SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): May 29, 1998
PRIME CELLULAR, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-18700 13-3570672
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
100 First Stamford Place, Stamford, Connecticut 06902
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (203) 327-3620
________________________________________________________________________________
Former Name or Former Address, if Changed Since Last Report
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Item 2. Acquisition and Disposition of Assets.
On May 29, 1998, Registrant entered into a Merger Agreement (the "Merger
Agreement), by and among Registrant, Prime Cellular Acquisition Corp., a newly
formed wholly-owned subsidiary of Registrant (the "Subsidiary"), and Cell &
Molecular Technologies, Inc., a Delaware corporation ("CMT"). Pursuant to the
Merger Agreement, on May 29, 1998, the Subsidiary was merged with and into CMT
and all of the outstanding shares of capital stock of CMT were converted into an
aggregate of 1,611,000 shares of Common Stock, par value $.01 per share, of
Registrant (the "Merger"), representing approximately 26.4% (after consummation
of the Merger) of Registrant's issued and outstanding Common Stock (the "Merger
Shares").
CMT is engaged in the provision of contract research and
development services to the biotechnology and pharmaceutical industries as well
as the manufacture and sale of research products for the biotechnology and
pharmaceutical industries.
In connection with the Merger:
1. Registrant increased the number of directors constituting the entire
Board of Directors from three (3) to six (6) members. Joseph K. Pagano
("Pagano"), Frederick R. Adler and Samuel A. Rozzi, the members of the Board of
Directors prior to the Merger are continuing as such and have elected the
following individuals to fill the three vacancies on the Board of Directors
created by such increase: Thomas A. Livelli, the President and Chief Executive
Officer of CMT, Richard Malavarca, a Vice President of CMT, and Dr. Paul Marks,
President of Memorial Sloan-Kettering Cancer Center. Messrs. Livelli, Malavarca,
Adler and Pagano were directors and principal stockholders of CMT prior to the
Merger and Messrs. Adler and Pagano are noteholders of CMT.
2. Registrant issued options to purchase 115,200 shares of its Common Stock
under its 1990 Stock Option Plan, to holders of options that had been granted
under the Stock Option Plan of CMT. In addition, Registrant reserved options to
purchase up to 273,800 shares of Common Stock for future grant under
Registrant's 1990 Stock Option Plan for employees of CMT.
3. Each stockholder of CMT receiving Merger Shares agreed not to transfer
or dispose of any of their respective Merger Shares for a period of 24 months
following the Merger.
The number of Merger Shares issued in the Merger and the other terms of the
Merger were determined by negotiations among the representatives of the
Subsidiary and CMT.
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The descriptions of the Merger Agreement and the other agreements described
herein are qualified in their entirety by reference to the copy of the Merger
Agreement and the other agreements which are being filed as exhibits to this
Report and which are incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of the Business Acquired.
The required financial information for the business acquired will be filed
under cover of Form 8 within 60 days of the date this Form 8-K was required to
be filed.
(b) Pro Forma Financial Information and Exhibits.
The required pro forma financial information will be filed under cover of
Form 8 within 60 days of the date this Form 8-K was required to be filed.
(c) Exhibit 2 - Merger Agreement, dated as of May 29, 1998, by and among
Registrant, the Subsidiary and CMT. Schedules and attachments are
listed in the Exhibit Index to this Report and have been omitted
pursuant to Item 601(2) of Regulation S-B.
Item 8. Change in Fiscal Year
In connection with the Merger, Registrant adopted the fiscal year of CMT,
which is a calendar year. In accordance with the policy of the Securities and
Exchange Commission set forth in Appendix D, Reverse Acquisitions, no transition
report is required because (a) Registrant, the "legal acquiror," is considered
the "accounting acquiree," (b) CMT, the "legal acquiree," is considered the
"accounting acquiror," and (c) the accounting acquiree has adopted the fiscal
year of the accounting acquiror.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PRIME CELLULAR, INC.
By:/s/ Joseph K. Pagano
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Joseph K. Pagano, President
Date: June 15, 1998
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EXHIBIT INDEX
Exhibit Description Sequential Page No.
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2 Merger Agreement, dated as of May 29, 1998 6
by and among Registrant, the Subsidiary and CMT
List of Omitted Exhibits and Schedules
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Exhibit 1.2 Certificate of Merger
Exhibit 1.3 Alonges to Promissory Notes
Exhibit 1.4(a) CMT Certificate of Incorporation
Exhibit 1.4(b) CMT By-Laws
Exhibit 4.9 Lock-Up Agreement
Exhibit 5.2 Stockholders' Representation Letter
Exhibit 6.1(f) Tenzer Greenblatt Opinion
Exhibit 6.2(h) Littman Krooks Opinion
Schedule 1.3 Indebtedness
Schedule 2.2 CMT Stock Ownership
Schedule 2.6 Litigation
Schedule 2.12 Properties
Schedule 2.13 Intellectual Property
Schedule 2.14 Insurance
Schedule 2.16 Employment Arrangements
Schedule 2.17 Certain Business Matters
Schedule 2.18 Certain Contracts
Schedule 2.20 Consents
EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of May 29, 1998 (the "Agreement"), by
and among PRIME CELLULAR, INC., a Delaware corporation ("Prime"); CMT
ACQUISITION CORP., a Delaware corporation and a wholly-owned subsidiary of Prime
("Subsidiary"); and CELL & MOLECULAR TECHNOLOGIES, INC., a Delaware corporation
("CMT").
W I T N E S S E T H :
WHEREAS, CMT is engaged in the manufacture and sale of research products
for the biotechnology and pharmaceutical industries and the provision of
contract research and development services to the biotechnology and
pharmaceutical industries (the "Business");
WHEREAS, the Boards of Directors of Prime and of Subsidiary, and Prime, as
the stockholder of Subsidiary, as well as the Board of Directors of CMT and the
stockholders of CMT have (or shall have on or before the Effective Date) (a)
determined that it is in the best interests of their respective companies for
Subsidiary to be merged with and into CMT upon the terms and subject to the
conditions set forth herein and (b) approved the merger of Subsidiary with and
into CMT (the "Merger") in accordance with the General Corporation Law of the
State of Delaware ("Delaware Law"), and upon the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
parties hereto do hereby agree as follows:
1. The Merger.
1.1. The Merger. At the Effective Date (as defined in subsection 1.2),
and subject to and upon the terms and conditions of this Agreement and
Delaware Law, Subsidiary shall be merged with and into CMT, the separate
corporate existence of Subsidiary shall cease, and CMT shall continue as
the surviving corporation. CMT, as the surviving corporation after the
Merger, is hereinafter sometimes referred to as the "Surviving
Corporation."
1.2. Effective Date. At the Closing as set forth in Section 7 hereof,
Subsidiary and CMT shall cause the Merger to be consummated by filing a
Certificate of Merger (the "Certificate of Merger") with the Secretary of
State of the State of Delaware in the form of Exhibit 1.2 and making such
other filing as may be required by Delaware Law, in such form as
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required by and executed in accordance with such laws, which Certificate of
Merger shall provide for an effective date of 5:00 p.m. E.S.T., May 29,
1998 (the "Effective Date").
1.3. Effect of the Merger. At the Effective Date, the effect of the
Merger shall be as provided in the applicable provisions of Delaware Law.
