<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended OCTOBER 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
---------------- -------------------------
Commission file number 0-5958
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MERIDIAN MEDICAL TECHNOLOGIES, INC.
- ------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 52-0898764
- ------------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
10240 OLD COLUMBIA ROAD, COLUMBIA, MARYLAND 21046
- ------------------------------------------- --------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 410-309-6830
------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASS OUTSTANDING AT OCTOBER 31, 1996
- ------------------------------------- -------------------------------
COMMON STOCK, $.10 PAR VALUE 3,097,953 SHARES
<PAGE>
2
MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q
FOR THE QUARTER ENDED OCTOBER 31, 1996
PART I. FINANCIAL INFORMATION PAGE NO.
- ----------------------------- --------
ITEM 1. Financial Statements (Unaudited)
Consolidated Condensed Balance Sheets as of
October 31, 1996 and July 31, 1996 . . . . . . . . . . . . . 4
Consolidated Condensed Statements of Income
for the Three Months Ended October 31,
1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . 6
Consolidated Condensed Statements of Cash Flows
for the Three Months Ended October 31, 1996
and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Notes to Consolidated Condensed Financial
Statements . . . . . . . . . . . . . . . . . . . . . . . . . 9
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . . . 12
PART II. OTHER INFORMATION
- --------------------------
ITEM 2. Changes in Securities . . . . . . . . . . . . . . . . . . . 17
ITEM 4. Submission of Matters to a Vote of Security
Holders . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ITEM 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . 18
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
<PAGE>
3
MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q
FOR THE QUARTER ENDED OCTOBER 31, 1996
Certain statements in this Quarterly Report on Form 10-Q are forward-looking
and are identified by the use of forward-looking words or phrases such as
,"believes," "expects," is or are "expected," "anticipates," "anticipated,"
and words of similar import. These forward-looking statements are based on
the Company's current expectations. Because forward-looking statements
involve risks and uncertainties, the Company's actual results could differ
materially. In addition to the factors discussed generally herein, among the
factors that could cause results to differ materially from current
expectations are: (i) any failure to comply with covenants in the Company's
financing arrangement; (ii) the general economic and competitive markets and
countries where the Company and its subsidiaries offer products and services;
(iii) changes in capital availability or costs; (iv) fluctuations in demand
for certain of the Company's products, including changes in government
procurement policy; (v) the continued commitment of customers and strategic
partners to the Company's products and programs; (vi) technological challenges
associated with the development and manufacture of current and anticipated
products; (vii) commercial acceptance of auto-injectors and new products and
competitive pressure from traditional and new drug delivery methods and
medical devices; and (viii) delays, costs and uncertainties associated with
government approvals required to market new drugs and medical devices.
<PAGE>
4
PART I. FINANCIAL INFORMATION
- -----------------------------
ITEM 1. Financial Statements
MERIDIAN MEDICAL TECHNOLOGIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
October 31, July 31,
1996 1996
(unaudited) (audited)
----------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 270,700 $ 122,800
Receivables 4,732,600 7,332,300
Inventories 4,431,200 4,988,800
Prepaid expenses and other assets 1,196,200 752,400
Deferred income taxes 1,217,500 1,217,500
----------- ------------
Total current assets 11,848,200 14,413,800
----------- ------------
FIXED ASSETS 27,047,300 26,547,400
Less accumulated depreciation 12,167,600 11,732,400
----------- ------------
14,879,700 14,815,000
----------- ------------
PATENTS AND LICENSES, AT COST LESS
AMORTIZATION OF $720,100 AND $675,100 1,812,200 1,848,400
OTHER NONCURRENT ASSETS 2,000 7,800
----------- -----------
$28,542,100 $31,085,000
----------- -----------
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable to bank $ 629,200 $ 3,875,400
Note payable to Syntex 388,400 588,400
Current portion of long-term debt 545,500 516,800
Accounts payable 2,600,800 2,240,700
Customer deposits 715,800 736,000
Restructuring reserve 570,200 640,400
Other liabilities and accrued expenses 1,482,300 1,611,900
----------- -----------
Total current liabilities 6,932,200 10,209,600
OTHER LONG-TERM DEBT 1,182,100 1,184,300
OTHER NONCURRENT LIABILITIES 652,600 616,500
DEFERRED INCOME TAXES 1,605,500 1,605,500
----------- -----------
Total liabilities 10,372,400 13,615,900
----------- -----------
</TABLE>
<PAGE>
5
<TABLE>
<S> <C> <C>
SHAREHOLDERS' EQUITY:
Common stock, $.10 par value;
10,000,000 shares authorized;
3,097,950 and 3,091,700 issued
and outstanding 309,800 309,100
Paid-in capital in excess of par value 5,156,600 5,114,700
Retained earnings 12,703,300 12,045,300
----------- -----------
Total shareholders' equity 18,169,700 17,469,100
----------- -----------
$28,542,100 $31,085,000
----------- -----------
----------- -----------
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
<PAGE>
6
MERIDIAN MEDICAL TECHNOLOGIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
October 31,
---------------------------
1996 1995
---- ----
<S> <C> <C>
Net sales $ 9,256,500 $ 5,294,900
Cost of sales 5,931,600 3,514,600
----------- -----------
GROSS PROFIT 3,324,900 1,780,300
----------- -----------
Selling, general, and administrative
expenses 1,246,400 804,200
Research and development expenses 508,500 171,700
Depreciation and amortization expenses 483,600 421,200
Restructuring charge 94,000
----------- ----------
2,238,500 1,491,100
----------- ----------
OPERATING INCOME 1,086,400 289,200
----------- ----------
Other (expense) income:
Interest expense (60,400) (120,600)
Other income 47,300 66,200
----------- ---------
(13,100) (54,400)
----------- ---------
Income before income taxes 1,073,300 234,800
Provision for income taxes 415,000 90,400
----------- ---------
NET INCOME $ 658,300 $ 144,400
----------- ----------
----------- ----------
NET INCOME PER COMMON SHARE $.21 $.05
---- ----
---- ----
AVERAGE NUMBER OF SHARES OUTSTANDING 3,129,200 3,109,000
----------- -----------
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
<PAGE>
7
MERIDIAN MEDICAL TECHNOLOGIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
THREE MONTHS ENDED
OCTOBER 31
--------------------------
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $658,300 $144,400
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 483,600 421,200
Gain on fixed asset disposal (1,900) (13,600)
Deferred lease incentives (7,600) (7,600)
Decrease in receivables 2,599,700 988,900
Decrease (increase) in inventories 557,600 (1,353,000)
Increase in prepaid expenses
and other assets (443,800) (45,500)
Increase in accounts payable 360,100 431,900
(Decrease) in customer deposits (20,200) (12,500)
(Decrease) increase in
restructuring reserve (70,200) 73,200
Decrease in other liabilities
and accrued expenses (129,600) (155,500)
---------- -----------
Net cash provided by
operating activities 3,986,000 471,900
---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of fixed assets (497,900) (464,300)
Proceeds from sale of fixed assets 2,000 36,700
Purchases of patents and licenses (8,800) (10,400)
Increase in other noncurrent
liabilities 43,700 43,800
---------- -----------
Net cash used for investing
activities (461,000) (394,200)
---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
(Payments) proceeds on note payable to bank (3,246,200) 4,600
Payments on note payable to Syntex (200,000) (200,000)
Proceeds on other long-term debt 146,300
Payments on other long-term debt (119,800) (130,500)
Decrease in deferred revenue (250,000)
Sale of common stock 42,600 7,900
---------- -----------
<PAGE>
8
Net cash used for financing
activities (3,377,100) (568,000)
---------- -----------
NET INCREASE (DECREASE) IN CASH 147,900 (490,300)
CASH AT BEGINNING OF PERIOD 122,800 503,600
---------- -----------
CASH AT END OF PERIOD $ 270,700 $ 13,300
---------- -----------
---------- -----------
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
<PAGE>
9
MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q
FOR THE QUARTER ENDED OCTOBER 31, 1996
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
A. In the opinion of management, the accompanying unaudited consolidated
condensed financial statements contain all adjustments (consisting of
normal recurring accruals) necessary to present fairly the Company's
financial position as of October 31, 1996, the results of its
operations and cash flows for the three-month periods ended October
31, 1996 and 1995. The results of operations for the three-month
period ended October 31, 1996 are not necessarily indicative of the
results that may be expected for the fiscal year ending July 31, 1997.
B. The significant accounting principles and practices followed
by the Company are set forth in Note 1 of the Notes to Consolidated
Financial Statements in the Survival Technology, Inc. Annual Report
on Form 10-K for the year ended July 31, 1996.
C. Inventories consisted of the following:
<TABLE>
OCTOBER 31, JULY 31,
1996 1996
---- ----
<S> <C> <C>
Components and subassemblies $3,192,600 $2,968,600
Material, labor and overhead
costs in process 1,088,800 1,401,900
Finished goods 792,100 1,055,800
---------- -----------
5,073,500 5,426,300
Inventory reserve (642,300) (437,500)
---------- -----------
Total $4,431,200 $4,988,800
</TABLE>
D. In fiscal 1995, a restructuring plan was approved by the
Company's Board of Directors resulting in a $450,000 charge against
earnings for the relocation of its corporate office. As part of this
plan, the Company initiated certain organizational changes during
fiscal 1996 resulting in additional charges related to severance
benefits provided to certain employees terminated during fiscal 1996.
The following table sets forth the Company's restructuring
reserve as of October 31, 1996:
<PAGE>
10
RESTRUCTURING RESERVE
---------------------
<TABLE>
<CAPTION>
RELOCATION EMPLOYEE
OF FACILITIES SEPARATIONS TOTAL
------------- ----------- -----
<S> <C> <C> <C>
Reserve as of July 31, 1995 $ 450,000 $ 450,000
Restructuring of operations 321,900 321,900
Cash payments (7,200) (124,300) (131,500)
----------- --------- --------
Reserve as of July 31, 1996 442,800 197,600 640,400
Cash payments __ (70,200) (70,200)
----------- --------- ---------
Reserve as of October 31, 1996 $ 442,800 $ 127,400 $ 570,200
----------- --------- ---------
----------- --------- ---------
</TABLE>
<PAGE>
11
MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q
FOR THE QUARTER ENDED OCTOBER 31, 1996
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
In October 1996, the Company signed a letter of intent to sublease
its corporate office space in Rockville, Maryland and entered into a
new lease in Columbia, Maryland for the relocation of the corporate
headquarters. The reserve balance for the relocation of facilities at
October 31, 1996 is sufficient to cover both the moving costs and the
lease rate differential on the sublease. The Company moved its
corporate headquarters in December 1996.
E. As previously reported, on November 20, 1996, Brunswick
Biomedical Corporation ("Brunswick"), the holder of approximately
61.1% of the outstanding shares of the Company's outstanding common
stock, merged with and into the Company in accordance with the terms
of an Agreement and Plan of Merger dated as of September 11, 1996.
Additional information regarding the merger is set forth in the
Company's proxy statement dated October 30, 1996 and Current Report
on Form 8-K dated December 5, 1996.
<PAGE>
12
MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q
FOR THE QUARTER ENDED OCTOBER 31, 1996
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THE QUARTER IN REVIEW
On November 20, 1996, the shareholders of Survival Technology, Inc., ("STI"
or the "Company") approved a plan of merger with Brunswick Biomedical
Corporation ("Brunswick") forming Meridian Medical Technologies, Inc. First
quarter results reflect the operations of the Company without giving effect
to the merger. Although the Company is the surviving corporation of the
merger as a legal matter, the merger is treated as a purchase of the Company
by Brunswick for financial accounting purposes. As a result, the Company's
assets and liabilities will be revalued to their respective fair values and
Brunswick's historical financial statements will reflect the combined
operations of the Company and Brunswick after November 20, 1996. The Company
will retain its fiscal year end as July 31.
The Company reported net income of $658,300 ($0.21 per share) on sales of
$9.3 million for the first quarter of its fiscal year 1997. This represents
a 356% increase in net income and a 75% increase in sales when compared to
the net income of $144,400 ($0.05 per share) on sales of $5.3 million
reported in the same period last year.
Revenues increased $4 million during the current quarter on the strength of
higher U.S. and international military product and commercial auto-injector
sales. Military product sales increased $2 million (95 percent) to $4.1
million due to continued deliveries to the U.S. Department of Defense of the
new Diazepam auto-injector launched last year coupled with the expansion of
military auto-injector sales into new international markets. During the
first quarter, the Company also signed supply agreements with two allied
governments for military auto-injector products. Revenue from these
contracts are expected to aggregate an additional $4 million in fiscal 1997.
