AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger is made on the 16th day of
June 1999 by and among (i) Aptec Instruments Ltd., an Ontario corporation,
which, prior to the Closing (as defined below), shall be continued as a
corporation formed under the laws of the province of New Brunswick, Canada
("Aptec"), (ii) Nuclear Research Corporation, a Pennsylvania corporation
("NRC"), and (iii) Aptec Acquisition Corp., a Pennsylvania corporation which is
a wholly-owned subsidiary of Aptec ("Newco").
WHEREAS, the Boards of Directors of Aptec and NRC deem it in the best interests
of Aptec and NRC and their respective shareholders that Aptec and NRC combine
their businesses and operations in a transaction pursuant to which Aptec will
own 100% of the capital stock of NRC;
WHEREAS, the issued and outstanding share capital of Aptec consists of 30,780
shares of common stock, no par value ("Aptec Common Stock") all of which are
currently owned by the shareholders whose names appear on Exhibit A (the "Aptec
Shareholders"); and
WHEREAS, the issued and outstanding capital stock of NRC consists of 27,658
shares of common stock, par value $5.00 per share (the "NRC Common Stock"), of
which 15,502 shares are owned by the shareholders whose names appear on Exhibit
B hereto (the "Xxxxxxx Holders") and 12,156 shares are owned by other
shareholders.
ARTICLE I
THE MERGER
Section 1.01 The Merger.
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(a) At the Effective Time (as defined in Section 1.01(c)), NRC
shall be merged (the "Merger") with and into Newco in accordance with the
Pennsylvania Business Corporation Law of 1988 , as amended (the "PBCL"),
whereupon the separate existence of NRC will cease, and Newco shall be the
surviving corporation (the "Surviving Corporation").
(b) The closing of the Merger (the "Closing") will take place
at 10:00 a.m. (New York City time) on a date to be specified by the parties (the
"Closing Date"), which shall be no later than the second Business Day after
satisfaction of the conditions set forth in Article V, at the offices of Xxxxxx,
Xxxx & Xxxxxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, unless the
parties agree in writing to another time, date or place.
(c) Upon the Closing, NRC and Newco will file articles of
merger with the Department of State of the Commonwealth of Pennsylvania and make
all other filings or recordings required by Pennsylvania law in connection with
the Merger. The Merger will become effective at such time as the articles of
merger are filed with the Department of State of the Commonwealth of
Pennsylvania (the "Effective Time").
The amounts in Section 1.02 are to be adjusted to reflect the
purchase price adjustments set forth in Schedule A of the Stock Acquisition
Agreement.
(d) From and after the Effective Time, the Surviving
Corporation will possess all the rights, powers, privileges and franchises and
be subject to all of the obligations, liabilities, restrictions and disabilities
of NRC and Newco, all as provided under the PBCL.
Section 1.02 Merger Consideration. At the Effective Time:
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(a) Each share of NRC Common Stock issued and outstanding
immediately prior to the Effective Time held by the Public Shareholders (as
defined below) shall be converted into the right to receive from Newco $226.02
per share in cash (the "Cash Consideration") and each NRC option, warrant and
other rights to acquire shares under any stock option or purchase plan, program
or similar arrangement (each, as amended, an "Option Plan" and such option,
warrant and other rights, "Stock Options") held by a Public Shareholder
immediately prior to the Effective Time shall be converted into the right to
receive in cash from Newco the difference between the Cash Consideration and the
exercise price of such Stock Options as set forth on Schedule 1.02(a).
(b) Nine Hundred and Fifty (950) of the shares of NRC Common
Stock held by the Xxxxxxx Holders issued and outstanding immediately prior to
the Effective Time shall be converted into the right to receive from Newco
$226.02 per share in cash. The remaining 14,552 shares of NRC Common Stock held
by the Xxxxxxx Holders issued and outstanding immediately prior to the Effective
Time shall be exchanged with Newco for 7,055 shares of Aptec Common Stock (an
exchange ratio of .4848 share of Aptec Common Stock per share of NRC Common
Stock). Accordingly, assuming that the Xxxxxxx Holders own 15,502 shares of NRC
Common Stock at the Effective Time, the Xxxxxxx Holders will receive an
aggregate of 7,055 shares of Aptec Common Stock and $214,799 in cash.
(c) The Stock Options of NRC Common Stock set forth on
Schedule 1.02(c) held by the Xxxxxxx Holders immediately prior to the Effective
Time (the "Xxxxxxx Warrants") shall be exchanged for 5,665 shares of Aptec
Common Stock and the Xxxxxxx Warrants shall be canceled.
(d) At the Effective Time, the share certificates for the NRC
Common Stock held by the Xxxxxxx Holders (the "Xxxxxxx Share Certificates") and
the Xxxxxxx Warrants shall each be automatically converted into the number of
shares of Aptec Common Stock provided in Sections 1.02(b) and (c). Upon delivery
to Aptec by the Xxxxxxx Holders of the Xxxxxxx Share Certificates and the
Xxxxxxx Warrants, Aptec shall issue new Aptec share certificates in exchange
therefor. The aggregate of 12,720 shares of Aptec Common Stock issued to the
Xxxxxxx Holders under Sections 1.02(b) and (c) shall represent 29.241% of the
shares of all classes of equity securities of Aptec (including options, warrants
and convertible securities) outstanding immediately after the Effective Time.
(e) Notwithstanding the foregoing amounts in Section 1.02 are
to be adjusted to reflect the purchase price adjustments set forth in Schedule A
of the Stock Acquisition Agreement.
Section 1.03 Letter of Transmittal. Promptly after the
Effective Time, Newco will mail to each record holder of NRC Common Stock at the
Effective Time other than the Xxxxxxx Holders ("Public Shareholder" or in the
plural "Public Shareholders") (i) a letter of
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transmittal (the "Letter of Transmittal") that will specify that delivery will
be effected, and risk of loss and title to the certificates formerly
representing the NRC Common Stock will pass, upon delivery of such certificates
to the Surviving Corporation and will be in such form and have such other
provisions, including appropriate provisions with respect to back-up
withholding, as Newco reasonably may specify and (ii) instructions for effecting
the surrender of the certificates formerly representing shares of NRC Common
Stock in exchange for the Cash Consideration, without interest. The Letter of
Transmittal shall contain customary provisions for lost certificates.
Section 1.04 Surrender and Payment.
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(a) Upon surrender for cancellation to Newco of a certificate
formerly representing shares of NRC Common Stock, together with the Letter of
Transmittal, duly executed and completed in accordance with the instructions
thereto, a Public Shareholder will be entitled to receive a check from Newco in
the amount equal to the aggregate amount of the Cash Consideration which such
holder has the right to receive pursuant to the provisions of this Article I.
After the Effective Time and until so surrendered, each certificate representing
shares of NRC Common Stock will represent for all purposes only the right to
receive the Cash Consideration and shall have no further rights except as
provided in Section 1.09.
(b) If the Cash Consideration (or any portion thereof) is to
be delivered to a Person other than the Person in whose name the surrendered
certificate or certificates are registered, it will be a condition of such
delivery that the surrendered certificate or certificates shall be properly
endorsed or otherwise be in proper form for transfer and that the Person
requesting such payment shall pay any transfer or other Taxes required by reason
of the delivery of the Cash Consideration to a Person other than the registered
holder of the surrendered certificate or certificates or such Person shall
establish to the satisfaction of the Surviving Corporation that any such Tax has
been paid or is not applicable.
Section 1.05 Withholding of Tax. Newco will be entitled to
deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any former holder of NRC Common Stock such amounts as Newco
reasonably determines it is required to deduct and withhold with respect to the
making of such payment under the Code, or any provision of state, local or
foreign tax law. Such withheld amounts will be treated for all purposes of this
Agreement as having been paid to the former holder of NRC Common Stock in
respect of whom such deduction and withholding was made by Newco.
Section 1.06 Stock Transfer Books. At the Effective Time, the
stock transfer books of NRC will be closed and there will be no further
registration of transfers of shares of NRC Common Stock on the records of NRC.
Certificates formerly representing shares of NRC Common Stock that are presented
to the Surviving Corporation after the Effective Time will be canceled.
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Section 1.07 Stock Option Plans. As of the Effective Time, all
existing Option Plans of NRC shall terminate and any rights under any provisions
in any other plan, program or arrangement providing for the issuance or grant by
NRC of any interest in respect of the capital stock of NRC shall be canceled.
Section 1.08 Shareholder Approval. This Agreement shall be
governed by Section 1906 of the PBCL. This Agreement will be submitted for
adoption and approval to the holders of shares of NRC Common Stock at a special
meeting of the NRC shareholders convened for such purpose in accordance with the
provisions of this Agreement. The affirmative vote of the holders of shares of
NRC Common Stock representing a majority of the votes that may be cast by the
holders of all outstanding shares of NRC Common Stock (voting together as a
single class) is required to approve this Agreement. No other approval of NRC's
shareholders shall be required in order to consummate the Merger. Concurrently
herewith, the Xxxxxxx Holders have entered into the Voting Agreement attached
hereto as Exhibit C.
Section 1.09 Dissenters Rights. Notwithstanding any provision
of this Agreement to the contrary, NRC Common Stock that is outstanding
immediately prior to the Effective Time and that is held by Public Shareholders
who shall have dissented and demanded the right to receive the fair value of
their shares of NRC Common Stock in accordance with, and otherwise complied in
all respects with, Sections 1930 and 1571 through 1580 of the PBCL
(collectively, the "Dissenting Shares") shall be canceled but not converted into
or represent the right to receive the Cash Consideration. Such Public
Shareholders shall be entitled instead to receive payment of the fair value of
such Dissenting Shares (which may be more than, equal to, or less than the Cash
Consideration) in accordance with the provisions of such Sections 1930 and 1571
through 1580 of the PBCL, except that all shares of NRC Common Stock held by
Public Shareholders who shall fail to perfect or who effectively withdraw or
lose their rights to be paid the fair value for such NRC Common Stock under such
Sections 1930 and 1571 through 1580 of the PBCL shall thereupon be deemed to
have been converted into and to have become exchangeable for, as of the
Effective Time, the right to receive the Cash Consideration, without any
interest thereon, upon surrender, in the manner provided in Section 1.04, of the
certificate or certificates that formerly evidenced such shares of NRC Common
Stock.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF NRC
NRC represents and warrants to Aptec and Newco as follows:
Section 2.01 Corporate Existence and Power. NRC is a
corporation duly incorporated, validly existing and subsisting under the laws of
the Commonwealth of Pennsylvania and has all corporate power required to carry
on its business as now conducted. Except as set forth in Schedule 2.01, NRC is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction where the character of the property owned or leased by it
or the nature of its activities makes such qualification necessary, except where
the failure to so qualify or be in good standing would not have a Material
Adverse Effect.
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NRC has delivered to Aptec copies of NRC's articles of incorporation and by-laws
as currently in effect.
