EXHIBIT 2.1
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TRANSFUSION TECHNOLOGIES CORPORATION
AGREEMENT AND PLAN OF MERGER
DATED AS OF SEPTEMBER 4, 2000
TRANSFUSION TECHNOLOGIES CORPORATION
AGREEMENT AND PLAN OF MERGER
DATED AS OF SEPTEMBER 4, 2000
TABLE OF CONTENTS
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Page
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ARTICLE I MERGER 2
1.1 The Merger 2
1.2 Certificates of Incorporation and By-Laws 2
1.3 Directors and Officers 2
1.4 Effect on Capital Stock and Equivalent 2
1.5 Escrow Amount 3
1.6 Gross Cash 4
1.7 Cancellation of Options; Exchange of Certificates 6
1.8 Waiver of Appraisal Rights 7
ARTICLE II CLOSING 7
2.1 Effective Time; Closing 7
ARTICLE III REPRESENTATIONS AND WARRANTIES 7
3.1 Representations and Warranties of Signing Stockholders and the Company 7
ARTICLE IV REPRESENTATIONS AND WARRANTIES 24
4.1 Representations and Warranties of Haemonetics 24
ARTICLE V COVENANTS 25
5.1 Compliance with Law 25
5.2 Notice 25
5.3 Non-Solicitation and Breakup Fee 25
5.4 Conduct of Business of the Company 26
5.5 Consent of Stockholders 27
5.6 Option Cancellation 28
5.7 Termination of 401(k) 28
5.8 Payment of Certain Employment Obligations 28
5.9 Tax Return 28
5.10 Termination of the Amended and Restated Investors' Rights Agreement 28
5.11 Filings Under ▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇▇ Act 28
5.12 Amendment of Amended and Restated Certificate of Incorporation 28
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ARTICLE VI CONDITIONS TO OBLIGATIONS OF HAEMONETICS 29
6.1 Conditions 29
ARTICLE VII CONDITIONS TO OBLIGATIONS OF SIGNING STOCKHOLDERS 31
7.1 Conditions 31
ARTICLE VIII INDEMNIFICATION 32
8.1 Survival 32
8.2 Indemnification 32
8.3 Indemnification for Taxes and Appraisal Rights 34
8.4 Indemnification Mechanics 34
8.5 Notice of Claim 35
8.6 No Claims Back 35
8.7 Fees 35
ARTICLE IX TAX MATTERS 36
9.1 Tax Matters 36
ARTICLE X DISCLOSURE 39
10.1 Disclosure of Information 39
ARTICLE XI TERMINATION OF AGREEMENT 39
11.1 Manner 39
11.2 Termination by Haemonetics for Breach 40
11.3 Termination by the Company and Signing Stockholders for Breach 40
ARTICLE XII MISCELLANEOUS 40
12.1 Brokers, Finders and Expenses 41
12.2 Entire Agreement; Schedules 41
12.3 Modifications 41
12.4 Further Assurances 41
12.5 Binding Effect and Benefits 42
12.6 Action by Signing Stockholders 42
12.7 Indemnification of Officers and Directors 43
12.8 Assignment 43
12.9 Notices 43
12.10 Publicity and Disclosure 44
12.11 Construction 44
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12.12 Counterparts 45
12.13 Governing Law 45
12.14 Definitions 45
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AGREEMENT AND PLAN OF MERGER
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This Agreement and Plan of Merger ("Agreement") dated as of the 4th
day of September, 2000, by and among Haemonetics Corporation, a
Massachusetts corporation ("Haemonetics"), Transfusion Merger Co., a
Delaware corporation ("Newco"), the holders of a majority of the
outstanding shares of Preferred Stock (the "Preferred Stock" or "Preferred
Shares"), the holders of a majority of the outstanding shares of Common
Stock, $.01 par value (the "Common Stock" or "Common Shares"), of
Transfusion Technologies Corporation, a Delaware corporation (the
"Company") and B. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(the "Principals") as holders of options to purchase Common Stock
("Options") (such holders of such majority interests (other than
Haemonetics) and the Principals shall hereinafter be referred to
individually as a "Signing Stockholder" or collectively as "Signing
Stockholders", and any holder of shares of Preferred Shares or Common
Shares (other than Haemonetics) and any Principal, regardless of whether a
signatory to this Agreement, shall hereinafter be referred to individually
as a "Seller" or collectively as "Sellers") and the Company.
W I T N E S S E T H:
WHEREAS, Sellers (other than B. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇), each of whom is
identified in Schedule 3.1(d) hereto, and Haemonetics, own all of the
outstanding shares of capital stock of the Company;
WHEREAS, Haemonetics owns all of the outstanding shares of capital
stock of Newco;
WHEREAS, the Boards of Directors of the Company, Newco and
Haemonetics have each determined that it is advisable to effect a
reorganization of the Company by means of a merger of Newco with and into
the Company (the "Merger") upon the terms and subject to the conditions set
forth herein;
WHEREAS, in furtherance of the Merger, the Boards of Directors of the
Company and Newco have approved the merger of Newco with and into the
Company in accordance with the Delaware General Corporation Law (the
"DGCL"); and
WHEREAS, contemporaneously herewith, the Signing Stockholders and
Haemonetics have executed the Voting Agreement, in which the Signing
Stockholders have agreed to vote their Preferred Shares and Common Shares
in favor of the Merger.
NOW, THEREFORE, in consideration of the premises and mutual
representations, warranties and covenants contained herein, the parties
agree as follows:
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ARTICLE I
MERGER
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1.1 The Merger. At the Effective Time (as defined in Section 2.1):
Newco shall merge with and into the Company; the corporate existence of the
Company shall continue; and the separate existence of Newco shall cease.
All rights, title and interests to all intellectual property, real estate
and other property owned by the Company and Newco shall be allocated to and
vested in the Company without reversion or impairment, without further act
or deed, and without any transfer or assignment having occurred, but
subject to any existing liens or other encumbrances thereon. At the
Effective Time, the Surviving Corporation (as hereinafter defined) shall
thenceforth be responsible and liable for all liabilities and obligations
of the Company and Newco, and any proceeding pending by or against the
C7ompany or Newco may be prosecuted as if the Merger had not occurred and
the Surviving Corporation may be substituted in their place. Neither the
rights of creditors nor any liens upon the property of the Company or Newco
shall be impaired by the Merger. The Company, as the surviving corporation
after the Merger, is herein sometimes referred to as the "Surviving
Corporation." At the Effective Time, the Company and Newco shall execute
and deliver the Certificate of Merger in substantially the form attached
hereto as Exhibit A (the "Certificate of Merger").
1.2 Certificates of Incorporation and By-Laws
(a) Certificate of Incorporation. At the Effective Time, (i) the
Certificate of Incorporation of Newco as in effect immediately prior to the
Effective Time shall be amended so that the name of Newco shall be changed
to Transfusion Technologies Corporation, and (ii) as so amended, such
Certificate of Incorporation of Newco shall be the certificate of
incorporation of the Surviving Corporation.
(b) By-Laws. The By-Laws of Newco, as in effect immediately prior
to the Effective Time but with such amendments thereto as the parties
hereto may mutually agree prior to the Effective Date, shall be the By-Laws
of the Surviving Corporation until thereafter amended in accordance with
the DGCL, the Certificate of Incorporation of the Surviving Corporation and
its By-Laws.
1.3 Directors and Officers. The directors of the Company at the
Effective Time shall be as set forth in Schedule 1.3 hereof, each such
director to hold office in accordance with the Certificate of Incorporation
and By-Laws of the Surviving Corporation, and the officers of the Surviving
Corporation shall be as set forth in Schedule 1.3 hereof, in each case
until their respective successors are duly elected or appointed and
qualified.
1.4 Effect on Capital Stock and Equivalents. At the Effective Time,
by virtue of the Merger and without any action on the part of the Company,
Newco or the holders of any of the securities, the following shall occur:
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(a) Conversion of Capital Stock. Each share of Common Stock
issued and outstanding immediately prior to the Effective Time (other
than shares held by Haemonetics) shall be converted into the right to
receive a payment of $2.50 per Common Share, less the pro rata share
of amounts withheld pursuant to the escrow provisions of Section 1.5;
provided that the aggregate of such payments to the holders of the
Common Shares shall not exceed $1,587,617.50, which amount shall be
increased by an amount equal to (i) the number of shares of Common
Stock issued upon the exercise of Options (as hereafter defined)
after the date of this Agreement, (ii) multiplied by $2.50 (the
"Adjusted Common Share Amount"). In the event amounts to be paid to
the holders of Common Shares exceed the Adjusted Common Share Amount,
all such holders shall be cut back pro rata until such time that the
aggregate payment due to such holders of Common Shares is equal to
the Adjusted Common Share Amount. Consideration to be paid to holders
of Common Shares pursuant to this Section 1.4(a) shall not include
payment to holders of Common Shares issued upon conversion of any
series of the Company's Preferred Stock.
(b) Conversion of Preferred Stock. The holders of Series A
Convertible Preferred Stock, Series B Convertible Preferred Stock,
Series C Convertible Preferred Stock, Series D Convertible Preferred
Stock and Series E Convertible Preferred Stock, each par value $0.01
per share ("Preferred Stockholders") issued and outstanding
immediately prior to the Effective Time (other than the shares held
by Haemonetics) shall be entitled to receive such amounts as set
forth opposite each Preferred Stockholder's name on Schedule 1.4(b),
less the pro rata share of amounts withheld pursuant to the escrow
provisions of Section 1.5; provided the aggregate of such payments
shall not exceed $32,906,948. For purposes of this Section 1.4(b),
the Preferred Stockholders shall be deemed to include the holders of
Common Shares issued upon conversion of any series of the Company's
preferred stock. In the event amounts to be paid to the Preferred
Stockholders exceed $32,906,948, all such holders shall be cut back
pro rata until such time that the aggregate payment due to such
Preferred Stockholders is equal to $32,906,948.
(c) Warrant. The warrant to purchase up to 100,000 Common
Shares ("Warrant") outstanding immediately prior to the Effective
Time (and all shares issuable upon the exercise of the Warrant) shall
be converted into the right to receive payment of $2.50 per share of
such capital stock less the applicable exercise price per share;
provided that the aggregate of such payments to the holder of such
Warrant shall not exceed $137,000.
(d) Definitions. The "Aggregate Merger Consideration" shall
be equal to the aggregate amounts accrued and payable under the
foregoing Sections 1.4 (a) and (b), plus the aggregate amounts
accrued and payable to the Principals pursuant to Section 1.7 hereof,
subject to adjustments as provided in Sections 1.6 and 1.7. Each
Seller's "Merger Consideration" shall be equal to the amount so
accrued and payable to such individual Seller.
1.5 Escrow Amounts. At the Closing:
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(a) Escrow. Haemonetics shall deposit an amount equal to $2,500,000
less the Escrow Holdback Amount (defined below, which is to be deposited at
the Closing by the Company) plus an additional $50,000 (as a reserve to
cover costs and expenses of the Stockholders Representative) of the
Aggregate Merger Consideration to be paid to the Sellers, which, as to each
Seller, shall be in the proportion the Merger Consideration received by
that Seller bears to the Aggregate Merger Consideration, into escrow (the
"Escrow") (immediately upon completion of the Closing, the Escrow shall
contain $2,550,000) to be distributed pursuant to the terms and provisions
of an escrow agreement substantially in the form attached hereto as Exhibit
B (the "Escrow Agreement"). The holder of the Warrant shall not be subject
to such Escrow arrangement.
(b) Gross Cash Escrow. Without in any way limiting the obligations
and liabilities of the Sellers under Section 1.6, Haemonetics shall deposit
an amount equal to $1,000,000, less the Gross Cash Holdback Amount (defined
below, which is to be deposited at the Closing by the Company) of the
Aggregate Merger Consideration to be paid to the Sellers, which, as to each
Seller, shall be in the proportion the Merger Consideration received by
that Seller bears to the Aggregate Merger Consideration, into escrow (the
"Gross Cash Escrow") as one source of satisfying Sellers' obligations and
liabilities under Section 1.6, to be distributed pursuant to the terms and
provisions of an escrow agreement substantially in the form attached hereto
as Exhibit C (the "Gross Cash Escrow Agreement").
1.6 Gross Cash.
(a) (i) Within sixty (60) days after the Closing Date, Haemonetics
shall deliver to the Stockholders Representative (on behalf of the Sellers)
a computation of Gross Cash (as defined in Section 1.6(c)) immediately
following the Closing (the "Closing Statement of Gross Cash"), which shall
have been verified by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., LLP as having been prepared in
accordance with GAAP, as applicable.
(ii) Not later than thirty (30) days after receipt of the
Closing Statement of Gross Cash, the Stockholders Representative
(representing the Sellers) shall deliver to Haemonetics a written
notice of objection ("Objection"), setting forth any items included
in the Closing Statement of Gross Cash with which the Sellers
disagree and a description of the basis for such disagreement. In the
event the Stockholders Representative does not deliver an Objection
within such time period, the Sellers shall be deemed to have accepted
the Closing Statement of Gross Cash as delivered. Haemonetics and the
Company shall make readily available to the Stockholders
Representative all relevant books, records and supporting
documentation made available to Haemonetics and the Company relating
to the Closing Statement of Gross Cash and all other items reasonably
requested by the Stockholders Representative.
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(iii) In the event that the Stockholders Representative
delivers an Objection, Haemonetics shall negotiate in good faith with
the Stockholders Representative, and the Stockholders Representative
shall negotiate in good faith with Haemonetics, for a period of ten
(10) days after receipt of such Objection, to seek to resolve their
differences with respect to the Closing Statement of Gross Cash. If
Haemonetics and the Stockholders Representative are unable to resolve
all of such disagreements within such ten (10) day period, then no
later than seven (7) days following expiration of such ten (10) day
period they shall refer their remaining differences to KPMG LLP (the
"Independent Firm") who shall, acting as experts and not as
arbitrators, determine the value of those items on the Closing
Statement of Gross Cash which are submitted to the Independent Firm.
The parties shall instruct the Independent Firm to deliver its
written determination to Haemonetics and the Stockholders
Representative no later than the twentieth (20th) day after the
remaining differences underlying the Objection are referred to the
Independent Firm. The Independent Firm's determinations shall be
conclusive and binding upon all parties hereto absent manifest error.
