\n Exhibit A Form of Voting Agreement<\/p>\n Exhibit B Form of Non-Competition Agreement<\/p>\n
Exhibit C Form of License Agreement<\/p>\n
Exhibit D Form of Omnibus Waiver and Amendment Agreement<\/p>\n
Exhibit E Form of Parent Warrant<\/p>\n
Exhibit F Form of Certificate of Merger<\/p>\n
Exhibit G Form of Amended and Restated Certificate of Incorporation of the Company
\n<\/c><\/s><\/table>\n
-iii-
\n 5<\/p>\n
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION<\/p>\n
This AGREEMENT AND PLAN OF MERGER AND REORGANIZATION is made and entered
\ninto as of August 17, 2001, by and among VISX, Incorporated, a Delaware
\ncorporation (“Parent”), Orion Acquisition Corp., a Delaware corporation and a
\nwholly-owned subsidiary of Parent (“Merger Sub”), and Medjet Inc., a Delaware
\ncorporation (the “Company”).<\/p>\n
BACKGROUND<\/p>\n
A. Upon the terms and subject to the conditions of this Agreement (as
\ndefined in Section 1.2 below) and in accordance with the Delaware General
\nCorporation Law (“Delaware Law”), Parent and the Company intend to enter into a
\nbusiness combination transaction.<\/p>\n
B. The Board of Directors of the Company (i) has determined that the
\nMerger (as defined in Section 1.1) is advisable and in the best interests of the
\nCompany and its stockholders, (ii) has approved and declared advisable this
\nAgreement, and has approved the Merger and the other transactions contemplated
\nby this Agreement and (iii) has determined to recommend that the stockholders of
\nthe Company adopt and approve this Agreement and approve the Merger.<\/p>\n
C. The Boards of Directors of each of Parent and Merger Sub (i) have
\ndetermined that the Merger is advisable and in the best interests of Parent,
\nMerger Sub and their respective stockholders, and (ii) have approved this
\nAgreement, the Merger and the other transactions contemplated by this Agreement.<\/p>\n
D. Each of the respective Boards of Directors of the Company, Parent and
\nMerger Sub recognizes that it is a condition of this Agreement, as set forth in
\nSection 7.1(a) below, that Parent may terminate this Agreement at any time, and
\nfor any reason or no reason. In consideration for such termination right, and as
\na material inducement to the Company to enter into this Agreement, Parent shall
\npay to the Company an amount equal to Five Hundred Thousand Dollars
\n($500,000.00), as described in Section 5.1 below, concurrently with the
\nexecution and delivery of this Agreement.<\/p>\n
E. Concurrent with the execution and delivery of this Agreement, as a
\nmaterial inducement to Parent and Merger Sub to enter into this Agreement, (i)
\nEugene I. Gordon (the “Principal Shareholder”) is entering into a Voting
\nAgreement, in substantially the form attached as Exhibit A (the “Voting
\nAgreement”); (ii) the Principal Shareholder is entering into a Non-Competition
\nAgreement, in substantially the form attached as Exhibit B (the “Non-Competition
\nAgreement”); (iii) Parent and the Company are entering into a License Agreement,
\nin substantially the form attached as Exhibit C (the “License Agreement”); and
\n(iv) Parent and the Company are entering into an Omnibus Waiver and Amendment
\nAgreement, in substantially the form attached as Exhibit D (the “Omnibus Waiver
\nand Amendment Agreement”). The Voting Agreement, Non-Competition Agreement,
\nLicense Agreement and Omnibus Waiver and Amendment Agreement are collectively
\nreferred to as the “Related Agreements.”<\/p>\n
F. Concurrent with the execution and delivery of this Agreement, Parent
\nis purchasing from entities affiliated with Adam Smith & Co. (“ASC”): (i) 10,400
\nshares of the Company’s Series B Convertible Preferred Stock (the “Series B
\nPreferred”), which represent all of the Company’s<\/p>\n
6<\/p>\n
outstanding shares of Preferred Stock, (ii) warrants to purchase a total of
\n1,040,000 shares of the Company’s Common Stock (the “Common Stock Warrants”),
\nand (iii) a warrant to purchase a total of 325,000 shares of the Company’s
