<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Imex Medical Systems, Incorporated
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / No fee required
/X/ Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
Common Stock, par value $.001 per share
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
6,898,618
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
$1.45
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
$10,000,000
------------------------------------------------------------------------
(5) Total fee paid:
$2,000
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/X/ Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
$2,000
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
David J. Cook, Esq.
------------------------------------------------------------------------
(4) Date Filed:
7/7/97
------------------------------------------------------------------------
<PAGE>
IMEX MEDICAL SYSTEMS, INCORPORATED
6355 JOYCE DRIVE
GOLDEN, COLORADO 80403
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 22, 1997
To Stockholders of Imex Medical Systems, Incorporated:
A special meeting of the stockholders of Imex Medical Systems,
Incorporated, a Delaware corporation (the "Company"), will be held at the
offices of Chrisman, Bynum & Johnson, P.C., 1900 Fifteenth Street, Boulder,
Colorado on August 22, 1997 at 10:00 a.m. local time (the "Special Meeting"), to
consider and act upon the following matters:
1. To consider and vote upon a proposal to approve and adopt a Merger
Agreement, dated as of July 15, 1997 (the "Merger Agreement"), among the
Company, Nicolet Biomedical Inc., a California corporation ("Nicolet"), and
NBI Acquisition Corp., a Delaware corporation and wholly owned subsidiary
of Nicolet (the "Merger Subsidiary"), pursuant to which, among other
things, (i) the Merger Subsidiary will be merged with and into the Company
(the "Merger"), (ii) each outstanding share of Common Stock, par value
$.001 per share, of the Company (the "Common Stock"), other than Dissenting
Shares (as defined below), will be converted into the right to receive an
amount in cash equal to $10,000,000 (decreased by the amount up to $700,000
by which the Company's stockholders' equity at the date of the closing is
less than $4,000,000) divided by the number of shares of Common Stock
outstanding immediately prior to the Effective Time of the Merger ("Merger
Consideration"). The Merger Agreement provides that $700,000 will be held
in escrow pending a determination of the Company's stockholders' equity as
of closing. If said stockholders' equity is $4,000,000 or more, the full
escrow amount will be paid to the Company's stockholders and the Merger
Consideration per share of Common Stock will be approximately $1.45 per
share. If said stockholders' equity is less than $4,000,000, the
deficiency will be returned to Nicolet and the Merger Consideration per
share will be reduced accordingly to a minimum of approximately $1.35 per
share if the entire escrow fund is returned to Nicolet. A copy of the
Merger Agreement (with selected exhibits) is attached as Exhibit A to the
accompanying Proxy Statement.
2. To transact such other business as may properly come before the Special
Meeting or any adjournment thereof.
Only holders of record of the Common Stock at the close of business on July
14, 1997 are entitled to notice of and to vote at the Special Meeting. In the
Merger Agreement, holders of 52% of shares of Common Stock outstanding on the
record date have agreed to vote for the Merger Agreement. This vote is
sufficient under Delaware Law to approve and adopt the Merger Agreement.
Holders of the Common Stock who do not vote their shares in favor of the
Merger Agreement and who strictly comply with Section 262 of the Delaware
General Corporation Law (the "DGCL") have the right to object to the Merger
Agreement and make written demand for payment of the "fair value" of their
shares ("Dissenting Shares"). For a description of the rights of holders of
Dissenting Shares, see Section 262 of the DGCL, a copy of which is attached as
Exhibit B to the accompanying Proxy Statement. In addition, a summary of the
procedures to be followed in order to obtain payment for Dissenting Shares is
set forth under the caption "RIGHTS OF DISSENTING STOCKHOLDERS" in the Proxy
Statement.
Your attention is directed to the Proxy Statement, the Exhibits thereto and
the other materials relating to the Company that have been mailed to you
herewith for more complete information regarding the Merger Agreement and the
Company. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL AND ADOPTION OF
THE MERGER AGREEMENT.
By Order of the Board of Directors
Patricia L. Newman
Secretary
Golden, Colorado
July 31, 1997
YOUR VOTE IS IMPORTANT. ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND
THE SPECIAL MEETING. WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE MARK, SIGN AND
DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. YOU
MAY NEVERTHELESS VOTE IN PERSON IF YOU ATTEND THE SPECIAL MEETING.
<PAGE>
IMEX MEDICAL SYSTEMS, INCORPORATED
PROXY STATEMENT
---------------
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 22, 1997
---------------
This Proxy Statement is being furnished to the stockholders of Imex Medical
Systems, Incorporated, a Delaware corporation (the "Company"), in connection
with the solicitation by the Board of Directors of the Company of proxies to be
voted at a special meeting of stockholders of the Company to be held at the
offices of Chrisman, Bynum & Johnson, P.C., 1900 Fifteenth Street, Boulder,
Colorado on August 22, 1997 at 10:00 a.m. local time, and any adjournments or
postponements thereof (the "Special Meeting"). At the Special Meeting, the
stockholders of the Company will consider and vote upon a proposal to approve
and adopt a Merger Agreement, dated as of July 15, 1997 (the "Merger
Agreement"), by and among the Company, Nicolet Biomedical Inc., a California
corporation ("Nicolet") , and NBI Acquisition Corp., a Delaware corporation and
wholly owned subsidiary of Nicolet (the "Merger Subsidiary"), pursuant to which,
among other things (i) the Merger Subsidiary will be merged with and into the
Company (the "Merger"), and (ii) each outstanding share of Common Stock, par
value $.001 per share, of the Company (the "Common Stock"), other than
Dissenting Shares (as defined below), will be converted into the right to
receive an amount in cash equal to $10,000,000 (decreased by the amount up to
$700,000 by which the Company's stockholders' equity at the date of the closing
is less than $4,000,000) divided by the number of shares of Common Stock
outstanding immediately prior to the Effective Time of the Merger ("Merger
Consideration"). The Merger Agreement provides that $700,000 will be held in
escrow pending a determination of the Company's stockholders' equity as of
closing. If said stockholders' equity is $4,000,000 or more, the full escrow
amount will be paid to the Company's stockholders and the Merger Consideration
per share of Common Stock will be approximately $1.45 per share. If said
stockholders' equity is less than $4,000,000, the deficiency will be returned to
Nicolet and the Merger Consideration per share will be reduced accordingly to a
minimum of approximately $1.35 per share if the entire escrow fund is returned
to Nicolet. A copy of the Merger Agreement is attached as Exhibit A to this
Proxy Statement.
This Proxy Statement is accompanied by copies of the Company's Annual
Report on Form 10-K for the year ended June 30, 1996 and its Quarterly Report on
Form 10-Q for the quarter ended March 31, 1997. These materials are
specifically incorporated by reference in this Proxy Statement and are included
to aid stockholders in their consideration of the Merger.
Only holders of record of the Common Stock, par value $.001 per share, at
the close of business on July 14, 1997 are entitled to notice of and to vote at
the Special Meeting. This Proxy Statement is first being sent to stockholders
on or about July 31, 1997.
--------------------
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF
SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED
IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
<PAGE>
TABLE OF CONTENTS
PAGE
----
SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Date, time and Place of Meeting. . . . . . . . . . . . . . . . . . . . 4
Record Date; Stockholders Entitled to Vote; Quorum . . . . . . . . . . 4
Purpose of the Meeting . . . . . . . . . . . . . . . . . . . . . . . . 4
The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . 5
Voting of Shares Owned by Newman Family. . . . . . . . . . . . . . . . 5
Recommendation of the Company's Board of Directors . . . . . . . . . . 5
Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . 5
Interests of Certain Persons in the Merger . . . . . . . . . . . . . . 5
Federal Income Tax Consequences. . . . . . . . . . . . . . . . . . . . 5
Additional Factors to be Considered. . . . . . . . . . . . . . . . . . 6
Payment for Shares and Options . . . . . . . . . . . . . . . . . . . . 6
Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 6
The Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Nicolet Biomedical Inc . . . . . . . . . . . . . . . . . . . . . . . . 6
Market Price and Dividend Data . . . . . . . . . . . . . . . . . . . . 7
Selected Consolidated Financial Data . . . . . . . . . . . . . . . . . 8
THE SPECIAL MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Proposal to be Considered at the Special Meeting . . . . . . . . . . . 9
Record Date; Stockholder Approval. . . . . . . . . . . . . . . . . . . 9
Proxies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
THE MERGER--FACTORS TO BE CONSIDERED . . . . . . . . . . . . . . . . . . . 10
Background of the Merger . . . . . . . . . . . . . . . . . . . . . . . 10
Purpose and Structure of the Merger. . . . . . . . . . . . . . . . . . 11
Recommendation of the Company's Board of Directors . . . . . . . . . . 11
Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . 12
Plans for the Company After the Merger . . . . . . . . . . . . . . . . 16
Certain Effects of the Merger. . . . . . . . . . . . . . . . . . . . . 16
Interests of Certain Persons in the Merger . . . . . . . . . . . . . . 17
Indemnification of Officers and Directors. . . . . . . . . . . . . . . 17
Solicitation Fees and Expenses . . . . . . . . . . . . . . . . . . . . 17
Certain Federal Income Tax Consequences. . . . . . . . . . . . . . . . 17
Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . 18
THE MERGER AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Consideration to be Received by Stockholders . . . . . . . . . . . . . 19
Escrow and Exchange of Shares. . . . . . . . . . . . . . . . . . . . . 19
Payment for Shares and Options . . . . . . . . . . . . . . . . . . . . 19
Operations of the Company Prior to the Merger. . . . . . . . . . . . . 20
Conditions to Consummation of the Merger . . . . . . . . . . . . . . . 21
Voting of Shares Owned By Newman Family. . . . . . . . . . . . . . . . 21
Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . 22
RIGHTS OF DISSENTING STOCKHOLDERS. . . . . . . . . . . . . . . . . . . . . 22
2
<PAGE>
STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS. . . . . . . . 25
INDEPENDENT PUBLIC ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . 27
INFORMATION INCORPORATED BY REFERENCE. . . . . . . . . . . . . . . . . . . 27
AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS. . . . . . . . . . . . . 27
EXHIBIT A--MERGER AGREEMENT (with selected exhibits)
EXHIBIT B--PROVISIONS OF DELAWARE GENERAL CORPORATION LAW RELATING
TO APPRAISAL RIGHTS
EXHIBIT C--OPINION OF GRUNTAL & CO., INCORPORATED
3
<PAGE>
SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE IN
THIS PROXY STATEMENT. THE FOLLOWING SUMMARY IS NOT INTENDED TO BE COMPLETE AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MORE DETAILED INFORMATION
CONTAINED IN THIS PROXY STATEMENT, IN THE MATERIALS ACCOMPANYING THIS PROXY
STATEMENT, IN THE EXHIBITS HERETO AND IN THE DOCUMENTS INCORPORATED HEREIN BY
REFERENCE. STOCKHOLDERS ARE URGED TO REVIEW THE ENTIRE PROXY STATEMENT AND
ACCOMPANYING MATERIALS CAREFULLY.
DATE, TIME AND PLACE OF MEETING
A Special Meeting of the Stockholders of Imex Medical Systems, Incorporated
will be held on August 22, 1997 at 10:00 a.m. local time at the offices of
Chrisman, Bynum & Johnson, P.C. 1900 Fifteenth Street, Boulder, Colorado.
RECORD DATE; STOCKHOLDERS ENTITLED TO VOTE; QUORUM
Only holders of record of shares of the Common Stock at the close of
business on July 14, 1997 (the "Record Date") are entitled to notice of and to
vote at the Special Meeting. On that date, there were 6,898,618 shares of
Common Stock outstanding, held of record by approximately 600 stockholders.
See "THE SPECIAL MEETING--Record Date; Stockholder Approval." The presence, in
person or by proxy, at the Special Meeting of the holders of a majority of the
outstanding shares of the Common Stock is necessary to constitute a quorum at
the Special Meeting.
PURPOSE OF THE MEETING
At the Special Meeting, stockholders will consider and vote upon a
proposal to approve and adopt the Merger Agreement, a copy of which is
attached as Exhibit A to this Proxy Statement. See "THE SPECIAL
MEETING--Proposal to be Considered at the Special Meeting." The Merger
Agreement provides for the merger of the Merger Subsidiary with and into the
Company, with the result that the Company, as the surviving corporation (the
"Surviving Corporation"), will become a wholly owned subsidiary of Nicolet.
See "THE MERGER AGREEMENT--General."
THE MERGER
Pursuant to the Merger Agreement, the Merger Subsidiary will merge with and
into the Company, with the Company being the Surviving Corporation. Each
outstanding share of Common Stock (except Dissenting Shares) will be converted
into the right to receive the Merger Consideration. Nicolet's parent, Thermo
Electron Corporation ("Thermo") has agreed to guaranty Nicolet's obligation to
pay the Merger Consideration. See "THE MERGER AGREEMENT--Consideration to be
Received by Stockholders." After the Merger, Nicolet will own all of the
outstanding shares of capital stock of the Surviving Corporation. The shares of
the Common Stock will no longer be traded on the Nasdaq SmallCap Market and the
registration of the Common Stock under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), will be terminated. See "THE MERGER--FACTORS TO
BE CONSIDERED--Certain Effects of the Merger."
Approval of the Merger requires the affirmative vote of the holders of a
majority of the outstanding shares of the Common Stock. See "THE SPECIAL
MEETING--Record Date; Stockholder Approval."
The Merger is subject to various closing conditions, including the absence
of any development in the status or outlook for the business of the Company
which in Nicolet's reasonable judgment is materially adverse to the Company.
See "THE MERGER AGREEMENT--Conditions to Consummation of the Merger."
The Merger Agreement may, under specified circumstances, be terminated and
the Merger abandoned at any time prior to the filing of a Certificate of Merger
with the Delaware Secretary of State, notwithstanding approval of the
4
<PAGE>
Merger Agreement by the stockholders of the Company. Specifically, the Merger
Agreement can be terminated by mutual written consent of the parties, by
either party upon any unremedied breach of the Merger Agreement by the other
party, by either party if the Merger does not close by October 31, 1997 by
reason of a failure of any condition precedent to the closing not
attributable to the terminating party or by Nicolet if the Company's Board of
Directors withdraws or modifies its recommendation to approve the Merger or
fails to recommend rejection of any other proposal to acquire the Company
which may come to its attention. In the latter event, the Company will pay
Nicolet a cash termination fee of $300,000.
EFFECTIVE TIME OF THE MERGER
Unless otherwise agreed by the parties to the Merger Agreement or otherwise
provided by law, the Merger will become effective upon the acceptance for
recording of the Certificate of Merger by the Delaware Secretary of State (the
"Effective Time"). Subject to approval of the Merger at the Special Meeting and
the satisfaction or waiver of the terms and conditions in the Merger Agreement,
the Effective Time is expected to occur as soon as practicable after the Special
Meeting. See "THE MERGER AGREEMENT--Effective Time."
VOTING OF SHARES OWNED BY NEWMAN FAMILY
Dennis R. Newman, Patricia L. Newman, the Newman Family Trust and The Fred
E. and Jennie A. Newman Trust have agreed in the Merger Agreement to vote shares
of Common Stock owned beneficially by them in favor of the adoption of the
Merger Agreement and the approval of the Merger. These stockholders own
beneficially 52% of the Company's outstanding shares and, accordingly, their
affirmative votes are sufficient to approve the Merger under Delaware Law. See
"THE MERGER AGREEMENT - VOTING OF SHARES OWNED BY NEWMAN FAMILY."
RECOMMENDATION OF THE COMPANY'S BOARD OF DIRECTORS
The Board of Directors of the Company has determined that the Merger is
fair from a financial point of view to and in the best interests of the
Company's stockholders. The Board of Directors has approved the Merger
Agreement and recommends that stockholders vote in favor of the proposal to
approve and adopt the Merger Agreement. See "THE MERGER--FACTORS TO BE
CONSIDERED--Recommendation of the Company's Board of Directors."
OPINION OF FINANCIAL ADVISOR
On June 11, 1997, Gruntal & Co., Incorporated ("Gruntal") delivered a
written opinion to the Board of Directors of the Company to the effect that the
cash consideration to be received by the holders of the Common Stock in
connection with the Merger is fair to such stockholders from a financial point
of view. A copy of the written opinion of Gruntal dated June 11, 1997 is
attached as Exhibit C to this Proxy Statement. Stockholders of the Company are
urged to read the opinion of Gruntal in its entirety. For discussion of the
factors considered and assumptions made by Gruntal in reaching its opinion, see
"THE MERGER--FACTORS TO BE CONSIDERED--Opinion of Financial Advisor."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Board of Directors of the Company
with respect to the Merger Agreement and the transaction contemplated thereby,
stockholders should be aware that certain officers and directors of the Company
have interests in connection with the consummation of the Merger that may
conflict with the interests of the Company's stockholders. See "THE
MERGER--FACTORS TO BE CONSIDERED--Interests of Certain Persons in the Merger."
FEDERAL INCOME TAX CONSEQUENCES
For federal income tax purposes, the Merger will be treated as a taxable
sale or exchange of shares of the Common Stock for cash by each holder of the
Common Stock (including any holder of Dissenting Shares). The amount of gain or
loss to be recognized by each stockholder will be measured by the difference
between the amount of cash
5
<PAGE>
received by such stockholder in connection with the Merger for his or her
shares of Common Stock (including Dissenting Shares) and such stockholder's
tax basis in such shares of Common Stock at the Effective Time. See "THE
MERGER--FACTORS TO BE CONSIDERED--Certain Federal Income Tax Consequences."
ADDITIONAL FACTORS TO BE CONSIDERED
Stockholders of the Company should also consider the additional special
factors discussed elsewhere in this Proxy Statement under the caption "THE
MERGER--FACTORS TO BE CONSIDERED."
PAYMENT FOR SHARES AND OPTIONS
As promptly as possible after the Effective Time, instructions will be
furnished to holders of shares of the Common Stock regarding procedures to be
followed to surrender their certificates and receive payment for their shares.
Holders of options to purchase shares of Common Stock will receive prior to the
Effective Time a cash payment, equal to the excess, if any, of $1.45 per share
over the exercise price per share of each option, multiplied by the number of
shares for which such option is then exercisable. See "THE MERGER
AGREEMENT--Payment for Shares and Options."
DISSENTERS' RIGHTS
Under the Delaware General Corporation Law (the "DGCL"), any holder of the
Common Stock who does not vote in favor of the Merger and who strictly complies
with the procedural requirements of Section 262 of the DGCL, the full text of
which is attached as Exhibit B to this Proxy Statement, will have the right to
object to the Merger Agreement and make written demand for the payment of the
"fair value" of such holder's shares of the Common Stock. See "RIGHTS OF
DISSENTING STOCKHOLDERS."
THE COMPANY
The Company was organized under the laws of the state of Colorado on April
12, 1976. Effective July 31, 1987, the Company reincorporated in the State of
Delaware. The Company develops, manufactures, markets and services non-invasive
medical diagnostic and monitoring instruments for use by physicians in private
practice, clinics and hospitals. The Company is a leading producer and supplier
of portable ultrasonic and plethysmographic instrumentation used for listening
to blood flow in the veins and arteries as well as for monitoring the fetal
heart.
The principal executive office of the Company is located at 6355 Joyce
Drive, Golden, Colorado 80403, and the Company's telephone number is (303)
431-9400.
NICOLET BIOMEDICAL INC.
Nicolet is a leading manufacturer of biomedical instruments for assessing
muscle, nerve, sleep, hearing, and brain blood-flow disorders, various
neurologic disorders, and for related work in clinical neurophysiology. These
instruments are used in hospitals, clinics, universities, private-practice
medical offices, and medical research facilities.
Merger Subsidiary was formed specifically for the purpose of effecting the
transaction contemplated by the Merger Agreement. It is not anticipated that
prior to the Merger that Merger Subsidiary will have any significant assets or
liabilities other than its rights and obligations under the Merger Agreement or
that Merger Subsidiary will engage in any activities other than those incidental
to its formation and the transactions contemplated by the Merger Agreement.
The principal executive offices of Nicolet and Merger Subsidiary are
located at 5225 Verona Road, Bldg. 2, Madison, Wisconsin 53711 (telephone
number: (608) 273-5000).
6
<PAGE>
MARKET PRICE AND DIVIDEND DATA
The Common Stock is traded on the Nasdaq SmallCap Market under the Symbol
"IMEX". The following table sets forth the high and low trading prices per
share of the Common Stock on the Nasdaq SmallCap Market for the calendar periods
indicated. For 1995, the prices represent the high and low bid prices for the
periods indicated.
HIGH LOW
---- ---
1995
First Quarter ..................... $ .69 $ .63
Second Quarter .................... .66 .66
Third Quarter ..................... 1.00 .63
Fourth Quarter .................... .88 .56
1996
First Quarter ..................... $1.94 $ .95
Second Quarter .................... $2.06 1.13
Third Quarter ..................... 1.94 1.00
Fourth Quarter .................... 2.75 .81
1997
First Quarter ..................... $2.69 $1.37
Second Quarter .................... 1.62 .87
Third Quarter (through July 25) ... 1.31 1.06
On May 8, 1997, the last full day of trading prior to the announcement by
the Company that it had entered into a letter of intent with Nicolet relating
to the Merger, the reported high and low trading prices per share of the
Common Stock were $1.56 and $1.25, respectively. On July 25, 1997, the last
full day of trading prior to the printing of this Proxy Statement, the Common
Stock was subject to light trading and the reported high and low trading
prices per share of the Common Stock were the same, ie, $1.1875.
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THEIR SHARES.
The Company has never paid a cash dividend on the Common Stock and does not
anticipate paying any such dividend in the foreseeable future.
7
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
Set forth below is a summary of selected consolidated financial data with
respect to the Company excerpted or derived from the information contained in
the Company's Forms 10-Q for the quarters ended March 31, 1997 and March 31,
1996 and in Annual Reports on Form 10-K for the years ended June 30, 1996, 1995,
1994, 1993 and 1992. More comprehensive financial information is included in
such reports and other documents filed by the Company with the Securities and
Exchange Commission (the "Commission"), and the following summary is qualified
in its entirety by reference to such reports and other documents and all of the
financial information (including any related notes) contained therein. Such
reports and other documents may be inspected and copies may be obtained from the
offices of the Commission. See "AVAILABLE INFORMATION." In addition, copies of
the Company's Annual Report on Form 10-K for the year ended June 30, 1996 and
its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1997
accompany each copy of this Proxy Statement being provided to stockholders and
are incorporated herein by reference. See "INFORMATION INCORPORATED BY
REFERENCE."
<TABLE>
<CAPTION>
NINE MONTHS
ENDED MARCH 31 FISCAL YEARS ENDED JUNE 30,
-------------- ---------------------------
1997 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Net Sales $6,930,322 $7,250,890 $10,146,506 $9,175,853 $8,726,907 $9,257,517 $9,796,282
Net Income (Loss) (185,930) 58,228 137,706 (415,050) 211,859 (264,859) 506,303
Net Income (Loss)
per Common Share (.03) .01 .02 (.06) .03 (.04) .08
Total Assets 6,044,793 6,227,432 6,652,275 6,351,493 6,483,388 7,058,938 7,784,131
Long-term
Obligations 130,975 471,409 388,538 560,069 859,045 1,137,699 1,222,337
Cash Dividends per
Share 0 0 0 0 0 0 0
Book Value Per
Share .55 .56 .57 .55 .61 .58 .62
</TABLE>
8
<PAGE>
THE SPECIAL MEETING
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of the Company for a Special Meeting of
Stockholders to be held on August 22, 1997 at 10:00 a.m. local time at the
offices of Chrisman, Bynum & Johnson, P.C., 1900 Fifteenth Street, Boulder,
Colorado, and any adjournments thereof. Shares represented by properly
executed proxies received by the Company will be voted at the Special Meeting
or any adjournment thereof in accordance with the terms of such proxies,
unless such proxies are revoked. See "--Proxies" below.
PROPOSAL TO BE CONSIDERED AT THE SPECIAL MEETING
At the Special Meeting, the stockholders of the Company will consider and
vote upon a proposal to approve and adopt the Merger Agreement. Pursuant to
the Merger Agreement, the Merger Subsidiary will merge with and into the
Company, the separate corporate existence of the Merger Subsidiary will
cease, and the Company will be the Surviving Corporation. At the Effective
Time, each outstanding share of the Common Stock (except Dissenting Shares)
will be converted into the right to receive the Merger Consideration.
Holders of Dissenting Shares will be entitled to receive from the Surviving
Corporation a cash payment in the amount of the "fair value" of such shares,
determined in the manner provided in section 262 of the DGCL, but after the
Effective Time such shares will not represent any interest in the Surviving
Corporation other than the right to receive such cash payment. See "RIGHTS
OF DISSENTING STOCKHOLDERS." A copy of the Merger Agreement (with selected
exhibits) is attached as Exhibit A to this Proxy Statement.
In addition to approval and adoption of the Merger Agreement and the
transactions contemplated thereby, stockholders of the Company may be asked
to approve a proposal to adjourn the Special Meeting to permit further
solicitation of proxies in the event there are not sufficient votes at the
time of the Special Meeting to approve and adopt the Merger Agreement. It is
not anticipated that any other matters will be brought before the Special
Meeting. However, if other matters should come before the Special Meeting, it
is intended that the holders of proxies solicited hereby will vote thereon in
their discretion, unless such authority is withheld.
RECORD DATE; STOCKHOLDER APPROVAL
Only holders of record of the Common Stock at the close of business on
July 14, 1997 are entitled to notice of and to vote at the Special Meeting.
On that date, there were 6,898,618 shares of Common Stock outstanding,
which were held of record by approximately 600 stockholders. Each
share of Common Stock entitles its holder to one vote concerning all matters
properly coming before the Special Meeting. A majority of the shares of the
Common Stock entitled to vote, represented in person or by proxy, will
constitute a quorum. Abstentions and broker non-votes (i.e., shares held by
brokers in street name, voting on certain matters due to discretionary
authority or instructions from the beneficial owner but not voting on other
matters due to lack of authority to vote on such matters without instructions
from the beneficial owner) are counted for the purpose of establishing a
quorum and will have the same effect as a vote against the approval of the
Merger. The Merger must be approved by the holders of at least a majority of
all outstanding shares of Common Stock. Dennis R. Newman, Patricia L.
Newman, the Newman Family Trust and The Fred E. and Jennie A. Newman Trust
have agreed in the Merger Agreement to vote shares of Common Stock owned
beneficially by them in favor of the adoption of the Merger Agreement and the
approval of the Merger. These stockholders own beneficially 52% of the
Company's outstanding shares and, accordingly, their affirmative votes are
sufficient to approve the Merger under Delaware Law. See "THE MERGER
AGREEMENT - Voting Of Shares Owned By Newman Family."
PROXIES
Any Company stockholder entitled to vote at the Special Meeting may vote
either in person or by duly authorized proxy. All shares of the Common Stock
represented by properly executed proxies received prior to or at the
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Special Meeting and not revoked will be voted in accordance with the
instructions indicated in such proxies. IF NO INSTRUCTIONS ARE INDICATED,
SUCH PROXIES WILL BE VOTED FOR THE PROPOSAL TO APPROVE AND ADOPT THE MERGER
AGREEMENT AND, IN THE DISCRETION OF THE PERSONS NAMED IN THE PROXY, ON SUCH
OTHER MATTERS AS MAY PROPERLY BE PRESENTED AT THE SPECIAL MEETING.
A stockholder may revoke his or her proxy at any time prior to its use by
delivering to the Secretary of the Company a signed notice of revocation or a
later dated and signed proxy or by attending the Special Meeting and voting in
person. Attendance at the Special Meeting will not in itself constitute the
revocation of a proxy.
Expenses in connection with the solicitation of proxies will be paid by the
Company. Upon request, the Company will reimburse brokers, dealers and banks,
or their nominees, for reasonable expenses incurred in forwarding copies of the
proxy material to the beneficial owners of the Common Stock which such persons
hold of record. Solicitation of proxies will be made principally by mail.
Proxies may also be solicited in person, or by telephone or telegraph, by
officers and regular employees of the Company.
THE MERGER--FACTORS TO BE CONSIDERED
BACKGROUND OF THE MERGER
In March 1996, Gerald G. Brew, President of Nicolet, contacted Dennis
Newman, the Company's Chairman and Chief Executive Officer, to discuss
Nicolet's interest in expanding its business into the market for vascular
products. Mr. Newman, Mr. Brew and James H. Da Costa, Director, Corporate
Development of Thermo, also met at the Company's facility in March 1996 to
further discuss Nicolet's business expansion interests. On March 12, 1996,
Mr. Newman informed the Company's Board of Directors of Nicolet's visit and
preliminary interest in exploring a potential merger between the two
companies. In April 1996, the Company and Nicolet entered into a
confidentiality agreement and the Company distributed financial information
to Nicolet.
In June 1996, the Company engaged Gruntal to assist the Company in
evaluating strategic alternatives and the possible sale of the business.
During late September and October 1996, Gruntal contacted Mr. Brew, to
further discuss Nicolet's interest in the potential acquisition of Imex and
Mr. Brew expressed an interest in reopening a dialogue with the Company on
that subject.
As a result of these discussions, in November 1996, the Company and
Nicolet entered into another confidentiality agreement and Imex provided to
Nicolet a confidential memorandum containing financial and other information
regarding its business activities. Additionally, on December 20, 1996, Mr.
Brew visited the Company's facility. During this and subsequent meetings,
Mr. Brew and Mr. Newman continued to discuss their respective businesses, the
changing nature of the medical device industry and how their companies might
perform if they were combined. However, no agreements were reached during
these discussions.
From October 1996 through March 1997, the Company or Gruntal, acting on
the Company's behalf, contacted more than 100 other potential buyers.
On February 20, 1997, Mr. Newman, Mr. Da Costa and John T. Keiser,
President, Thermo Biomedical Inc., a subsidiary of Thermo, met at the Company's
facility. At that meeting, both parties continued discussions as to the
synergies which might be achieved if the Company were acquired by Nicolet.
Mr. Da Costa informally suggested at that meeting a price at which Nicolet
might be prepared to acquire all of the Company's business.
On February 28, 1997, Mr. Da Costa provided the Company with a letter
indicating Nicolet's interest in acquiring Imex and setting forth the
proposed terms that he had described in the meeting on February 20. Such
letter of indication of interest proposed a price of $9 million. The letter
did not address any proposed purchase price
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adjustments based on Imex's stockholders' equity, "break-up" fees or
"walk-away" rights. At a regularly scheduled meeting of Imex's Board held on
March 12, 1997, Mr. Newman advised the Board regarding discussions with
Nicolet, as well as the status of discussions with other potential buyers,
but stated his belief that it would be premature for the Board to consider
any of these arrangements until more definitive terms could be negotiated.
He advised the Board that he would report back to them as discussions
progressed.
After several follow-up telephone conversations between Nicolet and
Gruntal, on behalf of the Company, Thermo submitted a revised letter on
March 21, 1997. Such letter proposed a price of $10 million, subject to Imex
having a stockholders' equity of $4.4 million at closing. After several
additional discussions between Thermo and Gruntal, on behalf of Imex,
Nicolet, on April 28, 1997, issued a draft letter of intent to the Company
with respect to the proposed transaction. Such letter proposed a price of
$10 million, decreased by the amount by which the stockholders' equity of
Imex as of the closing date is less than $4.0 million. After additional
discussions between Thermo and Gruntal, on behalf of Imex, during the period
between April 28, 1997 and May 8, 1997, the letter of intent, containing
substantially the terms described above, was executed and delivered on May 8,
1997. A press release announcing the execution of the letter of intent was
disseminated before the opening of business on May 9, 1997 (the first
business day after the letter of intent was executed and delivered).
PURPOSE AND STRUCTURE OF THE MERGER
The purpose for the Merger is to enable Nicolet to acquire the entire
equity interest in the Company. The transaction has been structured as a
cash merger in order to provide the stockholders of the Company with cash for
all their shares and to provide a prompt and orderly transfer of ownership of
the Company from the stockholders of the Company to Nicolet.
The primary benefit of the Merger to the Company's stockholders is the
opportunity to sell all of their Common Stock at what the Board of Directors
believes is a fair price. The structure of the transaction as a cash merger
provides a cash payment at a fair price to all holders of outstanding Common
Stock and ensures the acquisition by Nicolet of all the outstanding shares of
the Company.
