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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: AUGUST 21, 1997
SPACELABS MEDICAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-20083 91-1558809
(State or other jurisdiction of (Commission file number) (I.R.S. Employer
incorporation or organization) Identification No.)
15220 N.E. 40TH STREET, P.O. BOX 97013, REDMOND, WASHINGTON 98073
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (425) 882-3700
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Item 1. Not Applicable
Item 2. Acquisition or Disposition of Assets
On August 21, 1997, the Company acquired Burdick, Inc. (Burdick)
a privately owned developer and manufacturer of diagnostic
cardiology systems based in Milton, Wisconsin. The acquisition
was effected pursuant to an Agreement and Plan of Merger dated
July 11, 1997 (a copy of which is filed herewith as Exhibit
10.34), under which Burdick (together with all assets,
operations and employees) has become a wholly-owned subsidiary
of the Company. Assets acquired include working capital,
manufacturing equipment, tooling, furniture and fixtures and
intellectual property used in connection with the development
and manufacture of diagnostic cardiology and respiratory systems
distributed principally in the primary care market. The Company
intends to operate Burdick in substantially the same manner as
it was operated prior to the acquisition with additional
resources focused on distribution into the hospital market.
The Company acquired Burdick with $50 million in cash which was
funded entirely with debt from Bank of America National Trust
and Savings Association dba Seafirst Bank. The amount of
consideration paid was established through negotiations between
the parties and analysis from independent valuation consultants.
The shareholders of Burdick prior to the acquisition included
approximately 6 institutional investors and 61 current and
former employees.
Items 3-6. Not Applicable
Item 7. Financial Statements and Exhibits
(a),(b) Financial Statements of Businesses Acquired and
Pro forma Financial Information.
The Company is currently assessing whether or not financial
statements and pro-forma information will be required. Should
such information be required, it will be filed not later than 60
days after September 5, 1997, the date by which this Form 8-K is
required to be filed.
(c) Exhibits.
10.34 Agreement and Plan of Merger
Item 8. Not Applicable
Item 9. Not Applicable
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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 thereunto duly authorized.
Date: September 5, 1997 SPACELABS MEDICAL, INC.
(Registrant)
/s/ Carl A. Lombardi
-----------------------------------
Carl A. Lombardi
Chairman of the Board and
Chief Executive Officer
/s/ James A. Richman
-----------------------------------
James A. Richman
Vice President and
Corporate Controller
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EXHIBIT 10.34
AGREEMENT AND PLAN OF MERGER
DATED JULY 11, 1997
BY AND AMONG
SPACELABS MEDICAL, INC.,
SLMD ACQUISITION CORPORATION
BURDICK, INC.,
AND
CERTAIN SHAREHOLDERS OF BURDICK, INC.
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II THE MERGER
Section 2.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.2 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.3 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.4 Corporate Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III CONVERSION AND EXCHANGE
Section 3.1 Conversion of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.2 Surrender and Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.3 No Further Transfers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.4 Certain Effects of the Merger. . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.5 Return to Purchaser. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE IV REPRESENTATIONS OF THE COMPANY
Section 4.1 Authority; Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.2 Consents; Ability to Carry Out the Agreement; No
Default; Non-Contravention. . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.3 Existence and Good Standing. . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.4 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.5 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.6 Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.7 Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.8 Maintenance of Books and Records. . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.9 Conduct of Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.10 Real and Personal Property; Leases . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.11 Material Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.12 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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Section 4.14 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.15 Employees; Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.16 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.17 Broker's or Finder's Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.18 Medical Devices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.19 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 4.20 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 4.21 No Adverse Effects or Changes . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.22 No Defaults or Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.23 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.24 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.25 Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.26 Certain Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.27 Certain Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.28 Guaranties and Suretyships . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.29 Product and Service Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.30 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE V REPRESENTATIONS AND WARRANTIES OF
THE PURCHASER AND ACQUISITION
Section 5.1 Organization and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 5.2 Authority Relative to Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 5.3 No Default; Non-Contravention. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 5.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.5 Acquisition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.6 Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.7 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VI COVENANTS OF THE COMPANY
Section 6.1 Conduct of Business of the Company . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 6.2 Review of the Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 6.3 Reasonable Efforts; Further Assurances . . . . . . . . . . . . . . . . . . . . . . 35
Section 6.4 Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 6.5 No Breach of Representations and Warranties . . . . . . . . . . . . . . . . . . . 36
Section 6.6 ISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 6.7 No Negotiations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 6.8 Termination of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 6.9 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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ARTICLE VII COVENANTS OF THE PURCHASER AND ACQUISITION
Section 7.1 No Breach of Representations and Warranties . . . . . . . . . . . . . . . . . . . 38
Section 7.2 Reasonable Efforts; Further Assurances . . . . . . . . . . . . . . . . . . . . . . 38
Section 7.3 Purchaser to Maintain Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE VIII CONDITIONS TO THE PURCHASER'S AND ACQUISITION'S OBLIGATIONS
Section 8.1 Representation and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 8.2 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 8.3 Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 8.4 Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 8.5 Legality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 8.6 Injunctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 8.7 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 8.8 Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 8.9 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 8.10 Corporate Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 8.11 Other Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 8.12 No Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 8.13 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 8.14 Related Party Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 8.15 Assignment of Siemens Indemnities . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 8.16 Cancellation of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 8.17 Certain Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 8.18 Termination of Stockholders' Agreement . . . . . . . . . . . . . . . . . . . . . . 41
Section 8.19 Termination of Share Purchase Rights . . . . . . . . . . . . . . . . . . . . . . . 41
Section 8.20 Termination of Certain Additional Agreements . . . . . . . . . . . . . . . . . . . 41
Section 8.21 Certain Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 8.22 IISA Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE IX CONDITIONS TO THE COMPANY'S OBLIGATIONS
Section 9.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 9.2 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 9.3 Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 9.4 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 9.5 Governmental Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 9.6 Legality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 9.7 Injunctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 9.8 Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
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Section 9.9 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE X TERMINATION
Section 10.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 10.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 10.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 10.4 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE XI SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
Section 11.1 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . 45
Section 11.2 Indemnification By Designated Shareholders . . . . . . . . . . . . . . . . . . . . 45
Section 11.3 Indemnification By Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 11.4 Basket and Other Limitations; Insurance and Tax
Recoveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 11.5 Indemnification Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 11.6 Indemnification Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 11.7 Tax Contests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE XII MISCELLANEOUS
Section 12.1 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 12.2 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 12.3 Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 12.4 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 12.5 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 12.6 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 12.7 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 12.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 12.9 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 12.10 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 12.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 12.12 Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of
July 11, 1997, by and between SPACELABS MEDICAL, INC., a California corporation
(the "Purchaser"), SLMD ACQUISITION CORPORATION, a Delaware corporation and a
wholly-owned subsidiary of the Purchaser ("Acquisition"), BURDICK, INC., a
Delaware corporation (the "Company") and the DESIGNATED SHAREHOLDERS (defined
below).
W I T N E S S E T H:
WHEREAS, the Company is primarily engaged in the business of
developing, manufacturing, selling and distributing worldwide
electrocardiograph records, stress testing systems, defibrillators and related
supplies to the health care industry (the "Business"); and
WHEREAS, the Board of Directors of each of the Purchaser and
the Company deem it to be desirable and in the best interests of such companies
that the Purchaser acquire the Company through the merger of Acquisition into
the Company upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the respective
representations and warranties set forth herein and the mutual covenants and
undertakings contained herein and intending to be legally bound hereby, the
parties do hereby represent, warrant, covenant and agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. The following terms shall have the following
meanings for purposes of this Agreement:
"Accounts Receivable" shall have the meaning set forth in
Section 4.23.
"Acquisition" shall have the meaning set forth in the
recitals.
"Acquisition Common Stock" means the common stock, par value
$.01 per share, of Acquisition.
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"Affiliate" shall mean any Person owning or controlling,
directly or indirectly, a majority of the capital stock or other similar equity
interest of such party, or any Person of which such party owns or controls,
directly or indirectly, a majority of the capital stock or other similar equity
interest, or any Person owned or controlled, directly or indirectly, by the
Person which owns or controls such party.
"Agreement" shall mean this Agreement and Plan of Merger,
including all exhibits and schedules hereto, as it may from time to time be
amended and in force.
"Business" shall have the meaning set forth in the recitals
hereto.
"Certificates" shall have the meaning set forth in Section
3.2(b).
"Class A Common Stock" shall mean the Class A Common Stock,
$.01 par value per share of the Company.
"Class B Common Stock" shall mean the Class B Common Stock,
$.01 par value per share of the Company.
"Closing" shall have the meaning set forth in Section 2.1.
"Closing Date" shall have the meaning set forth in Section
2.1.
"Closing Time" shall have the meaning set forth in Section
2.1.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Common Stock Merger Consideration" shall have the meaning
set forth in Section 3.1(a).
"Company" shall mean Burdick, Inc., a Delaware corporation;
provided, however, that as used in Sections 4.2, 4.3, 4.5, 4.6, 4.7, 4.9, 4.10,
4.12, 4.13, 4.15, 4.18, 4.19, 4.21, 4.22, 4.25, 4.27 and 4.30 of this
Agreement, the term "Company" shall refer to Burdick, Inc., as well as to each
Affiliate owned or controlled by Burdick, Inc., as well as to Shanghai Burdick
Medical Instrument Co., Ltd. ("Shanghai Burdick").
"Company Stock" shall mean the Class A Common Stock, the
Class B Common Stock and the Preferred Stock.
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"Competing Business" shall have the meaning set forth in
Section 4.25.
"Confidentiality Agreement" shall have the meaning set forth
in Section 6.2.
"Constituent Corporations" shall have the meaning set forth
in Section 3.4.
"Contracts" shall mean all written contracts, agreements,
open purchase orders, licenses and leases relating to the Business.
"Delaware Certificate of Merger" has the meaning set forth in
Section 2.3.
"Designated Shareholders" means George Messina, Gary Laube,
Robert McKaba, Joseph Weber, Robert S. Nielsen, Frank A. Schmidt, Gregg R.
Laycock and the Institutional Shareholders (defined in Section 4.17).
"DGCL" means the General Corporation Law of the State of
Delaware.
"Disbursing Agent" shall have the meaning set forth in
Section 3.1(c).
"Dissenting Shares" shall have the meaning set forth in
Section 3.1(e).
"DLJ" shall have the meaning set forth in Section 4.17.
"Effective Time" shall have the meaning set forth in Section
2.3.
"Environmental Law" shall mean the federal Clean Air Act, 42
U.S.C. Section 7401 et seq., the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601 et seq., the Emergency
Planning and Community Right To Know Act, 42 U.S.C. Section 1101 et seq., the
Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et seq., the Oil
Pollution Act of 1990, 33 U.S.C. Section 2701 et seq., the Pollution
Prevention Act of 1990, 42 U.S.C. Section 13101 et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq., the Safe
Drinking Water Act, 42 U.S.C. Section 3306 et seq., the Endangered Species
Act, 16 U.S.C. Section 1531 et seq., the Toxic Substances Control Act, 7
U.S.C. Section 136 et seq., all as amended, and any state or local
counterparts thereof, including specifically, the provisions of Chapter 281,
283, 285, 287, 289, 291, 292 and 299 of Wisconsin Statutes and regulations
promulgated thereunder.
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"Environmental Liabilities" shall mean any cost, damages,
expense, liability, obligation, or other responsibility arising from or under
Environmental Law and consisting of or relating to:
(a) fines, penalties, judgments, awards, settlements,
costs or expenses associated with legal or administrative proceedings, damages,
losses, claims, demands and response, investigative, remedial, or inspection
costs and expenses arising under Environmental Law; or
(b) financial responsibility under Environmental Law for
cleanup costs or corrective action, including any investigation, cleanup,
removal, containment, or other remediation or response actions ("Cleanup")
required by applicable Environmental Law (whether or not such Cleanup has been
required or requested by any Governmental Authority or any other Person) and
for any natural resource damages awarded in any administrative proceeding or by
a court of competent jurisdiction or agreed to by settlement undertaken with
consultation and approval by the Designated Shareholders, which consent shall
not be unreasonably withheld.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
"Escrow Account" is defined in Section 11.2.
"Escrow Agreement" shall have the meaning set forth in
Section 11.2.
"FDA" means the United States Food and Drug Administration.
"FDC Act" shall mean the Federal Food, Drug and Cosmetic Act,
as amended.
"Financial Statements" shall have the meaning set forth in
Section 4.5.
"GAAP" shall mean generally accepted accounting principles,
consistently applied.
"Governmental Authority" shall mean the government of the
United States or any foreign country or any state or political subdivision
thereof and any
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entity, body or authority exercising executive, judicial, regulatory or
administrative functions of government.
"Hazardous Materials" shall mean any waste or other substance
that is listed, defined, designated, or classified as, or otherwise determined
to be, hazardous, radioactive, or toxic or a pollutant or a contaminant under
or pursuant to any Environmental Law.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder.
"Indemnified Party" shall have the meaning set forth in
Section 11.5.
"Indemnifying Party" shall have the meaning set forth in
Section 11.5.
"Indebtedness" shall mean the aggregate of all principal,
interest, costs, fees and expenses due or to become due with respect to any
obligation.
"Intellectual Property" shall have the meaning set forth in
Section 4.7(b).
"Knowledge of the Company" shall mean the actual knowledge of
an officer or director of the Company, after due inquiry.
"Leased Real Property" shall have the meaning set forth in
Section 4.10.
"Leases" shall have the meaning set forth in Section 4.10.
"Letter Agreement" shall have the meaning set forth in
Section 6.2.
"Lien" shall mean any mortgage, lien, pledge, security
interest or other similar encumbrance, whether absolute, legal, equitable,
accrued or contingent or otherwise, including, without limitation, any rights
of first refusal as to any of the properties or assets of the Company (except
for (i) liens for current taxes or assessments not yet due or payable, (ii)
workers', mechanics', suppliers', carriers', warehousemen's, materialmen's or
repairmen's liens or other similar liens arising in the ordinary course of the
Business, (iii) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation, and (iv) deposits
to secure the performance of bids, trade contracts (other than for borrowed
money), leases, statutory obligations, surety and appeal
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bonds, performance bonds and other obligations of a like nature incurred in the
ordinary course of the Business).
