Exhibit 2.1
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
Among
MEDICAL ADVANCES, INC.,
INTERMAGNETICS GENERAL CORPORATION
INTERMAGNETICS MERGER SUB, INC.
and
THE STOCKHOLDERS OF MEDICAL ADVANCES, INC.
Dated as of
March 11, 1997
TABLE OF CONTENTS
PAGE
ARTICLE I - DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II - THE MERGER; CLOSING; EFFECTIVE TIME . . . . . . . . . . . . . . 9
2.1. THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.2 CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
2.3 EFFECTIVE TIME. . . . . . . . . . . . . . . . . . . . . . . . .10
ARTICLE III - ARTICLES OF INCORPORATION BY-LAWS AND OFFICERS AND
DIRECTORS OF THE SURVIVING CORPORATION. . . . . . . . . . . . . . . . .10
3.1 THE CERTIFICATE OF INCORPORATION. . . . . . . . . . . . . . . .10
3.2 THE BY-LAWS . . . . . . . . . . . . . . . . . . . . . . . . . .10
3.3 OFFICERS AND DIRECTORS. . . . . . . . . . . . . . . . . . . . .10
ARTICLE IV - CONVERSION OR CANCELLATION OF SHARES IN THE MERGER. . . . . . .11
4.1. CONVERSION OR CANCELLATION OF SHARES. . . . . . . . . . . . . .11
4.2 EXCHANGE OF CERTIFICATES; DIVIDENDS . . . . . . . . . . . . . .12
4.3. DISSENTERS RIGHTS . . . . . . . . . . . . . . . . . . . . . . .13
4.4 TRANSFER OF SHARES AFTER THE EFFECTIVE TIME . . . . . . . . . .13
ARTICLE V - SEVERAL REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS . . .14
5.1. AUTHORITY; NO CONFLICT. . . . . . . . . . . . . . . . . . . . .14
5.2. TITLE TO SHARES . . . . . . . . . . . . . . . . . . . . . . . .15
5.3. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
5.4 RELATIONSHIPS WITH RELATED PERSONS. . . . . . . . . . . . . . .15
5.5 BROKERS OR FINDERS. . . . . . . . . . . . . . . . . . . . . . .15
5.6 DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . . . . .16
ARTICLE VI - REPRESENTATIONS AND WARRANTIESOF THE COMPANY AND THE
OFFICER AND DIRECTOR STOCKHOLDERS . . . . . . . . . . . . . . . . . . .16
6.1 ORGANIZATION AND EXISTENCE. . . . . . . . . . . . . . . . . . .16
6.2 AUTHORITY; NO CONFLICT. . . . . . . . . . . . . . . . . . . . .16
6.3 CAPITALIZATION. . . . . . . . . . . . . . . . . . . . . . . . .18
6.4 FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . .18
6.5 BOOKS AND RECORDS . . . . . . . . . . . . . . . . . . . . . . .19
6.6 TITLE TO PROPERTIES; ENCUMBRANCES . . . . . . . . . . . . . . .19
6.7 CONDITION AND SUFFICIENCY OF ASSETS . . . . . . . . . . . . . .20
6.8 ACCOUNTS RECEIVABLE.. . . . . . . . . . . . . . . . . . . . . .20
6.9 INVENTORY . . . . . . . . . . . . . . . . . . . . . . . . . . .20
6.10 NO UNDISCLOSED LIABILITIES. . . . . . . . . . . . . . . . . . .21
6.11 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
6.12 NO MATERIAL ADVERSE CHANGE. . . . . . . . . . . . . . . . . . .22
6.13 EMPLOYEE BENEFITS . . . . . . . . . . . . . . . . . . . . . . .22
6.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS. . . . . . . . . . . . . . . . . . . . . . . . .23
6.15 LEGAL PROCEEDINGS; ORDERS . . . . . . . . . . . . . . . . . . .25
6.16 ABSENCE OF CERTAIN CHANGES AND EVENTS . . . . . . . . . . . . .26
6.17 CONTRACTS; NO DEFAULTS. . . . . . . . . . . . . . . . . . . . .27
6.18 INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . .30
6.19 ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . . .31
6.20 EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . .33
6.21 LABOR RELATIONS; COMPLIANCE . . . . . . . . . . . . . . . . . .33
6.22 INTELLECTUAL PROPERTY . . . . . . . . . . . . . . . . . . . . .34
6.23 CERTAIN PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . .37
6.24 DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . . . . .37
6.25 BROKERS OR FINDERS. . . . . . . . . . . . . . . . . . . . . . .37
ARTICLE VII - REPRESENTATIONS AND WARRANTIES OF PURCHASER AND
MERGER SUB. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
7.1 ORGANIZATION AND GOOD STANDING. . . . . . . . . . . . . . . . .38
7.2 AUTHORITY; NO CONFLICT. . . . . . . . . . . . . . . . . . . . .38
7.3 SEC FILINGS . . . . . . . . . . . . . . . . . . . . . . . . . .39
7.4 CERTAIN PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . .39
7.5 BROKERS OR FINDERS. . . . . . . . . . . . . . . . . . . . . . .39
7.6 TAX-FREE REORGANIZATION . . . . . . . . . . . . . . . . . . . .40
7.7 COMPLIANCE WITH LEGAL REQUIREMENTS. . . . . . . . . . . . . . .40
ARTICLE VIII - COVENANTS OF SELLERS. . . . . . . . . . . . . . . . . . . . .40
8.1 ACCESS AND INVESTIGATION. . . . . . . . . . . . . . . . . . . .40
8.2 OPERATION OF THE BUSINESS OF THE COMPANY. . . . . . . . . . . .40
8.3 NEGATIVE COVENANT . . . . . . . . . . . . . . . . . . . . . . .41
8.4 REQUIRED APPROVALS. . . . . . . . . . . . . . . . . . . . . . .41
8.5 NOTIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . .41
8.6 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS. . . . . . . . . . .42
8.7 MEETING OF THE COMPANY'S STOCKHOLDERS . . . . . . . . . . . . .42
8.8 TAX FILINGS.. . . . . . . . . . . . . . . . . . . . . . . . . .43
8.9 BEST EFFORTS. . . . . . . . . . . . . . . . . . . . . . . . . .43
ARTICLE IX - COVENANTS OF PURCHASER AND MERGER SUB . . . . . . . . . . . . .43
9.1 APPROVALS OF GOVERNMENTAL BODIES. . . . . . . . . . . . . . . .43
9.2 BEST EFFORTS. . . . . . . . . . . . . . . . . . . . . . . . . .43
9.3 NOTIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . .44
9.4 INSURANCE.. . . . . . . . . . . . . . . . . . . . . . . . . . .44
ARTICLE X - CONDITIONS PRECEDENT TO PURCHASERS OBLIGATION
TO CLOSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
10.1 ACCURACY OF REPRESENTATIONS . . . . . . . . . . . . . . . . . .44
10.2 SELLERS' PERFORMANCE. . . . . . . . . . . . . . . . . . . . . .45
10.3 CONSENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . .45
10.4 ADDITIONAL DOCUMENTS. . . . . . . . . . . . . . . . . . . . . .45
10.5 NO PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . .45
10.6 EMPLOYMENT AGREEMENTS . . . . . . . . . . . . . . . . . . . . .46
10.7 STOCKHOLDER APPROVAL. . . . . . . . . . . . . . . . . . . . . .46
10.8 DISSENTERS. . . . . . . . . . . . . . . . . . . . . . . . . . .46
10.9 GOVERNMENTAL AND REGULATORY CONSENTS. . . . . . . . . . . . . .46
10.10 RESIGNATIONS. . . . . . . . . . . . . . . . . . . . . . . . . .46
10.11 NO PROHIBITION. . . . . . . . . . . . . . . . . . . . . . . . .46
ARTICLE XI - CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE. . . . . .47
11.1 ACCURACY OF REPRESENTATIONS . . . . . . . . . . . . . . . . . .47
11.2 PURCHASER'S PERFORMANCE.. . . . . . . . . . . . . . . . . . . .47
11.3 CONSENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . .47
11.4 ADDITIONAL DOCUMENTS. . . . . . . . . . . . . . . . . . . . . .47
11.5 NO INJUNCTION . . . . . . . . . . . . . . . . . . . . . . . . .48
11.6 STOCKHOLDER APPROVAL. . . . . . . . . . . . . . . . . . . . . .48
11.7 GOVERNMENTAL CONSENTS . . . . . . . . . . . . . . . . . . . . .48
11.8 NO PROHIBITION. . . . . . . . . . . . . . . . . . . . . . . . .48
ARTICLE XII - TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . .49
12.1 TERMINATION EVENTS. . . . . . . . . . . . . . . . . . . . . . .49
12.2 EFFECT OF TERMINATION . . . . . . . . . . . . . . . . . . . . .49
ARTICLE XIII - INDEMNIFICATION; REMEDIES . . . . . . . . . . . . . . . . . .50
13.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED
BY KNOWLEDGE. . . . . . . . . . . . . . . . . . . . . . . . . .50
13.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS . . . . . . .50
13.3 DOLLAR LIMITATIONS ON INDEMNIFICATION CLAIMS. . . . . . . . . .51
13.4 INDEMNIFICATION AND PAYMENT OF DAMAGES BY PURCHASER . . . . . .51
13.5 TIME LIMITATIONS. . . . . . . . . . . . . . . . . . . . . . . .52
13.6 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS . . . . . . .52
13.7 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS . . . . . . . . . .53
13.8 EFFECT OF TAXES, OTHER BENEFITS AND INSURANCE . . . . . . . . .54
ARTICLE XIV - REGISTRATION RIGHTS. . . . . . . . . . . . . . . . . . . . . .54
14.1 REQUIRED AND INCIDENTAL REGISTRATION. . . . . . . . . . . . . .54
14.2 PROCEDURE FOR REGISTRATION. . . . . . . . . . . . . . . . . . .55
14.3 INDEMNIFICATION BY THE PURCHASER. . . . . . . . . . . . . . . .56
14.4 INDEMNIFICATION BY SELLING STOCKHOLDERS . . . . . . . . . . . .57
14.5 NOTIFICATION BY SELLING STOCKHOLDERS. . . . . . . . . . . . . .58
14.6 NOTIFICATION BY PURCHASER.. . . . . . . . . . . . . . . . . . .58
14.7 CONDITIONS TO REGISTRATION. . . . . . . . . . . . . . . . . . .58
14.8 PURCHASER COSTS AND EXPENSES. . . . . . . . . . . . . . . . . .60
14.9 REGISTRABLE SECURITIES. . . . . . . . . . . . . . . . . . . . .60
ARTICLE XV - GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . .60
15.1 EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . .60
15.2 PUBLIC ANNOUNCEMENTS. . . . . . . . . . . . . . . . . . . . . .60
15.3 CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . .61
15.4 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . .61
15.5 ARBITRATION . . . . . . . . . . . . . . . . . . . . . . . . . .62
15.6 FURTHER ASSURANCES. . . . . . . . . . . . . . . . . . . . . . .62
15.7 WAIVER. . . . . . . . . . . . . . . . . . . . . . . . . . . . .63
15.8 ENTIRE AGREEMENT AND MODIFICATION . . . . . . . . . . . . . . .63
15.9 DISCLOSURE SCHEDULE AND OTHER SCHEDULES . . . . . . . . . . . .63
15.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. . . . . . .64
15.11 SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . .64
15.12 SECTION HEADINGS, CONSTRUCTION. . . . . . . . . . . . . . . . .64
15.13 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . .64
15.14 COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . .64
Disclosure Schedule
Offeree Questionnaire. . . . . . . . . . . . . . . . . . . . . . . . . Annex O
Wisconsin Articles of Merger . . . . . . . . . . . . . . . . . . . . Annex 2.3
Certificate of Incorporation of Merger Sub . . . . . . . . . . . . . Annex 3.1
Bylaws of Merger Sub . . . . . . . . . . . . . . . . . . . . . . . . Annex 3.2
Letter of Transmittal. . . . . . . . . . . . . . . . . . . . . . . . Annex 4.2
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . Annex 6.4
Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Annex 6.17
Employment Agreement . . . . . . . . . . . . . . . . . . . . . . . .Annex 10.6
Consulting Agreement . . . . . . . . . . . . . . . . . . . . . . . Annex 10.6A
Forms of Agreement Relating to Intellectual Property Assets. . . . .Annex 6.22
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER (hereinafter called
this "Agreement"), dated as of March 11, 1997, among Medical Advances, Inc., a
Wisconsin corporation (the "Company"), Intermagnetics General Corporation, a
New York corporation ("Purchaser"), and Intermagnetics Merger Sub, Inc., a
Wisconsin corporation, a wholly-owned subsidiary of Purchaser ("Merger Sub"),
the Company and Merger Sub sometimes being hereinafter collectively referred to
as the "Constituent Corporations", and the individual stockholders named
herein (the "Stockholders").
RECITALS
WHEREAS, the Boards of Directors of Purchaser and the Company each have
determined that it is in the best interests of their respective stockholders
for Purchaser to acquire the Company upon the terms and subject to the
conditions set forth herein;
WHEREAS, the Company, Purchaser, Merger Sub and the Stockholders intend
that the Merger qualify as a tax-free reorganization under the provisions of
Section 368 of the IRC (as hereinafter defined);
WHEREAS, each Stockholder has completed an Offeree Questionnaire,
copies of which are attached as Annex 0 to this Agreement; and
WHEREAS, the Company, Purchaser, Merger Sub and the Stockholders desire
to make certain representations, warranties, covenants and agreements in
connection with this Agreement.
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms have the meanings specified
or referred to in this Section 1:
"Applicable Contract"--any Contract (a) under which the Company has or
may acquire any rights, (b) under which the Company has or may become subject
to any obligation or liability, or (c) by which the Company or any of the
assets owned or used by it is or may become bound.
"Balance Sheet"--as defined in Section 6.4.
"Best Efforts"--the efforts that a prudent Person desirous of achieving
a result would use in similar circumstances to ensure that such result is
achieved as expeditiously as possible; provided, however, that an obligation to
use Best Efforts under this Agreement does not require the Person subject to
that obligation to take actions that would result in a materially adverse
change in the benefits to such Person of this Agreement and the Contemplated
Transactions.
"Breach"--a "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument delivered
pursuant to this Agreement will be deemed to have occurred if there is or has
been any inaccuracy in or breach of, or any failure to perform or comply
with, such representation, warranty, covenant, obligation, or other provision,
and the term "Breach" means any such inaccuracy, breach, failure, claim,
occurrence, or circumstance.
"Business Plan"--the business plan of the Company set forth as Schedule
1 hereto.
"Commission"--the U.S. Securities and Exchange Commission.
"Closing Date"--the date and time as of which the Closing actually
takes place.
"Closing"--as defined in Section 2.2.
"Company"--as defined in the Recitals of this Agreement.
"Consent"--any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"Consulting Agreement"--as defined in Section 10.6.
"Contemplated Transactions"--all of the transactions contemplated by
this Agreement, including:
(a) the Merger;
(b) the execution, delivery, and performance of the
Employment Agreement, and the Consulting Agreement; and
(c) the performance by Purchaser and Sellers of their
respective covenants and obligations under this
Agreement.
"Contract"--any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"Damages"--as defined in Section 13.2.
"Effective Time"--as defined in Section 2.3.
"Employment Agreement"--as defined in Section 10.6.
"Encumbrance"--any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right
of first refusal, or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income, or exercise of any other attribute
of ownership.
"Environment"--soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds, drainage basins, and
wetlands), groundwaters, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life, and any other environmental
medium or natural resource.
"Environmental, Health, and Safety Liabilities"--any cost, damages,
expense, liability, obligation, or other responsibility arising from or under
applicable Environmental Law or Occupational Safety and Health Law and
consisting of or relating to:
(a) any environmental, health, or safety matters or
conditions (including on-site or off-site contamination, occupational
safety and health, and regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal
or administrative proceedings, damages, losses, claims, demands and
responses, investigative, remedial, or inspection costs and expenses
arising under Environmental Law or Occupational Safety and Health Law;
(c) financial responsibility under Environmental Law or
Occupational Safety and Health Law for cleanup costs or corrective
action, including any investigation, cleanup, removal, containment, or
other remediation or response actions ("Cleanup") required by
applicable Environmental Law or Occupational Safety and Health Law
(whether or not such Cleanup has been required or requested by any
Governmental Body or any other Person) and for any natural resource
damages; or
(d) any other compliance, corrective, investigative, or
remedial measures required under Environmental Law or Occupational
Safety and Health Law.
The terms "removal," "remedial," and "response action," include the
types of activities covered by the Comprehensive Environmental Response,
Compensation, and Liability Act, 42U.S.C. 9601 et seq., as amended
("CERCLA").