The fees and disbursements of the Independent Firm shall be shared
equally by the Sellers and Haemonetics. The Sellers shall be jointly
and severally obligated with respect to their portion of such fees
and disbursements of the Independent Firm. Haemonetics and the
Stockholders Representative shall make readily available to the
Independent Firm all relevant books and records and any work papers
(including those of the parties' respective accountants) relating to
the Closing Statement of Gross Cash and all other items reasonably
requested by the Independent Firm.
(b) To the extent that the Closing Statement of Gross Cash, agreed
to by Haemonetics and the Stockholders Representative or as determined by
the Independent Firm, whichever is the case (the "Final Closing Statement
of Gross Cash "), does not reflect Gross Cash of the Company of at least
the amount of $11,892,000, less the Cash Adjustment (the "Minimum Cash"),
the Aggregate Merger Consideration due the Sellers shall be reduced by the
amount by which the Gross Cash reflected on the Final Closing Statement of
Gross Cash is less than an amount equal to Minimum Cash less $100,000; such
reduction: (i) to be recovered first, from the Gross Cash Escrow; (ii) if
the Gross Cash Escrow is exhausted, to be recovered from the Escrow; and
(iii) if the Escrow is exhausted to be paid ratably by the Signing
Stockholders, as soon as practicable. The obligation of the Signing
Stockholders under (iii) of this Section 1.6(b) to ratably pay any
reduction not covered by the Gross Cash Escrow and the Escrow is separate
from and in addition to their indemnity obligation under Article VIII of
this Agreement and is not subject to the limitations of Article VIII of
this Agreement. To the extent that the Final Closing Statement of Gross
Cash reflects Gross Cash greater than the Minimum Cash by an amount in
excess of $100,000, the Aggregate Merger Consideration shall be increased
by an amount equal to the sum by which Gross Cash reflected on the Final
Closing Statement of Gross Cash exceeds (i) Minimum Cash plus (ii)
$100,000, such increase shall be distributed to the Stockholders
Representative, to be distributed on a pro rata basis among Sellers as soon
as practicable.
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(c) Gross Cash for the purposes of this Section 1.6 shall be
calculated as cash and cash equivalents of the Company, determined in
accordance with GAAP, plus payments to holders of Options, retention
bonuses, severance payments, payments for accrued vacation, and COBRA
payments, all as provided for in this Agreement or separately agreed to by
the Company and Haemonetics, plus related FICA, and plus payments for
associated transaction expenses not to exceed $150,000, but less any
payments made by Haemonetics pursuant to Section 12.1.
(d) "Cash Adjustment" for purposes of this Section 1.6 shall be an
amount equal to (i) $50,000 multiplied by the number of Delay Days, and
(ii) $25,000 multiplied by the number of No Fault Delay Days. A "Delay Day"
shall be each business day (i) commencing on September 12, 2000 and through
and including the Closing Date and (ii) on which the Closing does not take
place as a result of actions or inactions of Haemonetics or a delay arising
in connection with the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ filing. A Delay Day shall not
include any day commencing on September 12, 2000 on which the Closing does
not take place as a result of actions or inactions of the Company or the
Signing Stockholders. Notwithstanding the foregoing, if the Closing takes
place after September 11, 2000 as a result of (i) actions or inactions of
both the Company and Haemonetics, or (ii) actions or inactions of neither
the Company and the Signing Stockholders, on the one hand, nor Haemonetics,
on the other hand, then each such day shall constitute a "No Fault Delay
Day."
1.7 Cancellation of Options; Exchange of Certificates.
(a) Prior to the Effective Time, each holder of Options, whether or
not fully vested, shall execute and deliver an Option Cancellation
Agreement to the Company (an "OCA"). Pursuant to the OCA, each holder will
receive in payment for past services rendered a payment from the Company of
$2.50 per underlying share, less the applicable exercise price therefor
(the "Option Payment"), at which time the Options will be cancelled;
provided that the aggregate of such payments to the holders of all Options
shall not exceed $1,402,254.35, which amount shall be reduced (as reduced,
the "Adjusted Option Amount") by an amount equal to (i) $2.50 multiplied by
the number of shares of Common Stock issued upon the exercise of Options
after the date of this Agreement and prior to the Closing, less (ii) all
amounts paid to the Company upon exercise of such Options. Option Payments
to all holders of Options other than the Principals shall be paid by the
Company immediately prior to Closing. Option Payments to the Principals,
less the Escrow Holdback Amount and the Gross Cash Holdback Amount (each
defined below), shall likewise be paid by the Company immediately prior to
Closing. At the Closing, the Company shall deposit: (i) the Escrow Holdback
Amount into the Escrow and; (ii) the Gross Cash Holdback Amount into the
Gross Cash Escrow. The "Escrow Holdback Amount" shall be equal to the
product of the following (i) $2,550,000 divided by the Aggregate Merger
Consideration, multiplied by (ii) the Option Cancellation Payment otherwise
payable to such Principals. The "Gross Cash Holdback Amount" shall be equal
to the product of the following (i) $1,000,000 divided by the Aggregate
Merger Consideration multiplied by (ii) the Option Cancellation Payments
otherwise payable to such Principal. In the event amounts to be
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paid to the holders of Options exceed the Adjusted Option Amount, all such
holders shall be cut back pro rata until such time that the aggregate
payment due to such holders of Options is equal to the Adjusted Option
Amount.
(b) At the Closing, each Seller shall deliver to the Surviving
Corporation, certificates or affidavits of loss and, if requested by
Haemonetics, indemnity bonds (each, a "Certificate" or "Affidavit",
respectively), as applicable, which immediately prior to the Effective Time
represented all outstanding Common Shares and Preferred Shares. Upon
surrender of such a Certificate for cancellation or surrender of an
executed Affidavit, the Certificate so surrendered shall forthwith be
canceled and the holder of such Certificate and/or the Warrant holder
executing an Affidavit with respect to its, his or her interests, shall be
entitled to receive in exchange therefor cash in the amount due in respect
thereof calculated in accordance with Section 1.4. Subject to Section 1.5
hereof, all required cash payments to Sellers shall be paid by check or (if
requested by an individual Seller who will be receiving in excess of
$50,000 and who provides Haemonetics with wire instructions sufficiently in
advance thereof) by wire transfer of immediately available funds at the
Closing to the accounts specified by such Sellers.
1.8 Waiver of Appraisal Rights. By the execution and delivery of
this Agreement by the Signing Stockholders, each Signing Stockholder
entitled to receive a cash payment pursuant to Section 1.4 herein hereby
waives any appraisal rights which such Signing Stockholder may have against
the Company pursuant to Section 262 of the DGCL.
ARTICLE II
CLOSING
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2.1 Effective Time; Closing. Subject to the terms and conditions of
this Agreement, the closing (the "Closing") with respect to the Merger and
the other transactions contemplated hereunder shall take place at the
offices of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ at 10:00 A.M. on September 11, 2000, or such later date as
all of the closing conditions contained in Articles VI and VII shall be
satisfied or waived respectively, by Haemonetics and Newco, and by the
Signing Stockholders (the "Effective Time" or the "Closing Date"). The
parties shall cause the Merger to be consummated by filing a Certificate of
Merger as required by Section 251 of the DGCL in the offices of the
Delaware Secretary of State.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SIGNING STOCKHOLDERS AND THE COMPANY
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3.1 Representations and Warranties of Signing Stockholders and the
Company. Except as set forth in the disclosure schedules (the "Disclosure
Schedules"), the Company and
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the Signing Stockholders make the following representations and warranties.
The Signing Stockholders, except as otherwise provided herein, jointly but
not severally, hereby make the following representations and warranties to
Haemonetics and Newco. The Company likewise makes the following
representations and warranties to Haemonetics and Newco. For purposes of
this Agreement, an event or fact shall be deemed to be "material" for all
purposes under this Agreement if such event or fact alone or in conjunction
with other related events or facts is reasonably likely to result in
expense or loss to the Company in excess of $20,000 (as to matters covered
by provisions other than Section 3.1(h)(i), (ii) and (ix)) or in excess of
$5,000 (as to matters covered by Section 3.1(h)(i), (ii) and (ix)). The
Signing Stockholders and the Company may refer within any one schedule to a
document disclosed in another schedule. For purposes of this Article III,
the "Company" shall mean the Company and all of its subsidiaries, unless
the context requires otherwise.
(a) Corporate Status. Transfusion Technologies Corporation is a
corporation validly organized, existing and in good standing under the laws
of the State of Delaware, GMBH (as hereafter defined) is an entity validly
organized, existing and in good standing under the laws of Germany and
Westgate (as hereafter defined) is an entity validly organized, existing
and in good standing under the laws of the Commonwealth of Massachusetts,
and each of Transfusion Technologies Corporation, GMBH and Westgate has the
corporate power and authority to own and lease its properties as presently
owned and leased and to carry on its business as now conducted. Transfusion
Technologies Corporation is in good standing as a foreign corporation
qualified to do business in Massachusetts and in each jurisdiction in which
the failure to qualify to do business would have a material adverse effect
on the business, assets, prospects, condition (financial or otherwise) or
results of operations of the Company taken as a whole ("Material Adverse
Effect"). Schedule 3.1(a) contains true and complete copies of the
Certificate of Incorporation of Transfusion Technologies Corporation, as
amended to the date hereof, certified by the Secretary of State of the
State of Delaware, and its by-laws, as amended to the date hereof, and
certified by its Secretary.
(b) Authority Relative to Agreement. The Signing Stockholders, with
each Signing Stockholder representing only as to himself, herself or itself
and not with respect to the other Signing Stockholders, and Transfusion
Technologies Corporation have full right, power and authority to enter into
and perform this Agreement. The execution, delivery and, subject to receipt
of required shareholder approval in accordance with the DGCL prior to the
Effective Time, performance of this Agreement by Transfusion Technologies
Corporation and the consummation by it of the transactions contemplated
thereby have been duly and effectively authorized by all necessary
corporate action. This Agreement has been duly executed by the Signing
Stockholders, with each Signing Stockholder representing such only as to
himself, herself or itself and not with respect to the other Signing
Stockholders, and Transfusion Technologies Corporation and constitutes a
legal, valid and binding obligation of the Signing Stockholders, with each
Signing Stockholder representing such only as to himself, herself or itself
and not with respect to the other Signing Stockholders, and Transfusion
Technologies
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Corporation enforceable against them in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, arrangement, or similar laws affecting the rights of
creditors generally and subject to the discretion of courts to award
equitable remedies. The shares of the Surviving Corporation to be
outstanding immediately following the Effective Time, when issued in
compliance with this Agreement, will be validly issued, fully paid and
nonassessable, and free of any liability, security interest, lien,
encumbrance, claim or other restriction, other than those arising from
Newco and Haemonetics.
(c) Effect of Agreement. Except as indicated in Schedule 3.1(c)
hereto, upon receipt of required shareholder approval, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby (i) do not require the filing with, or the
consent, waiver, approval, license or authorization of any governmental
agency or regulatory authority, except as required under the ▇▇▇▇-▇▇▇▇▇-
▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended ("HSR Act"); (ii) do
not conflict with or result in a breach of the Certificate of Incorporation
of Transfusion Technologies Corporation or its by-laws or any material
contract, mortgage, deed of trust, license, indenture or other material
agreement or other instrument, or any order, judgment, decree, local, state
or Federal statute, regulation, or any other restriction of any kind or
character, to which the Signing Stockholders, with each Signing Stockholder
representing such only as to himself, herself or itself and not with
respect to the other Signing Stockholders, the Company or any of the other
Sellers are a party or by which the Signing Stockholders, with each Signing
Stockholder representing such only as to himself, herself or itself and not
with respect to the other Signing Stockholders, the Company or any of the
other Sellers or any of their assets may be bound; and (iii) do not result
in the creation of any material liability, security interest, lien,
encumbrance, claim or other restriction ("Lien") upon any of the properties
or assets of the Company or in the acceleration or maturity of any debt of
the Company, excluding any violations in the case of clauses (ii) and (iii)
that in the aggregate would not have a Material Adverse Effect.
(d) Capital Stock. Immediately prior to the Closing, the authorized
capital stock of Transfusion Technologies Corporation, the names of the
shareholders of Transfusion Technologies Corporation and their respective
share ownership are as set forth in Schedule 3.1(d) hereto. Except as set
forth in Schedule 3.1(d) hereto, all outstanding shares of capital stock of
Transfusion Technologies Corporation are duly authorized, validly issued,
fully paid and non-assessable, and there is no existing option, warrant,
right, call, pre-emptive right or commitment of any character relating to
the issued or unissued capital stock of Transfusion Technologies
Corporation, and no restriction is imposed by Transfusion Technologies
Corporation or by any other person on transfers of any of the Shares. Each
Signing Stockholder severally and not jointly represents and warrants that
such Signing Stockholder owns the shares of Transfusion Technologies
Corporation stock listed opposite the name of such Signing Stockholder in
Schedule 3.1(d), that such shares owned by such Signing Stockholder are
validly issued, fully paid and non-assessable and are owned free and clear
of any Lien. All of the Signing Stockholders jointly but not severally
represent and warrant that each Seller that is not a
9
Signing Stockholder owns the shares of Transfusion Technologies Corporation
stock listed opposite the name of such other Seller in Schedule 3.1(d),
that such shares owned by such other Sellers are validly issued, fully paid
and non-assessable and are owned free and clear of any Lien.
(e) Financial Statements. Except as shown in Schedule 3.1(e)
hereto, the audited consolidated balance sheet of the Company as at
December 31, 1999, and the consolidated related statements of earnings, and
combined statements of cash flow for the year then ended (including the
footnotes thereto), audited by PricewaterhouseCoopers LLP, the unaudited
consolidated balance sheets of the Company for the 7 months ending July 31,
2000 (the "Interim Balance Sheet") and the related unaudited consolidated
statements of income and retained earnings for the period then ended (with
the Interim Balance Sheet, the "Interim Financials"), are consistent with
the books and records of the Company, and present fairly, in all material
respects, the financial position of the Company as of such dates and the
results of its operations and the changes in its financial position for the
periods then ended and have been prepared in conformity with GAAP
consistent with that of similar periods for preceding years, except as
shown in Schedule 3.1(e) hereto and except that the unaudited consolidated
financial statements do not contain the footnotes required under GAAP and
are subject to normal year-end adjustments. The Company has previously
provided actual copies of such financial statements to Haemonetics. The
audited consolidated balance sheet of the Company as at December 31, 1999
is referred to herein as the "Base Balance Sheet" and December 31, 1999 is
referred to herein as the "Balance Sheet Date."