"Loss" or "Losses" shall have the meaning set forth in
Section 11.2.
"Material" shall mean, when used in connection with any
action, representation, warranty, covenant, inaction or undertaking, an amount
in excess of $50,000.
"Material Adverse Effect" shall mean, when used with any
representation, warranty or covenant, any breach or failure to comply resulting
in a Loss or Losses in an amount in excess of $500,000.
"Material Contract" shall have the meaning set forth in
Section 4.11.
"Merger" shall have the meaning set forth in Section 2.2.
"Merger Consideration" has the meaning set forth in Section
3.1(a).
"M&I" shall have mean M&I Marshall & Ilsley Bank.
"Notice" shall have the meaning set forth in Section 11.5.
"PBGC" shall have the meaning set forth in Section 4.15.
"Permitted Liens" shall have the meaning set forth in Section
4.6(a).
"Permits" shall have the meaning set forth in Section 4.19.
"Person" shall mean any individual, corporation, partnership,
limited liability company, joint venture, trust, association, unincorporated
organization or other entity.
"Plans" shall have the meaning set forth in Section 4.15.
"PMA or PMAs" shall have the meaning set forth in Section
4.18.
"Preferred Stock" shall mean the Redeemable Preferred Stock,
$1.00 par value per share of the Company.
"Preferred Stock Merger Consideration" shall have the meaning
set forth in Section 3.1(b).
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"Purchaser" shall have the meaning set forth in the recitals
hereto.
"Rights" shall have the meaning set forth in Section 4.4.
"SEC" shall mean the United States Securities and Exchange
Commission.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Shareholders" shall mean all of the holders of the Company's
capital stock, including the holders of the Company Stock. Each of the
Shareholders and their respective holdings of the Company Stock are set forth
on Schedule 4.4.
"Siemens Indemnities" shall mean those indemnities of Siemens
Medical Corporation and Siemens Corporation (together, "Siemens") set forth in
Section 13 of the Asset Purchase Agreement dated September 3, 1993 by and among
the Company, Siemens and the other parties thereto (the "Siemens Asset Purchase
Agreement").
"Stockholders Agreement" shall mean the Stockholders
Agreement dated September 15, 1993 between the Company and its Shareholders, as
amended.
"Surviving Corporation" shall have the meaning set forth in
Section 2.2.
"Taxes" shall have the meaning set forth in Section 4.13.
"Termination Date" shall have the meaning set forth in
Section 10.1.
"Total Consideration" shall mean $50,000,000.
"Transaction Bonus" shall have the meaning set forth in
Section 4.26.
"Unvested Rights" shall have the meaning set forth in Section
6.8.
"Vested Rights" shall have the meaning set forth in Section
6.8.
ARTICLE II
THE MERGER
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Section 2.1 Closing. The Closing (the "Closing") of the
transactions contemplated by this Article II shall take place at 10:00 A.M., on
the third business day after the fulfillment or waiver of the last of the
conditions specified in Article VIII and IX hereof, at the offices of Foley &
Lardner, Madison, Wisconsin, or at such other time, date and place as may be
agreed upon in writing by the Purchaser and the Company. (Hereinafter, the
date on which the Closing shall take place is referred to as the "Closing Date"
and the time on the Closing Date when the Closing shall take place is referred
to as the "Closing Time").
Section 2.2 The Merger. Upon the terms and subject to the
conditions of this Agreement and in accordance with the General Corporation Law
of the State of Delaware (the "DGCL"), on the Closing Date, Acquisition shall
be merged with and into the Company (the "Merger"). The Company shall continue
its existence as the surviving corporation in the Merger (and is hereinafter
sometimes referred to as the "Surviving Corporation") and the separate
corporate existence of Acquisition shall terminate at the Effective Time.
Section 2.3 Effective Time. The Merger shall become effective
at such time as a certificate of merger (the "Delaware Certificate of Merger"),
in form and substance reasonably satisfactory to the Purchaser and the Company,
is filed with the Secretary of State of the State of Delaware in accordance
with Section 103 of the DGCL or at such later time as is specified in the
Delaware Certificate of Merger (the "Effective Time"). The Delaware
Certificate of Merger shall be filed as soon as practicable after the Closing
Time.
Section 2.4 Corporate Organization.
(a) Immediately subsequent to the Effective Time, the
Surviving Corporation (i) shall be a wholly-owned subsidiary of the Purchaser,
(ii) shall continue its separate corporate existence with all its purposes,
objects, rights, privileges, powers, certificates and franchises unimpaired by
the Merger under the laws of the State of Delaware, (iii) shall retain the name
"Burdick, Inc.", and (iv) shall succeed to all rights, assets, liabilities and
obligations of Acquisition and the Company in accordance with the DGCL.
(b) The Certificate of Incorporation and By-Laws of
Acquisition at the Effective Time shall be the Certificate of Incorporation and
By-Laws, respectively, of the Surviving Corporation after the Effective Time,
and thereafter may be amended in accordance with their respective terms and as
provided by applicable law.
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(c) At the Effective Time, the directors and officers of
Acquisition shall be the directors and officers of the Surviving Corporation,
each to hold office in accordance with the Certificate of Incorporation and
By-Laws of the Surviving Corporation.
ARTICLE III
CONVERSION AND EXCHANGE
Section 3.1 Conversion of Shares. At the Effective Time:
(a) The amount per share payable to the holders of the
issued and outstanding shares of Class A Common Stock and Class B Common Stock
immediately prior to the Effective Time (other than Dissenting Shares) shall,
by reason of the Merger and without any action by the holders thereof, equal:
(i) $50,000,000 (the "Total Consideration") less the sum of: (v) the
Indebtedness on the Closing Date payable to M&I and Siemens, (w) the aggregate
Preferred Stock Merger Consideration, (x) the amount expended by the Company
(including obligations incurred but not paid) pursuant to Section 6.9 of this
Agreement for environmental remediation at the Company's facility in Milton,
Wisconsin between the date of execution of this Agreement and the Closing Date,
(y) the fees and other amounts payable on the Closing Date to Harvest Ventures,
National City Capital Corp., and Frank Low pursuant to their respective
management agreements with the Company as described in Section 8.20, and (z)
the excess legal fees, if any, as set forth in Section 12.1, divided by (ii)
the number of shares of Class A Common Stock and Class B Common Stock
outstanding on the Closing Date (the "Common Stock Merger Consideration").
(b) The holder of each issued and outstanding share of
Preferred Stock immediately prior to the Effective Time (other than Dissenting
Shares) shall, by reason of the Merger and without any action by the holder
thereof, be entitled to receive $10.00 per share in cash plus any accrued but
unpaid dividends per share through the Effective Time (the "Preferred Stock
Merger Consideration") (the Common Stock Merger Consideration and the Preferred
Stock Merger Consideration are referred to herein as the "Merger
Consideration").
(c) The Purchaser shall select a disbursing agent (the
"Disbursing Agent") and the Company, the Purchaser and the Designated
Shareholders shall provide the Disbursing Agent with irrevocable written
instructions (the "Instruction Letter"): (i) to deduct from the Total
Consideration and to pay the amounts identified in items (v), (x), (y) and (z)
of Section 3.1(a) above from the amounts deposited by the Purchaser pursuant to
Section 3.2(a) to the payees listed in the
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Instruction Letter on or promptly after the Effective Time, and (ii) to deduct
from the Common Stock Merger Consideration otherwise payable to the Designated
Shareholders and certain other employee shareholders listed on Schedule 3.1(c)
(the "Other Employee Shareholders"), the following items, and to pay such items
to the payees listed in the Instruction Letter on or promptly after the
Effective Time:
(A) The Disbursing Agent shall deduct from
the Common Stock Merger Consideration otherwise payable to
the Institutional Shareholders (defined in Section 4.26): (1)
the fee payable to DLJ as set forth in Section 4.17, (2)
Transaction Bonuses payable on the Closing Date to management
as set forth in Section 4.26, and (3) the Indemnification
Amount to be deposited into escrow pursuant to Section 11.2
of this Agreement. Each Institutional Shareholder's share of
the Indemnification Amount shall be equal to the product of
the Indemnification Amount multiplied by a fraction, the
numerator of which is the number of shares of Common Stock
owned by such Institutional Shareholder immediately prior to
the Effective Time, and the denominator of which is the total
number of shares of Common Stock held by all Institutional
Shareholders immediately prior to the Effective Time.
(B) The Disbursing Agent shall deduct from
the Common Stock Merger Consideration otherwise payable to
the Designated Shareholders who are members of Company
management: (1) the amount, if any, of principal and
interest due on the Closing Date and owed by the respective
management member to the Company pursuant to outstanding
notes and other indebtedness owed to the Company, and (2) the
exercise price associated with the exercise by such
management member of any Vested Rights on or prior to the
Effective Time.
(C) The Disbursing Agent shall deduct from
the Common Stock Merger Consideration otherwise payable to
the Other Employee Shareholders the amount, if any, of
principal and interest due on the Closing Date and owed by
such Other Employee Shareholders members to the Company
pursuant to outstanding notes and other indebtedness owed to
the Company.
(d) Each share of Acquisition Common Stock issued and
outstanding immediately prior to the Effective Time shall, by reason of the
Merger and without any action by the holder thereof, be converted into one
share of
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Company Common Stock, which shall thereafter constitute all of the issued and
outstanding shares of the Surviving Corporation.
(e) Notwithstanding anything in this Agreement to the
contrary, any shares of Company Stock which are outstanding immediately prior
to the Effective Time and which are held by Shareholders who shall not have
voted such shares in favor of the Merger and who shall have filed with the
Company a written objection to the Merger and a demand for appraisal of such
shares in the manner provided in Section 262 of the DGCL ("Dissenting Shares")
shall not be converted into the right to receive, or be exchangeable for, the
applicable Merger Consideration, but, instead, such Shareholders shall be
entitled only to such rights as are granted by Section 262 of the DGCL. Such
Shareholders shall be entitled to receive payment of the appraised value of
such shares of Company Stock held by them in accordance with the provisions of
such Section 262, except that all Dissenting Shares held by Shareholders who
shall have failed to perfect or who effectively shall have withdrawn or lost
their rights to appraisal of such shares of Company Stock under such Section
262 of the DGCL shall thereupon be deemed to have been converted into and to
have become exchangeable for, as of the Effective Time, the right to receive
the applicable Merger Consideration, without any interest thereof, upon
surrender, in the manner provided in Section 3.2, of the Certificate or
Certificates that formerly evidenced such shares. The Purchaser shall pay the
appraised value determined pursuant to Section 262 of the DGCL; provided, that
the Purchaser shall be reimbursed by the Institutional Shareholders from the
Escrow Account for that portion of the appraised value which exceeds the
applicable Merger Consideration which would have been paid to a dissenting
Shareholder had the Shareholder not dissented from the Merger.
(f) The Company shall give the Purchaser: (i) prompt
notice of any demands for appraisal received by the Company, withdrawals of
such demands and any other instruments served pursuant to the DGCL and received
by the Company and (ii) the opportunity to direct all negotiations and
proceedings with respect to demands for appraisal under the DGCL. The Company
shall not, except with the prior written consent of the Purchaser, make any
payment with respect to any demands for appraisal or offer to settle or settle
any such demands.
Section 3.2 Surrender and Payment.
(a) On or before the Closing Date, the Purchaser shall,
at the option of the Purchaser, either: (i) deposit or cause to be deposited
with the Disbursing Agent, $50,000,000 in immediately available funds, with
directions to hold such funds until the Effective Time, or (ii) obtain from a
federally insured bank with assets of not less than $1,000,000,000 an
irrevocable commercial letter of
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credit in favor of the Disbursing Agent in the amount of $50,000,000, in form
and substance satisfactory to the Company and the Disbursing Agent.
(b) Promptly after the Effective Time, the Disbursing
Agent shall mail to each holder of record of a certificate or certificates
which immediately prior to the Effective Time represented Company Stock (the
"Certificates") a letter of transmittal and instructions for use in effecting
the surrender of the Certificates in exchange for the applicable Merger
Consideration. Upon surrender of a Certificate to the Disbursing Agent,
together with such letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in cash, subject to the provisions of
Section 3.1, the applicable Merger Consideration for each share of Company
Stock formerly represented by such Certificate, and the Certificate so
surrendered shall forthwith be canceled. Until surrendered as contemplated by
this Article III, from and after the Effective Time each Certificate shall be
deemed to represent only the right to receive the applicable Merger
Consideration for each share of Company Stock formerly represented by such
Certificate, and shall not evidence any interest in, or any right to exercise
the rights of a stockholder of, the Surviving Corporation. If a cash payment
is to be made to a person other than the one whose name the Certificate
surrendered in exchange therefor is registered, it shall be a condition to such
issuance or payment that such Certificate be properly endorsed (or accompanied
by an appropriate instrument of transfer) and accompanied by evidence that any
applicable stock transfer taxes have been paid or provided for.
Section 3.3 No Further Transfers. At the Effective Time, the
stock transfer books of the Company shall be closed, and no transfer of Company
Stock shall thereafter be made.
Section 3.4 Certain Effects of the Merger. At the Effective
Time, the Surviving Corporation shall thereupon and thereafter possess all the
rights, privileges, powers and franchises, as well of a public as of a private
nature, and be subject to all restrictions, disabilities and duties, of each of
Acquisition and the Company (sometimes hereinafter referred to as the
"Constituent Corporations"); and all and singular, the rights, privileges,
powers and franchises of each of the Constituent Corporations, and all
property, real, personal and mixed, and all debts due to either of the
Constituent Corporations on whatever account, as well as for stock
subscriptions as all other things, in action or belonging to each of the
Constituent Corporations shall be vested in the Surviving Corporation; and all
property, rights, privileges, powers and franchises and all and every other
interest shall be thereafter as effectively the property of the Surviving
Corporation as they were of the several and respective Constituent
Corporations; but any claim existing or action or proceeding pending by or
against the Company may be prosecuted as if
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this Merger had not taken place, or the Surviving Corporation may be
substituted in its place, and all rights of creditors and liens upon any
property of either of the Constituent Corporations shall be preserved
unimpaired, and all debts, liabilities and duties of each of the Constituent
Corporations shall thenceforth attach to the Surviving Corporation, and may be
enforced against it to the same extent as if said debts, liabilities and duties
have been incurred or contracted by it.
