AGREEMENT AND PLAN OF MERGER by and among TUMBLER HOLDINGS, INC., TUMBLER MERGER CORP. and BIOLOK INTERNATIONAL INC. Dated as of September 7, 2006
Execution
Copy
AGREEMENT
AND PLAN OF MERGER
by
and among
TUMBLER
HOLDINGS, INC.,
TUMBLER
MERGER CORP.
and
BIOLOK
INTERNATIONAL INC.
Dated
as
of September 7, 2006
THIS
AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made and entered into as of
September 7, 2006, by and among TUMBLER HOLDINGS, INC., a Delaware corporation
(“Parent”), TUMBLER MERGER CORP., a Delaware corporation and wholly-owned
subsidiary of Parent (“Merger Sub”), and BIOLOK INTERNATIONAL
INC.,
a
Delaware corporation (the “Company”). Parent, Merger Sub and the Company are
sometimes referred to herein each, individually, as a “Party” and, collectively,
as the “Parties.” Capitalized terms used herein shall have the respective
meanings ascribed thereto in Section 9.13 or 9.14.
RECITALS
A. It
is
proposed that Merger Sub shall, as promptly as practicable, commence a tender
offer to acquire all of the outstanding shares of Company common stock, par
value $0.01 per share (“Company Common Stock”), all upon the terms and subject
to the conditions set forth herein.
B. It
is
also proposed that, following the consummation of the Offer, Merger Sub will
merge with and into the Company (the “Merger”) and each share of Company Common
Stock that is not tendered and accepted pursuant to the Offer will thereupon
be
cancelled and converted into the right to receive cash in an amount equal
to the
Per Share Amount, all upon the terms and subject to the conditions set forth
herein.
C. As
a
condition and further inducement to Parent and Merger Sub to enter into this
Agreement and incur the obligations set forth herein, certain stockholders
of
the Company (each, a “Major Stockholder”) concurrently herewith are entering
into a Stockholders Support Agreement (the “Stockholders Support Agreement”),
dated as of the date hereof, with Parent and Merger Sub, in the form attached
hereto as Exhibit
A,
pursuant to which each such Major Stockholder has, among other things, upon
the
terms and subject to the conditions set forth therein, irrevocably agreed
to
tender such Major Stockholder’s shares of Company Common Stock.
D. Each
of
the Boards of Directors of Parent, Merger Sub and Company has (i) determined
that this Agreement is advisable, (ii) determined that this Agreement and
the
transactions contemplated hereby (including the Offer and the Merger), taken
together, are in the best interests of their respective stockholders, and
(iii)
approved this Agreement and the transactions contemplated hereby (including
the
Offer and the Merger), all upon the terms and subject to the conditions set
forth herein.
NOW,
THEREFORE, in consideration of the foregoing and the mutual representations,
warranties, covenants and agreements herein contained, and for other good
and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties hereby agree as follows:
ARTICLE
I
THE
OFFER
1.1 The
Offer.
(a) Terms
of the Offer; Conditions to Offer.
Provided that this Agreement shall not have been earlier terminated in
accordance with ARTICLE VIII, as promptly as practicable after the date hereof
(but in no event more than five (5) business days thereafter), Merger Sub
shall
(and Parent shall cause Merger Sub to) commence (within the meaning of Rule
14d-2 under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) a cash tender offer (the “Offer”) to purchase any and all of the
outstanding shares of Company Common Stock at a price per share of Company
Common Stock, subject to the terms of Section 1.1(b), equal to a price of
Two
Dollars and Fifteen Cents ($2.15) per share of Company Common Stock, net
to the
holder thereof in cash (such amount, or any different amount per share of
Company Common Stock that may be paid pursuant to the Offer, is the “Per Share
Amount”). The obligation of Merger Sub to accept for payment and to pay for any
outstanding shares of Company Common Stock tendered (and the obligation of
Parent to cause Merger Sub to accept for payment and to pay for any Company
Shares tendered) pursuant to the Offer shall be subject only to (i) the
condition (the “Minimum Condition”) that, prior to the then scheduled expiration
of the Offer (as it may be extended from time to time pursuant to Section
1.1(c)
there be validly tendered in accordance with the terms of the Offer and not
withdrawn a number of shares of Company Common Stock that, together with
the
outstanding shares of Company Common Stock then owned by Parent (if any)
and
Merger Sub, and their direct and indirect wholly owned subsidiaries and
affiliates, represents at least 50.01% of all then outstanding shares of
Company
Common Stock calculated on a fully diluted basis (including, without limitation,
all shares of Company Common Stock issuable upon the conversion of any
convertible securities or upon the exercise of any options, warrants or rights,
excluding, however, any securities not convertible or exercisable (including
for
this purpose any securities which become convertible or exercisable as a
result
of conversion pursuant to Section 2.7(a)) on or prior to October 31, 2006
shall
have been validly tendered in accordance with the terms of the Offer and
not
withdrawn prior to the expiration of the Offer and (ii) the satisfaction
or
waiver in accordance with the terms of this Agreement of each of the other
conditions set forth in Annex
A.
Parent
and Merger Sub expressly reserve the right to waive any such condition, to
increase the Per Share Amount, and to make any other changes in the terms
and
conditions of the Offer; provided, however, that unless previously approved
by
the Company in writing, neither Parent nor Merger Sub may make any change
to the
terms and conditions of the Offer that (i) decreases the Per Share Amount,
(ii)
changes the form of consideration to be paid in the Offer, (iii) reduces
the
number of shares of Company Common Stock to be purchased in the Offer, (iv)
imposes conditions to the Offer in addition to the conditions to the Offer
set
forth in Annex
A,
(v)
amends the conditions to the Offer set forth in Annex
A
so as to
broaden the scope of such conditions to the Offer, (vi) extends the Offer
except
as provided in Section 1.1(c), (vii) amends or waives the Minimum Condition,
or
(viii) makes any other change to any of the terms and conditions of the Offer
in
any manner that is adverse to the holders of shares of Company Common Stock
in
the reasonable good faith judgment of the Company. The conditions
to the Offer set forth in Annex
A
are for
the sole benefit of Parent and Merger Sub and may be waived by Parent and
Merger
Sub, in whole or in part, at any time and from time to time, in their sole
discretion, other than the Minimum Condition, which may be waived by Parent
and
Merger Sub only with the prior written consent of the Company. The failure
by
Parent and Merger Sub at any time to exercise any of the foregoing rights
shall
not be deemed a waiver of any such right, and each such right shall be deemed
an
ongoing right that may be asserted at any time and from time to
time.
2
(b) Adjustments
to Per Share Amount. The Per Share Amount shall be adjusted appropriately
to
reflect the effect of any stock split, reverse stock split, stock dividend
(including any dividend or distribution of securities convertible into Company
Common Stock), extraordinary cash dividends, reorganization, recapitalization,
reclassification, combination, exchange of shares or other like change with
respect to Company Common Stock occurring on or after the date hereof and
prior
to Merger Sub’s acceptance for payment of, and payment for, shares of Company
Common Stock pursuant to the Offer.
(c) Extension
and Expiration of Offer. Subject to the terms and conditions of the Offer
and
this Agreement, the Offer shall expire at midnight, New York Time, on the
date
that is twenty (20) business days (calculated in accordance with Section
14d-1(g)(3) under the Exchange Act) after the date the Offer is commenced
(within the meaning of Rule 14d-2 under the Exchange Act); provided, however,
that notwithstanding the foregoing or anything to the contrary set forth
in this
Agreement (i) Merger Sub shall extend the Offer for any period required by
any
rule, regulation, interpretation or position of the Securities and Exchange
Commission (“SEC”) or its staff or other governmental or self-regulatory entity
that is applicable to the Offer, and (ii) in the event that any of the
conditions to the Offer set forth on Annex
A
are not
satisfied or waived as of any then scheduled expiration date of the Offer,
Merger Sub shall extend the Offer for successive extension periods of not
more
than ten (10) business days each, until such time as either (A) all of the
conditions to the Offer are satisfied or waived, or (B) this Agreement is
terminated pursuant to the terms of Article VIII; provided, however, that
notwithstanding the foregoing clauses (i) and (ii) of this Section 1.1(c),
in no
event shall Merger Sub be required to extend the Offer beyond the termination
of
this Agreement in accordance with Article VIII.
(d) Payment
for shares of Company Common Stock. Subject to the terms and conditions of
the
Offer and this Agreement, Merger Sub shall (and Parent shall cause Merger
Sub
to) accept for payment, and pay for, all shares of Company Common Stock validly
tendered and not withdrawn pursuant to the Offer, as promptly as practicable
after the applicable expiration date of the Offer (as it may be extended
in
accordance with Section 1.1(c)). The Per Share Amount payable in respect
of each
share of Company Common Stock validly tendered and not withdrawn pursuant
to the
Offer shall be paid net to the holder thereof in cash, subject to reduction
only
for any applicable withholding taxes in accordance with Section 2.8(d) payable
by such holders.
(e) Subsequent
Offering Period. Merger Sub may (but shall not be required to) extend the
Offer
for a subsequent offering period (within the meaning of Rule 14d-11 under
the
Exchange Act) of not less than three (3) nor more than twenty (20) business
days
immediately following the expiration of the Offer provided, however, that
in the
event that more than eighty percent
(80%) of the then outstanding shares of Company Common Stock have been validly
tendered and not withdrawn pursuant to the Offer on the applicable expiration
date of the Offer (as it may be extended in accordance with Section 1.1(c)),
Merger Sub shall extend the Offer for a subsequent offering period (within
the
meaning of Rule 14d-11 under the Exchange Act) of ten (10) business days
immediately following the applicable expiration date of the Offer. Subject
to
the terms and conditions of the Offer and this Agreement, Merger Sub shall
(and
Parent shall cause Merger Sub to) accept for payment, and pay for, all shares
of
Company Common Stock validly tendered and not withdrawn pursuant to the Offer
as
so extended by such subsequent offering period, as promptly as practicable
after
any such shares of Company Common Stock are tendered during such subsequent
offering period. The Per Share Amount payable in respect of each share of
Company Common Stock validly tendered and not withdrawn pursuant to the Offer,
as so extended by such subsequent offering period, shall be paid net to the
holder thereof in cash, subject to reduction only for any applicable withholding
taxes in accordance with Section 2.8(d) payable by such
holder.
3
(f) Transfers
of Ownership. If the payment equal to the Per Share Amount or Merger
Consideration in cash is to be made to a Person other than the Person in
whose
name the surrendered certificate formerly evidencing shares of Company Common
Stock is registered on the stock transfer books of the Company, it shall
be a
condition of payment that the certificate so surrendered shall be endorsed
properly or otherwise be in proper form for transfer and that the Person
requesting such payment shall have paid all transfer and other taxes required
by
reason of the payment of the Per Share Amount or Merger Consideration to
a
Person other than the registered holder of the certificate surrendered or
shall
have established to the satisfaction of Parent that such taxes either have
been
paid or are not applicable.
(g) Schedule
TO; Offer Documents. On the date the Offer is commenced (within the meaning
of
Rule 14d-2 under the Exchange Act), Parent and Merger Sub shall (i) file
with
the SEC a Tender Offer Statement on Schedule TO (together with all amendments
and supplements thereto, and including all exhibits thereto, the “Schedule TO”)
with respect to the Offer, which shall contain as an exhibit or incorporate
by
reference an Offer to Purchase, or portions thereof (the “Offer to Purchase”),
and forms of the letter of transmittal and summary advertisement, if any,
in
respect of the Offer (together with any supplements or amendments thereto,
the
“Offer Documents”), and (ii) cause the Offer Documents to be disseminated to all
holders of shares of Company Common Stock (collectively, the “Company
Securityholders”). Subject to the provisions of Section 6.10(a), the Schedule TO
and the Offer Documents may include a description of the determinations,
approvals and Recommendations of the Board of Directors of the Company (the
“Company Board”) set forth in Section 1.2(a). The Company shall promptly furnish
to Parent and Merger Sub in writing all information concerning the Company
that
may be required by applicable federal securities laws or reasonably requested
by
Parent and Merger Sub for inclusion in the Schedule TO or the Offer Documents.
Parent and the Company shall cooperate in good faith to determine the
information regarding the Company that is necessary or reasonably appropriate
to
include in the Schedule TO and the Offer Documents in order to satisfy
applicable securities laws. Parent and Merger Sub shall cause the Schedule
TO
and the Offer Documents to comply in all material respects with the Exchange
Act
and all other Laws. Parent and Merger Sub hereby agree that the Schedule
TO and
the Offer Documents, when filed with the SEC and on the date first published,
sent or given to the Company Securityholders, shall 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 no representation or warranty is made
by
Parent or Merger Sub with respect to information supplied by the Company
in
writing specifically for inclusion or incorporation by reference in the Schedule
TO or the Offer Documents. Parent and Merger Sub shall provide the Company
a
reasonable opportunity to review and comment on the Schedule TO and the Offer
Documents prior to the filing thereof with the SEC. Parent and Merger Sub
shall
advise the Company, promptly after it receives notice thereof, of any request
by
the SEC or its staff for an amendment or revision of the Schedule TO or the
Offer Documents, or comments thereon or responses thereto, or request by
the SEC
or its staff for additional information in connection therewith and shall
provide to the Company all written comments or requests for information that
Parent, Merger Sub or their counsel may receive from the SEC or its staff
with
respect to the Schedule TO and the Offer Documents promptly after receipt
thereof. Parent and Merger Sub shall respond to any such
4
comments
or requests from the SEC regarding the
Schedule TO and the Offer Documents. No filing of, or amendment or supplement
to, or correspondence with the SEC or its staff with respect to the Schedule
TO
and the Offer Documents shall be made by Parent and Merger Sub without providing
the Company and its counsel a reasonable opportunity to participate in the
formulation thereof and to review and comment thereon. If at any time prior
to
the Appointment Time, any information relating to the Parent, Merger Sub,
Company or any of their respective directors, officers or affiliates, should
be
discovered by Parent, Merger Sub or the Company (including any correction to
any
of the information provided by them for use in the Schedule TO or other Offer
Documents) which should be set forth in an amendment or supplement to the
Schedule TO or other Offer Documents so that the Schedule TO or other Offer
Documents would not include any misstatement of a material fact or omit to
state
any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the party which
discovers such information shall promptly notify the other party or parties
hereto, as the case may be, and an appropriate amendment or supplement to the
Schedule TO or the other Offer Documents describing such information shall
be
promptly prepared and filed with the SEC and disseminated to the Company
Securityholders, in each case as and to the extent required by applicable law.
1.2 Company
Action.
(a) Company
Determinations, Approvals and Recommendations.
The
Company hereby consents to the Offer and represents and warrants to Parent
and
Merger Sub that, at a meeting duly called and held prior to the date hereof,
the
Company Board has, upon the terms and subject to the conditions set forth
herein, (i) determined that this Agreement and the transactions contemplated
hereby are advisable, (ii) determined that this Agreement and the transactions
contemplated hereby (including the Offer and the Merger), taken together,
are
fair to and in the best interests of the Company Securityholders, (iii) approved
this Agreement and the transactions contemplated hereby (including the Offer
and
the Merger) which approval constituted approval under Section 203 of the
Delaware General Corporation Law (“DGCL”) as a result of which this Agreement
and the transactions contemplated hereby (including the Offer and the Merger),
are not and will not be subject to any restrictions under Section 203 of
the
DGCL, and (iv) resolved to recommend that the Company Securityholders accept
the
Offer, tender
their shares of Company Common Stock to Merger Sub pursuant to the Offer
and
adopt this Agreement in accordance with the applicable provisions of laws
of the
State of Delaware (“Delaware Law”) (the actions described in clauses (i) through
(iv) are referred to collectively as the “Recommendations”); provided, however,
that Recommendations may be withheld, withdrawn, amended or modified in
accordance with the terms of Section 5.2. As of the date hereof, the
Recommendations were unanimous. The Company hereby consents to the inclusion
of
the foregoing determinations and approvals in the Offer Documents and, to
the
extent that the foregoing Recommendations are not withheld, withdrawn, amended
or modified in accordance with Section 5.2, the Company hereby consents to
the
inclusion of such Recommendations in the Offer Documents. Each director and
executive officer of the Company has executed a Stockholders Support
Agreement.
(b) Schedule
14D-9.
The
Company shall (i) file with the SEC, to the extent reasonably practical
concurrently with the filing by Parent and Merger Sub of the Schedule TO,
a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with
all
amendments and supplements thereto, and including all exhibits thereto,
the
“Schedule 14D-9”), and (ii) cause the Schedule 14D-9 to be mailed to the Company
Securityholders, to the extent reasonably practical together with the Offer
Documents, promptly after the commencement of the Offer (within the meaning
of
Rule 14d-2 under the Exchange Act). Subject to the provisions of Section
5.2,
the Company agrees the Schedule 14D-9 shall include a description of the
determinations and approvals, and shall include the Recommendations. Each
of
Parent and Merger Sub shall promptly furnish to the Company in writing
all
information concerning Parent and Merger Sub that may be required by applicable
federal securities laws or reasonably requested by the Company for inclusion
in
the Schedule 14D-9. The Company shall provide Parent, Merger Sub and their
counsel reasonable opportunity to review and comment on the Schedule 14D-9
prior
to the filing thereof with the SEC. Parent and Merger Sub hereby agree
that the
information provided by them specifically in writing for inclusion or
incorporation by reference in the Schedule 14D-9 shall 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. The Company
shall
advise Parent, promptly after it receives notice thereof, of any request
by the
SEC or its staff for an amendment or revision of the with respect to the
Schedule 14D-9, or comments thereon or responses thereto, or request by
the SEC
or its staff for additional information in connection therewith and shall
provide to Parent and its counsel all written comments or requests for
information that the Company or its counsel may receive from the SEC or
its
staff with respect to the Schedule 14D-9 promptly after receipt thereof.
The
Company shall respond to any such comments or requests from the SEC regarding
the Schedule 14D-9. No filing of, or amendment or supplement to, or
correspondence with the SEC or its staff with respect to the Schedule 14D-9
shall be made by the Company without providing Parent a reasonable opportunity
to participate in the formulation thereof and to review and comment thereon.
If
at any time prior to the Appointment Time, any information relating to
the
Company, Parent, Merger Sub, or any of their respective directors, officers
or
affiliates, should be discovered by Parent, Merger Sub or the Company (including
any correction to any of the information provided by them for use in the
Schedule 14D-9 which should be set forth in an amendment or supplement
to the
Schedule 14D-9 so that the Schedule 14D-9 would not include any misstatement
of
a material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under
which they were made, not misleading), the party which discovers such
information shall promptly notify the other party or parties hereto, as
the case
may be, and an appropriate amendment or supplement to the Schedule 14D-9
describing such information shall be promptly prepared and filed with the
SEC
and disseminated to the Company Securityholders, in each case as and to
the
extent required by applicable law.
5
(c) Company
Information.
In
connection with the Offer, the Company shall, or shall cause its transfer
agent
to, promptly following a request by Parent, furnish Parent with such
information, including, without limitation, a list, as of the most recent
practicable date, of the Company Securityholders, mailing labels and any
available listing or computer files containing the names and addresses of
all
record and beneficial holders of shares of Company Common Stock, and lists
of
security positions of shares of Company Common Stock held in stock depositories
(including, without limitation, updated lists of stockholders, mailing labels,
listings or files of securities positions, to the extent available), and
with
such assistance, as Parent or its agents may reasonably request in order
to
disseminate and otherwise communicate the Offer to the record and beneficial
holders of shares of Company Common Stock. Such information shall be provided
in
such format, including electronic form (if such information is existing in
electronic form), as may be reasonably requested by Parent and as is
practicable. Subject to any and all Laws, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Merger, Parent and Merger Sub and their affiliates,
associates, employees, agents and representatives shall (i) hold in confidence
the information contained in any such lists of stockholders, mailing labels
and
listings or files of securities positions, (ii) use such information only
in
connection with the Offer and the Merger and, (iii) if (A) this Agreement
shall
be terminated pursuant to Article VIII and (B) Parent and Merger Sub shall
withdraw the Offer or the Offer shall otherwise expire or terminate in
accordance with the terms hereof without Merger Sub having accepted for payment
any shares of Company Common Stock pursuant to the Offer, deliver (and shall
use
their respective reasonable efforts to cause their affiliates, associates,
employees, agents and representatives to deliver) to the Company any and
all
copies and any extracts or summaries from such information then in their
possession or control.
1.3 Company
Boards of Directors and Committees; Section 14(f) of Exchange
Act.
(a) Composition
of Company Board.
Effective upon the acceptance for payment by Merger Sub of the number of
the
shares of Company Common Stock pursuant to the Offer (the “Appointment Time”),
Parent shall be entitled to designate the number of directors, rounded up
to the
next whole number, on the Company Board that equals the product of: (i) the
total number of directors on the Company Board (giving effect to the election
of
any additional directors pursuant to this Section 1.3); and (ii) the percentage
that the number of shares of Company Common Stock owned by Parent and/or
Merger
Sub (including shares of Company Common Stock accepted for payment) bears
to the
total number of shares of Company Common Stock outstanding. Promptly following
a
request by Parent, the Company shall take all action reasonably necessary
to
cause Parent’s designees to be elected or appointed to the Company Board,
including, without limitation, at the option of Parent, increasing the number
of
directors (and amending the Bylaws if so required), or seeking and accepting
resignations of incumbent directors, or both; provided, however, that prior
to
the Effective Time, the Company Board shall always
have at least two members who were directors of the Company prior to
consummation of the Offer and who are not affiliated with Parent or Merger
Sub
(each, a “Continuing Director”). In the event that a Continuing Director shall
resign from the Company Board prior to the Effective Time, Parent, Merger
Sub
and the Company shall permit the remaining Continuing Directors to appoint
the
resigning director’s successor, who shall thereafter be deemed to be a
Continuing Director for all purposes of and under this Agreement. If the
number
of Continuing Directors is reduced to fewer than two for any reason prior
to the
Effective Time, the remaining and departing Continuing Directors shall be
entitled to designate a person to fill the vacancy or vacancies such that
there
shall be at least two Continuing Directors, who shall thereafter be deemed
to be
a Continuing Director for all purposes of and under this Agreement. If there
shall be no Continuing Directors prior to the Effective Time, the majority
of
the members of the Company Board who are not Continuing Directors shall
designate two persons to fill the vacancies such that there shall be two
Continuing Directors, who shall thereafter be deemed to be a Continuing Director
for all purposes of and under this Agreement. The Company shall, upon Parent’s
request following the Appointment Time, also cause persons elected or designated
by Parent to constitute the same percentage (rounded up to the next whole
number) as is on the Company Board of (i) each committee of the Company Board
(other than as it relates to action which may be taken or is required to
be
taken by the Continuing Directors pursuant to Section 1.3(c), (ii) each board
of
directors (or similar body) of each Company Subsidiary and (iii) each committee
(or similar body) of each such board, in each case only to the extent permitted
by applicable law or the rules of any stock exchange on which the shares
of
Company Common Stock are listed.
