SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
November 13, 1996
(Date of earliest event reported)
Lanxide Corporation
(Exact name of Registrant as specified in its charter)
Delaware 0-16293 51-0270253
(State of (Commission File No.) (IRS Employer
Incorporation) Identification No.)
1300 Marrows Road
Newark, Delaware 19714
(Address of principal executive offices, including zip code)
(302) 456-6200
(Registrant's telephone number, including area code)
_____________________________________________________________
(Former name or former address, if changed since last report)
ITEM 5.
On November 13, 1996, Lanxide Corporation, a
Delaware corporation (the "Company"), and Commodore
Environmental Services, Inc., a Delaware corporation
("Commodore"), entered into an Agreement and Plan of
Merger under which the Company will become a wholly owned
subsidiary of Commodore and the Company's stockholders
will become Commodore stockholders. As a result of the
merger, each share of the Company's common stock will be
exchanged for 19.1 shares of Commodore common stock, each
share of the Company's Series A Preferred Stock will be
exchanged for 7.1 shares of Commodore common stock and
each share of the Company's 7% Series E Redeemable
Preferred Stock will be exchanged for one share of a
newly created issue of Commodore Series D Preferred
Stock.
The information set forth above is qualified
in its entirety by reference to (i) the Agreement and
Plan of Merger, dated November 13, 1996, by and between
the Company, Commodore and COES Acquisition Corp. (the
"Merger Agreement"), a copy of which is attached hereto
as Exhibit 1 and (ii) a joint press release issued by the
Company and Commodore on November 14, 1996, a copy of
which is attached hereto as Exhibit 2.
On November 13, 1996, Commodore extended a
$3,000,000 line of credit to Lanxide Performance
Materials, Inc., a Delaware corporation and wholly owned
subsidiary of the Company ("LPM"). The line of credit is
guaranteed by the Company and is due the earlier of
February 28, 1998 or the date on which the Company
terminates the Merger Agreement as the result of the
withdrawal by the Company's Board of Directors of its
approval of the Merger Agreement in the exercise of its
fiduciary duties.
The information set forth above is qualified
in its entirety by reference to (i) the Line of Credit
Agreement, dated November 13, 1996, by and between LPM
and Commodore, a copy of which is attached hereto as
Exhibit 3, (ii) the Line of Credit Promissory Note, dated
November 13, 1996, by LPM to Commodore, a copy of which
is attached hereto as Exhibit 4, (iii) the Security
Agreement, dated November 13, 1996, between LPM and
Commodore, a copy of which is attached hereto as Exhibit
5, (iv) the Guaranty, dated November 13, 1996, of the
Company in favor of Commodore, a copy of which is
attached hereto as Exhibit 6 and (v) the Letter
Agreement, dated November 13, 1996, by and between LPM
and Commodore Applied Technologies, Inc., a copy of which
is attached hereto as Exhibit 7.
ITEM 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired:
Not applicable.
(b) Pro Forma financial information:
Not applicable.
(c) Exhibits:
1. Agreement and Plan of Merger, dated
November 13, 1996, by and among the
Company, Commodore and COES Acquisition
Corp.
2. Press Release issued by the Company and
Commodore on November 14, 1996.
3. Line of Credit Agreement, dated November
13, 1996, by and between LPM and
Commodore.
4. Line of Credit Promissory Note, dated
November 13, 1996, by LPM in favor of
Commodore.
5. Security Agreement, dated November 13,
1996, by and between LPM and Commodore.
6. Guaranty, dated November 13, 1996, by the
Company in favor of Commodore.
7. Letter Agreement, dated November 13, 1996,
by and between LPM and Commodore Applied
Technologies, Inc.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned
hereunto duly authorized.
LANXIDE CORPORATION
By:/s/ Robert J. Ferris
________________________
Robert J. Ferris
Secretary, Treasurer and
Vice President-Administration
Date: November 15, 1996
EXHIBIT INDEX
Exhibit Sequential
Number Description Page Number
1 Agreement and Plan of Merger,
dated November 13, 1996, by
and among the Company,
Commodore and COES Acquisition
Corp.
2 Press Release issued by the
Company and Commodore on
November 14, 1996.
3 Line of Credit Agreement,
dated November 13, 1996, by
and between LPM and Commodore.
4 Line of Credit Promissory
Note, dated November 13, 1996,
by LPM in favor of Commodore.
5 Security Agreement, dated
November 13, 1996, by and
between LPM and Commodore.
6 Guaranty, dated November 13,
1996, by the Company in favor
of Commodore.
7 Letter Agreement, dated
November 13, 1996, by and
between LPM and Commodore
Applied Technologies, Inc.
Exhibit 1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is made and
entered into this 13th day of November, 1996, by and among
LANXIDE CORPORATION ("Lanxide"), a corporation organized and
existing under the laws of the State of Delaware, with its
principal executive office located at 1300 Marrows Road, P.O. Box
6077, Newark, Delaware 19714; COMMODORE ENVIRONMENTAL SERVICES,
INC. ("Commodore"), a corporation organized and existing under
the laws of the State of Delaware, with its principal executive
office located at 150 East 58th Street, Suite 3400, New York, New
York 10155; and COES ACQUISITION CORP. (the "Merger Subsidiary"),
a corporation organized and existing under the laws of the State
of Delaware and a wholly-owned subsidiary of Commodore, with its
principal executive office located at 150 East 58th Street, Suite
3400, New York, New York 10155.
R E C I T A L S:
A. The Board of Directors of each of Lanxide and Commodore
are of the opinion that the business combination transactions
described herein are in the best interest of the respective
parties and their respective stockholders.
B. This Agreement contemplates that Commodore shall become
the parent entity of Lanxide pursuant to the transactions
described below.
C. At the Effective Time (as hereinafter defined), (i) the
Merger Subsidiary shall be merged with and into Lanxide so that
Lanxide will be the surviving corporation of such merger, (ii)
the outstanding shares of capital stock of Lanxide shall be
exchanged for or converted into shares of capital stock of
Commodore and (iii) the outstanding shares of capital stock of
the Merger Subsidiary shall be converted into shares of capital
stock of Lanxide. As a result, stockholders of Lanxide shall
become stockholders of Commodore, and Lanxide and its
subsidiaries shall conduct their respective businesses and
operations as direct and indirect wholly-owned subsidiaries of
Commodore.
D. Special Committees, comprised of independent directors
of each of Lanxide and Commodore, have recommended the approval
and adoption by their respective Boards of Directors of this
Agreement. This Agreement has been approved and adopted by the
Boards of Directors of each of the parties hereto and by the
Board of Directors of Commodore as the sole stockholder of the
Merger Subsidiary.
E. The transactions described in this Agreement are
subject to the approval of the stockholders of Lanxide, the
stockholders of Commodore, and the satisfaction of certain other
conditions described in this Agreement.
F. For federal income tax purposes, it is intended that
the transactions contemplated hereby shall constitute a
reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, and that Lanxide, Commodore and Merger
Subsidiary each will be a party to the reorganization within the
meaning of Section 368(b) of the Internal Revenue Code.
NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants, and agreements set forth
herein, the Parties agree as follows:
ARTICLE ONE
DEFINITIONS
In addition to other terms defined in this Agreement, and
except as otherwise provided herein, the capitalized terms set
forth below (in their singular and plural forms as applicable)
shall have the following meanings:
1.1 "Affiliate" shall mean, with respect to any Person, any
other Person in control of, controlled by, or under common
control with, the first Person.
1.2 "Cleanup" shall mean all actions required to: (a)
cleanup, remove, treat or remediate Hazardous Materials in the
indoor or outdoor environment; (b) prevent the Release of
Hazardous Materials so that they do not migrate, endanger or
threaten to endanger public health or welfare in the indoor or
outdoor environment; (c) perform pre-remedial studies and
investigations and post-remedial monitoring and care; or (d)
respond to any government requests for information or documents
in any way relating to cleanup, removal, treatment or remediation
or potential cleanup, removal, treatment or remediation of
Hazardous Materials in the indoor or outdoor environment.
1.3 "Commodore" shall mean Commodore Environmental
Services, Inc., a Delaware corporation, the name of which
corporation shall be changed to "CoLanx, Inc.," on or immediately
following the Effective Time of the Merger, pursuant to the
Restated Commodore Charter.
1.4 "Commodore Capital Stock" shall mean, collectively,
the Commodore Common Stock, Commodore Series AA Preferred Stock,
Commodore Series B Preferred Stock, Commodore Series C Preferred
Stock, and Commodore Series D Preferred Stock.
1.5 "Commodore Common Stock" shall mean the shares of
common stock, $.01 par value per share, which per share par value
shall be reduced to $.0001 per share pursuant to the Restated
Commodore Charter.
1.6 "Commodore Common Stock Equivalents" shall mean the
collective reference to shares of Commodore Common Stock which
are potentially issuable as at the Effective Time of the Merger
upon (a) the exercise of all outstanding Commodore Warrants and
Commodore Stock Options or (b) the conversion of all outstanding
Commodore Convertible Notes, and all shares of outstanding
Commodore Capital Stock which, by their terms, are convertible
into shares of Commodore Common Stock; provided, that Commodore
Common Stock Equivalents shall not include: (i) shares of
Commodore Common Stock issued in connection with the Commodore
Public Offering; and (ii) a maximum of 20,000,000 shares of
Commodore Common Stock which shall be issued and are potentially
issuable to the Senior Executive Officers under the 1997
Commodore Stock Option Plan upon exercise of 1997 Stock Options.
1.7 "Commodore Companies" shall mean, collectively,
Commodore and all Commodore Subsidiaries.
1.8 "Commodore Convertible Notes" shall mean the 8.5%
convertible notes of Commodore due 1998 in $4,000,000 aggregate
principal amount.
1.9 "Commodore Disclosure Schedule" shall mean the
schedules furnished by Commodore to Lanxide relating to certain
of the representations and warranties of Commodore contained in
this Agreement, which disclosure schedules shall identify and
make reference to the specific sections in this Agreement to
which each disclosure contained therein relates.
1.10 "Commodore Fairness Opinion" shall mean the written
opinion of Schroder Wertheim & Co. Incorporated, or such other
nationally recognized investment bank as the Special Committee of
the Board of Directors of Commodore shall select to render its
opinion, as to the fairness to Commodore of the exchange ratio in
the Merger from a financial point of view.
1.11 "Commodore Financial Statements" shall mean (i) the
audited consolidated balance sheets (including related notes and
schedules) of Commodore as of December 31, 1995 and December 31,
1994, and the related audited statements of income, changes in
stockholders' equity and changes in financial position or cash
flows (including related notes and schedules, if any) for the
three fiscal years ended December 31, 1995; and (ii) the
unaudited consolidated balance sheets (including related notes
and schedules) of Commodore as of June 30, 1996 and the related
unaudited statements of income, changes in stockholders' equity
and changes in financial position or cash flows (including
related notes and schedules, if any) for the six months ended
June 30, 1996 and June 30, 1995, respectively, as filed by
Commodore in SEC Documents.
1.12 "Commodore Preferred Stock" shall mean the collective
reference to the Commodore Series AA Preferred Stock, Commodore
Series B Preferred Stock, Commodore Series C Preferred Stock and
Commodore Series D Preferred Stock.
1.13 "Commodore Public Offering" shall mean the public
offering, pursuant to the Commodore Public Offering Registration
Statement which shall have been declared effective by the SEC
under the 1933 Act, of shares of Commodore Common Stock, all upon
such terms and conditions as the Board of Directors of Commodore
may determine.
1.14 "Commodore Public Offering Registration Statement"
shall mean the Registration Statement on Form S-1, or other
appropriate form, as filed by Commodore with, and as declared
effective by, the SEC under the 1933 Act in connection with the
Commodore Public Offering and related transactions contemplated
by this Agreement.
1.15 "Commodore Reverse Stock Split" shall mean the reverse
split of (a) all outstanding shares of Commodore Common Stock,
and (b) all shares of Commodore Common Stock issuable under
Commodore Common Stock Equivalents, which are issued and
outstanding immediately prior to the Effective Time of the
Merger, as effected pursuant to the Restated Commodore Charter.
1.16 "Commodore Series AA Preferred Stock" shall mean shares
of 10% callable non-convertible shares of Series AA Preferred
Stock, $.01 par value per share, of Commodore. The terms,
designations, preferences, limitations, privileges, and relative
rights of the Commodore Series AA Preferred Stock shall be as set
forth in the Restated Commodore Charter.
1.17 "Commodore Series B Preferred Stock" shall mean the
shares of 8% cumulative convertible shares of Series B Preferred
Stock, par value $.01 per share, of Commodore. The terms,
designations, preferences, limitations, privileges, and relative
rights of the Commodore Series B Preferred Stock shall be as set
forth in the Restated Commodore Charter.
1.18 "Commodore Series C Preferred Stock" shall mean the
shares of non-dividend paying shares of Series C Convertible
Preferred Stock, $.01 par value per share, of Commodore. The
terms, designations, preferences, limitations, privileges, and
relative rights of the Commodore Series C Preferred Stock shall
be as set forth in the Restated Commodore Charter.
1.19 "Commodore Series D Preferred Stock" shall mean the
shares of 7% cumulative redeemable shares of Series D Preferred
Stock, $.01 par value per share and $10 per share liquidation
value, of Commodore which shall be issued at the Effective Time
of the Merger in exchange for shares of Lanxide Series E
Preferred Stock. The terms, designations, preferences,
limitations, privileges, and relative rights of the Commodore
Series D Preferred Stock shall be as set forth in the Restated
Commodore Charter.
1.20 "Commodore Stock Options" shall mean the options to
purchase shares of Commodore Common Stock outstanding at the date
of this Merger Agreement; provided that, unless the context
clearly indicates otherwise, the term Commodore Stock Options
shall not include 1997 Commodore Stock Options.
1.21 "Commodore Subsidiaries" shall mean the subsidiaries of
Commodore, which shall include Commodore Applied Technologies,
Inc., a Delaware corporation ("CAT"), Commodore Refrigerant
Technologies, Inc., a Delaware corporation ("CRT"), Commodore
Separation Technologies, Inc., a Delaware corporation ("CST"),
and the other Commodore Subsidiaries described in Section 6.3 of
this Agreement and any other corporation, limited liability
company, general or limited partnership, limited liability
partnership or other organization acquired as a Subsidiary of
Commodore in the future and owned by Commodore at the Effective
Time.
1.22 "Commodore Warrants" shall mean warrants to purchase
shares of Commodore Common Stock.
1.23 "Common Stock Exchange Ratio" shall mean nineteen and
one-tenth (19.1) shares, representing the number of shares of
Commodore Common Stock into which each full share of Lanxide
Common Stock shall be converted at the Effective Time of the
Merger, before giving effect to the Commodore Reverse Stock
Split.
1.24 "Common Stock Exchange Ratio Reciprocal" shall mean the
quotient resulting from dividing (a) one, by (b) the Common Stock
Exchange Ratio then in effect.
1.25 "Delaware Certificate of Merger" shall mean the
Certificate of Merger to be executed by the Surviving
Corporation, and filed with the Secretary of State of the State
of Delaware relating to the merger of the Merger Subsidiary with
and into Lanxide, all as contemplated by Section 2.1. of this
Agreement.
1.26 "Effective Time" shall have the meaning ascribed to
such term in Section 2.3 of this Agreement.
1.27 "Environmental Claim" shall mean any claim, action,
cause of action, investigation or notice (written or oral) by any
person or entity alleging potential liability (including, without
limitation, potential liability for investigatory costs, Cleanup
costs, governmental response costs, natural resources damages,
property damages, personal injuries, or penalties) arising out
of, based on or resulting from (a) the presence, or Release into
the indoor or outdoor environment, of any Hazardous Materials at
any location, whether or not owned or operated by Lanxide or any
of its Subsidiaries, as the case may be, or (b) circumstances
forming the basis of any violation, or alleged violation, of any
Environmental Law.
1.28 "Environmental Laws" shall mean all federal, state,
local and foreign laws and regulations relating to pollution or
protection of human health or 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,
ground water, land surface or subsurface strata) or otherwise
relating to the manufacture, processing, distribution, use,
treatment, storage, Release, disposal, 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 and the management or use of natural resources.
1.29 "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
1.30 "Exhibits" shall mean the Exhibits marked Exhibits "1"
through "6", inclusive, copies of which are attached to this
Agreement. Such Exhibits are hereby incorporated by reference
herein and made part hereof, and may be referred to in this
Agreement and any other related instrument or document without
being attached hereto.
1.31 "GAAP" shall mean generally accepted accounting
principles consistently applied.
1.32 "Hazardous Materials" means "hazardous substance" (as
defined by the Comprehensive Environmental Response,
Compensation, and Liability Act, as amended), "hazardous waste"
(as defined by the Resource Conservation and Recovery Act, as
amended), pesticides, petroleum, crude oil or any fraction
thereof, radioactive material, and any pollutant, oil,
contaminant, or hazardous, extremely hazardous, dangerous or
toxic chemical, material, or waste and any other substance within
the meaning of any Environmental Law or which could pose a hazard
to the environment or the health and safety of any person.
1.33 "Internal Revenue Code" shall mean the Internal Revenue
Code of 1986, as amended.
1.34 "Joint Proxy Statement" shall mean the joint proxy
statement/prospectus used by Lanxide and Commodore to solicit the
approval of their respective stockholders of the transactions
contemplated by this Agreement.
1.35 "Lanxide" shall mean Lanxide Corporation, a Delaware
corporation.
1.36 "Lanxide Capital Stock" shall mean the collective
reference to the Lanxide Common Stock, the Lanxide Series A
Preferred Stock, and the Lanxide Series E Preferred Stock.
1.37 "Lanxide Common Stock" shall mean the shares of common
stock, par value $.01 per share, of Lanxide.
1.38 "Lanxide Common Stock Equivalents" shall mean the
collective reference to shares of Lanxide Common Stock which are
issuable immediately prior to the Effective Time of the Merger
upon (a) the exercise of all outstanding Lanxide Warrants and
Lanxide Stock Options, (b) the conversion of all shares of
outstanding Lanxide Preferred Stock which, by their terms, are
convertible into shares of Lanxide Common Stock, or (c) shares of
Lanxide Common Stock issuable pursuant to Lanxide's Deferred
Compensation Plans.
1.39 "Lanxide Companies" shall mean, collectively, Lanxide
and all Lanxide Subsidiaries.
1.40 "Lanxide Deferred Compensation Plans" shall mean
the collective reference to the Lanxide Corporation Deferred
Compensation Plan and the individual Deferred Compensation Plan
for Robert Wolffe.
1.41 "Lanxide Disclosure Schedule" shall mean the schedules
furnished by Lanxide to Commodore relating to certain of the
representations and warranties of Lanxide contained in this
Agreement, which disclosure schedules shall identify and make
reference to the specific sections in this Agreement to which
each disclosure contained therein relates.
1.42 "Lanxide Fairness Opinion" shall mean the written
opinion of Pennsylvania Merchant Group Ltd. ("PMG"), or such
other nationally recognized investment bank as the Special
Committee of the Board of Directors of Lanxide shall select to
render its opinion, as to the fairness to stockholders of Lanxide
of the Merger from a financial point of view.
1.43 "Lanxide Financial Statements" shall mean (i) the
audited consolidated balance sheets (including related notes and
schedules) of Lanxide as of September 30, 1995 and September 30,
1994, and the related audited statements of income, changes in
stockholders' equity and changes in financial position or cash
flows (including related notes and schedules, if any) for the
three fiscal years ended September 30, 1995 and (ii) the
unaudited consolidated balance sheets (including related notes
and schedules) of Lanxide as of June 30, 1996 and June 30, 1995
and the related unaudited statements of income, changes in
stockholders' equity and changes in financial position or cash
flows (including related notes and schedules, if any) for the
nine months ended June 30, 1996 and June 30, 1995, respectively,
as filed by Lanxide in SEC Documents.
1.44 "Lanxide Preferred Stock" shall mean the collective
reference to the Lanxide Series A Preferred Stock and Lanxide
Series E Preferred Stock.
1.45 "Lanxide Series A Preferred Stock" shall mean the
shares of Series A Convertible Preferred Stock, par value $.01
per share and liquidation value $80 per share, of Lanxide.
1.46 "Lanxide Series E Preferred Stock" shall mean the
shares of 7% cumulative redeemable shares of Series E Preferred
Stock, par value $.01 per share and $10 per share liquidation
value, of Lanxide.
1.47 "Lanxide Stock Options" shall mean the options issued
by any of the Lanxide Companies to purchase shares of Lanxide
Common Stock which are outstanding as at the Effective Time of
the Merger, including such options set forth in Section 5.2(a) of
the Lanxide Disclosure Schedule.
1.48 "Lanxide Subsidiaries" shall mean the Subsidiaries of
Lanxide and the other Lanxide Subsidiaries described in Section
5.3 of this Agreement and any other corporation, limited
liability company, general or limited partnership, limited
liability partnership or other organization acquired as a
Subsidiary of Lanxide in the future and owned by Lanxide at the
Effective Time of the Merger.
1.49 "Lanxide Unit Warrants" shall mean the warrants to
purchase shares of Lanxide Common Stock, comprising a portion of
the Units issued by Lanxide and currently traded on the OTC
Bulletin Board, which warrants expire on November 14, 1996.
1.50 "Lanxide Warrants" shall mean the warrants to
purchase shares of Lanxide Common Stock which are outstanding as
at the Effective Time of the Merger.
1.51 "Material Adverse Change" or "Material Adverse Effect"
shall mean, when used with respect to Commodore or Lanxide, as
the case may be, any change or effect that is or would reasonably
be expected (so far as can be foreseen at the time) to be
materially adverse to the business, properties, assets,
liabilities, condition (financial or otherwise), or results of
operations of Commodore and its Subsidiaries taken as a whole, or
Lanxide and its Subsidiaries taken as a whole.
1.52 "Merger" shall mean the merger of the Merger Subsidiary
with and into Lanxide.
1.53 "Merger Subsidiary" shall mean COES Acquisition Corp.,
a Delaware corporation.
1.54 "Merger Registration Statement" shall mean the
Registration Statement on Form S-4, or other appropriate form, as
filed by Commodore with, and as declared effective by, the SEC
under the 1933 Act in connection with the Merger and related
transactions contemplated by this Agreement.
1.55 "Nasdaq" shall mean the Nasdaq National Market, or if
shares of Commodore Common Stock are not listed for trading on
the Nasdaq National Market, the Nasdaq SmallCap Market.
1.56 "1933 Act" shall mean the Securities Act of 1933, as
amended.
1.57 "1934 Act" shall mean the Securities Exchange Act of
1934, as amended.
1.58 "Party" shall mean the individual reference to either
Commodore, Lanxide or Merger Subsidiary, and "Parties" shall mean
the collective reference to all of Commodore, Lanxide and Merger
Subsidiary.
1.59 "Pension Plans" shall mean any employee pension benefit
plan as such term is defined in Section 3(2) of ERISA which is
maintained by the referenced Party.
1.60 "Person" shall mean any individual, corporation,
limited liability company, partnership, association, trust, joint
venture, agency or government instrumentality, or any subdivision
thereof.
1.61 "Preferred Stock Exchange Ratio" shall mean seven and
one hundred four hundredths (7.104) shares representing the
number of shares of Commodore Common Stock into which each full
share of Lanxide Series A Preferred Stock shall be converted at
the Effective Time of the Merger, before giving effect to the
Commodore Reverse Stock Split, (which ratio was derived by
multiplying (a) the fraction of a share of Lanxide Common Stock
into which the Lanxide Series A Preferred Stock is convertible by
its terms by (b) the Common Stock Exchange Ratio).
1.62 "Registration Statements" shall mean the collective
reference to the Merger Registration Statement and Commodore
Public Offering Registration Statement.
1.63 "Regulatory Authorities" shall mean, collectively, the
SEC and any other government agency or instrumentality regulating
or having jurisdiction over the respective businesses of
Commodore or Lanxide.
1.64 "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 of any Hazardous Materials, including
the movement of Hazardous Materials through or in the air, soil,
surface water, groundwater or property.
1.65 "Restated Commodore Charter" shall mean the Amended and
Restated Certificate of Incorporation of Commodore, substantially
in the form of Exhibit 1 annexed hereto and made a part hereof,
pursuant to which, inter alia: (a) Commodore shall effect the
Commodore Reverse Stock Split; (b) the par value per share of all
authorized and outstanding shares of Commodore Common Stock shall
be reduced from $.01 to $.0001; and (c) the corporate name of
Commodore shall be changed to "CoLanx, Inc."
1.66 "SEC" shall mean the United States Securities and
Exchange Commission.
1.67 "SEC Documents" shall mean all reports and registration
statements filed, or required to be filed, by a Party or one of
its Subsidiaries pursuant to the Securities Laws.
1.68 "Securities Laws" shall mean the 1933 Act, the 1934
Act, the Investment Company Act of 1940, as amended, the
Investment Advisors Act of 1940, as amended, the Trust Indenture
Act of 1939, as amended, and the rules and regulations of the SEC
promulgated thereunder.
1.69 "Senior Executive Officers" shall mean the collective
reference to Messrs. Paul E. Hannesson, Edward L. Harper, Marc S.
Newkirk and/or such other senior executive officers as shall be
determined by the Board of Directors of Commodore and the
Compensation Committee of the Board of Directors of Commodore.
1.70 "Significant Subsidiary" shall mean any present or
future consolidated Subsidiary of the Party in question, the
assets of which constitute ten percent (10%) or more of the
consolidated assets of such Party as reflected on such Party's
consolidated statement of condition prepared in accordance with
GAAP.
1.71 "Stockholders' Meetings" shall mean the meetings of the
stockholders of Commodore and Lanxide to be held pursuant to
Section 4.6 and Section 4.7, respectively, of this Agreement,
including any adjournment or adjournments thereof.
1.72 "Subsidiary" shall mean any Person of which the Person
in question owns or controls 50% or more of the outstanding
equity interests, either directly or through one or more Persons,
the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of
such entity.
1.73 "Surviving Corporation" shall mean Lanxide, as the
surviving corporation of the Merger of the Merger Subsidiary with
and into Lanxide, as contemplated hereby.
1.74 "1997 Commodore Stock Option Plan" shall mean a stock
option plan of Commodore, substantially in the form of Exhibit 6
annexed hereto, pursuant to which Commodore shall authorize for
issuance thereunder, as qualified and non-qualified stock
options, an aggregate of 20,000,000 shares of Commodore Common
Stock (before giving effect to the Commodore Reverse Stock
Split), to be issued, within the limits specified in such 1997
Commodore Stock Option Plan, on such terms and conditions as
determined by the Board of Directors of Commodore.
