Exhibit 2.1
AGREEMENT AND PLAN
OF MERGER
DATED AS OF
APRIL 28, 1998
AMONG
MEDISYS PLC
LMC ACQUISITION CORP.
AND
XXXXXX MEDICAL CORPORATION
TABLE OF CONTENTS
ARTICLE I. THE MERGER.........................................................1
Section 1.1. The Merger..............................................1
Section 1.2. Effective Date of the Merger............................1
ARTICLE II. SURVIVING CORPORATION..............................................1
Section 2.1. Certificate of Incorporation............................1
Section 2.2. By-Laws.................................................2
Section 2.3. Board of Directors; Officers............................2
Section 2.4. Effects of Merger.......................................2
ARTICLE III. CONVERSION OF SHARES; OTHER SECURITIES...........................2
Section 3.1. Merger Consideration....................................2
ARTICLE IV. PAYMENT PROCEDURES; MECHANICS OF THE MERGER.......................3
Section 4.1. Payment Procedures......................................3
Section 4.2. Dissenting Shares.......................................4
Section 4.3. Stock Options...........................................5
Section 4.4. Stockholders' Meetings..................................5
Section 4.5. Closing of the Company's Transfer Books.................6
Section 4.6. Assistance in Consummation of Merger....................6
Section 4.7. Closing.................................................6
ARTICLE V. REPRESENTAIONS AND WARRANTIES OF PARENT............................6
Section 5.1. Organization and Qualification..........................6
Section 5.2. Authority Relative to this Agreement....................6
Section 5.3. Parent Action...........................................7
Section 5.4. Financial Advisor.......................................7
Section 5.5. Information.............................................7
Section 5.6. Financing...............................................8
Section 5.7. Litigation..............................................8
ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................8
Section 6.1. Organization and Qualification..........................8
Section 6.2. Capitalization..........................................8
Section 6.3. Subsidiaries............................................9
Section 6.4. Authority Relative to this Agreement....................9
Section 6.5. Reports and Financial Statements.......................10
Section 6.6. Absence of Certain Changes or Events...................11
Section 6.7. Litigation.............................................11
Section 6.8. Employee Benefit Plans.................................12
Section 6.9. Labor Matters..........................................14
Section 6.10. Company Action.........................................14
Section 6.11. Compliance with Applicable Laws........................15
Section 6.12. Liabilities............................................15
Section 6.13. Taxes..................................................15
Section 6.14. Certain Agreements.....................................15
Section 6.15. Patents, Trademarks, Etc...............................16
Section 6.16. No Material Adverse Effect.............................16
Section 6.17. Products Liability.....................................17
Section 6.18. Environmental Matters..................................17
Section 6.19. Title to Property......................................18
Section 6.20. Absence of Certain Business Practices..................19
Section 6.21. Financial Advisor .....................................19
ARTICLE VII. REPRESENTATIONS AND WARRANTIES REGARDING SUB....................19
Section 7.1. Organization...........................................19
Section 7.2. Capitalization.........................................19
Section 7.3. Authority Relative to this Agreement...................19
ARTICLE VIII. CONDUCT OF BUSINESS PENDING THE MERGER.........................20
Section 8.1. Conduct of Business by the Company Pending the Merger..20
ARTICLE IX. ADDITIONAL AGREEMENTS............................................21
Section 9.1. Access and Information.................................21
Section 9.2. Proxy Statement........................................22
Section 9.3. Employee Matters.......................................22
Section 9.4. Indemnification........................................23
Section 9.5. Additional Agreements..................................24
Section 9.6. Alternative Proposals..................................24
Section 9.7. Advice of Changes; SEC Filings.........................25
Section 9.8. Restructuring of Merger................................25
Section 9.9. Cancellation of Warrants; Repayment of Loans from
Affiliates...........................................25
Section 9.10. Agreement of Principal Stockholders....................26
Section 9.11 Fairness Opinion.......................................26
ARTICLE X. CONDITIONS PRECEDENT..............................................26
Section 10.1. Conditions to Each Party's Obligation to Effect the
Merger...............................................26
Section 10.2. Conditions to Obligation of the Company to Effect
the Merger...........................................27
Section 10.3. Conditions to Obligations of Parent and Sub to
Effect the Merger....................................27
ARTICLE XI. TERMINATION, AMENDMENT AND WAIVER................................28
Section 11.1. Termination by Mutual Consent..........................28
Section 11.2 Termination by Either Parent or the Company............28
Section 11.3. Termination by the Company.............................29
Section 11.4. Termination by the Parent..............................29
Section 11.5. Effect of Termination and Abandonment..................30
ARTICLE XII. GENERAL PROVISIONS..............................................31
Section 12.1. Non-Survival of Representations, Warranties and
Agreements...........................................31
Section 12.2. Notices................................................31
Section 12.3. Fees and Expenses......................................32
Section 12.4. Publicity..............................................32
Section 12.5. Specific Performance...................................32
Section 12.6. Assignment; Binding Effect.............................33
Section 12.7. Entire Agreement.......................................33
Section 12.8. Amendment..............................................33
Section 12.9. Governing Law..........................................33
Section 12.10. Counterparts..........................................33
Section 12.11. Headings and Table of Contents........................33
Section 12.12. Interpretation.......................................33
Section 12.13. Waivers..............................................34
Section 12.14. Severability.........................................34
Section 12.15. Subsidiaries.........................................34
Xxxxxxx 00.00. Xxxxxx Xxxxxx Dollars; Exchange Rates................34
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of April 28,
1998, by and among Medisys PLC, a Scottish public limited company ("Parent"),
LMC Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
Parent ("Sub"), and Xxxxxx Medical Corporation, a Delaware corporation (the
"Company"):
W I T N E S S E T H:
WHEREAS, Parent and the Company desire to effect a business combination by
means of the merger of Sub with and into the Company (the "Merger"); and
WHEREAS, the Boards of Directors of Parent, Sub and the Company have
approved the Merger, upon the terms and subject to the conditions set forth
herein;
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained herein the parties hereto
agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions hereof, on the
Effective Date (as defined in Section 1.2), Sub shall be merged into the Company
and the separate existence of Sub shall thereupon cease, and the Company, as the
corporation surviving the Merger (the "Surviving Corporation"), shall by virtue
of the Merger continue its corporate existence under the laws of the State of
Delaware.
1.2 Effective Date of the Merger. Subject to the provisions of this
Agreement, a certificate of merger (the "Certificate of Merger") in such form as
is required by the relevant provisions of the Delaware General Corporation Law
(the "DGCL") shall be duly prepared, executed and acknowledged by the Surviving
Corporation and thereafter delivered to the Secretary of State of the State of
Delaware for filing on the date of the Closing (as defined in Section 4.1(c)).
The Merger shall become effective (the "Effective Date") upon the filing of the
Certificate of Merger or at such time thereafter as is provided in such
Certificate of Merger.
ARTICLE II
SURVIVING CORPORATION
2.1 Certificate of Incorporation. The Certificate of Incorporation of Sub
shall be the Certificate of Incorporation of the Surviving Corporation after the
Effective Date, and thereafter may be amended in accordance with its terms and
as provided by law and this Agreement.
2.2 By-Laws. The By-laws of Sub as in effect on the Effective Date shall be
the By-laws of the Surviving Corporation, and thereafter may be amended in
accordance with its terms and as provided by law and this Agreement.
2.3 Board of Directors; Officers. The directors of Sub immediately prior to
the Effective Date shall be the directors of the Surviving Corporation, and the
officers of the Company immediately prior to the Effective Date shall be the
officers of the Surviving Corporation, in each case until their respective
successors are duly elected and qualified.
2.4 Effects of Merger. The Merger shall have the effects set forth in
Section 259 of the DGCL.
ARTICLE III
CONVERSION OF SHARES; OTHER SECURITIES
3.1 Merger Consideration. On the Effective Date, by virtue of the Merger
and without any action on the part of any holder of any shares of Common Stock,
par value $.01 per share, of the Company ("Company Common Stock"):
(a) All shares of Company Common Stock which are held by the Company
or any subsidiary of the Company, and any shares of Company Common Stock owned
by Parent, Sub or any other subsidiary of Parent, shall be canceled.
(b) Each remaining outstanding share of Company Common Stock, other
than the Dissenting Shares (as defined in Section 4.2), shall be converted into
and represent the right to receive $4.00 in cash (the "Merger Consideration") in
accordance with Section 4.1.
(c) Each issued and outstanding share of capital stock of Sub shall be
converted into and become one fully paid and nonassessable share of common stock
of the Surviving Corporation.
In the event of any stock dividend, stock split, reclassification,
recapitalization, combination or exchange of shares with respect to, or rights
issued in respect of, Company Common Stock after the date hereof, the Merger
Consideration shall be adjusted accordingly.
2
ARTICLE IV
PAYMENT PROCEDURES; MECHANICS OF THE MERGER
4.1 Payment Procedures.
(a) Prior to the Effective Date, Parent shall select a Payment Agent,
which shall be Parent's Transfer Agent or such other person or persons
designated by Parent, to act as Payment Agent for the Merger (the "Payment
Agent").
(b) Promptly after the Effective Date, Parent shall instruct the
Payment Agent to mail to each holder of a certificate or certificates evidencing
shares of Company Common Stock (other than Dissenting Shares) ("Certificates")
(i) a letter of transmittal (which shall include a Substitute Form W-9 and shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of such Certificates to the
Payment Agent) and (ii) instructions to effect the surrender of the Certificates
in exchange for the Merger Consideration. Each holder of Company Common Stock,
upon surrender to the Payment Agent of such holder's Certificates with the
letter of transmittal, duly executed, and such other customary documents as may
be required pursuant to such instructions, shall be paid the amount of cash to
which such holder is entitled, pursuant to this Agreement, as payment of the
Merger Consideration (without any interest accrued thereon). Until so
surrendered, each Certificate shall after the Effective Date represent for all
purposes only the right to receive the Merger Consideration. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and, if required by the Surviving Corporation, the posting
by such person of a bond in such reasonable amount as the Surviving Corporation
may direct as indemnity against any claim that may be made against it with
respect to such Certificate, the Payment Agent will deliver in exchange for such
lost, stolen or destroyed Certificate the Merger Consideration payable in
respect thereof pursuant to this Agreement.
(c) At the Closing of the transactions contemplated by this Agreement
(the "Closing), Parent shall deposit in trust with the Payment Agent, for the
ratable benefit of the holders of Company Common Stock (other than Dissenting
Shares), the appropriate amount of cash to which such holders are entitled
pursuant to this Agreement as payment of the Merger Consideration (the "Payment
Fund"). The Payment Agent shall, pursuant to irrevocable instructions, make the
payments to the holders of the Company Common Stock as set forth in this
Agreement.
(d) If any delivery of the Merger Consideration is to be made to a
person other than the registered holder of the Certificates surrendered in
exchange therefor, it shall be a condition to such delivery that the Certificate
so surrendered shall be properly endorsed or be otherwise in proper form for
transfer and that the person requesting such delivery shall (i) pay to the
Payment Agent any transfer or other taxes required as a result of delivery to a
3
person other than the registered holder or (ii) establish to the satisfaction of
the Payment Agent that such tax has been paid or is not payable.
(e) Any portion of the Payment Fund that remains undistributed to the
holders of Company Common Stock as of the first anniversary of the Effective
Date shall be delivered to Parent upon demand, and any holder of Company Common
Stock who has not theretofore complied with the exchange requirements of this
Section shall have no further claim upon the Payment Agent and shall thereafter
look only to Parent for payment of the Merger Consideration.
