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EXHIBIT 1
Execution Copy
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AGREEMENT AND PLAN OF MERGER
dated as of January 27, 1997
by and among
DENTSPLY INTERNATIONAL INC.,
IMAGE ACQUISITION CORP.
and
NEW IMAGE INDUSTRIES, INC.
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TABLE OF CONTENTS
ARTICLE 1 -- THE OFFER.................................................................2
1.1 The Offer............................................................2
1.2 Parent Action; Tender Offer Documents................................2
1.3 Company Action.......................................................3
ARTICLE 2 -- THE MERGER................................................................4
2.1 The Merger...........................................................4
2.2 Effective Time.......................................................4
2.3 Closing..............................................................5
2.4 Effects of the Merger................................................5
2.5 Certificate of Incorporation; By-Laws................................5
2.6 Directors and Officers of the Surviving Corporation..................5
2.7 Taking of Necessary Action; Further Action...........................5
2.8 Conversion of Securities.............................................5
2.9 Exchange of Certificates.............................................6
2.10 Transfer of Shares After Effective Date..............................7
2.11 Company Stock Options................................................7
2.12 Company Warrants.....................................................8
ARTICLE 3 -- REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................8
3.1 Organization and Qualification.......................................9
3.2 Certificate of Incorporation and By-Laws.............................9
3.3 Subsidiaries.........................................................9
3.4 Capitalization.......................................................9
3.5 Authority Relative to this Agreement................................10
3.6 Commission Filings..................................................11
3.7 No Undisclosed Liabilities..........................................12
3.8 Absence of Certain Changes or Events................................12
3.9 Litigation..........................................................13
3.10 Absence of Changes in Benefit Plans.................................13
3.11 ERISA Compliance....................................................13
3.12 Taxes...............................................................15
3.13 Information Supplied................................................16
3.14 Compliance with Applicable Laws.....................................16
3.15 State Takeover Statutes.............................................18
3.16 Brokers; Schedule of Fees and Expenses..............................18
3.17 Contracts; Debt Instruments.........................................18
3.18 Title to Properties.................................................19
3.19 Labor Matters.......................................................20
3.20 Insurance...........................................................20
(i)
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3.21 Intellectual Property Matters.......................................20
3.22 Payments............................................................21
3.23 Suppliers and Customers.............................................21
3.24 Regulatory Matters..................................................22
ARTICLE 4 -- REPRESENTATIONS AND WARRANTIES OF PARENT.................................22
4.1 Organization and Qualification......................................22
4.2 Authority Relative to this Agreement................................22
4.3 Financing...........................................................23
4.4 Ownership of Company Securities.....................................23
4.5 Information Supplied................................................23
4.6 Capitalization......................................................23
4.7 Financial Advisor...................................................23
ARTICLE 5 -- CONDUCT OF BUSINESS PENDING THE MERGER...................................24
5.1 Conduct of Business by the Company Pending the Merger...............24
5.2 Actions by Parent and Merger Sub Pending the Merger.................26
ARTICLE 6 -- ADDITIONAL AGREEMENTS....................................................26
6.1 Stockholder Approval; Preparation of Proxy Statement................26
6.2 Stock Options and Warrants..........................................27
6.3 Expenses............................................................27
6.4 Other Actions.......................................................28
6.5 Exclusive Dealing...................................................28
6.6 Notification of Certain Matters.....................................29
6.7 Access to Information...............................................30
6.8 Antitrust Laws......................................................30
6.9 Public Announcements................................................30
6.10 Directors...........................................................30
6.11 Directors' and Officers' Insurance Coverage.........................31
6.12 Benefit Plans and Certain Contracts.................................32
ARTICLE 7 -- CONDITIONS...............................................................32
7.1 Conditions to Obligation of each Party to Effect the Merger.........32
7.2 Additional Conditions to Obligation of the Company..................33
ARTICLE 8 -- TERMINATION, AMENDMENT AND WAIVER........................................33
8.1 Termination.........................................................33
8.2 Effect of Termination...............................................34
8.3 Amendment...........................................................34
8.4 Extension; Waiver...................................................34
(ii)
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ARTICLE 9 -- GENERAL PROVISIONS.......................................................35
9.1 Survival of Representations, Warranties and Agreements..............35
9.2 Notices.............................................................35
9.3 Interpretation......................................................36
9.4 Entire Agreement; No Third Party Beneficiaries......................36
9.5 Assignment..........................................................36
9.6 Governing Law.......................................................36
9.7 Counterparts........................................................36
9.8 Specific Performance................................................37
Appendix -- Conditions to the Offer............................................A-1
(iii)
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of
January 27, 1997, is by and among DENTSPLY International Inc., a Delaware
corporation ("Parent"), Image Acquisition Corp., a Delaware corporation and
wholly owned subsidiary of Parent ("Merger Sub"), and New Image Industries,
Inc., a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and
the Company have approved the acquisition of the Company by Parent upon the
terms and subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, Parent proposes to cause
Merger Sub to make a tender offer (as it may be amended from time to time as
permitted under Section 1.1 of this Agreement, the "Offer") to purchase all the
issued and outstanding shares of Common Stock, par value $.001 per share, of
the Company (the "Company Common Stock," the outstanding shares of Company
Common Stock being hereinafter referred to as the "Shares"), at a purchase
price of $2.00 per share (the "Offer Price"), net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set
forth in this Agreement; and the Board of Directors of the Company has adopted
resolutions approving the Offer and the Merger (as defined below), recommending
that the Company's stockholders accept the Offer;
WHEREAS, each of the respective Boards of Directors of Parent, Merger
Sub and the Company has approved the Offer and the merger of Merger Sub with
and into the Company (the "Merger") upon the terms and subject to the
conditions set forth in this Agreement, whereby each issued and outstanding
share of Company Common Stock, other than shares owned directly or indirectly
by Parent or the Company and "Dissenting Shares" (as defined in Section
2.8(d)), will be converted into the right to receive the Offer Price;
WHEREAS, concurrently with the execution of this Agreement and as an
inducement to Parent to enter into this Agreement, Parent, Merger Sub and each
executive officer (as defined in Rule 3b-7 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) and director of the
Company who, in each case, owns Shares or options or warrants to acquire shares
of the Company Common Stock and The ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Trust, a stockholder of the Company (collectively, the "Stockholder Parties"),
are entering into separate stockholder agreements (the "Stockholder
Agreements"), pursuant to which each such Stockholder Party is agreeing to
tender all Shares owned by such person in the Offer, upon the terms and subject
to the conditions set forth in such Stockholder Party's respective Stockholder
Agreement; and
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger;
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NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, intending to be legally bound hereby, Parent,
Merger Sub and the Company hereby agree as follows:
ARTICLE 1 -- THE OFFER
1.1 The Offer.
(a) Subject to the conditions set forth in the Appendix
hereto, as promptly as practicable but in no event later than five business
days after the date of the public announcement by Parent and the Company of the
execution of this Agreement, Merger Sub shall, and Parent shall cause Merger
Sub to, commence (within the meaning of Rule 14d-2 under the Exchange Act),
the Offer for any and all Shares at a price of $2.00 per share net to the
seller in cash, without interest thereon, and, subject to the conditions set
forth in the Appendix, consummate the Offer in accordance with its terms. The
Offer shall be made by means of an Offer to Purchase having the conditions set
forth in the Appendix (any of which may be waived by Merger Sub or Parent in
its sole discretion). The obligations of Merger Sub to commence the Offer and
to accept for payment and to pay for any Shares validly tendered on or prior to
the expiration of the Offer and not withdrawn shall be subject only to the
conditions set forth in the Appendix.
(b) Parent will not, and will cause Merger Sub not to,
without the prior written consent of the Company (which consent may be withheld
for any reason), decrease the price per Share, or change the form of
consideration payable, in the Offer, decrease the number of Shares sought in
the Offer, change the conditions to the Offer from those contained in the
Appendix hereto, impose additional conditions to the Offer, or amend any
material term of the Offer in a manner adverse to the holders of the Shares.
Subject to the terms and conditions of the Offer and this Agreement, Merger Sub
shall, and Parent shall cause Merger Sub to, accept for payment, and pay for,
all Shares validly tendered and not withdrawn pursuant to the Offer that Merger
Sub becomes obligated to accept for payment, and pay for, pursuant to the Offer
as soon as practicable after the expiration of the Offer.
1.2 Parent Action; Tender Offer Documents. As soon as
practicable but not later than the date of commencement of the Offer, Parent
shall file or cause to be filed with the Securities and Exchange Commission
(the "SEC") a Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1").
The Schedule 14D-1 filed with the SEC, which shall contain the Offer to
Purchase and a related letter of transmittal and summary advertisement (such
Schedule 14D-1 and the documents included therein pursuant to which the Offer
will be made, together with any supplement or amendment thereto, are hereafter
referred to as the "Offer Documents") shall comply as to form in all material
respects with the applicable provisions of the Exchange Act and the rules and
regulations promulgated thereunder, and shall not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that the foregoing representation shall not apply with respect to the accuracy
of information furnished in
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writing by the Company specifically for inclusion in the Offer Documents or
which is taken, after consultation with the Company, from reports filed by the
Company under the Exchange Act (provided that such information has not been
superseded by information contained in reports filed by the Company under the
Exchange Act subsequent thereto), which accuracy shall be the sole
responsibility of the Company. Parent, Merger Sub and the Company each agrees
promptly to correct any information provided by it for use in the Offer
Documents if and to the extent that it shall have become false or misleading in
any material respect, and Parent and Merger Sub further agree to take all steps
necessary to cause the Schedule 14D-1 as so corrected to be filed with the SEC
and the Offer Documents as so corrected to be disseminated to holders of
Shares, in each case as and to the extent required by applicable Federal
securities laws. The Company and its counsel shall be given reasonable
opportunity to review the Offer Documents prior to their filing with the SEC.
Parent and Merger Sub agree to provide the Company and its counsel in writing
any comments Parent, Merger Sub or its counsel may receive from the SEC or its
staff with respect to the Offer Documents promptly after receipt of such
comments.
1.3 Company Action.
(a) The Company hereby approves of and consents to the
Offer and represents that the Board of Directors of the Company, at a meeting
duly called and held, duly and unanimously adopted resolutions approving this
Agreement, the Offer and the Merger, determining that the terms of the Offer
and the Merger are fair, from a financial point of view, to, and in the best
interests of, the Company's stockholders and recommending that the Company's
stockholders approve and adopt this Agreement, and that the Company's
stockholders accept the Offer and tender their Shares pursuant to the Offer,
provided, however, that any such recommendation may be amended, withdrawn or
modified in accordance with the provisions of Section 6.5(b). The Company
represents that its Board of Directors has received the opinion of ▇▇▇▇▇▇ Gull
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Inc. ("▇▇▇▇▇▇ Gull") to the effect that the proposed
consideration to be received by the holders of Shares pursuant to the Offer and
the Merger is fair to such holders from a financial point of view, and a
complete and correct signed copy of such opinion has been delivered by the
Company to Parent. The Company understands that, concurrently with the
execution of this Agreement, each of the Company's directors and officers
intends to execute a Stockholder Agreement with Parent and/or Merger Sub and
intends to tender all Shares owned by such person pursuant to the Offer. The
Company hereby approves of and consents to the execution by each Stockholder
Party of such Stockholder Party's Stockholder Agreement and the consummation of
the transactions contemplated thereby, including the tender of such Shares, and
represents that the Board of Directors of the Company, at a meeting duly called
and held, duly and unanimously adopted resolutions approving the execution of
the Stockholder Agreements and the consummation of the transactions
contemplated thereby.
(b) On the date the Offer Documents are filed with the
SEC, the Company shall file with the SEC and mail to the holders of Shares a
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"),
which shall reflect the recommendations described in Section 1.3(a). The
Company agrees that the Schedule 14D-9, including all amendments and
supplements thereto, shall comply as to form in all material respects with the
applicable provisions of the Exchange Act and the rules and regulations
promulgated thereunder, and shall not contain any
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untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading;
provided, however, that the foregoing representation shall not apply with
respect to the accuracy of information furnished in writing by Parent
specifically for inclusion in the Schedule 14D-9 or taken from reports, after
consultation with the Company, filed by Parent under the Exchange Act (provided
that such information has not been superseded by information contained in
reports filed by Parent under the Exchange Act subsequent thereto). The
Company, Parent and Merger Sub each agrees promptly to correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that it shall
have become false or misleading in any material respect, and the Company
further agrees to take all steps necessary to cause the Schedule 14D-9 as so
amended or supplemented to be filed with the SEC and disseminated to the
Company's shareholders, in each case as and to the extent required by
applicable Federal securities laws. Parent and Merger Sub and their counsel
shall be given reasonable opportunity to review the Schedule 14D-9 prior to its
filing with the SEC. The Company agrees to provide Parent and its counsel in
writing any comments the Company or its counsel may receive from the SEC or its
staff with respect to the Schedule 14D-9 promptly after receipt of such
comments.