Without limiting the generality of the foregoing, and subject thereto, at
the Effective Date, all the rights, privileges, powers, franchises and all
property (real, personal and mixed) of Subsidiary and all debts due
Subsidiary shall vest in CMT, and all debts, liabilities, obligations and
duties of Subsidiary shall become the debts, liabilities, obligations and
duties of CMT. In addition, certain of the terms of certain indebtedness of
CMT listed on Schedule 1.3 in the aggregate principal amount of $500,000
shall be amended by the issuance of allonges to such promissory notes in
the form attached hereto as Exhibit 1.3.
1.4. Certificate of Incorporation; By-Laws.
(a) The Certificate of Incorporation of CMT, as in effect immediately
prior to the Effective Date (annexed hereto as Exhibit 1.4(a)), shall be
the Certificate of Incorporation of the Surviving Corporation until
thereafter amended as provided by law or such Certificate of Incorporation.
(b) The By-Laws of CMT, as in effect immediately prior to the
Effective Date (annexed hereto as Exhibit 1.4(b)), shall be the By-Laws of
the Surviving Corporation until thereafter amended as provided by law or
the Certificate of Incorporation of the Surviving Corporation or the
By-Laws of the Surviving Corporation.
1.5. Directors and Officers of Prime and Surviving Corporation.
(a) The Board of Directors of Prime immediately following the
Effective Date shall have six (6) members, consisting of (i) Joseph K.
Pagano, Chairman, (ii) Frederick R. Adler, (iii) Samuel A. Rozzi, (iv)
Thomas J. Livelli, (v) Paul Marks and (vi) Richard Malavarca, each director
to hold office in accordance with applicable law, the Certificate of
Incorporation and By-Laws of Prime until their resignation, removal or
replacement.
(b) The officers and directors of CMT immediately prior to the Merger
shall be the officers and directors of the Surviving Corporation
immediately after the Merger, with each director and officer serving as
such in accordance with applicable law, the Certificate of Incorporation
and By-Laws of the Surviving Corporation until their resignation, removal
or replacement.
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1.6. Conversion of Securities. At the Effective Date, by virtue of the
Merger and without any action on the part of Prime, Subsidiary or CMT:
(a) Each issued and outstanding share of the Common Stock and the
Senior Convertible Preferred Stock of CMT (collectively, the "CMT Stock")
shall be converted into the right to receive 900 shares (the "Merger
Consideration") of Common Stock, par value $.01 per share, of Prime (the
"Prime Stock") against the surrender to CMT of such CMT Stock.
(b) All shares of the CMT Stock surrendered in exchange for shares of
Prime Stock, shall be canceled and extinguished by CMT.
(c) CMT shall issue an aggregate of 100 shares of the common stock of
CMT to Prime, which shares shall constitute all of the issued and
outstanding shares of the capital stock of CMT following the Merger.
(d) Any shares of the capital stock of Subsidiary held in the treasury
of Subsidiary shall be cancelled and extinguished without any conversion
thereof and no payment shall be made with respect thereto.
(e) At the Effective Date, Prime shall surrender for cancellation any
shares of capital stock of the Subsidiary held by it and the stock transfer
books of the Subsidiary shall be closed and there shall be no further
registration of transfers of any shares of the capital stock of the
Subsidiary thereafter on its records.
(f) From and after the Effective Date, the holders of certificates
evidencing ownership of CMT Stock shall cease to have any rights with
respect to such stock, except as otherwise provided herein or by law.
(g) Notwithstanding anything to the contrary in this subsection 1.6,
no party hereto shall be liable to a holder of a certificate or
certificates formerly representing CMT Stock for any amount properly paid
to a public official pursuant to any applicable property, escheat or
similar law.
(h) No fractional shares of Prime Stock shall be issued in connection
with the Merger.
(i) If between the date of this Agreement and the Effective Date the
outstanding shares of Prime Stock shall have been changed into a different
number of shares or a different class, by reason of any stock dividend,
subdivision, reclassification, recapitalization, split-up, combination,
exchange of shares or the like, the ratio of shares of Prime
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Stock to shares of CMT Stock to be issued in the Merger shall be
correspondingly adjusted.
2. Representations and Warranties as to CMT. CMT hereby represents and
warrants to Prime and Subsidiary, as follows:
2.1. Organization, Standing and Power. CMT is a corporation duly
organized, validly existing and in good standing under the laws of
Delaware, with full corporate power and authority to own, lease and operate
its properties and to carry on the Business, as presently conducted by it.
Except for the state of New Jersey, in which CMT is duly qualified and in
good standing as a foreign corporation, there are no states or
jurisdictions in which the character and location of any of the properties
owned or leased by CMT, or the conduct of its Business, makes it necessary
for it to qualify to do business as a foreign corporation and where it has
not so qualified, except for those jurisdictions in which the failure to so
qualify would not have a materially adverse effect on the Business or
operations of CMT. Copies of the Certificate of Incorporation of CMT and
all amendments thereof and the By-laws of CMT, as amended to date, have
been made available to Prime and are complete and correct. CMT's minute
books heretofore exhibited to Prime contain complete and accurate records
of all meetings and other corporate actions of its stockholders and board
of directors (including committees of its Board of Directors).
2.2. Capitalization. The authorized capital stock of CMT consists of
1,000 shares of Senior Convertible Preferred Stock, par value $.01 per
share (the "Preferred Stock"), 2,000 shares of Class A Voting Common Stock,
par value $.01 per share (the "Class A Stock"), and 150 shares of Class B
Non-Voting Convertible Common Stock, par value $.01 per share, of which
1,000 shares of Preferred Stock and 790 shares of Class A Stock are issued
and outstanding and are held by various stockholders in the amounts set
forth in Schedule 2.2 hereof. To the best of the knowledge of CMT, except
for an aggregate of 128 shares of CMT Stock reserved for issuance upon the
exercise of outstanding options issued pursuant to the 1997 Stock Option
Plan, an aggregate of 82 Shares of CMT Stock reserved for issuance upon the
exercise of options that may be granted in the future under the 1997 Stock
Option Plan, and 222.22 Shares of CMT Stock reserved for issuance upon the
exercise of options that may be granted in the future under the 1998 Stock
Option Plan there are no outstanding options, warrants, rights, calls,
commitments, conversion rights, puts, plans or other agreements of any
character to which either CMT or, to the best of the knowledge of CMT, the
stockholders of CMT is a party or otherwise bound which provide for the
acquisition or disposition of any of the CMT Stock or any of the securities
of CMT. All of the CMT Stock has been duly and validly issued and is fully
paid and nonassessable.
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2.3. Interests in Other Entities. CMT does not (a) own, directly or
indirectly, of record or beneficially, any shares of voting stock or other
equity securities of any other entity, (b) have any ownership interest,
direct or indirect, of record or beneficially, in any unincorporated
entity, or (c) have any obligation, direct or indirect, present or
contingent, (i) to purchase or subscribe for any interest in, advance or
loan monies to, or in any way make investments in, any person or entity, or
(ii) to share any profits or capital investments or both from an entity.
2.4. Authority.
(a) The execution and delivery by CMT of this Agreement and of all of
the agreements to be executed and delivered by it pursuant hereto (the "CMT
Documents"), the performance by CMT of its obligations hereunder and
thereunder, and the consummation of the transactions contemplated hereby
and thereby, have been duly and validly authorized by all necessary
corporate action on the part of CMT (including, but not limited to, the
unanimous consent of the stockholders and Board of Directors of CMT) and
CMT has all necessary power with respect thereto.