Section 3.5 Return to Purchaser. Any cash made available to the
Disbursing Agent by the Purchaser and not disbursed, or any portion of a letter
of credit obtained by the Purchaser in favor of the Disbursing Agent and not
drawn down and disbursed, as the case may be, for Certificates within six
months after the Effective Time shall be repaid or redelivered by the
Disbursing Agent to the Purchaser, after which time any holder of a Certificate
who has not theretofore delivered or surrendered such certificate to the
Disbursing Agent, subject to applicable law, shall look as a general creditor
only to the Surviving Corporation for payment of the applicable Merger
Consideration. Notwithstanding the foregoing, none of the Disbursing Agent,
the Surviving Corporation or any other party hereto shall be liable to a holder
of Company Stock for any Merger Consideration delivered to a public official
pursuant to applicable escheat laws.
ARTICLE IV
REPRESENTATIONS OF THE COMPANY
The Company represents and warrants to the Purchaser that
each of the following is true and correct as of the date of this Agreement and
will be true and correct on the Closing Date:
Section 4.1 Authority; Enforceability. The Company has the
requisite power to execute and deliver this Agreement and all other documents
hereby contemplated, and subject to the requisite vote of the Shareholders, to
consummate the transactions hereby contemplated and to take all other actions
required to be taken by it pursuant to the provisions hereof. The execution
and delivery of this Agreement, the Delaware Certificate of Merger and all
other documents hereby contemplated to be executed by the Company have been
duly authorized by all requisite corporate action on the part of the Company.
This Agreement has been duly executed and delivered by the Company and
constitutes the valid, binding and enforceable obligation of the Company,
enforceable in accordance with its terms and conditions, except to the extent
that its enforcement is limited by bankruptcy, insolvency, reorganization, or
other laws relating to or affecting the enforcement of creditors' rights
generally and by general principles of equity.
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Section 4.2 Consents; Ability to Carry Out the Agreement; No
Default; Non-Contravention. Except for those consents set forth in Schedule
4.2, no authorization, approval, order, license, permit, franchise or consent,
and no registration, declaration, notice or filing by or with any Governmental
Authority, the Company or any other Person is required in connection with the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby. Except as set forth on Schedule 4.2, neither
the execution and delivery of this Agreement and all other documents hereby
contemplated nor the consummation of the transactions hereby contemplated
shall: (i) constitute any violation or breach of the certificate of
incorporation or by-laws of the Company, (ii) constitute a default under or a
breach of, or result in acceleration of any obligation under, any provision of
any Contract to which the Company is a party or by which any of its assets may
be affected or secured, which default, breach of acceleration has not been
waived, (iii) violate any judgment, orders, writ, injunction, decree, statute,
rule or regulation applicable to the Company or any of its respective assets,
or (iv) result in the creation of any Lien on any of the assets or properties
of the Company, except in the case of those items specified in clause (ii),
(iii) or (iv) above which would not, individually or in the aggregate, limit
the Company's ability to consummate the transactions hereby contemplated or
have a Material Adverse Effect on the Company or the Business.
Section 4.3 Existence and Good Standing. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. The Company is qualified to transact business
and is in good standing in each of the jurisdictions identified on Schedule
4.3. The Company has the requisite corporate power and authority to own, lease
and operate its properties and to carry on its Business as now being and
heretofore conducted. The Company is duly qualified to transact business as a
foreign corporation in each jurisdiction where the ownership or leasing of its
properties or the conduct of its Business requires such qualification, except
where the failure to so qualify would not have a Material Adverse Effect on the
Company. Schedule 4.3 contains a list of all of the Company's subsidiaries and
Affiliates, including without limitation, the Company's joint venture
arrangement relating to Shanghai Burdick Medical Instrument Co., Ltd., together
with copies of all organizational, partnership, joint venture, operating
agreements and other similar documentation.
Section 4.4 Capitalization. The Company is authorized to issue:
(a) 12,250,000 shares of Common Stock, consisting of 10,00,000 shares of Class
A Common Stock and 2,500,000 shares of Class B Common Stock, and (b) 3,000,000
shares of Preferred Stock. There are issued and outstanding: (i) 5,810,864
shares of Class A Common Stock; (ii) 1,615,385 shares of Class B
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<PAGE> 20
Common Stock; and (iii) 1,051,974 shares of Preferred Stock. All such
outstanding shares of Company Stock have been duly authorized and validly
issued and are fully paid and nonassessable. Schedule 4.4 identifies each
Shareholder of the Company and the amount and type of Company Stock owned by
each. Except as set forth on Schedule 4.4, the Shareholders own the Company
Stock free and clear of any Liens. Except as set forth on Schedule 4.4, there
are not now, and there have never been any outstanding options, warrants,
rights (including without limitation, statutory or contractual preemptive
rights), subscriptions, calls, commitments, conversion rights, rights of
exchange, plans or other agreements providing for the purchase, issuance or
sale of any shares of the capital stock or any other security of the Company,
whether vested or unvested (together, the "Rights"). No such Rights shall
exist as of the Closing Date. The termination or exercise of the rights of the
holders of the Vested and Unvested Rights described in Section 6.8 is in
accordance with the provisions of the documents and instruments governing such
Rights and applicable law, and the Company is not subject to any liability in
connection therewith. After the Closing Time, there will be no continuing
claims of ownership with respect to the Rights and no claims for payment with
respect to such Rights. The Company has complied at all times in the past with
all Rights which have ever been in existence since the date of the Company's
formation.
Section 4.5 Financial Statements.
(a) The Company has heretofore furnished the Purchaser
with the following financial statements (collectively the "Financial
Statements"): (a) the consolidated balance sheets, consolidated statements of
income, statements of changes in shareholders' equity, consolidated statements
of cash flows, and notes thereto, for the years ended September 30, 1995 and
1996, all audited and certified by Arthur Andersen LLP; and (b) latest
consolidated balance sheets, and related consolidated statements of income,
shareholders' equity and cash flows for the fiscal quarters ended December 31,
1996 and March 31, 1997.
(b) The Financial Statements have been prepared in
accordance with GAAP, subject to, in the case of any unaudited Financial
Statements, normal year-end audit adjustments, none of which, in the aggregate,
will have a Material Adverse Effect. The Financial Statements fairly present
in all Material respects the financial condition of the Company as of the dates
and for the periods reflected therein.
(c) Except as disclosed in this Agreement (including all
Schedules and Exhibits hereto), the Company is not liable for any liabilities
or obligations, known or unknown, accrued, absolute, contingent or otherwise,
other than those
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set forth in the Financial Statements or those which would not have a Material
Adverse Effect on the Business and operations of the Company and those
liabilities and obligations incurred in the ordinary course of the Business
since the date of the latest Financial Statements.
Section 4.6 Properties.
(a) Title to Properties; Encumbrances. Except as set
forth on Schedule 4.6 and for properties and assets which have been sold or
otherwise disposed of in the ordinary course of business since March 31, 1997,
the Company has good and marketable title to: (a) all of its properties and
assets, including, without limitation, all the properties and assets reflected
in the Financial Statements, and (b) all properties and assets purchased by the
Company since March 31, 1997; in each case subject to no encumbrance, lien,
charge or other restriction of any kind or character, except for: (i) liens
reflected in the Financial Statements, (ii) zoning or planning restrictions,
easements, permits and other similar restrictions or limitations on the use of
real property, or minor irregularities in title thereto, which individually or
in the aggregate do not materially detract from the value of, or impair the use
of, such property by the Company in the operation of its Business, (iii) liens
for current taxes not yet due and payable and taxes being contested in good
faith for which adequate reserves have been established and are contained in
the Financial Statements, and (iv) liens which individually or in the aggregate
do not have a Material Adverse Effect on the Company. Liens of the nature
described in clauses (i) through (iv) are hereinafter referred to as "Permitted
Liens."
(b) Condition and Sufficiency of Properties and Assets.
Except as disclosed on Schedule 4.6, the tangible property and assets of the
Company in all Material respects are in the operating condition and repair
necessary to operate the Business in the manner it has been operated by the
Company (with the exception of normal wear and tear). The tangible properties
and assets constitute, in all Material respects, all of the machinery, vehicles
and equipment that have been utilized for the operation of the Business by the
Company.
Section 4.7 Intellectual Property. Schedule 4.7 is a true,
correct and complete list of all of the Company's registered trademarks, trade
names and service marks, patents and registered copyrights (including any
pending applications for any of the foregoing) (collectively, the "Intellectual
Property"). Except as disclosed on Schedule 4.7:
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(a) all of the Intellectual Property is owned by the
Company free and clear of all Liens (except for Liens disclosed herein or in
the Schedules annexed hereto), and is not subject to any license, royalty or
other agreement;
(b) to the Company's and the Designated Shareholders'
Knowledge, the Company has not received, during the previous two years, written
notice of any pending or threatened claims with respect to the Intellectual
Property;
(c) to the Company's and the Designated Shareholders'
Knowledge, no license or royalty agreement included in the Contracts to which
the Company is a licensee is the subject of any written notice of termination;
(d) The Company has not received, during the previous
two years, any written notice contesting its right to use any Intellectual
Property employed in products comprising the Company's ECG product line which
have been shipped prior to the Closing Date; and
(e) Except for Intellectual Property not directly
related to the ECG product line or Intellectual Property which is embodied in
day-to-day, commercial software licenses or software licenses used in the
administration of the Business, the Company has not granted any license or
agreements to pay or receive any royalty in respect of any Intellectual
Property.
(f) No product sold by the Company infringes upon the
patents, trademarks, service marks, copyrights or licenses or license rights
that are owned by others. No litigation is pending and no claim has been made
against the Company or, to the Knowledge of the Company, is threatened,
contesting the right of the Company to sell or use any product presently sold
by the Company. To the Knowledge of the Company, no patent or invention, or
any statute, law, rule, regulation, standard or code, relating to the Company's
Intellectual Property is pending or proposed before a governmental or public
body or authority which would have a Material Adverse Effect on the Business of
the Company.
Section 4.8 Maintenance of Books and Records. The Company has
maintained and will, until the Closing Date, continue to maintain complete and
accurate customer lists, supplier lists, sales files, price lists, pricing
schedules, sales literature, technical literature and all other books and
records relating to the Business maintained in the ordinary course of business
consistent with past practice.
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Section 4.9 Conduct of Business. Since March 31, 1997, the
Company has conducted the Business in the ordinary course and consistent with
past practice.
Section 4.10 Real and Personal Property; Leases.
(a) The Company does not own and has never owned any
real property. Schedule 4.10 hereto contains a list of all real property and
personal property leases or subleases to which the Company is a party
("Leases"). Except as set forth on Schedule 4.10, there are no leases,
occupancies, rights of occupancy or other agreements, covenants or restrictions
relating to the purchase, sale or occupancy of any of the real property covered
by any of the Leases (the "Leased Real Property"). Each of the Leases set
forth in Schedule 4.10 is in full force and effect; all rents due to date on
each such Lease have been paid; in each case, the Company is not in Material
default thereunder; and there exists no Material event of default or event,
occurrence, condition or act which, with the giving of notice, the lapse of
time on the happening of any other event or condition, would become a Material
default by the Company under any such Lease.
(b) Except as set forth on Schedule 4.10, the Company
has not taken any action, or omitted to take any action, which has resulted in
the creation of any Lien, easement, right of way, building or use restriction,
exception, variance, reservation or limitation as might in any Material respect
interfere with or impair the present and continued use of any of the Leased
Real Property or the usual and normal conduct of the Business.
(c) Except as set forth on Schedule 4.10, to the
Knowledge of the Company, there are no: (i) outstanding mortgages, deeds of
trust or other financing liens encumbering or in any other way affecting any
portion of the Leased Real Property or any rents or other income arising
therefrom, or (ii) agreements, covenants or restrictions materially affecting
any of the Leased Real Property or the current use thereof.
(d) To the Knowledge of the Company, there is no
pending, threatened or proposed proceeding or governmental action to modify the
zoning classification of, or to condemn or take by the power of eminent domain
(or to purchase in lieu thereof), or to classify as a landmark, or to impose
special assessments on, or otherwise to take or restrict in any way the right
to use, develop or alter, all or any part of the Leased Real Property.
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Section 4.11 Material Contracts. Schedule 4.11 lists all
Contracts of the following types to which the Company is a party (together, the
"Material Contracts"):
(a) any collective bargaining agreement;
(b) any Contract (other than employee benefits) with any
employee of the Company or any of its Affiliates, including any agreement to
acquire, exchange, convert or redeem (or to acquire the right to acquire,
exchange, covert or redeem) shares of the Company Stock;
(c) any Contract with a sales representative,
manufacturer's representative, distributor, dealer, broker, marketing, sales
agency, advertising agency or other Person engaged in sales, distributing,
marketing or promotional activities, or any Contract to act as one of the
foregoing on behalf of any Person;
(d) any Contract, other than a customer order, which
involves the material payment of cash or other property, an unperformed
commitment, or goods or services, having a value in excess of $50,000;
(e) any Contract in excess of $10,000 pursuant to which
the Company has made or will make any loans or advances (other than accounts
receivable), or has or will have incurred debts, other than accounts payable
incurred in the ordinary course of business, or become a guarantor or surety or
otherwise become responsible with respect to any undertaking of another
(except for the negotiation or collection of negotiable instruments in
transactions in the ordinary course of business);
(f) other than trade terms, any indenture, credit
agreement, loan agreement, note, mortgage, security agreement, lease of real
property or personal property or agreement for financing;
(g) any Contract creating a partnership, joint venture
joint development or other cooperative undertaking;
(h) any Contract that creates any restrictions with
respect to the geographical area of operation or scope or type of business of
the Company;
(i) any power of attorney or agency agreement with any
Person pursuant to which such Person is granted the authority to act for or on
behalf of the Company, or the Company is granted the authority to act for or on
behalf of any Person;
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(j) any Contract relating to any acquisition or
disposition of any subsidiary, division, line of business during the two (2)
years prior to the date of this Agreement; and
(k) any Contract not specified above that is Material to
the Company.