(f) If a Certificate has not been surrendered prior to the date on
which any receipt of Merger Consideration would otherwise escheat to or become
the property of any governmental agency, such Certificate shall, to the extent
permitted by applicable law, be deemed to be canceled and no Merger
Consideration, money or other property will be due to the holder thereof.
(g) The Payment Agent shall invest cash in the Payment Fund in
obligations of or guaranteed by the United States of America with remaining
maturities not exceeding 180 days, in commercial paper obligations receiving the
highest rating from either Xxxxx'x Investors Services, Inc. or Standard & Poor's
Corporation, or in certificates of deposit or banker's acceptances of commercial
banks with capital exceeding $500 million (collectively, "Permitted
Investments"). The maturities of Permitted Investments shall be such as to
permit the Payment Agent to make prompt payment to former stockholders of the
Company entitled thereto as contemplated by this Section. Any interest and other
income resulting from such investments shall be paid to Parent or as Parent may
otherwise direct.
4.2 Dissenting Shares.
(a) Notwithstanding any other provision of this Agreement to the
contrary, shares of Company Common Stock that are outstanding immediately prior
to the Effective Date and which are held by holders who shall have not voted in
favor of the Merger or consented thereto in writing and who shall have demanded
properly in writing appraisal for such shares in accordance with Section 262 of
the DGCL and who shall not have withdrawn such demand or otherwise have
forfeited appraisal rights (collectively, the "Dissenting Shares") shall not be
converted into or represent the right to receive the Merger Consideration. Such
holders shall be entitled to receive payment of the appraised value of such
shares, except that all Dissenting Shares held by holders who shall have failed
to perfect or who effectively shall have withdrawn or lost their rights to
appraisal of such shares under such Section 262 shall thereupon be deemed to
have been converted into and to have become exchangeable, as of the Effective
Date, for the right to receive, without any interest thereon, the Merger
Consideration, upon surrender of the Certificates evidencing such shares.
(b) The Company shall give Parent (i) prompt notice of any demands for
appraisal received by the Company, withdrawals of such demands, and any other
instruments
4
served pursuant to the DGCL and received by the Company and (ii) the opportunity
to direct all negotiations and proceedings with respect to demands for appraisal
under the DGCL. The Company shall not, except with the prior written consent of
Parent, make any payment with respect to any demands for appraisal, or offer to
settle, or settle, any such demands.
4.3 Stock Options.
(a) The Company's stock option plan, which is attached to Section 4.3
of the Company Disclosure Schedule (as defined in Section 6.1) (the "Option
Plan"), and each option to acquire shares of Company Common Stock outstanding
immediately prior to the Effective Date thereunder, whether vested or unvested
(each, an "Option" and collectively, the "Options"), shall be assumed by Parent
at the Effective Date, and each such Option shall become an option to purchase a
number of ordinary shares of Parent, par value 1p (a "Substitute Option"), equal
to the number of shares of Company Common Stock subject to such Option
multiplied by the Option Exchange Ratio (as defined below). The per share
exercise price for each Substitute Option shall be the current exercise price
per share of Company Common Stock divided by the Option Exchange Ratio, and each
Substitute Option otherwise shall after the Effective Date be subject to all of
the other terms and conditions of the original Option to which it relates. Prior
to the Effective Date, the Company shall take such additional actions as are
reasonably necessary under the applicable agreements and Option Plan to provide
that each outstanding Option shall, from and after the Effective Date, represent
only the right to purchase, upon exercise, ordinary shares of Parent and Parent
shall take such additional actions as are reasonable and necessary under
applicable law in order to effect the issuance of such Substitute Options to
such holders. Except as set forth in Section 4.3 of the Company Disclosure
Schedule, the vesting of no Option shall be accelerated by reason of the Merger
unless the agreement or arrangement under which it was granted or by which it is
otherwise governed specifically provides for such acceleration. For avoidance of
doubt, it is the intention of Parent and the Company that the Substitute Options
be identical in all respects to the Options (except for the number and type of
shares for which they shall be exercisable and the exercise price thereof) and
that, without limitation, (i) all terms of the plans under which such Options
were issued and (ii) all policies set forth in Section 4.3 of the Company
Disclosure Schedule, shall apply thereto from and after the Effective Date.
(b) For purposes of this Agreement, the term "Option Exchange Ratio"
shall mean the ratio of (x) $4.00 to (y) the U.S. dollar equivalent of the
average of the middle-market closing price per share of the Parent ordinary
shares on the Alternative Investment Market of the London Stock Exchange, as
shown in the "London Stock Exchange Daily Official List," for each of the ten
trading days ending two trading days prior to the Effective Date.
4.4 Stockholders' Meetings. (a) The Company shall take all action
necessary, in accordance with applicable law and its Certificate of
Incorporation and By-laws, to convene a special meeting of the holders of
Company Common Stock (the "Company Meeting") as promptly as practicable for the
purpose of considering and taking action upon this Agreement. Subject solely to
its fiduciary duties, the Board of Directors of the Company will recommend
5
that holders of Company Common Stock vote in favor of and approve the Merger and
the adoption of the Agreement at the Company Meeting. At the Company Meeting,
all of the shares of Company Common Stock then owned by Parent, Sub, or any
other subsidiary of Parent, or with respect to which Parent, Sub, or any other
subsidiary of Parent holds the power to direct the voting, will be voted in
favor of approval of the Merger and adoption of this Agreement.
(b) Parent shall take all action necessary, in accordance with
applicable law, stock exchange rules and its Memorandum and Articles of
Association, to convene an extraordinary meeting of the holders of its ordinary
shares to approve this Agreement, the Merger and the related issuance of
securities of Parent, to the extent approval is required and sought by Parent.
Subject solely to its fiduciary duties, the Board of Directors of Parent will
recommend that holders of its ordinary shares vote in favor of the matters put
before them.
4.5 Closing of the Company's Transfer Books. At the Effective Date, the
stock transfer books of the Company shall be closed and no transfer of shares of
Company Common Stock shall be made thereafter. In the event that, after the
Effective Date, Certificates are presented to the Surviving Corporation, they
shall be canceled and exchanged for the Merger Consideration as provided in
Sections 3.1 (b) and 4.1.
4.6 Assistance in Consummation of the Merger. Each of Parent, Sub and the
Company shall provide all commercially reasonable assistance to, and shall
cooperate with, each other to bring about the consummation of the Merger as soon
as possible in accordance with the terms and conditions of this Agreement.
Parent shall cause Sub to perform all of its obligations in connection with this
Agreement.
4.7 Closing. The Closing shall take place (i) at the offices of Xxxxx
Xxxxxxxxxxx XxXxxxxxx LLC, One Citicorp Center, 000 Xxxx 00xx Xxxxxx, 00xx
xxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00am, New York City time, on the earlier
of (A) August 14, 1998 or (B) the day which is no later than two business days
after the day on which the last of the conditions set forth in Article X is
fulfilled or waived and the meeting of Parent's Shareholders with respect to the
Merger and related financing has been held or (ii) at such other time and place
as Parent and the Company shall agree in writing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company as follows:
5.1 Organization and Qualification. Parent is a public limited company duly
incorporated, validly existing and in good standing under the laws of Scotland
and has the corporate power to carry on its business as it is now being
conducted or currently proposed to be conducted.
6
5.2 Authority Relative to this Agreement. Parent has the corporate
authority to enter into this Agreement and, subject to the satisfaction of the
conditions contained herein, to carry out its obligations hereunder. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by Parent's Board of
Directors. The Agreement constitutes a valid and binding obligation of Parent
enforceable in accordance with its terms except as enforcement may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights generally and except that the availability of equitable
remedies, including specific performance, is subject to the discretion of the
court before which any proceeding therefor may be brought. Except for the
requisite approval of the holders of the Parent ordinary shares of the
transactions contemplated hereby and related financing, no other corporate
proceedings on the part of Parent are necessary to authorize the Agreement and
the transactions contemplated hereby. Parent is not subject to or obligated
under (i) any memorandum, articles of association, indenture or other loan
document provision or (ii) any other contract, license, franchise, permit,
order, decree, concession, lease, instrument, judgment, statute, law, ordinance,
rule or regulation applicable to Parent or any of its subsidiaries or their
respective properties or assets, which would be breached or violated, or under
which there would be a default (with or without notice or lapse of time, or
both), or under which there would arise a right of termination, cancellation,
modification or acceleration of any obligation or the loss of a material
benefit, by its executing and carrying out this Agreement other than those
which, either singly or in the aggregate, has not had, or would not reasonably
be expected to have, a material adverse effect on the Parent's ability to
consummate the transactions contemplated hereby, including the Merger. Except as
required in connection, or in compliance, with the provisions of the Securities
and Exchange Act of 1934, as amended (the "Exchange Act"), the Securities Act of
1933, as amended (the "Securities Act"), and the corporation, securities or blue
sky laws or regulations of the various states or any rules or regulations of the
London Stock Exchange applicable to Parent, no filing or registration with, or
authorization, consent or approval of, any public body or authority is necessary
for the consummation by Parent of the Merger or the other transactions
contemplated by this Agreement other than filings, registrations,
authorizations, consents or approvals the failure of which to make or obtain has
not had, or would not reasonably be expected to have a material adverse effect
on Parent's ability to consummate the transactions contemplated hereby,
including the Merger.
5.3 Parent Action. The Board of Directors of Parent (at a meeting duly
called and held) has by the requisite vote of all directors present determined
that the Agreement is advisable and in the best interests of Parent and its
stockholders.
5.4 Financial Advisor. Parent represents and warrants that, except for
Xxxxx Xxxxxxxxx & Co. Limited and any other underwriter, broker, finder or
investment banker to be engaged in the normal course of business for the
offering of Parent's securities, no broker, finder or investment banker is
entitled to any brokerage or finder's fee or investment banking fee in
connection with the Merger and the related financing based upon arrangements
made by or on behalf of Parent.
7
5.5 Information. As of the date of this Agreement, Parent does not know of
any facts or circumstances which currently or with the passage of time
constitute a breach of the representations or warranties made by the Company
herein. To its knowledge, Parent has been furnished with and been given access
by the Company to considerable information about the Company and its business as
it has requested. The Company acknowledges that the foregoing shall not in any
way limit Parent's ability to terminate this Agreement pursuant to Section 11.4.
5.6 Financing. Based upon preliminary discussions with its proposed sources
of financing, Parent has a good faith belief that it will be able to raise the
funds necessary to consummate the transactions contemplated hereby.
5.7 Litigation. There is no suit, action, claim, arbitration or proceeding
pending or, to the knowledge of Parent, threatened against Parent seeking to
prevent or challenge the transactions contemplated by this Agreement. Parent is
not subject to any judgment, decree, injunction, rule or order of any court,
governmental department, commission, agency, instrumentality, or arbitrator
outstanding against Parent having, or which would reasonably be expected to
have, either alone or in the aggregate, a material adverse effect on Parent's
ability to consummate the transactions hereby.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
6.1 Organization and Qualification. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has the corporate power to carry on its business as it is now
being conducted. The Company is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
its properties owned or held under lease or the nature of its activities makes
such qualification necessary, except where the failure to be so qualified will
not have a material adverse effect on the business, properties, prospects,
assets, condition (financial or otherwise), liabilities or results of operations
of the Company and its Subsidiaries taken as a whole (a "Company Material
Adverse Effect"). Complete and correct copies as of the date hereof of the
Certificate of Incorporation and By-laws of the Company and each of its
Subsidiaries are attached to Section 6.1 of the disclosure schedule delivered by
the Company to Parent prior to execution and delivery of this Agreement (the
"Company Disclosure Schedule"). The Certificate of Incorporation and By-laws of
the Company are in full force and effect. The Company is not in violation of any
provision of its Certificate of Incorporation or By-laws.
