<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM 8-K
CURRENT REPORT
----------------------------------
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): DECEMBER 4, 1995
CIMCO, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 0-16249 33-0251163
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
265 BRIGGS AVENUE, COSTA MESA, CALIFORNIA 92626
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (714) 546-4460
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
Exhibit Index on Page 5
<PAGE> 2
ITEM 5. OTHER EVENTS
(a) On December 4, 1995, CIMCO, Inc. (the "Registrant") entered into a
definitive agreement to sell substantially all of the assets
and liabilities of the Registrant's Misty Ox proprietary respiratory
care product line to Vital Signs Ca, Inc. ("Vital Signs") for
$2,150,000 in cash, at least $2,000,000 of which was used to reduce
outstanding debt owed to Wells Fargo Bank, N.A. On December 5, 1995,
Vital Signs, Inc., a New Jersey corporation, issued a news release
related to the transaction.
The Asset Purchase Agreement dated as of December 4, 1995 between
Medical Molding Corporation of America, a wholly-owned
subsidiary of the Registrant, and Vital Signs and the news release
regarding the sale of the Misty Ox product line are attached as
Exhibits to this Report and are incorporated herein by this
reference. The descriptions thereof herein are subject to the complete
terms and provisions thereof as set forth in such Exhibits.
(b) On December 20, 1995, CIMCO, Inc. (the "Registrant") announced that it
had entered into an Agreement and Plan of Merger dated as of
December 19, 1995 with M.A. Hanna Company ("M.A. Hanna") and Hanwest,
Inc. ("Hanwest") whereby Hanwest would offer to acquire, through a
tender offer for $10.50 in cash per share, all of the outstanding
Common Stock par value $.01 per share, including the accompanying
Rights under the Company's Rights Agreement, dated December 5, 1992,
as amended (collectively, "Common Stock") of the Registrant.
In connection with the transactions, Mr. Russell T. Gilbert, the
Company's largest stockholder, agreed, pursuant to the Stockholder
Tender Agreement dated as of December 19, 1995, to sell the 539,734
shares he holds and 76,250 shares purchaseable upon exercise of
the options he holds to Hanwest on the terms of the tender offer.
Hanwest commenced the tender offer on December 27, 1995.
Concurrently, M.A. Hanna and Hanwest filed a Tender Offer Statement
on Schedule 14D-1 with the Securities and Exchange Commission
("Commission"). The Registrant's board of directors' approvals of the
tender offer and the definitive merger agreement and the board's
recommendation, as well as the terms contained in the Agreement and
Plan of Merger and the Stockholder Tender Agreement, are further
described in the Registrant's Solicitation/Recommendation Statement on
Schedule 14D-9 which was filed December 27, 1995 with the Commission,
and which hereafter may be amended.
Following consummation of the tender offer, Hanwest, a wholly-owned
subsidiary of M.A. Hanna, will merge with and into the Registrant and
the remaining shares of the Registrant's Common Stock will be
converted into the right to receive $10.50 in cash per share, without
interest.
The Agreement and Plan of Merger, the Stockholder Tender Agreement,
and the news release regarding the transactions are attached as
Exhibits to this Report and are incorporated herein by this
reference. The descriptions thereof herein are subject to the
complete terms and provisions thereof as set forth in such Exhibits.
2
<PAGE> 3
(c) Pursuant to a letter dated December 19, 1995 regarding
waivers proposed to be given by Wells Fargo Bank, N.A. at the request
of the Registrant, the Registrant amended its Credit Agreement with
Wells Fargo Bank, N.A., on December 22, 1995, which, among other
things, and subject to certain conditions, extends the expiration of
the Credit Agreement until April 30, 1996, increases the amount of
the Registrant's bridge loan from $1,800,000 to $2,450,000, and waives
certain financial covenants and those certain other covenants
identified as in conflict with the contemplated merger transactions.
Concurrently, Wells Fargo Bank, N.A. and Mesa Leasing Company, a
general partnership in which the Registrant is a 50 percent general
partner, amended the terms of a promissory note payable by Mesa
Leasing Company.
The waiver letter and the credit document amendments are attached as
Exhibits to this Report and are incorporated herein by this
reference. The descriptions thereof herein are subject to the
complete terms and provisions thereof as set forth in such Exhibits.
ITEM 7. FINANCIAL STATEMENT, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) EXHIBITS
Exhibit Number
2.6 Asset Purchase Agreement dated as of December 4, 1995 between
Medical Molding Corporation of America and Vital Signs Ca,
Inc.*
2.7 Agreement and Plan of Merger dated as of December 19, 1995
among the Registrant, M.A. Hanna Company and Hanwest, Inc.*
2.8 Stockholder Tender Agreement dated as of December 19, 1995
between Hanwest, Inc. and Russell T. Gilbert, an individual.
10.26 Letter regarding Waiver of Credit Document Provisions dated
December 19, 1995 from Wells Fargo Bank, N.A. to the Registrant
10.27 Fourth Amendment to Credit Documents dated as of December 22,
1995 between the Registrant and Wells Fargo Bank, N.A.
10.28 First Amendment to Promissory Note dated as of December 22,
1995 between Mesa Leasing Company and Wells Fargo Bank, N.A.
99.1 News Release dated December 5, 1995 issued by Vital Signs,
Inc. regarding a Sale of the Registrant's Misty Ox
Product Line to Vital Signs Ca, Inc.
99.2 News Release dated December 20, 1995 regarding Agreement and
Plan of Merger dated as of December 19, 1995
- ----------------------
* The Registrant agrees to file with the Commission supplementally upon
request any omitted schedule to the identified Exhibits. The contents of all
omitted schedules are briefly identified in such Exhibits.
3
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CIMCO, INC.
Date: December 27, 1995 By: RUSSELL T. GILBERT
---------------------------------
Russell T. Gilbert,
Chairman, President and
Chief Executive Officer
4
<PAGE> 5
EXHIBIT INDEX
The following exhibits are attached hereto:
<TABLE>
<CAPTION>
Exhibit
Number
-------
<S> <C>
2.6 Asset Purchase Agreement dated as of December 4, 1995 between
Medical Molding Corporation of America and Vital Signs
CA, Inc.
2.7 Agreement and Plan of Merger dated as of December 19, 1995 among
the Registrant, M.A. Hanna Company and Hanwest, Inc.
2.8 Stockholder Tender Agreement dated as of December 19, 1995 between
Hanwest, Inc. and Russell T. Gilbert, an individual
10.26 Letter regarding Waiver of Credit Document Provisions dated
December 19, 1995 from Wells Fargo Bank, N.A. to the Registrant
10.27 Fourth Amendment to Credit Documents dated as of December 22, 1995
between the Registrant and Wells Fargo Bank, N.A.
10.28 First Amendment to Promissory Note dated as of December 22, 1995
between Mesa Leasing Company and Wells Fargo Bank, N.A.
99.1 News Release dated December 5, 1995 issued by Vital Signs, Inc.
regarding a Sale of the Registrant's Misty Ox Product Line to
Vital Signs Ca, Inc.
99.2 News Release dated December 20, 1995 regarding an Agreement and
Plan of Merger dated as of December 19, 1995
</TABLE>
5
<PAGE> 1
EXHIBIT 2.6
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of December 4, 1995, by and between
MEDICAL MOLDING CORPORATION OF AMERICA, a California corporation ("Seller") and
a wholly owned subsidiary of CIMCO, INC., a Delaware corporation, and VITAL
SIGNS CA, INC., a California corporation (the "Purchaser") and a wholly owned
subsidiary of VITAL SIGNS, INC., a New Jersey corporation.
W I T N E S S E T H:
WHEREAS, the Seller desires to sell and transfer to the Purchaser, and
the Purchaser desires to purchase and assume from the Seller, certain of the
assets and liabilities, all as more specifically provided herein;
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and subject to and on the terms and conditions
set forth herein, the Seller and the Purchaser agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1. Certain Definitions. As used in this Agreement, the
following terms have the respective meanings set forth below.
"Affiliate" means, with respect to any Person, any other Person who
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise, and the
terms "controlled" and "controlling" have meanings correlative thereto.
"Agreement" means this Asset Purchase Agreement.
"Assumed Liabilities" means those obligations of Seller which
Purchaser is assuming pursuant to Section 3.1 below.
"Auditor's Report" has the meaning ascribed to such term in Section
4.2.6.
"Authorizations" has the meaning ascribed to such term in Section 3.12.
"Business Day" means a day, other than a Saturday or Sunday, on which
commercial banks in New Jersey and California are open for the general
transaction of business.
<PAGE> 2
"Closing" has the meaning ascribed to such term in Section 4.7.
"Closing Date" has the meaning ascribed to such term in Section 4.7.
"Code" means the Internal Revenue Code of 1986, as amended.
"Debit Memo" means a memorandum issued by Seller to a vendor of Seller
asserting Seller's claim to a credit from such vendor with respect to
merchandise returned to vendor, promotional allowances earned, charge-backs or
otherwise.
"Division" means the operating division of Seller which designs,
develops, assembles and markets the Products (as hereinafter defined) from 240
Briggs Avenue, Costa Mesa, California 92626, provided, however, that the term
"Division", as used in this Agreement, shall specifically exclude the contract
manufacturing activities relating to items other than the Products undertaken
by Seller for third parties prior to the Closing date.
"Employee Benefit Plan" has the meaning ascribed to such term in
Section 5.19.
"Encumbrances" has the meaning ascribed to such term in Section 5.6.
"Environmental Laws" means any federal, state and local law, statute,
ordinance, rule, regulation, license, permit, authorization, approval, consent,
court order, judgment, decree, injunction, code, requirement or agreement with
any Governmental Authority, (x) relating to pollution (or the cleanup thereof
or the filing of information with respect thereto), human health or the
protection of air, surface water, ground water, drinking water supply, land
(including land surface or subsurface), plant and animal life or any other
natural resource, or (y) concerning exposure to, or the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production or disposal of Regulated Substances, in each case as
amended and as now or hereafter in effect. The term Environmental Law
includes, without limitation, (i) the Comprehensive Environmental Response
Compensation and Liability Act of 1980, the Water Pollution Control Act, the
Clean Air Act, the Clean Water Act, the Solid Waste Disposal Act (including the
Resource Conservation and Recovery Act of 1976 and the Hazardous and Solid
Waste Amendments of 1984), the Toxic Substances Control Act, the Insecticide,
Fungicide and Rodenticide Act, the Occupational Safety and Health Act of 1970,
each as amended and as now or hereafter in effect, and (ii) any common law or
equitable doctrine (including, without limitation, injunctive relief and tort
doctrines such as negligence, nuisance, trespass and strict liability) that may
impose liability or obligations for injuries or damages due to or threatened as
a result of the presence of, exposure to, or ingestion of, any Regulated
Substance.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excluded Liabilities" means any and all liabilities or obligations of
the Seller or its Affiliates, of any kind or nature, whether or not relating to
the Division or the Purchased Assets, and whether known or unknown, absolute,
accrued, contingent or otherwise, or
2
<PAGE> 3
whether due or to become due, arising out of events or transactions or facts
occurring on, prior to, or after the Closing Date, other than the Assumed
Liabilities.
"FDA" shall mean the U.S. Food and Drug Administration and any
successor Governmental Agency having jurisdiction or regulatory oversight
authority over the design, manufacture, marketing and sale of the products
designed, marketed or sold by the Business or the other primary business
activities of Seller.
"Financial Statements" has the meaning ascribed to such term in
Section 5.10.
"GAAP" means generally accepted accounting principles as in effect in
the United States consistently applied.
"Governmental Authority" means any national, federal, state,
provincial, county, municipal or local government, foreign or domestic, or the
government of any political subdivision of any of the foregoing, or any entity,
authority, agency, ministry or other similar body exercising executive,
legislative, judicial, regulatory or administrative authority or functions of
or pertaining to government, including any authority or other
quasi-governmental entity established to perform any of such functions.
"Inventory" means any and all inventory, including raw materials, work
in process and finished goods, held by Seller in connection with the Division
and shown on SCHEDULE 5.9 hereof.
"Net Tangible Asset Value" means the aggregate amount of Purchased
Assets minus the aggregate amount of Trade Liabilities. "Initial Net Tangible
Asset Value" means the Net Tangible Asset Value as of October 31, 1995. "Final
Net Tangible Asset Value" means the Net Tangible Asset Value as of the Closing
Date, as set forth in the Auditor's Report.
"Operative Documents" means (i) in the case of the Seller the Bill of
Sale, the Assignment and Assumption Agreement, and all instruments and any
other documents to be executed and delivered by Seller necessary for the
conveyance of the Purchased Assets to the Purchaser and (ii) in the case of the
Purchaser, any documents which this Agreement expressly provides are to be
executed and delivered by the Purchaser.
"Person" means an individual, partnership, corporation, joint stock
company, unincorporated organization or association, trust or joint venture, or
a governmental agency or political subdivision thereof.
"Products" mean a range of nebulizers, humidifiers, and other
respiratory care and related products (commonly referred to as the Misty Ox
product line) offered for sale to customers of the Division in the ordinary
course of business prior to the Closing Date.
"Purchase Orders" means all outstanding purchase orders received from
customers of the Division in the ordinary course of business and all
outstanding purchase orders issued to suppliers of the Business in the ordinary
course of business; provided, however, that the term
3
<PAGE> 4
"Purchase Orders" shall not include any purchase order approved or issued by
Seller which is materially adverse, materially onerous or materially harmful to
any aspect of the Division, or any purchase order received from a customer of
the Division which does not include a mark-up over estimated cost (based on
current actual cost experience) consistent with past mark-ups on similar
business.
"Purchase Price" has the meaning ascribed to such term in Section 4.2.
"Purchased Assets" means all of the Seller's right, title and interest
in and to the following (but only to the extent that such assets are used in or
derived from the Division and do not constitute Retained Assets):
(i) to the extent reflected in the Auditor's Report, all of the
Seller's cash, money on deposit or in the process of collection with banks,
factors and others, certificates of deposit, commercial paper, letters of
credit, stock, bonds and other investment securities;
(ii) all machinery and equipment (including spare parts) and business
machines, automobiles, trucks, trailers, forklift trucks, and other vehicles,
furniture, fixtures, supplies, capital improvements in process, die, molds,
tools and all other tangible personal property employed in the conduct of the
business of the Division, but only to the extent reflected on SCHEDULE 5.6
hereof;
(iii) all raw material inventories, warehouse stock, parts,
inventories, material, supplies, work-in-progress and finished products,
packaging and shipping materials, but only to the extent reflected in SCHEDULE
5.9 hereof (the "Inventory");
(iv) all easements, rights of way, servitudes, leases, permits,
licenses or options used or held by the Division, if any, but only to the
extent reflected on any schedule hereto;
(v) all deposits, advances and manufacturer and supplier rebates to
the extent reflected in the Auditor's Report, but only to the extent shown on
SCHEDULE 1.1(B) hereto;
(vi) all prepaid rentals, deposits, advances, prepaid insurance and
other prepaid expenses to the extent reflected in the Auditor's Report, but
only to the extent shown on SCHEDULE 1.1(B) hereto;
(vii) all right, title and interest of the Seller in mortgages,
indentures, promissory notes, evidences of indebtedness, other debt, deeds of
trust, loan or credit agreements or similar agreements or instruments
evidencing indebtedness of customers (other than accounts receivable) to the
extent reflected in the Auditor's Report and as shown on SCHEDULE 1.1(B)
hereto;
(viii) all rights and claims of the Seller, whether mature,
contingent or otherwise, against third parties whether in tort, contract or
otherwise (but only to the extent accruing on and after the Closing Date), all
causes of action, unliquidated rights and claims under or pursuant to all
warranties, representations and guarantees made by manufacturers, suppliers
4
<PAGE> 5
or vendors (whenever accruing, but only to the extent relating to the Purchased
Assets listed in items (ii), (iii), or (xi) hereof), and all claims for
refunds, rights of off-set and credits of all kinds and all other general
intangibles (whenever accruing, but only to the extent relating to the
Purchased Assets listed in items (ii), (iii), or (xi) hereof);
(ix) all authorizations, consents, approvals, licenses, orders,
permits, exemptions of, filings or registrations with, any Governmental
Authority, including without limitation any and all 510K approvals issued by
the FDA and all correspondence relating thereto, but only to the extent shown
on SCHEDULE 5.12;
(x) all patents, patent registrations, patent applications,
trademarks, service marks, trademark and service mark registrations and
applications therefor shown on SCHEDULE 5.19 together with, copyrights,
copyright registrations, copyrights applications, trade and division or other
names used in the operation of the Division, technology, inventions, licenses
to use products and software, product drawings, trade secrets, know-how,
customer lists, processes, intellectual property and other proprietary
information or rights to the extent derived from or used in the conduct of
operations of the Division; and permits, licenses or other agreements to or
from third parties regarding the foregoing and listed on SCHEDULE 5.19 hereof
or that are related to the Products (the "Proprietary Rights");
(xi) all rights under any executory contract related to the Division
to which the Seller or any of its Affiliates is a party, any license
agreement, security agreement, indemnity agreement, subordination agreement,
mortgage, equipment lease or other lease or sublease, conditional sale or title
retention agreement and any purchase order from, or contract with, any customer
or supplier as listed on SCHEDULE 5.21;
(xii) restrictive covenants and obligations of present and former
employees, agents, representatives, and independent contractors of the Division
to the extent accruing on and after the Closing Date; all records, files and
correspondence relating to and necessary to the conduct of the business of the
Division (excluding tax returns, accounting records, and financial statements
and related schedules), drawings, engineering, manufacturing and assembly
information; all operating and training manuals, catalogs, quotations, bids,
sales and promotional materials, correspondence, trade association memberships
(to the extent transferable), research and development records, prototypes and
models, lists of present and former customers and suppliers, customer
information, business plans (whether prepared by the Seller or a third party)
relating to the Division; and the personnel, employment and other records
relating to the employees of the Division which are to be hired by the
Purchaser; and
(xiii) all accounts receivable of the Division as shown on the
Auditor's Report.
"Regulated Substances" means pollutants, contaminants, hazardous or
toxic substances, compounds or related materials or chemicals, hazardous
materials, hazardous waste, flammable explosives, radon, radioactive materials,
asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls,
petroleum and petroleum products (including, but not limited to, waste
petroleum and petroleum products) as regulated under applicable Environmental
Laws.
5
<PAGE> 6
"Retained Assets" means the assets listed on SCHEDULE 1.1(III).
"Trade Liabilities" means any and all accounts payable on unsecured
indebtedness of or relating to the business for goods or services purchased by
the Division in the ordinary course of business which is payable on ordinary
commercial terms consistent with the ordinary practice of the industry in which
the Division operates as shown on the Auditors' Report; provided, however, that
"Trade Liabilities" excludes any and all amounts for which the goods or
services to which they relate have not been received by the Division.
Section 1.2. Interpretation. Unless otherwise indicated to the
contrary herein by the context or use thereof: (i) the words, "herein,"
"hereto," "hereof" and words of similar import refer to this Agreement as a
whole and not to any particular Section or paragraph hereof; (ii) words
importing the masculine gender shall also include the feminine and neutral
genders, and vice versa; and (iii) words importing the singular shall also
include the plural, and vice versa.
ARTICLE II
PURCHASE AND SALE OF ASSETS
Section 2.1. Assets Acquired. Subject to the terms and conditions
of this Agreement, Seller agrees to sell, assign, convey, transfer and deliver
to Purchaser on the Closing Date, and Purchaser agrees to purchase and acquire
from Seller on the Closing Date, all of the Purchased Assets, free and clear of
all liens, security interests and encumbrances whatsoever.
ARTICLE III
LIMITATION OF ASSUMPTION OF LIABILITIES
Section 3.1. Liabilities Assumed. Purchaser agrees to assume the
following obligations of Seller:
3.1.1 to fill customer Purchase Orders not filled as of the
Closing Date which are assigned to Purchaser at the Closing as part of the
Purchased Assets and which either (a) are listed on SCHEDULE 3.1. or (b) were
accepted by Seller in the ordinary course of business prior to the Closing
Date, subject to Seller's obligations under Section 7.13. hereof.
3.1.2 to pay suppliers for goods received by Purchaser
after the Closing pursuant to Purchase Orders issued by Seller prior to the
Closing and assigned to Purchaser at the Closing as part of the Purchased
Assets and as detailed in SCHEDULE 3.1.
6
<PAGE> 7
3.1.3 to perform obligations arising after the Closing with
respect to the period after the Closing under the Contracts assigned to Buyer
at the Closing as part of the Purchased Assets and as detailed in SCHEDULE 3.1.
3.1.4 to assume Seller's Trade Liabilities, but only up to
the amount set forth in the Auditor's Report.
3.1.5 to assume and perform Seller's warranty and rework
obligations as provided by the written warranty policy provided by Seller to
its customers and only as detailed in SCHEDULE 3.1 with respect to the
products sold by the Division, subject to Seller's obligations under Section
7.14 hereof.
Section 3.2. Limitations. EXCEPT FOR THE OBLIGATIONS SET FORTH IN
SECTION 3.1, PURCHASER SHALL NOT ASSUME OR DISCHARGE ANY DEBTS, OBLIGATIONS,
LIABILITIES OR COMMITMENTS OF SELLER OR THE DIVISION WHETHER ACCRUED NOW OR
HEREAFTER, WHETHER FIXED OR CONTINGENT, AND WHETHER KNOWN OR UNKNOWN, INCLUDING
BUT NOT LIMITED TO ANY SEVERANCE, VACATION PAY OR ANY OTHER OBLIGATIONS TO
EMPLOYEES OF SELLER UNLESS SUCH OBLIGATIONS ARISE EXCLUSIVELY AS A RESULT OF
EMPLOYMENT OF SUCH PERSONS BY PURCHASER. SELLER SHALL INDEMNIFY AND HOLD
HARMLESS PURCHASER FOR AND WITH RESPECT TO ALL EXCLUDED LIABILITIES, PURSUANT
TO SECTION 10.2 BELOW.
ARTICLE IV
PURCHASE PRICE; METHOD OF PAYMENT; ALLOCATION
Section 4.1. Purchase Price. The purchase price payable under
(the "Purchase Price") shall equal the sum of the following:
4.1.1 the Final Net Tangible Asset Value; plus
4.1.2 $900,000.
Section 4.2. Calculation of the Final Net Tangible Asset Value.
The Final Net Tangible Asset Value shall be calculated as follows:
4.2.1 At the Closing, the Seller and Purchaser shall each approve the
Balance Sheet of the Division as of November 30, 1995, which shall be
consistent with this Agreement and the Schedules hereto and as shall be
reasonably agreed upon by Seller and Purchaser. The November 30, 1995 Balance
Sheet shall reflect the "Estimated Value" of the Net Tangible Asset Value.
7
<PAGE> 8
4.2.2 Promptly after the Closing, but in any event within ten (10)
business days after the Closing Date, the parties will reasonably cooperate to
develop a Balance Sheet of the Division as of the Closing Date ("Closing
Balance Sheet"). The Closing Balance Sheet will be computed and prepared by
acceptance of the November 30, 1995 Balance Sheet and the application of GAAP
to account for changes therein occurring since November 30, 1995 to the Closing
Date, consistent with the principles and interim adjustments agreed upon at the
Closing. The Net Tangible Asset Value established as of the Closing Date shall
be the "Final Net Tangible Asset Value" for all purposes of this Agreement.
4.2.2.1 Such Closing Balance Sheet shall contain separate
line items for each type of asset and liability as detailed in SCHEDULE 5.10.
4.2.2.2 Inventory which is damaged, dirty, obsolete or
otherwise not currently saleable in the ordinary course of business shall not
be included in Inventory for purposes of this Agreement or the calculation of
Net Tangible Asset Value and shall be retained by Seller. The Inventory shall
be calculated on the basis of one or more appropriately timed physical counts
made by Seller and Purchaser.
4.2.2.3 No Debit Memo balances shall be deducted from Trade
Liabilities unless and until the applicable vendor has accepted the applicable
Debit Memo in writing.
4.2.2.4 Goodwill and all other intangible assets (other than
patents, which shall be valued at book value) shall be valued at zero for
purposes of such Closing Balance Sheet.
4.2.3 If Purchaser or Seller should object to such Closing Balance
Sheet on the grounds that it has not been prepared in accordance with this
Agreement, it may give written notice of such objection to the other party
within seven (7) days after its receipt of such Closing Balance Sheet. If no
such assertion is made within such seven (7) day period, or if Buyer and Seller
agree upon all matters in dispute, such balance sheet, as adjusted to reflect
any such agreements, shall be final and binding upon the parties hereto for the
purpose of determining the final Net Tangible Asset Value.
4.2.4 If Purchaser and Seller are unable to resolve all items in
dispute within ten (10) days after receipt of a party's written objection to
the above-mentioned Closing Balance Sheet, then such items shall be resolved by
the offices of Coopers & Lybrand in Chicago. The determination of such third
party accounting form shall be final and binding upon all parties hereto for
purposes of calculating the final Net Tangible Asset Value. Both parties will
use their best efforts to resolve these matters as rapidly as possible.
4.2.5 Purchaser shall pay the costs and fees of the Purchaser and
Seller shall pay the costs and fees of the Seller, in connection with the
foregoing examination and preparation and review of the above-mentioned Closing
Balance Sheet. The fees of any third-party firm employed pursuant to the
provisions of Section 4.2.4 shall be borne one-half by Buyer and one-half by
Seller.
8
<PAGE> 9
4.2.6 After all adjustment required pursuant to Sections 4.2.3 and
4.2.4 have been made to such Closing Balance Sheet, the Seller and Purchaser or
the independent Accountant shall prepare a report (the "Auditor's Report")
reflecting the aggregate dollar amount of Assets set forth on such adjusted
balance sheet and the aggregate dollar amount of Trade Liabilities set forth on
such adjusted balance sheet. The Final Net Tangible Asset Value shall equal
(x) the aggregate amount of Assets set forth in such Auditor's Report less (y)
the aggregate amount of Trade Liabilities set forth in such Auditor's Report.
Section 4.3. Payment of the Purchase Price. The purchase price
described above shall be paid as follows:
4.3.1 At the Closing, Purchaser shall
4.3.1.1 wire funds to Seller's lender, Wells Fargo
Bank, pursuant to wire transfer instructions to be provided by Wells Fargo Bank
("Seller's Lender") in the amount of (i) $900,000 plus (ii) the Estimated
Value minus (iii) the "Withheld Sum" equal to ten percent (10%) of the
Estimated Value (in the aggregate, the "Cash Portion").
Section 4.4. Withheld Sum. Within seven (7) days following
determination of the Final Net Tangible Asset Value pursuant to Section 4.2
above, the Purchaser shall hold the Withheld Sum and pay or credit it in
accordance with this Section 4.4.
4.4.1 If the Estimated Value exceeds the Final Net Tangible
Asset Value, Purchaser may retain for itself the amount of such excess, without
interest thereon, from the Withheld Sum. In such event the balance of the
Withheld Sum, if any, shall be wired to the Seller's Lender.
4.4.2 If the Final Net Tangible Asset Value equals or is
greater than the Estimated Value, Purchaser shall wire the entire Withheld Sum,
without interest thereon, to the Seller's Lender.
4.4.3 If the Final Net Tangible Asset Value exceeds the
Estimated Value in addition to delivery of the Withheld Sum as provided in
Section 4.4.2, Purchaser shall wire funds to Seller's Lender equal to the
amount of such excess, without interest thereon.
4.4.4 If the amount by which the Estimated Value exceeds the
Final Net Tangible Asset Value is greater than the Withheld Sum, the Seller
shall deliver to the Purchaser a cashier's check equal to the amount of such
excess, without interest thereon.
Section 4.5. Bulk Sales Compliance. (a) The Purchaser waives any
compliance with the provisions and procedures of Article 6 of the Uniform
Commercial Code as currently enacted in California (the "Bulk Sales Law"), and
any other similar laws applicable to the transactions contemplated hereby, but
Seller nevertheless represents and warrants that the Purchased Assets will be
transferred to the Purchaser free and clear of any Encumbrances or transferee
liability that may be imposed by the Bulk Sales Law or such similar laws.
9
<PAGE> 10
Notwithstanding the foregoing, the Purchaser shall have the right to publish
notices pursuant to the Bulk Sales Law.
(b) In furtherance of the foregoing, but not in limitation thereof,
(i) at the Closing Date, the Seller shall provide to the Purchaser a list of
all creditors of the Division (the "Creditors List"), including any Person
holding secured, unsecured, matured, unmatured, liquidated, unliquidated,
contingent, non-contingent, legal or equitable claims against the Seller or the
Purchased Assets, including all taxing authorities and claimants pursuant to
any pending or threatened litigation (collectively, "Creditors"). The
Creditors List shall be signed and sworn to or affirmed by a duly authorized
officer of the Seller, and shall contain the names and business addresses of
all Creditors of the Seller, the amount owed to each such Creditor, if known,
the names of all Persons who are known to the Seller to assert claims against
the Seller which are disputed by the Seller and shall otherwise comply with the
requirements of the Bulk Sales Law.
Section 4.6. Allocation of the Purchase Price. The Purchase Price
shall be allocated as set forth in EXHIBIT 4.6 hereto. The Purchaser and the
Seller shall use such allocation in filing their respective Internal Revenue
Service Form 8594s.
Section 4.7. Closing. The closing of the transactions contemplated
hereby (the "Closing") shall take place at the offices of CIMCO, INC. 265
Briggs Avenue, Costa Mesa California, at 10:00 a.m. on December 4, 1995, or at
such other time and place as is mutually agreed by the Purchaser and the
Sellers. The time and date of the Closing is herein called the "Closing Date".
Each party shall accept faxed documents for purposes of the Closing, with
original documents to be sent by overnight delivery service.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Purchaser, except as set
forth in any of the Schedules delivered by Seller, as follows:
Section 5.1. Organization and Qualification of the Seller. The
Seller and Cimco, Inc. are corporations duly organized, validly existing and in
good standing under the laws of the State of California and the State of
Delaware, respectively, with full power and authority to own or lease its
property and assets and to carry on the business of the Division as presently
conducted, and is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction where the failure to be so qualified
would have a material adverse effect on the business, financial condition,
results of operations or prospects (financial and otherwise) of the Division (a
"Material Adverse Effect"). SCHEDULE 5.1 lists each jurisdiction in which the
Seller is so qualified. The business of the Division is conducted solely
through the Seller and the Seller does not, directly or indirectly, own any
subsidiaries.
10
<PAGE> 11
Section 5.2. Authorization. The Seller has full corporate power and
authority to execute and deliver this Agreement and each of the other Operative
Documents to be executed and delivered by it and to perform its obligations
hereunder and thereunder, all of which have been duly authorized by all
requisite corporate action on the part of Seller. This Agreement and each of
the other Operative Documents to be executed and delivered by it has been or,
at the time of delivery will be, duly authorized, executed and delivered by the
Seller and constitutes or, at the time of delivery will constitute, a valid and
binding agreement of the Seller, enforceable against the Seller in accordance
with its terms, subject to bankruptcy, in solvency and laws relating to
creditor's rights.
Section 5.3. Non-contravention. Neither the execution and delivery
of this Agreement and each of the other Operative Documents to be executed and
delivered by it, nor the performance by the Seller of its obligations hereunder
and thereunder, will (i) contravene any provision contained in the Seller's
Articles of Incorporation or by-laws, (ii) violate or result in a breach (with
or without the lapse of time, the giving of notice or both) of or constitute a
default under (A) any contract, agreement, commitment, indenture, mortgage,
lease, pledge, note, license, permit or other instrument or obligation or (B)
any judgment, order, decree, law, rule or regulation or other restriction of
any Governmental Authority, in each case to which the Seller is a party or by
which it is bound or to which any of its assets or properties are subject,
subject to any requirement that Seller obtain the approval and release of liens
from Wells Fargo Bank, N.A. (appropriate documentation of which is to be
delivered by the Seller at the Closing), (iii) result in the creation or
imposition of any lien, claim, charge, encumbrance, equity, restriction or
right on any of the Seller's assets or properties, or (iv) result in the
acceleration of, or permit any Person to accelerate or declare due and payable
prior to its stated maturity, any Assumed Liability.
