EXHIBIT 2.4
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AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF SEPTEMBER 9, 1997
BY AND AMONG
TRIAD MEDICAL INC.
SUN ACQUISITION INC.
SUN MEDICAL, INC.
AND
ITS SOLE STOCKHOLDER
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS................................................................1
Section 1.01. Certain Defined Terms................................................1
ARTICLE II THE MERGER AND RELATED MATTERS.............................................7
Section 2.01. Certificate of Merger................................................7
Section 2.02. The Effective Time...................................................7
Section 2.03. Certain Effects of the Merger........................................7
Section 2.04. Effect of the Merger on Capital Stock................................8
Section 2.05. Delivery, Exchange and Payment.......................................9
Section 2.06. Fractional Shares...................................................10
Section 2.07. Escrow of Contingent Merger Consideration...........................10
Section 2.08. Assumption and Payment of Closing Date Indebtedness.................11
Section 2.09. ▇▇▇▇▇▇▇▇ Application of Note Proceeds...............................11
Section 2.10. Payment of SERP Obligation to ▇▇▇▇▇▇▇▇..............................11
ARTICLE III REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDER........................................................11
Section 3.01. By the Stockholder..................................................11
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND THE STOCKHOLDER...........................................13
Section 4.01. By the Company and the Stockholder..................................13
ARTICLE V REPRESENTATIONS AND WARRANTIES OF TMI AND NEWCO...........................14
Section 5.01. By TMI and Newco....................................................14
ARTICLE VI COVENANTS EXTENDING TO THE EFFECTIVE TIME.................................14
Section 6.01. Of Each Party.......................................................14
ARTICLE VII THE CLOSING AND CONDITIONS TO CLOSING
AND CONSUMMATION..........................................................15
Section 7.01. The Closing and Certain Conditions..................................15
ARTICLE VIII COVENANTS FOLLOWING THE EFFECTIVE TIME....................................16
Section 8.01. Of Each Party Other Than the Company................................16
ARTICLE IX INDEMNIFICATION...........................................................17
Section 9.01. Indemnification Rights and Obligations..............................17
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ARTICLE X LIMITATIONS ON COMPETITION................................................17
ARTICLE XI GENERAL PROVISIONS........................................................17
Section 11.01. Treatment of Confidential Information...............................17
Section 11.02. Restrictions on Transfer of TMI Common Stock........................17
Section 11.03. Brokers and Agents..................................................18
Section 11.04. Assignment; No Third Party Beneficiaries............................19
Section 11.05. Entire Agreement; Amendment; Waivers................................19
Section 11.06. Counterparts........................................................19
Section 11.07. Expenses............................................................19
Section 11.08. Notices.............................................................20
Section 11.09. Governing Law.......................................................21
Section 11.10. Exercise of Rights and Remedies.....................................21
Section 11.11. Time................................................................21
Section 11.12. Reformation and Severability........................................21
Section 11.13. Remedies Cumulative.................................................22
Section 11.14. Respecting the IPO..................................................22
Section 11.15. Joinder of ▇▇▇▇▇▇▇▇.................................................22
Section 11.16. Disclaimer by Independent Fiduciary.................................22
ARTICLE XII TERMINATION...............................................................22
Section 12.01. Termination of This Agreement.......................................22
Section 12.02. Liabilities in Event of Termination.................................23
ARTICLE XIII MATTERS RELATING TO THE PLAN AND ESCROW FUND..............................24
13.01. Compliance Efforts........................................................24
13.02. Plan Related Claims.......................................................24
13.03. Payments from Escrow Fund.................................................25
13.04. Voting of Escrowed Shares.................................................26
13.05. Duration of Escrow Agreement..............................................26
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made as
of September 9, 1997, among TRIAD Medical Inc., a Delaware corporation ("TMI"),
Sun Acquisition, Inc., a Texas corporation and a wholly owned subsidiary of TMI
("Newco"), Sun Medical, Inc., a Texas corporation (the "Company"), ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, as Trustee of the Sun Medical, Inc. Employee Stock Ownership Trust,
the sole stockholder of the Company (the "Stockholder"), and Consulting
Fiduciaries, Inc., the independent fiduciary of the Sun Medical, Inc.
Employee Stock Ownership Plan (the "Independent Fiduciary").
PRELIMINARY STATEMENT
The parties to this Agreement wish to effect a business combination
pursuant to which:
(i) Newco will merge into the Company (the "Merger") on the
terms and subject to the conditions of this Agreement;
(ii) TMI, VIA mergers involving TMI subsidiaries, will acquire
the stock of all or some of the entities identified in the accompanying
Addendum I (each an "Other Founding Company" and, collectively with the
Company, the "Founding Companies") under agreements similar to this
Agreement entered into among those entities, their equity owners, TMI
and subsidiaries of TMI (collectively, the "Other Agreements"); and
(iii) TMI will effect a public offering of shares of its common
stock.
The respective boards of directors of TMI, Newco and the Company have
approved and adopted this Agreement to effect a transaction subject to Section
351 of the Code.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, representations and undertakings contained in this Agreement, the
parties to this Agreement agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms have the meanings assigned to them below in this Section 1.01.
Capitalized terms used in this Agreement but not defined in this Section 1.01
have the meanings assigned to them in the Preliminary Statement or in Article I
of the Uniform Provisions (the text of which is by this reference incorporated
in this Agreement), as the case may be.
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"AGREEMENT" means this Agreement, including the Disclosure
Statement relating to this Agreement and all attached Schedules, Annexes
and Exhibits, as each of them may be amended, modified or supplemented
from time to time under their provisions or the provisions of this
Agreement.
"BUSINESS CORPORATION ACT" means the Texas Business Corporation
Act.
"CEILING AMOUNT" means (i) on or before the first anniversary of
the IPO Closing Date, $11 million, and (ii) thereafter, $5.5 million
less the amount of all Damages paid or which have become payable by the
party or the parties in question with respect to indemnification claims
made on or before the first anniversary of the IPO Closing Date.
"CLOSING DATE INDEBTEDNESS" means the aggregate unpaid principal
balance of (i) the ▇▇▇▇▇▇▇▇ Note, (ii) the ▇▇▇▇ Note, and (iii) the TCB
Note, in each case at the IPO Closing Date.
"CLOSING MEMORANDUM" means the form of closing memorandum to be
prepared by TMI for the Closing under this Agreement in which there
shall be included the forms of certificates of officers, the opinions of
counsel and certain other documents to be delivered at the Closing as
provided in Article VII.
"COMPANY COMMON STOCK" means the common stock, no par value, of
the Company.
"CONTINGENT CASH CONSIDERATION" means $1,500,000.
"CONTINGENT STOCK CONSIDERATION" means 35,714 shares of TMI
Common Stock.
"COUNSEL FOR TMI AND NEWCO" means ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
"COUNSEL FOR THE COMPANY AND THE STOCKHOLDERS" means Akin, Gump,
Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P.
"CURRENT BALANCE SHEET" means the unaudited balance sheet of the
Company at June 30, 1997, which is included in the Initial Financial
Statements.
"CURRENT BALANCE SHEET DATE" means June 30, 1997.
"CURRENT DATE" means any day during the 20-day period ending on
the date of the Closing.
"CYSCO" means Cysco Enterprises, Inc., a Texas corporation.
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"CYSCO NOTE PAYABLE" means the indebtedness (both principal and
accrued, unpaid interest) owed by the Company to Cysco, under (i) the
Promissory Note of the Company dated February 15, 1997, payable to the
order of Cysco in the original principal amount of $325,000 and (ii) the
related Note Agreement of even date therewith between Cysco and the
Company.
"DISCLOSURE STATEMENT" means the written statement executed by
the Company and the Stockholder and delivered to TMI prior to the
execution and delivery of this Agreement, in which either (a) exceptions
are taken to each of certain of the representations and warranties made
by the Company and the Stockholder in this Agreement or (b) it is
confirmed that no exception is taken to that representation and
warranty.
"DOL" means the United States Department of Labor.
"▇▇▇▇ NOTE" means the Stockholder's promissory note dated January
2, 1992, originally payable to the order of ▇▇▇▇▇▇ ▇▇▇▇ in the original
principal amount of $1,185,000, the outstanding principal balance of
which was $514,000 at June 30, 1997, which promissory note was assigned
by ▇▇▇▇▇▇ ▇▇▇▇ to ▇▇▇▇▇▇▇▇ on January 2, 1995, and is now held by
▇▇▇▇▇▇▇▇.
"ESCROW AGENT" means the bank or other financial institution to
be jointly designated by TMI and the Independent Fiduciary to serve as
the escrow agent under the Escrow Agreement.
