Exhibit 10
AGREEMENT AND PLAN OF MERGER
By and Between
Millenium Holding Group, Inc.,
a Nevada corporation
and
Sutura, Inc.,
a Delaware corporation
Dated as of July 9, 2004
TABLE OF CONTENTS
Page
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ARTICLE 1 DEFINITIONS.......................................................1
ARTICLE 2 THE MERGER........................................................1
2.1 The Merger....................................................1
2.2 The Closing...................................................1
2.3 Actions at Closing............................................2
2.4 Effect of Merger..............................................2
2.5 Certificate of Incorporation..................................2
2.6 Bylaws........................................................2
2.7 Directors and Officers........................................2
ARTICLE 3 MERGER CONSIDERATION AND MANNER OF CONVERSION....................3
3.1 Merger Consideration..........................................3
3.2 Dissenters' Rights............................................3
3.3 Conversion of Rights..........................................3
3.4 Rights as Stockholders; Stock Transfers.......................4
3.5 Fractional Shares.............................................4
3.6 Payment for Shares............................................4
ARTICLE 4 REPRESENTATION AND WARRANTIES OF THE COMPANY......................5
4.1 Organization..................................................5
4.2 Authority.....................................................5
4.3 No Consents...................................................6
4.4 No Conflicts..................................................6
4.5 Capital Structure.............................................6
4.6 Obligations With Respect to Capital Stock.....................6
4.7 Subsidiaries..................................................7
4.8 Financial Statements..........................................7
4.9 No Undisclosed Liabilities....................................7
4.10 Business Changes..............................................7
4.11 Properties....................................................8
4.12 Taxes.........................................................8
4.13 Compliance with Laws..........................................8
4.14 Litigation....................................................9
4.15 Contracts.....................................................9
4.16 Intellectual Proprietary Rights...............................9
4.17 Insurance....................................................10
4.18 Environmental Compliance.....................................10
4.19 Employment Matters...........................................10
4.20 Brokers or Finders...........................................10
4.21 Books and Records............................................11
4.22 Regulatory Compliance........................................11
ARTICLE 5 REPRESENTATION AND WARRANTIES OF THE PURCHASER...................11
5.1 Organization.................................................11
5.2 Authority....................................................12
5.3 No Consents..................................................12
5.4 No Conflicts.................................................12
5.5 Capital Structure............................................13
5.6 Obligations With Respect to Capital Stock....................13
5.7 Subsidiaries.................................................13
5.8 Financial Statements.........................................13
5.9 No Undisclosed Liabilities...................................14
5.10 Business Changes.............................................14
5.11 Properties...................................................14
5.12 Taxes........................................................15
5.13 Compliance with Laws.........................................15
5.14 Litigation...................................................15
5.15 Contracts....................................................15
5.16 Intellectual Proprietary Rights..............................15
5.17 Insurance....................................................16
5.18 Environmental Compliance.....................................16
5.19 Employment Matters...........................................16
5.20 Brokers or Finders...........................................17
5.21 Books and Records............................................17
5.22 Financial Reports and Regulatory Documents...................17
ARTICLE 6 CONDUCT PENDING THE CLOSING......................................18
ARTICLE 7 CONDITIONS TO CLOSING............................................20
7.1 Conditions to Each Party's Obligations.......................20
7.2 Conditions to Obligations of the Purchaser...................21
7.3 Conditions to Obligations of the Company.....................21
ARTICLE 8 TERMINATION......................................................22
8.1 Termination..................................................22
8.2 Effect of Termination and Abandonment........................24
ARTICLE 9 GENERAL PROVISIONS...............................................24
9.1 Survival of Representations and Warranties...................24
9.2 Further Assurances...........................................24
9.3 Waiver.......................................................24
9.4 Brokers......................................................24
9.5 Notices......................................................24
9.6 Governing Law................................................25
9.7 Assigment....................................................25
9.8 Counterparts.................................................25
9.9 Closing Date.................................................25
9.10 Review of the Agreement......................................25
9.11 Schedules....................................................25
9.12 Effective date...............................................26
AGREEMENT AND PLAN OF MERGER
This agreement and plan of MERGER (this "AGREEMENT") is made and entered
into as of this 9th day of July, 2004, by and among Millenium Holding Group,
Inc., a Nevada corporation (the "PURCHASER"), and Sutura, Inc., a Delaware
corporation (the "COMPANY") hereinafter referred to as the "PARTIES."
RECITALS
WHEREAS, the Purchaser and the Company intend to effect a merger (the
"MERGER") of the Company with and into Purchaser in accordance with this
Agreement and as provided for under Chapter 92A of the Nevada Revised Statutes,
as amended ("NEVADA LAW") and Title 8 of the Delaware General Corporation Law
("DELAWARE LAW").
WHEREAS, the respective Boards of Directors of both the Company and the
Purchaser have approved the terms of this Agreement and of the transactions
contemplated hereby; and
WHEREAS, the Company and the Purchaser desire to set forth the terms of the
Agreement in connection with the transactions provided for herein; and
AGREEMENT
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
intending to be legally bound hereby the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the applicable definitions of terms used in
this Agreement shall be set forth in EXHIBIT A.
ARTICLE 2
THE MERGER
2.1 THE MERGER. At the Effective Time (as defined in SECTION 2.4), and
subject to and upon the terms and conditions of this Agreement and Nevada Law
and Delaware Law, (i) the Company shall be merged with and into the Purchaser,
(ii) the separate corporate existence of the Company shall cease and (iii) the
Purchaser shall continue as the surviving corporation. The Purchaser as the
surviving corporation after the Merger is hereinafter sometimes referred to as
the "SURVIVING CORPORATION."
2.2 THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "CLOSING") shall take place as soon as practicable after the
satisfaction or waiver (subject to applicable law) of the conditions (excluding
conditions that, by their terms, cannot be satisfied until the Closing Date) set
forth in ARTICLE VII hereof (the "CLOSING DATE") at the offices of the Company,
commencing at 10:00 a.m., local time or at such other time and place as the
parties may mutually agree. All proceedings to be taken and all documents to be
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executed at the Closing shall be deemed to have been taken, delivered and
executed simultaneously, and no proceeding shall be deemed taken nor documents
deemed executed or delivered until all have been taken, delivered and executed.
The date of Closing may be accelerated or extended by agreement of the Parties.
2.3 ACTIONS AT CLOSING. At the Closing the parties shall file a Certificate
of Merger with the Secretary of State of the State of Nevada and make all other
filings required under any applicable State laws (including, without limitation,
Delaware Law) to cause the consummation of the Merger and the transaction
contemplated hereby.
2.4 EFFECT OF MERGER. The Merger shall become effective at the time (the
"EFFECTIVE TIME") the Company and the Purchaser file the Certificate of Merger
with the Secretary of State of the State of Nevada and as provided under Nevada
Law and Delaware Law, or such later time as the Purchaser and the Company may
agree upon and as may be set forth in the Certificate of Merger. The Merger
shall have the effects set forth in this Agreement, the Certificate of Merger
and the applicable provisions of Nevada Law and Delaware Law. Without limiting
the foregoing, at the Effective Time all the property, rights, privileges,
powers and franchises of the Company and the Purchaser shall vest in the
Surviving Corporation, and all debts, liabilities and duties of the Company and
the Purchaser shall become the debts, liabilities and duties of the Surviving
Corporation. The Surviving Corporation may, at any time after the Effective
Time, take any action (including executing and delivering any document) in the
name and on behalf of the Company or the Purchaser in order to carry out and
effectuate the transactions contemplated hereby.
2.5 CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of the
Surviving Corporation shall be amended and restated at and as of the Effective
Time to, provide that the name of the Surviving Corporation shall be Sutura,
Inc.
2.6 BYLAWS. The Bylaws of the Surviving Corporation shall be amended and
restated at and as of the Effective Time to read as did the Bylaws of the
Company immediately prior to the Effective Time.
2.7 DIRECTORS AND OFFICERS. The directors and officers of the Surviving
Company shall be:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ - Chairman/ President/ CEO and a Director
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ - Director
▇▇▇▇ Crew, M.D. - Director
▇▇▇▇▇▇ ▇▇▇▇ - V.P. Operations
▇▇▇ ▇▇▇▇▇▇ - V.P. R&D/ Engineering
ARTICLE 3
MERGER CONSIDERATION AND
MANNER OF CONVERSION
3.1 MERGER CONSIDERATION. At the Effective Time, the shares of Company Stock
issued and outstanding immediately prior to the Effective Time, other than any
Company Dissenting Shares, shall by virtue of the Merger and without any action
on the part of the Purchaser, the Company or any holder thereof, be canceled or
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terminated and shall be converted into and exchanged for the right to receive
the Merger Consideration. No shares of Company Stock shall be deemed to be
outstanding or have any rights other than those set forth in this SECTION 3.1
after the Effective Time. Pursuant to the Merger (i) the shareholders of
Purchaser immediately prior to the Effective Time (on a fully diluted as
converted basis, assuming conversion, exercise and/or exchange of all securities
or other rights to acquire Purchaser Common Stock) shall hold in the aggregate
ten percent (10%) of the Common Stock of the Surviving Corporation immediately
following the Effective Time and (ii) the stockholders of the Company
immediately prior to the Effective Time (on a fully diluted as converted basis,
assuming conversion, exercise and/or exchange of all securities or other rights
to acquire Company Stock ) shall hold in the aggregate ninety percent (90%) of
the Common Stock of the Surviving Corporation immediately following the
Effective Time.
3.2 DISSENTERS' RIGHTS. Company Dissenting Shares will not be converted
into the right to receive the Merger Consideration otherwise payable with
respect to such shares at or after the Effective Time, but will be converted
into the right to receive such consideration as may be determined to be due with
respect to such Company Dissenting Shares pursuant to Delaware Law. Purchaser
agrees that, except with the prior written consent of the Company, or as
required under Delaware Law or Nevada Law, it will not voluntarily make any
payment with respect to, or settle or offer or agree to settle, any such demand
for appraisal.
