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EXHIBIT 99.10
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Merger Agreement"), dated as of
November 12, 1996, is among Furon Company, a California corporation (the
"Purchaser"), FCY, Inc., an Ohio corporation and wholly owned subsidiary of the
Purchaser ("Merger Sub"), and Medex, Inc., an Ohio corporation (the "Company").
WITNESSETH:
WHEREAS, the Board of Directors of the Purchaser and the Board of Directors
of the Company have each determined that it is advisable to merge the Company
with Merger Sub (the "Merger") pursuant to this Merger Agreement, with the
result that the holders of the outstanding Common Stock of the Company, $.01 par
value, together with any stock purchase rights related thereto (the "Shares"),
shall receive a payment in cash for each Share as provided in this Merger
Agreement and the Company shall become a wholly owned subsidiary of the
Purchaser.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the Purchaser, Merger Sub and the Company hereby agree as
follows:
1. THE OFFER
1.1 831 Meeting; The Offer.
(a) The Company shall call and hold a special meeting of shareholders
of the Company for the purpose of voting on the proposed control share
acquisition of the Company by Merger Sub (the "831 Meeting"). The record
date for, and the date, time and place of, the 831 Meeting shall be as
heretofore or hereafter fixed by the directors of the Company, subject to
the consent of the Purchaser. The Company shall give notice of the 831
Meeting as promptly as reasonably practicable to all shareholders of record
as of the record date set for such meeting. The notice shall include or be
accompanied by the information specified in Section 1701.831(D) of Title 17
of the Ohio Revised Code (the "Ohio Law"). The directors of the Company
shall recommend that the Company's shareholders approve the proposed
control share acquisition at the 831 Meeting, unless (i) the directors of
the Company are advised by counsel that such recommendation would be
inconsistent with their fiduciary duties as directors or (ii) this Merger
Agreement is terminated in accordance with Section 8. The Company, the
Purchaser and Merger Sub shall promptly cause joint proxy materials with
respect to the 831 Meeting to be prepared, filed with the Securities and
Exchange Commission and distributed to shareholders of the Company in
accordance with Regulation 14A under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and shall jointly solicit proxies to be
voted at the 831 Meeting. In advance of the 831 Meeting, the directors of
the Company shall appoint an inspector of election to act at such meeting
and shall request the inspector to use methods for identifying interested
shares (as defined in Section 1701.01(CC)(2) of the Ohio Law) mutually
agreed upon by the Company and the Purchaser in performing its duties
pursuant to Section 1701.50(C) and Section 1701.831(E)(1) of the Ohio Law.
(b) Provided that nothing shall have occurred which would result in a
failure to satisfy any of the conditions set forth in Schedule 1.1(b)
hereto, Merger Sub shall, and the Purchaser shall cause Merger Sub to,
promptly, and in no event later than one business day after the date
hereof, publicly announce, and within five business days thereafter
commence (within the meaning of Rule 14d-2 under Exchange Act) a tender
offer for any and all Shares at a price of $23.50 per Share net to the
seller in cash (the "Offer") and, subject to the conditions set forth in
such Schedule 1.1(b), shall consummate the Offer in accordance with its
terms. The Offer shall be made by means of an Offer to Purchase having only
the conditions set forth in Schedule 1.1(b) (the "Offer Conditions")
hereto, which may be asserted by the Purchaser in its sole discretion,
except that the Purchaser shall not waive the condition set forth in
paragraph (b) of Schedule 1.1(b) or purchase any Shares pursuant to the
Offer if the shareholder approval required by Section 1701.831 of the Ohio
Law shall not have been obtained unless the Purchaser is satisfied, in its
reasonable discretion, that said Section 1701.831 is invalid or
inapplicable to the
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purchase of shares pursuant to the Offer. The expiration date of the Offer
will not be later than 5:00 p.m. on the second business day after the
conclusion of the 831 Meeting. At the Company's request, Merger Sub will,
and the Purchaser will cause Merger Sub to, extend the expiration date of
the Offer from time to time for up to an aggregate of an additional ten
business days following the conclusion of the 831 Meeting if the condition
set forth in clause (1) of the first paragraph of the Offer Conditions is
not fulfilled prior to 5:00 p.m. on the second business day after the
conclusion of the 831 Meeting. The Purchaser may at any time, at its sole
discretion, increase the price per Share payable in the Offer or extend the
Offer.
1.2 Company Action.
(a) The Company hereby approves of and consents to the Offer and
represents that the Board of Directors of the Company, at a meeting duly
called and held, duly adopted resolutions approving this Merger Agreement,
the Offer and the Merger, determining that the terms of the Offer and the
Merger are fair to, and in the best interests of, the Company's
shareholders and recommending that the Company's shareholders approve and
adopt this Merger Agreement, if a vote is required by applicable law, and
that the Company's shareholders accept the Merger Agreement and the Offer
and tender their Shares pursuant to the Offer. The Company represents that
its Board of Directors has received the opinion of ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. to the
effect that, as of the date of this Merger Agreement, the cash
consideration to be received by holders of Shares (other than the Purchaser
and its affiliates) in the Offer and the Merger is fair to such holders
from a financial point of view.
(b) Concurrently with the commencement of the Offer, the Company shall
file with the Securities and Exchange Commission (the "SEC") and mail to
the holders of Shares a Solicitation/Recommendation Statement on Schedule
14D-9 together with all amendments and supplements thereto and including
the exhibits thereto (the "Schedule 14D-9"), which shall reflect the
recommendations described in the preceding paragraph (a). The Company
agrees that the Schedule 14D-9, including all amendments and supplements
thereto, shall, (i) in all material respects, comply with the requirements
of the Exchange Act and the rules and regulations thereunder and other
applicable laws; (ii) include all information required by Rule 14f-1 of the
Exchange Act; and (iii) not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided,
however, that the foregoing representation shall not apply with respect to
the accuracy of information furnished in writing by the Purchaser
specifically for inclusion in the Schedule 14D-9 or taken from reports
filed by the Purchaser under the Exchange Act. None of the information
furnished in writing or confirmed in writing by the Company for inclusion
in the Offer Documents (as defined in Section 3.4), will contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
Purchaser and Merger Sub and their counsel shall be given an opportunity to
review the Schedule 14D-9 prior to it being filed with the SEC and
disseminated to shareholders. The Company agrees promptly to correct any
information provided by it for use in the Offer Documents if and to the
extent that it shall have become false or misleading in any material
respect.
(c) The Company will promptly furnish the Purchaser with mailing
labels containing the names and addresses of the record holders of Shares
and lists of securities positions of Shares held in stock depositories,
each as of a recent date, and shall furnish the Purchaser with such
additional information (including updated lists of shareholders, mailing
labels and lists of securities positions) and assistance as the Purchaser
or its agents may reasonably request to communicate the Offer to the
shareholders of the Company.
2. THE MERGER
2.1 The Merger. At the Effective Time (as defined in Section 2.3 hereof),
in accordance with this Merger Agreement and the Ohio Law, Merger Sub shall be
merged with and into the Company (the
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"Merger"), the separate existence of Merger Sub (except as may be continued by
operation of law) shall cease, and the Company shall continue as the surviving
corporation. The Company hereinafter sometimes is referred to as the "Surviving
Corporation."
2.2 Effect of the Merger. The Merger shall have the effects set forth in
Section 1701.82 of the Ohio Law.
2.3 Consummation of the Merger. As soon as is practicable after the
satisfaction or waiver of the conditions hereinafter set forth but in no event
earlier than January 2, 1997, the parties hereto will cause the Merger to be
consummated by filing a Certificate of Merger with the Secretary of State of the
State of Ohio, in such form as required by, and executed in accordance with, the
relevant provisions of applicable law. The time of the filing of the Certificate
of Merger with the Secretary of State of the State of Ohio is referred to herein
as the "Effective Time."
2.4 Articles of Incorporation; Code of Regulations; By-Laws. The Articles
of Incorporation, Code of Regulations and By-Laws of the Company, as in effect
immediately prior to the Effective Time, shall be the Articles of Incorporation,
Code of Regulations and By-Laws of the Surviving Corporation, and thereafter
shall continue to be its Articles of Incorporation, Code of Regulations and
By-Laws until amended as provided therein and under the Ohio Law.
2.5 Directors and Officers of Surviving Corporation.
(a) At the Effective Time, by virtue of the Merger and without any
action on the part of Merger Sub, the directors of Merger Sub shall be the
initial directors of the Surviving Corporation and shall hold office from
the Effective Time until their respective successors are duly elected or
appointed and qualify in the manner provided in the Articles of
Incorporation, Code of Regulations and By-Laws of the Surviving
Corporation, or as otherwise provided by law.
(b) At the Effective Time, by virtue of the Merger and without any
action on the part of Merger Sub, the officers of the Company at the
Effective Time shall be the initial officers of the Surviving Corporation
and shall hold office from the Effective Time until their respective
successors are duly elected or appointed and qualify in the manner provided
in the Articles of Incorporation, Code of Regulations and By-Laws of the
Surviving Corporation, or as otherwise provided by law.
2.6 Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of Merger Sub, the Company or the
holder of any of the securities of the Company or Merger Sub:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than Shares to be canceled pursuant to Section 2.6(b)
hereof), together with the associated common stock purchase rights issued
under the Rights Agreement (as hereinafter defined) shall be canceled and
extinguished and be converted into and represent the right to receive from
the Surviving Corporation $23.50 in cash, without interest, or such higher
price per Share as may have been paid pursuant to the Offer (the "Merger
Consideration"). All such Shares and any such stock purchase rights, by
virtue of the Merger and without any action on the part of the holders
thereof, shall no longer be outstanding and shall be canceled and retired
and shall cease to exist, and each holder of a certificate representing any
such Shares shall thereafter cease to have any rights with respect to such
Shares or stock purchase rights, except the right to receive the Merger
Consideration for such Shares and any associated stock purchase rights upon
the surrender of such certificate in accordance with Section 2.8.
(b) Each Share issued and outstanding immediately prior to the
Effective Time and held in the treasury of the Company or owned by the
Purchaser or any direct or indirect subsidiary of the Purchaser (including
Merger Sub) shall be canceled and retired and no payment shall be made with
respect thereto.
(c) All of the issued and outstanding common shares of Merger Sub (all
of which shall be owned by the Purchaser immediately prior to the Effective
Time), taken together, shall be converted into that number of
validly-issued, fully-paid and non-assessable common shares, par value
$0.01 per share, of the
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Surviving Corporation that equals the number of common shares, par value
$0.01 per share, of the Company issued and outstanding immediately prior to
the Effective Time.