(c) The Company will promptly furnish Parent or cause
Parent to be furnished with mailing labels containing the names and addresses
of the record holders of Shares as of a recent date and of those persons
becoming record holders subsequent to such date, together with copies of all
lists of stockholders, security position listings and computer files and all
other information in the Company's possession or control regarding the
beneficial owners of Shares, and shall furnish Parent with such additional
information and assistance as Parent may reasonably request to communicate the
Offer to the stockholders of the Company.
ARTICLE 2 -- THE MERGER
2.1 The Merger. Upon the terms and subject to the conditions of
this Agreement and in accordance with the Delaware General Corporation Law (the
"DGCL"), at the "Effective Time" (as defined in Section 2.2 hereof), Merger Sub
shall be merged with and into the Company in the Merger, the separate existence
of Merger Sub (except as may be continued by operation of law) shall cease, and
the Company shall continue as the surviving corporation following the Merger
(the "Surviving Corporation"). Notwithstanding the foregoing, Parent may elect
at any time prior to the Merger to merge the Company with and into Merger Sub,
instead of merging Merger Sub with and into the Company, in which event the
parties agree to execute an appropriate amendment to this Agreement to reflect
the foregoing.
2.2 Effective Time. Upon the terms and subject to the conditions
hereof, the parties hereto will file a Certificate of Merger with the Secretary
of State of the State of Delaware, in such form as may be required by, and
executed in accordance with, the DGCL. The Merger shall become effective at
such time as such document is so filed or at such time as is set forth in the
Certificate of Merger, if different, which time is hereinafter referred to as
the "Effective Time."
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2.3 Closing. The closing of the Merger shall take place at the
offices of ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
at 10:00 a.m., Eastern Time, on a date (the "Closing Date") to be specified by
the parties, which shall be no later than the second business day after the
satisfaction or waiver of the conditions set forth in Article 7.
2.4 Effects of the Merger. The Merger shall have the effects set
forth in the applicable provisions of the DGCL and this Agreement.
2.5 Certificate of Incorporation; By-Laws. The Certificate of
Incorporation and By-Laws of Merger Sub at the Effective Time shall be the
Certificate of Incorporation and By-Laws of the Surviving Corporation until
amended as provided therein and under the DGCL.
2.6 Directors and Officers of the Surviving Corporation. The
directors and officers of Merger Sub at the Effective Time shall, from and
after the Effective Time, be the directors and officers of the Surviving
Corporation until their successors shall have been duly elected or appointed
and qualified or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's Certificate of Incorporation and
Bylaws.
2.7 Taking of Necessary Action; Further Action. If, at any time
after the Effective Time, any further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full rights and title to and possession of all assets, properties, rights,
privileges, immunities and franchises of either the Company or Merger Sub, the
officers and directors of each such corporation are fully authorized in the
name of such corporation or otherwise to take, and shall take, all such lawful
and necessary action.
2.8 Conversion of Securities. At the Effective Time, by virtue
of the Merger and without any action on the part of Merger Sub, the Company or
the holder of any of the securities of the Company or Merger Sub:
(a) Subject to Section 2.8(d) hereof, each Share issued
and outstanding immediately prior to the Effective Time (other than Shares to
be canceled pursuant to Section 2.8(b) hereof), shall be canceled and
extinguished and be converted into and represent the right to receive $2.00 in
cash, without interest (the "Merger Consideration"). All such Shares, by
virtue of the Merger and without any action on the part of the holders thereof,
shall no longer be outstanding and shall be canceled and retired and shall
cease to exist, and each holder of a certificate representing any such Shares
shall thereafter cease to have any rights with respect thereto, except the
right to receive the Merger Consideration for such Shares upon the surrender of
such certificate in accordance with Section 2.9.
(b) Each Share issued and outstanding immediately prior
to the Effective Time and held in the treasury of the Company or owned by
Parent or any direct or indirect subsidiary of Parent (including Merger Sub)
shall be canceled and retired and no payment shall be made with respect
thereto.
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(c) Each share of Common Stock, par value $.01 per
share, of Merger Sub issued and outstanding immediately prior to the Effective
Time shall be converted into and become one validly issued, fully paid and
nonassessable share of Common Stock, par value $.01 per share, of the Surviving
Corporation.
(d) Notwithstanding anything in this Agreement to the
contrary, any issued and outstanding Shares held by a person (a "Dissenting
Stockholder") who objects to the Merger and complies with all the provisions of
the DGCL concerning the right of holders of Shares to dissent from the Merger
and require appraisal of their Shares ("Dissenting Shares") shall not be
converted as described in Section 2.8(a) but shall become the right to receive
such consideration as may be determined to be due to such Dissenting
Stockholder pursuant to the laws of the State of Delaware. If, after the
Effective Time, such Dissenting Stockholder withdraws his demand for appraisal
or fails to perfect or otherwise loses his right of appraisal, in any case
pursuant to the DGCL, his Shares shall be deemed to be converted as of the
Effective Time into the right to receive the Merger Consideration. The Company
shall give Parent (i) prompt notice of any demands for appraisal of Shares
received by the Company and (ii) the opportunity to participate in and direct
all negotiations and proceedings with respect to any such demands. The Company
shall not, without the prior written consent of Parent, make any payment with
respect to, or settle, offer to settle or otherwise negotiate, any such
demands.
2.9 Exchange of Certificates.
(a) Prior to the Effective Time, Parent shall select a
bank or trust company to act as paying agent (the "Paying Agent") for the
payment of the Merger Consideration upon surrender of certificates representing
Shares.
(b) Parent shall, or shall cause the Surviving
Corporation to, provide to the Paying Agent on a timely basis, as and when
needed after the Effective Time, funds necessary to pay for the Shares as part
of the Merger pursuant to Section 2.8.
(c) As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding Shares (the "Certificates") whose Shares were converted
into the right to receive the Merger Consideration pursuant to Section 2.8, (i)
a letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon delivery
of the Certificates to the Paying Agent and shall be in a form and have such
other provisions as Parent may reasonably specify) and (ii) instructions for
use in effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to the Paying
Agent or to such other agent or agents as may be appointed by Parent, together
with such letter of transmittal, duly executed, and such other documents as may
reasonably be required by the Paying Agent, the holder of such Certificate
shall be entitled to receive in exchange therefor the amount of cash into which
the Shares theretofore represented by such Certificate shall have been
converted pursuant to Section 2.8, and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of Shares which
is not registered in the transfer
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records of the Company, payment may be made to a person other than the person
in whose name the Certificate so surrendered is registered, if such Certificate
shall be properly endorsed or otherwise be in proper form for transfer and the
person requesting such payment shall pay any transfer or other taxes required
by reason of the payment to a person other than the registered holder of such
Certificate or establish to the satisfaction of the Surviving Corporation that
such tax has been paid or is not applicable. Until surrendered as contemplated
by this Section 2.9, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender the
amount of cash, without interest, into which the Shares theretofore represented
by such Certificate shall have been converted pursuant to Section 2.8. No
interest will be paid or will accrue on the cash payable upon the surrender of
any Certificate. In the event any Certificate shall have been lost, stolen or
destroyed, Parent may, in its discretion and as a condition precedent to the
payment of the Merger Consideration in respect of shares represented by such
Certificate, require the owner of such lost, stolen or destroyed Certificate to
make an affidavit of that fact containing such indemnification provisions as
Parent may deem appropriate, including, without limitation, the posting of a
bond in such amount as Parent may reasonably direct as indemnity against any
claim that may be made against it, the Surviving Corporation or the Paying
Agent with respect to such Certificate.
(d) All cash paid upon the surrender of Certificates in
accordance with the terms of this Article 2 shall be deemed to have been paid
in full satisfaction of all rights pertaining to the Shares theretofore
represented by such Certificates, and there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the
Shares which were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation or the Paying Agent for any reason, they shall be canceled and
exchanged as provided in this Article 2.
(e) None of Parent, Merger Sub, the Company or the
Paying Agent shall be liable to any person in respect of any cash delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law. If any Certificates shall not have been surrendered prior to
seven years after the Effective Time (or immediately prior to such earlier date
on which any payment pursuant to this Article 2 would otherwise escheat to or
become the property of any federal, state or local government or any court,
administrative or regulatory agency or commission or other governmental
authority or agency, domestic or foreign (a "Governmental Entity")), the cash
payment in respect of such Certificate shall, to the extent permitted by
applicable law, become the property of the Surviving Corporation, free and
clear of all claims or interests of any person previously entitled thereto.
2.10 Transfer of Shares After Effective Date. No transfers of
Shares shall be made on the stock transfer books of the Surviving Corporation
at or after the Effective Time.
2.11 Company Stock Options. As of the Effective Time, each option
(a "Stock Option") to purchase Shares under the Company's 1989 Stock Incentive
Plan (the "1989 Plan"), 1992 Stock Incentive Plan (the "1992 Plan"), 1992
Director Incentive Plan (the "1992 Director Plan"), 1993 Stock Incentive Plan
(the "1993 Plan"), 1993 Director Incentive Plan (the "1993 Director Plan"), the
Insight Imaging Systems, Inc. 1994 Stock Option Plan (the "Insight Plan") and
the 1995 Stock
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Incentive Plan (the "1995 Plan" and together with the 1989 Plan, the 1992 Plan,
the 1992 Director Plan, the 1993 Plan, the 1993 Director Plan and the Insight
Plan, the "Stock Option Plans," true, complete and correct copies of which have
heretofore been furnished to Parent), whether or not then exercisable in
accordance with its terms, shall be converted into the right to receive, upon
the surrender of the agreement evidencing such Stock Option to the Paying Agent
in accordance with the provisions of Section 2.9 applicable to Certificates and
upon the delivery to the Paying Agent of the "Stock Option Acknowledgment"
referred to below, an amount in cash (net of applicable withholding) equal to
the excess, if any, of the Merger Consideration over the exercise price per
Share subject to such Stock Option (each, an "Option Share") multiplied by the
number of Option Shares previously subject to such Stock Option (assuming full
vesting of all Stock Options). Each holder of a Stock Option who surrenders
the agreement evidencing such Stock Option to the Paying Agent shall execute a
written acknowledgment, in form satisfactory to Parent (the "Stock Option
Acknowledgment"), that such holder's receipt of cash in exchange for such Stock
Option shall be in full settlement of such Stock Option and that such holder
understands that such Stock Option shall, as of the Effective Time, represent
only the right to receive cash in accordance with this Section 2.11 and shall
otherwise be canceled. Regardless of the number of Stock Options (if any) so
surrendered, all Stock Options shall be canceled at the Effective Time and
shall thereafter represent only the right to receive the amount of cash payable
under this Section 2.11 upon compliance with the terms hereof.
2.12 Company Warrants. As of the Effective Time, each warrant to
purchase Shares (a "Warrant"), whether or not then exercisable in accordance
with its terms, shall be converted into the right to receive, upon the
surrender of the agreement evidencing such Warrant to the Paying Agent in
accordance with the provisions of Section 2.9 applicable to Certificates and
upon the delivery to the Paying Agent of the "Warrant Acknowledgment" referred
to below, an amount in cash (net of applicable withholding) equal to the
excess, if any, of the Merger Consideration over the exercise price per share
of the Common Stock of the Company subject to such Warrant (each, a "Warrant
Share") multiplied by the number of Warrant Shares previously subject to such
Warrant. Each holder of a Warrant who surrenders the agreement evidencing such
Warrant to the Paying Agent shall execute a written acknowledgment, in form
satisfactory to Parent (the "Warrant Acknowledgment"), that such holder's
receipt of cash in exchange for such Warrant shall be in full settlement of
such Warrant and that such holder understands that such Warrant shall, as of
the Effective Time, represent only the right to receive cash in accordance with
this Section 2.12 and shall otherwise be canceled. Regardless of the number of
Warrants, if any, so surrendered, all Warrants shall be canceled at the
Effective Time and shall thereafter represent only the right to receive the
amount of cash payable under this Section 2.12 upon compliance with the terms
hereof.
ARTICLE 3 -- REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in a schedule attached to this Agreement (the
"Company Disclosure Schedule") which identifies with particularity an exception
to a representation and warranty in this Agreement, the Company represents and
warrants to Parent and Merger Sub as set forth below. A disclosure with
respect to a particular representation and warranty shall be deemed to apply to
any other representations and warranties to which it relates.
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3.1 Organization and Qualification. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power to carry on its
business as it is now being conducted and as it is proposed to be conducted.
The Company is duly qualified as a foreign corporation to do business, and is
in good standing, in each jurisdiction where the character of its properties
owned or leased or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified would not have a
"Material Adverse Effect" on the Company. As used in this Agreement, the term
"Material Adverse Effect" shall mean a material adverse effect upon the
business, financial condition, results of operations, properties, assets or
liabilities of the party affected thereby that is, or could reasonably be
expected to be, materially adverse to such party and its subsidiaries, taken as
a whole.
3.2 Certificate of Incorporation and By-Laws. The Certificate of
Incorporation and By-Laws of the Company in the forms attached to the Company
Disclosure Schedule are the Certificate of Incorporation and By-Laws of the
Company as in effect on the date of this Agreement.