3.3 CONVERSION OF RIGHTS.
(a) At the Effective Time, each option or other right to purchase shares of
Company Stock pursuant to stock options or stock appreciation rights granted by
the Company and outstanding at the Effective Time, whether or not exercisable,
and all other warrants or other rights to purchase shares of Company Stock
(collectively "COMPANY RIGHTS") shall be converted into and become rights with
respect to Purchaser Common Stock, and Purchaser shall assume each Company
Right, in accordance with the terms of such stock option plan or such other
agreement or arrangement pertaining to such Company Rights (as applicable),
except that from and after the Effective Time, (i) Purchaser and its
compensation committee shall be substituted for the Company Board of Directors
or the committee of the Company Board of Directors administering the stock
option plan, (ii) each Company Right assumed by Purchaser may be exercised only
for shares of Purchaser Common Stock (or cash, in the case of stock appreciation
rights), (iii) the number of shares of Purchaser Common Stock subject to Company
Rights shall be equal to the number of shares of Company Stock subject to the
Company Right immediately prior to the Effective Time multiplied by the Exchange
Ratio and (iv) the per share exercise price under the Company Right shall be
adjusted by dividing the per share exercise price under the Company Right by the
Exchange Ratio and rounding up to the nearest cent. Notwithstanding the
provisions of clause (iii) of the preceding sentence, Purchaser shall not be
obligated to issue any fraction of a share of Purchaser Common Stock upon
exercise of a Company Right, but in lieu thereof, Purchaser shall round-up
fractional shares to the next highest whole number. The term, exercisability,
vesting schedule, status as an "Incentive Stock Option" under Section 422 of the
Code, if applicable, and all other terms and conditions of the options or
warrants, to the extent permitted by law, and otherwise reasonably practical
shall be unchanged. Each option, which is an Incentive Stock Option, shall be
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adjusted in accordance with the requirements of Section 424(a) of the Code so as
not to constitute a modification, renewal or extension of the option within the
meaning of Section 424(h) of the United States Internal Revenue Code.
(b) The Company agrees to take all necessary steps to effectuate the
foregoing provisions of this SECTION 3.3, including using its reasonable efforts
to obtain from each holder of a Company Right any consent or agreement that may
be deemed necessary or advisable in order to effectuate the transactions
contemplated by this Section 3.3. Anything in this Agreement to the contrary
notwithstanding, Purchaser shall have the right, in its sole discretion, not to
deliver the consideration provided in this Section 3.3 to a former holder of a
Company Right who has not delivered such consent or agreement.
3.4 RIGHTS AS STOCKHOLDERS; STOCK TRANSFERS. At the Effective Time, holders
of Company Stock shall cease to be, and shall have no rights as, stockholders of
the Company, other than to receive any dividend or other distribution with
respect to such Company Stock with a record date occurring prior to the
Effective Time and the consideration provided for in this ARTICLE III. After the
Effective Time there shall be no transfers on the stock transfer books of the
Company of Company Stock outstanding prior to the Effective Time
3.5 FRACTIONAL SHARES. Notwithstanding any other provision hereof, no
fractional shares of Purchaser Common Stock and no certificates or scrip
therefore, or other evidence of ownership therefore, will be issued as part of
the Merger Consideration. Instead, Purchaser shall round-up fractional shares to
the next whole number (after aggregating all Merger Consideration due such
holder).
3.6 PAYMENT FOR SHARES.
(a) Promptly after the Effective Time, the Purchaser shall mail to each
Company Stockholder a form of letter of transmittal (which shall be in such form
and contain such provisions as the Purchaser and the Company may reasonably
agree and specify) and instructions for use in effecting the surrender of all
the certificates or Company Rights that, immediately prior to the Effective
Time, represented any of such shares of Company Stock or Company Rights in
exchange for payment of the Merger Consideration therefore or Convertible
Securities of Purchaser (as the case may be). At and after the Effective Time,
as received, the Surviving Corporation shall promptly deliver to the persons
entitled thereto the pro-rata Merger Consideration or Convertible Securities to
which such person is entitled, delivered in person or by mail to the address
specified in the applicable letter of transmittal.
(b) Notwithstanding the foregoing, no party hereto shall be liable to any
holder of certificates formerly representing shares of Company Stock for any
amount paid to a public official pursuant to any applicable abandoned property,
escheat or similar law. Unless otherwise provided for in this Agreement, the
Purchaser shall pay all charges and expenses in connection with the exchange of
public shares of Purchaser for shares of Company Stock.
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ARTICLE 4
REPRESENTATION AND
WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser that, as of the
date of this Agreement and as of the date of Closing:
4.1 ORGANIZATION. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, with full
corporate power and authority to conduct its business as is now being conducted,
and is duly qualified to do business and is in good standing in the State of
California. SCHEDULE 4.1 lists (a) all Subsidiaries and correctly sets forth the
capitalization of each Subsidiary and ownership interest of the Company or any
other Person therein, and (b) the jurisdiction in which each Subsidiary is
organized. Each of the Subsidiaries is duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation or
organization, except where the lack thereof would not have a Material Adverse
Effect. The Company and each of its Subsidiaries has the necessary power to own
its properties and assets and to carry on its business as now conducted and is
duly qualified or licensed to do business in each foreign jurisdiction where it
conducts business or has assets, except where failure to be so qualified,
licensed or in good standing would not have a Material Adverse Effect. The
Company has delivered to the Purchaser correct and complete copies of the
charter and bylaws of each of its Subsidiaries and the names of the directors
and officers of each of the Company and its Subsidiaries.
4.2 AUTHORITY. The Company has all requisite corporate power and authority
to enter into this Agreement, to perform its obligations under this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement, and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company. This Agreement has been duly executed and delivered
by each of the Company and constitutes valid and binding obligations of the
Company, enforceable against in accordance with its terms.
4.3 NO CONSENTS. No consents, approvals, orders, waivers or authorizations
of, or registration, declaration or filing with, any third party or Governmental
Body is required by or with respect to the Company or the Subsidiaries in
connection with the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby, except for: (a) such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable state securities laws or the securities laws of
the United States or of any foreign country; (b) those consents expressly listed
in SCHEDULE 4.3; (c) such filings, if any, required with the United States
Federal Trade Commission (the "FTC") and the Antitrust Division of the
Department of Justice (the "DOJ") pursuant to the HSR Act; and (d) those
consents, approvals, orders, waivers, authorizations, registrations,
declarations or filings which, if not obtained or made, would not have a
Material Adverse Effect.
4.4 NO CONFLICTS. Except as set forth in SCHEDULE 4.4, the execution and
delivery of this Agreement and the performance of its obligations hereunder (a)
shall not be in violation or breach of, and shall not conflict with or
constitute a default under, any of the terms of the Company's Certificate of
Incorporation or Bylaws, of any contract, agreement or commitment binding upon
5
the Company or its Subsidiaries or any of their respective assets or properties,
except in each case as would not have a Material Adverse Effect, nor enable any
third party to terminate any Company Material Agreement; and (b) shall not
conflict with or violate, in any material respect, any applicable law, rule,
regulation, judgment, order or decree of any Governmental Body having
jurisdiction over the Subsidiaries or any of their assets or properties.
4.5 CAPITAL STRUCTURE. The authorized capital stock of the Company consists
of 15,000,000 shares of capital stock, of which 10,000,000 shares are Common
Stock, $0.001 par value (the "COMPANY COMMON STOCK"), and 5,000,000 shares are
Preferred Stock, $0.001 par value (the "COMPANY PREFERRED STOCK"), of which
352,160 shares are designated Series A Preferred Stock. As of July 9, 2004 there
were 7,226,589 shares issued and outstanding, of which 6,874,429 shares were
Company Common Stock, and 352,160 shares were Company Preferred Stock. All
shares of Company Stock are or will be at Closing, duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights
created by statute, the Company's charter documents or any agreement to which
the Company is a party or by which it is bound.
4.6 OBLIGATIONS WITH RESPECT TO CAPITAL STOCK. SCHEDULE 4.6 sets forth a
true and complete list as of the date hereof of all holders of outstanding
Convertible Securities of the Company, the exercise price per share, the term of
each such Convertible Security, whether such Convertible Security is a
nonqualified stock option or incentive stock option and any restrictions on
exercise or sale of such Convertible Securities or underlying shares. On the
Closing Date, the Company shall deliver to Purchaser a complete and correct
updated SCHEDULE 4.6 giving effect to any exercise of Convertible Securities on
or prior to Closing. Except as set forth in SCHEDULE 4.6 there will be no
outstanding: (a) securities convertible into or exchangeable for the capital
stock of any class of the Company or its Subsidiaries; (b) options, warrants or
other rights to subscribe for or purchase shares of Equity Securities of any
class of the Company or its Subsidiaries; or (c) agreements of any kind relating
to the issuance of any Equity Securities of any class of the Company or its
Subsidiaries, or any such convertible or exchangeable securities or any such
options, warrants or rights to subscribe for or purchase shares of Equity
Securities of the Company or its Subsidiaries. Except as set forth in SCHEDULE
4.6, and as contemplated by this Agreement, to the Knowledge of the Company
there are no voting trusts or other agreements or understandings with respect to
the Company Stock or any stock of its Subsidiaries.
4.7 SUBSIDIARIES. Except as described in SCHEDULE 4.7 the Company owns all
of the Equity Securities of each of the Subsidiaries, beneficially and of
record. SCHEDULE 4.7 lists all Equity Securities of Persons other than the
Subsidiaries owned beneficially and of record by the Company. All such Equity
Securities of the Subsidiaries and those listed on SCHEDULE 4.7 are owned free
and clear of any Encumbrance and are fully paid, validly issued and
nonassessable.
