Exhibit 10.29
STOCK AND WARRANT PURCHASE AGREEMENT, dated as of October 4, 1995 (the
"Agreement"), among the ▇▇▇▇▇▇▇ Family Trust (the "Trust"), the ▇.▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇.▇.▇. Contributory Account (the "▇▇▇"), G.S. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ("▇▇.
▇▇▇▇▇▇▇" and, together with the Trust and the ▇▇▇, the "Purchasers" and each a
"Purchaser") and DIANON Systems, Inc., a Delaware corporation (the "Company").
WHEREAS Purchasers wish to purchase from the Company, and the Company
wishes to sell to Purchasers, 1,000,000 shares (the "Shares") of the Company's
Common Stock, par value $0.01 per share ("Common Stock"), and 800,000 two-year
warrants (the "Warrants") entitling Purchasers to purchase up to a total of
800,000 shares of Common Stock (the "Warrant Shares");
WHEREAS Purchaser and the Company are entering into this Agreement to
provide for such purchase and sale and to establish various rights and
obligations in connection therewith. Certain terms used herein are defined in
Section 6.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein set forth, the parties agree as follows:
1. Purchase and Sale of Shares.
1.1 Purchase and Sale. Upon the terms set forth herein and
contemporaneously with the execution of this Agreement, the Company is selling
to Purchasers, and Purchasers are purchasing from the Company, the Shares and
the Warrants for an aggregate purchase price of $5,612,000.
1.2 Manner of Payment. The total purchase price of $5,612,000 payable
at the Closing (as defined below) to the Company shall be paid as follows: (a)
$5,316,000 in cash by bank checks of Purchasers payable to the Company; and (b)
$296,000 in a two-year, 7% promissory note from ▇▇. ▇▇▇▇▇▇▇ (the "Note").
1.3 Time and Place of Closing. The sale and purchase of the Shares and
the Warrants (the "Closing") shall take place at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇, One Battery Park Plaza, New York, New York, at 10:00 a.m. on the date
hereof. The date on which the Closing is to occur is hereinafter called the
"Closing Date."
1.4 Transactions to be Effected at Closing. At the Closing:
(a) the Company and Purchasers shall execute and deliver a
registration rights agreement in the form of Exhibit A (the
"Registration Rights Agreement");
(b) the Company shall deliver to Purchasers a warrant
certificate (in the form of Exhibit B), in definitive form and
registered in the name of ▇▇. ▇▇▇▇▇▇▇, representing the Warrants being
purchased by it pursuant hereto;
(c) the Company shall deliver to Purchasers stock certificates
in definitive form, registered in the name of the applicable Purchaser,
representing the Shares being purchased by it pursuant hereto;
(d) Purchasers shall concurrently pay to the Company
$5,316,000 by bank check or checks of Purchasers payable to the
Company;
(e) the Company shall deliver to Purchasers a duly executed
amendment (the "Rights Amendment"), in the form of Exhibit C, to the
Rights Agreement, dated as of April 29, 1994 (the "Rights Agreement"),
between the Company and American Stock Transfer and Trust Company;
(f) ▇▇. ▇▇▇▇▇▇▇ shall deliver to the Company the duly executed
Note in favor of the Company in substantially the form of Exhibit D;
and
(g) Purchasers shall have received an opinion of counsel to
the Company substantially in the form of Exhibit E.
2. Representations and Warranties of the Company. The Company
represents and warrants as of the date hereof as follows:
2.1 Organization and Qualification. Each of the Company and its
Significant Subsidiaries is a corporation duly organized and existing in good
standing under the laws of the jurisdiction in which its has incorporated and
has the corporate power to own its respective property and to carry on its
respective business as now being conducted. Each of the Company and its
Significant Subsidiaries is duly qualified as a foreign corporation to do
business and in good standing in every jurisdiction in which the nature of the
respective business conducted or property owned by it make such qualification
necessary and where the failure so to qualify would have a material adverse
effect on the business or financial possession of the Company and its
Subsidiaries taken as a whole. The Company and its Significant Subsidiaries
possess all rights, licenses and permits reasonably required for the maintenance
and operation of their respective material properties and the conduct of their
respective material businesses as now being maintained and operated and
conducted.
2.2 Due Authorization. The execution and delivery of this Agreement,
the Registration Rights Agreement, the Rights Amendment and the issuance and
sale of the Shares, the Warrants and the Warrant Shares by the Company and
compliance by the Company with all the provisions of this Agreement, the Rights
Amendment, the Registration Rights Agreement, the Warrants and the Shares (a)
are within the corporate powers and authority of the Company, (b) do not require
the approval or consent of any third party, (c) do not require the approval or
consent of any stockholders of the Company and (d) have been authorized by all
requisite corporate proceedings on the part of the Company. This Agreement, the
Rights Amendment, the Warrants and the Registration Rights Agreement have been
duly executed and delivered by the Company and constitute valid and binding
agreements of the Company enforceable in accordance with their respective terms,
except that (i) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium and other similar laws now or hereafter in effect
relating to creditors' rights and (ii) the remedy of specific performance and
injunctive relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought. The Company has
furnished to Purchasers true and correct copies of the Company's Restated
Certificate of Incorporation, as amended, and By-laws as in effect on the date
of this Agreement. The Company has taken all necessary action to amend the
Rights Agreement (as defined in Section 2.9) in order to provide that
Purchasers, upon purchase of the Shares pursuant hereto and upon purchase of the
Warrant Shares pursuant to exercise of the Warrants, will not constitute an
"Acquiring Person" for purposes of the Rights Agreement hereunder. The
acquisition by Purchasers of the Shares, the Warrants and the Warrant Shares
(upon exercise of the Warrants) has been approved and authorized by the
Company's Board of Directors, including for purposes of Section 203 of the
Delaware General Corporation Law.
2.3 SEC Reports. The Company has filed all proxy statements, reports
and other documents required to be filed by it under the Exchange Act after
December 31, 1993 (collectively, the "SEC Reports") and the Company has
furnished Purchasers copies of its Annual Report on Form 10-K for the fiscal
year ended December 31, 1994, and all proxy statements and reports under Section
13 of the Exchange Act filed by the Company after such date, each as filed with
the Commission. Each SEC Report was in substantial compliance with the
requirements of its respective report form and did not on the date of filing
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
the light of the circumstances under which they were made, not misleading.
2.4 Financial Statements. The financial statements (including any
related schedules and/or notes) included in the SEC Reports are in conformity
with the books and records of the Company, have been prepared in accordance with
generally accepted accounting principles consistently followed (except as
indicated in the notes thereto) throughout the periods involved and fairly
present the consolidated financial condition, results of operations and changes
in financial position of the Company and its subsidiaries as of the dates
thereof and for the periods ended on such dates (in each case subject, as to
interim statements, to changes resulting from year-end adjustments (none of
which are material in amount or effect)).
2.5 Actions Pending; Compliance with Law. Except as disclosed on
Schedule 2.5, there is no action, suit, investigation or proceeding pending or,
to the knowledge of the Company, threatened by any public official or
governmental authority against the Company or any of its Subsidiaries or any of
their respective properties or assets by or before any court, arbitrator or
governmental body, department, commission, board, bureau, agency or
instrumentality, which questions the validity of this Agreement, the
Registration Rights Agreement, the Rights Amendment, or the Warrants or which
are reasonably likely to result in a Material Adverse Effect, and neither the
Company nor any of its Subsidiaries is in default in any material respect with
respect to any judgment, order, writ, injunction, decree or award. Except as
disclosed on Schedule 2.5 or as otherwise previously disclosed to Purchasers,
the businesses of the Company and its Subsidiaries are in compliance in all
material respects with applicable Federal, state, local and foreign governmental
laws and regulations, including, without limitation, laws and regulations
relating to employment practices (such as practices in respect of
discrimination, health and safety), but excluding any such laws and regulations
described in Section 2.13.