The primary reason for the Company entering into the Merger Agreement is
the Board of Directors' belief that it would be difficult for the Company to
significantly enhance operating performance and maximize stockholder value on
a stand-alone basis in the immediate future. The Board of Directors
believes, based upon the factors discussed below under "THE MERGER - FACTORS
TO BE CONSIDERED--Recommendation of the Company's Board of Directors," that
an internal restructuring of the Company's operations in order to enhance its
growth and profitability would not yield as favorable a result to the
Company's stockholders in the foreseeable future as the Merger with Nicolet.
Consequently, the Board of Directors believes that the Merger is the best
available opportunity to maximize stockholder value at the present time.
RECOMMENDATION OF THE COMPANY'S BOARD OF DIRECTORS
On June 11, 1997, the Company's Board of Directors, by unanimous vote at
a regular Board meeting held on that date, determined that the transactions
contemplated by the Merger are fair from a financial point of view to and in
the best interests of the stockholders of the Company, approved the Merger
Agreement and resolved to recommend that the Company's stockholders approve
the Merger Agreement.
In arriving at its recommendation and determination that the Merger is
fair to and in the best interests of stockholders of the Company, the Board
carefully considered the terms of the Merger at its meetings held on March
12, 1997 and June 11, 1997. As part of this process, the Board considered
the advice and assistance of its outside financial and legal advisors
regarding fairness to the stockholders of the Company of the terms of the
Merger Agreement and all related agreements and management's advice
regarding business reasons that favored approval of the Merger.
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In determining to approve and adopt the Merger Agreement and related
implementing agreements, and in determining the fairness of the terms of the
Merger, the Board of Directors considered the following factors, each of which,
in the Board of Directors' view, supported the determination to recommend the
Merger:
(i) information with regard to the financial condition, results of
operation, liquidity, business and prospects of the Company, as well
as the risks involved in achieving those prospects, current market,
regulatory and economic conditions (including current conditions in
the medical products and health care industries), the going concern
value of the Company (as reflected in part by its historical and
projected operating results) and the liquidation value of the Company;
(ii) the historical market prices of and trading activity in the Company's
Common Stock, particularly the fact that the Merger will enable the
stockholders of the Company to realize a price per share for all their
shares which the Board of Directors believes is fair;
(iii) the written opinion of Gruntal that the cash consideration to be
paid in the Merger is fair, from a financial point of view, to
the stockholders of the Company;
(iv) the terms and conditions of the Merger Agreement, including the
fiduciary out provision negotiated by the Company, which allowed the
Company to entertain other acquisition proposals thereafter; the fact
that the Company may terminate the Merger Agreement in certain
circumstances; the circumstances under which the breakup fee is
payable; and the relatively few substantive closing conditions;
(v) the Company's positive relationship with Nicolet, and Nicolet's
reputation in the medical products industry;
(vi) the likely decrease in the market price of the Company's Common Stock
if the Company was not sold, taking into account the likelihood of
downward pressure on the market price as a result of factors discussed
in subparagraph (i) above; and
(vii) the likelihood that the Merger would be viewed favorably by most
of the Company's stockholders.
In view of the wide variety of factors considered in connection with its
evaluation of the terms of the Merger, the Company's Board of Directors did not
find it practicable to, and did not, quantify or otherwise attempt to assign
relative weights to the specific factors considered in reaching its conclusions.
If the Merger is not approved by the Company's stockholders and the Merger
does not occur, the Company will continue its current operations as an
independent company. However, for the reasons discussed above, it is possible
that the Company would seek a business combination with another company.
OPINION OF FINANCIAL ADVISOR
As described under "THE MERGER--FACTORS TO BE CONSIDERED--Background of the
Merger" above, the Company engaged Gruntal to act as its exclusive financial
advisor in connection with the Company's review of strategic and financial
planning matters including the possible merger or sale of the Company. In
connection with the transaction discussed herein and pursuant to the terms of
the engagement, the Company requested that Gruntal evaluate the fairness to the
holders of the Company's Common Stock from a financial point of view of the
consideration to be received by the stockholders in connection with the Merger.
On June 11, 1997, Gruntal delivered to the Board of Directors its opinion to the
effect that, as of such date and based upon and subject to certain matters,
assumptions and limitations set forth in such opinion and described to the
Board of Directors, the consideration to be received by the stockholders is fair
from a financial point of view (the "Gruntal Opinion"). The opinion does not
address the Company's underlying business decision to proceed with the Merger.
It is directed to the Board of Directors of the Company and is directed only to
the fairness from a financial point of view of the terms of the Merger to the
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stockholders of the Company and does not constitute a recommendation to any
stockholder of the Company as to how such stockholder should vote with respect
to the Merger at the Special Meeting.
A copy of the Gruntal Opinion, which sets forth the assumptions made and
matters considered in, and limits on the review undertaken, is attached to this
Proxy Statement as Exhibit C and should be read by stockholders carefully in its
entirety. The summary of the Gruntal Opinion set forth in this Proxy Statement
is qualified in its entirety by reference by the full text of such Opinion.
In connection with its opinion, Gruntal, among other things, (i) reviewed
the draft Merger Agreement; (ii) reviewed the Annual Reports on Form 10-K and
related publicly available financial information of the Company for the two most
recent fiscal years ended June 30, 1995 and 1996, the Quarterly Reports on Form
10-Q of the Company for the periods ended September 30, 1996, December 31, 1996
and March 31, 1997; (iii) reviewed the unaudited income statement, balance sheet
and cash flow statement of the Company for the ten months ended April 26, 1997,
management's budgeted income statement (ten months actual and two months budget)
for June 30,1997 and projected income statement for fiscal years 1998 through
2000 (the "Projections"); (iv) conducted discussions with members of senior
management of the Company concerning the past and current business, operations,
assets, present financial condition and future prospects of the Company; (v)
reviewed the historical reported market prices and trading activity for the
Company's Common Stock; (vi) compared certain financial information and
operating statistics relating to the Company with published financial
information and operating statistics relating to selected public companies that
Gruntal deemed to be most comparable to the Company; (vii) compared the amount
per share of the cash consideration proposed to be paid to the holders of the
Company's Common Stock upon approval of the Merger with the financial terms, to
the extent publicly available, of selected other recent acquisitions that
Gruntal deemed to be relevant; (viii) reviewed certain other information,
including publicly available information relating to the business, earnings,
cash flow, assets and prospects of the Company; (ix) reviewed and compared the
other acquisition proposals that the Company had received and (x) reviewed such
other financial studies and analysis and performed such other investigations and
took into account such other matters as Gruntal deemed necessary.
Gruntal relied without independent verification upon the accuracy and
completeness of all of the financial and other information reviewed by it for
purposes of rendering its opinion. Gruntal also relied upon the management of
the Company as to the reasonableness and achievability of the Projections (and
the assumptions and bases therefor) provided to Gruntal and assumed for purposes
of such opinion that the Projections was reasonably prepared on bases reflecting
the best currently available estimates and judgment of the Company's management
on the future financial performance of the Company. Gruntal was not requested
to make, and did not make, an independent appraisal or evaluation of the assets,
properties, facilities or liabilities of the Company and Gruntal was not
furnished with any such appraisal or evaluation. Gruntal also relied as to all
legal matters on advice of counsel to the Company. As indicated below, Gruntal
was directed to, and did, solicit several third parties regarding any
indications of interest in acquiring all or any part of the Company before
delivering its opinion. Gruntal also noted that the "fiduciary out provision"
of the Merger Agreement also gives the Company the right to consider certain
unsolicited offers. Gruntal's opinion to the Company's Board of Directors was
based upon prevailing market conditions (including, then current market prices
for the Company's Common Stock) and other circumstances and conditions existing
on the date of such opinion and does not represent Gruntal's opinion as to what
the actual value of the Company's Common Stock will be after the date of such
opinion. It is not contemplated that Gruntal will give any subsequent opinion
with respect to the Merger.
The following is a brief summary of certain financial analysis performed by
Gruntal in connection with its opinion.
COMPARABLE COMPANY ANALYSIS. Using publicly available information, Gruntal
compared selected historical, current and projected operating and financial
data, stock data and financial ratios for the Company with certain data from
selected publicly traded companies engaged primarily in the medical diagnostic
and monitoring equipment/device business that, in Gruntal's judgment, were most
closely comparable to the Company. The companies selected were: AFP Imaging
Corporation, Arrhythmia Research Technology, Inc., Bio-Logic Systems Inc., CAS
Medical Systems, Inc. and Colorado MEDtech, Inc. (the "Comparable Companies").
Gruntal reviewed, among other things, the following data with respect to the
Comparable Companies: (i) operating statement data, including latest twelve
months ("LTM") net
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revenues; (ii) LTM operating cash flow ("LTM EBITDA"); (iii) LTM operating
income ("LTM EBIT"); (iv) LTM net income; and (v) selected balance sheet
data, including book value. None of the earnings estimates for the
Comparable Companies were available from the Institutional Brokers Estimate
System ("IBES"). Utilizing this information, Gruntal calculated a range of
market multiples for the Comparable Companies by dividing the "Enterprise
Value" (total common shares outstanding multiplied by closing market price
per share on May 28, 1997 or "Market Equity Value," plus total debt and
preferred stock, minus cash and cash equivalents) for each Comparable Company
by, among other things, such company's LTM net revenues, LTM EBITDA and LTM
EBIT, and by dividing each of the Comparable Company's Market Equity Value
by, among other things, the company's LTM net income and book value. For the
Comparable Companies: (i) the LTM net revenue multiples ranged from 0.37x to
1.61x (0.76x mean), (ii) the LTM EBITDA multiples ranged from 2.56x to 11.87x
(6.98x mean), (iii) the LTM EBIT multiples ranged from 2.70x to 13.46x (8.88x
mean), (iv) the LTM net income multiples ranged from 6.64x to 20.86x (14.73x
mean), and (v) the book value multiples ranged from 0.90x to 5.19x (2.30x mean).
Gruntal then compared the market multiples for the Comparable Companies
to the multiples being paid for the Company. Based on an assumed merger
consideration to the Company of $9.75 million (based on the mid-point of
management's estimate of the purchase price), the Company's implied
multiples were as follows: (i) LTM net revenues 1.11x, (ii) LTM EBITDA
28.30x, (iii) LTM EBIT not meaningful due to negative EBIT, (iv) LTM net
income not meaningful due to negative net income, and (v) book value 2.58x.
Gruntal noted that the multiples being paid to the Company were (1)
substantially higher than the multiples observed in the Comparable Companies
on the basis of LTM EBITDA, and (2) well within the range of or above the
mean multiples of LTM net revenues and book value.
COMPARABLE TRANSACTION ANALYSIS. Gruntal reviewed selected
publicly-available financial data, including Enterprise Value (at the
effective date of the transaction) to net revenues, Enterprise Value to
EBITDA, Enterprise Value to EBIT, Market Equity Value to net income and
Market Equity Value to book value, regarding nine acquisitions of selected
medical diagnostic and monitoring equipment/device companies with deal values
(includes net debt) of up to $75.0 million. The nine transactions selected
(the "Comparable Transactions"), which took place between June 1993 and May
1997, were as follows: (i) the acquisition of Aequitron Medical Inc. by
Nellcor Puritan-Bennett, (ii) the acquisition of Bird Medical Technologies
Inc. by ThermoElectron Corp., (iii) the acquisition of Community Health
Computing Corp. by ADAC Laboratories, (iv) the acquisition of Diasonics
Ultrasound by Elbit, Ltd., (v) the acquisition of Interspec Inc. by Advanced
Technology Labs, (vi) the acquisition of Laser Precision Corp. by GN Great
Nordic Ltd., (vii) the acquisition of MDT Corp. by Getinge Industries, (viii)
the acquisition of Mountain Medical Equipment by Cryogenic Associates, and
(ix) the acquisition of Cardiotronic Systems Inc. by Ballard Medical Products.
Gruntal calculated the multiples of each of these aforementioned selected
data points based upon the Comparable Transactions. The range of multiples
calculated were as follows: (i) Enterprise Value to LTM net revenues were 1.92x
and 0.30x, (ii) Enterprise Value to LTM EBITDA were 12.16x and 9.55x, (iii)
Enterprise Value to LTM EBIT were 18.22x and 13.13x, (iv) market Equity Value to
LTM net income were 38.17x and 22.89x, and (v) Market Equity Value to book value
were 3.29x and 0.69x. Accordingly, the calculated mean and median multiples
were as follows: (i) Enterprise Value to LTM net revenues were 0.96x and 0.90x,
respectively; (ii) Enterprise Value to LTM EBITDA were 10.52x and 9.91x,
respectively; (iii) Enterprise Value to LTM EBIT were 15.78x and 15.88x,
respectively; (iv) Market Equity Value to LTM net income were 28.84x and 27.15x,
respectively; and (v) Market Equity Value to book value were 1.91x and 1.80x,
respectively. Based on a mid-point merger consideration to the Company
estimated by the Company's management of $9.75 million, the Company's implied
multiples were as follows: (i) Enterprise value to LTM net revenues of 1.11x,
(ii) Enterprise Value to LTM EBITDA of 28.30x, (iii) Enterprise Value to LTM
EBIT not meaningful due to negative LTM EBIT, (iv) Market Equity Value to LTM
net income not meaningful due to negative LTM net income, and (v) Market Equity
Value to book value of 2.58x. Gruntal noted the implied multiples for the
Company were (1) substantially higher than the multiples observed in the
Comparable Transactions on the basis of LTM EBITDA, and (2) well within the
range of and above the mean multiples of LTM net revenues and book value.
Gruntal also performed premium analysis for the Comparable Transactions.
The one month premium ranged from -14.3% to 72.1% with a mean of 39.5% for the
nine selected comparable transactions with three of the transactions
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having a premium of 50.0% or more. These one month premiums compared to a
10.2% premium for the Company based on a merger consideration to the
Company's shareholders of $1.41 per share (based on the mid-point of
management's estimate of the purchase price) and the Company's closing stock
price one month prior to May 9, 1997. Although these mergers and
acquisitions Comparable Transactions were used for comparison purposes, none
of such transactions took place under market conditions or competitive
circumstances that were directly comparable to those of the Merger.
Accordingly, an analysis of the results described above is not mathematical
nor necessarily precise; rather, it should be considered in conjunction with
the analyses as a whole.
DISCOUNTED CASHFLOW ANALYSIS. Gruntal performed a discounted cashflow
("DCF") analysis of the Company on a standalone basis, based upon a three year
projection using financial information provided by the Company's management for
the years ending June 30, 1998 through June 30, 2000. For the DCF analysis,
Gruntal discounted the projected unleveraged free cash flows (earnings before
interest, taxes, plus depreciation and amortization, less capital expenditures)
for the respective three years and the terminal value (calculated as a multiple
of EBIT). From this Enterprise Value, Gruntal subtracted all debt obligations
appearing on the Company's balance sheet at March 31, 1997 and added the cash
balance on such balance sheet to arrive at an implied equity value ("Equity
Value"). The terminal value was computed by applying multiples ranging from
6.00x to 10.00x to the forecasted EBIT of the last year projected. Applying
discount rates of 17.5% and 20.0% based on its estimated range of the Company's
weighted average cost of capital, Gruntal calculated the Company's Equity Value
ranging from $4.0 million to $7.3 million. Further, Gruntal performed
sensitivity analyses to understand the effects on Equity Value from changes in
the terminal value. Due to the high proportion of value contribution associated
with the terminal value, a sensitivity analysis was performed assuming the
terminal value was 80.0% or 120.0% of the foregoing terminal value. With these
changes the implied Equity Value for the Company ranged from $3.2 million to
$8.8 million.
HISTORICAL PRICE AND VOLUME ANALYSIS. Gruntal reviewed the weekly
closing price and volume of the Company's Common Stock during the one, three
and five year periods ending May 30, 1997. The high, low and average closing
prices for the Company's Common Stock for the 12 month period ended May 30,
1997 were $2.50, $0.94 and $1.50, respectively; the high, low and average
closing prices for the three year period ended May 30, 1997 were $2.50, $0.63
and $1.08, respectively; the high, low and average closing prices for the
five year period ended May 30,1997 were $2.50, $0.63 and $1.20, respectively.
Gruntal noted the mid-point offer price of $1.41 per share (based on
management's estimate of the purchase price) represents a slight discount to
the twelve month average price and a premium to the three-year and five-year
average share price. Gruntal also tested the frequency distribution for
price sensitivity of the Company's Common Stock. Gruntal determined that
over the last year, approximately 64.4% of the volume of the Company's Common
Stock have traded above $1.44 (the Company's estimate of the upper range of
the offer price per share), while over the last three years and five years,
approximately 45.9% and 41.0% of the trades of the Company's Common Stock
have been traded above $1.44. Gruntal noted that the Company experienced
increased trading activity and a significant net increase in stock price
during the period of November 1996 through January 1997 largely as a result
of the Company's news release and the demonstration of a prototype of a
potential future product at the American Heart Association convention on
November 11 and 12, 1996 and related media coverage that followed the
announcement. Gruntal observed that the Company's stock did not trade higher
than $1.44 (the high-end of management's estimate of the purchase price per
share) after March 28, 1997 (until May 8, 1997, the day before the
announcement of the Merger). For all but a short period of time over the
past five years, a majority of the shares have traded below management's
estimated purchase price range per share.
GENERAL. The summary set forth above does not purport to be a complete
description of the analyses performed by Gruntal. The preparation of a fairness
opinion involves various determinations as to the most appropriate and relevant
methods of financial analyses and the application of these methods to the
particular circumstances and, therefore, such an opinion is not readily
susceptible to summary description. Accordingly, notwithstanding the separate
factors summarized above, Gruntal believes that its analyses must be considered
as a whole and that selected portions of its analyses and the factors considered
by it, without considering all analyses and factors, could create an incomplete
view of the evaluation process underlying its opinion. In performing its
analyses, Gruntal made numerous assumptions with respect to industry
performance, general business and economic conditions and other matters, many of
which are beyond the control of the Company. The analyses performed by Gruntal
are not necessarily indicative of actual values
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or future results, which may be significantly more or less favorable than
suggested by such analyses. Additionally, analyses relating to the values of
businesses do not purport to be appraisals or to reflect the prices at which
businesses actually may be sold.
Gruntal is an investment banking firm engaged, among other things, in the
valuation of businesses and securities in connection with mergers, acquisitions,
underwritings, sales and distributions of listed and unlisted securities,
private placements and valuations for estate, corporate and other purposes.
Gruntal is a nationally recognized investment banking firm which has substantial
experience in merger and acquisition transactions and was familiar with the
Company. In the ordinary course of business, Gruntal may actively trade in the
securities of the Company for its own account and the accounts of its customers,
and accordingly, may at any time hold a long or short position in such
securities.
Pursuant to the terms of the engagement letter dated June 27, 1996 (the
"Engagement Letter"), Gruntal was paid $25,000 upon execution of the engagement
letter and $50,000 was payable to Gruntal upon the delivery of the Gruntal
Opinion. In addition, Gruntal is entitled to receive a financial advisory fee
in the amount of up to $175,000 upon consummation of the Merger. The Company
agreed to indemnify Gruntal against certain liabilities, including liabilities
under the federal securities laws, and to reimburse Gruntal for their reasonable
out-of-pocket expenses in connection with this engagement. The Company also
agreed to reimburse Gruntal for the fees and disbursements of Gruntal's counsel.
PLANS FOR THE COMPANY AFTER THE MERGER
After the Merger, Nicolet anticipates that it will continue its review of
the Company and its assets, business, operations, properties, policies,
corporate structure, dividend policy, capitalization and management and consider
whether any changes would be desirable in light of the circumstances then
existing. At this time Nicolet does not intend to close the Company's corporate
headquarters located in Golden, Colorado. Effective upon consummation of the
Merger, the directors of the Merger Subsidiary will be the initial directors of
the Surviving Corporation.
Except for the foregoing, and as otherwise indicated in this Proxy
Statement, Nicolet does not have any other present plans or proposals which
relate to or would result in an extraordinary corporate transaction, such as a
merger, reorganization or liquidation, involving the Company, a sale or transfer
of a material amount of assets of the Company or any material change in the
Company's capitalization or any other material changes in the Company's
corporate structure or business.
CERTAIN EFFECTS OF THE MERGER
As a result of the Merger, the entire equity interest of the Company will
be owned by Nicolet, and the current stockholders will have no continuing
interest in the Company. Therefore, following the Merger, the stockholders of
the Company will no longer benefit from any increases in the value of the
Company. Following the Merger, Nicolet will own 100% of the Company and will
have complete control over the management and conduct of the Company's business,
all income generated by the Company and any future increase in the Company's
value. Similarly, Nicolet will also bear the risk of any losses incurred in the
operation of the Company and any decrease in the value of the Company.
Following the Merger, the Common Stock will no longer meet the requirements
of the Nasdaq SmallCap Market for continued listing and will, therefore, be
delisted from the Nasdaq National Market.
The Common Stock is currently registered as a class of securities under the
Exchange Act. Registration of the Common Stock under the Exchange Act may be
terminated upon application of the Company to the Commission if the Common Stock
is not listed on a national securities exchange or quoted on the Nasdaq SmallCap
Market and there are fewer than 300 record holders of the Common Stock.
Termination of registration of the Common Stock under the Exchange Act would
substantially reduce the information required to be furnished by the Company to
its stockholders and to the Commission and would make certain provisions of the
Exchange Act, such as the short-swing trading
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provisions of Section 16(b), the requirement of furnishing a proxy statement
in connection with stockholders' meetings pursuant to Section 14(a), and the
requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions, no longer applicable to the Company. It is the
present intention of Nicolet to cause the Company to make an application for
the termination of the registration of the Common Stock under the Exchange
Act as soon as practicable after the Effective Time of the Merger.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Board of Directors of the Company
with respect to the Merger Agreement and the transactions contemplated thereby,
stockholders should be aware that certain members of the management and the
Board of Directors of the Company have certain interests in the Merger in
addition to the interests of the stockholders of the Company generally. In
connection with the Board of Directors' determination that the Merger is fair to
the Company's stockholders, the Board carefully considered conflict of interest
issues relating to the matters described below.
LEASE. As a condition to closing of the Merger, the Company will enter
into a new lease ("Lease") with Dennis R. Newman and Patricia L. Newman pursuant
to which the Company will continue to lease its current facilities at 6355 Joyce
Drive, Golden, Colorado from the Newmans. The Lease will commence with the
closing of the Merger and will end on June 30, 1998. The Company will have the
option to extend the Lease for two periods of one year each. The Company will
pay rent of $127,572 for the initial term and $131,399 and $135,341 for the
first and second renewal terms. The Company will also pay taxes, insurance
costs and utilities charges with respect to the premises.
NEWMAN AGREEMENT. As a condition to closing of the Merger, Dennis R.
Newman, Chairman and CEO of the Company, will enter into an agreement with the
Company (the "Newman Agreement") pursuant to which Mr. Newman (i) will remain an
employee of the Company for 6 months after the closing of the Merger at a base
salary of $112,600 per year, (ii) will provide consulting services to the
Company for an additional four years on a part time basis (approximately three
days a week for the first two years and two days a week for the next two years)
at a compensation rate of $5,000 per month and (iii) will not compete with the
Company for a period of four and one-half years after the closing of the Merger.
STOCK OPTIONS. While certain cash settlements of "in-the-money" stock
options will be paid in connection with the consummation of the Merger, none of
such options is owned by the directors or executive officers of the Company.
The cash settlement amounts are based upon the spread between $1.45 per share
and the exercise price per share of such options and do not take into account
any income taxes that may be required to be withheld.
INDEMNIFICATION OF OFFICERS AND DIRECTORS. The Merger Agreement provides
that, for a period of not less than three years following the Effective Time,
Nicolet will cause the Surviving Corporation to honor in all material
respects the obligations of the Company pursuant to the provisions of the
Company's by-laws with respect to the indemnification of the officers and
directors of the Company.
SOLICITATION FEES AND EXPENSES.
Neither Nicolet nor the Company will pay any fees or commissions to any
broker or dealer or any other person for soliciting Company stockholders with
respect to the Merger. Brokers, dealers, commercial banks and trust companies
will, upon request, be reimbursed by the Company for reasonable and necessary
costs and expenses incurred by them in forwarding materials to their customers.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Under currently existing provisions of the Internal Revenue Code of 1986,
as amended (the "Code"), the Treasury Regulations promulgated thereunder,
applicable judicial decisions and administrative rulings, all of which are
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subject to change, the federal income tax consequences described below are
expected to arise in connection with the Merger. Due to the complexity of the
Code, the following discussion is limited to the material federal income tax
aspects of the Merger for a Company stockholder who is a citizen or resident of
the United States. The following discussion does not address potential foreign,
state, local and other tax consequences, nor does it address taxpayers subject
to special treatment under the federal income tax laws, such as insurance
companies, tax-exempt organizations, S corporations and taxpayers subject to the
alternative minimum tax. In addition, the following discussion may not apply to
Company stockholders who acquired their shares upon the exercise of employee
stock options or otherwise as compensation. Neither the company nor Nicolet has
requested either the Internal Revenue Service or counsel to rule or issue an
opinion on the federal income tax consequences of the Merger. ALL STOCKHOLDERS
ARE URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE FEDERAL, FOREIGN,
STATE AND LOCAL TAX CONSEQUENCES OF THE DISPOSITION OF THEIR SHARES IN THE
MERGER.
For federal income tax purposes, the Merger will be treated as a taxable
sale or exchange of shares of Common Stock for cash by each holder of such
shares (including any holder of Dissenting Shares). Accordingly, the federal
income tax consequences to the holders of Common Stock will generally be as
follows:
(a) Assuming that the shares of Common Stock exchanged by a Company stockholder
for cash in connection with the Merger are capital assets in the hands of
the stockholder at the Effective Time, such stockholder will recognize
capital gain or loss by reason of the consummation of the Merger.
(b) The capital gain or loss, if any, will be long-term with respect to shares
of Common Stock held for more than 12 months as of the Effective Time and
short-term with respect to such shares held for 12 months or less as of the
Effective Time.
(c) The amount of capital gain or loss to be recognized by each holder of
Common Stock will be measured by the difference between the amount of cash
payable to the account of such stockholder in connection with the Merger
(including cash received for Dissenting Shares and from the escrow account)
and such stockholder's tax basis in the Common Stock at the Effective Time.
Cash payments made pursuant to the Merger (including any cash paid to
holders of Dissenting Shares) will be reported to the extent required by the
Code to stockholders of the Company and the Internal Revenue Service. Such
amounts will ordinarily not be subject to withholding of federal income tax.
However, backup withholding of such tax at a rate of 31% may apply to certain
stockholders by reason of the events specified in Section 3406 of the Code and
the Treasury Regulations promulgated thereunder, which include failure of a
stockholder to supply the Company or its agent with such stockholder's taxpayer
identification number. Accordingly, each Company stockholder will be asked to
provide the stockholder's correct taxpayer identification number on a Substitute
Form W-9 which is to be included in the letter of transmittal to be sent to
stockholders relating to their shares of Common Stock. Withholding may also
apply to Company stockholders who are otherwise exempt from such withholding,
such as a foreign person, if such person fails to properly document its status
as an exempt recipient.
The cash settlement amounts distributed in connection with the Merger to
holders of options to acquire shares of Common Stock will constitute "wages,"
and will be subject to income and employment tax withholding. The gross amount
due, the withheld amount and the net payment will be included in each option
holder's W-2 form for 1997.
REGULATORY APPROVALS
No federal or state regulatory approvals of the Merger are required.
THE MERGER AGREEMENT
The information under this caption is qualified in its entirety by
reference to the full text of the Merger Agreement, a copy of which is attached
as Exhibit A to this Proxy Statement.
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GENERAL
The Company and Nicolet entered into the Merger Agreement effective
July 15, 1997. If the stockholders of the Company approve the Merger Agreement
and the other conditions to the closing of the Merger are satisfied, the
Merger Subsidiary will be merged with and into the Company, with the result
that the separate corporate existence of the Merger Subsidiary will then
cease. The Company will be the Surviving Corporation and will be a wholly
owned subsidiary of Nicolet. At the Effective Time, the Common Stock will be
converted automatically into the right to receive cash, as described below.
See "THE MERGER AGREEMENT--Consideration to be Received by Stockholders."
The shares of the Common Stock will no longer be listed or traded on the
Nasdaq SmallCap Market, and the registration of the Common Stock under the
Exchange Act will be terminated.
EFFECTIVE TIME
If the Merger Agreement is adopted by the requisite vote of the Company's
stockholders, the Merger will be consummated and become effective upon the
acceptance for recording of the Certificate of Merger by the Delaware Secretary
of State, which is expected to occur on or about August 22, 1997 or (if the
other closing conditions are not satisfied as of such date) as soon as
practicable after conditions to the Merger are satisfied (or waived to the
extent permitted), or such other date agreed on by the parties. There can be no
assurance that all conditions to the Merger will be satisfied. See "THE MERGER
AGREEMENT--Conditions to Consummation of the Merger."
CONSIDERATION TO BE RECEIVED BY STOCKHOLDERS
In connection with the Merger, each share of Common Stock outstanding
immediately prior to the Effective Time (other than Dissenting Shares) will be
converted into the right to receive an amount in cash equal to $10,000,000
(decreased by the amount up to $700,000 by which the Company's stockholders'
equity at the date of the closing is less than $4,000,000) divided by the number
of shares of Common Stock outstanding immediately prior to the Effective Time of
the Merger. Dissenting Shares will be converted to cash in the manner described
under the caption "RIGHTS OF DISSENTING STOCKHOLDERS."
ESCROW AND EXCHANGE OF SHARES
The Merger Agreement provides that Nicolet shall deliver to State Street
Bank and Trust Company (the "Exchange Agent") the amount of $9,300,000, which
represents approximately $1.35 per share of Common Stock ("Initial Merger
Consideration"), which amount will be distributed to the Company's stockholders
as described under "Payment for Shares and Options" below. In addition, Nicolet
will deposit $700,000, with State Street Bank and Trust Company ("Escrow Agent")
pursuant to an Escrow Agreement attached as an exhibit to the Merger Agreement.
By voting for the Merger Agreement, a stockholder will be consenting to the
establishment of this escrow fund, the appointment of Dennis R. Newman as the
Stockholder Representative and as attorney-in-fact and agent for the
stockholders for purposes of the Escrow Agreement.
Within 60 days of closing, Nicolet shall prepare and submit to the
Stockholder Representative a balance sheet of the Company as of closing. The
Stockholder Representative may raise objections to the balance sheet submitted
by Nicolet. To the extent that any objections are not resolved by the
Stockholder Representative and Nicolet, Coopers & Lybrand LLP shall resolve such
objections. If the Company's stockholders' equity as reflected on that balance
sheet, as adjusted, is $4,000,000 or more, the full escrow amount will be paid
to the Company's stockholders pro rata. If said stockholders' equity is less
than $4,000,000, the deficiency will be taken from the escrow amount and
returned to Nicolet.
PAYMENT FOR SHARES AND OPTIONS
PAYMENT FOR SHARES. The Exchange Agent will act as the exchange agent for
payment of the Initial Merger Consideration to the holders of the Common Stock.
Instructions with regard to the surrender of certificates formerly
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representing shares of Common Stock, together with the letter of transmittal
to be used for that purpose, will be mailed to stockholders as soon as
practicable after the Effective Time. As soon as practicable following
receipt from the stockholder of a duly executed letter of transmittal,
together with certificates formerly representing Common Stock and any other
items specified by the letter of transmittal, the Exchange Agent will pay the
Initial Merger Consideration to such stockholder.
After the Effective Time, the holder of a certificate formerly representing
Common Stock will cease to have any rights as stockholder of the Company, and
such holder's sole right will be to receive the Merger Consideration with
respect to such shares (or, in the case of Dissenting Shares, the statutorily
determined "fair value"). If payment is to be made to a person other than the
person in whose name the surrendered certificate is registered, it will be a
condition of payment that the certificates so surrendered be properly endorsed
or otherwise in proper form for transfer and that the person requesting such
payment shall pay any transfer or other taxes required by reason of such payment
or establish to the satisfaction of the Surviving Corporation that such taxes
have been paid or are not applicable. No transfer of shares outstanding
immediately prior to the Effective Time will be made on the stock transfer books
of the Surviving Corporation after the Effective Time.