"Environmental Law"--any applicable Legal Requirement that requires or
relates to:
(a) advising appropriate authorities, employees, and the
public of intended or actual releases of pollutants or hazardous
substances or materials, violations of discharge limits, or other
prohibitions and of the commencements of activities, such as resource
extraction or construction, that could have significant impact on the
Environment;
(b) preventing or reducing to acceptable levels the release
of pollutants or hazardous substances or materials into the
Environment;
(c) reducing the quantities, preventing the release, or
minimizing the hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated,
packaged, and used so that they do not present unreasonable risks to
human health or the Environment when used or disposed of;
(e) protecting resources, species, or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or other
potentially harmful substances;
(g) cleaning up pollutants that have been released,
preventing the threat of release, or paying the costs of such clean up
or prevention; or
(h) making responsible parties pay private parties, or
groups of them, for damages done to their health or the Environment, or
permitting self-appointed representatives of the public interest to
recover for injuries done to public assets.
"ERISA"--the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"ERISA Affiliate" --as defined in Section 6.13.
"Exchange Agent" --as defined in Section 4.2
"Facilities"--any real property, leaseholds, or other interests
currently or formerly owned or operated by the Company and any buildings,
plants, structures, or equipment (including motor vehicles, tank cars, and
rolling stock) currently or formerly owned or operated by the Company.
"GAAP"--generally accepted United States accounting principles, applied
on a basis consistent with the basis on which the Balance Sheet and the other
financial statements referred to in Section 6.4(b) were prepared.
"Governmental Authorization"--any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"Governmental Body"--any:
(a) nation, state, county, city, town, village, district, or
other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other
government;
(c) governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department,
official, or entity and any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory,
or taxing authority or power of any nature.
"Hazardous Activity"--the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment, or use (including any
withdrawal or other use of groundwater) of Hazardous Materials in, on, under,
about, or from the Facilities or any part thereof into the Environment.
"Hazardous Materials"--any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be,
hazardous, radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Law, including any admixture or solution
thereof, and specifically including petroleum and all derivatives thereof or
synthetic substitutes therefor and asbestos or asbestos-containing materials.
"Intellectual Property Assets" --as defined in Section 6.22.
"IRC"--the Internal Revenue Code of 1986 or any successor law, and
regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
"IRS"--the United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
"Knowledge"--an individual will be deemed to have "Knowledge" of a
particular fact or other matter if such individual is actually aware or should
be aware of such fact or other matter.
A Person (other than an individual) will be deemed to have "Knowledge"
of a particular fact or other matter if any individual who is serving, or who
has at any time during the past five years served, as a director, officer,
partner, executor, or trustee of such Person (or in any similar capacity)
has, or at any time during such five years had, Knowledge of such fact or other
matter.
"Legal Requirement"--any applicable federal, state, local, municipal,
foreign, international, multinational, or other administrative order,
constitution, law, ordinance, regulation, statute, or treaty.
"Material Adverse Effect" --an effect which would materially and
adversely impact the Company or its financial condition, business or
operations.
"Occupational Safety and Health Law"--any applicable Legal Requirement
designed to provide safe and healthful working conditions and to reduce
occupational safety and health hazards, and any program, whether governmental
or private (including those promulgated or sponsored by industry associations
and insurance companies), designed to provide safe and healthful working
conditions.
"Officer and Director Stockholders" --▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇.
"Order"--any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"Ordinary Course of Business"--an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of
such Person and is taken in the ordinary course of the normal day-to-
day operations of such Person; and
(b) such action is not required to be authorized by the
board of directors of such Person (or by any Person or group of Persons
exercising similar authority) and is not required to be specifically
authorized by the parent company (if any) of such Person.
"Organizational Documents"--(a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the partnership agreement
and any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a
limited partnership; (d) any charter or similar document adopted or filed in
connection with the creation, formation, or organization of a Person; and
(e) any amendment to any of the foregoing.
"Person"--any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"Plan"--as defined in Section 6.13.
"Proceeding"--any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"Purchaser"--as defined in the first paragraph of this Agreement.
"Purchaser Common Stock"--as defined in Section 4.1(a).
"Related Person"--with respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by
such individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a Material
Interest; and
(d) any Person with respect to which such individual or one
or more members of such individual's Family serves as a director,
officer, partner, executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is
directly or indirectly controlled by, or is directly or indirectly
under common control with such specified Person;
(b) any Person that holds a Material Interest in such
specified Person;
(c) each Person that serves as a director, officer, partner,
executor, or trustee of such specified Person (or in a similar
capacity);
(d) any Person in which such specified Person holds a
Material Interest;
(e) any Person with respect to which such specified Person
serves as a general partner or a trustee (or in a similar capacity);
and
(f) any Related Person of any individual described in clause
(b) or (c).
For purposes of this definition, (a) the "Family" of an individual
includes (i) the individual, (ii) the individual's spouse, (iii) any other
natural person who is related to the individual or the individual's spouse
within the second degree, and (iv) any other natural person who resides with
such individual, and (b) "Material Interest" means direct or indirect
beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange
Act of 1934) of voting securities or other voting interests representing at
least 5% of the outstanding voting power of a Person or equity securities
or other equity interests representing at least 5% of the outstanding equity
securities or equity interests in a Person.
"Release"--any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment, whether
intentional or unintentional.
"Representative"--with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"Securities Act"--the Securities Act of 1933 or any successor law, and
regulations and rules issued pursuant to that Act or any successor law.
"Sellers"--the Company and the Stockholders.
"Shares"--as defined in Section 4.1(a).
"Subsidiary"--with respect to any Person (the "Owner"), any corporation
or other Person of which securities or other interests having the power to
elect a majority of that corporation's or other Person's board of directors or
similar governing body, or otherwise having the power to direct the business
and policies of that corporation or other Person (other than securities or
other interests having such power only upon the happening of a contingency that
has not occurred) are held by the Owner or one or more of its Subsidiaries.
"Tax"--any tax (including any income tax, capital gains tax, value-
added tax, sales tax, franchise tax, property tax, payroll tax, workers
compensation, unemployment tax, gift tax or estate tax), levy, assessment,
tariff, duty (including any customs duty), deficiency, or other fee, and any
related charge or amount (including any fine, penalty, interest, or addition to
tax), imposed, assessed, or collected by or under the authority of any
Governmental Body or payable pursuant to any tax-sharing agreement or any other
Contract relating to the sharing or payment of any such tax, levy, assessment,
tariff, duty, deficiency, or fee.
"Tax Return"--any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment
of any Tax or in connection with the administration, implementation, or
enforcement of or compliance with any Legal Requirement relating to any Tax.
"Threat of Release"--a substantial likelihood of a Release that may
require action in order to prevent or mitigate damage to the Environment that
may result from such Release.
"Threatened"--a claim, Proceeding, dispute, action, or other matter
will be deemed to have been "Threatened" if any demand or statement has been
made or any notice has been given, or if any other event has occurred or any
other circumstances exist, that would lead a prudent Person to conclude that
such a claim, Proceeding, dispute, action, or other matter is likely to be
asserted, commenced, taken, or otherwise pursued in the future.
"WBCL" --Wisconsin Business Corporation Law.
Certain other terms are defined in other sections in this Agreement and
wherever such terms are used throughout this Agreement, such terms shall have
the meanings assigned thereto in such other sections.
ARTICLE II
THE MERGER; CLOSING; EFFECTIVE TIME
2.1. THE MERGER.
Subject to the terms and conditions of this Agreement, at the Effective
Time (as defined in Section 2.3) the Company shall be merged with and into
Merger Sub and the separate corporate existence of the Company shall thereupon
cease (the "Merger"). Merger Sub shall be the surviving corporation in the
Merger (sometimes hereinafter referred to as the "Surviving Corporation"),
shall have the name "Medical Advances, Inc." and shall continue to be governed
by the laws of the State of Wisconsin, and the separate corporate existence of
Merger Sub with all its rights, privileges, immunities, powers and franchises
shall continue unaffected by the Merger. The Merger shall have the effects
specified in the WBCL.
2.2 CLOSING.
The closing of the Merger (the "Closing") shall take place (i) at the
Milwaukee, Wisconsin office of ▇▇▇▇▇▇▇ & ▇▇▇▇ S.C. at 10:00 a.m. on March 11,
1997 or (ii) at such other place and time and/or in such other date as the
Company and Purchaser may agree.
2.3 EFFECTIVE TIME.
As soon as practicable following the Closing, and provided that this
Agreement has not been terminated or abandoned pursuant to Article XII hereof,
the Company and the Purchaser will cause Articles of Merger (the "Wisconsin
Articles of Merger") to be executed and filed with the Department of Financial
Institutions of the State of Wisconsin as provided in the WBCL. The
Wisconsin Articles of Merger are attached as Annex 2.3 to this Agreement. The
Merger shall become effective, as of 12:01a.m. Central Standard Time, on the
date on which the Wisconsin Articles of Merger have been duly filed with the
Department of Financial Institutions of the State of Wisconsin, and such time
is hereinafter referred to as the "Effective Time."
ARTICLE III
ARTICLES OF INCORPORATION BY-LAWS AND
OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION
3.1 THE CERTIFICATE OF INCORPORATION.
The Articles of Incorporation of Merger Sub (the "Certificate") in
effect at the Effective Time shall be the Articles of Incorporation of the
Surviving Corporation, until duly amended in accordance with the terms thereof
and the WBCL. The Articles of Incorporation of Merger Sub are attached hereto
as Annex 3.1 to this Agreement.
3.2 THE BY-LAWS.
The By-Laws of Merger Sub in effect at the Effective Time shall be the
By-Laws of the Surviving Corporation, until duly amended in accordance with the
terms thereof and the WBCL. The By-Laws of Merger Sub are attached as Annex
3.2 to this Agreement.
3.3 OFFICERS AND DIRECTORS.
The directors of Merger Sub and the officers of the Company at the
Effective Time shall, from and after the Effective Time, be the directors and
officers, respectively, of the Surviving Corporation until their successors
have been duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the Surviving Corporations Articles
of Incorporation and By-Laws.
ARTICLE IV
CONVERSION OR CANCELLATION OF SHARES IN THE MERGER
4.1. CONVERSION OR CANCELLATION OF SHARES.
The manner of converting or canceling shares of the Company and Merger
Sub in the Merger shall be as follows:
(a) At the Effective Time, the shares of the Common Stock,
par value $.01 per share (the "Shares") of the Company issued and
outstanding immediately prior to the Effective Time or Shares which are
held by Stockholders ("Dissenting Stockholders") exercising appraisal
rights pursuant to the WBCL (the "Excluded Shares") shall, by virtue of
the Merger and without any action on the part of the holders thereof, be
converted into the right to receive, without interest, on an aggregate
basis (i) 652,173.91 shares (the "Stock Portion") of Purchaser Common
Stock, par value $0.10 per share (the "Purchaser Common Stock"), which
number was determined by dividing $7,500,000 by $11.50 per share (the
"Share Price"), (ii) $4,500,000 (the "Cash Portion") payable in cash,
and (iii) certain additional contingent rights (the "Contingent
Portion") as set forth in Section 4.1(f) below (the Stock Portion, the
Cash Portion and the Contingent Portion, are hereinafter referred to
as the "Aggregate Merger Consideration"). At the Effective Time,
each Share issued and outstanding immediately prior to the Effective
Time, other than the Excluded Shares, shall by virtue of the Merger and
without any action on the part of the holder thereof, be converted into
the right to receive a pro rata portion of the Aggregate Merger
Consideration (the "Merger Consideration"). All such Shares, by virtue
of the Merger and without any action on the part of the holders
thereof, shall no longer be outstanding and shall be canceled
and retired and shall cease to exist, and each holder of a certificate
representing any such Shares ("Company Certificates") shall thereafter
cease to have any rights with respect to such Shares, except the right
to receive the Merger Consideration for such Shares upon the
surrender of such certificate in accordance with Section 4.2 or, with
respect to the Excluded Shares, the right, if any, to receive payment
from the Surviving Corporation of the "fair value" of such Shares as
determined in accordance with Sections 180.1301 through 180.1331
of the WBCL.
(b) Each Share issued and held in the Company's treasury at
the Effective Time, shall, by virtue of the Merger and without any
action on the part of the holder thereof, cease to be outstanding,
shall be canceled and retired without payment of any consideration
therefor and shall cease to exist.
(c) At the Effective Time, each share of Common Stock, par
value $.01 per share, of Merger Sub issued and outstanding immediately
prior to the Effective Time shall, be and remain one share of Common
Stock of the Surviving Corporation.
(d) No fractional shares of Purchaser Common Stock shall be
issued in the Merger. In lieu thereof, the Purchaser shall issue to
any holder of Company Certificates otherwise entitled to a fractional
share, upon surrender of such certificates as described in Section 4.2,
a check for an amount of cash equal to the fraction of a share of
Purchaser Common Stock multiplied by the Share Price or the Adjusted
Closing Price, as the case may be.
(e) At the Effective Time, the Cash Portion and the amount
of any cash in lieu of any fractional shares, calculated in accordance
with subsection (d) of this Section 4.1, shall be delivered directly to
the Company for distribution to the Stockholders as provided
in Section 4.2(d) hereof.
(f) In addition to the consideration provided in Section
4.1(a), the holders of the Shares of the Company issued and outstanding
immediately prior to the Effective Time or Excluded Shares which are
held by the Dissenting Stockholders, shall, by virtue of the Merger and
without any action on the part of the holders thereof, be entitled to
certain additional shares (the "Adjustment Shares") of Purchaser
Common Stock if, and only if, the average closing price of the
Purchaser Common Stock (the "Adjusted Closing Price"), as reported on
the American Stock Exchange for the period (the "Adjustment Period")
beginning on the first trading day after the Company issues a release
on its revenues and earnings for its fiscal year 1997 and ending ninety
(90) calendar days later, is less than the Share Price. The Adjustment
Shares shall be calculated as that number of shares equal to (a)
$7,500,000 divided by the greater of (i) $10.00 per share or (ii) the
Adjusted Closing Price, minus (b) $7,500,000 divided by the Share
Price. In no event shall the number of Adjustment Shares exceed
97,826.09. The Adjustment Shares shall be distributed pro rata among
the Stockholders pursuant to the percentages set forth in Schedule 5.2
of the Disclosure Schedule. The Purchaser shall issue the Adjustment
Shares no less than thirty (30) days after the end of the Adjustment
Period, and from and effective on the date of such issuance the
Adjustment Shares shall be deemed a part of the Stock Portion. In the
event that the Purchaser declares or issues a stock dividend, and the
record day for such stock dividend occurs prior to the issuance and
distribution of the Adjustment Shares, the numbers of shares and the
prices per share used for the calculations set forth in this Section
4.1(f) shall all be adjusted, consistent with standard practices of the
Purchaser, to reflect such stock dividend.
4.2 EXCHANGE OF CERTIFICATES; DIVIDENDS.
(a) At the Effective Time, Purchaser shall deposit with American
Stock Transfer & Trust Company (the "Exchange Agent"), for the benefit of the
holders of Shares, certificates representing the Stock Portion Shares of
Purchaser Common Stock. The Exchange Agent shall make the deliveries provided
for in Section 4.1 using such Purchaser Common Stock. Promptly after the
Effective Time, the Exchange Agent shall mail to each shareholder of record of
the Company as of immediately prior to the Effective Time, a form letter of
transmittal in the form attached as Annex 4.2 to this Agreement (which shall
specify that delivery shall be effected, and risk of loss and title to the
Company Certificates shall pass, only upon proper delivery of the Company
Certificates to the Exchange Agent) and instructions for use in effecting the
surrender of the Company Certificates for conversion and exchange thereof.
Upon surrender to the Exchange Agent of a Company Certificate, in accordance
with the instructions thereto, the holder of such Company Certificate shall
be entitled to receive in exchange therefor the Merger Consideration (other
than the Cash Portion), and such Company Certificate shall forthwith be
canceled. If Company Common Stock is to be issued to a person other than the
person in whose name the Company Certificate is registered, it shall be a
condition of exchange that the Company Certificate so surrendered shall be
properly endorsed with signatures guaranteed, or otherwise in proper form
satisfactory to Purchaser for transfer and that the person requesting such
payment shall pay any transfer or other taxes required by reason of the
issuance or delivery to such person or establish to the satisfaction of the
Purchaser that such tax has been paid or is not applicable. Until surrendered
in accordance with this Section 4.2, each Company Certificate shall represent
solely the right to receive the Merger Consideration in the form and manner
provided herein.
(b) No dividends or other distributions that are otherwise payable on
such Purchaser Common Stock shall be paid to persons entitled to receive such
stock until such persons surrender their Company Certificates. Upon such
surrender, there shall be paid to such person any dividends which shall have
become payable with respect to such Company Certificates (less the amount of
taxes, if any, which may have been imposed thereon) between the Effective Time
and the time of such surrender. Notwithstanding the above, neither the
Exchange Agent nor any party hereto shall be liable for any Company Common
Stock or dividend or distribution thereon delivered to any government agency
pursuant to any abandoned property, escheat or similar law.
