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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
DAVIS INSTRUMENTS, LLC,
A MARYLAND LIMITED LIABILITY COMPANY,
INOTEK TECHNOLOGIES CORP.,
A DELAWARE CORPORATION,
AND
THE STOCKHOLDERS NAMED HEREIN
MAY 15, 2001
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TABLE OF CONTENTS
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ARTICLE I -- TERMS OF THE MERGER & CLOSING; CONVERSION OF
SHARES
Section 1.01. The Merger.................................. 1
Section 1.02. Effects of the Merger....................... 1
Section 1.03. Conversion of Shares........................ 1
Section 1.04. The Closing................................. 2
Section 1.05. The Closing Date............................ 2
Section 1.06. Actions At Closing.......................... 2
Section 1.07. Exchange Procedures; Surrender of
Certificates........................................... 2
ARTICLE II -- REPRESENTATIONS AND WARRANTIES OF INOTEK AND
THE PRINCIPAL STOCKHOLDERS
Section 2.01. Organization and Capital Stock; Standing and
Authority.............................................. 3
Section 2.02. Authorization; No Defaults.................. 3
Section 2.03. Subsidiaries................................ 3
Section 2.04. Financial Information....................... 3
Section 2.05. Absence of Changes.......................... 4
Section 2.06. Regulatory Enforcement Matters.............. 4
Section 2.07. Tax Matters................................. 4
Section 2.08. Litigation.................................. 4
Section 2.09. Properties, Contracts, Employee Benefit
Plans and Other Agreements............................. 4
Section 2.10. Reports..................................... 5
Section 2.11. Investment Portfolio........................ 5
Section 2.12. Employee Matters and ERISA.................. 5
Section 2.13. Title to Properties; Licenses; Insurance.... 6
Section 2.14. Environmental Matters....................... 6
Section 2.15. Compliance with Laws and Regulations........ 7
Section 2.16. Brokerage................................... 7
Section 2.17. No Undisclosed Liabilities.................. 7
Section 2.18. Statements True and Correct................. 7
Section 2.19. Commitments and Contracts................... 7
Section 2.20. Material Interest of Certain Persons........ 8
Section 2.21. Conduct to Date............................. 8
Section 2.22. Irrevocable Proxies......................... 9
Section 2.23. Accounts Receivable......................... 9
Section 2.24. Minute Books................................ 9
ARTICLE IIA -- ADDITIONAL REPRESENTATIONS AND WARRANTIES OF
THE PRINCIPAL STOCKHOLDERS
Section 2A.1. Ownership of Inotek Common.................. 9
Section 2A.2. Authority................................... 9
Section 2A.3. No Breach or Violation...................... 9
Section 2A.4. Consents.................................... 9
ARTICLE III -- REPRESENTATIONS AND WARRANTIES OF DAVIS
Section 3.01. Organization................................ 10
Section 3.02. Authorization............................... 10
Section 3.03. Litigation.................................. 10
Section 3.04. Statements True and Correct................. 10
Section 3.05. Availability of Resources................... 10
ARTICLE IV -- AGREEMENTS OF INOTEK
Section 4.01. Business in Ordinary Course................. 10
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Section 4.02. Breaches.................................... 12
Section 4.03. Written Consents; Information Statement..... 12
Section 4.04. Consummation of Agreement................... 12
Section 4.05. Access to Information....................... 13
Section 4.06. Consents of Third Parties................... 13
Section 4.07. Subsequent Financial Statements............. 13
ARTICLE V -- AGREEMENTS OF DAVIS
Section 5.01. Conduct of Business......................... 13
Section 5.02. Breaches.................................... 13
Section 5.03. Consummation of Agreement................... 13
Section 5.04. Consents of Third Parties................... 13
Section 5.05. Obtaining of Financing...................... 13
ARTICLE VI -- CONDITIONS PRECEDENT TO THE MERGER
Section 6.01. Conditions to the Obligations of Davis...... 14
Section 6.02. Conditions to the Obligations of Inotek..... 14
ARTICLE VII -- TERMINATION
Section 7.01. Mutual Agreement............................ 15
Section 7.02. Breach of Agreements........................ 15
Section 7.03. Failure of Conditions....................... 15
Section 7.04. Unilateral Termination...................... 15
Section 7.05. Effect of Termination....................... 15
ARTICLE VIII -- GENERAL PROVISIONS
Section 8.01. Confidential Information.................... 15
Section 8.02. Publicity................................... 16
Section 8.03. Return of Documents......................... 16
Section 8.04. Notices..................................... 16
Section 8.05. Survival of Representations, Warranties and
Agreements............................................. 16
Section 8.06. Costs and Expenses.......................... 17
Section 8.07. Entire Agreement............................ 17
Section 8.08. Headings and Captions....................... 17
Section 8.09. Waiver, Amendment or Modification........... 17
Section 8.10. Rules of Construction....................... 17
Section 8.11. Counterparts................................ 17
Section 8.12. Successors and Assigns...................... 17
Section 8.13. Governing Law............................... 17
Signatures................................................ 18
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger, dated as of May 15, 2001, is by and
among Davis Instruments, a Maryland limited liability company ("Davis"), INOTEK
Technologies Corp., a Delaware corporation ("Inotek") and Neal E. Young, David
L. White and Dennis W. Stone (the "Principal Stockholders"). This Agreement and
Plan of Merger is hereinafter referred to as the "Agreement."
In consideration of the mutual representations, warranties, agreements and
covenants contained herein, Davis, Inotek and the Principal Stockholders hereby
agree as follows:
ARTICLE I
TERMS OF THE MERGER & CLOSING; EXCHANGE OF SHARES
SECTION 1.01. The Merger. Davis will organize an interim subsidiary
("Newco") and, subject to the satisfaction or waiver of the conditions set forth
in Article VI of this Agreement, Davis will cause Newco to merge with and into
Inotek (the "Merger") pursuant to applicable corporate law ("Corporate Law"), in
a merger in which Inotek will be the surviving corporation.
SECTION 1.02. Effects of the Merger. (a) The Merger shall have all of the
effects provided by Corporate Law and this Agreement, and the separate corporate
existence of Newco shall cease on consummation of the Merger and be combined in
Inotek.
(b) The Certificate of Incorporation of Inotek from and after the Effective
Time shall be amended as set forth on Exhibit A attached hereto.
(c) The Bylaws of Inotek from and after the Effective Time shall be the
same as the Bylaws of Newco immediately prior to the Effective Time, except for
the corporate name which shall be "INOTEK Technologies Corp."
(d) The directors and officers of Newco immediately prior to the Effective
Time shall, without the necessity of any further corporate action, become the
directors and officers of Inotek from and after the Effective Time.
SECTION 1.03. Conversion of Shares. (a) At the Effective Time, subject to
the terms of this Agreement and the Escrow Agreement (as defined in Section
1.06(b)(iii), each share of common stock, $0.01 par value, of Inotek ("Inotek
Common") issued and outstanding immediately prior to the Effective Time shall be
converted into the right to receive $0.65 (the "Common Share Merger Price");
provided, however, that shares of Inotek Common held in the treasury of Inotek
or by any direct or indirect subsidiary of Inotek immediately prior to the
Effective Time shall be canceled.
(b) The stock transfer books of Inotek shall be closed, and no share
transfers will be permitted after the Effective Time. At the Effective Time, by
virtue of the Merger and without any action on the part of the holders thereof,
all of the shares of Inotek Common shall cease to be outstanding and be
canceled.