Commercial sales improved by $2 million (61 percent) during the first quarter
on the strength of auto-injector sales to Center Laboratories, Inc., the
Company's exclusive distributor for the EpiPen-Registered Trademark- and Epi
E-Z Pen-TM- auto-injectors, and revenues generated from a new auto-injector
development and supply agreement with a major multi-national
<PAGE>
13
MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q
FOR THE QUARTER ENDED OCTOBER 31, 1996
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
pharmaceutical company signed during the first quarter. This agreement
contributed revenue of approximately $675,000 during the quarter and is
expected to generate additional revenue of $1.5 million over the remainder of
fiscal 1997. Sales of the Company's EpiPen and Epi E-Z Pen auto-injectors
increased $942,700 during the first quarter. This favorable sales trend is
due primarily to sales of the new Epi E-Z Pen, launched in March 1996,
coupled with Center's expanded marketing efforts in the U.S.
Gross margins were 36% for the quarter ended October 31, 1996 compared to 33%
in the comparable prior year period and 29% for the fiscal year ended July
31, 1996. This improvement is attributable to higher sales coupled with
overhead cost reductions implemented in the first quarter of fiscal 1997.
Operating expenses increased by $747,400 (50%) due to higher levels of
expenditures associated with the development of the Company's new generation
auto-injector products as well as higher bad debt expense associated with a
receivable balance in dispute.
Other expenses decreased $41,300 in the first quarter of fiscal 1997 when
compared with the same period in fiscal 1996 due primarily to lower interest
expense. Improved cash flow from operations contributed to lower levels of
bank borrowing during the first quarter.
LIQUIDITY AND CAPITAL RESOURCES
During the current quarter, the Company had a $5 million line of credit
agreement ("Agreement") with Merrill Lynch Business Financial Services Inc.
("MLBFS"). Outstanding borrowings under the Agreement totalled $629,200 at
October 31, 1996 The interest rate charged by MLBFS was the 30-day
commercial paper rate as published in the Wall Street Journal plus 265 basis
points. The Agreement placed a $5 million limit on capital expenditures in
any one fiscal year which aggregated $497,900 for the quarter ended October
31, 1996.
At the effective time of the merger ("Effective Time"), the Company assumed
Brunswick's indebtedness under a senior bridge loan of $11 million, a
subordinated promissory note ("Note") of $4.7 million, and a subordinated
loan ("Subordinated Loan") of $1 million. At the Effective Time, the senior
bridge loan converted into a $10 million term loan ("Term Loan") and $1
million of the outstanding principal amount was
<PAGE>
14
MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q
FOR THE QUARTER ENDED OCTOBER 31, 1996
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
repaid. In addition, the lenders of the senior bridge loan made available to
the Company a $5 million revolving credit loan, a portion of which was used
to discharge the Company's existing debt under the MLBFS Agreement. The
Company expects to rely on its revolving credit loan to satisfy its working
capital and capital expenditure requirements.
The Term Loan and the revolving credit loan bear interest at a variable rate
equal to the Federal Funds Rate plus 2% and the Federal Funds Rate plus
1.75%, respectively. These loans are secured by substantially all of the
assets of the Company and will mature on the fifth anniversary of the
Effective Time. Quarterly principal payments on the Term Loan will be
required in scheduled amounts ranging from $500,000 to $750,000, and
mandatory prepayments of 75% of the Company's excess cash flow will be
required on an annual basis. Financial covenants under the Term Loan and the
revolving credit loan will require the Company to maintain certain levels of
net worth and debt to EBITDA (earnings before interest, taxes, depreciation
and amortization) ratios while limiting the Company's capital expenditures
made in any one fiscal year.
The Note matures on the fifth anniversary of the Effective Time and bears
interest at the rate of 12% per annum through April 15, 1998 and 13%
thereafter. Through April 30, 1998, accrued interest will be compounded and
be added to principal. Thereafter, accrued interest is payable quarterly in
arrears. Principal under the Note is payable in one payment on the maturity
date. The Company may only prepay the Note after repaying all senior
indebtedness, including the Term Loan and the revolving credit loan, or with
the consent of the senior lender. The Company is obligated to prepay the
Note, subject to the rights of the senior debt, upon obtaining certain
additional debt and equity financings to the extent of the net cash proceeds
from such financings.
The Subordinated Loan matures on the same day as the Note and bears interest
at the same rate as the Note. Principal of the Subordinated Loan is payable
in seven consecutive quarterly installments of $125,000 beginning on April
30, 1999, with one final payment payable on the maturity date. The
Subordinated Loan may be prepaid only after satisfaction of the Term Loan,
the revolving credit loan and the Note, or with the consent of the senior
lender. The Company is obligated to prepay the Subordinated Loan, subject to
the rights of the senior lender, upon obtaining certain additional debt and
equity financings to the extent of the net cash proceeds from such financings.
<PAGE>
15
MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q
FOR THE QUARTER ENDED OCTOBER 31, 1996
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
The Company has a Loan Agreement pursuant to which Syntex Laboratories, Inc.
agreed to lend $5.4 million to the Company to finance working capital
requirements and capital expenditures designed to increase the production
capacity of the Company's Cartrix-TM- syringe system. The outstanding loan
balance bears interest at the same rate of interest the Company pays on its
current commercial line of credit facility. Principal payments continued for
the calendar quarter ended September 30, 1996 at the minimum of $200,000 per
quarter reducing the outstanding loan balance to $388,400 at October 31, 1996.
To assist in the Company's previously reported capital investment program,
the Company entered into a loan agreement with The CIT Group/Equipment
Financing, Inc. ("CIT") in May 1995. This arrangement will consist of a
series of loans for the acquisition of production molds, high speed component
preparation and filling equipment and facility renovations not to exceed a
maximum aggregate of $3 million. Loan proceeds to date totalled $1.7 million
of which $1.3 million was outstanding at October 31, 1996 at a weighted
average interest rate of 8.8%.
Although management believes that the Company should be able to service its
indebtedness and comply with the financial convenants of the Term Loan,
management recognizes that the Company must achieve higher operating results,
obtain external financing through strategic partners or alliances with
entities interested in and with the resources to support the Company's
research programs and activities and/or obtain additional equity financing.
No assurances can be given that the Company will be successful in achieving
higher operating results, finding strategic partners or alliances, or raising
additional capital.
BALANCE SHEET REVIEW
Working capital was $4,916,000 at October 31, 1996 compared with $4,204,200
at July 31, 1996 representing an increase of $711,800 (17%). This increase
resulted primarily from a significant decline in short-term borrowings under
the Company's credit facility with MLBFS.
Cash provided by operating activities aggregated approximately $4 million for
the quarter ended October 31, 1996. Receivables decreased $2.6 million (35%)
during the current quarter from the liquidation of fiscal 1996 year end
receivables coupled with improved collection procedures. Inventories
decreased $557,600 (11%) due to the completion of shipments
<PAGE>
16
MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q
FOR THE QUARTER ENDED OCTOBER 31, 1996
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
under DoD orders in September 1996 for the new Diazepam auto-injector
launched in fiscal 1996. In addition, the Company has implemented several
programs designed to lower on-hand inventory levels, which has improved cash
flow.
During the current quarter, note payable to bank decreased $3.2 million due
to liquidation of high fiscal year 1996 receivable balances coupled with
improved collection efforts associated with first quarter product deliveries.
Note payable to Syntex decreased $200,000 in line with scheduled quarterly
payments discussed above under "Liquidity and Capital Resources."
Capital expenditures aggregated $497,900 during the first quarter of fiscal
1997 which consisted primarily of improvements designed to automate and
validate current production processes at the Company's St. Louis
manufacturing facility. In addition to capital expenditures required to
automate the Company's aseptic filling, assembly and final packaging
processes and to fund new product development, the Company expects to incur
additional expenditures to introduce new and expand existing product lines
acquired from Brunswick. The Company's working capital following the merger
plus the revenue from sales of existing products may not be sufficient to
meet such capital expenditures as presently structured. Management
recognizes that the Company must generate additional resources, whether
through internal or external sources, to meet its objectives or consider
modifications or reductions to its programs. Shareholder's equity increased
$700,600 on the strength of net income ($658,300) in the quarter ended
October 31, 1996 coupled with the issuance of stock under employee stock
options.
<PAGE>
17
MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q
FOR THE QUARTER ENDED OCTOBER 31, 1996
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
Financial covenants under the Term Loan and the revolving credit loan
described herein require the Company to maintain certain levels of net worth
and debt to EBITDA ratios and limit the Company's capital expenditures in any
one fiscal year to amounts varying from $2 million to $3.5 million. In
addition, covenants under such indebtedness restrict the ability of the
Company to pay any dividends on its common stock.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its annual meeting of stockholders on November 20, 1996
following the end of the first quarter. A total of 2,877,157 shares of
common stock were voted at the annual meeting in person or by proxy. The
following matters were voted on at that meeting:
(1) Approval of an Agreement and Plan of Merger and the Transactions
Contemplated Thereby - - The proposal to was approved by a vote of
2,192,657 shares for; 329,336 shares against, and 920 shares as
abstentions and broker non-votes.
(2) Election of Directors - - The nominees listed in the proxy statement
dated October 30, 1996 were elected to the terms of office as disclosed
therein as follows:
DIRECTOR VOTES FOR VOTES AGAINST
-------- --------- -------------
Bruce M. Dresner 2,802,541 74,616
Robert G. Foster 2,802,491 74,666
James H. Miller 2,802,261 74,896
E. Andrews Grinstead, III 2,802,491 74,666
David L. Lougee 2,802,390 74,767
(3) Ratification of Selection of Accountants - - The proposal to ratify the
selection of Price Waterhouse LLP as independent accountants for fiscal
year 1997 was approved by a vote of 2,865,046 shares for, 361 shares
against, and 11,750 shares as abstentions and broker non-votes.
<PAGE>
18
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
2.1 Agreement and Plan of Merger dated September 11, 1996
(incorporated by reference herein from Exhibit 6(a) to
Amendment No. 1 to Schedule 13D filed by Brunswick dated
September 13, 1996).
3.1 Amendment to First Amended and Restated Certificate of
Incorporation, dated November 20, 1996 (filed herewith).
4.1 Form of warrant to be issued by the Registrant to former
holders of Brunswick preferred stock (incorporated by
reference herein from Exhibit 4.1 to Form 8-K filed by
the Registrant dated December 5, 1996).
4.2 Forms of warrants assumed and to be issued by the
Registrant in connection with the merger with Brunswick
(filed herewith).
4.3 Form of warrant issued to the Estate of Stanley J.
Sarnoff, assumed by the Registrant (incorporated by
reference herein from Exhibit 4b to Schedule 13D filed by
Brunswick dated April 15, 1996.
10.1 Credit Agreement, dated as of April 15, 1996, among
Brunswick, as the Borrower, Various Lenders and
Internationale Nederlanden (U.S.) Capital Corporation as
the Agent for the Lenders (incorporated by reference
herein from Exhibit 1 to Schedule 13D filed by ING (U.S.)
Investment Corporation dated December 2, 1996).
10.2 Warrant Purchase Agreement, dated as of April 15, 1996,
between Brunswick and Internationale Nederlanden (U.S.)
Capital Corporation (incorporated by reference herein
from Exhibit 2 to Schedule 13D filed by ING (U.S.)
Investment Corporation dated December 2, 1996).
10.3 Registration Rights Agreement, dated as of April 15,
1996, between Brunswick and Internationale Nederlanden
(U.S.) Capital Corporation (incorporated by reference
herein from Exhibit 3 to Schedule 13D filed by ING (U.S.)
Investment Corporation dated December 2, 1996).
<PAGE>
19
10.4 First Amendment to Credit Agreement, dated as of October
25, 1996, between Brunswick and Internationale
Nederlanden (U.S.) Capital Corporation (incorporated by
reference herein from Exhibit 4 to Schedule 13D filed by
ING (U.S.) Investment Corporation dated December 2, 1996).
10.5 First Amendment to Warrant Purchase Agreement, dated as
of October 25, 1996, between Brunswick and Internationale
Nederlanden (U.S.) Capital Corporation (incorporated by
reference herein from Exhibit 5 to Schedule 13D filed by
ING (U.S.) Investment Corporation dated December 2, 1996).
10.6 Assumption Agreement to the Credit Agreement, dated as of
November 20, 1996, between Meridian Medical Technologies,
Inc. and Internationale Nederlanden (U.S.) Capital
Corporation (incorporated by reference herein from
Exhibit 6 to Schedule 13D filed by ING (U.S.) Investment
Corporation dated December 2, 1996).
10.7 Assumption Agreement to the Warrant Purchase Agreement,
dated as of November 20, 1996, between Meridian Medical
Technologies, Inc. and Internationale Nederlanden (U.S.)
Capital Corporation (incorporated by reference herein
from Exhibit 7 to Schedule 13D filed by ING (U.S.)
Investment Corporation dated December 2, 1996).