3.3 Subsidiaries. The Company Disclosure Schedule lists each
subsidiary of the Company (each a "Subsidiary" and collectively the
"Subsidiaries"). Each Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has the requisite corporate power to carry on its business as
it is now being conducted. Each Subsidiary is duly qualified as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of its properties owned or leased or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
would not have a Material Adverse Effect on the Company. All of the
outstanding shares of capital stock of each of the Subsidiaries are validly
issued, fully paid and nonassessable and are owned by the Company or by a
wholly owned Subsidiary of the Company, free and clear of all liens, pledges,
claims, charges, encumbrances and security interests of any kind or nature
whatsoever ("Liens"), and there are no proxies outstanding with respect to such
shares. Except for the capital stock of its Subsidiaries, the Company does not
own, directly or indirectly, any capital stock or other ownership interest in
any other corporation, partnership, joint venture or other business association
or entity.
3.4 Capitalization. The authorized capital stock of the Company
consists of 10,000,000 Shares and 1,000,000 shares of preferred stock, par
value $.001 per share (the "Preferred Stock"). As of the date hereof:
(a) 5,479,911 Shares are outstanding;
(b) no shares of Company Common Stock are held in the
treasury of the Company or any of its Subsidiaries;
(c) (i) 58,450 shares of Company Common Stock are
reserved for issuance pursuant to the 1989 Plan, (ii) 261,000 shares of Company
Common Stock are reserved for issuance pursuant to the 1992 Plan, (iii) no
shares of Company Common Stock are reserved for issuance pursuant to the 1992
Director Plan, (iv) 480,000 shares of Company Common Stock are reserved for
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issuance pursuant to the 1993 Plan, (v) 255,000 shares of Company Common Stock
are reserved for issuance pursuant to the 1993 Director Plan (vi) 500,000
shares of Company Common Stock are reserved for issuance pursuant to the 1995
Stock Incentive Plan and (vii) 102,756 shares of Company Common Stock are
reserved for issuance pursuant to the Insight Plan and (viii) 565,284 shares of
Company Common Stock are reserved for issuance upon exercise of Warrants.
(d) Stock Options to purchase no more than 1,177,083
shares of Company Common Stock are outstanding pursuant to the Stock Option
Plans of which 263,644 Stock Options are held by persons other than Stockholder
Parties and are exercisable at a price less than $2.00;
(e) Warrants to purchase 565,284 shares of Company
Common Stock are outstanding of which no Warrants are held by persons other
than Stockholder Parties and are exercisable at a price less than $2.00;
(f) no shares of Preferred Stock are outstanding.
The Company Disclosure Schedule contains a true and complete listing of (i) all
Stock Options, the holder of each Stock Option, the number of Stock Options
held by each such holder and the exercise prices of all such Stock Options, and
(ii) all Warrants, the holders of each Warrant, the number of Warrants held by
each such holder and the exercise prices of all such Warrants.
All outstanding shares of capital stock of the Company are, and all
shares which may be issued upon the exercise of Stock Options or Warrants will,
when issued in accordance with the terms thereof against payment to the Company
of the consideration therefor specified in the applicable agreements, be duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. There are no bonds, debentures, notes or other indebtedness
of the Company having the right to vote (or convertible into, or exchangeable
for, securities having the right to vote) on any matters on which stockholders
of the Company may vote. Except as set forth above, as of the date of this
Agreement, there are no outstanding securities, options, warrants, calls,
rights, commitments, agreements, arrangements or undertakings of any kind to
which the Company or any of its Subsidiaries is a party, or by which any of
them is bound, obligating the Company or any of its Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock or other voting securities of the Company or of any of its
Subsidiaries or obligating the Company or any of its Subsidiaries to issue,
grant, extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. As of the date of this
Agreement, there are no outstanding contractual obligations (x) of the Company
or any of its Subsidiaries to repurchase, redeem or otherwise acquire any
shares of capital stock of the Company or any of its Subsidiaries or (y) of the
Company to vote or to dispose of any shares of the capital stock of any of its
Subsidiaries.
3.5 Authority Relative to this Agreement. The Company has the
requisite corporate power and authority to enter into this Agreement and to
perform its obligations hereunder. The execution and delivery of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly authorized by the Board of
Directors of the
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Company and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement and the transactions contemplated hereby,
except for any required approval of the Merger by the Company's stockholders as
set forth in Section 6.1. This Agreement has been duly executed and delivered
by the Company and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as limited
by applicable bankruptcy, insolvency, reorganization, moratorium and other laws
of general application affecting enforcement of creditors' rights generally.
Neither the Company nor any Subsidiary is subject to or obligated under any
provision of (a) its respective Certificate of Incorporation or By-Laws,
(b) any contract, (c) any license, franchise or permit, or (d) any law,
regulation, order, judgment or decree, which would be breached, violated or
defaulted (with or without due notice or lapse of time or both) or in respect
of which a right of termination or acceleration or a loss of a material benefit
or any encumbrance on any of its assets would be created or suffered by its
execution and performance of this Agreement, except (as to clauses (b), (c) or
(d) above) where such breach, violation, default, right of termination or
acceleration, loss or encumbrance, individually or in the aggregate, would not
have a Material Adverse Effect on the Company. The consummation of the Offer
and the Merger by the Company will not require the consent or approval of, or a
registration or filing with, any person or Governmental Entity, other than
(w) approval of the holders of Shares if required by applicable law or the
Company's Certificate of Incorporation or Bylaws, (x) applicable requirements,
if any, of the Exchange Act, state "blue sky" or takeover laws and the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇"),
(y) filing and recordation of appropriate merger documents as required by the
DGCL and (z) where failure to obtain such consents or approvals or to make such
registration or filing would not have, individually or in the aggregate, a
Material Adverse Effect on the Company or prevent or materially delay the
Company from performing its obligations under this Agreement.
3.6 Commission Filings. The Company has filed all required
reports, schedules, forms, statements and other documents with the SEC since
June 30, 1993. The Company has heretofore delivered to Parent its (a) Annual
Reports on Form 10-K for each fiscal year of the Company beginning with the
fiscal year ended June 30, 1993, as filed with the SEC, (b) Quarterly Reports
on Form 10-Q for each fiscal quarter of the Company beginning with the fiscal
quarter ended September 30, 1993, as filed with the SEC, (c) proxy statements
relating to the Company's meetings of stockholders (whether annual or special)
during each fiscal year beginning with the fiscal year 1993 and (d) all other
reports filed by the Company with the SEC since June 30, 1993 (collectively,
the "SEC Documents"). As of their respective dates, the SEC Documents complied
as to form in all material respects with the requirements of the Exchange Act
and the rules and regulations of the SEC promulgated thereunder and applicable
to such SEC Documents, and none of the SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein , in light of the
circumstances under which they were made, not misleading, except for such
statements, if any, as have been modified by subsequent filings prior to the
date hereof and furnished to Parent. The financial statements of the Company
included in the SEC Documents comply with applicable accounting requirements
and the rules of the SEC with respect thereto, have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
(except as may be specifically indicated therein or in the notes thereto,
except for such statements, if any, as have been modified by subsequent filings
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prior to the date hereof and furnished to Parent or, in the case of the
unaudited statements, as permitted by Form 10-Q of the SEC) during the periods
involved and fairly present the consolidated financial position of the Company
and its consolidated Subsidiaries as of the dates thereof and the consolidated
results of their operations, changes in stockholders' equity and statements of
cash flows (or changes in financial position prior to the approval of FASB 95)
for the periods then ended, subject, in the case of the unaudited consolidated
interim financial statements, to normal year-end adjustments and any other
adjustments described therein.
3.7 No Undisclosed Liabilities. Neither the Company nor any of
its Subsidiaries has any liabilities, obligations or commitments of any nature
(whether absolute, accrued, contingent or otherwise), matured or unmatured
(herein "Liabilities"), except (a) Liabilities which are adequately reflected
or reserved against in the financial statements of the Company for the quarter
ended September 30, 1996, (b) Liabilities which have been incurred in the
ordinary course of business and consistent with past practice since September
30, 1996 which individually or in the aggregate would not have a Material
Adverse Effect on the Company and (c) Liabilities under this Agreement and fees
and expenses related thereto.
3.8 Absence of Certain Changes or Events. Except as heretofore
disclosed in the SEC Documents, since the date of the most recently audited
financial statements included in the SEC Documents, the Company has conducted
its business only in the ordinary course, and there has not been:
(a) any event, act, occurrence or omission to act or
occur having or which, insofar as reasonably can be foreseen, may have, a
Material Adverse Effect on the Company;
(b) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or property) with
respect to any of the Company's capital stock;
(c) any split, combination or reclassification of any of
its capital stock or any issuance or the authorization of any issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock;
(d) (i) any granting by the Company or any of its
Subsidiaries to any executive officer of the Company or any of its Subsidiaries
of any increase in compensation, except as required under employment agreements
in effect as of the date of the most recent audited financial statements
included in the SEC Documents, (ii) any granting by the Company or any of its
Subsidiaries to any such executive officer of any increase in severance or
termination pay, except as required under any employment, severance or
termination agreement in effect as of the date of the most recent audited
financial statements included in the SEC Documents (true, complete and correct
copies of all of which agreements have heretofore been furnished to Parent),
(iii) any entry by the Company or any of its Subsidiaries into any employment,
severance or termination agreement with any such executive officer, or (iv) any
grant, whether or not to an employee of the Company or any of its Subsidiaries,
of any Stock Option or other option, warrant or right to purchase or otherwise
acquire any shares
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of capital stock of the Company or any of its Subsidiaries (other than grants
included within subsections (d) and (e) of Section 3.4);
(e) any damage, destruction or loss, whether or not
covered by insurance, that has or could, insofar as reasonably can be foreseen,
have, a Material Adverse Effect on the Company; or
(f) any change in accounting methods or principles by
the Company.
3.9 Litigation. Except as disclosed in the SEC Documents, as of
the date of this Agreement, there is no suit, action or proceeding pending or,
to the knowledge of the Company, threatened against the Company or any of its
Subsidiaries that individually or in the aggregate could reasonably be expected
to (a) have a Material Adverse Effect on the Company, (b) materially impair the
ability of the Company to perform its obligations under this Agreement or (c)
prevent the consummation of any of the transactions contemplated by this
Agreement, nor is there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against the Company or any of its
Subsidiaries having, or which is reasonably likely to have, any effect referred
to in the foregoing clauses (a), (b) or (c) above.
3.10 Absence of Changes in Benefit Plans. Except as disclosed in
the SEC Documents, since the date of the most recent audited financial
statements included in the SEC Documents, there has not been any adoption or
amendment in any material respect by the Company or any of its Subsidiaries of
any bonus, pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom stock,
retirement, vacation, severance, disability, death benefit, hospitalization,
medical or other plan, arrangement or understanding (whether or not legally
binding) providing benefits to any current or former employee, officer or
director of the Company or any of its Subsidiaries; true, complete and correct
copies of all of such plans, arrangements and understandings have heretofore
been furnished to Parent. Except as disclosed in the SEC Documents, there are
no employment, consulting, severance, termination or indemnification
agreements, arrangements or understandings in effect (other than employment and
consulting agreements which are terminable at will without liability to the
Company) between the Company or any of its Subsidiaries and any current or
former employee, officer or director of the Company or any of its Subsidiaries.
3.11 ERISA Compliance.
(a) The Company Disclosure Schedule contains a list of
each "employee pension benefit plan" (as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
(sometimes referred to herein as a "Pension Plan"), each "employee welfare
benefit plan" (as defined in Section 3(1) of ERISA) and each stock option,
stock purchase, deferred compensation plan or arrangement and each other
employee fringe benefit plan (as defined in Section 6039D(d) of the Internal
Revenue Code of 1986, as amended (the "Code")) maintained, contributed to or
required to be maintained or contributed to by the Company, any of its
Subsidiaries or any other person or entity that, together with the Company, is
treated as a single employer under Section 414(b), (c), (m) or (o) of the Code,
(each, a "Commonly Controlled Entity"), for the benefit of any
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current or former employees, officers, directors or independent contractors of
the Company or any of its Subsidiaries (collectively, "Benefit Plans"). The
Company has delivered to Parent true, complete and correct copies of (i) each
Benefit Plan (or, in the case of any unwritten Benefit Plans, descriptions
thereof), (ii) the most recent annual report on Form 5500 filed with the
Internal Revenue Service with respect to each Benefit Plan (if any such report
was required), (iii) the most recent summary plan description for each Benefit
Plan for which such summary plan description is required and (iv) each
currently effective trust agreement and insurance or group annuity contract
relating to any Benefit Plan.
(b) To the knowledge of the Company, there has been no
failure to administer any Benefit Plan in all material respects in accordance
with its terms, and no failure of the Company, its Subsidiaries or any Benefit
Plan to comply in all material respects with ERISA or the Code.
