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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
MDT CORPORATION
(Name of Subject Company)
MDT CORPORATION
(Name of Person Filing Statement)
COMMON STOCK, PAR VALUE $1.25 PER SHARE,
INCLUDING THE ASSOCIATED
COMMON STOCK PURCHASE RIGHTS
(Title of Class of Securities)
552687 10 5
(CUSIP Number of Class of Securities)
J. MILES BRANAGAN
CHIEF EXECUTIVE OFFICER
MDT CORPORATION
STRATFORD HALL
SUITE 200
1009 SLATER ROAD
DURHAM, NORTH CAROLINA 27703
(919) 941-9745
(Name, address and telephone
number of person authorized to
receive notice and communications on
behalf of the person filing statement)
with a copy to:
C. JAMES LEVIN
O'MELVENY & MYERS
400 SOUTH HOPE STREET
15TH FLOOR
LOS ANGELES, CALIFORNIA 90071
(213) 669-6000
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is MDT Corporation, a Delaware corporation
(the "Company"), and the address of the principal executive offices of the
Company is Stratford Hall, Suite 200, 1009 Slater Road, Durham, North Carolina
27703. The title of the class of equity securities to which this statement
relates is the Common Stock, par value $1.25 per share, of the Company (the
"Shares"), including the associated Common Stock Purchase Rights (the "Rights")
of the Company issued pursuant to the Rights Agreement dated as of February 12,
1990, between the Company and Bank of America, N.T. & S.A., as rights agent, as
extended or amended pursuant to the Rights Agreement dated as of August 1, 1992
and the Amendment to Rights Agreement dated as of May 10, 1996, between the
Company and Chemical Trust Company of California, as successor rights agent.
Unless the context requires otherwise, all references to Shares herein shall
include the associated Rights.
ITEM 2. TENDER OFFER OF THE BIDDER.
This statement relates to the tender offer (the "Offer") by Getinge
Acquisition Corp., a Delaware corporation (the "Bidder"), and an indirect
wholly-owned subsidiary of Getinge Industrier AB (publ), a corporation organized
under the laws of Sweden ("Getinge"), for all outstanding Shares at $4.50 per
Share (the "Offer Price"), net to the seller in cash, upon the terms and subject
to the conditions set forth in the Agreement and Plan of Merger dated as of May
12, 1996 (the "Merger Agreement"), by and among Getinge, the Bidder and the
Company. The Offer is disclosed in a Tender Offer Statement on Schedule 14D-1
dated May 17, 1996, as filed with the Securities and Exchange Commission (the
"Schedule 14D-1"). The address of the principal executive offices of the Bidder
is set forth in the Schedule 14D-1, 8130 Lehigh Avenue, Morton Grove, Illinois
60053.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and address of the Company, which is the person filing this
statement, are set forth in Item 1 above.
(b) Certain contracts, agreements, arrangements and understandings between
the Company and certain of its directors and executive officers are described on
pages I-5 through I-6 (under the caption "Directors Compensation"), pages I-7
through I-10 (under the captions "Employment Agreements" and "Employee Benefit
Plans") and Page I-11 (under the section entitled "Certain Transactions") of the
Company's Information Statement pursuant to Section 14(f) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and Rule 14f-1 thereunder
(the "Information Statement"), a copy of which is included as Schedule I hereto
and incorporated herein by reference in its entirety. As of the date hereof,
except as described under the captions "Merger Agreement" and "Environmental
Investigations Indemnity" below or as set forth in the above-referenced sections
of the Information Statement, there exists no material contract, agreement,
arrangement or understanding and no actual or potential conflict of interest
between the Company or its affiliates and (i) the Company's executive officers,
directors or affiliates, or (ii) the Bidder or the Bidder's executive officers,
directors or affiliates.
MERGER AGREEMENT
The following is a summary of the Merger Agreement. Defined terms used
below and not defined herein have the respective meanings assigned to those
terms in the Merger Agreement. The following summary is qualified in its
entirety by reference to the Merger Agreement, a copy of which is filed as
Exhibit (c)(1) hereto and is incorporated herein by reference in its entirety.
The Offer. The Merger Agreement provides that the obligation of Bidder to
accept for payment Shares tendered pursuant to the Offer is subject to the
satisfaction or waiver of the Minimum Condition and the other conditions
described below. See "Certain Conditions of the Offer." The Merger Agreement
provides that, without the prior written consent of the Company, Bidder will not
(i) decrease the Offer Price, (ii) decrease the number of Shares sought, (iii)
decrease the Minimum Condition, (iv) change the form of consideration
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payable in the Offer, or (v) impose any additional, or amend any other term or
condition of the Offer in any manner adverse to the Stockholders.
Pursuant to the Merger Agreement, the Company has approved of and consented
to the Offer and has represented that the Board of Directors of the Company has
(i) unanimously determined that each of the Merger Agreement, the Offer and the
Merger are fair to and in the best interests of Stockholders, (ii) received the
opinion of Lehman Brothers Inc. to the effect that the Offer and the Merger are
fair to Stockholders from a financial point of view, (iii) approved the Merger
Agreement and the transactions contemplated thereby, including the Offer and the
Merger, and (iv) resolved to recommend that Stockholders accept the Offer,
tender their Shares thereunder to Bidder and approve and adopt the Merger
Agreement and the Merger. Pursuant to the Merger Agreement, the Company has
agreed that concurrent with the commencement of the Offer, it will file with the
Commission and mail to Stockholders this Schedule 14D-9, which contains the
recommendation of the Board of Directors that Stockholders accept the Offer,
tender their Shares thereunder and approve and adopt the Merger Agreement and
the Merger.
Certain Conditions of the Offer. In addition to (and not in limitation of)
Bidder's rights to extend and amend the Offer at any time in its sole discretion
(subject to the provisions of the Merger Agreement), Bidder will not be required
to accept for payment or, subject to any applicable rules and regulations of the
Securities and Exchange Commission (the "Commission"), including Rule 14e-1(c)
under the Exchange Act (relating to Bidder's obligation to pay for or return
tendered Shares promptly after termination or withdrawal of the Offer), pay for,
and may delay the acceptance for payment of or, subject to the restriction
referred to above, the payment for, any tendered Shares, and may terminate or
amend the Offer as to any Shares not then paid for, if (i) there shall not have
been validly tendered and not withdrawn prior to the expiration of the Offer
such number of Shares which would constitute at least the Minimum Condition,
(ii) any applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvement Act of 1976, as amended (the "HSR Act") has not expired or
terminated, or (iii) at any time on or after the date of the Merger Agreement
and before the time of payment for any such Shares, any of the following events
shall occur or shall be determined by Bidder, in its sole discretion (reasonably
determined), to have occurred:
(a) there shall have been any action taken, or any statute, rule,
regulation, judgment, order or injunction promulgated, entered, enforced,
enacted, issued or deemed applicable to the Offer or the Merger by any
domestic or foreign federal or state governmental regulatory or
administrative agency or authority or court or legislative body or
commission which (1) prohibits, or imposes any material limitations, other
than limitations generally affecting the industries in which the Company
and Getinge conduct their business, on Getinge's or Bidder's ownership or
operation (or that of any of their respective subsidiaries or affiliates)
of all or a material portion of the Company's businesses or assets as a
whole, or compels Getinge or Bidder or their respective subsidiaries and
affiliates to dispose of or hold separate any material portion of the
business or assets of the Company or Getinge, in each case taken as a
whole, (2) prohibits, or makes illegal, the acceptance for payment, payment
for or purchase of Shares or the consummation of the Offer, the Merger or
the other transactions contemplated by the Merger Agreement, (3) results in
the material delay in the ability of Bidder, or renders Bidder unable, to
accept for payment, pay for or purchase a material amount of the Shares, or
(4) imposes material limitations on the ability of Bidder or Getinge
effectively to exercise full rights of ownership of the Shares, including,
without limitation, the right to vote the Shares purchased by it on all
matters properly presented to Stockholders;
(b) there shall have occurred (1) any general suspension of trading
in, or limitation on prices for, securities in the NASDAQ National Market
System, for a period in excess of three hours, (2) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States or Sweden (whether or not mandatory), (3) a commencement of a
war, armed hostilities or other national or international calamity directly
or indirectly involving the United States or Sweden and having a Material
Adverse Effect (as defined in the Merger Agreement) or materially adversely
affecting or delaying the Offer, (4) any limitation (whether or not
mandatory) by any Swedish or United States governmental authority on the
extension of credit by banks or other financial institutions in a manner
which prohibits the extension of funds under the financing commitment
provided to Getinge by
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Skandinaviska Enskilda Banken AB, or (5) in the case of any of the
foregoing existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof;
(c)(1) the representations and warranties of the Company set forth in
the Merger Agreement shall not be true and correct in any material respects
as of the date of the Merger Agreement and as of consummation of the Offer
as though made on or as of such date, (2) the Company shall have failed to
comply with its covenants and agreements under the Merger Agreement in all
material respects or (3) there shall have occurred any events or changes
which have had individually or in the aggregate a Material Adverse Effect
on the Company and its subsidiaries taken as a whole; provided, however,
that for purposes of determining the trueness and correctness of the
representations and warranties under clause (1) above and for purposes of
clause (3) above, no change or effect shall be deemed a Material Adverse
Effect to the extent that such change or effect arises (i) from
developments, events or changes arising out of the transactions
contemplated by the Merger Agreement and specifically relating to Getinge
as the acquiror of the Company or (ii) from general economic conditions or
matters generally affecting the industries in which the Company conducts
its business;
(d) the Board of Directors shall have withdrawn, or modified or
changed in a manner adverse to Getinge or Bidder (including by amendment of
this Schedule 14D-9) its recommendation of the Offer, the Merger Agreement,
or the Merger, or recommended another proposal or offer, or the Board of
Directors, upon request of Bidder, shall fail to reaffirm such approval or
recommendation or shall have resolved to do any of the foregoing; or
(e) the Merger Agreement shall have terminated in accordance with its
terms;
which in the sole judgment of Getinge or Bidder (subject to the provisions of
the Merger Agreement), in any such case, and regardless of the circumstances
(including any action or inaction by Getinge or Bidder) giving rise to such
conditions makes it inadvisable to proceed with the Offer and/or with such
acceptance for payment of or payment for Shares.
Subject to the provisions of the Merger Agreement, the foregoing conditions
are for the sole benefit of Getinge and Bidder and may be asserted by Bidder or,
subject to the terms of the Merger Agreement, may be waived by Getinge or
Bidder, in whole or in part at any time and from time to time in the sole
discretion of Getinge or Bidder, provided, that the condition set forth in
clause (e) above may be waived only by the mutual consent of Getinge or Bidder
and the Company.
The Merger. The Merger Agreement provides that, subject to the terms and
conditions thereof, at the Effective Time, Bidder will be merged with and into
the Company and the separate corporate existence of Bidder shall cease, with the
Company continuing as the surviving corporation in the Merger (sometimes
hereinafter referred to as the "Surviving Corporation"), and continuing to be
governed by the laws of the State of Delaware. As of the Effective Time, each
Share issued and outstanding (other than Shares held in the treasury of the
Company or any subsidiary thereof, any Shares owned by Bidder or any subsidiary
thereof, and any Shares held by Stockholders exercising appraisal rights
pursuant to the DGCL) will be converted into the right to receive the Offer
Price in cash, without interest.
Pursuant to the Merger Agreement, as of the Effective Time, by virtue of
the Merger and without any action on the part of the holders of any Shares or
any shares of capital stock of Bidder, each issued and outstanding share of
capital stock of Bidder will be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation.
Agreements of the Company, Getinge and Bidder. In the Merger Agreement,
the Company has represented that the Board of Directors has duly and validly
approved the transactions contemplated thereby for the purposes of Section 203
of the DGCL. Accordingly, the provisions of Section 203 of the DGCL will not
apply to the transactions contemplated by the Merger Agreement. The Company has
also represented that no other state takeover statute or similar statute or
regulation applies or purports to apply to the Offer, the Merger or the other
transactions contemplated by the Merger Agreement. Furthermore, the Company has
represented in the Merger Agreement that the Board of Directors has taken all
necessary action so that (i) the
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Rights will not be exercisable, trade separately, or be otherwise affected by
the Offer, the Merger or the other transactions contemplated by the Merger
Agreement, (ii) in consummating the Offer and the Merger, none of Getinge and
its affiliates will be deemed to be an "Acquiring Person" for purposes of the
Rights Agreement, and (iii) a "Distribution Date" (as defined in the Rights
Agreement) will not occur by virtue of the Offer, the Merger or the other
transactions contemplated by the Merger Agreement. The Company has also agreed
in the Merger Agreement to take any action reasonably requested by Getinge to
ensure and confirm that the Company, Getinge and their respective affiliates
will not have any obligations in connection with the Rights or the Rights
Agreement in connection with the Offer, the Merger and the other transactions
contemplated by the Merger Agreement.
Pursuant to the Merger Agreement, the Company shall, if required by
applicable law in order to consummate the Merger, duly call, give notice of,
convene and hold a special meeting of its Stockholders (the "Special Meeting")
as promptly as practicable following the acceptance for payment and purchase of
Shares by Bidder pursuant to the Offer for the purpose of considering and taking
action upon the approval of the Merger and the adoption of the Merger Agreement.
If Bidder acquires (pursuant to the Offer or otherwise) at least two-thirds of
the outstanding Shares, Bidder will have sufficient voting power to approve the
Merger without the affirmative vote of any other Stockholder.
The Merger Agreement provides that if required by applicable law in order
to consummate the Merger, the Company, acting through its Board of Directors,
shall, in accordance with applicable law, prepare and file with the Commission a
preliminary proxy or information statement in accordance with the Exchange Act
relating to the Merger and the Merger Agreement and use its best efforts to
obtain and furnish the information required to be included by the Exchange Act
and the Commission in such proxy or information statement (including any
amendment or supplement thereto, the "Proxy Statement") and, after consultation
with Getinge, to respond promptly to any comments made by the Commission with
respect to the preliminary Proxy Statement and cause a definitive Proxy
Statement to be mailed to its stockholders. The Company has also agreed to
include in the Proxy Statement the recommendation of the Board of Directors that
Stockholders vote in favor of the approval of the Merger and the adoption of the
Merger Agreement. Getinge has agreed to vote, or cause to be voted, all Shares
then owned by it, Bidder or any of Getinge's other subsidiaries in favor of the
approval of the Merger and the adoption of the Merger Agreement.
The Merger Agreement further provides that each of Getinge, Bidder and the
Company have agreed, upon the terms and subject to the conditions set forth in
the Merger Agreement, to use all reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and cooperate
with the other parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner practicable, the
Offer and the Merger, and the other transactions contemplated by the Merger
Agreement, including to obtain all necessary waivers, consents and approvals, to
defend all lawsuits or other legal proceedings challenging the Merger Agreement
or the consummation of any of the transactions contemplated by the Merger
Agreement, and to execute and deliver any additional instruments necessary to
consummate the transactions contemplated by, and to fully carry out the purposes
of, the Merger Agreement.
The Merger Agreement provides that promptly upon the purchase of and
payment for any Shares pursuant to the Offer, Getinge shall be entitled to
designate for appointment or election to the Board of Directors, upon written
notice to the Company, such number of directors, rounded up to the next whole
number, on the Board of Directors such that the percentage of its designees on
the Board shall equal the percentage of the outstanding Shares beneficially
owned by Getinge and its affiliates. In furtherance thereof, the Company shall,
upon request of Bidder, use its best efforts promptly to cause Getinge's
designees to be so elected to the Company's Board, and in furtherance thereof,
to the extent necessary, increase the size of the Board of Directors. The
Company shall also cause persons designated by Getinge to constitute at least
the same percentage (rounded up to the next whole number) as is on the Board of
Directors of (i) each committee of the Board of Directors, (ii) each board of
directors (or similar body) of each subsidiary of the Company and (iii) each
committee (or similar body) of each such board. The Company has agreed to
promptly take all actions required pursuant to Section 14(f) of the Exchange Act
and Rule 14f-1 thereunder in order to fulfill its obligations to appoint such
designees, including mailing to stockholders the information required by such
Section 14(f) and Rule 14f-1 (or, at Getinge's request, furnishing such
information to Getinge for inclusion in the Schedule 14D-1 and the Offer to
Purchase) as is necessary to enable Getinge's
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designees to be elected to the Board of Directors. Such required information is
set forth in Schedule I to the Company's Schedule 14D-9.
From and after the time, if any, that Getinge's designees constitute a
majority of the Board of Directors, any amendment of the Merger Agreement, any
termination of the Merger Agreement by the Company, any extension of time for
performance of any of the obligations of Getinge or Bidder thereunder, any
waiver of any condition or any of the Company's rights thereunder or other
action by the Company thereunder may be effected only by the action of a
majority of the directors of the Company then in office who are not officers of
Getinge or designees, stockholders or affiliates of Getinge, which action shall
be deemed to constitute the action of any committee specifically designated by
the Board of Directors to approve the actions and transactions contemplated by
the Merger Agreement and the full Board of Directors; provided, that if there
shall be no such directors, such actions may be effected by majority vote of the
entire Board of Directors.
The Merger Agreement provides that the directors of Bidder at the Effective
Time shall be the initial directors of the Surviving Corporation. The officers
of the Company at the Effective Time will be the initial officers of the
Surviving Corporation.
The Company has agreed in the Merger Agreement that until the acquisition
of the Shares pursuant to the Offer, except as specifically contemplated by the
Merger Agreement, the Company shall and shall cause its subsidiaries to carry on
their respective businesses in the ordinary course and use all commercially
reasonable efforts consistent with good business judgment to preserve intact
their current business organizations and, subject to complying with subsections
(viii) and (ix) below, keep available the services of their current officers and
key employees and preserve their relationships consistent with past practice
with desirable customers, suppliers, licensors, licensees, distributors and
others having business dealings with them. The Company has further covenanted
and agreed that, except as expressly contemplated by the Merger Agreement or as
consented to in writing by Getinge (which consent shall not be withheld
unreasonably), after the date of the Merger Agreement and prior to the
consummation of the Offer:
(i) neither the Company nor any of its subsidiaries shall, directly or
indirectly, amend its certificate of incorporation or by-laws or similar
organizational documents;
(ii) neither the Company nor any of its subsidiaries shall: (A)(1)
declare, set aside or pay any dividend or other distribution payable in
cash, stock or property with respect to the Company's capital stock or that
of its subsidiaries, or (2) redeem, purchase or otherwise acquire directly
or indirectly any of the Company's capital stock or that of its
subsidiaries; (B) issue, sell, pledge, dispose of or encumber any
additional shares of, or securities convertible into or exchangeable for,
or options, warrants, calls, commitments or rights of any kind to acquire,
any shares of capital stock of any class of the Company or its
subsidiaries, other than Shares issued upon the exercise of employee or
director stock options ("Options") outstanding on the date of the Merger
Agreement granted under the Company's 1987 Stock Option Plan, as amended
and restated through May 1, 1993 (the "Option Plan") as in effect on the
date of the Merger Agreement; or (C) split, combine or reclassify the
outstanding capital stock of the Company or of any of the subsidiaries of
the Company;
(iii) neither the Company nor any of its subsidiaries shall acquire or
agree to acquire (A) by merging or consolidating with, or by purchasing a
substantial portion of the assets of, or by any other manner, any business
or any corporation, partnership, joint venture, association or other
business organization or division thereof (including entities which are
subsidiaries of the Company or any of the Company's subsidiaries) or (B)
any assets, including real estate, except (1) purchases of inventory,
furnishings, equipment, fuel and other non-material assets in the ordinary
course of business consistent with past practice or (2) expenditures
consistent with the Company's current capital budget previously provided to
Getinge as set forth in the Merger Agreement (the "Capital Budget");
(iv) neither the Company nor any of its subsidiaries shall make any
new capital expenditure or expenditures, other than capital expenditures
not to exceed, in the aggregate, the amounts provided for capital
expenditures in the Capital Budget;
(v) neither the Company nor any of its subsidiaries shall, except in
the ordinary course of business and consistent with past practice or as
provided for in the Capital Budget, undertake or agree to
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undertake any capital expenditures for the construction or acquisition of
any plant, manufacturing or distribution facility, equipment, or other real
property or fixtures except in the ordinary course of business and
consistent with past practice;
(vi) neither the Company nor any of its subsidiaries shall, except in
the ordinary course of business and except as otherwise permitted by the
Merger Agreement, modify, amend or terminate any material contract or
agreement set forth in any reports, proxy statements, forms and other
documents required to be filed with the Commission since January 1, 1993
(the "Commission Documents") to which the Company or any subsidiary thereof
is a party or waive, release or assign any material rights or claims;
(vii) neither the Company nor any of its subsidiaries shall transfer,
lease, license, sell, mortgage, pledge, dispose of, or encumber any
property or assets other than in the ordinary course of business and
consistent with past practice;
(viii) neither the Company nor any of its subsidiaries shall: (A)
enter into any employment or severance agreement with or, except in
accordance with the existing written policies of the Company, grant any
severance or termination pay to any officer, director or key employee of
the Company or any its subsidiaries; or (B) hire or agree to hire any new
or additional key employees or officers at an annual salary in excess of
$125,000;
(ix) neither the Company nor any of its subsidiaries shall, except as
required to comply with applicable law or expressly provided in the Merger
Agreement, (A) adopt, enter into, terminate or amend any Benefit Plan (as
defined in the Merger Agreement) or other arrangement for the current or
future benefit or welfare of any director, officer or current or former
employee, except to the extent necessary to coordinate any such Benefit
Plans with the terms of the Merger Agreement, (B) increase in any manner
the compensation or fringe benefits of, or pay any bonus to, any director,
officer or employee (except for normal increases or bonuses in the ordinary
course of business consistent with past practice to employees other than
directors, officers or senior management personnel and that, in the
aggregate, do not result in a significant increase in benefits or
compensation expense to the Company and its subsidiaries relative to the
level in effect prior to such action (but in no event shall the aggregate
amount of all such increases exceed 3% of the aggregate annualized
compensation expense of the Company and its subsidiaries reported in the
most recent audited financial statements of the Company included in the
Commission Documents)), (C) pay any benefit not provided for under any
Benefit Plan, (D) grant any awards under any bonus, incentive, performance
or other compensation plan or arrangement or Benefit Plan (including the
grant of stock options, stock appreciation rights, stock based or stock
related awards, performance units or restricted stock, or the removal of
existing restrictions in any Benefit Plans or agreements or awards made
thereunder) or (E) except as required by the current terms thereof, take
any action to fund or in any other way secure the payment of compensation
or benefits under any employee plan, agreement, contract or arrangement or
Benefit Plan;
(x) neither the Company nor any of its subsidiaries shall: (A) incur
or assume any long-term debt, or except in the ordinary course of business,
incur or assume any short-term indebtedness in amounts not consistent with
past practice; (B) incur or modify any material indebtedness or other
liability except as set forth in the Merger Agreement; (iii) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other
person, except in the ordinary course of business and consistent with past
practice; (D) make any loans, advances or capital contributions to, or
investments in, any other person (other than to wholly-owned subsidiaries
of the Company, or by such subsidiaries to the Company, or customary loans
or advances to employees in accordance with past practice); (E) settle any
claims in excess of $100,000 other than in the ordinary course of business,
in accordance with past practice, and without admission of liability; or
(F) enter into any material commitment or transaction in excess of $100,000
except in the ordinary course of business;
(xi) neither the Company nor any of its subsidiaries shall change any
of the accounting methods used by it unless required by U.S. GAAP;
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(xii) neither the Company nor any of its subsidiaries shall make any
material tax election or settle or compromise any material tax liability;
(xiii) neither the Company nor any of its subsidiaries shall pay,
discharge or satisfy any claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction of any such claims, liabilities or
obligations, in the ordinary course of business and consistent with past
practice, or of claims, liabilities or obligations reflected or reserved
against in, or contemplated by, the consolidated financial statements (or
the notes thereto) of the Company and its consolidated subsidiaries; or,
except in the ordinary course of business consistent with past practice,
waive the benefits of, or agree to modify in any manner, any
confidentiality agreement or undertaking to which the Company or any of its
subsidiaries is a party; and
(xiv) neither the Company nor any of its subsidiaries will enter into
an agreement, contract, commitment or arrangement to do any of the
foregoing, or to authorize, recommend, propose or announce an intention to
do any of the foregoing.
The Merger Agreement further provides that the Company shall not, and shall
not permit any of its subsidiaries to, take any voluntary action that would
result in (i) any of its representations and warranties set forth in the Merger
Agreement that are qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that are not so qualified becoming untrue in any
material manner having a Material Adverse Effect (as defined in the Merger
Agreement) or (iii) any of the conditions to the Offer described above following
the caption "Certain Conditions of the Offer" not being satisfied (subject to
the Company's right to take action specifically permitted by the "No
Solicitation" provisions of the Merger Agreement described below).
The Merger Agreement requires that the Company shall (and shall cause each
of its subsidiaries to) afford to the officers, employees, accountants, counsel,
financing sources and other representatives of Getinge (subject to applicable
law and any existing confidentiality provisions in Company contracts), access,
during normal business hours during the period prior to the Effective Time, to
all its properties, books, contracts, commitments and records, including, at
Getinge's discretion, access to conduct environmental investigations on the
terms and conditions set forth in letter agreements between Getinge and the
Company dated April 26, 1996 and May 10, 1996; provided, however, that the
Company shall (and shall cause each of its subsidiaries to) furnish promptly to
Getinge (a) a copy of each report, schedule, registration statement and other
document filed or received by it during such period pursuant to the requirements
of federal or state securities laws and (b) all other information concerning its
business, properties and personnel as Getinge may reasonably request. Except as
otherwise agreed to in writing by the Company, unless and until Getinge and
Bidder shall have purchased at least a majority of the outstanding Shares
pursuant to the Offer, Getinge will be bound by the terms of a confidentiality
agreement with the Company dated September 26, 1995 (the "Confidentiality
Agreement").
No Solicitation. The Company has agreed in the Merger Agreement that it
shall not, nor shall it permit any of its subsidiaries to, nor shall it
authorize (and shall use its best efforts not to permit) any officer, director
or employee of, or any investment banker, attorney or other advisor or
representative of, the Company or any of its subsidiaries to, solicit or
initiate, or knowingly encourage the submission of, any Takeover Proposal (as
hereinafter defined). Notwithstanding the foregoing, and subject to the second
succeeding paragraph below, if prior to the acceptance for payment of Shares
pursuant to the Offer, the Board of Directors, after receiving advice from
outside legal counsel to the Company, determines that a failure to act would be
inconsistent with its fiduciary duties to the Stockholders under applicable law,
the Company may (i) furnish information with respect to the Company to any
person in response to an unsolicited request pursuant to a confidentiality
agreement with terms and conditions similar to the Confidentiality Agreement and
(ii) participate in discussions and negotiations regarding any potential
Takeover Proposal. For purposes of the Merger Agreement, "Takeover Proposal"
means (a) any proposal or offer from any person relating to any direct or
indirect acquisition or purchase of all or a substantial part of the assets of
the Company or any of its subsidiaries or of any class of equity securities of
the Company or any of its subsidiaries or any tender offer or exchange offer
that if consummated would result in any person beneficially owning shares of any
class of
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equity securities of the Company or any of its subsidiaries, or any merger,
consolidation, business combination, sale of substantially all of the assets,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any of its subsidiaries other than the transactions contemplated by
the Merger Agreement, or (b) any other transaction the consummation of which
would reasonably be expected to impede, interfere with, prevent or materially
delay the Offer or the Merger.
Pursuant to the Merger Agreement, and subject to compliance by the members
of the Board of Directors with their fiduciary duties, neither the Board of
Directors nor any committee thereof shall (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Getinge or Bidder, the approval or
recommendation by the Board of Directors or any such committee of the Offer, the
Merger Agreement or the Merger, (ii) approve or recommend, or propose to approve
or recommend, any Takeover Proposal or (iii) enter into any definitive agreement
to consummate any Takeover Proposal. Notwithstanding the foregoing, in the event
that prior to the time of acceptance for payment of Shares in the Offer if in
the opinion of the Board of Directors, after receiving advice from outside legal
counsel to the Company, failure to act would be inconsistent with its fiduciary
duties to the Stockholders under applicable law, the Board of Directors may
(subject to the terms of this and the following sentence) withdraw or modify its
approval or recommendation of the Offer, the Merger Agreement or the Merger,
approve or recommend or propose to approve or recommend a Takeover Proposal, or
enter into an agreement with respect to a Takeover Proposal, in each case at any
time after midnight on the next business day following Getinge's receipt of
written notice (a "Notice of Takeover Proposal") advising Getinge that the Board
of Directors has received a Takeover Proposal, specifying the material terms and
conditions of such Takeover Proposal and identifying the person making such
Takeover Proposal; provided that the Company shall not enter into a definitive
agreement to consummate a Takeover Proposal unless the Company shall have
furnished Getinge with a Notice of Takeover Proposal within the time frame
provided in the immediately preceding clause in advance of any date that it
intends to enter into such agreement. In addition, if the Company enters into a
definitive agreement with respect to any Takeover Proposal, it shall
concurrently with entering into such agreement pay, or cause to be paid, to
Getinge the Expenses (as such term is defined in the Merger Agreement).
