Exhibit 2.1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
ANGIODYNAMICS, INC.
ROYAL I, LLC
AND
RITA MEDICAL SYSTEMS, INC.
NOVEMBER 27, 2006
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TABLE OF CONTENTS
Page
SECTION 1. THE MERGER......................................................................................2
1.1 MERGER OF THE COMPANY INTO MERGER SUB...........................................................2
1.2 EFFECT OF THE MERGER............................................................................2
1.3 CLOSING; EFFECTIVE TIME.........................................................................2
1.4 LIMITED LIABILITY COMPANY OPERATING AGREEMENT...................................................2
1.5 EFFECT OF THE MERGER............................................................................2
1.6 CLOSING OF THE COMPANY'S TRANSFER BOOKS.........................................................3
1.7 EXCHANGE OF CERTIFICATES........................................................................4
1.8 FURTHER ACTION..................................................................................5
1.9 APPRAISAL RIGHTS................................................................................5
1.10 TAX CONSEQUENCES................................................................................5
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................................................6
2.1 DUE ORGANIZATION; SUBSIDIARIES..................................................................6
2.2 AUTHORITY; BINDING NATURE OF AGREEMENT..........................................................6
2.3 CAPITALIZATION, ETC.............................................................................7
2.4 NON-CONTRAVENTION; CONSENTS.....................................................................9
2.5 SEC FILINGS; FINANCIAL STATEMENTS...............................................................9
2.6 ABSENCE OF CHANGES.............................................................................11
2.7 PROPRIETARY ASSETS.............................................................................12
2.8 CONTRACTS......................................................................................14
2.9 LIABILITIES....................................................................................16
2.10 COMPLIANCE WITH LEGAL REQUIREMENTS; FDA MATTERS................................................16
2.11 GOVERNMENTAL AUTHORIZATIONS....................................................................19
2.12 TAX MATTERS....................................................................................19
2.13 EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS......................................................20
2.14 ENVIRONMENTAL MATTERS..........................................................................24
2.15 LEGAL PROCEEDINGS; ORDERS......................................................................25
2.16 VOTE REQUIRED..................................................................................25
2.17 FOREIGN CORRUPT PRACTICES ACT..................................................................25
2.18 REAL PROPERTY..................................................................................26
2.19 INSURANCE POLICIES.............................................................................26
2.20 INFORMATION TO BE SUPPLIED.....................................................................26
2.21 TAKEOVER STATUTES; COMPANY RIGHTS PLAN.........................................................27
2.22 FINANCIAL ADVISOR..............................................................................27
2.23 OPINION OF FINANCIAL ADVISOR...................................................................27
2.24 AFFILIATE TRANSACTIONS.........................................................................27
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB........................................28
3.1 DUE ORGANIZATION; SUBSIDIARIES.................................................................28
3.2 AUTHORITY; BINDING NATURE OF AGREEMENT.........................................................28
3.3 CAPITALIZATION, ETC............................................................................29
3.4 NON-CONTRAVENTION; CONSENTS....................................................................30
3.5 SEC FILINGS; FINANCIAL STATEMENTS..............................................................31
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3.6 ABSENCE OF CHANGES.............................................................................32
3.7 PROPRIETARY ASSETS.............................................................................33
3.8 CONTRACTS......................................................................................35
3.9 LIABILITIES....................................................................................37
3.10 COMPLIANCE WITH LEGAL REQUIREMENTS; FDA MATTERS................................................37
3.11 GOVERNMENTAL AUTHORIZATIONS....................................................................40
3.12 TAX MATTERS....................................................................................41
3.13 EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS......................................................42
3.14 ENVIRONMENTAL MATTERS..........................................................................44
3.15 LEGAL PROCEEDINGS; ORDERS......................................................................45
3.16 VOTE REQUIRED..................................................................................45
3.17 FOREIGN CORRUPT PRACTICES ACT..................................................................45
3.18 REAL PROPERTY..................................................................................46
3.19 INSURANCE POLICIES.............................................................................46
3.20 INFORMATION TO BE SUPPLIED.....................................................................46
3.21 TAKEOVER STATUTES; RIGHTS PLAN.................................................................47
3.22 FINANCIAL ADVISOR..............................................................................47
3.23 OPINION OF FINANCIAL ADVISOR...................................................................47
3.24 AFFILIATE TRANSACTIONS.........................................................................47
SECTION 4. CERTAIN COVENANTS OF THE COMPANY AND PARENT....................................................47
4.1 ACCESS AND INVESTIGATION.......................................................................47
4.2 OPERATION OF BUSINESS..........................................................................48
4.3 NO SOLICITATION BY THE COMPANY.................................................................52
SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES............................................................54
5.1 REGISTRATION STATEMENT AND PROXY STATEMENT FOR STOCKHOLDER APPROVAL............................54
5.2 COMPANY SHAREHOLDERS' MEETING AND PARENT STOCKHOLDERS' MEETING.................................55
5.3 REGULATORY APPROVALS...........................................................................56
5.4 COMPANY STOCK OPTIONS AND WARRANTS.............................................................57
5.5 EMPLOYEE BENEFITS..............................................................................58
5.6 INDEMNIFICATION OF OFFICERS AND DIRECTORS......................................................59
5.7 ADDITIONAL AGREEMENTS..........................................................................60
5.8 PUBLIC DISCLOSURE..............................................................................61
5.9 TAX MATTERS....................................................................................61
5.10 RESIGNATION OF DIRECTORS.......................................................................61
5.11 NASDAQ LISTING OF ADDITIONAL SHARES............................................................61
5.12 TAKEOVER LAWS; RIGHTS PLANS....................................................................61
5.13 FORM S-8; SECTION 16...........................................................................62
5.14 LITIGATION.....................................................................................62
5.15 ADVICE OF CHANGES..............................................................................62
5.16 DIRECTORS OF PARENT............................................................................63
5.17 RULE 145 AFFILIATES............................................................................63
SECTION 6. CONDITIONS TO THE MERGER.......................................................................63
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION..........................................................63
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6.2 ADDITIONAL CONDITIONS TO PARENT'S AND MERGER SUB'S OBLIGATIONS.................................64
6.3 ADDITIONAL CONDITIONS TO THE COMPANY'S OBLIGATIONS.............................................65
SECTION 7. TERMINATION....................................................................................66
7.1 TERMINATION....................................................................................66
7.2 EFFECT OF TERMINATION..........................................................................67
7.3 EXPENSES; TERMINATION FEES.....................................................................67
SECTION 8. MISCELLANEOUS PROVISIONS.......................................................................68
8.1 AMENDMENT......................................................................................68
8.2 WAIVER.........................................................................................68
8.3 NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES..................................................68
8.4 ENTIRE AGREEMENT; COUNTERPARTS.................................................................68
8.5 APPLICABLE LAW; JURISDICTION...................................................................68
8.6 ATTORNEYS' FEES................................................................................69
8.7 ASSIGNABILITY; THIRD PARTY BENEFICIARIES.......................................................69
8.8 NOTICES........................................................................................70
8.9 SEVERABILITY...................................................................................70
8.10 SPECIFIC PERFORMANCE...........................................................................71
8.11 CONSTRUCTION...................................................................................71
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made
and entered into on November 27, 2006, by and among ANGIODYNAMICS, INC., a
Delaware corporation ("Parent"), ROYAL I, LLC, a Delaware limited liability
company and a direct, wholly-owned subsidiary of Parent ("Merger Sub"), and
RITA MEDICAL SYSTEMS, INC., a Delaware corporation (the "Company"). Certain
capitalized terms used in this Agreement are defined in Exhibit A.
RECITALS
WHEREAS, Parent, Merger Sub and the Company intend to effect
a merger (the "Merger") of the Company with and into Merger Sub in accordance
with this Agreement and the General Corporation Law of the State of Delaware
(the "DGCL") and the applicable provisions of the Delaware Limited Liability
Company Act (the "DLLCA");
WHEREAS, it is intended that the Merger shall qualify as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code") and this Agreement shall constitute the
plan of reorganization;
WHEREAS, the Board of Directors of the Company (i) has
determined that the Merger is in the best interests of, and is advisable to,
the Company and its stockholders, (ii) has approved and adopted this Agreement,
the Merger and the other transactions contemplated by this Agreement, (iii) has
taken all corporate action necessary to render the rights issuable under the
Company Rights Agreement inapplicable to this Agreement, the Merger and the
other transactions contemplated hereby and (iv) has determined to recommend
that the stockholders of the Company adopt this Agreement (the recommendation
referred to in this clause (iv) is referred to in this Agreement as the
"Company Recommendation");
WHEREAS, the Board of Directors of Parent (i) has determined
that the Merger is in the best interests of Parent and its stockholders, (ii)
has approved and adopted this Agreement, the Merger and the other transactions
contemplated by this Agreement, and (iii) has determined to recommend that the
stockholders of Parent approve the issuance of Parent Common Stock pursuant to
the Merger as contemplated by this Agreement (the recommendation referred in
this clause (iii) is referred to in this Agreement as the "Parent
Recommendation");
WHEREAS, (i) the Board of Managers of Merger Sub has (a)
determined that the Merger is in the best interests of, and advisable to,
Merger Sub and Parent, as its sole member, (b) approved and adopted this
Agreement, the Merger and the other transactions contemplated by this
Agreement, and (d) has determined to recommend that Parent, as the sole member
of Merger Sub, approve this Agreement and (ii) Parent, as the sole member of
Merger Sub, will, immediately after the execution and delivery hereof, approve,
adopt and declare advisable this Agreement, the Merger and the other
transactions contemplated by this Agreement; and
WHEREAS, Parent, Merger Sub and the Company desire to make
certain representations, warranties, covenants and agreements in connection
with the Merger and also to prescribe various conditions to the Merger.
NOW THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements hereinafter
set forth, the parties to this Agreement, intending to be legally bound, agree
as follows:
SECTION 1 THE MERGER.
1.1 MERGER OF THE COMPANY INTO MERGER SUB.
Upon the terms and subject to the conditions set forth in
this Agreement, at the Effective Time (as defined in Section 1.3), the Company
shall be merged with and into Merger Sub, and the separate corporate existence
of the Company shall cease. Merger Sub will continue as the surviving entity in
the Merger (the "Surviving Entity") and will be a wholly-owned subsidiary of
Parent.
1.2 EFFECT OF THE MERGER.
The Merger shall have the effects set forth in this Agreement
and the applicable provisions of the DGCL and the DLLCA.
1.3 CLOSING; EFFECTIVE TIME.
The consummation of the Merger (the "Closing") shall take
place at the offices of Heller Ehrman LLP, 275 Middlefield Road, Menlo Park,
California at 10:00 a.m. on a date to be mutually agreed upon by Parent and the
Company (the "Closing Date"), which date shall be no later than the third
business day after the conditions set forth in Section 6 shall have been
satisfied or waived (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the satisfaction or waiver of such
conditions), or such other time as Parent and the Company shall mutually agree.
Subject to the provisions of this Agreement, the parties shall cause the Merger
to become effective by causing Merger Sub to execute and file in accordance
with the DGCL and the DLLCA a certificate of merger with the Secretary of State
of the State of Delaware (the "Certificate of Merger"). The Merger shall become
effective upon such filing, or at such later date and time set forth in the
Certificate of Merger (the "Effective Time").
1.4 LIMITED LIABILITY COMPANY OPERATING AGREEMENT.
(a) The Limited Liability Company Operating Agreement of the
Merger Sub in effect as of immediately prior to the Effective Time will be the
Limited Liability Company Operating Agreement of the Surviving Entity following
the Effective Time; provided, however, that the Limited Liability Company
Operating Agreement shall be amended to change the name of the Surviving Entity
to "RITA Medical Systems, LLC".
(b) The managers and officers of the Surviving Entity shall
be the respective individuals who are the managers and officers of Merger Sub
immediately prior to the Effective Time.
1.5 EFFECT OF THE MERGER.
(a) At the Effective Time, by virtue of the Merger and
without any further action on the part of Parent, Merger Sub, the Company or
any Company Stockholder, subject to Section 1.5(b), Section 1.5(c), Section
1.5(d), and Section 1.9 each share of Company Common Stock then issued and
outstanding, other than Excluded Shares and Dissenting Shares, if any, shall be
converted into the right to receive:
(i) 0.1722 of a fully paid and nonassessable share
of Parent Common Stock (the "Per Share Stock Merger Consideration"); and
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(ii) if the Parent Common Stock Price is less than
or equal to $27.29 and greater than or equal to $18.18, an amount of cash equal
to $4.70 less the Per Share Stock Merger Consideration Value; and
(iii) if Parent Common Stock Price is less than
$18.18, an amount of cash equal to $1.57.
(b) If, on or after the date of this Agreement and prior to
the Effective Time, the outstanding shares of Company Common Stock or Parent
Common Stock are changed into a different number or class of shares by reason
of any stock split, stock dividend, reverse stock split, reclassification,
recapitalization or other similar transaction, including any such transaction
with a record date between the date of this Agreement and the Effective Time,
then the Merger Consideration shall be appropriately adjusted to the extent the
record date for any such event is between the date of this Agreement and the
Effective Time, so as to provide the holders of Company Common Stock and Parent
the same economic effect as contemplated prior to such stock split, stock
dividend, reverse stock split, reclassification, recapitalization or other
similar transaction.
(c) At the Effective Time, each Excluded Share shall be
cancelled and extinguished without any conversion or payment therefor.
(d) No fractional shares of Parent Common Stock shall be
issued in connection with the Merger, and no certificates or scrip for any such
fractional shares shall be issued, and such fractional share interests shall
not entitle the owner thereof to vote or to any rights as a holder of Parent
Common Stock. Any holder of Company Common Stock who would otherwise be
entitled to receive a fraction of a share of Parent Common Stock pursuant to
the Merger (after aggregating all fractional shares of Parent Common Stock
issuable to such holder) shall, in lieu of such fraction of a share and upon
surrender of such holder's Company Stock Certificate(s) (as defined in Section
1.6), be paid in cash the dollar amount (rounded up to the nearest whole cent),
without interest, equal to the product obtained by multiplying (A) that
fraction of a share of Parent Common Stock to which such stockholder would
otherwise be entitled (after aggregating all fractional shares of Parent Common
Stock otherwise issuable to such holder) by (B) the Parent Common Stock Price.
Alternatively, Parent shall have the option of instructing the Exchange Agent
to aggregate all fractional shares of Parent Common Stock, sell such shares in
the public market and distribute to holders of Company Common Stock who
otherwise would have been entitled to such fractional shares of Parent Common
Stock a pro rata portion of the proceeds of such sale.
1.6 CLOSING OF THE COMPANY'S TRANSFER BOOKS.
At the Effective Time: (a) all shares of Company Common Stock
("Shares") outstanding immediately prior to the Effective Time shall
automatically be canceled and shall cease to exist, each share of Company
Common Stock shall represent only the right to receive the Merger Consideration
and all holders of certificates representing Shares that were outstanding
immediately prior to the Effective Time shall cease to have any rights as
stockholders of the Company; and (b) the stock transfer books of the Company
shall be closed with respect to all Shares outstanding immediately prior to the
Effective Time. No further transfer of any such Shares shall be made on such
stock transfer books after the Effective Time. If, after the Effective Time, a
valid certificate previously representing any Shares (a "Company Stock
Certificate") is presented to the Exchange Agent (as defined in Section 1.7) or
to the Surviving Entity or Parent, such Company Stock Certificate shall be
canceled and shall be exchanged as provided in this Section 1.
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1.7 EXCHANGE OF CERTIFICATES.
(a) Prior to the Closing Date, Parent shall appoint its
transfer agent for the Parent Common Stock to act as exchange agent in the
Merger (the "Exchange Agent"). Within two business days after the Effective
Time, Parent shall deposit with the Exchange Agent, for the benefit of the
holders of Shares, (i) certificates representing the shares of Parent Common
Stock issuable pursuant to this Section 1, and (ii) cash representing the Cash
Merger Consideration payable pursuant to this Section 1 (such cash and shares
of Parent Common Stock, together with any dividends or distributions with
respect thereto, being referred to as the "Exchange Fund").
(b) As soon as practicable after the Effective Time, and in
any event within two business days following receipt of the list of record
holders of certificates representing shares of Company Common Stock ("Company
Stock Certificates") as of the close of business on the Closing Date from the
transfer agent for the Company Common Stock, the Exchange Agent will mail to
the record holders of Company Stock Certificates (i) a letter of transmittal in
customary form and containing such provisions as Parent and the Company may
reasonably specify (including a provision confirming that delivery of Company
Stock Certificates shall be effected, and risk of loss and title to Company
Stock Certificates shall pass, only upon delivery of such Company Stock
Certificates to the Exchange Agent), and (ii) instructions for use in effecting
the surrender of Company Stock Certificates in exchange for the Merger
Consideration. Upon surrender of a Company Stock Certificate to the Exchange
Agent for exchange, together with a duly executed letter of transmittal and
such other documents as may be reasonably required by the Exchange Agent or
Parent, (A) the holder of such Company Stock Certificate shall be entitled to
receive in exchange therefor the Merger Consideration, and (B) the Company
Stock Certificate so surrendered shall be immediately canceled. Until
surrendered as contemplated by this Section 1.7, each Company Stock Certificate
shall be deemed, from and after the Effective Time, to represent only the right
to receive the Merger Consideration and any distribution or dividend the record
date for which is after the Effective Time. If any Company Stock Certificate
shall have been lost, stolen or destroyed, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Company Stock Certificates, the
Merger Consideration; provided, however, that Parent may, in its discretion and
as a condition precedent to the issuance of any certificate representing Parent
Common Stock, require the owner of such lost, stolen or destroyed Company Stock
Certificate to provide an appropriate affidavit and to deliver a bond (in such
reasonable sum as Parent may reasonably direct) as indemnity against any claim
that may be made against the Exchange Agent, Parent or the Surviving Entity
with respect to such Company Stock Certificate.
(c) No dividends or other distributions declared or made with
respect to Parent Common Stock with a record date after the Effective Time
shall be paid to the holder of any unsurrendered Company Stock Certificate with
respect to the shares of Parent Common Stock that such holder has the right to
receive pursuant to the Merger until such holder surrenders such Company Stock
Certificate in accordance with this Section 1.7.
(d) Any portion of the Exchange Fund that remains
undistributed to holders of Company Stock Certificates as of the date one year
after the Effective Time shall be delivered to Parent upon demand, and any
holders of Company Stock Certificates who have not theretofore surrendered
their Company Stock Certificates to the Exchange Agent in accordance with this
Section 1.7 shall thereafter look only to Parent for satisfaction of their
claims for the Merger Consideration to which such holder is entitled pursuant
hereto, subject to applicable abandoned property law, escheat laws or similar
Legal Requirements.
(e) Each of the Exchange Agent, Parent and the Surviving
Entity shall be entitled to deduct and withhold from any consideration payable
or otherwise deliverable pursuant to this Agreement
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to any holder or former holder of Company Common Stock such amounts as may be
required to be deducted or withheld therefrom under the Code or any provision
of state, local or foreign tax law or under any other applicable Legal
Requirement. To the extent such amounts are so deducted or withheld, such
amounts shall be treated for all purposes under this Agreement as having been
paid to the Person to whom such amounts would otherwise have been paid.
(f) Neither Parent nor the Surviving Entity shall be liable
to any holder or former holder of Company Common Stock or to any other Person
with respect to any shares of Parent Common Stock (or dividends or
distributions with respect thereto), or for any cash amounts, properly
delivered to any public official in compliance with any applicable abandoned
property law, escheat law or similar Legal Requirement.
1.8 FURTHER ACTION.
If, at any time after the Effective Time, any further action
is determined by Parent to be necessary or desirable to carry out the purposes
of this Agreement or to vest the Surviving Entity with full right, title and
possession of and to all rights and property of Merger Sub and the Company, the
officers and directors of the Surviving Entity and Parent shall be fully
authorized (in the name of Merger Sub, in the name of the Company and
otherwise) to take such action. Parent, Merger Sub and Surviving Entity also
shall take such further actions as may be necessary or desirable to ensure that
the Exchange Agent sends out the letters of transmittal to the stockholders of
the Company and issues certificates representing Parent Common Stock to such
stockholders in accordance with Section 1.7.
1.9 APPRAISAL RIGHTS.
Notwithstanding anything to the contrary in this Article 1,
in the event that any Cash Merger Consideration is included in the Merger
Consideration, any shares of the Company Common Stock outstanding immediately
prior to the Effective Time and held by a Person who has not voted in favor of
the adoption of this Agreement and who has demanded appraisal for such shares
in accordance with the DGCL (the "Dissenting Shares") shall not be converted
into a right to receive the Merger Consideration, unless such holder fails to
perfect or withdraws or otherwise loses its rights to appraisal of it is
determined that such holder does not have appraisal rights in accordance with
the DGCL. If such holder fails to timely perfect or withdraws the demand for
appraisal, or it is determined that such holder does not have appraisal rights,
such shares shall be treated as if they had been converted as of the Effective
Time into the right to receive the Merger Consideration. The Company shall
serve prompt notice to Parent of any notice of intent to demand appraisal, or
any demand for payment, received by the Company and Parent shall have the right
to participate in and direct all negotiations and proceedings with respect to
such demands. Prior to the Effective Time, the Company shall not, without the
prior written consent of Parent, make any payment with respect to, or settle or
offer to settle, any such demands, or agree to do any of the foregoing.
1.10 TAX CONSEQUENCES.
For federal income tax purposes, the Merger is intended to
constitute a reorganization within the meaning of Section 368 of the Code. The
parties to this Agreement hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Treasury Regulations. Parent, the Company and Merger Sub have
taken no actions and will take no actions, nor have they failed to take any
actions or will they fail to take any actions, either before or after the
Closing, which could reasonably be expected to cause the Merger to fail to
qualify as a reorganization. Each of Parent and Merger Sub (as the Surviving
Entity) shall report the Merger for
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income tax purposes as a reorganization and will take no position in any Tax
Return or Tax proceeding inconsistent with treatment of the Merger as a
reorganization.
SECTION 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as disclosed in Company SEC Documents filed prior to
the date hereof or the Disclosure Letter delivered by the Company to Parent and
Merger Sub prior to the execution and delivery of this Agreement (the "Company
Disclosure Letter") and referred to in the section of the Company Disclosure
Letter corresponding to the section(s) of this Section 2 to which such
disclosure applies (unless it is reasonably apparent from the face of such
disclosure that the disclosure or statement in one section of the Company
Disclosure Letter should apply to one or more sections thereof), the Company
hereby represents and warrants to Parent and Merger Sub as follows:
2.1 DUE ORGANIZATION; SUBSIDIARIES.
The Company is a corporation duly organized, validly existing
and in good standing under the Legal Requirements of the jurisdiction of its
incorporation, and each of the other Acquired Corporations which is a
"significant subsidiary" (as defined in Regulation S-X) of the Company is a
corporation duly organized, validly existing and in good standing under the
Legal Requirements of the jurisdiction of its incorporation or formation. Each
of the Acquired Corporations has all necessary power and authority: (a) to
conduct its business in the manner in which its business is currently being
conducted; (b) to own and use its assets in the manner in which its assets are
currently owned and used; and (c) to perform its material obligations under all
Company Material Contracts. Each of the Acquired Corporations is qualified to
do business as a foreign corporation, and is in good standing, under the Legal
Requirements of all jurisdictions where the failure to be so qualified would
have a Material Adverse Effect on the Acquired Corporations. The Company has
delivered or made available to Parent accurate and complete copies of the
certificate of incorporation, bylaws and other charter or organizational
documents of each of the Acquired Corporations, including all amendments
thereto (collectively, the "Company Organization Documents"). The Company has
no Subsidiaries, except for the corporations identified in Schedule 2.1 of the
Company Disclosure Letter. The Company and each of its Subsidiaries are
collectively referred to herein as the "Acquired Corporations". None of the
Acquired Corporations has any equity interest or similar interest in, or any
interest convertible into or exchangeable or exercisable for any equity or
similar interest in, any Entity, other than the Acquired Corporations'
interests in their Subsidiaries identified in Schedule 2.1 of the Company
Disclosure Letter.
2.2 AUTHORITY; BINDING NATURE OF AGREEMENT.
The Company has all requisite corporate power and authority
to enter into and, subject to the receipt of the stockholder approval
contemplated by Section 5.2, to perform its obligations under this Agreement.
This Agreement constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, subject
to (a) Legal Requirements of general application relating to bankruptcy,
insolvency and the relief of debtors, (b) rules of law governing specific
performance, injunctive relief and other equitable remedies and (c) the
approval of stockholders of the Company. The Company hereby represents that its
Board of Directors, at a meeting duly called and held on or prior to the date
hereof, has by unanimous vote (i) determined that the Merger is in the best
interests of the Company and its stockholders, (ii) approved, adopted and
declared advisable this Agreement, (iii) approved the Merger and the other
transactions contemplated by this Agreement, and (iv) determined to make the
Company Recommendation to the stockholders of the Company.
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2.3 CAPITALIZATION, ETC.
(a) The authorized capital stock of the Company consists of
150,000,000 shares of Company Common Stock and 2,000,000 shares of Company
Preferred Stock. The Company has not authorized any other class of capital
stock other than the Company Common Stock and the Company Preferred Stock. As
of November 24, 2006, 43,248,964 shares of Company Common Stock have been
issued or are outstanding and no shares of the Company Preferred Stock have
been issued or are outstanding. No shares of Company Common Stock are held in
the Company's treasury or are held by any of the Company's Subsidiaries. All of
the outstanding shares of Company Common Stock have been duly authorized and
validly issued, and are fully paid and nonassessable. None of the outstanding
shares of Company Common Stock is entitled or subject to any preemptive right,
right of participation, right of maintenance or any similar right or subject to
any right of first refusal in favor of the Company. There is no Contract to
which the Company is a party and, to the Company's knowledge, there is no
Contract between other Persons, relating to the voting or registration of, or
restricting any Person from purchasing, selling, pledging or otherwise
disposing of, any shares of Company Common Stock. None of the Acquired
Corporations is under any obligation, or is bound by any Contract pursuant to
which it may become obligated, to repurchase, redeem or otherwise acquire any
outstanding shares of Company Common Stock.
(b) As of November 24, 2006, 5,876,746 shares of Company
Common Stock are reserved for issuance pursuant to stock options under the
Company's 2005 Stock and Incentive Plan (as amended and together with all stock
option agreements evidencing grants thereunder, the "2005 Incentive Plan"), of
which options to acquire 2,233,384 shares of Company Common Stock are
outstanding, 1,000,000 shares of Company Common Stock are reserved for issuance
pursuant to stock options under the Company's 2000 Director's Stock Option Plan
(as amended and together with all stock agreements evidencing grants
thereunder, the "2000 Director's Plan"), of which options to acquire 567,670
shares of Company Common Stock are outstanding, 2,000,000 shares of Company
Common Stock are reserved for issuance pursuant to stock options under the
Company's 2000 Stock Plan (as amended and together will all stock agreements
evidencing grants thereunder, the "2000 Stock Plan"), of which options to
acquire 2,595,155 shares of Company Common Stock are outstanding, 2,318,025
shares of Company Common Stock are reserved for issuance pursuant to stock
options under the Company's 1998 Incentive Stock Plan (as amended and together
will all stock agreements evidencing grants thereunder the "1998 Stock Plan"),
of which options to acquire 2,318,025 shares of Company Common Stock are
outstanding, 46,261 shares of Company Common Stock are reserved for issuance
pursuant to stock options under the Company's 1994 Incentive Stock Plan (as
amended and together will all stock agreements evidencing grants thereunder the
"1994 Stock Plan"), of which options to acquire 46,261 shares of Company Common
Stock are outstanding, and 167,167 shares of Company Common Stock are available
for issuance pursuant to the Company's 2000 Employee Stock Purchase Plan (as
amended and together with all stock agreements evidencing grants thereunder the
"Company ESPP"), of which 167,167 shares of Company Common Stock remain
available for issuance thereunder. Stock options granted by the Company
pursuant to the 2005 Incentive Plan, the 2000 Director's Plan, the 2000 Stock
Plan, the 1998 Stock Plan and the 1994 Stock Plan (together, the "Company Stock
Option Plans"), as well as any stock options granted by the Company outside of
the Company Stock Option Plans (but excluding the Company ESPP), are referred
to collectively herein as "Company Options." Schedule 2.3(b) of the Company
Disclosure Letter sets forth the following information with respect to each
Company Option outstanding as of November 24, 2006: (i) the particular plan
pursuant to which such Company Option was granted; (ii) the name of the
optionee; (iii) the number of shares of Company Common Stock subject to such
Company Option and the number of such shares that have been exercised; (iv) the
current exercise price of such Company Option; (v) the date on which such
Company Option was granted; (vi) the extent to which such Company Option is
vested and exercisable as of the date of this Agreement; (vii) the vesting
schedule of such Company Option including the anticipated acceleration of
vesting of Company Options as described
7
in this Section 2.3(b) and Schedule 2.3(b) of the Company Disclosure Letter;
(viii) the expiration date of the Company Option; and (ix) the period of time
following termination of employment during which the Company Option may be
exercised if not expired. The Company has delivered or made available to Parent
accurate and complete copies of the Company ESPP, all stock option plans
pursuant to which the Company has granted Company Options, and the forms of all
stock option agreements evidencing such options. There have been no repricings
of any Company Options through amendments, cancellation and reissuance or other
means during the current or prior two calendar years. Effective as of the
Effective Time and as described in Schedule 2.3(b) of the Company Disclosure
Letter, only those Company Options outstanding as of the date hereof and as of
immediately prior to the Effective Time, which are to become exercisable and
vested pursuant to their terms or the agreements of the Company in effect prior
to the date hereof, shall become exercisable and vested with respect to the
shares underlying such Company Options without any action by the Board or any
committee thereof. None of the Company Options have been granted in
contemplation of the Merger or the transactions contemplated in this Agreement
and no Company Options have been granted since November 24, 2006. None of the
Company Options were granted with exercise prices below or deemed to be below
fair market value on the date of grant. All grants of Company Options were
validly made and properly approved by the board of directors of the Company (or
a duly authorized committee or subcommittee thereof) in compliance with all
applicable law and recorded on the Company Financial Statements in accordance
with GAAP, and no such grants involved any "back dating," "forward dating" or
similar practices with respect to such grants.
(c) Schedule 2.3(c) of the Company Disclosure Letter sets
forth the following information with respect to each warrant of the Company
outstanding as of November 24, 2006 (each, a "Company Warrant"): (i) the
aggregate number of warrants outstanding; (ii) the expiration date; and (iii)
the exercise price. The terms of each Company Warrant do not prohibit the
assumption of the Company Warrants as provided in Section 5.4(d).
(d) Except as set forth in Section 2.3(a), Section 2.3(b) or
Section 2.3(c) above or on Schedule 2.3(d) of the Company Disclosure Letter,
and other than the Company Rights Agreement and the rights thereunder, there is
no: (i) outstanding subscription, option, call, warrant or right (whether or
not currently exercisable) to acquire any shares of the capital stock or other
securities of any of the Acquired Corporations; (ii) outstanding security,
instrument or obligation that is or may become convertible into or exchangeable
for any shares of the capital stock or other securities of any of the Acquired
Corporations; (iii) rights agreement, stockholder rights plan or similar plan
commonly referred to as a "poison pill"; or (iv) Contract under which any of
the Acquired Corporations are or may become obligated to sell or otherwise
issue any shares of its capital stock or any other securities ("Company Rights
Agreements") (items (i) through (iv) above, collectively, "Company Stock
Rights").
(e) All outstanding shares of Company Common Stock, all
outstanding Company Options and all outstanding shares of capital stock of each
Subsidiary of the Company have been issued and granted in compliance in all
material respects with (i) all applicable securities laws and other applicable
Legal Requirements, and (ii) all requirements set forth in Contracts applicable
to the issuance of Company Common Stock, granting of Company Options and/or the
issuance of shares of capital stock of any Company Subsidiary. All of the
outstanding shares of capital stock of each of the Company's Subsidiaries have
been duly authorized and are validly issued, are fully paid and nonassessable
and, except as required by Legal Requirements applicable to each of the
Acquired Corporations which is formed or incorporated under the laws of a
foreign jurisdiction, are owned beneficially and of record by the Company, free
and clear of any Encumbrances. Schedule 2.3(e) of the Company Disclosure Letter
sets forth all entities (other than Subsidiaries) in which any of the Acquired
Corporations has any ownership interest and the amount of such interest.