(f) Undisclosed Liabilities. Except as indicated in Schedule 3.1(f)
hereto or as would not have a Material Adverse Effect, the Company does not
have any liabilities (whether absolute, accrued, contingent or otherwise),
except: (i) such liabilities which are accrued or reserved against in the
Interim Balance Sheet or disclosed in the notes thereto or Schedules
hereto; (ii) liabilities not required by GAAP to be accrued, reserved or
disclosed; or (iii) liabilities which were incurred after the date of the
Interim Balance Sheet in the ordinary course of business and in amounts
consistent with prior periods.
(g) Absence of Certain Changes or Events. Since the Balance Sheet
Date to the date hereof, except as specified in Schedule 3.1(g) or as
specifically disclosed on the Interim Financials, the Company has not (i)
discharged or satisfied any Lien or paid any material obligation or
liability, fixed or contingent, except current liabilities reflected in the
Base Balance Sheet, liabilities incurred since the date of the Base Balance
Sheet in the ordinary course of business, obligations and liabilities under
contracts including those referred to in Section 3.1 and liabilities
incurred since the date of the Base Balance Sheet in connection with the
transactions contemplated by this Agreement; (ii) mortgaged, pledged or
subjected to any Lien, any of its assets or properties except in the
ordinary course of business; (iii) transferred or leased or agreed to
transfer or lease any of its material assets or properties except in the
ordinary course of business for fair value; (iv) canceled or compromised
any material debt or claim except for
10
adjustments made with respect to contracts for the purchase of supplies or
for the sale of products or services in the ordinary course of business and
in amounts consistent with prior periods; (v) transferred or granted any
material rights under any leases, licenses, agreements, patents,
inventions, trademarks, trade names, copyrights, or with respect to know-
how except in the ordinary course of business; (vi) made or granted, or
promised to make or grant, any general or individual wage or salary
increase, or entered into any employment, retention, bonus, severance, or
change-of-control agreement with any current or former officer or employee,
or changed or increased the rates of compensation payable through bonus,
pension, contract, or other commitment to any current or former officer,
director, employee or consultant, for any period before or after the
Balance Sheet Date other than (A) increases in base salary or wages for
employees with W-2 annualized compensation for 1999 not in excess of
$100,000 which were granted in the ordinary course of business on a basis
consistent with past practices; or (B) increases in compensation pursuant
to written employment agreements listed on Schedule 3.1(l)(iv); (vii) other
than in connection with the transactions contemplated by this Agreement,
entered into any material transaction outside the ordinary course of
business including without limitation, any contract, license, lease or
agreement which obligates the Company for more than $20,000 in any one case
or more than $50,000 in the aggregate; (viii) suffered any material adverse
change in its businesses, including, without limitation, the loss of any
significant distributor, vendor or customer; (ix) declared any dividend or
made any payment or distribution to its shareholders or purchased or
redeemed any shares or agreed to take any such action; (x) incurred any
labor dispute, other than routine individual grievances, or any activity or
proceeding by a labor union or representative thereof to organize any
employees of the Company, or any lockouts, strikes, slowdowns, work
stoppages or threats thereof by or with respect to such employees which
would have a Material Adverse Effect; or (xi) made or agreed to make any
loan to any shareholder, officer or director (except for advances of out-
of-pocket expenses incurred in the performance of the Company's business
made in the ordinary course of business).
(h) Tax Matters. Except as set forth in Schedule 3.1(h) hereto:
(i) The Company has duly and timely filed all Tax Returns (as
defined herein) required to be filed by it and, except for sales and
use Taxes aggregating $75,000 with respect to which a reserve has
been established, has timely paid all Taxes (as defined herein), that
in the aggregate or individually are material, shown, or required to
be shown, on such Tax Returns. All such Tax Returns are complete and
accurate in all material respects. The Company has paid all other
Taxes, that in the aggregate or individually are material, for which
notice of assessment or demand for payment has been made to the
Company, except for such Taxes as are being contested in good faith
which are disclosed on Schedule 3.1(h).
(ii) The reserves for Taxes due or owing by the Company (as
opposed to any reserves for deferred Taxes established to reflect
timing differences between book and
11
Tax income) in the Interim Balance Sheet are sufficient for all
unpaid Taxes, that in the aggregate or individually are material,
whether or not disputed, of the Company.
(iii) The Company is not the subject of any judicial
proceeding concerning any Tax liability of the Company, and there is
no claim concerning any Tax liability of the Company either (A)
asserted in writing by any taxing authority, or (B) to the knowledge
of the Company or any Signing Stockholder, proposed to be asserted.
No issues have been resolved in favor of any taxing authority or, to
the knowledge of the Company or the Signing Stockholders, raised in
any examination by any taxing authority with respect to the Company
which, by application of similar principles, reasonably could be
expected to result in a proposed deficiency for any other period not
so examined. Schedule 3.1(h) lists all federal, state, local and
foreign income Tax Returns filed by or with respect to the Company
for all taxable periods ended on or after December 31, 1995 (and the
dates on which those Tax Returns were filed with the relevant taxing
authority), indicates those Tax Returns, if any, that have been
audited, and indicates those Tax Returns that currently are the
subject of audit. The Company has made available to Haemonetics
complete and correct copies of all federal, state, local and foreign
income Tax Returns filed by, and all Tax examination reports and
statements of deficiencies assessed against or agreed to by, the
Company for taxable periods ended on or after December 31, 1996.
(iv) Except as set forth on Schedule 3.1(h), (A) the Company
has never joined in or been required to join in filing a consolidated
Tax Return, and has never had an obligation to contribute to the
payment of Taxes determined on a consolidated, combined or unitary
basis with respect to the Company or any affiliate of the Company,
and (B) the Company has not been an electing small business
corporation within the meaning of Subchapter S of the Code.
(v) The Company has not received any written ruling of a
taxing authority related to Taxes or entered into any written and
legally binding agreement with a taxing authority relating to Taxes.
(vi) Except as set forth on Schedule 3.1(h), the Company is
not the beneficiary of any extension of time within which to file any
Tax Returns.
(vii) No claim has ever been made by an authority in a
jurisdiction where the Company does not file Tax Returns that it is
subject to the imposition of any Tax by that jurisdiction.
(viii) There are no liens on any of the assets of the Company
that arose in connection with any failure or alleged failure to pay
any Taxes, other than Taxes disclosed on Schedule 3.1(h) which are
being contested in good faith.
12
(ix) The Company has timely withheld and paid all Taxes, that
in the aggregate or individually are material, required to be
withheld and paid in connection with amounts paid or owing to any
employee, consultant, independent contractor, creditor, stockholder
or any other third party.
(x) The Company has not waived any statute of limitations with
respect to the assessment or collection of Taxes nor agreed to any
extension of time with respect to any Tax assessment or deficiency,
or the collection of any Tax, which remains outstanding.
(xi) The Company has not filed a consent under Section 341(f)
of the Code concerning collapsible corporations, or agreed to have
Section 341(f)(2) applied to any disposition of an asset owned by the
Company.
(xii) Except as disclosed on Schedule 3.1(h), the Company has
not made any payments, is not obligated to make any payment, and is
not a party to any agreement that is reasonably likely to obligate it
under any circumstances to make any payment that will not be
deductible under Section 280G of the Code, or that would be subject
to an excise Tax under Section 4999 of the Code; and as to any
payment pursuant to any agreement, plan or arrangement disclosed on
Schedule 3.1(h), all requisite stockholder votes will have been taken
or obtained by the Company prior to the Closing so as to avoid the
characterization of each such payment as a "parachute payment" for
purposes of Sections 280G and 4999 of the Code.
(xiii) The Company has no liability for the Taxes of any
person under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign law) or as a transferee,
successor, by contract, indemnification, guarantee, or otherwise.
(xiv) The Company has not agreed to make and is not required
to make an adjustment under Section 481 of the Code (or any
comparable provision of state, local or foreign law) by reason of a
change in method of accounting.
(xv) The Company is not and has never been the subject to any
closing agreements with any Tax authority.
(xvi) The Company is not a party to any joint venture,
partnership or other arrangement that is treated as a partnership for
federal income Tax purposes.
(xvii) The Company has not used the installment method to
defer any material liability for Taxes for any taxable period ending
at or before the Closing Date.
(xviii) No power of attorney has been granted by the Company,
and is currently in force, with respect to any matter relating to
Taxes.
13
(xix) The Company is not, and has not been, a United States
Real Property Holding Corporation within the meaning of Section
897(c)(2) of the Code during the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code.
(xx) There is no limitation on the utilization of net
operating losses, built-in losses, tax credits or other similar items
of the Company under Section 382, 383 or 384 of the Code or the
Treasury Regulations thereunder other than the limitation arising as
a result of the Merger and the limitations disclosed on
Schedule 3.1(h).
(xxi) The Company's elections to be governed by the provisions
of Subchapter S of the Code and corresponding state statutes were
validly made, and the Company was subject to Subchapter S of the Code
and the corresponding state statutes as set forth on Schedule 3.1(h)
and qualified under said provisions while such elections were in
effect. With respect to periods during which the Company was so
qualified, Sellers timely reported their distributive share of the
Company's income, gain and losses on their Tax Returns and paid all
Taxes due with respect to said income, gain and losses.
(xxii) For the purposes of this Agreement, the words "Tax" and
"Tax Returns" shall have the following meanings, respectively;
"Tax" means all federal, state and local and foreign taxes,
levies, deficiencies or other assessments and other charges of
whatever nature (including income, gross receipts, license,
payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs duties,
capital stock, franchise, profits, withholding, backup
withholding, social security, unemployment, disability, real
property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, and
estimated) imposed by any taxing authority, including any
interest, penalty, or addition thereto, whether disputed or
not, as well as any expenses incurred in connection with the
determination, settlement or litigation of any liability.
"Tax Return" means any federal, state, local or foreign return,
declaration, report, claim for refund, amended return,
declaration of estimated Tax or information return or statement
relating to Taxes, and any schedule or attachment thereto,
filed or maintained, or required to be filed or maintained in
connection with the calculation, determination, assessment or
collection of any Tax, and including any amendment thereof.
(i) No Royalty Payments. Other than off-the-shelf software licensed
to the Company as an end user, the Company is not the licensee of any
patent, copyright, formula, secret process, trademark, trade or brand name,
or know-how requiring the payment of any material royalty or licensing fee
except as set forth in Schedule 3.1(i) hereto.
14
(j) Title to and Condition of Real Estate. All real property owned
or leased by the Company is described in Schedule 3.1(j) hereto ("Real
Property"). The Company has good and marketable or insurable title to or a
valid leasehold interest in all the Real Property owned by it, or leased by
it, as the case may be, subject to no Lien, except for (i) capital leases
or related arrangements in connection with industrial development agencies
identified in Schedule 3.1(j); (ii) security interests which secure
indebtedness included in the Base Balance Sheets described in
Schedule 3.1(j) hereto; (iii) those matters identified in Schedule 3.1(j)
hereto; (iv) zoning, restrictions, prohibitions and other requirements
imposed by any governmental authority having jurisdiction over the Real
Property which does not materially detract from the value or materially
impair the use of such Real Property as it is currently being used; (v)
water lines, sanitary sewer, drainage, gas distribution lines and mains,
electrical and telephone easements and rights-of-way of record; (vi) real
property taxes, assessments and installments of special assessments for
special or local improvements not yet due and payable as of the Closing
Date; and (vii) imperfections of title, none of which materially detract
from the value or materially impair the use of the Real Property
(collectively, "Permitted Encumbrances"). Except as indicated in Schedule
3.1(j) hereto, the real estate leases referred to in such Schedule 3.1(j)
are in full force and effect and include all of the material leases,
including amendments, under which the Company holds a leasehold interest in
real estate. The Company is in material compliance with all material
provisions of each of its Real Property leases.
Except as specifically described in Schedule 3.1(j) hereto, the
material buildings and improvements located upon the Real Property are
generally in good condition and repair, reasonable wear and tear excepted,
have been well maintained, are supplied with utilities and other services
necessary for the operation of such facilities and, to the knowledge of the
Signing Stockholders, there are no failures to conform with any applicable
zoning law or regulation that would have a Material Adverse Effect. To the
knowledge of the Sellers and the Company, there are no pending or
threatened condemnation proceedings, lawsuits, or administrative actions
relating to the Real Property.
(k) Title to and Condition of Personal Property. Except as set
forth on Schedule 3.1(k), the Company has good and marketable title to all
of its tangible personal property reflected in the Base Balance Sheet and
has not since disposed of any such property, other than in the ordinary
course of business, and in a manner and to an extent which is not material
to the conduct of its businesses. None of the tangible personal property
identified on Schedule 3.1(k), except to the extent identified on that
schedule, is subject to Liens other than Permitted Liens and except for
security interests described in Schedules 3.1(k) or 3.1(l) hereto. All of
the tangible personal property owned or leased by the Company which is
material to the conduct of its businesses is, taken as a whole, in good
condition and repair, reasonable wear and tear excepted, and conforms in
all material respects with all applicable laws, statutes, ordinances, rules
and regulations, except as indicated in Schedule 3.1(k) hereto. "Permitted
Liens" means liens for taxes, assessments or governmental charges, or
landlords', mechanics', materialmen's or similar Liens, in each case that
are not delinquent or which are being contested in good faith.
