EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
dated August 11, 1999
by and among
MAGELLAN TECHNOLOGY, INC.,
BTI ACQUISITION CORP.,
BIOLOGICAL TECHNOLOGIES INTERNATIONAL, INC.,
THE ▇▇▇▇▇▇▇▇▇ ASSET MANAGEMENT COMPANY,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
TABLE OF CONTENTS
ARTICLE I THE MERGER
SECTION 1.01. The Merger..............................................1
SECTION 1.02. Conversion of Capital Stock.............................2
SECTION 1.03. Exchange of Certificates................................3
SECTION 1.04. Time and Place of Closing...............................6
ARTICLE II
OTHER MATTERS RELATING TO
CORPORATE ORGANIZATION AND GOVERNANCE
SECTION 2.01. Actions to Be Taken.....................................6
SECTION 2.02. The Surviving Corporation...............................6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01. Corporate Existence and Power...........................7
SECTION 3.02. Corporate Authorization.................................8
SECTION 3.03. Governmental Authorization..............................8
SECTION 3.04. Non-Contravention.......................................8
SECTION 3.05. Capitalization..........................................9
SECTION 3.07. Absence of Certain Changes or Events...................10
SECTION 3.08. Disclosure Documents...................................10
SECTION 3.09. Litigation.............................................10
SECTION 3.10. Taxes..................................................11
SECTION 3.11. Employee Benefit Plans; ERISA..........................12
SECTION 3.12. Environmental Matters..................................14
SECTION 3.13. Labor Matters..........................................15
SECTION 3.14. Compliance with Laws...................................15
SECTION 3.15. Finders' Fees..........................................16
SECTION 3.16. Accounting Matters.....................................16
SECTION 3.17. Intellectual Property..................................16
SECTION 3.18. Significant Agreements.................................18
SECTION 3.19. Insurance..............................................19
SECTION 3.20. Real Property..........................................19
SECTION 3.21. Tangible Assets........................................20
SECTION 3.22. Inventory..............................................20
SECTION 3.23. Product Warranty; Product Liability....................21
SECTION 3.24. Voting Requirements....................................21
SECTION 3.25. State Takeover Laws; No Anti-Takeover Measures.........21
SECTION 3.26. Codes and Policies.....................................21
SECTION 3.27. Year 2000 Compliance...................................22
SECTION 3.28. Proprietary Information................................22
SECTION 3.29. Guaranties; Power of Attorney..........................22
SECTION 3.30. Affiliated Transactions................................23
SECTION 3.31. Disclosure.............................................23
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
SECTION 4.01. Corporate Existence and Power..........................23
SECTION 4.02. Corporate Authorization................................23
SECTION 4.03. Governmental Authorization.............................24
SECTION 4.04. Non-Contravention......................................24
SECTION 4.05. Capitalization.........................................24
SECTION 4.06. Organization of Merger Sub.............................25
SECTION 4.07. No Prior Activities....................................25
SECTION 4.08. SEC Reports and Financial Statements...................25
SECTION 4.09. Absence of Certain Changes or Events...................26
ARTICLE V COVENANTS OF THE COMPANY
SECTION 5.01. Conduct of Business of the Company Pending the Effective
Time...................................................26
SECTION 5.02. Access to Financial and Operational Information........28
SECTION 5.03. Notices of Certain Events..............................29
SECTION 5.04. Stockholders' Meetings.................................29
SECTION 5.05. Release of 17% Guaranty; Release of Certain Shares.....30
ARTICLE VI
COVENANTS OF PARENT
SECTION 6.01. Conduct of Business of Parent Pending the Effective
Time...................................................30
SECTION 6.02. Notices of Certain Events..............................30
ARTICLE VII COVENANTS OF PARENT AND THE COMPANY
SECTION 7.01. Advice of Certain Changes..............................31
SECTION 7.02. Agreement to Cooperate; Further Assurances.............31
SECTION 7.03. No Solicitation........................................32
SECTION 7.04. Proxy Statement........................................32
SECTION 7.05. Confidential Information...............................32
SECTION 7.06. Stock Option Plans and Benefit Plans...................32
SECTION 7.07. Expenses...............................................33
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01. Conditions to Obligations of Parent and Merger Sub.....33
SECTION 8.02. Conditions to Obligations of the Company...............34
SECTION 8.03. Conditions to Obligations of Each Party................35
ARTICLE IX
TERMINATION OF AGREEMENT
SECTION 9.01. Termination............................................35
SECTION 9.02. Effect of Termination..................................37
ARTICLE X
VOTING AGREEMENTS; CERTAIN STOCKHOLDER COVENANTS
SECTION 10.01. Approval of Merger...................................37
SECTION 10.02. No Conflict..........................................37
SECTION 10.03. Certain Stockholder Covenants........................38
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Further Assurances...................................38
SECTION 11.02. Survival.............................................38
SECTION 11.03. Notices..............................................38
SECTION 11.04. Governing Laws and Consent to Jurisdiction...........40
SECTION 11.05. Binding upon Successors and Assigns; Assignment......40
SECTION 11.06. Severability.........................................40
SECTION 11.07. Entire Agreement; No Third Party Beneficiaries.......40
SECTION 11.08. Other Remedies.......................................40
SECTION 11.09. Amendment and Waivers................................40
SECTION 11.10. No Waiver............................................41
SECTION 11.11. Construction of Agreement............................41
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into
the 11th day of August, 1999, by and among Magellan Technology, Inc., a Utah
corporation ("Parent"), BTI Acquisition Corp., a Utah corporation and a wholly
owned subsidiary of Parent ("Merger Sub"), and Biological Technologies
International, Inc., a Massachusetts corporation (the "Company"). The ▇▇▇▇▇▇▇▇▇
Asset Management Company, an unincorporated common law business organization
("▇▇▇▇▇▇▇▇▇ Management"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
("Beinecke") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇") are parties to this Agreement for
the limited purposes set forth herein.
RECITALS
WHEREAS, the Boards of Directors of Parent, Merger Sub and the Company
deem it advisable and in the best interests of their respective stockholders to
consummate, and have approved the business combination transaction provided for
herein in which the Company would merge with and into Merger Sub and the
Surviving Corporation (as defined below) would become a wholly owned subsidiary
of Parent (the "Merger");
WHEREAS, for Federal income tax purposes, it is intended that the
Merger shall qualify as a tax free reorganization within the meaning of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, for accounting purposes, it is intended that the Merger shall
be accounted for as a pooling-of-interests.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, the
parties agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger.
(a) At the Effective Time (as defined below) and subject to
the terms and conditions hereof and the provisions of the Utah Revised Business
Corporation Act ("Utah Law") and Chapter 156B of the Annotated Laws of
Massachusetts ("Massachusetts Law"), the Company will be merged with and into
Merger Sub in accordance with Utah Law and Massachusetts Law, the separate
existence of the Company shall thereupon cease and Merger Sub shall continue as
the surviving corporation in the Merger (the "Surviving Corporation"). The
Company and Merger Sub are sometimes hereinafter referred to collectively as the
"Constituent Corporations."
(b) Subject to the terms and conditions hereof, the Merger
shall be consummated as promptly as practicable (and in any event within two
business days) after satisfaction or, to the extent permitted hereunder, waiver
of all of the conditions to each party's obligation to consummate the Merger
contained in Article VIII, by duly filing appropriate articles of merger (the
"Articles of Merger"), in such form as is required by, and executed in
accordance with, the relevant provisions of Massachusetts Law and Utah Law. The
Merger shall be effective at such time as the Articles of Merger are duly filed
with the Secretary of State of the States of Massachusetts and the Division of
Corporations and Commercial Code of Utah in accordance with Massachusetts Law
and Utah Law or at such later time as is specified in the Articles of Merger
(the "Effective Time"). The date on which the Effective Time shall occur is
referred to herein as the "Effective Date." This Agreement is intended by the
parties to constitute the agreement or plan of merger contemplated by Section 79
of Massachusetts Law and Section 16-10a-1101 of Utah Law.
(c) The separate corporate existence of Merger Sub, as the
Surviving Corporation, with all its purposes, objects, rights, privileges,
powers, certificates and franchises, shall continue unimpaired by the Merger.
The Surviving Corporation shall succeed to all the properties and assets of the
Constituent Corporations and to all debts, causes of action and other interests
due or belonging to the Constituent Corporations and shall be subject to, and
responsible for, all the debts, liabilities and duties of the Constituent
Corporations with the effect set forth in Section 80 of Massachusetts Law. The
Surviving Corporation shall be subject to suit in Massachusetts for all
obligations of any Constituent Corporation arising prior to the Effective Time
and, for so long as the foregoing obligations remain outstanding, for all
obligations incurred after the Effective Time by the Surviving Corporation. The
Secretary of State of Massachusetts is hereby irrevocably appointed as the agent
of the Surviving Corporation to accept service of process in any action for the
enforcement of the obligations referred to in the previous sentence.
SECTION 1.02. Conversion of Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Common Stock, no par value per share, of the Company (the "Company
Common Stock") or capital stock of Merger Sub:
(a) Capital Stock of Merger Sub. Each issued and outstanding
share of the capital stock of Merger Sub shall be converted into and become one
fully paid and nonassessable share of Common Stock, no par value, of the
Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. All
shares of Company Common Stock that are owned by the Company as treasury stock
and any shares of Company Common Stock owned by Parent, Merger Sub or any other
wholly owned Subsidiary of Parent or the Company shall be canceled and retired
and shall cease to exist and no stock of Parent or other consideration shall be
delivered in exchange therefor. All shares of Common Stock, par value $.0002 per
share, of Parent (the "Parent Common Stock") owned by the Company shall remain
unaffected by the Merger. For purposes of this Agreement "Subsidiary" shall
mean, with respect to any entity, any corporation, association, partnership,
limited liability company, joint venture or other business entity of which more
than 50% of the outstanding voting stock (or equivalent interest) is at the time
owned by such entity or by one or more Subsidiaries or by such entity and one or
more Subsidiaries.
(c) Exchange Ratio for Company Common Stock. Subject to
Section 1.03(e), each issued and outstanding share of Company Common Stock
(other than shares to be canceled in accordance with Section 1.02(b)) shall be
converted into the right to receive 2.06 (the "Exchange Ratio") fully paid and
nonassessable shares of Parent Common Stock. All such shares of Company Common
Stock, if any, when so converted, shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each holder
of a certificate representing any such shares shall cease to have any rights
with respect thereto, except the right to receive the shares of Parent Common
Stock and any cash in lieu of fractional shares of Parent Common Stock to be
issued or paid in consideration therefor upon the surrender of such certificate
in accordance with Section 1.03, without interest.
SECTION 1.03. Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, Parent shall
deposit with Zions Bank Stock Transfer or such other bank or trust company
designated by Parent (and reasonably acceptable to the Company) (the "Exchange
Agent"), for the benefit of the holders of shares of Company Common Stock, for
exchange in accordance with this Article I, through the Exchange Agent,
certificates representing the shares of Parent Common Stock (such shares of
Parent Common Stock, together with any dividends or distributions with respect
thereto, being hereinafter referred to as the "Exchange Fund") issuable pursuant
to Section 1.02 in exchange for outstanding shares of Company Common Stock.
