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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
GAMMA BIOLOGICALS, INC.
(Name of Subject Company)
GAMMA BIOLOGICALS, INC.
(Name of Person Filing Statement)
COMMON STOCK, PAR VALUE $0.10 PER SHARE
(Title of Class of Securities)
364 657 106
(CUSIP Number of Class of Securities)
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DAVID E. HATCHER
GAMMA BIOLOGICALS, INC.
3700 MANGUM ROAD
HOUSTON TEXAS 77092
(713) 681-8481
(Name, address and telephone number of person
authorized to receive notice and communications
on behalf of the person filing statement)
COPIES TO:
DAVID F. TAYLOR
LIDDELL, SAPP, ZIVLEY, HILL & LABOON, L.L.P.
3400 CHASE TOWER
600 TRAVIS
HOUSTON, TEXAS 77002
(713) 226-1496
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Gamma Biologicals, Inc., a Texas
corporation (the "Company"), and the address of the principal executive offices
of the Company is 3700 Mangum Road, Houston, Texas 77092. The title of the class
of equity securities to which this statement relates is the Company's common
stock, par value $0.10 per share (the "Common Stock").
ITEM 2. TENDER OFFER OF THE BIDDER.
This statement relates to the tender offer (the "Offer") described in the
Tender Offer Statement on Schedule 14D-1, dated September 25, 1998 (as amended
or supplemented, the "Schedule 14D-1"), filed by Immucor, Inc., a Georgia
corporation (the "Parent"), and its wholly owned subsidiary Gamma Acquisition
Corporation, a Texas corporation (the "Purchaser"), with the Securities and
Exchange Commission (the "Commission"), relating to an offer by the Purchaser to
purchase all the issued and outstanding Common Stock and associated preferred
stock purchase rights (collectively, the "Shares") at a price of $5.40 per
Share, net to the seller in cash, without interest thereon (the "Offer Price"),
upon the terms and subject to the conditions set forth in the Purchaser's Offer
to Purchase, dated September 25, 1998, and the related Letter of Transmittal
(together, the "Offer Documents"), copies of which are filed as Exhibits 1 and 2
to this Solicitation/Recommendation Statement on Schedule 14D-9 (this "Schedule
14D-9"), respectively.
The Offer Documents indicate that the principal executive offices of the
Purchaser and the Parent are located at 3130 Gateway Drive, Norcross, Georgia
30091. The offer is being made pursuant to the Agreement and Plan of Merger,
dated as of September 21, 1998 (the "Merger Agreement"), among the Company, the
Parent and the Purchaser. A copy of the Merger Agreement is filed as Exhibit 3
to this Schedule 14D-9, and is incorporated herein by reference in its entirety.
Pursuant to the Merger Agreement, as soon as practicable following the
satisfaction or waiver of certain conditions, the Purchaser will be merged with
and into the Company (the "Merger"), with the Company continuing as the
surviving corporation. In the Merger, each Share outstanding at the Effective
Time (as defined in the Merger Agreement) (other than Shares held in the
treasury of the Company or Shares owned by the Parent, the Purchaser or any
other subsidiary of the Parent), will, by virtue of the Merger and without any
action by the holder thereof, be converted into the right to receive $5.40 per
share, net to the Seller in cash, without interest thereon. The Merger Agreement
is summarized in Item 3 of this Schedule 14D-9.
ITEM 3. IDENTITY AND BACKGROUND
(a) The name and address of the Company, which is the person filing this
Schedule 14D-9, are set forth in Item 1 above. Unless the context otherwise
requires, references to the Company in this Schedule 14D-9 are to the Company
and its subsidiaries, viewed as a single entity.
(b) Each material contract, agreement, arrangement and understanding and
actual potential conflict of interest between the Company or its affiliates and
(i) the Company's executive officers, directors or affiliates or (ii) Purchaser,
its executive officers, directors or affiliates, is described below or
incorporated herein by reference as provided below.
Certain contracts, agreements, arrangements and understandings between the
Company and its executive officers, directors and affiliates are described in
the sections entitled "Beneficial Ownership of Common Stock," "Director
Compensation," "Severance Agreements" and "Certain Relationships and Related
Transactions" in the Company's Proxy Statement dated June 30, 1998, relating to
its 1998 Annual Meeting of Shareholders held on August 11, 1998 (the "Proxy
Statement"). A copy of such Proxy Statement is filed as Exhibit 4 hereto and is
incorporated herein by reference.
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THE MERGER AGREEMENT
The Merger Agreement, a copy of which is being provided to shareholders with
this Schedule 14D-9, should be read in its entirety for a more complete
description of the terms and provisions of the Merger Agreement. The following
is a summary of certain portions of the Merger Agreement which relate to
arrangements among the Company, Purchaser, Parent and the Company's executive
officers and directors.
BOARD REPRESENTATION. The Merger Agreement provides that upon the request
of the Parent or the Purchaser, the Company will, promptly following the
purchase by the Purchaser pursuant to the Offer of that number of Shares which,
when aggregated with the Shares then owned by the Parent and any of its
affiliates, represents at least a majority of the outstanding Shares on a fully
diluted basis, take all actions necessary to cause persons designated by the
Purchaser (the "Purchaser Designees") to become directors on the Board of
Directors (the "Board") of the Company such that the Purchaser will have
representation on the Board equal to the percentage of outstanding Shares held
by the Purchaser and its affiliates (rounded up to the next whole number).
Further, the Merger Agreement provides that the Company will increase the size
of the Board and/or use its reasonable efforts to secure the resignation of such
number of directors as is necessary to enable the Purchaser's Designees to be
elected to the Company's Board, and to cause the Purchaser's Designees to be so
elected, provided that, prior to the Effective Time of the Merger, the Company's
Board will always have at least two members who are not officers, designees,
shareholders or affiliates of the Purchaser.
AGREEMENT WITH RESPECT TO DIRECTOR AND OFFICER INDEMNIFICATION AND
INSURANCE. The Merger Agreement provides that, subject to being able to obtain
policies on a commercially reasonable basis, the Purchaser shall either (i) for
at least four years after the Effective Time, provide officers' and directors'
liability insurance in respect of acts or omissions occurring at or prior to the
Effective Time covering each officer and director currently covered by the
Company's policies on terms with respect to coverage and amount no less
favorable than those of such policies in effect as of the date of the Merger
Agreement or (ii) purchase tail insurance in respect of the Company's existing
officers' and directors' liability insurance for four years. After the Merger,
the right to indemnification of officers and directors as provided for in the
Articles of Incorporation and By-Laws of the Company will not be amended,
repealed or otherwise modified.
STOCK OPTIONS. All outstanding stock options and warrants to purchase
Shares will be canceled prior to the consummation of the Offer in exchange for
an amount in cash equal to the excess of the price per share to be paid in the
Offer over the per share exercise price of each option or warrant. In addition,
as of the Effective Time of the Merger, all stock option plans shall terminate
and no participant in any stock option plan shall have any right to acquire any
capital stock of the Company.
OTHER AGREEMENTS
Pursuant to a Stock Option Agreement dated September 21, 1998, the Company
granted an irrevocable option to the Purchaser to purchase 19.9% of the
Company's stock at a price of $5.40 per share. In addition, each executive
officer and director executed a Shareholders Agreement dated September 21, 1998,
pursuant to which they agreed to tender their shares in the Offer and granted an
option to the Purchaser to purchase their shares at a price of $5.40 per share.
Copies of the Stock Option Agreement and Shareholders Agreement are filed as
Exhibits 5 and 6 hereto, respectively, and are incorporated herein by reference.
RIGHTS AGREEMENT
The Company has in place a shareholder rights plan dated as of September 5,
1989 (the "Rights Plan"). The Rights Plan was adopted by the Board for the
purpose of protecting the Company and the shareholders from coercive or
otherwise unfair takeover attempts.
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Under the Rights Plan, upon certain "Triggering Events," each shareholder of
the Company, other than shareholders who have acquired beneficial ownership of
20% or more of the Company's shares (defined by the Rights Plan as "Acquiring
Persons"), are entitled to exercise certain Rights, and receive upon such
exercise Shares of the Company having a value equal to two times the exercise
price of the Rights. These Rights, if exercised, significantly dilute the value
of the Acquiring Person's Shares, thus making it very expensive for the
Acquiring Person to acquire control of the Company without the consent of the
Company.
The Triggering Events under the Rights Plan, generally speaking, are events
that affect control of the Company, including, among other events, mergers with
an Acquiring Person, the acquisition by any person of 20% or more of the Shares,
and certain significant asset sales.
The Offer and the Merger normally would constitute Triggering Events under
the Rights Plan. However, the Board, because it has determined that the Offer
and Merger are in the best interests of the Company's shareholders, and in order
to facilitate the Offer and the Merger, has amended the Rights Plan to provide
that neither the Purchaser nor the Parent is an Acquiring Person (as defined
under the Rights Plan), and that the Offer, Merger, and other transactions
contemplated by the Merger Agreement are not Triggering Events (as defined under
the Rights Plan) so as to trigger the Rights issued under the Rights Plan, and
do not otherwise result in any of the consequences contemplated by the Rights
Plan. This amendment to the Rights Plan is required as a condition to the Merger
Agreement. A copy of the Rights Plan and the amendment to same are filed
herewith as Exhibits 7 and 8 and are incorporated herein by reference, and the
foregoing summary is qualified in its entirety by reference thereto.
LIMITATION OF LIABILITY
The Company's Articles of Incorporation provides that a director of the
Company shall not be personally liable to the Company or its shareholders for
monetary damages for breach of fiduciary duty as a director unless, and only to
the extent that, such director is liable (i) for any breach of the director's
duty of loyalty to the Company or its shareholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or are in violation of
law, (iii) for any transactions from which the director derived an improper
personal benefit, (iv) for acts or omissions for which the liability of a
director is expressly provided for by statute, or (v) an act related to an
unlawful stock repurchase or payment of a dividend. The effect of this provision
of the Company's Articles of Incorporation is to eliminate the rights of the
Company and its shareholders (through shareholders' derivative suits on behalf
of the Company) to recover monetary damages against a director for breach of his
fiduciary duty (including breaches resulting from negligent or grossly negligent
behavior) except in the situations described in clauses (i) through (v) above.
This provision does not limit or eliminate the rights of the Company or any
shareholder to seek non-monetary relief such as an injunction or rescission in
the event of a breach of a director's fiduciary duty.
CERTAIN CONFLICTS
STOCK OPTIONS. As of the date of filing of this Schedule 14D-9, the current
directors and executive officers of the Company as a group hold stock options to
purchase an aggregate of 407,610 Shares at exercise prices ranging from $2.81 to
$5.50 per Share granted under the stock option plans. All outstanding stock
options and warrants to purchase the Shares will be canceled prior to the
consummation of the Offer in exchange for an amount in cash equal to the excess
of the price per share to be paid in the Offer over the per share exercise price
of each option or warrant. In addition, as of the Effective Time of the Merger,
all stock option plans shall terminate and no participant in any stock option
plan shall have any right to acquire any capital stock of the Company.
EMPLOYMENT AGREEMENTS. The Company maintains severance agreements (the
"Severance Agreements") with Betty F. Hatcher, David E. Hatcher, Margaret J.
O'Bannion, Jimmie L. Turner, Raul F.
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Alvarez, Susan A. Batcha, Thomas H. Frame and Marilyn K. Moulds (individually an
"Employee" and collectively, the "Employees"), described under the section
captioned "Director Compensation" in Exhibit 4 hereto, a form of which is filed
herewith as Exhibit 9 and is incorporated herein by reference. Each Severance
Agreement contains provisions which state that if, within two years after a
change-of-control, the Company terminates such Employee's employment other than
for cause, the Company shall pay to such Employee a cash amount equal to a
multiple (ranging from 2 to 2.99) of such Employee's average annual compensation
for a specified period of years. The payments due such Employee will be subject
to reduction for the purpose of avoiding a limitation on the Company's federal
income tax deduction of "excess parachute payments." Termination other than for
cause includes termination after certain events, such as a demotion or a
reduction in compensation or benefits. The acquisition of Shares pursuant to the
Offer and the Merger will constitute a change-of-control for purposes of the
Severance Agreements.
OTHER MATTERS. Certain other transactions have occurred, or relationships
exist, between the Company and its directors, executive officers or affiliates.
See "Director Compensation" in Exhibit 4 hereto.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) The Company's Board of Directors has approved the Merger Agreement and
the transactions contemplated thereby and determined unanimously that the Offer
and the Merger are fair to and in the best interests of the shareholders of the
Company and recommends that all shareholders of the Company accept the Offer and
tender all their Shares pursuant to the Offer. This recommendation is based in
part upon an opinion (the "Fairness Opinion") received by the Company from Dain
Rauscher Wessels, a division of Dain Rauscher Incorporated ("Dain Rauscher
Wessels"), that the consideration to be received by the Company's shareholders
in the Offer and the Merger is fair to the shareholders from a financial point
of view. No limitations were imposed by the Board or management of the Company
on Dain Rauscher Wessels with respect to the investigation made, or the
procedures followed by it, in rendering the Fairness Opinion. For purposes of
its opinion, Dain Rauscher Wessels relied, without independent verification, on
the accuracy, completeness and fairness of all financial and other information
reviewed by it. The Fairness Opinion contains a description of the factors
considered, the assumptions made and the scope of review undertaken by Dain
Rauscher Wessels in rendering its opinion. THE FULL TEXT OF THE FAIRNESS OPINION
RECEIVED BY THE COMPANY FROM DAIN RAUSCHER WESSELS IS FILED AS EXHIBIT 10 TO
THIS SCHEDULE 14D-9 AND IS INCORPORATED HEREIN BY REFERENCE IN ITS ENTIRETY.
SHAREHOLDERS ARE URGED TO READ SUCH OPINION IN ITS ENTIRETY.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer at least that
number of Shares which would constitute 67% of the currently outstanding Shares
on a fully diluted basis based on the number of stock options and warrants
exercised prior to the consummation of the Offer (the "Minimum Condition").
Under Texas law, the approval of the Board and the affirmative vote of the
holders of two-thirds of the outstanding Shares are required to approve the
Merger. Accordingly, if the Minimum Condition is satisfied, the Purchaser will
have sufficient voting power to cause the approval of the Merger without the
affirmative vote of any other shareholder.
The Offer is scheduled to expire at 12:00 midnight, E.S.T, on Thursday,
October 23, 1998, unless the Purchaser, subject to certain limitations, elects
to extend the period of time for which the Offer is open. A copy of the press
release issued jointly by the Company and the Purchaser on September 21, 1998,
announcing the Offer and the Merger is filed as Exhibit 11 to this Schedule
14D-9 and is incorporated herein by reference.
(b) Mr. Edward L. Gallup, CEO of Parent, and Mr. David E. Hatcher, CEO of
the Company, have known each other for over thirty years. For at least the last
ten years, the two of them have discussed at
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various times the possibility of business combinations, joint ventures, and
other transactions between Parent and the Company.
On March 12, 1996, a representative of Parent wrote to a representative of
the Company requesting information and materials regarding the Company. On March
20, 1996, Parent received a confidentiality agreement and an executive summary
regarding the Company. The confidentiality agreement was never executed and
contacts were discontinued.
On July 16, 1997, Mr. Gallup and Mr. Hatcher met to discuss the merits of a
business combination between Parent and the Company.
On August 5, 1997, Parent wrote to the Company proposing a transaction
offering $5.40 per Share in cash for all outstanding Shares, subject to
completion of due diligence, approval of the respective Boards of Directors of
Parent and the Company, and satisfactory negotiation of the terms of a
definitive merger agreement, and requested a reply by August 15, 1997.
On August 7, 1997, the Board of Directors of the Company discussed the
written offer and established a committee to engage financial advisors and
report any results to the Board. The Company informed Parent of these procedures
and that it would not be able to respond by August 15, 1997.
On August 22, 1997, the Company engaged Rauscher Pierce Refsnes, Inc. (which
subsequently merged with Dain Bosworth Incorporated, which simultaneously
changed its name to Dain Rauscher Incorporated) as its investment banker and
financial advisor.
On October 20, 1997, representatives of Parent, the Company and Dain
Rauscher Wessels met to discuss a potential transaction and a form of
confidentiality agreement. On October 28, 1997, Parent executed a
confidentiality and standstill agreement with the Company.
On November 5, 1997, representatives of Parent, the Company and Dain
Rauscher Wessels met to discuss a potential merger transaction and exchange
historical and projected financial information regarding the Company. The
Company also provided certain patent information for review by Parent's
attorneys.
On November 9, 1997, the Board of Directors of the Company met, and
representatives of Dain Rauscher Wessels addressed the Board. Given the increase
in market price per share of the Company's Common Stock, representatives of Dain
Rauscher Wessels stated that Parent's offer was inadequate, and they would have
further discussions with Parent and its representatives and notify the Board of
any developments.
On February 4, 1998, Parent wrote to the Company formally withdrawing its
written offer of $5.40 per share presented on August 5, 1997.
In April 1998, Mr. Gallup and Mr. Hatcher met to discuss potential business
combinations between Parent and the Company.
On May 5, 1998, Parent retained TM Capital Corp. ("TM Capital") as its
investment banker and financial advisor in connection with a possible
acquisition of the Company. On May 13, 1998, representatives of TM Capital and
Dain Rauscher Wessels met to discuss a potential business combination between
Parent and the Company.
On May 18, 1998, Parent wrote to the Company proposing a transaction at a
premium price to be mutually agreed upon for all outstanding Shares on a cash
basis. Thereafter, Parent requested and the Company provided non-public
historical and projected financial information.
On June 4, 1998, Parent wrote to the Company proposing a transaction
offering $6.00 per Share for all outstanding Shares on a cash basis, subject to
the completion of due diligence, the negotiation of a definitive merger
agreement, and the approval of the Company's Board of Directors. Dain Rauscher
Wessels shortly thereafter informed TM Capital that the Company did not consider
this to be an adequate offer.
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On June 12, 1998, TM Capital indicated to Dain Rauscher Wessels that Parent
would be prepared to consider a transaction offering $6.50 per Share for all
outstanding Shares on a cash basis, subject to completion of due diligence,
approval of the respective Boards of Directors of Parent and the Company, and
satisfactory negotiation of the terms of a definitive merger agreement. On June
17, 1998, the Company received a letter from a third party indicating an
interest in a business combination at a premium over the stock price. The Board
of Directors of the Company met on June 17, 1998, to review the proposals from
Parent and the third party. The Company then informed Dain Rauscher Wessels that
it was not prepared at that time to accept Parent's offer, and Dain Rauscher
Wessels then informed TM Capital of the Board's decision. Discussions between
representatives of Parent, TM Capital, the Company and Dain Rauscher Wessels
continued.
On June 26, 1998, Mr. Hatcher met with representatives of the third party
and informed them that time was of the essence for any specific offer. The
representatives of the third party requested two weeks to discuss an offer with
its management and Board of Directors. On July 16, 1998, the Company received
written notice that the third party would not be able to present a viable offer
for the Company.
On July 21, 1998, representatives of Parent, TM Capital and the Company met
and agreed to recommend a cash purchase price of $6.50 per Share, subject to
completion of due diligence, approval of the respective Boards of Directors of
Parent and the Company, and satisfactory negotiation of the terms of a
definitive merger agreement.
On July 27 and 28, 1998, representatives of Parent, TM Capital, the Company,
Dain Rauscher Wessels and their respective counsel met to conduct business,
financial and legal due diligence. Additional due diligence information requests
and exchanges between Parent and the Company continued thereafter.
On August 11, 1998, the Company issued a press release which reported
results for the quarter ended June 30, 1998. The Company reported a decline in
net revenues, an operating loss and a net loss for the quarter. The Company also
stated that revenues from the newly launched ReACT product line were
materializing more slowly than had been forecasted.
On September 4, 1998, the Company issued a press release which declared a
1/2-cent-per-share quarterly dividend payable October 20, 1998. This represented
a reduction from the Company's prior dividend rate of 2 1/2-cents-per-share per
quarter.
On September 4, 1998, given the passage of time, the absence of an agreement
on a transaction, and the Company's desire to move forward with other
alternatives, the Company wrote to Parent and requested Parent to withdraw its
offer. On September 4, 1998, Parent wrote to the Company declining to withdraw
the offer, and indicating that it was prepared to meet with the Company to
negotiate the final terms of a transaction.
On September 11, 1998, counsel to Parent provided the Company with a draft
of the Agreement and Plan of Merger (the "Merger Agreement"), and the Company
provided Parent with updated financial information.
On September 16, 1998, representatives of Parent, TM Capital, the Company,
Dain Rauscher Wessels and their respective counsel met to discuss the results of
Parent's due diligence review. At this meeting, Parent submitted a revised
proposal of $5.25 per share in cash for all outstanding shares. After further
discussion and negotiations, Parent proposed a cash tender offer at $5.40 per
Share for 100% of the Company's outstanding shares, subject to negotiation of
satisfactory terms of the Merger Agreement. The Company held a special
telephonic meeting with its Board of Directors later that afternoon whereby the
proposed transaction was approved subject to negotiation of the definitive
Merger Agreement. Between September 16 and September 20, 1998, negotiations were
conducted as to the details of the transaction and the Merger Agreement. During
this period the Company and Parent also negotiated the terms of the Stock Option
Agreement between the Company and Parent, and the Shareholders Agreement between
Parent, Purchaser and the Company's officers and directors.
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On September 17, 1998, Parent's Board of Directors held a special telephonic
meeting with all directors present. Parent's Board of Directors reviewed and
unanimously approved the proposed terms of the Offer and Merger.
On September 20, 1998, the Board of Directors of the Company held a special
telephonic meeting, with all directors present. Representatives of Dain Rauscher
Wessels as well as the Company's counsel also participated on the telephonic
call. The Board of Directors reviewed the terms of the Merger Agreement, the
Stock Option Agreement and Shareholders Agreement. Company counsel advised the
directors of their fiduciary duties in connection with their consideration of
the Merger Agreement, the Stock Option Agreement, the Offer and the Merger.
After presenting their financial analyses of the fairness of the consideration
to be received in the Offer and the Merger, Dain Rauscher Wessels delivered its
oral opinion that, as of the date of such opinion, the consideration of $5.40
per Share in cash to be received by the holders of Shares in the Offer and
Merger is fair to such holders from a financial point of view. The Board of
Directors then discussed the merits of the proposed Offer and Merger. Following
such discussion, the Board of Directors unanimously approved the Merger
Agreement and the Stock Option Agreement, determined that the offer and the
Merger are fair to, and in the best interests of, the shareholders of the
Company, and resolved unanimously to recommend that the shareholders of the
Company tender their shares to the Purchaser pursuant to the Offer.
Early on the morning of September 21, 1998, Parent, Purchaser and the
Company entered into the Merger Agreement, the Company and Parent entered into
the Stock Option Agreement, and Parent, Purchaser and the Company's officers and
directors entered into the Shareholders Agreement. The parties announced the
transaction later than morning pursuant to a joint press release.
In arriving at its decision to approve the Offer and the Merger and
recommend that the Company's shareholders accept the Offer and tender their
Shares, the Board considered a number of factors, including, without limitation,
the following:
(i) the financial and other terms and conditions of the Offer and the Merger
Agreement;
(ii) the fact that the $5.40 per Share price to be received by the Company's
shareholders in both the Offer and the Merger represents a substantial premium
over the historical trading prices for the Shares, including a premium over the
closing market price of $2.80 per Share on September 18, 1998, the last full
trading day prior to the approval and execution of the Merger Agreement;
(iii) the written opinion of Dain Rauscher Wessels that the consideration to
be received by the Company's shareholders pursuant to the Offer and the Merger
is fair to such shareholders from a financial point of view. A copy of Dain
Rauscher Wessels's written opinion is filed as Exhibit 10 to this Schedule 14D-9
and is incorporated herein by reference. Such opinion should be read in its
entirety for a description of the procedures followed, assumptions and
qualifications made, matters considered and limitations of the review undertaken
by Dain Rauscher Wessels;
(v) the fact that no other potential strategic partner had expressed an
interest in engaging in a business combination or other strategic transaction
that would likely be on terms as favorable to the Company's shareholders as
those of the Offer and the Merger;
(vi) the fact that the beneficial owners of approximately 15.6% of the
Shares were prepared to endorse the Merger Agreement;
(vii) the fact that the Offer and the Merger were not conditioned on the
availability of financing which, combined with the experience, reputation and
financial condition of the Parent, increased the likelihood that the proposed
Offer and Merger will be consummated;
(viii) the fact that, to the extent required by the fiduciary obligations of
the Board of Directors of the Company to the shareholders under Texas law, the
Company may terminate the Merger Agreement in order to approve a tender offer or
exchange offer for the Shares or other proposed business combination
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by a third party on terms more favorable to the Company's shareholders than the
Offer and the Merger taken together, upon the payment of the Parent's and
Purchaser's expenses and a $1,250,000 termination fee;
(ix) the effect of the Offer and the Merger on the Company's relationships
with its employees and customers; and
(x) the advice of the Company's legal advisors with respect to the terms of
the Merger Agreement, the Offer and the Mergers.
The Board of Directors recognized that consummation of the Offer and the
Merger will deprive current shareholders of the Company of the opportunity to
participate in the future growth prospects of the Company and, therefore, in
reaching its conclusion to approve the Offer and the Merger, determined that the
historical results of operations and future prospects of the Company are
currently adequately reflected in the $5.40 price per Share.
In light of all the factors set forth above, the Board of Directors approved
the Offer and the Merger. In view of the variety of factors considered in
connection with its evaluation, the Board of Directors did not assign relative
weights to the specific factors considered in reaching its decision or determine
that any factor was of particular importance. Rather, the Board of Directors
viewed its position and recommendations as being based on the totality of the
information presented to it and considered by it.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The Company retained Dain Rauscher Wessels to provide the Fairness Opinion
in connection with the proposed Offer and Merger. Pursuant to a letter
agreement, dated August 22, 1997, between the Company and Dain Rauscher Wessels,
the Company has agreed to pay Dain Rauscher Wessels a contingency fee equal to
2.25% of the first $25,000,000 of aggregate consideration and 3.0% of the amount
of aggregate consideration in excess of $25,000,000 received by the Company in
the Offer and the Merger (the "Contingency Fee"). In addition, the Company will
pay a fee of $75,000 upon delivery of the Fairness Opinion. Such $75,000 fee
would be credited against the Contingency Fee. The Company has also agreed to
reimburse Dain Rauscher Wessels for all out-of-pocket expenses incurred in
connection with the engagement, including fees and disbursements of its legal
counsel, whether or not the Offer or the Merger is consummated.
Except as set forth above, neither the Company nor any person acting on its
behalf has or currently intends to employ, retain or compensate any person to
make solicitations or recommendations to the shareholders of the Company on its
behalf with respect to the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) During the past sixty (60) days, no transactions in the Shares have been
effected by the Company or, to the best of the Company's knowledge, by any
executive officer, directors, affiliate or subsidiary of the Company.
(b) To the best of the Company's knowledge, to the extent permitted by
applicable securities laws, rules or regulations, each executive officer,
director, affiliate and subsidiary of the Company currently intends to tender
all Shares to Purchaser which are held of record or beneficially by such person
or over which he, she or it has sole dispositive power.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth herein, no negotiation is being undertaken or is
underway by the Company in response to the Offer which relates to or would
result in (i) an extraordinary transaction, such as a merger or reorganization,
involving the Company or any subsidiary thereof; (ii) a purchase, sale or
transfer of a
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material amount of assets by the Company or any subsidiary thereof; (iii) a
tender offer for or other acquisition of securities by or of the Company; or
(iv) any material change in the present capitalization or dividend policy of the
Company.
(b) Except as set forth herein, there is no transaction, board resolution,
agreement in principle or signed contract in response to the Offer that relates
to, or would result in, one or more of the events referred to in Item 7(a)
above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
The Information Statement required by Section 14(f) and Rule 14(f)-1 of the
Exchange Act will be furnished separately to Shareholders in connection with the
possible designation by the Purchaser, pursuant to the Merger Agreement, of
certain persons to be appointed to the Board of Directors of the Company other
than at a meeting of the Company's Shareholders.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- --------------- -----------------------------------------------------------------------------------------------------
<C> <S>
1 Offer to Purchase, dated September 25, 1998*
2 Letter of Transmittal*
3 Agreement of Plan and Merger, dated as of September 21, 1998, among the Parent, the Purchaser and the
Company
4 Proxy Statement of the Company dated June 30, 1998
5 Stock Option Agreement, dated September 21, 1998, between the Company, the Parent and the Purchaser
6 Shareholders Agreement dated September 21, 1998, between the Company, the Purchaser and certain
shareholders of the Company
7 Rights Plan dated September 5, 1989
8 Amendment to Rights Plan dated September 20, 1998
9 Form of Severance Agreement
10 Fairness Opinion of Dain Rauscher Wessels dated September 21, 1998*
11 Press release issued by the Company and the Parent on September 21, 1998
</TABLE>
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* Included in copies mailed to Shareholders
10
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
September 25, 1998
<TABLE>
<S> <C> <C>
GAMMA BIOLOGICALS, INC.
/s/ DAVID E. HATCHER
---------------------------------------------
David E. Hatcher, President, Chief Executive
Officer
and Chairman of the Board
</TABLE>
11
<PAGE>
September 25, 1998
DEAR GAMMA BIOLOGICALS, INC. SHAREHOLDER:
We are pleased to inform you that on September 21, 1998, Gamma Biologicals,
Inc. ("Gamma") entered into an agreement with Immucor, Inc. ("Immucor") and
Gamma Acquisition Corporation, a wholly owned subsidiary of Immucor
("Purchaser"), which provides for the acquisition of Gamma by means of a cash
tender offer and a subsequent merger.
As the first step of this acquisition, Purchaser is making a cash tender
offer for any and all outstanding shares of Gamma's common stock (the "Shares")
at a price of $5.40 per Share, net to the seller in cash. Subject to certain
conditions, Purchaser and Gamma will be merged subsequent to the completion of
the tender offer, and the remaining outstanding Shares will be converted into
the right to receive $5.40 per Share. The tender offer is conditioned, among
other things, on there being tendered and not withdrawn at least 67% of the
shares outstanding on a fully diluted basis based on the number of stock options
and warrants exercised prior to the consummation of the offer.
YOUR BOARD OF DIRECTORS HAS DETERMINED THAT THE TENDER OFFER AND THE MERGER
ARE FAIR TO AND IN THE BEST INTERESTS OF GAMMA'S SHAREHOLDERS AND RECOMMENDS
THAT EVERY SHAREHOLDER OF GAMMA ACCEPT THE TENDER OFFER AND TENDER HIS, HER OR
ITS SHARES.
In arriving at its recommendation, the Board of Directors gave careful
consideration to the factors described in the attached
Recommendation/Solicitation Statement on Schedule 14D-9 that is being filed
today with the Securities and Exchange Commission, including the opinion of Dain
Rauscher Wessels, Gamma's financial advisor, to the effect that the
consideration to be received by the shareholders pursuant to the offer and the
merger is fair to such holders from a financial point of view.
Enclosed for your consideration are copies of the tender offer materials and
Gamma's Schedule 14D-9. These documents should be read carefully. In particular,
I call your attention to Item 4 of the Schedule 14D-9, which describes both the
reasons for the Board's recommendation and certain additional information that
shareholders may wish to consider before taking action with respect to the
offer.
Very truly yours,
/s/ DAVID E. HATCHER
CHIEF EXECUTIVE OFFICER, PRESIDENT
AND CHAIRMAN OF THE BOARD
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
OF
GAMMA BIOLOGICALS, INC.
BY
GAMMA ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY
OF
IMMUCOR, INC.
AT
$5.40 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, EASTERN
TIME, ON FRIDAY, OCTOBER 23, 1998, UNLESS THE OFFER IS EXTENDED.
THE BOARD OF DIRECTORS OF GAMMA BIOLOGICALS, INC. (THE "COMPANY") HAS
UNANIMOUSLY APPROVED THE OFFER, THE MERGER AND THE OTHER TRANSACTIONS
CONTEMPLATED BY THE MERGER AGREEMENT, HAS DETERMINED THAT THE TERMS OF THE OFFER
AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S
SHAREHOLDERS, AND RECOMMENDS THAT THE SHAREHOLDERS OF THE COMPANY ACCEPT THE
OFFER AND TENDER THEIR SHARES.
The Offer is conditioned upon, among other things, there being validly
tendered a number of Shares which, when added to the Shares beneficially owned
by Immucor, Inc. (the "Parent"), would represent at least 67% of the Shares
outstanding on a fully diluted basis on the date of purchase based on the number
of stock options and warrants exercised prior to the consummation of the Offer.
IMPORTANT
Any shareholder desiring to tender all or any portion of such
shareholder's Shares should either (i) complete and sign the Letter of
Transmittal (or a facsimile thereof) in
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<PAGE>
accordance with the instructions in the Letter of Transmittal, have such
shareholder's signature thereon guaranteed if required by Instruction 1 to the
Letter of Transmittal, mail or deliver the Letter of Transmittal (or such
facsimile) and any other required documents to the Depositary and either deliver
the certificates for such Shares to the Depositary along with the Letter of
Transmittal (or facsimile) or deliver such Shares pursuant to the procedure for
book-entry transfer set forth in Section 2 or (ii) request such shareholder's
broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for such shareholder. A shareholder having Shares registered in the
name of a broker, dealer, commercial bank, trust company or other nominee must
contact such broker, dealer, commercial bank, trust company or other nominee if
such shareholder desires to tender such Shares.
If a shareholder desires to tender Shares and such shareholder's
certificates for Shares are not immediately available or the procedure for
book-entry transfer cannot be completed on a timely basis, or time will not
permit all required documents to reach the Depositary prior to the Expiration
Date, such shareholder's tender may be effected by following the procedure for
guaranteed delivery set forth in Section 2.
Questions and requests for assistance may be directed to TM Capital
Corp., the Dealer Manager, or to Beacon Hill Partners, Inc., the Information
Agent, at their respective addresses and telephone numbers set forth on the back
cover of this Offer to Purchase. Additional copies of this Offer to Purchase,
the Letter of Transmittal, the Notice of Guaranteed Delivery and other related
materials may be obtained from the Information Agent or from brokers, dealers,
commercial banks and trust companies.
------------------------------------
The Dealer Manager for the Offer is:
[TM Capital Corp. Logo]
September 25, 1998
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Section 1. Terms of the Offer............................................. 2
Section 2. Procedures for Tendering Shares................................ 4
Section 3. Withdrawal Rights.............................................. 8
Section 4. Acceptance for Payment and Payment............................. 8
Section 5. Certain Federal Income Tax Consequences........................ 10
Section 6. Price Range of Shares; Dividends on the Shares................. 11
Section 7. Certain Information Concerning the Company..................... 11
Section 8. Certain Information Concerning the Parent and the Purchaser.... 13
Section 9. Source and Amount of Funds..................................... 16
Section 10. Background of the Offer........................................ 16
Section 11. Purpose of the Offer; Plans for the Company.................... 20
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
Section 12. The Merger..................................................... 20
Section 13. Certain Conditions of the Offer................................ 31
Section 14. Certain Legal Matters.......................................... 33
Section 15. Fees and Expenses.............................................. 35
Section 16. Miscellaneous.................................................. 35
</TABLE>
SCHEDULE I
Directors and Executive Officers of the Parent and the Purchaser
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<PAGE>
TO THE HOLDERS OF SHARES OF GAMMA BIOLOGICALS, INC.
Gamma Acquisition Corporation, a Texas corporation (the "Purchaser")
and a wholly owned subsidiary of Immucor, Inc., a Georgia corporation (the
"Parent"), hereby offers to purchase all outstanding shares of common stock, par
value $.10 per share, and the associated common stock purchase rights (together
with the rights, the "Shares"), of Gamma Biologicals, Inc., a Texas corporation
(the "Company"), at a price of $5.40 per Share, net to the seller in cash,
without interest thereon (the "Offer Price"), upon the terms and subject to the
conditions set forth in this Offer to Purchase and in the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
collectively constitute the "Offer").
Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares pursuant to the
Offer. The Purchaser will pay all charges and expenses of TM Capital Corp. ("TM
Capital"), as Dealer Manager (in such capacity, the "Dealer Manager"), Harris
Trust Company of New York, as Depositary (the "Depositary"), and Beacon Hill
Partners, Inc., as Information Agent (the "Information Agent"), incurred in
connection with the Offer. See Section 15.
The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of September 21, 1998 (the "Merger Agreement"), among the Purchaser,
the Parent and the Company. The Merger Agreement provides, among other things,
for the merger of the Purchaser with and into the Company (the "Merger")
following the purchase of Shares pursuant to the Offer. In the Merger, each
outstanding Share (other than Shares owned by the Parent or any subsidiary of
the Parent, Shares held as treasury shares by the Company, and Shares owned by
shareholders who perfect appraisal rights under Texas law) will be converted
into the right to receive $5.40 per Share net in cash. See Section 12.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE
OFFER, THE MERGER AND THE OTHER TRANSACTIONS CONTEMPLATED BY THE MERGER
AGREEMENT, HAS DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO
AND IN THE BEST INTERESTS OF THE COMPANY'S SHAREHOLDERS, AND RECOMMENDS THAT THE
SHAREHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES.
The Offer is subject to the fulfillment of a number of conditions (the
"Offer Conditions"), including, among other things, there being validly tendered
a number of Shares which, when added to the Shares beneficially owned by the
Parent, constitutes at least 67% of the Shares outstanding on a fully diluted
basis on the date of purchase based on the number of stock options and warrants
exercised prior to the consummation of the Offer (the "Minimum Condition").
According to representations made by the Company in the Merger
Agreement, as of the date of the Merger Agreement: (i) 4,625,762 Shares were
issued and outstanding, (ii) 753,410
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<PAGE>
Shares were reserved for future issuance upon exercise of outstanding employee
stock options and (iii) 4,625,762 Shares were reserved for future issuance upon
the exercise of the rights.
Certain other Offer Conditions are described in Section 13. The
Purchaser expressly reserves the right, in its sole discretion, to waive any one
or more of the Offer Conditions. See Sections 13 and 14. The Offer is not
conditioned on the receipt of financing.
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
SECTION 1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including,
if the Offer is extended or amended, the terms and conditions of any extension
or amendment), the Purchaser will accept for payment and pay for all Shares
validly tendered prior to the Expiration Date. The term "Expiration Date" means
12:00 midnight, Eastern Time, on Friday, October 23, 1998, unless the Purchaser
extends the period of time during which the Offer is open, in which event the
term "Expiration Date" shall mean the latest time and date at which the Offer,
as so extended by the Purchaser, will expire.
THE OFFER IS CONDITIONED UPON THE SATISFACTION OF THE MINIMUM CONDITION
AND THE SATISFACTION OF THE OTHER OFFER CONDITIONS SET FORTH IN SECTION 13. THE
OFFER IS NOT CONDITIONED ON THE RECEIPT OF FINANCING.
If all of the Offer Conditions are not satisfied on the Expiration Date
then, provided that Purchaser determines that all Offer conditions are
reasonably capable of being satisfied and subject to Securities and Exchange
Commission (the "SEC") rules with respect to extension of time periods,
Purchaser may extend the Offer from time to time until all Offer Conditions have
been satisfied or waived. The Merger Agreement also provides that upon the
Expiration Date, as the same may be extended, if all Offer Conditions have been
satisfied, the Purchaser shall accept Shares properly tendered for purchase,
subject to the right to extend the Offer not more than ten (10) business days in
the aggregate if less than 90% of the Shares have been properly tendered, such
90% to be calculated after giving effect to the conversion of any securities
convertible into Common Stock, and the exercise of any options, warrants or
other rights to acquire Common Stock. UNDER NO CIRCUMSTANCES WILL INTEREST BE
PAID ON THE PURCHASE PRICE FOR TENDERED SHARES, WHETHER OR NOT THE PURCHASER
EXERCISES ITS RIGHT TO EXTEND THE OFFER.
If, by the Expiration Date (including any extension in accordance with
the Merger Agreement), any or all of the Offer Conditions have not been
satisfied or waived, the Purchaser reserves the right (but will not be
obligated), subject to the applicable rules and regulations of the SEC, to (a)
terminate the Offer and not accept for payment or pay for any
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<PAGE>
Shares and return all tendered Shares to tendering shareholders, (b) waive all
the unsatisfied Offer Conditions and accept for payment and pay for all Shares
validly tendered prior to the Expiration Date, (c) extend the Offer and, subject
to the right of shareholders to withdraw Shares until the Expiration Date,
retain the Shares that have been tendered during the period or periods for which
the Offer is extended, or (d) amend the Offer.
The rights reserved by the Purchaser in the two preceding paragraphs
are in addition to the Purchaser's rights pursuant to Section 13. There can be
no assurance that the Purchaser will exercise its right to extend the Offer
beyond October 23, 1998. Any extension, amendment or termination will be
followed as promptly as practicable by public announcement as to such. In the
case of an extension, Rule 14e-l(d) under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), requires that the announcement be issued no
later than 9:00 a.m., Eastern time, on the next business day after the
previously scheduled Expiration Date, or the first opening of the American Stock
Exchange (the "AMEX") on the next business day after the previously scheduled
Expiration Date, in accordance with the public announcement requirements of Rule
14d-4(c) under the Exchange Act. Subject to applicable law (including Rules
14d-4(c) and 14d-6(d) under the Exchange Act, which require that any material
change in the information published, sent or given to shareholders in connection
with the Offer be promptly disseminated to shareholders in a manner reasonably
designed to inform shareholders of such change), and without limiting the manner
in which the Purchaser may choose to make any public announcement, the Purchaser
will not have any obligation to publish, advertise or otherwise communicate any
such public announcement other than by making a release to the PR Newswire. As
used in this Offer to Purchase, "business day" has the meaning set forth in Rule
14d-1 under the Exchange Act.
If the Purchaser extends the Offer or if the Purchaser is delayed in
its acceptance for payment of or payment (whether before or after its acceptance
for payment of Shares) for Shares or it is unable to pay for Shares pursuant to
the Offer for any reason, then, without prejudice to the Purchaser's rights
under the Offer, the Depositary may retain tendered Shares on behalf of the
Purchaser, and such Shares may not be withdrawn except to the extent tendering
shareholders are entitled to withdrawal rights as described in Section 3.
However, the ability of the Purchaser to delay the payment for Shares that the
Purchaser has accepted for payment is limited by Rule 14e-1(c) under the
Exchange Act, which requires that a bidder pay the consideration offered or
return the securities tendered by or on behalf of holders of securities promptly
after the termination or withdrawal of such bidder's offer.
If the Purchaser makes a material change in the terms of the Offer or
the information concerning the Offer, the Purchaser will extend the Offer and
disseminate additional tender offer materials to the extent required by Rules
14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period during
which the Offer must remain open following material changes in the terms of the
Offer or information concerning the Offer, other than a change in price or a
change in the percentage of securities sought, will depend upon the facts and
circumstances then existing, including the relative materiality of the changed
terms or information. With respect to a change in price or a change in the
percentage of securities
-3-
<PAGE>
sought, a minimum period of 10 business days is generally required to allow for
adequate dissemination to shareholders and investor response.
The Company has provided the Purchaser with the Company's shareholder
lists and security position listings for the purpose of disseminating the Offer
to holders of Shares. This Offer to Purchase, the related Letter of Transmittal
and other relevant materials will be mailed to record holders of Shares, and
will be furnished to brokers, dealers, commercial banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
shareholder lists, or, if applicable, who are listed as participants in a
clearing agency's security position listing, for subsequent transmittal to
beneficial owners of Shares.
SECTION 2. PROCEDURES FOR TENDERING SHARES
Valid Tender. For a shareholder validly to tender Shares pursuant to
the Offer, either (a) a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), together with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message (as
defined below), and any other required documents, must be received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase prior to the Expiration Date and either certificates for tendered
Shares ("Share Certificates") must be received by the Depositary at one of such
addresses or such Shares must be delivered pursuant to the procedures for
book-entry transfer set forth below (and a Book-Entry Confirmation (as defined
below) received by the Depositary), in each case prior to the Expiration Date,
or (b) the tendering shareholder must comply with the guaranteed delivery
procedures set forth below.
Book-Entry Transfer. The Depositary will establish an account with
respect to the Shares at The Depositary Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer within two business days after the date of
this Offer to Purchase. Any financial institution that is a participant in any
of the Book-Entry Transfer Facility's systems may make book-entry delivery of
Shares by causing a Book-Entry Transfer Facility to transfer such Shares into
the Depositary's account in accordance with such Book-Entry Transfer Facility's
procedures for such transfer. However, although delivery of Shares may be
effected through book-entry transfer into the Depositary's account at a
Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message (as defined below), and any other required documents, must,
in any case, be transmitted to, and received by, the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date, or the tendering shareholder must comply with the guaranteed
delivery procedures described below. The confirmation of a book-entry transfer
of Shares into the Depositary's account at a Book-Entry Transfer Facility as
described above is referred to herein as a "Book-Entry Confirmation." DELIVERY
OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH
BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
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<PAGE>
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against such participant.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY
TRANSFER FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER.
SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter
of Transmittal (a) if the Letter of Transmittal is signed by the registered
holder (which term, for purposes of this Section, includes any participant in
any of the Book-Entry Transfer Facility's systems whose name appears on a
security position listing as the owner of the Shares) of Shares tendered
therewith and such registered holder has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal or (b) if such Shares are tendered
for the account of a financial institution (including most commercial banks,
savings and loan associations and brokerage houses) that is a participant in the
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(an "Eligible Institution"). In all other cases, all signatures on the Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instructions 1
and 5 to the Letter of Transmittal. If Share Certificates are registered in the
name of a person other than the signer of the Letter of Transmittal, or if
payment is to be made or Share Certificates for Shares not tendered or not
accepted for payment are to be returned to a person other than the registered
holder of the Share Certificates surrendered, the tendered Share Certificates
must be endorsed or accompanied by appropriate stock powers, in either case
signed exactly as the name or names of the registered holders appear on the
Share Certificates, with the signatures on the Share Certificates or stock
powers guaranteed as described above. See Instructions 1 and 5 to the Letter of
Transmittal.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant
to the Offer and such shareholder's Share Certificates are not immediately
available or the procedure for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such shareholder's tender may be
effected if all the following conditions are met:
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<PAGE>
(i) the tender is made by or through an Eligible
Institution;
(ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form provided by the
Purchaser, is received by the Depositary, as provided below, prior to
the Expiration Date; and
(iii) the Share Certificates, representing all tendered
Shares, in proper form for transfer (or a Book-Entry Confirmation with
respect to all such Shares), together with a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), with any
required signature guarantees, or, in the case of a book-entry
transfer, an Agent's Message, and any other required documents are
received by the Depositary within three trading days after the date of
execution of such Notice of Guaranteed Delivery. A "trading day" is any
day on which the AMEX is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, fax or mail to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in such
Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted
for payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (a) Share Certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (b) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and (c) any other documents required by the Letter of Transmittal.
Accordingly, tendering shareholders may be paid at different times depending
upon when Share Certificates or Book-Entry Confirmations with respect to Shares
are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE
PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS
OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
The Purchaser's acceptance for payment of Shares validly tendered
pursuant to the Offer will constitute a binding agreement between the tendering
shareholder and the Purchaser upon the terms and subject to the conditions of
the Offer.
Appointment as Proxy. By executing a Letter of Transmittal as set forth
above, a tendering shareholder irrevocably appoints designees of the Purchaser
as such shareholder's attorneys-in-fact and proxies in the manner set forth in
the Letter of Transmittal, each with full power of substitution, to the full
extent of such shareholder's rights with respect to the Shares tendered by such
shareholder and accepted for payment by the Purchaser and with respect to any
and all other Shares or other securities or rights issued or issuable in respect
of such Shares on or after September 25, 1998. All such proxies will be
irrevocable and considered coupled with an interest in the tendered Shares. Such
appointment will be effective when, and only to the extent that, the Purchaser
accepts such Shares for payment pursuant to the Offer.
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<PAGE>
Upon such acceptance for payment, all prior powers of attorney, proxies and
consents given by such shareholder with respect to such Shares or other
securities or rights will, without further action, be revoked and no subsequent
powers of attorney, proxies, consents or revocations may be given (and, if
given, will not be deemed effective). The designees of the Purchaser will
thereby be empowered to exercise all voting and other rights with respect to
such Shares and other securities or rights in respect of any annual, special,
adjourned or postponed meeting of the Company's shareholders, actions by written
consent in lieu of any such meeting or otherwise, as they in their sole
discretion deem proper. The Purchaser reserves the right to require that, in
order for Shares to be deemed validly tendered, immediately upon the Purchaser's
acceptance for payment of such Shares, the Purchaser must be able to exercise
full voting, consent and other rights with respect to such Shares and other
securities or rights, including voting at any meeting of shareholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by the Purchaser, in its sole discretion, whose
determination will be final and binding on all parties. The Purchaser reserves
the absolute right to reject any or all tenders determined by it not to be in
proper form or the acceptance for payment of or payment for which may, in the
opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves the
absolute right to waive any defect or irregularity in the tender of any Shares
of any particular shareholder whether or not similar defects or irregularities
are waived in the case of other shareholders. No tender of Shares will be deemed
to have been validly made until all defects or irregularities relating thereto
have been cured or waived. None of the Purchaser, the Parent, the Depositary,
the Information Agent, the Dealer Manager or any other person will be under any
duty to give notification of any defects or irregularities in tenders or incur
any liability for failure to give any such notification. The Purchaser's
interpretation of the terms and conditions of the Offer (including the Letter of
Transmittal and the instructions thereto) will be final and binding on all
parties.
Backup Withholding. In order to avoid "backup withholding" of federal
income tax on payments of cash pursuant to the Offer, a shareholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such shareholder's correct taxpayer identification number ("TIN") on a
Substitute Form W-9 and certify under penalties of perjury that such TIN is
correct and that such shareholder is not subject to backup withholding. If a
shareholder does not provide such shareholder's correct TIN or fails to provide
the certifications described above, the Internal Revenue Service (the "IRS") may
impose a penalty on such shareholder and the payment of cash to such shareholder
pursuant to the Offer may be subject to backup withholding of 31% of the amount
of such payment. All shareholders surrendering Shares pursuant to the Offer
should complete and sign the main signature form and the Substitute Form W-9
included as part of the Letter of Transmittal to provide the information and
certification necessary to avoid backup withholding (unless an applicable
exemption exists and is proved in a manner satisfactory to the Purchaser and the
Depositary). Noncorporate foreign shareholders should complete and sign the main
signature form and a Form W-8, Certificate of Foreign Status, a copy of which
may be obtained from the
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<PAGE>
Depositary, in order to avoid backup withholding. See Instruction 9 to the
Letter of Transmittal.
SECTION 3. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, tenders of Shares
pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may
be withdrawn pursuant to the procedures set forth below at any time prior to the
Expiration Date.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
its address set forth on the back cover of this Offer to Purchase and must
specify the name of the person having tendered the Shares to be withdrawn, the
number of Shares to be withdrawn and the name of the registered holder of the
Shares to be withdrawn, if different from the name of the person who tendered
the Shares. If Share Certificates have been delivered or otherwise identified to
the Depositary, then, prior to the physical release of such Share Certificates,
the serial numbers shown on such Share Certificates must be submitted to the
Depositary and, unless such Shares have been tendered by an Eligible
Institution, the signatures on the notice of withdrawal must be guaranteed by an
Eligible Institution. If Shares have been delivered pursuant to the procedure
for book-entry transfer as set forth in Section 2, any notice of withdrawal must
also specify the name and number of the account at the appropriate Book-Entry
Transfer Facility to be credited with the withdrawn Shares and otherwise comply
with such Book-Entry Transfer Facility's procedures.
Withdrawals of tenders of Shares may not be rescinded, and any Shares
properly withdrawn will thereafter be deemed not validly tendered for purposes
of the Offer. However, withdrawn Shares may be retendered by again following one
of the procedures described in Section 2 at any time prior to the Expiration
Date.
All questions as to the form and validity (including time of receipt)
of notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding on all parties. None
of the Purchaser, the Parent, the Depositary, the Information Agent, the Dealer
Manager or any other person will be under any duty to give notification of any
defects or irregularities in any notice of withdrawal or incur any liability for
failure to give any such notification.
SECTION 4. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of the Offer (including,
if the Offer is extended or amended, the terms and conditions of any such
extension or amendment), the Purchaser will accept for payment and will pay for
all Shares validly tendered promptly after the Expiration Date. All questions as
to the satisfaction of such terms and conditions will be determined by the
Purchaser, in its sole discretion, whose determination will be final and
-8-
<PAGE>
binding on all parties. See Sections 1 and 13. The Purchaser expressly reserves
the right, in its sole discretion, to delay acceptance for payment of or payment
for Shares in order to comply in whole or in part with any applicable law. See
Section 14. Any such delays will be effected in compliance with Rule 14e-l(c)
under the Exchange Act (relating to a bidder's obligation to pay for or return
tendered securities promptly after the termination or withdrawal of such
bidder's offer).
In all cases, payment for Shares accepted for payment pursuant to the
Offer will be made only after timely receipt by the Depositary of (a) Share
Certificates for (or a timely Book-Entry Confirmation with respect to) such
Shares, (b) a Letter of Transmittal (or facsimile thereof), properly completed
and duly executed, with any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message, and (c) any other documents required by
the Letter of Transmittal. The per Share consideration paid to any shareholder
pursuant to the Offer will be the highest per Share consideration paid to any
other shareholder of the same class pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have
accepted for payment, and thereby purchased, Shares validly tendered to the
Purchaser as, if and when the Purchaser gives oral or written notice to the
Depositary of the Purchaser's acceptance for payment of such Shares. Payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for validly
tendering shareholders for the purpose of receiving payment from the Purchaser
and transmitting payment to tendering shareholders. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE
PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT. Upon the deposit of funds with the Depositary for the purpose of making
payments to tendering shareholders, the Purchaser's obligation to make such
payment shall be satisfied and tendering shareholders must thereafter look
solely to the Depositary for payment of amounts owed to them by reason of the
acceptance for payment of Shares pursuant to the Offer. The Purchaser will pay
any stock transfer taxes with respect to the transfer and sale to it or its
order pursuant to the Offer, except as otherwise provided in Instruction 6 of
the Letter of Transmittal, as well as any charges and expenses of the Depositary
and the Information Agent.
If the Purchaser is delayed in its acceptance for payment of or payment
for Shares or is unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer (but subject to compliance with Rule 14e-1(c) under the Exchange Act),
the Depositary may, nevertheless, on behalf of the Purchaser, retain tendered
Shares, and such Shares may not be withdrawn except to the extent tendering
shareholders are entitled to exercise, and duly exercise, withdrawal rights as
described in Section 3.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, Share Certificates for any such unpurchased Shares will be returned,
without expense to the tendering shareholder (or, in the case of Shares
delivered by book-entry transfer of such Shares into the
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Depositary's account at a Book-Entry Transfer Facility pursuant to the procedure
set forth in Section 2, such Shares will be credited to an account maintained at
the appropriate Book-Entry Transfer Facility), as promptly as practicable after
the expiration, termination or withdrawal of the Offer.
