AGREEMENT AND PLAN OF MERGER
by and among
INTERNATIONAL REMOTE IMAGING SYSTEMS, INC.,
a Delaware corporation,
NORFOLK SCIENTIFIC, INC.
a Massachusetts corporation
doing business as StatSpin Technologies
and
STATSPIN ACQUISITION CORPORATION,
a Massachusetts corporation
Dated as of January 31, 1996
TABLE OF CONTENTS
PAGE
SECTION 1 THE MERGER AND RELATED MATTERS. . . . . . . . . . . . . . . . . . . 1
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Consummation of the Merger; Effective Time . . . . . . . . . . . . . . 2
1.4 Articles of Organization; By-Laws. . . . . . . . . . . . . . . . . . . 2
1.5 Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Conversion of Capital Stock. . . . . . . . . . . . . . . . . . . . . . 2
1.6.1 Conversion of Outstanding StatSpin Stock . . . . . . . . . . . . . . . 2
1.6.2 Cancellation of StatSpin Treasury Shares . . . . . . . . . . . . . . . 2
1.6.3 Conversion of Merger Sub Stock . . . . . . . . . . . . . . . . . . . . 2
1.6.4 Exchange of Certificates; Fractional Shares . . . . . . . . . . . . . 2
1.7 Conversion of Stock Appreciation Rights. . . . . . . . . . . . . . . . 3
1.7.1 Uncapped StatSpin SAR's. . . . . . . . . . . . . . . . . . . . . . . . 3
1.7.2 Capped StatSpin SAR's. . . . . . . . . . . . . . . . . . . . . . . . . 3
1.7.3 Exchange of Agreements; Fractional Shares. . . . . . . . . . . . . . . 3
1.8 Assumption of Warrants and Stock Options . . . . . . . . . . . . . . . 4
1.9 Escrow of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.10 Maximum Merger Consideration . . . . . . . . . . . . . . . . . . . . . 5
1.11 Taking of Necessary Action; Further Action . . . . . . . . . . . . . . 5
1.12 Registration Rights. . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.13 Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
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PAGE
SECTION 2 REPRESENTATIONS AND WARRANTIES OF STATSPIN. . . . . . . . . . . 6
2.1 Existence and Rights . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2 Agreements Authorized. . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3 No Conflict. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.4 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.5 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.6 No Material Changes. . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.7 Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . . . 9
2.8 Contingencies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.9 Real Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.10 Personal Property and Leasehold Improvements . . . . . . . . . . . . .10
2.11 Restrictive Agreements . . . . . . . . . . . . . . . . . . . . . . . .10
2.12 Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . .10
2.13 Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
2.14 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
2.15 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
2.16 Acquisition Agreements . . . . . . . . . . . . . . . . . . . . . . . .11
2.17 Business Relations . . . . . . . . . . . . . . . . . . . . . . . . . .11
2.18 Affiliate Transactions . . . . . . . . . . . . . . . . . . . . . . . .11
2.19 Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
2.20 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . .13
2.21 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . .13
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PAGE
2.22 Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
2.23 Labor Relations; Employees . . . . . . . . . . . . . . . . . . . . . .14
2.24 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
2.25 Pooling Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . .15
2.26 Board Approval. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.27 No Finder's Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . .15
2.28 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
2.29 Offering Memorandum. . . . . . . . . . . . . . . . . . . . . . . . . .15
2.30 Transaction Expenses . . . . . . . . . . . . . . . . . . . . . . . . .16
SECTION 3 REPRESENTATIONS AND WARRANTIES OF IRIS. . . . . . . . . . . . . . .16
3.1 Existence and Rights . . . . . . . . . . . . . . . . . . . . . . . . .16
3.2 Agreements Authorized. . . . . . . . . . . . . . . . . . . . . . . . .16
3.3 No Conflict. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
3.4 IRIS Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
3.5 IRIS SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . .17
3.6 No Material Changes. . . . . . . . . . . . . . . . . . . . . . . . . .17
3.7 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
3.8 No Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . .18
3.9 Operations of Merger Sub . . . . . . . . . . . . . . . . . . . . . . .18
3.10 Offering Memorandum. . . . . . . . . . . . . . . . . . . . . . . . . .18
SECTION 4 COVENANTS OF STATSPIN . . . . . . . . . . . . . . . . . . . . . . .18
4.1 Conduct Prior to Effective Time. . . . . . . . . . . . . . . . . . . .18
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PAGE
4.1.1 Capital Stock Changes; Dividends; Redemptions. . . . . . . . . . . . .18
4.1.2 Ordinary Course. . . . . . . . . . . . . . . . . . . . . . . . . . . .18
4.1.3 Certain Personnel. . . . . . . . . . . . . . . . . . . . . . . . . . .18
4.1.4 Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
4.1.5 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
4.1.6 Sale or Acquisition of Assets. . . . . . . . . . . . . . . . . . . . .19
4.1.7 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
4.1.8 Related Party Transactions . . . . . . . . . . . . . . . . . . . . . .19
4.1.9 Capital Expenditures and Material Contracts. . . . . . . . . . . . . .19
4.1.10 Amendment of Charter . . . . . . . . . . . . . . . . . . . . . . . . .19
4.1.11 Preservation of Organization . . . . . . . . . . . . . . . . . . . . .19
4.1.12 Standard of Conduct. . . . . . . . . . . . . . . . . . . . . . . . . .19
4.1.13 Prohibited Discussions . . . . . . . . . . . . . . . . . . . . . . . .20
4.2 Transfers of StatSpin Equity Securities. . . . . . . . . . . . . . . .20
4.3 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
4.4 Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
4.5 StatSpin Stockholder Approval. . . . . . . . . . . . . . . . . . . . .20
4.6 Affiliate Agreements . . . . . . . . . . . . . . . . . . . . . . . . .21
4.7 Pooling Accounting . . . . . . . . . . . . . . . . . . . . . . . . . .21
4.8 Representations and Warranties . . . . . . . . . . . . . . . . . . . .21
4.9 Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
4.10 Supplemental Information . . . . . . . . . . . . . . . . . . . . . . .21
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PAGE
4.11 Announcements. . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
SECTION 5 COVENANTS OF IRIS . . . . . . . . . . . . . . . . . . . . . . . . .22
5.1 Representations True . . . . . . . . . . . . . . . . . . . . . . . . .22
5.2 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
5.3 Offering Memorandum. . . . . . . . . . . . . . . . . . . . . . . . . .22
5.4 Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
5.5 Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
5.6 Indemnification of StatSpin Directors and Officers . . . . . . . . . .22
5.7 Tax Compliance, Reporting and Other Actions. . . . . . . . . . . . . .23
5.8 Appointment of Mr. Kelley to IRIS Board. . . . . . . . . . . . . . . .23
SECTION 6 CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . . . .23
6.1 Conditions Precedent to Obligations of IRIS. . . . . . . . . . . . . .23
6.1.1 Accuracy of Representations and Warranties. . . . . . . . . . . . . . 23
6.1.2 Compliance with Covenants. . . . . . . . . . . . . . . . . . . . . . .23
6.1.3 Noncompetition Agreement . . . . . . . . . . . . . . . . . . . . . .24
6.1.4 Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . .24
6.1.5 Pooling Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.1.6 Registration Rights Agreements. . . . . . . . . . . . . . . . . . . . 24
6.1.7 Securityholder Representation Letters . . . . . . . . . . . . . . . . 24
6.1.8 Consents Obtained; Filings. . . . . . . . . . . . . . . . . . . . . . 24
6.1.9 No Material Adverse Effect. . . . . . . . . . . . . . . . . . . . . . 24
6.1.10 Legal Actions or Proceedings . . . . . . . . . . . . . . . . . . . . .24
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PAGE
6.1.11 All Proceedings To Be Satisfactory . . . . . . . . . . . . . . . . . .25
6.1.12 Opinion of Counsel for StatSpin. . . . . . . . . . . . . . . . . . . .25
6.1.13 IRIS Employee Acknowledgment Form. . . . . . . . . . . . . . . . . . .25
6.1.14 Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . . . . .25
6.2 Conditions Precedent to Obligations of StatSpin. . . . . . . . . . . .25
6.2.1 Accuracy of Representations and Warranties . . . . . . . . . . . . . .25
6.2.2 Compliance with Covenants. . . . . . . . . . . . . . . . . . . . . . .25
6.2.3 Consents Obtained; Filings . . . . . . . . . . . . . . . . . . . . . .25
6.2.4 AMEX Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
6.2.5 Employment Agreement . . . . . . . . . . . . . . . . . . . . . . . . .26
6.2.6 No Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . .26
6.2.7 All Proceedings To Be Satisfactory . . . . . . . . . . . . . . . . . .26
6.2.8 Opinion of Counsel for IRIS . . . . . . . . . . . . . . . . . . . . .26
6.2.9 Legal Actions or Proceedings . . . . . . . . . . . . . . . . . . . . .26
6.2.10 Registration Rights Agreements . . . . . . . . . . . . . . . . . . . .26
6.2.11 Minimum IRIS Stock Price . . . . . . . . . . . . . . . . . . . . . . .26
6.2.12 Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . .26
SECTION 7 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . .26
7.1 Indemnification of IRIS. . . . . . . . . . . . . . . . . . . . . . . .26
7.2 Indemnification of StatSpin and the StatSpin Stockholders. . . . . . .27
7.3 Survival of Representations and Warranties . . . . . . . . . . . . . .27
7.4 Deductible Amount. . . . . . . . . . . . . . . . . . . . . . . . . . .27
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7.5 Effect of Disclosures. . . . . . . . . . . . . . . . . . . . . . . . .27
7.6 Procedures for Indemnification . . . . . . . . . . . . . . . . . . . .27
7.7 Failure to Assume Defense. . . . . . . . . . . . . . . . . . . . . . .28
7.8 Cooperation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
7.9 Stockholder Representative . . . . . . . . . . . . . . . . . . . . . .28
SECTION 8 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
8.1 Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
8.2 Mutual Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . .29
8.3 Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . .29
8.4 Material Breach. . . . . . . . . . . . . . . . . . . . . . . . . . . .29
8.5 Effects of Termination . . . . . . . . . . . . . . . . . . . . . . . .29
8.6 Rights to Proceed. . . . . . . . . . . . . . . . . . . . . . . . . . .29
SECTION 9 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
SECTION 10 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . .34
10.1 Entire Agreement; Modifications. . . . . . . . . . . . . . . . . . . .34
10.2 Meaning of "Knowledge" . . . . . . . . . . . . . . . . . . . . . . . .34
10.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
10.4 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
10.5 Cooperation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
10.6 Third-Party Benefits . . . . . . . . . . . . . . . . . . . . . . . . .34
10.7 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . .35
10.8 Remedies Not Exclusive . . . . . . . . . . . . . . . . . . . . . . . .35
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PAGE
10.9 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
10.10 Governing Law; Consent to Jurisdiction . . . . . . . . . . . . . . . .36
10.11 Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . .37
10.12 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
10.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
10.14 Arbitration as Exclusive Remedy. . . . . . . . . . . . . . . . . . . .37
10.15 Agreement Negotiated . . . . . . . . . . . . . . . . . . . . . . . . .38
10.16 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "AGREEMENT") is made and entered
into as of January 31, 1996, by and among INTERNATIONAL REMOTE IMAGING SYSTEMS,
INC., a Delaware corporation ("IRIS"), NORFOLK SCIENTIFIC, INC., a Massachusetts
corporation doing business as "StatSpin Technologies" ("STATSPIN"), STATSPIN
ACQUISITION CORPORATION, a Massachusetts corporation and wholly-owned subsidiary
of IRIS ("MERGER SUB"), with reference to the following facts:
A. IRIS and StatSpin desire to effect a combination of their respective
businesses through a merger of StatSpin and Merger Sub.
B. The Boards of Directors of IRIS and StatSpin believe it is in the best
interests of each company and their respective stockholders to consummate such
combination on the terms and conditions set forth herein.
C. The parties intend that such acquisition qualify as a tax-free
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended, and a "pooling of interests" under Opinion No. 16 of
the Accounting Principles Board.
NOW, THEREFORE, based on the above premises and in consideration of the
mutual covenants and agreements contained herein, the parties agree as follows
(capitalized terms not otherwise defined herein have the meanings set forth in
Section 9):
SECTION 1
THE MERGER AND RELATED MATTERS
1.1 THE MERGER. At the Effective Time, and subject to and upon the terms
and conditions of this Agreement and the applicable provisions of the
Massachusetts Business Corporation Law, (a) Merger Sub shall be merged with and
into StatSpin (the "MERGER"), (b) the separate existence of Merger Sub shall
cease and (c) StatSpin shall continue as the surviving corporation (sometimes
referred to herein as the "SURVIVING CORPORATION") and shall succeed to and
assume all of the rights and obligations of Merger Sub in accordance with the
Massachusetts Business Corporation Law. The Merger shall have the effects set
forth herein and in the applicable provisions of the Massachusetts Business
Corporation Law.
1.2 CLOSING. The closing of the Merger (the "CLOSING") shall take place
at the offices of Irell & Manella, counsel to IRIS, at 1800 Avenue of the Stars,
Suite 900, Los Angeles, California as soon as practicable after the satisfaction
or waiver of the conditions set forth in Section 6. (The date on which the
Closing occurs is hereinafter referred to as the "CLOSING DATE").