Section 5.4. No Consents. Except as set forth in SCHEDULE 5.4, no
notice to, filing with, or authorization, registration, consent or approval of
any Governmental Authority or other Person is necessary for the execution,
delivery or performance of this Agreement or any of the other Operative
Documents or the consummation of the transactions contemplated hereby or
thereby by the Seller, including without limitation any consent by or filing
with our Governmental Authority in respect of any applicable Environmental Law.
Section 5.5. The Purchased Assets. The Purchased Assets constitute
all of the rights, properties and assets (tangible or intangible) which are
necessary for the conduct of the business of the Division in accordance with
past operations of the Seller, other than the molding operations of the Seller
and Cimco, Inc., which are not being acquired by Purchaser hereunder, and other
than the real property in which the business of the Division is conducted. No
third party (including any Affiliate) owns or has any interest by lease,
license or otherwise in any of the Purchased Assets. The documents of transfer
to be executed and delivered by the Seller at the Closing will be sufficient to
convey good and marketable title to the Purchased Assets to the Purchaser, free
and clear of all Encumbrances, other than Assumed Liabilities.
Section 5.6. Personal Property. Except as disclosed in SCHEDULE
5.6, the Seller has good and marketable title to (or valid leasehold or
contractual interests in) all personal
11
<PAGE> 12
property comprising the Purchased Assets, free and clear of any lien, claim,
charge, mortgage, security interest, equity or other encumbrance (collectively,
"Encumbrances"). Except as disclosed on SCHEDULE 5.6, all machinery,
equipment, furniture, fixtures and other personal property used in the Business
is in good operating condition and fit for operation in the ordinary course of
business (subject to normal wear and tear) with no defects that could interfere
with the conduct of normal operations of such equipment, furniture, fixtures
and other personal property and are suitable for the purposes for which they
are currently being used.
Section 5.7. Real Property. All plants, structures and buildings
leased or otherwise occupied or used by the Business are in good operating
condition and fit for operation in the ordinary course of business (subject to
normal wear and tear) with no structural or other defects that could interfere
with the conduct of normal operations of such facilities and are suitable for
the purposes for which they are currently being used. No real property or
interest therein is included in the "Purchased Assets," but Purchaser shall be
entitled to transition off the premises of the Division for not over the 90
days immediately following the Closing as provided in Section 7.12 hereof.
Section 5.8. No Condemnation. Neither the whole nor any portion of
the real property or the improvements thereon is subject to any governmental
decree or order to be sold nor have any proceedings for the condemnation,
expropriation or other taking of all or any portion of such real property or
improvements been instituted or, to the Seller's best knowledge, threatened by
any Governmental Authority, with or without payment therefor.
Section 5.9. Inventory. SCHEDULE 5.9 sets forth a true and complete
listing of all Inventory used or held for sale in the Division as of November
30, 1995, including, without limitation, raw materials, work-in-process and
finished goods. Except as shown on SCHEDULE 5.9, all of the Seller's Inventory
consists of items which are good and merchantable, not obsolete, and of a
quantity and quality usable and salable in the regular and ordinary course of
the Division consistent with past practices at prices at least equal to their
value on the Seller's books. The Seller has good and marketable title to all
of such Inventory, free and clear of any Encumbrances other than Encumbrances
in favor of Purchaser. Subject to the provisions of Section 7.15, Seller is
not under any liability or obligation with respect to the return of Inventory
in the possession of its customers.
Section 5.10. Financial Statements and Reports. The Seller has
previously furnished to the Purchaser true and complete copies of the unaudited
balance sheets of Seller's respiratory medical products division and contract
manufacturing operations ("RMPD") as of April 30, 1994 and April 30, 1995, the
Division's unaudited balance sheet as of November 30, 1995 and the related
unaudited statements of operations for the six month period then ended, and
statements of income for the RMPD's fiscal years ended April 30, 1994 and April
30, 1995, all certified by RMPD's chief financial officer (collectively, the
"Financial Statements"). The Financial Statements have been prepared in
conformity with GAAP, applied on a consistent basis except for year-end
adjustments consisting only of normal recurring accruals (all of which are
described in SCHEDULE 5.10) and present fairly the
12
<PAGE> 13
financial condition and results of operations of the Division or RMPD as the
case may be, as of and for the periods included therein.
Section 5.11. Absence of Certain Developments. Except as set forth
in SCHEDULE 5.11, since November 30, 1995, there has not been any material
adverse change, or any development which could reasonably be expected to result
in a prospective material adverse change, in the business, financial condition,
results of operations or the prospects (financial and other) of the Division,
taken as a whole. Except as set forth in SCHEDULE 5.11, since November 30,
1995, the Seller has conducted the business of the Division in the ordinary and
usual course consistent with past practices and has not (i) sold, leased,
transferred or otherwise disposed of any of the assets of the Division (other
than dispositions in the ordinary course of business consistent with past
practices), (ii) terminated or amended in any material respect any contract or
lease to which the Seller is a party or to which it is bound or to which its
properties are subject, (iii) suffered any material loss, damage or destruction
whether or not covered by insurance, (iv) made any change in the accounting
methods or practices it follows, whether for general financial or tax purposes,
(v) incurred any liabilities (other than in the ordinary course of business,
none of which, individually or in the aggregate, are material), (vi) incurred,
created or suffered to exist any Encumbrances on the Purchased Assets other
than those listed on SCHEDULE 5.6 or created in the ordinary course of
business, none of which, individually or in the aggregate, are material, (vii)
increased the compensation payable or to become payable to any of the officers
or employees of the Division or increased any bonus, severance, accrued
vacation, insurance, pension or other Employee Benefit Plan, payment or
arrangement made by the Seller for or with any such officers or employees,
(viii) suffered any labor dispute, strike or other work stoppage, (ix) made or
obligated itself to make any capital expenditures in excess of $5,000
individually or in the aggregate, (x) entered into any contract or other
agreement requiring the Seller to make payments in excess of $5,000 per annum,
individually or in the aggregate, other than in the ordinary course of business
consistent with past practices, (xi) entered into any agreement to do any of
the foregoing or (xii) suffered any other event, fact or circumstance which
could reasonably be expected to result in a Material Adverse Effect.
Section 5.12. Governmental Authorizations; Licenses; Etc. Except as
set forth on SCHEDULE 5.12, the Division has been operated in compliance with
all applicable laws, rules, regulations, codes, ordinances, orders, policies
and guidelines of all Governmental Authorities, including but not limited to,
those related to: fire, safety, labeling of products, pricing, sales or
distribution of products, antitrust, trade regulation, trade practices,
sanitation, land use, employment or employment practices, energy and similar
laws and all laws, rules, regulations and guidelines administered or
promulgated by the FDA, except for violations which, individually or in the
aggregate, would not have a Material Adverse Effect. Except as set forth on
SCHEDULE 5.12, the Seller has and as of the Closing Date will have all permits,
licenses, approvals, certificates and other authorizations, and has made all
notifications, registrations, certifications and filings with all Governmental
Authorities, necessary or advisable for the operation of the Division as
currently conducted by the Seller, except for those which, individually or in
the aggregate would not have a Material Adverse Effect. The Seller has and as
of the Closing Date will have received 510K approvals from the FDA in respect
of each product marketed or sold by the Division prior to or as of the
13
<PAGE> 14
Closing Date. Except as set for on SCHEDULE 5.12, there is no action, case or
proceeding pending or, to the Seller's best knowledge, threatened by any
Governmental Authority with respect to (i) any alleged violation by the Seller
or its Affiliates of any law, rule, regulation, code, ordinance, order, policy
or guideline of any Governmental Authority, or (ii) any alleged failure by the
Seller or its Affiliates to have any permit, license, approval, certification
or other authorization required in connection with the operation of the
Division. Except as set forth on SCHEDULE 5.12, no notice of any violation of
such laws has been received by the Seller or any Affiliate of the Seller and
neither the Seller nor any such Affiliate has received any notice that the
products manufactured or sold by the Division are not in compliance with, or do
not meet the standards of, all applicable laws, including the Good
Manufacturing Practices required by the FDA. SCHEDULE 5.12 sets forth a true
and complete list of all permits, licenses, approvals, certificates,
registrations and other authorizations relating to the Division (the
"Authorizations") including without limitation all 510K approvals issued by the
FDA in respect of the products marketed or sold by the Division. Such
Authorizations are in full force and effect and the Seller has received no
notification of the suspension or cancellation of any thereof. The Seller has
no grounds to believe that any of the Authorizations listed on Schedule 5.12
will not be transferable to the Purchaser.
Section 5.13. Litigation. Except as set forth in SCHEDULE 5.13,
there are no lawsuits, actions, proceedings, claims, orders or investigations
by or before any Governmental Authority pending or, to the Seller's best
knowledge, threatened against the Seller or its Affiliates relating to the
Division, the Purchased Assets, the Assumed Liabilities or any product alleged
to have been manufactured or sold by the Division or seeking to enjoin the
transactions contemplated hereby and, except as set forth in SCHEDULE 5.13,
there are no facts or circumstances known to the Seller that could result in a
claim for damages or equitable relief which, if decided adversely, could,
individually or in the aggregate, have a Material Adverse Effect.
Section 5.14. Undisclosed Liabilities. Other than those reflected in
the Financial Statements, there are no material liabilities of the Seller of
any kind or nature whatsoever, whether known or unknown, absolute, accrued,
contingent or otherwise, or whether due or to become due relating to the
Division, other than liabilities incurred relating to the Division in the
ordinary course of business and consistent with past practices since the date
of the Financial Statements, none of which, individually or in the aggregate,
are material, and there exists no facts or circumstances (other than general
economic conditions) that could reasonably be expected to result in any such
liability.
Section 5.15. Taxes. All federal, state, county, local and foreign
tax returns and reports of the Seller or any Affiliate of the Seller required
to be filed which relate to or affect the Division or the Purchased Assets have
been duly filed. All federal, state, county, local, foreign and any other
taxes (including all income, withholding and employment taxes), assessments
(including interest and penalties), fees and other governmental charges with
respect to the employees, properties, assets, income or franchises of the
Seller or any Affiliate of the Seller relating to or affecting the Division or
the Purchased Assets have been paid or duly provided for, or are being
contested in good faith by appropriate proceedings as
14
<PAGE> 15
disclosed on SCHEDULE 5.15 and adequate reserves therefor have been established
pursuant to GAAP, or have arisen after the date hereof in the ordinary course
of business. There are no tax liens on any of the Purchased Assets.
Section 5.16. Insurance. SCHEDULE 5.16 sets forth a true and correct
list of all insurance policies or binders maintained by the Seller on the date
hereof relating to the Division or the Purchased Assets showing, as to each
policy or binder, the carrier, policy number, coverage limits, expiration
dates, annual premiums, deductibles or retention levels and a general
description of the type of coverage provided. Such policies and binders are,
and at all times prior to the Closing will be, in full force and effect. At
all times prior to the Closing Date, the Seller has maintained appropriate and
adequate insurance policies covering the Purchased Assets and all aspects of
the Division consistent with industry practice.
Section 5.17. Environmental Matters. Except as set forth on SCHEDULE
5.17, (i) the Division is being and has been conducted in compliance with all
Environmental Laws, (ii) the real property owned (and that leased to Purchaser
after the Closing pursuant to Section 7.12) or operated by Seller in connection
with the Division or leased, occupied or used by Seller in connection with the
Division (including, without limitation, soil, groundwater or surface water on,
under or adjacent to the properties and buildings thereon) (the "Affected
Property") do not contain any Regulated Substance other than as permitted under
applicable Environmental Laws, (iii) Seller has, and at all times has had, all
permits, licenses and other approvals and authorizations required under
applicable Environmental Laws for the operation of the Division, (iv) the
Seller has not received any notice from any Governmental Authority that the
Seller or any of its Affiliates may be a potentially responsible party in
connection with any waste disposal site or facility used, directly or
indirectly, by or otherwise related to the Division, (v) no reports have been
filed, or have been required to be filed, by the Seller concerning the release
of any Regulated Substance or the violation of any Environmental Law on or at
the properties used in the Division, (vi) no Regulated Substance has been
disposed of, transferred, released or transported from the Affected Property,
other than as permitted under applicable Environmental Law pursuant to
appropriate regulations, permits or authorizations, (vii) there have been no
environmental investigations, studies, audits, tests, reviews, or other
analyses conducted by or which are in the possession of the Seller or any
Affiliate of the Seller relating to the Division, true and correct copies of
which have not been delivered to the Purchaser prior to the date hereof, (viii)
there are no underground storage tanks on, in or under any of the properties
presently owned or operated by the Division and no underground storage tanks
have been closed or removed from such properties, (ix) the Seller has not
presently incurred, and the Affected Property is not presently subject to, any
liabilities (fixed or contingent) relating to any suit, settlement, judgment or
claim asserted or arising under any Environmental Law, [(x) all documents filed
by or on behalf of the Seller or any Affiliate of the Seller with any
Governmental Authority pursuant to any Environmental Law in connection with the
sale of the Division or the Purchased Assets were true, correct and complete
and did not omit to state any fact required to be stated therein or necessary
to make the statements therein not misleading,] (xi) all Environmental Laws in
existence at the time the Affected Property was acquired were complied with,
and (xii) there are no civil, criminal or administrative actions, suits,
demands, claims, hearings, investigations or other proceedings pending or
threatened against the Division or the Seller or
15
<PAGE> 16
any Affiliate of the Seller with respect to the Division or the Purchased
Assets relating to any violations, or alleged violations, of any Environmental
Law, and neither the Division nor the Seller or any Affiliate of the Seller
have received any notices, demand letters or requests for information, arising
out of, in connection with, or resulting from, a violation, or alleged
violation, of any Environmental Law, and neither the Division nor the Seller or
any Affiliate of the Seller have been notified by any Governmental Authority or
any other Person that the Division or the Purchased Assets have, or may have,
any liability pursuant to any Environmental Law. SCHEDULE 5.17 includes a true
and complete list of all Standard Industrial Classification (SIC) Codes
applicable to the Division or the Purchased Assets. No filing or registration
with or approval of or consent by any Governmental Authority is required of the
Seller in connection with the execution and delivery of this Agreement or the
consummation of the transactions by the Seller as contemplated hereby.
Section 5.18. Employee Matters. (a) SCHEDULE 5.18 contains a true
and correct list of the employees currently employed by the Seller in the
conduct of the business of the Division, including (i) any agreement concerning
such employees and a description of the rate and nature of all current
compensation payable by the Seller to each employee, (ii) the amount of annual
vacation time each such employee receives and has accrued, and the amount of
severance compensation, if any, to which each is entitled.
(b) (i) The Seller has not entered into any collective bargaining
agreements with respect to the above-mentioned employees, (ii) except as set
for in SCHEDULE 5.18, there are no written personnel policies applicable to
such employees generally, other than employee manuals, copies of which have
previously been provided to the Purchaser, (iii) there is no labor strike,
dispute, slowdown or work stoppage or lockout pending or, to the best of the
Seller's knowledge, threatened against or affecting the Division and during the
past three years there has been no such action, (iv) to the Seller's best
knowledge, no union organization campaign is in progress with respect to any of
such employees, and no question concerning representation exists respecting
such employees, (v) there is no unfair labor practice, charge or complaint
pending or, to the Seller's best knowledge, threatened against the Seller
arising out of the conduct of the division, and (vi) the Seller has not entered
into any agreement, arrangement or understanding restricting its ability to
terminate the employment of any or all of such employees at any time, for any
lawful or no reason, without penalty or liability.
Section 5.19. Proprietary Rights. (a) All of the Seller's
Proprietary Rights are listed in SCHEDULE 5.19. Except as disclosed therein,
the Seller owns and possesses all right, title and interest in, and upon
consummation of the transactions contemplated hereby, the Purchaser will own
all right, title and interest in, the Proprietary Rights. The Seller has taken
all necessary action to protect the Proprietary Rights and the transactions
contemplated by this Agreement will have no material adverse effect on the
Seller's right, title and interest in the Proprietary Rights.
(b) No claim by any third party contesting the validity,
enforceability, use or ownership of any Proprietary Right has been made, is
currently pending or is threatened. The Seller has not received any notice of,
nor is it aware of any fact which indicates a
16
<PAGE> 17
likelihood of any infringement or misappropriation by any third party with
respect to any of the Proprietary Rights. The Seller has not infringed or
misappropriated any rights of any third parties, nor is it aware of any
infringement or misappropriation which will occur as a result of the continued
operation of the Division as now conducted.
Section 5.20. Contracts. (a) SCHEDULE 5.20 describes all contracts,
agreements, leases, commitments, instruments, plans, permits or licenses,
whether written or oral, with respect to the Division to which the Seller is a
party or is otherwise bound, of the types described below (the "Contracts"):
(i) all agreements, commitments, purchase orders, sale
confirmations or other similar agreements for the sale by the Division
of products or services, or the purchase by the Division of raw
materials, products or services, other than those that are for amounts
not to exceed $5,000;
(ii) all agreements, commitments, purchase orders, sale
confirmations or other similar agreements for the purchase by the
Division of machinery, equipment or other personal property other than
those that are for amounts not to exceed $5,000;
(iii) all capitalized leases, pledges, conditional sale or
title retention agreements concerning assets used in the business of
the Division;
(iv) all employment agreements and commitments and all
consulting or severance agreements or arrangements;
(v) all agreements relating to the consignment or lease of
personal property (whether the Seller is lessee, sublessee, lessor or
sublessor), other than such agreements that provide for annual
payments of less than $5,000;
(vi) all license, royalty or other agreements relating to the
Proprietary Rights;
(vii) all agreements prohibiting the Seller from freely
engaging in the business of the Division in any geographic area;
(viii) all agreements to provide rebates to customers of the
Division, to the extent not reflected as a liability on the Financial
Statements;
(ix) all distribution, sales agency and other similar
agreements relating to the marketing, sale or distribution by the
Division of its products; and
(x) any agreements other than those covered by clauses (i)
through (viii) above relating to the Division and involving payment or
receipt of more than $2,500 in the aggregate and all agreements which
otherwise materially affect the Division.
(b) Except as disclosed in SCHEDULE 5.20, all of the Contracts which
are intended to be assigned to the Purchaser hereunder are fully assignable to
the Purchaser by the Seller
17
<PAGE> 18
without the consent of any third party. All consents of third parties required
for the assignment of such Contracts to the Purchaser have been obtained, or
will have been obtained prior to or on the Closing Date. To the best of the
Seller's knowledge after due inquiry, none of the other parties to any such
Contracts intends to terminate or materially alter the provisions of such
Contracts either as a result of transactions contemplated hereby or otherwise,
except as disclosed in SCHEDULE 5.20.
(c) Except as disclosed in SCHEDULE 5.20, the Seller is not in, nor
has the Seller given or received notice of, any default or claimed, purported
or alleged default, or facts that, with notice or lapse of time, or both, would
constitute a default (or give rise to a termination right) on the part of any
party in the performance of any obligation to be performed under any of the
Contracts.
(d) The Seller has not violated the Truth in Negotiations Act or the
False Claims Act or any other law regulating government contracts or failed to
comply with the applicable requirements of the Federal Cost Accounting
Standards with respect thereto would have a Material Adverse Effect.
(e) True and complete copies of all written Contracts, including any
amendments thereto, have been delivered to the Purchaser and such documents
constitute the legal, valid and binding obligation of the Seller and, to the
best of the Seller's knowledge after due inquiry, each other party purportedly
obligated thereunder.
Section 5.21. Customers and Suppliers. SCHEDULE 5.21 sets forth a
list of (a) the fifteen (15) largest customers of the Division in terms of
gross sales and (b) the fifteen (15) largest suppliers of the Division in terms
of purchases , in each case during the period from May 1, 1994 to the date of
this Agreement. Except as set forth on SCHEDULE 5.21, (a) no customer has
notified or otherwise indicated to the Seller that it will stop, or decrease
the rate of, its purchases of materials, products or services from the
Division, and no customer has, since April 30, 1994, ceased or materially
decreased its purchases of any such materials, products or services from the
Division; and (b) no supplier of the Division has notified or otherwise
indicated to the Seller that it will stop, or decrease the rate of, or, other
than publicly announced generally applicable price increases, materially
increase the cost of, its supply of materials, products or services used by the
Division, and no supplier has, since April 30, 1994, ceased, materially
decreased the rate of or materially raised the cost of, any such materials,
products or services. The Seller is not a party to any contract or commitment
relating to the Division to purchase products from any supplier, other than
contracts or commitments that are terminable at will by Seller in its sole
discretion, without cost or penalty. SCHEDULE 5.21 lists a summary of all
sales by the Division to each of its 15 largest customers from and after May 1,
1994 and also lists all open orders from each customer of the Division as of
the date of this Agreement.
Section 5.22. Ability to Conduct Business. To the knowledge of
Seller, the consummation of the transactions contemplated hereby will enable
the Purchaser to conduct the business of the Division substantially as it is
currently being conducted.
18
<PAGE> 19
Section 5.23. Brokers. The Seller has retained no person or firm as
a broker in connection with the transaction contemplated by this Agreement.
Should any person or firm claim that a fee or any other consideration is owed
by virtue of any agreement or act by Seller, Seller shall indemnify and hold
Purchaser harmless from any such fee or claim.
Section 5.24. Disclosure. No representation or warranty made by the
Seller in this Agreement, any Schedule, any Exhibit or any certificate
delivered, or to be delivered, by or on behalf of the Seller pursuant hereto
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements contained
herein or therein not misleading. There is no fact which the Seller has not
disclosed to the Purchaser in writing which the Seller presently believes has
or may have a material adverse effect on the properties, assets, business,
operations, financial condition or prospects of the Seller or the Division or
on the ability of the Seller to perform its obligations under this Agreement or
the other Operative Documents to be executed and performed by it.
Section 5.25. Absence of Questionable Payments. Neither the Seller
nor any Affiliate, director, officer, employee, agent, representative or other
Person acting on behalf of the Seller in connection with the Division has: (i)
used any corporate or other funds for unlawful contributions, payments, gifts
or entertainment, or made any unlawful expenditures relating to political
activities to government officials or others, or (ii) accepted or received any
unlawful contributions, payments, gifts or expenditures.
Section 5.26. All Proprietary Rights for the Business and the
Products. There are no intellectual property or proprietary information or
rights related to or used in the conduct of the Business or required for the
production, sale or use of the Products in accordance with the past operations
of the Seller, other than the Proprietary Rights being acquired by the
Purchaser pursuant to this Agreement, except for Proprietary Rights relating to
the molding operations of Seller and Cimco, Inc. which are not being acquired
hereunder.
Section 5.27. All Equipment Required for Production of the Products.
The machinery, equipment and other tangible personal property being acquired by
the Purchaser pursuant to this Agreement are all the machinery, equipment, and
personal property required for the production of the Products in accordance
with the past operations of the Seller, except for the molding operations of
Seller and Cimco, Inc. which are not being acquired hereunder.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Seller as follows:
Section 6.1. Organization. The Purchaser and Vital Signs, Inc. are
corporations duly organized, validly existing and in good standing under the
laws of the State of
19
<PAGE> 20
California and New Jersey respectively, and have full corporate power and
authority to own or lease its property and assets and to carry on its business
as presently conducted.
Section 6.2. Authorization. The Purchaser has full corporate power
and authority to execute and deliver this Agreement and each of the other
Operative Documents to which it is a party and to perform its obligations
hereunder and thereunder, all of which have been duly authorized by all
requisite corporate action on the part of the Purchaser. Each of this
Agreement and each of the other Operative Documents to which it is a party, has
been or, at the time of delivery will be, duly authorized, executed and
delivered by the Purchaser and constitutes or, at the time of delivery will
constitute, a valid and binding agreement of the Purchaser, enforceable against
the Purchaser in accordance with its terms.
Section 6.3. Non-contravention. The Purchaser is not subject to any
provision of its Certificate of Incorporation or by-laws or any agreement,
instrument, law, rule, regulation, order, decree or judgment of any
Governmental Authority or other restriction that would prevent the consummation
of the transactions contemplated by this Agreement and the other Operative
Documents.
Section 6.4. No Consents. Except for consents required in connection
with the Purchaser's assumption of the Assumed Liabilities, no notice to,
filing with, or authorization, registration, consent or approval of any
Governmental Authority or other Person is necessary for the execution, delivery
or performance of this Agreement and the other Operative Documents to which it
is a party or the consummation of the transactions contemplated hereby and
thereby by the Purchaser.
Section 6.5. Brokers. The Purchaser has retained Peter Blanchard as
a finder in connection with the transaction contemplated by this Agreement as a
result of which he is entitled to a finder's fee which will be paid by the
Purchaser. No other person or firm is entitled to any consideration as a broker
or finder with respect to this transaction. Purchaser shall hold Seller
harmless and indemnify Seller from any fee claimed by Peter Blanchard or any
other person or firm claiming that a broker's or finder's fee in connection
with this transaction is owed as a result of any act or agreement on the part
of Purchaser..
Section 6.6. Disclosure. No representation or warranty made by the
Purchaser in this Agreement any Schedule, any Exhibit or any certificate
delivered or to be delivered, by or on behalf of the Purchaser pursuant hereto
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements contained
herein or therein not misleading. There is no fact which the Seller has not
disclosed to the Seller in writing which the Purchaser presently believes has
or may have a material adverse effect on the properties, assets, business,
operations, financial condition or prospects of the Purchaser or on the ability
of the Purchaser to perform its obligations under this Agreement or the other
Operative Documents to be executed and performed by Purchaser.
20
<PAGE> 21
ARTICLE VII
COVENANTS AND AGREEMENTS
Section 7.1. Access and Information. Prior to the Closing, the
Purchaser shall be entitled to make or cause to be made such investigation of
the Division, and the financial and legal condition hereof, as the Purchaser
deems necessary or advisable, and the Seller shall cooperate with any such
investigation. In furtherance of the foregoing, but not in limitation thereof,
the Seller shall permit the Purchaser and its agents and representatives or
cause them to be permitted to have full and complete access to the premises,
books and records of the Division upon reasonable notice during regular
business hours and shall furnish such financial and operating data,
projections, forecasts, business plans, strategic plans and other data relating
to the Division as the Purchaser shall request from time to time. Prior to the
Closing, the Purchaser shall not use any information obtained pursuant to this
Section 7.1 for any purpose unrelated to the consummation of the transactions
contemplated by this Agreement and, if such transactions are not consummated,
it will hold all information and documents obtained pursuant to this Section
7.1 in confidence unless and until such time as such information or documents
otherwise become publicly available or as it is advised by counsel that any
such information or document is required by law to be disclosed. In the event
that this Agreement is terminated, the Purchaser will deliver to the Seller all
documents so obtained by it and any copies thereof in the possession of the
Purchaser or its agents and representatives or, at the option of the Purchaser,
the Purchaser shall cause all of such documents and all of such copies to be
destroyed and shall certify the destruction thereof to the Seller.
No investigation by the Purchaser or any of its agents or
representatives, including without limitation its intellectual property
counsel, heretofore or hereafter made shall modify or otherwise affect any
representations and warranties of the Seller, which shall survive any such
investigation, or the conditions to the obligation of the Purchaser to
consummate the transactions contemplated hereby.
Section 7.2. Affirmative Covenants. Prior to the Closing, except as
otherwise expressly provided herein, the Seller shall:
(a) conduct the business of the Division only in the ordinary and
regular course of business consistent with past practices;
(b) keep in full force and effect its corporate existence and all
material rights, franchises, Proprietary Rights and goodwill relating or
obtaining to the Division;
(c) use its best efforts to retain those employees actively employed
in the business of the Division and preserve its present relationships with
customers, suppliers, contractors, distributors and such employees, and
continue to compensate such employees consistent with past practices;
21
<PAGE> 22
(d) maintain the Proprietary Rights so as not to affect adversely the
validity or enforcement thereof; maintain the other Purchased Assets in
customary repair, order and condition and maintain insurance reasonably
comparable to that in effect on the date of this Agreement; and in the event of
any casualty, loss or damage to any of the Purchased Assets, either repair or
replace such assets with assets of comparable quality or subject to the
provisions of Section 11.13, transfer consideration to the Purchaser at Closing
equal to the full repair cost or replacement value of such assets;
(e) maintain the books, accounts and records related to the Division
in accordance with GAAP, to the extent applicable, consistent with past
practices;
(f) use its best efforts to obtain all authorizations, consents,
waivers, approvals or other actions necessary or desirable to consummate the
transactions contemplated hereby and to cause the other conditions to the
Purchaser's obligation to close to be satisfied;
(g) promptly inform the Purchaser in writing of any material breach
of or change in the representations and warranties contained in Article V
hereof;
Section 7.3. Negative Covenants. Prior to the Closing, without the
prior written consent of the Purchaser, which shall not be unreasonably
withheld, or as otherwise expressly provided herein, the Seller will not:
(a) enter into any contract, agreement or commitment which, if
entered into prior to the date of this Agreement, would cause any
representation or warranty of the Seller to be untrue or be required to be
disclosed on one or more Schedules referred to in Article III; and
(b) take or omit to be taken any action, or permit its Affiliates to
take or to omit to take any action, which could reasonably be expected to have
a Material Adverse Effect.
Section 7.4. Closing Documents. The Seller shall, prior to or on the
Closing Date, execute and deliver, or cause to be executed and delivered to the
Purchaser, the documents or instruments described in Section 8.2. The Purchaser
shall, prior to or on the Closing Date, execute and deliver, or cause to be
executed and delivered, to the Sellers, the documents or instruments described
in Section 8.3.
Section 7.5. Post Closing Access and Assistance. (a) After the
Closing, upon request the Seller and its representatives shall be permitted
reasonable access, during normal business hours, to and to make inspection of
the books and records of the Seller transferred to the Purchaser hereunder so
long as such records are maintained by the Purchaser in accordance with its
customary records retention policy and to make copies thereof as is reasonably
necessary to allow the Seller to obtain information in the Purchaser's
possession (but excluding attorney work product or other privileged
communications). The Seller shall pay the Purchaser's out-of-pocket costs and
expenses in connection with satisfying such requests.
22
<PAGE> 23
(b) After the Closing, upon request the Purchaser and its
representatives shall be permitted reasonable access, during normal business
hours, to and to make inspection of the books and records (if any) of the
Seller which may be retained by the Seller relating to the Division and the
Purchased Assets and to make copies thereof as is reasonably necessary to allow
the Purchaser to obtain information in the Seller's possession (but excluding
attorney work product or other privileged communications). The Purchaser shall
pay the Seller's out-of-pocket costs and expenses in connection with satisfying
such requests.
(c) The following shall govern cooperation between the parties
regarding the transfer, maintenance and preservation of ownership rights in the
Proprietary Rights:
(i) The Seller shall cooperate with Purchaser in preparing and
providing at Seller's expense the instruments of conveyance and
related documents necessary or reasonably requested by Purchaser to
convey, sell, assign and transfer as provided herein all rights, title
and interest in and to the Proprietary Rights in all countries of the
world, which instruments shall be in registrable form in such
countries in which any rights included within the Proprietary Rights
are registered or under application as of the Closing Date. Purchaser
shall be responsible for filing and recordation of such instruments
and documents and for paying any fees or other charges in connection
therewith.
(ii) Except as provided by Section 10.2, Purchaser shall be
responsible following the Closing for paying all of the costs and
expenses in preparing, filing, registering, prosecuting, defending and
maintaining all such Proprietary Rights and the rights and interests
associated therewith. Seller shall use reasonable efforts to cooperate
with Purchaser in connection therewith, and shall be reimbursed for
all reasonable expenses incurred in connection therewith.
(iii) Upon the request of Purchaser, Seller shall use
reasonable efforts to make available or cause to be made available,
from time to time as reasonably required, current or former employees,
directors, officers, consultants, accountants and attorneys employed
or retained at any relevant time by Seller in connection with the
Division for purpose of giving testimony or such other reasonable
cooperation or assistance as Purchaser may reasonably require for the
preparation and defense or prosecution of any arbitration or judicial
or administrative action or proceeding in connection with (A) the
Purchaser's actual or threatened prosecution of Persons other than
Seller or any of its Affiliates that it believes to be infringing any
of its rights included within the Proprietary Rights and (B) the
defense by Purchaser of any claim of or action for infringement made,
brought or threatened by any Person other than Seller or any of its
Affiliates which might adversely affect the ownership, enjoyment or
value of the Proprietary Rights by Purchaser. Seller's costs and
expenses in connection therewith shall be reimbursed by Purchaser.