The Purchaser reserves the right to transfer or assign, in whole or
from time to time in part, to the Parent, or to one or more direct or indirect
wholly owned subsidiaries of the Parent, the right to purchase Shares tendered
pursuant to the Offer, but any such transfer or assignment will not relieve the
Purchaser of its obligations under the Offer and will in no way prejudice the
rights of tendering shareholders to receive payment for Shares validly tendered
and accepted for payment pursuant to the Offer.
SECTION 5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The receipt of cash pursuant to the Offer or the Merger will be a
taxable transaction for federal income tax purposes under the Internal Revenue
Code of 1986, as amended (the "Code"), and may also be a taxable transaction
under applicable state, local or foreign income or other tax laws. Generally,
for federal income tax purposes, a tendering shareholder will recognize gain or
loss equal to the difference between the amount of cash received by the
shareholder pursuant to the Offer or the Merger and the adjusted tax basis in
the Shares tendered by the shareholder and purchased pursuant to the Offer or
converted in the Merger, as the case may be. Gain or loss will be calculated
separately for each block of Shares tendered and purchased pursuant to the Offer
or converted in the Merger, as the case may be.
If Shares are held by a shareholder as capital assets, gain or loss
recognized by the shareholder will be capital gain or loss, which will be
long-term capital gain or loss if the shareholder's holding period for the
Shares exceeds one year. In addition, any gain on the sale of Shares by an
individual may be taxed at the maximum rate of 20%, if, as of the date of sale,
the Shares were held by such individual for more than 18 months.
THE FOREGOING DISCUSSION IS INCLUDED FOR GENERAL INFORMATION ONLY AND
MAY NOT BE APPLICABLE WITH RESPECT TO SHARES RECEIVED AS COMPENSATION OR WITH
RESPECT TO HOLDERS OF SHARES WHO ARE SUBJECT TO SPECIAL TAX TREATMENT UNDER THE
CODE, SUCH AS NON-U.S. PERSONS, LIFE INSURANCE COMPANIES, TAX-EXEMPT
ORGANIZATIONS AND FINANCIAL INSTITUTIONS, AND MAY NOT APPLY TO A HOLDER OF
SHARES IN LIGHT OF INDIVIDUAL CIRCUMSTANCES. SHAREHOLDERS ARE URGED TO CONSULT
THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO THEM
(INCLUDING THE APPLICATION AND EFFECT OF ANY STATE, LOCAL OR FOREIGN INCOME AND
OTHER TAX LAWS) OF THE OFFER AND THE MERGER.
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SECTION 6. PRICE RANGE OF SHARES; DIVIDENDS ON THE SHARES
The Shares are listed on the AMEX under the symbol GBL. The following
table sets forth the high and low closing sales prices per Share as reported on
the AMEX Composite tape, together with the per Share dividends paid by the
Company as reported in publicly available sources.
<TABLE>
<CAPTION>
HIGH LOW DIVIDENDS
<S> <C> <C> <C>
FISCAL 1997
First quarter $4 1/2 $3 3/4 $0.025
Second quarter 4 2 7/8 0.025
Third quarter 3 3/4 3 0.025
Fourth quarter 4 3 1/16 0.025
FISCAL 1998
First quarter $4 13/16 $3 9/16 $0.025
Second quarter 5 3/4 4 3/8 0.025
Third quarter 6 3/8 4 1/8 0.025
Fourth quarter 5 3/8 4 5/16 0.025
FISCAL 1999
First quarter $5 7/16 4 1/2 $0.025
Second quarter (through 5 1/16 2 1/4 0.025
September 24, 1998)
</TABLE>
On September 4, 1998, the Company declared a dividend $0.005 per share
payable October 20, 1998. On September 18, 1998, the last full trading day prior
to the public announcement of the execution of the Merger Agreement and the
Purchaser's intention to commence the Offer, the closing sale price for the
Shares was $2 7/8 per Share. On September 24, 1998, the last full trading day
before commencement of the Offer, the closing sale price for the Shares was $5
1/16 per Share. SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR
THE SHARES.
SECTION 7. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Texas corporation with its principal offices at 3700
Mangum Road, Houston, Texas 77092. The Company's principal line of business is
manufacturing and selling a variety of refined and specialized testing products
known as in-vitro diagnostic reagents.
The reagents are sold to transfusion departments of hospitals, blood
collection center, medical laboratories and research institutions where they are
used to detect the presence of diagnostically significant substances in
biological fluids, primarily human blood. The company also develops test
systems, which use certain of the Company's reagents and serve to standardize
test procedures. See "New Technology -- Gamma reACT-TM- Test System".
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<PAGE>
The Company's current products are used in a number of applications,
including:
- grouping donor and patient bloods and performing compatibility
tests prior to transfusion
- detecting hemolytic disease of the newborn
- identifying antibodies and certain inherited blood group
antigens
The Company markets its products to over 3,500 hospitals, blood centers
and laboratories in the United States and Canada, and to dealers in
approximately 50 countries. Domestic sales are made through the Company's direct
sales force, as well as through independent distributors. Internationally, the
Company sells its products and products manufactured by others through its
subsidiary, Gamma Biologicals, B.V., and independent distributors.
GAMMA BIOLOGICALS, INC.
SELECTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31, THREE MONTHS ENDED JUNE 30,
--------------------------------------- -----------------------------
INCOME STATEMENT DATA 1996 1997 1998 1997 1998
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net Sales $16,940,588 $17,554,502 $18,253,763 $ 4,827,992 $ 4,366,544
Operating Income 898,974 1,576,255 653,974 453,590 (293,514)
Net Income 823,530 1,115,820 1,309,616 309,006 (156,902)
BALANCE SHEET DATA (AT
END OF PERIOD)
Working Capital $10,298,982 $10,167,457 $ 9,121,701 $ 9,868,851 $ 8,525,970
Total Assets 18,425,700 19,869,527 22,133,240 20,247,247 21,698,624
Long-Term Debt 353,097 345,120 851,240 508,620 782,520
Shareholders' Equity 16,852,086 17,664,907 18,506,469 17,859,550 18,297,949
PER SHARE:
Net Income per Common
Share (Basic) $ 0.18 $ 0.24 $ 0.28 $ 0.07 $ (0.03)
Net Income Per Common
Share on a Fully Diluted
Basis $ 0.18 $ 0.24 $ 0.28 $ 0.07 $ (0.03)
</TABLE>
Available Information. The Company is subject to the informational
requirements of the Exchange Act and, in accordance therewith, files periodic
reports, proxy statements and other information with the SEC relating to its
business, financial condition and other matters. Information as of particular
dates concerning the Company's directors and officers, their remuneration, stock
options and other matters, the principal holders of the Company's securities and
any material interest of such persons in transactions with the Company is
required to be disclosed in proxy statements distributed to the Company's
shareholders and filed with the SEC. Such reports, proxy statements and other
information may be inspected at the public reference facilities of the SEC at
450 Fifth Street, N.W., Washington, DC
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20549, and at the regional offices of the Commission located at Seven World
Trade Center, 13th Floor, New York, NY 10048 and Citicorp Center, 500 West
Madison Street (Suite 1400), Chicago, IL 60661. Copies of such information are
obtainable, by mail, upon payment of the SEC's customary charges, by writing to
the Commission's principal office at 450 Fifth Street, N.W., Washington, DC
20549. The SEC also maintains a worldwide website on the internet at
http:\\www.sec.gov which site contains registration statements, reports, proxy
and information statements regarding registrants that file electronically with
the SEC including the Company.
Company Information. The information concerning the Company contained
in this Offer to Purchase has been supplied by the Company for inclusion herein
or has been taken from or based upon publicly available documents on file with
the Commission and other publicly available information. Although the Parent and
the Purchaser do not have any knowledge that any such information is untrue,
neither the Purchaser nor the Parent takes any responsibility for the accuracy
or completeness of such information or for any failure by the Company to
disclose events that may have occurred and may affect the significance or
accuracy of any such information.
SECTION 8. CERTAIN INFORMATION CONCERNING THE PARENT AND THE PURCHASER
The Purchaser is a newly incorporated Texas corporation and a wholly
owned subsidiary of the Parent which to date has not conducted any business
other than in connection with the Offer and the Merger. The Parent is a Georgia
corporation. The principal executive offices of the Parent and the Purchaser are
located at 3130 Gateway Drive, Norcross, Georgia 30091.
Description of Business. The Parent develops, manufactures and sells a
complete line of reagents and systems used primarily by hospitals, clinical
laboratories and blood banks in a number of tests performed to detect and
identify certain properties of the cell and serum components of human blood
prior to blood transfusion. The Parent also develops automated blood bank
instruments.
The Parent has developed an automated, "walk-away", blood bank
analyzer, using the Parent's proprietary Capturer technology called the ABS2000.
The instrument is designed for patient testing in hospital transfusion
laboratories and is the first fully automated blood bank system that performs
blood compatibility tests currently done manually by blood bank technologists.
The Parent also has the North American distribution rights for blood bank
applications of the ROSYS Plato system manufactured by ROSYS Anthos Ag of
Switzerland. In 1998, the Parent began marketing an automated medical
instrument, previously referred to as the ABSHV, utilizing DYNEX Technologies,
Inc.'s 510(k) clearance for its product called the DIAS PLUS. The instrument
provides large blood donor centers and clinical reference laboratories automated
batch processing and positive sample identification of routine blood donor
tests, and uses the Company's solid phase Capture (registered trademark) assays.
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The Parent markets and sells its products to its over 4,000 customers
worldwide through sales personnel employed by the Parent and through
distributors located throughout the world. The Parent has sought to increase its
market share through the expansion of its product line to offer its customers a
full range of products for their reagent needs. The Company believes it can
increase its market share by marketing products based on its solid phase
technology.
Set forth below is a summary of certain consolidated financial
information with respect to the Parent and its subsidiaries excerpted or derived
from the information contained in the Parent's Annual Report on Form 10-K for
the year ended May 31, 1998 (the "Parent 10-K"). More comprehensive financial
information is included in the complete financial statements of the Parent
contained in the Parent 10-K on file with the Commission, and such financial
statements are incorporated herein by reference.
IMMUCOR, INC.
SELECTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
-----------------------------------------
INCOME STATEMENT DATA 1996 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
Net Sales $30,964,057 $35,653,617 $39,790,434
Operating Income 3,593,777 2,976,832 3,778,674
Net Income 2,772,635 1,839,914 2,068,773
BALANCE SHEET DATA (AT END OF PERIOD)
Working Capital $32,524,374 $31,868,041 $32,948,438
Total Assets 47,206,858 57,725,646 57,544,276
Long-Term Debt 3,908,795 10,665,658 8,911,727
Shareholders' Equity 39,345,250 41,220,868 42,432,550
PER SHARE:
Net Income per Common
Share (Basic) $ 0.35 $ 0.23 $ 0.26
Net Income Per Common
Share on a Fully Diluted
Basis $ 0.32 $ 0.22 $ 0.25
</TABLE>
Available Information. The Parent is subject to the informational
requirements of the Exchange Act and, in accordance therewith, files periodic
reports relating to its business, financial condition and other matters.
Information, as of particular dates, concerning the Parent's directors and
officers, their remuneration, stock options and other matters, the principal
holders of the Parent's securities and any material interest of such persons in
transactions with the Parent is required to be disclosed in proxy statements
distributed to the Parent's shareholders and filed with the SEC.
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<PAGE>
Such reports, proxy statements and other information may be inspected at the
SEC, and copies thereof should be obtainable from the Commission in the same
manner as is set forth with respect to the Company in Section 7. The SEC also
maintains a worldwide website on the internet at http:\\www.sec.gov which site
contains registration statements, reports, proxy and information statements
regarding registrants that file electronically with the SEC including the
Purchaser.
Beneficial Ownership of Company Securities, Contacts with the Company,
etc. Except as set forth in this Offer to Purchase, neither the Purchaser, the
Parent, nor, to the best knowledge of the Purchaser or the Parent, any of the
persons listed in Schedule I hereto, or any associate or majority owned
subsidiary of such persons, beneficially owns any equity security of the
Company, and neither the Purchaser, the Parent, nor, to the best knowledge of
the Purchaser or the Parent, any of the persons listed in Schedule I hereto, any
associate or majority owned subsidiary of such persons, or any of their
respective directors, executive officers or subsidiaries, has effected any
transaction in any equity security of the Company during the past 60 days. On
September 21, 1998, the Purchaser, the Parent and the Company entered into that
certain Stock Option Agreement of even date pursuant to which the Company
granted to Purchaser an option to purchase up to 19.9% of the outstanding stock
of the Company for $5.40 per share. In addition, on September 21,1998, the
Purchaser, the Parent and certain of the Company's stockholders entered into
that certain Shareholders Agreement of even date pursuant to which stockholders
holding approximately 15.6% of the outstanding shares of the Company (giving
effect to the exercise of all options held by such stockholders) granted to
Purchaser an a proxy and an option to purchase all of their shares of Company
stock for $5.40 per share.
Except as set forth in this Offer to Purchase, neither the Purchaser,
the Parent, nor, to the best knowledge of the Purchaser or the Parent, any of
the persons listed in Schedule I hereto, has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Company, including, without limitation, any contract,
arrangement, understanding or relationship concerning the transfer or the voting
of any securities of the Company, joint ventures, loan or option arrangements,
puts or calls, guaranties of loans, guaranties against loss or the giving or
withholding of proxies. Except as set forth in this Offer to Purchase, neither
the Purchaser, the Parent, nor, to the best knowledge of the Purchaser or the
Parent, any of the persons listed in Schedule I hereto, has had any transactions
with the Company or any of its executive officers, directors or affiliates that
would require reporting under the rules of the Commission.
Except as set forth in this Offer to Purchase, there have been no
contacts, negotiations or transactions between the Purchaser, the Parent, or, to
the best knowledge of the Purchaser or the Parent, any of the persons listed in
Schedule I hereto or any subsidiary of such persons, on the one hand, and the
Company or its executive officers, directors or affiliates, on the other hand,
concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, election of directors, or a sale or other transfer of
a material amount of assets that would require reporting under the rules of the
Commission.
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<PAGE>
SECTION 9. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by the Purchaser to purchase all of
the Shares pursuant to the Offer, fund payments for cancellation of options and
pay fees and expenses related to the Offer and the Merger is estimated to be
approximately $27 million. The Purchaser plans to obtain all funds needed for
the Offer and the Merger through a capital contribution from the Parent.
Parent plans to obtain a portion of the funds for such capital
contribution through a new credit facility (the "Credit Facility"). The Credit
Facility will provide a term loan of $20 million to finance the acquisition. The
Credit Facility will initially bear interest at LIBOR plus 120 basis points. The
Credit Facility will contain customary covenants that include maintenance of
certain financial ratios. The remainder of the funds for the capital
contribution will be provided from the Parent's cash holdings.
Although no definitive plan or arrangement for repayment of borrowings
under the Credit Facility has been made, Parent anticipates such borrowings will
be repaid with internally generated funds (including, if the Merger is
accomplished, those of the Company) and from other sources which may include the
proceeds of future refinancings. No decision has been made concerning the method
Parent will use to repay the borrowings under the Credit Facility. Such decision
will be made based on Parent's review from time to time of the advisability of
particular actions, as well as prevailing interest rates, financial and other
economic conditions and such other factors as Parent may deem appropriate.
SECTION 10. BACKGROUND OF THE OFFER
Mr. Edward L. Gallup, CEO of Parent, and Mr. David E. Hatcher, CEO of
the Company, have known each other for over 30 years. For at least the last ten
years, the two of them have discussed at various times the possibility of
business combinations, joint ventures, and other transactions between Parent and
the Company.
On March 12, 1996, a representative of Parent wrote to a representative
of the Company requesting information and materials regarding the Company. On
March 20, 1996, Parent received a confidentiality agreement and an executive
summary regarding the Company. The confidentiality agreement was never executed
and contacts were discontinued.
On July 16, 1997, Mr. Gallup and Mr. Hatcher met to discuss the merits
of a business combination between Parent and the Company.
On August 5, 1997, Parent wrote to the Company proposing a transaction
offering $5.40 per Share in cash for all outstanding Shares, subject to
completion of due diligence, approval of the respective Boards of Directors of
Parent and the Company, and satisfactory negotiation of the terms of a
definitive merger agreement, and requested a reply by August 15, 1997.
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<PAGE>
On August 7, 1997, the Board of Directors of the Company discussed the
written offer and established a committee to engage financial advisors and
report any results to the Board. The Company informed Parent of these procedures
and that it would not be able to respond by August 15, 1997.
On August 22, 1997, the Company engaged Rauscher Pierce Refsnes, Inc.
(which subsequently merged with Dain Bosworth Incorporated, which
simultaneously changed its name to Dain Rauscher Incorporated) as its
investment banker and financial advisor.
On October 20, 1997, representatives of Parent, the Company and Dain
Rauscher Wessels, a division of Dain Rauscher Incorporated ("Dain Rauscher
Wessels") met to discuss a potential transaction and a form of
confidentiality agreement. On October 28, 1997, Parent executed a
confidentiality and standstill agreement with the Company.
On November 5, 1997, representatives of Parent, the Company and Dain
Rauscher Wessels met to discuss a potential merger transaction and exchange
historical and projected financial information regarding the Company. The
Company also provided certain patent information for review by Parent's
attorneys.
On November 9, 1997, the Board of Directors of the Company met, and
representatives of Dain Rauscher Wessels addressed the Board. Given the
increase in the market price per share of the Company's Common Stock,
representatives of Dain Rauscher Wessels stated that Parent's offer was
inadequate, and they would have further discussions with Parent and its
representatives and notify the Board of any developments.
On February 4, 1998, Parent wrote to the Company formally withdrawing
its written offer of $5.40 per share presented on August 5, 1997.
In April 1998, Mr. Gallup and Mr. Hatcher met to discuss potential
business combinations between Parent and the Company.
On May 5, 1998, Parent retained TM Capital Corp. ("TM Capital") as
its investment banker and financial advisor in connection with a possible
acquisition of the Company. On May 13, 1998, representatives of TM Capital
and Dain Rauscher Wessels met to discuss a potential business combination
between Parent and the Company.
On May 18, 1998, Parent wrote to the Company proposing a transaction at
a premium price to be mutually agreed upon for all outstanding Shares on a cash
basis. Thereafter, Parent requested and the Company provided non-public
historical and projected financial information.
On June 4, 1998, Parent wrote to the Company proposing a transaction
offering $6.00 per Share for all outstanding Shares on a cash basis, subject
to the completion of due diligence, the negotiation of a definitive merger
agreement, and the approval of the Company's Board of Directors. Dain
Rauscher Wessels shortly thereafter informed TM Capital that the Company did
not consider this to be an adequate offer.
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<PAGE>
On June 12, 1998, TM Capital indicated to Dain Rauscher Wessels that Parent
would be prepared to consider a transaction offering $6.50 per Share for all
outstanding Shares on a cash basis, subject to completion of due diligence,
approval of the respective Boards of Directors of Parent and the Company, and
satisfactory negotiation of the terms of a definitive merger agreement. On
June 17, 1998, the Company received a letter from a third party indicating an
interest in a business combination at a premium over the stock price. The
Board of Directors of the Company met on June 17, 1998, to review the
proposals from Parent and the third party. The Company then informed Dain
Rauscher Wessels that it was not prepared at that time to accept Parent's
offer, and Dain Rauscher Wessels then informed TM Capital of the Board's
decision. Discussions between representatives of Parent, TM Capital,
the Company and Dain Rauscher Wessels continued.
On June 26, 1998, Mr. Hatcher met with representatives of the third
party and informed them that time was of the essence for any specific offer. The
representatives of the third party requested two weeks to discuss an offer with
its management and Board of Directors. On July 16, 1998, the Company received
written notice that the third party would not be able to present a viable offer
for the Company.
On July 21, 1998, representatives of Parent, TM Capital, the Company
and Dain Rauscher Wessels met and agreed to recommend a cash purchase price
of $6.50 per Share, subject to completion of due diligence, approval of the
respective Boards of Directors of Parent and the Company, and satisfactory
negotiation of the terms of a definitive merger agreement.
On July 27 and 28, 1998, representatives of Parent, TM Capital, the
Company, Dain Rauscher Wessels and their respective counsel met to conduct
business, financial and legal due diligence. Additional due diligence
information requests and exchanges between Parent and the Company continued
thereafter.
On August 11, 1998, the Company issued a press release which reported
results for the quarter ended June 30, 1998. The Company reported a decline in
net revenues, an operating loss and a net loss for the quarter. The Company also
stated that revenues from the newly launched ReACT product line were
materializing more slowly than had been forecasted.
On September 4, 1998, the Company issued a press release which declared
a 1/2-cent-per-share quarterly dividend payable October 20, 1998. This
represented a reduction from the Company's prior dividend rate of 2
1/2-cents-per-share per quarter.
On September 4, 1998, given the passage of time, the absence of an
agreement on a transaction, and the Company's desire to move forward with other
alternatives, the Company wrote to Parent and requested Parent withdraw its
offer. On September 4, 1998, Parent wrote to the Company declining to withdraw
the offer, and indicating that it was prepared to meet with the Company to
negotiate the final terms of a transaction.
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<PAGE>
On September 11, 1998, counsel to Parent provided the Company with a
draft of the Agreement and Plan of Merger (the "Merger Agreement"), and the
Company provided Parent with updated financial information.
On September 16, 1998, representatives of Parent, TM Capital, the
Company, Dain Rauscher Wessels and their respective counsel met to discuss
the results of Parent's due diligence review. At this meeting, Parent
submitted a revised proposal of $5.25 per share in cash for all outstanding
shares. After further discussion and negotiations, Parent proposed a cash
tender offer at $5.40 per Share for 100% of the Company's outstanding shares,
subject to negotiation of satisfactory terms of the Merger Agreement. The
Company held a special telephonic meeting with its Board of Directors later
that afternoon whereby the proposed transaction was approved subject to
negotiation of the Definitive Merger Agreement. Between September 16 and
September 20, 1998, negotiations were conducted as to the details of the
transaction and the Merger Agreement. During this period the Company and
Parent also negotiated the terms of the Stock Option Agreement between the
Company and Parent, and the Shareholders Agreement between Parent, Purchaser
and the Company's officers and directors.
On September 17, 1998, Parent's Board of Directors held a special
telephonic meeting with all directors present. Parent's Board of Directors
reviewed and unanimously approved the proposed terms of the Offer and Merger.
On September 20, 1998, the Board of Directors of the Company held a
special telephonic meeting, with all directors present. Representatives of
Dain Rauscher Wessels as well as the Company's counsel also participated on
the telephonic call. The Board of Directors reviewed the terms of the Merger
Agreement, the Stock Option Agreement and Shareholders Agreement. Company
counsel advised the directors of their fiduciary duties in connection with
their consideration of the Merger Agreement, the Stock Option Agreement, the
Offer and the Merger. After presenting their financial analyses of the
fairness of the consideration to be received in the Offer and the Merger,
Dain Rauscher Wessels delivered its oral opinion that, as of the date of such
opinion, the consideration of $5.40 per Share in cash to be received by the
holders of Shares in the Offer and Merger were fair to such holders from a
financial point of view. The Board of Directors then discussed the merits of
the proposed Offer and Merger. Following such discussion, the Board of
Directors unanimously approved the Merger Agreement and the Stock Option
Agreement, determined that the Offer and the Merger are fair to, and in the
best interests of, the shareholders of the Company, and resolved unanimously
to recommend that the shareholders of the Company tender their shares to the
Purchaser pursuant to the Offer.
Early on the morning of September 21, 1998, Parent, Purchaser and the
Company entered into the Merger Agreement, the Company and Parent entered into
the Stock Option Agreement, and Parent, Purchaser and the Company's officers and
directors entered into the Shareholders Agreement. The parties announced the
transaction later that morning pursuant to a joint press release.
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SECTION 11. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY
Purpose. The purpose of the Offer and the Merger is to enable the
Parent to acquire control of, and the entire equity interest in, the Company.
The Offer, as the first step in the acquisition of the Company, is intended to
facilitate the acquisition of all the Shares. The purpose of the Merger is to
acquire all Shares not purchased pursuant to the Offer or otherwise. Pursuant to
the Merger, each then outstanding Share (other than Shares owned by the Parent
or any of its subsidiaries) will be converted into the right to receive an
amount in cash equal to the price per Share paid by the Purchaser pursuant to
the Offer. Although it is the Purchaser's intention to consummate the Merger as
promptly as practicable, there can be no assurance that the Merger will be
consummated or, if consummated, of the timing thereof. In addition to approval
by the Company's Board of Directors, which occurred on September 20, 1998,
consummation of the Merger will require the affirmative vote of the holders of
at least 67% of the Shares. Alternatively, if the Purchaser purchases 90% or
more of the Shares, the Merger could be consummated without the approval of the
shareholders through a "short form" merger (described below in Section 12).
Plans for the Company. The Parent intends, upon acquiring control of
the Company, to continue its review and evaluation of the Company and its
subsidiaries and their respective assets, businesses, corporate structure,
capitalization, operations, properties, policies, management and personnel.
Generally, the Parent intends to integrate the Company's business with
the Parent's existing operations, with a view to achieving operating
efficiencies and cost savings while maintaining and enhancing customer service.
After the Parent conducts its review of the Company, it is possible that the
Parent might modify its current plans.
SECTION 12. THE MERGER
The Merger Agreement. The following is a summary of the Merger
Agreement. The summary is qualified in its entirety by reference to the Merger
Agreement, which has been filed as an exhibit to the Schedule 14D-1 and is
incorporated herein by reference.
The Tender Offer. Pursuant to the terms of the Merger
Agreement, the Purchaser has agreed to, and the Parent has agreed to
cause the Purchaser to, offer to purchase each outstanding Share of the
Company tendered pursuant to the Offer at a price of $5.40 per share,
net to the seller in cash, and to cause the Offer to remain open for
twenty business days (until October 23, 1998). If all of the Offer
Conditions are not satisfied on the Expiration Date then, provided that
Purchaser determines that all Offer Conditions are reasonably capable
of being satisfied and subject to SEC rules with respect to extension
of time periods, Purchaser may extend the Offer from time to time until
all Offer Conditions have been satisfied or waived. The Merger
Agreement also requires the Purchaser, upon the Expiration Date, as the
same may be extended, if
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all Offer Conditions have been satisfied, to accept Shares properly
tendered for purchase, subject to the Purchaser's right to extend the
Offer not more than ten (10) business days in the aggregate if less
than 90% of the Shares have been properly tendered, such 90% to be
calculated after giving effect to the conversion of any securities
convertible into Common Stock, and the exercise of any options,
warrants or other rights to acquire Common Stock.
The Company has agreed to include in its Tender Offer
Solicitation/Recommendation Statement filed with the Commission on
Schedule 14D-9 a recommendation by the Company's Board of Directors
that the Company's shareholders accept the Offer and tender their
Shares pursuant to the Offer. The Company's Board of Directors has
resolved to recommend that the Company's shareholders accept the Offer
and tender their Shares pursuant to the Offer and has received an
opinion from Dain Rauscher Wessels ("DRW") that, as of the date of such
opinion, the consideration to be received by the shareholders of the
Company pursuant to the Offer and the Merger is fair to such
shareholders from a financial point of view.
Board Designees. The Merger Agreement provides that promptly
following the purchase by the Purchaser pursuant to the Offer of that
number of Shares which, when aggregated with the Shares then owned by
the Parent and any of its affiliates, represents at least a majority of
the Shares then outstanding on a fully diluted basis, the Company will,
if requested by the Purchaser or the Parent, take all actions necessary
to cause persons designated by the Purchaser to become directors of the
Company so that the total number of directors so designated equals the
product, rounded up to the next whole number, of (i) the total number
of directors of the Company multiplied by (ii)the ratio of the number
of Shares beneficially owned by the Purchaser or its affiliates at the
time of such purchase over the number of Shares then outstanding. In
furtherance thereof, the Company will take whatever action is
necessary, including, but not limited to, amending the Company's bylaws
to increase the size of its Board of Directors, or using reasonable
efforts to secure the resignation of directors, or both, as is
necessary to permit that number of the Purchaser's designees to be
elected to the Company's Board of Directors; provided that, prior to
the Effective Time (as defined below), the Company's Board of Directors
will always have at least two members who are not officers, designees,
shareholders, or affiliates of the Purchaser (the "Independent
Directors"). All of the Independent Directors will be individuals who
are currently directors of the Company, except to the extent that no
such individuals wish to be directors. The Company's obligations to
appoint designees to its Board of Directors will be subject to Section
14(f)of the Exchange Act and Rule 14f-1 promulgated thereunder. The
Parent and the Purchaser will supply to the Company and will be solely
responsible for any information with respect to either of them and
their nominees, officers, directors, and affiliates required by Section
14(f) and Rule 14f-1. The Company will promptly take all actions
required pursuant to Section 14(f) and Rule 14f-1 in order to fulfill
these obligations and (provided that the Purchaser shall have provided
to the Company on a timely basis all information required to be
included in the Information Statement with respect to the Purchaser's
designees) will include in the Schedule 14D-9
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such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1. Following
the election or appointment of the Purchaser's designees, any amendment
to the Merger Agreement, any termination of the Merger Agreement by the
Company, any extension by the Company of the time for the performance
of any of the obligations of the Purchaser or the Parent under the
Merger Agreement, any recommendation to shareholders or any
modification or withdrawal of any such recommendation, the retention of
counsel and other advisors in connection with the transactions
contemplated hereby, or any waiver of any of the Company's rights under
the Merger Agreement will require the concurrence of a majority of the
Independent Directors, unless no individuals who are currently
directors of the Company wish to be directors.
The Merger. Pursuant to the terms of the Merger Agreement, the
Purchaser will be merged with and into the Company in accordance with
the Texas Business Corporation Act (the "TBCA"). As a result, the
separate existence of the Purchaser will cease and the Company will be
the surviving corporation (the "Surviving Corporation"). As soon as
practicable after satisfaction or waiver of all conditions to the
Merger set forth in the Merger Agreement, the parties will cause
articles of merger to be duly filed with the Secretary of State of the
State of Texas. The Merger will become effective when the articles of
merger are so filed and the Secretary of State of the State of Texas
issues a certificate of merger (the "Effective Time").
By virtue of the Merger, at the Effective Time: (i) each share
of common stock of the Purchaser then issued and outstanding will be
converted into one share of the Surviving Corporation; and (ii) each
share then issued and outstanding, except for Shares held by the
Company as treasury shares or owned by the Parent or any subsidiary of
the Parent (which Shares will be immediately canceled and no payment
will be made with respect thereto) will be converted into the right to
receive, without interest, an amount in cash equal to the price per
Share paid in the Offer (the "Merger Consideration"). Subject to the
right of shareholders to dissent from the Merger and require appraisal
of their Shares pursuant to the TBCA, from and after the Effective Time
all Shares will be canceled and retired and cease to exist and each
holder of a certificate representing any Shares immediately prior to
the Effective Time will thereafter cease to have any rights with
respect to such Shares, except the right to receive the Merger
Consideration therefor.
Until amended in accordance with applicable law, the articles
of incorporation and bylaws of the Purchaser in effect immediately
prior to the Effective Time will be the articles of incorporation and
bylaws of the Surviving Corporation after the consummation of the
Merger. Until successors are duly elected or appointed and qualified in
accordance with applicable law, from and after the Effective Time, the
directors and officers of the Purchaser immediately prior to the
Effective Time will be the directors and officers of the Surviving
Corporation after the consummation of the Merger.
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Stock Options. The Board of Directors of the Company (or, if
appropriate, any committee administering the Stock Option Plans (as
defined below)) shall adopt such resolutions or take such other actions
as are required to provide that (i) each outstanding stock option or
warrant to purchase shares of Company Stock (a "Stock Option")
heretofore granted under any employee stock option plan, stock option
or warrant plan for directors, or other incentive plan of the Company
(collectively, the "Stock Option Plans") outstanding immediately prior
to the consummation of the Offer, whether or not then exercisable,
shall be canceled immediately prior to the consummation of the Offer in
exchange for an amount in cash, payable at the time of such
cancellation, equal to the product of (y) the number of shares of
Company Stock subject to such Stock Option immediately prior to the
consummation of the Offer and (z) the excess of the price per share to
be paid in the Offer over the per share exercise price of such Stock
Option. All Stock Option Plans shall terminate as of the Effective Time
and the provisions in any other Company Benefit Arrangement (as defined
in the Merger Agreement) providing for the issuance, transfer or grant
of any capital stock of the Company or any interest in respect of any
capital stock of the Company shall be deleted as of the Effective Time,
and the Company shall ensure that following the Effective Time no
holder of a Stock Option or any participant in any Stock Option Plan
shall have any right thereunder to acquire any capital stock of the
Company, Parent or the Surviving Corporation.
Representations and Warranties of the Company. In the Merger
Agreement, the Company has made customary representations and
warranties to the Purchaser and the Parent, including, but not limited
to, representations and warranties relating to the following: the
organization and qualifications of the Company and its subsidiaries;
the authority of the Company to enter into and perform its obligations
under the Merger Agreement and carry out the related transactions;
required consents and approvals; the capitalization of the Company and
its subsidiaries; filings made by the Company with the Commission; the
accuracy of the Company's consolidated financial statements; the
absence of certain changes or developments since March 31, 1998;
litigation; necessary permits; product warranties and liabilities;
labor and employee benefit matters; taxes; FDA; intellectual property
rights; environmental matters; finders and investment bankers;
insurance; indemnification; board approval and recommendation;
shareholder approval; the opinion of its financial advisor; state
takeover statutes; documents supplied, filed or distributed by the
Company relating to the Offer; the Company's Rights Agreement; and real
and personal property.
Representations and Warranties of the Parent and the
Purchaser. The Parent and the Purchaser have also made customary
representations and warranties in the Merger Agreement, including, but
not limited to, representations and warranties relating to the
following: the incorporation of the Parent and the Purchaser; the
authority of each of the Parent and the Purchaser to enter into and
perform its obligations under the Merger Agreement and consummate the
related transactions; government approvals; filings made by the Parent
with the Commission; the accuracy of the Parent's consolidated
financial statements; litigation; shareholder approval;
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availability of sufficient funds to consummate the Offer; documents
supplied, filed or distributed by the Parent or the Purchaser relating
to the Offer; finders and investment bankers; and board approval.
Additional Agreements of the Company. In the Merger Agreement,
the Company has agreed that, except as contemplated or permitted by the
Merger Agreement or specifically disclosed in the schedules thereto, or
as otherwise approved in writing by the Parent, from the date of the
Merger Agreement until the time that the designees of the Purchaser
have been appointed to the Board of Directors of the Company, the
Company will conduct, and will cause its subsidiaries to conduct, their
respective businesses in the ordinary course consistent with past
practice. Throughout this same period of time (i)the Company will not
adopt or approve any change or amendment in its articles of
incorporation or bylaws; (ii)the Company will not, and will not permit
any of its subsidiaries to, merge, consolidate, or enter into a share
exchange with any other individual, corporation, partnership,
association, trust or other entity or organization, including a
government or political subdivision or any agency or instrumentality
thereof (a "Person"), sell, lease, license, mortgage, pledge or
otherwise dispose of any material assets, except (a) in the ordinary
course consistent with past practice or (b) transfers between the
Company and/or its wholly owned subsidiaries; (iii) the Company will
not declare, set aside, or pay any dividends or make any distributions
in respect of the Shares; (iv) the Company will not, and will not
permit any of its subsidiaries to, (a) issue, deliver, sell, encumber,
or authorize or propose the issuance, delivery, sale, or encumbrance
of, any capital stock or other securities of the Company or any capital
stock or other securities of its subsidiaries ("Company Subsidiary
Securities"), other than pursuant to the Company's Rights Agreement,
dated as of September 5, 1989, as amended, (the "Company Rights
Agreement"), and the issuance of Shares pursuant to the Parent Stock
Option for Company Options granted prior to the date hereof, (b) split,
combine, or reclassify any Shares or Company Subsidiary Securities, (c)
repurchase, redeem, or otherwise acquire any capital stock or other
voting securities of the Company or any voting Company Subsidiary
Securities, or (d) amend the terms of any outstanding voting
securities; (v) the Company will not, without the prior written consent
of the Parent, which consent shall not be unreasonably withheld or
delayed, make any commitment or enter into any contract or agreement
that is reasonably likely to be, individually or in the aggregate,
material to the Company and its subsidiaries taken as a whole except in
the ordinary course of business consistent with past practices; (vi)
except to the extent required by law or by existing written agreements
or plans disclosed in Company reports to the Commission or the Company
disclosure schedule, neither the Company nor any of its subsidiaries
will increase in any manner the compensation or fringe benefits of any
of its directors or officers (other than increases in the ordinary
course of business in the compensation or fringe benefits of any
officers who are not executive officers), pay any pension or retirement
allowance to any such director or officer, become a party to, amend, or
commit itself to any pension, retirement, profit-sharing,
welfare-benefit plan, or employment agreement with or for the benefit
of any such director or officer, or grant any severance or termination
pay or stay-in-place bonus to any such director or officer, or increase
the
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benefits payable under any existing severance or termination pay or
stay-in-place bonus policies; (vii) the Company will not, and will not
permit any of its subsidiaries to, make any material tax election or
settle or compromise any material federal, state, local or foreign tax
liability; and (viii) the Company will not agree to do any of the
foregoing.
In the Merger Agreement, the Company has further agreed that,
from the date of the Merger Agreement until the Effective Time, it will
not, and will use its best efforts to cause its subsidiaries and the
officers, directors, employees, and agents of the Company and its
subsidiaries not to, directly or indirectly, (i) take any action to
solicit, to initiate, or knowingly to encourage any good faith offer or
proposal for (x) a merger or other business combination involving the
Company or any of its subsidiaries and any Person (other than the
Parent, the Purchaser, or any subsidiary of either the Parent or the
Purchaser), (y) an acquisition by any Person (other than the Parent,
the Purchaser, or any subsidiary of either the Parent or the Purchaser)
of assets or earning power of the Company or any of its subsidiaries,
in one or more transactions, representing 25% or more of the
consolidated assets or earning power of the Company and its
subsidiaries, or (z) an acquisition by any Person (other than the
Parent, the Purchaser, or any subsidiary of either the Parent or the
Purchaser) of securities representing 20% or more of the voting power
of the Company or any of its subsidiaries (any of the events in (x),
(y) and (z) being a "Company Acquisition Proposal"), (ii) take any
action knowingly to facilitate (including, without limitation, amending
the Company Rights Agreement or redeeming the rights issued thereunder)
any Company Acquisition Proposal; (iii) engage or participate in
discussions or negotiations, or enter into agreements, with any Person
with respect to a Company Acquisition Proposal, or (iv) in connection
with a Company Acquisition Proposal, disclose any nonpublic information
relating to the Company or any of its subsidiaries or afford access to
the properties, books, or records of the Company or any of its
subsidiaries to any Person, except that the Company may take action
described in clause (ii), (iii), or (iv) if (A) such action is taken in
connection with an unsolicited Company Acquisition Proposal, (B) the
failure to take such action would not be consistent with the fiduciary
duties of the Board of Directors under applicable law (as advised by
legal counsel to the Company), and (C) in the case of the disclosure of
nonpublic information relating to the Company or any of its
subsidiaries in connection with a Company Acquisition Proposal.
Neither the Board of Directors of the Company nor any
committee thereof shall (i) withdraw or modify, or propose to withdraw
or modify, in a manner adverse to the Parent, the approval or
recommendation by such Board of Directors or such committee of the
Offer, the Merger, or the Merger Agreement, (ii) approve or recommend,
or propose publicly to approve or recommend, any Company Acquisition
Proposal, or (iii) cause the Company to enter into any letter of
intent, agreement in principle, acquisition agreement or other similar
agreement (each, an "Acquisition Agreement") related to any Company
Acquisition Proposal, except that, in any case set forth in clause (i),
(ii), or (iii) above, prior to the acceptance for payment of Shares
pursuant to the Offer, the Board of Directors of the Company may, in
response to an unsolicited Company
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Acquisition Proposal, (A) withdraw or modify its approval or
recommendation of the Offer, the Merger, or the Merger Agreement or (B)
approve or recommend any such Company Acquisition Proposal if, in the
case of any action described in clause (A) or (B), the failure to take
such action would not be consistent with the fiduciary duties of the
Board of Directors under applicable law (as advised by legal counsel to
the Company) and, in the case of the actions described in clause (B),
concurrently with such approval or recommendation the Company
terminates the Merger Agreement and promptly thereafter enters into an
Acquisition Agreement with respect to a Company Acquisition Proposal.
Merger Meeting; Proxy Statement. The Merger will be
consummated as soon as practicable after the purchase of Shares
pursuant to the Offer. If Purchaser is able to do so under the TBCA it
will consummate the Merger pursuant to the "short form" merger
provisions of the TBCA. If required by the TBCA in order to consummate
the Merger, as soon as practicable following the purchase of Shares
pursuant to the Offer, the Company will take all action necessary in
accordance with the TBCA and with the Company's articles of
incorporation and bylaws to convene a meeting of its shareholders to
approve the Merger and adopt the Merger Agreement (the "Merger
Meeting"). The Company's Board of Directors will recommend that the
Company's shareholders approve the Merger and adopt the Merger
Agreement, and will cause the Company to use all reasonable efforts to
solicit from the shareholders proxies to vote therefor, unless (i) such
recommendation would not be consistent with the fiduciary duties of the
Board of Directors under applicable law (as advised by legal counsel to
the Company) or (ii) the Merger Agreement is terminated in accordance
with its terms. The Company will, if required by law for the
consummation of the Merger, prepare and file with the Commission
preliminary proxy materials relating to the approval of the Merger and
the adoption of the Merger Agreement by the Company's shareholders, and
will file with the Commission revised preliminary proxy materials, if
appropriate, and definitive proxy materials in a timely manner as
required by the rules and regulations of the Commission. Except as
otherwise provided in clauses (i) and (ii) of this paragraph, the proxy
materials relating to the Merger Meeting will include the
recommendation of the Company's Board of Directors. The Parent will
vote, or cause to be voted, all Shares beneficially owned by it in
favor of the Merger.
Covenants of the Parent and the Purchaser. The Parent will use
all reasonable efforts to, without any lapse in coverage, either (i)
for at least four years after the Effective Time, provide directors'
and officers' liability insurance ("D&O Insurance") in respect of acts
or omissions occurring at or prior to the Effective Time covering each
such Person currently covered by the Company's D&O Insurance policy on
terms with respect to coverage and amount no less favorable than those
of such policy in effect on the date of the Merger Agreement; provided
that the Parent will not be required to pay per annum more than the
last premium (annualized) paid by the Company for such policy prior to
the date of the Merger Agreement, (ii) purchase tail insurance in
respect of the Company's existing D&O Insurance for four years for a
premium not to exceed the amount of the customary premium for such tail
insurance, or (iii) if such D&O
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Insurance or tail insurance is only available at premiums in excess of
the premiums set forth in clauses (i) or (ii), as applicable, then
purchase the highest level of D&O Insurance or tail insurance available
at such applicable premium.
Covenants of the Company, the Parent and the Purchaser.
Subject to the terms and conditions of the Merger Agreement, the
Company, the Parent and the Purchaser agree to use their best efforts
to take all actions and to do all things necessary or advisable under
applicable laws and regulations to consummate the transactions
contemplated by the Merger Agreement as promptly as practicable. If any
"fair price," "moratorium," or other similar statute or regulation
becomes applicable to the transactions contemplated by the Merger
Agreement, each of the parties and, subject to applicable fiduciary
duties, their respective Boards of Directors will use all reasonable
efforts to grant such approvals and take such actions as are necessary
so that the transactions contemplated by the Merger Agreement may be
consummated as promptly as practicable on the terms contemplated
thereby and otherwise act to minimize the effects of such statute or
regulation on the transactions contemplated by the Merger Agreement.
Conditions to the Merger. The obligations of the Company, the
Parent and the Purchaser to consummate the Merger are subject to the
satisfaction of the following conditions: (i) if required by applicable
law, the Merger has been approved, and the Merger Agreement has been
adopted, by the requisite vote of the Company's shareholders; (ii) the
Purchaser shall have purchased all validly tendered and not properly
withdrawn Shares in accordance with the Offer; and (iii) no provision
of any applicable domestic law or regulation and no judgment,
injunction, order or decree of a court or governmental agency or
authority of competent jurisdiction is in effect that has the effect of
making the Offer or the Merger illegal or otherwise restrains or
prohibits the purchase of Shares pursuant to the Offer or the
consummation of the Merger. The obligations of the Parent and the
Purchaser to consummate the Merger are further subject to satisfaction
or waiver of the following conditions: consummation of the Offer;
compliance by the Company with its obligation to cause persons
designated by the Parent to become directors of the Company in
accordance with the Merger Agreement; and the exercise of dissenters'
rights by Company Shareholders with respect to 10% or less of the
Shares.
Termination. The Merger Agreement may be terminated and the
Offer and the Merger may be abandoned at any time prior to the
Effective Time, notwithstanding any prior approval of the Merger and
adoption of the Merger Agreement by the Company's shareholders, (i) by
the mutual written consent of the Company, the Parent, and the
Purchaser; (ii) by either the Company or the Parent if the Merger has
not been consummated by March 30, 1999, provided that such right of
termination will not be available to any party that, at the time of
termination, is in material breach of any of its obligations under the
Merger Agreement; (iii) by either the Company or the Parent if any
applicable domestic law, rule, or regulation makes consummation of the
Merger illegal or if any judgment, injunction, order, or decree of a
court or governmental
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agency or authority of competent jurisdiction restrains or prohibits
the consummation of the Offer or Merger and such judgment, injunction,
order, or decree has become final and nonappealable; (iv) by either the
Company or the Parent if the requisite vote of the Company's
shareholders approving the Merger and adopting the Merger Agreement has
not been obtained at the Merger Meeting; provided that the right to so
terminate the Merger Agreement will not be available to the Parent if
it has not voted, or caused to be voted, all Shares beneficially owned
by it in favor of the Merger; (v) by either the Company or the Parent
if the Offer terminates without the purchase of Shares thereunder;
provided that the right to so terminate the Merger Agreement shall not
be available to (i) the Parent, if the Purchaser shall have breached
its obligations to conduct the tender offer in accordance with the
terms of the Merger Agreement, or (ii) any party whose willful failure
to perform any of its obligations under the Merger Agreement results in
the failure of any of the Offer Conditions or if the failure of any
such Offer Conditions results from facts or circumstances that
constitute a material breach of the representations or warranties of
such party under the Merger Agreement; or (vi) by the Company if the
Company receives an unsolicited Company Acquisition Proposal that the
Board of Directors determines in good faith, after consultation with
its legal and financial advisors, is likely to lead to a merger,
acquisition, consolidation, or similar transaction that is more
favorable to the shareholders of the Company than the transactions
contemplated by the Merger Agreement; provided that the Company has
given the Parent at least five business days notice of the material
terms of such Company Acquisition Proposal and such termination shall
not be effective until the Company has paid the Termination Fee (as
defined below), if and to the extent required under the terms of the
Merger Agreement.
In the event of any such termination of the Merger Agreement
and abandonment of the Offer and the Merger, no party to the Merger
Agreement (or any of its directors, officers, employees, agents, or
advisors) will have any liability or further obligation to any other
party to the Merger Agreement except (i) for obligations of the Company
to pay, under circumstances described below, the Termination Fee and
certain expenses of the Parent and the Purchaser, (ii) for obligations
arising out of the applicability of the Confidentiality Agreement to
information provided pursuant to the Merger Agreement, and (iii) for
liability for any breach of covenants or agreements of the Merger
Agreement.
Fees and Expenses. The Merger Agreement provides that, except
as set forth below, all costs and expenses incurred in connection with
the Merger Agreement will be paid by the party incurring the costs and
expenses.
Pursuant to the Merger Agreement, if (i) the Merger Agreement
is terminated by the Company because the Company receives an
unsolicited Company Acquisition Proposal that the Board of Directors of
the Company determines in good faith, after consultation with its legal
and financial advisors, is likely to lead to a merger, acquisition,
consolidation, or similar transaction that is more favorable to the
shareholders of the Company than the Merger, (ii) any Person publicly
makes a
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Company Acquisition Proposal and thereafter the Merger Agreement is
terminated because an insufficient number of Shares are tendered in the
Offer, or (iii) any Person publicly makes a Company Acquisition
Proposal and thereafter the Merger Agreement is terminated, prior to
the purchase of Shares by the Purchaser pursuant to the Offer, by the
Parent because (a) the Company has violated its obligations under the
terms of the Merger Agreement with respect to Company Acquisition
Proposals in any material respects and a Company Acquisition Proposal
was made by any Person after such violation or (b) the Board of
Directors of the Company did not publicly recommend in the Schedule
14D-9 that the Company's shareholders accept the Offer and tender their
Shares pursuant to the Offer and approve the Merger and adopt the
Merger Agreement, or the Board of Directors of the Company withdrew,
modified, or changed such recommendation in any manner materially
adverse to the Parent, then the Company will reimburse the Parent and
the Purchaser for up to $500,000 of the reasonable documented
out-of-pocket expenses and fees actually incurred by the Parent and the
Purchaser in connection with the transactions contemplated by the
Merger Agreement prior to the termination of the Merger Agreement,
including, without limitation, all reasonable fees and expenses of
counsel, financial advisors, accountants, and environmental and other
experts and consultants to the Parent and the Purchaser ("Transaction
Costs").
If (x) the Merger Agreement is terminated by the Company as
set forth in clause (i) of the immediately preceding paragraph, (y) any
Person publicly makes a Company Acquisition Proposal, thereafter the
Merger Agreement is terminated as set forth in clause (ii) of the
immediately preceding paragraph, and within 12 months after termination
the Company agrees to or consummates any Company Acquisition Proposal,
or (z) any Person publicly makes a Company Acquisition Proposal and
thereafter the Merger Agreement is terminated as set forth in clause
(iii) of the immediately preceding paragraph, then, in addition to
reimbursing the Parent and the Purchaser for their Transaction Costs,
the Company has agreed to pay the Parent a fee of $1,250,000 (the
"Termination Fee").
Waiver and Amendment. Subject to applicable law and the terms
of the Merger Agreement, any provision of the Merger Agreement may be
amended or waived prior to the Effective Time if, and only if, such
amendment or waiver is in writing and duly executed and delivered, in
the case of an amendment, by each of the parties to the Merger
Agreement or, in the case of a waiver, by the party against whom the
waiver is to be effective.
Required Vote. In general, under Texas law, the Merger requires the
approval of the Company's Board of Directors and the approval by the holders of
two-thirds of all outstanding Shares.
Accordingly, if the Purchaser acquires more than two-thirds of the
outstanding Shares pursuant to the Offer, the Purchaser would have the voting
power to approve the Merger without the vote of any other shareholders and could
effect the Merger by so voting and by
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action of the Board of Directors of the Purchaser, the Company's Board of
Directors having already approved the Merger on September 20, 1998. This will be
the case if the Minimum Condition is satisfied. In the Merger Agreement, the
Purchaser has agreed to vote in favor of the Merger all of the Shares purchased
in the Offer.
Further, Texas law provides that, if a parent corporation owns 90% or
more of each class of outstanding shares of a subsidiary, the parent corporation
may merge the subsidiary into itself, or merge itself into the subsidiary, by
action of the board of directors of the parent corporation and without action or
vote by the shareholders of either corporation. Accordingly, if the Purchaser
owns 90% or more of the outstanding Shares after consummation of the Offer, a
"short form" merger could be effected by action of the Purchaser's Board of
Directors and without the approval of the Company's shareholders.
Dividends and Distributions. The Company has agreed that, from the date
of the Merger Agreement until the time that the designees of the Purchaser have
been appointed to the Board of Directors of the Company, the Company will not
declare, set aside, or pay any dividends or make any distributions on the
Shares.
Appraisal Rights. Shareholders do not have appraisal rights as a result
of the Offer. However, if the Merger is consummated, shareholders of the Company
at the time of the Merger who comply with all statutory requirements and do not
vote in favor of the Merger will have the right under the TBCA to demand an
appraisal of, and receive payment in cash of the fair value of, their Shares
outstanding immediately prior to the Effective Time in accordance with Article
5.13 of the TBCA.
Under the TBCA, shareholders who properly demand appraisal and
otherwise comply with the applicable statutory procedures will be entitled to
receive a judicial determination of the fair value of their Shares (exclusive of
any element of value arising from the accomplishment or expectation of the
Merger) and to receive payment of such fair value in cash. Any such judicial
determination of the fair value of such Shares could be based upon
considerations other than or in addition to the price paid in the Offer and the
Merger and the market price of the Shares.
THE FOREGOING SUMMARY OF THE RIGHTS OF SHAREHOLDERS DOES NOT PURPORT TO
BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY SHAREHOLDERS
DESIRING TO EXERCISE ANY AVAILABLE APPRAISAL RIGHTS. THE PRESERVATION AND
EXERCISE OF APPRAISAL RIGHTS REQUIRE STRICT ADHERENCE TO THE APPLICABLE
PROVISIONS OF TEXAS LAW.
"Going Private" Transactions. The Commission has adopted Rule 13e-3
under the Exchange Act which is applicable to certain "going private"
transactions and which may under certain circumstances apply to the Merger.
However, Rule 13e-3 would not apply to the Merger if (i) the Shares are
deregistered under the Exchange Act prior to the Merger or other business
combination or (ii) the Merger or other business combination is consummated
within
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one year after the purchase of the Shares pursuant to the Offer and the amount
paid per Share in the Merger or other business combination is at least equal to
the amount paid per Share in the Offer. If applicable, Rule 13e-3 requires,
among other things, that certain financial information concerning the fairness
of the proposed transaction and the consideration offered to minority
shareholders in such transaction be filed with the SEC and disclosed to
shareholders prior to the consummation of the transaction.