(c) The shares of Purchaser Common Stock representing the Stock
Portion shall be restricted securities and may not be transferred by the holders
thereof unless they are registered under the Securities Act or are exempt from
registration thereunder. The certificates representing such shares shall bear
a legend to the foregoing effect.
(d) As soon as practicable after the Effective Time, the Company
shall deliver to each Stockholder such Stockholders pro rata share of the Cash
Portion and any cash in lieu of any fractional share to which such Stockholder
is entitled pursuant to subsection (d) of Section 4.1 hereof.
4.3. DISSENTERS' RIGHTS.
If any Dissenting Stockholder shall be entitled to be paid the "fair
value" of his or her Shares as provided in the WBCL, the Company shall give
Purchaser notice thereof and Purchaser shall have the right to participate in
all negotiations and proceedings with respect to any such demands. Neither the
Company nor the Surviving Corporation shall, except with the prior written
consent of Purchaser, voluntarily make any payment with respect to, or settle
or offer to settle, any such demand for payment. If any Dissenting Stockholder
shall fail to perfect or shall have effectively withdrawn or lost the right to
dissent, the Shares held by such Dissenting Stockholder shall thereupon be
treated as though such Shares had been converted into the Merger Consideration
pursuant to Section 4.1.
4.4 TRANSFER OF SHARES AFTER THE EFFECTIVE TIME.
No transfers of Shares shall be made on the stock transfer books of the
Surviving Corporation at or after the Effective Time.
ARTICLE V
SEVERAL REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each of the Stockholders hereby severally, but not jointly, represents
to Purchaser as follows, which representations shall survive the Closing for
the time periods set forth in Section 13.5:
5.1. AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid and binding
obligation of such Stockholder, enforceable against such Stockholder in
accordance with its terms. To the extent such Stockholder is a party
to the Employment Agreement or the Consulting Agreement (collectively,
the "Sellers Closing Documents"), such Sellers Closing Document
will constitute the legal, valid and binding obligation of such
Stockholder, enforceable against such Stockholder in accordance with
its terms. Such Stockholder has the absolute and unrestricted right,
power, authority and capacity to execute and deliver this Agreement
and the Sellers Closing Documents to the extent such Stockholder is a
party thereto and to perform such Stockholders obligations under this
Agreement and the Sellers Closing Documents, to the extent such
Stockholder is a party thereto.
(b) Except as set forth in Section 5.1 of the Disclosure
Schedule attached hereto (the "Disclosure Schedule"), such Stockholder
is not and will not be required to give any notice to or obtain any
Consent from any Person in connection with the execution and
delivery of this Agreement or the consummation or performance of any of
the Contemplated Transactions.
(c) Except as set forth in Section 5.1 of the Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation or performance of any of the Contemplated Transactions
will, directly or indirectly (with or without notice or lapse
of time) contravene, conflict with, or result in a violation of, or
give any Governmental Body or other Person the right to challenge, any
of the Contemplated Transactions or to exercise any remedy or obtain
any relief under, any Legal Requirement or any Order to which such
Stockholder may be subject.
(d) Neither such Stockholder nor any Related Person of such
Stockholder has or may acquire any rights under, and neither such
Stockholder nor any Related Person of such Stockholder has or may
become subject to any obligation or liability under, any Contract
that relates to the business of, or any of the assets owned or used by,
the Company.
(e) Such Stockholder is acquiring the Purchaser Common Stock
for such Stockholders own account and not with a view to distribution
within the meaning of Section2(11) of the Securities Act. Such
Stockholder is an "accredited investor" as such term is defined in Rule
501(a) under the Securities Act. Such Stockholder has completed
an Offering Questionnaire with respect to such Stockholders
qualifications as an investor in an offering exempt under Section 4(2)
and Regulation D under the Securities Act.
5.2. TITLE TO SHARES.
Such Stockholder owns the number of Shares set forth opposite such
Stockholders name in Section 5.2 of the Disclosure Schedule free and clear of
all Encumbrances.
5.3. TAXES.
Such Stockholder has paid all Taxes that have or may have become due
pursuant to the Tax Returns filed for all years during such period in which the
Company's "S" Corporation election is in effect and will pay all Taxes due
pursuant to a Tax Return filed for the tax year ending as of the close of
business on the date of the Closing and any tax due with respect to the
consummation of the Contemplated Transactions. No Stockholder has taken, and
prior to the Closing, shall take any action that would cause the Merger to fail
to be a reorganization under Section 368(a)(1)(A) and Section 368 (a)(2)(D) of
the IRC for federal and state income tax purposes with respect to the
Stockholders. No Stockholder has taken, and prior to the Closing, shall take
any action that would cause the Company to be treated as a "C" corporation for
federal or state tax purposes.
5.4 RELATIONSHIPS WITH RELATED PERSONS.
No Stockholder or any Related Person of such Stockholder has, since
January 1, 1995: (i) had any interest in any property used in or pertaining to
the Company's business, or (ii) owned of record or beneficially an equity
interest or other financial or profit interest in a Person that has (a) had
business dealings or a material financial interest in any transaction with the
Company other than business dealings or transactions conducted in the Ordinary
Course of Business with the Company at substantially prevailing market prices
or on substantially prevailing market terms or (b) engaged in competition with
the Company with respect to any of the products or services of the Company (a
"Competing Business") in any markets presently served by the Company except for
less than one percent (1%) of the outstanding capital stock of any Competing
Business that is publicly traded on a recognized exchange or in the over-the-
counter market or (c) been a party to any Contract with or had any claim or
right against, the Company.
5.5 BROKERS OR FINDERS.
Except for obligations to Cleary, Gull, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Inc., which
will be paid by such Stockholder, such Stockholder has incurred no obligation
or liability, contingent or otherwise, which would require the Company to make
any payment for brokerage or finders fees or agents commissions or other
similar payments in connection with this Agreement.
5.6 DISCLOSURE
(a) No representation or warranty of such Stockholder in this
Agreement and no statement by such Stockholder in the Schedules hereto omits to
state a material fact necessary to make the statements herein or therein, in
light of the circumstances in which they were made, not misleading.
(b) No notice given by such Stockholder pursuant to this
Agreement will contain any untrue statement or omit to state a material fact
necessary to make the statements therein or in this Agreement, in light of the
circumstances in which they were made, not misleading.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE OFFICER AND DIRECTOR STOCKHOLDERS
The Company and the Officer and Director Stockholders jointly and
severally represent to the Purchaser, which representations shall survive the
Closing for the time periods set forth in Section 13.5, as follows.
6.1 ORGANIZATION AND EXISTENCE.
(a) The Company is a corporation duly organized and validly existing
under the laws of the State of Wisconsin, with full corporate power and
authority to conduct its business as it is now being conducted or as it is
proposed to be conducted under the Business Plan, to own or use the properties
and assets that it purports to own or use, and to perform all its obligations
under Applicable Contracts. The Company is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each state or
other jurisdiction in which either the ownership or use of the properties owned
or used by it, or the nature of the activities conducted by it, requires such
qualification.
(b) The Company has delivered to Purchaser copies of the
Organizational Documents of the Company, as currently in effect.
6.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding
obligation of the Company, enforceable against the Company in accordance with
its terms. Upon the execution and delivery of the Employment Agreement and the
Consulting Agreement, the Sellers' Closing Documents will constitute the legal,
valid, and binding obligations of the Company to the extent that it is a party
thereto, enforceable against the Company in accordance with their respective
terms. The Company has the absolute and unrestricted right, power, authority,
and capacity to execute and deliver this Agreement and the Sellers' Closing
Documents to the extent that it is a party thereto and to perform its
obligations under this Agreement and the Sellers' Closing Documents.
(b) Except as set forth in Section 6.2 of the Disclosure Schedule,
neither the execution and delivery of this Agreement nor the consummation or
performance of any of the Contemplated Transactions will, directly or
indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of
(A) any provision of the Organizational Documents of the Company, or
(B) any resolution adopted by the board of directors or the
Stockholders of the Company;
(ii) contravene, conflict with, or result in a violation of,
or give any Governmental Body or other Person the right to challenge
any of the Contemplated Transactions, or to exercise any remedy or
obtain any relief under, any Legal Requirement or any Order to which
the Company, or any of the assets owned or used by the Company,
may be subject;
(iii) contravene, conflict with, or result in a violation of
any of the terms or requirements of, or give any Governmental Body the
right to revoke, withdraw, suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by the Company or that
otherwise relates to the business of, or any of the assets owned or
used by, the Company which in any case would have a Material Adverse
Effect;
(iv) cause Purchaser or the Company to become subject to, or
to become liable for the payment of, any Tax;
(v) cause any of the assets owned by the Company to be
reassessed or revalued by any taxing authority or other Governmental
Body which would have a Material Adverse Effect;
(vi) contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to declare a
default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any Applicable
Contract which would have a Material Adverse Effect; or
(vii) result in the imposition or creation of any Encumbrance
upon or with respect to any of the assets owned or used by the Company
which would have a Material Adverse Effect.
Except as set forth in Section 6.2 of the Disclosure Schedule, the
Company is not nor will it be required to give any notice to or obtain any
Consent from any Person in connection with the execution and delivery of this
Agreement or the consummation or performance of any of the Contemplated
Transactions.
6.3 CAPITALIZATION.
The authorized equity securities of the Company consist of 2,000,000
shares of common stock, par value $.01 per share, of which 100,004 shares are
issued and outstanding and constitute the Shares. Of such issued and
outstanding Shares 7,662 shares are held by the Company as treasury shares and
the remaining 92,342 shares are held by the Stockholders as set forth in
Section 5.2 of the Disclosure Schedule. All of the outstanding equity
securities of the Company have been duly authorized and validly issued and are
fully paid and nonassessable, except as provided in Section180.0622 of the
WBCL and the cases decided thereunder. There are no Contracts relating
to the issuance, sale, or transfer of any equity securities or other securities
of the Company, other than this Agreement. None of the outstanding equity
securities or other securities of the Company was issued in violation of the
Securities Act or any other Legal Requirement. The Company does not own, nor
has it any Contract to acquire, any equity securities or other securities of
any Person or any direct or indirect equity or ownership interest in any other
business.
6.4 FINANCIAL STATEMENTS.
The Company has delivered to Purchaser: (a) audited balance sheets of
the Company as at December 31 in each of the years 1994 and 1995, and the
related audited consolidated statements of income, changes in stockholders'
equity, and cash flow for each of the fiscal years then ended, together with
the report thereon of ▇▇▇▇▇▇▇▇ & Company, independent auditors, (b) an audited
balance sheet of the Company as at December 31, 1996 (including the notes
thereto, the "Balance Sheet"), and the related statements of income, changes in
stockholders equity and cash flow for the fiscal year then ended, together with
the report thereon of ▇▇▇▇▇▇▇▇ & Company, independent auditors, and (c) an
unaudited balance sheet of the Company as at February 28, 1997 (including the
notes thereto, the "Interim Balance Sheet") and the related statements of
income, and cash flow for the month then ended and the related unaudited notes
thereto. Such financial statements and notes fairly present the financial
condition and the results of operations, changes in stockholders' equity,
and cash flow of the Company as at the respective dates of and for the periods
referred to in such financial statements, all in accordance with GAAP; subject,
in the case of the Interim Balance Sheet to appropriate-year end adjustments
and disclosures customarily placed in footnotes. The financial statements
referred to in this Section 6.4 reflect the consistent application of such
accounting principles throughout the periods involved. No financial statements
of any Person other than the Company are required by GAAP to be included in the
financial statements of the Company. The financial statements referred to in
this Section 6.4 are attached as Annex 6.4 to the Disclosure Schedule.
6.5 BOOKS AND RECORDS.
The books of account, minute books, stock record books, and other
records of the Company, all of which have been made available to Purchaser, are
complete and correct and have been maintained in accordance with sound business
practices and the requirements of Section 13(b)(2) of the Securities Exchange
Act of 1934, as amended, including the maintenance of an adequate system of
internal controls. Except as set forth in Section 6.5 of the Disclosure
Schedule, the minute books of the Company contain accurate and complete records
of all meetings held of, and corporate action taken by, the Stockholders, the
Boards of Directors, and committees of the Boards of Directors of the Company.
At the Closing, all of those books and records will be in the possession
of the Company.
6.6 TITLE TO PROPERTIES; ENCUMBRANCES
The Company does not own, nor has it ever owned, any real property or
other interests therein. The Company owns all its properties and assets
(whether tangible or intangible, except for Intellectual Property Assets which
are covered in Section 6.22 hereof) that it purports to own located in the
facilities owned or operated by the Company or reflected as owned in the books
and records of the Company, including all of the properties and assets
reflected in the Balance Sheet and the Interim Balance Sheet (except for
personal property sold since the date of the Balance Sheet and the Interim
Balance Sheet in the Ordinary Course of Business), and all of the properties
and assets purchased or otherwise acquired by the Company since the date of the
Balance Sheet and the Interim Balance Sheet (except for personal property
acquired and sold since the date of the Balance Sheet and the Interim Balance
Sheet in the Ordinary Course of Business and consistent with past practice) .
All material properties and assets reflected in the Balance Sheet and the
Interim Balance Sheet are free and clear of all Encumbrances except, with
respect to all such properties and assets, (a) mortgages or security interests
shown on the Balance Sheet or the Interim Balance Sheet as securing specified
liabilities or obligations, with respect to which no default (or event that,
with notice or lapse of time or both, would constitute a default) exists,
(b) mortgages or security interests incurred in connection with the purchase of
property or assets after the date of the Interim Balance Sheet (such mortgages
and security interests being limited to the property or assets so acquired),
with respect to which no default (or event that, with notice or lapse of time
or both, would constitute a default) exists and (c) liens for current taxes not
yet due.
6.7 CONDITION AND SUFFICIENCY OF ASSETS.
The buildings, plants, structures, and equipment of the Company are
structurally sound, are in good operating condition and repair, and are
adequate for the uses to which they are being put, and none of such buildings,
plants, structures, or equipment is in need of maintenance or repairs except
for ordinary, routine maintenance and repairs that are not material in nature
or cost. The building, plants, structures, and equipment of the Company are
sufficient for the continued conduct of the Company's business after the
Closing in substantially the same manner as conducted prior to the Closing.
6.8 ACCOUNTS RECEIVABLE.
All accounts receivable of the Company that are reflected on the
Balance Sheet or the Interim Balance Sheet or on the accounting records of the
Company as of the Closing Date (collectively, the "Accounts Receivable")
represent or will represent valid obligations arising from sales actually made
or services actually performed in the Ordinary Course of Business. There is no
contest, claim, or right of set-off, other than any contest, claim or right
which would not have a Material Adverse Effect and other than returns in the
Ordinary Course of Business, under any Contract with any obligor of an Accounts
Receivable relating to the amount or validity of such Accounts Receivable in
excess of the aggregate reserve for uncollectible Accounts Receivable on
the Balance Sheet, the Interim Balance Sheet or the accounting records of the
Company. Section6.8 of the Disclosure Schedule contains a complete and
accurate list of all Accounts Receivable as of a date which is within two (2)
days of the Closing, which list sets forth the aging of such Accounts
Receivable.
6.9 INVENTORY.
Except for items of inventory for which the loss would not have a
Material Adverse Effect, all inventory of the Company, including consigned
inventory, whether or not reflected in the Balance Sheet or the Interim Balance
Sheet, consists of a quality and quantity usable and salable in the Ordinary
Course of Business, except for obsolete items and items of below-standard
quality, all of which have been written off or written down to net realizable
value in the Balance Sheet or the Interim Balance Sheet or on the accounting
records of the Company as of the Closing Date, as the case may be. Except for
items of inventory for which the loss would not have a Material Adverse
Effect, the quantities of each item of inventory (whether raw materials, work-
in-process, or finished goods) are not excessive, but are reasonable in the
present circumstances of the Company. Section6.9 of the Disclosure Schedule
sets forth the location of all items of the Company's inventory, including
consigned inventory. The Company's procedures for tracking and controlling
consigned inventory are contained in Section 6.9 of the Disclosure Schedule,
and such procedures, in the reasonable judgment of the Company, are adequate
for such purpose and have been followed by the Company consistent with past
practice.
6.10 NO UNDISCLOSED LIABILITIES.
Except as set forth in Section 6.10 of the Disclosure Schedule hereto,
the Company has no liabilities or obligations of any nature (whether known or
unknown and whether absolute, accrued, contingent, or otherwise) which would
have a Material Adverse Effect except for liabilities or obligations reflected
or reserved against in the Balance Sheet or Interim Balance Sheet and properly
disclosed in the notes thereto and current liabilities incurred in the Ordinary
Course of Business since the respective dates thereof.