"ESCROW AGREEMENT" means the Escrow Agreement to be entered into
on the IPO Closing Date among the Company, the Independent Fiduciary and
the Escrow Agent as contemplated in Section 2.07.
"ESCROW FUND" means (i) the Contingent Cash Consideration, (ii)
the Contingent Stock Consideration, and (iii) all interest and dividends
on the Contingent Cash Consideration and the Contingent Stock
Consideration, and all proceeds thereof, earned, paid or realized while
the same are on deposit with the Escrow Agent.
"ESCROWED SHARES" means all shares of TMI Common Stock included
in the Contingent Stock Consideration and deposited in escrow under the
Escrow Agreement.
"EXISTING RELATED PARTY LEASE" means the Lease Agreement
presently in effect between Dual Development, as lessor, and the
Company, as lessee, under which the Company now leases the premises at
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ #▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇.
"FIDUCIARY ENGAGEMENT LETTER" means the letter agreement dated
August 26, 1997, between TMI and the Independent Fiduciary under which
the Independent Fiduciary was engaged to act as independent fiduciary of
the Plan.
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"FSA RECEIVABLE" means the note receivable of the Company from
Foundation Surgery Affiliation.
"INDEPENDENT FIDUCIARY" means Consulting Fiduciaries, Inc., the
independent fiduciary of the Plan and Trust.
"INITIAL CASH CONSIDERATION" means an amount of cash equal to (i)
the Maximum Cash Consideration minus (ii) the Contingent Cash
Consideration.
"INITIAL FINANCIAL STATEMENTS" means (a) the audited balance
sheets of the Company at December 31, 1995 and 1996 and the related
audited statements of operations, stockholders' equity and cash flows
for each of the Company's three fiscal years in the three-year period
ended December 31, 1996, together with the related audit report of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, and (b) the Current Balance Sheet and the related
unaudited statements of operations, stockholders' equity and cash flows
for the six-month period ended on the Current Balance Sheet.
"INITIAL STOCK CONSIDERATION" means 485,000 shares of TMI Common
Stock.
"LOAN REPAYMENT SHARES" means shares of TMI Common Stock which
TMI shall issue and deliver to ▇▇▇▇▇▇▇▇ in partial payment of the
▇▇▇▇▇▇▇▇ Note as provided in Section 2.08, which number of shares shall
be determined by (i) first subtracting (a) $726,000 from (b) the unpaid
balance of principal on the ▇▇▇▇▇▇▇▇ Note at the Closing Date, and (ii)
then dividing the result thus obtained by $14.
"MAJORITY STOCKHOLDERS" means the Stockholder.
"MAXIMUM CASH CONSIDERATION" means an amount of cash equal to (i)
$2,861,000 minus (ii) the amount of the Closing Date Indebtedness.
"MERGER CONSIDERATION" has the meaning specified in Section 2.04.
"NEW EMPLOYMENT AGREEMENT" means the Employment Agreement entered
into as of September 9, 1997, between TMI and ▇▇▇▇▇▇▇▇.
"NEW LEASE AGREEMENT" means the Lease Agreement to be executed
and delivered by the Company and Dual Development at or before the
Closing, to be effective as of the Effective Time, and to be in the form
of Exhibit 1.01-C attached to this Agreement, by which the Company, from
and after the Effective Time, will lease the real property now leased by
it under the Existing Related Party Lease.
"NEWCO" means Sun Acquisition, Inc., a Texas corporation.
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"PLAN" means the Sun Medical, Inc. Employee Stock Ownership Plan.
"PLAN DOCUMENTS" means all agreements, documents and instruments
creating, evidencing or governing the Plan, the Trust or both.
"PLAN PARTICIPANTS" means all individuals, estates, trusts, and
entities who are now, have ever been or may later become entitled to
receive any benefit under the Plan, including (i) all past and present
participants in the Plan, (ii) all persons who as a result of a
qualified domestic relations order or otherwise have succeeded, once
succeeded, or may later succeed, to all or part of a past or present
Plan participant's interest in the Plan, (iii) the estate,
beneficiaries, heirs, legatees, devisees, personal legal
representatives, and "qualified spouses" (as that term is defined in the
Plan Documents) of all deceased Plan participants and of all deceased
persons who one succeeded to all or part of any Plan participant's
interest in the Plan, and (iv) all guardians or other personal legal
representatives of any past or present participant in the Plan or of any
person who has or once succeeded, or may later succeed, to all or part
of any past or present participant's interest in the Plan, and who is,
in any such case, incompetent or otherwise under a legal disability.
"PLAN RELATED CLAIMS" means all claims, demands or assessments
made or asserted by the IRS, the DOL, any other Governmental Authority,
any Plan Participant or any other Person based upon, arising out of or
under or relating to:
(i) any Prohibited Transaction engaged in by the Company,
any past or present Company Subsidiary, the Plan, the Trustee,
any past trustee of the Plan, or any other past or present
fiduciary of the Plan;
(ii) any failure of the Plan to have been qualified under
Section 401(a) of the Code, or exempt from U.S. federal income
Taxes under Section 501(a) of the Code, at any time prior to the
Effective Time or thereafter if attributable to acts or omissions
occurring prior to the Effective Time;
(iii) the making of any contributions to the Plan by the
Company or any past or present Company Subsidiary which were not
deductible for U.S. federal income tax purposes, for any taxable
period ending on or before the Effective Time;
(iv) any breaches of fiduciary duty on the part of any
past or present Plan fiduciary;
(v) any other failure of the Company, any past or present
Company Subsidiary, the Trustee, any past trustee of the Plan
Trust, or any other past or present fiduciary of the Plan to
comply with ERISA or the Code with respect to the Plan; or
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(vi) any sanctions, Taxes, fees, penalties and interest
imposed under the Code, ERISA or other applicable Law in respect
of any of the foregoing.
"PLAN RELATED DAMAGES" means all Damages paid, suffered or
incurred by the Company or the TMI Indemnified Parties in connection
with or as a result of any Plan Related Claim, determined without regard
to the Threshold Amount.
"PLAN TRUST" means the Sun Medical, Inc. Employee Stock
Ownership Trust.
"PRO RATA SHARE" means 100%.
"REJUVENA" means Rejuvena Corporation, a Texas corporation.
"REJUVENA EQUITY SECURITIES" means (i) all shares of Capital
Stock of Rejuvena owned by the Company and (ii) all options held by the
Company for the purchase of shares of Capital Stock of Rejuvena.
"REJUVENA NOTE AGREEMENT" means the Note Agreement dated October
25, 1996, between the Company and Rejuvena.
"REJUVENA NOTE RECEIVABLE" means the unpaid principal of and all
unpaid accrued interest on all convertible promissory notes issued to
the Company under the Rejuvena Note Agreement.
"RESPONSIBLE OFFICER" means ▇▇▇▇▇▇▇▇.
"SCHEDULED AGREEMENTS" means the agreements described in
Schedule 4.11.
"▇▇▇▇▇▇▇▇" means ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ in his individual capacity.
"▇▇▇▇▇▇▇▇' TCB LOAN" means the loan to ▇▇▇▇▇▇▇▇ from TCB
evidenced by ▇▇▇▇▇▇▇▇' Installment Promissory Note dated December 31,
1995, payable to the order of TCB, the outstanding principal balance of
which was $514,000 at June 30, 1997.
"▇▇▇▇▇▇▇▇ NOTE" means the Stockholder's promissory note dated
January 2, 1992, payable to the order of ▇▇▇▇▇▇▇▇ in the original
principal amount of $2,765,000, the outstanding principal balance of
which was $1,436,000 at June 30, 1997.
"STOCKHOLDERS AGREEMENT" means the Stockholders Agreement entered
into as of September 9, 1997, among TMI, the Stockholder and the other
Persons party thereto.
"SURVIVING CORPORATION" means the Company, which is to be
designated in the Certificate of Merger as the surviving corporation of
the Merger.
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"TCB" means Texas Commerce Bank National Association.
"TCB NOTE" means the Stockholder's promissory note dated July 31,
1991, payable to the order of TCB in the original principal amount of
$350,000, the outstanding principal balance of which was $75,000 at June
30, 1997.
"TERRITORY" has the meaning specified in Section 10.01.
"TMI" means TRIAD Medical Inc., a Delaware corporation.
"TMI ACQUISITION CANDIDATE" means any Entity engaged in any of
the businesses of distributing medical or healthcare products to
hospitals, clinics, physicians, laboratories, pharmacies, alternate care
sites or other medical or healthcare facilities or conceiving,
designing, developing or testing technologically advanced medical or
healthcare products, and which was called on by any of the Company, TMI
or a Subsidiary of the Company or TMI in connection with the possible
acquisition by any of them of that Entity or with respect to which any
of them has made an acquisition analysis.
