<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8 - K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) AUGUST 6, 1996
--------------
GALILEO ELECTRO-OPTICS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 04-2526583
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
0-11309
(Commission File Number)
GALILEO PARK, P.O. BOX 550, STURBRIDGE, MASSACHUSETTS 01566
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code (508) 347-9191
- -------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE> 2
Item 2. Acquisition or Disposition of Assets
------------------------------------
On August 6, 1996, the Registrant acquired Leisegang Medical, Inc.
("LMI"), a Florida corporation, pursuant to the Agreement and Plan of
Merger dated as of July 17, 1996 (the "Merger Agreement") among the
Registrant, a wholly-owned subsidiary of the Registrant, LMI and the
principal stockholders of LMI. Following the merger, LMI became a
wholly-owned subsidiary of the Registrant.
The Registrant issued 269,923 shares of its common stock in exchange for
all of the outstanding common stock of LMI. The acquisition is being
accounted for as a pooling of interests. The terms of the transaction
resulted from arms-length negotiations between the Registrant and LMI and
are more fully set forth in the Merger Agreement filed as Exhibit 2.1
hereto. Neither the Registrant nor any of its affiliates had any
relationship with LMI prior to the merger.
LMI, headquartered in Boca Raton, FL, is a distributor and manufacturer of
OB/GYN diagnostic and surgical equipment with fiscal year 1996 sales of
$6.5 million. Included in its product line are colposcopes produced by
Leisegang GmbH, a related company, not acquired by the Registrant, based
in Berlin, Germany, that is the world's largest and oldest manufacturer of
colposcopes and accessories. In addition to colposcopes, LMI's products
include biopsy instruments, ultrasound, video equipment, laser and
electro-surgical systems and accessories, cryosurgery equipment, surgical
instruments, rigid and flexible hysteroscopes, bone densitometers and
fetal heart monitors. The products are sold to OB/GYN doctors' offices and
hospitals through an internal sales force and by manufacturers'
representatives.
Item 7. Financial Statements and Exhibits
---------------------------------
a) Financial Statements of Business Acquired
It is impracticable to provide financial statements of Leisegang
Medical, Inc. at the time of filing this report. The required
information will be filed no later than 60 days after the date this
report is required to be filed.
b) Pro Forma Financial Information
It is impracticable to provide pro forma financial information at
the time of filing this report. The required information will be
filed no later than 60 days after the date this report is required
to be filed.
c) Exhibits
2.1 Agreement and Plan of Merger, dated July 17, 1996, among Galileo
Electro-Optics Corporation, LMI Acquisition Corporation, Leisegang
Medical, Inc. and the principal stockholders of Leisegang Medical,
Inc. The schedules and exhibits to the Agreement are omitted and
will be furnished to the Commission upon request.
99.1 Press Release dated July 22, 1996.
99.2 Press Release dated August 8, 1996.
2
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GALILEO ELECTRO-OPTICS CORPORATION
Date: August 9, 1996 By: /s/ Josef W. Rokus
------------------------------
Josef W. Rokus
Vice President, Finance and
Chief Financial Officer
3
<PAGE> 4
EXHIBIT INDEX
Exhibit No.
-----------
2.1 Agreement and Plan of Merger dated July 17, 1996.
99.1 Press Release dated July 22, 1996
99.2 Press Release dated August 8, 1996
4
<PAGE> 1
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
among
GALILEO ELECTRO-OPTICS CORPORATION
LMI ACQUISITION CORPORATION
LEISEGANG MEDICAL, INC.
and
THE PRINCIPAL STOCKHOLDERS
OF LEISEGANG MEDICAL, INC.
NAMED HEREIN
-----------------------------
Dated as of July 17, 1996
-----------------------------
=============================
<PAGE> 2
TABLE OF CONTENTS
Page
SECTION 1 - THE MERGER..................................................... 1
1.1 The Merger................................................... 1
1.2 Effective Time............................................... 1
1.3 Effects of the Merger........................................ 1
1.4 Articles of Incorporation and Bylaws......................... 1
1.5 Directors and Officers....................................... 2
1.6 Conversion of Stock.......................................... 2
1.7 Closing of Seller Transfer Books............................. 3
1.8 Exchange of Certificates..................................... 3
1.9 No Fractional Shares......................................... 3
1.10 Escrow of Shares............................................. 3
SECTION 2 - REPRESENTATIONS AND WARRANTIES OF SELLER....................... 4
2.1 Organization and Qualification............................... 4
2.2 Authority to Execute and Perform Agreements; No
Dissenters Rights............................................ 4
2.3 Capitalization and Title to Shares........................... 4
2.4 Subsidiaries and Other Affiliates............................ 5
2.5 Financial Statements......................................... 5
2.6 Absence of Undisclosed Liabilities........................... 5
2.7 No Material Adverse Change................................... 5
2.8 Tax Matters.................................................. 6
2.9 Compliance with Laws......................................... 7
2.10 No Breach.................................................... 7
2.11 Actions and Proceedings...................................... 7
2.12 Contracts and Other Agreements............................... 8
2.13 Bank Accounts and Powers of Attorney......................... 9
2.14 Properties................................................... 9
2.15 Intellectual Property........................................ 10
2.16 Customers.................................................... 10
2.17 Accounts Receivable.......................................... 10
2.18 Inventory.................................................... 11
2.19 Employee Benefit Plans....................................... 11
2.20 Employee Relations........................................... 11
2.21 Transactions with Management................................. 12
2.22 Insurance.................................................... 12
2.23 Brokerage.................................................... 12
2.24 Hazardous Materials.......................................... 12
2.25 Disclosure................................................... 13
SECTION 3 - REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL STOCKHOLDERS... 13
(i)
<PAGE> 3
3.1 Authority to Execute and Perform Agreements.................. 13
3.2 No Breach.................................................... 13
3.3 Title to Shares.............................................. 13
3.4 Accuracy of Seller Representations and Warranties............ 14
SECTION 4 - REPRESENTATIONS AND WARRANTIES OF BUYER AND ACQUISITION........ 14
4.1 Organization................................................. 14
4.2 Authority to Execute and Perform Agreement................... 14
4.3 Capitalization............................................... 14
4.4 SEC Reports.................................................. 14
4.5 Financial Statements......................................... 15
4.6 No Material Adverse Change................................... 15
4.7 Actions and Proceedings...................................... 15
4.8 No Breach.................................................... 15
SECTION 5 - COVENANTS AND AGREEMENTS....................................... 16
5.1 Conduct of Business.......................................... 16
5.2 Corporate Examinations and Investigations.................... 17
5.3 Expenses..................................................... 17
5.4 Authorization from Others.................................... 18
5.5 Consummation of Agreement.................................... 18
5.6 Further Assurances........................................... 18
5.7 Corporate Approvals.......................................... 18
5.8 Public Announcements and Confidentiality..................... 18
5.9 Stockholder Letters.......................................... 18
5.10 No Solicitation.............................................. 19
5.11 Buyer SEC Filings............................................ 19
5.12 Disclosure Statements........................................ 19
5.13 Indemnification.............................................. 19
5.14 Employee Benefits Matters.................................... 19
SECTION 6 -CONDITIONS PRECEDENT TO THE OBLIGATIONS OF EACH PARTY
TO CONSUMMATE THE MERGER............................................. 20
6.1 Approvals.................................................... 20
6.2 Employment Agreement......................................... 20
6.3 Absence of Order............................................. 20
SECTION 7 - CONDITIONS PRECEDENT TO THE OBLIGATIONS OF
BUYER AND ACQUISITION TO CONSUMMATE THE MERGER....................... 20
7.1 Representations, Warranties and Covenants.................... 20
7.2 Stockholder Letters.......................................... 21
7.3 Opinion of Counsel to Seller................................. 21
7.4 Merger Documents............................................. 21
7.5 Pooling of Interests......................................... 21
7.6 Accountants' Letter.......................................... 21
(ii)
<PAGE> 4
7.7 Tax Opinion.................................................. 21
7.8 Escrow Agreement............................................. 21
7.9 Audited Financial Statements................................. 21
7.10 Trademark License............................................ 22
7.11 Distribution Agreement....................................... 22
7.12 Certificates................................................. 22
SECTION 8 - CONDITIONS PRECEDENT TO THE OBLIGATION OF
THE SELLER AND THE PRINCIPAL STOCKHOLDERS TO CONSUMMATE THE MERGER... 22
8.1 Representations, Warranties and Covenants.................... 22
8.2 Opinion of Counsel to Buyer.................................. 22
8.3 Tax Opinion.................................................. 22
8.4 Registration Rights Agreement................................ 22
8.5 Certificates................................................. 22
SECTION 9 - TERMINATION, AMENDMENT AND WAIVER.............................. 23
9.1 Termination.................................................. 23
9.2 Effect of Termination........................................ 23
9.3 Amendment.................................................... 23
9.4 Waiver....................................................... 23
SECTION 10 - INDEMNIFICATION............................................... 24
10.1 Survival..................................................... 24
10.2 Obligation of Seller and the Stockholders to Indemnify....... 24
10.3 Obligation of the Buyer and Acquisition to Indemnify......... 24
10.4 Limitations on Indemnification............................... 25
10.5 Notice and Defense of Claims................................. 25
SECTION 11 - MISCELLANEOUS................................................. 26
11.1 Notices...................................................... 27
11.2 Entire Agreement............................................. 27
11.3 Governing Law................................................ 27
11.4 Consent to Jurisdiction...................................... 27
11.5 Invalidity................................................... 28
11.6 Binding Effect; No Assignment................................ 28
11.7 Variations in Pronouns....................................... 28
11.8 Counterparts................................................. 28
11.9 Disclosure Schedules......................................... 28
(iii)
<PAGE> 5
EXHIBITS
A Escrow Agreement
B Stockholder Letter
C Employment Agreement
D Trademark License Agreement
E Amendment to Distribution Agreement
F Registration Rights Agreement
(iv)
<PAGE> 6
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER dated as of July 17, 1996 is among
Galileo Electro-Optics Corporation (the "Buyer"), a Delaware corporation; LMI
Acquisition Corporation ("Acquisition"), a Florida corporation and wholly-owned
subsidiary of the Buyer; Leisegang Medical, Inc. (the "Seller"), a Florida
corporation; and the stockholders of the Seller identified on the signature
pages hereto (the "Principal Stockholders"). The parties wish to effect the
acquisition of the Seller by the Buyer through a merger of Acquisition into the
Seller on the terms and conditions hereof. This Agreement is intended to be a
"plan of reorganization" within the meaning of [Section]368(a) of the Internal
Revenue Code of 1986, as amended (the "Code").