Any portion of the Merger Consideration remaining undistributed upon
expiration or termination of the Exchange Agent's appointment will be returned
to Nicolet, and any holders of theretofore unsurrendered Common Stock
certificates may thereafter surrender to Nicolet such stock certificates and
(subject to abandoned property, escheat or similar laws) receive in exchange
therefore the Merger Consideration to which they are entitled.
STOCKHOLDERS OF THE COMPANY SHOULD NOT FORWARD THEIR STOCK CERTIFICATES TO
THE EXCHANGE AGENT WITHOUT A LETTER OF TRANSMITTAL, AND SHOULD NOT RETURN THEIR
STOCK CERTIFICATES WITH THE ENCLOSED PROXY.
OPTION SETTLEMENT PAYMENTS. Prior to the Effective Time, the Company will
cause the outstanding options to purchase shares of the Company's Common Stock
to be canceled. In consideration of such cancellation, the Company will pay to
the holder of each such option an amount (the "Option Settlement Amount"), net
of withholding taxes, equal to the excess, if any, of $1.45 per share over the
exercise price per share of such option multiplied by the number of shares for
which such option is then exercisable. Under the Merger Agreement, the Company
has agreed to take such actions as are necessary to fully advise holders of
options of their rights under the Merger Agreement and their respective stock
option agreements. After the Effective Time, no holder of an option will have
any rights other than to receive payment for such holder's options equal to the
Option Settlement Amount.
NO INTEREST ON PAYMENT AMOUNTS. In no event will holders of shares of
Common Stock or options to purchase Common Stock be entitled to receive payment
of any interest on the Merger Consideration or the Option Settlement Amounts.
OPERATIONS OF THE COMPANY PRIOR TO THE MERGER
The Company has agreed that, prior to the Effective Time, the business of
the Company will be conducted in accordance with certain restrictions set forth
in the Merger Agreement. Among other things, the Company has agreed that, except
as the Company and Nicolet may otherwise agree, the Company will, and will cause
its subsidiaries to, operate only in the ordinary course of business, and
neither the Company nor any of its subsidiaries will do any of the following:
(i) issue, grant or sell, or redeem or repurchase, any shares of Common Stock or
any other securities of the Company or any rights, warrants or options to
acquire any shares or other securities; (ii) pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of its capital stock; (iii) create, incur or assume any debt not
currently outstanding (including capital leases obligations, but excluding
accounts payable incurred in the ordinary course of business); assume,
guarantee, endorse or otherwise become liable for the obligations of any other
person; or make any loans, advances or capital contributions to, or investments
in, any other person; (iv) other than in the ordinary course of business, enter
into, adopt or amend any employee benefit plan or any employment or severance
agreement or arrangement, increase in any manner the compensation or fringe
benefits of, or materially modify the employment terms of, or pay any bonuses
to, its employees or hire or fire any employee; (v) acquire, sell,
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lease, encumber or dispose of any assets or rights, other than purchases and
sales of assets in the ordinary course of business; (vi) pay any obligation or
liability other than in the ordinary course of business; or (vii) enter into,
amend, terminate, take or omit to take any action that would constitute a
violation of or default under, or waive any rights under, any contract.
In addition, the Company has agreed that until the earlier of the
termination of the Merger Agreement or the Effective Time, neither the Company
nor any representatives will, directly or indirectly, take any action to
encourage, solicit or initiate or engage or participate in negotiations or
discussions concerning any Acquisition Proposal (as defined below), or furnish
any nonpublic information concerning the Company to any party in connection with
any Acquisition Proposal. An Acquisition Proposal is defined in the Merger
Agreement as a proposal for any tender offer, exchange offer, merger,
consolidation, sale of material assets, recapitalization, accumulation of shares
or proxy solicitation or other business combination involving the Company or any
of its subsidiaries. Notwithstanding the foregoing, the Company may (i) take
any position with respect to an Acquisition Proposal that the Board of Directors
of the Company is required to do in the exercise of its fiduciary duties, as
advised in writing by outside legal counsel and (ii) in the case of a Qualified
Acquisition Proposal, furnish information about the Company to the potential
party to the transaction and enter into and participate in discussions or
negotiations with such party. A Qualified Acquisition Proposal means a bona
fide written Acquisition Proposal at a price per share that the Company's Board
of Directors reasonably believes exceeds the Merger Consideration. The Company
must give immediate notice to Nicolet, and disclose details of, any Acquisition
Proposal it receives, any indications that a person is interested in making an
Acquisition Proposal or any discussions or negotiations relating to a Qualified
Acquisition Proposal.
CONDITIONS TO CONSUMMATION OF THE MERGER
The Merger will occur only if the Merger Agreement is approved and
adopted by the requisite vote of the holders of the Common Stock.
Consummation of the Merger also is subject to the satisfaction of certain
other conditions specified in the Merger Agreement, unless such conditions
are waived (to the extent such waiver is permitted by law). The failure of
any such condition to be satisfied, if not waived, would prevent consummation
of the Merger.
The obligations of Nicolet to consummate the Merger are subject to
satisfaction of the following conditions, among others: (i) the number of
Dissenting Shares shall not exceed 6% of the number of outstanding shares as
of the Effective Time; (ii) the Company shall have obtained all necessary
waivers, permits, consents, approvals or other authorizations; (iii) the
Company's representations and warranties in the Merger Agreement shall be
true and correct as of the Effective Time; (iv) the Company shall have
performed and complied with its agreements and covenants as of or prior to
the Effective Time; (v) no action, suit or proceeding shall be pending,
threatened or in effect that would prevent consummation of the Merger or
adversely affect the right of Nicolet to own, operate or control the
Company's assets or operations; (vi) Nicolet shall have received an
acceptable legal opinion from the Company's legal counsel; (vii) no
development in the status or outlook for the business of the Company shall
have occurred which in Nicolet's judgment is materially adverse to the
Company; (viii) Dennis R. Newman shall have executed and delivered the Newman
Agreement; (ix) Dennis R. Newman and Patricia L. Newman shall have executed
and delivered the Lease; (x) Nicolet shall have received from Gruntal a
letter setting forth the total fees and expenses (not to exceed $250,000
(including the $25,000 retainer already paid) plus reasonable expenses)
payable to Gruntal for its services rendered to the Company and (xi) the
Company shall have entered into an amendment to a third party license
agreement in form and substance satisfactory to the Buyer.
The obligations of the Company to consummate the Merger are subject to
satisfaction of the following conditions, among others: (i) Nicolet's
representations and warranties in the Merger Agreement shall be true and
correct as of the Effective Time; (ii) Nicolet shall have performed and
complied with its agreements and covenants as of or prior to the Effective
Time; (iii) the Company shall have received an acceptable legal opinion from
Nicolet's legal counsel.
VOTING OF SHARES OWNED BY NEWMAN FAMILY
Dennis R. Newman, Patricia L. Newman, the Newman Family Trust and The Fred
E. and Jennie A. Newman Trust have agreed in the Merger Agreement to vote shares
of Common Stock owned beneficially by them in favor of the adoption of the
Merger Agreement and the approval of the Merger. These stockholders own
beneficially 52% of
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the Company's outstanding shares and, accordingly, their affirmative votes are
sufficient to approve the Merger under Delaware Law.
TERMINATION
The Merger Agreement may be terminated and the Merger abandoned at any time
prior to the filing of Certificate of Merger with the Delaware Secretary of
State whether before or after action by the Company's stockholders and without
further approval by the Company's stockholders under any of the following
circumstances: (i) by mutual written consent of the Company and Nicolet; (ii) by
either the Company or Nicolet after October 31, 1997 if the conditions of such
party's obligation to consummate the Merger have not been satisfied or waived
(otherwise than due to a failure of the party seeking to terminate); (iii) by
either the Company or Nicolet if the Company stockholders do not approve the
Merger; (iv) by either Thermo or the Company if the other party breaches the
Merger Agreement and fails to remedy the breach; and (v) by Nicolet if the
Company's Board of Directors shall have taken any action with respect to an
Acquisition Proposal other than to recommend its rejection, shall have taken a
position of neutrality with respect to an Acquisition Proposal, failed to take
any position with respect to any Acquisition Proposal within ten (10) business
days after the making or commencement of the Acquisition Proposal or withdrawn
or modified its recommendation of the Merger in a manner adverse to Nicolet. In
the event of termination by Nicolet pursuant to (v), the Company shall
immediately pay to Nicolet a cash termination fee of $300,000.
ACCOUNTING TREATMENT
The Merger will be accounted for under the purchase method of accounting
under which the total consideration paid in the Merger will be allocated among
the Surviving Corporation's consolidated assets and liabilities based on the
fair values of the assets acquired and liabilities assumed.
RIGHTS OF DISSENTING STOCKHOLDERS
When the Merger is effected, stockholders of the Company who comply with
the procedures prescribed in Section 262 of the DGCL ("Section 262") will be
entitled to a judicial determination of the "fair value" of their shares
(exclusive of any element of value arising from the accomplishment or
expectation of the Merger) and to receive from the Company payment of such fair
value in cash. Shares of Common Stock which are outstanding immediately prior
to the Effective Time and with respect to which appraisal shall have been
properly demanded in accordance with Section 262 shall not be converted into the
right to receive the Merger Consideration at or after the Effective Time unless
and until the holder of such shares withdraws his or her demand for such
appraisal or becomes ineligible for such appraisal.
The following is a brief summary of the statutory procedures to be followed
by a stockholder of the Company in order to dissent from the Merger and perfect
appraisal rights under the DGCL. This summary is not intended to be complete
and is qualified in its entirety by reference to Section 262, the text of which
is included as Exhibit B to this Proxy Statement. Any stockholder considering
demanding appraisal is advised to consult legal counsel.
A written demand for appraisal of shares of Common Stock must be delivered
to the Company by a stockholder seeking appraisal before the taking of the vote
on the Merger. This written demand must be separate from any proxy or vote
abstaining from or voting against approval of the Merger. Voting against
approval of the Merger, abstaining from voting or failing to vote with respect
to approval of the Merger will not constitute a demand for appraisal within the
meaning of Section 262.
Stockholders electing to exercise their appraisal rights under Section 262
must not vote for approval of the Merger. A vote by a stockholder against
approval of the Merger is not required in order for that stockholder to exercise
appraisal rights. However, if a stockholder returns a signed proxy but does not
specify a vote against approval of the Merger or a direction to abstain, the
proxy, if not revoked, will be voted for approval of the Merger, which will have
the effect of waiving that stockholder's appraisal rights.
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A written demand for appraisal must reasonably inform the Company of the
identity of the stockholder of record and that such stockholder intends thereby
to demand appraisal. Accordingly, a demand for appraisal should be executed by
or for the stockholder of record, fully and correctly, as such stockholder's
name appears on the stock certificates. If Common Stock is owned of record in a
fiduciary capacity, such as by a trustee, guardian or custodian, such demand
must be executed by the fiduciary. If, for example, a stockholder holds shares
of Common Stock through a broker, who in turn holds shares through a central
securities depository nominee, such as Cede & Co., a demand for appraisal of
such shares must be made by or on behalf of such depository nominee. If Common
Stock is owned of record by more than one person, as in a joint tenancy or
tenancy in common, such demand must be executed by or for all joint owners. An
authorized agent, including an agent for two or more joint owners, may execute
the demand for appraisal for a stockholder of record; however, the agent must
identify the record owner and expressly disclose the fact that, in exercising
the demand, he is acting as agent for the record owner.
A record owner, such as a broker, who holds Common Stock as a nominee for
others, may exercise appraisal rights with respect to the Common Stock held for
all or less than all beneficial owners of Common Stock as to which the holder is
the record owner. In such case, the written demand must set forth the number of
shares of Common Stock covered by such demand. Where the number of shares of
Common Stock is not expressly stated, the demand will be presumed to cover all
shares of Common Stock outstanding in the name of such record owner. Beneficial
owners who are not record owners and who intend to exercise appraisal rights
should instruct the record owner to comply strictly with the statutory
requirements with respect to the delivery of written demand prior to the taking
of the vote on the Merger.
A Company stockholder who elects to exercise appraisal rights must mail or
deliver the written demand for appraisal to: Secretary, Imex Medical Systems
Incorporated, 6355 Joyce Drive, Golden, Colorado 80403, or deliver such demand
to the Company in person at the Special Meeting. The written demand for
appraisal should specify the stockholder's name and mailing address and the
number of shares of Common Stock covered by the demand, and should state that
the stockholder is thereby demanding appraisal in accordance with Section 262.
Within ten days after the Effective Time, the Company must provide notice
as to the date of effectiveness of the Merger to all stockholders who have duly
and timely delivered demands for appraisal and who have not voted for approval
of the Merger Agreement
Within 120 days after the Effective Time, any dissenting stockholder is
entitled, upon written request, to receive from the Company a statement setting
forth the aggregate number of shares not voted in favor of approval of the
Merger Agreement and with respect to which demands for appraisal have been
received by the Company and the number of holders of such shares. Such
statement must be mailed within 10 days after the written request therefor has
been received by the Company.
Within 120 days after the Effective Time, either the Company or any
dissenting stockholder may file a petition in the Delaware Court of Chancery
demanding a determination of the fair value of shares of Common Stock of all
dissenting stockholders. If a petition for an appraisal is timely filed, after
a hearing on such petition, the Delaware Court of Chancery will determine which
of the Company stockholders are entitled to appraisal rights and thereafter will
appraise the shares of Common Stock owned by such stockholders, determining the
fair value of such shares, exclusive of any element of value arising from the
accomplishment or expectation of the Merger, together with the fair rate of
interest to be paid, if any, upon the amount determined to be fair value. In
determining fair value, the Delaware Court of Chancery is to take into account
all relevant factors. In WEINBERGER V. UOP, INC., ET AL, the Delaware Supreme
Court discussed the factors that could be considered in determining fair value
in an appraisal proceeding, stating that "proof of value by any techniques or
methods which are generally considered acceptable in the financial community and
otherwise admissible in court" should be considered and the "fair price
obviously requires consideration of all relevant factors involving the value of
a company." The Delaware Supreme Court stated that in making this determination
of fair value the court and the appraiser may consider "all factors and elements
which reasonably might enter into the fixing of value," including "market value,
asset value, dividends, earnings prospects, the nature of the enterprise and any
other facts which were known or which could be ascertained as of the date of the
merger and which throw any light on future prospects of the merged
corporation..." The Delaware Supreme Court has construed Section
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262 to mean that "elements of future value, including the nature of the
enterprise, which are known or susceptible of proof as of the date of the
merger and not the product of speculation, may be considered." However, such
court noted that Section 262 provides that fair value is to be determined
"exclusive of any element of value arising from the accomplishment or
expectation of the merger."
Stockholders considering whether to seek appraisal should bear in mind that
the fair value of their Common Stock determined under Section 262 could be more
than, the same as, or less than the value of the Merger Consideration to be
exchanged in the Merger, and that opinions of investment banking firms as to
fairness from a financial point of view are not necessarily opinions as to fair
value under Section 262. Moreover, the Company reserves the right to assert in
any appraisal proceeding that, for purposes thereof, the "fair value" of the
Common Stock is less than the value of the Merger Consideration.
The cost of the appraisal proceeding may be determined by the Delaware
Court of Chancery and taxed upon the parties as the court deems equitable in the
circumstances. Upon application of a dissenting stockholder, the court may
order that all or a portion of the expenses incurred by any dissenting
stockholder in connection with the appraisal proceeding, including, without
limitation, reasonable attorneys' fees, and the fees and expenses of experts, be
charged pro rata against the value of all shares entitled to appraisal. In the
absence of such a determination or assessment, each party bears its own
expenses.
A dissenting stockholder who has duly demanded appraisal in compliance with
Section 262 will not, after the Effective Time, be entitled to vote for any
purpose the Common Stock subject to such demand or to receive payment of
dividends or other distributions on such Common Stock, except for dividends or
other distributions payable to stockholders of record at a date prior to the
Effective Time.
At any time within 60 days after the Effective Time, any dissenting
stockholder will have the right to withdraw his or her demand for appraisal and
to accept the Merger Consideration. After this period, a dissenting stockholder
may withdraw his or her demand for appraisal only with the consent of the
Company. If no petition for appraisal is filed with the Delaware Court of
Chancery within 120 days after the Effective Time, dissenting stockholders'
rights to appraisal shall cease and they shall be entitled only to receive the
Merger Consideration. Inasmuch as the Company has no obligation to file such a
petition, any stockholder who desires such a petition to be filed is advised to
file it on a timely basis. However, no petition timely filed in the Delaware
Court of Chancery demanding appraisal shall be dismissed as to any stockholder
without the approval of the Delaware Court of Chancery, and such approval may be
conditioned upon such terms as the Delaware Court of Chancery deems just.
A vote for the Merger will constitute a waiver of appraisal rights. A
failure to vote against the Merger will not, under Delaware law, constitute a
waiver of appraisal rights. If a stockholder returns a proxy which does not
contain instructions as to how it should be voted, such proxy will be voted in
favor of the Merger and, accordingly, appraisal rights will be waived. As
described above, a vote against the Merger is not sufficient to perfect
appraisal rights. A stockholder's failure to make the written demand prior to
the Special Meeting (under Delaware law) as described above will constitute a
waiver of appraisal rights.
Cash received pursuant to the exercise of dissenters' rights may be subject
to federal or state income tax. See "THE MERGER--FACTORS TO BE CONSIDERED--
Certain Federal Income Tax Consequences."
ANY HOLDER WHO FAILS TO COMPLY WITH THE REQUIREMENTS OF SECTION 262 OF THE
DELAWARE GENERAL CORPORATION LAW (SEE EXHIBIT B) WILL FORFEIT HIS OR HER RIGHTS
TO DISSENT AND WILL RECEIVE THE MERGER CONSIDERATION FOR HIS OR HER SHARES.
24
<PAGE>
STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of June 12, 1997, certain information
with respect to beneficial ownership of the Common Stock by (i) each person or
entity known by the Company to own beneficially more than 5% of the Company's
Common Stock; (ii) each director of the Company; (iii) each executive officer of
the Company; and (iv) all executive officers and directors as a group. For
purposes of this table, beneficial ownership of securities is defined in
accordance with the rules of the Securities and Exchange Commission and means
generally the power to vote or dispose of securities, regardless of any economic
interest therein. Except as otherwise indicated, the stockholders listed in the
table have sole voting and investment power with respect to the shares
indicated. For the purpose of determining "Percent of Outstanding Shares," the
number of shares of Common Stock outstanding at June 12, 1997 was 6,898,083,
and shares subject to stock options exercisable within 60 days after June 12,
1997 held by the individual or entity with respect to whom the percentage is
calculated are assumed to be outstanding for purposes of such calculation.
<TABLE>
PERCENT OF
NUMBER OF SHARES OUTSTANDING
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED SHARES
- ------------------------ ------------------ -----------
<S> <C> <C>
Newman Family Trust 632,592(1) 9.17%
c/o 1900 Fifteenth Street
Boulder, CO 80302
Dennis R. Newman 1,477,802(2) 21.42%
6355 Joyce Drive
Golden, CO 80403
Patricia L. Newman 1,474,759(2) 21.38%
6355 Joyce Drive
Golden, CO 80403
Jerome G. Donahue 386,375 5.60%
6731 Urban Circle
Arvada, CO 80004
Fred H. Ayers 118,167(3) 1.71%
Byron R. Chrisman 96,148(3) 1.39%
Dr. Richard E. Geesaman 51,696(3) .74%
Kenneth L. Koskella 228,825(4) 3.30%
Ernest S. Malachowski 43,368(5) .63%
R.C. Mercure, Jr. 89,859(3)(6) 1.30%
All Directors and Executive Officers as a Group 4,599,591(7) 65.9%
(8 Persons)
</TABLE>
- ---------------------
(1) Dennis and Patricia Newman are co-trustees of this Trust for their children
with Byron R. Chrisman, a Director of the Company. As such, they have
shared voting power and shared investment power with the co-trustee.
(2) Includes one-half of 134,271 shares owned by Dennis and Patricia Newman
jointly and one-half of the 53,332 shares held by the Fred E. and Jennie A.
Newman Trust. In this trust, the Newmans, as co-trustees, have shared
voting power and shared investment power with an independent co-trustee.
Excludes 632,592 shares held by the Newman Family Trust as shown in this
table. The respective amounts shown in the table as being owned
25
<PAGE>
by Mr. Newman and Mrs. Newman, who are husband and wife, do not include
shares owned individually by the other spouse.
(3) Includes options to purchase 10,000 shares which are currently exercisable
or become exercisable within sixty days. The exercise price is greater
than the Merger Consideration.
(4) Includes options to purchase 28,824 shares which are currently exercisable
or become exercisable within sixty days. The exercise price is greater
than the Merger Consideration
(5) Includes options to purchase 11,500 shares which are currently exercisable
or become exercisable within sixty days. The exercise price is greater
than the Merger Consideration
(6) Includes 5,026 shares owned by a partnership of which Dr. Mercure is a
co-general partner and, as such, has shared voting and investment power.
(7) Includes shares in the Newman Family Trust. See Footnote 1.
26
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated financial statements of the Company as of June 30, 1996
and June 30, 1995 and for the three years ended June 30, 1996, incorporated by
reference in this Proxy Statement, have been audited by Deloitte & Touche LLP,
independent auditors.
A representative of Deloitte & Touche LLP will be at the Special Meeting to
answer questions by stockholders and will have the opportunity to make a
statement if so desired.
INFORMATION INCORPORATED BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended June 30,
1996, its Quarterly Reports on Form 10-Q for the quarters ended September 30,
1996, December 31, 1996 and March 31, 1997 and its Current Report on Form 8-K
dated May 9, 1997 filed by the Company with the Commission (Commission File
No. 0-1140), are incorporated by reference into this Proxy Statement.
All documents and reports subsequently filed by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Proxy Statement and prior to the date of the Special Meeting shall be deemed to
be incorporated by reference in this Proxy Statement. Any statement contained in
a document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Proxy Statement to
the extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Proxy Statement.
Copies of the documents concerning the Company (without exhibits)
incorporated by reference in this Proxy Statement are available without charge
upon written or oral request from Patricia L. Newman, Secretary, Imex Medical
Systems, Incorporated, 6355 Joyce Drive, Golden, Colorado 80403, (telephone
(303) 431-9400).
AVAILABLE INFORMATION
The Company is subject to the informational reporting requirements of the
Exchange Act and, in accordance therewith, files reports, proxy statements
and other information with the Commission. Such reports, proxy statements
and other information can be inspected and copies made at the public
reference facilities of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and the Commission's regional offices at Seven World
Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material can also be obtained from the Public Reference Section of Commission
at its Washington, D.C. address, at prescribed rates. The SEC also maintains
a World-Wide Web site that contains reports, proxy statements and other
information filed electronically with the Commission at http://www.sec.gov.
The Company's Common Stock is listed and traded on the Nasdaq Small Cap
Market, and such reports, proxy statements and other information may be
inspected at the offices of Nasdaq Operations, 1735 K Street, N.W.,
Washington, D.C. 20006.
27
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Proxy Statement and in the documents
incorporated herein by reference constitute "forward-looking statements" within
the meaning of Section 21E of the Exchange Act. For this purpose, any
statements contained herein or incorporated herein that are not statements of
historical fact may be deemed to be forward-looking statements. Without
limiting the foregoing, the words "believes," "anticipates," "plans," "expects"
and similar expressions are intended to identify forward-looking statements.
There are a number of important factors that could cause the results of the
Company to differ materially from those indicated by such forward-looking
statements, including among others, those detailed in Item 2 of the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1997 incorporated
herein by reference.
By Order of the Board of Directors
Patricia L. Newman
SECRETARY
Golden, Colorado
July 31, 1997
28
<PAGE>
EXHIBIT A
MERGER AGREEMENT
AMONG
NICOLET BIOMEDICAL INC.,
NBI ACQUISITION CORP.
AND
IMEX MEDICAL SYSTEMS, INCORPORATED
JULY 15, 1997
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I
THE MERGER.............................................................. 1
1.1 THE MERGER....................................................... 1
1.2 THE CLOSING...................................................... 1
1.3 ACTIONS AT THE CLOSING........................................... 2
1.4 ADDITIONAL ACTION................................................ 2
1.5 CONVERSION OF SECURITIES......................................... 2
1.6 DISSENTING SHARES................................................ 3
1.7 OPTIONS.......................................................... 4
1.8 EXCHANGE OF SHARES............................................... 4
1.9 ESCROW........................................................... 5
1.10 POST-CLOSING ADJUSTMENT.......................................... 6
1.11 CERTIFICATE OF INCORPORATION..................................... 7
1.12 BY-LAWS.......................................................... 7
1.13 NO FURTHER RIGHTS................................................ 7
1.14 CLOSING OF TRANSFER BOOKS........................................ 7
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................... 7
2.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER.................. 8
2.2 CAPITALIZATION................................................... 8
2.3 AUTHORIZATION OF TRANSACTION..................................... 8
2.4 NONCONTRAVENTION................................................. 9
2.5 SUBSIDIARIES..................................................... 9
2.6 SEC REPORTS AND FINANCIAL STATEMENTS............................. 10
2.7 ABSENCE OF CERTAIN CHANGES....................................... 11
2.8 UNDISCLOSED LIABILITIES.......................................... 11
2.9 TAX MATTERS...................................................... 11
2.10 ASSETS........................................................... 12
2.11 OWNED REAL PROPERTY.............................................. 12
2.12 INTELLECTUAL PROPERTY............................................ 13
2.13 INVENTORY........................................................ 13
2.14 FDA MATTERS...................................................... 13
2.15 CONTRACTS........................................................ 15
2.16 POWERS OF ATTORNEY............................................... 15
2.17 INSURANCE........................................................ 15
2.18 LITIGATION....................................................... 15
2.19 PRODUCT WARRANTY................................................. 16
-i-
<PAGE>
PAGE
----
2.20 EMPLOYEES........................................................ 16
2.21 EMPLOYEE BENEFITS................................................ 16
2.22 ENVIRONMENTAL MATTERS............................................ 17
2.23 LEGAL COMPLIANCE................................................. 18
2.24 PERMITS.......................................................... 18
2.25 BROKERS' FEES.................................................... 19
2.26 BOOKS AND RECORDS................................................ 19
2.27 CUSTOMERS AND SUPPLIERS.......................................... 19
2.28 COMPANY ACTION; SECTION 203 OF THE DELAWARE GENERAL
CORPORATION LAW................................................ 19
2.29 DISCLOSURE....................................................... 20
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE TRANSITORY
SUBSIDIARY............................................................ 20
3.1 ORGANIZATION..................................................... 20
3.2 AUTHORIZATION OF TRANSACTION..................................... 20
3.3 NONCONTRAVENTION................................................. 20
ARTICLE IV
COVENANTS............................................................... 21
4.1 BEST EFFORTS..................................................... 21
4.2 NOTICES AND CONSENTS............................................. 21
4.3 SPECIAL MEETING.................................................. 21
4.4 OPERATION OF BUSINESS............................................ 22
4.5 FULL ACCESS...................................................... 23
4.6 NOTICE OF BREACHES............................................... 23
4.7 EXCLUSIVITY...................................................... 24
4.8 INDEMNIFICATION OF DIRECTORS AND OFFICERS........................ 25
ARTICLE V
CONDITIONS TO CONSUMMATION OF MERGER.................................... 25
5.1 CONDITIONS TO OBLIGATIONS OF THE BUYER AND THE TRANSITORY
SUBSIDIARY..................................................... 25
5.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY......................... 27
ARTICLE VI
TERMINATION............................................................. 27
6.1 TERMINATION OF AGREEMENT......................................... 27
-ii-
<PAGE>
PAGE
----
6.2 EFFECT OF TERMINATION............................................ 28
6.3 TERMINATION FEE.................................................. 28
ARTICLE VII
DEFINITIONS............................................................. 29
ARTICLE VIII
MISCELLANEOUS........................................................... 30
8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES................... 30
8.2 PRESS RELEASES AND ANNOUNCEMENTS................................. 30
8.3 NO THIRD PARTY BENEFICIARIES..................................... 31
8.4 ENTIRE AGREEMENT................................................. 31
8.5 SUCCESSION AND ASSIGNMENT........................................ 31
8.6 COUNTERPARTS..................................................... 31
8.7 HEADINGS......................................................... 31
8.8 NOTICES.......................................................... 31
8.9 GOVERNING LAW.................................................... 32
8.10 AMENDMENTS AND WAIVERS........................................... 32
8.11 SEVERABILITY..................................................... 32
8.12 EXPENSES......................................................... 33
8.13 SPECIFIC PERFORMANCE............................................. 33
8.14 CONSTRUCTION..................................................... 33
Exhibit A - Escrow Agreement
Exhibit B - Opinion of Counsel to the Company
Exhibit C - Newman Agreement
Exhibit D - Lease
Exhibit E - Opinion of Counsel to the Buyer and the Transitory Subsidiary
Disclosure Schedule
-iii-
<PAGE>
MERGER AGREEMENT
Agreement entered into as of July 15, 1997 by and among Nicolet Biomedical
Inc., a California corporation (the "Buyer"), NBI Acquisition Corp., a Delaware
corporation and a wholly-owned subsidiary of the Buyer (the "Transitory
Subsidiary"), and Imex Medical Systems, Incorporated, a Delaware corporation
(the "Company"). The Buyer, the Transitory Subsidiary and the Company are
referred to collectively herein as the "Parties."
This Agreement contemplates a merger of the Transitory Subsidiary into the
Company. In such merger, the stockholders of the Company will receive cash in
exchange for their capital stock of the Company.
Now, therefore, in consideration of the representations, warranties and
covenants herein contained, the Parties agree as follows.
ARTICLE I
THE MERGER
1.1 THE MERGER. Upon and subject to the terms and conditions of this
Agreement, the Transitory Subsidiary shall merge with and into the Company (with
such merger referred to herein as the "Merger") at the Effective Time (as
defined below). From and after the Effective Time, the separate corporate
existence of the Transitory Subsidiary shall cease and the Company shall
continue as the surviving corporation in the Merger (the "Surviving
Corporation"). The "Effective Time" shall be the time at which the Company and
the Transitory Subsidiary file the certificate of merger prepared and executed
in accordance with the relevant provisions of the Delaware General Corporation
Law (the "Certificate of Merger") with the Secretary of State of the State of
Delaware. The Merger shall have the effects set forth in Section 259 of the
Delaware General Corporation Law.
1.2 THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Hale and Dorr LLP
in Boston, Massachusetts, commencing at 3:00 p.m. local time on August 22, 1997,
or, if all of the conditions to the obligations of the Parties to consummate the
transactions contemplated hereby have not been satisfied or waived by such date,
on such mutually agreeable later date as soon as practicable after the
satisfaction or waiver of all conditions to the obligations of the Parties to
consummate the transactions contemplated hereby (the "Closing Date").
1.3 ACTIONS AT THE CLOSING. At the Closing,
(a) the Company shall deliver to the Buyer and the Transitory
Subsidiary the various certificates, instruments and documents referred to in
Section 5.1,
-1-
<PAGE>
(b) the Buyer and the Transitory Subsidiary shall deliver to the
Company the various certificates, instruments and documents referred to in
Section 5.2,
(c) the Company and the Transitory Subsidiary shall file with the
Secretary of State of the State of Delaware the Certificate of Merger,
(d) the Buyer or the Surviving Corporation shall deliver (by check or
by wire transfer) an amount equal to the Exchange Agent Payment (as defined in
Section 1.8(a) below) to a bank trust company or other entity appointed by the
Buyer to act as the exchange agent (the "Exchange Agent") in accordance with
Section 1.8, and
(e) the Buyer, the Stockholder Representative (as defined therein)
and the Escrow Agent (as defined therein) shall execute and deliver the Escrow
Agreement attached hereto as EXHIBIT A (the "Escrow Agreement") and the Buyer or
the Transitory Subsidiary shall deposit funds with the Escrow Agent in
accordance with Section 1.9.