(c) If holders of Inotek Common are entitled to require appraisal of their
shares under applicable Corporate Law, shares held by a dissenting holder who
has perfected the right to obtain an appraisal of his shares shall not be
converted as described in this Section 1.03, but from and after the Effective
Time shall represent only the right to receive such consideration as may be
determined pursuant to applicable Corporate Law; provided, however, that each
share of Inotek Common outstanding immediately prior to the Effective Time and
held by a dissenting holder who after the Effective Time shall withdraw his
demand for appraisal or lose his right of appraisal shall thereafter have only
such rights as are provided under applicable Corporate Law.
(d) Any options to purchase shares of Inotek Common ("Inotek Options")
which are not exercised prior to the Effective Time shall be canceled at the
Effective Time.
(e) At the Effective Time, the outstanding shares of common stock of Newco
shall be converted into an equal number of shares of Inotek Common, so that
immediately following the effective time of the Merger,
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the number of outstanding shares of Inotek Common shall be equal to the number
of outstanding shares of common stock of Newco immediately prior to the Merger.
SECTION 1.04. The Closing. The closing of the Merger (the "Closing") shall
take place at the offices of legal counsel for Davis or at such other location
as is mutually agreeable to the parties hereto at 10:00 a.m. local time on the
Closing Date described in Section 1.05 of this Agreement.
SECTION 1.05. The Closing Date. The Closing shall take place at a date and
time designated by Davis not later than five (5) business days following the
satisfaction or waiver of the conditions set forth in Sections 6.01 and 6.02, or
on such other date as Davis and Inotek may agree (the "Closing Date"). The
Merger shall be effective at the time specified in Corporate Law (the "Effective
Time").
SECTION 1.06. Actions At Closing. (a) At the Closing, Inotek shall deliver
to Davis:
(i) certified copies of the Certificate of Incorporation and Bylaws of
Inotek;
(ii) a certificate signed by the Chairman of the Board of Directors
and President of Inotek stating that (A) each of the representations and
warranties contained in Article II is true and correct in all material
respects at the time of the Closing with the same force and effect as if
such representations and warranties had been made at the Closing, and (B)
all of the conditions set forth in Section 6.01 have been satisfied or
waived as provided therein;
(iii) a certified copy of resolutions of the Board of Directors of
Inotek and of the stockholders of Inotek, establishing the requisite
approvals under applicable Corporate Law of this Agreement, the Merger and
the other transactions contemplated hereby;
(iv) the complete minute book of Inotek and access to complete stock
transfer records reflecting transfers of Inotek Common prior to the
Effective Time; and
(v) a certificate of Inotek's transfer agent, in form and substance
reasonably satisfactory to Davis, reflecting the capitalization of Inotek
as of the day preceding the Closing Date.
(b) At the Closing, Davis shall deliver to Inotek:
(i) a certificate signed by the President of Davis stating that (A)
each of the representations and warranties contained in Article III is true
and correct in all material respects at the time of the Closing with the
same force and effect as if such representations and warranties had been
made at the Closing, and (B) all of the conditions set forth in Section
6.02 have been satisfied or waived as provided therein;
(ii) a certified copy of resolutions of the Board of Directors of
Davis and Newco and of the stockholder of Newco, establishing the requisite
approvals under applicable Corporate Law of this Agreement, the Merger and
the other transactions contemplated hereby; and
(iii) evidence reasonably satisfactory to Inotek that Davis has
deposited into an escrow account the sum of $257,000.00 pursuant to the
terms of an Escrow Agreement of even date herewith by and among Davis,
Inotek and the Principal Stockholders (the "Escrow Agreement").
SECTION 1.07. Exchange Procedures; Surrender of Certificates. As soon as
reasonably practicable after the Effective Time, Davis shall mail to each record
holder of shares of Inotek Common a letter of transmittal in form reasonably
satisfactory to Inotek (which shall specify that delivery shall be effected, and
risk of loss and title to certificates shall pass, only upon proper delivery of
the certificates to Davis and shall be in such form and have such other
provisions as Davis may reasonably specify) and instructions for use in
effecting the surrender of certificates, and, after deducting the amount to be
deposited in an escrow account pursuant to Section 1.06(b)(iii), Davis shall
promptly pay the appropriate consideration to former holders of Inotek Common
who make proper delivery of certificates or comply with Davis's reasonable
instructions and requirements with respect to any certificate that has been lost
or stolen.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF INOTEK AND THE PRINCIPAL STOCKHOLDERS
Inotek and the Principal Stockholders severally, but not jointly, represent
and warrant to Davis as follows:
SECTION 2.01. Organization and Capital Stock; Standing and Authority.
(a) Inotek is a corporation duly incorporated, validly existing and in
good standing under the laws of Delaware and has the power to own all of
its property and assets, to incur all of its liabilities and to carry on
its business as now conducted.
(b) As of the date hereof, the authorized capital stock of Inotek
consists solely of 10,000,000 shares of Inotek Common, of which 4,754,088
are outstanding and 100,000 are held as treasury stock. All of the
outstanding shares of Inotek Common are duly and validly issued, fully paid
and non-assessable. None of the outstanding shares of Inotek Common has
been issued in violation of any preemptive rights.
(c) Except as set forth in Section 2.01(b), and except as disclosed in
Section 2.01(c) of that certain document delivered by Inotek to Davis,
entitled the "Disclosure Schedule" and executed by Inotek and Davis
concurrently with the execution and delivery of this Agreement (the
"Disclosure Schedule"), there are no shares of capital stock or other
equity securities of Inotek issued or outstanding and no outstanding
options, warrants, rights to subscribe for, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into
or exchangeable for, shares of capital stock of Inotek or contracts,
commitments, understandings or arrangements by which it is or may be
obligated to issue additional shares of capital stock.
SECTION 2.02. Authorization; No Defaults. The Board of Directors of Inotek
has by all requisite action approved this Agreement, the Merger and the Proxies
(as defined in Section 2.22), and it has authorized the execution and delivery
of this Agreement and the Proxies on behalf of Inotek by duly authorized
officers and the performance of Inotek's obligations hereunder and thereunder.
Nothing in the Certificate of Incorporation or Bylaws of Inotek or, except as
disclosed in Section 2.02 of the Disclosure Schedule, any other agreement,
instrument, decree, proceeding, law or regulation (except as specifically
referred to in or contemplated by this Agreement) by or to which Inotek is bound
or subject would prohibit or inhibit it from consummating this Agreement and the
Merger on the terms and conditions contained herein. Inotek has duly and validly
executed and delivered this Agreement, which constitutes a legal, valid and
binding obligation of Inotek, enforceable in accordance with its terms. Inotek
is not in default under nor in violation of any provision of its Certificate of
Incorporation or Bylaws, nor is it in default under or in violation of any
promissory note, indenture or any evidence of indebtedness or security therefor,
nor is it in default under or in violation of any material lease, contract or
other material commitment or agreement.
SECTION 2.03. Subsidiaries. Inotek has no direct or indirect subsidiaries,
nor does it own any equity interest in any corporation or other entity.