1.75 "1997 Commodore Stock Options" shall mean the options
to purchase shares of Commodore Common Stock issued under the
1997 Commodore Stock Option Plan.
ARTICLE TWO
THE MERGER
2.1 Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time of the Merger, the Merger
Subsidiary shall be merged with and into Lanxide and the separate
existence of Merger Subsidiary shall thereupon cease, all in
accordance with the provisions of and with the effect provided in
Section 251 of the General Corporation Law of the State of
Delaware (the "DGCL"). Lanxide shall be the Surviving
Corporation resulting from the Merger and shall become a wholly-
owned subsidiary of Commodore and shall continue to be governed
by the laws of the State of Delaware. The Merger shall be
consummated pursuant to the terms of this Agreement, which has
been approved and adopted by the Board of Directors of each of
Commodore, Lanxide and the Merger Subsidiary. Lanxide, as the
surviving corporation of the Merger, is hereinafter sometimes
referred to as the "Surviving Corporation" and Lanxide and the
Merger Subsidiary are sometimes hereinafter collectively referred
to as the "Constituent Corporations." In accordance with the
DGCL, all of the rights, privileges, powers, immunities, purposes
and franchises of the Constituent Corporations shall vest in the
Surviving Corporation and all of the debts, liabilities,
obligations and duties of the Constituent Corporations shall
become the debts, liabilities, obligations and duties of the
Surviving Corporation.
2.2 Closing. Subject to the terms and conditions of this
Agreement, the closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at 10:00 a.m., local
time, as soon as practicable after all of the conditions set
forth in Article IX of this Agreement are satisfied or waived or
on such other date and at such other time as may be mutually
agreed upon by the Parties (the date and time the Closing
actually occurs being referred to herein as the "Closing Date").
2.3 Effective Time.
(a) The Merger and other transactions contemplated by
this Agreement shall become effective on the date and at the time
that the Delaware Certificate of Merger is accepted for filing by
the Secretary of State of the State of Delaware. The time at
which the Merger shall become effective is referred to herein as
the "Effective Time." Unless otherwise mutually agreed upon in
writing by the chief executive officer or chief financial officer
of Lanxide and the chief executive officer or chief financial
officer of Commodore, the Parties shall cause the Effective Time
to occur as promptly as practicable upon satisfaction of the
conditions set forth in Article Nine of this Agreement.
2.4 Certificate of Incorporation and By-laws of Lanxide.
From and after the Effective Time:
(a) the Certificate of Incorporation of Lanxide in
effect immediately prior to the Effective Time shall be
amended and restated in its entirety as set forth on Exhibit
2 annexed hereto and made a part hereof, and as so amended
and restated shall be the Certificate of Incorporation of
the Surviving Corporation; and
(b) the By-laws of Lanxide in effect immediately prior
to the Effective Time, a copy of which is attached hereto as
Exhibit 3 and made a part hereof, shall be the Bylaws of the
Surviving Corporation until thereafter amended in accordance
with applicable law.
ARTICLE THREE
CONVERSION AND EXCHANGE OF SECURITIES;
EFFECT OF MERGER ON COMMODORE AND LANXIDE STOCK OPTION PLANS
3.1 Conversion and Exchange of Securities. At the
Effective Time, by virtue of the Merger and without any action on
the part of any Party hereto or the holder of any of the
following Securities:
(a) Conversion of Lanxide Common Stock. Subject to
Sections 3.2, 3.6 and 3.7(g) hereof, each full share of Lanxide
Common Stock shall be converted into and become that number of
validly issued, fully paid and nonassessable shares of Commodore
Common Stock as shall be equal to the Common Stock Exchange
Ratio. All shares of Lanxide Common Stock, when so converted,
shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each holder of
a certificate representing prior to the Effective Time any such
shares shall cease to have any rights with respect thereto,
except the right to receive certificates representing the shares
of Commodore Common Stock into which such shares of Lanxide
Common Stock have been converted (and any dividends or other
distributions payable pursuant to Section 3.7(h) hereof, and any
cash in lieu of a fractional share payable pursuant to Section
3.7(g) hereof) with respect thereto upon the surrender of such
certificate in accordance with Section 3.7, without interest.
(b) Conversion of Lanxide Series A Preferred Stock.
Subject to Sections 3.2, 3.6 and 3.7(g) hereof, each full share
of Lanxide Series A Preferred Stock shall be converted into and
become that number of validly issued, fully paid and
nonassessable shares of Commodore Common Stock as shall be equal
to the Preferred Stock Exchange Ratio. All shares of Lanxide
Series A Preferred Stock, when so converted, shall no longer be
outstanding and shall automatically be canceled and retired and
shall cease to exist, and each holder of a certificate
representing prior to the Effective Time any such shares shall
cease to have any rights with respect thereto, except the right
to receive certificates representing the shares of Commodore
Common Stock into which such shares of Lanxide Series A Preferred
Stock have been converted (and any dividends or other
distributions payable pursuant to Section 3.7(h) hereof, and any
cash in lieu of a fractional share payable pursuant to Section
3.7(g) hereof) with respect thereto upon the surrender of such
certificate in accordance with Section 3.7, without interest.
(c) Conversion of Lanxide Series E Preferred Stock.
Subject to Sections 3.2, 3.6 and 3.7(g) hereof, each full share
of Lanxide Series E Preferred Stock shall be converted into and
become one (1) validly issued, fully paid and nonassessable share
of Commodore Series D Preferred Stock. All shares of Lanxide
Series E Preferred Stock shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist,
and each holder of a certificate representing prior to the
Effective Time any such shares shall cease to have any rights
with respect thereto, except the right to receive certificates
representing the shares of Commodore D Preferred Stock into which
such shares of Lanxide Series E Preferred Stock have been
converted (and any dividends or other distributions payable
pursuant to Section 3.7(h) hereof and any cash in lieu of a
fractional share payable pursuant to and Section 3.7(g) hereof)
with respect thereto upon the surrender of such certificate in
accordance with Section 3.7, without interest.
3.2 Treasury Stock. At the Effective Time and without any
action on the part of the Parties or the holders of any
securities, all shares of Lanxide Capital Stock which are held in
treasury immediately prior to the Effective Time of the Merger,
shall be canceled and retired and shall cease to exist, and no
capital stock of Commodore or other consideration shall be
delivered or deliverable in exchange therefor.
3.3 Merger Subsidiary Stock. At the Effective Time and
without any action on the part of the Parties or the holders of
any securities, each share of common stock of Merger Subsidiary
issued and outstanding immediately prior to the Effective Time of
the Merger shall be converted into one share of the common stock
of the Surviving Corporation, and each certificate evidencing
ownership of shares of Merger Subsidiary common stock shall from
and after the Effective Time of the Merger evidence ownership of
the same number of shares of common stock of the Surviving
Corporation.
3.4 Commodore Stock. The Surviving Corporation shall,
immediately following the Effective Time of the Merger, return to
Commodore, without payment of any consideration therefor, any
shares of Commodore Common Stock held by it immediately prior to
the Effective Time, whereupon such shares shall be canceled and
retired by Commodore and resume the status of authorized and
unissued shares.
3.5 Transfer Books. At the Effective Time of the Merger,
the stock transfer books of Lanxide shall be closed and no
further transfer of shares of Lanxide Capital Stock shall
thereafter be made. If, after the Effective Time, certificates
evidencing prior to the Effective Time any shares of the Lanxide
Capital Stock are presented to Lanxide they shall be canceled and
exchanged as provided in Section 3.1 hereof.
3.6 Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, at the Effective Time, shares of
Lanxide Capital Stock which are issued and outstanding
immediately prior to the Effective Time and which are held by any
stockholder of Lanxide who: (a) is entitled to appraisal rights
pursuant to Section 262 of the DGCL and (b) on a timely basis,
makes and perfects a demand for appraisal of such shares in
accordance with all the requirements and provisions of Section
262 of the DGCL, and who does not effectively withdraw or lose
the right to such appraisal (collectively, "Dissenting Shares"),
shall not be converted as described in Section 3.1, but shall
from and after the Effective Time, represent only the right to
receive such consideration as may be determined to be due to such
stockholder with respect to such Dissenting Shares pursuant to
Section 262 of the DGCL.
3.7 Exchange of Certificates.
(a) Appointment of Exchange Agent. On or before the
Closing Date, Commodore shall enter into an agreement approved by
Lanxide (the "Exchange Agent Agreement") with The Bank of New
York or another exchange agent jointly selected by Commodore and
Lanxide (the "Exchange Agent"), authorizing such Exchange Agent
to act as exchange agent hereunder.
(b) Exchange Fund. As soon as reasonably practicable
after the Effective Time, Commodore shall deposit with the
Exchange Agent, in trust for the holders of certificates which
immediately prior to the Effective Time represented Lanxide
Capital Stock converted in the Merger ("Former Certificates"),
certificates ("Commodore Certificates") representing the shares
of Commodore Capital Stock issuable pursuant to Section 3.1 and
funds necessary to pay for any dividends or distributions with
respect thereto and any cash necessary to pay for fractional
shares (collectively, the "Exchange Fund"). The Exchange Fund
shall not be used for any other purpose.
(c) Letter of Transmittal. As soon as reasonably
practicable after the Effective Time, the Exchange Agent shall
mail to each holder of record of a Former Certificate(s): (i) a
notice of the effectiveness of the Merger, and (ii) a letter of
transmittal (which shall state that delivery shall be effected,
and risk of loss and title to the Former Certificates shall pass,
only upon delivery of the Former Certificates to the Exchange
Agent) with instructions for use in effecting the surrender and
exchange of the Former Certificates. Such notice, letter of
transmittal and instructions shall contain such provisions and be
in such form as Commodore and Lanxide may jointly specify.
(d) Exchange Procedure. Promptly following the
surrender, in accordance with such instructions, of a Former
Certificate to the Exchange Agent (or such other agent or agents
as may be appointed by the Exchange Agent or Commodore pursuant
to the Exchange Agent Agreement), together with such letter of
transmittal (duly executed) and any other documents required by
such instructions or letter of transmittal, the Exchange Agent
shall, subject to Section 3.7(e), cause to be distributed to the
person in whose name such Former Certificate shall have been
issued a Commodore Certificate registered in the name of such
person representing the number of whole shares of the applicable
Commodore Capital Stock, as the case may be, into which the
shares previously represented by the surrendered Former
Certificate shall have been converted at the Effective Time
pursuant to Section 3.1 and payment (which shall be made by
check) of any cash payable in lieu of a fractional share pursuant
to Section 3.7(g). Each Former Certificate so surrendered shall
forthwith be canceled.
(e) Unregistered Transfers of Commodore or Lanxide
Stock. In the event of a transfer of ownership of Lanxide
Capital Stock which is not registered in the transfer records of
Lanxide, a Commodore Certificate representing the proper number
of whole shares of the applicable Commodore Capital Stock may be
issued (and cash in lieu of a fractional share may be paid) to
the transferee if the Former Certificate representing such
Lanxide Capital Stock surrendered to the Exchange Agent in
accordance with Section 3.7(h) is properly endorsed for transfer
or is accompanied by appropriate and properly endorsed stock
powers (in each case with appropriate signature guarantees) and
is otherwise in proper form to effect such transfer, if the
person requesting such transfer pays to the Exchange Agent any
transfer or other taxes payable by reason of such transfer or
establishes to the satisfaction of the Exchange Agent that such
taxes have been paid or are not required to be paid.
(f) Lost, Stolen or Destroyed Certificates. In the
event any Former Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the
person claiming such Former Certificate to be lost, stolen or
destroyed satisfactory to Commodore and complying with any other
reasonable requirements imposed by Commodore, Commodore will
cause to be delivered to such person in respect of such lost,
stolen or destroyed Former Certificate the applicable shares of
Commodore Capital Stock and other property deliverable in respect
thereof as determined in accordance with this Article Three.
Commodore may, in its discretion, require the owner of such lost,
stolen or destroyed Former Certificate to give Commodore a bond
in such sum as it may direct as indemnity against any claim that
may be made against Commodore or the Surviving Corporation with
respect to the Former Certificate alleged to have been lost,
stolen or destroyed.
(g) No Fractional Shares of Commodore Capital Stock.
No certificates or scrip representing fractional shares of
Commodore Capital Stock shall be issued upon the surrender for
exchange of Former Certificates, no stock split or dividend with
respect to shares of Commodore Capital Stock shall relate to any
fractional share interest, and no such fractional share interest
will entitle the owner thereof to vote as, or to any other rights
of, a stockholder of Commodore. In lieu of such fractional
shares, any holder of Lanxide Capital Stock who would otherwise
be entitled to a fractional share of Commodore Capital Stock
(after taking into account all shares of Lanxide Capital Stock
owned by such holder), will, upon surrender of his Former
Certificate(s) to the Exchange Agent in accordance with Section
3.7(h), be entitled to receive an amount of cash in the amount
equal to such holders pro rata interest in the net amount
received upon the Exchange Agent's sale in the open market
reasonably promptly after the Effective Time, on behalf of such
holders, of the aggregate shares of the Commodore Common Stock
represented by all such fractional shares after subtracting all
costs of such sale.
(h) No Dividends Before Surrender of Certificates. No
dividends or other distributions declared or made with respect to
Commodore Capital Stock shall be paid to the holder of any
unsurrendered Former Certificate with respect to the shares of
Commodore Capital Stock represented thereby, until the holder of
record of such Former Certificate shall surrender such Former
Certificate as provided herein. Subject to the effect of
applicable laws, following surrender of any such Former
Certificate, there shall be paid to the record holder of the
certificates representing whole shares of the applicable
Commodore Capital Stock issued in exchange therefor, without
interest, (i) at the time of such surrender or as promptly as
practicable thereafter, the amount of dividends or other
distributions, if any, theretofore payable by Commodore with
respect to such whole shares of Commodore Capital Stock the
payment date for which was on or prior to such surrender, and
(ii) at the appropriate payment date, the amount of dividends or
other distributions, if any, with a record date prior to such
surrender and with a payment date subsequent to such surrender
payable with respect to such whole shares of Commodore Capital
Stock. In no event shall the person entitled to receive such
dividends or other distributions be entitled to receive interest
on such dividend or other distribution.
(i) Transfer Taxes; Withholding. If any Commodore
Certificate or cash in lieu of any fractional shares is to be
paid to or issued in a name other than that in which the Former
Certificate surrendered in exchange therefor is registered, it
shall be a condition of such exchange that the Former Certificate
so surrendered shall be properly endorsed and otherwise in proper
form for transfer and that the Person requesting such exchange
shall pay to the Exchange Agent any transfer or other taxes
required by reason of the issuance of such Commodore Certificate
and the distribution of such cash payment in a name other than
that of the registered holder of the Former Certificate so
surrendered, or shall establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not applicable.
Commodore or the Exchange Agent shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to
this Agreement to any holder of Commodore Capital Stock or
Lanxide Capital Stock such amounts as Commodore or the Exchange
Agent are required to deduct and withhold under the Internal
Revenue Code, or any provision of state, local or foreign tax
law, with respect to the making of such payment. To the extent
that amounts are so withheld by Commodore or the Exchange Agent,
such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of Commodore Capital
Stock or Lanxide Capital Stock in respect of whom such deduction
and withholding was made by Commodore or the Exchange Agent.
(j) No Further Ownership Rights in Lanxide Capital
Stock. All shares of Commodore Capital Stock issued and all
cash in lieu of fractional shares paid upon the surrender for
exchange of shares of Lanxide Capital Stock in accordance with
the terms hereof shall be deemed to have been issued and paid in
full satisfaction of all rights pertaining to such shares of
Lanxide Capital Stock (provided, however, that after the
Effective Time Commodore shall, on behalf of Lanxide, pay as
provided in Section 3.7(h) any dividends or make any other
distributions (in Commodore Capital Stock in the case of stock
dividends) with a record date prior to the Effective Time which
may have been declared by Commodore or Lanxide on such shares of
Lanxide Capital Stock prior to the date hereof or which may be
declared after the date hereof in accordance with the terms of
this Agreement and which remain unpaid at the Effective Time).
Subject to this Section 3.7(j), if, after the Effective Time,
former Certificates are presented to Commodore or Surviving
Corporation, as applicable, for any reason, they shall be
canceled and exchanged as provided in this Article Three.
(k) Abandoned Property Laws. Payment or delivery of
any shares of Commodore Capital Stock, any cash in lieu of
fractional shares of Commodore Capital Stock and any dividends or
distributions with respect to Commodore Capital Stock shall be
subject to applicable abandoned property, escheat and similar
laws, and neither Commodore nor the Surviving Corporation shall
be liable to any holder of shares of Commodore Capital Stock or
Lanxide Capital Stock for any such shares, for any dividends or
distributions with respect thereto or for any cash in lieu of
fractional shares which may be delivered to any public official
pursuant to any abandoned property, escheat or similar law.
3.8 Lanxide Stock Options, Lanxide Warrants, Deferred
Compensation Plans and Benefit Plans.
(a) Lanxide Stock Options. At the Effective Time of
the Merger, each outstanding Lanxide Stock Option issued by
Lanxide pursuant to any Lanxide Stock Option Plan in effect as at
the Effective Time of the Merger, or otherwise issued by any of
the Lanxide Companies, whether vested or unvested, shall be
assumed by Commodore. Thereafter, each Lanxide Stock Option
shall be deemed to constitute an option to purchase, on the same
terms and conditions as were applicable under such Lanxide Stock
Option, that number of shares of Commodore Stock which shall be
equal to the product derived by multiplying (i) the number of
shares of Lanxide Common Stock that were subject to such Lanxide
Stock Option immediately prior to the Effective Time, by (ii) the
Common Stock Exchange Ratio, at an exercise price per share of
Commodore Common Stock which shall be equal to the product
derived by multiplying (x) the exercise price per share of
Lanxide Common Stock subject to such Lanxide Stock Option
immediately prior to the Effective Time, by (y) the Common Stock
Exchange Ratio Reciprocal, in each case, in accordance with and
subject to the applicable anti-dilution provisions of each of the
Lanxide Stock Options; provided, however, that all Lanxide Stock
Options held by senior officers of Lanxide and by Messrs.
Jonathan Hinton and R. Michael Rice shall become fully vested at
the Effective Time and shall not expire as a result of such
individual's failure to remain an employee or consultant of
Lanxide. The assumption hereinabove provided for shall be
accomplished in a manner that shall, in all respects, comply with
the requirements of the Internal Revenue Code with respect to
each Lanxide Stock Option that is an incentive stock option (as
defined in Section 422(b) of the Internal Revenue Code) including
any requirement that the assumption of such Lanxide Stock Option
by Commodore shall not give to the holder any additional benefits
that he did not have prior to such assumption, and Commodore may
make any changes that it deems necessary or desirable with
respect to such assumption in order to satisfy the requirements
of the Internal Revenue Code.
(b) Lanxide Warrants. At the Effective Time of the
Merger, each outstanding Lanxide Warrant issued by Lanxide shall
be assumed by Commodore. Thereafter, each Lanxide Warrant shall
be deemed to entitle the holder thereof to purchase, on the same
terms and conditions as were applicable under such Lanxide
Warrant, that number of validly issued, fully paid and
nonassessable shares of Commodore Common Stock which shall be
equal to the product derived by multiplying (i) the number of
full shares of Lanxide Common Stock purchasable upon exercise of
each of the Lanxide Warrants outstanding immediately prior to the
Effective Time, by (ii) the Common Stock Exchange Ratio, at an
exercise price per share of Commodore Common Stock which shall be
equal to the product derived by multiplying (x) the applicable
per share exercise price(s) set forth in each of the Lanxide
Warrants outstanding immediately prior to the Effective Time of
the Merger, by (y) the Common Stock Exchange Ratio Reciprocal; in
each case in accordance with and subject to the applicable anti-
dilution provisions of each of the Lanxide Warrants; provided,
however, that Lanxide Warrants held by Senior Executive Officers
and by Messrs. Hinton and Rice shall become fully vested at the
Effective Time and shall not expire as a result of the failure of
such individual to remain an employee of or consultant to
Lanxide.
(c) Lanxide Deferred Compensation Plans. At the
Effective Time of the Merger, the obligation of Lanxide to issue
each share of Lanxide Common Stock issuable by Lanxide pursuant
to any Lanxide Deferred Compensation Plan shall be assumed by
Commodore. Thereafter, each right to purchase each share of
Lanxide Common Stock issuable under any Lanxide Deferred
Compensation Plan shall be deemed to entitle the holder thereof
to purchase, on the same terms and conditions as were applicable
under such Lanxide Deferred Compensation Plan, that number of
validly issued, fully paid and nonassessable shares of Commodore
Common Stock which shall be equal to the product derived by
multiplying (i) the number of full shares of Lanxide Common Stock
purchasable under such Lanxide Deferred Compensation Plan
immediately prior to the Effective Time, by (ii) the Common Stock
Exchange Ratio, at an exercise price per share of Commodore
Common Stock which shall be equal to the product derived by
multiplying (x) the applicable per share exercise price(s) set
forth in the applicable Lanxide Deferred Compensation Plan in
effect immediately prior to the Effective Time of the Merger, by
(y) the Common Stock Exchange Ratio Reciprocal.
(d) Intentionally left blank.
(e) Actions by Commodore. Commodore shall take all
corporate action necessary to reserve for issuance a sufficient
number of shares of Commodore Common Stock for delivery upon
exercise of Commodore Stock Options, Lanxide Stock Options,
Lanxide Warrants and Lanxide Deferred Compensation Plans assumed
by it pursuant to this Section 3.9 and the Assumption Agreements.
As soon as practicable after the Effective Time, Commodore shall
file a registration statement on Form S-1 or Form S-8 (which may
be filed as a post-effective amendment to the Merger Registration
Statement), or any successor forms, or another appropriate form
with respect to the issuance of shares of Commodore Common Stock
upon exercise of such Commodore Stock Options, Lanxide Stock
Options, Lanxide Warrants and Lanxide Deferred Compensation
Plans, and shall use its best efforts to maintain the
effectiveness of such registration statement or registration
statements for so long as such Commodore Stock Options, Lanxide
Stock Options, Lanxide Warrants and Lanxide Deferred Compensation
Plans remain outstanding.
(f) No Effect on Other Employee Benefit Plans. The
Merger shall have no effect on the terms and conditions of any
other employee benefit plans and arrangements of any of the
Lanxide Companies, all of which shall remain in full force and
effect (and subject to amendment and termination) following the
Effective Time of the Merger in accordance with their respective
terms.
3.9 Adjustment of the Exchange Ratio.
In the event of any stock split, combination,
reclassification or stock dividend with respect to Commodore
Common Stock, any change or conversion of Commodore Common Stock
into other securities; or if a record date with respect to any of
the foregoing should occur, prior to the Effective Time,
appropriate and proportionate adjustments shall be made to the
Common Stock Exchange Ratio and the Preferred Stock Exchange
Ratio, and thereafter all references in this Agreement to the
Common Stock Exchange Ratio and the Preferred Stock Exchange
Ratio shall be deemed to be to the Common Stock Exchange Ratio
and the Preferred Stock Exchange Ratio as so adjusted.
ARTICLE FOUR
STRUCTURE OF COMMODORE AND RELATED MATTERS
4.1 Commodore Capital Stock.
The terms, designations, preferences, limitations,
privileges, and relative rights of each of Commodore Series AA
Preferred Stock, Commodore Series B Preferred Stock, Commodore
Series C Preferred Stock and Commodore Series D Preferred Stock
shall be as set forth in the Restated Commodore Charter attached
hereto as Exhibit 1.
4.2 Board of Directors.
(a) From and after the Effective Time, Commodore shall
take all necessary action so that the Board of Directors of
Commodore and of the Surviving Corporation shall consist of the
following seven (7) persons: Bentley J. Blum ("Blum"), Paul E.
Hannesson ("Hannesson"), Marc S. Newkirk ("Newkirk"), J.
Frederick Van Vranken, Jr. ("Van Vranken"), Kenneth L. Adelman
("Adelman"), Herbert A. Cohen ("Cohen") and David L. Mitchell
("Mitchell"). Such persons shall continue to serve as members of
the Board of Directors of Commodore and Lanxide until the annual
meeting of stockholders of Commodore immediately following the
Effective Time of the Merger, or until their successors shall be
duly elected or appointed and qualify in the manner provided in
their respective By-laws, or as otherwise provided by applicable
law.
(b) The respective Boards of Directors of the
Commodore Subsidiaries and the Lanxide Subsidiaries shall be such
persons as the Board of Directors of Commodore and the Surviving
Corporation shall respectively determine, with such persons to
hold such positions until their successors shall have been duly
elected or appointed and qualify in the manner provided in the
By-laws of the respective Subsidiaries, or as otherwise provided
by applicable law; provided, that the Board of Directors of CAT
shall consist of Messrs. Blum, Hannesson, Adelman, Cohen and
Mitchell, until the next annual meeting of stockholders of CAT or
until the successors to such persons shall have been duly elected
or appointed and qualify in the manner provided in the By-laws of
CAT, or as otherwise provided by applicable law.
(c) If prior to the Effective Time any of the
individuals named in Section 4.2(a) hereof resigns, retires, or
otherwise ceases to serve as a director of the Surviving
Corporation or Commodore, as the case may be, or otherwise
becomes unable or unwilling to serve as a director of Commodore
or the Surviving Corporation, his replacement shall be chosen by
a majority of the remaining members on the Board of Directors of
Commodore.
(d) Unless otherwise determined by the Board of
Directors of Commodore, following the Effective Time, meetings of
the Board of Directors of Commodore shall be held in New York and
Delaware on a rotating basis designed to cause approximately one-
half of such meetings to be held in New York and one-half of such
meetings to be held in Delaware during each year.
4.3 Management. The principal executive officers of each
of Commodore and the Surviving Corporation upon the Effective
Time of the Merger shall be those persons set forth on Exhibit 5
annexed hereto.
4.4 Headquarters of Commodore and Subsidiaries. Following
the Effective Time, unless otherwise determined by the Board of
Directors of Commodore, the principal corporate offices of
Commodore shall be located in New York, New York, the principal
corporate offices of the Surviving Corporation and the Lanxide
Subsidiaries shall be located in Newark, Delaware, the principal
corporate offices of CAT shall be located in Houston, Texas, the
principal corporate offices of CST shall be located in Atlanta,
Georgia, and the principal corporate offices of CRT shall be
located in New York, New York.