4.8 FINANCIAL STATEMENTS. The Company has delivered to the Purchaser true
and complete copies of the Company Financial Statements. The audited portion of
Company Financial Statements have been prepared in accordance with GAAP, applied
on a consistent basis throughout the periods covered thereby, and present fairly
in all material respects the financial position, assets and liabilities of the
Company and its Subsidiaries at the dates indicated and the results of its
operations and changes in financial position for the periods indicated. The
unaudited portion of Company Financial Statements present fairly in all material
6
respects the results of operations of the Company and its Subsidiaries in
accordance with GAAP, except as otherwise stated therein (or in any related
notes) and except for the lack of footnotes and subject to normal audit
adjustment.
4.9 NO UNDISCLOSED LIABILITIES. Except as set forth in SCHEDULE 4.9, to the
Company's Knowledge, the Company has no undisclosed liabilities or obligations
(whether absolute, accrued, contingent or otherwise and whether due or to become
due, including liabilities for taxes and interest and penalties thereon) of a
material nature required by GAAP to be reflected on a consolidated balance sheet
of the Company or described in the notes thereto that are not reflected in the
Company Financial Statements, except for liabilities and obligations (a)
incurred since December 31, 2003 in the Ordinary Course of Business; or (b)
specifically disclosed in any Schedule to this Agreement.
4.10 BUSINESS CHANGES. Since December 31, 2003, except with respect to
inter-company transactions or as otherwise contemplated by this Agreement or as
set forth in SCHEDULE 4.10, (a) each of the Company and its Subsidiaries has
conducted its business in the Ordinary Course of Business; none of the Company
and its Subsidiaries has issued, declared, set aside or paid any dividend or
other distribution of cash or property on any of its respective Equity
Securities nor has it, directly or indirectly, purchased, redeemed or otherwise
acquired any shares of its respective Equity Securities or entered into any
agreement or commitment to do any of the foregoing; (b) for each of the Company
and its Subsidiaries there has not been any (i) general uniform increase in the
compensation of the employees (including, without limitation, any increase
pursuant to any bonus, pension, profit-sharing, deferred compensation or other
plan or commitment), other than increases in the Ordinary Course of Business,
(ii) increase in any such compensation payable to any individual officer,
director, consultant or agent, other than increases in the Ordinary Course of
Business, (iii) loans made to any officers, directors, shareholders, employees,
consultants or agents; and (c) none of the Company and its Subsidiaries has
incurred additional debt for borrowed money, nor has it incurred any obligation
or liability (fixed, contingent or otherwise), nor made any acquisition of or
contract for acquisition of any assets, nor paid any obligation or liability
(except for current obligations or liabilities), in each case in excess of
$4,000,000 or $7,000,000 in the aggregate, except in the Ordinary Course of
Business;
4.11 PROPERTIES. SCHEDULE 4.11 lists all real property leased by the
Company and its Subsidiaries. The Company and its Subsidiaries own no real
property. Except as provided on SCHEDULE 4.11 hereto (i) the Company and its
Subsidiaries have good and marketable title to all assets and properties listed
on the Company Financial Statements or thereafter acquired, free and clear of
any Encumbrances other than Permitted Liens, except where the lack of such good
and marketable title would not have a Material Adverse Effect; and (ii) all of
the material fixed assets and material properties listed in the Company
Financial Statements or thereafter acquired are in satisfactory condition and
repair in all material respects for the requirements of the business as
presently conducted. All material agreements pursuant to which the Company and
its Subsidiaries lease real or personal property are listed in SCHEDULE 4.11
hereto, are valid, effective and enforceable in accordance with their respective
terms and there is not under any such leases any existing default or any event
which, with notice or lapse of time or both, would have a Material Adverse
Effect.
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4.12 TAXES. Each of the Company and its Subsidiaries has duly filed with
the appropriate Governmental Body all tax returns and reports required to be
filed, and has paid or accrued in full all Taxes due to, or claimed to be due
by, any taxing authority. To the Knowledge of the Company, such tax filings
where correct and complete when filed.
4.13 COMPLIANCE WITH LAWS. To the Company's Knowledge, the business of each
of the Company and its Subsidiaries has been conducted in compliance with all
applicable laws, regulations, orders and other requirements of any Governmental
Body, except where failure to comply will not have a Material Adverse Effect.
4.14 LITIGATION. Except as set forth in SCHEDULE 4.14, and except for
claims, disputes, actions, proceedings, suits or appeals that would not have a
Material Adverse Effect, there is no claim, dispute, action, proceeding, suit or
appeal, at law or in equity, pending against any of the Company and its
Subsidiaries, or involving any of the Company and its Subsidiaries assets or
properties, before any court, agency, authority, arbitration panel or other
tribunal, and, to the Company's Knowledge, none have been threatened.
4.15 CONTRACTS. SCHEDULE 4.15 lists each contract or agreement to which the
Company is a party (and the Company has provided the Purchaser with a copy of
each such written contract or agreement or a written description of each such
verbal contract or agreement) that: (i) is a power of attorney or similar
authorization granted by the Company and its Subsidiaries to third parties, or
(ii) currently involves payments or receipts of more than $500,000 to vendors
and $200,000 to customers on an annual basis that cannot be terminated by the
Company without penalty on less than 61 days notice (collectively, the "COMPANY
MATERIAL AGREEMENTS"). The Company and its Subsidiaries are not in material
default individually or in the aggregate (or would not by the lapse of time
and/or the giving of notice be in material default) in respect of any Company
Material Agreement to which they are parties. To the Company's Knowledge, no
party to any Company Material Agreement is in material default thereunder or has
materially breached any terms or provisions thereof which are material to the
conduct of any of the respective business. To the Company's Knowledge, none of
the Material Agreements will be terminated as a result of the transaction
contemplated hereby.
4.16 INTELLECTUAL PROPRIETARY RIGHTS. The Company and its Subsidiaries own
or have the right to use all Intellectual Property necessary for the operation
of their businesses as presently conducted. SCHEDULE 4.16 constitutes a full and
complete list of all material Intellectual Property that the Company and its
Subsidiaries own or license (to or from a third party) in connection with their
operations (the "COMPANY INTELLECTUAL PROPERTY ASSETS"), and specifies whether
such Intellectual Property is owned or used under license and whether the
Company and its Subsidiaries act as licensor or licensee. The Company and its
Subsidiaries hold all right, title and interest in and to those Company
Intellectual Property Assets which are specified as owned by them, except where
the failure to hold all such right, title and interest would not have a Material
Adverse Effect. All material license agreements and all other instruments
relating to material licenses are in full force and effect and true and complete
copies thereof have been provided to the Purchaser. None of the Company
Intellectual Property Assets have been held or stipulated to be invalid in any
litigation which has been concluded and the validity of the Company Intellectual
Property Assets has not been questioned in any litigation that is currently
pending or, to the Company's Knowledge, threatened, except where any such
8
pending or threatened litigation would not have a Material Adverse Effect. To
the Company's Knowledge, none of the Company and its Subsidiaries infringes on
the Intellectual Property of any third party through its actions in the conduct
of its business in any material respect.
4.17 INSURANCE. SCHEDULE 4.17 constitutes a full and complete list of all
policies of insurance to which any of the Company and its Subsidiaries is a
party or is a beneficiary or named insured. All of the insurance policies and
bonds maintained by the Company and its Subsidiaries are in full force and
effect, except where the failure of such policies or bonds to be in full force
and effect would not have a Material Adverse Effect. None of the Company and its
Subsidiaries has received any notice or other indication from any insurer or
agent of any intent to cancel or not to renew any of such insurance policies,
except where any such cancellation or failure to renew would not have a Material
Adverse Effect.
4.18 ENVIRONMENTAL COMPLIANCE. To the Company's Knowledge, each of the
Company and its Subsidiaries has all permits, licenses and other authorizations,
which are required under existing Environmental Laws and the failure of which
would have a Material Adverse Effect. To the Company's Knowledge, each of the
Company and its Subsidiaries is presently in compliance in all material respects
with all Environmental Laws, and none has generated, manufactured, refined,
transported, transferred, produced or processed any hazardous material or solid
waste, except in compliance with all applicable Environmental Laws. There are no
existing environmental conditions or circumstances with respect to any real
property owned or leased by the Company and its Subsidiaries, whether or not
discovered, which would be probable to result in a liability which would have a
Material Adverse Effect, should any such conditions or circumstances become the
basis for any claim which is asserted in the future by any aggrieved party
(including, without limitation, any Governmental Body). There is no pending or,
to the Company's Knowledge, threatened civil or criminal litigation, notice of
violation or administrative proceeding to which any of the Company and its
Subsidiaries is a party relating to Environmental Laws, except where any such
litigation, violation or proceeding would not have a Material Adverse Effect.
4.19 EMPLOYMENT MATTERS. For any worldwide employee whose annual
compensation exceeds $100,000 or foreign equivalent thereof, SCHEDULE 4.19
comprises a list of: (i) all employment contracts or agreements to which each of
the Company and its Subsidiaries is a party or is subject as of the date of this
Agreement, and (ii) the names, current salary rates, and accrued vacation and
sick leave for all the employees of the Company and its Subsidiaries. None of
the Company and its Subsidiaries has any shop union contracts or enterprise
collective bargaining agreements; (i) none of the Company and its Subsidiaries
is currently engaged in any labor negotiations or employment dispute or
grievance except for minor grievances with individual employees and not with any
employee organization or group; and (ii) to the Company's knowledge, none of the
Company and its Subsidiaries is the subject of any union organizing. Except as
set forth in SCHEDULE 4.19, none of the Company and its Subsidiaries has
sponsored, maintained or participated in, nor does it currently sponsor,
maintain or participate in, any oral or written employee benefit plan (as such
term is defined in Section 3(3) of Employee Retirement Income Security Act of
1974, as amended ("ERISA")), or any trust related to any such plan.