SECTION 2.04. Financial Information. The audited balance sheets of Inotek
as of May 31, 2000 and related income statements and statements of changes in
shareholders' equity and of cash flows for the three years ended May 31, 2000,
together with the notes thereto, included in Inotek's Annual Report on Form 10-K
for the year ended May 31, 2000 as currently on file with the Securities and
Exchange Commission (the "SEC"); and the unaudited balance sheets of Inotek as
of February 28, 2001 and related income statements and statements of changes in
shareholders' equity and of cash flows for the nine months ended February 28,
2001, together with the notes thereto, included in Inotek's Quarterly Report on
Form 10-Q for the three months ended February 28, 2001 as currently on file with
the SEC (such financial statements and notes collectively referred to herein as
the "Inotek Financial Statements"), have been prepared, except as described in
Note 1 to the February 28, 2001 financial statements, in accordance with
generally accepted accounting principles applied on a consistent basis and
fairly present the financial position and results of operations, changes in
shareholders' equity and cash flows of Inotek as of the dates and for the
periods indicated. The
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internal financial statements of Inotek as of January 31, 2001, which were
provided to Davis in connection with its due diligence examination of Inotek
were prepared in accordance with applicable requirements, consistently applied,
and in reasonable detail accurately reflect the transactions and disposition of
the assets of Inotek for the periods covered by such statements.
SECTION 2.05. Absence of Changes. Since May 31, 2000 there has not been
any material adverse change in the financial condition, the results of
operations or the business of Inotek, nor have there been any events or
transactions having such a material adverse effect which should be disclosed in
order to make the Inotek Financial Statements not misleading.
SECTION 2.06. Regulatory Enforcement Matters. Except as disclosed in
Section 2.06 of the Disclosure Schedule, Inotek is not subject to, nor has it
received any notice or advice that it may become subject to, any order,
agreement, proceeding or other regulatory enforcement action with or by any
federal, state or local governmental agency.
SECTION 2.07. Tax Matters. (a) Except as disclosed in Section 2.15 of the
Disclosure Schedule, Inotek has filed all federal, state, local and foreign
income, franchise, excise, sales, use, real and personal property and other tax
returns required to be filed. All such returns fairly reflect the information
required to be presented therein. All provisions for accrued but unpaid taxes
contained in the Inotek Financial Statements were made in accordance with
generally accepted accounting principles and in the aggregate do not fail to
provide for material tax liabilities.
(b) Inotek has not (i) executed an extension or waiver that is currently in
effect with respect to any statute of limitations on the assessment or
collection of any tax; (ii) entered into any tax sharing or tax allocation
agreement or been a part of a consolidated group filing a consolidated tax
return; (iii) become liable for a tax of any other person or entity pursuant to
Treasury Regulation 1.1502-6 (or any similar provision of state, local or
foreign laws) as a transferee or successor or by contract or otherwise; or (iv)
made any payment, become obligated to make any payment or been party to a
contract or agreement that would obligate it to make any payment that would be
disallowed as a deduction under Section 280G or 162(m) of the Internal Revenue
Code.
(c) There has not been any ownership change of Inotek, as defined in
Section 382(g) of the Internal Revenue Code, that occurred during or after any
taxable period in which Inotek incurred a net operating loss that carries over
to any taxable period ending after 1999.
(d) All material elections with respect to taxes affecting Inotek have been
and will be timely made.
SECTION 2.08. Litigation. Except as disclosed in Section 2.08 of the
Disclosure Schedule, there is no litigation, claim or other proceeding pending
or, to the knowledge of Inotek, threatened against Inotek or to which the
property of Inotek is or would be subject.
SECTION 2.09. Properties, Contracts, Employee Benefit Plans and Other
Agreements. Section 2.09 of the Disclosure Schedule specifically identifies the
following:
(a) all loan and credit agreements, conditional sales contracts and
security agreements relating to obligations or assets of Inotek;
(b) all agreements, loans, contracts, leases, guaranties, letters of
credit, lines of credit or commitments of Inotek not referred to elsewhere
in this Section 2.09 which:
(i) involve payment by Inotek of more than $5,000;
(ii) involve payments based on Inotek's profits;
(iii) relate to the future purchase of goods or services in excess
of the requirements of its respective business at current levels or for
normal operating purposes;
(iv) were not made in the ordinary course of business;
(v) materially affect Inotek's business or financial condition; or
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(vi) require the consent or approval of any third party for the
Merger to be consummated or impose any cost or penalty on Inotek as a
result of the Merger.
(c) all contracts, agreements, plans and arrangements by which any
profit sharing, group insurance, hospitalization, stock option, pension,
retirement, bonus, deferred compensation, stock bonus, stock purchase,
collective bargaining agreements, contracts or arrangements under which
pensions, deferred compensation or other retirement benefits is being paid,
or plans or arrangements established or maintained, sponsored or undertaken
by Inotek for the benefit of officers, directors or employees, including
each trust or other agreement with any custodian or any trustee for funds
held under any such agreement, plan or arrangement, and in respect to any
of them, the latest reports or forms, if any, filed with the Department of
Labor and Pension Benefit Guaranty Corporation under ERISA (as defined
below), any current financial or actuarial reports and any currently
effective IRS private ruling or determination letters obtained by or for
the benefit of Inotek;
(d) all leases, subleases or licenses with respect to real or personal
property, whether as lessor, lessee, licensor or licensee, with annual
rental or other payments due thereunder in excess of $25,000;
(e) all agreements for the employment, retention or engagement, or
with respect to the severance, of any officer, employee, agent, consultant
or other person or entity which by its terms is not terminable by Inotek on
thirty (30) days written notice or less without any payment by reason of
such termination; and
(f) the name and annual compensation of each employee of Inotek as of
March 31, 2001 and the name and a description of the annual compensation
and all other benefits paid in the calendar year 2000 and payable as of
March 31, 2001 to each director of Inotek.
Copies of each document, plan or contract identified in Section 2.09 of the
Disclosure Schedule are appended to the Disclosure Schedule and are hereby
incorporated therein.
SECTION 2.10. Reports. Inotek has filed all reports and statements,
together with any amendments required to be made with respect thereto, required
to be filed with the SEC and all other governmental authorities with
jurisdiction over Inotek. Except as set forth in Section 2.10 of the Disclosure
Schedule, as of the dates indicated thereon, each of such reports and documents,
including any financial statements, exhibits and schedules thereto, complied in
all material respects with the relevant statutes, rules and regulations enforced
or promulgated by the authority with which they were filed, and did not 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 were made, not
misleading.
SECTION 2.11. Investment Portfolio. All United States Treasury securities
and other investment securities held by Inotek, as reflected in the latest
balance sheet of Inotek included in the Inotek Financial Statements and in its
accounting books and records, are carried in accordance with generally accepted
accounting principles.
SECTION 2.12. Employee Matters and ERISA. (a) Except as disclosed in
Section 2.12 (a) of the Disclosure Schedule, Inotek has not entered into any
collective bargaining agreement with any labor organization with respect to any
group of employees, and there is no present effort nor existing proposal to
attempt to unionize any group of employees of Inotek.
(b)(i) Inotek has been and is in material compliance with all applicable
laws respecting employment and employment practices, terms and conditions of
employment and wages and hours, including, without limitation, any laws
respecting employment discrimination and occupational safety and health
requirements, and Inotek is not engaged in any unfair labor practice; (ii) there
is no unfair labor practice complaint against Inotek pending or, to the
knowledge of Inotek, threatened before the National Labor Relations Board; (iii)
there is no labor dispute, strike, slowdown or stoppage actually pending or
threatened against or directly affecting Inotek; and (iv) Inotek has not
experienced any work stoppage or other material labor difficulty during the past
five years.