2.6 Governmental Consents, etc. The Company is not required to obtain
any consent, approval or authorization of, or to make any declaration or filing
with, any governmental authority as a condition to or in connection with the
valid execution, delivery and performance of this Agreement, the Rights
Amendment, the Warrants and the Registration Rights Agreement and the valid
offer, issue, sale or delivery of the Shares and the Warrant Shares, or the
performance by the Company of its obligations in respect thereof, except (a)
with respect to the transactions contemplated by the Registration Rights
Agreement, for filings with the Commission and state securities commissions and
(b) with respect to the transactions contemplated hereby, the filing of a Form D
with the Commission and with the Department of Banking of the State of
Connecticut.
2.7 Taxes. The Company and its Subsidiaries have filed or caused to be
filed all Federal, state and local income tax returns which are required to be
filed and have paid or caused to be paid all taxes as shown on said returns and
on all assessments received by it to the extent that such taxes have become due,
except taxes the validity or amount of which is being contested in good faith by
appropriate proceedings and with respect to which adequate reserves have been
set aside. No Federal income tax returns of the Company and its Subsidiaries
have been examined and reported on by the Internal Revenue Service (or closed by
applicable statutes). The Company and its Subsidiaries have paid or caused to be
paid, or have established reserves that the Company reasonably believes to be
adequate in all material respects, for all tax liabilities applicable to the
Company and its Subsidiaries for all fiscal years which have not been examined
and reported on by the taxing authorities (or closed by applicable statues).
2.8 Conflicting Agreements and Charter Provisions. Neither the
execution and delivery of this Agreement, the Rights Amendment, the Warrants and
the Registration Rights Agreement nor the issuance of the Shares and the Warrant
Shares nor fulfillment of nor compliance with the terms and provisions hereof or
thereof will conflict with or result in a breach of the terms, conditions or
provisions of, or give rise to a right of termination under, or constitute a
default under, or result in any violation of, the Restated Certificate of
Incorporation, as amended, or By-Laws of the Company or any mortgage, agreement,
instrument, order, judgment, decree, statute, law, rule or regulation to which
the Company or any of its Subsidiaries or any of their respective property is
subject. The acquisition by Purchasers of the Shares, the Warrants and the
Warrant Shares are not and will not be subject to the requirements of Article
Seventh of the Company's Restated Certificate of Incorporation.
2.9 Capitalization. The authorized capital stock of the Company
consists of (a) 20,000,000 shares of Common Stock, of which, as of the date
hereof, 5,311,450 shares are issued and outstanding and no shares are held in
its treasury, and (b) 5,000,000 shares of preferred stock, par value $0.01 per
share, of the Company, no shares of which are issued and outstanding, and all of
such outstanding shares have been validly issued and are fully paid and
nonassessable. No class of capital stock of the Company is entitled to
preemptive rights. As of October 3, 1995, (i) 676,679 shares of Common Stock
were issuable upon the exercise of outstanding employee options (the "Employee
Options") pursuant to the Company's 1991 Stock Incentive Plan, Outside Director
Stock Compensation Plan (the "Directors Plan") and certain other option
agreements (collectively, the "Incentive Plans"), (ii) 154,017 shares of Common
Stock, available for any future grants of stock options under the Incentive
Plans, were contingently issuable to employees under the Incentive Plans and
(iii) 100,000 shares of Series A Junior Participating Preferred Stock, par value
$0.01 per share, of the Company ("Series A Stock") were reserved pursuant to the
Rights Agreement. Except as set forth above and pursuant to the Warrants, the
Incentive Plans and the Rights Agreement, there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, shares of any
capital stock of the Company, or contracts, commitments, understandings, or
arrangements by which the Company is or may become bound to issue additional
shares of its capital stock or options, warrants or rights to purchase or
acquire any shares of its capital stock.
2.10 Status of Shares. The Shares and the Warrants being issued on the
date hereof have been duly authorized by all necessary corporate action on the
part of the Company (no consent or approval of stockholders being required by
law, the Restated Certificate of Incorporation, as amended, or By-Laws of the
Company or otherwise), and such Shares and such Warrants, upon payment therefore
as provided herein, will be validly issued, fully paid and nonassessable, and
the issuance of such Shares and such Warrants is not and will not be subject to
preemptive rights of any other stockholder of the Company. The Warrant Shares
have been duly authorized by all necessary corporate action on the part of the
Company (no consent or approval of stockholders being required by law, the
Restated Certificate of Incorporation, as amended, or By-Laws of the Company or
otherwise), and such Warrant Shares have been validly reserved for issuance, and
upon issuance upon exercise of the Warrants and upon payment therefor as
provided in the Warrants will be validly issued and outstanding, fully paid and
nonassessable.
2.11 ERISA. No accumulated funding deficiency (as defined in Section
302 of ERISA and Section 412 of the Code), whether or not waived, exists with
respect to any Plan (as defined below) (other than a Multiemployer Plan (as
defined below)). No liability to the Pension Benefit Guaranty Corporation has
been incurred with respect to any Plan (other than a Multiemployer Plan) by the
Company or any of its Subsidiaries which is or would be materially adverse to
the Company and its Subsidiaries taken as a whole. Neither the Company nor any
of its Subsidiaries has maintained a Plan which is subject to Title IV of ERISA
or has contributed to a Multiemployer Plan. The execution and delivery of this
Agreement and the issue and sale of the Shares and the Warrants will not involve
any transaction which is subject to the prohibitions of Section 406 of ERISA or
in connection with which a tax could be imposed pursuant to Section 4975 of the
Code. As used in this Section 2.12, the term "Plan" shall mean an "employee
pension benefit plan" (as defined in Section 3(2) of ERISA) which is or has been
established or maintained, or to which contributions are or have been made, by
the Company or by any trade or business, whether or not incorporated, which,
together with the Company, is under common control or treated as a single
employer, as described in Section 414(b) or (c) of the Code; and the term
"Multiemployer Plan" shall mean any Plan which is a "multiemployer plan" (as
such term is defined in Section 4001(a)(3) of ERISA).
2.12 Possession of Franchises, Licenses, etc. The Company and its
Subsidiaries possess all franchises, certificates, licenses, permits and other
authorizations from governmental political subdivisions or regulatory
authorities, free from burdensome restrictions, that are necessary in any
material respect for the ownership, maintenance and operation of their
respective properties and assets, and neither the Company nor any of its
Subsidiaries is in violation of any thereof in any material respect.
2.13 Environmental Laws.
(a) The Company and its Subsidiaries are in compliance in all
material respects with all applicable federal, state or local statutes,
codes, rules or regulations relating to the environment, natural
resources and public or employee health and safety ("Environmental
Laws");
(b) No judicial or administrative proceedings are pending or
threatened against the Company and its Subsidiaries alleging the
violation of any Environmental Law and no notice from any governmental
body or other person has been served upon the Company or any of its
Subsidiaries claiming any violation of any Environmental Laws; and
(c) All substances, materials or wastes which are regulated by
federal, state or local government, including, without limitation, any
substance, material or waste which is defined as a "hazardous waste,"
"hazardous material," "hazardous substance," "toxic waste" or "toxic
substance" under any provision of Environmental Law, used or generated
by the Company or any of its Subsidiaries have been stored, used,
treated and disposed of by them or on their behalf in such manner as
not to result in Environmental Costs and Liabilities, which are
reasonably likely to exceed $100,000. "Environmental Costs and
Liabilities" means any losses, liabilities, obligations, damages,
fines, penalties, judgments, actions, claims, costs and expenses
(including, without limitation, fees, disbursements and expenses of
legal counsel, experts, engineers and consultants and the costs of
investigation and feasibility studies, remedial or removal actions and
cleanup activities) arising from or under any Environmental Law or
order or contract with any federal, state or local governmental
authority or other person with respect to the enforcement of any
Environmental Law.
2.14 Election of Director. ▇▇. ▇▇▇▇▇▇▇ has been duly elected by the
Board of Directors of the Company to serve as a director on that Board effective
upon the issuance of, and payment for, the Shares and the Warrants.