8
2.4 NON-CONTRAVENTION; CONSENTS.
Neither the execution, delivery or performance of this
Agreement nor the consummation of the Merger, or any of the other transactions
contemplated by this Agreement, will directly or indirectly (with or without
notice or lapse of time):
(a) contravene, conflict with or result in a violation of any
of the provisions of the Company Organization Documents or any resolution
adopted by the stockholders, the Board of Directors or any committee of the
Board of Directors of any of the Acquired Corporations;
(b) subject to such filings, if any, as may be required
pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended ("HSR") and any Governmental Body action related thereto, contravene,
conflict with or result in a violation of, or give any Governmental Body the
right to challenge the Merger or any of the other transactions contemplated by
this Agreement or to exercise any remedy or obtain any relief under, any Legal
Requirement or any Order to which any of the Acquired Corporations, or any of
the material assets owned or used by any of the Acquired Corporations, is
subject;
(c) contravene, conflict with or result in a violation of any
of the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate or modify, any material
Governmental Authorization that is held by any of the Acquired Corporations or
that is otherwise material to the business of any of the Acquired Corporations
or to any of the assets owned or used by any of the Acquired Corporations; or
(d) contravene, conflict with or result in a violation or
breach of, or result in a default under, any provision of any Company Material
Contract (except for any such violation or breach which by its terms can be
cured and is so cured within the applicable cure period or where the
non-breaching party has no right to accelerate or terminate as a result of such
violation or breach), or give any Person the right to (i) declare a default or
exercise any remedy under any Company Material Contract, (ii) accelerate the
maturity or performance of any Company Material Contract, or (iii) cancel,
terminate or modify any term of any Company Material Contract.
Except as may be required by the Securities Act, the Exchange
Act, the DGCL and the rules and regulations of the Nasdaq (as such rules and
regulations relate to the Registration Statement and the Proxy Statement) and
such filings as may be required pursuant to the HSR and except for any Consent
required under any Company Material Contract, none of the Acquired Corporations
was, is or will be required to make any filing with or give any notice to, or
obtain any Consent from, any Person in connection with (x) the execution,
delivery or performance of this Agreement, or (y) the consummation of the
Merger or any of the other transactions contemplated by this Agreement, except
in the case of subsections (x) and (y), where the failure to make such filing,
give such notice or obtain any such consent would not have a Material Adverse
Effect on the Acquired Corporations.
2.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) All statements, reports, schedules, forms, exhibits and
other documents required to have been filed by the Company with the SEC since
January 1, 2004 (the "Company SEC Documents") have been so filed. As of their
respective dates (or, if amended, supplemented or superseded by a filing prior
to the date of this Agreement, then on the date of such amendment, supplement
or superseding filing): (i) each of the Company SEC Documents complied in all
material respects with the applicable requirements of the Securities Act or the
Exchange Act (as the case may be); and (ii) none of the Company SEC Documents
contained any untrue statement of a material fact or
9
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(b) The Company SEC Documents include all certifications and
statements required of it, if any, by (i) Rule 13a-14 or 15d-14 under the
Exchange Act, and (ii) 18 U.S.C. Section 1350 (Section 906 of the
Sarbanes-Oxley Act of 2002), and each of such certifications and statements
contain no qualifications or exceptions to the matters certified therein other
than a knowledge qualification, permitted under such provision, and have not
been modified or withdrawn and neither the Company nor any of its officers has
received any notice from the SEC or any other Governmental Body questioning or
challenging the accuracy, completeness, form or manner of filing or submission
of such certifications or statements.
(c) The Company is in compliance in all material respects
with all of the provisions of the Sarbanes-Oxley Act of 2002, and the
provisions of the Exchange Act and the Securities Act relating thereto, which
under the terms of such provisions (including the dates by which such
compliance is required) have become applicable to the Company.
(d) Except as amended in subsequent filings made prior to the
date hereof and set forth on Schedule 2.5(d) of the Company Disclosure Letter,
the financial statements (including related notes, if any) contained in the
Company SEC Documents (the "Company Financial Statements"): (i) complied as to
form in all material respects with the published rules and regulations of the
SEC applicable thereto; (ii) were prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered (except as may be indicated in
the notes to such financial statements or, in the case of unaudited statements,
as permitted by Form 10-Q of the SEC, and except that the unaudited financial
statements may not have contained footnotes and were subject to normal and
recurring year-end adjustments which were not, or are not reasonably expected
to be, individually or in the aggregate, material); and (iii) fairly presented
in all material respects the consolidated financial position of the Company and
its consolidated subsidiaries as of the respective dates thereof and the
consolidated results of operations and cash flows of the Company and its
consolidated subsidiaries for the periods covered thereby. For purposes of this
Agreement, "Company Balance Sheet" means that consolidated balance sheet of the
Company and its consolidated subsidiaries as of September 30, 2006 set forth in
the Company's Quarterly Report on Form 10-Q filed with the SEC on November 7,
2006 and the "Company Balance Sheet Date" means September 30, 2006.
(e) The Company maintains a system of internal controls
sufficient to provide reasonable assurance that (i) transactions are executed
with management's authorization, (ii) transactions are recorded as necessary to
permit preparation of financial statements in accordance with GAAP and to
maintain accountability for assets, (iii) access to assets is permitted only in
accordance with management's authorization, (iv) the recorded amount for assets
is compared with existing assets at reasonable intervals and appropriate action
is taken with respect to any differences, (v) all information (both financial
and non-financial) required to be disclosed by the Company in the reports that
it files or submits under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in the rules and forms of the
SEC and (vi) all such information is accumulated and communicated to Company's
management as appropriate to allow timely decisions regarding required
disclosure and to make the certifications of the Chief Executive Officer and
Chief Financial Officer of the Company required under the Exchange Act with
respect to such reports. There are no significant deficiencies or material
weaknesses in the design or operation of the Company's internal controls, and
Company has not been informed by its independent auditors, accountants,
consultants or others involved in the review of internal controls that any such
significant deficiencies or material weaknesses exist, which could adversely
affect the Company's ability to record, process, summarize and report financial
data. There is no fraud in connection with the Company Financial Statements,
whether or not material,
10
that involves management or other employees who have a significant role in the
Company's internal controls.
2.6 ABSENCE OF CHANGES.
(a) Since the Company Balance Sheet Date,
(i) none of the Acquired Corporations has made any
material changes in its pricing polices or payment or credit practices or
failed to pay any creditor any material amount owed to such creditor when due
or granted any extensions or credit other than in the ordinary course of
business consistent with prior practice;
(ii) none of the Acquired Corporations has
terminated or closed any material facility, business or operation;
(iii) none of the Acquired Corporations has written
up or written down any of its material assets; and
(iv) there has been no material loss, destruction or
damage to any item of property of the Acquired Corporations, whether or not
insured.
(b) Except as set forth in Schedule 2.6(b) of the Company
Disclosure Letter, since the Company Balance Sheet Date and through the date of
this Agreement:
(i) there has not been any event that has had a
Material Adverse Effect on the Acquired Corporations, and no fact, event,
circumstance or condition exists or has occurred that could reasonably be
expected to have a Material Adverse Effect on the Acquired Corporations;
(ii) each of the Acquired Corporations has operated
its respective business in the ordinary course consistent with prior practice;
(iii) none of the Acquired Corporations has (A)
declared, accrued, set aside or paid any dividend or made any other
distribution in respect of any shares of capital stock; (B) repurchased,
redeemed or otherwise reacquired any shares of capital stock or other
securities; (C) made any capital expenditure which, when added to all other
capital expenditures made on behalf of the Acquired Corporations since the
Company Balance Sheet Date, exceeds $250,000, in the aggregate; (D) made any
material Tax election; (E) settled any Legal Proceedings involving amounts in
excess of $100,000; or (F) entered into or consummated any transactions with
any affiliate;
(iv) none of the Acquired Corporations has (A) sold
or otherwise disposed of, or acquired, leased, licensed, waived or relinquished
any material right or other material asset to, from or for the benefit of, any
other Person except for rights or other assets sold, disposed of, acquired,
leased, licensed, waived or relinquished in the ordinary course of business
consistent with prior practice; (B) mortgaged, pledged or subjected to any
Encumbrance any of their respective property, business or assets; (C) entered
into or amended any lease of real property (whether as lessor or lessee); or
(D) canceled or compromised any debt or claim other than accounts receivable in
the ordinary course of business consistent with prior practice;
(v) none of the Acquired Corporations has (A)
amended or waived any of its material rights under, or permitted the
acceleration of vesting under any provision of any agreement or Company Stock
Option Plans evidencing any outstanding Company Option; (B) caused or permitted
any
11
Company Employee Plan to be amended in any material respect; or (C) paid
any bonus or other incentive or equity compensation or made any profit-sharing
or similar payment to, or materially increased the amount of the wages, salary,
commissions, fringe benefits or other compensation or remuneration payable to,
any of its directors, officers or consultants;
(vi) there has been no material labor dispute
(including any work slowdown, stoppage or strike) involving the Acquired
Corporations;
(vii) none of the Acquired Corporations has made any
change in its methods of accounting or accounting practices;
(viii) none of the Acquired Corporations has made
any loan, advance or capital contributions to, or any other investment in, any
Person;
(ix) none of the Acquired Corporations has
terminated or amended, or suffered a termination of, any Company Material
Contract;
(x) none of the Acquired Corporations has entered
into any contractual obligation to do any of the things referred to elsewhere
in this Section 2.6; and
(xi) there has been no material development in any
Legal Proceeding described in a Company SEC Document.
2.7 PROPRIETARY ASSETS.
(a) Schedule 2.7(a) of the Company Disclosure Letter sets
forth as of the date of this Agreement (i) all U.S. and foreign patents, patent
applications, registered trademarks, material unregistered trademarks,
trademark applications, copyright registrations and copyright applications,
Internet domain names, computer software (other than third party software
generally available for sale to the public) and fictitious name and assumed
name registrations owned by any of the Acquired Corporations, (ii) all patent
applications and other Proprietary Assets that are currently in the name of
inventors or other Persons and for which an Acquired Corporation has the right
to receive an assignment and (iii) all material third party licenses for
Proprietary Assets to which an Acquired Corporation is the licensee party and
which are not set forth on Schedule 2.8(a)(iii) of the Company Disclosure
Letter. Each Acquired Corporation has good, valid and marketable title to, or
has a valid right to use, license or otherwise exploit, all of the material
Acquired Corporation Proprietary Assets necessary for the conduct of such
Acquired Corporation's business as presently conducted, free and clear of all
Encumbrances. None of the Acquired Corporations has developed jointly with any
other Person any material Acquired Corporation Proprietary Asset with respect
to which such other Person has any rights. Other than the Material Acquired
Corporations IP Contracts and Contracts entered into in the ordinary course of
business consistent with prior practice that are not, with respect to any
individual Contract, material to the Acquired Corporations, there is no
Acquired Corporation Contract pursuant to which any Person has any right
(whether or not currently exercisable) to use, license or otherwise exploit any
Acquired Corporation Proprietary Asset owned or exclusively licensed by any of
the Acquired Corporations.
(b) (i) All Acquired Corporation Proprietary Assets owned by
any of the Acquired Corporations are, subsisting and in effect and to the
Company's knowledge, valid and enforceable; (ii) none of the Acquired
Corporation Proprietary Assets and no Proprietary Asset that is currently being
developed or reduced to practice or which is the subject of a current invention
disclosure by any of the Acquired Corporations (either by itself or with any
other Person) infringes, misappropriates, conflicts with or otherwise violates
any Proprietary Asset owned or used by any other Person; (iii) none of the
12
products or services that is or has been designed, created, developed,
assembled, performed, manufactured, sold, marketed or licensed by any of the
Acquired Corporations is infringing, misappropriating or making any unlawful or
unauthorized use of any Proprietary Asset owned or used by any other Person,
and, none of such products or services has at any time infringed,
misappropriated or made any unlawful or unauthorized use of, and none of the
Acquired Corporations has received in the past three (3) years any written, or
to the Company's knowledge, oral notice of any actual, alleged, possible or
potential infringement, misappropriation or unlawful or unauthorized use of,
any Proprietary Asset owned or used by any other Person; (iv) the operation of
the business of each Acquired Corporation as it currently is conducted does not
and will not when conducted by the Surviving Entity in substantially the same
manner following the Closing, infringe or misappropriate or make any unlawful
or unauthorized use of any Proprietary Asset of any other Person; and (v) to
the Company's knowledge, no other Person is infringing, misappropriating or
making any unlawful or unauthorized use of, and no Proprietary Asset owned or
used by any other Person infringes or conflicts with, any Acquired Corporation
Proprietary Asset, and no such claims have been asserted or threatened against
any Person by the Company or, to the knowledge of the Company, any other
Person, in the past three (3) years. The Acquired Corporation Proprietary
Assets constitute all the Proprietary Assets necessary to enable each of the
Acquired Corporations to conduct its business in the manner in which such
business is currently being conducted. Upon the consummation of the Merger, the
Surviving Entity shall have good, valid, and enforceable title, or license (if
the applicable Acquired Corporations Proprietary Asset is licensed to an
Acquired Corporation) to all Acquired Corporation Proprietary Assets, free and
clear of all Encumbrances and on, and subject to, the same terms and conditions
as in effect immediately prior to the Closing. None of the Acquired
Corporations has entered into any covenant not to compete or any Contract
limiting its ability to exploit fully any Acquired Corporation Proprietary
Assets owned or licensed by such Acquired Corporation or to transact business
in any market or geographical area or with any Person.
(c) Each Acquired Corporation has taken all reasonable steps
that are required to protect such Acquired Corporation's rights in confidential
information and trade secrets of the Acquired Corporation or provided by any
other Person to the Acquired Corporation. Set forth on Schedule 2.7(c) of the
Company Disclosure Letter is a list of each employee, consultant and contractor
of the Acquired Corporations that has executed a proprietary information and
confidentiality agreement substantially in the form previously made available
to Parent and described on Schedule 2.7(c) of the Company Disclosure Letter.
(d) Neither this Agreement nor the transactions contemplated
by this Agreement, including any assignment to Parent by operation of law as a
result of the Merger of any Contracts to which the Acquired Corporations is a
party, will result in: (i) Parent, any of its affiliates or the Surviving
Entity granting to any third party any incremental right to or with respect to
or non-assertion under any Proprietary Assets owned by, or licensed to, any of
them, (ii) Parent, any of its affiliates or the Surviving Entity, being bound
by, or subject to, any incremental non-compete or other incremental material
restriction on the operation or scope of their respective businesses, (iii)
Parent, any of its affiliates or the Surviving Entity being obligated to pay
any incremental royalties or other material amounts, or offer any incremental
discounts, to any third party or (iv) the Acquired Corporations being required
under a Contract to procure or attempt to procure from Parent or any of its
subsidiaries a license grant to or covenant not to assert in favor of any
Person. As used in this Section 2.7(d), an "incremental" right, non-compete,
restriction, royalty or discount refers to a right, non-compete, restriction,
royalty or discount, as applicable, in excess, whether in terms of contractual
term, contractual rate or scope, of those that would have been required to be
offered or granted, as applicable, had the parties to this Agreement not
entered into this Agreement or consummated the transactions contemplated
hereby.
(e) With respect to the use of software in the business of
each of the Acquired Corporations as such business is currently conducted, to
the knowledge of the Company, no such software
13
contains defects in its operation or any device or feature designed to disrupt,
disable, or otherwise impair the functioning of any software. Such software has
been validated for its use. There have been no material security breaches in
any of the Acquired Corporations' information technology systems, and there
have been no disruptions in any of the Acquired Corporations' information
technology systems that materially adversely affected such Acquired
Corporations' business or operations. Each Acquired Corporation has evaluated
their disaster recovery and backup needs and have implemented plans and systems
that reasonably address their assessment of risk.
(f) All products of the Acquired Corporations ("Company
Product") conform in all material respects with all applicable contractual
commitments and all express and implied warranties, the Acquired Corporations'
published product specifications and with all regulations, certification
standards and other requirements of any applicable governmental entity or third
party. The channel activities of the Acquired Corporations related to sales or
distribution of Company Products conform in all material respects with all
applicable contractual commitments. The Acquired Corporations have no liability
(whether known or unknown, asserted or unasserted, absolute or contingent,
accrued or unaccrued, liquidated or unliquidated, due or to become due or
otherwise) for replacement or modification of any Company Product or other
damages in connection therewith other than in the ordinary course of business.
There are no known material defects in the design or technology embodied in any
Company Product which impair or are likely to impair the intended use of such
Company Product. There is no presently pending, or, to the knowledge of the
Company, threatened, and, to the knowledge of the Company, there is no basis
for, any civil, criminal or administrative actions, suits, demands, claims,
hearings, notices of violation, investigations, proceedings or demand letters
relating to any alleged hazard or alleged defect in design, manufacture,
materials or workmanship, including any failure to warn or alleged breach of
express or implied warranty or representation, relating to any Company Product.
None of the Acquired Corporations have extended to any of its customers any
written product warranties, indemnifications or guarantees that deviate in any
material respect from the standard product warranties, indemnification
arrangements or guarantees of the Acquired Corporations.
2.8 CONTRACTS.
(a) For purposes of this Agreement, each of the following
shall be deemed to constitute a "Company Material Contract", which Company
Material Contracts and all amendments thereto, in each case as of the date of
this Agreement are listed on Schedule 2.8 of the Company Disclosure Letter and
copies of which have been made been made available to Parent:
(i) any Acquired Corporation Contract that is
required by the rules and regulations of the SEC to be filed as an exhibit to
the Company SEC Documents;
(ii) any Acquired Corporation Contract relating to
(A) the employment of any employee or the services of any independent
contractor or consultant and pursuant to which any of the Acquired Corporations
is or may become obligated to make any severance or termination payment in
excess of $50,000 or (B) any bonus, relocation or other payment in excess of a
material amount to any current or former employee, independent contractor,
consultant, officer or director (other than payments, in the case of (A) and
(B) above, in respect of salary or pursuant to standard severance policies,
existing bonus plans or standard relocation policies of the Company which are
listed on Schedule 2.8(a) or Schedule 2.13(a) of the Company Disclosure
Letter);
(iii) any Acquired Corporation Contract relating to
the acquisition, transfer, development, sharing or license of any material
Proprietary Asset, including the Contracts set forth on Schedule 2.7(a)(iii) of
the Company Disclosure Letter (except for any Acquired Corporation Contract
pursuant to which (A) any Proprietary Asset is licensed to the Acquired
Corporations under any third
14
party software license generally available for sale to the public) ("Material
Acquired Corporations IP Contract"), or (B) any material Proprietary Asset is
licensed by any of the Acquired Corporations to any customer in connection with
the sale of any product in the ordinary course of business consistent with
prior practice);
(iv) any Acquired Corporation Contract with any
officer, director or affiliate of the Company;
(v) any Acquired Corporation Contract creating or
relating to any partnership or joint venture or any sharing of revenues,
profits, losses, costs or liabilities, under which an Acquired Corporation has
continuing material obligations;
(vi) any Acquired Corporation Contract that involves
the payment or expenditure by an Acquired Corporation in excess of $50,000 that
may not be terminated by such Acquired Corporation (without penalty) within 60
days after the delivery of a termination notice by the applicable Acquired
Corporation;
(vii) any Acquired Corporation Contract
contemplating or involving the payment or delivery of cash or other
consideration to an Acquired Corporation in excess of $50,000;
(viii) any Acquired Corporation Contract imposing
any restriction on the right or ability of any Acquired Corporation to (A)
compete with any other Person, (B) acquire any material product or other
material asset or any services from any other Person, sell any material product
or other material asset to or perform any services for any other Person or
transact business or deal in any other manner with any other Person, or (C)
develop or distribute any material technology; and
(ix) any other Acquired Corporation Contract, if a
breach of such Acquired Corporation Contract could reasonably be expected to
have a Material Adverse Effect on the Acquired Corporations.
(b) Each Company Material Contract is valid and in full force
and effect, and is enforceable in accordance with its terms subject to (A)
Legal Requirements of general application relating to bankruptcy, insolvency
and the relief of debtors, and (B) rules of law governing specific performance,
injunctive relief and other equitable remedies, except to the extent they have
expired in accordance with their terms and except where the failure to be in
full force and effect, individually or in the aggregate, would not reasonably
be expected to be material to the Acquired Corporations. The Company has
delivered to or made available to Parent true and complete copies of each
Company Material Contract, except in the case of a Company Material Contract
which is derived from a standard form agreement of the Acquired Corporations,
the Company has delivered to or made available to Parent a form or forms of
such agreement. In each case where a Company Material Contract is derived from
a standard form agreement, all of the terms, conditions and provisions of such
Company Material Contract are substantially similar with respect to material
terms to the form agreement from which such agreement derived.
(c) None of the Acquired Corporations has materially violated
or breached, or committed any material default under, any Company Material
Contract. To the Company's knowledge, no other Person has materially violated
or breached, or committed any material default under, any Company Material
Contract.
(d) To the Company's knowledge, no event has occurred, and no
circumstance or condition exists, that (with or without notice or lapse of
time) could reasonably be expected to (i) result in
15
a material violation or breach of any provision of any Company Material
Contract by any of the Acquired Corporations; (ii) give any Person the right to
declare a material default or exercise any remedy under any Company Material
Contract; (iii) give any Person the right to accelerate the maturity or
performance of any Company Material Contract; or (iv) give any Person the right
to cancel or terminate, or modify in any material respect, any Company Material
Contract
2.9 LIABILITIES.
Except as disclosed in Company SEC Documents, since the
Company Balance Sheet Date, none of the Acquired Corporations has any accrued,
contingent or other liabilities of any nature, either matured or unmatured
(whether due or to become due) required to be reflected in financial statements
prepared in accordance with GAAP, except for: (a) liabilities that are
reflected in the "Liabilities" column of the Company Balance Sheet and the
notes thereto, (b) normal and recurring liabilities that have been incurred by
the Acquired Corporations since the Company Balance Sheet Date in the ordinary
course of business consistent with prior practice, and (c) liabilities incurred
in connection with the transactions contemplated by this Agreement.
2.10 COMPLIANCE WITH LEGAL REQUIREMENTS; FDA MATTERS.
(a) Each of the Acquired Corporations is in compliance in all
material respects with all applicable Legal Requirements. Within the past three
years none, of the Acquired Corporations has received any written notice or, to
the Company's knowledge, other communication from any Governmental Body
regarding any actual or possible material violation of, or failure to comply in
any material respect with, any Legal Requirement.
(b) Except as would not, individually or in the aggregate,
have a Material Adverse Effect on the Acquired Corporations, each of the
Acquired Corporations is in possession of all franchises, grants,
authorizations, licenses, establishment registrations, product listings,
permits, easements, variances, exceptions, consents, certificates, clearances,
approvals and orders of any Government Body, including the United States Food
and Drug Administration (the "FDA") and similar authorities in the U.S. and
non-U.S. jurisdictions necessary for each Acquired Corporation to own, lease
and operate its properties or to develop, produce, store, distribute, promote
and sell its products or otherwise to carry on its business as it is now being
conducted (the "Company Permits"), and, as of the date of this Agreement, such
Company Permits are in full force and effect and no suspension or cancellation
of any of the Company Permits is pending or, to the knowledge of the Company,
threatened, except where the failure to have, or the suspension or cancellation
of, any of the Company Permits would not, individually or in the aggregate,
have a Material Adverse Effect on the Acquired Corporations. Except for
conflicts, defaults or violations which, individually or in the aggregate,
would not have a Material Adverse Effect on the Acquired Corporations, no
Acquired Corporation is in conflict with, or in violation or default of, (i)
any law applicable to such Acquired Corporation or by which any property,
asset, operation, or product of an Acquired Corporation is bound or affected,
including the Federal Food, Drug and Cosmetic Act (the "FDCA"), Titles XVIII
and XIX of the federal Social Security Act, including the Federal Health Care
Programs Anti-Kickback Statute, the Health Insurance Portability and
Accountability Act ("HIPAA"), the Federal False Claims Act, or any other
similar act or law or (ii) any Company Permit.
(c) Except as would not, individually or in the aggregate,
have a Material Adverse Effect on the Acquired Corporations:
(i) all manufacturing operations of the Acquired
Corporations are being conducted in substantial compliance with applicable good
manufacturing practice pursuant to the Quality System Regulation (21 C.F.R.
Part 820);
16
(ii) all necessary clearances or approvals from
governmental agencies for all device products which are manufactured or sold by
the Acquired Corporations have been obtained, and each Acquired Corporation is
in substantial compliance with the most current form of each applicable
clearance, approval, or regulatory standards applicable to devices for which no
clearance or approval is required, with respect to the development, design,
manufacture, labeling, storage, distribution, promotion and sale by the such
Acquired Corporation of such products;
(iii) all of the clinical studies which have been,
or are being conducted by or for the Acquired Corporations, are being conducted
in substantial compliance with required experimental protocols, procedures and
controls, with generally accepted good clinical practice (pursuant to 21 C.F.R.
Parts 50, 54, 56, 58, and 812) and all applicable government regulatory,
statutory and other requirements;
(iv) to the knowledge of the Company, none of its
respective officers, employees or agents (during the term of such person's
employment by any Acquired Corporation or while acting as an agent of an
Acquired Corporation) has made any untrue statement of a material fact or
fraudulent statement to the FDA or any governmental agency (including non-U.S.
regulatory agencies), failed to disclose a material fact required to be
disclosed to the FDA or similar governmental agency (including non-U.S.
regulatory agencies), or to the knowledge of the Company, committed an act,
made a statement or failed to make a statement that could reasonably be
expected to provide a basis for the FDA or similar governmental agency
(including non-U.S. regulatory agencies) to invoke its "Fraud, Untrue
Statements of Material Facts, Bribery, and Illegal Gratuities" Final Policy set
forth in 56 Fed. Reg. 46191 (September 10, 1991) and any amendments thereto (or
"Application Integrity Policy") or similar governmental policy or regulation
(including non-U.S. policies or regulations);
(v) to the knowledge of the Company, except as
disclosed in the Company 10-K, no Acquired Corporation has received any written
notice within the past three years that the FDA or any similar governmental
agency (including non-U.S. regulatory agencies) has commenced, or threatened to
initiate, any action to withdraw its clearance or approval, or to request the
recall of, any product of an Acquired Corporation, or commenced, or overtly
threatened to initiate any action to enjoin production at any facility of an
Acquired Corporation;
(vi) to the knowledge of the Company, as to each
medical device, drug, biologic or other article manufactured and/or distributed
by an Acquired Corporation within the past three years, such article was not
and/or is not adulterated or misbranded within the meaning of the FDCA or any
similar governmental act or law of any jurisdiction (including non-U.S.
jurisdictions); and
(vii) to the knowledge of the Company, none of the
officers or employees of the Acquired Corporations (during the term of such
person's employment by an Acquired Corporation or while acting as an agent of
an Acquired Corporation), subsidiaries or affiliates was subject to an FDA
debarment order, nor have any such persons been convicted of any crime or
engaged in any conduct for which debarment or similar punishment is mandated or
permitted by any applicable law.
(d) As to each product subject to the jurisdiction of the FDA
under the FDCA which is developed, manufactured, tested, validated,
distributed, held and/or marketed by the Acquired Corporations, to the
knowledge of the Company such product is being developed, manufactured, held
and distributed in substantial compliance with all applicable requirements
under the FDCA and the PDMA and similar state laws, if applicable, including
such requirements relating to investigational use, premarket clearance,
premarket approval, registration and device listing, design control, wholesale
drug distribution permitting, good manufacturing practice, labeling,
advertising, record keeping, filing of reports (e.g., 21 C.F.R. Parts 803 and
806) and security, except for such noncompliance which, individually or in the
aggregate, would not have a Material Adverse Effect on the Acquired
Corporations.
17
(e) To the knowledge of the Company, each Acquired
Corporation has, prior to the execution of this Agreement, provided to Parent
copies of or made available for Parent's review any and all documents in its
possession material to assessing the Acquired Corporation's compliance with the
FDCA and implementing regulations for the prior three years, including copies
in its possession of (i) all FDA Establishment Inspection reports, FDA Form 483
and all correspondence between the Acquired Corporations and the FDA relating
to each such Establishment Inspection report, FDA Form 483, Warning Letters and
company responses issued during the last three years; (ii) all audit reports
performed during the last three years, whether performed by the Acquired
Corporations or an outside consultant; (iii) any material document (prepared by
the Acquired Corporations) concerning any material oral or written
communication received from the FDA or any other governmental department or
agency during the last three years; (iv) any administrative or judicial order,
ruling, consent decree or agreement issued or entered into during the last
three years in which an Acquired Corporation or its respective predecessor
companies were a named party; or (v) any recall notice or order and all company
responses relating to any product of the Acquired Corporations.
(f) Schedule 2.10(f) of the Company Disclosure Letter sets
forth a complete and accurate list of (i) medical devices, drugs, biologics, or
other articles currently manufactured or distributed by the Acquired
Corporations and listed or registered with the FDA or similar U.S. or
non-governmental agency, (ii) each clinical trial protocol submitted by the
Acquired Corporations to the FDA or similar U.S. or non-U.S. governmental
agency within the last three years, (iii) each Pre-Market Approval application
(PMA) or Pre-Market Notification (510(k)) and any amendments or supplements
thereto filed by the Acquired Corporations pursuant to the FDCA, or any non-US.
equivalents, (iv) each New Drug Application (NDA) or Biologic License
Application (BLA) filed by the Acquired Corporations pursuant to the FDCA or
the Public Health Service Act, as amended, or any non-U.S. equivalents.
(g) (i) Each of the Acquired Corporations is in compliance,
to the extent applicable, with any HIPAA obligations, and the transactions
contemplated by this Agreement are in accordance with, and will not violate or
result in the violation of, HIPAA by the Acquired Corporations; (ii) no
Acquired Corporation has received any communication or inquiry (whether written
or oral) from the Department of Health and Human Services, the Federal Trade
Commission, or any other Governmental Body regarding its failure to comply, in
any material respect with one or more of HIPAA's provisions (other than an
industry-wide communication not specifically targeted to any Acquired
Corporation); (iii) no certification organization has concluded or stated that
any Acquired Corporation has failed or may fail to comply with HIPAA or any
requirement or element thereof, including one or more of the HIPAA electronic
transaction standards; and (iv) no Acquired Corporation has received any
communication (whether written or oral) from any individual, customer, or
trading partner regarding its failure to comply in any material respect with
one or more of HIPAA's provisions.
(h) No Acquired Corporation is engaged in any activity,
whether alone or in concert with one or more of its customers, which would
constitute a violation of any Legal Requirement (including (i) federal
anti-fraud and abuse or similar laws pertaining to Medicare, Medicaid or any
other federal health care or insurance program; (ii) state laws pertaining to
Medicaid or any other state health care or insurance programs; (iii) state or
federal laws pertaining to billings to insurance companies, health maintenance
organizations, and other managed care plans or insurance fraud; and (iv)
federal and state laws relating to collection agencies (in the performance of
collection services) prohibiting fraudulent, abusive or unlawful practices
connected in any way with the provisions of health care services, the billing
for such services provided to a beneficiary of any state, federal or private
health or insurance program or credit collection services, except for
violations that could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect on the Acquired Corporations.
Without limiting the generality of the foregoing, no Acquired Corporation has
directly or indirectly, knowingly and willfully paid, offered to pay or agreed
to pay, or solicited or received, any fee, commission, sum of money,
18
property or other remuneration to or from any person which is or may be illegal
under 42 U.S.C. ss. 1320a-7b(b) or any similar state law.
(i) No Acquired Corporation nor, to the knowledge of the
Company, any of the Acquired Corporations' respective officers, directors,
employees or agents (as those terms are defined under 42 C.F.R. 1001.1001): (i)
has had a civil monetary penalty assessed against him, her or it, as the case
may be, under Section 1128A of the Social Security Act or any regulations
promulgated thereunder; (ii) has been debarred, excluded or suspended from
participation under the Medicare program, Medicaid program or any other federal
or state health program or any regulations promulgated thereunder; or (iii) has
been charged with convicted of any criminal offense relating to the delivery of
any item or service under Medicare, Medicaid, or other federal or state health
program.