Accordingly, in consideration of the mutual representations, warranties
and covenants contained herein, the parties hereto agree as follows:
1. THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions hereof,
and in accordance with the Florida Business Corporation Act (the "FBCA"),
Acquisition shall be merged with and into the Seller (the "Merger"). The Merger
shall occur at the Effective Time (as defined herein). Following the Merger, the
Seller shall continue as the surviving corporation (the "Surviving Corporation")
and be a wholly-owned subsidiary of the Buyer, and the separate corporate
existence of Acquisition shall cease.
1.2 EFFECTIVE TIME. As soon as practicable after satisfaction or waiver
of all conditions to the Merger, the parties shall cause articles of merger (the
"Articles of Merger") to be filed and recorded in accordance with Section
607.1105 of the FBCA and shall take all such further actions as may be required
by law to make the Merger effective. The Merger shall be effective at such time
as the Articles of Merger are filed with the Department of State of Florida in
accordance with the FBCA (the "Effective Time"). Immediately prior to the filing
of the Articles of Merger a closing (the "Closing") will be held at the offices
of Palmer & Dodge LLP, One Beacon Street, Boston, Massachusetts (or such other
place as the parties may agree) for the purpose of confirming satisfaction or
waiver of all conditions to the Merger. The Closing shall take place on August
6, 1996 or on such other date as the parties may agree. The date on which the
Closing occurs is referred to herein as the "Closing Date".
1.3 EFFECTS OF THE MERGER. The Merger shall have the effects set forth
in Section 607.1106 of the FBCA.
1.4 ARTICLES OF INCORPORATION AND BYLAWS. The Articles of Incorporation
and Bylaws of Acquisition, in each case as in effect immediately prior to the
Effective Time, shall be the Articles of Incorporation and Bylaws of the
Surviving Corporation immediately after the Effective Time.
-1-
<PAGE> 7
1.5 DIRECTORS AND OFFICERS. The directors and officers of Acquisition
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Corporation immediately after the Effective Time, each to hold
office in accordance with the Articles of Incorporation and Bylaws of the
Surviving Corporation. The Surviving Corporation may designate such other
officers as it determines.
1.6 CONVERSION OF STOCK.
(a) At the Effective Time, by virtue of the Merger and without any action
on the part of the Buyer, Acquisition or the Seller:
(i) All shares of Class A common stock, $.01 par value (the "Class A
Stock"), and all shares of Class B common stock, $.01 par value (the "Class B
Stock") of the Seller (the Class A Stock and the Class B Stock being referred to
herein collectively as "Seller Stock") outstanding immediately prior to the
Effective Time, other than shares held by the Seller as treasury stock or shares
held by any subsidiary of the Seller, shall be converted into and become the
right to receive, in the aggregate, 269,923 shares (subject to the payment of
cash for fractional shares as provided in Section 1.9) of common stock, $.01 par
value, of the Buyer ("Buyer Common Stock"). Such shares of Buyer Common Stock
are referred to hereinafter as the "Merger Consideration".
(ii) All shares of Seller Stock held at the Effective Time by the Seller
as treasury stock or by a subsidiary of the Seller shall be canceled and no
payment shall be made with respect thereto.
(iii) Each share of common stock of Acquisition, $.01 par value,
outstanding immediately prior to the Effective Time shall be converted into and
become one validly issued, fully paid and nonassessable share of common stock,
$.01 par value, of the Surviving Corporation.
(b) For the purpose of this Agreement, "Closing Market Value" of Buyer
Common Stock means the average of the closing prices of Buyer Common Stock as
reported by the Nasdaq National Market System for the ten trading days ending on
the third trading day prior to the Closing Date.
(c) The Merger Consideration shall be allocated among the holders of shares
of Seller Stock outstanding immediately prior to the Effective Time by
allocating among such holders that number of shares of Buyer Common Stock
determined by multiplying the number of shares of Seller Stock held by each such
holder by the Conversion Ratio.
(d) "Conversion Ratio" means the quotient obtained by dividing the
aggregate number of shares of Buyer Common Stock delivered as the Merger
Consideration by the number of shares of Seller Stock outstanding immediately
prior to the Effective Time.
-2-
<PAGE> 8
1.7 CLOSING OF SELLER TRANSFER BOOKS. At the Effective Time, the stock
transfer books of the Seller shall be closed, and no transfer of Seller Stock
shall thereafter be made. If, after the Effective Time, certificates
representing shares of Seller Stock are presented to the Surviving Corporation,
they shall be canceled and exchanged for certificates representing Buyer Common
Stock.
1.8 EXCHANGE OF CERTIFICATES. On the Closing Date, each holder of
shares of Seller Stock shall surrender to the Buyer properly endorsed
certificates representing all of such holder's ownership of Seller Stock, and
the Buyer shall deliver in exchange therefor (subject to the escrow deposit
required by Section 1.10) a certificate representing that number of whole shares
of Buyer Common Stock into which the shares of Seller Stock theretofore
represented by the certificate so surrendered shall have been converted pursuant
to the provisions of this Agreement, and the certificate so surrendered shall
forthwith be canceled. Until surrendered in accordance with the provisions of
this Section, each Seller Stock certificate (other than for shares to be
canceled in accordance with Section 1.6(a)(ii)) shall represent for all purposes
shares of Buyer Common Stock. Buyer Common Stock into which Seller Stock shall
be converted in the Merger shall be deemed to have been issued at the Effective
Time. If any Buyer Common Stock certificates are to be issued in a name other
than that in which the Seller Stock certificate surrendered is registered, it
shall be a condition of such exchange that the person requesting such exchange
shall deliver to the Buyer all documents necessary to evidence and effect such
transfer and shall pay to the Buyer any transfer or other taxes required by
reason of the issuance of certificates for such shares of Buyer Common Stock in
a name other than that of the registered holder of the certificate surrendered
or establish to the satisfaction of the Buyer that such tax has been paid or is
not applicable.
1.9 NO FRACTIONAL SHARES. No certificates representing fractional
shares of Buyer Common Stock shall be issued upon the surrender for exchange of
Seller Stock certificates. No fractional interest shall entitle the owner to
vote or to any rights of a security holder. In lieu of fractional shares, each
holder of shares of Seller Stock who would otherwise have been entitled to a
fractional share of Buyer Common Stock, will receive upon surrender of a Seller
Stock certificate or certificates, as the case may be, an amount in cash
(without interest) determined by multiplying such fraction by the Closing Market
Value of one share of Buyer Common Stock (determined in accordance with Section
1.6(b)). The Buyer shall not be liable to any holder of shares of Seller Stock
for any cash in lieu of fractional interests delivered to a public official
pursuant to applicable escheat or abandoned property laws.
1.10 ESCROW OF SHARES. At the Effective Time, the Buyer shall deposit
10% of the total number of shares comprising the Merger Consideration with an
escrow agent reasonably satisfactory to the Seller to be held and disbursed by
such agent in accordance with the form of escrow agreement (the "Escrow
Agreement") attached hereto as EXHIBIT A. Such shares shall be deducted pro rata
from the shares allocable to each former holder of Seller Stock.
-3-
<PAGE> 9
2 - REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth on the disclosure schedule delivered to the Buyer on
the date hereof (the "Seller Disclosure Schedule"), the section numbers of which
are numbered to correspond to the section numbers of this Agreement to which
they refer, the Seller represents and warrants to the Buyer and Acquisition as
follows:
2.1 ORGANIZATION AND QUALIFICATION.
(a) The Seller is a corporation duly organized, validly existing and in
good standing under the laws of Florida with full corporate or other power and
authority to own, lease and operate its assets and properties and to carry on
its business as now being and as heretofore conducted. The Seller is qualified
or otherwise authorized to transact business as a foreign corporation in all
jurisdictions in which such qualification or authorization is required by law,
except for jurisdictions in which the failure to be so qualified or authorized
would not have a material adverse effect on the assets, properties, business,
prospects, results of operations or financial condition of the Seller (the
"Business of Seller").
(b) The Disclosure Schedule sets forth all jurisdictions (in the United
States or outside of the United States) in which the Seller files or is required
to file franchise, income or other tax returns, based upon the ownership or use
of property therein or the derivation of income therefrom.
(c) The Seller has previously provided to the Buyer true and complete
copies of the Articles of Incorporation and bylaws of the Seller as presently in
effect, and the Seller is not in default thereunder. The minute books of the
Seller contain true and complete records of all meetings and consents in lieu of
meetings of the Board of Directors (and any committees thereof) and of the
stockholders since the time of the Seller's incorporation and accurately reflect
in all material respects all transactions referred to in such minutes and
consents in lieu of meetings. The stock books of the Seller are true and
complete.
2.2 AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS; NO DISSENTERS RIGHTS.
The Seller has the corporate power and authority to enter into, execute and
deliver this Agreement and to perform its obligations hereunder. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by the Board of Directors and the
stockholders of the Seller. No other action on the part of the Seller is
necessary to consummate the transactions contemplated hereby. This Agreement
has been duly executed and delivered by the Seller and constitutes a valid and
binding obligation of the Seller, enforceable in accordance with its terms. No
holder of Seller Stock is entitled to dissent from consummation of the Merger
under Section 607.1302 of the FBCA.
2.3 CAPITALIZATION AND TITLE TO SHARES.
(a) The Seller is authorized to issue 1,000,000 shares of Class A Stock,
all of which shares are issued and outstanding, and 100,000 shares of Class B
Stock, of which 49,200 shares are issued and outstanding. Such shares are owned
of record by the persons and in the amounts
-4-
<PAGE> 10
set forth in the Seller Disclosure Schedule. No other class of capital stock of
the Seller is authorized or outstanding. All of the issued and outstanding
shares of the Seller's capital stock are duly authorized and are validly issued,
fully paid, nonassessable and free of preemptive rights. None of the issued and
outstanding shares of the Seller have been issued in violation of any federal or
state law or any preemptive rights or rights to subscribe for or purchase
securities.
(b) There are no outstanding rights, subscriptions, warrants, calls,
preemptive rights, options or other agreements of any kind to purchase or
otherwise receive from the Seller any shares of the capital stock or any other
security of the Seller and no outstanding securities of any kind convertible
into or exchangeable for such securities. There are no shareholder agreements,
voting trusts, proxies or other agreements, instruments or understandings with
respect to the outstanding shares of capital stock of the Seller to which the
Seller is a party.
(c) The Seller does not own beneficially any shares of capital stock of
the Buyer.
2.4 SUBSIDIARIES AND OTHER AFFILIATES. The Seller has no subsidiaries
and does not directly or indirectly own or have any investment in any of the
capital stock of, and is not a party to a partnership or joint venture with, any
other person.