2.15 Subsidiaries. The Company does not have any Significant
Subsidiaries.
2.16 No Undisclosed Liabilities. As of June 30, 1995, the Company did
not have any material indebtedness or liability of any nature (whether known or
unknown and whether accrued, absolute, contingent or otherwise, and whether due
or to become due) which is not shown on the Company's June 30, 1995 balance
sheet set forth in the SEC Reports (the "Balance Sheet") or the notes thereto or
disclosed herein or in any document delivered to Purchasers hereunder upon the
execution and delivery hereof. Except as set forth in the Balance Sheet, the
Company does not have outstanding any material indebtedness or liability, nor,
to the knowledge of the Company, there is no condition or event that could
result in any material indebtedness or liability, of any kind, whether accrued,
absolute, contingent or otherwise, that may arise or be incurred other than in
the ordinary course of business, whether or not such indebtedness or liability
would have been required to be disclosed in a balance sheet prepared in
accordance with United States generally accepted accounting principles.
2.17 Default. The Company is not in default, or, to the knowledge of
the Company, alleged to be in default, with respect to any judgment, order,
writ, injunction or decree of any court or any federal, state, municipal or
other governmental authority, department, commission, board or agency or other
entity, where such default would have a material adverse effect on the financial
condition, results of operations, business, properties, assets or liabilities of
the Company and its Subsidiaries taken as a whole (a "Material Adverse Effect").
The Company is not in breach or default, or, to the knowledge of the Company,
alleged to be in breach or default, under any lease, license, contract,
agreement or instrument, where such default would have a Material Adverse Effect
and the Company does not know of any condition or event which is reasonably
likely to cause or create a default or defaults under any such lease, license,
contract, agreement or instrument, where such default would have a Material
Adverse Effect. The Company does not know of any other party to any lease,
license, contract, agreement or instrument to which the Company is a party and
which is material to the Company's business that is in default thereunder and,
to the knowledge of the Company, there exists no condition or event which, after
notice or lapse of time or both, would constitute a default of any other party
to any such material lease, license, contract, agreement or instrument.
2.18 No Material Adverse Changes. Except as set forth in Schedule 2.18,
since June 30, 1995, there has not been, occurred or arisen (i) any material
adverse change in the financial condition, results of operations, business,
properties, assets or liabilities of the Company and its Subsidiaries taken as a
whole, (ii) any damage or destruction in the nature of a casualty loss, whether
covered by insurance or not, adversely affecting any property of the Company or
its Subsidiaries which damage or destruction would have a Material Adverse
Effect, (iii) any actual or, to the knowledge of the Company, threatened strike
or other labor dispute which strike or dispute would have a Material Adverse
Effect, (iv) any extraordinary loss (as defined in Opinion No. 30 of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and any amendments or interpretations thereof) suffered by the
Company or any Subsidiary, which, individually or in the aggregate, would have a
Material Adverse Effect and (v) any waiver by the Company or any Subsidiary of
any right or rights which, individually or in the aggregate, would have a
Material Adverse Effect.
2.19 Registration Rights. There are no outstanding effective rights to
demand or require registration under a registration statement of any of the
Company's securities under the Securities Act.
2.20 Patents, etc. The Company owns or has valid and enforceable right
to use all rights under any patent, trademark, trade name, copyright or other
intellectual property (or any application or registration respecting any
thereof), material to the conduct of its business as such business is currently
being conducted, and, to the knowledge of the Company, neither the Company nor
any Subsidiary is infringing or alleged to be infringing the rights of any third
party with respect to any of the foregoing, which infringement would have a
Material Adverse Effect.
2.21 Disclosures. The Company has not knowingly furnished Purchasers
with any materially false or misleading information concerning the Company, its
business or financial condition or knowingly omitted to inform Purchasers of any
facts necessary to make the information that was furnished to Purchasers not
misleading in a material manner.
3. Representations and Warranties of Purchaser. Purchasers jointly and
severally represent and warrant as of the date hereof as follows:
3.1 Due Authorization. Each Purchaser has all right, power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. Each Purchaser that is a trustee under a trust agreement,
trust indenture or other instrument creating the trust of which such Purchaser
is a trustee (i) is acting in his capacity as trustee, (ii) has the power under
such trust agreement, trust indenture or other instrument to purchase his
respective Shares as trustee and to enter into this Agreement on behalf of the
trust and (iii) if acting as trustee under a trust agreement, trust indenture or
other instrument other than a will, is the trustee named in such agreement,
indenture or other instrument, or has been duly appointed as successor or
substitute trustee pursuant to the provisions of such agreement, indenture or
other instrument. The execution and delivery of this Agreement by each Purchaser
and the consummation by each Purchaser of the transactions contemplated hereby
have been duly authorized by all necessary action on behalf of such Purchaser.
This Agreement has been duly executed and delivered by each Purchaser or, if any
Purchaser is a trustee acting in his capacity as trustee, by such Purchaser as
trustee of the trust in which the Shares are to be held, and constitutes a valid
and binding agreement of such Purchaser, or, if Purchaser is a trustee acting in
his capacity as trustee, constitutes the legal, valid and binding obligation of
such trust in which any Shares and any Warrant Shares are held, in each case
enforceable in accordance with its terms, except that (a) such enforcement may
be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights and (b)
the remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought. The Note has been duly
executed and delivered by ▇▇. ▇▇▇▇▇▇▇ and constitutes a valid and binding
agreement of ▇▇. ▇▇▇▇▇▇▇ enforceable in accordance with its terms, except that
(i) such enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights and (ii) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought. ▇▇.
▇▇▇▇▇▇▇ has full power and authority to execute and deliver this Agreement on
behalf of the Trust and the ▇▇▇.
3.2 Conflicting Agreements and Other Matters. Neither the execution and
delivery of this Agreement or the Note nor the performance by each Purchaser of
their respective obligations hereunder or under the Note will conflict with,
result in breach of the terms, conditions or provisions of, constitute a default
under, result in the creation of any mortgage, security interest, encumbrance,
lien or charge of any kind upon any of the properties or assets of each
Purchaser, or, if any Purchaser is a trustee or trustees acting in his, her, its
or their capacity or capacities as trustee or trustees, the trust agreement,
trust indenture or other instrument creating the trust or trusts of which such
Purchaser is trustee or trustees, or require any consent, approval or other
action by or any notice to or filing with any court or administrative or
governmental body, pursuant to any agreement, instrument, order, judgment,
decree, statute, law, rule or regulation by which each Purchaser is bound,
except for filings after the Closing of a Schedule 13D pursuant to Section 13(d)
of the Exchange Act.
3.3 Acquisition for Investment; Source of Funds. Each Purchaser is
acquiring its Shares and Warrants, if any, for its own account for the purpose
of investment and not with a view to or for sale in connection with any
distribution thereof, and each Purchaser has no present intention or plan to
effect any distribution of the Shares or the Warrant Shares; provided, that the
disposition of each Purchaser's property shall at all times be and remain within
its control and subject to the provisions of this Agreement, the Warrants, the
Note and the Registration Rights Agreement. Each Purchaser represents that it is
(a) an "accredited investor" as that term is defined in Regulation D of the
Securities Act and (b) a resident of the State of Connecticut.
3.4 Ownership of Securities. At the date hereof neither any Purchaser
nor any of their respective Affiliates or Associates (collectively, the "▇▇▇▇▇▇▇
Entities") Beneficially Owns directly or, to the knowledge of all Purchasers,
indirectly (or have any option or other right to acquire), any securities of the
Company other than the Shares and the Warrants, if any, being purchased by each
Purchaser hereunder and none of the ▇▇▇▇▇▇▇ Entities has any arrangement or
understanding with any Person with respect to acquiring, holding, voting or
disposing of the Shares or any other Voting Securities.
3.5 Voting of Shares and Warrant Shares. ▇▇. ▇▇▇▇▇▇▇ has the right,
individually and without the consent of any other trustee, to vote and dispose
of any Shares or Warrant Shares that will be at any time held by the ▇▇▇. ▇▇.
