... K
EXHIBIT 9.3(d)(ii)--Baxter Secretary's Certificate........................................................ L
EXHIBIT 9.3(e)(i)--Baxter In-House Counsel Opinion........................................................ M
EXHIBIT 9.3(e)(ii)--SASMF Opinion......................................................................... N
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of December 3, 1996, by and among
Xxxxxx International Inc., a Delaware corporation ("Baxter"), Baxter CVG
Services III, Inc., a Utah corporation and a wholly owned subsidiary of Baxter
("Purchaser"), and Research Medical, Inc., a Utah corporation (the "Company").
WHEREAS, the respective Boards of Directors of Baxter, Purchaser and the
Company have approved the merger (the "Merger") of Purchaser into the Company,
upon the terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 THE MERGER. Upon the terms and subject to the conditions
hereof, at the Effective Time (as defined in Section 1.2 hereof), Purchaser
shall be merged with and into the Company and the separate corporate existence
of Purchaser shall thereupon cease, and the Company shall be the surviving
corporation in the Merger (the "Surviving Corporation") and all of its rights,
privileges, powers, immunities, purposes and franchises shall continue
unaffected by the Merger. The Merger shall have the effects set forth in Section
16-10a-1106 of the Utah Business Corporation Act (the "UBCA").
Section 1.2 EFFECTIVE TIME OF THE MERGER. The Merger shall become
effective when properly executed Articles of Merger meeting the requirements of
Section 16-10a-1105 of the UBCA are duly filed with the Utah Division of
Corporations and Commercial Code or at such later time as the parties hereto
shall have designated in such filing as the Effective Time of the Merger (the
"Effective Time"), which filing shall be made as soon as practicable after the
closing of the transactions contemplated by this Agreement in accordance with
Section 3.8 hereof.
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 ARTICLES OF INCORPORATION. The Articles of Incorporation of
the Purchaser as in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation.
Section 2.2 BYLAWS. The Bylaws of Purchaser as in effect immediately prior
to the Effective Time shall be the Bylaws of the Surviving Corporation.
Section 2.3 DIRECTORS AND OFFICERS OF SURVIVING CORPORATION. (a) The
directors of Purchaser immediately prior to the Effective Time shall be the
directors of the Surviving Corporation as of the Effective Time.
(b) The officers of the Company immediately prior to the Effective Time
shall be the officers of the Surviving Corporation as of the Effective Time and
shall hold office from the Effective Time until their respective successors are
duly elected or appointed and qualify in the manner provided in the Articles of
Incorporation and Bylaws of the Surviving Corporation, or as otherwise provided
by law.
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ARTICLE III
CONVERSION OF SHARES
Section 3.1 MERGER CONSIDERATION. As of the Effective Time, by virtue of
the Merger and without any action on the part of the holder thereof:
(a) Each share of Company Common Stock (as hereinafter defined) owned by any
wholly owned subsidiary of the Company and each share of Company Common Stock
held by Baxter, or any subsidiary of Baxter shall be cancelled and retired and
cease to exist and no consideration shall be delivered in exchange therefor.
(b) Each share of Company Common Stock issued and outstanding immediately
prior to the Effective Time, other than Company Common Stock to be canceled in
accordance with Section 3.1(a) (the "Shares") shall be converted into the right
to receive (the "Merger Consideration") the fraction of a share of Common Stock,
par value $1 per share of Baxter ("Baxter Shares"), the numerator of which
fraction shall be (i) $23.50, and the denominator of which shall be (ii) the
Baxter Stock Price (as defined herein). All such Shares, when so converted,
shall no longer be outstanding and shall automatically be cancelled and retired
and shall cease to exist, and each holder of a certificate formerly representing
any such Shares (each, a "Certificate") shall cease to have any rights with
respect thereto, except to receive the Merger Consideration, without interest
upon surrender of such Certificates.
(c) For purposes of calculating the Merger Consideration, the "Baxter Stock
Price" shall be an amount equal to the average closing sale price of a Baxter
Share on the New York Stock Exchange ("NYSE"), as such closing sale price shall
be reported in THE WALL STREET JOURNAL or, if not available, such other
authoritative publication as may be reasonably selected by Baxter, for the ten
(10) consecutive trading days ending on and including the second trading day
prior to the date of the Special Meeting (as defined herein) at which this
Agreement is approved.
(d) Immediately prior to the Effective Time, each outstanding employee and
director option (individually, an "Option") outstanding at the Effective Time
granted under the Company's (i) Long-Term Equity Based Incentive Plan, (ii)
Non-Employee Director Stock Option and SAR Plan, (iii) 1994 Supplemental Equity
Based Incentive Plan and (iv) any other stock option plan or arrangement of the
Company or any Subsidiary (as defined herein) of the Company (collectively, the
"Company Stock Option Plans"), shall, whether vested or unvested, by virtue of
the Merger and without any further action on the part of the Company or the
holder of such Option, be cancelled in consideration for payment by the Company,
at or immediately prior to the Effective Time, to the holder of such Option an
amount in cash equal to (i) the product of (A) the Merger Consideration
(expressed as a fraction), (B) the Baxter Stock Price, and (C) the number of
Shares subject to such Option, less (ii) the aggregate exercise price of such
Option.
(e) Each share of common stock, par value $.01 per share, of Purchaser
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one fully paid and nonassessable share of Common Stock
of the Surviving Corporation.
Section 3.2 EXCHANGE OF CERTIFICATES REPRESENTING SHARES. (a) On the date
of the Effective Time, Baxter shall deposit, or shall cause to be deposited,
with an exchange agent selected by Baxter and reasonably satisfactory to the
Company (the "Exchange Agent"), for the benefit of the holders of Shares, for
exchange in accordance with this Article III, (i) certificates representing the
number of Baxter Shares issuable as part of the Merger Consideration (exclusive
of shares to be cancelled pursuant to Section 3.1(a)), and (ii) from time to
time as requested by the Exchange Agent, cash to be paid in lieu of the issuance
of fractional shares as provided in Section 3.4 hereof (such cash and
certificates for Baxter Shares, if any, together with dividends or distributions
with respect thereto being hereinafter referred to collectively as the "Exchange
Fund").
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(b) At the Effective Time, Baxter shall cause the Exchange Agent to mail (or
deliver at its principal office) to each holder of record of Shares (i) a letter
of transmittal which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions, including appropriate provisions with respect to back-up
withholding, as Baxter may reasonably specify, and (ii) instructions for use in
effecting the surrender of the Certificates. Upon surrender of a Certificate for
cancellation to the Exchange Agent, together with such letter of transmittal,
duly executed and completed in accordance with the instructions thereto, the
holder thereof shall be entitled to receive in exchange therefor that portion of
the Exchange Fund which such holder has the right to receive pursuant to the
provisions of this Article III, after giving effect to any required withholding
tax, and the Certificate so surrendered shall forthwith be cancelled. No
interest will be paid or accrued on the cash to be paid as part of the Merger
Consideration. In the event of any transfer of ownership of Shares which has not
been registered in the transfer records of the Company, certificates
representing the proper number of Baxter Shares, if any, together with a check
in an amount equal to the cash component of the Exchange Fund, will be issued to
the transferee of the Certificate presented to the Exchange Agent, accompanied
by all documents required to evidence and effect the prior transfer thereof and
to evidence that any applicable stock transfer taxes associated with such
transfer were paid.
Section 3.3 DIVIDENDS. No dividends or other distributions with respect to
Baxter Shares constituting part of the Merger Consideration shall be paid to the
holder of any unsurrendered Certificates until such Certificates are surrendered
as provided in Section 3.1. Upon such surrender, all dividends and other
distributions payable in respect of the Baxter Shares to be issued in exchange
therefor on a date subsequent to, and in respect of a record date after the
Effective Time, shall be paid, without interest, to the person in whose name the
certificates representing the Baxter Shares into which such Shares were
converted are registered or as otherwise directed by that person. In no event
shall the person entitled to receive such dividends or distributions be entitled
to receive interest on any such dividends or distributions.
Section 3.4 NO FRACTIONAL SHARES. No certificates or scrip representing
fractional Baxter Shares shall be issued upon the surrender of Certificates
pursuant to this Article III and no dividend, stock split or other change in the
capital structure of the Company shall relate to any fractional interest, and
such fractional interests shall not entitle the owner thereof to vote or to any
rights of a security holder. In lieu of any such fractional interest, each
holder of a Certificate who would otherwise have been entitled to a fraction of
a Baxter Share upon surrender of Certificates pursuant to this Article III shall
be paid cash upon such surrender in an amount equal to the product of such
fraction multiplied by the Baxter Stock Price.
Section 3.5 CLOSING OF COMPANY TRANSFER BOOKS. At the Effective Time, the
stock transfer books of the Company shall be closed and no transfer of Shares
shall thereafter be made. If, after the Effective Time, Certificates are
presented to the Surviving Corporation, they shall be cancelled and exchanged as
provided in this Article III.
Section 3.6 UNCLAIMED AMOUNTS. Any portion of the Exchange Fund which
remains unclaimed by the former stockholders of the Company six months after the
Effective Time shall be delivered by the Exchange Agent to Baxter. Any former
stockholders of the Company who have not theretofore complied with this Article
III shall thereafter look only to Baxter for payment of the Merger
Consideration, cash in lieu of fractional shares, and unpaid dividends and
distributions in respect of Baxter Shares deliverable as part of the Merger
Consideration as determined pursuant to this Agreement, in all cases without any
interest thereon. None of Baxter, the Surviving Corporation, the Exchange Agent
or any other person will be liable to any former holder of Shares for any amount
properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
Section 3.7 LOST CERTIFICATES. In the event any Certificate shall have
been lost, stolen or destroyed, upon the making and delivery of an affidavit of
that fact by the person claiming such Certificate to have
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been lost, stolen or destroyed and, if required by Baxter, the posting by such
person of a bond in such reasonable amount as Baxter may direct as indemnity
against any claim that would be made against the Company or Baxter with respect
to such Certificate, the Exchange Agent shall issue in exchange for such lost,
stolen or destroyed Certificate the portion of the Exchange Fund deliverable in
respect thereof pursuant to this Agreement.
Section 3.8 CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP 10 a.m., local time, on the later of (a) twenty (20)
business days after the mailing of the Company Proxy Statement/Prospectus (as
defined in Section 8.7 below) and (b) the business day on which all of the
conditions set forth in Article IX hereof are satisfied or waived, or at such
other date, time and place as Baxter and the Company shall agree (the "Closing
Date").
Section 3.9 SHAREHOLDERS' MEETING. If required by applicable law in order
to consummate the Merger, the Company, acting through its Board of Directors,
shall, in accordance with applicable law:
(a) duly call, give notice of, convene and hold a special meeting of its
shareholders (the "Special Meeting") as soon as practicable following the
execution of this Agreement, such notice shall indicate that one of the purposes
of the Special Meeting is to consider the Merger;
(b) prepare and file with the Securities and Exchange Commission (the "SEC")
a preliminary proxy or information statement relating to the Merger and this
Agreement and use its reasonable efforts (x) to obtain and furnish the
information required to be included by the SEC in the Company Proxy Statement/
Prospectus and, after consultation with Baxter, to respond promptly to any
comments made by the SEC with respect to the preliminary proxy or information
statement and cause a definitive proxy or information statement (the "Company
Proxy Statement") to be mailed to its shareholders and (y) to obtain the
necessary approvals of the Merger and this Agreement by its shareholders; and
(c) include in the Company Proxy Statement/Prospectus (x) a summary of the
plan of merger contemplated by the Agreement and (y) the recommendation of the
Board of Directors that the shareholders of the Company vote in favor of the
approval of the Merger and the adoption of this Agreement unless the Board of
Directors determines after consultation with independent counsel that because of
a conflict of interest or other special circumstances it should make no
recommendation and the Board of Directors communicates the basis for such
determination in the Company Proxy Statement/ Prospectus.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as otherwise disclosed to Baxter and Purchaser in a letter delivered
to them prior to the execution hereof (which letter shall contain appropriate
references to identify the representations and warranties herein to which the
information in such letter relates) (the "Company Disclosure Letter"), the
Company represents and warrants to Baxter and Purchaser as follows:
Section 4.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. (a) The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Utah, is duly qualified to do business as a foreign
corporation and is in good standing in the jurisdictions listed on Section
4.1(a) of the Company Disclosure Letter, which include each jurisdiction in
which the character of the Company's properties or the nature of its business
makes such qualification necessary, except in jurisdictions, if any, where the
failure to be so qualified would not result in a Material Adverse Effect (as
defined below). The Company has all requisite corporate or other power and
authority to own, use or lease its properties and to carry on its business as it
is now being conducted and as it is now proposed to be conducted. The Company
has delivered to Baxter or its affiliate a complete and correct copy of its
Articles of Incorporation and
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Bylaws, each as currently in effect. The Company is not in default in any
respect in the performance, observation or fulfillment of any provision of its
Articles of Incorporation or Bylaws.
(b) Section 4.1(b) of the Company Disclosure Letter lists the name and
jurisdiction of organization of each Subsidiary (as defined below) and the
jurisdictions in which each such Subsidiary is qualified or holds licenses to do
business as a foreign corporation as of the date hereof. Each of the
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, is duly qualified
to do business as a foreign corporation and is in good standing in the
jurisdictions listed on Section 4.1(b) of the Company Disclosure Letter, which
include each jurisdiction in which the character of such Subsidiary's properties
or the nature of its business makes such qualification necessary, except in
jurisdictions, if any, where the failure to be so qualified would not result in
a Material Adverse Effect. Each of the Subsidiaries has the requisite corporate
or other power and authority to own, use or lease its properties and to carry on
its business as it is now being conducted and as it is now proposed to be
conducted. Each of such Subsidiaries is operating in accordance with all
applicable laws and regulations of its jurisdiction of incorporation, except
where the failure so to operate would not result in a Material Adverse Effect.