The Company has delivered to Purchaser complete copies of each Material
Contract listed on Schedule 4.11, and a written description of each oral
arrangement so listed. Each of the Material Contracts is in full force and
effect, and there is no existing default by the Company, and to the Knowledge
of the Company, no default by any other Person, under a Material Contract which
would have a Material Adverse Effect on the Company.
Section 4.12 Litigation.
(a) Except as set forth on Schedule 4.12, there is: (i)
no suit, action, litigation or administrative, arbitration or other proceeding
pending against the Company with respect to the Business, (ii) no governmental
investigation or inquiry pending or, to the Knowledge of the Company,
threatened in writing against the Company with respect to the Business, and
(iii) no judgment, stipulation, order, decree, or agreement arising from any
such suit, action, litigation, proceeding or investigation against the Company
with respect to the Business, which, in each case if determined against the
Company, might have a Material Adverse Effect on the Company.
(b) Notwithstanding the foregoing, the Company has no
liability of any kind arising from or in connection with: (i) Downs v. Burdick
Corporation, Bucks County, Pennsylvania Case No. 28552, and all losses,
liabilities, costs and expenses associated with such case are payable by
Siemens pursuant to the terms of the Siemens Asset Purchase Agreement, or (ii)
any rights which have been or may be asserted by Paul J. Heimbuch under or in
connection with the Stockholders Agreement.
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Section 4.13 Taxes.
(a) Except as disclosed on Schedule 4.13, the Company
has: (i) filed on a timely basis, or will file or cause to be filed on a
timely basis on or prior to the Closing Date, all returns for Taxes which are
required to be filed by the Company, and (ii) paid on a timely basis, or will
pay on a timely basis prior to the Closing Date, all Taxes shown on the Tax
Returns as owing. For purposes of this Agreement, "Taxes" (or "Tax" where the
context requires) means all Federal, state, county, local, foreign and other
taxes and assessments (including, without limitation, income, profits, premium,
estimated, excise, sales, use, occupancy, gross receipts, franchise, severance,
transfer, withholding, employment, unemployment compensation, payroll related
and property taxes, and other governmental charges and assessments), whether or
not measured in whole or in part by net income, and including deficiencies,
interest, additions, to tax or interest, and penalties with respect thereto.
(b) Except as provided on Schedule 4.13: (i) there are
no agreements, waivers or other arrangements providing for extensions of time
with respect to the assessment or collection of unpaid Taxes of the Company,
(ii) there are no actions, suits, proceedings, investigations or claims now
pending, or to the Knowledge of the Company, threatened against the Company in
respect of any such unpaid Taxes or any matters under discussion with any
Federal, state, count or local authority relating to any amount of any such
unpaid Taxes, and (iii) to the Knowledge of the Company, no tax returns of the
Company have been audited and none are in the process of being audited by the
applicable taxing authorities, and there is no Tax deficiency outstanding,
proposed or assessed against the Company.
Section 4.14 Insurance. Set forth in Schedule 4.14 hereto is a
list of all of the insurance policies which the Company maintains with respect
to the Business. All such insurance policies are in full force and effect and
will be in full force and effect on the Closing Date. The Company is not in
default with respect to any provision contained in any such insurance policy.
There are no outstanding unpaid claims under any such policy and the Company
has not received any notice of cancellation or non-renewal of any such policy.
Section 4.15 Employees; Benefit Plans.
(a) Employment Agreements. Except as set forth on
Schedule 4.15(a), none of the Company's employees are subject to an employment
agreement or other written arrangements regarding employment, and all of the
Company's employees are employed "at will" and subject to termination at any
time with or without cause. Each employee of the Company who is qualified as
an
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exempt employee under the Fair Labor Standards Act, 29 U.S.C. Section 201 et
seq., has executed, or prior to the Closing Date will have executed, a
confidentiality, nondisclosure and inventions agreement in the form attached as
Exhibit 4.15(a). No employee of the Company owns, or has asserted any right,
title or interest in or to, any of the Company's Intellectual Property.
(b) Disclosure. Schedule 4.15(b) sets forth a list of
each "employee benefit plan" (as defined in Section 3(3) of ERISA) and each
other plan, trust agreement, contract, arrangement, policy, understanding or
practice relating to any bonus, severance, health, dental, accident, sick
leave, disability, death, vacation, deferred compensation, pension, profit
sharing, retirement, stock option, stock purchase, stock appreciation,
insurance, "parachute," fringe or welfare benefits maintained by the Company or
any ERISA Affiliate (as defined in Section 4.15(d)), or to which the Company or
any ERISA Affiliate contributes or is liable, or to which the Company or any
ERISA Affiliate has contributed or been liable for, the benefit of employees
and/or former employees (collectively, the "Plans"). True and correct copies
of all of the Plans, including all amendments thereto, have heretofore been
provided to the Purchaser. No Plan is a "multiemployer plan" (as defined in
Section 4001 of ERISA), and neither the Company nor any ERISA Affiliate has
ever contributed or been obligated to contribute to a multiemployer plan. No
Plan is a "defined benefit plan" (as defined in Section 414 of the Code) or an
"employee pension benefit plan" (as defined in Section 3(2) of ERISA) subject
to Title IV of ERISA, and neither the Company nor any ERISA Affiliate has ever
contributed nor been obligated to contribute to a defined benefit plan or an
employee pension benefit plan.
(c) Prohibited Transactions, etc. There have been no
"prohibited transactions" (within the meaning of Section 406 or 407 of ERISA or
Section 4975 of the Code) for which a statutory or administrative exemption
does not exist with respect to any Plan, and no event or omission has occurred
in connection with which the Company or any of its assets or any Plan, directly
or indirectly, could be subject to any liability under ERISA, the Code or any
other law or order applicable to any Plan, or under any agreement, instrument,
law or order pursuant to or under which the Company has agreed to indemnify or
is required to indemnify any person against liability incurred under any such
law or order other than with respect to payment of benefits in the ordinary
course.
(d) Controlled Group; Affiliated Service Group; Leased
Employees. Except as disclosed in Schedule 4.15(d), the Company is not and
never has been a member of a "controlled group of corporations" (as defined in
Section 414(b) of the Code), under common control with any unincorporated trade
or business (as determined under Section 414(c) of the Code) or a member of an
"affiliated service
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group" (as defined in Section 414(m) of the Code). For purposes of this
Section 4.15, an "ERISA Affiliate" shall be any entity that is: (i) a member
of a controlled group of corporations of which the Company is a member, (ii) an
unincorporated trade or business under common control with the Company or (iii)
a member of an affiliated service group of which the Company is a member.
There are not and never have been any leased employees (as defined in Section
414(n) of the Code) who perform services for the Company, and no individuals
are expected to become leased employees with the passage of time.
(e) Payments and Compliance. To the Knowledge of the
Company, with respect to each Plan: (i) all payments due from the Company to
date have been made and all amounts properly accrued to date as liabilities of
the Company which have not been paid have been properly recorded on the books
of the Company and are reflected in the Financial Statements; (ii) the Company
has complied with, and each Plan conforms in form and operation to, all
applicable laws and regulations, including but not limited to ERISA and the
Code, in all Material respects; (iii) each Plan which is intended to qualify
under Section 401 of the Code has received a favorable determination letter
from the Internal Revenue Service with respect to such qualification, its
related trust has been determined to be exempt from taxation under Section
501(a) of the Code, and nothing has occurred since the date of such letter that
has or is reasonably expected to adversely affect such qualification or
exemption; (iv) there are no actions, suits or claims pending (other than
routine claims for benefits) or, to the Knowledge of the Company, threatened
with respect to each Plan or against the assets of each Plan; and (v) no Plan
is a plan which is established and maintained outside the United States
primarily for the benefit of individuals substantially all of whom are
nonresident aliens.
(f) Post-Retirement Benefits. Except as disclosed in
Schedule 4.15(f), no Plan provides benefits, including, without limitation,
death or medical benefits (whether or not insured) with respect to any
individuals beyond their retirement or other termination of service with the
Company other than: (i) coverage mandated by applicable law, (ii) death or
retirement benefits under any Plan that is an employee pension benefit plan,
(iii) deferred compensation benefits accrued as liabilities on the books of the
Company and reflected in the Financial Statements, (iv) disability benefits
under any Plan that is an "employee welfare benefit plan" (as defined in
Section 3(1) of ERISA) and which have been fully provided for by insurance or
otherwise, or (v) benefits in the nature of severance pay.
(g) No Triggering of Obligations. Except as set forth
on Schedule 4.15(g), the consummation of the transactions contemplated by this
Agreement is not expected to: (i) entitle any current or former employee of
the Company to
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severance pay, unemployment compensation or any other payment, except as
expressly provided in this Agreement, (ii) accelerate the time of payment or
vesting, or increase the amount of compensation due to any such employee or
former employee, or (iii) result in any prohibited transaction for which an
exemption is not available.
(h) Future Commitments. The Company has no announced
plan or legally binding commitment to create any additional Plans or to amend
or terminate any existing Plan.
(i) Certain Amounts. Except as set forth on Schedule
4.15(i), the Company has no liability of any kind for severance pay,
termination pay or any other similar costs, expenses, liabilities or amounts
which may arise from the termination of any written employment agreements with
any of the Company's employees.
Section 4.16 Environmental Matters. Except as set forth in
Schedule 4.16:
(a) The Company is, and at all times has been, in
Material compliance with, and has not been and is not in violation of or liable
under, any Environmental Law. The Company has no basis to expect and has not
received, any actual or threatened claim, order, notice, or other communication
from: (i) any Governmental Authority or private citizen acting in the public
interest, or (ii) the current or prior owner or operator of any facilities, of
any actual or potential violation or failure to comply with any Environmental
Law, or of any actual or threatened obligation to undertake or bear the cost of
any Environmental Liabilities with respect to any of the properties or assets
(whether real, personal, or mixed) in which the Company has had an interest, or
with respect to any property or facility at or to which Hazardous Materials
were generated, manufactured, refined, transferred, imported, used, or
processed by the Company, or any other Person for whose conduct it is or may be
held responsible, or from which Hazardous Materials have been transported,
treated, stored, handled, transferred, disposed, recycled or received.
(b) There are no pending or, to the Knowledge of the
Company, threatened encumbrances, or other restrictions of any nature,
resulting from any Environmental Liabilities or arising under or pursuant to
any Environmental Law, with respect to or affecting any of the facilities or
any other properties and assets (whether real, personal, or mixed) in which the
Company has or had an interest.
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(c) There are no Hazardous Materials, other than those
used in the ordinary course of business and in Material compliance with all
applicable Environmental Laws, present in, on or at any of the Company's
facilities.
(d) During the period from September 15, 1993 to the
Closing Date, there has not been any release or threat of release of any
Hazardous Materials in violation of any Environmental Law: (i) at or from any
of the Company's facilities, (ii) to the Knowledge of the Company, at any other
location where any Hazardous Materials were transferred from such facilities,
or (iii) at or from any other properties in which the Company has or had any
interest.
(e) The Company has delivered to Purchaser true and
complete copies and results of any reports, studies, analyses, tests, or
monitoring possessed or initiated by the Company pertaining to Hazardous
Materials in, on, or at the Company's facilities, or concerning compliance by
the Company or any other Person for whose conduct it is held responsible, with
Environmental Laws.
(f) The Company has obtained all permits, licenses and
other authorizations which are required for the leasing of any of its
properties or assets or the conduct of its Business under Environmental Laws.
Section 4.17 Broker's or Finder's Fees. Except for Donaldson,
Lufkin & Jenrette Securities Corporation ("DLJ"), neither the Company nor any
of the Shareholders has retained any investment bank, broker, finder, advisory
or intermediary in connection with the transactions contemplated by this
Agreement which would be entitled to a fee or commission in connection
therewith or upon the consummation thereof for which the Company will be
liable. The Shareholders identified on Schedule 4.17 ("Institutional
Shareholders") are solely responsible for the payment of and have agreed to pay
any fees, expenses and other payments due DLJ in connection with the
transactions contemplated by this Agreement (except in the event this
transaction fails to close, in which case such fees and expenses are payable by
the Company), and in the event that this transaction closes, the Company shall
have no liability with respect to such fees and expenses, and the Designated
Shareholders shall defend, indemnify and hold the Company harmless from all
such fees and expenses payable to DLJ in connection with the transactions
contemplated by this Agreement, without regard to any of the limitations or
restrictions on indemnification set forth in Section 11.
Section 4.18 Medical Devices.
(a) Set forth on Schedule 4.18(a) is a list of the
company's 510(k) notifications and pre-market approval applications ("PMAs").
All such 510(k)s,
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PMAs and related documentation are in compliance with applicable FDA
requirements. All of the Company's products, where required by applicable law,
are being marketed under a valid 510(k) notification or PMA. All of the
Company's products in commercial distribution which are not marketed under a
valid 510(k) or PMA are listed on Schedule 4.18(a), together with a statement
describing the reasons why such products are being marketed without such
approvals. The Company has obtained and maintains all necessary regulatory
approvals from applicable foreign regulatory agencies relating to all products
distributed and sold by the Company. All products sold or marketed by the
Company are listed with the FDA in accordance with 21 CFR Part 807. The
Company has timely filed all required medical device reports for deaths,
serious injuries and reportable malfunctions and has provided copies of all
such reports to Purchaser.