▇▇▇▇▇▇▇ and his wife together have the right, without the need for the consent
of any other trustee, to vote and dispose of any Shares or Warrant Shares that
will be at any time held by the Trust.
3.6 Brokers or Finders. Except for certain fees previously disclosed by
Purchasers to the Company which the Company has agreed to pay, no agent, broker,
investment banker or other firm or Person, including any of the foregoing that
is an Affiliate of any Purchaser, is or will be entitled to any broker's or
finder's fee or any other commission or similar fee from Purchasers in
connection with any of the transactions contemplated by this Agreement.
3.7 Investment Purpose. Purchasers are acquiring the Shares, the
Warrants and the Warrant Shares for purposes of investment and in order to
acquire a significant equity interest in the Company and have no current plan or
intention of seeking to acquire control of the Company, except that ▇▇. ▇▇▇▇▇▇▇,
as a director of the Company, will participate in and influence the formulation
of the business plans and strategies of the Company. The Schedule 13D filed by
Purchasers pursuant to Rule 13d-1 under the Exchange Act reporting their
acquisition of the Shares, the Warrant and the Warrant Shares shall be
consistent with the representations set forth in this Section 3.7.
4. Covenants.
4.1 Financial Statements and Other Reports. The Company covenants that
it will deliver to ▇▇. ▇▇▇▇▇▇▇ so long as the ▇▇▇▇▇▇▇ Entities Beneficially Own
Voting Securities representing 5% or more of the Total Voting Power:
(a) as soon as practicable and in any event within 45 days
after the end of each quarterly period (other than the last quarterly
period) in each fiscal year, a consolidated statement of earnings and
retained earnings and a consolidated statement of changes in financial
position of the Company and its Subsidiaries for the period from the
beginning of the then current fiscal year to the end of such quarterly
period, and a consolidated balance sheet of the Company and its
Subsidiaries as of the end of such quarterly period, setting forth in
each case in comparative form figures for the corresponding period or
date in the preceding fiscal year, all in reasonable detail and
certified by an authorized financial officer of the Company, subject to
changes resulting from year-end adjustments; provided, however, that
delivery pursuant to clause (c) below of a copy of the Quarterly Report
on Form 10-Q of the Company for such quarterly period filed with the
Commission shall be deemed to satisfy the requirements of this clause
(a);
(b) as soon as practicable and in any event within 90 days
after the end of each fiscal year, a consolidated statement of earnings
and retained earnings and a consolidated statement of changes in
financial position of the Company and its Subsidiaries for such year,
and a consolidated balance sheet of the Company and its Subsidiaries as
of the end of such year, setting forth in each case in comparative form
the corresponding figures from the preceding fiscal year, all in
reasonable detail and examined and reported on by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
L.L.P. or other independent public accountants of recognized standing
selected by the Company; provided, however, that delivery pursuant to
clause (c) below of a copy of the Annual Report on Form 10-K of the
Company for such fiscal year filed with the Commission shall be deemed
to satisfy the requirements of this clause (b);
(c) promptly upon transmission thereof, copies of all such
financial statements, proxy statements, notices and reports as it shall
send to its stockholders and copies of all such registration statements
(without exhibits), other than registration statements relating to
employee benefit or dividend reinvestment plans, and all such regular
and periodic reports as it shall file with the Commission; and
(d) with reasonable promptness, such other financial data of
the Company and its Subsidiaries as ▇▇. ▇▇▇▇▇▇▇ may reasonably request.
4.2 Inspection of Property. The Company covenants that, so long as the
▇▇▇▇▇▇▇ Entities Beneficially Own Voting Securities representing 5% or more of
the Total Voting Power, it will permit representatives of ▇▇. ▇▇▇▇▇▇▇ to visit
and inspect, at ▇▇. ▇▇▇▇▇▇▇'▇ expense, any of the properties of the Company and
its Subsidiaries, to examine the corporate books and make copies or extracts
therefrom and to discuss the affairs, finances and accounts of the Company and
its Subsidiaries with the principal officers of the Company, all at such
reasonable times and as often as ▇▇. ▇▇▇▇▇▇▇ may reasonably request; provided,
however, that the foregoing shall be subject to compliance with reasonable
safety requirements and shall not require the Company or any of its Subsidiaries
to permit any inspection which in the reasonable judgment of the Company would
result in the disclosure of any trade secrets or violate any statute or
regulation with respect to confidentiality or security. Each Purchaser agrees
not to disclose to any Person any information or data obtained by it pursuant to
this Section 4.2 or Section 4.1(a) until such information or data otherwise
becomes publicly available or except pursuant to a valid subpoena, judicial
process or its equivalent; provided, that each such Purchaser shall have used
its best efforts to give the Company advance notice of such subpoena or judicial
process so that the Company may seek an appropriate protective order.
4.3 Exchange of Stock and Warrant Certificates. The Company covenants
that it shall, at its expense, promptly upon surrender of any certificates
representing shares of Common Stock or the Warrants at the office of the Company
referred to in, or designated pursuant to, Section 7.5, execute and deliver to
each Purchaser a new certificate or certificates in denominations specified by
such Purchaser for an aggregate number of shares of Common Stock or number of
Warrants, as the case may be, equal to the number of shares of such stock or
number of Warrants, as the case may be, represented by the certificates
surrendered.
4.4 Lost, Stolen, Destroyed or Mutilated Stock and Warrant
Certificates. Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction or mutilation of any certificate for shares of Common Stock
or the Warrants and, in the case of loss, theft or destruction, upon delivery of
an indemnity satisfactory to the Company or, in the case of mutilation, upon
surrender and cancellation thereof, the Company shall issue a new certificate of
like tenor of a number of shares of Common Stock or number of Warrants, as the
case may be, equal to the number of shares of such stock or number of Warrants,
as the case may be, represented by the certificate lost, stolen, destroyed or
mutilated.
4.5 Board Representation. The Company shall cause ▇▇. ▇▇▇▇▇▇▇ to be
included in the slate of nominees recommended by its Board of Directors to the
Company's stockholders for election as a director at each annual meeting of the
stockholders of the Company and shall seek to cause the election of ▇▇. ▇▇▇▇▇▇▇,
including soliciting proxies in favor of the election of ▇▇. ▇▇▇▇▇▇▇; provided,
that, ▇▇. ▇▇▇▇▇▇▇ shall not be entitled to be included in the slate of nominees
subsequently recommended by the Board of Directors of the Company to the
Company's stockholders for election as directors to the Board of Directors of
the Company if the ▇▇▇▇▇▇▇ Entities Beneficially Own Voting Securities
representing less than 5% of the Total Voting Power (determined as of the record
date for each annual meeting of stockholders of the Company). For so long as ▇▇.
▇▇▇▇▇▇▇ has rights under this Section 4.5, the Company's Board of Directors
shall elect and nominate for election to such Board, as soon as possible and in
any event prior to the next annual meeting of the Company's stockholders, one
person (in addition to the Incumbent Directors as of the date hereof and ▇▇.
▇▇▇▇▇▇▇ and their successors) reasonably acceptable to all directors.
4.6 Limitation on Transactions with Affiliates. The Company
covenants that, so long as Voting Securities representing 5% or more of the
Total Voting Power are Beneficially Owned by the ▇▇▇▇▇▇▇ Entities, unless ▇▇.
▇▇▇▇▇▇▇ otherwise consents in writing, the Company will not, and will not permit
any of its Subsidiaries to, conduct any material business or enter into any
material transaction with any Affiliate of the Company (other than ▇▇. ▇▇▇▇▇▇▇
or any of its Affiliates or any Subsidiary of the Company all the capital stock
of which except for directors qualifying and similar shares are owned by the
Company) unless the terms thereof are no less favorable to the Company or such
Subsidiary than it could obtain in a comparable arm's-length transaction with a
Person not an affiliate of the Company.