6.11 TAXES.
(a) The Company has filed or caused to be filed (on a timely basis
since January 1, 1992) all Tax Returns that are or were required to be filed by
it, pursuant to applicable Legal Requirements. Sellers have delivered to
Purchaser copies of, and Section 6.11 of the Disclosure Schedule contains, a
complete and accurate list of, all such Tax Returns filed since January 1, 1992.
The Company has paid, or made provision for the payment of, all Taxes that have
or may have become due pursuant to those Tax Returns or otherwise, or pursuant
to any assessment received by Sellers or the Company, except such Taxes, if any,
as are listed in Section 6.11 of the Disclosure Schedule and are being contested
in good faith and as to which adequate reserves (determined in accordance with
GAAP) have been provided in the Balance Sheet and Interim Balance Sheet.
(b) Section 6.11 of the Disclosure Schedule contains a complete and
accurate list of all audits of all such Tax Returns filed since January 1,
1992, including a reasonably detailed description of the nature and outcome of
each audit. All deficiencies proposed as a result of such audits have been
paid, reserved against, settled, or, as described in Section 6.11 of the
Disclosure Schedule are being contested in good faith by appropriate
proceedings. Section 6.11 of the Disclosure Schedule describes all audit
adjustments to the United States federal income Tax Returns and any state Tax
Returns filed by the Company for all taxable years since January 1, 1992, and
the resulting deficiencies proposed by the IRS and any state tax commission.
Except as described in Section 6.11 of the Disclosure Schedule, the Company has
not given or been requested to give waivers or extensions (or is or would be
subject to a waiver or extension given by any other Person) of any statute of
limitations relating to the payment of Taxes of the Company or for which the
Company may be liable for any Tax Returns filed since January 1, 1992.
(c) The charges, accruals, and reserves with respect to Taxes accrued
to the date thereof on the Balance Sheet and Interim Balance Sheet of the
Company are adequate (determined in accordance with GAAP) and are at least equal
to the Company's liability for Taxes. There exists no proposed tax assessment
against the Company except as disclosed in the Balance Sheet or in Section6.11
of the Disclosure Schedule. No consent to the application of Section341(f)(2) of
the IRC has been filed with respect to any property or assets held, acquired, or
to be acquired by the Company. All Taxes that the Company is or was required by
Legal Requirements to withhold or collect have been duly withheld or collected
and, to the extent required, have been paid to the proper Governmental Body or
other Person.
(d) All Tax Returns filed by the Company since January 1, 1992 are
true, correct, and complete in all material respects. There is no tax sharing
agreement that will require any payment by the Company after the date of this
Agreement.
As of the close of business on the date of Closing, the S election of
the Company shall terminate and the portion of the taxable year of the Company
ending on such date shall be treated as an S short year (an "S Short Year")
pursuant to Treas. Regs. 1.1362-3(a) to which income or loss
shall be allocated pursuant to Section 1362(e)(3) of the Code.
(e) The Company has not and, prior to the Closing, will not take any
action that would cause the Merger to fail to be a reorganization under Section
368(a)(1)(A) and Section 368 (a)(2)(D) of the IRC for federal and state income
tax purposes with respect to the Stockholders.
(f) The Sellers have not and, prior to the Closing, will not take any
action that would cause the Company to be treated as a "C" corporation for
federal or state tax purposes.
6.12 NO MATERIAL ADVERSE CHANGE.
Since the date of the Balance Sheet, there has not been any change in
the business, operations, properties, prospects, assets, or condition of the
Company which would have a Material Adverse Effect, and no event has occurred
or circumstance exists that may result in such a change.
6.13 EMPLOYEE BENEFITS.
Section 6.13 of the Disclosure Schedule sets forth all of the Company's
bonus, deferred or incentive compensation, profit sharing, retirement, vacation,
sick leave, hospitalization, insurance, disability, stock options or severance
plans, programs, arrangements and policies and all "employee pension benefit
plans" (as defined in Section 3(2) of ERISA), and "employee welfare benefit
plans" (as defined in Section 3(1) of ERISA) (collectively, the "Plans")
sponsored or contributed to by the Company or by any trade or business, whether
or not incorporated that together with the Company would be deemed a "single
employer" within the meaning of Section 4001 of ERISA (an "ERISA Affiliate"),
for the benefit of any employee or former employee of the Company or any ERISA
Affiliate. Each such Plan is in compliance in all material respects, and has
been administered in all material respects, in accordance with the applicable
provisions of ERISA and the IRC and all other applicable Legal Requirements.
All contributions required to be made with respect to all Plans on or prior to
the Closing have been timely made. None of the Company, any ERISA Affiliate or
any Plan, trust or trustee or administrator thereof has (i) engaged in any
transaction prohibited by ERISA or the IRC or which would subject the Company to
a tax or civil penalty thereunder; (ii) breached any fiduciary duty owed by it
with respect to the Plans described above; or (iii) failed to file or distribute
in a timely and proper manner all reports and information required to be filed
or distributed in accordance with ERISA which in the case of any matter covered
in clauses (i), (ii) or (iii), above would have a Material Adverse Effect.
Neither the Company nor any ERISA Affiliate maintains any Plan subject to Title
IV of ERISA or Section 412 of the IRC. Neither the Company nor any ERISA
Affiliate is a participating or contributing employer in any "multiemployer
plan" (as defined in Section 3(37)(A) of ERISA) with respect to employees of the
Company nor has the Company incurred any withdrawal liability with respect to
any such multiemployer plan or any liability in connection with the termination
or reorganization of any multiemployer plan. Neither the Company nor any ERISA
Affiliate maintains a voluntary employees beneficiary association under Section
501(c)(9) of the IRC nor does either the Company or any ERISA Affiliate have
any obligation to provide post-retirement medical or other benefits to
employees, former employees or other survivors, dependents or beneficiaries,
except as may be required by the Consolidated Omnibus Budget Reconciliation Act
of 1985 or Wisconsin's Health Insurance Continuation Law, Wis. Stats.
632.897. Each Plan intended to be "qualified" within the meaning of
Section 401(a) of the IRC is so qualified and the trusts maintained thereunder
are exempt from taxation under Section 501(a) of the IRC. There are no
pending, or to the Knowledge of the Company, Threatened claims by or on behalf
of any Plan, by any employee or beneficiary covered under any such Plan,
or otherwise involving any such Plan, other than routine claims for benefits.
6.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS
(a) Except as set forth in Section 6.14 of the Disclosure Schedule
and except for environmental matters covered by Section 6.19 and labor relations
matters covered by Section 6.21 and any matter which would not have a Material
Adverse Effect:
(i) the Company is, and at all times since January 1, 1992
has been, in compliance with each Legal Requirement that is or was
applicable to it or to the conduct or operation of its business or the
ownership or use of any of its assets, including, without limitation,
with respect to design, labelling, testing and inspection of the
Company's products, those Legal Requirements of the Food and Drug
Administration;
(ii) to the Knowledge of the Company, no event has occurred
or circumstance exists that (with or without notice or lapse of time)
(A) may constitute or result in a violation by the Company of, or a
failure on the part of the Company to comply with, any Legal
Requirement, or (B) may give rise to any obligation on the part of the
Company to undertake, or to bear all or any portion of the cost of, any
remedial action of any nature; and
(iii) the Company has not received, at any time since January
1, 1992, any formal notice or other formal communication from any
Governmental Body or any other Person regarding (A) any actual,
alleged, possible, or potential violation of, or failure to comply
with, any Legal Requirement; (B) any actual, alleged, possible, or
potential obligation on the part of the Company to undertake, or to
bear all or any portion of the cost of, any remedial action of any
nature or (C) any recall or seizure with respect to any of the
Company's products.
(iv) the Company has maintained sufficient reserves to cover
warranty claims relating to any of its products.
(b) Section 6.14 of the Disclosure Schedule contains a complete and
accurate list of each Governmental Authorization that is held by the Company or
that otherwise relates to the business of, or to any of the assets owned or
used by, the Company and which is material to the operations of the Company
(the "Listed Governmental Authorizations") . Each Listed Governmental
Authorization is valid and in full force and effect. Except as set forth in
Section 6.14 of the Disclosure Schedule and except for matters which would not
have a Material Adverse Effect:
(i) the Company is, and at all times since January 1, 1992
has been, in full compliance with all of the terms and requirements of
each Listed Governmental Authorization;
(ii) to the Knowledge of the Company, no event has occurred
or circumstance exists that may (with or without notice or lapse of
time) (A) constitute or result directly or indirectly in a violation of
or a failure to comply with any term or requirement of any Listed
Governmental Authorization, or (B) result directly or indirectly in the
revocation, withdrawal, suspension, cancellation, or termination of, or
any modification to, any Listed Governmental Authorization;
(iii) the Company has not received, at any time since January
1, 1992, any formal notice or other formal communication from any
Governmental Body or any other Person regarding (A) any actual,
alleged, possible, or potential violation of or failure to comply with
any term or requirement of any Listed Governmental Authorization, or
(B) any actual, proposed, possible, or potential revocation,
withdrawal, suspension, cancellation, termination of, or modification
to any Listed Governmental Authorization; and
(iv) all applications required to have been filed for the
renewal of any Listed Governmental Authorization have been duly filed
on a timely basis with the appropriate Governmental Bodies, and all
other filings required to have been made with respect to such
Listed Governmental Authorizations have been duly made on a timely
basis with the appropriate Governmental Bodies.
The Listed Governmental Authorizations collectively constitute all of
the Governmental Authorizations necessary to permit the Company to lawfully
conduct and operate its business in the manner it currently conducts and
operates such business and to permit the Company to own and use its assets in
the manner in which it currently owns and uses such assets and to sell its
products.
6.15 LEGAL PROCEEDINGS; ORDERS.
(a) There is no pending Proceeding:
(i) that has been commenced by or against the Company or
that otherwise relates to or may affect the business of, or any of the
assets owned or used by, the Company; or
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with,
any of the Contemplated Transactions.
No such Proceeding has been Threatened, and to the Knowledge of the
Company no event has occurred or circumstance exists that may give rise to or
serve as a basis for the commencement of any such Proceeding.
(b) There is no Order to which the Company, or any of the assets
owned or used by the Company, is subject; and no officer, director, agent,
stockholder, or employee of the Company is subject to any Order that prohibits
such officer, director, agent, stockholder, or employee from engaging in or
continuing any conduct, activity, or practice relating to the business of the
Company.
(c) The Company is, and at all times since January 1, 1992 has been,
in full compliance with all of the terms and requirements of each Order to which
it, or any of the assets owned or used by it, is or has been subject. To the
Knowledge of the Company, no event has occurred or circumstance exists that may
constitute or result in (with or without notice or lapse of time) a violation
of or failure to comply with any term or requirement of any Order to which the
Company, or any of the assets owned or used by the Company, is subject. The
Company has not received, at any time since January 1, 1992, any formal notice
or other communication from any Governmental Body or any other Person
regarding any actual, alleged, possible, or potential violation of, or failure
to comply with, any term or requirement of any Order to which the Company, or
any of the assets owned or used by the Company, is or has been subject.
6.16 ABSENCE OF CERTAIN CHANGES AND EVENTS.
Except as set forth in Section 6.16 of the Disclosure Schedule, since
the date of the Interim Balance Sheet, or, with respect to the statement in
clause (a), since the date of the Balance Sheet, the Company has conducted its
businesses only in the Ordinary Course of Business and there has not been any:
(a) change in the Company's authorized or issued capital
stock; grant of any stock option or right to purchase shares of capital
stock of the Company; issuance of any security convertible into such
capital stock; grant of any registration rights; purchase, redemption,
retirement, or other acquisition by the Company of any shares of any
such capital stock; or declaration or payment of any dividend or other
distribution or payment in respect of shares of capital stock except
that the Company may distribute to its Stockholders as dividends
(i) all of its cash balances and short-term investments to the extent
of the Company's accumulated adjustments account within the meaning of
Section 368(e) of the IRC as of December 31, 1996, and (ii) an
additional amount sufficient to satisfy the federal and State
of Wisconsin income tax obligations of a hypothetical Stockholder of
the Company with respect to the period from January 1, 1997 through the
Effective Time, to the extent of the Company's accumulated adjustments
account within the meaning of Section 368(e) of the IRC, assuming such
Stockholder was subject to the highest federal and state marginal tax
rate for such period, that such distribution constituted the sole
income of such Stockholder and that the Stockholder was not entitled to
any tax deductions or offsets of any type less (iii) amounts adequate
to pay the amounts recorded as accrued dividends and contributions
on the Company's Balance Sheet;
(b) amendment to the Organizational Documents of the
Company;
(c) payment or increase by the Company of any bonuses,
salaries, or other compensation to any stockholder, director, officer,
or (except in the Ordinary Course of Business) employee or entry into
any employment, severance, or similar Contract with any director,
officer, or employee;
(d) adoption of, or increase in the payments to or benefits
under, any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement, or other employee benefit plan for or
with any employees of the Company;
(e) damage to or destruction or loss of any asset or
property of the Company, whether or not covered by insurance,
materially and adversely affecting the properties, assets, business,
financial condition, or prospects of the Company;
(f) entry into, termination of, or receipt of notice of
termination of (i) any supply, license, distributorship, dealer, sales
representative, joint venture, credit, or similar agreement, or (ii)
any Contract or transaction involving a total remaining commitment by
or to the Company of at least $15,000;
(g) sale (other than sales of inventory in the Ordinary
Course of Business), lease, or other disposition of any asset or
property of the Company or mortgage, pledge, or imposition of any lien
or other encumbrance on any material asset or property of the
Company, including the sale, lease, or other disposition of any of the
Intellectual Property Assets;
(h) cancellation or waiver of any claims or rights with a
value to the Company in excess of $10,000;
(i) material change in the accounting methods used by the
Company;
(j) material adverse change in the customer relationship
with Picker, Elscint and GE Yokogawa; or
(k) agreement, whether oral or written, by the Company to do
or cause any of the foregoing.
6.17 CONTRACTS; NO DEFAULTS.
(a) Section 6.17 of the Disclosure Schedule contains a complete and
accurate list, and Annex 6.17 to this Agreement contains true and complete
copies, of:
(i) each Applicable Contract that involves performance of
services or delivery of goods, materials or products of an amount or
value in excess of $25,000;
(ii) each Applicable Contract that involves performance of
services or delivery of goods or materials to the Company of an amount
or value in excess of $25,000;
(iii) each Applicable Contract that was not entered into in
the Ordinary Course of Business and that involves expenditures or
receipts in excess of $25,000;
(iv) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Applicable
Contract affecting the ownership of, leasing of, title to, use of, or
any leasehold or other interest in, any real or personal property
(except personal property leases and installment and conditional sales
agreements having a value per item or aggregate payments of less than
$15,000 and with terms of less than one year) ;
(v) each licensing agreement or other Applicable Contract
with respect to patents, trademarks, copyrights, or other intellectual
property, including agreements with current or former employees,
consultants, or contractors regarding the appropriation or the non-
disclosure of any of the Intellectual Property Assets;
(vi) each joint venture, partnership, and other Applicable
Contract (however named) involving a sharing of profits, losses, costs,
or liabilities by the Company with any other Person;
(vii) each Applicable Contract containing covenants that in
any way purport to restrict the business activity of the Company or
limit the freedom of the Company to engage in any line of business or
to compete with any Person;
(viii) each Applicable Contract providing for payments to or by
any Person based on sales, purchases, or profits, other than direct
payments for goods;
(ix) each power of attorney that is currently effective and
outstanding;
(x) each Applicable Contract entered into other than in the
Ordinary Course of Business that contains or provides for an express
undertaking by the Company to be responsible for consequential damages;
(xi) each Applicable Contract for capital expenditures in
excess of $25,000;
(xii) each written warranty, guaranty, and or other similar
undertaking with respect to contractual performance extended by the
Company;
(xiii) each Applicable Contract relating to the distribution of
the Company's goods or products; and
(xiv) each amendment, supplement, and modification (whether
oral or written) in respect of any of the foregoing.
(b) Except as set forth in Section 6.17 of the Disclosure Schedule:
(i) No Related Person of the Company has or may acquire any
rights under, and no Related Person of the Company has or may become
subject to any obligation or liability under, any Contract that relates
to the business of, or any of the assets owned or used by, the
Company; and
(ii) No officer, director, agent, employee, consultant, or
contractor of the Company is bound by any Contract that purports to
limit the ability of such officer, director, agent, employee,
consultant, or contractor to (A) engage in or continue any conduct,
activity, or practice relating to the business of the Company, or (B)
assign to the Company or to any other Person any rights to any
invention, improvement, or discovery.
(c) Except as set forth in Section 6.17 of the Disclosure Schedule,
each Contract identified or required to be identified in Section 6.17 of the
Disclosure Schedule (the "Listed Contracts") is in full force and effect and is
valid and enforceable in accordance with its terms.