6.2 Capitalization. The authorized capital stock of the Company consists of
20,000,000 shares of Company Common Stock, $.01 par value and 1,000,000 shares
of preferred stock, $.01 par value (the "Preferred Stock"). As of March 31,
1998, 3,093,359 shares of Company Common Stock were validly issued and
outstanding, fully paid and nonassessable,
8
there were no shares of Preferred Stock issued and outstanding and (except for
issuances upon the exercise of outstanding options) there have been no changes
in such numbers of shares through the date hereof. As of the date hereof, there
are no bonds, debentures, notes or other indebtedness having the right to vote
on any matters on which the Company's shareholders may vote issued or
outstanding. Except as set forth in Section 6.2 of the Company Disclosure
Schedule, there are no options, warrants, calls or other rights, agreements or
commitments presently outstanding obligating the Company to issue, deliver or
sell shares of its capital stock or debt securities, or obligating the Company
to grant, extend or enter into any such option, warrant, call or other such
right, agreement or commitment. After the Effective Date, subject to Section
4.3, the Surviving Corporation will have no obligation to issue, transfer or
sell any shares of capital stock of the Company or the Surviving Corporation
pursuant to any Company Employee Benefit Plan (as defined in Section 6.8).
6.3 Subsidiaries. The only Subsidiaries of the Company are disclosed in
Section 6.3 of the Company Disclosure Schedule. Each Subsidiary of the Company
is a corporation duly incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation and has the corporate power to
carry on its business as it is now being conducted. Each Subsidiary of the
Company is duly qualified as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of its properties owned
or held under lease or the nature of its activities makes such qualification
necessary except where the failure to be so qualified, when taken together with
all such failures, has not had, or would not reasonably be expected to have a
material adverse effect on the business, properties, assets, condition
(financial or otherwise), liabilities or results of operations of such
Subsidiary. Section 6.3 of the Company Disclosure Schedule contains, with
respect to each Subsidiary of the Company, its name and jurisdiction of
incorporation and, with respect to each Subsidiary that is not wholly owned, the
number of issued and outstanding shares of capital stock and the number of
shares of capital stock owned by the Company or a Subsidiary. All the
outstanding shares of capital stock of each Subsidiary of the Company are
validly issued, fully paid and nonassessable, and those owned by the Company or
by a Subsidiary of the Company are owned free and clear of any liens, claims or
encumbrances. Except as set forth in Section 6.3 of the Company Disclosure
Schedule, there are no existing options, warrants, calls or other rights,
agreements or commitments of any character relating to the issued or unissued
capital stock or other securities of any of the Subsidiaries of the Company.
Except as set forth in Section 6.3 of the Company Disclosure Schedule, the
Company does not directly or indirectly own any interest in any other
corporation, partnership, joint venture or other business association or entity.
6.4 Authority Relative to this Agreement. The Company has the corporate
power to enter into this Agreement and to carry out its obligations hereunder.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by the Company's
Board of Directors. This Agreement constitutes a valid and binding obligation of
the Company enforceable in accordance with its terms except as enforcement may
be limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally and except that the availability of
equitable remedies,
9
including specific performance, is subject to the discretion of the court before
which any proceeding therefor may be brought. Except for the approval of the
holders of a majority of the shares of Company Common Stock, no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
and the transactions contemplated hereby. Except as set forth in Section 6.4 of
the Company Disclosure Schedule, the Company is not subject to or obligated
under (i) any charter, by-law, indenture or other loan document provision or
(ii) any other contract, license, franchise, permit, order, decree, concession,
lease, instrument, judgment, statute, law, ordinance, rule or regulation
applicable to the Company or any of its Subsidiaries or their respective
properties or assets which would be breached or violated, or under which there
would be a default (with or without notice or lapse of time, or both), or under
which there would arise a right of termination, cancellation, modification or
acceleration of any obligation or the loss of a material benefit, by its
executing and carrying out this Agreement. Except as disclosed in Section 6.4 of
the Company Disclosure Schedule or, with respect to the Merger or the
transactions contemplated thereby, in connection, or in compliance, with the
provisions of the Securities Act, the Exchange Act, and the corporation,
securities or blue sky laws or regulations of the various states, no filing or
registration with, or authorization, consent or approval of, any public body or
authority is necessary for the consummation by the Company of the Merger or the
other transactions contemplated hereby, other than filings, registrations,
authorizations, consents or approvals the failure of which to make or obtain has
not had, or would not reasonably be expected to have, a Company Material Adverse
Effect or prevent the consummation of the transactions contemplated hereby,
including the Merger.
6.5 Reports and Financial Statements.
(a) The Company has previously furnished Parent with true and complete
copies of its (i) Annual Report to Stockholders and Annual Reports on Form 10-K
for the fiscal years ended December 31, 1995, December 31, 1996 and December 31,
1997 as filed with the Securities and Exchange Commission (the "Commission"),
(ii) proxy statements related to all meetings of its shareholders (whether
annual or special) since January 1, 1996 and (iii) the other reports (including
Forms 10-Q and 8-K) or registration statements set forth in Section 6.5 of the
Company Disclosure Schedule which have been filed by the Company with the
Commission since January 1, 1995, except for preliminary material (in the case
of clauses (ii) and (iii) above) and except for registration statements on Form
S-8 relating to employee benefit plans, which are all the documents that the
Company was required to file with the Commission since that date (clauses (i)
through (iii) being referred to herein collectively, together with all financial
statements (including footnotes), exhibits, schedules thereto and documents
incorporated by reference therein, as the "Company SEC Reports"). As of their
respective filing dates, the Company SEC Reports complied as to form in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and the rules and regulations of the Commission
thereunder applicable to such Company SEC Reports. As of their respective filing
dates, the Company SEC Reports did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. None of the Company's subsidiaries is
required to file any forms, reports or other documents
10
with the Commission. The consolidated financial statements of the Company
included in the Company SEC Reports, including any forms, reports or other
documents filed with the Commission by the Company subsequent to the date
hereof, (i) comply as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the
Commission with respect thereto; (ii) have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods presented (except as may be indicated therein or in the
notes thereto) or in the case of unaudited statements, as permitted for
presentation in quarterly reports on Form 10-Q; (iii) present fairly, in all
material respects, the financial position of the Company and its Subsidiaries as
at the dates thereof and the results of their operations and cash flow for the
periods then ended, subject in the case of interim financial statements to
normal year-end adjustments; and (iv) are in all material respects, prepared in
accordance with the books of account and records of the Company and its
Subsidiaries.
(b) The Company has (i) delivered to Parent true and complete copies
of all material correspondence between the Commission and the Company or its
legal counsel, accountants or other advisors since January 1, 1995 except for
cover letters transmitting SEC reports, and (ii) disclosed to Parent in writing
the content of all material discussions between the Commission and the Company
or its legal counsel, accountants or other advisors concerning the adequacy of
form of any SEC Report filed with the Commission since January 1, 1995. The
Company is not aware of any issues raised by the Commission with respect to any
of the SEC Reports, other than those disclosed to Parent pursuant to clause (i)
or (ii) of this Section 6.5(b).
6.6 Absence of Certain Changes or Events. Since December 31, 1997, except
as set forth on Section 6.6 of the Company Disclosure Schedule, the Company and
its Subsidiaries have conducted their businesses in the ordinary course,
consistent with past practice, and since such date, there has not been (i) any
transaction, commitment, dispute or other event or condition (financial or
otherwise) of any character (whether or not in the ordinary course of business)
individually or in the aggregate that has had, or would reasonably be expected
to have, a Company Material Adverse Effect; (ii) any damage, destruction or
loss, whether or not covered by insurance, which has had, or would reasonably be
expected to have, a Company Material Adverse Effect; (iii) any entry into any
commitment or transaction material to the Company and its Subsidiaries taken as
a whole (including, without limitation, any borrowing or sale of assets) except
in the ordinary course of business consistent with past practice; (iv) any
declaration, setting aside or payment of any dividend or distribution (whether
in cash, stock or property) with respect to its capital stock; (v) any material
change in its accounting principles, practices or methods or revaluation of the
Company's assets; (vi) any repurchase or redemption with respect to its capital
stock; (vii) any split, combination or reclassification of any of the Company's
capital stock or the issuance or authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for, shares of the
Company's capital stock except as set forth in Section 6.6 of the Company
Disclosure Schedule; (viii) any grant of or any amendment of the terms of any
option to purchase shares of capital stock of the Company; (ix) any granting by
the Company or any of its Subsidiaries to any director, officer or employee of
the Company or any of its Subsidiaries of (A) any increase in compensation
(other than in the case of employees in the
11
ordinary course of business consistent with past practice) or (B) any increase
in severance or termination pay; (x) any entry by the Company or any of its
Subsidiaries into any employment, severance, bonus or termination agreement with
any director, officer or employee of the Company or any of its Subsidiaries; or
(xi) any agreement (whether or not in writing), arrangement or understanding to
do any of the foregoing.
6.7 Litigation. Except as described in the SEC Reports and in Section 6.7
of the Company Disclosure Schedule, there is no suit, action, claim, arbitration
or proceeding pending or, to the knowledge of the Company, threatened against
the Company or any of its Subsidiaries which, either alone or in the aggregate,
has had or would reasonably be expected to have a Company Material Adverse
Effect or a material adverse effect on the Company's ability to consummate the
transactions contemplated hereby, nor is there any judgment, decree, injunction,
rule or order of any court, governmental department, commission, agency,
instrumentality or arbitrator outstanding against the Company or any of its
Subsidiaries having, or which would reasonably be expected to have, either alone
or in the aggregate, a Company Material Adverse Effect or a material adverse
effect on the Company's ability to consummate the transactions contemplated
hereby.
6.8 Employee Benefit Plans.
(a) Section 6.8 of the Company Disclosure Schedule hereto sets forth a
list of all "employee benefit plans", as defined in Section 3(3) of the United
States Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and all other material employee benefit arrangements or payroll practices,
including, without limitation, any such arrangements or payroll practices
providing severance pay, sick leave, vacation pay, salary continuation for
disability, retirement benefits, deferred compensation, bonus pay, incentive
pay, stock options (including those held by Directors, employees, and
consultants), hospitalization insurance, medical insurance, life insurance,
scholarships or tuition reimbursements, that are maintained by the Company, any
Subsidiary of the Company or any Company ERISA Affiliate (as defined below) or
to which the Company, any Subsidiary of the Company or any Company ERISA
Affiliate is obligated to contribute thereunder for current or former employees,
independent contractors, consultants and leased employees of the Company, any
Subsidiary of the Company or any Company ERISA Affiliate (the "Company Employee
Benefit Plans").