6
(b) Section
14(f) of the Exchange Act.
The
Company’s obligation to appoint Parent’s designees to the Company Board shall be
subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder. The Company shall promptly take all action required pursuant
to this
Section 1.3 and Section 14(f) and Rule 14f-1 in order to fulfill its obligations
under this Section 1.3, and shall include in the Schedule 14D-9 such information
with respect to the Company and its directors and officers as is required
under
such Section 14(f) and Rule 14f-1 in order to fulfill its obligations under
this
Section 1.3. Each of Parent and Merger Sub shall provide to the Company in
writing, and be solely responsible for any information with respect to Parent
and Merger Sub and their nominees, directors, officers and affiliates, required
by such Section 14(f) and Rule 14f-1.
(c) Required
Approvals of Continuing Directors.
Notwithstanding anything to the contrary set forth in this Agreement, in
the
event that Parent’s designees are elected or appointed to the Company Board
prior to the Effective Time pursuant to Section 1.3(a) and there shall be
any
Continuing Directors, the approval of a majority of such Continuing Directors
shall be required in order to (i) amend or terminate this Agreement, or agree
or
consent to any amendment or termination of this Agreement, in any case on
behalf
of the Company, (ii) extend the time for performance of, or waive, any of
the
obligations or other acts of Parent or Merger Sub under this Agreement, (iii)
waive any of the Company’s rights, benefits or privileges under this Agreement,
or (iv) make any other determination with respect to any action to be taken
or
not to be taken by or on behalf of the Company relating to this Agreement
or the
transactions contemplated hereby, including the Offer and the Merger; or
(v)
approve any other action by the Company which is reasonably likely to materially
and adversely affect the interests of the Company
Securityholders (other than Parent, Merger Sub and their affiliates (other
than
the Company and its Subsidiaries) with respect to the transactions contemplated
by this Agreement. Without limitation, any decrease in the amount of Merger
Consideration or any change in the form of Merger Consideration shall be
deemed
to materially and adversely affect the interests of the Company Securityholders
(other than Parent, Merger Sub and their affiliates (other than the Company
and
its Subsidiaries)).
7
ARTICLE
II
THE
MERGER
2.1 The
Merger.
At the
Effective Time, in accordance with the DGCL and the terms and conditions
of this
Agreement, Merger Sub shall be merged with and into the Company. From and
after
the Effective Time, the separate corporate existence of Merger Sub shall
cease
and the Company, as the surviving corporation in the Merger, shall continue
its
existence under the laws of the State of Delaware as a wholly-owned subsidiary
of Parent. The Company, as the surviving corporation after the Merger, is
hereinafter sometimes referred to as the “Surviving Corporation.”
2.2 Closing.
Unless
this Agreement shall have been terminated and the transactions contemplated
by
this Agreement abandoned pursuant to the provisions of Article VIII, and
subject
to the satisfaction or waiver, as the case may be, of the conditions set
forth
in Article VII, the closing of the Merger and other transactions contemplated
by
this Agreement (the “Closing”) shall take place at 10:00 a.m. (Eastern time) on
a date to be mutually agreed upon by the Parties (the “Closing Date”), which
date shall be no later than the first Business Day after all the conditions
set
forth in Article VII (excluding conditions that, by their nature, cannot
be
satisfied until the Closing) shall have been satisfied or waived. The Closing
shall take place at the offices of Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, P.C., Chrysler Center, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
or at
such other location as is agreed to by the Parties. For purposes of this
Agreement, “Business Day” shall mean any day other than a day on which banks are
permitted or required to be closed in New York, New York.
2.3 Effective
Time.
Subject
to the provisions of this Agreement, on the Closing Date or as soon thereafter
as is practicable the Parties shall cause the Merger to become effective
by the
execution by the Company and the filing by Parent, in accordance with the
DGCL,
of a certificate of merger (the “Certificate of Merger”) with the Secretary of
State of the State of Delaware, the date and time of such filing, or such
later
date and time as may be agreed upon by the Parties and specified therein,
being
hereinafter referred to as the “Effective Time.”
2.4 Effect
of the Merger.
At the
Effective Time, the Merger shall have the effects set forth in this Agreement
and in the applicable provisions of the DGCL. Without limiting the generality
of
the foregoing, and subject thereto, at the Effective Time all the assets,
properties, rights, privileges, immunities, powers and franchises of the
Company
and Merger Sub shall vest in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Merger Sub shall become the debts,
liabilities and duties of the Surviving Corporation.
8
2.5 Certificate
of Incorporation and Bylaws of the Surviving Corporation.
From
and after the Effective Time and without further action on the part of the
Parties, the Certificate of Incorporation and Bylaws of the Merger Sub
immediately prior to the Effective Time shall remain as the Certificate of
Incorporation and Bylaws of the Surviving Corporation until amended in
accordance with the respective terms thereof.
2.6 Directors
and Officers.
The
directors and officers of Merger Sub immediately prior to the Effective Time
shall be the initial directors and officers of the Surviving Corporation,
each
to hold office in accordance with the Certificate of Incorporation and the
Bylaws of the Surviving Corporation, in each case, until their respective
successors are duly elected or appointed and qualified or until their earlier
death, resignation or removal in accordance with the Surviving Corporation’s
Certificate of Incorporation and Bylaws.
2.7 Conversion
of Company Common Stock, Etc.
At the
Effective Time, by virtue of the Merger and without any action on the part
of
the Parties or the stockholders of the Company:
(a) Promptly
following the execution of this Agreement, the Company shall ensure that
immediately prior to the Closing, all options to purchase shares of Company
capital stock outstanding immediately prior to the Closing and not exercised
(individually, an “Option”, and collectively, “Options”) shall, in each case, in
accordance with and pursuant to the terms of the Company’s option plans under
which such Options were granted, be cancelled or deemed to have been exercised
immediately prior to the Closing
for the
number of shares of the Company
Common Stock determined by multiplying the number of shares of Company Common
Stock for which the Option in question is exercisable multiplied by the
difference between (x) the Per Share Amount and (y) the exercise price per
share
of the Option in question;
provided, however, that no
holder
of any Option (each,
a
“Former
Option Holder”)
shall be
required to pay the exercise price or any other amount in connection with
such
deemed exercise, and each Former Option Holder
shall
have the rights specified in Section 2.7(b) with respect to his,
her
or its Options.
Notwithstanding the foregoing, no shares of the
Company Common Stock or any other security of the Company
shall be
issued to any
Former
Option Holder in respect of such deemed exercise. The amounts payable pursuant
to this Section 2.7(a) to Former Option Holders are referred to herein
collectively as the “Option Payments.”
Promptly
following the execution of this Agreement, the Company shall use commercially
reasonable efforts to ensure that immediately prior to the Closing, all warrants
to purchase capital stock of the Company (the “Warrants”) outstanding
immediately prior to the Closing shall be deemed terminated immediately prior
to
the Closing in consideration of a payment equal to the number of shares of
Company Common Stock for which the Warrant in question is exercisable multiplied
by the difference between (x) the Per Share Amount and (y) the exercise price
per share of the Warrant in question, provided, however, that with respect
to
any person subject to Section 16(a) of the Exchange Act, any such amount
shall
be paid as soon as practicable after the first date payment can be made without
liability to such person under Section 16(b) of the Exchange Act. Holders
of
Warrants currently outstanding are referred to herein collectively as the
“Former Warrant Holders”). The amounts payable pursuant to this Section 2.7(a)
to Former Warrant Holders are referred to herein collectively as the “Warrant
Payments.”
9
(b) Each
share of Company Common Stock outstanding immediately prior to the Closing
(other than Dissenting Shares) and shares of Company Common Stock owned by
Parent, Merger Sub or the Company, or by any direct or indirect wholly-owned
Subsidiary of Parent, Merger Sub or the Company, in each case immediately
prior
to the Effective Time (whether pursuant to the Offer or otherwise), but
including shares of Company Common Stock deemed to have been issued upon
the
deemed exercise of Options and Warrants pursuant to Section
2.7(a)
above),
shall be converted automatically into the right to receive the Per Share
Amount
in cash, without interest (the “Merger Consideration”).
(c) Each
share of Company Common Stock owned by Parent, Merger Sub or the Company,
or by
any direct or indirect wholly-owned Subsidiary of Parent, Merger Sub or the
Company, in each case immediately prior to the Effective Time (whether pursuant
to the Offer or otherwise) shall be cancelled and extinguished without any
conversion thereof or consideration paid therefor.
2.8 Surrender
of Certificates.
(a) Payment
Agent.
Promptly following the date of this Agreement, Parent shall select a bank
or
trust company reasonably satisfactory to the Company to act as the payment
agent
(the “Payment Agent”) in the Merger, and shall enter into a customary agreement
with the Payment Agent, in a form reasonably satisfactory to the
Company.
(b) Parent
to Provide Cash.
Promptly following the Effective Time, Parent shall provide, or cause the
Surviving Corporation to provide, to the Payment Agent funds in an amount
necessary for the payment of the Merger Consideration pursuant to Article
II
upon surrender of Certificates (such funds being referred to herein as the
“Merger Fund”).
(c) Payment
Procedures.
As soon
as reasonably practicable after the Effective Time, Parent and Merger Sub
shall
cause the Payment Agent to mail to each holder of record (as of immediately
prior to the Effective Time) of a certificate or certificates (the
“Certificates”) which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock (other than Dissenting Shares)
whose
shares were converted into the right to receive the Merger Consideration
pursuant to this Article II: (i) a letter of transmittal (in customary form
which shall specify that delivery shall be effected, and risk of loss and
title
to the Certificates shall pass, only upon delivery of the Certificates to
the
Payment Agent) and (ii) instructions for use in effecting the surrender of
the
Certificates in exchange for the Merger Consideration payable in respect
thereof
pursuant to this Article II (which instructions shall provide that, at the
election of the surrendering holder, Certificates may be surrendered, and
the
Merger Consideration in exchange therefor collected, by hand delivery). Upon
surrender of Certificates for cancellation to the Payment Agent, together
with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, and such other documents as may reasonably
be
required by the Payment Agent, the holder of such Certificates shall be entitled
to receive in exchange therefor the amount of Merger Consideration to which
such
holder is entitled pursuant to this Article II, and the Certificates so
surrendered shall forthwith be cancelled. Until so surrendered, outstanding
Certificates will be deemed from and after the Effective
Time, for all corporate purposes, to evidence the right to receive the Merger
Consideration payable in respect thereof pursuant to this Article
II.
10
(d) Required
Withholding.
Each of
the Payment Agent, Parent and the Surviving Corporation shall be entitled
to
deduct and withhold from any consideration payable or otherwise deliverable
pursuant to this Agreement such amounts as may be required to be deducted
or
withheld therefrom under the Internal Revenue Code of 1986, as amended (the
“Code”) or any provision of state, local or foreign tax law. To the extent such
amounts are so deducted or withheld, the amount of such consideration shall
be
treated for all purposes under this Agreement as having been paid to the
Person
to whom such consideration would otherwise have been paid and (ii) Parent
shall
provide, or cause the Payment Agent to provide, to such Person written notice
of
the amounts so deducted or withheld.
(e) Investment
of Merger Fund.
The
Payment Agent shall invest the cash in the Merger Fund as directed by Parent
on
a daily basis; provided that no such investment or loss thereon shall affect
the
amounts payable to Company stockholders pursuant to this Article II. Any
interest and other income resulting from such investment shall become a part
of
the Merger Fund, and any amounts in excess of the amounts payable to Company
stockholders pursuant to this Article II shall promptly be paid to
Parent.
(f) Termination
of Merger Fund.
Any
portion of the Merger Fund which remains undistributed to the holders of
Certificates eighteen (18) months after the Effective Time shall, at the
request
of the Surviving Corporation, be delivered to the Surviving Corporation or
otherwise on the instruction of the Surviving Corporation, and any holders
of
the Certificates who have not surrendered such Certificates in compliance
with
this Section 2.8 shall after such delivery to Surviving Corporation look
only to
the Surviving Corporation or Parent for the Merger Consideration pursuant
to
this Article II.
2.9 No
Further Ownership Rights in Company Common Stock.
From
and after the Effective Time, all cash paid upon the surrender for exchange
of
shares of Company Common Stock in accordance with the terms hereof shall
be
deemed to have been paid in full satisfaction of all rights pertaining to
such
shares of Company Common Stock, and there shall be no further registration
of
transfers on the records of the Surviving Corporation of shares of Company
Common Stock which were outstanding immediately prior to the Effective Time,
other than transfers to reflect, in accordance with settlement procedures,
trades effected prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be cancelled and exchanged as provided in this Article II.
2.10 Lost,
Stolen or Destroyed Certificates.
In the
event any Certificates shall have been lost, stolen or destroyed, the Payment
Agent shall pay in exchange for such lost, stolen or destroyed Certificates,
upon the making of an affidavit of that fact by the holder thereof, the amount
in cash as may be payable therefor pursuant to Section 2.7.
2.11 Capital
Stock of Merger Sub.
Each
share of common stock of Merger Sub, par value $0.001 per share (“Merger Sub
Common Stock”), issued and outstanding immediately prior to the Effective Time
shall be converted automatically into one fully paid and non-assessable
share of common stock of the Surviving Corporation, par value $0.001 per
share.
From and after the Effective Time, each stock certificate of Merger Sub
that
previously represented shares of Merger Sub Common Stock shall evidence
ownership of an equal number of shares of common stock of the Surviving
Corporation.
11
2.12 Dissenting
Shares.
Notwithstanding anything in this Agreement to the contrary, shares of Company
Common Stock issued and outstanding immediately prior to the Effective Time
that
are held by any stockholder of record who is entitled to demand and properly
demands appraisal of such shares pursuant to, and who complies in all respects
with, the DGCL (“Dissenting Shares”) shall not be converted into or represent a
right to Merger Consideration as provided in Section 2.7(b) but rather shall
be
Dissenting Shares. Holders of Dissenting Shares shall be entitled to payment
of
the fair value of such Dissenting Shares in accordance with Section 262 of
the
DGCL; provided, however, that if any such holder shall waive, withdraw or
lose
the right to appraisal under the DGCL, then the right of such holder to be
paid
the fair value of such holder’s Dissenting Shares shall cease and such
Dissenting Shares shall be deemed to have been converted as of the Effective
Time into, and to have become exchangeable solely for the right to receive,
the
applicable Merger Consideration as provided in Section 2.7(b), which shall
be
paid to such holder of Dissenting Shares from the Dissenters Holdback. Prior
to
the Appointment Time, the Company shall give prompt notice to Parent of any
written demands received by Company for appraisal of any shares of capital
stock
of Company, and Parent shall have the right to participate in and direct
all
negotiations and proceedings with respect to such demands. Prior to the
Effective Time, the Company shall not, without the prior written consent
of
Parent, make any payment with respect to, or settle or offer to settle, any
such
demands, or agree to do any of the foregoing.
2.13 No
Liability.
Notwithstanding any other provision of this Agreement, neither Parent, Merger
Sub nor the Surviving Corporation shall be liable to a holder of shares of
Company Common Stock for any Merger Consideration properly paid to a public
official pursuant to any applicable abandoned property, escheat or similar
law.
2.14 Taking
of Necessary Action; Further Action.
If, at
any time and from time to time after the Effective Time, any further action
is
necessary or desirable to carry out the purposes of this Agreement and to
vest
in the Surviving Corporation full right, title and possession of all properties,
assets, rights, privileges, powers and franchises of the Company and Merger
Sub,
the officers and directors of the Surviving Corporation shall take, or cause
to
be taken, all such lawful and necessary action as is consistent with this
Agreement on behalf of the Company and Merger Sub. Parent shall cause Merger
Sub
to perform all of its obligations relating to this Agreement and the
transactions contemplated hereby.
12
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
Except
as
set forth in the disclosure letter provided by the Company to Parent on the
date
hereof and accepted in writing by Parent (the “Company Disclosure Letter”), the
Company, on behalf of itself and its Subsidiaries, represents and warrants
to
Parent that, the statements contained in this Article III are true, complete
and
correct. The Company Disclosure Letter shall be arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this Article
III, and the disclosure in any paragraph shall be deemed to qualify only
the
corresponding paragraph of this Article III, provided that any matters disclosed
in any particular section of the Company Disclosure Letter shall be deemed
to
have been disclosed in any other section of the Disclosure Letter for which
such
matter is relevant so long as the applicability of such matter to such other
section is reasonably apparent. As used in this Agreement, a “Company Material
Adverse Effect” means any change, event or effect that is materially adverse to
the business assets (including, without limitation, intangible assets),
financial condition (including changes in working capital or indebtedness)
or
results of operations of the Company and its Subsidiaries, taken as a whole,
excluding any changes, events or effects that are attributable to: (i)
conditions that materially and adversely affect the general worldwide economy,
except to the extent that those changes disproportionately affect the Company
and its Subsidiaries (taken as a whole); (ii) conditions that materially
and
adversely affect the dental implant industry, except to the extent that those
changes disproportionately affect the Company and its Subsidiaries (taken
as a
whole), (iii) any effect arising out of or attributable to the public
announcement of the transactions contemplated by this Agreement, (iv) any
effect
arising out of or attributable to any action taken or failed to be taken
by the
Company or any of its Subsidiaries at the written request of Parent or Merger
Sub, or (v) any effect arising out of or attributable to any action taken
by
Parent or its Affiliates.
3.1 Organization
and Qualification.
The
Company is a corporation duly incorporated, validly existing and in corporate
and tax good standing under the laws of the State of Delaware. The Company
is
duly qualified or licensed as a foreign corporation to conduct business,
and is
in good standing, under the laws of each jurisdiction where the character
of the
properties owned, leased or operated by it, or the nature of its activities,
makes such qualification or licensing necessary, except where the failure
to be
so qualified, licensed or in good standing, individually or in the aggregate,
has not had and would not reasonably be expected to have a Company Material
Adverse Effect. The Company has made available to Parent true, complete and
correct copies of its Certificate of Incorporation and Bylaws, each as amended
to date. The Company is not in default under or in violation of any provision
of
its Certificate of Incorporation or Bylaws.
3.2 Subsidiaries.
(a) The
Company Disclosure Letter sets forth a true, complete and correct list of
each
Subsidiary of the Company.
(b) Each
Subsidiary of the Company is a corporation duly organized, validly existing
and
in good standing under the laws of the jurisdiction of its incorporation,
and is
duly qualified or licensed as a foreign corporation to conduct business,
and is
in good standing, under the laws of each jurisdiction where the character
of the
properties and other assets owned, leased or operated by it, or the nature
of
its activities, makes such qualification or licensing necessary, except where
the failure to be so qualified, licensed or in good standing, individually
or in
the aggregate, has not had and would not reasonably be expected to have a
Company Material Adverse
Effect. The Company has made available to Parent true, complete and correct
copies of the Certificate of Incorporation, Bylaws or other charter or
equivalent organizational documents of each of its Subsidiaries, each as
amended
to date.
13
(c) All
of
the issued and outstanding shares of capital stock of, or other equity interests
in, each Subsidiary of the Company are: (i) duly authorized, validly issued,
fully paid, non-assessable; (ii) owned, directly or indirectly, by the Company
(other than director’s qualifying shares in the case of foreign Subsidiaries)
free and clear of all liens, claims, security interests, pledges and
encumbrances of any kind or nature whatsoever (collectively, “Liens”); and (iii)
free of any restriction, including, without limitation, any restriction which
prevents the payment of dividends to the Company or any other Subsidiary
of the
Company, or which otherwise restricts the right to vote, sell or otherwise
dispose of such capital stock or other ownership interest, other than
restrictions under the Securities Act of 1933, as amended (the “Securities
Act”), and state securities laws.
(d) For
purposes of this Agreement, the term “Subsidiary” means, with respect to any
party, any corporation or other organization, whether incorporated or
unincorporated, of which (i) such party (or any other Subsidiary of such
party)
is a general partner (excluding partnerships, the general partnerships of
which
held by such party or a Subsidiary of such party do not have a majority of
the
voting interest of such partnership) or (ii) at least a majority of the
securities or other equity interests having by their terms ordinary voting
power
to elect a majority of the Board of Directors or others performing similar
functions with respect to such corporation or other organization, is directly
or
indirectly owned or controlled by such party or by any one or more of its
Subsidiaries, or by such party and one or more of its Subsidiaries.
3.3 Capital
Structure.
(a) The
authorized capital stock of the Company consists of 20,500,000 shares, comprised
of 20,000,000 shares of Company Common Stock and 500,000 shares of preferred
stock, par value $.75 per share (“Company Preferred Stock”).
(b) As
of the
date hereof: (i) (a) 15,668,838 shares of Company Common Stock are issued
and
outstanding; (ii) no shares of Company Preferred Stock are issued and
outstanding; (ii) 17,327 shares of Company Common Stock and no shares of
Company
Preferred Stock are held in the treasury of the Company; (iii) 67,000
shares of Company Common Stock are duly reserved for future issuance pursuant
to
employee stock options granted pursuant to the Company’s Incentive
Stock
Option Plan (the “Company Option Plan”), and 250,000 shares of Company Common
Stock are duly reserved for future issuance pursuant to employee stock options
not granted pursuant to the Company Option Plan; and (iv) 500,000 shares
of
Company Common Stock are duly reserved for future issuance pursuant to warrants
issued by the Company. Except as described in this paragraph, there are no
shares of voting or non-voting capital stock, equity interests or other
securities of the Company authorized, issued, reserved for issuance or otherwise
outstanding.
14
(c) All
outstanding shares of Company Common Stock are, and all shares which may
be
issued pursuant to the Company Stock Plan will be, when issued against
payment
therefor in accordance
with the terms thereof, duly authorized, validly issued, fully paid and
non-assessable, and not subject to, or issued in violation of, any kind
of
preemptive, subscription or any kind of similar rights.
(d) There
are
no bonds, debentures, notes or other indebtedness of the Company having
the
right to vote (or convertible into securities having the right to vote)
on any
matters on which stockholders of the Company may vote. Except as described
in
subsections (b) and (c) above, there are no outstanding securities, options,
warrants, calls, rights, commitments, agreements, arrangements or undertakings
of any kind (contingent or otherwise) to which the Company is a party
or bound
obligating the Company to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other voting
securities
of the Company or obligating the Company to issue, grant, extend or enter
into
any agreement to issue, grant or extend any security, option, warrant,
call,
right, commitment, agreement, arrangement or undertaking. Neither the
Company
nor any Subsidiary of the Company is subject to any obligation or requirement
to
provide funds for or to make any investment (in the form of a loan or
capital
contribution) to or in any Person.