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(c) Except as disclosed in Sections 2.01(c) and 2.12(c) of the Disclosure
Schedule, Inotek does not maintain, contribute to or participate in or have any
liability under any employee benefit plans, as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or any
nonqualified employee benefit plans or deferred compensation, bonus, stock or
incentive plans, or other employee benefit or fringe benefit programs for the
benefit of former or current employees (collectively, the "Employee Plans"). No
present or former employee of Inotek has been charged with breaching nor has
breached a fiduciary duty under any Employee Plan. Inotek does not participate
in, nor has it in the past five years participated in, nor has it any present or
future obligation or liability under, any multiemployer plan (as defined at
Section 3(37) of ERISA). Except as separately disclosed in Section 2.12(c) of
the Disclosure Schedule, Inotek does not maintain, contribute to, or participate
in any plan that provides health, major medical, disability, life insurance,
severance, salary continuation or other benefits to one or more former employees
or consultants.
(d) All liabilities of the Employee Plans have been funded on the basis of
consistent methods in accordance with sound actuarial assumptions and practices,
and no Employee Plan, at the end of any plan year, or at February 28, 2001 had
an accumulated funding deficiency. No actuarial assumptions have been changed
since the last written report of actuaries on the Employee Plans. All insurance
premiums (including premiums to the Pension Benefit Guaranty Corporation) have
been paid in full, subject only to normal retrospective adjustments in the
ordinary course. Except as reflected in the Inotek Financial Statements, Inotek
has no contingent or actual liabilities under Title IV of ERISA. No accumulated
funding deficiency (within the meaning of Section 302 of ERISA or Section 412 of
the Internal Revenue Code of 1986, as amended (the "Code")) has been incurred
with respect to any Employee Plan, whether or not waived. No reportable event
(as defined in Section 4043 of ERISA) has occurred with respect to any Employee
Plan as to which a notice would be required to be filed with the Pension Benefit
Guaranty Corporation. No claim is pending, threatened or imminent with respect
to any Employee Plan (other than a routine claim for benefits for which plan
administrative review procedures have not been exhausted) for which Inotek would
be liable, except as is reflected in the Inotek Financial Statements. Inotek has
no liability for excise taxes under Sections 4971, 4975, 4976, 4977, 4979 or
4980B of the Code or for a fine under Section 502 of ERISA with respect to any
Employee Plan. All Employee Plans have in all material respects been operated,
administered and maintained in accordance with the terms thereof and in
compliance with the requirements of all applicable laws, including, without
limitation, ERISA.
SECTION 2.13. Title to Properties; Licenses; Insurance. (a) Inotek does
not own any interest in any real property;
(b) all leasehold interests for real property and any material personal
property used by Inotek in its business are held pursuant to lease agreements
which are valid and enforceable in accordance with their terms;
(c) to the best of Inotek's knowledge, all real property occupied or used
by Inotek complies in all material respects with all applicable zoning
requirements and other laws and regulations relating thereto, and there are no
condemnation proceedings pending or threatened with respect to any of such
properties;
(d) Inotek has valid title or other ownership rights under licenses to all
material intangible personal or intellectual property used by Inotek in its
business, free and clear of any material claim, defense or right of any other
person or entity, subject only to rights of the licensors pursuant to applicable
license agreements, which rights do not materially and adversely interfere with
the use of such property; and
(e) all material insurable properties owned or held by Inotek are
adequately insured by financially sound and reputable insurers in such amounts
and against fire, earthquake and other risks insured against by extended
coverage and public liability insurance, in amounts and on terms customary with
companies of similar size.
SECTION 2.14. Environmental Matters. As used in this Agreement,
"Environmental Laws" means all local, state and federal environmental, health
and safety laws and regulations in all jurisdictions in which Inotek has done
business or owned, leased or operated property, including, without limitation,
the Federal Resource Conservation and Recovery Act, the Federal Comprehensive
Environmental Response, Compensa-
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tion and Liability Act, the Federal Clean Water Act, the Federal Clean Air Act,
and the Federal Occupational Safety and Health Act.
To the best of Inotek's knowledge, neither the conduct nor operation of
Inotek nor any condition of any property presently or previously owned, leased
or operated in any capacity by Inotek violates or violated any Environmental
Law, and no condition or event has occurred with respect to any property that,
with notice or the passage of time, or both, would constitute a violation
material to the business of Inotek of any Environmental Law or obligate (or
potentially obligate) Inotek to remedy, stabilize, neutralize or otherwise alter
the environmental condition of any property. Inotek has not received notice from
any person or entity that Inotek, or the operation or condition of any property
ever owned, leased or operated in any capacity by Inotek, are or were in
violation of any Environmental Law, or that Inotek is responsible (or
potentially responsible) for remedying, or the cleanup of, any pollutants,
contaminants, or hazardous or toxic wastes, substances or materials at, on or
beneath any such property.
SECTION 2.15. Compliance with Laws and Regulations. Except as disclosed in
Section 2.15 of the Disclosure Schedule, Inotek has all licenses, franchises,
permits and other governmental authorizations that are legally required to
enable it to conduct its business, is qualified to conduct business in every
jurisdiction in which such qualification is required and is in compliance in all
material respects with all applicable laws, ordinances and regulations.
SECTION 2.16. Brokerage. Except for fees payable by Inotek to Sanders
Morris Harris Inc., there are no existing claims or agreements for brokerage
commissions, investment banking fees, financial advisory fees, finders' fees or
similar compensation payable by Inotek in connection with the transactions
contemplated by this Agreement.
SECTION 2.17. No Undisclosed Liabilities. Inotek does not have any
material liability, whether known or unknown, asserted or unasserted, absolute
or contingent, accrued or unaccrued, liquidated or unliquidated, and whether due
or to become due (and there is no past or present fact, situation, circumstance,
condition or other basis for any present or future action, suit or proceeding,
hearing, charge, complaint, claim or demand against Inotek giving rise to any
such liability), except (i) liabilities reflected in the Inotek Financial
Statements,(ii) liabilities of the same type incurred in the ordinary course of
business since February 28, 2001, and (iii) liabilities described in Section
4.01(f)(i)(A), (B) and (C) hereof.
SECTION 2.18. Statements True and Correct. None of the information
supplied or to be supplied by Inotek for inclusion in any document to be filed
with the SEC or any regulatory authority in connection with the transactions
contemplated hereby, at the respective times such documents are filed, and, in
the case of the Information Statement (as defined in Section 4.03), when mailed
to the stockholders of Inotek, will be false or misleading with respect to any
material fact, omit to state any material fact necessary in order to make the
statements therein not misleading or omit to state any material fact required to
be stated in order to correct any statement in any earlier communication. All
documents that Inotek is responsible for filing with the SEC in connection with
the transactions contemplated hereby will comply in all material respects with
the provisions of applicable law and the rules and regulations thereunder.
SECTION 2.19. Commitments and Contracts. Except as disclosed in Sections
2.09 and 2.19 of the Disclosure Schedule (and with a true and correct copy of
the document or other item referred to being attached as an exhibit to the
Disclosure Schedule), Inotek is not a party or subject to any of the following
(whether written or oral, express or implied):
(i) any agreement, arrangement or commitment not made in the ordinary
course of business;
(ii) any agreement, indenture or other instrument not reflected in the
Inotek Financial Statements relating to the borrowing of money by Inotek or
the guarantee by Inotek of any obligation (except trade payables or
instruments related to transactions entered into in the ordinary course of
business, in each case properly reflected in the appropriate books and
records of Inotek); or
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(iii) any contract containing covenants which limit Inotek's right or
ability to compete in any line of business or with any person or containing
any restriction of the geographical area in which, or method by which,
Inotek may carry on its business.