Section 2.02 Corporate Authorization. The execution, delivery
and performance by NRC of this Agreement and the consummation by NRC of the
transactions contemplated hereby are within NRC's corporate powers and, except
for the approval and adoption by NRC's shareholders of this Agreement and the
Merger, have been duly authorized by all necessary corporate action on the part
of NRC. This Agreement has been duly and validly executed and delivered by NRC
and, assuming the due and valid authorization, execution and delivery of this
Agreement by Aptec and Newco constitutes a valid and binding agreement of NRC,
enforceable in accordance with its terms except as may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and other similar
laws affecting creditors' rights generally and by equitable principles of
general applicability. The Board of Directors of NRC has approved the Merger,
this Agreement and the transactions contemplated hereby. Xxxxxx, Xxxxxx & Co.
has delivered to the Board of Directors of NRC its opinion that the Allocation
(as such term is defined in such opinion) of the value of the transactions is
fair to the Public Shareholders from a financial point of view. No other
corporate proceedings on the part of NRC are necessary to authorize or approve
this Agreement or to consummate the transactions contemplated hereby, other than
the approval and adoption of the Merger and this Agreement by the shareholders
of NRC.
Section 2.03 Governmental Authorization. The execution,
delivery and performance by NRC of this Agreement and the consummation by NRC of
the Merger and the other transactions contemplated hereby require no consent,
waiver, approval, authorization or permit by or from, or action by or in respect
of, or filing with, any Governmental Entity, other than: (i) the filing of the
articles of merger as contemplated by Section 1.01(a); (ii) compliance with any
applicable requirements of the Securities Exchange Act of 1934, as amended
(together with the rules and regulations promulgated thereunder, the "Exchange
Act") and (iii) compliance with any applicable requirements under any contracts
with a Governmental Entity to which NRC is a party.
Section 2.04 Non-contravention. Except as set forth on
Schedule 2.04, the execution, delivery and performance by NRC of this Agreement
and the consummation by NRC of the transactions contemplated hereby do not and
will not: (i) contravene or conflict with the articles of incorporation or
by-laws of NRC; (ii) contravene or conflict with or constitute a violation of
any provision of any state or federal law, regulation, judgment, injunction,
order or decree and to the knowledge of NRC, any foreign law or regulation
binding upon or applicable to NRC or any NRC Subsidiary; (iii) result in a
breach or violation of or constitute a default (or an event that with the giving
of notice or the lapse of time or both would constitute a default) under or give
rise to a right of termination, amendment, cancellation or acceleration of any
material right or obligation of NRC or any NRC Subsidiary or to a loss of any
material benefit to which NRC or any NRC Subsidiary is entitled or require any
consent, approval or authorization under any provision of any material
agreement, contract or other instrument binding upon NRC or any NRC Subsidiary
or any of their respective assets; or (iv) result in the creation or imposition
of any Lien on any material asset of NRC or any NRC Subsidiary.
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Section 2.05 Capitalization.
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(a) As of June 16, 1999, the authorized capital stock of NRC
consisted solely of 60,000 shares of NRC Common Stock, of which 27,658 were
issued and outstanding.
(b) As of June 16, 1999, there were outstanding Stock Options
and Xxxxxxx Warrants to purchase an aggregate of 20,230 shares of NRC Common
Stock, held by the persons and in the amounts appearing in Schedule 1.02(a) and
Schedule 1.02(c).
(c) All outstanding shares of NRC Common Stock have been duly
authorized and validly issued and are fully paid and non-assessable. Except as
set forth in this Section 2.05, there are outstanding (i) no shares of capital
stock or other voting securities of NRC, (ii) no securities of NRC convertible
into or exchangeable for shares of capital stock or voting securities of NRC and
(iii) no options or other rights to acquire from NRC, and no obligation of NRC
to issue, any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of NRC. The securities
described in Section 2.05(a) and Section 2.05(b) are referred to collectively as
the "NRC Securities". Except pursuant to the terms of the NRC Securities, there
are no outstanding obligations of NRC or any NRC Subsidiary to repurchase,
redeem or otherwise acquire any NRC Securities.
(d) There are no outstanding contractual obligations of NRC or
any NRC Subsidiary to provide funds to, or make any investment (in the form of a
loan, capital contribution or otherwise) in, any other Person other than to
wholly-owned NRC Subsidiaries, in the ordinary course of business consistent
with past practice.
Section 2.06 Subsidiaries.
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(a) Except as set forth on Schedule 2.06(a), each NRC
Subsidiary is a corporation or other legal entity duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, has all corporate, partnership or similar powers required to carry
on its business as now conducted and is duly qualified to do business as a
foreign corporation or other legal entity and is in good standing in each
jurisdiction where the character of the property owned or leased by it or the
nature of its activities makes such qualification necessary, except any
jurisdiction where the failure to so qualify or be in good standing would not
have a Material Adverse Effect. All NRC Subsidiaries and their respective
jurisdictions of organization are identified in Schedule 2.06(b).
(b) All of the outstanding shares of capital stock of, or
other ownership interests in, each NRC Subsidiary, are owned by NRC, directly or
indirectly, free and clear of any Lien and free of any other limitation or
restriction (including any restriction on the right to vote, sell or otherwise
dispose of such capital stock or other ownership interests). There are no
outstanding (i) securities of NRC convertible into or exchangeable for shares of
capital stock or other voting securities or ownership interests in any NRC
Subsidiary or (ii) options or other rights to acquire from NRC or any NRC
Subsidiary, and no other obligation of NRC or any NRC Subsidiary to issue, any
capital stock, voting securities or other ownership interests in, or any
securities convertible into or exchangeable for any capital stock, voting
securities or ownership
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interests in, any NRC Subsidiary. The securities described in clauses (i) and
(ii) above are referred to collectively as the "NRC Subsidiary Securities".
There are no outstanding obligations of NRC or any NRC Subsidiary to repurchase,
redeem or otherwise acquire any outstanding NRC Subsidiary Securities or pay any
dividend or make any other distribution in respect thereof to a Person other
than NRC or a wholly-owned NRC Subsidiary.
Section 2.07 SEC Filings. NRC has filed with the SEC all
forms, reports, definitive proxy statements, schedules and registration
statements required to be filed with the SEC since January 1, 1996 through and
including the date hereof (the "SEC Reports"). No NRC Subsidiary is required to
file any report, form or document with the SEC. As of its respective filing
date, no SEC Report contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary to make
the statements made therein, in the light of the circumstances under which they
were made, not misleading. The SEC Reports when filed complied in all material
respects with applicable requirements of the Securities Act of 1933, as amended,
and the Exchange Act.
Section 2.08 Financial Statements.
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(a) The audited consolidated financial statements and
unaudited consolidated interim financial statements of NRC included in the SEC
Reports (including, without limitation, the audited consolidated balance sheet
at June 30, 1998 (the "Balance Sheet") and the unaudited consolidated balance
sheet at March 31, 1999 (the "Interim Balance Sheet") (collectively, the
"Financial Statements") fairly present, in conformity with GAAP applied on a
consistent basis (except as may be indicated in the notes thereto or in the case
of unaudited interim financial statements as permitted by Form 10-Q or 10-QSB of
the SEC), the consolidated financial position of NRC and its consolidated NRC
Subsidiaries as of the dates thereof and its consolidated statements of
operations, shareholders' equity and cash flows for the periods then ended
(subject to normal year-end adjustments in the case of any unaudited interim
financial statements). The Financial Statements have been prepared from the
books and records of NRC and the NRC Subsidiaries maintained in the ordinary
course of business and reflect and provide adequate reserves in respect of all
known liabilities of NRC and the NRC Subsidiaries, including all known
contingent liabilities, as of their respective dates.
(b) NRC and each of the NRC Subsidiaries keeps books, records
and accounts that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of assets of such entity. None of NRC or any of
the NRC Subsidiaries, and no employee, agent or shareholder of any such entity,
directly or indirectly has made any payment of funds of any such entity or
received or retained any funds in violation of any applicable law, rule or
regulation.
Section 2.09 Disclosure Documents. The Proxy Statement and any
amendment or supplement thereto, when filed, will comply as to form in all
material respects with the applicable requirements of the Exchange Act. At the
time the Proxy Statement or any amendment or supplement thereto is first mailed
to shareholders of NRC and at the time such shareholders vote on the approval
and adoption of this Agreement, the Proxy Statement, as supplemented or amended,
if applicable, will not contain any untrue statement of a material fact
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or omit to state any material fact necessary in order to make the statements
contained therein, in the light of the circumstances under which they were made,
not misleading. The representations and warranties in this Section 2.09 do not
apply to statements in or omissions from the Proxy Statement or any amendment or
supplement thereto based upon information furnished to NRC in writing by Aptec
or Eurisys Mesures SA ("EM") for use therein.
Section 2.10 Absence of Certain Changes or Events. Since June
30, 1998, except as disclosed in the SEC Reports, there has not been: (i) any
change in the business, operations or financial condition of NRC or any of the
NRC Subsidiaries that has had or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect; (ii) any
declaration, setting aside or payment of any dividend or other distribution with
respect to any shares of capital stock of NRC, or any repurchase, redemption or
other acquisition by NRC or any of the NRC Subsidiaries of any outstanding
shares of capital stock or other securities of, or other ownership interests in,
NRC or any of the NRC Subsidiaries; (iii) any incurrence, assumption or
guarantee by NRC or any of the NRC Subsidiaries of any indebtedness for borrowed
money other than in the ordinary course of business and in amounts and on terms
consistent with past practices; or (iv) as of the date hereof, any damage,
destruction or other casualty loss (whether or not covered by insurance)
affecting the business or assets of NRC or any of the NRC Subsidiaries that has
had or would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
Section 2.11 Real Property.
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(a) Set forth on Schedule 2.11(a) is (i) a complete list of
all real property (the "Owned Property") that NRC or any of the NRC Subsidiaries
owns, or in which NRC or any of the NRC Subsidiaries has legal or equitable
title and (ii) a description of each lease of real property under which NRC or
any of the NRC Subsidiaries is a lessee, lessor, sublessee or sublessor (the
"Leased Property"). The Owned Property and the Leased Property sometimes
collectively are referred to as the "Real Property". True and complete copies of
all leases to which NRC or any Subsidiary is a party respecting any real
property and all other instruments granting such leasehold interests, rights,
options or other interests (the "Property Leases"), and to the extent in
possession of NRC or any NRC Subsidiary of all deeds, title insurance policies,
surveys, mortgages, agreements and other documents granting to NRC or any of the
NRC Subsidiaries title to or an interest in any Real Property (the "Title
Documents"), have been made available to Aptec.
(b) With respect to the Property Leases, no breach or event of
default on the part of NRC or any NRC Subsidiary to any of the Property Leases
and no event that, with the giving of notice or lapse of time or both, would
constitute such breach or event of default, have occurred and are continuing
unremedied. All the Property Leases are in full force and effect and are valid
and enforceable against the parties thereto in accordance with their terms. All
rental and other payments due under each of the Property Leases have been duly
paid in accordance with the terms of such Property Lease. The Merger does not
require the consent of any party to, constitute an event of default under or
trigger any options to terminate or otherwise change the existing terms of any
Property Lease.