4.7 Availability of Shares. The Company covenants that, so long as
the Company has any obligations under the Warrants to issue shares of Common
Stock, the Company, in order to satisfy its obligations under the Warrants, will
keep available for issuance a number of shares of authorized but unissued Common
Stock which may be purchased thereunder.
4.8 Stockholder Meeting. At the first annual meeting of stockholders
after the date hereof, the Company shall submit a proposal to the Company's
stockholders (together with a recommendation to the Company's stockholders by
the Company and its Board to approve such proposal) to enable the Purchasers'
Voting Limit (as defined in Section 5.1(ii)) to be increased to 20% of the Total
Voting Power (which increase reflects the agreement of the parties without
giving effect to any requirements of the National Association of Securities
Dealers) and the Company and Board of Directors shall use their best efforts to
obtain such approval. If the Company's stockholders approve such proposal by a
majority of the total votes cast on the proposal, the Company shall then enter
into an appropriate amendment of this Agreement with Purchasers to increase the
Purchasers' Voting Limit to 20% of the Total Voting Power. If the Company's
stockholders do not approve such proposal, ▇▇. ▇▇▇▇▇▇▇ shall have the right
within 30 days (or, if such transaction would result in liability under Section
16(b) of the Exchange Act, such longer period, up to six months from the date of
purchase of the Warrants, as may be necessary to avoid such liability) after
such stockholders' meeting to rescind some or all of the Warrants then
outstanding and upon such rescission the Company shall pay ▇▇. ▇▇▇▇▇▇▇ an amount
equal to $1.52 per Warrant in cash and cancel a pro rata portion of the then
outstanding principal amount of the Note.
5. Standstill Provisions.
5.1 Acquisition of Voting Securities. Until the earliest of (a) the
seventh anniversary of the date hereof, (b) such date as the ▇▇▇▇▇▇▇ Entities
cease to Beneficially Own Voting Securities representing 5% or more of the Total
Voting Power, and (c) the occurrence of a Change in Control or a Rights Plan
Event (the earliest of such dates being referred to as the "Standstill
Termination Date") and subject to the further provisions hereof, each Purchaser
covenants and agrees that:
(i) The ▇▇▇▇▇▇▇ Entities will not, directly or indirectly,
without the prior written consent of the Company, Beneficially Own any
Voting Securities except for (A) the Shares, (B) shares of Common Stock
issuable upon exercise of the Warrants, (C) shares of Common Stock
issuable upon exercise of options granted to ▇▇. ▇▇▇▇▇▇▇ under the
Directors Plan or any other shares of Common Stock or rights to acquire
Common Stock made available to non-employee directors of the Company
pursuant to Company plans and (D) additional Voting Securities of the
Company so long as the Voting Power of all such additional Voting
Securities Beneficially Owned by the ▇▇▇▇▇▇▇ Entities, together with
the Voting Power of the shares referred to in clauses (A), (B) and (C)
then Beneficially Owned by the ▇▇▇▇▇▇▇ Entities (calculated without
giving effect to paragraph (ii) of this Section 5.1), does not equal or
exceed 25% of the Total Voting Power;
(ii) Subject to Section 4.8, if at any time the ▇▇▇▇▇▇▇
Entities Beneficially Own Voting Securities representing more than
1,056,978 votes ("Purchasers' Voting Limit"), then the ▇▇▇▇▇▇▇ Entities
shall take such action as shall be required so that all shares of
Voting Securities Beneficially Owned by the ▇▇▇▇▇▇▇ Entities
representing votes in excess of such number are voted in the same
proportion as the votes cast by other holders of Voting Securities on
all matters to be voted on by the holders of Voting Securities
(including, without limitation, matters relating to mergers or other
business combinations). Notwithstanding the foregoing, the ▇▇▇▇▇▇▇
Entities shall be free to vote all of their Voting Securities in such
manner as they determine in their sole discretion with respect to any
Low Return Transaction (as defined in Section 5.4(b)); and
(iii) The ▇▇▇▇▇▇▇ Entities (A) shall be present, in person or
by proxy, at all stockholders' meetings of the Company so that all
outstanding Voting Securities Beneficially Owned by the ▇▇▇▇▇▇▇
Entities shall be counted for the purpose of determining the presence
of a quorum at such meetings and (B) subject to Section 5.1(ii), in any
election of directors of the Company, shall vote all outstanding Voting
Securities Beneficially Owned by the ▇▇▇▇▇▇▇ Entities for the election
of the Company's nominees as directors of the Company; provided, that
the Company has complied with its obligations set forth in Section 4.5.
5.2 Restrictions on Transfer. Prior to the Standstill Termination Date,
the ▇▇▇▇▇▇▇ Entities shall not, directly or indirectly, sell, transfer, pledge,
encumber or otherwise dispose of (collectively, "Transfer") any Voting
Securities or the Warrants or any incidents of Beneficial Ownership of any
Voting Securities or Warrants except for (i) Transfers after the second
anniversary of the date hereof of shares of Common Stock pursuant to (x) the
exercise of the registration rights set forth in the Registration Rights
Agreement or (y) a transaction that complies with the volume, time period and
manner of sale provisions contained in Rules 144(e) and (f) under the Securities
Act as in effect at the time of such transaction; provided, that, except with
respect to underwritten offerings pursuant to the Registration Rights Agreement,
the ▇▇▇▇▇▇▇ Entities shall use their best efforts (which shall include advising
any broker of the provisions of this Section 5.2 but shall not require undue
investigation on the part of the ▇▇▇▇▇▇▇ Entities) so that no such Transfers
under this clause (i) are made knowingly to any Person (including its Affiliates
and any Person or entities which are, to Purchasers' knowledge after inquiry of
the Company, part of any 13D Group which includes such transferee or any of its
Affiliates) that, after giving effect to such Transfer, would Beneficially Own
Voting Securities representing greater than 10% of the Total Voting Power, (ii)
Transfers of shares of Common Stock pursuant to any bona fide tender or exchange
offer to acquire shares of Common Stock; provided, that, during the first two
years after the date hereof, such offer has been approved and recommended by the
Company's Board of Directors or (iii) Transfers to an Affiliate of any
Purchaser; provided, that such Affiliate becomes a signatory to, and agrees to
be bound by, this Agreement.
5.3 Other Matters. Each Purchaser covenants and agrees that until the
Standstill Termination Date, except solely by virtue of ▇▇. ▇▇▇▇▇▇▇'▇
representation on the Board of Directors of the Company as provided in Section
4.5 hereof:
(a) Neither any Purchaser nor any other ▇▇▇▇▇▇▇ Entity thereof
shall deposit any Voting Securities in a voting trust or subject any
Voting Securities to any arrangement or agreement with respect to the
voting of such Voting Securities or other agreement having similar
effect (other than a voting trust, arrangement or agreement solely
among the Purchasers and their Affiliates).
(b) Neither any Purchaser nor any other ▇▇▇▇▇▇▇ Entity shall
solicit proxies or become a "participant" in a "solicitation" (as such
terms are defined in Regulation 14A under the Exchange Act) in
opposition to the recommendation of the majority of the directors of
the Company with respect to any matter other than any charter or by-law
amendment to be voted upon by the Company's stockholders that would
adversely affect the rights of any such Purchaser, ▇▇. ▇▇▇▇▇▇▇ or any
other ▇▇▇▇▇▇▇ Entity under this Agreement or adversely affect the
rights of any such Purchaser, ▇▇. ▇▇▇▇▇▇▇ or any other ▇▇▇▇▇▇▇ Entity
as a holder of Voting Securities in a discriminatory manner.
(c) Neither any Purchaser nor any other ▇▇▇▇▇▇▇ Entity thereof
shall form, join or otherwise participate in a 13D Group or otherwise
act in concert with any other Person who is not a ▇▇▇▇▇▇▇ Entity for
the purpose of acquiring, holding, voting or disposing of Voting
Securities.