(d) Except as set forth in Section 6.17 of the Disclosure Schedule:
(i) the Company is, and at all times since January 1, 1992
has been, in full compliance with all applicable terms and requirements
of each Listed Contract;
(ii) each other Person that has or had any obligation or
liability under any Listed Contract is and at all times since January
1, 1992 has been, in full compliance with all applicable terms and
requirements of such Listed Contract;
(iii) to the Knowledge of the Company, no event has occurred
or circumstance exists that (with or without notice or lapse of time)
may contravene, conflict with, or result in a violation or breach of,
or give the Company or other Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance
of, or to cancel, terminate, or modify, any Applicable Contract; and
(iv) the Company has not given to or received from any other
Person, at any time since January 1, 1992, any formal notice or other
formal communication regarding any actual, alleged, possible, or
potential violation or breach of, or default under, any Listed Contract.
(e) There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or payable to the
Company under current or completed Listed Contracts with any Person and no such
Person has made written demand for such renegotiation.
(f) The Contracts relating to the sale, design, manufacture, or
provision of products or services by the Company have been entered into in the
Ordinary Course of Business and have been entered into without the commission
of any act alone or in concert with any other Person, or any consideration
having been paid or promised, that is or would be in violation of any Legal
Requirement.
6.18 INSURANCE.
(a) The Company has delivered to Purchaser:
(i) true and complete copies of all policies of insurance to
which the Company is a party or under which the Company, or any
director of the Company, is or has been covered at any time within the
five years preceding the date of this Agreement;
(ii) true and complete copies of all pending applications for
policies of insurance; and
(iii) any statement by the auditor of the Company's financial
statements with regard to the adequacy of such entity's coverage or of
the reserves for claims.
(b) Section 6.18 of the Disclosure Schedule describes:
(i) any self-insurance arrangement by or affecting the
Company, including any reserves established thereunder;
(ii) any contract or arrangement, other than a policy of
insurance, for the transfer or sharing of any risk by the Company; and
(iii) all obligations of the Company to third parties with
respect to insurance (including such obligations under leases and
service agreements) and identifies the policy under which such coverage
is provided.
(c) Section 6.18 of the Disclosure Schedule sets forth, by year, for
the current policy year and each of the four preceding policy years:
(i) a loss run from each of the Company's insurers for each
such year; and
(ii) a statement describing the loss experience for all
claims that were self-insured, including the number and aggregate cost
of such claims.
(d) Except as set forth in Section 6.18 of the Disclosure Schedule:
(i) All policies to which the Company is a party or that
provide coverage to the Company, or any director or officer of the
Company:
(A) are valid, outstanding, and enforceable;
(B) are issued by an insurer that, in the reasonable
judgment of the Company, is financially sound and reputable;
(C) taken together, in the reasonable judgment of the
Company, provide adequate insurance coverage for the assets and the
operations of the Company for all risks to which the Company is
normally exposed;
(D) in the reasonable judgment of the Company, are
sufficient for compliance with all Legal Requirements and Contracts to
which the Company is a party or by which any of them is bound;
(E) will continue in full force and effect following
the consummation of the Contemplated Transactions; and
(F) do not provide for any retrospective premium
adjustment or other experience-based liability on the part of the
Company.
(ii) The Company has not received (A) any refusal of coverage
or any notice that a defense will be afforded with reservation of
rights, or (B) any notice of cancellation or any other indication that
any insurance policy is no longer in full force or effect or will not
be renewed or that the issuer of any policy is not willing or able to
perform its obligations thereunder.
(iii) The Company has paid all premiums due, and have
otherwise performed all of its obligations, under each policy to which
the Company is a party or that provides coverage to the Company or any
director thereof.
(iv) The Company has given notice to the insurer of all
claims that may be insured thereby.
6.19 ENVIRONMENTAL MATTERS.
Except as set forth in Section 6.19 of the Disclosure Schedule and
except for any matter which would not have a Material Adverse Effect:
(a) The Company is, and at all times has been, in full
compliance with, and has not been and is not in violation of or liable
under, any Environmental Law. The Company has not received any actual
or Threatened order, notice, or other communication from any
Governmental Body or private citizen acting in the public interest, of
any actual or potential violation or failure to comply with any
Environmental Law, or of any actual or Threatened obligation to
undertake or bear the cost of any Environmental, Health, and Safety
Liabilities with respect to any of the Facilities or with respect to
any property or Facility at or to which Hazardous Materials were
generated, manufactured, refined, transferred, imported, used, or
processed by the Company or from which Hazardous Materials have been
transported, treated, stored, handled, transferred, disposed, recycled,
or received by the Company.
(b) To the Knowledge of the Company, there are no pending or
Threatened claims, Encumbrances, or other restrictions of any nature,
resulting from any Environmental, Health, and Safety Liabilities or
arising under or pursuant to any Environmental Law, with respect to or
affecting any of the Facilities.
(c) The Company has not received from any Governmental Body
any citation, directive, inquiry, notice, Order, summons, warning, or
other communication that relates to Hazardous Materials, or any
alleged, actual, or potential violation or failure to comply with
any Environmental Law, or of any alleged, actual, or potential
obligation to undertake or bear the cost of any Environmental, Health,
and Safety Liabilities with respect to any of the Facilities or with
respect to any property or facility to or from which Hazardous
Materials generated, manufactured, refined, transferred, imported,
used, or processed by the Company, have been transported, treated,
stored, handled, transferred, disposed, recycled, or received.
(d) The Company has no Environmental, Health, and Safety
Liabilities with respect to the Facilities or, to the Knowledge of the
Company, at any property geologically or hydrologically adjoining the
Facilities.
(e) There are no Hazardous Materials present on or in the
Environment at the Facilities or, to the Knowledge of the Company, at
any geologically or hydrologically adjoining property, including any
Hazardous Materials contained in barrels, above or underground storage
tanks, landfills, land deposits, dumps, equipment (whether moveable
or fixed) or other containers, either temporary or permanent, and
deposited or located in land, water, sumps, or any other part of the
Facilities or such adjoining property, or incorporated into any
structure therein or thereon. The Company has no Knowledge of, nor
has it permitted or conducted any Hazardous Activity with respect to
the Facilities except in full compliance with all applicable
Environmental Laws.
(f) There has been no Release or, to the Knowledge of the
Company, Threat of Release, of any Hazardous Materials at or from the
Facilities or at any other locations where any Hazardous Materials were
generated, manufactured, refined, transferred, produced, imported,
used, or processed from or by the Facilities, or to the Knowledge of
the Company, any geologically or hydrologically adjoining property,
whether by the Company, or any other Person.
(g) The Company has delivered to Purchaser true and complete
copies and results of any reports, studies, analyses, tests, or
monitoring possessed or initiated by Sellers pertaining to Hazardous
Materials or Hazardous Activities in, on, or under the Facilities, or
concerning compliance by the Company with Environmental Laws.
6.20 EMPLOYEES.
(a) Section 6.20 of the Disclosure Schedule contains a complete and
accurate list of the following information for each employee of the Company:
name; job title; current compensation paid or payable at January 1, 1994, 1995,
1996 and 1997 and at the Closing; vacation accrued; and service credited for
purposes of vesting and eligibility to participate under any pension,
retirement, profit-sharing, thrift-savings, deferred compensation, stock bonus,
stock option, cash bonus, employee stock ownership (including investment credit
or payroll stock ownership), severance pay, insurance, medical, welfare, or
vacation plan, other Employee Pension Benefit Plan or Employee Welfare Benefit
Plan, or any other employee benefit plan or any director plan. No employee is
on leave of absence or layoff status.
(b) No employee or director of the Company is a party to, or is
otherwise bound by, any agreement or arrangement, including any
confidentiality, noncompetition, or proprietary rights agreement, between such
employee or director and any other Person ("Proprietary Rights Agreement") that
in any way adversely affects or will affect (i) the performance of his duties
as an employee or director of the Company, or (ii) the ability of the Company
to conduct its business, including any Proprietary Rights Agreement with the
Company by any such employee or director. To the Knowledge of the Company, no
officer, or other key employee of the Company intends to terminate his or her
employment with the Company.
(c) Section 6.20 of the Disclosure Schedule also contains a complete
and accurate list of the following information for each retired employee or
director of the Company, or their dependents, receiving benefits or scheduled
to receive benefits in the future: name, pension benefit, pension option
election, retiree medical insurance coverage, retiree life insurance coverage,
and other benefits.
6.21 LABOR RELATIONS; COMPLIANCE.
The Company has not been nor is it a party to any collective bargaining
or other labor Contract. There has not been, there is not presently pending or
existing, and there is not Threatened, (a) any strike, slowdown, picketing,
work stoppage, or employee grievance process, (b) any Proceeding against or
affecting the Company relating to the alleged violation of any Legal
Requirement pertaining to labor relations or employment matters, including any
charge or complaint filed by an employee or union with the National Labor
Relations Board, the Equal Employment Opportunity Commission, or any comparable
Governmental Body, organizational activity, or other labor or employment
dispute against or affecting the Company or its premises, or (c) any
application for certification of a collective bargaining agent affecting the
Company. To the Knowledge of the Company, no event has occurred or
circumstance exists that could provide the basis for any work stoppage or other
labor dispute. There is no lockout of any employees by the Company, and no such
action is contemplated by the Company. The Company has complied in all respects
with all Legal Requirements relating to employment, equal employment
opportunity, nondiscrimination, immigration, wages, hours, benefits, collective
bargaining, the payment of social security and similar taxes, occupational
safety and health, and plant closing. The Company is not liable for the
payment of any compensation, damages, taxes, fines, penalties, or other
amounts, however designated, for failure to comply with any of the foregoing
Legal Requirements.
6.22 INTELLECTUAL PROPERTY.
(a) Intellectual Property Assets--The term "Intellectual Property
Assets" includes all domestic and international rights to:
(i) the Company's name, all fictional business names,
trading names, registered and unregistered trademarks, service marks,
and applications of the Company (collectively, "Marks") ;
(ii) all of the Company's patents, patent applications, and
inventions and discoveries that may be patentable (collectively,
"Patents") ;
(iii) all of the Company's copyrights in both published works
and unpublished works (collectively, "Copyrights") ;
(iv) all of the Company's rights in mask works (collectively,
"Rights in Mask Works") ; and
(v) all of the Company's know-how, trade secrets,
confidential information, customer lists, software, technical
information, data, process technology, plans, drawings, and blue prints
(collectively, "Trade Secrets") ;
owned, used, or licensed by the Company as licensee or licensor.
(b) Agreements--Section 6.22 of the Disclosure Schedule contains a
complete and accurate list of all Contracts, including all licenses, relating
to the Intellectual Property Assets to which the Company is a party or by which
the Company is bound, except for any license implied by the sale of a product
and perpetual, paid-up licenses for commonly available software programs with a
value of less than $500 under which the Company is the licensee. There are no
outstanding and, to Company's Knowledge, no Threatened disputes or
disagreements with respect to any such agreement.
(c) Know-How Necessary for the Business
(i) The Intellectual Property Assets are all those necessary
for the operation of the Company's business as it is currently
conducted or as reflected in the Business Plan given to Purchaser. The
Company is the owner of all right, title, and interest in and to each
of the Intellectual Property Assets, free and clear of all liens,
security interests, charges, encumbrances, equities, and other adverse
claims, and has the right to use without payment to a third party all
of the Intellectual Property Assets.
(ii) Except as set forth in Section 6.22 of the Disclosure
Schedule, all former and current employees of the Company have executed
written Contracts with the Company that assign to it all rights to any
inventions, improvements, discoveries, or information relating
to the business of the Company. No employee of the Company has entered
into any Contract that restricts or limits in any way the scope or type
of work in which the employee may be engaged or requires the employee
to transfer, assign, or disclose information concerning his work to
anyone other than the Company. Copies of the forms of Agreement
executed by employees of the Company relating to the Company's
Intellectual Property Assets are included in Annex 6.22 to the
Disclosure Schedule.
(d) Patents
(i) Section 6.22 of the Disclosure Schedule contains a
complete and accurate list and summary description of all Patents in
all jurisdictions, both domestic and foreign.
(ii) All of the issued Patents are currently in compliance
with formal legal requirements (including payment of filing,
examination, and maintenance fees and proofs of working or use) in the
applicable jurisdictions, are valid and enforceable, and are not
subject to any maintenance fees or taxes or actions falling due within
ninety days after the Closing Date.
(iii) No Patent has been or is now involved in any
interference, reissue, reexamination, or opposition proceeding. To the
Knowledge of the Company, there is no potentially interfering patent or
patent application of any third party which would interfere with the
Patents.
(iv) No Patent is infringed or, to the Company's Knowledge,
has been challenged or Threatened in any way. None of the products
manufactured and sold, nor any process or know-how used, by the Company
infringes or is alleged to infringe any patent or to the Companys
Knowledge other proprietary right of any other Person.
(v) All products made, used, or sold by the Company under
the Patents have not been marked with the proper patent notice.
(e) Marks
The Company has no Marks which have been registered under any
jurisdiction and does not have any Marks which are material to its business.
(f) Copyrights
The Company has no Copyrights which have been registered under any
jurisdiction and does not have any Copyrights which are material to its
business.
(g) Trade Secrets
(i) With respect to each Trade Secret, the documentation
relating to such Trade Secret is current, accurate, and sufficient in
detail and content to identify and explain it and to allow its full and
proper use without reliance on the knowledge or memory of any
individual.
(ii) The Company has taken all reasonable precautions to
protect the secrecy, confidentiality, and value of its Trade Secrets in
all jurisdictions, both domestic and foreign.
(iii) The Company has an absolute (but not necessarily
exclusive) right to use the Trade Secrets. The Trade Secrets are not
part of the public knowledge or literature, and, to the Knowledge of
the Company, have not been used, divulged, or appropriated either for
the benefit of any Person (other than the Company) or to the detriment
of the Company. No Trade Secret is subject to any adverse claim or has
been Threatened in any way in any jurisdiction, be it domestic or
foreign.
6.23 CERTAIN PAYMENTS.
Neither the Company nor any director, officer, agent, or employee of
the Company, or to the Company's Knowledge any other Person associated with or
acting for or on behalf of the Company, has directly or indirectly (a) made any
contribution, gift, bribe, rebate, payoff, influence payment, kickback, or
other payment to any Person, private or public, regardless of form, whether
in money, property, or services for or in respect of the Company or any
affiliate of the Company (i) to obtain favorable treatment in securing
business, (ii) to pay for favorable treatment for business secured, (iii) to
obtain special concessions or for special concessions already obtained, or (iv)
in violation of any Legal Requirement, or (b) established or maintained any
fund or asset that has not been recorded in the books and records of the
Company.
6.24 DISCLOSURE.
(a) No representation or warranty of the Company or the Officer and
Director Stockholders in this Agreement and no statement in the Disclosure
Schedule, or in the Company's Offering Document (other than forecasts and
financial projections in the Offering Document) omits to state a material fact
necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading. The Company's Offering
Document has been previously delivered to the Purchaser.
(b) No notice given pursuant to this Agreement will contain any
untrue statement or omit to state a material fact necessary to make the
statements therein or in this Agreement, in light of the circumstances in which
they were made, not misleading.
6.25 BROKERS OR FINDERS.
The Company and its agents have incurred no obligation or liability for
which the Company would be responsible, contingent or otherwise, for brokerage
or finders' fees or agents' commissions or other similar payment in connection
with this Agreement.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND MERGER SUB
Purchaser and Merger Sub jointly and severally represent and warrant to
Sellers as follows:
7.1O RGANIZATION AND GOOD STANDING.
Purchaser is a corporation duly organized, validly existing, and in
good standing under the laws of the State of New York. Merger Sub is a
corporation duly organized and validly existing under the laws of the State of
Wisconsin. Purchaser has delivered to Sellers a copy of the Organizational
Documents of Merger Sub, as currently in effect.
7.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding
obligation of Purchaser and Merger Sub, enforceable against Purchaser and Merger
Sub in accordance with its terms. Upon the execution and delivery by Purchaser
of the Employment Agreement and the Consulting Agreement (collectively, the
"Purchaser's Closing Documents"), the Purchaser's Closing Documents will
constitute the legal, valid, and binding obligations of Purchaser, enforceable
against Purchaser in accordance with their respective terms. Purchaser has the
absolute and unrestricted right, power, and authority to execute and deliver
this Agreement and the Purchaser's Closing Documents and to perform its
obligations under this Agreement and the Purchaser's Closing Documents. Merger
Sub has the absolute, unrestricted right, power and authority to execute and
deliver this Agreement and to perform its obligations under this Agreement.