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(c) With respect to the Title Documents, to NRC's knowledge,
no breach or event of default on the part of NRC or any NRC Subsidiary, or on
the part of any other party thereto and no event that, with the giving of notice
or lapse of time or both, would constitute such breach or event of default under
any term, covenant or condition of such Title Documents, has occurred and is
continuing unremedied.
(d) NRC and the Subsidiaries have good and marketable title in
fee simple to the Owned Property and to all plants, buildings and improvements
thereon, free and clear of any mortgages, Liens, security interests, claims,
charges, imperfections of title, encroachments, easements, rights-of-way,
squatters' rights, encumbrances, covenants, conditions or restrictions
("Impairments"), except for those Impairments that are described on Schedule
2.11(d) or described in the Title Documents.
(e) To NRC's knowledge, the buildings and improvements owned
or leased by NRC or any NRC Subsidiary, and the operation or maintenance thereof
as operated and maintained do not, (i) contravene any zoning or building law or
ordinance or other administrative regulation (including but not limited to those
relating to zoning, land division, building, fire, health and safety) or (ii)
violate any restrictive covenant or any provision of federal, state, local or
foreign law.
(f) There is no pending or, to NRC's knowledge, threatened
condemnation or eminent domain proceeding with respect to, or that could affect,
any Owned Property or Leased Property.
(g) Schedule 2.11(g) includes a complete and accurate list of
the property classifications for zoning purposes of all Real Property as of the
date hereof. Each parcel of Real Property is currently being used in a manner
that is consistent with and in compliance with the property classification
assigned to it for zoning purposes.
Section 2.12 Personal Property. NRC and the NRC Subsidiaries
have good and marketable title to all personal property reflected on the Balance
Sheet and all personal property acquired by NRC or any of the NRC Subsidiaries
since the date of the Balance Sheet (except such personal property as has been
disposed of in the ordinary course of business), free and clear of any Liens (as
hereinafter defined), except for: (i) the Liens identified on Schedule 2.12;
(ii) Liens for current taxes not yet due and payable or delinquent; and (iii)
mechanics', carriers', workmen's, and similar Liens arising in the ordinary
course of business.
Section 2.13 Accounts Receivable. All accounts receivable of
NRC that are reflected on the Financial Statements or the accounting records of
NRC and the NRC Subsidiaries as of the Closing Date (collectively, the "Accounts
Receivable") represent or will represent valid obligations arising from sales
actually made or services actually performed in the ordinary course of business.
The Accounts Receivable are or will be as of the Closing Date collectible within
360 days of the date due. Except as set forth in Schedule 2.13(a), there is no
contest, claim, or right of setoff other than returns in the ordinary course of
business, under any contract with any obligor of an Accounts Receivable relating
to the amount or validity of such Accounts Receivable. Schedule 2.13(b) contains
complete and accurate lists of all Accounts
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Receivable as of the date of the Interim Balance Sheet and as of the date of
this Agreement, which lists set forth the aging of such Accounts Receivable.
Since the date of the Interim Balance Sheet, NRC has not written off or written
down or created reserves against any Accounts Receivable and from the date
hereof to the Closing Date, NRC will not write-off or write down or create
reserves against any Accounts Receivable.
Section 2.14 Personnel.
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(a) Set forth on Schedule 2.14 (a) is a true and complete list
of:
(i) the name of each person employed by NRC or any
NRC Subsidiary (other than hourly employees) whose total compensation
for services rendered, including without limitation bonuses and
deferred compensation, for the fiscal year ended June 30, 1998 was in
excess of the rate of $40,000 per year, the title or job classification
of each such person and the current compensation of each such person;
(ii) the name of each person, if any, holding tax or
other powers of attorney from NRC or any NRC Subsidiary and a summary
of the terms thereof;
(iii) the name and title or job description of each
director and officer, and each other key employee, of NRC and each of
the NRC Subsidiaries; and
(iv) the name and title or job description of each
employee in respect of whom NRC is the beneficiary of a life insurance
policy, and the details of such policy.
(b) Except as set forth on Schedule 2.14(b), since June 30,
1998, there has been no material change in the rate of total compensation for
services rendered, including without limitation bonuses and deferred
compensation, for any of the employees listed on Schedule 2.14(a), and the
bonuses and deferred compensation established for the fiscal year ending June
30, 1998 were consistent with the past practices of NRC for similar employees in
similar situations.
Section 2.15 Labor Matters.
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(a) Except as set forth on Schedule 2.15, neither NRC nor any
NRC Subsidiary is a party to any contract or collective bargaining agreement
with any labor organization. Other than as set forth on Schedule 2.15, no
organization or representation question is pending respecting the employees of
NRC or the NRC Subsidiaries, and no such question has been raised within the
preceding three years.
(b) All reasonably anticipated obligations of NRC or the NRC
Subsidiaries, whether arising by operation of law, contract, past custom or
otherwise, for unemployment compensation benefits, pension benefits, salaries,
wages, bonuses, sick leave, vacation and other forms of compensation payable to
the officers, directors and other employees of NRC or the NRC Subsidiaries have
been paid or adequate accruals therefore have been made in the Balance Sheet.
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(c) There is no claim, grievance, arbitration, negotiation,
suit, action or charge of or by any employee of NRC or any NRC Subsidiary
pending against NRC or any NRC Subsidiary before the National Labor Relations
Board or any state or local agency or in any court, nor to NRC's knowledge is
there any basis therefor. NRC and the NRC Subsidiaries have complied, in respect
of their employees, in all material respects with all applicable statutes,
regulations, orders and restrictions of the United States of America, all states
and other subdivisions thereof, and to NRC's actual knowledge, all foreign
jurisdictions and all agencies and instrumentalities of the foregoing, except
where the failure to so comply would not have a Material Adverse Effect.
(d) NRC has made available to Aptec copies of all claims,
complaints, reports or other documents in NRC's files concerning NRC or any NRC
Subsidiary or their employees made by or against NRC or any NRC Subsidiary
during the past five years pursuant to workers' compensation laws, Title VII of
the Civil Rights Act of 1964, the Occupational Safety and Health Act of 1970,
the National Labor Relations Act of 1935 or any other federal or state laws
relating to employment of labor.
Section 2.16 Environmental Matters.
----------------------
(a) (i) Except as set forth on Schedule 2.16, none of
NRC, the NRC Subsidiaries nor any previous owner, tenant, occupant,
operator or user of any Real Property or Former Real Property (as
hereinafter defined) or any other Person has engaged in or permitted
any operation or activity at or upon, or any use or occupancy of, any
Real Property or Former Real Property for the purpose of or in any way
involving the handling, manufacture, treatment, storage, use,
generation, release, discharge, refining, reclaiming, recycling,
dumping or disposal of any Hazardous Materials (as hereinafter defined)
on, under, in or about any Real Property or Former Real Property (as
hereinafter defined), or transported any Hazardous Materials to, from
or across any Real Property or Former Real Property (as hereinafter
defined). No Hazardous Materials currently are produced, incorporated
in any construction, deposited, stored or otherwise located on, under,
in or about any Real Property other than in compliance in all material
respects with Environmental Requirements.
(ii) Except as set forth on Schedule 2.16, no
Hazardous Materials have migrated from any Real Property or Former Real
Property onto or under other properties, and no Hazardous Materials
have migrated or threatened to migrate from other properties onto or
under any Real Property.
(iii) Except as set forth on Schedule 2.16, no
underground improvement, including without limitation treatment or
storage tank or water, gas or oil well, is or ever has been located on
any Real Property or Former Real Property. All underground treatment
and storage tanks, if any, have been exhumed and disposed of, and all
portions of the Real Property and Former Real Property and all
groundwater
11
contaminated by any Hazardous Materials contained therein, have been
remediated in full compliance with all Environmental Requirements.
(iv) All Real Property and Former Real Property and
all current and past activities thereon, during NRC's ownership and
operation, including without limitation the use, maintenance and
operation of all Real Property and Former Real Property and all
activities and conduct of business related thereto, currently comply
and at all times in the past during NRC's ownership and operation have
complied in all material respects with all Environmental Requirements.
(v) None of NRC, the NRC Subsidiaries nor, any
current or prior owner or occupant of any Real Property or Former Real
Property has received any notice or other communication concerning or
has any knowledge of (A) any violation or alleged violation of
Environmental Requirements, whether or not corrected or (B) any alleged
liability for Environmental Damages (as defined below) in connection
with any Real Property, Former Real Property, or material transported
to, from or across any Real Property or Former Real Property. No writ,
injunction, decree, order or judgment relating to the foregoing is
outstanding. There is no lawsuit, claim, proceeding, citation,
directive, summons or investigation pending or threatened against NRC
or any of the NRC Subsidiaries relating to any alleged violation of or
liability under any applicable Environmental Requirements or the
presence of any Hazardous Materials on any Real Property or Former Real
Property.
(b) For the purposes of this Agreement:
(i) "Environmental Damages" means all claims,
judgments, damages, losses, penalties, fines, liabilities (including
strict liability), encumbrances, Liens, costs and expenses of defense
of a claim (whether or not such claim is ultimately defeated), good
faith settlements of judgment, and costs and expenses of reporting,
investigating, removing and/or remediating Hazardous Materials, of
whatever kind or nature, contingent or otherwise, matured or unmatured,
including without limitation reasonable attorney's fees and
disbursements and consultants' fees, any of which arise out of or
relate to the existence of Hazardous Materials at, upon, about or
beneath the Real Property or Former Real Property, or migrating or
threatening to migrate to or from the Real Property or Former Real
Property or transported to, from, or across any Real Property or Former
Real Property.
(ii) "Environmental Requirements" means all
applicable statutes, regulations, rules, ordinances, codes, actions,
licenses, permits, orders, approvals, plans, authorizations,
concessions, franchises and similar items of all federal state, and
local governmental branches agencies, departments, commissions, boards,
bureaus or instrumentalities domestic and foreign, having jurisdiction
and all applicable judicial and administrative and regulatory decrees,
judgments and orders and all covenants running with the land that
relate to the protection of health or the environment, including
without limitation those that relate to the existence, handling,
manufacture, treatment, storage, use, generation, release, discharge,
refining, recycling, reclaiming or disposal of Hazardous Materials.
12
(iii) "Former Real Property" means any real property
in which NRC or any of the NRC Subsidiaries heretofore held but no
longer holds a fee, leasehold or other legal, beneficial or equitable
interest.
(iv) "Hazardous Materials" means any substance: (A)
the presence of which requires reporting, investigation, removal or
remediation under any Environmental Requirement; (B) that is defined as
a "hazardous waste," "hazardous substance" or "pollutant" or
"contaminate" under any Environmental Requirement; (C) that is toxic,
explosive, corrosive, flammable, ignitable, infectious, radioactive,
reactive, carcinogenic, mutagenic or otherwise hazardous and is
regulated under any Environmental Requirement; (D) the presence of
which on any Real Property or Former Real Property poses a hazard to
the health or safety of persons on or about any Real Property or Former
Real Property; (E) the presence of which on adjacent properties
constitutes a trespass by NRC or an NRC Subsidiary; (F) that contains
gasoline, diesel fuel or other petroleum hydrocarbons; or (G) that
contains PCBs, asbestos or urea formaldehyde foam insulation.