(b) None of the Company Employee Benefit Plans is a "multiemployer
plan", as defined in Section 4001(a)(3) of ERISA (a "Multiemployer Plan"), and
neither the Company nor any Company ERISA Affiliate presently maintains such a
plan. None of the Company, any Subsidiary or Company ERISA Affiliate (subject to
the knowledge of the Company, in the case of any Subsidiary or Company ERISA
Affiliate acquired by the Company, for periods prior to such acquisition), has
withdrawn in a complete or partial withdrawal from any Multiemployer Plan, nor
has any of them incurred any material liability due to the termination or
reorganization of such a Multiemployer Plan.
12
(c) No Company Benefit Plan nor the Company has incurred any material
liability or penalty under Section 4975 of the Internal Revenue Code, as amended
(the "Code") or Section 502(i) of ERISA.
(d) Except as set forth in Section 6.8 (d) of the Company Disclosure
Schedule, the Company does not maintain or contribute to any plan or arrangement
which provides or has any liability to provide life insurance or medical or
other employee welfare benefits to any employee or former employee upon his
retirement or termination of employment, and the Company has never represented,
promised or contracted (whether in oral or written form) to any employee or
former employee that such benefits would be provided.
(e) The execution of, and performance of the transactions contemplated
in, this Agreement will not, either alone or upon the occurrence of subsequent
events, result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any employee. The only
severance agreements or severance policies applicable to the Company or its
Subsidiaries in the event of a change of control of the Company are the
agreements and policies specifically referred to in Section 6.8 of the Company
Disclosure Schedule (and, in the case of such agreements, the form of which is
attached to the Company Disclosure Schedule). Each executive officer of the
Company (as such term is defined in Rule 3b-7 under the Exchange Act) and each
of the individuals identified on Section 6.8(e) of the Company Disclosure
Schedule is a party to a non-competition agreement with the Company or a
Significant Subsidiary, as the case may be, and copies of the forms of such
non-competition agreements are attached to Section 6.8 of the Company Disclosure
Schedule.
(f) None of the Company Employee Benefit Plans is a "single employer
plan", as defined in Section 4001(a)(15) of ERISA, that is subject to Title IV
of ERISA, and neither the Company nor any Company ERISA Affiliate presently
maintains such a plan. None of the Company, any of its Subsidiaries or any ERISA
Affiliate has any material liability under Section 4062 of ERISA to the Pension
Benefit Guaranty Corporation or to a trustee appointed under Section 4042 of
ERISA. None of the Company, any Subsidiary, or any Company ERISA Affiliate
(subject to the knowledge of the Company, in the case of any Subsidiary or
Company ERISA Affiliate acquired by the Company, for periods prior to such
acquisition) has engaged in any transaction described in Section 4069 of ERISA.
(g) Each Company Employee Benefit Plan that is intended to qualify
under Section 401 of the Code, and each trust maintained pursuant thereto, has
been determined to be exempt from federal income taxation under Section 501 of
the Code by the IRS, and, to the Company's knowledge, nothing has occurred with
respect to the operation or organization of any such Company Employee Benefit
Plan and there have been no amendments to any such Company Employee Benefit Plan
that would cause the loss of such qualification or exemption or the imposition
of any material liability, penalty or tax under ERISA or the Code.
13
(h) All contributions (including all employer contributions and
employee salary reduction contributions) required to have been made under any of
the Company Employee Benefit Plans to any funds or trusts established thereunder
or in connection therewith have been made by the due date thereof and no
contributions have been made to the Company Employee Benefit Plans that would be
considered non-deductible under the Code.
(i) There has been no violation of ERISA or the Code with respect to
the filing of applicable reports, documents and notices regarding the Company
Employee Benefit Plans with the Secretary of Labor or the Secretary of the
Treasury or the furnishing of required reports, documents or notices to the
participants or beneficiaries of the Company Employee Benefit Plans.
(j) True, correct and complete copies of the following documents, with
respect to each of the Company Benefit Plans, have been delivered or made
available to the Parent by the Company: (i) all plans and related trust
documents and any other instruments or contracts under which the Company
Employee Benefit Plans are operated, and amendments thereto; (ii) the Forms 5500
for the past three years and (iii) summary plan descriptions.
(k) There are no pending actions, claims or lawsuits which have been
asserted, instituted or, to the Company's knowledge, threatened, against the
Company Employee Benefit Plans, the assets of any of the trusts under such plans
or the plan sponsor or the plan administrator, or, to the Company's knowledge,
against any fiduciary of the Company Employee Benefit Plans with respect to the
operation of such plans (other than routine benefit claims).
(l) The Company Employee Benefit Plans have been maintained, in all
material respects, in accordance with their terms and with all provisions of
ERISA and the Code (including rules and regulations thereunder) and other
applicable federal and state laws and regulations.
(m) For purposes of this Agreement, "Company ERISA Affiliate" means
any business or entity which is a member of the same "controlled group of
corporations," under "common control" or an "affiliated service group" with an
entity within the meanings of Sections 414(b), (c) or (m) of the Code, or
required to be aggregated with the entity under Section 414(o) of the Code, or
is under "common control" with the entity, within the meaning of Section
4001(a)(14) of ERISA, or any regulations promulgated or proposed under any of
the foregoing Sections.
6.9 Labor Matters. Neither the Company nor any of its Subsidiaries is a
party to, or bound by, any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization. There is no
unfair labor practice or labor arbitration proceeding pending or, to the
knowledge of the Company, threatened against the Company or its Subsidiaries
relating to their business. To the best knowledge of the Company, there are no
organizational efforts with respect to the formation of a collective bargaining
unit presently being made or threatened involving employees of the Company or
any of its
14
Subsidiaries. There is no labor strike, material slowdown or material work
stoppage or lockout actually pending or, to the best knowledge of the Company,
threatened against or affecting the Company or its Subsidiaries and neither the
Company nor any Subsidiary has experienced any strike, material slowdown or
material work stoppage or lockout.
6.10 Company Action. The Board of Directors of the Company (at a meeting
duly called and held) has by the requisite vote of all directors present (a)
determined that the Merger is advisable and fair and in the best interests of
the Company and its shareholders, (b) approved the Merger in accordance with the
provisions of Section 251 of the DGCL, (c) recommended the approval of this
Agreement and the Merger by the holders of the Company Common Stock and directed
that the Merger be submitted for consideration by the Company's shareholders at
the Company Meeting.
6.11 Compliance with Applicable Laws. The Company and each of its
Subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all courts, administrative agencies or commissions or other
governmental authorities or instrumentalities, domestic or foreign (each, a
"Governmental Entity"), material to and necessary to conduct the business of the
Company or such Subsidiary, as the case may be (the "Company Permits"). The
Company and its Subsidiaries are in compliance in all material respects with the
terms of the Company Permits, and the Company and each of its Subsidiaries are
in compliance in all material respects with all laws, ordinances and regulations
of any Governmental Entity. Except as disclosed in Section 6.11 of the Company
Disclosure Schedule, no investigation or review by any Governmental Entity, with
respect to the Company or any of its Subsidiaries is pending, or to the
knowledge of the Company, threatened.
6.12 Liabilities. Since December 31, 1997, neither the Company nor any of
its Subsidiaries has incurred any material liabilities or obligations (absolute,
accrued, contingent or otherwise) of the type that is required to be disclosed
in the Company SEC Reports (including the financial statements contained
therein), except for (i) accounts payable incurred in the ordinary course of
business not in excess of $250,000, (ii) liabilities of the same nature as those
reflected on the financial statements to the Company SEC Reports (including the
footnotes thereto) incurred in the ordinary course of business in accordance
with past practice (iii) liabilities under or required to be incurred under this
Agreement and (iv) liabilities under Company Material Contracts (as hereafter
defined). To the best knowledge of the Company, as of the date of this
Agreement, there was no basis for any claim or liability of any nature against
the Company or its Subsidiaries, whether absolute, accrued, contingent or
otherwise, which has had, or would reasonably be expected to have, a Company
Material Adverse Effect, other than as reflected in the Company SEC Reports
(including the financial statements thereto).
6.13 Taxes. (a) For the purposes of this Agreement, the term "Tax" shall
include all Federal, state, local and foreign income, profits, franchise, gross
receipts, payroll, sales, employment, use, property, withholding, excise and
other taxes, duties and assessments of any nature whatsoever together with all
interest, penalties and additions imposed with respect to such amounts. Each of
the Company and its Subsidiaries has filed all Tax returns required to be
15
filed by any of them and has paid (or the Company has paid on its behalf), or
has set up an adequate reserve for the payment of, all Taxes required to be paid
in respect of the periods covered by such returns. The information contained in
such Tax returns is true and complete in all material respects. Neither the
Company nor any Subsidiary of the Company is delinquent in the payment of any
Tax, assessment or governmental charge. Except as disclosed in Section 6.13 of
the Company Disclosure Schedule, no deficiencies for any taxes have been
proposed, asserted or assessed against the Company or any of its Subsidiaries
that have not been finally settled or paid in full, and no requests for waivers
of the time to assess any such Tax are pending.
6.14 Certain Agreements. Except as set forth on Section 6.14 of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries, nor, to
the best knowledge of the Company, any other party thereto, is in breach of or
default under any material agreement, contract or commitment to which the
Company or any of its Subsidiaries is a party (each, a "Company Material
Contract"), nor has the Company or any Subsidiary received in writing any claim
or threat of such breach or default, in any case in such a manner as would
permit any other party to cancel or terminate the same or would permit any other
party to collect material damages from the Company or any of its Subsidiaries
thereunder. All of the Company Material Contracts are in full force and effect.
True and complete copies of the Company Material Contracts have been provided to
Parent by the Company. Except as set forth on Section 6.14 of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries is party to
any agreement containing any provision or covenant limiting in any material
respect the ability of the Company or any Subsidiary to (i) sell any products or
services of any other person, (ii) engage in any line of business, or (iii)
compete with or to obtain products or services from any person or limiting the
ability of any person to provide products or services to the Company or any
Subsidiary.
6.15 Patents, Trademarks, Etc.
(a) The Company and its Subsidiaries own or are licensed or otherwise
possess legally enforceable rights to use all patents, trademarks, trade names,
service marks, trade secrets, copyrights and licenses, all applications for and
registrations of such patents, trademarks, trade names, service marks, trade
secrets, copyrights and licenses, and all processes, formulae, methods,
schematics, technology, know-how, tangible or intangible proprietary information
or material that are necessary to conduct the business of the Company and its
Subsidiaries as currently conducted (the "Intellectual Property Rights");
(b) Neither the Company nor any of its Subsidiaries is or will be as a
result of the execution and delivery of this Agreement or the performance of its
obligations under this Agreement, in breach of any license, sublicense or other
agreement relating to the Intellectual Property Rights or any license,
sublicense or other agreement pursuant to which the Company or any of its
Subsidiaries is authorized to use any third party patents, trademarks or
copyrights, in the manufacture of, incorporated in, or form a part of any
product of the Company or any of its Subsidiaries.
16
(c) To the Company's knowledge, all patents, registered trademarks,
service marks and copyrights held by the Company or any of its Subsidiaries
which the Company considers to be material to its business are valid and
enforceable and except as set forth on Section 6.15 of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries (i) has been sued in
any suit, action or proceeding which involves a claim of infringement of any
patent, trademark, service or xxxx or copyright or the violation of any trade
secret or other proprietary right of any third party; or (ii) has any knowledge
that the manufacturing, importation, marketing, licensing, sale, offer for sale,
or use of any of its products infringes any patent, trademark, service xxxx,
copyright, trade secret or other proprietary right of any third party.