In addition to the obligations of the Company set forth in clause (i) of
the preceding paragraph, the Company is obligated to advise Getinge of any
Takeover Proposal, or any proposal with respect to any Takeover Proposal, the
material terms and conditions of such Takeover Proposal, and the identity of the
person making any such Takeover Proposal or inquiry.
The Company shall be entitled, in the exercise of the Board of Directors'
fiduciary duties, to notify any person that has made a Takeover Proposal of the
material terms and conditions of any change or modification to the terms and
conditions of the Offer or Merger, or of any alternative transaction (a
"Responsive Offer") that may be proposed by Getinge, Bidder or any of their
affiliates. Getinge and Bidder agree that all such Responsive Offers shall
remain open for at least two full business days after receipt by the Company.
Agreements Respecting Employee Matters. The Merger Agreement provides that
the Company shall, effective as of the commencement of the Offer, cause each
Option outstanding under the Option Plan, whether or not then exercisable or
vested, to become fully exercisable and vested. The Company shall, effective on
or before the consummation of the Offer, cause each Option that is then
outstanding to be cancelled.
The Merger Agreement specifies that the Option Plan shall terminate as of
the Effective Time and the provisions in any other Benefit Plan providing for
the issuance, transfer or grant of any capital stock of the Company or any
interest in respect of any capital stock of the Company shall be deleted as of
the Effective Time, and the Company shall use its best efforts to ensure that
following the Effective Time no holder of an Option or any participant in the
Option Plan shall have any right thereunder to acquire any capital stock of the
Company, Getinge or the Surviving Corporation.
Pursuant to the Merger Agreement, for a period of one year following the
Effective Time, Bidder shall, or shall cause the Surviving Corporation to,
provide all of the employees of the Surviving Corporation and its subsidiaries
with employee benefit plans, programs, policies or arrangements (the "Bidder
Benefit Plans") as are substantially equivalent, in the aggregate, to those
currently provided by the Company (the "Current
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Benefit Plans"), so long as such Current Benefit Plans are not materially more
favorable, in the aggregate, than the benefit plans generally provided to
employees of companies within the Company's industry. In the event such Current
Benefit Plans are materially more favorable, in the aggregate, than the benefit
plans generally provided to employees of companies within the Company's
industry, Bidder shall, or shall cause the Surviving Corporation to, provide for
a period of one year following the Effective Time to all employees of the
Surviving Corporation employee benefit plans that are substantially equivalent,
in the aggregate, to the benefit plans generally provided to employees of
companies within the Company's industry. Except to the extent that benefits may
be duplicated, each Bidder Benefit Plan shall give full credit for each
employee's period of service with the Company and its subsidiaries prior to the
Effective Time for all purposes for which such service was recognized under the
Company's benefit plans prior to the Effective Time, and shall waive any
pre-existing condition limitation for any Company employee covered under a
Benefit Plan immediately prior to the Effective Time.
Indemnification. Bidder and the Surviving Corporation have agreed in the
Merger Agreement that all rights to indemnification existing in favor of the
present or former directors, officers, employees, fiduciaries and agents of the
Company or any of its subsidiaries (collectively, the "Indemnified Parties") as
provided in the Company's certificate of incorporation or by-laws or the
certificate or articles of incorporation, by-laws or similar organizational
documents of any of the Company's subsidiaries as in effect as of the Effective
Time shall survive the Merger and shall continue in full force and effect for
three years after the Effective Time (without modification or amendment, except
as required by applicable law), to the fullest extent permitted by law, and
shall be enforceable by the Indemnified Parties against the Surviving
Corporation, provided that in any event Bidder and the Surviving Corporation
shall pay and reimburse expenses in advance of the final disposition of any
action or proceeding to each Indemnified Party to the fullest extent permitted
by law. At the Closing the Surviving Corporation shall expressly and directly
assume by written instrument all such obligations. Bidder shall cause to be
maintained in effect for not less than three years from the Effective Time the
current policies of directors' and officers' liability insurance maintained by
the Company (provided that Bidder may substitute therefor polices of at least
equivalent coverage containing terms and conditions which are no less
advantageous) with respect to matters occurring prior to the Effective Time,
provided that in no event shall Bidder or the Surviving Corporation be required
to expend to maintain or procure such insurance coverage any amount per annum in
excess of 200% of the aggregate premiums paid in 1995 on an annualized basis for
such purpose. In the event the payment of such amount for any year is
insufficient to maintain such insurance or equivalent coverage cannot otherwise
be obtained, the Surviving Corporation shall purchase as much insurance as may
be purchased for the amount indicated.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties thereto.
Conditions to the Merger. The obligations of each party to effect the
Merger are subject to the satisfaction of the following conditions, any and all
of which may be waived in whole or in part by the Company, Getinge or Bidder, as
the case may be, to the extent permitted by applicable law:
(a) The Merger Agreement shall have been approved and adopted by the
requisite vote of the Stockholders, if required by applicable law and the
Company's certificate of incorporation, in order to consummate the Merger;
(b) No statute, rule, order, decree or regulation shall have been
enacted or promulgated by any government or any governmental agency or
authority of competent jurisdiction which prohibits the consummation of the
Merger;
(c) There shall be no order or injunction of a court or other
governmental authority of competent jurisdiction in effect precluding,
restraining, enjoining or prohibiting consummation of the Merger; and
(d) Getinge, Bidder or their affiliates shall have purchased Shares
pursuant to the Offer.
The obligations of the Company to effect the Merger shall also be subject
to the satisfaction, or waiver by the Company, of the following conditions:
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<PAGE> 11
(a) Bidder and Getinge shall have performed in all material respects
their respective obligations under the Merger Agreement required to be
performed prior to the Effective Time; and
(b) All representations and warranties of Bidder and Getinge contained
in the Merger Agreement shall have been true and correct in all material
respects at the time made, and shall be true and correct in all material
respects as though made on and as of such date.
Termination. The Merger Agreement may be terminated by written notice and
the Merger may be abandoned, by written notice promptly given, at any time prior
to the Effective Time, whether prior to or after approval thereof by
Stockholders: (a) by mutual consent of Getinge and the Company; (b) by either
Getinge or the Company if any governmental entity shall have issued an order,
decree or ruling or taken any other action (which order, decree, ruling or other
action the parties hereto shall use their reasonable efforts to lift), in each
case permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by the Merger Agreement and such order, decree, ruling
or other action shall have become final and non-appealable; (c) by the Board of
Directors (i) if the Company has entered into a definitive agreement with a
third party to consummate a Takeover Proposal, provided the Company has complied
with all relevant provisions of the Merger Agreement and that it makes
simultaneous payment of the Expenses (as defined below), (ii) if, prior to the
purchase of Shares pursuant to the Offer, Getinge or Bidder breaches or fails in
any material respect to perform or comply with any of its obligations contained
in the Merger Agreement or breaches in any material respect its representations
and warranties as contained in the Merger Agreement, (iii) if Getinge or Bidder
shall have terminated the Offer without Getinge or Bidder purchasing the minimum
number of Shares pursuant thereto or failing to pay for the Shares accepted
pursuant to the Offer for purchase, in either case within 60 days of
commencement of the Offer, or if the Offer shall have expired without any Shares
being purchased therein, or (iv) if Getinge, Bidder or any of their affiliates
shall have failed to commence the Offer on or prior to five business days
following the date of the initial public announcement of the Offer, provided
that the Company may not terminate the Merger Agreement if the Company is in
material breach of the Merger Agreement; or (d) by Getinge (i) if, prior to the
purchase of the Shares pursuant to the Offer, the Board of Directors shall have
withdrawn or modified or changed in a manner adverse to Getinge or Bidder, its
approval or recommendation of the Offer, the Merger Agreement or the Merger or
shall have entered into a definitive agreement for the consummation of a
Takeover Proposal, or (ii) if the Offer shall have terminated or expired without
Getinge or Bidder purchasing any Shares thereunder (other than if Getinge or
Bidder has failed to purchase Shares in the Offer in violation of the Merger
Agreement or the terms of the Offer), or (iii) if, due to an occurrence that if
occurring after the commencement of the Offer would result in a failure to
satisfy any of the conditions to such commencement, Getinge, Bidder or any of
their affiliates fail to commence the Offer on or prior to five business days
following the date of the initial public announcement of the Offer.
Fees and Expenses. The Merger Agreement also provides that the Company
shall pay to Getinge all of Getinge's reasonably documented out-of-pocket
expenses in an amount up to but not to exceed $1,500,000 (the "Expenses") upon
demand if (i) Getinge or Bidder terminates the Merger Agreement in accordance
with clause (d)(i) of the preceding paragraph and a Takeover Proposal has been
received by the Company and publicly announced, (ii) the Company terminates the
Merger Agreement in accordance with clause (c)(i) of the preceding paragraph or
(iii) prior to any termination of the Merger Agreement, a Takeover Proposal
shall have been made and within nine months of the termination of the Merger
Agreement a transaction constituting a Takeover Proposal is consummated with
respect to, or the Company enters into an agreement with respect to, or approves
or recommends a Takeover Proposal, made prior to any termination of the Merger
Agreement, provided, however, that in the case of clause (iii) above such
Expenses shall not be paid if such transaction has a value to the Stockholders
equivalent to or less favorable than the proposed Offer and Merger and, provided
further that no payment is to be made if the Merger Agreement has been
terminated in accordance with clauses (c)(ii), (c)(iii) or (c)(iv) of the
preceding paragraph. In addition, if prior to any termination of the Merger
Agreement, any person or group purchases or otherwise acquires, directly or
indirectly, beneficial ownership of more than 20 percent of the outstanding
voting securities of the Company, and additionally, if at any time within 12
months following the termination of the Merger Agreement any such person or
group consummates a transaction that would otherwise constitute a Takeover
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<PAGE> 12
Proposal, Getinge is to be paid, immediately prior to the consummation of such
transaction, the Expenses (provided that no such payment shall be made if the
Merger Agreement has been terminated in accordance with clause (c)(ii) of the
preceding paragraph). The amount of Expenses so payable shall be the amount set
forth in an estimate delivered by Getinge, subject to upward or downward
adjustment (not to be in excess of the amount set forth above) upon reasonable
documentation therefor. For purposes of this paragraph, "Takeover Proposal"
shall mean Takeover Proposal as defined only in clause (a) of the definition of
Takeover Proposal set forth above under the subsection "No Solicitation."
Delaware Law. The Board of Directors has approved the Offer and the Merger
as contemplated by the Merger Agreement for purposes of Section 203 of the DGCL.
Accordingly, the provisions of Section 203 of the DGCL will not apply to the
Offer and the Merger. Section 203 of the DGCL prevents an "interested
stockholder" (generally, a stockholder owning 15% or more of a corporation's
outstanding voting stock or an affiliate or associate of that stockholder) from
engaging in a "business combination" (defined to include a merger and certain
other transactions) with a Delaware corporation for a period of three years
following the date on which the stockholder became an interested stockholder,
unless (i) prior to that date, the corporation's board of directors approved
either the business combination or the transaction that resulted in the
stockholder becoming an interested stockholder, (ii) upon consummation of the
transaction that resulted in the stockholder becoming an interested stockholder,
the interested stockholder owned at least 85% of the corporation's voting stock
outstanding at the time the transaction commenced (excluding shares owned by
certain employee stock plans and persons who are directors and also officers of
the corporation) or (iii) on or subsequent to that date, the business
combination is approved by the corporation's board of directors and authorized
at an annual or special meeting of stockholders, and not by written consent, by
the affirmative vote of at least 66 2/3% of the outstanding voting stock not
owned by the interested stockholder.
ENVIRONMENTAL INVESTIGATIONS INDEMNITY
Pursuant to letter agreements dated April 26, 1996 and May 10, 1996,
Getinge has agreed to indemnify the Company with respect to various potential
liabilities in connection with Getinge's environmental investigation of certain
of the Company's facilities.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) Recommendation. The Board of Directors of the Company has unanimously
approved the Merger Agreement and the transactions contemplated thereby and
unanimously determined that each of the Offer and the Merger is fair to, and in
the best interests of, the stockholders of the Company. The Board of Directors
of the Company unanimously recommends that all holders of Shares accept the
Offer and tender their Shares pursuant to the Offer and approve and adopt the
Merger Agreement and the Merger.
(b) Background of Negotiations. In September of 1992, Mr. Carl Bennet,
President of Getinge, arranged a meeting at the Company's offices in Torrance,
California, to discuss possible distribution, service or other business
arrangements between Getinge and the Company. At such meeting Mr. Bennet, Mr. J.
Miles Branagan, the Chief Executive Officer of the Company, and Mr. Charles B.
Swenson, who was at that time the Vice President for Marketing and Sales of the
Company, discussed the fact that the Company might be in a position to provide
field support to Getinge for its equipment sold in North America and that the
Company and Getinge might each license products to the other. Although both
parties expressed an interest in a continuing dialogue, no collaborative
projects were undertaken at that time.
By the summer of 1995, the Company had been considering the need to obtain
a European distributor for the plasma sterilizer which it was developing. The
Company decided to approach Getinge as a potential European distribution partner
for its plasma sterilizer. In August of 1995, Mr. Branagan contacted Mr. Bennet
by telephone and indicated the Company's interest in pursuing a distribution
agreement. On or about September 12 and 13, 1995, Mr. Branagan and Mr. Creighton
White, who was at that time Vice President for the Corporate, Governmental and
International Group of the Company, met with representatives of Getinge in
Getinge, Sweden, to discuss European distribution of the Company's plasma
sterilizer. At such meeting, Mr. Bennet first raised the possibility of a
combination between the two companies.
At the Company's request, a Confidentiality Agreement was entered between
Getinge and the Company on September 26, 1995.
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On or about September 29, 1995, Mr. Rune Andersson, Chairman of the Board
of Directors of Getinge, and Mr. Bennet met with Mr. Branagan at the Company's
request in Cannes, France. The purpose of the meeting was to discuss the
possibilities for combining the two companies. The discussions were general in
nature.
At the meetings of the Company's Board of Directors held on October 12 and
13, 1995, Mr. Branagan informed the Board of Directors about the discussions
with Getinge regarding a combination of the two companies. No specific terms or
proposals were adopted, but the Board of Directors authorized Mr. Branagan to
continue such discussions given the perceived potential strategic merits of a
combination with Getinge. The Board of Directors designated Mr. Charles E.
Johnson, an outside director of the Company, to work with Mr. Branagan in this
regard.
On or about November 15, 1995, Mr. Branagan and Mr. Johnson met with Mr.
Bennet in Chicago and generally discussed different forms which a potential
business combination might take, including a cash transaction, a stock-for-stock
transaction or some combination thereof, as well as timing considerations
relating to a transaction. The parties also discussed, in a preliminary manner,
a range of prices which might be acceptable to both Getinge and the Company. The
parties agreed to continue the discussions around March 1, 1996, at Getinge's
request, since Getinge had recently acquired Arjo AB, a Swedish corporation, and
was not in a position to discuss another acquisition immediately.
During December of 1995 and January of 1996, representatives of Getinge and
the Company continued negotiations on a possible distribution agreement for the
Company's plasma sterilizer. The Company and Getinge continued to negotiate a
possible distribution agreement, including at meetings in Dallas on March 4,
1996, but decided on May 10, 1996 not to enter into any such agreement in light
of the pendency of the Offer and Merger.
At the meeting of the Company's Board of Directors on February 1 and 2,
1996, Mr. Branagan and Mr. Johnson reported to the Board of Directors the status
of the business combination discussions.
Mr. Bennet and Mr. Lars-Peter Harbing, President of Getinge's United States
subsidiary, travelled to the United States on February 22 and 23, 1996, to meet
with Messrs. Branagan and Johnson, and to visit the Company's facilities in
Rochester, New York, Charleston, South Carolina, Durham, North Carolina and
Mercersburg, Pennsylvania. On February 24, 1996, Mr. Branagan and Mr. Bennet
discussed transaction terms by telephone. At that time, Mr. Branagan, having
conferred with Mr. Johnson, reported that neither he nor Mr. Johnson was
prepared to recommend that the Board of Directors consider a transaction at
$5.00 per share, as was then proposed by Mr. Bennet.
On February 25, 1996, Mr. Bennet telephoned Mr. Branagan to inform him that
Getinge was prepared to submit two proposals for consideration by the Company's
Board of Directors: (i) an offer of $5.50 in cash for each Share, or (ii) an
exchange of shares on the basis of one share of Getinge common stock for each
nine Shares, in each case subject to completion of due diligence. At the
Company's Board of Directors meeting on March 6, 1996, Mr. Branagan presented
both proposals to the Company's Board of Directors. The Board of Directors
agreed that the discussions should continue and appointed a committee composed
of Messrs. Branagan and Johnson and Mr. Charles A. French, an outside director
(collectively, the "Negotiating Committee"), to oversee negotiations and to
consider investment banking firms for the purpose of advising the Company on any
potential transaction with Getinge. Although the Board of Directors authorized
the Negotiating Committee to pursue either of the transactions, it indicated
that a cash transaction might be preferable, particularly because Getinge's
shares were not listed in the United States and because U.S. GAAP and Swedish
GAAP were dissimilar in certain respects, making such listing unlikely in the
short-term. As requested by the Board, Mr. Branagan notified Mr. Bennet after
the meeting that the Company's Board of Directors was interested in pursuing a
strategic combination but did not find a price of $5.50 compelling. Mr. Bennet
proposed a meeting in New York on March 13 and 14, 1996, in order to discuss the
transaction among representatives of Getinge and the Company and their
respective attorneys, auditors and investment bankers.
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On March 8, 1996, upon the recommendation of the Negotiating Committee, the
Company retained Lehman Brothers Inc. to act as the Company's financial adviser.
On March 13 and 14, 1996, representatives of Getinge and the Company,
including the Negotiating Committee, and their respective legal and financial
advisers met to negotiate the transaction. Over the course of the meetings, the
representatives conducted extensive discussions and negotiations concerning the
terms and conditions of the transaction. Based on those discussions, Getinge
indicated that it was prepared to offer $5.75 in cash for each Share, subject to
a more extensive due diligence review of the Company, as the parties had
concluded that a stock-for-stock transaction would not be appropriate.
Over the next several weeks, representatives of and advisors to Getinge met
with representatives of and advisors to the Company concerning certain
provisions of the proposed Merger Agreement and extensive legal, accounting,
environmental and employee benefit-related due diligence was undertaken. On
March 29, 1996, Lehman Brothers Inc. presented its preliminary analysis of the
transaction to the Company's Board of Directors.
On April 10, 1996, Mr. Bennet telephoned Mr. Branagan and indicated that
Getinge was prepared to offer a price of $5.25 in cash for each Share, based
upon the low level of incoming orders experienced by the Company in the fourth
quarter and other due diligence completed by Getinge, including Getinge's belief
that the Company would need to take additional reserves relating to certain
inventory, warranty and workers compensation matters. Later that day, the Board
of Directors of the Company and its financial and legal advisors convened to
discuss Getinge's new proposal.
On April 11, 1996, Mr. Bennet notified the Negotiating Committee by
telephone that Getinge was further lowering its offer to $5.125 in cash for each
Share because of concerns relating to its calculation of potential payments to
terminated employees pursuant to certain employment agreements with the Company.
Mr. Bennet also indicated that the price was subject to the completion of
environmental due diligence relating to the Company's Charleston, South
Carolina, and Henrietta, New York facilities. The Negotiating Committee reported
the revised proposal to the Board of Directors of the Company later that day and
met with Lehman Brothers Inc. on April 17, 1996, to consider Getinge's proposal.
On April 12, 1996, Getinge informed the Company that its preliminary
diligence indicated certain environmental contamination at the Charleston and
Henrietta facilities, and that the results of further testing to identify the
scope of the contamination would be available in approximately two weeks. On or
about April 23, 1996, the Company engaged an environmental specialist to analyze
such results and deliver a report thereon to the Company.
On or about April 24, 1996, the Negotiating Committee authorized Lehman
Brothers Inc. to determine whether another public company with health care
operations considered to be complimentary to those of the Company (the "Other
Party") might be interested in submitting a competing proposal to Getinge's
offer. Lehman Brothers Inc. approached the Other Party and discussed with it the
potential for a transaction with the Company. Lehman Brothers Inc. and the
Company provided the Other Party with information and materials, as requested.
On April 27, representatives of the Other Party met with Messrs. Branagan, Hein
and White at the Company's headquarters and with Messrs. Nerby and Kinsey,
presidents of two of the Company's operating units, at the Company's Henrietta,
New York facility, in order to obtain further information about the Company. On
or about May 1, 1996, Lehman Brothers Inc. was informed that the Other Party was
not interested in submitting a proposal to acquire the Company.
On May 3, 1996, Getinge informed the Company that its environmental due
diligence had revealed certain environmental contamination at each of the
Charleston and Henrietta facilities. Based on that information (which was
substantially corroborated by the Company's environmental specialist) and
Getinge's conviction that substantial restructuring costs would be incurred on a
going forward basis, Getinge stated that it was prepared to offer a price of
$4.50 in cash for each Share. The Company was subsequently advised by its
environmental specialist that the cost of remediating the environmental
contamination at the Company's facilities could range from $1.35 million to $2.7
million. The Board of Directors and the Company's financial and legal advisors
met on May 5, 1996, to consider Getinge's latest proposal. Following such
meeting,
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Mr. Johnson and Mr. Branagan, on behalf of the Negotiating Committee,
unsuccessfully attempted to negotiate an increase in the price offered by
Getinge. Discussions continued between the financial and legal advisors to each
of Getinge and the Company. Between May 10 and May 12, 1996, the parties
negotiated the final terms of the Merger Agreement, which, following its
approval by the Board of Directors of each of Getinge and the Company, was
executed on May 12, 1996.
Fiscal Year 1996 Earnings and Recent Developments. Concurrently with the
public announcement of the execution of the Merger Agreement on May 12, 1996,
the Company also announced that it recorded bookings and revenues in the fourth
quarter ended March 31, 1996 of approximately $28,889,000 and $34,022,000,
compared to $35,017,000 and $35,401,000 in the same period a year earlier. For
the fiscal year ended March 31, 1996, bookings and revenues were approximately
$128,136,000 and $131,188,000 compared to $134,535,000 and $135,462,000 for the
earlier year. The backlog of orders at March 31, 1996 was $24,057,000 compared
to $27,145,000 at March 31, 1995. The Company reported a loss for the recent
fourth quarter and fiscal year, estimated at $4,525,000 (approximately
$6,421,000 before taxes) and $6,066,000 (approximately $8,791,000 before taxes),
respectively. This result compares to earnings of $143,000 and $276,000 for the
same periods a year earlier. The results for the fourth quarter placed the
Company out-of-compliance with certain of the provisions of its bank credit
agreement.
Reasons for the Recommendation. In making the determinations and
recommendations set forth in Item 4(a) above, the Board of Directors considered
a number of factors, including the following:
(i) The terms and conditions of the Offer and the Merger Agreement;
(ii) Presentations by management regarding the financial condition,
results of operations, business and prospects of the Company, including (a)
declining order and sales trends, particularly in the Company's last fiscal
quarter, (b) the pressure on pricing for products and services exerted by
the increasing influence of buying groups by health care providers, (c)
delays in bringing the Company's plasma sterilizer product to market, (d)
the failure by the Company to comply with covenants in its current credit
facilities, even after amending such covenants, effective in February 1996,
to reflect the Company's anticipated performance, and (e) the general
prospects for the Company in such an environment, were it to remain
independent, including the impact on that environment of the recent merger
of Amsco International, Inc. and Steris Corporation;
(iii) The Board of Directors' belief that remaining independent was
not likely to provide value to the stockholders of the Company in the
foreseeable future superior to the Offer, in part because such course of
action could involve risk and uncertainty related to further cost
reductions and product line divestitures as well as distribution channel
closures and other measures;
(iv) The fact that there had been no unilateral proposals by any other
person to make a cash offer for the Company on terms superior to those
contained in the Offer;
(v) The fact that one of the potential acquirors of the Company
conducted due diligence and decided not to make an offer to acquire the
Company;
(vi) The presentations of Lehman Brothers Inc. on May 12, 1996, and
the opinion of Lehman Brothers Inc. that, as of May 12, 1996, from a
financial point of view, the consideration to be offered the Company's
stockholders pursuant to the Merger Agreement is fair to such holders (the
full text of such opinion, which sets forth the assumptions made, the
matters considered and the limitations on the review undertaken by Lehman
Brothers Inc. is attached as Schedule II hereto); and
(vii) That the Merger Agreement (a) permits, under circumstances
described above, the Board of Directors to terminate the Merger Agreement
and accept a competing offer, if failure to accept such a competing offer
would be inconsistent with the Board of Directors' fiduciary duties (see
Item 3 above), (b) provides for a thirty business day tender offer period,
ten more business days than required by law, (c) contains no termination
fee and limits the amount of expenses for which Getinge would be reimbursed
by the Company, in the event that the Board of Directors accepts a
competing offer, and (d)
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contains no voting agreements, asset lock-ups or grants of stock options or
proxies or other similar provisions.
The Board of Directors did not assign relative weights to the foregoing
factors or determine that any factor was of particular importance. Rather, the
Board of Directors viewed its position and recommendations as being based on the
totality of the information presented to and considered by it.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
LEHMAN ADVISORY AGREEMENT
The Company entered into a letter agreement (the "Lehman Advisory
Agreement") with Lehman Brothers Inc. dated March 11, 1996, pursuant to which
Lehman Brothers Inc. agreed to act as financial advisor to the Company in
connection with a potential transaction involving the possible transfer of a
material interest in the Company or of all or substantially all of the Company's
assets to another corporation or other business entity, which transaction would
take the form of a sale or exchange of capital stock or assets, a merger or
consolidation, a tender or exchange offer, a leveraged buyout, a minority
investment, the formation of a joint venture, or any similar transaction (a
"Sale"). As financial advisor, Lehman Brothers Inc. agreed, among other things,
to assist the Company as necessary to analyze the business and financial
condition of the Company, formulate appropriate strategy and structural
alternatives, advise in connection with negotiations and aid in the consummation
of a transaction.
Pursuant to the Lehman Advisory Agreement, the Company agreed to pay Lehman
Brothers Inc. a cash fee equal to $400,000 (the "Fee") upon the Sale of the
Company, either during the term of the Lehman Advisory Agreement or during the
one-year period following the expiration or termination thereof. If the
consideration received in the sale of the Company exceeds $5.50 per share in
cash, the Company has agreed to pay Lehman Brothers Inc. an additional amount
equal to 5.0% of the consideration in excess of $5.50 per share. The Company has
(i) paid Lehman Brothers Inc. a retainer of $50,000 upon the signing of the
Lehman Advisory Agreement and (ii) agreed to pay Lehman Brothers Inc. a fee of
$100,000 upon the delivery of a fairness opinion to the board of directors of
the Company in connection with any Sale of the Company, each of which shall be
deducted from the amount of the Fee payable upon the Sale of the Company. The
Company has agreed to reimburse Lehman Brothers Inc. for its reasonable
out-of-pocket expenses (including, without limitation, professional and legal
fees and disbursements) incurred in connection with its engagement pursuant to
the Lehman Advisory Agreement.
PAYMENTS TO NEGOTIATING COMMITTEE
The Board of Directors of the Company may determine to pay compensation to
the non-employee members of the Negotiating Committee for their efforts in
connection with the Offer and the Merger in an amount determined by the Board of
Directors to be reasonable. Such compensation is expected to be paid at a rate
that approximates the $250 currently paid by the Company to a director for
chairing and attending a meeting of a Board committee.
Except as set forth above, neither the Company nor any person acting on its
behalf has employed, retained or compensated any person to make solicitations or
recommendations to stockholders with respect to the Offer or the Merger.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) Except for transactions in the Shares described below, there have been
no transactions in Shares which were effected during the past 60 days by the
Company, or to the best knowledge of the Company, by any executive officer,
director, affiliate or subsidiary of the Company.
15
<PAGE> 17
MDT CORPORATION SAVINGS AND THRIFT PLAN FOR SALARIED EMPLOYEES
The following table sets forth the number of Shares purchased for the
accounts of the following executive officers participating in the MDT
Corporation Savings and Thrift Plan for Salaried Employees. All Shares were
purchased on the open market on April 3, 1996 and May 6, 1996 at a price per
share of $5.00 and $4.50, respectively.