(c) All Pension Plans intended to be qualified under
Section 401(a) of the Code have been the subject of determination letters from
the Internal Revenue Service to the effect that such Pension Plans are
qualified and exempt from federal income taxes under Sections 401(a) and
501(a), respectively, of the Code and no such determination letter has been
revoked nor, to the knowledge of the Company, has revocation been threatened,
nor has any such Pension Plan been amended since the date of its most recent
determination letter or application therefor in any respect that would
adversely affect its qualification or materially increase its costs.
(d) No Pension Plan that the Company or any of its
Subsidiaries maintains, or to which the Company or any of its Subsidiaries is
obligated to contribute, other than any Pension Plan that is a "multiemployer
plan" (as such term is defined in Section 4001(a)(3) of ERISA; collectively,
the "Multiemployer Pension Plans"), had, as of the respective last annual
valuation date for each such Pension Plan, an "unfunded benefit liability" (as
such term is defined in Section 4001(a)(18) of ERISA), based on actuarial
assumptions which have been furnished to Parent, and neither the Company nor
any of its Subsidiaries is aware of any facts or circumstances that would
materially change the funded status of any such Benefit Plans. None of the
Pension Plans has an "accumulated funding deficiency" (as such term is defined
in Section 302 of ERISA or Section 412 of the Code), and there has been no
application for a waiver of the minimum funding standards imposed by Section
412 of the Code with respect to any Benefit Plan that is a Pension Plan.
(e) None of the Company, any of its Subsidiaries, any
officer of the Company or any of its Subsidiaries or any of the Benefit Plans
which are subject to ERISA, including the Pension Plans, any trusts created
thereunder or any trustee or administrator thereof, has engaged in a nonexempt
"prohibited transaction" (as such term is defined in Section 406 of ERISA or
Section 4975 of the Code) or any other breach of fiduciary responsibility that
could subject the Company, any of its Subsidiaries or any officer of the
Company or any of its Subsidiaries to tax or penalty under ERISA, the Code or
other applicable law that has not been corrected or that individually or in the
aggregate would have a Material Adverse Effect on the Company (determined
assuming that the tax under Section 4975(b) of the Code is imposed with respect
to such prohibited transaction). Any taxes or penalties arising from
prohibited transactions referred to in this Section 3.11(e) that have been
corrected have been paid in full. Neither any of such Benefit Plans nor any of
such trusts that
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are subject to Title IV of ERISA has been terminated, nor has there been any
"reportable event" (as that term is defined in Section 4043 of ERISA) with
respect thereto, during the last three years.
(f) Neither the Company nor any Commonly Controlled
Entity has suffered or otherwise caused a "complete withdrawal" or a "partial
withdrawal" (as such terms are defined in Section 4203 and Section 4205,
respectively, of ERISA) with respect to any of the Multiemployer Pension Plans
that could lead to the imposition of any withdrawal liability under Section
4201 of ERISA; and no action has been taken that alone or with the passage of
time could result in either a partial or complete withdrawal by any Commonly
Controlled Entity in respect of any such plan.
(g) With respect to any Benefit Plan that is an employee
welfare benefit plan, (i) no such Benefit Plan is funded through a "welfare
benefit fund," as such term is defined in Section 419(e) of the Code, (ii) each
such Benefit Plan that is a "group health plan," as such term is defined in
Section 5000(b)(1) of the Code, complies in all material respects with the
applicable requirements of Section 4980B(f) of the Code and (iii) each such
Benefit Plan (including any such Plan covering retirees or other former
employees) may be amended or terminated without material liability to the
Company or any of its Subsidiaries on or at any time after the consummation of
the Offer, after giving any notice required by ERISA or the Code.
(h) No Commonly Controlled Entity has incurred any
material liability to a Pension Plan (other than for contributions not yet
due).
3.12 Taxes.
(a) Each of the Company and each of its Subsidiaries has
filed all material tax returns and reports required to be filed by it
("Returns"). All such Returns are complete and correct in all material
respects. Each of the Company and each of its Subsidiaries has paid (or the
Company has paid on its behalf or made provision for) all material taxes
required to be paid by it, and the most recent financial statements contained
in the SEC Documents properly reflect in accordance with generally accepted
accounting principles all material taxes payable by the Company and its
Subsidiaries for all taxable periods and portions thereof through the date of
such financial statements.
(b) No material deficiencies for any taxes have been
proposed, asserted or assessed against the Company or any of its Subsidiaries
that have not been fully paid or are not properly reflected in accordance with
generally accepted accounting principles in the most recent financial
statements contained in the SEC Documents, other than those taxes being
contested in good faith, and no requests for waivers of the time to assess any
such taxes are pending. The Company has not agreed with any tax authority to
extend the time to assess any such taxes. The Company has not entered into any
closing agreement with respect to any taxable year.
(c) The Company Disclosure Schedule sets forth (i) the
taxable years of the Company or any of its Subsidiaries as to which the
respective statutes of limitations with respect to federal income taxes have
not yet expired, and (ii) those taxable years and taxes as to which the Company
has agreed to extend the applicable statute of limitations.
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(d) None of the Company or any of its Subsidiaries has,
and none of them has ever had, a permanent establishment in any non-U.S.
country, as defined in any applicable tax treaty or convention between the
United States and such non-U.S. country, or any presence in a non-U.S. country
with which the United States does not have a tax treaty or convention that
could subject the Company or any Subsidiary to the tax laws of such non-U.S.
country.
(e) As used in this Agreement, "taxes" shall include all
federal, state, local and foreign income, property, sales, excise and other
taxes, tariffs or duties of any nature whatsoever.
(f) The Company is not a party to any agreements that
could reasonably be expected to result in any payments that would be
characterized as "excess parachute payments" (as such term is defined in
Section 280G(b)(1) of the Code.
3.13 Information Supplied. None of the information supplied or to
be supplied by the Company in writing specifically for inclusion in, and none
of the information specifically to be incorporated by reference in, (a) the
Offer Documents, (b) the Schedule 14D-9, (c) the information statement to be
filed by the Company in connection with the Offer pursuant to Rule 14f-1
promulgated under the Exchange Act (the "Information Statement"), if any, or
(d) any proxy statement (the "Proxy Statement") relating to the "Stockholders
Meeting" (as defined in Section 6.1(a)), will, in the case of the Offer
Documents, the Schedule 14D-9 and the Information Statement, at the respective
times that the Offer Documents, the Schedule 14D-9 and the Information
Statement are filed with the SEC or first published, sent or given to the
Company's stockholders, or, in the case of the Proxy Statement, at the time the
Proxy Statement is first mailed to the Company's stockholders or at the time of
the Stockholders Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Schedule 14D- 9, the Information Statement
and the Proxy Statement will comply in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder,
except that no representation or warranty is made by the Company with respect
to statements made or incorporated by reference therein based on information
supplied in writing by Parent or Merger Sub specifically for inclusion or
incorporation by reference therein.
3.14 Compliance with Applicable Laws.
(a) Each of the Company and each of its Subsidiaries has
in effect all material federal, state, local and foreign governmental
approvals, authorizations, certificates, filings, franchises, licenses,
notices, permits and rights ("Permits") necessary for it to own, lease or
operate its properties and assets and to carry on its business as now
conducted, and there has occurred no default under any such Permit, except for
the lack of Permits and for defaults under Permits which lack or default
individually or in the aggregate would not have a Material Adverse Effect on
the Company.
(b) Except as disclosed in the SEC Documents, to the
knowledge of the Company, the businesses of the Company and its Subsidiaries
are not being conducted in violation of any law,
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ordinance or regulation of any Governmental Entity, except for violations that
would not have a Material Adverse Effect on the Company. As of the date of
this Agreement, no investigation or review by any Governmental Entity with
respect to the Company or any of its Subsidiaries is pending or, to Company's
knowledge, threatened, nor has any Governmental Entity communicated to the
Company an intention to conduct any such investigation or review.
(c) Except as disclosed in the SEC Documents, each of
the Company and its Subsidiaries is, and has been, and each of the Company's
former Subsidiaries, while Subsidiaries of the Company, was, in material
compliance with all applicable "Environmental Laws" (as defined below), except
for noncompliance that would not have a Material Adverse Effect on the
Company). The term "Environmental Laws" means any federal, state or local
statute, code, ordinance, rule, regulation, policy, guideline, permit, consent,
approval, license, judgment, order, writ, decree, directive or injunction now
in effect, including the requirement to register underground storage tanks,
relating to: (i) "Releases" (as defined below) or threatened Releases of
"Hazardous Material" (as defined below) into the environment, including into
ambient air, soil, sediments, land surface or subsurface, buildings or
facilities, surface water, groundwater, publicly-owned treatment works, septic
systems or land; or (ii) the generation, treatment, storage, disposal, use,
handling, manufacturing, transportation or shipment of Hazardous Material.
(d) During the period of ownership or operation by the
Company and its current and former Subsidiaries of any of their respective
current or previously owned or leased properties, the Company has no knowledge
of any Releases of Hazardous Material in, on, under or affecting such properties
that would trigger reporting or cleanup obligations on the part of the Company
or its Subsidiaries under applicable environmental laws, and none of the Company
or its current and former Subsidiaries has disposed of any Hazardous Material or
any other substance in a manner that could reasonably be anticipated to lead to
a Release in, on or affecting such properties. To the Company's knowledge,
prior to the period of ownership or operation by the Company and its current and
former Subsidiaries of any of their respective current or previously owned or
leased properties, no Hazardous Material was generated, treated, stored,
disposed of, used, handled or manufactured at, or transported, shipped or
disposed of from, such current or previously owned properties, and the Company
has no knowledge of any Releases of Hazardous Material in, on, under or
affecting any such property that would trigger reporting or cleanup obligations
on the part of the Company or its Subsidiaries under applicable environmental
laws. The term "Release" has the meaning set forth in 42 U.S.C. Section
9601(22). The term "Hazardous Material" means (i) hazardous materials,
pollutants, contaminants, constituents, medical or infectious wastes, hazardous
wastes and hazardous substances as those terms are defined in the following
statutes and their implementing regulations: the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801 et seq., the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901 et seq., the Comprehensive
Environmental Response, Compensation and Liability Act, as amended by the
Superfund Amendments and Reauthorization Act, 42 U.S.C. Section 9601 et seq.,
the Clean Water Act, 33 U.S.C. Section 1251 et seq., the Toxic Substances
Control Act, 15 U.S.C. Section 2601 et seq. and the Clean Air Act, 42 U.S.C.
Section 7401 et seq., (ii) petroleum, including crude oil and any fractions
thereof, (iii) natural gas, synthetic gas and any mixtures thereof, (iv)
asbestos and/or asbestos-containing material, (v) radon and (vi) PCBs, or
materials or fluids containing PCBs.
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3.15 State Takeover Statutes. The Board of Directors of the
Company has approved the Offer, the Merger, this Agreement and the
Stockholder Agreements, and such approval is sufficient to render inapplicable
to the Offer, the Merger, this Agreement and the Stockholder Agreements and the
transactions contemplated by this Agreement and the Stockholder Agreements the
provisions of Section 203 of the DGCL. No other state takeover statute or
similar statute or regulation applies or purports to apply to the Offer, the
Merger, this Agreement, the Stockholder Agreements or any of the transactions
contemplated by this Agreement or the Stockholder Agreements.
3.16 Brokers; Schedule of Fees and Expenses. No broker,
investment banker, financial advisor or other person, other than ▇▇▇▇▇▇ Gull
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇ Gull"), the fees and expenses of which will be paid
by the Company and a signed copy of the Company's engagement letter with which
has been delivered to Parent, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company. A good faith estimate of the fees and expenses
incurred and to be incurred by the Company in connection with this Agreement
and the transactions contemplated by this Agreement (including the fees of the
Company's legal counsel) is set forth in the Company Disclosure Schedule. No
valid claim exists against the Company or the Surviving Corporation or, based
on any action by the Company or any Subsidiary, against Parent or Merger Sub
for payment of any "topping," "break-up" or "bust-up" fee or any similar
compensation or payment arrangement as a result of the transactions
contemplated hereby, including the Offer and the Merger.
3.17 Contracts; Debt Instruments.
(a) Except as disclosed in the SEC Documents, there is
no contract or agreement, written or oral that is material to the business,
condition (financial or otherwise), properties, assets, results of operations
of the Company or its Subsidiaries (a "Material Contract"); true, complete and
correct copies of all such Material Contracts, or written summaries of oral
agreements, have heretofore been furnished to Parent. For the purposes hereof,
"Material Contracts" shall mean (i) all contracts that are considered to be
"material" within the meaning of Item 601(b)(10) of Regulation S-K promulgated
under the Securities Act of 1933, as amended, and the Exchange Act and (ii) all
other agreements (whether or not material within the meaning of Regulation S-K)
that (A) limit the ability of the Company to engage or compete in any business,
whether or not such business is currently conducted by the Company, (B)
obligate the Company or the other party or parties thereto to pay an amount in
excess of $50,000 at one time or over a period of time, (C) provide for the
employment of any individual by the Company or any of its Subsidiaries, (D)
provide for the distribution of the Company's products, (E) provide for the
license by or from the Company of any patents, copyrights, trademarks or other
intellectual property, or (F) provide for the settlement or compromise of any
litigation. All such Material Contracts are in full force and effect, and, to
the Company's knowledge, the parties thereto other than the Company and its
Subsidiaries have complied and are complying with all of their obligations and
are not in default under (nor, to the Company's knowledge, does there exist any
condition which upon the passage of time or the giving of notice would
reasonably be expected to cause such a violation of or default under) any of
such Material Contracts. Neither the Company nor any of its Subsidiaries is in
violation of or in default under (nor
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does there exist any condition which upon the passage of time or the giving of
notice would reasonably be expected to cause such a violation of or default
under) any loan or credit agreement, note, bond, mortgage, indenture, lease,
permit, concession, franchise, license or any other contract, agreement,
arrangement or understanding to which it is a party or by which it or any of
its properties or assets is bound, except where such violation or default would
not have a Material Adverse Effect on the Company.