2.11 GOVERNMENTAL AUTHORIZATIONS.
Each of the Acquired Corporations holds all Governmental
Authorizations necessary to enable such Acquired Corporation to conduct its
business in the manner in which such business is currently being conducted
except where the failure to hold such Governmental Authorizations would not be
reasonably likely to have a Material Adverse Effect on the Acquired
Corporations. All such Governmental Authorizations are valid and in full force
and effect. Each Acquired Corporation is in compliance in all material respects
with the terms and requirements of such Governmental Authorizations. None of
the Acquired Corporations has received any notice or other communication from
any Governmental Body regarding (a) any actual or possible violation of or
failure to comply in any material respect with any term or requirement of any
Governmental Authorization, or (b) any actual or possible revocation,
withdrawal, suspension, cancellation, termination or modification of any
Governmental Authorization.
2.12 TAX MATTERS.
(a) Each of the Acquired Corporations has paid or provided
adequate reserves, in accordance with GAAP, for all material Taxes, due and
payable by any of them for or with respect to all periods up to and including
the date hereof, whether or not such Taxes were shown on any Tax Return, and
without regard to whether such Taxes are or were disputed.
(b) Each Acquired Corporation has filed on a timely basis
(taking into account any extensions of time an Acquired Corporation was
granted) all income Tax Returns and all other material Tax Returns that each
was required to file. None of the Acquired Corporations is currently the
beneficiary of any extension of time within which to file any Tax Return. No
claim that has not been resolved has ever been made to an Acquired Corporation
by an authority in a jurisdiction where the Acquired Corporations do not file
Tax Returns that any one of them is or may be subject to taxation by that
jurisdiction. None of the Acquired Corporations has given any currently
effective waiver of any statute of limitations in respect of Taxes or agreed to
any currently effective extension of time with respect to a Tax assessment or
deficiency. None of the Acquired Corporations has granted to any Person any
power of attorney that is currently in force with respect to any Tax matter.
There are no security interests on any of the assets of the Acquired
Corporations that arose in connection with any failure (or alleged failure) to
pay any Tax (other than liens for Taxes not yet due and payable).
(c) Each of the Acquired Corporations has withheld and paid
all material Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder or other third party.
19
(d) There is no dispute or claim concerning any liability for
Taxes of the Acquired Corporations either (i) claimed or raised by any
authority in writing or (ii) as to which such Company or Subsidiary has
knowledge based upon personal contact with any agent of such authority.
Schedule 2.12(d) to the Company Disclosure Letter sets forth as of the date of
this Agreement a complete and accurate list of current open audits of Tax
Returns filed by or on behalf of the Company and each of its Subsidiaries with
any Governmental Body.
(e) The unpaid Taxes of the Company and each of its
Subsidiaries (i) did not, as of the date of the most recent Company Financial
Statements, exceed the reserve for Tax Liability (as opposed to any reserve for
deferred Taxes established to reflect timing differences between book and Tax
income) set forth in the Company Balance Sheet and (ii) will not exceed that
reserve as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Acquired Corporations in
filing their Tax Returns other than any Taxes which the failure to pay would
not, individually or in the aggregate, result in a Material Adverse Effect on
the Acquired Corporations.
(f) None of the Acquired Corporations is a party to any Tax
allocation or sharing agreement. None of the Acquired Corporations has been a
"distributing corporation" or a "controlled corporation" as those terms are
defined in Section 355(a)(1) of the Code. None of the Acquired Corporations (i)
has been a member of an "affiliated group," as defined in Section 1504(a) of
the Code, filing a consolidated federal income Tax Return other than an
affiliated group the common parent of which is the Company or (ii) has any
Liability for the Taxes of any Person (other than any of the Acquired
Corporations) under Treas. Reg. Section 1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee or successor, by contract or
otherwise.
(g) The Company is not a U.S. real property holding
corporation within the meaning of Code Section 897(c)(2).
(h) The Company has made available to Parent or its legal or
accounting representative copies of all foreign, federal and state income tax
Returns for the Company and each of its subsidiaries filed for all periods
including and after the period ended December 31, 2003.
(i) Neither the Company nor any affiliate of the Company has
taken or agreed to take any action or knows of any fact or circumstance that is
reasonably likely to prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code.
2.13 EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS.
(a) Schedule 2.13(a) of the Company Disclosure Letter lists
as of the date of this Agreement (i) all employee pension benefit plans (as
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")), (ii) all employee welfare benefit plans (as defined in
Section 3(1) of ERISA), (iii) all other pension, bonus, commission, stock
option, stock purchase, incentive, deferred compensation, supplemental
retirement, severance, fringe benefits and other similar benefit plans
(including any fringe benefit under Section 132 of the Code and any foreign
plans), programs, Contracts,
20
arrangements or policies, and (iv) any employment, executive compensation or
severance agreements, whether written or otherwise, as amended, modified or
supplemented, of any Acquired Corporation or any other Entity (whether or not
incorporated) which is a member of a controlled group which includes any of the
Acquired Corporations or which is under common control with any of the Acquired
Corporations within the meaning of Sections 414(b), (c), (m) or (o) of the Code
or Section 4001(a) (14) or (b) of ERISA (each a "Company ERISA Affiliate") for
the benefit of, or relating to, any former or current employee, independent
contractor, officer or director (or any of their beneficiaries) of any Acquired
Corporation or any other Company ERISA Affiliate (all such plans, programs,
Contracts, agreements, arrangements or policies as described in this Section
2.13(a) shall be collectively referred to as the "Company Employee Plans"). The
Company has made available to Parent, true and complete copies of (i) each such
written Company Employee Plan (or a written description of any Company Employee
Plan which is not written) and all related trust agreements, insurance and
other contracts (including policies), summary plan descriptions, summaries of
material modifications, registration statements (including all attachments),
prospectuses and communications distributed to plan participants, (ii) the
three most recent annual reports on Form 5500 series, with accompanying
schedules and attachments (including accountants' opinions, if applicable),
filed with respect to each Company Employee Plan required to make such a
filing, (iii) the most recent actuarial valuation for each Company Employee
Plan subject to Title IV of ERISA, and (iv) the most recent favorable
determination letters issued for each Company Employee Plan and related trust
which is intended to be qualified under Section 401(a) of the Code (and, if an
application for such determination is pending, a copy of the application for
such determination).
(b) (i) None of the Company Employee Plans promises or
provides post-termination or retiree medical or other post-termination or
retiree welfare benefits to any person (other than continuation coverage to the
extent required by law, whether pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985 or otherwise); (ii) none of the Company Employee
Plans is a "Multiple Employer Welfare Arrangement" (as defined in Section 3(40)
of ERISA), a "Multiple Employer Plan" (as defined in Section 413(c) of the
Code), or a "Multiemployer Plan" (as defined in Section 3(37) of ERISA), and
neither the Acquired Corporations nor any Company ERISA Affiliate has ever
contributed to, been required to contribute to, or otherwise had any obligation
or liability in connection with a Multiple Employer Plan or a Multiemployer
Plan; (iii) no party in interest or disqualified person (as defined in Section
3(14) of ERISA and Section 4975 of the Code, respectively) has at any time
engaged in a transaction with respect to any Company Employee Plan which could
subject any of the Acquired Corporations, directly or indirectly, to any
material tax, material penalty or other material liability for prohibited
transactions under ERISA or Section 4975 of the Code; (iv) no fiduciary of any
Company Employee Plan has breached any of the responsibilities or obligations
imposed upon fiduciaries under Title I of ERISA which shall subject any of the
Acquired Corporations, directly or indirectly, to any material penalty or
liability for breach of fiduciary duty; (v) all Company Employee Plans have
been established, maintained and operated in accordance with their terms and
have been established, maintained and operated in substantial compliance with
all applicable Legal Requirements, including good faith compliance with Section
409A of the Code; (vi) all Company Employee Plans may by their terms be amended
and/or terminated at any time without the consent of any other Person subject
to applicable Legal Requirements and the terms of each Company Employee Plan;
(vii) each of the Acquired Corporations has performed all obligations required
to be performed by them under, and are not in any respect in default under or
in violation of, the terms and conditions of any Company Employee Plan; (viii)
none of the Acquired Corporations has any knowledge of any default or violation
by any other Person with respect to any of the Company Employee Plans; (ix)
each Company Employee Plan which is intended to be qualified under Section
401(a) of the Code and each trust intended to qualify under Section 501(a) of
the Code is the subject of a favorable determination letter from the Internal
Revenue Service as to its qualified status under Section 401(a) of the Code (or
comparable letter, such as an opinion or notification letter as to the form of
plan adopted by one or more Acquired Corporations), or has time remaining under
applicable Treasury guidance to seek such a determination, and to the Company's
knowledge nothing has occurred prior to or since the issuance of such letter
(or could reasonably be expected to occur) which might impair such favorable
determination or otherwise impair the qualified status of such plan; (x) no
Acquired Corporation is currently subject to any penalty or tax with respect to
any Company Employee Plan under Section 502(i) of ERISA or 4975 through 4980F
of the Code or has any outstanding liability for any penalty or tax which is
not otherwise reserved for or reflected in the Company Financial Statements;
(xi) all material contributions required to be made or reserved, and all
material premiums required to be paid by the Acquired Corporations, as
appropriate,
21
with respect to any Company Employee Plan pursuant to the terms of the Company
Employee Plan, any Legal Requirements or any collective bargaining agreement,
have been made, paid or reserved on or before their due dates (including any
extensions thereof); (xii) all Company Employee Plans required to be insured or
funded are either fully insured or funded by a related trust, and for each
Company Employee Plan that is funded by a related trust, the fair market value
of the assets of the related trust are at least equal to the liabilities of
such Company Employee Plan; (xiii) there are no audits, inquiries or
proceedings pending or threatened by the Internal Revenue Service or the
Department of Labor with respect to any Company Employee Plan; and (xiv) no
Company Employee Plan other than a Company Employee Plan intended to qualify
under Section 401(a) of the Code provides for post-employment or retiree
benefits.
(c) None of the Acquired Corporations or any other Company
ERISA Affiliate currently maintains, sponsors or participates in, or within the
last five years has maintained, sponsored or participated in, or has any
liability, contingent or otherwise, to, any "Employee Benefit Plan" (as defined
in Section 3(3) of ERISA) that is subject to Section 412 of the Code or Title
IV of ERISA.
(d) Except for the anticipated acceleration of vesting of
Company Options as described in Schedule 2.3(b) of the Company Disclosure
Letter and as otherwise provided in this Agreement, the consummation of the
transactions contemplated by this Agreement will not (either solely as a result
thereof or as a result of such transactions in conjunction with another event)
cause or result in an increase in the amount of compensation or benefits or
timing of payment of any benefits or compensation payable in respect of any
former or current employee, independent contractor or consultant (or any of
their beneficiaries) of any of the Acquired Corporations.
(e) There are no Legal Proceedings pending or, to the
knowledge of the Company, threatened in respect of or relating to any Company
Employee Plan. To the Company's knowledge, there are no facts or circumstances
which could reasonably be expected to give rise to any such Legal Proceeding
(other than routine benefit claims) in respect of or relating to any Company
Employee Plan.
(f) None of the Acquired Corporations has ever maintained an
employee stock ownership plan (within the meaning of Section 4975(e)(7) of the
Code) or any other Company Employee Plan that invests in Company capital stock.
Since December 31, 2005, none of the Acquired Corporations has proposed or
agreed to any increase in benefits under any Company Employee Plan (or the
creation of new benefits) or change in employee coverage which would increase
the expense of maintaining any Company Employee Plan. Except for the
anticipated acceleration of vesting of Company Options as described in Schedule
2.3(b) of the Company Disclosure Letter, no person will be entitled to any
severance benefits, acceleration of vesting of any the Company Options or the
extension of any period during which any Company Options may be exercised,
under the terms of any Company Employee Plan as a result of the consummation of
the transactions contemplated by this Agreement (either solely as a result
thereof or as a result of such transactions in conjunction with another event).
(g) To the extent that any Company Employee Plan is required
by any applicable Legal Requirement to be covered by any bond (e.g., fidelity
or otherwise) in any particular amount, each such Company Employee Plan
required to be covered by such bond has at all times been covered by such bond
in accordance and in material compliance with all applicable Legal
Requirements.
(h) (i) There are no controversies pending or, to the
knowledge of the Company, threatened, between any of the Acquired Corporations
and any of their respective foreign or domestic former or current employees,
officers, directors, independent contractors or consultants (or any of their
beneficiaries), (ii) there is no labor strike, dispute, slowdown, work stoppage
or lockout actually pending or, to the knowledge of the Company, threatened
against or affecting any Acquired Corporation, (iii) none of the Acquired
Corporations is a party to or bound by any collective bargaining or similar
agreement
22
with any labor organization, or work rules or practices agreed to
with any labor organization or employee association applicable to employees of
the Acquired Corporations, (iv) none of the employees of the Acquired
Corporations are represented by a labor organization or group that was either
certified or voluntarily recognized by any labor relations board and no union
organizing campaign or other attempt to organize or establish a labor union,
employee organization or labor organization involving employees of the Acquired
Corporations has occurred, is in progress or, to the knowledge of the Company,
is threatened, (v) the Acquired Corporations have each at all times been in
compliance in all material respects with all applicable Legal Requirements
governing or concerning labor relations, conditions of employment, employment
discrimination or harassment, wages, hours, or occupational safety and health,
and with any collective bargaining agreements (both foreign and domestic), (vi)
there is no unfair labor practice charge or complaint against any of the
Acquired Corporations pending or, to the knowledge of the Company, threatened
before the National Labor Relations Board or any similar state or foreign
agency, (vii) there is no grievance or arbitration demand or proceeding arising
out of any collective bargaining agreement or other grievance procedure
relating to the Acquired Corporations pending, or to the knowledge of the
Company, threatened, against any Acquired Corporation, (viii) none of the
Acquired Corporations is a federal or state contractor, (ix) to the Company's
knowledge, neither the Occupational Safety and Health Administration nor any
corresponding state or foreign agency is threatening to file any citation or
complaint, and there are no pending citations or complaints, relating to the
Acquired Corporations, and (x) there are no complaints, charges or claims
against any Acquired Corporation pending or, to the knowledge of the Company,
threatened, which could be brought or filed with any Governmental Body, court
or arbitrator based on, arising out of, in connection with, or otherwise
relating to the employment of, termination of employment of, or failure of any
Acquired Corporation to employ any individual. To the knowledge of the Company,
there are no pending, threatened or reasonably anticipated claims against any
of the Acquired Corporations under any workers' compensation disability policy
or long-term policy.
(i) No Company Employee Plan is a Voluntary Employees'
Beneficiary Association within the meaning of Section 501(c)(9) of the Code.
(j) All Company Employee Plans that are "group health plans"
as defined under the respective provision comply with and have been
administered in compliance with the health care continuation-coverage
requirements under Section 4980B(f) of the Code, Sections 601 through 607 of
ERISA, all final Treasury regulations under Section 4890B of the Code
explaining those requirements, and all other applicable Legal Requirements
regarding continuation and/or conversion coverage and with Code Section 4980D
and ERISA Sections 701 through 734, the requirements of the Family Medical
Leave Act, the requirements of HIPAA, the requirements of the Women's Health
and Cancer Rights Act of 1998, the requirements of the Newborns' and Mothers'
Health Protection Act of 1996, and any amendment to each such act or any
similar provisions of state law applicable to employees of the Acquired
Corporations.
(k) No amount required to be paid or payable to or with
respect to current or former employee of any of the Acquired Corporations in
connection with the transactions contemplated hereby (either solely as a result
thereof or as a result of such transactions in conjunction with any other
event) will be an "excess parachute payment" within the meaning of Section 280G
of the Code or will not be deductible under Sections 162(a)(1) or 404 of the
Code.
(l) Set forth on Schedule 2.13(l) of the Company Disclosure
Letter is a list of all employees of each Acquired Corporation as of the date
of this Agreement together with respect to each such employee (i) the
employee's base salary and (ii) any severance that would be due upon
termination with or without cause of such employee (other than pursuant to (A)
severance or bonus policies or employment or change of control agreements in
each case as in effect on the date of this Agreement and
23
listed on Schedule 2.8(a) or Schedule 2.13(a) of the Company Disclosure Letter,
or (B) Legal Requirements applicable to each of the Acquired Corporations which
is formed or incorporated under the laws of a foreign jurisdiction). Schedule
2.13(l) of the Company Disclosure Letter also sets forth with respect to each
Company employee accrued paid time off payable to each such employee as of
November 24, 2006.
(m) None of the Acquired Corporations has taken any action
that would constitute a "mass layoff," "mass termination" or "plant closing"
within the meaning of the United States Worker Adjustment and Retraining
Notification Act ("WARN Act") or otherwise trigger notice requirements or
liability under any federal, local, state, or foreign plant closing notice or
collective dismissal law.
(n) Each of the Acquired Corporations is in compliance with
all immigration and naturalization Legal Requirements relating to employment
and employees, each of the Acquired Corporations has properly completed and
maintained in all material respects all applicable forms (including I-9 forms),
there are no citations, investigations, enforcement proceedings or formal
complaints concerning immigration or naturalization Legal Requirements pending
or, to the knowledge of the Company, threatened before the United States
Citizenship and Immigration Services or any related federal, state, foreign or
administrative agency or court, involving or against the Acquired Corporations,
and none of the Acquired Corporations has received notice of any violation of
any immigration and naturalization Legal Requirement.
(o) The classification by the Acquired Corporations or a
Company ERISA Affiliate of individuals as employees or independent contractors
has been made in compliance with all applicable Legal Requirements. None of the
Acquired Corporations nor any of its Company ERISA Affiliates has (i) used the
services or workers provided by third party contract labor suppliers, temporary
employees, "leased employees" (as that term is defined in Section 414(n) of the
Code), or individuals who have provided services as independent contractors to
an extent that would reasonably be expected to result in the disqualification
of any of the Company Employee Plans or the imposition of penalties or excise
taxes with respect to the Company Employee Plans by the IRS, the Department of
Labor, or the Pension Benefit Guaranty Corporation.
2.14 ENVIRONMENTAL MATTERS.
Each of the Acquired Corporations is in compliance with, and
has conducted its activities in compliance with, all applicable Environmental
Laws, which compliance includes the possession by each of the Acquired
Corporations of all material permits and other Governmental Authorizations
required under applicable Environmental Laws, and compliance with the terms and
conditions thereof, except where the failure to so comply would not result in a
material liability or clean up obligation on the Acquired Corporations. The
consummation of the transactions contemplated by this Agreement will not affect
the validity of such material permits and Governmental Authorizations held by
the Company or any of the Acquired Corporations, and will not require any
filing, notice, or remediation under any Environmental law. To the knowledge of
the Company, there are no past or present events, conditions, activities, or
practices which would reasonably be expected to prevent the Company's or any of
the Acquired Corporations' compliance in all material respects with any
Environmental Law, or which would reasonably be expected to give rise to any
material liability of the Company or any of the Acquired Corporations under any
Environmental Law. Within the past seven years, none of the Acquired
Corporations has received any written notice, or to its knowledge, other
communication (in writing or otherwise) that alleges that any of the Acquired
Corporations is not in material compliance with any Environmental Law, and the
Company has no knowledge of any circumstances that would reasonably be expected
to result in such claims or communications. To the Company's knowledge, no
current or prior owner of any property owned, leased or controlled by any of
the Acquired Corporations has received any
24
written notice or other communication (in writing or otherwise) that alleges
that such current or prior owner or any of the Acquired Corporations is not in
compliance with any Environmental Law in such a manner as would be reasonably
likely to result in a material liability or clean up obligation on any Acquired
Corporation. Neither the Company nor any of the Acquired Corporations has
assumed by contract, agreement or otherwise any liabilities or obligations
arising under any Environmental Law, or is currently performing any required
investigation, response or other corrective action under any Environmental Law.
There are no underground storage tanks or related piping on any property owned,
leased, controlled by or used by any of the Acquired Corporations, and any
former such tanks and piping have been removed or closed in accordance with
applicable Environmental Laws. To the Company's knowledge, all property that is
owned by, leased to, controlled by or used by any of the Acquired Corporations
is free of any friable asbestos or asbestos-containing material.
2.15 LEGAL PROCEEDINGS; ORDERS.
Except as set forth in the Company SEC Documents or in
Schedule 2.15 of the Company Disclosure Letter, there is no pending Legal
Proceeding and, to the Company's knowledge, within the past 24 months no Person
has threatened in writing to commence any Legal Proceeding, that involves any
of the Acquired Corporations or any of the assets owned or used by any of the
Acquired Corporations, in each case which would be reasonably likely to be
material to the Acquired Corporations; and there is no Order to which any of
the Acquired Corporations, or any of the material assets owned or used by any
of the Acquired Corporations, is subject.
2.16 VOTE REQUIRED.
The affirmative vote of the holders of a majority of the
shares of Company Common Stock outstanding on the record date for the Company
Stockholders' Meeting is the only vote of the holders of any class or series of
the Company's capital stock necessary to approve this Agreement and otherwise
approve and consummate the Merger as set forth herein.
2.17 FOREIGN CORRUPT PRACTICES ACT.
Neither the Company, any other Acquired Corporation, any of
the Acquired Corporation's officers, directors, nor, to the Company's
knowledge, any employees or agents, distributors, representatives or other
persons acting on the express, implied or apparent authority of any Acquired
Corporation, have paid, given or received or have offered or promised to pay,
give or receive, any bribe or other unlawful payment of money or other thing of
value, any unlawful discount, or any other unlawful inducement, to or from any
person or Governmental Body in the United States or elsewhere in connection
with or in furtherance of the business of any of the Acquired Corporations
(including any unlawful offer, payment or promise to pay money or other thing
of value (a) to any foreign official, political party (or official thereof) or
candidate for political office for the purposes of influencing any act,
decision or omission in order to assist any Acquired Corporation in obtaining
business for or with, or directing business to, any person, or (b) to any
person, while knowing that all or a portion of such money or other thing of
value will be offered, given or promised unlawfully to any such official or
party for such purposes). Neither the business of the Company nor of any other
Acquired Corporation is in any manner dependent upon the making or receipt of
such unlawful payments, discounts or other inducements. Neither the Company nor
any other Acquired Corporation has otherwise taken any action that could cause
the Company or any other Acquired Corporation to be in violation of the Foreign
Corrupt Practices Act of 1977, as amended, the regulations thereunder, or any
applicable Legal Requirements of similar effect.
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2.18 REAL PROPERTY.
Except as set forth in Schedule 2.18 of the Company
Disclosure Letter, the Company has good and marketable title to, or a valid
leasehold interest in, all of its real properties, in each case free and clear
of all Encumbrances. Schedule 2.18 of the Company Disclosure Letter sets forth
a true, correct and complete list of all real property owned by the Acquired
Corporations at any time during the past five years and a true and correct list
of all real property currently leased by each of the Acquired Corporations
identifying, with respect to each lease of such real property, the date of, the
parties to, and any amendments, modifications, extensions or other supplements
to such lease. No Acquired Corporation has sent or received any written notice
of any default under any of the leases of real property to which it is party.
No Acquired Corporation is in material breach of, or in default in any material
respect under, any covenant, agreement, term or condition of or contained in
any lease of real property to which it is a party and there has not occurred
any event that with the lapse of time or the giving of notice or both could
constitute such a default or breach.
2.19 INSURANCE POLICIES.
The Company has delivered to Parent prior to the date hereof
a complete and accurate list of all insurance policies in force naming the
Company, any of the other Acquired Corporations or any director, officer or
employee thereof as an insured or beneficiary or as a loss payable payee or for
which the Company or any other Acquired Corporation has paid or is obligated to
pay all or part of the premiums. Neither the Company nor any other Acquired
Corporation has received notice of any pending or threatened cancellation or
premium increase (retroactive or otherwise) with respect thereto, and each of
the Acquired Corporations is in compliance in all material respects with all
conditions contained therein. There are no material pending claims against such
insurance policies by the Company or any other Acquired Corporation as to which
insurers are defending under reservation of rights or have denied liability,
and there exists no material claim under such insurance policies that has not
been properly filed by the Company or any other Acquired Corporation. Except
for the self-insurance retentions or deductibles set forth in the policies
contained in the aforementioned list, the policies are adequate in scope and
amount to cover all prudent and reasonably foreseeable risks which may arise in
the conduct of the business of the Acquired Corporations that would reasonably
be expected to have a Material Adverse Effect on the Acquired Corporations.
2.20 INFORMATION TO BE SUPPLIED.
None of the information supplied or to be supplied by or on
behalf of the Company for inclusion or incorporation by reference in the
Registration Statement will, at the time the Registration Statement is filed
with the SEC or becomes effective under the Securities Act, 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 the
light of the circumstances under which they are made, not misleading. None of
the information supplied or to be supplied by or on behalf of the Company for
inclusion or incorporation by reference in the Company Proxy Statement or
Parent Proxy Statement will, at the time the Company Proxy Statement or the
Parent Proxy Statement is mailed to the stockholders of the Company or to the
stockholders of Parent, as the case may be, or at the time of the Company
Stockholders' Meeting or the Parent Stockholders' Meeting, 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 the
light of the circumstances under which they are made, not misleading. The
Company Proxy Statement will comply as to form in all material respects with
the applicable provisions of the Exchange Act and the rules and regulations
promulgated by the SEC thereunder. Notwithstanding the foregoing, the Company
makes no representation or warranty with respect to any information supplied
26
by or to be supplied by Parent or Merger Sub that is included or incorporated
by reference in the foregoing documents.
2.21 TAKEOVER STATUTES; COMPANY RIGHTS PLAN.
(a) The approval of the Agreement and the transactions
contemplated hereby, including the Merger, by the Board of Directors of the
Company referred to in Section 2.2 constitutes the approval of this Agreement
and the transactions contemplated hereby, including the Merger, for purposes of
the DGCL and represents the only action necessary to ensure that any "business
combination" (as defined in Section 203 of the DGCL) or other applicable
provision of the DGCL does not and will not apply to the execution, delivery or
performance of this Agreement or the consummation of the Merger and the other
transactions contemplated hereby. To the Company's knowledge, no other Takeover
Laws are applicable to the Merger, this Agreement, or any of the transactions
contemplated hereby and thereby.
(b) The Company Rights Plan has been amended so that (A)
Parent, Merger Sub and any of their "Affiliates" or "Associates" (as such terms
are defined in the Company Rights Plan) are exempt from the definition of
"Acquiring Person" contained in the Company Rights Plan, and no "Shares
Acquisition Date" or "Distribution Date" (as such terms are defined in the
Company Rights Plan) will occur as a result of the execution of this Agreement
or any other transactions contemplated by this Agreement or the consummation of
the Merger and (B) the Company Rights Plan will terminate and the Company Stock
Rights associate therewith will expire immediately prior to the Effective Time.
The Company Rights Plan, as so amended, has not been further amended or
modified.
2.22 FINANCIAL ADVISOR.
Except with respect to Piper Jaffray & Co. and C.E.
Unterberg, Towbin, LLC, no broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
Merger or any of the other transactions contemplated by this Agreement based
upon arrangements made by or on behalf of any of the Acquired Corporations. The
Company has furnished to Parent accurate and complete copies of its agreements
with Piper Jaffray & Co. and C.E. Unterberg, Towbin, LLC.
2.23 OPINION OF FINANCIAL ADVISOR.
The Company's Board of Directors has received the opinion of
Piper Jaffray & Co., financial advisor to the Company, that, subject to the
assumptions, qualifications and limitations set forth therein, the Merger
Consideration proposed to be paid in the Merger pursuant to this Agreement is
fair, from a financial point of view, to the holders of Company Common Stock as
of the date of this Agreement. The Company will furnish an accurate and
complete copy of said opinion to Parent.
2.24 AFFILIATE TRANSACTIONS.
Schedule 2.24 of the Company Disclosure Letter contains a
complete and correct list, as of the date of this Agreement, of all agreements,
contracts, transfers of assets or liabilities or other commitments or
transactions, whether or not entered into in the ordinary course of business,
to or by which any Acquired Corporation, on the one hand, and any of their
respective officers or directors (or any of their respective Affiliates, other
than any Acquired Corporation) on the other hand, are or have been a party or
otherwise bound or affected, and that (a) are currently pending, in effect or
have been in effect during the past 12 months, (b) involve continuing
liabilities and obligations that, individually or in the aggregate, have been,
are or will be material to any Acquired Corporation, taken as a whole and (c)
are not Company Employee Plans disclosed in Schedule 2.13(a) of the Company
Disclosure Letter.
27
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as disclosed in Parent SEC Documents filed prior to
the date hereof or the Disclosure Letter delivered by Parent and Merger Sub to
the Company prior to the execution and delivery of this Agreement (the "Parent
Disclosure Letter") and referred to in the section of the Parent Disclosure
Letter corresponding to the section(s) of this Section 3 to which such
disclosure applies (unless it is reasonably apparent from the face of such
disclosure that the disclosure or statement in one section of the Parent
Disclosure Letter should apply to one or more sections thereof), Parent and
Merger Sub represent and warrant to the Company as follows:
3.1 DUE ORGANIZATION; SUBSIDIARIES.
Parent is a corporation duly organized, validly existing and
in good standing under the Legal Requirements of the jurisdiction of its
incorporation, and each of the other AngioDynamics Corporations which is a
"significant subsidiary" (as defined in Regulation S-X) of Parent is a
corporation duly organized, validly existing and in good standing under the
Legal Requirements of the jurisdiction of its incorporation or formation. Each
of the AngioDynamics Corporations has all necessary power and authority: (a) to
conduct its business in the manner in which its business is currently being
conducted; (b) to own and use its assets in the manner in which its assets are
currently owned and used; and (c) to perform its material obligations under all
Parent Material Contracts. Each of the AngioDynamics Corporations is qualified
to do business as a foreign corporation, and is in good standing, under the
Legal Requirements of all jurisdictions where the failure to be so qualified
would have a Material Adverse Effect on the AngioDynamics Corporations. Parent
has delivered or made available to the Company accurate and complete copies of
the certificate of incorporation, bylaws and other charter or organizational
documents of each of the AngioDynamics Corporations, including all amendments
thereto (collectively, the "Parent Organization Documents"). Parent has no
Subsidiaries, except for the corporations identified in Schedule 3.1 of the
Parent Disclosure Letter. Parent and each of its Subsidiaries are collectively
referred to herein as the "AngioDynamics Corporations". None of the
AngioDynamics Corporations has any equity interest or similar interest in, or
any interest convertible into or exchangeable or exercisable for any equity or
similar interest in, any Entity, other than the AngioDynamics Corporations'
interests in their Subsidiaries identified in Schedule 3.1 of the Parent
Disclosure Letter.
3.2 AUTHORITY; BINDING NATURE OF AGREEMENT.
Each of Parent and Merger Sub has all requisite corporate
power and authority to enter into and, subject to the receipt of the
stockholder approval contemplated by Section 5.2, to perform its obligations
under this Agreement. This Agreement constitutes the legal, valid and binding
obligation of Parent and Merger Sub, enforceable against Parent and Merger Sub
in accordance with its terms, subject to (a) Legal Requirements of general
application relating to bankruptcy, insolvency and the relief of debtors, (b)
rules of law governing specific performance, injunctive relief and other
equitable remedies and (c) the approval of the stockholders of Parent. Parent
hereby represents that its Board of Directors, at a meeting duly called and
held on or prior to the date hereof, has by unanimous vote (i) determined that
the Merger is in the best interests of Parent and its stockholders, (ii)
approved, adopted and declared advisable this Agreement, the Merger and the
other transactions contemplated by this Agreement, and (iii) determined to make
the Parent Recommendation to the stockholders of Parent. Merger Sub hereby
represents that its Board of Managers, by unanimous written consent, approved
and adopted this Agreement, declared it advisable and approved the Merger and
the other transactions contemplated by this Agreement, and recommended that the
Parent adopt this Agreement. Parent hereby represents that it, as the sole
member of Merger Sub, will approve and adopt this Agreement, the Merger and the
other transactions contemplated by this Agreement immediately after the
execution and delivery of this Agreement by the parties hereto.
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3.3 CAPITALIZATION, ETC.