\nCommon Stock (the “ASC Warrant”). At the Effective Time (as defined in Section
\n1.2 below), the 10,400 shares of Series B Preferred, the Common Stock Warrants
\nand the ASC Warrant will be canceled and extinguished without any conversion or
\nexercise thereof. If this Agreement is terminated pursuant to Article VII
\nhereof, then certain of Parent’s rights as the owner of the Series B Preferred,
\nthe Common Stock Warrants and ASC Warrant will be subject to certain
\nlimitations, as set forth more fully in Section 7.3 below.<\/p>\n
G. Concurrent with the execution and delivery of this Agreement, as a
\nmaterial inducement to Parent and Merger Sub to enter into this Agreement, the
\nCompany is issuing and delivering to Parent a three-year warrant, in the form
\nattached as Exhibit E (the “Parent Warrant”) to purchase 1,320,000 shares of
\nCompany Common Stock at a per share exercise price of seventy-five cents
\n($0.75), as described more fully in Section 5.3 below. At the Effective Time (as
\ndefined in Section 1.2 below), the Parent Warrant will be canceled and
\nextinguished without any conversion or exercise thereof.<\/p>\n
NOW, THEREFORE, in consideration of the covenants, promises and
\nrepresentations set forth in this Agreement, and for other good and valuable
\nconsideration, the receipt and sufficiency of which are hereby acknowledged, the
\nparties agree as follows:<\/p>\n
ARTICLE I
\n THE MERGER<\/p>\n
1.1 The Merger. At the Effective Time (as defined in Section 1.2) and
\nsubject to and upon the terms and conditions of this Agreement and the
\napplicable provisions of Delaware Law, Merger Sub shall be merged with and into
\nthe Company (the “Merger”), the separate corporate existence of Merger Sub shall
\ncease and the Company shall continue as the surviving corporation. The Company
\nas the surviving corporation after the Merger is sometimes referred to as the
\n“Surviving Corporation.”<\/p>\n
1.2 Effective Time; Closing. Subject to the provisions of this
\nAgreement, the parties shall cause the Merger to be consummated by filing a
\nCertificate of Merger, in the form attached as Exhibit F with the Secretary of
\nState of the State of Delaware in accordance with the relevant provisions of
\nDelaware Law (the “Certificate of Merger”) (the time of such filing (or such
\nlater time, as may be agreed in writing by the Company and Parent and specified
\nin the Certificate of Merger) being the “Effective Time”) as soon as practicable
\non the Closing Date (as defined below). Unless the context otherwise requires,
\nthe term “Agreement” refers collectively to this Agreement and Plan of Merger
\nand Reorganization and the Certificate of Merger. The closing of the Merger (the
\n“Closing”) shall take place at either (in Parent’s option) the offices of Kelley
\nDrye & Warren LLP, 101 Park Avenue, New York, New York or Wilson Sonsini
\nGoodrich & Rosati, Professional Corporation, 245 Park Avenue, New York, New
\nYork, after satisfaction or waiver of all conditions to Closing set forth in
\nArticle VI, including without limitation satisfaction in Parent’s sole
\ndiscretion of the closing condition set forth in Section 6.3(m); provided,
\nhowever, that the Closing shall occur no sooner than five business days after
\ndelivery of the written certificate referred to in such section (the “Closing
\nDate”).<\/p>\n
-2-
\n 7<\/p>\n
1.3 Effects of the Merger. At the Effective Time, the effects of the
\nMerger shall be as provided in this Agreement and the applicable provisions of
\nDelaware Law. Without limiting the generality of the foregoing, and subject
\nthereto, at the Effective Time all the property, rights, privileges, powers and
\nfranchises of the Company and Merger Sub shall vest in the Surviving
\nCorporation, and all debts, liabilities and duties of the Company and Merger Sub
\nshall become the debts, liabilities and duties of the Surviving Corporation.<\/p>\n
1.4 Certificate of Incorporation; Bylaws.<\/p>\n
(a) At the Effective Time, the Certificate of Incorporation of