(b) Set forth on the Company Disclosure Schedule is (i)
a list of all loan or credit agreements, notes, bonds, mortgages, indentures
and other agreements and instruments (other than accounts payable) pursuant to
which any indebtedness of the Company or any of its Subsidiaries is outstanding
or may be incurred and (ii) the respective principal amounts currently
outstanding thereunder. For purposes of this Agreement, "indebtedness" shall
mean, with respect to any person, without duplication, (A) all obligations of
such person for borrowed money, or with respect to deposits or advances of any
kind to such person, (B) all obligations of such person evidenced by bonds,
debentures, notes or similar instruments, (C) all obligations of such person
upon which interest charges are customarily paid, (D) all obligations of such
person under conditional sale or other title retention agreements relating to
property purchased by such person, (E) all obligations of such person issued or
assumed as the deferred purchase price of property or services (excluding
obligations of such person to creditors for raw materials, inventory, services
and supplies incurred in the ordinary course of such person's business), (F)
all capitalized lease obligations of such person, (G) all obligations of others
secured by any lien on property or assets owned or acquired by such person,
whether or not the obligations secured thereby have been assumed, (H) all
obligations of such person under interest rate or currency hedging transactions
(valued at the termination value thereof), (I) all letters of credit issued for
the account of such person and (J) all guarantees and arrangements having the
economic effect of a guarantee of such person of any indebtedness of any other
person.
3.18 Title to Properties.
(a) Each of the Company and each of its Subsidiaries has
good and marketable title to, or valid leasehold interests in, all its
properties and assets, free and clear of all Liens, other than (i)
materialmen's, mechanics', carriers', workers', repairmen's and other similar
Liens arising or incurred in the ordinary course of business, or statutory
landlords' Liens under leases to which the Company is a party, with respect to
which the underlying obligation is not in default, (ii) the statutory rights of
third parties with respect to inventory or work in progress under orders or
contracts entered into by the Company in the ordinary course of business, (iii)
Liens that are immaterial in amount and do not materially impair the present
or contemplated use of the properties or assets subject thereto or affected
thereby, or otherwise materially impair present or contemplated business
operations in which such properties are used, (iv) as reflected in the
financial statements included in the Company's Form 10-Q for the fiscal quarter
ended September 30, 1996, (v) Liens for taxes not yet delinquent, and (vi)
claims consisting of leases with respect to which the underlying obligation is
not in default.
(b) Each of the Company and each of its Subsidiaries has
complied in all material respects with the terms of all leases of which it is a
party and under which it is in occupancy, all such leases are in full force and
effect and, to the Company's knowledge, the parties thereto other than the
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Company and its Subsidiaries have complied and are complying with all of their
obligations and are not in default under (nor does there exist any condition
which upon the passage of time or the giving of notice would reasonably be
expected to cause such a violation of or default under) any of such leases.
Each of the Company and each of its Subsidiaries enjoys peaceful and
undisturbed possession under all such leases.
3.19 Labor Matters. There are no collective bargaining or other
labor union agreements to which the Company or any of its Subsidiaries is a
party or by which any of them is bound. Neither the Company nor any of its
Subsidiaries has encountered any labor union organizing activity, or had any
actual or, to the Company's knowledge, threatened employee strikes, work
stoppages, slowdowns or lockouts.
3.20 Insurance. As of the date hereof, the Company and each of
its Subsidiaries are covered under insurance policies and programs which
provide coverage to the Company against such losses and risks and in such
amounts as are adequate and customary in the businesses in which they are
engaged; true, complete and correct copies of all such policies and programs
have heretofore been furnished to Parent. All material policies of insurance
and fidelity or surety bonds insuring the Company or any of its Subsidiaries or
their respective businesses, assets, employees, officers and directors are in
full force and effect. Except as otherwise disclosed pursuant to Section 3.9,
as of the date hereof, there are no material claims by the Company or any
Subsidiary under any such policy or instrument as to which any insurance
company is denying liability or defending under a reservation of rights clause.
All necessary notifications of claims have been made to insurance carriers.
3.21 Intellectual Property Matters.
(a) The Company owns or has the right to use, free and
clear of all Liens, charges, claims and restrictions, all know-how, processes,
patents, trade secrets, trademarks, service marks, trade names, copyrights,
licenses, proprietary rights and other intellectual property rights materially
necessary to its business as now conducted or contemplated (the "Company
Intellectual Property Rights"). Any license agreement by which any Company
Intellectual Property Right is licensed by the Company from a third party has
heretofore been furnished to Parent.
(b) To the Company's knowledge it is not infringing upon
or otherwise acting adversely to any actual or claimed know-how, process,
patent, trade secret, trademark, service ▇▇▇▇, trade name, copyright, license,
information, proprietary right or other right of any person. The Company has
not received any communications alleging that the Company has violated or, by
conducting its business as now conducted or currently proposed to be conducted
by the Company, would violate any know-how, process, patent, trade secret,
trademark, service ▇▇▇▇, trade name, copyright, license, or other proprietary
right of any person, and, to the Company's knowledge, there is no basis for any
such allegation.
(c) To the Company's knowledge, there is no actual or
threatened infringement or adverse use of the Company's Intellectual Property
Rights. There are no outstanding options, licenses or agreements of any kind
relating to any Company Intellectual Property Rights in favor of
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any third party (other than license agreements on the Company's standard form
entered into in the ordinary course of business).
(d) To the Company's knowledge, neither the execution
nor delivery of this Agreement, nor the carrying on of the Company's business
by the employees of the Company, nor the conduct of the Company's business as
now conducted or under development, will conflict with or result in a breach of
the terms, conditions or provisions of, or constitute a default under or a
violation of, any fiduciary duty or any contract, covenant or instrument under
which any of such employees is now obligated. To the Company's knowledge, it
is not, nor will it be necessary to, utilize any inventions of any of the
Company's employees made prior to their employment by the Company.
(e) No present or former employee of the Company or its
Subsidiaries and no other person owns or has any proprietary, financial or
other interest, direct or indirect, in whole or in part, in any Company
Intellectual Property Rights. The Company Disclosure Schedule lists all
confidentiality or non-disclosure agreements to which the Company or its
Subsidiaries or any of its or their employees is a party, other than customary
agreements on the Company's standard form with employees who are not officers
or directors.
3.22 Payments. Neither the Company nor any of its Subsidiaries
has paid or delivered any fee, commission or other sum of money or item of
property to any finder, agent, government official or other party, in the
United States or any other country, which is related to the business or
operations of the Company or any of its Subsidiaries, which the Company knows
or has reason to believe to have been illegal under any federal, state or local
laws of the United States or any other country having jurisdiction; and to the
Company's knowledge, neither the Company nor any of its Subsidiaries has
participated in any illegal boycotts or other similar practices affecting any
of its actual or potential customers. To the Company's knowledge, the Company
and its Subsidiaries are in compliance in all material respects with the
Foreign Corrupt Practices Act.
3.23 Suppliers and Customers. There are no material agreements
which commit the Company or any of its Subsidiaries to sell products or
purchase materials or components at fixed prices or prices determined by an
established formula, other than purchase orders on the Company's standard form
for normal commercial quantities entered into in the ordinary course. Except
as disclosed in the SEC Documents, no customer accounted for more than five
percent of the Company's or any of its Subsidiaries sales in either of the past
two fiscal years (any such customer being a "Material Customer") and no
supplier material to the business of the Company and its Subsidiaries, taken as
a whole, or Material Customer has terminated its relationship with the Company
or any of its Subsidiaries or has during the past fiscal year materially
decreased or delayed, or, to the Company's knowledge, threatened to materially
decrease or delay its services or supplies to the Company or any of its
Subsidiaries or decrease its usage of the Company's or any of its Subsidiaries'
products or services. None of the Company or any of its Subsidiaries is aware
of any facts or events which may reasonably be expected to form the basis for
such a decrease or delay. Set forth on the Company Disclosure Schedule is a
complete and accurate list of:
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(a) each supplier where purchases exceeded $74,000 for
the six months ended December 31, 1996;
(b) each customer to whom sales exceeded $42,000 for the
six months ended December 31, 1996 and the aggregate sales with respect to each
such customer; and
(c) each supplier who constitutes a single source of
supply to the Company or any of its Subsidiaries where purchases exceeded
$25,000 for the last fiscal year.
3.24 Regulatory Matters.
(a) None of the Company or any of its Subsidiaries sells
any products for which a premarket approval of or 510(k) notification to the
U.S. Food and Drug Administration ("FDA") or any other federal, state, local,
non-U.S. or other governmental authority is required, or for which applications
for premarket approval or premarket notification have been filed or granted,
and there are no products sold by the Company or any of its Subsidiaries which
are, and none of the Company or any of its Subsidiaries is, otherwise subject
to the jurisdiction of the FDA or any similar state, local, non-U.S. or other
governmental authority.
(b) To the Company's knowledge, there exists no set of
facts which would cause the Company or any of its Subsidiaries to recall any
product from the market or to restrict the marketing of any product or to
terminate or suspend testing of any product.
ARTICLE 4 -- REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company as follows:
4.1 Organization and Qualification. Each of Parent and Merger
Sub is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the requisite corporate power
to carry on its business as now conducted and as proposed to be conducted.
4.2 Authority Relative to this Agreement. Each of Parent and
Merger Sub has the requisite corporate power and authority to enter into this
Agreement and to carry out its respective obligations hereunder. The execution
and delivery of this Agreement by Parent and Merger Sub and the consummation by
Parent and Merger Sub of the transactions contemplated hereby have been duly
authorized by the respective Boards of Directors of Parent and Merger Sub and
by Parent as the sole stockholder of Merger Sub, and no other corporate
proceedings on the part of Parent or Merger Sub are necessary to authorize this
Agreement or the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Parent and Merger Sub and constitutes a valid
and binding obligation of each such company, enforceable against such company
in accordance with its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally. Neither Parent nor
Merger
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Sub is subject to or obligated under any provision of (a) its respective
Certificate of Incorporation or Bylaws, (b) any contract, (c) any license,
franchise or permit or (d) any law, regulation, order, judgment or decree,
which would be breached, or violated or defaulted (with or without due notice
or lapse of time or both) or in respect of which a right of termination or
acceleration or a loss of a material benefit or any encumbrance on any of its
assets would be created by its execution and performance of this Agreement,
except (as to (b), (c) or (d) above) where such breach, violation or right
would not, individually or in the aggregate have a Material Adverse Effect on
Parent or prevent or materially delay Parent or Merger Sub from performing its
obligations under this Agreement. The consummation of the Offer and the Merger
by Parent and Merger Sub will not require the consent or approval of any party
other than (x) applicable requirements, if any, of the Exchange Act, state
"blue sky" or takeover laws and the HSR Act, (y) filing and recordation of
appropriate merger documents as required by the DGCL and (z) where failure to
obtain such consents or approvals would not, individually or in the aggregate,
have a Material Adverse Effect on Parent or prevent or materially delay Parent
or Merger Sub from performing its obligations under this Agreement.
4.3 Financing. Parent has, or has the borrowing facilities to
obtain, all funds necessary for the payment of the aggregate purchase price of
the Shares in the Offer and the Merger and any and all amounts which may become
payable under Sections 2.11 and 2.12 hereof and to pay all of its related fees
and expenses pursuant to the Offer and the Merger.
4.4 Ownership of Company Securities. Parent is not now, and has
not during the three- year period ending on the date hereof been, the direct or
indirect owner of 15% or more of the outstanding voting securities of the
Company (for purposes of this representation, Parent shall not be deemed to own
any Shares by virtue of the execution of the Stockholder Agreements).
4.5 Information Supplied. None of the information supplied or to
be supplied by Parent or Merger Sub specifically for inclusion in, and none of
the information specifically to be incorporated by reference in, (a) the Offer
Documents, (b) the Schedule 14D-9, (c) the Information Statement, if any, or
(d) any Proxy Statement will, in the case of the Offer Documents, the Schedule
14D-9 and the Information Statement, at the respective times that the Offer
Documents, the Schedule 14D-9 and the Information Statement are filed with the
SEC or first published, sent or given to the Company's stockholders, or, in the
case of the Proxy Statement, at the time the Proxy Statement is first mailed to
the Company's stockholders or at the time of the Stockholders Meeting, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
4.6 Capitalization. The authorized capital stock of Merger Sub
consists of 1,000 shares of common stock. As of the date hereof, there are 100
shares of common stock of Merger Sub outstanding. All outstanding shares of
capital stock of Merger Sub are duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights.