(a) The authorized capital stock of Parent consists of: (i)
45,000,000 shares of Parent Common Stock and (ii) 5,000,000 shares of Parent
Preferred Stock, of which 50,000 shares have been designated as Series A Junior
Participating Preferred Stock pursuant to the Parent Rights Agreement. Parent
has not authorized any other class of capital stock other than the Parent
Common Stock and Parent Preferred Stock. As of November 24, 2006, 15,675,324
shares of Parent Common Stock have been issued or are outstanding and no shares
of Preferred Stock have been issued or are outstanding. No shares of Parent
Common Stock are held in Parent's treasury or are held by any of Parent's
Subsidiaries. All of the outstanding shares of Parent Common Stock have been
duly authorized and validly issued, and are fully paid and nonassessable. None
of the outstanding shares of Parent Common Stock is entitled or subject to any
preemptive right, right of participation, right of maintenance or any similar
right or subject to any right of first refusal in favor of Parent. There is no
Contract to which Parent is a party and, to Parent's knowledge, there is no
Contract between other Persons, relating to the voting or registration of, or
restricting any Person from purchasing, selling, pledging or otherwise
disposing of, any shares of Parent Common Stock. None of the AngioDynamics
Corporations is under any obligation, or is bound by any Contract pursuant to
which it may become obligated, to repurchase, redeem or otherwise acquire any
outstanding shares of Parent Common Stock.
(b) As of November 24, 2006, 1,497,674 shares of Parent
Common Stock are reserved for issuance pursuant to stock options under the 1997
Stock Option Plan (as amended and together with all stock option agreements
evidencing grants thereunder, the "1997 Stock Plan"), of which options to
acquire 493,870 shares of Parent Common Stock are outstanding, 2,000,000 shares
of Parent Common Stock are reserved for issuance under the 2004 Stock and
Incentive Plan (as amended and together with all stock option agreements
evidencing grants thereunder, the "2004 Stock Plan"), of which options to
acquire 945,233 shares of Parent Common Stock are outstanding, and 200,000
shares of Parent Common Stock are available for issuance under the 2004
Employee Stock Purchase Plan ("Parent ESPP"). Stock options granted by the
Company pursuant to the 1997 Stock Plan and the 2004 Stock Plan (together, the
"Parent Stock Option Plans"), as well as any stock options granted by Parent
outside of the Parent Stock Option Plans (but excluding the Parent ESPP), are
referred to collectively herein as "Parent Options." Parent has delivered or
made available to Company accurate and complete copies of the Parent ESPP, all
stock option plans pursuant to which Parent has granted Parent Options, and the
forms of all stock option agreements evidencing such options. There have been
no repricings of any Parent Options through amendments, cancellation and
reissuance or other means during the current or prior two calendar years. None
of the Parent Options have been granted in contemplation of the Merger or the
transactions contemplated in this Agreement and no Parent Options have been
granted since November 24, 2006. None of the Parent Options were granted with
exercise prices below or deemed to be below fair market value on the date of
grant. All grants of Parent Options were validly made and properly approved by
the board of directors of Parent (or a duly authorized committee or
subcommittee thereof) in compliance with all applicable law and recorded on the
Parent Financial Statements in accordance with GAAP, and no such grants
involved any "back dating," "forward dating" or similar practices with respect
to such grants.
(c) Except as set forth in Section 3.3(a) or Section 3.3(b)
above, and other than the Parent Rights Agreement and the rights thereunder,
there is no: (i) outstanding subscription, option, call, warrant or right
(whether or not currently exercisable) to acquire any shares of the capital
stock or other securities of any of the AngioDynamics Corporations; (ii)
outstanding security, instrument or obligation that is or may become
convertible into or exchangeable for any shares of the capital stock or other
securities of any of the AngioDynamics Corporations; (iii) rights agreement,
stockholder rights plan or similar plan commonly referred to as a "poison
pill"; or (iv) Contract under which any of the AngioDynamics Corporations are
or may become obligated to sell or otherwise issue any shares of its
29
capital stock or any other securities ("Parent Rights Agreements") (items (i)
through (iv) above, collectively, "Parent Stock Rights").
(d) All outstanding shares of Parent Common Stock, all
outstanding Parent Options and all outstanding shares of capital stock of each
Subsidiary of Parent have been issued and granted in compliance with (i) all
applicable securities laws and other applicable Legal Requirements, and (ii)
all requirements set forth in Contracts applicable to the issuance of Parent
Common Stock, granting Parent Options and/or the issuance of shares of capital
stock of any Parent Subsidiary. All of the outstanding shares of capital stock
of each of the Parent's Subsidiaries have been duly authorized and are validly
issued, are fully paid and nonassessable and, except as required by Legal
Requirements applicable to each of the AngioDynamics Corporations which is
formed or incorporated under the laws of a foreign jurisdiction, are owned
beneficially and of record by Parent, free and clear of any Encumbrances.
Schedule 3.3(d) of the Parent Disclosure Letter sets forth all entities (other
than Subsidiaries) in which any of the AngioDynamics Corporations has any
ownership interest and the amount of such interest.
(e) Parent directly owns all of the equity interests of
Merger Sub.
3.4 NON-CONTRAVENTION; CONSENTS.
Neither the execution, delivery or performance of this
Agreement nor the consummation of the Merger, or any of the other transactions
contemplated by this Agreement, will directly or indirectly (with or without
notice or lapse of time):
(a) contravene, conflict with or result in a violation of any
of the provisions of the Parent Organization Documents or any resolution
adopted by the stockholders, the Board of Directors or any committee of the
Board of Directors of any of the AngioDynamics Corporations;
(b) subject to such filings, if any, as may be required
pursuant to the HSR and any Governmental Body action related thereto,
contravene, conflict with or result in a violation of, or give any Governmental
Body the right to challenge the Merger or any of the other transactions
contemplated by this Agreement or to exercise any remedy or obtain any relief
under, any Legal Requirement or any Order to which any of the AngioDynamics
Corporations, or any of the material assets owned or used by any of the
AngioDynamics Corporations, is subject;
(c) contravene, conflict with or result in a violation of any
of the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate or modify, any material
Governmental Authorization that is held by any of the AngioDynamics
Corporations or that is otherwise material to the business of any of the
AngioDynamics Corporations or to any of the assets owned or used by any of the
AngioDynamics Corporations; or
(d) contravene, conflict with or result in a violation or
breach of, or result in a default under, any provision of any Parent Material
Contract (except for any such violation or breach which by its terms can be
cured and is so cured within the applicable cure period or where the
non-breaching party has no right to accelerate or terminate as a result of such
violation or breach), or give any Person the right to (i) declare a default or
exercise any remedy under any Parent Material Contract, (ii) accelerate the
maturity or performance of any Parent Material Contract, or (iii) cancel,
terminate or modify any term of any Parent Material Contract.
Except as may be required by the Securities Act, the Exchange
Act, the DGCL and the rules and regulations of the Nasdaq (as such rules and
regulations relate to the Registration Statement and the Proxy Statement) and
such filings as may be required pursuant to the HSR and except for any Consent
30
required under any Parent Material Contract, none of the AngioDynamics
Corporations was, is or will be required to make any filing with or give any
notice to, or obtain any Consent from, any Person in connection with (x) the
execution, delivery or performance of this Agreement, or (y) the consummation
of the Merger or any of the other transactions contemplated by this Agreement,
except in the case of subsections (x) and (y), where the failure to make such
filing, give such notice or obtain any such consent would not have a Material
Adverse Effect on the AngioDynamics Corporations.
3.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) All statements, reports, schedules, forms, exhibits and
other documents required to have been filed by Parent with the SEC since March
5, 2004 (the "Parent SEC Documents") have been so filed. As of their respective
dates (or, if amended, supplemented or superseded by a filing prior to the date
of this Agreement, then on the date of such amendment, supplement or
superseding filing): (i) each of the Parent SEC Documents complied in all
material respects with the applicable requirements of the Securities Act or the
Exchange Act (as the case may be); and (ii) none of the Parent SEC Documents
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(b) The Parent SEC Documents include all certifications and
statements required of it, if any, by (i) Rule 13a-14 or 15d-14 under the
Exchange Act, and (ii) 18 U.S.C. Section 1350 (Section 906 of the
Sarbanes-Oxley Act of 2002), and each of such certifications and statements
contain no qualifications or exceptions to the matters certified therein other
than a knowledge qualification, permitted under such provision, and have not
been modified or withdrawn and neither Parent nor any of its officers has
received any notice from the SEC or any other Governmental Body questioning or
challenging the accuracy, completeness, form or manner of filing or submission
of such certifications or statements.
(c) Parent is in compliance in all material respects with all
of the provisions of the Sarbanes-Oxley Act of 2002, and the provisions of the
Exchange Act and the Securities Act relating thereto which under the terms of
such provisions (including the dates by which such compliance is required) have
become applicable to Parent.
(d) The financial statements (including related notes, if
any) contained in the Parent SEC Documents (the "Parent Financial Statements"):
(i) complied as to form in all material respects with the published rules and
regulations of the SEC applicable thereto; (ii) were prepared in accordance
with GAAP applied on a consistent basis throughout the periods covered (except
as may be indicated in the notes to such financial statements or, in the case
of unaudited statements, as permitted by Form 10-Q of the SEC, and except that
the unaudited financial statements may not have contained footnotes and were
subject to normal and recurring year-end adjustments which were not, or are not
reasonably expected to be, individually or in the aggregate, material), and
(iii) fairly presented in all material respects the consolidated financial
position of Parent and its consolidated subsidiaries as of the respective dates
thereof and the consolidated results of operations and cash flows of Parent and
its consolidated subsidiaries for the periods covered thereby. For purposes of
this Agreement, "Parent Balance Sheet" means that consolidated balance sheet of
Parent and its consolidated subsidiaries as of September 2, 2006 set forth in
the Parent's Quarterly Report on Form 10-Q filed with the SEC on October 11,
2006 (the "Parent 10-K") and the "Parent Balance Sheet Date" means September 2,
2006.
(e) Parent maintains a system of internal controls sufficient
to provide reasonable assurance that (i) transactions are executed with
management's authorization, (ii) transactions are recorded as necessary to
permit preparation of financial statements in accordance with GAAP and to
31
maintain accountability for assets, (iii) access to assets is permitted only in
accordance with management's authorization, (iv) the recorded amount for assets
is compared with existing assets at reasonable intervals and appropriate action
is taken with respect to any differences, (v) all information (both financial
and non-financial) required to be disclosed by Parent in the reports that it
files or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of the SEC
and (vi) all such information is accumulated and communicated to Parent's
management as appropriate to allow timely decisions regarding required
disclosure and to make the certifications of the Chief Executive Officer and
Chief Financial Officer of Parent required under the Exchange Act with respect
to such reports. There are no significant deficiencies or material weaknesses
in the design or operation of Parent's internal controls, and Parent has not
been informed by its independent auditors, accountants, consultants or others
involved in the review of internal controls that any such significant
deficiencies or material weaknesses exist, which could adversely affect
Parent's ability to record, process, summarize and report financial data. There
is no fraud in connection with the Parent Financial Statements, whether or not
material, that involves management or other employees who have a significant
role in Parent's internal controls.
3.6 ABSENCE OF CHANGES.
(a) Since the Parent Balance Sheet Date,
(i) none of the AngioDynamics Corporations has made
any material changes in its pricing polices or payment or credit practices or
failed to pay any creditor any material amount owed to such creditor when due
or granted any extensions or credit other than in the ordinary course of
business consistent with prior practice;
(ii) none of the AngioDynamics Corporations has
terminated or closed any material facility, business or operation;
(iii) none of the AngioDynamics Corporations has
written up or written down any of its material assets; and
32
(iv) there has been no material loss, destruction or
damage to any item of property of the AngioDynamics Corporations, whether or
not insured.
(b) Except as set forth in Schedule 3.6(b) of the Parent
Disclosure Letter, since the Parent Balance Sheet Date and through the date of
this Agreement:
(i) there has not been any event that has had a
Material Adverse Effect on the AngioDynamics Corporations, and no fact, event,
circumstance or condition exists or has occurred that could reasonably be
expected to have a Material Adverse Effect on the AngioDynamics Corporations;
(ii) each of the AngioDynamics Corporations has
operated its respective business in the ordinary course consistent with prior
practice;
(iii) none of the AngioDynamics Corporations has (A)
declared, accrued, set aside or paid any dividend or made any other
distribution in respect of any shares of capital stock; (B) repurchased,
redeemed or otherwise reacquired any shares of capital stock or other
securities; (C) made any capital expenditure which, when added to all other
capital expenditures made on behalf of the AngioDynamics Corporations since the
Parent Balance Sheet Date, exceeds $250,000, in the aggregate; (D) made any
material Tax election; (E) settled any Legal Proceedings involving amounts in
excess of $100,000; or (F) entered into or consummated any transactions with
any affiliate;
(iv) none of the AngioDynamics Corporations has (A)
sold or otherwise disposed of, or acquired, leased, licensed, waived or
relinquished any material right or other material asset to, from or for the
benefit of, any other Person except for rights or other assets sold, disposed
of, acquired, leased, licensed, waived or relinquished in the ordinary course
of business consistent with prior practice; (B) mortgaged, pledged or subjected
to any Encumbrance any of their respective property, business or assets; (C)
entered into or amended any lease of real property (whether as lessor or
lessee); or (D) canceled or compromised any debt or claim other than accounts
receivable in the ordinary course of business consistent with prior practice;
(v) none of the AngioDynamics Corporations has (A)
amended or waived any of its material rights under, or permitted the
acceleration of vesting under, any provision of any of the Parent Employee
Plans or any provision of any agreement or Parent Stock Option Plan evidencing
any outstanding Parent Option; (B) caused or permitted any Parent Employee Plan
to be amended in any material respect; or (C) paid any bonus or other incentive
or equity compensation or made any profit-sharing or similar payment to, or
materially increased the amount of the wages, salary, commissions, fringe
benefits or other compensation or remuneration payable to, any of its
directors, officers or consultants;
(vi) there has been no material labor dispute
(including any work slowdown, stoppage or strike) involving the AngioDynamics
Corporations;
(vii) none of the AngioDynamics Corporations has
made any change in its methods of accounting or accounting practices;
(viii) none of the AngioDynamics Corporations has
made any loan, advance or capital contributions to, or any other investment in,
any Person;
(ix) none of the AngioDynamics Corporations has
terminated or amended, or suffered a termination of, any Parent Material
Contract;
(x) none of the AngioDynamics Corporations has
entered into any contractual obligation to do any of the things referred to
elsewhere in this Section 3.6; and
(xi) there has been no material development in any
Legal Proceeding described in a Parent SEC Document.
3.7 PROPRIETARY ASSETS.
(a) Schedule 3.7(a) of the Parent Disclosure Letter sets
forth as of the date of this Agreement (i) all U.S. and foreign patents, patent
applications, registered trademarks, material unregistered trademarks,
trademark applications, copyright registrations and copyright applications,
Internet domain names, computer software (other than third party software
generally available for sale to the public) and fictitious name and assumed
name registrations owned by any of the AngioDynamics Corporations, (ii) all
patent applications and other Proprietary Assets that are currently in the name
of inventors or other Persons and for which an AngioDynamics Corporation has
the right to receive an assignment and (iii) all material third party licenses
for Proprietary Assets to which an AngioDynamics Corporation is the licensee
party and which are not set forth on Schedule 3.8(a)(iii) of the Parent
Disclosure Letter. Each AngioDynamics Corporation has good, valid and
marketable title to, or has a
33
valid right to use, license or otherwise exploit, all of the material
AngioDynamics Corporation Proprietary Assets necessary for the conduct of such
AngioDynamics Corporation's business as presently conducted, free and clear of
all Encumbrances. None of the AngioDynamics Corporations has developed jointly
with any other Person any material AngioDynamics Corporation Proprietary Asset
with respect to which such other Person has any rights. Other than the Material
AngioDynamics Corporations IP Contracts and the Contracts entered into in the
ordinary course of business consistent with prior practice that are not, with
respect to any individual Contract, material to the AngioDynamics Corporations,
there is no AngioDynamics Corporation Contract pursuant to which any Person has
any right (whether or not currently exercisable) to use, license or otherwise
exploit any AngioDynamics Corporation Proprietary Asset owned or exclusively
licensed by any of the AngioDynamics Corporations.
(b) (i) All AngioDynamics Corporation Proprietary Assets
owned by any of the AngioDynamics Corporations are subsisting and in effect,
and to the Parent's knowledge, valid and enforceable; (ii) none of the
AngioDynamics Corporation Proprietary Assets and no Proprietary Asset that is
currently being developed or reduced to practice or which is the subject of a
current invention disclosure by any of the AngioDynamics Corporations (either
by itself or with any other Person) infringes, misappropriates, conflicts with
or otherwise violates any Proprietary Asset owned or used by any other Person;
(iii) none of the products or services that is or has been designed, created,
developed, assembled, performed, manufactured, sold, marketed or licensed by
any of the AngioDynamics Corporations is infringing, misappropriating or making
any unlawful or unauthorized use of any Proprietary Asset owned or used by any
other Person, and none of such products or services has at any time infringed,
misappropriated or made any unlawful or unauthorized use of, and none of the
AngioDynamics Corporations has received in the past three (3) years any
written, or to Parent's knowledge, oral notice or of any actual, alleged,
possible or potential infringement, misappropriation or unlawful or
unauthorized use of, any Proprietary Asset owned or used by any other Person;
(iv) the operation of the business of each AngioDynamics Corporation as it
currently is conducted does not, and will not when conducted immediately
following the Closing, infringe or misappropriate or make any unlawful or
unauthorized use of any Proprietary Asset of any other Person; and (v) to
Parent's knowledge, no other Person is infringing, misappropriating or making
any unlawful or unauthorized use of, and no Proprietary Asset owned or used by
any other Person infringes or conflicts with, any AngioDynamics Corporation
Proprietary Asset, and no such claims have been asserted or threatened against
any Person by Parent or, to the knowledge of Parent, any other Person, in the
past three (3) years. The AngioDynamics Corporation Proprietary Assets
constitute all the Proprietary Assets necessary to enable each of the
AngioDynamics Corporations to conduct its business in the manner in which such
business is currently being conducted. None of the AngioDynamics Corporations
has entered into any covenant not to compete or any Contract limiting its
ability to exploit fully any AngioDynamics Corporation Proprietary Assets owned
or licensed by such AngioDynamics Corporation or to transact business in any
market or geographical area or with any Person.
(c) Each AngioDynamics Corporation has taken all reasonable
steps that are required to protect such AngioDynamics Corporation's rights in
confidential information and trade secrets of the AngioDynamics Corporation or
provided by any other Person to the AngioDynamics Corporation. Without limiting
the foregoing, each AngioDynamics Corporation has, and enforces, a policy
requiring each employee, consultant and contractor to execute a proprietary
information and confidentiality agreement, substantially in the forms
previously made available to the Company and listed on Schedule 3.7(c) of the
Parent Disclosure Letter, and all current and former employees, consultants and
contractors of such AngioDynamics Corporation have executed such an agreement.
(d) Neither this Agreement nor the transactions contemplated
by this Agreement will result in: (i) the Company, any of its affiliates or the
Surviving Entity granting to any third party any incremental right to or with
respect to or non-assertion under any Proprietary Assets owned by, or
34
licensed to, any of them, (ii) the Company, any of its affiliates or the
Surviving Entity, being bound by, or subject to, any incremental non-compete or
other incremental material restriction on the operation or scope of their
respective businesses, (iii) the Company, any of its affiliates or the
Surviving Entity being obligated to pay any incremental royalties or other
material amounts, or offer any incremental discounts, to any third party or
(iv) the AngioDynamics Corporations being required under a Contract to procure
or attempt to procure from the Company or any of its subsidiaries a license
grant to or covenant not to assert in favor of any Person. As used in this
Section 3.7(d), an "incremental" right, non-compete, restriction, royalty or
discount refers to a right, non-compete, restriction, royalty or discount, as
applicable, in excess, whether in terms of contractual term, contractual rate
or scope, of those that would have been required to be offered or granted, as
applicable, had the parties to this Agreement not entered into this Agreement
or consummated the transactions contemplated hereby.
(e) With respect to the use of software in the business of
each of the AngioDynamics Corporations as such business is currently conducted,
to the knowledge of Parent, no such software contains defects in its operation
or any device or feature designed to disrupt, disable, or otherwise impair the
functioning of any software. Such software has been validated for its use.
There have been no material security breaches in any of the AngioDynamics
Corporations' information technology systems, and there have been no
disruptions in any of the AngioDynamics Corporations' information technology
systems that materially adversely affected such AngioDynamics Corporations'
business or operations. Each AngioDynamics Corporation has evaluated their
disaster recovery and backup needs and have implemented plans and systems that
reasonably address their assessment of risk.
(f) All products of the AngioDynamics Corporations
("AngioDynamics Product") conform in all material respects with all applicable
contractual commitments and all express and implied warranties, the
AngioDynamics Corporations' published product specifications and with all
regulations, certification standards and other requirements of any applicable
governmental entity or third party. The channel activities of the AngioDynamics
Corporations related to sales or distribution of AngioDynamics Products conform
in all material respects with all applicable contractual commitments. The
AngioDynamics Corporations have no liability (whether known or unknown,
asserted or unasserted, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated, due or to become due or otherwise) for replacement
or modification of any AngioDynamics Product or other damages in connection
therewith other than in the ordinary course of business. There are no known
material defects in the design or technology embodied in any AngioDynamics
Product which impair or are likely to impair the intended use of such
AngioDynamics Product. There is no presently pending, or, to the knowledge of
Parent, threatened, and, to the knowledge of Parent, there is no basis for, any
civil, criminal or administrative actions, suits, demands, claims, hearings,
notices of violation, investigations, proceedings or demand letters relating to
any alleged hazard or alleged defect in design, manufacture, materials or
workmanship, including any failure to warn or alleged breach of express or
implied warranty or representation, relating to any AngioDynamics Product. None
of the AngioDynamics Corporations have extended to any of its customers any
written product warranties, indemnifications or guarantees that deviate in any
material respect from the standard product warranties, indemnification
arrangements or guarantees of the AngioDynamics Corporations.
3.8 CONTRACTS.
35
(a) For purposes of this Agreement, each of the following
shall be deemed to constitute a "Parent Material Contract", which Parent
Material Contracts and all amendments thereto, in each case as of the date of
this Agreement are listed on Schedule 3.8 of the Parent Disclosure Letter and
copies of which have been made been made available to the Company; provided,
however, that no Parent Employee Plans shall be or shall be deemed to be a
Parent Material Contract:
(i) any AngioDynamics Corporation Contract that is
required by the rules and regulations of the SEC to be filed as an exhibit to
the Parent SEC Documents;
(ii) any AngioDynamics Corporation Contract relating
to (A) the employment of any employee or the services of any independent
contractor or consultant and pursuant to which any of the AngioDynamics
Corporations is or may become obligated to make any severance or termination
payment in excess of $50,000 or (B) any bonus, relocation or other payment in
excess of a material amount to any current or former employee, independent
contractor, consultant, officer or director (other than payments, in the case
of (A) and (B) above, in respect of salary or pursuant to standard severance
policies, existing bonus plans or standard relocation policies of Parent which
are listed on Schedule 3.8(a) of the Parent Disclosure Letter; but not
including any Parent Employee Plan);
(iii) any AngioDynamics Corporation Contract
relating to the acquisition, transfer, development, sharing or license of any
material Proprietary Asset, including the Contracts set forth on Schedule
3.7(a)(iii) of the Parent Disclosure Letter (except for any AngioDynamics
Corporation Contract pursuant to which (A) any Proprietary Asset is licensed to
the AngioDynamics Corporations under any third party software license generally
available for sale to the public), "Material AngioDynamics Corporation IP
Contract" or (B) any material Proprietary Asset is licensed by any of the
AngioDynamics Corporations to any customer in connection with the sale of any
product in the ordinary course of business consistent with prior practice);
(iv) any AngioDynamics Corporation Contract with any
officer, director or affiliate of Parent;
(v) any AngioDynamics Corporation Contract creating
or relating to any partnership or joint venture or any sharing of revenues,
profits, losses, costs or liabilities, under which an AngioDynamics Corporation
has continuing material obligations;
(vi) any AngioDynamics Corporation Contract that
involves the payment or expenditure by an AngioDynamics Corporation in excess
of $50,000 that may not be terminated by such AngioDynamics Corporation
(without penalty) within 60 days after the delivery of a termination notice by
the applicable AngioDynamics Corporation;
(vii) any AngioDynamics Corporation Contract
contemplating or involving the payment or delivery of cash or other
consideration to an AngioDynamics Corporation in excess of $50,000;
(viii) any AngioDynamics Corporation Contract
imposing any restriction on the right or ability of any AngioDynamics
Corporation to (A) compete with any other Person, (B) acquire any material
product or other material asset or any services from any other Person, sell any
material product or other material asset to or perform any services for any
other Person or transact business or deal in any other manner with any other
Person, or (C) develop or distribute any material technology; and
(ix) any other AngioDynamics Corporation Contract,
if a breach of such AngioDynamics Corporation Contract could reasonably be
expected to have a Material Adverse Effect on the AngioDynamics Corporations.
(b) Each Parent Material Contract is valid and in full force
and effect, and is enforceable in accordance with its terms subject to (A)
Legal Requirements of general application relating to bankruptcy, insolvency
and the relief of debtors, and (B) rules of law governing specific performance,
injunctive relief and other equitable remedies, except to the extent they have
expired in accordance with
36
their terms and except where the failure to be in full force and effect,
individually or in the aggregate, would not reasonably be expected to be
material to the AngioDynamics Corporations. Parent has delivered to or made
available to the Company true and complete copies of each Parent Material
Contract, except in the case of a Parent Material Contract which is derived
from a standard form agreement of the AngioDynamics Corporations, Parent has
delivered to or made available to the Company a form or forms of such
agreement. In each case where a Parent Material Contract is derived from a
standard form agreement, all of the terms, conditions and provisions of such
Parent Material Contract are substantially similar with respect to material
terms to the form agreement from which such agreement derived.
(c) None of the AngioDynamics Corporations has materially
violated or breached, or committed any material default under, any Parent
Material Contract. To Parent's knowledge, no other Person has materially
violated or breached, or committed any material default under, any Parent
Material Contract.
(d) To Parent's knowledge, no event has occurred, and no
circumstance or condition exists, that (with or without notice or lapse of
time) could reasonably be expected to (i) result in a material violation or
breach of any provision of any Parent Material Contract by any of the
AngioDynamics Corporations; (ii) give any Person the right to declare a
material default or exercise any remedy under any Parent Material Contract;
(iii) give any Person the right to accelerate the maturity or performance of
any Parent Material Contract; or (iv) give any Person the right to cancel or
terminate, or modify in any material respect, any Parent Material Contract
3.9 LIABILITIES.
Except as disclosed in Parent SEC Documents, since the Parent
Balance Sheet Date, none of the AngioDynamics Corporations has any accrued,
contingent or other liabilities of any nature, either matured or unmatured
(whether due or to become due) required to be reflected in financial statements
prepared in accordance with GAAP, except for: (a) liabilities that are
reflected in the "Liabilities" column of the Parent Balance Sheet and the notes
thereto, (b) normal and recurring liabilities that have been incurred by the
AngioDynamics Corporations since the Parent Balance Sheet Date in the ordinary
course of business consistent with prior practice, and (c) liabilities incurred
in connection with the transactions contemplated by this Agreement.
3.10 COMPLIANCE WITH LEGAL REQUIREMENTS; FDA MATTERS.
(a) Each of the AngioDynamics Corporations is in compliance
in all material respects with all applicable Legal Requirements. Within the
past three years, none of the AngioDynamics Corporations has received any
written notice or, to Parent's knowledge, other communication from any
Governmental Body regarding any actual or possible material violation of, or
failure to comply in all material respects with, any Legal Requirement.
(b) Except as would not, individually or in the aggregate,
have a Material Adverse Effect on the AngioDynamics Corporations, each of the
AngioDynamics Corporations is in possession of all franchises, grants,
authorizations, licenses, establishment registrations, product listings,
permits, easements, variances, exceptions, consents, certificates, clearances,
approvals and orders of any Government Body, including the FDA and similar
authorities in the U.S. and non-U.S. jurisdictions necessary for each
AngioDynamics Corporation to own, lease and operate its properties or to
develop, produce, store, distribute, promote and sell its products or otherwise
to carry on its business as it is now being conducted (the "Parent Permits"),
and, as of the date of this Agreement, such Parent Permits are in full force
and effect and no suspension or cancellation of any of Parent Permits is
pending or, to the knowledge of Parent, threatened, except where the failure to
have, or the suspension or cancellation of,
37
any of Parent Permits would not, individually or in the aggregate, have a
Material Adverse Effect on the AngioDynamics Corporations. Except for
conflicts, defaults or violations which, individually or in the aggregate,
would not have a Material Adverse Effect on the AngioDynamics Corporations, no
AngioDynamics Corporation is in conflict with, or in violation or default of,
(i) any law applicable to such AngioDynamics Corporation or by which any
property, asset, operation, or product of an AngioDynamics Corporation is bound
or affected, including the FDCA, Titles XVIII and XIX of the federal Social
Security Act, including the federal Health Care Programs Anti-Kickback Statute,
HIPAA, the Federal False Claims Act, or any other similar act or law or (ii)
any Parent Permit.
(c) Except as would not, individually or in the aggregate,
have a Material Adverse Effect on the AngioDynamics Corporations:
(i) all manufacturing operations of the
AngioDynamics Corporations are being conducted in substantial compliance with
applicable good manufacturing practice pursuant to the Quality System
Regulation (21 C.F.R Part 820);
(ii) all necessary clearances or approvals from
governmental agencies for all device products which are manufactured or sold by
the AngioDynamics Corporations have been obtained, and each AngioDynamics
Corporation is in substantial compliance with the most current form of each
applicable clearance, approval, or regulatory standards applicable to devices
for which no clearance or approval is required, with respect to the
development, design, manufacture, labeling, storage, distribution, promotion
and sale by the such AngioDynamics Corporation of such products;
(iii) all of the clinical studies which have been,
or are being conducted by or for the AngioDynamics Corporations, are being
conducted in substantial compliance with required experimental protocols,
procedures and controls, with generally accepted good clinical practices
(pursuant to 21 C.F.R. Parts 50, 54, 56, 58 and 812) and all applicable
government regulatory, statutory and other requirements;
(iv) to the knowledge of Parent, none of its
respective officers, employees or agents (during the term of such person's
employment by any AngioDynamics Corporation or while acting as an agent of an
AngioDynamics Corporation) has made any untrue statement of a material fact or
fraudulent statement to the FDA or any governmental agency (including non-U.S.
regulatory agencies), failed to disclose a material fact required to be
disclosed to the FDA or similar governmental agency (including non-U.S.
regulatory agencies), or to the knowledge of Parent, committed an act, made a
statement or failed to make a statement that could reasonably be expected to
provide a basis for the FDA or similar governmental agency (including non-U.S.
regulatory agencies) to invoke its "Fraud, Untrue Statements of Material Facts,
Bribery, and Illegal Gratuities" Final Policy set forth in 56 Fed. Reg. 46191
(September 10, 1991) and any amendments thereto (or "Application Integrity
Policy") or similar governmental policy or regulation (including non-U.S.
policies or regulations);
(v) to the knowledge of Parent, no AngioDynamics
Corporation has received any written notice within the past three years that
the FDA or any similar governmental agency (including non-U.S. regulatory
agencies) has commenced, or threatened to initiate, any action to withdraw its
clearance or approval, or to request the recall, of any product of an
AngioDynamics Corporation, or commenced, or overtly threatened to initiate any
action to enjoin production at any facility of an AngioDynamics Corporation;
(vi) to the knowledge of Parent, as to each medical
device, drug, biologic or other article manufactured and/or distributed by an
AngioDynamics Corporation, within the past three (3)
38
years such article was not and/or is not adulterated or misbranded within the
meaning of the FDCA or any similar governmental act or law of any jurisdiction
(including non-U.S. jurisdictions); and
(vii) to the knowledge of Parent, none of the
officers or employees of the AngioDynamics Corporations (during the term of
such person's employment by an AngioDynamics Corporation or while acting as an
agent of an AngioDynamics Corporation), subsidiaries or affiliates was subject
to an FDA debarment order, nor have any such persons been convicted of any
crime or engaged in any conduct for which debarment or similar punishment is
mandated or permitted by any applicable law.