(c) Except as set forth on Schedule 2.16, NRC and the NRC
Subsidiaries have complied in all material respects with all Environmental
Requirements.
(d) NRC has made available to Aptec true and complete copies
of all claims, complaints, reports assessments, audits, investigations and other
documents in the possession of or obtainable by NRC made by, on behalf of or
against NRC or any NRC Subsidiary during the past five (5) years pertaining to
Environmental Requirements or Hazardous Materials.
(e) Notwithstanding anything to the contrary in this Section
2.16, all representations made by NRC in this Section 2.16 with respect to the
actions or omissions of any current or prior owner or occupant of any Real
Property or Former Real Property, other than NRC or any NRC Subsidiary, are made
to the actual knowledge of NRC.
Section 2.17 Non-ERISA Plans. Set forth on Schedule 2.17 is a
complete list of each current employment contract and consulting agreement
entered into by NRC or any NRC Subsidiary, or by which NRC or any NRC Subsidiary
is bound (b), and each deferred compensation, bonus, incentive compensation,
restricted stock, stock option, employee stock purchase, savings, severance or
termination pay agreement or plan and any other employee benefit plan,
agreement, arrangement or commitment, whether formal or informal, not required
to be listed on Schedule 2.18, maintained, entered into or contributed to, or
which is required to be maintained, entered into or contributed to, by NRC or
any NRC Subsidiary for the benefit of any current or former director, officer or
employee of NRC or any NRC Subsidiary (the "Non- ERISA Plans").
Section 2.18 ERISA Plans.
------------
(a) Except as set forth on Schedule 2.18(a), there is no
employee pension benefit plan (the "Pension Plans") as defined in Section 3(2)
of the Employee Retirement Income Security Act of 1974 ("ERISA") or employee
welfare benefit plan (the "Welfare Plans" and, together with the Pension Plans,
collectively referred to as the "ERISA Plans") as defined in
13
Section 3(1) of ERISA established, maintained or contributed to by NRC or any
ERISA Affiliate or to which NRC or any ERISA Affiliate had an obligation to
contribute during the five years preceding the date hereof. As used herein, the
term "ERISA Affiliate" means a corporation which is a member of a controlled
group of corporations with NRC or any NRC Subsidiary within the meaning of
Section 414(b) of the Internal Revenue Code of 1986 (the "Code"), a trade or
business (including a sole proprietorship, partnership, trust, estate or
corporation) which is under common control with NRC or any NRC Subsidiary within
the meaning of Section 414(c) of the Code, or a member of an affiliated service
group with NRC or any NRC Subsidiary within the meaning of Section 414(m) or
Section 414(o) of the Code.
(b) Except as set forth on Schedule 2.18(b), no contract,
agreement, plan or other arrangement, whether or not an ERISA Plan (other than
this Agreement), exists pursuant to which the execution of this Agreement would
trigger an obligation by NRC or any NRC Subsidiary to pay any amount or provide
any property to any employee, officer or director of NRC or any of the NRC
Subsidiaries.
Section 2.19 Compliance with Law. Except as set forth in
Schedule 2.16 or 2.19, NRC and the NRC Subsidiaries, their officers, directors,
agents and employees have complied with all applicable statutes, regulations,
orders and restrictions of the United States of America, all states and other
subdivisions thereof, to NRC's actual knowledge all applicable foreign
jurisdictions, all agencies and instrumentalities of the foregoing and all
national and international self-regulatory bodies and authorities in respect of
the conduct of NRC's and the NRC Subsidiaries' business and ownership of their
properties, except where such failure to comply would not have a Material
Adverse Effect.
Section 2.20 Litigation. Except as set forth on Schedule 2.20,
there is no action, suit, claim, proceeding, inquiry or investigation pending
or, to NRC's knowledge, threatened, against or affecting NRC or any NRC
Subsidiary, or the assets, properties, business or business prospects of NRC or
any NRC Subsidiary, or relating to or involving the transactions contemplated by
this Agreement at law or in equity, or before or by any arbitrator or any
federal, state, local or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, and NRC knows of no
basis for any of the foregoing. Except as set forth on Schedule 2.20, none of
NRC or any NRC Subsidiary has received any opinion or memorandum or legal advice
or notice from legal counsel to the effect that it is exposed, from a legal
standpoint, to any liability or disadvantage that may have a Material Adverse
Effect. Neither NRC nor any NRC Subsidiary is in default with respect to any
order, writ, injunction or decree known to or served upon NRC or such NRC
Subsidiary. Except as set forth on Schedule 2.20, there is no pending action or
suit brought by NRC or any NRC Subsidiary against others.
Section 2.21 Material Contracts.
-------------------
(a) Except as set forth on Schedules 2.21(a), neither NRC nor
any NRC Subsidiary is a party to any written or to NRC's knowledge, oral:
14
(i) contract involving an income or expense in excess
of $50,000 (on an annualized basis) or contract not made in the
ordinary course of business;
(ii) consulting agreement or contract for the
employment of any officer, employee or other person on a full-time,
part-time or consulting basis;
(iii) agreement, mortgage, indenture, loan or credit
agreement, security agreement, guaranty or indemnity or other agreement
or instrument relating to the borrowing or lending of money or
extension of credit or providing for the mortgaging or pledging of, or
otherwise placing a Lien or security interest on, any assets or
properties of NRC or any NRC Subsidiary;
(iv) option, warrant or other contract for the purchase
of any debt or equity security of any corporation, or for the issuance
of any debt or equity security, or the conversion of any obligation,
instrument or security into debt or equity securities, of NRC or any
NRC Subsidiary; or
(v) settlement agreement of any administrative or
judicial proceedings within the past five years; or
(vi) intellectual property (including trademark)
licensing agreement.
(b) Except as set forth in Schedule 2.21(b), neither NRC nor
any of the NRC Subsidiaries is in breach of or in default in any material
respect under any provisions of the contracts, obligations or commitments set
forth on Schedule 2.21 (collectively, the "Contracts"), and no event has
occurred that, with the giving of notice or lapse of time or both, would
constitute such a breach or default. NRC has made available to Aptec a true and
complete copy of all written contracts, obligations or commitments set forth on
Schedule 2.21(b), and accurate descriptions of all oral contracts, obligations
or commitments set forth on Schedule 2.21(b).
Section 2.22 Conduct of Business. Since June 30, 1998, NRC has
preserved the business organization of NRC intact, kept available to NRC the
services of all current officers and employees and preserved the goodwill of the
suppliers, customers, employees and others having business relations with NRC.
Except as set forth on Schedule 2.22, since June 30, 1998, NRC has conducted its
business in the ordinary course, has maintained its assets and properties in at
least as good order and condition as existed on June 30, 1998 (other than wear
as may be accounted for by reasonable use) and as is necessary to continue to
conduct its business and has not and will not through to the Closing Date:
(a) incurred any material obligation or liability (absolute,
accrued, contingent or other), except in the ordinary course of business;
(b) discharged or satisfied any material Lien or encumbrance,
or paid or satisfied any material obligation or liability (absolute, accrued,
contingent or other), other than liabilities reflected on the Balance Sheet or
incurred since June 30, 1998 in the ordinary course of business consistent with
past practice;
15
(c) written down or written off any Accounts Receivable,
except as permitted under Section 2.13;
(d) increased or established any reserve for taxes or other
liabilities on its books or otherwise provided therefor, except for current
taxes due in the ordinary course of business;
(e) mortgaged, pledged or subjected to any Lien, charge or
other encumbrance any of the assets or properties of NRC or any of the NRC
Subsidiaries; except for leases and financing of equipment in the ordinary
course of business.
(f) sold, assigned or transferred any asset, property or
business or canceled any debt or claim or waived any right, except sales of
inventory and immaterial amounts of other assets in the ordinary course of
business;
(g) granted any increase in the compensation (including
bonuses and deferred compensation) payable to any executive officer, director,
or key employee of NRC, or granted any increase in compensation to any other
employee of NRC in excess of five percent (5%).
(h) made or authorized any capital expenditure for additions
to plant and equipment of NRC and the NRC Subsidiaries in excess of $100,000 in
the aggregate except as may have been necessary for ordinary repair, maintenance
and replacement;
(i) made or forgiven any loan to any shareholder or any
relative or affiliate of any shareholder, or declared, set aside or paid to any
shareholder any dividend or other distribution in respect of its capital stock,
or redeemed or purchased any of its capital stock, or agreed to take any such
action;
(j) transferred any asset or paid any commission, salary or
bonus to any shareholder or any relative or affiliate of any shareholder other
than the payment of wages or salaries to shareholder employees in the ordinary
course of business and as disclosed on Schedule 2.15 or paid any rent,
commission or fee to any shareholder or any relative or affiliate of any
shareholder other than pursuant to leases disclosed on Schedule 2.11 in the
amounts shown thereon;
(k) entered into or agreed to enter into any transaction with
or for the benefit of any shareholder or any relative or affiliate of any
shareholder other than the transactions contemplated by this Agreement and the
Stock Acquisition Agreement;
(l) issued, sold or transferred, or agreed to issue, sell or
transfer, any stock, bond, debenture or other security of NRC or the NRC
Subsidiaries;
(m) paid, incurred or made any commitments to pay or incur any
default rate of interest, fees, costs or expenses of any nature whatsoever in
connection with any credit or loan facilities extended to NRC.
16
Section 2.23 Tax Matters.
------------
(a) Except as set forth on Schedule 2.23(a), NRC and the NRC
Subsidiaries in a timely manner (including extensions) have filed and will file
all returns and other reports required to be filed on or before the Effective
Time by them under all federal, state, local and foreign tax laws to which they
are subject. All such returns and reports are true, correct and complete in all
material respects and accurately set forth all items to the extent required to
be reflected or included in such returns by applicable federal, state, local or
foreign tax laws, regulations or rules. NRC and the NRC Subsidiaries have paid
in full or set up an adequate reserve in respect of all taxes for the periods
covered by such returns, as well as all other taxes, penalties, interest, fines,
deficiencies, assessments and governmental charges that have become due or
payable, including without limitation all taxes that NRC or any of the
Subsidiaries is obligated to withhold from amounts paid or payable to or
benefits conferred upon employees, creditors and third parties. Neither NRC nor
any NRC Subsidiary has any tax liability for which an adequate tax reserve has
not been established on the Balance Sheet, whether or not disputed, including
any interest and penalty in connection therewith, for all periods ending on or
prior to the date of the Balance Sheet. There are no representations or
warranties being made with respect to: (i) the availability of net operating
loss carry forwards for income tax purposes or other carry forwards which may
apply for taxable periods after the Effective Time; or (ii) the income tax basis
for any assets of NRC or any NRC Subsidiary. With respect to any periods for
which tax returns have not yet been required to be filed or for which taxes are
not yet due and payable, NRC has only incurred liability for taxes in the
ordinary course of its business and in the manner and at a level consistent with
prior years.