4.5 Indemnification; Directors and Officers' Insurance.
(a) For six years after the Effective Time, Commodore
shall, and shall cause the Surviving Corporation to, indemnify,
defend and hold harmless any person who is now, or has been at
any time prior to the date hereof, or who becomes prior to the
Effective Time, a director, officer, employee or agent (an
"Indemnified Person") of any of the Commodore Companies or the
Lanxide Companies against all losses, claims, damages,
liabilities, costs and expenses (including attorneys' fees and
expenses), judgments, fines, losses and amounts paid in
settlement in connection with any actual or threatened action,
suit, claim, proceeding or investigation (each, a "Claim") to the
extent that any such Claim is based on, or arises out of: (i) the
fact that such Indemnified Person is or was a director, officer,
employee or agent of one or more of the Commodore Companies or
the Lanxide Companies or is or was serving at the request of one
or more of the Commodore Companies or the Lanxide Companies as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise; or (ii)
this Agreement or any of the transactions contemplated hereby, in
each case to the extent that any such Claim pertains to any
matter or fact arising, existing or occurring prior to or at the
Effective Time, regardless of whether such Claim is asserted or
claimed prior to, at or after the Effective Time, to the full
extent permitted under the DGCL, the certificates of
incorporation or by-laws of Commodore or the Surviving
Corporation or any indemnification agreement in effect at the
date hereof or as of the Effective Time, including provisions
relating to advancement of expenses incurred in the defense of
any such Claim; provided, however, that neither Commodore nor the
Surviving Corporation shall be required to indemnify any
Indemnified Person in connection with any proceeding (or portion
thereof) involving any Claim initiated by such Indemnified Person
unless the initiation of such proceeding (or portion thereof) was
authorized by the Board of Directors of Commodore or the
Surviving Corporation, or unless such proceeding is brought to
enforce rights under this Section 4.5. Without limiting the
generality of the preceding sentence, in the event any
Indemnified Person becomes involved in any Claim, after the
Effective Time, Commodore shall, and/or shall cause the Surviving
Corporation to, periodically advance to such Indemnified Person
its legal and other expenses (including the cost of any
investigation and preparation incurred in connection therewith),
subject to the providing by such Indemnified Person of an
undertaking to reimburse all amounts so advanced in the event of
a final non-appealable determination by a court of competent
jurisdiction that such Indemnified Person is not entitled
thereto.
(b) Commodore and Lanxide agree that all rights to
indemnification or liabilities, and all limitations with respect
thereto, existing in favor of any Indemnified Person, as provided
in the certificates of incorporation or by-laws of any of the
Commodore Companies or Lanxide Companies and any indemnification
agreement in effect at the date hereof or as of the Effective
Time, shall survive the Merger and shall continue in full force
and effect, without any amendment thereto, for a period of six
years from the Effective Time to the extent such rights,
liabilities and limitations are consistent with the DGCL;
provided, however, that in the event any Claim is asserted or
made within such six-year period, all such rights, liabilities
and limitations in respect of any such Claim shall continue until
disposition thereof; provided, further, that any determination
required to be made with respect to whether an Indemnified
Person's conduct complies with the standards set forth under the
DGCL, the certificate of incorporation or by-laws of any of the
Commodore Companies or Lanxide Companies or any such agreement,
as the case may be, shall be made by independent legal counsel
selected by such Indemnified Person and reasonably acceptable to
Commodore; and, provided, further, that nothing in this Section
4.5 shall impair any rights or obligations of any current or
former director or officer of any of the Commodore Companies or
Lanxide Companies.
(c) Commodore or the Surviving Corporation shall
maintain Lanxide's and Commodore's existing directors' and
officers' liability insurance policy ("D&O Insurance") for a
period of not less than six years after the Effective Date;
provided, however, that Commodore may substitute therefor
policies of substantially similar coverage and amounts containing
terms no less advantageous to such former directors or officers;
provided, further, that if the existing D&O Insurance expires or
is canceled during such period, Commodore and the Surviving
Corporation shall use their best efforts to obtain substantially
similar D&O Insurance; and, provided, further, that neither
Commodore nor the Surviving Corporation shall be required to pay
an annual premium for D&O Insurance in excess of 150% of the last
annual premium paid prior to the Effective Time, but in such case
shall purchase as much coverage as possible for such amount.
(d) The provisions of this Section 4.5 are intended to
be for the benefit of, and shall be enforceable by, each
Indemnified Person, his or her heirs and his or her personal
representatives.
4.6 Commodore Stockholder Meeting. Subject to the
fiduciary duties of the Board of Directors of Commodore (the
"Commodore Board") under applicable law (as determined by the
Commodore Board in good faith after consultation with and based
upon advice of counsel), the Commodore Board will take all action
necessary in accordance with applicable law and Commodore's
Certificate of Incorporation and By-laws to duly call and hold,
as promptly as practicable on a date to be mutually agreed upon
by Commodore and Lanxide, a meeting of Commodore's stockholders
(the "Commodore Stockholders Meeting") for the purpose of
considering and voting upon this Agreement, the Merger, the
Restated Commodore Charter and related transactions contemplated
hereby (collectively, the "Commodore Merger Proposal"). The
Commodore Board will, subject to its fiduciary duties under
applicable law (as determined by the Commodore Board in good
faith after consultation with and based upon advice of counsel),
recommend that Commodore's stockholders vote in favor of approval
and adoption of the Commodore Merger Proposal, and Commodore will
use its best efforts to solicit from its stockholders proxies in
favor of approval and adoption of the Commodore Merger Proposal.
Subject to their fiduciary duties under applicable law (as
determined by the Commodore Board in good faith after
consultation with and based upon advice of counsel), the
Commodore Board will not withdraw its recommendation that the
stockholders of Commodore vote in favor of the approval and
adoption of the Commodore Merger Proposal (except as contemplated
by Sections 9.2(f) or 10.1(e) of this Agreement).
4.7 Lanxide Stockholder Meeting. Subject to the fiduciary
duties of the Board of Directors of Lanxide (the "Lanxide Board")
under applicable law (as determined by the Lanxide Board in good
faith after consultation with and based upon advice of counsel),
the Lanxide Board will take all action necessary in accordance
with applicable law and Lanxide's Certificate of Incorporation
and By-laws to duly call and hold, as promptly as practicable on
a date to be mutually agreed upon by Lanxide and Commodore, a
meeting of Lanxide's stockholders (the "Lanxide Stockholders'
Meeting") for the purpose of considering and voting upon this
Agreement and the Merger and related transactions contemplated
hereby (collectively, the "Lanxide Merger Proposal"). The
Lanxide Board will, subject to their fiduciary duties under
applicable law (as determined by the Lanxide Board in good faith
after consultation with and based upon advice of counsel),
recommend that Lanxide's stockholders vote in favor of approval
and adoption of the Lanxide Merger Proposal, and Lanxide will use
its best efforts to solicit from its stockholders proxies in
favor of approval and adoption of the Lanxide Merger Proposal.
Subject to their fiduciary duties under applicable law (as
determined by the Lanxide Board in good faith after consultation
with and based upon advise of counsel), the Lanxide Board will
not withdraw its recommendation that the stockholders of Lanxide
vote in favor of the approval and adoption of the Lanxide Merger
Proposal (except as contemplated by Sections 9.3(f) or 10.1(e) of
this Agreement).
4.8 Joint Proxy Statement and Registration Statement.
Commodore and Lanxide shall promptly prepare and file with the
SEC the Merger Registration Statement containing therein the
preliminary Joint Proxy Statement as soon as reasonably
practicable, and shall use their respective best efforts to (i)
have the Merger Registration Statement declared effective and the
Joint Proxy Statement cleared as soon as practicable, (ii)
promptly respond to the comments of the SEC thereon and (iii)
cause Commodore to take any reasonable actions required to be
taken under applicable state securities or "blue sky" laws in
connection with the issuance of the securities of Commodore to be
covered by the Merger Registration Statement. As soon as
practicable after the SEC clears the Merger Registration
Statement and related Joint Proxy Statement (as the same may be
amended from time to time in response to comments received from
the SEC), Commodore will request acceleration of the effective
date of the Merger Registration Statement so that the same may be
declared effective by the SEC under the 1933 Act, and Commodore
and Lanxide shall each cause to be mailed to their respective
stockholders of record the definitive Joint Proxy Statement in
the form cleared for mailing to stockholders by the SEC. There
shall have been registered under the 1933 Act pursuant to the
Merger Registration Statement: (i) all shares of Commodore Common
Stock being issued to stockholders of Lanxide in the Merger in
exchange for outstanding shares of Lanxide Common Stock and
Lanxide Series A Preferred Stock, and (ii) all shares of
Commodore Common Stock potentially issuable upon (A) exercise of
Lanxide Warrants and Lanxide Stock Options, and (B) issuable
pursuant to the Lanxide Deferred Compensation Plans, as
applicable. Each of Commodore and Lanxide shall notify the other
promptly of the receipt of any comments of the SEC and of any
request by the SEC for amendments or supplements to the Joint
Proxy Statement or the Merger Registration Statement or for
additional information and shall supply one another with copies
of all correspondence with the SEC with respect to any of the
foregoing filings. If at any time prior to the Commodore
Stockholders Meeting or the Lanxide Stockholders' Meeting any
event should occur relating to Commodore or any of its
Subsidiaries or any of their respective officers, directors or
affiliates which should be described in an amendment of, or
supplement to, the Joint Proxy Statement or the Merger
Registration Statement, Commodore shall promptly inform Lanxide.
If at any time prior to the Lanxide Stockholders' Meeting or the
Commodore Stockholders Meeting any event should occur relating to
Lanxide or any of its Subsidiaries or any of their respective
officers, directors or affiliates which should be described in an
amendment of, or supplement to, the Joint Proxy Statement or the
Merger Registration Statement, Lanxide shall promptly inform
Commodore. Whenever any event occurs which should be described in
an amendment of, or a supplement to, the Joint Proxy Statement or
the Merger Registration Statement, Commodore and Lanxide shall,
upon learning of such event, cooperate with each other to
promptly prepare, file and clear with the SEC and (if required by
applicable law) mail such amendment or supplement to the
stockholders of Commodore and Lanxide.
4.9 Letters from Accountants. Commodore will use its best
efforts to cause to be delivered to Lanxide and Commodore a
"comfort letter" of Tanner + Co., Commodore's independent
auditors, dated a date within two business days before the date
on which the Merger Registration Statement becomes effective and
addressed to Lanxide and Commodore, in form reasonably
satisfactory to Lanxide and Commodore in connection with the
procedures undertaken by them with respect to the financial
statements and other financial information of Commodore and its
Subsidiaries contained in the Merger Registration Statement.
Lanxide will use its best efforts to cause to be delivered to
Commodore a "comfort letter" of Price Waterhouse, LLP, Lanxide's
independent auditors, dated a date within two business days
before the date on which the Merger Registration Statement
becomes effective and addressed to Commodore, in form reasonably
satisfactory to Commodore and in connection with the procedures
undertaken by them with respect to the financial statements and
other financial information of Lanxide and its Subsidiaries
contained in the Merger Registration Statement.
4.10 State Takeover Statutes. Lanxide will, upon the
request of Commodore, take all reasonable steps to (i) exempt the
Merger from the requirements of any applicable state takeover law
and (ii) assist in any challenge by Commodore to the validity or
applicability to the Merger of any state takeover law.
4.11 Listing on Nasdaq. Commodore shall use its reasonable
best efforts to cause: (a) the shares of Commodore Common Stock
issued and outstanding immediately prior to the Effective Time;
(b) the shares of Commodore Common Stock issued in connection
with the Commodore Public Offering Registration Statement and (c)
the shares of Commodore Common Stock issued to Lanxide
stockholders at the Effective Time of the Merger to be included
for listing on Nasdaq on the Effective Date of the Merger or as
soon thereafter as is practicable; and shall further use its
reasonable best efforts to cause all additional Commodore Common
Stock Equivalents potentially issuable following the Effective
Time of the Merger upon (i) exercise of Lanxide Warrants and
Lanxide Stock Options, and (ii) issuable pursuant to the Lanxide
Deferred Compensation Plans, to be included for listing on the
Nasdaq upon issuance thereof. If Commodore is unable to effect
such listing on the Nasdaq National Market, such shares of
Commodore Common Stock and Common Stock Equivalents may be listed
on the Nasdaq SmallCap Market.
4.12 Certificate of Incorporation and By-laws of Commodore.
At the Effective Time of the Merger (i) the Certificate of
Incorporation of Commodore in effect immediately prior to the
Effective Time shall be amended and restated pursuant to the
Restated Commodore Charter in the form and content set forth as
Exhibit 1; and (ii) the By-laws of Commodore in effect
immediately prior to the Effective Time shall read in their
entirety as set forth in Exhibit 4 until thereafter amended as in
accordance with applicable law.
ARTICLE FIVE
REPRESENTATIONS AND WARRANTIES OF LANXIDE
Lanxide hereby represents and warrants to Commodore as
follows:
5.1 Organization, Standing, and Authority. Lanxide is a
corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware, and is duly
qualified to do business, and in good standing in each
jurisdiction where its ownership or leasing of property or the
conduct of its business requires it to be so qualified, other
than those in which the failure to be duly qualified would not
reasonably be expected to have a Material Adverse Effect on
Lanxide, and has corporate power and authority to carry on its
business as now conducted and to own, lease, and operate its
assets, properties, and business, and to execute and deliver this
Agreement and perform the respective terms of this Agreement.
Lanxide has in effect all federal, state, local, and foreign
governmental authorizations necessary for it to own or lease its
properties and assets and to carry on its business as is now
being conducted, other than those the absence of which, either
individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on Lanxide.
5.2 Capital Stock.
(a) As of the date hereof, the authorized capital
stock of Lanxide consists of (i) 25,000,000 shares of Lanxide
Common Stock, of which as of the date hereof, 1,325,592 shares
are issued and outstanding, and (ii) 15,000,000 shares of Lanxide
Preferred Stock, $.01 par value, of which 1,109,161 shares of
Lanxide Series A Preferred Stock and 26,100 shares of Lanxide
Series E Preferred Stock are issued and outstanding. All of the
issued and outstanding shares of Lanxide Capital Stock are
validly issued, fully paid and nonassessable. None of the
outstanding shares of Lanxide Capital Stock has been issued in
violation of any preemptive rights of the current or past
stockholders of Lanxide. As of the date hereof, Lanxide has
reserved (i) 412,549 shares of Lanxide Common Stock for issuance
upon conversion of the outstanding shares of Lanxide Series A
Preferred Stock, (ii) an aggregate of 140,263 shares of Lanxide
Common Stock issuable upon exercise of outstanding Lanxide
Warrants, (iii) an aggregate of 331,281 shares of Lanxide Common
Stock issuable upon exercise of outstanding options for Lanxide
Common Stock granted by any of the Lanxide Companies, including
those set forth on Section 5.2(a) of the Lanxide Disclosure
Schedule, pursuant to which options covering not more than
307,048 shares of Lanxide Common Stock were outstanding as of the
date hereof, (iv) a maximum aggregate of 59,481 shares of Lanxide
Common Stock issuable pursuant to the Lanxide Deferred
Compensation Plans and (v) an aggregate of 55,583 shares of
Lanxide Common Stock issuable upon exercise of the Lanxide Unit
Warrants.
(b) Except as set forth in Section 5.2(a) of this
Agreement, on Section 5.2(a) of the Lanxide Disclosure Schedule
or Section 5.2(b) of Lanxide Disclose Schedule, there are no
shares of capital stock or other equity securities of Lanxide
outstanding and no outstanding options, warrants, scrip, rights
to subscribe to, calls, or commitments of any character
whatsoever relating to, or securities or rights convertible into
or exchangeable for, shares of the capital stock of Lanxide or
contracts, commitments, understandings, or arrangements by which
Lanxide is or may be bound to issue additional shares of its
capital stock or options, warrants, or rights to purchase or
acquire any additional shares of its capital stock. There are no
contracts, commitments, understandings, or arrangements by which
Lanxide or any of its Subsidiaries is or may be bound to transfer
any shares of the capital stock of any Lanxide Subsidiary, except
for a transfer to Lanxide or any wholly-owned Lanxide Subsidiary,
and, except as disclosed on the Lanxide Disclosure Schedule,
there are no agreements, understandings, or commitments relating
to the rights of Lanxide to vote or to dispose of such shares.
5.3 Lanxide Subsidiaries. Section 5.3 of the Lanxide
Disclosure Schedule lists all of the Lanxide Subsidiaries in
existence as of the date of this Agreement. Except as set forth
on Section 5.3(a) of the Lanxide Disclosure Schedule, no equity
securities of any of the Lanxide Subsidiaries are or may become
required to be issued (other than to Lanxide) by reason of any
options, warrants, scrip, rights to subscribe to, calls, or
commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares
of the capital stock of any Lanxide Subsidiary, and there are no
contracts, commitments, understandings, or arrangements by which
any Lanxide Subsidiary is bound to issue (other than to Lanxide)
additional shares of its capital stock or options, warrants, or
rights to purchase or acquire any additional shares of its
capital stock. Except as provided in the Lanxide Disclosure
Schedule, all of the shares of capital stock of each Lanxide
Subsidiary held by Lanxide or another wholly-owned Lanxide
Subsidiary are fully paid and nonassessable and are owned by
Lanxide or any Lanxide Subsidiary free and clear of any claim,
lien, or encumbrance. Each Lanxide Subsidiary is duly organized,
validly existing, and in good standing under the laws of the
jurisdiction in which it is incorporated or organized; has the
corporate power and authority necessary for it to own or lease
its properties and assets and to carry on its business as it is
now being conducted; and has all federal, state, local, and
foreign governmental authorization necessary for it to own or
lease its properties and assets and to carry on its business as
it is now being conducted, except for such governmental
authorizations the absence of which, either individually or in
the aggregate, would not reasonably be expected to have a
Material Adverse Effect on Lanxide.
5.4 Authority.
(a) Lanxide has all requisite power and authority to
execute and deliver this Agreement and, subject to the approval
of Lanxide's stockholders with respect to the Merger and the
related transactions, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated herein, including
the Merger, have been duly and validly authorized by all
necessary corporate action in respect thereof on the part of
Lanxide, subject, with respect to this Agreement, to the approval
of the stockholders of Lanxide. This Agreement, subject to any
requisite stockholder approval hereof, has been duly executed and
delivered by Lanxide and constitutes a legal, valid, and binding
obligation of Lanxide, enforceable against Lanxide in accordance
with its terms (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or
similar laws, now or hereafter in effect, affecting the
enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court
before which any proceeding may be brought). The preparation of
the joint Proxy Statement to be filed with the SEC has been duly
authorized by the Board of Directors of Lanxide.
(b) Prior to the execution and delivery of this
Agreement, the Board of Directors of Lanxide (at a meeting duly
called and held) has (i) approved this Agreement and the Merger
and the other transactions contemplated hereby, (ii) determined
that the transactions contemplated hereby are fair to and in the
best interests of the holders of Lanxide capital stock and (iii)
except as may be required to comply with its fiduciary duties
under applicable law as advised by counsel, determined to
recommend this Agreement, the Merger and the other transactions
contemplated hereby to Lanxide's stockholders for approval and
adoption at the Lanxide Stockholders' Meeting. The affirmative
vote of the holders of a majority of the outstanding shares of
Lanxide Common Stock are the only votes of the holders of any
class or series of Lanxide's capital stock necessary to approve
the Merger.
5.5 Consents and Approvals; No Violations. Except as set
forth on Section 5.5 of the Lanxide Disclosure Schedule, the
execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby and
compliance with the provisions hereof will not, 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 the loss of
a material benefit under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the
properties or assets of Lanxide or any of its Subsidiaries under:
(i) any provision of the Certificate of Incorporation or By-laws
of Lanxide or the comparable charter or organization documents or
by-laws of any of its Subsidiaries, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, lease, agreement,
instrument, permit, concession, franchise or license applicable
to Lanxide or any of its Subsidiaries or (iii) any judgment,
order, decree, statute, law, ordinance, rule or regulation
applicable to Lanxide or any of its Subsidiaries or any of their
respective properties or assets, other than, in the case of
clauses (ii) and (iii), any such violations, defaults, rights,
liens, security interests, charges or encumbrances that,
individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on Lanxide and would
not materially impair the ability of Lanxide to perform its
obligations hereunder or prevent the consummation of any of the
transactions contemplated hereby. No filing or registration with,
or authorization, consent or approval of, any domestic (federal
and state), foreign (including provincial) or supranational
court, commission, governmental body, regulatory agency,
authority or tribunal (a "Governmental Entity") is required by or
with respect to Lanxide or any of its Subsidiaries in connection
with the execution and delivery of this Agreement by Lanxide or
is necessary for the consummation of the Merger and the other
transactions contemplated by this Agreement, except: (i) in
connection, or in compliance, with the provisions of the
Securities Laws and any state securities or "blue sky" laws; (ii)
for the filing of the Delaware Certificate of Merger with the
Secretary of State of the State of Delaware and appropriate
documents with the relevant authorities of other states in which
Lanxide or any of its Subsidiaries is qualified to do business;
and (iii) for such other consents, orders, authorizations,
registrations, declarations and filings the failure of which to
obtain or make would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on
Lanxide and would not materially impair the ability of Lanxide to
perform its obligations hereunder or prevent the consummation of
any of the transactions contemplated hereby.
5.6 [INTENTIONALLY OMITTED]
5.7 Tax Matters.
(a) All federal, state, local, and foreign tax returns
required to be filed by or on behalf of any of the Lanxide
Companies have been timely filed, or requests for extensions have
been timely filed and granted and have not expired, for periods
ending on or before September 30, 1995 and all returns filed are
complete and accurate to the best information and belief of
Lanxide, except to the extent that any failure to be correct and
complete would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on Lanxide. All
taxes shown on filed returns have been timely paid and Lanxide
and each of its Subsidiaries have complied with all rules and
regulations relating to the withholding of such taxes, except to
the extent that any failure to comply with such rules and
regulations would not, individually or in the aggregate,
reasonably be expected to have Material Adverse Effect on
Lanxide. As of the date of this Agreement, there is no audit,
examination, deficiency, or refund litigation or matter in
controversy with respect to any taxes that would reasonably be
expected to have a Material Adverse Effect on Lanxide, except as
reserved against in the Lanxide Financial Statements. All taxes,
interest, additions, and penalties due with respect to completed
and settled examinations or concluded litigation have been paid.
(b) None of the Lanxide Companies has executed an
extension or waiver of any statute of limitations on the
assessment or collection of any tax due that is currently in
effect.
(c) Adequate provision for any federal, state, local,
or foreign taxes due or to become due for any of the Lanxide
Companies for the period or periods through and including June
30, 1996, has been made and will be reflected on the June 30,
1996 unaudited Lanxide financial statements included in the
Lanxide Financial Statements.
(d) Deferred taxes of the Lanxide Companies have been
provided for in accordance with GAAP.
5.8 Lanxide Joint Ventures. The Lanxide Disclosure
Schedule annexed hereto lists all of the active and inactive
joint ventures among Lanxide or a Lanxide Subsidiary and any
third person, firm or corporation (individually, a "Lanxide Joint
Venture" and, collectively, "Lanxide Joint Ventures") as of the
date of this Agreement. The principal terms and conditions of
each Lanxide Joint Venture are disclosed on Section 5.8 of the
Lanxide Disclosure Schedule (which Schedule may make reference
to, or incorporate therein, the disclosures contained in specific
documents previously filed by Lanxide with the SEC).
5.9 Properties. Except as disclosed or reserved
against in the Lanxide Financial Statements, the Lanxide
Companies have good, valid and, in the case of real property,
marketable title to, or a valid leasehold interest in, free and
clear of all material liens, encumbrances, charges, defaults, or
equities of whatever character, all of the material properties
and assets, tangible or intangible, reflected in the Lanxide
Financial Statements as being owned by the Lanxide Companies as
of the date hereof, except for such title or interest the failure
of which would not have, individually or in the aggregate, a
Material Adverse Effect on Lanxide. To the best knowledge of
Lanxide's management, all buildings, and all fixtures, equipment,
and other property and assets held under leases or subleases by
any of the Lanxide Companies, are held under valid instruments
which are in full force and effect (except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or other laws affecting the enforcement of creditors'
rights generally and except that the availability of the
equitable remedy of specific performance or injunctive relief is
subject to the discretion of the court before which any
proceedings may be brought) and each of the Lanxide Companies has
complied with the terms of all such leases or subleases to which
it is a party and under which it is in occupancy, except for
failure to comply or be in full force and effect which would not
reasonably be expected to, individually or in the aggregate, have
a Material Adverse Effect on Lanxide. To the best knowledge of
Lanxide's management, the policies of fire, theft, liability, and
other insurance maintained with respect to the assets or
businesses of the Lanxide Companies provide adequate coverage
against loss, and the fidelity bonds in effect as to which any of
the Lanxide Companies is a named insured are believed to be
sufficient.
5.10 Compliance with Laws. To the best knowledge of
Lanxide's management, each of the Lanxide Companies:
(a) is in compliance with all laws, regulations,
reporting and licensing requirements, and orders applicable to
its business or employees conducting its business, the breach or
violation of which would reasonably be likely, individually or in
the aggregate, to have a Material Adverse Effect on Lanxide; and
(b) has received no notification or communication from
any agency or department of federal, state or local government or
the Regulatory Authorities or the staff thereof (i) asserting
that any of the Lanxide Companies is not in compliance with any
of the statutes, regulations, or ordinances which such
governmental authority or Regulatory Authority enforces, which as
a result of such noncompliance, would reasonably be likely,
individually or in the aggregate, to result in a Material Adverse
Effect on Lanxide, (ii) threatening to revoke any license,
franchise, permit, or governmental authorization which would
reasonably be likely, individually or in the aggregate, to have a
Material Adverse Effect on Lanxide; or (iii) requiring any of the
Lanxide Companies to enter into a cease and desist order,
agreement, or memorandum of understanding.
5.11 Employee Benefit Plans.
(a) Lanxide has made available for inspection to
Commodore prior to the execution of this Agreement, complete and
correct copies of all pension, retirement, profit-sharing,
deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus, or other incentive plan, any
other written employee program, arrangement, or agreement, any
medical, vision, dental, or other health plan, any life insurance
plan, or any other employee benefit plan or fringe benefit plan,
including, without limitation, any "employee benefit plan" as
that term is defined in Section 3(3) of ERISA, currently adopted,
maintained by, sponsored in whole or in part by, or contributed
to by any of the Lanxide Companies or affiliate thereof for the
benefit of their employees, retirees, dependents, spouses,
directors, independents, spouses, directors, independent
contractors, or other beneficiaries that are eligible to
participate, whether arrived at through collective bargaining or
otherwise (collectively, the "Lanxide Benefit Plans"), and has
delivered to Commodore prior to the execution of this Agreement a
summary of such Lanxide Benefit Plans. Any of the Lanxide
Benefit Plans which is an "employee pension benefit plan," as
that term is defined in Section 3(2) of ERISA, is referred to
herein as an "ERISA Plan." No Lanxide Benefit Plan is or has
been a multiemployer plan within the meaning of Section 3(37) of
ERISA.
(b) All Lanxide Benefit Plans are in compliance with
the applicable terms of ERISA and the Internal Revenue Code, and
any other applicable laws, rules, and regulations except in
instances in which such non-compliance would not reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect on Lanxide.
(c) No Lanxide ERISA Plan is a defined benefit pension
plan.
5.12 No Existing Violation; Default.
(a) Neither Lanxide nor any of its Subsidiaries is in
violation of (i) its charter or other organizational documents or
by-laws, (ii) any applicable law, ordinance or administrative or
governmental rule or regulation or (iii) any order, decree or
judgment of any governmental entity having jurisdiction over
Lanxide or any of its Subsidiaries, except for any violations
that, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on Lanxide. The
properties, assets and operations of Lanxide and its Subsidiaries
are in compliance in all material respects with all applicable
federal, state, local and foreign laws, rules and regulations,
orders, decrees, judgments, permits and licenses relating to
public and worker health and safety and the protection of the
environment (collectively, "Worker Safety Laws"). With respect
to such properties, assets and operations, including any
previously owned, leased or operated properties, assets or
operations, to the knowledge of Lanxide management, there are no
past or current events, conditions, circumstances, activities,
practices, incidents, actions or plans of Lanxide or any of its
Subsidiaries that may interfere with or prevent compliance or
continued compliance in all material respects with applicable
Worker Safety Laws, other than any such interference or
prevention as would not, individually or in the aggregate with
any such other interference or prevention, reasonably be expected
to have a Material Adverse Effect on Lanxide.