(b) Schedule 4.18(b) contains a true, correct and
complete list of: (i) to the Knowledge of the Company, all products which have
been recalled by the Company in the United States and outside the United States
(whether voluntarily or otherwise) at any time during the past three years,
(ii) to the knowledge of the Company, all proceedings in the United States and
outside of the United States at any time during the past three years against
the Company, the outcome of which dictated the withdrawal, detention,
suspension, cessation of marketing, recall or seizure of any product or, the
outcome of which dictated criminal or civil penalties or injunctive relief
relating to any product, (iii) to the knowledge of the Company, all proceedings
at any time during the past three years, the outcome of which dictated the
closure or suspension of operations of any of the Company's facilities (or
portions thereof) or, the outcome of which dictated criminal or civil penalties
or injunctive relief relating to any of Company's facilities, and (iv) to the
knowledge of the Company, all FDA Forms 483 and all FDA warning or FDA
regulatory letters and notices of adverse findings during the past three years
addressed to the Company relating to any product manufactured, sold or
distributed by the Company. To the Knowledge of the Company, there are no
facts which furnish any basis for any warning letters, Section 305 notices, or
other similar communications, and other than as disclosed on Schedule 4.18(b),
there have been no recalls, field notifications, safety alerts or seizures
requested or threatened relating to the products sold by the Company. Except
as set forth on Schedule 4.18(b), all manufacturing facilities operated by the
Company are registered with the FDA in accordance with 21 CFR Part 807.
(c) The Company has delivered to Purchaser copies of all
written documents from Governmental Authorities or industry groups received
during the last three years by the Company that relate to the Company's
non-compliance with material reporting, registration, labeling, good
manufacturing practices, advertising and other requirements under the FDC Act,
the non-compliance with which could
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have a Material Adverse Effect on the Business taken as a whole, or which
otherwise relates to the Company's non-compliance with material FDA rules and
regulations, the non-compliance with which could have a Material Adverse Effect
on the Business taken as a whole. Complete and correct copies of all written
documents are annexed hereto in Schedule 4.18(c). Except as so provided, to
the Knowledge of the Company, the Company and its Affiliates are operating in
all Material respects in compliance with all applicable FDA rules, regulations
and policies.
(d) Except as set forth on Schedule 4.18(d), to the
Knowledge of the Company, there are no facts which are reasonably likely to
cause: (i) the denial, withdrawal, recall or suspension of any product sold or
intended to be sold by the Company, (ii) a change in the marketing
classification or labeling of any such products, or (iii) a termination or
suspension of marketing of any such products.
(e) The Company has provided to Purchaser access to and
copies of all internal audit reports (as required by 21 CFR Section 820.20)
conducted by the Company and all management letter comments from outside
auditors for the past three years.
(f) Except for those defects which in the aggregate
would not have a Material Adverse Effect, none of the products sold or marketed
by the Company contains any patent or latent defect in design, materials or
workmanship.
Section 4.19 Permits. The Company has all licenses, permits,
orders or approvals of, and has made all required registrations, filings or
reports with, any governmental or public body or authority that are necessary
or appropriate to the conduct of the Business of the Company as presently
conducted (collectively, "Permits"). Schedule 4.19 contains a list of all
Permits. All Permits are in full force and effect; no violations are or have
been recorded in respect of any Permit; and no proceeding is pending or, to the
Knowledge of the Company or the Designated Shareholders, threatened to revoke
or limit any Permit.
Section 4.20 Labor Relations. The Company is not in violation of
any law relating to employment, employment practices, terms and conditions of
employment and wages and hours, and the Company has not and is not engaged in
any unfair labor or unlawful employment practice. There is no, and since
September 15, 1993, there has not been any: (a) unfair labor practice
complaint, administrative charges or court complaints pending or, to the
Knowledge of the Company, threatened against the Company before the National
Labor Relations Board, the Equal Employment Opportunity Commission (except for
the EEOC action filed by Ms. Karyn Hilborn) or any other Governmental
Authority, or any unlawful
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employment practice charge pending before any Governmental Authority, including
any discrimination charge, and no grievance or arbitration proceeding arising
out of our under any collective bargaining agreement pending or, to the
Knowledge of the Company, threatened, or (b) strike, labor dispute, slowdown,
stoppage, requests for representation or secondary boycotts pending or, to the
Knowledge of the Company, threatened against the Company. The Company is not,
and during the past three years the Company has not been, a party to any
collective bargaining agreement.
Section 4.21 No Adverse Effects or Changes. Except as listed on
Schedule 4.21, since the date of the Financial Statements, there has been no
Material Adverse Effect on the Business, other than changes in the ordinary
course of business and changes disclosed herein or in the Schedules attached
hereto.
Section 4.22 No Defaults or Violations. Except as disclosed on
Schedule 4.22, to the Knowledge of the Company:
(a) The Company is in compliance with all laws
applicable to the Company and relating to the Business, other than those laws,
the noncompliance with which would not have a Material Adverse Effect on the
Business taken as a whole.
(b) During the previous three years, no written notice
from any Governmental Authority has been received by the Company claiming any
Material violation of any law or asserting any Material Tax assessment or
Material penalty in connection with the operation of, or otherwise relating to,
the Business.
Section 4.23 Accounts Receivable. All accounts receivable of the
Company that are reflected on the Financial Statements or on the accounting
records of the Company as of the Closing Date (collectively, the "Accounts
Receivable") represent or will represent valid obligations arising from sales
actually made or services actually performed in the ordinary course of
business, with respect to which the Company has no further obligation to bring
about a resale of such product by the buyer thereof or to accept any such
product for credit or return. Unless paid prior to the Closing Date, the
Accounts Receivable are or will be as of the Closing Date current and
collectible, net of the respective reserves shown on the Financial Statements
or on the accounting records of the Company as of the Closing Date (which
reserves are adequate and calculated consistent with past practice and, in the
case of the reserve as of the Closing Date, will not represent a greater
percentage of the Accounts Receivable as of the Closing Date than the reserve
reflected in the Financial Statements and will not represent a Material Adverse
Effect on the composition of such Accounts Receivable in terms of aging).
There is
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no contest, claim, or right of set-off, other than returns in the ordinary
course of business, under any Contract with any obligor of an Accounts
Receivable relating to the amount or validity of such Accounts Receivable.
Schedule 4.23 contains a complete and accurate list of all Accounts Receivable
as of the date of the most recent Financial Statements, which list sets forth
the aging of such Accounts Receivable.
Section 4.24 Inventory. All inventory of the Company, whether or
not reflected in the Financial Statements, consists of a quality and quantity
usable and salable in the ordinary course of business, net of reserves
reflected in the Financial Statements or on the accounting records of the
Company as of the Closing Date, as the case may be. All inventories not written
off have been priced at the lower of cost or net realizable value.
Section 4.25 Related Party Transactions. Except as set forth on
Schedule 4.25, no Shareholder, director, officer, or employee of the Company
has any interest in any property (whether real, personal, or mixed and whether
tangible or intangible) used in or pertaining to the Company's Business.
Except as set forth on Schedule 4.25, no such person has (of record or as a
beneficial owner) an equity interest or any other financial or profit interest
in, any Person that has: (i) had business dealings or a material financial
interest in any transaction with the Company, or (ii) engaged in competition
with the Company with respect to any line of the products or services of the
Company (a "Competing Business") in any market presently served by the Company,
except for less than one percent of the outstanding capital stock of any
Competing Business that is publicly traded on any recognized exchange or in the
over-the-counter market. Except as set forth in on Schedule 4.25, no such
person is a party to any Contract with, or has any claim or right against, the
Company.
Section 4.26 Certain Agreements. Except as disclosed on Schedule
4.26, neither the execution and delivery of the Agreement, nor the consummation
of the transactions contemplated hereby will: (i) result in any payment by the
Company (including, without limitation, severance, unemployment compensation,
parachute payments, bonus or otherwise) becoming due to any director, employee
or independent contractor of the Company under any Plan, agreement or
otherwise, (ii) increase any benefits otherwise payable under any Plan or
agreement, or (iii) result in the acceleration of the time for payment or
vesting of any such benefits. The bonus payable to certain management
employees of the Company as described in that certain letter agreement dated
July 2, 1997, between the Company and George Messina (the "Transaction Bonus")
shall be paid by the Institutional Shareholders, and the Company shall have no
liability of any kind with respect to the payment of such amounts.
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Section 4.27 Certain Payments. Since September 15, 1993, the
Company, its directors, officers, agents, and employees and, to the Knowledge
of the Company, any other Person associated with or acting for or on behalf of
the Company, have not, directly or indirectly: (a) made any contribution,
gift, bribe, rebate, payoff, influence payment, kickback, or other payment to
any Person, private or public, regardless of form, whether in money, property,
or services: (i) to obtain favorable treatment in securing business, (ii) to
pay for favorable treatment for business secured, (iii) to obtain special
concessions or for special concessions already obtained, for or in respect of
the Company or any of its Affiliates, or (iv) in violation of any applicable
law, including without limitation, the Foreign Corrupt Practices Act of 1977,
or (b) established or maintained any fund or asset that has not been recorded
in the books and records of the Company.
Section 4.28 Guaranties and Suretyships. The Company has no
powers of attorney outstanding (other than those issued in the ordinary course
of business with respect to tax matters). To the Knowledge of the Company, the
Company has no obligations or liabilities (absolute or contingent) as
guarantor, surety, co-signer, endorser, co-maker, indemnitor or otherwise
respecting the obligations or liabilities of any other Person, except for the
endorsement of negotiable instruments in the ordinary course of business.
Section 4.29 Product and Service Warranties. Schedule 4.29 sets
forth true and complete standard forms of warranty offered by the Company to
third parties with respect to each of the products marketed by the Company that
have been issued by the Company at any time during the past three years. The
Company has no service or warranty liabilities to customers or other Persons
which are not adequately reserved against or reflected on the Financial
Statements,: (i) which reserves, if inadequate, do not result in a Material
Adverse Effect, and (ii) which liabilities do not constitute a Material Adverse
Effect.
Section 4.30 Disclosure. No representation or warranty of the
Company in this Agreement or any of the Schedules attached hereto omits to
state a material fact necessary to make the statements herein or therein, in
light of the circumstances in which they were made, not misleading.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
THE PURCHASER AND ACQUISITION
Each of the Purchaser and Acquisition, jointly and severally,
represents and warrants to the Company that:
Section 5.1 Organization and Good Standing. The Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of the State of California. Acquisition is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Each of the Purchaser and Acquisition has the corporate power and authority to
own or lease all of the properties and assets owned or leased by it and to
carry on its business as it is now being conducted.
Section 5.2 Authority Relative to Agreement. Each of the
Purchaser and Acquisition has the corporate power to execute and deliver this
Agreement and all other documents hereby contemplated, and to consummate the
transactions hereby contemplated and to take all other actions required to be
taken by it pursuant to the provisions hereof. The execution, delivery and
performance of, and consummation of the transactions contemplated by, this
Agreement, the Delaware Certificate of Merger and all other documents hereby
contemplated to be executed by the Purchaser or Acquisition have been duly
authorized by the Board of Directors of each of the Purchaser and Acquisition.
This Agreement constitutes the legal, valid and binding obligation of the
Purchaser or Acquisition enforceable against each of them in accordance with
their respective terms and conditions, except to the extent that its
enforcement is limited by bankruptcy, insolvency, reorganization, or other laws
relating to or affecting the enforcement of creditors' rights generally and by
general principles of equity. The payment of the Merger Consideration does not
require any further corporate proceedings on the part of the Purchaser and will
not breach or result in a default under any provision of any agreement to which
the Purchaser is a party or by which it is bound.
Section 5.3 No Default; Non-Contravention. Except as set forth
on Schedule 5.3, neither the execution and delivery of this Agreement and all
other documents hereby contemplated nor the consummation of the transactions
hereby contemplated shall: (i) constitute any violation or breach of the
certificates of incorporation or by-laws of the Purchaser or Acquisition; (ii)
constitute a default under or a breach of, or result in acceleration of any
obligation under, any provision of any contract, lease, mortgage or other
instrument to which the Purchaser or Acquisition is a party or by which any of
its assets may be affected or secured,
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which default, breach of acceleration has not been waived; (iii) violate any
judgment, orders, writ, injunction, decree, statute, rule or regulation
applicable to the Purchaser or Acquisition or any of their respective assets;
or (iv) result in the creation of any lien on any of the assets or properties
of the Purchaser or Acquisition, except in the case of those items specified in
clause (ii), (iii) or (iv) above which would not, individually or in the
aggregate, limit the Purchaser's or the Acquisition's ability to consummate the
transactions hereby contemplated or have a Material Adverse Effect on the
Purchaser or Acquisition.
Section 5.4 Consents and Approvals. Except as set forth on
Schedule 5.4, no authorization, approval, order, license, permit, franchise or
consent, and no registration, declaration, notice or filing by or with any
domestic or foreign Governmental Authority, the Purchaser or any other Person
is required in connection with the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby.
Section 5.5 Acquisition. Acquisition has not and will not
conduct any business nor does it or will it have any operating assets, and the
Purchaser has good and valid title to all of the issued and outstanding shares
of Acquisition Common Stock.
Section 5.6 Finder's Fees. Neither the Purchaser nor
Acquisition has incurred any liability for finder's or brokerage fees or
agent's commissions in connection with this Agreement or the transactions
hereby contemplated.
Section 5.7 Financing. The Purchaser presently has, or as of
the Closing Date, will have available cash or cash equivalents in an amount
sufficient in order to enable the Purchaser to consummate the transaction
contemplated by this Agreement.