6.16 No Material Adverse Effect. Except as otherwise disclosed herein, in
the Company SEC Reports, in the Company Disclosure Schedule or Section 6.16 of
the Company Disclosure Schedule, the Company is not aware of any fact which,
alone or together with another fact, which has had, or would reasonably be
expected to have, a Company Material Adverse Effect.
6.17 Products Liability.
(a) There is no notice, demand, claim, action, suit, inquiry, hearing,
proceeding, notice of violation or investigation of a civil, criminal or
administrative nature before any court or governmental or other regulatory or
administrative agency, commission or authority against or involving any product,
substance or material (collectively, "Product") or class of claims or lawsuits
involving the same or similar Product produced, distributed or sold by or on
behalf of the Company which is pending or, to the knowledge of Company,
threatened, resulting from an alleged defect in design, manufacture, materials
or workmanship of any Product produced, distributed or sold by or on behalf of
the Company, or any alleged failure to warn, or from any breach of implied
warranties or representations, and there has not been any Occurrence (as defined
below) that is material to the business of the Company or any of its
subsidiaries taken as a whole;
(b) For purposes of this Section 6.17, the term "Occurrence" shall
mean any accident, happening or event which was caused or allegedly caused by
any alleged hazard or alleged defect in manufacture, design, materials or
workmanship including, without limitation, any alleged failure to warn or any
breach of express or implied warranties or representations with respect to, or
any such accident, happening or event otherwise involving, a Product (including
any parts or components) manufactured, produced, distributed or sold by or on
behalf of the Company which is likely to result in a claim or loss.
6.18 Environmental Matters.
(a) The operations of the Company and its Subsidiaries are, and in the
past have been, in compliance in all material respects with all applicable laws,
regulations and other requirements of governmental or regulatory authorities or
duties under the common law
17
relating to toxic or hazardous substances, wastes, pollution or to the
protection of human health, safety, or the environment (collectively,
"Environmental Laws") and have obtained and maintained in effect all material
licenses, permits and other authorizations or registrations (collectively
"Environmental Permits") required under all Environmental Laws and are, and in
the past have been, in compliance with all such Environmental Permits in all
material respects.
(b) Neither the Company nor any Subsidiary has performed or suffered
any act which would reasonably be expected to give rise to, or has otherwise
incurred, liability to any person (governmental or other) under the United
States Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), or any other Environmental Laws, as amended, nor has the Company or
any Subsidiary received written notice of any such liability or any claim
therefor or submitted notice pursuant to Section 103 of CERCLA to any
governmental agency with respect to any of its assets.
(c) No hazardous substance, hazardous waste, contaminant, pollutant or
toxic substance (as such terms are defined in any applicable Environmental Law
and collectively referred to herein as "Hazardous Materials") has been released,
placed or dumped by the Company or any of its Subsidiaries or by action of any
of them otherwise come to be located on, at, beneath or near any of the assets
or properties owned or leased by the Company or any of its Subsidiaries or any
surface waters or groundwaters thereon or thereunder.
(d) Neither the Company nor any of its Subsidiaries owns or operates,
and has never owned or operated, aboveground or underground storage tanks
containing a regulated substance, as such term is defined in Subchapter IX of
the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6991 et seq., as
amended, or a surface impoundment, lagoon, landfill, PCB containing electrical
equipment or asbestos containing materials.
(e) With respect to any or all of the real properties owned or leased
by the Company or any of its Subsidiaries to the knowledge of the Company, (i)
there are no, nor have there been in the past, asbestos-containing materials,
urea formaldehyde insulation, polychlorinated biphenyls or lead-based paints
present at any such properties; and (ii) there are no wetlands (as defined under
any Environmental Law) located on any such properties, nor have any been
drained, filled or otherwise altered.
(f) None of the real properties owned or leased by the Company or any
of its Subsidiaries (i) has been used or is now used for the generation,
transportation, storage, handling, treatment or disposal of any Hazardous
Materials in violation of applicable Environmental Laws or (ii) is identified on
a federal, state or local listing of sites which require or might require
environmental cleanup.
(g) There are no ongoing investigations or negotiations, pending or
threatened, or administrative, judicial or regulatory proceedings, or consent
decrees or other agreements in effect that relate to environmental conditions
in, on, under, about or related to the
18
Company or any of its Subsidiaries, any of their operations or the real
properties owned or leased by them.
(h) Neither the Company nor any of its Subsidiaries is subject to
reporting requirements under the federal Emergency Planning and Community
Right-to-Know Act, 42 U.S.C. ss. 11001 et seq., or analogous state statues and
related regulations, all as amended.
(i) Notwithstanding the foregoing, the Company makes no representation
or warranty with respect to any buildings in which the Company leases office
space, the common areas of such buildings, the land upon which such buildings
are situated, or the premises in such buildings leased by the Company (except
with respect to the Company's personal property located therein).
6.19 Title to Property.
(a) Except as set forth in Section 6.19 of the Company Disclosure
Schedule, the Company and its Subsidiaries have good and marketable title, or
valid leasehold rights in the case of leased property, to all real property and
all personal property purported to be owned or leased by them, free and clear of
all material liens, security interests, claims, encumbrances and charges,
excluding (i) liens for fees, taxes, levies, imposts, duties or governmental
charges of any kind which are not yet delinquent or are being contested in good
faith by appropriate proceedings which suspend the collection thereof, (ii)
liens for mechanics, materialmen, laborers, employees, suppliers or other liens
arising by operation of law for sums which are not yet delinquent or are being
contested in good faith by appropriate proceedings, (iii) liens created in the
ordinary course of business in connection with the leasing or financing of
office, computer and related equipment and supplies, (iv) easements and similar
encumbrances ordinarily created for xxxxxx utilization and enjoyment of
property, and (v) liens or defects in title or leasehold rights that, in the
aggregate, do not and will not have a Company Material Adverse Effect;
(b) Consummation of the Merger will not result in any breach of or
constitute a default (or an event with which notice or lapse of time or both
would constitute a default) under, or give to others any rights of termination
or cancellation of, or require the consent of others under, any lease in which
the Company or its Subsidiaries is a lessee.
6.20 Absence Of Certain Business Practices. During the past five years,
none of the Company's officers, employees or, to the Company's knowledge,
agents, nor, to the Company's knowledge, any other person acting on behalf of
any of them or the Company, has, directly or indirectly, given or agreed to give
any improper gift or similar benefit to any customer, supplier, governmental
employee or other person.
6.21 Financial Advisor. Except for the financial advisor that will deliver
the Fairness Opinion (as defined in Section 9.11 hereof), no broker, finder or
investment banker is
19
entitled to any brokerage or finder's fee or investment banking fee in
connection with the Merger based upon arrangements made by or on behalf of the
Company.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES REGARDING SUB
Parent and Sub jointly and severally represent and warrant to the Company as
follows:
7.1 Organization. Sub is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware. Sub has not
engaged in any business since it was incorporated other than in connection with
its organization and the transactions contemplated by this Agreement.
7.2 Capitalization. The authorized capital stock of Sub consists of 1,000
shares of Common Stock, par value $.01 per share, 100 shares of which are
validly issued and outstanding, fully paid and nonassessable and are owned
directly or indirectly by Parent free and clear of all liens, claims and
encumbrances.
7.3 Authority Relative to this Agreement. Sub has the corporate power to
enter into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by its Board of
Directors and sole shareholder, and no other corporate proceedings on the part
of Sub are necessary to authorize this Agreement and the transactions
contemplated hereby. Except as referred to herein or in connection, or in
compliance, with the provisions of the Securities Act, the Exchange Act and the
environmental, corporation, securities or blue sky laws or regulations of the
various states, no filing or registration with, or authorization, consent or
approval of, any public body or authority is necessary for the consummation by
Sub of the Merger or the transactions contemplated by this Agreement, other than
filings, registrations, authorizations, consents or approvals the failure to
make or obtain would not prevent the consummation of the transactions
contemplated hereby.
ARTICLE VIII
CONDUCT OF BUSINESS PENDING THE MERGER
8.1 Conduct of Business by the Company Pending the Merger. Prior to the
Effective Date, unless Parent shall otherwise agree in writing:
(i) The Company shall, and shall cause its Subsidiaries to, carry on
their respective businesses in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted, and shall, and shall
cause its Subsidiaries to, use their commercially reasonable efforts to preserve
intact their present business organizations and preserve their relationships
with customers, suppliers and others having business dealings with
20
them to the end that their goodwill and on going businesses shall be unimpaired
at the Effective Date. The Company shall, and shall cause its Subsidiaries to,
(a) maintain insurance coverages and its books, accounts and records in the
usual manner consistent with prior practices; (b) comply in all material
respects with all laws, ordinances and regulations of Governmental Entities
applicable to the Company and its subsidiaries; and (c) maintain and keep its
properties and equipment in good repair, working order and condition in
accordance with past practice, ordinary wear and tear excepted; and (d) perform
in all material respects its obligations under all material contracts and
commitments to which it is a party or by which it is bound;
(ii) The Company shall not and shall not propose to (A) sell or pledge
or agree to sell or pledge any capital stock owned by it in any of its
Subsidiaries (subject to the fiduciary duties of the Company's Board of
Directors), (B) amend its Certificate of Incorporation or By-laws, (C) split,
combine or reclassify its outstanding capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of capital stock of the Company, or declare, set aside
or pay any dividend or other distribution payable in cash, stock or property, or
(D) directly or indirectly redeem, purchase or otherwise acquire or agree to
redeem, purchase or otherwise acquire any shares of Company capital stock;
(iii) Subject to the fiduciary duties of the Company's Board of
Directors, the Company shall not, nor shall it permit any of its Subsidiaries
to, without the consent of Parent which shall not be unreasonably withheld (A)
issue, deliver or sell or agree to issue, deliver or sell any additional shares
of, or rights of any kind to acquire any shares of, its capital stock of any
class, any indebtedness having the right to vote on which the Company's
shareholders may vote or any option, rights or warrants to acquire, or
securities convertible into, shares of capital stock other than issuances of
Company Common Stock pursuant to employment agreements as in effect on the date
hereof, the exercise of stock options outstanding on the date hereof or granted
prior to the Effective Date under automatic grants under the Company's Employee
Stock Option Plan; (B) acquire, lease or dispose or agree to acquire, lease or
dispose of any capital assets or any other assets other than in the ordinary
course of business consistent with past practice; (C) incur additional
indebtedness or encumber or grant a security interest in any asset or enter into
any other material transaction other than in each case in the ordinary course of
business consistent with past practice; (D) acquire or agree to acquire by
merging or consolidating with, or by purchasing a substantial equity interest
in, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof; or (E) enter
into any contract, agreement, commitment or arrangement with respect to any of
the foregoing;
(iv) The Company shall not, nor shall it permit any of its
Subsidiaries to, except as required to comply with applicable law, enter into
any new (or amend any existing) Company Benefit Plan or any new (or amend any
existing) employment, severance or consulting agreement, grant any general
increase in the compensation of directors, officers or employees (including any
such increase pursuant to any bonus, pension, profit-sharing or other plan or
commitment) or grant any increase in the compensation payable or to become
payable to
21
any director, officer or employee, except in any of the foregoing cases in
accordance with pre-existing contractual provisions or in the ordinary course of
business consistent with past practice; and
(v) The Company shall not, nor shall it permit any of its Subsidiaries
to, make any investments in non-investment grade securities
ARTICLE IX
ADDITIONAL AGREEMENTS
9.1 Access and Information. The Company and its Subsidiaries shall afford
Parent and to its accountants, counsel and other representatives, upon
reasonable advance notice, reasonable access during normal business hours (and
at such other times as the parties may mutually agree) throughout the period
prior to the Effective Date to all of their properties, books, contracts,
commitments, records and personnel and, during such period, the Company shall
furnish promptly to the Parent (i) a copy of each report, schedule and other
document filed or received by it or its Subsidiaries pursuant to the
requirements of federal or state securities laws, and (ii) all other information
concerning the Company's or its Subsidiaries' business, properties and personnel
as the Parent may request. Each of the Company and Parent shall hold, and shall
cause their respective Affiliates, employees and agents to hold, in confidence
all information provided to the other pursuant to the terms hereof, in
connection with the transactions contemplated hereby or otherwise provided on a
confidential basis.