9
4.20 BROKERS OR FINDERS. Except as set forth in SCHEDULE 4.20, the Company
has not incurred nor will incur, directly or indirectly, any liability for any
brokerage or finders' fees or agent's commissions or any similar charges in
connection with this Agreement or any transaction contemplated hereby.
4.21 BOOKS AND RECORDS. The minute books, stock record books and other
records of the Company and its Subsidiaries, all of which have been made
available to the Purchaser, are correct in all material respects. The minute
books of the Company and its Subsidiaries are accurate in material respects
records of all meetings and other corporate actions of their respective
shareholders and board of directors and committees thereof.
4.22 REGULATORY COMPLIANCE. (i) (A) With respect to each of the Company's
products and, to the extent applicable, products under development
(collectively, "COMPANY PRODUCTS"), (1) SCHEDULE 4.22 sets forth a list of all
approvals, clearances, authorizations, licenses and registrations required by
United States or foreign governments or government agencies obtained by the
Company and its Subsidiaries to permit the manufacturing, distribution, sales,
marketing or human research activities of the Company (the "COMPANY ACTIVITIES
TO DATE") with respect to each Product (collectively, "COMPANY LICENSES"); and
(2) the Company and its Subsidiaries are in compliance in all material respects
with all terms and conditions of each Company License and with all requirements
pertaining to the Activities to Date with respect to each Product which is not
required to be the subject of a Company License; (B) all manufacturing
operations performed by or on behalf of the Company have been and are being
conducted in all material respects in compliance with current good manufacturing
practices, and quality system regulations issued by the United States Food and
Drug Administration ("FDA") and, to the extent applicable, counterpart
regulations in the European Union; (C) the Company and its Subsidiaries are in
compliance in all material respects with all applicable reporting requirements
for all licenses or plant registrations described in clause (A) above; except,
in the case of the preceding clauses (A) through (C), for any such failures to
obtain or noncompliance which, individually or in the aggregate, would not have
a Material Adverse Effect. (ii) To the Company's Knowledge, no filing or
submission to the FDA or any other Governmental Body with regard to the Products
that is the basis for any approval or clearance contains any material omission
or material false information.
ARTICLE 5
REPRESENTATION AND
WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company that, as of the
date of this Agreement and as of the date of Closing:
5.1 ORGANIZATION. The Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada, with full
corporate power and authority to conduct its business as is now being conducted,
and is duly qualified to do business and is in good standing in the State of
Nevada. SCHEDULE 5.1 lists (a) all Subsidiaries and correctly sets forth the
capitalization of each Subsidiary and ownership interest of the Purchaser or any
other Person therein, and (b) the jurisdiction in which each Subsidiary is
organized. Each of the Subsidiaries is duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation or
10
organization, except where the lack thereof would not have a Material Adverse
Effect. The Purchaser and each of its Subsidiaries has the necessary power to
own its properties and assets and to carry on its business as now conducted and
is duly qualified or licensed to do business in each foreign jurisdiction where
it conducts business or has assets, except where failure to be so qualified,
licensed or in good standing would not have a Material Adverse Effect. The
Purchaser has delivered to the Company correct and complete copies of the
charter and bylaws of each of its Subsidiaries and the names of the directors
and officers of each of the Purchaser and its Subsidiaries.
5.2 AUTHORITY. The Purchaser has all requisite corporate power and
authority to enter into this Agreement, to perform its obligations under this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement, and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Purchaser. This Agreement has been duly executed and
delivered by the Purchaser and constitutes valid and binding obligations of the
Purchaser, enforceable against the Purchaser in accordance with its terms.
5.3 NO CONSENTS. No consents, approvals, orders, waivers or authorizations
of, or registration, declaration or filing with, any third party or Governmental
Body is required by or with respect to the Purchaser or the Subsidiaries in
connection with the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby, except for: (a) such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable state securities laws or the securities laws of
the United States or of any foreign country; (b) those consents expressly listed
in SCHEDULE 5.3; (c) such filings, if any, required with the FTC and DOJ
pursuant to the HSR Act; and (d) those consents, approvals, orders, waivers,
authorizations, registrations, declarations or filings which, if not obtained or
made, would not have a Material Adverse Effect.
5.4 NO CONFLICTS. Except as set forth in SCHEDULE 5.4 the execution and
delivery of this Agreement and the performance of its obligations hereunder (a)
shall not be in violation or breach of, and shall not conflict with or
constitute a default under, any of the terms of the Purchaser's Certificate of
Incorporation or Bylaws, of any contract, agreement or commitment binding upon
the Purchaser or its Subsidiaries or any of their respective assets or
properties, except in each case as would not have a Material Adverse Effect, nor
enable any third party to terminate any Material Agreement; and (b) shall not
conflict with or violate, in any material respect, any applicable law, rule,
regulation, judgment, order or decree of any Governmental Body having
jurisdiction over the Purchaser or its Subsidiaries or any of their assets or
properties.
5.5 CAPITAL STRUCTURE. The authorized capital stock of the Purchaser
consists of 53,000,000 shares of capital stock, of which 50,000,000 shares are
Common Stock, $0.05 par value (the "PURCHASER COMMON STOCK"), and 3,000,000
shares are Preferred Stock, $0.001 par value (the "PURCHASER PREFERRED STOCK"),
of which as of July 9, 2004 there were 16,655,370 shares of Purchaser Common
Stock issued and outstanding, and there were no shares of Purchaser Preferred
Stock issued and outstanding. All of the shares of Purchaser Common Stock are or
will be at Closing, duly authorized, validly issued, fully paid and
11
non-assessable and not subject to preemptive rights created by statute, the
Purchase's charter documents or any agreement to which the Purchaser is a party
or by which it is bound.
5.6 OBLIGATIONS WITH RESPECT TO CAPITAL STOCK. SCHEDULE 5.6 sets forth a
true and complete list as of the date hereof of all holders of outstanding
Convertible Securities of the Purchaser, the exercise price per share, the term
of each such Convertible Security, whether such Convertible Security is a
nonqualified stock option or incentive stock option and any restrictions on
exercise or sale of such Convertible Securities or underlying shares. On the
Closing Date, the Purchaser shall deliver to Company a complete and correct
updated SCHEDULE 5.6 giving effect to any exercise of Convertible Securities on
or prior to Closing. Except as set forth in SCHEDULE 5.6, there are no
outstanding: (a) securities convertible into or exchangeable for the capital
stock of any class of the Purchaser or its Subsidiaries; (b) options, warrants
or other rights to subscribe for or purchase shares of capital stock of any
class of the Purchaser or its Subsidiaries; or (c) agreements of any kind
relating to the issuance of any Equity Securities of any class of the Purchaser
or its Subsidiaries, or any such convertible or exchangeable securities or any
such options, warrants or rights to subscribe for or purchase shares of Equity
Securities of the Purchaser or its Subsidiaries. Except as set forth in SCHEDULE
5.6, and as contemplated by this Agreement, to the Knowledge of the Purchaser
there are no voting trusts or other agreements or understandings with respect to
the Purchaser Common Stock or any stock of its Subsidiaries.
5.7 SUBSIDIARIES. Except as described in SCHEDULE 5.7, the Purchaser owns
all of the Equity Securities of each of the Subsidiaries, beneficially and of
record. SCHEDULE 5.7 lists all Equity Securities of Persons other than the
Subsidiaries owned beneficially and of record by the Purchaser. All such Equity
Securities of the Subsidiaries and those listed on SCHEDULE 5.7 are owned free
and clear of any encumbrance and are fully paid, validly issued and
non-assessable.
5.8 FINANCIAL STATEMENTS. The audited financial statements of Purchaser as
filed pursuant to the Exchange Act have been prepared in accordance with GAAP,
applied on a consistent basis throughout the periods covered thereby, and
present fairly in all material respects the financial position, assets and
liabilities of the Purchaser at the dates indicated and the results of its
operations and changes in financial position for the periods indicated. The
unaudited quarterly financial statements of Purchaser as filed pursuant to the
Exchange Act present fairly in all material respects the results of operations
of the Purchaser except as otherwise stated therein (or in any related notes)
and except for the lack of footnotes and subject to normal audit adjustment.
5.9 NO UNDISCLOSED LIABILITIES. Except as set forth in SCHEDULE 5.9, to the
Purchaser's Knowledge, Purchaser has no undisclosed liabilities or obligations
(whether absolute, accrued, contingent or otherwise and whether due or to become
due, including liabilities for taxes and interest and penalties thereon) of a
material nature required by GAAP to be reflected on a consolidated balance sheet
of the Purchaser or described in the notes thereto that are not reflected in the
Financial Statements, except for liabilities and obligations (a) incurred since
December 31, 2003 in the Ordinary Course of Business; or (b) specifically
disclosed in any Schedule to this Agreement.