4.7 Financial Advisor. Since January 1, 1995, ▇▇▇▇▇▇ Gull has
not been engaged by, has not provided any investment banking or other financial
advisory services to, and has not been paid
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for the provision of any such services by, Parent, Merger Sub or any of their
subsidiaries or affiliates; provided, however, ▇▇▇▇▇▇ Gull may have, since
January 1, 1995, made a market in and traded, and may in the future make a
market in and trade, securities of Parent in the ordinary course of its
business for its own account and the account of its customers. This
representation and warranty is intended to benefit the Company and each member
of its Board of Directors each of whom shall be a third party beneficiary of
this Section 4.7.
ARTICLE 5 -- CONDUCT OF BUSINESS PENDING THE MERGER
5.1 Conduct of Business by the Company Pending the Merger. The
Company covenants and agrees that, from the date hereof until the Effective
Time, unless expressly contemplated by this Agreement or as may be agreed to in
writing by Parent:
(a) The businesses of the Company and its Subsidiaries
shall be conducted only in the ordinary course of business and consistent with
past practice;
(b) the Company shall not, and shall not permit any of
its Subsidiaries to: (i) sell or pledge or agree to sell or pledge any stock
owned by it in any of its Subsidiaries; (ii) amend its Certificate of
Incorporation or By-Laws; or (iii) split, combine or reclassify any shares of
its outstanding capital stock or declare, set aside or pay any dividend or
other distribution payable in cash, stock or property or redeem or otherwise
acquire any shares of its capital stock;
(c) the Company shall not, and shall cause each of its
Subsidiaries not to: (i) authorize for issuance, issue or sell any additional
shares of, or rights of any kind to acquire any shares of, its capital stock of
any class (whether through the issuance or granting of stock options, warrants,
convertible securities, commitments, subscriptions, rights to purchase or
otherwise), except for unissued Shares reserved for issuance upon the exercise
of Stock Options or Warrants outstanding on the date hereof in accordance with
their existing terms; (ii) acquire, dispose of, transfer, lease, license,
mortgage, pledge or encumber any material assets; (iii) incur, assume or prepay
any indebtedness for borrowed money or any other material liabilities, except
accounts payable incurred in the ordinary course of business consistent with
past practice, or issue or sell any debt securities or warrants or rights to
acquire debt securities of the Company or any of its Subsidiaries; (iv) assume,
endorse (other than in the ordinary course of business consistent with past
practices), guarantee or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the material obligations of any other
person; (v) make any loans, advances or capital contributions to, or
investments in, any other person or otherwise enter into any Material Contract
other than in the ordinary course of business and consistent with past
practices; (vi) make any loans to employees, other than travel advances in the
ordinary course of business; (vii) fail to maintain adequate insurance
consistent with past practices for its business and properties;
(viii) undertake, make or commit to undertake or make any capital expenditures
in an amount greater than $10,000 per individual capital expenditure and no
more than $25,000 per month in the aggregate (on a combined basis for the
Company and the Subsidiaries); or (ix) enter into any contract, agreement,
commitment or arrangement with respect to any of the foregoing;
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(d) the Company shall use its reasonable best efforts
consistent with past practice to preserve intact the business organization of
the Company and its Subsidiaries, keep available the services of its and their
present officers and employees, and preserve its existing relationships with
customers, suppliers and others with which it and its respective Subsidiaries
have business dealings;
(e) the Company shall not, and shall cause its
Subsidiaries not to, (i) enter into any new agreements or amend or modify any
existing agreements with any of its respective officers, directors or employees
or with any "disqualified individuals" (as defined in Section 280G(c) of the
Code), (ii) grant any increases in the compensation of its respective
directors, officers and employees or any "disqualified individuals" (as defined
in Section 280G(c) of the Code) other than (A) pursuant to written agreements
in effect at the date hereof, true, complete and correct copies of all of which
have previously been furnished to Parent by the Company, or (B) increases in
the ordinary course of business and consistent with past practice to persons
who are not directors or corporate officers of or "disqualified individuals"
with respect to the Company or any Subsidiary, (iii) enter into, adopt, amend
or terminate, or grant any new benefit not presently provided for under, any
employee benefit plan or arrangement, except as required by law or to maintain
the tax qualified status of the plan; provided, however, that the Company or
its subsidiaries may terminate to the extent permitted by applicable law any
benefit or any employee benefit plan or arrangement or (iv) take any action
with respect to the grant of any severance or termination pay other than in the
ordinary course of business and consistent with past practice and pursuant to
policies in effect on the date of this Agreement;
(f) the Company shall not, and shall not permit any
Subsidiary to, acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, association or other business
organization or division thereof or otherwise acquire or agree to acquire any
assets (other than equipment, inventory and supplies in the ordinary course of
business);
(g) the Company shall not, and shall not permit any of
its Subsidiaries to, sell, lease, license, encumber or otherwise dispose of, or
agree to sell, lease, license, encumber or otherwise dispose of, any of its
material assets;
(h) the Company shall take all actions reasonably
necessary so that the conditions set forth in the Appendix which require
actions to be performed by the Company are satisfied on a timely basis, except
as contemplated by this Agreement;
(i) unless the Company receives a "Superior Acquisition
Proposal" (as defined in Section 6.5(b) hereof), the Company will not call any
meeting of its stockholders to be held prior to March 25, 1997 other than as
required by this Agreement;
(j) the Company shall not, and shall not permit any
Subsidiary to, make any tax election or settle (except to settle reserved
amounts for an amount equal to or less than the amount so reserved) or
compromise any income tax liability;
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(k) the Company and each Subsidiary shall make timely
payments, in accordance with the terms applicable thereto, of all currently due
liabilities for borrowed money;
(l) the Company shall not, and shall not permit any
Subsidiary to, pay, discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge, settlement or satisfaction, in
the ordinary course of business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved against in the most
recent consolidated financial statements (or the notes thereto) of the Company
included in the SEC Documents;
(m) the Company shall not, and shall not permit any
Subsidiary to, modify, amend or terminate any Material Contract, lease of real
property or of a material amount of assets, or agreement relating to
indebtedness or the extension of credit, or waive, release or assign any rights
or claims thereunder; and
(n) the Company shall maintain in full force and effect
its current policies of directors' and officers' liability insurance covering
all persons who are presently covered by such policies.
5.2 Actions by Parent and Merger Sub Pending the Merger. None of
the provisions contained in Section 5.1 of this Agreement shall prohibit Parent
or Merger Sub (or any of their respective subsidiaries), during the period
between the payment for Shares pursuant to the Offer and the Effective Time,
from taking or causing to be taken any action with respect to the business of
the Company and its Subsidiaries that Parent or Merger Sub (or any of their
respective subsidiaries) would legally be permitted to take or cause to be
taken with respect to a majority owned subsidiary of Parent or Merger Sub (or
any of their respective subsidiaries), provided that Parent shall not take any
action in violation of the terms of this Agreement that would cause Parent's
obligations to effect the Merger hereunder to not be satisfied and provided
further that any such action taken by or at the direction of Parent or Merger
Sub (or any of their respective subsidiaries) shall not cause a breach by the
Company of any of the provisions of Section 5.1 of this Agreement.
ARTICLE 6 -- ADDITIONAL AGREEMENTS
6.1 Stockholder Approval; Preparation of Proxy Statement.
(a) If the approval of the Merger by the Company's
Stockholders (the "Company Stockholder Approval") is required by law, the
Company will, at Parent's request, as soon as practicable in accordance with
applicable law following acceptance for payment of and payment for shares of
Company Common Stock, duly call, give notice of, convene and hold a meeting of
its stockholders (the "Stockholders' Meeting") for the purpose of obtaining
such Company Stockholder Approval. The Company will, through its Board of
Directors, subject to Section 6.5(b) hereof, recommend to its stockholders that
such Company Stockholder Approval be given. Notwithstanding the foregoing, if
Parent, Merger Sub or any other subsidiary of Parent shall acquire at least 90%
of
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the outstanding Shares, the parties shall, at the request of Parent, take all
necessary and appropriate action to cause the Merger to become effective as
soon as practicable after the expiration of the Offer without a Stockholders'
Meeting in accordance with Section 253 of the DGCL. Without limiting the
generality of the foregoing, the Company agrees that its obligations pursuant
to the first sentence of this Section 6.1(a) shall not be affected by (i) the
commencement, public proposal, public disclosure or communication to the
Company of any "Acquisition Proposal" (as defined in Section 6.5(a)) that is
not a "Superior Acquisition Proposal" (as defined in Section 6.5(b)) or (ii)
the withdrawal or modification by the Board of Directors of the Company of its
approval or recommendation of the Offer, this Agreement or the Merger.
(b) If the Company Stockholder Approval is required by law,
the Company will, at Parent's request, as soon as practicable following
acceptance for payment of and payment for shares of Company Common Stock,
prepare and file a preliminary Proxy Statement (or, if applicable, an
information statement in lieu of proxy statement pursuant to Rule 14C under the
Exchange Act, with all references herein to the Proxy Statement being deemed to
refer to such information statement, to the extent applicable) with the SEC and
will use its best efforts to respond to any comments of the SEC or its staff
and to cause the definitive Proxy Statement to be mailed to the Company's
stockholders as promptly as practicable after responding to all such comments
to the satisfaction of the SEC staff. The Company will notify Parent promptly
of the receipt of any comments from the SEC or its staff and of any request by
the SEC or its staff for amendments or supplements to the Proxy Statement or
for additional information and will supply Parent with true, complete and
correct copies of all correspondence between the Company or any of its
representatives, on the one hand, and the SEC or its staff, on the other hand,
with respect to the Proxy Statement or the Merger. If at any time prior to the
Stockholders' Meeting there shall occur any event that should be set forth in
an amendment or supplement to the Proxy Statement, the Company will promptly
prepare and mail to its stockholders such an amendment or supplement. The
Company will not mail any Proxy Statement, or any amendment or supplement
thereto, to which Parent reasonably objects, it being understood that Parent
may not reasonably object to the inclusion of information deemed necessary by
the Company, upon the written advice of its outside counsel, in order to comply
with the Exchange Act and the rules and regulations promulgated thereunder.
(c) Parent agrees to cause all Shares purchased pursuant to
the Offer and all other Shares owned by Merger Sub or any other subsidiary of
Parent to be voted in favor of the Company Stockholder Approval.
6.2 Stock Options and Warrants . Within five business days after
the commencement of the Offer, the Company will notify in writing each holder
of a Stock Option under the Stock Option Plans and each holder of a Warrant of
the effect of the Merger on the rights of the option holder and warrant holder
as described in Section 2.11 and Section 2.12, respectively.
6.3 Expenses.
(a) Except as provided in Section 6.3(b) below, whether or
not the Offer and/or the Merger are consummated, each of the Company and Parent
will separately bear its own expenses,
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including the fees and disbursements of counsel, investment bankers and
accountants, incurred in connection with the Offer, the Merger, this Agreement
and the transactions contemplated hereby.
(b) If the Company or any Affiliate or Agent (as defined
in Section 6.5) of the Company shall fail to fulfill its obligations under
Section 6.5, or shall enter into an agreement which contemplates the sale of
all or any material portion of the assets of, or any equity interest in, the
Company to a third party, or the parties to the Stockholder Agreements or any
of them shall enter into an agreement which contemplates such a transaction,
then, in any such case, the Company shall promptly reimburse Parent for all of
its out-of-pocket expenses incurred in connection with the Offer, the Merger,
this Agreement, the Stockholder Agreements or any transactions contemplated by
this Agreement or the Stockholder Agreements.
6.4 Other Actions. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by the Offer and this
Agreement, including (a) consummation of the Offer and payment for the Shares
duly and properly tendered therein, (b) filing the Certificate of Merger
referred to in Section 2.2, (c) removing any legal impediment to the
consummation or effectiveness of such transactions and (d) obtaining all
necessary waivers, consents and approvals and to effect all necessary
registrations and filings, including, but not limited to, filings under the HSR
Act and submissions of information requested by governmental authorities,
subject to the appropriate vote of stockholders of the Company required to so
vote as described in Section 6.1(a).