9.2 Proxy Statement. Parent and the Company shall cooperate and promptly
prepare, and the Company shall file with the Commission as soon as practicable,
a proxy statement with respect to the Company Meeting (the "Proxy Statement"),
which shall comply as to form in all material respects with the applicable
provisions of the Exchange Act and the rules and regulations thereunder. The
Company shall use all reasonable efforts, and Parent will cooperate with the
Company, to have the Proxy Statement cleared by the Commission as promptly as
practicable. The Company shall, as promptly as practicable, provide copies of
any written comments received from the Commission with respect to the Proxy
Statement to Parent and advise Parent of any oral comments with respect to the
Proxy Statement received from the Commission. Parent agrees that none of the
information supplied or to be supplied by Parent for inclusion or incorporation
by reference in the Proxy Statement and each amendment or supplement thereto, at
the time of mailing thereof and at the time of the Company Meeting, will contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. The Company agrees
that none of the information supplied or to be supplied by the Company for
inclusion or incorporation by reference in the Proxy Statement and each
amendment or supplement thereto, at the time of mailing thereof and at the time
of the Company Meeting, will contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. For purposes of the
22
foregoing, it is understood and agreed that information concerning or related to
Parent will be deemed to have been supplied by Parent and information concerning
or related to the Company and the Company Meeting shall be deemed to have been
supplied by the Company. The Company will provide Parent with a reasonable
opportunity to review any amendment or supplement to the Proxy Statement prior
to filing such with the Commission, and will provide Parent with a copy of all
such filings made with the Commission. No amendment or supplement to the Proxy
Statement shall be made without the approval of Parent, which approval shall not
be unreasonably withheld or delayed.
9.3 Employee Matters. As of the Effective Date, the employees of the
Company and each Subsidiary shall continue employment with the Surviving
Corporation and the Subsidiaries, respectively, in the same positions and at the
same level of wages and/or salary and without having incurred a termination of
employment or separation from service; provided, however, except as may be
specifically required by applicable law or any contract, the Surviving
Corporation and the Subsidiaries shall not be obligated to continue any
employment relationship with any employee for any specific period of time.
Except as otherwise provided by Section 4.3 hereof, as of the Effective Date,
the Surviving Corporation shall be the sponsor of the Company Employee Benefit
Plans sponsored by the Company immediately prior to the Effective Date, and
Parent shall cause the Surviving Corporation and the Subsidiaries to satisfy all
obligations and liabilities under such Company Employee Benefit Plans. To the
extent any employee benefit plan, program or policy of the Parent or its
affiliates is made available to the employees of the Surviving Corporation or
its Subsidiaries: (i) service with the Company and the Subsidiaries by any
employee prior to the Effective Date shall be credited for eligibility and
vesting purposes under such plan, program or policy, but not for benefit accrual
purposes, and (ii) with respect to any welfare benefit plans to which such
employees may become eligible, Parent shall cause such plans to provide credit
for any co-payments or deductibles by such employees and waive all pre-existing
condition exclusions and waiting periods, other than limitations or waiting
periods that have not been satisfied under any welfare plans maintained by the
Company and the Subsidiaries for their employees prior to the Effective Date.
9.4 Indemnification.
(a) The Company shall indemnify, defend and hold harmless, and after
the Effective Date, the Surviving Corporation shall indemnify, defend and hold
harmless the officers, directors and employees of the Company and its
subsidiaries who were such at any time prior to the Effective Date (the
"Indemnified Parties") from and against all losses, expenses, claims, damages or
liabilities ("Losses") arising out of the transactions contemplated by this
Agreement occurring before the Effective Date to the fullest extent permitted or
required under applicable law, including without limitation the advancement of
expenses; provided, however, that such indemnification shall not be available
with respect to Losses arising out of the failure of the Company to obtain the
Fairness Opinion. Parent agrees that all rights to indemnification existing in
favor of the directors, officers or employees of the Company as provided in the
Company's Certificate of Incorporation or By-Laws, as in effect as of the date
hereof, with respect to matters occurring through the Effective Date, shall
survive the Merger and shall
23
continue in full force and effect for a period of not less than three years from
the Effective Date. Parent agrees to cause the Surviving Corporation to maintain
in effect for not less than three years after the Effective Date the current
policies of directors' and officers' liability insurance maintained by the
Company with respect to matters occurring on or prior to the Effective Date;
provided, however, that the Surviving Corporation may substitute therefor
policies of at least the same coverage (with carriers comparable to the
Company's existing carriers) containing terms and conditions which are no less
advantageous to the Indemnified Parties; provided, further, that Parent shall
not be required in order to maintain or procure such coverage to pay an annual
premium in excess of 150% of the current annual premium paid by the Company for
its existing coverage (the "Cap"); and provided, further, that if equivalent
coverage cannot be obtained, or can be obtained only by paying an annual premium
in excess of the Cap, Parent shall only be required to obtain as much coverage
as can be obtained by paying an annual premium equal to the Cap.
(b) In the event that any action, suit, proceeding or investigation
relating hereto or to the transactions contemplated by this Agreement is
commenced by a person or entity who or which is not a party to this Agreement,
whether before or after the Effective Date, the parties hereto agree to
cooperate and use their respective reasonable efforts to defend against and
respond thereto.
9.5 Additional Agreements.
(a) Subject to the terms and conditions herein provided, each of the
parties hereto agrees to use all reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including using all
reasonable efforts to obtain all necessary waivers, consents and approvals as
may be necessary or advisable to consummate the merger, to effect all necessary
registrations and filings (including, but not limited to, filings with all
applicable Governmental Entities) and to lift any injunction to the Merger (and,
in such case, to proceed with the Merger as expeditiously as possible).
(b) In case at any time after the Effective Date any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and/or directors of Parent, the Company and the Surviving Corporation
shall take all such commercially reasonable and necessary action.
9.6 Alternative Proposals. Prior to the Effective Date, the Company agrees
(a) that neither it nor any of its Subsidiaries shall, and it shall direct and
use its best efforts to cause it and its Subsidiaries' officers, directors,
employees, agents and representatives (including, without limitation, any
investment banker, attorney or accountant retained by it or
24
any of its Subsidiaries) not to, initiate, solicit or encourage, directly or
indirectly, any inquiries or the making or implementation of any proposal or
offer (including, without limitation, any proposal or offer to its stockholders)
with respect to a merger, acquisition, consolidation or similar transaction
involving, or any purchase of all or substantially all of the assets or any
equity securities of, the Company or any of its Subsidiaries (any such proposal
or offer being hereinafter referred to as an "Alternative Proposal") or engage
in any negotiations concerning, or provide any confidential information or data
to, or have any discussions with, any person relating to an Alternative
Proposal, or release any third party from any obligations under any existing
standstill agreement or arrangement relating to any Alternative Proposal, or
otherwise facilitate any effort or attempt to make or implement an Alternative
Proposal; (b) that it will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing, and it will take the necessary
steps to inform the individuals or entities referred to above of the obligations
undertaken in this Section 9.6; and (c) that it will notify Parent immediately
if any such inquiries or proposals are received by, any such information is
requested from, or any such negotiations or discussions are sought to be
initiated or continued with, it or any of its Subsidiaries: provided, however,
that nothing contained in this Section 9.6 shall prohibit the Board of Directors
of the Company from (i) furnishing information to or entering into discussions
or negotiations with, any person or entity that makes an unsolicited bona fide
proposal to acquire the Company pursuant to a merger, consolidation, share
exchange, purchase of a substantial portion of assets, business combination or
other similar transaction, if, and only to the extent that, (A) the Board of
Directors of the Company determines in good faith (after consultation with and
based on advice of its outside legal counsel) that such action is required for
the Board of Directors to comply with its fiduciary duties to stockholders
imposed by law, (B) prior to furnishing such information to, or entering into
discussions or negotiations with, such person or entity, (i) the Company
provides written notice to Parent to the effect that it is furnishing
information to, or entering into discussions or negotiations with, such person
or entity and (ii) the Company and such person or entity enter into an
appropriate confidentiality agreement with respect to information to be supplied
by the Company and (C) the Company keeps Parent promptly informed of the status
and all material terms and conditions of any such discussions or negotiations
(including identities of parties) and, if any such proposal or inquiry is in
writing, furnishes a copy of such proposal or inquiry to Parent as soon as
practicable after the receipt thereof; and (ii) to the extent applicable,
complying with Rule 14e-2 promulgated under the Exchange Act with regard to an
Alternative Proposal. Nothing in this Section 9.6 shall (x) permit the Company
to terminate this Agreement (except as specifically provided in Article XI
hereof), (y) permit the Company to enter into any agreement with respect to an
Alternative Proposal during the term of this Agreement (it being agreed that
during the term of this Agreement, the Company shall not enter into any
agreement with any person that provides for, or in any way facilitates, an
Alternative Proposal (other than a confidentiality agreement in customary
form)), or (z) affect any other obligation of the Company under this Agreement.
9.7 Advice of Changes; SEC Filings. The Company shall confer on a regular
basis with Parent on operational matters. The Company shall promptly advise
Parent orally and in writing of any change or event that has had, or could
reasonably be expected to have, a
25
Company Material Adverse Effect. The Company shall promptly provide to Parent
(and its counsel) copies of all filings made by such party with the Commission
or any other state or federal Governmental Entity in connection with this
Agreement and the transactions contemplated hereby.
9.8 Restructuring of Merger. Upon the mutual agreement of Parent and the
Company, the Merger shall be restructured in the form of a forward subsidiary
merger of the Company into Sub, with Sub being the surviving corporation, or as
a merger of the Company into Parent, with Parent being the surviving
corporation. In such event, this Agreement shall be deemed appropriately
modified to reflect such form of merger.
9.9 Cancellation of Warrants; Repayment of Loans from Affiliates. On the
Effective Date, and without any further action by the holders thereof (a)
warrants to purchase 400,000 shares of Company Common Stock held by Mr. Xxxx
Xxxxxxxx and warrants to purchase 50,000 shares of Company Common Stock held by
Xx. Xxxxx Xxxxx shall be canceled and the holders thereof shall thereafter have
the right to payment in cash equal to $400,000 and $50,000, respectively, in
exchange therefor, which payment shall be made by the Surviving Corporation
promptly after the Effective Date and (b) the loans by Xx. Xxxxxxxx and Xx.