15
(l) Lists of Contracts and Other Data. Attached hereto as Schedule
3.1(l) is a list of the following:
(i) all agreements to which the Company is a party and which
are material to the businesses of the Company, including investors'
rights agreements, stock restriction agreements, stockholder
agreements and any similar agreements that grant rights relating to
the stock of the Company;
(ii) all guarantees of notes or other financial obligations
and loan agreements (including mortgages, deeds of trust, indentures
and credit agreements) to which the Company is an obligor;
(iii) all employment, consulting, retention, severance, and
change-of-control agreements, executive compensation agreements and
plans, and bonus and commission agreements and plans of the Company,
or for which the Company has any liability or contingent liability;
(iv) the name of each financial institution in which the
Company has an account or safe deposit box (with the identifying
account number or symbol) and the names of all persons authorized to
draw thereon or to have access thereto, and the names of all persons
holding a power of attorney from the Company (excluding those
relating to service of process or qualification or pursuant to
governmental regulatory or licensing requirements);
(v) any contract or agreement for the purchase of any
commodity, product, material, supplies, equipment or other personal
property, or for the receipt of any service, other than purchase
orders entered into in the ordinary course of business;
(vi) any contract or agreement for the purchase or lease of
any fixed asset, whether or not such purchase or lease is in the
ordinary course of business, for a price in excess of $20,000;
(vii) any contract or agreement providing for the purchase of
all or substantially all of its requirements of a particular product
from a supplier, or for periodic minimum purchases of a particular
product from a supplier;
(viii) any contract or agreement in which the Company is in a
partnership or joint venture with one or more Persons (as defined
below);
(ix) any confidentiality agreement or any non-competition
agreement or other contract or agreement containing covenants
limiting the Company's freedom to compete in any line of business or
in any location or with any Person;
16
(x) any contract or agreement with any Seller or any present
or former officer, director, consultant, agent or stockholder of the
Company or with any affiliate of any of them; and
(xi) any loan agreement, indenture, note, bond, debenture or
any other document or agreement evidencing a capitalized lease
obligation or indebtedness to any Person.
The foregoing may exclude contracts (i) requiring payments under a
single contract or in the aggregate under a series of related contracts of
less than $20,000 per year; (ii) for the purchase of goods or services or
the sale of products in the ordinary course of business; (iii) which can be
terminated by the Company without substantial penalty owed by the Company
upon 30 days' notice and without a material loss of benefits to the
Company; (iv) which are substantially performed except for warranty,
guaranty, indemnification, non-compete or indemnification obligations and
which in the aggregate will not have a Material Adverse Effect; or (v)
disclosed in other Disclosure Schedules hereto. "Person" means an
individual, corporation, partnership, joint venture, joint stock company,
association, trust, business trust, unincorporated organization,
governmental authority, or any other entity of whatever nature.
To the best of the Signing Stockholder's knowledge, the Company is
not in material default under any material agreements referred in this
Section 3.1(l) and all such agreements are in full force and effect in
accordance with their terms.
(m) Accounts Receivable. The accounts receivable of the Company
shown on the Base Balance Sheet and all accounts receivable of the Company
which have arisen subsequent thereto have arisen in the ordinary and usual
course of its businesses and, subject to reserves taken therefor, as
reflected on the Interim Balance Sheet, are valid and enforceable and
subject to no set-off or counterclaim.
(n) Labor Matters. Except as provided in Schedule 3.1(n) hereto,
there are no material (i) strikes; (ii) arbitrations; (iii) grievances;
(iv) other labor disputes; or (v) union organizational drives pending,
initiated or, to the knowledge of the Signing Stockholders and the Company,
threatened between the Company and any of its employees. The Company has
complied in all material respects with all the laws relating to the
employment of labor. Except as disclosed in Schedule 3.1(n) hereto, the
Company is not indebted to any officer, director, employee or shareholder,
whether by loan, advance or otherwise, other than for accrued salaries, and
advances for out-of-pocket expenses incurred in the ordinary course of
business and other compensation pursuant to arrangements disclosed in
Schedule 3.1(n) hereto.
(o) Supplier and Customer Relations. Schedule 3.1(o) attached
hereto sets forth a list of all material customers and suppliers. Except as
set forth thereon, no customer or supplier during each of the last two
fiscal years has accounted for more than $100,000 of revenue or orders in
each such year; to the knowledge of the Signing Stockholders and the
Company, the
17
relationship of the Company with its suppliers and customers is, in
general, a good commercial working relationship. No customer or supplier
set forth on Schedule 3.1(o) has canceled or otherwise terminated its
relationship with the Company other than in the ordinary course of
business, or materially decreased its services, supplies or materials
provided to the Company or, to the knowledge of the Signing Stockholders,
threatened to do so.
(p) Benefit Plans.
(i) Employee Welfare Benefit Plans. Except as disclosed in
Schedule 3.1(p)(i) hereto: (A) the Company does not maintain or
contribute to and is not obligated to maintain or contribute to any
"employee welfare benefit plan" as defined in Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")
or any material fringe benefit plan, and (B) with respect to each
plan listed in Schedule 3.1(p)(i) hereto, (1) the plan is in material
compliance with ERISA, the Internal Revenue Code of 1986, as amended
(the "Code") and all other applicable law; (2) the plan has been
administered in all material respects in accordance with its
governing documents (except as otherwise required by applicable law);
(3) none of the Company or the Plan or, to the knowledge of Sellers,
any "disqualified person" or "party in interest" as defined,
respectively, in Section 4975 of the Code or Section 3(14) of ERISA,
or any fiduciary with respect to the plan, has engaged in any
"prohibited transaction" as defined in Section 406 of ERISA or
Section 4975 of the Code other than any transaction subject to a
statutory exception or administrative exemption; (4) all premiums due
prior to the date hereof, if any, on any insurance contract through
which the plan is funded have been paid; (5) the plan, if funded, is
in material compliance with Sections 419 and 419A of the Code, if
applicable; and (6) the plan, if a group health plan within the
meaning of Section 607(l) of ERISA and Section 5000(b)(1) of the
Code, is in material compliance with Section 601 of ERISA and Section
4980B(f) of the Code.
(ii) Employee Pension Benefit Plans. Except as disclosed in
Schedules 3.1(p)(ii) or 3.1(p)(iii) hereto, the Company does not
maintain or contribute to and is not obligated to maintain or
contribute to or have any liability or contingent liability for any
"employee pension benefit plan" as defined in Section 3(2) of ERISA.
With respect to each plan listed in Schedule 3.1(p)(ii) and except as
disclosed in Schedule 3.1(p)(ii): (A) the plan is in material
compliance with ERISA, the Code and all other applicable statutes and
regulations; (B) a favorable determination letter has been issued by
the Internal Revenue Service with respect to each plan intended to
qualify under Section 401(a) of the Code and the Internal Revenue
Service has taken no action to revoke such letter and no grounds for
such revocation exist; (C) the plan has been administered in all
material respects in accordance with its governing documents as
modified by applicable law; (D) none of the Company or the Plan or,
to the knowledge of Sellers and the Company, any "disqualified
person" or "party in interest" as defined, respectively, in Section
4975 of the Code or Section 3(14) of ERISA, or any fiduciary with
respect to the plan, has engaged in any "prohibited transaction" as
defined in Section 406 of ERISA or Section 4975 of the Code other
than a transaction subject to statutory exception or
18
administrative exemption; (E) all contributions required to be made
to the plan have been made to the plan; and (F) there has been no
material failure to pay any amounts known by the Sellers or the
Company to be due and owing as required by the terms of the plan and
there is no material litigation, arbitration or disputed claim
outstanding.
(iii) Employment and Non-Tax Qualified Deferred Compensation
Arrangements. Except as disclosed in Schedule 3.1(p)(iii) hereto, the
Company does not maintain or contribute to, or have any liability or
contingent liability for, any retirement or deferred or incentive
compensation or stock purchase or stock grant or stock option or
phantom stock or severance pay arrangement entered into between the
Company and any current or former officer, consultant, director or
employee of the Company that is not a tax qualified arrangement under
Section 401(a) of the Code.
(iv) Copies of Information. Except as disclosed in
Schedule 3.1(p)(iv) hereto, true and complete copies of each
"employee benefit plan" as defined in Section 3(3) of ERISA
maintained by the Company as set forth on Schedules 3.1(p)(i) and
3.1(p)(ii) hereto and any other plan or arrangement maintained by the
Company as set forth on Schedule 3.1(p)(iii) hereto, including
amendments thereto, have been delivered to Newco, together with (A) a
true and complete copy of the two most recent annual reports (Form
5500 including, if applicable, Schedule B thereto) prepared in
connection with any such plan; (B) a true and complete copy of the
two most recent actuarial valuation reports prepared in connection
with any defined benefit plan, if any; and (C) a copy of the most
recent summary plan description of each such plan.
(v) Controlled Group. For purposes of this Section 3.1(p), any
reference to the term "Company" shall be deemed to refer also to any
entity (regardless of whether it is subject to ERISA) which is or has
been under common control or affiliated with the Company ("ERISA
Affiliate") within the meaning of Section 4001(b)(1) of ERISA and the
rules and regulations promulgated thereunder or Sections 414(b), (c),
(m) or (o) of the Code and the rules and regulations promulgated
thereunder.
(vi) Miscellaneous. None of the employee welfare benefit plans
referenced in Schedule 3.1(p)(i) is a "multiple employer welfare
plan" (as described in section 3(40) of ERISA). With respect to any
plan disclosed in Schedule 3.1(p)(i), there are no understandings,
agreements, or undertakings, written or oral, that would prevent any
such plan (including any plan covering retirees or other former
employees) from being amended or terminated without material
liability to the Company at any time on or after the Closing Date. No
plan listed in Schedule 3.1(p)(i) provides for continuing benefits or
coverages after termination of or retirement from employment, except
for benefits mandated by section 4980B of the Code or applicable
State statute. None of the plans listed in Schedule 3.1(p)(ii) is (A)
a "multi employer pension plan" (as defined in section 3(37) of
ERISA), (B) subject to Title IV of ERISA, or (C) subject to section
412 of the Code. The consummation of the transaction contemplated by
this Agreement will not, directly or indirectly, under any plan
disclosed in the
19
schedules to this Section 3.1(p), (A) entitle any current or former
employee, officer, consultant, or director of the Company to any
payment (including severance pay, change in control payments, or
similar such compensation), (B) result in acceleration of vesting or
of any benefits under any such plan, or (C) result in any material
increase in benefits under any such plan. As a result, directly or
indirectly, of the transactions contemplated by this Agreement
(including, without limitation, as a result of any termination of
employment prior to, on, or after the Closing Date), the Company will
not be obligated under any plan disclosed in the schedules to this
Section 3.1(p) to make a payment to any individual who is a
"disqualified individual" that would be characterized as an "excess
parachute payment" (as such terms are defined in section 280G(b)(1)
of the Code) without regard to whether such payment is reasonable
compensation for personal services performed or to be performed in
the future.
(q) Litigation. Except as set forth in Schedule 3.1(q) hereto,
there are no legal or administrative proceedings pending (including
asserted claims, suits, actions, arbitrations or governmental
investigations) against the Company or, to the best of the Signing
Stockholders' and the Company's knowledge, threatened against the Company.
(r) Permits. To the best of the Signing Stockholders' and the
Company's knowledge, except as set forth in Schedule 3.1(r) hereto, the
Company holds all material licenses, permits, and other approvals (other
than environmental permits which are the subject of Section 3.1(t)) that
are required to permit it to conduct its business as conducted. All such
material licenses, permits, and other approvals (other than routine
business licenses, permits and similar approvals) are valid and in full
force and effect, and the Company is in compliance in all material respects
with all such material licenses, permits and other approvals.
(s) Compliance with Law.
(i) Except as otherwise disclosed in Schedule 3.1(s) hereto,
the Company has not violated or failed to comply with any law or
order of any foreign, federal, state or local government or any other
governmental department or agency, or any judgment, decree or order
of any court, applicable to its businesses or operations except where
any such violations or failures to comply would not, in the
aggregate, have a Material Adverse Effect.
(ii) To the knowledge of Sellers and the Company, the Company
is not under investigation with respect to, any possible material
violation of any applicable law, statute, ordinance, regulation,
rule, order or requirement relating to any of the foregoing in
connection with the business of the Company and the Company has filed
all material reports required to be filed with any governmental,
regulatory or administrative agency or authority except where any
such violations or failures to comply would not, in the aggregate,
have a Material Adverse Effect.
(t) Environmental Matters.
20
(i) Environmental Law. When used in this Agreement,
"Environmental Law" shall mean any existing federal, state, or local
statute, ordinance or rule or regulation, any judicial or
administrative order (whether or not on consent), request or
judgment, any common law doctrine or theory, and any provision or
condition of any permit, license or other operating authorization,
relating to (A) protection of the environment, persons or the public
welfare from actual or potential exposure (or the effects of
exposure) to any actual or potential release, discharge or emission
(whether past or present) of, or regarding the manufacture,
processing, importation, use, treatment, storage or disposal of, any
chemical, raw material, pollutant, contaminant or toxic or hazardous
substance; or (B) occupational or public health or safety.
(ii) Environmental Compliance and Liabilities. To the Signing
Stockholders' and the Company's knowledge, the Company has complied
with all Environmental Laws except for instances of non-compliance
which do not, in the aggregate, have a Material Adverse Effect. The
Signing Stockholders and the Company do not know of any present
condition of the Company or the Real Property, nor of their present
or past activities or manner of operation, that give rise to any
liability pursuant to any Environmental Laws to any person,
contingent or otherwise that, in the aggregate, would have a Material
Adverse Effect.
(u) Medical Devices. Except as disclosed in Schedule 3.1(u)
attached hereto, the Company has complied in all material respects with all
governmental laws, regulations and/or orders pertaining to medical devices,
including, without limitation, the manufacturing, marketing, sales and
distribution of all such devices. The Signing Stockholders and the Company
do not know of any present or past activities or manner of operation of the
Company, that would give rise to any liability, contingent or otherwise
that, in the aggregate, would have a Material Adverse Effect.
(v) Insurance. Schedule 3.1(v) attached hereto sets forth a list of
all insurance policies (including policies providing property, casualty,
liability, and workers' compensation coverage, benefits or coverage for any
plan described in Section 3.1(p)(i) or (ii), and bond and surety
arrangements) to which the Company has been a party, a named insured, or
otherwise the beneficiary of coverage at any time within the past three (3)
years and specifies the insurer, the amount of coverage, type of insurance,
expiration date, and any retroactive premium adjustments or other loss
sharing arrangements. With respect to each such insurance policy: (a) the
policy is legal, valid, binding, enforceable, and in full force and effect;
(b) the Company is not in breach or default (including with respect to the
payment of premiums or the giving of notices), and to the Signing
Stockholders' knowledge no event has occurred which, with notice or the
lapse of time, would constitute such a breach or default, or permit
termination, modification, or acceleration under the policy; and (c) no
party to the policy has repudiated any provision thereof. The Company has
been covered during the past five (5) years by insurance in scope and
amount that the Signing Stockholders and the Company believe to be
reasonable for the businesses in
21
which it has engaged during the aforementioned period. Schedule 3.1(v)
describes any self-insurance arrangements affecting the Company.