1.3 CONSUMMATION OF THE MERGER; EFFECTIVE TIME. As soon as practicable on
the Closing Date, the parties hereto shall consummate the Merger by executing
and filing articles of merger (the "ARTICLES OF MERGER") with the Secretary of
State of the Commonwealth of Massachusetts in such form as required by, and
executed in accordance with, the Massachusetts Business Corporation Law. The
Merger shall become effective (the "EFFECTIVE TIME") upon the filing of the
Articles of Merger.
1.4 ARTICLES OF ORGANIZATION; BY-LAWS. The Articles of Organization and
By-Laws of Merger Sub, as in effect immediately prior to the Effective Time and
as amended by the Articles of Merger, shall become the Articles of Organization
and By-Laws of the Surviving Corporation and thereafter shall continue in effect
until amended as provided therein and in the Massachusetts Business Corporation
Law.
1.5 DIRECTORS AND OFFICERS. The directors and officers of Merger Sub
immediately prior to the Effective Time shall become the directors and officers
of the Surviving Corporation and shall hold office from the Effective Time until
their respective successors are duly elected or appointed and qualified in the
manner provided in the By-Laws of the Surviving Corporation, or as otherwise
provided by law.
1.6 CONVERSION OF CAPITAL STOCK. At the Effective Time and subject to the
provisions of Sections 1.9 (Escrow of Shares) and 1.10 (Maximum Merger
Consideration), by virtue of the Merger and without any action on the part of
IRIS, StatSpin, Merger Sub or any stockholder of StatSpin:
1.6.1 CONVERSION OF OUTSTANDING STATSPIN STOCK. Each share of
StatSpin Common Stock issued and outstanding immediately prior to the Effective
Time, other than shares held by StatSpin as treasury stock and shares held by
persons exercising dissenters' rights ("DISSENTING SHARES"), shall be converted
into the right to receive 4.0950 shares of IRIS Common Stock (the "EXCHANGE
RATIO").
1.6.2 CANCELLATION OF STATSPIN TREASURY SHARES. Each Share held by
StatSpin as treasury stock immediately prior to the Effective Time shall be
cancelled and extinguished at the Effective Time without any conversion thereof
and no payment shall be made with respect thereto.
1.6.3 CONVERSION OF MERGER SUB STOCK. Each share of common stock,
$.01 par value per share, of Merger Sub issued and outstanding issued and
outstanding immediately prior to the Effective Time shall be converted into one
(1) share of common stock of the Surviving Corporation.
1.6.4 EXCHANGE OF CERTIFICATES; FRACTIONAL SHARES. As soon as
practicable after the Effective Time, each holder of an outstanding
certificate(s) that prior thereto represented a share of StatSpin Common Stock
shall surrender such certificate(s) to the transfer agent for IRIS, together
with a duly executed letter of transmittal or affidavit of loss and such other
documents as may be reasonably requested by IRIS or the transfer agent
(including, without limitation, an indemnification agreement with respect to
lost
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certificates), and shall thereupon be entitled to receive in exchange therefor a
certificate or certificates representing the number of whole shares of IRIS
Common Stock into which the shares so surrendered shall have been converted. No
fractional shares shall be issued, but in lieu thereof holders of certificates
who would otherwise be entitled to receive a fraction of a share of IRIS Common
Stock shall be paid an amount in cash equal to the value of such fraction of a
share based upon the IRIS Stock Price. The fractional share interests of each
holder shall be aggregated so that no holder receives cash in an amount equal to
or greater than the value of one full share of IRIS Common Stock. Until so
surrendered, each certificate which, prior to the Effective Time, represented
shares of StatSpin Common Stock shall, from and after the Effective Time,
represent only the right to receive shares of IRIS Common Stock and cash in lieu
of any fractional interests. Neither IRIS, its transfer agent, Merger Sub,
StatSpin or the Surviving Corporation shall be liable to any holder of such
certificates for any cash or shares of IRIS Common Stock properly paid to a
public official pursuant to applicable abandoned property, escheat or similar
law.
1.7 CONVERSION OF STOCK APPRECIATION RIGHTS. At the Effective Time and
subject to (A) applicable federal and state withholding requirements, (B) the
provisions of Section 1.9 (Escrow of Shares) and (C) the provisions of Section
1.10 (Maximum Merger Consideration), IRIS shall issue as satisfaction in full
for each StatSpin SAR issued and outstanding immediately prior to the Effective
Time the number of shares of IRIS Common Stock determined in accordance with
this Section 1.7.
1.7.1 UNCAPPED STATSPIN SAR'S. With respect to each holder of a
StatSpin SAR on the Effective Date which is not subject to an SAR Cap, IRIS
shall issue a number of shares of IRIS Common Stock equal to (A) the number of
shares of StatSpin Common Stock with respect to which such holder's StatSpin SAR
has vested MULTIPLIED BY (B) the difference between the StatSpin Stock Price and
the base price of such StatSpin SAR (i.e. the "spread") DIVIDED BY (C) the IRIS
Stock Price.
1.7.2 CAPPED STATSPIN SAR'S. With respect to each holder on the
Effective Date of a StatSpin SAR subject to an SAR Cap, IRIS shall issue a
number of shares of IRIS Common Stock equal to (A) the number of shares of
StatSpin Common Stock with respect to which such holder's StatSpin SAR has
vested MULTIPLIED BY (B) the difference between the SAR Cap and the base price
of such StatSpin SAR (i.e. the "spread") DIVIDED BY (C) the IRIS Stock Price.
1.7.3 EXCHANGE OF AGREEMENTS; FRACTIONAL SHARES. As soon as
practicable after the Effective Time, each holder of an outstanding agreement
that prior thereto represented a StatSpin SAR shall surrender such agreement to
the transfer agent for IRIS, together with a duly executed letter of transmittal
or affidavit of loss and such other documents as may be reasonably requested by
IRIS or the transfer agent (including, without limitation, an indemnification
agreement with respect to lost certificates), and shall thereupon, subject to
applicable federal and state withholding requirements, be entitled to receive in
exchange therefor a certificate or certificates representing the number of whole
shares of IRIS Common Stock into which the StatSpin
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SAR agreement so surrendered shall have been converted. No fractional shares
shall be issued, but in lieu thereof holders of StatSpin SAR agreements who
would otherwise be entitled to receive a fraction of a share of IRIS Common
Stock shall be paid an amount in cash equal to the value of such fraction of a
share based upon the IRIS Stock Price. The fractional share interests of each
holder shall be aggregated so that no holder receives cash in an amount equal to
or greater than the value of one full share of IRIS Common Stock. Until so
surrendered, each agreement which, prior to the Effective Time, represented a
StatSpin SAR shall, from and after the Effective Time, represent only the right
to receive shares of IRIS Common Stock and cash in lieu of any fractional
interests. Neither IRIS, its transfer agent, Merger Sub, StatSpin or the
Surviving Corporation shall be liable to any holder of such StatSpin SAR for any
cash or shares of IRIS Common Stock properly paid to a public official pursuant
to applicable abandoned property, escheat or similar law.
1.8 ASSUMPTION OF WARRANTS AND STOCK OPTIONS. At the Effective Time and
subject to the provisions of Section 1.10 (Maximum Merger Consideration), IRIS
shall assume each outstanding warrant (a "STATSPIN WARRANT"), and each
outstanding option, whether vested or unvested, (a "STATSPIN OPTION"), to
purchase shares of StatSpin Common Stock. From and after the Effective Time,
each outstanding StatSpin Warrant and each outstanding StatSpin Option shall
entitle the holder to purchase shares of IRIS Common Stock on the same terms and
conditions as set forth in such StatSpin Warrant or StatSpin Option (including,
without limitation, any applicable vesting schedule), EXCEPT THAT (i) the holder
shall be entitled to purchase the number, rounded down to the nearest whole
integer, of full shares of IRIS Common Stock such holder would have been
entitled to receive pursuant to the Merger had such holder exercised such
StatSpin Warrant or StatSpin Option in full, including as to unvested shares,
immediately prior to the Effective Time, (ii) the price per share of IRIS Common
Stock shall be an amount, rounded up to the nearest whole cent, equal to (a) the
exercise price per share for the shares of StatSpin Common Stock otherwise
purchasable pursuant to the StatSpin Warrant or StatSpin Option DIVIDED BY (b)
the Exchange Ratio, and (iii) the registration rights of the holder shall be as
set forth in the Registration Rights Agreement which shall supersede any
registration rights previously associated with or contained in such holders
StatSpin Option or StatSpin Warrant. As soon as practicable after the Effective
Time, upon receipt by IRIS of a copy of such StatSpin Warrant or StatSpin
Option, IRIS issue and deliver to the holder thereof an originally signed
agreement evidencing the foregoing assumption of such StatSpin Warrant or
StatSpin Option by IRIS.
1.9 ESCROW OF SHARES. At the Closing, the holders of record of StatSpin
Common Stock at the Effective Time and the holders of record of StatSpin SAR's
at the Effective Time shall deposit in escrow ten percent (10%) of the aggregate
number of shares of IRIS Common Stock received by them in connection with the
Merger (the "ESCROWED SHARES"). For purposes of creating such escrow, each
holder of record of at the Effective Time of StatSpin Common Stock and each
holder of record at the Effective Time of StatSpin SAR's shall contribute a pro
rata number of the shares of IRIS Common Stock based on the number of shares of
IRIS Common Stock to which all such holders are entitled at the Effective Time.
Subject to compliance with the provisions of
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Sections 1.6.4 (Exchange of Stock Certificates) and 1.7.3 (Exchange of StatSpin
SAR Agreements), as applicable, the Escrowed Shares shall be released in
accordance with the terms of the Escrow Agreement to the holders of record at
the Effective Time of StatSpin Common Stock and the holders or record at the
Effective Time of StatSpin SAR's pro rata based on the number of shares of IRIS
Common Stock to which each holder was entitled at the Effective Time. The
escrow shall be administered in accordance with the terms of the Escrow
Agreement. The parties agree that for federal income tax purposes, the holders
of record at the Effective Time of StatSpin Common Stock and the holders of
record at the Effective Time of StatSpin SAR's will own the Escrowed Shares as
of the Effective Time.
1.10 MAXIMUM MERGER CONSIDERATION. The parties acknowledge that the
Exchange Ratio was based on an exchange of $3,000,000 of IRIS Common Stock for
all of the outstanding StatSpin Common Stock, StatSpin SAR's, StatSpin Warrants
and StatSpin Options. Therefore, the parties agree that the maximum
consideration to be paid by IRIS (including IRIS Common Stock to be reserved for
issuance upon exercise of StatSpin Options and StatSpin Warrants assumed by
IRIS) pursuant to the Merger shall be limited to a number of shares of IRIS
Common Stock equal to $3,000,000 plus the aggregate exercise price of the
outstanding StatSpin Options and StatSpin Warrants divided by the IRIS Stock
Price. In the event that the outstanding StatSpin Common Stock, StatSpin SAR's,
StatSpin Warrants and StatSpin Options at the Effective Time is greater as set
forth on SCHEDULES 2.4(a) AND 2.4(b), the Exchange Ratio shall be
proportionately decreased. No adjustment shall be made in the aggregate
consideration to be paid in the Merger as a result of any cash proceeds received
by StatSpin pursuant to the exercise of currently outstanding StatSpin Warrants
or StatSpin Options.
1.11 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time after the
Effective Time, any such further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of StatSpin and Merger Sub, the officers and directors of
StatSpin and Merger Sub are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and necessary
action.
1.12 REGISTRATION RIGHTS. The shares of IRIS Common Stock issued to
holders of StatSpin Common Stock and holders of StatSpin SAR's in connection
with the Merger, and the shares of IRIS Common Stock issuable upon exercise to
holders of StatSpin Warrants and StatSpin Options assumed by IRIS in connection
with the Merger, shall have the registration rights set forth in the
Registration Rights Agreement.
1.13 LEGEND. Each certificate for IRIS Common Stock issued hereunder or
under any StatSpin Warrant or StatSpin Option assumed hereunder, and each
certificate issued in exchange or upon transfer of any thereof, shall be stamped
or otherwise imprinted with a legend in substantially the following form:
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The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or qualified under any
applicable state securities laws and may not be transferred, sold,
assigned, pledged or otherwise disposed of unless (i) a registration
statement under the Securities Act of 1933, as amended, shall have become
effective with respect thereto and all applicable qualifications under
state securities laws have been obtained with respect thereto, (ii) or a
written opinion from counsel for the holder reasonably satisfactory to the
issuer has been obtained stating that no such registration or qualification
is required.
SECTION 2
REPRESENTATIONS AND WARRANTIES OF STATSPIN
As an inducement for IRIS to enter into this Agreement, StatSpin hereby
represents and warrants to IRIS that each of the following statements is true
and correct:
2.1 EXISTENCE AND RIGHTS. StatSpin (i) is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Massachusetts, and (ii) has the corporate power and authority to own its
properties and to carry on its business as now conducted. StatSpin has no
interests, direct or indirect, in any partnership, joint venture, corporation or
other business entity. The copies of the Charter and By-Laws of StatSpin, which
have been previously delivered to IRIS, are complete and correct. StatSpin is
duly qualified and in good standing in each jurisdiction in which the character
of its business makes such qualification necessary except where the failure to
so qualify would not have a Material Adverse Effect on StatSpin.