Xxxxxx X. Xxxxxx to the Company in the original principal amounts of $1,700,000
and $500,000, respectively, shall be converted into the right to (i) the cash
payment to Xx. Xxxxxxxx of $1,200,000 plus all accrued and unpaid interest on
his loan and the issuance to Xx. Xxxxxxxx by Parent of Parent ordinary shares,
par value 1p per share, having a value equal to $500,000 and (ii) the cash
payment to Xx. Xxxxxx of all accrued and unpaid interest on his loan and the
issuance to Xx. Xxxxxx by Parent of Parent ordinary shares having a value equal
to $500,000, which payments and issuances shall be made promptly after the
Effective Date and (c) the 300,000 options outstanding to Xx. Xxxxxx shall be
canceled at Closing. For purposes of determining the value of the Parent
ordinary shares hereunder, each Parent ordinary share shall have a value equal
to the average of the middle market closing price for the Parent ordinary shares
on the Alternative Investment Market of the London Stock Exchange, as shown in
"The London Stock Exchange Daily Official List" on each of the ten trading days
ending two days prior to the Effective Date. Prior to the issuance of such
Parent ordinary shares, each of Messrs. Xxxxxxxx and Xxxxxx shall enter into a
subscription with Parent in form reasonably satisfactory to Parent, which will
provide, among other things, that the Parent ordinary shares to be issued
hereunder may not be sold, assigned, pledged or otherwise transferred for a
period of six months from the date of issuance.
9.10 Agreement of Principal Stockholders. Each of Messrs. Xxxxxx and
Xxxxxxxx and Mr. Xxxx Xxxxxx (collectively, the "Stockholders") agrees that from
and after the date hereof until August 31, 1998, or such earlier date as this
Agreement shall be terminated (a) he shall not pledge, hypothecate or otherwise
transfer his shares of Company Common Stock in any manner and (b) he shall vote
all of his shares of Company Common Stock in favor of the Merger (and against
any Alternative Proposal). Nothing contained in this Section 9.10 shall be
construed to prevent any of the Stockholders, when acting in their capacities as
directors of the Company, from exercising their fiduciary duties as directors in
accordance with applicable law.
26
9.11 Fairness Opinion. The Company shall use its commercially reasonable
efforts to engage an investment bank reasonably acceptable to Parent promptly
after the date of this Agreement for the purpose of delivering a written opinion
to the effect that, as of the date of this Agreement, the Merger Consideration
is fair to the holders of Company Common Stock from a financial point of view
(the "Fairness Opinion"). The Company shall engage such investment bank to
deliver the Fairness Opinion within three weeks of the date of this Agreement
(the "Fairness Opinion Period"). The fees and commissions payable to the
Company's financial advisor in connection with its services to the Company shall
be reasonably acceptable to Parent. The Company take all commercially reasonable
steps to facilitate the delivery of the Fairness Opinion and shall use its
commercially reasonable efforts to cooperate with the investment bank and supply
all information reasonably requested on a timely basis. Any failure by the
Company's investment bank to deliver the Fairness Opinion for any reason other
than the adequacy of the value of the Merger Consideration shall be deemed to be
a breach of this covenant by the Company.
ARTICLE X
CONDITIONS PRECEDENT
10.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Date of the following conditions:
(a) This Agreement and the Merger shall have been approved and adopted
by the requisite vote of the holders of the Company Common Stock.
(b) No preliminary or permanent injunction or other order by any
federal or state court in the United States of competent jurisdiction which
prevents the consummation of the Merger shall have been issued and remain in
effect (each party agreeing to use its reasonable efforts to have any such
injunction lifted).
10.2 Conditions to Obligation of the Company to Effect the Merger. The
obligation of the Company to effect the Merger shall be subject to the
fulfillment at or prior to the Effective Date of the following conditions,
unless waived by the Company:
(a) The Parent and Sub shall have performed in all material respects
their agreements contained in this Agreement required to be performed on or
prior to the Effective Date, and the representations and warranties of Parent
and Sub contained in this Agreement shall be true in all material respects when
made and on and as of the Effective Date as if made on and as of such date
(except to the extent they relate to a particular date), except as expressly
contemplated or permitted by this Agreement, and the Company shall have received
a certificate of the President or Chief Executive Officer or a Vice President of
Parent and Sub to that effect.
27
(b) Parent and Sub shall have furnished the Company with a certified
copy of the resolutions adopted by their respective directors approving the
terms, execution and delivery of this Agreement, the Merger contemplated hereby,
and Parent's and Sub's performance hereunder, together with a certificate of
incumbency of Parent and Sub, executed by their respective President or a
Vice-President, and Secretary, which lists the officers and specimen signatures
of the officers who have executed this Agreement and all other documents and
instruments contemplated by this Agreement on behalf of Parent and Sub.
(c) The Company shall have received an opinion of Parent's and Sub's
legal counsel, dated as of the Closing Date, as to the matters set forth on
Exhibit 10.2(c) attached hereto, addressed to the Company.
10.3 Conditions to Obligations of Parent and Sub to Effect the Merger. The
obligations of Parent and Sub to effect the Merger shall be subject to the
fulfillment at or prior to the Effective Date of the additional following
conditions, unless waived by Parent:
(a) The Company shall have performed in all material respects its
agreements contained in this Agreement required to be performed on or prior to
the Effective Date, and the representations and warranties of the Company
contained in this Agreement shall be true when made and on and as of the
Effective Date as if made on and as of such date (except to the extent they
relate to a particular date), except as expressly contemplated or permitted by
this Agreement, and Parent and Sub shall have received a certificate of the
President or Chief Executive Officer or a Vice President of the Company to that
effect.
(b) From the date of this Agreement through the Effective Date, there
shall not have occurred any change, individually or together with other changes,
that has had, or would reasonably be expected to have, a material adverse change
in the financial condition, business, results of operations or prospects of the
Company and its Subsidiaries, taken as a whole.
(c) The number of shares of Company Common Stock for which written
demand for appraisal has been properly made pursuant to Section 262 of the DCGL
shall not have exceeded 5% of the total number of shares of Company Common Stock
outstanding immediately prior to the Effective Date.
(d) The Company shall have furnished Parent and Sub with a certified
copy of the resolutions adopted by the Company's directors and stockholders
approving the terms, execution and delivery of this Agreement, the Merger
contemplated hereby, and the Company's performance hereunder, together with a
certificate of incumbency of the Company, executed by its President or a
Vice-President, and its Secretary, which lists the officers and specimen
signatures of the officers who have executed this Agreement and all other
documents and instruments contemplated by this Agreement on behalf of the
Company.
28
(e) Parent and Sub shall have received an opinion of the Company's
legal counsel, dated as of the Closing Date, as to the matters set forth on
Exhibit 10.3(e) attached hereto, addressed to Parent and Sub.
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
11.1 Termination by Mutual Consent. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Date, before or
after the approval of this Agreement by the stockholders of the Company, by the
mutual consent of Parent and the Company.
11.2 Termination by Either Parent or the Company. This Agreement may be
terminated and the Merger may be abandoned by action of the Board of Directors
of either Parent or the Company if (a) the Merger shall not have been
consummated by August 31, 1998, or (b)the approval of the Company's stockholders
required by Section 10.1(a) shall not have been obtained at a meeting duly
convened therefor or at any adjournment or postponement thereof, or (c) a United
States federal or state court of competent jurisdiction or United States federal
or state governmental, regulatory or administrative agency or commission shall
have issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated by
this Agreement and such order, decree, ruling or other action shall have become
final and non-appealable; provided, that the party seeking to terminate this
Agreement pursuant to this clause (c) shall have used all reasonable efforts to
remove such injunction, order or decree; and provided, in the case of a
termination pursuant to clause (a) above, that the terminating party shall not
have breached in any material respect its obligations under this Agreement in
any manner that shall have proximately contributed to the failure to consummate
the Merger.
11.3 Termination by the Company. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Date, before or after
the adoption and approval by the stockholders of the Company referred to in
Section 10.1(a), by action of the Board of Directors of the Company and written
notice to Parent, if (a) in the exercise of its fiduciary duties to its
stockholders imposed by law, the Board of Directors of the Company determines
that such termination is required by reason of an Alternative Proposal being
made, or (b) there has been a material breach by Parent or Sub of any
representation or warranty contained in this Agreement, or (c) there has been a
material breach of any of the covenants or agreements set forth in this
Agreement on the part of Parent, which breach is not curable or, if curable, is
not cured within 30 days after written notice of such breach is given by the
Company to Parent. Notwithstanding anything contained in this Agreement to the
contrary, the Company shall have the right to terminate this Agreement and
abandon the Merger (A) during the Fairness Opinion Period if the Company
receives a written opinion from the investment bank retained pursuant to Section
9.11 to the effect that the Merger Consideration is not fair from a financial
point of view to the holders of the Company Common Stock, or on the last day of
the Fairness Opinion Period
29
if the Fairness Opinion has not been delivered, or (B) at any time after June
30, 1998, if, within five (5) days after the written request by the Company
after such date, Parent does not furnish to the Company a written letter
addressed to the Company from Xxxxx Xxxxxxxxx & Co. Limited and/or other
reputable investment banks capable of providing such financing confirming their
firm commitment to provide the financing required in connection with the
transactions contemplated hereby for the payment of all amounts due hereunder or
related hereto (including fees and expenses of its financial advisors and legal
counsel).
11.4 Termination by Parent. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Date, by action of the Board
of Directors of Parent and written notice to the Company, if (a) the Board of
Directors of the Company shall have withdrawn or modified in a manner adverse to
Parent its approval or recommendation of this Agreement or the Merger or shall
have recommended an Alternative Proposal to the Company's stockholders, or (b)
there has been a material breach by the Company of any representation or
warranty contained in this Agreement, or (c) there has been a material breach by
the Company of any of the covenants or agreements set forth in this Agreement,
which breach is not curable or, if curable, is not cured within 30 days after
written notice of such breach is given by Parent to the Company, or (d) a change
or changes having the effect specified in Section 10.3(b) shall have occurred.
Notwithstanding the foregoing, this Agreement may be terminated by Parent and
the Merger may be abandoned (A) at any time prior to May 15, 1998, by action of
the Board of Directors of Parent and written notice to the Company, if Parent
concludes as a result of Parent's legal, business and financial due diligence
review of the Company, that (i) the Company's business, properties, assets,
condition (financial or otherwise), liabilities or operations are not
satisfactory, or (ii) the Company is in material breach of any representation or
warranty made in this Agreement, or (B) during the Fairness Opinion Period if
the Company receives a written opinion from the investment bank retained
pursuant to Section 9.11 to the effect that the Merger consideration is not fair
from a financial point of view to the holders of the Company Common Stock, or
within two business days after the termination of the Fairness Opinion Period if
the Company shall not have obtained the Fairness Opinion, or (C) before June 30,
1998 if Parent shall have failed to obtain the irrevocable undertaking from
holders of a majority of Parent's ordinary shares to vote in favor of the
resolutions necessary to effect the Merger and the related financing or (D)
prior to June 30, 1998 if Parent and Sub shall not have obtained a firm
commitment from Xxxxx Xxxxxxxxx & Co. Limited and/or other reputable investment
banks capable of providing such financing to provide the financing required in
connection with the transactions contemplated hereby for the payment of all
amounts due hereunder or related hereto (including fees and expenses of its
financial advisors and legal counsel) on terms satisfactory to Parent in its
sole discretion.