(b) There is no existing event of default or event
that, but for the giving of notice or lapse of time, or both,
would constitute an event of default under any loan or credit
agreement, note, bond, mortgage, indenture or guarantee of
indebtedness for borrowed money and there is no existing event of
default or event that, but for the giving of notice or lapse of
time, or both, would constitute an event of default under any
lease, other agreement or instrument to which Lanxide or any of
its Subsidiaries is a party or by which Lanxide or any such
Subsidiary or any of their respective properties, assets or
business[es] is bound which would, individually or in the
aggregate, reasonably be likely to have a Material Adverse Effect
on Lanxide.
5.13 Material Contracts. Except as reflected in the Lanxide
Financial Statements, none of the Lanxide Companies, nor any of
their respective assets, business, or operations is as of the
date of this Agreement a party to, or is bound or affected by, or
receives benefits under, any contract or agreement or amendment
thereto that in each case would be required to be filed as an
exhibit to a Form 10-K that has not been timely filed as an
exhibit in an SEC Document previously filed by Lanxide with the
SEC and identified to Commodore.
5.14 Material Contract Defaults. None of the Lanxide
Companies is in default, nor to the best knowledge of Lanxide is
any other party in material default, in any respect under any
contract, agreement, commitment, arrangement, lease, insurance
policy, or other instrument to which such Lanxide Company is a
party or by which its respective assets, business, or operations
may be bound or affected or under which it or its respective
assets, business, or operations receives benefits, except for
such breaches and defaults which would not be expected to have,
individually or in the aggregate, a Material Adverse Effect on
Lanxide, and there has not occurred any event that with the lapse
of time or the giving of notice, or both, would constitute such a
breach or default. Neither Lanxide nor any of its Subsidiaries
is a party to or bound by any non-competition agreement or any
other agreement or obligation which purports to limit in any
material respect the manner in which, or the localities in which,
Lanxide or any such Subsidiary is entitled to conduct all or any
material portion of the business of Lanxide and its Subsidiaries
taken as a whole.
5.15 Legal Proceedings. Except as set forth on Section 5.15
of the Lanxide Disclosure Schedule, there are no actions, suits,
or proceedings instituted or pending, or to the best knowledge of
Lanxide's management, threatened (or unasserted but considered
probable of assertion any of which if asserted would have at
least a reasonable probability of an unfavorable outcome) against
any of the Lanxide Companies, or against any property, asset,
interest, or right of any of them, that are reasonably expected
to have either individually or in the aggregate, a Material
Adverse Effect on Lanxide or that are reasonably expected to
materially threaten or materially impede the consummation of the
transactions contemplated by this Agreement. None of the Lanxide
Companies is a party to any agreement or instrument or is subject
to any charter or other corporate restriction or any judgment,
order, writ, injunction, decree, rule, regulation, code or
ordinance that threatens or might impede the consummation of the
transactions contemplated by this Agreement.
5.16 Absence of Certain Changes or Events. Since June 30,
1996, except as disclosed on the Lanxide Disclosure Schedule, in
the Lanxide Financial Statements or in an SEC Document identified
to Commodore, (i) neither Lanxide nor any of its Subsidiaries has
entered into any material oral or written agreement or other
transaction, that is not in the ordinary course of business or
that would reasonably be expected to result in a Material Adverse
Effect on Lanxide; (ii) neither Lanxide nor any of its
Subsidiaries has sustained any loss or interference with its
business or properties from fire, flood, windstorm, accident or
other calamity (whether or not covered by insurance) that has had
or that would reasonably be expected to have a Material Adverse
Effect on Lanxide; (iii) there has been no material change in the
indebtedness of Lanxide and its Subsidiaries, no change in the
outstanding shares of capital stock of Lanxide except for the
issuance of shares of Lanxide Common Stock pursuant to the
Lanxide Stock Options and Lanxide Warrants and no dividend or
distribution of any kind declared, paid or made by Lanxide on any
class of its capital stock except for dividends required to be
paid on currently outstanding shares of the Lanxide Preferred
Stock; and (iv) there has been no event causing a Material
Adverse Effect on Lanxide, nor any development that would,
individually or in the aggregate, reasonably be expected to
result in a Material Adverse Effect on Lanxide; and during the
period from September 30, 1995 through the date of this
Agreement, neither Lanxide nor any of its Subsidiaries has taken
any action that, if taken during the period from the date of this
Agreement through the Effective Time, would constitute a breach
of Section 7.1 or 7.2 hereof.
5.17 Intellectual Property. Lanxide and its Subsidiaries
own or have a valid license to use all inventions, patents,
trademarks, service marks, trade names, copyrights, trade
secrets, software, mailing lists and other intellectual property
rights (collectively, the "Lanxide Intellectual Property")
necessary to carry on their respective businesses as currently
conducted; and neither Lanxide nor any such Subsidiary has
received any notice of infringement of or conflict with, and, to
Lanxide's knowledge, there are no infringements of or conflicts
with, the rights of others with respect to the use of any of the
Lanxide Intellectual Property that, in either such case, has had
or would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Lanxide or result in
material adverse publicity for Lanxide.
5.18 Labor Matters. Except as disclosed on Section 5.18 of
the Lanxide Disclosure Schedule, neither Lanxide nor any of its
Subsidiaries has any labor contracts, collective bargaining
agreements or material employment or consulting agreements with
any persons employed by or otherwise performing services
primarily for Lanxide or any of its Subsidiaries (the "Lanxide
Business Personnel") or any representative of any Lanxide
Business Personnel. Except as set forth on the Lanxide Disclosure
Schedule, neither Lanxide nor any of its Subsidiaries has engaged
in any unfair labor practice with respect to Lanxide Business
Personnel, and there is no unfair labor practice complaint
pending against Lanxide or any of its Subsidiaries with respect
to Lanxide Business Personnel which, in either such case, would
reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect on Lanxide. Except as set forth on the
Lanxide Disclosure Schedule, there is no material labor strike,
dispute, slowdown or stoppage pending or, to the knowledge of
Lanxide, threatened against Lanxide or any of its Subsidiaries,
and neither Lanxide nor any of its Subsidiaries has experienced
any material primary work stoppage or other material labor
difficulty involving its employees during the last three years,
except for any of the foregoing which would not have a Material
Adverse Effect on Lanxide.
5.19 SEC Filings. Lanxide has filed all documents required
to be filed prior to the date hereof by it and its Subsidiaries
with the SEC (the "Lanxide SEC Documents"). As of their
respective dates, or if amended as of the date of the last such
amendment, the Lanxide SEC Documents complied, and all documents
required to be filed by Lanxide or any of its Subsidiaries with
the SEC after the date hereof and prior to the Effective Time
(the "Subsequent Lanxide SEC Documents") will comply, in all
material respects with the requirements of the 1933 Act or the
1934 Act, as the case may be, and the applicable rules and
regulations promulgated thereunder and none of the Lanxide SEC
Documents contained, and the Subsequent
Lanxide SEC Documents will not contain, any untrue statement of a
material fact or omitted, or will omit, to state any material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, or are to be made, not misleading. The
consolidated financial statements of Lanxide included in the
Lanxide SEC documents are in accordance with the books and
records of the Lanxide Companies and fairly present, and those to
be included in the Subsequent Lanxide SEC Documents will be in
accordance with the books and records of the Lanxide Companies
and will fairly present, the consolidated financial position of
Lanxide and its consolidated Subsidiaries, as at the respective
dates thereof and the consolidated results of their operations
and their consolidated cash flows for the respective periods then
ended (subject, in the case of the unaudited statements, to
normal year-end audit adjustments and to any other adjustments
described therein) in conformity with GAAP (except, in the case
of the unaudited statements, as permitted by Form 10-Q of the
SEC) applied on a consistent basis during the periods involved
(except as may be indicated therein or in the notes thereto).
Since September 30, 1994, Lanxide has not made any change in the
accounting practices or policies applied in the preparation of
its financial statements, except as may be required by GAAP.
5.20 Environmental Matters.
(a) Lanxide and its Subsidiaries are in compliance in
all material respects with all applicable Environmental Laws
(which compliance includes, but is not limited to, the possession
by Lanxide and its Subsidiaries of all permits and other
governmental authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions
thereof), except for failures to comply which would not
reasonably be expected, individually or in the aggregate, to have
a Material Adverse Effect on Lanxide. Neither Lanxide nor any of
its Subsidiaries has received any written communication, whether
from a governmental authority, citizens group, employee or
otherwise, that alleges that Lanxide or any of its Subsidiaries
is not in such compliance, and there are no past or present
actions, activities, circumstances conditions, events or
incidents that may prevent or interfere with such compliance in
the future.
(b) No transfers of permits or other governmental
authorizations under Environmental Laws, and no additional
permits or other governmental authorizations under Environmental
Laws, will be required to permit the Surviving Corporation and
its Subsidiaries to conduct their respective businesses in full
compliance with all applicable Environmental Laws immediately
following the Closing Date, as conducted by Lanxide and its
Subsidiaries immediately prior to the Closing Date.
(c) There is no Environmental Claim pending or, to the
knowledge of Lanxide, threatened against Lanxide or any of its
Subsidiaries or, to the knowledge of Lanxide, against any Person
whose liability for any Environmental Claim Lanxide or any of its
Subsidiaries has or may have retained or assumed either
contractually or by operation of law which would reasonably be
expected, individually or in the aggregate, to have a Material
Adverse Effect on Lanxide.
(d) There are no past or present actions, activities,
circumstances, conditions, events or incidents, including,
without limitation, the Release, emission, discharge, presence or
disposal of any Hazardous Material, which could form the basis of
any Environmental Claim against Lanxide or any of its
Subsidiaries, or to the knowledge of Lanxide, against any Person
whose liability for any Environmental Claim Lanxide or any of its
Subsidiaries has or may have retained or assumed either
contractually or by operation of law which would reasonably be
expected, individually or in the aggregate, to have a Material
Adverse Effect on Lanxide.
(e) Neither Lanxide nor any of its Subsidiaries has
placed, stored, deposited, discharged, buried, dumped or disposed
of Hazardous Materials or any other wastes produced by, or
resulting from, any business, commercial or industrial
activities, operations or processes, on, beneath or adjacent to
any property currently owned, operated or leased by Lanxide or
any of its Subsidiaries, except for inventories of such
substances to be used, and wastes generated therefrom, in the
ordinary course of business of Lanxide and its Subsidiaries
(which inventories and wastes, if any, were and are stored or
disposed of in accordance with applicable Environmental Laws and
in a manner such that there has been no Release of any such
substances into the indoor or outdoor environment), except where
Lanxide and its Subsidiaries have failed to comply with
Environmental Laws applicable to the above matters or have failed
to store such inventories and wastes in a manner described above
and such failures would not be reasonably expected, individually
or in the aggregate, to have a Material Adverse Effect on
Lanxide.
(f) Lanxide has made available for inspection to
Commodore, complete and correct copies and results of any
reports, studies, analyses, tests or monitoring possessed or
initiated by Lanxide or any of its Subsidiaries pertaining to
Hazardous Materials in, on, beneath or adjacent to any property
currently or formerly owned, operated or leased by Lanxide or any
of its Subsidiaries, or regarding Lanxide's or any of its
Subsidiaries' compliance with applicable Environmental Laws.
ARTICLE SIX
REPRESENTATIONS AND WARRANTIES OF COMMODORE
Commodore hereby represents and warrants to Lanxide as
follows:
6.1 Organization, Standing, and Authority. Commodore is a
corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware, and is duly
qualified to do business, and in good standing in each
jurisdiction where its ownership or leasing of property or the
conduct of its business requires it to be so qualified other than
those in which the failure to be duly qualified would not
reasonably be expected to have a Material Adverse Effect on
Commodore, and has corporate power and authority to carry on its
business as now conducted and to own, lease, and operate its
assets, properties, and business, and to execute and deliver this
Agreement and perform the respective terms of this Agreement.
Commodore has in effect all federal, state, local, and foreign
governmental authorizations necessary for it to own or lease its
properties and assets and to carry on its business as is now
being conducted, other than those the absence of which, either
individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on Commodore.
6.2 Capital Stock.
(a) As of the date hereof, the authorized capital
stock of Commodore consists of (i) 100,000,000 shares of
Commodore Common Stock, of which as of the date hereof,
57,924,368 shares are issued and outstanding, and (ii) 10,000,000
shares of Commodore Preferred Stock, par value $.01 per share, of
which 3,000,000 shares of Commodore Series AA Preferred Stock,
1,534,709 shares of Commodore Series B Preferred Stock, and
106,458.33 shares of Commodore Series C Preferred Stock are
issued and outstanding. All of the issued and outstanding shares
of Commodore Capital Stock are validly issued, fully paid and
nonassessable. None of the outstanding shares of Commodore
Capital Stock has been issued in violation of any preemptive
rights of the current or past stockholders of Commodore. As of
September 30, 1996, Commodore has reserved (i) 4,000,000 shares
of Commodore Common Stock for issuance upon conversion of the
outstanding Commodore Convertible Notes, (ii) 511,570 shares of
Commodore Common Stock for issuance upon possible conversion of
the outstanding shares of Commodore Series B Preferred Stock,
(iii) a maximum of 2,129,167 shares of Commodore Common Stock for
issuance upon possible conversion of outstanding shares of
Commodore Series C Preferred Stock, (iv) an aggregate of
17,945,653 shares of Commodore Common Stock issuable upon
exercise of outstanding Commodore Warrants, and (v) an aggregate
of 3,135,000 shares of Commodore Common Stock issuable upon
exercise of outstanding Commodore Stock Options were outstanding
as of September 30, 1996. In addition to the foregoing,
Commodore has pledged as collateral to secure payment of the
outstanding Commodore Convertible Notes an aggregate of 8,000,000
additional shares of Commodore Common Stock, which shares shall
be returned to Commodore for cancellation upon either prepayment
of such notes or conversion thereof into shares of Commodore
Common Stock at a conversion price of $1.00 per share (subject to
reduction as a result of the Commodore Reverse Stock Split), all
as contemplated by Section 7.9 hereof.
(b) It is anticipated that on or about November 13,
1996, the Board of Directors of Commodore shall adopt the 1997
Commodore Stock Option Plan and shall grant (subject to
ratification by the requisite majority of Commodore stockholders
at the Commodore stockholders meeting called to approve the
Merger) to the following Senior Executive Officers, the number of
1997 Commodore Stock Options listed below opposite their
respective names, all of which shall be exercisable at the
closing price of Commodore Common Stock on the date the Commodore
Board of Directors shall authorize the 1997 Commodore Stock
Option Plan and grant such 1997 Commodore Stock Options:
Paul E. Hannesson - 3,450,000 1997 Commodore Stock Options,
of which 950,000 shares shall vest upon grant, and 2,500,000
shall vest over a five year period based upon Mr.
Hannesson's continued full-time employment with Commodore,
at the rate of 20% per annum;
Edward L. Harper - 2,000,000 1997 Commodore Stock Options,
of which 200,000 shares shall vest upon grant, and 1,800,000
shall vest over a five year period based upon Mr. Harper's
continued full-time employment with Commodore, at the rate
of 20% per annum. In addition, Mr. Harper will receive an
aggregate of 375,000 shares of Commodore Common Stock upon
execution of his employment agreement with Commodore;
Marc S. Newkirk - Subject to consummation of the Merger, Mr.
Newkirk shall receive an aggregate of 1,500,000 1997
Commodore Stock Options, which shall vest over a five year
period based upon Mr. Newkirk's continued full-time
employment with Commodore, at the rate of 20% per annum; and
(c) Except as set forth in Section 6.2(a) and Section
6.2(b) of this Agreement or on the Commodore Disclosure Schedule,
there are no shares of capital stock or other equity securities
of Commodore outstanding and no outstanding options, warrants,
scrip, rights to subscribe to, calls, or commitments of any
character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of the capital stock
of Commodore or contracts, commitments, understandings, or
arrangements by which Commodore is or may be bound to issue
additional shares of its capital stock or options, warrants, or
rights to purchase or acquire any additional shares of its
capital stock. There are no contracts, commitments,
understandings, or arrangements by which Commodore or any of its
Subsidiaries is or may be bound to transfer any shares of the
capital stock of any Commodore Subsidiary, except for a transfer
to Commodore or any wholly-owned Commodore Subsidiary, and,
except as disclosed on the Commodore Disclosure Schedule, there
are no agreements, understandings, or commitments relating to the
rights of Commodore to vote or to dispose of such shares.
6.3 Commodore Subsidiaries. The Commodore Disclosure
Schedule annexed hereto lists all of the Commodore Subsidiaries
in existence as of the date of this Agreement. No equity
securities of any of the Commodore Subsidiaries are or may become
required to be issued (other than to Commodore) by reason of any
options, warrants, scrip, rights to subscribe to, calls, or
commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares
of the capital stock of any Commodore Subsidiary, and there are
no contracts, commitments, understandings, or arrangements by
which any Commodore Subsidiary is bound to issue (other than to
Commodore) additional shares of its capital stock or options,
warrants, or rights to purchase or acquire any additional shares
of its capital stock. Except as provided in the Commodore
Disclosure Schedule, all of the shares of capital stock of each
Commodore Subsidiary held by Commodore or another wholly-owned
Commodore Subsidiary are fully paid and nonassessable and are
owned by Commodore or any Commodore Subsidiary free and clear of
any claim, lien, or encumbrance. Except as provided in the
Commodore Disclosure Schedule, each Commodore Subsidiary is duly
organized, validly existing, and in good standing under the laws
of the jurisdiction in which it is incorporated or organized; has
the corporate power and authority necessary for it to own or
lease its properties and assets and to carry on its business as
it is now being conducted; and has all federal, state, local, and
foreign governmental authorization necessary for it to own or
lease its properties and assets and to carry on its business as
it is now being conducted, except for such governmental
authorizations the absence of which, either individually or in
the aggregate, would not reasonably be expected to have a
Material Adverse Effect on Commodore
6.4 Authority.
(a) Commodore has all requisite power and authority to
execute and deliver this Agreement and, subject to the approval
of Commodore's stockholders with respect to the Merger and the
related transactions, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated herein, including
the Merger, have been duly and validly authorized by all
necessary corporate action in respect thereof on the part of
Commodore, subject, with respect to this Agreement, to the
approval of the stockholders of Commodore. This Agreement,
subject to any requisite stockholder approval hereof, has been
duly executed and delivered by Commodore and constitutes a legal,
valid, and binding obligation of Commodore, enforceable against
Commodore in accordance with its terms (except as such
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws, now or
hereafter in effect, affecting the enforcement of creditors'
rights generally and except that the availability of the
equitable remedy of specific performance or injunctive relief is
subject to the discretion of the court before which any
proceeding may be brought). The preparation of the Joint Proxy
Statement and the Merger Registration Statement to be filed with
the SEC has been duly authorized by the Board of Directors of
Commodore.
(b) Prior to the execution and delivery of this
Agreement, the Board of Directors of Commodore (at a meeting duly
called and held) has (i) approved this Agreement and the Merger
and the other transactions contemplated hereby, (ii) determined
that the transactions contemplated hereby are fair to and in the
best interests of the holders of Commodore capital stock and
(iii) except as may be required to comply with its fiduciary
duties under applicable law as advised by counsel, determined to
recommend this Agreement, the Merger and the other transactions
contemplated hereby to Commodore's stockholders for approval and
adoption at the Commodore Stockholders' Meeting. The affirmative
vote of the holders of a majority of the outstanding shares of
Commodore Common Stock are the only votes of the holders of any
class or series of Commodore's capital stock necessary to approve
the Merger.
(c) The Board of Directors of each of Commodore and
the Merger Subsidiary has approved this Agreement and the Merger
for purposes of Section 203(a)(1) of the DGCL.
6.5 Consents and Approvals; No Violations. The execution
and delivery of this Agreement do not, and the consummation of
the transactions contemplated hereby and compliance with the
provisions hereof will not, 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 the loss of a material
benefit under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or
assets of Commodore or any of its Subsidiaries under: (i) any
provision of the Certificate of Incorporation or By-laws of
Commodore or the comparable charter or organization documents or
by-laws of any of its Subsidiaries, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, lease, agreement,
instrument, permit, concession, franchise or license applicable
to Commodore or any of its Subsidiaries or (iii) any judgment,
order, decree, statute, law, ordinance, rule or regulation
applicable to Commodore or any of its Subsidiaries or any of
their respective properties or assets, other than, in the case of
clauses (ii) and (iii), any such violations, defaults, rights,
liens, security interests, charges or encumbrances that,
individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on Commodore and would
not materially impair the ability of Commodore to perform its
obligations hereunder or prevent the consummation of any of the
transactions contemplated hereby. No filing or registration with,
or authorization, consent or approval of, any domestic (federal
and state), foreign (including provincial) or supranational
court, commission, governmental body, regulatory agency,
authority or tribunal (a "Governmental Entity") is required by or
with respect to Commodore or any of its Subsidiaries in
connection with the execution and delivery of this Agreement by
Commodore or is necessary for the consummation of the Merger and
the other transactions contemplated by this Agreement, except:
(i) in connection, or in compliance, with the provisions of the
Securities Laws and any state securities or "blue sky" laws; (ii)
for the filing of the Delaware Certificate of Merger with the
Secretary of State of the State of Delaware and appropriate
documents with the relevant authorities of other states in which
Commodore or any of its Subsidiaries is qualified to do business;
and (iii) for such other consents, orders, authorizations,
registrations, declarations and filings the failure of which to
obtain or make would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on
Commodore and would not materially impair the ability of
Commodore to perform its obligations hereunder or prevent the
consummation of any of the transactions contemplated hereby.
6.6 [INTENTIONALLY OMITTED]
6.7 Tax Matters.
(a) All federal, state, local, and foreign tax returns
required to be filed by or on behalf of any of the Commodore
Companies have been timely filed, or requests for extensions have
been timely filed and granted and have not expired, for periods
ending on or before December 31, 1995 and all returns filed are
complete and accurate to the best information and belief of
Commodore, except to the extent that any failure to be correct
and complete would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on
Commodore. All taxes shown on filed returns have been timely
paid and Commodore and each of its Subsidiaries have complied
with all rules and regulations relating to the withholding of
such taxes, except to the extent that any failure to comply with
such rules and regulations would not, individually or in the
aggregate, reasonably be expected to have Material Adverse Effect
on Commodore. As of the date of this Agreement, there is no
audit, examination, deficiency, or refund litigation or matter in
controversy with respect to any taxes that would reasonably be
expected to have a Material Adverse Effect on Commodore, except
as reserved against in the Commodore Financial Statements or as
disclosed in the Commodore Disclosure Schedule. All taxes,
interest, additions, and penalties due with respect to completed
and settled examinations or concluded litigation have been paid.
(b) Except as disclosed on the Commodore Disclosure
Schedule, none of the Commodore Companies has executed an
extension or waiver of any statute of limitations on the
assessment or collection of any tax due that is currently in
effect.
(c) Adequate provision for any federal, state, local,
or foreign taxes due or to become due for any of Commodore
Companies for the period or periods through and including June
30, 1996, has been made and will be reflected on the June 30,
1996 unaudited Commodore financial statements included in the
Commodore Financial Statements. To the extent that Commodore
shall, prior to the Effective Time, be required to file with the
SEC unaudited financial statements as at September 30, 1996 and
for the nine months then ended, adequate provision for any
federal, state, local, or foreign taxes due or to become due for
any of Commodore Companies for the period or periods through and
including September 30, 1996, will have been made.
(d) Deferred taxes of the Commodore Companies have
been provided for in accordance with GAAP.
6.8 Commodore Joint Ventures. The Commodore Disclosure
Schedule annexed hereto lists all of the active and inactive
joint ventures and joint working arrangements among Commodore, a
Commodore Subsidiary (including CAT) and any third person, firm
or corporation (individually, a "Commodore Joint Venture" and,
collectively, "Commodore Joint Ventures") as of the date of this
Agreement. The principal terms and conditions of each Commodore
Joint Venture is disclosed on the Commodore Disclosure Schedule
(which Schedule may make reference to, or incorporate therein,
the disclosures contained in specific documents previously filed
by Commodore or CAT with the SEC).
6.9 Properties. Except as disclosed or reserved
against in the Commodore Financial Statements, the Commodore
Companies have good, valid and, in the case of real property,
marketable title to, or a valid leasehold interest in, free and
clear of all material liens, encumbrances, charges, defaults, or
equities of whatever character all of the material properties and
assets, tangible or intangible, reflected in the Commodore
Financial Statements as being owned by the Commodore Companies as
of the date hereof, except for such title or interest the failure
of which would not have, individually or in the aggregate, a
Material Adverse Effect on Commodore. To the knowledge of
Commodore's management, all buildings, and all fixtures,
equipment, and other property and assets held under leases or
subleases by any of the Commodore Companies, are held under valid
instruments which are in full force and effect (except as
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or other laws affecting
the enforcement of creditors' rights generally and except that
the availability of the equitable remedy of specific performance
or injunctive relief is subject to the discretion of the court
before which any proceedings may be brought) and each of the
Commodore Companies has complied with the terms of all such
leases or subleases to which it is a party and under which it is
in occupancy, except for failure to comply or be in full force
and effect which would not reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect
on Commodore. To the best knowledge of Commodore's management,
the policies of fire, theft, liability, and other insurance
maintained with respect to the assets or businesses of the
Commodore Companies provide adequate coverage against loss, and
the fidelity bonds in effect as to which any of the Commodore
Companies is a named insured are believed to be sufficient.
6.10 Compliance with Laws. To the best knowledge of
Commodore's management, each of the Commodore Companies:
(a) is in compliance with all laws, regulations,
reporting and licensing requirements, and orders applicable to
its business or employees conducting its business, the breach or
violation of which would reasonably be likely, individually or in
the aggregate, to have a Material Adverse Effect on Commodore;
and
(b) has received no notification or communication from
any agency or department of federal, state or local government or
the Regulatory Authorities or the staff thereof (i) asserting
that any of the Commodore Companies is not in compliance with any
of the statutes, regulations, or ordinances which such
governmental authority or Regulatory Authority enforces, which as
a result of such noncompliance, would reasonably be likely,
individually or in the aggregate, to result in a Material Adverse
Effect on Commodore, (ii) threatening to revoke any license,
franchise, permit, or governmental authorization which would
reasonably be likely, individually or in the aggregate, to have a
Material Adverse Effect on Commodore, or (iii) requiring any of
the Commodore Companies to enter into a cease and desist order,
agreement, or memorandum of understanding.