2.2 AGREEMENTS AUTHORIZED. The execution, delivery and performance by
StatSpin of this Agreement, and any related agreements to which it is or will be
a party, have been duly authorized by all necessary corporate action, including,
without limitation, approval by the holders of a majority of the outstanding
shares of StatSpin Common Stock, and do not require StatSpin to provide or
obtain any notice to, or the consent or approval from, any governmental or other
regulatory authority or other person except the following:
(i) the filing of the Articles of Merger with the Secretary of State of the
Commonwealth of Massachusetts;
(ii) the consent of Citizens Bank of Massachusetts under the terms of the
Revolving Loan Agreement dated August 1995 (which consent will not be obtained
with the permission of IRIS based on StatSpin's representation that there are no
amounts currently outstanding thereunder and will not be any amounts outstanding
thereunder on the Closing Date);
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(iii) the consent of the Massachusetts Technology Development Corporation
under the terms of an Amended and Restated 9% Subordinated Secured Promissory
Note dated February 17, 1995 (which consent will not be obtained with the
permission of IRIS based on StatSpin's representation the outstanding principal
amount thereof does not exceed $125,000);
(iv) the consent of holders of more than 50% of the aggregate principal
amount outstanding of the StatSpin's 12% Subordinated Notes dated March 13, 1992
(which consents will be obtained prior to Closing);
(v) the consent of each holder of a StatSpin Option (which consents will
be obtained prior to Closing); and
(vi) the consent of each holder of a StatSpin Warrant (which consents will
be obtained prior to Closing).
This Agreement, and any related agreements to which StatSpin is or will be a
party, have been (or will be) duly executed and delivered by StatSpin and are
(or upon execution and delivery will be) legal, valid and binding obligations of
StatSpin enforceable against StatSpin in accordance with their terms, subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to creditors rights generally and general principles of
equity.
2.3 NO CONFLICT. The execution, delivery and performance by StatSpin of
this Agreement and any related agreements will not (i) modify, breach or
constitute grounds for the occurrence or declaration of a default under or allow
another party a right to terminate (with or without notice or lapse of time or
both) any agreement, indenture, undertaking or other instrument to which
StatSpin is a party or by which it or any of its assets may be bound or affected
except for the agreements as to which StatSpin has disclosed under Section 2.2
with respect to which required consents will not be obtained, (ii) violate any
provision of law or any regulation or any order, judgement, or decree of any
court or other agency of government to which StatSpin is subject, (iii) violate
any provision of the Charter or By-Laws of StatSpin, or (iv) result in the
creation or imposition of (or the obligation to create or impose) any Claim on
any of StatSpin's properties except as disclosed in Section 2.2.
2.4 CAPITALIZATION. The authorized capital stock of StatSpin consists
solely of 300,000 shares of StatSpin Common Stock, of which 69,771 shares are
issued and outstanding. SCHEDULES 2.4(a) AND (b) set forth a complete and
accurate list of all outstanding shares of StatSpin Common Stock, StatSpin
Warrants, StatSpin Options and StatSpin SAR's, the holders thereof and the
material terms thereof. StatSpin has terminated its 1984 Incentive Stock Option
Plan and there are no stock options outstanding under such plan. StatSpin does
not hold any shares of StatSpin Common Stock in its treasury. Except as set
forth SCHEDULES 2.4(a) AND (b), StatSpin has no outstanding stock appreciation
right, option, warrant, convertible debt, subscription agreement, rights
agreement or other commitment which either (i) obligates StatSpin to
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issue, sell or transfer any shares of the capital stock of StatSpin or any
successor-in-interest, (ii) obligates StatSpin to repurchase, redeem or
otherwise acquire any outstanding shares of the capital stock of StatSpin, or
(iii) may be the basis for a claim by any person that such person has an
interest (contingent or otherwise) in the equity of StatSpin or any
successor-in-interest. All of the outstanding shares of the StatSpin Common
Stock are duly and validly issued, fully paid, non-assessable and not subject to
any preemptive rights, are owned of record by the persons in the amounts shown
in SCHEDULE 2.4(a), and to the best knowledge of StatSpin are free and clear of
all Claims (including, without limitation, stockholders agreements, voting
agreements and rights of first refusal) except as set forth on SCHEDULE 2.4(a).
2.5 FINANCIAL STATEMENTS. StatSpin has previously delivered to IRIS
correct and complete copies of (a) audited financial statements for each of
StatSpin's last three fiscal years, together with the notes thereto and the
unqualified independent auditors' reports of KPMG Peat Marwick thereon, and (b)
unaudited interim financial statements for the 6-month periods ended September
30, 1995 and 1994 (such audited and unaudited financial statements,
collectively, the "STATSPIN FINANCIAL STATEMENTS"). The StatSpin Financial
Statements (i) are correct and complete in all material respects (subject, in
the case of the unaudited StatSpin Financial Statements, to normal year-end
adjustments which are not expected to be material in amount and the absence of
footnotes), (ii) present fairly the financial position of StatSpin at such dates
and the results of the operations and cash flows of StatSpin for the periods
covered therein, (iii) are complete and correct in all material respects, and
(iv) have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis.
2.6 NO MATERIAL CHANGES. Since September 30, 1995, StatSpin has conducted
its business only in the ordinary course consistent with past practice, and
there has not been:
(i) except as disclosed on ANY SCHEDULE to this Agreement, any Material
Adverse Effect, or any occurrence or event which could reasonably be expected to
have a Material Adverse Effect, on StatSpin;
(ii) any declaration or payment of any dividend or other distribution on or
in respect of any capital stock of StatSpin, or any direct or indirect
redemption, retirement, purchase or other acquisition of any capital stock of
StatSpin;
(iii) any increase, which is either not in the ordinary course of business
or is in excess of 5% in the aggregate or for any individual, in the
compensation by StatSpin to any of its directors, officers, employees,
consultants or agents, or any hiring of a director, officer, employee,
consultant or agent at a base compensation level in excess of $40,000 per annum,
or
(iv) any transaction involving StatSpin and any Related Party.
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2.7 UNDISCLOSED LIABILITIES. Except as set forth on SCHEDULE 2.7,
StatSpin has no obligations, indebtedness or liabilities (including without
limitation liabilities to current and former employees, including without
limitation such liabilities arising out of any benefit plan, health plan, dental
plan, long or short term disability plan, life insurance plan, or other similar
plan or policy of StatSpin), contingent or otherwise and whether or not such
liabilities would ordinarily be required under generally accepted accounting
principles to be accrued on a balance sheet or referred to in a footnote, other
than: (i) those disclosed or adequately reserved for on StatSpin's September 30,
1995, balance sheet; (ii) obligations, indebtedness or liabilities incurred
since September 30, 1995 in the ordinary course of business consistent with past
practice; or (iii) obligations and liabilities which do not exceed $30,000 in
the aggregate.
2.8 CONTINGENCIES. Except as set forth on SCHEDULE 2.8 or in the StatSpin
Financial Statements, (i) there are no express product warranties relating to
products manufactured or distributed by StatSpin; (ii) there is no litigation,
arbitration, administrative proceeding, audit request or, to the best knowledge
of StatSpin, investigation pending against StatSpin, its business or its assets;
(iii) StatSpin does not know of any threats of, or reasonable basis for, any
such litigation, arbitration, administrative proceeding or investigation, the
results of which could reasonably be expected to have a Material Adverse Effect
on StatSpin; (iv) neither the Food & Drug Administration ("FDA") nor any
comparable state agency has within the past six (6) years notified, or to the
best StatSpin's knowledge, intends to notify, StatSpin of any violation of the
Federal Food, Drug and Cosmetics Act, the regulations promulgated thereunder or
any comparable state laws or regulations; (v) StatSpin does not know of, and has
never received any notice of, any potential liability under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 or any comparable
state law or regulation; (vi) to the extent due on or before the date hereof,
StatSpin has paid all sales and use taxes arising out of the operation of its
business; and (vi) the StatSpin Financial Statements do not include and, under
generally accepted accounting principles applied on a consistent basis, are not
required to include, any reserves for liabilities relating to product warranties
on the products sold by it. StatSpin is not subject to any order, writ,
injunction or decree of any court or other governmental or regulatory authority.
2.9 REAL PROPERTY. StatSpin does not own or lease any real property other
than the 10,851 square feet of the premises located at 85 Morse Street, Norwood,
Massachusetts (the "PREMISES") which are leased by StatSpin pursuant to the
terms and conditions of that certain Commercial Lease by and between John E.
Reardon and Paul E. Reardon, on the one hand, and StatSpin, on the other hand,
dated February 15, 1990, as amended by that certain First Amendment to Agreement
of Lease dated April 1, 1995. StatSpin has previously delivered a true and
correct copy of such lease to IRIS, and StatSpin is not in default thereunder
which default could reasonable be expected to have a Material Adverse Effect on
StatSpin. To the best knowledge of StatSpin, such lease remains in full force
and effect without any default of the other party thereto.
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2.10 PERSONAL PROPERTY AND LEASEHOLD IMPROVEMENTS. StatSpin has the
right to use all personal property held by it or used in its business, and the
buildings, offices, and any other structures occupied by StatSpin, and all
computers, machinery, equipment and motor vehicles owned or used by StatSpin are
in the aggregate in good operating condition, except for ordinary wear and tear
and assets which are no longer in use, and are generally adequate and sufficient
for the operation of StatSpin's business as currently conducted.
2.11 RESTRICTIVE AGREEMENTS. Except as set forth on SCHEDULE 2.11,
there are no contracts, agreements or understandings to which StatSpin is a
party or under which StatSpin is bound that in any way preclude or substantially
restrict StatSpin from competing in any geographic area or business sector.
2.12 INTELLECTUAL PROPERTY. SCHEDULE 2.12 identifies all of the
Intellectual Property along with (if applicable) the registration numbers, dates
of issuance and names of the inventors or authors of such patents, marks, names
and registered copyrights and any other related information. Except as set
forth on SCHEDULE 2.12, StatSpin is the exclusive owner of all such Intellectual
Property free and clear of all Claims and is not a party to any license,
agreement or arrangement, whether as licensee, licensor or otherwise, with
respect to any such Intellectual Property. Except as set forth on SCHEDULE
2.12, (i) StatSpin has the unencumbered right and authority to use all of the
Intellectual Property; (ii) to the best knowledge of StatSpin, such use does not
conflict with, infringe on, or violate any rights of others; (iii) StatSpin is
not in default under any license relating to any of the Intellectual Property;
(iv) there have been no claims made against StatSpin asserting the invalidity,
abuse, misuse or unenforceability of any of its Intellectual Property, and, to
the best knowledge of StatSpin, there are no reasonable grounds for the same;
(v) StatSpin has not received a notice of conflict with the asserted rights of
others with respect to any Intellectual Property within the last three years;
and (vi) to the best knowledge of StatSpin, no person is violating or infringing
any of the Intellectual Property.
2.13 INVENTORY. StatSpin's inventory is of a quality saleable in the
normal course of business and contains quantities appropriate for normal
operations subject to inventory reserves reflected in the StatSpin Financial
Statements.
2.14 INSURANCE. StatSpin has in full force and effect the policies of
fire, liability, errors and omissions and other forms of insurance listed on
SCHEDULE 2.14, and the copies of such policies provided to IRIS are accurate and
complete. StatSpin reasonably believes that such policies are adequate in
amount and scope to cover all pending and reasonably anticipated product
liability claims against StatSpin. Furthermore, (i) StatSpin is not in default
in any material respect under any such policies and there is no material
inaccuracy in any application for such policies, (ii) StatSpin's activities and
operations have been conducted in a manner so as to conform in all material
respects to the applicable provisions of such policies, and (iii) StatSpin has
not received a notice of cancellation, non-renewal or premium increase with
respect to any such policy.
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2.15 CONTRACTS. SCHEDULE 2.15 correctly lists all contracts and
commitments, written and oral, to which StatSpin is a party or by which StatSpin
or any of its assets are bound, including all amendments, modifications and
waivers thereto (the "MATERIAL CONTRACTS"), which (i) relate to any Intellectual
Property, (ii) relate to any real property, (iii) restrict StatSpin's ability to
compete in any product line or in any geographic market, (iv) could reasonably
be expected to involve the payment or receipt by StatSpin of more than $30,000
in any 12-month period, (v) relate to the purchase, sale, repurchase, transfer,
registration, issuance or voting of StatSpin Common Stock, StatSpin Warrants or
StatSpin SAR's, (vi) relate to any indebtedness for borrowed money or any
guarantee thereof, (vii) create any lien on any of the assets of StatSpin or
(viii) involve any Related Party; PROVIDED, HOWEVER that Material Contracts
shall not include purchase orders or employment contracts. The copies of the
Material Contracts (including all amendments, modifications and waivers)
previously delivered to IRIS are complete and correct. Each of the Material
Contracts (including all amendments, modifications and waivers) (a) has been
duly authorized, executed and delivered by StatSpin and, to the best knowledge
of StatSpin, the other parties thereto, (b) to the best knowledge of StatSpin,
remains in full force and effect to the extent of its terms without any
amendment, modification or waiver not reflected in the Material Contracts
previously delivered to IRIS, (c) to the best knowledge of StatSpin, is binding
on the parties thereto in accordance with and to the extent of its terms and
applicable laws, subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting or relating to creditors rights generally and
general principles of equity and (d) StatSpin has not received any notice
threatening or declaring, termination as a result of any alleged uncured breach
or default. StatSpin is not in default under any existing note, mortgage, or
other Material Contract, including, without limitation, (i) the 11% Subordinated
Notes dated April 30, 1991, (ii) the 12% Subordinated Notes dated March 13,
1992, (iii) the Amended and Restated 9% Subordinated Secured Note dated February
17, 1995 and (iv) the Revolving Loan Agreement dated August 1995 with Citizens
Bank.