(d) As to each product subject to the jurisdiction of the FDA
under the FDCA which is developed, manufactured, tested, validated,
distributed, held and/or marketed by the AngioDynamics Corporations, to the
knowledge of Parent such product is being developed, manufactured, held and
distributed in substantial compliance with all applicable requirements under
the FDCA and the PDMA and similar state laws, if applicable, including such
requirements relating to investigational use, premarket clearance, premarket
approval, registration and device listing, design control, wholesale drug
distribution permitting, good manufacturing practice, labeling, advertising,
record keeping, filing of reports (e.g., 21 C.F.R. Parts 803 and 806) and
security, except for such noncompliance which, individually or in the
aggregate, would not have a Material Adverse Effect on the AngioDynamics
Corporations.
(e) To the knowledge of Parent, each AngioDynamics
Corporation has, prior to the execution of this Agreement, provided to Parent
copies of or made available for Parent's review any and all documents in its
possession material to assessing the AngioDynamics Corporation's compliance
with the FDCA and implementing regulations for the prior three years, including
copies in its possession of (i) all FDA Establishment Inspection reports, FDA
Form 483 and all correspondence between the Acquired Corporation and the FDA
relating to each such Establishment Inspection report, FDA Form 483, Warning
Letters and company responses issued during the last three years; (ii) all
audit reports performed during the last three years, whether performed by the
AngioDynamics Corporations or an outside consultant; (iii) any material
document (prepared by the AngioDynamics Corporations) concerning any material
oral or written communication received from the FDA, or any other governmental
department or agency during the last three years; (iv) any administrative or
judicial order, ruling, consent decree or agreement issued or entered into
during the last three years in which an AngioDynamics Corporation or its
respective predecessor companies were a named party; or (v) any recall notice
or order and all company responses relating to any product of the AngioDynamics
Corporations.
(f) Schedule 3.10(f) of Parent Disclosure Letter sets forth a
complete and accurate list of (i) medical devices, drugs, biologics, or other
article currently manufactured or distributed by the AngioDynamics Corporations
and listed or registered with the FDA or similar U.S. or non-U.S. governmental
agency, (ii) each clinical trial protocol submitted by the AngioDynamics
Corporations to the FDA or similar U.S. or non-U.S. governmental agency within
the last three years, (iii) each Pre-Market Approval application (PMA) or
Premarket Notification (510(k)) and any amendments or supplements thereto filed
by the AngioDynamics Corporations pursuant to the FDCA, or any non-US.
equivalents, (iv) each New Drug Application (NDA) or Biologic License
Application (BLA) filed by AngioDynamics Corporations pursuant to the FDCA or
the Public Health Service Act, as amended, or any non-U.S. equivalents.
(g) (i) Each of the AngioDynamics Corporations is in
compliance, to the extent applicable, with any HIPAA obligations, and the
transactions contemplated by this Agreement are in accordance with, and will
not violate or result in the violation of, HIPAA by the AngioDynamics
Corporations; (ii) no AngioDynamics Corporation has received any communication
or inquiry (whether written or oral) from the Department of Health and Human
Services, the Federal Trade Commission, or
39
any other Governmental Body regarding its failure to comply, in any material
respect with one or more of HIPAA's provisions (other than an industry-wide
communication not specifically targeted to any AngioDynamics Corporation);
(iii) no certification organization has concluded or stated that any
AngioDynamics Corporation has failed or may fail to comply with HIPAA or any
requirement or element thereof, including one or more of the HIPAA electronic
transaction standards; and (iv) no AngioDynamics Corporation has received any
communication (whether written or oral) from any individual, customer, or
trading partner regarding its failure to comply in any material respect with
one or more of HIPAA's provisions.
(h) No AngioDynamics Corporation is engaged in any activity,
whether alone or in concert with one or more of its customers, which would
constitute a violation of any Legal Requirement (including (i) federal
anti-fraud and abuse or similar laws pertaining to Medicare, Medicaid or any
other federal health care or insurance program; (ii) state laws pertaining to
Medicaid or any other state health care or insurance programs; (iii) state or
federal laws pertaining to billings to insurance companies, health maintenance
organizations, and other managed care plans or insurance fraud; and (iv)
federal and state laws relating to collection agencies in the performance of
collection services) prohibiting fraudulent, abusive or unlawful practices
connected in any way with the provisions of health care services, the billing
for such services provided to a beneficiary of any state, federal or private
health or insurance program or credit collection services, except for
violations that could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect on the AngioDynamics Corporations.
Without limiting the generality of the foregoing, no AngioDynamics Corporation
has directly or indirectly, knowingly and willfully paid, offered to pay or
agreed to pay, or solicited or received, any fee, commission, sum of money,
property or other remuneration to or from any person which is or may be illegal
under 42 U.S.C. ss. 1320a-7b(b) or any similar state law.
(i) No AngioDynamics Corporation nor, to the knowledge of the
Parent, any of the AngioDynamics Corporations' respective officers, directors,
employees or agents (as those terms are defined under 42 C.F.R. 1001.1001): (i)
has had a civil monetary penalty assessed against him, her or it, as the case
may be, under Section 1128A of the Social Security Act or any regulations
promulgated thereunder; (ii) has been debarred, excluded or suspended from
participation under the Medicare program, Medicaid program or any other federal
or state health program or any regulations promulgated thereunder; or (iii) has
been charged with convicted of any criminal offense relating to the delivery of
any item or service under Medicare, Medicaid, or other federal or state health
program.
3.11 GOVERNMENTAL AUTHORIZATIONS.
Each of the AngioDynamics Corporations holds all Governmental
Authorizations necessary to enable such AngioDynamics Corporation to conduct
its business in the manner in which such business is currently being conducted
except where the failure to hold such Governmental Authorizations would not be
reasonably likely to have a Material Adverse Effect on the AngioDynamics
Corporations. All such Governmental Authorizations are valid and in full force
and effect. Each AngioDynamics Corporation is in compliance in all material
respects with the terms and requirements of such Governmental Authorizations.
None of the AngioDynamics Corporations has received any notice or other
communication from any Governmental Body regarding (a) any actual or possible
violation of or failure to comply in any material respect with any term or
requirement of any Governmental Authorization, or (b) any actual or possible
revocation, withdrawal, suspension, cancellation, termination or modification
of any Governmental Authorization.
40
3.12 TAX MATTERS.
(a) The AngioDynamics Corporations have paid or provided
adequate reserves, in accordance with GAAP, for all material Taxes, due and
payable by any of them for or with respect to all periods up to and including
the date hereof whether or not such Taxes were shown on any Tax Return and
without regard to whether such Taxes are or were disputed.
(b) Each of the AngioDynamics Corporations has filed on a
timely basis (taking into account any extensions of time an AngioDynamics
Corporation was granted) all income Tax Returns and all other material Tax
Returns that each was required to file. None of the AngioDynamics Corporations
is currently the beneficiary of any extension of time within which to file any
Tax Return. No claim that has not been resolved has ever been made to an
AngioDynamics Corporation by an authority in a jurisdiction where the
AngioDynamics Corporations do not file Tax Returns that any one of them is or
may be subject to taxation by that jurisdiction. None of the AngioDynamics
Corporations has given any currently effective waiver of any statute of
limitations in respect of Taxes or agreed to any currently effective extension
of time with respect to a Tax assessment or deficiency. None of the
AngioDynamics Corporations has granted to any Person any power of attorney that
is currently in force with respect to any Tax matter. There are no security
interests on any of the assets of any of the AngioDynamics Corporations that
arose in connection with any failure (or alleged failure) to pay any Tax (other
than liens for Taxes not yet due and payable).
(c) The AngioDynamics Corporations have withheld and paid all
material Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder or other third party.
(d) There is no dispute or claim concerning any liability for
Taxes of the AngioDynamics Corporations either (i) claimed or raised by any
authority in writing or (ii) as to which such AngioDynamics Corporation has
knowledge based upon personal contact with any agent of such authority.
Schedule 3.12(d) to the Parent Disclosure Letter sets forth as of the date of
this Agreement a complete and accurate list of current open audits of Tax
Returns filed by or on behalf of the AngioDynamics Corporations with any
Governmental Body.
(e) The unpaid Taxes of the AngioDynamics Corporations (i)
did not, as of the date of the most recent Parent Financial Statements, exceed
the reserve for Tax Liability (as opposed to any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) set
forth in the Parent Balance Sheet and (ii) will not exceed that reserve as
adjusted for the passage of time through the Closing Date in accordance with
the past custom and practice of the AngioDynamics Corporations in filing their
Tax Returns other than any Taxes which the failure to pay would not,
individually or in the aggregate, result in a Material Adverse Effect on the
AngioDynamics Corporations.
(f) None of the AngioDynamics Corporations is a party to any
Tax allocation or sharing agreement. None of the AngioDynamics Corporations (i)
has been a member of an "affiliated group," as defined in Section 1504(a) of
the Code, filing a consolidated federal income Tax Return other than an
affiliated group the common parent of which is Parent or (ii) has any Liability
for the Taxes of any Person (other than any of the AngioDynamics Corporations)
under Treas. Reg. Section 1.1502-6 (or any similar provision of state, local,
or foreign law), as a transferee or successor, by contract or otherwise.
(g) Parent has made available to the Company or its legal or
accounting representative copies of all foreign, federal and state income tax
Returns for Parent and each of its subsidiaries filed for all periods including
and after the tax period ended May 31, 2004.
41
(h) Neither Parent nor any affiliate of Parent has taken or
agreed to take any action or knows of any fact or circumstance that is
reasonably likely to prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code.
3.13 EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS.
(a) The representations in this Section 3.13(a) shall apply
to (i) all material employee pension benefit plans (as defined in Section 3(2)
of ERISA), (ii) all material employee welfare benefit plans (as defined in
Section 3(1) of ERISA), (iii) all other material pension, bonus, commission,
stock option, stock purchase, incentive, deferred compensation, supplemental
retirement, severance, fringe benefits and other similar benefit plans
(including any material fringe benefit under Section 132 of the Code and any
material foreign plans), programs, Contracts, arrangements or policies, and
(iv) any material employment, executive compensation or severance agreements,
whether written or otherwise, as amended, modified or supplemented, of any
AngioDynamics Corporation or any other Entity (whether or not incorporated)
which is a member of a controlled group which includes any of the AngioDynamics
Corporations or which is under common control with any of the AngioDynamics
Corporations within the meaning of Sections 414(b), (c), (m) or (o) of the Code
or Section 4001(a) (14) or (b) of ERISA (each, a "Parent ERISA Affiliate") for
the benefit of, or relating to, any former or current employee, independent
contractor, officer or director (or any of their beneficiaries) of any
AngioDynamics Corporation or any other Parent ERISA Affiliate (all such plans,
programs, Contracts, agreements, arrangements or policies as described in this
Section 3.13(a) shall be collectively referred to as the "Parent Employee
Plans"). Parent has made available to the Company, true and complete copies of
(i) each such written Parent Employee Plan (or a written description of any
Parent Employee Plan which is not written) and all related trust agreements,
insurance and other contracts (including policies), summary plan descriptions,
summaries of material modifications, registration statements (including all
attachments), prospectuses and communications distributed to plan participants,
(ii) the three most recent annual reports on Form 5500 series, with
accompanying schedules and attachments (including accountants' opinions, if
applicable), filed with respect to each Parent Employee Plan required to make
such a filing, (iii) the most recent actuarial valuation for each Parent
Employee Plan subject to Title IV of ERISA, and (iv) the most recent favorable
determination letters issued for each Parent Employee Plan and related trust
which is intended to be qualified under Section 401(a) of the Code (and, if an
application for such determination is pending, a copy of the application for
such determination).
(b) (i) None of the Parent Employee Plans promises or
provides post-termination or retiree medical or other post-termination or
retiree welfare benefits to any person (other than continuation coverage to the
extent required by law, whether pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985 or otherwise); (ii) none of the Parent Employee
Plans is a Multiple Employer Welfare Arrangement, a Multiple Employer Plan or a
Multiemployer Plan, and neither the AngioDynamics Corporations nor any Parent
ERISA Affiliate has ever contributed to, been required to contribute to, or
otherwise had any obligation or liability in connection with a Multiple
Employer Plan or a Multiemployer Plan; (iii) no party in interest or
disqualified person (as defined in Section 3(14) of ERISA and Section 4975 of
the Code, respectively) has at any time engaged in a transaction with respect
to any Parent Employee Plan which could subject any of the AngioDynamics
Corporations, directly or indirectly, to any material tax, material penalty or
other material liability for prohibited transactions under ERISA or Section
4975 of the Code; (iv) no fiduciary of any Parent Employee Plan has breached
any of the responsibilities or obligations imposed upon fiduciaries under Title
I of ERISA which shall subject any of the AngioDynamics Corporations, directly
or indirectly, to any material penalty or liability for breach of fiduciary
duty; (v) all Parent Employee Plans have been established, maintained and
operated in accordance with their terms and have been established, maintained
and operated in substantial compliance with all applicable Legal Requirements,
including good faith compliance with Section 409A of the Code; (vi) none of the
AngioDynamics Corporations has any knowledge of any default or violation by any
other
42
Person with respect to any of the Parent Employee Plans; and (vii) each Parent
Employee Plan which is intended to be qualified under Section 401(a) of the
Code and each trust intended to qualify under Section 501(a) of the Code is the
subject of a current favorable determination letter from the Internal Revenue
Service as to its qualified status under Section 401(a) of the Code (or
comparable letter, such as an opinion or notification letter as to the form of
plan adopted by one or more AngioDynamics Corporations), or has time remaining
under applicable Treasury guidance to seek such a determination, and to
Parent's knowledge nothing has occurred prior to or since the issuance of such
letter (or could reasonably be expected to occur) which might impair such
favorable determination or otherwise impair the qualified status of such plan.
(c) None of the AngioDynamics Corporations or any other
Parent ERISA Affiliate currently maintains, sponsors or participates in, or
within the last five years has maintained, sponsored or participated in, or has
any liability, contingent or otherwise, to, any "Employee Benefit Plan" (as
defined in Section 3(3) of ERISA) that is subject to Section 412 of the Code or
Title IV of ERISA.
(d) The consummation of the transactions contemplated by this
Agreement will not (either solely as a result thereof or as a result of such
transactions in conjunction with another event) cause or result in an increase
in the amount of compensation or benefits or accelerate the vesting or timing
of payment of any benefits or compensation payable in respect of any former or
current employee, independent contractor or consultant (or any of their
beneficiaries) of any of the AngioDynamics Corporations.
(e) There are no material Legal Proceedings pending or, to
the knowledge of Parent, threatened in respect of or relating to any Parent
Employee Plan. To Parent's knowledge, there are no facts or circumstances which
could reasonably be expected to give rise to any such material Legal Proceeding
(other than routine benefit claims) in respect of or relating to any Parent
Employee Plan.
(f) No person will be entitled to any severance benefits,
acceleration of vesting of any the Parent Options or the extension of any
period during which any Parent Options may be exercised, under the terms of any
Parent Employee Plan as a result of the consummation of the transactions
contemplated by this Agreement (either solely as a result thereof or as a
result of such transactions in conjunction with another event).
(g) (i) There are no controversies pending or, to the
knowledge of Parent, threatened, between any of the AngioDynamics Corporations
and any of their respective foreign or domestic former or current employees,
officers, directors, independent contractors or consultants (or any of their
beneficiaries), (ii) there is no labor strike, dispute, slowdown, work stoppage
or lockout actually pending or, to the knowledge of Parent, threatened against
or affecting any AngioDynamics Corporation, (iii) none of the AngioDynamics
Corporations is a party to or bound by any collective bargaining or similar
agreement with any labor organization, or work rules or practices agreed to
with any labor organization or employee association applicable to employees of
the AngioDynamics Corporations, (iv) none of the employees of the AngioDynamics
Corporations are represented by a labor organization or group that was either
certified or voluntarily recognized by any labor relations board and no union
organizing campaign or other attempt to organize or establish a labor union,
employee organization or labor organization involving employees of the
AngioDynamics Corporations has occurred, is in progress or, to the knowledge of
Parent, is threatened, (v) the AngioDynamics Corporations have each at all
times been in compliance in all material respects with all applicable Legal
Requirements governing or concerning labor relations, conditions of employment,
employment discrimination or harassment, wages, hours, or occupational safety
and health, and with any collective bargaining agreements (both foreign and
domestic), (vi) there is no unfair labor practice charge or complaint against
any of the AngioDynamics Corporations pending or, to the knowledge of Parent,
threatened before the National Labor Relations
43
Board or any similar state or foreign agency, (vii) there is no grievance or
arbitration demand or proceeding arising out of any collective bargaining
agreement or other grievance procedure relating to the AngioDynamics
Corporations pending, or to the knowledge of Parent, threatened, against any
AngioDynamics Corporation, (viii) none of the AngioDynamics Corporations is a
federal or state contractor, (ix) to Parent's knowledge, neither the
Occupational Safety and Health Administration nor any corresponding state or
foreign agency is threatening to file any citation or complaint, and there are
no pending citations or complaints, relating to the AngioDynamics Corporations,
and (x) there are no complaints, charges or claims against any AngioDynamics
Corporation pending or, to the knowledge of Parent, threatened, which could be
brought or filed with any Governmental Body, court or arbitrator based on,
arising out of, in connection with, or otherwise relating to the employment of,
termination of employment of, or failure of any AngioDynamics Corporation to
employ any individual. To the knowledge of Parent, there are no pending,
threatened or reasonably anticipated claims against any of the AngioDynamics
Corporations under any workers' compensation disability policy or long-term
policy.
(h) No amount required to be paid or payable to or with
respect to current or former employee of any of the AngioDynamics Corporations
in connection with the transactions contemplated hereby (either solely as a
result thereof or as a result of such transactions in conjunction with any
other event) will be an "excess parachute payment" within the meaning of
Section 280G of the Code or will not be deductible under Sections 162(a)(1) or
404 of the Code.
(i) None of the AngioDynamics Corporations has taken any
action that would constitute a "mass layoff," "mass termination" or "plant
closing" within the meaning of the WARN Act or otherwise trigger notice
requirements or liability under any federal, local, state, or foreign plant
closing notice or collective dismissal law.
(j) Each of the AngioDynamics Corporations is in compliance
with all immigration and naturalization Legal Requirements relating to
employment and employees, each of the AngioDynamics Corporations has properly
completed and maintained in all material respects all applicable forms
(including I-9 forms), there are no citations, investigations, enforcement
proceedings or formal complaints concerning immigration or naturalization Legal
Requirements pending or, to the knowledge of Parent, threatened before the
United States Citizenship and Immigration Services or any related federal,
state, foreign or administrative agency or court, involving or against the
AngioDynamics Corporations, and none of the AngioDynamics Corporations has
received notice of any violation of any immigration and naturalization Legal
Requirement.
3.14 ENVIRONMENTAL MATTERS.
Each of the AngioDynamics Corporations is in compliance with,
and has conducted its activities in compliance with, all applicable
Environmental Laws, which compliance includes the possession by each of the
AngioDynamics Corporations of all material permits and other Governmental
Authorizations required under applicable Environmental Laws, and compliance
with the terms and conditions thereof, except where the failure to so comply
would not result in a material liability or clean up obligation on the
AngioDynamics Corporations. The consummation of the transactions contemplated
by this Agreement will not affect the validity of such material permits and
Governmental Authorizations held by Parent or any of the AngioDynamics
Corporations, and will not require any filing, notice, or remediation under any
Environmental law. To the knowledge of Parent, there are no past or present
events, conditions, activities, or practices which would reasonably be expected
to prevent Parent's or any of the AngioDynamics Corporations' compliance in any
material respect with any Environmental Law, or which would reasonably be
expected to give rise to any material liability of Parent or any of the
AngioDynamics Corporations under any Environmental Law. Within the past seven
years, none of the AngioDynamics Corporations has received any written notice,
or to its knowledge, other communication (in writing or otherwise) that alleges
that any of the AngioDynamics Corporations is not in material compliance with
any Environmental Law, and Parent has no knowledge of any circumstances that
would reasonably be expected to result in such claims or communications. To
Parent's knowledge, no current or prior owner of any property owned, leased or
controlled by any of the AngioDynamics Corporations has received any written
notice or other communication
44
(in writing or otherwise) that alleges that such current or prior owner or any
of the AngioDynamics Corporations is not in compliance with any Environmental
Law in such a manner as would be reasonably likely to would not result in a
material liability or clean up obligation on any AngioDynamics Corporation.
Neither Parent nor any of the AngioDynamics Corporations has assumed by
contract, agreement or otherwise any liabilities or obligations arising under
any Environmental Law, or is currently performing any required investigation,
response or other corrective action under any Environmental Law. There are no
underground storage tanks or related piping on any property owned, leased,
controlled by or used by any of the AngioDynamics Corporations, and any former
such tanks and piping have been removed or closed in accordance with applicable
Environmental Laws. To Parent's knowledge, all property that is owned by,
leased to, controlled by or used by any of the AngioDynamics Corporations is
free of any friable asbestos or asbestos-containing material.
3.15 LEGAL PROCEEDINGS; ORDERS.
Except as set forth in the Parent SEC Documents, there is no
pending Legal Proceeding and, to Parent's knowledge, within the past 24 months
no Person has threatened in writing to commence any Legal Proceeding, that
involves any of the AngioDynamics Corporations or any of the assets owned or
used by any of the AngioDynamics Corporations, in each case which would be
reasonably likely to be material to the AngioDynamics Corporations; and there
is no Order to which any of the AngioDynamics Corporations, or any of the
material assets owned or used by any of the AngioDynamics Corporations, is
subject.
3.16 VOTE REQUIRED.
(a) The affirmative vote of a majority of the votes cast on
the proposal to approve the issuance of Parent Common Stock pursuant to the
Merger is the only vote of the holders of any class or series of Parent's
capital stock necessary to approve the issuance of Parent Common Stock pursuant
to the Merger.
(b) The affirmative vote of Parent is the only vote of
the holders of any class or series of Merger Sub's equity interests necessary
to approve this Agreement and otherwise approve and consummate the Merger as
set forth herein.
3.17 FOREIGN CORRUPT PRACTICES ACT.
Neither Parent, any other AngioDynamics Corporation, any of
the AngioDynamics Corporation's officers, directors, nor, to Parent's
knowledge, any employees or agents, distributors, representatives or other
persons acting on the express, implied or apparent authority of any
AngioDynamics Corporation, have paid, given or received or have offered or
promised to pay, give or receive, any bribe or other unlawful payment of money
or other thing of value, any unlawful discount, or any other unlawful
inducement, to or from any person or Governmental Body in the United States or
elsewhere in connection with or in furtherance of the business of any of the
AngioDynamics Corporations (including any unlawful offer, payment or promise to
pay money or other thing of value (a) to any foreign official, political party
(or official thereof) or candidate for political office for the purposes of
influencing any act, decision or omission in order to assist any AngioDynamics
Corporation in obtaining business for or with, or directing business to, any
person, or (b) to any person, while knowing that all or a portion of
45
such money or other thing of value will be offered, given or promised
unlawfully to any such official or party for such purposes). Neither the
business of Parent nor of any other AngioDynamics Corporation is in any manner
dependent upon the making or receipt of such unlawful payments, discounts or
other inducements. Neither Parent nor any other AngioDynamics Corporation has
otherwise taken any action that could cause Parent or any other AngioDynamics
Corporation to be in violation of the Foreign Corrupt Practices Act of 1977, as
amended, the regulations thereunder, or any applicable Legal Requirements of
similar effect.
3.18 REAL PROPERTY.
Parent has good and marketable title to, or a valid leasehold
interest in, all of its real properties, in each case free and clear of all
Encumbrances. The AngioDynamics Corporations have not owned any real property
at any time during the past five years. No AngioDynamics Corporation has sent
or received any written notice of any default under any of the leases of real
property to which it is party. No AngioDynamics Corporation is in material
breach of, or in default in any material respect under, any covenant,
agreement, term or condition of or contained in any lease of real property to
which it is a party and there has not occurred any event that with the lapse of
time or the giving of notice or both could constitute such a default or breach.
3.19 INSURANCE POLICIES.
Neither Parent nor any other AngioDynamics Corporation has
received notice of any pending or threatened cancellation or premium increase
(retroactive or otherwise) with respect thereto, and each of the AngioDynamics
Corporations is in compliance in all material respects with all conditions
contained therein. There are no material pending claims against such insurance
policies by Parent or any other AngioDynamics Corporation as to which insurers
are defending under reservation of rights or have denied liability, and there
exists no material claim under such insurance policies that has not been
properly filed by Parent or any other AngioDynamics Corporation. Except for the
self-insurance retentions or deductibles, the policies are adequate in scope
and amount to cover all prudent and reasonably foreseeable risks which may
arise in the conduct of the business of the AngioDynamics Corporations that
would reasonably be expected to have a Material Adverse Effect on the
AngioDynamics Corporations.
3.20 INFORMATION TO BE SUPPLIED.
None of the information supplied or to be supplied by or on
behalf of Parent for inclusion or incorporation by reference in the
Registration Statement will, at the time the Registration Statement is filed
with the SEC or becomes effective under the Securities Act, 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 the
light of the circumstances under which they are made, not misleading. None of
the information supplied or to be supplied by or on behalf of Parent for
inclusion or incorporation by reference in the Parent Proxy Statement or the
Company Proxy Statement will, at the time the Parent Proxy Statement or the
Company Proxy Statement is mailed to the stockholders of Parent or the
stockholders of the Company, as the case may be, or at the time of the Parent
Stockholders' Meeting or the Company's Stockholders' Meeting, 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
the light of the circumstances under which they are made, not misleading. The
Parent Proxy Statement will comply as to form in all material respects with the
applicable provisions of the Exchange Act and the rules and regulations
promulgated by the SEC thereunder. Notwithstanding the foregoing, Parent makes
no representation or warranty with respect to any information supplied by or to
be supplied by the Company that is included or incorporated by reference in the
foregoing documents.
46
3.21 TAKEOVER STATUTES; RIGHTS PLAN.
(a) To Parent's knowledge, no Takeover Laws (other than
Section 203 of the DGCL) are applicable to the Merger, this Agreement or any of
the transactions contemplated hereby. The action of the Board of Directors of
Parent in approving this Agreement (and the transactions provided for herein)
is sufficient to render inapplicable to this Agreement (and the transactions
provided for herein) the restrictions on "business combinations" (as defined in
Section 203 of the DGCL) as set forth in Section 203 of the DGCL.
(b) No "Stock Acquisition Date" or "Distribution Date" (as
such terms are defined in the Parent Rights Plan) will occur as a result of the
execution of this Agreement or any other transactions contemplated by this
Agreement or the consummation of the Merger. The Parent Rights Plan, as so
amended, has not been further amended or modified.
3.22 FINANCIAL ADVISOR.
Except with respect to Cain Brothers & Company, LLC ("Cain
Brothers"), no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the Merger or
any of the other transactions contemplated by this Agreement based upon
arrangements made by or on behalf of any of the AngioDynamics Corporations.
Parent has furnished to the Company an accurate and complete copy of its
agreement with Cain Brothers.
3.23 OPINION OF FINANCIAL ADVISOR.
The Parent's Board of Directors has received the opinion of
Cain Brothers, financial advisor to Parent, that as of the date of this
Agreement and subject to the assumptions, qualifications and limitations set
forth therein, the Merger Consideration is fair to Parent from a financial
point of view. Parent will furnish an accurate and complete copy of said
opinion to the Company.
3.24 AFFILIATE TRANSACTIONS.
Schedule 3.24 of the Parent Disclosure Letter contains a
complete and correct list, as of the date of this Agreement, of all agreements,
contracts, transfers of assets or liabilities or other commitments or
transactions, whether or not entered into in the ordinary course of business,
to or by which the AngioDynamics Corporations, on the one hand, and any of
their respective officers or directors (or any of their respective Affiliates,
other than any AngioDynamics Corporation) on the other hand, are or have been a
party or otherwise bound or affected, and that (a) are currently pending, in
effect or have been in effect during the past 12 months, (b) involve continuing
liabilities and obligations that, individually or in the aggregate, have been,
are or will be material to the AngioDynamics Corporations, taken as a whole and
(c) are not Parent Employee Plans.
SECTION 4. CERTAIN COVENANTS OF THE COMPANY AND PARENT
4.1 ACCESS AND INVESTIGATION.
During the period from the date of this Agreement until the
earlier of the Effective Time or the date this Agreement shall be terminated in
accordance with Section 7 (the "Pre-Closing Period"), each of the Company and
Parent shall use its commercially reasonable efforts to cause the Acquired
Corporations, in the case of the Company, and the AngioDynamics Corporations in
the case of Parent, to provide the other party's Representatives with
reasonable access during normal business hours to the personnel and assets of,
and to all existing books, records, Tax Returns, work papers and other
documents
47
and information relating to, the Acquired Corporations and the AngioDynamics
Corporations and with such additional financial, operating and other data and
information regarding the Acquired Corporations, as Parent may reasonably
request, and the AngioDynamics Corporations, as the Company may reasonably
request, as the case may be; provided, however, that the parties shall endeavor
to coordinate such access through the following contacts: Craig Factor for the
Company and Joseph Gerardi for Parent. Each party acknowledges that the Company
and Parent have previously entered into a Mutual Nondisclosure Agreement, dated
as of April 20, 2006, as amended by a letter agreement as of June 28, 2006,
between the Company and Parent (the "Confidentiality Agreement"), which will
continue in full force and effect in accordance with its terms.
4.2 OPERATION OF BUSINESS.
(a) During the Pre-Closing Period the Company (which for
purposes of this Section 4.2 shall include the Acquired Corporations) and
Parent (which for purposes of this Section 4.2 shall include the AngioDynamics
Corporations) shall, (i) except in the case of the Company, as provided in
Schedule 4.2 of the Company Disclosure Letter, (ii) except in the case of
Parent, as provided in Schedule 4.2 of the Parent Disclosure Letter, (iii)
except as contemplated by this Agreement, and (iv) except with the prior
written consent of the other party (the granting or withholding of such consent
not to be unreasonably delayed, withheld or conditioned): (A) conduct, in the
case of the Company, the business and operations of the Acquired Corporations
taken as a whole, and in the case of Parent, the business and operations of the
AngioDynamics Corporations taken as a whole, (1) in the ordinary course
consistent with prior practice, and (2) in material compliance with all
applicable Legal Requirements and the requirements of all Company Material
Contracts in the case of the Acquired Corporations and of all Parent Material
Contracts in the case of the AngioDynamics Corporations; (B) use commercially
reasonable efforts to preserve intact, in the case of the Company, the current
business organization of the Acquired Corporations taken as a whole, and in the
case of Parent, the current business organization of the AngioDynamics
Corporations taken as a whole, keep available the services of their current
officers and key employees and maintain their relations and goodwill at least
as favorable as at the date of this Agreement with all suppliers, customers,
distributors, landlords, creditors, licensors, licensees and other Persons
having business relationships with them; (C) provide all notices, assurances
and support required by any Contract relating to any Acquired Corporation
Proprietary Asset or AngioDynamics Corporation Proprietary Asset, as the case
may be, in order to ensure that no condition under such Contract occurs which
could result in, or could increase the likelihood of any transfer or disclosure
by any Acquired Corporation or AngioDynamics Corporation, as the case may be,
of any source code materials or other Acquired Corporation Proprietary Asset or
AngioDynamics Corporation Proprietary Asset, as the case may be; and (iv) keep
in full force and effect (with the same scope and limits of coverage) all
insurance policies in effect as of the date of this Agreement covering all
material assets of the Acquired Corporations or the AngioDynamics Corporations,
as the case may be (including using commercially reasonable efforts to renew
such policies which may expire or terminate during the Pre-Closing Period;
provided, however, that either the Company or Parent may choose not to renew
any such policy without the other party's prior written consent, subject to
reasonable prior consultation with the other party).