6.11 Employee Benefit Plans.
(a) Commodore has made available for inspection to
Lanxide prior to the execution of this Agreement copies of all
pension, retirement, profit-sharing, deferred compensation, stock
option, employee stock ownership, severance pay, vacation, bonus,
or other incentive plan, any other material written employee
program, arrangement, or agreement, any medical, vision, dental,
or other health plan, any life insurance plan, or any other
employee benefit plan or fringe benefit plan, including, without
limitation, any "employee benefit plan" as that term is defined
in Section 3(3) of ERISA, currently adopted, maintained by,
sponsored in whole or in part by, or contributed to by any of the
Commodore Companies or affiliate thereof for the benefit or
employees, retirees, dependents, spouses, directors,
independents, spouses, directors, independent contractors, or
other beneficiaries that are eligible to participate, whether
arrived at through collective bargaining or otherwise
(collectively, the "Commodore Benefit Plans"), and has delivered
to Lanxide prior to the execution of this Agreement a summary of
such Commodore Benefit Plans. Any of the Commodore Benefit Plans
which is an "employee pension benefit plan," as that term is
defined in Section 3(2) of ERISA, is referred to herein as an
"ERISA Plan." No Commodore Benefit Plan is or has been a
multiemployer plan within the meaning of Section 3(37) of ERISA.
(b) All Commodore Benefit Plans are in compliance with
the applicable terms of ERISA and the Internal Revenue Code, and
any other applicable laws, rules, and regulations except for
instances in which such non-compliance would not reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect on Commodore.
(c) No Commodore ERISA Plan is a defined benefit
pension plan.
6.12 No Existing Violation; Default.
(a) Neither Commodore nor any of its Subsidiaries is
in violation of (i) its charter or other organizational documents
or by-laws, (ii) any applicable law, ordinance or administrative
or governmental rule or regulation or (iii) any order, decree or
judgment of any governmental entity having jurisdiction over
Commodore or any of its Subsidiaries, except for any violations
that, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on Commodore. The
properties, assets and operations of Commodore and its
Subsidiaries are in compliance in all material respects with all
applicable federal, state, local and foreign Worker Safety Laws.
With respect to such properties, assets and operations, including
any previously owned, leased or operated properties, assets or
operations, to the knowledge of the Commodore management, there
are no past or current events, conditions, circumstances,
activities, practices, incidents, actions or plans of Commodore
or any of its Subsidiaries that may interfere with or prevent
compliance or continued compliance in all material respects with
applicable Worker Safety Laws, other than any such interference
or prevention as would not, individually or in the aggregate with
any such other interference or prevention, reasonably be expected
to have a Material Adverse Effect on Commodore.
(b) There is no existing event of default or event
that, but for the giving of notice or lapse of time, or both,
would constitute an event of default under any loan or credit
agreement, note, bond, mortgage, indenture or guarantee of
indebtedness for borrowed money and there is no existing event of
default or event that, but for the giving of notice or lapse of
time, or both, would constitute an event of default under any
lease, other agreement or instrument to which Commodore or any of
its Subsidiaries is a party or by which Commodore or any such
Subsidiary or any of their respective properties, assets or
business[es] is bound which would, individually or in the
aggregate, reasonably be likely to have a Material Adverse Effect
on Commodore.
6.13 Material Contracts. Except as disclosed on the
Commodore Disclosure Schedule, or otherwise reflected in the
Commodore Financial Statements, none of the Commodore Companies,
nor any of their respective assets, business, or operations is as
of the date of this Agreement a party to, or is bound or affected
by, or receives benefits under, any contract or agreement or
amendment thereto that in each case would be required to be filed
as an exhibit to a Form 10-K that has not been timely filed as an
exhibit in an SEC Document previously filed by Commodore with the
SEC and identified to Lanxide.
6.14 Material Contract Defaults. None of the Commodore
Companies is in default, nor to the best knowledge of Commodore
is any other party in material default, in any respect under any
contract, agreement, commitment, arrangement, lease, insurance
policy, or other instrument to which such Commodore is a party or
by which its respective assets, business, or operations may be
bound or affected or under which it or its respective assets,
business, or operations receives benefits, except for such
breaches and defaults which would not be expected to have,
individually, or in the aggregate, a Material Adverse Effect on
Commodore, and there has not occurred any event that with the
lapse of time or the giving of notice, or, both would constitute
such a breach or default. Neither Commodore nor any of its
Subsidiaries is a party to or bound by any non-competition
agreement or any other agreement or obligation which purports to
limit in any material respect the manner in which, or the
localities in which, Commodore or any such Subsidiary is entitled
to conduct all or any material portion of the business of
Commodore and its Subsidiaries taken as a whole.
6.15 Legal Proceedings. There are no actions, suits, or
proceedings instituted or pending or, to the best knowledge of
Commodore's management, threatened (or unasserted but considered
probable of assertion any of which if asserted would have at
least a reasonable probability of an unfavorable outcome) against
any of the Commodore Companies, or against any property, asset,
interest, or right of any of them, that are reasonably expected
to have either individually or in the aggregate a Material
Adverse Effect on Commodore or that are reasonably expected to
materially threaten or materially impede the consummation of the
transactions contemplated by this Agreement. None of the
Commodore Companies is a party to any agreement or instrument or
is subject to any charter or other corporate restriction or any
judgment, order, writ, injunction, decree, rule, regulation, code
or ordinance that threatens or might impede the consummation of
the transactions contemplated by this Agreement.
6.16 Absence of Certain Changes or Events. Since June 30,
1996, except as disclosed on the Commodore Disclosure Schedule,
in the Commodore Financial Statements or in an SEC Document
identified to Lanxide, (i) neither Commodore nor any of its
Subsidiaries has entered into any material oral or written
agreement or other transaction, that is not in the ordinary
course of business or that would reasonably be expected to result
in a Material Adverse Effect on Commodore; (ii) neither Commodore
nor any of its Subsidiaries has sustained any loss or
interference with its business or properties from fire, flood,
windstorm, accident or other calamity (whether or not covered by
insurance) that has had or that would reasonably be expected to
have a Material Adverse Effect on Commodore; (iii) there has been
no material change in the indebtedness of Commodore and its
Subsidiaries, no change in the outstanding shares of capital
stock of Commodore except for the issuance of shares of Commodore
Common Stock pursuant to the Commodore Stock Options and
Commodore Warrants and no dividend or distribution of any kind
declared, paid or made by Commodore on any class of its capital
stock except for dividends required to be paid on currently
outstanding shares of the Commodore Preferred Stock; and (iv)
there has been no event causing a Material Adverse Effect on
Commodore, nor any development that would, individually or in the
aggregate, reasonably be expected to result in a Material Adverse
Effect on Commodore; and during the period from December 31, 1995
through the date of this Agreement, neither Commodore nor any of
its Subsidiaries has taken any action that, if taken during the
period from the date of this Agreement through the Effective
Time, would constitute a breach of Section 7.1 or 7.2 hereof.
6.17 Intellectual Property. Except as set forth in the
Commodore Disclosure Schedule, Commodore and its Subsidiaries own
or have a valid license to use all inventions, patents,
trademarks, service marks, trade names, copyrights, trade
secrets, software, mailing lists and other intellectual property
rights (collectively, the "Commodore Intellectual Property")
necessary to carry on their respective businesses as currently
conducted; and neither Commodore nor any such Subsidiary has
received any notice of infringement of or conflict with, and, to
Commodore's knowledge, there are no infringements of or conflicts
with, the rights of others with respect to the use of any of the
Commodore Intellectual Property that, in either such case, has
had or would reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on Commodore or result
in material adverse publicity for Lanxide.
6.18 Labor Matters. Except as disclosed on the Commodore
Disclosure Schedule, neither Commodore nor any of its
Subsidiaries has any labor contracts, collective bargaining
agreements or material employment or consulting agreements with
any persons employed by or otherwise performing services
primarily for Commodore or any of its Subsidiaries (the
"Commodore Business Personnel") or any representative of any
Commodore Business Personnel. Except as set forth on the
Commodore Disclosure Schedule, neither Commodore nor any of its
Subsidiaries has engaged in any unfair labor practice with
respect to Commodore Business Personnel, and there is no unfair
labor practice complaint pending against Commodore or any of its
Subsidiaries with respect to Commodore Business Personnel which,
in either such case, would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on
Commodore. Except as set forth on the Commodore Disclosure
Schedule, there is no material labor strike, dispute, slowdown or
stoppage pending or, to the knowledge of Commodore, threatened
against Commodore or any of its Subsidiaries, and neither
Commodore nor any of its Subsidiaries has experienced any
material primary work stoppage or other material labor difficulty
involving its employees during the last three years, except for
any of the foregoing which would not have a Material Adverse
Effect on Commodore.
6.19 SEC Filings. Commodore has filed all documents
required to be filed prior to the date hereof by it and its
Subsidiaries with the SEC (the "Commodore SEC Documents"). As of
their respective dates, or if amended as of the date of the last
such amendment, the Commodore SEC Documents complied, and all
documents required to be filed by Commodore or any of its
Subsidiaries with the SEC after the date hereof and prior to the
Effective Time (the "Subsequent Commodore SEC Documents") will
comply, in all material respects with the requirements of the
1933 Act or the 1934 Act, as the case may be, and the applicable
rules and regulations promulgated thereunder and none of the
Commodore SEC Documents contained, and the Subsequent Commodore
SEC Documents will not contain, any untrue statement of a
material fact or omitted, or will omit, to state any material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, or are to be made, not misleading. The
consolidated financial statements of Commodore included in the
Commodore SEC Documents are in accordance with the books and
records of the Commodore Companies and fairly present, and those
to be included in the Subsequent Commodore SEC Documents will be
in accordance with the books and records of the Commodore
Companies and will fairly present, the consolidated financial
position of Commodore and its consolidated Subsidiaries, as at
the respective dates thereof and the consolidated results of
their operations and their consolidated cash flows for the
respective periods then ended (subject, in the case of the
unaudited statements, to normal year-end audit adjustments and to
any other adjustments described therein) in conformity with GAAP
(except, in the case of the unaudited statements, as permitted by
Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated therein or in the
notes thereto). Since December 31, 1994, Commodore has not made
any change in the accounting practices or policies applied in the
preparation of its financial statements, except as may be
required by GAAP.
6.20 Environmental Matters.
(a) Commodore and its Subsidiaries are in compliance
in all material respects with all applicable Environmental Laws
(which compliance includes, but is not limited to, the possession
by Commodore and its Subsidiaries of all permits and other
governmental authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions
thereof), except for failures to comply which would not
reasonably be expected, individually or in the aggregate, to have
a Material Adverse Effect on Commodore. Neither Commodore nor
any of its Subsidiaries has received any written communication,
whether from a governmental authority, citizens group, employee
or otherwise, that alleges that Commodore or any of its
Subsidiaries is not in such compliance, and there are no past or
present actions, activities, circumstances conditions, events or
incidents that may prevent or interfere with such compliance in
the future.
(b) No transfers of permits or other governmental
authorizations under Environmental Laws, and no additional
permits or other governmental authorizations under Environmental
Laws, will be required to permit Commodore and its Subsidiaries
to conduct its business in full compliance with all applicable
Environmental Laws immediately following the Closing Date, as
conducted by Commodore and its Subsidiaries immediately prior to
the Closing Date.
(c) There is no Environmental Claim pending or, to the
knowledge of Commodore, threatened against Commodore or any of
its Subsidiaries or, to the knowledge of the Commodore, against
any Person whose liability for any Environmental Claim Commodore
or any of its Subsidiaries has or may have retained or assumed
either contractually or by operation of law which would
reasonably be expected, individually or in the aggregate, to have
a Material Adverse Effect on Commodore.
(d) There are no past or present actions, activities,
circumstances, conditions, events or incidents, including,
without limitation, the Release, emission, discharge, presence or
disposal of any Hazardous Material which could form the basis of
any Environmental Claim against Commodore or any of its
Subsidiaries, or, to the knowledge of Commodore, against any
Person whose liability for any Environmental Claim Commodore or
any of its Subsidiaries has or may have retained or assumed
either contractually or by operation of law which would
reasonably be expected, individually or in the aggregate, to have
a Material Adverse Effect on Commodore.
(e) Neither Commodore nor any of its Subsidiaries has
placed, stored, deposited, discharged, buried, dumped or disposed
of Hazardous Materials or any other wastes produced by, or
resulting from, any business, commercial or industrial
activities, operations or processes, on, beneath or adjacent to
any property currently owned, operated or leased by Commodore or
any of its Subsidiaries, except for inventories of such
substances to be used, and wastes generated therefrom, in the
ordinary course of business of Commodore and its Subsidiaries
(which inventories and wastes, if any, were and are stored or
disposed of in accordance with applicable Environmental Laws and
in a manner such that there has been no Release of any such
substances into the indoor or outdoor environment), except where
Commodore and its Subsidiaries have failed to comply with
Environmental Laws applicable to the above matters or have failed
to store such inventories and wastes in a manner described above
and such failures would not be reasonably expected, individually
or in the aggregate, to have a Material Adverse Effect on
Commodore.
(f) Commodore has made available for inspection to
Lanxide, complete and correct copies and results of any reports,
studies, analyses, tests or monitoring possessed or initiated by
Commodore or any of its Subsidiaries pertaining to Hazardous
Materials in, on, beneath or adjacent to any property currently
or formerly owned, operated or leased by Commodore or any of its
Subsidiaries, or regarding Commodore's or any of its
Subsidiaries' compliance with applicable Environmental Laws.
ARTICLE SEVEN
COVENANTS AND AGREEMENTS
Each Party hereby covenants and agrees with the other Party
as follows:
7.1 Conduct of Business - Negative Covenants. From the
date of this Agreement until the earlier of the Effective Time or
until the termination of this Agreement, each Party covenants and
agrees that it will not do or agree or commit to do, and shall
not permit any of its Subsidiaries to do or to commit to do, any
of the following without the prior written consent of the chief
executive officer or chief financial officer of the other Party,
which consent shall not be unreasonably delayed or withheld:
(a) except as set forth on the Lanxide Disclosure
Schedule or the Commodore Disclosure Schedule, as the case may
be, or as expressly contemplated by this Agreement, amend its
certificates of incorporation or bylaws; or
(b) except as expressly permitted in this Agreement or
(i) as to Commodore, in accordance with the specific terms of
Commodore Capital Stock, Commodore Warrants, Commodore
Convertible Notes or Commodore Stock Options, or (ii) as to
Lanxide, in accordance with the specific terms of Lanxide Capital
Stock, Lanxide Warrants, Lanxide Stock Options or Lanxide
Deferred Compensation Plans, repurchase, redeem, or otherwise
acquire or exchange, directly or indirectly, any shares of its
capital stock or any securities convertible into any shares of
its capital stock; or
(c) except as expressly contemplated by this Agreement
or as disclosed in Disclosure Schedules hereto, acquire, or agree
to acquire, any business or any corporation, partnership, limited
liability company, association, firm, or organization or division
thereof, or otherwise acquire or agree to acquire any assets
other than in connection with (i) internal reorganizations or
consolidations involving existing Subsidiaries or (ii) the
creation of new Subsidiaries organized to conduct or continue
activities otherwise permitted by this Agreement; or
(d) except as disclosed in the Disclosure Schedules
hereto, sell or otherwise dispose of, or agree to sell, lease or
otherwise dispose of: (i) any shares of capital stock of any
Subsidiary of such Party (unless any such shares of stock are
sold or otherwise transferred to such Party or any of its wholly-
owned Subsidiaries); (ii) any Subsidiary of such Party; (iii) any
substantial part of the assets of such Party or any Subsidiary of
such Party; or (iv) any asset other than in the ordinary course
of business for reasonable and adequate consideration; provided,
however, such covenant in this subparagraph (e) shall not be
applicable to the sale of shares or assets sold after the date of
this Agreement in transactions not otherwise prohibited by this
Agreement resulting in a gain or loss in each sale not in excess
of $10,000; or
(e) except as disclosed in the Disclosure Schedules or
as contemplated hereby, incur, directly or indirectly, any
additional debt obligation or other obligation for borrowed
money, other than (i) the replacement of existing short-term debt
with other short-term debt in the same or lesser aggregate
principal amount or (ii) indebtedness of any Lanxide Company to
another Lanxide Company or of any Commodore Company to another
Commodore Company, not in excess of an aggregate of $25,000 for
such Party and its Subsidiaries on a consolidated basis; or
(f) grant any general increase in compensation or
benefits to its employees or to its officers, except in
accordance with past practice or as required by law; pay any
bonus except in accordance with past practice or the provisions
of any applicable program or plan adopted by the Board of
Directors of such Party prior to the date of this Agreement;
enter into any severance agreements with its officers or the
officers of any Subsidiary except as previously disclosed; grant
any material increase in fees or other increases in compensation
or other benefits to any of its directors except as in accordance
with past practice; or effect any change in retirement benefits
for any class of its employees or officers (unless such change is
required by applicable law) that would materially increase the
retirement benefit liabilities of such Party and its Subsidiaries
on a consolidated basis; or
(g) except as disclosed on the Commodore Disclosure
Schedule or the Lanxide Disclosure Schedule, as the case may be,
amend any existing employment contract between such Party or any
Subsidiary thereof and any person having a salary thereunder in
excess of $100,000 per year (unless such amendment is required by
law) to increase the compensation or benefits payable thereunder
or enter into any new employment contract with any person having
a salary thereunder in excess of $100,000 that such Party or its
applicable Subsidiary does not have the unconditional right to
terminate without liability (other than liability for services
already rendered) at any time on or after the Effective Time; or
(h) adopt any new employee benefit plan of such Party
or any Subsidiary thereof or make any material change in or to
any existing employee benefit plans of such Party or any
Subsidiary thereof other than (A) as previously approved by the
other Parties, or (B) any such change that is required by law or
that, in the opinion of counsel, is necessary or advisable to
maintain the tax qualified status of any such plan; or
(i) (A) declare, set aside or pay any dividends on, or
make any other actual, constructive or deemed distributions in
respect of, any of its capital stock, or otherwise make any
payments to its stockholders in their capacity as such (other
than dividends required to be paid on the outstanding shares of
Lanxide Preferred Stock or the Commodore Preferred Stock); (B)
split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock; or
(C) purchase, redeem or otherwise acquire any shares of its
capital stock or those of any Subsidiary or any other securities
thereof or purchase, redeem or otherwise acquire or extend the
expiration of or otherwise amend, any rights, warrants or options
to acquire any such shares or other securities; or
(j) except to the extent set forth in Section 6.2 (b)
hereof, issue, deliver, sell, pledge, dispose of or otherwise
encumber any shares of its capital stock, any other voting
securities or equity equivalent or any securities convertible
into, or any rights, warrants or options to acquire, any such
shares, voting securities, equity equivalent or convertible
securities, other than (A) the issuance of Commodore Common Stock
to be issued in connection with the Merger and Commodore Public
Offering, all as contemplated hereby, (B) the issuance of shares
of Lanxide Common Stock or Commodore Common Stock upon the
exercise of currently outstanding Lanxide Stock Options, Lanxide
Warrants, Lanxide Deferred Compensation Plans, Commodore Stock
Options or Commodore Warrants, as the case may be, and (C) the
issuance of stock options to employees of Lanxide or Commodore or
any of its Subsidiaries in the ordinary course of business and
consistent with past practice.
7.2 Conduct of Business-Affirmative Covenants. Unless the
prior written consent of Lanxide or Commodore, respectively,
shall have been obtained by the other Party, and except as
otherwise contemplated herein, each Party shall and shall cause
its Subsidiaries: to operate its business in accordance with the
ordinary course of its business as currently conducted and, to
the extent consistent herewith, use its reasonable best efforts
to preserve intact its business organizations and assets,
maintain its rights and franchises, keep available services of
its current officers and employees and preserve its relationships
with customers, suppliers and others having business dealings
with it, all to the end that its goodwill and ongoing business
shall be unimpaired at the Effective Time, and to take no action
which would (i) adversely affect the ability of any of them to
obtain any necessary approvals of governmental authorities
required for the transactions contemplated hereby without
imposition of a condition or restriction that would have a
Material Adverse Effect on either Commodore or Lanxide or (ii)
adversely affect the ability of such Party to perform its
covenants and agreements under this Agreement.
7.3 Adverse Changes in Condition. Lanxide and Commodore
each agrees to give written notice promptly to the other Party
concerning any material adverse change in such Party's condition
or that of any of the Subsidiaries of such Party from the date of
this Agreement until the Effective Time that might adversely
affect the consummation of the transactions contemplated hereby
or upon becoming aware of the occurrence or impending occurrence
of any event or circumstance which would cause or constitute a
material breach of any of the representations, warranties, or
covenants of such Party contained herein. Each Party shall use
its best efforts to prevent or promptly to remedy the same.
7.4 Investigation and Confidentiality. Prior to the
Effective Time, Lanxide and Commodore each will keep the other
Party advised of all material developments relevant to its
business and to the consummation of the Merger and may make or
cause to be made such investigation, if any, of the business and
properties of the other Party and its Subsidiaries and of their
respective financial and legal condition as Lanxide or Commodore
reasonably deems necessary or advisable to familiarize itself and
its advisers with such business, properties, and other matters,
provided that such investigation shall be reasonably related to
the transactions contemplated hereby and shall not interfere
unnecessarily with normal operations. Lanxide and Commodore each
agrees to furnish the other Party and the other Party's advisers
with such financial and operating data and other information with
respect to its businesses, properties, and employees as Lanxide
or Commodore shall from time to time reasonably request.
Commodore shall deliver to Lanxide any Subsequent Commodore SEC
Document promptly upon the filing thereof with the SEC, and
Lanxide shall deliver to Commodore any Subsequent Lanxide SEC
Document promptly upon the filing thereof with the SEC. No
investigation by one Party shall affect the representations and
warranties of the other Party, and until the Effective Time each
such representation and warranty shall survive any such
investigation. Each Party shall, and shall cause its directors,
officers, employees, advisers and agents to, maintain the
confidentiality of all confidential information furnished to it
by the other Party concerning such other Party's business,
operations, and financial condition and shall not use such
information for any purpose except in furtherance of the
transactions contemplated by this Agreement. If this Agreement
is terminated prior to the Effective Time, each Party shall
promptly return all documents and copies thereof, and all work
papers containing confidential information received from the
other Party.
7.5 Agreement of Affiliates. Each of Lanxide and Commodore
shall deliver to the other Party a letter identifying all persons
whom it reasonably believes is an "affiliate" of such Party for
purposes of Rule 145 under the Securities Act of 1933, as
amended. Each of Lanxide and Commodore shall use its best
efforts to cause each person who is identified as an "affiliate"
in the letter referred to above to deliver to Commodore not later
than the effective date of the Registration Statement relating to
the Commodore Public Offering, a written agreement, in form and
content reasonably satisfactory to counsel to Lanxide and
Commodore, to the effect that such person is an "affiliate" of
Lanxide or Commodore (as the case may be) and that such person
shall not sell, pledge, transfer, or otherwise dispose of the
shares of Commodore Capital Stock held by such person except as
contemplated by this Agreement and will not sell, pledge,
transfer, or otherwise dispose of the shares of Commodore Capital
Stock to be received by such person upon consummation of the
Merger except in compliance with applicable provisions of the
1933 Act and the rules and regulations thereunder. Commodore
shall not be required to maintain the effectiveness of the
Registration Statement under the 1933 Act for the purposes of
resale of Commodore Capital Stock by such affiliates.
7.6 Certain Actions. Except with respect to this Agreement
and the transactions contemplated hereby, neither Lanxide nor
Commodore shall solicit or encourage or take any other action to
facilitate (including by way of furnishing any information that
it is not legally obligated to furnish) any inquiry or proposal
relating to the merger or consolidation of such Party or any of
its Significant Subsidiaries with any entity or the acquisition
of such Party or any of its Significant Subsidiaries or all or
substantially all of their assets or properties or capital stock
by any person or entity. Neither Lanxide nor Commodore shall
negotiate with respect to any such proposal except in compliance
with its legal obligations, nor shall it reach any agreement or
understanding (formal or informal, written or otherwise) with
respect to any such proposal. Notwithstanding the foregoing,
either Party may take any of the actions prohibited pursuant to
this Section 7.6, if and to the extent that it is required to do
so in order to reasonably comply with fiduciary obligations of
its Board of Directors under applicable law as determined by such
Board of Directors in good faith after consultation and based
upon advice of counsel. Each of Lanxide and Commodore shall
promptly notify the other Party orally and in writing in the
event it receives any such inquiry or proposal.
7.7 Agreement as to Efforts to Consummate. Subject to the
terms and conditions of this Agreement, each of Lanxide and
Commodore agrees to use all reasonable efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, all
things necessary, proper, or advisable under applicable laws and
regulations to consummate and make effective, as soon as
practicable after the date of this Agreement, the transactions
contemplated by this Agreement, including, without limitation,
using reasonable efforts to lift or rescind any injunction or
restraining order or other order adversely affecting the ability
of the Parties to consummate the transactions contemplated
herein. Each of Lanxide and Commodore shall use, and shall cause
each of the Lanxide Subsidiaries or Commodore Subsidiaries, as
the case may be, to use, its best efforts to obtain consents of
all third parties and governmental bodies necessary or desirable
for the consummation of the transactions contemplated by this Agreement.
7.8 Supplements to Disclosure Schedules. Each of Lanxide
and Commodore shall promptly supplement or amend their respective
Disclosure Schedules with respect to any matter hereafter arising
or discovered which, if existing or known at the date of this
Agreement, would have been required to be set forth or otherwise
disclosed in its respective Disclosure Schedule (the "Updated
Information"). No such supplement or amendment of the Commodore
Disclosure Schedule or the Lanxide Disclosure Schedule, as the
case may be, to include the Updated Information shall affect the
ability of Lanxide or Commodore, respectively, to rely on the
conditions to Merger set forth in Article Nine hereof.
7.9 Prepayment or Conversion of Commodore Convertible
Notes. On or prior to the Effective Time, Commodore shall notify
all holders of Commodore Convertible Notes that it will prepay in
full all outstanding Commodore Convertible Notes on a date which
shall be not more than sixty (60) days following the date of such
notice, unless converted into shares of Commodore Common Stock
(after giving effect to the Commodore Reverse Stock Split) in
accordance with the terms thereof, prior to the date fixed for
prepayment. In such connection, Commodore shall reserve, from
the net proceeds of the Commodore Public Offering, sufficient
funds to effect such prepayment, and at the time of such
prepayment and/or conversion of the Commodore Convertible Notes,
as the case may be, all shares of Commodore Common Stock pledged
to secure payment of such Commodore Convertible Notes shall be
returned to Commodore for cancellation.
ARTICLE EIGHT
ADDITIONAL AGREEMENTS
8.1 Press Releases. Prior to the Effective Time of the
Merger, Lanxide and Commodore shall consult with each other as to
the form and substance of any press release or other public
disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, however, that nothing
in this Section 8.1 shall be deemed to prohibit any Party from
making any disclosure which its counsel deems necessary or
advisable in order to satisfy such Party's disclosure obligations
imposed by law.