2.16 ACQUISITION AGREEMENTS. Neither StatSpin nor, to the best
knowledge of StatSpin, any stockholder of StatSpin is or intends to be a party
to any agreement, written or oral, with any other person or entity concerning a
merger, consolidation, asset or stock acquisition, disposition or other business
acquisition or business combination transaction involving StatSpin.
2.17 BUSINESS RELATIONS. StatSpin has good commercial working
relationships with its customers, suppliers and distributors. StatSpin has not
received notice that any of its customers, suppliers or distributors intends to
terminate or alter its relationship with StatSpin except for terminations or
alterations which would not, in the aggregate, have a Material Adverse Effect on
StatSpin or the Surviving Corporation. StatSpin reasonably believes that the
Transactions will not adversely affect the relationship of StatSpin (including,
after the Effective Time, Surviving Corporation) with any of its suppliers or
distributors.
2.18 AFFILIATE TRANSACTIONS. Except as disclosed in the notes to the
StatSpin Financial Statements, to the best knowledge of StatSpin, no Related
Party of StatSpin
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(i) owns (other than ownership of less than one percent (1%) of the stock of a
publicly traded corporation), directly or indirectly, individually or
collectively, any interest in any corporation, partnership, firm, association or
sole proprietorship, which is either a competitor, potential competitor,
customer, supplier or distributor of StatSpin or has an existing contractual
relationship with StatSpin; or (ii) owes any money to or is owed any money by
StatSpin, other than indebtedness for compensation earned and not yet paid in
the ordinary course of business.
2.19 BENEFIT PLANS. SCHEDULE 2.19 sets forth all employee benefit
plans, funds, programs or arrangements (including but not limited to employee
benefit plans as defined in Section 3(3) of ERISA) which StatSpin has sponsored
or maintained, or to which it has been required to contribute ("BENEFIT PLANS").
StatSpin has previously delivered to IRIS complete and correct copies of all
Benefit Plan documents (including trust, investment management and custodial
agreements and insurance and annuity policies and contracts) and the most recent
IRS form 5500 Series filing and summary plan description, related to each
Benefit Plan. Except as otherwise described on SCHEDULE 2.19, (i) each Benefit
Plan has been operated in material conformity with its terms and applicable laws
(including but not limited to the Code and ERISA); (ii) all continuation
coverage under any group health plan provided by StatSpin or any entity under
common control or constituting an affiliated service group with StatSpin (within
the meaning of Section 414(b), (c), (m) or (o) of the Code) has been provided in
material conformity with the Code and ERISA; (iii) StatSpin has made all
contributions required to be made by it under any Benefit Plan for all plan
years ending before the Closing Date and has either made or accrued all such
contributions with respect to all periods commencing prior to the date hereof,
including without limitation all employee contributions and corresponding
matching contributions to the 401(k) Plan maintained by StatSpin; (iv) each
funded employee pension plan as defined in Section 3(2) of ERISA is qualified
under Section 401(a) of the Code, as amended by the Retirement Equity Act and
the Deficit Reduction Act of 1984, and nothing has occurred which has resulted
or is likely to result in the revocation of such qualification; (v) neither
StatSpin nor any entity under common control or constituting an affiliated
service group with StatSpin (within the meaning of Section 414(b), (c), (m) or
(o) of the Code) sponsors, maintains or is required to contribute to any defined
benefit pension plan (as defined in Section 3(35) of ERISA), is a party to or
has contributed to any multi-employer plan (as defined in Section 3(37) of
ERISA), has incurred any unsatisfied liability under Title IV of ERISA, or
assumed any liability under Section 4204 of ERISA; (vi) to the best knowledge of
StatSpin, no prohibited transaction (as defined in either Section 4975 of the
Code or Section 406 of ERISA) has occurred with respect to any Benefit Plan;
(vii) StatSpin has complied in all material respects with the reporting and
disclosure requirements under ERISA and the Code to the extent applicable to any
Benefit Plan; and (viii), to the best knowledge of StatSpin, no director or
officer of StatSpin, to the extent he or she is a fiduciary with respect to any
Benefit Plan, has breached any responsibility or obligation imposed upon
fiduciaries under Title I of ERISA or which would result in any claim being made
under, by or on behalf of any Benefit Plan and there has been no actual,
anticipated or threatened litigation, arbitration or governmental administrative
action concerning or involving any such Benefit Plan. StatSpin has, in all
summary plan
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descriptions or other written employee communications relating to any employee
benefit plan (as defined in Section 3(3) of ERISA), reserved its rights to amend
or terminate the Benefit Plan to which the description or other communications
relates and has not represented otherwise in any such description or
communications, nor has StatSpin represented that any health or medical
insurance benefit is available to any employee after such employee's separation
from service with StatSpin except as provided in any disability plan, as
required by law or as disclosed on SCHEDULE 2.19.
2.20 ENVIRONMENTAL MATTERS. Except as disclosed on SCHEDULE 2.20,
StatSpin has complied in all material respects with, and is in material
compliance with, the provisions of all federal, state and local environmental,
health and safety laws, codes and ordinances, and all rules and regulations
promulgated thereunder pertaining to Hazardous Materials, waste, air emissions,
water discharges, and other environmental and health safety matters with respect
to StatSpin's use or occupation of the Premises. StatSpin has not generated,
handled, treated, stored, transported or disposed of any Hazardous Material
other than in material compliance with any applicable federal, state or local
laws, codes, ordinances, rules or regulations applicable to such activity.
StatSpin has no liability for damage to third parties or property or remediation
of contaminated property pursuant to CERCLA or similar state laws relating to
the use, transportation, storage or disposal of Hazardous Material, nor has
StatSpin received notice of, nor does StatSpin have reason to know of, any facts
or circumstances which might reasonably be expected to give rise to liability
relating to the use, transportation, storage, or disposal of Hazardous
Materials, or which might reasonably be expected to give rise to liability for
employee exposure to Hazardous Materials. StatSpin has disposed of, or arranged
for the disposal of, its solid and liquid wastes in compliance with applicable
Hazardous Materials laws. To the best of its knowledge, StatSpin has not
disposed of, or arranged for the disposal of, any waste or Hazardous Materials
to any location which is listed or proposed for listing under CERCLA, or on any
similar state list, or which is the subject of federal, state or local
enforcement actions or other investigations which may lead to liability on the
part of IRIS or the Surviving Corporation for site investigation or cleanup
costs, remedial work, damages to natural resources or for personal injury. To
the best of its knowledge, StatSpin does not lease any property located on a
site which is listed or proposed for listing under CERCLA or on any similar
state list.
2.21 COMPLIANCE WITH LAWS. Except as specifically set forth on ANY
SCHEDULE to this Agreement, StatSpin is not in violation of any applicable law
or regulation, or of any judgment, order, decree or other requirement of any
court, tribunal or governmental body, or any agency or official acting in an
official capacity, the violation of which, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect on StatSpin.
2.22 PERMITS. StatSpin has all Permits and Licenses required for the
ownership, use and operation of its property and assets, both real and personal,
and all other Permits and Licenses which are necessary or proper for the conduct
of its business. Except as set forth on SCHEDULE 2.22, each Permit and License
is presently valid and in full force and effect; no proceeding is pending or, to
the best knowledge of StatSpin,
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threatened to revoke, limit or negate any such Permit or License; and no such
Permit or License has ever been revoked, limited or negated or been threatened
with such action. Immediately after the Effective Time, each Permit and License
will be valid and in full force and effect with respect to StatSpin. StatSpin
does not know, or have reason to know, of any facts or circumstances which would
reasonably be expected to prevent renewal of any of StatSpin's Permits or
Licenses after the Effective Time prior to their scheduled expiration or require
additional Permits or Licenses in order to operate its business as presently
operated. StatSpin is in compliance in all material respects with its Permits
and Licenses.
2.23 LABOR RELATIONS; EMPLOYEES. StatSpin has good relationships with
its employees and consultants. Except for satisfaction of the SAR's as
expressly provided in this Agreement, StatSpin has not made and is not obligated
to make any payments contingent on the Merger. StatSpin has generally not
required its employees and consultants to execute confidentiality,
non-competition or invention assignment agreements, but StatSpin reasonably
believes that the failure to obtain such agreements from its employees and
consultants will not have a Material Adverse Effect on StatSpin. StatSpin does
not have any employment, severance, change-of-control or similar agreements with
any of its employees other than (i) an Employment Agreement dated as of May 26,
1994 with Thomas F. Kelley, a true and correct copy of which has been previously
delivered to IRIS and (ii) agreements evidencing the StatSpin SAR's listed on
SCHEDULE 2.4(b). StatSpin is not delinquent in payments to any of its employees
or consultants for any wages, salaries, commissions, benefits, bonuses or other
direct or indirect compensation for any services performed by him or her prior
to the date hereof or amounts required to be reimbursed to any of its employees
or consultants. Except as disclosed on SCHEDULE 2.8, there is no pending or (to
the best knowledge of StatSpin) threatened litigation by any employees or
consultants with respect to StatSpin, and there are no pending or (to the best
knowledge of StatSpin) threatened administrative actions or claims with respect
to StatSpin's relationship to any employee or consultant including without
limitation discrimination claims (whether for sex, age, race, religion, national
origin or any other reason). There is no unfair labor practice complaint
against StatSpin pending before the National Labor Relations Board or any
comparable state, local or foreign agency, and there is no labor strike,
dispute, slowdown or stoppage actually pending or, to the best knowledge of
StatSpin, threatened against or involving StatSpin. StatSpin is not a party to
nor is it subject to any collective bargaining agreement and none is currently
being negotiated, and StatSpin is not aware of any union organizing activities
in connection with StatSpin. StatSpin has no plans to terminate, and to the
best knowledge of StatSpin, no executive, salesperson or key employee or
consultant of StatSpin has any plans to terminate, the employment or consulting
relationship of any such person with StatSpin either prior to or after the
Effective Time.
2.24 TAXES. Except as disclosed on SCHEDULE 2.24, StatSpin has (i)
timely filed all returns for Taxes required to be filed on or before the date
hereof or has obtained extensions (without penalty or interest) of the deadline
for filing; (ii) paid or adequately reserved on its September 30, 1995 balance
sheet for all Taxes which may be owed by it as of such date; (iii) adequately
reserved for deferred Taxes in accordance with generally
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accepted accounting principles consistently applied; and (iv) duly withheld,
collected and paid over to the proper governmental authorities all Taxes and
assessments required to have been withheld or collected and paid over by
StatSpin, all as and to the extent prescribed by law. StatSpin has not been
advised of any deficiency claimed or proposed to be claimed against or relating
to StatSpin by any taxing authority which has not been paid, settled or
adequately reserved for on its September 30, 1995 balance sheet, and there are
no matters under discussion with any taxing authority which might reasonably
result in the assessment of additional amounts against or relating to StatSpin.
There are no liens for Taxes (other than for current Taxes not yet due and
payable) upon the assets of StatSpin. StatSpin has previously delivered to IRIS
complete and correct copies of all federal, state and local income tax returns
of or in respect of StatSpin for StatSpin's tax years ended March 31, 1995,
1994, 1993 and 1992. StatSpin is not a party to or bound by any tax indemnity,
tax sharing or tax allocation agreement. StatSpin has never been a member of an
affiliated group of corporations within the meaning of Section 1504 of the Code.
StatSpin has never been a party to any joint venture, partnership, or other
arrangement or contract which could be treated as a partnership for federal
income tax purposes.
2.25 POOLING MATTERS. Neither StatSpin nor any of its Affiliates has,
to the best knowledge of StatSpin based solely upon consultation with its
independent auditors, taken or agreed to take any action that would prevent IRIS
from accounting for the business combination to be effected by the Merger as a
pooling of interests under Opinion No. 16 of the Accounting Principles Board.
2.26 BOARD APPROVAL. The Board of Directors of StatSpin has (i)
approved the Merger, this Agreement and the Articles of Merger and (ii)
recommended that its stockholders approve the Merger, this Agreement and the
Articles of Merger.
2.27 NO FINDER'S FEE. Neither StatSpin nor, to the best of its
knowledge, any of its stockholders, officers, directors, agents or employees
have incurred any liability to any broker, finder or agent for any brokerage
fees, finder's fees, commissions or similar amounts with respect to the
Transactions.
2.28 DISCLOSURE. To the knowledge of StatSpin, the written information
delivered or made available by StatSpin or its representatives to IRIS or its
representatives in connection with the Transactions, taken as whole, does not
contain any untrue statement of a material fact, or omit to state any material
fact necessary in order to make the statements contained herein, in the light of
the circumstances under which it was made, not misleading, except where such
untrue statement or omission was corrected in subsequent information delivered
or made available by StatSpin or its representatives to IRIS or its
representatives.
2.29 OFFERING MEMORANDUM. None of the information provided by StatSpin
for inclusion in the Offering Memorandum will contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order
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to make the statements therein, in light of the circumstances under which they
are made, not misleading.
2.30 TRANSACTION EXPENSES. The fees and expenses incurred by StatSpin
in connection with the negotiation, preparation and execution of this Agreement
and any related agreement, and the consummation of the Transactions, will not
exceed $65,000 in the aggregate.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF IRIS
As an inducement for StatSpin to enter into this Agreement, IRIS
represents and warrants that each of the following statements is complete and
correct:
3.1 EXISTENCE AND RIGHTS. IRIS (i) is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and (ii) has the corporate power and authority to own its properties and to
carry on its business as now conducted. The copies of the Certificates of
Incorporation and By-Laws of IRIS which have been previously delivered to
StatSpin are complete and correct.