SECTION 2.20. Material Interest of Certain Persons. (a) No officer or
director of Inotek or any "associate" (as such term is defined in Rule 14a-1
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of
any such officer or director has any material interest in any material contract
or property (real or personal, tangible or intangible), used in or pertaining to
the business of Inotek.
(b) There are no outstanding loans from Inotek to any present officer,
director, employee or any associate or related interest of any person referred
to in subsection (a).
SECTION 2.21. Conduct to Date. From and after May 31, 2000 through the
date of this Agreement, except for entering into this Agreement and performing
its obligations hereunder, and except as disclosed in Section 2.21 of the
Disclosure Schedule, Inotek has not done the following:
(i) failed to conduct its business in the ordinary and usual course
consistent with past practices;
(ii) issued, sold, granted, conferred or awarded any common or other
stock, or any corporate debt securities properly classified under generally
accepted accounting principles applied on a consistent basis as long-term
debt;
(iii) effected any stock split or adjusted, combined, reclassified or
otherwise changed its capitalization;
(iv) declared, set aside or paid any cash or stock dividend or other
distribution in respect of its capital stock, or purchased, redeemed,
retired, repurchased, or exchanged, or otherwise directly or indirectly
acquired or disposed of any of its capital stock;
(v) incurred any material obligation or liability (absolute or
contingent), except as contemplated by Section 4.01(f)(i)(A), (B) and (C)
hereof and normal trade or business obligations or liabilities incurred in
the ordinary course of business, or subjected to lien any of its assets or
properties other than in the ordinary course of business consistent with
past practice and as properly reflected in Inotek's books and records;
(vi) discharged or satisfied any material lien or paid any material
obligation or liability (absolute or contingent), other than in accordance
with its terms in the ordinary course of business, except as contemplated
by Section 4.01(f)(i)(A), (B) and (C) hereof;
(vii) sold, assigned, transferred, leased, exchanged, or otherwise
disposed of any of its properties or assets other than for a fair
consideration in the ordinary course of business;
(viii) except as required by contract, (A) increased the rate of
compensation of, or paid any bonus to, any of its directors, officers, or
other employees, except merit or promotion increases in accordance with
existing policy, (B) except as contemplated by Section 4.01(f)(i)(C)
hereof, entered into any new, or amended or supplemented any existing,
employment, management, consulting, deferred compensation, severance or
other similar contract, (C) entered into, terminated or substantially
modified any of the Employee Plans or (D) except as contemplated by Section
4.01(f)(i)(C) hereof, agreed to do any of the foregoing;
(ix) suffered any material damage, destruction or loss, whether as the
result of fire, explosion, earthquake, accident, casualty, labor trouble,
taking of property by any governmental authority, flood, windstorm,
embargo, riot, act of God, act of war or other casualty or event, whether
or not covered by insurance;
(x) canceled or compromised any debt, except for debts charged off or
compromised in accordance with past practice;
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(xi) entered into any material transaction, contract or commitment
outside the ordinary course of its business; or
(xii) made or guaranteed any loan to any of the Employee Plans.
SECTION 2.22. Irrevocable Proxies. Inotek has delivered to Davis the valid
and binding irrevocable proxies of Neal E. Young, David L. White and Dennis W.
Stone (the "Proxies") in the form of Exhibit 2.22. To the best of Inotek's
knowledge, the Proxies are legal, valid and binding obligations of the persons
granting proxies therein, enforceable in accordance with their terms.
SECTION 2.23. Accounts Receivable. (a) Inotek has made available to Davis
a list of all accounts receivable of Inotek as of January 31, 2001 ("Accounts
Receivable") reflecting a range of days elapsed since invoice.
(b) All Accounts Receivable arose in the ordinary course of business and
are collectible except to the extent of reserves therefor set forth in Inotek's
accounting books and records. Except for a security interest held by Bank One,
Texas, N. A. in connection with Inotek's credit facility in the amount of
$500,000 (none of such amount being outstanding as of the date of this
Agreement), no person has a lien on or security interest in any of such Accounts
Receivable, and no request or agreement for deduction or discount has been made
with respect to any of such Accounts Receivable.
SECTION 2.24. Minute Books. The minutes of Inotek made available to Davis
are the only minutes of Inotek and contain a reasonably accurate summary of all
meetings of the Board of Directors or committees thereof and of its stockholders
for the periods covered by such minutes.
ARTICLE IIA
ADDITIONAL REPRESENTATIONS AND WARRANTIES
OF THE PRINCIPAL STOCKHOLDERS
Each Principal Stockholder, severally but not jointly, further represents
and warrants to Davis as follows:
2A.1 Ownership of Inotek Common. Such Principal Stockholder is the
sole record and beneficial owner of the Inotek Common designated as being
owned by such Principal Stockholder opposite such Principal Stockholder's
name in Section 2A.1 of the Disclosure Schedule. Such Inotek Common
constitutes all of the Inotek Common owned, beneficially or of record, by
such Principal Stockholder, and such Principal Stockholder, except as set
forth in Section 2.09 of the Disclosure Schedule, has no options, warrants
or other rights to acquire Inotek Common.
2A.2 Authority. Such Principal Stockholder has all requisite power
and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by such Principal Stockholder, and constitutes the valid and
binding obligation of such Principal Stockholder, enforceable in accordance
with its terms.
2A.3 No Breach or Violation. The execution and delivery by such
Principal Stockholder of this Agreement do not, and, the consummation of
the transactions contemplated hereby will not, breach or violate (i) any
mortgage, indenture, lease, contract or other agreement or instrument,
permit, concession, franchise or license to which such Principal
Stockholder or any of his properties or assets is subject, or (ii) any
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to such Principal Stockholder or his properties or assets.
2A.4 Consents. No consent, waiver, approval, order or authorization
of, or registration, declaration or filing with, any governmental entity or
any third party, including a party to any agreement with such Principal
Stockholder (so as not to trigger any conflict), is required by or with
respect to such Principal Stockholder in connection with the execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) such consents, waivers, approvals,
orders, authorizations,
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registrations, declarations and filings as may be required under applicable
securities laws, and (ii) the filing of a Merger Certificate pursuant to
the Corporate Law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF DAVIS
Davis represents and warrants to Inotek as follows:
SECTION 3.01. Organization. Davis is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Maryland.
SECTION 3.02. Authorization. The Board of Directors of Davis has by all
requisite action approved this Agreement and the Merger and authorized the
execution hereof on its behalf by duly authorized officers and the performance
of its obligations hereunder. Nothing in the Articles of Organization or
Operating Agreement governing Davis or any other agreement, instrument, decree,
proceeding, law or regulation (except as specifically referred to in this
Agreement) by or to which Davis is bound or subject prohibits or inhibits Davis
from consummating this Agreement and the Merger on the terms and conditions
herein contained. This Agreement has been duly and validly executed and
delivered by Davis and constitutes a legal, valid and binding obligation,
enforceable in accordance with its terms.
SECTION 3.03. Litigation. There is no litigation, claim or other
proceeding pending or, to the best of the knowledge of Davis, threatened that
would prohibit Davis from consummating the transactions contemplated by this
Agreement.
SECTION 3.04. Statements True and Correct. None of the written information
supplied or to be supplied by Davis for inclusion in any document to be filed
with the SEC or any regulatory authority in connection with the transactions
contemplated hereby will, at the respective times such documents are filed and,
in the case of the Information Statement (as defined in Section 4.03), when
mailed to the stockholders of Inotek, be false or misleading with respect to any
material fact, omit to state any material fact necessary in order to make the
statements therein not misleading or omit to state any material fact required to
be stated in order to correct any statement in any earlier communication. All
documents that Davis is responsible for filing with the SEC and any other
regulatory authority in connection with the transactions contemplated hereby
will comply with applicable laws, rules and regulations.