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time, the Exchange Agent shall mail to each holder of record
of a certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the "Certificates")
whose shares were converted pursuant to Section 1.02 into the right to receive
shares of Parent Common Stock (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 Exchange Agent and
shall be in such form and have such other provisions as Parent and the Company
may reasonably specify) and (ii) instructions for use in effecting the surrender
of the Certificates in exchange for certificates representing shares of Parent
Common Stock. Upon surrender of a Certificate for cancellation to the Exchange
Agent or to such other agent or agents as may be appointed by Parent and Merger
Sub, together with such letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor a certificate
representing that number of whole shares of Parent Common Stock which such
holder has the right to receive pursuant to the provisions of this Article I,
and the Certificate so surrendered shall forthwith be canceled. In the event of
a transfer of ownership of Company Common Stock which is not registered in the
transfer records of the Company, a certificate representing the proper number of
shares of Parent Common Stock may be issued to a transferee if the Certificate
representing such Company Common Stock is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer and
by evidence that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 1.03, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the certificate representing shares of Parent Common
Stock and cash in lieu of any fractional shares of Parent Common Stock as
contemplated by this Section 1.03. Lost and mutilated shares of Company Common
Stock shall be treated in the same manner as they are currently treated by the
Company.
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the Effective Time with
respect to Parent Common Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Certificate with respect to the
shares of Parent Common Stock represented thereby and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to Section 1.03(e)
until the holder of record of such Certificate shall surrender such Certificate.
Subject to the effect of applicable laws, following surrender of any such
Certificate, there shall be paid to the record holder of the certificates
representing whole shares of Parent Common Stock issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of any cash
payable in lieu of a fractional share of Parent Common Stock to which such
holder is entitled pursuant to Section 1.03(e) and the amount of dividends or
other distributions with a record date after the Effective Time theretofore paid
with respect to such whole shares of Parent Common Stock, and (ii) at the
appropriate payment date, the amount of dividends or other distributions with a
record date after the Effective Time but prior to surrender and a payment date
subsequent to surrender payable with respect to such whole shares of Parent
Common Stock.
(d) No Further Ownership Rights in Company Common Stock. All
shares of Parent Common Stock issued upon the surrender for exchange of shares
of Company Common Stock in accordance with the terms hereof (including any cash
paid pursuant to Section 1.03(c) or 1.03(e)) shall be deemed to have been issued
in full satisfaction of all rights pertaining to such shares of Company Common
Stock, subject, however, to the Surviving Corporation's obligation to pay any
dividends or make any other distributions with a record date prior to the
Effective Time which may have been declared or made by the Company on such
shares of Company Common Stock in accordance with the terms of this Agreement or
prior to the date hereof and which remain unpaid at the Effective Time, and
there shall be no further registration of transfers on the stock transfer books
of the Surviving Corporation of the shares of Company Common Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Article I.
(e)Fractional Shares. Notwithstanding any other provision of
this Agreement to the contrary, no certificates or scrip for fractional shares
of Parent Common Stock shall be issued in connection with the Merger. All shares
of Parent Common Stock to which a holder of shares of Company Common Stock is
entitled in connection with the Merger shall be aggregated. If a fractional
share results from such aggregation, in lieu of any such fractional share, each
holder of shares of Company Common Stock who would otherwise have been entitled
to receive a fraction of a share of Parent Common Stock upon surrender of
Certificates for exchange pursuant to Article I shall be entitled to receive
from the Exchange Agent a cash payment (without interest) equal to such fraction
multiplied by the average closing price per share of Parent Common Stock during
the three trading days immediately prior to the Effective Time.
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the stockholders of the Company for one year
after the Effective Time shall be delivered to Parent, upon demand, and any
stockholders of the Company who have not theretofore complied with this Article
I shall thereafter look only to Parent for payment of their claim for Parent
Common Stock, any cash in lieu of fractional shares of Parent Common Stock and
any dividends or distributions with respect to Parent Common Stock.
(g) No Liability. Neither Parent nor the Company shall be
liable to any holder of shares of Company Common Stock or Parent Common Stock,
as the case may be, for such shares (or dividends or distributions with respect
thereto) delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
SECTION 1.04. Time and Place of Closing. The closing of the Merger
shall take place at the offices of ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, as promptly as practicable (and in
any event within two business days) after satisfaction or, to the extent
permitted hereunder, waiver of all of the conditions to each party's obligation
to consummate the Merger contained in Article VIII, or at such other place or
time as the Parent and the Company may agree.
ARTICLE II
OTHER MATTERS RELATING TO CORPORATE
ORGANIZATION AND GOVERNANCE
SECTION 2.01. Actions to Be Taken. The following actions shall be
taken:
(a) On the date hereof the Company shall enter into a
Forbearance Agreement with the ▇▇▇▇▇▇▇▇▇ Asset Management Company in the form of
Exhibit 2.01 attached hereto.
SECTION 2.02. The Surviving Corporation.
(a) Certificate of Incorporation. At the Effective Time, the
Certificate of Incorporation of Merger Sub, as in effect immediately prior to
the Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation.
(b) Bylaws. At the Effective Time, the Bylaws of Merger Sub,
as in effect immediately prior to the Effective Time, shall be the Bylaws of the
Surviving Corporation.
(c) Directors and Officers. At and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with
applicable law or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's Certificate of Incorporation and
Bylaws, the directors of Merger Sub at the Effective Time, shall be the
directors of the Surviving Corporation, and the officers of the Company at the
Effective Time shall be the initial officers of the Surviving Corporation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in the disclosure schedule referring specifically
to this Agreement (the "Company Disclosure Schedule") which has been delivered
to Parent on or prior to the execution hereof, the Company represents and
warrants to Parent as set forth below:
SECTION 3.01. Corporate Existence and Power.
(a) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has all corporate power required to carry on its business as
now conducted. The Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the character of
the property owned, leased, or operated by it or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
or to be in good standing would not have a Material Adverse Effect on the
Company. For purposes of this Agreement, a "Material Adverse Effect," with
respect to any person or entity, shall mean a material adverse effect on the
financial condition, business, properties, assets, liabilities (including
contingent liabilities), results of operations of such person or entity and its
Subsidiaries, taken as a whole. "Material Adverse Change" shall mean a change or
a development that would have a Material Adverse Effect; and "person" shall mean
any individual, corporation, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization or government or other
agency or political subdivision thereof, or any other entity. The Company has
delivered to Parent true and complete copies of the Certificate of Incorporation
and Bylaws of the Company as currently in effect. Such Articles of
Incorporation, Bylaws and equivalent organizational documents are in full force
and effect and no other organizational documents are applicable to or binding
upon the Company. The Company is not in violation of any of the provisions of
its Articles of Incorporation or Bylaws.
(b) The Company Disclosure Schedule sets forth a complete and
correct list of all entities in which the Company owns, directly or indirectly,
any equity or voting interest, and sets forth the amount of capital stock of or
other equity interests in such entities so owned, directly or indirectly, and
the total amount of authorized capital stock of or other equity interests in
such entities.
SECTION 3.02. Corporate Authorization.
The execution, delivery and performance by the Company of this
Agreement and the consummation by the Company of the transactions contemplated
hereby are within the Company's corporate powers and have been duly authorized
by all necessary corporate action, except for the approval of this Agreement and
the transactions contemplated hereby by the Company's stockholders to the extent
required by applicable law. This Agreement has been duly and validly executed
and delivered by the Company and, assuming the due authorization, execution and
delivery hereof by Parent and Merger Sub, constitutes a valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms, except that such enforceability may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to or affecting creditors' rights generally and (ii) general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
SECTION 3.03. Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated by this Agreement require no action by or in
respect of, or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign
("Governmental Entity") other than:
(a) the filing of Articles of Merger in accordance with
Massachusetts Law;
(b) compliance with any applicable requirements of the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (the"Securities Act"); and
(c) compliance with any applicable foreign or state securities
or "blue sky" laws, rules or regulations.
SECTION 3.04. Non-Contravention. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby do not and will not:
(a) contravene or conflict with any provision of the
respective charters or bylaws (or similarly governing documents) of the Company;
(b) assuming compliance with the matters referred to in
Section 3.03 and assuming the requisite approval of the Company's stockholders
of the transactions contemplated by this Agreement, contravene or conflict with
or constitute a violation of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to the Company or any of
its respective properties or assets;
(c) conflict with or result in a breach or violation of, or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or result in any third party having any right of
termination, amendment, acceleration or cancellation of, or loss of a benefit
under, (i) any agreement, contract or other instrument binding upon the Company
or, (ii) assuming compliance with the matters referred to in Section 3.03, any
material license, franchise, permit or other similar authorization held by the
Company; or
(d) result in the creation or imposition of any Lien (as
defined below) on any material asset of the Company. For purposes of this
Agreement, the term "Lien" shall mean, with respect to any asset, any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind in respect of
such asset.
SECTION 3.05. Capitalization. The authorized capital stock of the
Company consists of 2,000,000 shares of Company Common Stock and 200,000 shares
of non-voting stock. As of the date hereof, there are outstanding: (i) 1,457,950
shares of Company Common Stock (excluding 55,023 shares held in treasury), (ii)
55,023 shares of non-voting stock; and (iii) options ("Company Options") to
purchase an aggregate of 111,548 shares of Company Common Stock. All outstanding
shares of capital stock of the Company have been duly authorized and validly
issued and are fully paid and nonassessable and free from any preemptive rights.
Except as set forth in this Section or on the Company Disclosure Schedule, there
are outstanding (i) no shares of capital stock or other voting or nonvoting
securities of the Company, (ii) no securities of the Company convertible into or
exchangeable for shares of capital stock or voting securities of the Company and
(iii) no options, calls, commitments, or other rights of any character relating
to the capital stock, voting securities or securities convertible into or
exchangeable for capital stock or other voting securities of the Company (the
items in clauses (i), (ii) and (iii) being referred to collectively as the
"Company Securities"). Except as contemplated by this Agreement, there are no
outstanding obligations of the Company to repurchase, redeem or otherwise
acquire any Company Securities. The Company does not own directly or indirectly
any equity interest or equity investment in, nor is the Company subject to any
obligation or requirement to provide for or to make any equity investment in,
any corporation, limited liability company, partnership, joint venture,
business, trust or entity. All offers and sales of Company Securities have been
in compliance with applicable federal and state securities and "blue sky" laws
and have complied with any preemptive rights under the Company's Articles of
Incorporation.
SECTION 3.06. Financial Statements.
(a) The Company maintains true records and books of account in
which appropriate entries are made of all dealings and transactions relating to
the business and affairs of the Company. The Company has furnished to Parent the
unaudited balance sheets and statements of income, changes in stockholders'
equity and cash flow as of and for the fiscal years ended December 31, 1998 (the
"Company Financial Statements") of the Company. The Company Financial Statements
fairly present, in conformity with generally accepted accounting principles
applied on a consistent basis (except as may be indicated in the notes thereto),
the financial position of the Company as of the dates thereof and the
consolidated results of operations and cash flows for the periods then ended.