3.2 AGREEMENTS AUTHORIZED. The execution, delivery and performance by
IRIS of this Agreement, and any related agreements to which it is or will be a
party, have been duly authorized by all necessary corporate action and do not
require IRIS to provide or obtain any notice to, or the consent or approval
from, any governmental or other regulatory authority or other person except the
American Stock Exchange. This Agreement, and any related agreements to which it
is or will be a party, has been duly executed and delivered by IRIS and is a
legal, valid and binding obligation of IRIS enforceable against IRIS in
accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to creditors rights
generally and general principles of equity.
3.3 NO CONFLICT. The execution, delivery and performance by IRIS of
this Agreement and any related agreements will not (i) modify, breach or
constitute grounds for the occurrence or declaration of a default under or allow
another party a right to terminate (with or without notice or lapse of time or
both) any agreement, indenture, undertaking or other instrument to which IRIS is
a party or by which it or any of its assets may be bound or affected, (ii)
violate any provision of law or any regulation or any order, judgement, or
decree of any court or other agency of government to which IRIS is subject,
(iii) violate any provision of the Charter or By-Laws of IRIS, or (iv) result in
the creation or imposition of (or the obligation to create or impose) any Claim
on any of the properties of IRIS.
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3.4 IRIS SHARES. The shares of IRIS Common Stock, when issued in the
Merger in compliance with this Agreement, will be duly and validly issued, fully
paid and non-assessable.
3.5 IRIS SEC REPORTS. IRIS has previously furnished to StatSpin
complete and correct copies of the IRIS Annual Report on Form 10-K for the year
ended December 31, 1994, Proxy Statement dated April 29, 1995 and Quarterly
Report on Form 10-Q for the quarter ended September 30, 1995 (collectively, the
"IRIS SEC DOCUMENTS"). As of their respective filing dates, the IRIS SEC
Documents complied in all material respects with the requirements of the
Exchange Act and none of the IRIS SEC Documents contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading, except to the extent
corrected by a document subsequently filed with the SEC. The financial
statements of IRIS, including the notes thereto, included in the IRIS SEC
Documents (the "IRIS FINANCIAL STATEMENTS") comply as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles consistently applied
(except as may be indicated in the notes thereto or, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC), fairly present the
consolidated financial position of IRIS at the dates thereof and of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal, recurring audit adjustments) and are complete
and correct in all material respects. There has been no change in IRIS
accounting principles except as described in the notes to the IRIS Financial
Statements. IRIS has no material obligations other than (i) those set forth in
the IRIS Financial Statements and (ii) those not required to be set forth in the
IRIS Financial Statements under generally accepted accounting principles.
3.6 NO MATERIAL CHANGES. Since September 30, 1995, there has not been
any Material Adverse Effect, or any occurrence or event which could reasonably
be expected to have a Material Adverse Effect, on IRIS which has not been
disclosed in the SEC Filings or the Offering Memorandum. The IRIS press release
dated November 15, 1995 announcing the development program with Poly U/A
Systems, Inc. and the completion of a related unit offering is true and correct
in all material respects.
3.7 DISCLOSURE. To the knowledge of IRIS, the written information
delivered or made available by IRIS or its representatives to StatSpin or its
representatives in connection with the Transactions, taken as a whole, does not
contain any untrue statement of a material fact, or omit to state any material
fact necessary in order to make the statements contained herein, in the light of
the circumstances under which it was made, not misleading, except where such
untrue statement or omission was corrected in subsequent information delivered
or made available by IRIS or its representatives to StatSpin or its
representatives.
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3.8 NO FINDER'S FEES. Neither IRIS nor any of its officers, directors,
agents or employees has incurred any liability to any broker, finder or agent
for any brokerage fees, finder's fees, commissions or similar amounts with
respect to the Transactions.
3.9 OPERATIONS OF MERGER SUB. Merger Sub will be a newly formed
Massachusetts corporation formed solely for the purpose of facilitating the
Merger and, except as otherwise described or contemplated in this Agreement,
will not have conducted any business operations prior to the Effective Time.
3.10 OFFERING MEMORANDUM. None of the information included by IRIS in
the Offering Memorandum will contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading.
SECTION 4
COVENANTS OF STATSPIN
4.1 CONDUCT PRIOR TO EFFECTIVE TIME. StatSpin covenants that, between
the date of this Agreement and the Effective Time, unless IRIS shall otherwise
consent in writing in advance:
4.1.1 CAPITAL STOCK CHANGES; DIVIDENDS; REDEMPTIONS. Except for
the issuance of shares of StatSpin Common Stock upon the exercise of presently
outstanding StatSpin Warrants and StatSpin Options, StatSpin shall not issue or
sell any shares of its capital stock or other securities, acquire directly or
indirectly, by redemption or otherwise, any such capital stock, reclassify or
split-up any such capital stock, declare or pay any dividends thereon in cash,
securities or other property or make any other distribution with respect
thereto, or grant or enter into any options, warrants, calls or commitments of
any kind with respect thereto;
4.1.2 ORDINARY COURSE. StatSpin shall conduct its business only
in the ordinary and usual course consistent with past practice.
4.1.3 CERTAIN PERSONNEL. StatSpin shall use reasonable efforts
to prevent any change with respect to StatSpin's management, supervisory
personnel or sales personnel.
4.1.4 GOODWILL. StatSpin shall use reasonable efforts to
preserve the goodwill of customers, suppliers, distributors and others having
business relations with StatSpin.
4.1.5 INSURANCE. StatSpin shall use reasonable efforts to
maintain in full force and effect all policies of insurance with respect to
StatSpin now in effect (or secure
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comparable replacement policies in the event the insurer cancels or declines to
renew such policies) and shall give all notices and present all claims under all
such policies in a timely fashion.
4.1.6 SALE OR ACQUISITION OF ASSETS. StatSpin shall not Transfer
or acquire (whether through a purchase, merger or otherwise) any assets except
inventory sold in the ordinary course of business consistent with past practice
or capital assets acquired in accordance with Section 4.1.9.
4.1.7 INDEBTEDNESS. StatSpin shall not (i) borrow or agree to
borrow any funds or incur, assume, or guarantee, any obligation or liability
(absolute or contingent), which is not incurred in the ordinary course of
business; or (ii) pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, contingent or otherwise), other than the payment, discharge
or satisfaction in the ordinary course of business consistent with past practice
of liabilities or obligations reflected or reserved against in the StatSpin
Financial Statements or incurred after the dates thereof in the ordinary course
of business consistent with past practice.
4.1.8 RELATED PARTY TRANSACTIONS. StatSpin shall not effect any
transaction with any Related Party except as required under an existing
agreement or arrangement the terms of which have been previously disclosed to
IRIS, nor shall StatSpin enter into any new contract or arrangement with any
Related Party.
4.1.9 CAPITAL EXPENDITURES AND MATERIAL CONTRACTS. StatSpin
shall not (i) make any capital expenditures in excess of $10,000 individually or
$30,000 in the aggregate (other than the purchase of tooling as previously
discussed with IRIS which shall not be counted toward such dollar limits), (ii)
enter into, amend, terminate, renew or waive any provision of any Material
Contract or (iii) commit to any of the foregoing.
4.1.10 AMENDMENT OF CHARTER. StatSpin shall not amend its
Charter or By-laws except pursuant to the Articles of Merger or make any change
in its authorized or issued capital stock except pursuant to the exercise of the
outstanding StatSpin Warrants and StatSpin Options disclosed on SCHEDULE 2.4(a)
OR 2.4(b).
4.1.11 PRESERVATION OF ORGANIZATION. StatSpin shall use
reasonable efforts (i) to maintain at all times the status of StatSpin as a
corporation duly organized, validly existing, in good standing and duly
qualified and licensed to conduct its business as now being conducted in each of
the jurisdictions in which such business is now being conducted; (ii) to
maintain in effect all Permits and Licenses that are required for StatSpin to
carry on its business; and (iii) to preserve StatSpin's business organizations
intact.
4.1.12 STANDARD OF CONDUCT. StatSpin shall operate in compliance
with all applicable laws.
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4.1.13 PROHIBITED DISCUSSIONS. StatSpin shall not shall solicit,
encourage or respond to any inquiries from any person or entity, or provide
information to, or conduct negotiations with, any other person or entity
concerning a sale of all or any part of the assets of StatSpin (except a sale of
assets of immaterial value in the ordinary course of StatSpin's business as
previously conducted), sale of stock, merger, consolidation, or other form of
business acquisition or business combination transaction involving StatSpin or
its capital stock. StatSpin shall also use reasonable efforts to prevent any of
its stockholders or agents from engaging in any of the foregoing activities.
StatSpin shall immediately (i) communicate to IRIS the substance of any inquiry
or proposal concerning any such transaction which may be received by it or, to
its knowledge, any of its stockholders or agents and (ii) reject any such
inquiry or proposal.
4.2 TRANSFERS OF STATSPIN EQUITY SECURITIES. Between the date of this
Agreement and the Effective Time, StatSpin shall use reasonable efforts to
prevent the Transfer any StatSpin Common Stock or other StatSpin securities.
4.3 CONSENTS. As promptly as practicable after the date of this
Agreement, StatSpin shall effect all filings, registrations and requests for
consent with, and use reasonable efforts to obtain all consents, authorizations,
approvals and declarations from, all third parties and government agencies
required under laws applicable to StatSpin or under contracts to which StatSpin
is a party for StatSpin and to consummate the Transactions. StatSpin shall use
reasonable efforts to obtain consents required, if any, in order to enable
Surviving Corporation to retain after the Effective Time all rights under
existing real and personal property leases and other contracts, without
modification. IRIS shall use reasonable efforts to assist StatSpin as
reasonably requested with all matters described above in this Section 4.3.
4.4 ACCESS. From the date hereof through the earlier of the Closing
or termination of this Agreement, StatSpin shall (i) permit IRIS and its
authorized representatives to have full access during normal business hours and
under reasonable conditions to any and all premises, properties, files, books,
records, documents and other information of StatSpin, (ii) provide IRIS and its
authorized representatives with all information which such parties reasonably
request concerning the foregoing matters, including without limitation, the
financial condition and results of operation of StatSpin, (iii) otherwise
reasonably cooperate with and assist IRIS and its authorized representatives in
connection with their investigation, (iv) upon the request of IRIS, deliver to
IRIS true and correct copies of any documents requested, and (v) provide IRIS
with access to and copies as requested of the work papers of KPMG Peat Marwick
compiled in connection with reviewing the financial statements of StatSpin. All
of the foregoing information shall be deemed confidential information and shall
be subject to the confidentiality provisions of the Letter of Intent.
4.5 STATSPIN STOCKHOLDER APPROVAL. StatSpin shall use its reasonable
efforts to secure as soon as practicable the approval (at a meeting or by
written consent) of all of its stockholders to the Merger, this Agreement and
the Articles of Merger. In
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connection therewith, StatSpin shall deliver to each of its stockholders, and to
each holder of a StatSpin SAR, StatSpin Warrant or StatSpin Option, a copy of
the Offering Memorandum prepared by IRIS, and StatSpin shall supply for
inclusion therein or incorporation by reference thereby such information
regarding StatSpin and the Transactions as may be reasonably requested by IRIS.
4.6 AFFILIATE AGREEMENTS. StatSpin and IRIS shall each use reasonable
efforts to obtain prior to the Closing an executed Affiliate Agreement from each
their respective Affiliates with respect to the Transfer of shares of IRIS
Common Stock. As soon as practicable after the date hereof, StatSpin shall
deliver to IRIS a list of names of those persons who are, in StatSpin's
reasonable judgment after consultation with legal counsel, Affiliates of
StatSpin. StatSpin shall provide IRIS such information and documents as IRIS
shall reasonably request for purposes of reviewing such list. IRIS shall be
entitled to place legends on the certificates evidencing any IRIS Common Stock
to be issued to StatSpin's Affiliates pursuant to the terms of this Agreement
and the Articles of Merger, and to issue appropriate stop transfer instructions
to the transfer agent for IRIS Common Stock, consistent with the terms of such
Affiliate Agreements, whether or not such Affiliate Agreements are actually
delivered to IRIS.
4.7 POOLING ACCOUNTING. StatSpin agrees not to knowingly take any
action that would adversely affect the ability of IRIS to treat the Merger as a
pooling of interests, and StatSpin agrees to take such action as may be
reasonably required to negate the impact of any past actions which would
adversely impact the ability of IRIS to treat the Merger as a pooling of
interests.
4.8 REPRESENTATIONS AND WARRANTIES. StatSpin shall use reasonable
efforts to ensure that all of the representations and warranties of StatSpin
contained herein shall be true and correct from the date hereof through the
Effective Time.
4.9 LEGAL OPINION. StatSpin shall use its best efforts to cause
Goodwin, Procter & Hoar, counsel for StatSpin, to render an opinion at the
Closing, dated as of the Closing Date, in substantially the form attached hereto
as EXHIBIT A.
4.10 SUPPLEMENTAL INFORMATION. From the date hereof through the
Effective Time, StatSpin shall deliver to IRIS immediately upon StatSpin's
discovery or access thereto, any information (i) as may be reasonably required
to update the information set forth on the Schedules hereto or (ii) that
otherwise amends, updates or conflicts with any of the matters discussed in the
representations or warranties set forth in Section 2.