2.5 FINANCIAL STATEMENTS. The Seller has previously delivered to the Buyer
(i) financial statements of the Seller at March 31, 1996 and 1995 and for the
twelve-month periods then ended compiled by Roni D. Laskin, C.P.A., P.A. (the
"Annual Financial Statements") and (ii) a balance sheet of the Seller as at May
31, 1996 (the "Interim Balance Sheet") and related statements of income for the
period then ended (the "Interim Financial Statements"). All of such financial
statements are collectively referred to herein as the "Seller Financial
Statements." The Seller Financial Statements have been prepared from, and are in
accordance with, the books and records of the Seller and present fairly the
financial position and the results of operations of the Seller as of the dates
and for the periods indicated, in each case in accordance with generally
accepted accounting principles ("GAAP") consistently applied throughout the
periods involved, subject in the case of the Interim Financial Statements, to
normal year-end adjustments, which are not in the aggregate material.
2.6 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in the
Seller Disclosure Schedule, the Seller has no liabilities or obligations of any
kind (whether accrued, absolute, contingent or otherwise) other than liabilities
and obligations reflected or reserved against in the Interim Balance Sheet and
current liabilities incurred since the date of the Interim Balance Sheet in the
ordinary course of business.
2.7 NO MATERIAL ADVERSE CHANGE. Since March 31, 1996, except as
described in the Interim Financial Statements, there has not been:
(a) any material adverse change in the Business of Seller;
(b) any transaction, commitment, contract or agreement entered into by the
Seller or any relinquishment by the Seller of any contract or other right having
a value of or involving aggregate payments in excess of $25,000;
-5-
<PAGE> 11
(c) any redemption or other acquisition of any capital stock of the Seller
or any declaration, setting aside, or payment of any dividend or distribution of
any kind with respect to any shares of capital stock of the Seller;
(d) any increase in compensation, bonus or other benefits payable or to
become payable by the Seller to any director, officer or employee, other than
regularly scheduled increases in the ordinary course of business;
(e) any entering into or granting by the Seller of any new employment
agreement providing for annual compensation over $25,000, any new employee
benefit, deferred compensation or other similar employee benefit arrangement, or
any new consulting arrangement, or any grant of any severance or termination
rights to any director, officer or employee of the Seller or any increase in
benefits payable under existing severance or termination pay policies or
employment agreements;
(f) any change in any accounting method or practice followed by the Seller;
(g) any making by the Seller of any loan or advance to any shareholder,
officer, director or consultant (other than expense advances made in the
ordinary course of business), or any other loan or advance otherwise than in the
ordinary course of business;
(h) except for inventory or equipment acquired in the ordinary course of
business, any acquisition by the Seller of all or any part of the assets,
properties, capital stock or business of any other person; or
(i) except in the ordinary course of business, any sale, abandonment or any
other disposition of any of the Seller's assets or properties.
2.8 TAX MATTERS.
(a) The Seller has filed all tax reports and returns required to be filed
by it and has paid or will timely pay all taxes and other charges shown as due
on such reports and returns. The Seller is not delinquent in the payment of any
material tax assessment or other governmental charge (including without
limitation applicable withholding taxes). Any provision for taxes reflected in
the Interim Balance Sheet is adequate for payment of any and all tax liabilities
for periods ending on or before the date thereof, and there are no tax liens on
any assets of the Seller except liens for current taxes not yet due.
(b) There are no pending audits of any tax return filed by the Seller and
the Seller has not been notified by any tax authority that any such audit is
contemplated or pending. The Seller knows of no tax deficiency or claim for
additional taxes asserted or threatened to be asserted against the Seller by any
taxing authority and the Seller knows of no grounds for any such assessment. No
extension of time with respect to any date on which a tax return was or is to be
filed by the Seller is in force, and no waiver or agreement by the Seller is in
force for the extension of time for the assessment or payment of any tax. The
federal income tax returns of the Seller
-6-
<PAGE> 12
have been audited through the taxable year ended March 31, 1992. For purposes of
this Agreement, the term "tax" includes all federal, state, local and foreign
taxes or assessments, including income, sales, gross receipts, excise, use,
value added, royalty, franchise, payroll, withholding, property and import taxes
and any interest or penalties applicable thereto.
(c) The Seller has not agreed to, or is required to, make any adjustments
under Section 481(a) of the Code by reason of a change in accounting method or
otherwise.
2.9 COMPLIANCE WITH LAWS
(a) The Seller has all licenses, permits, franchises, orders or approvals
of any federal, state, local or foreign governmental or regulatory body material
to the conduct of its businesses (collectively, "Permits"); such Permits are in
full force and effect; and no proceeding is pending or, to the best knowledge of
the Seller, threatened to revoke or limit any Permit. The Seller Disclosure
Schedule contains a true and complete list of all Permits.
(b) The Seller is not in violation of any applicable law, ordinance or
regulation or any order, judgment, injunction, decree or other requirement of
any court, arbitrator or governmental or regulatory body, except for violations
that would not, in the aggregate, have a material adverse effect on the Business
of Seller. During the last three years, the Seller has not received notice of,
and there has not been any citation, fine or penalty imposed against the Seller
for, any such violation or alleged violation. To the best knowledge of the
Seller, the Seller has not received any such notice of violation more than three
years ago which has not been resolved.
2.10 NO BREACH. Except for the filing of the Articles of Merger with the
Department of State of Florida, the execution, delivery and performance of this
Agreement by the Seller and the consummation by the Seller of the transactions
contemplated hereby will not (i) violate any provision of the Articles of
Incorporation or bylaws of the Seller, (ii) violate, conflict with or result in
the breach of any of the terms or conditions of, result in modification of the
effect of, or otherwise give any other contracting party the right to terminate,
or constitute (or with notice or lapse of time or both constitute) a default
under, any instrument, contract or other agreement to which the Seller is a
party or to which the Seller or any of its assets or properties is bound or
subject, (iii) violate any law, ordinance or regulation or any order, judgment,
injunction, decree or other requirement of any court, arbitrator or governmental
or regulatory body applicable to the Seller or by which any of Seller's assets,
properties or securities is bound, (iv) violate any Permit, (v) require any
filing with, notice to, or permit, consent or approval of, any other
governmental or regulatory body or (vi) result in the creation of any lien or
other encumbrance on the assets, properties or securities of the Seller
excluding from the foregoing clauses (ii), (iii), (iv), (v) and (vi) any
exceptions to the foregoing that, in the aggregate, would not have a material
adverse effect on the Business of Seller or on the ability of the Seller to
consummate the transactions contemplated hereby.
2.11 ACTIONS AND PROCEEDINGS. There are no outstanding orders, awards,
judgments, injunctions, decrees or other requirements of any court, arbitrator
or governmental or regulatory body against the Seller, or any of its securities,
assets or properties. There are no actions, suits, investigations or claims or
legal, administrative or arbitration proceedings pending or, to the best
-7-
<PAGE> 13
knowledge of the Seller, threatened against the Seller that individually or in
the aggregate would have a material adverse effect upon the transactions
contemplated hereby or the Business of Seller. To the best knowledge of the
Seller, there is no fact, event or circumstance now in existence that reasonably
could be expected to give rise to any action, suit, claim, proceeding or
investigation that individually or in the aggregate would have a material
adverse effect upon the transactions contemplated hereby or on the Business of
Seller.
2.12 CONTRACTS AND OTHER AGREEMENTS. The Seller Disclosure Schedule
sets forth a list of the following contracts and other agreements to which the
Seller or any Subsidiary is a party or by or to which any of them or their
assets or properties are bound or subject:
(a) any agreement or series of related agreements requiring aggregate
payments by or to the Seller or any Subsidiary of more than $10,000;
(b) any agreement with or for the benefit of any current or former officer,
director, shareholder, employee or consultant of the Seller;
(c) any agreement with any labor union or association representing any
employee of the Seller;
(d) any agreement for the purchase or sale of materials, supplies,
equipment, merchandise or services that contain an escalation, renegotiation or
redetermination clause or that obligate the Seller to purchase all or
substantially all of its requirements of a particular product from a supplier,
or for periodic minimum purchases of a particular product from a supplier;
(e) any agreement for the sale of any of the assets or properties of the
Seller other than in the ordinary course of business or for the grant to any
person of any options, rights of first refusal, or preferential or similar
rights to purchase any such assets or properties;
(f) any partnership or joint venture agreement;
(g) any agreement of surety, guarantee or indemnification, other than
agreements in the ordinary course of business with respect to obligations in an
aggregate amount not in excess of $50,000;
(h) any agreement containing covenants of the Seller not to compete in any
line of business, in any geographic area or with any person or covenants of any
other person not to compete with the Seller or in any line of business of the
Seller;
(i) any agreement granting or restricting the right of the Seller to use
any Proprietary Right (as defined in Section 2.15);
(j) any agreement with customers or suppliers for the sharing of fees, the
rebating of charges or other similar arrangements;
-8-
<PAGE> 14
(k) any agreement with any holder of securities of the Seller as such
(including, without limitation, any agreement containing an obligation to
register any of such securities under any federal or state securities laws);
(l) any agreement obligating the Seller to deliver services or product
enhancements or containing a "most favored nation" pricing clause;
(m) any agreement relating to the acquisition by the Seller of any
operating business or the capital stock of any other person;
(n) any agreement requiring the payment to any person of a brokerage or
sales commission or a finder's or referral fee (other than arrangements to pay
commissions or fees to employees in the ordinary course of business);
(o) any agreement or note relating to or evidencing outstanding
indebtedness for borrowed money;
(p) any lease, sublease or other agreement under which the Seller is lessor
or lessee of any real property or equipment or other tangible property;
(q) any distribution or sales representation agreement relating to the sale
of the Seller's products by others or the sale by the Seller of the products of
others; and
(r) any other material agreement whether or not made in the ordinary course
of business.
True and complete copies of all the contracts and other agreements (and all
amendments, waivers or other modifications thereto) set forth on the Seller
Disclosure Schedule have been furnished to the Buyer. Each of such contracts is
valid, subsisting, in full force and effect, binding upon the Seller, and to the
best knowledge of the Seller, binding upon the other parties thereto in
accordance with their terms, and the Seller is not in default under any of them,
nor, to the best knowledge of the Seller, is any other party to any such
contract or other agreement in default thereunder, nor does any condition exist
that with notice or lapse of time or both would constitute a default thereunder,
except, in each case, such defaults as would not, individually or in the
aggregate, have a material adverse effect on the Business of Seller.