(b) Except as reflected or reserved against in the balance
sheet of the Company as of December 31, 1998, the Company has no liabilities of
any nature (whether accrued, absolute, contingent or otherwise), except for
liabilities incurred in the ordinary course of business since December 31, 1999
which would not, individually or in the aggregate, have a Material Adverse
Effect.
SECTION 3.07. Absence of Certain Changes or Events. Since December 31,
1998, the Company has conducted its business only in the ordinary course,
consistent with past practice, and there has not occurred or arisen any event,
individually or in the aggregate, having or which would have a Material Adverse
Effect on the Company. Without limiting the foregoing, the Company has not,
since March 16, 1999, entered any contract, employment agreement, or any other
agreement of any nature whatsoever.
SECTION 3.08. Disclosure Documents. None of the information supplied or
to be supplied by the Company for inclusion in the proxy statement relating to
the meetings of the Company's stockholders to be held in connection with the
Merger (as the same may be amended or supplemented from time to time, the "Proxy
Statement"), at the time of mailing of the Proxy Statement to stockholders of
the Company or at the time of the meeting of such stockholders to be held in
connection with the Merger, contains any untrue statement of a material fact or
omits 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 or will 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 therein not misleading.
SECTION 3.09. Litigation. There is no action, suit, proceeding, claim
or investigation pending or, to the knowledge of the Company, threatened against
or affecting the Company or any of its assets or against or involving any of its
officers, directors or employees in connection with the business or affairs of
the Company, including, without limitation, any claims for indemnification
arising under any agreement to which the Company is a party. The Company is not
subject to or in default with respect to any writ, order, judgment, injunction
or decree. The Company and any of its assets is not subject to any order, writ,
judgment, injunction, decree, determination or award which would prevent or
delay the consummation of the transactions contemplated hereby.
SECTION 3.10. Taxes.
(a) The Company (i) has filed or will file or cause to be
filed when due (taking into account extensions) with the appropriate Federal,
state, local, foreign and other governmental agencies, all tax returns,
estimates, reports and documents of a similar nature relating to taxes required
to be filed by it, and all such returns, estimates and reports are or will be at
the time of filing, true, complete and correct in all material respects, (ii)
either paid when due and payable or established adequate reserves or otherwise
accrued on the Company Balance Sheet all material Federal, state, local or
foreign taxes, levies, imposts, duties, licenses and registration fees and
charges of any nature whatsoever, and unemployment and social security taxes and
income tax withholding, including interest and penalties thereon (collectively
"Taxes") and there are no material Taxes, interest, penalties, assessments or
deficiencies claimed in writing by any Taxing authority and received by the
Company that, in the aggregate, would result in any Tax liability in excess of
the amount of the reserves or accruals, and (iii) has or will establish in
accordance with its normal accounting practices and procedures accruals and
reserves that, in the aggregate, are adequate for the payment of all material
Taxes not yet due and payable and attributable to any period preceding the
Effective Time.
(b) Neither the Company nor any predecessor corporation has
executed or filed with the IRS or any other Taxing authority any agreement or
other document extending, or having the effect of extending, the period of
assessment or collection of any material Taxes.
(c) The Company is not a party to and is not bound by (or will
prior to the Effective Date become a party to or bound by) any Tax indemnity,
Tax sharing or Tax allocation agreement or other similar arrangement. The
Company has not been a member of an affiliated group other than one of which
Company was the common parent, or filed or been included in a combined,
consolidated or unitary Tax return other than one filed by the Company.
(d) The Company has delivered to Parent correct and complete
copies of all tax returns, examination reports and statements of deficiencies
assessed against or agreed to by the Company since January 1, 1997.
(e) The Company has furnished to Parent as of the date of this
Agreement as well as on an estimated basis as of the Effective Time: (i) a
complete schedule of the tax and book basis differences of the Company; (ii) a
complete listing of the amount of any net operating loss (as well as
jurisdiction and expiration dates), net capital loss, unused investment or other
credits, unused foreign tax credits, or excess charitable contributions
allocable to the Company and any current limitation or restriction as to the
utilization thereof; and (iii) a complete listing of the amount of any deferred
gain or loss allocable to the Company.
SECTION 3.11. Employee Benefit Plans; ERISA.
(a) The Company is not a party to any oral or written (i)
employment, severance, collective bargaining or material consulting agreement
not terminable on 60 days' or less notice, (ii) agreement with any current or
former executive officer or other current or former key employee of the Company
(A) the benefits of which are contingent, or the terms of which are materially
altered, upon the occurrence of a transaction involving the Company of the
nature of any of the transactions contemplated by this Agreement, (B) providing
any term of employment or compensation guarantee, or (C) providing severance
benefits or other benefits after the termination of employment of such executive
officer or key employee regardless of the reason for such termination of
employment, (iii) agreement, plan or arrangement under which any person may
receive payments subject to the tax imposed by Section 4999 of the Code, or (iv)
agreement or plan, including, without limitation, any stock option plan, stock
appreciation right plan, restricted stock plan or stock purchase plan, the
benefits of which would be increased, or the vesting of benefits of which will
be accelerated, by the occurrence of any of the transactions contemplated by
this Agreement or the value of any of the benefits of which will be calculated
on the basis of any of the transactions contemplated by this Agreement. The
Company Disclosure Schedule contains a true and correct description of the
annual compensation, bonus plans and awards, options, SAR's, deferred
compensation and all other material benefits for each of the executive officers
of the Company.
(b) Neither the Company nor any corporation or other entity
which under Section 4001(b) of ERISA is under common control with the Company (a
"Company ERISA Affiliate") maintains any "Employee Pension Benefit Plan"
("Pension Plan") or any "Employee Welfare Benefit Plan" ("Welfare Plan") as such
terms are defined in Sections 3(2) and 3(1) respectively of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), which is subject
to ERISA. Each Pension Plan and Welfare Plan of the Company and the Company
ERISA Affiliates has been maintained in all material respects in compliance with
its terms and all provisions of ERISA and the Code (including rules and
regulations thereunder) and other applicable laws. Neither the Company nor any
Company ERISA Affiliate is subject to potential liability under Section 4069(a)
of ERISA.
(c) No Pension Plan or Welfare Plan of the Company or any
Company ERISA Affiliate is currently subject to an audit or other investigation
by the IRS, the Department of Labor, the Pension Benefit Guaranty Corporation or
any other Governmental Entity nor are any such plans subject to any lawsuits or
legal proceedings of any kind or to any material pending disputed claims by
employees or beneficiaries covered under any such plan or by any other parties.
(d) No "prohibited transaction," as defined in Section 406 of
ERISA or Section 4975 of the Code, resulting in material liability to the
Company or any Company ERISA Affiliate has occurred with respect to any Pension
Plan or Welfare Plan. The Company has no knowledge of any breach of fiduciary
responsibility under Part 4 of Title I of ERISA which has resulted in or would
result in any material liability to the Company, any trustee, administrator or
fiduciary of any Pension Plan or Welfare Plan of the Company or any Company
ERISA Affiliate.
(e) Neither the Company nor any Company ERISA Affiliate, since
January 1, 1986, has maintained or contributed to, or been obligated or required
to contribute to, a "Multiemployer Plan," as such term is defined in Section
4001(a)(3) of ERISA. Neither the Company nor any Company ERISA Affiliate has
either withdrawn, partially or completely, or instituted steps to withdraw,
partially or completely, from any Multiemployer Plan nor has any event occurred
which would enable a Multiemployer Plan to give notice of and demand payment of
any material withdrawal liability with respect to the Company or any Company
ERISA Affiliate.
(f) There is no contract, agreement, plan or arrangement
covering any employee or former employee of the Company or any Company ERISA
Affiliate that, individually or collectively, could give rise to the payment of
any material amount that would not be deductible pursuant to the terms of
Sections 162(m) or 280G of the Code.
(g) The Company has delivered or made available to Parent full
and complete copies or descriptions of, and the Company Disclosure Schedule
contains a complete list of each Pension Plan, Welfare Plan and each other
material agreement, policy, plan or other arrangement, whether written or oral,
express or implied, fixed or contingent, to which the Company or any Company
ERISA Affiliate is a party or by which the Company or any Company ERISA
Affiliate or any property or asset of the Company or any Company ERISA Affiliate
is bound, which is or relates to a pension, option, bonus, deferred
compensation, retirement, stock purchase, profit-sharing, severance pay, health,
welfare, incentive, vacation, sick leave, medical disability, hospitalization,
life or other insurance or fringe benefit plan, policy or arrangement. Certain
of the employment agreements contain change in control provisions which will be
triggered as of the Effective Time, as set forth in the Company Disclosure
Schedule.
(h) The Company has delivered or made available to Parent, for
each Pension Plan which is intended to be "qualified" within the meaning of
Section 401(a) of the Code, a copy of the most recent determination letter
issued by the IRS to the effect that each such Plan is so qualified and that
each trust created thereunder is tax exempt under Section 501 of the Code, and
the Company is unaware of any fact or circumstances that would jeopardize the
qualified status of each such Pension Plan or the tax exempt status of each
trust created thereunder.
SECTION 3.12. Environmental Matters.
(a) No communication (written or oral), notice, notification,
demand, request for information, citation, summons, complaint or order has been
received, no complaint has been filed, no penalty has been assessed and no
investigation is pending or has been threatened (each, an "Action") by any
Governmental Entity or other person or entity with respect to any (i) alleged
violation by the Company of any Environmental Law, (ii) alleged failure by the
Company to have any environmental permit, certificate, license, approval,
registration or authorization required in connection with the conduct of its
business or (iii) Regulated Activity, in each case where such Action has had or
would have, a Material Adverse Effect on the Company.
(b) The Company does not have any material Environmental
Liabilities and there has been no Release of Hazardous Substances into the
environment or violation of any Environmental Law by the Company with respect to
any of its respective properties.
(c) The Company has delivered or otherwise made available for
inspection to Parent true, complete and correct copies and results of any
reports, studies, analyses, tests or monitoring possessed or initiated by the
Company or regarding the Company's compliance with applicable Environmental
Laws.
(d) No transfers of permits or other governmental
authorizations under Environmental Laws, and no additional permits or other
governmental authorizations under Environmental Laws, will be required to permit
the Company or the Surviving Corporation, as the case may be, to be in full
compliance with all applicable Environmental Laws immediately following the
transactions contemplated hereby. To the extent that such transfers or
additional permits and other governmental authorizations are required, the
Company agrees to effect such transfers and obtain such permits and other
governmental authorizations prior to the Closing.