(d) Other than pursuant to a direct request by the Company,
neither any Purchaser nor any other ▇▇▇▇▇▇▇ Entity thereof shall offer
or propose (i) to enter into, directly or indirectly, any merger or
other business combination involving the Company, (ii) to purchase,
directly or indirectly, a material portion of the assets of the Company
or (iii) to acquire any Voting Securities if such acquisition would be
inconsistent with Section 5.1 hereof.
(e) Neither any Purchaser nor any other ▇▇▇▇▇▇▇ Entity thereof
shall (i) disclose any intention, plan or arrangement inconsistent with
the foregoing or (ii) advise, assist (including by knowingly providing
or arranging financing for that purpose) or knowingly encourage any
other Person in connection with any of the foregoing.
5.4 Notice of Certain Third Party Transactions. (a) Until the
Standstill Termination Date, the Company shall give Purchasers written notice
within two business days following receipt by the Company of any of the
following: (i) any written or oral notice from any Person or group couched in
such terms as to put the Company reasonably on notice of the likelihood that
such Person or groups has acquired or is proposing to acquire any shares of
Voting Securities which results in, or, if successful, would result in, such
persons or group owning or having the right to acquire more than 15% of the
Total Voting Power; (ii) any notice under the HSR Act relating to the Company;
or (iii) any statement on Schedule 13D or Schedule 14D-1 (or any successor
schedule or form to such schedules) under the Exchange Act relating to any
Voting Securities of the Company. In its written notice to Purchasers, the
Company shall disclose the material terms of such transaction, except that the
Company need not disclose the name of the inquirer, purchaser or offeror, as the
case may be. The Company may not enter into any definitive agreement relating to
any such transaction until ten (10) business days have elapsed after Purchasers'
receipt of the Company's notice under this Section 5.4(a). The Company shall
have no obligation to update the information contained in any such notice.
(b) If the Company desires to enter into a merger, consolidation or
other business combination transaction in which the Company would not be the
surviving corporation or in which the Company's outstanding Voting Securities
were to be changed or exchanged for cash, stock or assets of another Person, or
50% or more of the Company's capital stock outstanding immediately after such
merger, consolidation or other business combination transaction would not be
owned by the stockholders of the Company immediately prior to such merger,
consolidation or other business combination transaction or all or substantially
all of the Company's assets or earning power would be sold, the Company shall
give Purchasers written notice of such proposed transaction (a "Proposed
Transaction") and the Company shall not enter into an agreement with respect to
such Proposed Transaction and shall negotiate in good faith with Purchasers (but
shall not be precluded from pursuing any such Proposed Transaction), in each
case for a period of fifteen (15) business days after the date of such notice
with a view towards reaching a mutually beneficial transaction with the
Purchasers. The Company shall have no obligation to update the information
contained in such notice unless the previously noticed terms are made materially
less favorable to the Company, in which case the preceding and this sentence
shall apply to such revised transaction. During such 15 business day period, the
Company and the Purchasers shall keep confidential (subject to the requirements
of applicable securities laws) the fact that such negotiations are occurring
(including the terms discussed) and shall make no direct or indirect disclosure
thereof to any other Person (other than their respective advisers). If, after
such 15 business day period, the Company enters into an agreement with respect
to such Proposed Transaction and, under the terms of such Proposed Transaction,
Purchasers would receive proceeds in an amount that is less than the amount of
their cash investment in the Shares, the Warrants and the Warrant Shares plus a
return on such investment at the compounded rate of 10% per annum from the date
of investment (which amount, in the case of a transaction involving the purchase
of or an exchange for less than all of such Shares, Warrants and Warrant Shares,
shall be computed solely on the basis of the proportion of such Shares, Warrants
and Warrant Shares that would be sold in such Proposed Transaction) (a "Low
Return Transaction"), then, notwithstanding the provisions of Section 5.1 or 5.3
hereof, Purchasers shall have the right to make and consummate one or more
offers to the Company to acquire the Company in a merger transaction or to the
stockholders to acquire all of their shares of Common Stock at a higher price
than the price being offered in such Approved Transaction (with non-cash
consideration valued at fair market value).
5.5 Restrictions on Amendments to the Rights Plan and Adoption of New
Rights Plan. Until the Standstill Termination Date, the Board of Directors of
the Company shall not (a) amend the definition of "Acquiring Person" set forth
in the Rights Plan (as amended by the Rights Amendment) so as to deprive the
▇▇▇▇▇▇▇ Entities of the benefits afforded by the Rights Amendment, (b) adopt any
new rights plan pursuant to which holders of rights would be entitled to
purchase securities upon the occurrence of certain "triggering events" at less
than fair market value thereof which adopts a definition of "Acquiring Person"
(or any functionally equivalent designation) which deprives the ▇▇▇▇▇▇▇ Entities
of the benefits afforded by the Rights Amendment or (c) cause any ▇▇▇▇▇▇▇ Entity
to become, for the purposes of any application of the Rights Plan, an "Acquiring
Person" (or any functionally equivalent designation) solely by reason of its or
his purchase of any Voting Securities in compliance with Section 5 of this
Agreement. If an event described in Section 6.10(a) occurs, the Company shall at
the same time amend the definition of "Acquiring Person" (or any functionally
equivalent designation) to permit the ▇▇▇▇▇▇▇ Entities to acquire Voting
Securities representing such greater Total Voting Power.
5.6 Maintenance of Purchaser's Interest. From and after the date hereof
until the Standstill Termination Date, upon the issuance or sale for cash by the
Company of any Voting Securities (other than Voting Securities issued pursuant
to options or rights to acquire Voting Securities granted or to be granted to
officers, employees, consultants or directors pursuant to any stock plan, stock
bonus, stock appreciation rights, stock purchase or other benefit plan relating
to such classes or persons, hereafter adopted by those members of the Board of
Directors who (i) in the case of officer and employee awards, are not officers
or employees of the Company and (ii) in the case of all other awards, are not
entitled to participate in any plan then the subject of approval other than
automatic non-discretionary plans), the Company shall offer to Purchasers, by
written notice to Purchasers given concurrently with such issuance or sale, the
opportunity to acquire such number of Voting Securities on the same terms and
conditions as such issuance or sale as shall allow the ▇▇▇▇▇▇▇ Entities,
immediately following the issuance or sale of all such Voting Securities, to be
the Beneficial Owner, in the aggregate, of Voting Securities representing the
same Total Voting Power as that represented by the Voting Securities owned by
the ▇▇▇▇▇▇▇ Entities immediately prior to the issuance or sale referred to in
this Section 5.6 (without giving effect to Section 5.1(ii)).
5.7 Top Up Right. From and after the date hereof until the Standstill
Termination Date, the Company covenants that, so long as the ▇▇▇▇▇▇▇ Entities
Beneficially Own Voting Securities representing 15% or more of the Total Voting
Power, if the Company proposes to issue Voting Securities or securities
convertible or exchangeable into Voting Securities to any Person or group of
related Persons (a "Buyer") and, immediately after such issuance, such Buyer
would Beneficially Own (a) capital stock representing a greater percentage of
the total capital stock outstanding (determined on an as-converted basis) or (b)
(after giving effect to Section 5.1(ii) with respect to the ▇▇▇▇▇▇▇ Entities and
any similar restriction with respect to such Buyer) Voting Securities
representing a greater percentage of Total Voting Power, than the percentage of
total Common Stock outstanding or Total Voting Power, respectively, Beneficially
Owned by the ▇▇▇▇▇▇▇ Entities at such time, then, notwithstanding the provisions
of Section 5.1(i), the Company shall offer to Purchasers new Voting Securities
(on the same terms and conditions as such issuance to Buyer) and/or amend the
restrictions set forth in Section 5.1(ii) so that, after giving effect to such
issuances and/or amendment, Buyer and the ▇▇▇▇▇▇▇ Entities would Beneficially
Own (i) the same number of shares of Common Stock and (ii) Voting Securities
representing the same percentage of Total Voting Power (giving effect to Section
5.1(ii) as so amended with respect to the ▇▇▇▇▇▇▇ Entities and any similar
restriction with respect to Buyer).