ARTICLE VI
COVENANTS OF THE COMPANY
Section 6.1 Conduct of Business of the Company. During the
period from the date of this Agreement to the Closing Date, the Company agrees
to conduct its Business and operations in the ordinary course. Except as may
be approved in writing by the Purchaser or as is otherwise expressly permitted
or required by this Agreement, the Company shall cause:
(a) the Company's certificate of incorporation and
by-laws to be maintained in its form on the date of this Agreement;
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(b) the Company to refrain from entering into or
termination of any Contract or commitment, except (i) for extensions of
existing vendor contracts, or (ii) Contracts and commitments in the ordinary
course of business of a value not greater than $1,000,000 in the aggregate;
provided, that the Company shall not enter into or terminate any Contracts or
commitments, regardless of value, with any lenders, dealers or distributors,
joint venture partner or for the licensing of any rights in, or the sale or
other disposition of, any of the Company's Intellectual Property;
(c) the Company to refrain from increasing its
indebtedness for borrowed money, except current borrowings in the ordinary
course of business; provided, that, in no event shall the Company's aggregate
outstanding indebtedness for borrowed money (principal, accrued interest and
other borrowing costs or expenses) exceed $13,500,000;
(d) the Company to refrain from canceling or waiving any
claim or right of Material value to the Company;
(e) the Company to refrain from selling, abandoning or
making any other disposition of any Material asset or property or making any
Material acquisition of the properties, capital stock or business of any other
Person, except for dispositions or acquisitions of inventory or equipment in
the ordinary course of business;
(f) the Company to refrain from terminating or failing
to renew any Material Contract or other agreement, including, without
limitation, any insurance policy;
(g) the Company to refrain from making any change in its
accounting methods or practices;
(h) except in connection with the transactions
contemplated by this Agreement, the Company to refrain from any change in the
Company Stock issued and outstanding; any grant of any stock option or right to
purchase shares of the Company Stock; any issuance of any security convertible
into the Company Stock; any grant of any registration rights; any purchase,
redemption, retirement, or other acquisition by the Company of any shares of
the Company Stock; or any declaration or payment of any dividend or other
distribution or payment in respect of shares of the Company Stock;
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(i) except as set forth on Schedule 6.1(i), the Company
to refrain from any payment or increase in any bonuses, salaries, or other
compensation to any Shareholder, director, officer, or (except in the ordinary
course of business) employee or the entry into any employment, severance, or
similar Contract with any director, officer, or employee;
(j) the Company to refrain from the adoption of, or
increase in the payments to or benefits under, any profit sharing, bonus,
deferred compensation, savings, insurance, pension, retirement, or other
employee benefit plan for or with any employees of the Company;
(k) the Company to refrain from the sale (other than
sales of inventory or equipment in the ordinary course of business), lease, or
other disposition of any asset or property of the Company or the mortgage,
pledge, or imposition of any Lien on any asset or property of the Company,
including the sale, lease, or other disposition of any Intellectual Property;
and
(l) the Company to refrain from making any commitment or
agreement to do any of the foregoing.
Section 6.2 Review of the Company. The Purchaser may, prior to
the Closing Date, through its representatives and agents, review the
properties, books, records and personnel of the Company to familiarize itself
with such properties and the Business of the Company. The Company shall permit
the Purchaser and its representatives and agents to have, after the execution
of this Agreement by the Purchaser and Acquisition, reasonable access to the
premises and to the books and records of the Company during normal working
hours and to cause the officers of the Company to furnish the Purchaser with
such financial and operating data and other information with respect to the
Business and properties of the Company, and copies of such corporate documents,
records, agreements and other materials as the Purchaser shall from time to
time reasonably request. Without limiting the generality of the foregoing, the
Purchaser shall be entitled to have reasonable access to the Company's dealers,
distributors, customers, vendors and others having business with the Company;
provided, that: (i) the Purchaser shall coordinate all such contact with George
P. Messina, President of the Company, in advance and the Company may
participate, in its discretion, in all such contact, and (ii) any such actions
by Purchaser will not unreasonably interfere with the Company's business
relationships. Except as may be required by law or court or governmental
order, in the event of termination of this Agreement, the Purchaser shall keep
confidential any material information obtained from the Company and shall
return to the Company or destroy all copies of any schedules, statements,
documents or other written information obtained in connection therewith. The
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parties hereto acknowledge that: (a) the Purchaser and the Company have
entered into a Confidentiality Agreement dated October 9, 1996 (the
"Confidentiality Agreement") and the Purchaser confirms that it and its
Affiliates will comply with their respective obligations thereunder; and (b)
Purchaser and the Company entered into a letter agreement dated May 18, 1997
that contains a confidentiality provision ("Letter Agreement"). In the event
that there is a conflict between the confidentiality provisions in the
Confidentiality Agreement and Letter Agreement, the provisions of the Letter
Agreement shall govern.
Section 6.3 Reasonable Efforts; Further Assurances. The Company
agrees to use all reasonable efforts to take, or cause to be taken, all action
to do, or cause to be done, and to assist and cooperate with the other parties
hereto in doing, all things necessary, proper or advisable to consummate and
make effective, in the most expeditious manner practicable, the transactions
contemplated by this Agreement, including, but not limited to: (a) compliance
with the HSR Act in all respects (including the filing of a notification and
report form to the extent necessary), (b) the obtaining of all necessary
waivers, consents and approvals from Governmental Authorities and the making of
all necessary registrations and filings (including, but not limited to, filings
with Governmental Authorities, if any) and to the taking of all reasonable
steps as may be necessary to obtain any approval or waiver from, or to avoid
any action or proceeding by, any Governmental Authorities, (c) the obtaining of
all necessary consents, approvals or waivers from third parties and (d) the
defending of any lawsuits or any other legal proceedings whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby including, without limitation, seeking to have
any temporary restraining order entered by any court or administration
authority vacated or reversed.
Section 6.4 Shareholder Approval.
(a) The Company shall, as soon as practicable following
the date of this Agreement, and, at the option of the Company, either: (i)
duly call, give notice of, convene and hold a meeting of its shareholders, or
(ii) solicit the written consent of its shareholders in accordance with Section
228 of the DGCL, for the purpose of approving this Agreement and the
transactions contemplated by this Agreement. The Designated Shareholders agree
to vote their shares of Company Stock in favor of the Merger. The Company
shall, through its Board of Directors, recommend to its shareholders approval
of this Agreement and the transactions contemplated by this Agreement.
(b) The Company shall prepare, as promptly as
practicable upon the execution of this Agreement, a proxy statement and form of
proxy for use
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either at the Company's stockholder's meeting or in the Company's consent
solicitation relating to this Agreement and the transactions hereby
contemplated. The Company shall cause such proxy statement and form of proxy
to be mailed to the shareholders of the Company at the earliest possible date.
(c) The Board of Directors of the Company shall
recommend that the shareholders of the Company vote in favor of this Agreement
and the transactions hereby contemplated and cause the Company to take all
lawful actions to solicit from the shareholders of the Company's proxies in
favor of such approval.
Section 6.5 No Breach of Representations and Warranties.
Neither the Company nor any of the Designated Shareholders shall take any
action which would cause or constitute a breach, or would, if it had been taken
prior to the date hereof, have caused or constituted a breach of, any of its
representations, warranties or covenants set forth in this Agreement. The
Company shall, in the event of or promptly after the occurrence of, or promptly
after obtaining Knowledge of the occurrence of or the impending or threatened
occurrence of, any fact or event which would cause or constitute a breach of
any of the representations, warranties or covenants set forth herein as of the
Closing Date, give detailed notice hereof to the Purchaser, and the Company and
the Designated Shareholders shall use all reasonable efforts to prevent or
promptly remedy such breach.
Section 6.6 IISA Compliance. Promptly upon execution of this
Agreement but in any event prior to the Closing Date, the Company shall take
all steps which are necessary to comply with the reporting and other
requirements imposed pursuant to the International Investment Survey Act, 22
U.S.C. Section 3101, et seq., including the payment of any applicable amounts
due the Bureau of Economic Analysis or any other Governmental Authority in
connection therewith.
Section 6.7 No Negotiations. Until such time, if any, as this
Agreement is terminated pursuant to Section 10, neither the Company nor the
Designated Shareholders will, directly or indirectly solicit, initiate, or
encourage any inquiries or proposals from, discuss or negotiate with, provide
any non-public information to, or consider the merits of any unsolicited
inquiries or proposals from, any Person (other than Purchaser) relating to any
transaction involving the sale of the business or assets (other than in the
ordinary course of business) of the Company or any of its Affiliates, or any of
the Company Stock, or any merger, consolidation, business combination, or
similar transaction involving the Company or any of its Affiliates.
Section 6.8 Termination of Rights. At any time prior to the
Closing Date, each holder of any Rights which, by their terms, are vested or
exercisable ("Vested Rights"), shall be entitled to receive in exchange
therefor the Company Stock into
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which such Vested Rights are convertible or exercisable pursuant to their
terms. Unless exercised by the holders thereof prior to the Closing, all of
the Vested Rights shall terminate as of the Closing Time, and the holders
thereof shall have no other Rights of any kind with respect to the Company
Stock or other securities of the Company. All other rights to acquire Company
Stock or other securities of the Company, including without limitation, all
options, warrants and other similar rights ("Unvested Rights"), also shall
terminate as of the Closing Time, and the holders thereof shall not be entitled
to receive any compensation or payment of any kind or other rights in respect
thereof. Notwithstanding anything to the contrary, the exercise of any Vested
Rights shall not increase the Merger Consideration payable by the Purchaser
pursuant to the terms of this Agreement. The Company shall take all actions
which are necessary or expedient to effect all of the foregoing on or prior to
the Closing Date.
Section 6.9 Environmental Matters. The Company shall address
and resolve all instances of existing arsenic and diesel range organic
compounds contamination at the Company's Milton, Wisconsin facility in excess
of applicable residual contaminant levels established by Chapter NR-720 of the
Wisconsin Administrative Code, as identified in the Phase I and Phase II
Environmental Site Assessment, Property at 15 Plumb Street, Milton, Wisconsin
53563, dated June 1997, prepared by BT2, Inc. by reporting such instances to
the Wisconsin Department of Natural Resources ("WDNR"), performing, or
arranging to have performed, all investigation and remediation, if any,
required by the WDNR, and obtaining a no action letter, or if remediation is
required, obtaining a closure letter from the WDNR confirming that all required
investigation and remediation has been performed and no further action is
required to address and resolve such instances. The Company shall use its best
efforts to satisfy its obligations hereunder prior to the Closing Date and if
unsatisfied as of that date, to satisfy such obligations as soon as reasonably
practicable thereafter. Any money spent or obligations incurred by the Company
between the date of this Agreement and the Closing Date pursuant to this
Section shall be deducted from the Total Consideration as provided in Section
3.1(a). Any money spent or obligations incurred after the Closing Date by the
Company, Purchaser or Acquisition pursuant to this Section shall be reimbursed
from the Escrow Account as described in Article XI. The obligations of the
Company and the Designated Shareholders under this Section shall survive the
Merger for the Claims Period set forth in Section 11.1 and shall be subject to
the Indemnification Amount set forth in Section 11.2, but the satisfaction of
such obligations shall not constitute a condition precedent to the Closing.
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ARTICLE VII
COVENANTS OF THE PURCHASER AND ACQUISITION
Section 7.1 No Breach of Representations and Warranties.
Neither the Purchaser nor Acquisition shall take any action which would cause
or constitute a material breach, or would, if it had been taken prior to the
date hereof, have caused or constituted a Material breach of, any of the
representations and warranties set forth in Article V hereof. The Purchaser
and Acquisition shall, in the event of, or promptly after the occurrence of, or
promptly after obtaining knowledge of the occurrence or the impending or
threatened occurrence of, any fact or event which would cause or constitute a
breach of any of the representations and warranties set forth in Article V
hereof as of the Closing Date, give detailed notice thereof to the Company, and
the Purchaser and Acquisition shall use their reasonable efforts to prevent or
promptly remedy such breach.
Section 7.2 Reasonable Efforts; Further Assurances. The
Purchaser and Acquisition agree to use all reasonable efforts to take, or cause
to be taken, all action to do, or cause to be done, and to assist and cooperate
with the other parties hereto in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement, including, but
not limited to: (a) compliance with the HSR Act in all respects (including the
filing of a notification and report form to the extent necessary), (b) the
obtaining of all necessary waivers, consents and approvals from Governmental
Authorities and the making of all necessary registrations and filings
(including, but not limited to, filings with Governmental Authorities, if any)
and to the taking of all reasonable steps as may be necessary to obtain any
approval or waiver from, or to avoid any action or proceeding by, any
Governmental Authorities, (c) the obtaining of all necessary consents,
approvals or waivers from third parties, and (d) the defending of any lawsuits
or any other legal proceedings whether judicial or administrative, challenging
this Agreement or the consummation of the transactions contemplated hereby
including, without limitation, seeking to have any temporary restraining order
entered by any court or administration authority vacated or reversed.
Section 7.3 Purchaser to Maintain Insurance. The Purchaser
agrees to maintain for the period during which the Escrow and Indemnification
Agreement is in effect insurance comparable to the insurance maintained by the
Company on the date of execution of this Agreement. George P. Messina hereby
agrees to cooperate in obtaining key-man life insurance on his life.
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ARTICLE VIII
CONDITIONS TO THE PURCHASER'S AND ACQUISITION'S OBLIGATIONS
All obligations of the Purchaser and Acquisition under this
Agreement are subject to the fulfillment, at the Closing Time, of each of the
following conditions, any or all of which may be waived in whole or in part, at
or prior to the Closing Time by the Purchaser in its sole discretion:
Section 8.1 Representation and Warranties. The representations
and warranties contained in Article IV hereof shall be true and correct at and
as of the Closing Time as though such representations and warranties were made
at and as of such time, except for those representations and warranties which
are expressly made as of a specified earlier date.
Section 8.2 Covenants. The Company shall have performed and
complied with all agreements and conditions on its part required by this
Agreement to be performed or complied with prior to or at the Closing Time.
Section 8.3 Officer's Certificate. The Purchaser shall have
received a certificate of an executive officer of the Company and the
Designated Shareholders, dated the Closing Date, certifying to the fulfillment
of the conditions specified in Sections 8.1 and 8.2 hereof and in the form of
Exhibit 8.3 hereto.
Section 8.4 Opinions of Counsel. The Purchaser shall have
received the opinion of Reid & Priest LLP, dated the Closing Date, in the form
of Exhibit 8.4.