"THRESHOLD AMOUNT" means $220,000.
"TRANSFER TAXES" has the meaning specified in Section 11.07.
"TRUSTEE" means ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, in his capacity as Trustee of
the Stockholder.
"UNIFORM PROVISIONS" means the Uniform Provisions of TMI for the
Acquisition of Founding Companies attached as Annex 1 to this Agreement.
ARTICLE II
THE MERGER AND RELATED MATTERS
Section 2.01. CERTIFICATE OF MERGER. Subject to the terms and conditions
of this Agreement, the Company will cause a Certificate of Merger to be duly
executed and delivered on or promptly after the date of the Closing to the
Secretary of State of the State of Texas.
Section 2.02. THE EFFECTIVE TIME. The effective time of the Merger (the
"Effective Time") will be the time on the IPO Closing Date which the Certificate
of Merger specifies or, if the Certificate of Merger does not specify another
time, 8:00 a.m., eastern time, on the IPO Closing Date.
Section 2.03. CERTAIN EFFECTS OF THE MERGER. At and as of the Effective
Time, (a) Newco will be merged with and into the Company in accordance with the
provisions of the Business
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Corporation Act, (b) Newco will cease to exist as a separate legal entity, (c)
the articles of incorporation of the Company will be amended to change its
authorized capital stock to 1,000 shares, par value $1.00 per share, of Common
Stock, (d) the Company will be the Surviving Corporation and, as such, will, all
with the effect provided by the Business Corporation Act, (i) possess all the
properties and rights, and be subject to all the restrictions and duties, of the
Company and Newco and (ii) be governed by the laws of the State of Texas, (e)
the Charter Documents of the Company then in effect (after giving effect to the
amendment of the Company's articles of incorporation specified in clause (c) of
this sentence) will become and thereafter remain (until changed in accordance
with (i) applicable law, in the case of the articles of incorporation or (ii)
their terms, in the case of the bylaws) the Charter Documents of the Surviving
Corporation, (f) the initial board of directors of the Surviving Corporation
will be the Persons named in Schedule 2.03, and those Persons will hold the
office of director of the Surviving Corporation subject to the provisions of the
applicable laws of the State of Texas and the Charter Documents of the Surviving
Corporation, and (g) the initial officers of the Surviving Corporation will be
as set forth in Schedule 2.03, and each of those Persons will serve in each
office specified for that Person in Schedule 2.03, subject to the provisions of
the Charter Documents of the Surviving Corporation, until that Person's
successor is duly elected to, and, if necessary, qualified for, that office.
Section 2.04. EFFECT OF THE MERGER ON CAPITAL STOCK. As of the Effective
Time, as a result of the Merger and without any action on the part of any holder
thereof:
(i) the shares of Company Common Stock issued and
outstanding immediately prior to the Effective Time will (i) be
converted into the right to receive, without interest, on
surrender of the certificate evidencing those shares, (a) an
amount of cash equal to the Initial Cash Consideration, (b) the
Initial Stock Consideration, and (c) such Contingent Cash
Consideration, Contingent Stock Consideration and other cash and
property from time to time included in the Escrow Fund as may
from time to time be paid or distributed to the Stockholder under
the terms of Section 2.07, Article XIII of this Agreement, and
the Escrow Agreement (all of which are herein collectively called
the "Merger Consideration"), (ii) cease to be outstanding and to
exist, and (iii) be canceled and retired;
(ii) each share of Company Common Stock held in the
treasury of the Company or any Company Subsidiary will (i) cease
to be outstanding and to exist and (ii) be canceled and retired;
and
(iii) each share of Newco Common Stock issued and
outstanding immediately prior to the Effective Time will be
converted into one share of Common Stock, par value $1.00 per
share, of the Surviving Corporation, and the shares of Common
Stock of the Surviving Corporation issued on conversion will
constitute all the issued and outstanding shares of Capital Stock
of the Surviving Corporation.
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Each holder of a certificate representing shares of Company Common Stock
immediately prior to the Effective Time will, as of the Effective Time and
thereafter, cease to have any rights respecting those shares other than the
right to receive, without interest, the Merger Consideration and the additional
cash, if any, owing with respect to those shares as provided in Section 2.06.
Section 2.05. DELIVERY, EXCHANGE AND PAYMENT.
(a) At or after the Effective Time: (i) the Stockholder, as the
holder of certificates representing shares of Company Common Stock,
will, on surrender of his certificates to TMI (or any agent which may be
appointed by TMI for purposes of this Section 2.05), receive, and TMI
will pay and issue, or cause to be paid and issued, to the Stockholder,
in each case, subject to the provisions of Section 2.06, the Initial
Cash Consideration and the Initial Stock Consideration; and (ii) until
any certificate representing Company Common Stock has been surrendered
and replaced pursuant to this Section 2.05, that certificate will, for
all purposes, be deemed to evidence ownership of the number of whole
shares of TMI Common Stock included in the Initial Stock Consideration.
All shares of TMI Common Stock included in the Initial Stock
Consideration will be deemed for all purposes to have been issued by TMI
at the Effective Time. All cash included in the Initial Cash
Consideration shall be paid by TMI's company check or checks, one or
more wire transfers to accounts designated by the respective
Stockholders at least two New York business days before the IPO Closing
Date, or by certified or official bank check or checks, at TMI's option.
(b) The Stockholder will deliver to TMI (or any agent that may be
appointed by TMI for purposes of this Section 2.05) on or before the IPO
Closing Date the certificates representing Company Common Stock owned by
the Stockholder, duly endorsed in blank by him, or accompanied by duly
executed stock powers in blank, and with all necessary transfer tax and
other revenue stamps, acquired at his expense, affixed and canceled.
Each Stockholder shall cure any deficiencies in the endorsement of the
certificates or other documents of conveyance respecting, or in the
stock powers accompanying, the certificates representing Company Common
Stock delivered by him.
(c) No dividends (or interest) or other distributions declared or
earned after the Effective Time with respect to shares of TMI Common
Stock, included in the Initial Stock Consideration and payable to the
holders of record thereof after the Effective Time will be paid to the
holder of any unsurrendered certificates representing shares of Company
Common Stock for which such shares of TMI Common Stock have been issued
in the Merger until those certificates are surrendered as provided
herein, but (i) on such surrender TMI will cause to be paid, to the
Person in whose name the certificates representing such shares of TMI
Common Stock shall then be issued, the amount of dividends or other
distributions previously paid with respect to such whole shares of TMI
Common Stock with a record date, or which have accrued, subsequent to
the Effective Time, but prior to surrender, and the amount of any cash
payable to such Person for and in lieu of fractional
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shares pursuant to Section 2.06 and (ii) at the appropriate payment date
or as soon as practicable thereafter, TMI will cause to be paid to that
Person the amount of dividends or other distributions with a record
date, or which have been accrued, subsequent to the Effective Time, but
which are not payable until a date subsequent to surrender, which are
payable with respect to such whole shares of TMI Common Stock, subject
in all cases to any applicable escheat laws. No interest will be payable
with respect to the payment of such dividends or other distributions or
cash for and in lieu of fractional shares on surrender of outstanding
certificates.
Section 2.06. FRACTIONAL SHARES. Notwithstanding any other provision of
this Article II, no fractional shares of TMI Common Stock will be issued, and
any Stockholder otherwise entitled to receive a fractional share of TMI Common
Stock but for this Section 2.06 will instead be entitled to receive a cash
payment for and in lieu thereof in the amount (rounded to the nearest whole
cent) equal to that Person's fractional interest in a share of TMI Common Stock
multiplied by the IPO Price.
Section 2.07. ESCROW OF CONTINGENT MERGER CONSIDERATION.
(a) At the Effective Time:
(i) the Company and the Independent Fiduciary shall
execute and deliver, and shall cause the Escrow Agent to execute
and deliver, an Escrow Agreement in substantially the form of
Exhibit 1.02-D attached to this Agreement; and
(ii) the Company shall deposit with the Escrow Agent, to
be held and distributed by the Escrow Agent as provided in the
Escrow Agreement and Article XIII of this Agreement, (a) a
certificate or certificates evidencing the Contingent Stock
Consideration and (b) the Contingent Cash Consideration.
(b) The Escrowed Shares shall:
(i) be issued and outstanding shares of TMI Common Stock
and shall appear as such on the balance sheet of TMI;
(ii) be entitled, PRO RATA with all other holders of TMI
Common Stock, to all dividends declared with respect to the TMI
Common Stock; and
(iii) have voting rights equal to the voting rights of
all other issued and outstanding shares of TMI Common Stock.