5.8 Standstill Termination Events. Notwithstanding the provisions of
Sections 5.1 and 5.3, if, in response to any tender or exchange offer to acquire
Voting Securities made pursuant to a Schedule 14D-1 filed with the Commission (a
"Tender Offer"), the Company (i) recommends acceptance of, or responds neutrally
to, such Tender Offer (as evidenced by the Company's filing with the Commission
of a Schedule 14D-9) or (ii) redeems the Rights issued under the Rights
Agreement, the ▇▇▇▇▇▇▇ Entities may make an offer to purchase for cash and
purchase all outstanding shares of Common Stock at a higher price than the
consideration being offered in the Tender Offer.
6. Definitions. For purposes of this Agreement, the following terms
shall have the following meanings:
6.1 "Affiliate" and "Associate" shall have the respective meanings set
forth for such terms in Rule 12b-2 under the Exchange Act, as in effect on the
date of this Agreement.
6.2 (a) The ▇▇▇▇▇▇▇ Entities shall be deemed the "Beneficial Owner" of,
shall be deemed to "Beneficially Own" and shall be deemed to have "Beneficial
Ownership" of:
(i) any securities which any Purchaser or any other ▇▇▇▇▇▇▇
Entity is deemed to "beneficially own" within the meaning of Rules
13d-3 and 13d-5 under the Exchange Act, as in effect on the date of
this Agreement; and
(ii) any securities (the "underlying securities") which any
Purchaser or any other ▇▇▇▇▇▇▇ Entity has the right to acquire (whether
such right is exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or understanding (written
or oral), or upon the exercise of conversion rights, exchange rights,
rights, warrants or options, or otherwise (it being understood that
such Purchaser shall also be deemed to be the Beneficial Owner of the
securities convertible into or exchangeable for the underlying
securities).
(b) Any Person other than any ▇▇▇▇▇▇▇ Entity shall be deemed the
"Beneficial Owner" of, shall be deemed to "Beneficially Own" and shall be deemed
to have "Beneficial Ownership" of any securities which such Person or any of
such Person's Affiliates or Associates is deemed to "beneficially own" within
the meaning of Rules 13d-3 and 13d-5 under the Exchange Act, as in effect on the
date of this Agreement.
6.3 "Change in Control" shall mean:
(a) the acquisition, other than from the Company, by any
Person or group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange Act) of Beneficial Ownership of 50% or more of the Total
Voting Power, but excluding, for this purpose, any such acquisition by
(i) the Company or any of its subsidiaries, (ii) any employee benefit
plan (or related trust) of the Company or its subsidiaries or (iii) any
corporation with respect to which, following such acquisition, more
than 50% of the combined voting power of the then outstanding
securities of such corporation entitled to vote generally in the
election of directors is then Beneficially Owned, directly or
indirectly, by Persons who were the Beneficial Owners of Voting
Securities of the Company immediately prior to such acquisition in
substantially the same proportion as their ownership, immediately prior
to such acquisition, of the Total Voting Power of the Company; or
(b) individuals who, as of October 1, 1995, constitute the
Board of Directors of the Company (the "Incumbent Board") cease for any
reason to constitute at least a majority of such Board; provided, that
any individual becoming a director subsequent to October 1, 1995 whose
election, or nomination for election, by the Company's stockholders,
was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of office is
in connection with an actual or threatened election contest relating to
the election of the directors of the Company (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act); or
(c) approval by the stockholders of the Company of a
reorganization, merger or consolidation, in each case, with respect to
which all or substantially all the individuals and entities who were
the respective Beneficial Owners of the Voting Securities immediately
prior to such reorganization, merger or consolidation do not, following
such reorganization, merger or consolidation, Beneficially Own,
directly or indirectly, more than 50% of the combined voting power of
the then outstanding voting securities entitled to vote generally in
the election of directors of the corporation resulting from such
reorganization, merger or consolidation; or
(d) the sale or other disposition of all or substantially all
the assets of the Company in one transaction or series of related
transactions.
6.4 "Code" shall mean the Internal Revenue Code of 1986, as amended.
6.5 "Commission" shall mean the Securities and Exchange Commission.
6.6 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
6.7 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
6.8 "HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended.
6.9 "Person" shall mean any individual, partnership, joint venture,
joint stock company, association, corporation, trust, unincorporated
organization, government or department or agency of a government, or other
entity.
6.10 A "Rights Plan Event" shall mean (a) any amendment of the Rights
Agreement to change the definition of, or the implementation of a successor
rights plan which uses a definition of, "Acquiring Person" (or any functionally
equivalent designation) to permit another Person to acquire Voting Securities
representing a greater percentage of Total Voting Power than the maximum
percentage of Total Voting Power that the ▇▇▇▇▇▇▇ Entities are permitted to
Beneficially Own pursuant to Section 5.1(i) hereof as then in effect (or, if
modified, as otherwise in effect under this Agreement) or (b) during the
pendency of a Tender Offer (as defined in Section 5.8), a court of competent
jurisdiction declares the Rights Agreement to be invalid or otherwise
inapplicable to the Tender Offer.
6.11 "Securities Act" shall mean the Securities Act of 1933, as
amended.
6.12 "Significant Subsidiary" shall mean a Subsidiary of the Company
constituting a "significant subsidiary" as defined in Rule 1-02(v) of Regulation
S-X promulgated by the Commission.
6.13 "Subsidiary" shall mean, as to any Person, any corporation at
least a majority of the shares of stock of which having general voting power
under ordinary circumstances to elect a majority of the Board of Directors of
such corporation (irrespective of whether or not at the time stock of any other
class or classes shall have or might have voting power by reason of the
happening of any contingency) is, at the time as of which the determination is
being made, owned by such Person or one or more of its Subsidiaries or by such
Person and one or more of its Subsidiaries.
6.14 "13D Group" shall mean any group of Persons deemed to be a
"person" within the meaning of Section 13(d)(3) of the Exchange Act which would
be required under Section 13(d) of the Exchange Act and the rules and
regulations thereunder (as in effect, and based on legal interpretations thereof
existing, on the date hereof) to file a statement on Schedule 13D with the
Commission if such group Beneficially Owned Voting Securities representing more
than 5% of any class of Voting Securities then outstanding.
6.15 "Total Voting Power" at any time shall mean the total combined
voting power in the general election of directors of all the Voting Securities
then outstanding. For purposes of determining the percentage of Total Voting
Power of Voting Securities Beneficially Owned:
(i) by the ▇▇▇▇▇▇▇ Entities, any securities not outstanding
which are subject to conversion rights, exchange rights, rights,
warrants, options or similar securities held any Person shall be deemed
to be outstanding, but shall not be deemed to be outstanding for the
purpose of computing the percentage of Voting Securities beneficially
owned by any other Person, except that this paragraph (i) shall not
apply to any determination made pursuant to Section 5.1(ii).
(ii) by any Person other than the ▇▇▇▇▇▇▇ Entities, any
securities not outstanding which are subject to conversion rights,
exchange rights, rights, warrants, options or similar rights which are
convertible, exchangeable or exercisable within sixty days shall be
deemed to be outstanding, but shall not be deemed to be outstanding for
the purpose of computing the percentage of Voting Securities
Beneficially Owned by any other Person.
6.16 "Voting Power" at any time shall mean the aggregate voting power
in a general election of directors of Voting Securities.
6.17 "Voting Securities" shall mean at any time shares of any class of
capital stock of the Company which are then entitled to vote generally in the
election of directors, including Common Stock.
7. Miscellaneous
7.1 Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such which may be hereafter declared invalid, void or unenforceable.
7.2 Specific Enforcement. Each Purchaser, on the one hand, and the
Company, on the other, acknowledge and 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 to prevent breaches of the provisions of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state thereof having jurisdiction, this being in addition to any
other remedy to which they may be entitled at law or equity.
7.3 Entire Agreement. This Agreement (including the documents set forth
in the Exhibits hereto) contains the entire understanding of the parties with
respect to the transactions contemplated hereby.