1.4 ADDITIONAL ACTION. The Surviving Corporation may, at any time after
the Effective Time, take any action, including executing and delivering any
document, in the name and on behalf of either the Company or the Transitory
Subsidiary, in order to consummate the transactions contemplated by this
Agreement.
1.5 CONVERSION OF SECURITIES. At the Effective Time, by virtue of the
Merger and without any action on the part of any Party or the holder of any of
the following securities:
(a) Each share of common stock, $.001 par value per share, of the
Company ("Shares") issued and outstanding immediately prior to the Effective
Time (other than Shares owned beneficially by the Buyer or the Transitory
Subsidiary, Dissenting Shares (as defined in Section 1.6(a)) and Shares held in
the Company's treasury) shall be converted into and represent the right to
receive (subject to the provisions of Section 1.9 and Section 1.10) an amount in
cash, without any interest thereon, equal to the Merger Consideration per Share
(as defined below). Holders of Shares shall be entitled to receive, promptly
following the Closing, the Initial Merger Consideration per Share (as defined
below); the aggregate Escrow Consideration per Share (as defined below) shall be
deposited in escrow pursuant to Section 1.9 and shall be held and disposed of in
accordance with the terms of the Escrow Agreement. The "Merger Consideration
per Share" shall mean the amount determined by dividing (i) $10 million by (ii)
the number of Shares issued and outstanding immediately prior to the Effective
Time (other than Shares owned beneficially by the Buyer or the Transitory
Subsidiary and Shares held in the Company's treasury). The "Initial Merger
Consideration per Share" shall mean the Merger Consideration per Share less the
Escrow Consideration per Share. The "Escrow Consideration per Share" shall mean
the amount determined by dividing $700,000 by the number of Shares issued and
outstanding immediately prior to the Effective Time (other than Shares owned
beneficially by the Buyer or the Transitory Subsidiary and Shares held in the
Company's treasury). The "Merger Consideration" shall mean the aggregate amount
payable to the holders of Shares pursuant to Section 1.5(a).
-2-
<PAGE>
(b) Each Share held in the Company's treasury immediately prior to
the Effective Time and each Share owned beneficially by the Buyer or the
Transitory Subsidiary shall be cancelled and retired without payment of any
consideration therefor.
(c) Each share of common stock, $.001 par value per share, of the
Transitory Subsidiary issued and outstanding immediately prior to the Effective
Time shall be converted into and thereafter evidence one share of common stock,
$.001 par value per share, of the Surviving Corporation.
1.6 DISSENTING SHARES.
(a) For purposes of this Agreement, "Dissenting Shares" means Shares
held as of the Effective Time by a stockholder of record of the Company (a
"Company Stockholder") who has not voted such Shares in favor of the adoption of
this Agreement and the Merger and with respect to which appraisal shall have
been duly demanded and perfected in accordance with Section 262 of the Delaware
General Corporation Law and not effectively withdrawn or forfeited prior to the
Effective Time. Dissenting Shares shall not be converted into or represent the
right to receive the Merger Consideration, unless such Company Stockholder's
right to appraisal shall have ceased in accordance with Section 262(k) of the
Delaware General Corporation Law. If such Company Stockholder's right to
appraisal of Dissenting Shares shall have ceased in accordance with Section
262(k) of the Delaware General Corporation Law, then, (i) as of the occurrence
of such event, such holder's Dissenting Shares shall cease to be Dissenting
Shares and shall be converted into and represent the right to receive the Merger
Consideration payable in respect of such Shares pursuant to Section 1.5, and
(ii) promptly following the occurrence of such event, the Buyer or the Surviving
Corporation shall deliver to the Exchange Agent a payment equal to the Initial
Merger Consideration per Share multiplied by the number of such Shares held by
such holder and shall deliver to the Escrow Agent, or if the Escrow Agreement
has terminated, to the Exchange Agent, a payment equal to the Escrow
Consideration per Share multiplied by the number of such Shares held by such
holder.
(b) The Company shall give the Buyer (i) prompt notice of any written
demands for appraisal of any Shares, withdrawals of such demands, and any other
instruments that relate to such demands received by the Company and (ii) the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal under the Delaware General Corporation Law. The Company shall
not, except with the prior written consent of the Buyer, make any payment with
respect to any demands for appraisal of Shares or offer to settle or settle any
such demands.
1.7 OPTIONS.
(a) Prior to the Effective Time, the Company shall terminate each
outstanding stock option for the purchase of Shares or other right to receive
Shares (collectively, "Options"), pursuant to a written agreement, in a form
reasonably satisfactory to the Buyer, between the Company and each holder of an
Option, in exchange for the payment of an amount in cash equal
-3-
<PAGE>
to the product of (i) the excess of the Merger Consideration per Share over
the exercise price per Share of such Option, if any, and (ii) the number of
Shares for which such Option is then exercisable; PROVIDED, that amounts
payable with respect to Options shall be reduced by any applicable federal
and state withholding taxes.
(b) The Company shall terminate all stock option plans and other
stock or equity-related plans of the Company (the "Stock Plans") immediately
prior to the Effective Time.
1.8 EXCHANGE OF SHARES.
(a) Prior to the Effective Time, the Buyer shall appoint the Exchange
Agent to effect the exchange for the Merger Consideration of certificates that,
immediately prior to the Effective Time, represented Shares converted into the
right to receive the Merger Consideration pursuant to Section 1.5 (including any
Shares referred to in the last sentence of Section 1.6(a)) ("Certificates"). On
the Closing Date, the Buyer shall deliver to the Exchange Agent, in trust for
the benefit of holders of Certificates, an amount equal to the Initial Merger
Consideration per Share multiplied by the number of Shares outstanding
immediately prior to the Effective Time (other than Shares owned beneficially by
the Buyer or the Transitory Subsidiary, Dissenting Shares and Shares held in the
Company's treasury) (the "Exchange Agent Payment"). As soon as practicable
after the Effective Time, the Buyer shall cause the Exchange Agent to send a
notice and a transmittal form to each holder of a Certificate advising such
holder of the effectiveness of the Merger and the procedure for surrendering to
the Exchange Agent such Certificate in exchange for the Initial Merger
Consideration per Share. Each holder of a Certificate, upon proper surrender
thereof to the Exchange Agent in accordance with the instructions in such
notice, shall be entitled to receive in exchange therefor (subject to any taxes
required to be withheld) (i) the Initial Merger Consideration per Share
multiplied by the number of Shares represented by such Certificate, and (ii) if
such funds have been distributed to the Exchange Agent at the time of the
receipt by the Exchange Agent of such Certificate, his or her pro rata share of
the portion of the Escrow Fund (if any) disbursed by the Escrow Agent to the
Exchange Agent pursuant to Section 1.10(c).
(b) Until properly surrendered, each such Certificate shall be deemed
for all purposes to evidence only the right to receive the Merger Consideration
payable pursuant to Section 1.5(a). Holders of Certificates shall not be
entitled to receive the Merger Consideration to which they would otherwise be
entitled until such Certificates are properly surrendered.
(c) Neither the Exchange Agent nor any Party shall be liable to a
holder of Shares for any Merger Consideration payable to such holder pursuant to
Section 1.5(a) that is delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(d) Promptly following the date which is six months after the Closing
Date, the Exchange Agent shall return to the Buyer all Merger Consideration in
its possession, and the Exchange Agent's duties shall terminate. Thereafter,
(i) each holder of a Certificate may
-4-
<PAGE>
surrender such Certificate to the Buyer and, subject to applicable abandoned
property, escheat and similar laws, receive in exchange therefor the Merger
Consideration payable with respect thereto pursuant to Article I and (ii) any
funds which would otherwise have been paid to the Exchange Agent pursuant to
Section 1.6(a) or Section 1.10(c) shall instead be paid to the Buyer, for the
benefit of holders of Certificates which have not yet been surrendered for
exchange.
1.9 ESCROW.
(a) On the Closing Date, the Buyer or the Transitory Subsidiary shall
deposit with the Escrow Agent an amount equal to the Escrow Consideration per
Share multiplied by the number of Shares issued and outstanding immediately
prior to the Effective Time (other than Shares beneficially owned by the Buyer
or the Transitory Subsidiary, Dissenting Shares and Shares held in the Company's
treasury) (together with any further sums to be paid into escrow pursuant to the
last sentence of Section 1.6(a), the "Escrow Fund"), for the purpose of securing
the post-closing adjustment set forth in Section 1.10. The Escrow Fund shall be
held by the Escrow Agent under the Escrow Agreement pursuant to the terms
thereof. The Escrow Fund shall be held as a trust fund and shall not be subject
to any lien, attachment, trustee process or any other judicial process of any
creditor of any party, and shall be held and disbursed solely for the purposes
and in accordance with the terms of the Escrow Agreement.
(b) The adoption of this Agreement and the approval of the Merger by
the Company Stockholders shall constitute approval of the Escrow Agreement and
of all of the arrangements relating thereto, including without limitation the
placement in escrow of the Escrow Fund and the appointment of the Stockholder
Representative.
1.10 POST-CLOSING ADJUSTMENT. The aggregate Merger Consideration payable
pursuant to Section 1.5(a) shall be subject to adjustment after the Closing Date
as follows:
(a) Within 60 days after the Closing Date, the Buyer shall prepare
and deliver to the Stockholder Representative a consolidated balance sheet for
the Company (the "Draft Closing Balance Sheet") as of the Closing Date. The
Buyer shall prepare the Draft Closing Balance Sheet in accordance with United
States generally accepted accounting principles ("GAAP") applied on a basis
consistent with the preparation of the Financial Statements (as defined in
Section 2.6).
(b) The Stockholder Representative shall deliver to the Buyer within
30 days after receiving the Draft Closing Balance Sheet a detailed statement
describing its objections (if any) thereto. Failure of the Stockholder
Representative to so object to the Draft Closing Balance Sheet shall constitute
acceptance thereof, whereupon the Draft Closing Balance Sheet shall be deemed to
be the Closing Balance Sheet. The Buyer and the Stockholder Representative
shall use reasonable efforts to resolve any such objections, but if they do not
reach a final resolution within 30 days after the Buyer has received the
statement of objections, the Buyer and the Stockholder Representative shall
engage Coopers & Lybrand L.L.P. (the "Accountants") to determine whether the
objections raised by the Stockholder Representative are appropriate. The
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Draft Closing Balance Sheet shall be adjusted in accordance with the
Accountants' determination and, as so adjusted, shall be the "Closing Balance
Sheet". Such determination by the Accountants shall be conclusive and binding
upon the Buyer, the Stockholder Representative and the Company Stockholders.
The fees and expenses of the Accountants shall be paid as follows: one-half
shall be paid by the Buyer, and the Stockholder Representative and the Buyer
shall direct the Escrow Agent to pay the other half of such fees and expenses
from the Escrow Fund.
(c) If the Stockholders' Equity (as defined below) is less than
$4,000,000, the Stockholder Representative and the Buyer shall promptly direct
the Escrow Agent to deliver (i) an amount equal to such deficiency (the
"Adjustment") from the Escrow Fund to the Buyer, by wire transfer or other
delivery of immediately available funds, and (ii) the balance of the Escrow Fund
(less any fees and expenses to be paid therefrom pursuant to the last sentence
of Section 1.10(b)), on a pro rata basis, to (A) the Escrow Stockholders (as
defined in the Escrow Agreement) who have surrendered Certificates to the
Exchange Agent, and (B) the Exchange Agent, for the benefit of holders of
Certificates which have not yet been surrendered for exchange. If the
Stockholders' Equity is greater than or equal to $4,000,000, the Stockholder
Representative and the Buyer shall promptly direct the Escrow Agent to deliver
the Escrow Fund (less any fees and expenses to be paid therefrom pursuant to the
last sentence of Section 1.10(b)), on a pro rata basis, to (A) the Escrow
Stockholders who have surrendered Certificates to the Exchange Agent, and (B)
the Exchange Agent, for the benefit of holders of Certificates which have not
yet been surrendered for exchange. "Stockholders' Equity" shall mean the excess
of the consolidated assets over the consolidated liabilities of the Company, as
shown on the Closing Balance Sheet.
1.11 CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of the
Surviving Corporation shall be the same as the Certificate of Incorporation of
the Transitory Subsidiary immediately prior to the Effective Time, except that
the name of the corporation set forth therein shall be changed to the name of
the Company.
1.12 BY-LAWS. The By-laws of the Surviving Corporation shall be the same
as the By-laws of the Transitory Subsidiary immediately prior to the Effective
Time, except that the name of the corporation set forth therein shall be changed
to the name of the Company.
1.13 NO FURTHER RIGHTS. From and after the Effective Time, no Shares shall
be deemed to be outstanding, and holders of certificates formerly representing
Shares shall cease to have any rights with respect thereto except as provided
herein or by law.
1.14 CLOSING OF TRANSFER BOOKS. At the Effective Time, the stock transfer
books of the Company shall be closed and no transfer of Shares shall thereafter
be made. If, after the Effective Time, certificates formerly representing
Shares are presented to the Surviving Corporation or the Exchange Agent, they
shall be cancelled and exchanged for the Merger Consideration in accordance with
Section 1.5, subject to Section 1.9 and to applicable law in the case of
Dissenting Shares.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Buyer that the statements
contained in this Article II are true and correct, except as set forth in the
disclosure schedule attached hereto (the "Disclosure Schedule"). The Disclosure
Schedule shall be arranged in paragraphs corresponding to the numbered and
lettered paragraphs contained in this Article II, and the disclosures in any
paragraph of the Disclosure Schedule shall qualify only the corresponding
paragraph in this Article II.
2.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER. The Company is a
corporation duly organized, validly existing and in corporate and tax good
standing under the laws of the State of Delaware. The Company is duly qualified
to conduct business and is in corporate and tax good standing under the laws of
each jurisdiction in which the nature of its businesses or the ownership or
leasing of its properties requires such qualification, except where the failure
to be so qualified would not have a material adverse effect on the assets,
business, financial condition or results of operations of the Company and the
Subsidiaries (as defined below), taken as a whole. The Company has all
requisite corporate power and authority to carry on the businesses in which it
is engaged and to own and use the properties owned and used by it. The Company
has furnished to the Buyer true and complete copies of its Certificate of
Incorporation and By-laws, each as amended and as in effect on the date hereof.
The Company is not in default under or in violation of any provision of its
Certificate of Incorporation or By-laws.
2.2 CAPITALIZATION. The authorized capital stock of the Company consists
of (a) 10,000,000 Shares, of which 6,898,618 shares are issued and outstanding,
and (b) 3,000,000 shares of Preferred Stock, $.001 par value per share, none of
which are issued or outstanding. Section 2.2 of the Disclosure Schedule sets
forth a complete and accurate list of all holders of Options, including the
number of Shares subject to each Option and the exercise price per share of each
Option. All of the issued and outstanding Shares are, and all shares that may
be issued upon exercise or conversion of Options will be, duly authorized,
validly issued, fully paid, nonassessable and free of all preemptive rights.
There are no outstanding or authorized options, warrants, rights, agreements or
commitments to which the Company is a party or which are binding upon the
Company providing for the issuance, disposition or acquisition of any of its
capital stock, other than the Options listed in Section 2.2 of the Disclosure
Schedule. There are no outstanding or authorized stock appreciation, phantom
stock or similar rights with respect to the Company. There are no agreements,
voting trusts, proxies, or understandings with respect to the voting, or
registration under the Securities Act of 1933, as amended (the "Securities
Act"), of any shares of capital stock of the Company. All of the issued and
outstanding shares of capital stock of the Company were issued in compliance
with applicable federal and state securities laws.
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2.3 AUTHORIZATION OF TRANSACTION. The Company has all requisite power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. The execution and delivery by the Company of this Agreement and,
subject to the adoption of this Agreement and the approval of the Merger by a
majority of the votes represented by the outstanding Shares entitled to vote on
this Agreement and the Merger (the "Requisite Stockholder Approval"), the
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action on the part of the Company. This Agreement has
been duly and validly executed and delivered by the Company and constitutes a
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms.
2.4 NONCONTRAVENTION. Subject to the filing of the Certificate of Merger
as required by the Delaware General Corporation Law, neither the execution and
delivery of this Agreement by the Company, nor the consummation by the Company
of the transactions contemplated hereby, will (a) conflict with or violate any
provision of the Certificate of Incorporation or By-laws of the Company,
(b) require on the part of the Company or any Subsidiary any filing with, or any
permit, authorization, consent or approval of, any court or other governmental
or regulatory authority or agency (a "Governmental Entity"), (c) conflict with,
result in a breach of, constitute (with or without due notice or lapse of time
or both) a default under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify or cancel, or require any notice, consent
or waiver under, any contract, agreement or instrument to which the Company or
any Subsidiary is a party or by which the Company or any Subsidiary is bound or
to which any of their assets is subject, (d) result in the imposition of any
Security Interest (as defined below) upon any assets of the Company or any
Subsidiary or (e) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Company, any Subsidiary or any of their properties
or assets. For purposes of this Agreement, "Subsidiary" means any corporation
with respect to which the Company, directly or indirectly, has the power to vote
or direct the voting of sufficient securities to elect a majority of the
directors. For purposes of this Agreement, "Security Interest" means any
mortgage, pledge, security interest, encumbrance, charge, or other lien (whether
arising by contract or by operation of law), other than (i) mechanic's,
materialmen's, and similar liens, (ii) liens arising under worker's
compensation, unemployment insurance, social security, retirement, and similar
legislation, and (iii) liens on goods in transit incurred pursuant to
documentary letters of credit, in each case arising in the ordinary course of
business consistent with past custom and practice (including with respect to
frequency and amount) ("Ordinary Course of Business") of the Company and not
material to the Company.
2.5 SUBSIDIARIES. Section 2.5 of the Disclosure Schedule sets forth for
each Subsidiary (a) its name and jurisdiction of incorporation, (b) the number
of issued and outstanding shares of each class of its capital stock, the names
of the holders thereof and the number of shares held by each such holder, and
(c) the names of its directors and officers. Each Subsidiary is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Each Subsidiary is duly qualified to conduct
business and is in corporate and tax good standing under the laws of each
jurisdiction in which the nature of
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its businesses or the ownership or leasing of its properties requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the assets, business, financial condition or
results of operations of the Company and the Subsidiaries, taken as a whole.
Each Subsidiary has all requisite corporate power and authority to carry on
the businesses in which it is engaged and to own and use the properties owned
and used by it. The Company has delivered to the Buyer correct and complete
copies of the charter and By-laws of each Subsidiary, as amended to date. No
Subsidiary is in default under or in violation of any provision of its
charter or By-laws. All of the issued and outstanding shares of capital
stock of each Subsidiary are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights. All shares of capital stock of
each Subsidiary are held of record and owned beneficially by either the
Company or another Subsidiary, and are held and owned free and clear of any
Security Interests. There are no outstanding or authorized options,
warrants, rights, agreements or commitments to which the Company or any
Subsidiary is a party or which are binding on any of them providing for the
issuance, disposition or acquisition of any capital stock of any Subsidiary.
There are no outstanding stock appreciation, phantom stock or similar rights
with respect to any Subsidiary. There are no voting trusts, proxies, or
other agreements or understandings with respect to the voting of any capital
stock of any Subsidiary. The Company does not control directly or indirectly
or have any direct or indirect equity participation in any corporation,
partnership, trust, or other business association which is not a Subsidiary.
2.6 SEC REPORTS AND FINANCIAL STATEMENTS. The Company has previously
furnished to the Buyer complete and accurate copies, as amended or supplemented
to date, of its (a) Annual Report on Form 10-K for the fiscal years ended June
30, 1995, and 1996, as filed with the Securities and Exchange Commission (the
"SEC"), (b) proxy statements relating to all meetings of its stockholders
(whether annual or special) since January 1, 1995 and (c) all other reports and
registration statements, other than registration statements on Form S-8, filed
by the Company with the SEC since January 1, 1995 (such annual reports, proxy
statements, registration statements and other filings, together with any
amendments or supplements thereto, are collectively referred to herein as the
"Company Reports"). The Company Reports constitute all of the documents filed
or required to be filed with the SEC since January 1, 1995. As of their
respective dates, the Company Reports 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 audited financial statements and
unaudited interim financial statements of the Company included in the Company
Reports (together, the "Financial Statements") (i) comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, (ii) have been prepared
in accordance with GAAP applied on a consistent basis throughout the periods
covered thereby (except as may be indicated therein or in the notes thereto, and
in the case of quarterly financial statements, as permitted by Form 10-Q under
the Securities Exchange Act of 1934, as amended (the "Exchange Act")), and (iii)
fairly present the consolidated financial condition, results of operations and
cash flows of the Company and the Subsidiaries as of the respective dates
thereof and for the periods referred to therein. Each of the consolidated total
assets of the Company and consolidated annual net sales of the Company, as
determined in accordance with the requirements of the Hart-Scott-Rodino
Antitrust
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Improvements Act of 1976, as amended, and the regulations promulgated
thereunder, is less than $25,000,000.
2.7 ABSENCE OF CERTAIN CHANGES. Since March 31, 1997, (a) there has not
been any material adverse change in the assets, business, financial condition or
results of operations of the Company or the Subsidiaries, taken as a whole, and
(b) neither the Company nor any Subsidiary has taken any of the actions set
forth in clauses (a) through (g) of Section 4.4.
2.8 UNDISCLOSED LIABILITIES. Neither the Company nor any Subsidiary has
any liability, except for (a) liabilities shown on the balance sheet included in
the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997
filed with the SEC (the "Most Recent Balance Sheet"), (b) liabilities which have
arisen since March 31, 1997 in the Ordinary Course of Business and which are
similar in nature and amount to the liabilities which arose during the
comparable period of time in the immediately preceding fiscal period and
(c) contractual liabilities incurred in the Ordinary Course of Business which
are not required by GAAP to be reflected on a balance sheet.
2.9 TAX MATTERS.
(a) The Company and the Subsidiaries have filed all Tax Returns (as
defined below) required to be filed and all such Tax Returns were correct and
complete in all material respects. The Company and the Subsidiaries have paid
all Taxes (as defined below) that are shown to be due on any such Tax Returns.
The unpaid Taxes of the Company and the Subsidiaries for tax periods through
March 31, 1997 do not exceed the accruals and reserves for Taxes set forth on
the Most Recent Balance Sheet. Neither the Company nor any Subsidiary has any
actual or potential liability for any Tax obligation of any taxpayer (including
without limitation any affiliated group of corporations or other entities that
included the Company or any Subsidiary during a prior period) other than the
Company and the Subsidiaries. All Taxes that the Company or any Subsidiary is
or was required by law to withhold or collect have been duly withheld or
collected and, to the extent required, have been paid to the proper Governmental
Entity. For purposes of this Agreement, "Taxes" means all taxes, charges, fees,
levies or other similar assessments or liabilities, including without limitation
income, gross receipts, ad valorem, premium, value-added, excise, real property,
personal property, sales, use, transfer, withholding, employment, payroll and
franchise taxes imposed by the United States of America or any state, local or
foreign government, or any agency thereof, or other political subdivision of the
United States or any such government, and any interest, fines, penalties,
assessments or additions to tax resulting from, attributable to or incurred in
connection with any tax or any contest or dispute thereof. For purposes of this
Agreement, "Tax Returns" means all reports, returns, declarations, statements or
other information required to be supplied to a taxing authority in connection
with Taxes.
(b) The Company has delivered to the Buyer correct and complete
copies of all federal income Tax Returns, examination reports and statements of
deficiencies assessed against or agreed to by any of the Company or any
Subsidiary since January 1, 1994. The
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federal income Tax Returns of the Company have been audited by the Internal
Revenue Service or are closed by the applicable statute of limitations for
all taxable years through 1992. No examination or audit of any Tax Returns
of the Company or any Subsidiary by any Governmental Entity is currently in
progress or, to the knowledge of the Company and the Subsidiaries, threatened
or contemplated. Neither the Company nor any Subsidiary has waived any
statute of limitations with respect to taxes or agreed to an extension of
time with respect to a tax assessment or deficiency.
(c) Neither the Company nor any Subsidiary is a "consenting
corporation" within the meaning of Section 341(f) of the Internal Revenue Code
of 1986 (as amended, the "Code"), and none of the assets of the Company or the
Subsidiaries are subject to an election under Section 341(f) of the Code.
Neither the Company nor any Subsidiary has been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(l)(A)(ii) of the Code.
Neither the Company nor any Subsidiary is a party to any Tax allocation or
sharing agreement.
(d) Neither the Company nor any Subsidiary is or has ever been a
member of an "affiliated group" of corporations (within the meaning of
Section 1504 of the Code), other than a group of which only the Company and the
Subsidiaries are members. Neither the Company nor any Subsidiary has made an
election under Treasury Reg. Section 1.1502-20(g). Neither the Company nor any
Subsidiary is or has been required to make a basis reduction pursuant to
Treasury Reg. Section 1.1502-20(b) or Treasury Reg. Section 1.337(d)-2T(b).
2.10 ASSETS. Each of the Company and the Subsidiaries owns or leases all
tangible assets necessary for the conduct of its businesses as presently
conducted. Such tangible assets are free from material defects, have been
maintained in accordance with normal industry practice, and are in good
operating condition and repair (subject to normal wear and tear). No asset of
the Company (tangible or intangible) is subject to any Security Interest.
2.11 OWNED REAL PROPERTY. Neither the Company nor any Subsidiary owns any
real property.
2.12 INTELLECTUAL PROPERTY.
(a) Each of the Company and the Subsidiaries owns, or is licensed or
otherwise possesses legally enforceable rights to use, all patents, trademarks,
trade names, service marks, copyrights, and any applications for such patents,
trademarks, trade names, service marks and copyrights, schematics, technology,
know-how, computer software programs or applications and tangible or intangible
proprietary information or material (collectively, "Intellectual Property") that
are used to conduct its business as currently conducted. Section 2.12 of the
Disclosure Schedule lists (i) all patents and patent applications and all
trademarks, registered copyrights, trade names and service marks which are owned
by the Company or the Subsidiaries, including the jurisdictions in which each
such Intellectual Property right has been issued or registered or in which any
such application for such issuance or
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registration has been filed, (ii) all licenses, sublicenses and other
agreements to which the Company or a Subsidiary is a party and pursuant to
which any person is authorized to use any Intellectual Property rights, and
(iii) all licenses, sublicenses and other agreements as to which the Company
or a Subsidiary is a party and pursuant to which the Company or a Subsidiary
is authorized to use any third party Intellectual Property rights which are
used in the business of the Company or a Subsidiary or which form a part of
any product or service of the Company or a Subsidiary (excluding "shrink
wrap" licenses for commercially available software products).
(b) Neither the Company nor any of the Subsidiaries has been named in
any suit, action or proceeding which involves a claim of infringement of any
Intellectual Property right of any third party. To the knowledge of the Company
and the Subsidiaries, (i) the business and operations of the Company and the
Subsidiaries do not infringe any Intellectual Property right of any third party
and (ii) the Intellectual Property rights of the Company and the Subsidiaries
are not being infringed by the business, operations or products of any third
party.
2.13 INVENTORY. All inventory of the Company and the Subsidiaries consists
of a quality and quantity usable in the Ordinary Course of Business. All
inventories not written-off have been priced at the lower of cost or market, on
a first-in, first-out basis. The quantities of each type of inventory, whether
raw materials, work-in-process or finished goods, are not excessive in the
present circumstances of the Company and the Subsidiaries.
2.14 FDA MATTERS.
(a) Each of the Company and the Subsidiaries is, and the products
sold by each of the Company and the Subsidiaries are, in compliance with each
material law (including rules and regulations thereunder), standard, guide or
order administered or issued by the federal Food and Drug Administration (the
"FDA") or any other federal, state, local or foreign agency or other
Governmental Entity having regulatory authority over the products of the Company
and the Subsidiaries (a "Regulatory Agency"). Without limiting the generality
of the foregoing, the Company is duly and validly registered with the FDA as a
manufacturer of medical devices and is in compliance with all applicable FDA
rules and regulations relating to "good manufacturing practices."
(b) Neither the Company nor any Subsidiary has received from a
Regulatory Agency, or has knowledge of any facts which would furnish any
reasonable basis for, any notice of adverse findings, regulatory letters,
warning letters, Section 305 notices or other similar communications from a
Regulatory Agency, and there have been no seizures conducted or threatened by a
Regulatory Agency, and no recalls, field notifications or alerts conducted,
requested or threatened by a Regulatory Agency, relating to the products sold by
the Company or any Subsidiary.
(c) Each premarket approval ("PMA") and premarket notification
("510(k)") and related documents and information for each of the products of the
Company and the Subsidiaries is in compliance with the applicable federal
statutes, rules, regulations, standards,
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guides or orders administered or promulgated by a Regulatory Agency and all
preclinical and clinical studies have been conducted with recognized good
clinical and good laboratory practices in all material respects. Section
2.14 of the Disclosure Schedule sets forth a list of all products of the
Company and the Subsidiaries indicating (i) which products are marketed under
authority of a Regulatory Agency, including without limitation, a PMA or
510(k), and identifying such authority, and (ii) which products are not
marketed under authority of a Regulatory Agency, and indicating the basis for
marketing such products without such authority. Section 2.14 of the
Disclosure Schedule also sets forth a list of all PMA applications, PMA
supplements, 510(k) submissions and investigational device exemption
submissions of the Company or any Subsidiary currently pending with a
Regulatory Agency.
(d) Neither the Company nor any Subsidiary is aware of any facts
which are reasonably likely to cause (i) the denial, withdrawal, recall or
suspension of any products sold or proposed to be sold by the Company or any
Subsidiary, (ii) a change in the marketing classification or labeling of any
such products, or (iii) a termination or suspension of marketing of any such
products.
(e) None of the products manufactured, marketed or sold by the
Company or any Subsidiary has been recalled or subject to a field notification
(whether voluntarily or otherwise), and neither the Company nor any Subsidiary
has received notice (whether completed or pending) of any proceeding seeking
recall, suspension or seizure of any products sold or proposed to be sold by the
Company or any Subsidiary.
2.15 CONTRACTS. Section 2.15 of the Disclosure Schedule lists each
contract, agreement or commitment to which the Company or any Subsidiary is a
party that is material to the Company or its business (other than those listed
in Section 2.12 of the Disclosure Schedule), including without limitation (i)
any contract, agreement or commitment providing for the payment or receipt by
the Company of an amount in excess of $25,000; (ii) any contract, agreement or
commitment concerning confidentiality or non-competition; (iii) any contract,
agreement or commitment with any stockholder or employee of the Company or an
affiliate thereof; (iv) any contract, agreement or commitment with any
distributors, resellers or manufacturer's representatives of or for the
Company's products; (v) any lease or sublease of real estate; and (vi) any
contract, agreement or commitment for the borrowing of money or pursuant to
which the Company is indebted to another party or has guaranteed the
indebtedness of another party (collectively, together with the agreements and
licenses listed in Section 2.12 of the Disclosure Schedule, the "Contracts").
The Company has previously delivered to the Buyer a complete and accurate copy
of each Contract. Each Contract is valid, binding, enforceable and in full
force and effect; each Contract will continue to be valid, binding, enforceable
and in full force and effect immediately following the Closing in accordance
with the terms thereof as in effect immediately prior to the Closing; and no
breach or default exists under any of the Contracts and none will arise as a
result of the Merger.
2.16 POWERS OF ATTORNEY. There are no outstanding powers of attorney
executed on behalf of the Company or any Subsidiary.
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2.17 INSURANCE. Section 2.17 of the Disclosure Schedule lists each
insurance policy (including fire, theft, casualty, general liability, workers
compensation, business interruption, environmental, product liability and
automobile insurance policies and bond and surety arrangements) to which the
Company or any Subsidiary has been a party, a named insured, or otherwise the
beneficiary of coverage at any time within the past three years. Each such
insurance policy is enforceable and in full force and effect; such policy will
continue to be enforceable and in full force and effect immediately following
the Closing in accordance with the terms thereof as in effect prior to the
Closing; neither the Company nor any Subsidiary is in breach or default
(including with respect to the payment of premiums or the giving of notices)
under such policy, and no event has occurred which, with notice or the lapse of
time, would constitute such a breach or default or permit termination,
modification or acceleration, under such policy; and neither the Company nor any
Subsidiary has received any notice from the insurer disclaiming coverage or
reserving rights with respect to a particular claim or such policy in general.