6.5 Exclusive Dealing.
(a) Neither the Company nor any of its Subsidiaries,
officers, directors, or the directors and officers of its Subsidiaries, nor any
of its other affiliates (each, an "Affiliate") shall, and the Company shall
cause its and its respective Affiliates' employees, agents and representatives
(including, without limitation, any investment banking, legal or accounting
firm retained by the Company or any of its Affiliates and any individual member
or employee of the foregoing) (each, an "Agent") not to: (i) initiate, solicit
or seek, directly or indirectly, any inquiries or the making or implementation
of any proposal or offer (including, without limitation, any proposal or offer
to its stockholders or any of them) with respect to a merger, acquisition,
consolidation, recapitalization, liquidation, dissolution or similar
transaction involving, or any purchase of all or a substantial portion of the
assets or any equity securities of, the Company or any of its Subsidiaries,
except for the transactions contemplated by this Agreement (any such proposal
or offer being hereinafter referred to as an "Acquisition Proposal"); or (ii)
engage in any negotiations concerning, or provide any confidential information
or data to, or have any discussions with, any person relating to an Acquisition
Proposal; or (iii) otherwise cooperate in any effort or attempt to make,
implement or accept an Acquisition Proposal; provided, however, that the
Company may, if it receives an Acquisition Proposal which was not directly or
indirectly initiated, solicited or otherwise sought by the Company or by any of
its Affiliates or its or their respective Agents, and which is a Superior
Acquisition Proposal (as defined below), respond to such Superior Acquisition
Proposal by engaging
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in negotiations with respect thereto and providing nonpublic information
concerning the Company to the person making such Superior Acquisition Proposal,
provided that such person has entered into a written confidentiality agreement
on terms no more favorable to such person than the Mutual Confidential
Non-Disclosure Agreement, dated October 8, 1996, between the Company and
Parent, is to Parent, and provided further that the Company has received a
written opinion of its outside counsel that such response is required in order
to satisfy the fiduciary duties imposed under applicable law on its Board of
Directors. The Company shall take the necessary steps to inform the
individuals and entities referred to in the first sentence hereof of the
obligations undertaken in this Section 6.5(a).
(b) Unless this Agreement has theretofore been
terminated pursuant to Section 8.1(f) hereof, neither the Board of Directors of
the Company nor any committee thereof shall (i) withdraw or modify, or propose
to withdraw or modify, in a manner adverse to Parent or Merger Sub, the
approval or recommendation by such Board of Directors or any such committee of
the Offer, this Agreement or the Merger, (ii) approve or recommend, or propose
to approve or recommend, any Acquisition Proposal, or (iii) enter into any
agreement with respect to any Acquisition Proposal. Notwithstanding the
foregoing, in the event the Board of Directors of the Company receives an
Acquisition Proposal that constitutes a "Superior Acquisition Proposal" (as
defined below), the Board of Directors may (subject to the limitations
contained in this Section) withdraw or modify its approval or recommendation of
the Offer, this Agreement or the Merger, approve or recommend any such Superior
Acquisition Proposal, enter into an agreement with respect to any such Superior
Acquisition Proposal or terminate this Agreement, in each case at any time
after 48 hours following Parent's receipt of written notice (a "Notice of
Superior Acquisition Proposal") advising Parent that the Board of Directors has
received a Superior Acquisition Proposal, specifying the material terms and
conditions of such Superior Acquisition Proposal and identifying the person
making such Superior Acquisition Proposal. For purposes of this Agreement, a
"Superior Acquisition Proposal" means an Acquisition Proposal received by the
Company without violation of the provisions of Section 6.5(a), having terms
which the Board of Directors of the Company determines, in the exercise of its
fiduciary duties, after consultation with outside counsel, and upon the written
opinion of its outside financial advisor to be more favorable to the Company's
stockholders from a financial point of view than the Offer and the Merger.
(c) In addition to the obligations of the Company set
forth in paragraph (b) of this Section 6.5, the Company shall promptly advise
Parent orally and in writing of any request for nonpublic information relating
to the Company or by any person that, to the Company's knowledge, may be
considering making, or has made, an Acquisition Proposal, or the receipt of any
Acquisition Proposal, or any inquiry with respect to any Acquisition Proposal,
the material terms and conditions of such request, Acquisition Proposal or
inquiry, and the identity of the person making any such Acquisition Proposal or
inquiry. The Company will keep Parent fully informed of the status and details
of any such request, Acquisition Proposal or inquiry.
6.6 Notification of Certain Matters. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(a) the occurrence, or failure to occur, of any event, which occurrence or
failure would be likely to cause any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect at any time
from the date hereof
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to the Effective Time, and (b) any material failure of the Company or Parent,
as the case may be, or any officer, director, employee or agent thereof, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder.
6.7 Access to Information. The Company shall, and shall cause
its Subsidiaries, officers, directors, employees and agents to, upon reasonable
notice, afford the officers, employees, agents and representatives of Parent
complete access at all reasonable times, from the date hereof to the Effective
Time, to its officers, employees, agents, properties, books and records, and
shall furnish Parent all financial, operating and other data and information as
Parent, through its officers, employees, agents or representatives, may
reasonably request.
6.8 Antitrust Laws. As promptly as practicable, the Company,
Parent and Merger Sub shall make all filings and submissions under the HSR Act
as may be reasonably required to be made in connection with this Agreement and
the transactions contemplated hereby. Subject to Section 6.7 hereof, the
Company will furnish to Parent and Merger Sub, and Parent and Merger Sub will
furnish to the Company, such information and assistance as the other may
reasonably request in connection with the preparation of any such filings or
submissions. Subject to Section 6.7 hereof and to the preservation of
attorney-client privilege and work-product doctrine, the Company will provide
Parent and Merger Sub, and Parent and Merger Sub will provide the Company, with
true, complete and correct copies of all correspondence, filings and
communications (or memoranda setting forth the substance thereof) between such
party or any of its representatives, on the one hand, and any governmental
agency or authority or members of their respective staffs, on the other hand,
with respect to this Agreement and the transactions contemplated hereby;
provided, however, that Parent and Merger Sub shall not be required to provide
the Company with copies of confidential documents or information included in
Parent's filings and submissions under the HSR Act.
6.9 Public Announcements. Upon execution of this Agreement, an
appropriate public announcement of the transactions contemplated hereby, the
form and substance of which shall have been agreed to by Parent and the
Company, shall be made; provided, that no such announcement shall be made
unless and until it shall comply with Rule 14d-2 under the Exchange Act. So
long as this Agreement is in effect and subject to Section 6.5(b), neither
Parent nor the Company shall make any other press release or other written
public statement concerning the transactions contemplated by this Agreement,
including the Offer and the Merger, without the approval of the other party
hereto; provided, however, that either Parent or the Company may, without such
approval, make such press releases or other written public statements as are
required by law, and shall consult with the other party with respect to the
form and substance of such statements.
6.10 Directors. The Company will comply with the requirements of
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, so
that, upon the acceptance for payment of, and payment for, any Shares by Merger
Sub pursuant to the Offer which, when taken together with any Shares which
Parent beneficially owns (as such term is defined under the Exchange Act),
represent at least a majority of the then outstanding Shares, Merger Sub shall
be entitled at such time to designate the directors on the Board of Directors
of the Company, and the Company shall, at such time, obtain resignations of
all then-serving Directors and, prior to such resignations, cause Merger
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Sub's designees to be elected to, and to constitute all of, the Board of
Directors of the Company. The Company agrees to cooperate in permitting the
exercise by Merger Sub of its rights under this Section 6.10, including,
without limitation, (x) cooperating in satisfying the requirements of
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, and
(y) amending, prior to the expiration date of the Offer, any provisions of the
By-Laws or any agreement by which the Company is bound that could delay or
hinder the ability of Merger Sub or Parent to elect its designees to a majority
of the directorships constituting the Board of Directors of the Company. The
Company will not take any action to delay or hinder such election.
6.11 Directors' and Officers' Insurance Coverage.
(a) For six years after the earlier of (i) the date on
which the designees of Merger Sub have been elected to the Board of Directors
of the Company pursuant to Section 6.10 hereof and constitute all the members
thereof and (ii) the Effective Time, Parent and the Surviving Corporation shall
indemnify, defend and hold harmless the present officers, directors, employees
and agents of the Company and its Subsidiaries (each an "Indemnified Party")
against all losses, claims, damages, liabilities, fees and expenses (including
reasonable fees and disbursements of counsel) and judgments, fines, losses,
claims, liabilities and amounts paid in settlement (provided that any such
settlement is effected with the prior written consent of Parent or the
Surviving Corporation, which consent shall not be unreasonably withheld))
arising out of actions or omissions occurring at or prior to the Effective Time
(including without limitation matters arising out of or pertaining to the
transactions contemplated by this Agreement) to the full extent permitted by
the DGCL or the Company's certificate of incorporation or bylaws as in effect
at the date hereof, including provisions therein relating to the advancement of
expenses incurred in the defense of any action or suit; provided, however, that
in the event any claim or claims are asserted or made within such six-year
period, all rights to indemnification in respect of any such claim or claims
shall continue until disposition of the claim to which such rights are
applicable.
(b) For two years after the Effective Time, Parent and
the Surviving Corporation will (i) maintain the current policies of officers'
and directors' liability insurance in respect of acts or omissions (including
without limitation matters arising out of or pertaining to the transactions
contemplated by this Agreement) occurring at or prior to the Effective Time
covering each person who is an officer or director of the Company on the date
hereof and who is currently covered by the Company's officers' and directors'
liability insurance policy, or (ii) substitute policies providing substantially
similar coverage containing terms and conditions that, taken together, are not
materially less advantageous, and provided that such substitution does not
result in gaps or lapses in coverage.
(c) Parent and the Surviving Corporation shall pay all
expenses (including attorneys' fees) that may be incurred by any Indemnified
Party or person having rights to coverage pursuant to this Section 6.11
(collectively, "Covered Persons") in enforcing the obligations of Parent and
the Surviving Corporation provided for in this Section 6.11, provided that no
such expenses shall be payable if such Indemnified Party or person is found, in
or as a result of such enforcement action, not to have the rights to coverage
claimed by such Indemnified Party or person. The parties hereto acknowledge
and agree that the remedy at law for any breach of the obligations under this
Section
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6.11 is and will be insufficient and inadequate and that the Covered Persons,
in addition to any remedies at law, shall be entitled to equitable relief.
Without limiting any remedies Covered Persons may otherwise have hereunder or
under applicable law, in the event of nonperformance of any obligation under
this Section 6.11, the Covered Persons shall have, in addition to any other
rights at law or equity, the right to specific performance.
(d) The rights under this Section 6.11 are contingent
upon, and shall survive, the consummation of the Offer, are intended to benefit
the Company, the Surviving Corporation and each Covered Person, shall be
binding on all successors and assigns of Parent and the Surviving Corporation
and shall be enforceable by each Covered Person, each of whom shall be a third
party beneficiary of this Section 6.11.
6.12 Benefit Plans and Certain Contracts.
(a) Parent hereby agrees to cause the Surviving
Corporation to pay, in accordance with their terms as in effect on the date
hereof, all amounts due and payable under the terms of all written employment
contracts, agreements, plans, policies and written commitments of the Company
and its Subsidiaries with or with respect to its current employees, officers
and directors as such contracts, agreements, plans, policies and written
commitments are described in the Company Disclosure Schedule. For at least two
years following the Effective Time, each employee of the Company and its
Subsidiaries (while such person remains an employee of the Company and its
Subsidiaries) shall be entitled to participate in all Benefit Plans maintained
or sponsored by the Company or in benefit plans providing substantially similar
benefits.
(b) Upon or prior to the consummation of the Offer,
Parent and the Company shall enter into an employment agreement with ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ (the "Employment Agreement").
(c) Nothing contained in this Agreement (other than as
specifically provided in the Employment Agreement), including, without
limitation, this Section 6.12, shall confer on any person not a party to this
Agreement, or constitute or be evidence of any agreement or understanding,
express or implied, that any person has a right to be employed as an employee
of or consultant to Parent or the Surviving Corporation for any period of time
or at any specific rate of compensation, or that any employee or other person
shall have a right to participate in any benefit plans maintained by Parent, or
to receive any equity or options to acquire equity in the Company or Parent.
ARTICLE 7 -- CONDITIONS
7.1 Conditions to Obligation of each Party to Effect the Merger.
The respective obligations of each party to effect the Merger shall be subject
to the fulfillment or waiver at or prior to the Effective Time of the following
conditions:
(a) If required by the DGCL, the Company Stockholder
Approval shall have been obtained by the requisite vote of the stockholders of
the Company;
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(b) No statute, rule, regulation, executive order,
decree, temporary restraining order, preliminary injunction or permanent
injunction or other order or legal restraint or prohibition preventing the
consummation of the Merger shall have been issued by any Governmental Entity
and shall remain in effect; and
(c) All authorizations, consents, orders or approvals
of, or declarations or filings with, or expiration of waiting periods imposed
by, any Governmental Entity necessary for the consummation of the Merger and
the transactions contemplated by this Agreement shall have been filed, occurred
or been obtained and shall be in effect at the Effective Time.
7.2 Additional Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is also subject to the condition
that each of Parent and Merger Sub shall have made the Offer in accordance with
its terms as contemplated by Section 1.1 hereof and shall have consummated the
Offer in accordance with its terms.