5.10 BUSINESS CHANGES. Since December 31, 2003, except with respect to
inter-Purchaser transactions or as otherwise contemplated by this Agreement or
as set forth in SCHEDULE 5.10, (a) the Purchaser and its Subsidiaries has
12
conducted its business in the Ordinary Course of Business; the Purchaser and its
Subsidiaries have not issued, declared, set aside or paid any dividend or other
distribution of cash or property on any of its respective Equity Securities nor
has it, directly or indirectly, purchased, redeemed or otherwise acquired any
shares of its respective, Equity Securities or entered into any agreement or
commitment to do any of the foregoing (b) for the Purchaser and its Subsidiaries
there has not been any (i) general uniform increase in the compensation of the
employees (including, without limitation, any increase pursuant to any bonus,
pension, profit-sharing, deferred compensation or other plan or commitment),
other than increases in the Ordinary Course of Business, (ii) increase in any
such compensation payable to any individual officer, director, consultant or
agent, other than increases in the Ordinary Course of Business, (iii) loans made
to any officers, directors, shareholders, employees, consultants or agents, and
(c) the Purchaser and its Subsidiaries have not incurred additional debt for
borrowed money, nor has it incurred any obligation or liability (fixed,
contingent or otherwise), nor made any acquisition of or contract for
acquisition of any assets, nor paid any obligation or liability (except for
current obligations or liabilities), in each case in excess of $4,000,000 or
$7,000,000 in the aggregate, except in the Ordinary Course of Business;
5.11 PROPERTIES. SCHEDULE 5.11 lists all real property leased by the
Purchaser and its Subsidiaries, which is true in all material respects as of the
date hereof. The Purchaser and its Subsidiaries own no real property except as
provided on SCHEDULE 5.11 hereto: (i) the Purchaser and its Subsidiaries have
good and marketable title to all assets and properties listed on the Financial
Statements or thereafter acquired, free and clear of any Encumbrances other than
Permitted Liens, except where the lack of such good and marketable title would
not have a Material Adverse Effect; and (ii) all of the material fixed assets
and material properties listed in the Financial Statements or thereafter
acquired are in satisfactory condition and repair in all material respects for
the requirements of the business as presently conducted. All material agreements
pursuant to which the Purchaser and its Subsidiaries lease real or personal
property are listed in SCHEDULE 5.11 hereto, are valid, effective and
enforceable in accordance with their respective terms and there is not under any
such leases any existing material default or any event which, with notice or
lapse of time or both, would have a Material Adverse Effect.
5.12 TAXES. Except as set forth in SCHEDULE 5.12, the Purchaser and each of
its Subsidiaries has duly filed with the appropriate Governmental Body all tax
returns and reports required to be filed, and has paid or accrued in full all
Taxes due to, or claimed to be due by, any taxing authority. To the Knowledge of
the Purchaser, such tax filings were correct and complete when filed.
5.13 COMPLIANCE WITH LAWS. To the Purchaser's Knowledge, the business of
the Purchaser and its Subsidiaries has been conducted in compliance with all
applicable laws, regulations, orders and other requirements of any Governmental
Body, except where failure to comply will not have a Material Adverse Effect.
5.14 LITIGATION. Except as set forth in SCHEDULE 5.14 and, except for
claims, disputes, actions, proceedings, suits or appeals that would not have a
Material Adverse Effect, there is no claim, dispute, action, proceeding, suit or
appeal, at law or in equity, pending against the Purchaser and its Subsidiaries,
or involving the Purchaser and its Subsidiaries assets or properties, before any
13
court, agency, authority, arbitration panel or other tribunal, and, to the
Purchaser's Knowledge, none have been threatened.
5.15 CONTRACTS. SCHEDULE 5.15 lists each contract or agreement to which the
Purchaser is a party (and the Purchaser has provided the Company with a copy of
each such written contract or agreement or a written description of each such
verbal contract or agreement), (i) is a power of attorney or similar
authorization granted by the Purchaser and its Subsidiaries to third parties, or
(ii) currently involves payments or receipts of more than $500,000 to vendors
and $200,000 to customers on an annual basis that cannot be terminated by the
Purchaser without penalty on less than 61 days notice (collectively, the
"PURCHASER MATERIAL AGREEMENTS"). The Purchaser and its Subsidiaries are not in
material default individually or in the aggregate (or would not by the lapse of
time and/or the giving of notice be in material default) in respect of any
Purchaser Material Agreement to which they are parties. To the Purchaser's
Knowledge, no party to any Purchaser Material Agreement is in material default
thereunder or has materially breached any terms or provisions thereof which are
material to the conduct of any of the respective business. To the Purchaser's
Knowledge, none of the Purchaser Material Agreements will be terminated as a
result of the transaction contemplated hereby.
5.16 INTELLECTUAL PROPRIETARY RIGHTS. The Purchaser and its Subsidiaries
own or have the right to use all Intellectual Property necessary for the
operation of their businesses as presently conducted. SCHEDULE 5.16 constitutes
a full and complete list of all material Intellectual Property that the
Purchaser and its Subsidiaries own or license (to or from a third party) in
connection with their operations (the "PURCHASER INTELLECTUAL PROPERTY ASSETS"),
and specifies whether such Intellectual Property is owned or used under license
and whether the Purchaser and its Subsidiaries act as licensor or licensee. The
Purchaser and its Subsidiaries hold all right, title and interest in and to
those Purchaser Intellectual Property Assets which are specified as owned by
them, except where the failure to hold all such right, title and interest would
not have a Material Adverse Effect. All material license agreements and all
other instruments relating to material licenses are in full force and effect and
true and complete copies thereof have been provided to the Company. None of the
Purchaser Intellectual Property Assets have been held or stipulated to be
invalid in any litigation which has been concluded and the validity of the
Purchaser Intellectual Property Assets has not been questioned in any litigation
that is currently pending or, to the Purchaser's Knowledge, threatened, except
where any such pending or threatened litigation would not have a Material
Adverse Effect. To the Purchaser's Knowledge, the Purchaser and its Subsidiaries
do not infringe on the Intellectual Property of any third party through its
actions in the conduct of its business in any material respect.
5.17 INSURANCE. SCHEDULE 5.17 constitutes a full and complete list of all
policies of insurance to which the Purchaser and its Subsidiaries is a party or
is a beneficiary or named insured. All of the insurance policies and bonds
maintained by the Purchaser and its Subsidiaries are in full force and effect,
except where the failure of such policies or bonds to be in full force and
effect would not have a Material Adverse Effect. None of the Purchaser and its
Subsidiaries has received any notice or other indication from any insurer or
agent of any intent to cancel or not to renew any of such insurance policies,
except where any such cancellation or failure to renew would not have a Material
Adverse Effect.
14
5.18 ENVIRONMENTAL COMPLIANCE. To the Purchaser's Knowledge, the Purchaser
and its Subsidiaries have all permits, licenses and other authorizations, which
are required under existing Environmental Laws and the failure of which would
have a Material Adverse Effect. To the Purchaser's Knowledge, the Purchaser and
its Subsidiaries is presently in compliance in all material respects with all
Environmental Laws, and has not generated, manufactured, refined, transported,
transferred, produced or processed any hazardous material or solid waste, except
in compliance with all applicable Environmental Laws. There are no existing
environmental conditions or circumstances with respect to any real property
owned or leased by the Purchaser and its Subsidiaries, whether or not
discovered, which would be probable to result in a liability which would have a
Material Adverse Effect, should any such conditions or circumstances become the
basis for any claim which is asserted in the future by any aggrieved party
(including, without limitation, any Governmental Body). There is no pending or,
to the Purchaser's Knowledge, threatened civil or criminal litigation, notice of
violation or administrative proceeding to which the Purchaser and its
Subsidiaries is a party relating to Environmental Laws, except where any such
litigation, violation or proceeding would not have a Material Adverse Effect.
5.19 EMPLOYMENT MATTERS. For any worldwide employee whose annual
compensation exceeds $100,000 or foreign equivalent thereof, SCHEDULE 5.19
comprises a list of: (i) all employment contracts or agreements to which each of
the Purchaser and its Subsidiaries is a party or is subject as of the date of
this Agreement, and (ii) the names, current salary rates, and accrued vacation
and sick leave for all the employees of the Purchaser and its Subsidiaries. (i)
the Purchaser and its Subsidiaries does not have any shop union contracts or
enterprise collective bargaining agreements; (ii) the Purchaser and its
Subsidiaries are not currently engaged in any labor negotiations or employment
dispute or grievance except for minor grievances with individual employees and
not with any employee organization or group; and (iii) to the Purchaser's
Knowledge, the Purchaser and its Subsidiaries is the subject of any union
organizing. Except as set forth in SCHEDULE 5.19, the Purchaser and its
Subsidiaries has not sponsored, maintained or participated in, nor does it
currently sponsor, maintain or participate in, any oral or written employee
benefit plan (as such term is defined in Section 3(3) of ERISA), or any trust
related to any such plan.
5.20 BROKERS OR FINDERS. Except as set forth in SCHEDULE 5.20, the
Purchaser has not incurred nor will incur, directly or indirectly, any liability
for any brokerage or finders' fees or agent's commissions or any similar charges
in connection with this Agreement or any transaction contemplated hereby.
5.21 BOOKS AND RECORDS. The minute books, stock record books and other
records of the Purchaser and its Subsidiaries, all of which have been made
available to the Company, are correct in all material respects. The minute books
of the Purchaser and its Subsidiaries are accurate in material respects records
of all meetings and other corporate actions of their respective shareholders and
board of directors and committees thereof.
5.22 FINANCIAL REPORTS AND REGULATORY DOCUMENTS. Except as set forth on
SCHEDULE 5.22, Purchaser has timely filed all reports, registrations and
statements, together with any amendments required to be made with respect
thereto, that it was required to file since January 1, 2000, with the SEC, and
all other material reports and statement required to be filed by it with any
15
Governmental Body since January 1, 2000, including, without limitation, any
report or statement required to be filed pursuant to the laws of the United
States or the State of Nevada, and has paid all fees and assessments due and
payable in connection therewith. As of their respective dates, such reports,
registrations and statements complied in all material respects with all the
laws, rules and regulations of the applicable Governmental Body with which they
are filed. The Purchaser SEC Reports (i) at the time filed, complied in all
material respects with the applicable requirements of the Securities Act and
Exchange Act, as the case may be, (ii) did not at the time they were filed (or
if amended or superseded b a filing prior to the date of this Agreement, then on
the date of such filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated in such Purchaser SEC Reports or necessary
in order to make the statements in such Purchaser SEC reports, in light of the
circumstances under which they were made, not misleading. None of Purchaser's
Subsidiaries is required to file any forms, reports or other documents with the
SEC. Except as set forth in this Agreement or the Schedules or Exhibits attached
hereto, or as disclosed in the Purchaser SEC Reports, there is no fact that the
Purchaser has not disclosed to the Company in writing and of which any of its
officers, directors or executive employees is aware and that has had or would
reasonably be expected to have a Material Adverse Effect.