2.13 BANK ACCOUNTS AND POWERS OF ATTORNEY. The Seller Disclosure
Schedule identifies all bank and brokerage accounts of the Seller, whether or
not such accounts are held in the name of the Seller, lists the respective
signatories therefor and lists the names of all persons holding a power of
attorney from the Seller and a summary of the terms thereof.
2.14 PROPERTIES. (a) The Seller owns and has good title to all of its
assets and properties reflected as owned on the March 31, 1996 balance sheet
included in the Annual Financial Statements, free and clear of any lien, claim
or other encumbrance, except for (i) the liens, claims or other encumbrances
reflected in the Interim Financial Statements, (ii) assets and properties
disposed of, or subject to purchase or sales orders, in the ordinary course of
business
-9-
<PAGE> 15
since March 31, 1996, (iii) liens or other encumbrances securing the liens of
materialmen, carriers, landlords and like persons, all of which are not yet due
and payable, (iv) liens for taxes not yet delinquent and (v) liens, claims or
other encumbrances that, in the aggregate, are not material to the Business of
Seller.
(b) The Seller does not own any real property and does not have any options
or contractual obligations to purchase or acquire any interest in real property.
The Seller has a valid leasehold interest in all of the buildings, structures
and leasehold improvements, and owns or has a valid leasehold interest in all
equipment and other tangible property material to the conduct of its business,
all of which are in good and sufficient operating condition and repair, ordinary
wear and tear excepted. There is no equipment located on the premises of the
Seller that is on loan from another party.
2.15 INTELLECTUAL PROPERTY. The Seller owns, or is licensed to use or
otherwise has the right to use, all patents, trademarks, service marks, trade
names, logos, franchises, and copyrights, and all applications for any of the
foregoing, and all technology, inventions, trade secrets, know-how, computer
software and processes used in or necessary for the conduct of its business as
now conducted (collectively, the "Proprietary Rights"). The Seller Disclosure
Schedule sets forth a list of all such copyrights, trademarks, tradenames and
patents, and all applications therefor. The Seller is not aware of any claim by
any third party that the business of the Seller as currently conducted infringes
upon the proprietary rights of others, nor has the Seller received any notice or
claim from any third party of such infringement by the Seller. The Seller is not
aware of any infringement by any third party on, or any competing claim of right
to use or own any of, the Proprietary Rights of the Seller. The Seller has the
right to use, free and clear of claims or rights of others, all customer lists
and computer software used in the conduct of its business. To the best knowledge
of the Seller, none of the activities of the employees of the Seller on behalf
of the Seller violates any agreements or arrangements which any such employees
have with former employers.
2.16 CUSTOMERS. The Seller Disclosure Schedule sets forth the ten
customers (including independent sales representatives) who accounted for the
largest sales of the Seller for the year ended March 31, 1996 (the "Customers").
The relationships of the Seller with the Customers are good commercial working
relationships. No Customer has canceled or otherwise terminated its relationship
with the Seller or has during the current year to date decreased materially its
usage or purchase of the services of the Seller. The Seller does not know of any
plan or intention of any Customer, and has not received any written threat or
notice from any Customer, to terminate, cancel or otherwise materially and
adversely modify its relationship with the Seller or to decrease materially or
limit its usage or purchase of the services or products of the Seller.
2.17 ACCOUNTS RECEIVABLE. Subject to the allowances with respect to
accounts receivable set forth on the Interim Balance Sheet, all accounts
receivable reflected on the Interim Balance Sheet and all accounts receivable
arising subsequent thereto have arisen in the ordinary course of business of the
Seller, represent valid and enforceable obligations due to the Seller and have
been and are subject to no set-off, counterclaim or future performance
obligation on the part of the Seller.
-10-
<PAGE> 16
2.18 INVENTORY. The inventory of the Seller is in good and merchantable
condition and saleable or usable in the manufacture of saleable finished goods
in the ordinary course of business.
2.19 EMPLOYEE BENEFIT PLANS. The Seller Disclosure Schedule sets forth a
complete list of all pension, profit sharing, retirement, deferred compensation,
welfare, insurance, disability, bonus, vacation pay, severance pay and similar
plans, programs or arrangements, including without limitation all employee
benefit plans as defined in Section 3 of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") (the "Plans") maintained by the Seller. The
Seller does not maintain or contribute to any "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, and the Seller has not incurred any material
liability under Sections 4062, 4063 or 4201 of ERISA. Each Plan maintained by
the Seller which is intended to be qualified under either Section 401(a) or
501(c)(9) of the Code ("Qualified Plans") is so qualified. Each Plan has been
administered in all material respects in accordance with the terms of such Plan
and the provisions of any and all statutes, orders or governmental rules or
regulations, including without limitation ERISA and the Code, and to the
knowledge of the Seller nothing has been done or omitted to be done with respect
to any Plan that would result in any material liability on the part of the
Seller under Title I of ERISA or Section 4975 of the Code. All reports required
to be filed with respect to all Plans, including without limitation annual
reports on Form 5500, have been timely filed except where the failure to so file
would not have a material adverse effect on the Business of Seller. No
"reportable event" as defined at Section 4043 of ERISA, other than any such
event for which the thirty-day notice period has been waived, has occurred with
respect to any pension plan subject to Title IV of ERISA. With respect to all
pension plans subject to Title IV of ERISA, such plans have no unfunded benefit
liabilities, all contributions to such plans under the minimum funding
requirements of Section 412 of the Code have been made and all premium payments
to the Pension Benefit Guaranty Corporation with respect to such plans have been
made. All claims for welfare benefits incurred by employees on or before the
Closing are or will be fully covered by third-party insurance policies or
programs. Except for continuation of health coverage to the extent required
under Section 4980B of the Code or as otherwise set forth in this Agreement,
there are no obligations under any welfare plan providing benefits after
termination of employment.
2.20 EMPLOYEE RELATIONS. The Seller has approximately 27 full-time
equivalent employees and generally enjoy good employer-employee relations. The
Seller is not delinquent in payments to any of its employees or consultants for
any wages, salaries, commissions, bonuses or other direct compensation for any
services performed by them to the date hereof or amounts required to be
reimbursed to such employees. Upon termination of the employment of any
employees, neither the Seller nor the Buyer or the Surviving Corporation will by
reason of the Merger or anything done prior to the Effective Time be liable to
any of such employees for severance pay or any other payments (other than
accrued salary, vacation or sick pay in accordance with the Seller's normal
policies). True and complete information as to all current directors, officers,
employees and consultants of the Seller including, in each case, name, current
job title, base salary, bonus potential, commissions and termination obligations
has been previously furnished to the Buyer.
-11-
<PAGE> 17
2.21 TRANSACTIONS WITH MANAGEMENT. Except as disclosed in the Seller
Disclosure Schedule, no executive officer or director of the Seller has (whether
directly or indirectly through another entity in which such person has an
interest, other than as the holder of less that 1% of a class of securities of a
publicly traded company) any interest in (i) any property or assets of the
Seller (except as a shareholder), (ii) any current competitor, customer or
supplier of the Seller or (iii) any person which is currently a party to any
material contract or agreement with the Seller.
2.22 INSURANCE. The Seller Disclosure Schedule sets forth a list of all
policies or binders of fire, liability, product liability, workers compensation,
vehicular, directors' and officers' and other insurance held by or on behalf of
the Seller. Such policies and binders are in full force and effect, are
reasonably believed to be adequate for the businesses engaged in by the Seller
and are in conformity with the requirements of all leases or other agreements to
which the Seller is a party and, to the best knowledge of the Seller, are valid
and enforceable in accordance with their terms. The Seller is not in default
with respect to any provision contained in any such policy or binder nor has the
Seller failed to give any notice or present any claim under any such policy or
binder in due and timely fashion. There are no outstanding unpaid claims under
any such policy or binder. The Seller has not received notice of cancellation or
non-renewal of any such policy or binder.
2.23 BROKERAGE. No broker, finder, agent or similar intermediary has
acted on behalf of the Seller or any of the Principal Stockholders in connection
with this Agreement or the transactions contemplated hereby, and there are no
brokerage commissions, finders' fees or similar fees or commissions payable in
connection herewith based on any agreement, arrangement or understanding with
the Seller or any of the Principal Stockholders, or any action taken by any of
them.
2.24 HAZARDOUS MATERIALS
(a) There are no Hazardous Materials (as hereinafter defined) generated,
used, handled or stored by the Seller the proper disposal of which will require
any material expenditure by the Seller. There has been no generation, use,
handling, storage or disposal of any Hazardous Materials in violation of common
law or any applicable environmental law at any site owned or premises leased by
the Seller during the period of the Seller's ownership or lease or, to the best
of Seller's knowledge, prior thereto. Nor has there been or is there threatened
any release of any Hazardous Materials on or at any such site or premises during
such period or, to the best of Seller's knowledge, prior thereto in violation of
common law or any applicable environmental law or which created or will create
an obligation to report or remediate such release. "Hazardous Materials" means
any "hazardous waste" as defined in either the United States Resource
Conservation and Recovery Act or regulations adopted pursuant to said Act, and
any "hazardous substances" or "hazardous materials" as defined in the United
States Comprehensive Environmental Response, Compensation and Liability Act.
(b) There is no environmental or health and safety matter that could have a
material adverse effect on the Business of Seller. The Seller has previously
furnished to the Buyer copies of any environmental audits or risk assessments,
site assessments, documentation regarding offsite
-12-
<PAGE> 18
disposal of Hazardous Materials, spill control plans and material correspondence
with any governmental agency regarding the foregoing.
2.25 DISCLOSURE. The representations and warranties and statements of
the Seller and contained in this Agreement do not contain any untrue statement
of a material fact, and, when taken together, do not omit to state any material
fact necessary to make such representations, warranties and statements, in light
of the circumstances under which they are made, not misleading. There is no fact
known to the Seller that has not been disclosed to the Buyer in this Agreement
that is reasonably likely to have a material adverse effect on the Business of
Seller.
3 - REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL STOCKHOLDERS
Except as set forth on the disclosure schedule delivered to the Buyer on
the date hereof (the "Stockholder Disclosure Schedule"), the section numbers of
which are numbered to correspond to the section numbers of this Agreement to
which they refer, each of the Principal Stockholders, severally, represents and
warrants to the Buyer and Acquisition as to itself only as follows:
3.1 AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS. Each Principal
Stockholder has the full legal right and power and all authority and approvals
required to enter into, execute and deliver this Agreement and the Stockholder
Letter (as defined herein) and to perform fully its obligations hereunder and
thereunder. This Agreement has been duly executed and delivered and is the valid
and binding obligation of each Principal Stockholder enforceable in accordance
with its terms. When executed and delivered pursuant hereto, the Stockholder
Letter will be the valid and binding obligation of each Principal Stockholder
enforceable in accordance with its terms.