The issuance and delivery of the Purchaser Common Stock has been duly
authorized by all requisite corporate action of Purchaser and when issued in
connection with the Merger will be validly issued, fully paid and non-
assessable (except as provided in Section 630 of the New York Business
Corporation Law, which provision is not applicable to Purchaser) and not
subject to any transfer restriction other than those existing under applicable
federal and state securities laws and those set forth in this Agreement.
(b) Neither the execution and delivery of this Agreement by Purchaser
or Merger Sub nor the consummation or performance of any of the Contemplated
Transactions by Purchaser or Merger Sub will give any Person the right to
prevent, delay, or otherwise interfere with any of the Contemplated
Transactions pursuant to or will contravene, conflict with, or result in a
violation of:
(i) any provision of Purchaser's Organizational Documents or
Merger Subs Organizational Documents;
(ii) any resolution adopted by the board of directors or the
stockholders of Purchaser or Merger Sub;
(iii) any Legal Requirement or Order to which Purchaser or
Merger Sub may be subject; or
(iv) any material Contract to which Purchaser or Merger Sub
is a party or by which Purchaser or Merger Sub may be bound.
Neither Purchaser nor Merger Sub is, nor will either of them be,
required to obtain any Consent from any Person in connection with the execution
and delivery of this Agreement or the consummation or performance of any of the
Contemplated Transactions.
7.3 SEC FILINGS.
Purchaser has filed with the Commission all forms, reports and
documents required to be filed with the Commission since January 1, 1994
(collectively the "SEC Filings") and has delivered to the Company and the
Stockholders true and complete copies of its (i) Annual Report on Form 10-
K for the years ended May 27, 1996, May 28, 1995 and May 29, 1994, as filed
with the SEC; and (ii) all other reports, statements and registration
statements (including Quarterly Reports on Form10-Q and Current Reports on
Form 8-K) filed by the Purchaser with the Commission since May 27, 1996. As of
their respective dates, the SEC Filings (including all exhibits and schedules
thereto and documents incorporated by reference therein), 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 the light
of the circumstances under which they were made, not misleading. The financial
statements of the Purchaser and its subsidiaries included or incorporated by
reference in the SEC Filings (including the related notes and schedules) have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present the consolidated assets,
liabilities and financial position of the Purchaser and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and changes in financial position for the periods then ended
(subject, in the case of any unaudited interim financial statements, to normal
year-end adjustments) .
7.4 CERTAIN PROCEEDINGS.
There is no pending Proceeding that has been commenced against
Purchaser or Merger Sub that challenges, or may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions. To Purchaser's Knowledge, no such Proceeding has
been Threatened.
7.5 BROKERS OR FINDERS.
Purchaser and its officers and agents have incurred no obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement and will
indemnify and hold Sellers harmless from any such payment alleged to be due by
or through Purchaser as a result of the action of Purchaser or its officers or
agents.
7.6 TAX-FREE REORGANIZATION.
After the Closing, neither Purchaser nor Merger Sub will take any
action that would cause the Merger to fail to be a reorganization under Section
368(a)(1)(A) and Section 368(a)(2)(D) of the IRC for federal and state income
tax purposes with respect to the Stockholders.
7.7 COMPLIANCE WITH LEGAL REQUIREMENTS.
Except for any matter which would not have a material adverse effect on
the financial condition, business or assets of Purchaser, Purchaser is, and at
all times since January 1, 1992 has been, in compliance with each Legal
Requirement that is or was applicable to it or to the conduct or operation of
its business or the ownership or use of any of its assets.
ARTICLE VIII
COVENANTS OF SELLERS
8.1 ACCESS AND INVESTIGATION.
Between the date of this Agreement and the Closing Date, Sellers will,
and will cause the Company and its Representatives to, (a) afford Purchaser and
its Representatives and prospective lenders and their Representatives
(collectively, "Purchaser's Advisors") full and free access to the Company's
personnel, properties (including subsurface testing), contracts, books and
records, and other documents and data, (b) furnish Purchaser and Purchaser's
Advisors with copies of all such contracts, books and records, and other
existing documents and data as Purchaser may reasonably request, and (c)
furnish Purchaser and Purchaser's Advisors with such additional financial,
operating, and other data and information as Purchaser may reasonably request.
8.2 OPERATION OF THE BUSINESS OF THE COMPANY.
The parties hereto intend that the results of operation of the Company
commencing January1, 1997 shall be for the benefit of the Purchaser. Between
the date of this Agreement and the Closing Date, the Company will, and the
Stockholders will cause the Company to:
(a) conduct the business of the Company only in the Ordinary
Course of Business;
(b) use their Best Efforts to preserve intact the current
business organization of the Company, keep available the services of
the current officers, employees, and agents of the Company, and
maintain the relations and good will of suppliers, customers,
landlords, creditors, employees, agents, and others having business
relationships with the Company;
(c) confer with Purchaser concerning operational matters of
a material nature; and
(d) otherwise report periodically to Purchaser as requested
by Purchaser concerning the status of the business, operations, and
finances of the Company.
8.3 NEGATIVE COVENANT.
Except as otherwise expressly permitted by this Agreement, between the
date of this Agreement and the Closing Date, the Company will not, and the
Stockholders will cause the Company not to, without the prior consent of
Purchaser, take any affirmative action, or fail to take any reasonable action
within their or its control, as a result of which any of the changes or events
listed in Section 6.16 is likely to occur.
8.4 REQUIRED APPROVALS.
As promptly as practicable after the date of this Agreement, the
Company will, and the Stockholders will cause the Company to, make all filings
required by Legal Requirements to be made by them in order to consummate the
Contemplated Transactions. Between the date of this Agreement and the Closing
Date, the Company will, and the Stockholders will cause the Company to, (a)
cooperate with Purchaser with respect to all filings that Purchaser elects to
make or is required by Legal Requirements to make in connection with the
Contemplated Transactions, and (b) cooperate with Purchaser in obtaining all
consents identified in Section 6.2 of the Disclosure Schedule and any
accountants or other consents required to be included in any SEC Filings made
by Purchaser in connection with the Contemplated Transactions. The Company
will, and the Stockholders will cause the Company to, provide to Purchaser any
financial information of the Company necessary for the preparation of any SEC
Filing to be made by Purchaser in connection with the Contemplated
Transactions.
8.5 NOTIFICATION.
Between the date of this Agreement and the Closing Date, each Seller
will promptly notify Purchaser in writing if such Seller becomes aware of any
fact or condition that causes or constitutes a Breach of any of Sellers'
representations and warranties herein as of the date of this Agreement,
or if such Seller becomes aware of the occurrence after the date of this
Agreement of any fact or condition that would (except as expressly contemplated
by this Agreement) cause or constitute a Breach of any such representation or
warranty had such representation or warranty been made as of the time of
occurrence or discovery of such fact or condition. Should any such fact or
condition require any change in the Disclosure Schedule hereto if the
Disclosure Schedule was dated the date of the occurrence or discovery of any
such fact or condition, Sellers will promptly deliver to Purchaser a supplement
to the Disclosure Schedule specifying such change. Upon Purchasers written
acceptance of such change, such schedule as so amended or supplemented shall be
deemed the Disclosure Schedule hereto. During the same period, each Seller
will promptly notify Purchaser of the occurrence of any Breach of any covenant
of such Seller in this Article VIII or of the occurrence of any event that may
make the satisfaction of the conditions in Article X impossible or unlikely.
8.6 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS.
Except as expressly provided in this Agreement, Sellers will cause all
indebtedness owed to the Company by any Stockholder or any Related Person of
any Seller to be paid in full prior to Closing. As of the date hereof there
is, and as of the date of the Closing there will be, no such indebtedness
outstanding.
8.7 MEETING OF THE COMPANY'S STOCKHOLDERS.
The Company will take all action necessary in accordance with the WBCL
and its Organizational Documents to convene a meeting of holders of Shares as
promptly as practicable to consider and vote upon the approval of this
Agreement and the Merger. Subject to fiduciary requirements of applicable law,
the Board of Directors of the Company shall recommend such approval and the
Company shall take all lawful action to solicit such approval. At any such
meeting of the Company all of the Shares then owned by the Stockholders will be
voted in favor of this Agreement. The Company's proxy or information statement
with respect to such meeting of shareholders (the "Proxy Statement"), at the
date thereof and at the date of such meeting, will not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that the foregoing shall not apply to the extent that any such untrue statement
of a material fact or omission to state a material fact was made by the
Company in reliance upon and in conformity with written information concerning
the Purchaser furnished to the Company by Purchaser specifically for use in the
Proxy Statement. Purchaser understands that for purposes of this Section 8.7
that while the Company's projections and forward-looking information furnished
by the Company to Purchaser were prepared in good faith and represent the
Company's best estimate as to the subject matter thereof, the Company makes no
representation or warranty as to the truth, completeness or accuracy of any
projections or forward-looking information furnished by the Company to
Purchaser. In lieu of a meeting, all Stockholders may execute a consent
resolution approving the Merger.
8.8 TAX FILINGS.
Stockholders shall prepare and file with the Internal Revenue Service
("IRS") on a timely basis the Tax Returns for the S Short Year of the Company;
provided, however, that Purchaser shall review such Tax Returns prior to the
filing thereof with the IRS. The Stockholders covenant to pay their respective
shares of the Taxes due with respect to the S Short Year.
8.9 BEST EFFORTS.
Between the date of this Agreement and the Closing Date, Sellers will
use their Best Efforts to cause the conditions in Article X to be satisfied.
ARTICLE IX
COVENANTS OF PURCHASER AND MERGER SUB
9.1 APPROVALS OF GOVERNMENTAL BODIES.
As promptly as practicable after the date of this Agreement, Purchaser
will, and will cause each of its Related Persons, including, without
limitation, Merger Sub, to, make all filings required by Legal Requirements to
be made by them to consummate the Contemplated Transactions. Between the date
of this Agreement and the Closing Date, Purchaser will, and will cause each
Related Person, including, without limitation, Merger Sub, to cooperate with
Sellers with respect to all filings that Sellers are required by Legal
Requirements to make in connection with the Contemplated Transactions, and (ii)
cooperate with Sellers in obtaining all consents identified in the Disclosure
Schedule hereto; provided that this Agreement will not require Purchaser to
dispose of or make any change in any portion of its business or to incur any
other burden to obtain a Governmental Authorization.
9.2 BEST EFFORTS.
Except as set forth in the proviso to Section 9.1, between the date of
this Agreement and the Closing Date, Purchaser and Merger Sub will each use its
Best Efforts to cause the conditions in Article XI to be satisfied.
9.3 NOTIFICATION.
Between the date of this Agreement and the Closing Date, Purchaser will
promptly notify each Seller in writing if Purchaser becomes aware of any fact
or condition that causes or constitutes a Breach of any Purchasers
representations and warranties herein as of the date of this Agreement or
Purchaser becomes aware of the occurrence after the date of this Agreement of
any fact or condition that would (except as expressly contemplated by this
Agreement) cause or constitute a Breach of any such representation or warranty
had such representation or warranty been made as of the time of occurrence of
discovery of such fact or condition. Should any such factor or condition
require any change in the schedules attached to Article VII hereto if such
schedules were dated the date of the occurrence or discovery of any such fact
or condition, Purchaser will promptly deliver to each Seller, a supplement to
such schedules specifying such change. Upon the Company's written acceptance
of such change, such schedules as so amended or supplemented shall be deemed
the Schedules attached to Article VII hereto. During the same period,
Purchaser will promptly notify each Seller of the occurrence of any Breach of
any covenant of Purchaser in this Article IX or of the occurrence of any event
that may make the satisfaction of the conditions in Article XI impossible or
unlikely.
9.4 INSURANCE.
After the Closing, Purchaser will maintain in full force and effect
products liability insurance in amounts consistent with the past practice of
the Company.
ARTICLE X
CONDITIONS PRECEDENT TO PURCHASERS OBLIGATION TO CLOSE
Purchaser's obligations to consummate the Merger and to take the other
actions required to be taken by Purchaser at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Purchaser, in whole or in part) :
10.1 ACCURACY OF REPRESENTATIONS.
All of Sellers' representations and warranties in this Agreement
(considered collectively), and each of these representations and warranties
(considered individually), must have been accurate in all material respects as
of the date of this Agreement, and must be accurate in all material respects
as of the Closing Date as if made on the Closing Date.
10.2 SELLERS' PERFORMANCE.
All of the covenants and obligations that Sellers are required to
perform or to comply with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and obligations
(considered individually), must have been duly performed and complied
with in all material respects.
10.3 CONSENTS.
Each of the Consents identified in the Schedule 7.2 must have been
obtained and must be in full force and effect.
10.4 ADDITIONAL DOCUMENTS.
Each of the following documents must have been delivered to Purchaser:
(a) an opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇, S.C., dated the Closing Date, in
the form attached hereto as Annex 10.4.
(b) such other documents as Purchaser may reasonably request for the
purpose of (i) evidencing the accuracy of any of Sellers' representations and
warranties, (ii) evidencing the performance by the Sellers of, or the
compliance by the Sellers with, any covenant or obligation required to be
performed or complied with by such Sellers, (iii) evidencing the satisfaction
of any condition referred to in this Article X, (iv) otherwise facilitating the
consummation or performance of any of the Contemplated Transactions or (v)
necessary for the preparation and filing with the Commission of any SEC Filings
to be made by Purchaser in connection with the Contemplated Transactions,
including any accountants consents or financial information required under the
rules, regulations and forms of the Commission.
10.5 NO PROCEEDINGS.
Since the date of this Agreement, there must not have been commenced or
Threatened against Purchaser, or against any Person affiliated with Purchaser,
any Proceeding (a) involving any challenge to, or seeking damages or other
relief in connection with, any of the Contemplated Transactions, or (b) that
may have the effect of preventing, delaying, making illegal, or otherwise
interfering with any of the Contemplated Transactions.
10.6 EMPLOYMENT AGREEMENTS.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall have entered into an Employment Agreement in
the form attached as Annex 10.6 to this Agreement (the "Employment Agreement")
and ▇▇▇▇▇ ▇. ▇▇▇▇ shall have entered into a Consulting Agreement in the form
attached as Annex 10.6(A) to this Agreement (the"Consulting Agreement") .
10.7 STOCKHOLDER APPROVAL.
This Agreement shall have been duly approved by the requisite vote of
holders of the Shares, in accordance with the WBCL and the Organizational
Documents of the Company.
10.8 DISSENTERS.
No holder of the outstanding Shares shall have exercised dissenters
rights.
10.9 GOVERNMENTAL AND REGULATORY CONSENTS.
All filings required to be made prior to the Effective Time by the
Company with, and all consents, approvals and authorizations required to be
obtained prior to the Effective Time by the Company from, governmental and
regulatory authorities in connection with the execution and delivery of this
Agreement by the Company and the consummation of the transactions contemplated
hereby by the Company, Purchaser and Merger Sub shall have been made or
obtained (as the case may be) .
10.10 RESIGNATIONS.
Seller shall have received the resignations of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ as
directors of the Company.
10.11 NO PROHIBITION.
Neither the consummation nor the performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time), materially contravene, or conflict with, or result in a material
violation of, or cause Purchaser or any Person affiliated with Purchaser to
suffer any material adverse effect under, (a) any applicable Legal Requirement
or Order, or (b) any Legal Requirement or Order that has been published,
introduced, or otherwise formally proposed by or before any Governmental Body.
ARTICLE XI
CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
Sellers' obligation to consummate the Merger and to take the other
actions required to be taken by Sellers at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Sellers, in whole or in part) :
11.1 ACCURACY OF REPRESENTATIONS.
All of Purchaser's and Merger Subs representations and warranties in
this Agreement (considered collectively), and each of these representations and
warranties (considered individually), must have been accurate in all material
respects as of the date of this Agreement and must be accurate in all material
respects as of the Closing Date as if made on the Closing Date.
11.2 PURCHASER'S PERFORMANCE.
All of the covenants and obligations that Purchaser or Merger Sub are
required to perform or to comply with pursuant to this Agreement at or prior to
the Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been performed and complied
with in all material respects.
11.3 CONSENTS.
Each of the Consents identified in the Disclosure Schedule must have
been obtained and must be in full force and effect.
11.4 ADDITIONAL DOCUMENTS.
Purchaser must have caused the following documents to be delivered to
Sellers:
(a) an opinion of Day, ▇▇▇▇▇ & ▇▇▇▇▇▇, dated the Closing
Date, in the form attached hereto as Annex 11.4 to the Disclosure
Schedule; and
(b) such other documents as Sellers may reasonably request
for the purpose of (i) evidencing the accuracy of any representation
or warranty of Purchaser or Merger Sub, (ii) evidencing the performance
by Purchaser or Merger Sub of, or the compliance by Purchaser or Merger
Sub with, any covenant or obligation required to be performed or
complied with by Purchaser or Merger Sub, (iii) evidencing the
satisfaction of any condition referred to in this Article XI, or
(iv) otherwise facilitating the consummation of any of the Contemplated
Transactions.