(b) This Agreement is, and when executed and delivered by CMT, the CMT
Documents to be delivered by it pursuant hereto will be, the valid and
binding obligation of CMT, enforceable in accordance with its terms,
subject to the effect of applicable bankruptcy, reorganization, insolvency,
moratorium and other similar laws of general application relating to,
limiting or affecting the enforcement of creditors' rights generally and
general principles of equity that may limit the enforceability of the
remedies, covenants or other provisions of this Agreement or the CMT
Documents and the availability of injunctive relief or other equitable
remedies.
2.5. Noncontravention. Neither the execution and delivery by CMT of
the CMT Documents pursuant hereto, nor the consummation of any of the
transactions contemplated hereby or thereby, nor the performance by CMT of
its obligations, as the case may be, hereunder or thereunder, will (nor
with the giving of notice or the lapse of time or both would) (a) conflict
with or result in a breach of any provision of the Certificate of
Incorporation or By-laws of CMT, or (b) in any manner which would
materially affect the ability of CMT to consummate or perform the
transactions contemplated hereby or have a material adverse effect on the
business, properties, assets, prospects and operations of CMT (hereinafter,
a "Material Adverse Effect"), (i) give rise to a default, or any right of
termination, cancellation or acceleration, or otherwise be in conflict with
or result in a loss of contractual benefits to CMT or under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture,
license, agreement or other instrument or obligation to which it
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is a party or by which CMT may be bound or to which CMT or the Business may
be subject, or require any consent, approval or notice under the terms of
any such document or instrument, or (ii) violate any order, writ,
injunction, decree, law, statute, rule or regulation of any court or
governmental authority which is applicable to CMT, or the Business, or
(iii) result in the creation or imposition of any lien, claim, charge,
restriction or encumbrance upon any of the properties or assets of CMT, or
(c) interfere with or otherwise adversely affect the ability of Surviving
Corporation to carry on the Business after the Effective Date on
substantially the same basis as is now conducted by CMT.
2.6. Litigation.
(a) Except as disclosed on Schedule 2.6, there are no suits or
actions, or administrative, arbitration or other proceedings or
governmental investigations, pending or, to the best of the knowledge of
CMT, threatened, against or relating to CMT or the Business. There are no
judgments, orders, stipulations, injunctions, decrees or awards in effect
which relate to CMT, the Business or the operation of the Company, which if
decided against CMT would have a Material Adverse Effect.
(b) Schedule 2.6 also lists all products liability claims made or, to
the best of the knowledge of CMT, threatened against CMT in any of CMT's
last three fiscal years.
2.7. Compliance with Law. To the best of the knowledge of CMT, CMT and
the stockholders of CMT are not engaging in any activity or omitting to
take any action as a result of which (a) they are in violation of any law,
rule, regulation, zoning or other ordinance, statute, order, injunction or
decree, or any other requirement of any court or governmental or
administrative body or agency, applicable to CMT, its assets or the
Business ("Laws"), which would have a Material Adverse Effect, which Laws
include, but are not limited to, those relating to: the use, storage,
handling, transport or disposal of pollutants, contaminants, pesticides,
petroleum or petroleum product, asbestos, hazardous or toxic materials or
wastes, or any substance, whether solid, liquid or gaseous, that is listed,
defined or regulated as a "hazardous substance", "hazardous waste" or
"solid waste" or otherwise classified as hazardous or toxic, in or pursuant
to any Environmental Law (as defined in subparagraph 2.8 hereof), causing
or posing a threat to cause contamination or adverse effect to the
environment ("Hazardous Substances"); occupational safety and health;
business practices and operations; labor practices; employee benefits; and
zoning and other land use, and (b) CMT, the Business or any of the assets
of CMT have been or may be materially and adversely affected.
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2.8. Environmental Matters.
(a) (i) The properties and facilities of CMT are not being and, to the
best of the knowledge of CMT, have never been used to make, store, handle,
treat, dispose, generate, or transport Hazardous Substances in violation of
any law; (ii) Hazardous Substances are not and, to the best of the
knowledge of CMT, have never been made, stored, handled, treated, disposed
of, generated, or transported on or from the properties and facilities of
CMT, except in accordance with applicable law now in effect; (iii) the
properties, facilities and operations of CMT comply and, to the best of the
knowledge of CMT, have complied in all material respects with all
applicable Environmental Laws (as defined herein); (iv) none of the
properties, facilities or operations of CMT is and, to the best of the
knowledge of CMT, has ever been subject to any judicial or administrative
proceedings alleging the violation of any Environmental Law; (v) none of
the properties, facilities or operations of CMT is and, to the best of the
knowledge of CMT, has ever been the subject of federal, state or local
investigation evaluating whether any remedial action is needed to respond
to a release of any Hazardous Substance into the environment; (vi) CMT has
not filed nor is presently required to file any notice under any federal,
state, or local law indicating past or present treatment or disposal of a
Hazardous Substance or reporting a spill or release of a Hazardous
Substance into the environment; and (vii) CMT has never received notice
nor, to the best of the knowledge of CMT, is aware of any contingent
liability in connection with any release of any Hazardous Substance into
the environment.
(b) For purposes hereof, "Environmental Laws" means all federal, state
and local laws, rules, regulations, permits, orders, judgments, injunctions
and decrees relating to Hazardous Substances applicable to the Business and
the facilities of CMT (whether or not owned by it). Such laws and
regulations include, without limitation, the Resource Conservation and
Recovery Act of 1976 ("RCRA"); the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"); the Toxic Substances
Control Act; the Clean Water Act; and the Clean Air Act, all as amended
from time to time; state and federal superlien and environmental cleanup
programs, including without limitation the New Jersey Industrial Site
Recovery Act ("ISRA"); and the regulations of the U.S. Department of
Transportation (with respect to hazardous materials transportation) and the
Nuclear Regulatory Commission. The term "release" shall have the meanings
specified in CERCLA and the terms "solid waste" and "disposed," the meaning
specified in RCRA, as such definitions may be subsequently modified,
supplemented or amended; provided, however, that in the event either CERCLA
or RCRA is amended so as to broaden the meaning of any term defined
thereby, such broader meaning shall apply subsequent to the effective date
of such amendment; and provided, further, however, that to the extent a
parcel of real property is
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situated in a state or other jurisdiction in which the applicable laws may
establish a meaning for "release," "solid waste" or "disposal" which is
broader than that specified in either CERCLA or RCRA, such broader meaning
shall apply.
2.9. Financial Statements. CMT has heretofore delivered to Prime and
Subsidiary audited balance sheets for the years ended December 31, 1997 and
1996, together with the related statements of operations, changes in
stockholders' equity and cash flows for the three years ended December 31,
1997, 1996 and 1995 (collectively, the "Financial Statements"). The
Financial Statements were prepared in accordance with generally accepted
accounting principals ("GAAP"), consistently applied, and present fairly
the financial position of CMT as at the dates thereof and the results of
operations and the cash flow for the periods indicated. The books and
records of CMT are complete and correct, have been maintained in accordance
with good business practices, and accurately reflect the basis for the
financial condition, results of operations and cash flow of CMT as set
forth in the Financial Statements.