10.8 $10,000,000 Term Note of Meridian Medical Technologies,
Inc. dated November 20, 1996 (incorporated by reference
herein from Exhibit 8 to Schedule 13D filed by ING (U.S.)
Investment Corporation dated December 2, 1996).
10.9 $15,000,000 Revolving Note of Meridian Medical
Technologies, Inc. dated November 20, 1996 (incorporated
by reference herein from Exhibit 9 to Schedule 13D filed
by ING (U.S.) Investment Corporation dated December 2,
1996).
10.10 Warrant Certificate for 90,912 Warrants of Meridian
Medical Technologies, Inc.- Certificate No.-1
(incorporated by reference herein from Exhibit 10 to
Schedule 13D filed by ING (U.S.) Investment Corporation
dated December 2, 1996).
10.11 Warrant Certificate for 83,579 Warrants of Meridian
Medical Technologies, Inc.-Certificate No.-1
(incorporated by reference herein from Exhibit 11 to
Schedule 13D filed by ING (U.S.) Investment Corporation
dated December 2, 1996).
<PAGE>
20
10.12 Employment agreement with James H. Miller, dated November
20, 1996 (filed herewith).
10.13 Form of Registration Rights Agreement with former
Brunswick stockholders (filed herewith).
(b) Reports on Form 8-K:
(a) On September 16, 1996, the Company filed a report on Form
8-K, pursuant to Item 5 thereof, to report the signing of
the merger agreement with Brunswick Biomedical
Corporation.
(b) On December 5, 1996, the Company filed a report on Form
8-K, pursuant to Item 2 thereof, to report the
consummation
<PAGE>
21
MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q
FOR THE QUARTER ENDED OCTOBER 31, 1996
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (CONTINUED)
of the previously announced merger. The report on Form
8-K included or referred the following financial
statements:
(1) Audited consolidated financial statements of Brunswick as
of June 30, 1996 and for the year ended, together with
the report of the independent accountants thereon, were
previously included on pages F-1 through F-28 of the
Registrant's definitive proxy statement dated October
30,1996.
(2) Audited consolidated financial statements of Brunswick as
of June 30, 1995 and 1994 and for the two years ended
June 30, 1995 and 1994, together with the report of the
independent public accountants thereon. (filed
therewith).
(3) Unaudited Interim Financial Statements of Brunswick for
the one month ended July 31, 1996 and 1995 and as of
October 31, 1996 and 1995 and for the quarters then ended
are not yet available and will be filed as an amendment
to the Form 8-K as soon as practicable, but not later
than 60 days after the date thereof.
(4) Unaudited pro forma combined financial information as of
July 31, 1996, giving effect to the merger, were
previously included on pages 50-55 of the Registrant's
Definitive Proxy Statement dated October 30, 1996.
<PAGE>
22
MERIDIAN MEDICAL TECHNOLOGIES, INC.
FORM 10-Q
FOR THE QUARTER ENDED OCTOBER 31, 1996
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.
MERIDIAN MEDICAL TECHNOLOGIES, INC.
-----------------------------------
Registrant
December 13, 1995 By: /s/JAMES H. MILLER
- ------------------- --------------------------
Date James H. Miller
President and
Chief Executive Officer
(Principal Executive Officer)
December 13, 1995 By: /s/JEFFREY W. CHURCH
- ------------------- -------------------------
Date Jeffrey W. Church
Senior Vice President - Finance
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
<PAGE>
Exhibit 3.1
SURVIVAL TECHNOLOGY, INC.
CERTIFICATE OF AMENDMENT
OF
FIRST AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
SURVIVAL TECHNOLOGY, INC., a corporation duly organized and existing
under the General Corporation Law of the State of Delaware (the "Corporation"),
DOES HEREBY CERTIFY AS FOLLOWS:
FIRST: The Board of Directors of the Corporation, by unanimous written
consent, in accordance with Section 141(f) of the General Corporation
Law of the State of Delaware, duly adopted a resolution in
accordance with Section 242 of the General Corporation Law of the
State of Delaware proposing, declaring advisable and recommending an
amendment to the First Amended and Restated Certificate of
Incorporation of the Corporation. The resolution setting forth the
proposed amendment is as follows:
NOW THEREFORE
BE IT
RESOLVED: That the Board of Directors of the Corporation hereby proposes
and declares advisable that, assuming Brunswick Biomedical
Corporation merges with and into the Corporation, then
immediately after the effective time of such merger Article I
of the First Amended and Restated Certificate of Incorporation
of the Corporation be amended so that it shall read:
ARTICLE I
NAME
---------
The name of the Corporation is Meridian Medical Technologies,
Inc. (the "Corporation").
SECOND: That the annual meeting of the stockholders of the Corporation was
duly called and held, upon notice in accordance with Section 222 of
the General Corporation Law of the State of Delaware at which meeting
the necessary number of shares were voted in favor of said amendment.
<PAGE>
THIRD: The aforesaid amendment was duly adopted in accordance with the
applicable provisions of Section 242 of the General Corporation Law of
the State of Delaware.
FOURTH: This certificate of amendment is to become effective at 4:00 p.m. on
November 20, 1996.
IN WITNESS WHEREOF, the undersigned, SURVIVAL TECHNOLOGY, INC., has
caused this Certificate of Amendment of First Amended and Restated Certificate
of Incorporation to be executed on its behalf by its Chief Financial Officer and
Senior Vice President -- Finance and attested by its Assistant Secretary as of
this day of November, 1996.
---
SURVIVAL TECHNOLOGY, INC.
By: /s/ JEFFREY W. CHURCH
---------------------------------
Jeffrey W. Church
Chief Financial Officer
and Senior Vice President --
Finance
Attest: /s/ J. CHONTELLE WOODWARD
----------------------------
J. Chontelle Woodward
Assistant Secretary
<PAGE>
Exhibit 4.2
THE WARRANTS REPRESENTED HEREBY HAVE BEEN ACQUIRED BY THE
HOLDER NAMED HEREON FOR HIS OWN ACCOUNT FOR INVESTMENT
WITH NO INTENTION OF MAKING OR CAUSING TO BE MADE ANY
PUBLIC DISTRIBUTION OF ALL OR ANY PORTION THEREOF; THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") OR APPLICABLE STATE
SECURITIES LAWS AND MAY NOT BE TRANSFERRED
OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED
UNDER THE ACT AND SUCH LAWS OR (1) REGISTRATION UNDER
THE ACT AND THE APPLICABLE STATE SECURITIES LAWS
IS NOT REQUIRED AND (2) AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY IS FURNISHED TO THE
COMPANY TO THE EFFECT THAT REGISTRATION UNDER THE ACT
AND THE APPLICABLE STATE LAWS IS NOT REQUIRED.
WARRANT TO PURCHASE COMMON STOCK OF
MERIDIAN MEDICAL TECHNOLOGIES, INC.
Warrant No. Shares
---------- ----------
This certifies that, for value received,
(the "HOLDER") is entitled to subscribe for and purchase up to
shares (subject to adjustment from time to time pursuant to the provisions of
Section 5 hereof) of fully paid and nonassessable Common Stock of MERIDIAN
MEDICAL TECHNOLOGIES, INC., a Delaware corporation (the "COMPANY"), at the
Warrant Price (as defined in Section 2 hereof), subject to the provisions and
upon the terms and conditions hereinafter set forth.
As used herein, the term "COMMON STOCK" shall mean the Company's
presently authorized Common Stock, $.10 par value per share, and any stock
into or for which such Common Stock may hereafter be converted or exchanged.
This Warrant was originally one of a series of substantially identical
warrants (the "Warrants") issued by Brunswick Biomedical Corporation ("BBC")
pursuant to those certain Preferred Stock and Warrant Purchase Agreements
dated March 14, 1996 (the "Purchase Agreements") in connection with the offer
and sale of the Series D and E Preferred Stock and was assumed by the Company
on November 20, 1996 when BBC merged with and into the Company (the "Merger").
<PAGE>
- 2 -
1. TERM OF WARRANT. The purchase right represented by this Warrant
is exercisable, in whole or in part, at any time during the period beginning
on March 14, 1996 (the "INITIAL EXERCISE DATE") and ending on March 14, 2001.
2. WARRANT PRICE. The exercise price of this Warrant is $8.33 per
share, subject to adjustment from time to time pursuant to the provisions of
Section 5 hereof (the "WARRANT PRICE").
3. METHOD OF EXERCISE.
Subject to Section 1 hereof, the purchase right represented by this
Warrant may be exercised by the holder hereof, in whole or in part, by the
surrender of this Warrant (with the notice of exercise form attached hereto
as EXHIBIT 1 duly executed) at the principal office of the Company and by the
payment to the Company, by check or wire transfer, of an amount equal to the
Warrant Price per share multiplied by the number of shares then being
purchased. The Company agrees that the shares so purchased shall be deemed
to be issued to the holder hereof as the record owner of such shares as of
the close of business on the date on which this Warrant shall have been
surrendered and payment made for such shares as aforesaid. In the event of
any exercise of this Warrant, certificates for the shares of stock so
purchased shall be delivered to the holder hereof within 15 days thereafter
and, unless this Warrant representing the portion of the shares, if any, with
respect to which this Warrant has been fully exercised or expired, a new
Warrant representing the portion of the shares, if any, with respect to which
this Warrant shall not then have been exercised, shall also be issued to the
holder hereof within such 15 day period.
4. STOCK FULLY PAID; RESERVATION OF SHARES. All Common Stock which
may be issued upon the exercise or conversion of this Warrant will, upon
issuance, be fully paid and nonassessable, and free from all taxes, liens and
charges with respect to the issue thereof. During the period within which
the rights represented by this Warrant may be exercised, the Company will at
all times have authorized, and reserved for the purpose of the issuance upon
exercise of the purchase rights evidenced by this Warrant, a sufficient
number of shares of its Common Stock to provide for the exercise of the
rights represented by this Warrant.
5. ADJUSTMENTS.
(a) RECLASSIFICATION, CONSOLIDATION OR MERGER. In case of any
reclassification or change of outstanding securities of the class issuable
upon exercise of this Warrant
<PAGE>
- 3 -
(other than a change in par value, or from par value to no par value, or from
no par value to par value, or as a result of a subdivision or combination),
or in case of any consolidation or merger of the Company with or into another
corporation, other than a merger with another corporation in which the
Company is a continuing corporation and which does not result in any
reclassification or change of outstanding securities issuable upon exercise
of this Warrant, or in case of any sale of all or substantially all of the
assets of the Company, the Company, or such successor or purchasing
corporation, as the case may be, shall execute a new Warrant, providing that
the holder of this Warrant shall have the right to exercise such new Warrant
and procure upon such exercise, in lieu of each share of Common Stock
theretofore issuable upon exercise of this Warrant, the kind and amount of
shares of stock, other securities, money and property receivable upon such
reclassifications, change, consolidation, or merger by a holder of one share
of Common Stock. Such new Warrant shall provide for adjustments which shall
be as nearly equivalent as may be practicable to the adjustments provided for
in this Section 5. No consolidation or merger of the Company with or into
another corporation referred to in the first sentence of this paragraph (a)
shall be consummated unless the successor or purchasing corporation referred
to above shall have agreed to issue a new Warrant as provided in this Section
5. The provisions of this subsection (a) shall similarly apply to successive
reclassifications, changes, consolidations, mergers and transfers.
(b) SUBDIVISION OR COMBINATION OF SHARES. If the Company at any
time while this Warrant remains outstanding and unexpired shall subdivide or
combine its Common Stock, the Warrant Price shall be proportionately
decreased in the case of a subdivision or increased in the case of a
combination.
(c) STOCK DIVIDENDS. If the Company at any time while this
Warrant is outstanding and unexpired shall pay a dividend with respect to
Common Stock payable in, or make any other distribution with respect to,
Common Stock (except any distribution specifically provided for in the
foregoing subparagraphs (a) or (b)) then the Warrant Price shall be adjusted,
from and after the date of determination of shareholders entitled to receive
such dividend or distribution, to that price determined by multiplying the
Warrant Price in effect immediately prior to such date of determination by a
fraction (a) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such dividend or distribution
and (b) the denominator of which shall be the total number of shares of
Common Stock outstanding immediately after such dividend or distribution.
<PAGE>
- 4 -
(d) ADJUSTMENT OF NUMBER OF SHARES. Upon each adjustment in the
Warrant Price pursuant to Section 5(a), (b) or (c), the number of shares of
Common Stock purchasable hereunder shall be adjusted, to the nearest whole
share, to the product obtained by multiplying the number of shares
purchasable immediately prior to such adjustment in the Warrant Price by a
fraction, the numerator of which shall be the Warrant Price immediately prior
to such adjustment and the denominator of which shall be the Warrant Price
immediately thereafter.