(e) The
Company has previously made available to Parent a true, complete and
correct
list of the holders of all outstanding options and warrants to purchase
shares
of Company Common Stock, including: (i) the date of grant; (ii) the exercise
price; (iii) the vesting schedule and expiration date; and (iv) any other
material terms, including, without limitation, any terms regarding the
acceleration of vesting.
(f) All
shares of Company Common Stock, and all options and warrants to purchase
shares
of Company Common Stock, issued on or after January 23, 1998 were issued
in
compliance with all applicable federal and state securities laws.
(g) There
are
no outstanding contractual obligations of the Company to repurchase,
redeem or
otherwise acquire any shares of capital stock (or options to acquire
any such
shares) or other security or equity interest of the Company. There are
no
stock-appreciation rights, security-based performance units, phantom
stock or
other security rights or other agreements, arrangements or commitments
of any
character (contingent or otherwise) pursuant to which any Person is or
may be
entitled to receive any payment or other value based on the revenues,
earnings
or financial performance or other attribute of the Company or any of
its
Subsidiaries or assets or calculated in accordance therewith (other than
ordinary course payments or commissions to sales representatives of the
Company
or any of its Subsidiaries based upon revenues generated by them without
augmentation as a result of the Merger or other transactions contemplated
hereby) or to cause the Company or any of its Subsidiaries to file a
registration statement under the Securities Act, or which otherwise relate
to
the registration of any securities of the Company or any of its
Subsidiaries.
(h) Except
for proxies issued by Company stockholders in connection with specific
stockholder meetings, there are no voting trusts, proxies or other
agreements,
commitments or understandings of any character to which the Company
or any of
its Subsidiaries or, to the knowledge of the Company, any of the stockholders
of
the Company, is a party or by which any of them is bound with respect
to the
issuance, holding, acquisition, voting or disposition of any shares
of
capital stock or other security or equity interest of the Company or
any of its
Subsidiaries.
15
(i) No
shares
of preferred stock of any class or series have been issued by the Company
on or
after January 23, 1998.
3.4 Authority;
No Conflict; Required Filings.
(a) The
Company has all requisite corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
Merger and other transactions contemplated hereby. The execution and delivery
of
this Agreement, the performance of its obligations hereunder and the
consummation of the Merger and other transactions contemplated hereby, have
been
duly authorized by all corporate action on the part of the Company and no
other
corporate proceedings are necessary, other than the approval and adoption
of
this Agreement by the affirmative vote of the holders of a majority of the
outstanding shares of Company Common Stock in accordance with the DGCL and
the
Company’s Certificate of Incorporation (the “Requisite Stockholder Approval”).
(b) This
Agreement has been duly executed and delivered by the Company and constitutes
a
valid and binding obligation of the Company, enforceable against it in
accordance with its terms, subject only to: (i) the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting the enforcement of creditors’ rights generally;
(ii) general equitable principles (whether considered in a proceeding in
equity
or at law); and (iii) an implied covenant of good faith and fair dealing
(collectively, the “Equitable Exceptions”).
(c) Except
as
set forth in the Company Disclosure Letter, the execution and delivery of
this
Agreement do not, and the performance by the Company of its obligations
hereunder and the consummation of the Merger and other transactions contemplated
hereby will not, conflict with or result in any violation of, or default
(with
or without notice or lapse of time, or both) under, or give rise to a right
of
termination, cancellation or acceleration of any obligation or to a loss
of a
material benefit, or result in the creation of any Liens in or upon any of
the
properties or other assets of the Company or any of its Subsidiaries under
any
provision of: (i) the Certificate of Incorporation or Bylaws of the Company
or
other equivalent organizational documents of any of its Subsidiaries; (ii)
subject to the governmental filings and other matters referred to in paragraph
(d) below, any (A) permit, license, franchise, statute, law, ordinance or
regulation or (B) judgment, decree or order, in each case applicable to the
Company or any of its Subsidiaries, or by which any of their respective
properties or assets may be bound or affected; or (iii) any loan or credit
agreement, note, bond, mortgage, indenture, material contract, material
agreement, lease or other instrument or obligation to which the Company or
any
of its Subsidiaries is a party or by which any of their respective properties
may be bound or affected.
(d) No
material consent, approval, order or authorization of, or registration,
declaration or filing with, any government, governmental, statutory, regulatory
or administrative authority, agency, body or commission or any court, tribunal
or judicial body, whether federal, state, local or foreign (each, a
“Governmental Authority”) is required by or with respect to the Company
or any of its Subsidiaries in connection with the execution and delivery
of this
Agreement or the consummation of the Merger and other transactions contemplated
hereby except for the filing of the Certificate of Merger with the Secretary
of
State of the State of Delaware in accordance with the DGCL.
16
3.5 Board
Approval; Required Vote.
(a) The
Company Board has, at a meeting duly called and held at which all members
were
present or by a unanimous written consent: (i) approved, declared advisable
and
adopted this Agreement; (ii) determined that the Merger and other transactions
contemplated by this Agreement are advisable, fair to and in the best interest
of the Company and its stockholders; and (iii) resolved to recommend to the
stockholders of the Company to accept the Offer and approve and adopt this
Agreement and approve the transactions contemplated by this Agreement; and
(iv)
directed that this Agreement be submitted to the stockholders of the Company
for
their approval and adoption. As of the date hereof, none of the aforesaid
actions by the Company Board has been amended, rescinded or modified.
(b) The
Requisite Stockholder Approval is the only vote of the holders of any class
or
series of capital stock of the Company necessary to approve and adopt this
Agreement, the Merger or the other transactions contemplated
hereby.
3.6 SEC
Filings; Financial Statements.
(a) The
Company has made all filings with the SEC that it has been required to make
in
the past two (2) years under the Securities Act or the Exchange Act, as the
case
may be (the “Company SEC Documents”). As of the time it was filed with the SEC
each of the Company SEC Documents complied with the applicable requirements
of
the Securities Act or the Exchange Act, as the case may be.
(b) Except
to
the extent stated therein, the financial statements (including any related
notes) contained in the Company SEC Documents (the “Company Financial
Statements”): (i) when filed, complied as to form with the published rules and
regulations of the SEC applicable thereto; (ii) when filed, were prepared
in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods covered (except as may be indicated in the notes
to
such financial statements or, in the case of unaudited statements, as permitted
by Form 10-Q of the SEC, and except that the unaudited financial statements
may
contain footnotes and are subject to normal and recurring year-end adjustments);
and (iii) fairly present, in all material respects, the financial position
of
the Company as of the respective dates thereof and the results of operations
and
cash flows of the Company for the periods covered thereby (except as may
be
indicated in the notes to such financial statements or, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC, and except that the unaudited
financial statements may not contain footnotes and are subject to normal
and
recurring year-end adjustments).
(c) The
Schedule 14D-9 and, if applicable, the Proxy Statement (and any amendment
thereof or supplement thereto) will comply as to form in all material respects
with applicable federal
securities laws. The Schedule 14D-9 and, if applicable, the Proxy Statement,
on
the date filed with the SEC and the date first published, sent or given to
the
Company Securityholders, will 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 no
representation or warranty is made by the Company with respect to information
supplied by Parent or Merger Sub in writing for inclusion or incorporation
by
reference in the Schedule 14D-9 and the Proxy Statement. The information
provided by the Company in writing to the Parent or Merger Sub for inclusion
or
incorporation by reference in the Schedule TO or the 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 in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
17
(d) The
Company has designed and implemented disclosure controls and procedures,
within
the meaning of Rule 13a-15(e) of the Exchange Act, to ensure that material
information relating to the Company, including its consolidated Subsidiaries,
is
made known to the management of the Company by others within those entities,
and
(i) has disclosed, based on its most recent evaluation, to the Parent and
to the
Company’s outside auditors and the audit committee of the Company Board (A) all
significant deficiencies and material weaknesses in the design or operation
of
internal controls over financial reporting (as defined in rule 13a-15(f)
of the
Exchange Act) which are reasonably likely to adversely affect the Company’s or
its Subsidiaries’ ability to record, process, summarize and report financial
data, and (B) any fraud, whether material or not material, that involves
management or other employees of the Company or its Subsidiaries who have
or had
a significant role in the Company’s internal controls over financial reporting.
The certificates of the Chief Executive Officer and Chief Financial Officer
of
the Company required by Rule 13a-14 under the Exchange Act with respect to
the
Company SEC Reports, as applicable, were true and correct as of the date
made.
(e) Each
of
the Company and its Subsidiaries maintains accurate books and records reflecting
its assets and liabilities and maintains effective internal accounting controls
over financial reporting as required by Rule 13a-15 or Rule 15d-15, as
applicable, of the Exchange Act, that provide assurance that (i) transactions
are executed with management’s authorization; (ii) transactions are recorded as
necessary to permit preparation of the consolidated financial statements
of the
Company and to maintain accountability for the Company’s consolidated assets;
(iii) access to the Company’s consolidated assets is permitted only in
accordance with management’s authorization; (iv) the reporting of the Company’s
consolidated assets is compared with existing assets at regular intervals;
and
(v) accounts, notes and other receivables and inventory are recorded accurately,
and proper and adequate procedures are implemented to effect the collection
thereof on a current and timely basis. Further, to the knowledge of the Company
and its Subsidiaries, no facts or circumstances exist as of the date hereof
that
would reasonably be expected to prevent or otherwise delay the assessment
of
management of the Company of internal control over financial reporting that
concludes that the internal control over financial reporting of the Company
and
its Subsidiaries is effective as required by Section 404 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act as of the time such assessment is required.
18
(f) The
Company has provided or made available to Parent true and complete copies
of all
comment letters received by the Company from the SEC since January 1, 2004
and
all responses to such comment letters by or on behalf of the Company.
3.7 Absence
of Undisclosed Liabilities.
The
Company and its Subsidiaries do not have any material liabilities or
obligations, whether fixed, contingent, accrued or otherwise, liquidated
or
unliquidated and whether due or to become due, other than: (i) liabilities
reflected or reserved against on the balance sheet contained in the Company’s
interim financial statements (the “Company’s Most Recent Balance Sheet”) as of
July 31, 2006 (the “Company’s Most Recent Balance Sheet Date”); (ii) obligations
under any Company Material Contract and (iii) liabilities or obligations
incurred since the Company’s Most Recent Balance Sheet Date in the ordinary
course of business, consistent with past practice in both type and
amount.
3.8 Absence
of Certain Changes or Events.
Since
the Company’s Most Recent Balance Sheet Date, the Company and its Subsidiaries
have conducted their respective businesses only in the ordinary course of
business consistent with past practice, and there has not been: (i) any action,
event or occurrence which has had, or could reasonably be expected to result
in,
a Company Material Adverse Effect; or (ii) any other action, event or occurrence
that would have required the consent of Parent pursuant to Section
5.1
had such
action, event or occurrence taken place after the execution and delivery
of this
Agreement.
3.9 Agreements,
Contracts and Commitments.
(a) The
Company Disclosure Letter lists each of the following contracts and agreements
(including, without limitation, oral and informal arrangements) of the Company
and its Subsidiaries (such contracts and agreements listed in the Company
Disclosure Letter, together with all contracts, agreements, leases and subleases
concerning the management or operation of any real property (including, without
limitation, brokerage contracts) listed in the Company Disclosure Letter
to
which the Company or any of its Subsidiaries is a party and all agreements
relating to Intellectual Property set forth in the Company Disclosure Letter,
being “Company Material Contracts”):
(i) each
contract, agreement, invoice, purchase order and other arrangement, for the
purchase of inventory, spare parts, other materials or personal property
with
any supplier or for the furnishing of services to the Company or any of its
Subsidiaries or otherwise related to the business of the Company or any of
its
Subsidiaries under the terms of which: (A) the Company or any of its
Subsidiaries is likely to pay or otherwise give consideration of more than
$25,000 in the aggregate during the calendar year ended December 31, 2006,
(B)
the Company or any of its Subsidiaries is likely to pay or otherwise give
consideration of more than $50,000 in the aggregate over the remaining term
of
such contract, or (C) cannot be cancelled by the Company or any of its
Subsidiaries, as applicable, without penalty or further payment in excess
of
$5,000 and without more than thirty (30) days’ notice;
(ii) each
contract, agreement, invoice, sales order and other arrangement, for the
sale of
inventory or other personal property or for the furnishing of services by
the
Company or any of its Subsidiaries which: (A) is likely to involve
consideration of more than $25,000 in the aggregate
during the calendar year ended December 31, 2006, (B) is likely to involve
consideration of more than $50,000 in the aggregate over the remaining term
of
the contract, or (C) cannot be cancelled by the Company or any of its
Subsidiaries, as applicable, without penalty or further payment in excess
of
$5,000 and without more than thirty (30) days’ notice;
19
(iii) all
broker, distributor, dealer, manufacturer's representative, franchise, agency,
sales promotion, market research, marketing, consulting and advertising
contracts and agreements to which the Company or any of its Subsidiaries
is a
party;
(iv) all
management contracts and contracts with independent contractors or consultants
(or similar arrangements) to which the Company or any of its Subsidiaries
is a
party and which are not cancelable without penalty or further payment and
without more than thirty (30) days’ notice;
(v) all
contracts and agreements relating to indebtedness of the Company or any of
its
Subsidiaries;
(vi) all
contracts and agreements with any Governmental Authority to which the Company
or
any of its Subsidiaries is a party;
(vii) all
contracts and agreements that limit the ability of the Company or any of
its
Subsidiaries to compete in any line of business or with any Person or in
any
geographic area or during any period of time;
(viii) all
contracts and agreements between or among the Company or any affiliate or
Subsidiary of the Company;
(ix) all
contracts and agreements for providing benefits under any Benefit Plan (as
hereinafter defined); and
(x) all
other
contracts and agreements, whether or not made in the ordinary course of the
business, which are material to the Company or any of its Subsidiaries or
the
conduct of their respective businesses.
For
purposes of this Agreement, the term “lease” shall include any and all leases,
subleases, sale/leaseback agreements or similar arrangements.
(b) Except
as
disclosed in the Company Disclosure Letter, each Company Material Contract:
(i) is valid and binding on the respective parties thereto and is in full
force and effect. Neither the Company nor any of its Subsidiaries is in breach
of, or default under, any Company Material Contract, as applicable.
(c) Except
as
disclosed in the Company Disclosure Letter, no other party to any Company
Material Contract is, to the knowledge of the Company, in material breach
thereof or default thereunder.
20
(d) Except
as
disclosed in the Company Disclosure Letter, there is no contract, agreement
or
other arrangement granting any Person any preferential right to purchase,
other
than in the ordinary course of the business consistent with past practice,
any
of the properties or assets of the Company or any of its Subsidiaries.
3.10 Compliance
with Laws.
(a) Except
as
set forth in the Company Disclosure Letter, each of the Company and its
Subsidiaries has complied with all material federal, state, local and foreign
statutes, laws and regulations (“Laws”), and is not in violation of, and has not
received any written claim or notice that it is in violation of, any such
Laws
with respect to the conduct of its business or the ownership and operation
of
its properties and other assets. Except as set forth in the Company Disclosure
Letter, no investigation or review by any Governmental Authority is pending
or,
to the knowledge of the Company, has been threatened against the Company
or any
of its Subsidiaries.
(b) Without
limiting the generality of the foregoing: (i) the Company Disclosure Letter
lists all claims, statements, and other matters (including, but not limited
to,
all correspondence or communications with Governmental Authorities,
intermediaries or carriers) concerning or relating to any federal or state
government funded health care program that involve, relate to or allege:
(a) any
violation of any applicable rule, regulation, policy or requirement of any
such
program or any irregularity with respect to any activity, practice or policy
of
the Company or any of its Subsidiaries; or (b) any violation of any applicable
rule, regulation, policy or requirement of any such program or any irregularity
with respect to any claim for payment or reimbursement made by the Company
or
any of its Subsidiaries or any payment or reimbursement paid to the Company
or
any of its Subsidiaries. Except as set forth on the Company Disclosure Letter
there are no such violations or irregularities nor are there any grounds
to
anticipate the commencement of any investigation or inquiry, or the assertion
of
any claim or demand by any Governmental Authority, intermediary or carrier
with
respect to any of the activities, practices, policies or claims of the Company
or any of its Subsidiaries or the businesses of the Company or any of its
Subsidiaries, or any payments or reimbursements claimed by the Company or
any of
its Subsidiaries. Neither the Company nor any of its Subsidiaries is currently
subject to any outstanding audit by any such Governmental Authority,
intermediary or carrier.
(c) Except
as
set forth on the Company Disclosure Letter, neither the Company nor any of
its
Subsidiaries has received any written notice that it is not in compliance
with
any Laws.
(d) Neither
the Company nor any of its Subsidiaries has submitted any claim to any Payment
Program in connection with any referrals that knowingly violated any applicable
self-referral Law, including without limitation the Federal Ethics in Patient
Referrals Act, 42 U.S.C. § 1395nn (known as the “▇▇▇▇▇ Law”), or any
applicable state self-referral Law.
(e) The
Company and each of its Subsidiaries is in compliance in all material respects
with all disclosure requirements of all applicable self-referral Laws, including
without limitation the ▇▇▇▇▇ Law and any applicable state self-referral
Law.
21
(f) Neither
the Company nor any affiliate or Subsidiary of the Company has knowingly
or
willfully solicited, received, paid or offered to pay any remuneration, directly
or indirectly, overtly or covertly, in cash or kind for the purpose of making
or
receiving any referral which violated any applicable anti-kickback Law,
including without limitation the Federal Health Care Program ▇▇▇▇-▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇.▇.▇. § ▇▇▇▇▇-▇▇(▇) (known as the “Anti-Kickback Statute”), or
any applicable state anti-kickback Law.
(g) Neither
the Company nor any of its Subsidiaries has submitted any claim for payment
to
any Payment Program in violation of any Laws relating to false claim or fraud,
including without limitation the Federal False Claims Act, 31 U.S.C.
§ 3729, or any applicable state false claim or fraud Law.
(h) The
Company and each of its Subsidiaries is in compliance with all applicable
requirements of the Occupational Safety and Health Act and all applicable
state
equivalents, and with all applicable regulations promulgated under any such
legislation, and with all orders, judgments, and decrees of any tribunal
under
such legislation, that apply to the Company’s or any of its Subsidiaries’
businesses, and, except as set forth on the Company Disclosure Letter, neither
the Company nor any of its Subsidiaries has received any notice alleging
any
violation thereof.
(i) The
Company and each of its Subsidiaries is in compliance with all applicable
security and privacy standards regarding protected health information under
the
Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) and all
applicable state privacy Laws.
(j) The
Company maintains and is in compliance with a compliance plan regarding the
provision of its services as such services involve trade with foreign countries,
and such compliance plan includes appropriate training and a comprehensive
ethical code of conduct.
(k) The
Company and each of its Subsidiaries is in compliance with all Laws relating
to
immigration and the employment of aliens.
(l) The
Company and each of its Subsidiaries possesses all licenses, certificates,
authorizations and permits required by the United States Food and Drug
Administration (the “FDA”) and any other federal, state or foreign agency or
body engaged in the regulation of medical devices and human tissue; and the
Company and each of its Subsidiaries has complied, in all material respects,
with any and all laws and regulations of the FDA and any such other federal,
state and foreign agency or body; and neither the Company nor any of its
Subsidiaries has received notification of any proceeding relating to revocation
or modification of any such license, certificate, authorization or permit
or
noncompliance with any applicable law or regulation. Each marketing application
submitted to the FDA or similar application to foreign regulatory bodies
and
related documents and information, has been filed, approved (if applicable)
and
maintained in compliance with applicable statutes, rules, regulations,
standards, guidelines or orders administered or promulgated by the FDA or
other
regulatory body.
22
3.11 Permits.
The
Company Disclosure Letter contains a true, correct and complete list and
summary
description of all material federal, state, local and foreign governmental
licenses, permits, franchises, approvals, registrations, certificates and
authorizations reasonably necessary for the conduct of the Company’s business
and the businesses of its Subsidiaries as presently conducted and the ownership
and operation of their respective properties and other assets, including,
without limitation those that are required under all Environmental Laws (the
“Company Permits”). Each Company Permit is valid and in full force and effect as
of the date hereof, no Company Permit is subject to any lien, encumbrance,
charge, limitation, restriction, probation or other qualification and there
is
no default under any Company Permit or any basis for the assertion of any
default thereunder. There is no investigation or proceeding pending or, to
the
knowledge of the Company, threatened, that could result in the termination,
revocation, limitation, suspension, restriction or impairment of any Company
Permit or the imposition of any fine, penalty or other sanctions for violation
of any legal or regulatory requirements relating to any Company Permit or
any
basis therefor. Except as set forth in the Company Disclosure Letter, the
rights
and benefits of each Company Permit will be available to the Surviving
Corporation immediately after the Effective Time on terms substantially
identical to those enjoyed by the Company and its Subsidiaries immediately
prior
to the Effective Time.
3.12 Litigation. Except
as
set forth in the Company Disclosure Letter, there is no suit, action,
arbitration, claim, governmental or other proceeding before any Governmental
Authority pending or, to the knowledge of the Company, threatened, against
the
Company or any of its Subsidiaries.
3.13 Restrictions
on Business Activities.
Except
as set forth in the Company Disclosure Letter, there is no agreement, judgment,
injunction, order or decree binding upon the Company or any of its Subsidiaries
which has or could reasonably be expected to have (after giving effect to
the
Merger) the effect of prohibiting or impairing any current or currently
anticipated future business practice of the Company or any of its Subsidiaries,
any acquisition of property by the Company or any of its Subsidiaries or
the
conduct of business by the Company or any of its Subsidiaries as currently
conducted or as currently proposed to be conducted.
3.14 Employee
Benefit Plans.
(a) Definitions.
The
following capitalized terms have the following meanings:
“BENEFIT
PLAN”
means
any collective bargaining agreement, any Pension Plan or any bonus, profit
sharing, deferred compensation, incentive compensation, stock ownership,
stock
purchase, stock appreciation, restricted stock, stock repurchase rights,
stock
option, phantom stock, performance, retirement, vacation, severance or
termination, disability, death benefit, employment, consulting, independent
contractor, director, retention, hospitalization, fringe benefit, medical,
dental, vision or other plan, program, policy, arrangement or contract (whether
or not subject to the Laws of the United States) established, maintained,
contributed to or required to be established, maintained or contributed to
by
the Company or any ERISA Affiliate, in each case, providing benefits to any
employee of the Company or any employee of any Subsidiary of the Company,
and in
each case whether written or oral, informal or formal, subject to ERISA or
not.