11.5 NO INJUNCTION.
There must not be in effect any Legal Requirement or any injunction or
other Order that (a) prohibits the Contemplated Transactions, and (b) has been
adopted or issued, or has otherwise become effective, since the date of this
Agreement. In addition, since the date of this Agreement, there must not have
been commenced or Threatened against any of the Sellers or against any Person
affiliated with any of the Sellers, any Proceeding (a) involving any challenge
to, or seeking damages or other relief in connection with, any of the
Contemplated Transactions or (b) that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with any of the Contemplated
Transactions.
11.6 STOCKHOLDER APPROVAL.
This Agreement shall have been duly approved by the requisite vote of
the holders of the Shares, in accordance with the WBCL and the Organizational
Documents of the Company.
11.7 GOVERNMENTAL CONSENTS.
All filings required to be made prior to the Effective Time by the
Company, Purchaser and Merger Sub with, and all consents, approvals, permits
and authorizations required to be obtained prior to the Effective Time by the
Company, Purchaser and Merger Sub from, governmental and regulatory authorities
in connection with the execution and delivery of this Agreement by the
Company, Purchaser and Merger Sub and the consummation of the transactions
contemplated hereby by Purchaser, Merger Sub and the Company shall have been
made or obtained (as the case may be) .
11.8 NO PROHIBITION.
Neither the consummation nor the performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time), materially contravene, or conflict with, or result in the material
violation of, or cause any of the Sellers or any Person affiliated with any of
the Sellers to suffer any Material Adverse Effect under (a) any applicable
Legal Requirement or Order, or (b) any legal requirement or order that has been
published, introduced or otherwise formally proposed by or before any
Governmental Body.
ARTICLE XII
TERMINATION
12.1 TERMINATION EVENTS.
This Agreement may, by notice given prior to or at the Closing, be
terminated:
(a) by either Purchaser, on the one hand, or the Company, on
the other hand, if a material Breach of any provision of this
Agreement has been committed by the other party and such Breach has not
been waived;
(b) (i) by Purchaser if any of the conditions in Article X has
not been satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of
Purchaser to comply with its obligations under this Agreement) and
Purchaser has not waived such condition on or before the Closing Date;
or (ii) by Sellers, if any of the conditions in Article XI has not been
satisfied as of the Closing Date or if satisfaction of such a condition
is or becomes impossible (other than through the failure of Sellers to
comply with their obligations under this Agreement) and Sellers have
not waived such condition on or before the Closing Date.
(c) by mutual consent of Purchaser and Sellers; or
(d) by (i) the Purchaser if the Closing has not occurred
(other than through the failure of the Purchaser to comply fully with
its obligations under this Agreement) or (ii) the Company if the
Closing has not occurred (other than through the failure of the Company
to comply fully with its obligations under this Agreement), on or
before March 31, 1997, or such later date as the parties may agree
upon.
12.2 EFFECT OF TERMINATION.
Each party's right of termination is in addition to any other rights it
may have under this Agreement or otherwise, and the exercise of a right of
termination will not be an election of remedies. If this Agreement is
terminated pursuant to Section12.1, all further obligations of the parties
under this Agreement will terminate, except that the obligations in Articles
XIII and XV will survive; provided, however, that if this Agreement is
terminated by a party because of the Breach of the Agreement by another party
or because one or more of the conditions to the terminating party's obligations
under this Agreement is not satisfied as a result of another party's failure to
comply with its obligations under this Agreement, the terminating party's right
to pursue all legal remedies will survive such termination unimpaired.
ARTICLE XIII
INDEMNIFICATION; REMEDIES
13.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY
KNOWLEDGE.
Except as set forth in Section 13.5, all representations, warranties,
covenants, and obligations in this Agreement, the Disclosure Schedule and other
Schedules hereto, the supplements to the Disclosure Schedule and other
Schedules and any certificate or document delivered pursuant to this
Agreement will survive the Closing. The right to indemnification, payment of
Damages or other remedy based on such representations, warranties, covenants,
and obligations will not be affected by any investigation conducted with
respect to, or any Knowledge acquired (or capable of being acquired) at any
time, whether before or after the execution and delivery of this Agreement or
the Closing Date, with respect to the accuracy or inaccuracy of or compliance
with, any such representation, warranty, covenant, or obligation. The waiver in
writing of any condition based on the accuracy of any representation or
warranty, or on the performance of or compliance with any covenant or
obligation, will not affect the right to indemnification, payment of Damages,
or other remedy based on such representations, warranties, covenants, and
obligations.
13.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS.
(a) Subject to the limitations, restrictions and conditions set forth
in this Agreement, each of the Stockholders will severally, but not jointly,
indemnify and hold harmless Purchaser, the Company, and their respective
Representatives, stockholders, controlling persons, and affiliates
(collectively, the "Purchaser Indemnified Persons") for, and will pay to the
Purchaser Indemnified Persons the amount of, any loss, liability, claim, damage
(including incidental and consequential damages), expense (including costs of
investigation and defense and reasonable attorneys' fees) or diminution of
value, whether or not involving a third-party claim (collectively, "Damages"),
arising, directly or indirectly, from or in connection with: (i) any Breach of
any representation or warranty made by such Stockholder in this Agreement; or
(ii) any Breach by such Stockholder of any covenant or obligation of such
Stockholder in this Agreement.
(b) Subject to the limitations, restrictions and conditions set forth
in this Agreement, each of the Stockholders will severally but not jointly
indemnify and hold harmless each of the Purchaser Indemnified Persons for, or
pay to the Purchaser Indemnified Persons the amount of any Damages arising,
directly or indirectly, from or in connection with: (i) any Breach of any
representation or warranty made by the Company in this Agreement; or (ii) any
Breach by the Company of any covenant or obligation of the Company under this
Agreement.
The remedies provided in this Section 13.2 and any other remedies
provided at equity will be the exclusive remedies available to Purchaser and
the other Indemnified Persons.
13.3 DOLLAR LIMITATIONS ON INDEMNIFICATION CLAIMS.
(a) The Stockholders shall not be required to provide indemnification
under Section 13.2 unless the Damages of Purchaser or any of the Purchaser
Indemnified Persons for all claims for indemnification under Section 13.2 shall
exceed in the aggregate One Hundred Thousand Dollars ($100,000) (the "Basket
Amount") .
(b) In no event shall (i) the aggregate liability of all of the
Sellers with respect to all claims for indemnification by Purchaser or any of
the Purchaser Indemnified Persons hereunder exceed the amount of the Purchase
Price (the "Cap Amount") or (ii) the liability of any Stockholder with respect
to all claims of indemnification exceed the product of the Cap Amount and the
percentage set forth opposite such Stockholders name in Section 5.2 of the
Disclosure Schedule or (iii) the liability of any Stockholder with respect to
any individual claim of indemnification exceed an amount equal to the product
of the amount of such claim and the percentage set forth opposite such
Stockholders name in Section 5.2 of the Disclosure Schedule. Amounts payable
by the Stockholders pursuant to this Section may be made in cash or in shares
of Purchaser Common Stock valued at the lower of the Share Price or the
Adjusted Closing Price, as the case may be; provided, however, that the number
of shares that may be tendered by a Stockholder may not exceed such
Stockholders pro rata share of the Stock Portion and the shares of Purchaser
Common Stock so tendered shall be represented by the share certificates
received by such Stockholder pursuant to the Merger.
This section shall not apply with respect to any Stockholder for any
Breach of such Stockholders representations and warranties to which such
Stockholder had Knowledge at any time prior to the time such representation and
warranty was made or any intentional Breach by such Stockholder of any covenant
or obligation.
13.4 INDEMNIFICATION AND PAYMENT OF DAMAGES BY PURCHASER.
Purchaser will indemnify and hold harmless Stockholders, and will pay
to Stockholders the amount of any Damages arising, directly or indirectly, from
or in connection with (a) any Breach of any representation or warranty made by
Purchaser or Merger Sub in Article VII of this Agreement or in any certificate
delivered by Purchaser pursuant to this Agreement, or (b) any Breach by
Purchaser of any covenant or obligation of Purchaser or Merger Sub in this
Agreement. Purchaser will have no liability for indemnification or otherwise
with respect to the matters described in clause (a) or (b) of this Section 13.4
until the total of all Damages with respect to such matters exceeds the Basket
Amount. In no event shall the aggregate liability of Purchaser with
respect to all claims for indemnification by the Stockholders exceed
$7,500,000. The liability of Purchaser with respect to any claim by an
individual Stockholder shall not exceed the amount of the Stock Portion
received by such Stockholder (valued at the lower of the Share Price or the
Adjusted Closing Price, as the case may be) pursuant to this Agreement. These
limitations will not apply to any Breach of any of Purchasers or Merger Subs
representations and warranties of which Purchaser had Knowledge at any time
prior to the date on which such representation and warranty is made or
any intentional Breach by Purchaser or Merger Sub of any covenant or obligation
and Purchaser will be liable for all Damages with respect to such Breaches.
The remedies provided in this Section 13.4 and any other remedies
provided at equity will be the exclusive remedies available to Sellers.
13.5 TIME LIMITATIONS.
If the Closing occurs, Sellers will have no liability (for
indemnification or otherwise) with respect to any representation or warranty,
or covenant or obligation to be performed and complied with prior to the
Closing Date, other than those in Sections 5.2, 5.3, 6.2, 6.3, 6.11, 6.13, and
6.19, unless on or before July 31, 1998 Purchaser notifies Sellers of a claim
specifying the factual basis of that claim in reasonable detail to the extent
then known by Purchaser. If the Closing occurs, Purchaser will have no
liability (for indemnification or otherwise) with respect to any representation
or warranty, or covenant or obligation to be performed and complied with prior
to the Closing Date, other than those in Section 7.2, unless on or before
July31, 1998, Stockholders notify Purchaser of a claim specifying the factual
basis of that claim in reasonable detail to the extent then known by
Stockholders. A claim with respect to Section5.2, 5.3, 6.2, 6.3, 6.11, 6.13,
6.19 or 7.2 may be made at any time, except that with respect to third party
claims, such claim must be made prior to the expiration of any applicable
statute of limitations; a claim for indemnification or reimbursement not based
upon any representation or warranty or any covenant or obligation to be
performed and complied with prior to the Closing Date may be made at any time.
13.6 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS.
(a) Promptly after receipt by an indemnified party under Section 13.2
or Section 13.3 of notice of the commencement of any Proceeding against it, such
indemnified party will, if a claim is to be made against an indemnifying party
under such Section, give notice to the indemnifying party of the commencement
of such claim, but the failure to notify the indemnifying party will not
relieve the indemnifying party of any liability that it may have to any
indemnified party, except to the extent that the indemnifying party
demonstrates that the defense of such action is prejudiced by the indemnifying
party's failure to give such notice.
(b) If any Proceeding referred to in Section 13.6(a) is brought
against an indemnified party and it gives notice to the indemnifying party of
the commencement of such Proceeding, the indemnifying party will be entitled to
participate in such Proceeding and, to the extent that it wishes (unless (i)
the indemnifying party is also a party to such Proceeding and the indemnified
party determines in good faith that joint representation would be
inappropriate, or (ii) the indemnifying party fails to provide reasonable
assurance to the indemnified party of its financial capacity to defend such
Proceeding and provide indemnification with respect to such Proceeding), to
assume the defense of such Proceeding with counsel satisfactory to the
indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will not, as long as it diligently conducts such defense, be
liable to the indemnified party under this Article XIII for any fees of other
counsel or any other expenses with respect to the defense of such Proceeding,
in each case subsequently incurred by the indemnified party in connection with
the defense of such Proceeding, other than reasonable costs of investigation.
If the indemnifying party assumes the defense of a Proceeding, (i) it will be
conclusively established for purposes of this Agreement that the claims made in
that Proceeding are within the scope of and subject to indemnification; (ii) no
compromise or settlement of such claims may be effected by the indemnifying
party without the indemnified party's consent unless (A) there is no finding or
admission of any violation of Legal Requirements or any violation of the rights
of any Person and no effect on any other claims that may be made against the
indemnified party, and (B) the sole relief provided is monetary damages that
are paid in full by the indemnifying party; and (iii) the indemnified party
will have no liability with respect to any compromise or settlement of
such claims effected without its consent. If notice is given to an indemnifying
party of the commencement of any Proceeding and the indemnifying party does
not, within thirty days after the indemnified party's notice is given, give
notice to the indemnified party of its election to assume the defense of such
Proceeding, the indemnifying party will be bound by any determination made in
such Proceeding or any compromise or settlement effected by the indemnified
party.
(c) Notwithstanding the foregoing, if an indemnified party determines
in good faith that there is a reasonable probability that a Proceeding may
adversely affect it or its affiliates other than as a result of monetary
damages for which it would be entitled to indemnification under this
Agreement, the indemnified party may, by notice to the indemnifying party,
assume the exclusive right to defend, compromise, or settle such Proceeding,
but the indemnifying party will not be bound by any determination of a
Proceeding so defended or any compromise or settlement effected without
its consent (which may not be unreasonably withheld) .
13.7 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS.
A claim for indemnification for any matter not involving a third-party
claim may be asserted by notice to the party from whom indemnification is
sought.
13.8 EFFECT OF TAXES, OTHER BENEFITS AND INSURANCE.
The determination of any Damages for indemnification which may be
claimed under ArticleXIII shall be net of insurance proceeds received (but
also net of recovery costs and adjusted for any tax incurred as a result of the
receipt of any such insurance proceeds, except to the extent of any tax
benefits received from the loss which gave rise to such insurance proceeds) by
the party bearing such Damages as a result thereof.
ARTICLE XIV
REGISTRATION RIGHTS
14.1 REQUIRED AND INCIDENTAL REGISTRATION.
(a) If at any time after the Closing and prior to the third
anniversary thereof, the holders of at least fifty (50%) percent of the
Registrable Securities (as hereinafter defined) then outstanding shall decide to
sell or otherwise dispose of all or a portion of the Registrable Securities of
the Purchaser then owned by such holders then, so long as such holders are not
in material breach of any representations, warranties or covenants contained
herein at such time, such holders may give written notice to the Purchaser of
the proposed disposition, specifying the number of Registrable Securities so to
be sold or disposed of and requesting that the Purchaser prepare and file a
registration statement under the Securities Act covering such Registrable
Securities. The Purchaser shall within 30 days thereafter give written notice
to the other holders of Registrable Securities of such request and each of the
other holders shall have the option for a period of 10 days after receipt
by it of notice from the Purchaser to include its Registrable Securities in
such registration statement. The Purchaser shall use its best efforts to cause
an appropriate registration statement (the"Registration Statement") covering
such Registrable Securities to be filed within 60 days of receipt of such
notice with the Commission and to become effective as soon as reasonably
practicable and to remain effective for a 90-day period, which period shall be
extended by the length of any periods during which the Registration Statement
is suspended pursuant to Section 14.7(vii) hereof. (The holders whose
Registrable Securities are included in a Registration Statement are hereinafter
referred to as the"Selling Stockholders") . The Purchaser shall not be
obligated to file more than two Registration Statements pursuant to the
foregoing provisions of this Section 14.1, subject to the provisions of Section
14.7(vii) . The Purchaser shall bear all Purchaser Costs and Expenses (as
defined in Section14.8) of such Registration Statements.
(b) If at any time after the Closing and prior to the third
anniversary thereof, the Purchaser shall propose the filing of a Registration
Statement on an appropriate form under the Securities Act of any Purchaser
Common Stock, otherwise than pursuant to subsection (a) of this Section 14.1 and
other than a registration statement on Forms S-8 or S-4 or any equivalent form
then in effect, then the Purchaser shall give the holders of Registrable
Securities notice of such proposed registration and shall include in any
Registration Statement relating to such securities all or a portion of the
Registrable Securities then owned by such holders which such holders shall
request (such holders also to be considered Selling Stockholders), by notice
given by such holders to the Purchaser within 10 days after the giving of such
notice by the Purchaser, to be so included. In the event of the inclusion of
Registrable Securities pursuant to this subsection (b), the Selling Stockholders
shall bear their pro rata share of the Purchaser Costs and Expenses of such
registration. In the event the distribution of securities of the Purchaser
covered by a Registration Statement referred to in subsection (b) is to be
underwritten, then the Purchasers obligation to include Registrable Securities
in such Registration Statement shall be subject to the following further
conditions:
(i) The distribution for the account of the Selling Stockholders
shall be underwritten by the same underwriters who are underwriting the
distribution of the securities for the account of the Purchaser and/or any
other persons whose securities are covered by such Registration Statement,
and the Selling Stockholders shall enter into an agreement with such
underwriters containing customary provisions;
(ii) If the underwriting agreement entered into with the
aforesaid underwriters contains restrictions upon the sale of securities of the
Purchaser, other than the securities which are to be included in the proposed
distribution, for a period after the effective date of the Registration
Statement, then such restrictions shall be binding upon the Selling
Stockholders and, if requested by the Purchaser, the Selling Stockholders shall
enter into a written agreement to that effect; and
(iii) If the underwriters shall state in writing that they
are unwilling to include any or all of the Selling Stockholders securities in
the proposed underwriting because such inclusion will materially interfere with
the orderly sale and distribution of the securities being offered by the
Purchaser, then the number of Selling Stockholders securities to be included
shall be reduced pro rata on the basis of the number of shares requested to be
included by such holders, or there shall be no inclusion of Selling
Stockholders securities in the registration statement and proposed
distribution, in accordance with such statement by the underwriters.