(d) After the closing and for a period of ninety (90) days, Seller
shall provide to Purchaser (upon Purchaser's request) and at Seller's sole
cost and expense the advisory services and
23
<PAGE> 24
assistance of James T. Bagwell for the purposes of enabling an orderly
transition of the Division and of the manufacturing process of the Products
from Seller to Purchaser.
The obligations hereunder exclude attorney work product or other
privileged communications unless waived or approved by Seller.
Section 7.6. Transfer and Property Taxes. (a) Each of Seller and
Purchaser shall pay one-half of any transfer, sales, purchase, use or similar
tax under the laws of any Governmental Authority arising out of or resulting
from the purchase of the Purchased Assets and the assumption of the Assumed
Liabilities. The Seller shall prepare and file the required tax returns and
other required documents with respect to the taxes and fees required to be paid
by it pursuant to the preceding sentence and shall promptly provide the
Purchaser with evidence of the payment of such taxes and fees. Without
limiting the foregoing, Seller shall promptly provide Purchaser with a copy of
its Internal Revenue Service Form 8594 filed in connection with this
transaction.
(b) The Seller shall (i) prepare and file all tax returns reporting
the income attributable to the Purchased Assets or the operation of the
Business for all periods ending prior to or on the Closing Date, (ii) prepare
and file all income tax returns reporting the income of the Seller arising on
the Closing Date from the sale to the Purchaser of the Purchased Assets and the
assumption by the Purchaser of the Assumed Liabilities, (iii) be responsible
for the conduct of all tax examinations relating to the tax returns referred to
in (i) and (ii) above, and (iv) pay all taxes attributable to the Purchased
Assets or the operation of the Business due with respect to the tax returns
referred to in (i) and (ii) above. The Purchaser shall prepare and file all
tax returns reporting the income attributable to the ownership of the Purchased
Assets and the operation of the Business for all periods beginning after the
Closing and shall be liable for and pay all taxes due in respect of such tax
returns.
(c) All personal property, motor vehicle (including road use) and ad
valorem taxes, and all other taxes, charges or assessments levied or imposed
upon the Purchased Assets by any Governmental Authority, for the taxable year
beginning before and ending on or after the Closing Date shall be apportioned
and pro rated on a per diem basis between the Purchaser and the Seller as of
11:59 p.m. on the day before the Closing Date (the "Adjustment Time"). The
Seller shall pay or cause to be paid, on or prior to the Closing Date, all ad
valorem taxes and any other taxes and assessments against the Purchased Assets
for all taxable periods ending prior to the Closing Date. The Purchaser shall
pay all ad valorem taxes and any other taxes and assessments against the
Purchased Assets for all periods beginning on or after the Closing Date. If
the Closing Date shall occur before the tax rate for the year of Closing is
fixed by the appropriate taxing authority, the apportionment of any such taxes
shall be upon the basis of the tax rate for the preceding year applied to the
latest assessed valuation and shall be readjusted promptly after such tax rates
are known. Such obligation to readjust shall survive the Closing.
Section 7.7. Use of Seller's Name and Logo. (a) Purchaser shall be
permitted to continue to use all purchased packaging materials regardless of
whether such materials bear
24
<PAGE> 25
Seller's name and/or logo not being acquired by the Purchaser, but only until
such materials have been used.
(b) As to any products manufactured by Seller before or after the
Closing for purchase and resale by Purchaser, Purchaser may indicate that such
products have been manufactured by Seller.
Section 7.8. Non-Competition and Confidentiality Agreement. For a
period of five (5) years after the Closing Date, neither Seller nor its
Affiliates will, directly or indirectly, anywhere in the continental United
States engage in the designing, developing, manufacturing or marketing of
respiratory care and related products; provided, however, that Seller and/or
any of its Affiliates may only manufacture (but not sell or market) components
of respiratory care and related products for unrelated companies. The Seller
shall not at any time after the Closing use for its own benefit or divulge or
convey to any third party, any Confidential Information (as hereinafter
defined) relating to the Division. For purposes of this Agreement,
Confidential Information consists of all information, knowledge or data
currently held by the Division and relating exclusively to the Division
including, without limitation, customer and supplier lists, formulae, trade
know-how processes, secrets, consultant contract, pricing information,
marketing plans and respiratory product development plans to the extent not in
the public domain or otherwise publicly available or used by Seller of its
Affiliates in their own businesses and which relate to products other than
those of the Division. Information which enters the public domain or is
publicly available loses its confidential status hereunder so long as neither
the Seller nor its Affiliates directly or indirectly wrongfully causes such
information to enter the public domain following the Closing Date.
The Seller acknowledges that the restrictions contained in this
Section 7.8 are reasonable and necessary to protect the legitimate interests of
the Purchaser and that any breach by the Seller of any provision hereof will
result in irreparable injury to the Purchaser. The Seller acknowledges that,
in addition to all remedies available at law, the Purchaser shall be entitled
to equitable relief, including injunctive relief, and an equitable accounting
of all earnings, profits or other benefits arising from such breach and shall
be entitled to receive such other damages, direct or consequential, as may be
appropriate. The Purchaser shall not be required to post any bond or other
security in connection with any proceeding to enforce this Section 7.8.
Without limiting the generality of Section 11.4, the provisions of
this Section 7.8 shall inure to the benefit of any subsequent transferee of the
Division or any substantial portion thereof, provided that this Agreement is
assigned to such transferee by written agreement, a copy of which shall have
been furnished to Seller, and such transferee continues to conduct the business
of the Division as acquired hereunder and as the same developed in the normal
course of business. In the event that the Seller or any Affiliate of the
Seller (i) dissolves, liquidates or winds up the affairs of the Seller, (ii)
sells the capital stock of the Seller other than sales of stock through a
broker to purchasers who are unknown to Seller or such Affiliate, (iii) merges,
consolidates or otherwise combines the Seller with
25
<PAGE> 26
any other entity, or (iv) otherwise leases, transfers, sells or disposes of all
or any substantial portion of the remaining assets of the Seller, whether in
one transaction or a series of related transactions, the Seller or the
Affiliate party to such transaction, as the case may be, shall request from the
shareholders of the Seller, any successor to the Seller or any purchaser or
other transferee of all or any substantial portion of its remaining assets, as
the case may be, a written agreement to comply with the provisions of this
Section 7.8, including this paragraph, as if such successor, purchaser or other
transferee were a party hereto.
Cimco, Inc. and its subsidiaries, including Seller, shall be bound by
the non-competition agreement described herein whether owned by its current
shareholders or a successor in interest. However, a shareholder of Cimco,
Inc. shall not be precluded from owning or acquiring a business that competes
with Purchaser as long as the business operation of Cimco, Inc. remains
separate, apart, and distinct from the competitive business owned by Cimco,
Inc.'s shareholder and Cimco, Inc. uses reasonable efforts to protect the
Proprietary Rights and Confidential Information of Purchaser.
Notwithstanding any term or provision herein or elsewhere, this
Section 7.8 shall not apply to or restrict any successor or transferee of the
business or assets of Cimco, Inc. in the conduct of any business conducted by
such successor or transferee prior to becoming a successor or transferee of
Cimco, Inc. or Seller or an Affiliate of Seller or acquired from any unrelated
party by such successor or transferee at any time after such entity became a
successor or transferee of Seller or an Affiliate of Seller. Should a transfer
to a competitor occur, or should such successor or transferee acquire such a
competing business, Purchaser has the option, exercisable, if at all, within
thirty (30) days following the later of (i) the effective date of such event,
or (ii) Purchaser receiving written notice of such event to terminate in its
entirety the Manufacturing Agreement.
Section 7.9. Best Efforts; Further Assurances. Subject to the terms
and conditions herein provided, each of the parties hereto shall use its best
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things reasonably necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement. Each of the Seller and the Purchaser will use
their respective best efforts to obtain consents of all Governmental
Authorities and third parties necessary to the consummation of the transactions
contemplated by this Agreement. In the event that at any time after Closing
any further action is necessary to carry out the purposes of this Agreement,
the Seller or the proper directors or officers of the Seller or the Purchaser,
as the case may be, shall take all such action without any further
consideration therefor.
Section 7.10. Third Party Proposals. Neither the Seller nor any of
its subsidiaries nor any Affiliate of the Seller shall solicit or encourage
inquiries or proposals with respect to, or, except as required by law or a
fiduciary obligation in the written opinion of counsel to the Seller, furnish
any information relating to or participate in any negotiations or discussions
concerning, any acquisition or purchase of all or a substantial portion of the
assets of, or of a
26
<PAGE> 27
substantial equity interest in, the Seller or any of its subsidiaries or any
business combination with the Seller or any of its subsidiaries other than as
contemplated by this Agreement. The Seller shall notify the Purchaser
immediately if any such inquiries or proposals are received by, any such
information is requested from, or any such negotiations or discussions are
sought to be initiated with, the Seller or any of its subsidiaries. The Seller
shall instruct its officers, directors, agents, advisors and Affiliates to
comply with the provisions of this Section 7.10.
Section 7.11. Employment of Division's Employees. Purchaser may but
shall have no obligation to offer employment to and, following the Closing
Date, employ as many of Seller's employees as Purchaser determines in good
faith it can use in the conduct of the Business. Purchaser shall be under no
obligation to establish or continue, under the same of different terms or
conditions, any employee benefit arrangement for any of Seller's employees as
are hired by Purchaser. Purchaser shall notify Seller in writing as soon as
practicable, but no later than the Closing Date, the specific employees of
Seller to be offered employment by Purchaser.
Section 7.12. Disposition of Inventory Following Closing. Purchaser
will arrange, and Seller will provide all reasonable cooperation to Purchaser
at Purchaser's expense, to effect a prompt transfer following the Closing of
the Inventory and the Equipment to such location(s) as Purchaser may designate.
As set forth in SECTION 5.7 above, Purchaser shall be entitled to occupy the
premises of the Division at 240 Briggs Avenue, Costa Mesa, California for up to
90 days following the closing on the terms as detailed in this Section 7.12.
Purchaser shall pay the Seller at a rate of $5800 per month for the exclusive
use and occupancy of the approximately 13,482 square feet currently occupied by
the Division at 240 Briggs Avenue, Costa Mesa, California, prorated for the
period that Purchaser actually occupies such premises. That portion of the
above premises to be occupied by Seller is detailed in EXHIBIT 7.12. The
above rate is a gross rent including, but not limited to, all rents, utilities,
property taxes, property insurance, common area charges, maintenance and
repairs, depreciation, and other charges or assessments relating to the
operation and management of the occupied premises. Seller shall be solely
responsible for hazardous materials or substances, if any, which may be found
at 240 Briggs Avenue, Costa Mesa, California unless such hazardous materials or
substances are brought onto, utilized at, or disposed of at the premises by
Purchaser, its employees, or its contractors.
Section 7.13. Obligations Regarding Certain Customer Purchase Orders.
In the event that, prior to the Closing, Seller accepts Purchase Orders from
customers in the ordinary course of business of the Division which are not
listed on SCHEDULE 3.1, and which are not filled by Seller prior to the
Closing, Purchaser shall fill such orders. Seller shall pay to Purchaser,
within thirty (30) days following receipt of Purchaser's invoice therefor, an
amount equal to one hundred ten percent (110%) of Purchaser's actual cost of
filling such orders.
Section 7.14. Warranty Obligations. In the event that, from time to
time following the Closing, any customers of the Division return products of
the Division which were purchased prior to the Closing for reworking or other
warranty work under Seller's warranty
27
<PAGE> 28
policy detailed in SCHEDULE 3.1 (collectively, "Warranty Work"), Purchaser
shall perform such Warranty Work. Seller shall reimburse Purchaser for all
Warranty Work performed by Purchaser under Seller's warranty policy for
products purchased prior to the Closing that in the aggregate costs Purchaser
in excess of $28,000.00.
Section 7.15. Repurchase of Inventory. Notwithstanding any other
portion of this Agreement, in the event that any inventory items listed on
SCHEDULE 5.9 have not been sold to customers by the end of the eighteenth
(18th) month from the Closing Date, Seller agrees to repurchase the unsold
items at the same price paid by Purchaser at the Closing.
Section 7.16. Sales Representative Agreements. During the thirty
(30) day period commencing on the Closing Date, Purchaser agrees to fulfill
customer orders submitted by Seller's independent sales representatives
referenced in SCHEDULE 5.20 if all of the following conditions are met: (i)
Seller sends termination notices to the above-referenced sales representatives
as soon as reasonably possible; (ii) the sales representatives submit orders
consistent with the pricing, ordering, and commission policies and schedules
that existed between the sales representatives and Seller just prior to the
Closing; and (iii) the sales representatives acknowledge in writing that the
arrangement set forth in this Section 7.16 in no way shall extend beyond said
30-day period and that Purchaser owes no obligation to the sales representative
except for payment of the commission earned on the orders submitted during
said 30-day period at such time that the customer pays for the goods ordered.
ARTICLE VIII
CONDITIONS TO CLOSING
Section 8.1. Mutual Conditions. The respective obligations of each
party to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment at or prior to Closing of the conditions that (a) no
Governmental Authority of competent jurisdiction shall have (i) enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
judgment, decree, injunction or other order which is in effect; or (ii)
commenced or threatened any action or proceeding, which in either case would
prohibit consummation of the transactions contemplated by this Agreement, and
(b) no suit or other action or procedure shall have been initiated seeking to
prevent or delay the consummation of the transactions contemplated hereby and
by the other Operative Documents.
Section 8.2. Conditions to the Purchaser's Obligations. The
obligations of the Purchaser to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment prior to or at Closing of
each of the following conditions:
(a) All representations and warranties made by the Seller in this
Agreement and the Schedules delivered by the Seller to the Purchaser pursuant
hereto shall be true, correct and complete in all material respects on the date
hereof and as of the Closing Date as though such representations and warranties
were made as of the Closing Date, and the Seller shall have duly performed or
complied with all of the covenants, obligations and conditions to be
28
<PAGE> 29
performed or complied with by it under the terms of this Agreement on or prior
to or at Closing.
(b) There shall have been no material damage, destruction or loss
to, or any other material and adverse change in, the Purchased Assets or the
Business, regardless of insurance coverage.
(c) All authorizations, consents, waivers, approvals or other
actions legally required in connection with the execution, delivery and
performance of this Agreement and each of the other Operative Documents, by the
Seller and the consummation by the Seller of the transactions contemplated
hereby and thereby shall have been obtained and shall be in full force and
effect; the Seller shall have obtained any authorizations, consents, waivers,
approvals or other actions required to prevent a material breach or default by
the Seller under any contract to which Seller is party or for the continuation
of any agreement to which Seller is a party and which relates and is material
to the Purchased Assets or the Division; and all authorizations, consents,
waivers, approvals or other actions necessary to permit the Purchaser to
operate the business of the Division in compliance with all applicable laws
immediately after the Closing shall have been obtained and shall be in full
force and effect.
(d) The Purchaser shall have completed its investigation of the
Division and the Purchaser shall be satisfied in its sole discretion with the
condition of the Division and its future prospects.
(e) Prior to or at Closing, the Seller shall have delivered to the
Purchaser all instruments of assignment, transfer and conveyance identified
herein and such other closing documents as shall be requested by the Purchaser
in form and substance acceptable to the Purchaser's counsel, including the
following:
(i) such instruments of sale, transfer, assignment,
conveyance and delivery (including all vehicle titles), in form and
substance reasonably satisfactory to counsel for the Purchaser
(including without limitation the Bill of Sale set forth as EXHIBIT B
and the Assignment and Assumption Agreement set forth as EXHIBIT C),
as are required in order to transfer to the Purchaser good and
marketable title to the Purchased Assets, free and clear of all
Encumbrances except as provided herein;
(ii) a certificate of the Seller over the signature of the
President or a Vice President of the Seller, dated the Closing Date,
to the effect that (1) the person signing such certificate is familiar
with this Agreement and (2) the conditions specified in Section
8.2(a), (b) and (c) have been satisfied;
(iii) a certificate of the Secretary or Assistant Secretary of
the Seller, dated the Closing Date, as to the incumbency of any
officer of the Seller executing this Agreement, each other Operative
Document and each other document related thereto and covering such
other matters as the Purchaser may reasonably request;
29
<PAGE> 30
(iv) a certified copy of (1) the Certificate of Incorporation
and by-laws of the Seller and all amendments thereto and (2) the
resolutions of the Seller's Board of Directors authorizing the
execution, delivery and consummation of this Agreement and each other
Operative Document and the transactions contemplated hereby and
thereby;
(v) an opinion of Stradling, Yocca, Carlson and Rauth, P.C.,
counsel to the Seller, dated the Closing Date, in form and substance
acceptable to Purchaser and addressing the matters set forth in
EXHIBIT D;
(vi) such evidence as Purchaser shall request demonstrating
that the transactions contemplated by this Agreement have been
approved by the Board of Directors (and, if necessary, by the
Shareholders) of CIMCO, Inc., and
(vii) such other documents or instruments as the Purchaser
reasonably requests to effect the transactions contemplated hereby.
(f) Prior to or at Closing, the Seller shall have delivered to the
Purchaser evidence reasonably satisfactory to the Purchaser that the
transactions contemplated hereby are not subject to any applicable registration
or filing requirement under any Environmental Law, or in lieu thereof a
certificate, clearance letter or other comparable document from each relevant
Governmental Authority that each such applicable Environmental Law has been
complied with.
(g) Seller shall have received, and shall have delivered to
Purchaser copies of, 510K approvals from the FDA for all products sold or
marketed by the Business on or prior to the Closing Date, except as otherwise
set forth on SCHEDULE 5.12.
(h) Prior to, or at the Closing Seller shall have delivered to
Purchaser that certain Manufacturing Agreement dated as of the Closing Date
between Seller and Purchaser (hereinafter the "Manufacturing Agreement").
Section 8.3. Conditions to the Seller's Obligations. The obligations
of the Seller to consummate the transactions contemplated by this Agreement
shall be subject to the fulfillment at or prior to the Closing of each of the
following conditions:
(a) All representations and warranties made by the Purchaser in
this Agreement shall be true, correct and complete in all material respects on
the date hereof and as of the Closing Date as though such representations and
warranties were made as of the Closing Date, and the Purchaser shall have duly
performed or complied with all of the covenants, obligations and conditions to
be performed or complied with by it under the terms of this Agreement on or
prior to or at Closing.
30
<PAGE> 31
(b) All authorizations or approvals or other action required in
connection with the execution, delivery and performance of this Agreement, and
each of the other Operative Documents by the Purchaser of the transactions
contemplated hereby and thereby shall have been obtained and shall be in full
force and effect.
(c) Prior to or at Closing, the Purchaser shall have delivered to
the Seller such closing documents as shall be reasonably requested by the
Seller in form and substance reasonably acceptable to the Seller's counsel,
including the following:
(i) the Assignment and Assumption Agreement executed by
the Purchaser and dated the Closing Date;
(ii) a certificate of the Purchaser over the signature of
its President or a Vice President of the Purchaser, dated the Closing
Date, to the effect that (1) the person signing such certificate is
familiar with this Agreement and (2) the conditions specified in
Section 8.3(a) and (b) have been satisfied;
(iii) a certificate of the Secretary or Assistant Secretary
of the Purchaser, dated the Closing Date, as to the incumbency of any
officer of the Purchaser executing this Agreement, the instruments of
transfer or any document related thereto and covering such other
matters as the Seller may reasonably request;
(iv) a certified copy of (1) the Certificate of
Incorporation and by-laws of the Purchaser and all amendments thereto
and (2) the resolutions of the Purchaser's Board of Directors
authorizing the execution, delivery and consummation of this
Agreement, the instruments of transfer and the transactions
contemplated hereby and thereby;
(vi) an opinion of Brody & Satz, counsel to the Purchaser,
dated the Closing Date, in form and substance acceptable to Seller
addressing the matters set forth in EXHIBIT G;
(vii) the Purchase Price, as set forth in Section 2.2 in one
or more checks or by a wire transfer as specified by the Seller prior
to the Closing; and
(viii) such other documents or instruments as the Seller
reasonably requests to effect the transactions contemplated hereby.
31
<PAGE> 32
ARTICLE IX
TERMINATION
Section 9.1. Termination. This Agreement may be terminated at any
time prior to Closing as follows:
(a) by mutual consent of the Seller and the Purchaser;
(b) by either the Seller or the Purchaser if the other party hereto
shall breach in any material respect any of its representations, warranties or
obligations contained in this Agreement;
(c) by the Purchaser if any authorization, consent, waiver or
approval required for the consummation of the transactions contemplated hereby
shall impose any condition or requirement, which condition or requirement the
Purchaser determines, in its good faith judgment, to be materially burdensome
or to deny to the Purchaser in any material respect the benefits intended to be
obtained by the Purchaser pursuant to the transactions contemplated by this
Agreement;
(d) by the Purchaser, in the event that the conditions to its
obligations set forth in Article VI hereof have not been satisfied or waived;
(e) by the Seller, in the event that the conditions to its
obligations set forth in Article VI hereof have not been satisfied or waived on
or before the Closing Date; and
(f) by either party if the transactions contemplated by this
Agreement shall not have been consummated on or before January 1, 1996 (or such
later date as may be agreed upon in writing by the parties hereto).
Section 9.2. Effect of Termination. If this Agreement is terminated
pursuant to Section 9.1 hereof, all rights and obligations of the Seller and
the Purchaser hereunder shall terminate and no party shall have any liability
to the other party, except for obligations of the parties hereto in Sections
7.1, 10.2, 10.3, 11.2 and 11.9, which shall survive the termination of this
Agreement, and except nothing herein will relieve any party from liability for
any breach of any representation, warranty, agreement or covenant contained
herein prior to such termination.
ARTICLE X
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
Section 10.1. Survival of Representations and Warranties. The
representations and warranties provided for in this Agreement shall survive the
Closing and remain in full force and effect, subject to the terms of SECTION
10.2 below.
32
<PAGE> 33
Section 10.2. Indemnification. (a) The Seller shall indemnify and
hold harmless the Purchaser, its Affiliates, officers, directors, employees,
agents and representatives, and any Person claiming by or through any of them,
against and in respect of any and all claims, costs, expenses, damages,
liabilities, losses or deficiencies (including, without limitation, counsel's
fees and other costs and expenses incident to any suit, action or proceeding)
(the "Damages") arising out of, resulting from or incurred in connection with
(i) any inaccuracy in any representation or the breach of any warranty made by
the Seller in this Agreement, (ii) the breach by the Seller of any covenant or
agreement to be performed by it hereunder, and (iii) any Excluded Liability.
(b) The Purchaser shall indemnify and hold harmless the Seller, its
Affiliates, officers, directors, employees, agents and representatives, and any
Person claiming by or through any of them, against and in respect of any and
all claims, costs, expenses, damages, liabilities, losses or deficiencies
(including, without limitation, counsel's fees and other costs and expenses
incident to any suit, action or proceeding) (the "Damages") arising out of,
resulting from or incurred in connection with (i) any inaccuracy in any
representation or the breach of any warranty made by the Purchaser in this
Agreement, (ii) the breach by the Purchaser of any covenant or agreement to be
performed by it hereunder, and (iii) any Assumed Liability.
(c) Any Person providing indemnification pursuant to the provisions of
this Section 10.2 is hereinafter referred to as an "Indemnifying Party" and any
Person entitled to be indemnified pursuant to the provisions of this Section
8.2 is hereinafter referred to as an "Indemnified Party."
(d) Following the determination of the final Net Asset Value as of the
Closing Date, any claim made under this Agreement shall be made only pursuant
and subject to this Article X.
(e) The obligations of any Indemnifying Party to indemnify any
Indemnified Party pursuant to this Article X shall be subject to the following
limitations:
(i) No claim shall be made except to the extent that any
violation of any representation or warranty of a party to this
Agreement shall result in direct injury or damage to the Indemnified
Party.
(ii) Except for claims relating to accounts receivables
acquired by Purchaser pursuant to this Agreement, no claim shall be
made except to the extent that the aggregate of all damages suffered
by the Indemnified Party exceeds (a) $50,000 ($10,000, if the claim
relates to Liabilities Assumed pursuant to Section 3.1 if this
agreement) plus (b) the aggregate amount of all assets discovered or
arising and benefitting the Indemnified Party from and after the
Closing which had not been included in the determination of Net Asset
Value, and the aggregate indemnification obligation of the Seller
under this Agreement shall in no event exceed the Purchase Price
(except for claims relating to products liability, Proprietary Rights
and
33
<PAGE> 34
intellectual property, and environmental matters, which shall be
counted toward, but shall not be subject to, such limit).
(iii) Notwithstanding any other provision of this Article X,
in the event of a final judgment which prohibits Purchaser or its
successors or assigns from using any of the Proprietary Rights
necessary to manufacture and sell the Products, Seller may, at its
sole option and at its expense obtain and maintain (also at Seller's
sole expense) a license for Purchaser and its successors or assigns to
use such Proprietary Rights.
(iv) No claim may be made for indemnification under this
Agreement after the expiration of three (3) years following the
Closing date, except that claims for indemnification due to a breach
of Sections 5.19 and 5.17 of this Agreement and/or relating to
products liability may be made at any time following the Closing date.
Section 10.3. Procedures for Claims. In the case of any claim for
indemnification arising from a claim of a third party, an Indemnified Party
shall give prompt written notice, in no event more than 10 days following such
Indemnified Party's receipt of such claim or demand, to the Indemnifying Party
of any claim or demand which such Indemnified Party has knowledge and as to
which it may request indemnification hereunder. The Indemnifying Party shall
have the right to defend and to direct the defense against any such claim or
demand, in its name or in the name of the Indemnified Party, as the case may
be, at the expense of the Indemnifying Party, and with counsel selected by the
Indemnifying Party unless (i) such claim or demand seeks an order, injunction
or other equitable relief against the Indemnified Party, or (ii) the
Indemnified Party shall have reasonably concluded that (x) there is a conflict
of interest between the Indemnified Party and the Indemnifying Party in the
conduct of the defense of such claim or demand or (y) the Indemnified Party has
one or more defenses not available to the Indemnifying Party. Notwithstanding
anything in this Agreement to the contrary, the Indemnified Party shall, at the
expense of the Indemnifying Party, cooperate with the Indemnifying Party, and
keep the Indemnifying Party fully informed, in the defense of such claim or
demand. The Indemnified Party shall have the right to participate in the
defense of any claim or demand with counsel employed at its own expense;
provided, however, that, in the case of any claim or demand described in clause
(i) or (ii) of the second preceding sentence or as to which the Indemnifying
Party shall not in fact have employed counsel to assume the defense of such
claim or demand, the reasonable fees and disbursements of such counsel shall be
at the expense of the Indemnifying Party. The Indemnifying Party shall have no
indemnification obligations with respect to any such claim or demand which
shall be settled by the Indemnified Party without the prior written consent of
the Indemnifying Party, which consent shall not be unreasonably withheld or
delayed.
Section 10.4. Guaranty of Accounts Receivable. Any provision to the
contrary herein contained notwithstanding, and without limiting any other right
of the Seller hereunder to recover for a breach of a representation or
warranty, for indemnification or otherwise, the Seller hereby guaranties to
Purchaser that all of the accounts receivable of the Business included in the
Purchased Assets and reflected on the Auditor's Report will be collected
34
<PAGE> 35
within 180 days after the Closing. In the event that after the expiration of
such 180 day period Purchaser has collected on account of such accounts
receivable an amount less than the book value of the accounts receivable of the
Business as shown on the Auditors' Report, the Seller agrees to repurchase all
uncollected accounts receivable of the Division from Purchaser for an amount
equal to (x) the book value of such accounts receivable as shown on the
Auditors' Report minus (y) the net amounts deduction of the collection expenses
realized by Purchaser on account of the accounts receivable included in the
Purchased Assets.
ARTICLE XII
MISCELLANEOUS
Section 11.1. Notices. All notices or other communications required
or permitted hereunder shall be in writing and shall be delivered personally,
by facsimile or sent by certified, registered or express air mail, postage
prepaid, and shall be deemed given when so delivered personally, or by
facsimile, or if mailed, five days after the date of mailing, as follows:
If to the Purchaser: Vital Signs Ca, Inc.
20 Campus Road
Totowa, New Jersey 07512
Attention: Mr. Anthony J. Dimun
Telephone: (201) 790-1330
Facsimile: (201) 790-4227
With a copy to: Vital Signs, Inc.
20 Campus Road
Totowa, New Jersey 07512
Attention: General Counsel
Telephone: (201) 790-1330
Facsimile: (201) 790-4227
If to the Seller: Medical Molding Corporation of America
265 Briggs Avenue
Costa Mesa, California 92626
Attention: Russell T. Gilbert
Telephone: (714) 546-4460
Facsimile: (714) 556-6955
With a copy to: Stradling, Yocca, Carlson & Rauth, P.C.
660 Newport Center Drive, Suite 1600
Newport Beach, California 92660
Attention: Nick E. Yocca
Telephone: (714) 725-4000
Facsimile: (714) 725-4100
35
<PAGE> 36
Section 11.2. Expenses. Regardless of whether the transactions
provided for in this Agreement are consummated, except as otherwise provided
herein, each party hereto shall pay its own expenses incident to this Agreement
and the transactions contemplated herein.
SECTION 11.3. GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF NEW JERSEY, WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES
THEREOF. EACH OF THE PARTIES HERETO IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATES OF NEW JERSEY AND CALIFORNIA AND THE
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY AND THE CENTRAL
DISTRICT OF CALIFORNIA FOR THE PURPOSE OF ANY SUIT, ACTION, PROCEEDING OR
JUDGMENT RELATING TO OR ARISING OUT OF THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED HEREBY. SERVICE OF PROCESS IN CONNECTION WITH ANY SUCH SUIT,
ACTION OR PROCEEDING MAY BE SERVED ON EACH PARTY HERETO ANYWHERE IN THE WORLD
BY THE SAME METHODS AS ARE SPECIFIED FOR THE GIVING OF NOTICES UNDER THIS
AGREEMENT. EACH OF THE PARTIES HERETO IRREVOCABLY CONSENTS TO THE JURISDICTION
OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING AND TO THE LAYING OF
VENUE IN SUCH COURT. EACH PARTY HERETO IRREVOCABLY WAIVES ANY OBJECTION TO THE
LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH COURTS
AND IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM; PROVIDED
HOWEVER, UNLESS OTHERWISE AGREED BY THE PARTIES, ANY CASE INSTITUTED OR
COMMENCED BY THE SELLER SHALL BE BROUGHT IN CALIFORNIA AND ANY CASE INSTITUTED
OR COMMENCED BY PURCHASER OR ITS AFFILIATES SHALL BE BROUGHT IN NEW JERSEY.
Section 11.4. Assignment; Successors and Assigns; No Third Party
Rights. Except as otherwise provided herein, this Agreement may not be
assigned by operation of law or otherwise without consent of the other party,
which shall not be unreasonably withheld, and any attempted assignment shall,
without such consent, be null and void. The Purchaser may assign all of its
rights under this Agreement to any Affiliate; provided such Affiliate assumes
all of the obligations of the Purchaser hereunder, and provided further that no
such assignment shall relieve Purchaser or Vital Signs, Inc. of their
respective obligations under this Agreement. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors, assigns and legal representatives, except as otherwise provided in
SECTION 7.8. This Agreement shall be for the sole benefit of the parties to
this Agreement and their respective successors, assigns and legal
representatives and is not intended, nor shall be construed, to
36
<PAGE> 37
give any Person, other than the parties hereto and their respective successors,
assigns and legal representatives, any legal or equitable right, remedy or
claim hereunder.
Section 11.5. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original agreement, but all
of which together shall constitute one and the same instrument.
Section 11.6. Titles and Headings. The headings and table of
contents in this Agreement are for reference purposes only, and shall not in
any way affect the meaning or interpretation of this Agreement.
Section 11.7. Entire Agreement. This Agreement, including the
Schedules and Exhibits attached thereto, constitutes the entire agreement among
the parties with respect to the matters covered hereby and supersedes all
previous written, oral or implied understandings among them with respect to
such matters.
Section 11.8. Amendment and Modification. This Agreement may only be
amended or modified in writing signed by the party against whom enforcement of
such amendment or modification is sought.