SECTION 13. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other term or provision of the Offer, the Purchaser
will not be required to accept for payment or, subject to any applicable rules
and regulations of the Commission, including Rule 14e-1(c) under the Exchange
Act (relating to a bidder's obligation to pay for or return tendered shares
after the termination or withdrawal of the Offer), to pay for any Shares not
theretofore accepted for payment or paid for pursuant to the Offer, if (1) there
are not validly tendered and not properly withdrawn prior to the expiration of
the Offer that number of Shares which, when aggregated with the Shares then
owned by the Parent and any of its affiliates, represents at least 67% of the
Shares then outstanding on a fully diluted basis (the "Minimum Condition") or
(2) at any time on or after the date of the Merger Agreement and at or before
the time that any Shares are accepted for payment any of the following
conditions exist:
(a) Any provision of any applicable domestic law or
regulation, or any judgment, injunction, order, or decree of a court or
governmental agency or authority of competent jurisdiction, is in
effect that (i) makes the Offer or the Merger illegal or otherwise,
directly or indirectly or prohibits or materially restrains the making
of the Offer, the acceptance for payment of, payment for, or ownership,
directly or indirectly, of some or all of the shares of Company Stock
by Purchaser or Parent, (ii) prohibits or materially limits the
ownership or operation by the Company or any of its Subsidiaries that
owns a material portion of the business and assets of the Company and
its Subsidiaries, taken as a whole, or by Parent, Purchaser, or any
Subsidiaries of Parent of all or a material portion of the business or
assets of the Company and its Subsidiaries, taken as a whole, or of
Parent and its Subsidiaries, taken as a whole, as a result of the
Offer, the Merger, or the other transactions contemplated by the
Agreement, or (iii) imposes material limitations on the ability of
Purchase or Parent to acquire, hold, or exercise full rights of
ownership of the shares of Company Stock, including but not limited to
the right to vote any shares of Company Stock acquired or owned by
Purchaser or Parent on all matters properly presented to the
stockholders of the Company, including but not limited to the approval
of the Agreement and approval of the Merger and the right to vote any
shares of capital stock of any Subsidiaries of the Company (other than
immaterial Subsidiaries), or would impose any such limitations with
respect to the Common Stock of the Surviving Corporation after the
Merger.
(b) Any consents, authorizations, orders, and approvals of, or
filings or registrations with, any governmental commission, board, or
other regulatory body
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required in connection with the execution, delivery, and performance of
the Agreement has not been obtained or made, except (i) the filing of
appropriate articles of merger in accordance with applicable law,
including Texas Law, (ii) compliance with applicable requirements of
the Exchange Act, and (iii) where Parent reasonably concludes that the
failure to obtain or make any such consent, authorization, order,
approval, filing, or registration (A) is not likely to have,
individually or in the aggregate, a material adverse effect on the
financial condition, results of operations, or business of the Company
and its Subsidiaries before or after the Merger, taken as a whole (a
"Company Material Adverse Effect"), or on the financial condition,
results of operations, or business of Parent and Purchaser before or
after the Merger, taken as a whole (a "Parent Material Adverse
Effect"), and (B) would not render the Offer or the Merger illegal or
provide a reasonable basis to conclude that the parties or their
affiliates or any of their respective directors or officers will be
subject to a risk of criminal liability.
(c) Any Third Party Consents have not been obtained except
where Parent reasonably concludes that the failure to obtain any Third
Party Consents is not likely to have, individually or in the aggregate,
a Company Material Adverse Effect.
(d) The Company has failed to perform in any material respect
any of its agreements, covenants, or other obligations to be performed
by it under the Agreement at or prior to such time, or any
representations and warranties of the Company contained in the
Agreement are not true in any material respect at such time as if made
at and as of such time (unless the representation or warranty is made
as of a specified date, in which case such representation or warranty
is not true as of such date). For purposes of determining whether this
condition has been satisfied, all qualifications in the representations
and warranties as to the knowledge of the Company will be disregarded.
(e) There shall have occurred any event or any development
that, insofar as reasonably can be foreseen, is reasonably likely to
result in a Company Material Adverse Effect.
(f) There shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on any national
securities exchange or in the United States, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in
the United States, (iii) any limitation (whether or not mandatory) by
any U.S. government or governmental, administrative or regulatory
authority or agency, on, or any other event that materially adversely
affects, the extension of credit by banks or other lending
institutions, (iv) a commencement or a war or armed hostilities or
other national or international calamity directly or indirectly
involving the United States which would reasonably be expected to have
a Company Material Adverse Effect, a Parent Material Adverse Effect or
materially adversely affect (or materially delay) the consummation of
the Offer or (v) in the case of any of the
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foregoing existing at the time of the execution of the Agreement, a
material acceleration or worsening thereof which acceleration of
worsening is reasonably expected to have a Company Material Adverse
Effect, a Parent Material Adverse Effect or to materially adversely
affect the consummation of the Offer.
(g) It shall have been publicly disclosed that beneficial
ownership (determined for the purposes of this paragraph as set forth
in Rule 13d-3 promulgated under the Exchange Act) of 20% or more the
Company Stock, before any potential dilution related to such beneficial
ownership, has been acquired by any corporation (including the Company
or any of its subsidiaries or affiliates), partnership, person or other
entity or group (as defined in Section 13(d)(3) of the Exchange Act),
other than Parent or any of its affiliates, or (ii) (A) the Board of
Directors of the Company or any committee thereof shall have withdrawn
or modified in a manner adverse to Parent or Merger Sub the approval or
recommendation of the Offer, the Merger or the Agreement and, within
ten business days of taking and disclosing to its stockholders the
aforementioned position, shall not have publicly reconfirmed its
recommendation of the Offer, the Merger or the Agreement; (B) the Board
of Directors of the Company or any committee thereof shall have
approved or recommended any takeover proposal or any other acquisition
of Company Stock other than the Offer and the Merger; (C) any such
corporation, partnership, person or other entity or group shall have
entered into a definitive agreement or an agreement in principle with
the Company with respect to a tender offer or exchange offer for any
Company Stock or a merger, consolidation or other business combination
with or involving the Company or any of its Subsidiaries or (D) the
Board of Directors of the Company or any committee thereof shall have
resolved to do any of the foregoing.
(h) The Agreement has been terminated in accordance with
its terms.
The foregoing conditions are for the sole benefit of the Purchaser and
the Parent and may be waived by the Purchaser in whole or in part at any time
and from time to time in its sole discretion. The failure by the Purchaser at
any time to exercise any of the foregoing rights will not be deemed a waiver of
any such right, the waiver of any such right with respect to particular facts
and circumstances will not be deemed a waiver with respect to any other facts
and circumstances and each such right will be deemed an ongoing right that may
be asserted at any time and from time to time.
SECTION 14. CERTAIN LEGAL MATTERS
General. Except as otherwise disclosed herein, based on information
furnished by the Company or filed by the Company with the Commission, neither
the Purchaser nor the Parent is aware of (i) any license or regulatory permit
that appears to be material to the business of the Company and its subsidiaries,
taken as a whole, that might be adversely affected by the acquisition of Shares
by the Purchaser pursuant to the Offer or the Merger or (ii) any approval
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or other action, by any governmental, administrative or regulatory agency or
authority, domestic, foreign or supranational, that would be required for the
acquisition or ownership of Shares by the Purchaser as contemplated herein. The
Purchaser's obligation under the Offer to accept for payment and pay for Shares
is subject to certain conditions. See Section 13.
Certain State Laws. Article 13.03 of the TBCA provides that, except in
certain circumstances, a Texas corporation may not engage in a "business
combination" with an "interested" shareholder for three years following the date
on which the shareholder became an "interested" shareholder unless, among other
things, prior to such date the board of directors of the corporation approved
either the "business combination" or the transaction that resulted in the
shareholder becoming an "interested" shareholder. If the Minimum Condition is
satisfied, the Purchaser will become an "interested" shareholder of the Company
when it purchases Shares pursuant to the Offer, and the Merger will be a
"business combination." However, the Board of Directors of the Company has
approved both the Offer and the Merger, and, therefore, the Company will not
need to wait for three years before completing the Merger.
The Company, directly or through subsidiaries, conducts business in a
number of states throughout the United States, some of which have enacted
takeover laws. The Purchaser cannot be certain that these laws will not apply to
the Offer and has not complied with any such laws. Should any person seek to
apply any state takeover law, the Purchaser will take such action as it then
deems appropriate, which may include challenging the validity or applicability
of any such statute in appropriate court proceedings. In the event it is
asserted that one or more state takeover laws is applicable to the Offer and the
Merger, and an appropriate court does not determine that it is inapplicable or
invalid as applied to the Offer, the Purchaser might be required to file certain
information with, or receive approvals from, the relevant state authorities. In
addition, if enjoined, the Purchaser might be unable to accept for payment any
Shares tendered pursuant to the Offer, or be delayed in continuing or
consummating the Offer. In such case, the Purchaser may not be obligated to
accept for payment any Shares tendered. See Section 13.
Foreign Approvals. The Company owns property in the Netherlands. In
connection with the acquisition of the Shares pursuant to the Offer, the laws of
the Netherlands may require the filing of information with, or the obtaining of
the approval of, governmental authorities in such countries and jurisdictions.
The government in the Netherlands might attempt to impose additional conditions
on the Company's operations conducted in such countries and jurisdictions as a
result of the acquisition of the Shares pursuant to the Offer or the Merger.
There can be no assurance that the Purchaser will be able to cause the Company
or its subsidiaries to satisfy or comply with such laws or that compliance or
non-compliance will not have adverse consequences for the Company or any
subsidiary after purchase of the Shares pursuant to the Offer or the Merger.
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SECTION 15. FEES AND EXPENSES
TM Capital Corp. is acting as Dealer Manager in connection with the
Offer and serving as exclusive financial advisor to the Parent in connection
with the Offer and the Merger. Pursuant to the terms of Dealer Manager's
engagement, the Parent has agreed to pay Dealer Manager a fee of $430,000 in
connection with the Offer and the Merger. In addition, the Parent has agreed to
reimburse Dealer Manager for its reasonable travel and out-of-pocket expenses,
including, without limitation, fees and disbursements of its counsel, incurred
in connection with the Offer and the Merger or otherwise arising out of Dealer
Manager's engagement, and has also agreed to indemnify Dealer Manager and
certain related parties against certain liabilities and expenses, including,
without limitation, certain liabilities under the federal securities laws,
arising out of Dealer Manager's engagement.
Beacon Hill Partners, Inc. has been retained by the Purchaser as
Information Agent in connection with the Offer. The Information Agent may
contact holders of Shares by mail, telephone, telex, telegraph and personal
interview and may request brokers, dealers and other nominee shareholders to
forward material relating to the Offer to beneficial owners of Shares. The
Purchaser will pay the Information Agent reasonable and customary compensation
for all such services in addition to reimbursing the Information Agent for
reasonable out-of-pocket expenses in connection therewith. The Purchaser has
agreed to indemnify the Information Agent against certain liabilities and
expenses in connection with the Offer, including, without limitation, certain
liabilities incurred by reason of a material misstatement or omission.
Harris Trust Company of New York has been retained as the Depositary.
The Purchaser will pay the Depositary reasonable and customary compensation for
its services in connection with the Offer, will reimburse the Depositary for its
reasonable out-of-pocket expenses in connection therewith and will indemnify the
Depositary against certain liabilities and expenses in connection therewith,
including, without limitation, certain liabilities under the federal securities
laws.
Except as set forth above, neither the Parent nor the Purchaser will
pay any fees or commissions to any broker, dealer or other person for soliciting
tenders of Shares pursuant to the Offer. Brokers, dealers, commercial banks and
trust companies and other nominees will, upon request, be reimbursed by the
Parent or the Purchaser for customary clerical and mailing expenses incurred by
them in forwarding offering materials to their customers.
SECTION 16. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the securities,
blue sky or other laws of such jurisdiction.
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Neither the Purchaser nor the Parent is aware of any jurisdiction in which the
making of the Offer or the acceptance thereof would not be in compliance with
the laws of such jurisdiction. To the extent the Purchaser or the Parent becomes
aware of any state law that would limit the class of offerees in the Offer, the
Purchaser will amend the Offer and, depending on the timing of such amendment,
if any, will extend the Offer to provide adequate dissemination of such
information to such holders of Shares prior to the expiration of the Offer. In
any jurisdiction the securities, blue sky or other laws of which require the
Offer to be made by a licensed broker or dealer, the Offer is being made on
behalf of the Purchaser by the Dealer Manager or one or more registered brokers
or dealers licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR THE PARENT NOT CONTAINED HEREIN OR
IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
THE PURCHASER AND THE PARENT HAVE FILED WITH THE COMMISSION A TENDER
OFFER STATEMENT ON SCHEDULE 14D-1 PURSUANT TO RULE 14D-3 UNDER THE EXCHANGE ACT,
TOGETHER WITH EXHIBITS, FURNISHING CERTAIN ADDITIONAL INFORMATION WITH RESPECT
TO THE OFFER, AND MAY FILE AMENDMENTS THERETO. SUCH SCHEDULE 14D-1 AND ANY
AMENDMENTS THERETO, INCLUDING EXHIBITS, MAY BE INSPECTED AND COPIES MAY BE
OBTAINED IN THE MANNER SET FORTH IN SECTION 7 WITH RESPECT TO THE COMPANY
(EXCEPT THAT SUCH MATERIAL WILL NOT BE AVAILABLE AT THE REGIONAL OFFICES OF THE
COMMISSION).
GAMMA ACQUISITION CORPORATION
September 25, 1998
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF THE PARENT AND THE PURCHASER
The Parent. Set forth below are the name, business address and present
principal occupation or employment, and material occupations, positions, offices
or employments for the past five years of each director and executive officer of
the Parent. Except as otherwise noted, the business address of each such person
is 3130 Gateway Drive, Norcross, Georgia 30091, and each such person is a United
States citizen. In addition, except as otherwise noted, each director and
executive officer of the Parent has been employed in his or her present
principal occupation listed below during the last five years. Directors of the
Parent are indicated by an asterisk.
PRINCIPAL OCCUPATION OR EMPLOYMENT,
NAME 5-YEAR EMPLOYMENT HISTORY
Edward L. Gallup Mr. Gallup has been chairman of the Board of
Directors, President and Chief Executive
Officer of Parent since its founding in
1982. Mr. Gallup has worked in the blood
banking business for over 33 years.
Ralph A. Eatz Mr. Eatz, who has been working in the blood
banking reagent field for over 29 years, has
been a director and Vice President-
Operations of the Parent since its founding,
and Senior Vice President-Operations since
December 1988.
Daniel T. McKeithan Mr. McKeithan has been a director of the
Parent since February 28, 1983. Mr.
McKeithan also has 29 years experience in
pharmaceutical and diagnostic products with
Johnson and Johnson, Inc., including Vice
President-manufacturing of the Ortho
Diagnostic Systems division. Mr. McKeithan's
business address is 8539 Via De Los Libros,
Scottsdale, Arizona 85258.
Didier L. Lanson Mr. Lanson has been a director of the Parent
since October 24, 1989. Since September
1992, he has served as Vice President,
Europe, of syStemix International,
subsidiary of syStemix, Inc., a publicly
traded biotechnology company recently
acquired by Novartis Biotech Holding
Corporation, a wholly owned subsidiary of
Novartis Inc., and primarily engaged in the
development of cellular processes and
cellular products. Mr. Lanson is a citizen
of
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France. Mr. Lanson's business address is
1651 Page Mill Road, Palo Alto, California
94305.
Dr. Gioacchino De Chiricio Dr. De Chiricio has been President of
Immucor Italia S.r.l. since February 1994.
From 1989 until 1994, he was employed in the
United States by Ortho Diagnostic Systems,
Inc., a Johnson and Johnson Company, as
General Manager, Immunocytometry, with
worldwide responsibility. Mr. De Chiricio is
a citizen of Italy. Mr. De Chiricio's
business address is 20090 Noverasco Di
Opera, Via Sporting Mirasole, 4, Italy.
G. Bruce Papesh Mr. Papesh is the co-founder of Dart, Papesh
& Co., a Lansing, Michigan based company
that provides investment consulting and
other financial services. He has served as
President of Dart, Papesh & Co. Inc., since
1987. Mr. Papesh has over 27 years of
experience in investment services while
serving in stock broker, consulting and
executive management positions. He provides
investment services to Kenneth B. Dart and
Robert C. Dart and their affiliates. Mr.
Papesh also serves as a Director and as
Secretary of Neogen Corporation, an
agricultural biotechnology company. Mr.
Papesh's business address is 501 South
Capital Avenue, Suite 111, Lansing, Michigan
48933.
Dennis M. Smith, Jr. MD. Dr. Smith has served as Director of the
Parent since April 17, 1998. Dr. Smith is
the Chair of the Section of Pathology and
the Director of Laboratories at Columbia
Memorial Hospital in Jacksonville, Florida.
In addition to these duties, Dr. Smith is a
member of the Board of Directors of Medical
Equity Partners, Jacksonville, Florida, Vice
President of AmeriPath, Inc. Dr. Smith is a
past president of the American Association
of Blood Banks and is currently Chairman of
the Board of Trustees of the National Blood
Foundation. He has over 19 years of
experience in the medical field. Mr. Smith's
business address is 3349 University
Boulevard South, Jacksonville, Florida
32216.
Joseph E. Rosen Mr. Rosen has served as a Director of the
Parent April 20, 1998. Mr. Has been with
Sera-Tec Biologicals since its inception in
1969 and has served as President for the
past 15 years. Mr. Rosen is currently
serving as Chairman of the American Blood
Resources Association. He has over
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25 years of experience in the blood banking
industry. Mr. Rosen's business address is
223 North Center Drive, North Brunswick, New
Jersey 08902.
The Purchaser. The name and position with the Purchaser of each
director and executive officer of the Purchaser are set forth below. The
business address, present principal occupation or employment, five-year
employment history and citizenship of Mr. Gallup is set forth above.
NAME POSITION WITH THE PURCHASER
Edward L. Gallup President, Chief Executive Officer and Sole
Director
Steven C. Ramsey Vice President, Treasurer and Secretary. Mr.
Ramsey has been Chief Financial Officer of
Parent since April, 1998. Prior to joining
Parent, Mr. Ramsey served as Vice President
and Chief Financial Officer of International
Murex Technologies Corporation. Mr. Ramsey's
business address is 3130 Gateway Drive,
Norcross, Georgia 30091.
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Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each shareholder of the
Company or such shareholder's broker, dealer, commercial bank, trust company or
other nominee to the Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
Harris Trust Company of New York
By Mail: By Overnight Courier: By Hand:
Wall Street Station Wall Street Station Receive Window
P.O. Box 1023 88 Pine Street, 19th Floor Wall Street Station
New York, NY 10268-1023 New York, NY 10005 88 Pine Street, 19th Floor
New York, NY 10005
By Facsimile Transmission:
(for Eligible Institutions
Only)
(212) 706-7636 or 7637
For Information Telephone
(call collect):
(212 701-7624
Questions and requests for assistance may be directed to the
Information Agent or the Dealer Manager at their respective addresses or
telephone numbers set forth below. Additional copies of this Offer to Purchase,
the Letter of Transmittal and all other tender offer materials may be obtained
from the Information Agent as set forth below, and will be furnished promptly at
the Purchaser's expense. You may also contact your broker, dealer, commercial
bank, trust company or other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
Beacon Hill Partners, Inc.
90 Broad Street
New York, New York 10004
(212) 843-8500
or
Toll Free (800) 566-9061
The Dealer Manager for the Offer is:
[TM Capital Corp. Logo]
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<PAGE>
One Battery Park Plaza, 35th Floor
New York, New York 10004
(212) 809-1360
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<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
OF
GAMMA BIOLOGICALS, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED SEPTEMBER 25, 1998
BY
GAMMA ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
IMMUCOR, INC.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, EASTERN TIME, ON
FRIDAY, OCTOBER 23, 1998, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
THE DEPOSITARY FOR THE OFFER IS:
Harris Trust Company of New York
<TABLE>
<S> <C> <C>
BY MAIL: BY OVERNIGHT COURIER: BY HAND:
Wall Street Station Wall Street Plaza Wall Street Plaza
P.O. Box 1023 88 Pine Street, 19th Floor 88 Pine Street, 19th
New York, NY 10268-1023 New York, NY 10005 Floor
New York, NY 10005
</TABLE>
By Facsimile Transmission:
(for Eligible Institutions Only)
(212) 701-7636 or 7637
For Information Telephone
(call collect):
(212) 701-7624
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER
OF TRANSMITTAL WHERE INDICATED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9
PROVIDED BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by shareholders either if
certificates evidencing Shares (as defined below) are to be forwarded herewith
or if delivery of Shares is to be made by book-entry transfer to the
Depositary's account at The Depository Trust Company (each a "Book-Entry
Transfer Facility" and collectively, the "Book-Entry Transfer Facility")
pursuant to the book-entry transfer procedure described in Section 2 of the
Offer to Purchase (as defined below). Delivery of documents to a Book-Entry
Transfer Facility does not constitute delivery to the Depositary.
Shareholders whose certificates evidencing Shares ("Share Certificates") are
not immediately available or who cannot deliver their Share Certificates and all
other documents required hereby to the
1
<PAGE>
Depositary prior to the Expiration Date (as defined in Section l of the Offer to
Purchase) or who cannot complete the procedure for delivery by book-entry
transfer on a timely basis and who wish to tender their Shares must do so
pursuant to the guaranteed delivery procedure described in Section 2 of the
Offer to Purchase. See Instruction 2.
/ / CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution ______________________________________________
Check Box of Applicable Book-Entry Transfer Facility:
(CHECK ONE)
<TABLE>
<C> <S> <C> <C>
/ / [ ] / / [ ]
Account Number Transaction Code Number
</TABLE>
/ / CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING.
PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY:
Name(s) of Registered Holder(s) ____________________________________________
Window Ticket No. (if any) _________________________________________________
Date of Execution of Notice of Guaranteed Delivery _________________________
Name of Institution which Guaranteed Delivery ______________________________
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
-------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED
HOLDER(S) (PLEASE FILL IN, IF BLANK, EXACTLY TOTAL NUMBER
AS NAME(S) SHARE CERTIFICATE(S) AND OF SHARES
SHARE(S)TENDERED APPEAR(S) ON SHARE SHARE EVIDENCED BY
CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NUMBER SHARES CERTIFICATE SHARE OF
NECESSARY) TENDERED** NUMBERS(S)* CERTIFICATE(S)*
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
TOTAL SHARES
- ---------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by shareholders delivering Shares by book-entry
transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by
each Share Certificate delivered to the Depositary are being tendered
hereby. See Instruction 4.
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL
CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Gamma Acquisition Corporation, a Texas
corporation ("Purchaser") and a wholly owned subsidiary of Immucor, Inc., a
Georgia corporation ("Parent"), the above-described shares of common stock, par
value $.10 per share, and the associated common stock purchase rights (together
with the rights, the "Shares"), of Gamma Biologicals, Inc., a Texas corporation
(the "Company"), pursuant to Purchaser's offer to purchase all outstanding
Shares, at $5.40 per Share, net to the seller in cash, without interest thereon
(the "Offer Price"), upon the terms and subject to the conditions set forth in
the Offer to Purchase, dated September 25, 1998 (the "Offer to Purchase"),
receipt of which is hereby acknowledged, and in this Letter of Transmittal
(which, as amended from time to time, together constitute the "Offer"). The
undersigned understands that Purchaser reserves the right to transfer or assign,
in whole or from time to time in part, to one or more of its affiliates, the
right to purchase all or any portion of the Shares tendered pursuant to the
Offer.
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith, in accordance with the terms of the Offer (including, if the
Offer is extended or amended, the terms and conditions of such extension or
amendment), the undersigned hereby sells, assigns and transfers to, or upon the
order of, Purchaser all right, title and interest in and to all the Shares that
are being tendered hereby and all dividends, distributions (including, without
limitation, distributions of additional Shares and other securities) and rights
declared, paid or distributed in respect of such Shares (collectively,
"Distributions"), and irrevocably appoints the Depositary the true and lawful
agent and attorney-in-fact of the undersigned with respect to such Shares and
all Distributions, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (i) deliver
Share Certificates evidencing such Shares and all Distributions, or transfer
ownership of such Shares and all Distributions on the account books maintained
by a Book-Entry Transfer Facility, together, in either case, with all
accompanying evidences of transfer and authenticity, to or upon the order of
Purchaser, (ii) present such Shares and all Distributions for transfer on the
books of the Company, and (iii) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares and all Distributions, all in
accordance with the terms of the Offer.
By executing this Letter of Transmittal, the undersigned irrevocably
appoints Edward L. Gallup and Steven C. Ramsey of the Purchaser as proxies of
the undersigned, each with full power of substitution, to the full extent of the
undersigned's rights with respect to the Shares tendered by the undersigned and
accepted for payment by the Purchaser (and any and all Distributions). All such
proxies shall be considered coupled with an interest in the tendered Shares.
This appointment will be effective if, when, and only to the extent that, the
Purchaser accepts such Shares for payment pursuant to the Offer. Upon such
acceptance for payment, all prior proxies given by the undersigned with respect
to such Shares (and any such other Shares and securities) will, without further
action, be revoked, and no subsequent proxies may be given nor any subsequent
written consent executed by the undersigned (and, if given or executed, will not
be deemed to be effective) with respect thereto. The designees of the Purchaser
named above will, with respect to the Shares and other securities for which the
appointment is effective, be empowered to exercise all voting and other rights
of the undersigned as they in their sole discretion may deem proper at any
annual or special meeting of the shareholders of the Company or any adjournment
or postponement thereof, by written consent in lieu of any such meeting or
otherwise, and the Purchaser reserves the right to require that, in order for
Shares or other securities to be deemed validly tendered, immediately upon the
Purchaser's acceptance for payment of such Shares, the Purchaser must be able to
exercise full voting rights with respect to such Shares or other securities.
3
<PAGE>
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Distributions, and that when such Shares are accepted for payment
by Purchaser, Purchaser will acquire good, marketable and unencumbered title
thereto and to all Distributions, free and clear of all liens, restrictions,
charges and encumbrances, and that none of such Shares and Distributions will be
subject to any adverse claim. The undersigned, upon request, shall execute and
deliver all additional documents deemed by the Depositary or Purchaser to be
necessary or desirable to complete the sale, assignment and transfer of the
Shares tendered hereby and all Distributions. In addition, the undersigned shall
remit and transfer promptly to the Depositary for the account of Purchaser all
Distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer, and, pending such remittance and transfer
or appropriate assurance thereof, Purchaser shall be entitled to all rights and
privileges as owner of each such Distribution and may withhold the entire
purchase price of the Shares tendered hereby, or deduct from such purchase
price, the amount or value of such Distribution as determined by Purchaser in
its sole discretion.
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, personal representatives, successors and assigns of the undersigned.
Except as otherwise stated in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 2 of the Offer to Purchase and in the
instructions hereto will constitute the undersigned's acceptance of the terms
and conditions of the Offer. Purchaser's acceptance of such Shares for payment
will constitute a binding agreement between the undersigned and Purchaser upon
the terms and subject to the conditions of the Offer, including, without
limitation, the undersigned's representation and warranty that the undersigned
owns the Shares being tendered.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of all Shares
purchased, and return all Share Certificates evidencing Shares not purchased or
not tendered, in the name(s) of the registered holder(s) appearing above under
"Description of Shares Tendered." Similarly, unless otherwise indicated in the
box entitled "Special Delivery Instructions," please mail the check for the
purchase price of all Shares purchased and all Share Certificates evidencing
Shares not tendered or not purchased (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing above
under "Description of Shares Tendered." In the event that the boxes entitled
"Special Payment Instructions" and "Special Delivery Instructions" are both
completed, please issue the check for the purchase price of all Shares purchased
and return all Share Certificates evidencing Shares not purchased or not
tendered in the name(s) of, and mail such check and Share Certificates to, the
person(s) so indicated. The undersigned recognizes that Purchaser has no
obligation, pursuant to the Special Payment Instructions, to transfer any Shares
from the name of the registered holder(s) thereof if Purchaser does not purchase
any of the Shares tendered hereby.
4
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares purchased
or Share Certificate(s) evidencing Shares not tendered or not purchased are to
be issued in the name of someone other than the undersigned.
Issue / / Check / / Share Certificate(s) to:
Name: __________________________________________________________________________
(PRINT)
Address: _______________________________________________________________________
(ZIP CODE)
TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER
(SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares purchased
or Share Certificate(s) evidencing Shares not tendered or not purchased are to
be mailed to someone other than the undersigned, or to the undersigned at an
address other than that shown under "Description of Shares Tendered."
Mail / / Check / / Share Certificate(s) to:
Name: __________________________________________________________________________
(PRINT)
Address: _______________________________________________________________________
(ZIP CODE)
5
<PAGE>
IMPORTANT
SHAREHOLDER(S): SIGN HERE
(ALSO PLEASE COMPLETE SUBSTITUTE FORM W-9 INCLUDED HEREIN)
X ______________________________________________________________________________
X ______________________________________________________________________________
(SIGNATURE(S) OF HOLDER(S))
Dated: 1998
(Must be signed by registered holder(s) exactly as name(s) appear(s) on the
Share Certificate(s) or on a security position listing or by a person authorized
to become a registered holder by certificates and documents transmitted
herewith. If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, please provide the following information. See
Instruction 5.)
Name(s): _______________________________________________________________________
________________________________________________________________________________
(PLEASE PRINT)
Capacity (full title): _________________________________________________________
Address: _______________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No.: ___________________________________________________
Taxpayer Identification or Social Security No.: ________________________________
(SEE SUBSTITUTE FORM W-9 INCLUDED HEREIN)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY.
PLACE MEDALLION GUARANTEE IN SPACE BELOW.
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. All signatures on this Letter of Transmittal
must be guaranteed by a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
or by a financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (an
"Eligible Institution"), unless (i) this Letter of Transmittal is signed by the
registered holder(s) of the Shares (which term, for purposes of this document,
shall include any participant in a Book-Entry Transfer Facility whose name
appears on a security position listing as the owner of Shares) tendered hereby
and such holder(s) has (have) completed neither the box entitled "Special
Payment Instructions" nor the box entitled "Special Delivery Instructions" or
(ii) such Shares are tendered for the account of an Eligible Institution. See
Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE CERTIFICATES. This Letter of
Transmittal is to be used either if Share Certificates are to be forwarded
herewith or if Shares are to be delivered by book-entry transfer pursuant to the
procedure set forth in Section 2 of the Offer to Purchase. Share Certificates
evidencing all physically tendered Shares, or a confirmation of a book-entry
transfer into the Depositary's account at a Book-Entry Transfer Facility of all
Shares delivered by book-entry transfer, in each case together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) and any
other documents required by this Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth at the front hereof prior to the
Expiration Date (as defined in Section l of the Offer to Purchase). If Share
Certificates are forwarded to the Depositary in multiple deliveries, a properly
completed and duly executed Letter of Transmittal must accompany each such
delivery. Shareholders whose Share Certificates are not immediately available,
who cannot deliver their Share Certificates and all other required documents to
the Depositary prior to the Expiration Date or who cannot complete the procedure
for delivery by book-entry transfer on a timely basis may tender their Shares
pursuant to the guaranteed delivery procedure described in Section 2 of the
Offer to Purchase. Pursuant to such procedure: (i) such tender must be made by
or through an Eligible Institution; (ii) a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form made available by
Purchaser, must be received by the Depositary prior to the Expiration Date; and
(iii) the Share Certificates evidencing all physically delivered Shares in
proper form for transfer by delivery, or a confirmation of a book-entry transfer
into the Depositary's account at a Book-Entry Transfer Facility of all Shares
delivered by book-entry transfer, in each case together with a Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed, with
any required signature guarantees, and any other documents required by this
Letter of Transmittal, must be received by the Depositary within three American
Stock Exchange, Inc. ("AMEX") trading days after the date of execution of such
Notice of Guaranteed Delivery, all as described in Section 2 of the Offer to
Purchase.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. By execution of this Letter of Transmittal
(or a facsimile hereof), all tendering shareholders waive any right to receive
any notice of the acceptance of their Shares for payment.
7
<PAGE>
3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the Share Certificate numbers, the number of
Shares evidenced by such Share Certificates and the number of Shares tendered
should be listed on a separate schedule and attached hereto.
4. PARTIAL TENDERS (NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares evidenced by any Share Certificate
delivered to the Depositary herewith are to be tendered hereby, fill in the
number of Shares which are to be tendered in the box entitled "Number of Shares
Tendered." In such cases, new Share Certificate(s) evidencing the remainder of
the Shares that were evidenced by the Share Certificates delivered to the
Depositary herewith will be sent to the person(s) signing this Letter of
Transmittal, unless otherwise provided in the box entitled "Special Delivery
Instructions," as soon as practicable after the expiration or termination of the
Offer. All Shares evidenced by Share Certificates delivered to the Depositary
will be deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the Share Certificates evidencing such Shares without alteration,
enlargement or any other change whatsoever.
If any Share tendered hereby is owned of record by two or more persons, all
such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Share Certificates or separate stock
powers are required, unless payment is to be made to, or Share Certificates
evidencing Shares not tendered or not purchased are to be issued in the name of,
a person other than the registered holder(s), in which case, the Share
Certificate(s) evidencing the Shares tendered hereby must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s)of the registered holder(s) appear(s) on such Share Certificate(s).
Signatures on such Share Certificate(s) and stock powers must be guaranteed by
an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Share Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such Share Certificate(s). Signatures on such
Share Certificate(s) and stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Share Certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of such person's authority so to act must be
submitted.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction 6,
Purchaser will pay all stock transfer taxes with respect to the sale and
transfer of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or Share
Certificate(s) evidencing Shares not tendered or not purchased are to be issued
in the name of, a person other than the registered holder(s), the amount of any
stock transfer taxes (whether imposed on the registered holder(s), such other
person or otherwise) payable on account of the transfer to such other person
will be deducted from the purchase price of such Shares purchased, unless
evidence satisfactory to Purchaser of the payment of such taxes, or exemption
therefrom, is submitted. EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT
BE NECESSARY FOR TRANSFER TAX STAMPS TO BE AFFIXED TO THE SHARE CERTIFICATES
EVIDENCING THE SHARES TENDERED HEREBY.
8
<PAGE>
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Share Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name of
a person other than the person(s) signing this Letter of Transmittal or if such
check or any such Share Certificate is to be sent to someone other than the
person(s) signing this Letter of Transmittal or to the person(s) signing this
Letter of Transmittal but at an address other than that shown in the box
entitled "Description of Shares Tendered," the appropriate boxes on the reverse
of this Letter of Transmittal must be completed.
8. WAIVER OF CONDITIONS. Except as described in the Offer to Purchase, the
conditions to the Offer may be waived by the Purchaser in whole or in part at
any time and from time to time in its sole discretion.
9. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and
requests for assistance may be directed to the Dealer Manager or the Information
Agent at their respective addresses or telephone numbers set forth below.
Additional copies of the Offer to Purchase, this Letter of Transmittal and the
Notice of Guaranteed Delivery may be obtained from the Information Agent or from
brokers, dealers, commercial banks or trust companies.
10. SUBSTITUTE FORM W-9. Each tendering shareholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on the
Substitute Form W-9 which is provided under "Important Tax Information" below
and to certify, under penalties of perjury, that such number is correct and that
such shareholder is not subject to backup withholding of federal income tax. If
a tendering shareholder has been notified by the Internal Revenue Service that
such shareholder is subject to backup withholding, such shareholder must cross
out item (2) of the Certification box of the Substitute Form W-9, unless such
shareholder has since been notified by the Internal Revenue Service that such
shareholder is no longer subject to backup withholding. Failure to provide the
information on the Substitute Form W-9 may subject the tendering shareholder to
31% federal income tax withholding on the payment of the purchase price of all
Shares purchased from such shareholder. If the tendering shareholder has not
been issued a TIN and has applied for one or intends to apply for one in the
near future, such shareholder should write "Applied For" in the space provided
for the TIN in Part I of the Substitute Form W-9, and sign and date the
Substitute Form W-9. If "Applied For" is written in Part l and the Depositary is
not provided with a TIN within 60 days, the Depositary will withhold 31% on all
payments of the purchase price to such shareholder until a TIN is provided to
the Depositary.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED WITH ANY REQUIRED SIGNATURE GUARANTEES, AND SHARE
CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND OR A PROPERLY COMPLETED
AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY AND ALL OTHER REQUIRED DOCUMENTS
MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE (AS DEFINED IN
THE OFFER TO PURCHASE).
IMPORTANT TAX INFORMATION
Under the federal income tax law, a shareholder whose tendered Shares are
accepted for payment is required by law to provide the Depositary (as payer)
with such shareholder's correct TIN on Substitute Form W-9 below. If such
shareholder is an individual, the TIN is such shareholder's social security
number. If the Depositary is not provided with the correct TIN, the shareholder
may be subject to a $50 penalty imposed by the Internal Revenue Service. In
addition, payments that are made to such shareholder with respect to Shares
purchased pursuant to the Offer may be subject to backup withholding of 31%.
Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such individual must submit a statement, signed under penalties of
perjury,
9
<PAGE>
attesting to such individual's exempt status. Forms of such statements can be
obtained from the Depositary. See the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional
instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the shareholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a shareholder
with respect to Shares purchased pursuant to the Offer, the shareholder is
required to notify the Depositary of such shareholder's correct TIN by
completing the form below certifying (a) that the TIN provided on Substitute
Form W-9 is correct (or that such shareholder is awaiting a TIN) and (b) that
(i) such shareholder has not been notified by the Internal Revenue Service that
such shareholder is subject to backup withholding as a result of a failure to
report all interest or dividends or (ii) the Internal Revenue Service has
notified such shareholder that such shareholder is no longer subject to backup
withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The shareholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are in more than one name or are not in the name
of the actual owner, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional guidance on
which number to report. If the tendering shareholder has not been issued a TIN
and has applied for a number or intends to apply for a number in the near
future, the shareholder should write "Applied For" in the space provided for the
TIN in Part I, and sign and date the Substitute Form W-9. If "Applied For" is
written in Part I and the Depositary is not provided with a TIN within 60 days,
the Depositary will withhold 31% of all payments of the purchase price to such
shareholder until a TIN is provided to the Depositary.
ALL TENDERING SHAREHOLDERS MUST COMPLETE THE FOLLOWING:
PAYER'S NAME: [ ]
SUBSTITUTE PART I--Taxpayer Identification Number--For all accounts, enter
taxpayer FORM W-9 identification number in the box at right. Social Security
Number(s) (For most individuals, this is your social OR DEPARTMENT OF THE
TREASURY security number. If you do not have a INTERNAL REVENUE SERVICE number,
see Obtaining a Number in the Employer Identification Number enclosed
Guidelines.) Certify by signing and (If awaiting TIN write dating below. Note:
If the account is in "Applied For") more than one name, see the chart in the
enclosed Guidelines to determine which number to give the payer.
PAYER'S REQUEST FOR TAXPAYER PART II--For Payees Exempt From Backup
Withholding, see the enclosed IDENTIFICATION NUMBER Guidelines and complete as
instructed therein.
("TIN") CERTIFICATION--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me), and
(2) I am not subject to backup withholding either because I have not been
notified by the Internal Revenue Service (the "IRS") that I am
subject to backup withholding as a result of failure to report all
interest or dividends, or the IRS has notified me that I am no longer
subject to backup withholding.
10
<PAGE>
CERTIFICATE INSTRUCTIONS--You must cross out item (2) above if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after being
notified by the IRS that you were subject to backup withholding you received
another notification from the IRS that you are no longer subject to backup
withholding, do not cross out item (2). (Also see instructions in the enclosed
Guidelines.)
Signature
Date
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE
REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
The Information Agent for the Offer is:
Beacon Hill Partners, Inc.
90 Broad Street
New York, New York 10004
(212) 843-8500
or
Toll Free (800) 566-9061
The Dealer Manager for the Offer is:
TM Capital Corp.
One Battery Park Plaza, 35th Floor
New York, New York 10004
(212) 809-1360
September 25, 1998
11
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of September 21, 1998 (this
"AGREEMENT"), is made by and among IMMUCOR, INC., a Georgia corporation
("PARENT"), GAMMA ACQUISITION CORPORATION, a Texas corporation and wholly
owned subsidiary of Parent ("MERGER SUB"), and GAMMA BIOLOGICALS, INC., a
Texas corporation (the "COMPANY").
In consideration of the respective representations, warranties, and
agreements set forth herein, the parties hereto agree as follows:
ARTICLE I.
THE TENDER OFFER AND MERGER
SECTION 1.01 TENDER OFFER
(a) As promptly as practicable, but in no event later than five
business days after the public announcement of the execution of this
Agreement, Merger Sub will, and Parent will cause Merger Sub to, offer to
purchase (the "OFFER") each outstanding share of Common Stock, $.10 par value
(the "COMMON STOCK"), of the Company, including the associated Company Right
(as defined in Section 3.06) (together with the Company Right, "COMPANY
STOCK"), tendered pursuant to the Offer at a price of $5.40 per share, net to
the seller in cash. The obligations of Merger Sub and Parent to consummate
the Offer and to accept for payment and purchase the Company Stock tendered
in the Offer will be subject only to the conditions set forth in Schedule
1.01(a) (Offer Conditions) (the "OFFER CONDITIONS"). The expiration date of
the Offer shall be twenty (20) business days after commencement. Parent and
Merger Sub agree that if all of the Offer Conditions are not satisfied on
such initial expiration date then, provided that Parent determines that all
Offer Conditions are reasonably capable of being satisfied and subject to
Securities and Exchange Commission (the "SEC") rules with respect to
extension of time periods, Merger Sub may extend the Offer from time to time
until all Offer Conditions have been satisfied or waived. Parent and Merger
Sub agree that upon the expiration date of the Offer, as the same may be
extended in accordance with the immediately preceding sentence, if all Offer
Conditions have been satisfied, Merger Sub shall accept the shares of Company
Stock properly tendered for purchase, subject to the right to extend the
Offer not more than ten (10) business days in the aggregate if less than 90%
of the Company Stock have been properly tendered, such 90% to be calculated
after giving effect to the conversion of any securities convertible into
Common Stock, and the exercise of any options, warrants or other rights to
acquire Common Stock.
(b) On the date of the commencement of the Offer, Merger Sub and
Parent will file with the SEC their Tender Offer Statement on Schedule 14D-1
(together with all supplements or amendments thereto, and including all
exhibits, the "OFFER DOCUMENTS"). Merger Sub and Parent will give the
Company and its counsel a reasonable opportunity to review and comment upon
the Offer Documents prior to their being filed with the SEC or disseminated
to the
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Company's stockholders. Parent and Merger Sub agree that the Offer Documents
shall comply as to form in all material respects with the Securities Exchange
Act of 1934, as amended (the "EXCHANGE ACT"), and the rules and regulations
promulgated thereunder, and the Offer Documents, on the date filed with the
SEC and on the date first published, sent, or given to the Company's
stockholders, 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, except that no representation or
warranty is made by Parent or Merger Sub with respect to information supplied
by the Company or any of its stockholders in writing specifically for
inclusion or incorporation by reference in the Offer Documents. Each of
Parent, Merger Sub, and the Company agrees promptly to correct any
information provided by it for use in the Offer Documents if and to the
extent that such information shall have become false or misleading in any
material respect, and Parent and Merger Sub further agree to take all steps
necessary to cause the Offer Documents as so corrected to be filed with the
SEC and the other Offer Documents as so corrected to be disseminated to the
Company's stockholders, in each case as and to the extent required by
applicable federal securities laws. Parent and Merger Sub agree to provide
the Company and its counsel any comments Parent, Merger Sub, or their counsel
may receive from the SEC or its staff with respect to the Offer Documents
promptly after the receipt of such comments.
(c) As promptly as practicable, but in no event later than the
date on which Parent shall have notified the Company that the Offer Documents
initially are to be filed with the SEC, the Company will file its Tender
Offer Solicitation/Recommendation Statement on Schedule 14D-9 with respect to
the Offer (together with all supplements or amendments thereto, and including
all exhibits, ("SCHEDULE 14D-9"), which shall include a recommendation by the
Company's Board of Directors that the Company's stockholders accept the Offer
and tender their Company Stock pursuant to the Offer. The Company agrees
that the Schedule 14D-9 shall comply as to form in all material respects with
the requirements of the Exchange Act and the rules and regulations
promulgated thereunder and, on the date filed with the SEC and on the date
first published, sent, or given to the Company's stockholders, 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, except that no representation or warranty is made by the
Company with respect to information supplied by Parent or Merger Sub in
writing specifically for inclusion in the Schedule 14D-9. Each of the
Company, Parent, and Merger Sub agrees promptly to correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that such
information shall have become false or misleading in any material respect,
and the Company further agrees to take all steps necessary to amend or
supplement the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended
or supplemented to be filed with the SEC and disseminated to the Company's
stockholders, in each case as and to the extent required by applicable
federal securities laws. Parent and its counsel shall be given reasonable
opportunity to review and comment upon the Schedule 14D-9 prior to its filing
with the SEC or dissemination to stockholders of the Company. The Company
agrees to provide Parent and its counsel any comments the Company or its
counsel may receive from the SEC or its staff with respect to the Schedule
14D-9 promptly after the receipt of such comments. The Company's Board of
Directors has resolved to recommend that the Company's stockholders accept
the Offer and tender their Company Stock pursuant to the Offer and has
received an opinion from Dain
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Rauscher Wessels that, as of the date of such opinion, the consideration to
be received by the stockholders of the Company pursuant to the Offer and the
Merger is fair to such stockholders from a financial point of view. In
addition, the Company shall cause its transfer agent to furnish Parent and
Merger Sub with mailing labels, security position listings and any available
listings or computer files containing the names and addresses of record
holders of the Common Stock or the Company Stock as of a recent date, and
shall furnish to Parent and Merger Sub such information and assistance as the
Parent or Merger Sub may reasonably request in communicating the Offer to the
Company's stockholders.
(d) If requested by Parent or Merger Sub, the Company will,
promptly following the purchase by Merger Sub pursuant to the Offer of that
number of shares of Company Stock which, when aggregated with the shares of
Company Stock then owned by Parent and any of its affiliates, represents at
least a majority of the shares of Company Stock then outstanding on a fully
diluted basis, take all actions necessary to cause persons designated by
Merger Sub to become directors of the Company so that the total number of
directors so designated equals the product, rounded up to the next whole
number, of (i) the total number of directors of the Company multiplied by
(ii) the ratio of the number of shares of Company Stock beneficially owned by
Merger Sub or its affiliates at the time of such purchase over the number of
shares of Company Stock then outstanding. In furtherance thereof, the Company
will take whatever action is necessary, including but not limited to amending
the Company's bylaws, to increase the size of its Board of Directors, or use
reasonable efforts to secure the resignation of directors, or both, as is
necessary to permit that number of Merger Sub's designees to be elected to
the Company's Board of Directors; provided that, prior to the Effective Time,
the Company's Board of Directors will always have at least two members who
are not officers, designees, stockholders, or affiliates of Merger Sub
("INDEPENDENT DIRECTORS"). All of the Independent Directors will be
individuals who are currently directors of the Company, except to the extent
that no such individuals wish to be directors. The Company's obligations to
appoint designees to its Board of Directors will be subject to Section 14(f)
of the Exchange Act, and Rule 14f-1 promulgated thereunder. Parent and Merger
Sub will supply to the Company and will be solely responsible for any
information with respect to either of them and their nominees, officers,
directors, and affiliates required by Section 14(f) and Rule 14f-1. The
Company will promptly take all actions required pursuant to Section 14(f) and
Rule 14f-1 in order to fulfill its obligations under this Section 1.01 and
(provided that Merger Sub shall have provided to the Company on a timely
basis all information required to be included in the Information Statement
with respect to Merger Sub's designees) will include in the Schedule 14D-9
such information with respect to the Company and its officers and directors
as is required under Section 14(f) and Rule 14f-1.
(e) Following the election or appointment of Merger Sub's
designees pursuant to Section 1.01(d), any amendment to this Agreement, any
termination of this Agreement by the Company, any extension by the Company of
the time for the performance of any of the obligations of Merger Sub or
Parent under this Agreement, any recommendation to stockholders or any
modification or withdrawal of any such recommendation, the retention of
counsel and other advisors in connection with the transactions contemplated
hereby, or any waiver of any of the Company's rights under this Agreement
will require the concurrence of a majority of the Independent Directors,
unless no individuals who are currently directors of the Company wish to be
directors. In addition, the Independent Directors shall have the right to
retain, at the expense
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of the Company, one separate firm of counsel to represent them in connection
with the transactions contemplated hereby.
(f) The parties will cooperate with each other, including by
furnishing any necessary information and making any filings required by
applicable law, to ensure that the matters contemplated by this Section 1.01
are consummated as promptly as practicable.
SECTION 1.02 THE MERGER.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, at the Effective Time (as defined in Section 1.02(b)), Merger Sub
will be merged with and into the Company in accordance with the Texas
Business Corporation Act ("TEXAS LAW"). As a result of this merger (the
"MERGER"), the separate existence of Merger Sub will cease and the Company
will be the surviving corporation (the "SURVIVING CORPORATION").
(b) As soon as practicable after satisfaction or, to the extent
permitted hereunder, waiver of all conditions to the Merger set forth in
Article VII, the parties will cause articles of merger in such form as is
required by, and executed in accordance with, Texas Law to be duly filed with
the Secretary of State of the State of Texas. The Merger will become
effective when the articles of merger are so filed and the certificate of
merger is issued by the Secretary of State of Texas (the "EFFECTIVE TIME").
(c) From and after the Effective Time, the Merger will have the
effects specified in Texas Law.
(d) The closing of the Merger (the "CLOSING") will take place (i)
at the offices of Nelson Mullins Riley & Scarborough, L.L.P., 999 Peachtree
Street, N.E., Suite 1400, Atlanta, Georgia 30309, at 10:00 a.m. on the first
business day following the date on which the last to be fulfilled or waived
of the conditions set forth in Article VII (other than those conditions that
by their nature are to be satisfied at the Closing, but subject to the
fulfillment or waiver of those conditions at the Closing) have been satisfied
or waived in accordance with this Agreement or (ii) at such other place and
time as the parties may agree.
SECTION 1.03 CONVERSION OF SHARES.
At the Effective Time:
(a) Each share of Common Stock of Merger Sub (a share of "MERGER
SUB COMMON STOCK") issued and outstanding immediately prior to the Effective
Time will be converted into one share of Common Stock of the Surviving
Corporation.
(b) Each share of Company Stock issued and outstanding immediately
prior to the Effective Time will, except as otherwise provided in Section
1.03(c), be converted, by virtue of the Merger and without any action on the
part of the holder thereof, into the right to receive, without interest, an
amount in cash equal to the price per share paid in the Offer (the "MERGER
CONSIDERATION"). Subject to Section 1.06, from and after the Effective Time,
all shares of
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Company Stock, by virtue of the Merger and without any action on the part of
the holders thereof, will be canceled and retired and cease to exist, and
each holder of a certificate representing any shares of Company Stock
immediately prior to the Effective Time (a "STOCK CERTIFICATE") will
thereafter cease to have any rights with respect to such shares of Company
Stock, except the right to receive the Merger Consideration therefor upon the
surrender of the Stock Certificate in accordance with Section 1.04.
(c) Each outstanding share of Company Stock held by the Company as
a treasury share or owned by Parent, Merger Sub, or any other Subsidiary (as
defined in Section 3.07) of Parent immediately prior to the Effective Time
will be canceled, and no payment will be made with respect thereto.
SECTION 1.04 SURRENDER AND PAYMENT.
(a) Prior to the Effective Time, Parent will appoint a bank or
trust company reasonably acceptable to the Company (the "EXCHANGE AGENT") for
the purpose of exchanging Stock Certificates. Parent will make available to
the Exchange Agent funds in amounts and at the times necessary for the
payment of the Merger Consideration in accordance with this Section 1.04
(such cash is referred to as the "EXCHANGE FUND").
(b) Promptly, but in no event more than five business days, after
the Effective Time, Parent will send, or will cause the Exchange Agent to
send, to each holder of a Stock Certificate a letter of transmittal and
instructions for use in surrendering the Stock Certificates for payment in
accordance with this Section 1.04. The agreement with the Exchange Agent
will provide that, upon surrender to the Exchange Agent of such Stock
Certificates, together with the letter of transmittal, duly executed and
completed in accordance with the instructions thereto and such other
documents as may be reasonably required by the Exchange Agent, the Exchange
Agent shall promptly pay to the persons entitled thereto, out of the Exchange
Fund, a check in the amount to which such persons are entitled pursuant to
Section 1.03(b), after giving effect to any required tax withholdings, and
such Stock Certificate shall forthwith be canceled.
(c) After the Effective Time, Stock Certificates will represent
the right, upon surrender thereof to the Exchange Agent, together with a duly
executed and properly completed letter of transmittal relating thereto, to
receive (i) cash in the amount to which such holder is entitled under Section
1.03 after giving effect to any required tax withholding or (ii) payment from
the Surviving Corporation of the "fair value" of such shares of Company Stock
as determined under Articles 5.11, 5.12, and 5.16(E), as applicable, of Texas
Law, subject to the conditions set forth therein and in accordance with
Section 1.06 of this Agreement. No interest will be paid or will accrue on
such amount.
(d) If any cash is to be paid to a Person other than the
registered holder of the Stock Certificates surrendered in exchange therefor,
it will be a condition to such payment that the Stock Certificates so
surrendered be properly endorsed or otherwise in proper form for transfer and
that the Person requesting such payment pay to the Exchange Agent any
transfer or other taxes required as a result of such issuance or establish to
the satisfaction of the Exchange Agent that such tax has been paid or is not
applicable. For purposes of this Agreement, "PERSON"
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means an individual, a corporation, a partnership, a limited liability
company, an association, a trust, or any other entity or organization,
including a governmental or political subdivision or any agency or
instrumentality thereof.
(e) At and after the Effective Time, the stock transfer books of
the Company will be closed, and there will be no further registration of
transfers of shares of Company Stock outstanding prior to the Effective Time.
If, at or after the Effective Time, Stock Certificates are presented to the
Surviving Corporation, they will be canceled and exchanged in accordance with
this Article I.
(f) Any cash in the Exchange Fund that remains unclaimed by the
holders of shares of Company Stock six months after the Effective Time will
be returned to Parent, upon demand, and any such holder who has not
surrendered his shares of Company Stock in accordance with this Section 1.04
prior to that time will thereafter look only to Parent, as a general creditor
thereof, to pay the Merger Consideration to which such holder is entitled.
Notwithstanding the foregoing, Parent will not be liable to any holder of
shares of Company Stock for any amount paid to a public official pursuant to
applicable abandoned property, escheat, or similar laws.
(g) If any Stock Certificate is lost, stolen, or destroyed, upon
the making of an affidavit of that fact by the Person claiming such Stock
Certificate to be lost, stolen, or destroyed and, if required by the
Surviving Corporation, the posting by such Person of a bond in such
reasonable amount as Parent may direct as indemnity against any claim that
may be made against it with respect to such Stock Certificate, the Exchange
Agent will pay the Merger Consideration payable in respect of such Stock
Certificate pursuant to this Agreement.