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SHARES SHARES
EXECUTIVE OFFICER (4/3/96) (5/6/96)
- ----------------------------------------------------------------------- --------- ---------
<S> <C> <C>
J. Miles Branagan...................................................... 377 421
Thomas Hein............................................................ 70 77
Melvin Nerby........................................................... 42 40
</TABLE>
(b) To the best of the Company's knowledge, each executive officer,
director and affiliate of the Company currently intends to tender all Shares
over which he or she has sole dispositive power to the Bidder, except for Shares
the sale of which may trigger liability for holders under Section 16(b) of the
Exchange Act.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth above in Item 3(b) or in Item 4(b) above, the
Company is not engaged in any negotiations in response to the Offer which relate
to or would result in (i) an extraordinary transaction, such as a merger or
reorganization, involving the Company or any subsidiary of the Company; (ii) a
purchase, sale or transfer of a material amount of assets by the Company or any
subsidiary of the Company; (iii) a tender offer for or other acquisition of
securities by or of the Company; or (iv) any material change in the present
capitalization or dividend policy of the Company.
(b) Except as described in Item 3(b) or Item 4(b) above, there are no
transactions, Board of Directors resolutions, agreements in principle or signed
contracts in response to the Offer which relate to or would result in one or
more of the events referred to in Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
The Information Statement attached as Schedule I hereto is being furnished
in connection with the possible designation by Getinge, pursuant to the Merger
Agreement, of certain persons to be appointed to the Board of Directors of the
Company other than at a meeting of the stockholders of the Company.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
The following exhibits are filed herewith:
(a)(1) Form of letter to stockholders of the Company.*
(a)(2) Opinion of Lehman Brothers Inc. dated May 12, 1996.*
(a)(3) Press release issued by the Company on May 12, 1996.
(c)(1) Agreement and Plan of Merger dated May 12, 1996, among the
Company, Getinge and Bidder.
- ---------------
* Included in copies mailed to stockholders.
16
<PAGE> 18
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
Dated: May 17, 1996 MDT CORPORATION
By: /s/ J. Miles Branagan
Name: J. Miles Branagan
Title: President and Chief
Executive Officer
S-1
<PAGE> 19
SCHEDULE I
INFORMATION STATEMENT OF THE COMPANY
PURSUANT TO SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
------------------------
This Information Statement ("Information Statement") is being mailed on or
about May 17, 1996 as a part of the Company's Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9") to the holders of record of
Common Stock, par value $1.25 per share, of the Company at the close of business
on or about May 17, 1996. You are receiving this Information Statement in
connection with the possible election of persons designated by Getinge to a
majority of the seats on the Board of Directors of the Company.
The Merger Agreement provides that in the event Getinge or any of its
subsidiaries acquires any of the Shares pursuant to the Offer, Getinge shall be
entitled to designate for appointment or election to the Board of Directors,
upon written notice to the Company, such number of persons so that the designees
of Getinge (the "Getinge Designees") constitute the same percentage of the
Company's Board of Directors (rounded up to the next whole number) as the
percentage of Shares acquired in connection with the Offer. At the consummation
of the Offer, the Company anticipates that the Board of Directors of the Company
will obtain the resignation of such number of directors as is necessary to
enable such number of Getinge Designees to be so elected. Notwithstanding the
foregoing, the parties have agreed to use their respective reasonable efforts to
ensure that at least two of the members of the Company's Board of Directors
shall, at all times prior to the Effective Time (as defined in Section 1.6 of
the Merger Agreement) be, persons that are neither (i) officers of Getinge or
the Company, nor (ii) designees, stockholders or affiliates of Getinge.
You are urged to read this Information Statement carefully. You are not,
however, required to take any action. Capitalized terms used herein and not
otherwise defined herein shall have the meaning set forth in the Schedule 14D-9.
The information contained in this Information Statement concerning Getinge
has been furnished to the Company by Getinge, and the Company assumes no
responsibility for the accuracy or completeness of such information.
INFORMATION WITH RESPECT TO THE COMPANY'S
OUTSTANDING VOTING STOCK
There were 6,769,431 shares of Common Stock, par value $1.25 per share
("Common Stock"), of the Company outstanding on May 9, 1996, and each share is
entitled to one vote on each matter.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information as of May 9, 1996
(except as otherwise noted) with respect to the beneficial ownership of the
Company's Common Stock by (i) each person or entity known by the Company to be
the beneficial owner of more than five percent of the Company's Common Stock,
(ii) each director, (iii) each executive officer named in the Summary
Compensation Table set forth under the caption "Executive Compensation" below,
and (iv) all directors and officers as a group. Except as provided under state
marital property laws and except as otherwise indicated, each person or entity
listed below has sole voting and investment power with respect to the shares
listed. Any reference to stock options held by any person or entity refers to
stock options which are currently exercisable or exercisable within 60 days of
May 9, 1996.
I-1
<PAGE> 20
<TABLE>
<CAPTION>
SHARES OF PERCENT OF
COMMON CLASS
BENEFICIAL OWNER STOCK OWNED*
- ----------------------------------------------------------------------- --------- ----------
<S> <C> <C>
Heartland Advisors, Inc................................................ 1,313,500(a) 19.4%
790 North Milwaukee Street
Milwaukee, Wisconsin 53202
Lawndale Capital Management, Inc....................................... 408,700(b) 6.0%
One Sansome Street
Suite 3900
San Francisco, California 94104
The TCW Group, Inc..................................................... 486,500(c) 7.2%
865 South Figueroa Street
Los Angeles, California 90017
J. Miles Branagan...................................................... 361,059(d) 5.3%
Stratford Hall, Suite 200
1009 Slater Road
Durham, North Carolina 27703
LaMoyne H. Fleming, D.D.S.............................................. 14,551(e) **
Charles A. French...................................................... 5,000(f) **
John S. Gilbertson..................................................... 5,000(g) **
Charles E. Johnson..................................................... 7,000(h) **
Clark D. Jones......................................................... 8,544(i) **
James B.D. Mark, M.D................................................... 7,000(j) **
John C Shamy........................................................... 44,099(k) **
Katherine A. Schipper, Ph.D............................................ 5,000(l) **
Thomas M. Hein......................................................... 43,162(m) **
Richard G. Kinsey...................................................... 40,000(n)
Melvin K. Nerby........................................................ 54,138(o) **
Charles B. Swenson..................................................... 65,256(p) **
Creighton A. White..................................................... 30,000(q)
All directors and officers as a group (16 persons)..................... 764,565(r) 10.7%
</TABLE>
- ---------------
* Pursuant to Rule 13d-3 (d) (1) under the Securities Exchange Act of 1934, as
amended, any shares of Common Stock not outstanding which are subject to
options or conversion rights held by a person named in the preceding table
are deemed to be outstanding for the purpose of computing the percentage of
outstanding shares of Common Stock owned by such person but are not deemed to
be outstanding for the purpose of computing the percentage owned by any other
person.
** Less than 1%
(a) According to the amended Schedule 13G filed with the Securities and Exchange
Commission, dated February 9, 1996.
(b) According to the Schedule 13D filed with the Securities and Exchange
Commission, dated December 6, 1995. Includes 5,100 shares as to which Andrew
E. Shapiro, the sole director and officer of Lawndale Capital Management,
Inc., exercises sole voting and dispositive power.
(c) According to the amended Schedule 13G filed with the Securities and Exchange
Commission, dated February 12, 1996.
(d) Includes 265,092 shares held jointly with Mr. Branagan's spouse, 480 shares
held jointly with Mr. Branagan's mother, 15,487 shares held by the Trustee
of the MDT Corporation Savings and Thrift Plan for Salaried Employees, and
80,000 shares covered by options.
(e) Includes 6,000 shares covered by options.
I-2
<PAGE> 21
(f) Represents 5,000 shares covered by options.
(g) Represents 5,000 shares covered by options.
(h) Includes 5,000 shares covered by options.
(i) Includes 1,500 shares covered by options.
(j) Includes 5,000 shares covered by options.
(k) Includes 6,000 shares covered by options.
(l) Represents 5,000 shares covered by options.
(m) Includes 2,191 shares held by the Trustee of the MDT Corporation Savings and
Thrift Plan for Salaried Employees, 971 shares held by Mr. Hein
individually, and 40,000 shares covered by options.
(n) Represents 40,000 shares covered by options.
(o) Includes 1,867 shares held jointly with Mr. Nerby's spouse, 2,271 shares
held by the Trustee of the MDT Corporation Savings and Thrift Plan for
Salaried Employees, and 50,000 shares covered by options.
(p) Includes 50,000 shares covered by options.
(q) Represents 30,000 shares covered by options.
(r) Includes 21,347 shares held by the Trustee of the MDT Corporation Savings
and Thrift Plan for Salaried Employees and 398,500 shares covered by
options.
BOARD OF DIRECTORS
The following table provides certain relevant information as of May 9, 1996
concerning the directors and their principal occupations:
J. MILES BRANAGAN, age 63, has been a director since 1971 and is a
co-founder of the Company. He has served as Chairman of the Board of Directors
since 1983, President since 1971, and as Chief Executive Officer since 1978. In
addition, he served as Co-Executive Officer from 1971 to 1978, Chief Financial
Officer from 1971 to 1988, and Chief Operating Officer from 1988 to 1995. Prior
to joining the Company, Mr. Branagan was a partner in a national public
accounting firm. Mr. Branagan also serves on the Board of Trustees of the Van
Kampen American Capital Group of Open-End Mutual Funds.
LAMOYNE H. FLEMING, D.D.S., age 68, has been a director since 1986. From
1952 to 1985, Dr. Fleming served as a Dental Officer in the United States Air
Force. From 1982 to his retirement with the rank of Colonel in 1985, he served
as Special Assistant for Dental Affairs, Office of the Secretary of Defense,
representing the Army, Navy and Air Force. Dr. Fleming is retired.
CHARLES A. FRENCH, age 53, has been a director since February 1995. From
1986 to 1989, Mr. French served as Chief Operating Officer and as a director of
Spectramed, Inc., a manufacturer of medical devices based in Newport Beach,
California. Prior to joining Spectramed, Mr. French held various senior
management positions with other companies in the health care industry. He has
been an investor in and consultant to various health care companies since 1989.
Mr. French is also a director of Qualmart Corporation.
JOHN S. GILBERTSON, age 52, has been a director since February 1995. From
1992 to the present, Mr. Gilbertson has served as Executive Vice President, and
from 1994 to the present he has served as Chief Operating Officer of AVX
Corporation, an international electronics manufacturing concern headquartered in
Myrtle Beach, South Carolina. He is also a director of AVX Corporation and
Kyocera Corporation. Prior to joining AVX, Mr. Gilbertson held various positions
with Corning Glass Company and served as an officer in the United States Air
Force.
CHARLES E. JOHNSON, age 59, has been a director since 1993. Mr. Johnson is
Chief of Staff of the Governor's Office for the State of Utah. Prior to being
named Chief of Staff, Mr. Johnson served as Director
I-3
<PAGE> 22
of the Office of Planning and Budget for the State of Utah from July 1991 to
December 1992. Mr. Johnson is a Certified Public Accountant and spent 31 years
in the practice of public accounting, most recently as the Managing Partner of
the Salt Lake City office of KPMG Peat Marwick from 1987 to 1991. While with
KPMG Peat Marwick, Mr. Johnson served on that firm's board of directors and in
various other capacities.
CLARK D. JONES, age 61, has been a director since 1986. Mr. Jones has
served as Chairman of the Board of Summit Family Restaurants, Inc. (formerly
known as JB's Restaurants, Inc.) since 1987. He served as Chief Executive
Officer from 1981 to 1991 and President from 1981 to 1987 and was employed by
that company in various other positions from 1970 to 1980.
JAMES B.D. MARK, M.D., age 66, has been a director since July, 1995. From
1972 to the present, Dr. Mark has been head of the Division of Thoracic Surgery
and, from 1978 to the present, has been the Johnson and Johnson Professor of
Surgery at Stanford University Medical Center in Stanford, California. During
the past 30 years, Dr. Mark has served in a variety of positions within the
Stanford University Medical Center, including, most recently, as Chief of Staff,
Stanford University Hospital (1988-1992); Associate Dean for Clinical Affairs
(1988-1992); and as Acting Chairman, Department of Surgery (1974-1977).
KATHERINE A. SCHIPPER, PH.D., age 46, has been a director since February
1995. From 1993 to the present, Dr. Schipper has been the Eli B. and Harriett B.
Williams Professor of Accounting and KPMG Peat Marwick Faculty Research Scholar
and, from 1991 to the present, Director of the Institute of Professional
Accounting at the Graduate School of Business of the University of Chicago. From
1994 to the present, Dr. Schipper has served as a director of Hong Kong Card
Funding Corporation, a wholly-owned subsidiary of Manhattan Card Co. Ltd., a
credit card issuer based in Hong Kong.
JOHN C SHAMY, age 68, has been a director since 1971. He has served as
Secretary of the Company since 1985, as Treasurer from 1985 to 1988, and as
Assistant Treasurer since 1988. Prior to his retirement on December 31, 1995, he
had been President and a director of Fund Management and Research Corporation,
an investment advisory firm, since 1963, of Foundation Growth Stock Fund, Inc.,
an open-end mutual fund, since 1964, and of Continental Mutual Investment Fund,
Inc., an open-end mutual fund, since 1969.
There are no family relationships between any directors or executive
officers of the Company.
During the fiscal year ended March 31, 1996, the Board of Directors held
ten meetings. Each board member attended 75% or more of the total number of
meetings of the board and meetings of committees on which he or she served which
were held during the fiscal year ended March 31, 1996 and during the period for
which he or she has been a board or committee member.
BOARD COMMITTEES
The Board of Directors has established an Audit Committee, a Compensation
Committee and a Nominating Committee. The specific responsibilities of each of
these Committees are summarized below.
The Audit Committee consults with and reviews reports and recommendations
of the Company's Independent Accountants and reports thereon to the Board of
Directors. The Audit Committee is also responsible for reviewing the terms of
proposed transactions between the Company and its affiliates, including its
directors and officers. The Audit Committee currently consists of Messrs. French
and Johnson and Dr. Schipper. The Audit Committee held four meetings during the
fiscal year ended March 31, 1996.
The Compensation Committee reviews published data and Company information
pertaining to executive compensation and reports thereon to the Board of
Directors. Such reports pertain to all officers of the Company (exclusive of its
subsidiaries) and include salaries, bonuses, stock options, employee benefits
and other forms of compensation. The Compensation Committee also administers the
Company's Amended and
I-4
<PAGE> 23
Restated 1987 Stock Option Plan (the "Stock Option Plan"). The Compensation
Committee currently consists of Messrs. Gilbertson, Jones and Shamy. The
Compensation Committee held five meetings during the fiscal year ended March 31,
1996.
The Nominating Committee, which was established in September 1994,
considers and evaluates potential candidates for the Board of Directors and
nominates persons for election or reelection to the Board. The Nominating
Committee presently consists of Mr. Branagan, Dr. Fleming and Dr. Mark. The
Nominating Committee held four meetings during the fiscal year ended March 31,
1996.
The Nominating Committee may, in its discretion, consider stockholder
recommendations of persons to be considered as nominees to fill future vacancies
on the Board of Directors. Such recommendations should be sent in writing to the
Secretary of the Company at the Company's address and must be accompanied by
detailed biographical and occupational data on the prospective nominee along
with the written consent of the prospective nominee for potential consideration
of his or her name by the Committee.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consisted of Messrs. Jones, Gilbertson and
Shamy. Mr. Shamy is Secretary of the Company and its subsidiaries. Mr. Shamy is
paid a fee of $1,000 per month for his services as Secretary. He is not eligible
to receive bonus compensation under the Company's Management Incentive
Compensation Plan.
DIRECTORS COMPENSATION
Each of the directors, other than Mr. Branagan, receives a retainer fee of
$1,500 per month and fees of $1,000 for each meeting of the Board of Directors
and $500 for each meeting of a committee of the Board of Directors that the
director attends. Each director who chairs a committee of the Board of Directors
receives an additional fee of $250 for each meeting of the committee which the
director attends and chairs. Directors are reimbursed for travel and other
expenses related to attendance at Board and committee meetings. In connection
with the Offer and the negotiation of the Merger Agreement, the Board of
Directors appointed a special Negotiating Committee consisting of Messrs.
Branagan, Johnson and French. Messrs. Johnson and French may receive additional
compensation for their service on such committee in an amount to be determined
by the Board of Directors. Such compensation is expected to be paid at a rate
that approximates the $250 currently paid by the Company to a director who
chairs and attends a meeting of a Board committee.
Non-employee directors of the Company (including, for these purposes, Mr.
Shamy) are also automatically entitled to receive grants of nonqualified stock
options under the Company's Stock Option Plan. Each non-employee who becomes a
director after the 1993 Annual Meeting of Stockholders is automatically granted
upon his or her initial election or appointment to the Board of Directors an
option to purchase 5,000 shares of the Company's Common Stock. Following his
election as a director in 1995, Dr. Mark received an option to purchase 5,000
shares of the Company's Common Stock at an exercise price of $6.625 per share.
Annually, but subject to certain limitations described below, each non-employee
director is also automatically granted an option to purchase the nearest number
of whole shares of Common Stock (up to a maximum of 1,500 shares per director
per year) determined by dividing the non-employee directors' average annual
compensation (i.e., the average of the aggregate amount of fixed retainer and
attendance fees that all non-employee directors received for serving as
directors of the Company in the immediately preceding year) by the fair market
value per share of the Company's Common Stock on the grant date, which is the
fifth business day following the date of the public release by the Company of
its annual statement of sales and earnings. Notwithstanding the foregoing, (a)
no annual grants of options shall be made to non-employee directors for any
fiscal year unless the Company's earnings per share for such fiscal year are
equal to or greater than the average of the Company's earnings per share for the
immediately preceding three fiscal years, (b) the maximum number of shares which
may be granted to any individual non-employee director under the Stock Option
Plan shall not exceed 1% of the Company's total issued and outstanding Common
Stock, and (c) the maximum number of shares which may be granted to all
directors of the Company shall not exceed in the aggregate one-half of the total
shares issuable under the Stock Option Plan. Annual option grants that would
I-5
<PAGE> 24
otherwise exceed the limits described in (b) and (c) above shall be prorated
within such limitations. None of the directors received an option grant pursuant
to this formula with respect to Fiscal Year 1994, Fiscal Year 1995 or Fiscal
Year 1996.
The purchase price per share of Common Stock covered by any option granted
to a non-employee director pursuant to the Stock Option Plan is payable in cash
and/or shares and equals the fair market value per share of the Common Stock on
the grant date. The options become exercisable 12 months after the grant date
and, unless earlier terminated, terminate on the date which is the earlier of
(i) five years from the grant date, or (ii) the date of adoption by the Board of
Directors of a plan of complete liquidation of the Company's assets. The Board
of Directors, subject to plan limits, retains discretion to modify the terms of
outstanding options and to reprice the options.
In the event a non-employee director's services as a Board member are
terminated for any reason other than fraud, dishonesty or death, then any
options granted to the non-employee director pursuant to the Stock Option Plan,
to the extent such options had become exercisable on the date of such
termination, continue to be exercisable for a period of three months thereafter
or the balance of the option term, whichever period is shorter. If the holder of
the option dies while serving as a director of the Company, or within not more
than three months after the termination of such status, then any such options,
to the extent they had become exercisable on the date of death, continue to be
exercisable by the director's descendants, heirs or personal representatives for
a period of twelve months after the date of death or the balance of the option
term, whichever period is shorter. In the event the option holder's directorship
is terminated for fraud or dishonesty, all of the holder's unexercised options
expire as of the date of termination.
The Stock Option Plan contains provisions relating to adjustments for
changes in the Company's Common Stock upon certain specified events, including
mergers, reorganizations, recapitalizations, stock splits, stock dividends and
similar events. In addition, the Stock Option Plan provides that each option
granted to a non-employee director shall become immediately exercisable for a
period of 30 days following any "change in control" of the Company as defined in
the Stock Option Plan (see "Employee Benefit Plans -- Stock Option Plan"). In
connection with the Offer and the proposed Merger, the Board of Directors has
determined that, for purposes of the Stock Option Plan, a change in control is
about to occur and, consequently, all options outstanding under the Stock Option
Plan shall be exercisable until midnight on June 17, 1996. Each non-employee
director has acknowledged to the Company that any options remaining unexercised
at such time shall expire unless the Offer is not successfully consummated (in
which case such unexercised options shall be treated as if no change in control
occurred and shall be governed by their original terms). Pursuant to the Merger
Agreement, the Stock Option Plan will terminate at the Effective Time of the
Merger.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information regarding compensation from the
Company for each of the fiscal years ended March 31, 1996, 1995 and 1994 as to
the Chief Executive Officer and each of the next five most highly compensated
executive officers of the Company during the last completed fiscal year
(collectively, the "Named Executive Officers").
I-6
<PAGE> 25
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------- ---------------------
OTHER ALL
ANNUAL SECURITIES OTHER
COMPEN- UNDERLYING COMPEN-
FISCAL SALARY BONUS SATION OPTIONS SATION
NAME AND PRINCIPAL POSITION YEAR ($)(A) ($) ($)(B) (#)(C) ($)(D)
- --------------------------------------------- ------ -------- ------- ------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
J. Miles Branagan............................ 1996 $270,599 -- $83,870 -- $ 75,674
Chairman of the Board of Directors,........ 1995 220,000 -- -- 10,000 62,181
Chief Executive Officer and President...... 1994 220,000 -- -- -- 64,596
Thomas M. Hein............................... 1996 140,160 -- 66,458 -- 35,497
Vice President, Finance,................... 1995 120,712 -- -- 5,000 7,643
Treasurer and Assistant Secretary.......... 1994 120,712 -- -- -- 9,056
Richard G. Kinsey............................ 1996 132,500 -- 93,709 -- 20,216
President, MDT Technionic Company.......... 1995 27,604 -- -- 40,000 --
and Vice President, Product Support Group
(E)
Melvin K. Nerby.............................. 1996 144,000 -- -- -- 29,246
President, MDT Biologic Company,........... 1995 111,767 -- -- 15,000 18,570
and Vice President, Sterility.............. 1994 111,767 -- -- -- 19,653
Assurance Systems Group
Charles B. Swenson........................... 1996 144,000 -- 54,328 -- 18,141
President, MDT Diagnostic.................. 1995 129,363 -- -- 15,000 15,971
Company, and Vice President,............... 1994 129,363 -- -- -- 17,433
Examining and Operatory Equipment Group
Creighton A. White........................... 1996 132,000 39,800 -- -- 10,157
Vice President, Corporate,................. 1995 30,250 -- -- 30,000 --
Governmental and International Group (F)
</TABLE>
- ---------------
(A) Amounts shown reflect cash and non-cash compensation earned by the Named
Executive Officers.
(B) Amounts shown represent expenses paid or reimbursed by the Company in
connection with the relocation of the Named Executive Officer to Durham,
North Carolina (in the case of Messrs. Branagan and Hein), Henrietta, New
York (in the case of Mr. Kinsey) and Charleston, South Carolina (in the case
of Mr. Swenson) during the 1996 fiscal year.
(C) Amounts shown reflect five-year stock options granted to the Named Executive
Officers under the Company's 1987 Amended and Restated Stock Option Plan.
(D) The amounts shown for the 1996 fiscal year were derived from the following
items: J. M. Branagan: $4,000 -- Company Savings Plan match;
$8,052 -- Company payment to Retirement Plan; $61,452 -- Company payment to
SERP; $2,171, -- Imputed Value-Life Insurance. T. M. Hein: $2,780 -- Company
Savings Plan match; $6,574 -- Company payment to Retirement Plan; $968 --
Company payment to SERP; $175 -- Imputed Value-Life Insurance;
$25,000 -- Forgiveness of indebtedness owed to the Company (see "Certain
Transactions"). M. K. Nerby: $3,456 -- Company Savings Plan match;
$6,804 -- Company payment to Retirement Plan; $18,548 -- Company payment to
SERP; $438 -- Imputed Value-Life Insurance. C. B. Swenson: $2,552 -- Company
Savings Plan match; $6,804-Company payment to Retirement Plan;
$8,324 -- Company payment to SERP; $461-Imputed Value-Life Insurance. C.A.
White: $2,105 -- Company Savings Plan match; $8,052 -- Company payment to
Retirement Plan. R.G. Kinsey: $3,180 -- Company Savings Plan match;
$6,114 -- Company payment to Retirement Plan; $10,440 -- Company payment to
SERP; $428 -- Imputed Value-Life Insurance.
(E) Mr. Kinsey joined the Company in January, 1995 and became an executive
officer effective April 1, 1995.
(F) Mr. White joined the Company in January, 1995 and became an executive
officer effective April 1, 1995. The amount of bonus compensation shown for
Mr. White during the 1996 fiscal year represents a signing bonus of $20,000
and a guaranteed bonus of $19,800 under the Company's Management Incentive
Compensation Plan ("MICP"). The Board of Directors of the Company terminated
the MICP effective April 1, 1996.
EMPLOYMENT AGREEMENTS
The Company has entered into separate employment agreements with Messrs.
Branagan, Hein and White which respectively provide for annual salaries of not
less than $270,599, $140,160 and $132,000 for such individuals or, in each case,
such larger amount as the Board of Directors in its discretion determines. In
addition, MDT Biologic has entered into an employment agreement with Mr. Nerby,
MDT Diagnostic
I-7
<PAGE> 26
Company has entered into an employment agreement with Mr. Swenson, and MDT
Technionic Company has entered into an employment agreement with Mr. Kinsey,
which agreements respectively provide for annual salaries of not less than
$144,000, $144,000 and $132,500 for such individuals or, in each case, such
larger amount as the Board of Directors in its discretion determines. All such
agreements require the Company to provide the executive officer with various
health, disability and life insurance benefits and the opportunity for incentive
compensation based on the criteria set forth in the Company's MICP. (The Board
of Directors of the Company terminated the MICP effective April 1, 1996.) All
such agreements are effective as of April 1, 1995 and in each case supersede and
replace any and all earlier employment agreements with such individuals.
The agreements with Messrs. Branagan, Kinsey and White respectively provide
that each executive officer will serve in his respective position for a
three-year period. Each of the agreements with Messrs. Hein, Nerby and Swenson
respectively provides that each executive officer will serve in his respective
position for a four-year period. Each of the agreements with Messrs. Hein,
Kinsey, Nerby, Swenson and White provides that, on the second anniversary of
such agreement, the term of such agreement automatically will be extended for an
additional year (or, in the case of Mr. Kinsey and Mr. White, an additional two
years), and, thereafter, when only two years of such term as extended remain,
the term of such agreement will again be extended for an additional year, such
extensions continuing from year to year in the same manner, subject to the
discretion of the Board of Directors not to so extend the term of any such
agreement by prior written notice to the executive officer to which any such
non-extended agreement pertains.
Upon the occurrence of a change in control of the Company, the term of the
agreements with each of Messrs. Hein, Nerby and Swenson is automatically
reinstated to the three- or four-year period provided for in each such agreement
(and in the case of Mr. Kinsey and Mr. White, an additional four-year period),
commencing upon the date of the change in control. Except for the agreement with
Mr. Branagan, each of the agreements also provides for lump-sum, undiscounted
cash payments and the continuation of certain other benefits following
termination of the executive officer covered thereby without cause in connection
with a change in control, which payments and benefits are to be equal to the
then current rate of compensation and benefits provided for in any such
agreement so terminated for the remaining term of any such agreement.
For purposes of the agreements, a "change in control" is defined to mean
(i) without prior approval of the Board of Directors of the Company, a single
entity or group of affiliated entities acquires more than 50% of the voting
stock of the Company issued and outstanding immediately prior to such
acquisition; (ii) the Board of Directors of the Company approves an unsolicited
bid by a single entity or group of affiliated entities to acquire more than 50%
of the voting stock of the Company issued and outstanding immediately prior to
the approval of such acquisition, and such acquisition is consummated; (iii) the
stockholders of the Company approve the consummation of any merger of the
Company or any sale or other disposition of all or substantially all of its
assets, if the stockholders of the Company immediately before such transaction
own, immediately after consummation of such transaction, equity securities
(other than options and other rights to acquire equity securities) possessing
less than 50% of the voting power of the surviving or acquiring corporation; or
(iv) a change in the majority of the Board of Directors of the Company during
any 24-month period without the approval of a majority of directors in office at
the beginning of such period.
In connection with the Offer and the proposed Merger, the Board of
Directors of the Company has determined that the consummation of the Offer
constitutes a change in control for purposes of the employment agreements with
the Company's executive officers. The cash amounts and other benefits payable by
the Company to such officers following any termination of employment in
connection with the change in control may not be fully deductible to the Company
to the extent such payments and benefits exceed the limitations contained in
Section 280G of the Internal Revenue Code. Each of the employment agreements was
recently amended to permit the executive officer to refuse all or any portion of
such payments and benefits to the extent that receipt of such amounts may result
in adverse tax consequences to the executive officer. Under such amendments, the
Company is relieved of the obligation to pay any amount which the executive
officer so refuses in writing.