6. NOTICE OF ADJUSTMENTS. Whenever any Warrant Price shall be
adjusted pursuant to Section 5 hereof, the Company shall prepare a
certificate signed by its chief financial officer setting forth, in
reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated, the Warrant
Price after giving effect to such adjustment and the number of shares then
purchasable upon exercise of this Warrant, and shall cause copies of such
certificate to be mailed (by first class mail, postage prepaid) to the holder
of this Warrant at the address specified in Section 10(d) hereof, or at such
other address as may be provided to the Company in writing by the holder of
this Warrant.
7. FRACTIONAL SHARES. No fractional shares of Common Stock will be
issued in connection with any exercise hereunder, but in lieu of such
fractional shares the Company shall make a cash payment therefor upon the
basis of the Warrant Price then in effect.
8. COMPLIANCE WITH THE ACT.
(a) COMPLIANCE WITH THE ACT. The holder of this Warrant, by
acceptance hereof, agrees that this Warrant and the shares of Common Stock to
be issued upon exercise hereof are being acquired for such holder's own
account for investment with no intention of making or causing to be made any
public distribution of all or any portion thereof; and such securities may
not be pledged, sold or in any other way transferred in the absence of an
effective registration statement for such securities under the Act and
registration of such securities under applicable state securities laws or (i)
registration under applicable state securities laws is not required and (ii)
an opinion of counsel satisfactory to the Company is furnished to the Company
to the effect that registration under the Act is not required.
<PAGE>
- 5 -
9. TRANSFER AND EXCHANGE OF WARRANT.
(a) TRANSFER. This Warrant may be transferred or succeeded to by
any person; PROVIDED HOWEVER, that the Company is given written notice by the
transferee at the time of such transfer stating the name and address of the
transferee and identifying the securities with respect to which such rights
are being assigned.
(b) EXCHANGE. Subject to compliance with the terms hereof, this
Warrant and all rights hereunder are transferable, in whole or in part, at
the office of the Company by the holder hereof in person or by duly
authorized attorney, upon surrender of this Warrant properly endorsed. Each
taker and holder of this Warrant, by taking or holding the same, consents and
agrees that this Warrant, when endorsed in blank, shall be deemed negotiable;
provided, that the last holder of this Warrant as registered on the books of
the Company may be treated by the Company and all persons dealing with this
Warrant as the absolute owner hereof for any purposes and as the person
entitled to exercise the rights represented by this Warrant or to transfer
hereof on the books of the Company, any notice to the contrary
notwithstanding, unless and until such holder seeks to transfer registered
ownership of this Warrant on the books of the Company and such transfer is
effected.
10. MISCELLANEOUS.
(a) NO RIGHTS AS SHAREHOLDER. Except as provided in the
Agreement, no holder of the Warrant or Warrants shall be entitled to vote or
receive dividends or be deemed the holder of Common Stock or any other
securities of the Company which may at any time be issuable on the exercise
hereof for any purpose, nor shall anything contained herein be construed to
confer upon the holder of this Warrant, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors
or upon any matter submitted to shareholders at any meeting thereof, or to
give or withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of stock, change of par
value or change of stock to no par value, consolidation, merger, conveyance
or otherwise), or to receive notice of meetings, or to receive dividends or
subscription rights or otherwise until the Warrant or Warrants shall have
been exercised and the shares purchasable upon the exercise hereof shall have
become deliverable, as provided herein.
(b) REPLACEMENT. On receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Warrant
and, in the case of
<PAGE>
- 6 -
loss, theft or destruction, on delivery of an indemnity agreement, or bond
reasonably satisfactory in form and amount to the Company or, in the case of
mutilation, on surrender and cancellation of this Warrant, the Company, at
its expense, will execute and deliver, in lieu of this Warrant, a new Warrant
of like tenor.
(c) NOTICE OF CAPITAL CHANGES. In case:
(i) the Company shall declare any dividend or distribution
payable to the holder of its Common Stock;
(ii) there shall be any capital reorganization or
reclassification of the capital stock of the Company, or consolidation or
merger of the Company with, or sale of all or substantially all of its assets
to, another corporation or business organization; or
(iii) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of said cases, the Company shall give the holder of
this Warrant written notice, in the manner set forth in subparagraph (d)
below, of the date on which a record shall be taken for such dividend, or
distribution or for determining shareholders entitled to vote upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up and of the date when any such transaction shall
take place, as the case may be. Such written notice shall be given at least
30 days prior to the transaction in question and not less than 20 days prior
to the record date in respect thereof.
(d) NOTICE. Any notice given to either party under this Warrant
shall be in writing, and any notice hereunder shall be deemed to have been
given upon the earlier of delivery thereof by hand delivery, by courier, or
by standard form of telecommunication or three (3) business days after the
mailing thereof if sent registered mail with postage prepaid, addressed to
the Company at its principal executive offices and to the holder at its
address set forth in the Company's books and records or at such other address
as the holder may have provided to the Company in writing.
(e) NO IMPAIRMENT. The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed
<PAGE>
- 7 -
hereunder by the Company, but will at all times in good faith assist in the
carrying out of all the provisions of the Warrant.
(f) REGISTRATION RIGHTS. The Common Stock issued upon exercise
of this Warrant shall be registered for resale by the Holder in accordance
with the Registration Rights Agreement signed by the Holder in connection
with the Merger.
(g) GOVERNING LAW. This Warrant shall be governed by and
construed under the laws of the State of Delaware.
IN WITNESS WHEREOF, this Warrant is executed as of this day of
, 1996.
MERIDIAN MEDICAL TECHNOLOGIES,
INC.
By: -----------------------------
Title: -----------------------------
<PAGE>
- 8 -
EXHIBIT I
NOTICE OF EXERCISE
TO: MERIDIAN MEDICAL TECHNOLOGIES, INC.
1. The undersigned hereby elects to purchase shares of Common
Stock of MERIDIAN MEDICAL TECHNOLOGIES, INC. pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase price of such
shares in full.
2. Please issue a certificate or certificates representing said
shares of Common Stock in the name of the undersigned or in such other name
as is specified below:
----------------------------------------
(Name)
----------------------------------------
----------------------------------------
(Address)
3. The undersigned represents that the aforesaid shares of Common
Stock are being acquired for the account of the undersigned for investment
and not with a view to, or for resale in connection with, the distribution
thereof and that the undersigned has no present intention of distributing or
reselling such shares.
--------------------------------------
Signature
<PAGE>
THE WARRANTS REPRESENTED HEREBY HAVE BEEN ACQUIRED BY THE HOLDER
NAMED HEREON FOR HIS OWN ACCOUNT FOR INVESTMENT
WITH NO INTENTION OF MAKING OR CAUSING TO BE MADE ANY
PUBLIC DISTRIBUTION OF ALL OR ANY PORTION THEREOF; THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") OR APPLICABLE STATE
SECURITIES LAWS AND MAY NOT BE TRANSFERRED
OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED
UNDER THE ACT AND SUCH LAWS OR (1) REGISTRATION UNDER
THE ACT AND THE APPLICABLE STATE SECURITIES LAWS
IS NOT REQUIRED AND (2) AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY IS FURNISHED TO THE
COMPANY TO THE EFFECT THAT REGISTRATION UNDER THE ACT
AND THE APPLICABLE STATE LAWS IS NOT REQUIRED.
COMMON STOCK PURCHASE WARRANT
To Subscribe for Shares of
Common Stock
of
Meridian Medical Technologies, Inc.
THIS CERTIFIES THAT, for value received, (the "holder"), is entitled
to subscribe for and purchase from Meridian Medical Technologies, Inc. (the
"Company") up to ( ) shares of the Company's Common
Stock, $0.10 par value [as defined in Section 7(a), the "Stock"] at a price
of $8.33 per share (with adjustments provided for herein, the "Warrant
Price") at any time until April 22, 2000, subject to the terms and conditions
stated in this Warrant (the "Warrant").
1. EXERCISE
The rights represented by this Warrant may be exercised by the holder
in whole or in part by the surrender of this Warrant and delivery of an
executed Exercise Notice in the form attached hereto to the Company at its
principal office at any time or times within the period specified above,
accompanied by payment for the Stock so subscribed for by certified or bank
check. In the event of the partial exercise of the rights represented by
this Warrant, a new Warrant representing the number of shares as to which
this Warrant
<PAGE>
- 2 -
shall not have been exercised shall be promptly issued to the holder. In any
event, such a new Warrant and a certificate or certificates for the Stock
purchased shall be delivered by the Company to the holder not later than ten
days after payment is made for the purchased Stock.
2. VALIDITY OF ISSUE
The Company warrants and agrees that all shares of Stock which may be
issued upon the exercise of the rights represented by this Warrant will, upon
issuance, be fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issue thereof. The Company further warrants and
agrees that during the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized and
reserved a sufficient number of shares of Stock to provide for the exercise
of the rights represented by this Warrant.
3. INVESTMENT REPRESENTATION
The holder by accepting this Warrant represents that the Warrant is
acquired for the holder's own account for investment purposes and not with a
view to any offering or distribution and that the holder has no present
intention of selling or otherwise disposing of the Warrant or the underlying
shares of Stock. Upon exercise, the holder will confirm, in respect of
securities obtained upon such exercise, that it is acquiring such securities
for its own account and not with a view to any offering or distribution in
violation of applicable securities laws.
4. ADJUSTMENTS TO PREVENT DILUTION
a. If and whenever the Company shall issue or sell any shares of
Stock for a consideration per share less than the Warrant Price in effect
immediately prior to the time of such issue or sale, then upon such issue or
sale, the Warrant Price shall be recalculated (and if applicable reduced, but
in no event thereby increased) to a price (calculated to the nearest cent)
determined by dividing (i) an amount equal to the sum of (aa) the number of
shares of Stock outstanding immediately prior to such issue or sale
multiplied by the then existing Warrant Price, and (bb) the consideration, if
any, received by the Company upon such issue or sale by (ii) the total number
of shares of Stock outstanding immediately after such issue or sale. For
purposes of this Section 4, the phrase "Convertible Securities" (defined
below) shall not include shares of Stock issued or issuable to officers,
directors or employees of, or consultants to, the Company pursuant to a stock
purchase or option plan or other employee or director stock incentive or
<PAGE>
- 3 -
compensation programs approved by the Board of Directors.
(1) If at any time the Company shall in any manner grant any options
or rights to subscribe for or to purchase Stock or securities
convertible into Stock ("Convertible Securities") or shall issue or
sell any Convertible Securities and the price per share for which
Stock is issuable upon the exercise of such rights or options or upon
conversion or exchange of such Convertible Securities [determined by
dividing (i) the total amount, if any, received or receivable by the
Company as consideration for the granting of such rights or options or
for the issuance or sale of Convertible Securities, plus the minimum
aggregate amount of additional consideration payable to the Company
upon the exercise of such rights or options, plus, in the case of such
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the conversion or exchange
thereof, by (ii) the total maximum number of shares of Stock issuable
upon the exercise of such rights or options or upon the conversion or
exchange of such Convertible Securities] shall be less than the
Warrant Price in effect immediately prior to the time of the granting
of such rights or options or the issuance or sale of such Convertible
Securities, then the total maximum number of shares of Stock issuable
upon the exercise of such rights or options or upon conversion or
exchange of such Convertible Securities shall (as of the date of
granting of such rights or options or the issuance or sale of such
Convertible Securities) be deemed to be outstanding and to have been
issued for such price per share. No further adjustments of the
Warrant Price shall be made upon the actual issue of such Stock or of
such Convertible Securities upon exercise of such rights or options or
upon the actual issue of such Stock upon conversion or exchange of
such Convertible Securities. Unless a provision of any other paragraph
of this Section 4 controls, if the price per share for which Stock is
issuable upon exercise of such rights or options or upon conversion or
exchange of such Convertible Securities shall change at any time, the
Warrant Price then in effect shall forthwith be adjusted or readjusted
to such Warrant Price as would have obtained had the adjustments made
upon the issuance or sale of such rights, options or Convertible
Securities been made upon the basis of (a) the issuance of the number
of shares of Stock theretofore actually delivered (and the total
<PAGE>
- 4 -
consideration received therefor) upon the exercise of such options or
rights or upon the conversions or exchange of such Convertible
Securities, and (b) the assumption that the remaining outstanding
options, rights, or Convertible Securities were originally issued at
the time of such change. On the expiration of any such option or right
or the termination of any such right to convert or exchange such
Convertible Securities, the Warrant Price then in effect shall
forthwith be readjusted to such Warrant Price as would have obtained
had the adjustments made upon the issuance or sale of such rights or
options or Convertible Securities been made upon the basis of (a) the
issuance of the number of shares of Stock theretofore actually
delivered (and the total consideration received therefor) upon the
exercise of such rights or options or upon the conversions or exchange
of such Convertible Securities and (b) the issuance or sale of any such
options, rights or Convertible Securities as remain outstanding after
said expiration or termination.