The Company has delivered to Xxxxxx or its affiliate a complete and correct copy
of the Articles of Incorporation and Bylaws (or similar charter documents) of
each of the Subsidiaries, each as currently in effect. No Subsidiary is in
default in any respect in the performance, observation or fulfillment of any
provision of its Articles of Incorporation or Bylaws (or similar charter
documents).
(c) For purposes of this Agreement, (i) a "Material Adverse Effect" shall
mean any event, circumstance, condition, development or occurrence, individually
or in the aggregate, causing, resulting in or reasonably likely to have a
material adverse effect on the condition (financial or otherwise), business,
assets, properties, prospects or results of operations of the Company and its
Subsidiaries taken as a whole, (ii) "subsidiary" shall mean, with respect to any
party, any corporation or other organization, whether incorporated or
unincorporated, of which (x) at least 50 percent or more of the securities or
other interests having voting power to elect a majority of the Board of
Directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled
by such party or by any one or more of its subsidiaries, or by such party and
one or more of its subsidiaries, or (y) such party or any other subsidiary of
such party is a general partner (excluding such partnerships where such party or
any subsidiary of such party do not have a majority of the voting interest in
such partnership); and (iii) "Subsidiary" shall mean any subsidiary of the
Company.
Section 4.2 CAPITALIZATION. (a) The authorized capital shares of the
Company consists solely of 20,000,000 common shares $.50 par value per share
(the "Company Common Stock"), of which (i) 9,628,706 shares are issued and
outstanding; (ii) no shares are issued and held in the treasury of the Company;
(iii) 687,660 shares are reserved for issuance upon exercise of outstanding
Options under the Company Stock Plans; (iv) no shares are reserved for issuance
under the Employee Stock Purchase Plan; and (v) 170,000 shares are reserved for
issuance under non-employee stock option agreements. No agreement or other
document grants or imposes on any shares of the Company Common Stock any right,
preference, privilege or restriction with respect to the transaction
contemplated hereby (including, without limitation, any rights of first refusal)
other than the right to vote on the Merger. All of the issued and outstanding
shares of the Company Common Stock are, and all shares that may be issued
pursuant to the exercise of outstanding Options will be, when issued in
accordance with the terms thereof, duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights. There are no bonds, debentures,
notes or other indebtedness having general voting rights (or convertible into
securities having such rights) ("Voting Debt") of the Company or any of its
Subsidiaries issued and outstanding. There are no employee or director stock
appreciation rights with respect to the Shares (each, an "SAR") of the Company
or any of its Subsidiaries issued and outstanding. Except as set forth above,
(i) there are no shares of the Company authorized, issued or outstanding and
(ii) there are no existing options, warrants, calls, preemptive rights,
subscriptions or other rights, agreements, arrangements or commitments of any
character (including without limitation "earn-out" arrangements) obligating the
Company or any of its Subsidiaries to issue,
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transfer or sell or cause to be issued, transferred or sold any shares of or
Voting Debt of, or other equity interest in, or any interest relating to or
whose value is dependent on the value of the equity interest in, the Company or
any of its Subsidiaries or securities convertible into or exchangeable for such
shares or equity interests or obligations of the Company or any of its
Subsidiaries to grant, extend or enter into any such option, warrant, call,
subscription or other right, agreement, arrangement or commitment. There are no
outstanding contractual obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of the Company or any
Subsidiary or affiliate of the Company or to provide funds to make any
investment (in the form of a loan, capital contribution or otherwise) in any
Subsidiary or any other entity.
(b) There are no voting trusts or other agreements or understandings to
which the Company or any of its Subsidiaries is a party with respect to the
voting of the shares of the Company or any of the Subsidiaries. None of the
Company or its Subsidiaries will be required to redeem, repurchase or otherwise
acquire shares of capital stock of the Company or any of its Subsidiaries,
respectively, as a result of the transactions contemplated by this Agreement.
(c) All of the issued and outstanding shares of capital stock of each
Subsidiary are owned beneficially and of record by the Company or a wholly owned
subsidiary of the Company, free and clear of all liens, charges, pledges,
encumbrances, equities, voting restrictions, claims and options of any nature,
and all such shares have been duly authorized, validly issued and are fully
paid, nonassessable and free of preemptive rights. The Company has not made,
directly or indirectly, any material investment in, advance to or purchase or
guaranty of any obligations of, any entity other than such Subsidiaries.
Section 4.3 AUTHORITY. The Company has full corporate power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby on the part of the Company
have been duly and validly authorized by the Company's Board of Directors, and
no other corporate proceedings on the part of the Company are necessary, as a
matter of law or otherwise for the consummation of the transactions contemplated
hereby other than the approval of the Merger by the Company's shareholders at
the Special Meeting. This Agreement has been duly and validly executed and
delivered by the Company and is a valid and binding agreement of the Company,
enforceable against it in accordance with its terms. The Merger will not entitle
any shareholder of the Company to Dissenter's rights under Part 13 of the UBCA.
Section 4.4 CONSENTS AND APPROVALS; NO VIOLATION. The execution and
delivery of this Agreement, the consummation of the transactions contemplated
hereby and the performance by the Company of its obligations hereunder will not:
(a) conflict with or result in any breach of any provision of the Company's
Articles of Incorporation or Bylaws or the Articles of Incorporation or Bylaws
(or other similar charter documents) of any of its Subsidiaries;
(b) require any consent, approval, order, authorization or permit of, or
registration, filing with or notification to, any governmental or regulatory
authority or agency (a "Governmental Entity") or any private third party, except
for (i) the filing of a pre-merger notification and report form by the Company
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), (ii) the filing with the SEC of the Company Proxy
Statement/Prospectus relating to the approval by the Company's shareholders of
this Agreement, if such approval is required by law and such reports under
Section 13(a) of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act") as may be required in connection with this Agreement and the
transactions contemplated hereby and (iii) the filing of the Articles of Merger
with the Utah Division of Corporations and Commercial Code;
(c) result in any violation of or the breach of or constitute a default
(with notice or lapse of time or both) under (or give rise to any right of
termination, cancellation or acceleration or guaranteed payments
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under or to a loss of a material benefit or result in the creation or imposition
of a lien under) any of the terms, conditions or provisions of any note, lease,
mortgage, indenture, license, agreement or other instrument or obligation to
which the Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries or any of their respective properties or assets may
be bound, except for such violations, breaches, defaults, or rights of
termination, cancellation or acceleration, or losses as to which requisite
waivers or consents have been obtained or will be obtained prior to the
Effective Time or which, individually or in the aggregate, would not (i) result
in a Material Adverse Effect, (ii) materially impair the ability of the Company
to perform its obligations under this Agreement or (iii) prevent the
consummation of any of the transactions contemplated by this Agreement;
(d) violate the provisions of any order, writ, injunction, judgment, decree,
statute, rule or regulation applicable to the Company or any Subsidiary, in such
a manner as to (i) result in a Material Adverse Effect, (ii) materially impair
the ability of the Company to perform its obligations under this Agreement or
(iii) prevent the consummation of any of the transactions contemplated by this
Agreement; or
(e) result in the creation of any lien, charge or encumbrance upon any
shares of capital stock, properties or assets of the Company or its Subsidiaries
under any agreement or instrument to which the Company or its Subsidiaries is a
party or by which the Company or its Subsidiaries is bound.
Section 4.5 COMPANY SEC REPORTS. The Company has filed with the SEC, and
has heretofore made available to Xxxxxx or its affiliate true and complete
copies of, each form, registration statement, report, schedule, proxy or
information statement and other document (including exhibits and amendments
thereto), including without limitation its Annual Reports to Shareholders
incorporated by reference in certain of such reports, required to be filed with
the SEC since June 30, 1993 under the Securities Act of 1933, as amended (the
"Securities Act"), or the Exchange Act, each of which is identified on Section
4.5 of the Company Disclosure Letter (collectively, the "Company SEC Reports").
As of the respective dates such Company SEC Reports were filed or, if any such
Company SEC Reports were amended, as of the date such amendment was filed, each
of the Company SEC Reports, including without limitation any financial
statements or schedules included therein, (a) complied in all material respects
with all applicable requirements of the Securities Act and the Exchange Act, as
the case may be, and the applicable rules and regulations promulgated
thereunder, and (b) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. None of the Subsidiaries is required to file any
forms, reports or other documents with the SEC pursuant to Section 12 or 15 of
the Exchange Act.
Section 4.6 FINANCIAL STATEMENTS. Each of the audited consolidated
financial statements and unaudited consolidated interim financial statements of
the Company (including any related notes and schedules) included (or
incorporated by reference) in its Annual Reports on Form 10-K for each of the
three fiscal years ended June 30, 1994, 1995 and 1996 and its Quarterly Reports
on Form 10-Q for all interim periods during such period and subsequent thereto
(collectively, the "Financial Statements") have been prepared from, and are in
accordance with, the books and records of the Company and its consolidated
Subsidiaries, comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis (except as
may be indicated in the notes thereto and subject, in the case of quarterly
financial statements, to normal and recurring year-end adjustments) and fairly
present, in conformity with GAAP applied on a consistent basis (except as may be
indicated in the notes thereto), the consolidated financial position of the
Company and its Subsidiaries as of the date thereof and the consolidated results
of operations and cash flows (and changes in financial position, if any) of the
Company and its Subsidiaries for the periods presented therein (subject to
normal year-end adjustments and the absence of financial footnotes in the case
of any unaudited interim financial statements).
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Section 4.7 ABSENCE OF UNDISCLOSED LIABILITIES. Except (a) as specifically
disclosed in the Company SEC Reports and (b) for liabilities and obligations
incurred in the ordinary course of business and consistent with past practice
since September 30, 1996, the Company and any of its Subsidiaries have not
incurred any liabilities or obligations of any nature (contingent or otherwise)
which individually or in the aggregate would be reasonably likely to have a
Material Adverse Effect.
Section 4.8 ABSENCE OF CERTAIN CHANGES. Except as disclosed in the Company
SEC Reports, since September 30, 1996 the Company and its Subsidiaries have
conducted their respective businesses only in, and have not engaged in any
transaction other than according to, the ordinary and usual course, and there
has not been, nor has the Company or any of its Subsidiaries agreed, whether in
writing or otherwise, to take any action that would result in, (a) any Material
Adverse Effect; (b) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to the
capital stock of the Company or any of its Subsidiaries or any redemption,
repurchase or other acquisition of any shares of capital stock of the Company;
(c) any change by the Company in tax or financial accounting principles,
practices or methods; (d) any labor dispute or difficulty which would reasonably
be likely to result in any Material Adverse Effect, and to the Company's
knowledge no such dispute or difficulty is now threatened; (e) any material
asset damaged, sold, disposed of (except inventory sold in the ordinary course
of business), mortgaged, pledged or subjected to any lien, charge or other
encumbrance; (f) any increase in the compensation payable or which could become
payable by the Company or any of its Subsidiaries to their directors, officers,
employees, agents, consultants, distributors, dealers or sales representatives;
(g) any adoption or amendment of any Plan (as defined in Section 4.11(a)
herein); (h) any issuance, transfer, sale or pledge by the Company or its
Subsidiaries of any shares of stock or other securities or stock appreciation
rights or of any commitments, options, rights or privileges under which the
Company or its Subsidiaries is or may become obligated to issue any shares of
stock or other securities, except for issuances of stock pursuant to the
exercise of options outstanding on such date; (i) any indebtedness incurred by
the Company or its Subsidiaries, except such as may have been incurred in the
ordinary course of business and consistent with past practice; (j) any loan made
or agreed to be made by the Company or its Subsidiaries, nor has the Company or
its Subsidiaries become liable or agreed to become liable as a guarantor with
respect to any indebtedness; (k) any waiver by the Company or its Subsidiaries
of any right or rights of material value or any payment, direct or indirect, of
any material debt, liability or other obligation; (l) any change in or amendment
to the articles of incorporation or bylaws (or similar charter documents) of the
Company or its Subsidiaries; (m) any payment, loan or advance of any amount to
or in respect of, or the sale, transfer or lease of any properties or assets
(whether real, personal or mixed, tangible or intangible) to, or entering into
of any agreement arrangement or transaction with any officer or director of the
Company or its Subsidiaries or any affiliate thereof, or any business or entity
in which the Company or its Subsidiaries or any affiliate thereof, or relative
of any such person, has any direct or material indirect interest (collectively,
"Related Parties") except for (i) directors' fees and (ii) compensation to the
officers and employees of the Company in the ordinary course of business; (n)
any material adverse change or any overt threat of any material adverse change
in the Company's relations with, or any loss or threat of loss of, any of the
Company's or any Subsidiary's important suppliers, clients or customers; (o) any
material modification or change, or any modification or change that would result
in a diminishment of coverage, to insurance policies; (p) any write-offs as
uncollectible of any notes or accounts receivable of the Company or any
Subsidiary or write-downs of the value of any assets or inventory by the Company
and its Subsidiaries other than in immaterial amounts or in the ordinary course
of business consistent with past practice; or (q) any material adverse change to
a material contract.