(b) Except as contemplated by this Agreement or as set forth
on Schedule 4.2(b) of the Company Disclosure Letter, during the Pre-Closing
Period, the Company shall not and shall not permit any of the other Acquired
Corporations, without the prior written consent of Parent (the granting or
withholding of such consent not to be unreasonably delayed, withheld or
conditioned) to:
(i) declare, accrue, set aside or pay any dividend
or make any other distribution in respect of any shares of capital stock or
repurchase, redeem or otherwise reacquire any shares of capital stock or other
securities;
48
(ii) sell, issue, grant or authorize the issuance or
grant of (A) any capital stock, other security (including the sale, transfer or
grant of any treasury shares) or any obligation convertible or exchangeable for
capital stock or any other security of any of the Acquired Corporations or (B)
any Company Stock Right, except that prior to the Effective Time (1) the
Company may issue Company Common Stock (and corresponding rights under the
Company Rights Agreement) upon the valid exercise of Company Stock Rights
outstanding as of the date of this Agreement, (2) the Company may grant options
to purchase shares of Company Common Stock (and corresponding rights under the
Company Rights Agreement) at fair market value in the ordinary course of
business consistent with prior practice and in accordance with the Company
Stock Option Plans to employees of the Company (and the exercise of those
options) in an amount not to exceed the number of options set forth on Schedule
4.2(b)(ii) of the Company Disclosure Letter, and (3) shares of Company Common
Stock (and corresponding rights under the Company Rights Agreement) issuable to
participants in the Company ESPP consistent with the terms thereof in an amount
not to exceed the number of shares set forth on Schedule 4.2(b)(ii) of the
Company Disclosure Letter;
(iii) hire any new employee of the Company or any
other Acquired Corporation, other than non-officer employees hired in the
ordinary course of business consistent with prior practice;
(iv) except (i) as required by applicable Legal
Requirements, (ii) for the anticipated acceleration of vesting of Company
Options as described in Schedule 2.3(b) or Schedule 2.13(a) of the Company
Disclosure Letter, (iii) pursuant to the terms of a Company Employee Plan, as
in existence on the date hereof, or (iv) as disclosed on Schedule 2.3(b) of the
Company Disclosure Letter, amend or waive any of its rights under any provision
of any of the Company Stock Option Plans, any provision of any agreement
evidencing any outstanding stock option or any restricted stock purchase
agreement or any other equity related award, or otherwise modify any of the
terms of any outstanding option, warrant, or other security or any related
Contract;
(v) form any Subsidiary;
(vi) amend or permit the adoption of any amendment
to the Company Organization Documents, or effect a recapitalization,
reclassification of shares, stock split, reverse stock split or similar
transaction;
(vii) make any capital expenditure in excess of
$250,000 in the aggregate;
(viii) enter into or become bound by, or permit any
of the Proprietary Assets owned by it to become bound by, any Company Material
Contract under which the Company grants an exclusive license to or other
exclusive rights in any such Proprietary Asset;
(ix) acquire or agree to acquire, by merging or
consolidating with, by purchasing an equity interest in or a portion of the
material assets of any business or any corporation, partnership, association or
other business organization or division thereof, or otherwise acquire or agree
to acquire any material assets of any other Person, except for the purchase of
assets from suppliers or vendors in the ordinary course of business;
49
(x) sell, lease, exchange, mortgage, pledge,
transfer or otherwise subject to any Encumbrance or dispose of any of its
material assets, except for sales, dispositions or transfers in the ordinary
course of business;
(xi) (A) incur any indebtedness for borrowed money
or guarantee any such indebtedness of another Person, issue or sell any debt
securities or warrants or other rights to acquire any debt securities,
guarantee any debt securities of another Person, enter into any "keep well" or
other agreement to maintain any financial statement condition of another Person
or enter into any agreement having the economic effect of any of the foregoing,
except for borrowings incurred under the Company's existing credit facility in
the ordinary course of business, (B) make any loans or advances to any other
Person other than in the ordinary course of business consistent with prior
practice or (C) make any capital contributions to, or investments in, any other
Person;
(xii) (A) pay, discharge, settle or satisfy any
claims, liabilities or obligations (whether absolute or contingent, matured or
unmatured, known or unknown), other than the payments, discharges or
satisfactions in the ordinary course of business or (B) subject to Section
4.3(d), (1) waive any material benefits of, or agree to modify in any material
respect, any standstill or similar agreement to which any Acquired Corporation
is a party or (2) waive any benefits of, or agree to modify, any
confidentiality agreement or similar agreement to which any Acquired
Corporation is a party (other than confidentiality agreements entered into in
the ordinary course of business consistent with prior practice where such
modification or waiver would not have a Material Advance Effect on the Acquired
Corporations);
(xiii) except as set forth in Schedule 2.8(a) or
Schedule 2.13(a) of the Company Disclosure Letter, (A) except as required by
Legal Requirements applicable to each of the Acquired Corporations which is
formed or incorporated under the laws of a foreign jurisdiction or pursuant to
the terms of a Company Employee Plan as in existence on the date hereof (1)
increase in any material manner or respect the compensation or fringe benefits
of, or pay any bonus or incentive or equity compensation to, any current or
former director, officer; employee or consultant; (2) grant any severance,
retention, change in control or termination pay to, or enter into any
severance, change in control, retention or termination pay agreement with, any
current or former director, officer, employee of consultant or enter into any
employment or consultant agreement with any current or former director,
officer, employee or consultant; (3) pay any benefit or other compensation not
provided for under any Company Employee Plan or other arrangement; (4) grant
any awards under any bonus, incentive, performance, equity or other
compensation plan or arrangement or Company Employee Plan or other arrangement
(including the grant of stock options, stock appreciation rights, stock-based
or stock-related awards, performance units or restricted stock, or the removal
of existing restrictions in any Company Employee Plan or other arrangement or
agreement or awards made thereunder), other than options issued in accordance
with Section 4.2(b)(ii) above, payments payable pursuant to the Company's 2006
Management Performance Incentive Plan as set forth on Schedule 4.2(b) of the
Company Disclosure Letter and such other bonus payments as set forth on
Schedule 4.2(b), or (5) take any action to fund prior to when due or in any
other way secure the payment of compensation or benefits under any agreement or
(B) except as may be required to comply with applicable Legal Requirements,
establish, adopt, enter into or amend any Company Employee Plan or other
arrangement;
(xiv) change any of its methods of accounting or
accounting practices in any respect, except as required by GAAP;
(xv) make or rescind any express or deemed material
election relating to Taxes, file an amended return, settle or compromise any
material claim, action, suit, litigation, proceeding, arbitration,
investigation, audit or controversy relating to Taxes, or change any of its
methods of reporting income or deductions for federal income tax purposes from
those employed in the preparation of the federal income tax returns;
50
(xvi) commence or settle any material Legal
Proceeding other than in the ordinary course of business;
(xvii) take, agree to take, or omit to take any
action which would cause any of the conditions set forth in Section 6 of this
Agreement not to be able to be satisfied prior to the Termination Date;
(xviii) enter into or become bound by any Company
Material Contract, or waive, release, or assign any material rights or claims
under, or materially modify or terminate any, Company Material Contract;
(xix) allow any of the Acquired Corporation
Proprietary Assets to lapse, expire (except by operation of law) or become
abandoned; or
(xx) agree or commit to take any of the actions
described in clauses (i) through (xix) of this Section 4.2(b).
(c) Except as contemplated by this Agreement or as set forth
on Schedule 4.2(c) of the Parent Disclosure Letter, during the Pre-Closing
Period, neither Parent nor Merger Sub shall, nor shall they permit any of the
AngioDynamics Corporations, without the prior written consent of the Company
(the granting or withholding of such consent not to be unreasonably delayed,
withheld or conditioned) to:
(i) declare, accrue, set aside or pay any dividend
or make any other distribution in respect of any shares of capital stock or
repurchase, redeem or otherwise reacquire any shares of capital stock or other
securities other than dividends paid by one AngioDynamics Corporation to
another AngioDynamics Corporation;
(ii) sell, issue, grant or authorize the issuance or
grant of (A) any capital stock, other security (including the sale, transfer or
grant of any treasury shares) or any obligation convertible or exchangeable for
capital stock or any other security of any of the AngioDynamics Corporations or
(B) any Parent Stock Right, except that prior to the Effective Time, (1) Parent
may issue Parent Common Stock (and corresponding rights under the Parent Rights
Agreement) upon the valid exercise of Parent Stock Rights outstanding as of the
date of this Agreement, (2) Parent may grant options to purchase shares of
Parent Common Stock at fair market value in the ordinary course of business
consistent with prior practice and in accordance with existing Parent Stock
Option Plans to employees, directors and consultants of Parent or any of its
affiliates (and the exercise of those options) in an amount not to exceed the
number of options set forth on Schedule 4.2(c)(ii) of the Parent Disclosure
Letter, and (3) Parent may issue shares of Parent Common Stock (and
corresponding rights under the Parent Rights Agreement) to participants in the
Parent ESPP consistent with the terms thereof;
(iii) amend or permit the adoption of any amendment
to the Parent Organization Documents, or effect a recapitalization,
reclassification of shares, stock split, reverse stock split or similar
transaction;
(iv) acquire or agree to acquire, by merging or
consolidating with, by purchasing an equity interest in or a portion of the
assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof, or
otherwise acquire or agree to acquire any assets of any other Person, except
for the purchase of assets from suppliers or vendors in the ordinary course of
business consistent with prior practice;
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(v) sell, lease, exchange, mortgage, pledge,
transfer or otherwise subject to any Encumbrance or dispose of any of its
material assets, except for sales, dispositions or transfers in the ordinary
course of business consistent with prior practice;
(vi) change any of its methods of accounting or
accounting practices in any respect, except as required by GAAP;
(vii) take, agree to take, or omit to take any
action which would cause the conditions set forth in Section 6 of this
Agreement not to be able to be satisfied prior to the Termination Date or which
would reasonably be expected to prevent, materially delay or impede the
consummation of the Merger or the other transactions contemplated by this
Agreement; or
(viii) commence or settle any material Legal
Proceeding other than in the ordinary course consistent with prior practice; or
(ix) agree or commit to take any of the actions
described in clauses (i) through (viii) of this Section 4.2(c).
4.3 NO SOLICITATION BY THE COMPANY.
(a) During the Pre-Closing Period, the Company shall not,
directly or indirectly, and shall not, directly or indirectly, authorize or
permit any of the other Acquired Corporations or any Representative of any of
the Acquired Corporations to, (i) solicit, encourage, initiate or seek the
making, submission or announcement of any Company Acquisition Proposal, (ii)
furnish any information regarding any of the Acquired Corporations to any
Person (other than Parent or Merger Sub) in connection with or in response to a
Company Acquisition Proposal or any similar inquiry, (iii) engage or
participate in any discussions or negotiations with any Person (other than
Parent or Merger Sub) with respect to any Company Acquisition Proposal or any
similar inquiry, (iv) approve, endorse or recommend any Company Acquisition
Proposal, or (v) enter into any letter of intent or similar document or any
Contract contemplating or otherwise relating to any Company Acquisition
Transaction; provided, however, that this Section 4.3 shall not prohibit (A)
the Company, or the Board of Directors of the Company, prior to the approval of
this Agreement by the Company Stockholders, from furnishing nonpublic
information regarding the Acquired Corporations to, or entering into or
participating in discussions or negotiations with, any Person in response to an
unsolicited, bona fide written Company Acquisition Proposal that the Board of
Directors of the Company concludes in good faith, after consultation with its
financial advisors, would reasonably be expected to result in a Company
Superior Offer if (1) none of the Acquired Corporations or any Representative
of any of the Acquired Corporations shall have violated any of the restrictions
set forth in this Section 4.3(a) in connection with the receipt of such Company
Acquisition Proposal, (2) the Board of Directors of the Company concludes in
good faith, after consultation with its outside legal counsel, that such action
with respect to such Company Acquisition Proposal is required to comply with
the fiduciary duties of the Board of Directors of the Company to the Company
Stockholders under applicable Legal Requirements, (3) the Company gives to
Parent the notice required by Section 4.3(b), and (4) the Company furnishes any
information provided to the maker of the Company Acquisition Proposal only
pursuant to a confidentiality agreement between the Company and such Person on
substantially the same terms as the Confidentiality Agreement, and such
furnished information is delivered to Parent at substantially the same time (to
the extent such information has not been previously furnished by the Company to
Parent); or (B) subject to the obligation of the Company and the Company's
Board of Directors not to withhold, withdraw or modify its recommendation
except as expressly set forth in Section 4.3(d), the Company from complying
with Rules 14d-9 and 14e-2 promulgated under the Exchange Act with regard to
any Company Acquisition Proposal.
52
(b) The Company shall promptly, and in no event later than
twenty-four (24) hours after its receipt of any Company Acquisition Proposal or
similar inquiry, or any request for nonpublic information relating to any of
the Acquired Corporations in connection with a Company Acquisition Proposal or
similar inquiry, advise Parent orally and in writing of such Company
Acquisition Proposal, inquiry or request (including providing the identity of
the Person making or submitting such Company Acquisition Proposal, inquiry or
request, and a summary of the material terms thereof, if the Company
Acquisition Proposal is not in writing, or a copy of the Company Acquisition
Proposal and any related draft agreements if it is in writing) that is made or
submitted by any Person during the Pre-Closing Period. The Company shall keep
Parent informed in all material respects on a prompt basis with respect to the
status of any such Company Acquisition Proposal, inquiry or request and any
material modification or proposed material modification thereto (and in no
event later than twenty-four (24) hours of any request, material modification
or proposed material modification thereto).
(c) Upon the execution of this Agreement, the Company shall
immediately cease and shall cause to be terminated any discussions existing as
of the date of this Agreement between the Company or any Representative of the
Company and any Person (other than Parent) that relate to any Company
Acquisition Proposal.
(d) Notwithstanding anything in this Agreement to the
contrary, the Board of Directors of the Company may at any time prior to
receipt of the approval of the Company Stockholders of this Agreement,
withhold, withdraw or modify the Company Recommendation in a manner adverse to
Parent in respect of a Company Acquisition Transaction if: (i) an unsolicited,
bona fide written offer is made to the Company by a third party for a Company
Acquisition Transaction, and such offer is not withdrawn; (ii) the Company's
Board of Directors determines in good faith after consultation with its
financial advisors that such offer constitutes a Company Superior Offer; (iii)
following consultation with outside legal counsel, the Company's Board of
Directors determines that the withholding, withdrawal or modification of the
Company Recommendation is required to comply with the fiduciary duties of the
Board of Directors of Company to the Company Stockholders under applicable
Legal Requirements; (iv) the Company Recommendation is not withheld, withdrawn
or modified in a manner adverse to Parent at any time prior to four business
days after Parent receives written notice from the Company confirming that the
Company's Board of Directors has determined that such offer is a Company
Superior Offer; and (v) at the end of such four business day period, after
taking into account any adjustment or modification of the terms of this
Agreement proposed by Parent (and any adjustment or modification of the terms
of such Company Acquisition Proposal), the Board of Directors of the Company
again makes the determination in good faith after consultation with its outside
legal counsel
53
and financial advisors that such offer is a Company Superior Offer and that the
withholding, withdrawal or modification of the Company Recommendation is
required to comply with the fiduciary duties of the Board of Directors of the
Company to the stockholders of the Company under applicable Delaware law.
Notwithstanding anything in this Agreement to the contrary, the Board of
Directors of the Company may at any time prior to receipt of the approval of
the Company's stockholders of this Agreement, withhold, withdraw or modify the
Company Recommendation in a manner adverse to Parent other than in respect of a
Company Acquisition Transaction if: (i) following consultation with outside
legal counsel, the Company's Board of Directors determines in good faith that
the withdrawal or modification of such Company Recommendation is required to
comply with the fiduciary duties of the Board of Directors of Company to the
stockholders of the Company under applicable Legal Requirements; (ii) the
Company Recommendation is not withdrawn or modified in a manner adverse to
Parent at any time prior to four business days after Parent receives written
notice from the Company confirming that the Company's Board of Directors has
determined to withdraw or modify the Company Recommendation and specifying the
reasons therefor, and (iii) at the end of such four business day period, after
taking into account any adjustment or modification of the terms of this
Agreement proposed by Parent, the Board of Directors of the Company again makes
the determination in good faith after consultation with its outside legal
counsel and financial advisors that the withdrawal or modification of such
Company Recommendation is required to comply with the fiduciary duties of the
Board of Directors of the Company to the stockholders of the Company under
applicable Legal Requirements. The Board of Directors of the Company may not
withhold, withdraw or modify the Company Recommendation in a manner adverse to
Parent except in compliance in all respects with this Section 4.3(d).
(e) Notwithstanding anything to the contrary contained in
this Agreement, (i) the obligation of the Company to call, give notice of,
convene and hold the Company Stockholders' Meeting and to hold the vote of the
Company Stockholders on the approval of the Merger and the approval and
adoption of this Agreement at the Company Stockholders' Meeting shall not be
limited or otherwise affected by the commencement, disclosure, announcement or
submission to it of any Company Acquisition Proposal (whether or not a Company
Superior Offer), or by any change of the Company Recommendation and (ii) in any
case in which the Company withholds or withdraws the Company Recommendation
pursuant to Section 4.3(d), the Company shall nevertheless submit this
Agreement and the Merger to a vote of the Company Stockholders as permitted by
Section 146 of the DGCL.
SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES
5.1 REGISTRATION STATEMENT AND PROXY STATEMENT FOR STOCKHOLDER
APPROVAL.
(a) As soon as practicable following the execution of this
Agreement, Parent and the Company shall jointly prepare, and Parent shall file
with the SEC, a registration statement on Form S-4 consisting of (i) a proxy
statement of the Company in connection with the Company Stockholders' Meeting
complying with applicable Legal Requirements (the "Company Proxy Statement"),
(ii) a proxy statement of Parent in connection with the Parent Stockholders'
Meeting and complying with applicable Legal Requirements (the "Parent Proxy
Statement") and (iii) a prospectus relating to the Parent Common Stock to be
offered and sold pursuant to this Agreement in the Merger (such registration
statement, together with the amendments and supplements thereto being the
"Registration Statement"). Parent shall use commercially reasonable efforts to
have the Registration Statement declared effective under the Securities Act as
promptly as practicable after its filing. The Company will use commercially
reasonable efforts to cause the Company Proxy Statement to be mailed to the
Company Stockholders and Parent will use commercially reasonable efforts to
cause the Parent Proxy Statement to be mailed to Parent's stockholders, as
promptly as practicable after the Registration Statement is declared effective
under the Securities Act. Parent shall also take any action required to be
taken under any applicable state securities laws and other applicable Legal
Requirements in connection with the issuance of Parent Common Stock pursuant to
this Agreement, and each party shall furnish all information concerning the
Company, Parent and the holders of capital stock of the Company and Parent, as
applicable, as may be reasonably requested by the other party in connection
with any such action and the preparation, filing and distribution of the
Company Proxy Statement and Parent Proxy Statement. No filing of, or amendment
or supplement to, or correspondence to the SEC or its staff with respect to,
the Registration Statement or Parent Proxy Statement will be made by Parent, or
with respect to the Company Proxy Statement will be made by the Company,
without providing the other party a reasonable opportunity to review and
comment thereon. Parent will advise the
54
Company, promptly after it receives notice thereof, of the time when the
Registration Statement has become effective or any supplement or amendment has
been filed, the issuance of any stop order, the suspension of the qualification
of the Parent Common Stock issuable in connection with the Merger for offering
or sale in any jurisdiction, or any request by the SEC for amendment of the
Registration Statement or comments thereon and responses thereto or requests by
the SEC for additional information. The Company will advise Parent, promptly
after it receives notice thereof, of any request by the SEC for the amendment
of the Company Proxy Statement or comments thereon and responses thereto or
requests by the SEC for additional information. Parent will advise the Company,
promptly after it receives notice thereof, of any request by the SEC for the
amendment of the Registration Statement, the Parent Proxy Statement or the
Company Proxy Statement or comments thereon and responses thereto or requests
by the SEC for additional information relating thereto. If at any time prior to
the Effective Time any information relating to the Company or Parent, or any of
their respective affiliates, officers or directors, is discovered by the
Company or Parent which should be set forth in an amendment or supplement to
either the Registration Statement, the Company Proxy Statement or the Parent
Proxy Statement, so that any of such documents would not include any
misstatement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading, the party which discovers such information shall
promptly notify the other parties hereto and an appropriate amendment or
supplement describing such information shall be promptly filed with the SEC,
after the other party or parties have had a reasonable opportunity to review
and comment thereon, and, to the extent required by applicable Legal
Requirements, disseminated to the stockholders of the Company or the
stockholders of Parent, as the case may be.
(b) The Company shall, and shall cause its Subsidiaries, and
their respective officers, employees, consultants and advisors, including legal
and accounting advisors of the Company and its Subsidiaries, to cooperate in
connection with the filing of the Registration Statement as may be reasonably
requested. Such cooperation by the Company shall include, at the reasonable
request of Parent, (i) (x) preparing, financial statements, pro forma
statements and other financial data and pertinent information of the type
required by Regulation S-X and Regulation S-K under the Securities Act and of
the type and form customarily included in registration statements and (y)
delivery of audited and unaudited consolidated financial statements of the
Company and its consolidated subsidiaries for all periods required (ii) using
commercially reasonable efforts to obtain customary accountants' comfort
letters, consents, legal opinions, survey and title insurance as requested by
the Parent along with such assistance and cooperation from such independent
accountants and other professional advisors as reasonably requested by Parent;
and (iii) otherwise reasonably cooperating in connection with the preparation
of the Registration Statement.
5.2 COMPANY SHAREHOLDERS' MEETING AND PARENT STOCKHOLDERS'
MEETING.
(a) The Company shall take all action necessary under all
applicable Legal Requirements to call, give notice of and hold a meeting of the
holders of Company Common Stock to vote on a proposal to adopt this Agreement
in accordance with the Company Organization Documents and the DGCL (the
"Company Stockholders' Meeting"). The Company Stockholders' Meeting shall be
held as soon as reasonably practicable after the Registration Statement is
declared effective under the Securities Act. The Company and Parent shall use
commercially reasonable efforts to hold the Company Stockholders' Meeting and
the Parent's Stockholder Meeting on the same day. The Company shall use
commercially reasonable efforts to take all actions necessary or advisable to
solicit proxies in favor of this Agreement and shall ensure that all proxies
solicited in connection with the Company Stockholders' Meeting are solicited in
compliance with all applicable Legal Requirements. Once the Company
Stockholders' Meeting has been called and noticed, the Company shall not
postpone or adjourn the Company Stockholders' Meeting (other than for the
absence of a quorum) without the consent of Parent.
(b) Subject to Section 4.3(d), the Company Proxy Statement
shall include the Company Recommendation, and the Company Recommendation shall
not be withdrawn or modified in a manner adverse to Parent, and no resolution
by the Board of Directors of the Company or any committee thereof to withdraw
or modify the Company Recommendation in a manner adverse to Parent shall be
adopted or proposed.
55
(c) The Company and Parent shall cooperate with one another
(i) in connection with the preparation of the Company Proxy Statement, the
Parent Proxy Statement and the Registration Statement pursuant to Section
5.1(b), (ii) in determining whether any action by or in respect of, or filing
with, any Governmental Body is required, or any actions, consents, approvals or
waivers are required to be obtained from parties to any material contracts, in
connection with the consummation of the transactions contemplated by this
Agreement and (iii) in seeking any such actions, consents, approvals or waivers
or making any such filings, furnishing information required in connection
therewith or with the Company Proxy Statement, the Parent Proxy Statement and
the Registration Statement and seeking timely to complete or obtain any such
actions, consents, approvals or waivers.
(d) Parent shall take all action necessary under all
applicable Legal Requirements to call, give notice of and hold a meeting of the
holders of Parent Common Stock to vote on a proposal to approve the issuance of
Parent Common Stock pursuant to this Agreement (the "Parent Stockholders'
Meeting"). The Parent Stockholders' Meeting shall be held as soon as reasonably
practicable after the Registration Statement is declared effective under the
Securities Act. Parent shall use commercially reasonable efforts to take all
actions necessary or advisable to solicit proxies in favor of the issuance of
Parent Common Stock and shall ensure that all proxies solicited in connection
with the Parent Stockholders' Meeting are solicited in compliance with all
applicable Legal Requirements. Once the Parent Stockholders' Meeting has been
called and noticed, Parent shall not postpone or adjourn the Parent
Stockholders' Meeting (other than for the absence of a quorum) without the
consent of the Company.
(e) The Parent Proxy Statement shall include the Parent
Recommendation, and the Parent Recommendation shall not be withdrawn or
modified in a manner adverse to the Company, and no resolution by the Board of
Directors of Parent or any committee thereof to withdraw or modify the Parent
Recommendation in a manner adverse to the Company shall be adopted or proposed.
5.3 REGULATORY APPROVALS
(a) As soon as may be reasonably practicable, but in no event
later than ten (10) business days after the date hereof, the Company and Parent
each shall file with the United States Federal Trade Commission (the "FTC") and
the Antitrust Division of the United States Department of Justice ("DOJ")
Notification and Report Forms relating to the transactions contemplated herein
to the extent any such filing is required by the HSR Act. The Company and
Parent each shall each use commercially reasonable efforts to obtain early
termination of any waiting period under HSR and Company and Parent shall each
promptly (a) supply the other with any information which may be required in
order to effectuate such filings and (b) supply any additional information
which reasonably may be required by the FTC or the DOJ.
(b) Each of the Company and Parent shall use its commercially
reasonable efforts to file, as soon as practicable after the date of this
Agreement, all other notices, reports and other documents required to be filed
with any Governmental Body with respect to the Merger and the other
transactions contemplated by this Agreement (including pre-merger notification
forms required by the merger notification or control laws and regulations of
any applicable foreign jurisdiction, as agreed to by the parties). Each of
Parent and the Company shall promptly (a) supply the other with any information
which may be required in order to effectuate such filings and (b) supply any
additional information which reasonably may be required by a Governmental Body
of any jurisdiction and which the parties may reasonably deem appropriate.
(c) Each of the Company and Parent shall (i) give the other
party prompt notice of the commencement or threat of commencement of any Legal
Proceeding by or before any Governmental Body with respect to the Merger or any
of the other transactions contemplated by this Agreement, (ii)
56
keep the other party informed as to the status of any such Legal Proceeding or
threat, and (iii) promptly inform the other party of any communication to or
from any Governmental Body regarding the Merger.
5.4 COMPANY STOCK OPTIONS AND WARRANTS
(a) Effective as of the Effective Time, the Company Stock
Option Plans and each Company Option that is outstanding immediately prior to
the Effective Time, whether or not then exercisable or vested, shall be assumed
by Parent. As of the Effective Time, each Company Option shall cease to
represent a right to acquire shares of Company Common Stock and shall be
converted automatically into a right to acquire cash and shares of Parent
Common Stock in an amount, at an exercise price and subject to such terms and
conditions determined as provided below. Subject to the accelerated vesting of
Company Options as described in Schedule 2.3(b) of the Company Disclosure
Letter, each Company Option so assumed by Parent shall be subject to, and
exercisable and vested upon, substantially the same terms and conditions as
under the applicable Company Stock Option Plans, including the maximum term of
the Company Option and the provisions regarding termination of the Company
Option following a termination of employment, except that (i) each assumed
Company Option shall be exercisable for, and represent the right to acquire (A)
that number of shares of Parent Common Stock (rounded down to the nearest whole
share) equal to (1) the number of shares of Company Common Stock subject to
such Company Option immediately prior to the Effective Time multiplied by (2)
the Per Share Stock Merger Consideration, plus (B) an amount of cash, without
interest, equal to (1) the number of shares of Company Common Stock subject to
such Company Option immediately prior to the Effective Time multiplied by (2)
the Per Share Cash Merger Consideration, if any; and (ii) the exercise price
per share of Parent Common Stock subject to each assumed Company Option (and
any associated cash consideration) shall be an amount equal to (1) the exercise
price per share of Company Common Stock subject to such Company Option in
effect immediately prior to the Effective Time divided by (2) the sum of the
Per Share Stock Merger Consideration and the Stock Equivalent Cash
Consideration; and (iii) references under the Company Option to a termination
of employment shall mean, on and after the Effective Time, a termination of
employment with the Surviving Entity or any AngioDynamics Corporation.
(b) The Company's Board of Directors, or its duly appointed
committee to administer the Company Stock Option Plans, shall adopt resolutions
and the Company and the Company's Board of Directors shall take all such other
actions as may be necessary or appropriate, effective contingent upon the
consummation of the transactions contemplated hereby, immediately prior to the
Closing Date, to provide for the application of Section 5.4(a) to the Company
Stock Option Plans and the Company Options outstanding as of immediately prior
to the Effective Time, including, without limitation, obtaining all necessary
consents.
(c) The conversion of Company Options provided for in Section
5.4(a) shall be effected in a manner consistent with Section 424 of the Code.
(d) As of the Effective Time, Parent shall, to the full
extent permitted by applicable law, assume all of the Company Warrants
identified on Schedule 2.3(c) of the Company Disclosure Letter and outstanding
immediately prior to the Effective Time. Each Company Warrant shall, to the
full extent permitted by applicable law, be assumed by Parent in such a manner
that it shall be exercisable upon the same terms and conditions as under each
Company Warrant pursuant to which it was issued; provided that (i) each Company
Warrant so assumed shall be exercisable for, and represent the right to acquire
(A) that number of shares of Parent Common Stock (rounded down to the nearest
whole share) equal to (1) the number of shares of Company Common Stock subject
to such Company Warrant immediately prior to the Effective Time multiplied by
(2) the Per Share Stock Merger Consideration, plus (B) an amount of cash equal
to (1) the number of shares of Company Common Stock subject to such Company
Warrant
57
immediately prior to the Effective Time multiplied by (2) the Per Share Cash
Merger Consideration, if any; and (ii) the exercise price per share of Parent
Common Stock subject to each assumed Company Warrant (and any associated cash
consideration) shall be an amount equal to (1) the exercise price per share of
Company Common Stock subject to such Company Warrant in effect immediately
prior to the Effective Time divided by (2) the sum of the Per Share Stock
Merger Consideration and the Stock Equivalent Cash Consideration.
(e) As of the Effective Time, the Company shall take all
actions necessary or appropriate as required pursuant to the terms of the
Company ESPP so that each Purchase Period and Offering Period (each as defined
in the Company ESPP) then in progress under the ESPP shall terminate no later
than the Effective Time and each option thereunder shall be automatically
exercised on or prior thereto.
5.5 EMPLOYEE BENEFITS
(a) Welfare Plans. Effective as of the Effective Time and for
a transition period ending on November 27, 2007 (the "Employee Transition
Period"), or if sooner, upon the applicable Acquired Corporations employee's
termination of employment, the Surviving Entity shall continue to provide
welfare benefits for the benefit of the employees of the Acquired Corporations
that are no less favorable in the aggregate to the benefits provided to such
employees under the Company Welfare Plans immediately prior to the Effective
Time. The transition period may be longer than the period specified above to
the extent that the Parent, in its sole discretion, determines that a longer
period is necessary to effect a reasonable transition for such employees.
Parent and/or the Surviving Entity shall adopt transition rules to prevent any
loss of credit for participant contributions, payments or co-payments in a
manner consistent with Section 5.5(e) of this Agreement.
(b) 401(k) Plan. Unless Parent has notified the Company no
later than three days prior to the Effective Time that the Company 401(k) Plan
should not be terminated, the Company will take all actions required to
terminate the Company 401(k) Plan so that the 401(k) Plan will be terminated no
later than immediately before the Effective Time. If the Company 401(k) Plan is
terminated prior to the Effective Time, Parent shall use its commercially
reasonable efforts to cause the Parent 401(k) Plan to be amended to permit the
employees who were eligible to participate in the Company 401(k) Plan
immediately before the Effective Time to be eligible to participate in the
Parent 401(k) Plan as of immediately following the Effective Time so that there
will be no interruption in the rights of such employees to make pre-tax
contributions under a Code Section 401(k) plan. All employees of the Acquired
Corporations who participate in the Company 401(k) Plan as of immediately
before the Effective Time shall be eligible for any matching contribution of
Parent to the same extent that similarly situated employees of Parent are
entitled, subject to the provisions of Section 5.5(e).
(c) Stock-Based Plans. Following the Effective Time,
employees of the Acquired Corporations will be eligible to receive stock
options and other stock-based awards under the stock-based plans maintained by
Parent and/or the Surviving Entity on substantially the same basis as similarly
situated Parent employees.
(d) Employment Policies and Practices. During the Employee
Transition Period, Parent or the Surviving Entity will continue to maintain
policies and practices relating to vacation time and personal time off for
non-exempt employees that are no less favorable in the aggregate to those of
the Acquired Corporations that were applicable to the employees of the Acquired
Corporations immediately prior to the Effective Time. The Merger shall not
adversely affect any employee's accrual of, or right to take, any accrued but
unused personal vacation time to which such employee is entitled pursuant to
the personal or vacation policies applicable to such employee immediately prior
to the Effective Time.