SECTION 3.05. Availability of Resources. Davis has sufficient financial
resources to perform its obligations pursuant to this Agreement, including,
without limitation, the ability to pay the consideration contemplated by Section
1.03 hereof.
ARTICLE IV
AGREEMENTS OF INOTEK
SECTION 4.01. Business in Ordinary Course. Inotek agrees that, except as
contemplated by this Agreement and as necessary to consummate the transactions
contemplated hereby, from the date of this Agreement until the earlier of the
Closing Date or the termination of this Agreement in accordance with its terms:
(a) Inotek shall continue to carry on its business and the discharge
or incurrence of obligations and liabilities only in the usual, regular and
ordinary course of business, as heretofore conducted, and by way of
amplification and not limitation, Inotek will not:
(i) declare or pay any dividend or make any other distribution to
stockholders, whether in cash, stock or other property; or
(ii) issue any common stock or other capital stock or any options,
warrants, or other rights to subscribe for or purchase common stock or
any other capital stock or any securities convertible into
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or exchangeable for any capital stock (except for the issuance of Inotek
Common pursuant to the valid exercise of Inotek Options identified in
Section 2.01(c) of the Disclosure Schedule); or
(iii) directly or indirectly redeem, purchase or otherwise acquire
any Inotek Common or any other capital stock of Inotek; or
(iv) effect a reclassification, recapitalization, split up,
exchange of shares, readjustment or other similar change in or to any
capital stock, or otherwise reorganize or recapitalize; or
(v) change its certificate of incorporation or bylaws, nor enter
into any agreement to merge or consolidate with, or sell a significant
portion of its assets to, any person or entity;
(b) Inotek will not, without the prior written consent of Davis:
(i) grant any increase (other than ordinary and normal increases
consistent with past practices) in the compensation payable or to become
payable to officers or salaried employees, grant any stock options or,
except as required by law, adopt or make any change in any bonus,
insurance, pension, or other Employee Plan, agreement, payment or
arrangement made to, for or with any of such officers or employees;
(ii) borrow or agree to borrow any amount of funds or increase the
amount available under any credit facility, except pursuant to its
existing $500,000.00 line of credit to pay (A) expenses incurred in the
ordinary course of business and (B) expenses in connection with the
negotiation, preparation, execution and delivery of this Agreement and
as necessary to perform its obligations in accordance with the terms
hereof and to consummate the transactions contemplated hereby, or
directly or indirectly guarantee or agree to guarantee any obligations
of others;
(iii) make or commit to make any loan or other extension of credit;
(iv) enter into any agreement, contract or commitment having a term
in excess of three (3) months;
(v) place on any of its assets or properties any mortgage, pledge,
lien, charge, or other encumbrance;
(vi) cancel or accelerate any material indebtedness owing to Inotek
or any claim which Inotek may possess, or waive any material rights of
substantial value; (viii) sell or otherwise dispose of any real property
or any material amount of any tangible or intangible personal property,
other than properties acquired in foreclosure or otherwise in the
ordinary collection of indebtedness;
(ix) commit any act or fail to do any act which will cause a breach
of any agreement, contract or commitment and which will have a material
adverse effect on the business, financial condition or results of
operations of Inotek;
(x) violate any law, statute, rule, governmental regulation or
order, which violation will have a material adverse effect on the
business, financial condition, or results of operations of Inotek; or
(xi) purchase any real or personal property or make any other
capital expenditure where the amount paid or committed therefor is in
excess of $5,000;
(c) Inotek shall not, without the prior written consent of Davis,
engage in any transaction or take any action that would render untrue in
any material respect any of the representations and warranties of Inotek
contained in Article II hereof, if such representations and warranties were
given immediately following such transaction or action;
(d) Inotek shall promptly notify Davis of the occurrence of any matter
or event known to and directly involving Inotek that is materially adverse
to the business, operations, properties, assets, or condition (financial or
otherwise) of Inotek;
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(e) Inotek shall not solicit or encourage, or hold discussions or
negotiations with or provide information to any person or entity in
connection with any proposal for the acquisition of all or a substantial
portion of the business, assets, shares of Inotek Common or other
securities or assets of Inotek. Inotek shall promptly advise Davis of its
receipt of any such proposal or inquiry and the substance thereof;
(f)(i) Inotek will maintain cash and cash equivalent balances of not
less than $750,000.00, less the following extraordinary expenses actually
incurred by Inotek in connection with the Merger: (A) fees and expenses
charged by Sanders Morris Harris Inc. with respect to the fairness opinion
referred to in Section 6.01(g), in the amounts set forth in Section 4.01(f)
of the Disclosure Schedule; (B) reasonable nonrecurring legal and
accounting fees, printing and filing costs and other similar expenditures
associated with the transaction, not exceeding an aggregate cost of
$75,000.00 or such greater amount as may be agreed to by Davis; and (C) a
severance payment to be made by Inotek to Dennis Stone in accordance with
the letter dated May 25, 2000 included in Section 2.09 of the Disclosure
Schedule. In determining compliance with this provision, to the extent that
holders of Inotek Options (other than Dennis Stone) exercise any of such
options prior to the Closing on a "net" or "cashless" basis (i.e., upon
exercise, the optionee delivers to Inotek in payment of the exercise price
that number of shares of Inotek common that, when multiplied by the current
market value of the Inotek Common, equal the aggregate exercise price),
thereby reducing the aggregate cash payments required to be made by Davis
in payment of the Common Share Merger Price, an amount equal to the number
of Inotek Common shares received by Inotek upon such exercises of options
multiplied by the Common Share Merger Price shall be added to Inotek's cash
and cash equivalent balances; provided further, that a "net" or "cashless"
exercise by Dennis Stone using the foregoing procedures shall not be given
such effect in calculating Inotek's cash and cash equivalent balances; and
(ii) Inotek will maintain inventory with a value equal to or exceeding
$1,200,000.00, and the value of Inotek's total accounts receivable will
exceed the value of its total accounts payable by $1,000,000.00 or more
(the amounts of inventory, accounts receivable and accounts payable to be
determined in accordance with generally accepted accounting principles,
consistently applied); and
(g) Inotek will use its commercially reasonable best efforts to obtain
and deliver to Davis, at or prior to the Closing, certificates of good
standing from each jurisdiction in which Inotek (i) owns or leases real
property, has employees, sells products or renders services and (ii) is
required to be qualified to do business.
SECTION 4.02. Breaches. Inotek shall, in the event it has knowledge of the
occurrence, or impending or threatened occurrence, of any event or condition
which would cause or constitute a breach (or would have caused or constituted a
breach had such event occurred or been known prior to the date hereof) of any of
its representations or agreements contained or referred to herein, give prompt
written notice thereof to Davis and use its best efforts to prevent or promptly
remedy the same.