2.10. Absence of Undisclosed Liabilities. CMT has no material
liabilities or obligations of any nature whatsoever, whether accrued,
absolute, contingent or otherwise, which have not been (a) in the case of
liabilities and obligations of a type customarily reflected on a corporate
balance sheet prepared in accordance with GAAP, (1) set forth on the
Financial Statements or (2) incurred in the ordinary course of business
since December 31, 1997, or (b) in the case of other types of liabilities
and obligations, described in any of the schedules delivered pursuant
hereto or omitted from said schedules in accordance with the terms of this
Agreement.
2.11. Accounts Receivables; Inventories.
(a) The accounts receivable, net of the allowance for doubtful
accounts applicable thereto (which allowance is established on a basis
consistent with GAAP) included in the latest balance sheets included in the
Financial Statements, are at the date hereof collectible in full over the
period of usual trade terms (by use of CMT's normal collection methods),
and there do not exist any defenses, counterclaims and set-offs which would
materially adversely affect such receivables representing obligations for
the total dollar amount thereof shown on the books of CMT. CMT has
performed all obligations with respect thereto which they were obligated to
perform to the date hereof.
(b) The inventories reflected on the Financial Statements consist of
items of a quality and quantity usable or saleable in the ordinary course
of business, except for obsolete materials, slow-moving items, materials of
below standard quality and not readily marketable items, all of which
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(i) have been written down to net realizable value or (ii) have been
adequately reserved against on the books and records of CMT or (iii) are to
be marked-down pursuant to CMT's existing inventory practices, consistently
applied. All inventories are stated at the lower of cost or market in
accordance with GAAP.
2.12. Properties. Except for any liens set forth on Schedule 2.12, CMT
has good and valid title to all of the properties and assets as are
necessary for the conduct of the Business, as reflected on the Financial
Statements as owned by it or thereafter acquired, except properties or
assets sold or otherwise disposed of in the ordinary course of business,
free and clear of any and all mortgages, liens (including liens for current
Taxes, as defined in subparagraph 2.15(b) hereof), pledges, claims, charges
and encumbrances of any nature whatsoever. All plants, structures and
equipment which are utilized in the Business, or are material to the
condition (financial or otherwise) of CMT are owned or leased by CMT.
Schedule 2.12 sets forth all (1) real property which is owned, leased
(whether as lessor or lessee) or subject to contract or commitment of
purchase or sale or lease (whether as lessor or lessee) by CMT, or which is
subject to a title retention or conditional sales agreement or other
security device, and (2) tangible personal property which is owned, leased
(whether as lessor or lessee) or subject to contract or commitment of
purchase or sale or lease (whether as lessor or lessee) by CMT.
2.13. Intellectual Property.
(a) CMT owns, or is licensed or otherwise possesses, legally
enforceable rights to use all patents, trademarks, trade names, service
marks and copyrights, any applications for and U.S. and foreign
registrations of such patents, trademarks, trade names, service marks and
copyrights, and all inventions, discoveries, improvements, processes,
formulae, methods, schematics, technology, know how, tangible or intangible
proprietary information, material or rights that are necessary to conduct
the Business as currently conducted or planned to be conducted by CMT, the
absence of which would be reasonably likely to have a Material Adverse
Effect (the "Intellectual Property Rights").
(b) Annexed hereto as Schedule 2.13 is a list containing a complete
and correct list of the Intellectual Property Rights of CMT (including a
summary description and, if applicable, the registration number or other
authority for use).
(c) No proceedings have been instituted, are pending or, to the best
of the knowledge of CMT, are threatened, which challenge the rights of CMT
in respect to the Intellectual
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Property Rights or the validity thereof. To the best of the knowledge of
CMT, none of the Intellectual Property Rights (or ownership or use thereof)
violates any laws, statutes, ordinances or regulations, or has at any time
infringed upon or violated any rights of others, or is being infringed by
others, or is subject to any outstanding order, decree, judgment,
stipulation or charge. CMT has not granted any license to third parties
with regard to the Intellectual Property Rights.
2.14. Insurance. Annexed hereto as Schedule 2.14 is a complete and
correct list and summary description of all material policies of insurance
relating to the Business or in which CMT is an insured party, beneficiary
or loss payable payee, including without limitation any products liability
insurance. Such policies are in full force and effect, all premiums due and
payable with respect thereto have been paid, and no notice of cancellation
or termination has been received by CMT with respect to any such policy.
2.15. Tax Matters.
(a) CMT has filed with the appropriate governmental agencies all tax
returns and reports required to be filed by it, and has paid in full or
contested in good faith or made adequate provision for the payment of,
Taxes (as defined herein) shown to be due or claimed to be due on such tax
returns and reports. The provisions for Taxes which will be set forth on
the latest balance sheet included in the Financial Statements reflects and
includes adequate provisions for the payment in full of any and all Taxes
for which CMT is or could be liable, whether to any governmental entity or
to other persons (as, for example, under tax allocation agreements), not
yet due for any and all periods up to and including the date of such
balance sheet; and all Taxes for periods beginning thereafter through the
Effective Date have been, or will be, paid when due or adequately reserved
against on the books of CMT and an amount of cash equal to the amount of
such reserve will have been set aside for the payment of such Taxes. CMT
has duly withheld all payroll taxes, FICA and other federal, state and
local taxes and other items requiring to be withheld by it from employer
wages, except to the extent contested in good faith and reserved against,
and has duly deposited the same in trust for or paid over to the proper
taxing authorities. CMT has not executed or filed with any taxing authority
any agreement extending the periods for the assessment or collection of any
Taxes, and is not a party to any pending or, to the best of the knowledge
of CMT, threatened, action or proceeding by any governmental authority for
the assessment or collection of Taxes. Within the past three years, the
United States federal income tax returns of CMT have not been examined by
the Internal Revenue Service ("the IRS") nor has the States of Delaware,
New Jersey, or any taxing authority thereof examined any merchandise,
personal property, sales or use tax returns of CMT. There is no tax lien,
whether imposed by any Federal,
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state, county, local or foreign taxing authority, outstanding against the
assets, properties or business of CMT. After the date hereof, no election
or consent with respect to any Tax (or the computation thereof) affecting
CMT will be made without the prior written consent of Prime. CMT has not
agreed to make and is not required to make any adjustment under Section
481(a) of the Internal Revenue Code, by reason of a change in accounting
method or otherwise. CMT is not a party to any tax sharing or allocation
agreement. CMT has not been a member of an affiliated group filing a
consolidated Federal income tax return and has no liability for Taxes under
Treas. Reg. ss. 1.1502-6 (or any similar provision of state, local or
foreign law), as a transferee or successor, by contract or otherwise.
(b) As used herein, the term "Taxes" or "Tax" means all federal,
state, county, local and other taxes and governmental assessments,
including but not limited to income taxes, estimated taxes, withholding
taxes, excise taxes, ad valorem taxes, payroll related taxes (including but
not limited to premiums for worker's compensation insurance and statutory
disability insurance), employment taxes, franchise taxes and import duties,
together with any related liabilities, penalties, fines, additions to tax
or interest.