8.2 Merger Subsidiary. Prior to the Effective Time, the
outstanding capital stock of the Merger Subsidiary shall consist
of one hundred (100) shares of common stock, all of which shares
shall be owned by Commodore. Prior to the Effective Time, the
Merger Subsidiary shall not (i) conduct any business operations
whatsoever or (ii) enter into any contract or agreement of any
kind (other than this Agreement and the Exhibits hereto, as
applicable), acquire any assets or incur any liability, except as
may be specifically contemplated by this Agreement or as the
Parties may otherwise agree. In the event this Agreement is
terminated prior to the Effective Time, the Merger Subsidiary
shall be dissolved.
ARTICLE NINE
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 Conditions to Lanxide's and Commodore's Obligation to
Effect the Merger. The respective obligations of Lanxide, on the
one hand, and Commodore, on the other hand, to consummate the
Merger are subject to the satisfaction of the following
conditions, unless waived by Lanxide or Commodore, as the case
may be, pursuant to Section 11.5 of this Agreement:
(a) Stockholders' Approvals. The holders of a majority
of the outstanding shares of each of Lanxide Common Stock and
Commodore Common Stock shall have approved this Agreement, the
Merger, and the consummation of the transactions contemplated
hereby, as and to the extent required by law and by the
provisions of any governing instruments or this Agreement, and
each Party shall have furnished to the other certified copies of
resolutions duly adopted by such Party's stockholders evidencing
the same.
(b) Consents and Approvals. All approvals and
authorizations of, filings and registrations with, and
notifications to, all Regulatory Authorities required for
consummation of the Merger and for the preventing of any
termination of any right, privilege, license, or agreement of
either Party or any of its respective Subsidiaries which, if not
obtained or made, would have a Material Adverse Effect on Lanxide
or Commodore, as the case may be, shall have been obtained or
made and shall be in full force and effect and all waiting
periods required by law shall have expired. Any approval
obtained from any Regulatory Authority which is necessary to
consummate the transactions contemplated hereby shall not be
conditioned or restricted in a manner which in the reasonable
judgment of the Board of Directors of either Party materially
adversely impacts the economic or business assumptions of the
transactions contemplated by this Agreement so as to render
inadvisable the consummation of the Merger. To the extent that
any lease, license, loan or financing agreement or other contract
or agreement to which any Party or any of its Subsidiaries, as
the case may be, is a party requires the consent of or waiver
from the other party thereto as a result of the transactions
contemplated by this Agreement, such consent or waiver shall have
been obtained, unless the failure to obtain such consent or
waiver would not have a Material Adverse Effect on anticipated
business, prospects or financial condition of such Party
following the Merger.
(c) Legal Proceedings. No Governmental Entity having
jurisdiction over Commodore or Lanxide, or any of their
respective Subsidiaries, shall have enacted, issued, promulgated,
enforced or entered any law, rule, regulation, executive order,
decree, injunction or other order (whether temporary, preliminary
or permanent) which is then in effect and has the effect of
making the Merger or any other transaction contemplated by this
Agreement illegal. There shall not have been instituted or be
pending any suit, action or proceeding by any Governmental Entity
as a result of this Agreement or any of the transactions
contemplated hereby which questions the validity or legality of
the transactions contemplated by this Agreement.
(d) Dissenting Shares. Holders of Dissenting Shares
representing five percent (5%) or more of the outstanding shares
of Lanxide Common Stock and Lanxide Series A Preferred Stock,
taken together as a class (each share of Lanxide Series A
Preferred Stock constituting for this purpose the equivalent of
0.371947 share of Commodore Common Stock) shall not have elected,
on a timely basis, to exercise any rights of appraisal under
applicable provisions of the DGCL.
(e) Tax Opinion of Counsel. Each of Lanxide and
Commodore shall have received from Messrs. Greenberg, Traurig,
Hoffman, Lipoff, Rosen & Quentel, counsel to Commodore, an
opinion, dated as of the Effective Time of the Merger, and in
form and substance reasonable satisfactory to the Parties, to the
effect that the Merger will constitute a reorganization within
the meaning of section 368(a) of the Code, and that Lanxide,
Commodore and Merger Subsidiary each will be a party to the
reorganization within the meaning of section 368(b) of the Code,
which opinion shall not have been withdrawn prior to the
Effective Time.
(f) Registration Statement. The Merger Registration
Statement shall have been declared effective under the 1933 Act
and no stop orders suspending the effectiveness of such Merger
Registration Statement shall be in effect and no proceedings for
such purpose shall be pending before or threatened by the SEC.
(g) Closing of Transactions under Commodore Public
Offering Registration Statement. The closing of the sale of the
securities being offered by Commodore pursuant to Commodore
Public Offering Registration Statement shall be consummated
simultaneous with or immediately following the Effective Time of
the Merger.
(h) Conditions Relating to Commodore Public Offering.
The gross proceeds of the Commodore Public Offering shall not be
less than $50.0 million, and the aggregate "market value"
(defined as the product of (i) the per share offering price of
shares of Commodore Common Stock sold in the Commodore Public
Offering, and (ii) the aggregate number of shares of Commodore
Common Stock and Commodore Common Stock Equivalents (including
for this purpose Lanxide Common Stock Equivalents assumed by
Commodore pursuant to Section 3.9) outstanding immediately
following the Effective Time, after giving effect to the
Commodore Reverse Stock Split but before giving effect to the
issuance of additional Commodore Common Stock in the Commodore
Public Offering) of all outstanding shares of Commodore Common
Stock and Commodore Common Stock Equivalents shall be not less
than $175.0 million.
9.2 Conditions to Obligations of Commodore to Effect the
Merger. The obligations of Commodore to consummate the Merger
are subject to the satisfaction of the following conditions,
unless waived by Commodore, pursuant to Section 11.5 of this
Agreement:
(a) Representations and Warranties. The
representations and warranties of Lanxide set forth or referred
to in this Agreement shall be true and correct as of the date of
this Agreement and as of the Effective Time with the same effect
as though all such representations and warranties had been made
on and as of the Effective Time, except (i) for any such
representations and warranties made as of a specified date, which
shall be true and correct in all material respects as of such
date, (ii) for breaches of representations or warranties which,
in the aggregate, would not be reasonably likely to have a
Material Adverse Effect on Lanxide or (iii) as expressly
contemplated by this Agreement or the Lanxide Disclosure
Schedule.
(b) Performance of Agreements and Covenants. Each and
all of the agreements and covenants of Lanxide to be performed
and complied with pursuant to this Agreement and the other
agreements contemplated hereby prior to the Effective Time shall
have been duly performed and complied with in all material
respects.
(c) Certificates. Lanxide shall have delivered to
Commodore a certificate dated as of the Effective Time and signed
on its behalf by its chief executive officer and its chief
financial officer, to the effect that (i) the conditions to its
obligations set forth in Section 9.2 (a) and 9.2 (b) of this
Agreement have been satisfied and (ii) that there has been no
Material Adverse Change in the consolidated financial condition
of Lanxide from that reflected on the June 30, 1996 financial
statements of Lanxide, all in such reasonable detail as Commodore
shall request.
(d) Opinions of Counsel. Lanxide shall have delivered
to Commodore an opinion, dated as of the Effective Time of the
Merger, of Skadden, Arps, Slate, Meagher & Flom, counsel to
Lanxide, as to such matters as Commodore may reasonably request
with respect to this Agreement and the transactions contemplated
by this Agreement.
(e) Commodore Fairness Opinion. On or before the date
of the mailing of the Joint Proxy Statement to its stockholders,
Commodore shall have received the Commodore Fairness Opinion to
the effect that, in the opinion of the investment banking firm
engaged by Commodore, as of the date of such opinion, the
Exchange Ratio is fair to Commodore from a financial point of
view.
(f) No Withdrawal or Modification of Fairness Opinion
and Special Committee Recommendation. On or before the Effective
Time, the Special Committee of the Board of Directors of
Commodore (the "Commodore Special Committee") shall have received
confirmation from Schroder Wertheim & Co. Incorporated (or such
other financial advisor as shall have rendered the Commodore
Fairness Opinion), as financial advisor to the Commodore Special
Committee indicating that the terms of the Commodore Public
Offering and the pending public offering of equity securities by
Commodore Separation Technologies, Inc., or another Commodore
Subsidiary (the "Subsidiary Offering"), as finally determined, do
not require such financial advisor to withdraw or modify in any
material respect, the conclusions contained in the Commodore
Fairness Opinion previously delivered, and the Commodore Special
Committee shall not have determined that the terms of the
Commodore Public Offering and the Subsidiary Offering require the
Commodore Special Committee to withdraw its favorable
recommendation to the Board of Directors of Commodore as to the
terms of the Merger contemplated hereby.
9.3 Conditions to Obligations of Lanxide to Effect the
Merger. The obligations of Lanxide to consummate the Merger are
subject to the satisfaction of the following conditions, unless
waived by Lanxide, pursuant to Section 11.5 of this Agreement:
(a) Representations and Warranties. The
representations and warranties of Commodore set forth or referred
to in this Agreement shall be true and correct as of the date of
this Agreement and as of the Effective Time with the same effect
as though all such representations and warranties had been made
on and as of the Effective Time, except (i) for any such
representations and warranties made as of a specified date, which
shall be true and correct in all material respects as of such
date, (ii) for breaches of representations or warranties which,
in the aggregate, would not be reasonably likely to have a
Material Adverse Effect on Commodore or (iii) as expressly
contemplated by this Agreement or any Disclosure Schedule.
(b) Performance of Agreements and Covenants. Each and
all of the agreements and covenants of Commodore to be performed
and complied with pursuant to this Agreement and the other
agreements contemplated hereby prior to the Effective Time shall
have been duly performed and complied with in all material
respects.
(c) Certificates. Commodore shall have delivered to
Lanxide a certificate dated as of the Effective Time and signed
on its behalf by its chief executive officer and its chief
financial officer, to the effect that (i) the conditions to its
obligations set forth in Section 9.3 of this Agreement have been
satisfied and (ii) that there has been no Material Adverse Change
in the consolidated financial condition of Commodore from that
reflected on the June 30, 1996 financial statements of Commodore,
all in such reasonable detail as Lanxide shall request.
(d) Opinions of Counsel. Commodore shall have
delivered to Lanxide and Commodore an opinion, dated as of the
Effective Time of the Merger, of Greenberg, Traurig, Hoffman,
Lipoff, Rosen & Quentel, counsel to Commodore, as to such matters
as Lanxide and Commodore may reasonably request with respect to
this Agreement and the transactions contemplated by this
Agreement.
(e) Lanxide Fairness Opinions. On or before the date
of the mailing of the Joint Proxy Statements to its stockholders,
Lanxide shall have received the Lanxide Fairness Opinion, to the
effect that in the opinion of the investment banking firm engaged
by Lanxide the Common Stock Exchange Ratio, the Preferred Stock
Exchange Ratio and the other terms of the Merger are fair to the
respective stockholders of Lanxide from a financial point of
view.
(f) No Withdrawal or Modification of Fairness Opinion
and Special Committee Recommendation. On or before the Effective
Time, the Special Committee of the Board of Directors of Lanxide
(the "Lanxide Special Committee") shall have received
confirmation from Pennsylvania Merchant Group, Ltd. (or such
other financial advisor as shall have rendered the Lanxide
Fairness Opinion), as financial advisor to the Lanxide Special
Committee, indicating that the terms of the Commodore Public
Offering and the Subsidiary Offering, as finally determined, do
not require such financial advisor to withdraw or modify in any
material respect, the conclusions contained in the Lanxide
Fairness Opinion previously delivered, and the Lanxide Special
Committee shall not have determined that the terms of the
Commodore Public Offering and the Subsidiary Offering require the
Lanxide Special Committee to withdraw its favorable
recommendation to the Board of Directors of Lanxide as to the
terms of the Merger contemplated hereby.
ARTICLE TEN
TERMINATION
10.1 Termination. Notwithstanding any other provision of
this Agreement, and notwithstanding the approval of this
Agreement and the Merger by the stockholders of Lanxide and
Commodore or both, this Agreement may be terminated and the
Merger abandoned at any time prior to the Effective Time:
(a) by mutual consent of each of Lanxide and
Commodore; or
(b) by either Lanxide or Commodore in the event of a
material breach by the other Party of any representation,
warranty, covenant, or agreement contained herein which cannot be
or has not been cured within thirty (30) days after the giving of
written notice to the breaching Party of such breach and which
represents or is likely to cause a Material Adverse Effect on
Lanxide or Commodore, as the case may be; or
(c) by either Lanxide or Commodore in the event that
the Merger shall not have been consummated on or before March 31,
1997; provided that neither Party shall be entitled to terminate
this Agreement pursuant to this Section 10.1(c) if the failure to
satisfy a condition precedent is a result of such party's own
action; or
(d) by either Lanxide or Commodore in the event (i)
any approval of any governmental or other Regulatory Authority
required for consummation of the Merger and the other
transactions contemplated hereby shall have been denied by final
non-appealable action of such authority or if any action taken by
such authority is not appealed within the time limit for appeal,
(ii) any Party is prohibited by an order or injunction (other
than an order or injunction on a temporary or preliminary basis)
of a court of competent jurisdiction from consummating the Merger
and all appeals from such order or injunction have been finally
exhausted, or (iii) if the stockholders of Lanxide or Commodore
fail to vote their approval of the Merger and the transactions
contemplated hereby as required by the DGCL or the provisions
hereof at the Stockholders' Meetings; or
(e) by either Lanxide or Commodore in the event that
either Special Committee or either Board of Directors withdraws
its approval of the transactions contemplated hereby in the
exercise of its fiduciary duties.
10.2 Effect of Termination. In the event of the termination
and abandonment of this Agreement, pursuant to Section 10.1 of
this Agreement, this Agreement shall become void and have no
effect, except that (i) the provisions of Sections 7.4, 11.1 and
11.2 of this Agreement shall survive any such termination and
abandonment, and (ii) a termination pursuant to Sections of this
Agreement shall not relieve the breaching Party from liability
for an uncured intentional and willful breach of a
representation, warranty, covenant or agreement giving rise to
such termination.
10.3 Survival of Representations and Warranties. The
respective representations and warranties of the Parties shall
not survive the Effective Time of the Merger.
ARTICLE ELEVEN
MISCELLANEOUS
11.1 Expenses.
(a) Except as provided in Section 11.1(b) of this
Agreement, each of the Parties shall bear and pay all costs and
expenses incurred by it or on its behalf in connection with the
preparation and negotiation of this Agreement and the Exhibits
and the Disclosure Schedules annexed hereto, and, except as
provided in Section 11.1(b) below, the related closing documents
and instruments required to be delivered at the Effective Time of
the Merger (collectively, the "Merger Expenses"). Included in
such Merger Expenses are the fees and expenses of each Party's
financial or other consultants, investment bankers, accountants,
and legal counsel.
(b) Notwithstanding the provisions of Section 11.1(a)
above, Commodore shall bear and pay all expenses relating to the
registration and sale of securities and other compliance with
applicable Securities Laws in connection with the Merger and
Commodore Public Offering (the "Securities Expenses"). Such
Securities Expenses shall include, but not be limited to:
(i) the legal fees, accounting fees, printing
costs and related expenses incurred in connection with
the preparation, filing and printing of the Merger
Registration Statement and related Joint Proxy
Statement, and Commodore Public Offering Registration
Statement,
(ii) all listing, filing, or registration fees,
including state securities laws filings or registration
fees in connection with the Registration Statements,
and
(iii) all other costs and expenses incurred by
Commodore or Lanxide prior to the effective date(s) of
the Registration Statements, in respect of the
registration of securities contemplated hereunder.
(c) Final settlement with respect to payment of fees
and expenses by the Parties pursuant to Section 11.1 of this
Agreement shall be made within ten (10) days of the termination
of this Agreement or immediately at the Effective Time of the
Merger.
11.2 Brokers and Finders. Except for investment bankers
engaged to render the Lanxide Fairness Opinion and the Commodore
Fairness Opinion and to act as underwriter(s) of securities in
connection with Commodore Public Offering, each of the Parties
represents and warrants that neither it nor any of its officers,
directors, employees, affiliates, or Subsidiaries has employed
any broker or finder or incurred any liability for any financial
advisory fees, investment bankers' fees, brokerage fees,
commissions, or finders' fees in connection with this Agreement
or the transactions contemplated hereby. In the event of a claim
by any broker or finder based upon his or its representing or
being retained by or allegedly representing or being retained by
either Lanxide or Commodore, Lanxide or Commodore, as the case
may be, agrees to indemnify and hold the other Party harmless for
and from any such claim.
11.3 Entire Agreement. Except as otherwise expressly
provided herein, this Agreement and the Exhibits and Schedules
hereto contain the entire agreement between the Parties with
respect to the transactions contemplated hereunder and
thereunder, and such agreements supersede all prior arrangements
or understandings with respect thereto, written or oral. The
terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the Parties and their respective
successors. Nothing in this Agreement expressed or implied, is
intended to confer upon any party, other than the Parties, or
their respective successors, any rights, remedies, obligations,
or liabilities under or by reason of this Agreement.
11.4 Amendments. To the extent permitted by law, this
Agreement may be amended, modified or supplemented only by a
subsequent writing signed by each of the Parties upon the
approval of the Boards of Directors of each of the Parties and
the respective Special Committees of Commodore and Lanxide;
provided, however, that the provisions of this Agreement relating
to the manner or basis in which shares of Lanxide Capital Stock
will be exchanged for Commodore Capital Stock shall not be
amended after the Stockholders' Meetings without the requisite
approval, if any, of the holders of the issued and outstanding
shares of Lanxide Capital Stock and Commodore Capital Stock
entitled to vote thereon.
11.5 Waivers. Prior to or at the Effective Time, Lanxide
acting through its Board of Directors or chief executive officer
or other authorized officer upon the approval of its Special
Committee, shall have the right to waive any default in the
performance of any term of this Agreement by Commodore, to waive
or extend the time for the compliance or fulfillment by Commodore
of any and all of its obligations under this Agreement, and to
waive any or all of the conditions precedent to the obligations
of Lanxide under this Agreement, except any condition which, if
not satisfied, would result in the violation of any law or
applicable governmental regulation. Prior to or at the Effective
Time, Commodore, acting through its Board of Directors or chief
executive officer or other authorized officer upon the approval
of its Special Committee, shall have the right to waive any
default in the performance of any term of this Agreement by
Lanxide, to waive or extend the time for the compliance or
fulfillment by Lanxide of any and all of its obligations under
this Agreement, and to waive any or all of the conditions
precedent to the obligations of Commodore under this Agreement,
except any condition which, if not satisfied, would result in the
violation of any law or applicable government regulation. Any
such extension or waiver shall be valid only if set forth in an
instrument in writing specifically referring to this Agreement
and signed on behalf of such party.
11.6 No Assignment. None of the Parties may assign any of
its rights or obligations under this Agreement to any other
Person and this Agreement shall not be assigned by operation of
law or otherwise.
11.7 Specific Enforceability. The Parties recognize and
hereby acknowledge that it is impossible to measure in money the
damages that would result to a Party by reason of the failure of
any of the Parties to perform any of the obligations imposed on
it by this Agreement. Accordingly, if any Party should institute
an action or proceeding seeking specific enforcement of the
provisions hereof, each Party against which such action or
proceeding is brought hereby waives the claim or defense that the
Party instituting such action or proceeding has an adequate
remedy at law and hereby agrees not to assert in any such action
or proceeding the claim or defense that such a remedy at law
exists.
11.8 Severability. In case any one or more of the
provisions contained in this Agreement should be invalid, illegal
or unenforceable in any respect against a Party hereto, the
validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired
thereby and such invalidity, illegality or unenforceability shall
apply only as to such Party in the specific jurisdiction where
such judgment shall be made.
11.9 Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and
sufficient if delivered by hand, by facsimile transmission, or by
registered or certified mail, postage prepaid to the persons at
the addresses set forth below (or at such other address as may be
provided hereunder), and shall be deemed to have been delivered
as of the date so delivered:
Lanxide: Lanxide Corporation
1300 Marrows Road
P.O. Box 6077
Newark, Delaware 19714-6077
Attn: Marc S. Newkirk, President
and Chief Executive Officer
fax. no. 302-456-6531
-and-
S. Frederick Van Vranken
Furman Selz LLP
230 Park Avenue
New York, New York 10169
fax. no. (212) 309-8285
Copy to Counsel: Skadden, Arps, Slate, Meagher & Flom
One Rodney Square
Wilmington, Delaware 19801
Attn: Robert B. Pincus, Esq.
fax. no. 302-651-3001
-and-
Lamb & Bouchand, P.C.
222 Delaware Avenue, Suite 1102
Wilmington, Delaware 19801
Attn: Stephen Lamb, Esq.
fax. no. 302-573-3510
Commodore: Commodore Environmental Services, Inc.
150 East 58th Street
Suite 3410
New York, New York 10155
Attn: Paul E. Hannesson, President
and Chief Executive Officer
fax. no. 212-753-0731
Copy to Counsel: Greenberg, Traurig, Hoffman, Lipoff,
Rosen & Quentel
153 East 53rd Street, 35th floor
New York, New York 10022
Attn: Stephen A. Weiss, Esq.
fax. no. 212-223-7161
Copy to Special
Committee: Special Committee of the Board of
Directors
of Commodore Environmental Services, Inc.
c/o Sperry, Mitchell & Company, Inc.
595 Madison Avenue, 30th Floor
New York, New York 10022
Attn: David Mitchell
fax no. 212-753-0757
Copy to Counsel: Patterson, Belknap, Webb & Tyler LLP
1133 Avenue of the Americas
New York, New York 10036
Attn: Stephen W. Schwarz, Esq.
fax no. 212-336-2222
COES Acquisition: COES Acquisition Corp.
150 East 58th Street
Suite 3410
New York, New York 10155
Attn: President
fax. no. 212-753-0731
Copy to Counsel: Greenberg, Traurig, Hoffman, Lipoff,
Rosen & Quentel
153 East 53rd Street, 35th floor
New York, New York 10022
Attn: Stephen A. Weiss, Esq.
fax. no. 212-223-7161
11.10 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of
Delaware, without regard to the conflict of laws rules thereof.
11.11 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an
original but all of which shall constitute one and the same
instrument.
11.12 Captions. The captions contained in this Agreement
are for reference purposes only and are not part of this
Agreement.
IN WITNESS WHEREOF, each of the Parties has cause this
Agreement to be executed on its behalf, and its corporate seal to
be hereunto affixed and attested to, by officers thereunto duly
authorized all as of the day and year first above written.
COMMODORE ENVIRONMENTAL
SERVICES, INC.
[Seal]
By: /s/ Paul E. Hannesson
--------------------------
Attest: Paul E. Hannesson,
President and Chief
/s/ Alice Farah Executive Officer
---------------------
LANXIDE CORPORATION
[Seal]
By: /s/ Marc S. Newkirk,
--------------------------
Attest: Marc S. Newkirk,
President and Chief
/s/ J. Michael Rice Executive Officer
---------------------
COES ACQUISITION CORP.
[Seal]
By: /s/ Bentley J. Blum,
--------------------------
Attest: Bentley J. Blum,
Chairman of the Board of
Directors
/s/ Alice Farah
---------------------
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
COMMODORE ENVIRONMENTAL SERVICES, INC.
LANXIDE CORPORATION
AND
COES ACQUISITION CORP.
NOVEMBER 13, 1996
Exhibit 2
COMMODORE ENVIRONMENTAL SERVICES AND LANXIDE
AGREE TO BUSINESS COMBINATION
NEW YORK, NEW YORK AND NEWARK, DELAWARE. . .November 14, 1996 -- FOR
IMMEDIATE RELEASE: Lanxide Corporation (OTC Bulletin Board: LNXI)
and Commodore Environmental Services, Inc. (OTC Bulletin Board:
COES) today announced that they had entered into a merger agreement
under which Lanxide will become a wholly-owned subsidiary of Commodore
and Lanxide stockholders will become Commodore stockholders.
The combined company will continue to develop and
engage in a commercialization of a portfolio of proprietary
process technologies which are used in applications involving
(i) the destruction and decontamination of certain hazardous
substances, including polychlorinated biphenyls, dioxins and
chemical warfare agents, (ii) the separation and recovery of
various solubilized materials, including metals, organic
chemicals and other targeted substances, from liquid and gaseous
process streams and (iii) the production of unique high
performance materials made from ceramic reinforced metal,
ceramic and polymer products.
As a result of the merger, each share of Lanxide Common
Stock will be exchanged for 19.1 shares of Commodore Common Stock
and each share of Lanxide Series A Preferred Stock will be
exchanged for 7.1 shares of Commodore Common Stock.
The merger is conditioned upon satisfaction or waiver
of certain conditions, including (i) the approval of the merger
by holders of a majority of the outstanding common shares of each
of Commodore and Lanxide and (ii) consummation of a public
offering of Commodore simultaneous with the merger with gross
proceeds of at least $50,000,000, and which values the combined
companies prior to such offering at not less than $175 million.
Commodore and Lanxide anticipate that the merger will close in
the first quarter of 1997. No assurance, however, can be given
that the transaction will be consummated in that time frame or at
all.
Lanxide was founded in 1983 to develop and
commercialize novel materials processing technology. The
Company's initial focus centered on unique approaches to the
fabrication of ceramic-reinforced ceramics and metals, and has
more recently expanded to include processing of polymeric
materials. The Company's patented technology has enabled it to
engineer a new class of high-performance materials, LANXIDE
composites, which combine many of the features of ceramics and
metals, providing a new class of structural materials. The
exhibit combinations of strength, damage tolerance, shape
versatility, hardness, stiffness, chemical stability and
temperature tolerance previously unavailable in a single class of
materials. Products introduced to date include electronic
components, optical components, automobile engine and brake
components, refractories, armor, industrial pump and cyclone
components, components for gas turbine engines, rocket engines
and certain other aerospace applications, and sporting goods.
Commodore Environmental Services, Inc. has been
involved in environmental material process technology since 1986.
On June 28, 1996, Commodore Environmental Services' formerly
wholly-owned subsidiary, Commodore Applied Technologies, Inc.
(AMEX:CXI), successfully completed its initial public offering of
common stock and redeemable warrants, raising gross proceeds of
$35,075,000. Commodore Applied Technologies is commercializing
its patent solvated electron process, which has been awarded the
U.S. EPA's first ever portable, non-thermal, nationwide permit
for PCB destruction. This process also destroys chemical warfare
agents and concentrates certain radioactive wastes for more
effective disposal. Commodore Environmental Services has
retained 69% ownership of Commodore Applied Technologies, Inc.
For further details, please contact R. Michael Rice at
Lanxide Corporation, 1300 Marrows Road, P.O. Box 6077, Newark, DE
19714-6077, Tel. (302) 456-6219, Fax (302) 454-1712 and Melissa
C. Berkowitz at Commodore Environmental Services, Inc., 150 East
58th Street, Suite 3400, New York, NY 10155, Tel. (212) 308-5800,
Fax (212) 753-0731.