Section 4.9 TAXES. (a) The Company and each of its Subsidiaries have
timely filed (or have had timely filed on their behalf) or will file or cause to
be timely filed, all material Tax Returns (as defined below) required by
applicable law to be filed by any of them prior to or as of the Closing Date.
All such Tax Returns and amendments thereto are or will be true, complete and
correct in all material respects.
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(b) The Company and each of its Subsidiaries have paid (or have had paid on
their behalf), or where payment is not yet due, have established (or have had
established on their behalf and for their sole benefit and recourse), or will
establish or cause to be established on or before the Closing Date, an adequate
accrual for the payment of all material Taxes (as defined below) due with
respect to any period ending prior to or as of the Closing Date.
(c) No Audit (as defined below) by a Tax Authority (as defined below) is
pending or threatened with respect to any Tax Returns filed by, or Taxes due
from, the Company or any Subsidiary. No issue has been raised by any Tax
Authority in any Audit of the Company or any of its Subsidiaries that if raised
with respect to any other period not so audited could be expected to result in a
material proposed deficiency for any period not so audited. No material
deficiency or adjustment for any Taxes has been threatened, proposed, asserted
or assessed against the Company or any of its Subsidiaries. There are no liens
for Taxes upon the assets of the Company or any of its Subsidiaries, except
liens for current Taxes not yet due.
(d) Neither the Company nor any of its Subsidiaries has given or been
requested to give any waiver of statutes of limitations relating to the payment
of Taxes or have executed powers of attorney with respect to Tax matters, which
will be outstanding as of the Closing Date.
(e) Prior to the date hereof, the Company and its Subsidiaries have
disclosed all material Tax sharing, Tax indemnity, or similar agreements to
which the Company or any of its Subsidiaries are a party to, is bound by, or has
any obligation or liability for Taxes.
(f) As used in this Agreement, (i) "Audit" shall mean any audit, assessment
of Taxes, other examination by any Tax Authority, proceeding or appeal of such
proceeding relating to Taxes; (ii) "Taxes" shall mean all Federal, state, local
and foreign taxes, payroll and employment taxes and other assessments of a
similar nature (whether imposed directly or through withholding), including any
interest, additions to tax, or penalties applicable thereto; (iii) "Tax
Authority" shall mean the Internal Revenue Service and any other domestic or
foreign governmental authority responsible for the administration of any Taxes;
and (iv) "Tax Returns" shall mean all Federal, state, local and foreign tax
returns, declarations, statements, reports, schedules, forms and information
returns and any amended Tax Return relating to Taxes.
Section 4.10 LITIGATION. There is no suit, claim, action, proceeding or
investigation pending or, to the Company's knowledge, threatened against or
affecting the Company, any of its Subsidiaries or any of the directors or
officers of the Company or any of its Subsidiaries in their capacity as such.
Neither the Company nor any of its Subsidiaries, nor any officer, director or
employee of the Company or any of its Subsidiaries, has been permanently or
temporarily enjoined by any order, judgment or decree of any court or any other
Governmental Entity from engaging in or continuing any conduct or practice in
connection with the business, assets or properties of the Company or such
Subsidiary nor, to the knowledge of the Company, is the Company, any Subsidiary
or any officer, director or employee of the Company or its Subsidiaries under
investigation by any Governmental Entity related to the conduct of the Company's
business. There is not in existence any order, judgment or decree of any court
or other tribunal or other agency enjoining or requiring the Company or any of
its Subsidiaries to take any action of any kind with respect to its business,
assets or properties.
Section 4.11 EMPLOYEE BENEFIT PLANS; ERISA.
(a) Section 4.11(a) of the Company Disclosure Letter contains a true and
complete list of each employment, bonus, deferred compensation, incentive
compensation, stock purchase, stock option, stock appreciation right or
stock-based incentive, severance or termination pay, hospitalization or other
medical, life or other insurance, supplemental unemployment benefits,
profit-sharing, pension, or retirement plan, program, agreement or arrangement,
and each other employee benefit plan, program, agreement or arrangement,
sponsored, maintained or contributed to or required to be contributed to by the
Company or by any trade or business, whether or not incorporated (an "ERISA
Affiliate"), that together with the Company would be deemed a "single employer"
within the meaning of section 4001(b)(1) of the Employee
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Retirement Income Security Act of 1974, as amended, and the rules and
regulations promulgated thereunder ("ERISA"), for the benefit of any current or
former employee or director of the Company, whether formal or informal and
whether legally binding or not (the "Plans"). Section 4.11(a) of the Company
Disclosure Letter identifies each of the Plans that is an "employee welfare
benefit plan," or "employee pension benefit plan" as such terms are defined in
sections 3(1) and 3(2) of ERISA (such plans being hereinafter referred to
collectively as the "ERISA Plans"). Neither the Company nor any ERISA Affiliate
has any formal plan or commitment, whether legally binding or not, to create any
additional Plan or modify or change any existing Plan that would affect any
current or former employee or director of the Company.
(b) With respect to each of the Plans, the Company has heretofore delivered
to Purchaser true and complete copies of each of the following documents:
(i) a copy of the Plan (including all amendments thereto) or a written
description of any Plan that is not otherwise in writing;
(ii) a copy of the annual report, if required under ERISA, with respect
to each ERISA Plan for the last three years;
(iii) a copy of the actuarial report, if required under ERISA, with
respect to each ERISA Plan for the last three years;
(iv) a copy of the most recent Summary Plan Description ("SPD"),
together with all Summaries of Material Modification issued with respect to
such SPD, if required under ERISA, with respect to each ERISA Plan, and all
other material employee communications relating to each ERISA Plan;
(v) if the Plan is funded through a trust or any other funding vehicle,
a copy of the trust or other funding agreement (including all amendments
thereto) and the latest financial statements thereof;
(vi) all contracts relating to the Plans with respect to which the
Company or any ERISA Affiliate may have any liability, including, without
limitation, insurance contracts, investment management agreements,
subscription and participation agreements and record keeping agreements; and
(vii) the most recent determination letter received from the Internal
Revenue Service with respect to each Plan that is intended to be qualified
under section 401(a) of the Internal Revenue Code of 1986, as from time to
time amended (the "Code").
(c) Neither the Company nor any current or former ERISA Affiliate is
currently or has ever been the sponsor of or required to make contributions to
any "employee benefit plan" (as defined in Section 3(3) of ERISA) subject to
Title IV of ERISA (including without limitation any "multiemployer plan" (as
defined in Section 3(37) of ERISA)), and neither the Company nor any ERISA
Affiliate has at any time incurred any liability with respect to any such
employee benefit plan.
(d) Neither the Company, any ERISA Affiliate, any of the ERISA Plans, any
trust created thereunder nor any trustee or administrator thereof has engaged in
a transaction or has taken or failed to take any action in connection with which
the Company, any ERISA Affiliate, any of the ERISA Plans, any such trust, any
trustee or administrator thereof, or any party dealing with the ERISA Plans or
any such trust could be subject to either a civil penalty assessed pursuant to
section 409 or 502(i) of ERISA or a tax imposed pursuant to section 4975, 4976
or 4980B of the Code.
(e) Full payment has been made, or will be made in accordance with section
404(a)(6) of the Code, of all amounts which the Company or any ERISA Affiliate
is required to pay under the terms of each of the ERISA Plans, and all such
amounts properly accrued through the Closing with respect to the current plan
year thereof will be paid by the Company on or prior to the Closing or will be
properly recorded on the Company's balance sheet.
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(f) Each of the Plans has been operated and administered in all material
respects in accordance with applicable laws, including but not limited to ERISA
and the Code.
(g) Each of the ERISA Plans that is intended to be "qualified" within the
meaning of section 401(a) of the Code is so qualified. The Company has timely
applied for and received a currently effective determination letter from the
Internal Revenue Service with respect to each such plan.
(h) Each of the ERISA Plans that is intended to satisfy the requirements of
section 501(c)(9) of the Code has so satisfied such requirements.
(i) No amounts payable under any of the Plans or any other agreement or
arrangement with respect to which the Company has or may have any liability
could give rise to the payment of any amount that would fail to be deductible
for Federal income tax purposes by virtue of Section 162(m) or Section 280G of
the Code.
(j) No "leased employee" (as is defined in section 414(n) of the Code)
performs services for the Company or any ERISA Affiliate.
(k) No Plan provides benefits, including without limitation death or medical
benefits (whether or not insured), with respect to current or former employees
after retirement or other termination of service other than (i) coverage
mandated by applicable law, (ii) death benefits or retirement benefits under any
"employee pension plan," as that term is defined in section 3(2) of ERISA, (iii)
deferred compensation benefits accrued as liabilities on the books of the
Company or the ERISA Affiliates, or (iv) benefits, the full cost of which is
borne by the current or former employee (or his beneficiary).
(l) With respect to each Plan that is funded wholly or partially through an
insurance policy, there will be no liability of the Company or any ERISA
Affiliate, as of the Closing Date, under any such insurance policy or ancillary
agreement with respect to such insurance policy in the nature of a retroactive
rate adjustment, loss sharing arrangement or other actual or contingent
liability arising wholly or partially out of events occurring prior to the
Closing Date.
(m) The consummation of the transactions contemplated hereunder will not
result in the payment, vesting, acceleration or enhancement of any benefit under
any Plan.
(n) The Company has no severance and termination policy and the Company's
employees are not entitled to severance pay under any current Company
arrangement.
(o) The Current Plan Year under the Company's Employee Stock Purchase Plan
will end on December 31, 1996, and there are no outstanding rights to acquire
Company Common Stock under the Employee Stock Purchase Plan.
(p) No options intended to qualify as "incentive stock options" under
Section 422 of the Code have at any time been granted under the Company's 1991
Long Term Equity Based Incentive Plan.
Section 4.12 ENVIRONMENTAL MATTERS.
(a) The businesses of the Company and its Subsidiaries have been and are in
full compliance with all federal, state, local and foreign laws and regulations
relating to pollution or protection of human health or the environment,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act and the Resource Conservation and Recovery Act,
ambient air, surface water, ground water, land surface or subsurface strata
(together "Environmental Laws" and including, without limitation, laws and
regulations relating to emissions, discharges, releases or threatened releases
of chemicals, pollutants, contaminants, wastes, toxic or hazardous substances or
wastes, petroleum and petroleum products, polychlorinated biphenyls (PCBs), or
asbestos or asbestos-containing materials ("Materials of Environmental
Concern")), or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Materials of
Environmental Concern; such compliance includes, but is not limited to, the
possession by the Company and its Subsidiaries of all
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permits and other governmental authorizations required under all applicable
Environmental Laws, and compliance with the terms and conditions thereof.
(b) Neither the Company nor any of its Subsidiaries has received any
communication (written or oral), whether from a governmental authority, citizens
group, employee or otherwise, that alleges that the Company or any of its
Subsidiaries are not in compliance with any Environmental Laws, and, to the best
knowledge of the Company after due inquiry, there are no circumstances that may
prevent or interfere with such compliance in the future. The Company has
provided to Xxxxxx or its affiliate all information that is in the possession of
or reasonably available to the Company or any of its Subsidiaries regarding
environmental matters pertaining to or the environmental condition of the
business or real property of the Company or any of its Subsidiaries, or the
Company's or any of its Subsidiaries' compliance (or noncompliance) with any
Environmental Laws.
(c) There is no claim, action, cause of action, investigation or notice
(written or oral) (together, "Environmental Claim") by any person or entity
alleging potential liability (including, without limitation, potential liability
for investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, person injuries, or penalties) arising out
of, based on or resulting from (i) the presence, or release into the
environment, of any Material of Environmental Concern at any location, whether
or not owned or operated by the Company or any of its Subsidiaries, or (ii)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law, that in either case is pending or, to the best knowledge of
the Company after due inquiry, threatened against the Company or any of its
Subsidiaries or against any person or entity whose liability for any
Environmental Claim the Company or any of its Subsidiaries has retained or
assumed either contractually or by operation of law.
(d) There are no past or present actions, activities, circumstances,
conditions, events or incidents, including, without limitation, the release,
emission, discharge, presence or disposal of any Material of Environmental
Concern, that, to the best knowledge of the Company after due inquiry, could
reasonably be expected to form the basis of any Environmental Claim against the
Company or any of its Subsidiaries, against any person or entity whose liability
for any Environmental Claim the Company or any of its Subsidiaries has retained
or assumed either contractually or by operation of law.
(e) Without in any way limiting the generality of the foregoing, (i) all
on-site and off-site locations where the Company or any of its Subsidiaries has
(previously or currently) stored, disposed or arranged for the disposal of
Materials of Environmental Concern are identified in Section 4.12 of the Company
Disclosure Letter, (ii) all underground storage tanks, and the capacity and
contents of such tanks, located on any property owned, leased, operated or
controlled by the Company or any of its Subsidiaries are identified in Section
4.12 of the Company Disclosure Letter, (iii) there is no asbestos contained in
or forming part of any building, building component, structure or office space
owned, leased, operated or controlled by the Company or any of its Subsidiaries,
and (iv) no PCBs or PCB-containing items are used or stored at any property
owned, leased, operated or controlled by the Company or any of its Subsidiaries.
Section 4.13 COMPLIANCE WITH APPLICABLE LAWS. The Company and each of its
Subsidiaries hold all licenses, permits and authorizations necessary for the
lawful conduct of its respective businesses, as now conducted, and such
businesses are not being, and the Company has not received any notice from any
authority or person that such businesses have been or are being, conducted in
violation of any law, ordinance or regulation, including without limitation any
law, ordinance or regulation relating to (a) the protection of the environment,
(b) the provision of medical supplies and services, or (c) occupational health
and safety, except for possible violations which either singly or in the
aggregate have not resulted and are not reasonably expected to result in a
Material Adverse Effect.