(d) Notwithstanding anything in this Merger Agreement to the contrary,
any issued and outstanding Shares held by a person (a "Dissenting
Shareholder") who objects to the Merger and complies with all the
provisions of the Ohio Law concerning the right of shareholders to dissent
from the Merger and require appraisal of their Shares ("Dissenting Shares")
shall not be converted as described in Section 2.6(a) but shall become the
right to receive such consideration as may be determined to be due to such
Dissenting Shareholder pursuant to the Ohio Law. If after the Effective
Time, such Dissenting Shareholder withdraws his demand or fails to perfect
or otherwise loses his dissenter's rights, in any case pursuant to the Ohio
Law, his Shares shall be deemed to be converted as of the Effective Time
into the right to receive the Merger Consideration, without interest. The
Company shall give the Purchaser (i) prompt notice of any demands by
Dissenting Shareholders received by the Company and (ii) the opportunity to
participate in and direct all negotiations and proceedings with respect to
any such demands. The Company shall not, without the prior written consent
of the Purchaser, make any payment with respect to, or settle, offer to
settle or otherwise negotiate, any such demands.
2.7 Payment Fund. Concurrently with the Effective Time, the Purchaser
shall deposit or shall cause to be deposited with the Disbursing Agent (as
defined in Section 2.8) in a separate fund established for the benefit of the
holders of Shares, for payment in accordance with this Section 2, through the
Disbursing Agent (the "Payment Fund"), immediately available funds in amounts
necessary to make the payments pursuant to this Section 2 to holders of Shares
(other than the Company, any subsidiary of the Company, the Purchaser, Merger
Sub or any other subsidiary of the Purchaser or holders of Dissenting Shares).
The Disbursing Agent shall, pursuant to irrevocable instructions, pay the Merger
Consideration out of the Payment Fund.
From time to time at or after the Effective Time, the Purchaser shall take
or cause to be taken all lawful action necessary to permit the Surviving
Corporation to make the appropriate cash payments, if any, to holders of
Dissenting Shares. The Disbursing Agent shall invest portions of the Payment
Fund as the Purchaser directs in obligations of or guaranteed by the United
States of America, in commercial paper obligations receiving the highest
investment grade rating from both ▇▇▇▇▇'▇ Investors Services, Inc. and Standard
& Poor's Corporation, or in certificates of deposit, bank repurchase agreements
or banker's acceptances of commercial banks with capital exceeding
$1,000,000,000 (collectively, "Permitted Investments"); provided, however, that
the maturities of Permitted Investments shall be such as to permit the
Disbursing Agent to make prompt payment to former holders of Shares entitled
thereto as contemplated by this Section. The Purchaser shall cause the Payment
Fund to be promptly replenished to the extent of any losses incurred as a result
of Permitted Investments. All earnings of Permitted Investments shall be paid to
the Purchaser. If for any reason (including losses) the Payment Fund is
inadequate to pay the amounts to which holders of Shares shall be entitled under
Section 2, the Purchaser shall in any event be liable for payment thereof. The
Payment Fund shall not be used for any purpose except as expressly provided in
this Merger Agreement. Six months after the Effective Date, all portions of the
Payment Fund not theretofore paid to former holders of Shares shall be remitted
to the Surviving Corporation and former holders of Shares shall thereafter look
solely to the Surviving Corporation for payment of the Merger Consideration.
2.8 Payment of Cash for Shares. Each holder of a certificate or
certificates representing Shares canceled upon the Merger pursuant to Section
2.6(a) hereof may thereafter surrender such certificate to a disbursing agent to
be designated by the Purchaser and reasonably satisfactory to the Company (the
"Disbursing Agent"), as agent for such holders of Shares, to effect the
surrender of such certificates on their behalf for a period ending six months
after the Effective Time. The Purchaser agrees that promptly after the Effective
Time it will distribute to such holders a form of letter of transmittal and
instructions for use in effecting the surrender of the certificates which,
immediately prior to the Effective Time, represented Shares in exchange for
payment therefor. Each such holder shall be entitled upon surrender of one or
more certificates formerly representing Shares, together with a letter of
transmittal, duly executed and completed in accordance with the instructions
thereto, to receive in exchange therefor a check representing the amount to
which such holder is entitled in respect of the canceled Shares represented by
such certificates after giving effect to any required tax withholding. Until so
surrendered and exchanged, each such certificate shall, after
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the Effective Time, be deemed to represent only the right to receive such
amount. If payment is to be made to a person other than the person in whose name
a surrendered certificate is registered, it shall be a condition to such payment
that the certificate so surrendered shall be endorsed or shall be otherwise in
proper form for transfer, with the registered owner's signature guaranteed by a
firm which is a member of a registered national securities exchange or of the
National Association of Securities Dealers, Inc. or by a commercial bank or
trust company having an office or correspondent in the United States, and that
the person requesting such payment shall have paid any transfer and other taxes
required by reason of such payment in a name other than that of the registered
holder of the certificate surrendered or shall have established to the
satisfaction of the Purchaser or the Disbursing Agent that such tax either has
been paid or is not payable. If any of the cash deposited with the Disbursing
Agent pursuant to Section 2.7 hereof for purposes of payment in exchange for
such Shares remains unclaimed following the expiration of six months after the
Effective Time, such cash shall be delivered to the Purchaser by the Disbursing
Agent, and thereafter the Disbursing Agent shall not be liable to any persons
claiming any amount of such cash and the surrender and exchange shall be
effected directly with the Purchaser. No interest shall accrue or be payable
with respect to any amounts which any holder shall be entitled to receive. The
Purchaser or the Disbursing Agent shall be authorized to pay the cash
attributable to any certificate theretofore issued which has been lost or
destroyed, but only upon receipt of satisfactory evidence of ownership of the
Shares represented thereby and of appropriate indemnification. From and after
the Effective Time, the holders of certificates evidencing ownership of Shares
outstanding immediately prior to the Merger shall cease to have any rights with
respect to such Shares except as otherwise provided herein or by law.
2.9 Taking of Necessary Action; Further Action. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purposes of this Merger Agreement and to vest the Surviving Corporation with
full rights, title and possession to all assets, properties, rights, privileges,
immunities and franchises of either the Company or Merger Sub, the officers and
directors of each such corporation are fully authorized in the name of such
corporation or otherwise to take, and shall take, all such lawful and necessary
action.
2.10 Closing. The closing of the Merger shall take place at the offices of
the Purchaser, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, at 9:00 a.m.
local time, on the second business day after the satisfaction or waiver of the
conditions set forth in Article 7 but in no event earlier than January 2, 1997.
2.11 Transfer of Shares After Effective Time. No transfers of Shares shall
be made on the stock transfer books of the Surviving Corporation at or after the
Effective Time.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company as follows:
3.1 Organization and Qualification. Each of the Purchaser and Merger
Sub is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization and has the requisite
corporate power to carry on its respective business as now conducted. The
Purchaser is duly qualified as a foreign corporation to do business and is
in good standing in each jurisdiction where the character of its properties
owned or leased or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified would not have a
material adverse effect on the Purchaser and its subsidiaries taken as a
whole.
3.2 Authority Relative to this Merger Agreement. Each of the
Purchaser and Merger Sub has the requisite corporate power and authority to
enter into this Merger Agreement and to carry out its respective
obligations hereunder. The execution and delivery of this Merger Agreement
by the Purchaser and Merger Sub and the consummation by the Purchaser and
Merger Sub of the transactions contemplated hereby have been duly
authorized by the respective Boards of Directors of the Purchaser and
Merger Sub and by the Purchaser as the sole shareholder of Merger Sub, and
no other corporate proceedings on the part of the Purchaser or Merger Sub
are necessary to authorize this Merger Agreement and the transactions
contemplated hereby. This Merger Agreement has been duly executed and
delivered by the Purchaser and Merger Sub and constitutes a valid and
binding obligation of each
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such company, enforceable against each such company in accordance with its
terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditor's rights in general and subject to general principles of equity.
Neither the Purchaser nor Merger Sub is subject to or obligated under any
provision of (i) its respective Certificate or Articles of Incorporation,
Code of Regulations, if any, or By-Laws, (ii) any contract, (iii) any
license, franchise or permit or (iv) any law, regulation, order, judgment
or decree, which would be breached or violated or in respect of which a
right of termination or acceleration or any encumbrance on any of its
assets would be created by its execution and performance of this Merger
Agreement. The consummation of the Offer and the Merger by the Purchaser
and Merger Sub will not require the consent or approval of any party, or
filing with any governmental authority, other than (i) approval by the
Purchaser as the sole shareholder of Merger Sub, (ii) applicable
requirements, if any, of the Exchange Act, state "blue sky" or takeover
laws and the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇
▇▇▇"), (▇▇▇) filing and recordation of appropriate merger documents as
required by the Ohio Law and (iv) where failure to obtain such consents or
approvals would not prevent or materially delay the Purchaser or Merger Sub
from performing its obligations under this Merger Agreement.
3.3 Financing. The Purchaser has cash, marketable securities and
lines of credit available for use in connection with the acquisition of the
Company in an aggregate amount necessary to consummate the Offer and the
Merger.
3.4 Tender Offer Documents. The Tender Offer Statement on Schedule
14D-1 filed with the SEC, which shall contain the Offer to Purchase and a
related letter of transmittal and summary advertisement (such Schedule
14D-1 and the documents therein pursuant to which the Offer will be made,
together with any supplement or amendment thereto, are hereafter referred
to as the "Offer Documents"), will comply in all material respects as to
form with the applicable provisions of the Exchange Act. Such Offer
Documents will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which
made, not misleading; provided, however, that the foregoing representation
shall not apply with respect to the accuracy of information furnished in
writing by the Company specifically for inclusion in the Offer Documents or
which is taken from reports filed by the Company under the Exchange Act,
which accuracy shall be the sole responsibility of the Company.
3.5 Brokers. Except for ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc., no broker,
investment banker, financial advisor or other person is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission
in connection with the transactions contemplated by this Merger Agreement
based upon arrangements made by or on behalf of the Purchaser or any of its
Subsidiaries.
3.6 Information Supplied. None of the information supplied or to be
supplied in writing by the Purchaser or Merger Sub for inclusion in the
Schedule 14D-9 or the Proxy Material (as hereinafter defined) will, at the
time the Schedule 14D-9 or any amendments or supplements thereto are filed
with the SEC or the Proxy Material is mailed to the Company's shareholders,
contain an 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, in light of the circumstances under which they were
made, not misleading or, in the case of the Proxy Material, at the time of
the meeting of shareholders to which the Proxy Material relates or at the
Effective Time, omit to state any material fact necessary to correct any
statement that has become false or misleading in any earlier communication
with respect to the solicitation of any proxy for such meeting.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Each of the following representations and warranties is qualified by the
disclosure letter (the "Disclosure Letter") delivered to Purchaser prior to the
execution hereof, whether or not reference is made to the Disclosure Letter in
such representation or warranty. Except as set forth in the Disclosure Letter or
in the
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"SEC Documents" (as hereinafter defined), the Company represents and warrants to
the Purchaser and Merger Sub as follows:
4.1 Organization and Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Ohio and has the requisite corporate power to carry on its
business as it is now being conducted. The Company is duly qualified as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or leased or the
nature of its activities makes such qualification necessary, except where
the failure to be so qualified would not have a "Material Adverse Effect".