2.18 LITIGATION. Section 2.18 of the Disclosure Schedule identifies, and
contains a brief description of, (a) any unsatisfied judgement, order, decree,
stipulation or injunction and (b) any claim, complaint, action, suit,
proceeding, hearing or investigation of or in any Governmental Entity or before
any arbitrator to which the Company or any Subsidiary is a party or, to the
knowledge of the Company and the Subsidiaries, is threatened to be made a party.
2.19 PRODUCT WARRANTY. No product manufactured, sold, leased, licensed or
delivered by the Company or any Subsidiary is subject to any guaranty, warranty
or other indemnity beyond the Company's standard warranty, which is set forth in
Section 2.19 of the Disclosure Schedule.
2.20 EMPLOYEES. Each employee of the Company and each Subsidiary has
entered into a confidentiality and assignment of inventions agreement with the
Company or a Subsidiary, a copy of which has previously been delivered to the
Buyer. To the knowledge of the Company, no key employee or group of employees
has any plans to terminate employment with the Company or any Subsidiary.
Neither the Company nor any Subsidiary is a party to or bound by any collective
bargaining agreement, nor has any of them experienced any strikes, grievances,
claims of unfair labor practices or other collective bargaining disputes. The
Company and the Subsidiaries have no knowledge of any organizational effort made
or threatened, either currently or within the past two years, by or on behalf of
any labor union with respect to employees of the Company or any Subsidiary.
2.21 EMPLOYEE BENEFITS.
(a) Section 2.21(a) of the Disclosure Schedule contains a list of all
employee benefit plans or policies (including without limitation bonus programs,
insurance plans, policies relating to vacations, sick days and leaves of
absence, and pension or retirement plans) of the Company in effect since January
1, 1995; and a complete and accurate copy of each such plan or policy has been
delivered by the Company to the Buyer. The Company has complied in all material
respects with the terms of each such plan or policy and with the provisions of
all laws
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and regulations applicable to such plan or policy. The Company has no
material liability or obligation under any such plan or policy, except as
reflected on the Most Recent Balance Sheet or incurred in the Ordinary Course
of Business since March 31, 1997. None of such plans or policies are subject
to the Employee Retirement Income Security Act of 1974, as amended. Neither
the terms of any such plan or policy, nor any plan description or other
written communication distributed generally to employees, prohibit the
Company from unilaterally amending or terminating any such plan or policy.
(b) Section 2.21(b) of the Disclosure Schedule discloses each:
(i) agreement with any director, executive officer or other employee of the
Company or any Subsidiary (A) the benefits of which are contingent, or the terms
of which are materially altered, upon the occurrence of a transaction involving
the Company or any Subsidiary of the nature of any of the transactions
contemplated by this Agreement or (B) providing severance benefits or other
benefits after the termination of employment of such director, executive officer
or key employee; (ii) agreement, plan or arrangement under which any person may
receive payments from the Company or any Subsidiary that may be subject to the
tax imposed by Section 4999 of the Code or included in the determination of such
person's "parachute payment" under Section 280G of the Code; and (iii) agreement
or plan binding the Company or any Subsidiary, including without limitation any
stock option plan, stock appreciation right plan, restricted stock plan, stock
purchase plan, severance benefit plan, or any employee benefit plan or policy,
any of the benefits of which will be increased, or the vesting of the benefits
of which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which will
be calculated on the basis of any of the transactions contemplated by this
Agreement.
2.22 ENVIRONMENTAL MATTERS.
(a) Each of the Company and the Subsidiaries has complied with all
applicable Environmental Laws (as defined below). There is no pending or, to
the knowledge of the Company and the Subsidiaries, threatened civil or criminal
litigation, written notice of violation, formal administrative proceeding, or
investigation, inquiry or information request by any Governmental Entity,
relating to any Environmental Law involving the Company or any Subsidiary. For
purposes of this Agreement, "Environmental Law" means any federal, state or
local law, statute, rule or regulation or the common law relating to the
environment or occupational health and safety, including without limitation any
statute, regulation or order pertaining to (i) treatment, storage, disposal,
generation and transportation of industrial, toxic or hazardous substances or
solid or hazardous waste; (ii) air, water and noise pollution; (iii) groundwater
and soil contamination; (iv) the release or threatened release into the
environment of industrial, toxic or hazardous substances, or solid or hazardous
waste, including without limitation emissions, discharges, injections, spills,
escapes or dumping of pollutants, contaminants or chemicals; (v) the protection
of wild life, marine sanctuaries and wetlands, including without limitation all
endangered and threatened species; (vi) storage tanks, vessels and containers;
(vii) underground and other storage tanks or vessels, abandoned, disposed or
discarded barrels, containers and other closed receptacles; (viii) health and
safety of employees
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and other persons; and (ix) manufacture, processing, use, distribution,
treatment, storage, disposal, transportation or handling of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or oil
or petroleum products or solid or hazardous waste. As used above, the terms
"release" and "environment" shall have the meaning set forth in the federal
Comprehensive Environmental Compensation, Liability and Response Act of 1980
("CERCLA").
(b) There have been no releases of any Materials of Environmental
Concern (as defined below) into the environment at any parcel of real property
or any facility formerly or currently owned, operated or controlled by the
Company or a Subsidiary. The Company is not aware of any releases of Materials
of Environmental Concern at parcels of real property or facilities other than
those owned, operated or controlled by the Company or a Subsidiary that could
reasonably be expected to have an impact on the real property or facilities
owned, operated or controlled by the Company or a Subsidiary. For purposes of
this Agreement, "Materials of Environmental Concern" means any chemicals,
pollutants or contaminants, hazardous substances (as such term is defined under
CERCLA), solid wastes and hazardous wastes (as such terms are defined under the
federal Resources Conservation and Recovery Act), toxic materials, oil or
petroleum and petroleum products, or any other material subject to regulation
under any Environmental Law.
(c) Set forth in Section 2.22(c) of the Disclosure Schedule is a list
of all environmental reports, investigations and audits relating to premises
currently or previously owned or operated by the Company or a Subsidiary
(whether conducted by or on behalf of the Company or a Subsidiary or a third
party, and whether done at the initiative of the Company or a Subsidiary or
directed by a Governmental Entity or other third party) which the Company has
possession of or access to. Complete and accurate copies of each such report,
or the results of each such investigation or audit, have been provided to the
Buyer.
(d) Neither the Company nor any Subsidiary has any liability arising
out of or related to its utilization of transporters of any Materials of
Environmental Concern or treatment, storage or disposal facilities. Neither the
Company nor any Subsidiary is aware of any environmental liability of any such
transporter or facility utilized by the Company or any Subsidiary.
2.23 LEGAL COMPLIANCE. Each of the Company and the Subsidiaries, and the
conduct and operations of their respective businesses, are in compliance with
each law (including rules and regulations thereunder) of any federal, state,
local or foreign government, or any Governmental Entity, which is applicable to
the Company or such Subsidiary or business, except for any violation of or
default which reasonably may be expected not to have a material adverse effect
on the assets, business, financial condition, results of operations or future
prospects of the Company and the Subsidiaries, taken as a whole.
2.24 PERMITS. Section 2.24 of the Disclosure Schedule sets forth a list of
all permits, licenses, registrations, certificates, orders or approvals from any
Governmental Entity (including
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without limitation those issued or required under Environmental Laws and
those relating to the occupancy or use of owned or leased real property)
("Permits") issued to or held by the Company or any Subsidiary. Such listed
Permits are the only Permits that are required for the Company and the
Subsidiaries to conduct their respective businesses as presently conducted,
except for those the absence of which would not have any material adverse
effect on the assets, business, financial condition, results of operations or
future prospects of the Company and the Subsidiaries. Each such Permit is in
full force and effect and, to the best of the knowledge of the Company or any
Subsidiary, no suspension or cancellation of such Permit is threatened and
there is no basis for believing that such Permit will not be renewable upon
expiration. Each such Permit will continue in full force and effect
following the Closing.
2.25 BROKERS' FEES. Except for a fee in an amount not to exceed $225,000
(plus reasonable expenses) payable to Gruntal & Co., Incorporated (the "Broker")
pursuant to an engagement letter dated June 27, 1996, a copy of which has been
provided to the Buyer, neither the Company nor any Subsidiary has any liability
or obligation to pay any fees or commissions to any broker, finder or agent with
respect to the transactions contemplated by this Agreement.
2.26 BOOKS AND RECORDS. The books, records and files of the Company and
the Subsidiaries (including without limitation the corporate record book and the
accounting records) are accurate and complete in all material respects.
2.27 CUSTOMERS AND SUPPLIERS. No material supplier of the Company or any
Subsidiary has indicated within the past year that it will stop, or decrease the
rate of, supplying materials, products or services to them. No material
customer or distributor, reseller or manufacturer's representative of the
Company or any Subsidiary has indicated within the past year that it will stop,
or decrease the rate of, buying, leasing or licensing products from them or
selling products for them. Section 2.27 of the Disclosure Schedule sets forth a
list of (a) each customer that accounted for more than 1% of the consolidated
revenues of the Company during the nine months ended March 31, 1997 and the
amount of revenues accounted for by such customer during each such period and
(b) each supplier that is the sole supplier of any significant product or
component to the Company or a Subsidiary.
2.28 COMPANY ACTION; SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW.
(a) The Board of Directors of the Company, at a meeting duly called
and held, has by the unanimous vote of all directors present (i) determined that
the Merger is fair and in the best interests of the Company and its
stockholders, (ii) adopted this Agreement in accordance with the provisions of
the Delaware General Corporation Law and approved the transactions contemplated
by this Agreement, and (iii) directed that this Agreement and the Merger be
submitted to the Company Stockholders for their adoption and approval and
resolved to recommend that Company Stockholders vote in favor of the adoption of
this Agreement and the approval of the Merger.
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(b) The transactions contemplated by this Agreement have been
approved by the Board of Directors of the Company for purposes of Section 203 of
the Delaware General Corporation Law.
2.29 DISCLOSURE. No representation or warranty by the Company contained in
this Agreement contains any untrue statement of a material fact or omits to
state any material fact necessary, in light of the circumstances under which it
was made, in order to make the statements herein not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER
AND THE TRANSITORY SUBSIDIARY
Each of the Buyer and the Transitory Subsidiary represents and warrants to
the Company as follows:
3.1 ORGANIZATION. Each of the Buyer and the Transitory Subsidiary is a
corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation.
3.2 AUTHORIZATION OF TRANSACTION. Each of the Buyer and the Transitory
Subsidiary has all requisite power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. The execution and delivery
of this Agreement by the Buyer and the Transitory Subsidiary, the performance by
the Buyer and the Transitory Subsidiary of this Agreement and the consummation
by the Buyer and the Transitory Subsidiary of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action
on the part of the Buyer and Transitory Subsidiary. This Agreement has been
duly and validly executed and delivered by the Buyer and the Transitory
Subsidiary and constitutes a valid and binding obligation of the Buyer and the
Transitory Subsidiary, enforceable against them in accordance with its terms.
3.3 NONCONTRAVENTION. Subject to the filing of the Certificate of Merger
as required by the Delaware General Corporation Law, neither the execution and
delivery of this Agreement by the Buyer or the Transitory Subsidiary, nor the
consummation by the Buyer or the Transitory Subsidiary of the transactions
contemplated hereby, will (a) conflict or violate any provision of the charter
or By-laws of the Buyer or the Transitory Subsidiary, (b) require on the part of
the Buyer or the Transitory Subsidiary any filing with, or permit,
authorization, consent or approval of, any Governmental Entity, (c) conflict
with, result in breach of, constitute (with or without due notice or lapse of
time or both) a default under, result in the acceleration of, create in any
party any right to accelerate, terminate, modify or cancel, or require any
notice, consent or waiver under, any contract, agreement or instrument to which
the Buyer or Transitory Subsidiary is a party or by which either is bound or to
which any of their assets are subject, or (d) violate
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any order, writ, injunction, decree, statute, rule or regulation applicable
to the Buyer or the Transitory Subsidiary or any of their properties or
assets.
ARTICLE IV
COVENANTS
4.1 BEST EFFORTS. Each of the Parties shall use commercially reasonable
efforts to take all actions and to do all things necessary, proper or advisable
to consummate the transactions contemplated by this Agreement.
4.2 NOTICES AND CONSENTS. The Company shall use its best efforts to
obtain, at its expense, all such waivers, permits, consents, approvals or other
authorizations from third parties and Governmental Entities, and to effect all
such registrations, filings and notices with or to third parties and
Governmental Entities, as may be required by or with respect to the Company in
connection with the transactions contemplated by this Agreement (including
without limitation those listed in Section 2.4 of the Disclosure Schedule).
4.3 SPECIAL MEETING.
(a) The Company shall call and hold, in accordance with the Delaware
General Corporation Law, a special meeting of the Company Stockholders for the
purpose of considering and voting upon the adoption of this Agreement (including
without limitation the matters referred to in Section 1.9) and the approval of
the Merger in accordance with the Delaware General Corporation Law (the "Special
Meeting") as soon as reasonably practicable. In connection with the Special
Meeting, the Company shall prepare and file with the SEC under the Exchange Act,
a proxy statement pursuant to which the Board of Directors of the Company shall
solicit from Company Stockholders proxies to vote in favor of the adoption of
this Agreement and the approval of the Merger at the Special Meeting (together
with any accompanying notice of meeting, letter to stockholders and form of
proxy, the "Proxy Statement"). The Proxy Statement shall (A) summarize the
terms of this Agreement and the Merger (including without limitation a summary
of the escrow arrangement), (B) include a statement that the adoption of this
Agreement and the approval of the Merger shall constitute approval of the
establishment of the Escrow Fund, the Escrow Agreement, the appointment of the
Stockholder Representative as their attorney-in-fact and agent for purposes of
Section 1.10 and the Escrow Agreement, and the taking by the Stockholder
Representative of any and all actions and the making of any and all decisions
required or permitted to be taken or made by him under Section 1.10 or the
Escrow Agreement and (C) include a statement that appraisal rights are available
for the shares of capital stock of the Company pursuant to Section 262 of the
Delaware General Corporation Law and a copy of such Section 262. The Company
shall provide the Buyer with the opportunity to review and comment upon the
Proxy Statement a reasonable time in advance of its filing with the SEC.
Promptly following the resolution to the satisfaction of the SEC of all SEC
comments on the Proxy Statement (or the expiration of the ten-day period under
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Rule 14a-6(a) under the Exchange Act, if no SEC comments are received by such
date), the Company shall distribute the Proxy Statement to its stockholders and,
pursuant thereto, solicit proxies from Company Stockholders to vote in favor of
the adoption of this Agreement and the approval of the Merger at the Special
Meeting.
(b) The Company shall ensure that the Proxy Statement is in
compliance with all applicable laws and does not, as of the date on which it is
mailed to Company Stockholders, and as of the date of the Special Meeting,
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading.
(c) The Company shall include in the Proxy Statement the
recommendation of its Board of Directors that the Company Stockholders vote in
favor of the adoption of this Agreement and the approval of the Merger, and
shall otherwise use its best efforts to obtain the Requisite Stockholder
Approval. Notwithstanding the foregoing, the Company shall not be required to
include such a recommendation of its Board of Directors in the Proxy Statement
if the Company's Board of Directors is advised in writing by outside legal
counsel (a copy of which is furnished to the Buyer) that the fiduciary duties of
the Board of Directors under applicable law prohibit it from fulfilling the
foregoing obligation.
(d) Dennis R. Newman, Patricia L. Newman, the Newman Family Trust and
the Fred E. & Jennie A. Newman Trust each agree (i) to vote all Shares that are
beneficially owned by him or her or it, or for which he or she or it has voting
authority, in favor of the adoption of this Agreement and the approval of the
Merger and (ii) not to sell, assign, convey or otherwise transfer, or grant
proxies or voting rights with respect to, any Shares that are beneficially owned
by him, her or it, or for which he or she or it has voting authority.
4.4 OPERATION OF BUSINESS. Except as contemplated by this Agreement,
during the period from the date of this Agreement to the Effective Time, the
Company shall (and shall cause each Subsidiary to) conduct its operations in the
Ordinary Course of Business and in compliance with all applicable laws and
regulations and, to the extent consistent therewith, use all reasonable efforts
to preserve intact its current business organization, keep its physical assets
in good working condition, keep available the services of its current officers
and employees and preserve its relationships with customers, suppliers and
others having business dealings with it to the end that its goodwill and ongoing
business shall not be impaired in any material respect. Without limiting the
generality of the foregoing, prior to the Effective Time, neither the Company
nor any Subsidiary shall, without the written consent of the Buyer:
(a) issue, grant or sell (except upon the exercise of Options
outstanding as of the date of this Agreement, provided the Company promptly
notifies the Buyer of any such exercise), or redeem or repurchase, any Shares or
any other securities of the Company or any rights, warrants or options to
acquire any Shares or other such securities;
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(b) pay any dividend or other distribution (whether in cash, stock or
property or any combination thereof) in respect of its capital stock;
(c) create, incur or assume any debt not currently outstanding
(including capital leases obligations, but excluding accounts payable incurred
in the Ordinary Course of Business); assume, guarantee, endorse or otherwise
become liable for the obligations of any other person; or make any loans,
advances or capital contributions to, or investments in, any other person;
(d) other than in the Ordinary Course of Business (i) enter into,
adopt or amend any employee benefit plan or any employment or severance
agreement or arrangement, (ii) increase in any manner the compensation or fringe
benefits of, or materially modify the employment terms of, or pay any bonuses
to, its employees or (iii) hire or fire any employee;
(e) acquire, sell, lease, encumber or dispose of any assets or
rights, other than purchases and sales of assets in the Ordinary Course of
Business;
(f) pay any obligation or liability other than in the Ordinary Course
of Business; or
(g) enter into, amend, terminate, take or omit to take any action
that would constitute a violation of or default under, or waive any rights
under, any Contract.
4.5 FULL ACCESS. The Company shall (and shall cause each Subsidiary to)
permit representatives of the Buyer to have full access (at all reasonable
times, and in a manner so as not to interfere with the normal business
operations of the Company and the Subsidiaries) to all premises, properties,
financial and accounting records, contracts, other records and documents, and
personnel, of or pertaining to the Company and each Subsidiary.
4.6 NOTICE OF BREACHES. The Company shall promptly deliver to the Buyer
written notice of any event or development that would (a) render any statement,
representation or warranty of the Company in this Agreement (including the
Disclosure Schedule) inaccurate or incomplete in any material respect, or
(b) constitute or result in a breach by the Company of, or a failure by the
Company to comply with, any agreement or covenant in this Agreement applicable
to such party. The Buyer or the Transitory Subsidiary shall promptly deliver to
the Company written notice of any event or development that would (i) render any
statement, representation or warranty of the Buyer or the Transitory Subsidiary
in this Agreement inaccurate or incomplete in any material respect, or
(ii) constitute or result in a breach by the Buyer or the Transitory Subsidiary
of, or a failure by the Buyer or the Transitory Subsidiary to comply with, any
agreement or covenant in this Agreement applicable to such party. No such
disclosure shall be deemed to avoid or cure any such misrepresentation or
breach.
4.7 EXCLUSIVITY.
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(a) The Company shall not, and the Company shall cause its
affiliates, as defined in Rule 12b-2 under the Exchange Act ("Affiliates"), and
each of its officers, directors, employees, representatives and agents
(including without limitation its financial advisors) not to, directly or
indirectly, (a) encourage, solicit, initiate, engage or participate in
discussions or negotiations with any corporation, partnership, person or other
entity or group (other than the Buyer or an Affiliate of the Buyer) (a "Third
Party") concerning any tender offer, exchange offer, merger, consolidation, sale
of material assets, recapitalization, accumulation of Shares or proxy
solicitation or other business combination involving the Company or any
Subsidiary (any such proposed tender offer, exchange offer, merger,
consolidation, sale of material assets, recapitalization, accumulation of Shares
or proxy solicitation or other business combination being referred to herein as
an "Acquisition Proposal") or (b) provide any non-public information concerning
the business, properties or assets of the Company or any Subsidiary to any Third
Party. Notwithstanding the foregoing, the Company or any of its Affiliates may
(i) in the case of any Acquisition Proposal, to the extent that the Board of
Directors of the Company is required to do so in the exercise of its fiduciary
duties, as advised in writing by outside legal counsel (a copy of which is
furnished to the Buyer), take any position with respect to such Acquisition
Proposal, and (ii) in the case of a Qualified Acquisition Proposal (as
hereinafter defined) (A) furnish or cause to be furnished information concerning
the business, properties or assets of the Company or the Subsidiaries to the
Third Party making such Qualified Acquisition Proposal, and (B) enter into,
participate in, conduct or engage in discussions or negotiations with such Third
Party. As used herein, "Qualified Acquisition Proposal" means a bona fide
written Acquisition Proposal at a price per Share that the Board of Directors of
the Company reasonably believes exceeds the Merger Consideration per Share.
Nothing contained in this Section 4.7 shall be construed to prohibit the Company
from making such disclosure to the Company Stockholders that, in the judgment of
the Board of Directors of the Company, as advised in writing by outside legal
counsel (a copy of which is furnished to the Buyer), is required by law.
(b) The Company shall immediately notify the Buyer, and will disclose
to the Buyer, all details of (i) any Acquisition Proposal it receives, (ii) any
indications that any person is potentially interested in making an Acquisition
Proposal, or (iii) the initiation and status of discussions or negotiations
relating to any Qualified Acquisition Proposal. In the event that the Company
furnishes any nonpublic information to any party other than the Buyer, the
Company shall simultaneously provide the Buyer with copies of or access to all
such information.
4.8 INDEMNIFICATION OF DIRECTORS AND OFFICERS. From and after the
Effective Time, the Buyer shall cause the Surviving Corporation to honor in
all material respects the obligations of the Company pursuant to the
provisions of the By-laws of the Company as in effect immediately prior to the
Effective Time with respect to the indemnification of the Company's directors
and officers as of the date of this Agreement. The By-laws of the Surviving
Corporation will contain the provision with respect to indemnification set
forth in the By-laws of the Company, which provision will not be amended,
repealed or otherwise modified for a period of three years from the Effective
Time in any manner that would adversely affect the rights thereunder of
individuals who, as of the date of this Agreement, were directors or officers
of the Company, unless such modification is required by law.
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ARTICLE V
CONDITIONS TO CONSUMMATION OF MERGER
5.1 CONDITIONS TO OBLIGATIONS OF THE BUYER AND THE TRANSITORY SUBSIDIARY.
The obligation of each of the Buyer and the Transitory Subsidiary to consummate
the Merger is subject to the satisfaction of the following conditions:
(a) this Agreement and the Merger shall have received the Requisite
Stockholder Approval and the number of Dissenting Shares shall not exceed 6% of
the number of outstanding Shares as of the Effective Time;
(b) the Company and the Subsidiaries shall have obtained all of the
waivers, permits, consents, approvals or other authorizations, and effected all
of the registrations, filings and notices, referred to in Section 4.2, except
for any which if not obtained or effected would not have a material adverse
effect on the assets, business, financial condition, results of operations or
future prospects of the Company or any Subsidiary or on the ability of the
Parties to consummate the transactions contemplated by this Agreement;
(c) the representations and warranties of the Company set forth in
Article II shall be true and correct when made on the date hereof and shall be
true and correct as of the Effective Time as if made as of the Effective Time,
except for representations and warranties made as of a specific date, which
shall be true and correct as of such date;
(d) the Company shall have performed or complied with its agreements
and covenants required to be performed or complied with under this Agreement as
of or prior to the Effective Time;
(e) no action, suit or proceeding shall be pending or threatened by
or before any Governmental Entity wherein an unfavorable judgment, order,
decree, stipulation or injunction would (i) prevent consummation of any of the
transactions contemplated by this Agreement, (ii) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation or
(iii) affect adversely the right of the Buyer to own, operate or control any of
the assets or operations of the Surviving Corporation or the Subsidiaries, and
no such judgment, order, decree, stipulation or injunction shall be in effect;
(f) the Company shall have delivered to the Buyer and the Transitory
Subsidiary a certificate to the effect that each of the conditions specified in
clauses (a) through (e) of this Section 5.1 is satisfied in all respects;
(g) the Buyer and the Transitory Subsidiary shall have received from
Chrisman, Bynum & Johnson, P.C. an opinion, in form and substance reasonably
satisfactory to
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the Buyer, with respect to the matters set forth in EXHIBIT B attached hereto,
addressed to the Buyer and the Transitory Subsidiary and dated as of the
Closing Date;
(h) no development in the status or outlook for the business of the
Company since May 8, 1997 shall have occurred which, in the reasonable judgment
of the Buyer, is materially adverse to the Company;
(i) Dennis R. Newman shall have executed and delivered to the Company
an agreement in the form attached hereto as EXHIBIT C (the "Newman Agreement");
(j) Dennis R. Newman and Patricia L. Newman shall have executed and
delivered to the Company a lease in the form attached hereto as EXHIBIT D (the
"Lease"); and
(k) the Buyer shall have received from the Broker a letter or other
instrument, in a form reasonably satisfactory to the Buyer, setting forth the
total fees and expenses (not to exceed $225,000 plus reasonable expenses)
payable to the Broker for the services rendered by the Broker to the Company.
5.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligation of the
Company to consummate the Merger is subject to the satisfaction of the following
conditions:
(a) the representations and warranties of the Buyer and the
Transitory Subsidiary set forth in Article III shall be true and correct when
made on the date hereof and shall be true and correct as of the Effective Time
as if made as of the Effective Time, except for representations and warranties
made as of a specific date, which shall be true and correct as of such date;
(b) each of the Buyer and the Transitory Subsidiary shall have
performed or complied with its agreements and covenants required to be performed
or complied with under this Agreement as of or prior to the Effective Time;
(c) each of the Buyer and the Transitory Subsidiary shall have
delivered to the Company a certificate to the effect that each of the conditions
specified in clauses (a) and (b) of this Section 5.2 is satisfied in all
respects;
(d) this Agreement and the Merger shall have received the Requisite
Stockholder Approval; and
(e) the Company shall have received from counsel to the Buyer and the
Transitory Subsidiary (who may be in-house counsel) an opinion with respect to
the matters set forth in EXHIBIT E attached hereto, addressed to the Company and
dated as of the Closing Date.
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ARTICLE VI
TERMINATION
6.1 TERMINATION OF AGREEMENT. The Parties may terminate this Agreement
prior to the Effective Time (whether before or after Requisite Stockholder
Approval), as provided below:
(a) the Parties may terminate this Agreement by mutual written
consent;
(b) the Buyer may terminate this Agreement by giving written notice
to the Company in the event the Company is in breach, and the Company may
terminate this Agreement by giving written notice to the Buyer and the
Transitory Subsidiary in the event the Buyer or the Transitory Subsidiary is in
breach, of any representation, warranty, or covenant contained in this
Agreement, and such breach is not remedied within 10 days of delivery of written
notice thereof;
(c) any Party may terminate this Agreement by giving written notice
to the other Parties at any time after the Company Stockholders have voted on
whether to approve this Agreement and the Merger in the event this Agreement and
the Merger failed to receive the Requisite Stockholder Approval;
(d) the Buyer may terminate this Agreement by giving written notice
to the Company if the Closing shall not have occurred on or before October 31,
1997 by reason of the failure of any condition precedent under Section 5.1
hereof (unless the failure results primarily from a breach by the Buyer or the
Transitory Subsidiary of any representation, warranty or covenant contained in
this Agreement);
(e) the Company may terminate this Agreement by giving written notice
to the Buyer and the Transitory Subsidiary if the Closing shall not have
occurred on or before October 31, 1997 by reason of the failure of any condition
precedent under Section 5.2 hereof (unless the failure results primarily from a
breach by the Company of any representation, warranty or covenant contained in
this Agreement); and
(f) the Buyer may terminate this Agreement if the Board of Directors
of the Company, at any time shall have (i) taken any action with respect to any
Acquisition Proposal other than to recommend rejection of the Acquisition
Proposal, (ii) taken a position of neutrality with respect to an Acquisition
Proposal, (iii) failed to take any position with respect to any Acquisition
Proposal within 10 business days after the making or commencement of the
Acquisition Proposal or (iv) withdraws its recommendation of the Merger or
modifies such recommendation in a manner adverse to the Buyer.
6.2 EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to Section 6.1, all obligations of the Parties hereunder shall
terminate without any further liability of any Party to any other Party, except
for any liability of any Party for breaches of this
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Agreement prior to such termination; PROVIDED, HOWEVER, that Section 6.3 shall
survive any such termination.
6.3 TERMINATION FEE. Notwithstanding the foregoing, in the event of the
termination of this Agreement pursuant to Section 6.1(f), the Company shall,
immediately upon such termination, pay to the Buyer in cash a termination fee in
the amount of $300,000.
ARTICLE VII
DEFINITIONS
For purposes of this Agreement, each of the following defined terms is
defined in the Section of this Agreement indicated below.
DEFINED TERM SECTION
------------ -------
510(k) 2.14(c)
Accountants 1.10(b)
Acquisition Proposal 4.7(a)
Adjustment 1.10(c)
Affiliate 4.7(a)
Broker 2.25
Buyer Introduction
CERCLA 2.22(a)
Certificate of Merger 1.1
Certificates 1.8(a)
Closing 1.2
Closing Balance Sheet 1.10(b)
Closing Date 1.2
Code 2.9(c)
Company Introduction
Company Reports 2.6
Company Stockholder 1.6(a)
Contracts 2.15
Disclosure Schedule Article II
Dissenting Shares 1.6(a)
Draft Closing Balance Sheet 1.10(a)
Effective Time 1.1
Environmental Law 2.22(a)
Escrow Agreement 1.3(e)
Escrow Agent 1.3(e)
Escrow Consideration per Share 1.5(a)
Escrow Fund 1.9(a)
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Escrow Stockholders 1.8(a)
Exchange Act 2.6
Exchange Agent 1.3(d)
Exchange Agent Payment 1.8(a)
FDA 2.14(a)
Financial Statements 2.6
GAAP 1.10(a)
Governmental Entity 2.4
Initial Merger Consideration per Share 1.5(a)
Intellectual Property 2.12(a)
Lease 5.1(j)
Materials of Environmental Concern 2.22(b)
Merger 1.1
Merger Consideration 1.5(a)
Merger Consideration per Share 1.5(a)
Most Recent Balance Sheet 2.8
Newman Agreement 5.1(i)
Options 1.7(a)
Ordinary Course of Business 2.4
Party Introduction
Permit 2.24
PMA 2.14(c)
Proxy Statement 4.3(a)
Qualified Acquisition Proposal 4.7(a)
Requisite Stockholder Approval 2.3
Regulatory Agency 2.14(a)
SEC 2.6
Securities Act 2.2
Security Interest 2.4
Shares 1.5(a)
Special Meeting 4.3(a)
Stock Plans 1.7(b)
Stockholder Representative 1.3(e)
Stockholders' Equity 1.10(c)
Subsidiary 2.4
Surviving Corporation 1.1
Taxes 2.9(a)
Tax Returns 2.9(a)
Third Party 4.7(a)
Transitory Subsidiary Introduction
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<PAGE>
ARTICLE VIII
MISCELLANEOUS
8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations or warranties in this Agreement shall survive the Closing.
8.2 PRESS RELEASES AND ANNOUNCEMENTS. No Party shall issue any press
release or make any public disclosure relating to the subject matter of this
Agreement prior to the Closing without the prior written approval of the other
Parties, which approval shall not be unreasonably withheld or delayed.
8.3 NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person other than the Parties and their respective
successors and permitted assigns.
8.4 ENTIRE AGREEMENT. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or among the Parties,
written or oral, with respect to the subject matter hereof, provided that the
Non-Disclosure Agreement dated as of April 12, 1996, between the Buyer and the
Company shall remain in effect in accordance with its terms.
8.5 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Parties; provided that the Transitory Subsidiary may assign its
rights, interests and obligations hereunder to an Affiliate of the Buyer.