(b) Set forth on Schedule 2.23(b) is a complete list of income
and other tax returns filed by NRC or any of the NRC Subsidiaries pursuant to
the laws or regulations of any federal, state, local or foreign tax authority
that have been examined or audited by the IRS or other appropriate authority
during the preceding five years. Also set forth on Schedule 2.23(b) is a
complete list of all adjustments resulting from each such examination or audit.
No tax examination or audit is in progress. No changes proposed by a taxing
authority in an audit during such five year period (other than changes disclosed
in Schedule 2.23(b)) can reasonably be expected to affect the amount of tax
liability for NRC or any NRC Subsidiary in the future. All deficiencies proposed
as a result of such examinations or audits have been paid or finally settled and
no issue has been raised in any such examination or audit that, by application
of similar principles, reasonably can be expected to result in the assertion of
a deficiency for any other year not so examined or audited. The results of any
settlement and the necessary adjustments resulting therefrom properly are
reflected in the Balance Sheet. The period during which any assessment against
NRC or any of the NRC Subsidiaries may be made by the IRS or other appropriate
authority has expired without waiver or extension for the years set forth on
Schedule 2.23(b) for each such authority. There are no grounds for any further
tax liability with respect to the years ended on or before the date of the
Balance Sheet that have not been examined or audited. There is no outstanding
agreement or waiver made by or on behalf of NRC or any of the NRC Subsidiaries
for the extension of time for any applicable statute of limitations, and neither
NRC nor any of the NRC Subsidiaries has requested any extension of time in which
to file any tax return.
17
(c) Except for taxes for the payment of which an adequate
reserve has been established on the Balance Sheet and for property taxes that
are not delinquent, there is no tax Lien, whether imposed by any federal, state,
local or foreign taxing authority, outstanding against any of the assets or
properties of NRC or any of the NRC Subsidiaries.
(d) NRC is not a United States Real Property Holding
Corporation (a "USRPHC") within the meaning of Section 897 of the Code and was
not a USRPHC on any "determination date" (as defined in ss.1.897-2(c) of the
Treasury Regulations) that occurred in the five-year period preceding the
Closing Date.
(e) Neither NRC nor any NRC Subsidiary has executed any
closing agreement pursuant to Section 7121 of the Code or any predecessor
provision thereof, or any similar provision of state or local law.
(f) NRC has not filed a consent pursuant to Section 341(f) of
the Code or agreed to have Section 341(f)(2) of the Code apply to any
disposition of a subsection (f) asset (as such term is defined in Section
341(f)(4) of the Code) owned by NRC or any NRC Subsidiary.
(g) None of the assets owned by NRC or any NRC Subsidiary is
property that is required to be treated as owned by any other Person pursuant to
Section 168(f)(8) of the Internal Revenue Code of 1954, as amended, as in effect
immediately prior to the enactment of the Tax Reform Act of 1986 or is
"tax-exempt use property" within the meaning of Section 168(h) of the Code.
(h) NRC is not a party to a tax sharing agreement or similar
arrangement.
(i) Neither NRC nor any NRC Subsidiary has agreed to make, and
none is required to make any adjustments pursuant to Section 481(a) of the Code
or any similar provision of state or local law by reason of a change in
accounting method initiated by it or any other relevant party; none has any
knowledge that the IRS has proposed any such adjustment or change in accounting
method; and there is no application pending with any taxing authority requesting
permission for any changes in accounting methods that relate to the business or
assets of NRC or any NRC Subsidiary.
(j) NRC has not made any payments, is not obligated to make
any payments, and is not a party to any agreement that under any circumstances
could obligate it to make payments, that would not in each case be deductible
under Section 280G of the Code.
(k) As used in this Agreement, the term "Tax Return" includes
any material report, statement, form, return or other document or information
required to be supplied to a taxing authority in connection with taxes. As used
in this Agreement, the term "Taxes" means any federal, state, local or foreign
income or gross receipts tax, alternative or add-on minimum tax, sales and use
tax, customs duty and any other tax, charge, fee, levy or other assessment
including without limitation property, transfer, occupation, service, license,
payroll, franchise, excise, withholding, ad valorem, severance, stamp, premium,
windfall profit, employment, rent or other tax, governmental fee or like
assessment or charge of any kind whatsoever, together with
18
any interest, fine or penalty thereon, addition to tax, additional amount,
deficiency, assessment or governmental charge imposed by any federal, state,
local or foreign taxing authority.
Section 2.24 Absence of Undisclosed Liabilities. Except as
specifically identified on Schedules 2.20 and 2.24, neither NRC nor any NRC
Subsidiary has any indebtedness or liability, whether accrued, fixed or
contingent, other than (a) liabilities reflected in the Balance Sheet, and (b)
liabilities incurred in the ordinary course of business of NRC and the NRC
Subsidiaries (consistent with past practice in terms of both frequency and
amount) subsequent to the date of the Balance Sheet.
Section 2.25 Insurance. Set forth on Schedule 2.25 is a
complete list and description of all policies of insurance, together with the
premiums currently payable thereon, (i) covering damage to goods being
manufactured, shipped, held or otherwise processed by NRC or any of the NRC
Subsidiaries, (ii) providing for fire, property, casualty, business
interruption, personal or product liability, workers' compensation and other
forms of insurance coverage for NRC, or (iii) providing for fire, property,
casualty and other forms of insurance coverage for the Real Property. All such
policies or substantially comparable insurance coverage will be outstanding and
in full force and effect at the Closing Date. There was no material inaccuracy
in any application for any such insurance coverage. Except as set forth on
Schedule 2.25, there is no claim, action, suit or proceeding arising out of or
based upon any of such policies of insurance, and no basis for any such claim,
action, suit or proceeding exists. There is no notice of any pending or
threatened termination or premium increase with respect to any of such policies,
and NRC and the NRC Subsidiaries are in compliance with all conditions contained
therein.
Section 2.26 Corporate Name. "Nuclear Research Corporation",
"NRC" and "NRC Industries" constitute all of the corporate names presently used
by NRC and the NRC Subsidiaries. Set forth on Schedule 2.26 is a list of all
jurisdictions, and the locations in such jurisdictions, in which the corporate
name, or any variations thereof are used by NRC or the NRC Subsidiaries. NRC and
the NRC Subsidiaries have the full legal right to use such names in each of such
jurisdictions and locations. There is no actual or, to NRC's knowledge,
threatened claim by any third party with respect to the use of such names or of
any actual or proposed use of the name or any variations thereof by any third
party in conflict with the use thereof by NRC and the NRC Subsidiaries. To NRC's
knowledge, the use by NRC and the NRC Subsidiaries of the name or any variations
thereof do not infringe upon the rights of any third party and neither NRC nor
any NRC Subsidiary has granted any third party any right to use such name or any
variations thereof.
Section 2.27 Transactions with Related Parties.
----------------------------------
(a) Except as set forth on Schedule 2.27, there are no
outstanding notes payable to, accounts receivable from or advances by NRC or any
of the NRC Subsidiaries to, and neither NRC nor any of the NRC Subsidiaries is
otherwise a creditor of, any shareholder or former shareholder of NRC or any
relative or affiliate of any shareholder or former shareholder of NRC. Since the
date of the Balance Sheet, neither NRC nor any of the NRC Subsidiaries has
19
incurred any obligation or liability to, or become a creditor of, any
shareholder or former shareholder of NRC or any relative or affiliate of any
shareholder or former shareholder of NRC.
(b) Except as set forth on Schedule 2.27, since the date of
the Balance Sheet, NRC has neither declared any dividends nor paid any dividends
to any shareholder or former shareholder of NRC or any relative or affiliate of
any shareholder or former shareholder of NRC.
(c) Neither NRC nor any of the NRC Subsidiaries has purchased
or leased real property from any shareholder or former shareholder of NRC or any
relative or affiliate of such person, including any other instruments granting
such leasehold interests, or involving rights, options or other interests.
Section 2.28 Permits. NRC and the NRC Subsidiaries have all
franchises, licenses, permits, certificates and other authorizations from
federal, state, local or to NRC's actual knowledge foreign governments or
governmental agencies, departments or bodies that are necessary for the conduct
of their business and which, if not obtained, would, individually or in the
aggregate, have a Material Adverse Effect (each a "Permit"). Schedule 2.28
contains a list of all Permits. NRC has no knowledge of any fact, error or
omission relevant to any Permit that would permit the revocation or withdrawal,
or the threatened revocation or withdrawal, thereof. NRC and the Subsidiaries
will continue to have the use and benefit thereof and the rights granted thereby
after the Merger has occurred.
Section 2.29 Bank Accounts. Schedule 2.29 contains an
accurate and complete list of:
(a) the names and addresses of each bank in which NRC or any
NRC Subsidiary has an account;
(b) the account numbers of such accounts; and
(c) the authorized signatories and amounts for such accounts.
Section 2.30 Product Liability. Except as set forth on
Schedule 2.30, there are no pending product liability, warranty, backcharge, or
other claims by any third party (whether based on contract or tort and whether
relating to personal injury, including death, property damage or economic loss)
arising from (A) services rendered by NRC or any NRC Subsidiary, (B) the
manufacture, sale, distribution, erection or installation of products by NRC or
any NRC Subsidiary or (C) the operation of NRC's or any NRC Subsidiary's
business.
Section 2.31 Customers. Set forth on Schedule 2.31 is a
complete list of the ten (10) largest (in terms of dollar volume) customers of
NRC and the NRC Subsidiaries for each of the fiscal years ended June 30, 1997
and 1998, indicating the amount paid to NRC by each customer for each such
fiscal year and the names of the employees of NRC who are primarily responsible
for servicing each such customer as of the date hereof. Except as set forth on
Schedule 2.31, to NRC's knowledge, none of such customers has terminated or
indicated an intention or plan to terminate all or a material part of the
services performed for or orders
20
historically placed by such customers. Except as set forth on Schedule 2.31, NRC
has satisfactory relationships with its major customers, suppliers and
contractors, and NRC has no reason to believe there will be any adverse change
in any of such relationships, whether by reason of the Merger or for any other
reason. None of the employees primarily responsible for servicing customers
listed thereon has indicated an intention or to NRC's knowledge, plan to
terminate his or her employment with NRC.
Section 2.32 Intellectual Property Matters.
------------------------------
(a) As used herein, the term "Intellectual Property Assets"
includes:
(i) all fictional business names, trading names,
registered and unregistered trademarks, service marks, and applications
(collectively, "Marks");
(ii) all patents, patent applications, and inventions
and discoveries that may be patentable owned by NRC or any NRC
Subsidiary (collectively, "Patents");
(iii) all registered copyrights in both published
works and unpublished works, and all rights in mask works
(collectively, "Copyrights"); and
(iv) all know-how, trade secrets, confidential
information, customer lists, customer histories, product formulations,
product information and specifications, software, technical
information, data, process technology, plans, drawings, and blueprints
(collectively, "Trade Secrets") owned, used, or licensed by NRC as
licensee or licensor.