SECTION 1.05 COMPANY OPTIONS.
The Board of Directors of the Company (or, if appropriate, any
committee administering the Stock Option Plans (as defined below)) shall
adopt such resolutions or take such other actions as are required to provide
that (i) each outstanding stock option or warrant to purchase shares of
Company Stock (a "STOCK OPTION") heretofore granted under any employee stock
option plan, stock option or warrant plan for directors, or other incentive
plan of the Company (collectively, the "STOCK OPTION PLANS") outstanding
immediately prior to the consummation of the Offer, whether or not then
exercisable, shall be cancelled immediately prior to the consummation of the
Offer in exchange for an amount in cash, payable at the time of such
cancellation, equal to the product of (y) the number of shares of Company
Stock subject to such Stock Option immediately prior to the consummation of
the Offer and (z) the excess of the price per share to be paid in the Offer
over the per share exercise price of such Stock Option. All Stock Option
Plans shall terminate as of the Effective Time and the provisions in any
other Company Benefit Arrangement (as defined herein) providing for the
issuance, transfer or grant of any capital stock of the Company or any
interest in respect of any capital stock of the Company shall be deleted as
of the Effective Time, and the Company shall ensure that following the
Effective Time no holder of a Stock Option or any participant in any Stock
Option Plan shall have any right thereunder to acquire any capital stock of
the Company, Parent or the Surviving Corporation, except as provided in
Section 1.05.
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SECTION 1.06 SHARES OF DISSENTING STOCKHOLDERS.
Notwithstanding anything in this Agreement to the contrary, any issued
and outstanding shares of Company Stock held by a person (a "DISSENTING
STOCKHOLDER") who objects to the Merger and complies with all the provisions
of Texas Law concerning the right of holders of shares of Company Stock to
dissent from the Merger and require appraisal of their shares shall not be
converted as described in Section 1.03(b), but shall be converted into the
right to receive such consideration as may be determined to be due to such
Dissenting Stockholder pursuant to Texas Law. If, after the Effective Time,
such Dissenting Stockholder withdraws his demand for appraisal in accordance
with Article 5.13 of Texas Law or fails to perfect or otherwise loses his
right to appraisal, in any case pursuant to Texas Law, his shares of Company
Stock shall be deemed to be converted as of the Effective Time into the right
to receive the Merger Consideration. The Company shall give Parent (i)
prompt notice of any demands for appraisal of shares of Company Stock
received by the Company and (ii) the opportunity to participate in all
negotiations and proceedings with respect to any such demands. The Company
shall not, without the prior written consent of Parent, make any payment with
respect to, or settle, offer to settle, or otherwise negotiate, any such
demands.
SECTION 1.07 OTHER AGREEMENTS.
In connection with the execution and delivery of this Agreement, the
Company has granted to Merger Sub an option to purchase 19.9% of the
Company's Company Stock, giving effect to the exercise of such option (the
"PARENT STOCK OPTION"); and certain shareholders of the Company have granted
options to Merger Sub to purchase their shares of Company Stock (the "INSIDER
LOCK-UP OPTIONS").
ARTICLE II.
THE SURVIVING CORPORATION
SECTION 2.01 ARTICLES OF INCORPORATION.
The articles of incorporation of Merger Sub in effect immediately
prior to the Effective Time will be the articles of incorporation of the
Surviving Corporation after the consummation of the Merger until amended in
accordance with applicable law.
SECTION 2.02 BYLAWS.
The bylaws of Merger Sub in effect immediately prior to the Effective
Time will be the bylaws of the Surviving Corporation after the consummation
of the Merger until amended in accordance with applicable law.
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SECTION 2.03 DIRECTORS AND OFFICERS.
From and after the Effective Time, until successors are duly elected
or appointed and qualified in accordance with applicable law, the directors
and officers of Merger Sub immediately prior to the Effective Time will be
the directors and officers of the Surviving Corporation after the
consummation of the Merger.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent that:
SECTION 3.01 CORPORATE EXISTENCE AND POWER.
The Company is a corporation duly incorporated, validly existing, and
in good standing under the laws of the State of Texas and has all requisite
corporate power and authority to own, lease, and operate its properties and
to carry on its business as now conducted. The Company is duly qualified to
do business as a foreign corporation and is in good standing in each
jurisdiction where it is required to be so qualified by reason of the
character of the property owned or leased by it or the nature of its
activities, except where the failure to be qualified or in good standing is
not, individually or in the aggregate, reasonably likely to have a Company
Material Adverse Effect (as defined in the Offer Conditions).
SECTION 3.02 CORPORATE AUTHORIZATION.
The execution, delivery, and performance by the Company of this
Agreement and the consummation by the Company of the Merger and the other
transactions contemplated hereby are within the Company's corporate power and
authority and, except for any required approval by the Company's stockholders
in connection with the consummation of the Merger, have been duly authorized
by all necessary corporate action on the part of the Company. This Agreement
has been duly executed and delivered by the Company and, assuming the due
authorization, execution, and delivery hereof by Parent and Merger Sub,
constitutes a legal, valid, and binding agreement of the Company.
SECTION 3.03 GOVERNMENTAL AUTHORIZATION.
The execution, delivery, and performance by the Company of this
Agreement and the consummation by the Company of the Merger and the other
transactions contemplated hereby do not require any material consent,
approval, authorization, or permit of, other action by, or filing with, any
governmental body, agency, official, or authority other than (i) as set forth
on Section 3.03 of the Disclosure Schedule delivered by the Company to Parent
concurrently with the execution and delivery of this Agreement (the "COMPANY
DISCLOSURE SCHEDULE"), (ii) the filing of appropriate certificates of merger
in accordance with Texas Law, (iii) the filing and delivery of the Schedule
14D-9, and (iv) compliance with applicable requirements of the Exchange Act.
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SECTION 3.04 ARTICLES OF INCORPORATION AND BYLAWS.
Section 3.04 of the Company Disclosure Schedule includes true, correct
and complete copies of the articles of incorporation and the bylaws or the
equivalent organizational documents, in each case as amended or restated as
of the date hereof, of the Company and each of its Subsidiaries.
SECTION 3.05 NON-CONTRAVENTION.
The execution, delivery, and performance by the Company of this
Agreement, the purchase of shares of Company Stock by Merger Sub pursuant to
the Offer, and the consummation by the Company of the Merger and the other
transactions contemplated by this Agreement do not and will not (i)
contravene or conflict with the articles of incorporation or bylaws of the
Company or any of its Subsidiaries (ii) contravene, conflict with, or
constitute a violation of any provision of any law, rule, regulation,
judgment, injunction, order, or decree binding upon or applicable to the
Company or any of its Subsidiaries, (iii) constitute a default, give rise to
a right of termination, cancellation, or acceleration of any material right
or obligation of the Company or any of its Subsidiaries, or give rise to a
loss of any material benefit to which the Company or any of its Subsidiaries
is entitled, under any provision of any agreement or other instrument binding
upon the Company or any of its Subsidiaries or under any license, franchise,
permit, or other similar authorization held by the Company or any of its
Subsidiaries, or (iv) result in the creation or imposition of any Lien on any
asset of the Company or any of its Subsidiaries; in each case except as set
forth in Section 3.05 of the Company Disclosure Schedule and except for any
occurrences or results referred to in clauses (ii), (iii), and (iv) that
would not be reasonably likely to prevent or delay consummation of the Offer
or the Merger or, individually or in the aggregate, have a Company Material
Adverse Effect. For purposes of this Agreement, "Lien" means, with respect
to any asset, any mortgage, lien, pledge, charge, security interest,
encumbrance, or other right or interest of another to or in, or adverse claim
of any kind in respect of, such asset.
SECTION 3.06 CAPITALIZATION.
(a) The Company has 26,000,000 authorized shares, consisting of
25,000,000 shares of Common Stock and 1,000,000 shares of Preferred Stock,
$10.00 par value, of the Company ("COMPANY PREFERRED STOCK"). As of the date
hereof, (i) 4,625,762 shares of Company Stock were issued and outstanding,
(ii) 753,410 shares of Company Stock were reserved for future issuance upon
exercise of outstanding Company Options granted pursuant to the Company
Option Plans, and (iii) 4,625,762 shares of Company Common Stock were
reserved for issuance upon exercise of the rights (the "COMPANY RIGHTS" or,
individually, a "COMPANY RIGHT") distributed in connection with the Rights
Agreement, adopted as of September 5, 1989 and subsequently amended (as
amended, the "COMPANY RIGHTS AGREEMENT"). As of the date of this Agreement,
no shares of Company Preferred Stock were issued and outstanding. Except as
described in this Section 3.06 or in Section 3.06 of the Company Disclosure
Schedule, as of the date of this Agreement, no shares of capital stock of the
Company are reserved for issuance. Each of the issued and outstanding shares
of Common Stock is duly authorized, validly issued,
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and fully paid and nonassessable and has not been issued in violation of (nor
are any of the authorized shares of Common Stock subject to) any preemptive
or similar rights created by statute, the articles of incorporation or the
bylaws of the Company, or any agreement to which the Company is a party or is
bound, or any applicable provision of law. Each of the issued and
outstanding Company Rights is duly authorized and validly issued.
(b) Except as set forth in paragraph (a) of this Section 3.06 or
as set forth on Section 3.06 of the Company Disclosure Schedule, there are no
options, warrants, or other rights (including but not limited to registration
rights and conversion rights), agreements, arrangements, or commitments to
which the Company is a party relating to the issued or unissued capital stock
of the Company or obligating the Company to grant, issue, or sell any capital
stock of the Company or other security of the Company. Except as set forth
in Section 3.06 of the Company Disclosure Schedule, there are no obligations,
contingent or otherwise, of the Company to (i) purchase, redeem, or otherwise
acquire any shares of Company Stock, other capital stock of the Company, or
capital stock or other equity interests of any Subsidiary of the Company; or
(ii) (other than advances to Subsidiaries, and prepayments to other Persons
for goods or services, in the ordinary course of business) provide a material
amount of funds to, or make any material investment in, or provide any
guarantee with respect to the obligations of, any Subsidiary of the Company
or any other Person.
(c) Section 3.06 of the Company Disclosure Schedule lists, as of
the date indicated, the number of shares of Company Stock subject to
outstanding Company Options and the exercise price of each outstanding
Company Option. The Company has made available to Parent and Merger Sub
complete and correct copies of the Company Option Plans and all forms of
Company Options.
SECTION 3.07 SUBSIDIARIES.
(a) For purposes of this Agreement, "SUBSIDIARY" of any Person
means (i) any corporation or other entity of which securities or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions are,
directly or indirectly, owned by such Person, and (ii) any partnership of
which such Person is a general partner. Section 3.07 of the Company
Disclosure Schedule sets forth a complete and accurate list of the
Subsidiaries of the Company and indicates for each such Subsidiary the
jurisdiction of incorporation or organization. Each Subsidiary of the
Company is a corporation duly incorporated, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation or is a
partnership duly constituted under its governing law, has the requisite
corporate or partnership power and authority to own, lease, and operate its
properties and to carry on its business substantially as now conducted, and
is duly qualified to do business as a foreign corporation or partnership and
is in good standing in each jurisdiction where it is required to be so
qualified by reason of the character of the property owned or leased by it or
the nature of its activities, except where the failure to be qualified or in
good standing is not, individually or in the aggregate, reasonably likely to
have a Company Material Adverse Effect.
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(b) Except as set forth in Section 3.07 of the Company Disclosure
Schedule, all of the outstanding capital stock or other ownership interests
in each Subsidiary of the Company is owned by the Company, directly or
indirectly, free and clear of any Lien and free and clear of any other
limitation or restriction (including any restriction on the right to vote,
sell, or otherwise dispose of such capital stock or other ownership
interests). Except as set forth in Section 3.07 of the Company Disclosure
Schedule, there are no outstanding (i) securities of the Company or any of
its Subsidiaries convertible into or exchangeable for shares of capital stock
or other voting securities or ownership interests in any such Subsidiary of
the Company or (ii) options or other rights to acquire from the Company or
any of its Subsidiaries, and no other obligation of the Company or any of its
Subsidiaries to issue, any capital stock, voting securities, or other
ownership interests in, or any securities convertible into or exchangeable
for any capital stock, voting securities, or ownership interests in, any such
Subsidiary of the Company (the items in clauses (i) and (ii), including
capital stock, are collectively referred to as the "COMPANY SUBSIDIARY
SECURITIES"). There are no outstanding obligations of the Company or any of
its Subsidiaries to transfer, sell, pledge, repurchase, redeem, or otherwise
acquire any outstanding Company Subsidiary Securities.
SECTION 3.08 COMPANY SEC REPORTS.
Since April 1, 1993, the Company has filed all forms, reports,
registration statements and other documents required to be filed by it with
the SEC, including without limitation (i) all Annual Reports on Form 10-K,
(ii) all Quarterly Reports on Form 10-Q, (iii) all proxy statements relating
to meetings of stockholders (whether annual or special), and (iv) all Current
Reports on Form 8-K. (All of the documents filed by the Company with the SEC
during such period, including all exhibits contained or incorporated by
reference in such documents, are collectively referred to as the "COMPANY SEC
REPORTS"). The Company SEC Reports, as amended to date, (x) were prepared in
accordance with the requirements of the Securities Act of 1933, as amended
(the "SECURITIES ACT"), or the Exchange Act, as the case may be, and (y) did
not at the time they were filed contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
SECTION 3.09 FINANCIAL STATEMENTS; NO UNDISCLOSED LIABILITIES.
The audited consolidated financial statements and unaudited
consolidated interim financial statements (including the related notes and
schedules) of the Company and its Subsidiaries included or incorporated by
reference in the Company SEC Reports (the "COMPANY FINANCIAL STATEMENTS")
were prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except as may be indicated in the notes
thereto and except that such unaudited interim financial statements do not
contain full footnote disclosure) and fairly present the consolidated
financial position of the Company and its consolidated Subsidiaries as of the
dates thereof and their consolidated results of operations and cash flows for
the periods then ended, subject, in the case of any unaudited interim
financial statements, to normal year-end adjustments, none of which would be
reasonably likely to be, individually or in the aggregate, material in
amount. Neither the Company nor its Subsidiaries have any liabilities,
whether accrued, contingent, or otherwise, required by generally accepted
accounting principles
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or applicable SEC rules to be disclosed by the Company in the Company
Financial Statements other than (i) liabilities disclosed in the Company
Financial Statements or the Company SEC Reports, and (ii) liabilities for
which the Company has made adequate reserves as reflected in the Company
Financial Statements.
SECTION 3.10 MATERIAL CONTRACTS.
Except as set forth in Section 3.10 of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries is a party to, or
is bound by (a) any material agreement, indenture, or other instrument
relating to the borrowing of money by the Company or any of its Subsidiaries
or the guarantee by the Company or any of its Subsidiaries of any such
obligation or (b) any other contract or agreement or amendment thereto that
(i) should be or should have been filed as an exhibit to a Form 10-K filed or
to be filed by the Company with the SEC, (ii) places any material
restrictions on the right of the Company or any of its Subsidiaries to engage
in any material business activity currently conducted, or (iii) is otherwise
material to the financial condition, results of operations or business of the
Company and its Subsidiaries, taken as a whole (collectively, the "COMPANY
CONTRACTS"). Neither the Company nor any of its Subsidiaries is in material
default under any Company Contract, and there has not occurred any event that
with the lapse of time or the giving of notice or both would constitute such
a material default.
SECTION 3.11 ABSENCE OF CERTAIN CHANGES.
Except as disclosed in Section 3.11 of the Company Disclosure
Schedule, since March 31, 1998: (a) the Company and its Subsidiaries have
conducted their business in all material respects in the ordinary course
consistent with reasonable past practices, (b) there has not been any change
or development, or combination of changes or developments, in the business,
operations, or financial condition of the Company or any of its Subsidiaries
which are reasonably likely to have, individually or in the aggregate, a
Company Material Adverse Effect, (c) there has not been any declaration,
setting aside, or payment of any dividend or other distribution with respect
to any shares of capital stock of the Company, or any repurchase, redemption,
or other acquisition by the Company or any of its Subsidiaries of any
outstanding shares of capital stock or other securities of, or other
ownership interests in, the Company or any of its Subsidiaries, (d) there has
not been any amendment of any term of any outstanding security of the Company
or any of its Subsidiaries, (e) there has not been any incurrence,
assumption, or guarantee by the Company or any of its Subsidiaries of any
indebtedness for borrowed money other than in the ordinary course of business
and in amounts and on terms consistent with reasonable past practices, (f)
there has not been any creation or assumption by the Company or any of its
Subsidiaries of any Lien on a material amount of assets (including the sale,
pledge, or assignment of a material amount of receivables) other than in the
ordinary course of business consistent with past practices, and (g) there has
not been any change in any method of accounting or accounting practice by the
Company or any of its Subsidiaries, except for any such change required by
reason of a concurrent change in generally accepted accounting principles or
to conform a Subsidiary's accounting policies and practices to those of the
Company. Furthermore, except as disclosed in Section 3.11 of the Company
Disclosure Schedule, since March 31, 1998, there has not been any (i) grant
of any severance or termination pay or stay-in-place bonus to any director or
officer of the Company or any of its Subsidiaries, (ii) entering into
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of any employment, deferred compensation, or other similar agreement (or any
amendment to any such existing agreement) with any director or officer of the
Company or any of its Subsidiaries, (iii) increase in benefits payable under
any existing severance or termination pay or stay-in-place bonus policies or
agreements with any director or officer of the Company or any of its
Subsidiaries, (iv) increase in compensation, bonus, or other benefits payable
to directors or executive officers of the Company or any of its Subsidiaries,
or (v) general increase in the compensation payable or benefits provided to
other employees of the Company or any of its Subsidiaries.
SECTION 3.12 LITIGATION.
Except as disclosed in Section 3.12 of the Company Disclosure
Schedule, (i) there are no actions, suits, or proceedings pending before,
and, to the knowledge of the Company, there is no pending investigation by,
any court or arbitrator or any governmental body, agency, official, or
authority against the Company, any of its Subsidiaries, or any of their
respective properties, (ii) to the knowledge of the Company, there is no
threat of any such action, suit, or proceeding, and (iii) no judgment,
decree, injunction, rule, order, or similar action of any court or arbitrator
or any governmental body, agency, official or authority, domestic or foreign,
is outstanding against the Company or any of its Subsidiaries.
SECTION 3.13 PERMITS; COMPLIANCE.
Except as is disclosed in Section 3.13 of the Company Disclosure
Schedule, the Company and its Subsidiaries are in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals and orders necessary to own,
lease and operate their properties and to carry on their businesses as they
are now being conducted (collectively, the "COMPANY PERMITS"). Except as set
forth in Section 3.13 of the Company Disclosure Schedule, neither the Company
nor any of its Subsidiaries is in conflict with, or in material default or
violation of, (a) any federal, state, or foreign law applicable to the
Company or such Subsidiary or by which any of its properties are bound or
subject or (b) any of the Company Permits. Except as set forth in Section
3.13 of the Company Disclosure Schedule, since March 31, 1993, the Company
has not received any notification with respect to possible conflicts,
defaults, or violations of any federal, state, or foreign law applicable to
the Company or any of its Subsidiaries or by which any of its or their
properties are bound or subject which have not been cured.
SECTION 3.14 PRODUCT WARRANTIES AND LIABILITIES.
Except as set forth in Section 3.14 of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries knows or has any
reason to believe there is any basis for alleging any claim, liability,
damage, loss, cost or expense as a result of any defect or other deficiency
(whether of design, materials, workmanship, labeling instructions or
otherwise) ("PRODUCT LIABILITY") with respect to any product sold or services
rendered by or on behalf of the Company or any of its Subsidiaries now or in
the past, whether such Product Liability is incurred by reason of any express
warranty (including, without limitation, any warranty of merchantability or
fitness), any doctrine of common law (tort, contract or other), any statutory
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provision, or otherwise and irrespective of whether such Product Liability is
covered by insurance.
SECTION 3.15 ERISA.
(a) As used in this Section 3.15, each of the following terms has the
indicated meaning:
(i) "AFFILIATE" of any Person means any other Person that,
together with such Person, would be treated as a single employer under
Section 414 of the Internal Revenue Code of 1986, as amended (the "CODE").
(ii) "COMPANY EMPLOYEE PLANS" means each "employee benefit
plan," as defined in Section 3(3) of ERISA that (A) is subject to any
provision of ERISA and (B) is maintained, administered, contributed to, or
required to be contributed to, as the case may be, by the Company or any
Affiliate (while it is or was an Affiliate of the Company) and covers any
employee or former employee of the Company or any such Affiliate or under
which the Company or any such Affiliate has any liability.
(iii) "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
(iv) "COMPANY BENEFIT ARRANGEMENT" means each employment,
severance, welfare, or other similar contract, arrangement, or policy and
each plan or arrangement (written or oral) providing for compensation,
benefit, bonus, pension, retirement, profit-sharing, stock option or other
stock related rights, other forms of incentive or deferred compensation, and
each cafeteria, Section 125, medical, vision, dental, disability, death
benefit, life insurance, health and/or accident, sickness, vacation, paid
time off, sick pay, education-reimbursement, incentive, "change of control,"
and any other or similar plan, program, arrangement, agreement or
understanding, that (A) is not a Company Employee Plan, (B) is entered into,
maintained, or contributed to, as the case may be, by the Company or any of
its Affiliates (while it is or was an Affiliate of the Company), or (C)
covers any employee or former employee or director or former director of the
Company or any such Affiliate.
(v) "FOREIGN BENEFIT PLAN" means each "employee benefit
plan," as defined in Section 3(3) of ERISA that (A) is established and
maintained outside of the United States primarily for the benefit of
individuals substantially all of whom are nonresident aliens and which is not
subject to any provision of ERISA and (B) is maintained, administered,
contributed to, or required to be contributed to, as the case may be, by the
Company or any Affiliate (while it is or was an Affiliate of the Company) and
covers any employee or former employee of the Company or any such Affiliate
under which the Company or any such Affiliate has any liability, and means
each Company Benefit Arrangement that is established and maintained outside
of the United States primarily for the benefit of individuals substantially
all of whom are nonresident aliens and which is not subject to ERISA.
(b) The Company has heretofore made available to Parent, and agrees that
it will as soon as practicable after the date of this Agreement furnish Parent
upon Parent's request with, copies
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of all Company Employee Plans (and, if applicable, related trust agreements)
and all amendments thereto and the most recent Forms 5500 required to be
filed with respect thereto, Internal Revenue Service determination letters,
and actuarial reports, in each case to the extent applicable. All annual
reports (as described in ERISA Section 103), Treasury Forms 5500, and other
documents or writings required to be filed or otherwise submitted in
connection with one or more of the Company Employee Plans or Company Benefit
Arrangements have been timely and properly filed or otherwise submitted in
accordance with applicable law.
(c) Section 3.15 of the Company Disclosure Schedule identifies each
Company Employee Plan, and further identifies whether a given Company
Employee Plan constitutes a "defined benefit plan" as defined in Section
3(35) of ERISA. Except as set forth on Section 3.15 of the Company Disclosure
Schedule, no Company Employee Plan constitutes a "multiemployer plan," as
defined in Section 3(37) of ERISA, and no Company Employee Plan or Company
Benefit Arrangement is maintained in connection with any trust described in
Section 501(c)(9) of the Code. Except as set forth on Section 3.15 of the
Company Disclosure Schedule, no Company Employee Plan provides retiree
medical or life insurance benefits or is subject to Title IV of ERISA.
Neither the Company nor any of its Affiliates has incurred, or will have
incurred as of Closing, any liability under Title IV of ERISA, including,
without limitation, arising in connection with the termination of, or
complete or partial withdrawal from, any plan currently or previously covered
by Title IV of ERISA, and the Pension Benefit Guarantee Corporation has not
instituted proceedings to terminate any such plan nor, to the knowledge of
the Company, do any conditions exist that present a risk of such occurrence.
Nothing done or omitted to be done by the Company or any of its Subsidiaries
or, to the knowledge of the Company, by any other Person, and no transaction
or holding of any asset under or in connection with any Company Employee Plan
by the Company or any of its Subsidiaries or, to the knowledge of the
Company, by any other Person, has or will make the Company or any of its
Subsidiaries or any officer or director of the Company or any of its
Subsidiaries subject to any liability under Title I of ERISA or for any tax,
penalty, assessment or material liability pursuant to Section 4975 of the
Code or Section 502 of ERISA. With respect to each Company Employee Plan
subject to Title IV of ERISA, the Company has made available to Parent the
most recent actuarial report showing the present value of accrued benefits
under such plan, based upon the actuarial assumptions used for funding
purposes with respect to such plan. No Company Employee Plan or any trust
established thereunder has incurred any "accumulated funding deficiency" (as
defined in Section 302 of ERISA and Section 412 of the Code), whether or not
waived, as of the last day of the most recent fiscal year of each such plan
ended prior to the date hereof; and all contributions required to be made
with respect thereto (whether pursuant to the terms of any Company Employee
Plan or otherwise) on or prior to the date hereof have been timely made. All
Company Employee Plans and Company Benefit Arrangements are in compliance
with all applicable laws, and the consummation of the transactions
contemplated by this Agreement will not cause any such plan to violate any
applicable law or provision of any such plan.
(d) Each Company Employee Plan and Company Benefit Arrangement and
related trusts comply with and have been maintained, funded and administered
in compliance with all applicable provisions of the Code relating to
qualification and tax exemption, or other intended tax consequences, under
Code Sections 401(a), 501(a) and/or 125, and Company has received no notice
from any Person, government, instrumentality or agency challenging such
compliance.
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Favorable IRS determination letters (to the extent such may be sought) on the
qualification of each such plan are in full force and effect.
(e) No termination or partial termination exists or will exist as
of the Closing with respect to any Company Benefit Arrangement or Company
Employee Plan.
(f) As of the Closing, full payment will have been made of all
amounts which the Company or each Subsidiary of the Company is required to
have made after or prior to such time, under any applicable law or terms of
an applicable such plan, as a contribution to or in relation to any such
plan, and no accumulated funding deficiency (as defined in ERISA Section 302
or Code Section 412), whether or not waived, will exist with respect to any
such plan.
(g) Except as disclosed in Section 3.15 of the Company Disclosure
Schedule, the consummation of the transactions contemplated by this Agreement
will not (i) give rise to any severance pay or any payment contingent upon or
as a result of a direct or indirect change in control or ownership of the
Company or any Subsidiary of the Company, or (ii) accelerate the time of
payment or vesting, or increase the amount of any compensation due to, or
benefits under any Company Benefit Arrangement or Company Employee Plan.
(h) Section 3.15 of the Company Disclosure Schedule lists each
material Company Benefit Arrangement currently in effect provided to any
director, executive officer, or employee of the Company or any former
director, executive officer, or employee of the Company and sets forth each
Company Benefit Arrangement with respect to which benefits will be
accelerated or paid as a result of the transactions contemplated by this
Agreement. Copies of all written Company Benefit Arrangements and all
amendments thereto have heretofore been made available to Parent, and will
promptly be furnished to Parent upon Parent's request after the date of this
Agreement. Each Company Benefit Arrangement has been maintained in
compliance with its terms and with the requirements prescribed by any and all
statutes, orders, rules, and regulations that are applicable to such Company
Benefit Arrangement.
(i) There are no pending claims, or, to the knowledge of the
Company, threats of claims by, in relation to, or on behalf of any Company
Employee Plan or Company Benefit Arrangement, by any employee, former
employee or beneficiary covered under any such plan or arrangement, or any
government or governmental agency or instrumentality or otherwise involving
any such plan or arrangement other than claims for benefits in the ordinary
course.
(j) Section 3.15 of the Company Disclosure Schedule identifies
each Foreign Benefit Plan. The Foreign Benefit Plans maintained, contributed
to, or required to be contributed to, by one or more of the Company, any
Subsidiary of the Company, or any Affiliate of one or more of the foregoing,
have at all times complied with and been administered in all material
respects in accordance with all applicable laws, tax, funding, and other or
similar requirements, and the consummation of the transactions contemplated
by this Agreement will not cause any such plan to violate any such law or
requirement. Without limiting the foregoing, there is no failure to comply
with any applicable law, requirement or any other or similar circumstance
which would or is likely to result in a loss of tax-related approval or other
regulatory related approval for any Foreign Benefit Plan, regardless of
whether such approval is or is intended to be applicable.
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SECTION 3.16 LABOR.
Neither the Company nor any of its Subsidiaries is a party to or bound
by any collective bargaining agreement respecting its employees, nor is there
existing, or to the knowledge of the Company any threat of, any strike,
organized walkout, or other organized work stoppage or labor organizational
effort by any employees of the Company or of any of its Subsidiaries.
SECTION 3.17 TAXES.
Except as set forth in the Company SEC Reports:
(a) the Company and its Subsidiaries have timely filed all Tax
Returns required to be filed by them with any taxing authority with respect
to Taxes for all periods heretofore ended, taking into account any extension
of time to file granted to or obtained on behalf of the Company and its
Subsidiaries;
(b) all Taxes required to be paid prior to the Effective Time have
been duly and timely paid or will be duly and timely paid by the Effective
Time;
(c) no material deficiency for any amount of Tax has been asserted
or assessed by a taxing authority against the Company or any of its
Subsidiaries, except for amounts for which the Company has made an adequate
reserve as reflected in the Company Financial Statements;
(d) all liability for Taxes of the Company or any of its
Subsidiaries that are or will become due or payable with respect to periods
covered by the Company Financial Statements have, in all material respects,
been paid or adequately reserved for in the Company Financial Statements to
the extent required by generally accepted accounting principles, and all
prepaid Taxes and other Tax assets reflected in the Company Financial
Statements represent valid accounts determined in accordance with generally
accepted accounting principles;
(e) neither the Company nor any of its Subsidiaries is liable for
any material amount of Taxes arising out of membership or participation in
any consolidated, affiliated, combined, or unitary group in which they were
at any time members, other than the group of which the Company is the common
parent;
(f) there are no material Liens for Taxes upon the assets of the
Company or of any of its Subsidiaries other than for Taxes not yet due and
payable;
(g) there are no outstanding waivers or comparable consents
extending the statute of limitations with respect to any Taxes or Tax Returns
of the Company or any of its Subsidiaries;
(h) there are no material audits, claims, actions, suits, or
proceedings now pending, nor, to the knowledge of the Company, is there a
material threat of any such audits, claims, actions, suits, or proceedings,
nor, to the knowledge of the Company, is there any material
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pending investigation, against or with respect to the Company or any of its
Subsidiaries in respect of any Taxes;
(i) neither the Company nor any of its Subsidiaries is a party to
any agreement providing for the allocation or sharing of Taxes; and
(j) there has been no change in the method of accounting utilized
by the Company or any of its Subsidiaries that would require a material
adjustment to taxable income under Section 481 of the Code.
For purposes of this Agreement, "TAXES" or "TAX" means all federal,
state, local, and foreign taxes, levies, and other assessments, including
without limitation, all income, excise, property, sales, use, value added,
transfer, franchise, profits, withholding, payroll, social security,
Medicare, or other taxes including any interest, additions to tax, and
penalties applicable thereto; and "TAX RETURN" means any return, declaration,
statement, report, schedule, information return, and other document
(including any related or supporting information) with respect to Taxes.
SECTION 3.18 FDA AND RELATED MATTERS.
(a) Section 3.18 of the Company Disclosure Schedule sets forth a
complete and accurate list, referencing relevant records and documents, since
January 1, 1993, of (i) all Regulatory or Warning Letters, Notices of Adverse
Findings, and Section 305 Notices and similar letters or notices issued by
the Food and Drug Administration (the "FDA") or any other federal, state,
local, or foreign governmental entity that is concerned with the safety,
efficacy, reliability, or manufacturing of medical products, including drugs
and devices, relating to the conduct of the business of the Company and its
Subsidiaries, (ii) all United States Pharmacopoeia product problem reporting
program complaints or reports, MedWatch FDA Forms 3500, and device experience
network complaints received by the Company or any of its Subsidiaries and all
Drug and Medical Device Reports, adverse drug experience reports, and
therapeutic failure reports filed by the Company or any of its Subsidiaries,
which complaints or reports pertain to any incident involving death, serious
injury, or a serious adverse drug experience, and for which incident there
has been any (1) notice or follow up inquiry to the Company or any of its
Subsidiaries by the FDA, (2) litigation or arbitration claim or cause of
action commenced, or (3) notice to any insurance carrier of the Company or
any of its Subsidiaries tendering the defense or giving notice of a possible
or actual claim against the Company or any of its Subsidiaries, (iii) all
product recalls and safety alerts conducted by or issued to the Company or
any of its Subsidiaries and any requests from the FDA or any other drug and
medical device regulatory agency requesting the Company or any of its
Subsidiaries to cease to investigate, test, or market any product, (iv) any
civil penalty actions begun by the FDA or any other drug and medical device
regulatory agency against the Company or any of its Subsidiaries and all
consent decrees issued with respect to the Company or any of its
Subsidiaries, and (v) any other written communications between the FDA or any
other drug and medical device regulatory agency, on the one hand, and the
Company or any of its Subsidiaries, on the other hand. The Company has
delivered to Parent copies of all documents referred to in Section 3.18 of
the Company Disclosure Schedule, as well as copies of all complaints and other
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information required to be maintained by the Company pursuant to Section 820
of Title 21 of the Code of Federal Regulations ("CFR") or 21 CFR Section 211.
(b) The Company and its Subsidiaries have obtained all consents,
approvals, certifications, authorizations, and permits of, and have made all
filings with, or notifications to, the FDA and all other drug and medical
device regulatory agencies pursuant to applicable requirements of all FDA
laws, rules, and regulations, and all corresponding state and foreign laws,
rules, and regulations applicable to the Company and its Subsidiaries. All
representations made by the Company or any of its Subsidiaries in connection
with any such consents, approvals, certifications, authorizations, permits,
filings, and notifications were true and correct in all material respects at
the time such representations were made, and the products of the Company and
its Subsidiaries comply with, and perform in accordance with the
specifications described in, such representations. The Company and its
Subsidiaries are in all material respects in compliance with all applicable
FDA laws, rules, and regulations, and all corresponding applicable state and
foreign laws, rules, and regulations (including Good Manufacturing Practices,
as defined in 21 CFR Parts 210, 211, and 820, Medical Device Reporting
requirements, and Adverse Experience Reporting) applicable to the business of
the Company. The Company has not received any notice that any of the
consents, approvals, certifications, authorizations, registrations, permits,
filings, or notifications that it has received or made to operate its
business have been or are being revoked or challenged. Except as set forth
on Section 3.18 of the Company Disclosure Schedule, to the knowledge of the
Company, there are no investigations or inquiries pending, and there is no
threat of any investigation or inquiry, by the FDA or any other drug and
medical device regulatory agency relating to the operation of the business of
the Company and its Subsidiaries or its compliance with FDA laws, rules, and
regulations, and corresponding state and foreign laws, rules, and
regulations, applicable to the business of the Company and its Subsidiaries.
None of the matters set forth on Section 3.18 of the Company Disclosure
Schedule is reasonably likely to have, individually or in the aggregate, a
Company Material Adverse Effect.
SECTION 3.19 INTELLECTUAL PROPERTY RIGHTS.
(a) Section 3.19 of the Company Disclosure Schedule lists each of
the following items that are related to the business of the Company and its
Subsidiaries: (i) patents and applications therefor, registrations of
trademarks (including service marks) and applications therefor, and
registrations of copyrights and applications therefor that are owned by the
Company or any of its Subsidiaries, (ii) unexpired licenses relating to
Intellectual Property Rights (as defined in paragraph (d) of this Section
3.19) that have been granted to or by the Company or any of its Subsidiaries,
and (iii) other agreements relating to Intellectual Property Rights (as
defined below).
(b) The Company and its Subsidiaries collectively own or have the
right to use all of the Intellectual Property Rights that are used in the
conduct of the business of the Company and its Subsidiaries. Except as set
forth in Section 3.19 of the Company Disclosure Schedule, such ownership and
right to use are free and clear of all Liens, claims, and rights of third
parties. Except as set forth in Section 3.19 of the Company Disclosure
Schedule, such ownership and right to use will not be affected by the
consummation of the Offer, the Merger, or by any of the
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transactions contemplated herein whether because of non-assignment
provisions, change of control provisions, or otherwise. The Company and its
Subsidiaries have the right to license to others the use of all Intellectual
Property Rights owned by them.
(c) Except as set forth on Section 3.19 of the Company Disclosure
Schedule, to the knowledge of the Company there are no material allegations
or claims that any product or process manufactured, used, sold, or under
development by or for the Company or its Subsidiaries infringes on the
Intellectual Property Rights of any third party, and no challenges to the
validity, ownership, or right to use or license by the Company or any of its
Subsidiaries of any of the Intellectual Property Rights owned, used, or
licensed by the Company or any of its Subsidiaries.
(d) As used in this Agreement, the term "INTELLECTUAL PROPERTY
RIGHTS" includes patents, patent applications, trademarks, trademark
applications, service marks, service mark applications, copyrights, copyright
applications, and proprietary trade names, publication rights, computer
programs (including source codes and object codes), inventions, know how,
trade secrets, technology, processes, and formulae.
SECTION 3.20 ENVIRONMENTAL PROTECTION
(a) As used in this Agreement, each of the following terms has the
indicated meaning:
(i) "COMPANY REAL PROPERTY" means the real property now or
formerly owned or leased by the Company or any of its Subsidiaries, except as
otherwise expressly limited where the term is used.
(ii) "ENVIRONMENTAL LAW" means federal, state, local, or
foreign laws, statutes, rules, regulations, and ordinances relating to the
protection of the environment.
(iii) "HAZARDOUS MATERIAL" means any hazardous, toxic, or
dangerous substance defined as such in (or for purposes of) the Comprehensive
Environmental Response, Compensation and Liability Act, as amended
("CERCLA"), or any other Environmental Law.
(b) Except as set forth on Section 3.20 of the Company Disclosure
Schedule:
(i) The Company and each of its Subsidiaries is and has
been in compliance with all applicable Environmental Laws, except for any
such non-compliance which has been cured and for which neither the Company
nor any of its Subsidiaries has any further liability or obligation.
(ii) Neither the Company nor any of its Subsidiaries has
treated, stored, disposed of, or released any Hazardous Material on Company
Real Property in violation of any applicable Environmental Laws, and, to the
knowledge of the Company, none of the conditions at the Company Real Property
is reasonably likely to give rise to any remedial obligation of the Company
or any of its Subsidiaries under any Environmental Laws.
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(iii) Neither the Company nor any of its Subsidiaries has
received any written notices, demand letters, or written requests for
information from any governmental body, agency, official, or authority or
from any third party indicating that the Company or any of its Subsidiaries
is in violation of, or liable in a amount to any Person under, any
Environmental Law, except for any such violation which has been cured and for
which neither the Company nor any of its Subsidiaries has any further
liability or obligation.
(iv) There are no actions, suits, or proceedings pending,
and, to the knowledge of the Company, there is no threat of any actions,
suits, or proceedings, and, to the knowledge of the Company, there are no
investigations pending, against the Company or any of its Subsidiaries or
involving any of the presently owned or leased Company Real Property before
any court or arbitrator or any governmental body, agency, official, or
authority relating to any violation, or alleged violation, by the Company or
any of its Subsidiaries of any Environmental Law or relating to the
contamination of any such Company Real Property.
(v) There are no underground storage tanks on any
presently owned or leased Company Real Property, and no underground storage
tanks have been closed or removed from any Company Real Property while the
Company Real Property was owned or leased by the Company or any of its
Subsidiaries, the closure or removal of which is reasonably likely to give
rise to a liability of the Company or any of its Subsidiaries under any
Environmental Law.
(vi) None of the Company, any of its Subsidiaries, or any
of the presently owned or leased Company Real Property is currently subject
to, any liabilities, fixed or contingent, relating to any suit, settlement,
court order, administrative order, judgment, or claim asserted under any
Environmental Law.
(vii) The Company and its Subsidiaries have made available
to Parent (A) all studies, reports, and similar documents that have been
generated by third-party consultants, internal compliance reports of the
Company or any of its Subsidiaries, and documents filed by the Company or any
of its Subsidiaries with any governmental agency, relating to environmental
matters at any Company Real Property, and (B) all other documents relating to
any actual or potential contamination of Company Real Property. The Company
has furnished Parent with copies of any such studies, reports, and documents
indicating that the conditions at any of the Company Real Property are
reasonably likely to give rise to a remedial obligation or other liability of
the Company or any of its Subsidiaries under any Environmental Laws.
(viii) The Company and its Subsidiaries have all permits
required by applicable Environmental Laws and are in all material respects in
compliance with the provisions of all such permits.
(ix) Neither the Company nor any of its Subsidiaries has
any obligation to any third party with respect to any previously owned, or
presently or previously leased, Company Real Property relating to the
remediation of any contamination under any Environmental Laws.
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(c) Neither the Company nor any of its Subsidiaries has received
written notice from any Person that any part of the Company Real Property has
been or is listed as a site containing Hazardous Material requiring
remediation under CERCLA or any other Environmental Law.
SECTION 3.21 FINDERS AND INVESTMENT BANKERS.
Except for Dain Rauscher Wessels, no investment banker, broker,
finder, or other similar intermediary has been retained by or is authorized
to act on behalf of the Company or any of its Subsidiaries, or otherwise is
entitled to any fee or commission in connection with the transactions
contemplated by this Agreement. The Company has provided Parent with a copy
of the engagement letter with Dain Rauscher Wessels, as amended to date.
Dain Rauscher Wessels' fees will be paid by the Company.
SECTION 3.22 INSURANCE.
Section 3.22 of the Company Disclosure Schedule lists, and the Company
has made available to Parent or its representatives for review current and
complete copies of, all insurance policies, binders, and surety and fidelity
bonds relating to the Company and its Subsidiaries (including, without
limitation, all policies or binders of casualty, general liability, and
workers' compensation, but excluding the owner's and lessee's policies of
title insurance referred to in Section 3.30(h)), all of which are currently
in force and effect. All premiums and other amounts due and payable under
each such policy, binder, and bond have been paid. Neither the Company nor
any of its Subsidiaries is in default with respect to any material provision
contained in any such policy, binder, or bond and has not failed to give any
notice of or present any material claim thereunder as required under the
terms of the policy. There are no outstanding unpaid claims under any such
policy, binder, or bond, and neither the Company nor any of its Subsidiaries
has received any written notice of cancellation or non-renewal of any such
policy, binder, or bond. Neither the Company nor any of its Subsidiaries has
received any written notice from any of its insurance carriers that any
insurance premiums paid by it will be materially increased in the future as a
result of the claims experience of the Company or such Subsidiary.
SECTION 3.23 INDEMNIFICATION.
Except as set forth in the articles of incorporation and bylaws of the
Company or its Subsidiaries or as disclosed in the Company SEC Reports or on
Section 3.23 of the Company Disclosure Schedule, neither the Company nor any
of its Subsidiaries is a party to any indemnification agreement with any of
its present or former directors, officers, employees, agents, or other
persons who serve in any similar capacity.
SECTION 3.24 BOARD APPROVAL AND RECOMMENDATION.
Prior to the execution of this Agreement, the Board of Directors of
the Company, at a meeting duly called and held, unanimously (a) determined
that this Agreement and the transactions contemplated hereby, including the
Merger, the Offer, and the Parent Stock Option, are fair to the stockholders
of the Company, (b) approved this Agreement and the transactions contemplated
hereby, including the Merger, the Offer, and the Parent Stock Option, and (c)
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recommended that the Company's stockholders tender their shares of Company
Stock pursuant to the Offer and approve this Agreement and the transactions
contemplated herein, including the Merger (unless approval of this Agreement
and the Merger is not required by reason of the fact that immediately prior
to the Effective Time Merger Sub owns at least 90% of the Company Stock
outstanding at such time).
SECTION 3.25 VOTE REQUIRED.
The only vote of the holders of any class or series of capital stock
of the Company necessary to approve the Merger is the affirmative vote of the
holders of at least two-thirds of the outstanding shares of Company Stock.
No such vote by the holders of any class or series of capital stock of the
Company will be necessary if at the Effective Time Merger Sub owns at least
90% of the shares of Company Stock outstanding at the Effective Time. There
is no vote of the holders of any class or series of capital stock of the
Company necessary in order for Merger Sub to commence and consummate the
Offer.
SECTION 3.26 OPINION OF FINANCIAL ADVISOR.
The Company has received the opinion of Dain Rauscher Wessels to the
effect that the consideration to be received by the stockholders of the
Company pursuant to the Offer and the Merger is fair to such stockholders
from a financial point of view.
SECTION 3.27 COMPANY RIGHTS AGREEMENT.
Neither Parent nor any of its affiliates or associates is an
"ACQUIRING PERSON" (as defined in the Company Rights Agreement) and there has
not been a "SHARES ACQUISITION DATE" or a "DISTRIBUTION DATE" (as defined in
the Company Rights Agreement) under the Company Rights Agreement. The
Company has amended the Company Rights Agreement to provide that (i) the
execution, delivery, and performance of this Agreement, the Parent Stock
Option and the Insider Lock-Up Options, the purchase of shares of Company
Stock pursuant to the Offer, the purchase of shares pursuant to the Parent
Stock Option and the Insider Lock-Up Options, and the consummation of the
Merger and the other transactions contemplated by this Agreement will not (A)
cause Parent or any of its affiliates or associates to become an Acquiring
Person or (B) otherwise cause a Shares Acquisition Date or Distribution Date
to occur, and (ii) upon purchase of shares of Company Stock pursuant to the
Offer, the Parent Stock Option or the Insider Lock-Up Options, the Company
Rights will no longer be exercisable, and the former holders of the Company
Rights will not have any claims or rights thereunder. The Company has filed
with the SEC and made available to Parent a true and correct copy of the
Company Rights Agreement, as amended through the date hereof.
SECTION 3.28 TAKEOVER STATUTES.
The Board of Directors of the Company has heretofore expressly
approved the acquisition of shares of Company Stock by Merger Sub pursuant to
the Offer, the Parent Stock Option and the Insider Lock-Up Options, and the
Merger for purposes of Article 13.03 of Texas Law, and such approval is
sufficient to render inapplicable to the Merger and the other
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transactions contemplated by this Agreement the provisions of Article 13.03
of Texas Law. Except for Section 13.03, no "fair price," "moratorium," or
other similar antitakeover statute or provision applies or purports to apply
to the Offer, the Merger, the Parent Stock Option, or the other transactions
contemplated hereby. Except for the Company Rights Agreement and the related
shares of Common Stock issuable upon exercise of the Company Rights, no
provision of the articles of incorporation or bylaws of the Company or any of
its Subsidiaries would, directly or indirectly, restrict or impair the
ability of Merger Sub or Parent to vote, or otherwise to exercise the rights
of a stockholder with respect to, the Common Stock.
SECTION 3.29 INFORMATION SUPPLIED.
None of the information that is included in the Offer Documents in
reliance upon and in conformity with written information furnished to Parent
by the Company specifically for use in the Offer Documents will, at the time
such information is furnished to Parent, contain an untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Schedule
14D-9, at the time the Schedule 14D-9 or any amendment thereto is filed with
the SEC, will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; except that, the foregoing does not apply to the extent
that any such untrue statement of a material fact or omission to state a
material fact was or is made by the Company in reliance upon and in
conformity with written information furnished to the Company by Merger Sub or
Parent specifically for use in the Schedule 14D-9.
SECTION 3.30 REAL AND PERSONAL PROPERTY.
(a) For purposes of this Section 3.30, "PERMITTED LIEN" means any
(A) Lien that does not materially interfere with the use of, or materially
diminish the value of, the property subject thereto and (B) capital lease
obligation entered into in the ordinary course of business.
(b) Section 3.30 of the Company Disclosure Schedule lists all of
the real property owned (the "OWNED REAL PROPERTY") or leased (the "LEASED
REAL PROPERTY") by the Company or any of its Subsidiaries.
(c) Except as set forth in Section 3.30 of the Company Disclosure
Schedule, the Company or its Subsidiary, as the case may be, has (i) good and
valid fee simple title to the Owned Real Property, (ii) good and valid title
to all of the tangible personal property recorded as an asset in the Company
Financial Statements as of June 30, 1998, and not disposed of since that date
in the ordinary course of business, and (iii) a valid and subsisting
leasehold interest in the Leased Real Property, that, in the case of each of
clauses (i), (ii), and (iii) above, is free and clear of any Lien other than
Permitted Liens.
(d) All of the buildings, improvements and other facilities
including in the Owned Real Property or Leased Real Property are in good
condition, normal wear and tear excepted, and
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are suitable for their present purposes, and none of such buildings,
improvements or facilities is subject to any material structural defect.
(e) The primary business operations currently conducted on the
Owned Real Property and the Leased Real Property are not in violation of
applicable zoning laws and regulations, except for violations that
individually or in the aggregate are not material.
(f) The buildings and other structures located on the Owned Real
Property do not encroach on real property of another Person, and no building
or structure of any other Person encroaches on any of the Owned Real
Property, except for encroachments that individually or in the aggregate, are
not material.
(g) The buildings and structures on the Owned Real Property have
direct vehicular access (or indirect vehicular access through valid and
enforceable easements) to public roads and all appropriate utilities
necessary for the conduct of the business thereon as it is presently
conducted.
(h) The Company has made available to Parent all owner's policies
of title insurance as to Owned Real Property, lessee's policies of title
insurance as to Leased Real Property (if any), and related surveys that are
in its possession.
SECTION 3.31 RELATED PARTY TRANSACTIONS.
Except as set forth in Section 3.31 of the Company Disclosure
Schedule, no director, officer, partner, employee, "affiliate" or "associate"
(as such terms are defined in Rule 12b-2 under the Exchange Act) of the
Company or any of its Subsidiaries (i) has borrowed any monies from or has
outstanding any indebtedness or other similar obligations to the Company or
any of its Subsidiaries; (ii) owns any direct or indirect interest of any
kind in, or is a director, officer, employee, partner, affiliate or associate
of, or consultant or lender to, or borrower from, or has the right to
participate in the management, operations or profit of, any person or entity
which is (1) a competitor, supplier, customer, distributor, lessor, tenant,
creditor or debtor of the Company or any of its Subsidiaries, (2) engaged in
a business related to the business of the Company or any of its Subsidiaries,
or (3) participating in any transaction to which the Company or any of its
Subsidiaries is a party; or (iii) is otherwise a party to any contract,
arrangement or understanding with the Company or any of its Subsidiaries.
SECTION 3.32 CERTAIN BUSINESS PRACTICES.
Neither the Company, any of its Subsidiaries, nor to the Company's
knowledge any directors, officers, agents or employees of the Company or any
of its Subsidiaries (i) has used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to political activity; (ii)
has made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns or
violated any provision of the Foreign Corrupt Practices Act of 1977, as
amended; (iii) has made any other payment prohibited by applicable law; or
(iv) in the case of the Company, any of its Subsidiaries
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or any of its officers or key employees, is a party to or bound by any
noncompetition or similar agreement or obligation with any third party, which
restricts its or his or her business practices.
SECTION 3.33 SUPPLIERS AND CUSTOMERS.
As of the date hereof, and except as set forth in Section 3.33 of the
Company Disclosure Schedule, the Company has received no written notice from
or, to its knowledge, any oral notice from any significant supplier to or
customer of the Company's business of such supplier's or customer's intention
to materially and adversely alter its existing business relationship with the
Company.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB
Parent and Merger Sub jointly and severally represent and warrant to the
Company that:
SECTION 4.01 CORPORATE EXISTENCE.
Parent and Merger Sub are corporations duly incorporated, validly
existing, and in good standing under the laws of the State of Georgia and
Texas, respectively.
SECTION 4.02 CORPORATE AUTHORIZATION.
The execution, delivery, and performance by Parent and Merger Sub of
this Agreement, the purchase by Merger Sub of shares of Company Stock
pursuant to the Offer and pursuant to the Parent Stock Option, and the
consummation of the Merger and the other transactions contemplated hereby by
Parent and Merger Sub are within their respective corporate power and
authority and have been duly authorized by all necessary corporate action on
the part of Parent and Merger Sub, respectively. This Agreement has been
duly executed and delivered by Parent and Merger Sub and, assuming the due
authorization, execution, and delivery hereof by the Company, constitutes a
legal, valid, and binding agreement of Parent and Merger Sub.
SECTION 4.03 GOVERNMENTAL AUTHORIZATION.
The execution, delivery, and performance by Parent and Merger Sub of
this Agreement, the purchase of shares of Company Stock by Merger Sub
pursuant to the Offer and pursuant to the Parent Stock Option, and the
consummation of the Merger and the other transactions contemplated hereby by
Parent and Merger Sub do not require any material consent, approval,
authorization, or permit of, other action by, or filing with, any
governmental body, agency, official, or authority other than (i) the filing
of appropriate certificates of merger in accordance with Texas Law, (ii) the
filing and delivery of the Offer Documents, and (iii) compliance with
applicable requirements of the Exchange Act.
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SECTION 4.04 NON-CONTRAVENTION.
The execution, delivery, and performance by Parent and Merger Sub of
this Agreement, the purchase by Merger Sub of the shares of Company Stock
pursuant to the Offer, and the consummation of the Merger and the other
transactions contemplated hereby by Parent and Merger Sub do not and will not
(i) contravene or conflict with the articles of incorporation or bylaws of
Parent or the articles of incorporation or bylaws of Merger Sub, (ii)
materially contravene, conflict with, or constitute a violation of any
provision of any law, rule, regulation, judgment, injunction, order, or
decree binding upon or applicable to Parent, Merger Sub, or any of their
Subsidiaries, or (iii) constitute a default, give rise to a right of
termination, cancellation, or acceleration of any material right or
obligation of Parent, Merger Sub, or any of their Subsidiaries, or give rise
to a loss of any material benefit to which Parent, Merger Sub which would
prevent or materially delay consummation of the Offer or the Merger.
SECTION 4.05 PARENT SEC REPORT.
Parent's Annual Report on Form 10-K for the year ended May 31, 1998
and filed with the SEC was prepared in accordance with the requirements of
the Exchange Act, and did not at the time it was filed contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
SECTION 4.06 AVAILABILITY OF FUNDS.
Parent and Merger Sub have available to them, and shall maintain the
availability of, sufficient funds to enable them to consummate the
transactions contemplated by this Agreement.
SECTION 4.07 INFORMATION SUPPLIED.
None of the information that is included in the Schedule 14D-9 in
reliance upon and in conformity with written information furnished to the
Company by Parent or Merger Sub specifically for use in the Offer Documents
will, at the time such information is furnished to the Company, contain an
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
Offer Documents, at the time they or any amendments thereto are filed with
the SEC or on the date first published, sent, or given to the Company's
stockholders, will not contain an untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; except that, the foregoing does not apply to the extent
that any such untrue statement of a material fact or omission to state a
material fact was or is made by Parent or Merger Sub in reliance upon and in
conformity with written information furnished to Parent or Merger Sub by the
Company specifically for use in the Offer Documents.