(2) If the Company shall declare a dividend, or make any
further distribution upon any capital stock of the Company, payable
in Stock or Convertible Securities, then any Stock or Convertible
Securities (as the case may be) issuable in payment of such
dividend or distribution shall be deemed to have been issued or
sold without consideration; and in addition to the adjustment of
the Warrant Price required by this Section 4(a), the number of
shares of Stock issuable upon exercise of this Warrant shall be
proportionately increased so that the holder upon exercise of this
Warrant shall be entitled to receive the same number of shares of
Stock which it would have received if it had exercised this Warrant
in full immediately prior to the date for determining stockholders
entitled to receive such dividend or distribution.
(3) If any shares of Stock or Convertible Securities or any
rights or options to purchase any such Stock or Convertible
Securities shall be issued for cash, then the consideration
received shall be deemed to be the amount received by the Company,
without deduction therefrom of any expenses incurred or any
underwriting commissions or concessions paid or allowed by the
Company in connection therewith. In case any shares of Stock or
Convertible Securities or any rights or options to purchase any
such Stock or Convertible Securities shall be issued for a
consideration other than cash, the amount of the consideration
other than
<PAGE>
- 5 -
cash received by the Company shall be deemed to be the
value of such consideration as determined by the Board of
Directors of the Company, without deduction of any expenses
incurred or any underwriting commissions or concessions paid
or allowed by the Company in connection therewith.
(4) If the Company shall take a record of the holders
of its Stock for the purpose of entitling them (i) to
receive a dividend or other distribution payable in Stock or
in Convertible Securities, or (ii) to subscribe for or
purchase Stock or Convertible Securities, then for purposes
of this Warrant such record date shall be deemed to be the
date of the issue or sale of the shares of Stock deemed to
have been issued or sold upon the declaration of such
dividend or the making of such other distribution or the
date of the granting of such right of subscription or
purchase, as the case may be.
b. If the Company shall declare a dividend upon any Stock of the
Company payable otherwise than as a cash dividend paid out of current
earnings, or in Stock or Convertible Securities, then the Warrant Price in
effect immediately prior to the declaration of such dividend shall be reduced
by an amount equal to the fair value of the dividend per share of the Stock
outstanding at the time of such declaration as determined by the Board of
Directors of the Company. Such reduction shall take effect as of the date on
which a record is taken for the purpose of such dividend or, if a record is
not taken, the date as of which the holders of Stock of record entitled to
such dividend are to be determined.
c. If the Company shall at any time subdivide its outstanding shares
of Stock into a greater number of shares, then the Warrant Price in effect
immediately prior to such subdivision shall be proportionately reduced, and
the number of shares issuable upon exercise of this Warrant shall be
proportionately increased; and conversely, in case the outstanding shares of
Stock of the Company shall be combined into a smaller number of shares, the
Warrant Price in effect immediately prior to such combination shall be
proportionately increased and the number of shares issuable proportionately
reduced.
d. Except as provided in paragraph (c) of this Section, if any
capital reorganization or reclassification of the capital stock of the
Company, or consolidation or merger of the Company with another corporation,
or the sale of all or substantially all of its assets or of any successor
corporation's property and assets to any other corporation or
<PAGE>
- 6 -
corporations (any such corporation being included within the meaning of the
term "successor corporation") shall be effected, then as a condition of such
recapitalization, reclassification, consolidation, merger, or conveyance,
lawful and adequate provision shall be made whereby the holder shall
thereafter have the right to purchase and receive upon the basis and upon the
terms and conditions specified in this Warrant and in lieu of the shares of
Stock of the Company immediately theretofore purchasable and receivable upon
the exercise of the right represented hereby, such shares of stock,
securities or assets as may be issued or payable with respect to or in
exchange for a number of outstanding shares of such Stock equal to the number
of shares of such Stock immediately theretofore purchasable and receivable
upon the exercise of the rights represented hereby had such recapitalization,
reclassification, consolidation, merger or conveyance not taken place, and in
any such case appropriate provisions shall be made with respect to the rights
and interests of the holder of this Warrant to the end that the provisions
hereof (including without limitation provisions for adjustment of the warrant
price and of the number of shares purchasable upon the exercise of this
warrant) shall thereafter be applicable, as nearly as may be, in relation to
any shares of stock, securities or assets thereafter deliverable upon the
exercise hereof. Except as hereinafter provided, the Company shall not
effect any consolidation or merger unless prior to the consummation thereof
the successor corporation shall assume by written instrument executed and
mailed to the holder at its address registered on the books of the Company
the obligation to deliver to the holder such shares of stock, securities or
assets as, in accordance with the foregoing provisions, such holder may be
entitled to purchase. Notwithstanding the foregoing, in the event of a
merger or consolidation in which the Company is not the surviving entity, if
the Company concludes that it will be unable to satisfy the conditions of
this paragraph without a material adverse effect on the terms of such
proposed transaction, then the Company shall have the option, prior to or
contemporaneously with the closing of such merger or consolidation, to
purchase the Warrant from the holder at its then fair value, having regard to
both the spread between the Warrant Price and the value of the consideration
to be received in the transaction and the remaining term of the Warrant. The
Company and the holder of the Warrant shall agree on such fair value or, in
the event they are unable to agree, shall submit the question of fair value
to binding arbitration before a single arbitrator sitting in Boston,
Massachusetts, under the commercial rules of the American Arbitration
Association (any cost of arbitration to be borne by the Company).
<PAGE>
- 7 -
e. Upon any adjustment of the Warrant Price, then and in each such
case the Company shall give written notice thereof, by first class mail,
postage prepaid, addressed to the holder of this Warrant at its address
registered on the books of the Company, which notice shall state the Warrant
Price resulting from such adjustment and the increased or decreased, if any,
number of shares purchasable at such price upon the exercise of this Warrant,
setting forth in reasonable detail the method of calculation and the facts
upon which such calculation is based.
5. NOTICE OF REORGANIZATIONS, ETC.
In case at any time:
a. The Company shall declare any dividend upon its Stock whether
payable in cash, property or Stock or make any distribution to the holders of
its Stock;
b. there shall be any capital reorganization, or reclassification of
the capital stock of the Company, or consolidation or merger of the Company
with another corporation; or
c. there shall be a voluntary or involuntary dissolution, liquidation
or winding up of the Company;
then, in each one or more of said cases, the Company shall give at least 20
days' prior written notice, by first class mail, postage prepaid, addressed
to the holder at its address registered on the books of the Company of (i)
the date on which the books of the Company shall close or a record shall be
taken for purposes of ascertaining which shareholders will be entitled to
participate in such dividend or distribution or will be entitled to vote on
such reclassification, reorganization, consolidation, merger, dissolution,
liquidation or winding up, as the case may be; (iii) the date on which the
vote shall be taken concerning such reclassification, reorganization,
consolidation, merger, dissolution, liquidation or winding up, as the case
may be; and (ii) the date on which such dividend or distribution is to be
paid or such reclassification, liquidation or winding up, as the case may be,
is to be effective. Such notice shall also specify the date as of which the
holders of Stock of record shall participate in said dividend or distribution
or shall be entitled to exchange their Stock for securities or other property
deliverable upon such reorganization, reclassification, consolidation,
merger, dissolution, liquidation, or winding up, as the case may be.
<PAGE>
- 8 -
6. ISSUANCE OF ADDITIONAL STOCK
The Company shall give to the holder at least 20 days' prior written
notice, by first class mail, postage prepaid, addressed to the holder at its
address registered on the books of the Company, of the record date for
determining the holders of Stock who shall be granted rights as a class to
subscribe for or to purchase, or any options for the purchase of, Stock or
Convertible Securities, to the end that the holder may exercise its rights to
acquire Stock under this Warrant, by delivery of an executed Exercise Notice
in accordance with Section 1 prior to said record date, and may thereby
receive the same rights as other holders of Stock on said record date.
7. MISCELLANEOUS
a. As used herein the term "Stock" shall mean and include the
Company's presently authorized Common Stock, $.10 par value, and stock of any
other class into which such presently authorized Stock may hereafter be
changed. For the purposes of Sections 4, 5, and 6, the term "Stock" shall
also include any capital stock of any class of the Company hereafter
authorized which shall not be limited to a fixed sum or percentage in respect
of the rights of the holders thereof to participate in dividends or in the
distribution of assets upon the voluntary or involuntary liquidation,
dissolution or winding up of the Company.
b. This Warrant shall not entitle the holder to any voting rights or
other rights as a stockholder of the Company, or to any other rights
whatsoever except the rights herein expressed, and no cash dividend paid out
of earnings or surplus or interest shall be payable or accrue in respect of
this Warrant or the interest represented hereby or the shares which may be
subscribed for any purchased hereunder until and unless and except to the
extent that the rights represented by this Warrant shall be exercised.
c. This Warrant is exchangeable, upon the surrender hereof at the
office or agency of the Company, for new Warrants of like tenor representing
in the aggregate the right to subscribe for and purchase the number of shares
which may be subscribed for and purchased hereunder, each of such new
Warrants to represent the right to subscribe for and purchase each number of
shares as shall be designated by said holder at the time of such surrender.
8. TRANSFER AND REGISTRATION
a. If any proposed transfer, in whole or in part, of this Warrant or
the Stock issuable upon exercise of this
<PAGE>
- 9 -
Warrant might reasonably involve a public offering of the same contrary to
the investment representations in Section 3, the Company may require as a
condition precedent to such transfer, an opinion of counsel, satisfactory to
it, that the proposed transfer will not involve a public offering which is
required to be registered under the Securities Act of 1933. Subject to the
foregoing, this Warrant and all rights hereunder is transferable, in whole or
in part, on the books of the Company to be maintained for such purpose, upon
surrender of this Warrant at the principal office of the Company, together
with a written assignment of this Warrant duly executed by the holder or its
agent or attorney.
b. This Warrant and the name and address of the holder have been
registered in a Warrant Register that is kept at the principal office of the
Company, and the Company may treat the holder so registered as the absolute
owner of this Warrant for all purposes.
(c) The Common Stock issued upon exercise of this Warrant shall be
registered for resale by the Holder in accordance with the Registration
Rights Agreement signed by the Holder in connection with the Merger.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
by its President on this day of , 199 .
MERIDIAN MEDICAL TECHNOLOGIES, INC.
By
-------------------------------
James H. Miller
President
<PAGE>
- 10 -
ASSIGNMENT
FOR VALUE RECEIVED hereby sells, assigns and transfers all of the
rights of the undersigned under the within Warrant, with respect to the
number of shares of the Common Stock covered thereby set forth hereinbelow,
unto
Social Security
or Federal No.
Name of Identification of
Assignee Address Number Shares
- -------- ------- --------------- ------
Signature:
----------------------------------
Address:
----------------------------------
----------------------------------
----------------------------------
Date:
----------------------------------
<PAGE>
- 11 -
EXERCISE NOTICE
TO: Meridian Medical Technologies, Inc.
The undersigned owner of the accompanying Warrant hereby irrevocably
exercises the option to purchase shares of Common Stock in
accordance with the terms of such Warrant, directs that the shares issuable
and deliverable upon such purchase (together with any check for a fractional
interest) be issued in the name of and delivered to the undersigned, and
makes payment in full therefor at the Warrant Price provided in such
Warrant.
COMPLETE FOR REGISTRATION OF SHARES OF COMMON STOCK ON THE STOCK
TRANSFER RECORDS MAINTAINED BY COMPANY:
-------------------------------------------------------
Name of Warrant Holder
-------------------------------------------------------
Address
-------------------------------------------------------
Social Security or Federal Identification Number
-------------------------------------------------------
Signature:
-------------------------------------------------------
Date:
<PAGE>
Exhibit 10.12
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT, dated as of November 20, 1996, is made by and
between JAMES H. MILLER ("Executive") and SURVIVAL TECHNOLOGY, INC.
("Company"), a Delaware corporation.
RECITALS
A. The Executive and the Company have entered into an employment
agreement, dated March 2, 1993 ("Former Agreement").
B. The Company and Brunswick Biomedical Corporation ("BBC") have agreed
that, as a condition to consummation of the merger of BBC with and into the
Company ("BBC Merger"), the Company and the Executive shall have entered into
an Employment Agreement in substitution for the Former Agreement and an
employment agreement between the Executive and BBC ("BBC Employment
Agreement").
C. The Board of Directors of the Company ("Board of Directors") has
determined that it is in the best interest of the Company's shareholders that
appropriate steps should be taken to reinforce and encourage the continued
dedication of the Executive to the Executive's assigned duties.