ARTICLE 6
CONDUCT PENDING THE CLOSING
During the period from the date of this Agreement and continuing until the
Closing Date or the termination of this Agreement, the Parties hereto agree as
follows:
(a) ACCESS TO INFORMATION. The Parties shall afford to the each other and
to each others attorneys, accountants, and other authorized representatives,
access to, and upon request, copies of, all information available to the parties
and their respective Subsidiaries with respect to the operations of the parties
and their respective Subsidiaries including, all of the respective properties,
books, contracts, commitments, records and personnel. Such investigation shall
be conducted in such a manner so as not to interfere unreasonably with the
operations of the Company and its Subsidiaries. Further, each party agrees that
it will not, and will cause its representative not to, use any Confidential
Information obtained pursuant to this SECTION 6.1(A) (as well as any other
Confidential Information obtained prior to the date hereof in connection with
the entering into of this Agreement) for any purpose unrelated to the
consummation of the transactions contemplated by this Agreement. Subject to the
Requirements of Law, each party will keep confidential, and will cause its
representative to keep confidential, all Confidential Information and documents
obtained pursuant to this SECTION 6.1(A) (as well as any other information
obtained prior to the date hereof in connection with the entering into of this
Agreement). In the event that this Agreement is terminated or the transaction
contemplated by this Agreement shall otherwise fail to be consummated, each
party shall promptly cause all copies of documents or extracts thereof
containing Confidential Information and data as to the other party to be
returned to the other party. No investigation by either party of the business
and affairs of the other party shall affect or be deemed to modify or waive any
representation, warranty, covenant or agreement in this Agreement, or the
conditions to either party's obligation to consummate the transactions
contemplated by this Agreement.
16
(b) DIRECTOR AND STOCKHOLDER APPROVAL. Each of the Parties shall take all
action necessary (i) to obtain the written consent of its directors or to
convene a meeting of its directors to approve the Merger, this Agreement and the
transactions contemplated hereby and thereby, (ii) to obtain the written consent
of the holders of the Company Stock or Purchaser Common Stock (as applicable) or
to convene a meeting of their respective stockholders as soon as reasonably
practicable and (iii) to solicit the approval of their respective stockholders
of the Merger, this Agreement and the transactions contemplated hereby and
thereby. Each of the Parties shall ensure that its director and stockholder
approval is solicited in compliance with the procedural requirements of Delaware
Law or Nevada Law, the Certificate of Incorporation and the Bylaws of the
Company or the Purchaser (as applicable), provided, however, that no director or
officer shall be required to violate any fiduciary duty or other requirement
imposed by law in connection therewith.
(c) UPDATE TO DISCLOSURE SCHEDULES. Without limiting any party's right to
rely on the respective representations or warranties of the other parties
contained in ARTICLES IV OR V of this Agreement, each party shall provide the
other parties with updates to their respective Disclosure Schedules provided or
made available pursuant hereto as to material facts which arise or are first
discovered between the date of this Agreement and the Closing Date and which, if
they had occurred and been known prior to the date of this Agreement, would have
been required to be disclosed in order to make such party's respective
representations and warranties true and correct in all material respects as of
the date of this Agreement. Each party shall take all reasonable action within
their respective capability necessary to render accurate as of the Closing Date
its respective representations and warranties contained in this Agreement and
shall refrain from taking any action which would render inaccurate as of the
Closing Date any such representations or warranties. Each party shall notify the
other of any material adverse development causing a breach of any of its own
representations and warranties. Each party shall notify the other of any action,
suit or proceeding that shall be instituted or threatened against such party to
restrain, prohibit, or otherwise challenge the legality of any transaction
contemplated by this Agreement.
(d) COMMUNICATIONS. Neither of the Parties shall furnish any communication
to the public if the subject matter thereof relates to the other parties or to
the transactions contemplated by this Agreement without the prior approval of
the other party as to the content thereof, which approval shall not be
unreasonably withheld. Nothing contained herein shall prevent any party at any
time from furnishing any information to any Governmental Body or from issuing
any release where it reasonably believes it is legally required to do so.
(e) ORDINARY COURSE OF BUSINESS. Each of the Parties shall use, and cause
each of its Subsidiaries to use, best efforts to: (i) preserve the services of
its present officers and employees, its net asset value and its business,
including its relationship with its customers and suppliers; (ii) operate and
carry on its business operations only in the Ordinary Course of Business and
substantially as presently operated; (iii) not sell, dispose of or encumber or
enter into any agreement for the sale of any of its material assets other than
in the Ordinary Course of Business; (iv) not change the method by which bonuses
or other payments are made to its officers, directors and employees and (v) not
enter into any material contract, arrangement or agreement.
17
(f) DIVIDENDS; CHANGES IN STOCK. Except in completing the transactions
contemplated by this Agreement, none of the Purchaser and/or its Subsidiaries
shall or shall propose to: (i) declare or pay any dividends on or make any other
distributions in respect of any of its capital stock; (ii) split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock; or (iii) repurchase or otherwise acquire any shares of its
capital stock.
(g) LEGAL CONDITIONS. Each party shall take all reasonable actions
necessary to comply promptly with any legal requirements which may be imposed on
the consummation of the transaction contemplated herein and shall promptly
cooperate with and furnish information to the other party in connection with any
such requirements imposed upon such other party in connection herewith. Each
party shall take all reasonable actions to obtain (and to cooperate with the
other party in obtaining) any consent, authorization, order or approval of, or
any exemption by, any Governmental Body, or other third party, required to be
obtained or made by such party (or by the other party) in connection with the
taking of any action contemplated thereby or by this Agreement. Each of the
parties shall file any Notification and Report Forms and related materials that
it may be required to file with the FTC and the DOJ under the HSR Act and shall
use its reasonable best efforts to obtain an early termination of the applicable
waiting period and make any further filings pursuant thereto that may be
necessary, proper or advisable.
(h) ISSUANCE OF SECURITIES. Neither the Company nor the Purchaser shall
issue, deliver or sell, or authorize or propose or enter into any agreement for
the issuance, delivery or sale of, or purchase or propose the purchase of, any
Convertible Securities or Equity Securities, except (i) pursuant to the
provision of Convertible Securities issued and outstanding as of the date hereof
or (ii) pursuant to the agreements contemplated by SECTIONS 7.3(E),(G) AND (I).
(i) GOVERNING DOCUMENTS. None of the Purchaser and/or its Subsidiaries
shall amend its charter documents.
(j) SALARIES, BENEFIT PLANS, ETC. None of the Purchaser and/or its
Subsidiaries shall incur any salaries or other compensation payable to officers,
directors, employees or consultants, and shall not hire any employees or
consultants, nor adopt or amend in any material respect any collective
bargaining agreement or benefit plan or any other agreement with employees.
(k) NOTICE OF CERTAIN DEFAULTS OR CLAIMS. The Purchaser shall give prompt
notice to the Company of (i) any notice of default received by it under any
material instrument or material agreement to which any of the Purchaser and/or
its Subsidiaries is a party or by which it is bound; (ii) any transaction that
is reasonably likely to have a Material Adverse Effect.
ARTICLE 7
CONDITIONS TO CLOSING
7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The obligations of each party
to effect the Merger are subject to the satisfaction on or prior to the Closing
Date of the following conditions unless waived (to the extent such conditions
can be waived) by all such parties affected thereby, as applicable:
18
(a) GOVERNMENT CONSENTS; AUTHORIZATIONS. All material consents,
authorizations, orders or approvals of, and filings or registrations with or
imposed by, any Governmental Body which are required for or in connection with
the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby shall have been obtained or made, including,
without limitation, expiration or early termination of the waiting period under
the HSR Act.
(b) LEGAL ACTION. No temporary restraining order, preliminary injunction or
permanent injunction or other order preventing the consummation of the
transactions contemplated herein shall have been issued by any Government Body
of competent jurisdiction and remain in effect. Each party agrees to use its
reasonable best efforts to have any such injunction or order lifted.
(c) LEGISLATION. No Requirement of Law shall have been enacted and remain
in effect which prohibits or makes illegal the consummation of this Agreement or
any of the conditions to the consummation of this Agreement.
7.2 CONDITIONS TO OBLIGATIONS OF THE PURCHASER. The obligations of the
Purchaser to perform this Agreement at the Closing are subject to the
satisfaction on or prior to the Closing Date of the following conditions, unless
waived by the Purchaser:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Company contained in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date, and the Purchaser shall have received
a certificate signed by an officer of the Company to such effect.
(b) DIRECTOR AND STOCKHOLDER APPROVAL. The Company shall have obtained all
requisite approval of its directors and stockholders for this Agreement, the
Merger and the transactions contemplated hereby.
(c) PERFORMANCE OF OBLIGATIONS BY THE COMPANY. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement on or before the Closing Date, and the Purchaser shall
have received a certificate signed by an officer of the Company to such effect.
7.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations of the
Company to perform this Agreement at the Closing are subject to the satisfaction
on or prior to the Closing Date of the following conditions, unless waived by
the Company:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Purchaser and contained in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date, and the Company shall have received a
certificate signed by an officer of the Purchaser to such effect.