Section 11.9. Public Announcement. Except as may be required by law,
neither the Seller, on the one hand, or the Purchaser, on the other hand, shall
issue any press release or otherwise publicly disclose this Agreement or the
transactions contemplated hereby or any dealings between or among the parties
in connection with the subject matter hereof without the prior approval of the
other. In the event that any such press release or other public disclosure
shall be required, the party required to issue such release or other disclosure
shall consult in good faith with the other party hereto with respect to the
form and substance of such release or other disclosure prior to the public
dissemination thereof. Neither party shall disclose the Purchase Price,
whether prior to, on or after the Closing Date, except as may be required by
applicable laws or regulations or the rules of any securities exchange or
association binding on the Purchaser or the Seller, as the case may be, and
except as may be required to obtain consents and approvals from banks or
financial institutions or other parties to agreements to be assigned to
Purchaser, provided that such banks, financial institutions or other parties
agree to comply with the intent of this Section 11.9.
Section 11.10. Waiver. Any of the terms or conditions of this
Agreement may be waived at any time by the party or parties entitled to the
benefit thereof, but only by a writing signed by the party or parties waiving
such terms or conditions.
Section 11.11. Severability. The invalidity of any portion hereof
shall not affect the validity, force or effect of the remaining portions
hereof. If it is ever held that any restriction hereunder is too broad to
permit enforcement of such restriction to its fullest extent, such restriction
shall be enforced to the maximum extent permitted by law.
37
<PAGE> 38
Section 11.12. No Strict Construction. Each of the Purchaser and the
Seller acknowledge that this Agreement has been prepared jointly by the parties
hereto, and shall not be strictly construed against either party.
Section 11.13. Risk of Loss. Prior to the Closing, the risk of loss
with respect to the Purchased Assets shall remain with the Seller. In the
event of any material casualty, in addition to any other rights the Purchaser
may have hereunder, the Purchaser shall have the right to terminate this
Agreement upon giving written notice of its election to terminate to the
Seller.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
VITAL SIGNS CA, INC.,
A California Corporation
By: ANTHONY J. DIMUN
----------------------------
Name:Anthony J. Dimun
Title:Vice-President
MEDICAL MOLDING CORPORATION OF
AMERICA, A California Corporation
By: RUSSELL T. GILBERT
----------------------------
Name: Russell T. Gilbert
Title: Chairman
By: JAMES T. BAGWELL
----------------------------
Name: James T. Bagwell
Title: President
38
<PAGE> 39
GUARANTEE AND INDEMNIFICATION
CIMCO, INC., a Delaware corporation, represents and warrants that it
holds all of the issued and outstanding shares of capital stock of MEDICAL
MOLDING CORPORATION OF AMERICA, a California corporation ("MMCA"), and that it
guarantees full and prompt performance by MMCA of all obligations and
liabilities of MMCA under the foregoing Agreement and agrees to indemnify and
hold VITAL SIGNS CA, INC. and its corporate parent VITAL SIGNS harmless from
any breach or violation of the obligations set forth in the foregoing
Agreement, hereby waiving notice, demand, and obligations to proceed against
any third party.
CIMCO, INC.
By: RUSSELL T. GILBERT
------------------------
Name: Russell T. Gilbert
Title: Chairman
GUARANTEE AND INDEMNIFICATION
VITAL SIGNS, INC., a New Jersey corporation, represents and warrants
that it holds all of the issued and outstanding shares of capital stock of
VITAL SIGNS CA, INC., a California corporation ("VSCA"), and that it guarantees
full and prompt performance by VSCA of all obligations and liabilities of VSCA
under the foregoing Agreement and agrees to indemnify and hold MEDICAL MOLDING
CORPORATION OF AMERICA, and its corporate parent CIMCO, INC. harmless from any
breach or violation of the obligations set forth in the foregoing Agreement,
hereby waiving notice, demand, and obligations to proceed against any third
party.
VITAL SIGNS, INC.
By: T.D. WALL
-------------------------
Name: T.D. Wall
Title: President
39
<PAGE> 1
EXHIBIT 2.7
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
AMONG
CIMCO, INC.,
M.A. HANNA COMPANY
AND
HANWEST, INC.
DATED AS OF DECEMBER 19, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
(Not Part of the Agreement)
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I -- THE TENDER OFFER. . . . . . . . . . . . . . . . . . . . . . . . 1
1.01 The Offer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Company Action . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.03 Board of Directors and Committees; Section 14(f) . . . . . . . . . 6
ARTICLE II -- THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.01 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.02 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.03 Certificate of Incorporation . . . . . . . . . . . . . . . . . . . 7
2.04 By-Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.05 Directors and Officers . . . . . . . . . . . . . . . . . . . . . . 8
2.06 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . 8
2.07 Stockholders' Meeting. . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III -- CONVERSION OR CANCELLATION OF SHARES; STOCK RIGHTS. . . . . . 10
3.01 Conversion or Cancellation of Shares . . . . . . . . . . . . . . . 10
3.02 Exchange of Certificates; Paying Agent . . . . . . . . . . . . . . 10
3.03 Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . 12
3.04 Transfer of Shares After the Effective Time. . . . . . . . . . . . 12
3.05 Company Stock Rights . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE IV -- REPRESENTATIONS AND WARRANTIES OF THE COMPANY. . . . . . . . . 13
4.01 Organization; Qualification. . . . . . . . . . . . . . . . . . . . 13
4.02 Company Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 13
4.03 The Company's Capitalization . . . . . . . . . . . . . . . . . . . 14
4.04 Company Equity Investments . . . . . . . . . . . . . . . . . . . . 15
4.05 Authority Relative to this Agreement . . . . . . . . . . . . . . . 15
4.06 Consents and Approvals; No Violation . . . . . . . . . . . . . . . 16
4.07 SEC Reports; Financial Statements. . . . . . . . . . . . . . . . . 17
4.08 Proxy Statement; Offer Documents . . . . . . . . . . . . . . . . . 17
4.09 Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . 18
4.10 Absence of Certain Changes or Events . . . . . . . . . . . . . . . 18
4.11 Title, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.12 Patents, Trademarks, Etc.. . . . . . . . . . . . . . . . . . . . . 19
4.13 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.14 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . 20
4.15 Legal Proceedings, Etc.. . . . . . . . . . . . . . . . . . . . . . 21
4.16 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.17 Material Agreements. . . . . . . . . . . . . . . . . . . . . . . . 22
4.18 Compliance with Law. . . . . . . . . . . . . . . . . . . . . . . . 23
4.19 Insider Interests. . . . . . . . . . . . . . . . . . . . . . . . . 23
4.20 Officers, Directors and Employees. . . . . . . . . . . . . . . . . 23
4.21 Environmental Protection . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>
- i -
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
4.22 Brokers and Finders. . . . . . . . . . . . . . . . . . . . . . . . 24
4.23 Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.24 Respiratory Medical Products Sale. . . . . . . . . . . . . . . . . 25
4.25 No Other Representations or Warranties . . . . . . . . . . . . . . 25
ARTICLE V -- REPRESENTATIONS AND WARRANTIES OF THE PARENT AND THE
PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.01 Corporation Organization . . . . . . . . . . . . . . . . . . . . . 25
5.02 Authorized Capital . . . . . . . . . . . . . . . . . . . . . . . . 26
5.03 Corporation Authority. . . . . . . . . . . . . . . . . . . . . . . 26
5.04 No Prior Activities. . . . . . . . . . . . . . . . . . . . . . . . 26
5.05 No Financing Contingency . . . . . . . . . . . . . . . . . . . . . 26
5.06 Governmental Filings; No Violations. . . . . . . . . . . . . . . . 27
5.07 Brokers and Finders. . . . . . . . . . . . . . . . . . . . . . . . 27
5.08 Offer Documents; Proxy Statement; Other Information. . . . . . . . 27
5.09 No Other Representations or Warranties . . . . . . . . . . . . . . 28
ARTICLE VI -- COVENANTS OF THE PARTIES . . . . . . . . . . . . . . . . . . . 28
6.01 Conduct of Business of the Company . . . . . . . . . . . . . . . . 28
6.02 Notification of Certain Matters. . . . . . . . . . . . . . . . . . 30
6.03 Access to Information. . . . . . . . . . . . . . . . . . . . . . . 31
6.04 Further Information. . . . . . . . . . . . . . . . . . . . . . . . 32
6.05 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . 32
6.06 Interim Financial Statements . . . . . . . . . . . . . . . . . . . 32
6.07 Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.08 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.09 Filings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.10 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . 34
6.11 Indemnity; D&O Insurance . . . . . . . . . . . . . . . . . . . . . 34
6.12 Other Potential Bidders. . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE VII -- CONDITIONS TO THE MERGER. . . . . . . . . . . . . . . . . . . 38
7.01 Conditions to Each Party's Obligation to Effect the Merger . . . . 38
7.02 Conditions to the Obligations of the Parent and the Purchaser to
Effect the Merger. . . . . . . . . . . . . . . . . . . . . . . . . 38
7.03 Conditions to the Obligations of the Company to Effect the Merger. 39
ARTICLE VIII -- CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.01 Time and Place . . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.02 Filings at the Closing . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE IX -- TERMINATION; AMENDMENT; WAIVER . . . . . . . . . . . . . . . . 39
9.01 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.02 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . 41
9.03 Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . 42
</TABLE>
- ii -
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE X -- MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.01 Survival of Representations, Warranties, Covenants and
Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.02 Amendment and Modification. . . . . . . . . . . . . . . . . . 43
10.03 Waiver of Compliance; Consents. . . . . . . . . . . . . . . . 43
10.04 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 44
10.05 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 44
10.06 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.07 Entire Agreement, Assignment Etc. . . . . . . . . . . . . . . 45
10.08 Validity. . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.09 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.10 Specific Performance. . . . . . . . . . . . . . . . . . . . . 45
</TABLE>
ANNEX A Certain Conditions to Offer
ANNEX B Form of Stockholder Tender Agreement
- iii -
<PAGE> 5
DEFINITIONS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Acquiring Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Acquisition Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Bridge Note. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Certificate of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . 7
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Company Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Company Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Company Disclosure Letter. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Company Right. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Company Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Confidentiality Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Constituent Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Delaware Certificate of Merger . . . . . . . . . . . . . . . . . . . . . . . . 7
Department of Justice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Dissenting Stockholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Distribution Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Environmental Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Equity Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
FTC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Indemnified Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Independent Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Line of Credit Note. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Material Adverse Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Minimum Condition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
MMCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Offer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Offer Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Other Filings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
PaineWebber. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
</TABLE>
- iv -
<PAGE> 6
<TABLE>
<CAPTION>
Page
----
<S> <C>
Parent Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Parent Disclosure Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Pertinent Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . 24
Preferred Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Proxy Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Purchaser. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Real Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Real Property Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Redelivering Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Related Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Revolving Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Schedule 14D-9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SEC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SEC Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Series A Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Stock Option Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Stockholder Tender Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 4
Stockholders' Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Surviving Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Tax Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Third Party. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Third Party Acquisition. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
</TABLE>
- v -
<PAGE> 7
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement"),
dated as of December 19, 1995, among CIMCO, Inc., a Delaware corporation (the
"Company"), Hanwest, Inc., a Delaware corporation (the "Purchaser"), and M.A.
Hanna Company, a Delaware corporation (the "Parent").
WHEREAS, the Board of Directors of the Company has determined that it
is in the best interests of its stockholders for the Purchaser to acquire the
Company upon the terms and subject to the conditions set forth herein;
WHEREAS, the Company, the Parent and the Purchaser desire to make
certain representations, warranties and agreements in connection with this
Agreement;
WHEREAS, in furtherance of such acquisition, the Parent proposes to
cause the Purchaser to make the Offer (as defined in Section 1.01) to purchase
all of the issued and outstanding shares of common stock of the Company, par
value $0.01 per share (the "Common Stock"), upon the terms and subject to the
conditions of this Agreement, and the Board of Directors of the Company has
approved the Offer and determined to recommend that the Company's stockholders
accept the Offer; and
WHEREAS, to complete such acquisition, the respective Boards of
Directors of the Parent, the Purchaser and the Company, and the Parent acting as
the sole stockholder of the Purchaser, have approved the Offer and the merger of
the Purchaser with and into the Company upon the terms and subject to the
conditions of this Agreement, whereby each issued and outstanding share of
Common Stock not owned directly or indirectly by the Parent or the Company,
except shares of Common Stock held by persons who object to such merger and
demand payment of the value of their shares of Common Stock, will be converted
into the right to receive in cash the same price per share of Common Stock paid
pursuant to the Offer;
NOW, THEREFORE, in consideration of the representations, warranties
and agreements herein contained, and subject to the terms and conditions herein
contained, the parties hereto hereby agree as follows:
ARTICLE I
THE TENDER OFFER
1.01 THE OFFER. (a) Provided that this Agreement shall not have been
terminated in accordance with Article IX and none of
<PAGE> 8
- 2 -
the events or conditions set forth in Annex A shall have occurred and be
existing, then, not later than the first business day after execution of this
Agreement, the Parent shall issue a public announcement of the execution of this
Agreement, and not later than the fifth business day after the date of the
public announcement of the execution of this Agreement, the Purchaser shall,
subject to the provisions of this Agreement, commence a tender offer (the
"Offer") for all of the outstanding shares of Common Stock, together with the
associated rights issued pursuant to the Rights Agreement dated as of December
5, 1992, as amended (the "Company Rights Agreement"), between the Company and
First Interstate Bank of California, as Rights Agent (collectively, the
"Shares") at a price of $10.50 per Share, net to the seller in cash. The
Purchaser shall accept for payment and pay for all Shares which have been
validly tendered and not withdrawn pursuant to the Offer at the earliest time
following expiration of the Offer that all conditions to the Offer set forth in
Annex A hereto shall have been satisfied or waived by the Purchaser. The
obligation of the Purchaser to accept for payment, purchase and pay for Shares
tendered pursuant to the Offer shall be subject to the conditions set forth in
Annex A hereto, including the condition that a number of Shares representing not
less than a majority of the Shares on a fully diluted basis shall have been
validly tendered and not withdrawn prior to the expiration date of the Offer
(the "Minimum Condition"). Solely for purposes of determining whether the
Minimum Condition has been satisfied, any Shares owned by Parent or Purchaser
shall be deemed to have been validly tendered and not withdrawn pursuant to the
Offer. The Purchaser expressly reserves the right to increase the price per
Share payable in the Offer or to make any other changes in the terms and
conditions of the Offer; PROVIDED, HOWEVER, that, unless previously approved by
the Company in writing, no change may be made which decreases the price per
Share payable in the Offer, which changes the form of consideration to be paid
in the Offer, which reduces the maximum number of Shares to be purchased in the
Offer, which imposes conditions to the Offer in addition to those set forth in
Annex A hereto, which broadens the scope of such conditions, which increases the
minimum number of Shares which must be tendered as a condition to the acceptance
for payment and payment for shares in the Offer, which waives the Minimum
Condition if such waiver would result in less than a majority of Shares being
accepted for payment or paid for pursuant to the Offer, which, except as
hereinafter set forth in this Subsection 1.01(a), extends the period of the
Offer beyond 45 days after the date of commencement of the Offer, or which
otherwise amends the terms of the Offer (including any of the conditions set
forth in Annex A) in a manner that is materially adverse to holders of Shares.
Notwithstanding the foregoing, the Purchaser may, without the consent of the
Company, (i) extend the Offer if, at the scheduled expiration date of the Offer,
any of the conditions to the Purchaser's obligation to purchase Shares shall not
be satisfied until such time as such conditions are satisfied, or (ii) extend
the Offer for a period of not more than 15 business days beyond the latest
expiration date that would otherwise be
<PAGE> 9
- 3 -
permitted under clause (i) of this sentence if, on the date of such extension,
more than two-thirds but less than 90 percent of Shares have been validly
tendered and not properly withdrawn pursuant to the Offer. It is agreed that the
conditions set forth in Annex A are for the sole benefit of the Parent and the
Purchaser and may be asserted by the Parent or the Purchaser regardless of the
circumstances giving rise to any such condition (including any action or
inaction by the Purchaser, unless any such action or inaction by the Purchaser
would constitute a breach by the Purchaser of any of its covenants under this
Agreement) or may be waived by the Parent or the Purchaser, in whole or in part
at any time and from time to time, in its sole discretion. The failure by the
Parent or the Purchaser at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right and each such right shall be
deemed an ongoing right which may be asserted at any time and from time to time.
Any determination by the Parent or the Purchaser with respect to any of the
foregoing conditions (including, without limitation, the satisfaction of such
conditions) shall be final and binding on the parties. The Company agrees that
no Shares held by the Company will be tendered in the Offer.
(b) As promptly as reasonably practicable following execution of this
Agreement, the Parent and the Purchaser shall file with the Securities and
Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 with
respect to the Offer, which shall contain an offer to purchase and related
letter of transmittal and summary advertisement (such Schedule 14D-1 and the
documents therein pursuant to which the Offer will be made, together with any
supplements or amendments thereto, the "Offer Documents"). The Offer Documents
shall comply as to form in all material respects with the requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations promulgated thereunder and, on the date filed with the SEC and
on the date first published, sent or given to the holders of Shares, shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading, except that no representation is made by the Parent or the Purchaser
with respect to information supplied by the Company in writing specifically for
inclusion in the Offer Documents. Each of the Parent, the Purchaser and the
Company agrees promptly to correct any information supplied by it specifically
for inclusion in the Offer Documents if and to the extent that such information
shall have become false or misleading in any material respect, and each of the
Parent and the Purchaser further agrees to take all steps necessary to cause the
Offer Documents as so corrected to be filed with the SEC and to be disseminated
to holders of Shares, in each case as and to the extent required by applicable
Federal securities laws. The Parent and the Purchaser agree to provide the
Company and its counsel in writing with any comments the Parent, the Purchaser
or their counsel may receive from the SEC or its Staff with respect to the Offer
Documents
<PAGE> 10
- 4 -
promptly after the receipt of such comments. The Company and its counsel shall
be given a reasonable opportunity to review and comment upon the Offer Documents
and all amendments and supplements thereto prior to their filing with the SEC or
dissemination to the stockholders of the Company.
1.02 COMPANY ACTION. (a) The Company hereby approves of and consents
to the Offer and represents and warrants that the Board of Directors of the
Company (the "Board"), at a meeting duly called and held, has unanimously
adopted resolutions (i) determining that this Agreement and the transactions
contemplated hereby, including the Offer and the Merger (as defined in Section
2.01), are fair to, and in the best interests of, the stockholders of the
Company, (ii) approving and adopting this Agreement and the transactions
contemplated hereby, including the Offer, the Merger, and the Stockholder Tender
Agreement of even date between the Purchaser and a certain stockholder of the
Company (the "Stockholder Tender Agreement") and the transactions contemplated
thereby, in all respects and that such approval constitutes approval of the
Offer, this Agreement, the Merger and the Stockholder Tender Agreement, and the
transactions contemplated hereby and thereby, for purposes of Section 203 of the
General Corporation Law of the State of Delaware (the "DGCL") and similar
provisions of any other similar state statutes that might be deemed applicable
to the transactions contemplated hereby, and Article EIGHTH of the Certificate
of Incorporation (as defined in Section 2.03 of this Agreement), and (iii)
recommending that the stockholders of the Company accept the Offer, tender their
Shares thereunder to the Purchaser and approve and adopt this Agreement and the
Merger; PROVIDED, HOWEVER, that such recommendation may be withdrawn, modified
or amended to the extent that the Board, by a majority vote, determines in its
good faith judgment, based as to legal matters on the advice of legal counsel,
that the Board is required to do so for the proper discharge of its fiduciary
duties.
(b) The Company has been advised by each of its executive officers who
as of the date hereof is aware of the transactions contemplated hereby and each
of its Directors, that each such person intends to tender pursuant to the Offer
all Shares owned by such person. The Company represents that the Board has
received the opinion of PaineWebber Incorporated ("PaineWebber") that the
proposed consideration to be received by holders of Shares pursuant to the Offer
and the Merger is fair to such holders from a financial point of view.
(c) The Company shall use its best efforts to file with the SEC a
Solicitation/ Recommendation Statement on Schedule 14D-9 with respect to the
Offer (such Schedule 14D-9, as amended from time to time, the "Schedule 14D-9")
on the date the Offer Documents are filed with the SEC, and in any event shall
file with the SEC the Schedule 14D-9 not later than the date required pursuant
to the Exchange Act and the applicable rules and regulations promulgated
thereunder, containing the recommendation
<PAGE> 11
- 5 -
described in Section 1.02(a) and shall mail the Schedule 14D-9 to the
stockholders of the Company. The Schedule 14D-9 shall comply in all material
respects with the requirements of the Exchange Act and the rules and regulations
promulgated thereunder on the date filed with the SEC and on the date first
published, sent or given to the Company's stockholders, and shall not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by the Company with respect to
information supplied in writing by the Parent or the Purchaser specifically for
inclusion or incorporation by reference in the Schedule 14D-9. Each of the
Company, the Parent and the Purchaser agrees promptly to correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that such
information shall have become false or misleading in any material respect, and
the Company further agrees to take all steps necessary to amend or supplement
the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or supplemented
to be filed with the SEC and disseminated to the Company's stockholders, in each
case as and to the extent required by applicable Federal securities laws. The
Parent and its counsel shall be given a reasonable opportunity to review and
comment upon the Schedule 14D-9 and all amendments and supplements thereto prior
to their filing with the SEC or dissemination to stockholders of the Company.
(d) In connection with the Offer, the Company will, and will cause its
transfer agent (the "Transfer Agent") to, furnish promptly to the Parent and the
Purchaser mailing labels containing the names and addresses of all record
holders of Shares as of a recent date and of those persons becoming record
holders after such date, together with copies of all lists of stockholders and
security position listing and computer files and all other information in the
Company's possession and control regarding the beneficial ownership of Shares.
The Company shall promptly furnish the Parent and the Purchaser with such
additional information (including, but not limited to, updated lists of holders
of Shares and their addresses, mailing labels and security position listings and
computer files) and such other assistance as the Parent and the Purchaser or
their agents may reasonably request in communicating the Offer to the record and
beneficial holders of Shares. Subject to the requirements of law, and except for
such steps as are necessary or advisable to disseminate the Offer and any other
documents necessary to consummate the Merger and to solicit tenders of Shares
and the approval of the Merger, Parent and Purchaser and each of their
affiliates shall hold in confidence the information contained in any of such
labels, lists and additional information, shall use such information only in
connection with the Offer and the Merger, and, if this Agreement shall be
terminated, shall deliver to the Company all copies of such information then in
their possession or under their control.
<PAGE> 12
- 6 -
1.03 BOARD OF DIRECTORS AND COMMITTEES; SECTION 14(f). (a) Promptly
upon acceptance for payment of, and commencement of payment for, such number of
Shares which represent at least a majority of the Shares (determined on a fully
diluted basis) by Purchaser pursuant to the Offer and from time to time
thereafter, the Purchaser shall be entitled to designate up to such number of
directors, rounded up to the next whole number, on the Board as will give the
Purchaser representation on the Board equal to the product of the number of
directors on the Board (giving effect to any increase in the number of directors
pursuant to this Section 1.03) and the percentage that such number of Shares
beneficially owned by the Purchaser and its affiliates bears to the total number
of Shares, and the Company shall, at such time, cause the Purchaser's designees
to be elected or appointed, upon request by the Purchaser. In connection with
the foregoing, the Company shall promptly, as reasonably agreed by the Parent
and the Company, either increase the size of the Board and/or secure the
resignation of such number of its current directors as is necessary to enable
the Purchaser's designees to be elected or appointed to the Board and to cause
the Purchaser's designees to be so elected or appointed. At such times and,
subject to the last sentence of this Section 1.03(a), to the extent requested by
the Parent, the Company will use its best efforts to cause persons designated by
the Purchaser to constitute the same percentage of each committee of the Board
(other than any committee of the Board established to take action under this
Agreement) as the Purchaser's designees constitute on the Board. Notwithstanding
the foregoing, the Company, the Parent and the Purchaser shall each use its best
efforts to ensure that two of the members of the Board as of the date hereof who
are not officers, employees or affiliates of the Company or the Parent (the
"Independent Directors") shall remain members of the Board until the Purchaser
owns a majority of the Shares and thereafter until the Effective Time (as
defined in Section 2.02) and if the number of the Independent Directors shall be
reduced below two for any reason, any remaining Independent Director(s) shall be
entitled to designate independent persons to fill such vacancies and such
persons shall be deemed to be Independent Directors; or, if no Independent
Directors then remain, the other directors shall designate two independent
persons to fill such vacancies, and such persons shall be deemed to be
Independent Directors.
(b) The Company's obligation to appoint designees to the Board shall
be subject to Section 14(f) of the Exchange Act, and Rule 14f-1 promulgated
thereunder. The Company shall promptly take all action required pursuant to such
Section and Rule in order to fulfill its obligations under this Section 1.03,
including mailing to its stockholders with the Schedule 14D-9 such information
as is required under such Section and Rule in order to fulfill its obligations
under this Section 1.03. The Purchaser will supply to the Company in writing and
be solely responsible for any information with respect to itself and its
nominees, officers, directors and affiliates required by such Section and Rule.
<PAGE> 13
- 7 -
(c) Following the election or appointment of the Purchaser's designees
pursuant to this Section 1.03, any amendment of this Agreement, any termination
of this Agreement by the Company, any recommendation made by the Board pursuant
to Section 2.07(a)(ii) of this Agreement, any extension by the Company of the
time for the performance of any of the obligations or other acts of the
Purchaser or the Parent hereunder or waiver of any of the Company's rights or
waiver by the Company of any condition hereunder, will require the concurrence
of a majority of the Independent Directors.
ARTICLE II
THE MERGER
2.01 THE MERGER. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined in Section 2.02), the Parent shall
cause the Purchaser to merge (the "Merger") with and into the Company and the
separate corporate existence of the Purchaser shall thereupon cease. The Company
shall be the surviving corporation in the Merger (the Purchaser and the Company
are sometimes hereinafter referred to as the "Constituent Corporations" and the
Company is sometimes hereinafter referred to as the "Surviving Corporation") and
shall, following the Merger, be governed by the laws of the State of Delaware,
and the separate corporate existence of the Company, with all its rights,
privileges, immunities, powers and franchises, of a public as well as of a
private nature, shall continue unaffected by the Merger. From and after the
Effective Time, the Merger shall have the effects specified in the DGCL.
2.02 EFFECTIVE TIME. At the Closing contemplated in Section 8.01, the
Company and the Parent will cause a Certificate of Merger (the "Delaware
Certificate of Merger") to be executed and filed by the Company and the
Purchaser with the Secretary of State of the State of Delaware as provided in
the DGCL. The Merger shall become effective as of the date and at the time the
Delaware Certificate of Merger is duly filed with the Secretary of State of the
State of Delaware, and such time is hereinafter referred to as the "Effective
Time."
2.03 CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of
the Company (the "Certificate of Incorporation") in effect immediately prior to
the Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation, until duly amended in accordance with the terms thereof and the
DGCL.
2.04 BY-LAWS. The By-Laws of the Company as in effect immediately
prior to the Effective Time shall be the By-Laws of the Surviving Corporation,
until duly amended in accordance with the terms thereof and the DGCL.
<PAGE> 14
- 8 -
2.05 DIRECTORS AND OFFICERS. At the Effective Time, the directors of
the Purchaser immediately prior to the Effective Time shall be the directors of
the Surviving Corporation, each of such directors to hold office, subject to the
applicable provisions of the Certificate of Incorporation and By-Laws of the
Surviving Corporation, until their respective successors shall be duly elected
or appointed and qualified. The officers of the Company immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation, in
each case until their respective successors are duly elected or appointed and
qualified.
2.06 FURTHER ASSURANCES. If at any time after the Effective Time the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments or assurances or any other acts or things are necessary,
desirable or proper: (a) to vest, perfect or confirm, of record or otherwise, in
the Surviving Corporation, its right, title or interest in, to or under any of
the rights, privileges, powers, franchises, properties or assets of either of
the Constituent Corporations, or (b) otherwise to carry out the purposes of this
Agreement, the proper officers and directors of the Surviving Corporation are
hereby authorized on behalf of the respective Constituent Corporations to
execute and deliver, in the name and on behalf of the respective Constituent
Corporations, all such deeds, bills of sale, assignments and assurances and do,
in the name and on behalf of the Constituent Corporations, all such other acts
and things necessary, desirable or proper to vest, perfect or confirm its right,
title or interest in, to or under any of the rights, privileges, powers,
franchises, properties or assets of the Constituent Corporations and otherwise
to carry out the purposes of this Agreement.
2.07 STOCKHOLDERS' MEETING. (a) After the Purchaser has accepted for
payment the Shares tendered pursuant to the Offer, the Company, acting through
the Board, shall, at the Parent's request and in accordance with applicable law:
(i) duly call, give notice of, convene and hold an annual or special
meeting of its stockholders (the "Stockholders' Meeting"), to be held as soon as
practicable for the purpose of approving this Agreement, the Merger and the
transactions contemplated hereby and thereby;
(ii) include in the Proxy Statement (as defined in Section 4.08) the
recommendation of the Board that stockholders of the Company vote in favor of
the approval and adoption of this Agreement and the Merger and the other
transactions contemplated hereby and thereby and that the cash consideration to
be received by the stockholders of the Company pursuant to the Merger is fair to
such stockholders; and
(iii) as soon as practicable after the Parent's request, prepare and
file a preliminary Proxy Statement with the SEC and, after consultation with the
Parent and the Purchaser,
<PAGE> 15
- 9 -
respond promptly to any comments made by the SEC with respect to the Proxy
Statement and any preliminary version thereof and cause the Proxy Statement to
be mailed to its stockholders at the earliest practicable time after responding
to all such comments to the satisfaction of the Staff of the SEC and to obtain
the necessary approvals by its stockholders of this Agreement. Without limiting
the generality of the foregoing, the Company agrees that its obligations
pursuant to this Section 2.07(a) shall not be affected by either the
commencement, public proposal, public disclosure or other communication to the
Company of any offer to acquire some or all of the Shares or all or any
substantial portion of the assets of the Company or any change in the
recommendation of the Board.
(b) The Company, the Parent and the Purchaser, as the case may be,
shall promptly prepare and file any other filings required under the Exchange
Act or any other Federal or state securities or corporate laws relating to the
Merger and the transactions contemplated herein (the "Other Filings"). Each of
the parties hereto shall notify the other parties hereto promptly of the receipt
by it of any comments from the SEC or its Staff and of any request of the SEC
for amendments or supplements to the Proxy Statement or by the SEC or any other
governmental officials with respect to any Other Filings or for additional
information and will supply the other parties hereto with copies of all
correspondence between it and its representatives, on the one hand, and the SEC
or the members of its Staff or any other governmental officials, on the other
hand, with respect to the Proxy Statement, any Other Filings or the Merger. The
Company, the Parent and the Purchaser each shall use its best efforts to obtain
and furnish the information required to be included in the Proxy Statement, any
Other Filings or the Merger. If at any time prior to the time of approval of
this Agreement by the Company's stockholders there shall occur any event that
should be set forth in an amendment or supplement to the Proxy Statement, the
Company shall promptly prepare and mail to its stockholders such amendment or
supplement. The Company shall not mail the Proxy Statement or, except as
required by the Exchange Act or the rules and regulations promulgated
thereunder, any amendment or supplement thereto, to the Company's stockholders
unless the Company has first obtained the consent of the Parent to such mailing.
(c) At the Stockholders' Meeting, the Parent, the Purchaser and their
affiliates will vote all Shares owned by them in favor of approval and adoption
of this Agreement, the Merger, and the transactions contemplated hereby and
thereby.
(d) Notwithstanding the foregoing, in the event that the Purchaser
shall acquire at least 90 percent of the Shares, the parties hereto agree, at
the request of the Purchaser, to take all necessary and appropriate action to
cause the Merger to become effective, in accordance with Section 253 of the
DGCL, as soon as reasonably practicable after such acquisition and satisfaction
or
<PAGE> 16
- 10 -
waiver of the conditions of Article VII, without a meeting of the stockholders
of the Company.