(e) For the purposes of this Agreement, the following terms
have the following meanings: "Environmental Laws" shall mean any and all
Federal, state, local and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders, decrees, codes, injunctions and governmental
restrictions relating to human health, the environment or to emissions,
discharges or releases of Hazardous Substances into the environment or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Substances or the clean-up or other
remediation thereof. "Environmental Liabilities" shall mean all liabilities
which (i) arise under or relate to Environmental Laws and (ii) relate to
Regulated Activities occurring or conditions existing on or prior to the
Effective Time. "Hazardous Substances" shall mean any pollutants, contaminants,
toxic, radioactive, caustic or otherwise hazardous substance or waste, including
petroleum, its derivatives, by-products and other hydrocarbons, or any substance
having any constituent elements displaying any of the foregoing characteristics
that is regulated under or by any applicable Environmental Law. "Regulated
Activity" shall mean any generation, treatment, storage, recycling,
transportation, disposal or Release of any Hazardous Substances. "Release" means
any release, spill, emission, discharge, leaking, pumping, injection, deposit,
disposal, dispersal, leaching or migration into the indoor or outdoor
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or into or out of any property,
including the movement of Hazardous Substances through or in air, soil, surface
water, groundwater or property.
SECTION 3.13. Labor Matters. The Company is not a party to any
collective bargaining agreement or other labor union contract applicable to
persons employed by the Company, and, to the knowledge of the Company, there are
no activities or proceedings of any labor union to organize any such employees.
There is no labor dispute, work stoppage, or strike against the Company pending
or threatened.
SECTION 3.14. Compliance with Laws. The Company is not in violation of,
or has not violated, any applicable provisions of (i) any law, rule, statute,
order, ordinance or regulation or (ii) any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise, or other instrument or
obligation to which the Company is a party or by which the Company or its assets
are bound or affected, which, individually or in the aggregate, would result or
reasonably be expected to result in a Material Adverse Effect.
SECTION 3.15. Finders' Fees. There is no investment banker, broker,
finder or other intermediary which has been retained by or is authorized to act
on behalf of the Company nor any of its directors, officers or employees who is
entitled to any fee or commission in connection with the transactions
contemplated by this Agreement.
SECTION 3.16. Accounting Matters. Neither the Company nor, to its
knowledge, any of its Affiliates has taken or agreed to take any action that
would prevent Parent from accounting for the transactions to be effected
pursuant to Article I of this Agreement in accordance with the
pooling-of-interests method of accounting under the requirements of Opinion
No.16 "Business Combinations" of the Accounting Principles Board of the American
Institute of Certified Public Accountants, as amended by applicable
pronouncements by the Financial Accounting Standards Board ("APB No. 16").
SECTION 3.17. Intellectual Property.
(a) The Intellectual Property Rights (as defined below)
comprise all of the intellectual property rights necessary for the operation of
the business of the Company as currently conducted or as currently proposed to
be conducted. The Company Disclosure Schedule sets forth a true, correct and
complete list of all: (i) patented or registered Intellectual Property Rights
and pending patent applications or other applications for registrations of the
Intellectual Property Rights owned or filed by or on behalf of the Company; (ii)
all trade names and unregistered trademarks and service marks owned or used by
the Company; (iii) all unregistered copyrights, and mask works and
non-confidential descriptions of trade secrets and confidential information
owned or used by the Company; and (iv) all licenses or similar agreements or
arrangements relating to the Intellectual Property Rights to which the Company
is a party, either as licensee or licensor.
(b) Except as set forth in the Company Disclosure Schedule:
(i) the Company owns and possesses all right, title and interest in and to, or
has a valid and enforceable license to use, the Intellectual Property Rights
necessary for the operation of the business of the Company as currently
conducted or as currently proposed to be conducted free and clear of all Liens;
(ii) no claim by any third party contesting the validity, enforceability, use or
ownership of any of the Intellectual Property has been made, is currently
outstanding or is threatened, and there are no grounds for the same; (iii) no
loss or expiration of any Intellectual Property Rights would have a Material
Adverse Effect on the business of the Company, and no such loss or expiration is
threatened, pending or reasonably foreseeable; (iv) the Company has not received
any notices of, nor is the Company aware of any facts which indicate a
likelihood of, any infringement or misappropriation by, or conflict with, any
third party with respect to the Intellectual Property Rights (including, without
limitation, any demand or request that the Company license any rights from a
third party); and (v) the Company has not infringed, misappropriated or
otherwise conflicted with any intellectual property rights or other rights of
any third parties and the Company is not aware of any infringement,
misappropriation or conflict which will occur as a result of the continued
operation of the business of the Company as currently conducted or as currently
proposed to be conducted.
(c) The transactions contemplated hereby (including, without
limitation, the Merger) will have no Material Adverse Effect on the right, title
and interest in and to the Intellectual Property Rights or the validity and
enforceability thereof, and such Intellectual Property Rights will be the
property of the Surviving Corporation as a result of the Merger. The Company has
taken all necessary and desirable action to maintain and protect the
Intellectual Property Rights. To the best of the Company's knowledge, the owners
of any Intellectual Property Rights licensed to the Company have taken all
necessary and desirable action to maintain and protect the Intellectual Property
Rights subject to such licenses.
(d) For the purposes of this Agreement, "Intellectual Property
Rights" means all of the following owned by, issued to or licensed to the
Company, along with all income, royalties, damages and payments due or payable
to the Company at the Effective Time or thereafter (including, without
limitation, damages and payments for past or future infringements or
misappropriations thereof), the right to ▇▇▇ and recover for past infringements
or misappropriations thereof and any and all corresponding rights that, now or
hereafter, may be secured by the Company throughout the world: patents, patent
applications, patent disclosures and inventions (whether or not patentable and
whether or not reduced to practice and including, without limitation, all
inventions of employees of the Company) and any reissues, continuations,
continuations-in-part, revisions, extensions or reexaminations thereof;
trademarks, service marks, trade dress, logos, trade names and corporate names,
together with all goodwill associated therewith (including, without limitation,
the use of the current corporate name and trade name(s) listed on the Company
Disclosure Schedule and all translations, adaptations, domain names, mask works,
and registrations, applications and renewals for any of the foregoing);
copyrights and copyrightable works; Internet domain names; mask works; and
registrations, applications and renewals for any of the foregoing trade secrets
and confidential information (including, without limitation, ideas, formulae,
compositions, know-how, manufacturing and production processes and techniques,
research and development information, drawings, specifications, designs, plans,
proposals, technical data, financial and accounting data, data bases and
documentation); other intellectual property rights; and all copies and tangible
embodiments of the foregoing (in whatever form or medium), in each case
including, without limitation, the items set forth on the Company Disclosure
Schedule.
SECTION 3.18. Significant Agreements. The Company Disclosure Schedule
sets forth a complete and correct list of all contracts, agreements, indentures,
leases, mortgages, licenses, plans, arrangements, understandings, commitments
(whether oral or written) and instruments (collectively, "Contracts") that are
material to the Company, including, without limitation, the following: (i) any
Contract calling for any payment of $18,000 or multiple payments in a
twelve-month period aggregating $18,000 or more, (ii) any Contract for the
purchase, sale or lease of supplies, raw materials, commodities, goods or
services having an aggregate fair market value in any twelve-month period of
$18,000, (iii) any Contract relating to Intellectual Property, and (iv) any
Contract purporting to restrict or prohibit the Company or any Affiliate of the
Company from engaging or competing in any business or engaging or competing in
any business in any geographic area (the Contracts listed in the Company
Disclosure Schedule, collectively, the "Significant Agreements"). The Company
has heretofore furnished to Parent complete and correct copies of the
Significant Agreements, each as amended or modified to the date hereof
(including any waivers with respect thereto). Since December 31, 1998, there
have been no transactions between the Company, on the one hand, and the other
parties to the Significant Agreements or any of their respective Affiliates, on
the other hand, other than transactions in the ordinary course of business
consistent with past practice pursuant to and in accordance with the terms of
the Significant Agreements. Each of the Significant Agreements is in full force
and effect and enforceable in accordance with its terms. The Company has not
received any notice (written or oral) or cancellation or termination of, or any
expression or indication of an intention or desire to cancel or terminate, any
of the Significant Agreements. No Significant Agreement is the subject of, or
has been threatened to be made the subject of, any arbitration, suit or other
legal proceeding. With respect to any Significant Agreement which by its terms
will terminate as of a certain date unless renewed or unless an option to extend
such Significant Agreement is exercised, the Company has not received any notice
(written or oral), or otherwise has any knowledge, that any such Significant
Agreement will not be, or is not likely to be, so renewed or that any such
extension option will not be exercised. There exists no event of default or
occurrence, condition or act on the part of the Company or, to the knowledge of
the Company, on the part of any of the other parties to the Significant
Agreements which constitutes or would constitute (with notice or lapse of time
or both) a breach of or default under any of the Significant Agreements. The
execution, delivery and performance by the Company of this Agreement and the
consummation of the transactions contemplated hereby, including the Merger, do
not and will not conflict with, or result in the breach or termination of any
provision of or constitute a default (with or without the giving or notice or
the lapse of time or both) under, or give rise to any right of termination,
cancellation, or loss of any benefit to which the Company is entitled under any
provision of any Significant Agreement.
SECTION 3.19. Insurance. The Company Disclosure Schedule sets forth a
complete and correct list of all insurance policies (including a brief summary
of the nature and terms thereof and any amounts paid or payable to the Company
thereunder) providing coverage in favor of the Company or any of its assets.
Each such policy is in full force and effect, no notice of termination,
cancellation or reservation of rights has been received with respect to any such
policy, there is no default with respect to any provision contained in any such
policy, and there has not been any failure to give any notice or present any
claim under any such policy in a timely fashion or in the manner or detail
required by any such policy, except for any such failures to be in full force
and effect, any such terminations, cancellations, reservations or defaults, or
any such failures to give notice or present claims which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
The coverage provided by such policies is reasonable in scope and amount, in
light of the risks attendant to the business and activities of the Company.
SECTION 3.20. Real Property. Section 3.20 of the Company Disclosure
Schedule sets forth the Company's principal place of business and the addresses
of the Company's leased property (the "Lease"). The Company Disclosure Schedule
identifies all real property (the "Real Property") owned, leased or used by the
Company in connection with its business or operations. Except as set forth on
the Company Disclosure Schedule, the Company has no obligations or liabilities
associated with any other lease or similar arrangement involving real property.
With respect to the Real Property:
(a) The Lease, and each other lease or agreement by which the
Company holds any interest in or right to use any of the Real Property, is, and
after the Closing will continue to be, legal and constitutes, and after the
Closing will continue to constitute, the valid, binding and enforceable
agreement of each party thereto and is and after the Closing will continue to be
in full force and effect;
(b) No party to the Lease or any other lease or agreement by
which the Company holds any interest in or right to use any of the Real Property
is in breach or default, and no event has occurred that, with notice or lapse of
time, or both, would constitute a breach or default or permit termination,
modification or acceleration thereunder;
(c) No party to the Lease or any other lease or agreement by
which the Company holds any interest in or right to use any of the Real Property
has repudiated any provision thereof;
(d) There are no disputes, oral agreements or forbearance
programs in effect as to or related to the Lease or any other lease or agreement
by which the Company holds any interest in or right to use any of the Real
Property;
(e) The Company has not assigned, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest in any of the Real
Property (including, without limitation, the leasehold created by the Lease);
(f) All facilities operated or occupied by the Company
(including, without limitation, the property leased under the Lease) have
received all approvals of all governmental authorities (including all licenses
and permits) required in connection with the use and operation thereof and are
and have been used, operated, and maintained in accordance with all applicable
statutes, laws, rules and regulations;
(g) All facilities operated or occupied by the Company
(including, without limitation, the property leased under the Lease) are
supplied with utilities and other services necessary for the use and operation
of said facilities; and
(h) The Company has good and marketable title (in the case of
owned Real Property), or a valid and enforceable leasehold interest (in the case
of leased Real Property) in and to each parcel of the Real Property, free and
clear of any security interest, easement, covenant or other restriction, except
for (i) installments of special easements not yet delinquent and (ii) recorded
easements, covenants and other restrictions that do not impair the current use,
operation, occupancy or value, or the marketability of title, of the property
subject thereto.