(w) Records and Books. The minute books of the Company have
previously been made available to Haemonetics. The stock transfer ledgers
or record books of the Company completely and accurately set forth all
transfers of the Company's capital stock from the date of organization
through the date hereof.
(x) Disclosure of Material Information. To the best knowledge of
the Signing Stockholders and the Company, neither this Agreement (including
the Disclosure Schedules and Exhibits hereto) nor any agreement, document,
certificate or instrument furnished in connection herewith contains, with
respect to the Company or any of the Signing Stockholders, any untrue
statement of a material fact.
(y) Transactions with Interested Persons. Except as set forth on
Schedule 3.1(y) attached hereto, no family member, no officer, supervisory
employee or director of the Company owns directly or indirectly, either
individually or jointly, any material interest in, or serves as an officer
or director of, any customer, competitor or supplier of the Company, or any
organization which has a material contract or arrangement with the Company.
(z) Patents, Trademarks, etc. Set forth on Schedule 3.1(z) is a
list of all material patents, patent rights, patent applications,
trademarks, trademark applications, service marks, service ▇▇▇▇
applications, trade names, trade name applications and copyrights owned by,
in whole or in part, or registered in the name of the Company, or of which
the Company is a licensor or licensee. The Company owns or possesses
adequate licenses or other rights to use all patents, patent applications,
trademarks, trademark applications, service marks, service ▇▇▇▇
applications, trade names, copyrights, manufacturing processes, formulae,
trade secrets and know-how (collectively, "Intellectual Property")
necessary to the conduct of its business as now conducted and no claim is
pending or, to the knowledge of the Signing Stockholders and the Company,
threatened to the effect that the operations of the Company infringe upon
or conflict with the asserted rights of any other person under any
Intellectual Property, and Company and the Signing Stockholders are not
aware of any basis upon which any such claim (whether or not pending or
threatened) should reasonably be anticipated. Except as set forth on
Schedule 3.1(z), no claim is pending or, to the knowledge of the Signing
Stockholders and the Company, threatened to the effect that any such
Intellectual Property owned or licensed by the Company, or which Company
otherwise has the right to use, is invalid or unenforceable by the Company,
and the Company and the Signing Stockholders are not aware of any basis
upon which any such claim (whether or not pending or threatened) should
reasonably be anticipated.
(aa) Inventories.
22
(i) Except as disclosed in Schedule 3.1(aa) attached hereto:
(A) the inventories of the Company are properly reflected in the
Interim Balance Sheet and are of a quality and quantity saleable in
the ordinary course of business of the Company, net of reserves taken
therefor, as reflected on the Interim Balance Sheet, and (B) the
values of the inventories stated in the Financial Statements reflect
the Company's normal inventory valuation policies and were determined
in accordance with GAAP consistently applied.
(ii) As of the date hereof, purchase commitments for raw
materials and parts for the Company are not, individually or in the
aggregate, in excess of normal requirements and none of such
commitments are at prices materially in excess of current market
prices. Sales commitments for finished goods are all at prices in
excess of prices used in valuing inventory items or of estimated
costs of manufacture of items not in inventory after allowing for
selling expenses and a normal profit margin.
(bb) Shareholder Approval. The Board of Directors of Transfusion
Technologies Corporation has authorized the use of written consents by the
stockholders of Transfusion Technologies Corporation to approve of the
Merger Agreement, the Merger and all transactions contemplated by the
Merger Agreement in accordance with Article Sixth of Transfusion
Technologies Corporation's Amended and Restated Certificate of
Incorporation. As of the Closing Date, Transfusion Technologies Corporation
will have obtained requisite approval of this Agreement and of the Merger
by written consent of Transfusion Technologies Corporation's stockholders
in accordance with the DGCL. In connection with the solicitation of such
consents, at the time of the Closing, Transfusion Technologies Corporation
will have prepared and distributed to Transfusion Technologies
Corporation's stockholders, in accordance with applicable law, a memorandum
or solicitation statement (the "Solicitation Statement") pursuant to which
the Board of Directors of Transfusion Technologies Corporation solicited
consents to vote in favor of the adoption of this Agreement and the
approval of the Merger. At the time of the Closing, the Solicitation
Statement (i) did not or will not, as of the date on which it was delivered
or mailed to Transfusion Technologies Corporation's stockholders, as of the
date of each consent, and as of effective date of the approval, have
contained any untrue statement of a material fact and (ii) will have
complied with all applicable laws, including all federal and state
securities laws.
(cc) Subsidiaries. Transfusion Technologies Corporation has no
subsidiaries other than Transfusion Technologies GmbH ("GMBH") and Westgate
Securities Corporation ("Westgate"), each of which is a wholly owned
subsidiary of Transfusion Technologies Corporation, and each of which
presently has no operations other than in connection with liquidation.
Other than with respect to inter-company balances, neither GMBH nor
Westgate has any assets, other than cash assets which, in the case of GMBH,
do not exceed $50,000, and in the case of Westgate, do not exceed $20,000,
and neither GMBH nor Westgate has any material liabilities. As used herein,
"subsidiary" means any corporation or entity of which the Company owns 50%
or more of the capital stock or other equity.
23
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NEWCO AND HAEMONETICS
-------------------------------------------------------
4.1 Representations and Warranties of Haemonetics. Newco and
Haemonetics jointly and severally represent and warrant to Sellers as
follows:
(a) Organization. Haemonetics is a corporation, duly
organized, validly existing and in good standing under the laws of
the Commonwealth of Massachusetts. Newco is a corporation, duly
organized, validly existing and in good standing under the laws of
the State of Delaware. Each of Newco and Haemonetics has all
requisite corporate power and authority to own its properties as
presently owned and to carry on its business as now conducted. Copies
of Haemonetics Articles of Organization, as amended to the date
hereof, certified by the Secretary of State of the Commonwealth of
Massachusetts, and its by-laws, as amended to the date hereof, are
attached hereto as Schedule 4.1(a). Copies of Newco's Certificate of
Incorporation, as amended to the date hereof, and certified by the
secretary of Newco, and its by-laws are also attached as Schedule
4.1(a). Newco is a newly-formed, wholly-owned subsidiary of
Haemonetics formed for the purpose of consummating the transactions
contemplated by this Agreement and has had and currently has no other
assets or business activities.
(b) Authority Relative to Agreement. The execution, delivery
and performance of this Agreement by Newco and Haemonetics and
consummation by them of the transactions contemplated hereby have
been duly and effectively authorized by all necessary corporate
action, and this Agreement constitutes a legal, valid and binding
obligation of Newco and Haemonetics enforceable against each in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, arrangement, or
similar laws affecting the rights of creditors generally and subject
to the discretion of courts to award equitable remedies.
(c) Effect of Agreement. The execution, delivery and
performance of this Agreement by Newco and Haemonetics and the
consummation of the transactions contemplated thereby (i) do not
require the filing with, or the consent, waiver, approval, license or
authorization of, any governmental agency or regulatory authority,
except as required under the HSR Act; (ii) do not conflict with or
result in a breach of Newco's Certificate of Incorporation or
Haemonetics' Articles of Organization or their By-laws or any
mortgage, deed of trust, license, indenture or other agreement or
instrument or any order, judgment, decree, statute, regulation or any
other restriction of any kind or character to which Haemonetics or
Newco is a party or by which Haemonetics or Newco or any of their
assets may be bound; and (iii) do not result in the creation of any
liability, lien, encumbrance, claim or other restriction upon any of
the property or assets of Haemonetics or Newco or in the acceleration
or maturity of any debt of Haemonetics or Newco.
24
(d) Investment Purpose. Haemonetics is entering into the
transactions contemplated herein for its own account, for investment
purposes and not with a view to the resale or distribution of any
securities acquired as a consequence of the transactions contemplated
herein.
ARTICLE V
COVENANTS OF THE COMPANY AND THE SIGNING STOCKHOLDERS
-----------------------------------------------------
From and after the date of this Agreement and until the earlier of
the Closing or the termination of this Agreement in accordance with its
terms, each of the Signing Stockholders and the Company covenants and
agrees with Haemonetics and Newco as follows:
5.1 Compliance with Law. The Company and the Signing Stockholders
shall comply with all applicable laws and regulations required for the
valid and effective consummation of the transactions contemplated hereby.
5.2 Notice. The Company and the Signing Stockholders shall promptly
notify Haemonetics in writing upon the occurrence or nonoccurrence of any
event which does then, or which upon the passing of time or the giving of
notice would, constitute a breach of or default under, or render misleading
or untrue any agreement, covenant, representation or warranty made by the
Signing Stockholders in this Agreement.
5.3 Non-Solicitation and Breakup Fee. The Company and the Signing
Stockholders shall not directly or indirectly, through any officer,
director, agent or otherwise, solicit, encourage or negotiate with any
Person, or accept any proposal, to acquire the Company, including without
limitation an acquisition of all or substantially all of the assets of the
Company or any equity in the Company or any equity investment, merger,
consolidation or business combination with the Company. Subject to the
exercise by the Company's directors of their fiduciary duties (as advised
in writing by counsel), the Company will not participate in any discussions
or negotiations regarding, or furnish to any other Person, any non-public
information with respect to, or assist or participate in, any effort or
attempt by any other Person to do or seek any of the foregoing. Prior to
the Closing, the Signing Stockholders shall not sell, sign, assign, pledge
or otherwise transfer any of the Shares. The Company shall within one
business day notify Haemonetics if any such proposal or offer, or any
inquiry or contact with any Person with respect thereto, is made.
The Company shall pay to Haemonetics the sum of $2,000,000 (Two
million dollars), which the parties agree to be equal to the reasonable
fees and expenses incurred by Haemonetics and Newco in connection with the
consummation of the transactions contemplated hereby if the Closing has not
occurred and (i) the Company's directors, in the exercise of their
fiduciary duties (as advised in writing by counsel), on or before the
Closing Date, shall have failed to approve or
25
taken a public position materially inconsistent with its approval or
recommendation of this Agreement or the terms hereof or (ii) the Company's
directors shall have approved a Superior Proposal (as hereinafter defined).
Nothing contained in this section shall relieve the Company of its
obligation (subject to the exercise by the Company's directors of their
fiduciary duties, as advised in writing by counsel) to recommend that the
Sellers accept and approve the transactions contemplated by this Agreement.
The provisions contained in this Section 5.3 shall survive any termination
of this Agreement.
5.4 Conduct of Business of the Company. Prior to the Closing,
unless Haemonetics has consented in writing thereto or unless otherwise
specifically permitted or contemplated by this Agreement, the Company:
(i) shall use its reasonable best efforts to preserve intact
its business organization and goodwill and keep available the
services of its executive officers and material employees, its
customers and others having business relations with the Company, as
applicable;
(ii) shall promptly notify Haemonetics of any material
emergency or other material change in the condition (financial or
otherwise), business, properties, assets, liabilities, prospects or
the normal course of its business or in the operation of its
properties, any material governmental complaints, investigations or
hearings, or the breach in any material respect of any representation
or warranty contained herein;
(iii) shall conduct its operations according to its usual,
regular and ordinary course in substantially the same manner as
heretofore conducted and refrain from changing or introducing any
method of financial or tax accounting, management or operations
except in the ordinary course of business and consistent with past
practices;
(iv) except as provided in Section 5.12, the Company shall not
amend its certificate of incorporation or by-laws;
(v) shall not (A) issue any shares of its capital stock,
effect any stock split, reverse stock split, stock dividend,
recapitalization or other similar transaction, (B) grant, confer or
award any option, warrant, conversion right or other right not
existing on the date hereof to acquire any shares of its capital
stock or grant any stock appreciation rights, (C) adopt any new
employee benefit plan (including any stock option, stock appreciation
right, stock benefit or stock purchase plan) or amend any of their
benefit plans in any material respect, except for changes which are
required by applicable law;
(vi) shall not (A) declare, set aside or pay any dividend or
make any other distribution or payment with respect to any shares of
its capital stock, or (B) directly or
26
indirectly redeem, purchase or otherwise acquire any shares of its
capital stock, or make any commitment for any such action;
(vii) shall not sell, lease, or otherwise dispose of, or agree
to the sale, lease or other disposition of any of its assets or
properties, except in the ordinary course of business;
(viii) shall not make any loans, advances or capital
contributions to, or investments in, any other person other than
loans and advances to employees relating to the incurrence of
expenses in the ordinary course consistent with past practices;
(ix) shall not discharge or satisfy any claims, liabilities or
obligations, other than the payment, discharge or satisfaction, in
the ordinary course of business consistent with past practice or in
accordance with their terms, of liabilities reflected or reserved
against in, or contemplated by, the Interim Financials (or the notes
thereto), or incurred in the ordinary course of business consistent
with past practice or entered into in accordance with this Agreement
or the settlement of claims and litigation in the ordinary course of
business;
(x) shall not make any purchase of any product, asset or
property other than in the ordinary course of business, or mortgage,
pledge, subject to a lien or otherwise encumber any of its properties
or assets other than in the ordinary course of business;
(xi) shall not incur any contingent liability as a guarantor
or otherwise with respect to the obligations of others, or incur any
other indebtedness or contingent or fixed obligations or liabilities
except in the ordinary course of business;
(xii) shall not make any change in the compensation payable or
to become payable to any of their respective officers, employees,
agents or independent contractors other than increases in the
ordinary course of business consistent with past practices;
(xiii) shall have in effect and maintain at all times all
insurance of the kind and in the amount it currently carries or
equivalent insurance with any substitute insurers approved in writing
by the other party;
(xiv) shall permit Haemonetics and its authorized
representatives to have full access to all its properties, assets,
records, Tax Returns, contracts and documents and furnish to
Haemonetics or its authorized representatives such financial and
other information with respect to its business or properties as
Haemonetics may from time to time reasonably request; and
(xv) shall not make any material Tax elections, settle or
compromise any Tax liability with any taxing authority or file any
amended Tax Return or claim for refund.