As used in this Merger Agreement, the term "Material Adverse Effect" shall
mean a material adverse effect in the business, financial condition,
results of operations, properties, assets or liabilities of the Company and
its Subsidiaries (as defined below) and shall be measured by reference to
the Company and its Subsidiaries, taken as a whole, and the size of the
transactions contemplated by the Offer and the Merger, taken together, and
shall not be determined solely by reference to accounting concepts of
materiality unless the matter involves accounting matters or the context of
this Merger Agreement otherwise requires.
4.2 Articles of Incorporation, Code of Regulations and By-Laws. The
Articles of Incorporation, Code of Regulations and By-Laws in the form
attached hereto as Exhibits 1, 2, and 3, respectively, are the Articles of
Incorporation, Code of Regulations and By-Laws of the Company as in effect
on the date of this Merger Agreement.
4.3 Subsidiaries. Each subsidiary of the Company (each a "Subsidiary"
and collectively the "Subsidiaries") is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation and has the requisite corporate power to carry on its
business as it is now being conducted. Each Subsidiary is duly qualified as
a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or leased or the
nature of its activities makes such qualification necessary, except where
the failure to be so qualified would not have a Material Adverse Effect.
All of the outstanding shares of capital stock of each of the Subsidiaries
are validly issued, fully paid and nonassessable and are owned by the
Company or by a wholly owned Subsidiary of the Company, free and clear of
all liens, claims, or encumbrances, and there are no proxies outstanding
with respect to such shares and no one has the right to acquire any such
shares. The Company has delivered to the Purchaser a true and complete list
of the ownership interests of the Company in the Subsidiaries and the
Company has no ownership interests in any other corporation, partnership,
joint venture or other business association or entity.
4.4 Capitalization. As of the date hereof, the authorized capital
stock of the Company consists of 20,000,000 Shares. As of the date hereof,
(i) 6,216,601 Shares were outstanding, all of which were validly issued,
fully paid and nonassessable, (ii) 150,590 Shares were held in the treasury
of the Company or any of its Subsidiaries, (iii) 2,307,938 Shares were
reserved for issuance pursuant to the Company's Administrative Stock Option
Plan, Key Employee Nonstatutory Stock Option Plan, Executive Stock Option
Plan, the Non-Employee Director Restricted Stock Option Plans and the
Employees' Stock Purchase Plan (the "Stock Option Plans"), copies of which
have heretofore been furnished to the Purchaser, and (iv) options to
purchase 1,157,091 Shares (the "Stock Options") were outstanding pursuant
to the Stock Option Plans. The Disclosure Letter sets forth a true and
complete listing of all Stock Options, the number of Stock Options so held
and the exercise prices of such Stock Options. Pursuant to a Rights
Agreement dated as of October 12, 1995, as amended, between the Company and
Huntington National Bank, as Rights Agent (the "Rights Agreement"), the
Company has issued to its shareholders certain rights to purchase
additional shares of Common Stock of the Company. Except as set forth above
or pursuant to the Employees' Stock Purchase Plan and except as set forth
in the Disclosure Letter, there are not now, and at the Effective Time
there will not be, any shares of capital stock or other equity securities
of the Company issued or outstanding or any options, warrants or other
rights, agreements, arrangements or commitments obligating the Company or
any of its Subsidiaries to issue or sell any shares of capital stock of the
Company or of any Subsidiary. There are no outstanding contracts of the
Company or any Subsidiary to repurchase, redeem or otherwise acquire any
capital stock or other equity securities of the Company or any Subsidiary.
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4.5 Authority Relative to this Merger Agreement. The Company has the
requisite corporate power and authority to enter into this Merger Agreement
and to perform its obligations hereunder. The execution and delivery of
this Merger Agreement by the Company and the consummation by the Company of
the transactions contemplated hereby have been duly authorized by the Board
of Directors of the Company and no other corporate proceedings on the part
of the Company are necessary to authorize this Merger Agreement and the
transactions contemplated hereby, except for any required approval of the
Merger by the Company's shareholders as set forth in Section 6.1 of this
Merger Agreement. This Merger Agreement has been duly executed and
delivered by the Company and constitutes a valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms,
except as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditor's
rights in general and subject to general principles of equity. Except as
set forth in the Disclosure Letter, neither the Company nor any Subsidiary
is subject to or obligated under any provision of (i) its respective
Certificate or Articles of Incorporation, Code of Regulations or By-Laws,
(ii) any contract (excluding all contracts which are terminable upon 90
days or less notice without premium or penalty or contracts involving not
more than $100,000 per fiscal year in payments expected to be paid or
received by the Company or any Subsidiary), (iii) any license, franchise or
permit, or (iv) any law, regulation, order, judgment or decree, which would
be breached, violated or defaulted (with or without due notice or lapse of
time or both) or in respect of which a right of termination or acceleration
or a loss of a material benefit or any encumbrance on any of its assets
would be created or suffered by its execution and performance of this
Merger Agreement. Except as set forth in the Disclosure Letter, the
consummation of the Offer and the Merger by the Company will not require
the consent or approval of or registration or filing with any Federal,
state or local government or any court, administrative or regulatory agency
or commission or other governmental authority or agency, domestic or
foreign, other than (i) approval of the holders of Shares if required by
applicable law or by the Company's Articles of Incorporation, Code of
Regulations or By-Laws, (ii) applicable requirements, if any, of the
Exchange Act, state "blue sky" or takeover laws and the HSR Act, (iii)
filing and recordation of appropriate merger documents as required by the
Ohio Law and (iv) where failure to obtain such consents or approvals or to
make such registration or filing would not have individually or in the
aggregate a Material Adverse Effect on or prevent or materially delay the
Company from performing its obligations under this Merger Agreement. Except
as set forth in the Disclosure Letter, to the best of the Company's
knowledge, no state takeover statute or similar statute or regulation
applies or purports to apply to the Offer, the Merger, this Merger
Agreement or any of the transactions contemplated hereby.
4.6 Commission Filings. The Company has heretofore delivered to the
Purchaser its (i) Annual Reports on Form 10-K for the years ended June 30,
1994, June 30, 1995 and June 30, 1996, as filed with the SEC, (ii) proxy
statements relating to the Company's meetings of shareholders (whether
annual or special) during 1994, 1995 and 1996, and (iii) all other reports
filed by the Company with the SEC since June 30, 1995 (collectively, the
"SEC Documents"). As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the Exchange Act and the
rules and regulations of the SEC promulgated thereunder and applicable to
such SEC Documents, and none of the SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading. The
financial statements of the Company included in the SEC Documents
previously provided to the Purchaser comply as to form in all material
respects with applicable accounting requirements and published rules 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 and
except, in the case of unaudited statements, as permitted by Form 10-Q and
Regulation S-X of the SEC) and fairly present the consolidated financial
position of the Company and its consolidated Subsidiaries as of the dates
thereof and the consolidated results of their operations, changes in
shareholders' equity and statements of cash flow for the periods then
ended, subject, in the case of the unaudited consolidated interim financial
statements, to normal year-end adjustments and any other adjustments
described therein. The unaudited
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financial statements of the Company for the three months ended September
30, 1996 (the "Unaudited First Quarter Financial Statements"), previously
provided to the Purchaser have been prepared using the same accounting
principles and policies and in a manner consistent with the financial
statements of the Company and its Subsidiaries for the period ended June
30, 1996 and fairly present the consolidated financial position of the
Company and its consolidated Subsidiaries as of September 30, 1996, and the
consolidated results of their operations, changes in shareholders' equity
and statements of cash flow for the three months ended September 30, 1996.
Except as set forth in the SEC Documents or in the Unaudited First Quarter
Financial Statements, and except for liabilities and obligations incurred
in the ordinary course of business consistent with past practice, since
, 30, 1996, neither the Company nor any Subsidiary has any
material liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by generally accepted
accounting principles to be set forth on the consolidated balance sheet of
the Company and its consolidated Subsidiaries or in the notes thereto.
4.7 Absence of Certain Changes or Events. Since September 30, 1996,
except as previously disclosed in writing to the Purchaser, neither the
Company nor any Subsidiary has: (a) suffered any Material Adverse Effect or
any event, change or condition, known as of the date hereof, likely to
cause or have any such Material Adverse Effect, other than as a result of
changes in conditions, including economic or political developments,
applicable to the business of health care generally or the business of
manufacturing or selling medical devices generally not having a
disproportionate effect on the Company's business relative to the effect of
any such change on other entities in the business of manufacturing or
selling medical devices; or (b) conducted its business and operations other
than as permitted by Section 5.1 hereof.
4.8 Litigation and Liabilities. Except as disclosed in the Disclosure
Letter or SEC Documents, there are no actions, suits or proceedings pending
or, to the knowledge of the Company, threatened against the Company or any
of the Subsidiaries that are reasonably likely to result in damages to the
Company in excess of $50,000.
4.9 Employee Benefits. (a) True and complete copies of all documents
comprising Benefit Plans have been provided to the Purchaser. For purposes
of this Merger Agreement, the term "Benefit Plan" includes any plan,
contract or arrangement (regardless of whether funded or unfunded, or
foreign or domestic) which is sponsored by the Company or any of the
Subsidiaries, or to which the Company or any of the Subsidiaries makes
contributions or which covers any Employee of the Company or any Subsidiary
in his or her capacity as an Employee or to which the Company or any
Subsidiary has any obligation with respect to any current or former
employee, and which is (i) an "Employee Benefit Plan" within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), (ii) a severance contract with (an) employee(s) or
former employee or any severance plan applicable to employees or former
employees, (iii) a stock option plan, stock appreciation plan, stock
purchase plan or any plan of deferred compensation, or (iv) any other plan
or program providing fringe benefits to employees or former employees
involving costs or obligations of the Company or its Subsidiaries which,
individually or in the aggregate, could result in costs to the Company in
excess of $50,000.