I-8
<PAGE> 27
EMPLOYEE BENEFIT PLANS
The material which follows in this section describes certain provisions
made by the Company pursuant to certain stock option, employee savings and
retirement plans, now in effect, that provide for severance, termination or
change in control benefits to employees, including the Named Executive Officers,
other than group life and accident insurance, group hospitalization and similar
group payments and benefits.
Stock Option Plan. Members of the Board of Directors, officers and other
key employees of the Company are eligible to receive options to purchase up to
an aggregate of 1,200,000 shares of the Company's Common Stock under the Stock
Option Plan, which is administered by the Compensation Committee of the Board of
Directors. The exercise price of each option granted must be at least the fair
market value of the Common Stock at the date of grant (except that, with respect
to 10% stockholders, the exercise price must be at least 110% of the fair market
value), and no option may be exercised earlier than one year from the date of
grant. Under the Stock Option Plan, in the event that a change in control occurs
or, with respect to options awarded to officers and employees of the Company
(other than Mr. Shamy), the Board of Directors determines in good faith that a
change in control is about to occur, all outstanding options will be immediately
exercisable by the option holder for the total remaining number of shares
covered by options.
For purposes of the Stock Option Plan, a "change in control" is defined to
mean (i) without prior approval of the Board of Directors of the Company, a
single entity or group of affiliated entities acquires more than 50% of the
stock of the Company issued and outstanding immediately prior to such
acquisition; (ii) the stockholders of the Company approve the consummation of
any merger of the Company or any sale or other disposition of all or
substantially all of its assets, if the stockholders of the Company immediately
before such transaction own, immediately after consummation of such transaction,
equity securities (other than options and other rights to acquire equity
securities) possessing less than 50% of the voting power of the surviving or
acquiring corporation; or (iii) a change in the majority of the Board of
Directors of the Company during any 24-month period without the approval of a
majority of directors in office at the beginning of such period.
In connection with the Offer and the proposed Merger, the Board of
Directors has determined that, for purposes of the Stock Option Plan, a change
in control is about to occur and, consequently, all options outstanding under
the Stock Option Plan shall be exercisable until midnight on June 17, 1996. Any
options remaining unexercised at such time shall expire unless the Offer is not
successfully consummated (in which case such unexercised options shall be
treated as if no change in control occurred and shall be governed by their
original terms). Pursuant to the Merger Agreement, the Stock Option Plan will
terminate at the Effective Time of the Merger.
Supplemental Executive Retirement Plan. Certain officers of the Company
(except Mr. Shamy) and its subsidiaries also participate in the Company's
Supplemental Executive Retirement Plan (the "SERP"). Except as provided below,
the SERP provides a lump sum benefit at age 65 equal to the present value of
annual payments for life equal to a "replacement percentage" of the
participant's final base salary. Participants may also elect installment
payments. The replacement percentage equals 50% (reduced for individuals who
became officers on or after age 50) plus one-half of 1% for each year of service
as an officer in excess of ten. This amount is reduced by the present value of
the participant's social security benefit and the benefits payable from the
Retirement Plan and the Savings and Thrift Plan. This resulting amount is then
multiplied by the participant's vested percentage; a participant vests at the
rate of 20% for each year of service as an officer after his second year of
service as an officer. The SERP benefits are also payable after age 55 if the
participant is vested (with a 5% reduction for each year that retirement
precedes age 65). The Company has established a trust as a source of benefits to
participants. The SERP states that the Company shall contribute no more than 20%
of the participant's annual base salary on behalf of the participant plus the
additional amounts that would have been contributed to the Retirement Plan
and/or the Savings and Thrift Plan (described below) if the $150,000
compensation limit were not applicable. The participant's retirement benefit
shall equal the amount contributed on behalf of the participant plus or minus
any earnings or losses. Such contributions are shown in the Summary Compensation
Table in this Proxy Statement.
Subject to the foregoing trust provisions, unless the Board of Directors of
the Company otherwise determines, SERP benefits are also paid if there is a
change in control and, within two years, the participant is
I-9
<PAGE> 28
involuntarily terminated, suffers a significant diminution of duties and
responsibilities, has a downward change of title or is forced to relocate
thereby resulting in his resignation. In this case, the participant is 100%
vested and there is no early retirement reduction. For this purpose, a "change
in control" is defined to mean (i) without prior approval of the Board of
Directors of the Company, a single entity or group of affiliated entities
acquires more than 50% of the stock of the Company issued and outstanding
immediately prior to such acquisition; (ii) the Board of Directors of the
Company approves an unsolicited bid by a single entity or group of affiliated
entities to acquire more than 50% of the stock of the Company issued and
outstanding immediately prior to the approval of such acquisition, and such
acquisition is consummated; (iii) the stockholders of the Company approve the
consummation of any merger of the Company or any sale or other disposition of
all or substantially all of its assets, of the stockholders of the Company
immediately before such transaction own, immediately after consummation of such
transaction, equity securities (other than options and other rights to acquire
equity securities) possessing less than 50% of the voting power of the surviving
or acquiring corporation; or (iv) a change in the majority of the Board of
Directors of the Company during any 24-month period without the approval of a
majority of directors in office at the beginning of such period. The Board of
Directors has determined, and the SERP has been amended to provide, that these
additional SERP benefits shall not be paid as a result of any transactions
involving the Bidder or Getinge (including any change in a majority of the Board
of Directors of the Company).
Retirement Plan. The MDT Corporation Retirement Plan (the "Retirement
Plan") is a profit sharing plan that covers all United States nonunion employees
of the Company and its domestic subsidiaries. The Company's contributions to the
Retirement Plan amount to three percent of each participant's compensation plus
three percent of each participant's compensation in excess of the Social
Security wage base. Compensation for this purpose is limited to $150,000.
Amounts allocated to a participant's account are subject to a vesting schedule
under which a participant would be 20% vested after one year of service and 20%
vested for each year of service thereafter, with 100% vesting after five years.
Bankers Trust Company acts as trustee for the Retirement Plan. Vested amounts
allocated to their accounts will be payable at retirement or other termination
of service. The Company has no mandatory retirement age.
Savings and Thrift Plan. Salaried employees of the Company, including
officers, are eligible to participate in the MDT Corporation Savings and Thrift
Plan for Salaried Employees (the "Savings Plan"). Participants may contribute up
to 6% of their compensation on a before-tax and/or after-tax basis. Compensation
for this purpose is limited to $150,000. A participant will receive matching
contributions from the Company of up to 50% of these contributions. Subject to
certain limitations, participants may make additional contributions, which are
not matched by the Company, equal to 10% of compensation on an after-tax basis
or 12% of compensation on a before-tax basis. Contributions may be invested, at
the election of the participant, in a guaranteed income fund, a balanced asset
fund, a diversified equity fund, a bond fund or the Company's Common Stock.
Company contributions vest at the rate of 20% after the first year of service
and 20% for each subsequent year of service with 100% vesting at the end of five
years. Company contributions are automatically vested upon the participant's
death, total and permanent disability or attainment of age 65. Benefits under
the Savings Plan become distributable to a participant or his beneficiary (in
the case of death) upon termination of employment by reason of resignation,
discharge, retirement, disability or death.
STOCK OPTIONS
The Company did not grant stock options or SAR's to any of the Named
Executive Officers during the fiscal year ended March 31, 1996, nor did any of
the Named Executive Officers exercise any stock options during such fiscal year
or hold any "in-the-money" options as of the end of such fiscal year.
I-10
<PAGE> 29
The following table sets forth information concerning the number of
unexercised options held by each of the Named Executive Officers on March 31,
1996.
FISCAL YEAR-END OPTION HOLDINGS
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS AT FY-END (#)
EXERCISABLE/
NAME UNEXERCISABLE
------------------------------------------------- -----------------------
<S> <C>
J. Miles Branagan................................ 69,653/10,347
Thomas M. Hein................................... 20,797/19,203
Melvin K. Nerby.................................. 50,000/0
Charles B. Swenson............................... 50,000/0
Creighton A. White............................... 15,384/14,616
Richard G. Kinsey................................ 15,384/24,616
</TABLE>
In connection with the Offer and the proposed Merger, all outstanding
options have become immediately exercisable and shall remain as such until
midnight on June 17, 1996. See "Employee Benefit Plans -- Stock Option Plan."
CERTAIN TRANSACTIONS
Upon commencement of his employment by the Company on July 11, 1988, Mr.
Hein, the Company's Vice President, Finance, Chief Financial Officer and
Treasurer, received interest-free loans in the aggregate amount of $75,000 to
assist him in purchasing a home in the Los Angeles area. In connection with Mr.
Hein's relocation to Raleigh, North Carolina, the Compensation Committee agreed
to forgive $25,000 of the balance on such loans on each of July 1, 1995, July 1,
1996 and July 1, 1997, subject to his being employed by the Company on such
dates. As of March 31, 1996, Mr. Hein's outstanding balance owed on such loans
was $50,000. Any outstanding loan is immediately due and payable upon
termination of Mr. Hein's employment with the Company for any reason.
In connection with Mr. Swenson's relocation to Charleston, South Carolina,
the Company provided Mr. Swenson with an interest-free loan in the amount of
$100,000 to assist him in purchasing a home in the Charleston area. Such loan is
immediately due and payable upon the first to occur of (i) the sale of Mr.
Swenson's existing residence in Southern California, or (ii) the third
anniversary of the date such loan is made. The loan is immediately due and
payable upon termination of Mr. Swenson's employment with MDT Diagnostic Company
for any reason.
SECTION 16 COMPLIANCE
Based solely upon its review of Forms 3, 4 and 5 and any amendments thereto
furnished to the Company, or written representations from certain reporting
persons that no other reports were required, the Company does not know of any
person who failed to file on a timely basis any reports required under Section
16(a) of the Securities Exchange Act of 1934, as amended.
INFORMATION WITH RESPECT TO GETINGE DESIGNEES
Set forth below are the names, ages, present principal occupations, five
year employment history and other directorships held in public companies of the
Getinge Designees.
CARL BENNET, 45, President and Chief Executive Officer of Getinge since
1989. Mr. Bennet has been a director of Scandinavian Recycling AB, a company
engaged in the recycling of rubber and metal equipment, since 1993, Metric AB
since 1995, Andersson & Bennet AB and Sperlingsholms Kraft AB, a power utility
company, since 1991.
LARS-PETER HARBING, 38, President of the Bidder. Mr. Harbing has also been
the President of Getinge International, Inc. since 1994 and was the President of
Getinge GmbH from 1991 to 1994.
I-11
<PAGE> 30
JOHAN MALMQVIST, 35, Executive Vice President of Getinge since 1996,
President of Arjo and Arjo AB since 1995. Business Area Manager Disinfection,
Business Area Manager of Getinge since 1990.
HARALD CASTLER, 39, Business Area Manager Sterilization -- Health Care
Industry of Getinge since 1988.
ULF GRUNADER, 42, Chief Financial Officer of Getinge since 1993. Auditor
with Arthur Andersen & Co. from 1978 to 1992.
INGMAR JOHANSSON, 46, Technical Director of Getinge since 1989.
SECURITY OWNERSHIP OF GETINGE DESIGNEES
No Getinge Designee directly or beneficially owns shares of Common Stock of
the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There have been no transactions or series of transactions, since April 1,
1995, to which the Company or any of its subsidiaries was or is to be a party in
which the amount involved exceeds $60,000 and in which any of the Getinge
Designees had or will have a direct or indirect material interest, nor has any
Getinge Designee been indebted to the Company or its subsidiaries in an amount
in excess of $60,000 or been involved in a material business relationship with
the Company or its subsidiaries.
I-12
<PAGE> 31
SCHEDULE II
LETTERHEAD
May 12, 1996
Board of Directors
MDT Corporation
Stratford Hall, Suite 200
1009 Slater Road
Morrisville, NC 27560
Members of the Board:
We understand that MDT Corporation (the 'Company') and Getinge Industrier
AB ('Getinge') have entered into an Agreement and Plan of Merger dated May 12,
1996 (the 'Agreement'), pursuant to which Getinge will acquire all of the
Company's common stock (the 'Shares') for consideration of $4.50 per share in
cash (the 'Proposed Transaction'). Pursuant to the Agreement, a wholly-owned
subsidiary of Getinge (the 'Subsidiary') shall commence a tender offer for the
Shares. Following the successful completion of the tender offer, the Company
will be merged with the Subsidiary and become a wholly-owned indirect subsidiary
of Getinge. The terms and conditions of the Proposed Transaction are set forth
in more detail in the Agreement.
We have been requested by the Board of Directors of the Company to render
our opinion with respect to the fairness, from a financial point of view, to the
Company's stockholders of the consideration to be offered in the Proposed
Transaction. We have not been requested to opine as to, and our opinion does not
in any manner address, the Company's underlying business decision to proceed
with or effect the Proposed Transaction.
In arriving at our opinion, we reviewed and analyzed: (1) the Agreement and
the specific terms of the Proposed Transaction, (2) publicly available
information concerning the Company that we believe to be relevant to our
inquiry, including but not limited to, the Company's Form 10-K and 10-Q filings
with the Securities Exchange Commission and annual reports, (3) financial and
operating information with respect to the business, operations and prospects of
the Company furnished to us by the Company, (4) a trading history of the
Company's common stock over the past five years and a comparison of that trading
history with those of other companies that we deemed relevant, (5) a comparison
of the historical financial results and present financial condition of the
Company with those of other companies that we deemed relevant, and (6) a
comparison of the financial terms of the Proposed Transaction with the financial
terms of certain other recent transactions that we deemed relevant. In addition,
we have considered the results of the limited solicitation of an indication of
interest from a third party with respect to the purchase of all or part of the
Company's business. In addition, we have had discussions with the management of
the Company concerning its business, operations, assets, financial condition and
prospects and undertook such other studies, analyses and investigations as we
deemed appropriate.
II-1
<PAGE> 32
In arriving at our opinion, we have assumed and relied upon the accuracy
and completeness of the financial and other information used by us without
assuming any responsibility for independent verification of such information and
have further relied upon the assurances of management of the Company that they
are not aware of any facts that would make such information inaccurate or
misleading. With respect to the financial projections of the Company, upon
advice of the Company we have assumed that such projections have been reasonably
prepared on a basis reflecting the best currently available estimates and
judgments of the management of the Company as to the future financial
performance of the Company and that the Company will perform substantially in
accordance with such projections. In arriving at our opinion, we have conducted
only a limited physical inspection of the properties and facilities of the
Company and have not made or obtained any evaluations or appraisals of the
assets or liabilities of the Company. In addition, except as noted above, you
have not authorized us to solicit and, we have not solicited any indications of
interest from any third party with respect to the purchase of all or part of the
Company's business. Our opinion necessarily is based upon market, economic and
other conditions as they exist on, and can be evaluated as of, the date of this
letter.
Based upon and subject to the foregoing, we are of the opinion as of the
date hereof that, from a financial point of view, the consideration to be
offered to the Company's stockholders in the Proposed Transaction is fair to
such stockholders.
We have acted as financial advisor to the Company in connection with the
Proposed Transaction and will receive a fee for our services which is contingent
upon the consummation of the Proposed Transaction. In addition, the Company has
agreed to indemnify us for certain liabilities that may arise out of the
rendering of this opinion. In the ordinary course of our business, we may trade
in the securities of the Company for our own account and for the accounts of our
customers and, accordingly, may at any time hold a long or short position in
such securities.
This opinion is for the use and benefit of the Board of Directors of the
Company and is rendered to the Company's Board of Directors in connection with
its consideration of the Proposed Transaction. This opinion is not intended to
be and does not constitute a recommendation to any stockholder of the Company as
to whether to accept the consideration to be offered to such stockholder in
connection with the Proposed Transaction.
Very truly yours,
LEHMAN BROTHERS
II-2
<PAGE> 33
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT NAME PAGE
- ------ ------------------------------------------------------------------------------ ----
<C> <S> <C>
(a)(1) Form of letter to stockholders of the Company.................................
(a)(2) Opinion of Lehman Brothers Inc. dated May 12, 1996............................
(a)(3) Press release issued by the Company on May 12, 1996...........................
(c)(1) Agreement and Plan of Merger dated May 12, 1996, among the Company, Getinge
and Bidder....................................................................
</TABLE>
<PAGE> 1
[MDT Corporation Letterhead]
May 17, 1996
Dear Stockholder:
I am pleased to inform you that on May 12, 1996, MDT Corporation (the
"Company") entered into an Agreement and Plan of Merger (the "Merger Agreement")
with Getinge Industrier AB and Getinge Acquisition Corp. ("Purchaser"). Pursuant
to the Merger Agreement, Purchaser today commenced a tender offer to purchase
all outstanding shares of the Company's Common Stock (the "Shares") for $4.50
per share in cash. Under the Merger Agreement, if at least two-thirds of the
Shares are tendered, the tender offer will be followed by a merger of Purchaser
into the Company. In the merger, each share of Common Stock will be converted
into the same consideration as is paid in the tender offer (other than shares
held by the Purchaser and by dissenting stockholders, if any).
The board of directors of the Company has unanimously approved the Merger
Agreement and the transactions contemplated by the Merger Agreement, and has
unanimously determined that each of the Merger Agreement, the tender offer and
the merger is fair to, and in the best interests of, the stockholders of the
Company. The board of directors of the Company unanimously recommends that
stockholders accept the offer, tender their Shares and approve and adopt the
Merger Agreement and the merger.
Accompanying this letter is a Schedule 14D-9, which describes the board's
decision to recommend the tender offer and the merger. This document contains
important information relating to the transaction, and we urge you to read it
carefully.
Sincerely,
J. Miles Branagan
Chairman of the Board of Directors,
Chief Executive Officer and President
<PAGE> 1
SCHEDULE II
LETTERHEAD
May 12, 1996
Board of Directors
MDT Corporation
Stratford Hall, Suite 200
1009 Slater Road
Morrisville, NC 27560
Members of the Board:
We understand that MDT Corporation (the 'Company') and Getinge Industrier
AB ('Getinge') have entered into an Agreement and Plan of Merger dated May 12,
1996 (the 'Agreement'), pursuant to which Getinge will acquire all of the
Company's common stock (the 'Shares') for consideration of $4.50 per share in
cash (the 'Proposed Transaction'). Pursuant to the Agreement, a wholly-owned
subsidiary of Getinge (the 'Subsidiary') shall commence a tender offer for the
Shares. Following the successful completion of the tender offer, the Company
will be merged with the Subsidiary and become a wholly-owned indirect subsidiary
of Getinge. The terms and conditions of the Proposed Transaction are set forth
in more detail in the Agreement.
We have been requested by the Board of Directors of the Company to render
our opinion with respect to the fairness, from a financial point of view, to the
Company's stockholders of the consideration to be offered in the Proposed
Transaction. We have not been requested to opine as to, and our opinion does not
in any manner address, the Company's underlying business decision to proceed
with or effect the Proposed Transaction.
In arriving at our opinion, we reviewed and analyzed: (1) the Agreement and
the specific terms of the Proposed Transaction, (2) publicly available
information concerning the Company that we believe to be relevant to our
inquiry, including but not limited to, the Company's Form 10-K and 10-Q filings
with the Securities Exchange Commission and annual reports, (3) financial and
operating information with respect to the business, operations and prospects of
the Company furnished to us by the Company, (4) a trading history of the
Company's common stock over the past five years and a comparison of that trading
history with those of other companies that we deemed relevant, (5) a comparison
of the historical financial results and present financial condition of the
Company with those of other companies that we deemed relevant, and (6) a
comparison of the financial terms of the Proposed Transaction with the financial
terms of certain other recent transactions that we deemed relevant. In addition,
we have considered the results of the limited solicitation of an indication of
interest from a third party with respect to the purchase of all or part of the
Company's business. In addition, we have had discussions with the management of
the Company concerning its business, operations, assets, financial condition and
prospects and undertook such other studies, analyses and investigations as we
deemed appropriate.
II-1
<PAGE> 2
In arriving at our opinion, we have assumed and relied upon the accuracy
and completeness of the financial and other information used by us without
assuming any responsibility for independent verification of such information and
have further relied upon the assurances of management of the Company that they
are not aware of any facts that would make such information inaccurate or
misleading. With respect to the financial projections of the Company, upon
advice of the Company we have assumed that such projections have been reasonably
prepared on a basis reflecting the best currently available estimates and
judgments of the management of the Company as to the future financial
performance of the Company and that the Company will perform substantially in
accordance with such projections. In arriving at our opinion, we have conducted
only a limited physical inspection of the properties and facilities of the
Company and have not made or obtained any evaluations or appraisals of the
assets or liabilities of the Company. In addition, except as noted above, you
have not authorized us to solicit and, we have not solicited any indications of
interest from any third party with respect to the purchase of all or part of the
Company's business. Our opinion necessarily is based upon market, economic and
other conditions as they exist on, and can be evaluated as of, the date of this
letter.
Based upon and subject to the foregoing, we are of the opinion as of the
date hereof that, from a financial point of view, the consideration to be
offered to the Company's stockholders in the Proposed Transaction is fair to
such stockholders.
We have acted as financial advisor to the Company in connection with the
Proposed Transaction and will receive a fee for our services which is contingent
upon the consummation of the Proposed Transaction. In addition, the Company has
agreed to indemnify us for certain liabilities that may arise out of the
rendering of this opinion. In the ordinary course of our business, we may trade
in the securities of the Company for our own account and for the accounts of our
customers and, accordingly, may at any time hold a long or short position in
such securities.
This opinion is for the use and benefit of the Board of Directors of the
Company and is rendered to the Company's Board of Directors in connection with
its consideration of the Proposed Transaction. This opinion is not intended to
be and does not constitute a recommendation to any stockholder of the Company as
to whether to accept the consideration to be offered to such stockholder in
connection with the Proposed Transaction.
Very truly yours,
LEHMAN BROTHERS
II-2
<PAGE> 1
NEWS RELEASE
For Additional Information contact:
J. Miles Branagan or Thomas Hein at (919) 941-9745
FOR RELEASE AT 9:00 P.M. EASTERN TIME,
MAY 12, 1996
DURHAM, NORTH CAROLINA
MDT CORPORATION ANNOUNCES AGREEMENT
TO BE ACQUIRED AND REPORTS PRELIMINARY
FOURTH QUARTER AND FISCAL YEAR RESULTS
AGREEMENT TO BE ACQUIRED
MDT Corporation (NASDAQ: MDTC) announced today that it has entered into an
agreement under which it will be acquired by Getinge Industrier AB, a Swedish
manufacturer of hospital and scientific equipment.
The Company and Getinge have signed a definitive merger agreement pursuant
to which Getinge will acquire all outstanding shares of the Company's common
stock. Getinge will commence a tender offer by May 17, 1996, for such shares at
a cash price of $4.50 per share. Those shares not acquired in the tender offer
will be converted into $4.50 in cash pursuant to a merger to be effected
following completion of the tender offer.
The Board of Directors of the Company has unanimously approved the
agreement and recommends that shareholders of the Company accept Getinge's
offer. The tender offer is required to remain open for 30 business days.
The tender offer will be made pursuant to definitive offering documents to
be filed with the Securities and Exchange Commission. Consummation of the tender
offer and the merger is subject to customary terms and conditions, including
approval of the holders of two-thirds of the shares to be acquired and
regulatory approvals.
J. Miles Branagan, Chairman of the Board of Directors, President and Chief
Executive Officer of the Company, said: "I believe that this transaction offers
value and liquidity to our shareholders at a time when our Company is facing
many significant challenges. It also provides a strong foundation for the
Company's future and creates a unique international presence and a combination
of products and services which will add value for our customers and create
opportunities for our employees."
Carl Bennet, Chief Executive Officer of Getinge, stated:
"Getinge, with a worldwide presence, is a leading manufacturer of
sterilization and disinfection equipment, with its strength in the United States
in the pharmaceutical sector.
MDT has most of its business in the U.S. market and a strong position in
the health care sector for sterilization, disinfection and customer service.
MDT and Getinge will form a competitive combination in the sterilization
and disinfection field in the United States and worldwide."
PRELIMINARY FOURTH QUARTER AND FISCAL YEAR RESULTS
MDT also announced that it recorded bookings and revenues in the fourth
quarter ended March 31, 1996, of approximately $28,889,000 and $34,022,000,
compared to $35,017,000 and $35,401,000 in the same period
<PAGE> 2
a year earlier. For the fiscal year ended March 31, 1996, bookings and revenues
were approximately $128,136,000 and $131,188,000 compared to $134,535,000 and
$135,462,000 for the earlier year. The backlog of orders at March 31, 1996, was
$24,057,000 compared to $27,145,000 at March 31, 1995. The Company will report a
loss for the recent fourth quarter and fiscal year, estimated at $4,525,000
(approximately $6,421,000 before taxes) and $6,066,000 (approximately $8,791,000
before taxes). This result compares to earnings of $143,000 and $276,000 for the
same periods a year earlier.
The results for the fourth quarter again placed the Company
out-of-compliance with certain of the provisions of its amended bank credit
agreement. An interim waiver of such provisions will be requested from the banks
while the Company seeks a further amendment to the bank credit agreement. No
assurance can be given that a waiver or further amendment will be obtained.
However, in connection with the Getinge transaction announced herein, the
Company is advised that Getinge has received a commitment from its lenders
sufficient to retire the loans outstanding under the bank credit agreement,
although Getinge may also attempt to reach mutually agreeable terms with the
Company's existing bank lenders.
Domestic customer demand for the Company's capital equipment was
particularly weak in the recent quarter, while international demand remained
relatively firm, but yielded generally lower margins. The combination of lower
revenues, proportionally higher international revenues and charges described
herein, produced lower gross profit margins for the recent quarter and fiscal
year of 22.2% and 28.0% versus 32.8% and 31.7% for the same periods last year.
The loss estimated for the fourth quarter reflects pre-tax charges for
inventory adjustments of approximately $2,425,000; a reserve for estimated
environmental cleanup costs of approximately $1,350,000; other charges of
approximately $992,000; additional reorganization costs of approximately
$662,000; and transaction costs of approximately $410,000.
Inventory adjustments reflected in the fourth quarter include a write-down
of approximately $489,000 in connection with inventory purchased from a supplier
who failed to maintain necessary compliance with FDA manufacturing standards; a
write-off of approximately $1,082,000 relating to products whose sales are being
discontinued by the Company, including approximately $724,000 attributable to
nutrition and ice stations and $358,000 attributable to certain tabletop
sterilizers; additional reserves for excess and obsolete inventory of
approximately $721,000, relating primarily to the identification of
slower-moving products and parts inventories; and, higher LIFO reserves of
approximately $133,000.
In connection with Getinge's investigation of the Company, the conduct of
environmental tests revealed previously undiscovered soil and groundwater
contamination at two of the Company's manufacturing facilities. The costs of
remediating such contamination are currently estimated to range from $1,350,000
to $2,700,000, and a reserve of $1,350,000 was established in the recent fourth
quarter to meet anticipated remediation obligations.
In connection with its year-end closing, the Company determined to increase
warranty reserves by approximately $260,000 and to write-off $349,000 of land
improvement costs incurred to pursue previous plans to construct a new
manufacturing facility in South Carolina. The write-off of land improvement
costs reflects the Company's pledge of additional collateral to secure an
amendment to its bank credit agreement, and the concomitant loss of such
collateral as a credit enhancement to support the previously contemplated
financing for such a facility. The Company plans to list for sale the real
property on which this facility was to have been constructed. Other charges also
included approximately $302,000 to increase reserves for projected additional
workers compensation expenses and approximately $179,000 to amortize assets
relating to the Company's plasma sterilizer program.
Reorganization costs of $662,000 incurred in connection with previously
announced cost reductions include approximately $500,000 of costs for personnel
reductions and approximately $162,000 for relocation and other expenses.
Transaction costs of approximately $410,000 for the fourth quarter reflected
both costs incurred in connection with the Getinge transaction announced herein
and costs incurred in connection with the negotiation and amendment of the
Company's bank credit agreement.
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<PAGE> 3
Further measures to reduce costs are being implemented by the Company. A
reserve of approximately $314,000 to reflect costs incurred to effect such
reductions, principally severance costs, is expected to be recorded in the first
quarter.
The statements made in this press release with respect to the Company's
cost reduction program and the estimated cost of remediating the environmental
contamination at the Company's manufacturing facilities are forward-looking
statements which involve risks and uncertainties. Such statements are qualified
by important factors which could cause actual results to differ materially from
those reported in such statements, including the following: in the case of the
cost savings, the ability of the Company to implement employee terminations as
presently scheduled and in the case of the cost to remediate the environmental
contamination, the extent and location of the contamination and any requirements
imposed on the Company to test for, contain and/or remediate any such
contamination in the future.