ARTICLE III
CONVERSION OR CANCELLATION OF SHARES; STOCK RIGHTS
3.01 CONVERSION OR CANCELLATION OF SHARES. At the Effective Time, by
virtue of the Merger and without any action on the part of the holders thereof:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than Shares owned by the Parent or any wholly-owned
subsidiary of the Parent (collectively, the "Parent Companies"), Shares held by
stockholders exercising appraisal rights pursuant to Section 262 of the DGCL
(the "Dissenting Stockholders"), and any shares held in the treasury of the
Company) shall be converted into and represent the right to receive, without
interest, an amount in cash equal to the greater of $10.50 net or the amount per
share which may be paid pursuant to the Offer as it may be amended (the "Merger
Consideration") upon surrender of the certificate or certificates that,
immediately prior to the Effective Time, represented issued and outstanding
Shares (the "Certificates"). As of the Effective Time, all such Shares shall no
longer be outstanding, shall be automatically cancelled and shall cease to
exist, and each holder of a Certificate representing any such Shares shall
thereafter cease to have any rights with respect to such Shares, except the
right to receive the Merger Consideration without interest for such Shares upon
the surrender of such Certificate or Certificates in accordance with Section
3.02.
(b) Each Share issued and outstanding immediately prior to the
Effective Time and owned by any of the Parent Companies, and each Share issued
and held in the Company's treasury immediately prior to the Effective Time,
shall no longer be outstanding, shall be cancelled without payment of any
consideration therefor and shall cease to exist, and each holder of a
Certificate representing any such Shares shall thereafter cease to have any
rights with respect to such Shares.
(c) Each share of Common Stock, without par value, of the Purchaser
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one fully-paid and non-assessable share of Common
Stock, par value $0.01 per share, of the Surviving Corporation.
3.02 EXCHANGE OF CERTIFICATES; PAYING AGENT. (a) Prior to the Closing,
the Parent shall select a bank or trust company to act as paying agent (the
"Paying Agent") for the payment of the cash consideration specified in Section
3.01 upon surrender of Certificates converted into the right to receive cash
pursuant to the Merger. From time to time at and after the Effective Time,
<PAGE> 17
- 11 -
the Parent shall make available, or cause the Purchaser or the Surviving
Corporation to make available, to the Paying Agent immediately available funds
in amounts and at times necessary for the payment of the Merger Consideration
(the "Funds") upon surrender of Certificates pursuant to Section 3.01, it being
understood that any and all interest earned on the Funds shall be paid over by
the Paying Agent as the Parent shall direct.
(b) Promptly after the Effective Time, the Paying Agent shall mail to
each person who was, at the Effective Time, a holder of record of a Certificate
or Certificates, other than the Company or any of the Parent Companies, a letter
of transmittal and instructions for use in effecting the surrender, in exchange
for payment in cash therefor, of the Certificates. The letter of transmittal
shall specify that delivery shall be effected, and risk of loss and title shall
pass, only upon proper delivery to and receipt of such Certificates by the
Paying Agent and shall be in such form and have such provisions as the Parent
shall reasonably specify. Upon surrender to the Paying Agent of such
Certificates, together with the letter of transmittal, duly executed and
completed in accordance with the instructions thereto and such other documents
as may be reasonably required by the Paying Agent, the Paying Agent shall
promptly pay to the persons entitled thereto, out of the Funds, a check in the
amount to which such persons are entitled pursuant to Section 3.01(a), after
giving effect to any required tax withholdings, and such Certificate shall
forthwith be cancelled. No interest will be paid or will accrue on the amount
payable upon the surrender of any such Certificates. If payment is to be made to
a person other than the registered holder of the Certificates surrendered, it
shall be a condition of such payment that the Certificates so surrendered shall
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 the payment to a person other than the registered holder of the
Certificates surrendered or establish to the satisfaction of the Surviving
Corporation or the Paying Agent that such tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 3.02, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the amount of cash, without
interest, into which the Shares theretofore represented by such Certificate
shall have been converted pursuant to Section 3.01. No interest shall accrue or
be paid on any portion of the Merger Consideration.
(c) One hundred eighty days following the Effective Time, the
Surviving Corporation shall be entitled to cause the Paying Agent to deliver to
it any Funds (including any interest, dividends, earnings or distributions
received with respect thereto which shall be paid as directed by the Parent)
made available to the Paying Agent by the Parent which have not been disbursed,
and thereafter holders of Certificates who have not theretofore complied with
the instructions for exchanging their Certificates shall be entitled to look
only to the Surviving Corporation for
<PAGE> 18
- 12 -
payment as general creditors thereof with respect to the cash payable upon due
surrender of their Certificates.
(d) Except as otherwise provided herein, the Parent shall pay all
charges and expenses, including those of the Paying Agent, in connection with
the exchange of the Merger Consideration for Certificates.
(e) Notwithstanding anything to the contrary in this Section 3.02,
none of the Paying Agent, the Parent, the Company, the Surviving Corporation or
the Purchaser shall be liable to a holder of a Certificate formerly representing
Shares for any amount properly delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. If Certificates are not
surrendered prior to two years after the Effective Time (or immediately prior to
such earlier date on which any payment pursuant to this Article III would
otherwise escheat or become the property of any Federal, state or local
government agency or authority, court or commission), unclaimed funds payable
with respect to such Certificates shall, to the extent permitted by applicable
law, become the property of the Surviving Corporation, free and clear of all
claims or interest of any person previously entitled thereto.
3.03 DISSENTERS' RIGHTS. Notwithstanding the provisions of Section
3.01 or any other provision of this Agreement to the contrary, Shares that have
not been voted in favor of the approval and adoption of the Merger and with
respect to which dissenters' rights shall have been demanded and perfected in
accordance with Section 262 of the DGCL (the "Dissenting Shares") and not
withdrawn shall not be converted into the right to receive cash at or after the
Effective Time, but such Shares shall become the right to receive such
consideration as may be determined to be due to holders of Dissenting Shares
pursuant to the laws of the State of Delaware unless and until the holder of
such Dissenting Shares withdraws his or her demand for such appraisal or becomes
ineligible for such appraisal. If a holder of Dissenting Shares shall withdraw
his or her demand for such appraisal or shall become ineligible for such
appraisal (through failure to perfect or otherwise), then, as of the Effective
Time or the occurrence of such event, whichever last occurs, such holder's
Dissenting Shares shall automatically be converted into and represent the right
to receive the Merger Consideration, without interest, as provided in Section
3.01(a). The Company shall give the Parent (i) prompt notice of any demands for
appraisal of Shares received by the Company and (ii) the opportunity to
participate in and direct all negotiations and proceedings with respect to any
such demands. The Company shall not, without the prior written consent of the
Parent, make any payment with respect to, or settle, offer to settle or
otherwise negotiate, any such demands.
3.04 TRANSFER OF SHARES AFTER THE EFFECTIVE TIME. No transfers of
Shares shall be made in the stock transfer books of the Surviving Corporation at
or after the Effective Time. If,
<PAGE> 19
- 13 -
after the Effective Time, Certificates formerly representing Shares are
presented to the Surviving Corporation, they shall be cancelled and exchanged
for the Merger Consideration set forth in Section 3.01.
3.05 COMPANY STOCK RIGHTS. Prior to the Effective Time, the Company
shall use its best efforts to procure the surrender as of the Effective Time of
all outstanding options to purchase shares of Common Stock of the Company (the
"Options") pursuant to the CIMCO, Inc. 1988 Incentive Stock Option Plan and the
CIMCO, Inc. 1991 Incentive Stock Option Plan (collectively, the "Stock Option
Plans"), in consideration of the payment at the Effective Time of an amount of
cash per share subject to each such Option equal to the difference between the
exercise price of such Option and the Merger Consideration, less an amount equal
to all taxes required to be withheld from such payment. As to any Option not so
surrendered, the Company shall use its best efforts to obtain, prior to the
Effective Time, the consent of the holder of the Option to acquire upon payment
of the exercise price an amount of cash equal to the Merger Consideration, less
an amount equal to all taxes required to be withheld from such payment, in lieu
of each Share formerly covered thereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Parent and the
Purchaser that:
4.01 ORGANIZATION; QUALIFICATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has all requisite corporate power and authority to own, lease and
operate its properties and carry on its business as now being conducted. The
Company is duly qualified to do business and is in good standing in each
jurisdiction in which the nature of the Company's business or the location of
its properties makes such qualification necessary, except for any such failure
to qualify or be in good standing as shall not have a Material Adverse Effect
(as defined in Section 4.06) on the Company. The Company Disclosure Letter (as
defined in Section 4.06) identifies, and the Company has heretofore made
available to the Parent, complete and correct copies of the Certificate of
Incorporation and By-Laws of the Company, as currently in effect.
4.02 COMPANY SUBSIDIARIES. (a) The Company Disclosure Letter lists
all subsidiaries of the Company. Except as indicated in the Company Disclosure
Letter, all of the outstanding shares of capital stock of each such subsidiary
are owned by the Company either directly or indirectly through another of its
subsidiaries. Except as set forth in the Company Disclosure Letter, no equity
securities of any subsidiary of the Company are or may be required
<PAGE> 20
- 14 -
to be issued (other than to the Company or its other subsidiaries) by reason of
any Equity Rights (as defined in Section 4.03) for shares of the capital stock
of any subsidiary of the Company, and there are no contracts, commitments,
understandings or arrangements by which any subsidiary of the Company is bound
to issue (other than to the Company) additional shares of its capital stock or
options, warrants or rights to purchase or acquire any additional shares of its
capital stock. Except as set forth in the Company Disclosure Letter, there are
no contracts, commitments, understandings or arrangements by which the Company
or any of its subsidiaries is or may be obligated to transfer any shares of the
capital stock of any subsidiary of the Company. Except as set forth in the
Company Disclosure Letter, all of the shares of capital stock of each subsidiary
of the Company held by the Company or any subsidiary of the Company are fully
paid and nonassessable and are owned by the Company or such subsidiary of the
Company free and clear of any claim, lien or encumbrance other than restrictions
on transferability under federal and any applicable state securities laws. Each
subsidiary of the Company is duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated or
organized, has the corporate power and authority necessary for it to own or
lease its properties and assets and to carry on its business as it is now being
conducted, and is duly qualified to do business and in good standing in the
states of the United States in which the ownership of its property or the
conduct of its business requires it to be so qualified, except for such
jurisdictions in which the failure to be so qualified and in good standing would
not have a Material Adverse Effect. As used in this Agreement, the term
"subsidiary" shall mean, with respect to the Company, any corporation or other
legal entity of which the Company or any of its subsidiaries controls or owns,
directly or indirectly, 50% or more of the stock or other equity interest
entitled to vote on the election of members to the board of directors or similar
governing body.
(b) Except for interests in the Company's subsidiaries and except as
set forth in the Company Disclosure Letter, neither the Company nor any of the
Company's subsidiaries owns, directly or indirectly, any interest or investment
(whether equity or debt) in any corporation, partnership, joint venture,
business, trust or entity, other than (i) non-controlling investments made in
the ordinary course of business and corporate partnering, development,
cooperative marketing and similar undertakings and arrangements entered into in
the ordinary course of business, and (ii) other investments of less than
$250,000 in the aggregate.
4.03 THE COMPANY'S CAPITALIZATION. The authorized capital stock of the
Company consists of (i) ten million Shares, and (ii) five million shares of
Preferred Stock, $.01 par value (the "Preferred Shares"), which Preferred Shares
include one hundred thousand shares of Series A Junior Participating Preferred
Stock, $.01 par value (the "Series A Shares"). As of the close of business on
December 18, 1995, there were (i) 2,970,481 Shares
<PAGE> 21
- 15 -
issued and outstanding and no Shares held in the Company's treasury, (ii) no
Preferred Shares issued and outstanding, and (iii) no Series A Shares issued and
outstanding. All outstanding Shares have been duly authorized and validly
issued, and are fully paid, nonassessable and were issued free of preemptive
rights. Except for the Options described in Section 3.05 hereof and except as
set forth on the Company Disclosure Letter there are not now, and at the
Effective Time there will not be, any subscriptions, options, warrants, calls,
rights, agreements or commitments relating to the issuance, sale, delivery or
transfer by the Company (including any right of conversion or exchange under any
outstanding security or other instrument) of its Shares (collectively, "Equity
Rights"). There are no outstanding contractual obligations of the Company to
repurchase, redeem or otherwise acquire any Shares. The Company Disclosure
Letter contains a complete and accurate list of all holders of Options and any
other options or rights of any kind to purchase or acquire shares of the Common
Stock of the Company, together with the number of such options and the terms of
such options held by each such holder.
4.04 COMPANY EQUITY INVESTMENTS. Except as set forth on the Company
Disclosure Letter, neither the Company nor any of its subsidiaries owns,
directly or indirectly, or has the right to acquire, any equity security of
another entity nor has the Company or any of its subsidiaries made any loan or
advance to any other entity.
4.05 AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has full
corporate power and authority to execute, deliver and perform this Agreement and
to consummate the transactions contemplated hereby. This Agreement has been duly
and validly approved by the Board, and the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by the Board and, except for the approval
of the Merger by the holders of at least a majority of the Shares in accordance
with the DGCL, no other corporate actions on the part of the Company are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby, including the acquisition of Shares pursuant to the Offer
and the Merger. The Company has taken all actions necessary to render the
prohibitions of Section 203 of the DGCL and the provisions of Article EIGHTH of
the Certificate of Incorporation to be inapplicable to the execution and
delivery of this Agreement and the Stockholder Tender Agreement and the
transactions contemplated hereby and thereby, including the acquisition of the
Shares pursuant to the Offer and the Merger. To the knowledge of the Company, no
other "fair price", "merger moratorium", "control share acquisition" or other
anti-takeover statute or similar statute or regulation applies or purports to
apply to the Merger, this Agreement or any of the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by the
Company and, assuming due authorization, execution and delivery by the Parent
and the
<PAGE> 22
- 16 -
Purchaser, constitutes a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting the enforcement of creditors'
rights generally as at the time in effect and by general principles of equity,
regardless of whether such enforceability is considered in a proceeding in
equity or at law.
4.06 CONSENTS AND APPROVALS; NO VIOLATION. Except as set forth on the
Company Disclosure Letter delivered to the Parent as of the date of this
Agreement (the "Company Disclosure Letter"), and except for any required
approval of the Merger by the stockholders of the Company and the filing of the
Delaware Certificate of Merger in accordance with the DGCL, neither the
execution, delivery and performance of this Agreement by the Company nor the
consummation by it of the transactions contemplated hereby will (i) conflict
with or result in any breach of any provision of the Certificate of
Incorporation or By-Laws of the Company; (ii) require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority, except (A) in connection with the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (B) in
connection with the Exchange Act, (C) where the failure to obtain such consent,
approval, authorization or permit, or to make such filing or notification, would
not have a Material Adverse Effect, and (D) for any requirements which became
applicable to the Company as a result of the specific regulatory status of the
Parent or the Purchaser or as a result of any other facts that specifically
relate to the business or activities in which the Parent or the Purchaser is or
proposes to be engaged; (iii) constitute a breach or result in a default under,
or give rise to any right of termination, amendment, cancellation or
acceleration under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, contract, agreement or other instrument or
obligation of any kind to which the Company is a party or by which the Company
or any of its assets may be bound, except for any such breach, default or right
as to which requisite waivers or consents have been obtained or which, in the
aggregate, would not have a Material Adverse Effect; or (iv) assuming compliance
with the DGCL and the HSR Act, violate any order, writ, injunction, judgment,
decree, law, statute, rule, regulation or governmental permit or license
applicable to the Company or any of its assets, which violation would have a
Material Adverse Effect.
For purposes of this Agreement, "Material Adverse Effect" means a
material adverse effect on the business, assets, prospects, financial condition
or results of operation of the Company and its subsidiaries considered on a
consolidated basis or on the ability of the Company, the Parent or the Purchaser
to consummate the transactions contemplated by this Agreement.
<PAGE> 23
- 17 -
4.07 SEC REPORTS; FINANCIAL STATEMENTS. The Company has filed all
required forms, reports and documents with the SEC since May 1, 1992
(collectively, the "SEC Reports"), each of which has complied in all material
respects with all applicable requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and the Exchange Act, each as in effect on the
dates so filed. None of such forms, reports or documents, including, without
limitation, any financial statements or schedules included or incorporated by
reference therein, contained, when filed, any untrue statement of a material
fact or omitted to state a material fact required to be stated or incorporated
by reference therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
Company has heretofore made available or promptly will make available to the
Parent, a complete and correct copy of any amendment to the SEC Reports. The
Company has previously furnished to the Parent audited consolidated balance
sheets of the Company and its subsidiaries as of April 30th in each of the years
1991 through 1995, and the related audited consolidated statements of income,
statements of cash flow or changes in financial position and changes in
stockholders' equity of the Company and its subsidiaries for the fiscal years
then ended (collectively, the "Related Statements"), together with the
respective reports thereon of Grant Thornton. The unaudited consolidated balance
sheet of the Company and its subsidiaries as of October 31, 1995 is hereinafter
referred to as the "Company Balance Sheet." Each of the balance sheets included
in the financial statements referred to in this Section 4.06 (including the
related notes thereto) presents fairly the financial position of the Company and
its subsidiaries as of their respective dates, and the Related Statements
included therein (including the related notes thereto) present fairly the
consolidated results of operations, the cash flows or changes in financial
position, and changes in stockholders' equity for the periods then ended, all in
conformity with generally accepted accounting principles applied on a consistent
basis, except as otherwise noted therein.
4.08 PROXY STATEMENT; OFFER DOCUMENTS. Any proxy or similar materials
distributed to the Company's stockholders in connection with the Merger,
including any amendments or supplements thereto (the "Proxy Statement"), will
comply in all material respects with applicable federal securities laws and will
not contain any untrue statements of a material fact required to be stated
therein or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that no representation is
made by the Company with respect to information supplied by the Parent in
writing for inclusion in the Proxy Statement. None of the information supplied
by the Company in writing for inclusion in the Offer Documents or provided by
the Company in the Schedule 14D-9 will, at the respective times that the Offer
Documents and the Schedule 14D-9 or any amendments or supplements thereto are
filed with the SEC and are first published or sent or
<PAGE> 24
- 18 -
given to holders of Shares, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
4.09 UNDISCLOSED LIABILITIES. Except as set forth on the Company
Disclosure Letter or reflected in the financial statements referred to in
Section 4.07, neither the Company nor any of its subsidiaries has any liability
or obligation, secured or unsecured (whether absolute, accrued, contingent or
otherwise, and whether due or to become due) except those which would not,
individually or in the aggregate, have a Material Adverse Effect.
4.10 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth on the
Company Disclosure Letter, since the date of the Company Balance Sheet (i) the
business of the Company and its subsidiaries has been conducted in the ordinary
course consistent with past practice (except as otherwise contemplated by this
Agreement), (ii) there has not been any change which has had a Material Adverse
Effect, and (iii) neither the Company nor any of its subsidiaries has taken any
action described in Section 6.01.
4.11 TITLE, ETC. (a) The Company Disclosure Letter sets forth a list
of all of the land, which includes the buildings, structures and other
improvements located thereon (the "Real Property"), which is owned in fee by the
Company and any of its subsidiaries. The Company or such subsidiary, as the case
may be, has, with respect to personal property, good, and, with respect to real
property, good, marketable and insurable, title to all of the properties and
assets which it purports to own and which are material to the business,
operation or financial condition of the Company and its subsidiaries free and
clear of all mortgages, security interests, liens, claims, charges or other
encumbrances of any nature whatsoever, except for (i) any liens, encumbrances or
defects reflected in the Company Balance Sheet or disclosed in the notes
thereto; (ii) any liens, encumbrances or defects which do not, individually or
in the aggregate, materially detract from the fair market value (free of such
liens, encumbrances or defects) of the property or assets subject thereto or
materially interfere with the current use by the Company and its subsidiaries of
the property or assets subject thereto or affected thereby or otherwise have a
Material Adverse Effect; (iii) any liens or encumbrances for taxes not
delinquent or which are being contested in good faith, provided that adequate
reserves for the same have been established on the Company Balance Sheet to the
extent required by generally accepted accounting principles; (iv) any liens or
encumbrances for current taxes and assessments not yet past due; (v) any
inchoate mechanic's and materialmen's liens and encumbrances for construction in
progress; (vi) any workmen's, repairmen's, warehousemen's and carriers' liens
and encumbrances arising in the ordinary course of business, so long as such
liens have not been filed; (vii) any liens of the type referred to in (vi) above
that have been filed, so long as such
<PAGE> 25
- 19 -
liens do not aggregate in excess of $25,000; (viii) liens securing obligations
under the Credit Agreement (as defined in Section 6.01); and (ix) with respect
to Real Property, any liens, encumbrances or defects which are matters of
record, including but not limited to, easements, quasi-easements, rights of way,
land use ordinances and zoning plans.
(b) The Company Disclosure Letter sets forth a list of all of the
leases and subleases (the "Real Property Leases") under which, as of the date
hereof, the Company or any subsidiary has the right to occupy space. The Company
has heretofore delivered to the Parent a true, correct and complete copy of all
of the Real Property Leases, including all amendments thereto. All Real Property
Leases and material leases pursuant to which the Company or any subsidiary
leases personal property from others are, in all material respects, valid,
binding and enforceable in accordance with their terms; neither the Company nor
any subsidiary has received notice of any default by the Company or any
subsidiary under any Real Property Lease which would have a Material Adverse
Effect; there are no existing defaults, or any condition or event which with the
giving of notice or lapse of time would constitute a default, by the Company or
any subsidiary thereunder which would have a Material Adverse Effect; and, with
respect to the Company's or any subsidiary's obligations thereunder without
qualification and with respect to the obligations of all other parties thereto,
to the knowledge of the Company, no uncured default or event or condition on the
part of any landlord exists under any Real Property Lease which with the giving
of notice or the lapse of time would constitute a default thereunder which would
have a Material Adverse Effect.
(c) All of the land, buildings, structures and other improvements
occupied by the Company and its subsidiaries in the conduct of its business are
included in the Real Property or the Real Property Leases.
(d) Neither the Company or any subsidiary owns or holds, nor is
obligated under or a party to, any option, right of first refusal or other
contractual right to purchase, acquire, sell or dispose of the Real Property and
the Real Property Leases or any portion thereof or interest therein.
4.12 PATENTS, TRADEMARKS, ETC. The Company Disclosure Letter
identifies all registered trademarks, copyrights and patents owned or licensed
by the Company and its subsidiaries as of the date hereof. To the Company's best
knowledge, the Company or its subsidiaries own, or are licensed or otherwise
have adequate right to use, all patents, patent rights, trademarks, trademark
rights, service marks, service mark rights, trade names, trade name rights,
copyrights, know-how, technology, trade secrets and other proprietary
information (collectively, the "Intellectual Property") which are material to
the conduct of the business of the Company and its subsidiaries. Except as set
forth in the Company Disclosure Letter, no claims have been asserted by any
<PAGE> 26
- 20 -
person, and neither the Company nor any of its subsidiaries has asserted a claim
against any person, with respect to any of the Intellectual Property owned or
used by the Company or its subsidiaries or challenging or questioning the
validity or effectiveness of any license or agreement relating thereto to which
the Company or any subsidiary is a party.
4.13 INSURANCE. The Company Disclosure Letter identifies all material
property, general liability and casualty insurance policies which currently
insure the Company and its subsidiaries and the Company shall use its reasonable
efforts to keep such policies in full force and effect up to the Closing Date.
Such policies are adequate in the view of the management of the Company for the
assets and operations of the Company and its subsidiaries.
4.14 EMPLOYEE BENEFIT PLANS. (a) For purposes of this Section 4.14,
"Company Benefit Plans" means all employee benefit plans and arrangements
described in section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), with respect to which the Company or any subsidiary
has a liability, whether direct or indirect, actual or contingent, and any
material bonus, incentive and similar plans maintained by the Company or any
subsidiary.
(b) The Company Disclosure Letter sets forth a list of all Company
Benefit Plans and the Company has delivered or made available to the Parent,
where applicable, accurate and complete copies of all Company Benefit Plan texts
and related agreements.
(c) Except as set forth in the Company Disclosure Letter with respect
to each Company Benefit Plan: (i) to the best knowledge of the Company, such
plan has been administered and enforced in all material respects in accordance
with its terms and applicable law; (ii) to the best knowledge of the Company
after reasonable inquiry, no breach of fiduciary duty or prohibited transaction
has occurred; (iii) no actions, suits, claims or disputes are pending, or to the
knowledge of the Company, threatened, other than routine claims for benefits;
(iv) all contributions and premiums due have been made on a timely basis; (v) to
the Company's best knowledge, all contributions made or required to be made
under such Company Benefit Plan meet the requirements for deductibility under
the Internal Revenue Code of 1986, as amended (the "Code"); and (vi) no Company
Benefit Plan is a multiemployer plan (as defined in ERISA section 3(37)), a
multiple employer plan within the meaning of the Code or ERISA, a defined
benefit plan within the meaning of ERISA section 3(35), a plan subject to
section 302 of ERISA or section 412 of the Code, or funded through a "welfare
benefit fund" (as defined in Section 419(e) of the Code).
(d) Except as set forth on the Company Disclosure Letter or as
specifically provided in Section 3.05, the consummation of the transactions
contemplated by this Agreement
<PAGE> 27
- 21 -
will not (i) entitle any individual to severance pay, or (ii) accelerate the
time of payment or vesting, or increase the amount, of compensation due to any
individual. The Company has delivered to the Parent true, correct and complete
copies of each plan, agreement or arrangement relating to the foregoing,
including all amendments thereto.
(e) The Company Disclosure Letter sets forth a description of all
obligations of the Company and its subsidiaries with respect to retiree medical
and retiree life insurance benefits under the Company Benefit Plans. The Company
has delivered to the Parent written material which is representative in all
material respects of written communications of the Company and its subsidiaries
with respect to retiree medical and retiree life insurance benefits under the
Company Benefit Plans, a list of which is set forth on the Company Disclosure
Letter.
(f) Each Company Benefit Plan intended to be qualified under section
401(a) of the Code is so qualified, and each trust or other funding vehicle
related thereto is exempt from federal income tax under section 501(a) of the
Code.
(g) With respect to any insurance policy providing funding for
benefits under any Company Benefit Plan, (i) there is no material liability of
the Company or any subsidiary in the nature of a retroactive or retrospective
rate adjustment, loss sharing arrangement, or other actual or contingent
liability, nor would there be any such material liability if such insurance
policy was terminated on the date hereof, and (ii) to the knowledge of the
Company, no insurance company issuing any such policy is in receivership,
conservatorship, liquidation or similar proceeding and, to the knowledge of the
Company, no such proceeding with respect to any insurer is imminent.
4.15 LEGAL PROCEEDINGS, ETC. Except as set forth on the Company
Disclosure Letter, (i) there is no claim, action, proceeding or investigation
pending or, to the knowledge of the Company, threatened against or relating to
the Company or any subsidiary before any court or governmental or regulatory
authority or body with respect to which there is a reasonable likelihood of a
determination which would have a Material Adverse Effect, and (ii) neither the
Company nor any subsidiary is subject to any outstanding order, writ, judgment,
injunction or decree of any court or governmental or regulatory authority or
body.
4.16 TAXES. Except as set forth on the Company Disclosure Letter, (i)
each of the Company and its subsidiaries has timely paid or adequately reserved
for in the Company Balance Sheet all Taxes (as defined below) required to be
paid by it through the date hereof (other than Taxes or audit adjustments which
would not, in the aggregate, have a Material Adverse Effect) and shall timely
pay any Taxes required to be paid by it after the date hereof and on or before
the Effective Time (unless the payment of such Taxes is being contested by the
Company or such
<PAGE> 28
- 22 -
subsidiary in good faith and an adequate reserve therefor is set up on the
Company's books to the extent required by generally accepted accounting
principles), (ii) each of the Company and its subsidiaries has timely filed all
notices, reports and returns for Taxes ("Tax Returns") that it is required to
file through the date hereof and shall, on or before the Effective Time,
correctly prepare and timely file, consistent with prior years in all material
respects, all Tax Returns that it is required to file after the date hereof and
on or before the Effective Time, (iii) the Company has correctly prepared, in
all material respects, all previously filed Tax Returns which remain open for
assessment and have not been examined or are currently under examination by the
appropriate governmental taxing authority, (iv) no material penalties or other
material charges are due with respect to the late filing of any Tax Return, (v)
neither the Company nor any subsidiary has been notified that it is currently
being audited by any taxing authority, (vi) no extension of time with respect to
any date on which any Tax Return was or is to be filed by the Company or any
subsidiary is in force as of the date hereof, (vii) no waiver or agreement by
the Company or any subsidiary is in force as of the date hereof for the
extension of time for the assessment or payment of any Tax, (viii) neither the
Company nor any subsidiary has agreed to make nor is required to make any
adjustment under Section 481(a) of the Code by reason of a change in accounting
method or otherwise, and (ix) the Company has not agreed to indemnify or
reimburse any subsidiary for the amount of any savings in Taxes which the
Company realized for any year as a result of including such subsidiary in the
combined and consolidated Tax Returns which the Company filed for such year, and
neither the Company nor any subsidiary has agreed to indemnify or reimburse, or
to pay any refund to, any third party for any liability or benefit with respect
to Taxes that such third party may owe or be entitled to receive, as the case
may be. "Taxes" shall mean all taxes, levies or other fiscal assessments,
including, without limitation, income, excise, property, sales, use, gross
receipts, value added, payroll, employment, import and franchise taxes and
customs duties imposed by the United States, or any state, county, local or
foreign government, or subdivision or agency thereof, and including any
interest, penalties or additions attributable thereto.
4.17 MATERIAL AGREEMENTS. Except as set forth on the Company
Disclosure Letter and except for agreements made for the purpose of completing
the transactions contemplated by this Agreement, neither the Company nor any of
its subsidiaries is as of the date hereof a party to, or bound by, any material
agreement of any kind to be performed in whole or in part after the Effective
Time. Solely for the purpose of this Section, the term "material agreement"
shall mean any single agreement which involves the payment or receipt by the
Company or any subsidiary, subsequent to the date of this Agreement, of more
than $100,000. Except as set forth on the Company Disclosure Letter, to the best
knowledge of the Company, there is no breach or default and there are no facts
which with notice or the passage of time would
<PAGE> 29
- 23 -
constitute a breach or default under, or give rise to any right of termination,
amendment, cancellation or acceleration under, whether as a result of the
consummation of the transactions contemplated hereby or otherwise, any
obligation to be performed by any party to a material agreement to which the
Company or any subsidiary is a party, which breach, default or right (assuming
the exercise thereof) would have a Material Adverse Effect.
4.18 COMPLIANCE WITH LAW. Except as set forth on the Company
Disclosure Letter, to the best knowledge of the Company, the business of the
Company and its subsidiaries is not being conducted and the properties and
assets of the Company and its subsidiaries are not currently owned or operated
in violation of any law, ordinance, regulation, order, judgment, injunction,
award or decree of any governmental or regulatory entity or court or arbitrator,
except for possible violations which either individually or in the aggregate do
not, and so far as can be reasonably foreseen will not, have a Material Adverse
Effect.
4.19 INSIDER INTERESTS. The Company Disclosure Letter sets forth all
material contracts, agreements with and other obligations to officers, directors
and employees or stockholders of the Company and its subsidiaries. Except as set
forth on the Company Disclosure Letter, no officer, director or stockholder of
the Company or any subsidiary, and no entity controlled by any such officer,
director or stockholder, and no relative or spouse who resides with any such
officer, director or stockholder (i) owns, directly or indirectly, any material
interest in any person that is or is engaged in business, other than on an
arm's-length basis, as a competitor, lessor, lessee, customer or supplier of the
Company or any subsidiary or (ii) owns, in whole or in part, any tangible or
intangible property that the Company or any subsidiary uses in the conduct of
the business of the Company and its subsidiaries.
4.20 OFFICERS, DIRECTORS AND EMPLOYEES. The Company Disclosure Letter
sets forth the name and current compensation of each officer, director or
employee of the Company and its subsidiaries whose current annual rate of
compensation from the Company (including bonuses but excluding commission-only
compensation) exceeds $50,000.