Section 4.14 MATERIAL CONTRACTS. Section 4.14 of the Company Disclosure
Letter hereto sets forth a true and correct list of any and all agreements,
contracts, purchase or installment agreements, indentures, leases, mortgages,
licenses, plans, arrangements, commitments (whether written or oral) and
instruments (collectively, "contracts") that are material to the Company and its
Subsidiaries (the "Material Contracts")
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(other than such contracts that are specifically filed with the Company's SEC
Reports), including without limitation the following types of contracts to which
the Company or any of its Subsidiaries is a party:
(a) any contract which is not terminable by the Company or any of its
Subsidiaries upon 30 days' or less notice and which involves outstanding
payments of more than $50,000;
(b) any customer contract between the Company or its Subsidiaries and any
party to whom the Company or its Subsidiaries provides goods or services which
represent annual payments by the Company of $50,000 or more;
(c) any contract for the purchase or sale of supplies, raw materials,
commodities or similar products used by the Company or its Subsidiaries and
which call for performance over a period of more than one year or represent
annual payments by the Company of $50,000 or more;
(d) any contract with third party payors, including Medicaid, health
maintenance organizations, preferred provider organizations, insurance companies
and other payment sources;
(e) any contract for the employment of any director, officer, employee,
consultant or other person or entity on a full-time, part-time, consulting or
other basis, including any severance or other termination provisions with
respect to such employment;
(f) any noncompetition agreement, other than customary agreements with
employees who are not officers, directors or key employees, or any other
contract that in any way restricts the Company or any of its Subsidiaries from
carrying on their business any place in the world; and
(g) any contract between the Company and any of its Subsidiaries or any of
their affiliates or with any officers, directors or key employees of the Company
or any of its Subsidiaries.
True and complete copies of each written Material Contract, or form thereof and
true and complete written summaries of each oral Material Contract have been
made available to Xxxxxx and its affiliate by the Company prior to the date
hereof. In addition:
(i) Each of the Material Contracts is a valid, binding and enforceable
agreement of the Company or its Subsidiaries and, to the knowledge of the
Company, the other parties thereto and will, subject to the satisfaction of
the conditions in Article IX, continue to be valid, binding and enforceable
immediately after the Closing, except (x) as such enforcement may be subject
to bankruptcy, insolvency or similar laws now or hereafter in effect
relating to creditors' rights, and (y) as the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought;
(ii) The Company has no reason to believe that the Company or the
relevant Subsidiary will not be able to fulfill in all material respects all
of its obligations under the Material Contracts which remain to be performed
after the date hereof; and
(iii) There has not occurred (i) since June 30, 1993 any material default
(or event which upon provision of notice or lapse of time or both would
become such a default) or (ii) prior to June 30, 1993 any uncured material
default (or event which upon provision of notice or lapse of time or both
would become such a default) under any of the Material Contracts on the part
of the Company or the relevant Subsidiary party thereto.
Section 4.15 INTELLECTUAL PROPERTY RIGHTS. (a) The Company owns or
possesses adequate rights to use all intellectual and similar property of every
kind and nature relating to or used or necessary in the operation of the Company
business, including, without limitation, (i) patents,trademarks associated with
the Company business (including all Governmental Entity trademarks, service
marks, logos and designs, all registrations and recordings thereof, and all
applications in the United States or any other Governmental Entity, all goodwill
symbolized thereby or associated therewith and all extensions or renewals
thereof which are set forth on Schedule 4.15 of the Company Disclosure Letter),
(iii) copyrights associated solely
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with the Company business, including all copyrights, United States and foreign
copyright registrations, and applications to register copyrights which are set
forth on Schedule 4.15 of the Company Disclosure Letter, (iv) inventions,
formulae, processes, designs, know-how, showq-how or other data or information,
(v) confidential or proprietary technical and business information, processes
and trade secrets, (vi) Computer Software, (vii) technical manuals and
documentation made or used in connection with any of the foregoing, and (viii)
licenses and rights with respect to the foregoing or property of like nature
(collectively, "Intellectual Property").
(b) (i) Schedule 4.15 of the Company Disclosure Letter sets forth a
complete and accurate list of all registered copyrights, patents and trademarks
owned by or under obligation of assignment to the Company, currently used in the
conduct of the Company business;
(ii) each owner, listed on Schedule 4.15 of the Company Disclosure
Letter is listed in the records of the appropriate Governmental Entity as
the sole owner of record (except as otherwise indicated in such Schedule
4.15 of the Company Disclosure Letter);
(iii) Schedule 4.15 of the Company Disclosure Letter sets forth a
complete and accurate list of all agreements between the Company, on the one
hand, and any Person, on the other hand, granting any right to use or
practice any rights under any Intellectual Property (collectively,
"Intellectual Property Licenses");
(iv) there is no Encumbrance on the right of the Company, to transfer to
Purchaser any of the Intellectual Property, as herein contemplated;
(v) no trade secret, formula, process, invention, design, know-how or
any other information has been disclosed or authorized to be disclosed to
any corporation, individual, limited liability company, joint stock company,
joint venture, partnership, unincorporated association, governmental
regulatory entity, country, state or political subdivision thereof, trust,
municipality or other entity (any of the foregoing, a "Person"), except in
the ordinary course of business or pursuant to an obligation of
confidentiality binding upon said Person;
(vi) there are no pending proceedings by or before Governmental Bodies,
including oppositions, interferences, proceedings or suits, relating to such
Intellectual Property, and no such proceedings are threatened;
(vii) the conduct of the Company business and the exercise of rights
relating to patents contained within the Intellectual Property does not
infringe upon or otherwise violate, Intellectual Property Rights of any
Person;
(viii) based on the Company's actual knowledge, no Person is infringing
upon or otherwise violating any patents contained within Intellectual
property;
(ix) the Company has not received notice of any claims, obligations or
liabilities and there are no pending claims, obligations or liabilities, of
any Persons relating to the scope, ownership or use of any of the
Intellectual Property; and
(x) each copyright registration, patent and registered trademark and
application therefor listed on Schedule 4.15 of the Company Disclosure
Letter is in proper form, not disclaimed and has been duly maintained,
including the submission of all necessary filings in accordance with the
legal and administrative requirements of the appropriate jurisdictions
except with respect to use requirements as to trademarks.
Section 4.16 FRAUD AND ABUSE. The Company and its Subsidiaries are not
regulated under federal Medicare and Medicaid statutes, including without
limitation, 42 U.S.C. Section1320a-7b and 42 U.S.C. Section1395nn or related
state or local statutes or regulations.
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Section 4.17 INSURANCE. Section 4.17(a) of the Company Disclosure Letter
lists each of the insurance policies relating to the Company or its Subsidiaries
which are currently in effect. The Company has provided Parent and Purchaser
with a true, complete and correct copy of each such policy or the binder
therefor. With respect to each such insurance policy or binder none of the
Company, any of its Subsidiaries or any other party to the policy is in breach
or default thereunder (including with respect to the payment of premiums or the
giving of notices), and the Company does not know of any occurrence or any event
which (with notice or the lapse of time or both) would constitute such a breach
or default or permit termination, modification or acceleration under the policy,
except for such breaches or defaults which, individually or in the aggregate,
would not result in a Material Adverse Effect. Section 4.17(b) of the Company
Disclosure Letter describes any self-insurance arrangements affecting the
Company or its Subsidiaries. The insurance policies listed on Section 4.17(a) of
the Company Disclosure Letter include all policies which are required in
connection with the operation of the business of the Company and its
Subsidiaries as currently conducted by applicable laws and all agreements
relating to the Company and its Subsidiaries. All such policies provide coverage
in reasonably sufficient amounts to insure against all risks usually insured
against by companies operating similar businesses or owning property in the
location where the Company and the Subsidiaries operate their businesses. All
such policies are in full force and effect, all premiums due with respect
thereto covering all periods up to and including the Closing Date will have been
paid as of such date and no notice of cancellation or termination has been
received with respect to any such policy. All policies of insurance will remain
in full force and effect through the Closing Date without the payment of
additional premiums.
Section 4.18 OPINION OF FINANCIAL ADVISOR. The Company has received, and
delivered to Xxxxxx or its affiliate a copy of, the opinion of Xxxxxxx Xxxxx &
Company, LLC, the Company's financial advisor, to the effect that the Merger
Consideration to be received by the Company's shareholders in the Merger, taken
as a whole, is fair to the Company's shareholders from a financial point of
view.
Section 4.19 UTAH LAW. The provisions of Sections 61-6-1 to 61-6-12 of the
Utah Code will not apply to the transactions contemplated by this Agreement.
Section 4.20 COMPANY DISCLOSURE. No representation or warranty by the
Company in this Agreement (including, without limitation, Company SEC Reports),
schedule or certificate furnished or to be furnished by the Company or any of
its representatives pursuant to the provisions hereof or in connection with the
transactions contemplated hereby, contains as of the date hereof any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements herein or therein, in the light of the
circumstances under which they were made, not misleading.
Section 4.21 PATENT OPINION. The Company has received, and delivered to
Xxxxxx or its affiliate a copy of the opinions of Xxxxxxx Xxxxxxxx & Xxxxxx,
special counsel to the Company, substantially in the form of Exhibit 4.21
attached hereto.
Section 4.22 LABOR MATTERS. There is no labor strike, dispute, slowdown,
work stoppage or lockout actually pending or, to the knowledge of the Company
(which term, for purposes of this Section 4.22, includes each of the Company's
Subsidiaries and Affiliates), threatened against or affecting the Company and,
during the past five years, there has not been any such action; (i) no union,
guild or other labor organization represents or claims to represent the
employees of the Company and no union, guild or other labor organizing activity
currently is occurring among and no question of representation exists concerning
such employees; (ii) the Company is neither a party to nor bound by any
collective bargaining, guild or similar agreement with any labor organization,
or work rules or practices agreed to with any labor organization or employee
association applicable to employees of the Company; (iii) there are no written
personnel policies, rules or procedures applicable to employees of the Company;
(iv) the Company has at all times been in material compliance with all
applicable laws respecting employment and employment practices, terms and
conditions of employment, wages, hours of work and occupational safety and
health, and are not engaged in any unfair labor practices as defined in the
National Labor Relations Act or other
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applicable law, ordinance or regulation; (v) there is no grievance or
arbitration proceeding arising out of any collective bargaining or guild
agreement or other grievance procedure relating to the Company; (vi) to the
knowledge of the Company, no charges or complaints relating to the Company are
pending before the Equal Employment Opportunity Commission, the Utah Industrial
Commission or any other corresponding state or foreign agency; and (vii) to the
knowledge of the Company, no federal, state, local or foreign agency responsible
for the enforcement of labor or employment laws, immigration laws, occupational
health and safety laws or any other law affecting the employees of the Company
intends to conduct or currently is conducting an investigation with respect to
or relating to the Company, and no such agencies have threatened to or have
filed any claims, charges, complaints or citations against the Company.
Section 4.23 WARN ACT. Since the enactment of the Worker Adjustment and
Retraining Notification Act of 1988 ("WARN Act"), neither the Company nor any of
its Subsidiaries have effectuated (i) a "plant closing" (as defined in the WARN
Act) affecting any site of employment or one or more operating units within any
site of employment of the Company or any of its Subsidiaries, or (ii) a "mass
layoff" (as defined in the WARN Act) affecting the Company or any of its
Subsidiaries; nor has the Company been affected by any transaction or engaged in
layoffs or employment terminations sufficient in number to trigger application
of any similar state or local law. None of the employees of any of the Company
or its Subsidiaries has suffered an "employment loss" (as defined in the WARN
Act) during the ninety-day period prior to the Effective Date of this Agreement.
Section 4.24 TRANSACTIONS WITH RELATED PARTIES. No Related Party:
(a) has borrowed money or loaned money to the Company or any Subsidiary;
(b) has made or threatened any contractual or other claim of any kind
whatsoever against the Company or any Subsidiary;
(c) has any interest in any property or assets used by the Company or any
Subsidiary in its business; or
(d) has been engaged in any other transaction with the Company or any
Subsidiary (other than employment relationships disclosed in Section 4.14).
Section 4.25 SUPPLIERS AND CUSTOMERS. No supplier or customer accounted
for more than five percent of the Company's and its Subsidiaries' sales or
purchases in either of the past two years and no other supplier or customer
material to the business of the Company and its Subsidiaries, taken as a whole,
has materially decreased its supplies or orders, as the case may be, or
terminated its relationship with the Company or any Subsidiary.
Section 4.26 ACCOUNTS RECEIVABLE. All of the accounts and notes receivable
of the Company and each Subsidiary represent amounts receivable for merchandise
actually delivered or services actually provided (or in the case of non-trade
accounts or notes, represent amounts receivable in respect of other bona fide
business transactions) and have arisen in the ordinary course of business. To
the Company's knowledge, the allowances for doubtful accounts reflected on the
Company's audited consolidated balance sheets for the years ended June 30, 1996
and 1995 were adequate, and the Company knows of no facts or liabilities which
would cause uncollected debts to exceed those allowances.