3.2 NO BREACH. The execution, delivery and performance of this Agreement
and the Stockholder Letter and the consummation of the transactions contemplated
hereby and thereby will not (i) violate, conflict with or result in the breach
of any of the terms or conditions of, result in modification of the effect of,
or otherwise give any other contracting party the right to terminate, or
constitute (or with notice or lapse of time or both constitute) a default under,
any material instrument, contract or other agreement to which the Principal
Stockholder is a party or to which the Principal Stockholder or its assets or
properties may be bound or subject, (ii) violate any order, judgment,
injunction, award or decree of any court, arbitrator or governmental or
regulatory body against, or binding upon, the Principal Stockholder or upon the
securities, properties or assets of the Principal Stockholder, (iii) violate any
statute, law or regulation of any jurisdiction as such statute, law or
regulation relates to the Principal Stockholder or (iv) require the approval or
consent of any foreign, federal, state, local or other governmental or
regulatory body or the approval or consent of any other person.
3.3 TITLE TO SHARES. Each Principal Stockholder owns beneficially and
of record, free and clear of any lien, claim or encumbrance, the shares of
Seller Stock set forth opposite such stockholder's name in the Seller Disclosure
Schedule. There are no shareholder agreements, voting trusts, proxies or other
agreements or understandings with respect to the outstanding shares of capital
stock of the Seller to which any Principal Stockholder is a party.
-13-
<PAGE> 19
3.4 ACCURACY OF SELLER REPRESENTATIONS AND WARRANTIES. To the knowledge
of each Principal Stockholder, the representations and warranties of the Seller
contained herein do not contain any untrue statement of a material fact and,
when taken together, do not omit to state any material fact necessary to make
such representations, warranties and statements, in light of the circumstances
under which they are made, not misleading.
4 - REPRESENTATIONS AND WARRANTIES OF BUYER AND ACQUISITION
Except as set forth on the disclosure schedule delivered to the Buyer on
the date hereof (the "Buyer Disclosure Schedule"), the section numbers of which
are numbered to correspond to the section numbers of this Agreement to which
they refer, the Buyer represents and warrants regarding itself and Acquisition,
and Acquisition represents and warrants regarding itself, to the Seller as
follows:
4.1 ORGANIZATION. Each of the Buyer and Acquisition is a corporation
duly organized, validly existing and in good standing under the laws of its
state of incorporation with full corporate power and authority to own, lease and
operate its assets and to carry on its business as now being and as heretofore
conducted.
4.2 AUTHORITY TO EXECUTE AND PERFORM AGREEMENT. Each of the Buyer and
Acquisition has the corporate power and authority to enter into, execute and
deliver this Agreement and to perform fully its respective obligations
hereunder. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by the Board of
Directors of the Buyer, which is the only required corporate action on the part
of the Buyer, and by all necessary corporate action on the part of Acquisition.
This Agreement has been duly executed and delivered by each of Buyer and
Acquisition and constitutes a valid and binding obligation of each, enforceable
in accordance with its terms.
4.3 CAPITALIZATION.
---------------
(a) The Buyer is authorized to issue 18,000,000 shares of Buyer Common
Stock, of which 6,532,779 shares were issued and outstanding as of April 30,
1996. When issued in accordance with the terms of this Agreement, the Buyer
Common Stock to be issued pursuant to the Merger will be duly authorized,
validly issued, fully paid, nonassessable and free of any preemptive rights.
(b) All the issued and outstanding shares of capital stock of Acquisition
have been or, at the Closing, will be duly authorized and validly issued, fully
paid and nonassessable, will not have been issued in violation of any preemptive
rights and will be owned by the Buyer.
4.4 SEC REPORTS. The Buyer has previously delivered to the Seller its
(i) Annual Report on Form 10-K for the year ended September 30, 1995 (the "Buyer
10-K"), as filed with the SEC, (ii) all proxy statements relating to the Buyer's
meetings of stockholders held since September 30, 1995 and (iii) all other
periodic and current reports filed by the Buyer with the
-14-
<PAGE> 20
SEC under the Securities Exchange Act of 1934 (the "Exchange Act") since
September 30, 1995. As of their respective dates, such reports complied in all
material respects with applicable SEC requirements and did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Buyer has timely
filed with the SEC all reports required to be filed under Sections 13, 14 or
15(d) of the Exchange Act since September 30, 1995.
4.5 FINANCIAL STATEMENTS. The consolidated financial statements
contained in the Buyer 10-K and in the Buyer's quarterly report on Form 10-Q for
the quarters ended December 31, 1995 and March 31, 1996 (the "Buyer 10-Qs") have
been prepared from, and are in accordance with, the books and records of the
Buyer and present fairly the consolidated financial condition and results of
operations of the Buyer and its subsidiaries as of and for the periods presented
therein, all in conformity with GAAP applied on a consistent basis, except as
otherwise noted therein and subject (in the case of the unaudited financial
statements included in the Buyer 10-Qs) to normal year-end adjustments, which
are not in the aggregate material.
4.6 NO MATERIAL ADVERSE CHANGE. Since September 30, 1995, except as
described in the Buyer 10-Qs, there has not been any material adverse change in
the assets, properties, business prospects, results of operations or financial
condition of the Buyer and its subsidiaries taken as a whole (the "Business of
Buyer").
4.7 ACTIONS AND PROCEEDINGS. Except as set forth in the Buyer 10-K or
the Buyer 10-Qs, there are no actions, suits or claims or legal, administrative
or arbitration proceedings pending or, to the best knowledge of the Buyer and
Acquisition, threatened against the Buyer, Acquisition or any other corporation
or legal entity of which the Buyer owns, directly or indirectly, 50% or more of
the stock or other equity interest entitled to vote for the election of
directors that individually or in the aggregate would have a material adverse
effect upon the transactions contemplated hereby or the Business of Buyer.
4.8 NO BREACH. Except for (a) the filing of the Articles of Merger with
the Department of State of Florida and (b) the filing with the Nasdaq National
Market System of an application for listing of the shares of Buyer Common Stock
to be issued in the Merger, the execution, delivery and performance of this
Agreement by the Buyer and Acquisition and the Escrow Agreement by the Buyer and
consummation by such parties of the transactions contemplated hereby will not
(i) violate any provision of the Certificate of Incorporation or bylaws of the
Buyer or the Articles of Incorporation or bylaws of Acquisition, (ii) violate,
conflict with or result in the breach of any of the terms or conditions of,
result in modification of the effect of, or otherwise give any other contracting
party the right to terminate, or constitute (or with notice or lapse of time or
both constitute) a default under, any instrument, contract or other agreement to
which the Buyer or Acquisition is party or to which either of them or any of
their assets or properties is bound or subject, (iii) violate any law, ordinance
or regulation or any order, judgment, injunction, decree or requirement of any
court, arbitrator or governmental or regulatory body applicable to the Buyer or
Acquisition or by which any of their assets or properties is bound, (iv) require
any filing with, notice to, or permit, consent or approval of, any governmental
or regulatory body or (v) result in the creation of any lien or other
encumbrance on the assets or
-15-
<PAGE> 21
properties of the Buyer or Acquisition, excluding from the foregoing clauses
(ii), (iii), (iv) and (v) any exceptions to the foregoing that, in the
aggregate, would not have a material adverse effect on the Business of Buyer or
on the ability of the Buyer or Acquisition to consummate the transactions
contemplated hereby.
5 - COVENANTS AND AGREEMENTS
The parties covenant and agree as follows:
5.1 CONDUCT OF BUSINESS. Except with the prior written consent of the
Buyer, which will not be unreasonably withheld, and except as otherwise
contemplated herein, during the period from the date hereof to the Closing Date,
the Seller shall observe the following covenants:
(a) AFFIRMATIVE COVENANTS PENDING CLOSING. The Seller will:
(i) PRESERVATION OF PERSONNEL. Use all reasonable efforts to preserve
intact its business organization and keep available the services of present
employees, in each case in accordance with past practice, it being understood
that termination of employees with poor performance ratings shall not constitute
a violation of this covenant;
(ii) INSURANCE. Use all reasonable efforts to keep in effect casualty,
public liability, workers compensation and other insurance policies in coverage
amounts not less than those in effect at the date of this Agreement;
(iii) PRESERVATION OF THE BUSINESS; MAINTENANCE OF PROPERTIES,
CONTRACTS. Use all reasonable efforts to preserve its business, advertise,
promote and market its services, keep its properties intact, preserve its
goodwill, and maintain all physical properties in good operating condition;
(iv) INTELLECTUAL PROPERTY RIGHTS. Use all reasonable efforts to
preserve and protect the Proprietary Rights; and
(v) ORDINARY COURSE OF BUSINESS. Operate its business diligently and
solely in the ordinary course.
(b) NEGATIVE COVENANTS PENDING CLOSING. The Seller will not:
(i) DISPOSITION OF ASSETS. Sell or transfer, or mortgage, pledge or
create or permit to be created any lien on, any of its assets, other than sales
or transfers in the ordinary course of business and liens existing under
arrangements disclosed herein or permitted under Section 2.14;
(ii) LIABILITIES. (A) Incur any obligation or liability other than in
the ordinary course of the Seller's business, (B) incur any indebtedness for
borrowed money or (C) enter into any contracts or commitments involving payments
by the Seller of $25,000 or more, other than
-16-
<PAGE> 22
purchase orders or commitments for inventory materials and supplies in the
ordinary course of business;
(iii) COMPENSATION. (A) Change the compensation or fringe benefits of
any officer, director, employee or consultant, except for ordinary merit
increases for employees other than officers based on periodic reviews in
accordance with past practices or (B) enter into or modify any Plan or any
employment, severance or other agreement with any officer, director, employee or
consultant of the Seller;
(iv) CAPITAL STOCK. (A) declare or pay any dividend or other
distribution with respect to any shares of its capital stock or (C) issue any
shares of its capital stock;
(v) CHARTER AND BYLAWS. Amend the Articles of Incorporation or
bylaws of the Seller;
(vi) ACQUISITIONS. Make any material acquisition of property other
than in the ordinary course of business;
(vii) LICENSE AGREEMENTS. Enter into or modify any license,
technology development or technology transfer agreement with any other person
or entity, other than license agreements entered into in the ordinary course of
business on the Seller's standard form as previously delivered to the Buyer.
(viii) OTHER MATERIAL CHANGES. Take any affirmative action or fail to
take any reasonable action within its control as a result of which any of the
changes or events listed in Section 2.7 is likely to occur.