(b) All Benefit Plans are valid and binding and in full force and
effect and there are no material defaults thereunder. Each Benefit Plan
complies currently, and has complied in the past, in form and operation,
with all applicable provisions of ERISA, the Internal Revenue Code of 1986,
as amended (the "Code"), and other applicable law, except for failures to
comply which would not have a Material Adverse Effect. Except as set forth
in the Disclosure Letter, the Company does not sponsor any "employee
pension benefit plan" within the meaning of Section 3(2) of ERISA ("Pension
Plan") which is intended to be qualified under Section 401(a) of the Code
or any plan providing for welfare benefits to former employees under any
Benefit Plan (excluding continuation coverage required under the
Consolidated Omnibus Budget Reconciliation Act of 1985). There is no
pending or, to the best knowledge of the Company, threatened litigation
relating to the Benefit Plans, except for routine claims for benefits that
are not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect. Neither the Company nor any of the Subsidiaries
has engaged in, or failed to engage in, a transaction with respect to
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any Benefit Plan that is reasonably likely to subject the Company or any of
the Subsidiaries to a tax or penalty imposed by either Section 4975 or
4980B of the Code or Section 502(i), 502(c), and 502(l), which,
individually or in the aggregate, could result in costs to the Company in
excess of $50,000, and neither the Company nor any of its Subsidiaries has
been assessed a penalty or tax under any such section.
(c) No Benefit Plan subject to Title IV of ERISA (including any
"multiemployer plan" as defined in ERISA) has been sponsored or contributed
to by the Company or any Subsidiary during the six year period immediately
preceding the date of this Merger Agreement.
(d) All contributions required to be made, and claims to be paid,
under the terms of any Benefit Plan have been timely made or reserves
therefor on the balance sheet of the Company have been established, which
reserves are adequate in all material respects.
(e) Except as described in the Disclosure Letter, no severance
benefits shall become payable under any Benefit Plan as a result of the
Merger, the Offer or the transactions contemplated herein.
4.10 Taxes. For the purposes of this section, the term "tax" shall
include all taxes, charges, withholdings, fees, levies, penalties,
additions, interest or other assessments imposed by any United States
federal, state or local authority or any other taxing authority on the
Company or any of its respective Tax Affiliates (as defined below) as to
their respective income, profit, franchise, gross receipts, payroll, sales,
employment, worker's compensation, use, property, withholding, excise,
occupancy, environmental and other taxes, duties or assessments of any
nature, whatsoever. The Company has filed or caused to be filed timely all
material federal, state, local and foreign tax returns required to be filed
by each of it and any member of its consolidated, combined, unitary or
similar group (each such member a "Tax Affiliate"). Such returns, reports
and other information are accurate and complete in all material respects
and have been made available to the Purchaser or its representatives. The
Company has paid or caused to be paid or has made adequate provision or set
up an adequate accrual or reserve for the payment of, all taxes shown to be
due in respect of the periods for which returns are due, and has
established (or will establish at least quarterly) an adequate accrual or
reserve for the payment of all material taxes payable in respect of the
period subsequent to the last of said periods required to be so accrued or
reserved. Neither the Company nor any of its Tax Affiliates has any
material liability for taxes in excess of the amount so paid or accruals or
reserves so established. Except as set forth in the Disclosure Letter,
neither the Company nor any of its Tax Affiliates is delinquent in the
payment of any material tax in excess of the amount reserved or provided
therefor, and no deficiencies for any tax, assessment or governmental
charge in excess of the amount reserved or provided therefor have been
threatened, claimed, proposed or assessed. Except as set forth below, no
waiver or extension of time to assess any taxes has been given or requested
and remains in effect on the date hereof. The Company's U.S. federal income
tax returns for all years ending on or prior to June 30, 1990 have been
audited (and such audits have been completed), however, the statute of
limitations remains open for such year as to certain amendments to such
return. The Company's U.S. federal tax returns for all years ending on or
prior to June 30, 1989 are no longer subject to audit by reason of the
applicable statute of limitations. All years ended subsequent to such date
have never been audited by the Internal Revenue Service or comparable state
agencies.
4.11 Information Supplied. Any proxy statement relating to the 831
Meeting or the Merger Meeting (as hereinafter defined) mailed by the
Company to the holders of Shares after the date hereof and all amendments
and supplements thereto (the "Proxy Material") will comply as to form in
all material respects with the applicable requirements of the Exchange Act
and the rules and regulations thereunder and will not, at the time of (a)
the first mailing thereof or (b) the meeting called pursuant to Section 6.1
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading, except that no representation is made by the Company
with respect to (i) information supplied by the Purchaser or Merger Sub
expressly for inclusion in any Proxy Material or (ii) any proxy statement
prepared and mailed after the Purchaser has obtained a majority of seats on
the Company's Board of Directors.
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4.12 Licenses and Permits. (a) The Company and the Subsidiaries have
obtained all licenses and permits necessary to conduct their respective
businesses and to own and operate their respective assets and such licenses
and permits are valid and in full force and effect except where the failure
to obtain such licenses and permits would not individually or in the
aggregate have a Material Adverse Effect. No defaults or violations exist
or have been recorded in respect of any license or permit of the Company
and the Subsidiaries other than defaults or violations which would not
reasonably be expected individually or in the aggregate to have a Material
Adverse Effect. No proceeding is pending or, to the best knowledge of the
Company, threatened looking toward the revocation, limitation or
non-renewal of any such license or permit, except for pending or threatened
proceedings that would not, in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(b) The Company has delivered or made available for inspection to the
Purchaser a true and complete list of each material license and permit, and
each material pending application for any license or permit, relating to
the Company and the Subsidiaries. All of such pending applications are in
good standing and without challenge of any kind, and each statement,
application and other document submitted or filed by the Company or any
Subsidiary to or with any federal, state or other governmental agency or
authority, or to or with any other person or entity, for purposes of
obtaining a new or renewed license or permit of any type described in this
Section 4.12 in connection with the transactions contemplated hereby is
true and complete, and except as set forth in the Disclosure Letter, none
of the rights of the Company or any Subsidiary under any license or permit
will be impaired by the consummation of the transactions contemplated
hereby, except, as to the foregoing matters, for such challenges,
incompletenesses or inaccuracies, nondisclosures or impairments which would
not, individually or taken in the aggregate, have a Material Adverse
Effect.
(c) Since June 30, 1996, except as set forth in the SEC Documents and
the Disclosure Letter, the Company has not received any written notice from
and has not been made a party to any proceeding which would, individually
or in the aggregate, have a Material Adverse Effect brought by any
governmental authority alleging that (a) the Company is, or may be in
violation of, any such law, governmental regulation or order, (b) the
Company must change any of its business practices to remain in compliance
with such law, governmental regulation or order, (c) the Company has failed
to obtain any license or permit required for the conduct of its business,
or (d) the Company is in default under or violation of any license or
permit.
4.13 Compliance with Laws. Except as set forth in the Disclosure
Letter, the Company and the Subsidiaries have complied in a timely manner
with all laws and governmental regulations and orders relating to any of
the property now or in the past owned, leased or used by them, or
applicable to their business, including, but not limited to, the labor,
equal employment opportunity, occupational safety and health,
environmental, hazardous or medical waste disposal and antitrust laws,
except where the failure to so comply would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
4.14 Insurance. As of the date hereof, the Company and each of its
Subsidiaries are covered under insurance policies and programs which
provide coverage to the Company by insurers, reasonably believed by the
Company to be of recognized financial responsibility and solvency, against
such losses and risks and in such amounts as are customary in the
businesses in which they are engaged. All material policies of insurance
and fidelity or surety bonds insuring the Company or any of its
Subsidiaries or their respective businesses, assets, employees, officers
and directors of which the Company has copies have previously been made
available for inspection by the Purchaser and are in full force and effect.
Except as otherwise set forth in the Disclosure Letter or SEC Documents, as
of the date hereof, there are no material claims by the Company or any
Subsidiary under any such policy or instrument as to which any insurance
company is denying liability or defending under a reservation of rights
clause. All necessary notifications of claims have been made to insurance
carriers other than those where the failure to so notify will not have a
Material Adverse Effect.
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4.15 Contracts. Except as set forth in the Disclosure Letter, all
contracts, agreements, commitments and other documents to which the Company
or any Subsidiary is a party or by which the Company, any Subsidiary, or
any of their assets is in any way affected or bound, including all
amendments and supplements thereto and modifications thereof (excluding all
contracts which are terminable upon 90 days or less notice without premium
or penalty or contracts involving not more than $100,000 per fiscal year in
payments expected to be paid or received by the Company or any Subsidiary)
(collectively, the "Material Contracts"), are legally valid and binding and
in full force and effect, enforceable against the Company or any such
Subsidiary in accordance with their terms, except as enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditor's rights in general and subject to
general principles of equity, except where failure to be legally valid and
binding and in full force and effect and enforceable would not have a
Material Adverse Effect or results from changes in applicable laws or legal
interpretations after the date hereof, and there are no defaults
thereunder, except those defaults that would not, individually or in the
aggregate, be reasonably expected to have a Material Adverse Effect. Except
as set forth in the Disclosure Letter, the Company has previously made
available for inspection by the Purchaser all written Material Contracts.
The Company has previously provided the Purchaser with copies of any
agreement with any executive officer or other key employee (other than
employees in Europe whose current salary is not in excess of $100,000 per
year) of the Company or any Subsidiary (A) the benefits of which are
contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving the Company or any Subsidiary of the
nature of any of the transactions contemplated by this Merger Agreement,
(B) providing any term of employment or compensation guarantee extending
for a period longer than 90 days or (C) providing severance benefits or
other benefits after the termination of employment of such executive
officer or key employee not comparable to benefits available to employees
generally.
4.16 Title to Properties. Except as set forth in the Disclosure
Letter, the Company and its Subsidiaries have good title to all real,
personal and intangible property reflected in the Company's September 30,
1996 balance sheet previously delivered to the Purchaser (except as
disposed of since such date in the ordinary course of business), and any
property acquired since the date of such balance sheet, free and clear of
all mortgages, security interests, liens, encumbrances, restrictions and
other burdens ("Liens") other than Liens under the Industrial Development
Bond issued to finance the Atlanta facility and such other liens which in
the aggregate do not and will not materially interfere with its ability to
conduct its business as presently conducted.
4.17 Labor Matters. There are no collective bargaining or other labor
union agreements to which the Company or any of its Subsidiaries is a party
or by which any of them is bound. To the best knowledge of the Company,
since September 30, 1996, neither the Company nor any of its Subsidiaries
has encountered any labor union organizing activity, or had any actual or
threatened employee strikes, work stoppages, slowdowns or lockouts.