4.11 ANNOUNCEMENTS. StatSpin shall not (before or after the Effective
Time) make any news release or other public announcement pertaining to the
Merger or any related transaction without the prior written consent of IRIS.
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SECTION 5
COVENANTS OF IRIS
5.1 REPRESENTATIONS TRUE. Until the Effective Time, IRIS will use its
best efforts to prevent the occurrence of any event which would cause any of its
representations and warranties set forth in this Agreement not to be true and
correct in any material respect.
5.2 CONSENTS. As promptly as practicable after the date of this
Agreement, IRIS shall effect all filings, registrations and requests for consent
with, and use reasonable efforts to obtain all consents, authorizations,
approvals and declarations from, all third parties and government agencies
required under laws applicable to IRIS or under contracts to which IRIS is a
party for IRIS or Merger Sub to consummate the Transactions other than the
filing of a registration statement under the Securities Act or any similar
filing with any state agency under the securities or "blue sky" laws of any
state. StatSpin shall use reasonable efforts to assist IRIS as reasonably
requested with all matters described above in this Section 5.2.
5.3 OFFERING MEMORANDUM. As soon as practicable, IRIS shall prepare
and deliver to StatSpin an Offering Memorandum (the "OFFERING MEMORANDUM") in
form and substance satisfactory to StatSpin and IRIS describing IRIS, StatSpin
and the Transactions.
5.4 LEGAL OPINION. IRIS shall use reasonable efforts to cause Irell &
Manella, counsel for IRIS and Merger Sub, to render an opinion at the Closing,
dated as of the Closing Date, in substantially the form attached hereto as
EXHIBIT B.
5.5 BENEFIT PLANS. IRIS agrees to provide employees of StatSpin with
credit for all prior service with StatSpin for purposes of vesting and
eligibility under any employee benefit plan, program or arrangement of IRIS and
to enroll the Statspin employees in such employee benefit plans, programs and
arrangements (including, without limitation, enrolling qualified employees in
the IRIS Key Employee Stock Purchase Program) as soon as practicable after the
Effective Time; PROVIDED, HOWEVER, IRIS shall continue StatSpin's current
health plan absent a significant increase in the cost thereof. Commencing three
months after the Effective Date, the senior management of the StatSpin will be
eligible for consideration for stock option awards under the 1994 IRIS Stock
Option Plan consistent with the Compensation Committee's general practices and
policies.
5.6 INDEMNIFICATION OF STATSPIN DIRECTORS AND OFFICERS. The Articles
of Organization and Bylaws of the Surviving Corporation shall contain provisions
identical with respect to exculpation and indemnification to those set forth in
Article X of the Articles of Organization of StatSpin and Article V of the
Bylaws of StatSpin, respectively, which provisions shall not be amended,
repealed or otherwise modified for a period of six (6) years from the Effective
Time in any manner that would adversely
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affect the rights thereunder of the individuals who were directors or officers
of StatSpin at the Effective Time. The parties acknowledge that, in the event
of a merger of the Surviving Corporation with and into IRIS, the assumption by
IRIS of such indemnification obligations would not adversely affect the rights
of such directors and officers.
5.7 TAX COMPLIANCE, REPORTING AND OTHER ACTIONS. The parties
acknowledge that the Merger is intended to qualify as a reorganization within
the meaning of Section 368(a) of the Code. Accordingly, IRIS shall comply with,
and shall cause Merger Sub and the Surviving Corporation to comply with, the
reporting requirements set forth in Treasury Regulation Section 1.368-3
applicable to them with respect to the Merger Acquisition, and none of them
shall make any election or take any reporting or other position inconsistent
with the treatment of the Merger as a reorganization within the meaning of
Section 368(a) of the Code except as required by law. Further, IRIS, Merger Sub
and/or the Surviving Corporation shall not take any action, or fail to take any
action, which would disqualify the Merger as a tax free reorganization under
Section 368(a) of the Code. Without limiting the foregoing, IRIS shall cause
the Surviving Corporation to satisfy the "continuity of business enterprise"
requirement as provided in Section 1.368-(1)(d) of the Treasury Regulations, and
IRIS will not transfer the stock, and the Surviving Corporation will not
transfer the assets, of the Surviving Corporation in a manner which would
disqualify the Merger as a tax free reorganization under Section 368(a) of the
Code.
5.8 APPOINTMENT OF MR. KELLEY TO IRIS BOARD. Promptly upon
consummation of the Merger, IRIS shall appoint Thomas F. Kelley to the IRIS
Board of Directors as a Class 3 Director and thereafter nominate Mr. Kelley for
reelection at the 1996 Annual Meeting of the IRIS stockholders.
SECTION 6
CONDITIONS PRECEDENT
6.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF IRIS. The obligations of
IRIS to consummate the Closing and effect the Merger are subject to the
satisfaction or waiver, prior to or at the Closing, of each of the following
conditions precedent:
6.1.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of StatSpin contained in this Agreement or in any
certificate or document delivered to IRIS pursuant hereto shall be true and
correct on and as of the Closing Date as though made at and as of that date
(except where such representation and warranty is made as of a date specifically
set forth therein), and StatSpin shall have delivered to IRIS a certificate to
that effect.
6.1.2 COMPLIANCE WITH COVENANTS. StatSpin shall have in all
material respects performed and complied with all terms, agreements, covenants
and conditions of
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this Agreement to be performed or complied with by them at the Closing Date, and
StatSpin shall have delivered to IRIS certificates to that effect.
6.1.3 NONCOMPETITION AGREEMENT. Thomas F. Kelley, StatSpin's
largest stockholder, shall have executed and delivered to IRIS the
Noncompetition Agreement.
6.1.4 ESCROW AGREEMENT. Each holder of StatSpin Common Stock or
a StatSpin SAR shall have executed and delivered to IRIS the Escrow Agreement.
6.1.5 POOLING MATTERS. (i) Each Affiliate of StatSpin shall have
executed and delivered to IRIS an Affiliate Agreement; (ii) each Affiliate of
IRIS shall have executed and delivered to IRIS an Affiliate Agreement; (iii)
IRIS shall have been advised by Coopers & Lybrand, its independent auditors,
that the Merger will qualify as a "pooling of interests" under Opinion No. 16 of
the Accounting Principles Board; and (iv) Coopers & Lybrand shall have been
advised by KPMG, StatSpin's independent auditors, that StatSpin qualifies as a
"poolable entity" under Opinion No. 16 of the Accounting Principles Board.
6.1.6 REGISTRATION RIGHTS AGREEMENTS. Each holder of StatSpin
Common Stock, a StatSpin Warrant, a StatSpin Option or a StatSpin SAR shall have
executed and delivered to IRIS the Registration Rights Agreement.
6.1.7 SECURITYHOLDER REPRESENTATION LETTERS. Each holder of
StatSpin Common Stock, a StatSpin Warrant, a StatSpin Option or a StatSpin SAR
shall have executed and delivered to IRIS a Securityholder Representation
Letter.
6.1.8 CONSENTS OBTAINED; FILINGS. StatSpin shall have obtained
all consents and approvals from, and shall have completed all declarations,
filings and registrations with, government agencies and private third parties
that are required for the execution, delivery and performance of this Agreement
by StatSpin, except for such consents, approvals, declarations, filings, and
registrations the failure of which to have so obtained or made will not have a
Material Adverse Effect on StatSpin.
6.1.9 NO MATERIAL ADVERSE EFFECT. There shall have been no
Material Adverse Effect, or any occurrence or event which could reasonably be
expected to have a Material Adverse Effect, on StatSpin.
6.1.10 LEGAL ACTIONS OR PROCEEDINGS. No legal action or
proceeding shall have been instituted or overtly threatened by any governmental
agency seeking to restrain, prohibit, invalidate or otherwise affect the
consummation of the Transactions, and no legal action or proceeding shall have
been instituted or overtly threatened by any private party seeking material
monetary awards from IRIS or Merger Sub in connection with the Transactions, or
from StatSpin whether or not in connection with the Transactions.
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6.1.11 ALL PROCEEDINGS TO BE SATISFACTORY. All corporate and
other proceedings to be taken by StatSpin in connection with the Transactions
and all documents incident thereto shall be reasonably satisfactory in form and
substance to IRIS and its counsel, and IRIS and said counsel shall have received
all such certified or other copies of such documents as it may reasonably
request.
6.1.12 OPINION OF COUNSEL FOR STATSPIN. IRIS shall have received
the favorable opinion of Goodwin, Proctor & Hoar, counsel to StatSpin, dated the
Closing Date, in substantially the form attached as EXHIBIT A.
6.1.13 IRIS EMPLOYEE ACKNOWLEDGMENT FORM. Each person employed
by StatSpin immediately prior to the Effective Time shall have executed and
delivered to IRIS a copy of the Employee Acknowledgement Form currently used by
IRIS.
6.1.14 DISSENTING SHARES. The number of Dissenting Shares shall
not constitute more than two percent (2%) of the outstanding shares of StatSpin
Common Stock.
6.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF STATSPIN. The obligations
of StatSpin to consummate the Closing and effect the Merger are subject to the
satisfaction or waiver, prior to or at the Closing, of the following conditions
precedent:
6.2.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of IRIS contained in this Agreement or in any
certificate or document delivered to StatSpin pursuant hereto shall be true and
correct on and as of the Closing Date as though made at and as of that date
(except where such representation and warranty is made as of a date specifically
set forth therein), and IRIS shall have delivered to StatSpin a certificate to
such effect.
6.2.2 COMPLIANCE WITH COVENANTS. IRIS and Merger Sub shall in
all material respects have performed and complied with all terms, agreements,
covenants and conditions of this Agreement to be performed or complied with by
it at the Closing Date, and IRIS shall have delivered to StatSpin a certificate
to that effect.
6.2.3 CONSENTS OBTAINED; FILINGS. IRIS shall have obtained all
consents and approvals from, and shall have completed all declarations, filings
and registrations with, government agencies and private third parties that are
required for the execution, delivery and performance of this Agreement by IRIS
and Merger Sub, except for such consents, approvals, declarations, filings, and
registrations the failure of which to have so obtained or made will not have a
Material Adverse Effect on IRIS.
6.2.4 AMEX LISTING. The American Stock Exchange shall have
approved for listing, subject only to official notice of issuance, the shares of
IRIS Common Stock issuable upon consummation of the Merger.
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6.2.5 EMPLOYMENT AGREEMENT. Thomas F. Kelley and either IRIS or
the Surviving Corporation shall have entered into a mutually acceptable
employment agreement which shall supersede Mr. Kelley's current employment
agreement with StatSpin.
6.2.6 NO MATERIAL ADVERSE EFFECT. There shall have been no
Material Adverse Effect, and no occurrence or event which could reasonably be
expected to result in a Material Adverse Effect, on IRIS.
6.2.7 ALL PROCEEDINGS TO BE SATISFACTORY. All corporate and
other proceedings to be taken by IRIS or Merger Sub in connection with the
Transactions and all documents incident thereto shall be reasonably satisfactory
in form and substance to StatSpin and its counsel, and StatSpin and said counsel
shall have received all such certified or other copies of such documents as they
may reasonably request.
6.2.8 OPINION OF COUNSEL FOR IRIS. StatSpin shall have received
the favorable opinion of Irell & Manella, counsel for IRIS and Merger Sub, dated
the Closing Date, substantially in the form attached as EXHIBIT B.
6.2.9 LEGAL ACTIONS OR PROCEEDINGS. No legal action or
proceeding shall have been instituted or overtly threatened by any governmental
agency seeking to restrain, prohibit, invalidate or otherwise affect the
consummation of the Transactions, and no legal action or proceeding shall have
been instituted or overtly threatened by any private party seeking material
monetary awards from StatSpin or its stockholders in connection with the
Transactions.
6.2.10 REGISTRATION RIGHTS AGREEMENTS. IRIS shall have executed
and delivered the Registration Rights Agreement to the Stockholder
Representative.
6.2.11 MINIMUM IRIS STOCK PRICE. The IRIS Stock Price shall be
at least $6.50.
6.2.12 ESCROW AGREEMENT. IRIS shall have executed and delivered
the Escrow Agreement to the Stockholder Representative.
SECTION 7
INDEMNIFICATION
7.1 INDEMNIFICATION OF IRIS. StatSpin, prior to the Effective Time,
and the StatSpin Stockholders, after the Effective Time, shall indemnify and
hold harmless IRIS, Merger Sub, the Surviving Corporation and their respective
officers, directors, employees and agents from and against the full amount of
Losses arising out of or resulting from a breach of any representation, warranty
or covenant made by StatSpin in this Agreement; PROVIDED, HOWEVER, that the
StatSpin Stockholders shall be liable to IRIS
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under this Section 7.1 only if the Merger is consummated and only to the extent
of the Escrowed Shares held in escrow pursuant to the Escrow Agreement, and the
Escrowed Shares shall be IRIS sole and exclusive remedy under this Section 7.1
against the StatSpin Stockholders.
7.2 INDEMNIFICATION OF STATSPIN AND THE STATSPIN STOCKHOLDERS. IRIS
shall indemnify and hold harmless StatSpin and its officers, directors,
employees and agents, prior to the Effective Time, and the StatSpin
Stockholders, after the Effective Time, from and against the full amount of
Losses arising out of or resulting from a breach of any representation, warranty
or covenant made by IRIS in this Agreement; PROVIDED, HOWEVER, that IRIS
shall be liable to the StatSpin Stockholders under this Section 7.2 only if the
Merger is consummated.