5.2 CORPORATE EXAMINATIONS AND INVESTIGATIONS. Prior to the Effective
Time, the Buyer shall be entitled, through its employees and representatives, to
have such access to the assets, properties, business, books, records and
operations of the Seller as the Buyer shall reasonably request in connection
with the Buyer's investigation of the Seller with respect to the transaction
contemplated hereby. Any such investigation and examination shall be conducted
at reasonable times upon prior notice to the Seller and in a manner minimizing
the interruption of the Seller's operations, and the Seller shall cooperate
fully therein. No investigation by the Buyer shall diminish or obviate any of
the representations, warranties, covenants or agreements of the Seller or the
Principal Stockholders contained in this Agreement. In order that the Buyer may
have full opportunity to make such investigation, the Seller shall furnish the
representatives of the Buyer during such period with all such information and
copies of such documents concerning the affairs of the Seller as such
representatives may reasonably request and cause its officers, employees,
consultants, agents, accountants and attorneys to cooperate fully with such
representatives in connection with such investigation.
5.3 EXPENSES. Whether or not the Merger is consummated, the Principal
Stockholders shall bear their own expenses and each of the Seller and the Buyer
shall bear its respective expenses incurred in connection with the preparation,
execution and performance of this Agreement and the transactions contemplated
hereby, including without limitation, all fees
-17-
<PAGE> 23
and expenses of agents, representatives, counsel and accountants and all such
fees and expenses relating to termination of the Seller's Profit Sharing Plan in
accordance with Section 5.14(b); provided, however, that the amount of such
expenses paid or incurred by the Seller shall not exceed $100,000, with any
additional amount being paid by the Principal Stockholders.
5.4 AUTHORIZATION FROM OTHERS. Prior to the Closing Date, the parties
shall use all reasonable efforts to obtain all authorizations, consents and
permits required to permit the consummation of the transactions contemplated by
this Agreement.
5.5 CONSUMMATION OF AGREEMENT. Each party shall use all reasonable
efforts to perform and fulfill all conditions and obligations to be performed
and fulfilled by it under this Agreement and to ensure that to the extent within
its control or capable of influence by it, no breach of any of the respective
representations, warranties and agreements hereunder occurs or exists on or
prior to the Effective Time, all to the end that the transactions contemplated
by this Agreement shall be fully carried out in a timely fashion.
5.6 FURTHER ASSURANCES. Each of the parties shall execute such
documents, further instruments of transfer and assignment and other papers and
take such further actions as may be reasonably required or desirable to carry
out the provisions hereof and the transactions contemplated hereby.
5.7 CORPORATE APPROVALS. Each Principal Stockholder agrees not to take
any action as a stockholder or director of the Seller to amend, modify or
rescind the approval of the Merger by the stockholders and directors of the
Seller.
5.8 PUBLIC ANNOUNCEMENTS AND CONFIDENTIALITY. Any press release or other
information to the press or any third party with respect to this Agreement or
the transactions contemplated hereby shall require the prior approval of the
Buyer and the Seller, which approval shall not be unreasonably withheld,
provided that a party shall not be prevented from making such disclosure as it
shall be advised by counsel is required by law. Each of the Seller and the
Principal Stockholders and the Buyer shall also keep confidential and shall not
use in any manner any information or documents obtained from the other
concerning the other's assets, properties, business and operations, unless
readily ascertainable from public information, already known or subsequently
developed independently by the party obligated hereby, or received from a third
party not under an obligation to keep such information confidential or otherwise
required by law. If this Agreement terminates all copies of any documents
obtained from a party or its representatives will be returned, except that one
copy thereof may be retained by counsel to the party returning such documents in
order to evidence compliance hereunder. The obligations set forth in the
previous two sentences shall survive termination of this Agreement.
5.9 STOCKHOLDER LETTERS. The Seller shall use all reasonable efforts to
deliver to the Buyer prior to the Closing Date a letter from each holder of
Class B Stock in substantially the form attached hereto as EXHIBIT B (a
"Stockholder Letter"), and each Principal Stockholder agrees to deliver a
Stockholder Letter to the Buyer prior to the Closing Date.
-18-
<PAGE> 24
5.10 NO SOLICITATION. The Seller and the Principal Stockholders will
not (i) solicit, initiate or encourage discussions with any person, other than
the Buyer, relating to the possible acquisition of the Seller or all or a
material portion of the assets or capital stock of the Seller or any merger or
other business combination with the Seller (an "Acquisition Transaction") or
(ii) participate in any negotiations regarding, or furnish to any other person
information with respect to, any effort or attempt by any other person to do or
to seek any Acquisition Transaction. The Seller and the Principal Stockholders
agree to inform the Buyer in reasonable detail within one business day of their
receipt of any offer, proposal or inquiry relating to any Acquisition
Transaction.
5.11 BUYER SEC FILINGS. The Buyer shall furnish the Seller with a copy
of each periodic or current report filed by it under the Exchange Act promptly
after filing the same. All filings made by the Buyer after the date hereof
pursuant to the Exchange Act will be made in a timely fashion, will comply as to
form in all material respects with the applicable provisions of the Exchange Act
and the rules and regulations thereunder and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading.
5.12 DISCLOSURE STATEMENTS. Prior to the Closing, the Seller promptly
will supplement or amend the Seller Disclosure Schedule delivered pursuant
hereto with respect to any matter hereafter arising which, if existing,
occurring or known at the date of this Agreement, would have been required to be
set forth or described in such Schedule or which is necessary to correct any
information in such Schedule which has been rendered materially inaccurate
thereby. No supplement or amendment to the Seller Disclosure Schedule shall
affect the conditions to the Buyer's obligation to consummate the Merger.
5.13 INDEMNIFICATION. The Buyer agrees that the rights to
indemnification provided to the directors and officers of the Seller by the
Seller's Articles of Incorporation or bylaws as in effect on the date of this
Agreement and by applicable law shall survive the Closing Date and as otherwise
specified therein.
5.14 EMPLOYEE BENEFITS MATTERS
(a) Employees of the Seller immediately prior to the Effective Time will
receive full credit for eligibility and vesting purposes for their years of
service prior to the Effective Time with the Seller under all employee benefit
plans of the Buyer, including without limitation the Galileo Employee 401(k)
Plan, but excluding the Galileo Employee Pension Plan. In addition, employees of
the Seller immediately prior to the Effective Time will receive full credit for
their years of service prior to the Effective Time with the Seller for purposes
of determining entitlement to vacation under the vacation benefit plan of Buyer
as in effect from time to time.
(b) Before the Effective Time, the Seller will terminate the Leisegang
Medical, Inc. Profit Sharing Plan and distribute all of the assets of the plan.
Neither the Surviving Corporation nor the Buyer will have any liability to the
Seller's employees or any other person as a result of the Seller's sponsorship
of the plan. The Buyer will direct the trustee of the Galileo Employee 401(k)
-19-
<PAGE> 25
Plan to accept rollovers of cash distributions from the Leisegang Medical, Inc.
Profit Sharing Plan.
6 - CONDITIONS PRECEDENT TO THE OBLIGATIONS OF EACH PARTY TO CONSUMMATE
THE MERGER
The respective obligations of each party to consummate the Merger shall be
subject to the satisfaction or waiver, at or before the Effective Time, of each
of the following conditions:
6.1 APPROVALS. All consents and approvals referred to in Sections 2.10,
3.2 and 4.8 of this Agreement or in the corresponding sections of each party's
Disclosure Schedule, shall have been obtained; provided however, that if the
Buyer waives the obtaining of any consent set forth in Section 2.10 or 3.2 of
the Seller Disclosure Schedule, such consent shall not be a condition to the
Seller's obligation to consummate the Merger.
6.2 EMPLOYMENT AGREEMENT. The Buyer, the Seller and W. Kip Speyer shall
have executed and delivered an employment agreement in substantially the form
attached hereto as EXHIBIT C.
6.3 ABSENCE OF ORDER. No restraining order or injunction of any court
which prevents consummation of the Merger shall be in effect.
7 - CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER AND
ACQUISITION TO CONSUMMATE THE MERGER
The obligation of the Buyer and Acquisition to consummate the Merger is
subject to the satisfaction or waiver by the Buyer, at or before the Effective
Time, of the following conditions:
7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations and
warranties of the Seller and the Principal Stockholders contained in this
Agreement (without regard to any exceptions for materiality or material adverse
effect) shall be true and correct on and as of the Effective Time except that
any representation or warranty (other than the representations and warranties
contained in Sections 2.1 to 2.6, inclusive, 2.23, 3.1 and 3.3) that is not true
shall nevertheless be deemed to be true for purposes of this Section 7.1 unless
the failure of the representations and warranties to be true, individually or in
the aggregate, would have a material adverse effect on the Business of Seller;
there shall not have been any material adverse change in the Business of the
Seller since the date of this Agreement; and the Seller and the Principal
Stockholders shall have performed and complied in all material respects with all
covenants and agreements required by this Agreement to be performed or complied
with by them on or prior to the Effective Time. Each of the Seller and the
Principal Stockholders shall have delivered to the Buyer a certificate, dated
the Closing Date, to the foregoing effect, as applicable.
-20-
<PAGE> 26
7.2 STOCKHOLDER LETTERS. The Buyer shall have received a Stockholder
Letter from each stockholder of the Seller, and each stockholder shall have made
such representations and warranties relating to securities law matters as may be
reasonably required by the Buyer.
7.3 OPINION OF COUNSEL TO SELLER. The Buyer shall have received an
opinion of counsel to the Seller, dated the Closing Date, in form and substance
reasonably acceptable to the Buyer.
7.4 MERGER DOCUMENTS. The Seller shall have executed and delivered the
Articles of Merger.
7.5 POOLING OF INTERESTS. The Buyer shall have received a letter from
the independent accountants for the Buyer to the effect that the Merger will
qualify for pooling of interests accounting treatment, and the Seller and the
Principal Stockholders shall have made such representations and warranties
regarding Seller's compliance with the requirements applicable to a combining
company for such treatment as Buyer's accountants may reasonably require.
7.6 ACCOUNTANTS' LETTER. The Buyer shall have received from the
independent accountants for the Buyer a letter dated the Closing Date with
respect to Seller's consolidated financial position and results of operations,
which letter shall be based upon certain agreed upon procedures to be specified
by the Buyer, which procedures shall be consistent with applicable professional
standards for letters delivered by independent accountants in connection with
comparable transactions.