SECTION 3.21. Tangible Assets. The Company owns or leases all tangible,
real and personal property and assets necessary for the conduct of its business
as presently conducted and as presently proposed to be conducted. Each such
tangible asset is free from security interests and defects (patent and latent),
has been maintained in accordance with normal industry practice, is in good
operating condition and repair (subject only to normal wear and tear), and is
suitable for the purposes for which it presently is used. The assets of the
Company include all assets material to the conduct of the business of the
Company as presently conducted.
SECTION 3.22. Inventory. Except as reserved against in the Company
Financial Statements, the inventory of the Company consists of raw materials and
finished goods, all of which is merchantable and fit for the purpose for which
it was procured or manufactured, and none of which is slow-moving, obsolete,
damaged or defective.
SECTION 3.23. Product Warranty; Product Liability. Each product
developed, fulfilled, manufactured, sold or delivered by the Company has been in
conformity in all material respects with all applicable contractual commitments
and all express and implied warranties, and the Company has no liability (and
there is no basis for any present or future charge, complaint, action, suit,
proceeding, hearing, investigation, claim or demand against the Company giving
rise to any liability) for replacement or repair thereof or other damages in
connection therewith, subject only to the reserve for product warranty claims
set forth in the Company's audited balance sheet as of December 31, 1998 or
except as fully covered by insurance. No product developed, fulfilled,
manufactured, sold or delivered by the Company is subject to any guaranty,
warranty or other indemnity beyond the applicable standard terms and conditions
of sale. The Company does not have any liability (and to the knowledge of the
Company there is no basis for any present or future charge, complaint, action,
suit, proceeding, hearing, investigation, claim or demand against the Company
giving rise to any liability) arising out of any injury to any person or
property as a result of the ownership, possession or use of any product
developed, fulfilled, manufactured, sold or delivered by the Company, which
would reasonably be expected to have a Material Adverse Effect.
SECTION 3.24. Voting Requirements. The affirmative vote of at least
ninety percent of the outstanding shares of Company Common Stock approving this
Agreement is the only vote of the holders of any class or series of Company
Securities necessary to approve this Agreement and the transactions contemplated
by this Agreement.
SECTION 3.25. State Takeover Laws; No Anti-Takeover Measures. The
Merger is exempt from the requirements of all "moratorium," "control share,"
"fair price," and other anti-takeover laws or regulations of the State of
Massachusetts. The Company has not issued or adopted, and is not subject to, any
shareholder rights plan or agreement, "poison pill" or any similar security,
plan or agreement which would have the effect of delaying, preventing or
materially reducing the expected benefits to Merger Sub and Parent of the
transactions contemplated by this Agreement.
SECTION 3.26. Codes and Policies. The Company has heretofore furnished
Parent with true and correct copies of all corporate codes of conduct, policy
manuals or other materials setting forth the Company's policies, procedures or
standards of general applicability relating to employment or operations.
SECTION 3.27. Year 2000 Compliance.
(a) All systems, hardware, software and firmware products used
by the Company in its own operations or used or incorporated in products or
services provided or to be provided by the Company to its customers are "Year
2000 Compliant" (as defined in the remainder of this Section 3.27) (including,
but not limited to calculating, comparing and sequencing) for, into, and between
the twentieth and twenty-first centuries, and years 1999 and 2000 leap year
calculations. The Company's systems, hardware, software and firmware products
are designed to be used prior to, during and after the calendar year 2000 A.D.,
and without human intervention will correctly recognize, calculate, process,
sequence, store and transmit Date Data without error or interruption, including
leap years, and including errors or interruptions from functions which may
involve Date Data from more than one century. The term "Date Data" means any
data or input which includes an indication of or reference to date and that is
stored information and internal to functionality. Date calculations involving
either a single century or multiple centuries will neither cause an abnormal
ending nor generate incorrect or unexpected results. When sorting by date, all
records will be sorted in accurate sequence and when the date is used as a key,
records will be read and written in accurate sequence. As used in the previous
sentence, accurate sequence means, by way of example, that records will be read,
written and sorted in ascending order so that the year 1999 is before the year
2000. The Company's systems, hardware, software and firmware products will
calculate, process and display leap year information according to the following
algorithm: (a) a leap year will have 29 days in the month of February; and (b)
and leap year occurs in all years divisible by 400 or, evenly divisible by 4 and
not evenly divisible by 100.
(b) The Company has received representations from the
suppliers, manufacturers or licensors, as the case may be, of all material
systems, hardware, software and firmware products used by the Company in its own
operations to the effect that such systems, hardware, software and firmware
products are Year 2000 Compliant.
SECTION 3.28. Proprietary Information. None of the Company's employees,
officers, directors or consultants has been engaged or employed or provided
development or other services to the Company in violation of any proprietary
information, non-compete, confidentiality or similar agreement with a third
party. No code, technology or confidential information belonging in whole or in
part to a third party has been used in or incorporated into any code, program,
technology or product of the Company.
SECTION 3.29. Guaranties; Power of Attorney. The Company is not a
guarantor or otherwise liable for any liability or obligation (including
indebtedness) of any other person or entity. There are no outstanding powers of
attorney executed on behalf of the Company.
SECTION 3.30. Affiliated Transactions. Except as set forth on the
Company Disclosure Schedule, no stockholder or manager or any officer or
director of the Company owns or has any interest in, any property or assets used
by the Company.
SECTION 3.31. Disclosure. The representations and warranties contained
in this Article 3 do not contain any untrue statement of fact or omit to state
any fact necessary in order to make the statements and information contained in
this Article 3 not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Except as disclosed in a document referring specifically to this
Agreement (the "Parent Disclosure Schedule") which has been delivered to the
Company on or prior to the execution hereof or as disclosed with reasonable
specificity in public filings made by Parent with the SEC since January 1, 1995,
Parent represents and warrants to the Company as set forth below:
SECTION 4.01. Corporate Existence and Power. Each of Parent and its
Subsidiaries is a corporation duly incorporated, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation and has
all corporate power required to carry on its business as now conducted. Merger
Sub is a corporation duly incorporated, validly existing and in good standing
under the laws of the State of Utah. Each of Parent and its Subsidiaries is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where the character of the property owned or leased by it or
the nature of its activities makes such qualification necessary, except where
the failure to be so qualified or to be in good standing would not have a
Material Adverse Effect on Parent. Parent has delivered or made available to the
Company true and complete copies of the Certificate of Incorporation and Bylaws
of Merger Sub, Parent and each of its Subsidiaries as currently in effect.
SECTION 4.02. Corporate Authorization. The execution, delivery and
performance by Parent and Merger Sub of this Agreement and the consummation by
Parent and Merger Sub of the transactions contemplated hereby are within
Parent's and Merger Sub's corporate powers and have been duly authorized by all
necessary corporate action, except for the approval of this Agreement and the
transactions contemplated hereby by Merger Sub's stockholders to the extent
required by applicable law. This Agreement has been duly and validly executed
and delivered by Parent and, assuming the due authorization, execution and
delivery hereof by the Company, constitutes a valid and binding agreement of
Parent and Merger Sub, enforceable against Parent and Merger Sub in accordance
with its terms, except that such enforceability may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting creditors' rights generally and
(ii) general principles of equity (regardless of whether enforcement is sought
in a proceeding in equity or at law).
SECTION 4.03. Governmental Authorization. The execution, delivery and
performance by Parent and Merger Sub of this Agreement and the consummation by
Parent and Merger Sub of the transactions contemplated by this Agreement require
no action by or in respect of, or filing with, any Governmental Entity other
than:
(a) the filing of the Articles of Merger in accordance with
Utah Law;
(b) compliance with any applicable requirements of the
Securities Act; and
(c) compliance with any applicable foreign or state securities
or "blue sky" laws, rules or regulations.
SECTION 4.04. Non-Contravention. The execution, delivery and
performance by Parent and Merger Sub of this Agreement and the consummation by
Parent and Merger Sub of the transactions contemplated hereby do not and will
not:
(a) contravene or conflict with any provisions of the
respective charters or bylaws (or similarly governing documents) of Parent or
any of its Subsidiaries;
(b) assuming compliance with the matters referred to in
Section 4.03 and assuming the requisite approval of Merger Sub's stockholders of
the transactions contemplated by this Agreement, contravene or conflict with or
constitute a violation of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to Parent or any
Subsidiary of Parent or any of their respective properties or assets;
SECTION 4.05. Capitalization. The authorized capital stock of Parent
consists of 50,000,000 shares of Parent Common Stock. As of the date hereof,
there are outstanding 24,173,646 shares of Parent Common Stock. All outstanding
shares of Parent Common Stock have been duly authorized and validly issued and
are fully paid and nonassessable and free from any preemptive rights. Except as
set forth in this Section or on the Parent Disclosure Schedule other than as set
forth in the Parent SEC Reports (as defined below) there are outstanding (i) no
shares of capital stock or other voting securities of Parent, (ii) no securities
of Parent convertible into or exchangeable for shares of capital stock or voting
securities of Parent and (iii) no options, calls, commitments or other rights of
any character relating to the capital stock, voting securities or securities
convertible into or exchangeable for capital stock or other voting securities of
Parent (the items in clauses (i), (ii) and (iii) being referred to collectively
as the"Parent Securities").
SECTION 4.06. Organization of Merger Sub. The authorized capital stock
of Merger Sub consists of 1,000 shares of common stock, par value $.01 per
share, all of which are outstanding. All the issued and outstanding capital
stock of Merger Sub is owned by Parent. Merger Sub has not conducted any
business prior to the date hereof and has no assets, liabilities or obligations
of any nature other than those incident to its formation and pursuant to this
Agreement.
SECTION 4.07. No Prior Activities. As of the date hereof and the
Effective Time, except for obligations or liabilities incurred in connection
with its incorporation or organization and the transactions contemplated by this
Agreement and except for this Agreement and any other agreements or arrangements
contemplated by this Agreement, Merger Sub has not and will not have incurred,
directly or indirectly, through any Subsidiary or Affiliate, any obligations or
liabilities or engaged in any business activities of any type or kind whatsoever
or entered into any agreements or arrangements with any person.