(b) (i) Schedule 2.32(b) attached hereto contains a
complete and accurate list and summary description, including any
royalties paid or received by NRC, of all contracts relating to the
Intellectual Property Assets to which NRC is a party or by which NRC is
bound, except for any license implied by the sale of a product and
perpetual, paid-up licenses for commonly available software programs
with a value of less than $500 under which NRC is the licensee. There
are no outstanding and to NRC's knowledge no threatened disputes or
disagreements with respect to any such agreement.
(ii) The Intellectual Property Assets owned or used
by NRC are all those necessary for the operation of NRC's business as
currently conducted. Except as set forth on Schedule 2.32(b), NRC is
the owner of all right, title, and interest in and to each of the
Intellectual Property Assets, free and clear of all Liens and, to NRC's
knowledge, other adverse claims, and to NRC's knowledge has the right
to use without payment to a third party all of the Intellectual
Property Assets. No employee of NRC has any rights to or interests in
the Intellectual Property Assets.
(iii) Except as set forth in Schedule 2.32(c) attached
hereto, all NRC research employees who are currently employed or were
employed during the past two years have executed written contracts with
NRC that assign to NRC all rights to any inventions, improvements,
discoveries, or information relating to the business of NRC. To NRC's
knowledge, no employee has entered into any contract that restricts or
limits in
21
any way the scope or type of work in which the employee may be engaged
or requires the employee to transfer, assign, or disclose information
concerning his work to anyone other than NRC.
(c) Patents.
(i) Schedule 2.32(c) attached hereto contains a
complete and accurate list and summary description of all Patents.
(ii) All of the issued Patents are currently in
compliance with formal legal requirements (including payment of filing,
examination, and maintenance fees and proofs of working or use), and,
to NRC's knowledge, are valid and enforceable and are not subject to
any maintenance fees or taxes or actions falling due within ninety days
after the Closing Date.
(iii) To NRC's knowledge, no Patent has been or is
now involved in any interference, reissue, reexamination, or opposition
proceeding. To NRC's knowledge, there is no potentially interfering
patent or patent application of any third party.
(iv) Except as set forth on Schedule 2.32(c), and to
NRC's actual knowledge, no Patent is infringed or, has been challenged
or threatened in any way. None of the products manufactured and sold,
nor any process or know-how used, by NRC infringes or is alleged to
infringe any patent or other proprietary right of any other Person. NRC
has not received notice of any Person's intent to challenge the
validity of any of the Patents.
(v) All products made, used, or sold under the
Patents have been marked with the proper patent notice.
(d) Trademarks.
(i) Schedule 2.32(d) attached hereto contains a
complete and accurate list and summary description of all Marks.
(ii) All Marks that have been registered with the
United States Patent and Trademark Office are currently in compliance
with all formal legal requirements (including the timely
post-registration filing of affidavits of use and incontestability and
renewal applications), are valid and enforceable, and are not subject
to any maintenance fees or taxes or actions falling due within ninety
days after the Closing Date.
(iii) No Xxxx has been or is now involved in any
opposition, invalidation, or cancellation and, to NRC's knowledge, no
such action is threatened with respect to any of the Marks.
22
(iv) To NRC's knowledge, there is no potentially
interfering trademark or trademark application of any third party.
(v) To NRC's knowledge, no Xxxx is infringed or has
been challenged or threatened in any way and none of the Marks used by
NRC infringes or is alleged to infringe any trade name, trademark, or
service xxxx of any third party.
(vi) All products and materials containing a Xxxx
xxxx the proper federal registration notice where permitted by law.
(e) Copyrights.
(i) Schedule 2.32(e) attached hereto contains a
complete and accurate list and summary description of all Copyrights.
(ii) All Copyrights have been registered and are
currently in compliance with all formal legal requirements, are valid
and enforceable, and are not subject to any maintenance fees or taxes
or actions falling due within ninety days after the Closing Date.
(iii) No Copyright is infringed or, to NRC's
knowledge, has been challenged or threatened in any way. None of the
subject matter of any of the Copyrights infringes or is alleged to
infringe any copyright of any third party or is a derivative work based
on the work of a third party.
(iv) All works encompassed by the Copyrights have
been marked with the proper copyright notice.
(f) Trade Secrets.
(i) With respect to each Trade Secret, the
documentation if any, defining such Trade Secret is current, accurate,
and sufficient in detail and content to identify and explain it and to
allow its full and proper use without reliance on the knowledge or
memory of any individual.
(ii) NRC has taken all reasonable precautions to
protect the secrecy, confidentiality, and value of the Trade Secrets.
(iii) NRC has an absolute (but not necessarily
exclusive) right to use the Trade Secrets. Except as set forth on
Schedule 2.32(f), the Trade Secrets are not part of the public
knowledge or literature, and, to NRC's knowledge, have not been used,
divulged, or appropriated either for the benefit of any Person or to
the detriment of NRC. No Trade Secret is subject to any adverse claim
or has been challenged or threatened in any way.
Section 2.33 Government Contracts. Schedule 2.33 sets forth
the nature and dollar amount of each contract obtained by NRC and the NRC
Subsidiaries since January 1, 1994
23
from any U.S. governmental body, agency or department or by reason of NRC's and
the NRC Subsidiaries' status as a "small business" or any other preferential,
priority or set-aside treatment granted under any federal, state or local law.
Section 2.34 Brokers. None of NRC or any of the NRC
Subsidiaries, or any of their respective officers, directors or employees, has
employed any investment banker, broker, finder or other intermediary or incurred
any liability for any brokerage fees, commissions or finder's fees in connection
with the transactions contemplated by this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF APTEC AND NEWCO
Aptec and Newco represent and warrant to NRC as follows:
Section 3.01 Corporate Existence and Power.
------------------------------
(a) Aptec is a corporation duly incorporated, validly existing
and subsisting under the laws of Ontario, and will on or before the Closing
Date, subject to regulatory approval, be continued as a corporation incorporated
under the law of the province of New Brunswick, and has and will have on the
Closing Date all corporate power required to carry on its business as now
conducted. Aptec is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities makes such qualification
necessary, except where the failure to so qualify or be in good standing would
not have a Material Adverse Effect. Aptec has delivered to NRC copies of Aptec's
certificate of incorporation and by-laws as currently in effect.
(b) Newco is a corporation duly incorporated, validly existing
and subsisting under the laws of the Commonwealth of Pennsylvania and has all
corporate power required to carry on its business as now conducted. Newco is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction where the character of the property owned or leased by it
or the nature of its activities makes such qualification necessary. Newco has
delivered to NRC copies of Newco's articles of incorporation and by-laws as
currently in effect.
Section 3.02 Corporate Authorization. The execution, delivery
and performance by each of Aptec and Newco of this Agreement and the
consummation by Aptec and Newco of the transactions contemplated hereby are
within the corporate powers of each of Aptec and Newco and have been duly
authorized by all necessary corporate action on the part of Aptec and Newco.
This Agreement has been duly and validly executed and delivered by each of Aptec
and Newco and, assuming the due and valid authorization, execution and delivery
of this Agreement by NRC, constitutes a valid and binding agreement of each of
Aptec and Newco, enforceable in accordance with its terms except as may be
limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and other similar laws affecting creditors' rights generally and by
24
equitable principles of general applicability. The Board of Directors of each of
Aptec and Newco, and Aptec as the sole shareholder of Newco, have approved the
Merger, this Agreement and the transactions contemplated hereby. No other
corporate proceedings or shareholder approvals on the part of Aptec or Newco are
necessary to authorize or approve this Agreement or to consummate the
transactions contemplated hereby.
Section 3.03 Governmental Authorization. The execution,
delivery and performance by each of Aptec and Newco of this Agreement and the
consummation by each of Aptec and Newco of the Merger and the other transactions
contemplated hereby require no consent, waiver, approval, authorization or
permit by or from, or action by or in respect of, or filing with, any
Governmental Entity, other than: (i) the filing of the articles of merger as
contemplated by Section 1.01(a); (ii) compliance with any applicable
requirements of the Exchange Act; and (iii) Canadian, federal and provincial
regulatory consents and filings.
Section 3.04 Non-contravention. Assuming compliance with the
matters referred to in Section 3.03, the execution, delivery and performance by
each of Aptec and Newco of this Agreement and the consummation by each of Aptec
and Newco of the transactions contemplated hereby do not and will not: (i)
contravene or conflict with the articles or by-laws of each of Aptec and Newco;
(ii) contravene or conflict with or constitute a violation of any provision of
any law, regulation, judgment, injunction, order or decree binding upon or
applicable to Aptec, Newco or any Subsidiary of Aptec; (iii) result in a breach
or violation of or constitute a default (or an event that with the giving of
notice or the lapse of time or both would constitute a default) under or give
rise to a right of termination, amendment, cancellation or acceleration of any
right or obligation of Aptec, Newco or any Subsidiary of Aptec or to a loss of
any material benefit to which Aptec, Newco or any Subsidiary of Aptec is
entitled or require any consent, approval or authorization under any provision
of any material agreement, contract or other instrument binding upon Aptec,
Newco or any Subsidiary of Aptec or any of their respective assets (including
any material license, franchise, permit or other similar authorization held by
Aptec, Newco or any Subsidiary of Aptec); or (iv) result in the creation or
imposition of any Lien on any material asset of Aptec, Newco or any Subsidiary
of Aptec.
Section 3.05 Aptec Shares. The Shares of Aptec Common Stock
issued to the Xxxxxxx Holders in the Merger, when issued, will be validly
issued, fully paid, and non-assessable.
ARTICLE IV
COVENANTS OF APTEC AND NRC
Section 4.01 Reasonable Best Efforts. Subject to the terms and
conditions herein provided, each of the parties will use its reasonable best
efforts to take, or cause to be taken, all action, and to do, or cause to be
done and to assist and cooperate with the other parties in doing, as promptly as
practicable, all things necessary or advisable under applicable laws and
regulations to ensure that the conditions set forth in Article V are satisfied
and to consummate and make effective the transactions contemplated by this
Agreement. If at any time after the
25
Effective Time any further action is reasonably necessary or desirable to carry
out the purposes of this Agreement, including the execution of additional
instruments, the proper officers and directors of each party will take all such
action.
Section 4.02 NRC Shareholder Meeting.
(a) NRC will take all action necessary in accordance with the
PBCL, the Exchange Act, and its Articles of Incorporation and by-laws to call,
give notice of and hold a meeting (the "Shareholder Meeting") of its
shareholders to consider and vote upon the approval and adoption of this
Agreement and the Merger and for such other purposes as may be necessary or
desirable.
(b) Promptly after the date hereof, NRC will prepare a proxy
statement pertaining to the Shareholder Meeting to be distributed to the holders
of NRC Common Stock (the "Proxy Statement"). The NRC Board will recommend that
the shareholders of NRC vote to approve the Merger and adopt this Agreement and
approve any other matters to be submitted to shareholders in connection
therewith, and NRC will include such recommendation in the Proxy Statement.
(c) NRC will promptly notify Aptec of the receipt of comments
from the SEC and of any request by the SEC for amendments or supplements to the
Proxy Statement or for additional information, and promptly will supply Aptec
with copies of all correspondence between NRC and the SEC with respect thereto.