4.21 ENVIRONMENTAL PROTECTION. Except as set forth on the Company
Disclosure Letter, the Company and each of its subsidiaries have obtained all
material permits, certificates, licenses, approvals and other authorizations
(collectively "Environmental Permits") relating to pollution or protection of
the environment, including those relating to emissions, discharges, releases of
pollutants, contaminants or chemicals, or industrial, toxic or hazardous
substances or wastes into the environment (including, without limitation,
ambient air, surface water, ground water, or land) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or
<PAGE> 30
- 24 -
chemicals, or industrial, toxic or hazardous substances or wastes, except where
the failure to have obtained any Environmental Permits shall not have a Material
Adverse Effect on the Company. To the best knowledge of the Company, except as
set forth on the Company Disclosure Letter, the Company and each of its
subsidiaries is in material compliance with all terms and conditions of the
Environmental Permits, and the Company and each of its subsidiaries is also in
material compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in all applicable environmental laws or contained in any regulation,
code, plan, order, decree, judgment, injunction, notice or demand letter issued,
entered, promulgated or approved thereunder, if any ("Pertinent Environmental
Laws"), except where the failure to have complied shall not have a Material
Adverse Effect on the Company. Except as set forth on the Company Disclosure
Letter, to the best knowledge of the Company, there are no past, present or
future events, conditions, circumstances, activities, practices, incidents,
actions or plans which may materially interfere with or prevent material
compliance or continued compliance with Pertinent Environmental Laws, or which
may give rise to any material common law or legal liability, or otherwise form
the basis of any material claim, action, demand, suit, proceeding, hearing,
study or investigation, based on or related to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling, or the
emission, discharge, release or threatened release into the environment, of any
pollutant, contaminant or chemical, or industrial, toxic or hazardous substance
or waste. Except as set forth on the Company Disclosure Letter, there is no
civil, criminal or administrative action, suit, demand, claim, hearing, notice
or demand letter, notice of violation, investigation, or proceeding pending or,
to the Company's knowledge, threatened against the Company or any subsidiary
relating in any way to any Pertinent Environmental Laws.
4.22 BROKERS AND FINDERS. Neither the Company or its subsidiaries nor
any of their respective officers, directors or employees has employed any
broker, finder or investment banker or incurred any liability for any brokerage
fees, commissions, finders' fees or investment banking fees in connection with
the transactions contemplated herein, except that the Company has employed, and
will pay the fees and expenses of, PaineWebber Incorporated as its financial
advisor, the arrangements with which have been disclosed in writing to the
Parent prior to the date hereof.
4.23 RIGHTS AGREEMENT. The Company Rights Agreement has been amended
to provide that the execution and delivery of this Agreement and the Stockholder
Tender Agreement and the consummation of the transactions contemplated hereby
and thereby will not cause (a) Parent or Purchaser to become an "Acquiring
Person" (as such term is defined in the Company Rights Agreement), (b) the
"Distribution Date" (as such term is defined in the
<PAGE> 31
- 25 -
Company Rights Agreement) to occur, (c) the provisions of Section 13(a) of the
Company Rights Agreement to be applicable in respect of capital stock of the
Purchaser or the Parent or the capital stock of any affiliate of the Purchaser
or the Parent or (d) any adjustment under the provisions of Section 11(a) of the
Company Rights Agreement.
4.24 RESPIRATORY MEDICAL PRODUCTS SALE. The Asset Purchase Agreement,
dated as of December 4, 1995, between Medical Molding Corporation of America, a
California corporation and wholly owned subsidiary of the Company ("MMCA"), and
Vital Signs CA, Inc. ("VSCA"), a California corporation and wholly owned
subsidiary of Vital Signs, Inc., a New Jersey corporation, provides for (i) the
assumption by VSCA of all substantial liabilities known to the Company, whether
absolute or contingent, arising out of the Respiratory Medical Products business
of MMCA and (ii) aggregate cash consideration paid by VSCA to MMCA of no less
than $2,151,000, and at least $113,000 of liabilities assumed by VSCA, taking
into account all provisions for adjustment of such cash consideration.
$2,000,000 of the cash consideration paid by VSCA to MMCA in connection with the
sale of the Respiratory Medical Products business of MMCA was used to reduce the
indebtedness of the Company provided pursuant to the Company's existing Credit
Agreement with Wells Fargo Bank, National Association ("Wells Fargo"), as the
same may be amended from time to time (the "Credit Agreement").
4.25 NO OTHER REPRESENTATIONS OR WARRANTIES. Subject solely to the
information set forth in the Company Disclosure Letter, each of the
representations and warranties of the Company in this Agreement is true and
correct as of the date of this Agreement. Any document delivered by the Company
pursuant to this Agreement is a true, correct and complete copy of such
document, and has not been modified or amended unless such amendment or
modification is included with such document or has been delivered to Parent on
or prior to the date hereof.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
THE PARENT AND THE PURCHASER
5.01 CORPORATION ORGANIZATION. The Parent is a corporation duly
organized and validly existing and in good standing under the laws of the State
of Delaware and the Purchaser is a corporation duly organized and validly
existing and in good standing under the laws of the State of Delaware. The
Parent and the Purchaser each has all requisite corporate power and authority to
own its assets and carry on its business as now being conducted or proposed to
be conducted. Each of the Parent and the Purchaser has delivered to the Company
complete and correct copies of its
<PAGE> 32
- 26 -
Certificate of Incorporation and By-Laws as in effect on the date hereof.
5.02 AUTHORIZED CAPITAL. The authorized capital stock of the Purchaser
consists of 10,000 shares of Common Stock, without par value, of which 100
shares are outstanding as of the Effective Time and are owned, beneficially or
of record, by Parent. All of the issued and outstanding shares of capital stock
of the Purchaser are validly issued, fully paid, nonassessable and free of
preemptive rights and all liens.
5.03 CORPORATION AUTHORITY. Each of the Parent and the Purchaser has
the necessary corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of this
Agreement by each of the Parent and the Purchaser, the performance by the Parent
and the Purchaser of their respective obligations hereunder and the consummation
by the Parent and the Purchaser of the transactions contemplated hereby have
been duly authorized by its Board of Directors and approved by the Parent as
sole stockholder of the Purchaser, and no other corporate proceeding on the part
of the Parent or the Purchaser is necessary for the execution and delivery of
this Agreement by the Parent and the Purchaser and the performance by the Parent
and the Purchaser of their respective obligations hereunder and the consummation
by the Parent and the Purchaser of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by each of the Parent and the
Purchaser and, assuming the due authorization, execution and delivery hereof by
the Company, is a legal, valid and binding obligation of the Parent and the
Purchaser, enforceable against each of the Parent and the Purchaser in
accordance with its terms, except to the extent that its enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting the enforcement of creditors' rights generally or by
general equitable principles, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
5.04 NO PRIOR ACTIVITIES. The Purchaser has not incurred, directly or
indirectly, any liabilities or obligations, except those incurred in connection
with its incorporation or with the negotiation of this Agreement, the Offer
Documents and the consummation of the transactions contemplated hereby and
thereby. The Purchaser has not engaged, directly or indirectly, in any business
or activity of any type or kind, or entered into any agreement or arrangement
with any person or entity, and is not subject to or bound by any obligation or
undertaking, that is not contemplated by or in connection with this Agreement,
the Offer Documents and the transactions contemplated hereby and thereby.
5.05 NO FINANCING CONTINGENCY. The Parent has sufficient funds to
consummate all of the transactions contemplated by this Agreement and will make
available to the Purchaser sufficient funds in sufficient time to consummate the
<PAGE> 33
- 27 -
Offer and the Merger in accordance with the terms of this Agreement.
5.06 GOVERNMENTAL FILINGS; NO VIOLATIONS. (a) No notices, reports or
other filings are required to be made by the Parent or the Purchaser with, nor
are any consents, registrations, approvals, permits or authorizations required
to be obtained by the Parent or the Purchaser from, any governmental or
regulatory authorities of the United States, the several States or any foreign
jurisdictions in connection with the execution and delivery of this Agreement by
the Parent and the Purchaser and the consummation by the Parent and the
Purchaser of the transactions contemplated hereby, the failure to make or obtain
any or all of which could prevent, materially delay or materially burden the
transactions contemplated by this Agreement, except (A) in connection with the
HSR Act, and (B) in connection with the Exchange Act.
(b) Neither the execution and delivery of this Agreement by the Parent
or the Purchaser nor the consummation by the Parent or the Purchaser of the
transactions contemplated hereby nor compliance by the Parent or the Purchaser
with any of the provisions hereof will: (i) conflict with or result in any
breach of any provision of its Certificate of Incorporation or By-Laws, (ii)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, or require any consent under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, license,
contract, agreement or other instrument or obligation to which the Parent or the
Purchaser is a party or by which it or any of its properties or assets may be
bound, (iii) require the creation or imposition of any lien upon or with respect
to the properties of the Parent or the Purchaser or (iv) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to the Parent
or the Purchaser or any of its properties or assets, excluding from the
foregoing clauses (iii) and (iv) violations, breaches or defaults which in the
aggregate, would neither have a material adverse effect on the business,
financial condition or operations of the Parent or the Purchaser nor prevent,
materially delay or materially burden the transactions contemplated by this
Agreement.
5.07 BROKERS AND FINDERS. Neither the Parent, the Purchaser nor any of
its officers, directors or employees has employed any broker, finder or
investment banker or incurred any liability for any brokerage fees, commissions,
finders fees or investment banking fees in connection with the transactions
contemplated herein, except that the Parent has employed and will pay the fees
and expenses of Salomon Brothers Inc.
5.08 OFFER DOCUMENTS; PROXY STATEMENT; OTHER INFORMATION. None of the
information included in the Offer Documents (including any amendments or
supplements thereto) or any
<PAGE> 34
- 28 -
schedules required to be filed with the SEC in connection therewith and
described therein as being supplied by the Parent or the Purchaser will, at the
respective times that the Offer Documents or any amendments or supplements
thereto or any such schedules are filed with the SEC, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. None of the
information supplied in writing by the Parent or the Purchaser specifically for
inclusion in the Proxy Statement, Schedule 14D-9 or any statement required
pursuant to Section 14(f) of the Exchange Act or any other schedules or
statements required to be filed with the SEC in connection therewith will
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein not misleading.
5.09 NO OTHER REPRESENTATIONS OR WARRANTIES. Each of the
representations and warranties of the Parent and the Purchaser in this Agreement
is true and correct as of the date of this Agreement. Any document delivered by
the Parent or the Purchaser pursuant to this Agreement is a true, correct and
complete copy of such document, and has not been modified or amended unless such
amendment or modification is included with such document or has been delivered
to the Company on or prior to the date hereof.
ARTICLE VI
COVENANTS OF THE PARTIES
6.01 CONDUCT OF BUSINESS OF THE COMPANY. Except as contemplated by
this Agreement or as set forth on the Company Disclosure Letter, during the
period from the date of this Agreement to the Effective Time, the Company and
its subsidiaries will conduct their business and operations only in the ordinary
and usual course of business consistent with past practice. Without limiting the
generality of the foregoing, and, except as contemplated in this Agreement or as
set forth on the Company Disclosure Letter, prior to the Effective Time, without
the advance written consent of the Parent (which consent will not be
unreasonably withheld with respect to the incurrence of indebtedness by the
Company under the revolving facility provided by Wells Fargo pursuant to the
Credit Agreement, as currently evidenced by the Promissory Note made by the
Company in favor of Wells Fargo, dated as of June 9, 1995, in the original
principal amount of $6,758,500 (the "Line of Credit Note") and the Promissory
Note made by the Company in favor of Wells Fargo, dated as of August 24, 1995,
in the original principal amount of $1,800,000 (the "Bridge Note"), but
excluding all of the Company's other indebtedness to Wells Fargo (the "Revolving
Line") pursuant to Section 6.01(b)(i)), neither the Company nor any of its
subsidiaries will:
<PAGE> 35
- 29 -
(a) Amend its Certificate of Incorporation or By-Laws or similar
governing documents;
(b) (i) Create, incur or assume any indebtedness for money borrowed,
including obligations in respect of capital leases, except (A) purchase money
mortgages granted in connection with past practice, (B) in the case of the
Company, indebtedness for borrowed money incurred in the ordinary course of
business not aggregating in excess of $7,000,000 outstanding at any time under
the Revolving Line, reduced by the net proceeds of any sale of assets by the
Company or any subsidiary out of the ordinary course of business, PROVIDED that
the proceeds of any borrowing are not distributed to the stockholders of the
Company; or (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other person; PROVIDED, HOWEVER, that the Company and its subsidiaries may
endorse negotiable instruments in the ordinary course of business consistent
with past practice;
(c) Declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
the Common Stock of the Company or any capital stock of any subsidiary;
(d) Issue, sell, grant, purchase or redeem, or issue or sell any
securities convertible into, or options with respect to, or warrants to purchase
or rights to subscribe to, or subdivide or in any way reclassify, any Shares,
except in any case above pursuant to the Stock Option Plans;
(e) (i) Increase the aggregate amount of compensation payable or to
become payable by the Company or any subsidiary to its directors, officers or
employees, whether by salary or bonus, by more than two percent in the aggregate
on an annual basis (excluding commission-only compensation, the rate of which
shall not be increased); or (ii) increase the rate or term of, or otherwise
alter, any bonus (other than any bonus permitted by clause (i) of this Section
6.01(e)), insurance, pension, severance or other employee benefit plan, payment
or arrangement made to, for or with any such directors, officers or employees;
(f) Enter into any agreement, commitment or transaction (other than
borrowings permitted by Section 6.01(b)), except agreements, commitments or
transactions in the ordinary course of business consistent with past practice;
(g) Sell, transfer, mortgage, pledge, grant any security interest or
permit the imposition of any lien or other encumbrance on any asset other than
in the ordinary course of business consistent with past practice and except (i)
pursuant to the Credit Agreement, (ii) in connection with purchase money
mortgages permitted by Section 6.01(b) or (iii) for any lien or other
encumbrance as to which the Company has a valid defense;
<PAGE> 36
- 30 -
(h) Waive any right under any contract or other agreement identified
on the Company Disclosure Letter if such waiver would have a Material Adverse
Effect;
(i) Other than as required by any change in generally accepted
accounting principles, make any material change in its accounting methods or
practices or make any material change in depreciation or amortization policies
or rates adopted by it for accounting purposes or, other than normal writedowns
or writeoffs consistent with past practices, make any writedowns of inventory or
writeoffs of notes or accounts receivable;
(j) Make any loan or advance to any of its stockholders, officers,
directors, employees (other than advances to field sales personnel, vacation
advances, relocation advances and travel advances in each case made in the
ordinary course of business in a manner consistent with past practice) or make
any other loan or advance to any other person or group otherwise than in the
ordinary course of business consistent with past practice;
(k) Terminate or fail to renew, where such renewal is at the Company's
or a subsidiary's option, any contract or other agreement (excluding customer
leases or contracts), the termination or failure of which to renew would have a
Material Adverse Effect;
(l) Enter into any collective bargaining agreement;
(m) Make any addition to or modification of the Company Benefits
Plans;
(n) Take, agree to take, or do or, with respect to anything within the
Company's or its subsidiaries control, knowingly permit to be done or to be
taken anything in the conduct of its business which (i) would cause any of the
representations of the Company to be or become untrue in any material respect,
and (ii) would reasonably be expected to have a Material Adverse Effect,
PROVIDED, HOWEVER,that nothing in this Section 6.01(n) shall affect the
generality of any provision of Annex A hereto; or
(o) Agree to do any of the foregoing.
6.02 NOTIFICATION OF CERTAIN MATTERS. (a) The Company shall give
prompt notice to the Parent of: (i) any notice or other communication from any
third party alleging that the consent of such third party is or may be required
in connection with the transactions contemplated by this Agreement; (ii) any
notice or other communication from any regulatory authority in connection with
the transactions contemplated by this Agreement; and (iii) the occurrence of any
event having, or which insofar as can be reasonably foreseen would have, a
Material Adverse Effect.
(b) Between the date of this Agreement and the Effective Time, the
Company shall give prompt notice to the Parent of any
<PAGE> 37
- 31 -
proposed settlement or similar agreement ("Settlement") with the Internal
Revenue Service or any other state, local or foreign governmental taxing
authority providing for any adjustment with respect to any Tax Return or any
additional liability for Taxes, and shall not enter into any Settlement without
the prior written consent of the Parent, which consent shall not be unreasonably
withheld.
6.03 ACCESS TO INFORMATION. (a) Between the date of this Agreement and
the Effective Time, the Company will during ordinary business hours and upon
reasonable advance notice, (i) give the Parent and the Parent's authorized
representatives all access the Parent shall reasonably request to all of its and
its subsidiaries' books, records (including, without limitation, the workpapers
of the Company's outside accountants), contracts, commitments, plants, offices
and other facilities and properties, and its and its subsidiaries' personnel,
representatives, accountants and agents; PROVIDED, HOWEVER, that all such access
shall take place after appropriate prior consultation with the officers of the
Company, (ii) permit the Parent to make such inspections thereof as it may
reasonably request (including, without limitation, observing the Company's or a
subsidiary's physical inventory of its assets), (iii) cause its and its
subsidiaries' officers and advisors to furnish to the Parent its financial and
operating data and such other existing information with respect to its business,
properties, assets, liabilities and personnel (including, without limitation,
title insurance reports, real property surveys and environmental reports, if
any), as the Parent may from time to time reasonably request, (iv) take such
actions as the Parent reasonably deems appropriate to verify the existence and
condition of equipment leased by the Company or any of its subsidiaries to its
customers, and (v) permit the Parent's accountants to conduct such confirmation
and testing procedures with respect to the receivables of the Company and its
subsidiaries as the Parent reasonably deems appropriate; PROVIDED, HOWEVER, that
(A) any such investigation shall be conducted in such a manner as not to
interfere unreasonably with the operation of the business of the Company, (B)
neither the Company nor any of its subsidiaries shall be required to take any
action which would constitute a waiver of the attorney-client privilege, (C)
neither the Company nor any of its subsidiaries need supply the Parent with any
information which it is under a legal obligation not to supply, and (D) until
such time as the Parent and/or its affiliates are the beneficial owners of a
majority of the Shares, any such activities by the Parent prior to the purchase
by the Purchaser of Shares pursuant to the Offer shall be for the purposes of
verifying the accuracy of representations and warranties of the Company and the
compliance by the Company with its covenants contained in this Agreement.
(b) Any information provided pursuant to this Agreement shall be held
by the Parent in accordance with and shall be subject to the terms of the
Confidentiality Agreement dated September 2, 1994 between the Company and the
Parent (the
<PAGE> 38
- 32 -
"Confidentiality Agreement"), the term of which the parties hereby agree to
extend to December 31, 1996. Notwithstanding anything herein or in the
Confidentiality Agreement to the contrary, the Parent, the Purchaser or the
Company may disclose any information required to be disclosed pursuant to the
Exchange Act, or otherwise required or requested to be disclosed by the SEC.
6.04 FURTHER INFORMATION. The Company and the Parent shall give prompt
written notice to the other of (i) any representation or warranty made by it
contained in this Agreement becoming untrue or inaccurate in any material
respect (including the Company, the Parent or the Purchaser receiving knowledge
of any fact, event or circumstance which may cause any representation qualified
as to knowledge to be or become untrue in any material respect) or (ii) the
failure by it to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement; PROVIDED, HOWEVER, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
6.05 FURTHER ASSURANCES. Consistent with the terms and conditions
hereof, each party hereto will execute and deliver such instruments and take
such other action as the other parties hereto may reasonably require in order to
carry out this Agreement and the transactions contemplated hereby.
6.06 INTERIM FINANCIAL STATEMENTS. Within 45 days after the end of
each fiscal quarter and 90 days after the end of any fiscal year after the date
of this Agreement, and until the Effective Time, the Company will deliver to the
Parent its Form 10-Q's or 10-K's, as the case may be, for such quarter or year.
The financial statements contained therein shall fairly present their respective
financial condition, results of operations and cash flows as at the date or for
the periods indicated in accordance with generally accepted accounting
principles consistently applied in accordance with past practice (except as may
be indicated in the notes thereto and except, in the case of unaudited
statements, as may be permitted by Form 10-Q of the Exchange Act), and shall be
prepared in conformity with the requirements of Regulation S-X under the
Exchange Act and Item 303 of Regulation S-K.
6.07 FAIRNESS OPINION. Within three business days of the execution of
this Agreement, the Company shall provide to the Parent a signed copy of the
written opinion of PaineWebber Incorporated that the Offer is fair to the
Company stockholders from a financial point of view, which PaineWebber
Incorporated has advised the Company it fully expects to be able to deliver at
such time.
6.08 BEST EFFORTS. Subject to the terms and conditions of this
Agreement, each of the parties hereto will use their best
<PAGE> 39
- 33 -
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement and shall use its best efforts to satisfy the conditions to the
transactions contemplated hereby and to obtain all waivers, permits, consents
and approvals and to effect all registrations, filings and notices with or to
third parties or governmental or public bodies or authorities which are
necessary or desirable in connection with the transactions contemplated by this
Agreement, including, but not limited to, filings to the extent required under
the Exchange Act and HSR Act, and obtaining consent to the Merger from Wells
Fargo Bank, National Association pursuant to the Credit Agreement. If at any
time after the Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement, the proper officers or directors of
each of the parties hereto shall take such action. Without limiting the
generality of the foregoing, the Parent as the sole stockholder of the
Purchaser, and the Purchaser as a stockholder of the Company, will consent
and/or vote in favor of the transactions contemplated hereunder, and Company,
the Parent, and the Purchaser will vigorously defend against any lawsuit or
proceeding, whether judicial or administrative, challenging this Agreement or
the consummation of any of the transactions contemplated hereby. Subject to the
terms and conditions of this Agreement, from time to time after the date hereof,
without further consideration, the Company will, at its own expense, execute and
deliver such documents to the Parent as the Parent may reasonably request in
order to consummate the transactions contemplated by this Agreement. Subject to
the terms and conditions of this Agreement, from time to time after the date
hereof, without further consideration, each of the Parent and the Purchaser
will, at its own expense, execute and deliver such documents to the Company as
the Company may reasonably request in order to consummate the transactions
contemplated by this Agreement.
6.09 FILINGS. The Company and the Parent will file, or cause to be
filed, as promptly as possible and, in the case of the Parent in no event later
than five business days after the date hereof, with the United States Federal
Trade Commission (the "FTC") and the Antitrust Division of the United States
Department of Justice (the "Department of Justice") pursuant to the HSR Act the
notification required by the HSR Act, including all requisite documents,
materials and information therefor, and request early termination of the waiting
period under the HSR Act. Each of the Company and the Parent shall furnish to
the other such necessary information and reasonable assistance as the other may
request in connection with its preparation of any filing or submission which is
necessary under the HSR Act. The Company and the Parent shall each keep the
other apprised of the status of any inquiries or requests for additional
information made by any governmental authority and shall comply promptly with
any such inquiry or request.
<PAGE> 40
- 34 -
6.10 PUBLIC ANNOUNCEMENTS. The initial press release with respect to
the transactions contemplated hereby shall be a joint press release, and
thereafter the Company and the Parent shall consult with each other before
issuing any press release or otherwise making any public statements with respect
to the transactions contemplated hereby and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by law or any listing agreement with a national securities
exchange or with National Association of Securities Dealers, Inc., or in order
to carry out the fiduciary duties of the Board, as advised by counsel.
6.11 INDEMNITY; D&O INSURANCE. (a) The Parent shall cause all rights
to indemnification by the Company now existing in favor of each present and
former director or officer of the Company (hereinafter referred to in this
Section as the "Indemnified Parties") as provided in the Company's By-Laws to
survive the Merger and to continue in full force and effect as rights to
indemnification by the Surviving Corporation for a period of five years
following the Effective Time. The Parent shall not permit the indemnification
agreements between the Company and each of the Indemnified Parties that are in
existence as of the date of this Agreement to be amended during the term of such
indemnification agreements without the consent of the respective parties
thereto.
(b) Subject to the terms set forth herein, the Surviving Corporation
shall indemnify and hold harmless, to the fullest extent permitted under
applicable law (and shall also advance expenses as incurred by an Indemnified
Party to the extent permitted under applicable law, provided the person to whom
expenses are advanced provides an undertaking to repay such advances if it is
ultimately determined that such person is not entitled to indemnification), each
Indemnified Party against any costs or expenses (including attorneys' fees),
judgments, fines, losses, claims, damages, liabilities and amounts paid in
settlement in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of or pertaining to any action, alleged action, omission or alleged omission
occurring on or prior to the Effective Time in their capacity as director or
officer (including, without limitation, any claims, actions, suits, proceedings
and investigations which arise out of or relate to the transactions contemplated
by this Agreement) for a period of five years after the Effective Time, provided
that, in the event any claim or claims are asserted or made within such five
year period, all rights to indemnification in respect of any such claim or
claims shall continue until final disposition of any and all such claims.
(c) Any Indemnified Party wishing to claim indemnification under this
Section 6.11, upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify the Surviving Corporation thereof, but the
failure to so
<PAGE> 41
- 35 -
notify shall not relieve the Surviving Corporation of any obligation to
indemnify such Indemnified Party or of any other obligation imposed by this
Section 6.11 unless and to the extent that such failure prejudices the Parent or
the Surviving Corporation; it being understood that it shall be deemed to
materially prejudice the Parent or the Surviving Corporation, as the case may
be, if, as a result of such failure to notify, the Parent or the Surviving
Corporation is not given an opportunity to assume the defense of such claim,
action, suit, proceeding or investigation within a reasonably prompt time after
such claim, action, suit, proceeding or investigation is asserted or initiated.
In the event of any such claim, action, suit, proceeding or investigation, (i)
the Surviving Corporation or the Parent shall have the right to assume the
defense thereof and shall not be liable to such Indemnified Party for any legal
expenses of other counsel or any other expenses subsequently incurred by such
Indemnified Party in connection with the defense hereof, except that if the
Parent or Surviving Corporation elects not to assume such defense or counsel for
the Indemnified Party advises that there are issues which raise conflicts of
interest between the Parent or Surviving Corporation and the Indemnified Party,
the Indemnified Party may retain counsel satisfactory to it, and the Surviving
Corporation shall pay all reasonable fees and expenses of such counsel for the
Indemnified Party promptly as statements therefore are received; PROVIDED,
HOWEVER, that in no event shall the Parent or Surviving Corporation be required
to pay fees and expenses, including disbursements and other charges, for more
than one firm of attorneys in any one legal action or group of related legal
actions unless (A) counsel for the Indemnified Party advises that there are
issues which raise conflicts of interest that require more than one firm of
attorneys, or (B) local counsel of record is needed in any jurisdiction in which
any such action is pending, (ii) the Parent and the Indemnified Party shall
cooperate in the defense of any such matter, and (iii) the Parent and the
Surviving Corporation shall not be liable for any settlement effected without
the prior written consent of one of them (which consent shall not be
unreasonably withheld); and PROVIDED, FURTHER, that the Parent and Surviving
Corporation shall not have any obligation hereunder to any Indemnified Party if
and to the extent a court of competent jurisdiction ultimately determines, and
such determination shall have become final, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by applicable
law.
(d) For two years after the Effective Time, the Parent shall cause the
Surviving Corporation to use reasonable efforts to maintain, if available for an
annual premium not in excess of $150,000, the officers' and directors' liability
insurance covering the Indemnified Parties who are presently covered by the
Company's officers' and directors' liability insurance (copies of which have
been delivered to the Parent), with respect to acts or omissions occurring at or
prior to the Effective Time, on terms no less favorable than those in effect on
the date hereof or at the Effective Time, or if such insurance coverage is not
available for
<PAGE> 42
- 36 -
an annual premium not in excess of $150,000, to obtain the amount of coverage
that is available for an annual premium of $150,000.
(e) In the event the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any person (except for any sale of the Company's molding business whether
through a merger, sale of assets, sale of stock or otherwise), then and in each
such case, proper provisions shall be made so that the successors and assigns of
the Surviving Corporation, or at Parent's option, Parent, shall assume the
obligations set forth in this Section 6.11. Notwithstanding the foregoing, if a
majority of the shares of common stock of the Company or Surviving Corporation
are sold or transferred to a third party, but the Parent, or any subsidiary of
Parent, retains ownership either of any of Company's subsidiaries that
immediately prior to the date hereof were engaged in, or substantially all of
the assets that prior to the date hereof were used in, the plastics compounding
business of the Company, the Parent shall assume the obligations of the
Surviving Corporation set forth in this Section 6.11.
(f) In the event that any of the provisions of Section 6.11(a), (b) or
(c) above would conflict with any of the provisions of the Company's By-Laws or
the indemnification agreements referenced in Section 6.11(a) above in a manner
that, if held applicable, would limit or restrict, or impose conditions or
obligations on the exercise by any of the Indemnified Parties of, any of the
indemnification rights granted to them under the Company's By-Laws or such
indemnification agreements, then, in any such event or circumstance the
applicable provisions of the Company's By-Laws or the indemnification agreements
shall control, as it is the intention of the parties that the Indemnified
Parties shall have indemnification rights no less favorable than those which
they have under the Company's By-Laws and such indemnification agreements, as in
effect on the date hereof.
(g) The covenants contained in this Section 6.11 shall survive the
Effective Time until fully discharged and are intended to benefit each of the
Indemnified Parties.
6.12 OTHER POTENTIAL BIDDERS. The Company, its affiliates and their
respective officers, directors, employees, investment bankers, attorneys and
other representatives and agents shall immediately cease any existing
discussions or negotiations, if any, with any parties conducted heretofore with
respect to any acquisition of all or any material portion of the assets of, or
any equity interest in, the Company or any business combination with the
Company. Prior to the acceptance for payment of Shares, the Company, directly or
indirectly, (a) may furnish information and access, in each case only in
response to unsolicited requests therefor, to any corporation, partnership,
person or other entity
<PAGE> 43
- 37 -
or group pursuant to confidentiality agreements that do not prohibit or restrict
disclosure to the Parent of any matter other than confidential information
regarding any such corporation, partnership, person or other entity or group and
(b) may participate in discussions and negotiate with such entity or group
concerning any proposed merger, sale of assets, sale of shares of capital stock,
acquisition of Shares other than pursuant to the Offer or the Merger or similar
transaction involving the Company or any division of the Company (an
"Acquisition Proposal"), only if such entity or group to which information or
access is furnished or discussions or negotiations are held has submitted a
written proposal to the Board relating to any such transaction and the Board by
a majority vote has determined in its good faith judgment, based as to legal
matters on the advice of legal counsel, that failing to take such action would
constitute a breach of the Board's fiduciary obligations under applicable law.
Except as set forth above, neither the Company or any of its affiliates, nor any
of its or their respective officers, directors, employees, representatives or
agents, shall, directly or indirectly, encourage, solicit, participate in or
initiate discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than the Parent
and the Purchaser, any affiliate or associate of the Parent and the Purchaser or
any designees of the Parent and the Purchaser) concerning any Acquisition
Proposal, or take any other action to facilitate the making of a proposal that
constitutes or could reasonably be expected to lead to an Acquisition Proposal.
Without limiting the foregoing, it is understood that any violation of the
restrictions set forth in the preceding sentence by any executive officer of the
Company or any of its subsidiaries shall be deemed to be a breach of this
Section 6.12 by the Company. The Company shall use its best efforts to ensure
that the officers, directors and employees of the Company and its subsidiaries
and any investment banker or other advisor or representatives retained by the
Company are aware of the restrictions set forth in the preceding sentences, and
the Company hereby represents that the Board has adopted resolutions directing
the officers, directors and employees of the Company and its subsidiaries to
comply with such restrictions. The Company promptly shall advise the Parent
orally and in writing of any Acquisition Proposal and any inquiries or
developments with respect thereto. Neither the Board nor any committee thereof
shall (i) withdraw or modify, or propose to withdraw or modify, in a manner
adverse to the Parent or the Purchaser the approval or recommendation by the
Board of the Offer, the Merger or this Agreement, or (ii) approve or recommend,
or propose to approve or recommend, any Acquisition Proposal. Notwithstanding
the foregoing, nothing contained in this Agreement shall prevent the Board from
approving or recommending to the Company stockholders any unsolicited tender
offer or exchange offer by a third party as contemplated by Rules 14d-9 and
14e-2 promulgated under the Exchange Act (and, in connection therewith,
withdrawing or modifying the approval or recommendation by the Board of the
Offer, the Merger or this Agreement) in the event any unsolicited
<PAGE> 44
- 38 -
takeover proposal shall have been made by a third party if, in the good faith
judgment of the Board, based as to legal matters on the advice of legal counsel,
withdrawing or modifying such approval or recommendation is required under
applicable law in the proper discharge of its fiduciary duties. Notwithstanding
the foregoing, nothing contained in this Section 6.12 shall prevent the Company
from negotiating and executing agreements relating to the sale by the Company of
its remaining parcel of real estate located in Corona, California as long as (i)
the terms and conditions of any such agreement shall be reasonably acceptable to
Parent and (ii) the proceeds (net of reasonable expenses of the Company relating
to such sale) of any such sale are used to reduce the indebtedness of the
Company under the revolving credit facility under the Credit Agreement.