However, no part of the Escrow Fund, while held by the Escrow
Agent under the Escrow Agreement, shall be considered to be assets of
the Plan for purposes of ERISA, and neither the Plan nor any Plan
Participant shall have any interest therein unless and until, and
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except to the extent, that property included in the Escrow Fund is
distributed to the Stockholder under the terms of Article XIII and the
Escrow Agreement.
Section 2.08. ASSUMPTION AND PAYMENT OF CLOSING DATE INDEBTEDNESS. On
the IPO Closing Date, effective as of the Effective Time, the Company shall
assume and agree to pay in full, in the manner provided in this Section 2.08,
the Closing Date Indebtedness. Immediately after the Effective Time and the
Company's assumption of the Closing Date Indebtedness, the Company shall pay,
and TMI shall provide to the Company the cash funds and Loan Repayment Shares
required by the Company in order to enable it to pay:
(i) in cash, the entire unpaid principal balance of, and
all unpaid interest on, the TCB Note;
(ii) in cash, the entire unpaid principal balance of,
and all unpaid interest on, the ▇▇▇▇ Note; and
(iii) the entire unpaid principal balance of, and all
unpaid interest on, the ▇▇▇▇▇▇▇▇ Note, such amount to be paid (a)
in cash, to the extent of $726,000 plus the amount of unpaid
interest on the entire principal balance of the ▇▇▇▇▇▇▇▇ Note,
and (b) by the issuance to ▇▇▇▇▇▇▇▇ of the Loan Repayment Shares,
to the extent of the remaining balance thereof.
Section 2.09. ▇▇▇▇▇▇▇▇ APPLICATION OF NOTE PROCEEDS. Immediately upon
the payment by the Company of the ▇▇▇▇▇▇▇▇ Note as provided in Section 2.08,
▇▇▇▇▇▇▇▇, out of the cash proceeds of such payment, shall pay in full the entire
unpaid principal balance of, and all accrued unpaid interest on, the ▇▇▇▇▇▇▇▇'
TCB Loan, and shall release and cause to be released any pledge of or security
interest in any shares of Company Common Stock securing payment of the ▇▇▇▇
Note, the ▇▇▇▇▇▇▇▇' Note, or the ▇▇▇▇▇▇▇▇' TCB Loan.
Section 2.10. PAYMENT OF SERP OBLIGATION TO ▇▇▇▇▇▇▇▇. On the IPO Closing
Date, immediately following the Effective Time, the Company shall pay to
▇▇▇▇▇▇▇▇, and TMI shall provide to the Company any cash funds it may require in
order to pay to ▇▇▇▇▇▇▇▇, the sum of $139,000 in full payment and satisfaction
of the Company's obligation to ▇▇▇▇▇▇▇▇ under the Company's Supplemental
Executive Retirement Plan.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
Section 3.01. BY THE STOCKHOLDER. The Stockholder represents and
warrants to TMI that all the following representations and warranties in this
Article III are true and correct:
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(a) (i) the Stockholder will be acquiring the shares of TMI
Common Stock included in the Merger Consideration solely for the
Stockholder's account, for investment purposes only and with no current
intention or plan to distribute (other than as specifically contemplated
in Section 11.02), sell or otherwise dispose of any of those shares in
connection with any distribution; (ii) the Stockholder is not a party to
any agreement or other arrangement for the disposition of any shares of
TMI Common Stock other than this Agreement, the Escrow Agreement, the
Stockholders Agreement, the Registration Rights Agreement and as
specifically contemplated in Section 11.02; (iii) the Stockholder is an
"accredited investor" as defined in Securities Act Rule 501 (a); (iv)
the Stockholder (A) is able to bear the economic risk of an investment
in the TMI Common Stock to be acquired by the Stockholder pursuant to
this Agreement, (B) can afford to sustain a total loss of that
investment, (C) has such knowledge and experience in financial and
business matters that the Stockholder is capable of evaluating the
merits and risks of the proposed investment in the TMI Common Stock, (D)
has had an adequate opportunity to ask questions and receive answers
from the officers of TMI concerning any and all matters relating to the
transactions contemplated by this Agreement, including the background
and experience of the current and proposed officers and directors of
TMI, the plans for the operations of the business of TMI, the business,
operations and financial condition of the Other Founding Companies and
any plans of TMI for additional acquisitions, and (E) has asked all
questions of the nature described in preceding clause (D), and all those
questions have been answered to his or her satisfaction;
(b) the Trustee is the duly named and serving trustee of the
Trust, the execution and delivery of this Agreement and the other
Transaction Documents on behalf of the Trust are within the powers of
the Trustee, and the performance by the Stockholder of this Agreement
and each of the other Transaction Documents is within the powers and
purposes of the Stockholder under all Plan Documents, true and correct
copies of all of which have been delivered to TMI;
(c) neither the execution, delivery nor performance by the
Stockholder of this Agreement or any other Transaction Document (i) will
result in a violation of or breach of, or conflict with, any of the Plan
Documents or (ii) constitute a Prohibited Transaction for which an
exemption from the prohibitions or taxes imposed by Section 406 of ERISA
or Section 4975 of the Code is not provided;
(d) except for fees and expenses payable to the Independent
Fiduciary for services rendered in such capacity, neither the Trustee
nor any other fiduciary of the Plan or the Trust has received any
consideration for his own personal account from any party dealing with
the Plan or the Trust in connection with this Agreement or the
transactions contemplated herein;
(e) the Plan has received a written opinion from an independent
financial advisor or appraiser that satisfies the requirements of
Section 401(a)(28)(C) of the Code to the effect
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that the terms of the Merger are fair to the present Plan Participants,
and that "adequate consideration" for purposes of Section 408 of ERISA
will be received by the Plan Participants in connection with the Merger,
and the opinion has not been withdrawn or rescinded;
(f) the present Participants have voted in accordance with the
Plan Documents, and Section 409(e) of the Code, to direct the
Independent Fiduciary to direct the Trustee to vote at least two-thirds
shares of Company Common Stock in favor of the Merger, and the
Independent Fiduciary has directed the Trustee to vote such shares in
favor of the Merger; and
(g) the representations and warranties contained in Article III
of the Uniform Provisions (the text of which Article hereby is
incorporated herein by this reference) are true and correct, and the
agreements set forth therein are hereby agreed to.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND THE STOCKHOLDER
Section 4.01. BY THE COMPANY AND THE STOCKHOLDER. The Company and the
Stockholder jointly and severally represent and warrant to, and agree with, TMI
that all the following representations and warranties in this Article IV are
true and correct:
(a) the Organization State of the Company is the State of Texas,
and the Company (i) is a corporation duly organized, validly existing
and in good standing under the laws of that State, (ii) has all
requisite corporate power and authority under those laws and its Charter
Documents to own or lease and to operate its properties and to carry on
its business as now conducted, and (iii) is duly qualified and in good
standing as a foreign corporation in all jurisdictions (other than its
Organization State) in which it owns or leases property or in which the
carrying on of its business as now conducted so requires except where
the failure to be so qualified, singly or in the aggregate, would not
have a Material Adverse Effect;
(b) the authorized Capital Stock of the Company is comprised of
500,000 shares of Company Common Stock, of which 166,887 shares have
been issued and are now outstanding and no shares are held by the
Company as treasury shares, and no outstanding Derivative Securities of
the Company exist;
(c) the Plan and the Trust have been duly authorized, organized
and established by all necessary corporate action on the part of the
Company, the Plan is a legal and valid employee stock ownership plan
within the meaning of Section 4975(e)(7) of the Code and
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Treasury Regulation Section 54.4975-11, and the Trust is exempt from
taxation under Section 501 of the Code;
(d) the issued and outstanding shares of Company Common Stock
owned by the Stockholder are qualifying employer securities under
Section 409(1) of the Code; and
(e) the representations and warranties contained in Article IV of
the Uniform Provisions (the text of which Article hereby is incorporated
herein by this reference) are true and correct, and the agreements set
forth in that Article IV are agreed to.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF TMI AND NEWCO
Section 5.01. BY TMI AND NEWCO. TMI and Newco jointly and severally
represent and warrant to the Company and the Stockholder that all the following
representations and warranties in this Article V are true and correct: (a) Newco
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Texas, (b) no Derivative Securities of Newco are
outstanding, (c) Newco has been organized for the sole purpose of participating
in the Merger and has not, and will not, engage in any activities other than
those necessary to effectuate the Merger, and (d) the representations and
warranties contained in Article V of the Uniform Provisions (the text of which
Article hereby is incorporated herein by this reference) are true and correct.