If, at any time prior to the NRC Shareholder Meeting, any event should occur
relating to or affecting NRC, Aptec or Newco, or to their respective
Subsidiaries, officers or directors, which event should be described in an
amendment or supplement to the Proxy Statement, the parties promptly will inform
each other and cooperate in preparing, filing and having declared effective or
clearing with the SEC and, if required by applicable state securities laws,
distributing to NRC's shareholders such amendment or supplement.
Section 4.03 Consents. Each of the parties will use its
reasonable best efforts to obtain as promptly as practicable all consents,
waivers, approvals, authorizations or permits of any Governmental Entity or any
other Person required in connection with the consummation of the transactions
contemplated by this Agreement.
Section 4.04 Public Announcements. Neither Aptec nor NRC will
issue any press release or make any other public announcement concerning this
Agreement, the Merger or the transactions contemplated hereby without the prior
consent of the other, except that either party may make such public disclosure
that it believes in good faith to be required by law (in which event such party
will notify the other party prior to making such disclosure).
Section 4.05 Notification of Certain Matters. Aptec and NRC
promptly will notify the other of: (i) the occurrence or non-occurrence of any
fact or event that would be reasonably likely to cause any (x) representation or
warranty contained in this Agreement to be untrue or inaccurate in any material
respect at any time from the date hereof to the Effective Time or (y) material
covenant, condition or agreement contained in this Agreement not to be
26
complied with or satisfied in all material respects; and (ii) any failure of
NRC, Aptec or Newco to comply with or satisfy in any material respect any
covenant, condition or agreement contained in this Agreement.
Section 4.06 Access to Information. From the date hereof until
the Effective Time, Aptec and NRC will, and will cause each of their
Subsidiaries to: (i) give the other party and its counsel, financial advisors,
auditors and other authorized representatives reasonable access during normal
business hours to the offices, properties, books and records of such party and
its Subsidiaries as the other party reasonably may request, and furnish the
other party with such financial and operating data and other information as the
other party reasonably may request; and (ii) instruct such parties' employees,
counsel and financial advisors to cooperate with the other party in their
investigation of the business of such party and its Subsidiaries.
Section 4.07 Tax-free Reorganization. Prior to the Effective
Time, each party will use its best efforts to cause the Merger to qualify as a
reorganization within the meaning of Section 368 of the Code, and will not take
any action reasonably likely to cause the Merger not to qualify as such a
reorganization.
ARTICLE V
CONDITIONS TO THE MERGER
Section 5.01 Conditions to the Obligations of Each Party. The
respective obligations of the parties to consummate the Merger are subject to
the satisfaction, at or prior to the Effective Time, of each of the following
conditions:
(a) The shareholders of NRC shall have approved and adopted
this Agreement and the Merger pursuant to the requirements of NRC's articles of
incorporation and by-laws and the PBCL;
(b) The consummation of the Merger shall not be restrained,
enjoined or prohibited by any order, judgment, decree, injunction or ruling of a
court of competent jurisdiction or any Governmental Entity entered after the
parties have used their reasonable best efforts to prevent such entry. There
shall not have been any statute, rule or regulation enacted, promulgated or
deemed applicable to the Merger by any Governmental Entity that prevents the
consummation of the Merger;
(c) NRC shall have received an opinion of Wolf, Block, Xxxxxx
and Xxxxx- Xxxxx LLP, dated the Effective Time, to the effect that (i) the
Merger should be treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code and (ii) each of Aptec, Newco
and NRC should be a party to the reorganization within the meaning of Section
368(b) of the Code. In rendering such opinion, Wolf, Block, Xxxxxx and
Xxxxx-Xxxxx LLP may receive and rely upon representations contained in
certificates of Aptec,
00
Xxxxx, XX, XXX and others, in each case in form and substance reasonably
acceptable to such counsel;
(d) NRC's indebtedness to First Union National Bank shall have
been repaid in full and new credit facilities acceptable to Aptec and EM shall
have been established in an amount sufficient to effect make such repayment;
(e) Xxxxxx, Xxxxxx & Co. shall not have withdrawn its fairness
opinion; and
(f) All conditions to closing of the Stock Acquisition
Agreement dated the date hereof among EM, the Xxxxxxx Holders, the Xxxxx
Holders, Aptec and NRC (the "Stock Acquisition Agreement") shall have been
satisfied or waived and the closing of the transactions contemplated therein
shall have taken place simultaneously with the Merger.
Section 5.02 Conditions Precedent to the Obligations of Aptec
and Newco. The obligations of Aptec and Newco to consummate the Merger are
subject to the satisfaction, at or prior to the Effective Time, of each of the
following further conditions:
(a) Each of the representations and warranties of NRC
contained in this Agreement shall have been true and correct in all material
respects when made and on and as of the Closing Date as if made on and as of
such date. Aptec shall have received a certificate to such effect by an
executive officer of NRC;
(b) NRC shall have performed and complied in all material
respects with all agreements and covenants required to be performed and complied
with by it under this Agreement on or prior to the Closing Date. Aptec shall
have received a certificate to such effect of an executive officer of NRC;
(c) All consents, waivers, approvals and authorizations
required to be obtained from any Governmental Entity prior to the consummation
of the transactions contemplated hereby shall have been obtained, except where
the failure to obtain any such consent, waiver, approval or authorization would
not have a Material Adverse Effect;
(d) On or before the tenth (10th) Business Day from the date
of this Agreement, First Union National Bank shall have delivered to NRC, and
NRC shall have delivered to Aptec and EM, in form and substance acceptable to
Aptec and EM, written confirmation that its credit facilities have been extended
through October 31, 1999 upon the terms currently in effect; and
(e) Public Shareholders who shall have dissented and demanded
the right to receive the fair value of their shares of NRC Common Stock, as
provided in Section 1.09, shall not represent in the aggregate more than ten
percent (10%) of all shares of NRC Common Stock held by the Public Shareholders
immediately before the Effective Time.
28
Section 5.03 Conditions Precedent to the Obligations of NRC.
The obligation of NRC to consummate the Merger is subject to the satisfaction,
at or prior to the Effective Time, of each of the following further conditions:
(a) Each of the representations and warranties of Aptec and
Newco contained in this Agreement shall have been true and correct in all
material respects when made and on and as of the Closing Date as if made on and
as of such date. NRC shall have received a certificate to such effect of an
executive officer of Aptec;
(b) Each of Aptec and Newco shall have performed and complied
in all material respects with all agreements and covenants required to be
performed and complied with by it under this Agreement on or prior to the
Closing Date. NRC shall have received a certificate to such effect of an
executive officer of Aptec; and
(c) All consents, waivers, approvals and authorizations
required to be obtained from any Governmental Entity prior to the consummation
of the transactions contemplated hereby shall have been obtained, except where
the failure to obtain any such consent, waiver, approval or authorization would
not have a Material Adverse Effect.
ARTICLE VI
REPRESENTATIONS, WARRANTIES AND COVENANTS SURVIVING
THE MERGER
Section 6.01 Covenants to the Xxxxxxx Holders. The
representations, warranties and covenants in this Article VI shall survive the
Merger and apply for the period of set forth therein; provided, however, that
such covenants shall terminate and have no further force or effect in the event
that each Statement Filer, as defined below, disposes of its shares of Aptec
stock in a taxable transaction. The indemnification provision of Section 6.03
shall survive for the period provided in Section 6.03.
Section 6.02 Representations, Warranties and Covenants of
Aptec. Aptec hereby represents, warrants and covenants with the Xxxxxxx Holders
that:
(a) On the Closing Date, Aptec will have been engaged in an
active trade or business (as defined in Treas. Reg. ss. 1.367(a)-3(c)(3)(i)(A)
and (ii)) in Canada throughout the entire 36-month period ending at the
Effective Time;
(b) Neither Aptec nor Newco has, nor will have at the
Effective Time, any intention to dispose of or discontinue the trade or business
that it conducts in Canada referred to in Section 6.02(a);
(c) Before January 1, 2005, Aptec will not dispose of any of
the shares of Newco stock owned following the Merger, except in (i) dispositions
that do not constitute
29
exchanges for United States federal income tax purposes and (ii) dispositions in
which gain is not required to be recognized for United States federal income tax
purposes;
(d) Before January 1, 2005, Aptec will cause Newco not to
dispose of substantially all, within the meaning of Section 368(a)(1)(C) of the
Code, of the assets of NRC received in the Merger, except for dispositions
described in Treas. Reg. ss. 1.367(a)-8(e)(3)(B);
(e) (i) In the event Aptec disposes of the stock of Newco or
Newco disposes of substantially all of the assets of NRC received in the Merger,
in either case in a transaction not violating Section 6.02(c) or Section
6.02(d), Aptec shall cooperate with the Xxxxxxx Holders in complying with the
requirements of Section 367 of the Code and the regulations promulgated
thereunder, and shall provide the Xxxxxxx Holders with any information that is
within the control of Aptec or Newco and that is reasonably requested to enable
them to comply with such statute and regulations and (ii) in the event Aptec
disposes of the stock of Newco or Newco disposes of substantially all of the
assets of NRC received in the Merger, in either case in a transaction violating
the covenants of Section 6.02(c) or Section 6.02(d), Aptec shall provide notice
of such disposition to the Xxxxxxx Holders;
(f) Aptec shall cause NRC to attach to NRC's timely filed
income tax return for the fiscal year ending on the date of the Merger a
"Section 367(a) - Reporting of Cross-- Border Transfer under Reg. ss.
1.367(a)-3(c)(6)" statement including the information required by Treas. Reg.
ss. 1.367(a)-3(c)(6) and meeting the other requirements of that section;
(g) None of the Shareholders of Aptec is, and immediately
before the Effective Time none will be, a U.S. person for U.S. federal income
tax purposes; and
(h) No assets have been or will be acquired by Aptec during
the 36-month period ending at the Effective Time other than in the ordinary
course of business, except assets the acquisition of which is described in
Treas. Reg. ss. 1.367(a)-3(c)(3)(iii)(B)(1).
Section 6.03 Indemnification for Certain Tax Consequences.
---------------------------------------------
(a) If Aptec or Newco breaches or violates any of the
representations, warranties and covenants contained in Section 6.02 of this
Agreement, which results in a Statement Filer, as defined below, (or any other
person) being required to recognize gain on the exchange of his or her NRC
Common Stock or warrants for Aptec Common Stock (the "NRC Exchange"), prior to
the end of the five taxable year period referred to in Treas. Reg. ss. 1.367(a)-
8(b)(3) (the "End Date"), then Aptec shall be liable to reimburse the Statement
Filer (or other person) for the amount of interest and penalties which he or she
is required to pay to the United States Government as a consequence of such gain
recognition [plus an amount equal to the Hypothetical Interest (as defined
below) on the amount of income tax paid to the United States Government by the
Statement Filer(s) as a consequence of such gain recognition;] provided,
however, that no amounts shall be due pursuant to this Section 6.03 to the
extent that amounts are paid by EM pursuant to Section 5.11 of the Stock
Acquisition Agreement. Each such reimbursement amount shall be grossed up to
take into account the amount of additional tax payable by the Statement Filer as
a consequence of receipt of any reimbursement as provided
30
above plus the amount of any gross-up received pursuant to this sentence. Any
claim for indemnification under this Section 6.03 must be made within 30 days
after the expiration of the statute of limitations on assessment of tax for the
relevant year.