Section 4.27 ABSENCE OF CERTAIN PAYMENTS. Neither the Company nor any of
the Subsidiaries nor any of their affiliates nor any of their respective
officers, directors, employees or agents or their people acting on behalf of any
of them have (i) engaged in any activity prohibited by the United States Foreign
Corrupt Practices Act of 1977 or any other similar law, regulation, decree,
directive or order of any other country and (ii) without limiting the generality
of the preceding clause (i), used any corporate or other funds for unlawful
contributions, payments, gifts or entertainment, or made any unlawful
expenditures relating to political activity to government officials or others.
None of the Company nor any of the Subsidiaries nor any of their affiliates or
any of their respective directors, officers, employees or agents of
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other persons acting on behalf of any of them, has accepted or received any
unlawful contributions, payments, gifts or expenditures.
Section 4.28 TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES;
CONDITION OF EQUIPMENT; CONDITION OF INVENTORY.
(a) The Company and the Subsidiaries have good and valid title to, or in the
case of leased properties and assets, valid leasehold interests in, all of their
tangible properties and assets, real, personal and mixed, used in their
business, free and clear of any liens, charges, pledges, security interests or
other encumbrances, except as reflected in the Company's audited financial
statements or except for such imperfections of title and encumbrances, if any
which are not substantial in character, amount or extend, and which do not
materially detract from the value as reflected in the Company's September 30,
1996 balance sheet, or interfere with the present use, of the property subject
thereto or affected thereby.
(b) The equipment owned or leased by the Company or the Subsidiaries is,
taken as a whole, (A) adequate for the conduct of the businesses consistent with
their past practice, (B) suitable for the uses to which it is currently
employed, (C) in good operating condition, (D) regularly and properly
maintained, (E) not obsolete, dangerous or in need of renewal or replacement,
except for renewal or replacement in the ordinary course of business, and (F)
free from any defects, except, with respect to clauses (B) through (E) above, as
would not have a Material Adverse Effect.
(c) The inventories of raw materials, work in process and finished goods
(collectively called "Inventories") shown on the Company's audited financial
statements included in the SEC Reports, consist of items of a quality and
quantity useable and salable in the ordinary course of business by the Company,
except for obsolete and slow moving items and items below standard quality, all
of which have been written down on the books of the Company to estimated net
realizable value or have been provided for by adequate reserves. All items
included in the Inventories are the property of the Company and in its
possession. No items included in the Inventories have been pledged as collateral
or are held by the Company or any Subsidiary on consignment from others. The
Inventories shown on the Company's consolidated balance sheets included in the
SEC Reports are based on quantities determined by physical count or measurement,
taken within the preceding twelve months, and are valued at the lower of cost
(determined on a first-in, first-out basis) or market value and on a basis
consistent with that of prior years.
Section 4.29 FDA MATTERS. The Company is in full compliance with all
statutes, rules and regulations of the U.S. Food and Drug Administration or
similar domestic state authority ("FDA") with respect to the manufacturing,
marketing and sale of all of its products. The Company has all requisite FDA
permits, approvals or the like to sell or manufacture such products in the
United States. The Company has previously delivered to Xxxxxx summary
information concerning all 510(k) applications, Premarket Approvals and
Investigational Device Exemptions obtained by the Company from the FDA or
required in connection with the manufacturing, marketing and sale of any product
of the Company. There are no pending or threatened actions, proceedings or
complaints by the FDA, the Consumer Product Safety Commission or the Better
Business Bureau, as applicable, which would prohibit or impede the sale of any
product currently manufactured or sold, or currently contemplated to be
manufactured or sold, by the Company into any market. The Company has received
no notice or communication from the FDA since September 30, 1996. No product
sold or leased by the Company or any Subsidiary within the past five years has
been the subject of any product recall order by the manufacturer thereof, the
FDA or any similar body.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF XXXXXX AND PURCHASER
Except as otherwise disclosed to the Company in a letter delivered to it
prior to the execution hereof (which letter shall contain appropriate references
to identify the representations and warranties herein to
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which the information in such letter relates) (the "Xxxxxx Disclosure Letter"),
Xxxxxx and Purchaser represent and warrant to the Company as follows:
Section 5.1 ORGANIZATION. Each of Xxxxxx and Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation and has the requisite corporate power
and authority to own, use or lease properties and to carry on its business as it
is now being conducted and as it is now proposed to be conducted. Purchaser has
delivered to the Company a complete and correct copy of its Articles of
Incorporation and Bylaws, each as currently in effect. Each of Xxxxxx and
Purchaser is not in default in any material respect in the performance,
observation or fulfillment of any provision of its Articles of Incorporation or
Bylaws.
Section 5.2 CAPITALIZATION; REGISTRATION RIGHTS. The authorized capital
stock of Xxxxxx consists of 350,000,000 Xxxxxx Shares and 100,000,000 shares of
preferred stock, par value $0 per share ("Xxxxxx Preferred Stock"), including,
3,500,000 shares of Series A Junior Participating Stock, par value $0 per share
("Series A Preferred"). As of September 30, 1996, (i) 287,701,247 Xxxxxx Shares
were issued and outstanding, of which 13,608,765 Xxxxxx Shares were held in
treasury and no shares of Series A Preferred were outstanding, and (ii)
31,137,613 Xxxxxx Shares were reserved under all employee stock option plans of
Xxxxxx. All of the issued and outstanding Xxxxxx Shares are validly issued,
fully paid and nonassessable and free of preemptive rights. All of the Xxxxxx
Shares reserved for issuance in exchange for Shares at the Effective Time in
accordance with this Agreement will be, when so issued, duly authorized, validly
issued, fully paid and nonassessable and free of preemptive rights. The
authorized capital stock of Purchaser consists of 1000 shares of common stock,
par value $.01 per share, 100 of which shares are validly issued and
outstanding, fully paid and nonassessable and are owned by Xxxxxx. Except as set
forth above or as specified in Section 5.2 of the Xxxxxx Disclosure Letter, as
of the date of this Agreement there are no shares of capital stock of Xxxxxx
issued or outstanding or any options, warrants, subscriptions, calls, rights,
convertible securities or other agreements or commitments obligating Xxxxxx to
issue, transfer, sell, redeem, repurchase or otherwise acquire any shares of the
capital stock or securities or any interests relating to or whose value is
dependent on the value of any equity interest, in Xxxxxx or Purchaser. Except as
provided in this Agreement or as disclosed in Section 5.2 of the Xxxxxx
Disclosure Letter, after the Effective Time Xxxxxx will have no obligation to
issue, transfer or sell any shares of its capital stock pursuant to any employee
benefit plan or otherwise.
Section 5.3 AUTHORITY. Each of Xxxxxx and Purchaser has all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby on
the part of Xxxxxx and Purchaser have been duly and validly authorized by the
Boards of Directors of Xxxxxx and of Purchaser and by Xxxxxx as the sole
shareholder of Purchaser and no other corporate proceedings on the part of
Xxxxxx and Purchaser as a matter of law or otherwise are necessary to authorize
this Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Xxxxxx and
Purchaser and constitutes a valid and binding agreement of each of Xxxxxx and
Purchaser, enforceable against each of them in accordance with its terms.
Section 5.4 CONSENT AND APPROVALS; NO VIOLATION. The execution and
delivery of this Agreement, the consummation of the transactions contemplated
hereby, and the performance by Xxxxxx and Purchaser of their obligations
hereunder will not:
(a) conflict with or result in a breach of any provision of the Certificate
of Incorporation or Bylaws of Xxxxxx or the Articles of Incorporation or Bylaws
of Purchaser;
(b) require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory authority, except (i)
the filing of a pre-merger notification and report form by Xxxxxx or Purchaser
under the HSR Act, (ii) the filing with the SEC of (x) the Company Proxy
Statement/ Prospectus relating to the approval by the Company's shareholders of
the Agreement as contemplated by Section 3.9 of the Agreement, if such approval
is required by law, and (y) the filing of a Registration
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Statement relating to the issuance of Xxxxxx Shares as contemplated in Section
8.7 of the Agreement, if such filing is required by law, and (iii) the filing of
the Articles of Merger and Share Exchange with the Utah Division of Corporations
and Commercial Code;
(c) result in any violation of or the breach of or constitute a default
(with notice or lapse of time or both) under (or give rise to any right of
termination, cancellation or acceleration or guaranteed payments under or to a
loss of a material benefit or result in the creation or imposition of a lien
under) any of the terms, conditions or provisions of any note, lease, mortgage,
indenture, license, agreement or other instrument or obligation to which Xxxxxx
or Purchaser is a party or by which Xxxxxx or Purchaser or any of their
respective properties or assets may be bound, except for such violations,
breaches, defaults, or rights of termination, cancellation or acceleration, or
losses as to which requisite waivers or consents have been obtained or will be
obtained prior to the Effective Time or which, individually or in the aggregate,
would not (i) have a material adverse effect on the condition (financial or
otherwise), business, assets, properties, prospects or results of operations of
Xxxxxx, Purchaser and their subsidiaries, taken as a whole (a "Xxxxxx Material
Adverse Effect"), (ii) materially impair the ability of Xxxxxx or Purchaser to
perform its obligations under this Agreement or (iii) prevent the consummation
of any of the transactions contemplated by this Agreement;
(d) violate the provisions of any order, writ, injunction, judgment, decree,
statute, rule or regulation applicable to Xxxxxx or Purchaser, in such a manner
as to (i) have a Xxxxxx Material Adverse Effect, (ii) materially impair the
ability of Xxxxxx or Purchaser to perform its obligations under this Agreement
or (iii) prevent the consummation of any of the transactions contemplated by
this Agreement; or
(e) result in the creation of any lien, charge or encumbrance upon any
shares of capital stock, properties or assets of Xxxxxx or Purchaser under any
agreement or instrument to which Xxxxxx or Purchaser is a party or by which
Xxxxxx or Purchaser is bound.
Section 5.5 PURCHASER'S OPERATIONS. The Purchaser was formed solely for
the purpose of engaging in the transactions contemplated hereby and has not
engaged in any business activities or conducted any operations other than in
connection with the transactions contemplated hereby.
Section 5.6 NO SHARES OWNED BY PURCHASER OR AFFILIATES. As of the date
hereof neither Xxxxxx nor Purchaser nor any of their affiliates owns any Shares.
Section 5.7 XXXXXX SEC REPORTS. Xxxxxx has filed with the SEC, and has
heretofore made available to the Company true and complete copies of, each form,
registration statement, report, schedule, proxy or information statement and
other document (including exhibits and amendments thereto), including without
limitation its Annual Reports to Shareholders incorporated by reference in
certain of such reports, required to be filed with the SEC since December 31,
1993 under the Securities Act, or the Exchange Act (collectively, the "Xxxxxx
SEC Reports"). As of the respective dates such Xxxxxx SEC Reports were filed or,
if any such Xxxxxx SEC Reports were amended, as of the date such amendment was
filed, each of the Xxxxxx SEC Reports, including without limitation any
financial statements or schedules included therein, (a) complied in all material
respects with all applicable requirements of the Securities Act and the Exchange
Act, as the case may be, and the applicable rules and regulations promulgated
thereunder, and (b) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
Section 5.8 XXXXXX DISCLOSURE. No representation or warranty by Xxxxxx or
Purchaser in this Agreement and no statement contained in any document
(including, without limitation, Xxxxxx SEC Reports), schedule or certificate
furnished or to be furnished by Xxxxxx or Purchaser to the Company or any of its
representatives pursuant to the provisions hereof or in connection with the
transactions contemplated hereby, contains as of the date hereof any untrue
statement of material fact or omits to state
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any material fact necessary in order to make the statements herein or therein,
in the light of the circumstances under which they were made, not misleading.
Section 5.9 XXXXXX FINANCIAL STATEMENTS. Each of the audited consolidated
financial statements and unaudited consolidated interim financial statements of
Xxxxxx (including any related notes and schedules) included (or incorporated by
reference) in its Annual Reports on Form 10-K for each of the three fiscal years
ended December 31, 1993, 1994 and 1995 and its Quarterly Reports on Form 10-Q
for all interim periods during such period and subsequent thereto (collectively,
the "Financial Statements") have been prepared from, and are in accordance with,
the books and records of Xxxxxx and its consolidated subsidiaries, comply in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis (except as may be indicated in the notes thereto
and subject, in the case of quarterly financial statements, to normal and
recurring year-end adjustments) and fairly present, in conformity with GAAP
applied on a consistent basis (except as may be indicated in the notes thereto),
the consolidated financial position of Xxxxxx and its subsidiaries as of the
date thereof and the consolidated results of operations and cash flows (and
changes in financial position, if any) of Xxxxxx and its subsidiaries for the
periods presented therein (subject to normal year-end adjustments and the
absence of financial footnotes in the case of any unaudited interim financial
statements).