Section 8.5 Legality. No change shall have occurred in any law,
rule or regulation which would prohibit the performance of the Purchaser's
obligations under Article III hereof.
Section 8.6 Injunctions. No court, agency or other authority
shall have issued any order, decree or judgment to set aside, restrain, enjoin
or prevent the performance of the Purchaser's obligations under Article III
hereof. No statute, rule, regulation, executive order, decree or injunction
shall have been enacted, entered, promulgated or enforced by any United States
court or Governmental Authority of competent jurisdiction which prohibits the
consummation of the Merger.
Section 8.7 Consents. The Company shall have obtained all
consents and approvals to the transactions contemplated hereby which are listed
on Schedule 8.7 hereto, specifically including approval under the University of
Glasgow GRI
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algorithm license agreements, which consents shall be in form and substance
acceptable to the Purchaser.
Section 8.8 Shareholder Approval. This Agreement and the
transactions contemplated hereby shall have been approved and adopted by the
Shareholders in accordance with applicable law, and 75% or more of the holders
of the Preferred Stock shall have approved the transactions contemplated by
this Agreement in accordance with the Company's certificate of incorporation
and applicable law.
Section 8.9 Merger. The Delaware Certificate of Merger shall
have been executed by the Company and delivered to the Purchaser.
Section 8.10 Corporate Matters. The Purchaser shall have
received evidence that the Company has taken, completed or corrected, as
applicable, each of the actions set forth on Schedule 8.10.
Section 8.11 Other Documents. The Company and each of the
Shareholders shall have executed and delivered each of the other documents and
instruments required to be executed in connection with the consummation of the
transactions contemplated by this Agreement, including, without limitation, the
Escrow Agreement.
Section 8.12 No Material Adverse Effect. There shall have been
no Material Adverse Effect on the Business or prospects of the Company or in
any of its assets or properties between the date of this Agreement and the
Closing Date.
Section 8.13 Employees. The Company and each of the employees of
the Company listed on Schedule 8.13 shall have entered into Employment
Agreements in the form attached as Exhibits 8.13, and each employee of the
Company who is qualified as an exempt employee under the Fair Labor Standards
Act shall have executed a confidentiality, nondisclosure and inventions
agreement in the form attached as Exhibit 4.15(a).
Section 8.14 Related Party Obligations. Each of the obligations
identified in Schedule 4.25 shall have been satisfied in full on or prior to
the Closing Date.
Section 8.15 Assignment of Siemens Indemnities. The Purchaser
shall have received an assignment of the Company's and the Shareholders' right,
title and interest in and to the Siemens Indemnities in form and substance
reasonably acceptable to Purchaser.
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Section 8.16 Cancellation of Rights. The Purchaser shall have
received satisfactory evidence that each of the Rights identified in Schedule
4.4 shall have been canceled or exercised on or prior to the Closing Date, and
that no such Rights shall be outstanding as of the Closing Date.
Section 8.17 Certain Payments. The Purchaser shall have received
written evidence of the payment by the Institutional Shareholders of the DLJ
fees described in Section 4.17 as part of the Merger contemplated hereby.
Section 8.18 Termination of Stockholders' Agreement. Each of the
parties to the Stockholders' Agreement (other than Paul Heimbuch) shall have
executed and delivered to the Purchaser an agreement or acknowledgement waiving
its rights thereunder and terminating such agreement effective as of the
Closing Date.
Section 8.19 Termination of Share Purchase Rights. The Purchaser
shall have received written evidence of the termination or exercise of the
rights under the Management Group Stock Purchase Agreement, Management Group
Earn Out Share Stock Purchase Agreements, the Earn Out Share Option Agreement
and the Investor Group Stock Purchase Agreement, each dated September 15, 1993,
and the Management Group Stock Purchase Agreement, and the Investor Group Stock
Purchase Agreement, each dated June 21, 1996, by each of the holders thereof
(other than Paul Heimbuch).
Section 8.20 Termination of Certain Additional Agreements. The
Purchaser shall have received written evidence of the termination of the
Company's Management Agreements with National City Capital Corp., Harvest
Partners and Frank Low effective as of the Closing Date and the payment, from
the Total Consideration, of all amounts due thereunder, including amounts
becoming due as a result of such termination.
Section 8.21 Certain Payments. The obligations set forth on
Schedule 8.21 shall have been satisfied from the Total Consideration or Merger
Consideration, as applicable, pursuant to Section 3.1.
Section 8.22 IISA Matters. The Purchaser shall have received
evidence of the Company's compliance with the requirements of Section 6.6, in
its reasonable discretion.
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ARTICLE IX
CONDITIONS TO THE COMPANY'S OBLIGATIONS
All obligations of the Company under this Agreement are
subject to fulfillment, at the Closing Time, of each of the following
conditions, any or all of which may be waived in whole or in part, at or prior
to the Closing Time by the Company in its sole discretion.
Section 9.1 Representations and Warranties. The representations
and warranties contained in Article V hereof shall be true and correct in each
case at and as of the Closing Time as though such representations and
warranties were made at and as of such time, except for those representations
and warranties which are expressly made as of a specified earlier date.
Section 9.2 Covenants. Each of the Purchaser and Acquisition
shall have performed and complied with all agreements and conditions on its
part required by this Agreement to be performed or complied with prior to or at
the Closing Time.
Section 9.3 Officer's Certificate. The Company shall have
received a certificate of an executive officer of each of the Purchaser and
Acquisition, dated the Closing Date, certifying to the fulfillment of the
conditions specified in Sections 9.1 and 9.2 hereof, in the forms set forth in
Exhibit 9.3.
Section 9.4 Opinion of Counsel. The Company shall have received
an opinion of Graham & James LLP, dated the Closing Date, in the form of
Exhibit 9.4.
Section 9.5 Governmental Consents. The Company shall have
obtained all approvals to the transactions contemplated hereby from all
Governmental Authorities which are listed on Schedule 9.5, which consents shall
be in form and substance acceptable to the Company.
Section 9.6 Legality. No change shall have occurred in any law,
rule or regulation which would prohibit the performance of the Company's
obligations under Article III hereof.
Section 9.7 Injunctions. No court, agency or other authority
shall have issued any order, decree or judgment to set aside, restrain, enjoin
or prevent the performance of the Company's obligations under Article III
hereof. No statute, rule, regulation, executive order, decree or injunction
shall have been enacted, entered,
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promulgated or enforced by any United States court or Governmental Authority of
competent jurisdiction which prohibits the consummation of the Merger.
Section 9.8 Shareholder Approval. The Company shall have
received the approval of the Shareholders to the transactions contemplated by
this Agreement in accordance with applicable law.
Section 9.9 Merger. The Delaware Certificate of Merger shall
have been executed and delivered by Acquisition to the Company.
ARTICLE X
TERMINATION
Section 10.1 Termination. This Agreement may be terminated at
any time prior to the Closing Date:
(a) by mutual consent of the Purchaser and the Company;
(b) by the Purchaser, if there has been a Material
violation or breach by the Company or the Designated Shareholders of any
representation, warranty or agreement contained in this Agreement or any failed
condition to the Purchaser's and Acquisition's obligations under Article VIII
hereof, and such breach or failure shall not have been remedied within ten (10)
business days (but in no event later than the Termination Date) after receipt
by the Company of a notice in writing from the Purchaser specifying the nature
of the breach and requesting such be remedied;
(c) by the Company, if there has been a Material
violation or breach by the Purchaser or Acquisition of any representation,
warranty or agreement contained in this Agreement or any failed condition to
the Company's obligation under Article IX hereof, and such breach or failure
shall not have been remedied within ten (10) business days (but in no event
later than the Termination Date) after receipt by the Purchaser of a notice in
writing from the Company specifying the nature of the breach and requesting
such be remedied;
(d) by either the Company or the Purchaser, if the
Merger shall not have been consummated on or before October 31, 1997 (the
"Termination Date") (unless the failure to consummate the Merger by such date
shall be due to the action or failure to act of the party seeking to terminate
this Agreement);
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(e) by either the Company or the Purchaser, if: (i) the
conditions to such party's obligations shall have become impossible to satisfy,
other than as a result of its own acts or omissions in violation of its
obligations hereunder, or (ii) any permanent injunction or other order of a
court or other competent authority preventing the consummation of the Merger
shall have become final and nonappealable; or
(f) by either the Company or the Purchaser, if the
consent of the applicable Governmental Authorities pursuant to the HSR Act has
not been secured on or prior to the Termination Date (unless the failure to
secure such consent by such date shall be due to the action or failure to act
of the party seeking to terminate this Agreement).
Section 10.2 Effect of Termination.
(a) In the event of the termination and abandonment of
this Agreement pursuant to Section 10.1 hereof, this Agreement shall forthwith
become void and have no effect, without any liability on the part of any party
hereto or its Affiliates, directors, officers or stockholders, except that
nothing contained in this Section 10.2 shall relieve any party from liability
for any breach of this Agreement.
(b) Notwithstanding the exercise of the foregoing right
to terminate or waive, the aggrieved party shall have and may pursue its rights
to recover damages for breach of contract or any representation, warranty or
covenant giving rise to such right.
Section 10.3 Amendment. This Agreement may be amended by the
parties hereto at any time before or after approval of the matters presented in
connection with the Merger by the Shareholders of the Company, but, after any
such approval, no amendment shall be made which by law requires further
approval by such Shareholders without such further approval. This Agreement
may not be amended except by an instrument in writing signed on behalf of each
of the parties hereto.
Section 10.4 Extension; Waiver. At any time prior to the
Effective Time, the parties hereto may, to the extent legally allowed: (i)
extend the time for the performance of any of the obligations or other acts of
the other parties hereto, (ii) waive any inaccuracies in the representations
and warranties contained herein or in any document delivered pursuant hereto
and herein or in any document delivered pursuant hereto, or (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such
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extension or waiver shall be valid only if set forth in a written instrument
signed on behalf of such party.
ARTICLE XI
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
Section 11.1 Survival of Representations and Warranties. The
respective representations and warranties of the Company contained in this
Agreement shall survive the execution of this Agreement and shall terminate
effective at the Closing Time. The representations and warranties of the
Purchaser, Acquisition and the Company contained in this Agreement shall
survive the Merger hereby until the expiration of three (3) years from the
Closing Date (the "Claims Period").
Section 11.2 Indemnification By Designated Shareholders. From
and after the Closing Date, the Designated Shareholders agree, pursuant to the
terms and conditions of this Agreement and the escrow agreement by and among
the Company, the Institutional Shareholders, the Purchaser and Acquisition and
the other parties thereto ("Escrow Agreement") in the form of Exhibit 11.2
hereto, to indemnify and hold harmless the Purchaser and Acquisition and any of
their Affiliates, officers, directors, agents and representatives against any
and all liabilities, damages, losses, costs or expenses whatsoever, including
reasonable fees and expenses of counsel ("Losses"), suffered or incurred within
the Claims Period, arising out of, or resulting from: (A) any breach of any
representation or warranty made by the Company under this Agreement or the
violation or non-performance of any covenant or obligation to be performed by
the Company under this Agreement (other than the representations, warranties
and covenants identified in subsection (B) below), and (B)(1) any breach of the
representations and warranties made by the Company in Sections 4.12(b), 4.15(i)
or 4.16, (2) any breach of the representations and warranties made in this
Agreement which are applicable to Shanghai Burdick where the breach arises from
or relates to the actions or inactions of Shanghai Burdick, and (3) the
violation or nonperformance of the covenants and obligations of the Company
contained in Section 6.9, including without limitation, all reimbursement
obligations under Section 6.9; provided, however: (i) the liability of the
Designated Shareholders under this Section 11.2 shall not exceed Four Million
Five Hundred Thousand Dollars ($4,500,000) (the "Indemnification Amount"); (ii)
the Purchaser shall, on the Closing Date, deposit or cause to be deposited with
the Disbursing Agent the Indemnification Amount into an escrow and
indemnification account ("Escrow Account") with a nationally-chartered
federally insured bank with assets in excess of one billion dollars pursuant to
the terms and conditions of an Escrow Agreement in the form of Exhibit 11.2;
and (iii) except as otherwise provided in Sections 4.17, 4.26 and 12.1, the
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<PAGE> 51
Purchaser's and Acquisition's indemnification rights under this Section 11.2
shall be limited solely to the Indemnification Amount in the Escrow Account,
subject however, to the limitations set forth in Section 11.4. Notwithstanding
the foregoing, the Escrow Agreement shall provide: (x) the Institutional
Shareholders shall defend, indemnify and hold the Purchaser harmless from and
against (without regard to the $500,000 basket contained in Section 11.4) any
and all costs incurred by the Company in connection with the exercise of
dissenters' rights by any of the Shareholders with respect to the transactions
contemplated by this Agreement, including without limitation, appraisal costs
and attorneys' fees and any obligation to pay appraisal amounts determined to
be due in excess of that portion of the Merger Consideration otherwise payable
to any dissenting Shareholders had they not dissented; (y) the indemnity set
forth in subsection 11.2(B) above shall not be subject to the $500,000 basket
contained in Section 11.4; and (z)(i) on the first anniversary of the Closing
Date (the "First Anniversary"), the escrow agent shall release to the
Institutional Shareholders pursuant to the Escrow Agreement an amount equal to
one-third (1/3) of the Indemnification Amount, less the sum of: (x) all Losses
paid to the Purchaser between the Closing Date and the First Anniversary, and
(y) an amount equal to the Purchaser's reasonable estimate of all Losses which
have not been paid as of the First Anniversary but for which the Purchaser has
asserted a claim in writing against the Institutional Shareholders as of such
date pursuant to the Escrow Agreement; (ii) on the second anniversary of the
Closing Date ("Second Anniversary"), the escrow agent shall release to the
Institutional Shareholders pursuant to the Escrow Agreement an amount equal to
two-thirds (2/3) of the Indemnification Amount, less the sum of: (w) the
amount paid by the escrow agent to the Institutional Shareholders on the First
Anniversary, (x) all Losses paid to the Purchaser between the First Anniversary
and the Second Anniversary, including, but not limited to, Losses resolved and
paid during such period which had previously been reflected as estimated Losses
under Subsection (z)(i)(y) above, and (y) an amount equal to the Purchaser's
reasonable estimate of all Losses which have not been paid as of the Second
Anniversary but for which the Purchaser has asserted a claim in writing against
the Institutional Shareholders as of such date pursuant to the Escrow
Agreement; and (iii) on the third anniversary of the Closing Date, the escrow
agent shall release to the Institutional Shareholders all amounts in the Escrow
Account less any pending indemnification claims of Purchaser. For purposes of
calculating the actual and estimated Losses under Subsections (z)(i) and
(z)(ii) above, such Losses shall be reduced by the amount, if any, of the
$500,000 basket which has not been consumed as of the date of any such
calculation (but only to the extent that the $500,000 basket is applicable to
such Losses).