The term “Benefit Plan” shall also include any plan, program, policy, arrangement
or contract with respect to which the Company or any ERISA Affiliate may
have
liability (including potential, secondary or contingent liability) under
Title IV of ERISA or otherwise to any Person being and including any
liability by reason of any Person’s being or having been an ERISA
Affiliate.
23
“ERISA”
means
the Employee Retirement Income Security Act of 1974, as
amended.
“ERISA
Affiliate”
means
any Person which is (or at any relevant time was) a member of a “controlled
group of corporations” with, under “common control” with, or a member of an
“affiliate service group” with the Company as such terms are defined in Section
414(b), (c), (m) or (o) of the Code.
“IRS”
means
the Internal Revenue Service.
“PENSION
PLAN”
means
any “employee pension benefit plan”, as defined in Section 3(2) of
ERISA.
(b) Benefit
Plans.
(i) The
Company Disclosure Letter contains a list of all Benefit Plans. The Company
has
delivered to Parent true and complete copies of (a) each Benefit Plan
(including amendments since the most recent restatement) or, in the case
of any
unwritten Benefit Plans, written descriptions thereof, (b) the annual
report (Form 5500) filed with the IRS or the Department of Labor with
respect to each Benefit Plan (if any such report was required) for the last
three plan years, (c) the most recent determination letter issued to each
Pension Plan that is intended to be qualified under Section 401(a) of the
Code
and any pending applications for a determination letter for such plans,
(d) the most recent summary plan description (and any summary of
modifications since the most recent summary plan description) for each Benefit
Plan for which such a summary plan description is required and any summaries
or
other communications distributed to participants for each Benefit Plan whether
or not required to provide a summary plan description, (e) all personnel,
payroll, and employment manuals and policies, (f) each trust agreement,
recordkeeping or other third-party agreement and group annuity contract relating
to any Benefit Plan, (g) all notices that were given by the Company, any
ERISA Affiliate or any Benefit Plan to the IRS, the Pension Benefit Guaranty
Corporation, the Department of Labor, the SEC, the Equal Employment Opportunity
Commission, or any other Governmental Authority relating to a Benefit Plan,
and
(h) all notices that were given by the IRS, the Pension Benefit Guaranty
Corporation, the Department of Labor, the Securities and Exchange Commission,
the Equal Employment Opportunity Commission, or any other Governmental Authority
to the Company or any ERISA Affiliate relating to any Benefit Plan.
(ii) Each
Benefit Plan has been operated and administered in accordance with its terms
and
applicable Law. The Company, each ERISA Affiliate and all the Benefit Plans
are
in compliance in all respects with the applicable provisions of ERISA, the
Code,
and other applicable Laws. All reports, returns and similar documents with
respect to the Benefit Plans required to be filed with any Governmental
Authority or distributed to any Benefit Plan participant, beneficiary, or
alternate payee have been duly and timely filed or distributed. There are
no
lawsuits, actions, termination proceedings or other proceedings pending,
or, to
the knowledge of the Company, threatened against or involving any Benefit
Plan
and there are no investigations by any Governmental Authority or other claims
(except claims for benefits payable in the normal operation of the Benefit
Plans) pending or, to the knowledge of the Company, threatened against or
involving any Benefit Plan or asserting any rights to benefits under any
Benefit
Plan. To the knowledge of the Company, there are no unasserted claims that,
if
pending or threatened, would be of the type described in this section. Neither
the Company or any of its Subsidiaries has any liability to the IRS with
respect
to any Benefit Plan, including any liability imposed under Chapter 43 of
the
Code.
24
(iii) All
contributions to, and payments from, the Benefit Plans that may have been
required to be made in accordance with the terms of the Benefit Plans and
applicable Laws, including, when applicable, Section 302 of ERISA or
Section 412 of the Code, have been timely made. All such contributions to,
and payments from, the Benefit Plans, except those payments to be made
from a
trust exempt under Section 501(a) of the Code, for any period ending before
the Closing Date that are not yet, but will be, required to be made, will
be
properly accrued and reflected on the Most Recent Balance Sheet. There
is no
Lien on the assets of the Company arising under Section 302(f) or 4068(a)
of
ERISA or Section 412(n) of the Code.
(iv) All
Pension Plans intended to be qualified and exempt from federal income Taxes
under Sections 401(a) and 501(a) of the Code, respectively, have received
determination letters from the IRS to the effect that such Pension Plans
are so
qualified and exempt from federal income taxes, and no such determination
letter
has been revoked nor has revocation of any such determination letter been
threatened. No such Pension Plan has been amended since the date of its
most
recent determination letter or application therefore in a manner which
would
adversely effect the qualification of the Plan. The Company and each ERISA
Affiliate has performed all obligations required to be performed by them
under,
and are not in default under or in violation of, the terms of any Benefit
Plan.
(v) No
transaction prohibited by Section 406 of ERISA and no “prohibited transaction”
(as defined in Section 4975 of the Code) has occurred with respect to any
Benefit Plan (except for which an exemption is available). None of the
Pension
Plans has been terminated nor have there been any “reportable events” (as
defined in Section 4043 of ERISA) with respect thereto. No employee of the
Company or any Subsidiary, or any trustee, administrator or other fiduciary
of
any Benefit Plan, or any agent of any of the foregoing, has engaged in
any
transaction or acted or failed to act in a manner that could subject the
Company
or any of its Subsidiaries to any liability for breach of fiduciary duty
under
ERISA or any other applicable Law (whether such liability is directly against
the Company or any of its Subsidiaries or the result of any existing indemnity
agreements).
(vi) No
Benefit Plan is or has ever been (or has ever been the successor or transferee
of) a “multiemployer plan” (as defined in Section 3(37) of ERISA) or a
“defined benefit plan” (as defined in Section 3(35) of ERISA). Neither the
Company nor any of its Subsidiaries has any actual or potential, secondary,
or
contingent liability to any Person under Title IV of ERISA and no Pension
Plan is subject to Title IV of ERISA. Neither the Company nor any of its
Subsidiaries
has contributed to, been required to contribute to, or withdrawn from any
“multiemployer plan” (as defined in Section 3(37) of ERISA).
25
(vii) Neither
the Company nor any of its Subsidiaries ever established, maintained or
contributed to, or had an obligation to maintain or contribute to or has
or had
any liability with respect to, any “voluntary employees’ beneficiary
association” (within the meaning of Section 501(c)(9) of the Code), any
organization or trust described in Sections 501(c)(17) or 501(c)(20) of the
Code
or any “welfare benefits fund” described in Section 419(e) of the
Code.
(viii) Neither
the Company nor any of its Subsidiaries has offered to provide health or
life
insurance coverage to any individual, or to the family members of any
individual, for any period extending beyond the termination of the individual’s
employment by the Company or any of its Subsidiaries, except to the extent
required by the health care continuation (also known as “COBRA”) provisions of
ERISA and the Code or similar state benefit continuation Laws. Each Benefit
Plan
that is a group health plan, as such term is defined in Section 5000(b)(1)
of the Code, complies in all respects with Sections 601 et seq. and 701 et
seq.
of ERISA and Section 4980B and Subtitle K of the Code.
(ix) Neither
the Company nor any of its Subsidiaries has any current or projected liability
or contingent obligation in respect of medical or other benefits for retired
or
former employee of the Company or any of its Subsidiaries or any
predecessor.
(x) Each
Benefit Plan (including any such plan covering retirees or other former
employees) may be discontinued or terminated without liability to the Company
or
any of its Subsidiaries (other than with respect to benefits then vested
thereunder) on or at any time after the Effective Time.
(xi) Except
as
contemplated by this Agreement, neither the execution and delivery of this
Agreement, nor the consummation of the Merger or the other transactions
contemplated thereby will result in the payment, vesting, or acceleration
of any
bonus, stock option or other equity-based award, retirement, severance, job
security or similar benefit or any enhanced benefit to any Person.
(xii) Neither
the Company nor any of its Subsidiaries has any Benefit Plan in which non-United
States employees participate and none of them are required to maintain any
such
plan.
(xiii) Since
the
Company’s formation, no Person is or has been an ERISA Affiliate.
(xiv) No
event
has occurred or circumstances exist that could reasonably be expected to
result
in (i) an increase in premium costs of Benefit Plans that are insured, or
(ii)
an increase in benefit or administrative costs of Benefit Plans that are
self-insured.
(xv) Neither
the Company nor any Subsidiary thereof has a formal plan, commitment, or
proposal, whether legally binding or not, or has made a commitment to any
individual to create any additional Benefit Plan or modify or change any
existing Benefit Plan that would affect
any current employee, director or consultant, or former employee, of the
Company
or any Subsidiary, or any beneficiary or alternate payee of such an individual.
No events have occurred or are expected to occur with respect to any Benefit
Plan that would cause a change in the cost of providing the benefits under
such
plan or would cause a change in the cost of providing for other liabilities
of
such plan.
26
3.15 Properties
and Assets.
(a) Except
as
set forth in the Company Disclosure Letter, the Company and its Subsidiaries
have good and valid title to all of their respective properties, interests
in
properties and assets, real and personal, reflected on the Company’s Most Recent
Balance Sheet or acquired since the Company’s Most Recent Balance Sheet Date,
or, in the case of leased properties and assets, valid leasehold interests
in
such properties and assets, in each case free and clear of all
Liens.
(b) There
is
no real property owned by the Company or any of its Subsidiaries. All leases
for
leased real property of the Company are listed on the Company Disclosure
Letter
and are in full force and effect, are valid and effective in accordance with
their respective terms, and there is not, under any of such leases, any existing
default or event of default (or event which with notice or the lapse of time,
or
both, would constitute a default) that would give rise to a claim
thereunder.
(c) The
facilities, property and equipment owned, leased or otherwise used by the
Company or any of its Subsidiaries are in a good state of maintenance and
repair, free from defects and in good operating condition (subject to normal
wear and tear), and suitable for the purposes for which they are currently
used.
(d) All
tangible assets which are leased by the Company or any of its Subsidiaries
have
been, in all material respects, maintained in accordance with the manufacturers’
standards and specifications required by each such lease.
3.16 Insurance.
(a) The
Company and its Subsidiaries maintain policies of insurance and bonds with
reputable companies against loss relating to their business, operations and
properties and such other risks as companies engaged in similar business
would,
in accordance with good business practice, customarily insure (the “Insurance
Policies”). All premiums due and payable under the Insurance Policies have been
paid on a timely basis and the Company and its Subsidiaries are in compliance
in
all respects with all other terms thereof. True, complete and correct copies
of
the Insurance Policies have been made available to Parent.
(b) The
Insurance Policies are in full force and effect and there are no material
claims
pending as to which coverage has been questioned, denied or disputed. All
claims
thereunder have been filed in a due and timely fashion. Except as set forth
in
the Company Disclosure Letter, neither the Company nor any of its Subsidiaries
has been refused insurance for which it has applied or had any policy of
insurance terminated (other than at its request), nor has the Company
or any of its Subsidiaries received notice from any insurance carrier that:
(i)
such insurance will be canceled or that coverage thereunder will be reduced
or
eliminated; or (ii) premium costs with respect to such insurance will be
increased, other than premium increases in the ordinary course of business
applicable on their terms to all holders of similar
policies.
27
3.17 Taxes.
(a) For
purposes of this Agreement, a “Tax” means any and all federal, state, local and
foreign taxes, assessments and other governmental charges, duties, impositions
and liabilities, including, without limitation, taxes based upon or measured
by
gross receipts, income, profits, gains, sales, use and occupation, value
added,
ad valorem, transfer, franchise, payroll, recapture, employment, imports,
exports and licenses, together with excise, real and personal property
withholding (of wages, dividends, interest and/or royalties) taxes, together
with all interest, penalties and additions imposed with respect to such amounts
and any obligations under any agreements or arrangements with any other Person
with respect to such amounts and including any liability for Taxes of a
predecessor entity.
(b) Each
of
the Company and its Subsidiaries has accurately prepared and timely filed
all
federal, state, local and foreign returns, estimates, information statements
and
reports required to be filed by it (collectively, “Returns”) relating to any and
all Taxes concerning or attributable to the Company or any of its Subsidiaries
or to their operations, and all such Returns are true, complete and
correct.
(c) Each
of
the Company and its Subsidiaries: (i) has paid all Taxes it is obligated
to pay
as reflected on the Returns or otherwise; (ii) has withheld all federal,
state,
local and foreign Taxes required to be withheld with respect to its employees
or
otherwise; and (iii) has kept all records that it is required to keep for
taxation purposes, such records being available for inspection at the premises
of the Company.
(d) There
is
no Tax deficiency outstanding, proposed or assessed against the Company or
any
of its Subsidiaries that is not both (i) described on the Company Disclosure
Letter, and (ii) accurately reflected as a liability on the Company Most
Recent
Balance Sheet, nor has the Company or any of its Subsidiaries executed any
waiver of any statute of limitations on or extending the period for the
assessment or collection of any Tax, nor is there any pending audit, action,
suit, proceeding, investigation or other examination regarding Taxes for
which
the Company or any of its Subsidiaries may have liability. There are no Tax
Liens on any assets of the Company or on any assets of any Subsidiary of
the
Company.
(e) Neither
the Company nor any of its Subsidiaries is a party to any agreement, plan,
arrangement or other contract covering any employee or independent contractor
or
former employee or independent contractor that, considered individually or
considered collectively with any other such contracts, could reasonably be
expected to, give rise directly or indirectly to the payment of any amount
that
would not be deductible pursuant to Section 280G or 162(m) of the Code (or
any
comparable provision of state or foreign Tax laws). Neither the Company nor
any
of its Subsidiaries is, or has ever been a party to or bound by any tax
indemnity agreement, tax-sharing agreement, tax allocation agreement or similar
contract or agreement.
28
(f) No
Option
provides for a deferral of compensation subject to Section 409A of the Code.
All
Options were granted with an exercise price equal to at least the fair market
value of the underlying Company Common Stock on the date such Option was
granted
based upon a reasonable valuation method. No Benefit Plan or other contract
between the Company and any “service provider” (as such term is defined in
Section 409A of the Code and the Treasury Regulations and Internal Revenue
Service guidance thereunder) provides for the deferral of compensation subject
to Section 409A of the Code. The execution and delivery of this Agreement
by the
Company and the other Parties and the consummation of the transactions
contemplated hereby will not (either alone or upon the occurrence of any
additional or subsequent events) constitute an event under any Benefit Plan
or
contract that will or may result in any payment of deferred compensation
subject
to Section 409A of the Code.
(g) Neither
the Company nor any of its Subsidiaries has any liability for unpaid Taxes
that
has not been properly accrued for and reserved for on the Company’s Most Recent
Balance Sheet, whether asserted or unasserted, contingent or
otherwise.
3.18 Environmental
Matters.
(a) The
Company and its Subsidiaries are in compliance in all respects with all
Environmental Laws, which compliance includes, without limitation, the
possession by the Company and its Subsidiaries of all Permits required under
all
applicable Environmental Laws, and compliance in all respects with the terms
and
conditions thereof.
(b) The
Company has not received any written communication from a Governmental Authority
or other Person that alleges that either the Company or any of its Subsidiaries
is not in compliance with any Environmental Laws or any Permit required under
any applicable Environmental Law, or that it is responsible (or potentially
responsible) for the cleanup of any Materials of Environmental Concern at,
on or
beneath its facilities or at, on or beneath any land adjacent thereto, and
the
Company has no knowledge that there are conditions existing at such facilities
that could reasonably be expected to prevent or interfere with such full
compliance in the future.
(c) The
Company has no knowledge of any past or present facts, circumstances or
conditions, including, without limitation, the release of any Materials of
Environmental Concern, that could reasonably be expected to result in a claim
against the Company or any of its Subsidiaries under any Environmental
Law.
(d) The
Company has made available to Parent true, complete and correct copies of
all
the Company’s environmental documentation regarding environmental matters
pertaining to, or the environmental condition of, its facilities or the
compliance (or non-compliance) by the Company and its Subsidiaries with any
Environmental Laws.
(e) None
of
the facilities used by the Company or any of its Subsidiaries is, or has
ever
been to the knowledge of the Company, a site for the use, generation,
manufacture, discharge, assembly, processing, storage, release, disposal
or
transportation to or from of any Materials
of Environmental Concern, except for chemicals used in the ordinary course
of
business of the Company and its Subsidiaries, all of which chemicals have
been
stored and used in compliance with all applicable Permits and Environmental
Laws.
29
(f) Neither
the Company nor any of its Subsidiaries has received written notice of, or
is to
the knowledge of the Company the subject of, any federal, state, local or
private litigation or proceedings involving a demand for damages or other
potential liability with respect to any alleged violations of Environmental
Laws.
(g) For
purposes of this Agreement, the terms “release” and “environment” shall have the
meaning set forth in any Environmental Law, as hereinafter defined.
“Environmental Law” shall mean any federal, state, local or foreign law,
statute, ordinance, code, or any rule or regulation of a Governmental Authority
having jurisdiction over the Company, implementing such law, statute, ordinance,
code, rule or regulation and any applicable case law or administrative decision
having the force of law, in each case existing and in effect on the date
hereof
relating to pollution or protection of public health, welfare or the
environment, including, without limitation, any statute or regulation pertaining
to: (i) management, handling, use, treatment, storage, disposal, release,
discharge, generation or transportation of Materials of Environmental Concern;
(ii) air and water pollution; (iii) groundwater and soil contamination; (iv)
the
release or threatened release into the environment of hazardous substances,
or
solid or hazardous waste, including, without limitation, emissions, discharges,
injections, spills, escapes or dumping of Materials of Environmental Concern;
(v) aboveground or underground storage tanks, vessels and containers; (vi)
abandoned, disposed or discarded barrels, tanks, vessels, containers and
other
closed receptacles; and (vii) the manufacture, processing, use, distribution,
treatment, storage, disposal, transportation or handling of Materials of
Environmental Concern. “Materials of Environmental Concern” shall mean any
substance, waste, or material that poses a threat to, or is regulated to
protect, human health, safety, public welfare, or the environment, including
without limitation: (a) any “hazardous substance,” “pollutant” or “contaminant,”
and any “petroleum” or “natural gas liquids” as those terms are defined or used
under Section 101 of the Comprehensive Environmental Response, Compensation
and
Liability Act of 1980, as amended (42 U.S.C. §§ 9601 et seq.), (b) “solid
waste” as defined by the federal Solid Waste Disposal Act (42 U.S.C.
§§ 6901 et seq.), (c) asbestos or a material containing asbestos, (d) any
material that contains lead or lead-based paint, (e) any item or equipment
that
contains or is contaminated by polychlorinated biphenyls, (f) any radioactive
material, (g) urea formaldehyde,
or (h)
any substance the presence or release of which requires reporting, investigation
or remediation under any Environmental Law.
30
3.19 Intellectual
Property.
(a) Generally.
Section 3.19(a) of the Company Disclosure Letter sets forth a complete and
accurate list of all United States and foreign: (i) trademarks, service marks
and trade names and designs (whether registered or unregistered) (“Trademarks”)
that are owned by or exclusively licensed to the Company or used or held
for use
by the Company in the conduct or operation of the Company’s business
(collectively, “Company Trademarks”), and for each registered Company Trademark,
the application serial number or registration number thereof, if applicable,
the
class of goods or the description of the goods or services covered thereby,
the
countries in which such registered Company Trademark is registered, and the
expiration date for each country; (ii) patents and patent applications
(including ▇▇▇▇▇ patents and utility models and applications therefor, as
applicable, and any continuations, continuations-in-part, divisionals, reissues,
supplemental protection certificates, renewals and applications for any of
the
foregoing) (“Patents”) that are owned by or exclusively licensed to the Company
or used or held for use by the Company in the conduct or operation of the
Company’s business (collectively “Company Patents”), and for each Company
Patent, the number, issue date, title and priority information for each country
in which such Company Patent has been issued, and for each patent application
comprising a Company Patent, the application number, date of filing, title
and
priority information for each country in which such patent application is
pending; (iii) copyright registrations and applications and unregistered
copyrights (“Copyrights”) that are owned by or exclusively licensed to the
Company or used or held for use by the Company in the conduct or operation
of
the Company’s business (collectively “Company Copyrights”), and for each
registered Company Copyright, the number and date of registration thereof
for
each country in which such Company Copyright has been registered, and a brief
description of the subject matter covered by any unregistered Company Copyright
and (iv) registered domain names, and World Wide Web Universal Resource Locators
(“Domain Names”) that are owned by or exclusively licensed to the Company or
used or held for use by the Company in the conduct or operation of the Company’s
business (collectively, “Company Domain Names”).
(b) Company
Trademarks.
(i) All
Company Trademarks for which an application for registration has been filed
are
currently in compliance with all Laws, other than any requirement that, if
not
satisfied, would not result in a cancellation of any such registration or
otherwise adversely affect the use, priority or enforceability of the Company
Trademark in question. No registered Company Trademark has been or is now
involved in any opposition or cancellation proceeding in the United States
Patent and Trademark Office. To the knowledge of the Company, there has been
no
prior use of any Company Trademark by any third party that confers upon said
third party superior rights in any such Company Trademark.
(ii) Except
as
set forth in Section 3.19(a) of the Company Disclosure Letter, the Company
is
the exclusive owner of all right, title and interest in and to all of the
Company Trademarks, in each case free and clear of any and all Encumbrances,
covenants, conditions and restrictions or other adverse claims or interests
of
any kind or nature, and the Company has not received any written notice or
claim
or any oral notice or claim, challenging the Company’s complete
and exclusive ownership of the Company Trademarks or suggesting that any
other
Person has any claim of legal or beneficial ownership with respect thereto.
There is no agreement, decree, arbitral award or other provision or contingency
which obligates the Company to grant licenses in future Company
Trademarks.
31
(c) Patents.
(i) All
Company Patents are currently in compliance with all Laws (including payment
of
filing, examination, and maintenance fees) other than any requirement that,
if
not satisfied and through the passage of time, would not result in a revocation
or lapse or otherwise adversely affect the enforceability of the Company
Patent
in question, and the Company has not taken any action or failed to take any
action (including a failure to disclose prior art in connection with the
prosecution of any Company Patent), or used or enforced (or failed to use
or
enforce) any of the Company Patents in a manner that would result in the
abandonment or unenforceability of any of the Company Patents.
(ii) No
Company Patent has been or is now involved in any interference, reissue,
reexamination or opposing proceeding in the United States Patent and Trademark
Office or any foreign patent office and no such action has been threatened.
There is no Patent of any Person that claims the same subject matter as any
Company Patent and no prior art invalidates any claim of any Company
Patent.