7.7 TAX OPINION. The Buyer shall have received an opinion of its
counsel, dated the Closing Date, substantially to the effect that, on the basis
of the facts and representations set forth in such opinion, or set forth in
writing elsewhere and referred to therein, for federal income tax purposes the
Merger will constitute a reorganization within the meaning of Section 368(a) of
the Code and that no gain or loss will be recognized by and there will be no
corporate income tax liability to the Buyer or Seller by reason of the Merger.
7.8 ESCROW AGREEMENT. The Escrow Agreement shall have been executed and
delivered by all parties thereto.
7.9 AUDITED FINANCIAL STATEMENTS. The Buyer shall have received from
the independent accountants for the Buyer a report stating that the balance
sheet of the Seller as of September 30, 1995 and related statements of income
for the twelve months then ended present fairly, in all material respects, the
financial position of the Seller as of such date and the results of its
operations for the twelve months then ended in conformity with generally
accepted accounting principles.
7.10 TRADEMARK LICENSE. The Trademark License Agreement between the
Seller and Leisegang Feinmechanik-Optik GmbH & Co. KG ("KG") shall have been
executed and delivered in substantially the form attached hereto as Exhibit D.
-21-
<PAGE> 27
7.11 DISTRIBUTION AGREEMENT. The amendment to the Distribution Agreement
dated as of January 1, 1986 between KG and the Seller shall have been executed
and delivered in substantially the form attached hereto as Exhibit E.
7.12 CERTIFICATES. The Seller shall have furnished the Buyer with such
certificates of public officials as may be reasonably requested by the Buyer.
8 - CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SELLER AND THE
PRINCIPAL STOCKHOLDERS TO CONSUMMATE THE MERGER
The obligation of the Seller and the Principal Stockholders to consummate
the Merger is subject to the satisfaction or waiver by them, at or before the
Effective Time, of the following conditions:
8.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations and
warranties of the Buyer and Acquisition contained in this Agreement shall be
true and correct in all material respects on and as of the Effective Time with
the same force and effect as though made on and as of the Effective Time. Each
of the Buyer and Acquisition shall have performed and complied in all material
respects with all covenants and agreements required by this Agreement to be
performed or complied with by it on or prior to the Effective Time. Each of the
Buyer and Acquisition shall have delivered to the Seller a certificate, dated
the Effective Time, to the foregoing effect.
8.2 OPINION OF COUNSEL TO BUYER. The Seller shall have received an
opinion of counsel to the Buyer and Acquisition, dated the Closing Date, in form
and substance reasonably acceptable to the Seller.
8.3 TAX OPINION. The Seller shall have received an opinion of its
counsel, addressed to the Seller and its stockholders and dated the Closing
Date, substantially to the effect that, on the basis of facts and
representations set forth in such opinion, or set forth in writing elsewhere and
referred to therein, for federal income tax purposes the Merger will constitute
a reorganization within the meaning of Section 368(a) of the Code, and no gain
or loss will be recognized by the Seller or its stockholders by reason of the
receipt of the shares of Buyer Common Stock in the Merger (it being understood
that such opinion will not extend to cash payments in lieu of fractional share
interests and may not extend to shares of Buyer Common Stock received by the
Seller stockholders who receive their Seller Stock pursuant to stock options or
otherwise as compensation); provided, however, that in the event that counsel is
unable or unwilling to deliver such opinion, then this condition shall be deemed
satisfied if such opinion is delivered by Buyer's counsel.
8.4 REGISTRATION RIGHTS AGREEMENT. The Buyer shall have executed and
delivered the Registration Rights Agreement in substantially the form attached
hereto as EXHIBIT F.
8.5 CERTIFICATES. The Buyer shall have furnished the Seller with such
certificates of public officials as may be reasonably requested by the Seller.
-22-
<PAGE> 28
9 - TERMINATION, AMENDMENT AND WAIVER
9.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time as follows:
(a) by the Seller or the Buyer if, without fault of the terminating party,
the Effective Time shall not have occurred on or before October 31, 1996, which
date may be extended by mutual consent of the parties;
(b) by the Board of Directors of the Seller upon written notice to the
Buyer if the Buyer or Acquisition has materially breached any representation,
warranty, covenant or agreement contained herein and has not cured such breach
within ten business days of receipt of written notice from the Seller or by the
Closing Date, if earlier;
(c) by the Buyer upon written notice to the Seller if the Seller or any
Principal Stockholder has materially breached any representation, warranty,
covenant or agreement contained herein and has not cured such breach within ten
business days of receipt of written notice from the Buyer or by the Closing
Date, if earlier;
(d) by any party if any court of competent jurisdiction or governmental
body shall have issued an order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Merger and such order,
decree or ruling shall have become final and nonappealable; or
(e) at any time with the written consent of all of the parties.
9.2 EFFECT OF TERMINATION. If this Agreement is terminated as provided
in Section 9.1, this Agreement shall forthwith become void and have no effect,
without liability on the part of any party, its directors, officers or
stockholders, other than the provisions of this Section 9.2, Section 5.3
relating to expenses and Section 5.8 relating to publicity and confidentiality
to the extent provided therein. Nothing contained in this Section 9.2 shall
relieve any party from liability for any breach of this Agreement occurring
before such termination.
9.3 AMENDMENT. This Agreement may not be amended except by an
instrument signed by each party hereto; provided, however, that without the
further approval of the stockholders of the Seller, no amendment may be made
that (a) alters or changes the amount or kind of consideration to be received as
provided herein or (b) alters or changes any of the terms of this Agreement if
such alteration or change would materially adversely affect the stockholders of
the Seller.
9.4 WAIVER. At any time prior to the Effective Time, any party hereto
may, (a) extend the time for the performance of any of the obligations or other
acts of any other party hereto or (b) waive compliance with any of the
agreements of any other party or any conditions to its own obligations, in each
case only to the extent such obligations, agreements and conditions are
-23-
<PAGE> 29
intended for its benefit; provided that any such extension or waiver shall be
binding upon a party only if such extension or waiver is set forth in a writing
executed by such party.
10 - INDEMNIFICATION
10.1 SURVIVAL. Notwithstanding any right of any party to fully
investigate the affairs of the other party and notwithstanding any knowledge of
facts determined or determinable by such party pursuant to such investigation or
right of investigation, each party has the right to rely fully upon the
representations, warranties, covenants and agreements of each other party in
this Agreement or in any certificate, financial statement or other document
delivered by any party pursuant hereto. All such representations, warranties,
covenants and agreements shall survive the execution and delivery hereof and the
Closing hereunder, subject to the limitations set forth in Section 10.4. No
person shall have a right to recovery against any party (or any officer,
director, employee or agent of a party) other than through the exercise of the
indemnification rights set forth in Section 10.2, which shall constitute the
sole and exclusive remedy after the Closing Date for any breach by a party of
any representation, warranty or covenant contained herein or in any certificate
or other instrument delivered pursuant hereto, other than a fraudulent or
intentional breach.
10.2 OBLIGATION OF SELLER AND THE STOCKHOLDERS TO INDEMNIFY
(a) Subsequent to the Effective Time, the holders of Seller Stock
outstanding immediately prior to the Effective Time shall, to the extent of
their interest in the Escrow Account held pursuant to the Escrow Agreement,
jointly and severally, indemnify and hold harmless the Buyer, Acquisition and
the Surviving Corporation (and their respective directors, officers, employees,
agents, affiliates and assigns) from and against all losses, liabilities,
damages, deficiencies, costs or expenses, including interest and penalties
imposed or assessed by any judicial or administrative body and reasonable
attorneys' fees, whether or not arising out of third-party claims and including
all amounts paid in investigation, defense or settlement of the foregoing
pursuant to this Section 10 ("Losses") based upon, arising out of or otherwise
in respect of any inaccuracy in or breach of any representation or warranty
(without regard to any exceptions for materiality or material adverse effect) or
covenant of the Seller contained herein or in any certificate delivered pursuant
hereto.
(b) Subsequent to the Effective Time, each Principal Stockholder shall
indemnify and hold harmless the Buyer, Acquisition and the Surviving Corporation
(and their respective directors, officers, employees, agents, affiliates and
assigns) from and against all Losses based upon, arising out of or otherwise in
respect of any inaccuracy in or breach of any representation, warranty or
covenant of such Principal Stockholder contained herein or in any certificate
delivered pursuant hereto.
10.3 OBLIGATION OF THE BUYER AND ACQUISITION TO INDEMNIFY. Subsequent to
the Effective Time, each of the Buyer and Acquisition severally agrees to
indemnify and hold harmless the holders of the Seller Stock outstanding
immediately prior to the Effective Time (and their respective directors,
officers, employees, agents, affiliates and assigns) from and against any
-24-
<PAGE> 30
Losses based upon, arising out of or otherwise in respect of any inaccuracy in
or breach of any representation, warranty covenant of the Buyer or Acquisition
contained herein or in any certificate delivered pursuant hereto.
10.4 LIMITATIONS ON INDEMNIFICATION. Notwithstanding the foregoing, the
right to indemnification under this Section 10 shall be subject to the following
terms:
(a) No indemnification shall be payable pursuant to Section 10.2 or Section
10.3 (i) for any single claim or series of related claims unless the amount
thereof exceeds $5,000 and (ii) unless and until the amount of all other claims
for indemnification pursuant to the applicable Section exceeds $100,000 in the
aggregate, whereupon indemnification pursuant to such Section shall be payable
for all such other claims without any deduction; provided, however, that the
limitations of this subsection shall not apply in the case of a fraudulent or
intentional misrepresentation or breach by any party.
(b) No indemnification shall be payable pursuant to Section 10.2 or Section
10.3 after the issuance of the first audited financial statements of the Buyer
combined with the Seller (the "Expiration Date"), except with respect to claims
made prior to the Expiration Date but not then resolved.
(c) Except for claims arising out of any inaccuracy in or breach of a
representation or warranty of a Principal Stockholder, all indemnification
claims under Section 10.2 shall be satisfied in full from the Escrow Account
held pursuant to the Escrow Agreement and no person shall have any right of
recovery from any person who was a holder of Seller Stock immediately prior to
the Effective Time. In the case of inaccuracy or breach of a Principal
Stockholder representation or warranty, the Buyer and Acquisition may recover
from the Escrow Account only that portion allocable to the Principal Stockholder
responsible for the inaccuracy or breach.
(d) The limitations of Section 10.4(a), (b) and (c) (other than the last
sentence of Section 10.4(c)) shall not apply in the case of a fraudulent or
intentional misrepresentation or breach by any party, but no person shall be
liable for any such misrepresentation or breach by any other person (except to
the extent of the Escrow Account held pursuant to the Escrow Agreement if such
misrepresentation or breach is by the Seller).