19
(b) DIRECTOR AND STOCKHOLDER APPROVAL. The Purchaser shall have obtained
all requisite approval of its directors and shareholders for this Agreement, the
Merger and the transactions contemplated hereby.
(c) PERFORMANCE OF OBLIGATIONS OF THE PURCHASER. The Purchaser shall have
performed in all material respects all obligations required to be performed by
it under this Agreement on or before the Closing Date, and the Company shall
have received a certificate signed by an officer of the Purchaser to such
effect.
(d) GOVERNMENTAL FILINGS; NO VIOLATIONS. Purchaser shall have made all
filings required of it pursuant to the Exchange Act, including the filing of a
Form 8-K upon execution of this Agreement describing the transaction, subject to
the Company's prior review and reasonable approval.
(e) RESTRUCTURE OF CONVERTIBLE NOTES. Those certain Convertible Notes
issued by the Company to ▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇ shall be restructured in a
manner satisfactory to the Company. Such restructure will include the right of
the Surviving Corporation to pay all principal and accrued but unpaid interest
due under each such Convertible Note without the holder converting such
Convertible Note into the right to receive any Merger Consideration or Purchaser
Stock or Company Stock.
(f) SIGNED RELEASES OF PRINCIPALS. The execution of Mutual Release, Hold
Harmless and Indemnification Agreements as of the day of the Closing and in form
satisfactory to the Company by ▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, Oasis and Go Industries releasing the Company and its officers,
directors, agents, employees and attorneys from any and all claims.
(g) CONVERSION OF PREFERRED. The conversion of the Company's preferred
stock held by Groot Kasteel to common stock of the Company as a one-for-one
basis..
(h) LIMIT ON DISSENTERS. Not more than five percent (5%) of the outstanding
shares of either Purchaser Stock or Company Stock shall have exercised dissenter
rights in connection with the proposed Merger.
(i) FINANCING TRANSACTION. Purchaser shall have entered into definitive
agreements contemplating the purchase and sale of at least $15.0 million of
securities of the Purchaser, in form and substance satisfactory to the Company
in its sole and absolute discretion.
(j) LIMITATION ON OUTSTANDING OBLIGATIONS. Except for trade payables
incurred in the Ordinary Course of Business and not past due, the Purchaser
shall have no more than $185,000 of outstanding debt or liabilities (including,
without limitation, any and all outstanding amounts owed or payable to employees
or independent contractors of Purchaser and amounts owed to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and
to Sutura, Inc. pursuant to Promissory Notes).
(k) TERMINATION OF EMPLOYMENT AGREEMENTS. The employment agreements with
each of ▇▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ shall be mutually terminated by the
Company and each such employee without any further liability or obligation of
20
the Surviving Company pursuant to such agreements, which terminations shall be
in form and substance satisfactory to the Company in its sole and absolute
discretion.
ARTICLE 8
TERMINATION
8.1 TERMINATION. Notwithstanding any other provisions of this Agreement,
this Agreement may be terminated, and the Merger may be abandoned as follows:
(a) MUTUAL CONSENT. At any time prior to the Effective Time, by the mutual
consent of Purchaser and Company, if the Board of Directors of each so
determines by vote of a majority of the members of its entire Board.
(b) BREACH. At any time prior to the Effective Time, by Purchaser or
Company if its Board of Directors so determines by vote of a majority of the
members of its Board, in the event of either: (i) a breach by the other party of
any representation or warranty contained herein (subject to the standard set
forth herein), which breach cannot be or has not been cured within 10 days after
the giving of written notice to the breaching party of such breach; or (ii) a
breach by the other party of any of the covenants or agreements contained
herein, which breach cannot be or has not been cured within 10 days after the
giving of written notice to the breaching party of such breach.
(c) DELAY. At any time prior to the Effective Time, by either Purchaser or
Company if its Board of Directors so determines by vote of a majority of the
members of its entire Board, in the event that the Merger is not consummated by
November 30, 2004, except not by such Party to the extent that the failure of
the Merger then to be consummated arises out of or results from knowing action
or inaction of such party to the detriment of the other Party, except as
permitted hereunder.
(d) NO APPROVAL. By Company or by the Shareholders of Purchaser, if its
Board of Directors so determines by a vote of a majority of the members of its
entire Board, in the event the approval of any Governmental Body required for
consummation of the Merger and the other transactions contemplated by this
Agreement shall have been denied by final nonappealable action of such
Governmental Body or any Governmental Body issues a final nonappealable order
blocking the Merger.
(e) FAILURE TO RECOMMEND, ETC. At any time prior to approval of the Merger
by the stockholders of the Company or by the shareholders of Purchaser, by
either Company or Purchaser, if the Board of Directors of the other shall have,
based on good faith exercise of their fiduciary duty, failed to recommend this
Merger and the Transactions contemplated herein to its stockholder or
shareholders (as applicable), withdrawn such recommendation or modified or
changed such recommendation in a manner adverse in any respect to the interests
of the other party for any reason other than as a result of a termination of the
Agreement allowed pursuant to Sections 8.1 (a) - (d).
(f) ACQUISITIONS PROPOSAL. This Agreement may be terminated by either
Company or Purchaser by written notice to the other if Purchaser (i) received an
Acquisition Proposal, (ii) receives the advice of its outside counsel that to
proceed with the Merger will violate the fiduciary duties of its Board of
21
Directors to its stockholders in light of such Acquisition Proposal, and (iii)
after receiving such advice, determines to accept such proposal; provided,
however, that neither party shall be entitled to terminate this Agreement
pursuant to this SECTION 8.1(F) unless it shall have provided the Company with
written notice of such a possible determination (which written notice will
inform the other of the material terms and conditions of the proposal, including
the identity of the proponent) not less than two business days prior to such
determination.
(g) DISCLOSURE SCHEDULES AMENDMENT OR SUPPLEMENT. At any time prior to the
Effective Time by either Company or Purchaser, if its Board of Directors so
determines by vote of a majority of the members of its entire Board that the
other party has amended its Disclosure Schedules provided pursuant to ARTICLES
IV OR V hereof (as applicable) and such amendment discloses events that would be
reasonably likely to result in a Material Adverse Effect on the Surviving
Company following the Closing.
8.2 EFFECT OF TERMINATION AND ABANDONMENT. In the event of termination of
this Agreement and the abandonment of the Merger pursuant to this ARTICLE VIII,
no party to this Agreement shall have any liability or further obligation to any
other party hereunder except that termination under SECTION 8.1(B) will not
relieve a breaching party from liability for any breach of this Agreement giving
rise to such termination; provided, however, in no event shall the breaching
party pay to the non-breaching party for such a breach an amount greater than
the actual out-of-pocket costs and expenses incurred by the non-breaching party
in connection with this Agreement and the enforcement of its rights hereunder.
ARTICLE 9
GENERAL PROVISIONS
9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representation and
warranties of the Company and Purchaser set out herein shall survive the
Closing.
9.2 FURTHER ASSURANCES. From time to time, each party will execute such
additional instruments and take such actions as may be reasonably required to
carry out the intent and purposes of this agreement.
9.3 WAIVER. Any failure on the part of either party hereto to comply with
any of its obligation, agreements, or conditions hereunder may be waived in
writing by the party to whom such compliance is owed.
9.4 BROKERS. Each party agrees to indemnify and hold harmless the other
party against any fee, loss, or expense arising out of claims by brokers or
finders employed or alleged to have been employed by the indemnifying party.
9.5 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given if delivered in person or sent by
prepaid first-class certified mail, return receipt requested or recognized
commercial courier service as follows:
22
If to the Company:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Sutura, Inc
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to the Purchaser:
▇▇▇▇▇▇▇ ▇. ▇▇▇
Millenium Holding Group, Inc,
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
9.6 GOVERNING LAW. This agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Nevada
9.7 ASSIGMENT. This agreement shall inure to the benefit of, and be binding
upon, the parties hereto and their successors and assigns provided however, that
any assignment by either party of its rights under this agreement without the
written consent of the other party shall be void.
9.8 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. Signatures sent by
facsimile transmission shall be deemed to be evidence of the original execution
thereof.
9.9 CLOSING DATE. The Closing shall take place upon the fulfillment by each
party of all the conditions of Closing required herein, but not later than 15
days following execution of this agreement unless extended by mutual consent of
the parties.
9.10 REVIEW OF THE AGREEMENT. Each party acknowledges that it has had time
to review this agreement and, as desired, consult with counsel. In the
interpretation of this agreement, no adverse presumption shall be made against
any party on the basis that it has prepared, or participated in the preparation
of, this agreement.
9.11 SCHEDULES. All schedules attached hereto, if any, shall be
acknowledged by each party by signature or initials thereon and shall be dated.
9.12 EFFECTIVE DATE. The effective date of this agreement shall be upon its
execution.
[Signatures on following page]
23
SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER BETWEEN SUTURA, INC.
AND MILLENIUM HOLDING GROUP, INC.
IN WITNESS WHEREOF, the parties have executed this agreement this 9th day
of July 2004.
MILLENIUM HOLDING GROUP, INC. SUTURA, INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇ By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------- -------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇, President ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
24
EXHIBIT A
DEFINITIONS
"ACQUISITION PROPOSAL" means any tender or exchange offer, proposal for a
merger, consolidation or other business combination involving Purchaser or any
proposal or offer to acquire in any manner a substantial equity interest in, or
a substantial portion of the assets or deposits of, Purchaser, other than the
transactions contemplated by this Agreement.
"AGREEMENT" shall have the meaning set forth in the introductory paragraph.
"CLOSING" and "CLOSING DATE" have the meanings set forth in Section 2.2 hereof.
"COMPANY" shall have the meaning set forth in the introductory paragraph.
"COMPANY ACTIVITIES TO DATE" shall have the meaning set forth in Section 4.22
"COMPANY COMMON STOCK" shall have the meaning set forth in Section 4.5.