SECTION 4.03. Written Consents; Information Statement. Concurrently with
the execution of this Agreement, Inotek has delivered to Davis a true copy of
written consents executed by Neal E. Young, David L. White and Dennis W. Stone
and delivered to Inotek approving the Merger and the other transactions
contemplated by this Agreement. As soon as reasonably practicable and within
applicable time limitations, Inotek shall (i) prepare and file with the SEC an
Information Statement (the "Information Statement") with respect to the Merger
and the other transactions contemplated by this Agreement, (ii) cause such
Information Statement to be mailed to all Inotek stockholders and (iii) perform
all other actions required by Section 14 of the Exchange Act, and the rules and
regulations thereunder. Prior to filing the Information Statement with the SEC,
Inotek shall provide a draft thereof to Davis and its counsel, allow Davis a
reasonable period of time to review and comment on the contents of such draft,
and consider in good faith any comments submitted by Davis.
SECTION 4.04. Consummation of Agreement. Inotek shall perform and fulfill
all conditions and obligations on its part to be performed or fulfilled pursuant
to this Agreement and to effect the Merger in
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accordance with the terms and provisions hereof. Inotek shall furnish to Davis
in a timely manner all information, data and documents reasonably requested by
Davis and shall cooperate fully with Davis in seeking such approvals and in
consummating the transactions contemplated by this Agreement.
SECTION 4.05. Access to Information. Inotek shall permit Davis reasonable
access, in a manner which will avoid undue disruption or interference with its
normal operations, to Inotek's properties. Inotek shall disclose and make
available to Davis all books, documents, papers and records relating to the
assets, stock ownership, properties, operations, obligations and liabilities of
Inotek including, but not limited to, all books of account (including the
general ledger), tax records, minute books of directors' and stockholders'
meetings, organizational documents, material contracts and agreements, loan
files, filings with any regulatory authority, accountants' workpapers (if
available and subject to the respective independent accountants' consent),
litigation files, plans affecting employees, and any other business activities
or prospects in which Davis may have a reasonable and legitimate interest in
furtherance of the transactions contemplated by this Agreement. Davis will hold
any such information which is nonpublic in confidence in accordance with the
provisions of Section 8.01 hereof.
SECTION 4.06. Consents of Third Parties. Inotek shall use its commercially
reasonable best efforts to obtain all consents of third parties necessary or
desirable for the consummation of the transactions contemplated by this
Agreement.
SECTION 4.07. Subsequent Financial Statements. As soon as available after
the date hereof, Inotek shall deliver to Davis monthly unaudited balance sheets
and profit and loss statements of Inotek prepared for its internal use and all
other financial reports or statements submitted to regulatory authorities after
the date hereof (collectively, the "Subsequent Financial Statements"). The
Subsequent Financial Statements shall be prepared on a basis consistent with
past accounting practices, shall fairly present the financial condition and
results of operations for the dates and periods presented and shall not include
any material assets or omit to state any material liabilities, absolute or
contingent, or other facts, which inclusion or omission would render such
financial statements misleading in any material respect.
ARTICLE V
AGREEMENTS OF DAVIS
SECTION 5.01. Conduct of Business. Davis shall not, without the prior
written consent of Inotek, engage in any transaction or take any action that
would render untrue in any material respect any of the representations and
warranties of Davis contained in Article III hereof, if such representations and
warranties were given immediately following such transaction or action. Davis
shall promptly notify Inotek of the occurrence of any matter or event known to
and directly involving Davis that is materially adverse to the ability of Davis
to consummate the transactions contemplated by this Agreement.
SECTION 5.02. Breaches. Davis shall, in the event it has knowledge of the
occurrence, or impending or threatened occurrence, of any event or condition
which would cause or constitute a breach (or would have caused or constituted a
breach had such event occurred or been known prior to the date hereof) of any of
its representations or agreements contained or referred to herein, give prompt
written notice thereof to Inotek and use its best efforts to prevent or promptly
remedy the same.
SECTION 5.03. Consummation of Agreement. Davis shall use its best efforts
to perform and fulfill all conditions and obligations on their parts to be
performed or fulfilled under this Agreement and to effect the Merger in
accordance with the terms and conditions of this Agreement.
SECTION 5.04. Consents of Third Parties. Davis shall use its commercially
reasonable best efforts to obtain all consents of third parties necessary or
desirable for the consummation of the transactions contemplated by this
Agreement.
SECTION 5.05. Obtaining of Financing. Davis shall use its commercially
reasonable best efforts to comply with the terms of any financing, or
commitments therefor, which it intends to use to pay any portion of the required
consideration in the Merger.
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ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
6.01 Conditions to the Obligations of Davis. The obligations of Davis to
effect the Merger and the other transactions contemplated by this Agreement
shall be subject to the satisfaction (or waiver by Davis) prior to or on the
Closing Date of the following conditions:
(a) the representations and warranties made by Inotek in this
Agreement shall be true in all material respects on and as of the Closing
Date with the same effect as though such representations and warranties had
been made or given on and as of the Closing Date;
(b) Inotek shall have performed and complied in all material respects
with all of its obligations and agreements required to be performed prior
to the Closing Date;
(c) no temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or
other legal restraint or prohibition preventing the consummation of the
Merger shall be in effect, nor shall any proceeding by any regulatory
authority or other person seeking any of the foregoing be pending. There
shall not be any action taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the Merger which makes
the consummation thereof illegal;
(d) all necessary approvals, consents and authorizations required by
law for consummation of the Merger, including the requisite approvals of
the stockholders of Inotek and all legally required regulatory approvals,
shall have been obtained, and all waiting periods required by law shall
have expired;
(e) On or prior to the Closing Date, Davis shall have received all
documents required to be received from Inotek, including without limitation
the consents referred to in Section 4.06, and a legal opinion of counsel to
Inotek dated the Closing Date with respect to the matters listed on Exhibit
6.01(e) attached hereto, all in form and substance reasonably satisfactory
to Davis; and
(f) Inotek shall have received a fairness opinion of Sanders Morris
Harris Inc., financial advisor to Inotek, to the effect that the
transactions contemplated by this Agreement are fair to the stockholders of
Inotek from a financial point of view.
SECTION 6.02. Conditions to the Obligations of Inotek. The obligations of
Inotek to effect the Merger and the other transactions contemplated by this
Agreement shall be subject to the satisfaction (or waiver by Inotek) prior to or
on the Closing Date of the following conditions:
(a) the representations and warranties made by Davis in this Agreement
shall be true in all material respects on and as of the Closing Date with
the same effect as though such representations and warranties had been made
or given on the Closing Date;
(b) Davis shall have performed and complied in all material respects
with all of its obligations and agreements hereunder required to be
performed prior to the Closing Date;
(c) no temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or
other legal restraint or prohibition preventing the consummation of the
Merger shall be in effect, nor shall any proceeding by any regulatory
authority or other person seeking any of the foregoing be pending. There
shall not be any action taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the Merger which makes
the consummation thereof illegal;
(d) all necessary approvals, consents and authorizations required by
law for consummation of the Merger shall have been obtained, and all
waiting periods required by law shall have expired;
(e) on or prior to the Closing Date, Inotek shall have received all
documents required to be received from Davis and a legal opinion of counsel
to Davis dated the Closing Date with respect to the matters listed on
Exhibit 6.02(e) attached hereto, all in form and substance reasonably
satisfactory to Inotek; and
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(f) Inotek shall have received a fairness opinion of Sanders Morris
Harris Inc., financial advisor to Inotek, to the effect that the
transactions contemplated by this Agreement are fair to the stockholders of
Inotek from a financial point of view
ARTICLE VII
TERMINATION
SECTION 7.01. Mutual Agreement. This Agreement may be terminated by the
mutual written agreement of the parties at any time prior to the Closing Date,
regardless of whether approval of this Agreement and the Merger by the
stockholders of Inotek shall have been previously obtained.