(e) In determining the amount of any indemnity, there shall be taken into
account any tax benefit, insurance proceeds or other similar recovery or offset
realized, directly or indirectly, by the party to be indemnified.
10.5 NOTICE AND DEFENSE OF CLAIMS. Promptly after receipt of notice of
any claim, liability or expense for which a party seeks indemnification
hereunder, such party shall give written notice thereof to the indemnifying
party, but such notification shall not be a condition to indemnification
hereunder except to the extent of actual prejudice to the indemnifying party.
The notice shall state the information then available regarding the amount and
nature of such claim, liability or expense and shall specify the provision or
provisions of this Agreement under which the liability or obligation is
asserted. If within 30 days after receiving such notice the indemnifying party
gives written notice to the indemnified party stating that it intends to defend
-25-
<PAGE> 31
against such claim, liability or expense at its own cost and expense, then
defense of such matter, including selection of counsel (subject to the consent
of the indemnified party which consent shall not be unreasonably withheld),
shall be by the indemnifying party and the indemnified party shall make no
payment on such claim, liability or expense as long as the indemnifying party is
conducting a good faith and diligent defense. Notwithstanding the foregoing, the
indemnified party shall at all times have the right to fully participate in such
defense at its own expense directly or through counsel; provided, however, if
the named parties to the action or proceeding include both the indemnifying
party and the indemnified party and representation of both parties by the same
counsel would be inappropriate under applicable standards of professional
conduct, the expense of separate counsel for the indemnified party shall be paid
by the indemnifying party. If no such notice of intent to dispute and defend is
given by the indemnifying party, or if such diligent good faith defense is not
being or ceases to be conducted, the indemnified party shall, at the expense of
the indemnifying party, undertake the defense of such claim, liability or
expense with counsel selected by the indemnified party, and shall have the right
to compromise or settle the same exercising reasonable business judgment. The
indemnified party shall make available all information and assistance that the
indemnifying party may reasonably request and shall cooperate with the
indemnifying party in such defense.
11 - MISCELLANEOUS
11.1 NOTICES. Any notice or other communication required or permitted
hereunder shall be in writing and shall be deemed given when so delivered in
person, by overnight courier, by facsimile transmission (with receipt confirmed
by telephone or by automatic transmission report) or two business days after
being sent by registered or certified mail (postage prepaid, return receipt
requested), as follows:
(i) if to the Buyer, to:
Galileo Park, P.O. Box 550
Sturbridge, MA 01566
Attention: William T. Hanley, President
Fax: (508) 347-2270
with a copy to:
David R. Pokross, Jr., Esq.
Palmer & Dodge LLP
One Beacon Street
Boston, MA 02108
Fax: (617) 227-4420
-26-
<PAGE> 32
(ii) if to the Seller or the Principal Stockholders, to:
6401 Congress Avenue
Boca Raton, FL 33487
Fax: (407) 997-1645
with a copy to:
Charles H. Lichtman, Esq.
Coston & Lichtman
Suite 310
8211 West Broward Boulevard
Plantation, FL 33324
Fax: (954) 424-8895
Any party may by notice given in accordance with this Section 11.1 to the other
parties designate another address or person for receipt of notices hereunder.
11.2 ENTIRE AGREEMENT. This Agreement contains the entire agreement
among the parties with respect to the Merger and related transactions, and
supersedes all prior agreements, written or oral, with respect thereto.
11.3 GOVERNING LAW. This Agreement is governed by the laws of the State
of Delaware without regard to its conflict of law provisions, except that the
Merger shall be governed by the laws of the State of Florida.
11.4 CONSENT TO JURISDICTION. The parties hereto irrevocably submit to
the nonexclusive jurisdiction of the United States District Court of the
District of Massachusetts (or, if subject matter jurisdiction in that court is
not available, in any state court located within Massachusetts) over any dispute
arising out of or relating to this Agreement or any agreement contemplated
hereby or the entering into of any of such agreements. Each party hereby
irrevocably agrees that all claims in respect of such dispute may be heard and
determined in such courts and consents to the service of process in any such
proceeding by the mailing of copies thereof to each party at its address
specified in Section 11.1. The parties hereby irrevocably waive, to the fullest
extent permitted by applicable law, any objection which they may now or
hereafter have to the laying of venue of any such dispute brought in such court
or any defense of inconvenient forum in connection therewith.
11.5 INVALIDITY. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein, shall
for any reason be held to be invalid, illegal or unenforceable in any respect,
then to the maximum extent permitted by law, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement or any
other such instrument.
-27-
<PAGE> 33
11.6 BINDING EFFECT; NO ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
permitted assigns. This Agreement is not assignable without the prior written
consent of the other parties hereto.
11.7 VARIATIONS IN PRONOUNS. All pronouns and any variations thereof
refer to the masculine, feminine or neuter, singular or plural, as the context
may require.
11.8 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
11.9 DISCLOSURE SCHEDULES. The Disclosure Schedules are a part of this
Agreement as if fully set forth herein.
-28-
<PAGE> 34
IN WITNESS WHEREOF, the parties have executed this Agreement under seal as
of the date first stated above.
GALILEO ELECTRO-OPTICS CORPORATION
By /s/ William T. Hanley
---------------------------------
William T. Hanley, President
LMI ACQUISITION CORPORATION
By /s/ William T. Hanley
---------------------------------
William T. Hanley, President
LEISEGANG MEDICAL, INC.
By /s/ W. Kip Speyer
---------------------------------
W. Kip Speyer, President
THE PRINCIPAL STOCKHOLDERS:
/s/ W. Kip Speyer
---------------------------------
W. Kip Speyer
/s/ Georg Leisegang
---------------------------------
Georg Leisegang
/s/ Peter Leisegang
---------------------------------
Peter Leisegang
/s/ Lutz Leisegang
---------------------------------
Lutz Leisegang
/s/ Harold Kwart
---------------------------------
Harold Kwart
/s/ Roni D. Laskin
---------------------------------
Roni D. Laskin
-29-
<PAGE> 1
EXHIBIT 99.1
[LOGO: GALILEO NEWS]
FROM: L.B. STAUFFER
PORTER, LE VAY & ROSE, INC.
(212) 564-4700
COMPANY WILLIAM T. HANLEY
CONTACT: PRESIDENT/CEO
FOR IMMEDIATE RELEASE
GALILEO ELECTRO-OPTICS AGREES TO ACQUIRE LEISEGANG MEDICAL
STURBRIDGE, MA, JULY 22 -- Galileo Electro-Optics Corporation (NASDAQ, NM:
GAEO) announced today that it has signed a definitive agreement to acquire
Leisegang Medical Inc. for 269,923 shares of Galileo stock. The transaction,
which will be accounted for as a pooling of interests, is expected to be
consummated in Galileo's fourth fiscal quarter.
Leisegang Medical, headquartered in Boca Raton, FL, is a privately-held
distributor and manufacturer of OB/GYN diagnostic and surgical equipment with
annual sales of $6.5 million. Included in its product line are colposcopes
produced by Leisegang GmbH, a related company based in Berlin, Germany, that is
the world's largest and oldest manufacturer of colposcopes and accessories. The
products are sold to OB/GYN doctors' offices and hospitals through an internal
sales force and by manufacturers' representatives.
-more-
Galileo Corporation Galileo Park P.O. Box 550 Sturbridge, MA 01566 USA
TEL. (508) 347-9191 FAX (508) 347-3849
World Wide Web Site: http://www.galileocorp.com
<PAGE> 2
-2-
William T. Hanley, president and chief executive officer of Galileo, noted
that Leisegang is well known and highly respected in the gynecological equipment
market, estimated to be $200 million annually, and is a leader in sales to
doctors' offices. In addition to colposcopes, its products include biopsy
instruments, ultrasound, video equipment, laser and electro-surgical systems and
accessories, cryosurgery equipment, surgical instruments, rigid and flexible
hysteroscopes, bone densitometers and fetal heart monitors.
"This acquisition will enable Galileo to participate immediately in a
market that is growing at 15 to 20 percent per year, and is expected to benefit
significantly from the trend toward minimally invasive surgery and office-based
procedures. It will also provide Galileo with new distribution channels that can
enhance the brand name recognition and market penetration of our medical imaging
and sensing products," Hanley added.
W. Kip Speyer, president of Leisegang Medical, commented, "We look forward
to joining the Galileo team, which has the complementary products, manufacturing
capacity and product development skills to maximize the opportunities for both
our companies."
Galileo Electro-Optics Corporation develops, manufactures and markets
fiberoptics and electro-optics components, assemblies and systems which
transmit, sense or intensify light or images. Galileo's products are sold
primarily to OEMs for applications in electronic imaging, analytical
instruments, office equipment, medical instrumentation and process analysis. The
company recently announced a joint distribution agreement with Fujikura America,
Inc., under which Galileo will distribute Fujikura's high pixel count optical
fiber for endoscopic medical devices in the U.S., its territories and Puerto
Rico.
-more-
<PAGE> 3
-3-
Detailed information about Galileo can be found on its World Wide Web page
on the Internet at http://www.galileocorp.com.
1996
<PAGE> 1
EXHIBIT 99.2
[LOGO: GALILEO NEWS]
FROM: L.B. STAUFFER
COMPANY WILLIAM T. HANLEY
CONTACT: PRESIDENT/CEO
FOR IMMEDIATE RELEASE
GALILEO ELECTRO-OPTICS COMPLETES
ACQUISITION OF LEISEGANG MEDICAL
STURBRIDGE, MA, AUG.8 -- Galileo Electro-Optics Corporation (NASDAQ, NM:
GAEO) announced today that is has completed its previously announced acquisition
of Leisegang Medical, Inc. for 269,923 shares of Galileo stock. The transaction
will be accounted for as a pooling of interests.
Leisegang Medical, headquartered in Boca Raton, FL, is a privately-held
distributor and manufacturer of OB/GYN diagnostic and surgical equipment with
annual sales of $6.5 million. Galileo Electro-Optics Corporation develops,
manufactures and markets fiberoptics and electro-optics components, assemblies
and systems which transmit, sense or intensify light or images. Galileo's
products are sold primarily to OEMs for applications in electronic imaging,
analytical instruments, office equipment, medical instrumentation and process
analysis.
Detailed information about Galileo can be found on its World Wide Web page
on the Internet at http://www.galileocorp.com.
1996
Galileo Corporation Galileo Park P.O. Box 550 Sturbridge, MA 01566 USA
TEL. (508) 347-9191 FAX (508) 347-3849
World Wide Web Site: http://www.galileocorp.com