ARTICLE VI
COVENANTS EXTENDING TO THE EFFECTIVE TIME
Section 6.01. OF EACH PARTY. Until the Effective Time, subject to the
waiver provisions of Section 11.05, each party hereto will comply with each
covenant for which provision is made in Article VI of the Uniform Provisions
(the text of which Article VI is hereby incorporated herein by this reference)
to be performed or observed by that party.
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ARTICLE VII
THE CLOSING AND CONDITIONS TO CLOSING AND CONSUMMATION
Section 7.01. THE CLOSING AND CERTAIN CONDITIONS.
(a) THE CLOSING. On or before the IPO Pricing Date, the parties
hereto will take all actions necessary to (i) effect the Merger on the
IPO Closing Date (including, as permitted by the Business Corporation
Act (A) the execution of a Certificate of Merger meeting the
requirements of the Business Corporation Act and providing that the
Merger will become effective on the IPO Closing Date and (B) the filing
of the Certificate with the Secretary of State of the State of Texas,
(ii) verify the existence and ownership of the certificates evidencing
the Company Common Stock to be exchanged for the Merger Consideration
pursuant to Section 2.05, and (iii) satisfy the document delivery
requirements to which the obligations of the parties to effect the
Merger and the other transactions contemplated hereby are conditioned by
the provisions of this Article VII (all those actions collectively being
the "Closing"). The Closing will take place at the offices of ▇▇▇▇▇▇ &
▇▇▇▇▇▇, L.L.P., ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ at 10:00 a.m., Houston
time, or at such later time on the IPO Pricing Date as TMI shall specify
by written notice to the Stockholder. The actions taken at the Closing
will not include the completion of either the Merger or the delivery of
the Company Common Stock or the Initial Stock Consideration or the
Initial Cash Consideration pursuant to Section 2.05. Instead, on the IPO
Closing Date, the Certificate of Merger will become effective pursuant
to Section 2.02, and all transactions contemplated by this Agreement to
be closed or completed on or before the IPO Closing Date, including the
surrender of the Company Common Stock in exchange for the Merger
Consideration (including a certified check or checks in an amount equal
to the cash portion of the Merger Consideration) will be closed or
completed, as the case may be. During the period from the Closing to the
IPO Closing Date, this Agreement may be terminated by the parties only
pursuant to Section 12.01 (b)(i).
(b) CERTAIN CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND THE
STOCKHOLDER. The obligations of the Company and the Stockholder with
respect to the actions to be taken by them at or before the Closing are
subject to the satisfaction on or before the date of the Closing, or
waiver by them pursuant to Section 11.05, of all the conditions set
forth in Sections 7.02(a) and 7.03. The obligations of the Stockholder
with respect to the actions to be taken on the IPO Closing Date are
subject to the satisfaction on that date of the following conditions:
(i) each of the Stockholders Agreement, the New Lease Agreement and the
New Employment Agreements then shall be in full force and effect; (ii)
the fairness opinion referred to in Section 3.01(d) shall not have been
withdrawn or rescinded; and (iii) all the conditions set forth in
Sections 7.02(b) and 7.03.
(c) CERTAIN CONDITIONS TO THE OBLIGATIONS OF TMI AND NEWCO. The
obligations of TMI and Newco with respect to actions to be taken by them
at or before the Closing are
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subject to the satisfaction on or before the date of the Closing, or
waiver by them pursuant to Section 11.05, of the following conditions:
(i) the Company shall have delivered to TMI a copy of the articles of
incorporation, as amended to the date of the Closing and certified by
the Secretary of State of the State of Texas as of a Current Date, of
the Company; (ii) the Company shall have collected in full, in cash, the
entire unpaid balance of the Rejuvena Note Receivable, (iii) the
Rejuvena Note Agreement shall have been terminated with no further
obligation thereunder on the part of the Company, (iv) the Company shall
have transferred to Rejuvena, as consideration for the payment in full
of the Rejuvena Note Receivable and the termination of the Rejuvena Note
Agreement, all of the Rejuvena Equity Securities, (v) the Company shall
have collected in full, in cash, the entire unpaid balance of the FSA
Receivable, (vi) the Company shall have paid in full, in cash, the Cysco
Note Payable, (vii) the Existing Related Party Lease Agreement shall
have been terminated with no further obligation thereunder on the part
of its parties, (viii) the New Lease Agreement shall have been executed
and delivered by Dual Development and shall then be in effect, (ix) the
fairness opinion referred to in Section 3.0(d) shall not have been
withdrawn or rescinded, and (x) all the conditions set forth in Sections
7.02(a) and 7.04(a).
(d) The obligations of TMI and Newco with respect to the actions
to be taken on the IPO Closing Date are subject to the satisfaction on
that date of the following conditions: (i) the New Employment Agreements
and the New Lease Agreement then shall be in full force and effect; and
(ii) all the conditions set forth in Sections 7.02(b) and 7.04(b).
(e) The text of Article VII of the Uniform Provisions hereby is
incorporated herein by this reference.
ARTICLE VIII
COVENANTS FOLLOWING THE EFFECTIVE TIME
Section 8.01. OF EACH PARTY OTHER THAN THE COMPANY. From and after the
Effective Time, subject to the waiver provisions of Section 11.05, each party
hereto (other than the Company) will comply with each covenant for which
provision is made in Article VIII of the Uniform Provisions (the text of which
Article hereby is incorporated herein by this reference) to be performed or
observed by that party.
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ARTICLE IX
INDEMNIFICATION
Section 9.01. INDEMNIFICATION RIGHTS AND OBLIGATIONS. The text of
Article IX of the Uniform Provisions hereby is incorporated herein by this
reference.
ARTICLE X
LIMITATIONS ON COMPETITION
[Intentionally Omitted]
ARTICLE XI
GENERAL PROVISIONS
Section 11.01. TREATMENT OF CONFIDENTIAL INFORMATION. Each party hereto
will comply with each covenant for which provision is made in Section 11.01 of
the Uniform Provisions (the text of which Section hereby is incorporated herein
by this reference) to be performed or observed by that party.
Section 11.02. RESTRICTIONS ON TRANSFER OF TMI COMMON STOCK.
(a) During the two-year period ending on the second anniversary
of the IPO Closing Date (the "Restricted Period") the Stockholder will
not voluntarily, except pursuant to and in accordance with the
applicable provisions of the Registration Rights Agreement: (i) sell,
assign, exchange, transfer, encumber, pledge, distribute, appoint or
otherwise dispose of (A) any shares of TMI Common Stock included in the
Merger Consideration or (B) any interest in (including any option to buy
or sell) any of those shares of TMI Common Stock, in whole or in part
and TMI will have no obligation to, and shall not, treat any such
attempted transfer as effective for any purpose; or (ii) engage in any
transaction, whether or not with respect to any shares of TMI Common
Stock or any interest therein, the intent or effect of which is to
reduce the risk of owning the shares of TMI Common Stock acquired
pursuant to Section 2.04 (including, for example engaging in put, call,
short-sale, straddle or similar market transactions); PROVIDED, HOWEVER,
that this Section 11.02 shall not restrict any transfer of TMI Common
Stock acquired by the Stockholder in connection with the Merger to any
of the Participants who are entitled to a distribution thereof under the
terms of the Plan Documents and who agree in writing to be bound by the
provisions of Section 11.01 and this Section 11.02. The certificates
evidencing the TMI Common Stock delivered to the Stockholder as part of
the Merger Consideration will bear a legend
A:2.4
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substantially in the form set forth below and containing such other
information as TMI may deem necessary or appropriate:
EXCEPT PURSUANT TO THE TERMS OF THE AGREEMENT AND PLAN OF
REORGANIZATION AMONG THE ISSUER, THE HOLDER OF THIS CERTIFICATE
AND THE OTHER PARTIES THERETO, THE SHARES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE VOLUNTARILY SOLD, ASSIGNED, EXCHANGED,
TRANSFERRED, ENCUMBERED, PLEDGED, DISTRIBUTED, APPOINTED OR
OTHERWISE DISPOSED OF, AND THE ISSUER SHALL NOT BE REQUIRED TO
GIVE EFFECT TO ANY ATTEMPTED VOLUNTARY SALE, ASSIGNMENT,
EXCHANGE, TRANSFER, ENCUMBRANCE, PLEDGE, DISTRIBUTION,
APPOINTMENT OR OTHER DISPOSITION OF ANY OF THOSE SHARES, DURING
THE TWOYEAR PERIOD ENDING ON [DATE THAT IS THE SECOND ANNIVERSARY
OF THE IPO CLOSING DATE] (THE "RESTRICTED PERIOD"). ON THE
WRITTEN REQUEST OF THE HOLDER OF THIS CERTIFICATE, THE ISSUER
AGREES TO REMOVE THIS RESTRICTIVE LEGEND (AND ANY STOP ORDER
PLACED WITH THE TRANSFER AGENT) AFTER THE DATE SPECIFIED ABOVE.