ARTICLE VI
COVENANTS OF THE COMPANY
Section 6.1 ORDINARY COURSE. Except as otherwise specifically provided in
this Agreement or as otherwise consented to in writing by Xxxxxx and Purchaser,
from the date of this Agreement to the Effective Time, the Company will, and
will cause each of its Subsidiaries to, conduct its operations only in the
ordinary and usual course of business and consistent with past practices and
will, and will cause each of its Subsidiaries to, preserve intact its present
business organization, take all reasonable efforts to keep available the
services of its present officers, employees and consultants and preserve its
present relationships with licensors, licensees, customers, suppliers,
employees, labor organizations and others with whom they have a significant
business relationship. Without limiting the generality of the foregoing, and
except as otherwise specifically provided in this Agreement or as set forth in
Section 6.1 of the Company Disclosure Letter, the Company will not, and will not
permit any Subsidiary to, directly or indirectly, from the date of this
Agreement to the Effective Time, without the prior written consent of Xxxxxx and
Purchaser:
(a) propose or adopt any amendment to or otherwise change its Articles of
Incorporation or Bylaws or other organizational documents;
(b) authorize for issuance, sale, pledge, disposition or encumbrance, or
issue, sell, pledge, dispose of or encumber (except pursuant to the exercise of
Options under the Company Stock Option Plans or pursuant to options disclosed in
Section 4.2 of the Company Disclosure Letter that are outstanding on the date
hereof) any of its shares or any of its other securities or any interest
relating to or whose value is dependent on the value of any equity interest in
the Company or the Subsidiaries or issue any securities convertible into or
exchangeable for, options, warrants to purchase, scrip, rights to subscribe for,
calls or commitments of any character whatsoever relating to, or enter into any
contract, understanding or arrangement with respect to the issuance of, any of
its shares or any of its other securities, or enter into any arrangement or
contract with respect to the purchase or voting of shares of its shares, or
adjust, split, reacquire, redeem, combine or reclassify any of its securities,
or make any other changes in its capital structure;
(c) (i) incur (contingently or otherwise) any liability or other obligation
including, without limitation, any indebtedness for borrowed money except in the
ordinary course of business or enter into any guarantee of any such obligation
of another person or mortgage, pledge or subject to any lien, charge or
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other encumbrance of their assets, properties or business, or (ii) make any
loans, advances or capital contributions to, or investments in, any other
person;
(d) enter into, amend or affirmatively renew any contract, commitment, lease
or other transaction (whether of real or personal property) except such
contracts, commitments, leases or other transactions that are not material or
are in the ordinary course of business and do not involve affiliates of the
Company;
(e) sell or otherwise dispose of or lease any part of their respective
properties or assets, including but not limited to the sale or license of any
real estate or intellectual property, or purchase or otherwise acquire or lease
properties or assets (including real estate) except sales or purchases of
inventory and purchases of capital equipment in the ordinary course of business,
or acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets of, or by any other manner, any
business or any corporation, partnership, joint venture, association or other
business organization or division thereof;
(f) declare, set aside or pay any dividends on, or make any distributions in
respect of, its outstanding shares;
(g) (i) grant any general increase in wage or salary rates, except in the
ordinary course of business consistent with past practice; (ii) make any change
in the compensation payable or to become payable to any of its officers,
directors, employees, agents or consultants; (iii) enter into or amend any
employment, consulting, severance, termination or similar agreement (except as
contemplated by Section 7.7); (iv) adopt any new Plan or amend any existing
Plan; (v) make any loans to any of its officers, directors, employees, agents or
consultants or any changes in its existing borrowing or lending arrangements for
or on behalf of any of such persons, whether contingent on the Closing or
otherwise; or (vi) except to the extent permitted by Section 3.1(b) hereof, take
any action to cause to be exercisable any otherwise unexercisable Option under
the Company Stock Option Plans;
(h) make any material changes in the type or amount of its insurance
coverages;
(i) make any material tax election (unless required by law) or settle or
compromise any material income tax liability of the Company or any of its
Subsidiaries except if such action is taken in the ordinary course of business
and Xxxxxx or its affiliate shall have been provided reasonable prior notice
thereof. The Company shall consult with Xxxxxx or its affiliate before filing or
causing to be filed any material Tax Return of the Company or any of the
Subsidiaries or before executing or causing to be executed any agreement or
waiver extending the period for assessment or collection of any Taxes of the
Company or any of its Subsidiaries;
(j) cancel any debts or waive, release or relinquish any material contract
rights or other material rights other than in the ordinary course of business
and consistent with past practice;
(k) take or agree or commit to take any action that would result in any of
the Company's representations or warranties hereunder qualified as to
materiality being untrue and any such representations and warranties that are
not so qualified being untrue in any material respect; and
(l) make, or commit to make, any capital expenditure in excess of $100,000
including, without limitation, for the purchase of real estate.
Section 6.2 ADVICE OF CHANGES. The Company shall promptly give notice to
Xxxxxx or its affiliate upon becoming aware of (i) any representation or
warranty of the Company contained in this Agreement that is qualified as to
materiality becoming untrue or inaccurate in any respect or any such
representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect, or (ii) the failure by the Company to comply
with or satisfy in any material respect any covenant, condition or agreement to
be complied with or satisfied by it under this Agreement and shall use its
reasonable best efforts to prevent or promptly remedy same.
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Section 6.3 RULE 145 AFFILIATES. At least 30 days prior to the Effective
Time, the Company shall cause to be delivered to Xxxxxx a letter identifying all
Persons who, at the time of the Shareholder Meeting described in Section 3.9,
may be deemed to be "affiliates" of the Company for purposes of Rule 145 under
the Securities Act (the "Securities Act Affiliates"). The Company shall use its
reasonable efforts to cause each person who is identified as a Securities Act
Affiliate to deliver to Xxxxxx at least 15 days prior to the Effective Time an
agreement substantially in the form of Exhibit 6.3 to this Agreement.
Section 6.4 NO SOLICITATION. (a) The Company and its Subsidiaries and
affiliates will not, and the Company and its Subsidiaries and affiliates will
use their reasonable efforts to ensure that their respective officers,
directors, employees, investment bankers, attorneys, accountants and other
representatives and agents do not, directly or indirectly, initiate, solicit,
encourage or participate in, or provide any information to any Person (as
defined below) concerning, or take any action to facilitate the making of, any
offer or proposal which constitutes or is reasonably likely to lead to any
Acquisition Proposal (as defined below) of the Company or any Subsidiary or
affiliate or an inquiry with respect thereto. The Company shall, and shall cause
its Subsidiaries and affiliates, and their respective officers, directors,
employees, investment bankers, attorneys, accountants and other agents to,
immediately cease and cause to be terminated all existing activities,
discussions and negotiations, if any, with any parties conducted heretofore with
respect to any of the foregoing. Notwithstanding the foregoing, the Company may,
directly or indirectly, provide access and furnish information concerning its
business, properties or assets to any corporation, partnership, person or other
entity or group pursuant to an appropriate confidentiality agreement, and may
negotiate and participate in discussions and negotiations with such entity or
group concerning an Acquisition Proposal and recommend to its shareholders an
Acquisition Proposal that the Board of Directors determines in good faith is
more favorable to the Company's shareholders than the Merger (x) if such entity
or group has submitted a bona fide written proposal to the Board of Directors of
the Company relating to any such transaction and (y) if, in the opinion of the
Board of Directors of the Company, after consultation with independent legal
counsel to the Company (who may be the Company's regularly engaged independent
counsel), the failure to provide such information or access or to engage in such
discussions or negotiations would be inconsistent with their fiduciary duties
under applicable law.
(b) The Company shall promptly notify Xxxxxx of any such offers, proposals
or Acquisition Proposals (including without limitation the terms and conditions
thereof and the identity of the Person making it), and will keep Xxxxxx apprised
of all developments with respect to any such Acquisition Proposal. For purposes
hereof, any material modification of an Acquisition Proposal shall constitute a
new Acquisition Proposal.
(c) As used in this Agreement, "Acquisition Proposal" when used in
connection with any Person shall mean any tender or exchange offer involving
such Person, any proposal for a merger, consolidation or other business
combination involving such Person or any subsidiary of such Person, any proposal
or offer to acquire in any manner a substantial equity interest in, or a
substantial portion of the business or assets of, such Person or any subsidiary
of such Person, any proposal or offer with respect to any recapitalization or
restructuring with respect to such Person or any subsidiary of such Person or
any proposal or offer with respect to any other transaction similar to any of
the foregoing with respect to such Person, or any subsidiary of such Person;
PROVIDED, HOWEVER, that, as used in this Agreement, the term "Acquisition
Proposal" shall not apply to any transaction of the type described in this
subsection (c) involving Xxxxxx, Purchaser or their affiliates. As used in this
Agreement, "Person" shall mean any corporation, partnership, person or other
entity or group (including the Company and its affiliates and representatives,
but excluding Xxxxxx or any of its affiliates or representatives).
Section 6.5 NO WARN ACT ACTIVITIES. From the date hereof through the
Closing Date, the Company shall not effectuate i) a "plant closing" (as defined
in the WARN Act) affecting any site of employment or one or more facilities or
operating units within any site of employment or facility of the Company's or
the Subsidiaries' business, or ii) a "mass layoff" (as defined in the WARN Act)
affecting any site of employment or facility of the Company's or the
Subsidiaries' business without giving all notices required by
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the WARN Act, or any similar state law or regulation and Seller shall assume all
liability for any alleged failure to give such notice and indemnify and hold
harmless Xxxxxx and its affiliates for any and all claims asserted under the
WARN Act or any similar state law or regulation because of a "plant closing" or
a "mass layoff" occurring on or before the Closing Date. For purposes of this
Agreement, the Closing Date is the "effective date" for purposes of the WARN
Act.
Section 6.6 TERMINATION OF EMPLOYEE STOCK PURCHASE PLAN. The Company shall
suspend indefinitely its Employee Stock Purchase Plan effective as of December
31, 1996, and the Company shall not issue any rights to acquire Company Common
Stock under such plan prior to such date.
ARTICLE VII
COVENANTS OF XXXXXX AND PURCHASER
Section 7.1 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE.
(a) Xxxxxx and Purchaser acknowledge that all rights to indemnification or
exculpation now existing in favor of the directors, officers, employees and
agents of the Company and its Subsidiaries as provided in their respective
charters or Bylaws or otherwise in effect as of the date hereof with respect to
matters occurring prior to the Effective Time shall survive the Merger and shall
continue in full force and effect. After the Effective Time, Xxxxxx shall, or
shall cause the Surviving Corporation to, indemnify, defend and hold harmless
the present and former officers, directors, employees and agents of the Company
and its Subsidiaries (each an "Indemnified Party") against all losses, claims,
damages, liabilities, fees and expenses (including reasonable fees and
disbursements of counsel and judgments, fines, losses, claims, liabilities and
amounts paid in settlement (provided that any such settlement is effected with
the prior written consent of Xxxxxx or the Surviving Corporation)) arising out
of actions or omissions occurring at or prior to the Effective Time to the full
extent permitted under Utah law, the Company's Articles of Incorporation or
Bylaws, in each case as in effect at the date hereof, including provisions
therein relating to the advancement of expenses incurred in the defense of any
action or suit; PROVIDED, that nothing herein shall impair any rights or
obligations of any present or former directors or officers of the Company.
(b) Xxxxxx shall cause the Surviving Corporation to maintain in effect for
not fewer than six years from and after the Effective Time the policies of
directors' and officers' liability insurance most recently maintained by the
Company (provided that Xxxxxx may cause the Surviving Corporation to substitute
therefor policies with reputable and financially sound carriers of at least the
same coverage and containing terms and conditions no less advantageous as long
as such substitution does not result in gaps or lapses in coverage with respect
to claims arising from or related to matters occurring prior to the Effective
Time); PROVIDED that in no event shall the Surviving Corporation be required to
expend more than an amount per year equal to 150% of the current annual premiums
paid by the Company (the "Premium Amount") to maintain or procure insurance
coverage pursuant to this Section 7.1(b); PROVIDED, FURTHER, that if the
Surviving Corporation is unable to obtain the insurance called for this Section
7.1(b), Xxxxxx shall cause the Surviving Corporation to obtain as much
comparable insurance as is available for the Premium Amount per year.
(c) Xxxxxx shall, or shall cause the Surviving Corporation to, pay all
expenses (including reasonable attorneys' fees that may reasonably be incurred
by the Indemnified Party in successfully enforcing the rights to which the
Indemnified Party is entitled under this Agreement or the Surviving
Corporation's Articles of Incorporation or Bylaws or is otherwise entitled.
(d) In the event the Surviving Corporation, Xxxxxx or any of their
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then, and in each such case, proper
provisions shall be made so that
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the successors and assigns of the Surviving Corporation and/or Xxxxxx, as the
case may be, shall assume its obligations set forth in this Section 7.1.
Section 7.2 CONTINUATION OF OPERATIONS. Xxxxxx and Purchaser shall for a
period of not less than one year from the Effective Date maintain the location
of the Company's headquarters at the same location from which the Company
conducted its headquarters immediately prior to the Effective Time.
Section 7.3 NYSE LISTING. Xxxxxx shall use its reasonable efforts to cause
the Xxxxxx Shares to be issued in the Merger in accordance with this Agreement
to be listed on the NYSE and on each national securities exchange on which
shares of Xxxxxx Common Stock may at such time to be admitted for trading or
listed, subject to official notice of issuance, prior to the Effective Time.
Section 7.4 XXXXXX PUBLIC INFORMATION. Xxxxxx shall, for a period of at
least three years after the Effective Time, file on a timely basis all reports
required to be filed pursuant to Section 13 of the Exchange Act, so that current
information regarding Xxxxxx is available as contemplated by Rule 144(c), or any
successor rule thereto, of the Securities Act
Section 7.5 EMPLOYEE BENEFITS. Subject to the right of Xxxxxx or the
Surviving Corporation to terminate at will any Employees, Xxxxxx shall cause the
Surviving Corporation (i) for a period of not less than one (1) year after the
Effective Time, to provide during the term of their employment after the
Effective Time any individuals employed by the Company immediately before the
Merger ("Employees") with salary, wages and other benefits at levels no less
favorable in the aggregate than those provided by the Company immediately before
the Merger, and (ii) continue the Company's current cash bonus plan (or a
substitute plan with substantially similar benefits) through December 31, 1997.