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(e) Service and Vesting Credit. Parent and/or Surviving
Entity will treat an individual's employment as an employee by the Acquired
Corporations the same as employment as an employee by Parent and/or Surviving
Entity for purposes of satisfying vesting and eligibility to participate
requirements under any Parent and/or Surviving Entity benefit arrangement in
which such employee participates following the Effective Time, but in no event
will such treatment result in a duplication of benefits for any employee. In
addition, Parent shall, to the extent permitted by any benefit plan or
underlying insurance or service provider applicable to employees of the
Acquired Corporations, use commercially reasonable efforts to waive, or cause
to be waived, any limitations on benefits relating to pre-existing conditions
to the same extent such limitations have been waived under any comparable
Company Employee Plan as of the Effective Time and, for the plan year that
includes the Effective Time, to recognize for purposes of annual deductible and
out-of-pocket limits under its medical and dental plans, deductible and
out-of-pocket expenses paid by employees in the calendar year in which the
Effective Time occurs.
(f) No Future Commitment. Nothing in this Agreement shall be
construed to limit any rights of Parent, the Company or the Surviving Entity to
(i) amend, modify or terminate any Company Employee Plans or any other employee
benefit plan, program, policy, agreement or arrangement or (ii) terminate the
employment of any employee of the any of the Acquired Corporations at any time
for any reason.
(g) Treatment of Certain Options. Parent and the Surviving
Entity agree and acknowledge and will take all action necessary to provide that
if the employment of any employee of an Acquired Corporation is terminated by
Parent or one of its affiliates for any reason other than cause, as determined
in good faith by Parent, on or prior to the six-month anniversary of the
Closing Date, each Company Option outstanding as of the date thereof held by
such terminating employee shall become exercisable and vested with respect to
100% of the shares underlying such Company Options and shall remain exercisable
for a period of at least 90 days from the date the employment of such employee
of an Acquired Corporation is actually terminated (but in no event shall any
Company Option remain exercisable later than the expiration of its term).
5.6 INDEMNIFICATION OF OFFICERS AND DIRECTORS.
(a) From and after the Effective Time, Parent shall cause the
Surviving Entity to honor all rights to indemnification existing as of the date
of this Agreement in favor of (i) current and former directors, officers and
employees of any Acquired Corporation (the "Indemnified Persons") and (ii)
those Persons who have indemnification agreements with any Acquired Corporation
as of the date of this Agreement, for acts and omissions occurring prior to or
at the Effective Time, as provided in the Company Organizational Documents and
under each indemnification agreement with the Indemnified Persons to which any
Acquired Corporation is a party (as each is in effect as of the date of this
Agreement), for a period of six years from the Effective Time. The Limited
Liability Operating Agreement of the Surviving Entity will contain provisions
with respect to exculpation and indemnification that are at least as favorable
to those contained in the Company Organizational Documents, which provisions
will not be amended, repealed or otherwise modified for a period of six years
from the Effective Time in any manner that would adversely affect the rights
thereunder of Indemnified Persons, unless such modification is required by
applicable Legal Requirements.
(b) For a period of six years from the Effective Time, Parent
shall cause the Surviving Entity to provide for officers' and directors'
liability insurance or a "tail" policy for the benefit of each Person (other
than the Company) named as an insured party in any officers' and directors'
liability insurance policy held by an Acquired Corporation as of the date of
this Agreement (the "Insured Parties"), on terms with respect to such coverage
no less favorable than those of such policy in effect on
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the date of this Agreement, covering only those acts or omissions occurring
prior to or at the Effective Time; provided, however, that Parent and the
Surviving Entity may substitute therefor policies issued by an insurance
carrier with the same or better credit rating as the Company's current
insurance carrier with at least the same coverage and amounts and containing
terms and conditions that are no less advantageous to the covered persons than
the Company's existing policies; provided, further that neither Parent nor the
Surviving Entity shall be required to maintain such policies to the extent the
cost of maintaining the same shall increase by more than 250% from the cost
most recently incurred by the Company for maintaining the same (the "Current
D&O Insurance Cost"), in which case Parent or the Surviving Entity shall
maintain as much comparable insurance as can be obtained for such amount. Prior
to the Effective Time, the Company shall take all reasonable actions requested
by Parent to maintain such directors and officers liability insurance. To the
extent that the Company can obtain, for an aggregate premium in an amount
acceptable to Parent, a six-year "tail" prepaid policy on terms and conditions,
in the aggregate, no less advantageous to the Insured Parties, or any other
Person entitled to the benefit of Section 5.6(a) and Section 5.6(b) of this
Agreement, as applicable, than the existing officers' and directors' liability
insurance maintained by the Company, covering, without limitation, the
transactions contemplated hereby, then Parent and the Surviving Entity shall
satisfy their obligations under the preceding sentence of this Section 5.6(b)
by the Company (with the consent of Parent, the granting or withholding of such
consent not to be unreasonably delayed, withheld or conditioned) purchasing
such "tail" prepaid policy immediately prior to the Effective Time. If such
"tail" prepaid policy is obtained by the Company prior to the Effective Time
(with the consent of Parent), Parent shall cause the Surviving Entity after the
Effective Time to maintain such policy in full force and effect, for its full
term, and to continue to honor its respective obligations thereunder. This
Section 5.6 shall survive the consummation of the Merger.
(c) The terms of this Section 5.6 are intended to be for the
benefit of and shall be enforceable by the Indemnified Persons and the Insured
Parties and their heirs and personal representatives and shall be binding on
Parent and the Surviving Entity and their successors and assigns.
5.7 ADDITIONAL AGREEMENTS.
Each of Parent and the Company shall use its commercially
reasonable efforts to take, or cause to be taken, all actions necessary to
carry out the intent and purposes of this Agreement and to consummate the
Merger and make effective the other transactions contemplated by this
Agreement. Without limiting the generality of the foregoing, each party to this
Agreement (i) shall cooperate fully with the other party, shall execute and
deliver such further documents, certificates, agreements and instruments and
shall take such other actions as may be reasonably requested by the other party
to evidence or reflect the transactions contemplated by this Agreement
(including the execution and delivery of all documents, certificates,
agreements and instruments reasonably necessary for all filings hereunder),
(ii) give all notices (if any) required to be made and given by such party in
connection with the Merger and the other transactions contemplated by this
Agreement; (iii) shall use its commercially reasonable efforts to obtain each
Consent (if any) required to be obtained (pursuant to any applicable Legal
Requirement or Contract, or otherwise) by such party in connection with the
Merger or any of the other transactions contemplated by this Agreement; and
(iv) shall use its commercially reasonable efforts to lift any restraint,
injunction or other legal bar to the Merger; provided, however, that Parent or
the Acquired Corporations shall not be required to sell, divest or otherwise
dispose of any material assets of the Company or any of the Acquired
Corporations or any assets of Parent or any of the AngioDynamics Corporations.
Each of the Company and Parent shall promptly deliver to the other party a copy
of each such filing made, each such notice given and each such Consent obtained
by it during the Pre-Closing Period.
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5.8 PUBLIC DISCLOSURE.
The initial press release relating to this Agreement shall be
a joint press release and thereafter Parent and the Company shall consult with
each other and shall agree upon the text of any press release or public
statement before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated hereunder and shall
not issue any such press release or make any such public statement prior to
such consultation and agreement, except as may be required by Legal
Requirements or any listing agreement with, or the rules of the Nasdaq, in
which case commercially reasonable efforts to consult with the other party
shall be made prior to such release or public statement; provided, however,
that no such consultation shall be required if, prior to the date of such
release or public statement, either party shall have withheld, withdrawn,
amended or modified the Company Recommendation or the Parent Recommendation, as
the case may be. No provision of this Agreement shall prohibit the Company from
issuing any press release or public statement in the event it withholds,
withdraws or modifies the Company Recommendation in compliance in all respects
with the provisions of Section 4.3 of this Agreement.
5.9 TAX MATTERS.
At or prior to the filing of the Registration Statement, the
Company, Merger Sub and Parent shall execute and deliver to Heller Ehrman LLP,
and to Skadden, Arps, Slate, Meagher & Flom LLP, tax representation letters in
customary form satisfactory to such counsel in connection with such counsel's
rendering of the opinions of counsel referred to in Sections 6.2(e) and 6.3(f)
of this Agreement. Parent, Merger Sub and the Company shall each confirm to
Heller Ehrman LLP, and to Skadden, Arps, Slate, Meagher & Flom LLP, on such
dates as shall be reasonably requested by Heller Ehrman LLP, and by Skadden,
Arps, Slate, Meagher & Flom LLP, the accuracy and completeness of the tax
representation letters delivered pursuant to the immediately preceding sentence
and shall execute such letters upon request. In rendering such opinions, each
of such counsel shall be entitled to rely on the tax representation letters
referred to in this Section 5.9.
5.10 RESIGNATION OF DIRECTORS.
To the extent requested by Parent, the Company shall deliver
to Parent upon the execution and delivery of this Agreement the resignations of
the directors of the Acquired Corporations from the boards of directors of the
Acquired Corporations, effective as of the Effective Time.
5.11 NASDAQ LISTING OF ADDITIONAL SHARES.
Parent shall, prior to the Closing Date and in accordance
with the requirements of Nasdaq, file with Nasdaq a Notification Form: Listing
of Additional Shares covering the shares of Parent Common Stock to be issued
pursuant to Company Stockholders pursuant to this Agreement or upon the
exercise of Company Options or Company Warrants.
5.12 TAKEOVER LAWS; RIGHTS PLANS.
(a) If any Takeover Law may become, or may purport to be,
applicable to the transactions contemplated in this Agreement, each of Parent
and the Company and the members of their respective Boards of Directors, to the
extent permissible under applicable Legal Requirements, will grant such
approvals and take such actions as are necessary so that the transactions
contemplated by this Agreement may be consummated as promptly as practicable,
and in any event prior to the Termination Date, on the terms and conditions
contemplated hereby and otherwise, to the extent permissible under
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applicable Legal Requirements, act to eliminate the effect of any Takeover Law
on any of the transactions contemplated by this Agreement.
(b) The Company shall not take any actions to (i) redeem the
Company Stock Rights associated with the Company Rights Plan, (ii) amend the
Company Rights Plan or (iii) take any action which would allow any "Person" (as
defined in the Company Rights Plan) other than Parent, Merger Sub or any
AngioDynamics Corporation to become a "Beneficial Owner" (for purposes of this
Section, as defined in the Company Rights Plan) of 15% or more of the
outstanding shares of Company Common Stock without causing a "Shares
Acquisition Date," or a "Distribution Date" (as each such term is defined in
the Company Rights Plan) to occur. The Board of Directors of the Company shall
not make a determination that Parent, Merger Sub or any of their respective
"Affiliates" or "Associates" (as such terms are defined in the Company Rights
Plan) is an "Acquiring Person" for purposes of the Company Rights Plan.
5.13 FORM S-8; SECTION 16.
(a) Parent shall file one or more registration statements on
Form S-8 or other form to the extent Form S-8 is unavailable for the shares of
Parent Common Stock issuable with respect to assumed Company Options within 10
business days following the Effective Time and shall keep any such registration
statements effective until all shares registered thereunder have been issued.
(b) Parent shall, prior to the Effective Time, cause Parent's
Board of Directors to approve the issuance of Parent equity securities
(including derivative securities) in connection with the Merger with respect to
any employees of the Company who, as a result of their relationship with
AngioDynamics as of or following the Effective Time, are subject or will become
subject to the reporting requirements of Section 16 of the Exchange Act to the
extent necessary for such issuance to be an exempt acquisition pursuant to SEC
Rule 16b-3. Prior to the Effective Time, the Board of Directors of the Company
shall approve the disposition of Company equity securities (including
derivative securities) in connection with the Merger by those directors and
officers of the Company subject to the reporting requirements of Section 16 of
the Exchange Act to the extent necessary for such disposition to be an exempt
disposition pursuant to SEC Rule 16b-3. Such actions shall be consistent with
all current applicable rules, interpretation and guidance of the SEC, including
the No-Action Letter, dated January 12, 1999, issued by the SEC to Skadden,
Arps, Slate, Meagher & Flom LLP and SEC Rule 16b-3(d) and (e).
5.14 LITIGATION.
The Company shall give Parent the opportunity to participate
in the defense of any stockholder litigation against the Company and/or its
directors relating to the transactions contemplated by this Agreement. Parent
shall give the Company the opportunity to participate in the defense of any
stockholder litigation against Parent and/or its directors relating to the
transactions contemplated by this Agreement, provided, however, that the
Company shall not enter into any settlement or compromise any such stockholder
litigation without Parent's prior written consent.
5.15 ADVICE OF CHANGES.
Each of the Company and Parent will give prompt written
notice to the other (and will subsequently keep the other informed on a current
basis of any developments related to such notice) upon its becoming aware of
the occurrence or existence of any fact, event or circumstance that (i) is
reasonably likely to result in any of the conditions set forth in Section 6 not
being able to be satisfied prior to the Termination Date or (ii) any
resignation of an employee of the Company at the director or Vice President
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level or above or that any such employee has given written notice of such
employee's intent to resign or voluntarily terminate his employment with any
Acquired Corporation.
5.16 DIRECTORS OF PARENT.
Parent will take all actions necessary to cause the Board of
Directors of Parent to fix the size of the Board of Directors of Parent
effective as of the Effective Time at nine directors and to include three
individuals who are Company directors as of the date hereof and are designated
by the Company prior to the date on which the Registration Statement is
declared effective by the SEC (which individuals shall be reasonably acceptable
to Parent's Nominating/Corporate Governance Committee). In the event that any
such individual is unwilling or unable to serve as a director of Parent, the
Company shall designate another individual who is serving as a director of the
Company as of the dater hereof and is reasonably acceptable to the Board of
Directors of Parent to serve as a director of Parent. In the event that (i) any
other individual designated to serve on the Board of Directors of Parent
immediately after the Effective Time is unwilling or unable to serve on the
Board or Directors of Parent at such time or (ii) the Company fails to
designate one or more directors in accordance with this Section 5.16, the Board
of Directors of Parent shall fill any resulting vacancy on the Board of
Directors in accordance with the Bylaws of Parent as soon as reasonably
practicable following the Effective Time. Each such director shall serve until
his or her respective successor is duly elected or appointed and qualified.
5.17 RULE 145 AFFILIATES.
The Company shall, at least 5 days prior to the mailing of
the Company Proxy Statement, deliver to Parent a list (reasonably satisfactory
to counsel for Parent), setting forth the names and addresses of all persons
who are, at the time of the Company Stockholders' Meeting, in the Company's
reasonable judgment, "affiliates" of the Acquired Corporations for purposes of
Rule 145 under the Securities Act. The Company shall furnish such information
and documents as Parent may reasonably request for the purpose of reviewing
such list. The Company shall use its commercially reasonable efforts to cause
each person who is identified as an "affiliate" in the list furnished pursuant
to this Section 5. 17 to execute a written agreement on or prior to the mailing
of the Company Proxy Statement, in the form of Exhibit B hereto.
SECTION 6. CONDITIONS TO THE MERGER
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION.
The respective obligations of the Company, Parent and Merger
Sub to consummate the Merger are subject to the satisfaction or, to the extent
permitted by Legal Requirements, the waiver by each party on or prior to the
Effective Time of each of the following conditions:
(a) This Agreement shall have been adopted by the requisite
vote of the Company Stockholders. The issuance of shares of Parent Common Stock
pursuant to this Agreement (including upon the exercise of Company Warrants and
Company Options assumed by Parent pursuant to this Agreement) shall have been
approved by the requisite vote of the Parent Stockholders;
(b) No provision of any applicable Legal Requirements and no
Order shall be in effect that prohibits the consummation of the Merger or the
other transactions contemplated by this Agreement, provided, however, that each
of Parent, Merger Sub and the Company shall have used its commercially
reasonable efforts to (i) prevent the application of any Legal Requirement and
(ii) prevent the entry of any Order that prohibits the consummation of the
Merger or the other transactions contemplated by this Agreement;
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(c) The Registration Statement shall have become effective
under the Securities Act and no stop order suspending the use of the
Registration Statement, the Company Proxy Statement or the Parent Proxy
Statement shall have been issued by the SEC nor shall proceedings seeking a
stop order have been initiated by the SEC;
(d) Parent shall have filed with Nasdaq the Notification
Form: Listing of Additional Shares with respect to the shares of Parent Common
Stock issued or issuable pursuant to this Agreement and such shares of Parent
Common Stock shall have been approved and authorized for listing on the Nasdaq,
subject to official notice of issuance; and
(e) Any waiting period (and any extension thereof) applicable
to the Merger under HSR shall have been terminated or shall have expired.
6.2 ADDITIONAL CONDITIONS TO PARENT'S AND MERGER SUB'S
OBLIGATIONS.
The respective obligations of Parent and Merger Sub to
consummate the Merger are subject to the satisfaction or, to the extent
permitted by Legal Requirements, the waiver by Parent and Merger Sub on or
prior to the Effective Time of each of the following conditions:
(a) The Company shall have performed or complied in all
material respects with all of its covenants, obligations or agreements required
to be performed or complied with under the Agreement prior to the Effective
Time;
(b) The representations and warranties of the Company
contained in the first two sentences of Section 2.3(a), the first sentence of
Section 2.3(b) and the first sentence of Section 2.3(c) shall be true and
correct in all respects as of the date of this Agreement; provided, however,
that this condition shall be deemed satisfied to the extent that, after giving
effect to any failure of such representation to be true and correct, the value
of the aggregate Merger Consideration (as if all outstanding options and
warrants had been exercised as of such date) that would be payable pursuant to
Section 1.5(a) hereof in respect of all shares of Company Common Stock actually
issued and outstanding as of the date hereof (and all Company Options and
Company Warrants outstanding as of the date hereof) would not exceed the
aggregate Merger Consideration (assuming the exercise of such outstanding
Company Options and Company Warrants and taking into account the receipt of the
exercise prices associated therewith) that would have been payable by Parent
had such representations been true and correct in all respects by more than
$2,200,000; provided; however, that if this condition is not satisfied, Parent
will negotiate in good faith with the Company to adjust the Per Share Stock
Merger Consideration and the Per Share Cash Merger Consideration to the extent
of such breach. The representations and warranties of the Company (other than
those listed in the previous sentence) contained in this Agreement not
qualified by Material Adverse Effect shall be accurate, except where the
failure to be accurate would not, in the aggregate, reasonably be expected to
have a Material Adverse Effect and the representations and warranties of the
Company contained in this Agreement which are qualified by Material Adverse
Effect shall be accurate, in the case of each, as of the date of this
Agreement, and on and as of the Effective Time, except, in each case, for those
representations and warranties which address matters only as of a particular
date (which (i) if not qualified by Material Adverse Effect shall remain true
and correct on and as of such particular date, except where the failure to be
accurate would not, in the aggregate, reasonably be expected to have a Material
Adverse Effect and (ii) if qualified by Material Adverse Effect shall remain
true and correct on and as of such particular date), with the same force and
effect as if made on and as of the Effective Time;
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(c) Since the Company Balance Sheet Date, there shall not
have been a Material Adverse Effect on the Acquired Corporations;
(d) Parent shall have received a certificate from an
executive officer of the Company certifying as to the matters set forth in
paragraphs (a), (b) and, (c) of this Section 6.2;
(e) Parent shall have received a legal opinion of Skadden,
Arps, Slate, Meagher & Flom LLP dated as of the Closing Date and addressed to
Parent, to the effect that the Merger will constitute a reorganization within
the meaning of Section 368 of the Code (it being understood that, in rendering
such opinion, Skadden, Arps, Slate, Meagher & Flom LLP may rely upon the tax
representation letters referred to in Section 5.9 of this Agreement). After
receipt of Parent Stockholders approval, Parent shall not waive receipt of such
tax opinion as a condition to closing unless further approval of the
stockholders of Parent is obtained with appropriate disclosure.
The foregoing conditions are for the sole benefit of Parent
and Merger Sub and may, subject to the terms of the Agreement, be waived by
Parent and Merger Sub, in whole or in part at any time and from time to time,
in the sole discretion of Parent and Merger Sub. The failure by Parent and
Merger Sub at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right and each such right shall be deemed an
ongoing right which may be asserted at any time and from time to time prior to
the Effective Time.
6.3 ADDITIONAL CONDITIONS TO THE COMPANY'S OBLIGATIONS.
The obligations of the Company to consummate the Merger are
subject to the satisfaction or, to the extent permitted by Legal Requirements,
the waiver by the Company on or prior to the Effective Time of each of the
following conditions:
(a) Parent or Merger Sub shall have performed or complied in
all material respects with all of their respective covenants, obligations or
agreements required to be performed or complied with under the Agreement prior
to the Effective Time;
(b) The representations and warranties of Parent contained in
this Agreement not qualified by Material Adverse Effect shall be accurate,
except where the failure to be accurate would not, in the aggregate, reasonably
be expected to have a Material Adverse Effect and the representations and
warranties of Parent contained in this Agreement which are qualified by
Material Adverse Effect shall be accurate, in the case of each, as of the date
of this Agreement, and on and as of the Effective Time, except, in each case,
for those representations and warranties which address matters only as of a
particular date (which (i) if not qualified by Material Adverse Effect shall
remain true and correct on and as of such particular date, except where the
failure to be accurate would not, in the aggregate, reasonably be expected to
have a Material Adverse Effect and (ii) if qualified by Material Adverse Effect
shall remain true and correct on and as of such particular date), with the same
force and effect as if made on and as of the Effective Time;
(c) Since the Parent Balance Sheet Date, there shall not have
been a Material Adverse Effect on the AngioDynamics Corporations;
(d) The Company shall have received a certificate from an
executive officer of Parent certifying as to the matters set forth in
paragraphs (a), (b) and (c) of this Section 6.3; and
(e) Parent shall have taken all actions required by Section
5.16 of this Agreement, effective as of the Effective Time.
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(f) The Company shall have received a legal opinion of Heller
Ehrman LLP dated as of the Closing Date and addressed to the Company, to the
effect that the Merger will constitute a reorganization within the meaning of
Section 368 of the Code (it being understood that, in rendering such opinion,
Heller Ehrman LLP may rely upon the tax representation letters referred to in
Section 5.9 of this Agreement). After receipt of the Company Stockholders
approval, the Company shall not waive receipt of such tax opinion as a
condition to closing unless further approval of the stockholders of the Company
is obtained with appropriate disclosure.
The foregoing conditions are for the sole benefit of the
Company and may, subject to the terms of the Agreement, be waived by the
Company, in whole or in part at any time and from time to time, in the sole
discretion of the Company. The failure by the Company at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such right and
each such right shall be deemed an ongoing right which may be asserted at any
time and from time to time prior to the Effective Time.
SECTION 7. TERMINATION
7.1 TERMINATION.
This Agreement may be terminated prior to the Effective Time,
whether before or after approval of this Agreement by the Company Stockholders:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if (i) the Merger shall
not have been consummated on or prior to the nine month anniversary of the date
hereof (the "Termination Date"); provided, however that the right to terminate
this Agreement under this Section 7.1(b)(i) shall not be available to any party
whose action or failure to act has been the cause of the failure of the Merger
to occur on or before such date and such action or failure to act constitutes a
breach of this Agreement;
(c) by either Parent or the Company if a court of competent
jurisdiction or other Governmental Body shall have issued a final and
nonappealable Order, or shall have taken any other action, having the effect of
permanently restraining, enjoining or otherwise prohibiting the Merger;
(d) by Parent, at any time prior to the Effective Time, if
any of the Company's covenants, representations or warranties contained in this
Agreement shall have been breached or, any of the Company's representations and
warranties shall have become untrue, such that any of the conditions set forth
in Section 6.2(b), Section 6.2(c) or Section 6.2(d) of this Agreement would not
be satisfied as of the time of such breach or at the time such representation
or warranty shall have become untrue, and such breach shall not have been cured
within thirty days of receipt by the Company of written notice of such breach
describing the details of such breach;
(e) by the Company, at any time prior to the Effective Time,
if any of Parent's or Merger Sub's covenants, representations or warranties
contained in this Agreement shall have been breached or, any of Parent's and
Merger Sub's representations and warranties shall have become untrue, such that
any of the conditions set forth in Section 6.3(b), Section 6.3(c) or Section
6.3(d) of this Agreement would not be satisfied as of the time of such breach
or at the time such representation or warranty shall have become untrue, and
such breach shall not have been cured within thirty days of receipt by Parent
written notice of such breach describing the details of such breach;
(f) by Parent if the Board of Directors of the Company
withholds, withdraws or modifies the Company Recommendation in a manner adverse
to Parent pursuant to Section 4.3(d);
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(g) by the Company or Parent if the required approval of the
Company Stockholders contemplated by this Agreement shall not have been
obtained by reason of the failure to hold a meeting or the failure to obtain
the required vote at the Company Stockholders' Meeting duly convened therefor
or at any adjournment thereof; provided, however, that the right to terminate
this Agreement under this Section 7.1(g) shall not be available to the Company
where the failure to hold a meeting or the failure to obtain the required
approval of the Company Stockholders shall have been caused by the action or
failure to act of the Company and such action or failure to act constitutes a
material breach by the Company of this Agreement; and
(h) by the Company or Parent if the required approval of the
stockholders of Parent contemplated by this Agreement shall not have been
obtained by reason the failure to hold a meeting or the failure to obtain the
required vote at the Parent Stockholders' Meeting duly convened therefor or at
any adjournment thereof; provided, however, that the right to terminate this
Agreement under this Section 7.1(h) shall not be available to Parent where the
failure to hold a meeting or the failure to obtain the required approval of the
stockholders of Parent shall have been caused by the action or failure to act
of Parent and such action or failure to act constitutes a material breach by
Parent of this Agreement.
7.2 EFFECT OF TERMINATION.
In the event of the termination of this Agreement as provided
in Section 7.1 of this Agreement, this Agreement shall be of no further force
or effect; provided, however, that (i) this Section 7.2, Section 7.3 and
Section 8 of this Agreement shall survive the termination of this Agreement and
shall remain in full force and effect, and (ii) the termination of this
Agreement shall not relieve any party from any liability or damages for any
intentional breach of any provision contained in this Agreement.
7.3 EXPENSES; TERMINATION FEES.
(a) Expenses. Except as set forth in this Section, fees and
expenses incurred in connection with this Agreement and the transactions
contemplated by this Agreement ("Transaction Expenses") shall be paid by the
party incurring such expenses, whether or not the Merger is consummated.
(b) Termination Fee. If this Agreement is terminated (i) by
Parent pursuant to Section 7.1(f) or (ii) by the Company or Parent pursuant to
Section 7.1(b) or Section 7.1(g) of this Agreement and prior to any such
termination, (A) any Person (other than Parent or its affiliates) shall have
made a Company Acquisition Proposal which shall have been publicly proposed by
such Person or any such Company Acquisition Proposal shall have become known to
the stockholders of the Company generally (other than as as a result of
disclosure by Parent, any of its Subsidiaries or any of their respective
Representatives) and (B) within 12 months after such termination of this
Agreement, a Company Change of Control Transaction shall have been consummated,
then the Company shall pay to Parent, in immediately available funds, a
nonrefundable fee in the amount of $8,000,000 (the "Termination Fee"). Any
Termination Fee shall be paid to Parent by the Company upon termination of this
Agreement in the case of a termination pursuant to clause (i) above and upon
the consummation of a Company Change of Control Transaction in the case of a
termination pursuant to clause (ii) above.
(c) Transfer Taxes. Any transfer fee, real estate or
otherwise, incurred in connection with this Agreement and the transactions
contemplated by this Agreement shall be paid by the Company and/or its
Subsidiaries.
67
SECTION 8. MISCELLANEOUS PROVISIONS
8.1 AMENDMENT.
This Agreement may be amended with the approval of the
respective Boards of Directors of the Company, Merger Sub and Parent at any
time (whether before or after any required approvals by the stockholders of the
Company or Parent); provided, however, that after any such required stockholder
approval has been obtained, no amendment shall be made which by applicable
Legal Requirements or the rules of the Nasdaq requires further approval of the
stockholders of either the Company or Parent without the further approval of
such stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
8.2 WAIVER.
(a) No failure on the part of any party to exercise any
power, right, privilege or remedy under this Agreement, and no delay on the
part of any party in exercising any power, right, privilege or remedy under
this Agreement, shall operate as a waiver of such power, right, privilege or
remedy; and no single or partial exercise of any such power, right, privilege
or remedy shall preclude any other or further exercise thereof or of any other
power, right, privilege or remedy.
(b) No party shall be deemed to have waived any claim arising
out of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy
is expressly set forth in a written instrument duly executed and delivered on
behalf of such party; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
8.3 NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
None of the representations, warranties or agreements
contained in this Agreement or in any certificate delivered pursuant to this
Agreement shall survive the Effective Time, except for agreements which
expressly by their terms survive the Effective Time.
8.4 ENTIRE AGREEMENT; COUNTERPARTS.
This Agreement (and the exhibits and schedules hereto)
constitutes the entire agreement among the parties hereto and supercedes all
other prior agreements and understandings, both written and oral, among or
between any of the parties hereto with respect to the subject matter hereof, it
being understood that the Confidentiality Agreement shall continue in full
force and effect until the Closing and shall survive any termination of this
Agreement. This Agreement may be executed in several counterparts, each of
which shall be deemed an original and all of which shall constitute one and the
same instrument.
8.5 APPLICABLE LAW; JURISDICTION.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to principles
of conflict of laws. The parties hereto hereby declare that it is their
intention that this Agreement shall be regarded as made under the laws of the
State of Delaware and that the laws of said State shall be applied in
interpreting its provisions in all cases where legal interpretation shall be
required. Each of the parties hereto agrees (a) that this Agreement involves at
least $100,000.00, and (b) that this Agreement has been entered into by the
parties hereto in express reliance upon 6 Del. C. ss. 2708. Each of the parties
hereto agrees that any action, suit or proceeding arising out of
68
the transactions contemplated by this Agreement (a "Proceeding") shall be
commenced and conducted exclusively in the federal or state courts of the State
of Delaware, and each of the parties hereby irrevocably and unconditionally:
(i) consents to submit to the exclusive jurisdiction of the federal and state
courts in the State of Delaware for any Proceeding (and each party agrees not
to commence any Proceeding, except in such courts); (ii) waives any objection
to the laying of venue of any Proceeding in the federal or state courts of the
State of Delaware; (iii) waives, and agrees not to plead or to make, any claim
that any Proceeding brought in any federal or state court of the State of
Delaware has been brought in an improper or otherwise inconvenient forum; and
(iv) waives, and agrees not to plead or to make, any claim that any Proceeding
shall be transferred or removed to any other forum. Each of the parties hereto
hereby irrevocably and unconditionally agrees: (1) to the extent such party is
not otherwise subject to service of process in the State of Delaware, to
appoint and maintain an agent in the State of Delaware as such party's agent
for acceptance of legal process, and (2) that service of process may also be
made on such party by prepaid certified mail with a proof of mailing receipt
validated by the United States Postal Service constituting evidence of valid
service, and that service made pursuant to clause (1) or (2) above shall have
the same legal force and effect as if served upon such party personally within
the State of Delaware.
8.6 ATTORNEYS' FEES.
In any action at law or suit in equity to enforce this
Agreement or the rights of any of the parties hereunder, the prevailing party
in such action or suit shall be entitled to reasonable attorneys' fees and all
other reasonable costs and expenses incurred in such action or suit.
8.7 ASSIGNABILITY; THIRD PARTY BENEFICIARIES.
This Agreement shall be binding upon, and shall be
enforceable by and inure solely to the benefit of, the parties hereto and their
respective successors and permitted assigns; provided, however, that neither
this Agreement nor any of the Company's or Parent's rights hereunder may be
assigned by the Company or by Parent without the prior written consent of
Parent or the Company, as the case may be, and any attempted assignment of this
Agreement or any of such rights by the Company or by Parent without such
consent shall be void and of no effect; provided, further, however, that,
except for assignments by Merger Sub to a wholly-owned Subsidiary of Parent,
neither this Agreement nor any of Parent's or Merger Sub's rights hereunder may
be assigned by Parent or Merger Sub without the prior written consent of the
Company, and any attempted assignment of this Agreement or any of such rights
by Parent or Merger Sub without such consent shall be void and of no effect.