(b) A "Statement Filer" is a person who files a Gain
Recognition Agreement under Treas. Reg. ss. 1.367(a)-8 with respect to any NRC
Exchange.
(c) Any amounts due pursuant to Section 6.03(a) with respect
to the payment of interest and penalties paid to the United States Government by
the Statement Filer(s) shall be paid to the Statement Filer(s) within ten (10)
Business Days after the delivery to EM of a calculation in reasonable detail of
the interest and penalties paid and proof of payment of the interest and
penalties. Any amounts due pursuant to Section 6.03(a) with respect to the tax
on any gross-up shall be paid to the Statement Filer(s) within ten (10) Business
Days after the delivery to EM of a calculation in reasonable detail of the
amount of income tax due as a result of the receipt of any such gross-up and
proof of payment of the tax.
(d) "Hypothetical Interest" with respect to tax paid by any
Statement Filer shall mean an amount of interest calculated at the rate of Prime
(as defined below) plus three percentage points compounded monthly for the
period beginning with the date on which an amount of tax is paid by the
Statement Filer(s) to United States Government and ending on the End Date.
Hypothetical Interest due hereunder to the Statement Filer(s) shall be paid in
arrears on the first day of each quarter annual period following the Tax Payment
Date.
(e) "Prime" for purposes of this Agreement shall mean the
Prime Rate as published in the Wall Street Journal on the Closing Date.
(f) No limitation set forth in this Agreement except in this
Article VI or any other agreement with respect to time or amount of
indemnification due any party hereunder shall apply to amounts due under this
Section 6.03.
ARTICLE VII
TERMINATION
Section 7.01 Termination. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time,
notwithstanding approval thereof by the shareholders of NRC:
(a) by mutual written agreement of NRC and Aptec;
(b) by either NRC or Aptec, if the Merger has not been
consummated by September 30, 1999; provided that the right to terminate this
Agreement pursuant to this Section 7.01(b) will not be available to any party
whose breach of any provision of this Agreement results in the failure of the
Merger to be consummated by such time; and further provided that Aptec may in
its sole discretion extend the date for the consummation of the
31
Merger to a date not later than October 31, 1999 in the event that the
definitive Proxy Statement is not mailed to NRC's Shareholders on or before
August 16, 1999;
(c) by either NRC or Aptec, if there shall be any law or
regulation that makes consummation of the Merger illegal or otherwise prohibited
or if any judgment, injunction, order or decree enjoining the parties from
consummating the Merger is entered and such judgment, injunction, order or
decree shall become final and nonappealable;
(d) by Aptec, in the event of any material breach by the
Xxxxxxx Holders under the Voting Agreement;
(e) by Aptec, upon a material breach of any representation,
warranty, covenant or agreement of NRC, or if any representation or warranty of
NRC shall become untrue in any material respect; and
(f) by NRC, upon a material breach of any representation,
warranty, covenant or agreement of Aptec or Newco, or if any representation or
warranty of Aptec or Newco shall become untrue.
(g) If an event comes to the attention of Aptec at any time
prior to Closing which could reasonably form the basis of a claim by EM under
the Stock Acquisition Agreement ("SAA") that EM would not close under the SAA
(the "Event"), Aptec shall be required to:
(i) Immediately notify each of EM and NRC of the
occurrence of the Event and inquire of EM if it intends to close under
the SAA notwithstanding the Event, and
(ii) within 10 business days of such notice advise
NRC of EM's reply to the inquiry reference in clause (i) above.
If, as and when EM advises Aptec of its intention not to close
under the SAA, or fails to respond to such notice, NRC shall be entitled to
terminate, and be released of its obligations pursuant to the Agreement and Plan
of Merger without any further action on the part of either Aptec or NRC.
The party desiring to terminate this Agreement pursuant to
this Section 7.01 shall give notice of such termination to the other party.
Section 7.02 Effect of Termination. If this Agreement is
terminated pursuant to Section 7.01, this Agreement will become void and of no
effect with no liability on the part of any party hereto or its respective
directors, officers or shareholders, except that the agreements contained in
Section 7.03 will survive the termination hereof. Nothing herein shall relieve
any party from liability for any breach of this Agreement.
32
Section 7.03 Fees and Expenses. Whether or not the Merger is
consummated, all costs and expenses incurred in connection with the Merger, this
Agreement and the transactions contemplated by this Agreement will be paid by
the party incurring such expenses, except as otherwise provided in the SAA.
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Notices. All notices, requests and other
communications to any party hereunder shall be in writing and shall be deemed to
have been duly given when delivered in person, by overnight courier or by
facsimile to the respective parties as follows:
If to Aptec or Newco, to:
Aptec Instruments Ltd.
Xxxx 00X Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxx
Xxxxxx X0X 0X0
Attention: Xxxxxx Xxxxx
with a copy to:
Torkin Xxxxx Xxxxx & Arbus
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx
Xxxxxx X0X 0X0
Attention: Xxxxxx Xxxxxxxxx, Esq.
and with a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
If to NRC, to:
Nuclear Research Corporation
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx
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with a copy if on or before July 4, 1999 to:
Wolf, Block, Xxxxxx and Xxxxx-Xxxxx LLP
000 Xxxxx 00xx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
and if after July 4, 1999 a copy to:
Wolf, Block, Xxxxxx & Xxxxx-Xxxxx LLP
0000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq.
and a copy to:
Adelman, Lavine, Gold and Xxxxx
Xxx Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxxx, Esq.
or such other address or facsimile number as such party may specify for the
purpose by written notice to the other parties hereto. Each such notice, request
or other communication will be effective: (i) if delivered in person, when such
delivery is made at the address specified in this Section 8.01; (ii) if
delivered by overnight courier, the next Business Day after such delivery is
sent to the address specified in this Section 8.01; or (iii) if delivered by
facsimile, when such facsimile is transmitted to the facsimile number specified
in this Section 8.01 and the appropriate confirmation is received.
Section 8.02 Survival of Representations, Warranties and
Agreements. The representations and warranties and agreements contained herein
and in any certificate or other writing delivered pursuant hereto will not
survive beyond the Effective Time. This Section 8.02 will not limit any covenant
or agreement of the parties which by its terms contemplates performance or
application after the Effective Time, including, but not limited to, the
representations, warranties and covenants contained in Article VI and Section
7.03.
Section 8.03 Amendment. This Agreement may be amended by NRC
and Aptec at any time before or after any approval of this Agreement by the
shareholders of NRC. After any such approval, no amendment may be made that: (i)
decreases the Cash Consideration or that adversely affects the rights of NRC's
shareholders without the approval of such shareholders; or (ii) adversely
affects the rights of the Xxxxxxx Holders without the approval of the Xxxxxxx
Holders. This Agreement may not be amended except by an instrument in writing
signed on behalf of all the parties.
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Section 8.04 Extension; Waiver. At any time prior to the
Effective Time, the parties may: (i) extend the time for the performance of any
of the obligations or other acts of any other party; (ii) waive any inaccuracies
in the representations and warranties contained herein by any other party or in
any document, certificate or writing delivered pursuant hereto by any other
party; or (iii) waive compliance with any of the agreements of any other party
or with any conditions to its own obligations. Any agreement on the part of any
party to any such extension or waiver will be valid only if set forth in an
instrument in writing signed on behalf of such party.
Section 8.05 Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns. No party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the prior written consent of the other parties.
Section 8.06 Governing Law. This Agreement will be construed
in accordance with and governed by the law of the State of New York applicable
to agreements entered into and to be performed wholly within such State, except
that the PBCL will apply to the Merger.
Section 8.07 Jurisdiction. Each of the parties: (i) consents
to submit itself to the personal jurisdiction of any federal or state court
located in the State of New York in the event any dispute arises out of this
Agreement or the Merger; (ii) agrees that it will not attempt to deny or defeat
such personal jurisdiction by motion or other request for leave from any such
court; and (iii) agrees that it will not bring any action relating to this
Agreement or the Merger in any court other than a federal or state court sitting
in the State of New York.
Section 8.08 Counterparts; Effectiveness. This Agreement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement will become effective when each party shall have
received counterparts hereof signed by all of the other parties.
Section 8.09 Entire Agreement. This Agreement and the other
agreements referred to herein or executed contemporaneously herewith constitute
the entire agreement, and supersede all prior agreements and understandings,
both written and oral, between the parties with respect to the subject matter of
this Agreement. No representation, inducement, promise, understanding, condition
or warranty not set forth herein has been made or relied upon by any party.
Section 8.10 Headings. The 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 8.11 Severability. In the event that any one or more
of the provisions contained in this Agreement shall be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement.
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Section 8.12 Additional Definitions.
-----------------------
(a) When used in this Agreement, the following terms have the
following meanings:
"Affiliate" as applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person.
"Business Day" means any day other than a Saturday, Sunday or
any other day on which banks in the State of New York are authorized or
obligated to be closed.
"Code" means the Internal Revenue Code of 1986, as amended.
"Dollars" or "$" means United States dollars, unless otherwise
specified.
"GAAP" means generally accepted accounting principles
consistently applied in effect in the United States of America as of the date of
the applicable determination.
"Governmental Entity" means any government or subdivision
thereof, or any administrative, governmental or regulatory authority, agency,
commission, tribunal or body, domestic, foreign or supranational.
"knowledge of NRC" means any fact or matter which is known by
any officer or director of NRC, or should have been known by such person after
due inquiry.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset.
"Material Adverse Effect" means any change or event that
individually or when taken together with all other changes and events, is or is
reasonably likely to be materially adverse to the business, assets, liabilities,
operations or condition (financial or otherwise) or prospects of NRC and its
Subsidiaries, taken as a whole, other than any such effect arising out of or
resulting from the transactions contemplated by this Agreement or general
economic, financial, or market conditions. A Material Adverse Effect shall be
conclusively deemed to exist if there occurs any event which causes or may
reasonably be expected to cause or result in estimable monetary loss which,
individually or when aggregated with all other events, exceeds $75,000.
"NRC Subsidiary" means any Subsidiary of NRC.
"Person" means an individual, a corporation, a limited
liability company, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or any agency or
instrumentality thereof.
"SEC" means the Securities and Exchange Commission.
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"Subsidiary" of any Person means any other Person of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other Persons performing similar functions
are directly or indirectly owned or controlled by such Person.
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IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be duly executed by its respective authorized officer as of the day
and year first above written.
APTEC INSTRUMENTS LTD.
By: /s/ Xxxxxx Xxxxx
-----------------------------------------
Name: Xxxxxx Xxxxx
Title: President
APTEC ACQUISITION CORPORATION
By: /s/ Xxxxxx Xxxxx
-----------------------------------------
Name: Xxxxxx Xxxxx
Title: President
NUCLEAR RESEARCH CORPORATION
By: /s/ Xxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: President
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