8.6 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
8.7 HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
8.8 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly delivered two
business days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, or one business day after it is sent via a reputable
nationwide overnight courier service, in each case to the intended recipient as
set forth below:
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<PAGE>
IF TO THE COMPANY: COPY TO:
Imex Medical Systems, Incorporated David J. Cook, Esq.
6355 Joyce Drive Chrisman, Bynum & Johnson, P.C.
Golden, CO 80403 1900 Fifteenth Street
Attn: Dennis Newman Boulder, CO 80302
IF TO THE BUYER OR THE
TRANSITORY SUBSIDIARY: COPY TO:
Nicolet Biomedical Inc. Patrick J. Rondeau, Esq.
c/o Thermo Electron Corporation Hale and Dorr LLP
81 Wyman Street 60 State Street
Post Office Box 9046 Boston, MA 02109
Waltham, MA 02254
Attn: General Counsel
Any Party may give any notice, request, demand, claim, or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication shall be deemed to
have been duly given unless and until it actually is received by the party for
whom it is intended. Any Party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Parties notice in the manner herein set forth.
8.9 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws (and not the law of conflicts) of the State of
Delaware.
8.10 AMENDMENTS AND WAIVERS. The Parties may mutually amend any provision
of this Agreement at any time prior to the Effective Time; PROVIDED, HOWEVER,
that any amendment effected subsequent to the Requisite Stockholder Approval
shall be subject to the restrictions contained in the Delaware General
Corporation Law. No amendment of any provision of this Agreement shall be valid
unless the same shall be in writing and signed by all of the Parties. No waiver
by any Party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
8.11 SEVERABILITY. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have
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<PAGE>
the power to reduce the scope, duration, or area of the term or provision, to
delete specific words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or
unenforceable term or provision, and this Agreement shall be enforceable as
so modified after the expiration of the time within which the judgment may be
appealed.
8.12 EXPENSES. Except as set forth in Section 1.10(b), Section 6.3 and the
Escrow Agreement, each of the Parties shall bear its own costs and expenses
(including financial advisory, brokers', finders', agents' and legal fees and
expenses) incurred in connection with this Agreement and the transactions
contemplated hereby. All such costs and expenses incurred by the Company which
have not been paid as of the Closing Date shall be reflected on the Closing
Balance Sheet.
8.13 SPECIFIC PERFORMANCE. Each of the Parties acknowledges and agrees
that one or more of the other Parties would be damaged irreparably in the event
any of the provisions of this Agreement are not performed in accordance with
their specific terms or otherwise are breached. Accordingly, each of the
Parties agrees that the other Parties shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions hereof in any
action instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter, in addition to any other remedy to
which it may be entitled, at law or in equity.
8.14 CONSTRUCTION. The language used in this Agreement shall be deemed to
be the language chosen by the Parties hereto to express their mutual intent, and
no rule of strict construction shall be applied against any Party. Any
reference to any federal, state, local, or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
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<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
NICOLET BIOMEDICAL INC.
By: /s/ Gerald G. Brew
------------------------------
Gerald G. Brew
Its President
NBI ACQUISITION CORP.
By: /s/ Gerald G. Brew
------------------------------
Gerald G. Brew
Its President
IMEX MEDICAL SYSTEMS, INCORPORATED
By: /s/ Dennis R. Newman
------------------------------
Dennis R. Newman
Its President and Chief
Executive Officer
The undersigned hereby executes this Agreement for the sole purpose of
guaranteeing to the Company the obligations of the Buyer contained in Sections
1.8 and 1.9 hereof.
THERMO ELECTRON CORPORATION
By: /s/ Melissa F. Riordan
------------------------------
Melissa F. Riordan
Its Treasurer
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<PAGE>
The following stockholders of the Company hereby execute this Agreement for
the limited purposes, to the extent applicable, of (i) agreeing to and becoming
bound by the provisions of Section 4.3(d) and (ii) agreeing to execute and
deliver to the Buyer at the Closing the Newman Agreement and the Lease.
/s/ DENNIS R. NEWMAN
----------------------------------
Dennis R. Newman, Individually
/s/ PATRICIA L. NEWMAN
----------------------------------
Patricia L. Newman, Individually
NEWMAN FAMILY TRUST
By: /s/ DENNIS R. NEWMAN
------------------------------
Dennis R. Newman, Trustee
By: /s/ PATRICIA L. NEWMAN
------------------------------
Patricia L. Newman, Trustee
By: /s/ BYRON R. CHRISMAN
------------------------------
Byron R. Chrisman, Trustee
THE FRED E. & JENNIE A. NEWMAN TRUST
By: /s/ DENNIS R. NEWMAN
------------------------------
Dennis R. Newman, Trustee
By: /s/ PATRICIA L. NEWMAN
------------------------------
Patricia L. Newman, Trustee
By: /s/ BYRON R. CHRISMAN
------------------------------
Byron R. Chrisman, Trustee
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<PAGE>
The undersigned, being the duly elected Secretary of the Transitory
Subsidiary, hereby certifies that this Agreement has been adopted by a
majority of the votes represented by the outstanding shares of capital stock
of the Transitory Subsidiary entitled to vote on this Agreement.
----------------------------------
Sandra L. Lambert, Secretary
[TO BE COMPLETED FOLLOWING THE REQUISITE STOCKHOLDER APPROVAL]
The undersigned, being the duly elected Secretary of the Company, hereby
certifies that this Agreement has been adopted by a majority of the votes
represented by the outstanding Shares entitled to vote on this Agreement.
----------------------------------
Patricia L. Newman, Secretary
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<PAGE>
EXHIBIT A TO MERGER AGREEMENT
ESCROW AGREEMENT
This Escrow Agreement is entered into as of ____________, 1997, by and
among Nicolet Biomedical Inc., a California corporation (the "Buyer"), Dennis R.
Newman (the "Stockholder Representative") and State Street Bank and Trust
Company (the "Escrow Agent").
WHEREAS, the Buyer and Imex Medical Systems, Incorporated (the "Company")
have entered into a Merger Agreement dated July 15, 1997 (the "Merger
Agreement") by and among the Company, the Buyer and a subsidiary of the Buyer,
pursuant to which such subsidiary will be merged into the Company which, as the
surviving corporation (the "Surviving Corporation"), will become a wholly-owned
subsidiary of the Buyer.
WHEREAS, the Merger Agreement provides that an escrow fund will be
established to provide for payment of any post-closing adjustment to the Merger
Consideration (as defined therein) on the terms and conditions set forth herein.
WHEREAS, the parties hereto desire to establish the terms and conditions
pursuant to which such escrow fund will be established and maintained.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. DEFINED TERMS. Capitalized terms used in this Agreement and not
otherwise defined shall have the meanings given them in the Merger Agreement.
2. CONSENT OF COMPANY STOCKHOLDERS. By virtue of the Company
Stockholders' approval of the Merger Agreement, the Company Stockholders
entitled to receive the Merger Consideration pursuant to Section 1.5 of the
Merger Agreement (the "Escrow Stockholders") have, without any further act of
any Company Stockholder, consented to: (a) the establishment of the Escrow Fund
(as defined below) in the manner set forth herein, (b) the appointment of the
Stockholder Representative as their representative for purposes of this
Agreement and as attorney-in-fact and agent for and on behalf of each Escrow
Stockholder, and the taking by the Stockholder Representative of any and all
actions and the making of any decisions required or permitted to be taken or
made by him under this Agreement and (c) all of the other terms, conditions and
limitations in this Agreement.
3. ESCROW FUND. On ______________, 1997 (the Closing Date under the
Merger Agreement), the Buyer or the Transitory Subsidiary shall deposit with the
Escrow Agent, by wire transfer or delivery of a check of the Buyer payable to
the Escrow Agent, the sum of $700,000. Such sum, together with any further
amounts deposited in escrow pursuant to the last sentence of Section 1.6(a) of
the Merger Agreement and any interest and earnings thereon, is referred to
herein as the "Escrow Fund." The Escrow Fund shall be held as a trust fund and
shall not be subject to any lien, attachment, trustee process or any other
judicial process of any creditor of any party hereto. The Escrow Fund shall be
invested in accordance with Section 5. The Escrow
<PAGE>
Agent agrees to accept delivery of the Escrow Fund and to hold such Escrow
Fund in escrow subject to the terms and conditions of this Agreement. The
Escrow Fund shall be security for the post-closing adjustment to the Merger
Consideration set forth in Section 1.10 of the Merger Agreement.
4. DISBURSEMENT OF ESCROW FUND. The Escrow Agent shall disburse the
Escrow Fund, by wire transfer or other delivery of immediately available funds,
in accordance with written instructions executed jointly by the Buyer and the
Stockholder Representative. Such written instructions shall set forth the name,
address, payment instructions and taxpayer identification number for each person
or entity to whom a portion of the Escrow Fund is to be disbursed. The Buyer
and the Stockholder Representative agree to provide such written instructions as
soon as practicable, but in any event by _______________, 1997.
5. INVESTMENT OF ESCROW FUND. Any monies held in the Escrow Fund shall
be invested by the Escrow Agent, to the extent permitted by law and as directed
by the Stockholder Representative in writing, in (i) obligations issued or
guaranteed by the United States of America or any agency or instrumentality
thereof, (ii) obligations (including certificates of deposit and bankers'
acceptances) of banks (including the Escrow Agent in its commercial capacity)
which at the date of their last public reporting had total assets in excess of
$500,000,000, (iii) commercial paper rated at least A-1 or P-1 or, if not rated,
issued by companies having outstanding debt rated at least AA or Aa and
(iv) money market mutual funds invested exclusively in some or all of the
securities described in the foregoing clauses (i), (ii) and (iii). Such
investments described above shall in all instances be subject to availability
(including any time-of-day requirements). In no instance shall the Escrow Agent
have any obligations to provide investment advice of any kind. The Escrow Agent
shall not be required to invest any funds held hereafter except as expressly
provided in this Section 5, and shall not be obligated to pay interest on
uninvested funds. All amounts received by the Escrow Agent (and any credits to
the Escrow Fund) shall be conditional upon collection (and actual receipt by the
Escrow Agent of final payment). In no event shall the Escrow Agent have any
obligation to advance funds.
The Escrow Agent shall be authorized at all times from time to time to
liquidate any investment of cash in the Escrow Fund as may be necessary to
provide available cash to make any release, disbursement or payment called
for under the terms of this Agreement.
6. DUTIES AND RESPONSIBILITIES OF ESCROW AGENT.
(a) The Buyer and the Stockholder Representative acknowledge and
agree that the Escrow Agent (i) shall not be responsible for any of the
agreements referred to herein (including without limitation the Merger
Agreement) but shall be obligated only for the performance of such duties as are
specifically set forth in this Agreement; (ii) shall not be obligated to take
any legal or other action hereunder which might in its judgment involve expense
or liability unless it shall have been furnished with indemnity acceptable to
it; (iii) may rely on and shall be protected in acting or refraining from acting
upon any written notice, instruction, instrument, statement, request or document
furnished to it hereunder and believed by it to be genuine and to have been
signed or presented by the proper person, and shall have no
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<PAGE>
responsibility for determining the accuracy thereof; and (iv) may consult
counsel satisfactory to it, including in-house counsel, and the advice or
opinion of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with the advice or opinion of such
counsel.
(b) Neither the Escrow Agent nor any of its directors, officers or
employees shall be liable to anyone for any action taken or omitted to be taken
by it or any of its directors, officers or employees hereunder except in the
case of gross negligence, bad faith or willful misconduct. The Buyer and the
Stockholder Representative, jointly and severally, covenant and agree to
indemnify the Escrow Agent and hold it harmless without limitation from and
against any loss, liability or expense of any nature incurred by the Escrow
Agent arising out of or in connection with this Agreement or with the
administration of its duties hereunder, including but not limited to, reasonable
legal fees and other reasonable costs and expenses of defending or preparing to
defend against any claim of liability in the premises, unless such loss,
liability or expense shall be caused by the Escrow Agent's gross negligence, bad
faith or willful misconduct. In no event shall the Escrow Agent be liable for
indirect, punitive, special or consequential damages. As between themselves,
the Buyer and the Stockholder Representative shall each be responsible for one-
half of any amounts owed under this paragraph (b).
(c) The Buyer and the Escrow Stockholders shall be responsible for
any and all obligations imposed now or hereafter by any applicable tax law with
respect to the payment to them of Escrow Funds under this Agreement. The Buyer
and the Stockholder Representative, jointly and severally, agree to indemnify
and hold the Escrow Agent harmless from and against any taxes, additions for
late payment, interest, penalties and other expenses, that may be assessed
against the Escrow Agent on any such payment or other activities under this
Agreement. The Buyer and the Stockholder Representative undertake to instruct
the Escrow Agent in writing with respect to the Escrow Agent's responsibility
for withholding and other taxes, assessments or other governmental charges,
certifications and governmental reporting in connection with its acting as
Escrow Agent under this Agreement. In the absence of contrary written
instructions, all interest and earnings on the Escrow Fund shall be allocated
for tax purposes to the Buyer and the Escrow Stockholders in the same proportion
as the distribution of the Escrow Fund pursuant to Section 4 is allocated among
the Buyer and the Escrow Stockholders. The Buyer and the Stockholder
Representative, jointly and severally, agree to indemnify and hold the Escrow
Agent harmless from any liability on account of taxes, assessments or other
governmental charges, including without limitation the withholding or deduction
or the failure to withhold or deduct same, and any liability for failure to
obtain proper certifications or to properly report to governmental authorities,
to which the Escrow Agent may be or become subject in connection with or which
arises out of this Agreement, including costs and expenses (including reasonable
legal fees and expenses), interest and penalties. Notwithstanding the foregoing,
no distributions will be made unless the Escrow Agent is supplied with an
original, signed Form W-9 or its equivalent prior to distribution. As between
themselves, the Buyer and the Stockholder Representative shall each be
responsible for one half of any amounts owed under this paragraph (c).
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<PAGE>
(d) The Escrow Agent shall have no more or less responsibility or
liability on account of any action or omission of any book-entry depository or
subescrow agent employed by the Escrow Agent than any such book-entry depository
or subescrow agent has to the Escrow Agent, except to the extent that such
action or omission of any book-entry depository or subescrow agent was caused by
the Escrow Agent's own gross negligence, bad faith or willful misconduct.
(e) The Buyer and the Stockholder Representative agree, jointly and
severally, to pay or reimburse the Escrow Agent for any legal fees and expenses
incurred in connection with the preparation of this Agreement and to pay the
Escrow Agent's reasonable compensation for its normal services hereunder in
accordance with the attached fee schedule, which may be subject to change on an
annual basis. The Escrow Agent shall be entitled to reimbursement on demand for
all expenses incurred in connection with the administration of the escrow
created hereby which are in excess of its compensation for normal services
hereunder, including without limitation, payment of any legal fees and expenses
incurred by the Escrow Agent in connection with the resolution of any claim by
any party hereunder. As between themselves, the Buyer and the Stockholder
Representative shall each be responsible for one-half of such fees and expenses.
(f) The Escrow Agent may at any time resign as Escrow Agent hereunder
by giving thirty (30) days prior written notice of resignation to the other
parties hereto. Prior to the effective date of the resignation as specified in
such notice, the Buyer will issue to the Escrow Agent a written instruction
authorizing redelivery of the Escrow Funds to a successor escrow agent that it
selects subject to the reasonable consent of the Stockholder Representative.
Such successor escrow agent shall be a bank or trust company, organized and
existing under the laws of the United States or any state thereof, subject to
examination by state or federal authorities, and have capital and surplus in
excess of $50,000,000. If, however, the Buyer shall fail to name a successor
escrow agent within twenty (20) days after the notice of resignation from the
Escrow Agent, the Stockholder Representative shall be entitled to name such
successor escrow agent. If no successor escrow agent is named by the Buyer or
the Stockholder Representative, the Escrow Agent may apply to a court of
competent jurisdiction for the appointment of a successor escrow agent. The
provisions of Section 6(b) and Section 6(c) shall survive the resignation or
removal of the Escrow Agent or the termination of this Agreement.
7. DISPUTE RESOLUTION. It is understood and agreed that should any
dispute arise with respect to the delivery, ownership, right of possession,
and/or disposition of the Escrow Fund, or should any claim be made upon such
Fund by a third party, the Escrow Agent upon receipt of a written notice of such
dispute or claim by the parties hereto or a third party, is authorized and
directed to retain in its possession without liability to anyone, all or any of
said Fund until such dispute shall have been settled either by the mutual
agreement of the parties involved or by a final order, decree or judgment of a
court in the United States of America, the time for perfection of an appeal of
such order, decree or judgment having expired. The Escrow Agent may, but shall
be under no duty whatsoever to, institute or defend any legal proceedings which
relate to the Escrow Fund.
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<PAGE>
8. LIABILITY AND AUTHORITY OF STOCKHOLDER REPRESENTATIVE; SUCCESSORS AND
ASSIGNS.
(a) The Stockholder Representative shall incur no liability to the
Escrow Stockholders with respect to any action taken or suffered by him in
reliance upon any note, direction, instruction, consent, statement or other
documents believed by him to be genuinely and duly authorized, nor for other
action or inaction except his own willful misconduct or negligence. The
Stockholder Representative may, in all questions arising under the Escrow
Agreement, rely on the advice of counsel and for anything done, omitted or
suffered in good faith by the Stockholder Representative based on such advice,
the Stockholder Representative shall not be liable to the Escrow Stockholders.
(b) In the event of the death or permanent disability of the
Stockholder Representative, or his resignation as a Stockholder Representative,
a successor Stockholder Representative shall be appointed by a majority vote of
the Escrow Stockholders, with each Escrow Stockholder (or his or her successors
or assigns) to be given a vote equal to the number of votes represented by the
Shares held by such Escrow Stockholder immediately prior to the Effective Time.
Each successor Stockholder Representative shall have all of the power,
authority, rights and privileges conferred by this Agreement upon the original
Stockholder Representative, and the term "Stockholder Representative" as used
herein shall be deemed to include any successor Stockholder Representative.
(c) The Stockholder Representative shall have full power and
authority to represent the Escrow Stockholders, and their successors, with
respect to all matters arising under this Agreement and all action taken by the
Stockholder Representative hereunder shall be binding upon the Escrow
Stockholders, and their successors, as if expressly confirmed and ratified in
writing by each of them. Without limiting the generality of the foregoing, the
Stockholder Representative shall have full power and authority to interpret all
of the terms and provisions of this Agreement, to compromise any claims asserted
hereunder and to authorize payments to be made with respect thereto, on behalf
of the Escrow Stockholders and their successors.
9. AMOUNTS PAYABLE BY STOCKHOLDER REPRESENTATIVE. Any amounts payable by
the Stockholder Representative pursuant to Section 6(b), or Section 6(c) or
Section 6(e) shall be payable solely as follows, and neither the Stockholder
Representative nor any Escrow Stockholder shall have any personal liability
therefor. The Stockholder Representative shall notify the Escrow Agent of any
such amount payable by the Escrow Stockholders as soon as he becomes aware that
any such amount is payable, with a copy of such notice to the Buyer. On the
sixth business day after the delivery of such notice, the Escrow Agent shall
disburse such amount from the Escrow Fund (up to the amount then available in
the Escrow Fund) to the Escrow Agent in accordance with the instructions of the
Stockholder Representative; provided that if the Buyer delivers to the Escrow
Agent (with a copy to the Stockholder Representative), within five business days
after delivery of such notice by the Stockholder Representative, a written
notice contesting the legitimacy or reasonableness of such amount, then the
Escrow Agent shall not disburse the disputed portion of such claimed amount
until such dispute has been resolved.
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<PAGE>
10. TERMINATION. This Agreement shall terminate upon the disbursement by
the Escrow Agent of all of the Escrow Funds in accordance with this Agreement;
provided that the provisions of Sections 6 and 8 shall survive such termination.
11. CONSENT TO JURISDICTION AND SERVICE. The Buyer and the Stockholder
Representative hereby absolutely and irrevocably consent and submit to the
jurisdiction of the courts of the Commonwealth of Massachusetts and of any
federal court located in said Commonwealth in connection with any actions or
proceedings brought against the Buyer and the Stockholder Representative by the
Escrow Agent arising out of or relating to this Escrow Agreement. In any such
action or proceeding, the Buyer and the Stockholder Representative hereby
absolutely and irrevocably waive personal service of any summons, complaint,
declaration or other process and hereby absolutely and irrevocably agree that
service thereof may be made by certified or registered first class mail directed
to the Buyer and the Stockholder Representative, as the case may be, at their
respective addresses in accordance with Section 13 hereof.
12. FORCE MAJEURE. Neither the Buyer nor the Stockholder Representative
nor the Escrow Agent shall be responsible for delays or failures in performance
resulting from acts beyond its control. Such acts shall include but not be
limited to acts of God, strikes, lockouts, riots, acts of war, epidemics,
governmental regulations superimposed after the fact, fire, communication line
failures, computer viruses, power failures, earthquakes or other disasters.
13. NOTICES. Any notice permitted or required hereunder shall be deemed
to have been duly given if delivered personally or if mailed certified or
registered mail, postage prepaid, to the parties at their addresses set forth
below or to such other address as they may hereafter designate.
If to Buyer:
Nicolet Biomedical, Inc.
5225 Verona Road, Bldg. 2
Madison, WI 53711
Attn: President
With a copy to:
Thermo Electron Corporation
81 Wyman Street - P.O. Box 9046
Waltham, MA 02254-9046
Attn: General Counsel
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<PAGE>
If to the Stockholder Representative:
Dennis R. Newman
6355 Joyce Drive
Golden, CO 80403
If to the Escrow Agent:
State Street Bank and Trust Company
Two International Place
Boston, MA 02110
Attn: Nicolet/Imex Escrow
Corporate Trust Department
14. MISCELLANEOUS.
(a) BINDING EFFECT. This Agreement shall be binding upon the
respective parties hereto and their heirs, executors, successors and assigns.
(b) MODIFICATIONS. This Agreement may not be altered or modified
without the consent of the parties hereto, which consent shall not constitute a
waiver of any of the terms or conditions of this Agreement, unless such waiver
is specified in writing, and then only to the extent so specified. A waiver of
any of the terms and conditions of this Agreement on one occasion shall not
constitute a waiver of the other terms and conditions of this Agreement, or of
such terms and conditions on any other occasion.
(c) GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the Commonwealth of Massachusetts.
(d) REPRODUCTION OF DOCUMENTS. This Agreement and all documents
relating thereto, including, without limitation, (i) consents, waivers and
modifications which may hereafter be executed, and (ii) certificates and other
information previously or hereafter furnished, may be reproduced by any
photographic, photostatic, microfilm, optical disk, micro-card, miniature
photographic or other similar process. The parties hereto agree that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction shall likewise be admissible in evidence.
(e) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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<PAGE>
(f) ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding and agreement of the parties with respect to the subject matter of
this Agreement and supersedes all prior agreements or understandings, written or
oral, between the parties with respect to the subject matter hereof.
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<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first above written.
NICOLET BIOMEDICAL INC.
By:
------------------------------
---------------------------------
DENNIS R. NEWMAN
STATE STREET BANK AND TRUST COMPANY
By:
------------------------------
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<PAGE>
EXHIBIT C TO MERGER AGREEMENT
AGREEMENT
This Agreement is made as of _________, 1997 between Imex Medical
Systems, Incorporated, a Delaware corporation (hereinafter referred to,
collectively with its subsidiaries, as the "Company"), and Dennis R. Newman
("Newman").
Nicolet Biomedical Inc. ("Nicolet") and the Company have entered into a
Merger Agreement dated July 15, 1997 (the "Merger Agreement") by and among
Nicolet, a subsidiary of Nicolet and the Company. In connection with the
merger contemplated by the Merger Agreement (the "Merger"), Newman (or
persons or entities affiliated with Newman) will receive approximately
$_______ as stockholders of the Company. The execution and delivery of
this Agreement by Newman is a condition to the closing of the Merger.
In consideration of the mutual covenants contained herein, Newman and the
Company agree as follows:
1. EMPLOYMENT RELATIONSHIP.
1.1 TERM OF EMPLOYMENT. The Company hereby agrees to employ
Newman, and Newman hereby accepts employment with the Company, upon the terms
set forth in this Agreement, for the period (the "Employment Period")
commencing on the date of this Agreement and ending on the date six months
after the date of this Agreement (the "Employment Termination Date"), unless
sooner terminated in accordance with the provisions of Section 1.4.
1.2 TITLE; CAPACITY. During the Employment Period, Newman shall
serve as a Vice President of the Company. Newman shall be based at the
Company's headquarters in Golden, Colorado. Newman shall be subject to the
supervision of, and shall have such authority as is delegated to him by, the
Board of Directors of the Company. Newman hereby accepts such employment and
agrees to undertake the duties and responsibilities inherent in such position
and such other duties and responsibilities as the Board of Directors of the
Company or its designee shall from time to time reasonably assign to him.
Newman agrees to devote his entire business time, attention and energies to
the business and interests of the Company during the Employment Period.
Newman agrees to abide by the rules, regulations, instructions, personnel
practices and policies of the Company and any changes therein which may be
adopted from time to time by the Company.
1.3 COMPENSATION AND BENEFITS. During the Employment Period:
(a) SALARY. The Company shall pay Newman a base salary at an
annual rate of $112,600.
<PAGE>
(b) EMPLOYEE BENEFITS. Newman shall be entitled to receive
employee benefits which, in the aggregate, are no less favorable to him than
what he currently receives from the Company.
1.4 EMPLOYMENT TERMINATION. The Employment Period shall terminate
prior to the Employment Termination Date under the following circumstances:
(a) at the election of the Company, for cause, immediately
upon written notice by the Company to Newman. For the purposes of this
Section 1.4, cause for termination shall be deemed to exist upon (i) a good
faith finding by the Company of the material failure of Newman to perform his
reasonably assigned employment duties for the Company, dishonesty, gross
negligence or misconduct, or (ii) the conviction of Newman of, or the entry
of a pleading of guilty or nolo contendere by Newman to, any crime involving
moral turpitude or any felony; or
(b) the death or disability of Newman. As used in this
Agreement, the term "disability" shall mean the inability of Newman, due to a
physical or mental disability, for a period of 90 days, whether or not
consecutive, during any 360-day period to perform the services contemplated
under this Agreement. A determination of disability shall be made by a
physician satisfactory to both Newman and the Company, PROVIDED that if
Newman and the Company do not agree on a physician, Newman and the Company
shall each select a physician and these two together shall select a third
physician, whose determination as to disability shall be binding on all
parties.
2. CONSULTING RELATIONSHIP.
2.1 TERM. The Company hereby agrees to retain Newman, and Newman
hereby agrees to render services to the Company, as a consultant, upon the
terms set forth in this Agreement, for the period (the "Consulting Period")
commencing on the Employment Termination Date and ending on the date four
years after the Employment Termination Date, unless sooner terminated in
accordance with the provisions of Section 2.5. Notwithstanding the
foregoing, the Consulting Period shall not commence if the Employment Period
is terminated prior to the Employment Termination Date pursuant to Section
1.4.
2.2 SERVICES. During the Consulting Period, Newman agrees to
perform such consulting, advisory and related services to and for the Company
as may be reasonably requested from time to time by the Company. The Company
and Newman anticipate that such consulting services will involve
approximately three days per week during the first two years of the
Consulting Period and approximately two days per week during the last two
years of the Consulting Period. Newman shall use his reasonable efforts in
the performance of his obligations under this Section 2.2. The Company shall
provide such access to its information and property as may be reasonably
required in order to permit Newman to perform his obligations under this
Section 2.2. Newman shall cooperate with the Company's personnel, shall
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not interfere with the conduct of the Company's business and shall observe
all rules, regulations and security requirements of the Company concerning
the safety of persons and property.
2.3 COMPENSATION. During the Consulting Period:
(a) CONSULTING FEES. The Company shall pay to Newman
consulting fees of $5,000 per month, payable in arrears on the last day of
each month. Payment for any partial month shall be prorated.
(b) REIMBURSEMENT OF EXPENSES. The Company shall reimburse
Newman, in accordance with Company policies and subject to any limitations as
may be set by the Company, for reasonable and necessary expenses incurred or
paid by Newman incident to the performance of his services under this
Agreement.
(c) BENEFITS. Newman shall not be entitled to any benefits,
coverages or privileges, including, without limitation, social security,
unemployment, medical or pension payments, made available to employees of the
Company.
2.4 INDEPENDENT CONTRACTOR STATUS. Newman shall perform all
services under this Section 2 as an "independent contractor" and not as an
employee or agent of the Company. Newman is not authorized to assume or
create any obligation or responsibility, express or implied, on behalf of, or
in the name of, the Company or to bind the Company in any manner.
2.5 TERMINATION OF CONSULTING RELATIONSHIP. The Consulting Period
shall terminate prior to its scheduled expiration date under the following
circumstances:
(a) at the election of the Company, for cause, immediately
upon written notice by the Company to Newman. For the purposes of this
Section 2.5, cause for termination shall be deemed to exist upon (i) a good
faith finding by the Company of the material failure of Newman to perform his
reasonably assigned consulting duties for the Company, dishonesty, gross
negligence or misconduct, or (ii) the conviction of Newman of, or the entry
of a pleading of guilty or nolo contendere by Newman to, any crime involving
moral turpitude or any felony; or
(b) the death or disability (as defined in Section 1.4(b)) of
Newman.
3. INVENTIONS AND PROPRIETARY INFORMATION.
3.1 INVENTIONS.
(a) All inventions, discoveries, computer programs, data,
technology, designs, innovations and improvements (whether or not patentable
and whether or not copyrightable) ("Inventions") related to the business of
the Company which are made, conceived, reduced to practice, created, written,
designed or developed by Newman, solely or
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jointly with others and whether during normal business hours or otherwise,
during either the Employment Period or the Consulting Period, or thereafter
if resulting or directly derived from Proprietary Information (as defined
below), shall be the sole property of the Company. Newman hereby assigns to
the Company all Inventions and any and all related patents, copyrights,
trademarks, trade names, and other industrial and intellectual property
rights and applications therefor, in the United States and elsewhere and
appoints any officer of the Company as his duly authorized attorney to
execute, file, prosecute and protect the same before any government agency,
court or authority. Upon the request of the Company and at the Company's
expense, Newman shall execute such further assignments, documents and other
instruments as may be necessary or desirable to fully and completely assign
all Inventions to the Company and to assist the Company in applying for,
obtaining and enforcing patents or copyrights or other rights in the United
States and in any foreign country with respect to any Invention.
(b) Newman shall promptly disclose to the Company all
Inventions and will maintain adequate and current written records (in the
form of notes, sketches, drawings and as may be specified by the Company) to
document the conception and/or first actual reduction to practice of any
Invention. Such written records shall be available to and remain the sole
property of the Company at all times.
(c) Newman agrees to cooperate fully with the Company, both
during and after the Employment Period and the Consulting Period, with
respect to the procurement, maintenance and enforcement of copyrights and
patents (both in the United States and foreign countries) relating to
Inventions. Newman shall sign all papers, including, without limitation,
copyright applications, patent applications, declarations, oaths, formal
assignments, assignment of priority rights, and powers of attorney, which the
Company may deem necessary or desirable in order to protect its rights and
interests in any Invention.
3.2 PROPRIETARY INFORMATION.
(a) Newman acknowledges that his relationship with the Company
is one of high trust and confidence and that in the course of his employment
by and service as a consultant to the Company he will have access to and
contact with Proprietary Information. Newman agrees that he will not, during
the Employment Period or the Consulting Period or at any time thereafter,
disclose to others, or use for his benefit or the benefit of others, any
Proprietary Information or Invention.
(b) For purposes of this Agreement, Proprietary Information
shall mean, by way of illustration and not limitation, all information
(whether or not patentable and whether or not copyrightable) owned, possessed
or used by the Company, including, without limitation, any Invention,
formula, vendor information, customer information, apparatus, equipment,
trade secret, process, research, report, technical data, know-how, computer
program, software, software documentation, hardware design, technology,
marketing or business plan, forecast, unpublished financial statement,
budget, license, price, cost and employee list that is
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<PAGE>
communicated to, learned of, developed or otherwise acquired by Newman in the
course of his employment by or service as a consultant to the Company.