(iii) The
Company is the owner of all right, title and interest in and to all of the
Company Patents, in each case free and clear of any and all Encumbrances,
covenants, conditions and restrictions or other adverse claims or interests
of
any kind or nature, and the Company has not received any written notice or
claim
challenging the Company’s complete and exclusive ownership of any of the Company
Patents or stating that any other Person has any claim of legal or beneficial
ownership with respect thereto. There is no agreement, decree, arbitral award
or
other provision or contingency which obligates the Company to grant licenses
in
future Company Patents.
(iv) The
inventions disclosed and claimed in the Company Patents may be practiced
by the
Company without infringing any other Patents owned by any Person.
(d) Copyrights.
(i) The
Company is the owner of all right, title and interest in and to each of the
Company Copyrights free and clear of any and all Encumbrances, covenants,
conditions and restrictions or other adverse claims or interests of any kind
or
nature, and the Company has not received any notice or claim (whether written
or
oral) challenging the Company’s complete and exclusive ownership of the Company
Copyrights or suggesting that any other Person has any claim of legal or
beneficial ownership with respect thereto.
(ii) The
Company has not received any written notice or claim challenging or questioning
the validity or enforceability of any of the Company Copyrights or otherwise
threatening
to bring a claim that any Company Copyright is invalid, is unenforceable
or has
been misused.
32
(iii) The
Company has not taken any action or failed to take any action (including
a
failure to disclose required information to the United States Copyright Office
in connection with any registration of a registered copyright therewith),
or
used or enforced (or failed to use or enforce) any of the Company Copyrights,
in
each case in a manner that could result in the unenforceability of any of
the
Company Copyrights. The Company has taken all reasonable steps to protect
the
Company’s rights in and to the Company Copyrights. To the knowledge of the
Company, no other Person has infringed or is infringing any of the Company
Copyrights.
(e) Trade
Secrets.
(i) The
Company has taken commercially reasonable steps in accordance with normal
industry practice to protect its rights in confidential information and
proprietary information, including any formula, pattern, compilation, program,
device, method, technique, or process, that: (1) derives independent economic
value, actual or potential, from not being generally known to the public
or to
other Persons who can obtain economic value from its disclosure or use; and
(2)
is the subject of efforts that are reasonable under the circumstances to
maintain its secrecy (collectively, “Trade Secrets”).
(ii) Without
limiting the generality of Section 3.19(e)(i) of the Company Disclosure Letter,
the Company enforces a policy of requiring each relevant employee, consultant
and contractor to execute proprietary information, confidentiality and
assignment agreements substantially in the Company’s standard forms that assign
to the Company all rights to any Intellectual Property relating to the Company’s
business that are developed by the employees, consultants or contractors,
as
applicable, and, except subject to confidentiality obligations, there has
been
no disclosure by the Company or, to the knowledge of the Company, any of
its
employees, contractors, agents or consultants of the Company’s confidential
information or Company Trade Secrets; nor have any actions been taken by
the
Company which would affect the Company’s ability to obtain U.S. or, to the
knowledge of the Company, foreign patent protection for the Company’s
inventions.
(f) License
Agreements.
(i) Section
3.19(f)(i) of the Company Disclosure Letter sets forth a complete and accurate
list of all license agreements granting to the Company any right to use or
practice any rights under any Company Intellectual Property (other than
“off-the-shelf” shrink wrap Software commercially available on reasonable terms
to any Person for a license fee of no more than $50,000) (collectively, the
“Company Inbound License Agreements”), indicating for each the title and the
parties thereto and an identification of all of the Intellectual Property
covered thereby.
(ii) Section
3.19(f)(ii) of the Company Disclosure Letter sets forth a complete and accurate
list of all license agreements (other than “click through” end user license
agreements entered into in the ordinary course of the Company’s business)
currently in effect under which the
Company has granted licenses or other rights to in or to use or practice
any
rights under any Company Intellectual Property, indicating for each the title
and parties thereto and an identification of all of the Intellectual Property
covered thereby (collectively, the “Company Outbound License
Agreements”).
33
(iii) There
is
no outstanding or threatened dispute or disagreement with respect to any
Company
Inbound License Agreement or any Company Outbound License Agreement. Correct
and
complete executed copies of all Company Inbound License Agreements and Company
Outbound License Agreements have been made available to Parent.
(g) Domain
Names.
The
Company is the exclusive owner of the Company Domain Names, and all such
Company
Domain Names are currently registered by the Company, as exclusive owner,
with
an ICANN accredited registrar, and the registration fees are paid through
the
date(s) listed on Section 3.19(g) of the Company Disclosure Letter. To the
Company’s knowledge and except as maybe provided on any such internet site or in
any terms of use or other policy governing the use of or access to any such
internet site, the Company is the owner or has sufficient rights to display
all
content displayed on the Internet site associated with each of the Company
Domain Names (collectively, the “Content”), and no consent, license or approval
from any third party is required in connection with the sale or transfer
of the
ownership of the Company Domain Names and the continued use of the Content
by
Parent or the Merger Sub. To the knowledge of the Company, no facts or
circumstances exist which could reasonably form the basis of a challenge
relating to Parent’s or Merger Sub’s unencumbered use of the Company Domain
Names or Content, or any part thereof.
(h) Ownership;
Sufficiency of Intellectual Property Assets.
The
Company owns or possesses adequate licenses or other rights to use, free
and
clear of Encumbrances (except in the case of the Company Inbound License
Agreements, the interests of the licensing party), orders, arbitration awards
and contingent licenses arising from termination provisions (or other causes)
in
agreements between the Company and any other Person, all of the Intellectual
Property used or required for use in the conduct of the Company’s business. The
Company Intellectual Property identified in Section 3.19(a) of the Company
Disclosure Letter, together with the rights granted to the Company under
the
Company Inbound License Agreements, constitute all the Intellectual Property
used or required for use in the operation of the Company’s business as currently
conducted and are all such Intellectual Property rights and Company Inbound
License Agreements necessary to operate the Company’s business after the Closing
in substantially the same manner as the Company’s business has been operated by
the Company. All contracts, license agreements and other agreements relating
to
the Company Intellectual Property currently used in the business of the Company
and its Subsidiaries as currently conducted or proposed to be conducted are
in
full force and effect. Except as set forth in the Company Disclosure Letter,
the
consummation of the transactions contemplated by this Agreement will neither
violate nor result in the breach, modification, cancellation, termination,
or
suspension of such contracts, licenses and agreements. Each of the Company
and
its Subsidiaries is in compliance with, and has not breached and has not
committed any action or omission that could reasonably be expected to result
in
such a breach of any such contracts, licenses and agreements and, to the
knowledge of the Company, all other parties to such contracts, licenses and
agreements are in compliance with, and have not breached any term of, such
contracts, licenses and agreements. At
the
Effective Time, the Surviving Corporation will be permitted to exercise all
of
the Company’s rights under such contracts, licenses and agreements to the same
extent the Company would have been able to had the transactions contemplated
by
this Agreement not occurred and without the payment of any additional amounts
or
consideration other than ongoing fees, royalties or payments which the Company
would otherwise be required to pay.
34
(i) No
Infringement by the Company.
The
operation of the businesses of the Company and its Subsidiaries as such
businesses are currently conducted, including the design, development,
marketing
and sale of the products or services of the Company (including with respect
to
products currently under development) and the Company’s use or contemplated use
of the Company Intellectual Property, to the knowledge of the Company has
not,
does not and will not infringe, dilute or misappropriate the Intellectual
Property of any third party or constitute unfair competition or trade practices
under the laws of any jurisdiction. No litigation is now pending and no
notice
or other claim has been received by the Company, (A) alleging that the
Company
has engaged in any activity or conduct that infringes upon, violates or
constitutes the unauthorized use of the Intellectual Property rights of
any
third party, including any contamination or misappropriation of Trade Secret
claims, or (B) challenging the ownership, use, validity or enforceability
of any
Intellectual Property owned or exclusively licensed by or to the Company,
past
or present.
(j) No
Infringement by Third Parties.
To the
knowledge of the Company no third party is misappropriating, infringing,
diluting or violating any Company Intellectual Property, and no claims
for any
of the foregoing have been brought against any third party by the Company.
The
Company has taken reasonable steps in accordance with normal industry practice
to protect the Company Intellectual Property.
(k) Assignment;
Change of Control.
The
execution, delivery and performance by the Company of this Agreement and
each of
the other documents contemplated hereby to which it is a party, and the
consummation of the transactions contemplated hereby and thereby, will
not
result in the loss or impairment of, or give rise to any right of any third
party to terminate, any of the Company’s rights in the Company Intellectual
Property or under any Company Inbound License Agreement or Company Outbound
License Agreement, nor require the consent of any Governmental Authority
or
third party in respect of any such Intellectual Property.
(l) Software.
The
Software owned or purported to be owned by the Company was: (i) developed
by
employees of the Company within the scope of their employment; (ii) developed
by
independent contractors who have assigned their rights to the Company pursuant
to written agreements; or (iii) otherwise acquired by the Company from
a third
party who assigned all Intellectual Property rights in the Software to
the
Company. None of the Software owned or purported to be owned by the Company
is,
in whole or in part, subject to the provisions of any open source or quasi-open
source license agreement that requires the disclosure of the source code
to any
Software owned or purported to be owned by the Company. The Company has
made no
submission or suggestion and is not subject to any agreement with standards
bodies or other entities, other than under Company Inbound License Agreements
or
Company Outbound License Agreements which would obligate the Company to
grant
licenses to or otherwise impair its control of the Company Intellectual
Property.
35
(m) Performance
of Existing Products.
The
Company’s currently licensed and marketed commercially available products and
services, including any customized products and services, conform and perform
in
all respects with the functions described in any currently applicable agreed
upon specifications or end user documentation provided to Parent or to customers
or potential customers of the Company and in accordance with the Company’s
contractual obligations to the Company’s customers. The Company has not been
notified, either orally or in writing, that such products do not perform
as set
forth above.
(n) Use
of User Data.
(i) The
Company’s use, license, sublicense and sale of any User Data collected from
users at its website and any co-branded websites which the Company manages
have
complied in all respects with the Company’s published privacy policy at the time
such User Data was used, licensed, sublicensed or sold, as applicable,
(collectively, the “Privacy Policies”), excluding any violation that, if
disclosed, would not reasonably be expected to result in a claim against
the
Company.
(ii) The
Company is in compliance with all U.S. and, to the knowledge of the Company,
non-U.S. applicable Laws and contractual obligations binding on the Company
that
relate to or govern the compilation, use and transfer of User Data.
(iii) There
is
no action (including any audit or investigation) pending or, to the knowledge
of
the Company, threatened, by any Person or any Governmental Authority involving
the use, disclosure or transfer of any User Data by the Company, nor, to
the
knowledge of the Company, has the Company been contacted by any Governmental
Authority regarding the use, disclosure or transfer of any User Data by the
Company.
(iv) None
of
the Privacy Policies currently in effect prohibits the transfer of User Data
to
Parent and its Affiliates pursuant to Parent’s acquisition of the websites,
products and other assets of the Company pursuant to this Agreement (it being
understood that, following such transfer, such User Data remains subject
to the
applicable use limitations set forth in such Privacy Policies).
(v) To
the
knowledge of the Company, no Person has obtained unauthorized access to User
Data stored on the computer systems of the Company (including, without
limitation, any User Data contained in any hard copy printouts), nor has
there
been any other unauthorized acquisition of material computerized data of
the
Company (including, without limitation, any data contained in any hard copy
printouts) that has compromised the security, confidentiality or integrity
of
any User Data maintained by the Company in any material manner.
3.20 Brokers.
Except
as set forth in the Company Disclosure Letter, no broker, financial advisor,
investment banker or other Person is entitled to any fee, commission or expense
reimbursement in connection with the Merger or other transactions contemplated
by this Agreement based upon arrangements made by or on behalf of the
Company.
36
3.21 Certain
Business Practices.
Neither
the Company, its Subsidiaries or, to the knowledge of the Company, any director,
officer, employee or agent of the Company or any of its Subsidiaries has:
(a)
used any funds for unlawful contributions, gifts, entertainment or other
unlawful payments relating to political activity; (b) made any unlawful payment
to any foreign or domestic government official or employee or to any foreign
or
domestic political party or campaign or violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended; (c) consummated any transaction,
made
any payment, entered into any agreement or arrangement or taken any other
action
in violation of Section 1128B(b) of the Social Security Act, as amended;
(d)
made any other unlawful payment; (e) transacted any business with the Republic
of the Sudan; or (f) engaged in the business of manufacturing or selling
alcoholic beverages, tobacco or firearms.
3.22 Government
Contracts.
Neither
the Company nor any of its Subsidiaries has been suspended or debarred from
bidding on contracts with any Governmental Authority and, to the knowledge
of
the Company, no such suspension or debarment has been initiated or threatened.
The consummation of the Merger and other transactions contemplated by this
Agreement will not result in any such suspension or debarment of the Company,
any of its Subsidiaries or the Parent (assuming that no such suspension or
debarment will result solely from the identity, acts or omissions of Parent
or
Parent’s affiliates).
3.23 Related
Party Transactions.
Except
as set forth in the Company SEC Documents, since the date of the Company’s last
proxy statement filed with the SEC, no event has occurred as of the date
hereof
that would be required to be reported by the Company pursuant to Item 404
of
Regulation S-B promulgated by the SEC.
3.24 Customers.
Listed
in the Company Disclosure Letter are the names of all the customers of the
Company that ordered goods or merchandise from the Company with an aggregate
value of $50,000 or more during the twelve-month period ended July 31, 2006,
and
the amount for which each such customer was invoiced during such period.
Except
as disclosed in the Company Disclosure Letter, the Company has not received
any
written notice and has no reason to believe that any significant customer
of the
Company has ceased, or will cease, to use the products, equipment, goods
or
services of the Company or has substantially reduced, or will substantially
reduce, the use of such products, equipment, goods or services at any
time.
3.25 Suppliers.
Listed
in the Company Disclosure Letter are the names of all the suppliers from
which
the Company ordered raw materials, supplies, merchandise and other goods
with an
aggregate purchase price of $50,000 or more during the twelve-month period
ended
July 31, 2006, and the amount for which each such supplier invoiced the Company
during such period. Except as disclosed in the Company Disclosure Letter,
the
Company has not received any written notice and has no reason to believe
that
any such supplier will not sell raw materials, supplies, merchandise and
other
goods to the Company at any time after the Closing Date on terms and conditions
similar to those imposed on current sales to the Company, subject to general
and
customary price increases.
3.26 Key
Employees; Labor.
The
Company Disclosure Letter lists the name, place of employment, the current
annual salary rates, bonuses, deferred or contingent compensation, pension,
accrued vacation, “golden parachute” and other like benefits paid or payable (in
cash or otherwise) in 2002, 2003, 2004 and 2005, the date of employment and
a
description of position and job function of each current salaried employee
or
officer of the Company and any of its Subsidiaries whose annual compensation
exceeded (or, in 2006, is expected to exceed) $100,000.
37
(a) All
directors, officers, management employees, and technical and professional
employees of the Company and any of its Subsidiaries are under written
obligation to the Company or any of its Subsidiaries to maintain in confidence
all confidential or proprietary information acquired by them in the course
of
their employment and to assign to the Company or any of its Subsidiaries,
as
applicable, all inventions made by them within the scope of their employment
during such employment and for a reasonable period thereafter.
(b) Neither
the Company nor any of its Subsidiaries has been, nor is any of them currently,
a party to any collective bargaining or other labor contract. Except as set
forth in the Company Disclosure Letter, there has not been and there is not
presently pending or existing, nor is there a threatened (a) strike, slowdown,
picketing, work stoppage, or employee grievance process, (b) any proceeding
against or affecting the Company or any of its Subsidiaries relating to the
alleged violation of any Laws pertaining to labor relations or employment
matters, including any charge or complaint filed by an employee or union
with
the National Labor Relations Board, the Equal Employment Opportunity Commission,
or any comparable Governmental Authority, organizational activity, or other
labor or employment dispute against or affecting the Company or any of its
Subsidiaries or their premises, or (c) application for certification of a
collective bargaining agent. To the knowledge of the Company, no event has
occurred or circumstance exists that could provide the basis for any work
stoppage or other labor dispute. There is no lockout of any employees by
the
Company or any of its Subsidiaries, and no such action is contemplated by
the
Company or any of its Subsidiaries. Each of the Company and its Subsidiaries
has
complied in all material respects with all Laws relating to employment,
equal employment opportunity, nondiscrimination, wages, hours, benefits,
collective bargaining, the payment of social security and similar taxes,
occupational safety and health, and plant closing. Neither the Company nor
any
of its Subsidiaries is liable for the payment of any compensation, damages,
taxes, fines, penalties, or other amounts, however designated, for failure
to
comply with any of the foregoing Laws.
3.27 Payment
Programs.
(a) All
Payment Programs in which the Company or any of its Subsidiaries has
participated at any time during the last three years are listed on the Company
Disclosure Letter (the “Company Payment Programs”). For purposes of this
Agreement, the term “Payment Programs” means Medicare, TRICARE, Medicaid,
Worker’s Compensation, Blue Cross/Blue Shield programs, and all other health
maintenance organizations, preferred provider organizations, health benefit
plans, health insurance plans, and other third party reimbursement and payment
programs. The Company or any of its Subsidiaries, as applicable, is a
participating provider, in good standing, in each Company Payment Program.
There
is no threatened or pending or concluded investigation, or civil, administrative
or criminal proceeding relating to the Company’s or any of its Subsidiaries’
participation in any Payment Program. Neither the Company nor any Subsidiary
is
subject to, nor has any of them been subjected to, any pre-payment
utilization review or other utilization review by any Payment Program. No
Payment Program has requested or threatened any recoupment, refund, or set-off
from the Company or any of its Subsidiaries and there is no basis therefor.
No
Payment Program has imposed a fine, penalty or other sanction on the Company
or
any of its Subsidiaries. Neither the Company nor any of its Subsidiaries
has
been excluded from participation in any Payment Program. Neither the Company
nor
any of its Subsidiaries has knowingly submitted to any Payment Program any
false
or fraudulent claim for payment, nor has the Company or any of its Subsidiaries
at any time knowingly violated any condition for participation, or any rule,
regulation, policy or standard of, any Payment Program. All Medicare cost
reports, if any, for all periods prior to the Effective Time have been
accurately completed and timely filed.
38
(b) Neither
the Company nor any of its Subsidiaries, affiliates, directors, officers
or
employees has directly or indirectly: (i) offered to pay to or solicited
any
remuneration from, in cash, property or in kind, or made any financial
arrangements with, any past or present patient or customer, past or present
medical director, physician, other health care provider, supplier, contractor,
third party, or Payment Program in order to induce or directly or indirectly
obtain business or payments from such Person, including without limitation
any
item or service for which payment may be made in whole or in part under any
federal, state or private health care program, or for purchasing, leasing,
ordering or arranging for or recommending, purchasing leasing, or ordering
any
good, facility, service or item for which payment may be made in whole or
in
part under any federal, state or private health care program; (ii) given
or
received, or agreed to give or receive, or is aware that there has been made
or
that there is any agreement to make or receive, any gift or gratuitous payment
or benefit of any kind, nature or description (including without limitation
in
money, property or services) to any past, present or potential patient or
customer, medical director, physician, other health care provider supplier
or
potential supplier, contractor, Payment Program or any other Person; (iii)
made
or agreed to make, or is aware that there has been made or that there is
any
agreement to make, any contribution, payment or gift of funds or property
to, or
for the private use of, any governmental official, employee or agent where
either the contribution, payment or gift or the purpose of such contribution,
payment or gift is or was illegal under the laws of the United States or
under
the laws of any state thereof or any other jurisdiction in which such payment,
contribution or gift was made; (iv) established or maintained any unrecorded
fund or asset for any purpose or made any false or artificial entries on
any of
its books or records for any reason; or (v) made or received or agreed to
make
or receive, or is aware that there has been made or received or that there
has
been any intention to make or receive, any payment to any Person with the
intention or understanding that any part of such payment would be used for
any
purpose other than that described in the documents supporting such payment.
All
billing practices of the Company and its Subsidiaries with respect to all
Payment Programs have been true, fair and correct and in compliance with
all
applicable laws, and all regulations and policies of all such Payment Programs,
and neither the Company nor any of its Subsidiaries has knowingly billed
for or
received any payment or reimbursement in excess of amounts permitted by law
or
the rules and regulations of Payment Programs or contracts
therewith.
3.28 Products.
Each of
the products produced, licensed or sold and services rendered by the Company
or
any of its Subsidiaries (“Products”) (i) is, and at all times has been, in
material compliance with all applicable Laws, and (ii) is, and at all relevant
times has been, fit for
the
ordinary purposes for which it is intended to be used and conforms to any
promises or affirmations of fact made on the container or label for such
Product
or in connection with its sale. Neither the Company nor any of its Subsidiaries
has knowledge of any design defect with respect to any Products, and each
of
such Products contains adequate warnings in accordance with applicable Laws
and
current industry practice with respect to its contents and
use.
39
3.29 Inventories.
Except
as set forth in the Company Disclosure Letter, all of the inventory of the
Company and its Subsidiaries, whether or not reflected on the Most Recent
Balance Sheet, consists of items of a quality and quantity usable or saleable
in
the ordinary course of the businesses of the Company and its Subsidiaries
as
first quality goods at prices having a value equal to the amounts reflected
on
the Most Recent Balance Sheet or, with respect to the Company’s after-acquired
inventory, at least equal to the cost thereof plus markups consistent with
United States Generally Accepted Accounting Principles (“GAAP”). Each item of
such inventory is valued on the Most Recent Balance Sheet at the lower of
cost
or market, by the first-in first-out method, in accordance with GAAP. The
Company’s and its Subsidiaries’ inventories and supplies are on the date hereof,
and will be at the Effective Time, at normal and adequate levels for the
continuation of such businesses in the ordinary course.
3.30 Books
and Records.
The
minute books of the Company and its Subsidiaries contain true, complete and
correct records of all actions taken at meetings of the Company’s and its
Subsidiaries’ stockholders, boards of directors and committees thereof and of
all written consents executed in lieu of the holding of a meeting and of
all
other matters set forth therein and have been maintained in a manner consistent
with good business practice.
3.31 Disclosure.
Except
as set forth in the Company Disclosure Letter, no representation or warranty
of
the Company contained in this Agreement, contains any untrue statement of
a
material fact or omits to state a material fact necessary in order to make
the
statements contained therein, in light of the information requested in such
representation or warranty, not misleading.
3.32 Proxy
Materials; Other Information.