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SECTION 4.08 FINDERS AND INVESTMENT BANKERS.
Except for TM Capital Corp., no investment banker, broker, finder, or
other similar intermediary has been retained by or is authorized to act on
behalf of Parent, Merger Sub, or any of their Subsidiaries who might be
entitled to any fee or commission in connection with the transactions
contemplated by this Agreement.
SECTION 4.09 BOARD APPROVAL.
Prior to the execution of this Agreement, each of the Boards of
Directors of Parent and Merger Sub approved this Agreement and the
transactions contemplated hereby, including the Merger and the Offer.
ARTICLE V.
ADDITIONAL AGREEMENTS OF THE COMPANY
The Company agrees that:
SECTION 5.01 CONDUCT OF THE COMPANY.
Except as contemplated or permitted by this Agreement or as otherwise
approved in writing by Parent, from the date of this Agreement until the time
that the designees of Merger Sub have become members of the Board of
Directors of the Company in accordance with Section 1.01(d) hereof, the
Company will, and will cause its Subsidiaries to, conduct their respective
businesses in the ordinary course consistent with reasonable past practice.
Subject to the foregoing exceptions, from the date hereof until the time that
the designees of Merger Sub have become members of the Board of Directors of
the Company in accordance with Section 1.01(d) hereof:
(a) the Company will not adopt or approve any change or amendment
in its articles of incorporation or bylaws;
(b) the Company will not, and will not permit any of its
Subsidiaries to, merge, consolidate, or enter into a share exchange with any
other Person; acquire any material stock or any material amount of assets of
any other Person; or sell, lease, license, mortgage, pledge, or otherwise
dispose of any material assets except in the ordinary course of business
consistent with reasonable past practice, or transfers between the Company
and/or its wholly owned Subsidiaries;
(c) the Company will not declare, set aside, or pay any dividends
(other than dividends declared prior to the date hereof) or make any
distributions in respect of shares of Company Stock;
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(d) the Company will not, and will not permit any of its
Subsidiaries to, (i) issue, deliver, sell, encumber, or authorize or propose
the issuance, delivery, sale, or encumbrance of, any capital stock or other
securities of the Company or any Company Subsidiary Securities, other than
(A) pursuant to the Company Rights Agreement (as amended pursuant to Section
3.27) and (B) the issuance of shares of Company Stock upon the exercise of
the Parent Stock Option or Company Options granted prior to the date hereof,
(ii) split, combine, or reclassify any shares of Company Stock or Company
Subsidiary Securities, (iii) repurchase, redeem, or otherwise acquire any
capital stock or other voting securities of the Company or any voting Company
Subsidiary Securities, or (iv) amend the terms of any outstanding voting
securities;
(e) the Company will not, without the prior written consent of
Parent, which consent shall not be unreasonably withheld or delayed, make any
commitment or enter into any contract or agreement that, individually or in
the aggregate, is reasonably likely to be material to the Company and its
Subsidiaries taken as a whole except in the ordinary course of business
consistent with reasonable past practices;
(f) except to the extent required by law or by existing written
agreements or plans disclosed in the Company SEC Reports, neither the Company
nor any of its Subsidiaries will increase in any manner the compensation or
fringe benefits of any of its directors, officers or employees (other than
increases in the ordinary course of business in the compensation or fringe
benefits of any officers or employees who are not executive officers); pay
any pension or retirement allowance to any such directors, officers or
employees; become a party to, amend, or commit itself to any pension,
retirement, profit-sharing, welfare benefit plan, or employment agreement
with or for the benefit of any such director, officer or employee; grant any
severance or termination pay or stay-in-place bonus to any such director,
officer or employee; or increase the benefits payable under any existing
severance or termination pay or stay-in-place bonus policies;
(g) the Company will not, and will not permit any of its
Subsidiaries to, make any material Tax election or settle or compromise any
material federal, state, local, or foreign Tax liability; and
(h) the Company will not agree to do any of the foregoing.
SECTION 5.02 ACCESS TO INFORMATION.
From the date hereof until the Effective Time or earlier termination
of this Agreement, the Company will give Parent and Merger Sub, their
counsel, financial advisors, auditors, and other authorized representatives
reasonable access during regular business hours to the offices, properties,
books, and records of the Company and its Subsidiaries, and will furnish to
Parent and Merger Sub, their counsel, financial advisors, auditors, and other
authorized representatives such financial and operating data and other
information as such Persons may reasonably request, and will instruct the
Company's employees, counsel, and financial advisors to cooperate with Parent
and Merger Sub in their evaluation.
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SECTION 5.03 OTHER OFFERS.
(a) From the date hereof until the Effective Time or the earlier
termination of this Agreement, the Company will not, and will use its best
efforts to cause its Subsidiaries and the officers, directors, employees, and
agents of the Company and its Subsidiaries not to, directly or indirectly,
(i) take any action to solicit, to initiate, or knowingly to encourage any
Company Acquisition Proposal (as defined below), (ii) take any action
knowingly to facilitate (including, without limitation, amending the Company
Rights Agreement other than as contemplated herein or redeeming the rights
issued thereunder) any Company Acquisition Proposal, (iii) engage or
participate in discussions or negotiations, or enter into agreements, with
any Person with respect to a Company Acquisition Proposal, or (iv) in
connection with a Company Acquisition Proposal, disclose any nonpublic
information relating to the Company or any of its Subsidiaries or afford
access to the properties, books, or records of the Company or any of its
Subsidiaries to any Person; and further the Company agrees that it will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with
respect to any of the foregoing and each will take the necessary steps to
inform the individuals or entities referred to above of the obligations
undertaken in this Section 5.03. Notwithstanding the foregoing, the Company
may take the action described in clause (ii), (iii), or (iv) of the preceding
sentence if (A) such action is taken in connection with an unsolicited
Company Acquisition Proposal, (B) the Company's Board of Directors has
determined, based on the written advice of its independent financial
advisors, that such Company Acquisition Proposal would, if consummated,
result in a transaction more favorable to the Company's shareholders from a
financial point of view than the transactions contemplated by this Agreement,
(C) legal counsel to the Company has advised the Company's Board of Directors
in writing that the failure to take such action would be a breach of the
fiduciary duties of the Board of Directors under applicable law, and (D) in
the case of the disclosure of nonpublic information relating to the Company
or any of its Subsidiaries in connection with a Company Acquisition Proposal,
such information is covered by a confidentiality agreement that provides
substantially the same or better protection to the Company as is afforded by
the Confidentiality Agreement. The Company will immediately notify Parent
orally and in writing of any Company Acquisition Proposal or any inquiries
with respect thereto. Any such written notification will include the
identity of the Person making such inquiry or Company Acquisition Proposal
and a description of the material terms of such Company Acquisition Proposal
(or the nature of the inquiry) and will indicate whether the Company is
providing or intends to provide the person making the Company Acquisition
Proposal with access to nonpublic information relating to the Company or any
of its Subsidiaries. For purposes of this Agreement, "COMPANY ACQUISITION
PROPOSAL" means any good faith offer or proposal for (x) a merger or other
business combination involving the Company or any of its Subsidiaries and any
Person (other than Parent, Merger Sub, or any other Subsidiary of either
Parent or Merger Sub), (y) an acquisition by any Person (other than Parent,
Merger Sub, or any other Subsidiary of either Parent or Merger Sub) of assets
or earning power of the Company or any of its Subsidiaries, in one or more
transactions, representing 25% or more of the consolidated assets or earning
power of the Company and its Subsidiaries, or (z) an acquisition by any
Person (other than Parent, Merger Sub, or any other Subsidiary of either
Parent or Merger Sub) of securities representing 20% or more of the voting
power of the Company or any of its Subsidiaries.
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(b) Except as set forth in this Section 5.03, neither the Board of
Directors of the Company nor any committee thereof shall (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Parent or
Merger Sub, the approval or recommendation by such Board of Directors or such
committee of the Offer, the Merger, or this Agreement, (ii) approve or
recommend, or propose publicly to approve or recommend, any Company
Acquisition Proposal, or (iii) cause the Company to enter into any letter of
intent, agreement in principle, acquisition agreement or other similar
agreement (each, an "ACQUISITION AGREEMENT") related to any Company
Acquisition Proposal, except that, in any case set forth in clause (i), (ii),
or (iii) above, prior to the acceptance for payment of shares of Company
Stock pursuant to the Offer, the Board of Directors of the Company may, in
response to an unsolicited Company Acquisition Proposal, (A) withdraw or
modify its approval or recommendation of the Offer, the Merger, or this
Agreement or (B) approve or recommend any such Company Acquisition Proposal
if, in the case of any action described in clause (A) or (B), the events
stated in clauses (B) and (C) of the second sentence of Section 5.03(a) have
occurred, and, in the case of the actions described in clause (B),
concurrently with such approval or recommendation the Company terminates this
Agreement and promptly thereafter enters into an Acquisition Agreement with
respect to a Company Acquisition Proposal.
(c) Nothing contained in this Agreement shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by
Rule 14d-9 or Rule 14e-2(a) promulgated under the Exchange Act or from making
any disclosure to the Company's stockholders if, in the good faith judgment
of the Board of Directors of the Company, after consultation with outside
counsel, failure so to disclose would be a breach of applicable law; provided
that, neither the Company nor its Board of Directors nor any committee
thereof shall, except as permitted by Section 5.03(b), withdraw or modify, or
propose to withdraw or modify, its position with respect to the Offer, the
Merger, or this Agreement or approve or recommend, or propose to approve or
recommend, a Company Acquisition Proposal.
SECTION 5.04 NOTICES OF CERTAIN EVENTS.
The Company will promptly notify Parent of:
(a) any notice or other communication from any Person alleging
that the consent of any third party (other than consents listed in Section
3.03 or 3.05 of the Company Disclosure Schedule) is or may be required in
connection with the transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions
contemplated by this Agreement;
(c) any actions, suits, claims, or proceedings commenced against,
or, to the knowledge of the Company, any threat of an action, suit, claim, or
proceeding made against, or any pending investigation of, the Company or any
of its Subsidiaries that, if pending on the date of this Agreement, would
have been required to have been disclosed pursuant to Section 3.12 or that
relate to the consummation of the transactions contemplated by this
Agreement; and
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(d) the receipt by the Company or any of its Subsidiaries
subsequent to the date of this Agreement of any notice of, or other
communication relating to, a default, or an event that with notice or lapse
of time or both would become a default, under any Company Contract.
SECTION 5.05 PATENT LITIGATION.
With respect to the law suit by MicroTyping Systems and Stiftung for
Diagnostiche Forschung against the Company concerning an alleged patent
infringement by the Company, without the express prior consent of Parent
the Company shall not make any filings with the court, comply with any
discovery requests, or engage in any discussions with the plaintiffs or their
respective legal counsel concerning the prosecution, defense or settlement of
such law suit, any claims covered thereby or any related claims.
SECTION 5.06 MERGER MEETING; PROXY STATEMENT.
(a) If required by applicable law, including Texas Law, in order
to consummate the Merger, as soon as practicable following the purchase of
shares of Company Stock pursuant to the Offer, the Company will take all
action necessary in accordance with applicable law and with the Company's
articles of incorporation and bylaws to convene a meeting of its stockholders
to approve the Merger and adopt this Agreement (the "MERGER MEETING"). The
Company's Board of Directors has heretofore recommended, and will continue to
recommend, that the Company's stockholders approve the Merger and adopt this
Agreement, and will cause the Company to use all reasonable efforts to
solicit from the stockholders proxies to vote therefor, unless (i) legal
counsel to the Company has advised the Company's Board of Directors in
writing that such recommendation would be a breach of the fiduciary duties of
the Board of Directors under applicable law or (ii) this Agreement is
terminated in accordance with Article VIII.
(b) The Company will, if required by law for the consummation of
the Merger, prepare and file with the SEC preliminary proxy materials
relating to the approval of the Merger and the adoption of this Agreement by
the Company's stockholders, and will file with the SEC revised preliminary
proxy materials, if appropriate, and definitive proxy materials in a timely
manner as required by the rules and regulations of the SEC. Subject to the
last sentence of Section 5.06(a), the proxy materials relating to the Merger
Meeting will include the recommendation of the Company's Board of Directors.
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ARTICLE VI.
ADDITIONAL AGREEMENTS OF PARENT, MERGER SUB, AND THE COMPANY
Parent, Merger Sub, and the Company agree that:
SECTION 6.01 BEST EFFORTS.
Subject to the terms and conditions of this Agreement, each party will
use its best efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary or advisable under applicable laws and
regulations to consummate the transactions contemplated by this Agreement as
promptly as practicable.
SECTION 6.02 CERTAIN FILINGS AND CONSENTS.
The Company and Parent will cooperate with one another (a) in
determining whether any action by or in respect of, or filing with, any
governmental body, agency, official, or authority is required, or any
actions, consents, approvals, or waivers are required to be obtained from
parties to any Company Contracts ("THIRD PARTY CONSENTS") in connection with
the transactions contemplated by this Agreement and (b) in attempting to take
all such actions, to obtain all such consents, approvals, and waivers, and to
make all such filings.
SECTION 6.03 PUBLIC ANNOUNCEMENTS.
Parent and the Company will consult with each other before issuing any
press release or making any public statement with respect to this Agreement
and the transactions contemplated hereby and, except as may be required by
applicable law or any listing agreement with the American Stock Exchange,
Inc. or The Nasdaq Stock Market, Inc., will not issue any such press release
or make any such public statement prior to such consultation.
SECTION 6.04 STATE TAKEOVER LAWS.
If any "fair price," "moratorium," or other similar statute or
regulation becomes applicable to the transactions contemplated by this
Agreement, the Company, Parent, and Merger Sub and, subject to applicable
fiduciary duties, their respective Boards of Directors will use all
reasonable efforts to grant such approvals and take such actions as are
necessary so that the transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms contemplated hereby and
otherwise act to minimize the effects of such statute or regulation on the
transactions contemplated hereby.
SECTION 6.05 MERGER MEETING.
The Merger will be consummated as soon as practicable (and in no event
later than two months) after the purchase of shares of Company Stock pursuant
to the Offer. If Merger Sub is able to do so under Texas Law, it will
consummate the Merger pursuant to Article 5.16 of Texas
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Law. Each of the Merger Sub and Parent will vote, or cause to be voted, all
shares of Company Stock beneficially owned by it in favor of the Merger.
SECTION 6.06 DIRECTOR AND OFFICER LIABILITY. Parent and Merger Sub agree
that:
(a) The articles of incorporation and the bylaws of the Surviving
Corporation will contain provisions with respect to exculpation from
liability and indemnification substantially as set forth in the articles of
incorporation and bylaws of the Company as of the date hereof, which
provisions shall not be amended, repealed, or otherwise modified in any
manner that would adversely affect the rights thereunder of individuals who
at the Effective Time were present or former directors or officers of the
Company, unless such modification is required by law.
(b) Parent will use all reasonable efforts to, without any lapse
in coverage, either (i) for at least four years after the Effective Time,
provide officers' and directors' liability insurance ("D&O INSURANCE") in
respect of acts or omissions occurring at or prior to the Effective Time
covering each such Person currently covered by the Company's D&O Insurance
policy on terms with respect to coverage and amount no less favorable than
those of such policy in effect on the date hereof; provided that, in no event
will Parent be required to pay per annum more than the last premium
(annualized) paid by the Company for such policy prior to the date hereof,
(ii) purchase tail insurance in respect of the Company's existing D&O
Insurance for four years for a premium not to exceed the amount of the
customary premium for such tail insurance, or (iii) if such D&O Insurance or
tail insurance is only available at premiums in excess of the premiums set
forth in clauses (i) or (ii), as applicable, then purchase the highest level
of D&O Insurance or tail insurance available at such applicable premium.
SECTION 6.07 WAIVER.
The Company hereby waives the Company's rights under paragraph 8 of
that certain letter agreement dated October 28, 1997, by and between the
Company and Parent (the "STANDSTILL AGREEMENT") so that Parent's and Merger
Sub's execution, delivery and performance of this Agreement, the consummation
of the Offer and the Merger, and the exercise of the Parent Stock Option and
the Insider Lock-Up Options, and their consummation of the transactions
contemplated thereby, will not violate or breach any provision of the
Standstill Agreement. If any of the terms of the Standstill Agreement
conflict with the terms of this Agreement, the Parent Stock Option or the
Insider Lock-Up Options, the terms of this Agreement, the Parent Stock Option
or the Insider Lock-Up Options, as the case may be, shall control.
SECTION 6.08 COMPANY BENEFIT PLANS.
Parent shall cause the Surviving Corporation to take such actions as
are necessary so that, for a period of at least one year after the Effective
Time, employees of the Company and its Subsidiaries who continue their
employment after the Effective Time will be provided employee benefits which
in the aggregate are at least generally comparable to those provided to such
employees as of the date hereof; PROVIDED, that it is understood that after
the Effective Time (i) neither Parent nor the Surviving Corporation will have
any obligation to issue or adopt any plans or arrangements to provide for the
issuance of shares of capital stock, warrants, options, stock
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appreciation rights or other rights in respect of any shares of capital stock
of any entity or any securities convertible or exchangeable into such shares
pursuant to any such plan or program, and (ii) nothing herein shall require
the Surviving Corporation to maintain any particular plan or arrangement.
ARTICLE VII.
CONDITIONS TO THE MERGER
SECTION 7.01 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY.
The obligations of the Company, Parent, and Merger Sub to consummate
the Merger are subject to the satisfaction of the following conditions:
(a) if required by applicable law, the Merger has been approved,
and this Agreement has been adopted, by the requisite vote of the Company's
stockholders;
(b) Merger Sub shall have purchased all validly tendered and not
properly withdrawn shares of Company Stock in accordance with the Offer; and
(c) no provision of any applicable domestic law or regulation, and
no judgment, injunction, order, or decree of a court or governmental agency
or authority of competent jurisdiction, that has the effect of making the
Offer or the Merger illegal or otherwise restrains or prohibits the purchase
of shares of Company Stock pursuant to the Offer or the consummation of the
Merger is in effect.
SECTION 7.02 CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGER SUB.
The obligations of Parent and Merger Sub to consummate the Merger are
subject to the satisfaction of the following conditions:
(a) the Offer shall have been consummated;
(b) the Company shall have complied with its obligations under
Section 1.01(d); and
(c) if any holders of Company Stock exercise their rights, if any,
under Articles 5.11 and 5.12 of Texas Law (Appraisal Rights), such rights
shall not have been exercised as to more than 10% of the outstanding Company
Stock.
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ARTICLE VIII.
TERMINATION
SECTION 8.01 TERMINATION.
This Agreement may be terminated and the Offer and the Merger may be
abandoned at any time prior to the Effective Time (notwithstanding any
approval of the Merger and adoption of this Agreement by the Company's
stockholders):
(a) by mutual written consent of the Company, Parent, and Merger
Sub;
(b) by either the Company or Parent and Merger Sub if the Merger
has not been consummated by March 30, 1999, provided that the right to
terminate this Agreement under this clause (b) will not be available to any
party that, at the time of termination, is in material breach of any of its
obligations under this Agreement;
(c) by either the Company or Parent and Merger Sub if any
applicable domestic law, rule, or regulation makes consummation of the Offer
or the Merger illegal or if any judgment, injunction, order, or decree of a
court or governmental agency or authority of competent jurisdiction restrains
or prohibits the consummation of the Offer or the Merger, and such judgment,
injunction, order, or decree has become final and nonappealable;
(d) by either the Company or Parent if the stockholder approval
referred to in Section 7.01(a) has not been obtained at the Merger Meeting;
(e) by either the Company or Parent if the Offer terminates
without the purchase of shares of Company Stock thereunder; provided that,
the right to terminate this Agreement pursuant to this Section 8.01(e) shall
not be available to (i) Parent, if Merger Sub shall have breached its
obligations under Section 1.01(a), or (ii) any party whose willful failure to
perform any of its obligations under this Agreement results in the failure of
any of the Offer Conditions or if the failure of any such Offer Conditions
results from facts or circumstances that constitute a material breach of the
representations or warranties of such party under this Agreement;
(f) by Parent and Merger Sub if (i) the Company violates its
obligations under Section 5.03 in any material respect and thereafter any
Person publicly makes a Company Acquisition Proposal or (ii) the Board of
Directors of the Company does not publicly recommend in the Schedule 14D-9
that the Company's stockholders accept the Offer and tender their shares of
Company Stock pursuant to the Offer and approve the Merger and adopt the
Agreement, or if the Board of Directors of the Company withdraws, modifies,
or changes such recommendation in any manner materially adverse to Parent; or
(g) by the Company if the Company receives an unsolicited Company
Acquisition Proposal and the events stated in clauses (B) and (C) of the second
sentence of Section 5.03(a) have occurred, provided that the Company has given
Parent at least five business days notice of the material terms of such Company
Acquisition Proposal and such termination shall not be
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effective until the Company has paid the Termination Fee, if and to the
extent required under Section 9.04(b), to Parent either by delivery of a
certified or bank check payable to Parent or by wire transfer to an account
designated in writing by Parent, at the Company's option.
SECTION 8.02 EFFECT OF TERMINATION.
If this Agreement is terminated and the Offer and the Merger are
abandoned pursuant to Section 8.01, no party to this Agreement (or any of its
directors, officers, employees, agents, or advisors) will have any liability
or further obligation to any other party except (a) as provided in Section
9.04, (b) that the agreements contained in Section 9.04 and in the Standstill
Agreement will survive the termination hereof, and (c) that nothing herein
will relieve any party from liability for any breach of its covenants or
agreements under this Agreement.
ARTICLE IX.
MISCELLANEOUS
SECTION 9.01 NOTICES.
All notices, requests, demands, consents and other communications
required or permitted hereunder shall be in writing and shall be deemed to
have been duly given when delivered by overnight courier or express mail
service or by postage pre-paid certified or registered mail, return receipt
requested (the return receipt constituting PRIMA FACIE evidence of the giving
of such notice, request, demand or other communication), by personal
delivery, or by fax with confirmation of receipt, to the following address or
such other address of which a party subsequently may give notice to all the
other parties:
If to Parent or Merger Sub, to:
Immucor Inc.
3130 Gateway Drive,
Norcross, GA 30091
Attention: Chief Executive Officer
Fax: (770) 242-8930
with a copy to:
Nelson Mullins Riley & Scarborough, L.L.P.
999 Peachtree Street, N.E.
Suite 1400, First Union Plaza
Atlanta, Georgia 30309
Attn: Philip H. Moise
Fax: (404) 817-6050
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if to the Company, to:
Gamma Biologicals, Inc.
3700 Mangum Road
Houston, TX 77092
Attn: Chief Executive Officer
Fax: (713) 956-3333
with a copy to:
Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.
600 Travis Street
3400 Texas Commerce Tower
Houston, Texas 77002
Attention: David F. Taylor
Fax: (713) 223-3717
SECTION 9.02 SURVIVAL.
None of the representations and warranties, agreements, and other
provisions contained in this Agreement or in any certificate or other writing
delivered pursuant to this Agreement, other than Articles I and II, will
survive the Effective Time.
SECTION 9.03 AMENDMENTS; NO WAIVERS.
(a) Subject to the applicable provisions of Texas Law and Section
1.01(e) of this Agreement, any provision of this Agreement may be amended or
waived prior to the Effective Time if, and only if, such amendment or waiver
is in writing and duly executed and delivered, in the case of an amendment,
by the Company, Parent, and Merger Sub or, in the case of a waiver, by the
party against whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right,
power, or privilege hereunder will operate as a waiver thereof, nor will any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power, or privilege.
SECTION 9.04 FEES AND EXPENSES.
(a) Subject to paragraph (b) of this Section, all costs and
expenses incurred in connection with this Agreement will be paid by the party
incurring the costs and expenses.
(b) If (i) this Agreement is terminated by the Company pursuant to
Section 8.01(g)(pertaining to a Company Acquisition Proposal), (ii) any Person
publicly makes a Company Acquisition Proposal and thereafter this Agreement is
terminated pursuant to Section 8.01(e) because an insufficient number of shares
of Company Stock are tendered in the Offer, or (iii) any Person publicly makes a
Company Acquisition Proposal and thereafter this Agreement is terminated
pursuant to Section 8.01(f), then the Company will reimburse Parent and Merger
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Sub for up to $500,000.00 of their reasonable documented out-of-pocket
expenses and fees actually incurred by Parent in connection with the
transactions contemplated by this Agreement prior to the termination of this
Agreement, and in enforcing its rights under this Section 9.04 after such
termination, including but not limited to all fees and expenses of counsel,
financial advisors, accountants, and environmental and other experts and
consultants to Parent and Merger Sub (the "TRANSACTION COSTS"). In addition,
the Company will pay to Parent a fee of $1,250,000.00 (the "TERMINATION
FEE"). The Termination Fee will be payable by delivery of immediately
available funds at the time of termination.
(c) If Parent receives such Transaction Costs and Termination Fee
under circumstances in which such Transaction Costs and Termination Fee are
payable, neither Parent, Merger Sub, nor any of their affiliates will assert
or pursue in any manner, directly or indirectly, any claim or cause of action
against the Company or any of its directors, officers, employees, agents, or
representatives based in whole or in part upon its or their receipt,
consideration, recommendation, or approval of a Company Acquisition Proposal,
including the Company's exercise of its right of termination of this
Agreement under Section 8.01(g).
SECTION 9.05 SUCCESSORS AND ASSIGNS; NO THIRD PARTY BENEFICIARIES.
The provisions of this Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
provided that no party may assign, delegate, or otherwise transfer any of its
rights or obligations under this Agreement without the consent of the other
parties. Notwithstanding the foregoing, Merger Sub shall have the right (a)
to assign to Parent or any direct or indirect wholly-owned subsidiary of
Parent any and all rights and obligations of Merger Sub under this Agreement,
including, without limitation, the right to substitute in its place such a
subsidiary as one of the constituent corporations in the Merger (such
subsidiary assuming all of the obligations of Merger Sub in connection with
the Merger) and may require subsidiaries of the Company to merge with
subsidiaries of Merger Sub (or its assignees) in connection with the Merger
and (b) to restructure the transaction to provide for the Merger of the
Company with and into Merger Sub or such other entity as provided above;
provided, however, that the Company shall not be deemed to have breached any
of its representations and warranties herein by reason of Merger Sub
exercising its rights hereunder, and by exercising such rights Parent will be
deemed to have waived the receipt of any additional consents of third parties
required by virtue thereof; and provided further that no such assignment
shall affect any obligation of Parent or Merger Sub hereunder and that it
shall remain primarily liable as to its assigned obligations. If Merger Sub
exercises its right to so restructure the transaction, the Company shall
promptly enter into appropriate agreements to reflect such restructuring.
SECTION 9.06 GOVERNING LAW.
The interpretation, validity, and enforceability of this Agreement
will be governed by the law of the State of Texas without regard to
principles of conflict of laws therein that would apply the laws of any other
jurisdiction.
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SECTION 9.07 COUNTERPARTS; EFFECTIVENESS.
This Agreement may be signed in any number of counterparts, each of
which will be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
SECTION 9.08 ENTIRE AGREEMENT.
This Agreement, the Company Disclosure Schedule, the Parent Stock
Option, the Insider Lock-Up Options and the Standstill Agreement constitute
the entire agreement among the parties with respect to the subject matter
hereof and supersede all prior agreements, both written and oral, among the
parties with respect to the subject matter of this Agreement. No
representation, warranty, or inducement not set forth herein has been made or
relied upon by any party. Neither this Agreement nor any provision hereof is
intended to confer upon any Person other than the parties any rights or
remedies.
SECTION 9.09 HEADINGS.
The headings contained in this Agreement are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
SECTION 9.10 SEVERABILITY.
If any term or other provision of this Agreement is invalid, illegal,
or unenforceable, all other provisions of this Agreement will remain in full
force and effect so long as the economic and legal substance of the
transactions contemplated hereby is not affected.
SECTION 9.11 SPECIFIC PERFORMANCE.
Except as set forth in Section 9.04, the parties agree that
irreparable damage would occur if any of the provisions of this Agreement is
not performed in accordance with the terms hereof and that the parties will
be entitled to specific performance of the terms hereof in addition to any
other remedies at law or in equity.
SECTION 9.12 "KNOWLEDGE" OF THE COMPANY.
For purposes of this Agreement, unless otherwise expressly provided
where the term is used, "knowledge" of the Company will be deemed to mean (i)
the actual knowledge of any director or executive officer of the Company and
(ii) the knowledge that any such director or executive officer would have had
if he or she, in connection with the confirmation of the accuracy of the
representations and warranties of the Company in this Agreement, had made due
inquiry of the officers, employees, advisors, and agents of the Company and
its Subsidiaries who are primarily responsible for the subject matter of such
representations and warranties.
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SECTION 9.13 DEFINITIONS.
Terms defined in the Exchange Act, used herein and not otherwise
defined herein shall have the meaning given in the Exchange Act.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
written above.
IMMUCOR, INC.
By:
----------------------------------
Edward J. Gallup, President
GAMMA ACQUISITION CORPORATION
By:
----------------------------------
Edward J. Gallup, President
GAMMA BIOLOGICALS, INC.
By:
----------------------------------
David E. Hatcher, President
41
<PAGE>
LIST OF SCHEDULES
<TABLE>
<CAPTION>
SCHEDULE DESIGNATION
- ---------------------------
<S> <C>
1.01(a) Offer Conditions
3.05 Violations
3.06 Capitalization
3.07 Subsidiaries
3.10 Material Contracts
3.11 Absence of Certain Changes
3.12 Litigation
3.13 Permits; Compliance
3.14 Product Warranties and Liabilities
3.15 Employee Benefits
3.18 FDA and Related matters
3.20 Intellectual Property
3.21 Environmental
3.22 Finders and Investment Bankers
3.23 Insurance
3.24 Indemnification
3.31 Real and Personal Property
</TABLE>
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SCHEDULE 1.01(a)--OFFER CONDITIONS
Merger Sub will not be required to accept for payment or, subject to
any applicable rules and regulations of the SEC, including, without
limitation, Rule 14e-1(c) under the Exchange Act (relating to Merger Sub's
obligation to pay for or return tendered shares after the termination or
withdrawal of the Offer), to pay for any shares of Company Stock not
theretofore accepted for payment or paid for pursuant to the Offer, if (1)
there are not validly tendered and not properly withdrawn prior to the
expiration of the Offer that number of shares of Company Stock which, when
aggregated with the shares of Company Stock then owned by Parent and any of
its affiliates, represents at least sixty-seven percent (67%) of the shares
of Company Stock then outstanding on a fully diluted basis, based on the
number of stock options and warrants exercised prior to the consummation of
the Offer (the "MINIMUM CONDITION"), or (2) at any time on or after the date
of the Agreement and at or before the time that any shares of Company Stock
are accepted for payment any of the following conditions exist:
(a) Any provision of any applicable domestic law or regulation, or
any judgment, injunction, order, or decree of a court or governmental agency
or authority of competent jurisdiction, is in effect that (i) makes the Offer
or the Merger illegal or otherwise, directly or indirectly or prohibits or
materially restrains the making of the Offer, the acceptance for payment of,
payment for, or ownership, directly or indirectly, of some or all of the
shares of Company Stock by Merger Sub or Parent, (ii) prohibits or materially
limits the ownership or operation by the Company or any of its Subsidiaries
that owns a material portion of the business and assets of the Company and
its Subsidiaries, taken as a whole, or by Parent, Merger Sub, or any
Subsidiaries of Parent of all or a material portion of the business or assets
of the Company and its Subsidiaries, taken as a whole, or of Parent and its
Subsidiaries, taken as a whole, as a result of the Offer, the Merger, or the
other transactions contemplated by the Agreement, or (iii) imposes material
limitations on the ability of Merger Sub or Parent to acquire, hold, or
exercise full rights of ownership of the shares of Company Stock, including
but not limited to the right to vote any shares of Company Stock acquired or
owned by Merger Sub or Parent on all matters properly presented to the
stockholders of the Company, including but not limited to the approval of the
Agreement and approval of the Merger and the right to vote any shares of
capital stock of any Subsidiaries of the Company (other than immaterial
Subsidiaries), or would impose any such limitations with respect to the
Common Stock of the Surviving Corporation after the Merger.
(b) Any consents, authorizations, orders, and approvals of, or
filings or registrations with, any governmental commission, board, or other
regulatory body required in connection with the execution, delivery, and
performance of the Agreement has not been obtained or made, except (i) the
filing of appropriate articles of merger in accordance with applicable law,
including Texas Law, (ii) compliance with applicable requirements of the
Exchange Act, and (iii) where Parent reasonably concludes that the failure to
obtain or make any such consent, authorization, order, approval, filing, or
registration (A) is not likely to have, individually or in the aggregate, a
material adverse effect on the financial condition, results of operations, or
business of the Company and its Subsidiaries before or after the Merger,
taken as a whole (a "COMPANY MATERIAL ADVERSE EFFECT"), or on the financial
condition, results of operations, or business of Parent and Merger Sub before
or after the Merger, taken as a whole (a "PARENT MATERIAL ADVERSE EFFECT"),
and (B) would not render the Offer or the Merger illegal or provide
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<PAGE>
a reasonable basis to conclude that the parties or their affiliates or any of
their respective directors or officers will be subject to a risk of criminal
liability.
(c) Any Third Party Consents have not been obtained except where
Parent reasonably concludes that the failure to obtain any Third Party
Consents is not likely to have, individually or in the aggregate, a Company
Material Adverse Effect.
(d) The Company has failed to perform in any material respect any
of its agreements, covenants, or other obligations to be performed by it
under the Agreement at or prior to such time, or any representations and
warranties of the Company contained in the Agreement are not true in any
material respect at such time as if made at and as of such time (unless the
representation or warranty is made as of a specified date, in which case such
representation or warranty is not true as of such date). For purposes of
determining whether this condition has been satisfied, all qualifications in
the representations and warranties as to the knowledge of the Company will be
disregarded.
(e) There shall have occurred any event or any development that,
insofar as reasonably can be foreseen, is reasonably likely to result in a
Company Material Adverse Effect;
(f) There shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on any national
securities exchange or in the United States, (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States, (iii) any limitation (whether or not mandatory) by any U.S.
government or governmental, administrative or regulatory authority or agency,
on, or any other event that materially adversely affects, the extension of
credit by banks or other lending institutions, (iv) a commencement or a war
or armed hostilities or other national or international calamity directly or
indirectly involving the United States which would reasonably be expected to
have a Company Material Adverse Effect, a Parent Material Adverse Effect or
materially adversely affect (or materially delay) the consummation of the
Offer or (v) in the case of any of the foregoing existing at the time of the
execution of the Agreement, a material acceleration or worsening thereof
which acceleration of worsening is reasonably expected to have a Company
Material Adverse Effect, a Parent Material Adverse Effect or to materially
adversely affect the consummation of the Offer.
(g) It shall have been publicly disclosed that beneficial
ownership (determined for the purposes of this paragraph as set forth in
Rule 13d-3 promulgated under the Exchange Act) of 20% or more the Company
Stock, before any potential dilution related to such beneficial ownership,
has been acquired by any corporation (including the Company or any of its
subsidiaries or affiliates), partnership, person or other entity or group (as
defined in Section 13(d)(3) of the Exchange Act), other than Parent or any of
its affiliates, or (ii) (A) the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified in a manner adverse to
Parent or Merger Sub the approval or recommendation of the Offer, the Merger
or the Agreement and, within ten business days of taking and disclosing to
its stockholders the aforementioned position, shall not have publicly
reconfirmed its recommendation of the Offer, the Merger or the Agreement; (B)
the Board of Directors of the Company or any committee thereof shall have
approved or recommended any takeover proposal or any other acquisition of
Company Stock other than the Offer and the Merger; (C) any such
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corporation, partnership, person or other entity or group shall have entered
into a definitive agreement or an agreement in principle with the Company
with respect to a tender offer or exchange offer for any Company Stock or a
merger, consolidation or other business combination with or involving the
Company or any of its Subsidiaries or (D) the Board of Directors of the
Company or any committee thereof shall have resolved to do any of the
foregoing.
(h) The Agreement has been terminated in accordance with its terms.
The foregoing conditions are for the sole benefit of Merger Sub and Parent
and may, subject to the terms of the Agreement, be waived by Merger Sub and
Parent in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent or Merger Sub at any time to exercise any
of the foregoing rights shall not be deemed a waiver of any such right, the
waiver of any such right with respect to particular facts and circumstances
shall not be deemed a waiver with respect to any other facts and
circumstances, and each such right shall be deemed an ongoing right that may
be asserted at any time and from time to time.
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GAMMA BIOLOGICALS, INC.
3700 MANGUM ROAD, HOUSTON, TEXAS 77092
JUNE 30, 1998
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The annual meeting of shareholders of Gamma Biologicals, Inc. (the
"Company") will be held August 11, 1998, at 3:00 p.m., Central time, at the
offices of the Company, 3700 Mangum Road, Houston, Texas 77092, for the
following purposes:
1. To elect directors; and
2. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Further information regarding the meeting and the nominees for election as
directors is set forth in the accompanying proxy statement. The Board of
Directors has fixed the close of business on June 22, 1998 as the record date
for the meeting, and only holders of Common Stock of record at such time will be
entitled to vote at the meeting or any adjournments thereof.
It will be a pleasure for the officers and directors to meet with you and
have an opportunity to answer any questions you may have about Company affairs.
The officers and directors will be available to talk individually with
shareholders before and after the meeting. Whether or not you plan to attend
the meeting, we urge you to sign and return the enclosed proxy so that your
shares will be represented at the meeting.
By order of the Board of Directors,
Lawrence E. Letwin
SECRETARY
June 30, 1998
PLEASE DATE, SIGN AND RETURN THE ENCLOSED PROXY
AT YOUR EARLIEST CONVENIENCE.
<PAGE>
GAMMA BIOLOGICALS, INC.
3700 MANGUM ROAD, HOUSTON, TEXAS 77092
JUNE 30, 1998
---------------
PROXY STATEMENT
---------------
This Proxy Statement is furnished in connection with the solicitation of
proxies for use at the annual meeting of shareholders (the "Meeting") of Gamma
Biologicals, Inc. (the "Company") to be held at the time and place and for the
purposes set forth in the foregoing Notice of Annual Meeting of Shareholders
(the "Notice") and at any adjournments thereof.
SOLICITATION AND VOTING OF PROXIES
The solicitation will be conducted by mail. The Company will bear the
expense of the solicitation of proxies, including the charges and expenses of
brokerage firms and others incurred in forwarding solicitation material to
beneficial owners of stock. Further solicitation of proxies may be made by
telephone or oral communication with shareholders of the Company following the
original solicitation. All further solicitation will be by regular employees of
the Company who will not be additionally compensated therefor. Copies of the
Proxy, Notice and Proxy Statement are being mailed to shareholders on or about
June 30, 1998.
Proxies in the accompanying form are solicited by the management at the
direction of the Board of Directors. Execution and return of the proxy will not
in any way affect a shareholder's right to attend the Meeting and to vote in
person, and a shareholder giving a proxy has the power to revoke it at any time
before it is exercised by giving written notice to the Company at or prior to
the Meeting. A proxy may also be revoked by execution of a proxy bearing a
later date or by attendance at the Meeting and voting in person by ballot.
Properly executed proxies in the accompanying form, received in due time and not
previously revoked, will be voted as specified. A proxy received by management
which does not withhold authority to vote or on which no specification has been
indicated will be voted for the proposals set forth in this Proxy Statement and
for the nominees for the Board of Directors of the Company named in Proposal No.
1 of this Proxy Statement. A majority of the outstanding shares will constitute
a quorum at the Meeting. Abstentions and broker non-votes are counted for
purposes of determining the presence or absence of a quorum for the transaction
of business. Abstentions are counted in tabulations of the votes cast on
proposals presented to shareholders, whereas broker non-votes are not counted
for purposes of determining whether a proposal has been approved.
At the date of this Proxy Statement, management of the Company does not
know of any business to be presented at the Meeting other than those matters
which are set forth in the Notice accompanying this Proxy Statement. If any
other business should properly come before the Meeting, it is intended that the
shares represented by proxies will be voted with respect to such business in
accordance with the judgment of the persons named in the proxy.
1
<PAGE>
COMMON STOCK OUTSTANDING AND PRINCIPAL HOLDERS THEREOF
Only holders of Common Stock of the Company of record at the close of
business on June 22, 1998 are entitled to notice of and to vote at the Meeting.
At that date, there were outstanding 4,625,762 shares of the Company's Common
Stock, which is the only class of stock that has been issued by the Company.
Each shareholder is entitled to one vote for each share of Common Stock held of
record by the shareholder on that date for all matters coming before the Meeting
and, except as otherwise provided by applicable law, a favorable vote consists
of a simple majority of the votes cast. Shareholders are not entitled to
cumulate their votes in the election of directors, which means that the holders
of more than half of the shares voting for the election of directors can elect
all of the directors if they choose to do so.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth, as of May 15, 1998, the ownership of the
Company's Common Stock by (i) each shareholder, if any, who is known by the
Company to own beneficially more than 5% of the outstanding Common Stock, (ii)
each director, (iii) each named executive officer and (iv) all directors and
executive officers as a group. Except as otherwise indicated, the shareholders
listed in the table have sole voting and investment power with respect to the
shares indicated. All information with respect to beneficial ownership has been
furnished by the shareholders to the Company.
<TABLE>
AMOUNT AND
NAME NATURE
OF BENEFICIAL OF BENEFICIAL PERCENT
OWNER OWNERSHIP OF CLASS
- ------------------------------------------- --------------- --------
<S> <C> <C>
Betty F. Hatcher . . . . . . . . . . . . . . 218,674(1) 4.7%
David E. Hatcher . . . . . . . . . . . . . . 144,599(2) 3.1%
H.H. "Will" Hardee . . . . . . . . . . . . . 88,578(3) 1.9%
Dr. Richard H. Aster . . . . . . . . . . . . 17,540(4) *
Bryan J. Brieden . . . . . . . . . . . . . . 22,671(5) *
Hayle B. Randolph . . . . . . . . . . . . . . 20,100(6) *
Jimmie L. Turner . . . . . . . . . . . . . . 27,897(7) *
John Case . . . . . . . . . . . . . . . . . . 22,599(8) *
Raul F. Alvarez . . . . . . . . . . . . . . . 4,875(9) *
All executive officers and directors as a
group (14 persons). . . . . . . . . . . . . 626,317(10) 12.9%
Dimensional Fund Advisors Inc. . . . . . . . 277,400(11) 6.0%
1299 Ocean Ave., 11th Floor
Santa Monica, CA 90401
</TABLE>
- --------------------
* Less than 1.0%.
(1) Includes 46,475 shares which can be acquired during the next 60
days pursuant to the exercise of outstanding stock options.
(2) Includes 58,500 shares which can be acquired during the next 60
days pursuant to the exercise of outstanding stock options.
(3) Includes 16,640 shares which can be acquired during the next 60
days pursuant to the exercise of outstanding stock options. Also
includes 2,400 shares owned of record by Mrs. Hardee, beneficial
ownership of which is disclaimed by Mr. Hardee.
2
<PAGE>
(4) Includes 15,040 shares which can be acquired during the next 60
days pursuant to the exercise of outstanding stock options.
(5) Includes 10,000 shares which can be acquired during the next 60
days pursuant to the exercise of outstanding stock options and
2,226 shares owned of record by Mrs. Brieden, beneficial
ownership of which is disclaimed by Mr. Brieden.
(6) Includes 20,000 shares which can be acquired during the next 60
days pursuant to the exercise of outstanding stock options.
(7) Includes 19,500 shares which can be acquired during the next 60
days pursuant to the exercise of outstanding stock options and
1,950 shares owned of record by Mrs. Turner, beneficial ownership
of which is disclaimed by Mr. Turner.
(8) Includes 12,500 shares which can be acquired during the next 60
days pursuant to the exercise of outstanding stock options and
799 shares owned of record by Mrs. Case, beneficial owner of
which is disclaimed by Mr. Case.
(9) Includes 4,875 shares which can be acquired during the next 60
days pursuant to the exercise of outstanding stock options.
(10) Includes 258,155 shares which can be acquired during the next
60 days pursuant to the exercise of outstanding stock options.
(11) Dimensional Fund Advisors Inc. ("Dimensional"), a registered
investment advisor, is deemed to have beneficial ownership of
277,400 shares of the Company in stock as of December 31, 1997,
all of which shares are held in portfolios of DFA Investment
Dimensions Group Inc., a registered open-end investment company,
or in series of the DFA Investment Trust Company, a Delaware
business trust, or the DFA Group Trust and DFA Participation
Group Trust, investment vehicles for qualified employee benefit
plans, for all of which Dimensional Fund Advisors Inc. serves as
investment manager. Dimensional disclaims beneficial ownership
of all such shares.
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
INFORMATION CONCERNING DIRECTORS
It is proposed that six directors will be elected at the Meeting, each to
hold office until the annual meeting of shareholders in 1999 and until his or
her successor is duly elected and qualified. The Company has no reason to
believe that any nominee will be unavailable to serve at the time of election.
All of the nominees are presently members of the Board of Directors of the
Company. There are no family relationships among any of the directors of the
Company. The names of the nominees, together with information as to their
principal occupations, age, and experience, are as follows:
3
<PAGE>
<TABLE>
DIRECTOR
NAME PRINCIPAL OCCUPATION AGE SINCE
- -------------------------------- ------------------------------------------ --- --------
<S> <C> <C> <C>
Dr. Richard H. Aster . . . . . . Senior Investigator at the Blood Center of 67 1997
Southeastern Wisconsin and professor
of medicine at Medical College of
Wisconsin(1)
Bryan J. Brieden . . . . . . . Consultant(2) 70 1970
H. H. "Will" Hardee . . . . . . Senior Vice President of Dain Rauscher 43 1997
Wessels(3)
Betty F. Hatcher . . . . . . . Executive Vice President and Assistant 65 1988
Secretary of the Company(4)
David E. Hatcher . . . . . . . Chairman of the Board, President and Chief
Executive Officer of the Company(5) 75 1970
Hayle B. Randolph . . . . . . . Blood services consultant(6) 67 1991
</TABLE>
- --------------------
(1) Dr. Aster retired in 1996 as President and Chief Executive Officer of
the Blood Center of Southeastern Wisconsin after 26 years. Dr. Aster
is Chairman of Genetic Testing Institute, Inc. and is a director of
Principle Preservation Portfolios, a mutual fund company and
subsidiary of the BC Ziegler Company.
(2) In 1994, Mr. Brieden retired as President of Bryan Biologicals, Inc.,
a distributor of laboratory supplies, a position he held for more than
five years. Mr. Brieden now serves as a consultant to Bryan
Biologicals, Inc.
(3) Mr. Hardee served as Senior Vice President of Kidder Peabody Co. for
three years from 1991 until October 1994. Mr. Hardee has served as
Senior Vice President of Dain Rauscher since October 1994.
(4) Ms. Hatcher served as the Senior Vice President and Secretary of the
Company prior to becoming a consultant to the Company in 1988. Ms.
Hatcher was appointed Assistant Secretary of the Company in February
1989 and was appointed Director of Product Development of the Company
in February 1990. She was appointed Executive Vice President of the
Company in August 1992.
(5) Mr. Hatcher served as President of the Company until June 1992 and
became President of the Company again in October 1996.
(6) Mr. Randolph served as President and Chief Executive Officer of Blood
Systems, Inc. until his retirement in March 1991. Mr. Randolph served
as a consultant on various projects for Blood Systems, Inc. and as the
Executive Director of Blood Systems Research Foundation until January
15, 1993 and is currently an independent consultant to the blood
services industry.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company met four times during fiscal 1998.
The Board has established two standing committees, the Audit Committee, which is
comprised of Messrs. Aster, Brieden, Hardee and Randolph, and the
Compensation/Stock Option Committee, which is comprised of Messrs. Aster,
Brieden, Hardee and Randolph. The Audit Committee exercises oversight with
respect to the Company's accounting practices and procedures and its
relationship with its independent auditors, and the Compensation/Stock Option
Committee makes recommendations to the Board of Directors regarding the
compensation of officers and employees of the Company and the granting of
options under the Company's 1991 Employee Stock Option Plan and 1995 Employee
Stock Option Plan. The Audit Committee met one time during fiscal 1998,
4
<PAGE>
and the Compensation/Stock Option Committee met two times during fiscal 1998.
There is no nominating committee. No incumbent director attended fewer than
75% of the total number of meetings of the Board of Directors and of all
committees of the board on which he or she served in fiscal 1998.
DIRECTOR COMPENSATION
Directors of the Company who are also employees of the Company do not
receive fees for attending meetings of the Board of Directors. Non-employee
directors of the Company receive a retainer of $3,000 per year, payable in
quarterly installments, and a fee of $600 for each meeting of the Board of
Directors and for each meeting of each committee of the Board of Directors
attended by such director. Pursuant to the 1997 Outside Director Stock Option
Plan, upon initial election to the Board of Directors, non-employee directors
receive an option to purchase 10,000 shares of the Company's Common Stock and,
the Board of Directors may grant additional options to the non-employee
directors in lieu of cash compensation.
EXECUTIVE OFFICERS
The following table sets forth the names, ages, length of service as an
officer, and the positions of the persons who are not nominees for director and
who are executive officers of the Company:
<TABLE>
OFFICER
NAME AGE SINCE POSITION
- --------------------- --- ------- -----------------------------------------------------------
<S> <C> <C> <C>
Jimmie L. Turner. . . 59 1989 Executive Vice President and Chief Operating Officer
Raul F. Alvarez . . . 49 1996 Senior Vice President - International Business
John Case . . . . . . 71 1980 Senior Vice President - Regulatory Affairs
Thomas H. Frame . . . 43 1996 Senior Vice President - Research and Development
Margaret O'Bannion. . 43 1989 Senior Vice President - Finance and Chief Financial Officer
Gary L. Parrish . . . 61 1994 Senior Vice President - National Sales
Susan A. Batcha . . . 44 1996 Vice President - Assistant to Regulatory Affairs
Marilyn K. Moulds . . 54 1996 Vice President - Consultation and Education
</TABLE>
Mr. Turner joined the Company in 1976 as a sales representative and became
Vice President-Customer Services in August 1989. Mr. Turner became Executive
Vice President and Chief Operating Officer in October 1996.
Mr. Alvarez joined the Company in 1994 as International Sales and Marketing
Manager. Previously, Mr. Alvarez had been division general manager of Menarini
Diagnostics in Barcelona, Spain and Florence, Italy. Mr. Alvarez became Vice
President-International Business in August 1996 and Senior Vice President -
International Business in August 1997.
Mr. Case joined the Company in 1976 and became Vice President-Regulatory
Affairs in 1980. He was appointed Senior Vice President - Regulatory Affairs in
August 1997.
Mr. Frame joined the Company in 1993 as Director of Monoclonal Production
and Product Development. Previously, Mr. Frame had been a senior scientist
specializing in monoclonal research at the Central Laboratory of the Netherlands
Red Cross Transfusion Service. Mr. Frame became Vice President-
5
<PAGE>
Research and Development in August 1996, and was appointed Senior Vice
President - Research and Development in August 1997.
Ms. O'Bannion joined the Company in 1978 and was named Controller of the
Company in 1987. Ms. O'Bannion became Vice President-Finance and Chief
Financial Officer in August 1989, and was appointed Senior Vice President -
Finance and Chief Financial Officer in August 1997.
Mr. Parrish joined the Company in 1977 as a sales representative and was
named National Sales Manager in 1989. He became Vice President-National Sales
in August 1994 and was appointed Vice President-National Sales and Customer
Services in October 1996, and Senior Vice President - National Sales in August
1997.
Ms. Batcha joined the Company in 1981 in Coombs manufacturing. Ms. Batcha
became department supervisor in 1984, and was named director of manufacturing in
1989. She became Vice President-Manufacturing in August 1996, and was appointed
Vice President - Assistant to Regulatory Affairs in August 1997.
Ms. Moulds joined the Company in 1975 as supervisor of consultation and
education. Ms. Moulds became director, consultation and education, in 1989, and
Vice President-Consultation and Education in August 1996.
COMPENSATION/STOCK OPTION COMMITTEE REPORT (1)
The Compensation/Stock Option Committee of the Board of Directors (the
"Committee") is composed entirely of outside directors and is responsible for
developing and making recommendations to the Board with respect to the Company's
executive compensation policies. This Committee Report sets forth the
components of the Company's executive officer compensation and describes the
basis on which the fiscal 1998 compensation determinations were made by the
Committee with respect to the executive officers of the Company.
In designing its executive compensation programs, the Company follows its
belief that executive compensation should reflect the value created for
shareholders while supporting the Company's strategic goals. The following
objectives have been adopted by the Committee:
1. Executive compensation should be meaningfully related to the value
created for shareholders;
2. Executive compensation programs should reflect and promote the
Company's value and reward individuals for outstanding contributions
to the Company's success; and
- --------------------
(1) Notwithstanding filings by the Company with the Securities and
Exchange Commission ("SEC") that have incorporated or may incorporate
by reference other SEC filings (including this proxy statement) in
their entirety, this Compensation Committee Report shall not be
incorporated by reference into such filings and shall not be deemed
to be "filed" with the SEC except as specifically provided otherwise
or to the extent required by Item 402 of the Regulation S-K.
6
<PAGE>
3. Short and long term executive compensation play a critical role in
attracting and retaining well qualified executives.
The Committee currently implements a compensation program based on three
components: a base salary, a bonus program related to Company and individual
performance during the relevant year, and a stock option program. The Committee
regularly reviews the various components of the Company's executive compensation
to ensure that they are consistent with the Company's objectives.
BASE SALARY. The Committee, in recommending the appropriate base salaries
of the Company's executive officers, generally considers the level of executive
compensation in similar companies in the industry. In addition, the Committee
takes into account (i) the performance of the Company and the roles of the
individual executive officers with respect to such performance and (ii) the
particular executive officer's specific responsibilities, and the long-term
performance of such executive officer in those areas of responsibility.
ANNUAL INCENTIVES. The bonus program provides direct financial incentives,
in the form of an annual cash bonus, to executive officers to achieve and exceed
the Company's annual goals. The Committee recommends cash bonuses based upon
the Committee's evaluation of the contributions of each individual officer
during the applicable fiscal year in achieving the goals of the Company for that
year.