MDT Corporation is a leading developer and manufacturer of sterility
assurance systems and examining and operating equipment, including related
accessories and consumables, which it sells in the worldwide health care and
scientific markets. The Company also provides service and distributes parts for
its products in those markets through its Service Centers, domestic and foreign.
-CONTINUED -
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<PAGE> 4
MDT CORPORATION AND SUBSIDIARIES
PRELIMINARY CONDENSED CONSOLIDATED INCOME STATEMENT DATA
(DOLLARS IN THOUSANDS -- EXCEPT PER SHARE AND OUTSTANDING SHARE DATA)
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31, YEAR ENDED MARCH 31,
--------------------------- ---------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Sales............................. $ 34,022 $ 35,401 $ 131,188 $ 135,462
Gross Profit...................... 7,540 11,610 36,751 42,898
Operating Expenses................ 10,308 9,719 38,355 37,355
Reorganization Costs.............. 662 502 2,035 1,235
Operating Income (Loss)........... (3,430) 1,389 (3,639) 4,308
Interest Expense.................. 835 977 3,443 3,514
Other (Income) Expense............ 2,156 (37) 1,709 113
Income (Loss) Before Income
Taxes........................... (6,421) 449 (8,791) 681
Net Income........................ (4,525) 143 (6,066) 276
Earnings Per Share................ (.67) .02 (.90) .04
Weighted Average Number of Shares
Outstanding..................... 6,769,000 6,840,000 6,769,000 6,775,000
</TABLE>
MDT CORPORATION AND SUBSIDIARIES
PRELIMINARY CONDENSED CONSOLIDATED BALANCE SHEET DATA
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31,
-----------------------
1996 1995
-------- --------
<S> <C> <C>
ASSETS
Current Assets..................................................... $ 69,306 $ 72,631
Other Assets....................................................... 30,726 32,718
-------- --------
Total Assets....................................................... $100,032 $105,349
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Bank Credit Agreement Borrowings................................ $ 33,300 $ 32,433
Other Current Liabilities....................................... 22,465 21,604
Other Non-Current Liabilities................................... 4,871 5,851
Stockholders' Equity............................................... 39,396 45,461
-------- --------
Total Liabilities and Stockholders' Equity......................... $100,032 $105,349
======== ========
</TABLE>
-END
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<PAGE> 1
------------------------
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
GETINGE INDUSTRIER AB,
GETINGE ACQUISITION CORP.
AND
MDT CORPORATION
DATED AS OF
MAY 12, 1996
------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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PAGE
----
<S> <C> <C>
ARTICLE I
THE OFFER AND MERGER................................................. 1
Section 1.1 The Offer............................................................ 1
Section 1.2 Company Actions...................................................... 1
Section 1.3 SEC Documents........................................................ 2
Section 1.4 Directors............................................................ 3
Section 1.5 The Merger........................................................... 3
Section 1.6 Effective Time....................................................... 4
Section 1.7 Closing.............................................................. 4
Section 1.8 Stockholders' Meeting................................................ 4
ARTICLE II
CONVERSION OF SECURITIES............................................. 4
Section 2.1 Conversion of Capital Stock.......................................... 4
Section 2.2 Exchange of Certificates............................................. 5
Section 2.3 Dissenters' Rights................................................... 6
Section 2.4 Intentionally Omitted................................................ 6
Section 2.5 Company Stock Plans.................................................. 6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................ 6
Section 3.1 Representations and Warranties of the Company........................ 6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER........... 17
Section 4.1.. Representations and Warranties of Parent and the Purchaser........... 17
ARTICLE V
COVENANTS............................................................ 19
Section 5.1 (a) Interim Operations of the Company................................ 19
(b) Other Actions.................................................... 21
Section 5.2 Access; Confidentiality.............................................. 21
Section 5.3 Reasonable Efforts; Notification..................................... 21
Section 5.4 No Solicitation...................................................... 22
Section 5.5 Publicity............................................................ 23
Section 5.6 Transfer Taxes....................................................... 23
Section 5.7 Indemnification...................................................... 23
Section 5.8 Benefits............................................................. 24
ARTICLE VI
CONDITIONS........................................................... 24
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger........... 24
Section 6.2 Conditions to the Company's Obligation to Effect the Merger.......... 25
ARTICLE VII
TERMINATION.......................................................... 25
Section 7.1 Termination.......................................................... 25
Section 7.2 Effect of Termination................................................ 26
</TABLE>
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<PAGE> 3
<TABLE>
<CAPTION>
PAGE
--
<S> <C> <C>
ARTICLE VIII
MISCELLANEOUS........................................................ 26
Section 8.1 Fees and Expenses.................................................... 26
Section 8.2 Amendment and Modification........................................... 27
Section 8.3 Nonsurvival of Representations and Warranties........................ 27
Section 8.4 Notices.............................................................. 27
Section 8.5 Interpretation....................................................... 27
Section 8.6 Counterparts......................................................... 28
Section 8.7 Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership............................................................ 28
Section 8.8 Severability......................................................... 28
Section 8.9 Governing Law........................................................ 28
Section 8.10 Assignment........................................................... 28
Section 8.11 Enforcement.......................................................... 28
Section 8.12 Extension; Waiver.................................................... 28
Section 8.13 Procedure for Termination, Amendment, Extension or Waiver............ 28
Section 8.14 Fiduciary Duty....................................................... 29
Section 8.15 Definitions.......................................................... 29
Annex A Certain Conditions of the Offer...................................... A-1
</TABLE>
ii
<PAGE> 4
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 12, 1996, by and among
Getinge Industrier AB, a Swedish corporation (the "Parent"), Getinge Acquisition
Corp., a Delaware corporation and an indirect wholly-owned subsidiary of Parent
(the "Purchaser"), and MDT Corporation, a Delaware corporation (the "Company").
ARTICLE I
THE OFFER AND MERGER
Section 1.1 The Offer. As promptly as practicable (but in no event later
than five business days after the public announcement of the execution hereof),
the Purchaser shall commence (within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) a tender offer
(the "Offer") for the outstanding shares of Common Stock, par value $1.25 per
share (the "Shares"), of the Company (together with the rights relating thereto)
at a price of $4.50 per Share, net to the seller in cash (such price, or such
higher price per Share as may be paid in the Offer, being referred to herein as
the "Offer Price"), subject to the conditions set forth in Annex A hereto.
The obligations of the Purchaser to commence the Offer and to accept for
payment and to pay for any Shares validly tendered on or prior to the expiration
of the Offer and not withdrawn shall be subject only to the conditions set forth
in Annex A hereto. The Offer shall be made by means of an offer to purchase (the
"Offer to Purchase") containing the terms set forth in this Agreement and the
conditions set forth in Annex A hereto. Notwithstanding anything to the contrary
in clause (iii) of Annex A hereto, the Purchaser shall be required to make a
reasonable determination that any of the events set forth in paragraphs (a)
through (e) of Annex A shall have occurred in order to refuse payment for
tendered Shares or to terminate the Offer in connection with any purported
failure to meet a condition specified in such clauses (a) through (e) of Annex
A.
The Purchaser shall not decrease the Offer Price or decrease the number of
Shares sought or the minimum number of Shares required to be tendered or change
the form of consideration payable in the Offer, impose additional or amend any
other term or condition of the Offer in any manner adverse to the holders of the
Shares (other than with respect to insignificant changes or amendments and
subject to the penultimate sentence of this Section 1.1) without the prior
written consent of the Company, provided, however, that if on the initial
scheduled expiration date of the Offer, which shall be 30 business days after
the date the Offer is commenced, all conditions to the Offer shall not have been
satisfied or waived, the Purchaser may, from time to time, in its sole
discretion, extend the expiration date. In addition, the Offer Price may be
increased, and the Offer may be extended to the extent required by law in
connection with such increase in each case without the consent of the Company.
The Purchaser shall, on the terms and subject to the prior satisfaction or
waiver of the conditions of the Offer, accept for payment and pay for Shares
validly tendered as promptly as practicable; provided, however, that if,
immediately prior to the expiration date of the Offer (as it may be extended),
the Shares validly tendered and not withdrawn pursuant to the Offer equal more
than 80% but less than 90% of the outstanding Shares, the Purchaser may extend
the Offer for a period not to exceed 10 business days, notwithstanding that all
conditions to the Offer are satisfied as of such expiration date of the Offer.
Section 1.2 Company Actions.
(a) The Company hereby approves of and consents to the Offer and represents
that the Board of Directors, at a meeting duly called and held, has (i)
unanimously determined that each of the Agreement, the Offer and the Merger (as
defined in Section 1.5) is fair to and in the best interests of the stockholders
of the Company, (ii) received the opinion of Lehman Brothers Inc., financial
advisor to the Company, to the effect that the Offer and the Merger are fair to
the stockholders of the Company from a financial point of view, (iii) approved
this Agreement and the transactions contemplated hereby, including the Offer and
the Merger (collectively, the "Transactions") and (iv) resolved to recommend
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.
The Company has been advised by each of its directors that each director,
subject to his fiduciary
<PAGE> 5
duties and changes in circumstances, intends to tender pursuant to the Offer all
Shares owned by such Person or to vote all Shares owned by such Person in favor
of the Merger.
(b) In connection with the Offer, the Company will promptly furnish or
cause to be furnished to the Purchaser mailing labels, security position
listings and any available listing or computer file containing the names and
addresses of all holders of record of the Shares as of a recent date, and shall
furnish the Purchaser with such additional information (including, but not
limited to, updated lists of holders of the Shares and their addresses, mailing
labels and lists of security positions) and assistance as the Purchaser or its
agents may reasonably request in communicating the Offer to the record and
beneficial holders of the Shares.
Section 1.3 SEC Documents.
(a) Concurrently with the commencement of the Offer, the Parent and the
Purchaser shall file with the United States Securities and Exchange Commission
(the "SEC") a Tender Offer Statement on Schedule 14D-1 in accordance with the
Exchange Act with respect to the Offer (the Schedule 14D-1 together with all
amendments, supplements and exhibits thereto, including the Offer to Purchase,
being collectively the "Offer Documents"). The Company and its counsel shall be
given a reasonable opportunity to review and comment on the Offer Documents and
all amendments and supplements thereto prior to their filing with the SEC or
dissemination to stockholders of the Company. The Purchaser agrees to provide
the Company and its counsel in writing with any comments the Purchaser and its
counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments and shall provide the
Company and its counsel a reasonable opportunity to review and comment on the
response of the Purchaser to such comments. Concurrently with the commencement
of the Offer, the Company shall file with the SEC a Solicitation/ Recommendation
Statement on Schedule 14D-9 in accordance with the Exchange Act (together with
all amendments and supplements thereto and including the exhibits thereto, the
"Schedule 14D-9"), which shall contain the recommendation referred to in clause
(iv) of Section 1.2(a) hereof; provided, that subject to the provisions of
Section 5.4, such recommendation may be withdrawn, modified or amended.
(b) Parent and the Purchaser will take all steps necessary to ensure that
the Offer Documents, and the Company will take all steps necessary to ensure
that the Schedule 14D-9, will comply in all material respects with the
provisions of applicable Federal and state securities Laws and, on the date
filed with the SEC and on the date first published, sent or given to the
Company's stockholders, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that Parent and the Purchaser
make no representation with respect to information furnished by the Company for
inclusion in the Offer Documents and the Company makes no representation with
respect to information furnished by Parent or the Purchaser for inclusion in the
Schedule 14D-9. The information supplied in writing by the Company for inclusion
in the Offer Documents and by Parent or the Purchaser for inclusion in the
Schedule 14D-9 will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. Each of Parent and the Purchaser will take all steps
necessary to cause the Offer Documents, and the Company will take all steps
necessary to cause the Schedule 14D-9, to be filed with the SEC and to be
disseminated to holders of the Shares, in each case as and to the extent
required by applicable Federal and state securities Laws. Each of Parent and the
Purchaser, on the one hand, and the Company, on the other hand, will promptly
correct any information provided by it for use in the Offer Documents and the
Schedule 14D-9, respectively, if and to the extent that it shall have become
false and misleading in any material respect and the Purchaser will take all
steps necessary to cause the Offer Documents, and the Company will take all
steps necessary to cause the Schedule 14D-9, as so corrected to be filed with
the SEC and to be disseminated to holders of the Shares, in each case as and to
the extent required by applicable Federal and state securities Laws. 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. The Company
agrees to provide Parent and its counsel in writing with any comments the
Company or its counsel may receive from the SEC or its staff with respect to the
Schedule 14D-9 promptly after the receipt of such comments and shall provide
Parent
2
<PAGE> 6
and its counsel a reasonable opportunity to review and comment on the response
of the Company to such comments.
Section 1.4 Directors.
(a) Promptly upon the purchase of and payment for any Shares by Parent or
any of its Subsidiaries pursuant to the Offer, Parent shall be entitled to
designate for appointment or election to the Company's Board of Directors, upon
written notice to the Company, such number of directors, rounded up to the next
whole number, on the Board of Directors such that the percentage of its
designees on the Board shall equal the percentage of the outstanding Shares
beneficially owned by Parent and its affiliates. In furtherance thereof, the
Company shall, upon request of the Purchaser, use its best efforts promptly to
cause Parent's designees to be so elected to the Company's Board, and in
furtherance thereof, to the extent necessary, increase the size of the Board of
Directors. At such time, the Company shall also cause Persons designated by
Parent to constitute at least the same percentage (rounded up to the next whole
number) as is on the Company's Board of Directors of (i) each committee of the
Company's Board of Directors, (ii) each board of directors (or similar body) of
each Subsidiary of the Company and (iii) each committee (or similar body) of
each such board. Notwithstanding the foregoing, until the Effective Time (as
defined in Section 1.6 hereof), the parties shall use all reasonable efforts to
have at least two members of the Board of Directors who are neither (i) officers
of Parent or the Company, nor (ii) designees, stockholders or affiliates of
Parent. The Company shall promptly take all actions required pursuant to Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order to
fulfill its obligations under this Section 1.4(a), including mailing to
stockholders the information required by such Section 14(f) and Rule 14f-1 (or,
at Parent's request, furnishing such information to Parent for inclusion in the
Offer Documents initially filed with the SEC and distributed to the stockholders
of the Company) as is necessary to enable Parent's designees to be elected to
the Company's Board of Directors. Parent or the Purchaser will supply the
Company in writing, and be solely responsible for, any information with respect
to either of them and their nominees, officers, directors and affiliates
required by such Section 14(f) and Rule 14f-1 as is necessary in connection with
the appointment of any of Parent's designees under Section 1.4(a). The
provisions of this Section 1.4(a) are in addition to and shall not limit any
rights which the Purchaser, Parent or any of their affiliates may have as a
holder or beneficial owner of Shares as a matter of law with respect to the
election of directors or otherwise.
(b) From and after the time, if any, that Parent's designees constitute a
majority of the Company's Board of Directors, any amendment of this Agreement,
any termination of this Agreement by the Company, any extension of time for
performance of any of the obligations of Parent or the Purchaser hereunder, any
waiver of any condition or any of the Company's rights hereunder or other action
by the Company hereunder may be effected only by the action of a majority of the
directors of the Company then in office who are not officers of Parent or
designees, stockholders or affiliates of Parent, which action shall be deemed to
constitute the action of any committee specifically designated by the Board of
Directors to approve the actions and Transactions contemplated hereby and the
full Board of Directors; provided, that if there shall be no such directors,
such actions may be effected by majority vote of the entire Board of Directors
of the Company.
Section 1.5 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined in Section 1.6 hereof), the Company
and the Purchaser shall consummate a merger (the "Merger") pursuant to which (a)
the Purchaser shall be merged with and into the Company and the separate
corporate existence of the Purchaser shall thereupon cease and (b) the Company
shall be the surviving corporation in the Merger (sometimes hereinafter referred
to as the "Surviving Corporation") and shall continue to be governed by the Laws
of the State of Delaware.
Pursuant to the Merger, (x) the Certificate of Incorporation of the Company
(the "Certificate of Incorporation"), as in effect immediately prior to the
Effective Time, shall be the initial certificate of incorporation of the
Surviving Corporation and (y) the By-laws of the Company (the "By-laws"), as in
effect immediately prior to the Effective Time, shall be the initial By-laws of
the Surviving Corporation. The Merger shall have the effects specified in the
Delaware General Corporation Law (the "DGCL").
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<PAGE> 7
The directors of the Purchaser at the Effective Time shall be the initial
directors of the Surviving Corporation. The officers of the Company at the
Effective Time shall be the initial officers of the Surviving Corporation.
Section 1.6 Effective Time. Parent, the Purchaser and the Company will
cause a Certificate of Merger, or, if applicable, a Certificate of Ownership and
Merger (as applicable, the "Certificate of Merger"), to be executed and filed on
the date of the Closing (as defined in Section 1.7) (or on such other date as
Parent and the Company may agree) with the Secretary of State of Delaware (the
"Secretary of State") as provided in the DGCL. The Merger shall become effective
on the date on which the Certificate of Merger has been duly filed with the
Secretary of State or such time as is agreed upon by the parties and specified
in the Certificate of Merger, and such time is hereinafter referred to as the
"Effective Time."
Section 1.7 Closing. The closing of the Merger (the "Closing") shall take
place at 10:00 a.m., local time, on the later to occur of (a) the day of (and
immediately following) the receipt of approval of the Merger by the Company's
stockholders, or as soon as practicable after expiration of the Offer if such
approval is not required and (b) a date to be specified by the parties, which
shall be no later than the second business day after satisfaction or waiver of
all of the conditions set forth in Section 6.1 hereof (the "Closing Date"), at
the offices of Skadden, Arps, Slate, Meagher & Flom, New York, New York, unless
another date or place is agreed to in writing by the parties hereto.
Section 1.8 Stockholders' Meeting.
(a) If required by applicable law in order to consummate the Merger, the
Company, acting through its Board of Directors, shall, in accordance with
applicable law:
(i) duly call, give notice of, convene and hold a special meeting of
its stockholders (the "Special Meeting") as promptly as practicable
following the acceptance for payment and purchase of Shares by the
Purchaser pursuant to the Offer for the purpose of considering and taking
action upon the approval of the Merger and the adoption of this Agreement;
(ii) prepare and file with the SEC a preliminary proxy or information
statement in accordance with the Exchange Act relating to the Merger and
this Agreement and use its best efforts (x) to obtain and furnish the
information required to be included by the Exchange Act and the SEC in the
Proxy Statement (as hereinafter defined) and, after consultation with
Parent, to respond promptly to any comments made by the SEC with respect to
the preliminary proxy or information statement and cause a definitive proxy
or information statement, including any amendment or supplement thereto
(the "Proxy Statement") to be mailed to its stockholders, provided that no
amendment or supplement to the Proxy Statement will be made by the Company
without consultation with Parent and its counsel and (y) to obtain the
necessary approvals of the Merger and this Agreement by its stockholders;
and
(iii) include in the Proxy Statement the recommendation of the Board
that stockholders of the Company vote in favor of the approval of the
Merger and the adoption of this Agreement.
(b) Parent shall vote, or cause to be voted, all of the Shares then owned
by it, the Purchaser or any of its other Subsidiaries and affiliates in favor of
the approval of the Merger and the adoption of this Agreement and shall use its
reasonable efforts to consummate the Merger as promptly as possible after
consummation of the Offer.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
Shares or any shares of capital stock of the Purchaser:
(a) Purchaser Capital Stock. Each issued and outstanding share of capital
stock of the Purchaser shall be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation.
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<PAGE> 8
(b) Cancellation of Treasury Stock and Purchaser-Owned Stock. All Shares
that are owned by the Company or any Subsidiary of the Company and any Shares
owned by the Purchaser or any Subsidiary of the Purchaser shall be cancelled and
retired and shall cease to exist and no consideration shall be delivered in
exchange therefor; provided, that Shares held beneficially or of record by any
plan, program or arrangement sponsored or maintained for the benefit of
employees of the Company or any Subsidiaries thereof shall not be deemed to be
held by the Company regardless of whether the Company has, directly or
indirectly, the power to vote or control the disposition of such Shares.
(c) Exchange of Shares. Each issued and outstanding Share (other than
Shares to be cancelled in accordance with Section 2.1(b) and any Shares which
are held by stockholders exercising appraisal rights pursuant to Section 262 of
the DGCL ("Dissenting Stockholders")) shall be converted into the right to
receive the Offer Price in cash, payable to the holder thereof, without interest
(the "Merger Consideration"), upon surrender of the certificate formerly
representing such Share in the manner provided in Section 2.2. All such Shares,
when so converted, shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist, and each holder of a certificate
representing any such Shares shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration therefor upon the
surrender of such certificate in accordance with Section 2.2, without interest,
or the right, if any, to receive payment from the Surviving Corporation of the
"fair value" of such Shares as determined in accordance with Section 262 of the
DGCL.
Section 2.2 Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall designate a
bank or trust company to act as agent for the holders of the Shares in
connection with the Merger (the "Paying Agent") to receive the funds to which
holders of the Shares shall become entitled pursuant to Section 2.1(c). Parent
shall, from time to time, make available to the Paying Agent funds in amounts
and at times necessary for the payment of the Merger Consideration as provided
herein. All interest earned on such funds shall be paid to Parent.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates, which immediately prior to the Effective Time
represented outstanding Shares (the "Certificates"), whose Shares were converted
pursuant to Section 2.1 into the right to receive the Merger Consideration (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in such form and have such other
provisions as Parent and the Company may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for payment of the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Paying Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly executed,
the holder of such Certificate shall be entitled to receive in exchange therefor
the Merger Consideration for each Share formerly represented by such Certificate
and the Certificate so surrendered shall forthwith be cancelled. If payment of
the Merger Consideration is to be made to a Person other than the Person in
whose name the surrendered Certificate is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed or shall
be otherwise in proper form for transfer and that the Person requesting such
payment shall have paid any transfer and other taxes required by reason of the
payment of the Merger Consideration to a Person other than the registered holder
of the Certificate surrendered or shall have established to the satisfaction of
the Surviving Corporation that such tax either has been paid or is not
applicable. Until surrendered as contemplated by this Section 2.2, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive the Merger Consideration in cash as contemplated by
this Section 2.2. The right of any stockholder to receive the Merger
Consideration shall be subject to and reduced by any applicable withholding Tax
obligation.
(c) Transfer Books; No Further Ownership Rights in the Shares. At the
Effective Time, the stock transfer books of the Company shall be closed and
thereafter there shall be no further registration of transfers of the Shares on
the records of the Company. From and after the Effective Time, the holders of
Certificates evidencing ownership of the Shares outstanding immediately prior to
the Effective Time shall cease to have any rights with respect to such Shares,
except as otherwise provided for herein or by applicable law. If, after
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the Effective Time, Certificates are presented to the Surviving Corporation for
any reason, they shall be cancelled and exchanged as provided in this Article
II.
(d) Termination of Fund; No Liability. At any time following six months
after the Effective Time, the Surviving Corporation shall be entitled to require
the Paying Agent to deliver to it any funds (including any interest received
with respect thereto) which had been made available to the Paying Agent and
which have not been disbursed to holders of Certificates, and thereafter such
holders shall be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat or other similar Laws) only as general creditors
thereof with respect to the Merger Consideration payable upon due surrender of
their Certificates, without any interest thereon. Notwithstanding the foregoing,
none of Parent, the Surviving Corporation or the Paying Agent shall be liable to
any holder of a Certificate for Merger Consideration delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
Section 2.3 Dissenters' Rights. Notwithstanding anything in this Agreement
to the contrary, if any Dissenting Stockholder shall demand to be paid the "fair
value" of such holder's Shares, as provided in Section 262 of the DGCL, such
Shares shall not be converted into or be exchangeable for the right to receive
the Merger Consideration except as provided in this Section 2.3 and the Company
shall give the Parent notice thereof and the Parent shall have the right to
participate in all negotiations and proceedings with respect to any such
demands. Neither the Company nor the Surviving Corporation shall, except with
the prior written consent of the Parent, voluntarily make any payment with
respect to, or settle or offer to settle, any such demand for payment. If any
Dissenting Stockholder shall fail to perfect or shall have effectively withdrawn
or lost the right to dissent, the Shares held by such Dissenting Stockholder
shall thereupon be treated as though such Shares had been converted into the
Merger Consideration pursuant to Section 2.1.
Section 2.4 [Intentionally Omitted]
Section 2.5 Company Stock Plans. (a) The Company shall, effective as of
the commencement of the Offer, cause each outstanding employee or director stock
option (the "Options") to purchase Shares granted under the Company's 1987 Stock
Option Plan, as amended and restated through May 1, 1993 (the "Option Plan"),
whether or not then exercisable or vested, to become fully exercisable and
vested. The Company shall, effective on or before the consummation of the Offer,
cause each Option that is then outstanding to be cancelled.
(b) All Option Plans shall terminate as of the Effective Time and the
provisions in any other Benefit Plan providing for the issuance, transfer or
grant of any capital stock of the Company or any interest in respect of any
capital stock of the Company shall be deleted as of the Effective Time, and the
Company shall use its best efforts to ensure that following the Effective Time
no holder of an Option or any participant in any Option Plan shall have any
right thereunder to acquire any capital stock of the Company, Parent or the
Surviving Corporation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Representations and Warranties of the Company. The Company
represents and warrants to Parent and the Purchaser as follows:
(a) Organization, Standing and Corporate Power. Except as set forth in
Schedule 3.1(a) of the Company Disclosure Schedule, each of the Company and each
of its Subsidiaries is a corporation duly organized, validly existing and in
good standing under the Laws of the jurisdiction in which it is organized and
has the requisite corporate power and authority to carry on its business as now
being conducted. Each of the Company and its Subsidiaries is duly qualified as a
foreign corporation or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed
(individually or in the aggregate) would not have a Material Adverse Effect on
the Company. The Company has made available to Parent complete and correct
copies of the Certificate of
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Incorporation, as amended, and By-laws of the Company, in each case as amended
to the date of this Agreement, and has delivered the certificates of
incorporation and by-laws or other organizational documents of its Subsidiaries,
in each case as amended to the date of this Agreement. The respective
certificates of incorporation and by-laws or other organizational documents of
the Subsidiaries of the Company do not contain any provision limiting or
otherwise restricting the ability of the Company to control such Subsidiaries.
(b) Subsidiaries. Except as set forth in Schedule 3.1(b) of the Company
Disclosure Schedule, the list of Subsidiaries of the Company filed by the
Company with its most recent Report on Form 10-K is a true and accurate list of
all the Subsidiaries of the Company which are required to be set forth therein.
All the outstanding shares of capital stock of each Subsidiary are owned by the
Company or by another wholly owned Subsidiary of the Company, free and clear of
all Liens, except as set forth in Schedule 3.1(b) of the Company Disclosure
Schedule. There are no other companies in which the Company has a direct or
indirect ownership interest.
(c) Capital Structure. The authorized capital stock of the Company
consists of 20,000,000 shares, par value $1.25 per share and 1,600,000 shares of
preferred stock, par value $1.25 per share. At the close of business on May 9,
1996, (i) 6,769,431 Shares and no shares of Company Preferred Stock were issued
and outstanding, (ii) 1,200,000 shares were reserved for issuance upon exercise
of outstanding Options, and (iii) 1,692,358 shares were reserved for issuance in
respect of the Company's Rights Agreement between the Company and Bank of
America dated as of February 12, 1990, as amended as of August 1, 1992, between
the Company and Chemical Trust Company of California. Except as set forth above,
as of the date of this Agreement: (i) no shares of capital stock or other voting
securities of the Company are issued, reserved for issuance or outstanding; (ii)
there were no stock appreciation rights, restricted stock grant or contingent
stock grants and there are no other outstanding contractual rights to which the
Company is a party the value of which is based on the value of Shares; (iii) all
outstanding shares of capital stock of the Company are, and all shares which may
be issued will be, when issued, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights; and (iv) there are no bonds,
debentures, notes or other indebtedness of the Company having the right to vote
(or convertible into, or exchangeable for, securities having the right to vote)
on any matters on which stockholders of the Company may vote. Except as set
forth above and in Schedule 3.1(c) of the Company Disclosure Schedule, as of the
date of this Agreement, there are no outstanding securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any kind
to which the Company or any of its Subsidiaries is a party or by which any of
them is bound obligating the Company or any of its Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock or other voting securities of the Company or of any of its
Subsidiaries or obligating the Company or any of its Subsidiaries to issue,
grant, extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. There are not any outstanding
contractual obligations of the Company or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock of the Company or any of
its Subsidiaries.