SECTION 4.08. SEC Reports and Financial Statements. Each form, report,
schedule, registration statement and definitive proxy statement filed by Parent
with the SEC since January 1, 1997 (as such documents have since the time of
their filing been amended and each document filed between the date hereof and
the Effective Time, the "Parent SEC Reports"), which include all the documents
(other than preliminary material) that Parent was required to file with the SEC
since such date, as of their respective dates, complied in all material respects
with the requirements of the Securities Act or the Exchange Act, as the case
maybe, applicable to such Parent SEC Reports. None of the Parent SEC Reports
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. The financial statements of Parent included in such reports
comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Form 10-QSB of the SEC) and fairly present
(subject, in the case of the unaudited statements, to normal, recurring audit
adjustments) the consolidated financial position of Parent and its Subsidiaries
as at the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended. Since December 31, 1998, neither Parent
nor any of its Subsidiaries has incurred any liabilities or obligations, whether
absolute, accrued, fixed, contingent, liquidated, unliquidated or otherwise and
whether due or to become due, except (i) as and to the extent set forth on the
audited balance sheet of Parent and its Subsidiaries as of December 31, 1998
(including the notes thereto) (the "Parent Balance Sheet"), (ii) as incurred in
connection with the transactions contemplated, or as provided, by this
Agreement, (iii) as incurred after December 31, 1998 in the ordinary course of
business and consistent with past practices, (iv) as described in the Parent SEC
Reports or (v) as would not, individually or in the aggregate, have a Material
Adverse Effect on Parent.
SECTION 4.09. Absence of Certain Changes or Events. Except as disclosed
in the Parent SEC Reports filed prior to the date hereof, since March 31, 1999,
Parent and its Subsidiaries have conducted their respective business only in the
ordinary course, consistent with past practice, and there has not occurred or
arisen any event, individually or in the aggregate, having or which would have a
Material Adverse Effect on Parent.
ARTICLE V
COVENANTS OF THE COMPANY
From the date hereof until the occurrence of the earlier of (i) the
Effective Time or (ii) termination of this Agreement pursuant to Section 9.01
hereof, the Company agrees that:
SECTION 5.01. Conduct of Business of the Company Pending the Effective
Time. Except as expressly permitted or contemplated by this Agreement, or by the
Company Disclosure Schedule, the Company shall conduct its operations in the
ordinary and usual course of business consistent with past practice and use its
best efforts to preserve intact its business goodwill, keep available the
services of its present officers and key employees, and preserve the goodwill
and business relationships with suppliers, distributors, customers and others
having business relationships with it. Without limiting the generality of the
foregoing, and except as otherwise permitted by this Agreement or as
specifically contemplated by the Company Disclosure Schedule, prior to the
Effective Time, without the consent of Parent, which consent shall not be
unreasonably withheld, the Company will not:
(a) amend or propose to amend their respective charters or
bylaws; or split, combine or reclassify their outstanding capital stock or
declare, set aside or pay any dividend or distribution in respect of any capital
stock or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock;
(b) (i) issue or authorize or propose the issuance of, sell,
pledge or dispose of, or agree to issue or authorize or propose the issuance of,
sell, pledge or dispose of, any additional shares of, or any options, warrants
or rights of any kind to acquire any shares of, their capital stock of any
class, any debt or equity securities convertible into or exchangeable for such
capital stock or any other equity related right (including any phantom stock or
SAR rights), other than any such issuance pursuant to options, warrants, rights
or convertible securities outstanding as of the date hereof in accordance with
their terms; (ii) acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial equity interest in or 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; (iii) sell (including by
sale-leaseback), lease, pledge, dispose of or encumber any assets or interests
therein, which are material, individually or in the aggregate, to the Company
other than in the ordinary course of business and consistent with past practice
or necessary to fulfill conditions set forth in Article VIII provided that the
Company has consulted with Parent prior to taking any such action; (iv) incur or
become contingently liable with respect to any material indebtedness for
borrowed money or guarantee any such indebtedness or issue any debt securities
or otherwise incur any material obligation or liability (absolute or contingent)
other than short-term indebtedness in the ordinary course of business and
consistent with past practice or in connection with those acquisition or
disposition transactions pending as of the date hereof which have been
previously disclosed to Parent; (v) redeem, purchase, acquire or offer to
purchase or acquire any (x) shares of its capital stock or (y) long-term debt
other than as required by governing instruments relating thereto; or (vi) enter
into any contract, agreement, commitment or arrangement with respect to any of
the foregoing;
(c) enter into or amend any employment, severance, special pay
arrangement with respect to termination of employment or other arrangements or
agreements with any directors, officers or key employees;
(d) adopt, enter into or amend any, or become obligated under
any new bonus, profit sharing, compensation, stock option, pension, retirement,
deferred compensation, health care, employment or other employee benefit plan,
agreement, trust, fund or arrangement for the benefit or welfare of any employee
or retiree, except as required to comply with changes in applicable law
occurring after the date hereof;
(e) make any material commitment or enter into any material
contract or agreement except in the ordinary course of business consistent with
past practice;
(f) except as may be required as a result of a change in law
or in generally accepted accounting principles, change any of the accounting
principles or practices used by it;
(g) revalue any of its assets, including, without limitation,
writing down the value of its inventory or writing off notes or accounts
receivable, other than in the ordinary course of business;
(h) make any material tax election or settle or compromise any
material income tax liability;
(i) settle or compromise any pending or threatened suit,
action or claim relating to the transactions contemplated hereby;
(j) pay, discharge or satisfy any material claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business of liabilities reflected or reserved against in, or
contemplated by, the financial statements (or the notes thereto) of the Company
incurred in the ordinary course of business consistent with past practice;
(k) waive, amend or allow to lapse any material term or
condition of any confidentiality or "standstill" agreement to which the Company
is a party; or
(l) take or agree to take any of the foregoing actions or any
action that would, or is reasonably likely to, result in any of its
representations and warranties set forth in this Agreement becoming untrue, or
in any of the conditions to the Merger set forth in Article VIII not being
satisfied or adversely affect the ability of Parent to account for the Merger as
a pooling-of-interests.
SECTION 5.02. Access to Financial and Operational Information. Subject
to compliance with applicable law, upon reasonable notice, the Company will give
Parent, its directors, its counsel, financial advisors, auditors and other
authorized representatives reasonable access during normal business hours to the
offices, properties, books and records of the Company, will furnish to Parent,
its counsel, financial advisors, auditors and other authorized representatives
such financial and operating data as such persons may reasonably request and
will instruct and request the Company's directors, officers, employees, counsel
and financial advisors to cooperate with Parent in its investigation of the
business of the Company and in the planning for the combination of the
businesses of the Company and Parent following the consummation of the Merger
provided that no investigation pursuant to this Section shall affect any
representation or warranty given by the Company to Parent hereunder; and
provided further that notwithstanding the provision of information by Company to
Parent or any investigation by Parent prior to or after the date hereof, Company
shall not be deemed to make any representation or warranty regarding the Company
except as expressly set forth in this Agreement. Unless otherwise required by
law, the parties will hold any such information which is nonpublic in confidence
until such time as such information otherwise becomes publicly available through
no wrongful act of either party and in the event of termination of this
Agreement for any reason, each party shall promptly return all nonpublic
documents obtained from any other party, and any copies made of such documents,
to such other party. In addition, in the event of such termination, all
documents, memoranda, notes and other writing whatsoever prepared by each party
based on the information in such material shall be destroyed (and each party
shall use its best efforts to cause its advisors and their representatives to
similarly destroy their respective documents, memoranda and notes), and such
destruction (and best efforts) shall be certified in writing to the other party
by an authorized officer supervising such destruction. All non-public
information obtained pursuant to this Section 5.02 shall be governed by the
Stand Still Agreement dated September 18, 1998 between Parent and the Company
(the "Confidentiality Agreement").
SECTION 5.03. Notices of Certain Events. The Company shall, upon
obtaining knowledge of any of the following, promptly notify Parent of:
(a) any material notice or other material communication from
any Governmental Entity in connection with the Merger; and
(b) any actions, suits, claims, investigations or other
judicial proceedings commenced or threatened against the Company which, if
pending on the date of this Agreement, would have been required to have been
disclosed pursuant to Section 3.09 or which relate to the consummation of the
Merger.
SECTION 5.04. Stockholders' Meetings. The Company shall call a meeting
of its stockholders to be held as promptly as practicable (but in no event more
than 30 days after the date hereof) for the purpose of voting upon this
Agreement and the transactions contemplated hereby. The Company will, through
its Board of Directors, recommend to its respective stockholders approval of
such matters and shall use all reasonable efforts to solicit from its
stockholders proxies in favor of such matters. The Company agrees that it will
not take any action or enter into any transaction prior to the meetings of
stockholders referred to above that would be reasonably likely to require a
recirculation of the Proxy Statement following its initial mailing to
stockholders.
SECTION 5.05. Release of 17% Guaranty; Release of Certain Shares. Prior
to the Closing, the Company shall use its best efforts to cause (i) the
surrender by the Company and ▇▇▇▇▇▇▇▇▇ Management of all of the right title and
interest in that certain 17% Guaranty (the "17% Guaranty") in favor of ▇▇▇▇▇▇▇▇▇
Management (and indirectly in favor of the Company) securing that certain
Non-Negotiable Promissory Note by the Company in favor of ▇▇▇▇▇▇▇▇▇ Management
in the original principal amount of $750,000 dated January 6, 1998 (the "Note")
and (ii) Beinecke to surrender to the Company, to be placed in the treasury of
the Company, 45,000 shares of Company Common Stock in exchange for the release
by the Company and ▇▇▇▇▇▇▇▇▇ Management of Beinecke's obligations under the 17%
Guaranty.
ARTICLE VI
COVENANTS OF PARENT
From the date hereof until the occurrence of the earlier of (i) the
Effective Time or (ii) termination of this Agreement pursuant to Section 9.01
hereof, Parent agrees that:
SECTION 6.01. Conduct of Business of Parent Pending the Effective Time.
Except as expressly permitted or contemplated by this Agreement or by the Parent
Disclosure Schedule, Parent shall, and shall cause each of its Subsidiaries to,
conduct its operations in the ordinary and usual course of business consistent
with past practice and use its best efforts to preserve intact their respective
business organizations' goodwill, keep available the services of their
respective present officers and key employees, and preserve the goodwill and
business relationships with suppliers, distributors, customers and others having
business relationships with them.
SECTION 6.02. Notices of Certain Events. Parent shall, upon obtaining
knowledge of any of the following, promptly notify the Company of:
(a) any material notice or other material communication from
any Governmental Entity in connection with the Merger; and
(b) any actions, suits, claims, investigations or other
judicial proceedings commenced or threatened against Parent or any of its
Subsidiaries which relate to the consummation of the Merger.
ARTICLE VII
COVENANTS OF PARENT AND THE COMPANY
From the date hereof until the occurrence of the earlier of (i) the
Effective Time or (ii) termination of this Agreement pursuant to Section
9.01hereof, the Company and Parent agree that:
SECTION 7.01. Advice of Certain Changes. Each party will promptly
advise each other party to this Agreement in writing to the extent such party
has knowledge (i) of the occurrence of any event subsequent to the date of this
Agreement that would render any representation or warranty of such party
contained in this Agreement, if made on or as of the date of such event or the
Effective Date, untrue, inaccurate or misleading in any material respect and
(ii) of any Material Adverse Change with respect to such party.