D. In order to induce the Executive to remain in the employ of the
Company and to induce the Executive to give the Executive's continued
attention and dedication to the Executive's assigned duties, the Company
desires to enter into, and the Executive wishes to accept, this Employment
Agreement in substitution for the Former Agreement and the BBC Employment
Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and intending to be legally bound hereby, the
Company and the Executive do hereby agree as follows:
ARTICLE 1.
DEFINITIONS
Whenever the following terms are used below in this Employment Agreement,
they shall have the meaning specified below, and no other, unless the context
clearly indicates
<PAGE>
to the contrary. The masculine pronoun shall include the feminine and
neuter, and the singular the plural, where the context so indicates.
1.1 Auditors. "Auditors" shall mean Price Waterhouse LLP, or an
independent certified public accounting firm that is duly selected by the
Board of Directors and is acceptable to the Executive.
1.2 Board of Directors. "Board of Directors" shall have the meaning
provided in the first recital of this Agreement.
1.3 Cause. "Cause" shall mean termination of employment with the
Company because of (i) the Executive's failure or refusal to perform
satisfactorily any duties reasonably required of the Executive by the Company
(other than by reason of disability), after reasonable demand for substantial
performance is delivered by the Company specifically identifying the manner
in which the Company believes the Executive has not performed his duties;
(ii) the commission by the Executive of a felony or the perpetration by the
Executive of a dishonest act against or breach of fiduciary duty toward the
Company; or (iii) any willful act or omission by the Executive which is
injurious in any material respect to the financial condition or business
reputation of the Company. For purposes of this Section 1.3, no act, or
failure to act, on the Executive's part shall be considered "willful" unless
done, or omitted to be done, by him not in good faith and without reasonable
belief that his act or omission was in the best interests of the Company.
1.4 Change of Control. A "Change of Control" shall be deemed to have
occurred if (i) any person or group of persons (as defined in Section 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended ("1934 Act"))
together with its affiliates, excluding employee benefit plans of the
Company, is or becomes, directly or indirectly, the "beneficial owner" (as
defined in Rule 13d-3 promulgated under the 1934 Act) of securities of the
Company representing 30% or more of the combined voting power of the
Company's then outstanding securities; or (ii) during the term of this
Agreement, as a result of a tender offer or exchange offer for the purchase
of securities of the Company (other than such an offer by the Company for its
own securities), or as a result of a proxy contest, merger, consolidation or
sale of assets, or as a result of any combination of the foregoing,
individuals who at the beginning of any two-year period during the term of
this Agreement constitute the Board of Directors, plus new
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<PAGE>
Directors whose election or nomination for election by the Company's
shareholders is approved by a vote of at least two-thirds of the Directors
still in office who were Directors at the beginning of such two-year period,
cease for any reason during such two-year period to constitute at least
two-thirds of the members of the Board of Directors; or (iii) the
shareholders of the Company approve a merger or consolidation of the Company
with any other corporation or entity regardless of which entity is the
survivor, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or being converted
into voting securities of the surviving entity) at least 80% of the combined
voting power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation and other than the
BBC Merger; or (iv) the shareholders of the Company approve a plan of
complete liquidation or winding-up of the Company or an agreement for the
sale or disposition by the Company of all or substantially all of the
Company's assets; or (v) any event which the Board of Directors determines
should constitute a Change of Control.
1.5 Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
1.6 Company. "Company" shall mean Survival Technology, Inc., a Delaware
corporation, its subsidiaries and affiliates, and any successor to its
business, whether direct or indirect, by purchase of securities, merger,
consolidation, purchase of all or substantially all of the Company's assets
or otherwise.
1.7 Date of Termination. "Date of Termination" shall mean (i) in the
case of the Executive's termination of employment by the Company for
Disability, thirty days after Notice of Termination is given, provided that
the Executive shall not have returned to the performance of the Executive's
assigned duties on a full-time basis during such thirty-day period; (ii) in
the case of termination of the Executive's employment by the Company for
Cause, the date of actual termination; or (iii) in the case of termination of
the Executive's employment by the Executive for Good Reason or termination
for any other reason, the date specified in the Notice of Termination, which
date shall not be less than thirty days after the date such Notice of
Termination is given.
-3-
<PAGE>
1.8 Disability. "Disability" shall mean absence from performance of
assigned duties for the Company on a full-time basis for six consecutive
calendar months as a result of incapacity due to medically documented
physical or mental illness; provided that the Executive shall not have
returned to the full-time performance of the Executive's duties within 30
calendar days of actual receipt of written Notice of Termination for the
reason of Disability. Such Notice of Termination may not be given prior to
the expiration of the six month period of Disability.
1.9 Executive. "Executive" shall have the meaning provided in the first
paragraph of this Agreement.
1.10 Good Reason. "Good Reason" shall mean the occurrence of any of the
following events without the Executive's express written consent:
(a) the assignment to the Executive of duties
inconsistent with the position and status of the
President and Chief Executive Officer of the
Company, or a substantial alteration in the nature,
status or prestige of the Executive's
responsibilities as President and Chief Executive
Officer of the Company from those in effect at the
date hereof (other than any such alteration
primarily attributable to the fact that the Company,
at the time of such alteration, is no longer a
publicly-held company);
(b) a reduction by the Company in the
Executive's pay grade or base salary as in effect at
the date hereof or as the same may be increased from
time to time during the term of this Agreement or
the Company's failure to increase (within 12 months
of the Executive's last increase in base salary) the
Executive's base salary in an amount which at least
equals, on a percentage basis, the average
percentage increase in base salary for all
executives of the Company having the same pay grade
as the Executive effected in the preceding 12
months;
(c) an involuntary relocation of the Executive
from the location contemplated in Section 3 hereof
or the breach by the Company of any other provision
of this Agreement; or
-4-
<PAGE>
(d) any purported termination of the employment
of the Executive by the Company which is not
effected according to the requirements of a Notice
of Termination as defined in Section 1.11 hereof.
1.11 Notice of Termination. "Notice of Termination" shall mean a
notice, in writing, to the Executive from the Company or to the Company from
the Executive, which indicates the specific termination provision enumerated
in this Agreement relied upon, and which sets forth in reasonable detail the
facts and circumstances alleged to provide a basis for termination of the
Executive's employment by the Company or by the Executive. Such notice must
be communicated to the Executive in accordance with Section 7.3 hereof.
1.12 Retirement. "Retirement" shall mean termination of the Executive's
employment on or after the date on which the Executive attains sixty-five
years of age or termination in accordance with any retirement agreement
entered into between the Executive and the Company.
1.13 Tax Counsel. "Tax Counsel" shall mean legal counsel, selected by
the Auditors and which is acceptable to the Executive and the Company, for
the purpose of rendering legal advice and services on tax issues arising
under this Agreement.
ARTICLE 2.
TERM
This Agreement shall be effective commencing on the date hereof and shall
continue in effect through November 30, 1999; provided, however, that
commencing on November 1, 1997 and on each November 1 thereafter, the term of
this Agreement shall automatically be extended for one additional year unless
no later than August 1 of such year, the Company shall have given the
Executive notice that it does not desire to extend the term of this
Agreement; and provided, further, that if a Change of Control shall have
occurred during the term of this Agreement, then, notwithstanding such notice
by the Company not to extend, this Agreement shall continue in effect for the
lesser of (i) a period of 36 months beyond the then scheduled expiration of
this Agreement, or (ii) a period ending on the date of the Retirement of the
Executive. Notice by the Company pursuant to this Article 2 that it does not
wish to extend the term of this Agreement shall not constitute a Notice of
Termination and shall not give the Executive Good Reason to terminate his
employment with the Company.
-5-
<PAGE>
ARTICLE 3.
EMPLOYMENT
The Company agrees to employ the Executive and the Executive agrees to
continue to serve the Company on the terms and conditions set forth herein.
Except as may otherwise be agreed upon between the Company and the Executive,
the Executive shall serve the Company as President and Chief Executive
Officer of the Company. At all times, the Executive shall report directly to
the Board of Directors of the Company. The Executive shall devote
substantially all of his working time and efforts to the business and affairs
of the Company, except for reasonable time spent for service on the boards of
directors of other corporations, vacations and civic and charitable
activities, and shall continue to represent the Company within its industry.
The Executive shall, except as the Executive may otherwise agree, perform his
principal activities at the executive offices of the Company, subject to
required travel on the Company's business.
ARTICLE 4.
BENEFITS AND COMPENSATION
4.1 Base Salary. During the term of his employment hereunder, the
Company shall pay to the Executive, in approximately equal installments not
less often than twice per month, a base salary of not less than $325,000 per
year, as the same may from time to time be increased.
4.2 Benefit Plans and Arrangements. The Executive shall be entitled to
participate in and receive benefits under the Company's employee benefit
plans and arrangements in effect during the term of his employment hereunder.
4.3 Perquisites. During the term of his employment hereunder, the
Executive shall be entitled to receive fringe benefits ordinarily and
customarily provided by the Company, including without limitation
reimbursement (up to a maximum of $7,645 per year, as the same may from time
to time be increased by approval of the Compensation and Stock Option Plan
Committee or other appropriate body of the Company's Board of Directors) for
the cost of leasing an automobile.
4.4 Expenses. The Company shall promptly reimburse the Executive for
all reasonable travel and other business-related expenses related to the
Company's business actually paid or incurred by him in the performance of his
services under this Agreement, including without limitation the cost
-6-
<PAGE>
of two airline clubs and the annual fee for one major credit card.
ARTICLE 5.
TERMINATION
5.1 Death. The Executive's employment hereunder shall terminate upon
his death.
5.2 Disability. During any period within the term of this Agreement
that the Executive is or becomes subject to a Disability, the Executive shall
continue to receive the Executive's full base compensation and other benefits
at the rate then in effect until the Executive's employment is terminated.
After termination for Disability, benefits accruing to the Executive shall be
determined in accordance with the Company's disability policy as then in
effect or, in the event that such termination is subsequent to a Change in
Control, as in effect immediately prior to any Change of Control, as the
Executive may elect.
5.3 Cause. The Company may terminate the Executive's employment
hereunder for Cause. In the event that the Executive's employment with the
Company is terminated for Cause, the Executive shall receive the Executive's
full base compensation as earned through the Date of Termination at the rate
in effect at the time Notice of Termination is given. Following payment of
said amount and without impairing the Executive's rights under benefit plans
and arrangements and the Company's policies and procedures, the Company shall
have no further obligations to the Executive under this Agreement.
5.4 Retirement. In the event that the Executive's employment with the
Company is terminated by reason of the Executive's Retirement, the Executive
shall be entitled to the benefits under the Company's regular retirement
program, or, if a separate retirement agreement has been entered into between
the Executive and the Company, benefits shall be provided according to the
terms of that agreement.
5.5 Involuntary Termination. In the event that the employment of the
Executive shall be terminated during the term of this Agreement (i) by the
Company for any reason other than for Cause, Disability or Retirement or (ii)
by the Executive for Good Reason, then:
(a) unless the Executive shall elect instead to
receive the benefits available under the Company's
severance policy, the Executive shall be entitled to
-7-
<PAGE>
receive: (i) the Executive's full base compensation
as earned through the Date of Termination at the
rate in effect at the time Notice of Termination is
given; (ii) for a 24-month period after such
termination (or such lesser number of months up to
the date of the Executive's Retirement), life,
disability, accident and health insurance coverage
substantially the same as that which the Executive
received immediately prior to the Notice of
Termination or if such termination is subsequent to
a Change in Control, as the Executive received prior
to such Change of Control, as the Executive may
elect (collectively, the "Benefits"), provided,
however, that if, despite the provisions of this
Section 5.5, the benefits enumerated above shall not
be payable or provided to the Executive or his
dependents, beneficiaries or estate under the
Company's plans because he is no longer an employee
of the Company, the Company itself shall pay or
provide for payment of such benefits to the
Executive, his dependents, beneficiaries or estate;
and (iii) a lump sum payment ("Severance Payment")
from the Company to the Executive of a dollar amount
equal to 200% of the base compensation of the
Executive for the twelve-month period immediately
preceding the Notice of Termination;
(b) all options to purchase securities of the
Company then held by the Executive shall be
immediately exercisable, without regard to whether
such options are exercisable at such time pursuant
to the terms of the documents under which such
options were granted; and
(c) any securities of the Company then held by
the Executive that are subject to any restriction on
transfer, other than restrictions imposed only by
federal or state securities laws, shall lapse and be
of no further force and effect with the result that
the Executive shall be permitted to sell, transfer
or otherwise dispose of such securities without
regard to any such restrictions.