ARTICLE VII
CONDITIONS TO THE MERGER
7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of each party to this Agreement to consummate the Merger
shall be subject to the following conditions, which have not been waived at or
prior to the Closing:
(a) The Purchaser shall have accepted for payment Shares tendered
pursuant to the Offer;
(b) This Agreement and the Merger shall have been approved and adopted
by the requisite vote or consent, if any is required, of the stockholders of the
Company required by the Company's Certificate of Incorporation and the DGCL;
(c) Any waiting period (and any extension thereof) applicable to the
Merger under the HSR Act shall have expired or been terminated; and
(d) No order, statute, rule, regulation, execution order, stay,
decree, judgment, or injunction shall have been enacted, entered, issued,
promulgated or enforced by any court or governmental authority which prohibits
or restricts the consummation of the Merger.
7.02 CONDITIONS TO THE OBLIGATIONS OF THE PARENT AND THE PURCHASER TO
EFFECT THE MERGER. The obligation of the Purchaser and the Parent to effect the
Merger shall be further subject to satisfaction of the conditions, unless waived
by the Parent, that (i) the Company shall have performed and complied in all
material respects with the agreements and obligations contained in Section 1.03,
(ii) the Company shall have performed and complied in all material respects with
the agreements and obligations contained in this Agreement (other than in
Section 1.03) required to be performed and complied with by it at or prior to
the Effective
<PAGE> 45
- 39 -
Time, except where the failure to have so performed and complied is not
reasonably expected to have a Material Adverse Effect, (iii) all outstanding
Options shall have been surrendered to the Company as provided in Section 3.05
of this Agreement and cancelled by the Company, and (iv) the Parent shall have
received a comfort letter, in form and substance reasonably requested by the
Parent, from Grant Thornton or another nationally recognized public accounting
firm regarding the updating of the Company's most recent financial statements.
7.03 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY TO EFFECT THE
MERGER. The obligation of the Company to effect the Merger shall be further
subject to the Parent and the Purchaser having performed and complied in all
material respects with the agreements and obligations contained in this
Agreement required to be performed and complied with by each of them at or prior
to the Effective Time, except where the failure to have so performed or complied
is not reasonably expected to have a material adverse effect on the ability of
the Parent or the Purchaser to consummate the transactions contemplated by this
Agreement.
ARTICLE VIII
CLOSING
8.01 TIME AND PLACE. The closing of the Merger (the "Closing") shall
take place at the offices of Jones, Day, Reavis & Pogue, North Point, 901
Lakeside Avenue, Cleveland, Ohio 44114, at 10:00 a.m. local time on a date to be
specified by the parties which shall be no later than the third business day
after the date on which the last of the closing conditions set forth in Article
VII is satisfied or waived (if waivable) unless another time, date or place is
agreed upon in writing by the parties hereto. The date on which the Closing
actually occurs is herein referred to as the "Closing Date."
8.02 FILINGS AT THE CLOSING. At the Closing, the Purchaser shall cause
the Delaware Certificate of Merger to be filed and recorded with the Secretary
of State of the State of Delaware in accordance with the provisions of Section
103 of the DGCL, and shall take any and all other lawful actions and do any and
all other lawful things necessary to cause the Merger to become effective.
ARTICLE IX
TERMINATION; AMENDMENT; WAIVER
9.01 TERMINATION. This Agreement may be terminated and the Offer (if
Purchaser has not accepted Shares for payment) and the Merger may be abandoned
at any time prior to the Effective Time:
<PAGE> 46
- 40 -
(a) by mutual written consent of the Parent, the Purchaser and the
Company;
(b) by the Parent and the Purchaser or the Company if any court of
competent jurisdiction in the United States or other United States governmental
body shall have issued an order, decree or ruling or taken any other final
action restraining, enjoining or otherwise prohibiting the Merger or the
acceptance for payment and payment for the Shares in the Offer and such order,
decree, ruling or other action is or shall have become nonappealable;
(c) by the Parent and the Purchaser if, due to an occurrence or
circumstance which would result in a failure to satisfy any of the conditions
set forth in Annex A hereto, the Purchaser shall have (A) failed to commence the
Offer within five business days following the date of the initial public
announcement of the Offer, (B) terminated the Offer or allowed the Offer to
expire without the purchase of any Shares thereunder, or (C) failed to pay for
Shares pursuant to the Offer within 75 days following the commencement of the
Offer;
(d) by the Company if (i) there shall not have been a material breach
of any representation, warranty, covenant or agreement on the part of the
Company which would entitle the Parent or the Purchaser to terminate this
Agreement pursuant to Section 9.01(e) and, due to an occurrence or circumstance
which would result in a failure to satisfy any of the conditions set forth in
Annex A hereto, the Purchaser shall have (A) failed to commence the Offer within
five business days following the date of the initial public announcement of the
Offer, (B) terminated the Offer or allowed the Offer to expire without the
purchase of any Shares thereunder, or (C) failed to pay for Shares pursuant to
the Offer within 75 days following the commencement of the Offer, or (ii) prior
to the purchase of Shares pursuant to the Offer, a corporation, partnership,
person or other entity or group shall have made a bona fide offer with respect
to an Acquisition Proposal that the Board by a majority vote determines in its
good faith judgment and in the exercise of its fiduciary duties, based as to
legal matters on the advice of legal counsel and as to financial matters on the
written fairness opinion of an investment banking firm of national reputation,
is more favorable to the Company's stockholders than the Offer and the Merger
and that the failure to terminate this Agreement and accept such offer would be
inconsistent with the proper exercise of the Board's fiduciary duties, provided
that such termination under this clause (ii) shall not be effective until
payment of the fee required by Section 9.03(b) hereof;
(e) by the Parent and the Purchaser prior to the purchase of Shares
pursuant to the Offer, if (i) there shall have been a breach of any
representation or warranty on the part of the Company having a Material Adverse
Effect or materially adversely affecting (or materially delaying) the
consummation of the Offer, (ii) there shall have been a breach of any covenant
or agreement
<PAGE> 47
- 41 -
on the part of the Company resulting in a Material Adverse Effect or materially
adversely affecting (or materially delaying) the consummation of the Offer,
(iii) the Company shall engage in negotiations with any entity or group (other
than the Parent or the Purchaser) that has proposed a Third Party Acquisition
(as defined below), (iv) the Board shall have withdrawn or modified (including
by amendment of the Schedule 14D-9) in a manner adverse to the Purchaser, its
approval or recommendation of the Offer, this Agreement or the Merger or shall
have recommended another offer, or shall have adopted any resolution to effect
any of the foregoing, or (v) a majority of the Shares on a fully diluted basis
shall not have been tendered in the Offer by the expiration date of the Offer
and on or prior to such date an entity or group (other than the Parent or the
Purchaser) shall have made and not withdrawn a proposal with respect to a Third
Party Acquisition; or
(f) by the Company if (i) there shall have been a breach of any
representation or warranty on the part of the Parent or the Purchaser which
materially adversely affects (or materially delays) the consummation of the
Offer or (ii) there shall have been a material breach of any covenant or
agreement on the part of the Parent or the Purchaser and which materially
adversely affects (or materially delays) the consummation of the Offer.
"Third Party Acquisition" means the occurrence of any of the following
events (i) the acquisition of the Company by merger or otherwise by any person
(which includes a "person" as such term is defined in Section 13(d)(3) of the
Exchange Act) or entity other than the Parent, the Purchaser or any affiliate
thereof (a "Third Party"); (ii) the acquisition by a Third Party of more than
30% of the total assets of the Company, taken as a whole; (iii) the acquisition
by a Third Party of 30% or more of the Shares; (iv) the adoption by the Company
of a plan of liquidation or the declaration or payment of an extraordinary
dividend; or (v) the repurchase by the Company of more than 20% of the Shares.
9.02 EFFECT OF TERMINATION. In the event of the termination of this
Agreement and the abandonment of the Offer and the Merger pursuant to Section
9.01, this Agreement shall forthwith become void and have no effect, without any
liability on the part of any party hereto or its affiliates, directors, officers
or stockholders, provided that no such termination shall relieve any of the
Company, the Parent or the Purchaser from liability for damages arising (a) from
any willful or intentional breach of this Agreement or (b) from their
obligations under Sections 4.22, 5.07, 6.03(b) and 9.03, this Section 9.02 and
Article X. If this Agreement is terminated as provided herein, upon request
therefor each party (the "Redelivering Party") shall redeliver all documents,
work papers and other materials obtained (whether before or after execution of
this Agreement) by the Redelivering Party from the requesting party in
connection with the transaction contemplated hereby, together with all copies
thereof in the possession of the Redelivering Party.
<PAGE> 48
- 42 -
9.03 FEES AND EXPENSES. (a) In the event the Parent and the Purchaser
terminate this Agreement pursuant to Section 9.01(c) (other than any such
termination based upon the failure to satisfy clause (iii)(d) of Annex A) or
9.01(e)(i) hereof, or the Company terminates this Agreement pursuant to Section
9.01(d)(i), or in the event that this Agreement is terminated in a manner
described in Section 9.03(b), the Company shall reimburse the Parent, the
Purchaser and their affiliates (not later than one business day after submission
of statements therefor) for all actual documented out-of-pocket fees and
expenses, not to exceed $750,000, actually and reasonably incurred by any of
them or on their behalf in connection with the Offer and the Merger and the
consummation of all transactions contemplated by this Agreement (including,
without limitation, attorneys' fees, fees payable to financing sources,
investment bankers, counsel to any of the foregoing, and accountants and filing
fees and printing costs). Upon the termination of this Agreement pursuant to any
provision described in the first sentence of this Section 9.01(a), Parent and
Purchaser will promptly provide the Company with an estimate of the amount of
such fees and expenses and a request for reimbursement hereunder, and will
provide the Company in due course with invoices or other reasonable evidence of
such expenses upon request. The Company shall in any event pay the amount
requested (not to exceed $750,000) within one business day of such request,
subject to the Company's right to demand a return of any portion as to which
invoices are not received in due course.
(b) In the event the Company terminates this Agreement pursuant to
Section 9.01(d)(ii) or in the event the Parent and the Purchaser terminate this
Agreement pursuant to 9.01(e)(ii), (iii), (iv) or (v) hereof, the Parent and the
Purchaser would suffer direct and substantial damages, which damages cannot be
determined with reasonable certainty. To compensate the Parent and the Purchaser
for such damages, the Company shall pay to the Purchaser the amount of
$1,400,000 as liquidated damages immediately upon such a termination as well as
all amounts to which the Parent and the Purchaser would be entitled pursuant to
Section 9.03(a); PROVIDED, HOWEVER, that if the Parent and the Purchaser
terminate this Agreement pursuant to 9.01(e)(iii) hereof, the Company shall pay
to the Purchaser the amount of $700,000 as liquidated damages immediately upon
such a termination (as well as all amounts to which the Parent and the Purchaser
would be entitled pursuant to Section 9.03(a)), and if within 12 months
thereafter the Company enters into an agreement with respect to a Third Party
Acquisition, or a Third Party Acquisition occurs, the Company shall pay to the
Purchaser the amount of $700,000 within one business day following the execution
of such an agreement or such occurrence, as the case may be; PROVIDED FURTHER,
HOWEVER, that Parent and Purchaser will only be entitled to recover only one
$1,400,000 payment or two $700,000 payments of liquidated damages under this
Section 9.03(b) (and one payment of fees and expenses pursuant to Section
9.03(a)) even if this Agreement is or may be terminated under more than one of
the provisions of Section 9.01
<PAGE> 49
- 43 -
described in the first sentence of this Section 9.03(b). It is specifically
agreed that the amount to be paid pursuant to this Section 9.03 represents
liquidated damages and not a penalty.
(c) Except as specifically provided in this Section 9.03 each party
shall bear its own expenses in connection with this Agreement and the
transactions contemplated hereby.
ARTICLE X
MISCELLANEOUS
10.01 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. The representations, warranties and agreements of the parties
contained in Sections 2.06, 3.01, 3.02 (but only to the extent that such Section
expressly relates to actions to be taken after the Effective Time), 3.03, 3.04,
3.05, 6.05, 6.08, 6.09, 6.11 and Article X hereof, shall survive the
consummation of the Offer and the Merger. The agreements of the parties
contained in Sections 6.03(b), 9.02, 9.03 and Article X hereof and the
representations and warranties in Sections 4.22 and 5.07 shall survive the
termination of this Agreement without termination. All other representations,
warranties, agreements and covenants in this Agreement shall not survive the
consummation of the Offer and the Merger or the termination of this Agreement.
10.02 AMENDMENT AND MODIFICATION. Subject to applicable law, this
Agreement may be amended, modified or supplemented only by written agreement of
the Parent (for itself and the Purchaser) and the Company at any time prior to
the Effective Time with respect to any of the terms contained herein executed by
duly authorized officers of the respective parties, except that after the
earlier of (a) the purchase by the Purchaser of a majority of the Shares on a
fully diluted basis, and (b) the meeting of stockholders to approve the Merger
contemplated by this Agreement, the price per Share to be paid pursuant to this
Agreement to the holders of Shares shall in no event be decreased and the form
of consideration to be received by the holders of such Shares in the Merger
shall in no event be altered without the approval of such holders.
10.03 WAIVER OF COMPLIANCE; CONSENTS. At any time prior to the
Effective Time, the parties hereto may extend the time for performance of any of
the obligations or other acts or waive any inaccuracies in the representations
and warranties contained herein or in the documents delivered pursuant hereto.
Any failure of the Parent (for itself and the Purchaser), on the one hand, or
the Company, on the other hand, to comply with any obligation, covenant,
agreement or condition herein may be waived in writing by the Parent (for itself
and the Purchaser) or the Company, respectively, but such waiver or failure to
insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of or estoppel with
<PAGE> 50
- 44 -
respect to any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of any party hereto or any extensions, such
consent or extension shall be given in writing in a manner consistent with the
requirements for a waiver of compliance as set forth in this Section 10.03.
10.04 COUNTERPARTS. This Agreement may be executed in any number
of counterparts each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
10.05 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard to
its conflicts of laws rules.
10.06 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or mailed by
registered or certified mail (return receipt requested) or by overnight courier
service to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
(a) If to the Company, to:
Prior to the Effective Time,
CIMCO, Inc.
265 Briggs Avenue
Costa Mesa, California 92626-4555
Attention: Chief Executive Officer
After the Effective Time,
CIMCO, Inc.
c/o M.A. Hanna Company
Suite 36-5000
200 Public Square
Cleveland, Ohio 44114-2304
Attention: General Counsel
with copies to:
Stradling, Yocca, Carlson & Rauth, P.C.
660 Newport Center Drive
Suite 1600
Newport Beach, California 92660-6441
Attention: Nick E. Yocca, Esq.
(b) if to the Parent or the Purchaser, to:
M. A. Hanna Company
Suite 36-5000
200 Public Square
Cleveland, Ohio 44114-2304
Attention: General Counsel
<PAGE> 51
- 45 -
with copies to:
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Attention: Lyle G. Ganske, Esq.
10.07 ENTIRE AGREEMENT, ASSIGNMENT ETC. This Agreement, which hereby
incorporates the Company Disclosure Letter, the Parent Disclosure Letter, the
Confidentiality Agreement and the Stockholder Tender Agreement, embodies the
entire agreement and understanding of the parties hereto in respect of the
subject matter hereof and, except for Section 6.11, is not intended to confer
upon any other person any rights or remedies hereunder. This Agreement
supersedes all prior agreements and understanding of the parties with respect to
the subject matter hereof other than the Confidentiality Agreement. This
Agreement and all of the provisions hereof shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns, but neither this Agreement nor any of the rights, interest or
obligations hereunder shall be assigned by any party hereto without the prior
written consent of the other parties hereto, except that the Parent shall have
the right to assign the rights of the Purchaser to any other (directly or
indirectly) wholly-owned subsidiary of the Parent without the prior written
consent of the Company.
10.08 VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
10.09 HEADINGS; CERTAIN DEFINITIONS. The Articles and Section headings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties and shall not affect in any way the meaning
or interpretation of this Agreement. Every reference herein to the word "days,"
if not preceded by the word "business," shall mean calendar days, and every
reference herein to the words "business days" shall mean each Monday, Tuesday,
Wednesday, Thursday and Friday that is not a day on which banking institutions
in the city of New York are authorized or obligated by law to close.
10.10 SPECIFIC PERFORMANCE. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this
<PAGE> 52
- 46 -
being in addition to any other remedy to which they are entitled at law or in
equity.
[INTENTIONALLY LEFT BLANK]
<PAGE> 53
- 47 -
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of the parties hereto as of the date first above
written.
CIMCO, INC.
By: RUSSELL T. GILBERT
--------------------------------------
Name: Russell T. Gilbert
Title: President and Chief Executive
Officer
M.A. HANNA COMPANY
By: MICHAEL S. DUFFEY
--------------------------------------
Name: Michael S. Duffey
Title: Vice President
HANWEST, INC.
By: MICHAEL S. DUFFEY
--------------------------------------
Name: Michael S. Duffey
Title: Vice President
<PAGE> 54
- 48 -
ANNEX A
The capitalized terms used herein have the meanings
set forth in the Agreement and Plan of Merger
to which this Annex A is attached
Notwithstanding any other provision of the Agreement and Plan of
Merger to which this ANNEX A is attached (the "MERGER AGREEMENT") or the Offer,
the Purchaser shall not be required to accept for payment, purchase or pay for
any Shares of the Company tendered, and may terminate or, subject to the terms
of the Merger Agreement, amend the Offer and may postpone the acceptance for
payment of and payment for any Shares, if prior to the time of acceptance for
payment of Shares tendered pursuant to the Offer:
(i) at least a majority of the Shares on a fully diluted basis shall
not have been validly tendered and, if tendered, not withdrawn immediately
prior to the expiration of the Offer (the "MINIMUM CONDITION");
(ii) any waiting period applicable to the Offer pursuant to the HSR
Act shall not have expired or been terminated;
(iii) at any time before the time of acceptance for payment for any
such Shares any of the following shall occur or exist:
(a) there shall have been instituted or be pending any action,
proceeding, application, claim or counterclaim by any government or
governmental authority or agency, domestic or foreign, before any
court or governmental regulatory or administrative agency, authority
or tribunal, domestic or foreign, (i) challenging the acquisition by
the Parent or the Purchaser of the Shares, seeking to restrain or
prohibit the making or consummation of the Offer or the Merger or
seeking to obtain from the Parent or the Purchaser any damages that
would result in a Material Adverse Effect if such were assessed
against the Company, (ii) seeking to prohibit or materially limit the
ownership or operation by the Parent or the Surviving Corporation of
all or any material portion of the business or assets of the Company
or compel the Parent or the Surviving Corporation to dispose of or to
hold separate all or any material portion of the business or assets of
the Company, or to impose any material limitation on the ability of
the Company or the Surviving Corporation to conduct such business or
own such assets, or (iii) seeking to impose material limitations on
the ability of the Parent (or any other affiliate of the Parent) to
acquire or hold or to exercise full rights of ownership of the Shares,
including, but not limited to,
<PAGE> 55
- 49 -
the right to vote the Shares purchased by them on all matters properly
presented to the stockholders of the Company; or
(b) there shall be any statute, rule, regulation, judgment, order
or injunction enacted, promulgated, entered, enforced or deemed
applicable to the Offer, the Merger or the Merger Agreement, or any
other action shall have been taken by any government, governmental
authority or court, domestic or foreign, other than the routine
application to the Offer or the Merger of waiting periods under the
HSR Act, that has, or has a substantial likelihood of resulting in,
any of the consequences referred to in clauses (i) through (iii) of
paragraph (a) above; or
(c) the Company shall have breached or failed to perform in any
material respect any of its obligations, covenants or agreements
contained in the Merger Agreement, or any of the representations and
warranties of the Company set forth in the Merger Agreement shall not
have been true and correct in any material respect when made or,
except for any representations and warranties made as of a specific
date, shall have ceased to be true and correct in any material respect
as if made on and as of the scheduled expiration of the Offer, as it
may be extended from time to time (the "EXPIRATION DATE") (or, in the
case of representations and warranties that are specifically qualified
as to materiality, shall not have been true and correct when made or
shall have ceased to be true and correct on and as of the Expiration
Date); or
(d) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on the New York
Stock Exchange, Inc. (ii) the declaration of a banking moratorium or
any suspension of payments in respect of banks in the United States
(whether or not mandatory), (iii) the commencement of a war, armed
hostilities or other international or national calamity directly or
indirectly involving the United States and having a Material Adverse
Effect on or materially adversely affecting (or materially delaying)
the consummation of the Offer, (iv) any limitation (whether or not
mandatory), by any U.S. governmental authority or agency on, or any
other event that, in the judgment of the Parent, is substantially
likely to materially adversely affect, the extension of credit by
banks or other financial institutions, or (v) from the date of the
Merger Agreement through the date of termination or expiration of the
Offer, a decline of at least 25% in the Standard & Poor's 500 Index;
or
<PAGE> 56
- 50 -
(e) the Merger Agreement shall have been terminated in
accordance with its terms; or
(f) prior to the purchase of Shares pursuant to the Offer, the
Company Board of Directors shall have withdrawn or modified (including
by amendment of the Schedule 14D-9) in a manner adverse to the Parent
its approval or recommendation of the Offer, the Merger Agreement or
the Merger or shall have recommended another offer for the purchase of
the Shares, which, in the sole judgment of the Parent in any such
case, and regardless of the circumstances (including any action or
omission by the Parent) giving rise to such condition, makes it
inadvisable to proceed with such acceptance for payment except where
as a result of the Company's receipt of an unsolicited acquisition
proposal from a third party (A) the Company issues to its stockholders
a communication that contains only the statements permitted by Rule
14d-9(e) under the Securities Exchange Act of 1934 (and does not
otherwise withdraw, modify or amend its approval or recommendation of
the transactions contemplated hereby) and (B) within five business
days of issuing such communication the Company publicly reconfirms its
approval and recommendation of the transactions contemplated by the
Offer and the Merger Agreement;
(g) There shall have occurred since July 31, 1995, a change,
occurrence or circumstance in the Company's business having a Material
Adverse Effect thereon; or
(h) The failure of the Company to obtain any of the waivers or
consents of Wells Fargo pursuant to the letter dated December 19, 1995
from Wells Fargo to the Company, Compounding Technology, Inc., and
Medical Molding Corporation of America.
<PAGE> 1
EXHIBIT 2.8
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
STOCKHOLDER TENDER AGREEMENT
by and between
HANWEST, INC.
and RUSSELL T. GILBERT
Dated as of December 19, 1995
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE> 2
STOCKHOLDER TENDER AGREEMENT
STOCKHOLDER TENDER AGREEMENT, dated as of December 19, 1995 (this
"Agreement"), by and between Hanwest, Inc., a Delaware corporation
("Purchaser"), and Russell T. Gilbert ("Stockholder").
WHEREAS, the Stockholder is the owner of 539,734 shares (the "Shares")
of Common Stock, $.01 par value per share (the "Common Stock"), of CIMCO, Inc.,
a Delaware corporation (the "Company"), including 4,394 Shares owned of record
by Stockholder for the benefit of his grandchildren and 10,257 Shares (the "ESOP
Shares") credited under the Company's Employee Stock Ownership Plan (the "ESOP")
to the account of Stockholder as of the date hereof, and holds stock options
(the "Options") to acquire an aggregate of 76,250 shares of Common Stock granted
pursuant to the Company's 1991 Incentive Stock Option Plan and the Company's
1988 Incentive Stock Option Plan; and
WHEREAS, M.A. Hanna Company, a Delaware corporation ("Parent"), the
Purchaser and the Company, have entered into an Agreement and Plan of Merger,
dated as of the date hereof (as amended from time to time, the "Merger
Agreement"), which provides, among other things, that, upon the terms and
subject to the conditions therein, Purchaser will make a cash tender offer (the
"Offer") for all of the outstanding shares of Common Stock and will merge with
the Company (the "Merger"); and
WHEREAS, as a condition to the willingness of Parent and Purchaser to
enter into the Merger Agreement, Purchaser has requested that the Stockholder
agree, and in order to induce Parent and Purchaser to enter into the Merger
Agreement, the Stockholder has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and subject to the terms and conditions set forth herein,
the parties hereto hereby agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The
Stockholder represents and warrants to the Purchaser as follows:
(a) The Stockholder is the sole record (except for the ESOP
Shares) and beneficial owner (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), which meaning will apply
for all purposes of this Agreement) of, and has good title to, all of the
Shares, and there exist no liens, claims, security interests, options, proxies,
voting agreements, charges or encumbrances of whatever
<PAGE> 3
nature ("Liens") affecting the Shares, subject, in the case of the ESOP Shares,
to the terms of the ESOP.
(b) Upon transfer to the Purchaser by the Stockholder of the
Shares upon consummation of the Offer or the Merger (whichever is earlier),
Purchaser will have good title to the Shares, free and clear of all Liens.
(c) Other than the Options, the Shares constitute all of the
securities (as defined in Section 3(10) of the Exchange Act, which definition
will apply for all purposes of this Agreement) of the Company beneficially
owned, directly or indirectly, by the Stockholder (excluding any securities
beneficially owned by any of his affiliates or associates (as such terms are
defined in Rule 12b-2 under the Exchange Act, which definition will apply for
all purposes of this Agreement) as to which he does not have voting or
investment power).
(d) Except for the Shares and the Options, the Stockholder does
not, directly or indirectly, beneficially own or have any option, warrant or
other right to acquire any securities of the Company that are or may by their
terms become entitled to vote or any securities that are convertible or
exchangeable into or exercisable for any securities of the Company that are or
may by their terms become entitled to vote, nor is the Stockholder subject to
any contract, commitment, arrangement, understanding or relationship (whether or
not legally enforceable) that allows or obligates him to vote or acquire any
securities of the Company.
(e) The execution and delivery of this Agreement by the
Stockholder does not, and the performance by the Stockholder of his obligations
hereunder will not, constitute a violation of, conflict with, result in a
default (or an event which, with notice or lapse of time or both, would result
in a default) under, or result in the creation of any Lien on any Shares under,
(i) any contract, commitment, agreement, understanding, arrangement or
restriction of any kind to which Stockholder is a party or by which the
Stockholder is bound or (ii) any judgment, writ, decree, order or ruling
applicable to the Stockholder.
(f) Neither the execution and delivery of this Agreement nor the
performance by the Stockholder of his obligations hereunder will (i) violate any
order, writ, injunction or judgment applicable to the Stockholder or (ii) to the
best knowledge of Stockholder, violate any law, decree, statute, rule or
regulation applicable to the Stockholder or require any consent, authorization
or approval of, filing with or notice to, any court, administrative agency or
other governmental body or authority, other than any required notices or filings
pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder (the "HSR Act") or
the federal securities laws.
2
<PAGE> 4
2. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser
represents and warrants to the Stockholder as follows:
(a) Purchaser is duly organized and validly existing and in good
standing under the laws of the State of Delaware, has the requisite corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby, and has taken all necessary corporate action
to authorize the execution, delivery and performance of this Agreement. This
Agreement has been duly and validly executed and delivered by Purchaser and
constitutes the legal, valid and binding obligation of Purchaser, enforceable
against Purchaser in accordance with its terms, except that (i) the
enforceability hereof may be subject to applicable bankruptcy, insolvency or
other similar laws, now or hereinafter in effect, affecting creditors' rights
generally, and (ii) the availability of the remedy of specific performance or
injunctive or other forms of equitable relief may be subject to equitable
defenses and would be subject to the discretion of the court before which any
proceeding therefor may be brought.
(b) The execution and delivery of this Agreement by Purchaser
does not, and the performance by Purchaser of its obligations hereunder will
not, constitute a violation of, conflict with, or result in a default (or an
event which, with notice or lapse of time or both, would result in a default)
under, its certificate of incorporation or bylaws or any contract, commitment,
agreement, understanding, arrangement or restriction of any kind to which
Purchaser is a party or by which Purchaser is bound or any judgment, writ,
decree, order or ruling applicable to Purchaser.
(c) Neither the execution and delivery of this Agreement nor the
performance by Purchaser of its obligations hereunder will violate any order,
writ, injunction, judgment, law, decree, statute, rule or regulation applicable
to Purchaser or require any consent, authorization or approval of, filing with,
or notice to, any court, administrative agency or other governmental body or
authority, other than any required notices or filings pursuant to the HSR Act or
the federal securities laws.
3. TENDER OF SHARES. The Stockholder will tender and sell (and not
withdraw) pursuant to and in accordance with the terms of the Offer all of the
Shares. Upon the purchase of all the Shares pursuant to the Offer in accordance
with this Section 3, this Agreement will terminate. In the event,
notwithstanding the provisions of the first sentence of this Section 3, any
Shares are for any reason withdrawn from the Offer or are not purchased pursuant
to the Offer, such Shares will remain subject to the terms of this Agreement.
The Stockholder acknowledges that Purchaser's obligation to accept for payment
and pay for the Shares in the Offer is subject to all the terms and conditions
of the Offer.
3
<PAGE> 5
4. TRANSFER OF THE SHARES. During the term of this Agreement, except
as otherwise provided herein, the Stockholder will not (a) offer to sell, sell,
pledge or otherwise dispose of or transfer any interest in or encumber with any
Lien any of the Shares, (b) acquire any shares of Common Stock or other
securities of the Company (otherwise than in connection with a transaction of
the type described in Section 7 and any such additional shares or securities
will be deemed Shares and included in the Shares subject to this Agreement),
including, without limitation, by exercising any of the Options, (c) deposit the
Shares into a voting trust, enter into a voting agreement or arrangement with
respect to the Shares or grant any proxy or power of attorney with respect to
the Shares, or (d) enter into any contract, option or other arrangement or
undertaking with respect to the direct or indirect acquisition or sale,
assignment or other disposition of or transfer of any interest in or the voting
of any shares of Common Stock or any other securities of the Company.
5. VOTING OF SHARES. The Stockholder, by this Agreement, does hereby
constitute and appoint Purchaser, or any nominee thereof, with full power of
substitution, during and for the term of this Agreement, as his true and lawful
attorney and proxy for and in his name, place and stead, to vote each of such
Shares at any annual, special or adjourned meeting of the stockholders of the
Company (and this appointment will include the right to sign his name (as
stockholder) to any consent, certificate or other document relating to the
Company which the laws of the State of Delaware may require or permit) (a) in
favor of the Merger, the execution and delivery by the Company of the Merger
Agreement and the approval and adoption of the terms thereof and hereof; (b)
against any action or agreement that would result in a breach in any respect of
any covenant, agreement, representation or warranty of the Company under the
Merger Agreement; and (c) against the following actions (other than the Merger
and the other transactions contemplated by the Merger Agreement): (i) any
extraordinary corporate transaction, such as a merger, consolidation or other
business combination involving the Company or its subsidiaries; (ii) a sale,
lease or transfer of a material amount of assets of the Company or one of its
subsidiaries, or a reorganization, recapitalization, dissolution or liquidation
of the Company or its subsidiaries; (iii) (A) any change in a majority of the
persons who constitute the board of directors of the Company as of the date
hereof; (B) any change in the present capitalization of the Company or any
amendment of the Company's Certificate of Incorporation or By-Laws, as amended
to date; (C) any other material change in the Company's corporate structure or
business; or (D) any other action which, in the case of each of the matters
referred to in clauses (iii)(A), (B), (C) and (D), is intended, or could
reasonably be expected, to impede, interfere with, delay, postpone, or adversely
affect the Merger and the other transactions contemplated by this Agreement and
the Merger Agreement. This proxy and power of attorney is a proxy and power
4
<PAGE> 6
coupled with an interest, and the Stockholder declares that it is irrevocable.