None of
the information supplied or to be supplied by the Company for inclusion or
incorporation by reference in the letter to stockholders, notice of meeting,
proxy statement and form of proxy to be distributed to Company stockholders
in
connection with the Merger and any schedules required to be filed with the
SEC
in connection therewith (collectively, the “Proxy Materials”) will, at the time
of the mailing of any of the Proxy Materials and at the time of the Company
Stockholders’ Meeting, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in
order
to make the statements therein, in light of the circumstances under which
they
are made, not misleading. If at any time prior to the Effective Time any
event
with respect to the Company, its officers and directors should occur which
is
required to be described in an amendment of, or a supplement to, the Proxy
Materials, the Company shall promptly inform Parent, such event shall be
so
described, and such amendment or supplement shall be promptly filed with
the SEC
and, as required by law, disseminated to the stockholders of the Company
and
Parent. The Proxy Materials will (with respect to the Company) comply as
to form
in all material respects with the requirements of the Exchange Act and the
rules
and regulations promulgated thereunder. Notwithstanding the foregoing, the
Company makes no representation or warranty with respect to
any
information supplied by Parent or Merger Sub which is contained in any of
the
foregoing documents.
40
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF PARENT AND MERGER SUB
Parent
and Merger Sub represent and warrant to the Company as follows:
4.1 Organization.
Each of
Parent and Merger Sub is a corporation duly incorporated, validly existing
and
in corporate and tax good standing under the laws of its respective state
of
incorporation.
4.2 Authority;
No Conflict; Required Filings.
(a) Each
of
Parent and Merger Sub has all requisite corporate power and authority to
execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the Merger and other transactions contemplated hereby. The execution
and delivery of this Agreement, the performance of its obligations hereunder
and
the consummation of the Merger and other transactions contemplated hereby,
have
been duly authorized by all corporate action on the part of Parent and Merger
Sub and no other corporate proceedings are necessary.
(b) This
Agreement has been duly executed and delivered by Parent and Merger Sub and
constitutes a valid and binding obligation of Parent and Merger Sub, enforceable
against each of them in accordance with its terms, subject only to the Equitable
Exceptions.
(c) The
execution and delivery of this Agreement do not, and the performance by either
Parent or Merger Sub of its obligations hereunder and the consummation of
the
Merger and other transactions contemplated hereby will not, conflict with
or
result in any violation of, or default (with or without notice or lapse of
time,
or both) under: (i) its Certificate of Incorporation, Bylaws or other equivalent
organizational documents; (ii) subject to the governmental filings and other
matters referred to in paragraph (d) below, any (A) permit, license, franchise,
statute, law, ordinance or regulation or (B) judgment, decree or order, in
each
case applicable to it, or by which any of its properties or assets may be
bound
or affected; or (iii) any loan or credit agreement, note, bond, mortgage,
indenture, contract, agreement, lease or other instrument or obligation to
which
it is a party or by which its properties may be bound or affected, except,
in
the case of clauses (ii) or (iii) above, for any such conflicts, violations,
defaults or other occurrences, if any, that could not, individually or in
the
aggregate, reasonably be expected to impair the ability of the Parties to
consummate the Merger on a timely basis.
(d) No
consent, approval, order or authorization of, or registration, declaration
or
filing with, any Governmental Authority is required by or with respect to
Parent
or Merger Sub in connection with the execution and delivery of this Agreement
or
the consummation of the Merger or other transactions contemplated hereby
except
for: (i) the filing of the Certificate of Merger
and related officers’ certificates with the Secretary of State of the State of
Delaware in accordance with the DGCL; and (ii) such consents, approvals,
orders
or authorizations, or registrations, declarations or filings which, if not
obtained or made, could not reasonably be expected to impair the ability
of the
Parties to consummate the Merger on a timely basis.
41
4.3 Compliance
with Laws.
Each of
Parent and Merger Sub has at all times complied with all federal, state,
local
and foreign statutes, laws and regulations, and is not in violation of, and
has
not received any written claim or notice of violation of, any such statutes,
laws and regulations with respect to the conduct of its business or the
ownership and operation of its properties and other assets, except for such
instances of non-compliance or violation, if any, which could not reasonably
be
expected to impair the ability of the Parties to consummate the Merger on
a
timely basis.
4.4 Litigation. There
is
no suit, action, arbitration, claim, governmental or other proceeding before
any
Governmental Authority pending or, to the knowledge of Parent, threatened,
against Parent or Merger Sub which, if decided adversely could reasonably
be
expected to impair the ability of the Parties to consummate the Merger on
a
timely basis.
4.5 Interim
Operations of Merger Sub.
Merger
Sub was formed solely for the purpose of engaging in the transactions
contemplated by this Agreement, has engaged in no other business activities
and
has conducted its operations only as contemplated in this
Agreement.
4.6 Financing.
Concurrently with its execution of this Agreement, the Parent and the Merger
Sub
shall deliver to the Company the reasonable assurances of HealthpointCapital
Partners II, L.P. ("HealthpointCapital"), made and directed to the Company
that
HealthpointCapital has sufficient funds to complete the Offer and the Merger
in
accordance with this Agreement.
ARTICLE
V
CONDUCT
OF BUSINESS PENDING THE MERGER
5.1 Conduct
of Business Pending the Merger.
(a) The
Company covenants and agrees that, between the date hereof and the earlier
to
occur of the Effective Time or such earlier time as this Agreement is terminated
in accordance with Article VIII (such period being hereinafter referred to
as
the “Interim Period”), except as expressly required by this Agreement or unless
Parent shall otherwise consent in writing, which consent shall not be
unreasonably withheld, conditioned or delayed, each of the Company and its
Subsidiaries: (i) shall conduct its business only in the ordinary course
of
business, consistent with past practice; (ii) shall not take any action,
or fail
to take any action, except in the ordinary course of business, consistent
with
past practice; and (iii) shall use its commercially reasonable efforts to
preserve intact its business organization, properties and assets, keep available
the services of their officers, employees and consultants, maintain in effect
all Company Material Contracts
and preserve their relationships, customers, licensees, suppliers and other
Persons with which it has business relations. By way of amplification and
not
limitation, except as expressly permitted by this Agreement, neither the
Company
nor any of its Subsidiaries shall, during the Interim Period, directly or
indirectly, do any of the following without the prior written consent of
Parent:
42
(i) amend
its
Certificate of Incorporation, Bylaws or other equivalent organizational
documents, or otherwise alter their corporate structure through merger,
liquidation, reorganization, restructuring or otherwise;
(ii) issue,
sell, transfer, pledge, dispose of or encumber any shares of capital stock
of
any class, or any options, warrants, convertible securities or other rights
of
any kind to acquire any shares of capital stock, or any other ownership interest
of the Company or any of its Subsidiaries (except for the issuance of shares
of
Company Common Stock issuable pursuant to the Company Stock Plan);
(iii) redeem,
repurchase or otherwise acquire, directly or indirectly, any shares of capital
stock of the Company or interest in or securities of any of its
Subsidiaries;
(iv) sell,
transfer, pledge, dispose of or encumber any properties, facilities, equipment
or other assets, except for sales of inventory and equipment in the ordinary
course of business;
(v) declare,
set aside or pay any dividend or other distribution (whether in cash, stock
or
other securities or property, or any combination thereof) in respect of any
of
its capital stock or other equity interests;
(vi) split,
combine or reclassify any shares of its capital stock or other securities
or
equity interests, or issue any other securities in respect of, in lieu of
or in
substitution for shares of its capital stock or equity interests;
(vii) sell,
transfer, lease, license, sublicense, mortgage, pledge, dispose of, encumber,
grant or otherwise dispose of any Company Intellectual Property, or amend
or
modify any existing agreements with respect to any Company Intellectual
Property;
(viii) acquire
(by merger, consolidation, acquisition of stock or assets or otherwise) any
corporation, limited liability company, partnership, joint venture or other
business organization or division thereof;
(ix)
(A)
issue any debt securities, (B) assume, guarantee or endorse or otherwise
as an
accommodation become responsible for the obligations of any Person, (C) make
any
loans, advance to any Person, (D) take any advance with respect to the Company’s
existing line of credit with Commerce Bank (the “Line of Credit”) without
providing notice to Parent or (E) increase the amount outstanding or the
aggregate credit available under the Line of Credit above $3,500,000;
43
(x) incur
any
indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse or otherwise as an accommodation become responsible
for the
obligations of any Person, or make any loans, advances or enter into any
financial commitments;
(xi) authorize
any capital expenditures in excess of $100,000 in the aggregate;
(xii) take
or
permit to be taken any action to: (A) increase the compensation payable to
its
officers or employees, except for increases in salary or wages in accordance
with agreements entered into prior to the date of this Agreement or otherwise
in
the ordinary course of business consistent with past practice; (B) grant
any
additional severance or termination pay to, or enter into any employment
or
severance agreements with, its officers; (C) grant any severance or termination
pay to, or enter into any employment or severance agreement with, any employee
except in accordance with agreements entered into before the date of this
Agreement or otherwise in the ordinary course of business consistent with
past
practice; (D) enter into any collective bargaining agreement; or (E) establish,
adopt, enter into or amend any bonus, profit sharing, thrift, compensation,
stock option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, trust, fund, policy or
arrangement for the benefit of any of its directors, officers or
employees;
(xiii) change
any accounting policies or procedures (including, without limitation, procedures
with respect to reserves, revenue recognition, payments of accounts payable
and
collection of accounts receivable), unless required by statutory accounting
principles or GAAP;
(xiv) create,
incur, suffer to exist or assume any Lien on any of its properties, facilities
or other assets;
(xv) other
than in the ordinary course of business: (A) enter into any Company Material
Contract; (B) modify, amend, transfer or terminate any Company Material Contract
or waive, release or assign any rights or claims thereto or thereunder; or
(C)
enter into or extend any lease with respect to real property;
(xvi) enter
into any agreement, or amend the terms of any existing agreement, which grants
to any Person exclusive supply, manufacturing, production, marketing or
distribution rights with respect to any of its products or
technologies;
(xvii) make
any
Tax election or settle or compromise any federal, state, local or foreign
Tax
liability, or agree to an extension of a statute of limitations with respect
thereto;
(xviii) pay,
discharge, satisfy or settle any litigation or waive, assign or release any
rights or claims with respect thereto, other than settlements in the ordinary
course of business that involve only the payment of non-material amounts
of cash
and do not involve any admission with respect to (A) any criminal wrongdoing
or
(B) the invalidity or unenforceability of, or any infringement with respect
to,
any Company Intellectual Property Rights;
(xix) amend
the
terms of any outstanding options under the Company Stock Plan, except as
may be
necessary to conform to the terms of this Agreement;
44
(xx) except
for insurance coverage that will terminate as a result of the transactions
contemplated hereby, fail to maintain in full force and effect all insurance
policies currently in effect, or permit any of the coverage thereunder
to lapse,
in each case without simultaneously securing replacement insurance policies
which will be in full force and effect and provide coverage substantially
similar to or greater than under the prior insurance policies;
(xxi) fail
to
make any expenditures that are necessary and sufficient to maintain or,
to the
extent budgeted or consistent with the past practice of the Company and
its
Subsidiaries, improve the conditions of the properties, facilities and
equipment
of the Company and its Subsidiaries, including, without limitation, budgeted
expenditures relating to maintenance, repair and replacement;
(xxii) take
any
action or fail to take any reasonable action permitted by this Agreement
if such
action or failure to take action could reasonably be expected to result
in
either (A) any of the representations and warranties of the Company set
forth in
Article III of this Agreement becoming untrue or (B) any of the conditions
to
the Closing set forth in Article VII of this Agreement not being satisfied
as of
the Closing Date; or
(xxiii) authorize,
recommend, propose, announce or enter into any agreement, contract, commitment
or arrangement to do any of the foregoing.
5.2 No
Solicitation of Other Proposals.
(a) The
Company shall, and shall direct its Representatives to, immediately cease
any
discussions, negotiations or written communications (other than communications
solely directed at informing other parties of the restrictions contained
in this
Section 5.2 and only in response to an inquiry from such other parties)
with any
party or parties that commenced prior to the execution of this Agreement
with
respect to any Competing Proposal. As used in this Agreement, a “Competing
Proposal” means any proposal, offer or indication of interest (other than this
Agreement and the Merger), whether in writing or otherwise, from any Person
or
group (as defined in Section 13(d)(3) of the Exchange Act) other than Parent,
Merger Sub or any affiliates thereof (a “Competing Third Party”), relating to
(i) any Material Change of Ownership; (ii) any tender offer (including
a
self-tender offer) or exchange offer that, if consummated, would result
in any
Competing Third Party beneficially owning more than 20% of any class of
equity
or voting securities of the Company; or (iii) a merger, consolidation,
share
exchange, business combination, sale of a majority of the assets of the
Company,
reorganization, recapitalization, liquidation, dissolution or other similar
transaction involving the Company.
(b) Unless
this Agreement shall have been validly terminated, the Company shall not,
nor
shall it authorize or permit any Representative of the Company or its
Subsidiaries to (i) solicit, initiate or knowingly encourage, or otherwise
knowingly facilitate, directly or indirectly, any inquiries relating to,
any
Competing Proposal; (ii) directly or indirectly initiate or participate
in any
discussions, negotiations or communications (other than communications
solely
directed at informing other parties of the restrictions contained in this
Section 5.2 and only in response to an inquiry from such other parties)
regarding any Competing Proposal; or (iii) furnish to any Competing
Third Party any nonpublic information or data for the purpose of encouraging
or
facilitating, or provide access to the properties, offices, books, records,
officers, directors or employees of the Company for the purpose of encouraging
or facilitating, any Competing Proposal. Without limiting the generality
of the
foregoing, it is understood that any violation of any of the restrictions
set
forth in this Section 5.2 by any Representative of the Company or any of
its
Subsidiaries shall be deemed to be a breach by the Company of this Section
5.2
by the Company. Notwithstanding the foregoing and anything to the contrary
contained in this Agreement, if, prior to obtaining Requisite Stockholder
Approval, the Company Board determines (after consultation with outside
counsel
and its financial advisor) that a Competing Proposal that did not result
from a
breach by the Company of this Section 5.2 constitutes or is reasonably
likely to
lead to a Superior Competing Proposal, then the Company may, to the extent
that
the Company Board determines in good faith after consultation with the
Company’s
outside counsel that failure to do so would be inconsistent with its fiduciary
obligations under applicable law and subject to the Company's providing
prompt
(but in any event within 24 hours after such decision is formally adopted
by the
Company Board) written notice to Parent of its decision to take such action
and
compliance by the Company with Section 5.2(d), (A) furnish information
or data
with respect to the Company and its Subsidiaries to such Competing Third
Party
(and the Representatives of such Competing Third Party) and (B) participate
in
discussions and negotiations (including solicitations of a revised Competing
Proposal by such Competing Third Party) directly or through its Representatives
with such Competing Third Party, subject to the Company receiving from
such
Competing Third Party a confidentiality agreement not materially less favorable
to the Company than the confidentiality obligations contained in the agreements
between the Company and Parent, provided, that all nonpublic information
(other
than any immaterial information) not already provided or made available
to the
Parent is provided to the Parent as soon as reasonably practicable (but
in any
event within 24 hours) after it is provided to such Competing Third
Party.
45
(c) Neither
the Company Board nor any committee thereof shall (i) withdraw or modify,
or
publicly propose or publicly resolve to withdraw or modify, in a manner adverse
to Parent or Merger Sub the Recommendations; (ii) approve or recommend, or
publicly propose or publicly resolve to approve or recommend, any Competing
Proposal; (iii) approve or recommend, or execute or enter into, or publicly
propose or publicly resolve to approve or recommend, any letter of intent,
agreement in principle, merger agreement, stock purchase agreement, asset
purchase agreement, acquisition agreement, option agreement or similar agreement
relating to a Competing Proposal (other than a confidentiality agreement
referred to in Section 5.2(b) entered into in the circumstances referred
to in
Section 5.2(b)) (an “Acquisition Agreement”); (iv) approve or recommend, or
execute or enter into, or publicly propose or publicly resolve to approve
or
recommend, any agreement requiring it to terminate this Agreement or abandon
or
fail to consummate the Merger or the transactions contemplated hereby; or
(v)
take any action necessary to render the provisions of any “moratorium”, “control
share”, “fair price”, “affiliate transaction”, “business combination”, or other
anti-takeover laws and regulations of any state or other jurisdiction, including
the provisions of Section 203 of the DGCL, inapplicable to any Competing
Proposal. Notwithstanding the foregoing or anything to the contrary set forth
in
this Agreement, prior to obtaining the Requisite Stockholder Approval, the
Company Board may, in response to a Superior Competing Proposal that did
not
result from a breach by the Company of this Section 5.2, (1) withdraw or
modify
the Recommendations, (2) approve
or recommend the Superior Competing Proposal or (3) terminate the Agreement
in
accordance with Section 8.1(e), but in the case of any action contemplated
by
clause (1) or any recommendation contemplated by clause (2), only (x) if
the
Company Board determines in good faith after consultation with the Company’s
outside counsel that failure to do so would be inconsistent with its fiduciary
obligations under applicable law and in each case, only (y) at a time that
is
after 24 hours following Parent’s receipt of written notice advising Parent that
the Company Board is prepared to take such action (during which period the
Company shall make its counsel available to Parent and shall consider in
good
faith any amendment of the terms of the Merger proposed by Parent or Merger
Sub
or any proposal by Parent or Merger Sub to amend the terms of this Agreement
or
the Merger), specifying therein the material terms and conditions of such
Superior Competing Proposal and identifying the Person or group making such
Superior Competing Proposal, and (y) if, following such 24-hour period, the
Company Board determines in good faith (after consultation with the Company’s
outside legal counsel and its financial advisor) that such proposed transaction
continues to be a Superior Competing Proposal, after taking into account
any
bona fide proposal by Parent or Merger Sub to amend the terms of this Agreement,
which proposal shall be binding during such 24-hour period and capable of
acceptance by the Company. The Company shall not during the term of this
Agreement release any Competing Third Party from, or agree to amend or waive
any
provision of, any confidentiality agreement with any Competing Third Party
with
respect to a Competing Proposal entered into pursuant to this Section 5.2
unless
it so amends or waives the confidentiality agreement with Parent, and the
Company shall use its best efforts to enforce, to the fullest extent permitted
by Law, each confidentiality agreement entered into pursuant to this Section
5.2. In addition, notwithstanding the foregoing or anything to the contrary
set
forth in this Agreement, prior to obtaining the Requisite Stockholder Approval,
the Company Board may withdraw or modify the Recommendations if the Company
Board determines, after consultation with outside counsel, that failure to
do so
would be inconsistent with its fiduciary obligations under applicable law,
but
only at a time that is after 24 hours following Parent’s receipt of written
notice advising Parent that the Company Board is prepared to take such action,
specifying the reasons therefor.
46
(d) In
addition to the obligations set forth in Sections 5.2(a), (b) and (c),
the
Company shall notify Parent orally and, if requested by Parent, in writing,
within 24 hours of the receipt by the Company of any Competing Proposal,
which
notification shall include the material terms and conditions of such Competing
Proposal and the identity of the person or group making or sending the
Competing
Proposal. The Company shall promptly (but in any event within 24 hours)
advise
Parent of any material change in the terms or conditions of a Competing
Proposal
or any other material development with respect thereto.
(e) Nothing
contained in this Section 5.2 or any other provision hereof shall prohibit
the
Company or the Company Board from making any disclosure to the Company’s
stockholders, if the Company Board determines, after consultation with
its
outside counsel, that failure to so disclose would be inconsistent with
its
fiduciary obligations under applicable Law or the Company’s or its obligations
under Sections 14d-9 and 14e-2 of the Exchange Act.
47
ARTICLE
VI
ADDITIONAL
AGREEMENTS
6.1 Access
to Information; Confidentiality.
(a) Upon
reasonable notice, the Company shall (and shall cause each of its Subsidiaries
to) afford to the officers, employees, accountants, counsel and other
representatives of Parent reasonable access, during the Interim Period, to
all
its properties, books, contracts, commitments and records and, during such
period, furnish promptly to Parent all information concerning its business,
properties and personnel as Parent may reasonably request. The Company shall
make available to Parent any appropriate employees for discussion of its
business, properties and personnel as Parent may reasonably request. No
investigation pursuant to this Section
6.1(a)
shall
affect any representations or warranties of the Company contained herein
or the
conditions to the obligations of the Company hereto.
(b) Each
Party shall hold, and shall use its best efforts to cause its affiliates
and its
and their respective officers, employees, counsel, accountants, financial
advisors, consultants and other representatives (collectively,
“Representatives”) to hold, all information obtained pursuant to Section
6.1(a)
in
strict confidence from any Person (other than any such affiliate or
Representative), unless (i) compelled to disclose by judicial or administrative
process or by other requirements of law or (ii) disclosed in an judicial
or
governmental action or proceeding brought by a Party in pursuit of its rights
or
in the exercise of its remedies hereunder, all documents and information
concerning the other Party or any of its affiliates furnished to it by the
other
Party or such other Party’s Representatives in connection with this Agreement or
the trans-actions contemplated hereby, except to the extent that such documents
or information can be shown to have been (x) previously known by the party
receiving such documents or information, (y) in the public domain (either
prior
to or after the furnishing of such documents or information hereunder) through
no fault of such receiving party or (z) later acquired by the receiving Party
from another source if the receiving Party is not aware that such source
is
under an obligation to another party hereto to keep such documents and
information confidential.
6.2 Reasonable
Efforts; Further Assurances.
(a) Parent
and the Company shall use their reasonable efforts to satisfy or cause to
be
satisfied all of the conditions precedent that are set forth in Article VII,
as
applicable to each of them. Each Party, at the reasonable request of the
other,
shall execute and deliver such other instruments and do and perform such
other
acts and things as may be necessary or desirable for effecting completely
the
consummation of the Merger and other transactions contemplated by this
Agreement.
(b) Subject
to the terms and conditions hereof, the Company and Parent agree to use their
respective 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, in the most expeditious manner practicable, the Merger
and
other transactions contemplated by this Agreement including, without limitation,
using their respective reasonable efforts: (i) to obtain prior
to
the Closing Date all licenses, certificates, permits, consents, approvals,
authorizations, qualifications and orders of Governmental Authorities and
parties to contracts with the Company or its Subsidiaries as are necessary
for
the consummation of the transactions contemplated hereby; (ii) to effect
all
necessary registrations and filings required by any Governmental Authority
(in
connection with which Parent and the Company shall cooperate with each other
in
connection with the making of all such registrations and filings, including,
without limitation, providing copies of all such documents to the non-filing
party and its advisors prior to the time of such filing and, if requested,
will
accept all reasonable additions, deletions or changes suggested in connection
therewith); (iii) to furnish to each other such information and assistance
as
reasonably may be requested in connection with the foregoing; and (iv) to
lift,
rescind or mitigate the effects of any injunction, restraining order or other
ruling by a Governmental Authority adversely affecting the ability of any
Party
to consummate the Merger or other transactions contemplated hereby and to
prevent, with respect to any threatened or such injunction, restraining order
or
other such ruling, the issuance or entry thereof.