SECTION 7.02. Agreement to Cooperate; Further Assurances. Subject to
the terms and conditions of this Agreement, each of the Company and Parent shall
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 under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement, subject to the requisite vote of stockholders of
the Company and Merger Sub, including providing information and using all
reasonable efforts to (i) promptly obtain all necessary or appropriate waivers,
consents and approvals, and promptly effect all necessary registrations and
filings, (ii) promptly effect, if necessary, the sale of assets or modification
of contracts by either party so long as such sales of assets or modification of
contracts by either party would not constitute a Material Adverse Effect on
Parent and the Surviving Corporation, taken as a whole, or adversely affect the
ability of Parent to account for the Merger as a pooling-of-interests, (iii)
promptly obtain necessary consents from both parties' bank lenders or mutually
or separately restructure their credit agreements so that obtaining such
consents shall not delay or prevent consummation of the transactions
contemplated by this Agreement and (iv) promptly take all actions necessary or
desirable to ensure that the Merger will be accounted for as a
pooling-of-interests. In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement,
the proper officers and directors of each party to this Agreement shall take all
necessary actions to the extent not inconsistent with their other duties and
obligations or applicable law.
SECTION 7.03. No Solicitation. The Company shall not, directly or
indirectly, through any officer, director, employee, investment banker,
attorney, representative or agent of such party, (i) solicit, initiate, or
encourage any inquiries or proposals that constitute, or could reasonably be
expected to lead to, a proposal or offer for a merger, consolidation, business
combination, sale of substantial assets, sale of shares of capital stock
(including without limitation by way of a tender offer) or similar transactions
involving such party or any of its Subsidiaries, other than the transactions
contemplated by or described in this Agreement (any of the foregoing inquiries
or proposals being referred to in this Agreement as an "Acquisition Proposal"),
(ii) engage in negotiations or discussions concerning, or provide any non-public
information or data to any person or entity relating to, any Acquisition
Proposal, or (iii) agree to, approve or recommend any Acquisition Proposal, or
otherwise facilitate any effort or attempt to make or implement an Acquisition
Proposal.
SECTION 7.04. Proxy Statement. As promptly as practicable after the
execution of this Agreement, the Company shall prepare the Proxy Statement. The
Proxy Statement shall include the comments of Parent's counsel with respect to
materials that must be proposed, the recommendation of the Board of Directors of
Parent in favor of this Agreement and the transactions contemplated hereby, and
the recommendation of the Board of Directors of the Company in favor of this
Agreement and the transactions contemplated hereby.
SECTION 7.05. Confidential Information. The Company and Parent
acknowledge that the Confidentiality Agreement shall remain in full force and
effect at all times prior to the Effective Time and after any termination of
this Agreement except as provided in such Confidentiality Agreement, and
reaffirm their agreement to comply with the terms thereof.
SECTION 7.06. Stock Option Plans and Benefit Plans. The Company and
Parent shall take such action as may be necessary to cause each unexpired and
unexercised Company Option granted under the Company's stock option plans listed
on Schedule 3.11 of the Company Disclosure Schedule (the "Company Stock Option
Plans"), to be automatically converted at the Effective Time into a
non-qualified option (a "New Parent Option") to purchase a number of shares of
Parent Common Stock equal to the number of shares of Company Common Stock that
could have been purchased under the Company Option multiplied by the Exchange
Ratio (with the resulting number of shares rounded down to the nearest whole
share), at a price per share of Parent Common Stock equal to the option exercise
price determined pursuant to the Company Option divided by the Exchange Ratio
(with the resulting exercise price rounded up to the nearest whole cent). Parent
shall (i) as of the Effective Time, assume all of the Company's obligations with
respect to Company Options as so converted, (ii) on or prior to the Effective
Time, reserve for issuance the number of shares of Parent Common Stock that will
become subject to New Parent Options pursuant to this Section 7.06, (iii) from
and after the Effective Time, upon exercise of the New Parent Options in
accordance with the terms thereof, make available for issuance all shares of
Parent Common Stock covered thereby and (iv) at the Effective Time, issue to
each holder of an outstanding Company Option a document evidencing the foregoing
assumption by Parent.
SECTION 7.07. Expenses. All costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expenses.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01. Conditions to Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub hereunder to consummate the Merger are
subject to the satisfaction or waiver, at or prior to the Effective Time, of
each of the following conditions:
(a) Covenants; Accuracy of Representations and Warranties. (i)
The Company shall have performed in all material respects its agreements
contained in this Agreement required to be performed at or prior to the
Effective Time; (ii) the representations and warranties of the Company contained
in Article III shall be true and accurate at the date of this Agreement and, as
of the Effective Time with the same force and effect as if they had been made as
of the Effective Time (except to the extent a representation or warranty speaks
specifically as of an earlier date and except as contemplated by this Agreement)
except for inaccuracies in any such representation and warranties that would
not, individually or in the aggregate have or reasonably be expected to have a
Material Adverse Effect on the Company; and (iii) the Company shall have
provided Parent with a certificate executed by two executive officers of the
Company, dated as of the Effective Date, to such effect.
(b) Shareholder Approval. The Merger and the other
transactions contemplated hereby shall be approved by the vote of shares of the
Company capital stock representing at least 90% of the issued and outstanding
capital stock of the Company.
(c) Consents. The Company shall have obtained all written
consents, assignments, waivers or authorizations, that are required to be
obtained by the Company as a result of the Merger.
(d) Release of 17% Guaranty; Return of Certain Shares.
▇▇▇▇▇▇▇▇▇ Management and the Company shall have released all of their right
title and interest in the 17% Guaranty and Beinecke in connection with the
release of his obligations under the 17% Guaranty shall have surrendered into
the treasury of the Company 45,000 shares of Company Common Stock.
(e) Consent and Disclosure Agreement. Shareholders of the
Company representing at least 90% of the outstanding capital stock of the
Company shall have executed a Consent and Disclosure Agreement in the form of
Exhibit 8.01(e) hereto.
(f) Release of all Claims. Parent, the Company, ▇▇▇▇▇▇▇▇▇
Management, ▇▇▇▇▇▇▇▇▇, Beinecke and ▇▇▇▇▇▇ shall have entered in a Release of
All Claims Agreement in the form of Exhibit 8.01(f) hereto.
(g) Opinion of Counsel. The Parent shall have received the
legal opinion of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP, counsel to the Company, in
form and substance acceptable to the Parent.
(h) Pooling Letters. Parent shall have received a letter of
its independent public accountants, dated the Effective Date, in form and
substance reasonably satisfactory to it stating that the transactions effected
pursuant to Article I of this Agreement will qualify as transactions to be
accounted for in accordance with the pooling-of-interests method of accounting
under the requirements of APB No. 16 (each being referred to as a "Pooling
Letter").
SECTION 8.02. Conditions to Obligations of the Company. The obligations
of the Company hereunder to consummate the Merger are subject to the
satisfaction or waiver, at or prior to the Effective Time, of each of the
following conditions:
(a) Covenants; Accuracy of Representations and Warranties. (i)
Parent shall have performed in all material respects its agreements contained in
this Agreement required to be performed at or prior to the Effective Time; (ii)
the representations and warranties of Parent set forth in Article IV shall be
true and accurate at the date of this Agreement and as of the Effective Time
with the same force and effect as if they had been made as of the Effective Time
(except to the extent a representation or warranty speaks specifically as of an
earlier date and except as contemplated by this Agreement) except, in each case,
for inaccuracies in any such representation and warranties that would not,
individually or in the aggregate, have or reasonably be expected to have a
Material Adverse Effect on Parent; and (iii) Parent shall have provided the
Company with a certificate executed by two executive officers of Parent, dated
as of the Effective Date, to such effect.
(b) Consents. Parent shall have obtained all written consents,
assignments, waivers or authorizations, that are required to be obtained by
Parent as a result of the Merger.
(c) Registration Rights Agreement. The Parent shall have
entered into a Registration Rights Agreement in the form of Exhibit 8.02(c)
hereto with all of the Shareholders of the Company that vote to approve the
Merger.
SECTION 8.03. Conditions to Obligations of Each Party. The respective
obligations of the Company, on the one hand, and Parent and Merger Sub, on the
other hand, to consummate the Merger are subject to the satisfaction or waiver,
at or prior to the Effective Time, of each of the following conditions:
(a) Stockholder Approval. Parent's and the Company's
stockholders shall have duly approved this Agreement and the transactions
contemplated hereby, all in accordance with applicable laws.
(b) Illegality or Legal Constraint. No statute, rule,
regulation, executive order, decree, injunction or restraining order shall have
been enacted, promulgated or enforced (and not repealed, superseded or otherwise
made inapplicable) by any court or Governmental Entity which prohibits the
consummation of the transactions contemplated by this Agreement or imposes
material conditions with respect thereto (each party agreeing to use all
reasonable efforts to have any such order, decree or injunction lifted).
ARTICLE IX
TERMINATION OF AGREEMENT
SECTION 9.01. Termination. This Agreement may be terminated at any time
prior to the Effective Time whether before or after the approval by the
stockholders of the Company or Parent:
(a) by mutual consent of the Boards of Directors of Parent and
the Company;
(b) by Parent or the Company, if (i) the Effective Date shall
not have occurred on or before October 15, 1999 or (iii) any court of competent
jurisdiction shall have issued an order, judgment or decree (other than a
temporary restraining order) restraining, enjoining or otherwise prohibiting the
Merger and such order, judgment or decree shall have become final and
nonappealable; provided, however, that the right to terminate this Agreement
pursuant to clause (i) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or resulted
in, the failure of the Effective Date to occur on or before such date;
(c) by Parent or the Company, if, at the meeting of the
Company stockholders (including any adjournment or postponement thereof) called
pursuant to Section 5.04 hereof, the requisite vote of the stockholders of the
Company for the Merger shall not have been obtained; (d) by Parent or the
Company, if, at the meeting of Parent stockholders (including any adjournment or
postponement thereof) the requisite vote of stockholders of Parent for the
Merger shall not have been obtained;
(d) by Parent, if (i) there has been a breach by the Company
of any representation or warranty set forth in this Agreement, which breach
would result in Material Adverse Effect on Parent and the Surviving Corporation,
taken as a whole, or upon the consummation of the transactions contemplated
hereby, which has not been cured within ten business days following receipt by
the breaching party of notice of such breach; or (ii) there has been a material
breach by the Company of any covenant or agreement set forth in this Agreement,
which breach has not been cured within ten business days following receipt by
the Company of notice of such breach; provided, however, that the right to
terminate this Agreement pursuant to this Section 9.01(e)(i) or (ii) shall not
be available to Parent if it, at such time, is in material breach of any
representation, warranty, covenant or agreement set forth in this Agreement;
(e) by the Company, if (i) there has been a breach by Parent
of any representation or warranty set forth in this Agreement, which breach
would result in Material Adverse Effect on Parent and the Surviving Corporation,
taken as a whole, or upon the consummation of the transactions contemplated
hereby, which has not been cured within ten business days following receipt by
the Parent of notice of such breach; (ii) there has been a material breach by
Parent of any covenant or agreement set forth in this Agreement, which breach is
not cured within ten days following receipt by the Parent of notice of such
breach; provided, however, that the right to terminate this Agreement pursuant
to this Section 9.01(f)(i) or (ii) shall not be available to the Company if it,
at such time, is in material breach of any representation, warranty, covenant or
agreement set forth in this Agreement.