5.5 Consent of Stockholders. Promptly following execution of this
Agreement, the
27
Company shall take all action necessary in accordance with applicable law
and its certificate of incorporation and by-laws to obtain the written
consent of its stockholders consenting to: (i) the adoption and approval of
this Agreement and the Merger; (ii) all other actions requiring stockholder
approval hereunder; and (iii) all such other actions as may be necessary or
appropriate for the consummation of the transactions contemplated hereby,
including, but not limited to, the requisite stockholder vote pursuant to
Section 280G of the Code with respect to the Employment Agreement referred
to in Section 6.1(i). In connection with the solicitation of consents, the
Company shall prepare and distribute to the Company's stockholders, in
accordance with applicable law, the Solicitation Statement.
5.6 Option Cancellation. All Options outstanding immediately prior
to the Effective Time shall be cancelled by the execution and delivery by
the holder thereof of an OCA, pursuant to which the Company shall be
released from any liabilities or continuing obligations relating thereto.
5.7 Termination of 401(k). Immediately prior to the Closing, the
Company shall terminate its 401(k) plan.
5.8 Payment of Certain Employment Obligations. The Company shall
make the payments, as contemporaneously agreed to, to the persons
identified on that schedule and receive, to the extent permissible under
applicable law, a full and complete release from all such persons of all
claims relating to their employment by, or termination from the Company,
other than claims and liabilities arising from indemnification obligations
to officers and directors of the Company prior to Closing under the
Company's Certificate of Incorporation or By-Laws.
5.9 Tax Return. The Company shall file its Tax Returns for the year
ended December 31, 1999.
5.10 Termination of the Amended and Restated Investors' Rights
Agreement. The Company shall terminate (i) the Amended and Restated
Investors' Rights Agreement, dated November 8, 1999, by and among the
Company and certain Investors and (ii) any and all agreements to which the
Company or any of the Signing Stockholders is a party that grant any rights
relating to the Company's capital stock, including preemptive rights, co-
sale rights, rights of first refusal and registration rights, except for
any warrants.
5.11 Filings Under ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act. The Company shall
cooperate fully with Haemonetics in connection with the preparation of any
filings which the Federal Trade Commission and the Antitrust Division of
the Department of Justice request pursuant to the HSR Act.
5.12 Amendment of Amended and Restated Certificate of Incorporation.
The Company shall amend its Amended and Restated Certificate of
Incorporation (the "Amended
28
Certificate") to permit the consummation of the merger in accordance with
the terms of this Agreement, including, but not limited to, such amendments
as may be necessary to modify and/or delete Section B(2), Section B(4)(h)
and Section B(9) of Article Fourth. Such amendments shall be made in
accordance with Section B(7)(b)(i) of Article Fourth of the Amended
Certificate.
ARTICLE VI
CONDITIONS TO OBLIGATION OF
NEWCO AND HAEMONETICS TO CONSUMMATE CLOSING
-------------------------------------------
6.1 Conditions. The obligations of Newco and Haemonetics under this
Agreement to consummate the Closing are subject to the following conditions
having been performed by the Company and the Signing Stockholders or waived
by Newco and Haemonetics:
(a) Representations and Warranties. Each of the
representations and warranties of the Company and the Signing
Stockholders contained in this Agreement shall be true and correct in
all respects as of the date of this Agreement and as of the Effective
Time as though made on and as of the Effective Time, except with
respect to any representation or warranty of the Company and the
Signing Stockholders that the Company and the Signing Stockholders
disclose in writing to Haemonetics after the date of this Agreement
but prior to the Closing that will not be true and correct as of the
Effective Time, but if and only if Haemonetics consummates the
Closing.
(b) Performance of Obligations. The Company and the Signing
Stockholders shall have performed or complied in all material
respects with all agreements and covenants required by this Agreement
to be performed or complied with at or prior to the Effective Time.
(c) Certificate from Officers. The Company shall have
delivered to Haemonetics a certificate of its President or Chief
Executive Officer dated the Closing Date to the effect that the
statements set forth in paragraphs (a) and (b) immediately above with
respect to the Company are true and correct.
(d) Corporate Documents. The Company shall have delivered to
Newco:
(i) an Officer's Certificate of the Company certifying
(x) the incumbency and genuineness of signatures of all
officers of the Company executing this Agreement, any document
delivered by the Company at the Closing and any other document,
instrument or agreement executed in connection herewith, (y)
the truth and correctness of resolutions of each Company
authorizing the entry by such Company into this Agreement and
the transactions contemplated hereby and (z) the truth,
correctness and completeness of the by-laws of the Company;
29
(ii) the minute books and stock record books of the
Company;
(iii) the certificate of incorporation of the Company
certified as of a recent date by the Secretary of State of the
State of Delaware; and
(iv) certificates of corporate and tax good standing and
legal existence of the Company as of a recent date from the
Secretary of State of the State of Delaware.
(e) Resignations. Haemonetics shall have received written
resignations of such directors and officers of the Company effective
as of the Closing as requested by Haemonetics.
(f) Opinion of the Company's Counsel. Haemonetics shall have
received from counsel to the Company a favorable opinion, dated the
Closing Date, in form and substance satisfactory to Haemonetics and
its counsel.
(g) Certificates. Haemonetics shall have received from each
Seller executed certificates representing all of the shares of
capital stock issued to such Seller and OCA's from all holders of
Options in substantially the same form as the form of Exhibit D
hereto.
(h) HSR Act. All applicable waiting periods, if any, under the
HSR Act shall have expired.
(i) Releases. The Signing Stockholders and the Company shall
have furnished Newco with general releases of all claims and
liabilities of the Company to the Signing Stockholders other than
claims and liabilities under this Agreement or arising from
indemnification obligations to officers and directors of the Company
prior to Closing under the Company's Certificate of Incorporation or
By-Laws.
(j) Employment Arrangements. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall have
executed and delivered an Employment Agreement with the Company in
form and substance satisfactory to Haemonetics, and ▇▇▇▇▇▇ ▇▇▇▇▇ and
▇▇▇▇ ▇▇▇▇▇▇▇ shall have accepted in writing their respective offers
of employment from Haemonetics.
(k) Merger. This Agreement and the Merger shall have been
approved by the Company's stockholders in accordance with the
Company's Certificate of Incorporation and By-Laws, and pursuant to
the requirements of the Delaware Corporation Law, and the Certificate
of Merger shall be declared effective by the Department of State of
the State of Delaware.
(l) Employee Releases. Haemonetics shall have received
releases in form and substance satisfactory to Haemonetics, and in
compliance with applicable law, from all employees of the Company
receiving severance benefits in connection with the consummation of
the transactions contemplated by this Agreement other than with
respect to claims and liabilities
30
under this Agreement or arising from indemnification obligations to
officers and directors of the Company prior to Closing under the
Company's Certificate of Incorporation or By-Laws.
(m) Option Cancellation. All Options outstanding immediately
prior to the Effective Time shall have been cancelled.
(n) Termination of 401(k) Plan. The Company shall have
terminated its 401(k) plan.
(o) Tax Return. The Company shall have filed its Tax Returns
for the year ended December 31, 1999.
(p) Payments. The Company shall have made severance, bonus and
COBRA payments to certain of its employees to Haemonetics'
satisfaction.
(q) Consulting Agreement. ▇▇▇▇▇▇ ▇▇▇▇▇▇ shall have entered
into a Consulting Agreement with Haemonetics in form and substance
satisfactory to Haemonetics.
ARTICLE VII
CONDITIONS TO OBLIGATION OF SIGNING STOCKHOLDERS
TO CONSUMMATE CLOSING
---------------------
7.1 Conditions. The obligation of the Signing Stockholders under
this Agreement to consummate the Closing is subject to the following
conditions having been performed by Haemonetics and Newco or waived by the
Signing Stockholders:
(a) Certificates. Signing Stockholders shall have received a
certificate executed by an officer of Newco, dated the Closing Date,
to the effect that the representations and warranties of Newco
contained in this Agreement are true and correct in all respects as
of the Effective Time as though made on and as of the Effective Time.
(b) Opinion of Counsel. Signing Stockholders shall have
received from counsel to Haemonetics and Newco a favorable opinion,
dated the Closing Date in form and substance satisfactory to the
Company and its counsel.
(c) HSR Act. All applicable waiting periods, if any, under the
HSR Act shall have expired.
(d) Merger. The Agreement and the Merger shall have been
approved by the directors of Haemonetics in accordance with its
articles of organization and by-laws and
31
pursuant to the requirements of Massachusetts law, and by the
directors of Newco in accordance with its certificate of
incorporation and by-laws and pursuant to the requirements of the
DGCL.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS, WARRANTIES
AND COVENANTS; INDEMNIFICATION
------------------------------
8.1 Survival. The representations, warranties, covenants,
agreements and certifications of the Signing Stockholders and the Company
contained in this Agreement, shall survive the Closing for a period of one
(1) year, except (i) the representations and warranties contained in
Section 3.1(d) shall be perpetual and not expire, (ii) the indemnification
contained in Section 8.2(b) with respect to the Warrant and any other
warrants shall expire upon the later of (A) the expiration of their
respective terms or (B) the expiration of the applicable statutes of
limitation with respect thereto; and (iii) the representations and
warranties relating to environmental and tax matters shall survive the
Closing for a period of five (5) years.
8.2 Indemnification. Subject to the limitations of this Section
8.2, and in accordance with Section 8.4 hereunder, after the Closing the
Sellers with respect to any claims made against the Escrow ("Escrow
Claims"), and the Signing Stockholders with respect to Escrow Claims (to
the extent not satisfied out of the Escrow) and claims made after
exhaustion or termination of the Escrow ("Post-Escrow Claims"), shall
indemnify jointly but not severally (i.e., on a pro rata basis as provided
in the next sentence) (except where otherwise provided, including the
payment obligations of the Signing Stockholders under Section 1.6(b) and
the several indemnity obligations of the Signing Stockholders under (b)(i)
and (ii) of this Section 8.2, which obligations shall be governed by those
provisions) Haemonetics and the Company from and against all loss, damage,
cost and expense (contingent or otherwise), and diminution in value,
including, without limitation, reasonable attorneys' fees (hereinafter
"Damages"), asserted against, imposed upon, or resulting to or incurred by
Haemonetics or the Company by reason of the breach by the Signing
Stockholders or the Company of their representations, warranties, covenants
and agreements contained herein; provided, however, that no such
indemnification shall be provided with respect to any breach of any
representation or warranty disclosed in writing to Haemonetics after the
date of this Agreement but prior to the Closing if and only if Haemonetics
consummates the Closing. The foregoing indemnity shall be borne and paid
pro rata by each Seller with respect to Escrow Claims and each Signing
Stockholder with respect to Escrow Claims (to the extent not satisfied out
of the Escrow) and Post-Escrow Claims in the proportion the Merger
Consideration received by that Seller or Signing Stockholder, as the case
may be, bears to the total Merger Consideration paid to all Sellers or
Signing Stockholders, as the case may be. Schedule 8.2 hereto lists the
Sellers and the Signing Stockholders and their pro rata share of the
foregoing indemnity obligation. The Sellers on the one hand and the Signing
Stockholders on the other hand, are sometimes referred to generically
herein as "Indemnifying Parties". The obligation of the Indemnifying
Parties to indemnify Haemonetics or any other
32
person in respect of breaches of representations and warranties shall be
subject to all of the following limitations:
(a) Notice. With respect to a breach of the representations
and warranties, the Indemnifying Parties shall be obligated to
indemnify Haemonetics only for those Damages as to which Haemonetics
has given the Indemnifying Parties written notice, subject to the
limitations set forth in Section 8.1 hereof and, with respect to the
Escrow, the terms and provisions of the Escrow Agreement. Any written
notice delivered by Haemonetics to the Indemnifying Parties pursuant
to this Section 8.2 shall set forth the basis of the claim for
Damages (including, without limitation, reference to the specific
details regarding the manner in which the representations are alleged
to have been breached) and, if then determinable by Haemonetics, a
reasonable estimate of the amount thereof.
(b) Certain Indemnities. Each Signing Stockholder shall:
severally indemnify Haemonetics and the Company against (i) any
violation by any Signing Stockholder of its, his or her several
representations and warranties contained in this Agreement, and (ii)
any violation of Section 12.1 and Article X. Each Indemnifying Party
shall jointly, but not severally, indemnify Haemonetics and the
Company against (i) any violation by any Signing Stockholder of its,
his or her representation and warranty contained in Section 3.1(d)
insofar as the same relates to the ownership of Shares by Sellers who
are not Signing Stockholders and (ii) any amount which Haemonetics
and the Company may be required to pay to (x) the holder of the
Warrant in excess of $137,000 and (y) the holders of any other
warrants of the Company. Each Signing Stockholder's several liability
for Damages for any violation of its, his or her representations and
warranties contained in Section 3.1(d) with respect to its, his or
her own ownership of Shares shall not exceed the portion of the
Aggregate Merger Consideration paid to such Signing Stockholder. Each
Indemnifying Party's liability for Damages for any violation by any
Signing Stockholder's representations and warranties contained in
Section 3.1(d) with respect to the ownership of Shares by any Seller
who is not a Signing Stockholder ("Non-Signing Stockholder")shall not
exceed the portion of the Aggregate Merger Consideration paid to such
Non-Signing Stockholder.
(c) Threshold. No Indemnifying Party will be required to
indemnify Haemonetics or the Company hereunder for any Damages until
the aggregate amount of Damages exceeds $175,000, whereupon
Haemonetics and the Company will thereafter be entitled to
indemnification for the full amount of all such Damages from the
first dollar. The threshold set forth in this Section 8.2(c) shall
not apply to (i) claims under Section 8.3 (a) below with respect to
sales and use Taxes in excess of $75,000; (ii) claims with regard to
the Warrant and any other warrants as set forth in 8.2(b); (iii)
claims relating to any violation of any representation or warranty
contained in Section 3.1(d); and (iv) claims with respect to
appraisal rights as set forth in Section 8.3(b).