Exhibit 3
COMMODORE ENVIRONMENTAL SERVICES, INC.
150 EAST 58TH STREET, SUITE 3400
NEW YORK, NEW YORK 10155
November 13, 1996
Lanxide Performance Materials, Inc.
1300 Marrows Road
P.O. Box 6077
Newark, Delaware 19714-6077
RE: LINE OF CREDIT AGREEMENT
Gentlemen:
This letter agreement sets forth the terms and
conditions under which Commodore Environmental Services, Inc., a
Delaware corporation (the "Lender"), agrees to make available to
Lanxide Performance Materials, Inc., a Delaware corporation (the
"Borrower"), a line of credit (the "Line of Credit") pursuant to
which, subject to the terms and conditions herein provided, the
Borrower may from time to time borrow from the Lender loans and
advances (collectively, "Advances") in an aggregate principal
amount not to exceed $3,000,000 at any time outstanding (the
"Maximum Loan Amount").
1. Borrowing Procedures.
(a) The Line of Credit will be available to the
Borrower commencing on the date hereof and continuing until such
time as the Advances shall become due and payable in accordance
with the Note (as such term is hereinafter defined). Within the
limit of the Maximum Loan Amount, the Borrower may borrow
hereunder from time to time, and may repay the outstanding
Advances at any time and from time to time.
(b) In order to borrow Advances under the Line of
Credit, the Borrower shall give written notice to the Lender,
specifying the amount of the requested Advance and the specific
use(s) to be made by the Borrower of the proceeds of the
requested Advance, not less than two (2) business days prior to
the date of the proposed borrowing. Provided that (i) this
agreement has not previously expired or been terminated and no
Event of Default (or event that, with notice or the passage of
time or both, would constitute an Event of Default) has then
occurred and is then continuing, and (ii) the Lender shall be
satisfied (in its sole and absolute discretion) with the
Borrower's proposed use(s) of the proceeds of the requested
Advance, the Lender will fund the requested Advance (or so much
thereof as may be available within the limit of the Maximum Loan
Amount) on or before the date of funding as requested by the
Borrower (or such later date on which the Borrower has provided
any supplemental information requested by the Lender with respect
to the proposed use(s) of the proceeds of the requested Advance),
such funds to be wire transferred to such account as may be
designated by the Borrower in its borrowing request. In no
event, however, shall the Lender be required to effect more than
three (3) fundings in any calendar month.
2. The Note.
(a) All Advances shall be represented by a Line
of Credit Promissory Note of even date herewith in the maximum
principal amount of $3,000,000 (the "Note"), provided that,
notwithstanding the face amount of the Note, the outstanding
amount of the Advances shall be as reflected on the Lender's
books and records, which shall at all times be prima facia
evidence of the amount of the outstanding Advances.
(b) The Advances shall bear interest at the
rate(s) in effect from time to time as provided in the Note, and
accrued interest on the Advances shall be payable monthly in
arrears as provided in the Note.
(c) The principal amount of all outstanding
Advances, together with all unpaid accrued interest thereon,
shall be payable as provided in the Note (whether upon maturity,
by acceleration or otherwise).
3. Collateral Security and Other Documents.
(a) The Advances, all interest thereon, and all
other fees and expenses related to the Advances (collectively,
the "Obligations"), shall be secured by a second priority lien
and security interest in favor of the Lender (second in priority
only to the liens and security interests granted by the Borrower
to Commodore Applied Technologies, Inc.) in all of the assets
(tangible and intangible) of the Borrower, pursuant to a Security
Agreement of even date herewith by and between the Lender and the
Borrower (as same may be amended from time to time, the "Security
Agreement"). Pursuant to such Security Agreement, the Borrower
is executing and delivering to the Lender UCC-1 financing
statements as required to perfect the Lender's liens and security
interests, and the Borrower will hereafter execute and deliver
such further agreements, instruments and documents, and take such
further action, as may reasonably be requested by the Lender to
confirm and perfect such liens and security interests.
(b) The Obligations shall further be secured by a
guaranty of payment of Lanxide Corporation (the "Parent"),
pursuant to a Guaranty of even date herewith executed and
delivered by the Parent to the Lender (as same may be amended
from time to time, the "Guaranty").
(c) The obligations of the Lender to make
Advances at any time and from time to time are and shall be
subject to (i) the continued full force and effect of the Note,
the Security Agreement and the Guaranty (except to the extent
released, waived or terminated by act or omission of the Lender),
and (ii) the continued truth and accuracy of all of the
Borrower's representations and warranties pursuant to paragraph 4
below.
4. Borrower's Representations and Warranties. The
Borrower hereby represents and warrants to the Lender that:
(a) The Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware.
(b) The execution, delivery and performance by
the Borrower of this agreement, the Note and the Security
Agreement have been duly authorized by all necessary corporate
action on the part of the Borrower, and have been duly executed
and delivered by the authorized officers of the Borrower in each
instance.
(c) This agreement, the Note and the Security
Agreement constitute the legal, valid and binding obligations of
the Borrower, enforceable against the Borrower in accordance with
their respective terms, except to the extent that enforceability
may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights generally, and by
general principles of equity.
(d) The execution, delivery and performance by
the Borrower of this Agreement, the Note and the Security
Agreement do not violate or constitute a breach of any provision
of the Borrower's certification of incorporation or by-laws, or
any material agreement to which the Borrower is a party or by
which any of its property or assets is bound; and no consent of
any other person is required for the Borrower's execution,
delivery and performance of this Agreement, the Note and the
Security Agreement.
5. Use of Proceeds. All proceeds of the Advances
will be utilized solely for the purpose of funding working
capital deficiencies incurred by the Borrower in the normal
course of business not to exceed $3,000,000 from and after the
date hereof; provided, however, that, without the prior written
consent of the Lender in each instance, no proceeds of Advances
will at any time be utilized, and the Borrower shall not permit
any proceeds of Advances at any time to be utilized, for repaying
the principal amount of any indebtedness of the Borrower, the
Parent or any of its affiliates outstanding on the date hereof.
6. Expenses. The Borrower shall reimburse the Lender
on demand for all reasonable attorneys' fees and other expenses
incurred by the Lender in connection with the preparation and
negotiation of this agreement and the other agreements,
instruments and documents referred to herein, and any amendments
or waivers hereunder or thereunder from time to time. To the
extent that any such reasonable fees and other expenses are not
paid by the Borrower to the Lender on demand, the Borrower hereby
authorizes the Lender to collect same by charging the amount
thereof as an Advance under the Line of Credit.
7. Notices. All notices, requests, demands and other
communications pursuant to this agreement shall be in writing and
delivered personally or sent by telecopier, recognized overnight
courier service, or certified mail (return receipt requested) to
the party being notified at its address first set forth above.
Either party may change its address for notice by means of notice
given in a like manner.
8. Miscellaneous.
(a) This agreement, together with the other
agreements, instruments and documents referred to herein,
represents the entire agreement and understanding between the
parties with respect to the subject matter hereof, and supersedes
all prior discussions and understandings with respect to such
subject matter.
(b) Neither any provision of this agreement nor
any performance hereunder may be amended or waived except by an
agreement in writing executed by the party to be charged
therewith.
(c) This agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their
respective successors and assigns, provided that the Borrower
shall have no right to assign any of its rights or obligations
hereunder without the prior written consent of the Lender.
(d) This agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
(e) This agreement shall be governed by and
construed in accordance with the laws of the State of New York,
without giving effect to principles of conflicts of laws.
(f) The Borrower hereby consents to the
jurisdiction of all courts (state and/or federal) sitting in the
State of New York in connection with any action or proceeding
arising out of or relating to this agreement or the transactions
contemplated hereby, and waives any objection to such venue on
the grounds of forum non conveniens or otherwise. The Borrower
hereby further waives all right to trial by jury in any such
action or proceeding.
Kindly confirm your agreement to the foregoing by
countersigning and return a copy of this agreement to the Lender,
together with the other agreements, instruments and documents
referred to herein.
Very truly yours,
COMMODORE ENVIRONMENTAL SERVICES, INC.
By: /s/ Andrew Oatey
------------------------------
Acknowledged, Confirmed and
Agreed To:
LANXIDE PERFORMANCE MATERIALS, INC.
By: /s/ Mark Mortenson
------------------------------
Exhibit 4
LINE OF CREDIT
PROMISSORY NOTE
$3,000,000 November 13, 1996
FOR VALUE RECEIVED, the undersigned, LANXIDE PERFORMANCE
MATERIALS, INC., a Delaware corporation (the "Maker"), hereby
promises to pay to the order of COMMODORE ENVIRONMENTAL SERVICES,
INC., a Delaware corporation (the "Payee"), the principal sum of
Three Million ($3,000,000) Dollars, or, if less, the aggregate
unpaid principal amount of all Advances made by the Payee to the
Maker pursuant to that certain Line of Credit Agreement of even
date herewith by and between the Payee and the Maker (as same may
be amended from time to time, the "Line of Credit Agreement"),
together with interest (computed on the daily unpaid balance of
all Advances based on a three hundred sixty (360) day year
counting the actual number of days elapsed) on any and all
principal amounts remaining unpaid hereunder from time to time
from the date hereof until payment in full hereof, at a floating
rate per annum equal to the floating prime rate of interest (the
"Prime Rate") publicly announced from time to time by Citibank,
N.A. ("Citibank") as being its so-called "prime rate" of interest
(regardless of whether such rate is the best rate offered or
extended by Citibank), with the effective interest rate hereunder
to be adjusted on the first calendar day of each calendar month
to reflect any net change in the Prime Rate from the date hereof
or from the date of the most recent adjustment hereunder, as the
case may be.
1. Payment of Principal and Interest.
(a) Subject to mandatory payment upon acceleration
pursuant to paragraph 4 below, the entire principal balance of
this Note shall be due and payable on the earlier of (i) February
28, 1998, or (ii) the termination by Lanxide of the proposed
merger of COES Acquisition Corp., a Delaware corporation and
wholly-owned subsidiary of Payee ("COES") into Lanxide
Corporation, holder of all of the outstanding capital stock of
Maker ("Lanxide"), a wholly-owned subsidiary of the Payee, if
such termination is pursuant to Section 10.1(e) of the Agreement
and Plan of Merger, by and among Payee, Lanxide and COES, dated
November 13, 1996.
(b) Accrued interest under this Note shall be due and
payable monthly in arrears on the last calendar day of each
calendar month (provided that, if such calendar day is a day on
which commercial banks in the State of New York are authorized or
required to be closed, then such payment shall be due and payable
on the next succeeding business day, with interest thereon at the
rate in effect during the calendar month then ended).
(c) All payments of principal and interest hereunder
shall be payable in lawful money of the United States of America
at the office of the Payee located at 150 East 58th Street, Suite
3400, New York, New York 10155.
2. Prepayment.
The Maker shall have the right to prepay, without
premium or penalty, at any time or times after the date hereof,
all or any portion of the outstanding principal balance of this
Note.
3. Events of Default.
The following are Events of Default hereunder:
(a) Any failure by the Maker to pay when due all or
any portion of any principal or accrued interest hereunder; or
(b) If the Maker (i) admits in writing its inability
to pay generally its debts as they mature, or (ii) makes a
general assignment for the benefit of creditors, or (iii) is
adjudicated a bankrupt or insolvent, or (iv) files a voluntary
petition in bankruptcy, or (v) takes advantage, as against its
creditors, of any bankruptcy law or statute of the United States
of America or any state or subdivision thereof now or hereafter
in effect, or (vi) has a petition or proceeding filed against it
under any provision of any bankruptcy or insolvency law or
statute of the United States of America or any state or
subdivision thereof, which petition or proceeding is not
dismissed within thirty (30) days after the date of the
commencement thereof, (vii) has a receiver, liquidator, trustee,
custodian, conservator, sequestrator or other such person
appointed by any court to take charge of its affairs or assets or
business and such appointment is not vacated or discharged within
thirty (30) days thereafter, or (viii) takes any action in
furtherance of any of the foregoing; or
(c) Any misrepresentation or breach of warranty under,
or any failure by any party thereto (other than the Payee) to
perform any obligation (which non-performance shall continue
uncured for more than fifteen (15) days after written notice
thereof to such party and to the Maker) under, or any purported
or attempted revocation or disclaimer by any party (other than
the Payee) of, any of (i) the Line of Credit Agreement, (ii) that
certain Security Agreement of even date herewith (the "Security
Agreement") by and between the Payee and the Maker, as same may
be amended from time to time, or (iii) that certain Guaranty of
even date herewith (the "Guaranty") executed and delivered by
Lanxide Corporation in favor of the Payee, as same may be amended
from time to time; or
(d) Any use of the proceeds of any Advances under the
Line of Credit Agreement for any purpose prohibited by the Line
of Credit Agreement; or
(e) The occurrence and continuance of any "Event of
Default" under that certain Line of Credit Promissory Note dated
August 30, 1996 in the maximum principal amount of $1,500,000
issued by the Maker to Commodore Applied Technologies, Inc.; or
(f) The liquidation, dissolution or permanent
cessation of all business operations of the Maker.
4. Remedies on Default.
If any Event of Default shall occur and be continuing,
the Payee shall have the right, in addition to any and all other
rights and remedies, (a) to declare the entire unpaid principal
balance of this Note, together with all unpaid accrued interest
hereunder, to be immediately due and payable, and (b) to exercise
any and all rights and remedies under the Security Agreement, the
Guaranty and/or in respect of any and all collateral pledged as
security for this Note (including, without limitation, all
"Collateral" under and as defined in the Security Agreement);
provided, however, that if there shall occur any Event of Default
under paragraph 3(b) above, then the entire unpaid principal
balance of this Note and all unpaid accrued interest hereunder
shall automatically become due and payable, without requirement
of any notice or demand, and the Maker may thereupon exercise its
rights and remedies as aforesaid.
5. Certain Waivers.
Except as otherwise expressly provided in this Note,
the Maker hereby waives diligence, demand, presentment for
payment, protest, dishonor, nonpayment, default, and notice of
any and all of the foregoing. The Maker hereby expressly agrees
that this Note, or any payment hereunder, may be extended,
modified or subordinated (by forbearance or otherwise) from time
to time, without in any way affecting the liability of the Maker.
The Maker hereby further waives the benefit of any exemption
under the homestead exemption laws, if any, or any other
exemption or insolvency laws, and consents that the Payee may
release or surrender, exchange or substitute any personal
property or other collateral security now or hereafter held as
security for the payment of this Note.
6. Amendments.
Neither any provision of this Note nor any performance
hereunder may be amended or waived orally, but only by an
agreement in writing and signed by the party against whom
enforcement of any waiver, change, modification or discharge is
sought.
7. Governing Law; Consent to Jurisdiction; Waiver of Jury
Trial.
This Note shall be deemed to be a contract made under
the laws of the State of New York and shall be governed by, and
construed in accordance with, the laws of the State of New York.
The Maker hereby irrevocably consents to the jurisdiction of all
courts (state and federal) sitting in the State of New York in
connection with any claim, action or proceeding relating to or
for the collection or enforcement of this Note, and hereby waives
any defense of forum non conveniens or other such claim or
defense in respect of the lodging of any such claim, action or
proceeding in any such court. THE MAKER HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY CLAIM, ACTION OR
PROCEEDING RELATING TO OR FOR THE COLLECTION OR ENFORCEMENT OF
THIS NOTE.
8. Collection Costs.
In the event that any principal or accrued interest of
this Note shall not be paid when due and payable (whether upon
maturity, by acceleration or otherwise), the Maker shall further
be liable for and shall pay to the Payee all collection costs and
expenses incurred by the Payee, including reasonable attorneys'
fees; and the Payee may take judgment for all such amounts in
addition to all other sums due hereunder.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Note on and as of the date first set forth above.
LANXIDE PERFORMANCE MATERIALS, INC.
By:/s/ Mark Mortenson
-------------------------------
President
______________________
(Title)
Exhibit 5
SECURITY AGREEMENT
SECURITY AGREEMENT (this "Agreement"), made this 13th day of
November, 1996, by and between COMMODORE ENVIRONMENTAL SERVICES,
INC., a Delaware corporation having offices at 150 East 58th
Street, Suite 3400, New York, New York 10155 (the "Secured
Party"), and LANXIDE PERFORMANCE MATERIALS, INC., a Delaware
corporation having its principal offices at 1300 Marrows Road,
P.O. Box 6077, Newark, Delaware 19714-6077 (the "Debtor");
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery
hereof, the Secured Party and the Debtor are entering into a Line
of Credit Agreement of even date herewith (the "Line of Credit
Agreement"), pursuant to which the Secured Party has agreed,
subject to the terms and conditions thereof, to extend a line of
credit to the Debtor not to exceed $3,000,000 in principal amount
outstanding at any time, with all loans and advances thereunder
(the "Advances") and interest thereon to be evidenced by that
certain Line of Credit Promissory Note of the Debtor of even date
herewith in such maximum principal amount payable to the order of
the Secured Party (the "Note"); and
WHEREAS, in order to induce the Secured Party to make the
Advances pursuant to the Line of Credit Agreement and to be
evidenced by the Note, the Debtor has agreed to grant to the
Secured Party a second priority lien and security interest
(second in priority only to the lien and security interest
heretofore granted by the Debtor to Commodore Applied
Technologies, Inc. ("CATI")) in substantially all of the Debtor's
assets, pursuant to the terms and conditions of this Agreement;
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
Section 1. Definitions.
(a) All terms used herein which are defined in Article 1 or
Article 9 of the Uniform Commercial Code (the "Code") shall have
the meanings given therein unless otherwise defined in this
Agreement. All references to the plural herein shall also mean
the singular and to the singular shall also mean the plural. All
references to the Secured Party and the Debtor pursuant to the
definitions set forth in the recitals hereto, or to any other
person herein, shall include their respective heirs, executors,
administrators, personal representatives, successors and
permitted assigns. The words "hereof," "herein," "hereunder,"
"this Agreement" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not any
particular provision of this Agreement and as this Agreement now
exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
(b) In addition to those capitalized terms defined
elsewhere in this Agreement, the following terms shall have the
following respective meanings wherever used in this Agreement:
"Accounts" shall mean all present and future rights of the
Debtor to payment for goods sold or leased, for services
rendered, or for loans or other financial accommodations
extended, whether or not evidenced by instruments or chattel
paper, and whether or not earned by performance.
"Collateral" shall have the meaning set forth in Section 2
below.
"Equipment" shall mean all of the Debtor's now owned and
hereafter acquired equipment, machinery, computers and computer
hardware and software (whether owned or licensed), vehicles,
tools, furniture, fixtures, all attachments, accessions and
property now or hereafter affixed thereto or used in connection
therewith, and substitutions and replacements thereof, wherever
located.
"Event of Default" shall have the meaning ascribed thereto
in the Note.
"Inventory" shall mean all of the Debtor's now owned and
hereafter existing or acquired raw materials, work in process,
finished goods and all other inventory of whatsoever kind or
nature, wherever located.
"Loan Obligations" shall mean the collective reference to
all principal, interest, collection costs, expenses and other
amounts owing or payable from time to time under the Note, and
any further amounts which, pursuant to the Line of Credit
Agreement and/or this Agreement, may be deemed part of and/or
added to the Loan Obligations, whether arising before or after
the commencement of any case with respect to the Debtor under the
United States Bankruptcy Code or any similar statute (including,
without limitation, the payment of interest and other amounts
which would accrue and become due but for the commencement of
such case).
"Person" or "person" shall mean any individual, sole
proprietorship, partnership, corporation, business trust,
unincorporated association, joint stock corporation, trust, joint
venture or other entity or any government or any agency or
instrumentality or political subdivision thereof.
"Records" shall mean all of the Debtor's present and future
books of account of every kind or nature, purchase and sale
agreements, invoices, ledger cards, bills of lading and other
shipping evidence, statements, correspondence, memoranda, credit
files and other data relating to the Collateral or any account
debtor, together with the tapes, disks, diskettes and other data
and software storage media and devices, file cabinets or
containers in or on which the foregoing are stored (including any
rights of the Debtor with respect to the foregoing maintained
with or by any other Person).
"Security Interests" shall mean the liens and security
interests granted by the Debtor to the Secured Party, and all
rights and remedies in respect thereof, pursuant to this
Agreement.
Section 2. The Security Interests.
In order to secure the due and punctual payment and
performance of all Loan Obligations owing to the Secured Party
from time to time, the Debtor hereby grants to the Secured Party
a continuing lien and security interest in, and hereby assigns to
the Secured Party as collateral security, the following described
property and interests of the Debtor, whether now owned or
hereafter acquired or existing, and wherever located
(collectively, the "Collateral"):
(a) all Accounts;
(b) all present and future contract rights, general
intangibles (including, but not limited to, tax and duty refunds,
registered and unregistered patents, trademarks, service marks,
copyrights, trade names, applications for the foregoing, trade
secrets, goodwill, processes, drawings, blueprints, customer
lists, licenses, whether as licensor or licensee (to the extent
that the granting of the Secured Party's lien and security
interest therein will not cause a termination of such licenses or
result in the loss of the benefits of such licenses to the
Debtor), choses in action and other claims and existing and
future leasehold interests in equipment, real estate and
fixtures, those intangibles set forth in Schedule 1 annexed
hereto, and the right to sue for infringement and/or unauthorized
use of any intangibles), chattel paper, documents, instruments,
letters of credit, bankers' acceptances and guaranties; provided,
however, the Collateral shall not include any license agreements
or comparable agreements relating to the use of intellectual
property granted by Lanxide Corporation to the Debtor at any time
and from time to time;
(c) all present and future monies, securities, credit
balances, deposits, deposit accounts and other property of the
Debtor now or hereafter held or received by or in transit to the
Secured Party or its affiliates or at any other depository or
other institution from or for the account of the Secured Party,
whether for safekeeping, pledge, custody, transmission,
collection or otherwise, and all present and future liens,
security interests, rights, remedies, title and interest in, to
and in respect of Accounts and other Collateral, including,
without limitation, (i) rights and remedies under or relating to
guaranties, contracts of suretyship, letters of credit and credit
and other insurance related to the Collateral, (ii) rights of
stoppage in transit, replevin, repossession, reclamation and
other rights and remedies of an unpaid vendor, lienor or secured
party, (iii) goods described in invoices, documents, contracts or
instruments with respect to, or otherwise representing or
evidencing, Accounts or other Collateral, including, without
limitation, returned, repossessed and reclaimed goods, and (iv)
deposits by and property of account debtors or other persons
securing the obligations of account debtors;
(d) all Inventory;
(e) all Equipment;
(f) all Records; and
(g) all products and proceeds of the foregoing, in any
form, including, without limitation, insurance proceeds and all
claims against third parties for loss or damage to or destruction
of any or all of the foregoing.
Section 3. Filing; Further Assurances.
The Debtor will, at its expense, execute, deliver, file and
record (in such manner and form as the Secured Party shall
require), or permit the Secured Party to file and record, (a) all
financing statements, (b) all carbon, photographic or other
reproductions of financing statements or this Agreement (which
shall be sufficient as a financing statement hereunder), (c) all
endorsements to title to any vehicles or other Collateral as may
be required in order to perfect the Security Interests therein,
and (d) all specific assignments or other papers that may be
necessary or desirable, or that the Secured Party may request, in
order to create, preserve, perfect or validate any Security
Interest or to enable the Secured Party to exercise and enforce
its rights hereunder with respect to any of the Collateral. The
Debtor hereby appoints the Secured Party as the Debtor's
attorney-in-fact to execute and file, in the name and on behalf
of the Debtor, such additional financing statements as the
Secured Party may request. In addition, in the event and to the
extent that any of Collateral consists of or is represented by
instruments or other evidences of ownership such as would require
physical possession of same in order to perfect the Security
Interests therein, the Debtor will promptly, at its expense,
deliver same to the Secured Party, with any necessary
endorsements thereon.
Section 4. Representations and Warranties of the Debtor.
The Debtor hereby represents and warrants as follows:
(a) That the Debtor is the valid and lawful owner of
all of the Collateral, free from any and all adverse liens,
security interests or encumbrances (other than the liens,
security interests and encumbrances heretofore granted by the
Debtor to CATI).
(b) That the Debtor has full right, power and
authority to grant to the Secured Party the Security Interests
pursuant to the terms of this Agreement, and that, except for the
liens and security interests heretofore granted by the Debtor to
CATI, the Security Interests do not conflict with any rights of
any other persons or any commitments of the Debtor to any other
persons.
(c) That no financing statement covering any of the
Collateral is on file in any public office, other than financing
statements heretofore filed in favor of CATI, and financing
statements filed pursuant to this Agreement.
(d) That all additional information, representations
and warranties contained in Exhibit A annexed hereto and made a
part hereof are true, accurate and complete on the date hereof.
Section 5. Covenants of the Debtor.
The Debtor hereby covenants and agrees as follows:
(a) That the Debtor will defend the Collateral and the
Security Interests against all claims and demands of all persons
at any time claiming any adverse interest therein or
thereagainst.
(b) That the Debtor will give written notice thereof
to the Secured Party at least thirty (30) days prior to (i) any
change in the location of the principal office of the Debtor or
the office where the Debtor maintains its books and records
pertaining to the Accounts and/or any other Collateral, (ii) any
change in any of the information contained in Exhibit A annexed
hereto, and (iii) the movement or location of any Collateral to
or at any address other than as set forth in said Exhibit A.
(c) That the Debtor will promptly pay any and all
taxes, assessments and governmental charges upon the Collateral
prior to the date that penalties may attach thereto or same
become a lien on any of the Collateral, except to the extent that
such taxes, assessments and charges shall be contested by the
Debtor in good faith and through appropriate proceedings.
(d) That the Debtor will immediately notify the
Secured Party of any event causing a material loss or diminution
in the value of the Collateral, and the amount (or the Debtor's
best estimate of the amount) of such loss or diminution.
(e) That the Debtor will at all times have and
maintain insurance with respect to all insurable Collateral in
amounts and of types as are customarily maintained by other
companies of comparable size and type of business, each of which
insurance policies shall name the Secured Party as a loss payee
as its interests may appear. All policies of insurance shall
provide for a minimum of thirty (30) days' written notice to the
Secured Party prior to any cancellation, modification or non-
renewal thereof. The Debtor shall, on the date hereof and from
time to time upon request hereafter, furnish the Secured Party
with certificates or other evidence satisfactory to the Secured
Party of compliance with the foregoing insurance provisions.
(f) That the Debtor will keep all of the Collateral
free from any and all adverse liens, security interests or
encumbrances and in good order and repair, reasonable wear and
tear excepted, and will not waste or destroy the Collateral or
any part thereof.
(g) That the Debtor will not use any of the Collateral
in violation of any applicable law.
Section 6. Records Relating to Collateral.
The Debtor will keep and maintain complete and accurate
records concerning the Collateral, including the Accounts and all
chattel paper included in the Accounts, at its principal
executive office as set forth in Exhibit A annexed hereto, or at
such other place(s) of business as the Secured Party may approve
in writing. The Debtor will (a) faithfully hold and preserve
such records and chattel paper, (b) permit representatives of the
Secured Party, at any time during normal business hours, upon
reasonable notice, and without undue material disruption of the
Debtor's business, to examine and inspect the Collateral and to
make copies and abstracts of such records and chattel paper, and
(c) furnish to the Secured Party such information and reports
regarding the Collateral as the Secured Party may from time to
time reasonably request.