(b) The Stockholder (i) acknowledges that the shares of TMI
Common Stock to be delivered to the Stockholder as part of the Merger
Consideration (A) have not been and, except pursuant to the Registration
Rights Agreement, if applicable, will not be registered under the
Securities Act and therefore may not be resold by the Stockholder
without compliance with the Securities Act and (B) will, as a result of
their restrictions on transferability which are imposed by this
Agreement during the Restricted Period, have a value materially less at
the Effective Time than the value of then freely tradeable shares of TMI
Common Stock, and (ii) covenants that none of the shares of TMI Common
Stock issued to the Stockholder as part of the Merger Consideration will
be offered, sold, assigned, pledged, hypothecated, transferred or
otherwise disposed of except after full compliance with all the
applicable provisions of the Securities Act and the rules and
regulations of the SEC and applicable state securities laws and
regulations. All certificates evidencing shares of TMI Common Stock
issued as part of the Merger Consideration will bear the following
legend in addition to the legend prescribed by Section 11.02(a):
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND MAY ONLY BE SOLD OR OTHERWISE
TRANSFERRED IF THE HOLDER HEREOF COMPLIES WITH THAT LAW AND OTHER
APPLICABLE SECURITIES LAWS.
In addition, certificates evidencing shares of TMI Common Stock issued
as part of the Merger Consideration to the Stockholder will bear any
legend required by the securities or blue sky laws of the state in which
the Stockholder resides.
Section 11.03. BROKERS AND AGENTS. ▇▇▇▇▇▇▇▇ and the Stockholder
represent and warrant to TMI that the Company has not directly or indirectly
employed or become obligated to pay any
A:2.4
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broker or similar agent in connection with the transactions contemplated hereby
and agrees, without regard to the Threshold Amount limitations set forth in
Article IX, to indemnify TMI against all Damage Claims arising out of claims for
any and all fees and commissions of brokers or similar agents employed or
promised payment by the Company.
Section 11.04. ASSIGNMENT; NO THIRD PARTY BENEFICIARIES. This Agreement
and the rights of its parties may not be assigned (except by operation of law)
and shall be binding on and inure to the benefit of the parties hereto, the
successors of TMI, and all successor trustees of the Trust). Neither this
Agreement nor any other Transaction Document is intended, or shall be construed,
deemed or interpreted, to confer on any Person not a party hereto or thereto any
rights or remedies hereunder or thereunder, except as provided in Section
6.05(b) or 11.14, in Article IX or as otherwise provided expressly herein or
therein.
Section 11.05. ENTIRE AGREEMENT; AMENDMENT; WAIVERS. This Agreement
constitutes the entire agreement and understanding among the Stockholder, the
Company, Newco and TMI and supersede all prior agreements and understandings,
both written and oral, relating to the subject matter of this Agreement. This
Agreement may be amended, modified or supplemented, and any right hereunder may
be waived, if, but only if, that amendment, modification, supplement or waiver
is in writing and signed by the Stockholder, the Company and TMI. The waiver of
any of the terms and conditions of this Agreement shall not be construed or
interpreted as, or deemed to be, a waiver of any of its other term or
conditions.
Section 11.06. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which will be an original, but all of which together will
constitute one and the same instrument.
Section 11.07. EXPENSES. Whether or not the transactions contemplated
hereby are consummated, (a) TMI will pay (i) the fees, expenses and
disbursements of TMI and Newco and their Representatives which are incurred in
connection with the subject matter of this Agreement and any amendments thereto,
including all costs and expenses incurred in the performance of and compliance
with all conditions to be performed by TMI and Newco under this Agreement,
including the costs of preparing the Registration Statement, and (ii) the fees,
expenses and disbursements of Counsel for the Company and the Stockholder
incurred in connection with the subject matter of this Agreement and the
Registration Statement on or before the IPO Closing Date, (b) the Company will
pay any fees, expenses and disbursements of any counsel (other than Counsel for
the Company and the Stockholder) incurred in connection with the subject matter
of this Agreement and the Registration Statement on or before the IPO Closing
Date, up to a maximum of $25,000 in the aggregate, and (c) the Stockholder will
pay from funds of the Trust, and not from funds of the Company or any Company
Subsidiary, (i) all sales, use, transfer and other similar taxes and fees
(collectively, "Transfer Taxes") incurred in connection with the transactions
contemplated hereby, and (ii) the fees, expenses and disbursements in excess of
$25,000 in the aggregate, of any counsel (other than Counsel for the Company and
the Stockholder) incurred in connection with the subject matter of this
Agreement and the Registration Statement on or before the IPO Closing Date. The
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Stockholder will file all necessary documentation and Returns with respect to
all Transfer Taxes. In addition, the Stockholder acknowledges that the
Stockholder, and not the Company or TMI or the Surviving Corporation, will pay
all Taxes due upon receipt of the consideration payable to the Stockholder
pursuant to Article II.
Section 11.08. NOTICES. All notices required or permitted hereunder
shall be in writing, and shall be deemed to be delivered and received (a) if
personally delivered or if delivered by telex, telegram, facsimile or courier
service, when actually received by the party to whom notice is sent or (b) if
delivered by mail (whether actually received or not), at the close of business
on the third Houston, Texas business day next following the day when placed in
the mail, postage prepaid, certified or registered, addressed to the appropriate
party or parties, at the address of such party set forth below (or at such other
address as such party may designate by written notice to all other parties in
accordance herewith):
(i) if to TMI or Newco, addressed to it at:
TRIAD Medical Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn.: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.,
Chief Executive Officer
with copies (which shall not constitute notice for
purposes of this Agreement) to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to the Stockholder, addressed to the Stockholder in
care of the Independent Fiduciary at:
c/o Consulting Fiduciary, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇
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(iii) if to the Company, addressed to it at:
Sun Medical, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, President
with copies (which shall not constitute notice for
purposes of this Agreement) to:
Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
SECTION 11.09. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE, WITH THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE CONFLICTS OF LAW PROVISIONS THEREOF, PROVIDED, HOWEVER,
THAT: (A) ARTICLE X AND THE RIGHTS AND OBLIGATIONS THEREUNDER OF THE PARTIES
THERETO WILL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
SUBSTANTIVE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO THE CONFLICTS OF LAW
PROVISIONS THEREOF AND (B) MATTERS PERTAINING SOLELY TO THE MERGER SHALL BE
GOVERNED BY THE BUSINESS CORPORATION ACT.
Section 11.10. EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise
provided herein, no delay or omission in the exercise of any right, power or
remedy accruing to any party hereto as a result of any breach or default
hereunder by any other party hereto shall impair any such right, power or
remedy, nor shall it be construed, deemed or interpreted as a waiver of or
acquiescence in any such breach or default, or of any similar breach or default
occurring later; nor shall any waiver of any single breach or default be
construed, deemed or interpreted as a waiver of any other breach or default
hereunder occurring before or after that waiver.
Section 11.11. TIME. Time is of the essence in the performance of this
Agreement in all respects.
Section 11.12. REFORMATION AND SEVERABILITY. If any provision of this
Agreement is invalid, illegal or unenforceable, that provision shall, to the
extent possible, be modified in such manner as to be valid, legal and
enforceable but so as to most nearly retain the intent of the parties hereto as
expressed herein, and if such a modification is not possible, that provision
shall be severed from this Agreement, and in either case the validity, legality
and enforceability of the remaining provisions of this Agreement shall not in
any way be affected or impaired thereby.
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Section 11.13. REMEDIES CUMULATIVE. Except as otherwise specifically
provided in Section 9.06, no right, remedy or election given by any term of this
Agreement shall be deemed exclusive, but each shall be cumulative with all other
rights, remedies and elections available at law or in equity.
Section 11.14. RESPECTING THE IPO. Each of the Company and the
Stockholder acknowledges and agrees that: (a) no firm commitment, binding
agreement or promise or other assurance of any kind, whether express or implied,
oral or written, exists at the date hereof that the Registration Statement will
become effective or that the IPO will occur at a particular price or within a
particular range of prices or occur at all; (b) neither TMI or any of its
Representatives nor any prospective underwriters in the IPO will have any
liability to the Company, the Stockholder or any of their respective Affiliates
or associates for any failure of (i) the Registration Statement to become
effective (provided, however, that TMI will use its reasonable best efforts to
cause the Registration Statement to become effective prior to January 31, 1998)
or (ii) the IPO to occur at a particular price or within a particular range of
prices or to occur at all; and (c) the decision of the Stockholder to enter into
this Agreement, or to vote in favor of or consent to the Merger, has been or
will be made independent of, and without reliance on, any statements, opinions
or other communications of, or due diligence investigations that have been or
will be made or performed by, any prospective underwriter relative to TMI or the
IPO. The Underwriter shall have no obligation to either of the Company and the
Stockholder with respect to any disclosure contained in the Registration
Statement.