Nothing in this Agreement, express or implied, is intended to or shall confer
upon any Person (other than the parties hereto) any right, benefit or remedy of
any nature whatsoever under or by reason of this Agreement except for (i) the
rights, benefits and remedies granted to the Indemnified Persons under Section
5.6, (ii) the rights of the Company Stockholders and the holders of Company
Options and Company Warrants to receive Merger Consideration in accordance with
the provisions of this Agreement, (iii) the rights of the employees of the
Acquired Coporations granted under Section 5.5(g), and (iv) the right of the
Company, on behalf of the Company Stockholders and holders of Company Options
and Company Warrants, to pursue claims for damages and other relief, including
equitable relief, for Parent's or Merger Sub's intentional breach of this
Agreement, fraud, wrongful repudiation or termination of this Agreement, or
wrongful failure to consummate the Merger, provided, however, that the rights
granted pursuant to clause (iv) of this Section 8.7 shall only be enforceable
on behalf of the Company Stockholders and the holders of Company Options and
Company Warrants by the Company in its sole and absolute discretion. Without
limiting the foregoing, it is expressly understood and agreed that the
provisions of Section 5.5 (except as expressly set forth above) are statements
of intent and no employees or other Person (including any party hereto) shall
have any rights or remedies, including rights of enforcement, with respect
thereto and no employee or other Person is, is intended to be or shall be
deemed to be a third-party beneficiary thereof.
69
8.8 NOTICES.
Any notice or other communication required or permitted to be
delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received (i) on the date of delivery if
delivered personally, (ii) on the date of confirmation of receipt (or the first
business day following such receipt if the date is not a business day) of
transmission by telecopy or facsimile, or (iii) on the date of confirmation of
receipt (or the first business day following such receipt if the date is not a
business day) if delivered by a nationally recognized overnight courier
service. All notices hereunder shall be delivered to the address or facsimile
telephone number set forth beneath the name of such party below (or to such
other address or facsimile telephone number as such party shall have specified
in a written notice given to the other parties hereto):
If to Parent or Merger Sub:
AngioDynamics, Inc.
603 Queensbury Avenue
Queensbury, NY 12804
Facsimile No.: (518) 798-3625
Attention: Joseph G. Gerardi
with a copy to (which copy shall not constitute notice hereunder):
Skadden, Arps, Slate, Meagher & Flom LLP
One Rodney Square
Wilmington, DE 19801
Facsimile No.: (302) 651-3001
Attention: Robert B. Pincus, Esq.
If to the Company:
RITA Medical Systems, Inc.
46421 Landing Parkway
Fremont, CA 94538
Facsimile No.: (650) 967-1961
Attention: Joseph M. DeVivo
with a copy to (which copy shall not constitute notice hereunder):
Heller Ehrman LLP
275 Middlefield Road
Menlo Park, California 94025
Facsimile No. (650) 324-0638
Attention: Mark B. Weeks, Esq.
8.9 SEVERABILITY.
If any provision of this Agreement or any part of any such
provision is held under any circumstances to be invalid or unenforceable in any
jurisdiction, then (a) such provision or part thereof shall, with respect to
such circumstances and in such jurisdiction, be deemed amended to conform to
applicable Legal Requirements so as to be valid and enforceable to the fullest
possible extent, (b) the invalidity or unenforceability of such provision or
part thereof under such circumstances and in such
70
jurisdiction shall not affect the validity or enforceability of such provision
or part thereof under any other circumstances or in any other jurisdiction, and
(c) the invalidity or unenforceability of such provision or part thereof shall
not affect the validity or enforceability of the remainder of such provision or
the validity or enforceability of any other provision of this Agreement;
provided, however, that the economic or legal substance of the transactions
contemplated hereby is not affected in a materially adverse manner to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith in general fashion to modify this Agreement so as to effect the
original interest of the parties as closely as possible in an acceptable manner
to the end that the transactions contemplated hereby are fulfilled to the
maximum extent possible.
8.10 SPECIFIC PERFORMANCE.
The parties agree that irreparable damage would occur in the
event that any provision of this Agreement is not performed in accordance with
its specific terms or is otherwise breached. The parties agree that, in the
event of any breach by the other party of any covenant or obligation contained
in this Agreement, the other party shall be entitled (in addition to any other
remedy that may be available to it, including monetary damages) to seek (a) a
decree or order of specific performance to enforce the observance and
performance of such covenant or obligation, and (b) an injunction restraining
such breach. The parties further agree that no party to this Agreement shall be
required to obtain, furnish or post any bond or similar instrument in
connection with or as a condition to obtaining any remedy referred to in this
Section 8.10, and each party waives any objection to the imposition of such
relief or any right it may have to require the obtaining, furnishing or posting
of any such bond or similar instrument.
8.11 CONSTRUCTION.
(a) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to
the effect that ambiguities are to be resolved against the drafting party shall
not be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(d) Except as otherwise indicated, all references in this
Agreement to "Sections" and "Exhibits" are intended to refer to Sections of
this Agreement and Exhibits to this Agreement.
[Signatures on Following Page]
71
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed as of the date first above written.
ANGIODYNAMICS, INC.
By: /s/ Eamonn P. Hobbs
----------------------------------------------
Name: Eamonn P. Hobbs
Title: President and Chief Executive Officer
ROYAL I, LLC
By: /s/ Eamonn P. Hobbs
----------------------------------------------
Name: Eamonn P. Hobbs
Title: President and Chief Executive Officer
RITA MEDICAL SYSTEMS, INC.
By: /s/ Joseph DeVivo
----------------------------------------------
Name: Joseph DeVivo
Title: President and Chief Executive Officer
[Signature Page to Agreement and Plan of Merger]
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
"1994 Stock Plan" is defined in Section 2.3(b) to this
Agreement.
"1997 Stock Plan" is defined in Section 3.3(b) to this
Agreement.
"1998 Stock Plan" is defined in Section 2.3(b) to this
Agreement.
"2000 Director's Plan" is defined in Section 2.3(b) to this
Agreement.
"2000 Stock Plan" is defined in Section 2.3(b) to this
Agreement.
"2004 Stock Plan" is defined in Section 3.3(b) to this
Agreement.
"2005 Incentive Plan" is defined in Section 2.3(b) to this
Agreement.
"Acquired Corporation Contract" shall mean any Contract: (a)
currently in force to which any of the Acquired Corporations is a party or (b)
by which any of the Acquired Corporations or any asset of any of the Acquired
Corporations is bound or has any continuing obligations or rights.
"Acquired Corporation Proprietary Asset" shall mean any
Proprietary Asset owned by or licensed to any of the Acquired Corporations or
otherwise used by any of the Acquired Corporations.
"Acquired Corporations" is defined in Section 2.1 to this
Agreement.
"Agreement" is defined in the Preamble to this Agreement.
"AngioDynamics Corporation Contract" shall mean any Contract:
(a) to which any of the AngioDynamics Corporations is a party; (b) by which any
of the AngioDynamics Corporations or any asset of any of the AngioDynamics
Corporations is or may become bound or under which any of the AngioDynamics
Corporations has, or may become subject to, any obligation; or (c) under which
any of the Acquired Corporations has or may acquire any right or interest.
"AngioDynamics Corporation Proprietary Asset" shall mean any
Proprietary Asset owned by or licensed to any of the AngioDynamics Corporations
or otherwise used by any of the AngioDynamics Corporations.
"AngioDynamics Corporations" is defined in Section 3.1 of
this Agreement.
"AngioDynamics Product" is defined in Section 3.7(f) of this
Agreement.
"Application Integrity Policy" is defined in Section
3.10(c)(vi) of this Agreement.
"Cain Brothers" is defined in Section 3.22 of this Agreement.
"Cash Merger Consideration" means the aggregate amount of Per
Share Cash Consideration paid by Parent pursuant to this Agreement, if any.
"Certificate of Merger" is defined in Section 1.3 to this
Agreement.
"Claim" shall mean any and all claims, demands, actions,
causes of action, suits, proceedings and administrative proceedings.
"Closing" is defined in Section 1.3 to this Agreement.
"Closing Date" is defined in Section 1.3 to this Agreement.
"Code" is defined in the Recitals to this Agreement.
"Company" is defined in the Preamble to this Agreement.
"Company Acquisition Proposal" shall mean any bona fide
offer, inquiry, proposal or indication of interest received from a third party
(other than an offer, inquiry, proposal or indication of interest by Parent)
relating to any Company Acquisition Transaction.
"Company Acquisition Transaction" shall mean any transaction
or series of transactions involving:
(a) any merger, consolidation, share exchange,
recapitalization, business combination or similar transaction involving any of
the Acquired Corporations;
(b) any issuance of securities, direct or indirect
acquisition of securities, tender offer, exchange offer or other similar
transaction in which (i) a Person or "Group" (as defined in the Exchange Act
and the rules promulgated thereunder) of Persons (other than any Acquired
Corporation) directly or indirectly acquires beneficial or record ownership of
securities representing more than 15% of the outstanding securities of any
class of voting securities of any of the Acquired Corporation, or (ii) any of
the Acquired Corporations issues securities representing more than 15% of the
outstanding securities of any class of voting securities of any of the Acquired
Corporations (to any Person other than an Acquired Corporation);
(c) any direct or indirect sale, lease, exchange,
transfer, license, acquisition or disposition of any business or businesses or
of assets or rights that constitute or account for 10% or more of the
consolidated net revenues, net income or assets of the Acquired Corporations;
or
(d) any liquidation or dissolution of any of the
Acquired Corporations.
"Company Balance Sheet" is defined in Section 2.5(d) of this
Agreement.
"Company Balance Sheet Date" is defined in Section 2.5(d) of
this Agreement.
"Company Change of Control Transaction" shall mean any
transaction or series of transactions in which:
(a) the Company merges with or into, or is acquired,
directly or indirectly, by merger or otherwise by any Person or "group" (as
defined in the Exchange Act and the rules promulgated thereunder) of related
Persons (other than Parent or any of its affiliates);
(b) any Person or "group" (as defined above) of related
Persons acquires, directly or indirectly, by means of an issuance of
securities, direct or indirect acquisition of securities, tender offer,
exchange offer or similar transaction, more than 40% of the outstanding
securities of any class of voting securities of the Company; or
(c) any Person or "group" (as defined above) of related
Persons acquires, directly or indirectly, by means of a sale, lease, exchange,
transfer, license, acquisition or disposition of any business or businesses or
of assets or rights that, in each case, constitute or account for 40% or more
of the consolidated net revenues, net income or assets of the Acquired
Corporations.
"Company Common Stock" shall mean the Common Stock, $0.001
par value, of the Company.
"Company Common Stock Price" shall mean the average of the
closing sales price of one (1) share of Company Common Stock as reported on the
Nasdaq (as reported in The Wall Street Journal or, if not reported therein, any
other authoritative source) for the ten trading days ending on (and including)
the third trading day immediately preceding the date of the Company
Stockholders' Meeting.
"Company Disclosure Letter" is defined in Section 2 of this
Agreement.
"Company Employee Plans" is defined in Section 2.13(a) of
this Agreement.
"Company ERISA Affiliate" is defined in Section 2.13(a) of
this Agreement.
"Company ESPP" is defined in Section 2.3(b) of this
Agreement.
"Company Financial Statements" is defined in Section 2.5(d)
of this Agreement.
"Company Material Contract" is defined in Section 2.8(a) of
this Agreement.
"Company Options" is defined in Section 2.3(b) of this
Agreement.
"Company Organization Documents" is defined in Section 2.1 of
this Agreement.
"Company Permits" is defined in Section 2.10(b) of this
Agreement.
"Company Preferred Stock" shall mean the Preferred Stock,
$0.001 par value, of the Company.
"Company Product" is defined in Section 2.7(f) of this
Agreement.
"Company Proxy Statement" is defined in Section 5.1 of this
Agreement.
"Company Recommendation" is defined in the Recitals of this
Agreement.
"Company Rights Agreements" is defined in Section 2.3(d) of
this Agreement.
"Company Rights Plan" shall mean that certain Preferred
Shares Rights Agreement dated as of July 31, 2001, by and between the Company
and U.S Stock Transfer Corporation, as Rights Agent.
"Company SEC Documents" is defined in Section 2.5(a) of this
Agreement.
"Company Stockholders" shall mean the holders of Company
Common Stock.
"Company Stockholders' Meeting" is defined in Section 5.2(a)
of this Agreement.
"Company Stock Certificate" is defined in Section 1.6 of this
Agreement.
"Company Stock Option Plans" is defined in Section 2.3(b) of
this Agreement.
"Company Stock Rights" is defined in Section 2.3(d) of this
Agreement.
"Company Rights Agreement" shall mean that certain Preferred
Shares Rights Agreement, dated as of July 31, 2001, by and between the Company
and U.S. Stock Transfer Corporation.
"Company Superior Offer" shall mean a Company Acquisition
Proposal to acquire substantially all of the equity securities or assets of the
Company on terms that the Board of Directors of the Company determines, in good
faith, after consultation with its outside legal counsel and its financial
advisor, that if consummated, is more favorable to the Company's stockholders
from a financial point of view than the Merger and the transactions
contemplated by this Agreement (including any proposal by Parent to amend the
terms of this Agreement) and is reasonably likely to be consummated, taking
into account all legal, financial and regulatory aspects of the offer and the
Person making the offer.
"Company Warrant" is defined in Section 2.3(c) of this
Agreement.
"Company Welfare Plans" shall mean all employee welfare
benefit plans (as defined in Section 3(1) of ERISA) of any Acquired Corporation
or any other Company ERISA Affiliate for the benefit of, or relating to, any
former or current employee, independent contractor, officer or director (or any
of their beneficiaries) of any Acquired Corporation or any other Company ERISA
Affiliate.
"Company 401(k) Plan" shall mean the RITA Medical Systems,
Inc. 401(k) Plan.
"Confidentiality Agreements" is defined in Section 4.1 of
this Agreement.
"Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
"Contract" shall mean any legally binding written or oral
agreement, contract, subcontract, lease, understanding, instrument, note,
option, warranty, purchase order, license, sublicense, insurance policy,
benefit plan or commitment or undertaking of any nature.
"Conversion Amount" shall mean the principal amount of the
RITA Senior Convertible Notes to be converted into shares of Company Common
Stock pursuant to the terms of the RITA Senior Convertible Notes.
"Conversion Price" shall mean $4.03, subject to adjustment
pursuant to the terms of the RITA Senior Convertible Notes.
"Conversion Shares" shall mean the number of shares of
Company Common Stock issuable upon the conversion of any portion of the RITA
Senior Convertible Notes into shares of Company Common Stock, which amount
shall be equal to the quotient obtained by dividing (i) the Conversion Amount
by (ii) the Conversion Price.
"Current D&O Insurance Cost" is defined in Section 5.6(b) of
this Agreement.
"DGCL" is defined in the Recitals of this Agreement.
"Dissenting Shares" is defined in Section 1.9 of this
Agreement.
"DOJ" is defined in Section 5.3(a) of this Agreement.
"DLLCA" is defined in the Recitals of this Agreement.
"Effective Time" is defined in Section 1.3 of this Agreement.
"Employee Transition Period" is defined in Section 5.5(a) of
this Agreement.
"Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right or community
property interest (including any restriction on the voting of any security, any
restriction on the transfer of any security or other asset, any restriction on
the receipt of any income derived from any asset, any restriction on the use of
any asset and any restriction on the possession, exercise or transfer of any
other attribute of ownership of any asset); provided that the term Encumbrance
shall not be deemed to include (a) liens for current Taxes or income Taxes not
yet due and payable or that are being contested in good faith, in each case,
and for which adequate reserves have been recorded, (b) liens for assessments
or other governmental charges or liens of landlords, carriers, warehousemen,
mechanics or materialmen securing obligations incurred in the ordinary course
of business consistent with prior practice that are not yet due and payable or
due but not delinquent or being contested in good faith, (c) liens incurred in
the ordinary course of business consistent with prior practice in connection
with workers' compensation, unemployment insurance and other types of social
security or to secure the performance of tenders, statutory obligations, surety
and appeal bonds, bids, leases, government contracts, performance and return of
money bonds and similar obligations, (d) purchase money or similar security
interests granted in connection with the purchase of equipment or supplies in
the ordinary course of business consistent with prior practice in an amount not
to exceed $10,000 in the aggregate, (e) liens, security interests, encumbrances
or restrictions which secure indebtedness which are properly reflected in the
Company 10-K or the Parent 10-K, as the case may be, (f) liens arising as a
matter of law in the ordinary course of business with respect to obligations
incurred after December 31, 2003, provided that the obligations secured by such
liens are not delinquent, (g) such title defects and liens, if any, as
individually or in the aggregate are not reasonably likely to have a Material
Adverse Effect on the Acquired Corporations or the AngioDynamics Corporations,
as the case may be, and (h) licenses or other agreements relating to
Proprietary Assets which are not intended to secure an obligation.
"Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
"Environmental Law" shall mean any foreign, federal, state or
local statute, law, rule, regulation, ordinance, treaty, code, policy or rule
of common law now or from time to time in effect and in each case as amended,
and any judicial or administrative interpretation thereof, including any
judicial or administrative order, consent decree or judgment, relating to the
environment, natural resources, health, safety or Hazardous Materials,
including the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended; the Resource Conservation and Recovery Act, as
amended; the Hazardous Materials Transportation Act, as amended; the Clean
Water Act, as amended; the Toxic
Substances Control Act, as amended; the Clean Air Act, as amended; the Safe
Drinking Water Act, as amended; the Atomic Energy Act, as amended; the Federal
Insecticide, Fungicide and Rodenticide Act, as amended; and the Occupational
Safety and Health Act, as amended; and
"ERISA" is defined in Section 2.13(a) of this Agreement.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and the regulations promulgated thereunder.
"Exchange Agent" is defined in Section 1.7(a) of this
Agreement.
"Exchange Fund" is defined in Section 1.7(a) of this
Agreement.
"Excluded Shares" shall mean any shares of Company Common
Stock held as of the Effective Time (a) by Parent, Merger Sub or any Subsidiary
of Parent or Merger Sub, (b) by any Subsidiary or (c) by the Company as
treasury shares.
"FDA" is defined in Section 2.10(b) of this Agreement.
"FDCA" is defined in Section 2.10(b) of this Agreement.
"FTC" is defined in Section 5.3(a) of this Agreement.
"GAAP" is defined in Section 2.3(b) of this Agreement.
"Governmental Authorization" shall mean any: (a) permit,
license, certificate, franchise, permission, variance, clearance, registration,
qualification or authorization issued, granted, given or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement; or (b) right under any Contract with any Governmental Body.
"Governmental Body" shall mean any: (a) nation, state,
commonwealth, province, territory, county, municipality, district or other
jurisdiction of any nature; (b) federal, state, local, municipal, foreign or
other government; (c) governmental or quasi-governmental authority of any
nature (including any governmental division, department, agency, commission,
instrumentality, official, organization, unit or body and any court or other
tribunal); or (d) the National Association of Securities Dealers, Inc.
(including the rules and regulations of the Nasdaq).
"Government Contract" shall mean any prime contract,
subcontract, letter contract, purchase order or delivery order, task order, or
other agreement of any kind executed or submitted to or on behalf of any
Governmental Body or any prime contractor or higher-tier subcontractor, or
under which any Governmental Body or any such prime contractor otherwise has or
may acquire any right or interest.
"Hazardous Materials" shall mean (A) petroleum or petroleum
products (including crude oil or any fraction thereof, natural gas, natural gas
liquids, liquefied natural gas, or synthetic gas useable for fuel, or any
mixture thereof), polychlorinated biphenyls (PCBs), asbestos or asbestos
containing materials, urea formaldehyde foam insulation, and radon gas; (B) any
substance defined as or included in the definition of "hazardous substance,"
"hazardous waste," "hazardous material," "extremely hazardous waste,"
"restricted hazardous waste," "waste," "special waste," "toxic substance,"
"toxic pollutant," "contaminant" or "pollutant," or words of similar import,
under any applicable Environmental Law (as defined below); (C) infectious
materials and other regulated medical wastes; (D) any substance which is toxic,
explosive, corrosive, flammable, radioactive, carcinogenic,
mutagenic or otherwise hazardous and is or becomes regulated by any
governmental agency; and (E) any other substance, material or waste the
presence of which requires investigation or remediation under any Environmental
Law.
"HIPAA" means the Health Insurance Portability and
Accountability Act of 1996, Pub. L. No. 104-191, as amended, and any rules or
regulations promulgated thereunder.
"HSR" is defined in Section 2.4(b) of this Agreement.
"Indemnified Persons" is defined in Section 5.6(a) of this
Agreement.
"Insured Party" is defined in Section 5.6(b) of this
Agreement.
"knowledge" with respect to any party hereto shall mean the
actual knowledge of such party's executive officers.
"Legal Proceeding" shall mean any action, suit, litigation,
arbitration, proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding), hearing, inquiry, audit, examination or
investigation commenced, brought, conducted or heard by or before, or otherwise
involving, any court or other Governmental Body or any arbitrator or
arbitration panel.
"Legal Requirement" shall mean any applicable federal, state,
local, municipal, foreign or other law, statute, constitution, principle of
common law, resolution, ordinance, code, edict, decree, rule, regulation,
ruling or requirement issued, enacted, adopted, promulgated, implemented or
otherwise put into effect by or under the authority of any Governmental Body
(or under the authority of NASD or the Nasdaq), including any Environmental
Law.
"Liability" shall mean any liability (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated, and whether
due or to become due), including any liability for Taxes.
"Material Acquired Corporations IP Contract" is defined in
Section 2.8(a) to this Agreement.
An event, violation, inaccuracy, circumstance or other matter
will be deemed to have a "Material Adverse Effect" on, or shall be deemed to be
"material" to, the Acquired Corporations, taken as a whole, if such event,
violation, inaccuracy, circumstance or other matter had or could reasonably be
expected to have a material adverse effect on the business, condition, assets,
operations or financial performance of the Acquired Corporations taken as a
whole or prevent or materially impede consummation of the Merger; provided,
however, that no one or more of the following shall be deemed to constitute, in
and of itself, or be taken into account in determining, the occurrence of a
Material Adverse Effect: (A) changes in national or international economic,
political or business conditions generally or the outbreak or escalation of
hostilities, including acts of war or terrorism (which changes do not
disproportionately affect the Acquired Corporations in any material respect);
(B) changes in factors generally affecting the industries or markets in which
the Acquired Corporations operate or participate (which changes do not
disproportionately affect the Acquired Corporations in any material respect);
(C) changes in any law, rule or regulation or GAAP or the interpretation
thereof (which changes do not disproportionately affect the Acquired
Corporations in any material respect); (D) any action required to be taken
pursuant to or in accordance with this Agreement or taken by or at the request
of Parent or its affiliates; (E) any failure by the Company to meet any
published estimates of revenues or earnings for any period ending on or after
the date of this Agreement and prior to the Closing Date; (F) a decline in the
price or trading volume of the Company Common Stock on the Nasdaq (for the
avoidance of doubt, clauses (E) and (F) shall not preclude Parent from
asserting that the underlying cause of any such (i) failure to meet any
published estimates or (ii) decline in price or trading volume, is a Material
Adverse Effect); (G) changes resulting from the public announcement of the
execution of this Agreement or the consummation of the transactions
contemplated hereby; or (H) changes or disruptions in financial, banking or
securities markets generally. An event, violation, inaccuracy, circumstance or
other matter will be deemed to have a "Material Adverse Effect" on, or shall be
deemed to be "material" to, the AngioDynamics Corporations, taken as a whole,
if such event, violation, inaccuracy, circumstance or other matter had or could
reasonably be expected to have a material adverse effect on the business,
condition, assets, operations or financial performance of the AngioDynamics
Corporations taken as a whole or prevent or materially impede consummation of
the Merger; provided, however, that no one or more of the following shall be
deemed to constitute, in and of itself, or be taken into account in
determining, the occurrence of a Material Adverse Effect: (A) changes in
national or international economic, political or business conditions generally
or the outbreak or escalation of hostilities, including acts of war or
terrorism (which changes do not disproportionately affect the AngioDynamics
Corporations in any material respect); (B) changes in factors generally
affecting the industries or markets in which the AngioDynamics Corporations
operate or participate (which changes do not disproportionately affect the
AngioDynamics Corporations in any material respect); (C) changes in any law,
rule or regulation or GAAP or the interpretation thereof (which changes do not
disproportionately affect the AngioDynamics Corporations in any material
respect); (D) any action required to be taken pursuant to or in accordance with
this Agreement or taken by or at the request of the Company or its affiliates;
(E) any failure by Parent to meet any published estimates of revenues or
earnings for any period ending on or after the date of this Agreement and prior
to the Closing Date; (F) a decline in the price or trading volume of the Parent
Common Stock on the Nasdaq (for the avoidance of doubt, clauses (E) and (F)
shall not preclude Company from asserting that the underlying cause of any such
(i) failure to meet any published estimates or (ii) decline in price or trading
volume, is a Material Adverse Effect); (G) changes resulting from the public
announcement of the execution of this Agreement or the consummation of the
transactions contemplated hereby; or (H) changes or disruptions in financial,
banking or securities markets generally.
"Material AngioDynamics Corporations IP Contract" is defined
in Section 3.8 of this Agreement.
"Merger" is defined in the Recitals of this Agreement.
"Merger Consideration" means the Per Share Stock Merger
Consideration actually issuable and the Per Share Cash Merger Consideration
actually payable by Parent, as the case may be, in respect of each share of
Company Common Stock issued and outstanding as of the Effective Time, other
than Excluded Shares and Dissenting Shares, and each Company Option and Company
Warrant outstanding as of the Effective Time.
"Merger Sub" is defined in the Preamble of this Agreement.
"Multiemployer Plan" is defined in Section 2.13(b) of this
Agreement.
"Multiple Employer Plan" is defined in Section 2.13(b) of
this Agreement.
"Multiple Employer Welfare Arrangement" is defined in Section
2.13(b) of this Agreement.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"Nasdaq" shall mean the Nasdaq Stock Market LLC national
securities exchange, or any successor thereto.
"Order" shall mean any: (a) order, judgment, injunction,
edict, decree, ruling, pronouncement, determination, decision, opinion,
verdict, sentence, subpoena, writ or award issued, made, entered, rendered or
otherwise put into effect by or under the authority of any court,
administrative agency or other Governmental Body or any arbitrator or
arbitration panel; or (b) Contract with any Governmental Body entered into in
connection with any Legal Proceeding.
"Parent" is defined in the Preamble of this Agreement.
"Parent Balance Sheet" is defined in Section 3.5(d) of this
Agreement.
"Parent Balance Sheet Date" is defined in Section 3.5(d) of
this Agreement.
"Parent Common Stock" shall mean the Common Stock, $0.01 par
value per share, of Parent (including, subject to the prior amendment or
redemption thereof, the corresponding rights ("Rights") to purchase shares of
Parent's Series A Junior Participating Preferred Stock pursuant to the Parent
Rights Agreement).
"Parent Common Stock Price" shall mean the average of the
closing sales price of one (1) share of Parent Common Stock as reported on the
Nasdaq (as reported in The Wall Street Journal or, if not reported therein, any
other authoritative source) for the ten trading days ending on (and including)
the third trading day immediately preceding the date of the Company
Stockholders' Meeting.
"Parent Disclosure Letter" is defined in Section 3 of this
Agreement.
"Parent Employee Plans" is defined in Section 3.13(a) of this
Agreement.
"Parent ERISA Affiliate" is defined in Section 3.13(a) of
this Agreement.
"Parent ESPP" is defined in Section 3.3(b) of this Agreement.
"Parent Financial Statements" is defined in Section 3.5(d) of
this Agreement.
"Parent Material Contract" is defined in Section 3.8(a) of
this Agreement.
"Parent Options" is defined in Section 3.3(b) of this
Agreement.
"Parent Organization Documents" is defined in Section 3.1 of
this Agreement.
"Parent Permits" is defined in Section 3.10(b) of this
Agreement.
"Parent Preferred Stock" shall mean the Preferred Stock,
$0.001 par value, of Parent.
"Parent Proxy Statement" is defined in Section 5.1 of this
Agreement.
"Parent Recommendation" is defined in the Recitals of this
Agreement.
"Parent Rights Agreements" is defined in Section 3.3(c) of
this Agreement.
"Parent SEC Documents" is defined in Section 3.5(a) of this
Agreement.
"Parent Stockholders" shall mean the holders of Parent Common
Stock.
"Parent Rights Agreement" shall mean that certain Rights
Agreement, dated as of May 26, 2004, by and between Parent and Registrar and
Transfer Company.
"Parent Stockholders' Meeting" is defined in Section 5.2(e)
of this Agreement.
"Parent Stock Option Plans" shall mean the stock option plans
of Parent listed in Section 3.3(b), any other plans or arrangements under which
Parent Options are issued and all stock option agreements evidencing stock
option grants under the foregoing.
"Parent Stock Rights" is defined in Section 3.3(c) of this
Agreement.
"Parent 10-K" is defined in Section 3.5(d) of this Agreement.
"Parent 401(k) Plan" shall mean the AngioDynamics, Inc.
Retirement & Savings Plan.
"PDMA" shall mean the Prescription Drug Marketing Act.
"Per Share Cash Merger Consideration" shall mean the amount
of cash, if any, payable pursuant to either Section 1.5(a)(ii) or Section
1.5(a)(iii) of this Agreement.
"Per Share Stock Merger Consideration" is defined in Section
1.5(a)(i) of this Agreement.
"Per Share Merger Consideration Value" shall mean the product
obtained by multiplying (i) the Per Share Stock Merger Consideration by (ii)
the Parent Common Stock Price, plus, the Per Share Cash Merger Consideration,
if any.
"Per Share Stock Merger Consideration Value" shall mean the
product obtained by multiplying (i) the Per Share Stock Merger Consideration by
(ii) the Parent Common Stock Price.
"Person" shall mean any individual, Entity or Governmental
Body.
"Pre-Closing Period" is defined in Section 4.1 of this
Agreement.
"Proceeding" is defined is Section 8.5 of this Agreement.
"Proprietary Asset" shall mean any: (a) patent, patent
application, trademark (whether registered or unregistered), trademark
application, trade name, fictitious business name, service mark (whether
registered or unregistered), service mark application, copyright (whether
registered or unregistered), database rights, design rights, moral rights,
domain name, assumed and fictitious name registrations, copyright application,
copyright registration, mask work right, mask work right application, trade
secret, or any other intellectual or industrial or intangible property right,
know-how, customer lists, computer software, source code, algorithm, invention,
engineering drawing, and technology; and (b) right to use or exploit any of the
foregoing.
"Registration Statement" is defined in Section 5.1 of this
Agreement.
"Representatives" shall mean officers, directors, employees,
agents, attorneys, accountants, advisors, consultants and representatives of
the Person and its Subsidiaries.
"RITA Senior Convertible Notes" shall mean the Senior
Convertible Notes issued pursuant to a Securities Purchase Agreement among RITA
Medical Systems, Inc. and Atlas Master Fund, Ltd. dated August 5, 2005.
"SEC" shall mean the U.S. Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as
amended and the regulations promulgated thereunder.
"Shares" is defined in Section 1.6 of this Agreement.
An entity shall be deemed to be a "Subsidiary" of another
Person if such Person directly or indirectly owns, beneficially or of record,
(a) an amount of voting securities of other interests in such Entity that is
sufficient to enable such Person to elect at least a majority of the members of
such Entity's Board of Directors or other governing body, or (b) at least 50%
of the outstanding equity or financial interests of such Entity.
"Stock Equivalent Cash Consideration" shall mean the quotient
obtained by dividing (i) the Per Share Cash Merger Consideration by (ii) the
Parent Common Stock Price.
"Surviving Entity" is defined in Section 1.1 of this
Agreement.
"Takeover Laws" shall mean any "Moratorium," "Control Share
Acquisition," "Fair Price," "Supermajority," "Affiliate Transactions," or
"Business Combination Statute or Regulation" or other similar state
antitakeover laws and regulations.
"Tax" shall mean any tax (including any income tax, franchise
tax, capital gains tax, gross receipts tax, value-added tax, surtax, excise
tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax,
business tax, withholding tax or payroll tax), levy, assessment, tariff, duty
(including any customs duty), deficiency or fee, and any related charge or
amount (including any fine, penalty or interest), imposed, assessed or
collected by or under the authority of any Governmental Body.
"Tax Return" shall mean any return (including any information
return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information
filed with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.
"Termination Date" is defined in Section 7.1(b) of this
Agreement.
"Termination Fee" is defined in Section 7.3(b) of this
Agreement.
"Transaction Expenses" is defined in Section 7.3(a) of this
Agreement.
"Warn Act" is defined Section 2.13(m) of this Agreement.
* * *