2.16. Employee Arrangements.
(a) Schedule 2.16 sets forth a complete and correct list and summary
description of all (i) union, collective bargaining, employment,
management, termination and consulting agreements to which CMT is a party
or otherwise bound, and (ii) compensation plans and arrangements, bonus and
incentive plans and arrangements, deferred compensation plans and
arrangements, pension and retirement plans and arrangements, profit-sharing
and thrift plans and arrangements, stock purchase and stock option plans
and arrangements, hospitalization and other life, health or disability
insurance or reimbursement programs, holiday, sick leave, severance,
vacation, tuition reimbursement, personal loan and product purchase
discount policies and arrangements, and other plans or arrangements
providing for benefits for employees of CMT including, without limitation,
any "employee pension plan" (as defined in Section 3(2) of ERISA) or any
"employee benefit plan", as such term is defined in Section 3(3) of ERISA,
whether or not subject to the provisions of ERISA (each such plan,
contract, policy and arrangement being herein referred to as an "Employee
Plan"). Said Schedule also lists the names and compensation of all
employees of CMT whose earnings during the last fiscal year were $50,000 or
more (including bonuses and other incentive compensation), and all
employees who are expected to receive at least said amount in respect of
the current fiscal year. Except as set forth on the CMT Disclosure
Schedule, none of such personnel is a party and subject to any oral or
written employment, bonus, pension, profit-sharing, deferred compensation,
percentage compensation, employee benefit
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(including without limitation medical disability, life insurance and other
welfare benefit plans), incentive, pension or retirement plans, fringe
benefit or termination or severance agreements, plans or commitments with
CMT.
(b) Except for the outstanding indebtedness evidenced by the Notes set
forth in Exhibit 1.3 hereof, in the aggregate amount of $500,000, to
certain directors and/or holders of Senior Convertible Preferred Stock of
CMT, there are no outstanding loans and other advances (other than travel
advances in the ordinary course of business which do not exceed $3,000
individually or $10,000 in the aggregate), either (i) made by CMT to any of
its officers, directors, employees, stockholders, partners or consultants
or (ii) made by such officers, directors, employees, stockholders, partners
or consultants to CMT.
(c) Except as disclosed on Schedule 2.16, there are no pending, or to
the best of the knowledge of CMT, threatened, labor negotiations, work
stoppages or work slowdowns involving or affecting the Business, and no
union representation questions exist, and there are no organizing
activities, in respect of any of the employees of CMT.
2.17. Certain Business Matters and Practices
(a) CMT is not a party to or bound by any material distributorship,
dealership, sales agency, franchise or similar agreement which relates to
the Business. CMT does not provide any warranties on its products and has
no greater obligations than to replace the product sold or as is otherwise
customary in the industry.
(b) Set forth on Schedule 2.17 is a description of (i) CMT's rebate
and volume discount practice, and obligations, (ii) CMT's allowance and
customer return practice and obligations, (iii) CMT's co-op advertising and
other promotional practices, (iv) price protection agreements, and (v)
return policies and historical return rates, as each of the foregoing
relate to CMT's customers and suppliers.
2.18. Certain Contracts. Set forth on Schedule 2.18 is a complete and
correct list of all material contracts, commitments, obligations and
understandings which are not set forth in any other schedule delivered
hereunder and to which CMT is a party or otherwise bound, except for each
of those which (a) was made in the ordinary course of business, and (b)
either (i) is terminable by CMT (and will be terminable by Prime) without
liability, expense or other obligation on thirty (30) days' notice or less,
or (ii) may be anticipated to involve aggregate payments to or by CMT of
$5,000 (or the equivalent) or less calculated over the full term thereof,
and (c) is not otherwise material to the Business. Except as set forth in
the immediately preceding sentence, there are no agreements or
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arrangements in effect with respect to the Business by any independent
salesperson, distributor, sublicensor or other remarketer or sales
organization. Complete and correct copies of all contracts, commitments,
obligations and undertakings set forth on any of the Schedules delivered
pursuant to this Agreement have been furnished by CMT to Prime and
Subsidiary, and (x) each of them is in full force and effect, no person or
entity which is a party thereto or otherwise bound thereby is in default
thereunder, and no event, occurrence, condition or act exists which does
(or which with the giving of notice or the lapse of time or both would)
give rise to a default or right of cancellation, acceleration or loss of
contractual benefits thereunder; (y) there has been no threatened
cancellations thereof, and (z) there are no outstanding disputes
thereunder; except, in any of the foregoing cases, where such default,
cancellation, dispute or the like would not have a Material Adverse Effect.
2.19. Customers and Suppliers. CMT has no information which might
reasonably indicate that any of its suppliers or customers have any
disputes with CMT or the Business or intend to cease selling or rendering
services to, or dealing with, as applicable, CMT on substantially the same
basis as of the date hereof, nor has any information been brought to its
attention which might reasonably lead it to believe any such suppliers or
customers intend to alter in any material respect the amount of sales or
services or the extent of dealings with CMT, or would alter in any material
respect the sales or services or dealings in the event of the consummation
of the Merger. CMT does not have information which might reasonably
indicate, nor has any information been brought to its attention which might
reasonably lead it to believe, that any supplier of CMT will not be able to
fulfill outstanding or currently anticipated purchase orders placed by, or
service obligations to, CMT.
2.20. Approvals/Consents. Except as set forth on Schedule 2.20, to the
best of the knowledge of CMT, no governmental, administrative third-party
consents, permits, appointments, approvals, licenses, certificates and
franchises are necessary for the Business. All such consents, permits,
appointments, approvals, licenses, certificates and franchises set forth on
Schedule 2.20 are in full force and effect and will, upon the consummation
of the Merger, remain in full force and effect without the payment of any
penalty, the incurrence of any additional debt, liability or obligation of
any nature whatsoever or the change of any term. No material violations of
the terms thereof have heretofore occurred or are known by CMT to exist as
of the date hereof. There are no proceedings pending or, to the best of the
knowledge of CMT, threatened, or any basis therefor, seeking to cancel,
terminate or limit such consents, permits, appointments, approvals,
licenses, certificates, franchises or other authorizations.
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2.21. Information as to CMT. None of the representations or warranties
made by CMT in this Agreement or in any agreement executed and delivered by
or on behalf of it pursuant hereto are false or misleading with respect to
any material fact, or omit to state any material fact necessary in order to
make the statements therein contained not misleading.
3. Representations and Warranties as to Prime and Subsidiary. Prime and
Subsidiary, as applicable, hereby represent and warrant to CMT, as follows:
3.1. Organization, Standing and Power. Each of Prime and Subsidiary is
a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware, with full corporate power and authority
to own, lease and operate its respective properties and to carry on its
respective business as presently conducted by it. There are no states or
jurisdictions in which the character and location of any of the properties
owned or leased by Prime or Subsidiary, or the conduct of their respective
businesses makes it necessary for them to qualify to do business as a
foreign corporation and where they have not so qualified, except for those
jurisdictions in which the failure to so qualify would not have a
materially adverse effect on the their respective businesses or operations.
Copies of the Certificates of Incorporation of Prime and Subsidiary and all
amendments thereof and the By-laws of Prime and Subsidiary, as amended to
date, have been heretofore made available to CMT.
3.2. Authority.
(a) The execution and delivery by Prime and Subsidiary of this
Agreement and of each agreement, document and instrument to be executed and
delivered by either or both of them pursuant hereto (the "Prime
Documents"), the compliance by either or both of them with the provisions
hereof and thereof, and the consummation of the transactions contemplated
hereby and thereby, have been duly and validly authorized by all necessary
corporate actions on the part of Prime and the Subsidiary, and Prime and
the Subsidiary have all necessary corporate powers with respect thereto.