Section 11.15. JOINDER OF ▇▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇ joins in the execution of
this Agreement to evidence his agreement to the provisions of Section 2.09 and
the representation made by him in Section 11.03.
Section 11.16. DISCLAIMER BY INDEPENDENT FIDUCIARY. The parties to this
Agreement acknowledge that the Independent Fiduciary, in its corporate capacity,
(i) has not independently investigated or verified the truth, accuracy or
completeness of, and shall have no liability or responsibility for or in respect
of, any of the representations and warranties made by the Company or the
Stockholder in this Agreement, and (ii) is not a party to this Agreement, and
(iii) has no obligation and makes no undertaking under this Agreement.
ARTICLE XII
TERMINATION
Section 12.01. TERMINATION OF THIS AGREEMENT.
(a) This Agreement may be terminated at any time prior to the
Closing solely:
(i) by the mutual written consent of TMI and the
Company;
A:2.4
22
(ii) by the Stockholder or the Company, on the one hand,
or by TMI, on the other hand, if the transactions contemplated by
this Agreement to take place at the Closing shall not have been
consummated by January 31, 1998, unless the failure of such
transactions to be consummated results from the willful failure
of the party (or in the case of the Stockholder and the Company,
any of them) seeking to terminate this Agreement to perform or
adhere to any agreement required hereby to be performed or
adhered to by it prior to or at the Closing or thereafter on the
IPO Closing Date;
(iii) by the Stockholder or the Company, on the one hand,
or by TMI, on the other hand, if a material breach or default
shall be made by the other party (or in the case of the
Stockholder and the Company, any of them) in the observance or in
the due and timely performance of any of the covenants,
agreements or conditions contained herein; or
(iv) by TMI if it is entitled to do so as provided in
Section 6.07;
(b) This Agreement may be terminated after the Closing solely:
(i) by TMI or the Company if the Underwriting Agreement
is terminated pursuant to its terms after the Closing and prior
to the consummation of the IPO; or
(ii) automatically and without action on the part of any
party hereto if the IPO is not consummated within 15 New York
City business days after the date of the Closing.
(c) If this Agreement is terminated pursuant to this Section
12.01, the Merger will be deemed for all purposes to have been abandoned
and of no force or effect. If this Agreement is terminated pursuant to
this Section 12.01 after the Certificate of Merger has been filed with
the Secretary of State of the State of Texas, but before the IPO has
been consummated, TMI will take all actions that Counsel for the Company
and the Stockholders advises TMI are required by the applicable laws of
the State of Texas to rescind the Merger.
Section 12.02. LIABILITIES IN EVENT OF TERMINATION. If this Agreement is
terminated pursuant to Section 12.01, there shall be no liability or obligation
on the part of any party hereto except (a) as provided in Section 11.07, (b) the
Stockholder shall be liable for any breach by the Stockholder of any covenant
made by the Stockholder in this Agreement and for any breach by the Stockholder
of any representation and warranty made by the Stockholder in Article III and
which the Stockholder knew was untrue or inaccurate at the date of this
Agreement, and (c) the Company shall be liable for any breach by the Company of
any covenant made by the Company in this Agreement and for any breach by the
Company of any representation and warrant made by the Company in Article IV and
which the Company knew as untrue or inaccurate at the date of this Agreement,
and (d) TMI shall be liable for any breach by TMI of any covenant made by TMI in
this Agreement and for any breach
A:2.4
23
by TMI of any representation and warranty made by TMI in Article V and which TMI
knew was untrue or inaccurate at the date of this Agreement.
ARTICLE XIII
MATTERS RELATING TO THE PLAN AND ESCROW FUND
13.01. COMPLIANCE EFFORTS. Beginning as soon as practicable after the
date the Registration Statement is initially filed, the Company and the
Independent Fiduciary shall jointly seek to identify and expeditiously resolve
all actual and potential Plan Related Claims and all other matters which the
Company or the Independent Fiduciary reasonably believe could result in any Plan
Related Damages. In that regard, the Company, as the Plan sponsor, with the
endorsement and cooperation of the Independent Fiduciary, shall voluntarily
disclose to the IRS all matters identified by the Company for disclosure to the
IRS, and shall seek to have such matters resolved with the IRS under the
voluntary Closing Agreement Program contemplated in Revenue Procedure 94-16 (the
"CAP Proceedings"), toward the end that the Company and the IRS will enter into
a Closing Agreement by which all Plan Related Claims in favor of the IRS will be
fully and finally settled and resolved (the "Plan Closing Agreement"). The
Independent Fiduciary, shall be entitled to attend and participate in all
discussions and negotiations between the Company and the IRS in connection with
the CAP Proceedings, and the Company agrees that it will not enter into a
Closing Agreement without the consent and approval of the Independent Fiduciary,
which the Independent Fiduciary agrees shall not be unreasonably withheld.
The Company, as the Plan sponsor, with the endorsement and cooperation
of the Independent Fiduciary, may also voluntarily disclose to the DOL such
matters relating to the Plan as the Company may consider appropriate for
disclosure, in which case (i) the Independent Fiduciary shall have the right to
attend and participate in all discussions and negotiations between the Company
and the DOL relating to the Plan and (ii) the Company agrees that it will not
enter into any settlement with the DOL without the consent and approval of the
Independent Fiduciary, which shall not be unreasonably withheld.
13.02. PLAN RELATED CLAIMS. If after the Effective Date, a Plan Related
Claim is asserted against the Company or any other TMI Indemnified Party, the
Company shall give the Independent Fiduciary written notice of the asserted
claim (a "Section 13.02 Notice"). Upon its receipt of a Section 13.02 Notice,
the Independent Fiduciary shall notify the Company in writing that the
Independent Fiduciary either (i) approves of the payment of the Plan Related
Claim described in the Section 13.02 Notice or (ii) objects to the payment of
such Plan Related Claim. If by such notice the Independent Fiduciary approves
the payment of the Plan Related Claim, then the Company and the Independent
Fiduciary shall jointly instruct the Escrow Agent in writing to pay the Plan
Related Claim from the Escrow Fund. If by such notice the Independent Fiduciary
objects to the payment of the Plan Related Claim, then:
A:2.4
24
(i) the Company, through counsel of its choosing, shall assume,
control and be responsible for the defense of the Plan Related Claim;
(ii) the Independent Fiduciary, through counsel of its choosing,
shall be entitled to participate in, but not control, the defense of the
Plan Related Claim; and
(iii) the Company shall not settle the Plan Related Claim without
the consent and approval of the Independent Fiduciary, which the
Independent Fiduciary agrees shall not be unreasonably withheld.
To the extent not in contravention of his fiduciary duties to the Plan
Participants, the Independent Fiduciary shall not authorize the Trustee to make
distributions to those Plan Participants who become eligible for distributions
in accordance with the terms of the Plan Documents until all Plan Related Claims
have been fully and finally resolved.
13.03. PAYMENTS FROM ESCROW FUND. The Company and the Independent
Fiduciary agree that there shall be paid from the Escrow Fund, and that they
shall jointly and timely instruct the Escrow Agent to pay from the Escrow Fund:
(i) all costs and expenses, including legal, accounting and other
professional fees incurred by the Company, any other TMI Indemnified
Party, or the Independent Fiduciary in connection with (a) the CAP
Proceedings and (b) the defense, negotiation, compromise or settlement
of any Plan Related Claim;
(ii) all amounts required to be paid by the Company under any
Closing Agreement or other agreement entered into between the Company
and the IRS or the DOL in accordance with the provisions of Section
13.01;
(iii) all amounts required to be paid by the Company in
connection with any settlement of a Plan Related Claim made in
accordance with the provisions of Section 13.02;
(iv) all Plan Related Damages resulting from any final judgment
rendered against the Company in respect of any Plan Related Claims; and
(v) all amounts with respect to which the Independent Fiduciary
is entitled to be indemnified by TMI under the terms of the Fiduciary
Engagement Letter.