(c) Newman's obligations under this Section 3.2 shall not
apply to any information that (i) is or becomes known to the general public
under circumstances involving no breach by Newman or others of the terms of
this Section 3.2, (ii) is generally disclosed to third parties by the Company
without restriction on such third parties, or (iii) is approved for release
by written authorization of the Board of Directors of the Company.
(d) Newman agrees that all records, files, memoranda, notes,
designs, data, reports, price lists, customer lists, drawings, plans,
computer programs, software, software documentation, sketches, laboratory and
research notebooks and other documents (and all copies or reproductions of
such materials) embodying Proprietary Information, whether created by the
Newman or others, which shall come into his custody or possession, shall be
and are the exclusive property of the Company to be used by the Newman only
in the performance of his duties for the Company. At any time upon request
by the Company, Newman shall promptly deliver to the Company all records,
files, memoranda, notes, designs, data, reports, price lists, customer lists,
drawings, plans, computer programs, software, software documentation,
sketches, laboratory and research notebooks and other documents (and all
copies or reproductions of such materials) embodying Proprietary Information
or otherwise relating to the business of the Company.
4. NON-COMPETITION AND NON-SOLICITATION.
4.1 NON-COMPETITION.
(a) Until the date four and one-half years after the date of
this Agreement, Newman will not directly or indirectly:
(i) as an individual proprietor, partner, stockholder,
officer, employee, director, joint venturer, investor, lender, consultant, or
in any other capacity whatsoever (other than as the holder of not more than
one percent of the combined voting power of the outstanding stock of a
publicly held company), develop, design, produce, market, sell or render (or
assist any other person in developing, designing, producing, marketing,
selling or rendering) products or services competitive with those developed,
designed, produced, marketed, sold or rendered by the Company while Newman
was employed or retained as a consultant by the Company; or
(ii) solicit, divert or take away, or attempt to divert or
to take away, the business or patronage of any of the clients, customers or
accounts, or prospective clients, customers or accounts, of the Company which
were contacted, solicited or served by Newman while employed or retained as a
consultant by the Company.
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(b) Notwithstanding the provisions of Section 4.1(a), Newman
shall be permitted to become a stockholder or investor of a company which
distributes, solely via catalogs or over the Internet, products which compete
with those of the Company; PROVIDED that Newman (i) may not serve as an
employee, director or officer of such company, (ii) may not serve as a
consultant or advisor to any manufacturers or customers of products which are
competitive with those of the Company, (iii) may not allow any such company
to use his name in a manner which, explicitly or implicitly, endorses
products which are competitive with those of the Company, and (iv) shall use
all reasonable efforts to cause any company using his name in the manner
described in clause (iii) to promptly cease such use.
(c) If Newman violates the provisions of Section 4.1(a),
Newman shall continue to be bound by the restrictions set forth in Section
4.1(a) until an aggregate of four and one-half years (which need not be
consecutive) following the date of this Agreement has expired without any
violation of such provisions.
4.2 NON-SOLICITATION. Until the date four and one-half years after
the date of this Agreement, Newman will not directly or indirectly recruit,
solicit or hire any employee of the Company, or induce or attempt to induce
any employee of the Company to terminate his/her employment with, or
otherwise cease his/her relationship with, the Company.
5. MISCELLANEOUS.
5.1 NO CONFLICT. Newman represents that the execution and
performance by him of this Agreement does not and will not conflict with or
breach the terms of any other agreement by which Newman is bound.
5.2 EQUITABLE REMEDIES. The restrictions contained in this
Agreement are necessary for the protection of the business and goodwill of
the Company and are considered by Newman to be reasonable for such purpose.
Newman acknowledges that any breach of the provisions of Section 3 or Section
4 would result in serious and irreparable injury to the Company for which the
Company cannot be adequately compensated by monetary damages alone. Newman
agrees, therefore, that, in addition to any other remedy it may have, the
Company shall be entitled to enforce the specific performance of Section 3
and Section 4 of this Agreement by Newman and to seek both temporary and
permanent injunctive relief (to the extent permitted by law) without the
necessity of proving actual damages.
5.3 INTERPRETATION. If any restriction set forth in Section 4 is
found by any court of competent jurisdiction to be unenforceable because it
extends for too long a period of time or over too great a range of activities
or in too broad a geographic area, it shall be interpreted to extend only
over the maximum period of time, range of activities or geographic area as to
which it may be enforceable.
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<PAGE>
5.4 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties relating to the subject matter hereof and
supersedes all prior agreements and understandings, whether written or oral,
relating to the subject matter of this Agreement.
5.5 AMENDMENT. This Agreement may be amended or modified only by a
written instrument executed by both the Company and Newman.
5.6 SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement.
5.7 WAIVER OF RIGHTS. No delay or omission by the Company in
exercising any right under this Agreement will operate as a waiver of that or
any other right. A waiver or consent given by the Company on any one
occasion is effective only in that instance and will not be construed as a
bar to or waiver of any right on any other occasion.
5.8 ASSIGNABILITY. The Company may assign this Agreement to any
other corporation or entity which acquires (whether by purchase, merger,
consolidation or otherwise) all or substantially all of the business and/or
assets of the Company.
5.9 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware (without
regard to conflict of law provisions). Any action, suit, or other legal
proceeding which is commenced to resolve any matter arising under or relating
to any provision of this Agreement shall be commenced only in a court of the
State of Delaware (or, if appropriate, a federal court located within
Delaware), and the Company and Newman each consents to the jurisdiction of
such a court.
NEWMAN ACKNOWLEDGES THAT HE HAS CAREFULLY READ THIS AGREEMENT AND
UNDERSTANDS AND AGREES TO ALL OF THE PROVISIONS IN THIS AGREEMENT.
WITNESS our hands and seals:
IMEX MEDICAL SYSTEMS, INCORPORATED
By:
--------------------------------------
--------------------------------------
(print name and title)
DENNIS R. NEWMAN
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--------------------------------------
(Signature)
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<PAGE>
EXHIBIT D TO MERGER AGREEMENT
LEASE
ARTICLE I
REFERENCE DATA
1.1 SUBJECTS REFERRED TO.
Each reference in this Lease to any of the following subjects shall be
construed to incorporate the data stated for that subject in this Section 1.1.
(a) Date of this Lease: ___________ __, 1997
(b) Premises: The land with the building thereon commonly
known as 6355 Joyce Street, Golden, Colorado legally
described on Exhibit A and more particularly shown on
Exhibit A-1 attached hereto.
(c) Landlord: Dennis R. Newman and Patricia L. Newman
(d) Original Address of Landlord: 9305 Blue Mountain Road
Golden, Colorado 80403
(e) Tenant: Imex Medical Systems, Incorporated, a Delaware corporation
(f) Original Address of Tenant: 6355 Joyce Street
Golden, Colorado 80401
(g) Term: The period commencing on the Commencement Date and ending at
11:59 p.m. local time June 30, 1998, with two options to extend as
set forth in Section 2.3.
(h) Commencement Date: The date hereof
(i) Annual Fixed Rent: $127,572.00
(j) Permitted Uses: Light manufacturing, research and development and
office uses
(k) Public Liability Insurance Limits:
Bodily Injury: $1,000,000
Property Damage: $1,000,000
<PAGE>
1.2 EXHIBITS.
The Exhibits listed below in this section are incorporated in this Lease by
reference and are to be construed as a part of this Lease:
EXHIBIT A. Description of Premises.
EXHIBIT A-1. Plan showing the Premises, including appurtenances thereto,
if any.
1.3 TABLE OF ARTICLES AND SECTIONS.
ARTICLE I
REFERENCE DATA......................................................... 1
1.1 SUBJECTS REFERRED TO............................................ 1
1.2 EXHIBITS........................................................ 2
1.3 TABLE OF ARTICLES AND SECTIONS.................................. 2
ARTICLE II
PREMISES AND TERM...................................................... 5
2.1 PREMISES........................................................ 5
2.2 TERM............................................................ 5
2.3 OPTION TO EXTEND................................................ 5
2.4 TERMINATION OF PRIOR LEASE...................................... 5
ARTICLE III
CONDITION OF PREMISES.................................................. 5
3.1 AS IS........................................................... 5
ARTICLE IV
RENT................................................................... 5
4.1 THE FIXED RENT.................................................. 5
4.2 ADDITIONAL RENT................................................. 6
4.2.1 REAL ESTATE TAXES........................................ 6
4.2.2 INSURANCE................................................ 7
4.2.3 UTILITIES................................................ 8
4.3 LATE PAYMENT OF RENT............................................ 8
ARTICLE V
LANDLORD'S COVENANTS................................................... 8
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5.1 DELIVERY OF POSSESSION.......................................... 8
5.2 LANDLORD'S REPRESENTATION....................................... 8
5.3 ROOF, EXTERIOR WALL, FLOOR SLAB AND STRUCTURAL COMPONENT REPAIR. 9
5.4 QUIET ENJOYMENT................................................. 9
5.5 HAZARDOUS MATERIALS............................................. 9
5.6 INDEMNITY....................................................... 10
ARTICLE VI
TENANT'S ADDITIONAL COVENANTS........................................... 10
6.1 AFFIRMATIVE COVENANTS............................................ 10
6.1.1 PERFORM OBLIGATIONS....................................... 10
6.1.2 USE....................................................... 10
6.1.3 REPAIR AND MAINTENANCE.................................... 10
6.1.4 COMPLIANCE WITH LAW....................................... 11
6.1.5 TENANT'S WORK............................................. 11
6.1.6 INDEMNITY................................................. 11
6.1.7 LANDLORD'S RIGHT TO ENTER................................. 12
6.1.8 PERSONAL PROPERTY AT TENANT'S RISK........................ 12
6.1.9 YIELD UP.................................................. 12
6.2 NEGATIVE COVENANTS............................................... 12
6.2.1 ASSIGNMENT AND SUBLETTING................................. 12
6.2.2 OVERLOADING AND NUISANCE.................................. 13
ARTICLE VII
CASUALTY OR TAKING...................................................... 13
7.1 TERMINATION...................................................... 13
7.2 RESTORATION...................................................... 14
ARTICLE VIII
DEFAULTS................................................................ 14
8.1 EVENTS OF DEFAULT................................................ 14
8.2 REMEDIES......................................................... 15
8.3 REMEDIES CUMULATIVE.............................................. 15
8.4 LANDLORD'S AND TENANT'S RIGHT TO CURE DEFAULTS................... 16
8.5 EFFECT OF WAIVERS OF DEFAULT..................................... 16
8.6 NO ACCORD AND SATISFACTION....................................... 16
ARTICLE IX
MORTGAGES............................................................... 17
9.1 RIGHTS OF MORTGAGE HOLDERS....................................... 17
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9.2 LEASE SUPERIOR OR SUBORDINATE TO MORTGAGES....................... 17
ARTICLE X
MISCELLANEOUS PROVISIONS................................................ 18
10.1 NOTICES FROM ONE PARTY TO THE OTHER.............................. 18
10.2 ESTOPPEL CERTIFICATE............................................. 18
10.3 LEASE NOT TO BE RECORDED......................................... 19
10.4 BIND AND INURE................................................... 19
10.5 ACTS OF GOD...................................................... 19
10.6 LANDLORD'S DEFAULT............................................... 19
10.7 BROKERAGE........................................................ 19
10.8 APPROVALS AND CONSENT............................................ 20
10.9 APPLICABLE LAW AND CONSTRUCTION.................................. 20
10.9.1 APPLICABLE LAW........................................... 20
10.9.2 NO OTHER AGREEMENT....................................... 20
10.9.3 TITLES................................................... 20
10.9.4 "LANDLORD" AND "TENANT".................................. 20
10.10 SUBMISSION NOT AN OFFER.......................................... 20
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ARTICLE II
PREMISES AND TERM
2.1 PREMISES. Landlord hereby leases and demises to Tenant and Tenant
hereby leases from Landlord, subject to and with the benefit of the terms,
covenants, conditions and provisions of this Lease, the Premises.
2.2 TERM. TO HAVE AND TO HOLD for a term beginning on the Commencement
Date hereof and continuing for the Term, unless sooner terminated as hereinafter
provided.
2.3 OPTION TO EXTEND. Provided that Tenant is not in default beyond any
applicable grace or cure period at the time of its exercise or at the
commencement of the respective Extension Term, Tenant shall have the right and
option to extend the Term for two periods of one year each (the "Extension
Terms") by giving written notice to Landlord of its exercise of its option to
extend the Term on or before that date which is six months prior to the
expiration of the original Term or the first Extension Term, as the case may be.
If either or both such options are so exercised, all of the terms, conditions,
covenants and agreements contained herein shall apply during each Extension
Term, except that the Annual Fixed Rent shall be $131,399.00 during the First
Extension Term and $135,341.00 during the Second Extension Term. In the event
Tenant exercises an option set forth herein, references to the Term shall
include the relevant Extension Term.
2.4 TERMINATION OF PRIOR LEASE. This lease terminates and supersedes
the lease agreement, dated June 1, 1982, between the Landlord and the Tenant,
as amended (the "Prior Agreement"), in its entirety, and the Prior Agreement
shall have no further force or effect.
ARTICLE III
CONDITION OF PREMISES
3.1 AS IS. Tenant accepts the Premises in their "as is" condition as of
the date of this Lease, subject to the provisions of Sections 5.1 and 5.2.
ARTICLE IV
RENT
4.1 THE FIXED RENT. Tenant covenants and agrees to pay rent to Landlord
at the Original Address of Landlord or at such other place or to such other
person or entity as Landlord may by notice to Tenant from time to time direct,
in equal installments of 1/12th of the Annual Fixed Rent in advance on the first
day of each calendar month included in the Term; and for any portion of a
calendar month at the beginning or end of the Term, at that rate payable in
advance for such portion.
4.2 ADDITIONAL RENT. In order that the Fixed Rent shall be net to
Landlord, Tenant covenants and agrees to pay, as Additional Rent, taxes,
insurance costs, and utility charges with respect to the Premises as provided in
this Section 4.2 as follows:
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4.2.1 REAL ESTATE TAXES. Tenant shall pay, directly to the authority
charged with collection thereof: (i) all real property taxes, assessments,
levies, fees, water and sewer rents and charges which are, at any time prior to
or during the Term hereof, imposed or levied upon or assessed against the
Premises and (ii) all charges for utilities furnished to the Premises which may
become a lien on the Premises (collectively "taxes and assessments" or if
singular "tax or assessment"). If any tax or assessment levied against the
Premises may legally be paid in installments, Tenant may elect to pay such tax
or assessment in installments. For each tax or assessment period, or
installment period thereof, wholly included in the Term, all such payments shall
be made by Tenant no later than the last date on which the same may be paid
without interest or penalty; provided that for any fraction of a tax or
assessment period, or installment period thereof, included in the Term at the
beginning or end thereof, Tenant shall pay to Landlord, within 20 days after
receipt of invoice therefor, the fraction of taxes and assessments so levied or
assessed or becoming payable which is allocable to such included period. Tenant
shall furnish Landlord with evidence of payment of taxes and assessments
promptly after each such payment.
If Tenant shall deem itself aggrieved by any such tax or assessment, and
shall elect to contest the payment thereof, Tenant may make such payment under
protest or, if postponement of such payment will not jeopardize Landlord's title
to the Premises nor prejudice Landlord's rights with respect to abatement
proceedings, Tenant may postpone the same.
Either party paying any tax or assessment shall be entitled to recover,
receive and retain for its own benefit all abatements and refunds related
thereto, unless it has previously been reimbursed by the other party. Any
abatement or refund related to a tax or assessment the payment of which was
apportioned between the parties shall be first applied to the costs of securing
such abatement or refund, and the balance shall be apportioned in like manner.
Neither party shall discontinue any abatement proceedings begun by it without
first giving the other party notice of its intent so to do and reasonable
opportunity to be substituted in such proceedings. Notwithstanding any other
provision of this Lease to the contrary, neither party paying any tax or
assessment shall make such payment in such an amount, in such a manner, or at
such a time as would prejudice any abatement proceeding.
Nothing contained in this Lease shall, however, require Tenant to pay any
franchise, corporate, estate, inheritance, succession, capital levy or transfer
tax of Landlord, or any income, profits or revenue tax or charge upon the rent
payable by Tenant under this Lease.
4.2.2 INSURANCE. Tenant shall take out and maintain throughout the Term
the following insurance protecting Landlord as a named insured and with such
additional insureds as Landlord from time to time may designate by notice to
Tenant:
4.2.2.1 All-risk insurance covering all buildings and improvements
now existing or hereafter erected upon the Premises, and all equipment and
fixtures installed in or used in connection with the Premises, with such
additional endorsements as may be necessary to include coverage for vandalism
and malicious conduct, floods, water damage and debris removal and
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demolition, with a co-insurance provision of 80% or an agreed amount clause,
in an amount equal to the replacement cost of all such buildings,
improvements, equipment and fixtures (but not less than the agreed amount if
coverage is pursuant to an agreed amount clause) as such replacement cost may
be determined from time to time.
4.2.2.2 Commercial general liability insurance indemnifying Landlord
and Tenant against all claims and demands for any injury to person or property
which may be claimed to have occurred on or about the Premises or on the
sidewalk or ways adjoining the Premises, in amounts which shall, at the
beginning of the Term, be at least equal to the limits set forth in Section 1.1,
and, from time to time during the Term, shall be for such higher limits, if any,
as are customarily carried in the area in which the Premises are located on
property similar to the Premises and used for similar purposes; and workmen's
compensation insurance with statutory limits covering all of Tenant's employees
working on the Premises.
4.2.2.3 Insurance against loss or damage from sprinklers and from
leakage or explosion or cracking of boilers, pipes carrying steam or water, or
both, pressure vessels or similar apparatus, in the so-called "broad form" and
in such amounts as Landlord may reasonably require.
4.2.2.4 All policies required under this Section 4.2.2 shall be
obtained from responsible companies qualified to do business in the state in
which the Premises are located and in good standing therein, which companies and
the amount of insurance allocated thereto shall be subject to Landlord's
reasonable approval. Tenant agrees to furnish Landlord with certificates
evidencing all such insurance prior to the beginning of the Term hereof and
evidence of each renewal policy at least 20 days prior to the expiration of the
policy it renews. Each such policy shall be non-cancelable with respect to the
interest of Landlord and the holders of any mortgages on the Premises without at
least 20 days' prior written notice thereto.
4.2.2.5 All insurance which is carried by either party with respect
to the Premises or to furniture, furnishings, fixtures or equipment therein or
alterations or improvements thereto, whether or not required, shall include
provisions which either designate the other party as one of the insured or deny
to the insurer acquisition by subrogation of rights of recovery against the
other party to the extent such rights have been waived by the insured party
prior to occurrence of loss or injury, insofar as, and to the extent that such
provisions may be effective without making it impossible to obtain insurance
coverage from responsible companies qualified to do business in the state in
which the Premises are located (even though extra premium may result therefrom).
In the event that extra premium is payable by either party as a result of this
provision, the other party shall reimburse the party paying such premium the
amount of such extra premium. If at the request of one party, this non-
subrogation provision is waived as to such party, then the obligation of
reimbursement by such party shall cease for such period of time as such waiver
shall be effective, but nothing contained in this Section 4.2.2.5 shall derogate
from or otherwise affect releases elsewhere herein contained of either party for
claims. Each party shall be entitled to have duplicates or certificates of any
policies containing such provisions. Each party hereby waives all rights of
recovery against the other for loss or injury against which the waiving party
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is protected by insurance containing said non-subrogation provisions, reserving,
however, any rights with respect to any excess of loss or injury over the amount
recovered by such insurance.
4.2.3 UTILITIES. Tenant shall pay directly to the proper authorities
charged with the collection thereof all charges for water, sewer, gas,
electricity, telephone and other utilities or services used or consumed on the
Premises, whether called charge, tax, assessment, fee or otherwise, including,
without limitation, water and sewer use charges and taxes, if any, all such
charges to be paid as the same from time to time become due.
4.3 LATE PAYMENT OF RENT. If any installment of Fixed Rent or payment of
Additional Rent is paid more than ten (10) days after the date the same was due,
it shall bear interest from the due date at the rate of ten percent per annum,
the payment of which shall be Additional Rent.
ARTICLE V
LANDLORD'S COVENANTS
Landlord covenants:
5.1 DELIVERY OF POSSESSION. Landlord covenants and agrees to deliver
possession of the Premises to Tenant on the Commencement Date free and clear
from all tenancies, occupancies, claims or rights to possession of persons other
than the rights of Landlord and Tenant under this Lease.
5.2 LANDLORD'S REPRESENTATION. Landlord represents and warrants that,
both on the date this Lease is executed and on the Commencement Date, the
Premises may be used for light manufacturing, research and development and
office uses and are and will be in compliance with all applicable federal, state
and local environmental laws and regulations, the Americans with Disabilities
Act and the applicable state or local building code, and free and clear from all
orders, notices and violations filed or entered by any public or quasi-public
authority, and from complaints or reports of violations, noted or existing in or
filed with any federal, state, county or local authority. Landlord further
represents and warrrants that, to the best of Landlord's knowledge, there has
been no discharge, release, generation, storage or disposal of any Hazardous
Materials on any property adjacent to the Premises prior to the commencement of
the Term of this Lease.
5.3 ROOF, EXTERIOR WALL, FLOOR SLAB AND STRUCTURAL COMPONENT REPAIR. To
make such repairs to the roof, exterior walls, other structural components,
floor slabs, and parking areas and facilities as may be necessary to keep them
in good order, repair and condition and in compliance with applicable laws,
codes and regulations.
5.4 QUIET ENJOYMENT. That Tenant on paying the Fixed Rent and additional
rent and performing the tenant obligations in this Lease shall peacefully and
quietly have, hold and enjoy the Premises, subject to all of the terms and
provisions hereof.
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5.5 HAZARDOUS MATERIALS. Landlord shall defend, indemnify and hold Tenant
harmless from and against all loss, cost, expense or damages Tenant, its
stockholders, officers, directors or employees may suffer or incur as a result
of the discharge, release, generation, storage or disposal of any Hazardous
Materials on or about the Premises prior to the commencement of the Term of this
Lease.
For purposes of this Lease Hazardous Materials shall mean all oil and
petroleum products and all hazardous or toxic substances, all substances which,
because of their quantitative concentration, or their chemical, radioactive,
flammable, explosive, infectious or other characteristics, constitute or may
reasonably be expected to constitute or contribute to a danger or hazard to
public health, safety or welfare or to the environment, including, without
limitation, any asbestos (whether or not friable) and any asbestos-containing
materials, waste oils, solvents and chlorinated oils, polychlorinated biphenyls
(PCBs) and chemical, biological and radioactive wastes, and any other substances
or any hazardous or toxic wastes or substances which are included under or
regulated by any Environmental Laws.
For purposes of this Lease Environmental Laws shall mean all federal, state
or local laws, rules and regulations (whether now existing or hereafter enacted
or promulgated, as they may be amended from time to time), and all judicial or
decisional law, pertaining to Hazardous Materials, environmental regulations
contamination by Hazardous Materials, clean-up of Hazardous Materials or
disclosures relating to Hazardous Materials, and any judicial or administrative
interpretation thereof, including any judicial or administrative orders or
judgments, including, without limitation: the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. Section 9601 et seq.
("CERCLA"); the Federal Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901 et seq. ("RCRA"); Superfund Amendments and Reauthorization Act of
1986, Public Law No. 99-499 ("SARA"); Toxic Substances Control Act, 15 U.S.C.
Section 2601 et seq. ("TSCA"); and all state superlien or environmental clean-up
or disclosure statutes in the state in which the Mortgage Property is located.
5.6 INDEMNITY. Landlord shall defend all actions against Tenant and any
stockholder, officer, director or employee of Tenant (herein, "Indemnified
Parties") with respect to, and shall pay, protect, indemnify and save harmless,
to the extent permitted by law, all Indemnified Parties from and against any and
all liabilities, losses, damages, costs, expenses (including reasonable
attorneys' fees and expenses), causes of action, suits, claims, demands or
judgments of any nature arising from (i) injury to or death or any person, or
damage to or loss of property, on or about the Premises or on adjoining
sidewalks, streets or ways, or connected with the use, condition or occupancy of
any thereof caused by the negligence or willful misconduct of Landlord or its
agents, contractors, licensees or invitees, (ii) violation by Landlord of this
Lease, or (iii) any act, fault, omission, or other misconduct of Landlord or its
agents or contractors.
ARTICLE VI
TENANT'S ADDITIONAL COVENANTS
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6.1 AFFIRMATIVE COVENANTS. Tenant covenants at its sole expense at all
times during the Term and for such prior or subsequent time as Tenant occupies
the Premises or any part thereof:
6.1.1 PERFORM OBLIGATIONS. To perform promptly all of the
obligations of Tenant set forth in this Lease; and to pay when due the Fixed
Rent and Additional Rent and all charges, rates and other sums which by the
terms of this Lease are to be paid by Tenant.
6.1.2 USE. To use the Premises only for the Permitted Uses, and from
time to time to procure all licenses and permits necessary therefor at Tenant's
sole expense.
6.1.3 REPAIR AND MAINTENANCE. Except as otherwise provided in
Articles V and VII, to keep the Premises in good order, condition and repair and
in at least as good order, condition and repair as they are in on the
Commencement Date or may be put in during the Term, reasonable use and wear,
fire and other casualty only excepted; to maintain in good condition all lawns
and planted areas and keep in good repair and clean and neat and free of snow
and ice all surfaced roadways, walks, and parking and loading areas; and to make
all repairs and to do all other work necessary for the foregoing purposes.
Notwithstanding the foregoing, in no event shall Tenant be required to make any
repair or replacement which would be considered capital in nature under
generally accepted accounting principles, and Landlord shall make all such
repairs or replacements promptly after receipt of written notice from Tenant.
6.1.4 COMPLIANCE WITH LAW. To make all non-structural, non-capital
repairs, alterations, additions or replacements to the Premises required by any
law or ordinance or any order or regulation of any public authority; to keep the
Premises equipped with all safety equipment required; to pay all municipal,
county, or state taxes assessed against the leasehold interest hereunder, or
against personal property of any kind on or about the Premises; and to comply
with the orders, regulations, variances, licenses and permits of or granted by
governmental authorities with respect to zoning, building, fire, health and
other codes, regulations, ordinances or laws applicable to the Premises, and the
condition, use or occupancy thereof, except that Tenant may defer compliance so
long as the validity of any such order, regulation, code, ordinance or law shall
be contested by Tenant in good faith and by appropriate legal proceedings.
Notwithstanding the foregoing, Landlord shall make such repairs, alterations or
replacements, shall furnish such safety equipment, and shall otherwise bring the
Premises into compliance with all applicable laws as of the commencement of the
Term of this Lease.
6.1.5 TENANT'S WORK. To obtain Landlord's prior approval of any
work to be done by Tenant in the Premises which is reasonably expected to cost
more than $25,000.00 in any single instance; to procure at Tenant's sole expense
all necessary permits and licenses before undertaking any work on the Premises;
to do all such work in a good and workmanlike manner employing materials of good
quality and so as to conform with all applicable zoning, building, fire, health
and other codes, regulations, ordinances and laws; to pay promptly when due the
entire cost of any work on the Premises undertaken by Tenant so that the
Premises shall at all times be free of liens for labor and materials; to require
such contractors employed by Tenant to
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carry workmen's compensation insurance in accordance with statutory
requirements; and to save Landlord harmless and indemnified from all injury,
loss, claims or damage to any person or property occasioned by or growing out
of such work.
6.1.6 INDEMNITY. Tenant shall defend all actions against Landlord,
any partner, trustee, stockholder, officer, director, employee or beneficiary of
Landlord, holders of mortgages on the Premises and any other party having an
interest in the Premises (herein, "Indemnified Parties") with respect to, and
shall pay, protect, indemnify and save harmless, to the extent permitted by law,
all Indemnified Parties from and against any and all liabilities, losses,
damages, costs, expenses (including reasonable attorneys' fees and expenses),
causes of action, suits, claims, demands or judgments of any nature arising from
(i) injury to or death of any person, or damage to or loss of property, on or
about the Premises or on adjoining sidewalks, streets or ways, or connected with
the use, condition or occupancy of any thereof, unless such injury, death or
damage was caused by the negligence or willful misconduct of Landlord or its
agents, contractors, licensees or invitees, (ii) violation by Tenant of this
Lease, or (iii) any act, fault, omission, or other misconduct of Tenant or its
agents, contractors, licensees, sublessees or invitees.
6.1.7 LANDLORD'S RIGHT TO ENTER. To permit Landlord and its agents
to enter the Premises at reasonable times after reasonable notice to examine the
Premises, to make such repairs and replacements as Landlord may elect or as
Landlord may be required to perform hereunder, and to show the Premises to
prospective purchasers, lenders and tenants, and, during the last six months of
the Term, to keep affixed in suitable places notices of availability of the
Premises.
6.1.8 PERSONAL PROPERTY AT TENANT'S RISK. All of the furnishings,
fixtures, equipment, effects and property of every kind, nature and description
of Tenant and of all persons claiming by, through or under Tenant which, during
the continuance of this Lease or any occupancy of the Premises by Tenant or
anyone claiming under Tenant, may be on the Premises, shall be at the sole risk
and hazard of Tenant and if the whole or any part thereof shall be destroyed or
damaged by fire, water or otherwise, or by the leakage or bursting of water
pipes, steam pipes, or other pipes, by theft or from any other cause, no part of
said loss or damage is to be charged to or to be borne by Landlord, except that
Landlord shall in no event be indemnified or held harmless or exonerated from
any liability to Tenant or to any other person for any injury, loss, damage or
liability caused by Landlord's negligence or willful misconduct.
6.1.9 YIELD UP. At the expiration of the Term or earlier termination
of this Lease: to surrender all keys to the Premises, to remove all furnishings,
fixtures, equipment and other personal property now or hereafter located in the
Premises, and to deliver and yield up the Premises broom-clean and in the same
condition the Premises are in as of the Commencement Date, reasonable wear and
tear, fire and other casualty excepted.
6.2 NEGATIVE COVENANTS. Tenant covenants at all times during the Term and
for such further time as Tenant occupies the Premises or any part thereof:
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6.2.1 ASSIGNMENT AND SUBLETTING. Not to assign, transfer, mortgage
or pledge this Lease or to grant a security interest in Tenant's rights
hereunder, or to sublease (which term shall be deemed to include the granting of
concessions and licenses and the like) or permit anyone other than Tenant to
occupy all or any part of the Premises or suffer or permit this Lease or the
leasehold interest hereby created or any other rights arising under this Lease
to be assigned, transferred or encumbered, in whole or in part, whether
voluntarily, involuntarily or by operation of law, unless, in each instance the
prior written consent of Landlord thereto shall have been obtained, which
consent shall not be unreasonably withheld, conditioned or delayed.
Notwithstanding the foregoing Tenant may assign this Lease or sublet any portion
or all of the Premises to any corporation, partnership, trust, association,
limited liability company or other business or organization (x) directly or
indirectly controlling and beneficially owning Tenant, (y) directly or
indirectly controlled by and beneficially owned by Tenant, or (z) under common
control with Tenant, or to any successor of Tenant by merger, consolidation or
acquisition of substantially all of the stock or assets of Tenant, without the
prior written consent of Landlord.
If for any assignment or sublease or occupancy by another, Tenant receives
rent or other consideration, either initially or over the term of the
assignment, sublease or occupancy, after payment of any expenses incurred in
connection therewith, in excess of the rent called for hereunder, or in case of
sublease of part of the Premises, in excess of such rent fairly allocable to the
part so subleased, after deducting all expenses of such transaction including,
without limitation, brokerage and legal fees and demising walls and other
leasehold improvements, Tenant shall pay to Landlord, as Additional Rent, 50% of
the excess of each such payment of rent or other consideration received by
Tenant promptly after its receipt.
Any attempted assignment, transfer, mortgage, pledge, grant of security
interest, sublease or other encumbrance, except as permitted by this Section
6.2.1, shall be void. No assignment, transfer, mortgage, grant of security
interest, sublease or other encumbrance, whether or not approved, and no
indulgence granted by Landlord to any assignee, sublessee or occupant shall in
any way impair Tenant's continuing primary liability (which after an assignment
or subletting shall be joint and several with the assignee or sublessee) of
Tenant hereunder, and no approval in a particular instance shall be deemed to be
a waiver of the obligation to obtain Landlord's approval in any other case.