(b) This Agreement is, and when executed and delivered by each of
Prime and the Subsidiary, the Prime Documents to be executed and delivered
by either or both of them pursuant hereto will be, the valid and binding
obligation of Prime and the Subsidiary enforceable in accordance with their
terms, subject to the effect of applicable bankruptcy, reorganization,
insolvency, moratorium and other similar laws of general application
relating to, limiting or affecting the enforcement of creditors' rights
generally and general principles of equity that may limit the
enforceability of the remedies, covenants or other provisions of this
Agreement or the Prime
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Documents and the availability of injunctive relief or other equitable
remedies.
3.3. Noncontravention. Neither the execution and delivery by Prime or
the Subsidiary of the Prime Documents pursuant hereto, nor the consummation
of the transactions contemplated hereby or thereby, nor the compliance by
Prime or the Subsidiary with the provisions hereof and thereof, (a) will
(nor with the giving of notice or the lapse of time or both, would)
conflict with or result in a violation of any provision of the Certificates
of Incorporation or By-laws of Prime and the Subsidiary, or (b) in any
manner which would materially affect the ability of Prime or Subsidiary to
consummate the transactions contemplated hereby, (i) give rise to a
default, or any right of termination, cancellation or acceleration, or
otherwise be in conflict with or result in a loss of contractual benefits
to Prime or Subsidiary or under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, license, agreement or other
instrument or obligation to which either of them is a party or by which
either of them may be bound or to which Prime or Subsidiary may be subject,
or require any consent, approval or notice under the terms of any such
document or instrument, or (ii) violate any order, writ, injunction,
decree, law, statute, rule or regulation of any court or governmental
authority which is applicable to Prime or Subsidiary, or (iii) result in
the creation or imposition of any lien, claim, charge, restriction or
encumbrance upon any of the properties or assets of Prime or Subsidiary.
3.4. Capitalization. The authorized capital stock of Prime consists of
20,000,000 shares of Prime Stock and 5,000,000 shares of preferred stock,
par value of $.01 per share. As of the date hereof, (1) 4,490,500 shares of
Prime Stock are issued and outstanding, all of which are duly authorized,
validly issued, fully paid and nonassessable; (2) no shares of preferred
stock are issued and outstanding; (3) 532,000 shares of Prime Stock are
issuable upon exercise of options granted by Prime, 242,000 shares of which
are 10 year options granted under Prime's 1990 Stock Option Plan and (4)
758,000 shares of Prime Stock are reserved for future issuance under the
1990 Stock Option Plan. There is no personal liability, and there are no
preemptive rights with regard to the capital stock of Prime, and no
right-of-first refusal or similar rights with regard to such capital stock.
3.5. Merger Consideration. The Merger Consideration, when issued, will
be (1) duly authorized and validly issued, fully paid and non-assessable,
(2) delivered hereunder free and clear of any security interests, pledges,
mortgages, claims, liens and encumbrances of any kind whatsoever except
that the Prime Stock will be "restricted securities" as such term is
defined in the rules and regulations of the Securities Exchange Commission
and will be subject to
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restrictions on transfers pursuant to such rules and regulations and state
laws and as otherwise set forth in the Lock-Up Agreement (as defined in
Section 4.9), and (3) issued in compliance with all applicable federal and
state securities laws.
3.6. Litigation. There are no suits or actions, or administrative,
arbitration or other proceedings or governmental investigations, pending
or, to the best of the knowledge of Prime and Subsidiary, threatened,
against or relating to Prime or Subsidiary. There are no judgments, orders,
stipulations, injunctions, decrees or awards in effect which relate to
Prime or Subsidiary, their respective business or operations, which if
decided against either Prime or Subsidiary would have a material adverse
effect on the businesses, properties, assets, prospects and operations or
either Prime or Subsidiary.
3.7. Compliance with Law. To the best of the knowledge of Prime and
Subsidiary, Prime and Subsidiary are not engaging in any activity or
omitting to take any action as a result of which they are in violation of
any Laws applicable to Prime or Subsidiary or any of their respective
properties or assets, in any manner which would adversely affect the
ability of Prime or Subsidiary to consummate the transactions provided for
in this Agreement in accordance with the terms of this Agreement.
3.8. Absence of Undisclosed Liabilities. Neither Prime nor Subsidiary
has any material liabilities or obligations of any nature whatsoever,
whether accrued, absolute, contingent or otherwise which have not been (a)
in the case of liabilities and obligations of a type customarily reflected
on a corporate balance sheet prepared in accordance with GAAP, (1) set
forth in its reports on Forms 10-K and 10-Q for the year ended May 31, 1997
and each of August 31, 1997, November 30, 1997 and February 28, 1998,
respectively, on file with the Securities and Exchange Commission (the "SEC
Filings") or (2) incurred in the ordinary course of business since February
28, 1998, or (b) in the case of other types of liabilities and obligations,
described in any of the schedules delivered pursuant hereto or omitted from
said schedules in accordance with the terms of this Agreement.
3.9. Information as to Prime and the Subsidiary. None of the
representations or warranties made by Prime or the Subsidiary in this
Agreement or in any agreement executed and delivered by or on behalf of
either or both of them pursuant hereto are false or misleading with respect
to any material fact, or omit to state any material fact necessary in order
to make the statements therein contained not misleading.
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4. Covenants
4.1. Investigation.
(a) Between the date hereof and the earlier of the Effective Date or
the termination date of this Agreement, Prime and/or Subsidiary, on the one
hand, and CMT, on the other hand (each an "Investigating Party"), may,
directly and through their respective representatives, make such
investigation of the other parties and their respective businesses and
assets as such Investigating Party deems necessary or advisable; provided,
that such investigation shall not affect any of the representations and
warranties contained herein or in any instrument or document delivered
pursuant hereto. In furtherance of the foregoing, the Investigating Party
shall have reasonable access, during normal business hours after the date
hereof, to all properties, books, contracts, commitments and records of
Prime and/or Subsidiary, on the one hand, or CMT, on the other hand, and
the party being investigated hereunder shall furnish such financial and
operating data and other information as may from time to time be reasonably
requested relating to the transactions contemplated by this Agreement. The
party being investigated hereunder, and its respective management,
employees, accountants and attorneys, shall cooperate fully with the
Investigating Party in connection with any such investigation.
(b) The Investigating Party shall use its reasonable efforts not to
disclose or use any confidential information which it obtains in connection
with any investigation pursuant hereto, except to the extent which it deems
to be reasonably necessary in order to evaluate the business and operations
of the other parties hereto. In the event that the Merger is not
consummated for any reason whatsoever, the Investigating Party shall return
to the other parties all documents, work papers and other written materials
which were obtained by it during the course of such investigation which
constitute confidential information.
4.2. Consummation of Transaction. Each of the parties hereto hereby
agrees to use all reasonable efforts to cause all conditions precedent to
his or its obligations (and to the obligations of the other parties hereto)
to consummate the transactions contemplated hereby to be satisfied,
including, but not limited to, using all reasonable efforts to obtain all
required (if so required by this Agreement) consents, waivers, amendments,
modifications, approvals, authorizations, novations and licenses; provided,
however, that nothing herein contained shall be deemed to modify any of the
absolute obligations imposed upon or rights of any of the parties hereto
under this Agreement or any agreement executed and delivered pursuant
hereto.