7.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties in this Agreement shall survive until the first (1st) anniversary
of the Closing Date, and, subject to the provisions of the Escrow Agreement
relating to Contingent Claims (as defined therein), no party may seek indemnity
under this Section 7 or any other recovery or remedy for any Loss under this
Agreement at any time after such anniversary.
7.4 DEDUCTIBLE AMOUNT. Notwithstanding the foregoing, neither IRIS,
on the one hand, nor StatSpin and the StatSpin Stockholders, on the other hand,
shall be required to indemnify the other under the terms of this Agreement
unless and until the aggregate amount of the Losses of the other exceeds
$30,000, in which case such indemnification obligations shall apply to all
Losses in excess of such amount.
7.5 EFFECT OF DISCLOSURES. The representations and warranties in this
Agreement shall remain in full force and effect regardless of any disclosures
made to or investigations made by a party; PROVIDED, HOWEVER, that the
Indemnifying Party shall have no indemnification obligation hereunder with
respect to any breach of a representation or warranty to the extent that the
Indemnifying Party proves that it did not have knowledge of such breach but the
Indemnified Party did have knowledge of such breach prior to the date hereof.
7.6 PROCEDURES FOR INDEMNIFICATION. If any claim is asserted or any
action or proceeding is brought in respect of which indemnity may be sought, the
Indemnified Party will promptly notify the Indemnifying Party in writing of such
asserted claim or the institution of such action or proceeding; PROVIDED,
HOWEVER, that the Indemnified Party's failure to so notify the Indemnifying
Party will not relieve the Indemnifying Party from any liability it might
otherwise have on account of this indemnity, except to the extent that the
Indemnifying Party has been materially prejudiced by such failure to notify.
The Indemnifying Party shall undertake full responsibility for the defense of
any Third-Party Claim which, if successful, would result in an obligation of
indemnity under this Section 7. The Indemnifying Party may contest or settle
any such claim on such terms as the Indemnifying Party may choose, PROVIDED
that the Indemnifying Party will not have the right, without the Indemnified
Party's prior written consent, to settle any
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such claim if such settlement (i) arises from or is part of any criminal action,
suit or proceeding, (ii) contains a stipulation to, confession of judgement with
respect to, or admission or acknowledgement of, any liability or wrongdoing on
the part of the Indemnified Party, (iii) relates to any Tax matters, (iv)
provides for injunctive relief, or other relief or finding other than money
damages, which is binding on the Indemnified Party, or (v) does not contain an
unconditional release of the Indemnified Party. Such defense will be conducted
by reputable attorneys retained by the Indemnifying Party at the Indemnifying
Party's cost and expense, but the Indemnified Party will have the right to
participate in such proceedings and to be separately represented by attorneys of
its own choosing. The Indemnified Party will be responsible for the costs of
such separate representation unless the Indemnified Party will have reasonably
concluded that the interests of the Indemnified Party and the Indemnifying Party
in the action conflict in such a manner and to such an extent as to make
advisable, consistent with applicable standards of professional responsibility,
the retention of separate counsel for the Indemnified Party, in which case the
Indemnifying Party will pay for one (but not more than one) separate counsel
chosen by the Indemnified Party.
7.7 FAILURE TO ASSUME DEFENSE. In the event that the Indemnifying
Party, by the 30th day after receipt of notice of any asserted claim (or, if
earlier, by the tenth day preceding the day on which an answer or other pleading
must be served in order to prevent judgment by default in favor of the person
asserting such claim), fails to assume the defense of such claim, the
Indemnified Party will (upon further notice to the Indemnifying Party) have the
right to undertake the defense, compromise or settlement of such claim on behalf
of and for the account and risk of the Indemnifying Party, subject to the right
of the Indemnifying Party to assume the defense of such claim at any time prior
to settlement, compromise or final determination thereof. The result of any
such defense, compromise or settlement executed by the Indemnified Party in good
faith shall be binding upon the Indemnifying Party with respect to its
obligations of indemnity under this Section 7.
7.8 COOPERATION. The Indemnifying Party and the Indemnified Party
shall cooperate in determining the validity of any Third-Party Claim or Tax
claim for any Loss for which a claim of indemnification may be made hereunder.
Each party shall also use all reasonable efforts to minimize all Losses.
7.9 STOCKHOLDER REPRESENTATIVE. The Stockholder Representative is
hereby appointed as agent and representative on behalf of the StatSpin
Stockholders with respect to any indemnification claims made hereunder and shall
have full authority to accept all notices, and consent to all settlements, on
behalf of the StatSpin Stockholders with respect to such claims. IRIS shall, by
delivery of written notice to the Stockholder Representative but otherwise in
accordance with the applicable notice requirements, be deemed to have satisfied
any requirement to deliver notice hereunder or under the Escrow Agreement to the
StatSpin Stockholders or any subset thereof.
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SECTION 8
TERMINATION
This Agreement may be terminated at any time on or prior to the Closing:
8.1 INJUNCTION. By StatSpin or IRIS if any court of competent
jurisdiction in the United States shall have issued an order (other than a
temporary restraining order), decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Transactions and such order,
decree, ruling or other action shall have become final and non-appealable.
8.2 MUTUAL AGREEMENT. By mutual agreement of StatSpin and IRIS.
8.3 TERMINATION DATE. By StatSpin or IRIS if the Closing shall not
have occurred on or before February 15, 1996, provided that the right to
terminate this Agreement pursuant to this Section 8.3 shall not be available to
a party who has materially breached any representation, warranty or covenant of
this Agreement.
8.4 MATERIAL BREACH. By StatSpin upon a material breach of any
representation, warranty or covenant of this Agreement by IRIS, and by IRIS upon
a material breach of any representation, warranty or covenant of this Agreement
by StatSpin, but only if such breach remains uncured for a period of ten (10)
days after receipt of written notice of such breach from the nonbreaching party.
8.5 EFFECTS OF TERMINATION. If this Agreement is terminated pursuant
to this Section 8, all obligations of the parties hereunder shall terminate
without liability of any party to any other party except the obligations of the
parties under Section 10.3 (Expenses), Section 10.10 (Governing Law;
Jurisdiction), Section 10.11 (Attorneys' Fees), Section 10.14 (Arbitration) and
the confidentiality provisions of the Letter of Intent (including, without
limitation, the confidentiality obligations thereunder). Nothing contained in
this Section 8.5 shall relieve any party of liability for any breach of this
Agreement which occurred prior to the date of termination of this Agreement.
8.6 RIGHTS TO PROCEED. Notwithstanding anything contained in this
Agreement to the contrary, if any of the conditions specified in Section 6.1
have not been satisfied, IRIS shall have the right to proceed with the
Transactions without waiving any of its rights hereunder arising out of the
breach of any representation, warranty or covenant herein; and if any of the
conditions specified in Section 6.2 not been satisfied, StatSpin shall have the
right to proceed with the Transactions without waiving any of its rights
hereunder.
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SECTION 9
DEFINITIONS
The following terms shall have the meanings set forth below:
"AFFILIATE" shall mean an "affiliate" within the meaning of Rule 145 of
the Rules and Regulations promulgated under the Securities Act and
requirements for a pooling of interests under Opinion No. 16 of the Accounting
Principles Board.
"ARTICLES OF MERGER" shall have the meaning set forth in Section 1.3.
"BENEFIT PLANS" shall have the meaning set forth in Section 2.19.
"CLAIMS" shall mean any and all liens, mortgages, charges, claims,
liabilities, options, debts, security interests, secured claims, and other
encumbrances of any kind or nature whatsoever, whether or not contingent,
liquidated, disputed or known.
"CLOSING" and "CLOSING DATE" shall have the respective meanings set
forth in Section 1.2.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"DISSENTING SHARES" shall have the meaning set forth in Section 1.6.1.
"EFFECTIVE DATE" shall mean the date on which the Effective Time falls.
"EFFECTIVE TIME" shall have the meaning set forth in Section 1.3.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ESCROW AGREEMENT" shall mean an Escrow Agreement, dated the Closing
Date, in substantially the form of EXHIBIT G.
"EXCHANGE RATIO" shall have the meaning set forth in Section 1.6.1.
"ESCROWED SHARES" shall have the meaning set forth in Section 1.9.
"FDA" shall have the meaning set forth in Section 2.8.
"HAZARDOUS MATERIAL" shall mean (i) any substance defined as "hazardous"
in the Comprehensive Environmental Response, Compensation and Liability Act of
1980 ("CERCLA"); (ii) any substance or matter which results in liability to
any person or entity from discharge of or exposure to such substance or matter
under any statutory,
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regulatory or common law theory; (iii) any substance or matter which becomes
subject to a federal, state or local agency order or requirement for removal,
treatment or remediation; (iv) crude oil or any fraction thereof, and (v) any
material defined as "hazardous" under Massachusetts law.
"INDEMNIFIED PARTY" shall mean, with respect to any Loss or alleged
Loss, the party seeking indemnity hereunder.
"INDEMNIFYING PARTY" shall mean, with respect to any Loss or alleged
Loss, the party from whom indemnity is being sought hereunder.
"INTELLECTUAL PROPERTY" shall mean all patents, pending patents,
trademarks, service marks, trade names, trade secrets and registered copyrights
presently used by StatSpin in the conduct of its business.
"IRIS" shall mean International Remote Imaging Systems, Inc., a Delaware
Corporation.
"IRIS COMMON STOCK" shall mean the common stock, $.01 par value per
share, of IRIS.
"IRIS FINANCIAL STATEMENTS" shall have the meaning set forth in Section
3.5.
"IRIS SEC DOCUMENTS" shall have the meaning set forth in Section 3.5.
"IRIS STOCK PRICE" shall mean $7.58 per share of IRIS Common Stock,
which represents the average closing price of a share of IRIS Common Stock on
the American Stock Exchange for the 10-day period ending on the third business
day preceding the date of this Agreement.
"LETTER OF INTENT" shall mean the letter from IRIS to StatSpin dated
October 27, 1995 confirming their mutual intention that IRIS acquire all of the
outstanding capital stock of StatSpin.
"LOSSES" shall mean any and all costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses and court costs incident to
any suit, action, investigation or other proceedings), damages and losses, net
of any insurance proceeds or tax benefits received with respect thereto.
"MASSACHUSETTS BUSINESS CORPORATION LAW" shall mean the Business
Corporation Law of the Commonwealth of Massachusetts, Chapter 156B of the
General Laws of Massachusetts, as amended.
"MATERIAL ADVERSE EFFECT" shall mean, with respect to any party hereto,
a material adverse effect on the financial condition, results of operations,
properties,
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assets, liabilities, business or, to the best of such party's knowledge,
prospects of such party and, in the case of StatSpin, the Surviving Corporation
after the Effective Time.
"MATERIAL CONTRACT" shall have the meaning set forth in Section 2.15.
"MERGER" shall have the meaning set forth in Section 1.1.
"MERGER SUB" shall mean Statspin Acquisition Corporation, a
Massachusetts corporation and wholly-owned subsidiary of IRIS.
"NONCOMPETITION AGREEMENT" shall mean a Noncompetition Agreement, dated
the Closing Date, in substantially the form of EXHIBIT C.
"OFFERING MEMORANDUM" shall have the meaning set forth in Section 5.3.
"PERMITS AND LICENSES" shall mean any and all federal, state and local
governmental permits, licenses, consents, approvals and authorizations, the loss
or violation of which would have a Material Adverse Effect on StatSpin,
including, without limitation, any required product marketing approvals and
manufacturing certifications from the FDA.
"PREMISES" shall have the meaning set forth in Section 2.9.
"REGISTRATION RIGHTS AGREEMENT" shall mean a Registration Rights
Agreements, dated the Closing Date, by and among IRIS and the holders of
StatSpin Common Stock, StatSpin Warrants, StatSpin Options and StatSpin SAR's in
substantially form of EXHIBIT E.
"RELATED PARTY" shall mean any stockholder, director or officer
StatSpin, any other person or entity that controls StatSpin, or any family
member of any of the foregoing.
"SAR CAP" shall mean, with respect to any StatSpin SAR held by certain
former employees of StatSpin, the fair market value per share of StatSpin Common
Stock on the date of such former employee's termination, determined in
accordance with the terms of such StatSpin SAR and set forth on SCHEDULE
2.4(b).
"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SECURITYHOLDER REPRESENTATION LETTER" shall mean a representation
letter, dated the Closing Date, in substantially the form attached at EXHIBIT F.
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"STATSPIN" shall mean Norfolk Scientific, Inc., a Massachusetts
corporation doing business as "StatSpin Technologies."
"STATSPIN COMMON STOCK" shall mean the common stock, $1.00 par value per
share, of StatSpin.
"STATSPIN FINANCIAL STATEMENTS" shall have the meaning set forth in
Section 2.5.
"STATSPIN OPTION" shall have the meaning set forth in Section 1.8.
"STATSPIN SAR" shall mean a stock appreciation right granted by StatSpin
to an employee of StatSpin.
"STATSPIN STOCKHOLDERS" shall mean the holders of record at the
Effective Time of StatSpin Common Stock and the holders of record at the
Effective Time of StatSpin SAR's.