Section 7.6 THIRD PARTY BENEFICIARIES. The provisions of Section 7.1 are
intended to be for the benefit of, and shall be enforceable by, each Indemnified
Party, his or her heirs and his or her personal representatives.
Section 7.7 EMPLOYMENT OFFER. Xxxxxx shall cause the Surviving Corporation
to offer employment to the persons specified in Exhibit 9.2(g) attached hereto
on the terms specified therein.
ARTICLE VIII
MUTUAL COVENANTS
Section 8.1 ACCESS TO INFORMATION; CONFIDENTIALITY. (a) Between the date
of this Agreement and the Effective Time, upon reasonable notice the Company
shall (and shall cause each of its Subsidiaries to) (i) give Xxxxxx, its
affiliates and their respective officers, employees, accountants, counsel,
financing sources and other agents and representatives full access to all
plants, offices, warehouses and other facilities and to all contracts, internal
reports, data processing files and records, Federal, state, local and foreign
tax returns and records, commitments, books, records and affairs of the Company
and its Subsidiaries, whether located on the premises of the Company or one of
its Subsidiaries or at another location during normal business hours; (ii)
furnish promptly to Xxxxxx or its affiliates a copy of each report, schedule,
registration statement and other document filed or received by it during such
period pursuant to the requirements of Federal securities laws or regulations;
(iii) permit Xxxxxx or its affiliates to make such inspections as they may
reasonably require; (iv) cause its officers and the officers of its Subsidiaries
to furnish Xxxxxx and its affiliates such financial, operating, technical and
product data and other information with respect to the business and properties
of the Company and its Subsidiaries as Xxxxxx or its affiliates from time to
time may request, including without limitation financial statements and
schedules; (v) allow Xxxxxx and its affiliates the opportunity to interview such
employees, vendors, customers, sales representatives, distributors and other
personnel of the Company with the Company's prior written consent, which consent
shall not be unreasonably withheld; and (vi) assist and cooperate with Xxxxxx
and its affiliates in the development of integration plans for implementation by
Xxxxxx and its affiliates and the Surviving Corporation following the Effective
Time; PROVIDED, HOWEVER, that no investigation pursuant to this
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Section 8.1 shall affect or be deemed to modify any representation or warranty
made by the Company herein. Until the Effective Time, materials furnished to
Xxxxxx or its affiliates pursuant to this Section 8.1 may be used by Xxxxxx or
its affiliates solely for strategic and integration planning purposes relating
to accomplishing the transactions contemplated hereby and for compliance with
the applicable securities laws.
(b) Except as otherwise provided below, until the Effective Time, Xxxxxx and
Purchaser shall, and shall cause their affiliates, agents and representatives
to, keep secret and retain in confidence, and not use for the benefit of any
such person or others (other than in connection with this Agreement and the
transactions contemplated hereby), any confidential information of the Company
which Xxxxxx or Purchaser or other affiliates obtained from the Company pursuant
to this Section 8.1. The restrictions on use and disclosure contained herein
shall not apply if and to the extent any such information (i) is publicly
available or becomes publicly available (through no action or fault of Xxxxxx or
Purchaser or other affiliates), (ii) was or is obtained by Xxxxxx or Purchaser
or other affiliates from a third party, PROVIDED that to the recipient's
knowledge, after reasonable inquiry, such third party was not bound by a
contractual, legal or fiduciary obligation of confidentiality to the Company or
any other party with respect to such information or material, (iii) was already
in the possession of Xxxxxx or Purchaser or other affiliates or known to Xxxxxx,
Purchaser or other affiliates prior to being disclosed or provided to them by or
on behalf of the Company, PROVIDED, that, to the recipient's knowledge, after
reasonable inquiry, the source of such information or material was not bound by
a contractual, legal or fiduciary obligation of confidentiality to the Company
or any other party with respect thereto, or (iv) is required to be disclosed in
a legal proceeding or pursuant to applicable law or the rules or regulations of
any national securities exchange or over-the-counter market. In the event that
Xxxxxx, Purchaser or its affiliates is requested or required (by oral questions,
interrogatories, request for information or documents in legal proceedings,
subpoena, civil investigative demand or other similar process) to disclose any
of the confidential information provided under this Section 8.1, such party
shall provide the Company with prompt written notice of any such request or
requirement so that the Company may seek a protective order or other appropriate
remedy and/ or waive compliance with the provisions of this Section 8.1. If, in
the absence of a protective order or other remedy or the receipt of a waiver by
the Company, Xxxxxx or Purchaser is nonetheless, based on advice of its outside
counsel, legally compelled to disclose the confidential information to any
tribunal or else stand liable to contempt or suffer other censure or penalty,
such party may, without liability hereunder, disclose to such tribunal only that
portion of the confidential information which such counsel advises such party is
legally required to be disclosed, provided that such party shall use its
reasonable efforts to preserve the confidentiality of the confidential
information, including without limitation by cooperating with the Company to
obtain an appropriate protective order or other reliable assurance that
confidential treatment will be afforded the confidential information by such
tribunal. The restrictions on use and disclosure of confidential information
under this Section 8.1 shall expire three years from the date hereof.
Section 8.2 HSR ACT. The Company, Xxxxxx and Purchaser shall take all
reasonable actions necessary to file as soon as practicable notifications under
the HSR Act and to respond as promptly as practicable to any inquiries received
from the Federal Trade Commission and the Antitrust Divisions of the Department
of Justice for additional information or documentation and to respond as
promptly as practicable to all inquiries and requests received from any state
attorney general or other Governmental Entity in connection with antitrust
matters.
Section 8.3 CONSENTS AND APPROVALS. Each of the Company, Xxxxxx and
Purchaser will take all reasonable actions necessary to comply promptly with all
legal requirements which may be imposed on it with respect to this Agreement and
the transactions contemplated hereby (which actions shall include without
limitation furnishing all information required under the HSR Act and in
connection with approvals of or filings with any other (Governmental Entity) and
will promptly cooperate with and furnish information to each other in connection
with any such requirements imposed upon any of them or any of their respective
subsidiaries in connection with this Agreement and the transactions contemplated
hereby.
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Each of the Company, Xxxxxx and Purchaser will, and will cause its respective
subsidiaries to, (i) take all reasonable actions necessary to obtain (and will
cooperate with each other in obtaining) any consent, authorization, order or
approval of, or any exemption by, any Governmental Entity or other public or
private third party required to be obtained or made by Xxxxxx, Purchaser, the
Company or any of their respective subsidiaries in connection with the Merger or
the taking of any action contemplated thereby or by this Agreement and (ii)
cooperate in maintaining good business relationships with distributors of the
Company products after the date hereof.
Section 8.4 NOTIFICATION OF CERTAIN MATTERS. The Company will give prompt
notice to Xxxxxx or Purchaser, and Xxxxxx and Purchaser will give prompt notice
to the Company, of (a) any notice of default received by either of them or any
of their subsidiaries subsequent to the date of this Agreement and prior to the
Effective Time under any material instrument or material agreement to which
either of them, or any of their subsidiaries, is a party or by which either is
bound, which default would, if not remedied, result in a Material Adverse Effect
or a Baxter Material Effect as the case may be or which would render materially
incomplete or untrue any representation made herein, (b) any suit, action or
proceeding instituted or, to the knowledge of any of them, threatened against or
affecting any of them subsequent to the date of this Agreement and prior to the
Effective Time which, if adversely determined, would result in a Baxter Material
Adverse Effect or result in a Material Adverse Effect in the Company and its
Subsidiaries or which would render materially incorrect any representation made
herein and (c) any material breach of the Company's, or Xxxxxx'x or Purchaser's,
as the case may be, covenants hereunder or the occurrence of any event that is
reasonably likely to cause any of its representations and warranties hereunder
to become incomplete or untrue in any material respect.
Section 8.5 BROKERS OR FINDERS. Each of Baxter and the Company represents,
as to itself, its subsidiaries and its affiliates, that no agent, broker,
investment banker, financial advisor or other firm or person is or will be
entitled to any brokers' or finders' fee or any other commission or similar fee
in connection with any of the transactions contemplated by this Agreement except
X.X. Xxxxxx & Co. Incorporated and Xxxxxxx Xxxxx & Company LLC, whose fees and
expenses will be paid by Baxter and the Company, respectively, in accordance
with the agreements with such firms (copies of which have been delivered by each
of the Company and Baxter to the other prior to the date of this Agreement), and
each of Baxter and the Company agrees to indemnify and hold the other harmless
from and against any and all claims, liabilities or obligations with respect to
any other fees, commissions or expenses asserted by any person on the basis of
any act or statement alleged to have been made by such party or its affiliates.
Section 8.6 PUBLICITY. So long as this Agreement is in effect and subject
to Section 6.4 hereof, neither the Company, Baxter nor any of their respective
affiliates shall issue or cause the publication of any press release or other
announcement with respect to the Merger, this Agreement or the other
transactions contemplated hereby without the prior consultation of the other
party, except as may be required by law or by any listing agreement with a
national securities exchange.
Section 8.7 REGISTRATION STATEMENT. As promptly as practicable, Baxter and
the Company shall cooperate and promptly prepare and file with the SEC the
Company Proxy Statement, which shall include a summary of the plan of merger
contemplated by this Agreement, and Baxter shall prepare and file with the SEC
the Registration Statement (collectively, such Company Proxy Statement and
Registration Statement, being the "Company Proxy Statement/Prospectus"). Baxter
shall use its reasonable efforts, and the Company will cooperate with Baxter, to
have the Registration Statement declared effective by the SEC as promptly as
practicable. Baxter shall also use its reasonable efforts to take any action
required to be taken under state securities or blue sky laws in connection with
the issuance of the Baxter Shares pursuant hereto. The Company shall furnish
Baxter with all information concerning the Company and the holders of its shares
and shall take such other action as Baxter reasonably may request in connection
with such Company Proxy Statement/Prospectus and issuance of the Baxter Shares
hereunder. Baxter agrees that the Company Proxy Statement/Prospectus and each
amendment or supplement thereto at the time of mailing thereof through twenty
(20) business days thereafter, or, in the case of the Registration Statement and
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each amendment or supplement thereto, at the time it is filed or becomes
effective, will not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; PROVIDED, HOWEVER, that the foregoing shall not apply to
the extent that any such untrue statement of a material fact or omission to
state a material fact was made by Baxter in reliance upon and in conformity with
written information concerning the Company furnished to Baxter by the Company
specifically for use in the Company Proxy Statement/Prospectus. The Company
agrees that the information provided by it for inclusion in the Company Proxy
Statement/Prospectus and each amendment or supplement thereto, at the time of
mailing thereof through twenty (20) business days thereafter, or, in the case of
information provided by the Company for inclusion in the Registration Statement
or any amendment or supplement thereto, at the time it is filed or becomes
effective, will not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; PROVIDED, HOWEVER, that the foregoing shall not apply to
the extent that any such untrue statement of a material fact or omission to
state a material fact was made by the Company in reliance upon and in conformity
with written information concerning Baxter or Purchaser furnished to the Company
by Baxter or Purchaser specifically for use in the Company Proxy
Statement/Prospectus. Except as otherwise required by law, no amendment or
supplement to the Company Proxy Statement/Prospectus will be made by Baxter or
the Company without the approval of the other party, which approval will not be
unreasonably withheld. Baxter will advise the Company, promptly after it
receives notice thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, the issuance of any
stop order, the suspension of the qualification of Baxter Shares issuable in
connection with the Merger for offering or sale in any jurisdiction, or any
request by the SEC for amendment of the Company Proxy Statement/Prospectus or
the Registration Statement or comments thereon and responses thereto or requests
by the SEC for additional information.
Section 8.8 ADDITIONAL AGREEMENTS. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use all reasonable efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including using all reasonable efforts to obtain all necessary waivers, consents
and approvals in connection with any governmental requirements set forth in
Section 4.4 of the Agreement, to effect all necessary registrations and filings
and to obtain all necessary financing. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement, the proper officers and/or directors of Baxter, Purchaser and
the Company shall take all such necessary action.
Section 8.9 TAX-FREE REORGANIZATION. Baxter and the Company shall each use
its reasonable efforts to cause the Merger to be treated as a reorganization
under Section 368(a) of the Code.
Section 8.10 PRE-CLOSING ADJUSTMENTS. At or before the Effective Time, the
Company shall, consistent with GAAP and in a manner reasonably requested by
Baxter and mutually satisfactory to the parties, establish such additional
accruals and reserves as may be necessary to conform the Company's accounting
reserve practices and methods (including credit loss practices and methods) to
those of Baxter (as such practices and methods are to be applied to the Company
from and after the Effective Time) and Xxxxxx'x plan with respect to the conduct
of the Company's business following the Merger and otherwise to reflect
Merger-related expenses and costs incurred by the Company, PROVIDED, HOWEVER,
that the Company shall not be required to take such action (a) more than five
days prior to the Effective Time and (b) unless Baxter agrees that all
conditions to Closing set forth in Section 9.2 which can be satisfied prior to
the Effective Time have been satisfied or waived, and no accrual or reserve made
by the Company or any Company subsidiary pursuant to this Section 8.10, or any
litigation or regulatory proceeding arising out of any such accrual or reserve,
shall constitute or be deemed to be a breach, violation of or failure to satisfy
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any representation, warranty, covenant, condition or other provision of this
Agreement or otherwise be considered in determining whether any such breach,
violation or failure to satisfy shall have occurred.