5.6 Tax Deductibility of Benefit Payments.
(a) It is intended that all amounts payable hereunder, together with all
other amounts payable to the Executive upon or in connection with a
termination of his employment, are reasonable compensation for the
Executive's service to the Company and its subsidiaries. Notwithstanding the
foregoing, should the Company
-8-
<PAGE>
determine, based upon the opinion of the Auditors with the advice and
assistance of Tax Counsel, that payment of any or all of the Severance
Payment and the Benefits together with any other amounts received by the
Executive that must be included in such determination, would result in the
payment of an "excess parachute payment" as defined in Section 280G of the
Code, then the Company will reduce the amount otherwise due and owing to the
Executive under this Agreement to the maximum amount that would permit a
determination that the Executive has not received an excess parachute payment
under the foregoing Code provision.
(b) The Company may reduce the Severance Pay and Benefits pursuant to
this Section 5.6 only if, within 60 days of the Executive's termination, it
provides the Executive with an opinion of the Auditors that the Executive
will be considered to have received "excess parachute payments" as defined in
Section 280G if he were to receive the full amounts owing pursuant to the
terms of this Agreement. Such opinion shall be based upon the proposed
regulations under Code Sections 280G and 4999 or substantial authority within
the meaning of Code Section 6661, and shall set forth with particularity the
smallest amount by which the payment due the Executive hereunder would have
to be reduced to avoid the imposition of any excise tax or the disallowance
of any deduction pursuant to Code Sections 280G and 4999 and shall
demonstrate the relation of such amount to the amounts set forth in paragraph
(a). The Executive shall, if he agrees with the determination of the
Company, notify the Company in writing of the payments and/or Benefits that
he wishes to have reduced in order to comply with the provisions of this
Section 5.6. In the event that the Executive fails to designate an order of
priority for the application of any such reduction, such reduction shall be
made in the order of priority determined by the Company. In the event that
the Executive does not agree with the opinion or calculation presented and he
is unable to resolve any dispute with the Company regarding such disagreement
within a period of 30 days of receipt of the opinion referenced above, the
Executive may take such other steps as he may deem advisable to enforce his
position.
5.7 Underpayment of the Severance Payment. In the event that the
initial determination of the Auditors and Tax Counsel results in a payment to
the Executive of a smaller Severance Payment than the Executive was actually
entitled to receive (as determined by the Auditors and Tax Counsel based on
controlling precedent), such underpayment shall be promptly disbursed to the
Executive or for the
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<PAGE>
Executive's benefit together with interest at the prime rate as announced
periodically by The Chase Manhattan Bank.
5.8 Legal Fees and Expenses. If litigation shall be instituted to
enforce or interpret any provision hereof and the Executive shall prevail,
the Company will reimburse the Executive for his reasonable attorneys' fees
and disbursements incurred in such proceeding and will pay prejudgment
interest at the legal rate then in effect on any money judgment or award
obtained by the Executive in such proceeding.
5.9 No Mitigation. The Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for in
this Agreement be reduced or offset by any compensation earned by the
Executive as a result of employment by another employer or by retirement
benefits after the Date of Termination or otherwise. Benefits payable
pursuant to Section 5.5(a)(ii) of this Agreement shall cease to the extent
that the Executive is entitled to receive such benefits pursuant to the
benefit plans of another employer of the Executive.
ARTICLE 6.
NON-COMPETITION; NON-DISCLOSURE
6.1 The Executive agrees that, while he is employed by the Company, he
will not directly or indirectly engage or participate in, as an owner,
partner, shareholder, officer, employee, director, agent or consultant, any
business that directly or indirectly competes with the Company or any of its
subsidiaries or affiliates, and, further, that he will not make any
investments in any business that competes with the Company. The Executive
further agrees that he will not at any time, except in the performance of his
duties for the Company, directly or indirectly disclose any trade secret or
confidential information that he learns by reason of his association with the
Company. The Executive acknowledges that all business records, papers,
documents and other matters created, collected or made by him in the
performance of his service for the Company shall remain the exclusive
property of the Company. The agreements and acknowledgments in this
paragraph are in addition to those contained in the Employment Agreement
incorporated by reference in Section 6.2.
6.2 The Executive ratifies and confirms the terms and obligations of the
Employment Agreement executed
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<PAGE>
between the Company and the Executive on July 13, 1989, containing a covenant
not to compete and provisions on nondisclosure of information, new
inventions, delivery of documents, and remedies. That Employment Agreement,
and any successor agreement to that Agreement, is hereby incorporated by
reference into this Agreement.
ARTICLE 7.
MISCELLANEOUS
7.1 Successors: Binding Agreement. The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform
it if no such succession had taken place. The failure of the Company to
obtain such assumption agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle the
Executive to compensation from the Company in the same amount and on the same
terms as the Executive would be entitled to hereunder if the Executive had
terminated the Executive's employment for Good Reason, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination.
7.2 Successors and Assigns. This Agreement shall inure to the benefit
of, and be enforceable by, the personal heirs, distributees, devisees and
legatees of the Executive.
7.3 Notice. Notices and all communications provided for in this
Agreement shall be in writing and shall be deemed to have been received when
delivered or mailed by United States registered mail, return receipt
requested, postage prepaid, addressed to the respective addresses set forth
at the end of this Agreement, provided that all notices to the Company shall
be directed to the attention of the Board of Directors with a copy to the
Secretary of the Company, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notice
of change of address shall be effective only upon receipt.
7.4 No Waiver. No provision of this Agreement may be modified, waived
or discharged unless in writing and signed by the Executive and such officer
of the Company as may be specifically designated or authorized by the Board
of Directors or by a Committee of the Board of Directors.
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<PAGE>
No waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.
7.5 Entire Agreement. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this
Agreement. This Agreement constitutes the entire agreement of the parties,
recites the sole considerations for the promises exchanged and supersedes any
prior agreements between the Executive and the Company or BBC with respect to
the subject matter hereof, including without limitation the Former Agreement
and the BBC Employment Agreement but excluding the Employment Agreement
incorporated by reference in Section 6.2 hereof.
7.6 Effective Time. This Employment Agreement shall become effective
upon consummation of the BBC Merger. If the BBC Merger is abandoned, this
Employment Agreement shall be null and void, and the Former Agreement shall
continue in effect in accordance with its terms.
7.7 Controlling Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Delaware relating to contracts to be performed entirely therein. All amounts
payable to the Executive pursuant to this Agreement shall be paid subject to
such reporting and withholding requirements, if any, as may be imposed by
applicable law and applicable Company policy.
7.8 Invalid Provision. The invalidity or unenforceability of any
provisions of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force
and effect.
7.9 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, and all such
counterparts together shall constitute but one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
SURVIVAL TECHNOLOGY, INC.,
a Delaware corporation
By: /s/David L. Lougee
-------------------------------
Chairman, Compensation and
Stock Option Plan Committee
Address: 2275 Research Boulevard
Rockville, Maryland 20850
JAMES H. MILLER
/s/James H. Miller
-----------------------------------
Address: Survival Technology, Inc.
2275 Research Boulevard
Rockville, Maryland 20850
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<PAGE>
Exhibit 10-13
MERGER OF BRUNSWICK BIOMEDICAL CORPORATION AND SURVIVAL TECHNOLOGY, INC.
SECURITY HOLDER QUESTIONNAIRE AND AGREEMENT
FOR PARTNERSHIPS, CORPORATIONS, AND OTHER ENTITIES
In connection with the merger (the "Merger") of Brunswick Biomedical
Corporation ("BBC") with and into Survival Technology, Inc. ("STI"),
stockholders of BBC will be entitled to receive shares of common stock of STI
("Shares") and, in some cases, warrants for Shares ("Merger Warrants") in
exchange for the securities of BBC that they currently hold. In addition, in
connection with the Merger, STI will assume the obligations of BBC under
certain warrant agreements and stock options and, upon exercise of such
warrants or options in accordance with their terms as adjusted to reflect the
Merger, will issue Shares to the holders thereof. STI intends to offer
Shares and Merger Warrants in connection with the Merger and upon exercise of
the warrants, options and Merger Warrants without registration under the
Securities Act of 1933, as amended ("Securities Act"), in reliance on certain
provisions of the Securities Act and Regulation D promulgated thereunder that
provide an exemption from registration. Accordingly, the Shares and Shares
issued upon exercise of warrants, options, and Merger Warrants issued will be
restricted as to resale and may only be resold pursuant to registration under
the Securities Act or an exemption from registration, and the certificates
for the Shares will bear a legend evidencing this restriction.
The purpose of this questionnaire is to permit STI to determine
whether you meet the "accredited investor" standards imposed by Regulation D
and to enable STI to collect information necessary for preparation of the
resale registration statement referred to in the next paragraph. STI's
reliance upon the exemption provided by Regulation D will be based in part on
the information herein supplied.
STI intends to file a registration statement under the Securities Act
that will enable the security holders of BBC ("Stockholders") to resell the
Shares they receive in connection with the Merger or upon exercise of the
warrants, options or Merger Warrants as soon as practicable after they
receive such Shares. STI's agreement with respect to such registration is
contained in Section IV hereof. The agreement set forth in Section IV hereof
shall constitute STI's sole obligation to register the Shares notwithstanding
the terms of any other agreements or understandings that you may have with
BBC. By signing this questionnaire and agreement you also will ratify all
actions taken by BBC's board of directors prior to the Merger and waive any
and all claims against STI arising under the provisions of any security of
BBC, any agreement or understanding related thereto, or otherwise, including
without limitation any claim for any accrued and unpaid dividends or rights
to redemption arising prior to or as a result of the Merger, any stockholders
agreements, and any preferred stock agreements. In addition, by signing this
agreement you will agree that upon consummation of the Merger, all BBC
stockholder agreements and preferred stock agreements will be terminated. By
signing this questionnaire, you will also agree that, to the extent the terms
<PAGE>
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of any security of BBC, any agreement or understanding with BBC related
thereto or otherwise differ from the terms of this Agreement or the Agreement
and Plan of Merger dated September 11, 1996 between STI and BBC, the terms of
this Agreement and such Agreement and Plan of Merger shall control.
Please complete fully, sign, date and return this Questionnaire to
Evelyn Mary Aswad, Arnold & Porter, 555 Twelfth Street, N.W., Washington,
D.C. 20004. Please print your response to each question and, where the
answer to the question is "None" or "Not Applicable," please so state.
If you have any questions about any of the items in this
Questionnaire, please contact Richard E. Baltz at Arnold & Porter, telephone
(202) 942-5124.
<PAGE>
-3-
SECTION I. GENERAL INFORMATION.
1. Full Name of Entity: _______________________________________________
Type of Entity: ____________________________________________________
State of Incorporation or Organization: ____________________________
Date of Incorporation or Organization: _____________________________
Employer Identification Number: ____________________________________
Address of Principal Place of Business: ____________________________
_____________________________________________________________________
_____________________________________________________________________
Telephone Number: __________________________________________________
Contact Person (name and title): ___________________________________
Total assets shown on most recent
audited financial statements: $____________
Total assets on the date hereof: $____________
2. Does the Entity have any debt or other obligations, or are there any
other reasonably foreseeable circumstances, that are likely in the
future to require the Entity to dispose of an interest which it may
acquire in STI?
Yes__________ No__________
3. Has the Entity ever been subject to bankruptcy, reorganization or debt
restructuring?
Yes__________ No__________
4. Is the Entity involved in any litigation which it reasonably believes
could materially and adversely affect its financial condition?
Yes__________ No__________
If yes, provide details:
_____________________________________________________________________
_____________________________________________________________________
<PAGE>
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SECTION II. ACCREDITED INVESTOR STATUS.
Identify each of the following categories applicable to the
undersigned entity by placing a check next to the applicable category:
(a) ____ An organization defined in Section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the
securities offered, with total assets in excess of $5,000,000.
(b) ____ A bank as defined in Section 3(a)(2) of the Securities Act or a
savings and loan association or other institution as defined in
Section 3(a)5(A) of the Securities Act, whether acting in regard to
this investment in its individual or a fiduciary capacity.
(c) ____ A broker or dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934, as amended ("Exchange Act").
(d) ____ An insurance company as defined in Section 2(13) of the
Securities Act.
(e) ____ An investment company registered under the Investment Company Act
of 1940.
(f) ____ A business development company as defined in Section 2(a)(48) of
the Investment Company Act of 1940.
(g) ____ A Small Business Investment Company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958.
(h) ____ A private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940.
(i) ____ Each equity owner of the undersigned satisfies the conditions of
statements (i) or (ii) below:
(i) He or she is a natural person whose net worth at the time of
purchase of the shares, or joint net worth with his or her
spouse, exceeds $1,000,000.
(ii He or she is a natural person who had individual income in excess
of $200,000 or joint income with spouse in excess of $300,000 in
each of the two most recent years, and reasonably expects to
reach the same income level in the current year.
<PAGE>
-5-
SECTION III. RESALE REGISTRATION INFORMATION.
1. How many shares of STI common stock does the undersigned own as of the
date of this questionnaire? _________________________________________
2. If, as of the date hereof, the undersigned owns any options, warrants,
or other rights to acquire shares of STI common stock, how many shares
are subject to such instruments as of this date?