All amounts required to be paid from the Escrow Fund shall be paid out
of the cash included in the Escrow Fund for as long as the cash is sufficient
for that purpose. Once all cash included in the Escrow Fund is paid or
distributed by the Escrow Agent, then in each instance thereafter when a payment
is required to be made from the Escrow Fund, (i) TMI shall make such payment and
(ii) TMI and the Independent Fiduciary shall instruct the Escrow Agent to
deliver to TMI a number of Escrowed Shares equal to (a) the amount so paid by
TMI divided by (b) $14.
A:2.4
25
13.04. VOTING OF ESCROWED SHARES. All Escrowed Shares shall be voted by
the Escrow Agent upon the direction of the Independent Fiduciary, which may be
through the Independent Fiduciary's direction to the Trustee, for as long as
they are held by the Escrow Agent under the Escrow Agreement.
13.05. DURATION OF ESCROW AGREEMENT. The Escrow Agreement shall remain
in effect until the earliest to occur of (i) the first date upon which all
property held in the Escrow Fund shall have been distributed by the Escrow Agent
in accordance with the terms of this Article XIII and Article IV and (ii) the
date specified in a notice to the Escrow Agent jointly signed by the Company and
the Independent Fiduciary as the date of termination of the Escrow Agreement and
the date as of which all property remaining in the Escrow Fund shall be
distributed to the Stockholder.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
TRIAD MEDICAL INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.,
Chief Executive Officer
PLAN FIDUCIARY:
CONSULTING FIDUCIARIES, INC., as
independent fiduciary of the Sun
Medical, Inc. Employee Stock
Ownership Plan and Trust
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇, Principal
SUN ACQUISITION, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.,
President
A:2.4
26
SUN MEDICAL, INC.
By: /s/ M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, President
STOCKHOLDER:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as Trustee of the
Sun Medical, Inc. Employee Stock
Ownership Trust
JOINDER
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, in his individual capacity, hereby joins in the
execution of this Agreement to evidence his agreement set forth in Section 2.09
of this Agreement and the representation made by him in Section 11.03 of this
Agreement.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Individually
A:2.4
27
ADDENDUM 1
to the
Agreement and Plan of Reorganization
dated as of September 9, 1997
by and among
TRIAD Medical, Inc.
Sun Acquisition, Inc.
Sun Medical, Inc.
and
the Stockholders Named Therein
A. Words and terms used in this Addendum which are defined in the
captioned Agreement to which this is an Addendum are used herein as therein
defined.
B. The Founding Companies are:
Custom Medical Specialties, Inc.
Healthtech Technology Delivery, Inc.
Kentec Medical, Inc.
MegaTech Medical, Inc.
New England Medical Specialties
Omnimedical, Inc.
Professional Equipment Company
Products for Surgery, Inc.
Sun Medical, Inc.
TRIAD Medical Inc.
▇▇▇▇▇▇ Medical Specialties, Inc.
A:2.4
28
SCHEDULE 2.03
to the
Agreement and Plan of Reorganization
dated as of September 9, 1997
by and among
TRIAD Medical, Inc.
Sun Acquisition, Inc.
Sun Medical, Inc.
and
the Stockholders Named Therein
A. Words and terms used in this Schedule which are defined in the
captioned Agreement to which this Schedule is attached as Schedule 2.03 are used
herein as therein defined.
B. The directors of the Surviving Corporation immediately after the
Effective Time are as follows:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
▇. ▇▇▇▇▇▇ Coop
▇▇▇▇▇ ▇. ▇▇▇▇
C. The officers of the Surviving Corporation immediately following the
Effective Time are as follows:
Chief Executive Officer: ▇. ▇▇▇▇▇▇ Coop
President: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Vice President: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President, Secretary
and Treasurer ▇▇▇▇▇ ▇. ▇▇▇▇
A:2.4
SCHEDULE 2.04
to the
Agreement and Plan of Reorganization
dated as of September 9, 1997
by and among
TRIAD Medical, Inc.
Sun Acquisition, Inc.
Sun Medical, Inc.
and
the Stockholders Named Therein
A. Words and terms used in this Schedule which are defined in the
captioned Agreement to which this Schedule is attached as Schedule 2.04 are used
herein as therein defined.
B. The name and address of each Stockholder are as follows:
NAME ADDRESS
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as Trustee of c/o ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Trustee
the Sun Medical, Inc. Employee ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, #▇▇▇
Stock Ownership Trust ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
C. Each outstanding share of Company Common Stock shall be converted
into .00000059 of the Merger Consideration.
A:2.4
SCHEDULE 3.01
to the
Agreement and Plan of Reorganization
dated as of September 9, 1997
by and among
TRIAD Medical, Inc.
Sun Acquisition, Inc.
Sun Medical, Inc.
and
the Stockholders Named Therein
A. Words and terms used in this Schedule which are defined in the
captioned Agreement to which this Schedule is attached as Schedule 3.01 are used
herein as therein defined.
B. The Stockholder is an "accredited investor" as defined in Securities
Act Rule 501(a).
SCHEDULE 3.02
to the
Agreement and Plan of Reorganization
dated as of September 9, 1997
by and among
TRIAD Medical, Inc.
Sun Acquisition, Inc.
Sun Medical, Inc.
and
the Stockholders Named Therein
A. Words and terms used in this Schedule which are defined in the
captioned Agreement to which this Schedule is attached as Schedule 3.02 are used
herein as therein defined.
B. The following table sets forth the ownership of the Company's Capital
Stock:
NUMBER OF SHARES
NAME CLASS OWNED
---- ----- ----------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as Trustee
of the Sun Medical, Inc.
Employee Stock Ownership Trust Common 166,887
C. No exception is taken to the representations and warranties made in
Section 3.02 of the captioned Agreement.
SCHEDULE 3.07
to the
Agreement and Plan of Reorganization
dated as of September 9, 1997
by and among
TRIAD Medical, Inc.
Sun Acquisition, Inc.
Sun Medical, Inc.
and
the Stockholders Named Therein
A. Words and terms used in this Schedule which are defined in the
captioned Agreement to which this Schedule is attached as Schedule 3.07 are used
herein as therein defined.
B. The Stockholder is, alone or with one or more other Persons, the
controlling Affiliate of the following Entity, business or trade (other than the
Company and the Company Subsidiaries, if the Stockholder is an Affiliate of the
Company) that is (a) engaged in any line of business which is the same as or
similar to any line of business in which the Company or any Company Subsidiary
is engaged or (b) is, or has within the three year period ending on the date of
the captioned Agreement, engaged in any transaction with the Company or any
Company Subsidiary except for (i) transactions in the ordinary course of
business of the Company or that Company Subsidiary and (ii) any single
transaction (or series of related transactions) involving property or services
having a value, or the payment of money, of less than $20,000:
None
A:2.4
SCHEDULE 4.11
to the
Agreement and Plan of Reorganization
dated as of September 9, 1997
by and among
TRIAD Medical, Inc.
Sun Acquisition, Inc.
Sun Medical, Inc.
and
the Stockholders Named Therein
A. Words and terms used in this Schedule which are defined in the
captioned Agreement to which this Schedule is attached as Schedule 4.11 are used
herein as therein defined.
B. The following Related Party Agreement will be permitted to continue
in effect past the date of the Closing in accordance with its terms, subject to
the following provisions of this Schedule:
1. The New Lease Agreement
SCHEDULE 6.04
to the
Agreement and Plan of Reorganization
dated as of September 9, 1997
by and among
TRIAD Medical, Inc.
Sun Acquisition, Inc.
Sun Medical, Inc.
and
the Stockholders Named Therein
A. Words and terms used in this Schedule which are defined in the
captioned Agreement to which this Schedule is attached as Schedule 6.04 are used
herein as therein defined.
B. The Company and the Company Subsidiaries may make the following
Restricted Payments prior to the Effective Time:
None
SCHEDULE 6.11
to the
Agreement and Plan of Reorganization
dated as of September 9, 1997
by and among
TRIAD Medical, Inc.
Sun Acquisition, Inc.
Sun Medical, Inc.
and
the Stockholders Named Therein
A. Words and terms used in this Schedule which are defined in the
captioned Agreement to which this Schedule is attached as Schedule 6.11 are used
herein as therein defined.
B. The Company will make all arrangements and take all such actions as
are necessary and satisfactory to THC to dispose, prior to the Effective Time,
of the following assets:
None
SCHEDULE 8.05
to the
Agreement and Plan of Reorganization
dated as of September 9, 1997
by and among
TRIAD Medical, Inc.
Sun Acquisition, Inc.
Sun Medical, Inc.
and
the Stockholders Named Therein
A. Words and terms used in this Schedule which are defined in the
captioned Agreement to which this Schedule is attached as Schedule 8.05 are used
herein as therein defined.
B. At or within 120 days following the Effective Time, TMI will cause
the following Stockholder Guarantees to be terminated:
None