LONG-TERM INCENTIVES. The stock option program is currently the Company's
primary long-term incentive plan for executive officers and key employees. The
objectives of the stock option program are to align executive officer
compensation and shareholder return, and to enable executive officers to develop
and maintain a significant, long-term stock ownership position in the Company's
Common Stock. In addition, grants of stock options to the named executive
officers and others are intended to retain and motivate executives to improve
long-term corporate and stock market performance. Stock options are granted at
the prevailing market value and will only have value if the Company's stock
price increases. Generally, grants of stock options vest in equal amounts over
four years, and executives must be employed by the Company at the time of
vesting in order to exercise a stock option.
Consistent with the Company's compensation program outlined above,
compensation for each of the named executive officers, as well as other senior
executives, consists of a base salary, bonus and stock options. The base
salaries for the named executive officers for fiscal 1998 were at levels below
competitive amounts paid to executives with comparable qualifications,
experience and responsibilities of other companies engaged in the same or
similar business as the Company. The Committee has not yet determined the
amount of cash bonuses, if any, to be paid to the named executive officers for
fiscal 1998.
The Committee believes that the compensation of the chief executive officer
("CEO") should be impacted by Company performance. Mr. Hatcher founded the
Company in 1970 and has served as its CEO since that time. During fiscal 1998,
Mr. Hatcher received a base salary of $230,000, which the Committee believes to
be average for the base salary for chief executive officers with comparable
qualifications, experience and responsibilities of other companies engaged in
the same or similar business as the Company. At this time, this Committee has
not made a determination as to the bonus, if any, to be paid to Mr. Hatcher, for
fiscal 1998.
Compensation Committee: Dr. Richard H. Aster, H.H. "Will" Hardee, Bryan J.
Brieden, and Hayle B. Randolph.
7
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Except as set forth below, no member of the Compensation/Stock Option
Committee of the Board of Directors of the Company was, during fiscal 1998, an
officer or employee of the Company or any of its subsidiaries, was formerly an
officer of the Company or any of its subsidiaries, or had any relationships
requiring disclosure.
During fiscal 1998, no executive officer of the Company served as (i) a
member of the compensation committee (or other board committee performing
equivalent functions) of another entity, one of whose executive officers served
on the compensation committee of the Board of Directors, (ii) a director of
another entity, one of whose executive officers served on the Compensation
Committee of the Board of Directors, or (iii) a member of the Compensation
Committee (or other board committee performing equivalent functions) of another
entity, one of whose executive officers served as a director of the Company.
The Company distributes its products in the State of Michigan through Bryan
Biologicals, Inc. In fiscal 1998, the Company's sales to Bryan Biologicals,
Inc. amounted to approximately $203,000, or 1.1%, of the Company's net sales.
Mr. Bryan J. Brieden, a director of the Company, is a consultant to, and former
president and principal owner of, Bryan Biologicals, Inc. As of May 1, 1998
Bryan Biologicals, Inc. owed the Company approximately $91,000 on open account
for product purchases made from November 1996 to April 1998. No interest is
charged by the Company on such obligation. The largest amount owed to the
Company by Bryan Biologicals, Inc. at any time during fiscal 1998 was
approximately $126,000.
8
<PAGE>
COMPENSATION TABLES
The cash and other compensation paid by the Company and its subsidiaries
during fiscal 1998 to the chief executive officer and the four most highly
compensated executive officers of the Company were as follows:
SUMMARY COMPENSATION TABLE
<TABLE>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------- ------------
SECURITIES
NAME AND PRINCIPAL FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS COMPENSATION
- ----------------------------------- ------ ------- ------ --------------- ----------- ------------
($) ($) ($) (#) ($)
<S> <C> <C> <C> <C> <C> <C>
David E. Hatcher . . . . . . . . . 1998 224,735 0 11,542 0 29,678(2)
Chairman of the Board, 1997 215,100 25,000 11,284 0 29,014
President and Chief Executive 1996 209,949 0 10,992 7,000 28,265
Officer
Betty F. Hatcher . . . . . . . . . 1998 116,523 0 7,033 0 19,568(3)
Executive Vice President, 1997 110,100 7,500 6,526 0 18,105
Assistant Secretary and 1996 106,680 0 6,214 5,000 17,328
Director
John Case . . . . . . . . . . . . 1998 116,523 0 0 0 0
Senior Vice President- 1997 110,100 6,500 0 0 0
Regulatory Affairs 1996 106,680 0 0 3,000 0
Jimmie L. Turner . . . . . . . . . 1998 118,311 0 3,130 10,000 9,274(4)
Executive Vice President 1997 103,657 7,500 2,960 0 8,463
and Chief Operating Officer 1996 95,046 0 2,796 3,000 8,011
Raul F. Alvarez(6) . . . . . . . . 1998 87,060 40,087 1,534 5,000 5,048(5)
Senior Vice President - 1997 81,600 21,940 1,423 0 4,019
International Business
</TABLE>
- ----------------
(1) For each named executive officer in fiscal 1998, represents payments
by the Company for the named executive's taxes on split dollar premium
payment.
(2) Represents the dollar value of premiums paid by the Company with
respect to a split dollar life insurance policy for the benefit of the
named executive.
(3) Includes $18,086 which represents the dollar value of premiums paid by
the Company with respect to a split dollar life insurance policy for
the benefit of the named executive, and $1,482 which represents
Company matching contributions pursuant to the Company's 401(k)
Retirement Savings Plan.
(4) Includes $8,050 which represents the dollar value of premiums paid by
the Company with respect to a split dollar life insurance policy for
the benefit of the named executive, and $1,224 which represents
Company matching contributions pursuant to the Company's 401(k)
Retirement Savings Plan.
9
<PAGE>
(5) Includes $3,945 which represents the dollar value of premiums paid by
the Company with respect to a split dollar life insurance policy for
the benefit of the named executive, and $1,103 which represents
Company matching contributions pursuant to the Company's 401(k)
Retirement Savings Plan.
(6) Not an executive officer in fiscal 1996.
OPTIONS GRANTED IN LAST FISCAL YEAR
<TABLE>
PERCENTAGE OF
TOTAL OPTIONS POTENTIAL REALIZABLE
NUMBER OF GRANTED TO EXERCISE VALUE AT ASSUMED STOCK
OPTIONS EMPLOYEES IN PRICE EXPIRATION PRICE APPRECIATION FOR
NAME GRANTED FISCAL YEAR (PER SHARE) DATE OPTION TERMS
- -------------------------- --------- ------------- ----------- ---------- ----------------------
5% 10%
----------------------
<S> <C> <C> <C> <C> <C>
David E. Hatcher . . . . 0 $0 $0
John Case . . . . . . . . 0 -- $0 $0
Betty F. Hatcher . . . . 0 -- $0 $0
Jimmie L. Turner . . . . 10,000 20% $4.50 8/7/2007 $28,300 $71,718
Raul F. Alvarez . . . . . 5,000 10% 4.50 8/7/2007 $14,150 $35,859
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
<TABLE>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED OPTIONS AT AT
ON VALUE FISCAL YEAR END FISCAL YEAR END
NAME EXERCISE REALIZED (EXERCISABLE/UNEXERCISABLE) (EXERCISABLE/UNEXERCISABLE)
- --------------------- -------- -------- --------------------------- ---------------------------
<S> <C> <C> <C> <C>
David E. Hatcher. . . 0 0 58,500/3,500 $24,600/$1,750
John Case . . . . . . 0 0 12,500/1,500 $3,630/$750
Betty F. Hatcher. . . 0 0 46,475/2,500 $29,006/$1,250
Jimmie L. Turner. . . 0 0 19,500/11,500 $4,070/$3,250
Raul F. Alvarez . . . 0 0 4,875/7,375 --/$875
</TABLE>
10
<PAGE>
PERFORMANCE GRAPH
The following performance graph provided by Research Data Group, Inc.
compares the performance of the Company's Common Stock to the Russell 2000
Index and a Peer Group Index (as defined below) for the Company's last five
fiscal years. Many of the Company's peers are privately-held companies, or
subsidiaries or divisions of larger publicly-held companies. As a result,
there is only one public company to which the Company may realistically
compare itself. Accordingly, the Peer Group Index consists of Immucor, Inc.
The graph below assumes $100 invested on March 31, 1993 in Company Common
Stock or Index and that any dividends are reinvested.
<TABLE>
3/93 3/94 3/95 3/96 3/97 3/98
------ ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Gamma Biologicals, Inc. . . $100.0 193.5 142.0 137.2 120.3 161.3
Russell 2000 . . . . . . . $100.0 110.8 117.0 151.0 158.8 225.5
Peer Group . . . . . . . . $100.0 79.31 96.55 182.7 131.0 132.7
</TABLE>
SEVERANCE AGREEMENTS
The Company has entered into severance agreements with Mr. Hatcher, Ms.
Hatcher, Ms. O'Bannion, Mr. Turner, Mr. Parrish, Mr. Alvarez, Mr. Frame, Ms.
Batcha and Ms. Moulds, which provide severance benefits upon a change of
control of the Company. Under these agreements, if one of the named
employee's employment is terminated without cause following a change of
control, he or she will be compensated by the Company as described below.
Each of Mr. Hatcher, Ms. Hatcher, Ms. O'Bannion, Mr. Turner, Mr. Parrish, Mr.
Alvarez and Mr. Frame will receive a lump sum payment equal to a specified
percentage of his or her average annual compensation for the five years
preceding the change of control. The percentage for Mr. Hatcher is 299% and
the percentage for Ms. Hatcher, Ms. O'Bannion, Mr. Turner, Mr. Parrish, Mr.
Alvarez and Mr. Frame is 200%. Each of Ms. Batcha and Ms. Moulds will
receive a lump sum payment equal to 200% of her average annual compensation
for the two years preceding the change of control. Stock options granted to
the named employees by the Company and not then exercisable will become
immediately exercisable in full. The Company is required to pay the named
employees all amounts owed to the named employees by the Company under any
deferred compensation arrangements. The Company is also required to
reimburse the named employees for all legal fees incurred as a result of
termination of employment following a change of control.
11
<PAGE>
SPLIT-DOLLAR AGREEMENTS
The Company has purchased life insurance policies insuring the lives of
Mr. Brieden, Ms. Hatcher, Mr. Hatcher, Ms. O'Bannion, Mr. Turner, Mr.
Parrish, Mr. Letwin, Mr. Alvarez, Mr. Frame, Ms. Batcha and Ms. Moulds and
has entered into split-dollar agreements with these persons. The Company is
the owner of the policies and by the terms of the split-dollar agreements is
obligated to pay all premiums and to take all necessary steps, upon the death
of the insured, to obtain the death benefits provided under the policies.
The insured is obligated to reimburse the Company on an annual basis for the
value of the economic benefit of the policy to the insured for that year (as
determined for federal income tax purposes). Upon the death of the insured,
the Company is entitled to receive a portion of the death benefits provided
under the policy equal to the amounts of net premiums and interest on policy
loans, if any, to the insured paid by the Company, plus 3% interest. This
amount is payable from the death benefits. With respect to all policy
proceeds in excess of the amounts required to be paid to the Company, the
insured has the right to designate the beneficiaries of the policy and the
right to elect the settlement option with respect to such proceeds. The
Company has the right to obtain loans secured by the policy. The insured may
also obtain loans secured by the policy, with the Company's consent. With
the consent of the Company, interest on policy loans to the insured may be
paid by the Company. All dividends declared by the issuer of the policy will
be first applied to purchase one-year term insurance on the insured's life in
an amount not to exceed the guaranteed cash value of the policy at the next
policy anniversary, with any remaining dividends being used to purchase
additional paid-up insurance.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers and persons who own more than 10%
of the Company's common stock (collectively, "Filing Persons") to file with
the Securities and Exchange Commission (the "SEC") initial reports of
ownership (Form 3), reports in changes of ownership (Form 4), or annual
reports of ownership (Form 5). All Filing Persons are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms
they file.
To the Company's knowledge, based on its review of the copies of such
reports furnished to the Company and upon certain representations made by the
Filing Persons, during fiscal 1998, all of the Filing Persons filed the
required reports on a timely basis.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company distributes its products in the State of Michigan through
Bryan Biologicals, Inc. In fiscal 1998, the Company's sales to Bryan
Biologicals, Inc. amounted to approximately $203,000, or 1.1%, of the
Company's net sales. Mr. Bryan J. Brieden, a director of the Company, is a
consultant to, and former president and principal owner of, Bryan
Biologicals, Inc. As of May 1, 1998, Bryan Biologicals, Inc. owed the
Company approximately $91,000 on open account for product purchases made from
November 1996 through April 1998. No interest is charged by the Company on
such obligation. The largest amount owed to the Company by Bryan
Biologicals, Inc. at any time during fiscal 1998 was approximately $126,000.
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RELATIONSHIP WITH INDEPENDENT AUDITORS
The independent auditors of the Company are Deloitte & Touche LLP who
have acted in that capacity for many years. The Company has requested that
Deloitte & Touche LLP act as the independent auditors for the Company for
fiscal 1999. Representatives of Deloitte & Touche LLP will be present at the
Meeting, having the opportunity to make a statement if they desire to do so,
and will be available to respond to appropriate questions addressed to them.
PROPOSALS OF SHAREHOLDERS
Proposals of shareholders intended to be presented at the 1999 annual
meeting of shareholders must be received by the Company at its principal
executive offices (3700 Mangum Road, Houston, Texas 77092) by March 2, 1999,
for inclusion in the Company's proxy materials relating to the annual meeting.
GENERAL
The management does not intend to present any matter for action at the
Meeting other than the matters described above, and does not know of any
other matters to be brought before the Meeting. However, if any such other
matter should properly come before the Meeting, or if any vacancy in the
proposed slate of directors should be caused by an unexpected occurrence
before the holding of the election, the proxies will vote thereon in
accordance with the recommendations of management or for such other nominee
as management may select.
The information set forth above as to the present principal occupations
of the nominees for directors, as to their beneficial ownership of securities
of the Company, and as to other information not of record with the Company is
based upon information furnished to the Company by those nominees.
By order of the Board of Directors,
Lawrence E. Letwin
SECRETARY
June 30, 1998
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS
BEING SOLICITED, UPON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE
ANNUAL REPORT OF THE COMPANY ON FORM 10-K FOR THE FISCAL YEAR ENDED MARCH 31,
1998, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE
FINANCIAL STATEMENTS AND SCHEDULES THERETO. REQUESTS FOR COPIES OF THE
ANNUAL REPORT SHOULD BE DIRECTED TO MS. MARGARET J. O'BANNION, GAMMA
BIOLOGICALS, INC., 3700 MANGUM ROAD, HOUSTON, TEXAS 77092.
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STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT, dated as of September 21, 1998 (the
"AGREEMENT"), is by and between Gamma Biologicals, Inc., a Texas corporation
("ISSUER"), and Immucor, Inc., a Georgia corporation ("PARENT").
WHEREAS, Issuer and Parent have entered into that certain Agreement and
Plan of Merger dated as of the date hereof (the "MERGER AGREEMENT") providing
for the strategic combination of Issuer and Gamma Acquisition Corporation, a
Texas corporation and wholly-owned subsidiary of Parent ("GRANTEE"),
providing for, among other things, the tender offer to Issuer's shareholders
followed by the merger of Issuer and Grantee (the "MERGER"); and
WHEREAS, as an inducement to Grantee's execution of the Merger
Agreement, Issuer hereby grants to Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
intending to be legally bound hereby, Issuer and Grantee agree as follows:
1. GRANT OF OPTION. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the "OPTION")
to purchase up to 19.9% shares (the "OPTION SHARES") of Issuer Common Stock
at a price per Option Share of $5.40 (the "PURCHASE PRICE"); provided,
however, that in no event shall the number of shares of Issuer Common Stock
for which this Option is exercisable exceed 19.9% of Issuer's issued and
outstanding shares of Common Stock as determined in accordance with Section
4(e) of this Agreement.
2. EXERCISE OF OPTION.
(a) Provided that no preliminary or permanent injunction or other order
against the delivery of the Option Shares issued by any court of competent
jurisdiction in the United States shall be in effect, Grantee may exercise
the Option, in whole or in part, at any time and from time to time at or
prior to the Termination Date (as defined below). Subject to Sections
6(b)-(h) of this Agreement, except as to Option Shares for which a notice of
exercise previously has been given pursuant to the terms hereof, the Option
shall terminate and be of no further force or effect upon the first
anniversary of the date hereof, unless Issuer and the Grantee shall agree in
writing to extend this Agreement to a date specified in such writing
(hereinafter sometimes referred to as the "TERMINATION DATE"); PROVIDED THAT
any purchase of Option Shares upon exercise of the Option shall be subject to
compliance with applicable law.
(b) If Grantee wishes to exercise the Option, it shall send Issuer a
written notice (the date of which being herein referred to as the "NOTICE
DATE") specifying: (i) the total number of Option Shares it intends to
purchase pursuant to such exercise; and (ii) subject to the next sentence, a
place and date not earlier than three business days nor later than 15
business days
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after the Notice Date for the closing (the "CLOSING") of such purchase (the
"CLOSING DATE"). If prior notification to or consent of any regulatory
authority is required in connection with such purchase, or if the Notice Date
is less than three business days prior to the Termination Date, then,
notwithstanding the prior occurrence of the Termination Date, the Closing
Date shall be extended for such period as shall be necessary to enable such
prior notification or consent to occur or to be obtained (and the expiration
of any mandatory waiting period), and/or until the Closing Date properly
specified in the notice of exercise. Issuer shall cooperate with Grantee in
the filing of any application or documents necessary to obtain any required
consent or in connection with any required prior notification and the Closing
shall occur immediately following receipt of such consent or the filing of
any such prior notification (and the expiration of any mandatory waiting
period).
3. PAYMENT AND DELIVERY OF CERTIFICATES.
(a) On each Closing Date, Grantee shall: (i) pay to Issuer, in cash in
immediately available funds by wire transfer to a bank account designated by
Issuer, an amount equal to the Purchase Price multiplied by the number of
Option Shares to be purchased on such Closing Date; and (ii) present and
surrender this Agreement to Issuer at the address of Issuer specified in
Section 10(f) hereof.
(b) At each Closing, simultaneously with the delivery of immediately
available funds and surrender of this Agreement as provided in Section 3(a)
above, (i) Issuer shall deliver to Grantee (A) a certificate or certificates
representing the Option Shares to be purchased at such Closing, which Option
Shares shall be free and clear of all liens, claims, charges and encumbrances
of any kind whatsoever and subject to no preemptive rights, and (B) if the
Option is exercised in part only, an executed, new Stock Option Agreement
with the same terms as this Agreement evidencing the right to purchase the
balance of the shares of Issuer Common Stock purchasable hereunder, and (ii)
Grantee shall deliver to Issuer a letter agreeing that Grantee shall not
offer to sell or otherwise dispose of such Option Shares in violation of
applicable federal and state securities laws or of the provisions of this
Agreement.
(c) In addition to any other legend that is required by applicable law,
certificates for the Option Shares delivered at each Closing shall be
endorsed with a restrictive legend which shall read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AND PURSUANT TO THE
TERMS OF A STOCK OPTION AGREEMENT DATED AS OF SEPTEMBER 21, 1998. A COPY OF
SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE UPON
RECEIPT BY ISSUER OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that the above legend shall be removed by
delivery of substitute certificate(s) without such legend if Grantee shall
have delivered to Issuer a copy of a letter from
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the staff of the Securities and Exchange Commission (the "SEC"), or an
opinion of counsel in form and substance reasonably satisfactory to Issuer
and its counsel, to the effect that such legend is not required for purposes
of the Securities Act of 1933.
(d) Upon the giving by Grantee to Issuer of the written notice of
exercise of the Option provided for under Section 2(b), the tender of the
applicable purchase price in immediately available funds and the tender of
this Agreement to Issuer, Grantee shall be deemed to be the holder of record
of the shares of Issuer Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of Issuer shall then be closed
or that certificates representing such shares of Issuer Common Stock shall
not then be actually delivered to Grantee. Issuer shall pay all expenses,
and any and all United States federal, state, and local taxes and other
charges that may be payable in connection with the preparation, issuance and
delivery of stock certificates under this Section in the name of the Grantee,
and Grantee shall pay all expenses and any United States federal, state and
local taxes and other charges that may be payable in connection with the
preparation, issuance and delivery of stock certificates under this Section
in the name of Grantee's assignee, transferee or designee.
(e) Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Issuer Common Stock so that the Option may be exercised without additional
authorization of Issuer Common Stock after giving effect to all other
options, warrants, convertible securities and other rights to purchase Issuer
Common Stock; (ii) that it will not, by amendment to its Articles of
Incorporation or Bylaws or through reorganization, consolidation, merger,
dissolution or sale of assets, or by any other voluntary act, avoid or seek
to avoid the observance or performance of any of the covenants, stipulations
or conditions to be observed or performed hereunder by Issuer; (iii) promptly
to take all action as may from time to time be required (including complying
(if applicable) with all premerger notification, reporting and waiting period
requirements specified in 15 U.S.C. Section 18a and regulations promulgated
thereunder) in order to permit Grantee to exercise the Option and Issuer duly
and effectively to issue shares of Issuer Common Stock pursuant hereto; and
(iv) promptly to take all action provided herein to protect the rights of
Grantee against dilution.
4. REPRESENTATIONS AND WARRANTIES OF ISSUER. Issuer hereby represents
and warrants to Grantee as follows:
(a) DUE AUTHORIZATION. Issuer has all requisite corporate power and
authority to enter into this Agreement to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Issuer. This
Agreement has been duly executed and delivered by Issuer.
(b) AUTHORIZED STOCK. Issuer has taken all necessary corporate and
other action to authorize and reserve and to permit it to issue, and, at all
times from the date hereof until the obligation to deliver Issuer Common
Stock upon the exercise of the Option terminates, will have reserved for
issuance, upon exercise of the Option, the number of shares of Issuer Common
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Stock necessary for Grantee to exercise the Option in full, and Issuer will
take all necessary corporate action to authorize and reserve for issuance all
additional shares of Issuer Common Stock or other securities which may be
issued pursuant to Section 6 upon exercise of the Option. The shares of
Issuer Common Stock to be issued upon due exercise of the Option, including
all additional shares of Issuer Common Stock or other securities which may be
issuable pursuant to Section 6, upon issuance pursuant hereto, shall be duly
and validly issued, fully paid and nonassessable, and shall be delivered free
and clear of all liens, claims, charges and encumbrances of any kind or
nature whatsoever, including any preemptive right of any shareholder of
Issuer.
(c) NO VIOLATION. The execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated hereby will not,
conflict with, or result in any violation pursuant to any provisions of the
Articles of Incorporation or Bylaws of Issuer or any subsidiary of Issuer or
result in any violation of any material loan or credit agreement, note,
mortgage, indenture, lease, plan or other agreement, obligation, instrument,
permit, concession, franchise, license, judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to Issuer or any subsidiary of
Issuer or their respective properties or assets.
(d) BUSINESS COMBINATION STATUTE. Prior to the execution and delivery
of this Agreement, the Board of Directors of Issuer has unanimously approved
any and all transactions, events, agreements and circumstances (including,
without limitation, the execution, delivery and performance of this Agreement
and the grant of the Option) that could have the effect of causing Grantee to
become an "interested stockholder" (as defined in Article 13.03 of the Texas
Business Corporation Act ("TEXAS LAW")); (ii) after giving effect to this
Agreement neither Parent nor Grantee is an "interested shareholder" as such
term is defined in Article 13.03 of Texas Law; and (iii) except for Article
13.03, no "fair price," "moratorium," or other similar antitakeover statute
or provision applies to the transaction contemplated by this Agreement.
(e) At the date hereof, the Option Shares consist of 1,149,221 shares
of Issuer Common Stock, which represents 19.9% of the shares of Issuer Common
Stock that would be outstanding immediately after the exercise in full of the
option on the date hereof; PROVIDED, HOWEVER, that no such Issuer Common
Stock held by a subsidiary of Issuer (in whatever capacity) shall be treated
as "issued and outstanding" for purposes of the foregoing calculation.
5. REPRESENTATIONS AND WARRANTIES OF GRANTEE. Grantee hereby
represents and warrants to Issuer that:
(a) DUE AUTHORIZATION. Grantee has all requisite corporate power and
authority to enter into this Agreement and, subject to any approvals or
consents referred to herein, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Grantee. This Agreement has been
duly executed and delivered by Grantee.
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(b) PURCHASE NOT FOR DISTRIBUTION. This Option is not being, and any
Option Shares or other securities acquired by Grantee upon exercise of the
Option will not be, acquired with a view to the public distribution thereof
and will not be transferred or otherwise disposed of except in a transaction
registered or exempt from registration under the Securities Act.
6. ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC.
(a) In the event of any change in Issuer Common Stock by reason of a
stock dividend, stock split, split-up, recapitalization, combination,
exchange of shares or similar transaction, the type and number of shares or
securities subject to the Option, and the Purchase Price therefor, shall be
adjusted appropriately, and proper provision shall be made in the agreements
governing such transaction so that Grantee shall receive, upon exercise of
the Option, the number and class of shares or other securities or property
that Grantee would have received in respect of Issuer Common Stock if the
Option had been exercised immediately prior to such event, or the record date
therefor, as applicable.
(b) If Issuer, prior to the Termination Date, shall enter into an
agreement: (i) to consolidate with or merge into any person, other than
Grantee or one of its subsidiaries, and shall not be the continuing or
surviving corporation of such consolidation or merger; (ii) to permit any
person, other than Grantee or one of its subsidiaries, to merge into Issuer
and Issuer shall be the continuing or surviving corporation, but, in
connection with such merger, the then outstanding shares of Issuer Common
Stock shall be changed into or exchanged for stock or other securities of
Issuer or any other person or cash or any other property or the outstanding
shares of Issuer Common Stock immediately prior to such merger shall after
such merger represent less than 50% of the outstanding shares and share
equivalents of the merged company; (iii) to sell or otherwise transfer all or
any substantial part of its assets to any person, other than Grantee or one
of its subsidiaries; or (iv) to enter into a transaction with an economic
effect similar to that described in clauses (i)-(iii), then, and in each such
case, the agreement governing such transaction shall make proper provisions
so that, upon the consummation of any such transaction and upon the terms and
conditions set forth herein, the Option, notwithstanding the fact that as of
the date of consummation of such transaction the Termination Date shall have
occurred, shall be converted into, or exchanged for, an option (the
"SUBSTITUTE OPTION"), at the election of Grantee, of either (x) the Acquiring
Corporation (as defined below), (y) any person that controls the Acquiring
Corporation, or (z) in the case of a merger described in clause (ii), Issuer
(in each case, such entity being referred to as the "SUBSTITUTE OPTION
ISSUER").
(c) The Substitute Option shall have the same terms as the Option,
provided that, if the terms of the Substitute Option cannot, because of the
applicability of any law or regulation, have the exact terms as the Option,
such terms shall be as similar as possible and in no event less advantageous
to Grantee. The Substitute Option Issuer shall also enter into an agreement
with the then-holder or holders of the Substitute Option in substantially the
same form as this Agreement, which shall be applicable to the Substitute
Option.
(d) The Substitute Option shall be exercisable for such number of
shares of the
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Substitute Common Stock (as hereinafter defined) as is equal to the Assigned
Value (as hereinafter defined) multiplied by the number of shares of Issuer
Common Stock for which the Option was theretofore exercisable, divided by the
Average Price (as hereinafter defined). The exercise price of each share of
Substitute Common Stock subject to the Substitute Option (the "SUBSTITUTE
PURCHASE PRICE") shall be equal to the Purchase Price multiplied by a
fraction in which the numerator is the number of shares of Issuer Common
Stock for which the Option was theretofore exercisable and the denominator is
the number of shares for which the Substitute Option is exercisable.
(e) The following terms have the meanings indicated:
(i) "ACQUIRING CORPORATION" shall mean (x) the continuing or
surviving corporation of a consolidation or merger with Issuer (if other
than Issuer), (y) Issuer in a consolidation or merger or in which Issuer
is the continuing or surviving person, and (z) the transferee of all or
any substantial part of Issuer's assets (or the assets of its
subsidiaries).
(ii) "SUBSTITUTE COMMON STOCK" shall mean the common stock issued
by the Substitute Option Issuer upon exercise of the Substitute Option.
(iii) "ASSIGNED VALUE" shall mean the highest of (x) the price per
share of Issuer Common Stock at which a tender offer or exchange offer
therefor has been made by any person (other than Grantee), and (y) the
price per share of Issuer Common Stock to be paid by any person (other
than the Grantee) pursuant to an agreement with Issuer; PROVIDED,
HOWEVER, that in the event of a sale of less than all of Issuer's
assets, the Assigned Value shall be the sum of the price paid in such
sale for such assets and the current market value of the remaining
assets of Issuer as determined by a nationally recognized investment
banking firm selected by Grantee, divided by the number of shares of
Issuer Common Stock outstanding at the time of such sale. In the event
that a tender offer or exchange offer is made for Issuer Common Stock or
an agreement is entered into for a merger or consolidation involving
consideration other than cash, the value of the securities or other
property issuable or deliverable in exchange for Issuer Common Stock
shall be determined by a nationally recognized investment banking firm
mutually selected by Grantee and Issuer (or if applicable, Acquiring
Corporation), provided that if a mutual selection cannot be made as to
such investment banking firm, it shall be selected by Grantee.
(iv) "AVERAGE PRICE" shall mean the average last sales price or
closing price of a share of the Substitute Common Stock for the 20
trading days immediately preceding the consolidation, merger or sale in
question, but in no event higher than the last sales price or closing
price of the shares of the Substitute Common Stock on the day preceding
such consolidation, merger, or sale; PROVIDED that if Issuer is Issuer
of the Substitute Option, the Average Price shall be computed with
respect to a share of common stock issued by Issuer, the person merging
into Issuer or by any company which controls or is
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controlled by such person, as Grantee may elect.
(f) In no event pursuant to any of the foregoing paragraphs shall the
Substitute Option be exercisable for more than 19.9% of the aggregate of the
shares of the Substitute Common Stock outstanding (calculated as described in
Section 4(e)) prior to exercise of the Substitute Option. In the event that
the Substitute Option would be exercisable for more than 19.9% (calculated as
described in Section 4(e)) of the aggregate of the shares of Substitute
Common Stock but for this clause (f), the Substitute Option Issuer shall make
a cash payment to Grantee equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this clause (f)
over (ii) the value of the Substitute Option after giving effect to the
limitation in this clause (f). This difference in value shall be determined
by a nationally recognized investment banking firm selected by Grantee.
(g) Issuer shall not enter into any transaction described in subsection
(b) of this Section 6 unless the Acquiring Corporation and any person that
controls the Acquiring Corporation assumes in writing all of the obligations
of Issuer hereunder and takes all other actions that may be necessary so that
the provisions of this Section 6 are given full force and effect (including,
without limitation, any action that may be necessary so that the shares of
Substitute Common Stock are in no way distinguishable from or have lesser
economic value (other than any diminution resulting from the fact that the
Substitute Common Stock is "restricted securities" within the meaning of Rule
144 under the Securities Act) than other shares of common stock issued by the
Substitute Option Issuer).
(h) The provisions of Sections 7 and 8 shall apply, with appropriate
adjustments, to any securities for which the Option becomes exercisable
pursuant to this Section 6 and, as applicable, references in such sections to
"Issuer," "Option," "Purchase Price," and "Issuer Common Stock" shall be
deemed to be references to "Substitute Option Issuer," "Substitute Option,"
"Substitute Purchase Price," and "Substitute Common Stock," respectively.
7. REGISTRATION RIGHTS.
(a) DEMAND REGISTRATION RIGHTS. Issuer shall, subject to the
conditions of subparagraph (c) below, if requested by Grantee, as
expeditiously as possible prepare, file and keep current a registration
statement under the Securities Act if such registration is necessary (in the
reasonable judgment of Issuer's counsel) in order to permit the sale or other
disposition of any or all shares of Issuer Common Stock or other securities
that have been acquired by or are issuable to Grantee upon exercise of the
Option in accordance with the intended method of sale or other disposition
stated by Grantee in such request, including without limitation a "shelf"
registration statement under Rule 415 under the Securities Act or any
successor provision, and Issuer shall use its best efforts to qualify such
shares or other securities for sale under any applicable state securities
laws.
(b) ADDITIONAL REGISTRATION RIGHTS. If Issuer at any time after the
exercise of the Option proposes to register any shares of Issuer Common Stock
under the Securities Act in
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connection with an underwritten public offering of such Issuer Common Stock,
Issuer will promptly give written notice to Grantee (and any permitted
transferee) of its intention to do so and, upon the written request of
Grantee (or any such permitted transferee of Grantee) given within 30 days
after receipt of any such notice (which request shall specify the number of
shares of Issuer Common Stock intended to be included in such underwritten
public offering by Grantee (or such permitted transferee)), Issuer will cause
all such shares, the holders of which shall have requested participation in
such registration, to be so registered and included in such underwritten
public offering.
(c) CONDITIONS TO REQUIRED REGISTRATION. Issuer shall use all
reasonable efforts to cause each registration statement referred to in
subparagraph (a) above to become effective and to obtain all consents or
waivers of other parties which are required therefor and to keep such
registration statement effective until the completion of Grantee's sale of
all shares or other securities covered by such registration statement,
PROVIDED, HOWEVER, Issuer shall not be required to register Option Shares
under the Securities Act pursuant to subparagraph (a) above:
(i) prior to a Purchase Event;
(ii) on more than two occasions; and
(iii) within 90 days after the effective date of a registration
referred to in subparagraph (b) above pursuant to which the holder or
holders of the Option Shares concerned were afforded the opportunity to
register such shares under the Securities Act and such shares were
registered as requested.
Issuer shall use all reasonable efforts to make any filings, and take
all steps, under all applicable state securities laws to the extent necessary
to permit the sale or other disposition of the Option Shares so registered in
accordance with the intended method of distribution for such shares.
(d) EXPENSES. Except where applicable state law prohibits such
payments, Issuer will pay all expenses (including without limitation
registration fees, qualification fees, blue sky fees and expenses, legal
expenses of Issuer, printing expenses and the costs of special audits or
"cold comfort" letters, expenses of underwriters, excluding discounts and
commissions but including liability insurance if Issuer so desires or the
underwriters so require, and the reasonable fees and expenses of any
necessary special experts) in connection with each registration pursuant to
subparagraph (a) or (b) above (including the related offerings and sales by
holders of Option Shares) and all other qualifications, notifications or
exemptions pursuant to subparagraph (a) or (b) above.
(e) INDEMNIFICATION. In connection with any registration under
subparagraph (a) or (b) above Issuer hereby indemnifies the holder of the Option
Shares, and each underwriter thereof, including each person, if any, who
controls such holder or underwriter within the meaning of Section 15 of the
Securities Act against all expenses, losses, claims, damages and
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liabilities caused by any untrue, or alleged untrue, statement of a material
fact contained in any registration statement or prospectus or notification or
offering circular (including any amendments or supplements thereto) or any
preliminary prospectus, or caused by any omission, or alleged omission, to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such expenses,
losses, claims, damages or liabilities of such indemnified party are caused
by any untrue statement or alleged untrue statement that was included by
Issuer in any such registration statement or prospectus or notification or
offering circular (including any amendments or supplements thereto) in
reliance upon and in conformity with, information furnished in writing to
Issuer by such indemnified party expressly for use therein, and Issuer and
each officer, director and controlling person of Issuer within the meaning of
Section 15 of the Securities Act shall be indemnified by such holder of the
Option Shares, or by such underwriter, as the case may be, for all such
expenses, losses, claims, damages and liabilities caused by any untrue, or
alleged untrue, statement, that was included by Issuer in any such
registration statement or prospectus or notification or offering circular
(including any amendments or supplements thereto) in reliance upon, and in
conformity with, information furnished in writing to Issuer by such holder or
such underwriter, as the case may be, expressly for such use.
Promptly upon receipt by a party indemnified under this subparagraph (e)
of notice of the commencement of any action against such indemnified party in
respect of which indemnity or reimbursement may be sought against any
indemnifying party under this subparagraph (e), such indemnified party shall
notify the indemnifying party in writing of the commencement of such action,
but the failure so to notify the indemnifying party shall not relieve it of
any liability which it may otherwise have to any indemnified party under this
subparagraph (e). In case notice of commencement of any such action shall be
given to the indemnifying party as above provided, the indemnifying party
shall be entitled to participate in and, to the extent it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
of such action at its own expense, with counsel chosen by it and satisfactory
to such indemnified party. The indemnified party shall have the right to
employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel (other than reasonable
costs of investigation) shall be paid by the indemnified party unless (i) the
indemnifying party either agrees to pay the same, (ii) the indemnifying party
fails to assume the defense of such action with counsel satisfactory to the
indemnified party, or (iii) the indemnified party has been advised by counsel
that one or more legal defenses may be available to the indemnifying party
that may be contrary to the interest of the indemnified party, in which case
the indemnifying party shall be entitled to assume the defense of such action
notwithstanding its obligation to bear fees and expenses of such counsel. No
indemnifying party shall be liable for any settlement entered into without
its consent, which consent may not be unreasonably withheld.
If the indemnification provided for in this subparagraph (e) is
unavailable to a party otherwise entitled to be indemnified in respect of any
expenses, losses, claims, damages or liabilities referred to herein, then the
indemnifying party, in lieu of indemnifying such party otherwise entitled to
be indemnified, shall contribute to the amount paid or payable by such party
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to be indemnified as a result of such expenses, losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative
benefits received by Issuer, the selling shareholders and the underwriters
from the offering of the securities and also the relative fault of Issuer,
the selling shareholders and the underwriters in connection with the
statements or omissions which resulted in such expenses, losses, claims,
damages or liabilities, as well as any other relevant equitable
considerations. The amount paid or payable by a party as a result of the
expenses, losses, claims, damages and liabilities referred to above shall be
deemed to include any legal or other fees or expenses reasonably incurred by
such party in connection with investigating or defending any action or claim;
PROVIDED, HOWEVER, that in no case shall the holders of the Option Shares be
responsible, in the aggregate, for any amount in excess of the net offering
proceeds attributable to its Option Shares included in the offering. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. Any
obligation by any holder to indemnify shall be several and not joint with
other holders.
In connection with any registration pursuant to subparagraph (a) or (b)
above, Issuer and each holder of any Option Shares (other than Grantee) shall
enter into an agreement containing the indemnification provisions of this
subparagraph (e) or such other indemnification and contribution agreement as
may be required.
(f) MISCELLANEOUS REPORTING. Issuer shall comply with all reporting
requirements and will do all such other things as may be necessary to permit
the expeditious sale at any time of any Option Shares by the holder thereof
in accordance with and to the extent permitted by any rule or regulation
promulgated by the SEC from time to time. Issuer shall at its expense
provide the holder of any Option Shares with any information necessary in
connection with the completion and filing of any reports or forms required to
be filed by them under the Securities Act or the Exchange Act, or required
pursuant to any state securities laws or the rules of any stock exchange.
(g) ISSUE TAXES. Issuer will pay all stamp taxes in connection with
the issuance and the sale of the Option Shares to Grantee and in connection
with the exercise of the Option, and will save Grantee harmless, without
limitation as to time, against any and all liabilities, with respect to all
such taxes. Grantee will pay all stamp taxes in connection with the issuance
and the sale of the Option Shares to an assignee, transferee or designee of
Grantee, and will save Issuer harmless, without limitation as to time,
against any and all liabilities with respect to all such taxes.
8. QUOTATION; LISTING. If Issuer Common Stock or any other securities
to be acquired upon exercise of the Option are then authorized for quotation
or trading or listing on the AMEX or any other securities exchange or market,
Issuer, upon the request of Grantee, will promptly file an application, if
required, to authorize for quotation or trading or listing the shares of
Issuer Common Stock or other securities to be acquired upon exercise of the
Option on the AMEX or such other securities exchange or market and will use
its best efforts to obtain approval, if required, of such quotation or
listing as soon as practicable.
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9. DIVISION OF OPTION. This Agreement (and the Option granted hereby)
are exchangeable, without expense, at the option of Grantee, upon
presentation and surrender of this Agreement at the principal office of
Issuer for other Agreements providing for Options of different denominations
entitling the holder thereof to purchase in the aggregate the same number of
shares of Issuer Common Stock purchasable hereunder. The terms "Agreement"
and "Option" as used herein include any other Agreements and related Options
for which this Agreement (and the Option granted hereby) may be exchanged.
Upon receipt by Issuer of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Agreement, and (in the case of loss,
theft or destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Agreement, if mutilated, Issuer will
execute and deliver a new Agreement of like tenor and date. Any such new
Agreement executed and delivered shall constitute an additional contractual
obligation on the part of Issuer, whether or not the Agreement so lost,
stolen, destroyed or mutilated shall at any time be enforceable by anyone.
10. MISCELLANEOUS.
(a) EXPENSES. Except as otherwise provided in Section 7, each of the
parties hereto shall bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
(b) WAIVER AND AMENDMENT. Any provision of this Agreement may be
waived at any time by the party that is entitled to the benefits of such
provision if such waiver is in writing. This Agreement may not be modified,
amended, altered or supplemented except upon the execution and delivery of a
written agreement executed by the parties hereto.
(c) ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARY; SEVERABILITY. This
Agreement and the other documents and instruments referred to herein between
Grantee and Issuer (a) constitute the entire agreement and supersede all
prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof and (b) is not intended to
confer upon any person other than the parties hereto (other than any
transferees of the Option Shares or any permitted transferee of this
Agreement pursuant to Section 10(h)) any rights or remedies hereunder. If
any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction or a federal or state regulatory agency to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated. If for any
reason such court or regulatory agency determines that the Option does not
permit Grantee to acquire the full number of shares of Issuer Common Stock as
provided in Section 3 (as adjusted pursuant to Section 6), it is the express
intention of Issuer to allow Grantee to acquire or to require Issuer to
repurchase such lesser number of shares as may be permissible without any
amendment or modification hereof.
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(d) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas without regard to any
applicable conflicts of law rules.
(e) DESCRIPTIVE HEADING. The descriptive headings contained herein are
for convenience of reference only and shall not affect in any way the meaning
or interpretation of this Agreement.
(f) NOTICES. All notices, requests, demands, consents and other
communications required or permitted hereunder shall be in writing and shall
be deemed to have been duly given when delivered by overnight courier or
express mail service or by postage pre-paid certified or registered mail,
return receipt requested (the return receipt constituting PRIMA FACIE
evidence of the giving of such notice, request, demand or other
communication), by personal delivery, or by fax with confirmation or receipt,
to the following address or such other address of which a party subsequently
may give notice to all the other parties:
If to Issuer to: Gamma Biologicals, Inc.
3700 Mangum Road
Houston, TX 77092
Attn: Chief Executive Officer
Fax: (713) 956-3333
with a copy to: Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.
600 Travis Street
3400 Texas Commerce Tower
Houston, Texas 77002
Attention: David F. Taylor
Fax: (713) 223-3717
If to Grantee to: Immucor Inc.
3130 Gateway Drive,
Norcross, GA 30091
Attention: Chief Executive Officer
Fax: (770) 242-8930
with a copy to: Nelson Mullins Riley & Scarborough, L.L.P.
First Union Plaza
999 Peachtree Street
Suite 1400
Atlanta, Georgia 30309
Fax: (404) 817-6050
Attn: Philip H. Moise, Esq.
(g) COUNTERPARTS. This Agreement and any amendments hereto may be
executed in
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two counterparts, each of which shall be considered one and the same
agreement and shall become effective when both counterparts have been
signed, it being understood that both parties need not sign the same
counterpart.
(h) ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option shall be assigned by
any of the parties hereto (whether by operation of law or otherwise) without
the prior written consent of the other party, except that Grantee may assign
this Agreement or any of its rights hereunder to a wholly owned subsidiary of
Grantee. Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
(i) FURTHER ASSURANCES. In the event of any exercise of the Option by
Grantee, Issuer and Grantee shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in
order to consummate the transactions provided for by such exercise.
(j) SPECIFIC PERFORMANCE. The parties hereto agree that this Agreement
may be enforced by either party through specific performance, injunctive
relief and other equitable relief. Both parties further agree to waive any
requirement for the securing or posting of any bond in connection with the
obtaining of any such equitable relief and that this provision is without
prejudice to any other rights that the parties hereto may have for any
failure to perform this Agreement.
(CONTINUED ON FOLLOWING PAGE)
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IN WITNESS WHEREOF, Issuer and Grantee have caused this Agreement to be
signed by their respective officers thereunto duly authorized, all as of the
day and year first written above.
IMMUCOR, INC.
By:
Edward J. Gallup, President
GAMMA BIOLOGICALS, INC.
By:
----------------------------
David E. Hatcher, President
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SHAREHOLDERS AGREEMENT
This SHAREHOLDERS AGREEMENT, dated as of September 21, 1998, among
IMMUCOR, INC., a Georgia corporation ("PARENT"), GAMMA ACQUISITION
CORPORATION, a Texas corporation and a wholly owned subsidiary of Parent (the
"PURCHASER"), and the shareholders identified on the signature page hereof
(the "SHAREHOLDERS").
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this Agreement,
Parent, the Purchaser and GAMMA BIOLOGICALS, INC., a Texas corporation (the
"COMPANY"), have entered into an Agreement and Plan of Merger (as such agreement
may hereafter be amended from time to time, the "MERGER AGREEMENT"), pursuant to
which the Purchaser will be merged with and into the Company (the "MERGER");
WHEREAS, in furtherance of the Merger, Parent and the Company desire
that as soon as practicable after the announcement of the execution of the
Merger Agreement, the Purchaser shall commence a cash tender offer (the
"OFFER") to purchase at a price of $5.40 per share all outstanding shares of
Common Stock (as defined in Section 1 hereof) of the Company, including all
of the Shares (as defined in Section 2 hereof) beneficially owned by the
Shareholders; and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Shareholders agree, and the
Shareholders have agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
1. DEFINITIONS. For purposes of this Agreement:
(a) "BENEFICIALLY OWN" or "BENEFICIAL OWNERSHIP" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT")), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of the
same securities by the same holder, securities Beneficially Owned by a Person
shall include securities Beneficially owned by all other Persons with whom such
Person would constitute a "group" as within the meaning of Section 13(d)(3) of
the Exchange Act.
(b) "COMMON STOCK" shall mean at any time the Common Stock, $.10 par
value, of the Company.
(c) "PERSON" shall mean an individual, corporation, partnership, limited
<PAGE>
liability company, joint venture, association, trust, unincorporated
organization or other entity.
(d) Capitalized terms used and not defined herein have the respective
meanings ascribed to them in the Merger Agreement.
2. TENDER OF SHARES.
(a) In order to induce Parent and the Purchaser to enter into the Merger
Agreement, each of the Shareholders hereby agrees to validly tender (or cause
the record owner of such shares to validly tender), and not to withdraw,
pursuant to and in accordance with the terms of the Offer, not later than the
fifteenth business day after commencement of the offer pursuant to Section 1.01
of the Merger Agreement and Rule 14d-2 under the Exchange Act, the number of
shares of Common Stock set forth opposite each Shareholder's name on Schedule I
hereto (the "EXISTING SHARES"), all of which are Beneficially owned by such
Shareholder, and any shares of Common Stock acquired by such Shareholder in any
capacity after the date hereof and prior to the termination of this Agreement by
means of purchase, exercise of any option, dividend, distribution or in any
other way (such shares of Common Stock, together with the Existing Shares, the
"SHARES"). Each of the Shareholders hereby acknowledges and agrees that
Parent's and the Purchaser's obligation to accept for payment and pay for the
Shares in the offer, including the Shares Beneficially Owned by such
Shareholder, is subject to the terms and conditions of the Offer.
(b) The Shareholders hereby permit Parent and the Purchaser to publish and
disclose in the Offer Documents and, if approval of the Company's shareholders
is required under applicable law, the Proxy Statement (including all documents
and schedules filed with the SEC) its identity and ownership of the Shares and
the nature of its commitments, arrangements and understandings under this
Agreement.
3. ADDITIONAL AGREEMENTS.
(a) GRANT OF OPTION.
(i) Each of the Shareholders hereby grants to Purchaser an irrevocable
option (the "OPTION") to purchase the Existing Shares at a price per share of
$5.40 (the "OPTION PURCHASE PRICE"); provided, however, such grant shall be
ineffective and without any legal effect as to any Shareholder if the
granting of the Option by that Shareholder would subject such Shareholder to
liability under Section 16(b) of the Exchange Act.
(ii) Provided that no preliminary or permanent injunction or other order
against the delivery of the Existing Shares issued by any court of competent
jurisdiction in the United States shall be in effect, Purchaser may exercise
the Option, in whole or in part, at any time and from time to time at or
prior to the Termination Date (as defined below). The Option shall terminate
and be of no further force or effect upon the first anniversary of the date
hereof, unless the Shareholders and the Purchaser shall agree in writing to
extend this Agreement to a date specified in such writing (as it may be so
extended, hereinafter sometimes
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<PAGE>
referred to as the "TERMINATION DATE") ; PROVIDED THAT any purchase of
Existing Shares upon exercise of the Option shall be subject to compliance
with applicable law. If Purchaser wishes to exercise the Option, it shall
send the Shareholders a written notice (the date of which being herein
referred to as the "NOTICE DATE") specifying: (i) the total number of
Existing Shares it intends to purchase pursuant to such exercise; and
(ii) subject to the next sentence, a place and date not earlier than three
business days nor later than 15 business days after the Notice Date for the
closing (the "CLOSING") of such purchase (the "CLOSING DATE"). If prior
notification to or consent of any regulatory authority is required in
connection with such purchase, or if the Notice Date is less than three
business days prior to the Termination Date, then, notwithstanding the prior
occurrence of the Termination Date, the Closing Date shall be extended for
such period as shall be necessary to enable such prior notification or
consent to occur or to be obtained (and the expiration of any mandatory
waiting period), and/or until the Closing Date properly specified in the
notice of exercise. Each of the Shareholders shall cooperate with Purchaser
in the filing of any application or documents necessary to obtain any
required consent or in connection with any required prior notification and
the Closing shall occur immediately following receipt of such consent or the
filing of any such prior notification (and the expiration of any mandatory
waiting period).
(b) VOTING AGREEMENT. Each of the Shareholders shall, at any meeting
of the holders of Common Stock, however called, or in connection with any
written consent of the holders of Common Stock, vote (or cause to be voted)
the Shares (if any) then held of record or Beneficially Owned by such
Shareholder, (i) in favor of the Merger, the execution and delivery by the
Company of the Merger Agreement and the approval of the terms thereof and
each of the other actions contemplated by the Merger Agreement and this
Agreement and any actions required in furtherance thereof and hereof; and
(ii) against any Acquisition Proposal and against any action or agreement
that would impede, frustrate, prevent or nullify this Agreement, or result in
a breach in any respect of any covenant, representation or warranty or any
other obligation or agreement of the Company under the Merger Agreement or
which would result in any of the conditions set forth in Schedule 1.01(a) to
the Merger Agreement or set forth in Article VII of the Merger Agreement not
being fulfilled.
(c) NO INCONSISTENT ARRANGEMENTS. Each of the Shareholders hereby
covenants and agrees that, except as contemplated by this Agreement and the
Merger Agreement, it shall not (i) transfer (which term shall include,
without limitation, any sale, gift, pledge or other disposition), or consent
to any transfer of, any or all of the Shares or any interest therein, (ii)
enter into any contract, option or other agreement or understanding with
respect to any transfer of any or all of the Shares or any interest therein,
(iii) grant any proxy, power-of-attorney or other authorization in or with
respect to the Shares, (iv) deposit the Shares into a voting trust or enter
into a voting agreement or arrangement with respect to the Shares or (v) take
any other action that would in any way restrict, limit or interfere with the
performance of its obligations hereunder or the transactions contemplated
hereby or by the Merger Agreement.
(d) GRANT OF IRREVOCABLE PROXY; APPOINTMENT OF PROXY.
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<PAGE>
(i) Each Shareholder hereby irrevocably grants to, and appoints Edward
L. Gallup and Steven C. Ramsey or either of them, in their respective
capacities as officers of Parent, and any individual who shall hereafter
succeed to any such office held by such individuals with Parent, and each of
them individually, and also irrevocably grants to, and appoints Parent, such
Shareholder's proxy and attorney-in-fact (with full power of substitution),
for and in the name, place and stead of the Shareholder, to vote the Shares,
or grant a consent or approval in respect of the Shares in favor of the
transactions contemplated hereby or by the Merger Agreement, and against any
Acquisition Proposal.
(ii) Each Shareholder represents that any proxies heretofore given in
respect of the Shareholder's Shares are not irrevocable, and that any such
proxies are hereby revoked.
(iii) Each Shareholder understands and acknowledges that Parent and the
Purchaser are entering into the Merger Agreement in reliance upon such
Shareholder's execution and delivery of this Agreement. Each Shareholder
hereby affirms that the irrevocable proxy set forth in this Section 3(c) is
given in connection with the execution of the Merger Agreement, and that such
irrevocable proxy is given to secure the performance of the duties of such
Shareholder under this Agreement. Each Shareholder hereby further affirms
that the irrevocable proxy is coupled with an interest and may under no
circumstances be revoked. Each Shareholder hereby ratifies and confirms all
that such irrevocable proxy may lawfully do or cause to be done by virtue
hereof. Each Shareholder agrees immediately to deliver to Parent, upon its
request, all certificates representing all of such Shareholder's Shares for
the purpose of noting such irrevocable proxy on such certificates. Such
irrevocable proxy is executed and intended to be irrevocable in accordance
with the provisions of Section C of Article 2.29 of the Texas Law.
(e) NO SOLICITATION. Each Shareholder hereby agrees, in its capacity
as a shareholder of the Company, that neither such Shareholder nor any of its
subsidiaries or affiliates shall (and such Shareholder shall cause its
officers, directors, partners, employees, representatives and agents,
including, but not limited to, investment bankers, attorneys and accountants,
not to), directly or indirectly, encourage, solicit, participate in or
initiate discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Parent,
any of its affiliates or representatives) concerning any Acquisition
Proposal. Each Shareholder will immediately cease any existing activities,
discussions or negotiations with any parties conducted heretofore with
respect to any Acquisition Proposal. Each Shareholder will immediately
communicate to Parent the terms of any proposal, discussion, negotiation or
inquiry (and will disclose any written materials received by the Shareholder
in connection with such proposal, discussion, negotiation or inquiry) and the
identity of the party making such proposal or inquiry which it may receive in
respect of any such transaction. Any action taken by the Company or any
member of the Board of Directors of the Company in accordance with
Section 5.3(b) of the Merger Agreement shall be deemed not to violate this
Section 3(d).
(f) BEST EFFORTS. Subject to the terms and conditions of
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<PAGE>
this Agreement, each of the parties hereto agrees to use its best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations
to consummate and make effective the transactions contemplated by this
Agreement and the Merger Agreement. Each party shall promptly consult with
the other and provide any necessary information and material with respect to
all filings made by such party with any Governmental Entity in connection
with this Agreement and the Merger Agreement and the transactions
contemplated hereby and thereby.
4. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS. Each
Shareholder hereby represents and warrants to Parent and the Purchaser as
follows:
(a) OWNERSHIP OF SHARES. The Shareholder is the record and Beneficial
Owner of the Existing Shares, as set forth on Schedule I. On the date hereof,
the Existing Shares constitute all of the Shares owned of record or
Beneficially Owned by the Shareholder. The Shareholder has sole voting power
and sole power to issue instructions with respect to the matters set forth in
Sections 2, 3 and 4 hereof, sole power of disposition and sole power to agree
to all of the matters set forth in this Agreement, in each case with respect
to all of the Existing Shares with no limitations, qualifications or
restrictions on such rights, subject to applicable securities laws and the
terms of this Agreement.
(b) POWER; BINDING AGREEMENT. Each Shareholder has the power
(corporate, partnership or other) and authority to enter into and perform all
of its obligations under this Agreement. The execution, delivery and
performance of this Agreement by the Shareholder will not violate any other
agreement to which such Shareholder is a party including, without limitation,
any voting agreement, proxy arrangement, pledge agreement, shareholders
agreement or voting trust. This Agreement has been duly and validly executed
and delivered by the Shareholder and constitutes a valid and binding
agreement of such Shareholder, enforceable against the Shareholder in
accordance with its terms. There is no beneficiary or holder of a voting
trust certificate or other interest of any trust of which such Shareholder is
a trustee whose consent is required for the execution and delivery of this
Agreement or the consummation by such Shareholder of the transactions
contemplated hereby.
(c) NO CONFLICTS. Except for filings under the Exchange Act (i) no
filing with, and no permit, authorization, consent or approval of, any
Governmental Entity is necessary for the execution of this Agreement by each
Shareholder and the consummation by such Shareholder of the transactions
contemplated hereby and (ii) none of the execution and delivery of this
Agreement by such Shareholder, the consummation by such Shareholder of the
transactions contemplated hereby or compliance by such Shareholder with any
of the provisions hereof shall (A) conflict with or result in any breach of
any organizational documents applicable to such Shareholder, (B) result in a
violation or breach of, or constitute (with or without notice or lapse of
time or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration) under any
of the terms, conditions or provisions of any note, loan agreement, bond,
mortgage, indenture, license, contract, commitment, arrangement,
understanding, agreement or other instrument or obligation
5
<PAGE>
of any kind to which such Shareholder is a party or by which such Shareholder
or any of its properties or assets may be bound, or (C) violate any order,
writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to the Shareholder or any of its properties or assets.
(d) NO ENCUMBRANCES. Except as permitted by this Agreement, the
Existing Shares and the certificates representing the Existing Shares are
now, and at all times during the term hereof will be, held by such
Shareholder, or by a nominee or custodian for the benefit of such
Shareholder, free and clear of all Encumbrances, proxies, voting trusts or
agreements, understandings or arrangements or any other rights whatsoever,
except for any such Encumbrances or proxies arising hereunder.
(e) NO FINDER'S FEES. No broker, investment banker, financial advisor
or other person is entitled to any broker's, finder's, financial adviser's or
other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of each of
the Shareholders.
(f) RELIANCE BY PARENT. Each Shareholder understands and acknowledges
that Parent and the Purchaser are entering into the Merger Agreement in
reliance upon such Shareholder's execution and delivery of this Agreement.
5. REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER. Each of
Parent and the Purchaser hereby represents and warrants to each Shareholder
as follows:
(a) POWER; BINDING AGREEMENT. Parent and the Purchaser each has the
corporate power and authority to enter into and perform all of its
obligations under this Agreement. The execution, delivery and performance of
this Agreement by each of Parent and the Purchaser will not violate any other
agreement to which either of them is a party. This Agreement has been duly
and validly executed and delivered by each of Parent and the Purchaser and
constitutes a valid and binding agreement of each of Parent and the
Purchaser, enforceable against each of Parent and the Purchaser in accordance
with its terms.
(b) NO CONFLICTS. Except for filings under the Exchange Act, (i) no
filing with, and no permit, authorization, consent or approval of, any
Governmental Entity is necessary for the execution of this Agreement by each
of Parent and the Purchaser and the consummation by each of Parent and the
Purchaser of the transactions contemplated hereby and (ii) none of the
execution and delivery of this Agreement by each of Parent and the Purchaser,
the consummation by each of Parent and the Purchaser of the transactions
contemplated hereby or compliance by each of Parent and the Purchaser with
any of the provisions hereof shall (A) conflict with or result in any breach
of any organizational documents applicable to either of Parent or the
Purchaser, (B) result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, material modification or
acceleration) under any of the terms, conditions or provisions of any note,
loan agreement, bond, mortgage, indenture, license, contract, commitment,
arrangement, understanding, agreement or other instrument or obligation
6
<PAGE>
of any kind to which either of Parent or the Purchaser is a party or by which
either of Parent or the Purchaser or any of their properties or assets may be
bound, or (C) violate any order, writ, injunction, decree, judgment, order,
statute, rule or regulation applicable to either of Parent or the Purchaser
or any of their properties or assets.
6. FURTHER ASSURANCES. From time to time, at the other party's
request and without further consideration, each party hereto shall execute
and deliver such additional documents and take all such further lawful action
as may be necessary or desirable to consummate and make effective, in the
most expeditious manner practicable, the transactions contemplated by this
Agreement.
7. STOP TRANSFER. No Shareholder shall request that the Company
register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of the Shares, unless such transfer
is made in compliance with this Agreement. In the event of a stock dividend
or distribution, or any change in the Common Stock by reason of any stock
dividend, split-up, recapitalization, combination, exchange of shares or the
like, the term "Shares" shall refer to and include the Shares as well as all
such stock dividends and distributions and any shares into which or for which
any or all of the Shares may be changed or exchanged.
8. TERMINATION. The covenants, agreements and proxy contained herein
with respect to the Shares shall terminate upon the termination of the Merger
Agreement in accordance with its terms.
9. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes
all other prior agreements and understandings, both written and oral, between
the parties with respect to the subject matter hereof.
(b) BINDING AGREEMENT. This Agreement and the obligations hereunder
shall attach to the Shares and shall be binding upon any person or entity to
which legal or beneficial ownership of the Shares shall pass, whether by
operation of law or otherwise, including, without limitation, each
Shareholder's administrators or successors. Notwithstanding any transfer of
Shares, the transferor shall remain liable for the performance of all
obligations of the transferor under this Agreement.
(c) ASSIGNMENT. This Agreement shall not be assigned by operation of
law or otherwise without the prior written consent of the other parties
hereto, provided that Parent or the Purchaser may assign, in its sole
discretion, its rights and obligations hereunder to any direct or indirect
wholly owned subsidiary of Parent, but no such assignment shall relieve
Parent or the Purchaser of its obligations hereunder if such assignee does
not perform such obligations.
7
<PAGE>
(d) AMENDMENTS, WAIVERS, ETC. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, except
upon the execution and delivery of a written agreement executed by the
parties hereto.
(e) NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if given) by hand delivery or telecopy
(with a confirmation copy sent for next day delivery via courier service,
such as Federal Express), or by any courier service, such as Federal Express,
providing proof of delivery. All communications hereunder shall be delivered
to the respective parties at the following addresses:
If to a Shareholder, to the address set forth on Schedule I hereto.
<TABLE>
<S> <C>
If to Parent or the Purchaser: Immucor Inc.
3130 Gateway Drive,
Norcross, GA 30091
Attention: Chief Executive Officer
Fax: (770) 242-8930
Copy to: Nelson Mullins Riley & Scarborough,
L.L.P.
First Union Plaza, Suite 1400
999 Peachtree Street
Atlanta, Georgia 30309
Fax: (404) 817-6050
Attention: Philip H. Moise
</TABLE>
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) SEVERABILITY. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any provision or portion of
any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and
this Agreement will be reformed, construed and enforced in such jurisdiction
as if such invalid, illegal or unenforceable provision or portion of any
provision had never been contained herein.
(g) SPECIFIC PERFORMANCE. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it
would not have an adequate remedy at law for money damages, and therefore in
the event of any such breach the aggrieved party shall be entitled to the
remedy of specific performance of such covenants and agreements
8
<PAGE>
and injunctive and other equitable relief in addition to any other remedy to
which it may be entitled, at law or in equity.
(h) REMEDIES CUMULATIVE. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.
(i) NO WAIVER. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of
the parties at variance with the terms hereof, shall not constitute a waiver
by such party of its right to exercise any such or other right, power or
remedy or to demand such compliance.
(j) NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to be
for the benefit of, and shall not be enforceable by, any person or entity who
or which is not a party hereto.
(k) GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Texas, without giving effect to the
principles of conflicts of law thereof.
(l) DESCRIPTIVE HEADINGS. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of
or to affect the meaning or interpretation of this Agreement.
(m) COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which, taken together,
shall constitute one and the same Agreement.
(continued on next page)
9
<PAGE>
IN WITNESS WHEREOF, Parent, the Purchaser and each of the Shareholders
listed below have caused this Agreement to be duly executed as of the day and
year first above written.
IMMUCOR, INC.
By:
Name:
Title:
GAMMA ACQUISITION CORPORATION
By:
Name:
Title:
SHAREHOLDERS:
David E. Hatcher
Betty F. Hatcher
Dr. Richard H. Aster
H.H. "Will" Hardee
Bryan J. Brieden
(Signatures continued on next page)
10
<PAGE>
SHAREHOLDERS AGREEMENT
September 21, 1998
(Continuation of Signatures)
Hayle B. Randolph
Jimmie L. Turner
Raul Alverez
John Case
Thomas H. Frame
Margaret O'Bannion
Gary L. Parrish
Susan A. Batcha
Marilyn K. Moulds
11
<PAGE>
SCHEDULE I
EXISTING SHARES
<TABLE>
<CAPTION>
Name Shares (1) Address for Notice (2)
---- ---------- ----------------------
<S> <C>
Betty F. Hatcher 228,764
David E. Hatcher 163,099
H.H. "Will" Hardee 102,363
Dr. Richard H. Aster 33,685
Bryan J. Brieden 23,300
Hayle B. Randolph 28,385
John Case 24,099
Raul F. Alvarez 19,750
Jimmie L. Turner 47,447
Thomas H. Frame 17,250
Margaret J. O'Bannion 37,350
Gary L. Parrish 20,100
Susan A. Batcha 18,725
Marilyn K. Moulds 18,084
</TABLE>
(1) Includes all options, whether or not currently exercisable.
(2) The address for notice for all Shareholders is:
c/o Gamma Biologicals, Inc.
3700 Mangum Road
Houston, TX 77092
Fax: (713) 956-3333
12
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
GAMMA BIOLOGICALS, INC.
----------------
Shareholder Rights Plan
Dated as of September 5, 1989
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
Table of Contents
-----------------
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
1. Certain Definitions 1
2. Authority to Appoint Rights Agent 6
3. Issue of Rights Certificates 6
4. Form of the Rights Certificates 8
5. Registration 9
6. Transfer, Split Up, Combination and Exchange
of Rights Certificates; Mutilated, Destroyed,
Lost or Stolen Rights Certificates 10
7. Exercise of Rights; Purchase Price;
Expiration Date of Rights 11
8. Cancellation and Destruction of Rights
Certificates 14
9. Reservation and Availability of Capital Stock 14
10. Record Date for Securities Issued Upon
Exercise 16
11. Adjustment of Purchase Price, Number and
Kind of Shares or Number of Rights 17
12. Certificate of Adjusted Purchase Price
or Number of Shares 28
13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power 28
14. Fractional Rights and Fractional Shares 32
15. Rights of Action 33
16. Agreement of Rights Holders 33
17. Rights Certificate Holder Not Deemed
a Shareholder 34
</TABLE>
<PAGE>
Table of Contents, continued
----------------------------
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
18. Indemnification of Corporate Officers 34
19. Issuance of New Rights Certificates 35
20. Redemption and Termination 36
21. Notice of Certain Events 36
22. Notices 38
23. Supplements and Amendment; Substituted Plan 38
24. Successors 39
25. Determination and Actions by the
Board of Directors, etc. 39
26. Benefits of this Plan 40
27. Severability 40
28. Governing Law 40
29. Descriptive Headings 41
Exhibit A -- Form of Rights Certificate
Exhibit B -- Form of Summary of Rights
</TABLE>
<PAGE>
SHAREHOLDER RIGHTS PLAN
SECTION 1. CERTAIN DEFINITIONS. For purposes of this Plan, the following
terms have the meanings indicated:
(a) "ACQUIRING PERSON" shall mean any Person or group of Persons
acting together, directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, who or which, together with all
Affiliates and Associates of such Person(s), shall be the Beneficial Owner of
20% or more of the shares of Common Stock then outstanding, but shall not
include (i) the Company, (ii) any Subsidiary of the Company, or (iii) any
employee benefit plan of the Company or any Subsidiary of the Company, or any
Person or entity organized, appointed or established by the Company acting in
accordance with and for or pursuant to the terms of any such plan.
(b) "ACT" shall mean the Securities Act of 1933, as amended.
(c) "ADJUSTMENT SHARES" shall have the meaning set forth in Section
11(a)(ii) hereof.
(d) "AFFILIATE" and "ASSOCIATE" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended and in effect on the
date of this Plan (the "Exchange Act").
(e) A Person shall be deemed the "BENEFICIAL OWNER" of, and shall
be deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether
such right is exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding (whether or not
in writing) or upon the exercise of conversion rights, exchange rights,
rights, warrants or options, or otherwise; PROVIDED, HOWEVER, that a
Person shall not be deemed the "Beneficial Owner" of, or to "beneficially
own," (A) securities tendered pursuant to a tender or exchange offer made
by such Person or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange, (B) securities
issuable upon exercise of Rights at any time prior to the occurrence of a
<PAGE>
Triggering Event, or (C) securities issuable upon exercise of Rights from
and after the occurrence of a Triggering Event which Rights were acquired
by such Person or any of such Person's Affiliates or Associates prior to
the Distribution Date or pursuant to Section 3(a) or Section 19 hereof
(the "Original Rights") or pursuant to Section 11(a)(i) hereof in
connection with an adjustment made with respect to any Original Rights;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of
or has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of
the General Rules and Regulations under the Exchange Act), including
pursuant to any agreement, arrangement or understanding, whether or not in
writing; PROVIDED, HOWEVER, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," any security under this
subparagraph (ii) as a result of an agreement, arrangement or understanding
to vote such security if such agreement, arrangement or understanding:
(A) arises solely from a revocable proxy given in response to a public
proxy or consent solicitation made pursuant to, and in accordance with, the
applicable provisions of the General Rules and Regulations under the
Exchange Act, and (B) is not also then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor
report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such
Person (or any of such Person's Affiliates or Associates) has any
agreement, arrangement or understanding (whether or not in writing), for
the purpose of acquiring, holding, voting (except pursuant to a revocable
proxy as described in the provision to subparagraph (ii) of this paragraph
(e)) or disposing of any voting securities of the Company;
PROVIDED, HOWEVER, that nothing in this paragraph (e) shall cause a Person
engaged in business as an underwriter of securities to be the "Beneficial
Owner" of, or to "beneficially own," any securities acquired through such
Person's participation in good faith in a firm commitment underwriting until
the expiration of forty days after the date of such acquisition.
(f) "BOARD" shall mean the Board of Directors of the Company.
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<PAGE>
(g) "BUSINESS DAY" shall mean any day other than a Saturday, Sunday
or a day on which banking institutions in the State of Texas are authorized
or obligated by law or executive order to close.
(h) "CLOSE OF BUSINESS" on any given date shall mean 5:00 P.M.
Central Time on such date; PROVIDED, HOWEVER, that if such date is not a
Business Day it shall mean 5:00 P.M. Central time on the next succeeding
Business Day.
(i) "COMMON STOCK" shall mean the common stock, $.10 per share par
value, of the Company, except that "Common Stock" or "common stock", when
used with reference to any Person other than the Company, shall mean the
capital stock of such Person with the greatest voting power, or the equity
securities or other equity interest having power to control or direct the
management, of such Person.
(j) "COMMON STOCK EQUIVALENTS" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(k) "COMPANY" shall mean Gamma Biologicals, Inc., a Texas
corporation, until a successor corporation shall have become such or until a
Principal Party shall assume, and thereafter be liable for, all obligations
and duties of the Company hereunder, pursuant to the applicable provisions of
this Plan, and thereafter "Company" shall mean such successor corporation or
Principal Party.
(l) "CURRENT MARKET PRICE" shall have the meaning set forth in
Section 11(d) hereof.
(m) "CURRENT VALUE" shall have the meaning set forth in Section 11
(a)(iii) hereof.
(n) "DISINTERESTED DIRECTOR" shall mean any member of the Board,
while such Person is a member of the Board, who (i) is not an Acquiring
Person or an Affiliate or Associate of an Acquiring Person, (ii) was not
nominated by or is not in any other manner representative of an Acquiring
Person or of an Affiliate or Associate of an Acquiring Person, (iii) does not
control and is not controlled by an Acquiring Person or an Affiliate or
Associate of an Acquiring Person, and (iv) does not have a substantial
interest (whether by beneficial ownership of securities or otherwise) in an
Acquiring Person or an Affiliate or Associate of an Acquiring Person. An
interest of less than 5% shall not be considered "substantial" for purposes
of this definition.
-3-
<PAGE>
(o) "DISTRIBUTION DATE" shall have the meaning set forth in Section
3(a) hereof.
(p) "EQUIVALENT COMMON STOCK" shall have the meaning set forth in
Section 11(b) hereof.
(q) "EXCHANGE ACT" shall have the meaning set forth in Section 1(d)
hereof.
(r) "EXPIRATION DATE" shall have the meaning set forth in Section
7(a) hereof.
(s) "FAIR VALUE OFFER" shall have the meaning set forth in Section
11(a)(ii)(A) hereof.
(t) "FINAL EXPIRATION DATE" shall mean the Close of Business on
September 5, 1999.
(u) "ORIGINAL RIGHTS" shall have the meaning set forth in Section
1(e)(i) hereof.
(v) "PERSON" shall mean any individual, firm, corporation,
partnership, unincorporated association, syndicate or other entity.
(w) "PLAN" shall mean this Shareholder Rights Plan as originally
adopted or as it may from time to time be supplemented or amended pursuant to
the applicable provisions hereof.
(x) "PRINCIPAL PARTY" shall have the meaning set forth in Section
13(b) hereof.
(y) "PURCHASE PRICE" shall have the meaning set forth in Section
4(a) hereof.
(z) "RECORD DATE" shall mean October 2, 1989.
(aa) "REDEMPTION PRICE" shall have the meaning set forth in Section
20(a).
(ab) "RIGHT" shall mean the right to purchase one share of Common
Stock (subject to adjustment) as provided herein.
(ac) "RIGHTS AGENT" shall have the meaning set forth in Section 2
hereof.
-4-
<PAGE>
(ad) "RIGHTS CERTIFICATES" shall have the meaning set forth in
Section 3(a) hereof.
(ae) "RIGHTS DIVIDEND DECLARATION DATE" shall mean September 5,
1989, the date that the Board declared a dividend distribution of one Right
for each outstanding share of Common Stock to holders of record of Common
Stock at the Close of Business on the Record Date.
(af) "SECTION 11(a)(ii) EVENT" shall mean any event described in
Section 11(a)(ii) hereof.
(ag) "SECTION 11(a)(ii) TRIGGER DATE" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(ah) "SECTION 13 EVENT" shall mean any event described in clauses
(x), (y) or (z) of Section 13(a) hereof.
(ai) "SPREAD" shall have the meaning set forth in Section
11(a)(iii) hereof.
(aj) "STOCK ACQUISITION DATE" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) under the Exchange Act)
by the Company or an Acquiring Person that an Acquiring Person has become
such without the consent of a majority of the Disinterested Directors.
(ak) "SUBSIDIARY" shall mean, with reference to any Person, any
corporation of which an amount of voting securities sufficient to elect at
least a majority of the directors of such corporation is beneficially owned,
directly (or indirectly, by such Person, or otherwise controlled by such
Person.
(al) "SUBSTITUTE CONSIDERATION" shall have the meaning set forth in
Section 11(a)(iii) hereof.
1. "SUBSTITUTION PERIOD" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(a) "SUMMARY OF RIGHTS" shall have the meaning set forth in Section
3(b) hereof.
(b) "TRADING DAY" shall have the meaning set forth in Section 11(d)
hereof.
(c) "TRIGGERING EVENT" shall mean any Section 11(a)(ii) Event or
any Section 13 Event.
-5-
<PAGE>
SECTION 2. AUTHORITY TO APPOINT RIGHTS AGENT. The Company may appoint a
rights agent (or one or more co-rights agents) to act as agent for the
Company and the holders of the Rights (who, in accordance with Section 3
hereof, shall prior to the Distribution Date also be the holders of the
Common Stock) in accordance with the terms and conditions hereof (the "Rights
Agent"), and may amend or supplement this Plan in accordance with Section 23
hereof in any manner necessary or desirable to induce such Rights Agent to
accept its appointment hereunder.
SECTION 3. ISSUE OF RIGHTS CERTIFICATES.
(a) Until the earliest of (i) the Close of Business on the tenth
day after the Stock Acquisition Date (or, if the tenth day after the Stock
Acquisition Date occurs before the Record Date, the Close of Business on the
Record Date), (ii) the Close of Business on the tenth day after the date that
a tender or exchange offer by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any person or entity organized, appointed or
established by the Company acting in accordance with and for or pursuant to
the terms of any such plan) is first published or sent or given within the
meaning of Rule 14d-2(a) of the General Rules and Regulations under the
Exchange Act (or, if the tenth day after such date occurs before the Record
Date, the Close of Business on the Record Date), if, upon consummation
thereof, such Person would be the Beneficial Owner of 20% or more of the
shares of Common Stock then outstanding, (iii) the Close of Business on the
tenth day after the occurrence of any of the events described in Section
11(a)(ii)(B) (or, if the tenth day after such date occurs before the Record
Date, the Close of Business on the Record Date), or (iv) the Close of
Business on the tenth day after the date that an offer to effect any of the
transactions described in Section 13(a) made, encouraged or supported by
Acquiring Person is first announced, published, sent or given (or, if the
tenth day after such date occurs before the Record Date, the Close of
Business on the Record Date) (the earliest of (i), (ii), (iii) and (iv) being
herein referred to as the "Distribution Date"), (x) the Rights will be
evidenced (subject to the provisions of paragraph (b) of this Section 3) by
the certificates for the Common Stock registered in the names of the holders
of the Common Stock (which certificates for Common Stock shall be deemed also
to be certificates for Rights) and not by separate certificates, and (y) the
Rights will be transferable only in connection with the transfer of the
underlying shares of Common Stock (including a transfer to the Company). As
soon as practicable after the
-6-
<PAGE>
Distribution Date, the Company will send by first class, insured, postage
prepaid mail, to each record holder of the Common Stock as of the Close of
Business on the Distribution Date, at the address of such holder shown on the
records of the Company, one or more Rights Certificates, in substantially the
form of Exhibit A hereto (the "Rights Certificates"), evidencing one Right
for each share of Common Stock so held, subject to adjustment as provided
herein. In the event that an adjustment in the number of Rights per share of
Common Stock has been made pursuant to Section 11(p) hereof, at the time of
distribution of the Rights Certificates, the Company shall make the necessary
and appropriate rounding adjustments (in accordance with Section 14(a)
hereof) so that Rights Certificates representing only whole numbers of Rights
are distributed and cash is paid in lieu of any fractional Rights. As of and
after the Distribution Date, the Rights will be evidenced solely by such
Rights Certificates.
(b) Promptly after the Record Date, the Company will send a copy of
a Summary of Rights, in substantially the form attached hereto as Exhibit B
(the "Summary of Rights"), by first class, postage prepaid mail, to each
record holder of the Common Stock as of the Close of Business on the Record
Date, at the address of such holder shown on the records of the Company. With
respect to certificates for the Common Stock outstanding as of the Record
Date, until the Distribution Date the Rights will be evidenced by such
certificates for the Common Stock and the registered holders of the Common
Stock shall also be the registered holders of the associated Rights. Until
the earlier of the Distribution Date or the Expiration Date, the transfer of
any certificates representing shares of Common Stock in respect of which
Rights have been issued shall also constitute the transfer of the Rights
associated with such shares of Common Stock.
(c) Except as may otherwise be determined by the Board, Rights
shall be issued in respect of all shares of Common Stock which are issued
(whether originally issued or from the Company's treasury) after the Record
Date but prior to the earlier of the Distribution Date or the Expiration
Date, and in the event of such a determination by the Board, no other
provisions of this Plan shall apply to any shares of Common Stock which the
Board has determined to be issued without Rights. Certificates representing
such shares of Common Stock shall also be deemed to be certificates for
Rights, and shall bear the following legend:
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in
-7-
<PAGE>
the Shareholder Rights Plan of Gamma Biologicals, Inc. (the "Company")
dated as of September 5, 1989, as it may be from time to time amended (the
"Plan"), the terms of which are hereby incorporated herein by reference and
a copy of which is on file at the principal offices of the Company. Under
certain circumstances, as set forth in the Plan, such Rights will be
evidenced by separate certificates and will no longer be evidenced by this
certificate. The Company will mail to the holder of this certificate a
copy of the Plan, as in effect on the date of mailing, without charge
promptly after receipt of a written request therefor. Under certain
circumstances set forth in the Plan, Rights issued to or held by any
Person who is, was or becomes an Acquiring Person or any Affiliate or
Associate thereof (as such terms are defined in the Plan), whether
currently held by or on behalf of such Person or by any subsequent
holder, may become null and void.
With respect to such certificates containing the foregoing legend, until the
earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Stock represented by such certificates shall be
evidenced by such certificates alone and registered holders of the Common
Stock shall also be the registered holders of the associated Rights, and the
transfer of any such certificates shall also constitute the transfer of the
Rights associated with the Common Stock represented by such certificates.
SECTION 4. FORM OF RIGHTS CERTIFICATES.
(a) The Rights Certificates (and the forms of election to purchase
and of assignment to be printed on the reverse thereof) shall each be
substantially in the form set forth in Exhibit A hereto and may have such
marks of identification (or designation and such legends, summaries (or
endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Plan, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the
Rights may from time to time be listed, or to conform to usage. Subject to
the provisions of Section 11 and Section 19 hereof, the Rights Certificates,
whenever distributed, shall be dated as of the Record Date and on their face
shall entitle the holders thereof to purchase such number of shares of Common
Stock as shall be set
-8-
<PAGE>
forth therein at the price set forth therein (such exercise price per share,
the "Purchase Price"), but the amount and type of securities purchasable upon
the exercise of each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.
(b) Any Rights Certificates issued pursuant to Section 3(a) or
Section 19 hereof that represents Rights beneficially owned by: (i) an
Acquiring Person or any Associate or Affiliate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom such
Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which a majority of the
Disinterested Directors have determined is a part of a plan, arrangement or
understanding which has as a primary purpose or effect avoidance of Section
7(e) hereof, and any Rights Certificate issued pursuant to Section 6 or
Section 11 hereof upon transfer, exchange, replacement or adjustment of any
other Rights Certificate referred to in this sentence, shall contain (to the
extent feasible) the following legend, modified as applicable to such Person:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Plan). Accordingly, this Rights Certificate and the
Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of such Plan.
SECTION 5. REGISTRATION.
(a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, the Chief Executive Officer, the
President, any Vice President or the Treasurer, either manually or by
facsimile signature, and shall have affixed thereto the Company's seal or a
facsimile thereof which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile
-9-
<PAGE>
signature. In case any officer of the Company who shall have signed any of
the Rights Certificates shall cease to be such officer of the Company before
issuance and delivery by the Company, such Rights Certificates,
nevertheless, may be issued and delivered by the Company with the same force
and effect as though the person who signed such Rights Certificates had not
ceased to be such officer of the Company; and any Rights Certificates may be
signed on behalf of the Company by any person who, at the actual date of the
execution of such Rights Certificate, shall be a proper officer of the
Company to sign such Rights Certificate, although at the date of the
execution of this Plan any such person was not such an officer.
(b) Following the Distribution Date, the Company or the Rights
Agent, if any, will keep or cause to be kept, at the principal executive
office of the Company or at the principal shareholder services office or
offices of the Rights Agent designated for such purposes, as the case may be,
books for registration and transfer of the Rights Certificates issued for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the
Rights Certificates, the number of Rights evidenced on its face by each of
the Rights Certificates and the date of each of the Rights Certificates.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES.
(a) Subject to the provisions of Section 4(b), Section 7(e) and
Section 14 hereof, at any time after the Close of Business on the
Distribution Date, and at or prior to the Close of Business on the Expiration
Date, any Rights Certificate or Certificates may be transferred, split up,
combined or exchanged for another Rights Certificate or Certificates,
entitling the registered holder to purchase a like number of shares of Common
Stock (or, following a Triggering Event, other securities, cash or other
assets, as the case may be) as the Rights Certificate or Certificates
surrendered then entitle such holder (or former holder in the case of a
transfer) to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate or Certificates shall make such
request in writing delivered to the Company or the Rights Agent, if any, and
shall surrender the Rights Certificate or Certificates to be transferred,
split up, combined or exchanged, with the form of assignment and certificate
duly executed, at the principal executive office of the Company, or the
principal shareholder services office or offices of the
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Rights Agent designated for such purposes, as the case may be. Neither the
Company nor the Rights Agent, if any, as the case may be, shall be obligated
to take any action whatsoever with respect to the transfer of any such
surrendered Rights Certificate until the registered holder shall have
completed and signed the certificate contained in the form of assignment set
forth on the reverse side of each such Rights Certificate and shall have
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the Secretary
of the Company or the Rights Agent, as the case may be, shall reasonably
request. Thereupon the Secretary of the Company or the Rights Agent, as the
case may be, shall, subject to Section 4(b), Section 7(e) and Section 14
hereof, deliver to the Person entitled thereto a Rights Certificate or Rights
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may
be imposed in connection with any transfer, split up, combination or exchange
or Rights Certificates.
(b) Upon receipt by the Company or the Rights Agent, if any, of
evidence reasonably satisfactory to either of them of the loss, theft,
destruction or mutilation of a Rights Certificate, and, in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to
either of them, and reimbursement to the Company or the Rights Agent, as the
case may be, of all reasonable expenses incidental thereto, and upon
surrender to the Company or the Rights Agent, as the case may be, and
cancellation of the Rights Certificate if mutilated, the Company or the
Rights Agent, as the case may be, will execute and deliver a new Rights
Certificate of like tenor to the registered owner in lieu of the Rights
Certificate so lost, stolen, destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
(a) Subject to Section 7(e) hereof, the registered holder of any
Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein, including without limitation the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii) and Section
20(a) hereof) in whole or in part at any time after the Distribution Date
upon surrender of the Rights Certificate, with the form of election to
purchase and the certificate on the reverse side thereof duly executed, to
the Company or the Rights Agent, if any, at the principal executive office of
the Company or the principal shareholder services office or offices of the
Rights Agent
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designated for such purposes, as the case may be, together with payment of the
aggregate Purchase Price with respect to the total number of shares of Common
Stock (or other securities, cash or other assets, as the case may be) as to
which such surrendered Rights are then exercisable, at or prior to the
earlier of (i) the Final Expiration Date or (ii) the time at which the Rights
are redeemed as provided in Section 20 hereof (the earlier of (i) or (ii)
being herein referred to as the "Expiration Date").
(b) The Purchase Price for each share of Common Stock issued pursuant
to the exercise of a Right shall initially be $15.00, and shall be subject to
adjustment from time to time as provided in Sections 11 and 13(a) hereof and
shall be payable in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly
executed, accompanied by payment, with respect to each Right so exercised,
of the Purchase Price per share of Common Stock (or, following a Triggering
Event, other securities, cash or other assets, as the case may be) to be
purchased as set forth below and an amount equal to any applicable transfer
tax, the Company shall promptly (i)(A) requisition from any transfer or
rights agent of the shares of Common Stock, if any (but only to the extent
such transfer agent expressly assumes such duty), or, if none, from the
Company's Secretary, as the case may be, certificates for the total number of
shares of Common Stock to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, or (B) if the
Company shall have elected to deposit the total number of shares of Common
Stock issuable upon exercise of the Rights hereunder with a depository agent,
requisition from the depository agent of depository receipts representing
such number of shares of Common Stock as are to be purchased (in which case
certificates for the shares of Common Stock represented by such receipts
shall be deposited by the transfer agent (but only to the extent such
transfer agent expressly assumes such duty), or, if none, from the Company's
Secretary, as the case may be, with the depository agent) and the Company will
direct the depository agent to comply with such request, (ii) when
appropriate, requisition the amount of cash, if any, to be paid in lieu of
fractional shares of Common Stock in accordance with Section 14 hereof, (iii)
after receipt of such certificates of depository receipts for shares of
Common Stock, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such name or
names as may be designated by such holder, and (iv) after receipt thereof,
deliver such cash, if any, to or upon the order of the registered
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holder of such Rights Certificate. The payment of the Purchase Price (as such
amount may be reduced pursuant to Section 11(a)(iii) hereof) may be made (x)
in cash or by certified check, cashier's check or bank draft payable to the
order of the Company or (y) if the Board so determines, by delivery of a
certificate or certificates (with appropriate stock powers executed in blank
attached thereto) evidencing a number of shares of Common Stock equal to the
then Purchase Price divided by the closing price (as determined pursuant to
Section 11(d) hereof) per share of Common Stock on the Trading Day
immediately preceding the date of such exercise. In the event that the
Company is obligated to issue other securities of the Company, pay cash
and/or distribute other property pursuant to Section 11(a) hereof, the
Company will make all arrangements necessary so that such other securities,
cash and/or other property are available for distribution, if and when
appropriate. The Company reserves the right to require, prior to the
occurrence of a Section 11(a)(ii) Event or at Section 13 Event, that upon the
exercise of any Rights, an appropriate number of Rights be exercised so that
any Common Stock issuable hereunder shall only be issued as whole shares.
(d) In case the registered holder of any Rights Certificate shall exercise
less than all the Rights evidenced thereby, a new Rights Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Company and delivered to, or upon the order of, the registered holder of such
Rights Certificate, registered in such name or names as may be designated by
such holder, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Plan to the contrary, from and after
the first occurrence of a Section 11(a)(ii) Event, any Rights beneficially owned
by (i) an Acquiring Person or an Associate or Affiliate of an Acquiring Person,
(ii) a transferee of any such Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after such Acquiring Person becomes such, or
(iii) a transferee of any such Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrent with such Acquiring
Person becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from such Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom such
Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which a majority of the
Disinterested Directors have determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
Section 7(e), shall become null and
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void without any further action and no holder of such Rights shall have any
rights whatsoever with respect to such Rights, whether under any provision of
this Plan or otherwise. The Company shall use all reasonable efforts to
ensure that the provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but shall have no liability to any holder of Rights
Certificates or other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or any Affiliates,
Associates or transferees of an Acquiring Person hereunder.
(f) Notwithstanding anything in this Plan to the contrary, the
Company shall not be obligated to undertake any action with respect to a
registered holder upon the occurrence of any purported exercise as set forth in
this Section 7 unless such registered holder shall have (i) completed and signed
the certificate following the form of election to purchase set forth on the
reverse side of the Rights Certificate surrendered for such exercise, and (ii)
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES. All
Rights Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, upon surrender to the Company or any of
its agents, be cancelled by it, and no Rights Certificates shall be issued in
lieu thereof except as expressly permitted by any of the provisions of this
Plan. The Company shall cancel and retire any other Rights Certificate
purchased or acquired by the Company otherwise than upon the exercise
thereof.
SECTION 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.
(a) The Company shall use reasonable efforts to cause to be reserved and
kept available out of its authorized and unissued shares of Common Stock (and,
following the occurrence of a Triggering Event, other securities) or out of its
authorized and issued Common Stock held in its treasury, the number of shares of
Common Stock (and, following the occurrence of a Triggering Event, other
securities) that, as provided in this Plan, including Section 11(a)(iii) hereof,
will be sufficient to permit the exercise in full of all outstanding Rights.
(b) So long as the share of Common Stock (and, following the occurrence
of a Triggering Event, other securities) issuable and deliverable upon the
exercise of the Rights are
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listed on any national securities exchange, the Company shall use its best
efforts to cause, from and after such time as the Rights become exercisable, all
shares reserved for such issuance to be listed on such exchange upon official
notice of issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a Section
11(a)(ii) Event on which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with Section 11(a)(iii)
hereof, or as soon as is required by law following the Distribution Date, as the
case may be, a registration statement under the Act with respect to the
securities purchasable upon exercise of the Rights on an appropriate form, (ii)
cause such registration statement to become effective as soon as practicable
after such filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the Act)
until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities, and (B) the date of the expiration of the
Rights. The Company will also take such action as may be appropriate under, or
to ensure compliance with, the securities or "blue sky" laws of the various
states in connection with the exercisability of the Rights. The Company may
temporarily suspend, for a period of time not to exceed ninety (90) days after
the date set forth in clause (i) of the first sentence of this Section 9(c), the
exercisability of the Rights in order to prepare and file such registration
statement and permit it to become effective. Upon any such suspension, the
Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect. In addition, if the Company shall
determine that a registration statement is required following the Distribution
Date, the Company may temporarily suspend the exercisability of the Rights until
such time as a registration statement has been declared effective.
Notwithstanding any provision of this Plan to the contrary, the Rights shall not
be exercisable in any jurisdiction if the requisite qualification in such
jurisdiction shall not have been obtained, the exercise thereof shall not be
permitted under applicable law or any necessary registration statement the
effectiveness of which in such jurisdiction is required to make the offering not
illegal, shall not have been declared effective.
(d) The Company shall take all such action as may be necessary to
ensure that all shares of Common Stock (and, following the occurrence of a
Triggering Event, other securities)
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delivered upon exercise of Rights shall at the time of delivery of the
certificates for such shares and of such other securities (subject to payment of
the Purchase Price) be duly and validly authorized and issued and that all
shares shall be fully paid and non-assessable.
(e) The Company shall pay when due and payable any and all federal
and state transfer taxes and charges which may be payable in respect of the
issuance or delivery of the Rights Certificates, any certificates for shares
of Common Stock (or other securities, as the case may be) issued upon the
exercise of Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or delivery of a
Rights Certificate to a Person other than, or the issuance or delivery of a
number of shares of Common Stock (or other securities, as the case may be) in
respect of a name other than that of the registered holder of the Rights
Certificate evidencing Rights surrendered for exercise or to issue or deliver
any certificates for a number of shares of Common Stock (or other securities,
as the case may be) in a name other than that of the registered holder upon
the exercise of any Rights until such tax shall have been paid (any such tax
being payable by the holder of such Rights Certificate at the time of
surrender) or until it has been established to the Company's satisfaction
that no such tax is due.
SECTION 10. RECORD DATE FOR SECURITIES ISSUED UPON EXERCISE. Each Person
in whose name any certificate for a number of shares of Common Stock (or
other securities, as the case may be) is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of such
shares of Common Stock (or other securities, as the case may be) represented
thereby, and such certificate shall be dated the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and all applicable transfer taxes) was made; PROVIDED,
HOWEVER, that if the date of such surrender and payment is a date upon which
the Common Stock (or other securities, as the case may be) transfer books of
the Company are closed, such Person shall be deemed to have become the record
holder of such shares (or other securities, an the case may be) on, and such
certificate shall be dated, the next succeeding Business Day on which the
Common Stock (or other securities, as the case may be) transfer books of the
Company are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Rights Certificate shall not be entitled to any rights of a
shareholder of the Company with respect to shares for which the Rights shall
be exercisable, including, without limitation, the right to vote, to receive
dividends or other
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distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the number and kind of securities
covered by each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a)(i) In the event the Company shall at any time after the date this
Plan is adopted (A) declare a dividend on the Common Stock payable in
shares of Common Stock, (B) subdivide the outstanding Common Stock, (C)
combine the outstanding Common Stock into a smaller number of shares, or
(D) issue any shares of its capital stock in a reclassification of the
Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a) and
Section 7(e) hereof, the Purchase Price in effect at the time of the record
date for such dividend or of the effective date of such subdivision,
combination or reclassification, and the number of shares of Common Stock
(or the number and kind of other securities, as the case may be), shall be
proportionately adjusted so that if a holder of Rights after such time were
to exercise that number of Rights which would result in the aggregate
amount of the Purchase Price payable upon such exercise (at the Purchase
Price then in effect) being equal to the amount of the Purchase Price that
was payable prior to such time upon exercise of a Right, the holder would
be entitled to receive the aggregate number of shares of Common Stock (or
the number and kind of other securities, as the case may be) which, if a
Right had been exercised immediately prior to such time and at a time when
the Common Stock (or other securities, as the case may be) transfer books
of the Company were open, the holder would have owned upon such exercise
and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. If an event occurs which would require an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii) hereof,
the adjustment provided for in this Section 11(a)(i) shall be in addition
to, and shall be made prior to, any adjustment required pursuant to Section
11(a)(ii) hereof.
(ii) In the event:
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(A) any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary
of the Company, or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such
plan), alone or together with its Affiliates and Associates, at any
time after the Rights Dividend Declaration Date, without the consent
of a majority of the Disinterested Directors, shall become the
Beneficial Owner of 20% or more of the shares of Common Stock then
outstanding, unless the event causing the 20% threshold to be crossed
is a transaction set forth in Section 13(a) hereof, or is an
acquisition of shares of Common Stock pursuant to a tender offer or an
exchange offer for all outstanding shares of Common Stock at a price
and on terms determined by at least a majority of the Disinterested
Directors after receiving advice from one or more investment banking
firms, to be (a) at a price which is fair to shareholders (taking into
account all factors which such members of the Board deem relevant
including, without limitation, prices which could reasonably be
achieved if the Company or its assets were sold on an orderly basis
designed to realize maximum value) and (b) otherwise in the best
interests of the Company and its shareholders (such offer herein
referred to as a "Fair Value Offer"), or
(B) any Acquiring Person whose acquisition of 20% or more of the
Company's Common Stock has been consented to by a majority of the
Disinterested Directors, or any Associate or Affiliate of any such
Acquiring Person, shall, without the consent of a majority of the
Disinterested Directors, (1) acquire, directly or indirectly, in one
or a series of transactions, an additional 2% or more of the Company's
Common Stock, (2) sell, purchase, lease, exchange, mortgage, pledge,
transfer or otherwise acquire or dispose of, in one or a series of
transactions, to, from or with the Company or any of its Subsidiaries,
assets on terms and conditions less favorable to the Company than the
Company would be able to obtain in arm's length negotiation with an
unaffiliated third party, other than pursuant to a transaction set
forth in Section 13(a) hereof, (3) sell, purchase, lease, exchange,
mortgage, pledge, transfer or otherwise acquire or dispose of, in one
or a series of transactions, to, from or with the Company
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or any of its Subsidiaries (other than incidental to the lines of
business, if any, engaged in as of the date of this Plan between the
Company and such Acquiring Person or Associate or Affiliate thereof)
assets having an aggregate fair market value of more than $5,000,000,
other than pursuant to a transaction set forth in Section 13(a)
hereof, (4) receive any compensation from the Company or any of the
Company's Subsidiaries other than compensation for full-time
employment as a regular employee at rates in accordance with the
Company's or such Subsidiary's normal practices, or (5) receive the
benefit, directly or indirectly (except resulting from a requirement
of law or governmental regulation), of any loans, advances,
guarantees, pledges or other financial assistance or any tax credits
or other tax advantage provided by the Company or any of its
Subsidiaries,
then, ten days following the first occurrence of a Section 11(a)(ii) Event
(or such shorter or longer period as a majority of the Disinterested
Directors shall from time to time determine), proper provision shall be
made so that each holder of a Right (except as provided below and in
Section 7(e) hereof) shall thereafter have the right to receive, upon
exercise thereof at the then current Purchase Price in accordance with the
terms of this Plan such number of shares of Common Stock of the Company as
shall equal the result obtained by (x) multiplying the then current
Purchase Price by the then number of shares of Common Stock for which a
Right was exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) Event, and (y) dividing that product (which, following
such first occurrence, shall thereafter be referred to as the "Purchase
Price" for each Right and for all purposes of this Plan) by 50% of the
Current Market Price per share of Common Stock on the date of such first
occurrence (such number of shares, the "Adjustment Shares"); PROVIDED that,
in no event shall the Company issue or be obligated to issue Common Stock
at a Purchase Price per share of Common Stock that is less than the per
share par value of the Common Stock, as the same may be adjusted from time
to time; and PROVIDED FURTHER that after the occurrence of any Section
11(a)(ii) Event, the Company, by action of a majority of the Disinterested
Directors in office at the time, may permit the Rights to be exercised, or
may require and specify that the Rights may only be exercised, for 50% of
the shares of Common Stock (or cash or other securities or assets to be
substituted for the Adjustment Shares pursuant to Section 11(a)(iii) below)
that
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would otherwise be purchasable pursuant to the preceding clauses of this
Section 11(a)(ii) in consideration of the surrender to the Company of the
Rights so exercised and without payment of the Purchase Price, and all
Rights so exercised under this proviso without payment of the Purchase
Price shall be deemed to have been exercised in full and shall be
cancelled; and PROVIDED FURTHER that during the ten days following the
first occurrence of a Section 11(a)(ii) Event (or such shorter or longer
period as a majority of the Disinterested Directors shall from time to time
determine), the Rights may be redeemed only by the vote of a majority of
the Disinterested Directors who are Directors of the Company on the day
before the occurrence of such Section 11(a)(ii) Event.
(iii) In the event that the number of shares of Common Stock which are
authorized by the Company's articles of incorporation but not outstanding
or reserved for issuance for purposes other than upon exercise of the
Rights is not sufficient to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii) of this Section 11(a), the
Company shall: (A) determine the excess of (1) the value of the Adjustment
Shares issuable upon the exercise of a Right (the "Current Value") over (2)
the Purchase Price (such excess being referred to as the "Spread"), and (B)
with respect to each Right, make adequate provision to substitute for the
Adjustment Shares, upon payment of the applicable Purchase Price, (1) cash,
(2) a reduction in the Purchase Price, (3) other equity securities of the
Company (including, without limitation, shares, or units of shares of
preferred stock, if any exists at such time), which the Board has deemed to
have the same value as shares of Common Stock (such shares of preferred
stock being referred to as "Common Stock Equivalents"), (4) debt securities
of the Company, (5) other assets, or (6) any combination of the foregoing
(whichever substituted, the "Substitute Consideration"), having an
aggregate value equal to the Current Value, where such aggregate value has
been determined by the Board based upon the advice of a
nationally-recognized investment banking firm selected by the Board;
PROVIDED, HOWEVER, if the Company shall not have made adequate provision to
deliver value pursuant to clause (B) above within thirty (30) days
following the date of the first occurrence of a Section 11(a)(ii) Event
(such date being referred to herein as the "Section 11(a)(ii) Trigger
Date"), then, subject to subsection (k) hereof, the Company shall be
obligated to deliver, upon the surrender for exercise of a Right and
without requiring payment of the
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Purchase Price, shares of Common Stock (to the extent available) and then,
if necessary, cash, which shares and/or cash have an aggregate value equal
to the Spread. If the Board shall determine in good faith that it is likely
that sufficient additional shares of Common Stock could be authorized for
issuance upon exercise in full of the Rights, the thirty- (30) day period
set forth above may be extended to the extent necessary, but not more than
ninety (90) days after the Section 11(a)(ii) Trigger Date, in order that
the Company may seek shareholder approval for the authorization of such
additional shares (such period, as it may be extended, being referred to
herein as the "Substitution Period"). To the extent that the Company
determines that some action need be taken pursuant to the first and/or
second sentences of this Section 11(a)(iii), the Company (x) shall provide,
subject to Section 7(e) hereof, that such action shall apply uniformly to
all outstanding Rights, and (y) may suspend the exercisability of the
Rights until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to determine
the value thereof. In the event of any such suspension, the Company shall
issue a public announcement stating that the exercisability of the Rights
has been temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect. For purposes of this Section
11(a)(iii), the value of the Common Stock shall be the Current Market Price
per share of the Common Stock on the Section 11(a)(ii) Trigger Date and the
value of any Common Stock Equivalent shall be deemed to have the same value
as the Common Stock on such date.
(b) In case the Company shall fix a record date for issuance of
rights, options or warrants to all holders of Common Stock, entitling them to
subscribe for or purchase (for a period expiring within forty-five (45)
calendar days after such record date) Common Stock (or shares having the same
rights, privileges and preferences as the shares of Common Stock ("Equivalent
Common Stock")) or securities convertible into Common Stock or Equivalent
Common Stock at a price per share of Common Stock or per share of Equivalent
Common Stock (or having a conversion price per share, if a security
convertible into Common Stock or Equivalent Common Stock) less than the
Current Market Price per share of Common Stock on such record date, the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be
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the number of shares of Common Stock outstanding on such record date, plus the
number of shares of Common Stock which the aggregate offering price of the total
number of shares of Common Stock and/or Equivalent Common Stock to be so offered
(and/or the aggregate initial conversion price of the convertible securities so
to be offered) would purchase at such Current Market Price, and the denominator
of which shall be the number of shares of Common Stock outstanding on such
record date, plus the number of additional shares of Common Stock and/or
Equivalent Common Stock to be offered for subscription or purchase (or into
which the convertible securities to be so offered are initially convertible).
In case such subscription price may be paid by delivery of consideration part
or all of which may be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board whose
determination shall be conclusive for all purposes. Shares of Common Stock owned
by or held for the account of the Company shall not be deemed outstanding for
the purpose of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed, and in the event that such rights or
warrants are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date had not been
fixed.
(c) In case the Company shall fix a record date for a distribution to
all holders of Common Stock (including any such distribution made in connection
with a consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness, cash (other than a regular quarterly
cash dividend out of the earnings or retained earnings of the Company), assets
(other than a dividend payable in Common Stock, but including any dividend
payable in stock other than Common Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase Price to be
in effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the Current Market Price per share of Common Stock
on such record date, less the fair market value (as determined in good faith by
the Board whose determination shall be conclusive for all purposes) of the
portion of the cash, assets or evidences of indebtedness to be so distributed or
of such subscription rights or warrants applicable to a share of Common Stock
and the denominator of which shall be such Current Market Price per share of
Common Stock. Such adjustments shall be made successively whenever such a record
date is fixed, and in the event that such distribution is not so made, the
Purchase Price shall be adjusted to be the Purchase Price which would have been
in effect if such record date had not been fixed.
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(d) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) hereof, the "Current Market
Price" per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of such Common Stock for the thirty (30)
consecutive Trading Days immediately prior to such date, and for purposes of
computations made pursuant to Section 11(a)(iii) hereof, the "Current Market
Price" per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of such Common Stock for the ten (10)
consecutive Trading Days immediately following such date; PROVIDED, HOWEVER,
that in the event the Current Market Price per share of the Common Stock is
determined during a period following the announcement by the issuer of such
Common Stock of (i) a dividend or distribution on such Common Stock payable in
shares of such Common Stock or securities convertible into shares of such Common
Stock (other than the Rights), or (ii) any subdivision, combination or
reclassification of such Common Stock, and prior to the expiration of the
requisite thirty (30) Trading Day or ten (10) Trading Day period, as set forth
above, after the ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination or reclassification, then, and in
each such case, the Current Market Price shall be properly adjusted to take into
account ex-dividend trading. The closing price for each day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
shares of Common Stock are listed or admitted to trading or, if the shares of
Common Stock are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotation System or
such other system then in use, or, if on any such date the shares of Common
Stock are not quoted by any such organization, the professional market maker
making a market in the Common Stock selected by the Board. If on any such date
no market maker is making a market in the Common Stock, the fair value of such
shares on such date as determined in good faith by the Board shall be used. The
term "Trading Day" shall mean a day on which the principal national securities
exchange on which the shares of Common Stock are listed or admitted to trading
is open for the transaction of business or, if the shares of Common Stock are
not listed or admitted to trading on any national securities
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exchange, a Business Day. If the Common Stock is not publicly held or not so
listed or traded, Current Market Price per share shall mean the fair value per
share as determined in good faith by the Board whose determination shall be
conclusive for all purposes. The Current Market Price of any fraction of a share
of Common Stock hereunder shall be determined by multiplying the Current Market
Price per share of Common Stock, determined in accordance with this paragraph,
by such fraction.
(e) Anything herein to the contrary notwithstanding, no adjustment
in the Purchase Price shall be required unless such adjustment would require
an increase or decrease of at least one percent (1%) in the Purchase Price;
PROVIDED, HOWEVER, that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under this Section 11 shall be
made to the nearest cent or to the nearest ten-thousandth of a share, as the
case may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the
earlier of (i) three (3) years from the date of the transaction which
mandates such adjustment, or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a)(ii) or Section 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock other than Common
Stock, thereafter the number of such other shares so receivable upon exercise of
any Right and the Purchase Price thereof shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in Sections 11(a), (b),
(c), (e), (g), (h), (i), (j), (k) and (m), and the provisions of Sections 7, 9,
10, 13 and 14 hereof with respect to the Common Stock shall apply on like terms
to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, that number of shares of Common Stock
purchasable from time to time hereunder (or, if applicable, preferred stock)
upon exercise of the Rights, all subject to further adjustment as provided
herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in
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Section 11(b) and (c), each Right outstanding immediately prior to the making of
such adjustment shall thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of shares of Common Stock (calculated to the nearest
ten-thousandth) obtained by (i) multiplying (x) the number of shares covered by
a Right immediately prior to this adjustment, by (y) the Purchase Price in
effect immediately prior to such adjustment of the Purchase Price, and (ii)
dividing the product so obtained by the Purchase Price in effect immediately
after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in lieu of any adjustment in
the number of shares of Common Stock purchasable upon the exercise of a Right.
In that event, each of the Rights outstanding after the adjustment in the number
of Rights shall be exercisable for that number of shares of Common Stock for
which a Right was exercisable immediately prior to such adjustment; and each
Right held of record prior to such adjustment of the number of Rights shall
become the number of Rights (calculated to the nearest one-ten-thousandth)
obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect immediately
after the adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Rights Certificates have
been issued, shall be at least ten (10) days later than the date of the public
announcement. If Rights Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the
Rights Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. All costs associated with such adjustment, including without
limitation any taxes required to be paid on account of such adjustment, shall be
borne by the Company. Rights Certificates to be so distributed shall be issued
and executed in the manner provided for herein (and may
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bear, at the option of the Company, the adjusted Purchase Price) and shall be
registered in the names of the holders of record of Rights Certificates on the
record dates specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the shares issuable upon the exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may continue to express the Purchase Price per
share of Common Stock and the shares of Common Stock which were expressed in the
initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, of the shares of Common
Stock issuable upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Common Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the shares of Common Stock and other capital stock or securities of the Company,
if any, issuable upon such exercise over and above the shares of Common Stock
and other capital stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such adjustment;
PROVIDED, HOWEVER, that the Company shall deliver to such holder a due bill or
other appropriate instrument evidencing such holder's right to receive such
additional shares (fractional or otherwise) or securities upon the occurrence
of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in its good faith judgment the Board shall determine to be
advisable in order that any (i) consolidation or subdivision of the Common
Stock, (ii) issuance wholly for cash of any shares of Common Stock at less than
the Current Market Price, (iii) issuance of rights, options or warrants referred
to in this Section 11, hereafter made by the Company to holders of its Common
Stock shall not be taxable to such shareholders.