\nthe Merger Sub, as in effect immediately prior to the Effective Time, shall be
\nthe Certificate of Incorporation of the Surviving Corporation until thereafter
\namended as provided by law and such Certificate of Incorporation of the
\nSurviving Corporation; provided, however, that at the Effective Time the
\nCertificate of Incorporation of the Surviving Corporation shall be amended and
\nrestated in the form attached as Exhibit G.<\/p>\n
(b) The Bylaws of Merger Sub, as in effect immediately prior to
\nthe Effective Time, shall be, at the Effective Time, the Bylaws of the Surviving
\nCorporation until thereafter amended.<\/p>\n
1.5 Directors and Officers. The initial directors of the Surviving
\nCorporation shall be the directors of Merger Sub immediately prior to the
\nEffective Time, until their respective successors are duly elected or appointed
\nand qualified. The initial officers of the Surviving Corporation shall be the
\nofficers of Merger Sub immediately prior to the Effective Time, until their
\nrespective successors are duly appointed.<\/p>\n
1.6 Effect on Capital Stock. Subject to the terms and conditions of this
\nAgreement, at the Effective Time, by virtue of the Merger and without any action
\non the part of Merger Sub, the Company or the holders of any of the following
\nsecurities, the following shall occur:<\/p>\n
(a) Conversion of Company Common Stock. At the Effective Time,
\neach outstanding share of common stock of the Company (“Company Common Stock”),
\nupon the terms and subject to the conditions set forth below and throughout this
\nAgreement, will be canceled and extinguished and be converted automatically into
\nthe right to receive Two Dollars ($2.00) (the “Per Share Purchase Price”), upon
\nthe terms and subject to conditions set forth in this Section 1.6 and throughout
\nthis Agreement. The Per Share Purchase Price shall be appropriately adjusted to
\nreflect fully the effect of any stock split, reverse stock split, stock
\ndividend, reorganization, recapitalization or like change with respect to
\nCompany Common Stock occurring after the date hereof and prior to the Effective
\nTime (a “Recapitalization”).<\/p>\n
(b) Cancellation of Parent-Owned Stock and Securities. Each
\nshare of Company capital stock and all warrants to purchase Company capital
\nstock held by the Company or owned by Merger Sub, Parent or any direct or
\nindirect wholly-owned subsidiary of the Company or of Parent immediately prior
\nto the Effective Time shall be canceled and extinguished without any conversion
\nthereof.<\/p>\n
-3-
\n 8<\/p>\n
(c) Stock Options and Warrants. At the Effective Time, each
\noutstanding option to purchase shares of Company Common Stock (each, a “Company
\nStock Option”) under the Company’s 1994 Stock Option Plan (the “Company Option
\nPlan”) or otherwise and each outstanding warrant to purchase shares of Company
\nCommon Stock (each, a “Company Warrant”) not exercised prior to the Effective
\nTime shall be canceled and extinguished. Parent will pay to each holder of a
\nCompany Stock Option or a Company Warrant the difference between $2.00 and the
\nexercise price per share (if less than $2.00) of Company Common Stock underlying
\nsuch Company Stock Option or Company Warrant multiplied by the total number of
\nshares of Company Common Stock underlying such Company Stock Option or Company
\nWarrant (other than any Company Warrant held by Parent). Parent will not pay any
\namounts with respect to Company Stock Options or Company Warrants that have an
\nexercise price of equal to or greater than $2.00.<\/p>\n
(d) Capital Stock of Merger Sub. Each share of common stock of
\nMerger Sub (the “Merger Sub Common Stock”) issued and outstanding immediately
\nprior to the Effective Time shall be converted into one validly issued, fully
\npaid and nonassessable share of common stock of the Surviving Corporation. Each
\ncertificate evidencing ownership of shares of Merger Sub Common Stock shall
\nevidence ownership of such shares of capital stock of the Surviving Corporation.