ARTICLE IX
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 9.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction or waiver, on or prior to the Effective Time, of the
following conditions:
(a) GOVERNMENTAL APPROVALS. All authorizations, consents, orders or
approvals of, or declarations or filings with, or expiration of waiting periods
imposed by, and Federal, state, local or foreign governmental or regulatory
authority necessary for the consummation of the Merger and the transactions
contemplated by this Agreement shall have been filed, occurred or been obtained
and shall be in effect at the Effective Time.
(b) LEGAL ACTION. No temporary restraining order, preliminary injunction
or permanent injunction or other order precluding, restraining, enjoining,
preventing or prohibiting the consummation of the Merger shall have been issued
by an Federal, state or foreign court or other governmental or regulatory
authority and remain in effect.
(c) STATUTES. No Federal, state, local or foreign statute, rule or
regulation shall have been enacted which prohibits the consummation of the
Merger or would make the consummation of the Merger illegal.
(d) SHAREHOLDER APPROVAL. This Agreement and the transactions contemplated
hereby shall have been approved and adopted by the requisite vote of the
stockholders of the Company respectively in accordance with and subject to
applicable law.
(e) REGISTRATION STATEMENT. The Registration Statement shall have been
declared effective under the Securities Act and shall not be the subject of any
stop order or proceedings seeking a stop order.
(f) LISTING. The Baxter Shares shall have been listed on the New York
Stock Exchange ("NYSE"), subject to official notice of issuance.
Section 9.2 CONDITIONS OF OBLIGATIONS OF BAXTER AND PURCHASER. The
obligation of Baxter and Purchaser to effect the Merger is further subject to
the satisfaction at or prior to the Effective Time of the following conditions,
unless waived by Baxter and Purchaser:
(a) The representations and warranties of the Company set forth in this
Agreement shall be true and correct in all material respects as of the date of
this Agreement and as of the Effective Time, as if made of such time.
(b) The Company shall have performed and complied, in all material respects,
with all obligations and covenants required to be performed or complied with by
it under this Agreement at or prior to the Effective Time.
(c) The Company shall have obtained all consents, approvals, authorizations
and permits required from third parties and any Governmental Entity (applicable
to the Company and its subsidiaries) necessary for the consummation of the
transactions by the Company of the transactions contemplated by this Agreement.
(d) Baxter and Purchaser shall have received from the Company an officer's
certificate substantially in the form of Exhibit 9.2(d)(i) attached hereto and a
Secretary's certificate substantially in the form of Exhibit 9.2(d)(ii) attached
hereto.
(e) From the date of this Agreement through the Effective Time, no event
shall have occurred which shall be reasonably likely to result or shall have
resulted in a Material Adverse Effect.
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(f) Baxter and Purchaser shall have received (i) an opinion from Xxxxx X.
Xxxxxx, Esq., counsel to the Company, substantially in the form of Exhibit
9.2(f)(i) attached hereto, (ii) an opinion from Ray, Xxxxxxx & Xxxxxxx, counsel
to the Company, substantially in the form of Exhibit 9.2(f)(ii) and (iii) a
letter dated the date hereof from Xxxxxxx, Xxxxxxxx & Xxxxxx, special counsel to
the Company, affirming the statements set forth in their opinions previously
delivered pursuant to Section 4.21 of the Agreement.
(g) Xxxx X. Xxxxxxx and those other persons specified in Schedule 9.2(g)
attached hereto shall have entered into employment or other agreements for the
periods and on such other terms substantially as set forth in Exhibits 9.2(g).A,
9.2(g).B and 9.2(g).C, provided, however that no person listed on Schedule
9.2(g) will be required by Baxter or Purchaser to relocate outside of the State
of Utah.
(h) The parties (other than the Company or its affiliates) to the options
listed in Schedule 9.2(h) attached hereto shall have agreed to receive cash
payments as calculated by Section 3.1(d) in cancellation of such options in full
prior to the Effective Time.
Section 9.3 CONDITIONS OF OBLIGATIONS OF THE COMPANY. The obligations of
the Company to effect the Merger are further subject to the satisfaction at or
prior to the Effective Time of the following conditions, unless waived by the
Company:
(a) The representations and warranties of Baxter and Purchaser set forth in
this Agreement shall be true and correct in all material respects as of the date
of this Agreement and as of the Effective Time, as if made as of such time.
(b) Baxter and Purchaser shall have performed and complied with, in all
material respects, all obligations and covenants required to be performed or
complied with by it under this Agreement at or prior to the Effective Time.
(c) Baxter and Purchaser shall have obtained all consents, approvals,
authorizations and permits required from third parties and any Governmental
Entity (applicable to Baxter and Purchaser and their subsidiaries) necessary for
the consummation of the transactions by Baxter and Purchaser of the transactions
contemplated by this Agreement.
(d) The Company shall have received from Baxter and Purchaser (i) an
officer's certificate substantially in the form of Exhibit 9.3(d)(i) attached
hereto and (ii) a Secretary's certificate substantially in the form of Exhibit
9.3(d)(ii)
(e) The Company shall have received an opinion (i) from Xxx X. Xxxxxxxx,
Esq., in-house counsel to Baxter, substantially in the form of Exhibit 9.3(e)(i)
attached hereto and (ii) an opinion from Skadden, Arps, Slate, Xxxxxxx & Xxxx
LLP, counsel to Baxter and Purchaser substantially in the form of Exhibit
9.3(e)(ii) attached hereto.
(f) The Company shall have received a written opinion from Ray, Xxxxxxx &
Xxxxxxx, counsel to the Company, to the effect that the Merger will be treated
for Federal income tax purposes as a reorganization under Section 368(a) of the
Code.
(g) From the date of this Agreement through the Effective Time, no event
shall have occurred which shall be reasonably likely to result or shall have
resulted in a Baxter Material Adverse Effect.
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ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
Section 10.1 TERMINATION. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
shareholder approval thereof:
(a) BY MUTUAL CONSENT. By mutual consent of the Board of Directors of
Parent and the Board of Directors of the Company.
(b) BY BAXTER AND PURCHASER OR THE COMPANY. By either the Board of
Directors of Baxter or the Board of Directors of the Company:
(i) if the Merger shall not have been consummated on or prior to June
30, 1997; PROVIDED, HOWEVER, that the right to terminate this Agreement
under Section 10.1(b)(i) shall not be available to any party whose failure
to fulfill any material obligation under this Agreement has been the cause
of or resulted in, the failure of the Merger to be consummated on or prior
to such date; or
(ii) if a court of competent jurisdiction or other governmental or
regulatory authority shall have issued an order, decree or ruling or taken
any other action (which order, decree, ruling or other action the parties
hereto shall use their reasonable efforts to lift), in each case permanently
restraining, enjoining, or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or other
action shall have become final and non-appealable.
(c) BY THE COMPANY. By the Board of Directors of the Company:
(i) if, prior to June 30, 1997, the Company shall have (A) accepted an
Acquisition Proposal in compliance with the terms of Section 6.4 hereof and
(B) paid or caused to be paid the fees provided for in Section 11.1(b)
hereof; or
(ii) if, prior to the Effective Time, Baxter or Purchaser breaches or
fails in any material respect to perform or comply with any of its material
covenants and agreements contained herein or breaches its representations
and warranties in any material respect.
(d) BY BAXTER AND PURCHASER. By the Board of Directors of Baxter:
(i) if Baxter or Purchaser is not in material breach of the Agreement
and (A) prior to the Effective Time, the Company shall have received an
Acquisition Proposal and not rejected such Acquisition Proposal within 20
days of its receipt or the Board of Directors of the Company shall have
withdrawn, or modified or changed (including by amendment to the Company
Proxy Statement/ Prospectus) in a manner adverse to Baxter or Purchaser its
approval or recommendation of the Merger or this Agreement, or shall have
recommended an Acquisition Proposal; or (B) prior to the Effective Time, it
shall have been publicly disclosed or Baxter or Purchaser shall have learned
that any person entity or "group" (as that term is defined in Section
13(d)(3) of the Exchange Act), other than Baxter or its affiliates or any
group of which any of them is a member shall have acquired beneficial
ownership (determined pursuant to Rule 13d-3 promulgated under the Exchange
Act) of more than 19.9% of any class or series of shares of the Company
(including the Shares), through the acquisition of stock, the formation of a
group or otherwise, or shall have been granted an option, right, or warrant,
conditional or otherwise, to acquire beneficial ownership of more than 19.9%
of any class or series of shares of the Company (including the Shares); or
(ii) if prior to the Effective Time, the Company breaches or fails in
any material respect to perform or comply with any of its material covenants
and agreements contained herein or breaches its representations and
warranties in any material respect.
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Section 10.2 EFFECT OF TERMINATION AND ABANDONMENT. In the event of
termination of this Agreement as provided in Section 10.1 above, written notice
thereof shall forthwith be given to the other party or parties specifying the
provision hereof pursuant to which such termination is made, and this Agreement
shall forthwith become null and void and there shall be no liability or
obligation on the part of Baxter and Purchaser, or any of them, or the Company,
or their respective officers, directors or employees, except (a) for fraud or
for material breach of this Agreement and (b) as set forth in this Section 10.2,
Sections 8.1(b) and 11.1 hereof.
ARTICLE XI
GENERAL PROVISIONS
Section 11.1 FEES AND EXPENSES. (a) Except as contemplated by this
Agreement, including Section 11.1(b) hereof, all costs and expenses incurred in
connection with this Agreement and the consummation of the transactions
contemplated hereby shall be paid by the party incurring such expenses.
(b) If (i) the Board of Directors of the Company shall terminate this
Agreement pursuant to Section 10.1(c)(i) hereof or (ii) the Board of Directors
of Baxter shall terminate this Agreement pursuant to either of Section
10.1(d)(i) or 10.1(d)(ii) hereof after receipt by the Company of an Acquisition
Proposal, the Company shall pay or cause to be paid to Baxter (concurrently with
the termination of this Agreement in the case of termination referred to in
Section 10.1(c)(i) hereof, or the earlier of (i) entering into an agreement to
consummate an Acquisition Proposal or (ii) upon consummation of an Acquisition
Proposal which existed at the time of termination, in either case within six
months of a termination referred to in either of Sections 10(d)(i) or 10(d)(ii)
hereof), an amount equal to $7,000,000.
(c) The Company's payment of a termination fee pursuant to this subsection
shall be the sole and exclusive remedy of Baxter and Purchaser against the
Company and any of its Subsidiaries and their respective directors, officers,
employees, agents, advisors or other representatives with respect to the
occurrences giving rise to such payment; provided that this limitation shall not
apply in the event of a willful breach of this Agreement by the Company with
respect to such occurrence.
Section 11.2 AMENDMENT AND MODIFICATION. Subject to applicable law, this
Agreement may be amended, modified and supplemented in any and all respects,
whether before or after any vote of the shareholders of the Company contemplated
hereby, by written agreement of the parties hereto, by action taken by their
respective Boards of Directors, at any time prior to the Effective Time with
respect to any of the terms contained herein; PROVIDED, HOWEVER, that after the
approval of this Agreement by the shareholders of the Company, no such
amendment, modification or supplement shall reduce or change the Merger
Consideration.
Section 11.3 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement shall survive the termination
of this Agreement in accordance with Article X or the Effective Time.
Section 11.4 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given upon personal delivery, facsimile
transmission (which is confirmed), telex or delivery by an overnight express
courier service (delivery, postage or freight charges prepaid), or on the fourth
day following deposit in the United States mail (if sent by registered or
certified mail, return receipt requested,
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delivery, postage or freight charges prepaid), addressed to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) If to Baxter or Purchaser, to:
c/o Baxter Healthcare Corporation
00000 Xxx Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxx X. Xxxxxxxx, Esq.,
Vice President, Law
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
(b) if to the Company, to:
Research Medical, Inc.
0000 Xxxxx 000 Xxxx
Xxxxxxx, Xxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxx X. Xxxxxxx
with a copy to:
Ray, Xxxxxxx & Xxxxxxx
00 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Telecopy No.: (000) 000-0000
Attention: A.R. Xxxxxx
Section 11.5 DEFINITIONS; INTERPRETATION. As used in this Agreement, the
term "affiliate(s)" shall have the meaning set forth in Rule 12b-2 of the
Exchange Act. When a reference is made in this Agreement to an Article, Section,
Exhibit or Schedule, such reference shall be to an Article, Section, Exhibit or
Schedule to this Agreement unless otherwise indicated. The words "include,"
"includes" and "including" when used herein shall be deemed in each case to be
followed by the words "without limitation." The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
Section 11.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
Section 11.7 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement and the Confidentiality Agreement dated May 7, 1996 by and between
Xxxxxx Healthcare Corporation and the Company (including the documents and the
instruments referred to herein and therein) (a) constitute the entire agreement
and supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof, and (b) except as
provided in Section 7.6 hereof are not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
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Section 11.8 SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or to her
authority to be invalid, void, unenforceable or against its regulatory policy,
the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
Section 11.9 GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws of the State of Utah (without giving effect to the
principles of conflicts of law thereof).
Section 11.10 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Purchaser may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Baxter or to any direct or indirect wholly owned subsidiary of Baxter. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
IN WITNESS WHEREOF, each of Baxter, Purchaser and the Company has caused
this Agreement to be executed on its behalf by its duly authorized officers
hereunder all as of the date first above written.
XXXXXX INTERNATIONAL INC.
By:
-------------------------------------------
Name:
Title:
BAXTER CVG SERVICES III, INC.
By:
-------------------------------------------
Name:
Title:
RESEARCH MEDICAL, INC.
By:
-------------------------------------------
Name:
Title:
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