The Stockholder hereby revokes all and any other proxies with respect to the
Shares that he may have heretofore made or granted.
6. ENFORCEMENT OF THE AGREEMENT. The Stockholder acknowledges that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that Purchaser will be entitled to
an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which it is entitled at law or in equity, including without limitation
under Section 12 hereof.
7. ADJUSTMENTS. The number and type of securities subject to this
Agreement will be appropriately adjusted in the event of any stock dividends,
stock splits, recapitalizations, combinations, exchanges of shares or the like
or any other action that would have the effect of changing the Stockholder's
ownership of the Company's capital stock or other securities.
8. COMPLIANCE WITH MERGER AGREEMENT. Stockholder shall comply with
the requirements of Section 6.12 of the Merger Agreement.
9. TERMINATION. Except for Section 12 hereof which will only terminate
as and when provided therein, this Agreement will terminate on the earlier of
(a) the date the Merger Agreement is terminated in accordance with its terms,
(b) the purchase of all the Shares pursuant to the Offer in accordance with
Section 3, and (c) March 31, 1996.
10. EXPENSES. All fees and expenses incurred by either of the
parties hereto will be borne by the party incurring such fees and expenses.
11. BROKERAGE. Purchaser and the Stockholder represent and warrant to
the other that the negotiations relevant to this Agreement have been carried on
by Purchaser, on the one hand, and the Stockholder, on the other hand, directly
with the other, and that there are no claims for finder's fees or brokerage
commissions or other like payments in connection with this Agreement or the
transactions contemplated hereby. Purchaser, on the one hand, and the
Stockholder, on the other hand, will indemnify and hold harmless the other from
and against any and all claims or liabilities for finder's fees or brokerage
commissions or other like payments incurred by reason of action taken by him, it
or any of them, as the case may be.
12. FEE. If (a) Parent and Purchaser or the Company terminates the
Merger Agreement pursuant to Section 9.01(c), (d)
5
<PAGE> 7
or (e) thereof and (b) on or after the date hereof and not later than one year
from the date of such termination, (i) the Board of Directors of the Company
approves or recommends any proposal or offer (an "Acquisition Proposal")
concerning any merger, sale of assets, sale of shares of capital stock or
similar transaction involving the Company other than from Purchaser, or (ii) the
Company enters into an agreement with respect to a merger, acquisition,
consolidation, recapitalization, liquidation, dissolution or similar transaction
involving, or any purchase of all or a substantial portion of the assets or
equity securities of, the Company, or (iii) Stockholder disposes of any or all
of his Shares to any person not an affiliate or an associate of Purchaser or to
the Company or any affiliate thereof (or realizes cash proceeds in respect of
such Shares as a result of a distribution to the Stockholder by the Company
following the sale of a material amount of the Company's assets) in connection
with a transaction proposed, described or set forth in such Acquisition Proposal
or agreement or pursuant to such acquisition or (iv) the Company undergoes a
recapitalization, dissolution, liquidation or similar transaction proposed,
described or set forth in such Acquisition Proposal or agreement or the Company
issues an extraordinary dividend or other distribution in accordance with such
Acquisition Proposal or agreement (each, a "Subsequent Transaction") at a per
share price or with equivalent per share proceeds, as the case may be (the
"Subsequent Price"), with a value in excess of $10.50 (the "Offer Price"), then
the Stockholder will promptly pay to Purchaser an amount equal to one-half of
the product of (x) the excess of the Subsequent Price over the Offer Price and
(y) the number of Shares disposed of or otherwise participating in the
Subsequent Transaction. In the event of any stock dividends, stock splits,
recapitalizations, combinations, exchanges of shares or the like or any other
action that would have the effect of changing the Stockholder's ownership of the
Company's capital stock or other securities, the Offer Price will be
appropriately adjusted for the purpose of this Section 12.
13. MISCELLANEOUS.
(a) All representations and warranties contained herein will
survive for one year after the termination hereof.
(b) Any provision of this Agreement may be waived at any time by
the party that is entitled to the benefits thereof. No such waiver, amendment or
supplement will be effective unless in a writing and is signed by the party or
parties sought to be bound thereby. Any waiver by any party of a breach of any
provision of this Agreement will not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of
this Agreement. The failure of a party to insist upon strict adherence to any
term of this Agreement or one or more sections hereof will not be considered a
waiver or deprive that party of the right thereafter
6
<PAGE> 8
to insist upon strict adherence to that term or any other term of this
Agreement.
(c) This Agreement contains the entire agreement among Purchaser
and the Stockholder with respect to the subject matter hereof, and supersedes
all prior agreements among Purchaser and the Stockholder with respect to such
matters. This Agreement may not be amended, changed, supplemented, waived or
otherwise modified, except upon the delivery of a written agreement executed by
the parties hereto.
(d) This Agreement will be governed by and construed in
accordance with the laws of the State of Delaware applicable to contracts made
and performed in that state.
(e) The descriptive headings contained herein are for convenience
and reference only and will not affect in any way the meaning or interpretation
of this Agreement.
(f) All notices and other communications hereunder will be in
writing and will be given (and will be deemed to have been duly given upon
receipt) by delivery in person, by telecopy, or by registered or certified mail,
postage prepaid, return receipt requested, addressed as follows:
If to the Stockholder to:
Mr. Russell T. Gilbert
c/o Cimco, Inc.
265 Briggs Avenue
Costa Mesa, California 92626-4555
Telecopier: (714) 549-1167
With a copy to:
O'Melveny & Myers
Suite 1700
610 Newport Center Drive
Newport Beach, California 92660
Attention: David A. Krinsky, Esq.
Telecopier:(714) 669-6994
If to the Purchaser to:
Hanwest, Inc.
c/o M.A. Hanna Company
Suite 36-5000
200 Public Square
Cleveland, Ohio 44114-2304
Attention: General Counsel
Telecopier: (216) 589-4200
7
<PAGE> 9
with copies to:
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Attention: Lyle G. Ganske, Esq.
Telecopier: (216) 579-0212
or to such other address as any party may have furnished to the other parties in
writing in accordance herewith.
(g) This Agreement may be executed in any number of counterparts,
each of which will be deemed to be an original, but all of which together will
constitute one agreement.
(h) This Agreement is binding upon and is solely for the benefit
of the parties hereto and their respective successors, legal representatives and
assigns. Neither this Agreement nor any of the rights, interests or obligations
under this Agreement will be assigned by any of the parties hereto without the
prior written consent of the other parties, except that Purchaser will have the
right to assign to Purchaser or any other direct or indirect wholly owned
subsidiary of Parent any and all rights and obligations of Purchaser under this
Agreement, including the right to purchase Shares tendered by the Stockholder
pursuant to the terms hereof and the Offer, provided that any such assignment
will not relieve Purchaser from any of its obligations hereunder.
(i) If any term or other provision of this Agreement is
determined to be invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other terms and provisions of this Agreement will
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party hereto. Upon any such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
will negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated by this Agreement are consummated to
the extent possible.
(j) All rights, powers and remedies provided under this Agreement
or otherwise available in respect hereof at law or in equity will be cumulative
and not alternative, and the exercise of any thereof by either party will not
preclude the simultaneous or later exercise of any other such right, power or
remedy by such party.
8
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the date first above written.
HANWEST, INC.
By: MICHAEL S. DUFFY
----------------------------------
Name: Michael S. Duffy
Title: Vice President
Stockholder
RUSSELL T. GILBERT
--------------------------------------
Russell T. Gilbert
9
<PAGE> 1
EXHIBIT 10.26
[WELLS FARGO BANK LETTERHEAD]
December 19, 1995
CIMCO, Inc.
265 Briggs Avenue
Costa Mesa, California 92626
Attention: Mr. L. Ronald Trepp
Re: Waiver of Credit Document Provisions
Ladies and Gentlemen:
Please refer to the following credits presently outstanding from Wells
Fargo Bank (the "Bank") to either CIMCO, Inc. ("CIMCO") or Mesa Leasing Company
("Mesa"):
1. Reimbursement obligations of CIMCO with respect to Letter of
Credit No. SAS-186329, dated September 15, 1993 and in the
original stated amount of $5,735,960 (the "Letter of Credit").
2. Promissory Note made by CIMCO in favor of the Bank, dated as
of February 1, 1995 and in the original principal amount of
$7,500,000 (the "Term Note").
3. Promissory Note made by CIMCO in favor of the Bank, dated as
of June 9, 1995 and in the original principal amount of
$6,758,500 (the "Line of Credit Note").
4. Promissory Note made by CIMCO in favor of the Bank, dated as
of August 24, 1995 and in the original principal amount of
$1,800,000 (the "Bridge Note").
5. Promissory Note made by Mesa in favor of the Bank dated as of
July 26, 1991 and in the original principal amount of
$2,300,000 (the "Mesa Note").
Please also refer to the Credit Agreement (as amended, the "Credit Agreement"),
dated as of February 1, 1995, by and between CIMCO and the Bank which
evidences, in part, the credits identified as item nos. 1 through 4, above.
You have advised the Bank that CIMCO has negotiated an agreement of
merger with M.A. Hanna Company, a Delaware corporation ("Hanna") and Hanwest,
Inc., a Delaware corporation ("Hanwest") whereby at least the majority of the
capital stock of CIMCO will be purchased for cash by Hanwest and, thereafter,
Hanwest will be merged into CIMCO. You have further advised us that Hanwest
will at no time have any material assets or liabilities other than the capital
stock of CIMCO and that the merger transaction will have no impact on the
balance
<PAGE> 2
CIMCO, Inc.
December 19, 1995
Page 2
sheet of CIMCO. You have provided us with a draft Agreement and Plan
of Merger (draft of 12/1/95) pursuant to which this acquisition and merger
transaction is to occur (the "Merger Agreement").
Section 5.4 of the Credit Agreement contains restrictions on the
merger or consolidation of CIMCO with any corporation or other entity. Section
6.1(j) of the Credit Agreement causes a default to arise thereunder in the
event of any change in ownership of 25% or more of CIMCO's common stock.
Section 5 of the Bridge Note causes a default to arise thereunder in the event
of certain transfers of stock of CIMCO. Section 2 of that certain Pledge
Agreement, dated as of August 24, 1995, made by CIMCO in favor of the Bank
incorporates one or all of the foregoing referenced terms so that a default or
breach under said Pledge Agreement might arise therefrom. You have asked that
the Bank waive its right to declare a default or breach of the relevant
agreement(s) under these specific sections due to the transfers of stock of
CIMCO or the merger of Hanwest into CIMCO contemplated by the Merger Agreement.
The Bank hereby agrees to such waiver, such waiver to become effective upon the
timely satisfaction of the following conditions:
1. No later than December 28, 1995, amendment documentation
reasonably acceptable to the Bank shall have been executed and
delivered by CIMCO and the Bank causing the maturity date of
the Term Note to be changed to April 30, 1996. Such amendment
documentation shall be accompanied by such certificates,
opinions, and other associated documentation as the Bank may
reasonably request.
2. No later than December 28, 1995, amendment documentation
reasonably acceptable to the Bank shall have been executed and
delivered by Mesa and the Bank causing the maturity date of
the Mesa Note to be changed to April 30, 1996. Such amendment
documentation shall be accompanied by such certificates,
opinions, and other associated documentation as the Bank may
reasonably request.
3. No later than December 28, 1995, amendment documentation
reasonably acceptable to the Bank shall have been executed and
delivered by CIMCO, the Bank and any other necessary parties
which documentation shall require that, no later than April
30, 1996, CIMCO shall be obligated to deliver cash
collateral to the Bank for the purpose of securing its
reimbursement obligations with respect to the Letter of
Credit, such cash collateral to be in the amount of the Bank's
maximum credit exposure under the Letter of Credit and to be
held in an interest-bearing account at the Bank until such
time as all obligations under CIMCO's reimbursement agreement
and associated credit documentation have been satisfied in
full. Such amendment documentation shall be accompanied by
such certificates, opinions, and other associated
documentation as the Bank may reasonably request.
<PAGE> 3
CIMCO, Inc.
December 19, 1995
Page 3
4. CIMCO shall have returned to the Bank, no later than December
21, 1995, a copy of this letter countersigned with indicated
agreement and approval by CIMCO, Medical Molding Corporation
of America and Compounding Technology Inc.
5. The stock acquisition and merger contemplated by the Merger
Agreement shall have been consummated no later than April 30,
1996.
No waiver of any term or condition of any credit document is intended
or implied hereby other than with respect to the specific sections identified
above, and the waiver described herein shall become effective only upon the
timely satisfaction of all of the indicated conditions.
CIMCO has requested and the Bank has agreed that, following the
contemplated merger, the Bank will reasonably consider a request by Mesa and/or
CIMCO to:
1. Amend the Mesa Note to reinstate its original maturity date of
July 26, 1996; and/or
2. Amend the credit documentation relating to the Letter of
Credit to eliminate the need for cash collateral specified
hereinabove,
provided that the Bank's consideration of such request shall be based upon the
establishment of such new credit support and such other credit criteria as the
Bank may reasonably require. Any such amendment documentation shall be
accompanied by such certificates, opinions, and other associated documentation
as the Bank may reasonably request.
The Bank hereby acknowledges that it has also received a request from
CIMCO (a) to extend the maturity date of the Bridge Note and the Line of Credit
Note to April 30, 1996, (b) to waive compliance with the financial covenants
specified in Section 4.9 of the Credit Agreement until April 30, 1996, and (c)
to increase the credit availability under the Bridge Note by $650,000. Credit
approval for these modifications has been obtained, subject to:
1. CIMCO's execution, no later than December 28, 1995, of
applicable amendment documentation prepared by and acceptable
to Bank and its counsel;
2. CIMCO's entry into a definitive merger agreement with Hanna
and Hanwest in accord with the terms of this letter no later
than December 28, 1995;
3. CIMCO's payment of a restructure fee of $25,000 and such Bank
costs and expenses as have been incurred to the date amendment
documentation is executed;
<PAGE> 4
CIMCO, Inc.
December 19, 1995
Page 4
4. The timely execution and delivery to Bank of the amendment
documentation contemplated in paragraphs numbered 1 through 3
on page 2 hereof.
Sincerely,
ART BROKX
---------------------------------
Art Brokx
Vice President
on behalf of Wells Fargo Bank, N.A.
AGREED AND APPROVED BY:
CIMCO, INC.
By: RUSSELL T. GILBERT
-----------------------------
Russell T. Gilbert, President
-----------------------------
Printed Name and Title
MEDICAL MOLDING CORPORATION
OF AMERICA
By: RUSSELL T. GILBERT
-----------------------------
Russell T. Gilbert, Chairman
-----------------------------
Printed Name and Title
COMPOUNDING TECHNOLOGY INC.
By: RUSSELL T. GILBERT
-----------------------------
Russell T. Gilbert, Chairman
-----------------------------
Printed Name and Title
<PAGE> 1
EXHIBIT 10.27
FOURTH AMENDMENT TO CREDIT DOCUMENTS
This Fourth Amendment to Credit Documents (the "Amendment") is entered
into as of December 22, 1995, by and between CIMCO, INC., a Delaware
corporation ("Borrower") and WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank").
RECITALS
WHEREAS, Borrower and Bank are parties to that certain Credit
Agreement, dated as of February 1, 1995, as heretofore amended by that certain
First Amendment to Credit Agreement, dated as of June 9, 1995, and as further
heretofore amended pursuant to that certain Second Amendment to Credit
Agreement and Revolving Line of Credit Note, dated as of August 24, 1995, that
certain Third Amendment to Credit Documents, dated as of October 27, 1995 and
as may be further amended from time to time (the "Credit Agreement").
WHEREAS, pursuant to the terms of the Credit Agreement, Borrower has
executed a Revolving Line of Credit Note in favor of Bank, dated as of June 9,
1995 and in the original principal amount of $6,758,500 (as amended from time
to time, the "Revolving Note").
WHEREAS, pursuant to the terms of the Credit Agreement, Borrower has
executed a Promissory Note in favor of Bank, dated as of February 1, 1995 and
in the original principal amount of $7,500,000 (as amended from time to time,
the "Term Note").
WHEREAS, on or about August 24, 1995, Borrower executed in favor of
Bank that certain Promissory Note, dated as of August 24, 1995 and in the
original principal amount of $1,800,000 (as amended from time to time, the
"Bridge Note").
WHEREAS, Borrower and Bank are parties to that certain Reimbursement
Agreement, dated as of September 1, 1993 (as amended from time to time, the
"Reimbursement Agreement"). Pursuant to the terms of the Reimbursement
Agreement, a letter of credit was issued by Bank for the account of Borrower in
the stated amount of $5,735,960.
WHEREAS, various other credit and security documents have been
executed in favor of Bank with respect to the foregoing credits.
WHEREAS, Borrower has requested that Bank agree to certain amendments
to the foregoing credit documents and to certain other agreements contained
herein.
WHEREAS, Bank has agreed to certain of Borrower's requests in
accordance with the terms and subject to all conditions set forth in this
Amendment.
WHEREAS, Meas Leasing Company, a general partnership ("Mesa Leasing"),
has heretofore delivered to Bank a Promissory Note (the "Mesa Note"), dated as
of July 26, 1991 and in the original principal amount of $2,300,000.
NOW THEREFORE, the parties hereto agree as follows:
<PAGE> 2
1. Amendment to Term Note. The second sentence of the second
paragraph of the Term Note is amended to read as follows:
"Principal shall be payable on the 1st day of each month in
installments of $156,250 each, commencing March 1, 1995 and
continuing up to and including April 1, 1996, with a final
installment consisting of all remaining unpaid principal due
and payable in full on April 30, 1996."
2. Amendments to Credit Agreement and Revolving Note.
a. The second sentence of the first full paragraph on
page 2 of the Revolving Note is amended to read:
"The outstanding principal balance of this Note shall be due
and payable in full on April 30, 1996."
b. As of the date of this Amendment, the principal
balance outstanding under the Revolving Note is $4,549,327.12 and the aggregate
stated amount of the letters of credit outstanding under the letter of credit
subfeature specified in Section 1.1(c) of the Credit Agreement is
$1,449,678.47. The parties hereby agree that from and after the date of this
Amendment the maximum principal borrowing availability under the "Line of
Credit" as specified in the second paragraph of Section 1.1 of the Credit
Agreement (not including outstanding letters of credit (which include a letter
of credit in the amount of $155,428.47 and a letter of credit in the amount of
$1,294,250.00) or advances resulting from draws thereunder) shall be
$4,549,327.12.
3. Amendments to Bridge Note.
a. The "Maturity Date" as defined in the Bridge Note, is
amended to be April 30, 1996 instead of December 28, 1995.
b. The parties hereby amend the Bridge Note to reflect a
face amount of $2,450,000 instead of $1,800,000. Borrower shall become
eligible for the advance of this additional principal amount of $650,000 upon
the effectiveness of this Amendment and the satisfaction of all conditions
precedent specified in Section 8 hereof.
4. Amendment to Credit Agreement. Compliance with the financial
covenants specified in Section 4.9 of the Credit Agreement is hereby waived by
Bank for the period from December 29, 1995 through April 30, 1996 only. For
all points of time from and after April 30, 1996, full compliance with such
Section 4.9 shall be required as though this wavier had not occurred.
5. Cash Collateral. Borrower agrees that on or before April 30,
1996, it will deposit with Bank, in cash, an amount equal to $5,335,974.14 (the
"Reserve Amount"), which is the present maximum credit exposure of Bank
pursuant to the Letter of Credit. The Reserve Amount will be held by Bank as
collateral security for all obligations of Borrower that may arise under the
Reimbursement Agreement and Borrower hereby grants a security interest to Bank
in such
2
<PAGE> 3
funds to secure such obligations. Such collateral will be held in an
interest-bearing demand deposit account with Bank, and Borrower agrees to
execute and deliver to Bank such security and such other documentation as Bank
may reasonably require to further evidence such lien, provided however that the
obligation to deliver such funds by such date is unconditional and in no way
dependent upon the delivery of such additional documentation.
6. Restructure Fee. Borrower agrees to pay a restructure fee to
Bank in the amount of $25,000 upon the execution of this Amendment by Bank.
This restructure fee is fully earned at such time and is nonfundable.
7. Costs and Expenses. Borrower acknowledges that all costs and
expenses of Bank incurred in connection with the negotiation and preparation of
this Amendment, or in connection with any document or transaction contemplated
herein, are, without limitation, obligations of Borrower pursuant to Section
7.3 of the Credit Agreement. Borrower agrees to pay to Bank such costs and
expenses within five business days from the date of receipt of invoice.
8. Conditions Precedent. The effectiveness of this Amendment is
conditioned upon the satisfaction of each of the following conditions no later
than December 28, 1995, or their waiver in writing by Bank:
a. Borrower shall have paid to Bank the restructure fee
provided for in Section 6 of this Amendment;
b. Bank and Mesa Leasing shall have entered into an
amendment to the Mesa Note changing the final maturity date thereof to April
30, 1996;
c. Counsel to Borrower, Stradling, Yocca, Carlson &
Rauth, shall have delivered to Bank an opinion in form reasonably satisfactory
to Bank pertaining to this Amendment and the amendment to the Mesa Note; and
d. A definitive merger agreement shall have been entered
into between Borrower and Hanwest, Inc. in substantially the form of the
"Merger Agreement" defined in Bank's letter to Borrower of December 19, 1995,
and Borrower shall have delivered a certification thereto and satisfactory
evidence thereof to Bank.
9. Amendment of Other Loan Documents. Each of the credit and
security documents associated with a document modified herein is hereby amended
such that all references to such document contained therein shall be deemed to
be references to such document as amended by this Amendment.
10. Reservation of Rights. This Amendment is a "Loan Document" as
defined in the Credit Agreement. Breach of any covenant or agreement hereunder
shall constitute an Event of Default under the Credit Agreement.
11. Counterparts. This Amendment may be executed in counterparts
and any party may execute any counterpart, each of which shall be deemed to be
an original and all of which, taken together, shall be deemed to be one and the
same document. The execution hereof by any party shall not become effective
until this Amendment is executed by all parties hereto.
3
<PAGE> 4
12. Except as specifically provided herein, all terms and
conditions of the agreements referenced herein remain in full force and effect,
without waiver or modification.
13. Borrower hereby remakes all representations and warranties
contained in the credit documents identified herein and reaffirms all covenants
set forth therein. Borrower further certifies as of the date of this
Amendment, other than is heretofore disclosed in writing to Bank, there exists
no Event of Default as defined in the Credit Agreement, nor any condition, act
or event which with the giving of notice or the passage of time or both would
constitute any such Event of Default.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed as of the date and year first written above.
CIMCO, INC., a Delaware corporation
By: RUSSELL T. GILBERT
------------------------------
Russell T. Gilbert
President
WELLS FARGO BANK, NATIONAL
ASSOCIATION
By: ART BROKX
------------------------------
Art Brokx, Vice President
------------------------------
Printed Name and Title
4
<PAGE> 5
REAFFIRMATION OF SECURITY AGREEMENTS
By their execution hereof, Medical Molding Corporation of America, a
California corporation and Compounding Technology Inc., a California
corporation do hereby consent to all terms and provisions contained in and all
transactions contemplated by the foregoing Amendment and hereby reaffirm that
all security agreements and other undertakings heretofore made by them in favor
of Bank remain in full force and effect.
Date: December 22, 1995
MEDICAL MOLDING CORPORATION OF AMERICA,
a California corporation
By: RUSSELL T. GILBERT
-----------------------------------
Russell T. Gilbert
Chairman
COMPOUNDING TECHNOLOGY INC.,
a California corporation
By: RUSSELL T. GILBERT
-----------------------------------
Russell T. Gilbert
Chairman
5
<PAGE> 1
EXHIBIT 10.28
FIRST AMENDMENT TO PROMISSORY NOTE
This First Amendment to Promissory Note (the "Amendment") is entered
into as of December 22, 1995, by and between MESA LEASING COMPANY, a general
partnership ("Borrower") and WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank").
RECITALS
WHEREAS, Borrower has heretofore delivered to Bank that certain
Promissory Note, dated as of July 26, 1991 and in the original face amount of
$2,300,000 (as amended from time to time, the "Note").
WHEREAS, the Note is secured by a Deed of Trust made by Borrower in
favor of Bank, dated as of July 26, 1991 and recorded in the official Records
of the Orange County Recorder on July 30, 1991 as Instrument No. 91-400493.
WHEREAS, Borrower has requested that Bank agree to certain amendments
to the Note.
WHEREAS, Bank has agreed to certain of Borrower's requests in
accordance with the terms and subject to all conditions set forth in this
Amendment.
NOW THEREFORE, the parties hereto agree as follows:
1. Amendment to Note. The first sentence of the third paragraph
of the Note is hereby modified to read as follows:
"Principal shall be payable in installments as follows:
Principal shall be payable on the 26th day of each month in
equal, successive installments of TWO THOUSAND EIGHT HUNDRED
FIFTY DOLLARS ($2,850.00) each, commencing August 26, 1991,
and continuing up to and including April 26, 1996, with a
final installment consisting of all remaining unpaid principal
and all remaining accrued and unpaid interest due and payable
in full on April 30, 1996."
2. Amendment of Other Loan Documents. Each of the credit and
security documents associated with the Note is hereby amended such that all
references to the Note contained therein shall be deemed to be references to
the Note as amended by this Amendment.
3. Counterparts. This Amendment may be executed in counterparts
and any party may execute any counterpart, each of which shall be deemed to be
an original and all of which, taken together, shall be deemed to be one and the
same document. The execution hereof by any party shall not become effective
until this Amendment is executed by all parties hereto.
4. Except as specifically provided herein, all terms and
conditions of the agreements referenced herein remain in full force and effect,
without waiver or modification.
<PAGE> 2
5. Borrower hereby remakes all representations and warranties
contained in the credit documents identified herein and reaffirms all covenants
set forth therein. Borrower further certifies as of the date of this
Amendment, other than as heretofore disclosed in writing to Bank, there exists
no Event of Default as defined in the Note, nor any condition, act or event
which with the giving of notice or the passage of time or both would constitute
any such Event of Default.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed as of the date and year first written above.
MEAS LEASING COMPANY,
a general partnership
By: RUSSELL T. GILBERT
----------------------------------
Russell T. Gilbert
its general partner
By: CIMCO, INC., a Delaware
corporation, its general partner
By: RUSSELL T. GILBERT
-----------------------------
Russell T. Gilbert
President
WELLS FARGO BANK, NATIONAL ASSOCIATION
By: ART BROKX
---------------------------------
Art Brokx, Vice President
---------------------------------
Printed Name and Title
2
<PAGE> 1
EXHIBIT 99.1
(BW)(VITAL-SIGNS)(VITL) Vital Signs acquires respiratory product line and
enters into multi-year managed care contract
Business Editors & Health/Medical Industry Writers
TOTOWA, N.J.--(HealthWire)--Dec. 5, 1995--VITAL SIGNS Inc. (Nasdaq:
VITL) announced today that it has signed a definitive agreement to acquire the
respiratory product line from Medical Molding Corporation of America Inc., a
subsidiary of CIMCO Inc.
The respiratory product line, consisting of nebulizer and humidifier
products are sold under the trademark Misty Ox(R) with sales of approximately
$3.3 million by Medical Molding for its fiscal year ended April 30, 1995.
Terence D. Wall, president and chief executive officer of Vital Signs,
stated: "The Misty Ox respiratory product line expands our respiratory product
offering for the Vital Signs direct sales force. Given the strong market share
presence that Vital Signs enjoys in the anesthesia and respiratory market, the
Misty Ox product line with its established niche, will enable our sales
personnel to present an even broader menu of respiratory products to our
hospital customers. Opportunities for increased sales of Misty Ox products
exist in the domestic hospital and home care markets where Misty Ox products
have been sold and in the international markets where sales efforts have just
started."
Additionally, Vital Signs announced that it has entered into a
multi-year sole source contract to sell anesthesia and critical care products
to Tenet Healthcare through October 1, 1998. Products under contract include
anesthesia face masks, circuits and circuit components for three years. A sole
source two year contract for single patient blood pressure cuffs has also been
awarded.
"We believe supplier/provider partnerships will be a key to success in
the future," stated Dan Reuvers, vice president of sales for Vital Signs. "The
Tenet relationship is an exciting stride in that direction."
Tenet is the second largest investor owned hospital group in the United
States with nearly one-hundred hospitals under ownership. These facilities,
along with some of their affiliate groups (ORNDA, BRIM) will participate in
this relationship.
Vital Signs, was recognized in the November, 1995 issue of Forbes
Magazine as one of "The 200 Best Small Companies in America"; signifying Vital
Signs continual commitment to design the highest quality single-patient use
medical product for anesthesia and critical care applications.
CONTACT: Vital Signs Inc.
Terence D. Wall
or Tony Dimun
201/790-1330
or
Torrance Group
Judy Santiago, 212/508-3460
<PAGE> 1
EXHIBIT 99.2
NEWS RELEASE
For Immediate Release
Investor contact: Barb Gould 216/589-4085
Media contact: Andy Opila 216/589-4018
CIMCO, Inc. contact: Tammy Trenkmann 714/546-4460
Pondel Parsons & Wilkinson contact: Cecilia Wilkinson 310/207-9300
M.A. HANNA REACHES DEFINITIVE
AGREEMENT TO ACQUIRE CIMCO
CLEVELAND (December 20, 1995) -- M.A. Hanna Company (NYSE/CHX:MAH), an
international specialty chemicals company, and CIMCO, Inc. (NASD:CIMC) jointly
announced that they have entered into a definitive merger agreement whereby M.A.
Hanna will acquire for $10.50 per share in cash all of the outstanding capital
stock of CIMCO, a producer of thermoplastic compounds and plastic components.
M.A. Hanna will promptly commence a tender offer to acquire all
outstanding shares of CIMCO common stock for $10.50 per share in cash. The
tender offer will be conditioned upon governmental approvals, among other
clearances, and the acquisition of a majority of the CIMCO commmon shares
by M.A. Hanna. Russell T. Gilbert, president and chief executive officer of
CIMCO and that company's largest stockholder, agreed to tender his 539,734
shares to
<PAGE> 2
M.A. Hanna pursuant to the tender offer. The merger agreement provides that
following the consummation of the offer the remaining CIMCO common shares will
be acquired for $10.50 per share in cash through a merger in which CIMCO will
become a business unit of M.A. Hanna. In connection with its approval of the
definitive agreement, CIMCO amended its share purchase rights to exclude the
M.A. Hanna transaction.
Gilbert said, "My objective and that of the CIMCO management team and board
of directors has been to maximize shareholder value. This transaction fulfills
that objective, and we're pleased that Hanna has recognized our achievements."
Consistent with its strategy as an intermediary between the polymer
producer and the end product manufacturer, M.A. Hanna intends to sell CIMCO's
plastics components business and retain its plastics compounding operations.
CIMCO's plastics compounding businesses, which operate as Compounding
Technology, Inc. (CTi), are located in Singapore; Corona, Calif.; and Charlotte,
N.C. accounting for 31 million pounds of capacity. Another facility is under
construction in France.
"The acquisition of CTi helps us on three fronts to have a more balanced
market profile. First, we will grow out international business. CTi provides
Hanna with an excellent base for growth in Asia," said Martin D. Walker, M.A.
Hanna chairman and chief executive officer.
<PAGE> 3
"Second, CTi's strong engineering plastics compounding business will add
breadth to our specialty compounding portfolio throughout the world," Walker
continued. "Third, we are able to build a stronger position in the electrical
and electronics and business machines markets."
CTi, formed in 1980, had sales of $44 million in fiscal 1995 and has 95
associates. Through the first six months of fiscal 1996, CTi's sales have nearly
doubled and operating profits are running five times greater than the same
period in fiscal 1995. The company develops and produces engineering plastic
compounds with an emphasis on polycarbonate resins, which are used in the
electrical/electronics, business machine and appliance markets because of the
material's toughness, clarity and heat resistance.
CIMCO, Inc., with headquarters in Costa Mesa, Calif., reported sales of $83
million for fiscal 1995. CIMCO was founded in 1959.
M.A. Hanna Company is a leading international specialty chemicals company.
It's primary businesses are plastics and rubber compounding, color and additive
concentrates and distribution of plastic resins and engineered shapes.