48
6.3 Stock
Options; Warrants.
Except
as set forth on Schedule
1.7
hereto,
at the Effective Time, each Option or other right to purchase shares of Company
Common Stock, whether vested or unvested, if not exercised, shall be cancelled
or deemed to have been exercised pursuant to Section
2.7(a)
above,
without any action by the holders thereof.
6.4 Employees;
Employee Benefits.
(a) Parent
agrees that individuals who are employed by the Company or any Subsidiary
of the
Company immediately prior to the Effective Time shall remain employees of
the
Surviving Corporation or one of its Subsidiaries upon the Effective Time
(each
such employee, a “Company Employee”); provided,
however,
that
this Section
6.4(a)
shall
not be construed to limit the ability of the Surviving Corporation, or Parent
or
any of its Subsidiaries to terminate the employment of any Company Employee
at
any time.
(b)
Prior
to the Effective Time, Parent shall offer employment to the individuals listed
on Schedule 6.4(b), on and subject to the terms set forth in a
separate written offer delivered to each such individual prior to the date
of
this Agreement.
(c) After
the
Effective Time the Company Employees shall be eligible to participate in
the
employee benefit plans of Parent to the same extent as any similarly situated
and geographically located employee of Parent.
6.5 Notification
of Certain Matters.
(a) The
Company shall give prompt notice to Parent, and Parent shall give prompt
notice
to the Company, (i) if any representation or warranty under this Agreement
becomes untrue and (ii) any failure of the Company, Parent or Merger Sub,
as the
case may be, to comply with or satisfy in any material respect, any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided,
however,
that
the delivery of any notice pursuant to this Section
6.5(a)
shall
not limit or otherwise affect the remedies available hereunder to the Party
receiving such notice.
49
(b) Each
of
the Company and Parent shall give prompt notice to the other of (i) any notice
or other communication from any Person alleging that the consent of such
Person
is or may be required in connection with the Merger or other transactions
contemplated by this Agreement; (ii) any notice or other communication from
any
Governmental Authority in connection with the Merger or other transactions
contemplated by this Agreement; (iii) any litigation, relating to or involving
or otherwise affecting the Company or any of its Subsidiaries or Parent that
relates to the Merger or other transactions contemplated by this Agreement;
(iv)
the occurrence of a default or event that, with notice or lapse of time or
both,
will become a default under either a Company Material Contract or a Parent
Material Contract; and (v) any change that would be considered reasonably
likely
to result in a Company or Parent Material Adverse Effect, as the case may
be, or
is likely to impair the ability of either Parent or the Company to consummate
the transactions contemplated by this Agreement.
6.6 Public
Announcements.
Except
as otherwise required by applicable law, court process or as provided elsewhere
herein, prior to the Closing or the earlier termination of this Agreement
pursuant to Article VIII, neither the Company nor Parent shall, nor shall
permit
any of its Subsidiaries to, issue or cause the publication of any press release
or other public announcement with respect to the Merger or other transactions
contemplated by this Agreement without the consent of the other Party, which
consent shall not be unreasonably withheld, conditioned or delayed.
6.7 FIRPTA
Compliance Pre-Closing.
The
Surviving Corporation shall, as soon as practicable after the Effective Time,
deliver to Parent a statement conforming to the requirements of Sections
1.897-2(h) and 1.1445-2(c)(3) of the regulations of the IRS in form and
substance, certifying that shares of capital stock of the Company do not
constitute “United States real property interests” under Section 897(c) of the
Code. In addition, simultaneously with the delivery of such statement, the
Company shall provide to Parent, as agent for the Company, a form of notice
to
the IRS conforming to the requirements of Section 1.897-2(h) (2) of such
regulations, together with written authorizations to Parent to deliver such
notifications to the IRS after the Effective Time.
6.8 Tax
Matters.
Without
the prior written consent of Parent, the Company shall not make or change
any
election, change an annual accounting period, adopt or change any accounting
method, file any amended Return, enter into any closing agreement, settle
any
Tax claim or assessment relating to the Company, surrender any right to claim
a
refund of Taxes, consent to any extension or waiver of the limitation period
applicable to any Tax claim or assessment relating to the Company, or take
any
other similar action relating to the filing of any Return or the payment
of any
Tax, if such election, adoption, change, amendment, agreement, settlement,
surrender, consent or other action would have the effect of increasing the
Tax
liability of the Company for any period ending after the Closing Date or
decreasing any Tax attribute of the Company existing on the Closing
Date.
6.9 Proxy
Statement.
If
approval of the Company’s stockholders is required by Delaware Law following the
Appointment Time in order to consummate the Merger other than pursuant to
Section 253 of the Delaware Law, as soon as practicable following the
Appointment Time, Parent, Merger Sub and Company will prepare with the SEC
a
proxy statement for use in connection
with the solicitation of proxies from the Company’s stockholders in connection
with the Merger and the Stockholders’ Meeting (the “Proxy Statement”). Parent
and Merger Sub, respectively, shall each promptly furnish the Company, in
writing, all information concerning Parent and Merger Sub that may be required
by applicable securities laws or reasonably requested by the Company for
inclusion in the Proxy Statement. As soon as practicable following the
Appointment Time, the Company shall file a preliminary Proxy Statement with
the
SEC. The Company shall advise Parent, promptly after it receives notice thereof,
of any request by the SEC or its staff for an amendment or revisions to the
Proxy Statement, or comments thereon and responses thereto, or requests by
the
SEC or its staff for additional information in connection therewith and shall
provide Parent and its counsel all written comments or requests for information
that the Company or its counsel may receive from the SEC or its staff with
respect to the Proxy Statement promptly after receipt thereof. The Company
shall
respond to any such comments or requests from the SEC regarding the Proxy
Statement. No filing of, or amendment or supplement to, or correspondence
with
the SEC or its staff with respect to the Proxy Statement shall be made by
the
Company without providing Parent a reasonable opportunity to participate
in the
formulation thereof and to review and comment thereon. As promptly as
practicable after the all comments and requests by the SEC have been resolved,
in the reasonable judgment of the Company (or, in the event that the SEC
has
informed the Company that will not review the preliminary Proxy Statement,
then
as promptly as practicable following the tenth (10th) day following the filing
of the preliminary Proxy Statement), the Company shall file a definitive
Proxy
Statement with the SEC and disseminate the definitive Proxy Statement to
its
stockholders. If at any time prior to the Stockholders’ Meeting, any information
relating to the Parent, Merger Sub, or any of their respective directors,
officers or affiliates, should be discovered by Parent, Merger Sub or the
Company (including any correction to any of the information provided by them
for
use in the Proxy Statement) which should be set forth in an amendment or
supplement to the Proxy Statement so that the Proxy Statement would not include
any misstatement of a material fact or omit to state any material fact necessary
to make the statements therein, in light of the circumstances under which
they
were made, not misleading, the party which discovers such information shall
promptly notify the other party or parties hereto, as the case may be, and
an
appropriate amendment or supplement to the Proxy Statement describing such
information shall be promptly prepared and filed with the SEC and disseminated
to the Company’s stockholders, in each case as and to the extent required by
applicable law. The Company shall cause the Proxy Statement to comply as
to form
and substance in all material respects with the applicable requirements of
the
Exchange Act or the rules or regulations of any other governmental or
self-regulatory entity.
50
6.10 Meeting
of Stockholders.
(a) Meeting
of Stockholders.
If
approval of the Company stockholders is required by Delaware Law in order
to
consummate the Merger other than pursuant to Section 253 of the DGCL, as
soon as
reasonably practicable after the mailing of the Proxy Statement to the Company
stockholders, the Company will take all action necessary in accordance with
Delaware Law and its Certificate of Incorporation and Bylaws to call, hold
and
convene a meeting of its stockholders to consider adoption of this Agreement
(the “Stockholders’ Meeting”). Following the Appointment Time, the Company will
use commercially reasonable efforts to solicit from its stockholders proxies
in
favor of the adoption of this Agreement and the Merger, and will take all
other
action necessary or advisable to secure the vote or consent of their respective
stockholders required by Delaware Law to obtain such approvals. Notwithstanding
anything to the contrary contained in this Agreement, the Company may adjourn
or
postpone its Stockholders’ Meeting to the extent necessary to ensure that any
necessary supplement or amendment to the Proxy Statement is provided to its
respective stockholders in advance of a vote on the Merger and this Agreement
or, if as of the time for which the Stockholders’ Meeting is originally
scheduled (as set forth in the Proxy Statement) there are insufficient shares
of
Company Common Stock represented (either in person or by proxy) to constitute
a
quorum necessary to conduct the business of such Stockholders’ Meeting. The
Company shall ensure that its Stockholders’ Meeting is called, noticed,
convened, held and conducted, and that all proxies solicited by its in
connection with the Stockholders’ Meeting are solicited in compliance with
Delaware Law, its Certificate of Incorporation and Bylaws and all other
applicable Laws. The Company shall give notice of, in accordance with the
requirements of Delaware Law, whether or not the Company Board at any time
subsequent to the date hereof shall determine that this Agreement is no longer
advisable or recommends that the Company’s stockholders reject it.
(b) Voting
Agreement.
Each of
Parent and Merger Sub shall vote all shares of Company Common Stock acquired
in
the Offer (or otherwise beneficially owned by it or any of its respective
Subsidiaries as of the applicable record date) in favor of the adoption
of this
Agreement in accordance with Delaware Law at the Stockholders’ Meeting or
otherwise. Parent shall vote all of the shares of capital stock of Merger
Sub
beneficially owned by it, or sign a written consent in lieu of a meeting
of the
stockholders of Merger Sub, in favor of the adoption of this Agreement
in
accordance with Delaware Law.
(c) Short-Form
Merger.
Notwithstanding the provisions of this Section 6.10, in the event that
Parent,
Merger Sub or any other Subsidiary of Parent, shall acquire at least ninety
percent (90%) of the issued and outstanding shares of Company Common Stock
pursuant to the Offer or otherwise, each of Parent, Merger Sub and the
Company
shall take all necessary and appropriate action to cause the Merger to
become
effective as soon as practicable after such acquisition, without a meeting
of
the stockholders of the Company, in accordance with Section 253 of the
DGCL.
51
ARTICLE
VII
CONDITIONS
OF MERGER
7.1 Conditions
to Obligation of Each Party to Effect the Merger.
The
obligations of each Party to effect the Merger and consummate the other
transactions contemplated hereby shall be subject to the satisfaction
at or
prior to the Closing of the following conditions, any of which may be
waived in
writing by the Party entitled to the benefit thereof, in whole or in
part, to
the extent permitted by the applicable law:
(a) No
Injunctions or Restraints; Illegality.
No
temporary restraining order, preliminary or permanent injunction or other
order
(whether temporary, preliminary or permanent)
issued by any court of competent jurisdiction, or other legal restraint
or
prohibition shall be in effect which prevents the consummation of the
Merger on
substantially identical terms and conferring upon Parent substantially
all the
rights and benefits as contemplated herein, nor shall any proceeding
brought by
any Governmental Authority, domestic or foreign, seeking any of the foregoing
be
pending, and there shall not be any action taken, or any law, regulation
or
order enacted, entered, enforced or deemed applicable to the Merger,
which makes
the consummation of the Merger on substantially identical terms and conferring
upon Parent substantially all the rights and benefits as contemplated
herein
illegal.
(b) Stockholder
Approval.
If
approval of the Merger by the Company’s stockholders is required by Delaware
Law, this Agreement shall have been approved and adopted, and the Merger
shall
have been duly approved, by the requisite vote under applicable law,
by the
stockholders of the Company.
(c) Purchase
of shares of Company Common Stock.
Parent
shall have accepted for payment and paid for the shares of Company
Common Stock
validly tendered pursuant to the Offer and not withdrawn.
52
ARTICLE
VIII
TERMINATION,
AMENDMENT, WAIVER
AND GUARANTEE
8.1 Termination.
This
Agreement may be terminated and the Merger, the Offer and other transactions
contemplated hereby may be abandoned at any time prior to the Effective Time,
notwithstanding approval thereof by the stockholders of the
Company:
(a) by
mutual
written consent of the Parties duly authorized by each of the Boards of
Directors of Parent and the Company;
(b) by
either
Parent or the Company if (i) the Offer shall not have been consummated on
or
before October 31, 2006; provided,
however,
that
the right to terminate this Agreement under this Section
8.1(b)
shall
not be available to a Party whose failure to fulfill any material obligation
under this Agreement has been the cause of, or resulted in, the failure of
the
Offer to have been consummated on or before such date,
(ii)
the Offer shall have expired pursuant to its terms (and not have been extended
by Parent) or (iii) if a Governmental Authority shall have issued an order
or
taken any other action, in each case, which has become final and non-appealable
and which restrains, enjoins or otherwise prohibits the Merger;
(c) by
Parent, if neither Parent nor Merger Sub is in material breach of its
obligations under this Agreement, and if (i) the Offer shall have remained
open
for not less than forty (40) business days and shall have expired without
Merger
Sub having purchased any shares thereunder, or (ii) if a Triggering Event
shall
have occurred at any time prior to the adoption of this Agreement by the
Requisite Stockholder Approval;
(d) by
the
Company, prior to the acceptance by Parent of shares of Company Common
Stock
pursuant to the Offer, if it is not in material breach of its obligations
under
this Agreement, and if the Offer shall have remained open for not less
than
forty (40) business days and shall have expired without Merger Sub having
purchased any shares thereunder; or
(e) by
the
Company, in order to enter into an agreement relating to a Superior Competing
Proposal; provided, however, that this Agreement may not be so terminated
unless
(x) the Company Board shall have complied in all material respects with
the
procedures set forth in Section 5.2 and (y) all of the payments required
by
Section 8.3 as a result of the operation of this paragraph (f) that are
then due
and payable have been made in full to Parent.
53
8.2 Effect
of Termination.
Except
as provided in this Section 8.2, in the event of the termination of this
Agreement pursuant to Section 8.1, this Agreement (other than this Section
8.2
and Sections 6.1(b), 6.6, 8.3 and ARTICLE IX, each of which shall survive
such
termination) will forthwith become void, and there will be no liability on
the
part of Parent, Merger Sub or the Company or any of their respective officers
or
directors to the other and all rights and obligations of any Party will cease,
except that nothing herein will relieve any Party from liability for any
intentional breach, prior to termination of this Agreement in accordance
with
its terms, of any representation, warranty, covenant or agreement contained
in
this Agreement, except as specified in Section 8.3(c).
8.3 Fees
and Expenses; Termination Fee.
(a) All
fees
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the Party incurring such fees and expenses,
whether or not the Merger is consummated, subject to Section
8.3(b).
(b) In
the
event that (i) Parent terminates
this Agreement pursuant to Section
8.1(c)(i) or (ii) the Company terminates this Agreement pursuant to Section
8.1(e), then the Company shall pay to Parent, simultaneously with such
termination in the case of a termination pursuant to Section 8.1(e) and within
five business days in the case of a termination pursuant to Section 8.1(c),
the
Termination Fee, plus all Parent Expenses, which Termination Fee and Parent
Expenses shall be payable by wire transfer of immediately available funds
to an
account specified by Parent.
(c) In
the
event that the Parent terminates this Agreement other than pursuant to Section
8.1(b) or (c), then the Parent shall pay the Company, simultaneously with
such
termination, the Company Expenses by wire transfer of immediately available
funds to an account specified by Parent.
(d) Payment
of the Termination Fee and Parent Expenses pursuant to Section 8.3(b) or
(c)
shall not be in lieu of damages incurred in the event of fraud or willful
breach
of this Agreement, but shall in all other cases be the exclusive remedies
available to Parent and Merger Sub if this Agreement is terminated by Parent
and
Merger Sub.
54
ARTICLE
IX
GENERAL
PROVISIONS
9.1 Notices.
All
notices or other communications which are required or permitted hereunder
shall
be in writing and sufficient if delivered personally or sent by
nationally-recognized overnight courier or by registered or certified mail,
postage prepaid, return receipt requested, or by electronic mail, with a
copy
thereof to be delivered by mail (as aforesaid) within twenty-four (24) hours
of
such electronic mail, or by telecopier, with confirmation as provided above
addressed as follows:
(a) If
to
Parent or Merger Sub:
c/o
HealthpointCapital Partners, L.P.
▇▇▇
▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier:
(▇▇▇) ▇▇▇-▇▇▇▇
E-Mail:
▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Attention:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ III, Managing Director
With
a
copy to:
Mintz,
Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇ ▇▇▇▇▇
Telecopier:
(▇▇▇) ▇▇▇-▇▇▇▇
E-Mail:
▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇
Attention:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
(b) If
to the
Company:
BioLok
International Inc.
▇▇▇
▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier:
(▇▇▇) ▇▇▇-▇▇▇▇
E-Mail:
▇▇▇@▇▇▇▇▇▇.▇▇▇
Attention:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
With
a
copy to:
▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, Esquire
Siegel,
Lipman, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier:
(▇▇▇) ▇▇▇-▇▇▇▇
E-Mail:
▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
or
to
such other address as the party to whom notice is to be given may have
furnished
to the other party in writing in accordance herewith. All such notices
or
communications shall be deemed to be received (a) in the case of personal
delivery, on the date of such delivery, (b) in the case of nationally-recognized
overnight courier, on the next Business Day after the date when sent (c)
in the
case of facsimile transmission or telecopier or electronic mail, upon confirmed
receipt, and (d) in the case of mailing, on the date of receipt or
refusal.
55
9.2 Interpretation.
When a
reference is made in this Agreement to Sections, subsections, Schedules or
Exhibits, such reference shall be to a Section, subsection, Schedule or Exhibit
to this Agreement unless otherwise indicated. The words “include,” “includes”
and “including”
when used herein shall be deemed in each case to be followed by the words
“without limitation.” The word “herein” and similar references mean, except
where a specific Section or Article reference is expressly indicated, the
entire
Agreement rather than any specific Section or Article. The table of contents
and
the headings contained in this Agreement are for reference purposes only
and
shall not affect in any way the meaning or interpretation of this
Agreement.
9.3 Amendment.
Except
as is otherwise required by applicable law, prior to the Closing this Agreement
may be amended by the parties hereto at any time by execution of an instrument
in writing signed by Parent, Merger Sub and the Company.
9.4 Waiver.
At any
time prior to the Effective Time, any Party may extend the time for the
performance of any of the obligations or other acts required hereunder, waive
any inaccuracies in the representations and warranties contained herein or
in
any document delivered pursuant hereto and waive compliance with any of the
agreements or conditions contained herein. Any such extension or waiver shall
be
valid only if set forth in an instrument signed by the Party to be bound
thereby.
9.5 Severability.
If any
term or other provision of this Agreement is invalid, illegal or incapable
of
being enforced by any rule of law, or public policy, all other conditions
and
provisions of this Agreement shall nevertheless remain in full force and
effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the Parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the extent possible.
9.6 Entire
Agreement.
This
Agreement (including all schedules hereto), and other documents and instruments
delivered in connection herewith constitute the entire agreement and supersede
all prior agreements and undertakings, both written and oral, among the Parties
with respect to the subject matter hereof.
9.7 Assignment.
This
Agreement shall not be assigned by operation of law or otherwise, except
that
Parent and Merger Sub may assign all or any of their rights hereunder to
any
affiliate, provided that no such assignment shall relieve the assigning Party
of
its obligations hereunder.
9.8 Parties
in Interest.
This
Agreement shall be binding upon and inure solely to the benefit of each Party
hereto, and nothing in this Agreement, express or implied, is intended to
or
shall confer upon any other Person (other than the stockholders of the Company,
who are expressly intended to be third party beneficiaries of this Agreement
if
the Merger is consummated) any right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement.
56
9.9 Failure
or Indulgence Not Waiver; Remedies Cumulative.
No
failure or delay on the part of any Party in the exercise of any right hereunder
will impair such right or be construed to
be a
waiver of, or acquiescence in, any breach of any representation, warranty
or
agreement herein, nor will any single or partial exercise of any such right
preclude other or further exercise thereof or of any other right. All rights
and
remedies existing under this Agreement are cumulative to, and not exclusive
to,
and not exclusive of, any rights or remedies otherwise
available.
9.10 Survival
of Representations and Warranties.
The
representations and warranties in this Agreement and the covenants in this
Agreement that are contemplated to occur prior to the Closing shall terminate
at
the Closing.
9.11 Governing
Law; Enforcement.
This
Agreement and the rights and duties of the Parties hereunder shall be governed
by, and construed in accordance with, the law of the State of Delaware. The
Parties agree that irreparable damage would occur in the event that any of
the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that
the
Parties shall be entitled to an injunction or injunctions to prevent breaches
of
this Agreement and to enforce specifically the terms and provisions of this
Agreement in the state courts in the State of Delaware, this being in addition
to any other remedy to which they are entitled at law or in equity. In addition,
each of the Parties: (a) consents to submit itself to the personal jurisdiction
of the state courts of the State of Delaware in the event any dispute arises
out
of this Agreement or any transaction contemplated hereby; (b) agrees that
it
will not attempt to deny or defeat such personal jurisdiction by motion or
other
request for leave from any such court; (c) waives any right to trial by jury
with respect to any action related to or arising out of this Agreement or
any
transaction contemplated hereby; and (d) consents to service of process by
delivery pursuant to Section
9.1.
9.12 Attorneys’
Fees.
If any
legal action or dispute arises under this Agreement, or arises by reason
of any
asserted breach of it, the prevailing party shall be entitled to recover
its
attorneys' fees actually and reasonably incurred and all other costs and
expenses incurred in connection with settling or resolving such dispute,
in
addition to any other relief to which that party may be entitled.
9.13 Certain
Definitions.
For
purposes of this Agreement, unless the context otherwise requires, the
term:
(a) “affiliate”
means a Person that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, the first mentioned
Person; including, but not limited to, any partnership or joint venture in
which
the Person (either alone, or through or together with any of its Subsidiaries)
has, directly or indirectly, an interest of 5% or more.
(b) “Company
Expenses” means all reasonably document expenses of Company, including fees and
expenses of counsel, financial advisors and accountants actually and reasonably
incurred in connection with the transactions contemplated hereby, payable
to the
Company by the Parent under Section 8.3(c), but not more than
$250,000.
57
(c) “Company
Intellectual Property” shall mean, collectively, (i) Company Trademarks, Company
Patents, Company Copyrights, and Company Domain Names, as those terms are
defined in Section 3.19 (a) of this Agreement, (ii) Software, (iii) any other
Intellectual Property owned by or exclusively licensed to the Company or
used or
held for use by the Company in the conduct or operation of the Company’s
business.
(d) “contract”
means any contract, plan, undertaking, understanding, agreement, license,
lease,
permit, franchise, note, bond, mortgage, indenture, binding commitment or
other
instrument or obligation, whether written or oral.