4.18 Environmental Matters. Except as set forth in the Disclosure
Letter, the Company and its Subsidiaries have complied in all material
respects with all federal, state or local statutes, ordinances, orders,
judgments, rulings or regulations relating to environmental pollution or to
environmental regulation or control. Neither the Company nor any of its
Subsidiaries, nor any of their respective officers, employees,
representatives or agents acting on behalf of the Company or any of its
Subsidiaries, nor, to the best knowledge of the Company, any other person,
has utilized, treated, stored, processed, discharged, spilled or otherwise
disposed of any substance defined as hazardous or toxic by any applicable
federal, state or local law, rule regulation, order or directive, or any
waste or by-product thereof, at any real property or any other facility
(provided that with respect to any person who is not an officer, employee,
representative or agent of the Company or any of its Subsidiaries, only
with respect to any real property or facility owned, leased or used by the
Company or any of its Subsidiaries), in violation of any applicable
statutes, regulations, ordinances or directives of any governmental
authority or court, which violations may reasonably be expected to have a
Material Adverse Effect. To the knowledge of the Company, no environmental
condition exists at any property owned, leased or used by the Company or
any Subsidiary,
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now or in the past, or to which the Company or any Subsidiary sent
hazardous substances or waste, that would give rise to any loss or
liability of the Company or any Subsidiary, including, without limitation,
liability associated with the cleanup or remedy of such condition, other
than loss or liability not constituting a Material Adverse Effect.
4.19 Vote Required. The only vote of the holders of any class or
series of capital stock of the Company necessary to approve the Merger is
the affirmative vote of the holders of a majority of the outstanding
Shares. The supermajority voting provisions of ARTICLE TWELFTH of the
Articles and the prohibitions of Chapter 1704 of the Ohio Law are not
applicable to the Merger Agreement or the transactions contemplated hereby.
4.20 Rights Agreement. Neither the execution and delivery of this
Merger Agreement nor the consummation of the transactions contemplated
hereby will trigger the distribution or exercisability of any rights under
the Rights Agreement or otherwise affect any rights or obligations under
the Rights Agreement. There has been no prior distribution of any rights
under the Rights Agreement.
4.21 Cumulative Exceptions. The exceptions to the representations and
warranties set forth in this Article 4 in the aggregate do not have a
Material Adverse Effect.
4.22 Full Disclosure. The representations and warranties made by the
Company in this Merger Agreement, or in any documents referenced or
delivered pursuant hereto or thereto, do not, and will not, contain any
untrue statement of fact or omit to state a fact required to be stated
herein or therein, or necessary to make the statements and facts contained
herein or therein, in light of the circumstances in which they are made,
not false or misleading other than untrue statements of fact or omissions
which, in the aggregate, do not, and are not reasonably likely to,
constitute a Material Adverse Effect. Copies of all documents heretofore or
hereafter delivered or made available to Merger Sub and the Purchaser
pursuant hereto were or will be complete and accurate copies of such
documents.
5. CONDUCT OF BUSINESS PENDING THE MERGER
5.1 Conduct of Business by the Company Pending the Merger. The Company
covenants and agrees that, prior to the Effective Time, unless the Purchaser
shall otherwise agree in writing or as otherwise expressly contemplated by this
Merger Agreement:
(a) The businesses of the Company and its Subsidiaries shall be
conducted only in, and the Company and the Subsidiaries shall not take any
action except in, the ordinary course of business and consistent with past
practice;
(b) the Company shall not (i) sell or pledge or agree to sell or
pledge any stock owned by it in any of its Subsidiaries; (ii) amend its
Articles of Incorporation, Code of Regulations, By-Laws or the last
sentence of Section 1(c) of its Rights Agreement; or (iii) split, combine
or reclassify any shares of its outstanding capital stock or declare, set
aside or pay any dividend or other distribution payable in cash, stock or
property or redeem or otherwise acquire any shares of its capital stock or
shares of the capital stock of any of its Subsidiaries;
(c) the Company shall not, and shall cause each of its Subsidiaries
not to (i) authorize for issuance, issue or sell any additional shares of,
or rights of any kind to acquire any shares of, its capital stock of any
class (whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise), except for
unissued Shares reserved for issuance upon the exercise of Stock Options in
accordance with their existing terms, as such Stock Options may be
accelerated pursuant to their existing terms; (ii) acquire, dispose of,
transfer, lease, license, mortgage, pledge or encumber any fixed or other
substantial assets other than in the ordinary course of business and
consistent with past practices; (iii) incur, assume or prepay any material
indebtedness or any other material liabilities other than in the ordinary
course of business and consistent with past practices, provided that the
Company may borrow money for use in the ordinary course of business on
terms reasonably acceptable to the Purchaser; (iv) assume, endorse (other
than in the ordinary course of business consistent with past practices),
guarantee or otherwise become liable or responsible (whether directly,
contingently or
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otherwise) for the material obligations of any other person (other than a
Subsidiary); (v) make any material loans, advances or capital contributions
to, or investments in, any other person, other than to Subsidiaries, or
otherwise enter into any Material Contract other than in the ordinary
course of business and consistent with past practices; (vi) make any loans
to employees, other than travel advances in the ordinary course of
business; (vii) fail to maintain adequate insurance consistent with past
practices for their businesses and properties; (viii) undertake, make or
commit to undertake or make any capital expenditures in an amount greater
than $100,000; or (ix) enter into any contract, agreement, commitment or
arrangement with respect to any of the foregoing or which requires payment
by the Company in an aggregate amount of $100,000 or more;
(d) the Company shall use reasonable business efforts to preserve
intact the business organization of the Company and its Subsidiaries to
keep available the services of its and their present officers and key
employees, and to preserve the goodwill of those having business
relationships with it and them;
(e) the Company shall not and shall cause its Subsidiaries not to (i)
enter into any new agreements (other than in its ordinary course of
business consistent with past practice) or amend or modify any existing
agreements (other than in its ordinary course of business consistent with
past practice and except as contemplated by Section 6.3) with any of their
respective officers, directors or employees or with any "disqualified
individuals" (as defined in Section 28OG(c) of the Code), (ii) grant any
increases in the compensation of their respective directors, officers and
employees or any "disqualified individuals" (as defined in Section 28OG(c)
of the Code) other than increases in the ordinary course of business and
consistent with past practice to persons who are not directors or corporate
officers of or "disqualified individuals" with respect to the Company or
any Subsidiary, (iii) enter into, adopt, amend or terminate, or grant any
new benefit not presently provided for under, any employee benefit plan or
arrangement, except as required by law or to maintain the tax qualified
status of the plan; provided, however, it is understood that the Company is
permitted to pay bonuses pursuant to its 1996 incentive compensation plan
and additional bonuses not to exceed in the aggregate amounts accrued
therefor in the Unaudited First Quarter Financial Statements; or (iv)
except as contemplated by Section 6.15, take any action with respect to the
grant of any severance or termination pay other than in the ordinary course
of business and consistent with past practice and pursuant to policies in
effect on the date of this Merger Agreement;
(f) the Company shall not, and shall not permit any Subsidiary to,
acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, association or other business
organization or division thereof or otherwise acquire or agree to acquire
any assets (other than equipment, inventory and supplies in the ordinary
course of business) that are material, individually or in the aggregate, to
the Company and its Subsidiaries taken as a whole;
(g) the Company shall take all actions reasonably necessary so that
the conditions to the Purchaser's or Merger Sub's obligations to consummate
the Offer and the Merger are satisfied on a timely basis, except as
contemplated by this Merger Agreement; and
(h) the Company will not call any meeting of its shareholders to be
held prior to December 31, 1996 other than as required by law or this
Merger Agreement (it being understood and agreed that the holding of the
1996 Annual Meeting of Shareholders scheduled for November 13, 1996, and
any adjournment thereof, shall not be prohibited by this Merger Agreement).
5.2 Actions by the Purchaser and Merger Sub Pending the Merger. None of
the provisions contained in Section 5.1 of this Merger Agreement shall prohibit
the Purchaser or Merger Sub (or any of their respective subsidiaries), during
the period between the payment for Shares pursuant to the Offer and the
Effective Time, from taking or causing to be taken any action with respect to
the business of the Company and the Subsidiaries that the Purchaser or Merger
Sub (or any of their respective subsidiaries) would legally be permitted to take
or cause to be taken with respect to a majority owned subsidiary of the
Purchaser or Merger Sub (or any of their respective subsidiaries), provided that
the Purchaser shall not take any action in violation of the terms of this Merger
Agreement that would cause the Purchaser's obligations to effect the Merger
hereunder to not be satisfied.
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6. ADDITIONAL AGREEMENTS
6.1 Meeting of Shareholders of the Company. (a) Promptly after expiration
of the Offer, the Company shall take all action necessary in accordance with the
Ohio Law and its Articles of Incorporation, Code of Regulations and By-Laws to
convene a meeting of its shareholders promptly to consider and vote upon the
Merger (the "Merger Meeting"), if such meeting is required by the Ohio Law. The
Board of Directors of the Company will recommend that the shareholders of the
Company vote to adopt and approve the Merger and this Merger Agreement, if such
vote is required or sought, and the Company shall use all reasonable efforts to
solicit from shareholders of the Company proxies in favor of such adoption and
approval unless, in either case, (i) the Board of Directors of the Company shall
have properly exercised its rights set forth in the third sentence of Section
6.4(b) or (ii) the Purchaser owns sufficient shares to approve the Merger and
this Merger Agreement by its own vote and requests the Company not to solicit
proxies. At any such meeting, the Purchaser shall vote, or cause to be voted,
all of the Shares then owned by the Purchaser or any subsidiary of the Purchaser
in favor of the Merger.
(b) If permitted by applicable law the Purchaser may elect to effect the
Merger without the holding of a meeting of the shareholders of the Company.
6.2 Proxy Statement. If required by law for the consummation of the
Merger, promptly after expiration of the Offer, the Company shall prepare and
(subject to the Purchaser's approval) file with the SEC under the Exchange Act,
and shall use all reasonable efforts to have cleared by the SEC, a proxy
statement or information statement, as appropriate, with respect to the meeting
of the Company's shareholders referred to in Section 6.1. The Proxy Material
relating to the Merger Meeting shall contain the recommendation of the Board of
Directors of the Company in favor of the Merger and for approval and adoption of
this Merger Agreement.
6.3 Stock Options; Stock Purchase Plan. As soon as practicable following
the date of this Merger Agreement, the Company (or, if appropriate, any
committee administering the Stock Option Plan) and the Purchaser shall take such
actions as are required (including, if necessary, the provision of funds by the
Purchaser to the Company) to provide that at the earlier of the purchase of
Shares pursuant to the Offer and the Effective Time each holder of a then
outstanding Stock Option (as defined in Section 4.4) whether or not then
exercisable or subject to shareholder approval shall, upon surrender thereof to
the Company, receive from the Company (except as otherwise may be provided in
the Director and Officer Agreements contemplated by Section 6.16) the difference
between the Merger Consideration and the exercise price for each share of
Company Common Stock covered by each Stock Option, net of any applicable tax
withholding. The holders of the Stock Options shall be entitled to enforce such
agreements against the Company, the Surviving Corporation and the Purchaser.