33
(d) Maximum Liability. Separate and apart from (i) any Gross
Cash adjustment pursuant to Section 1.6, (ii) any indemnification
obligation pursuant to Section 8.2(b) (other than indemnification
with respect to the Warrant or any other warrants): (A) the maximum
collective liability of all Indemnifying Parties for indemnification
claims shall be $5,000,000 (the "Maximum Collective Liability
Amount"); and (B) the maximum individual liability of any
Indemnifying Party for indemnification shall be such Indemnifying
Party's pro rata portion of such amount, as reflected in Schedule 8.2
attached hereto. However, the maximum liability established by this
paragraph does not apply to, and does not limit any Indemnifying
Party's liability for: (i) any Gross Cash adjustment pursuant to
Section 1.6 and; (ii) any indemnification obligation pursuant to
Section 8.2(b) (other than indemnification with respect to the
Warrant or any other warrants); provided, further, to the extent that
Haemonetics is unable (for any reason whatsoever, including, but not
limited to, exhaustion or termination of the Escrow) to receive
payment of indemnification to which it would otherwise be entitled
with respect to that portion of the Maximum Collective Liability
Amount otherwise apportioned to Non-Signing Stockholders (the "Non-
Signing Stockholders' Portion"), the maximum liability of the Signing
Stockholders hereunder will be increased by the amount of the Non-
Signing Stockholders' Portion, thereby, in turn, proportionately
increasing each individual Signing Stockholder's maximum liability
hereunder.
8.3 Indemnification for Taxes and Appraisal Rights. Subject to the
limitations of Section 8.2, the Indemnifying Parties shall be responsible
for and shall jointly but not severally indemnify and hold harmless the
Company and Haemonetics against:
(a) any and all Taxes of the Company due for periods ending on
or prior to the Closing Date and for any overlap period for the
portion of the period ending on the Closing Date, but, in the case of
any sales and use Taxes, only to the extent such Taxes exceed
$75,000, and
(b) any amounts that the Company pays to any Seller exercising
appraisal rights with respect to the Merger pursuant to Section 262
of the DGCL.
8.4 Indemnification Mechanics.
(a) Prior to release or termination of the Escrow, all
indemnification obligations pursuant to this Article VIII shall be
satisfied (i) first, out of the Escrow pursuant to the terms of the Escrow
Agreement and then (ii) to the extent such obligations have not been
satisfied pursuant to clause (i) hereof, by the Signing Stockholders. All
indemnification obligations subsequent to release or termination of the
Escrow shall be satisfied directly by the Signing Stockholders pursuant to
the terms of this Article VIII. In the event that the amount of the Escrow
is not sufficient to satisfy all of the joint indemnity obligations under
Section 8.2 and the several indemnity obligations under Section 8.2(b)(i)
and (ii), the Escrow shall be used first to satisfy the joint obligations.
34
(b) After the Closing, and except, (i) with respect to fraud, (ii)
with respect to the right in general to obtain equitable relief, (iii) with
respect to the right to obtain payment from the Signing Stockholders
pursuant to Section 1.6(b), and (iv) as otherwise expressly provided in
this Agreement, the indemnity under this Article VIII is the sole and
exclusive remedy of Haemonetics or the Company against the Signing
Stockholders with respect to this Agreement.
8.5 Notice of Claim.
(a) Haemonetics or the Company shall furnish the Stockholders
Representative, with prompt written notice of any threatened, potential or
actual claim or the commencement of any action against Haemonetics or the
Company in respect of which indemnity may be sought hereunder, provided
that the failure of Haemonetics or the Company to give notice as provided
herein shall not relieve the Indemnifying Parties of their obligations
under this Article VIII except if and to the extent the Indemnifying
Parties have been materially prejudiced thereby. Nothing in this Section
8.5(a) shall affect the notice of claim restrictions contained in Section
8.2(a).
(b) Defenses; Settlement. If any such action is brought against
Haemonetics, Haemonetics shall have the right to participate in or control
such action with counsel reasonably acceptable to the Stockholders
Representative, and the Stockholders Representative shall have the right
(but not the duty) to participate in the defense thereof, which shall be at
the expense of the Indemnifying Parties. Haemonetics shall not settle any
such action unless the Stockholders Representative consents in writing to
the terms of such settlement, which consent may not be unreasonably
withheld. The Signing Stockholders will cooperate in the defense and shall
take all actions in connection with such defense as may be reasonably
requested.
8.6 No Claims Back. Each Signing Stockholder hereby waives any
rights it may claim at law or in equity to seek damages, reimbursement,
indemnification, contribution or other similar rights or relief from the
Surviving Corporation in respect of any indemnification payments for which
the Indemnifying Parties are liable to Haemonetics. Notwithstanding the
foregoing, no waiver or release of any claims or rights arising from
indemnification obligations to officers and directors of the Company prior
to Closing pursuant to the Company's Certificate of Incorporation or by-
laws shall be deemed granted hereby.
8.7 Fees. In the event of any litigation arising from a dispute
under this Article VIII, the non-prevailing party in such litigation shall
pay the prevailing party's attorneys' fees and costs relating thereto.
35
ARTICLE IX
TAX MATTERS
-----------
9.1 Tax Matters.
(a) Returns.
(i) Haemonetics shall cause to be prepared and filed all Tax
Returns for the Company for all periods ending on or prior to the
Closing Date which are required to be filed after the Closing Date
(the "Pre-Closing Returns"). Haemonetics shall also cause to be
prepared and filed any Tax Returns for the Company for all Tax
periods that begin prior to and end after the Closing Date. In the
case of any Tax payable for a Tax period including (but not ending
on) the Closing Date, the portion of such Tax relating to the portion
of the Tax period ending on the Closing Date (the "Pre-Closing
Portion") shall be deemed to equal the following applicable amount:
(A) if such Tax is not based upon or related to income or receipts,
the portion of such Tax equal to the entire Tax multiplied by a
fraction, the numerator of which is the number of days in the Tax
period through the Closing Date and denominator of which is the
number of days in the entire Tax period, and (B) if such Tax
(including sales and use Taxes) is based on or related to income or
receipts, the amount that would have been due had the Tax period
ended on the Closing Date.
(ii) The Tax Returns required to be prepared pursuant to
Sections 9.1(a)(i) above (and in the case of returns covered by
clause (B) of the last sentence of Section 9.1(a)(i), the calculation
of the Pre-Closing Portion) shall be prepared in a manner consistent
with applicable statutory guidelines. All Pre-Closing Returns for any
Tax period ending on the Closing Date, relating to Taxes based on or
related to income or receipts shall be based on a closing of the
books as of the Closing Date. Haemonetics shall submit a copy of each
such return to the Signing Stockholders not later than thirty (30)
days (in the case of income and corporate excise tax returns) or
fifteen (15) days (in the case of all other returns) prior to the
filing thereof for their review and consent, which consent shall not
be unreasonably withheld or delayed. Haemonetics and the Signing
Stockholders shall consult and resolve in good faith any objection or
disputes with respect to such returns, it being understood that in
the absence of any such resolution, any and all such objections shall
be resolved in accordance with the procedure described in Section
9.1(f).
(iii) The Company shall not amend any Tax Returns of the
Company for Tax periods ending on or prior to the Closing Date (the
"Sellers' Tax Returns"), or file a claim for refund of Taxes
attributable to a Tax period ending on or prior to the Closing Date,
without the consent of the Signing Stockholders, which consent shall
not be unreasonably withheld or delayed.
36
(b) Contests. The Signing Stockholders shall have right, but not
the obligation, at the Signing Stockholders' expense, to control any audit
or examination by any Taxing authority of any Sellers' Tax Return and to
contest, resolve and defend against any assessment for additional Taxes,
notice of Tax deficiency or other adjustment to Taxes relating to any of
the Sellers' Tax Returns, to the extent such matter gives rise to, or
reasonably could be expected to give rise to, an indemnification obligation
on the part of the Signing Stockholders under Section 8.2 or Section 8.3
(collectively, the "Sellers' Tax Matters"); provided, however, that the
Signing Stockholders shall not settle or prosecute any Tax claim in a
manner that would have an adverse effect on the Company, Haemonetics, or
their affiliates without the prior written consent of Haemonetics, which
consent shall not be unreasonably withheld or delayed. Haemonetics and its
duly appointed representatives shall have the right to participate, at
Haemonetics' expense, in the defense of any such Sellers' Tax Matters if
Haemonetics or the Company may be adversely affected thereby. If requested
by the Signing Stockholders, the Company shall execute suitable powers of
attorney in favor of the Signing Stockholders or their representatives
permitting them to represent the Company with respect to such Sellers' Tax
Matters. If the Signing Stockholders elect not to control, contest, resolve
or defend as aforesaid, Haemonetics and the Company shall be entitled to do
so, provided, however, that neither Haemonetics nor the Company shall
settle or otherwise resolve any Sellers' Tax Matters without the prior
written consent of the Signing Stockholders, which consent shall not be
unreasonably withheld or delayed.
(c) Notices. If any party to this Agreement receives any written
notice or other communication from any Taxing authority relating to any Tax
audit or other proceeding relating to any Tax for which any other party
thereto may be obligated to indemnify or pay under this Agreement, such
party shall promptly forward such notice of communication to the other
party.
(d) Cooperation. Haemonetics and the Signing Stockholders shall
cooperate (and Haemonetics shall cause the Company to cooperate) fully, as
and to the extent reasonably requested by the other party, in connection
with the preparation and filing of the Company's Tax Returns, and in
connection with any audit or other proceeding with respect to Taxes
referred to in Section 9.1(b). Such cooperation shall include the retention
and (upon the other party's written request) the provision of records and
information that are reasonably relevant to such preparation and filing and
to any such proceeding and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material so provided. Each of Haemonetics and the Signing Stockholders
agrees to retain (and Haemonetics agrees to cause the Company to retain)
all books and records in the possession of such person at any time on or
after the date of this Agreement with respect to Tax matters pertinent to
the Company relating to any Tax period beginning prior to the Closing Date
until the expiration of the statute of limitations for assessment of the
applicable Taxes (and, to the extent notified by Haemonetics or the Signing
Stockholders, any extensions thereof), and shall not destroy or otherwise
dispose of any such books and records without first providing the other
party or parties with a reasonable
37
opportunity to review and copy the same. Haemonetics and the Signing
Stockholders acknowledge that any and all information obtained in
connection with the preparation of any Tax Return, audit or judicial or
administrative proceeding or determination pursuant to this Section 9.1 is
of a confidential nature and that all such information shall be used only
for the purposes set forth in this Section 9.1.
(e) Aggregate Merger Consideration Adjustment. For Tax purposes,
the Signing Stockholders and Haemonetics will treat all payments made by
the Signing Stockholders to or for the benefit of Haemonetics (including
any payments under the indemnity provisions of this Agreement and for any
misrepresentations or breaches of warranties or covenants) as adjustments
to the Aggregate Merger Consideration or, if paid directly to the Company,
as a contribution to capital, but only upon the prior written agreement of
Haemonetics and the Signing Stockholders that such treatment as a
contribution to capital is required by applicable published Internal
Revenue Service guidelines.
(f) Dispute Resolution. If there is any dispute regarding any
matter covered in this Section 9.1 and the parties to the dispute are
unable to resolve such dispute within a reasonable time period, such
dispute at the written request of Haemonetics or the Sellers'
Representative, as that term is defined below, shall be referred for
resolution to KPMG LLP (and each party hereby represents to the others that
such party has no existing relationship with such accounting firm). In such
event, such accounting firm shall, as soon as reasonably practicable
following the referral to it of the dispute, deliver to Haemonetics and the
Sellers' Representative a written report in which it shall set forth its
resolution of the dispute, and its determination shall be conclusive and
binding on the parties hereto. Haemonetics, the Company and the Sellers'
Representative shall cooperate fully with such accounting firm in
connection with such determination hereunder and the Company shall provide
it with full access to its books, records, employees and facilities to the
extent relevant to such resolution. The costs and expenses of retaining
such accounting firm shall be borne equally by the Company and the Signing
Stockholders. Any amount due hereunder which is not in dispute shall be
paid by the Company to the Signing Stockholders or vice versa, and the
remainder shall be paid within five (5) days of the determination by the
accounting firm.
(g) Transfer Taxes. All stamp, transfer, documentary, sales, use,
registration and other such taxes and fees (including any penalties and
interest) imposed on the Company or the Sellers with respect to the
transfer of the securities pursuant to this Agreement shall be paid by the
Signing Stockholders.
(h) Stockholders Representative. For purposes of this Section 9.1,
all action to be taken by, and notices to be given to, the Signing
Stockholders, or any of them, shall be taken by or given to, as the case
may be, the Stockholders' Representative (appointed pursuant to
Section 12.6 below) or the duly authorized representatives of the
Stockholders' Representative,
38
who shall have full authority to act on behalf of any and all of the
Signing Stockholders with respect to all matters that are the subject of
this Section 9.1.
ARTICLE X
FURTHER AGREEMENTS OF SIGNING STOCKHOLDERS
------------------------------------------
10.1 Disclosure of Information. As a material inducement to
Haemonetics and Newco to enter into this Agreement, each Signing
Stockholder severally shall not, for a period of five (5) years after the
Closing Date, directly or indirectly, divulge or disclose (except for
customary reporting of the financial aspects of the transactions
contemplated hereby to the respective security holders of the Signing
Stockholders or as may be required to comply with applicable law on advice
of counsel) for any purpose whatsoever, or use for personal benefit, any
confidential information that at any time (either before or after the date
of this Agreement) has been obtained by, or disclosed to, it, him or her as
a result of ownership of the securities being transferred hereunder or
other relationship with the Company. In the event of a breach or threatened
breach by any Signing Stockholder of any of the provisions of this Article,
Haemonetics, in addition to and not in limitation of, any other rights,
remedies, or damages available to Haemonetics at law or in equity, shall be
entitled to a permanent injunction in order to prevent or restrain any such
breach by any Signing Stockholder. The obligations in this Section 10.1
shall not apply to such portions of such confidential information that (a)
are or become generally available to the public or (b) are or become
available to such Selling Stockholder on a non-confidential basis from a
source, which the Selling Stockholder believes, on reasonable inquiry, is
not prohibited from disclosing such portions by a contractual, legal or
fiduciary obligation.