(d) Authority; Noncontravention; Company Action. The Company has the
requisite corporate power and authority to enter into this Agreement and,
subject to approval of this Agreement by the holders of two-thirds of the
outstanding Shares, to consummate the Merger contemplated by this Agreement. The
execution and delivery of this Agreement by the Company and the consummation by
the Company of the Transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of the Company,
subject, in the case of the Merger, to any necessary approval of this Agreement
by the holders of two-thirds of the outstanding Shares. This Agreement has been
duly executed and delivered by the Company and, assuming this Agreement
constitutes the valid and binding obligation of Parent and the Purchaser,
constitutes the valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except that (i) such enforcement may
be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar Laws now or hereafter in effect relating to creditors' rights generally
and general principles of equity and (ii) the remedy of specific performance and
injunctive relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought. Except as set
forth in Schedule 3.1(d) of the Company Disclosure Schedule, the execution and
delivery of this Agreement do not, and the consummation of the Transactions
contemplated by this Agreement
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(including the changes in the composition of the Board of Directors of the
Company) and compliance with the provisions of this Agreement will not, conflict
with, or result in any violation of, or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of any lien or other encumbrance upon any of the properties or
assets of the Company or any of its Subsidiaries under, (i) the Certificate of
Incorporation, as amended, or By-laws of the Company or the comparable charter
or organizational documents of any of its Subsidiaries, (ii) any loan or credit
agreement note, bond, mortgage, indenture, lease or other agreement, instrument,
permit, concession, franchise or license applicable to the Company or any of its
Subsidiaries or their respective properties or assets (including all agreements
described pursuant to Section 3.1(u)) or (iii) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the Company or any of
its Subsidiaries or their respective properties or assets, other than, in the
case of clauses (ii) or (iii), any such conflicts, violations, defaults, rights
or Liens that individually or in the aggregate would not (x) have a Material
Adverse Effect or (y) prevent the consummation of any of the Transactions
contemplated by this Agreement. No consent, approval, order or authorization of,
or registration, declaration or filing with, any Federal, state or local
government or any court, administrative or regulatory agency or commission or
other governmental authority or agency, domestic or foreign (a "Governmental
Entity") or any other party, is required by the Company or any of its
Subsidiaries in connection with the execution and delivery of this Agreement by
the Company or the consummation by the Company of the Transactions contemplated
by this Agreement, except for (i) if required, the filing of a premerger
notification and report form by the Company under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (ii) the filing
with the SEC of (x) the Schedule 14D-9, (y) a Proxy Statement and (z) such
reports under Section 13(a) of the Exchange Act in each case to the extent
required in connection with this Agreement and the Transactions contemplated by
this Agreement, (iii) the filing of the Certificate of Merger with the Secretary
of State and appropriate documents with the relevant authorities of other states
in which the Company is qualified to do business, (iv) as may be required by any
applicable state securities or "blue sky" Laws, and (v) such other consents,
approvals, orders, authorizations, registrations, declarations and filings the
failure of which to be obtained or made would not, individually or in the
aggregate, (x) have a Material Adverse Effect or (y) prevent the consummation of
any of the Transactions contemplated by this Agreement.
(e) SEC Documents; Financial Statements. The Company has filed all
reports, proxy statements, forms, and other documents required to be filed with
the SEC under the Securities Act of 1933 (the "Securities Act") and the Exchange
Act since January 1, 1993 (the "SEC Documents"). As of their respective dates,
(i) the SEC Documents complied in all material respects with the requirements of
the Securities Act, or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such SEC Documents,
and (ii) none of the SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial statements of the
Company included in the SEC Documents comply as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly present in
accordance with generally accepted accounting principles the consolidated
financial position of the Company and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments). Except as set forth in Schedule 3.1(e) of
the Company Disclosure Schedule and except as set forth in the SEC Documents
filed and publicly available prior to the date of this Agreement, and except for
liabilities and obligations incurred in the ordinary course of business
consistent with past practice since the date of the most recent consolidated
balance sheet included in the SEC Documents filed and publicly available prior
to the date of this Agreement, neither the Company nor any of its Subsidiaries
has any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by generally accepted accounting principles to
be set forth on a consolidated balance sheet of the Company and its consolidated
Subsidiaries or in the notes thereto.
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(f) Information Supplied. None of the written information supplied or to
be supplied by the Company expressly for inclusion or incorporation by reference
in (i) the Offer Documents or (ii) the Proxy Statement, will, and in the case of
the Offer Documents, at the time the Offer Documents are filed with the SEC and
first published, sent or given to the Company's stockholders, or, in the case of
the Proxy Statement, on the date the Proxy Statement is first mailed to the
Company's stockholders and at the time of the meeting of the Company's
stockholders held to vote on approval and adoption of this Agreement, 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 false or
misleading. The Proxy Statement will comply as to form in all material respects
with the Exchange Act and the rules and regulations thereunder, except that no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference therein based on information supplied by
Parent or the Purchaser for inclusion or incorporation by reference therein.
(g) Absence of Certain Changes or Events. Except as set forth in Schedule
3.1(g) of the Company Disclosure Schedule and except as set forth in the SEC
Documents filed prior to the date of this Agreement, since March 31, 1995, (i)
the Company and its Subsidiaries have conducted their respective businesses in
all material respects only in the ordinary course, (ii) there has not been any
Material Adverse Change in the Company and (iii) neither the Company nor any of
its Subsidiaries has taken any of the actions described in Sections 5.1(i),
(ii), (iii), (iv), (ix), (xi) or (xii).
(h) Litigation. Except as set forth in Schedules 3.1(h) and 3.1(x) of the
Company Disclosure Schedule or the SEC Documents or to the extent reserved for
as reflected on the Company's financial statements for the year ended March 31,
1995 or otherwise fully covered by insurance, there are (i) no suits, actions or
proceedings pending or, to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries, (ii) no complaints, lawsuits, charges or
other proceedings pending or, to the knowledge of the Company, threatened in any
forum by or on behalf of any present or former employee of the Company or any of
its Subsidiaries, any applicant for employment or classes of the foregoing
alleging breach of any express or implied contract of employment, any law or
regulation governing employment or the termination thereof or other
discriminatory, wrongful or tortious conduct in connection with the employment
relationship, (iii) no judgments, decrees, injunctions or orders of any
Governmental Entity or arbitrator outstanding against the Company and (iv)
except as set forth in the Schedule to this Section, none of the Intellectual
Property is subject to any order, writ, judgment, injunction, decree,
determination or award that, in the case of each of clauses (i), (ii), (iii) and
(iv) individually or in the aggregate has, or would reasonably be expected to
have a Material Adverse Effect on the Company.
(i) Absence of Changes in Benefit Plans; SEC Disclosure. Except as
disclosed in Schedule 3.1(i) of the Company Disclosure Schedule, there has not
been any adoption or amendment by the Company or any of its Subsidiaries or any
ERISA Affiliate (as defined in Section 3.1(j) hereof) of any Benefit Plan (as
defined in Section 3.1(j) hereof) since March 31, 1995. Except as disclosed in
Schedule 3.1(i) of the Company Disclosure Schedule, neither the Company nor any
of its Subsidiaries, nor any ERISA Affiliate has any formal plan or commitment,
whether legally binding or not, to create any additional Benefit Plan or modify
or change any existing Benefit Plan that would affect any employee or terminated
employee of the Company, a Subsidiary of the Company or any ERISA Affiliate. All
employment, consulting, severance, termination, change in control or
indemnification agreements, arrangements or understandings between the Company
or any of its Subsidiaries and any current or former officer or director of the
Company or any of its Subsidiaries which are required to be disclosed in the SEC
Documents have been disclosed therein.
(j) Employee Benefits; ERISA. (i) Schedule 3.1(j) of the Company
Disclosure Schedule contains a true and complete list of each material bonus,
deferred compensation, incentive compensation, stock purchase, stock option,
severance or termination pay, hospitalization or other medical, life or other
insurance, supplemental unemployment benefits, profit-sharing, pension, or
retirement plan, program, agreement or arrangement, and each other material
employee benefit plan, program, agreement or arrangement, sponsored, maintained
or contributed to or required to be contributed to (at any time during the past
six years) by the Company, any of its Subsidiaries or by any trade or business,
whether or not incorporated (an "ERISA Affiliate"), that together with the
Company or any Subsidiary of the Company would be deemed a "single
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employer" within the meaning of section 4001 of the Employee Retirement Income
Security Act of 1974, as amended, and the rules and regulations promulgated
thereunder ("ERISA"), for the benefit of any employee or terminated employee of
the Company, its Subsidiaries or any ERISA Affiliate, whether formal or informal
and whether legally binding or not (the "Benefit Plans").
(ii) With respect to each Benefit Plan, the Company has delivered a
true and complete copy thereof (including all amendments thereto), as well
as true and complete copies of the annual reports, if required under ERISA,
with respect thereto for the last completed plan year; the actuarial
reports, if required under ERISA, with respect thereto for the last
completed plan year; the most recent report prepared with respect thereto
in accordance with Statement of Financial Accounting Standards No. 87,
Employer's Accounting for Pensions; the most recent Summary Plan
Description, together with each Summary of Material Modifications, if
required under ERISA with respect thereto; if the Benefit Plan is funded
through a trust or any third party funding vehicle, the trust or other
funding agreement (including all amendments thereto) and the latest
financial statements thereof; and the most recent determination letter
received from the Internal Revenue Service with respect to each Benefit
Plan that is intended to be qualified under section 401 of the Internal
Revenue Code of 1986, as from time to time amended (the "Code").
(iii) No material liability under Title IV of ERISA has been incurred
by the Company, its Subsidiaries or any ERISA Affiliate since the effective
date of ERISA that has not been satisfied in full, and no condition exists
that presents a material risk to the Company, its Subsidiaries or any ERISA
Affiliate of incurring a material liability under such Title, other than
liability for premiums due the Pension Benefit Guaranty Corporation
("PBGC") (which premiums have been paid when due).
(iv) The PBGC has not instituted proceedings to terminate any Benefit
Plan and, to the knowledge of the Company, no condition exists that
presents a material risk that such proceedings will be instituted.
(v) Except as set forth in Schedule 3.1(j) of the Company Disclosure
Schedule, with respect to each Benefit Plan which is subject to Title IV of
ERISA, the present value of accrued benefits under such plan, based upon
the actuarial assumptions used for funding purposes in the most recent
actuarial report prepared by such plan's actuary with respect to such plan
do not exceed, as of its latest valuation date, the then current value of
the assets of such plan allocable to such accrued benefits.
(vi) Neither the Company, nor any Subsidiary of the Company, nor any
ERISA Affiliate, nor any Benefit Plan, nor any trust created thereunder,
nor, to the knowledge of the Company, any trustee or administrator thereof
has engaged in a transaction in connection with which the Company, any
Subsidiary of the Company or any ERISA Affiliate, any Benefit Plan, any
such trust, or any trustee or administrator thereof, could be subject to
either a civil penalty assessed pursuant to section 409 or 502(i) of ERISA
or a tax imposed pursuant to section 4975 or 4976 of the Code which would
have a Material Adverse Effect.
(vii) All material contributions which the Company, any Subsidiary of
the Company or an ERISA Affiliate are required to make with respect to each
Benefit Plan (for which contribution deductions are governed by section
404(a) of the Code) for the plan years of such plans ending with or within
the most recent tax year of the Company, the Subsidiary or ERISA Affiliate
ended prior to the date of this Agreement either (A) were made prior to the
last day of such tax year or (B) have been or will be made subsequent to
such last day within the time required by section 404(a)(6) of the Code in
order to be deemed to have been made on the last day of such tax year; and
all material contribution amounts properly accrued through the Closing Date
with respect to the current plan year of each Benefit Plan will be paid by
the Company, a Subsidiary of the Company or ERISA Affiliate, as
appropriate, on or prior to the Closing Date or will be properly recorded
on the Balance Sheet in accordance with Financial Accounting Standards
Board Statement No. 87; and no Benefit Plan subject to Title IV of ERISA or
any trust established thereunder has incurred any "accumulated funding
deficiency" (as defined in section 302 of ERISA and section 412 of the
Code), whether or not waived, as of the last day of the most recent fiscal
year of each Benefit Plan ended prior to the date of this Agreement; and
all material
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contributions required to be made with respect thereto (whether pursuant to
the terms of any Benefit Plan or otherwise) on or prior to the date of this
Agreement have been timely made.
(viii) No Benefit Plan is a "multiemployer pension plan," as such term
is defined in section 3(37) of ERISA.
(ix) Except as set forth in Schedule 3.1(j) of the Company Disclosure
Schedule, each Benefit Plan has been operated and administered in all
material respects in accordance with its terms and applicable law,
including but not limited to ERISA and the Code.
(x) Each Benefit Plan which is intended to be "qualified" within the
meaning of section 401(a) of the Code has received a favorable
determination letter from the IRS that it is so qualified and the trusts
maintained thereunder are exempt from taxation under section 501(a) of the
Code and to the Company's knowledge no event has occurred which would
reasonably be expected to adversely affect such qualified or exempt status.
(xi) Except as set forth in Schedule 3.1(j) of the Company Disclosure
Schedule, no Benefit Plan provides death or medical benefits (whether or
not insured), with respect to current or former employees of the Company,
its Subsidiaries or any ERISA Affiliate beyond their retirement or other
termination of service (other than (a) coverage mandated by applicable law,
(b) death benefits or retirement benefits under any "employee pension
plan," as that term is defined in section 3(2) of ERISA, or (c) benefits
the full cost of which is borne by the current or former employee (or his
beneficiary).
(xii) Except as disclosed in Schedule 3.1(j) of the Company Disclosure
Schedule or expressly provided in this Agreement, the consummation of the
Transactions contemplated by this Agreement will not (a) entitle any
current or former employee or officer of the Company or any ERISA Affiliate
to severance pay, or any other material payment from the Company, (b)
accelerate the time of payment or vesting, or increase the amount of
compensation due any such employee or officer, or (c) require the Company
or any ERISA Affiliate to fund or make any payments to any trust or other
funding vehicle in respect of any Benefit Plan.
(xiii) Except as set forth in Schedule 3.1(j) of the Company
Disclosure Schedule, there are no pending, or, to the knowledge of the
Company, threatened claims by, on behalf of or against any Benefit Plan, by
any employee or beneficiary covered under any such Benefit Plan, or
otherwise involving any such Benefit Plan (other than routine claims for
benefits) that would have a Material Adverse Effect.
(xiv) No Benefit Plan of the Company or its Subsidiaries or other
arrangement authorizes grants of either stock appreciation rights or
restricted stock of the Company and there are no outstanding stock
appreciation rights or restricted stock of the Company.
(xv) Except as set forth in Schedule 3.1(j) of the Company Disclosure
Schedule, no Benefit Plan is not subject to ERISA pursuant to Section
4(b)(4) of ERISA. Each Benefit Plan relating to employees not employed in
the United States (A) is in compliance with, in all material respects, all
requirements of law applicable thereto and the respective requirements of
the governing documents of such plan and (B) is fully and properly funded
in accordance with, and the assets thereof are held by a person authorized
to hold such assets under, applicable law and regulation and the governing
documents of such plan except to the extent the failure to be in compliance
with the statements in clauses (A) and (B) would not have a Material
Adverse Effect.
(k) Taxes. (i) Each of the Company and each of its Subsidiaries has
filed all Federal, and all material state, local and foreign, income Tax
Returns and all other material Tax Returns required to be filed by it. To
the knowledge of the Company, all such Tax Returns are complete and correct
except where the failure of such Tax Returns to be true and correct would
not individually or in the aggregate have a Material Adverse Effect. Each
of the Company and each of its Subsidiaries has paid (or the Company has
paid on its Subsidiaries' behalf), all Taxes shown as due on such Tax
Returns and all material Taxes for which no Tax Return was required to be
filed, and has provided adequate reserves in its most recent financial
statements contained in the SEC Documents in accordance with generally
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<PAGE> 15
accepted accounting principles for all Taxes payable by the Company and its
Subsidiaries for all taxable periods and portions thereof through the date
of such financial statements except where the failure to make such filings,
pay such taxes or provide for such reserves would not individually or in
the aggregate have a Material Adverse Effect.
(ii) Except as set forth in Schedule 3.1(k) of the Company Disclosure
Schedule, no deficiencies for any Taxes have been asserted or assessed
against the Company or any of its Subsidiaries, which are not reserved for.
To the knowledge of the Company, no governmental authority is presently
conducting a Tax audit or investigation with respect to the Company or any
of its Subsidiaries, or has asked for an extension or waiver of an
applicable statute of limitations. The Federal income Tax Returns of the
Company and each of its Subsidiaries consolidated in such Tax Returns have
been examined by and settled with the Internal Revenue Service for all
years through March 31, 1993 and all Tax Returns thereafter are open and
subject to examination. Neither the Company nor any of its Subsidiaries
within the past five years have filed Tax Returns on a consolidated,
combined or unitary basis with any group of entities except the group with
which it presently files Tax Returns. With respect to Taxes or any Tax
Return, no power of attorney has been executed by the Company or any of its
Subsidiaries.
(iii) Except as set forth in Schedule 3.1.(k) of the Company
Disclosure Schedule, no transaction contemplated by this Agreement is
subject to withholding under Section 1445 of the Internal Revenue Code of
1986, as amended.
(iv) As used in this Agreement, "Taxes" shall include all Federal,
state, local and foreign income, payroll, franchise, property, sales,
excise and any and all other Taxes, tariffs, duties, fees, assessments or
governmental charges of any nature whatsoever, including interest,
additions and penalties. As used in this Agreement, "Tax Returns" shall
mean all returns, reports, or similar statements required to be filed with
respect to any Tax (including any attached schedules), including, without
limitation, any information return, claim for refund, amended return or
declaration of estimated Tax.
(l) No Excess Parachute Payments. Except as disclosed on Schedule 3.1(l)
of the Company Disclosure Schedule, no amounts payable as a result of the
Transactions contemplated by this Agreement under the Benefit Plans or any other
plans or arrangements will constitute a "parachute payment" to a "disqualified
individual" as those terms are defined in section 280G of the Code, without
regard to whether such payment is reasonable compensation for personal services
performed or to be performed in the future.
(m) Compliance with Applicable Laws. (i) Except as set forth in Schedule
3.1(m) of the Company Disclosure Schedule, (i) to the knowledge of the Company,
the Company and each of its Subsidiaries have complied and are presently
complying in all material respects with all applicable Laws (whether statutory
or otherwise), rules, regulations, orders, ordinances, judgments or decrees of
all governmental authorities (Federal, state, local or otherwise) (collectively,
"Laws"), including, but not limited to, the Federal Occupational Safety and
Health Act, the Federal Food, Drug, and Cosmetic Act, and all Laws relating to
the safe conduct of business and environmental protection and conservation, the
Civil Rights Act of 1964 and Executive Order 11246 concerning equal employment
opportunity obligations of Federal contractors and any applicable health,
sanitation, fire, safety, labor, zoning and building Laws and ordinances, and
neither the Company nor any of its Subsidiaries has received notification of any
asserted present or past failure to so comply, except in each case where such
non-compliance would not individually or in the aggregate have a Material
Adverse Effect.
(ii) To the knowledge of the Company, each of the Company and its
Subsidiaries has in effect all Federal, state, local and foreign
governmental approvals, authorizations, certificates, filings, franchises,
licenses, notices, permits and rights, including all authorizations under
Environmental Laws ("Permits"), necessary for it to own, lease or operate
its properties and assets and to carry on its business substantially as now
conducted, there are no appeals nor any other actions pending to revoke any
such Permits, and there has occurred no material default or violation under
any such Permits except in each case to the extent the failure to have such
Permit or the revocation of such Permit or default or violation would not
individually or in the aggregate have a Material Adverse Effect.
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<PAGE> 16
(iii) Except as set forth in Schedule 3.1(m)(iii) of the Company
Disclosure Schedule, to the knowledge of the Company, each of the Company
and its Subsidiaries is, and has been, and each of the Company's former
Subsidiaries, while a Subsidiary of the Company, was in compliance in all
material respects with all applicable Environmental Laws, except such
non-compliance as do not and will not individually or in the aggregate have
a Material Adverse Effect. Except as set forth in Schedule 3.1(m)(iii) of
the Company Disclosure Schedule, to the knowledge of the Company, as of the
date of this Agreement, there are no circumstances or conditions that would
reasonably be expected to prevent or interfere with compliance by the
Company or its Subsidiaries in the future with Environmental Laws (or
Permits issued thereunder) in effect as of the date of this Agreement,
except such circumstances or conditions that would not individually or in
the aggregate have a Material Adverse Effect.
(iv) Except as set forth in Schedule 3.1(m)(iv) of the Company
Disclosure Schedule, neither the Company nor any Subsidiary of the Company
has received any written claim, demand, notice, complaint, court order,
administrative order or request for information from any Governmental
Entity or private party, alleging violation of, or asserting any
noncompliance with or liability under or potential liability under, any
Environmental Laws, except for matters which are no longer threatened or
pending and for which the Company or its Subsidiaries are not subject to
further requirements pursuant to an administrative or court order,
judgment, or a settlement agreement or which would not individually or in
the aggregate have a Material Adverse Effect.
(v) Except as set forth in Schedule 3.1(m)(v) of the Company
Disclosure Schedule, to the knowledge of the Company, during the period of
ownership or operation by the Company and its Subsidiaries of any of their
respective current or previously owned or leased properties, there have
been no Releases of Hazardous Material in, on, under or affecting such
properties except in each case for those which individually or in the
aggregate do not and will not have a Material Adverse Effect. Prior to the
period of ownership or operation by the Company and its Subsidiaries of any
of their respective current or previously owned or leased properties, to
the knowledge of the Company, no Hazardous Material was generated, treated,
stored, disposed of, used, handled or manufactured at, or transported
shipped or disposed of from, such current or previously owned or leased
properties, and there were no Releases of Hazardous Material in, on, under
or affecting any such property, except in each case for those which
individually or in the aggregate would not have a Material Adverse Effect.
(vi) Schedule 3.1(m)(vi) of the Company Disclosure Schedule identifies
all environmental audits, assessments or studies within the possession of
the Company or any Subsidiary of the Company with respect to the facilities
or real property currently or previously owned, leased or operated by the
Company or any Subsidiary of the Company, or to facilities or real property
owned or leased by former Subsidiaries of the Company (when such companies
were Subsidiaries of the Company), which were conducted within the last
five years and which contain information which individually or in the
aggregate has a Material Adverse Effect. The Company has furnished to
Parent complete and correct copies of all such audits, assessments and
studies.
(vii) Except for leases entered into in the ordinary course of
business, as to which no written notice of a claim for indemnity or
reimbursement has been received by the Company, and except as set forth on
Schedule 3.1(m)(vii) of the Company Disclosure Schedule, to the knowledge
of the Company, neither the Company nor any of its Subsidiaries has entered
into any agreement that may require it to pay to, reimburse, guarantee,
pledge, defend, indemnify, or hold harmless any Person for or against any
Environmental Liabilities and Costs.
(viii) Neither the Company nor any of its Subsidiaries has treated,
stored or disposed of "hazardous waste", as that term is defined in the
Resource Conservation and Recovery Act, 42 U.S.C. sec. 6901 et seq.,
analogous state Laws, or the regulations promulgated thereunder, such that
the Company or any of its Subsidiaries would be required to obtain a permit
under said Laws for such treatment, storage or disposal.
(n) DGCL Section 203; Other Takeover Statutes; Rights Agreement. (i) The
Board of Directors of the Company has duly and validly approved the Offer and
Merger contemplated hereby for the purposes of Section 203 of the DGCL.
Accordingly, the provisions of Section 203 of the DGCL will not apply to the
Offer
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<PAGE> 17
and Merger contemplated by this Agreement. No other state takeover statute or
similar statute or regulation applies or purports to apply to the Offer or the
Merger contemplated hereby.
(ii) The Board of Directors of the Company has taken all necessary
action so that (i) the Rights will not be exercisable, trade separately, or
be otherwise affected by the Offer, the Merger or the other Transactions
required hereby, (ii) none of Parent and its affiliates will be deemed to
be an "Acquiring Person" for purposes thereof in consummating the Offer and
Merger and (iii) a "Distribution Date" shall not occur by virtue of the
Offer, the Merger or the other Transactions contemplated hereby. The
Company will take any action reasonably requested by Parent to ensure and
confirm that the Company, Parent and their respective affiliates will not
have any obligations in connection with the Rights or the Rights Agreement
in connection with the Offer, the Merger and the other Transactions
contemplated hereby on the terms provided herein.
(o) Voting Requirements. The affirmative vote of the holders of two-thirds
of all the Shares entitled to vote approving this Agreement is the only vote of
the holders of any class or series of the Company's capital stock necessary to
approve this Agreement and the Transactions contemplated by this Agreement.
(p) Brokers. No broker, investment banker, financial advisor or other
Person, other than Lehman Brothers Inc., is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
Transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company.
(q) Opinion of Financial Advisor. The Company has received an opinion of
Lehman Brothers Inc., to the effect that, as of the date of this Agreement, the
consideration to be received in the Offer and the Merger by the Company's
stockholders is fair to the Company's stockholders from a financial point of
view, and a complete and correct signed copy of such opinion will be delivered
to Parent. Parent may, upon the prior review and approval of the Company and
Lehman Brothers Inc. of such reference, refer to this opinion in the Offer
Documents to the extent necessary to comply with the provisions of applicable
Federal and state securities laws.
(r) Intellectual Property. Schedule 3.1(r) of the Company Disclosure
Schedule sets forth a true and complete list of all patents, registered and
material unregistered trademarks, trade names, service marks and copyrights and
applications therefor owned, used or filed by or licensed to the Company and its
Subsidiaries (collectively, "Intellectual Property Rights"). The Intellectual
Property Rights are sufficient to allow each of the Company and each of its
Subsidiaries to conduct, and continue to conduct, its business as currently
conducted except where the failure to have such rights would not individually or
in the aggregate have a Material Adverse Effect. To the knowledge of the
Company, each of the Company and each of its Subsidiaries owns or has sufficient
unrestricted right to use the Intellectual Property Rights in order to allow it
to conduct, and continue to conduct, its business as currently conducted in all
material respects, and the consummation of the Transactions contemplated hereby
will not alter or impair such ability in any respect which would have a Material
Adverse Effect. There is no restriction or encumbrance on the right of the
Company to transfer to the Purchaser any of the Intellectual Property Rights, or
to grant licenses to the Intellectual Property Rights, other than any such Liens
that alone or in the aggregate would not result in a Material Adverse Effect or
as disclosed on Schedule 3.1(r) of the Company Disclosure Schedule. To the
knowledge of the Company, and except as disclosed on Schedule 3.1(r) of the
Company Disclosure Schedule, there are no pending oppositions, cancellations,
invalidity proceedings, interference or re-examination proceedings with respect
to the Intellectual Property Rights and no such proceedings are threatened. To
the knowledge of the Company, and except as disclosed on Schedule 3.1(r) of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries has
received any written notice from any other Person challenging the right of the
Company or any of its Subsidiaries to use any of the Intellectual Property
Rights. Except as disclosed on Schedule 3.1(r) of the Company Disclosure
Schedule, no claims are pending by any Person with respect to the ownership,
validity, enforceability or use of any such Intellectual Property Rights
challenging or questioning the validity or effectiveness of any of the
foregoing. Except as disclosed on Schedule 3.1(r) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries has made any claim of
a violation or infringement by others of its rights to or in connection with the
Intellectual Property Rights.
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<PAGE> 18
(s) Title to Properties. Each of the Company and each of its Subsidiaries
has sufficiently good and valid title to, or an adequate leasehold interest in,
its material tangible properties and assets (including the Real Property) in
order to allow it to conduct, and continue to conduct, its business as currently
conducted except where the failure to have such interests would not have a
Material Adverse Effect. To the knowledge of the Company, each of the Company
and each of its Subsidiaries enjoys peaceful and undisturbed possession under
all leases, except for such breaches of the right to peaceful and undisturbed
possession which individually or in the aggregate would not have a Material
Adverse Effect. Schedule 3.1(s) of the Company Disclosure Schedule sets forth a
complete list of all material real property and material interests in real
property owned in fee by the Company or one of its Subsidiaries (the "Fee
Properties") and sets forth all material real property and interests in real
property leased by the Company or one of its Subsidiaries as of the date hereof
(the "Leased Properties," together with the Fee Properties, the "Real
Property").
(i) Leases in Full Force and Effect.