6.4 No Solicitation. (a) Except as set forth in this Section 6.4(a), the
Company shall not, and will direct each officer, director, employee,
representative or agent and Subsidiary not to, directly or indirectly,
encourage, solicit, participate in or initiate discussions or negotiations with
or provide any information to any corporation, partnership, company, person or
other entity or group (other than the Purchaser, Merger Sub, or an affiliate or
an associate of the Purchaser or Merger Sub) concerning an Acquisition
Transaction (as herein defined). Notwithstanding the foregoing, the Company may,
directly or indirectly, furnish information and access, in each case in response
to unsolicited requests therefor, to the same extent permitted to the Purchaser
by Section 6.10, to any corporation, partnership, company, person or other
entity or group, pursuant to appropriate confidentiality agreements, and may
participate in discussions and negotiate with such corporation, partnership,
person or other entity or group concerning any proposal or offer from any person
relating to any direct or indirect acquisition of the Company upon a merger,
purchase of assets, purchase of or tender offer for shares of the Company's
Common Stock, recapitalization, plan of liquidation or similar transactions
involving the Company or any Subsidiary (an "Acquisition Transaction"), if the
Company's Board of Directors determines in its good faith judgment based on the
opinion of the Company's counsel as to its fiduciary duties that a failure to
act would be inconsistent with its fiduciary duties. In addition, in the event
of such determination by the Company's Board of Directors based upon such
opinion of its counsel, the Company may authorize its officers and other
appropriate personnel to cooperate with and be reasonably
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available to consult with any such corporation, partnership, company, person or
other entity or group so long as they enter into a confidentiality arrangement
substantially in the form of the confidentiality agreement with the Purchaser,
dated September 16, 1996, as amended. The Company shall promptly notify the
Purchaser if it shall, on or after the date hereof, have entered into a
confidentiality agreement with any third party in response to any unsolicited
request for information and access in connection with a possible Acquisition
Transaction involving the Company and such third party. Notwithstanding receipt
of any proposal relating to any other Acquisition Transaction, until termination
of this Merger Agreement in accordance with Section 8 hereof, the Company will
continue to comply with its obligations under Sections 6.6 and 6.10 hereof.
(b) Neither the Board of Directors of the Company nor any committee thereof
shall (i) withdraw or modify, or propose to withdraw or modify, in a manner
adverse to the Purchaser or Merger Sub, the approval or recommendation by such
Board of Directors or any such committee of the "control share acquisition," the
Offer, this Merger Agreement or the Merger, (ii) approve or recommend, or
propose to approve or recommend, any takeover proposal or (iii) enter into any
agreement with respect to any takeover proposal. For purposes of this Merger
Agreement, "takeover proposal" means any proposal for an Acquisition Transaction
(other than pursuant to the Stock Option Plans or the Stock Purchase Plan or
this Merger Agreement) and "qualified takeover proposal" means a proposal to
acquire all Shares by merger, tender offer or otherwise at a purchase price
which includes cash consideration in excess of $24.00 per share, which in the
good faith determination of the Board of Directors is reasonably likely to be
fully financed. Notwithstanding the first sentence of this paragraph (b), in the
event the Board of Directors of the Company receives a superior takeover
proposal (as defined below), the Board of Directors may (subject to the
limitations contained in this Section) withdraw or modify its approval or
recommendation of the "control share acquisition," the Offer, this Merger
Agreement or the Merger, approve or recommend any such superior takeover
proposal, enter into a definitive agreement with respect to any such superior
takeover proposal or terminate this Merger Agreement in each case at any time if
the Purchaser has not increased the Merger Consideration hereunder to an amount
at least equal to the consideration offered in any such superior takeover
proposal after five (5) business days following the Purchaser's receipt of
written notice (a "Notice of Superior Takeover Proposal") advising the Purchaser
that the Board of Directors has received a superior takeover proposal. The
Company may take any of the foregoing actions pursuant to the preceding sentence
only if Merger Sub shall not have accepted for payment the Shares pursuant to
the Offer. Nothing contained herein shall prohibit the Company from taking and
disclosing to its shareholders a position contemplated by Rule 14e-2(a)
following the Purchaser's receipt of a Notice of Superior Takeover Proposal
provided that the Company does not withdraw or modify its position with respect
to the Offer or Merger or approve or recommend a takeover proposal. For purposes
of this Merger Agreement, a "superior takeover proposal" means a qualified
takeover proposal having terms which the Board of Directors of the Company
determines in its good faith judgment (based, in part, on advice of a financial
advisor of nationally recognized reputation) to be more favorable to the
Company's shareholders than the Offer and the Merger.
6.5 Directors' Pensions. The Purchaser agrees that, upon acceptance by the
Purchaser for payment of Shares pursuant to the Offer, the Company shall pay to
each non-employee director of the Company, in full satisfaction of such
director's rights under the Non-Employee Directors Retirement Plan, an amount
equal to the retirement benefit earned by such director under such Plan, as
previously disclosed to the Purchaser in the Disclosure Letter.
6.6 Additional Agreements. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by the Offer and this
Merger Agreement, including (i) filing the Certificate of Merger referred to in
Section 2.3, (ii) using reasonable efforts to remove any legal impediment to the
consummation or effectiveness of such transactions and (iii) using reasonable
efforts to obtain all necessary waivers, consents and approvals and to effect
all necessary registrations and filings, including, but not limited to, filings
under the HSR Act and submissions of information requested by governmental
authorities.
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6.7 Expenses. (a) Except as provided below, all fees and expenses incurred
in connection with the Offer, the Merger, this Merger Agreement and the
transactions contemplated hereby shall be paid by the party incurring such fees
or expenses, whether or not the Offer or the Merger is consummated.
(b) If (i)(A) this Merger Agreement is terminated due to the occurrence of
any event specified in Section 8.1(e) hereof, or (B) any person or group (as
defined in Section 13(d)(3) of the Exchange Act) (other than the Purchaser,
Merger Sub or any of its or their affiliates) shall have become the beneficial
owner (as defined in Rule 13d-3 promulgated under the Exchange Act) of at least
20% of any class or series of capital stock of the Company (including the
Shares), after the date hereof and prior to the termination of this Merger
Agreement (except if this Merger Agreement shall have been terminated in
accordance with Section 8.1(f)(ii)), and within one year after the acquisition
of such beneficial ownership the Company consummates an Acquisition Transaction
(as defined in Section 6.4 hereof) with one or more persons (other than a party
hereto) or (ii) any one or more persons shall directly or indirectly make any
proposal respecting an Acquisition Transaction to the Company or its
shareholders (an "Acquisition Proposal") after the date hereof and prior to the
termination of this Merger Agreement (except if this Merger Agreement shall have
been terminated in accordance with Section 8.1(f)(ii)) and within one year of
the making of such Acquisition Proposal the Company shall have consummated an
Acquisition Transaction with any such person, then at the time of termination of
this Merger Agreement under Section 8.1(e) or 8.1(f)(i) or at the time of
consummation of such an Acquisition Transaction as contemplated by (i)(B) or
(ii) above, the Company shall promptly (but in no event later than five business
days) pay to the Purchaser a break-up fee equal to $7,965,074, in immediately
available funds.
6.8 Officers' and Directors' Insurance; Indemnification. The Purchaser
will cause the Surviving Corporation to (i) purchase and maintain a directors'
and officers' insurance and indemnification policy substantially equivalent to
the Company's current policy for all current officers and directors of the
Company on the date of this Merger Agreement to cover acts and omissions of
directors and officers of the Company occurring prior to the Effective Time for
six years after the Effective Time (or for such lesser period as can be
purchased for a premium not exceeding 200% of the last annual premium paid by
the Company for directors' and officers' insurance), (ii) assume and continue to
be bound by the Indemnification Agreements currently in effect between the
Company and each of the directors and certain executive officers of the Company
as set forth in the Disclosure Letter, and (iii) maintain in effect the current
provisions of the Articles of Incorporation of the Company (which shall be
contained in the Articles of Incorporation of Merger Sub and the Surviving
Corporation) relating to the rights to indemnification of officers and directors
with respect to indemnification for acts and omissions occurring prior to the
Effective Time. The Purchaser will indemnify each director and officer who
surrenders options for cancellation pursuant to Section 6.3 above against any
costs of defense arising from claims made against such officer or director under
Section 16(b) of the Exchange Act alleging liability to the Company thereunder
as a result of the transactions contemplated by this Merger Agreement. The
Purchaser will not, and will cause the Surviving Corporation not to, bring any
action alleging liability to the Company under Section 16(b) of the Exchange Act
as a result of the transactions contemplated by this Merger Agreement against
any director and officer of the Company who surrenders options for cancellation
pursuant to Section 6.3.
6.9 Notification of Certain Matters. The Company shall give prompt notice
to the Purchaser, and the Purchaser shall give prompt notice to the Company, of
(i) the occurrence, or failure to occur, of any event, which occurrence or
failure would be likely to cause any representation or warranty contained in
this Merger Agreement to be untrue or inaccurate at any time from the date
hereof to the Effective Time, provided that each party's obligation hereunder is
limited to events of which it has knowledge, and (ii) any material failure of
the Company or the Purchaser, as the case may be, or any officer, director,
employee or agent thereof, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder.
6.10 Access to Information. The Company shall, and shall cause its
Subsidiaries, officers, directors, employees and agents to, afford the officers,
employees and agents of the Purchaser complete access at all reasonable times,
from the date hereof to the Effective Time, to its officers, employees, agents,
properties, books and records, and shall furnish the Purchaser all financial,
operating and other data and information as the Purchaser, through its officers,
employees or agents, may reasonably request. Subject to applicable law, the
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Purchaser shall cause all such information of a non-public nature to be retained
confidentially. If this Merger Agreement is terminated, the Purchaser shall
promptly comply with the provisions of the Confidentiality Agreement dated
September 16, 1996, as amended, between the Purchaser and the Company with
respect to the return of confidential information to the Company by the
Purchaser.