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4.3. Cooperation/Further Assurances.
(a) Each of the parties hereto hereby agrees to fully cooperate with
the other parties hereto in preparing and filing any notices, applications,
reports and other instruments and documents which are required by, or which
are desirable in the reasonable opinion of any of the parties hereto, or
their respective legal counsel, in respect of, any statute, rule,
regulation or order of any governmental or administrative body in
connection with the transactions contemplated by this Agreement.
(b) Each of the parties hereto hereby further agrees to execute,
acknowledge, deliver, file and/or record, or cause such other parties to
the extent permitted by law to execute, acknowledge, deliver, file and/or
record such other documents as may be required by this Agreement and as
Prime and/or Subsidiary, on the one hand, and/or CMT, on the other, or
their respective legal counsel may reasonably require in order to document
and carry out the transactions contemplated by this Agreement.
4.4. Accuracy of Representations. Each party hereto agrees that prior
to the Closing Date it will enter into no transaction and take no action,
and will use his or its best efforts to prevent the occurrence of any event
(but excluding events which occur in the ordinary course of business and
events over which such party has no control), which would result in any of
his or its representations, warranties or covenants contained in this
Agreement or in any agreement, document or instrument executed and
delivered by him or it pursuant hereto not to be true and correct, or not
to be performed as contemplated, at and as of the time immediately after
the occurrence of such transaction or event.
4.5. Notification of Certain Matters. Each party hereto shall give
prompt notice to the other parties hereto of (a) the occurrence, or
nonoccurrence, or any event the occurrence, or nonoccurrence, of which
would be likely to cause any representation contained in this Agreement to
be untrue or inaccurate in any material respect at or prior to the
Effective Date and (b) any material failure by such party giving notice, to
comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by him or it hereunder; provided, however, that the
delivery of any notice pursuant to this subsection 4.5 shall not limit or
otherwise affect the remedies available hereunder to the party receiving
such notice.
4.6. Broker. Each of the parties hereto represents and warrants to the
other parties that no broker or finder was engaged or dealt with in
connection with any of the transactions contemplated by this Agreement, and
each of the parties shall indemnify and hold the other harmless from and
against any and all claims or liabilities asserted by or on
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behalf of any alleged broker or finder for broker's fees, finder's fees,
commissions or like payments.
4.7. Maintenance of Business. CMT will use its commercially reasonable
efforts to carry on its businesses, keep available the services of its
officers and employees and preserve its relationships with those of its
suppliers, licensors, licensees and others having business relationships
with it that are material to its businesses in substantially the same
manner as they have prior to the date hereof. If CMT becomes aware of a
material deterioration or facts which are likely to result in a material
deterioration in the relationship with any material supplier, licensor,
licensee or others having business relationships with it, CMT will promptly
bring such information to the attention of Prime in writing.
4.8. Stock Option Plan. At the Closing, or as soon thereafter as
practicable, (a) Prime shall reserve 900 shares of the Prime Stock for
issuance under Prime's existing 1990 Stock Option Plan for each 1 option to
purchase shares of Class A Voting Common Stock outstanding at the Closing
under the Cell & Molecular Technologies, Inc. 1997 Stock Option Plan and
(b) that the remaining options contained in the Cell & Molecular
Technologies, Inc. 1997 Stock Option Plan and the entire Cell & Molecular
Technologies, Inc. 1998 Stock Option Plan become options to purchase Shares
under Prime's 1990 Stock Option Plan and that Prime reserve shares of Prime
for issuance thereunder on a 900 to 1 basis, all as set forth on Schedule
4.8 attached hereto.
4.9. Lock-Up Agreement. At the Closing, each of the stockholders of
CMT shall execute and deliver a lock-up agreement, in the form of Exhibit
4.9 hereunder (the "Lock-up Agreement"), pursuant to which Lock-up
Agreement each of them would agree not to sell, without the prior consent
of Prime, their respective shares of Prime Common Stock until the second
anniversary of the closing of the Merger.
4.10. Management and Administrative Matters. Prime shall, effective at
the Closing, take any and all steps or actions reasonably necessary to
increase the size of the Board of Directors for Prime from three (3) to six
(6) and, thereafter nominate and elect each of Thomas J. Livelli, Paul
Marks and Richard Malavarca to serve on such board pursuant to the
Certificate of Incorporation and By-Laws.
4.11. Termination of CMT Shareholders' Agreement. Simultaneously with
the Closing, the Shareholders' Agreement, dated May 20, 1997, by and among
certain stockholders of CMT is hereby terminated.
5. Conditions of Merger. The respective obligations of the parties hereto
to effect the Merger shall be subject to
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the fulfillment at or prior to the Effective Date of the following conditions:
5.1. Litigation. No order of any court or administrative agency shall
be in effect which restrains or prohibits the transactions contemplated
hereby, and no claim, suit, action, inquiry, investigation or proceeding in
which it will be, or it is, sought to restrain, prohibit or change the
terms of or obtain damages or other relief in connection with this
Agreement or any of the transactions contemplated hereby, shall have been
instituted or threatened by any person or entity, and which, upon the
advice of either counsel to the parties hereto (based on the reasonable
likelihood of success and material consequences of such claim, suit,
action, inquiry or proceeding), makes it inadvisable to proceed with the
consummation of such transactions.
5.2. Ratification by the stockholders of CMT. All of the stockholders
of CMT shall have (a) consented to the transactions herein by the
affirmative vote of all of such stockholders; and (b) executed and
delivered Stockholder Representation letters, in substantially the form of
Exhibit 5.2 hereto (collectively, the "Stockholder Representation
Letters").
5.3. No Material Adverse Change. Except as otherwise provided by this
Agreement, there shall not have occurred prior to the Closing a material
adverse change in the financial or business condition of CMT, on the one
hand, or Prime or Subsidiary, on the other hand, in the reasonable judgment
of the other party.
5.4. Results of Investigation. Prime and Subsidiary, on the one hand,
and CMT, on the other hand, shall be satisfied with the results of any "due
diligence" investigation undertaken by them pursuant to Subsection 4.1
hereof.
5.5. Consents and Approvals. All consents, waivers, approvals,
licenses and authorizations by third parties and governmental and
administrative authorities (and all amendments or modifications to existing
agreements with third parties) required as a precondition to the
performance by CMT of its obligations hereunder and under any agreement
delivered pursuant hereto, or which in Prime's reasonable judgment are
necessary to continue unimpaired, subsequent to the Effective Date, any
rights in and to CMT's assets and/or the Business which could be impaired
by the Merger, shall have been duly obtained and shall be in full force and
effect.
5.6. Fairness Opinion. Unless Prime in its sole discretion shall have
waived receipt thereof, receipt by Prime of a favorable fairness opinion
from a reputable investment bank, with respect to the Merger.
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5.7. Lock-Up Agreement. Receipt by Prime of the Lock-Up Agreement,
duly executed by the stockholders of CMT.
5.8. Date of Consummation. The Merger shall have been consummated on
or prior to May 31, 1998, or such later date as the parties shall agree by
a written instrument signed by all of them.