(A) All material leases executed by the Company or its Subsidiaries
as lessee for the Leased Properties are in full force and effect and,
except as set forth on Schedule 3.1(s) of the Company Disclosure
Schedule, there exist no other landlords of the Leased Properties and
the Company and its Subsidiaries have received no written notices of
default from any landlord which default remains uncured as of the date
hereof and which individually or in the aggregate would result in a
Material Adverse Effect;
(B) All material leases executed by the Company or its Subsidiaries
as lessor for the Real Property are in full force and effect and, except
as set forth on Schedule 3.1(s) of the Company Disclosure Schedule,
there exist no other tenants of the Real Property and the Company and
its Subsidiaries have received no written notices of default from any
tenant which default remains uncured as of the date hereof and which
individually or in the aggregate would result in a Material Adverse
Effect;
(ii) Fee Simple Ownership. The Company and/or its Subsidiaries have
good, valid, marketable and fee simple title to all the Fee Property, free
and clear of all Liens, that will continue after the Closing except for
such Liens as shown on the title searches relating to such Fee Properties
disclosed on Schedule 3.1(s) of the Company Disclosure Schedule or Liens
which do not materially detract from the value or current use of the Fee
Property; and
(iii) No Variances or Conditions. There are no variances, special
exceptions, easements, or agreements pertaining to the fee properties
imposed by, or granted by or entered into by the Company or its
Subsidiaries, with or enforceable by any state, county or municipal
government, agent or body, any neighborhood or civic group, or any similar
body which individually or in the aggregate would have a Material Adverse
Effect. No written notice from any city, county or other governmental
authority has been received by the Company or its Subsidiaries requiring
any work, repair, construction, alteration or installation on, or in
connection with, the Real Property which individually or in the aggregate
would have a Material Adverse Effect.
(t) Insurance. (i) Set forth in Schedule 3.1(t) of the Company
Disclosure Schedule is a complete and accurate list as of the date hereof
of all primary, excess and umbrella policies of general liability, fire,
products liability, completed operations, employers' liability, workers'
compensation, bonds and other forms of insurance owned or held by or on
behalf of or providing insurance coverage to the Company and its
Subsidiaries as of the date hereof, including the following information for
each such policy: type(s) of insurance coverage provided; name of insurer;
effective dates of the policy; policy number; per occurrence and annual
aggregate deductibles or self-insured retention; and per occurrence and
annual aggregate limits of liability; and the extent, if any, to which the
limits of liability of any products liability or general liability
insurance have been invaded or exhausted.
(ii) All current policies set forth in Schedule 3.1(t) of the Company
Disclosure Schedule are in full force and effect, and with respect to all
policies, all premiums payable with respect to all periods up to and
including the Closing Date have been, or will be, paid, and no notice of
cancellation or termination has
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<PAGE> 19
been received with respect to any such policy except such cancellations or
terminations which individually or in the aggregate would not have a
Material Adverse Effect.
(iii) To the Company's knowledge, neither the Company nor any of its
Subsidiaries has been refused any insurance by any insurance carrier to
which the Company or any of its Subsidiaries have applied for any such
insurance or with which they have carried insurance during the last 5
(five) years, nor has, as of the date hereof, any of the insurance carriers
set forth in Schedule 3.1(t) of the Company Disclosure Schedule disclaimed
coverage, or defended the Company or any of its Subsidiaries under a
reservation of rights with respect to any pending claims, except where any
such refusal, disclaimer or defense under a reservation of rights,
individually or in the aggregate, would not have a Material Adverse Effect.
(u) Contracts; Debt Instruments. Except as set forth in Schedule 3.1(u) of
the Company Disclosure Schedule, there are no (i) agreements of the Company or
any of its Subsidiaries containing an unexpired covenant not to compete or any
other restriction on competition applying to the Company or any of its
Subsidiaries, (ii) interest rate, currency or commodity hedging, swap or similar
derivative transactions to which the Company is a party or (iii) other contracts
or amendments thereto that would be required to be filed as an exhibit to a Form
10-K filed by the Company with the SEC as of the date of this Agreement. To the
knowledge of the Company, each of the agreements listed in Schedule 3.1(u) of
the Company Disclosure Schedule is a valid and binding obligation of the Company
or its Subsidiary, as the case may be, and, limited to the Company's knowledge
based on written information received from any party thereto, of each other
party thereto, and, to the Company's knowledge, each such agreement is in full
force and effect and is enforceable by the Company or its Subsidiary in
accordance with its terms, except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar Laws now or
hereafter in effect relating to creditors' rights generally and (ii) the remedy
of specific performance and injunctive relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought and except to the extent any covenant not to compete contained
therein may be unenforceable. Except to the extent set forth in Schedule 3.1(u)
of the Company Disclosure Schedule or to the extent such default individually or
in the aggregate would not have a Material Adverse Effect, to the knowledge of
the Company, there are no existing defaults (or circumstances or events that,
with the giving of notice or lapse of time or both would become defaults) of the
Company or any of its Subsidiaries (or, to the knowledge of the Company based on
written information received from any party thereto, any other party thereto)
under any of the agreements set forth in Schedule 3.1(u) of the Company
Disclosure Schedule.
(v) Labor Relations. Except to the extent set forth in Schedule 3.1(v) of
the Company Disclosure Schedule, (i) there is no labor strike, dispute,
slowdown, stoppage or lockout actually pending, or to the knowledge of the
Company threatened against or affecting the Company or any of its Subsidiaries,
and during the past three years there has not been any such action which
individually or in the aggregate would have a Material Adverse Effect; (ii) to
the Company's knowledge, no union claims to represent the employees of the
Company or any of its Subsidiaries; (iii) the Company or any of its Subsidiaries
is not a party to or bound by any collective bargaining agreement with any labor
organization and (iv) as of the date hereof (x) none of the employees of the
Company or any of its Subsidiaries is represented by any labor organization, (y)
to the knowledge of the Company, there is no current union organizing activities
among the employees of the Company or any of its Subsidiaries and (z) the
Company has not received notice of any pending petition for certification before
the National Labor Relations Board with respect to any group of employees who
are not currently organized; (v) there are no written personnel policies, rules
or procedures applicable to employees of the Company or any of its Subsidiaries;
(vi) there is no grievance arising out of any collective bargaining agreement or
other grievance procedure against the Company or any of its Subsidiaries, except
such grievances which individually or in the aggregate would not have a Material
Adverse Effect; and (vii) there are no employment contracts or severance
agreements with any employees of the Company or any of its Subsidiaries, except
as set forth in Schedule 3.1(j) of the Company Disclosure Schedule and the SEC
Documents.
(w) Compliance with WARN Act. Since the enactment of the Worker Adjustment
and Retraining Notification Act of 1988 (the "WARN Act"), the Company and its
Subsidiaries have not incurred any
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<PAGE> 20
liability under and have complied in all material respect with, the WARN Act.
Except as set forth in Schedule 3.1(w) of the Company Disclosure Schedule, none
of the employees of the Company or any of its Subsidiaries has suffered an
"employment loss" (as defined in the WARN Act) since October 1, 1995.
(x) Products Liability. As used in this subsection 3.1(x), the term
"Product" shall mean any product designed, manufactured, shipped, sold,
marketed, distributed and/or otherwise introduced into the stream of commerce by
or on behalf of the Company or any of its Subsidiaries, including, without
limitation, any product sold in the United States by the Company or any of its
Subsidiaries as the distributor, agent, or pursuant to any other contractual
relationship with a non-U.S. manufacturer; and the term "Defect" shall mean a
defect or impurity of any kind, whether in design, manufacture, processing, or
otherwise, including, without limitation, any dangerous propensity associated
with any reasonably foreseeable use of a Product, or the failure to warn of the
existence of any defect, impurity, or dangerous propensity.
(i) Except as set forth in Schedule 3.1(x) of the Company Disclosure
Schedule, there is no pending or to the knowledge of the Company threatened
claim, action, suit, inquiry, proceeding or investigation by any individual
or Governmental Entity in which a Product is alleged to have a Defect nor,
to the knowledge of the Company and its Subsidiaries, is there any valid
basis for any such claim, action, suit, inquiry, proceeding, or
investigation; except any such claim, action, suit, inquiry, proceeding, or
investigation, which would not individually or in the aggregate, have a
Material Adverse Effect on the Company or any of its Subsidiaries.
(ii) Except as set forth in Schedule 3.1(x) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries has within the
last three years, either voluntarily or at the request of any Governmental
Entity, initiated or participated in a recall of any Product, provided
post-sale warnings regarding any Product, or sent "dear doctor" letters
regarding any Product.
(y) No Undisclosed Liabilities. Except (a) as disclosed in the Company SEC
Documents, including any exhibits to the SEC Documents, and (b) for liabilities
and obligations (x) incurred in the ordinary course of business and consistent
with past practice (y) pursuant to the terms of this Agreement or (z) as set
forth in Schedule 3.1(y) of the Company Disclosure Schedule, since March 31,
1995 to the date hereof, neither the Company nor any of its Subsidiaries has
incurred any liabilities or obligations of any nature, whether or not accrued,
contingent or otherwise, that have, or would be reasonably likely to have,
individually or in the aggregate a Material Adverse Effect or would be required
by GAAP to be reflected on a consolidated balance sheet of the Company and its
Subsidiaries (including the notes thereto).
(z) Full Disclosure. To the Company's knowledge, the representations and
warranties made by the Company in this Agreement, or in any documents referenced
or delivered pursuant hereto or thereto, does not, and will not, contain any
untrue statement of a material fact or omit to state a material fact required to
be stated herein or therein, or necessary to make the statements and facts
contained herein or therein, in light of the circumstances in which they are
made, not false or misleading. Copies of all documents heretofore or hereafter
delivered or made available to Parent and the Purchaser pursuant hereto were or
will be complete and accurate copies of such documents.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND THE PURCHASER
Section 4.1 Representations and Warranties of Parent and the
Purchaser. Parent and the Purchaser represent and warrant to the Company as
follows:
(a) Organization, Standing and Corporate Power. Each of Parent and the
Purchaser is a corporation duly organized, validly existing and in good standing
under the Laws of the jurisdiction in which each is incorporated and has the
requisite corporate power and authority to carry on its business as now being
conducted. Each of Parent and the Purchaser is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties
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<PAGE> 21
makes such qualification or licensing necessary, other than in such
jurisdictions where the failure to be so qualified or licensed (individually or
in the aggregate) would not have a Material Adverse Effect on Parent.
(b) Authority; Noncontravention. Parent and the Purchaser have the
requisite corporate power and authority to enter into this Agreement and to
consummate the Transactions contemplated by this Agreement. The execution and
delivery of this Agreement by Parent and the Purchaser and the consummation by
Parent and the Purchaser of the Transactions contemplated by this Agreement have
been duly authorized by all necessary corporate action on the part of Parent and
the Purchaser, as applicable. This Agreement has been duly executed and
delivered by Parent and the Purchaser and, assuming this Agreement constitutes
the valid and binding obligation of the Company, constitutes a valid and binding
obligation of each such party, enforceable against each such party in accordance
with its terms, except that (i) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar Laws now or hereafter in
effect relating to creditors' rights generally and (ii) the remedy of specific
performance and injunctive relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be brought.
The execution and delivery of this Agreement do not, and the consummation of the
Transactions contemplated by this Agreement will not, conflict with, or result
in any violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of any lien upon any of the properties or assets of Parent
under, (i) the certificate of incorporation or by-laws of Parent or the
Purchaser, (ii) any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Parent or the Purchaser or their respective properties
or assets, other than, in the case of clause (ii), any such conflicts,
violations, defaults, rights or Liens that individually or in the aggregate
would not (x) have a Material Adverse Effect or (y) prevent the consummation of
any of the Transactions contemplated by this Agreement. No consent, approval,
order or authorization of, or registration, declaration or filing with, any
Governmental Entity is required by Parent or the Purchaser in connection with
the execution and delivery of this Agreement or the consummation by Parent or
the Purchaser, as the case may be, of any of the Transactions contemplated by
this Agreement, except for (i) if required, the filing of a premerger
notification and report form under the HSR Act, (ii) the filing with the SEC of
(x) the Offer Documents and (y) such reports under the Exchange Act as may be
required in connection with this Agreement and the Transactions contemplated by
this Agreement, (iii) the filing of the Certificate of Merger with the Secretary
of State and appropriate documents with the relevant authorities of other states
in which the Company is qualified to do business, (iv) as may be required by an
applicable state securities or "blue sky" Laws, and (v) such other consents,
approvals, orders, authorizations, registrations, declarations and filings the
failure of which to be obtained or made would not, individually or in the
aggregate, (x) have a Material Adverse Effect or (y) prevent the consummation of
any of the Transactions contemplated by this Agreement.
(c) Information Supplied. None of the information supplied or to be
supplied by Parent or the Purchaser expressly for inclusion or incorporation by
reference in the Schedule 14D-9 or the Proxy Statement will, in the case of the
Schedule 14D-9, at the time the Schedule 14D-9 is filed with the SEC and first
published, sent or given to the Company's stockholders or, in the case of the
Proxy Statement, on the date the Proxy Statement is first mailed to the
Company's stockholders and at the time of the meeting of the Company's
stockholders held to vote on approval and adoption of this Agreement, 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.
(d) Financing. Parent has a bank commitment to provide the financing for
the Offer and the Merger and pursuant to such commitment shall provide the
Purchaser with the funds necessary to consummate the Offer and the Merger and
the Transactions contemplated thereby in accordance with the terms hereof and
thereof (the "Financing Commitment"). A copy of the Financing Commitment letter
has been made available to the Company. Parent has accepted the Financing
Commitment pursuant to its terms and has paid all fees due thereunder as of the
date of this Agreement. Parent and Purchaser acknowledge, however, that they are
obligated to accept for payment and promptly pay for all Shares validly tendered
pursuant to the Offer, subject to the satisfaction or waiver of the conditions
to the Offer, and to consummate the Merger as
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contemplated by this Agreement, whether or not the funds contemplated by the
Financing Commitment are obtained.
(e) Interim Operations of the Purchaser. The Purchaser was formed solely
for the purpose of engaging in the Transactions contemplated hereby and has not
engaged in any business activities or conducted any operations other than in
connection with the Transactions contemplated hereby. Parent shall cause
Purchaser to fulfill Purchaser's covenants, agreements and obligations under
this Agreement.
(f) Holding of Shares. As of the date of this Agreement, and at all times
prior to the consummation of the Offer, Parent, Purchaser and their Affiliates
shall not hold any Shares.
ARTICLE V
COVENANTS
Section 5.1 (a) Interim Operations of the Company. Until the acquisition
of the Shares pursuant to the Offer, except as specifically contemplated by this
Agreement, the Company shall and shall cause its Subsidiaries to carry on their
respective businesses in the ordinary course and use all commercially reasonable
efforts consistent with good business judgment to preserve intact their current
business organizations and, subject to complying with subsections (viii) and
(ix) of this Section 5.1(a), keep available the services of their current
officers and key employees and preserve their relationships consistent with past
practice with desirable customers, suppliers, licensors, licensees, distributors
and others having business dealings with them. Without limiting the generality
of the foregoing, the Company covenants and agrees that, except (i) as expressly
contemplated by this Agreement, (ii) as set forth in Schedule 5.1 of the Company
Disclosure Schedule or (iii) as consented to in writing by Parent, which consent
shall not be unreasonably withheld (it being understood that, without limiting
the ability of Parent to reasonably withhold its consent for any reason, the
failure to consent to any transaction that would materially adversely affect the
ability of Parent and/or its Affiliates to conduct the business of the Company
as contemplated by the Parent or impede the ability of any of the parties hereto
to consummate any of the Transactions contemplated hereby shall not be deemed to
be unreasonable), after the date hereof and prior to the consummation of the
Offer as contemplated herein:
(i) neither the Company nor any of its Subsidiaries shall, directly or
indirectly, amend its Certificate of Incorporation or By-laws or similar
organizational documents;
(ii) neither the Company nor any of its Subsidiaries shall: (i)(A)
declare, set aside or pay any dividend or other distribution payable in
cash, stock or property with respect to the Company's capital stock or that
of its Subsidiaries, or (B) redeem, purchase or otherwise acquire directly
or indirectly any of the Company's capital stock or that of its
Subsidiaries; (ii) issue, sell, pledge, dispose of or encumber any
additional shares of, or securities convertible into or exchangeable for,
or options, warrants, calls, commitments or rights of any kind to acquire,
any shares of capital stock of any class of the Company or its
Subsidiaries, other than Shares issued upon the exercise of Options
outstanding on the date hereof in accordance with the Option Plans as in
effect on the date hereof; or (iii) split, combine or reclassify the
outstanding capital stock of the Company or of any of the Subsidiaries of
the Company;
(iii) neither the Company nor any of its Subsidiaries shall acquire or
agree to acquire (A) by merging or consolidating with, or by purchasing a
substantial portion of the assets of, or by any other manner, any business
or any corporation, partnership, joint venture, association or other
business organization or division thereof (including entities which are
Subsidiaries of the Company or any of the Company's Subsidiaries) or (B)
any assets, including real estate, except (x) purchases of inventory,
furnishings, equipment, fuel and other non-material assets in the ordinary
course of business consistent with past practice or (y) expenditures
consistent with the Company's current capital budget previously provided to
Parent as set forth in Schedule 5.1(a) of the Company Disclosure Schedule
(the "Capital Budget");
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(iv) neither the Company nor any of its Subsidiaries shall make any
new capital expenditure or expenditures, other than capital expenditures
not to exceed, in the aggregate, the amounts provided for capital
expenditures in the Capital Budget;
(v) neither the Company nor any of its Subsidiaries shall, except in
the ordinary course of business and consistent with past practice or as
provided for in the Capital Budget, undertake or agree to undertake any
capital expenditures for the construction or acquisition of any plant,
manufacturing or distribution facility, equipment, or other real property
or fixtures except in the ordinary course of business and consistent with
past practice;
(vi) neither the Company nor any of its Subsidiaries shall, except in
the ordinary course of business and except as otherwise permitted by this
Agreement, modify, amend or voluntarily terminate any material contract or
agreement set forth in the SEC Documents to which the Company or any
Subsidiary is a party or waive, release or assign any material rights or
claims;
(vii) neither the Company nor any of its Subsidiaries shall transfer,
lease, license, sell, mortgage, pledge, dispose of, or encumber any
property or assets other than in the ordinary course of business and
consistent with past practice;
(viii) neither the Company nor any of its Subsidiaries shall: (i)
enter into any employment or severance agreement with or, except in
accordance with the existing written policies of the Company, grant any
severance or termination pay to any officer, director or key employee of
the Company or any its Subsidiaries; or (ii) hire or agree to hire any new
or additional key employees or officers at an annual salary in excess of
$125,000;
(ix) neither the Company nor any of its Subsidiaries shall, except as
required to comply with applicable law or expressly provided in this
Agreement, (A) adopt, enter into, terminate or amend any Benefit Plan or
other arrangement for the current or future benefit or welfare of any
director, officer or current or former employee, except to the extent
necessary to coordinate any such Benefit Plans with the terms of this
Agreement, (B) increase in any manner the compensation or fringe benefits
of, or pay any bonus to, any director, officer or employee (except for
normal increases or bonuses in the ordinary course of business consistent
with past practice to employees other than directors, officers or senior
management personnel and that, in the aggregate, do not result in a
significant increase in benefits or compensation expense to the Company and
its Subsidiaries relative to the level in effect prior to such action (but
in no event shall the aggregate amount of all such increases exceed 3% of
the aggregate annualized compensation expense of the Company and its
Subsidiaries reported in the most recent audited financial statements of
the Company included in the SEC Documents)), (C) pay any benefit not
provided for under any Benefit Plan, (D) grant any awards under any bonus,
incentive, performance or other compensation plan or arrangement or Benefit
Plan (including the grant of stock options, stock appreciation rights,
stock based or stock related awards, performance units or restricted stock,
or the removal of existing restrictions in any Benefit Plans or agreements
or awards made thereunder) or (E) except as required by the current terms
thereof take any action to fund or in any other way secure the payment of
compensation or benefits under any employee plan, agreement, contract or
arrangement or Benefit Plan;
(x) neither the Company nor any of its Subsidiaries shall: (i) incur
or assume any long-term debt, or except in the ordinary course of business,
incur or assume any short-term indebtedness in amounts not consistent with
past practice; (ii) incur or modify any material indebtedness or other
liability except as set forth in Schedule 5.1 of the Company Disclosure
Schedule; (iii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any other Person, except in the ordinary course of business
and consistent with past practice; (iv) make any loans, advances or capital
contributions to, or investments in, any other Person (other than to wholly
owned Subsidiaries of the Company, or by such Subsidiaries to the Company,
or customary loans or advances to employees in accordance with past
practice); (v) settle any claims in excess of $100,000 other than in the
ordinary course of business, in accordance with past practice, and without
admission of
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liability; or (vi) enter into any material commitment or transaction in
excess of $100,000 except in the ordinary course of business;
(xi) neither the Company nor any of its Subsidiaries shall change any
of the accounting methods used by it unless required by GAAP;
(xii) neither the Company nor any of its Subsidiaries shall make any
material Tax election or settle or compromise any material Tax liability;
(xiii) neither the Company nor any of its Subsidiaries shall pay,
discharge or satisfy any claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction of any such claims, liabilities or
obligations, in the ordinary course of business and consistent with past
practice, or of claims, liabilities or obligations reflected or reserved
against in, or contemplated by, the consolidated financial statements (or
the notes thereto) of the Company and its consolidated Subsidiaries;or,
except in the ordinary course of business consistent with past practice,
waive the benefits of, or agree to modify in any manner, any
confidentiality agreement or undertaking to which the Company or any of its
Subsidiaries is a party;
(xiv) neither the Company nor any of its Subsidiaries will enter into
an agreement, contract, commitment or arrangement to do any of the
foregoing, or to authorize, recommend, propose or announce an intention to
do any of the foregoing.
(b) Other Actions. The Company shall not, and shall not permit any of its
Subsidiaries to, take any voluntary action that would result in (i) any of its
representations and warranties set forth in this Agreement that are qualified as
to materiality becoming untrue, (ii) any of such representations and warranties
that are not so qualified becoming untrue in any material manner having a
Material Adverse Effect (iii) any of the conditions to the Offer set forth in
sections (a) and (c) of Exhibit A not being satisfied (subject to the Company's
right to take action specifically permitted by Section 5.4).
Section 5.2 Access; Confidentiality. Upon reasonable notice and subject to
applicable law and any confidentiality provisions in the Company's contracts as
of the date hereof, the Company shall (and shall cause each of its Subsidiaries
to) afford to the officers, employees, accountants, counsel, financing sources
and other representatives of Parent, access, during normal business hours during
the period prior to the Effective Time, to all its properties, books, contracts,
commitments and records, including, at the Parent's discretion, access to
conduct environmental investigations on the terms and conditions set forth in
letter agreements between the Parent and the Company dated April 26, 1996 and
May 10, 1996; provided, however, that the Company shall (and shall cause each of
its Subsidiaries to) furnish promptly to the Parent (a) a copy of each report,
schedule, registration statement and other document filed or received by it
during such period pursuant to the requirements of Federal or state securities
Laws and (b) all other information concerning its business, properties and
personnel as Parent may reasonably request. Except as otherwise agreed to in
writing by the Company, unless and until Parent and the Purchaser shall have
purchased at least a majority of the outstanding Shares pursuant to the Offer,
Parent will be bound by the terms of a confidentiality agreement with the
Company, dated September 26, 1995 (the "Confidentiality Agreement").
Section 5.3 Reasonable Efforts; Notification. (a) Upon the terms and
subject to the conditions set forth in this Agreement, each of the parties
agrees to use all reasonable efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to consummate and
make effective, in the most expeditious manner practicable, the Offer and the
Merger, and the other Transactions contemplated by this Agreement, including (i)
the obtaining of all necessary actions or nonactions, waivers, consents and
approvals from any Governmental Entity and the making of all necessary
registrations and filings (including filings with any Governmental Entity, if
any) and the taking of all reasonable steps as may be necessary to obtain an
approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity, (ii) the obtaining of all necessary consents, approvals or
waivers from third parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of any of the Transactions contemplated by this Agreement,
including seeking to have any stay or temporary restraining order entered by
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any court or other Governmental Entity vacated or reversed, and (iv) the
execution and delivery of any additional instruments necessary to consummate the
Transactions contemplated by, and to fully carry out the purposes of, this
Agreement; provided however, that in connection with any filing or submission or
other action required to be made or taken by any Party to effect the Merger and
all other Transactions contemplated hereby, the Company shall not without the
prior written consent of Parent commit to any divestiture transaction and Parent
shall not be required to divest or hold separate or otherwise take or commence
to take any action that, in the reasonable discretion of Parent, materially
limits its ability to conduct the business or its ability to retain, the Company
or any of its affiliates or any material portion of the assets of the Company.
In connection with and without limiting the foregoing, the Company and its Board
of Directors shall (i) take all action necessary to ensure that no state
takeover statute or similar statute or regulation is or becomes applicable to
the Offer, the Merger, this Agreement or any of the other Transactions
contemplated by this Agreement and (ii) if any state takeover statute or similar
statute or regulation becomes applicable to the Offer, the Merger or this
Agreement or any other transaction contemplated by this Agreement, take all
action necessary to ensure that the Offer, the Merger and the other Transactions
contemplated by this Agreement may be consummated as promptly as practicable on
the terms contemplated by this Agreement and otherwise to minimize the effect of
such statute or regulation on the Offer, the Merger, this Agreement and the
other Transactions contemplated by this Agreement.
(b) The Company shall give prompt notice to Parent of (i) any
representation or warranty made by it contained in this Agreement that is
qualified as to materiality becoming untrue or inaccurate in any respect
(including in the case of representations or warranties by the Company, the
Company receiving knowledge of any fact, event or circumstance which may cause
any representation qualified as to the knowledge of the Company to be or become
untrue or inaccurate in any 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 and further provided, that if, within ten business days
after receipt of such notice, Parent has not terminated this Agreement pursuant
to Section 7.1(d)(iii) or clause (c) of Annex A hereto and Section 7.1(d)(ii),
then the breach or failure described in such notice shall be deemed to have been
waived by Purchaser and Parent. The Company acknowledges that if after the date
of this Agreement the Company receives knowledge of any fact, event or
circumstance that would cause any representation or warranty that is conditioned
as to the knowledge of the Company to be or become untrue or inaccurate in any
respect, the receipt of such knowledge shall constitute a breach of the
representation or warranty that is so conditioned as of the date of such
receipt.
Section 5.4 No Solicitation. (a) The Company shall not, nor shall it
permit any of its Subsidiaries to, nor shall it authorize (and shall use its
best efforts not to permit) any officer, director or employee of, or any
investment banker, attorney or other advisor or representative of, the Company
or any of its Subsidiaries to, solicit or initiate, or knowingly encourage the
submission of, any Takeover Proposal. Notwithstanding the foregoing, and subject
to compliance with Section 5.4(c), if prior to the acceptance for payment of
Shares pursuant to the Offer, the Board of Directors, after receiving advice
from outside legal counsel to the Company, determines that a failure to act
would be inconsistent with its fiduciary duties to the Company's stockholders
under applicable law, the Company may (A) furnish information with respect to
the Company to any Person in response to an unsolicited request pursuant to a
confidentiality agreement with terms and conditions similar to the
Confidentiality Agreement and (B) participate in discussions and negotiations
regarding any potential Takeover Proposal. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth above by any
director or executive officer of the Company or any of its Subsidiaries, whether
or not such Person is purporting to act on behalf of the Company or any of its
Subsidiaries or otherwise, shall be deemed to be a breach of this Section 5.4(a)
by the Company. For purposes of this Agreement, "Takeover Proposal" means (x)
any proposal or offer from any Person relating to any direct or indirect
acquisition or purchase of all or a substantial part of the assets of the
Company or any of its Subsidiaries or of any class of equity securities of the
Company or any of its Subsidiaries or any tender offer or exchange offer that if
consummated would result in any Person beneficially owning shares of any class
of equity securities of the Company or any of its Subsidiaries, or any merger,
consolidation, business combination, sale of substantially all of the assets,
recapitalization, liquidation, dissolution or similar
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transaction involving the Company or any of its Subsidiaries other than the
Transactions contemplated by this Agreement, or (y) any other transaction the
consummation of which would reasonably be expected to impede, interfere with,
prevent or materially delay the Offer or the Merger.
(b) Subject to compliance by the directors with their fiduciary duties,
neither the Board of Directors of the Company nor any committee thereof shall
(i) withdraw or modify, or propose to withdraw or modify, in a manner adverse to
Parent or the Purchaser, the approval or recommendation by the Board of
Directors or any such committee of the Offer, this Agreement or the Merger, (ii)
approve or recommend, or propose to approve or recommend, any Takeover Proposal
or (iii) enter into any definitive agreement to consummate any Takeover
Proposal. Notwithstanding the foregoing, in the event prior to the time of
acceptance for payment of Shares in the Offer if in the opinion of the Board of
Directors, after receiving advice from outside legal counsel to the Company,
failure to act would be inconsistent with its fiduciary duties to the Company's
stockholders under applicable law, the Board of Directors may (subject to the
terms of this and the following sentences) withdraw or modify its approval or
recommendation of the Offer, this Agreement or the Merger, approve or recommend,
or propose to approve or recommend, a Takeover Proposal, or enter into an
agreement with respect to a Takeover Proposal, in each case at any time after
midnight on the next business day following Parent's receipt of written notice
(a "Notice of Takeover Proposal") advising Parent that the Board of Directors
has received a Takeover Proposal, specifying the material terms and conditions
of such Takeover Proposal and identifying the Person making such Takeover
Proposal; provided that the Company shall not enter into a definitive agreement
to consummate a Takeover Proposal unless the Company shall have furnished Parent
with a Notice of Takeover Proposal within the time frame provided in the
immediately preceding clause in advance of any date that it intends to enter
into such agreement. In addition, if the Company enters into a definitive
agreement with respect to any Takeover Proposal, it shall concurrently with
entering into such agreement pay, or cause to be paid, to Parent the Expenses
(as defined in Section 8.1(b)).