ARTICLE XI
TERMINATION OF AGREEMENT
------------------------
11.1 Manner. This Agreement and the transactions contemplated
hereby may be terminated prior to the Closing:
(a) by mutual written consent of Haemonetics, Newco, the
Company and the Signing Stockholders;
(b) by Haemonetics or Newco, on the one hand, and the Company
and Signing Stockholders, on the other, upon providing
written notice to the other parties at any time after
September 30, 2000;
(c) by any of Haemonetics, Newco, the Company or the Signing
Stockholders if ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ approval is not granted
by the Department of Justice and Federal Trade
Commission;
39
(d) by the Company, if the Company's Board of Directors
("Company Board") shall elect to terminate this Agreement
in order to recommend or approve a Superior Proposal,
provided that (i) the Company has provided written notice
to Haemonetics of its intention to enter into a binding
agreement regarding such other proposal within one
business day of such determination, (ii) at any time
after two business days following receipt by Haemonetics
of such notice, the Company Board has determined that
such proposal is and continues to be a Superior Proposal,
after taking into account any modifications to the
transactions contemplated by this Agreement that
Haemonetics has then proposed and not withdrawn, and
(iii) concurrently with the effectiveness of such
termination, pays to Haemonetics the Breakup Fee pursuant
to Section 5.3. "Superior Proposal" is an unsolicited
written offer from a third party that is not subject to
any financing contingencies and is as likely to be
consummated as the Merger, which the Company Board, in
furtherance of its fiduciary duties, determines would, if
consummated and taken as a whole, result in a transaction
more favorable to the Company's stockholders from a
financial point of view than the Merger; and
(e) by Haemonetics, if the Company Board (i) shall have
withdrawn, modified or changed in a manner adverse to
Haemonetics its approval or recommendation of this
Agreement or (ii) approved or recommended a Superior
Proposal.
Any termination effected pursuant to this Section 11.1 will result in the
termination of all rights, obligations and liabilities under this Agreement
with respect to all parties, except with respect to Article X.
11.2 Termination by Haemonetics for Breach. This Agreement may be
terminated by Haemonetics, if at any time prior to the Closing there shall
occur a material breach of any of the representations, warranties or
covenants of the Company or the Signing Stockholders or the failure by the
Company or the Signing Stockholders to perform any condition or obligation
hereunder.
11.3 Termination by the Company and Signing Stockholders for Breach.
This Agreement may be terminated by the Company, if at any time prior to
the Closing there shall occur a material breach of any of the
representations, warranties or covenants of Haemonetics or Newco or the
failure by Haemonetics or Newco to perform any material condition or
obligation hereunder.
ARTICLE XII
40
MISCELLANEOUS
-------------
12.1 Brokers, Finders and Expenses. Each party hereto represents
that no broker, agent, finder or other party has been retained by it, him,
her or it, except as set forth on Schedule 14.1 hereto, and no brokerage or
finder's fees or agent's commissions or other like payment has been agreed
to be paid by it, him, her or it in connection with this Agreement or on
account of the transactions contemplated by this Agreement. Each party
agrees to indemnify and hold harmless the other parties from and against
any and every claim arising by breach of the aforesaid representation and
warranty and all costs and expenses, legal or otherwise, which any such
party may incur as the result of any such claim. All fees and expenses
incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs or
expenses; except that, Haemonetics shall pay at the Closing the expenses
and reasonable hourly fees of ▇▇▇▇▇▇ & Dodge LLP for representing the
Company in connection with the negotiation of this Agreement and the
consummation of the Merger in an amount which shall not exceed $150,000,
less all associated transaction expenses previously paid.
12.2 Entire Agreement; Schedules. This Agreement constitutes the
entire agreement and supersedes all prior agreements and understandings,
both written and oral, between the parties hereto with respect to the
subject matter hereof, and no party shall be liable or bound to the other
in any manner by any warranties representations, covenants or agreements
except as specifically set forth herein or expressly required to be made or
delivered pursuant hereto. Inclusion of or reference to matters in a
schedule does not constitute an admission of what is material or the
materiality of such matter.
12.3 Modifications. Any amendment, change or modification of this
Agreement shall be void unless in writing and signed by all parties hereto.
No failure or delay by any party hereto in exercising any right, power or
privilege hereunder (and no course of dealing between or among any of the
parties) shall operate as a waiver of any such right, power or privilege.
No waiver of any default on any one occasion shall constitute a waiver of
any subsequent or other default. No single or partial exercise of any such
right, power or privilege shall preclude the further or full exercise
thereof.
12.4 Further Assurances. From time to time after the Closing Date,
Sellers will execute all such instruments as Company shall reasonably
request in order more effectively to complete the transactions contemplated
by this Agreement. The Signing Stockholders and Haemonetics shall also
execute and deliver to the appropriate party such other instruments as may
be reasonably required in connection with the performance of this Agreement
and each shall take all further actions as may be reasonably required to
carry out the transactions contemplated by this Agreement.
41
12.5 Binding Effect and Benefits. This Agreement shall be binding
upon and shall inure to the benefit of Haemonetics, Newco and the Signing
Stockholders and their respective heirs, trustees, successors and assigns.
Nothing expressed or referred to in this Agreement is intended or shall be
construed to give any person other than the parties to this Agreement,
their respective heirs, successors or assigns any legal or equitable right,
remedy or claim under or in respect of this Agreement.
12.6 Action by Signing Stockholders. In order to administer
efficiently the implementation of this Agreement, the Signing Stockholders
hereby and Sellers who are not Signing Stockholders hereafter shall
irrevocably authorize and appoint ▇▇▇▇▇ ▇▇▇▇▇▇ (the "Stockholders
Representative") as their agent and attorney: (i) to make any non-material
amendments or modifications of this Agreement and all other agreements and
documents contemplated hereby; (ii) to waive inaccuracies of
representations and warranties or compliance with any of the provisions
herein contained that the Stockholders Representative believes, in his sole
discretion, to be in the best interest of Sellers; (iii) to give and
receive all notices required to be given under this Agreement and the
Escrow Agreement; and (iv) to take all other actions authorized or called
for by this Agreement, including without limitation entering into and
delivering the Escrow Agreement and the Gross Cash Escrow Agreement and
contesting indemnification claims made thereunder on behalf of the
Indemnifying Parties. In connection with the foregoing, the Indemnifying
Parties acknowledge and agree that any and all obligations and liabilities
arising from the taking of such actions by the Stockholders Representative,
including the execution of the Escrow Agreement and the Gross Cash Escrow
Agreement, are legally valid, enforceable and binding against them. In the
event that the Stockholders Representative dies, becomes legally
incapacitated or resigns from such position, the Signing Stockholders shall
fill such vacancy and such replacement shall be deemed to be the
Stockholders Representative for all purposes of this Agreement, the Escrow
Agreement and the Gross Cash Escrow Agreement; however, no change in the
Stockholders Representative shall be effective until Haemonetics is given
notice of such change by the Signing Stockholders.
By the execution of this Agreement, the Indemnifying Parties agree
that:
(i) Haemonetics and Newco shall be able to rely conclusively
on the instructions and decisions of the Stockholders Representative
as to any actions required or permitted to be taken by the
Indemnifying Parties or the Stockholders Representative hereunder,
and no party hereunder shall have any cause of action against
Haemonetics or Newco for any action taken by Haemonetics or Newco in
reliance upon the instructions or decisions of the Stockholders
Representative;
(ii) all actions, decisions and instructions of the
Stockholders Representative shall be conclusive and binding upon all
of the Indemnifying Parties and no Indemnifying Party shall have the
right to object, dissent, protest or otherwise contest the same or
any cause of action against the Stockholders Representative for any
action taken, decision made or instruction given
42
by the Stockholders Representative under this Agreement, except for
fraud or willful breach of this Agreement by the Stockholders
Representative;
(iii) remedies available at law for any breach of the
provisions of this Section 12.6 are inadequate; therefore,
Haemonetics and Newco shall be entitled to temporary and permanent
injunctive relief without the necessity of proving damages if
Haemonetics or Newco brings an action to enforce this provisions of
this Section 12.6;
(iv) the provisions of this Section 12.6 are independent and
severable, shall constitute an irrevocable power of attorney, coupled
with an interest and surviving death, granted by the Indemnifying
Parties to the Stockholders Representative and shall be binding upon
the executors, heirs, legal representatives and successors of each
Indemnifying Party; and
(v) all fees and expenses incurred by the Stockholders
Representative shall be paid by the Indemnifying Parties hereunder,
pursuant to Section 1.5 hereof and the provisions of the Escrow
Agreement, and thereafter by the Signing Stockholders.
12.7 Indemnification of Officers and Directors. Haemonetics and the
Surviving Corporation will not after the Closing amend the Surviving
Corporation's Certificate of Incorporation and By-Laws in a manner that
would affect adversely the rights to indemnification of the Company's
existing officers and directors.
12.8 Assignment. Neither the Signing Stockholders nor Haemonetics
may assign any of their or its rights or obligations under this Agreement
without the prior written consent of Haemonetics or the Signing
Stockholders, as the case may be, which consent shall not be unreasonably
withheld; provided, that Haemonetics may assign its rights hereunder to its
affiliates.
12.9 Notices. Any notices or other communications required or
permitted to be given pursuant to this Agreement shall be deemed to have
been given if in writing and delivered personally or sent by certified
mail, postage prepaid, addressed as follows:
(a) To Haemonetics c/o Haemonetics Corporation
and Newco: ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a Copy to ▇▇▇▇ ▇▇▇▇▇, Esq. at
the same address
And with a copy to:
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
43
A Professional Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax: ▇▇▇-▇▇▇-▇▇▇▇
(b) To the Indemnifying Parties:
c/o ▇▇▇▇▇ ▇▇▇▇▇▇
Primus Venture Partners, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
With copies to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇▇ & Dodge LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Fax: ▇▇▇-▇▇▇-▇▇▇▇
(c) or such other addresses as shall be furnished in writing
by Haemonetics, Newco or Sellers to the other parties, in the manner
provided for herein.
12.10 Publicity and Disclosure. No press release or other public
disclosure, either written or oral, of this Agreement or the transactions
contemplated hereby shall be made by any party without the prior knowledge
and joint consent of the Signing Stockholders and Haemonetics.
12.11 Construction. The Section headings in this Agreement are
inserted for convenience of reference only and should not be taken or
construed to define, limit or describe the scope or intent of this
Agreement or effect its terms and provisions. Unless otherwise expressly
provided or unless the context shall otherwise require, words importing the
singular number shall include the plural, words importing the masculine
gender shall include the feminine and/or neuter, and vice versa.
44
12.12 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
12.13 Governing Law. This Agreement shall be governed, construed and
enforced in accordance with the laws of The Commonwealth of Massachusetts
regardless of the laws that might otherwise govern under applicable
Massachusetts principles of conflicts of law.
12.14 Definitions. The following terms are defined in the following
sections of this Agreement:
Term Section
---- -------
Affidavit 1.7(b)
Aggregate Merger Consideration 1.4(d)
Agreement Preamble
Allowable Payments 1.6(c)
Base Balance Sheet 3.1(e)
Base Balance Sheet Date 3.1(e)
Cash Adjustment 1.6(d)
Certificate 1.7
Closing Date 2.1
Closing Statement of Gross Cash 1.6(a)
Common Shares Preamble
Common Stock Preamble
Company Preamble
Delay Day 1.6(d)
Effective Time 2.1
Escrow Agreement 1.5
Escrow Amount 1.5
Escrow 1.5
Final Closing Statement of Gross Cash 1.6(b)
Haemonetics Preamble
Lien 3.1(c)
Material 3.1
Material Adverse Effect 3.1(a)
Minimum Cash 1.6(b)
Gross Cash 1.6(a)
Newco Preamble
Objection 1.6(a)
Options 1.7
Permitted Encumbrances 3.1(k)
45
Preferred Shares Preamble
Preferred Stock Preamble
Preferred Stockholders 1.4(b)
Real Property 3.1(j)
Sellers Preamble
Sellers' Tax Returns 8.1(b)
Signing Stockholders Preamble
Stockholders Representative 12.6
Surviving Corporation 1.1
Tax 3.1(h)
Tax Return 3.1(h)
Warrant 1.4(c)
[Remainder of Page Intentionally Left Blank]
46
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed all as of the day and year first above written.
HAEMONETICS CORPORATION
By: s/ ▇▇▇▇▇ ▇.▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President and Chief Executive
Officer
TRANSFUSION MERGER CO.
By: s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Secretary
TRANSFUSION TECHNOLOGIES CORPORATION
By: s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President and Chief Executive Officer
SIGNING STOCKHOLDERS:
Atlas Venture Fund II, L.P.
By: Atlas Venture Associates II,
L.P., its General Partner
By: s/ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Managing Partner
Atlas Venture Europe Fund B.V.
By: s/ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Managing Partner
47
BankAmerica Ventures
By: s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: General Partner
BA Venture Partners III
By: s/ ▇▇▇▇ ▇'▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇'▇▇▇▇▇▇▇▇
Title: General Partner
Corning Partners IV, L.P.
By: s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Managing Partner
Kestrel Venture Partners L.P.
By: Kestrel Ventures, LLC
By: s/ R. ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Name: R. ▇▇▇▇▇ ▇▇▇▇▇
Title: Manager
The Manufacturers Life Insurance
Company (U.S.A.)
By: s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
48
NEA Ventures 1995 L.P.
By: s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Manager
New Enterprise Associates VI,
Limited Partnership
By: s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Manager
New Venture Partners III L.P.
By: s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: General Partner
New Venture Partners IV L.P.
By: s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: General Partner
Premier Medical Partner Fund L.P.
By: Premier Capital Corporation,
its General Partner
By: s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
49
Primus Capital Fund III Limited
Partnership
By: Primus Venture Partners III
Limited Partnership its General
Partner
By: Primus Venture Partners, Inc.,
its General Partner
By: s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Partner
Primus Capital Fund IV Limited
Partnership
By: Primus Venture Partners IV
Limited Partnership its General
Partner
By: Primus Venture Partners IV,
Inc., its General Partner
By: s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Partner
Primus Executive Fund Limited
Partnership
By: Primus Venture Partners IV
Limited Partnership its General
Partner
By: Primus Venture Partners IV,
Inc., its General Partner
By: s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Partner
50
Prism Venture Partners I, L.P.
By: Prism Investment Partners,
L.P., its General Partner
By: Prism Venture Partners, L.L.C.,
its General Partner
By: s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ III
---------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇ III
Title: Managing Director
s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
51
s/ B. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
B. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
52