Section 7. Collections with Respect to Accounts.
The Debtor will, at its expense:
(a) endeavor to collect or cause to be collected from
customers and other Persons indebted on Accounts, as and when
due, any and all amounts, including interest, owing under or on
account of each Account.
(b) take or cause to be taken such appropriate action to
repossess goods, the sale of which gave rise to any Account, or
to enforce any rights or liens under Accounts, as the Debtor or
the Secured Party may deem proper, and in the name of the Debtor
or the Secured Party, as the Secured Party may deem proper;
provided, that (i) the Debtor will use its best judgment to
protect the interests of the Secured Party, and (ii) the Debtor
shall not be required under this Section 7 to take any action
which would be contrary to any applicable law. Subject to any
corresponding rights which may concurrently be exercisable by
CATI in respect of its security interests, the Debtor shall, at
the request of the Secured Party following the occurrence and
during the continuance of an Event of Default, notify the account
debtors of the Security Interests of the Secured Party in any of
the Accounts, and the Secured Party may itself at any such time
so notify account debtors. The Secured Party shall have full
power at any time after such notice to collect, compromise,
endorse, sell or otherwise deal with any or all outstanding
Accounts or the proceeds thereof in the name of either the
Secured Party or the Debtor. In the event that, after notice to
any account debtors directing payments to the Secured Party, the
Debtor receives any payment(s) on any Account(s), then, subject
to any rights which may concurrently be exercisable by CATI, such
payment(s) shall be held by the Debtor in trust for the Secured
Party and immediately turned over to the Secured Party as
aforesaid, for application in accordance with Section 11 below.
Section 8. General Authority.
(a) In the event that the Secured Party shall at any time
be required to take action to defend the Security Interests, or
the Debtor shall fail to satisfy its obligations under Section
5(c) or 5(e) hereof, then the Secured Party shall have the right,
but shall not be obligated, to take such steps and make such
payments as may be required in order to effect compliance, and
the Secured Party shall have the right either to demand and
receive immediate reimbursement from the Debtor for all costs and
expenses incurred by the Secured Party in connection therewith,
and/or to add such costs and expenses to the Loan Obligations.
(b) The Debtor hereby irrevocably appoints the Secured
Party the true and lawful attorney for the Debtor, with full
power of substitution, in the name of the Debtor, the Secured
Party or otherwise, for the sole use and benefit of the Secured
Party, but at the Debtor's expense, to the extent permitted by
law to exercise, at any time and from time to time during the
continuance of an Event of Default, any or all of the following
powers with respect to any or all of the Collateral (which powers
shall be in addition and supplemental to any powers, rights and
remedies of the Secured Party described herein):
(i) to demand, sue for, collect, receive and give
acquittance for any and all monies due or to become due upon or
by virtue thereof; and
(ii) to receive, take, endorse, assign and deliver any
and all checks, notes, drafts, documents and other negotiable and
non-negotiable instruments and chattel paper taken or received by
the Secured Party in connection therewith; and
(iii) to settle, compromise, discharge, extend,
compound, prosecute or defend any action or proceeding with
respect thereto; and
(iv) to sell, transfer, assign or otherwise deal in or
with same, or the proceeds or avails thereof, or the related
goods securing the Accounts, as fully and effectually as if the
Secured Party were the absolute owner thereof; and
(v) to extend the time of payment of any or all
thereof and to make any allowance and other adjustments with
reference thereto; and
(vi) to discharge any taxes, liens, security interests
or other encumbrances at any time placed thereon.
Anything hereinabove contained to the contrary notwithstanding,
the Secured Party shall give the Debtor not less than ten (10)
days' prior written notice of the time and place of any sale or
other intended disposition of any of the Collateral, except any
Collateral which is perishable or threatens to decline speedily
in value or is of a type customarily sold on a recognized market.
The Secured Party and the Debtor hereby agree that such notice
constitutes "reasonable notification" within the meaning of
Section 9-504(3) of the Code. The Secured Party's rights under
this Section 8 are expressly subject to any corresponding rights
which may concurrently be exercisable by CATI.
Section 9. Remedies Upon Event of Default.
If any Event of Default shall have occurred and be
continuing, then, subject to any corresponding rights which may
concurrently be exercisable by CATI, the Secured Party may
exercise all of the rights and remedies of a secured party under
the Code (whether or not the Code is in effect in the
jurisdiction where such rights and remedies are exercised) and,
in addition, the Secured Party may, without being required to
give any notice, except as herein provided or as may be required
by mandatory provisions of law, (a) apply the cash, if any, then
held by it as Collateral in the manner specified in Section 11
hereof, and (b) if there shall be no such cash or if such cash
shall be insufficient to pay all of the Loan Obligations in full,
sell the Collateral, or any part thereof, at public or private
sale or at any broker's board or on any securities exchange, for
cash, upon credit or for future delivery, and at such price or
prices as the Secured Party may deem satisfactory. The Secured
Party may require the Debtor to assemble all or any part of the
Collateral and make it available to the Secured Party at a place
to be designated by the Secured Party which is reasonably
convenient to the Debtor and the Secured Party. Any holder of a
Loan Obligation may be the purchaser of any or all of the
Collateral so sold at any public sale (or, if the Collateral is
of a type customarily sold on a recognized market or is of a type
which is the subject of widely distributed standard price
quotations, at any private sale) and thereafter hold same,
absolutely free from any right or claim of whatsoever kind. The
Secured Party is authorized, at any such sale, if it reasonably
deems same to be advisable, to restrict the prospective bidders
or purchasers of any of the Collateral which could be subject to
federal or state securities laws to persons who will represent
and agree that they are purchasing for their own account for
investment and not with a view to the distribution or sale of any
of such Collateral. Upon any such sale, the Secured Party shall
have the right to deliver, assign and transfer to the purchaser
thereof the Collateral so sold. Each purchaser at any such sale
shall hold the Collateral so sold absolutely, free from any claim
or right of whatsoever kind, including any equity or right of
redemption of the Debtor. To the extent permitted by law, the
Debtor hereby specifically waives all rights of redemption, stay
or appraisal which it has or may have under any rule of law or
statute now existing or hereafter adopted. The Secured Party
shall give the Debtor not less than ten (10) days' prior written
notice of its intention to make any such public or private sale
or sales at a broker's board or on a securities exchange. Such
notice, in case of a public sale, shall state the time and place
fixed for such sale, and in case of sale at a broker's board or
on a securities exchange, shall state the board or exchange at
which such sale is to be made and the day on which the
Collateral, or the portion thereof being sold, will first be
offered for sale at such board or exchange. Any such public sale
shall be held at such time or times within ordinary business
hours and at such place or places as the Secured Party may fix in
the notice of such sale. At any such sale, the Collateral may be
sold in one lot as an entirety or in separate parcels, as the
Secured Party may determine. The Secured Party shall not be
obligated to make such sale pursuant to any such notice. The
Secured Party may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from
time to time by announcement at the time and place fixed for the
sale, and such sale may be made at any time or place to which the
same may be adjourned. In case of any sale of all or any part of
the Collateral on credit or for future delivery, the Collateral
so sold may be retained by the Secured Party until the selling
price is paid by the purchaser thereof, but the Secured Party
shall not incur any liability in the case of the failure of such
purchaser to take up and pay for the Collateral so sold and, in
case of any such failure, such Collateral may again be sold upon
like notice. The Secured Party, instead of exercising the power
of sale herein conferred upon it, may proceed by a suit or suits
at law or in equity to foreclose the Security Interests and sell
the Collateral, or any portion thereof, under a judgment or
decree of a court or courts of competent jurisdiction.
Section 10. Right of Secured Party to Use and Operate
Collateral.
Upon the occurrence and during the continuance of any Event
of Default, to the extent permitted by law, the Secured Party
shall have the right and power, with or without legal process, to
enter upon any or all of the Debtor's premises, to take
possession of all or any part of the Collateral, and to exclude
the Debtor and all persons claiming under the Debtor wholly or
partly therefrom, and thereafter to sell same in accordance
herewith and/or hold, store, and/or use, operate, manage and
control the same. Upon any such taking of possession, the
Secured Party may, from time to time, at the expense of the
Debtor, make all such repairs, replacements, alterations,
additions and improvements to the Collateral as the Secured Party
may deem proper. In such case, the Secured Party shall have the
right to manage and control the Collateral and to carry on the
business and to exercise all rights and powers of the Debtor in
respect thereof as the Secured Party shall deem proper, including
the right to enter into any and all such agreements with respect
to the leasing and/or operation of the Collateral or any part
thereof as the Secured Party may see fit; and the Secured Party
shall be entitled to collect and receive all rents, issues,
profits, fees, revenues and other income of the same and every
part thereof. Such rents, issues, profits, fees, revenues and
other income shall be applied to pay the expenses of holding and
operating the Collateral and of conducting the business thereof,
and of all maintenance, repairs, replacements, alterations,
additions and improvements, and to make all payments which the
Secured Party may be required or may elect to make, if any, for
taxes, assessments, insurance and other charges upon the
Collateral or any part thereof, and all other payments which the
Secured Party may be required or authorized to make under any
provision of this Agreement (including legal costs and reasonable
attorneys' fees). The remainder of such rents, issues, profits,
fees, revenues and other income shall be applied in accordance
with Section 11 below, and, unless otherwise provided or required
by law or by a court of competent jurisdiction, any surplus shall
be paid over to the Debtor. The Secured Party's rights under
this Section 10 are expressly subject to any corresponding rights
which may concurrently be exercisable by CATI.
Section 11. Application of Collateral and Proceeds.
The proceeds of any sale of, or other realization upon, all
or any part of the Collateral shall be applied in the following
order of priorities:
(a) first, to pay the expenses of such sale or other
realization, and all expenses, liabilities and advances incurred
or made by or on behalf of the Secured Party in connection
therewith, and any other unreimbursed expenses for which the
Secured Party is to be reimbursed pursuant to Section 12 hereof;
(b) second, to the payment of the Loan Obligations
then outstanding in such order or manner as the Secured Party, in
its sole discretion, shall determine; and
(c) finally, to pay to the Debtor, or its successors
or assigns, or as a court of competent jurisdiction may direct,
any surplus then remaining from such proceeds.
Section 12. Expenses; Secured Party's Lien.
The Debtor will, forthwith upon demand, pay to the Secured
Party:
(a) the amount of any taxes or other charges which the
Secured Party may have been required to pay by reason of the
Security Interests (including any applicable transfer taxes) or
to free any of the Collateral from any lien thereon; and
(b) the amount of any and all reasonable out-of-pocket
expenses, including the reasonable fees and disbursements of its
counsel and of any agents not regularly in its employ, which the
Secured Party may incur in connection with (i) the collection,
sale or other disposition of any of the Collateral, (ii) the
exercise by the Secured Party of any of the powers conferred upon
it hereunder, and/or (iii) any default on the Debtor's part
hereunder.
Section 13. Termination of Security Interests; Release of
Collateral.
Upon the indefeasible payment in full of all Loan
Obligations, the Security Interests shall terminate and all
rights in the Collateral shall revert to the Debtor. Upon any
such termination of the Security Interests or release of
Collateral, the Secured Party will, at the Debtor's expense,
execute and deliver to the Debtor such documents as the Debtor
shall reasonably request to evidence the termination of the
Security Interests or the release of such Collateral, as the case
may be.
Section 14. Right of Set-Off.
In furtherance and not in limitation of any provisions
herein contained, the Debtor hereby agrees that any and all
deposits or other sums at any time due from the Secured Party to
the Debtor shall at all times constitute security for the
Obligations, and the Secured Party may exercise any right of set-
off against such deposits or other sums as may accrue or exist
hereunder and/or under applicable law.
Section 15. Notices.
All notices, demands and other communications hereunder
shall be given or made to the subject party at its address first
set forth above, or at such other address and/or telecopier
number as the addressee may hereafter specify for the purpose by
means of written notice to the other party hereto. Such notices
and other communications will be effectively given only if and
when given in writing and personally delivered, when sent by
facsimile transmission to a party's designated facsimile number,
one (1) day after being sent by Federal Express or other
recognized overnight courier service with all charges prepaid or
billed to the account of the sender, or three (3) days after
being mailed by first class mail with all postage prepaid.
Section 16. Waivers; Non-Exclusive Remedies.
No failure on the part of the Secured Party to exercise, and
no delay in exercising, and no course of dealing with respect to,
any right, power or remedy under this Agreement shall operate as
a waiver thereof; nor shall any single or partial exercise by the
Secured Party of any right, power or remedy under this Agreement
preclude any exercise of any other right, power or remedy. The
remedies in this Agreement are cumulative and are not exclusive
of any other remedies provided by law, in equity or otherwise.
Section 17. Changes in Writing.
Neither this Agreement nor any provision hereof may be
changed, waived, discharged or terminated orally but only by a
statement in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is
sought.
Section 18. Governing Law; Consent to Jurisdiction; Waiver of
Jury Trial.
(a) This Agreement shall (irrespective of where it is
executed, delivered and/or performed) be governed by and
construed in accordance with the laws of the State of New York
(without giving effect to principles of conflicts of law), except
as otherwise required by mandatory provisions of law and except
to the extent that remedies provided by the laws of any State
other than New York are governed by the laws of said State.
(b) The Debtor hereby consents to the jurisdiction of all
courts sitting in the State of New York, and of all courts from
which an appeal therefrom may be taken, with respect to any
action or proceeding relating to this Agreement or any related
transactions. THE DEBTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY
JURY IN ANY SUCH ACTION OR PROCEEDING, AND CONSENTS THAT THE
SECURED PARTY MAY FILE A COPY OF THIS AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE DEBTOR WITH RESPECT TO
JURISDICTION AND THE WAIVER OF THE RIGHT TO TRIAL BY JURY.
Section 19. Severability.
If any provision hereof is held invalid or unenforceable in
any jurisdiction, such provision shall (for purposes of
enforcement in such jurisdiction only) be reduced in scope and
effect to the extent necessary to render same enforceable, and
the other provisions hereof shall remain in full force and effect
in such jurisdiction and shall be liberally construed in favor of
the Secured Party.
Section 20. Headings.
The captions and Section headings in this Agreement are for
convenience of reference only, and shall not limit or otherwise
affect the meaning or interpretation of any provision hereof.
Section 21. Assignment.
This Agreement may not be assigned by the Debtor without the
Secured Party's prior written consent, but shall otherwise be
binding upon and inure to the benefit of the parties hereto and
their respective heirs, executors, administrators, personal
representatives, successors and assigns.
IN WITNESS WHEREOF, this Agreement has been executed by the
parties hereto as of the date first set forth above.
SECURED PARTY:
COMMODORE ENVIRONMENTAL SERVICES,
INC.
By: /s/ Andrew Oatey
________________________________
DEBTOR:
LANXIDE PERFORMANCE MATERIALS, INC.
By: /s/ Mark Mortenson
________________________________
STATE OF DELAWARE )
) ss.:
COUNTY OF NEW CASTLE)
On this 13th day of November, 1996, before me, a
Notary Public in and for the jurisdiction aforesaid, personally
appeared Mark G. Mortenson, to me known, who being
by me duly sworn, did depose and say that he is the
President of LANXIDE PERFORMANCE MATERIALS, INC., the
corporation named in and which executed the foregoing Security
Agreement; that he is duly authorized to execute same; and that
he subscribed, swore to and acknowledged the same in his capacity
as such officer and as the authorized and binding act and deed of
said corporation.
Dorothy D. Keckn
________________________________
Notary Public
SCHEDULE 1
TO SECURITY AGREEMENT
Patents, Copyrights and Trademarks
1. Patents and Patent Applications
File Patent Country Registration No. Date
None as of the date hereof.
2. Copyrights, Trademarks, Tradenames, Service Marks and
Applications
None as of the date hereof.
EXHIBIT A
TO SECURITY AGREEMENT
Additional Information, Representations and Warranties
(1) The exact name of the Debtor is as first set forth in the
Security Agreement.
(2) The Debtor has no subsidiaries.
(3) The Debtor owns and uses the following trade names:
None.
(4) The Debtor is duly organized, validly existing and in good
standing under the laws of the State of Delaware.
(5) The principal executive office of the Debtor is located at
1300 Marrows Road, Newark, Delaware 19714-6077, and the
books and records pertaining to the Accounts and other
Collateral are located at such address.
(6) The Debtor is not required, by the nature of its business or
the location of its property or assets, to be qualified to
do business as a foreign corporation in any jurisdiction.
(7) The Debtor has no place of business other than that
disclosed in Item (5) above.
(8) The Debtor does not own or have interests in personal
property located at places other than that disclosed in item
(5) above.
(9) The Debtor owns property consisting of leasehold
improvements and/or fixtures only at the location specified
in item (5) above.
Exhibit 6
GUARANTY
In order to induce Commodore Environmental Services, Inc., a
Delaware corporation (the "Lender"), to (a) enter into that
certain Line of Credit Agreement of even date herewith (as same
may be amended from time to time, the "Line of Credit Agreement")
with Lanxide Performance Materials, Inc., a Delaware corporation
(the "Obligor"), (b) accept from the Obligor that certain Line of
Credit Promissory Note of even date herewith in the maximum
principal amount of $3,000,000 (as same may be amended from time
to time, the "Note"), being issued pursuant to the Line of Credit
Agreement, and (c) extend to the Obligor from time to time the
loans and advances contemplated by the Line of Credit Agreement,
the undersigned, LANXIDE CORPORATION, a Delaware corporation (the
"Guarantor"), hereby guarantees to the Lender, and/or any other
holder(s) of the Note from time to time, the full and timely
payment and performance by the Obligor of all principal,
interest, expenses, charges and other obligations from time to
time outstanding under, in respect of or pursuant to the Line of
Credit Agreement and/or the Note (collectively, the "Guaranteed
Obligations"). This is an absolute, irrevocable and
unconditional guaranty of payment and not merely of collection,
and the Lender may (notwithstanding the Guarantor's joint and
several liability with the Obligor and any and all other
guarantor(s) of any of the Guaranteed Obligations) enforce this
Guaranty without the need to resort to any proceedings or obtain
any judgment as against the Obligor or any guarantor, or to make
any resort to or against any collateral pledged by the Obligor or
any guarantor to secure the payment and performance of any of the
Guaranteed Obligations; and in the event that there shall at any
time occur and be continuing any Event of Default under the Note,
or if the Obligor's obligations under the Note shall be
automatically accelerated in accordance with the provisions
thereof, then the Guarantor shall forthwith pay to the Lender, on
demand, all Guaranteed Obligations.
1. Until the indefeasible payment in full of the
Guaranteed Obligations, the Guarantor makes the following
"Deprizio" waiver: THE GUARANTOR SHALL NOT TAKE BY ASSIGNMENT,
SUBROGATION OR OTHERWISE ANY CLAIM OR COLLATERAL THAT THE LENDER
MIGHT HAVE OR OBTAIN AGAINST OR FROM THE OBLIGOR, AND THE
GUARANTOR IRREVOCABLY WAIVES AND RELEASES, IN ADDITION TO THOSE
CLAIMS, ANY CLAIM FOR UNJUST ENRICHMENT, INDEMNIFICATION,
CONTRIBUTION OR REIMBURSEMENT, AND ANY AND ALL OTHER SUBROGATION
CLAIMS AGAINST THE OBLIGOR ON ACCOUNT OF ANY PAYMENTS HEREUNDER,
WHETHER BY STATUTE, BY CONTRACT, BY LAW OR IN EQUITY, WHETHER
ACTUAL OR CONTINGENT, AND WHETHER NOW OR HEREAFTER ARISING.
2. In order to induce the Lender to accept this Guaranty,
the Guarantor hereby represents and warrants that (a) it is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, (b) the execution,
delivery and performance by the Guarantor of this Guaranty has
been duly authorized by all necessary corporate action on the
part of Guarantor, and has been duly executed and delivered by
the authorized officers of the Guarantor, (c) this Guaranty
constitutes the legal, valid and binding obligation of the
Guarantor enforceable against the Guarantor in accordance with
its terms, except to the extent that enforceability may be
limited by bankruptcy, insolvency or other similar laws affecting
the enforcement of creditors' rights generally, and by general
principles of equity, and (d) the Guarantor's execution, delivery
and performance of this Guaranty does not conflict with or
constitute a breach of the Guarantor's certificate of
incorporation or by-laws, or any material agreement to which the
Guarantor is a party or by which any of its property or assets is
bound, or require the consent of any other person.
3. The Guarantor hereby acknowledges and confirms that, as
the corporate parent and sole stockholder of the Obligor, the
Guarantor will derive immediate and substantial benefit from the
loans and advances to be made from time to time to the Obligor
under the Line of Credit Agreement. The Guarantor hereby further
acknowledges and agrees that the validity of this Guaranty and
the Guarantor's obligations hereunder shall in no way be
terminated, modified, affected, impaired or diminished by reason
of any of (i) the granting by the Lender of any consent,
indulgence, extension, renewal, waiver, compromise or release to
the Obligor or any other guarantor(s) of any of the Obligations,
(ii) any failure by the Lender to insist in any one or more
instances upon strict performance or observance by the Obligor
and/or any such other guarantor(s) of any of the terms,
provisions or conditions of the Line of Credit Agreement, the
Note and/or any security agreements, pledge agreements or other
agreements or instruments establishing or evidencing any
collateral security for the Note, this Guaranty or any other
guaranty of any of the Guaranteed Obligations (collectively, the
"Loan Documents"), (iii) any assertion or non-assertion by the
Lender against the Obligor and/or any such other guarantor(s) of
any of the rights or remedies reserved to the Lender in the Loan
Documents (including, without limitation, any application of
payments received from or in respect of the Obligor), (iv) any
forbearance by the Lender from exercising any of its rights or
remedies as aforesaid, (v) any bankruptcy, insolvency,
receivership, reorganization, liquidation or other similar
proceeding relating to the Obligor and/or any such other
guarantor(s), (vi) any relief of the Obligor and/or any such
other guarantor(s) from any of its obligations under the Loan
Documents, by operation of law, in equity or otherwise, (vii) any
offset or defense (other than the defense of full payment) in
favor of the Obligor, the Guarantor and/or any such other
guarantor(s) against the Lender, (viii) any amendment,
modification, extension, renewal, termination, compromise or
waiver under or in respect of the Loan Documents, (ix) any sale,
release or other disposition of any collateral security for the
Guaranteed Obligations, (x) any failure to take any action in
respect of any such collateral, or (xi) any transfer, assignment
or negotiation of any of the Loan Documents and/or any collateral
security as aforesaid (including, without limitation, this
Guaranty). The Guarantor hereby waives any and all notice,
demand, presentment, protest and other such privilege or
formality, and all notice in respect of the creation, renewal,
extension or accrual of any Guaranteed Obligations.
4. This Guaranty may be executed in any number of
counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument.
5. This Guaranty shall be binding upon the undersigned
Guarantor and its successors and assigns, shall inure to the
benefit of the Lender and its successors and assigns, and shall
terminate only upon the indefeasible payment and performance in
full of all of the Guaranteed Obligations. No assignment of, or
succession to, the obligations of the Guarantor hereunder shall
in any way terminate, modify, affect, impair or diminish the
obligations of the Guarantor hereunder, absent an express written
agreement to such effect duly executed by the Lender.
6. No delay on the part of the Lender in exercising any
rights hereunder, or any failure by the Lender to exercise any
such rights, shall operate as a waiver of any such rights for any
purposes, it being understood that the Lender may exercise any
and all of its rights hereunder at any time and from time to time
pursuant to the terms hereof.
7. This Guaranty may not be terminated, modified or
amended except by a writing duly executed by the Lender and the
Guarantor.
8. This Guaranty shall be governed by and construed in
accordance with the laws of the State of New York, without giving
effect to principles of conflicts of laws. The Guarantor hereby
consents to the jurisdiction of all courts (state and/or federal)
sitting in the State of New York in connection with any action or
proceeding under or in respect of this Guaranty, and waives trial
by jury in any such action or proceeding.
9. In the event that the holder hereof shall, after
default by the Guarantor of any of its obligations hereunder,
place this Guaranty in the hands of any attorney for enforcement
and/or collection, through legal proceedings or otherwise, the
Guarantor shall pay to the holder hereof all costs and expenses
of enforcement and collection (including reasonable attorneys'
fees).
IN WITNESS WHEREOF, the undersigned Guarantor, intending to
be legally bound hereby, has executed this Guaranty as of this
13th day of November, 1996.
Attest: LANXIDE CORPORATION
__________________________
By: /s/ Marc S. Newkirk
____________________________
Exhibit 7
November 13, 1996
Lanxide Performance Materials, Inc.
1300 Marrows Road
P.O. Box 6077
Newark, DE 19714-6077
Dear Sirs:
Reference is made to the Security Agreement dated
August 30, 1996 (the "Security Agreement") by and between
Commodore Applied Technologies, Inc. (the "Secured Party") and
Lanxide Performance Materials, Inc. (the "Debtor"). Reference is
further made to the security agreement to be entered into on or
about the date hereof (the "COES Security Agreement") between the
Debtor and Commodore Environmental Services, Inc. ("COES"),
pursuant to which the Debtor proposes to grant to COES a second
priority lien and security interest in the Collateral (as such
term is defined in the Security Agreement).
The Secured Party hereby (a) consents to the granting
of the liens and security interests to COES in accordance with
the form of COES Security Agreement presented hereto, and (b)
waives any Event of Default (as such term is defined in the Line
of Credit Promissory Noted dated August 30, 1996 (the "Note") in
the maximum principal amount of $1,500,000 issued by the Debtor
to the Secured Party) that would otherwise be deemed to have
occurred by reason of the granting of such liens and security
interests to COES. This consent is expressly subject to (i) the
granting of the liens and security interests in the Collateral to
COES strictly in accordance with the terms and conditions of the
form of COES Security Agreement presented hereto (including,
without limitation, the remedies of COES under the COES Security
Agreement being subject to the rights of the Secured Party under
the Security Agreement), (ii) the Debtor's agreement (evidenced
by its signature below) not to amend or modify in any respect the
liens and security interests being granted to COES, or the COES
Security Agreement or any other agreement or instrument
respecting the rights of COES against and in respect of the
Collateral, and (iii) the agreement of the Debtor (evidenced by
its signature below) that the occurrence and continuance of any
"Event of Default" under the Debtor's loan agreements and/or
promissory notes with COES shall constitute an Event of Default
under and for purposes of the Note.
Kindly confirm your agreement to the foregoing by
countersigning a counterpart copy of this letter in the space
provided below.
Very truly yours,
COMMODORE APPLIED
TECHNOLOGIES, INC.
By: /s/ Andrew Oatey
--------------------------
Acknowledged, Confirmed and
Agreed To:
LANXIDE PERFORMANCE MATERIALS, INC.
By: Mark Mortenson
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