(e) “control”
(including the terms “controlled by” and “under common control with”) means the
possession, directly or indirectly or as trustee or executor, of the power
to
direct or cause the direction of the management or policies of a Person,
whether
through the ownership of stock or other securities, as trustee or executor,
by
contract or credit arrangement or otherwise.
(f) “Escrow
Agreement” shall have the meaning ascribed thereto in the Stockholders Support
Agreement.
(g) “indebtedness”
means any amount owed (including, without limitation, unpaid interest and
fees
thereon) in respect of (i) borrowed money, (ii) capital lease
obligations and (iii) accounts payable that, as of any date of determination,
are past due by their terms.
(h) “Intellectual
Property” shall mean, collectively, (i) Trademarks, Patents, Copyrights, Domain
Names and Trade Secrets, as those terms are defined in Sections 3.19 (a)
and
3.19(e)(i) of this Agreement, (ii) Software, (iii) any proprietary interest,
whether registered or unregistered, in know-how, database rights, data in
databases, website content, inventions, invention disclosures or applications,
operating and manufacturing procedures, designs, specifications and the like,
and (iv) any proprietary interest in or to any documents or other tangible
media
containing any of the foregoing.
(i) “knowledge”
means (i) in the case an individual, knowledge of a particular fact or other
matter if (A) such individual is actually aware of such fact or other matter,
or
(B) a prudent individual could be expected to discover or otherwise become
aware
of such fact or other matter in the course of conducting a reasonable
investigation concerning the existence of such fact or other matter; and
(ii) in
the case of the Company, the knowledge of any of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
or
▇▇▇▇▇▇▇▇ ▇▇▇▇ after reasonable inquiry by any of them of the officers or
employees of the Company responsible for the matter at issue, (iii) in the
case
of any other Person (other than an individual) such Person will be deemed
to
have knowledge of a particular fact or other matter if any individual who
is
serving, or has at any time served, as a director, officer, partner, executor,
or trustee of such Person (or in any similar capacity) has, or at any time
had,
knowledge of such fact or other matter.
(j) “Material
Change of Ownership” means a change in the ownership of securities of the
Company such that the Company’s three largest stockholders, their respective
affiliates (including their extended family members), the directors and
executive officers of the Company, and stockholders of the Company of which
the
directors and executive officers of the Company are
affiliates would collectively own securities of the Company having less than
25%
of the combined voting power of the Company’s outstanding securities in the
election of directors of the Company.
58
(k) “Parent
Expenses” means the all reasonably documented expenses of Parent, including fees
and expenses of counsel, financial advisors and accountants actually and
reasonably incurred in connection with the transactions contemplated hereby,
but
not more than $250,000.
(l) “Person”
means any natural person, corporation, partnership, association, trust,
unincorporated organization, limited liability company, joint stock company,
joint venture, non-corporate business enterprise, or other entity or group
(as
defined in Section 13(d)(3) of the Exchange Act).
(m) “Proxy
Statement” shall mean the proxy statement to be sent to the Company’s
stockholders in connection with the Company Stockholders’ Meeting.
(n) “Software”
means individually each, and collectively all, of the computer programs,
including interfaces and any embedded software programs or applications,
owned
or licensed by the Company or otherwise included as an asset of the Company,
including as to each program, the processes and routines used in the processing
of data, the object code, source code (as to third-party source code, when
rights to the source code may be obtained), tapes, disks, and all improvements,
modifications, enhancements, versions and releases relating
thereto.
(o) “Superior
Competing Proposal” means a bona fide written proposal or offer made by a
Competing Third Party to acquire, directly or indirectly, including pursuant
to
a tender offer, exchange offer, sale of shares of stock, sale of assets,
merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction, more than 50% of the capital stock of the Company
then
outstanding or more than 50% of the consolidated total assets of the Company
and
its Subsidiaries (i) on terms the Company Board determines in good faith
(after
consulting the Company’s outside legal counsel and financial advisor) are more
favorable to the holders of Company Common Stock than the Merger and the
other
transactions contemplated by this Agreement, taking into account, among other
things, relevant legal, financial, regulatory, timing and other aspects of
the
offer and the Competing Third Party making the offer and the terms and
conditions of this Agreement and (ii) which is reasonably capable of being
consummated within 120 days after execution of a definitive agreement with
respect thereto (or within 120 days after the commencement of a tender offer
or
exchange offer, the filing of a petition for liquidation or dissolution,
or the
Company's approval of, consent to or acquiescence in any similar transaction
not
involving the execution of a definitive agreement).
(p) “Termination
Fee” means $1,155,000 in cash.
(q) “Triggering
Event” shall be deemed to have occurred if, prior to the Appointment Time, any
of the following shall have occurred: (A) a Change of Recommendation; (B)
the
Company shall have failed to include the Recommendations in the Schedule
14D-9
or permit the inclusion of the Recommendations in the Offer Documents; or
(C)
the Company Board shall have
for
any reason approved, or recommended that the Company’s stockholders approve, any
Acquisition Proposal.
59
(r) “User
Data” shall mean, to the extent collected or acquired by or on behalf of the
Company: (w) all data related to impression and “click through” activity of
users, including user identification and associated activities at a web site
as
well as pings and activity related to closed loop reporting and all other
data
associated with a user’s behavior on the Internet, including without limitation
all e-mail lists or other user information acquired by the Company directly
or
indirectly from a third party that collected such information, (x) all data
that
contains a personal element allowing for the identification of a natural
person,
(y) known, assumed or inferred information or attributes about a user or
identifier, and (z) all derivatives and aggregations of (w), (x) and (y),
including user profiles.
9.14 Certain
Additional Definitions.
As used
in this Agreement, the following terms shall have the respective meanings
ascribed thereto in the respective sections of this Agreement set forth opposite
each such term below:
|
Agreement
|
Preamble
|
|||
|
Acquisition
Agreement
|
|
5.2(c)
|
||
|
Anti-Kickback
Statute
|
3.10(b)(iv)
|
|||
|
Appointment
Time
|
1.3(a)
|
|||
|
Benefit
Plan
|
3.14(a)
|
|||
|
Business
Day
|
2.2
|
|||
|
Certificate
of Merger
|
2.3
|
|||
|
Certificates
|
2.8(c)
|
|||
|
Closing
|
2.2
|
|||
|
Closing
Date
|
2.2
|
|||
|
COBRA
|
3.14(b)(viii)
|
|||
|
Code
|
2.8(d)
|
|||
|
Company
|
Preamble
|
|||
|
Company
Board
|
1.1(g)
|
|||
|
Company
Common Stock
|
Recitals
|
|||
|
Company
Copyrights
|
3.19(a)
|
|||
|
Company
Disclosure Letter
|
Article
III preamble
|
|||
|
Company
Domain Names
|
3.19(a)
|
|||
|
Company
Employee
|
6.4(a)
|
|||
|
Company
Financial Statements
|
3.6(b)
|
|||
|
Company
Inbound License Agreements
|
3.19(f)(i)
|
|||
|
Company
Material Adverse Effect
|
Article
III preamble
|
|||
|
Company
Material Contracts
|
3.9(a)
|
|||
|
Company
Option Plan
|
3.3(b)
|
|||
|
Company
Outbound License Agreement
|
3.19(f)(i)
|
|||
|
Company
Patents
|
3.19(a)
|
|||
|
Company
Payment Programs
|
3.27(a)
|
|||
|
Company
Permits
|
3.11
|
|||
|
Company
Preferred Stock
|
3.3(a)
|
|||
|
Company
SEC Documents
|
3.6(a)
|
60
|
Company
Securityholders
|
1.1(g)
|
|||
|
Company
Trademarks
|
3.19(a)
|
|||
|
Company’s
Most Recent Balance Sheet
|
3.7
|
|||
|
Company’s
Most Recent Balance Sheet Date
|
3.7
|
|||
|
Competing
Proposal
|
5.2(a)
|
|||
|
Competing
Third Party
|
5.2(a)
|
|||
|
Content
|
3.19(g)
|
|||
|
Continuing
Director
|
1.3(a)
|
|||
|
Copyrights
|
3.19(a)
|
|||
|
Delaware
Law
|
1.2(a)
|
|||
|
DGCL
|
1.2(a)
|
|||
|
Dissenting
Share Payments
|
2.12
|
|||
|
Dissenting
Shares
|
2.12
|
|||
|
Domain
Names
|
3.19(a)
|
|||
|
Effective
Time
|
2.3
|
|||
|
Environmental
Law
|
3.18(g)
|
|||
|
ERISA
|
3.14(a)
|
|||
|
ERISA
Affiliate
|
3.14(a)
|
|||
|
Equitable
Exceptions
|
3.4(b)
|
|||
|
Exchange
Act
|
1.1(a)
|
|||
|
FDA
|
3.10(b)(ix)
|
|||
|
Former
Option Holder
|
2.7(a)
|
|||
|
Former
Warrant Holders
|
2.7(a)
|
|||
|
GAAP
|
3.29
|
|||
|
Governmental
Authority
|
3.4(d)
|
|||
|
HIPAA
|
3.10(b)(vii)
|
|||
|
Insurance
Policies
|
3.16(a)
|
|||
|
Interim
Period
|
5.1(a)
|
|||
|
IRS
|
3.14(a)
|
|||
|
Laws
|
3.10(a)
|
|||
|
Liens
|
3.2(b)
|
|||
|
Materials
of Environmental Concern
|
3.18(g)
|
|||
|
Merger
|
Recitals
|
|||
|
Merger
Consideration
|
2.7(b)
|
|||
|
Merger
Fund
|
2.8(b)
|
|||
|
Merger
Sub
|
Preamble
|
|||
|
Merger
Sub Common Stock
|
2.11
|
|||
|
Minimum
Condition
|
1.1(a)
|
|||
|
Offer
|
1.1(a)
|
|||
|
Offer
Documents
|
1.1(g)
|
|||
|
Offer
to Purchase
|
1.1(g)
|
|||
|
Option
|
2.7(a)
|
|||
|
Options
|
2.7(a)
|
|||
|
Option
Payments
|
2.7(a)
|
|||
|
Parent
|
Preamble
|
|||
|
Party
|
Preamble
|
61
|
Parties
|
Preamble
|
|||
|
Patents
|
3.19(a)
|
|||
|
Payment
Agent
|
2.8(a)
|
|||
|
Payment
Programs
|
3.27(a)
|
|||
|
Pension
Plan
|
3.14(a)
|
|||
|
Permits
|
3.11
|
|||
|
Per
Share Amount
|
1.1(a)
|
|||
|
Privacy
Policies
|
3.19(n)(i)
|
|||
|
Products
|
3.28
|
|||
|
Projections
|
3.31
|
|||
|
Proxy
Materials
|
3.32
|
|||
|
Proxy
Statement
|
6.9
|
|||
|
Recommendations
|
1.2(a)
|
|||
|
Representatives
|
6.1(b)
|
|||
|
Requisite
Stockholder Approval
|
3.4(a)
|
|||
|
Returns
|
3.17(b)
|
|||
|
Schedule
14D-9
|
1.2(b)
|
|||
|
Schedule
TO
|
1.1(g)
|
|||
|
SEC
|
1.1(c)
|
|||
|
Securities
Act
|
3.2(c)
|
|||
|
▇▇▇▇▇
Law
|
3.10(b)(ii)
|
|||
|
Stockholder
|
Recitals
|
|||
|
Stockholders
Support Agreement
|
Recitals
|
|||
|
Stockholders’
Meeting
|
6.10(a)
|
|||
|
Subsidiary
|
3.2(d)
|
|||
|
Surviving
Corporation
|
2.2
|
|||
|
Tax
|
3.17(a)
|
|||
|
Trademarks
|
3.19(a)
|
|||
|
Trade
Secrets
|
3.19(e)(i)
|
|||
|
Warrants
|
2.7(a)
|
|||
|
Warrant
Payments
|
2.7(a)
|
9.15 Counterparts.
This
Agreement may be executed in one or more counterparts, and by the different
Parties in separate counterparts, each of which when executed shall be deemed
to
be an original but all of which taken together shall constitute one and the
same
agreement.
62
IN
WITNESS WHEREOF, Parent, Merger Sub and the Company have duly executed this
Agreement as of the date first written above.
TUMBLER
HOLDINGS, INC.
By
/s/
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
III
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ III, President
TUMBLER
MERGER CORP.
By
/s/
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
III
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ III, President
BIOLOK
INTERNATIONAL INC.
By
/s/
▇▇▇▇▇
▇.
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President & Chief Executive Officer
63
ANNEX
A
CONDITIONS
TO THE OFFER
Reference
is made to that certain Agreement and Plan of Merger, dated as of September
__,
2006 (the “Agreement”) by and among TUMBLER
HOLDINGS, INC., a Delaware corporation (“Parent”), TUMBLER MERGER CORP., a
Delaware corporation and wholly-owned subsidiary of Parent (“Merger Sub”), and
BIOLOK INTERNATIONAL INC.,
a
Delaware corporation (the “Company”) (capitalized terms that are used but not
otherwise defined in this Annex A shall have the respective meanings ascribed
thereto in the Agreement).
Notwithstanding
any other provisions of the Offer and in addition to (and not in limitation
of)
the rights of Parent to extend and amend the Offer at any time in its sole
discretion (subject to the terms and conditions of the Agreement), Parent
shall
not be required to accept for payment or, subject to any applicable rules
and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating
to the obligation of Parent
to pay
for or return tendered shares of Company Common Stock promptly after termination
or withdrawal of the Offer), pay for, and may delay the acceptance for
payment
of or, subject to the restriction referred to above, the payment for, any
tendered shares of Company Common Stock if by the expiration of the Offer
(as it
may be extended pursuant to Section 1.1(c) of the Agreement), (i) the Minimum
Condition has not been satisfied or (ii) any of the following events shall
have
occurred and continue to exist:
(a) there
shall be pending or overtly threatened any suit, action or proceeding by
any
Governmental
Authority (i)
challenging the acquisition by Merger Sub or Parent of any shares of Company
Common Stock or (ii) seeking to restrain or prohibit the consummation of
the
Offer or the Merger provided that Parent is using commercially reasonable
efforts to remove such challenge, restraint or prohibition;
(b) there
shall be any statute, rule, regulation, judgment, order or injunction enacted,
entered, enforced, promulgated, or deemed applicable, pursuant to an
authoritative interpretation by or on behalf of a Governmental
Authority,
to the
Offer or the Merger, or any other action shall be taken by any Governmental
Authority,
that is
reasonably likely to result in any of the consequences referred to in the
immediately preceding paragraph (a) of this Annex A;
(c) any
Major
Stockholder shall have breached the Stockholders Support Agreement in any
material respect;
(d) any
of
the representations and warranties of the Company set forth in the Agreement
(i)
shall not have been true and correct as of the date of the Agreement or
(ii)
except with respect to representations and warranties made as of a particular
date shall not be true and correct on and as of the scheduled expiration
date of
the Offer with the same force and effect as if made on and as of such date,
except where the failure to be so true and correct has not had and would
not
reasonably be expected to have a Company Material Adverse Effect;
A-1
(e) there
shall have occurred and be continuing at the time immediately prior to
such
obligation of Parent
(i)
any
general suspension of trading in, or limitation on prices for, securities
on any
national securities exchange in the United States or the Nasdaq Stock
Market’s
National Market (other than a shortening of trading hours or any trading
halt
triggered solely as a result of a specified increase or decrease in a
market
index), or (ii) a declaration of a banking moratorium or any suspension
of
payments in respect of banks in the United States;
(f) the
Company shall have failed to perform any agreement, covenant or obligation
of
the Company to be performed or complied with by it prior to the Appointment
Time
under the Agreement, except where the failure to so perform would not
have a
Company Material Adverse Effect;
(g) since
the
date of the Agreement, there shall have occurred and be continuing any
event,
change or development that, individually or in the aggregate, has had
or
reasonably would be expected to have a Material Adverse Effect on the
Company;
or
(h) the
Agreement shall have been terminated in accordance with its terms;
and
which
in any such case makes it inadvisable, in the reasonable and good faith
judgment
of Parent or Merger Sub, to proceed with the Offer and/or with such acceptance
for payment of or payment for shares of Company
Common Stock.
The
conditions to the Offer set forth herein are for the sole benefit of
Parent and
Merger Sub and may be waived by Parent and Merger Sub, in whole or in
part, at
any time and from time to time, in their sole discretion, other than
the Minimum
Condition, which may be waived by Parent and Merger Sub only with the
prior
written consent of the Company. The failure by Parent and Merger Sub
at any time
to exercise any of the foregoing rights shall not be deemed a waiver
of any such
right, and each such right shall be deemed an ongoing right that may
be asserted
at any time and from time to time.
*
* * *
*
A-2
TABLE
OF CONTENTS
|
ARTICLE
I THE OFFER
|
2
|
|
|
1.1
|
The
Offer.
|
2
|
|
1.2
|
Company
Action.
|
5
|
|
1.3
|
Company
Boards of Directors and Committees; Section 14(f) of Exchange
Act.
|
6
|
|
ARTICLE
II THE MERGER
|
8
|
|
|
2.1
|
The
Merger
|
8
|
|
2.2
|
Closing
|
8
|
|
2.3
|
Effective
Time
|
8
|
|
2.4
|
Effect
of the Merger
|
8
|
|
2.5
|
Certificate
of Incorporation and Bylaws of the Surviving Corporation
|
9
|
|
2.6
|
Directors
and Officers
|
9
|
|
2.7
|
Conversion
of Company Common Stock, Etc
|
9
|
|
2.8
|
Surrender
of Certificates.
|
10
|
|
2.9
|
No
Further Ownership Rights in Company Common Stock
|
11
|
|
2.10
|
Lost,
Stolen or Destroyed Certificates
|
11
|
|
2.11
|
Capital
Stock of Merger Sub
|
11
|
|
2.12
|
Dissenting
Shares
|
12
|
|
2.13
|
No
Liability
|
12
|
|
2.14
|
Taking
of Necessary Action; Further Action
|
12
|
|
2.15
|
Stockholders
Support Agreement
|
12
|
|
ARTICLE
III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
|
13
|
|
|
3.1
|
Organization
and Qualification
|
13
|
|
3.2
|
Subsidiaries.
|
13
|
|
3.3
|
Capital
Structure.
|
14
|
|
3.4
|
Authority;
No Conflict; Required Filings.
|
16
|
|
3.5
|
Board
Approval; Required Vote.
|
17
|
|
3.6
|
SEC
Filings; Financial Statements.
|
17
|
|
3.7
|
Absence
of Undisclosed Liabilities
|
19
|
|
3.8
|
Absence
of Certain Changes or Events
|
19
|
|
3.9
|
Agreements,
Contracts and Commitments.
|
19
|
|
3.10
|
Compliance
with Laws.
|
21
|
|
3.11
|
Permits
|
23
|
|
3.12
|
Litigation
|
23
|
|
3.13
|
Restrictions
on Business Activities
|
23
|
|
3.14
|
Employee
Benefit Plans.
|
23
|
|
3.15
|
Properties
and Assets.
|
27
|
|
3.16
|
Insurance.
|
27
|
|
3.17
|
Taxes.
|
28
|
|
3.18
|
Environmental
Matters.
|
29
|
|
3.19
|
Intellectual
Property.
|
31
|
|
3.20
|
Brokers
|
36
|
|
3.21
|
Certain
Business Practices
|
37
|
|
3.22
|
Government
Contracts
|
37
|
|
3.23
|
Related
Party Transactions
|
37
|
|
3.24
|
Customers
|
37
|
|
3.25
|
Suppliers
|
37
|
|
3.26
|
Key
Employees; Labor
|
37
|
|
3.27
|
Payment
Programs.
|
38
|
|
3.28
|
Products
|
39
|
|
3.29
|
Inventories
|
40
|
|
3.30
|
Books
and Records
|
40
|
|
3.31
|
Disclosure
|
40
|
|
3.32
|
Proxy
Materials; Other Information
|
40
|
|
ARTICLE
IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER
SUB
|
41
|
|
|
4.1
|
Organization
|
41
|
|
4.2
|
Authority;
No Conflict; Required Filings.
|
41
|
|
4.3
|
Compliance
with Laws
|
42
|
|
4.4
|
Litigation
|
42
|
|
4.5
|
Interim
Operations of Merger Sub
|
42
|
|
ARTICLE
V CONDUCT OF BUSINESS PENDING THE MERGER
|
42
|
|
|
5.1
|
Conduct
of Business Pending the Merger.
|
42
|
|
5.2
|
No
Solicitation of Other Proposals.
|
45
|
|
ARTICLE
VI ADDITIONAL AGREEMENTS
|
48
|
|
|
6.1
|
Access
to Information; Confidentiality.
|
48
|
|
6.2
|
Reasonable
Efforts; Further Assurances.
|
48
|
|
6.3
|
Stock
Options; Warrants..
|
49
|
|
6.4
|
Employees;
Employee Benefits.
|
49
|
|
6.5
|
Notification
of Certain Matters.
|
49
|
|
6.6
|
Public
Announcements
|
50
|
|
6.7
|
FIRPTA
Compliance Pre-Closing
|
50
|
|
6.8
|
Tax
Matters
|
50
|
|
6.9
|
Proxy
Statement
|
50
|
|
6.10
|
Meeting
of Stockholders.
|
51
|
|
ARTICLE
VII CONDITIONS OF MERGER
|
52
|
|
|
7.1
|
Conditions
to Obligation of Each Party to Effect the Merger
|
52
|
|
ARTICLE
VIII TERMINATION, AMENDMENT AND WAIVER
|
53
|
|
|
8.1
|
Termination
|
53
|
|
8.2
|
Effect
of Termination
|
54
|
|
8.3
|
Fees
and Expenses; Termination Fee.
|
54
|
|
ARTICLE
IX
GENERAL PROVISIONS
|
55
|
|
|
9.1
|
Notices
|
55
|
|
9.2
|
Interpretation
|
56
|
|
9.3
|
Amendment
|
56
|
|
9.4
|
Waiver
|
56
|
|
9.5
|
Severability
|
56
|
|
9.6
|
Entire
Agreement
|
56
|
|
9.7
|
Assignment
|
56
|
|
9.8
|
Parties
in Interest
|
56
|
|
9.9
|
Failure
or Indulgence Not Waiver; Remedies Cumulative
|
57
|
|
9.10
|
Survival
of Representations and Warranties
|
57
|
|
9.11
|
Governing
Law; Enforcement
|
57
|
|
9.12
|
Attorneys’
Fees
|
57
|
|
9.13
|
Certain
Definitions
|
57
|
|
9.14
|
Certain
Additional Definitions
|
60
|
|
9.15
|
Counterparts
|
62
|