6. The Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
7, the closing of the Merger (the "Closing") will take place at a location
mutually acceptable to the parties hereto as promptly as practicable, but in no
event later than May 31, 1998, or such later date as shall have been fixed by a
written instrument signed by the parties (the "Closing Date"), after the
delivery by the parties hereto of the following upon the terms and conditions of
this Agreement:
6.1. Deliveries by Prime and Subsidiary. Prime and Subsidiary, as
applicable, shall deliver:
(a) stock certificate(s), registered in the name of each of the
stockholders of CMT, representing their pro rata share of the Merger
Consideration as set forth in Schedule 2.2 hereof, or duly executed
instructions to Prime's Transfer Agent, providing for the issuance of
stock certificates to each of the stockholders of CMT in accordance
with Schedule 2.2 hereof;
(b) copies of the resolutions of the Board of Directors of Prime
and Subsidiary, and the written consent of Prime as the stockholder of
Subsidiary, authorizing Subsidiary to execute and deliver the Prime
Documents, to perform its obligations thereunder and to effect the
Merger, duly certified by the secretaries or assistant secretaries of
Prime and Subsidiary;
(c) certificates of the Secretary or Assistant Secretary of
Subsidiary certifying as to the incumbency and specimen signatures of
the officers of Subsidiary executing the Prime Documents on behalf of
such corporation;
(d) closing certificates from each of Prime and Subsidiary,
executed by their respective presidents, dated the Closing Date, to
the effect that: (i) all the representations and warranties of Prime
or Subsidiary, as the case may be, are true and complete in all
material respects; (ii) all covenants to be performed by each of Prime
or Subsidiary, as the case may be, at or as of the Closing have been
performed in all material respects; and (iii) conditions to be
satisfied at or as of the Closing have been waived or satisfied in all
material respects;
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(e) confirmation, in the form satisfactory to the parties hereto,
from the State of Delaware or a filing service (jointly chosen by the
parties hereto) that the Certificate of Merger of Subsidiary with and
into CMT has been filed with the Secretary of State of Delaware,
together with a copy of the executed form of such agreement; and
(f) the opinion of the law firm of Tenzer Greenblatt LLP, counsel
for Prime and Subsidiary, dated the Closing Date, substantially in the
form of Exhibit 6.1(f) hereto.
6.2. Deliveries by CMT and the stockholders of CMT. CMT and the
stockholders of CMT, as the case may be, shall deliver to Prime and/or the
Subsidiary:
(a) stock certificate(s) representing the CMT Stock;
(b) copies of the resolutions of the Board of Directors of CMT,
and the written consent of the stockholders of CMT, authorizing CMT to
execute and deliver the CMT Documents, to perform its obligations
thereunder and to effect the Merger, duly certified by the secretary
or assistant secretary of CMT;
(c) closing certificates from the President of CMT, dated the
Closing Date, to the effect that: (i) all the representations and
warranties of CMT are true and complete in all material respects; and
(ii) all covenants to be performed by CMT and the stockholders of CMT
at or as of the Closing have been performed in all material respects;
and (iii) conditions to be satisfied at or as of the Closing have been
waived or satisfied in all material respects;
(d) certificates of the Secretary or Assistant Secretary of CMT
certifying as to the incumbency and specimen signatures of the
officers of CMT executing the CMT Documents on behalf of such
corporation;
(e) the consents, waivers, approvals, licenses and authorizations
by third parties and governmental and administrative authorities (and
all amendments or modifications to existing agreements with third
parties) required as a precondition to the performance by CMT of its
obligations hereunder and under any agreement delivered pursuant
hereto, or which in the parties' reasonable judgment are necessary to
continue unimpaired, subsequent to the Effective Date, any rights in
and to the Business which could be impaired by the Merger;
(f) the Stockholder Representation Letters;
(g) the Lock-Up Agreements; and
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(h) the opinion of the law firm of Littman Krooks Roth & Ball PC,
counsel for CMT, dated the Closing Date, in substantially the form
attached hereto as Exhibit 6.2(h).
6.3. Other Deliveries. In addition, the parties shall execute and
deliver such other documents as may be required by this Agreement and as
either of them or their respective counsel may reasonably require in order
to document and carry out the transactions contemplated by this Agreement.
7. Termination, Amendment and Waiver.
7.1. Termination. In the event that any of the conditions set forth in
Section 5 are not waived or satisfied on or before the Closing Date, this
Agreement shall, except with respect to subsections 4.1 (b) and 7.2 hereof,
forthwith become null and void and there shall be no liability on the part
of any party hereto under any provision hereof; provided, however, that
notwithstanding the provisions of the foregoing sentence, nothing in this
Agreement shall relieve any party from liability for any wilful breach of
the terms hereof.
7.2. Fees and Expenses. Prime, on the one hand, and CMT, on the other
hand, shall be responsible for, and shall pay, the fees and expenses
incurred by each of Prime and the Subsidiary, and CMT, respectively, in
connection with the Merger and the transactions contemplated by this
Agreement.
7.3. Waiver. At any time prior to the Effective Date, any party hereto
may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document
delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein. Any such extension or waiver
shall be valid if set forth in an instrument in writing signed by the party
or parties to be bound thereby.
8. General Provisions.
8.1. Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly
given or made as of the date received. Notices shall be either delivered
personally, deposited with courier, sent by telecopy, or mailed by
registered or certified mail (postage prepaid, return receipt requested),
to the parties at the following addresses (or at such other address for a
party as shall be specified by like notice):
If to Prime or Subsidiary: Prime Cellular, Inc.
100 First Stamford Place
Stamford, CT 06902
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Attn: Joseph K. Pagano,
Chairman of the Board and
Chief Executive Officer
Fax: (203) 359-0880
with a copy to: Tenzer Greenblatt LLP
405 Lexington Avenue
New York, New York 10174
Attn: Robert J. Mittman, Esq.
Fax: (212) 885-5001
If to CMT: Cell & Molecular Technologies, Inc.
406 Grand Central Avenue
Lavalette, New Jersey 08735
Attn: Thomas J. Livelli
President and Chief Executive
Officer
Fax: (732) 830-4594
with a copy to: Littman Krooks Roth & Ball PC
655 Third Avenue
New York, New York 10017
Attn: Mitchell Littman, Esq.
Fax: (212) 490-2990
8.2. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in
any manner adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are
fulfilled to the greatest extent possible.
8.3. Entire Agreement. This Agreement and the agreements referred to
herein constitute the entire agreement, and supersede all prior agreements,
representations and undertakings, both written and oral, among the parties,
or any of them, with respect to the subject matter hereof.
8.4. Amendment. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
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8.5. No Assignment. This Agreement shall not be assigned by operation
of law or otherwise, and any assignment shall be null and void.
8.6. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the law of the State of New York, without regard to its
choice of law principles.
8.7. Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original, but all
of which taken together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, each of the parties hereto, have caused this Agreement
to be executed as of the date first written above.
PRIME CELLULAR, INC.
By: /s/ Joseph K. Pagano
----------------------------------
Joseph K. Pagano, President
CMT ACQUISITION CORP.
By: /s/ Joseph K. Pagano
----------------------------------
Joseph K. Pagano, President
CELL & MOLECULAR TECHNOLOGIES, INC.
By: /s/ Thomas J. Livelli
---------------------------------
Thomas J. Livelli, President
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