14.2 PROCEDURE FOR REGISTRATION.
In connection with the filing of a Registration Statement pursuant to
Section 14.1 hereof, and in supplementation and not in limitation of the
provisions hereof, the Purchaser shall:
(i) Notify the Selling Stockholders as to the filing of the
Registration Statement and of all amendments or supplements thereto
filed prior to the effective date of said Registration Statement;
(ii) Notify the Selling Stockholders, promptly after the
Purchaser shall receive notice thereof, of the time when said
Registration Statement became effective or when any amendment or
supplement to any prospectus forming a part of said Registration
Statement has been filed;
(iii) Notify the Selling Stockholders promptly of any request
by the Commission for the amending or supplementing of such
Registration Statement or prospectus or for additional information;
(iv) Prepare and promptly file with the Commission and
promptly notify the Selling Stockholders of the filing of any
amendments or supplements to such Registration Statement or prospectus
as may be necessary to correct any statements or omissions if, at any
time when a prospectus relating to the Registrable Securities is
required to be delivered under the Securities Act, any event with
respect to the Purchaser shall have occurred as a result of which any
such prospectus or any other prospectus as then in effect would include
an untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made, in the light of
the circumstances under which they were made, not misleading;
(v) Advise the Selling Stockholders promptly after the
Purchaser shall receive notice or obtain knowledge of the issuance of
any stop order by the Commission suspending the effectiveness of any
such Registration Statement or amendment thereto or of the initiation
or threatening of any proceeding for that purpose, and promptly use its
best efforts to prevent the issuance of any stop order or obtain its
withdrawal promptly if such stop order should be issued;
(vi) Use its Best Efforts to qualify as soon as reasonably
practicable the Registrable Securities included in the Registration
Statement for sale under the securities or blue-sky laws of such states
and jurisdictions within the United States as shall be reasonably
requested by the Selling Stockholders; provided that the Purchaser
shall not be required in connection therewith or as a condition thereto
to qualify to do business, to become subject to taxation or to file a
consent to service of process generally in any of the aforesaid
statements or jurisdictions; and
(vii) Furnish the Selling Stockholders, as soon as available,
copies of any Registration Statement and each preliminary or final
prospectus, or supplement or amendment required to be prepared pursuant
hereto, all in such quantities as the Selling Stockholders may from
time to time reasonably request.
14.3 INDEMNIFICATION BY THE PURCHASER.
The Purchaser shall indemnify and hold harmless each Selling
Stockholder whose Registrable Securities are included in a Registration
Statement, each partner, officer and director of such Selling Stockholder, and
each person, if any, who controls such Selling Stockholder (but, in the case of
a controlling person, only if such controlling person indemnifies the persons
mentioned in Section 14.4 hereof in the manner set forth therein), from and
against all claims, liabilities, damages or losses, joint or several, which
such Selling Stockholder or any such partner, officer, director or controlling
person incurs, under the Securities Act or otherwise, insofar as such
claims, liabilities, damages or losses (or actions in respect thereof) are
caused by any untrue statement or alleged untrue statement of any material fact
contained in any preliminary prospectus (if used prior to the effective date of
the Registration Statement), or contained, on the effective date thereof, in
any Registration Statement under which Registrable Securities were registered
under the Securities Act, the prospectus contained therein, or any amendment or
supplement thereto, or arising out of or based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; and the Purchaser
shall reimburse such Selling Stockholder and any such partner, officer,
director or controlling person for any legal or other expenses reasonably
incurred by such Selling Stockholder, or any such partner, officer, director,
or controlling person in connection with investigating or defending any such
claim, liability, damage, loss or action; provided, however, that the Purchaser
shall not be liable to any such persons in any such case to the extent that any
such claim, liability, damage, loss or action arises out of or is based upon
any untrue statement or omission made in reliance upon and in conformity with
information furnished to the Purchaser by any Selling Stockholder for inclusion
in any of the foregoing documents.
14.4 INDEMNIFICATION BY SELLING STOCKHOLDERS.
Each Selling Stockholder shall Indemnify and hold harmless the
Purchaser, each of its directors, each of its officers who has signed a
Registration Statement, each person, if any, who controls the Purchaser within
the meaning of the Securities Act, from and against any claims, liabilities,
damages or losses the Purchaser or any such director, officer, or controlling
person incurs, under the Securities Act or otherwise, insofar as such claims,
liabilities, damages or losses (or actions in respect thereof) are caused by
any untrue statement of any material fact contained in any preliminary
prospectus (if used prior to the effective date of the Registration Statement)
or contained on the effective date thereof, in any Registration Statement under
which Registrable Securities were registered under the Securities Act, the
prospectus contained therein, or any amendment or supplement thereto, or
arising out of or based upon the omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading; in each case to the extent, but only to the extent, that such
untrue statement or omission was made in reliance upon and in conformity with
information furnished to the Purchaser by such Selling Stockholder in writing
expressly for inclusion in any of the foregoing documents, and such Selling
Stockholder shall reimburse the Purchaser and any such officer, director or
controlling person for any legal or other expenses reasonably incurred by the
Purchaser or any such director, officer or controlling person in connection
with investigating or defending any such claim, liability, damage, loss or
action.
14.5 NOTIFICATION BY SELLING STOCKHOLDERS.
Each Selling Stockholder and each other person indemnified pursuant to
Section 14.3 hereof shall, in the event it receives notice of the commencement
of any action against it which is based upon an alleged act or omission which,
if proven, would result in the Purchasers having to indemnify it pursuant to
Section 14.3 hereof, promptly notify the Purchaser, in writing, of the
commencement of such action and permit the Purchaser, if the Purchaser so
notifies such Selling Stockholders within ten (10) days after receipt by the
Purchaser of notice of the commencement of the action, to participate in and to
assume the defense of such action with counsel reasonably satisfactory to such
Selling Stockholders or such other indemnified person, as the case may be;
provided, however, that if the Purchaser assumes the defense of such action,
such action may not be settled without the consent of the Selling Stockholders
who are parties to such action. The omission to notify the Purchaser promptly
of the commencement of any such action shall not relieve the Purchaser of any
liability to indemnify such Selling Stockholders or such other indemnified
person, as the case may be, under Section 14.3 hereof, except to the extent the
Purchaser shall suffer any loss by reason of such failure to give notice and
shall not relieve the Purchaser of any other liabilities which it may have
under this or any other agreement.
14.6 NOTIFICATION BY PURCHASER.
The Purchaser agrees that, in the event it receives notice of the
commencement of any action against it which is based upon an alleged act or
omission which, if proven, would result in any Selling Stockholder having to
indemnify the Purchaser pursuant to Section 14.4 hereof, the Purchaser will
promptly notify such Selling Stockholders in writing of the commencement of
such action and permit such Selling Stockholders, if such Selling Stockholders
so notify the Purchaser within ten (10) days after receipt by such Selling
Stockholders of notice of the commencement of the action, to participate in and
to assume the defense of such action with counsel reasonably satisfactory to
the Purchaser; provided, however, that if such Selling Stockholders assume the
defense of such action, such action may not be settled without the consent of
the Purchaser. The omission to notify such Selling Stockholders promptly of
the commencement of any such action shall not relieve such Selling Stockholders
of liability to indemnify the Purchaser under Section 14.4 hereof, except to
the extent that such Selling Stockholders shall suffer any loss by reason of
such failure to give notice and shall not relieve such Selling Stockholders of
any other liabilities which it may have under this or any other agreement.
14.7 CONDITIONS TO REGISTRATION.
Each of the following shall be a condition precedent to the obligations
of Purchaser to take any action pursuant to this Article XIV to register any of
the Registrable Securities:
(i) The Selling Stockholders shall furnish to Purchaser such
information regarding themselves, the Registrable Securities held by
them, and the intended method of disposition of such securities as
shall be required to effect such registration.
(ii) All information specifically with respect to the Selling
Stockholders furnished to Purchaser by or on behalf of the Selling
Stockholders for use in connection with the preparation of any
registration statement hereunder shall be true and correct in all
material respects and shall not omit any material fact necessary to
make such information, in light of the circumstances under which it was
made, not misleading.
(iii) The Selling Stockholders will review carefully any
Registration Statement relating to the Registrable Securities and each
amendment or supplement thereto upon receipt thereof from Purchaser and
will promptly advise Purchaser in writing if: (i) the name and address
of any Selling Stockholder (if required to be disclosed) is not
properly set forth; (ii) the Selling Stockholders know of any
arrangements made or to be made by any person, or of any transaction
already effected, to limit or restrict the sale of the Registrable
Securities during the period of the public distribution or to stabilize
the market for the Registrable Securities during the period of the
public distribution; or (iii) the Selling Stockholders have entered
into any material arrangement with a broker-dealer for the sale
of the Registrable Securities through a cross or block trade, special
offering, exchange distribution or secondary distribution or a purchase
by a broker-dealer.
(iv) The Selling Stockholders shall not distribute any
prospectus or other offering material in connection with the offering
and sale of the Registrable Securities other than a prospectus or other
material permitted by the Securities Act and prepared by the Purchaser.
(v) The Selling Stockholders shall enter into such
agreements with the Purchaser with respect to the Registration of the
Registrable Securities containing such representations, warranties and
covenants as is customary in connection with the registration of
securities for sale under the Securities Act.
(vi) The Purchaser in its sole discretion may limit the
number of Registrable Securities to be included on any one Registration
Statement to not more than 60% of the Purchaser Shares to be issued in
the Merger.
(vii) The Purchaser reserves the right to suspend the use of
the Registration Statement by any Selling Stockholder during any period
in which the Purchaser determines that the Prospectus is not true and
correct in all material respects or omits a material fact necessary to
make the information contained therein, in light of the circumstances
under which it was made, not misleading.
14.8 PURCHASER COSTS AND EXPENSES.
As used in this Agreement, "Purchaser Costs and Expenses" shall include
all of the costs and expenses relating to the Registration Statement involved,
including but not limited to registration, filing and qualification fees, blue-
sky expenses, printing expenses, reasonable fees and disbursements of counsel
to the Purchaser and accounting fees; provided however, that underwriting
discounts and commissions and reimbursable underwriters expenses, if any, shall
be borne pro rata by the holders of the securities included in the Registration
Statement.
14.9 REGISTRABLE SECURITIES.
As used in this Agreement, "Registrable Securities" shall mean the
shares of Purchaser Common Stock constituting the Merger Consideration and any
additional shares of Purchaser Common Stock which may be issued with respect
thereto in any stock split, stock dividend or other recapitalization, which are
beneficially owned at the time of the notices contemplated in Section14.1 by
any of the Stockholders.
ARTICLE XV
GENERAL PROVISIONS
15.1 EXPENSES.
Except as otherwise expressly provided in this Agreement, each of the
Purchaser and Stockholders will bear its respective expenses incurred in
connection with the preparation, execution, and performance of this Agreement
and the Contemplated Transactions, including all fees and expenses of agents,
representatives, counsel, and accountants. In the event of termination of this
Agreement, the obligation of each party to pay its own expenses will be subject
to any rights of such party arising from a breach of this Agreement by another
party.
15.2 PUBLIC ANNOUNCEMENTS.
Any public announcement or similar publicity with respect to this
Agreement or the Contemplated Transactions will be issued, if at all, at such
time and in such manner as Purchaser determines after prior notice to Sellers.
Unless consented to by the other parties in advance or required by Legal
Requirements, prior to the Closing each party shall keep this Agreement
strictly confidential and may not make any disclosure of this Agreement to any
Person. Sellers and Purchaser will consult with each other concerning the means
by which the Company's employees, customers, and suppliers and others having
dealings with the Company will be informed of the Contemplated Transactions,
and Purchaser will have the right to be present for any such communication.
15.3 CONFIDENTIALITY.
Between the date of this Agreement and the Closing Date, Purchaser,
Merger Sub and Sellers will maintain in confidence, and will cause the
directors, officers, employees, agents, and advisors of Purchaser, Merger Sub
and the Company to maintain in confidence, any written information marked
"confidential" when originally furnished by another party or the Company in
connection with this Agreement or the Contemplated Transactions, unless (a)
such information is already known to such party or to others not bound by a
duty of confidentiality or such information becomes publicly available through
no fault of such party, (b) the use of such information is necessary or
appropriate in making any filing or obtaining any consent or approval required
for the consummation of the Contemplated Transactions, or (c) the furnishing or
use of such information is required by or necessary or appropriate in
connection with legal proceedings.
If the Contemplated Transactions are not consummated, each party will
return or destroy as much of such written information as the other party may
reasonably request.
15.4 NOTICES.
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when
(a) delivered by hand (with written confirmation of receipt), (b) sent by
telecopier (with written confirmation of receipt), provided that a copy is
mailed by registered mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties) :
Sellers: Medical Advances, Inc.
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Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇ & ▇▇▇▇, S.C.
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Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Purchaser or Merger Sub: Intermagnetics General Corporation
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Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Day, ▇▇▇▇▇ & ▇▇▇▇▇▇
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Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
15.5 ARBITRATION
Any controversy or claim arising out of or relating to this Agreement
or the breach or validity thereof shall be settled by arbitration in New York
City by a panel of three arbitrators in accordance with the rules of the
American Arbitration Association. Judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof.
15.6 FURTHER ASSURANCES.
The parties agree (a) to furnish upon request to each other such
further information, (b) to execute and deliver to each other such other
documents, and (c) to do such other acts and things, all as the other party may
reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
15.7 WAIVER.
The rights and remedies of the parties to this Agreement are cumulative
and not alternative. Neither the failure nor any delay by any party in
exercising any right, power, or privilege under this Agreement or the documents
referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right
arising out of this Agreement or the documents referred to in this Agreement
can be discharged by one party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by the other party;
(b) no waiver that may be given by a party will be applicable except in
the specific instance for which it is given; and (c) no notice to or demand on
one party will be deemed to be a waiver of any obligation of such party or of
the right of the party giving such notice or demand to take further action
without notice or demand as provided in this Agreement or the documents
referred to in this Agreement.
15.8 ENTIRE AGREEMENT AND MODIFICATION.
This Agreement supersedes all prior agreements between the parties with
respect to its subject matter (including the Letter of Intent between Purchaser
and Sellers dated January 9, 1997) and constitutes (along with the documents
referred to in this Agreement) a complete and exclusive statement of the terms
of the agreement between the parties with respect to its subject matter. This
Agreement may not be amended except by a written agreement executed by the
party to be charged with the amendment.
15.9 DISCLOSURE SCHEDULE AND OTHER SCHEDULES.
(a) All capitalized terms used in the Disclosure Schedule have the
meanings set forth in this Agreement. The Section references in the Disclosure
Schedule refer to Sections of the Agreement. For convenience, some disclosures
are cross-referenced to other Sections of the Disclosure Schedule. Summaries
of or reference to actual documents in the Disclosure Schedule are qualified in
their entirety by reference to such documents.
(b) In the event of any inconsistency between the statements in the
body of this Agreement and those in the Schedules (other than an exception
expressly set forth as such in a Schedule with respect to a specifically
identified representation or warranty), the statements in the body of this
Agreement will control.
15.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS.
None of the parties may assign any of its rights under this Agreement
without the prior consent of the other parties, which will not be unreasonably
withheld, except that Purchaser may assign any of its rights under this
Agreement to any Subsidiary of Purchaser. Subject to the preceding sentence,
this Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their
successors and assigns.
15.11 SEVERABILITY.
If any provision of this Agreement is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Agreement
will remain in full force and effect. Any provision of this Agreement held
invalid or unenforceable only in part or degree will remain in full force and
effect to the extent not held invalid or unenforceable.
15.12 SECTION HEADINGS, CONSTRUCTION.
The headings of Sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections of this
Agreement. All words used in this Agreement will be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms.
15.13 GOVERNING LAW.
This Agreement will be governed by the laws of the State of New York
without regard to conflicts of laws principles.
15.14 COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
INTERMAGNETICS MEDICAL ADVANCES, INC.
GENERAL CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Executive Officer Title: President
INTERMAGNETICS MERGER SUB, INC.
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
STOCKHOLDERS
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