"STATSPIN STOCK PRICE" shall mean the value of a share of StatSpin
Common Stock determined on a fully-diluted basis, which the parties agree is
$31.04 per share of StatSpin Common Stock based upon the capitalization set
forth in SCHEDULES 2.4(a) AND 2.4(b).
"STATSPIN WARRANT" shall have the meaning set forth in Section 1.8.
"STOCKHOLDER REPRESENTATIVE" shall mean Thomas F. Kelley, the individual
appointed as agent and representative pursuant to the Escrow Agreement for the
holders of record at the Effective Time of StatSpin Common Stock and StatSpin
SAR's.
"SURVIVING CORPORATION" shall have the meaning set forth in Section 1.1.
"TAX OR TAXES" shall mean any and all federal, state, local, foreign and
other net income, gross income, gross receipts, sales, use, ad valorem,
transfer, franchise, profits, license, lease, service, service use, withholding,
payroll, employment, excise, severance, stamp, occupation, premium, property,
windfall profits, customs, duties or other taxes, fees, assessments or charges
of any kind whatever, together with any interest and any penalties, additions to
tax or additional amounts with respect thereto.
"THIRD-PARTY CLAIM" shall mean a claim brought by a third party for
which indemnification is sought pursuant to Section 7.
"TRANSACTIONS" shall mean the transactions contemplated by this
Agreement.
"TRANSFER" shall mean any sale, transfer, assignment, hypothecation,
encumbrance or other disposition, whether voluntary or involuntary or whether by
gift, bequest or otherwise.
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SECTION 10
MISCELLANEOUS
10.1 ENTIRE AGREEMENT; MODIFICATIONS. This Agreement and any documents
referred to herein or executed contemporaneously herewith constitute the
parties' entire agreement with respect to the subject matter hereof and
supersede all agreements, representations, warranties, statements, promises and
understandings, whether oral or written, with respect to the subject matter
hereof; PROVIDED, HOWEVER, that the paragraphs of the Letter of Intent which
are expressly designated as binding shall remain in full force and effect. This
Agreement may not be amended, altered or modified except by a writing signed by
the parties.
10.2 MEANING OF "KNOWLEDGE". Whenever a representation or warranty is
stated to be based on the "KNOWLEDGE" of a party, such phrase refers to
whether any director or senior officer (i.e. an officer with a title at least
equal to vice president) of such party has actual knowledge of the matter
involved. The phrase "BEST KNOWLEDGE" shall refer to the "knowledge" of such
directors or officers after reasonable inquiry to the extent prudent under the
circumstances.
10.3 EXPENSES. Except as set forth in Section 8.5, whether or not the
Transactions are consummated, none of the parties hereto shall have any
obligation to pay any of the fees and expenses of any other party incident to
the negotiation, preparation and execution of this Agreement or any related
agreements, including the fees and expenses of counsel, accountants, investment
bankers and other experts.
10.4 WAIVERS. StatSpin may by written notice to IRIS, or IRIS may, by
written notice to the StatSpin, (a) extend the time for the performance of any
of the obligations or other actions of the other parties under this Agreement;
(b) waive any inaccuracies in the representations or warranties of the other
parties contained in this Agreement or in any document delivered pursuant to
this Agreement; (c) waive compliance with any of the conditions or covenants of
the other parties contained in this Agreement; or (d) waive performance of any
of the obligations of the other parties under this Agreement. With regard to
any power, remedy or right provided herein or otherwise available to any party
hereunder, (i) no waiver or extension of time will be effective unless expressly
contained in a writing signed by the waiving party or its representative, and
(ii) no alteration, modification or impairment will be implied by reason of any
previous waiver, extension of time, delay or omission in exercise or other
indulgence.
10.5 COOPERATION. Each party hereto agrees, both before and after the
Effective Time, to execute any and all further documents and writings and to
perform such other actions which may be or become necessary or expedient to
effectuate and carry out this Agreement.
10.6 THIRD-PARTY BENEFITS. None of the provisions of this Agreement
will be for the benefit of, or enforceable by, any third-party beneficiary;
PROVIDED, HOWEVER that
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(i) the holders of StatSpin Common Stock shall be third-party beneficiaries of
Sections 1.6.4 (Exchange of Certificates), 3 (Representations and Warranties of
IRIS), 5.7 (Tax Compliance and Reporting) and 7.2 (Indemnification of StatSpin
and StatSpin Stockholders), (ii) the holders of StatSpin Warrants shall be
third-party beneficiaries of Sections 1.8 (Assumption of Warrants and Stock
Options) and 3 (Representations and Warranties of IRIS), (iii) the holders of
StatSpin Options shall be third-party beneficiaries of Sections 1.8 (Assumption
of Warrants and Stock Options) and 3 (Representations and Warranties of IRIS),
(iv) the holders of StatSpin SAR's shall be third-party beneficiaries of
Sections 1.7.3 (Exchange of StatSpin SAR Agreements) and 3 (Representations and
Warranties of IRIS), (v) the directors and officers of StatSpin at the Effective
Time shall be third-party beneficiaries of the provisions of Section 5.6
(Indemnification of Directors and Officers) and (vi) the employees of StatSpin
shall be third-party beneficiaries of Section 5.5 (Benefit Plans).
10.7 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors and
permitted assigns. None of the parties may assign any of his or its rights
under this Agreement without the prior written consent of the others.
10.8 REMEDIES NOT EXCLUSIVE. Subject to Section 10.14
("Arbitration"), no remedy conferred by any of the specific provisions of this
Agreement is intended to be exclusive of any other remedy, and each and every
remedy will be cumulative and will be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise. The election of any one or more remedies will not constitute a
waiver of the right to pursue other available remedies.
10.9 NOTICES. All notices under this Agreement will be in writing and
will be delivered by personal service or facsimile or certified mail (or, if
certified mail is not available, then by first class mail), postage prepaid, to
such address as may be designated from time to time by the relevant party, and
which will initially be as set forth below. Any notice sent by certified mail
will be deemed to have been given three (3) days after the date on which it is
mailed. All other notices will be deemed given when received. No objection may
be made to the manner of delivery of any notice actually received in writing by
an authorized agent of a party. Notices will be addressed as follows or to such
other address as the party to whom the same is directed will have specified in
conformity with the foregoing:
(a) If to IRIS:
International Remote Imaging Systems, Inc.
9162 Eton Avenue
Chatsworth, California 91311
Attn: Fred H. Deindoerfer
Chairman of the Board and President
Telephone: (818) 709-1244
Facsimile: (818) 700-9661
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With a copy to:
Irell & Manella
1800 Avenue of the Stars, Suite 900
Los Angeles, CA 90067
Attn: Theodore E. Guth, Esq.
Telephone: (310) 277-1010
Facsimile: (310) 204-7199
(b) If to StatSpin:
Norfolk Scientific, Inc.
c/o StatSpin Technologies
85 Morse Street
Norwood, Massachusetts 02062
Attn: Thomas F. Kelley, Ph.D.
Chairman of the Board and President
Telephone: (617) 551-0100
Facsimile: (617) 551-0036
With a copy to:
Goodwin, Procter & Hoar
Exchange Place
Boston, Massachusetts 02109
Attn: John R. LeClaire, Esq.
Telephone: (617) 570-1144
Facsimile: (617) 523-1231
10.10 GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement has been
negotiated and entered into in the State of California, and all questions with
respect to the Agreement and the rights and liabilities of the parties under
this Agreement shall be governed by, and construed and enforced in accordance
with, the laws of the State of California without regard to the conflict of laws
rules of the State of California or any other jurisdiction. Subject to Section
10.14 ("Arbitration"), any litigation between the parties that arises from or
relates to this Agreement shall be conducted exclusively in Los Angeles,
California. Each party (i) irrevocably consents to the exclusive jurisdiction
of the Los Angeles Superior Court and the Federal District Court for the Central
District of California (or their successor courts) for all purposes in
connection with any litigation that arises from or relates to this Agreement,
(ii) agrees that any litigation arising from or relating to this Agreement shall
be instituted and prosecuted only in the such courts, (iii) waives any rights it
may have to personal service of summons, complaint, or other process in
connection therewith, and (iv) agrees that service may be made by registered or
certified mail addressed to such party sent to the addresses designated from
time to time in accordance with Section 10.9.
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10.11 ATTORNEYS' FEES. Should any litigation or arbitration be
commenced (including any proceedings in a bankruptcy court) between the parties
hereto or their representatives concerning any provision of this Agreement or
the rights and duties of any person or entity hereunder, the party or parties
prevailing in such proceeding shall be entitled, in addition to such other
relief as may be granted, to the attorneys' fees and court costs incurred by
reason of such litigation or arbitration.
10.12 HEADINGS. The Section headings in this Agreement are inserted
only as a matter of convenience, and in no way define, limit, or extend or
interpret the scope of this Agreement or of any particular Section.
10.13 SEVERABILITY. The validity, legality or enforceability of the
remainder of this Agreement shall not be affected even if one or more of the
provisions of this Agreement shall be held to be invalid, illegal or
unenforceable in any respect. To the extent permitted by applicable law, the
parties hereby waive any provision of law that would render any provision hereof
prohibited or unenforceable in any respect.
10.14 ARBITRATION AS EXCLUSIVE REMEDY. Subject to the proviso in
Section 7.1 (Indemnification of IRIS) and except for actions seeking injunctive
relief, which may be brought before any court having jurisdiction, any claim
arising out of or relating to (i) this Agreement, including, but not limited to,
its validity, interpretation, enforceability or breach, or (ii) the relationship
between the parties (including its commencement and termination) which are not
settled by agreement between the parties, shall be settled by arbitration
conducted exclusively in Los Angeles, California before a board of three
arbitrators, one selected by each party, and the third by the two persons so
selected, all in accordance with the Commercial Arbitration Rules of the
American Arbitration Association ("AAA") then in effect. The notice of intent
to arbitrate shall name one arbitrator, and the party(ies) receiving the notice
shall name the second arbitrator within 15 days or the moving party may select
the second arbitrator from a list supplied by the AAA. In the event that these
two arbitrators cannot agree upon a third arbitrator within 15 days, then the
third arbitrator shall be selected from the list provided by the AAA with the
parties striking names in order with the party striking first to be determined
by the flip of a coin. The parties hereby consent to the in personam
jurisdiction of the Superior Court of the State of California for purposes of
confirming any such award and entering judgment thereon. In any arbitration
proceedings hereunder, (a) all testimony of witnesses shall be taken under oath;
(b) discovery will be allowed under the provisions of Section 1283.05 of the
California Code of Civil Procedure, as presently in force, which are
incorporated herein; (c) upon conclusion of any arbitration, the arbitrators
shall render findings of fact and conclusions of law in a written opinion
setting forth the basis and reasons for any decision reached and deliver such
documents to each party to this Agreement along with a signed copy of the award
in accordance with Section 1283.6 of the California Code of Civil Procedure; and
(d) the rules of evidence as then applicable to civil actions under California
law shall be applied in the arbitration. Each party agrees that the arbitration
provisions of this Agreement are its exclusive remedy and expressly waives any
right to seek redress in another forum. Each party shall bear the fees of the
arbitrator appointed by it, and the fees of
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the neutral arbitrators shall be borne equally by each party during the
arbitration, but the fees of all arbitrators shall be borne by the losing party.
10.15 AGREEMENT NEGOTIATED. The parties hereto are sophisticated and
have consulted legal counsel with respect to this transaction. As a
consequence, the parties do not believe that the presumptions of California
Civil Code Section 1654 relating to the interpretation of contracts against the
drafter of any particular clause should be applied in this case and therefore
waive its effects.
10.16 COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
*** [NEXT PAGE IS SIGNATURE PAGE] ***
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SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
"IRIS"
INTERNATIONAL REMOTE IMAGING
SYSTEMS, INC.
By: /S/ FRED H. DEINDOERFER
-----------------------
Name: FRED H. DEINDOERFER
------------------------
Title:Chairman of the Board
and President
------------------------
"MERGER SUB"
STATSPIN ACQUISITION CORPORATION
By: /s/ FRED H. DEINDOERFER
-----------------------
Name: FRED H. DEINDOERFER
------------------------
Title:Chairman of the Board
And President
-----------------------
"STATSPIN"
NORFOLK SCIENTIFIC, INC.
By: /s/ THOMAS F. KELLEY
--------------------
Name: THOMAS F. KELLEY
--------------------
Title: President
--------------------
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INDEX OF SCHEDULES AND EXHIBITS
EXHIBITS
EXHIBIT A Form of Opinion of Goodwin, Proctor & Hoar, counsel to
StatSpin
EXHIBIT B Form of Opinion of Irell and Manella, counsel to IRIS
EXHIBIT C Form of Noncompetition Agreement
EXHIBIT D Form of Affiliate Agreement
EXHIBIT E Form of Registration Rights Agreement
EXHIBIT F Form of Securityholder Representation Letter
EXHIBIT G Form of Escrow Agreement
SCHEDULES
SCHEDULE 2.4(a) Capitalization
SCHEDULE 2.4(b) Stock Appreciation Rights
SCHEDULE 2.7 Undisclosed Liabilities
SCHEDULE 2.8 Contingencies
SCHEDULE 2.11 Restrictive Agreements
SCHEDULE 2.12 Intellectual Property
SCHEDULE 2.14 Insurance
SCHEDULE 2.15 Material Contracts
SCHEDULE 2.19 Benefit Plans
SCHEDULE 2.20 Environmental Matters
SCHEDULE 2.22 Permits and Licenses
SCHEDULE 2.24 Taxes