ARTICLE 8 -- TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether prior to or after any approval by the
stockholders of the Company:
(a) by mutual written consent of the Boards of Directors
of Parent and the Company;
(b) by Parent if (i) neither Parent nor any subsidiary
of Parent shall have accepted for payment any Shares pursuant to the Offer by
the sixtieth day following commencement of the Offer and such failure is not in
breach of the Offer or this Agreement, or (ii) Parent has properly terminated
the Offer in accordance with its terms; provided that Parent may not terminate
this Agreement pursuant to this Section 8.1(b) if (A) the failure of Parent or
Merger Sub to fulfill any obligation under this Agreement has been the cause
of, or resulted in, the circumstances described in clause (i), or (B) in the
case of clause (ii), Parent or Merger Sub has not exercised such right by the
close of business on or before the fifth business day following the termination
of the Offer in accordance with its terms;
(c) by Parent and Merger Sub prior to the purchase of
Shares pursuant to the Offer if there shall have been any material breach of a
material obligation of the Company hereunder and such breach shall not have
been remedied within five days after receipt by the Company of notice in
writing from Parent or Merger Sub specifying such breach and requesting that it
be remedied;
(d) by the Company prior to the purchase of Shares
pursuant to the Offer, if there shall have been any material breach of a
material obligation of Parent or Merger Sub hereunder and such breach shall
have not been remedied within five days after receipt by Parent or Merger Sub,
as the case may be, of notice in writing from the Company specifying such
breach and requesting that it be remedied;
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(e) by the Company, if (i) the Offer shall not have been
commenced on or before the fifth business day after the announcement to the
public of the execution of this Agreement, (ii) the Offer is terminated without
the purchase of any Shares and such termination is in breach of the Offer or
this Agreement, or (iii) Parent or Merger Sub has failed to pay or to cause
another entity to pay for Shares duly and properly tendered in the Offer within
10 business days following expiration of the Offer, provided that the Company
may not terminate this Agreement pursuant to this Section 8.1(e) if the failure
of the Company to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the circumstances described in clauses (i), (ii) or
(iii) hereof;
(f) by the Company or by Parent and Merger Sub prior to
the purchase of Shares pursuant to the Offer, if a Superior Acquisition
Proposal is received and the Board of Directors of the Company, pursuant to
Section 6.5(b), withdraws or modifies its recommendation of the Offer or
recommends to the stockholders of the Company that such stockholders tender
their Shares into, or vote in favor of, such Superior Acquisition Proposal,
provided that termination pursuant to this Section 8.1(f) shall not affect the
Company's obligations under Section 6.3 hereof; or
(g) by the Company or by Parent and Merger Sub if there
shall be any law or regulation that make consummation of the Merger illegal or
otherwise prohibited or if any judgment, injunction, order or decree enjoining
Parent, Merger Sub or the Company from consummating the Merger is entered and
such judgment, injunction, order or decree shall become final and
nonappealable.
8.2 Effect of Termination. In the event of termination of this
Agreement prior to the purchase of Shares as provided in Section 8.1, this
Agreement shall forthwith become void and of no effect, and there shall be no
liability on the part of Parent, Merger Sub or the Company, except that (a) the
provisions of Section 6.3, this Section 8.2 and Article 9 hereof shall survive
any such termination, and (b) nothing herein will relieve any party from
liability for any willful or grossly negligent breach of any representation or
warranty or any breach prior to such termination of any covenant or agreement
contained herein. Except as set forth herein, the provisions of this Section
8.2 shall constitute the exclusive remedy of the parties in the event of
termination of this Agreement prior to the purchase of Shares.
8.3 Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties, and provided
that any amendment effected after obtaining the Company Stockholder Approval
may be subject to further approval of the Company's stockholders if required by
the DGCL.
8.4 Extension; Waiver. At any time prior to the Effective Time,
any party hereto may (a) extend the time for the performance of any of the
obligations or other acts of any other party hereto or (b) waive compliance
with any of the agreements of any other party or with any conditions to its own
obligations. Any agreement on the part of a party hereto to any such extension
or waiver shall be valid if set forth in an instrument in writing signed on
behalf of such party by a duly
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authorized officer. The failure of any party to this Agreement to assert any
of its rights under this Agreement or otherwise shall not constitute a waiver
of those rights.
ARTICLE 9 -- GENERAL PROVISIONS
9.1 Survival of Representations, Warranties and Agreements. No
representations or warranties contained herein shall survive beyond
consummation of the Offer, and no agreements contained herein shall survive
beyond the Effective Time except that the agreements contained in Article II
and Sections 6.11 and 6.12 hereof shall survive beyond the Effective Time.
9.2 Notices. All notices and other communications hereunder
shall be given by telephone and immediately confirmed in writing and shall be
deemed given if delivered personally or mailed by registered or certified mail
(return receipt requested) or overnight courier to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to Parent or Merger Sub:
DENTSPLY International Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP
One Oxford Centre, 32nd floor
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
(b) if to the Company:
New Image Industries, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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With a copy to:
Irell & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
9.3 Interpretation. When a reference is made in this Agreement
to subsidiaries of Parent or the Company, the word "subsidiaries" or
"Subsidiaries" means any corporation more than fifty percent (50%) of whose
outstanding voting securities are directly or indirectly owned by Parent or the
Company, as the case may be. All references in this Agreement to the Company
conducting business in the ordinary course or in a manner consistent with past
practice shall be considered in light of the Company's financial condition
prior to and as of the date indicated in the applicable reference. The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
9.4 Entire Agreement; No Third Party Beneficiaries. This
Agreement (including the Appendix hereto and the documents and instruments
referred to herein) constitutes the entire agreement and supersedes all other
prior agreements and undertakings, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof, provided, however, that
(i) Paragraph 5 of the letter of intent dated December 24, 1996 between the
Company and Parent, (ii) the Credit Agreement, dated as of December 24, 1996,
by and among Parent, the Company and Insight Imaging Systems, Inc., (iii) the
Subordination and Intercreditor Agreement, dated December 24, 1996, by and
among Coast Business Credit, a division of Southern Pacific Thrift & Loan
Association, Parent, the Company and Insight Imaging Systems, Inc. and (iv) the
Mutual Confidential Non-Disclosure Agreement, dated October 8, 1996, between
Parent and the Company, shall remain in effect in accordance with their terms.
Except as provided in Section 4.7 and 6.11, there are no third party
beneficiaries of this Agreement and nothing in this Agreement, express or
implied, is intended to or shall confer upon any person other than the parties
hereto and their respective successors and permitted assigns, any rights,
remedies, obligations or liabilities.
9.5 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder may be assigned by operation of law or
otherwise, provided that Parent or Merger Sub may assign its rights and
obligations hereunder to a direct or indirect subsidiary of Parent, but no such
assignment shall relieve Parent or Merger Sub, as the case may be, of its
obligations hereunder. Subject to the foregoing sentence, this Agreement will
be binding upon, and inure to the benefit of, the parties and their respective
successors and assigns.
9.6 Governing Law. This Agreement shall be governed in all
respects, including validity, interpretation and effect, by the laws of the
State of Delaware, without giving effect to the conflicts of law principles
thereof.
9.7 Counterparts. This Agreement may be executed in one or more
counterparts which together shall constitute a single agreement.
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9.8 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any of the provisions of this
Agreement were not performed in accordance with the terms hereof and that the
parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or in equity.
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunder duly authorized.
DENTSPLY INTERNATIONAL INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Senior Vice President
IMAGE ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Senior Vice President
NEW IMAGE INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Executive Officer
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APPENDIX
CONDITIONS TO THE OFFER
1. Notwithstanding any other term of the Offer or this
Agreement, Parent or Merger Sub shall not be required to accept for payment or
to pay for any Shares tendered pursuant to the Offer, and may terminate or,
subject to Section 1.1 of this Agreement, amend the Offer and may postpone the
acceptance for payment of Shares pursuant thereto, unless (a) there shall have
been validly tendered and not withdrawn prior to the expiration of the Offer
such number of Shares that would constitute fifty-five percent (55%) of the
outstanding Shares as of the date of the commencement of the Offer (the
"Minimum Tender Condition"), and (b) any waiting period under the HSR Act
applicable to the purchase of Shares pursuant to the Offer shall have expired
or been terminated (the "HSR Condition"), provided, however, that prior to
March 25, 1997, Parent shall not terminate the Offer by reason of the
nonsatisfaction of the HSR Condition and, if the HSR Condition is the only
condition that is not satisfied upon the expiration of the Offer, Parent shall
cause the Offer to be extended to March 24, 1997.
2. Furthermore, notwithstanding any other term of the Offer or
this Agreement, Parent or Merger Sub shall not be required to accept for
payment or to pay for any Shares tendered pursuant to the Offer, and may
terminate or, subject to Section 1.1 of this Agreement, amend the Offer and may
postpone the acceptance for payment of Shares pursuant thereto if, at any time
on or after the date of this Agreement and before the acceptance of such Shares
for payment or the payment therefor, any of the following conditions exists:
(a) any statute, rule, regulation or order shall be
proposed, enacted, entered or deemed applicable to the Offer or the Merger
(i) making the purchase of, or payment for, some or all of the Shares pursuant
to the Offer or the Agreement illegal, or resulting in a material delay in the
ability of Parent to accept for payment or pay for some or all of the Shares,
or to consummate the Offer or Merger or seeking to obtain from the Company,
Parent or Merger Sub any damages that would have a Material Adverse Effect on
the Company or Parent, (ii) imposing material limitations on the ability of
Parent or Merger Sub effectively to acquire or hold or to exercise full rights
of ownership of the Shares acquired by it, including the right to vote the
Shares purchased by it on all matters properly presented to the stockholders of
the Company, (iii) which would require Parent or any direct or indirect
subsidiary of Parent to dispose of or hold separate any of the Shares or all or
any material portion of the assets or business of the Company and the
Subsidiaries, or (iv) prohibit or limit the ability of Parent or any direct or
indirect subsidiary of Parent to own, control or operate the Company or any of
its Subsidiaries or all or any material portion of the businesses, operations
or assets of the Company and its Subsidiaries, where such prohibition or
limitation would have a Material Adverse Effect on the Company;
(b) any governmental or regulatory action or proceeding
by or before any Governmental Entity shall be instituted or pending, or any
action or proceeding by any other person, domestic or foreign, shall be
instituted or pending, which would reasonably be expected to result in any of
the consequences referred to in clauses (i) through (iv) of paragraph
2(a) above; or
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(c) the Company shall not have complied with its
agreements and covenants in the Agreement, or any of its representations and
warranties in the Agreement, when made or at and as of any time thereafter, are
inaccurate or incomplete, except (i) where such failure so to comply or such
inaccuracy or incompleteness would not reasonably be expected to have a
Material Adverse Effect on the Company, (ii) for changes specifically permitted
by this Agreement or (iii) those representations and warranties that address
matters only as of a particular day must be accurate and complete as of such
date; or
(d) there shall have an occurred an event of default set
forth in that certain Amended and Restated Loan and Security Agreement, dated
May 22, 1996, among the Company and Insight Imaging Systems, Inc. ("Insight")
and Coast Business Credit, a division of Southern Pacific Thrift & Loan
Association ("Coast"), as to which event of default Coast has not given a
written waiver or is not required to forbear under the terms of that certain
letter agreement, dated December 24, 1996, among Coast, the Company, Insight
and Parent; or
(e) the Company shall commence a case under any chapter
of Title XI of the United States Code or any similar law or regulation; or a
petition under any chapter of Title XI of the United States Code or any similar
law or regulation is filed against the Company which is not dismissed within
five business days; or the Company shall apply for or consent to the
appointment of a receiver, trustee or liquidator of itself or of its property;
or the Company shall make a general assignment for the benefit of creditors; or
an order, judgment or decree shall be entered, without the application,
approval or consent of the Company by any court of competent jurisdiction,
approving a petition seeking a reorganization of the Company or appointing a
receiver, trustee or liquidator of the Company or of all or a substantial part
of its assets, and such order, judgment or decree shall continue unstayed for a
period of five business days; or the Company shall take corporate action for
the purpose of effecting any of the foregoing; or
(f) there shall have occurred (i) the declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (ii) the commencement of a war, armed hostilities or other
international or national calamity directly or indirectly involving the United
States, (iii) any limitation by any governmental authority on the extension of
credit by banks or other financial institutions, or (iv) in the case of any of
the foregoing existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof; or
(g) the Agreement shall have been terminated in
accordance with its terms;
which, in Parent's sole discretion, in any such case regardless of the
circumstances giving rise to any such conditions, makes it inadvisable to
proceed with such acceptance for payment or payment or makes it advisable to
terminate or amend the Offer.
3. The foregoing conditions are for the sole benefit of Parent
and Merger Sub and may be asserted by Parent and Merger Sub regardless of the
circumstances giving rise to any such conditions or may be waived by Parent or
Merger Sub in whole or in part, at any time and from time to time in their sole
discretion. The failure by Parent or Merger Sub at any time to exercise any of
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45
the foregoing rights shall not be deemed a waiver of any such right and each
right shall be deemed an ongoing right which may be asserted at any time and
from time to time. Any determination by Parent or Merger Sub concerning any
events described in the above conditions shall be final and binding on all
parties.
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