11.5 Effect of Termination and Abandonment.
(a) In the event that (x) any person shall have made an Alternative
Proposal and thereafter this Agreement is terminated either by the Company
pursuant to Section 11.3(a) or by either Parent or the Company pursuant to
Section 11.2(b), (y) the Board of Directors of the Company shall have withdrawn
or modified in a manner adverse to Parent its
30
approval or recommendation of this Agreement or the Merger or shall have
recommended an Alternative Proposal to the Company stockholders and Parent shall
have terminated this Agreement pursuant to Section 11.4(a) or (z) any person
shall have made an Alternative Proposal and thereafter this Agreement is
terminated for any reason other than those set forth in clauses (x) or (y) above
and within 12 months thereafter any Alternative Proposal shall have been
consummated with the third party who made such Alternative Proposal, then the
Company shall promptly, but in no event later than two days after such
termination or consummation with respect to clause (z), pay Parent a fee of
$500,000 (the "Termination Fee"), which amount shall be payable by wire transfer
of same day funds. Notwithstanding anything to the contrary contained herein,
Parent shall only be entitled to be paid the Termination Fee in the event that
at the time of the termination of this Agreement Parent is not in material
breach of any of the representations, warranties or covenants set forth in this
Agreement. The Company acknowledges that the agreements contained in this
Section 11.5(a) are an integral part of the transactions contemplated in this
Agreement, and that, without these agreements, Parent and Sub would not enter
into this Agreement; accordingly, if the Company fails to promptly pay the
amount due pursuant to this Section 11.5(a), and, in order to obtain such
payment, Parent or Sub commences a suit which results in a judgment against the
Company for the fee set forth in this Section 11.5(a), the Company shall pay to
Parent its costs and expenses (including attorneys' fees) in connection with
such suit, together with interest on the amount of the fee at the rate of 12%
per annum from the date such payment should have been made.
(b) In the event of termination of this Agreement and the abandonment
of the Merger pursuant to this Article XI, all obligations of the parties hereto
shall terminate, except the obligations of the parties pursuant to this Section
11.5 and Section 12.3 and except for the provisions of Sections 12.5, 12.6,
12.7, 12.9, 12.11, 12.12 and 12.14. Moreover, in the event of termination of
this Agreement pursuant to Section 11.2, 11.3 or 11.4, nothing herein shall
prejudice the ability of the non-breaching party from seeking damages from any
other party for any breach of this Agreement, including without limitation,
attorneys' fees and the right to pursue any remedy at law or in equity; provided
that following termination of this Agreement upon the occurrence of any of the
events described in clauses (x), (y) or (z) of Section 11.5(a), and provided
that the Termination Fee payable pursuant to Section 11.5 shall after such
termination be paid, neither Parent nor Sub shall (i) have any rights whatsoever
in respect of or in connection with the representations, warranties or covenants
of the Company, (ii) assert or pursue in any manner, directly or indirectly, any
claim or cause of action based in whole or in part upon alleged tortious or
other interference with rights under this Agreement against any entity or person
submitting an Alternative Proposal or (iii) assert or pursue in any manner,
directly or indirectly, any claim or cause of action against the Company or any
of its officers or directors based in whole or in part upon its or their
receipt, consideration, recommendation, or approval of an Alternative Proposal.
31
ARTICLE XII
GENERAL PROVISIONS
12.1 Non-Survival of Representations, Warranties and Agreements. All
representations and warranties set forth in this Agreement shall terminate at
the Effective Date. All covenants and agreements set forth in this Agreement and
any instrument delivered pursuant to this Agreement shall survive in accordance
with their terms.
12.2 Notices. All notices or other communications under this Agreement
shall be in writing and shall be given (and shall be deemed to have been duly
given upon receipt) by delivery in person, by facsimile or other standard form
of telecommunications, overnight courier or by registered or certified mail,
postage prepaid, return receipt requested, addressed as follows:
If to the Company:
Xxxxxx Medical Corporation
0000 Xxxxxxx Xxxxxxx Xxxxx XX
Xxxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx Xxxxxxxxx, President
and Chief Executive Officer
Facsimile: (000) 000-0000
With a copy to:
Golenbock, Eiseman, Assor & Xxxx
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile: (000)000-0000
If to Parent or Sub:
32
Medisys PLC
Walmar House
000-000 Xxxxxx Xxxxxx
Xxxxxx X0X XX0 Xxxxxxx
Attention: Xxxxx Xxxxxxx
Facsimile: (000) 000-000-0000
With a copy to:
Xxxxx Xxxxxxxxxxx XxXxxxxxx LLC
One Citicorp Center
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
or to such other address as any party may have furnished to the other parties in
writing in accordance with this Section.
12.3 Fees and Expenses. Whether or not the Merger is consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated by this Agreement shall be paid by the party incurring such
expenses, whether or not the Merger is consummated except as expressly provided
herein and except that (a) the filing fee in connection with the filing of the
Proxy Statement with the Commission and (b) the expenses incurred in connection
with printing and mailing the Proxy Statement, shall be shared equally by the
Company and Parent.
12.4 Publicity. So long as this Agreement is in effect, Parent, Sub and the
Company agree to consult with each other in issuing any press release or
otherwise making any public statement with respect to the transactions
contemplated by this Agreement, and none of them shall issue any press release
or make any public statement prior to such consultation, except as may be
required by law or by obligations pursuant to the rules of any listing agreement
with any national securities exchange, NASDAQ, the Alternative Investment Market
of the London Stock Exchange, or other regulatory body or association. The
commencement of litigation relating to this Agreement or the transactions
contemplated hereby or any proceedings in connection therewith shall not be
deemed a violation of this Section 12.4.
12.5 Specific Performance. The parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions or other appropriate equitable relief (in addition to other remedies
at law), without the requirement to post bond or security to prevent breaches of
this Agreement and to enforce specifically the terms and provisions hereof in
any
33
court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity.
12.6 Assignment; Binding Effect. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties; provided, however, Parent and Sub may
assign their rights, but not their obligations, under this Agreement to any of
their respective direct or indirect wholly owned subsidiaries. Subject to the
preceding sentence, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.
Notwithstanding anything contained in this Agreement to the contrary, nothing in
this Agreement, expressed or implied, is intended to confer on any person other
than the parties hereto or their respective successors and assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement;
provided that the Indemnified Parties shall be third-party beneficiaries of
Parent's agreement contained in Section 9.4 hereof.
12.7 Entire Agreement. This Agreement, the Exhibits, the Company Disclosure
Schedule and any documents delivered by the parties in connection herewith and
therewith constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings
among the parties with respect thereto. No addition to or modification of any
provision of this Agreement shall be binding upon any party hereto unless made
in writing and signed by all parties hereto.
12.8 Amendment. This Agreement may be amended by the parties hereto, by
action taken by their respective Boards of Directors, at any time before or
after approval of matters presented in connection with the Merger by the
stockholders of the Company and the Parent, but after any such stockholder
approval, no amendment shall be made which by law requires the further approval
of stockholders without obtaining such further approval. This Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
parties hereto.
12.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to its rules
of conflict of laws.
12.10 Counterparts. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the parties hereto.
12.11 Headings and Table of Contents. Headings of the Articles and Sections
of this Agreement and the Table of Contents are for the convenience of the
parties only, and shall be given no substantive or interpretive effect
whatsoever.
34
12.12 Interpretation. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the plural and vice
versa, and words denoting any gender shall include all genders and words
denoting natural persons shall include corporations and partnerships and vice
versa.
12.13 Waivers. At any time prior to the Effective Date, the parties hereto,
by or pursuant to action taken by their respective Boards of Directors, may (i)
extend the time for the performance of any of the obligations or other acts of
the other parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein or in any documents delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid if set forth in an instrument in writing signed on behalf
of such party. Except as provided in this Agreement, no action taken pursuant to
this Agreement, including, without limitation, any investigation by or on behalf
of any party, shall be deemed to constitute a waiver by the party taking such
action of compliance with any representations, warranties, covenants or
agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision hereunder shall not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereunder.
12.14 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
12.15 Subsidiaries. As used in this Agreement, the word "Subsidiary" when
used with respect to any party means any corporation or other organization,
whether incorporated or unincorporated, of which such party directly or
indirectly owns or controls at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of the
board of directors or others performing similar functions with respect to such
corporation or other organization, or any organization of which such party is a
general partner.
12.16 United States Dollars; Exchange Rates. (a) As used in this Agreement,
unless otherwise indicated, "$" shall mean U.S. dollars; and (b) to the extent
that the calculation of foreign currency exchange rates is required hereby,
reference shall be made to the appropriate rates set forth in "The Wall Street
Journal" for the applicable date.
35
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement
to be signed by their respective officers thereunder duly authorized all as of
the date first written above.
MEDISYS PLC
By: /s/ Xxxxx X. Xxxxxxx
-------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
LMC ACQUISITION CORP.
By: /s/ Xxxxx X. Xxxxxxx
-------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
XXXXXX MEDICAL CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxx
--------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: President
Agreed and Accepted
with Respect to Sections 9.9 and 9.10
/s/ Xxxx Xxxxxxxx
----------------------
Xxxx Xxxxxxxx
/s/ Xxxxxx X. Xxxxxx
----------------------
Xxxxxx X. Xxxxxx
/s/ Xxxx Xxxxxx
----------------------
Xxxx Xxxxxx
36
Exhibit 10.2(e)
Form of Opinion of Counsel to Parent and Sub (to be split between US and UK
counsel)
1. Parent is a public limited company duly incorporated, validly existing and in
good standing under the laws of Scotland and has the corporate power to carry on
its business as it is now being conducted or currently proposed to be conducted.
2. Sub is a corporation duly incorporated, validly existing and in good standing
under the laws of the State of Delaware.
3. Parent has the corporate authority to enter into the Merger Agreement and to
carry out its obligations hereunder. The execution and delivery of the Merger
Agreement and the consummation of the transactions contemplated thereby have
been duly authorized by Parent's Board of Directors. No other corporate
proceedings on the part of Parent are necessary to authorize the Merger
Agreement and the transactions contemplated thereby.
4. Sub has the corporate power to enter into the Merger Agreement and to carry
out its obligations thereunder. The execution and delivery of the Merger
Agreement and the consummation of the transactions contemplated thereby have
been duly authorized by Sub's Board of Directors and sole shareholder, and no
other corporate proceedings on the part of Sub are necessary to authorize this
Agreement and the transactions contemplated hereby.
37
Exhibit 10.3(e)
Form of Opinion of Counsel to the Company
1. The Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and has the corporate power to
carry on its business as it is now being conducted.
2. The authorized capital stock of the Company consists of 20,000,000 shares of
Company Common Stock, par value $.01 per share and 1,000,000 shares of preferred
stock, par value $.01 per share.
3. Each Subsidiary of the Company incorporated in the United States is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has the corporate power to carry
on its business as it is now being conducted.
4. The Company has the corporate power to enter into the Merger Agreement and to
carry out its obligations thereunder. The execution and delivery of the Merger
Agreement and the consummation of the transactions contemplated thereby have
been duly authorized by the Company's Board of Directors. No other corporate
proceedings on the part of the Company are necessary to authorize the Merger
Agreement and the transactions contemplated thereby.
5. The Board of Directors of the Company (at a meeting duly called and held) has
by the requisite vote of all directors present approved the Merger in accordance
with the provisions of Sections 251 of the DGCL.
6. A majority of the Company's stockholders have approved the Merger Agreement
and the Merger at a meeting duly called and held for such purpose.
38