6.2.2 OVERLOADING AND NUISANCE. Not to injure, overload, deface or
otherwise harm the Premises; nor commit any nuisance; not to dump, flush, or in
any way introduce any Hazardous Materials or any other toxic substances into the
septic, sewage or other waste disposal system serving the Premises in violation
of law; not to generate, store, use or dispose of Hazardous Materials in or on
the Premises in violation of law, or commit or suffer to be committed in or on
the Premises any act in violation of law.
ARTICLE VII
CASUALTY OR TAKING
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7.1 TERMINATION. In the event that the Premises, or any material part
thereof, shall be taken by any public authority or for any public use, or shall
be destroyed or damaged by fire or casualty, or by the action of any public
authority, and as a result thereof Tenant is unable to effectively operate its
business in the Premises, then this Lease may be terminated at the election of
Tenant. Such election, which may be made notwithstanding the fact that
Landlord's entire interest may have been divested, shall be made by the giving
of notice within 30 days after the right of election accrues.
7.2 RESTORATION. If this Lease is not terminated as aforesaid, this Lease
shall continue in force and a just proportion of the rent reserved, according to
the nature and extent of the damages sustained by the Premises, shall be
suspended or abated until the Premises, or what may remain thereof, shall be put
by Landlord in proper condition for use, which Landlord covenants to do with
reasonable diligence.
ARTICLE VII
DEFAULTS
8.1 EVENTS OF DEFAULT. If (a) Tenant shall default in the performance of
any of its obligations to pay the Fixed Rent or Additional Rent hereunder and if
such default shall continue for ten (10) days after notice from Landlord
designating such default or if within thirty (30) days after notice from
Landlord to Tenant specifying any other default or defaults Tenant has not
commenced diligently to correct the default or defaults so specified or has not
thereafter diligently pursued such correction to completion, or (b) Tenant
becomes insolvent or fails to pay its debts as they fall due, or (c) a trust
mortgage or assignment is made by Tenant for the benefit of creditors, or (d)
Tenant proposes a composition, arrangement, reorganization or recapitalization
with creditors, or (e) the leasehold estate under this Lease or any substantial
part of the property of Tenant is taken on execution, or by other process of
law, or is attached or subjected to any other involuntary encumbrance, or (f) a
receiver, trustee, custodian, guardian, liquidator or similar agent is appointed
with respect to Tenant, or if any such person or a mortgagee, secured party or
other creditor takes possession of the Premises or of any substantial part of
the property of Tenant, and, in either case, if such appointment or taking of
possession is not terminated within 90 days after it first occurs, or (g) a
petition is filed by or with the consent of Tenant under any federal or state
law concerning bankruptcy, insolvency, reorganization, arrangement, or relief
from creditors, or (h) a petition is filed against Tenant under any federal or
state law concerning bankruptcy, insolvency, reorganization, arrangement, or
relief from creditors, and such petition is not dismissed within 90 days
thereafter, or (i) Tenant dissolves or is dissolved or liquidates or adopts any
plan or commences any proceeding, the result of which is intended to include
dissolution or liquidation, then, and in any of such cases, Landlord and the
agents and servants of Landlord lawfully may, in addition to and not in
derogation of any remedies for any preceding breach of covenant, immediately or
at any time thereafter and without demand or notice and with or without process
of law enter into and upon the Premises or any part thereof in the name of the
whole or mail a notice of termination addressed to Tenant, and repossess the
same as of Landlord's former estate and expel Tenant and those claiming through
or under Ten-
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ant and remove its and their effects without being deemed guilty of any manner
of trespass and without prejudice to any remedies which might otherwise be used
for arrears of rent or prior breach of covenant, and upon such entry or mailing
as aforesaid this Lease shall terminate.
8.2 REMEDIES. In the event that this Lease is terminated under any of the
provisions contained in Section 8.1 or shall be otherwise terminated for breach
of any obligation of Tenant, Tenant covenants to pay forthwith to Landlord, as
compensation, the excess of the total rent reserved for the residue of the Term
over the rental value of the Premises for said residue of the Term, discounted
to present value using the then current discount rate of the Federal Reserve
Bank of Boston. In calculating the rent reserved there shall be included, in
addition to the Fixed Rent and Additional Rent, the value of all other
considerations agreed to be paid or performed by Tenant for said residue.
Tenant further covenants as additional and cumulative obligations after any such
termination to pay punctually to Landlord all the sums and to perform all the
obligations which Tenant covenants in this Lease to pay and to perform in the
same manner and to the same extent and at the same time as if this Lease had not
been terminated. In calculating the amounts to be paid by Tenant pursuant to
the next preceding sentence Tenant shall be credited with the portion of any
amount paid to Landlord as compensation as in this Section 8.2 provided,
allocable to the corresponding portion of the Term and also with the net
proceeds of any rent obtained by Landlord by reletting the Premises, after
deducting all Landlord's reasonable expenses in connection with such reletting,
including, without limitation, all repossession costs, brokerage commissions,
fees for legal services and expenses of preparing the Premises for such
reletting, it being agreed that Landlord shall use reasonable efforts to relet
the Premises and to mitigate damages.
Nothing contained in this Lease shall, however, limit or prejudice the
right of Landlord to prove for and obtain in proceedings under any federal or
state law relating to bankruptcy or insolvency or reorganization or arrangement,
an amount equal to the maximum allowed by any statute or rule of law in effect
at the time when, and governing the proceedings in which, the damages are to be
proved, whether or not the amount be greater than the amount of the loss or
damages referred to above.
8.3 REMEDIES CUMULATIVE. Any and all rights and remedies which Landlord
or Tenant may have under this Lease, and at law and equity, shall be cumulative
and shall not be deemed inconsistent with each other, and any two or more of all
such rights and remedies may be exercised at the same time insofar as permitted
by law.
8.4 LANDLORD'S AND TENANT'S RIGHT TO CURE DEFAULTS. Either Landlord or
Tenant may, but shall not be obligated to, cure, at any time, following 10 days'
prior notice to the other party hereto, except in cases of emergency when no
notice shall be required, any default by the other party hereto under this
Lease; and whenever the non-defaulting party so elects, all costs and expenses
incurred by such non-defaulting party, including reasonable attorneys' fees, in
curing a default shall be paid by the defaulting party on demand, together with
interest thereon at the rate provided in Section 4.3. In the event Landlord
fails to reimburse any such amount paid by
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Tenant within ten (10) days after demand, Tenant shall have the right to
offset such amount against the Fixed Rent and Additional Rent payable by
Tenant hereunder.
8.5 EFFECT OF WAIVERS OF DEFAULT. Any consent or permission by Landlord
or Tenant to any act or omission which otherwise would be a breach of any
covenant or condition herein, or any waiver by Landlord or Tenant of the breach
of any covenant or condition herein, shall not in any way be held or construed
(unless expressly so declared) to operate so as to impair the continuing
obligation of any covenant or condition herein, or otherwise, except as to the
specific instance, operate to permit similar acts or omissions.
The failure of Landlord or Tenant to seek redress for violation of, or to
insist upon the strict performance of, any covenant or condition of this Lease
shall not be deemed a waiver of such violation nor prevent a subsequent act,
which would have originally constituted a violation, from having all the force
and effect of an original violation. The receipt by Landlord of rent with
knowledge of the breach of any covenant of this Lease shall not be deemed to
have been a waiver of such breach by Landlord, or by Tenant, unless such waiver
be in writing signed by the party to be charged. No consent or waiver, express
or implied, by Landlord or Tenant to or of any breach of any agreement or duty
shall be construed as a waiver or consent to or of any other breach of the same
or any other agreement or duty.
8.6 NO ACCORD AND SATISFACTION. No acceptance by Landlord of a lesser sum
than the Fixed Rent, Additional Rent or any other charge then due shall be
deemed to be other than on account of the earliest installment of such rent or
charge due, unless Landlord elects by notice to Tenant to credit such sum
against the most recent installment due, nor shall any endorsement or statement
on any check or any letter accompanying any check or payment as rent or other
charge be deemed a waiver, an agreement or an accord and satisfaction, and
Landlord may accept such check or payment without prejudice to Landlord's right
to recover the balance of such installment or pursue any other remedy in this
Lease provided.
ARTICLE IX
MORTGAGES
9.1 RIGHTS OF MORTGAGE HOLDERS. The word "mortgage" as used herein
includes mortgages, deeds of trust or other similar instruments evidencing other
voluntary liens or encumbrances, and modifications, consolidations, extensions,
renewals, replacements and substitutes thereof. The word "holder" shall mean a
mortgagee, and any subsequent holder or holders of a mortgage. Until the holder
of a mortgage shall enter and take possession of the Premises for the purpose of
foreclosure, such holder shall have only such rights of Landlord as are
necessary to preserve the integrity of this Lease as security. Upon entry and
taking possession of the Premises for the purpose of foreclosure, such holder
shall have all the rights of Landlord. Notwithstanding any other provision of
this Lease to the contrary, including without limitation Section 10.3, no such
holder of a mortgage shall be liable either as mortgagee or as assignee, to
perform, or be liable in damages for failure to perform, any of the obligations
of
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Landlord unless and until such holder shall enter and take possession of the
Premises for the purpose of foreclosure. Upon entry for the purpose of
foreclosure, such holder shall be liable to perform all of the obligations of
Landlord accruing from and after such entry, provided that a discontinuance of
any foreclosure proceeding shall be deemed a conveyance under said provisions to
the owner of the Premises. No Fixed Rent, Additional Rent or any other charge
shall be paid more than 30 days prior to the due dates thereof and payments made
in violation of this provision shall (except to the extent that such payments
are actually received by a mortgagee in possession or in the process of
foreclosing its mortgage) be a nullity as against such mortgagee and Tenant
shall be liable for the amount of such payments to such mortgagee.
The covenants and agreements contained in this Lease with respect to the
rights, powers and benefits of a holder of a mortgage (including, without
limitation, the covenants and agreements contained in this Section 9.1)
constitute a continuing offer to any person, corporation or other entity, which
by accepting a mortgage subject to this Lease, assumes the obligations herein
set forth with respect to such holder; such holder is hereby constituted a party
of this Lease as an obligee hereunder to the same extent as though its name were
written hereon as such; and such holder shall be entitled to enforce such
provisions in its own name. Tenant agrees on request of Landlord to execute and
deliver from time to time any agreement which may be necessary to implement the
provisions of this Section 9.1.
9.2 LEASE SUPERIOR OR SUBORDINATE TO MORTGAGES. This Lease is and shall
continue to be subject and subordinate to any presently existing mortgage or
mortgages secured by the Premises, and to any and all advances hereafter made
thereunder, and to the interest of the holder or holders thereof in the
Premises. The holder of any such presently existing mortgage shall have the
election to subordinate the same to this Lease, exercisable by filing with the
appropriate recording office a notice of such election, whereupon this Lease
shall have priority over such mortgage. A copy of such filing shall be given to
Tenant. Such election by the holder of any presently existing mortgage shall
not affect priority with respect to this Lease of any other presently existing
mortgage.
Any mortgage or other voluntary lien or other encumbrance recorded
subsequent to the recording of the notice or short form referred to in Section
10.3, or the date of this Lease if no such notice or short form is required
under applicable law to impart constructive notice to third parties, shall be
subject and subordinate to this Lease unless Landlord and the holder of any such
subsequent mortgage and the holders of all mortgages prior to such subsequent
mortgage elect to subordinate this Lease to such subsequent mortgage and to any
and all advances thereafter made thereunder and to the interest of the holder
thereof in the Premises, such election to be exercisable by Landlord and all
such holders by filing with the appropriate recording office (a) a notice of
such election and (b) an agreement between the holder of such subsequent
mortgage and Tenant, consented to by holders of all mortgages having priority
over such subsequent mortgage, by the terms of which such holder will agree to
recognize the rights of Tenant under this Lease and to accept Tenant as tenant
of the Premises under the terms and conditions of this Lease in the event of
acquisition of title by such holder through foreclosure proceedings or otherwise
and Tenant will agree to recognize the holder of such subsequent mortgage as
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Landlord in such event, which agreement shall be made expressly to bind and
inure to the benefit of the successors and assigns of Tenant and of such
holder and upon anyone purchasing said Premises at any foreclosure sale
brought by such holder. Tenant and Landlord agree to execute and deliver any
appropriate instruments necessary to carry out the agreements contained in
this Section 9.2.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 NOTICES FROM ONE PARTY TO THE OTHER. All notices required or
permitted hereunder shall be in writing and addressed, if to the Tenant, at the
Original Address of Tenant or such other address as Tenant shall have last
designated by notice in writing to Landlord and, if to Landlord, at the Original
Address of Landlord or such other address as Landlord shall have last designated
by notice in writing to Tenant. Any notice shall be deemed duly given on the
third day after the same was mailed to such address postage prepaid, registered
or certified mail, return receipt requested, or when delivered to such address
by hand or by nationally recognized overnight courier service.
10.2 ESTOPPEL CERTIFICATE. Each party agrees from time to time, upon not
less than fifteen (15) days' prior written request by the other party, to
execute, acknowledge and deliver to the requesting party a statement in writing
certifying that this Lease is unmodified and in full force and effect and that
there are no uncured defaults of Landlord or Tenant under this Lease, and if
Landlord is the requesting party that Tenant has no defenses, offsets or
counterclaims against its obligations to pay the Annual Fixed Rent and
additional rent and to perform its other covenants under this Lease (or, if
there have been any modifications that the same is in full force and effect as
modified and stating the modifications and, if there are any defenses, offsets,
counterclaims, or defaults, setting them forth in reasonable detail), the dates
to which the Fixed Rent, additional rent and other charges have been paid and
such other matters relating to the Lease as may be reasonably requested. Any
such statement delivered pursuant to this Section 10.2 may be relied upon by a
prospective purchaser or mortgagee of the Premises or any prospective assignee
of any mortgagee of the Premises, or by a prospective assignee of Tenant's
interest in this Lease, as the case may be.
10.3 LEASE NOT TO BE RECORDED. Tenant agrees that it will not record this
Lease. Both parties shall, upon the request of either, execute and deliver a
notice or short form of this Lease in such form, if any, as may be permitted by
applicable statute. If this Lease is terminated before the Term expires the
parties shall execute, deliver and record an instrument acknowledging such fact
and the actual date of termination of this Lease.
10.4 BIND AND INURE. The obligations of this Lease shall run with the
land, and this Lease shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
-17-
<PAGE>
10.5 ACTS OF GOD. In any case where either party hereto is required to do
any act, delays caused by or resulting from Acts of God, war, civil commotion,
fire, flood or other casualty, labor difficulties, shortages of labor, materials
or equipment, government regulations, unusually severe weather, or other causes
beyond such party's reasonable control shall not be counted in determining the
time during which work shall be completed, whether such time be designated by a
fixed date, a fixed time or a "reasonable time", and such time shall be deemed
to be extended by the period of such delay.
10.6 LANDLORD'S DEFAULT. Landlord shall not be deemed to be in default in
the performance of any of its obligations hereunder unless it shall fail to
perform such obligations and such failure shall continue for a period of 30 days
following receipt of notice from Tenant, or such additional time as is
reasonably required with the exercise of reasonable diligence to correct any
such default, after notice has been given by Tenant to Landlord specifying the
nature of Landlord's default.
10.7 BROKERAGE. Landlord and Tenant each warrants and represents to the
other party hereto that it has had no dealings with any broker or agent in
connection with this Lease and covenants to defend, hold harmless and indemnify
the other party hereto from and against any and all cost, expense or liability
for any breach of the foregoing representation.
10.8 APPROVALS AND CONSENT. Whenever the consent or approval of either
party is required hereunder, the same shall not be unreasonably withheld or
delayed.
10.9 APPLICABLE LAW AND CONSTRUCTION.
10.9.1 APPLICABLE LAW. This Lease shall be governed by and construed
in accordance with the laws of the state in which the Premises are located. If
any term, covenant, condition or provision of this Lease or the application
thereof to any person or circumstances shall be declared invalid, or
unenforceable by the final ruling of a court of competent jurisdiction having
final review, the remaining terms, covenants, conditions and provisions of this
Lease and their application to persons or circumstances shall not be affected
thereby and shall continue to be enforced and recognized as valid agreements of
the parties, and in the place of such invalid or unenforceable provision, there
shall be substituted a like, but valid and enforceable provision which comports
to the findings of the aforesaid court and most nearly accomplishes the original
intention of the parties.
10.9.2 NO OTHER AGREEMENT. There are no oral or written agreements
between Landlord and Tenant affecting this Lease. This Lease may be amended,
and the provisions hereof may be waived or modified, only by instruments in
writing executed by Landlord and Tenant.
10.9.3 TITLES. The titles of the several Articles and Sections
contained herein are for convenience only and shall not be considered in
construing this Lease.
-18-
<PAGE>
10.9.4 "LANDLORD" AND "TENANT". Unless repugnant to the context, the
words "Landlord" and "Tenant" appearing in this Lease shall be construed to mean
those named above and their respective heirs, executors, administrators,
successors and assigns, and those claiming through or under them respectively.
10.10 SUBMISSION NOT AN OFFER. The submission of a draft of this Lease or
a summary of some or all of its provisions does not constitute an offer to lease
or demise the Premises, it being understood and agreed that neither Landlord nor
Tenant shall be legally bound with respect to the leasing of the Premises unless
and until this Lease has been executed by both Landlord and Tenant and a fully
executed copy delivered.
-19-
<PAGE>
WITNESS the execution hereof under seal as of the day and year set forth
in Section 1.1.
Landlord:
---------------------------------
Dennis R. Newman
---------------------------------
Patricia L. Newman
Tenant:
IMEX MEDICAL SYSTEMS, INCORPORATED
By:
-------------------------------
Name:
Title:
-20-
<PAGE>
EXHIBIT B
SECTION 262 OF THE DELAWARE GENERAL CORPORATION
LAW
<PAGE>
TITLE 8. CORPORATIONS
CHAPTER 1. GENERAL CORPORATION LAW
SUBCHAPTER IX. MERGER OR CONSOLIDATION
8 DEL. C. SECTION 262 (1996)
Section 262. APPRAISAL RIGHTS
(a) Any stockholder of a corporation of this State who holds shares of stock
on the date of the making of a demand pursuant to subsection (d) of this section
with respect to such shares, who continuously holds such shares through the
effective date of the merger or consolidation, who has otherwise complied with
subsection (d) of this section and who has neither voted in favor of the merger
or consolidation nor consented thereto in writing pursuant to Section 228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of his shares of stock under the circumstances described in
subsections (b) and (c) of this section. As used in this section, the word
"stockholder" means a holder of record of stock in a stock corporation and also
a member of record of a nonstock corporation; the words "stock" and "share" mean
and include what is ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation; and the words
"depository receipt" mean a receipt or other instrument issued by a depository
representing an interest in one or more shares, or fractions thereof, solely of
stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to Section 251 (other than a merger effected pursuant to
subsection (g) of Section 251), Section 252, Section 254, Section 257, Section
258, Section 263 or Section 264 of this title:
(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no appraisal
rights shall be available for any shares of stock of the constituent
corporation surviving a merger if the merger did not require for its
approval the vote of the holders of the surviving corporation as provided
in subsection (f) of Section 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required by
the terms of an agreement of merger or consolidation pursuant to Sections
251, 252, 254, 257, 258, 263 and 264 of this title to accept for such stock
anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock or depository receipts at the
effective date of the merger or consolidation will be either listed on a
national securities exchange or designated as a national market system
security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
<PAGE>
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under Section 253 of this title is not owned by
the parent corporation immediately prior to the merger, appraisal rights
shall be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for
such meeting with respect to shares for which appraisal rights are available
pursuant to subsection (b) or (c) hereof that appraisal rights are available
for any or all of the shares of the constituent corporations, and shall
include in such notice a copy of this section. Each stockholder electing to
demand the appraisal of his shares shall deliver to the corporation, before
the taking of the vote on the merger or consolidation, a written demand for
appraisal of his shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of his shares. A proxy
or vote against the merger or consolidation shall not constitute such a
demand. A stockholder electing to take such action must do so by a separate
written demand as herein provided. Within 10 days after the effective date
of such merger or consolidation, the surviving or resulting corporation
shall notify each stockholder of each constituent corporation who has
complied with this subsection and has not voted in favor of or consented to
the merger or consolidation of the date that the merger or consolidation has
become effective; or
(2) If the merger or consolidation was approved pursuant to Section 228
or Section 253 of this title, each constituent corporation, either before
the effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of stock
of such constituent corporation who are entitled to appraisal rights of the
approval of the merger or consolidation and that appraisal rights are
available for any or all shares of such class or series of stock of such
constituent corporation, and shall include in such notice a copy of this
section; provided that, if the notice is given on or after the effective
date of the merger or consolidation, such notice shall be given by the
surviving or resulting corporation to all such holders of any class or
series of stock of a constituent corporation that are entitled to appraisal
rights. Such notice may, and, if given on or after the effective date of the
merger or consolidation, shall, also notify such stockholders of the
effective date of the merger or consolidation. Any stockholder entitled to
appraisal rights may, within 20 days after the date of mailing of such
notice, demand in writing from the surviving or resulting corporation the
appraisal of such holder's shares. Such demand will be sufficient if it
reasonably informs the corporation of the identity of the stockholder and
that the stockholder intends thereby to demand the appraisal of such
holder's shares. If such notice did not notify stockholders of the effective
date of the merger or consolidation, either (i) each such constituent
corporation shall send a second notice before the effective date of the
merger or consolidation notifying each of the holders of any class or series
of stock of such constituent corporation that are entitled to appraisal
rights of the effective date of the merger or consolidation or (ii) the
surviving or resulting corporation shall send such a second notice
<PAGE>
to all such holders on or within 10 days after such effective date;
provided, however, that if such second notice is sent more than 20 days
following the sending of the first notice, such second notice need only be
sent to each stockholder who is entitled to appraisal rights and who has
demanded appraisal of such holder's shares in accordance with this
subsection. An affidavit of the secretary or assistant secretary or of the
transfer agent of the corporation that is required to give either notice
that such notice has been given shall, in the absence of fraud, be prima
facie evidence of the facts stated therein. For purposes of determining the
stockholders entitled to receive either notice, each constituent corporation
may fix, in advance, a record date that shall be not more than 10 days prior
to the date the notice is given, provided, that if the notice is given on or
after the effective date of the merger or consolidation, the record date
shall be such effective date. If no record date is fixed and the notice is
given prior to the effective date, the record date shall be the close of
business on the day next preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw his demand for
appraisal and to accept the terms offered upon the merger or consolidation.
Within 120 days after the effective date of the merger or consolidation, any
stockholder who has complied with the requirements of subsections (a) and (d)
hereof, upon written request, shall be entitled to receive from the corporation
surviving the merger or resulting from the consolidation a statement setting
forth the aggregate number of shares not voted in favor of the merger or
consolidation and with respect to which demands for appraisal have been received
and the aggregate number of holders of such shares. Such written statement shall
be mailed to the holders within 10 days after his written request for such a
statement is received by the surviving or resulting corporation or within 10
days after expiration of the period for delivery of demands for appraisal under
subsection (d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in Chancery
in which the petition was filed a duly verified list containing the names and
addresses of all stockholders who have demanded payment for their shares and
with whom agreements as to the value of their shares have not been reached by
the surviving or resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be accompanied by such a
duly verified list. The Register in Chancery, if so ordered by the Court, shall
give notice of the time and place fixed for the hearing of such petition by
registered or certified mail to the surviving or resulting corporation and to
the stockholders shown on the list at the addresses therein stated. Such notice
shall also be given by 1 or more publications at least 1 week before the day of
the hearing, in a newspaper of general circulation published in the City of
Wilmington, Delaware or such publication as the Court deems advisable. The forms
of the notices by mail and by publication shall be approved by the Court, and
the costs thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account
<PAGE>
all relevant factors. In determining the fair rate of interest, the Court may
consider all relevant factors, including the rate of interest which the
surviving or resulting corporation would have had to pay to borrow money during
the pendency of the proceeding. Upon application by the surviving or resulting
corporation or by any stockholder entitled to participate in the appraisal
proceeding, the Court may, in its discretion, permit discovery or other pretrial
proceedings and may proceed to trial upon the appraisal prior to the final
determination of the stockholder entitled to an appraisal. Any stockholder whose
name appears on the list filed by the surviving or resulting corporation
pursuant to subsection (f) of this section and who has submitted his
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that he is
not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the shares
of such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation.
<PAGE>
Exhibit C
[GRUNTAL LETTERHEAD]
June 11, 1997
Board of Directors
Imex Medical Systems, Inc.
6355 Joyce Drive
Golden, CO 80403
Dear Sirs:
We understand that Imex Medical Systems, Inc. ("Imex"), Thermo Electron
Corporation ("Thermo"), Nicolet Biomedical, Inc. ("Nicolet") and a wholly-owned
subsidiary of Nicolet ("Nicolet-Sub") have entered into a Merger Agreement (the
"Agreement"), pursuant to which Nicolet-Sub will be merged with and into Imex
(the "Merger"). We understand that, pursuant to the Agreement, among other
things, (i) each outstanding share of common stock of the Company (the "Common
Stock") will be converted into the right to receive an amount in cash equal to
$10,000,000 (decreased by the amount by which the Company's stockholders' equity
at closing is less than $4,000,000) divided by the number of shares of Common
Stock outstanding immediately prior to the Effective Time (as defined in the
Agreement) of the Merger (the "Transaction"), and (ii) Imex's management
estimates that the cash price per share of Common Stock will range from $1.38 to
$1.44. (The transaction contemplated by the Agreement is referred to herein as
the "Transaction.") The terms and conditions of the Transaction are set forth
in more detail in the Agreement.
You have requested our opinion as to the fairness to the shareholders of Imex
from a financial point of view of the terms of the Merger.
In arriving at our opinion, we have reviewed the Agreement and certain publicly
available business and financial information relating to Imex. We have also
reviewed certain other information, including financial forecasts and related
information, provided to us by Imex and we have met with Imex's management to
discuss the business and prospects of Imex. We have also considered certain
financial and stock market data of Imex, and we have compared that data with
similar
<PAGE>
Board of Directors
Imex Medical Systems, Inc.
June 11, 1997
Page 2
data for other publicly held companies in businesses similar to those of
Imex, and we have considered the financial terms of certain other business
combinations and other transactions which have been effected. We also
considered such other information, financial studies, analyses and
investigations and financial, economic and market criteria which we deem
relevant.
In connection with our review, we have not assumed any responsibility for
independent verification of any of the foregoing information and have relied on
it being complete and accurate in all material respects. With respect to the
financial forecasts, we have assumed that they have been reasonably prepared on
bases reflecting the best currently available estimates and judgments of Imex's
management as to the future financial performance of Imex. In addition, we have
not made an independent evaluation or appraisal of the assets or liabilities
(contingent or otherwise) of Imex, nor have we been furnished with any such
evaluations or appraisals. We have also relied as to all legal matters on
advice of counsel to Imex.
Our opinion is necessarily based upon financial, economic, market and other
conditions as they exist on, and the information made available to us as of, the
date hereof. It should be understood that, although subsequent developments may
affect this opinion, we do not have any obligation to update, revise or reaffirm
this opinion. We have not been requested to opine upon, and our opinion does
not in any manner address, Imex's underlying business decision to proceed with
the Transaction.
We have acted as financial advisor to Imex in connection with the Transaction
and will receive a fee for our services, a substantial portion of which is
contingent upon the consummation of the Transaction. In addition, Imex has
agreed to indemnify us for certain liabilities arising out of our engagement as
financial advisor, including the rendering of this opinion.
As part of our investment banking services, we are regularly engaged in the
valuation of businesses and securities in connection with mergers, acquisitions,
underwritings, sales and distributions of listed and unlisted securities,
private placements and valuations for estate, corporate and other purposes.
In the ordinary course of our business, we and our affiliates may actively trade
the equity securities of both Imex and Thermo for our own account and for the
accounts of customers and, accordingly, may at any time hold a long or short
position in such securities. As you are aware, we also regularly publish
research reports regarding the businesses and securities of publicly owned
companies in the medical device industry, including Thermo.
<PAGE>
Board of Directors
Imex Medical Systems, Inc.
June 11, 1997
Page 3
It is understood that this letter is for information of the Board of Directors
of Imex in connection with its consideration of the Transaction. Our opinion
does not constitute a recommendation to any member of the Board of Directors or
any shareholder as to how such member or shareholder should vote on the proposed
Transaction and is not to be quoted or referred to, in whole or in part, in any
registration statement, prospectus or proxy statement, or in any other document
used in connection with the offering or sale of securities, nor shall this
letter be used for other purposes, without our prior written consent. We
understand that this opinion will be filed with the Securities and Exchange
Commission and distributed to Imex's shareholders as part of the Proxy Statement
related to the proposed Merger. We hereby consent to the foregoing use of the
opinion.
Based upon and subject to the foregoing, it is our opinion that, as of the date
hereof, the terms of the Merger are fair, from a financial point of view, to the
holders of Imex Common Stock.
Respectfully submitted,
/s/ Gruntal & Co., L.L.C.
<PAGE>
PROXY -- IMEX MEDICAL SYSTEMS, INCORPORATED
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
SPECIAL MEETING OF STOCKHOLDERS OF
IMEX MEDICAL SYSTEMS, INCORPORATED
CALLED FOR AUGUST 22, 1997
The undersigned hereby appoints Dennis R. Newman and Patricia L. Newman, and
each of them, as Proxies with full power of substitution to represent the
undersigned and to vote all shares of the common stock of Imex Medical Systems,
Incorporated which the undersigned is entitled to vote at the Special Meeting of
the Stockholders of Imex Medical Systems, Incorporated to be held August 22,
1997 at the offices of Chrisman, Bynum & Johnson, P.C., 1900 Fifteenth Street,
Boulder, Colorado 80302 at 10:00 a.m., local time, and any adjournment thereof.
Said Proxies are directed to vote or refrain from voting as designated below
upon the following matters and otherwise at their discretion.
<TABLE>
<S> <C> <C> <C>
1. APPROVAL OF MERGER AGREEMENT, DATED AS OF JULY 15, 1997, AMONG IMEX MEDICAL SYSTEMS, INCORPORATED, NICOLET
BIOMEDICAL INC. AND NBI ACQUISITION CORP.
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
<TABLE>
<S> <C> <C> <C>
2. In their discretion upon such other matters as may properly come before the meeting or any adjournment thereof.
</TABLE>
<PAGE>
THIS PROXY WILL BE VOTED AS DIRECTED OR IF NO DIRECTION IS INDICATED WILL BE
VOTED FOR THE MERGER DESCRIBED IN MATTER NO. 1.
THE MANAGEMENT KNOWS OF NO OTHER
MATTERS THAT MAY PROPERLY BE OR
WHICH ARE LIKELY TO BE BROUGHT
BEFORE THE MEETING. HOWEVER, IF
ANY OTHER MATTERS ARE PROPERLY
BROUGHT BEFORE THE MEETING, THE
PERSONS NAMED IN THIS PROXY OR
THEIR SUBSTITUTES WILL VOTE IN
ACCORDANCE WITH THEIR BEST
JUDGMENT ON SUCH MATTERS.
THE UNDERSIGNED ACKNOWLEDGES
RECEIPT WITH THIS PROXY OF A COPY
OF THE NOTICE OF SPECIAL MEETING
AND PROXY STATEMENT DATED JULY 31,
1997.
SIGNED: ____________________, 1997
__________________________________
STOCKHOLDER
IMPORTANT: PLEASE DATE THIS PROXY
AND SIGN EXACTLY AS NAME OR NAMES
APPEAR THEREON. IF THE STOCK IS
HELD JOINTLY, SIGNATURES SHOULD
INCLUDE BOTH NAMES. EXECUTORS,
ADMINISTRATORS, TRUSTEES,
GUARDIANS AND OTHERS SIGNING IN A
REPRESENTATIVE CAPACITY, PLEASE
GIVE FULL TITLES.
PLEASE MARK, SIGN, DATE AND IMMEDIATELY RETURN IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