6.11 Employee Benefits. The Purchaser and the Company agree that all
employees of the Company immediately prior to the Effective Time shall be
employed by the Surviving Corporation immediately after the Effective Time, it
being understood that, except for employees of the Company with employment
agreements as set forth in Section 6.15, the Purchaser shall not have any
obligation to continue employing such employees for any length of time
thereafter. The Purchaser and the Company agree that, after the Effective Time,
all employees of the Company shall continue to be entitled to and shall receive
the same benefits currently provided the employees of the Company under the
existing Company benefit plans including its existing severance practices
("Company Benefit Plans") through six months from the date of any purchase
pursuant to the Offer so long as the continued provision of such Company Benefit
Plans to such employees does not cause any Purchaser benefit plan to be in
violation of any law or regulation governing such plans. From and after six
months from the date of any purchase pursuant to the Offer, the then employees
of the Surviving Corporation shall be entitled to and shall receive such
benefits as the then constituted management of the Surviving Corporation deems
necessary and appropriate for the Purchaser, subject to consent and advise from
the Purchaser's executive management. With respect to any such revised benefit
plans ("Benefit Plans"), the Purchaser shall grant all employees of the Company
and the Subsidiaries, who become participants in such plans after the Effective
Time credit for all service with the Company and the Subsidiaries, or their
respective predecessors (or any other party for which service has been
recognized by the Company) prior to the Effective Time for all purposes for
which such service was recognized by the Company prior to the Effective Time,
including but not limited to eligibility to participate, vesting in benefits
accrued while participating in such Benefit Plans, and the rate at which
benefits accrue while participating in such Benefit Plans; provided, however,
that such employees shall not accrue benefits under the Benefit Plans during or
on account of the period before they participated in such Benefit Plans. Thus,
by way of example and not limitation, if a Benefit Plan were to provide that
vacation benefits accrue for participants at a rate of one week per year for the
first five years of employment, and at a rate of two weeks per year thereafter,
an employee with five years of service upon his or her commencement of
participation would begin to accrue benefits at the rate of two weeks per year
immediately upon commencement of participation, but would not be granted
vacation benefits under the Benefit Plan for the years of employment prior to
becoming a participant. To the extent that the Benefit Plans provide medical or
dental welfare benefits after the Effective Time, the Purchaser shall cause all
pre-existing condition exclusions and actively-at-work requirements, to the
extent such requirements would have been met by the employees of the Company
under the Company Benefit Plans, to be waived and the Purchaser shall provide
that any expenses incurred on or before the Effective Time shall be taken into
account under the Benefit Plans for purposes of satisfying the applicable
deductible, coinsurance and maximum out-of-pocket provisions. Subject to the
rules governing eligibility, vesting and all other terms of any 401(k) plan or
other qualified retirement plan or ERISA pension plan (the "Retirement Plans"),
the employees of the Company, and the Subsidiaries, shall be eligible to
participate in the Retirement Plans on terms similar to the benefits provided to
similarly situated employees of the Purchaser, with credit granted for purposes
of eligibility and vesting for prior service with the Company and the
Subsidiaries.
6.12 Antitrust Laws. As promptly as practicable, the Company, the
Purchaser and Merger Sub shall make all filings and submissions under the HSR
Act as may be reasonably required to be made in connection with this Merger
Agreement and the transactions contemplated hereby. Subject to Section 6.10
hereof, the Company will furnish to the Purchaser and Merger Sub, and the
Purchaser and Merger Sub will furnish to the Company, such information and
assistance as the other may reasonably request in connection with the
preparation of any such filings or submissions. Subject to Section 6.10 hereof
and to the preservation of attorney-client privilege and work-product doctrine,
the Company will provide the Purchaser and Merger Sub, and the Purchaser and
Merger Sub will provide the Company, with copies of all correspondence, filings
or communications (or memoranda setting forth the substance thereof) between
such party or any of its representatives, on the one hand, and any governmental
agency or authority or members of their respective staffs, on the other hand,
with respect to this Merger Agreement and the transactions contemplated hereby;
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provided, however, that the Purchaser and Merger Sub shall not be required to
provide the Company with copies of confidential documents or information
included in the Purchaser's filings and submissions under the HSR Act.
6.13 Public Announcements. The Purchaser and Merger Sub, on the one hand,
and the Company, on the other hand, agree that they will use reasonable efforts
to consult with the other party prior to issuing any press release or otherwise
making any public statement or responding to any press inquiry with respect to
this Merger Agreement or the transactions contemplated hereby, except as may be
required by applicable law, court process or by obligations pursuant to any
listing agreement with any national securities exchange or national securities
quotation system.
6.14 Directors. Subject to Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder, upon the acceptance for payment of, and payment
for, any Shares by Merger Sub pursuant to the Offer which, represent at least
sixty percent (60%) of the then outstanding Shares, Merger Sub shall be entitled
to request and receive resignations of up to but not exceeding five (5)
directors on the Board of Directors of the Company and to designate new
directors to fill the resulting vacancies. Any number of directors requested to
resign by Merger Sub in accordance with the preceding sentence shall resign in
reverse order of seniority on the Board of Directors.
6.15 Employment Agreements. The Purchaser shall cause the Surviving
Corporation to assume and continue to be bound by (a) the Employment Agreements
currently in effect between the Company and each of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, as amended (including the amendment which eliminates the obligation
to provide letters of credit), and (b) the Executive Employment Agreements
approved by the Board of Directors of the Company on the date hereof, effective
upon purchase of Shares by Merger Sub pursuant to the Offer, between the Company
and each of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ and
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, in each case in the form previously received by the Purchaser.
6.16 Director and Officer Agreements. The Company will use its best
efforts to obtain from each director and officer an agreement that each such
person will tender his Shares to the Purchaser pursuant to the Offer or to the
Company, promptly following the purchase of Shares by the Purchaser pursuant to
the Offer but not earlier than January 2, 1997. The Company shall purchase, and
Purchaser shall cause the Company to purchase, for an amount equal to the Merger
Consideration, all of the Shares tendered to the Company pursuant to such
agreement. Each director and officer shall be entitled to enforce such
agreements against the Company, the Surviving Corporation and the Purchaser. In
addition, each of the directors and officers listed in Schedule 6.16 shall grant
to the Purchaser an option to acquire (but not a proxy or other right to vote,
directly or indirectly) his shares expiring upon termination of the Merger
Agreement with an exercise price equal to the Merger Consideration.
6.17 State Takeover Laws. The Purchaser shall file all information
required to be filed in connection with the Offer pursuant to Section
1707.041(A)(2) of the Ohio Law with the division of Securities of the State of
Ohio. If any other "fair price," "moratorium," or "control share acquisition"
statute or other similar statute or regulation becomes applicable to the
transactions contemplated by this Merger Agreement, the Company, the Purchaser,
and Merger Sub and their respective Boards of Directors will use all reasonable
efforts to grant such approvals and take such actions as are necessary so that
the transactions contemplated by this Merger Agreement may be consummated as
promptly as practicable on the terms contemplated hereby and otherwise act to
minimize the effects of such statute or regulation on the transactions
contemplated hereby.
6.18 Company Option. The Company shall grant to the Purchaser an option to
purchase (but not a proxy or other right to vote, directly or indirectly) up to
753,198 shares of common stock of the Company, together with any stock purchase
rights related thereto, at an exercise price equal to the Merger Consideration
and exercisable upon specified third party events, as set forth in the Option
Agreement attached hereto as Exhibit 4.
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7. CONDITIONS
7.1 Conditions to Obligation of Each Party to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions:
(a) This Merger Agreement and the Merger shall have been approved and
adopted by the requisite vote of the shareholders of the Company if
required by the Ohio Law;
(b) The waiting period (and any extension thereof) applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated; and
(c) No temporary restraining order, preliminary injunction or
permanent injunction or other order preventing the consummation of the
Merger shall have been issued by any Federal or state court and shall
remain in effect.
7.2 Additional Conditions to Obligation of the Company. The obligation of
the Company to effect the Merger is also subject to the condition that each of
the Purchaser and Merger Sub shall in all material respects have performed each
obligation and agreement and complied with each covenant to be performed and
complied with by it hereunder at or prior to the Effective Time.
7.3 Additional Conditions to Obligations of the Purchaser and Merger
Sub. The obligations of the Purchaser and Merger Sub to effect the Merger are
also subject to the following conditions:
(a) The Company shall in all material respects have performed each
obligation and agreement and complied with each covenant to be performed
and complied with by it hereunder on or prior to the Effective Time;
(b) The Purchaser or any of its subsidiaries shall have purchased
Shares pursuant to the Offer; (c) All Stock Options under the Stock Option
Plans shall have been surrendered or canceled; and
(d) The condition set forth in subsection (f) of Schedule 1.1(b) shall
not have occurred, provided, however, this Section 7.3(d) shall not be
applicable if Merger Sub owns 90% or more of the Shares.
8. TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Merger Agreement may be terminated at any time prior
to the Effective Time, whether prior to or after approval by the shareholders of
the Company:
(a) By mutual consent of the Boards of Directors of the Purchaser,
Merger Sub and the Company;
(b) By either the directors of Merger Sub or by the Company (by action
of its continuing Directors only, following the purchase of shares pursuant
to the Offer) if:
(i) (x) as a result of the failure, occurrence or existence of any
of the conditions set forth in Schedule 1.1(b) hereto (1) Merger Sub
shall have failed to commence the Offer within 15 days following the
date of this Merger Agreement; or (2) the Offer shall have terminated or
expired in accordance with its terms without Merger Sub having accepted
for payment any shares of Company Common Stock pursuant to the Offer or
(y) Merger Sub shall not have accepted for payment any shares of Company
Common Stock pursuant to the Offer by 75 days from the date hereof,
provided, however, that the passage of the period referred to in clause
(y) shall be tolled for any part thereof during which any party shall be
subject to a non-final order, decree, ruling or action restraining,
enjoining or otherwise prohibiting the purchase of shares of Company
Common Stock pursuant to the Offer or the consummation of the Merger;
and provided further that the right to terminate this Merger Agreement
pursuant to this Section 8.1(b)(i) shall not be available to any party
whose failure to perform any of its obligations under this Merger
Agreement results in the failure, occurrence or existence of any such
condition; or
(ii) any governmental entity shall have issued an order, decree or
ruling or taken any other action permanently enjoining, restraining or
otherwise prohibiting the acceptance for payment of, or
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payment for, shares of the Company Common Stock pursuant to the Offer or
the Merger and such order, decree or ruling or other action shall have
become final and nonappealable; or
(iii) the Merger shall not have been consummated by March 31, 1997;
(c) By the directors of Merger Sub if (i) neither the Purchaser nor
any subsidiary of the Purchaser shall have purchased any Shares pursuant to
the Offer by December 31, 1996 or (ii) the Purchaser has properly
terminated the Offer in accordance with its terms;
(d) By the directors of Merger Sub if there shall have been any
material breach of a material obligation of the Company hereunder and such
default shall not have been remedied within 5 days after receipt by the
Company of notice in writing from the Purchaser or Merger Sub specifying
such breach and requesting that it be remedied;
(e) By the directors of the Company in connection with entering into
any definitive agreement relating to any Acquisition Transaction in
accordance with Section 6.4;
(f) By the directors of Merger Sub, if the Board of Directors of the
Company shall have (i) exercised its rights set forth in the third sentence
of Section 6.4(b) or (ii) provided any information to any party in
accordance with Section 6.4(a); provided, however, that the Purchaser shall
not terminate this Merger Agreement pursuant to Section 8.1(f)(i) if, as a
result of the Company's receipt of a takeover proposal from a third party,
the Company, as required by applicable law, takes and discloses to the
Company's shareholders a position contemplated by Rule 14e-2(a)(2) or (3)
promulgated under the Exchange Act with respect to such proposal or the
transactions contemplated thereby and if within five business days of
taking and disclosing to its shareholders the aforementioned position the
Company publicly reconfirms its recommendation of the transactions
contemplated as set forth in Section 1.2 hereof; or
(g) By the directors of the Company, if there shall have been any
material breach of a material obligation of the Purchaser or Merger Sub
hereunder and such default shall have not been remedied within 5 days after
receipt by the Purchaser or Merger Sub, as the case may be, of notice in
writing from the Company specifying such breach and requesting that it be
remedied.