_____________________________________________________________________
_____________________________________________________________________
3. All of the Shares you will receive as a result of the Merger or have
the right to receive upon exercise of warrants, options or Merger
Warrants will be registered for resale unless you indicate otherwise
in the space provided below.
_____________________________________________________________________
4. Please indicate the nature of any material relationship which the
undersigned has had with STI or any of its predecessors or affiliates
within the past three years:
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
SECTION IV. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES
ACT.
1. REGISTRATION PROCEDURES AND EXPENSES. STI shall:
(a) as soon as practicable, but no later than thirty (30) days after the
Closing Date established pursuant to that certain Agreement and Plan
of Merger entered into between STI and BBC, prepare and file with the
Securities and Exchange Commission (the "Commission") a registration
statement on a form available for the sale of the Shares from time to
time in the market or in privately negotiated transactions;
(b) use its best efforts, subject to receipt of necessary information from
the Stockholders, to cause such registration statement to become
effective as soon as practicable after the filing thereof;
<PAGE>
-6-
(c) prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement
effective until the earlier of (i) the date all the Shares have been
sold pursuant thereto or (ii) three (3) years (or such shorter period
as provided in Rule 144(k) of the Securities Act) from the date the
Shares are received by the Stockholders;
(d) furnish to each Stockholder with respect to the Shares registered on
such registration statement (and to each underwriter, if any, of such
Shares) such number of copies of prospectuses and preliminary
prospectuses in conformity with the requirements of the Securities Act
and such other documents as the Stockholder may reasonably request,
in order to facilitate the public sale or other disposition of all or
any of the Shares by the Stockholder, PROVIDED, HOWEVER, that the
obligation of STI to deliver copies of prospectuses or preliminary
prospectuses to the Stockholder shall be subject to the receipt by STI
of reasonable assurances from the Stockholder that the Stockholder
will comply with the applicable provisions of the Securities Act and
of such other securities or blue sky laws as may be applicable in
connection with any use of such prospectuses or preliminary
prospectuses;
(e) file documents required for blue sky clearance for the sale of the
Shares in states specified in writing by any Stockholder;
(f) bear all expenses in connection with the procedures in paragraphs (a)
through (e) of this Section IV.1 and the registration of the Shares on
such registration statement and the satisfaction of the blue sky laws
of such states, including but not limited to all registrations,
exemptions, qualifications and filing fees, printing expenses, fees
and disbursements of counsel for STI, blue sky fees and expenses, and
excluding any underwriting discounts and selling commissions, and fees
and expenses, if any, of separate counsel or other independent
advisors to the Stockholder or other Stockholders.
STI understands that the Stockholder disclaims being an underwriter, but
the Stockholder being deemed an underwriter shall not relieve STI of any
obligation it has hereunder.
2. TRANSFER OF SHARES.
Stockholder understands and agrees that the Shares will be or are
restricted as to resale and agrees that Stockholder will only resell the
Shares pursuant to an effective registration statement or an exemption from
registration satisfactory to STI for the removal of the restricted transfer
legend on the Shares. After the registration of the Shares
<PAGE>
-7-
pursuant to Section IV.1 above, each Stockholder agrees that, during the
period the registration statement remains effective, such Stockholder:
(a) will not affect any disposition of the Shares that would
constitute a sale within the meaning of the Securities Act (a
"Transfer") except as contemplated in the registration statement
referred to in Section IV.1; and
(b) will not make any sale of the Shares without effectively causing
the prospectus delivery requirements under the Securities Act to
be satisfied.
3. INDEMNIFICATION.
STI shall defend, indemnify and hold harmless the Stockholders and each of
them and each stockholder's directors, officers, employees and
representatives and each person, if any, that controls such stockholder
within the meaning of section 15 of the Securities Act, from any
obligation, liability, claim, loss, cost, suit, damage, action, proceeding
or cause of action including, without limitation, attorneys' fees and
expenses (collectively, "Claims") arising from or pertaining to: (i) the
registration of the Shares described in this Section IV and/or the
registration or exemption of the Shares under state blue sky laws,
including but not limited to all Claims arising under federal and state
securities laws and including (except as expressly set forth below) any
misrepresentation or omission of a material fact contained in the
registration statement covering the Shares; and (ii) any failure by STI to
fulfill any undertaking included in the registration statement and/or this
Section IV; PROVIDED, HOWEVER, that the foregoing shall not apply and
instead a Stockholder shall be obligated to defend, indemnify and hold
harmless STI (and each person, if any, that controls STI within the meaning
of Section 15 of the Securities Act, each officer of STI who signs the
registration statement, and each director of STI) and the other
Stockholders from any Claim if and to the extent such Claim arises from or
pertains to (a) the failure of such indemnifying Stockholder to comply with
the covenants and agreements contained in Sections 2 and 6 of this Section
IV; and/or (b) any misrepresentation or omission of a material fact
contained, as of the effective date of any registration statement covering
the Shares, in information furnished to STI by or on behalf of such
indemnifying Stockholder specifically for use in the preparation of such
registration statement.
Promptly after receipt by any indemnified person of a notice of a claim or
the beginning of any action in respect of which indemnity is to be sought
against an indemnifying person pursuant to this Section 3, such indemnified
person shall notify the indemnifying person in writing of such claim or of
the commencement of such action, and, subject to the provisions hereinafter
stated, in case any such action shall be brought against an indemnified
person and such indemnifying person shall have been notified thereof, such
indemnifying person shall be entitled to participate therein, and, to the
extent it shall wish, to assume the
<PAGE>
-8-
defense thereof, with counsel reasonably satisfactory to such indemnified
person. After notice from the indemnifying person to such indemnified
person of its election to assume the defense thereof, such indemnifying
person shall not be liable to such indemnified person for any legal
expenses subsequently incurred by such indemnified person in connection
with the defense thereof, PROVIDED, HOWEVER, that if there exists or shall
exist a conflict of interest that would make it inappropriate in the
reasonable judgment of the indemnified person for the same counsel to
represent both the indemnified person and such indemnifying person or any
affiliate or associate thereof, the indemnified person shall be entitled to
retain its own counsel at the expense of such indemnifying person. The
failure of an indemnified person to give any notice shall not affect its
entitlement to indemnity hereunder except to the extent that the
indemnifying person is actually and materially prejudiced by such failure.
4. TERMINATION OF CONDITIONS AND OBLIGATIONS. The conditions precedent
imposed upon the transferability of the Shares shall cease and terminate as
to any particular number of the Shares when such Shares shall have been
effectively registered under the Securities Act and sold or otherwise
disposed of in accordance with the intended method of disposition set forth
in the registration statement covering such Shares.
5. INFORMATION AVAILABLE. So long as any registration statement is effective
covering the resale of Shares and Shares of such Stockholders remain
unsold, STI will furnish to each Stockholder:
(a) as soon as practicable after available (but in the case of STI's
Annual Report to Stockholders, within 120 days after the end of
each fiscal year of STI, if then available), one copy of (i) its
Annual Report to Stockholders, (ii) if not included in substance
in the Annual Report to Stockholders, its annual report on
Form 10-K, (iii) each of its Quarterly Reports to Stockholders,
and its quarterly report on Form 10-Q, (iv) each of its reports on
Form 8-K, and (v) a full copy of the particular registration
statement covering the Shares (the foregoing, in each case,
excluding exhibits); and
(b) upon the reasonable request of the Stockholder, all exhibits
excluded by the parenthetical to subparagraph (a) (iv) of this
Section IV.5 and all other information that is generally
available to the public;
and STI, upon the reasonable request of the Stockholder and receipt of
reasonable assurances of confidentiality, will meet with the Stockholder or
a representative thereof during regular business hours, at STI's
headquarters to discuss all information relevant for disclosure in any
registration statement covering the Shares and will otherwise cooperate
with any Stockholder conducting an investigation for the purpose of
<PAGE>
-9-
reducing or eliminating such Stockholders' exposure to liability under the
Securities Act, including the production of information at STI's
headquarters.
6. NO SALE PERIODS. STI will notify each Stockholder, at any time when a
prospectus relating to the registered Shares is required to be delivered
under the Securities Act, if STI becomes aware of the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated in the
prospectus or necessary to make the statements made in the prospectus not
misleading in the light of the then existing circumstances. STI will use
its best efforts consistent with its reasonable needs to amend the
prospectus to eliminate such untrue statement or omission. Each
Stockholder agrees not to effect a sale of the Shares pursuant to the
registration statement during any period that STI reasonably requests due
to the existence of information relating to events outside the ordinary
course of STI's business that has not been publicly disclosed, it being
understood and agreed that STI is under no obligation to disclose any such
information for the purpose of permitting any such sale provided that such
period shall not exceed 90 days on account of any one event.
7. HOLDBACK AGREEMENT. The Stockholder agrees, if so required by the managing
underwriter in an underwritten offering, not to effect any public sale or
distribution of his Shares during the seven days prior to and the 90 days
after any underwritten registration has become effective or, if the
managing underwriter advises STI in writing that, in its opinion, no such
public sale or distribution should be effected for a specific period longer
than 90 days after such underwritten registration in order to complete the
sale and distribution of securities included in such registration, and STI
gives notice to the Stockholder of such advice, during a reasonable longer
period not to exceed 180 days after such underwritten registration, whether
or not the Stockholder participates in such registration. The number of
days during which a Stockholder is not permitted to sell Shares as a result
of Section IV.6 or this Section IV.7 shall be added to the period during
which STI agrees to keep the registration statement in effect under this
Agreement.
8. NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing, shall be mailed by first-class registered or
certified air mail, postage prepaid, and shall be deemed given when so
mailed:
(a) if to STI, to Chontelle Woodward, Survival Technology, Inc., 2275
Research Boulevard, Suite #100, Rockville, Maryland 20850;
(b) if to the Stockholder, at the address as set forth in this document,
or at such other address or addresses as may have been furnished to
STI in writing; or
<PAGE>
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(c) if to any transferee or transferees of the Stockholder, at such
address or addresses as shall have been furnished to STI at the time
of the transfer or transfers, or at such other address or addresses as
may have been furnished by such transferee or transferees to STI in
writing.
9. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware and the United States of
America.
10. SURVIVAL. The representations, covenants, rights and obligations set forth
in this Agreement shall remain in effect throughout the effectiveness of any
registration statement covering the Shares and for a period of six years
thereafter.
SECTION V. ACKNOWLEDGMENT, RELEASE AND RATIFICATION.
The undersigned hereby acknowledges that STI's sole obligation with respect
to the registration of Shares is as set forth in Section IV hereof,
notwithstanding the terms of any other agreements or understandings that the
undersigned may have with BBC. By signing this questionnaire and agreement,
the undersigned also hereby ratifies any and all actions taken by the board
of directors of BBC prior to the effectiveness of the Merger. In addition,
in consideration of STI's agreement under Section IV hereof and other good
and valuable consideration, the receipt of which is hereby acknowledged, the
undersigned hereby:
(i) releases and discharges STI and its affiliates, successors, assigns,
predecessors, representatives, directors, officers, stockholders,
employees and agents with respect to any and all claims that the
undersigned may have arising under the provisions of any security of
BBC, any agreement or understanding with BBC related thereto, or
otherwise with respect thereto, including without limitation any claim
for any accrued and unpaid dividends or right of redemption arising
prior to or as a result of the Merger, any stockholder agreements, and
any BBC preferred stock agreements;
(ii) agrees that upon consummation of the Merger, all stockholder
agreements and preferred stock agreements with BBC will be terminated
and of no further force and effect; and
(iii) agrees that, to the extent the terms of any security of BBC, any
agreement or understanding with BBC related thereto or otherwise
differ from the terms of this Agreement or the Agreement and Plan of
Merger dated September 11, 1996 between STI and BBC, the terms of this
Agreement and such Agreement and Plan of Merger shall control.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
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The undersigned represents and warrants that the information stated
herein is true and complete as of the date hereof and will be true and
complete as of the date on which the undersigned receives any shares of STI
common stock. If, prior to the receipt of such shares, there should be any
change in such information or any of such information becomes incorrect or
incomplete, the undersigned agrees to notify, and promptly supply corrective
information to Evelyn Mary Aswad, Arnold & Porter, 555 Twelfth Street, N.W.,
Washington, D.C. 20004.
_______________________________________
Print Name of Entity
Witness or Attest:
________________________________ By: _________________________________
(signature) (signature)
________________________________ ______________________________________
Print Name of Individual Signing Print Name of Individual Signing
________________________________ ______________________________________
Title (if any) Title
Date: _________________________
AGREED AND ACCEPTED as to Section IV:
SURVIVAL TECHNOLOGY, INC.
By: ___________________________
Title: ________________________