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(n) The Company shall not, at any time after the Distribution Date,
(i) consolidate with any other Person (other than a Subsidiary of the Company in
a transaction which complies with Section 11 hereof), (ii) merge with or into
any other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11 hereof), or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction or a series of related
transactions, assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person or Persons (other than the Company and/or any of its Subsidiaries
in one or more transactions each of which complies with Section 11 hereof), if
(x) at the time of or immediately after such consolidation, merger or sale there
are rights, warrants or other instruments or securities outstanding or
agreements in effect which would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights to the holders of the Rights
or (y) prior to, simultaneously with or immediately after such consolidation,
merger or sale, the shareholders of the Person who constitutes, or would
constitute, the "Principal Party" for purposes of Section 13(a) hereof shall
have received a distribution of Rights previously owned by such Person or any of
its Affiliates or Associates.
(o) After the Distribution Date, the Company shall not, except as
permitted by Section 20 or Section 23 hereof, take (or permit any Subsidiary to
take) any action if at the time such action is taken it is reasonably
foreseeable that such action will diminish substantially or otherwise eliminate
the benefits intended to be afforded by the Rights.
(p) Anything in this Plan to the contrary notwithstanding, in the
event that the Company shall at any time after the Rights Dividend Declaration
Date and prior to the Distribution Date (i) declare a dividend on the
outstanding shares of Common Stock, (ii) subdivide the outstanding shares of
Common Stock, or (iii) combine the outstanding shares of Common Stock into a
smaller number of shares, the number of Rights associated with each share of
Common Stock then outstanding, or issued or delivered thereafter but prior to
the Distribution Date, shall be proportionately adjusted so that the number of
Rights thereafter associated with each share of Common Stock following any such
event shall equal the result obtained by multiplying the number of Rights
associated with each share of Common Stock immediately prior to such event by a
fraction; the numerator of which shall be the total number of shares of Common
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Stock outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such event.
(q) Upon the occurrence of a Section 11(a)(ii) Event, regardless of
whether an event described in Section 13(a) shall have yet occurred or not, the
Purchase Price for each share of Common Stock issued pursuant to the exercise of
a Right shall be determined in accordance with Section 11(a)(ii) hereof.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 11 and Section 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, if any, or if no Rights Agent has
been appointed, with the Company's Secretary, and with each transfer agent
for the Common Stock, a copy of such certificate, and (c) mail a brief
summary thereof to each holder of a Rights Certificate (or, if prior to the
Distribution Date, to each holder of a certificate representing shares of
Common Stock) in accordance with Section 22 hereof. The Rights Agent, if any,
shall be fully protected in relying on such certificate and on any adjustment
therein contained and shall not be deemed to have knowledge of any such
adjustment unless and until it shall have received such certificate.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
POWER.
(a) In the event that, following or simultaneously with the
Distribution Date, directly or indirectly, without the consent of a majority of
the Disinterested Directors, (x) the Company shall consolidate with, or merge
with and into, any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11 hereof), and the Company shall not be
the continuing or surviving corporation of such consolidation or merger, (y) any
Person (other than a Subsidiary of the Company in a transaction which complies
with Section 11 hereof) shall consolidate with, or merge with or into, the
Company, and the Company shall be the continuing or surviving corporation of
such consolidation or merger, and, in connection with such consolidation or
merger, all or part of the outstanding shares of Common Stock shall be changed
into or exchanged for stock or other securities of any other Person or cash or
any other property, or (z) the Company shall sell or otherwise transfer (or one
or more of its Subsidiaries shall sell or otherwise
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transfer), in one transaction or a series of related transactions, assets or
earning power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any Person or Persons (other
than the Company or any Subsidiary of the Company in one or more transactions,
each of which complies with Section 11 hereof) (each of the events described in
(x), (y), and (z) above being hereinafter referred to as a "Section 13 Event"),
then, and in each such case (except as may be contemplated by Section 13(d)
hereof), proper provision shall be made so that: (i) each holder of a Right,
except as provided in Section 7(e) hereof, shall thereafter have the right to
receive, upon the exercise thereof at the then current Purchase Price in
accordance with the terms of this Plan, such number of validly authorized and
issued, fully paid, non-assessable and freely tradeable shares of Common Stock
of the Principal Party, not subject to any liens, encumbrances, rights of first
refusal or other adverse claims, as shall be equal to the result obtained by
(1) multiplying the then current Purchase Price by the number of shares of
Common Stock (or, if applicable, preferred stock) for which a Right is
exercisable immediately prior to the first occurrence of a Section 13 Event
(or, if a Section 11(a)(ii) Event has occurred prior to the first occurrence
of a Section 13 Event, multiplying the number of shares of Common Stock (or,
if applicable, preferred stock) for which a Right was exercisable immediately
prior to the first occurrence of a Section 11(a)(ii) Event by the Purchase
Price in effect immediately prior to such first occurrence), and dividing
that product (which, following the first occurrence of a Section 13 Event,
shall be referred to as the "Purchase Price" for each Right and for all
purposes of this Plan) by (2) 50% of the Current Market Price per share of
the Common Stock of such Principal Party on the date of consummation of such
Section 13 Event; (ii) such Principal Party shall thereafter be liable for,
and shall assume, by virtue of such Section 13 Event, all the obligations and
duties of the Company pursuant to this Plan; (iii) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it being specifically,
intended that the provisions of Section 11 hereof shall apply only to such
Principal Party following the first occurrence of a Section 13 Event; (iv)
such Principal Party shall take such steps (including, but not limited to,
the reservation of a sufficient number of shares of its Common Stock) in
connection with the consummation of any such transaction as may be necessary
to assure that the provisions hereof shall thereafter be applicable, as
nearly as reasonably may be, in relation to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights; and (v) the
provisions of Section 11(a)(ii) hereof shall be of no effect following the
first occurrence of any Section 13 Event.
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(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (x) or (y) of
the first sentence of Section 13(a), the Person that is the issuer of any
securities into which shares of Common Stock of the Company are converted
in such merger or consolidation, and if no securities are so issued, the
Person that is the other party to such merger or consolidation; and
(ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to
such transaction or transactions;
PROVIDED, HOWEVER, that in any such case, (1) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding twelve-
(12) month period registered under Section 12 of the Exchange Act, and such
Person is a direct or indirect Subsidiary of another Person the Common Stock of
which is and has been so registered, "Principal Party" shall refer to such other
Person; and (2) in case such Person is a Subsidiary, directly or indirectly, of
more than one Person, the Common Stocks of two or more of which are and have
been so registered, "Principal Party" shall refer to whichever of such Persons
is the issuer of the Common Stock having the greatest aggregate market value.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent, if any, or if no Rights Agent
shall have been appointed, to the Company's Secretary, a supplemental agreement,
satisfactory in form and substance to a majority of the Disinterested Directors,
providing for the terms set forth in Paragraphs (a) and (b) of this Section 13
and further providing that, as soon as practicable after the date of any
consolidation, merger or sale of assets mentioned in paragraph (a) of this
Section 13, the Principal Party:
(i) will prepare and file a registration statement under the Act with
respect to the Rights and the securities
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purchasable upon exercise of the Rights on an appropriate form, and will
use its best efforts to cause such registration statement to (A) become
effective as soon as practicable after such filing and (B) remain effective
(with a prospectus at all times meeting the requirements of the Act) until
the Expiration Date; and
(ii) will deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply
in all respects with the requirements for registration on Form 10 under the
Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a Section 13
Event shall occur at any time after the occurrence of a Section 11(a)(ii) Event,
the Rights which have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a).
(d) Notwithstanding anything in this Plan to the contrary, Section 13
shall not be applicable to a transaction described in subparagraphs (x) and (y)
of Section 13(a) if (i) such transaction is consummated with a Person or Persons
(or a wholly-owned subsidiary of any such Person or Persons) who acquired shares
of Common Stock pursuant to a Fair Value Offer, (ii) the price per share of
Common Stock offered in such transaction is not less than the price per share of
Common Stock paid to all holders of shares of Common Stock whose shares were
purchased pursuant to such Fair Value offer, and (iii) the form of consideration
being offered to the remaining holders of shares of Common Stock pursuant to
such transaction is cash. Upon consummation of any such transaction contemplated
by this Section 13(d), all Rights hereunder shall expire.
(e) The provisions of this Section 13 shall be applicable to a
transaction described in subparagraphs (x), (y), and (z) of Section 13(a)
regardless of the business form of the Principal Party (e.g., corporation,
partnership or other form). In the event that the Principal Party is an entity
other than a corporation, the term "Common Stock," as used in reference to the
Principal Party in this Section 13 or otherwise, shall be construed to refer to
the equity securities or other equity interest having power to control or direct
the management of, or representing the fundamental economic interest in, such
Principal Party.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
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(a) The Company shall not be required to issue fractions or Rights
or to distribute Rights Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there may be paid to the registered holders
of the Rights Certificates with regard to which such fractional Rights would
otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole Right. For purposes of this Section 14(a),
the current market value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price of
the Rights for any day shall be the last sale price, regular way, or, in case
no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed
on the principal national securities exchanges on which the Rights are listed
or admitted to trading, or if the Rights are not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not
so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System or such other system then
in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by
a professional market maker selected by the Board making a market in the
Rights. If on any such date no such market maker is making a market in the
Rights, then the fair value of the Rights on such date as determined in good
faith by the Board shall be used.
(b) The Company shall not be required to issue fractions of shares
of Common Stock (or other securities) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Common Stock
(or other securities). In lieu of fractional shares of Common Stock (or other
securities), the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market value of a
share of Common Stock (or other securities). For purposes of this Section
14(b), the current market value of one share of Common Stock shall be the
closing price per share of Common Stock (as determined pursuant to Section
11(d) hereof) for the Trading Day immediately prior to the date of such
exercise, and the current market value of any other securities shall be
determined utilizing the principles of Section 11(d) hereof as applied by the
Board in its sole discretion.
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(c) The holders of Rights by the acceptance of the Rights
expressly waive any right to receive any fractional Rights and/or any
fractional shares upon exercise of a Right.
SECTION 15. RIGHTS OF ACTION. All rights of action in respect of this
Plan are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of
the Common Stock); and any registered holder of any Rights Certificate (or,
prior to the Distribution Date, of the Common Stock), without the consent of
the holder of any other Rights Certificate (or, prior to the Distribution
Date, of the Common Stock), may, in such holder's own behalf and for such
holder's own benefit, enforce, and may institute and maintain any suit,
action or, proceeding against the Company to enforce, or otherwise act in
respect of, such holder's right to exercise the Rights evidenced by such
Rights Certificate in the manner provided in such Rights Certificates and in
this Plan. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Plan and
shall be entitled to specific performance of the obligations hereunder and
injunctive relief against actual or threatened violations of the obligations
hereunder of any Person subject to this Plan.
SECTION 16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right by
accepting the same consents and agrees with the Company and with every other
holder of a Right that:
(a) Prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) After the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Company, if surrendered at the
principal executive office of the Company, or, if a Rights Agent is appointed
by the Company hereunder, only on the registry books of said Rights Agent, if
surrendered at the principal shareholder services office or offices of the
Rights Agent designated for such purposes, in either case duly endorsed or
accompanied by a proper instrument of transfer and with the appropriate forms
and certificates fully executed;
(c) Subject to Section 6(a) and Section 7(f) hereof, the Company
and the Rights Agent, if any, may deem and treat the person in whose name a
Rights Certificate (or, prior to the
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Distribution Date, the associated Common Stock certificates) is registered as
the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights
Certificates or the associated Common Stock certificate made by anyone other
than the Company or any Rights Agent) for all purposes whatsoever, and
neither the Company nor any Rights Agent appointed by the Company, subject to
the last sentence of Section 7(e) hereof, shall be required to be affected by
any notice to the contrary; and
(d) Notwithstanding anything in this Plan to the contrary, neither
the Company nor any Rights Agent appointed by the Company shall have any
liability to any holder of a Right or other Person as a result of its
inability to perform any of its obligations under this Plan by reason of any
preliminary or permanent injunction or other order, decree or ruling issued
by a court of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority,
prohibiting or otherwise restraining performance of such obligation;
PROVIDED, HOWEVER, the Company must use its best efforts to have any such
order, decree or ruling lifted or otherwise overturned as soon as possible.
SECTION 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends (or be deemed for any purpose the holder of the number of shares of
Common Stock or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Rights Certificate be construed to confer
upon the holder of any Rights Certificate, as such, any of the rights of a
shareholder or any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting shareholders (except as provided in Section 21
hereof), or to receive dividends or subscription rights or otherwise, until
the Right or Rights evidenced by such Rights Certificate shall have been
exercised in accordance with the provisions hereof.
SECTION 18. INDEMNIFICATION OF CORPORATE OFFICERS.
(a) The Company shall indemnify its officers for and hold them
harmless against any loss, liability, or expense incurred without negligence,
bad faith or willful misconduct on the part of such officers for anything
done or omitted by such
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officers in connection with the acceptance and administration of this Plan,
including the costs and expenses of defending against any claim of liability
arising therefrom, directly or indirectly, and will promptly reimburse such
officers for any legal or other expenses reasonably incurred in investigating
or defending any such loss, expense, claim, damage or liability.
(b) The Company's officers shall be protected by the indemnity
provided in this Section 18 and shall incur no liability for or in respect of
any action taken, suffered or omitted by any of them in connection with
their administration of this Plan in reliance upon any Rights Certificate or
certificate for Common Stock or for other securities of the Company,
instrument or assignment of transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or
other paper or document believed by such officer to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the
proper Person or Persons.
SECTION 19. ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding any
of the provisions of this Plan or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such
form as may be approved by the Board to reflect any adjustment or change in
the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Plan. In addition, in connection with
the issuance or sale of shares of Common Stock following the Distribution
Date and prior to the redemption or expiration of the Rights, the Company (a)
shall, with respect to shares of Common Stock so issued or sold pursuant to
the exercise of stock options, or under any employee benefit plan or
arrangement, or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company, and (b) may, in any other case, if deemed
necessary by the Company, and by the board, issue Rights Certificates
representing the appropriate number of Rights in connection with such
issuance or sale; PROVIDED, HOWEVER, that (i) no such Rights Certificate
shall be issued if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material
adverse tax consequences to the Company or the Person to whom such Rights
Certificate would be issued, and (ii) no such Rights Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise
have been made in lieu of the issuance thereof.
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SECTION 20. REDEMPTION AND TERMINATION.
(a) The Disinterested Directors then in office may, at any time
prior to the Final Expiration Date, at their option, upon the affirmative
vote or written consent of not less than a majority of such Disinterested
Directors, redeem all but not less than all of the then outstanding Rights at
a redemption price of $.01 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"). The Company may, at its option, pay
the Redemption Price in cash, shares of Common Stock (based on the Current
Market Price of the Common Stock at the time of redemption) or any other form
of consideration deemed appropriate by a majority of the Disinterested
Directors.
(b) Immediately upon the taking of action by a majority of the
Disinterested Directors ordering the redemption of the Rights, and without
any further action and without any notice, the right to exercise the Rights
will terminate and the only right thereafter of the holders of Rights shall
be to receive the Redemption Price (without the payment of any interest
thereon) for each Right so held. Promptly after the taking of action by a
majority of the Disinterested Directors ordering the redemption of the
Rights, the Company shall give notice of such redemption to the holders of
the then outstanding Rights by mailing such notice to all such holders at
each holder's last address as it appears upon the registry books of the
Company. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice
of redemption will state the method by which the payment of the Redemption
Price will be made.
SECTION 21. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to
the holders of Common Stock or to make any other distribution to the holders
of Common Stock (other than a regular quarterly cash dividend out of earnings
or retained earnings of the Company), or (ii) to offer to the holders of
Common Stock rights or warrants to subscribe for or to purchase any
additional shares of Common Stock or shares of stock of any class or any
other securities, rights or options, or (iii) to effect any reclassification
of its Common Stock (other than a reclassification involving only the
subdivision of outstanding shares of Common Stock), or (iv) to effect any
consolidation or
-36-
<PAGE>
merger into or with any other Person (other than a Subsidiary of the Company
in a transaction which complies with Section 11(o) hereof), or to effect any
sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one transaction or a series of related
transactions, of more than 50% of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to any other Person or Persons (other
than the Company and/or any of its Subsidiaries in one or more transactions
each of which complies with Section 11(o) hereof), or (v) to effect the
liquidation, dissolution or winding up of the Company, then, in each such
case, the Company shall give to each holder of a Rights Certificate, to the
extent feasible and, in accordance with Section 22 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the shares of Common Stock, if any such date is to
be fixed, and such notice shall be so given in the case of any action covered
by clause (i) or (ii) above at least twenty (20) days prior to the record
date for determining holders of the shares of Common Stock for purposes of
such action, and, in the case of any such other action, at least twenty (20)
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the shares of Common Stock, whichever
shall be the earlier.
(b) If any event set forth in Section 11(a)(ii) hereof shall
occur, then, (i) the Company shall as soon as practicable thereafter give to
each holder of a Rights Certificate, to the extent feasible and in accordance
with Section 22 hereof, a notice of the occurrence of such event, which
shall specify the event and the consequences of the event to holders of
Rights under Section 11(a)(ii) hereof, and (ii) all references in the
preceding paragraph to Common Stock shall, to the extent appropriate, also be
deemed thereafter to refer to other securities.
SECTION 22. NOTICES. Notices or demands authorized by this Plan to be
given or made to or on the Company shall be sufficiently given or made if
sent by first class mail, postage prepaid, addressed (until another address
is sent as provided below to the holders of the Rights) as follows:
-37-
<PAGE>
Gamma Biologicals, Inc.
3700 Mangum Road
Houston, Texas 77092
Attention: President
Notices or demands authorized by this Plan to be given or made to the
holder of any Rights Certificate (or, if prior to the Distribution Date, to
the holder of certificates representing shares of Common Stock) shall be
sufficiently given or made if sent by first class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the record
books of the Company.
SECTION 23. SUPPLEMENTS AND AMENDMENT; SUBSTITUTED PLAN. Prior to the
Distribution Date, the Company may supplement or amend any provision of this
Plan, terminate this Plan or adopt a new rights plan in substitution for this
Plan and all Rights outstanding hereunder (in which case this Plan and all
such Rights shall thereafter become null and void), without the approval of
any holders of certificates representing shares of Common Stock. From and
after the Distribution Date, the Disinterested Directors may supplement or
amend this Plan, or adopt a new rights plan in substitution for this Plan and
all Rights outstanding hereunder (in which case this Plan and all such Rights
shall thereafter become null and void), without the approval of any holders
of Rights Certificates in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) to shorten or lengthen
any time period hereunder, (iv) to effect compliance with, or take advantage
of, any changes in law affecting the legality or enforceability of plans or
arrangements such as this Plan, or (v) to change or supplement the provisions
hereunder in any other manner which the Disinterested Directors may deem
necessary or desirable, including without limitation the addition or other
events requiring adjustment to the Rights under Sections 11(a)(ii) or 13 or
procedures relating to the redemption of the Rights, which supplement or
amendment shall not adversely affect the interests of the holders of Rights
Certificates (other than an Acquiring Person or an Affiliate or Associate of
an Acquiring Person); PROVIDED, this Plan may not be supplemented or amended,
and a new rights plan may not be adopted in substitution for this Plan, to
lengthen, pursuant to clause (iii) of this sentence, any time period unless
such lengthening is for the purpose of protecting, enhancing or clarifying
the rights of, and/or the benefits to, the holders of Rights (other than an
Acquiring Person, or an Affiliate or Associate of an Acquiring Person).
Notwithstanding anything contained in this Plan to the contrary,
-38-
<PAGE>
no supplement or amendment or substituted plan shall be made or adopted which
changes the Redemption Price, the Final Expiration Date, the Purchase Price
or the number of shares of Common Stock for which Right is exercisable,
except that any such amendment may substitute preferred stock for the Common
Stock issuable upon exercise of the Right if the value of the preferred stock
so substituted with respect to each Right shall equal, in the sole discretion
of a majority of the Disinterested Directors, the then Current Market Value
of the Common Stock then issuable upon exercise of each Right, and any such
amendment or substituted plan effecting such substitution may amend any such
provision of this Plan, including without limitation the adjustment
provisions of Section 11, to reflect appropriately such substitution, or to
restate this Plan in its entirety to reflect appropriately such substitution.
Prior to the Distribution Date, the interests of the holders of Rights shall
be deemed coincident with the interests of the holders of Common Stock.
SECTION 24. SUCCESSORS. All the covenants and provisions of this Plan
by or for the benefit of the Company shall bind and inure to the benefit of
its successors and assigns hereunder.
SECTION 25. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS, ETC.
For all purposes of this Plan, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common
Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(l)(i) of the General
Rules and Regulations under the Exchange Act, subject in all events to the
provisions of Section l(e) hereof including specifically, the last proviso
thereof. The Board (or, as set forth herein, certain specified members
thereof shall have the exclusive power and authority to administer this
Plan and to exercise all rights and powers specifically granted to the Board
(or, as set forth herein, certain specified members thereof) or to the
Company, or as may be necessary or advisable in the administration of this
Plan, including, without limitation, the right and power to (i) interpret the
provisions of this Plan, and (ii) make all determinations deemed necessary or
advisable for the administration of this Plan (including but not limited to a
determination to redeem or not redeem the Rights, to consent to a transaction
in which a Person becomes an Acquiring Person, to amend the Plan or to remit
the Substitute Consideration or Spread payable). All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing) which are done
or made by the Board (or, as set forth herein, certain specified members
-39-
<PAGE>
thereof) in good faith, shall (x) be final, conclusive and binding on the
Company, the holders of the Rights and all other parties, and (y) not subject
the Board (or, as set forth herein, certain specified members thereof) to any
liability to the holders of the Rights.
SECTION 26. BENEFITS OF THIS PLAN. Nothing in this Plan shall be
construed to give to any Person other than the Company and the registered
holders of the Rights Certificates (and, prior to the Distribution Date,
registered holders of the Common Stock) any legal or equitable right, remedy
or claim under this Plan; but this Plan shall be for the sole and exclusive
benefit of the Company and the registered holders of the Rights Certificates
(and, prior to the Distribution Date, registered holders of the Common
Stock).
SECTION 27. SEVERABILITY. If any term, provision, covenant or
restriction of this Plan is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable (including without limitation
the last proviso to Section l(e)), the remainder of the terms, provisions,
covenants and restrictions of this Plan shall remain in full force and effect
and shall in no way be affected, impaired or invalidated; PROVIDED,
HOWEVER, that in the event of such a holding by such court or authority, this
Plan may be amended to take into account such holding including by way of
illustration but not limitation an amendment raising the percentage of
beneficial ownership specified in Section 1(a) or Section 11(a)(ii). Without
limiting the foregoing provisions of this Section 27, if any provisions of
this Plan requiring that a determination be made by less than the entire
Board (or at a time or with the concurrence of a group of directors
consisting less than the entire Board) is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable, such
determination shall no longer be subject to determination by such directors
constituting less than the entire Board, but shall instead be made in the
best interests of the holders of the Rights and with a view to effecting the
purposes and intent of the Plan by a court of competent jurisdiction, or, if
such court determines it is impermissible or inappropriate to discharge such
function, then such determination shall be made by the entire Board in good
faith, in accordance with applicable law and the Company's articles of
incorporation and by-laws, in the best interests of the holders of the
Rights, and with a view to effecting the purposes and intent of this Plan.
SECTION 28. GOVERNING LAW. THIS PLAN, EACH RIGHT AND EACH RIGHTS
CERTIFICATE ISSUED HEREUNDER SHALL BE DEEMED TO BE A
-40-
<PAGE>
CONTRACT MADE UNDER THE LAWS OF THE STATE OF TEXAS AND FOR ALL PURPOSES SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
SECTION 29. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Plan are inserted for convenience only and shall not control
or affect the meaning or construction of any of the provisions hereof.
-41-
<PAGE>
EXHIBIT A
[Form of Face Side of Rights Certificate]
Certificate No. R- __________________ Rights
NOT EXERCISABLE AFTER September 5, 1999, OR EARLIER IF REDEEMED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY,
AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE SHAREHOLDER RIGHTS PLAN.
UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON
(AS SUCH TERM IS DEFINED IN THE SHAREHOLDER RIGHTS PLAN) AND ANY SUBSEQUENT
HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. []THE RIGHTS REPRESENTED BY
THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR
BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING
PERSON (AS SUCH TERM IS DEFINED IN THE SHAREHOLDER RIGHTS PLAN). ACCORDINGLY,
THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND
VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH SHAREHOLDER
RIGHTS PLAN.]*
Rights Certificate
GAMMA BIOLOGICALS, INC.
This certifies that ________________________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions
of the Shareholder Rights Plan, dated as of September 5, 1989 (the "Rights
Plan"), of Gamma Biologicals, Inc., a Texas corporation (the "Company"), to
purchase from the Company at any time prior to 5:00 P.M. Central Time on
September 5, 1999, at the principal executive office of the Company or the
offices of the Rights Agent, if any, designated for such purpose, one fully
paid and non-assessable share of common stock, par value $.10 per share (the
"Common
- -------------
* The portion of the legend in brackets shall be inserted only if applicable
and shall replace the preceding sentence.
A-1
<PAGE>
Stock"), of the Company at a purchase price of $15.00 per share (the
"Purchase Price"), upon presentation and surrender of this Rights Certificate
with a Form of Election to Purchase and related Certificate duly executed.
The number of Rights evidenced by this Rights Certificate (and the amount of
securities constituting a Right which may be purchased upon exercise thereof)
set forth above, and the Purchase Price set forth above, are the amount of
securities constituting a Right and Purchase Price as of September 5, 1989,
based on the Common Stock as constituted as of such date.
As specified in the Rights Plan, the Company reserves the right, at the
sole discretion of its Board of Directors, to substitute for a share of
Common Stock, a share or fraction of a share of preferred stock of the
Company, in the event that the shareholders of the Company authorize the
creation of a class of Company preferred stock and so long as the value of
each such share or fraction of a share of such preferred stock is equal, in
the sole discretion of the Company's Board of Directors, to the then current
market value of a share of Common Stock.
Upon the occurrence of a Section 11(a)(ii) Event (as defined in the
Rights Plan), if the Rights evidenced by this Rights Certificate are
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate
thereof (as such terms are defined in the Rights Plan), (ii) a transferee of
any such Acquiring Person (or Associate or Affiliate thereof) who becomes a
transferee after such Acquiring Person becomes such, or (iii) under certain
circumstances specified in the Rights Plan, a transferee of any such
Acquiring Person (or Associate or Affiliate thereof), who becomes a
transferee prior to or concurrent with such Acquiring Person becoming such,
such Rights shall become null and void and no holder hereof shall have any
right with respect to such Rights from and after the occurrence of such
Section 11(a)(ii) Event.
As provided in the Rights Plan, the Purchase Price and the number and
kind of shares of Common Stock, securities or other property, which may be
purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening of
certain events, including Triggering Events (as defined in the Rights Plan).
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Plan, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Plan reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities
A-2
<PAGE>
hereunder of the Rights Agent, if any, the Company and the holders of the
Rights Certificates, which limitations of rights include the temporary
suspension of the exercisability of such Rights under the specific
circumstances set forth in the Rights Plan. Copies of the Rights Plan are on
file at the principal executive office of the Company and are also available
upon written request to the Company.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the principal executive offices of the Company or the
shareholder services office or offices of any Rights Agent designated for
such purpose, as the case may be, may be exchanged for another Rights
Certificate or Rights Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of shares of Common
Stock as the Rights evidenced by the Rights Certificate or Rights
Certificates surrendered shall have entitled such holder to purchase. If this
Rights Certificate shall be exercised in part, the holder shall be entitled
to receive upon surrender hereof another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Plan, the Rights evidenced by
this Certificate may be redeemed at any time prior to the Final Expiration
Date by the Company at its option at a redemption price of $.01 per Right
(payable in cash, Common Stock or other consideration deemed appropriate by a
majority of the Disinterested Directors of the Company).
The Company is not required to issue fractional shares of Common Stock
upon the exercise of any Right or Rights evidenced thereby, but in lieu
thereof a cash payment will be made, as provided in the Rights Plan.
No holder of this Rights Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of Common
Stock or any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Plan or herein be construed to confer upon the holder hereof, as such, any of
the rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to receive notice of meetings or other actions affecting
shareholders (except as provided in the Rights Plan), or to receive dividends
or subscription rights until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Plan.
A-3
<PAGE>
The Rights Certificate shall not be valid or effective for any purpose
until it shall have been executed by the Company.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Dated as of ____________________ ____, 19__.
ATTEST: GAMMA BIOLOGICALS, INC.
By:
- -------------------------------- --------------------------------
Title: Title:
CORPORATE SEAL
A-4
<PAGE>
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED
------------------------------------------------------------
hereby sells, assigns and transfers unto
- -------------------------------------------------------------------------------
(Please print name and address of transferee)
- -------------------------------------------------------------------------------
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _____________________________
Attorney, to transfer the within Rights Certificate on the books of the within-
named Company, with full power of substitution.
Dated:____________________ _____, 19____,
----------------------------------------
Signature
Signature Guaranteed:
A-5
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Person (as such
terms are defined in the Rights Plan);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this
Rights Certificate from any person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate of any such Person.
Dated:_______________ ______ 19___.
-----------------------------------
Signature
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
A-6
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate).
To: GAMMA BIOLOGICALS, INC.:
The undersigned hereby irrevocably elects to exercise ___________ Rights
represented by this Rights Certificates to purchase the number of shares of
Common Stock issuable upon the exercise of the Rights (or such other
securities of the Company or of any other person which may be issuable upon
the exercise of the Rights) and requests that the certificates for shares of
Common Stock (or such other securities) constituting such Rights be issued in
the name of and delivered to:
Please insert social security
or other identifying number:
--------------------------------------------------
- -------------------------------------------------------------------------------
(Please print name and address)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number:
--------------------------------------------------
- -------------------------------------------------------------------------------
(Please print name and address)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Dated:________________ ____, 19__
----------------------------------------
Signature
Signature Guaranteed:
A-7
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person
or an Affiliate or Associate of any such Person (as such terms are defined in
the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate
from any person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of any such Person.
Dated:______________ _____, 19___.
---------------------------------
Signature
NOTICE
The signature to the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change
whatsoever.
A-8
<PAGE>
EXHIBIT 8
AMENDMENT TO SHAREHOLDER RIGHTS PLAN
1. All capitalized terms used herein shall have the meaning set forth in
the Agreement.
2. The definition of "Acquiring Person" in Section 1 of the Agreement is
hereby amended and restated in its entirety to read as follows:
"Acquiring Person" shall mean any Person or group of Persons acting
together, directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, who or which, together with all
Affiliates and Associates of such Person(s), shall be the Beneficial Owner
of 20% or more of the shares of Common Stock then outstanding, but shall
not include (i) the Company, (ii) any Subsidiary of the Company, or (iii)
any employee benefit plan of the Company or any Subsidiary of the Company,
or any Person or entity organized, appointed or established by the Company
acting in accordance with and for or pursuant to the terms of any such
plan. Notwithstanding anything in this Agreement to the contrary, so long
as that certain Agreement and Plan of Merger dated as of September 21, 1998
by and among the Company, Immucor, Inc., a Georgia corporation ("Immucor"),
and Gamma Acquisition Corporation, a Texas corporation (the "Merger
Agreement"), has not been terminated pursuant to the terms thereof, neither
Immucor nor any Affiliate of Immucor shall be deemed to be an Acquiring
Person solely by reason of the execution, delivery and performance of the
Merger Agreement, including the Offer, the Parent Stock Option and the
Insider Lock-Up Options (as such terms are defined in the Merger Agreement)
or the announcement, making or consummation of Offer, the Parent Stock
Option and the Insider Lock-Up Options (as such terms are defined in the
Merger Agreement), the consummation of the Merger or any other transactions
contemplated by the Merger Agreement. If any of these exceptions to the
definition of an Acquiring Person apply, then the Person to whom the
exception pertains shall not be an Acquiring Person for any purpose under
this Agreement, including, without limitation, with respect to the
definitions of Distribution Date, Section 11(a)(ii) Event, Section 13
Event, Stock Acquisition Date and Triggering Event.
Notwithstanding any provision of this Agreement to the contrary,
(i) no Distribution Date, Section 11(a)(ii) Event, Section 13 Event,
Stock Acquisition Date or Triggering Event shall be deemed to have
occurred, (ii) neither Immucor nor any Subsidiary or Affiliate of
Immucor shall be deemed to have become an Acquiring Person, and
(iii) no holder of Rights shall be entitled to exercise such
<PAGE>
Rights under, or be entitled to any other rights pursuant to, this
Agreement solely by reason of (A) the approval, execution or delivery of
the Merger Agreement, (B) the acquisition of shares of Common Stock
pursuant to the Offer (as defined in the Merger Agreement), or (C) the
consummation of the Merger (as defined in the Merger Agreement).
3. A new Section 21 shall be added (and the numbering of subsequent
sections altered accordingly) as follows:
Section 21. TERMINATION. Upon the acquisition of shares of Common
Stock pursuant to the Offer (as defined in the Merger Agreement), and
without any further action and without any notice, the right to exercise
the Rights will terminate and the holders of Rights will have no further
rights under this Plan.
4. Except as specifically provided herein, the Agreement shall continue
in full force and effect in accordance with its terms without amendment or
modification.
2
<PAGE>
EXHIBIT 9
FORM OF SEVERANCE AGREEMENT
THIS AMENDED AND RESTATED SEVERANCE AGREEMENT (the "Agreement"), is
entered into this _____ day of _________, 1996, between _____________
("Executive") and GAMMA BIOLOGICALS, INC., a Texas corporation (the
"Company").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and its
shareholders for the Company to agree to provide benefits under circumstances
described below to Executive and other executives who are responsible for the
policy-making functions of the Company and the overall viability of the
Company's business; and
WHEREAS, the Board recognizes that the possibility of a change of
control of the Company is unsettling to such executives and wishes to make
arrangements at this time to assure their continuing dedication to their
duties to the Company and its shareholders notwithstanding attempts by
outside parties to gain control of the Company; and
WHEREAS, the Board believes it important, since the Company may receive
proposals from such outside parties, to enable such executives, without being
distracted by the uncertainties of their own employment situations, to
perform their regular duties, and where appropriate to assess such proposals
and advise the Board as to the best interests of the Company and its
shareholders and to take such other action as the Board determines to be
appropriate; and
WHEREAS, the Board also wishes to demonstrate to the executives that the
Company is concerned with their welfare and intends to assure that loyal
executives are treated fairly; and
WHEREAS, Executive and the Company previously entered into a Severance
Agreement dated ______________, and the parties now wish to amend and
restate such Severance Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto agree as follows:
1. In the event that any individual, corporation, partnership, company
or other entity (a "Person"), which terms shall include a "group" (within the
meaning of section 13(d) of the Securities Exchange Act of 1934, as amended
(the "Act")), begins a tender or exchange offer, circulates a proxy to the
Company's shareholders, or takes other steps to effect a "Change of Control"
(as defined in paragraph 3 below), Executive agrees that he will not
voluntarily leave the employ of the Company
<PAGE>
and will render the services contemplated in the recitals to this Agreement
until such Person has terminated its efforts to effect a Change of Control or
until a Change of Control has occurred.
2. If, within twenty-four months after a Change of Control,
Executive's employment is terminated by the Company for any reason other than
Cause (as defined in paragraph 4 below) subject to paragraph 6 below:
a. the Company will pay to Executive within 30 days of such
termination of employment a lump-sum cash payment equal to _____% of his
average annual compensation for the most recent ____ years ending before the
Change of Control (or for such shorter portion of that period as Executive
performed services for the Company), including for this purpose all
compensation included by the Company on his Forms W-2 for such years; and
b. any stock options granted to Executive by the Company will become
immediately exercisable in full; and
c. the Company will pay to Executive within 30 days of such
termination of employment a lump-sum cash payment equal to the full balance
standing to his credit with the Company under any and all deferred
compensation plans or arrangements; and
d. the Company will promptly reimburse Executive for any and all legal
fees and expenses incurred by him as a result of such termination of
employment, including, without limitation, all fees and expenses incurred to
enforce the provisions of this Agreement.
3. A Change of Control will occur for purposes of this Agreement if
(i) any Person becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Act) of more than thirty percent (30%) of the then outstanding voting
stock of the Company, (ii) there is a change of control of the Company of a
kind which would be required to be reported under Item 6(e) of Schedule 14A
of Regulation 14A promulgated under the Act (or a similar item in a similar
schedule or form) whether or not the Company is then subject to such
reporting requirement, (iii) the Company is a party to a merger,
consolidation, sale of assets or other reorganization or a proxy contest, as
a consequence of which members of the Board in office immediately prior to
such transaction or event constitute less than a majority of the Board
thereafter, or (iv) during any period of two consecutive years (which period
may begin before the date of this Agreement), individuals who at the
beginning of such period constituted the Board cease for any reason to
constitute a majority thereof; PROVIDED, HOWEVER, that any director who is
not in office at the beginning of such twenty-four month period but whose
election by the Board or whose nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds of the directors
then still in office who either were directors at the beginning of such
period or whose election or nomination for election was previously so
approved shall be deemed to have been in office at the beginning of such
period for purposes of this definition. Notwithstanding the foregoing
provisions of this paragraph 3, a Change of Control will not be deemed to
have occurred solely because of the acquisition or ownership of securities of
the Company (or any reporting requirement under the Act relating thereto) by
any employee benefit plan
<PAGE>
maintained by the Company for the benefit of employees.
4. "Cause" means only the willful commission by Executive of theft,
embezzlement or other serious and substantial crimes against the Company.
For purposes of this definition, no act or omission shall be considered to
have been "willful" unless it was not in good faith and Executive had
knowledge at the time that the act or omission was not in the best interest
of the Company.
5. If Executive leaves the employ of the Company for any reason
following a reduction in his position, compensation, responsibilities,
authority, fringe benefits, perquisites or any other benefit or privilege
enjoyed by him prior to the Change of Control or following an attempt by the
Company after a Change of Control to relocate Executive outside the Greater
Houston Metropolitan Area or, if Executive is at the time of the Change of
Control employed outside the Greater Houston Metropolitan Area, an area of
approximately comparable size surrounding the place where he is then
employed, or to require him to perform regular services outside of such area,
his employment will be deemed to have been terminated by the Company for
reasons other than Cause.
6. The payments and benefits due to Executive under paragraph 2 will
be subject to reduction as provided in this paragraph 6 for the purpose of
avoiding a limitation on the Company's federal income tax deduction of
"excess parachute payments" under section 280G of the Internal Revenue Code
of 1986. Within 20 days after the termination of Executive's employment,
Executive may (but is not required to) submit to the Company a written
opinion of a nationally recognized accounting firm, employment consulting
firm or law firm selected by Executive to the effect that, in such firm's
opinion, the payments and benefits due to Executive hereunder are not
required to be reduced in order to avoid such limitation on the Company's
deduction, or if such firm is of the view that a reduction in the payments
and benefits should be reduced. The opinion of such firm concerning the
extent of the required reduction, if any, in such payments and benefits
(which opinion need not be free from doubt), shall be final and binding on
both Executive and the Company. The Company agrees to pay the fees and
expenses of such firm in preparing and rendering its opinion. If Executive
does not submit such an opinion within 20 days after termination of
Executive's employment, the Company will make the determination to the extent
of the required reduction, if any, in the payments and benefits due to
Executive pursuant to this paragraph 6, and will make such payments and
provide such benefits to Executive no later than 30 days after the
termination of Executive's employment. The determination of the Company
concerning the extent of such required reduction will not be binding and will
be subject to arbitration in accordance with paragraph 8 of this Agreement.
In connection with any required reduction in the payments or benefits due to
Executive pursuant to this paragraph 6, Executive will be entitled to
designate the particular payments and/or benefits to be reduced.
7. If there has been a termination to which paragraph 2 applies, and the
Company and Executive agree that Executive shall provide post-termination
consulting or other services to the Company, the Company shall be entitled to
reduce its payment for such post-termination consulting or other services to the
extent of the payment made by it pursuant to paragraph 2. This paragraph 7
shall not obligate either the Company or Executive to agree to Executive's
provision of
<PAGE>
post-termination services.
8. In the case of any dispute under this Agreement, Executive may
initiate binding arbitration in Houston, Texas, before the American
Arbitration Association by serving a notice to arbitrate upon the Company or,
at Executive's election, institute judicial proceedings, in either case
within 90 days of the effective date of his termination or, if later, her
receipt of notice of termination, or such longer period as may be reasonably
necessary for Executive to take such action if illness or incapacity should
impair him taking such action within the 90-day period. The Company agrees
(i) to pay the cost of any such arbitration and/or judicial proceeding, and
(ii) to pay interest to Executive on any amounts ultimately found to be due
to Executive hereunder during any period of time that such amounts are
withheld pending arbitration and/or judicial proceedings.
9. If the Company is at any time, whether before or after or as a part
of a Change of Control, merged or consolidated into or with any other
corporation or other entity (whether or not the Company is the surviving
entity), or if substantially all of the assets thereof are transferred to
another corporation or other entity, the provisions of this Agreement will be
binding upon and inure to the benefit of the corporation or other entity
resulting from such merger or consolidation or the acquirer of such assets,
and this paragraph 9 will apply in the event of any subsequent merger or
consolidation or transfer of assets. In the event of any merger,
consolidation or sale of assets described above, nothing contained in this
Agreement will detract from or otherwise limit Executive's right to or
privilege of participation in any stock option or purchase plan or any bonus,
profit sharing, pension, group insurance, hospitalization or other incentive
or benefit plan or arrangement which may be or become applicable to
executives of the corporation resulting from such merger or consolidation or
the corporation acquiring such assets from the Company. In the event of any
merger, consolidation or sale of assets described above, references to the
Company in this Agreement shall unless the context suggests otherwise be
deemed to include the entity resulting from such merger or consolidation or
the acquirer of such assets of the Company.
10. All payments required to be made by the Company hereunder to
Executive or his dependents, beneficiaries or estate will be subject to the
withholding of such amounts relating to tax and/or other payroll deductions
as may be required by law.
11. No amendment, change or modification of this Agreement may be made
except in writing, signed by both parties.
12. At the election of the Company, this Agreement shall not apply to a
Change of Control which takes place after the third anniversary of the date
first written above, provided that the Company has given Executive notice of
its election at least 30 days before the Change of Control.
13. Payments made by the Company pursuant to this Agreement shall be in
lieu of severance payments, if any, which might otherwise be available to
Executive.
<PAGE>
14. The provisions of this Agreement shall be binding upon and shall
inure to the benefit of Executive, his executors, administrators, legal
representatives and assigns, and the Company and its successors.
15. The validity, interpretation and effect of this Agreement shall be
governed by the laws of the State of Texas.
16. There shall be no right of set-off or counterclaim in respect of
any claim, debt or obligation, against any payments to Executive, his
dependents, beneficiaries or estate provided for in this Agreement.
17. No right or interest to or in any payments shall be assignable by
Executive; PROVIDED, HOWEVER, that this provision shall not preclude him from
designating one or more beneficiaries to receive any amount that may be
payable after his death and shall not preclude the legal representative of
his estate from assigning any right hereunder to the person or persons
entitled thereto under his will or, in the case of intestacy, to the person
or persons entitled thereto under the laws of intestacy applicable to his
estate. The term "beneficiaries" as used in this Agreement shall mean a
beneficiary or beneficiaries so designated to receive any such amount or, if
no beneficiary has been so designated, the legal representative of
Executive's estate.
18. No right, benefit or interest hereunder shall be subject to
anticipation, alienation, sale, assignment, encumbrance, change, pledge,
hypothecation, or set-off in respect of any claim, debt or obligation, or to
execution, attachment, levy or similar process, or assignment by operation of
law. Any attempt, voluntary or involuntary, to effect any action specified
in the immediately preceding sentence, shall, to the full extent permitted by
law, be null, void and of no effect.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date set forth above.
GAMMA BIOLOGICALS, INC.
By:
-----------------------------------
Name:
----------------------------------
Title:
----------------------------------
----------------------------------------
"Executive"
<PAGE>
[LOGO]
September 21, 1998
The Board of Directors
Gamma Biologicals, Inc.
3700 Mangum Road
Houston, TX 77092
Attention: Mr. David E. Hatcher
Chairman of the Board, President, and Chief Executive Officer
Members of the Board:
You have requested our opinion as investment bankers as to the fairness,
from a financial point of view, to the holders of shares of common stock, par
value $0.10 per share ("Common Stock"), of Gamma Biologicals, Inc. (the
"Company"), of the consideration to be received by such holders in the proposed
acquisition of the Company by Immucor, Inc. ("Acquiror"), pursuant to the
Agreement and Plan of Merger (the "Agreement"), dated as of September 21, 1998,
by and among the Company, Acquiror, and Gamma Acquisition Corporation, a wholly
owned subsidiary of Acquiror ("Acquisition Sub"). Pursuant to the Agreement,
Acquisition Sub would make a cash tender offer ("Tender Offer") to purchase all
of the outstanding Common Stock at a price of $5.40 per share. Following
completion of the Tender Offer, Acquisition Sub would be merged into the Company
(the "Merger") and each outstanding share of Common Stock would be converted
into the right to receive $5.40. The terms and conditions of the Tender Offer
and the Merger are set forth more fully in the Agreement.
Dain Rauscher Wessels, a division of Dain Rauscher Incorporated ("Dain
Rauscher Wessels"), as part of its investment banking business, is regularly
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, secondary distributions of
listed and unlisted securities, private placements and valuations for corporate
and other purposes. We have been retained as the exclusive financial advisor to
the Company in connection with the Agreement and will receive a fee for our
services, a substantial portion of which is contingent upon the consummation of
the Agreement. The portion of our fee to be received for providing this opinion
is not contingent upon the consummation of the agreement. The Company has agreed
to indemnify us against certain liabilities in connection with our services. In
the ordinary course of business, Dain Rauscher Wessels may actively trade the
securities of both the Company and Acquiror for its own account and for the
accounts of its customers and, accordingly, may at any time hold a long or short
position in such securities.
In arriving at our opinion, we have undertaken such review, analyses and
inquiries as we deemed necessary and appropriate under the circumstances. Among
other things, we have reviewed (i) a copy of the Agreement and Plan of Merger
dated September 21, 1998, (ii) certain publicly available information concerning
the Company, (iii) certain other internal information concerning the business
and operations of the Company, primarily financial in nature (including
financial projections for the Company on a stand-
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Dain Rauscher Plaza (612) 371-2800
60 South Sixth Street Fax (612) 371-2763
P.O. Box 1160
Minneapolis, MN 55440-1160
<CAPTION>
Dain Rauscher Plaza Dain Rauscher Incorporated
P.O. Box 1160
Minneapolis, MN 55440-1160
<CAPTION>
60 South Sixth Street Member NYSE/SIPC
</TABLE>
<PAGE>
The Board of Directors
September 21, 1998
Page 2
alone basis), furnished to us by the management of the Company, (iv) the
reported prices and trading activity for the Company's Common Stock, (v) to the
extent publicly available, the financial terms of certain comparable acquisition
transactions, and (vi) certain financial and securities data for the Company,
which we compared with similar information for certain other publicly-traded
companies deemed by us to be comparable to the Company. In addition, we had
discussions with members of the management of the Company with respect to the
financial condition, current operating results, and business outlook for the
Company on a stand-alone basis.
With respect to the Company's financial projections, we have assumed that
such projections have been reasonably prepared on a basis reflecting the best
currently available estimates and judgments of the management of the Company as
to the future financial performance of the Company and that the Company will
perform substantially in accordance with such projections. We express no opinion
as to such financial projection information or the assumptions on which they
were based. We have not been engaged to and did not solicit other offers for the
Company.
In rendering our opinion, we have assumed and relied upon the accuracy and
completeness of the financial, legal, tax, operating and other information
provided to us by the Company (including without limitation the financial
statements and related notes thereto of the Company), and have not assumed
responsibility for independently verifying and have not independently verified
such information. We have not assumed any responsibility to perform, and have
not performed, an independent evaluation or appraisal of any of the respective
assets or liabilities of the Company, and we have not been furnished with any
such valuations or appraisals. In addition, we have not assumed any obligation
to conduct, and have not conducted, any physical inspection of the property or
facilities of the Company. Additionally, we have not been asked and did not
consider the possible effects of any litigation, other legal claims or any other
contingent matters.
Our opinion speaks only as of the date hereof, is based on the conditions as
they exist and information which we have been supplied as of the date hereof,
and is without regard to any market, economic, financial, legal or other
circumstances or event of any kind or nature which may exist or occur after such
date. The opinion expressed herein is provided for the information and
assistance of the Board of Directors of the Company in connection with its
consideration of the transaction contemplated by the Agreement and such opinion
does not constitute a recommendation to any stockholder with respect to such
transaction. Further, our opinion does not address the merits of the underlying
decision by the Company to engage in such transaction. This opinion shall not be
published or otherwise used, nor shall references to Dain Rauscher Wessels be
made, without prior written approval, except that the Company may include this
opinion in its entirety in any proxy statement or information statement relating
to the Tender Offer or the Merger sent to the Company's stockholders.
Based on our experience as investment bankers and subject to the foregoing,
including the various assumptions and limitations set forth herein, it is our
opinion that, as of the date hereof, the consideration to be received by the
holders of the Company's Common Stock pursuant to the Agreement is fair to such
holders, from a financial point of view.
Very truly yours,
[LOGO]
DAIN RAUSCHER WESSELS
a division of Dain Rauscher
Incorporated
<PAGE>
FOR IMMEDIATE RELEASE CONTACT: Immucor, Inc.
Edward Gallup, Steve Ramsey or
Connie Vinson
770-441-2051
Gamma Biologicals, Inc.
David E. Hatcher
713-681-8481
IMMUCOR, INC. TO ACQUIRE GAMMA BIOLOGICALS, INC.
IN A CASH TENDER OFFER FOR $5.40 PER SHARE
NORCROSS, GA - September 21, 1998 - Immucor, Inc. (NASDAQ: BLUD) and Gamma
Biologicals, Inc. (AMEX: GBL) today jointly announced that they have executed
a definitive merger agreement under which Gamma Acquisition Corporation, an
Immucor subsidiary, will commence a cash tender offer to acquire all of the
outstanding shares of Gamma Biologicals for $5.40 per share. The merger
agreement has been unanimously approved by the Board of Directors of each
company. Upon completion of this transaction, Gamma Biologicals will operate
as a wholly owned subsidiary of Immucor, Inc.
The cash tender offer of $5.40 for each Gamma Biologicals share represents a
total transaction value of approximately $25 million. The tender offer is
not conditioned upon financing. Subject to satisfaction of customary closing
conditions, Immucor and Gamma Biologicals expect the transaction to close
within five weeks from the date hereof.
Upon completion of this acquisition, Immucor will become the market leader in
providing blood serology reagents and systems in the U.S. and Canada, and
will greatly strengthen its international market position. The combination
of this market leadership with a broad line of automated instrumentation,
including Immucor's newly approved ABS2000 system, and an extensive pipeline
of new products, including Gamma's gel-based ReACT system, is expected to
generate growth in both revenue and profitability. Given the substantial
opportunities for synergies and cost savings, this transaction is expected to
increase Immucor's earnings per share.
Edward L. Gallup, Immucor's President and CEO, stated "I am pleased to
welcome Gamma's customers, employees and suppliers to our company. I am
confident that the combined strengths of our organizations will set the
standard for quality products and services in our industry for years to come."
David E. Hatcher, Gamma's President and CEO, stated "In Immucor, we have
found the ideal partner to continue the growth of our business. Given the
consolidation of our industry and the resources which Immucor provides, I
believe this transaction will best serve Gamma's
<PAGE>
customers, shareholders and employees."
Immucor, Inc., founded in 1982, manufactures and sells a complete line of
reagents and systems used by hospitals, reference laboratories and donor
centers to detect and identify certain properties of the cell and serum
components of blood prior to transfusion. Immucor markets a complete family
of automated instrumentation for all of its market segments. Immucor's
fiscal 1998 revenues were approximately $40 million. For more information on
Immucor, please visit the Company's website at www.immucor.com.
Gamma Biologicals, Inc., with fiscal 1998 revenues of approximately $18
million, manufactures and sells a wide variety of in-vitro diagnostic
reagents to blood donation centers, transfusion departments of hospitals,
medical laboratories and research institutions through a direct sales force
and distributor network. Gamma Biologicals distributes its products to more
than 50 countries worldwide. Additional information is available about Gamma
Biologicals on its website at www.gammabio.com.
THIS PRESS RELEASE MAY CONTAIN FORWARD-LOOKING STATEMENTS AS THAT TERM IS
DEFINED IN THE PRIVATE SECURITIES REFORM ACT OF 1995, INCLUDING, WITHOUT
LIMITATION, STATEMENTS CONCERNING EACH COMPANY'S EXPECTATIONS, BELIEFS,
INTENTIONS OR STRATEGIES REGARDING THE FUTURE. BECAUSE SUCH STATEMENTS DEAL
WITH FUTURE EVENTS, THEY ARE SUBJECT TO VARIOUS RISKS AND UNCERTAINTIES AND
ACTUAL RESULTS MAY DIFFER MATERIALLY FROM EACH COMPANY'S CURRENT
EXPECTATIONS. ALL FORWARD-LOOKING STATEMENTS INCLUDED IN THIS DOCUMENT ARE
BASED ON IN FORMATION AVAILABLE TO EACH COMPANY OF THE DATE HEREOF, AND EACH
COMPANY ASSUMES NO OBLIGATIONS TO UPDATE ANY SUCH FORWARD-LOOKING STATEMENTS.
FURTHER RISKS ARE DETAILED IN EACH COMPANY'S FILINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION, INCLUDING THOSE SET FORTH IN EACH COMPANY'S MOST RECENT
FORM 10-K AND QUARTERLY REPORTS ON FORM 10-Q.
(end)