7.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more of the counterparts have been signed by
each party and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
7.5 Notices. All notices, consents, requests, instructions, approvals
and other communications provided for herein and all legal process in regard
hereto shall be validly given, made or served, if in writing and delivered
personally, by telecopy (except for legal process) or sent by registered mail,
postage prepaid, if to:
The Company:
DIANON Systems, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chairman, President and
Chief Executive Officer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇ ▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Each Purchaser:
c/o Field Point Capital Management Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: G.S. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Weil, Gotshal & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. Block
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or telex number as any party may, from time to time,
designate in a written notice given in a like manner. With respect to any notice
required hereunder to the Trust, the ▇▇▇ or any other ▇▇▇▇▇▇▇ Entity, notice to
▇▇. ▇▇▇▇▇▇▇ shall be deemed to be effective notice to such Person.
7.6 Amendments. This Agreement may be amended as to Purchasers and
their respective successors, and the Company may take any action herein
prohibited or omit to perform any act required to be performed by it, if the
Company shall obtain the written consent of Purchasers and/or such successors.
This Agreement may not be waived, changed, modified or discharged orally, but
only by an agreement in writing signed by the party or parties against whom
enforcement of any waiver, change, modification or discharge is sought or by
parties with the right to consent to such waiver, change, modification or
discharge on behalf of such party.
7.7 Cooperation. Purchasers and the Company agree to take, or cause to
be taken, all such further or other actions as shall reasonably be necessary to
make effective and consummate the transactions contemplated by this Agreement.
7.8 Successors and Assigns. All covenants and agreements contained
herein shall bind and inure to the benefit of the parties hereto and their
respective successors.
7.9 Indemnity. (a) The Company agrees to indemnify and save harmless
each Purchaser and each Purchaser's officers, directors and employees from and
against any and all costs, expenses, damages or other liabilities resulting from
any misrepresentation or breach of a representation or warranty or
nonfulfillment of any covenant or agreement on the part of the Company under the
terms of this Agreement or any legal, administrative or other proceedings
arising out of the execution of this Agreement or the consummation of the
transactions contemplated hereby other than such costs, expenses, damages or
other liabilities resulting from the violation by any Purchaser of any legal
investment laws or other laws restricting or governing any Purchaser's
investments generally, from the violation or alleged violation by any Purchaser
of any duty such Purchaser may owe to any Person with a direct or indirect
interest in the Shares or the Warrant Shares.
(b) Each indemnified party under this Section 7.9 will, promptly after
the receipt of notice of the commencement of any action against such indemnified
party in respect of which indemnity may be sought from the Company on account of
any indemnity agreement contained in this Section 7.9, notify the Company in
writing of the commencement thereof. The omission of any indemnified party so to
notify the Company of any such action shall not relieve the Company from any
liability which it may have to such indemnified party other than pursuant to
this Section 7.9 or, unless the Company shall have been prejudiced by the
omission of such indemnified party so to notify the Company, pursuant to this
Section 7.9. In case any such action shall be brought against any indemnified
party and it shall notify the Company of the commencement thereof, the Company
shall be entitled to participate therein and, to the extent that it may wish, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the Company to such indemnified party
of its election so to assume the defense thereof, the Company will not be liable
to such indemnified party under this Section 7.9 for any legal or other expense
subsequently incurred by such indemnified party in connection with the defense
thereof; provided, however, that (i) if the Company shall elect not to assume
the defense of such claim or action or (ii) if the indemnified party reasonably
determines (A) that there may be a conflict between the positions of the Company
and of the indemnified party in defending such claim or action or (B) that there
may be legal defenses available to such indemnified party different from or in
addition to those available to the Company, then separate counsel for the
indemnified party shall be entitled to participate in and conduct the defense,
in the case of clauses (i) and (ii)(A), or such different defenses, in the case
of clause (ii)(B), and the Company shall be liable for any reasonable legal or
other expenses incurred by the indemnified party in connection with the defense.
7.10 Survival of Representations and Warranties. All representations
and warranties contained herein or made in writing by any party in connection
herewith shall survive the execution and delivery of this Agreement and the
issuance and delivery of the Shares and the Warrants, regardless of any
investigation made by or on behalf of any party. Notwithstanding the foregoing,
the representations and warranties contained in this Agreement and the indemnity
obligations related to such representations and warranties set forth in Section
7.9 shall terminate on, and no action or claim with respect thereto may be
brought after, the Standstill Termination Date (except for any action or claim
which is pending on such date as evidenced by written notice thereof which has
been delivered to the appropriate party prior to such date).
7.11 Transfer of Shares. Purchasers understand and agree that neither
any Shares, the Warrants nor any Warrant Shares have been or will be registered
under the Securities Act or the securities laws of any state and that they may
be sold or otherwise disposed of only in one or more transactions registered
under the Securities Act and, where applicable, such laws or as to which an
exemption from the registration requirements of the Securities Act and, where
applicable, such laws is available. Purchasers acknowledge that, except as
provided in the Registration Rights Agreement, Purchasers have no right to
require the Company to register the Shares, the Warrants or the Warrant Shares.
Purchasers understand and agree that each certificate representing the Shares,
the Warrants or the Warrant Shares (other than, with respect to the first
legend, the Shares, the Warrants or the Warrant Shares that are no longer
subject to the provisions of Section 5 and other than, with respect to the
second legend, the Shares, the Warrants or the Warrant Shares which have been
transferred in a transaction registered under the Securities Act or exempt from
the registration requirements of the Securities Act pursuant to Rule 144
thereunder or any similar rule or regulation) shall bear the following legends:
"THE TRANSFER OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE IS RESTRICTED BY AN AGREEMENT ON FILE
AT THE OFFICES OF THE CORPORATION."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT
OR SUCH LAWS."
and Purchaser agrees to transfer the Shares, the Warrants and the Warrant Shares
only in accordance with the provisions of such legends.
7.12 Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware.
7.13 Expenses. The Company shall, promptly after receiving appropriate
evidence thereof, reimburse Purchasers for their costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses) in connection with
the negotiation of this Agreement and the other documents referred to herein and
the consummation of the transaction contemplated hereby and thereby.
7.14 Publicity. The Company and Purchasers shall agree upon the text of
a press release announcing the transactions contemplated hereby.
7.15 Required Percentages. Various rights of Purchasers contained in
this Agreement are conditioned upon the ▇▇▇▇▇▇▇ Entities Beneficial Owning
Voting Securities representing a specified percentage of Total Voting Power (a
"Required Percentage"). Notwithstanding such provisions, such rights of
Purchasers shall not terminate if the Voting Power represented by Voting
Securities Beneficially Owned by the ▇▇▇▇▇▇▇ Entities is reduced to less than
the applicable Required Percentage as a result of the issuance of any Voting
Securities by the Company unless, in connection with such issuance, the ▇▇▇▇▇▇▇
Entities have, and do not exercise, the right to purchase their proportionate
share of such Voting Securities pursuant to Section 5.6; provided, that,
notwithstanding the immediately preceding provision, such right shall terminate
if any ▇▇▇▇▇▇▇ Entity sells or otherwise transfers Beneficial Ownership of any
Voting Securities such that, excluding the effects of all such Voting Securities
issuances by the Company, the Voting Securities Beneficially Owned by the
▇▇▇▇▇▇▇ Entities represent less than the applicable Required Percentage.
IN WITNESS WHEREOF, Purchaser, ▇▇. ▇▇▇▇▇▇▇ and the Company have caused
this Agreement to be duly executed, all as of the day and year first above
written.
▇▇▇▇▇▇▇ FAMILY TRUST
By /s/G.S. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------
Name: G. S. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Trustee
/s/G.S. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
G. S. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇. ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇.▇.▇.
CONTRIBUTORY ACCOUNT
By /s/G.S. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------
Name: G. S. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Trustee
DIANON SYSTEMS, INC.
By /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President, Chairman and Chief
Executive Officer