(c) In addition to the obligations of the Company set forth in paragraph
(b) (i) the Company shall advise Parent of any Takeover Proposal, or any
proposal with respect to any Takeover Proposal, the material terms and
conditions of such Takeover Proposal, and the identity of the Person making any
such Takeover Proposal or inquiry.
(d) The Company shall be entitled, in the exercise of the Board of
Directors' fiduciary duties, to notify any Person that has made a Takeover
Proposal of the material terms and conditions of any change or modification to
the terms and conditions of the Offer or Merger, or of any alternative
transaction (a "Responsive Offer"), that may be proposed by Parent, Purchaser or
any of their affiliates. Parent and Purchaser agree that all such Responsive
Offers shall remain open for at least two full business days after receipt by
the Company.
Section 5.5 Publicity. The initial press release with respect to the
execution of this Agreement shall be a joint press release acceptable to Parent
and the Company. Thereafter, so long as this Agreement is in effect and except
in respect of releases and announcements by the Company in connection with a
Takeover Proposal, neither the Company, Parent nor any of their respective
affiliates shall issue or cause the publication of any press release or other
announcement with respect to the Merger, this Agreement or the other
Transactions contemplated hereby without the prior consultation of the other
party.
Section 5.6 Transfer Taxes. All liability for transfer or other similar
Taxes arising out of or related to the Offer and the Merger or the consummation
of any other transaction contemplated by this Agreement, and due to the property
owned by the Company or any of its Subsidiaries or affiliates ("Transfer Taxes")
shall be borne by the Company, and the Company shall file or cause to be filed
all Tax Returns (on behalf of itself or its Subsidiaries) relating to such
Transfer Taxes which are due and shall use its best efforts to cause the
stockholders, to the extent required by law, to cooperate with respect to the
filing of such Tax Returns.
Section 5.7 Indemnification. The Purchaser and the Surviving Corporation
agree that all rights to indemnification existing in favor of the present or
former directors, officers, employees, fiduciaries and agents of the Company or
any of its Subsidiaries (collectively, the "Indemnified Parties") as provided in
the Company's Certificate of Incorporation or By-Laws or the certificate or
articles of incorporation, by-laws or similar organizational documents of any of
the Subsidiaries as in effect as of the Effective Time shall survive
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the Merger and shall continue in full force and effect for three years after the
Effective Time (without modification or amendment, except as required by
applicable law), to the fullest extent permitted by law, and shall be
enforceable by the Indemnified Parties against the Surviving Corporation
provided that in any event Purchaser and Surviving Corporation shall pay and
reimburse expenses in advance of the final disposition of any action or
proceeding to each Indemnified Party to the fullest extent permitted by law. At
the Closing the Surviving Corporation shall expressly and directly assume by
written instrument all such obligations. Purchaser shall cause to be maintained
in effect for not less than three years from the Effective Time the current
policies of the directors' and officers' liability insurance maintained by the
Company (provided that Purchaser may substitute therefor polices of at least
equivalent coverage containing terms and conditions which are no less
advantageous) with respect to matters occurring prior to the Effective Time,
provided that in no event shall Purchaser or the Surviving Corporation be
required to expend to maintain or procure insurance coverage pursuant to this
Section 5.7 any amount per annum in excess of 200% of the aggregate premiums
paid in 1995 on an annualized basis for such purpose. In the event the payment
of such amount for any year is insufficient to maintain such insurance or
equivalent coverage cannot otherwise be obtained, the Surviving Corporation
shall purchase as much insurance as may be purchased for the amount indicated.
The provisions of this Section 5.7 shall survive the consummation of the Merger
and expressly are intended to benefit each of the Indemnified Parties.
Section 5.8 Benefits. For a period of one year following the Effective
Time, Purchaser shall, or shall cause the Surviving Corporation to, provide all
of the employees of the Surviving Corporation and its subsidiaries with employee
benefit plans, programs, policies or arrangements (the "Purchaser Benefit
Plans") as are substantially equivalent, in the aggregate, as those currently
provided by the Company (the "Current Benefit Plans"), so long as such Current
Benefit Plans are not materially more favorable, in the aggregate, than the
benefit plans generally provided to employees of companies within the Company's
industry. In the event such Current Benefit Plans are materially more favorable,
in the aggregate, than the benefit plans generally provided to employees of
companies within the Company's industry, Purchaser shall, or shall cause the
Surviving Corporation to, provide for a period of one year following the
Effective Time to all employees of the Surviving Corporation employee benefit
plans that are substantially equivalent, in the aggregate, to the benefit plans
generally provided to employees of companies within the Company's industry.
Except to the extent that benefits may be duplicated, each Purchaser Benefit
Plan shall give full credit for each employee's period of service with the
Company and its Subsidiaries prior to the Effective time for all purposes for
which such service was recognized under the Company's benefit plans prior to the
Effective Time, including, but not limited to, recognition of service for
vesting, amount of benefits, eligibility to participate, and eligibility for
disability and early retirement benefits (including subsidies relating to such
benefits) and full credit for deductibles satisfied under the benefit plans
toward any deductibles for the same period following the Effective Time, and
shall waive any pre-existing condition limitation for any Company employee
covered under a Benefit Plan immediately prior to the Effective Time.
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party shall be subject to the
satisfaction on or prior to the Closing Date of each of the following
conditions, any and all of which may be waived in whole or in part by the
Company, Parent or the Purchaser, as the case may be, to the extent permitted by
applicable law:
(a) Stockholder Approval. This Agreement shall have been approved and
adopted by the requisite vote of the stockholders of the Company, if
required by applicable law and the Certificate of Incorporation, in order
to consummate the Merger;
(b) Statutes; Consents. No statute, rule, order, decree or regulation
shall have been enacted or promulgated by any government or any
governmental agency or authority of competent jurisdiction which prohibits
the consummation of the Merger;
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(c) Injunctions. There shall be no order or injunction of a court or
other governmental authority of competent jurisdiction in effect
precluding, restraining, enjoining or prohibiting consummation of the
Merger; and
(d) Purchase of Shares in Offer. Parent, the Purchaser or their
affiliates shall have purchased Shares pursuant to the Offer.
Section 6.2 Conditions to the Company's Obligation to Effect the
Merger. The obligation of the Company to effect the Merger shall also be
subject to the satisfaction, or waiver by the Company, of the following
conditions:
(a) Prior Performance. The Purchaser and Parent shall have performed
in all material respects its respective obligations under this Agreement
required to be performed by it prior to the Effective Time.
(b) Representations and Warranties. All representations and
warranties of the Purchaser and Parent contained in this Agreement shall
have been true and correct in all material respects at the time made, and
shall be true and correct in all material respects as though made on and as
of such date.
Parent and Purchaser will furnish the Company with such certificates and
other documents to evidence the fulfillment of the conditions set forth in this
Section 6.2 as the Company may reasonably request.
ARTICLE VII
TERMINATION
Section 7.1 Termination. This Agreement may be terminated by written
notice and the Merger contemplated herein may be abandoned at any time prior to
the Effective Time, whether before or after approval of matters presented in
connection with the Merger by the stockholders of the Company:
(a) By the mutual consent of Parent and the Company.
(b) By either of Parent or the Company if any Governmental Entity shall
have issued an order, decree or ruling or taken any other action (which order,
decree, ruling or other action the parties hereto shall use their reasonable
efforts to lift), in each case permanently restraining, enjoining or otherwise
prohibiting the Transactions contemplated by this Agreement and such order,
decree, ruling or other action shall have become final and non-appealable.
(c) By the Board of Directors of the Company:
(i) if the Company has entered into a definitive agreement with
another party to consummate a Takeover Proposal in accordance with Section
5.4(b), provided the Company has complied with all provisions thereof,
including the notice provisions therein, and that it makes simultaneous
payment of the Expenses as required herein; or
(ii) if, prior to the purchase of the Shares pursuant to the Offer,
Parent or the Purchaser breaches or fails in any material respect to
perform or comply with any of its obligations contained herein or breaches
its representations and warranties in any material respect; or
(iii) if Parent or the Purchaser shall have terminated the Offer
without Parent or the Purchaser (a) purchasing the minimum number of Shares
pursuant thereto or (b) failing to pay for the Shares accepted pursuant to
the Offer for purchase, in either case within 60 days of commencement of
the Offer, or if the Offer shall have expired without any Shares being
purchased therein; or
(iv) if Parent, the Purchaser or any of their affiliates shall have
failed to commence the Offer on or prior to five business days following
the date of the initial public announcement of the Offer; provided, that
the Company may not terminate this Agreement pursuant to this Section
7.1(c)(iv) if the Company is in material breach of this Agreement.
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(d) By Parent:
(i) if prior to the purchase of the Shares pursuant to the Offer, the
Board of Directors of the Company shall have withdrawn, or modified or
changed in a manner adverse to Parent or the Purchaser its approval or
recommendation of the Offer, this Agreement or the Merger or shall have
entered into a definitive agreement for the consummation of a Takeover
Proposal in accordance with Section 5.4(b); or
(ii) if the Offer shall have terminated or expired without Parent or
the Purchaser purchasing any Shares thereunder, provided that Parent or the
Purchaser may not terminate this Agreement pursuant to this Section
7.1(d)(ii) if Parent or the Purchaser has failed to purchase the Shares in
the Offer in violation of this Agreement or the terms of the Offer; or
(iii) if, due to an occurrence that if occurring after the
commencement of the Offer would result in a failure to satisfy any of the
conditions set forth in Annex A hereto, Parent, the Purchaser, or any of
their affiliates shall have failed to commence the Offer on or prior to
five business days following the date of the initial public announcement of
the Offer.
Section 7.2 Effect of Termination. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 7.1, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, the Purchaser or the Company, other than
the provisions of Section 3.1(p), the proviso of the first sentence and the last
sentence of Section 5.2, this Section 7.2 and Sections 8.1, 8.3, 8.4, 8.5, 8.7,
8.8, 8.9, 8.11, 8.12 and 8.15 and except to the extent that such termination
results from the wilful and material breach by a party of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Fees and Expenses. (a) Except as provided below, all fees and
expenses incurred in connection with the Offer, the Merger, this Agreement and
the Transactions contemplated hereby shall be paid by the party incurring such
fees or expenses, whether or not the Offer or the Merger is consummated.
(b) The Company shall pay, or cause to be paid, in same day funds to Parent
all of Parent's reasonably documented out-of-pocket expenses in an amount up to
but not to exceed $1,500,000 (the "Expenses") upon demand if (i) Parent or the
Purchaser terminates this Agreement under Section 7.1(d)(i), (ii) the Company
terminates this Agreement pursuant to Section 7.1(c)(i) or (iii) prior to any
termination of this Agreement, a Takeover Proposal shall have been made and
within nine months of the termination of this Agreement a transaction
constituting a Takeover Proposal is consummated with respect to, or the Company
enters into an agreement with respect to, or approves or recommends a Takeover
Proposal, in each case, made prior to any termination of this Agreement;
provided, however, that in the case of (iii) above in this paragraph (b) such
Expenses shall not be paid if such transaction has a value to the stockholders
of the Company equivalent to or less favorable than the proposed Offer and
Merger and, provided, further, that no payment shall be made if this Agreement
has been terminated pursuant to Section 7.1(c)(ii), Section 7.1(c)(iii)(b) and
Section 7.1(c)(iv) hereof. In addition, if prior to any termination of this
Agreement, any Person or group purchases or otherwise acquires, directly or
indirectly, beneficial ownership of more than 20% or more of the outstanding
voting securities of the Company and additionally, if at any time within 12
months following the termination of this Agreement any such Person or group
consummates a transaction that would otherwise constitute a Takeover Proposal,
there shall be paid to Parent immediately prior to the consummation of such
transaction the Expenses (provided that no such payment shall be made if this
Agreement has been terminated pursuant to Section 7.1(c)(ii) hereof). The amount
of Expenses so payable shall be the amount set forth in an estimate delivered by
Parent, subject to upward or downward adjustment (not to be in excess of the
amount set forth above) upon delivery of reasonable documentation therefor.
For purposes of this Section 8.1(b), "Takeover Proposal" shall mean
Takeover Proposal as defined only in subsection (x) of the last sentence of
Section 5.4(a).
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Section 8.2 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified and supplemented in any and all respects,
whether before or after any vote of the stockholders of the Company contemplated
hereby, by written agreement of the parties hereto (which in the case of the
Company shall include approvals as contemplated in Section 1.4(b)), at any time
prior to the Closing Date with respect to any of the terms contained herein;
provided, however, that after the approval of this Agreement by the stockholders
of the Company, no such amendment, modification or supplement shall reduce the
amount or change the form of the Merger Consideration.
Section 8.3 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any schedule, instrument
or other document delivered pursuant to this Agreement shall survive the
Effective Time. This Section 8.3 shall not limit any covenant or agreement of
the parties which by its terms contemplates performance after the Effective Date
of the Merger.
Section 8.4 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given upon receipt, and shall be given 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 Parent or the Purchaser, to:
Getinge Industrier AB
S-31044 Getinge
Sweden
Attn: Carl Bennet
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
U.S.A.
Attn: Bertil Lundqvist, Esq.
(b) if to the Company, to:
MDT Corporation
Stratford Hall, Suite 200
1009 Slater Road
Durham, NC 27703
U.S.A.
Attn: J. Miles Branagan
with a copy to:
O'Melveny & Myers
400 South Hope Street
Los Angeles, CA 90071-2899
U.S.A.
Attn: C. James Levin, Esq.
Section 8.5 Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. Whenever the words "include", "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words "without
limitation". As used in this Agreement, the term "affiliate(s)" shall have the
meaning set forth in Rule 12b-2 of the Exchange Act. As used in this Agreement,
any reference to any event, change or effect being material
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or having a Material Adverse Effect on or with respect to any entity (or group
of entities taken as a whole) means such event, change or effect is materially
adverse to the consolidated financial condition, businesses or results of
operations of such entity (or, if used with respect thereto, of such group of
entities taken as a whole).
Section 8.6 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties.
Section 8.7 Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership. This Agreement and the Confidentiality Agreement (including the
documents and the instruments referred to herein and therein): (a) constitute
the entire agreement and supersedes all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof, and (b) except as provided in Section 5.6 is not intended to confer upon
any Person other than the parties hereto any rights or remedies hereunder.
Section 8.8 Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void, unenforceable or against its regulatory policy,
the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
Section 8.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Delaware without giving
effect to the principles of conflicts of law thereof.
Section 8.10 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that the Purchaser may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect wholly owned Subsidiary of Parent. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
Section 8.11 Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any Federal court located in the State of Delaware or
any Delaware state court in the event any dispute arises out of this Agreement
or any of the Transactions contemplated by this Agreement, (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court and (c) agrees that it will not bring any
action relating to this Agreement or any of the Transactions contemplated by
this Agreement in any court other than a Federal or state court sitting in the
State of Delaware.
Section 8.12 Extension; Waiver. At any time prior to the Effective Time,
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement or (c) subject to the proviso of
Section 8.2, waive compliance with any of the agreements or conditions contained
in this Agreement. Any agreement on the part of a party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party to this Agreement to assert any
of its rights under this Agreement or otherwise shall not constitute a waiver of
those rights.
Section 8.13 Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Agreement pursuant to Section 7.1, an amendment of this
Agreement pursuant to Section 8.2 or an extension or waiver pursuant to Section
8.12 shall, in order to be effective, require in the case of Parent, the
Purchaser or the Company, action by its Board of Directors or the duly
authorized designee of its Board of Directors; provided, however, that in the
event that Purchaser's designees are appointed or elected to the Board of
Directors of the Company as provided in Section 1.4, after the acceptance for
payment of Shares pursuant to
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<PAGE> 32
the Offer and prior to the Effective Time, except as otherwise contemplated by
this Agreement the affirmative vote of a majority of the directors of the
Company that were not designated by Parent or Purchaser shall be required by the
Company to amend this Agreement by the Company.
Section 8.14 Fiduciary Duty. Notwithstanding anything to the contrary in
this Agreement, no provision of this Agreement shall be construed to prevent the
exercise by any director of the Company (or the Company's actions thereon) of
his or her fiduciary duties as contemplated to be exercised by Section 5.4
hereof.
Section 8.15 Definitions. For purposes of this Agreement:
"Acquiring Person" has the meaning assigned thereto in Section 3.1(n).
"Affiliate" of any Person means any other Person that controls (as
such term is defined in the Exchange Act), is controlled by or is under
common control with such Person.
"Benefit Plans" has the meaning assigned thereto in Section 3.1(j).
"By-laws" means the by-laws of MDT Corporation.
"Certificate of Incorporation" has the meaning assigned thereto in
Section 1.5.
"Certificate of Merger" has the meaning assigned thereto in Section
1.6.
"Certificates" has the meaning assigned thereto in Section 2.2.
"Closing" has the meaning assigned thereto in Section 1.7.
"Closing Date" has the meaning assigned thereto in Section 1.7.
"Code" means the Internal Revenue Code of 1986.
"Company" means MDT Corporation.
"Confidentiality Agreement" has the meaning assigned thereto in
Section 5.2.
"Defect" has the meaning assigned thereto in Section 3.1(x).
"DGCL" means the Delaware General Corporation Law.
"Dissenting Stockholders" has the meaning assigned thereto in Section
2.1(c).
"Distribution Date" has the meaning assigned thereto in Section
3.1(n).
"Effective Time" has the meaning assigned thereto in Section 1.6.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"Environmental Laws" means all foreign, Federal, state and local Laws,
regulations, rules and ordinances relating to pollution or protection of
the environment, including, without limitation, Laws relating to Releases
or threatened Releases of Hazardous Materials into the indoor or outdoor
environment (including, without limitation, ambient air, surface water,
groundwater, land, surface and subsurface strata) or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage,
Release, transport or handling of Hazardous Materials, and all Laws and
regulations with regard to recordkeeping, notification, disclosure and
reporting requirements respecting Hazardous Materials, and all Laws
relating to endangered or threatened species of fish, wildlife and plants.
"Environmental Liabilities and Costs" means all liabilities,
obligations, responsibilities, obligations to conduct cleanup, losses,
damages, deficiencies, punitive damages, consequential damages, treble
damages, costs and expenses (including, without limitation, all reasonable
fees, disbursements and expenses of counsel, expert and consulting fees and
costs of investigations and feasibility studies and responding to
government requests for information or documents), fines, penalties,
restitution and monetary sanctions, interest, direct or indirect, known or
unknown, absolute or contingent, past, present
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or future, resulting from any claim or demand, by any Person or entity,
whether based in contract, tort, implied or express warranty, strict
liability, joint and several liability, criminal or civil statute,
including any Environmental Law, or arising from a violation of
Environmental Laws or the Release of Hazardous Materials into the
environment.
"ERISA Affiliate" has the meaning assigned thereto in Section 3.1(j).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expenses" has the meaning assigned thereto in Section 8.1.
"Fee Properties" has the meaning assigned thereto in Section 3.1(s).
"Financing Commitment" has the meaning assigned thereto in Section
4.1(d).
"Governmental Entity" has the meaning assigned thereto in Section
3.1(d).
"Hazardous Materials" means all substances defined as hazardous
substances in the National Oil and Hazardous Substances Pollution
Contingency Plan, 40 C.F.R. sec. 300.5, or substances defined as hazardous
substances, hazardous materials, toxic substances, hazardous wastes,
pollutants or contaminants, under any Environmental Law, or substances
regulated under any Environmental Law, including, but not limited to,
petroleum (including crude oil or any fraction thereof), asbestos, and
polychlorinated biphenyls.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Intellectual Property Rights" has the meaning assigned thereto in
Section 3.1(r).
"Laws" has the meaning assigned thereto in Section 3.1(m).
"Leased Properties" has the meaning assigned thereto in Section
3.1(s).
"Lien" means any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title
retention or other security arrangement, or any adverse right or interest,
charge or claim of any nature whatsoever of, on, or with respect to any
asset, property or property interest; provided, however, that the term
"Lien" shall not include
(i) liens for water and sewer charges and current Taxes not yet due
and payable or being contested in good faith;
(ii) mechanics', carriers', workers', repairers', materialmens',
warehousemens' and other similar liens arising or incurred in the
ordinary course of business;
(iii) any interest or title of a lessor (or its creditors) or
lessee under any lease (including any lien granted by such lessor or
lessee and any lien arising under Article 2 of the Uniform Commercial
Code or the filing of any Uniform Commercial Code financing statement
with respect to any such lease); or
(iv) all liens approved in writing by the other party hereto.
"Material Adverse Change" or "Material Adverse Effect" means, when
used in connection with the Company or Parent, any change or effect (or any
development that, insofar as can reasonably be foreseen, is likely to
result in any change or effect) that has a material adverse effect on (a)
the business, properties, assets, financial condition or results of
operations of such party and its Subsidiaries taken as a whole or (b) the
ability of the Company or Parent to perform its obligations hereunder.
"Merger" has the meaning assigned thereto in Section 1.5.
"Merger Consideration" has the meaning assigned thereto in Section
2.1.
"Minimum Condition" has the meaning assigned thereto in Annex A.
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"Notice of Takeover Proposal" has the meaning assigned thereto in
Section 5.4(b).
"Offer" has the meaning assigned thereto in Section 1.1.
"Offer Documents" has the meaning assigned thereto in Section 1.3.
"Offer Price" has the meaning assigned thereto in Section 1.1.
"Offer to Purchase" has the meaning assigned thereto in Section 1.1.
"Option Plan" has the meaning assigned thereto in Section 2.5(a).
"Options" has the meaning assigned thereto in Section 2.5(a).
"Parent" means Getinge Industrier AB.
"Paying Agent" has the meaning assigned thereto in Section 2.2(a).
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permits" has the meaning assigned thereto in Section 3.1(m)(ii).
"Person" means an individual, corporation, partnership, joint venture,
association, trust, unincorporated organization or other entity.
"Product" has the meaning assigned thereto in Section 3.1(x).
"Proxy Statement" has the meaning assigned thereto in Section 1.8.
"Purchaser" means Getinge Acquisition Corporation.
"Real Property" has the meaning assigned thereto in Section 3.1(s).
"Release" means any release, spill, emission, discharge, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment (including, without
limitation, ambient air, surface water, groundwater, and surface or
subsurface strata) or into or out of any property, including the movement
of Hazardous Materials through or in the air, soil, surface water,
groundwater or property.
"Rights" means the Common Stock Purchase Rights issued by the Company
pursuant to the Rights Agreement.
"Rights Agreement" means the agreement dated February 12, 1990,
between the Company and Bank of America, N.T. & S.A., as amended pursuant
to the agreement dated August 1, 1992, between the Company and Chemical
Trust Company of California as successor rights agent.
"Schedule 14D-9" has the meaning assigned thereto in Section 1.3.
"SEC" means the United States Securities and Exchange Commission.
"SEC Documents" has the meaning assigned thereto in Section 3.1(e).
"Secretary of State" means the Secretary of State of Delaware.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" has the meaning assigned thereto in Section 1.1.
"Special Meeting" has the meaning assigned thereto in Section 1.8.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, joint venture or other entity in which such Person (i) owns,
directly or indirectly, 50% or more of the outstanding voting securities or
equity interests, (ii) is entitled to elect at least a majority of the
Board of Directors or similar governing body, or (iii) is a general
partner.
"Surviving Corporation" means MDT Corporation.
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"Takeover Proposal" has the meaning assigned thereto in Section
5.4(a).
"Tax Returns" has the meaning assigned thereto in Section 3.1(k)(iv).
"Taxes" has the meaning assigned thereto in Section 3.1(k)(iv).
"Transactions" has the meaning assigned thereto in Section 1.2(a).
"Transfer Taxes" has the meaning assigned thereto in Section 5.6.
"WARN Act" has the meaning assigned thereto in Section 3.1(w).
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IN WITNESS WHEREOF, Parent, the Purchaser and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
GETINGE INDUSTRIER AB
By: /s/ Carl Bennet
------------------------------------
Name: Carl Bennet
Title: Managing Director
GETINGE ACQUISITION CORP.
By: /s/ Lars-Peter Harbing
------------------------------------
Name: Lars-Peter Harbing
Title: President
MDT CORPORATION
By: /s/ J. Miles Branagan
------------------------------------
Name: J. Miles Branagan
Title: President
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ANNEX A
Certain Conditions of the Offer. Notwithstanding any other provisions of
the Offer, and in addition to (and not in limitation of) the Purchaser's rights
to extend and amend the Offer at any time in its sole discretion (subject to the
provisions of the Merger Agreement), the Purchaser shall not be required to
accept for payment or, subject to any applicable rules and regulations of the
SEC, including Rule 14e-1(c) under the Exchange Act (relating to the Purchaser's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for, and may delay the acceptance for payment of
or, subject to the restriction referred to above, the payment for, any tendered
Shares, and may terminate or amend the Offer as to any Shares not then paid for,
if (i) there shall not have been validly tendered and not withdrawn prior to the
expiration of the Offer such number of Shares which would constitute at least
66 2/3% of the Shares outstanding on a fully diluted basis (the "Minimum
Condition"), (ii) any applicable waiting period under the HSR Act has not
expired or terminated, or (iii) at any time on or after the date of the Merger
Agreement and before the time of payment for any such Shares, any of the
following events shall occur or shall be determined by the Purchaser, in its
sole discretion but subject to the provisions of the Merger Agreement, to have
occurred:
(a) there shall have been any action taken, or any statute, rule,
regulation, judgment, order or injunction promulgated, entered, enforced,
enacted, issued or deemed applicable to the Offer or the Merger by any
domestic or foreign Federal or state governmental regulatory or
administrative agency or authority or court or legislative body or
commission which directly or indirectly (1) prohibits, or imposes any
material limitations, other than limitations generally affecting the
industries in which the Company and Parent conduct their business, on,
Parent's or the Purchaser's ownership or operation (or that of any of their
respective Subsidiaries or affiliates) of all or a material portion of the
Company's businesses or assets as a whole, or compels Parent or the
Purchaser or their respective Subsidiaries and affiliates to dispose of or
hold separate any material portion of the business or assets of the Company
or Parent in each case taken as a whole, (2) prohibits, or makes illegal,
the acceptance for payment, payment for or purchase of Shares or the
consummation of the Offer, the Merger or the other transactions
contemplated by the Merger Agreement, (3) results in the material delay in
the ability of the Purchaser, or renders the Purchaser unable, to accept
for payment, pay for or purchase a material amount of the Shares, or (4)
imposes material limitations on the ability of the Purchaser or Parent
effectively to exercise full rights of ownership of the Shares including,
without limitation, the right to vote the Shares purchased by it on all
matters properly presented to the Company's stockholders;
(b) there shall have occurred (1) any general suspension of trading
in, or limitation on prices for, securities in the NASDAQ National Market
System, for a period in excess of three hours, (2) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States or Sweden (whether or not mandatory), (3) a commencement of a
war, armed hostilities or other international or national calamity directly
or indirectly involving the United States or Sweden and having a Material
Adverse Effect or materially adversely affecting or delaying the Offer, (4)
any limitation (whether or not mandatory) by any Swedish or United States
governmental authority on the extension of credit by banks or other
financial institutions in a manner which prohibits the extension of funds
under the Financing Commitment, (5) in the case of any of the foregoing
existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof;
(c) (1) the representations and warranties of the Company set forth in
the Merger Agreement shall not be true and correct in any material respect
as of the date of the Merger Agreement and as of consummation of the Offer
as though made on or as of such date, (2) the Company shall have failed to
comply with its covenants and agreements under the Merger Agreement in all
material respects or (3) there shall have occurred any events or changes
which have had individually or in the aggregate a Material Adverse Effect
on the Company and its Subsidiaries taken as a whole; provided, however,
that for purposes of determining the trueness and correctness of the
representations and warranties under clause (c)(1) and for purposes of
clause (c)(3), no change or effect shall be deemed a Material Adverse
Effect to the extent that such change or effect arises (i) from
developments, events or changes arising out of the Transactions and
specifically relating to Parent as the acquiror of the Company or (ii) from
general
A-1