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<PAGE> 52
Section 11.3 Indemnification By Purchaser. From and after the
Closing Date, the Purchaser agrees to indemnify and hold harmless the
Shareholders or any of their Affiliates, officers, directors, agents or
representatives against any and all Losses suffered or incurred within the
Claims Period, arising out of, or resulting from, any breach of any
representation or warranty made by the Purchaser or Acquisition under this
Agreement or the violation or non-performance of any covenant or obligation to
be performed by the Purchaser or Acquisition under this Agreement; subject,
however, to the limitations set forth in Sections 11.4.
Section 11.4 Basket and Other Limitations; Insurance and Tax
Recoveries.
(a) No party hereto shall be entitled to recover under
Sections 11.2 or 11.3 above, as the case may be, unless the party claiming
indemnification provides Notice (as defined in Section 11.5) to the other party
in accordance with Section 11.5 within three (3) years after the Closing Date.
No party shall be entitled to indemnification under either such Section 11.2 or
11.3 unless and until the aggregate amount indemnifiable under the relevant
Section exceeds Five Hundred Thousand Dollars ($500,000) and only for that
amount in excess of $500,000; provided, that the full amount of any Loss or
Losses shall be applied against the $500,000 basket, and not just the amount of
Loss or Losses in excess of the "Material" and "Material Adverse Effect"
thresholds where such terms are used in any representation, warranty or
covenant contained herein.
(b) Notwithstanding anything in this Article XI to the
contrary, the amount payable by an Indemnifying Party on account of an
indemnity claim made under this Article XI shall be reduced by the amount of
any insurance or tax proceeds actually received by an Indemnified Party with
respect to any insurance or tax claim made by such Indemnified Party with
respect thereto, after first reimbursing such Indemnified Party for the actual,
out-of-pocket costs of recovery incurred by such Indemnified Party to enforce
its insurance or tax claim.
Section 11.5 Indemnification Notice. In the event that the
Purchaser, Acquisition or the Shareholders has a claim for indemnification
under this Article XI, the party seeking indemnification (the "Indemnified
Party") shall promptly deliver to the party from whom indemnification is
requested (the "Indemnifying Party") a written notice (the "Notice") which
shall: (i) state that a Loss has occurred or is threatened for which the
Indemnified Party is entitled to indemnification pursuant to this Agreement;
and (ii) specify in reasonable detail each individual Loss including the amount
thereof, if reasonably ascertainable, and the nature of the representation,
warranty, covenant, obligation or conduct to which each Loss is related.
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<PAGE> 53
Section 11.6 Indemnification Procedure. Following delivery of a
Notice, the Indemnifying Party shall, using its commercially reasonable efforts
and at its own expense, defend, contest or otherwise protect against such legal
action, claim or proceeding with legal counsel of its own selection. The
Indemnified Party shall have the right, but not the obligation, to participate,
at its own expense, in the defense thereof through counsel of its own choice
and shall have the right but not the obligation, to assert any and all cross
claims or counterclaims it may have. So long as the Indemnified Party is using
its commercially reasonably efforts to defend any such legal action, claim or
proceeding, the Indemnified Party shall at all times cooperate in all
reasonable ways with, make its relevant files and records available for
inspection and copying by, and makes its employees available or otherwise
render reasonable assistance to the Indemnifying Party in connection with the
defense of such legal action, claim or proceeding and shall not without the
prior written consent of the Indemnifying Party, settle such action, claim or
proceeding for which indemnification is sought under this Article XI. In the
event that the Indemnifying Party fails to use its commercially reasonable
efforts to timely defend, contest or otherwise protect against any such legal
action, claim or proceeding, the Indemnified Party shall have the right, but
not the obligation, to defend, contest or otherwise protect against such legal
action, claim or proceeding and claim any compromise or settlement thereof.
The Indemnifying Party shall not compromise or settle any such matter if such
compromise or settlement would have a Material Adverse Effect on the
Indemnifying Party, without the prior written consent of the Indemnifying
Party, which consent shall not be unreasonably withheld.
Section 11.7 Tax Contests. Notwithstanding any of the foregoing,
the Purchaser shall have the sole right to conduct any tax audit or other tax
contest relating to the Purchaser's and the Company's tax returns after the
Closing Date. In the event any indemnifiable Loss arises out of any such tax
audits, the Purchaser will notify the Designated Shareholders and allow them to
comment on any written submissions relating to indemnifiable Losses. No such
tax contest or proceeding shall be paid, compromised or settled without the
consent of the Designated Shareholders, which consent shall not be unreasonably
withheld; the fact that the settlement of a tax contest will result in a Loss
to or an indemnification claim by Purchaser shall not, absent a bona fide
dispute with respect to the underlying tax liability giving rise thereto,
constitute reasonable grounds to withhold consent. The Purchaser shall conduct
any tax audits in good faith in order to minimize any indemnifiable Losses
payable by the Designated Shareholders.
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<PAGE> 54
ARTICLE XII
MISCELLANEOUS
Section 12.1 Expenses. Except as expressly otherwise provided
herein, the parties hereto shall pay all of their own expenses relating to the
transactions contemplated by this Agreement, including, without limitation, the
fees and expenses of their respective counsel and financial advisors. The
Company shall be entitled to pay up to $150,000 of the reasonable legal fees
and expenses incurred by the Company and the Shareholders in connection with
the transactions contemplated by this Agreement, and the excess, if any, shall
be borne solely by the Shareholders. The Shareholders shall defend, indemnify
and hold the Purchaser and the Company harmless from and against any such
excess fees and expenses, which indemnity shall be without regard to any of the
limitations or restrictions on indemnification set forth in Section 11.
SECTION 12.2 GOVERNING LAW. THE INTERPRETATION AND CONSTRUCTION
OF THIS AGREEMENT, AND ALL MATTERS RELATING HERETO, SHALL BE GOVERNED BY THE
LAWS OF THE STATE OF WASHINGTON, EXCEPT FOR MATTERS RELATING TO THE MERGER,
WHICH SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE.
Section 12.3 Jurisdiction. Any judicial proceeding brought
against any of the parties to this Agreement on any dispute arising out of this
Agreement or any matter related hereto may be brought in the federal courts
sitting in the states of Washington or Wisconsin, and, by execution and
delivery of this Agreement, each of the parties to this Agreement accepts for
himself or itself the exclusive jurisdiction of the aforesaid courts, and
irrevocably agrees to be bound by any judgment rendered thereby in connection
with this Agreement. The foregoing consents to jurisdiction shall not
constitute general consents to service of process in such states for any
purpose except as provided above and shall not be deemed to confer rights on
any person other than the respective parties to this Agreement.
Section 12.4 Captions. The Article and Section captions used
herein are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.
Section 12.5 Publicity. Except as otherwise required by law,
none of the parties hereto shall issue any press release or make any other
public statement, in each case relating to or connection with or arising out of
this Agreement or the matters contained herein, without obtaining the prior
approval of the other parties hereto, to the contents and the manner of
presentation and publication thereof.
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<PAGE> 55
Section 12.6 Notices. Any notice, demand, request, instruction
or other communication to be given hereunder by a party hereto shall be in
writing and shall be deemed to have been duly given and shall be effective:
(a) upon receipt if delivered by hand or by prepaid overnight express service,
(b) on the date of transmission if sent by telex, facsimile or other wise
transmission or (c) five Business Days after being deposited in the U.S. mail,
certified or registered mail, postage prepaid, and return receipt requested.
Notices shall be sent to the parties at the following addresses:
(a) If to Purchaser or Acquisition:
Spacelabs Medical, Inc.
15220 N.E. 40th Street
Redmond, Washington 98073
Attention: General Counsel
Facsimile No.: (425) 883-7091
with a copy to:
Graham & James LLP
1001 Fourth Avenue, Suite 4500
Seattle, Washington 98154
Attention: John M. Steel
Facsimile No.: (206) 389-1708
(b) If to the Company:
Burdick, Inc.
15 Plumb Street
Milton, Wisconsin 53563-1499
Attention: George P. Messina
Facsimile No.: (608) 868-1386
with a copy to:
Reid & Priest LLP
40 West 57th Street
New York, New York 10019
Attention: Leonard Gubar, Esq.
Facsimile No.: (212) 603-2001
50
<PAGE> 56
or to such other individual or address as a party hereto may designate for
itself by notice given as herein provided.
Section 12.7 Waivers. The failure of a party hereto at any time
or times to require performance of any provision hereof shall in no manner
affect its right at a later time to enforce the same. No waiver by a party of
any condition or of any breach of any term, covenant, representation or
warranty contained in this Agreement shall be effective unless in writing, and
no waiver in any one or more instances shall be deemed to be a further or
continuing waiver of any such condition or breach in other instances or a
waiver of any other condition or breach of any term, covenant, representation
or warranty.
Section 12.8 Severability. If any provision of this Agreement
shall be held invalid, illegal or unenforceable, the validity, legality or
enforceability of the other provisions hereof shall not be affected thereby,
and there shall be deemed substituted for the provision at issue a valid, legal
and enforceable provision as similar as possible to the provision at issue.
Section 12.9 Entire Agreement. This Agreement and the Schedules
and Exhibits attached hereto set forth the entire agreement and understanding
of the parties hereto and supersede the Letter Agreements dated May 9, 1997,
and May 18, 1997, and all prior agreements, arrangements and understandings
among the parties.
Section 12.10 Specific Performance. The parties agree that, due
to the unique subject matter of this transaction, monetary damages will be
insufficient to compensate the Purchaser in the event of a breach by the
Company or Shareholders on the one hand, and to compensate the Company and the
Shareholders in the event of a breach by the Purchaser and Acquisition on the
other hand, of this Agreement; therefore, the parties agree that in the event
of a Material breach by the breaching party of this Agreement, the nonbreaching
party shall be entitled to specific performance of the breaching party's
obligations hereunder.
Section 12.11 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 12.12 Transfer Taxes. The Shareholders and the Purchaser
shall share equally the cost of any transfer taxes imposed upon the Merger or
the other transactions contemplated by this Agreement.
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[THE NEXT PAGE IS THE SIGNATURE PAGE]
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<PAGE> 58
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above.
SPACELABS MEDICAL, INC.
By:
-------------------------------------
Name:
Title:
SLMD ACQUISITION CORPORATION
By:
-------------------------------------
Name:
Title:
BURDICK, INC.
By:
-------------------------------------
Name:
Title:
The following shareholders of the Company agree to vote in
favor of the Merger and transactions under this Agreement:
HARVEST PARTNERS INTERNATIONAL, L.P.
By:
-----------------------------------------
Name:
Title:
NATIONAL CITY CAPITAL CORP.
By:
-----------------------------------------
Name:
Title:
<PAGE> 59
NETHCORP. INVESTMENTS. VI B.V.
By: Greenfield Management Svcs. B.V.
---------------------------------------
By: Managing Director
DBG AUSLAND-HOLDING GmbH
By:
-----------------------------------------
Name:
Title:
V.S.P. INVESTMENT I, LTD.
By:
-----------------------------------------
Name:
Title:
-------------------------------------------
George P. Messina
-------------------------------------------
Gary Laube
-------------------------------------------
Robert McKaba
-------------------------------------------
Joseph Weber
-------------------------------------------
Frank A. Schmidt
-------------------------------------------
Gregg R. Laycock
54
<PAGE> 60
_________________________________________
Robert S. Nielsen
55
<PAGE> 61
EXHIBITS
<TABLE>
<CAPTION>
Number Description
- ------ -----------
<S> <C>
4.15(a) Confidentiality Agreement
8.3 Company Officer's Certificate
8.4 Opinion of Counsel to the Company
8.13 Employment Agreements
9.3 Purchaser Officer's Certificate
Acquisition Officer's Certificate
9.4 Opinion of Counsel to the Purchaser and
Acquisition
11.2 Escrow Agreement
</TABLE>
<PAGE> 62
SCHEDULES
<TABLE>
<CAPTION>
Number Description
- ------ -----------
<S> <C>
3.1(a) Management Shareholders
4.2 Consents
4.3 Qualifications
4.4 Capitalization, Shareholdings, Etc.
4.6 Properties; Intellectual Property
4.7 Intellectual Property
4.10 Leases
4.11 Material Contracts
4.12 Litigation
4.13 Taxes
4.14 Insurance
4.15 Employees; Benefit Plans
4.16 Environmental Matters
4.17 Institutional Shareholders
4.18 Medical Devices
4.19 Permits
4.21 Adverse Changes
4.22 Compliance with Laws
4.23 Accounts Receivable
</TABLE>
<PAGE> 63
<TABLE>
<S> <C>
4.25 Absence of Changes
4.26 Related Party Transactions
4.27 Acceleration of Rights
4.29 Warranties
5.3 Purchaser -- Non-Contravention Exceptions
5.4 Purchaser -- Consents
6.1(i) Compensation Increases
8.7 Consents -- Company
8.10 Corporate Matters
8.13 Key Employees
8.21 Instruction Letter Payment Items
9.5 Consents -- Purchaser and Acquisition
</TABLE>
(A copy of the above schedules will be provided to the United States Securities
and Exchange Commission upon request)