"COMPANY DISSENTING SHARE" means any share of Company Stock, which is owned by a
stockholder who or which has exercised his, her or its appraisal rights under
Delaware Law.
"COMPANY FINANCIAL STATEMENTS" means: (i) the audited consolidated balance
sheets of the Company at December 31, 1997, 1998, 1999 and 2000, and the related
statements of income, cash flows and changes in shareholders' equity for the
fiscal years then ended; and (ii) the unaudited consolidated balance sheets of
the Company at December 31, 2001, 2002, 2003 and the related statements of
income and cash flows for the periods then ended.
"COMPANY INTELLECTUAL PROPERTY ASSETS" shall have the meaning set forth in
Section 4.16.
"COMPANY LICENSES" shall have the meaning set forth in Section 4.22.
"COMPANY MATERIAL AGREEMENT" shall have the meaning set forth in Section 4.15.
"COMPANY PREFERRED STOCK" shall have the meaning set forth in Section 4.5.
"COMPANY PRODUCTS" shall have the meaning set forth in Section 4.22.
"COMPANY RIGHTS" shall have the meaning set forth in Section 3.3.
"COMPANY STOCK" means all of the issued and outstanding shares of Common Stock
and Preferred Stock of the Company issued and outstanding immediately before
Closing, including any New Stock.
"COMPANY STOCKHOLDER" means any holder of shares of Company Stock.
"CONFIDENTIAL INFORMATION" means all information relating to the customers or
markets of the party which originally disclosed such information ("DISCLOSING
PARTY"), the composition, manufacture or development of the Disclosing Party's
1
products, the corporate structure and organization of the Disclosing Party and
other technical data, trade secrets or proprietary information, the Financial
Statements and all earlier and subsequent financial statements, financial
information, budgets, forecasts, marketing plans and strategies, business plans,
business, assets or prospects of the Disclosing Party which such party protects
against unrestricted disclosure to others and such other information as the
Disclosing Party shall advise the other parties to this Agreement is considered
by the Disclosing Party as confidential. Confidential Information shall not
include information that: (i) was rightfully in the possession of the party
which originally received such information from the Disclosing Party ("RECEIVING
PARTY") or was rightfully known to the Receiving Party prior to receipt from the
Disclosing Party and is not subject to a separate confidentiality obligation;
(ii) is independently developed by the Receiving Party; (iii) is or becomes
publicly known without the fault of the Receiving Party; (iv) is or becomes
rightfully available to the Receiving Party without confidentiality restriction
from a source other than the Disclosing Party; or (v) which a party is required
to disclose pursuant to a directive of a Governmental Body; provided that in
each of the foregoing exceptions the burden of proof that any information does
not constitute Confidential Information shall be on the Receiving Party.
"CONVERTIBLE SECURITIES" means options, warrants or other rights to acquire
securities of the Company or Purchaser (as the context requires).
"DELAWARE LAW" shall have the meaning set forth in the Recitals.
"DISCLOSURE SCHEDULES" shall mean the Schedules of the Company provided pursuant
to Article IV or of the Purchaser provided pursuant to Article V (as the context
requires).
"DOJ" shall have the meaning set forth in Section 4.3.
"EFFECTIVE TIME" shall have the meaning set forth in Section 2.4
"ENCUMBRANCE" means any lien, claim, charge, security interest, mortgage,
pledge, easement, conditional sale or other title retention agreement, defect in
title, covenant or other claim or interest in property.
"ENVIRONMENTAL LAWS" means any laws, rules, regulations, orders, treaties,
statutes and codes of any Governmental Body presently in effect which prohibit,
regulate or control or relate to emissions, discharges, releases or threatened
releases of any pollutants, contaminants, chemicals or industrial, hazardous or
toxic materials or wastes or the transportation, storage, transfer, use,
manufacture, processing, distribution, treatment, disposal, handling or dealing
with such materials or which relate to pollution or to protection of the
environment.
"EQUITY SECURITIES" shall mean any capital stock or other equity interest or any
securities convertible into or exchangeable for capital stock or any other
rights, warrants or options to acquire any of the foregoing securities.
"ERISA" shall have the meaning set forth in Section 4.19.
2
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934 and the rules and
regulations promulgated thereunder, as amended.
"EXCHANGE RATIO" shall have the meaning set forth in the definition of Merger
Consideration.
"FDA" shall have the meaning set forth in Section 4.22.
"FTC" shall have the meaning set forth in Section 4.3.
"GAAP" means generally accepted accounting principles in the United States,
consistently applied.
"GOVERNMENTAL BODY" means any court or any governmental or regulatory authority
of the United States of America or any other country, or any state, county,
locality, district, or other political subdivision thereof, and includes without
limitation any self-regulatory organizations such as stock exchanges or the
National Association of Securities Dealers, which govern the issuance or trading
in securities.
"HSR ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder.
"INTELLECTUAL PROPERTY" means all proprietary rights and information, including,
without limitation, all patents (including any registrations, continuations,
continuations in part, renewals and applications for any of the foregoing);
ideas, conceptions and inventions (whether or not patentable, reduced to
practice or made the subject of a pending patent application), copyrights
(whether or not registered), copyrighted or copyrightable works, trademarks,
service marks, trade names, URLs and Internet domain names, databases, designs,
slogans and general intangibles of like nature, together with all goodwill
related to the foregoing, drawings, designs, mask works or registrations
thereof, technology, trade secrets and other confidential information, know-how,
proprietary processes, customer lists, inventions, methodologies and, with
respect to all of the foregoing, related confidential documentation
manufacturing and production processes and techniques, research and development
information and other confidential technical information, as well as all rights
in and to computer programs, data files and other software.
"KNOWLEDGE". Where any representation or warranty contained in this Agreement is
expressly qualified by reference to Knowledge of or relating to the Company,
such Knowledge shall mean the actual knowledge of the following officers and
directors of the Company: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇. Where any
representation or warranty contained in this Agreement is expressly qualified by
reference to Knowledge of or relating to the Purchaser, such Knowledge shall
mean the actual knowledge of the following officers and directors of the
Purchaser: ▇▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the business,
results of operations or financial condition of the Company and its Subsidiaries
or the Purchaser (as the context requires), in each case taken as a whole, other
than any effect relating to the economy or securities markets in general, or the
industries in which the relevant Party operates.
"MERGER" shall have the meaning set forth in the Recitals.
3
"MERGER CONSIDERATION" shall mean and be determined as follows:
Each share of Company Stock shall be converted into and exchanged for that
number of shares of Purchaser Common Stock pursuant to the following ratio
("EXCHANGE RATIO"):
A = (B/.10)/C
A - means the number of shares of Purchaser Common Stock to be exchanged
for each share of Company Stock.
B - that number of issued and outstanding shares of Purchaser Common Stock
determined immediately prior to the Closing, on a fully diluted as converted
basis, assuming conversion, exercise and/or exchange of all securities or other
rights to acquire Purchaser Common Stock.
C - means that number of issued and outstanding shares of Company Stock
immediately prior to the Closing, on a fully diluted as converted basis,
assuming conversion, exercise and/or exchange of all Convertible Securities or
other rights to acquire Company Stock.
"NEVADA LAW" shall have the meaning set forth in the Recitals.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business consistent
with past custom and practice.
"PARTIES" shall have the meaning set forth in the introductory paragraph.
"PERMITTED LIENS" means: (i) liens for Taxes, assessments and governmental
charges not yet due and payable; (ii) zoning laws and ordinances which do not in
any material respect, individually or in the aggregate, impair the value or
merchantability or use of the property as it is currently being used; (iii)
rights reserved to any Governmental Body to regulate the affected property; (iv)
purchase-money liens arising out of the purchase or sale of products or services
made in the Ordinary Course of Business; and (v) any Encumbrances that arise in
the Ordinary Course of Business.
"PERSON" means any individual, corporation (including any non-profit), general
or limited partnership, limited liability company, joint venture, estate, trust,
association, organization, foundation, labor union, or other entity or
Governmental Body.
"PURCHASER" shall have the meaning set forth in the introductory paragraph.
"PURCHASER COMMON STOCK" shall have the meaning set forth in Section 5.5.
"PURCHASER INTELLECTUAL PROPERTY ASSETS" shall have the meaning set forth in
Section 5.16.
"PURCHASER MATERIAL AGREEMENT" shall have the meaning set forth in Section 5.15.
"PURCHASER PREFERRED STOCK" shall have the meaning set forth in Section 5.5.
4
"PURCHASER SEC REPORTS" shall mean all the form, reports, and documents required
to be filed by Purchaser with the SEC since January 1, 2000.
"RELATED PARTY" means a Person controlling, controlled by or under common
control with a party to this Agreement or any Purchaser, offspring, spouse,
brother or sister of such person or his or her spouse (collectively "FAMILY
MEMBER") and any Person controlling, controlled by or under common control of
such Family Member.
"REQUIREMENT OF LAW" means any U.S. federal, state, local, municipal, foreign,
international, multinational or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute or treaty.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"STOCK OPTION PLANS" means the Amended and Restated 1999 and 2001 Stock Option
Plans of the Company and those of the Purchaser.
"SUBSIDIARIES" means any Person in which the Company or the Purchaser (as the
context requires) has a direct or indirect equity ownership interest of 50% or
more.
"SURVIVING CORPORATION" shall have the meaning set forth in Section 2.1.
"TAX" or "TAXES" means any U.S. federal, state, local or foreign tax, including
net income, alternative or add-on minimum, gross income, gross receipts,
property, sales, use, transfer, gains, license, excise, employment, payroll,
withholding or minimum tax, or any other tax, custom, duty, governmental fee or
other like assessment or charge of any kind whatsoever, together with any
interest or any penalty, addition to tax or additional amount imposed by any
Governmental Body.
5