SECTION 7.02. Breach of Agreements. In the event that there is a material
breach of any of the representations and warranties or agreements of Davis or
Inotek, which breach is not cured within 15 days after notice to cure such
breach is given to the breaching party by the non-breaching party, then the non-
breaching party, regardless of whether approval of this Agreement and the Merger
by the stockholders of Inotek shall have been previously obtained, may terminate
and cancel this Agreement by providing written notice of such action to the
other party hereto.
SECTION 7.03. Failure of Conditions. In the event that any of the
conditions to the obligations of a party are not satisfied or waived on or prior
to the Closing Date, and if any applicable cure period provided in Section 7.02
hereof has lapsed, then such party may, regardless of whether approval of the
transactions contemplated by this Agreement by the stockholders of Inotek shall
have been previously obtained, terminate and cancel this Agreement by delivery
of written notice of such action to the other party.
SECTION 7.04. Unilateral Termination. If the Closing Date shall not have
occurred on or prior to the day which is 120 days after the date of this
Agreement, then this Agreement may be terminated by any party by giving written
notice to the other party.
SECTION 7.05. Effect of Termination. Each party's right of termination
under this Article VII is in addition to any other rights it may have under this
Agreement or otherwise, and the exercise of a right of termination shall not
constitute an election of remedies. If this Agreement is terminated pursuant to
Section 7.01, 7.02, 7.03 or Section 7.04, all further obligations of the parties
under this Agreement will terminate, except that (i) the obligations in Sections
8.01, 8.03 and 8.06 will survive, and (ii) if this Agreement is terminated by a
party pursuant to Section 7.02 or 7.03 because of a breach of this Agreement by
the other party or because one or more of the conditions to the terminating
party's obligations hereunder has not been satisfied as a result of the other
party's failure to comply with any of its obligations under this Agreement, any
legal remedies to which the parties are entitled will survive such termination.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01 Confidential Information. The parties acknowledge the
confidential and proprietary nature of the "Information" (as herein defined)
which has heretofore been exchanged and which will be received from each other
hereunder and agree to hold and keep the same confidential. Such Information
will include any and all financial, technical, commercial, marketing, customer
or other information concerning the business, operations and affairs of a party
that may be provided to the others, irrespective of the form of the
communications, by such party's employees or agents. Such Information shall not
include information which is or becomes generally available to the public other
than as a result of a disclosure by a party or its representatives in violation
of this Agreement. The parties agree that the Information will be used solely
for the purposes contemplated by this Agreement and that such Information will
not be disclosed to any person other than employees and agents of a party who
are directly involved in implementing the Merger, who shall be informed of the
confidential nature of the Information and directed individually to abide by the
restrictions set forth in this Section 8.01. The Information shall not be used
in any way detrimental to a party, including use directly or indirectly in the
conduct of the other party's business or any business or enterprise in which
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such party may have an interest, now or in the future, and whether or not now in
competition with such other party. Neither Davis nor Inotek will purchase or
sell any security issued by the other party for so long as this Agreement
remains in effect.
SECTION 8.02. Publicity. Davis and Inotek shall cooperate with each other
in the development and distribution of all news releases and other public
disclosures concerning this Agreement and the Merger. No party shall issue any
news release or make any other public disclosure without the prior consent of
the other party, unless such is required by law upon the written advice of
counsel or is in response to published newspaper or other mass media reports
regarding the transactions contemplated hereby, in which latter event the
parties shall consult with each other to the extent practicable regarding such
responsive disclosure.
SECTION 8.03. Return of Documents. Upon termination of this Agreement
without the Merger becoming effective, each party shall deliver to the others
originals and all copies of all Information made available to such party and
will not retain any copies, extracts or other reproductions, in whole or in
part, of such Information.
SECTION 8.04. Notices. Any notice or other communication shall be in
writing and shall be deemed to have been given or made on the date of delivery,
in the case of hand delivery, or three (3) business days after deposit in the
United States Registered Mail, postage prepaid, or upon receipt if transmitted
by facsimile telecopy or any other means, addressed (in any case) as follows:
(a) if to Davis:
Lee D. Rudow, President
Davis Instruments, LLC
4701 Mount Hope Drive
Baltimore, Maryland 21215
Facsimile: (410) 764-8237
with a copy to:
John S. Daniels
Attorney at Law
6440 North Central Expressway, Suite 503
Dallas, Texas 75206
Facsimile: (214) 368-9094
(b) if to Inotek:
INOTEK Technologies Corp.
11212 Indian Trail
Dallas, Texas 75229
Attention: Neal E. Young
Facsimile: (972) 210-1601
with a copy to:
Bruce A. Cheatham, Esq.
Winstead Sechrest & Minick P.C.
5400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
Facsimile: (214) 745-5867
or to such other address as any party may from time to time designate by notice
to the others.
SECTION 8.05. Nonsurvival of Representations, Warranties and Agreements.
The representations, warranties and agreements of Davis, Inotek and the
Principal Stockholders contained herein shall terminate at the Effective Time,
except as otherwise provided in the Escrow Agreement with respect to certain
breaches of
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Section 2.04 hereof. The obligations of Davis and the Principal Stockholders in
the Escrow Agreement shall be contingent on the consummation of the Merger and
shall become effective only upon such consummation.
SECTION 8.06. Costs and Expenses. Except as may be otherwise provided
herein, each party shall pay its own costs and expenses incurred in connection
with this Agreement and the matters contemplated hereby, including without
limitation all fees and expenses of attorneys, accountants, brokers, financial
advisors and other professionals. In the event of termination of this Agreement,
the obligation of each party to pay its own expenses will be subject to any
rights of such party arising from a breach of this Agreement by another party.
SECTION 8.07. Entire Agreement. This Agreement, together with the Proxies,
constitutes the entire agreement between the parties and supersedes and cancels
any and all prior discussions, negotiations, undertakings, agreements in
principle and other agreements between the parties relating to the subject
matter hereof.
SECTION 8.08. Headings and Captions. The captions of Articles and Sections
hereof are for convenience only and shall not control or affect the meaning or
construction of any of the provisions of this Agreement.
SECTION 8.09. Waiver, Amendment or Modification. The conditions of this
Agreement which may be waived may only be waived by a written instrument
delivered to the other party. The failure of any party at any time or times to
require performance of any provision hereof shall in no manner affect the right
at a later time to enforce the same. This Agreement may not be amended or
modified except by a written document duly executed by the parties hereto.
SECTION 8.10. Rules of Construction. Unless the context otherwise
requires: (a) a term has the meaning assigned to it; (b) an accounting term not
otherwise defined has the meaning assigned to it in accordance with generally
accepted accounting principles; (c) "or" is not exclusive; and (d) words in the
singular may include the plural and in the plural include the singular.
SECTION 8.11. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which shall
be deemed one and the same instrument.
SECTION 8.13. Governing Law. This Agreement shall be governed by the laws
of the State of Texas.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their respective officers thereunto duly authorized, all as of the date first
written above.
DAVIS INSTRUMENTS, LLC
By: /s/ LEE D. RUDOW
----------------------------------
Lee D. Rudow
President
INOTEK TECHNOLOGIES CORP.
By: /s/ NEAL E. YOUNG
----------------------------------
Neal E. Young
Chairman
/s/ NEAL E. YOUNG
------------------------------------
Neal E. Young
/s/ DAVID L. WHITE
------------------------------------
David L. White
/s/ DENNIS W. STONE
------------------------------------
Dennis W. Stone
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