SECTION 9.02. Effect of Termination. In the event of termination of
this Agreement by either Parent or the Company as provided in Section 9.01
hereof, this Agreement shall forthwith become void (except as set forth in the
last three sentences of Section 5.02 and in Sections 7.05, 7.08, and this
Section 9.02) and there shall be no liability on the part of Parent, Merger Sub
or the Company or their respective officers or directors, except for any breach
of a party's obligations under this Section 9.02, in the last three sentences of
Section 5.02 and in Sections 7.05, and 7.08. Notwithstanding the foregoing, no
party hereto shall be relieved from liability for any willful or intentional
breach of this Agreement.
ARTICLE X
VOTING AGREEMENTS; CERTAIN STOCKHOLDER COVENANTS
SECTION 10.01. Approval of Merger. Each of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
Management, ▇▇▇▇▇▇ and Beinecke (collectively, the "Principal Stockholders")
hereby irrevocably agrees, for the period from the date hereof through the date
on which the Merger is consummated or the Merger Agreement is terminated in
accordance with the terms hereof, whichever is earlier to cost all votes
attributable to Company Common Stock now or hereafter beneficially owned by the
Principal Stockholders at any annual or special meeting of stockholders of the
Company, including any adjournments or postponements thereof, or written
consents of stockholders of the Company in lieu of a meeting, in favor of the
approval and adoption of this Agreement and the Merger and against any competing
transaction presented to the stockholders, if any. The Principal Stockholders
agree not to enter into any agreements the effect of which would be inconsistent
with the provisions of this Section 10.01.
SECTION 10.02. No Conflict. The Principal Stockholders each hereby
represent and warrant to Parent and Merger Sub that the provisions of this
Section 10.01 do not conflict with or violate (a) any law, statute, ordinance,
rule, regulation, order, judgment or decree applicable to the Principal
Stockholder or (b) result in any breach or default under any contract, mortgage
or agreement (or organization or governing document in the case of ▇▇▇▇▇▇▇▇▇
Management) governing such Principal Stockholder or any of his or its shares of
Company Stock.
SECTION 10.03. Certain Stockholder Covenants. Each of ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ Management and Beinecke hereby covenant to take the actions set forth
in Section 5.05 hereof with respect to the 17% Guaranty and the Note.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Further Assurances. Each party agrees to cooperate fully
with the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances as may be reasonably
requested by any other party to better evidence and reflect the transactions
described herein and contemplated hereby and to carry into effect the intents
and purposes of this Agreement. The covenants and agreements contained in this
Agreement shall survive the Effective Time.
SECTION 11.02. Survival. The representations and warranties in this
Agreement shall survive the termination of this Agreement or the Effective Time
for a period of 12 months (except for matters of which written notice has been
given prior to the expiration of such 12 month period), provided, however, that
the termination of sections 3.02, 3.05, and 3.12 shall survive the closing
indefinitely.
SECTION 11.03. Notices. Whenever any party hereto desires or is
required to give any notice, demand, or request with respect to this Agreement,
each such communication shall be in writing and shall be effective only if it is
delivered by personal service or mailed, United States registered or certified
mail, postage prepaid, or sent by prepaid overnight courier or confirmed
telecopier, addressed as follows:
If to Parent or Merger Sub:
Magellan Technology, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
With a copy to:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
If to the Company:
Biological Technologies International
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
One ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
If to ▇▇▇▇▇▇▇▇▇ Management:
▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇▇▇
If to ▇▇▇▇▇▇▇▇▇:
▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇▇▇
If to Beinecke:
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
If to Furber:
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Such communications shall be effective when they are received by the addressee
thereof. Any party may change its address for such communications by giving
notice thereof to the other parties in conformity with this Section.
SECTION 11.04. Governing Laws and Consent to Jurisdiction. The laws of
the State of Utah (irrespective of its choice of law principles) shall govern
all issues concerning the validity of this Agreement, the construction of its
terms, and the interpretation and enforcement of the rights and duties of the
parties. Each of the parties hereof irrevocably submits to the exclusive
jurisdiction of the courts of the State of Utah and the Federal courts of the
United States of America located in the State of Utah (and the Utah State and
Federal courts having jurisdiction over appeals therefrom) in respect of the
transactions contemplated by this Agreement, the other agreements and documents
referred to herein and the transactions contemplated by this Agreement and such
other documents and agreements.
SECTION 11.05. Binding upon Successors and Assigns; Assignment. This
Agreement and the provisions hereof shall be binding upon each of the parties,
their permitted successors and assigns. This Agreement may not be assigned by
any party without the prior consent of the other.
SECTION 11.06. Severability. If any provision of this Agreement, or the
application thereof, shall for any reason or to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances shall continue in full force and effect and in
no way be affected, impaired or invalidated.
SECTION 11.07. Entire Agreement; No Third Party Beneficiaries. This
Agreement and the other agreements and instruments referenced herein or therein
(a) constitute the entire understanding and agreement of the parties with
respect to the subject matter hereof and supersede all prior and contemporaneous
agreements or understandings, inducements or conditions, express or implied,
written or oral, between the parties with respect hereto and (b) are not
intended to confer upon any person other than the parties any rights or remedies
hereunder.
SECTION 11.08. Other Remedies. Except as otherwise provided herein, any
and all remedies herein expressly conferred upon a party shall be deemed
cumulative with and not exclusive of any other remedy conferred hereby or by law
on such party, and the exercise of any one remedy shall not preclude the
exercise of any other.
SECTION 11.09. Amendment and Waivers. Any term or provision of this
Agreement may be amended, and the observance of any term of this Agreement may
be waived (either generally or in a particular instance and either retroactively
or prospectively) only by a writing signed by the party to be bound thereby. The
waiver by a party of any breach hereof or default in the performance hereof
shall not be deemed to constitute a waiver of any other default or any
succeeding breach or default, unless such waiver so expressly states. At any
time before or after approval of this Agreement and the Merger by the
stockholders of the Company and prior to the Effective Time, this Agreement may
be amended or supplemented by the parties hereto with respect to any of the
terms contained in this Agreement, except that following approval by the
stockholders of the Company there shall be no amendment or change to the
provisions hereof with respect to the Exchange Ratio without further approval by
the stockholders of the Company, and no other amendment shall be made which by
law requires further approval by such stockholders without such further
approval.
SECTION 11.10. No Waiver. The failure of any party to enforce any of
the provisions hereof shall not be construed to be a waiver of the right of such
party thereafter to enforce such provisions.
SECTION 11.11. Construction of Agreement. A reference to an Article,
Section or an Exhibit shall mean an Article of, a Section in, or Exhibit to,
this Agreement unless otherwise explicitly set forth. The titles and headings
herein are for reference purposes only and shall not in any manner limit the
construction of this Agreement which shall be considered as a whole. The words
"include," "includes" and "including" when used herein shall be deemed in each
case to be followed by the words "without limitation."
SECTION 11.12. Counterparts; Facsimile. This Agreement may be executed
by facsimile and in any number of counterparts, each of which shall be an
original as against any party whose signature appears thereon and all of which
together shall constitute one and the same instrument.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, Parent, Merger Sub, and the Company have executed
this Agreement as of the date first above written. ▇▇▇▇▇▇▇▇▇ Management,
▇▇▇▇▇▇▇▇▇, Beinecke and ▇▇▇▇▇▇ have executed this Agreement as of the date first
set forth above for the limited purposes set forth in Article X hereof.
"PARENT"
Magellan Technology, Inc.
a Utah corporation
By: _______________________________
Name:
Title:
"MERGER SUB"
BTI Acquisition Corp.
a Utah corporation
By: _______________________________
Name:
Title:
"THE COMPANY"
Biological Technologies International, Inc.
a Massachusetts corporation
By: _______________________________
Name:
Title:
"▇▇▇▇▇▇▇▇▇ MANAGEMENT"
The ▇▇▇▇▇▇▇▇▇ Asset Management Company an
unincorporated common law business
organization
By: _______________________________
Name:
Title:
--------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
ANNEX A
INDEX OF DEFINED TERMS
Terms
17% Guaranty...............................................................5.05.
Acquisition Proposal.......................................................7.03.
Action..................................................................3.12.(a)
Agreement...............................................................Preamble
APB No. 16.................................................................3.17.
Articles of Merger......................................................1.01.(b)
Beinecke................................................................Preamble
Certificates............................................................1.03.(b)
Code....................................................................Recitals
Company.................................................................Preamble
Company Common Stock.......................................................1.02.
Company Disclosure Schedule..........................................Article III
Company Financial Statements............................................3.06.(a)
Company Stock Option Plans.................................................7.06.
Company Options............................................................3.05.
Company Securities.........................................................3.05.
Company ERISA Affiliate.................................................3.11.(b)
Company Financial Statements............................................3.06.(a)
Confidentiality Agreement..................................................5.02.
Contracts..................................................................3.18.
Effective Time..........................................................1.01.(b)
ERISA...................................................................3.11.(b)
Exchange Agent..........................................................1.03.(a)
Exchange Fund...........................................................1.03.(a)
Exchange Ratio..........................................................1.02.(c)
▇▇▇▇▇▇..................................................................Preamble
Governmental Entity........................................................3.03.
▇▇▇▇▇▇▇▇▇...............................................................Preamble
▇▇▇▇▇▇▇▇▇ Management....................................................Preamble
HSR Act.................................................................3.03.(b)
Lease......................................................................3.20.
Massachusetts Law.......................................................1.01.(a)
Material Adverse Change.................................................3.01.(a)
Merger Sub..............................................................Preamble
Merger..................................................................Recitals
New Parent Option..........................................................7.06.
Note.......................................................................5.05.
Parent..................................................................Preamble
Parent Common Stock.....................................................1.02.(b)
Parent SEC Reports.........................................................4.08.
Parent Balance Sheet.......................................................4.08.
Parent Common Stock.....................................................1.02.(b)
Parent Disclosure Schedule............................................Article IV
Parent Securities..........................................................4.05.
Pension Plan............................................................3.11.(b)
Pooling Letter..........................................................8.01.(h)
Proxy Statement............................................................3.08.
Principal Stockholders....................................................10.01.
Real Property..............................................................3.20.
Securities Act..........................................................3.03.(b)
Significant Agreements.....................................................3.18.
Surviving Corporation...................................................1.01.(a)
Taxes...................................................................3.10.(a)
Utah Law................................................................1.01.(a)
Welfare Plan 3.11.(b)