8.2 Effect of Termination. In the event of termination of this Merger
Agreement as provided in Section 8.1, this Merger Agreement shall forthwith
become void and there shall be no liability on the part of the Purchaser, Merger
Sub or the Company, except that (i) the provisions of Section 6.7 hereof, and
the last two sentences of Section 6.10 hereof, shall survive any such
termination, and (ii) nothing herein will relieve any party from liability for
any willful breach of any representation or warranty or any breach prior to such
termination of any covenant or agreement contained herein.
8.3 Amendment. This Merger Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties.
8.4 Waiver. At any time prior to the Effective Time, any party hereto may
(a) extend the time for the performance of any of the obligations or other acts
of any other party hereto or (b) waive compliance with any of the agreements of
any other party or with any conditions to its own obligations. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid if set
forth in an instrument in writing signed on behalf of such party by a duly
authorized officer.
9. GENERAL PROVISIONS
9.1 Brokers. The Company represents and warrants that no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the Offer or the Merger based upon arrangements
made by or on behalf of the Company, other than the arrangements with ▇▇▇▇▇
▇▇▇▇▇▇ Inc. and that a true and complete copy of the engagement letter between
the Company and ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. has previously been delivered to the
Purchaser. No valid claim exists against the Company or the Surviving
Corporation on or, based on any action by the Company or any Subsidiary, against
the Purchaser or Merger
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Sub for payment of any "topping", "break-up" or "bust-up" fee or any similar
compensation or payment arrangement as a result of the transactions contemplated
hereby, including the Offer and the Merger.
9.2 Survival of Representation, Warranties and Agreements. No
representations or warranties contained herein shall survive beyond the
Effective Time or, in the case of the Company, shall survive the acceptance for
payment of, and payment for, shares of Common Stock of the Company by Merger Sub
pursuant to the Offer. This Section 9.2 shall not limit any covenant or
agreement of the parties which by its terms contemplates performance after the
Effective Time.
9.3 Notices. All notices and other communications hereunder shall be given
by telephone and immediately confirmed in writing and shall be deemed given if
delivered personally or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to the Purchaser or Merger Sub:
Furon Company
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
With copies to:
O'Melveny & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(b) if to the Company:
Medex, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
With copies to:
▇▇▇▇ & ▇▇▇▇ Co., L.P.A.
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇., Esq.
And
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, III, Esq.
9.4 Interpretation. When a reference is made in this Merger Agreement to
subsidiaries of the Purchaser or the Company, the word "subsidiaries" or
"Subsidiaries" means any corporation more than fifty percent (50%) of whose
outstanding voting securities are directly or indirectly owned by the Purchaser
or the Company, as the case may be. The headings contained in this Merger
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Merger Agreement.
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9.5 No Third Party Beneficiaries. Except for the provisions of Section 2
and Sections 6.3, 6.5, 6.8, 6.11, 6.15 and 6.16, there are no third party
beneficiaries of this Merger Agreement and nothing else in this Merger
Agreement, express or implied, is intended to or shall confer upon any person
other than the parties hereto and their respective successors and permitted
assigns, any rights, remedies, obligations or liabilities.
9.6 Miscellaneous. This Merger Agreement (including the documents and
instruments referred to herein) (i) constitutes the entire agreement and
supersedes all other prior agreements and undertakings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof
except that the Confidentiality Agreement dated September 16, 1996, as amended,
between the Company and the Purchaser shall continue in effect; (ii) is not
intended to confer upon any other person any rights or remedies hereunder; (iii)
shall not be assigned by operation of law or otherwise, provided that the
Purchaser or Merger Sub may assign its rights and obligations hereunder to a
direct or indirect subsidiary of the Purchaser, but no such assignment shall
relieve the Purchaser or Merger Sub, as the case may be, of its obligations
hereunder; and (iv) shall be governed in all respects, including validity,
interpretation and effect, by the internal laws of the State of Ohio without
giving effect to the principles of conflict of laws thereof. This Merger
Agreement may be executed in one or more counterparts which together shall
constitute a single agreement.
9.7 Specific Performance. The parties hereto agree that irreparable damage
would occur in the event any of the provisions of this Merger Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
IN WITNESS WHEREOF, the Purchaser, Merger Sub and the Company have caused
this Merger Agreement to be executed as of the date first written above by their
respective officers thereunder duly authorized.
FURON COMPANY
By: /s/ J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Title: Chairman
FCY, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------------
Title: President
MEDEX, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Title:
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SCHEDULE 1.1(B)
CONDITIONS TO THE OFFER
Notwithstanding any other term of the Offer or this Merger Agreement, the
Purchaser or Merger Sub will not be required to accept for payment or to pay for
any Shares tendered pursuant to the Offer, and, in their good faith discretion,
may terminate or amend the Offer, and may postpone the acceptance for payment of
Shares pursuant thereto, unless, (i) there shall have been validly tendered and
not withdrawn prior to the expiration of the Offer 3,729,961 Shares (the
"Minimum Tender Condition"), and (ii) any waiting period under the HSR Act
applicable to the purchase of Shares pursuant to the Offer shall have expired or
been terminated (the "HSR Condition"). Furthermore, notwithstanding any other
term of the Offer or this Merger Agreement, the Purchaser or Merger Sub shall
not be required to accept for payment or to pay for any Shares not theretofore
accepted for payment or paid for, and, in their good faith discretion, may
terminate or amend the Offer and may postpone the acceptance for payment of
Shares pursuant thereto if, at any time on or after the date of this Merger
Agreement and before the acceptance of such Shares for payment or the payment
therefor, any of the following conditions exists:
(a) any statute, rule, regulation or order shall be proposed, enacted,
entered or deemed applicable to the Offer or the Merger (i) making the
purchase of, or payment for, some or all of the Shares pursuant to the
Offer, or the Merger Agreement illegal, or resulting in a material delay in
the ability of the Purchaser to accept for payment or pay for some or all
of the Shares, or to consummate the Offer or Merger or seeking to obtain
from the Company, the Purchaser or Merger Sub any damages or other remedy
or relief that would have a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole, (ii) imposing material limitations on the
ability of the Purchaser effectively to acquire or hold or to exercise full
rights of ownership of the Shares acquired by it, including the right to
vote the Shares purchased by it on all matters properly presented to the
shareholders of the Company, (iii) which would require the Purchaser or any
direct or indirect subsidiary of the Purchaser to dispose of or hold
separate any of the Shares or all or any material portion of the assets or
business of the Company and the Subsidiaries taken as a whole; or (iv)
prohibit or materially limit the ability of the Purchaser or any direct or
indirect subsidiary of the Purchaser to own, control or operate the
Company, or any of its subsidiaries or all or any material portion of the
businesses, operations or assets of the Company and its Subsidiaries taken
as a whole; or
(b) any shareholder approval required by Section 1701.831 of the Ohio
Law for a "control share acquisition" by the Purchaser or Merger Sub shall
not have been obtained; or
(c) any governmental or regulatory action or proceeding by or before
any court, government or governmental or regulatory authority, domestic or
foreign, shall be threatened, instituted or pending, or any action or
proceeding by any other person, domestic or foreign, shall be instituted or
pending, which would reasonably be expected to result in any of the
consequences referred to in clauses (i) through (iv) of paragraph (a)
above; or
(d) the Company shall not have complied in all material respects with
its agreements and covenants in the Merger Agreement, or its
representations and warranties in the Merger Agreement, when made or at and
as of any time thereafter, are untrue or incomplete in any material respect
or the Purchaser shall have become aware of any previously undisclosed
liability that has a Material Adverse Effect; or
(e) an offer shall have been publicly proposed to be made or have been
made on or after the date of this Offer to Purchase by another person or by
a "group" of persons as defined in Section 13(d)(3) of the Exchange Act,
individually or in the aggregate, to purchase or exchange for cash or other
consideration 20% or more of the Shares, or 20% or more of the Shares have
been or are proposed to be acquired by another person or by a group of
persons or another person or group of persons shall have entered into a
definitive agreement or an agreement in principle with the Company with
respect to a merger, consolidation or other business combination
transaction with, or an acquisition of a material portion of the assets of,
the Company or its Subsidiaries; or
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(f) any change (or any development involving a prospective change)
shall have occurred in the business, financial condition or results of
operations of the Company or any of its Subsidiaries that has had or is
reasonably expected to have a Material Adverse Effect upon the Company and
its Subsidiaries as a whole (including changes in conditions, such as
economic or political developments, applicable to the business of the
Company and its Subsidiaries as set forth in the Company's strategic
business plan or applicable to the medical device manufacturing and
distributing business currently conducted by the Company); or
(g) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock Exchange
or in the over-the-counter market, (ii) the declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States, (iii) the commencement of a war, armed hostilities or other
international or national calamity directly or indirectly involving the
United States, (iv) any limitation by any governmental authority on, or any
other event which, in the sole judgment of the Purchaser, affects the
extension of credit by banks or other financial institutions, (v) a
material adverse change in the United States exchange rates or a suspension
of, or limitation on, the markets therefor, (vi) a decrease of more than
25% in the Dow ▇▇▇▇▇ Industrial Average, or (vii) in the case of any of the
foregoing existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof; or
(h) the Merger Agreement shall have been terminated or amended to
provide for the amendment or termination of the Offer;
which, in the good faith discretion of the Purchaser, in any such case
regardless of the circumstances (including any action or omission by the
Purchaser) giving rise to any such conditions, makes it inadvisable to proceed
with such acceptance for payment or payment or makes it advisable to terminate
or amend the Offer.
The foregoing conditions are for the sole benefit of the Purchaser and
Merger Sub and may be asserted by the Purchaser and Merger Sub regardless of the
circumstances giving rise to any such conditions or may be waived by the
Purchaser or Merger Sub in whole or in part, at any time and from time to time
in their sole discretion. The failure by the Purchaser or Merger Sub at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each right shall be deemed an on-going right which may be asserted at
any time and from time to time. Any determination by the Purchaser or Merger Sub
concerning any events described in the above conditions shall be final and
binding on all parties.
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