\nAccordingly, as a result of the Merger, Parent (as the owner of all outstanding
\nshares of Merger Sub Common Stock immediately prior to the Effective Time) shall
\nbe the owner of all of the capital stock of the Surviving Corporation
\nimmediately after the Effective Time.<\/p>\n
(e) Shareholder Loans. In the event that any holder of Company
\nCommon Stock has outstanding loans owed to the Company as of the Effective Time,
\nthe consideration payable to such holder of Company Common Stock pursuant to
\nthis Section 1.6 shall be reduced by an amount equal to the outstanding
\nprincipal plus accrued interest of such holder’s loans as of the Effective Time.
\nThe reduction in the consideration contemplated in the preceding sentence is
\nintended to effect a payment mechanism for the satisfaction and not the
\nforgiveness of any such outstanding loan.<\/p>\n
1.7 Dissenting Shares.<\/p>\n
(a) Notwithstanding any other provisions of this Agreement to
\nthe contrary, any shares of Company Common Stock held by a holder who has
\nexercised and perfected appraisal rights for such shares in accordance with
\nSection 262 of Delaware Law and who has not effectively withdrawn or lost such
\nappraisal rights (“Dissenting Shares”), shall not be converted into or represent
\na right to receive the consideration for Company Common Stock set forth in
\nSection 1.6 hereof, but the holder thereof shall only be entitled to such rights
\nas are provided by Delaware Law.<\/p>\n
(b) Notwithstanding the provisions of Section 1.7(a) hereof, if
\nany holder of Dissenting Shares shall effectively withdraw or lose (through
\nfailure to perfect or otherwise) such holder’s appraisal rights under Delaware
\nLaw, then, as of the later of the Effective Time and the occurrence of such
\nevent, such holder’s shares shall automatically be converted into and represent
\nonly the right to receive the consideration for Company Common Stock set forth
\nin Section 1.6 hereof, without interest thereon, upon surrender of the
\ncertificate representing such shares.<\/p>\n
-4-
\n 9<\/p>\n
(c) The Company shall give Parent (i) prompt notice of any
\nwritten demand for appraisal received by the Company pursuant to the applicable
\nprovisions of Delaware Law, and (ii) the opportunity to participate in all
\nnegotiations and proceedings with respect to such demands. The Company shall
\nnot, except with the prior written consent of Parent, make any payment with
\nrespect to any such demands or offer to settle or settle any such demands.<\/p>\n
1.8 Surrender of Certificates.<\/p>\n
(a) Exchange Agent. Parent shall select a bank or trust company
\nreasonably acceptable to the Company to act as the exchange agent (the “Exchange
\nAgent”) in the Merger.<\/p>\n
(b) Parent to Provide Aggregate Consideration. Promptly after
\nthe Effective Time, Parent shall make available to the Exchange Agent for
\nexchange in accordance with this Article I, the Aggregate Consideration payable
\npursuant to Section 1.6 in exchange for outstanding shares of Company Common
\nStock. “Aggregate Consideration” shall mean the sum total of the amounts payable
\nin exchange for outstanding shares of Company Common Stock pursuant to Section
\n1.6.<\/p>\n
(c) Exchange Procedures. As soon as practicable after the
\nEffective Time, Parent shall cause the Exchange Agent to mail to each holder of
\nrecord (as of the Effective Time) of a certificate or certificates (the
\n“Certificates”), which immediately prior to the Effective Time represented
\noutstanding shares of Company Common Stock whose shares were converted into the
\nright to receive the amounts payable pursuant to Section 1.6, (i) a letter of
\ntransmittal in customary form (which shall specify that delivery shall be
\neffected, and risk of loss and title to the Certificates shall pass, only upon
\ndelivery of the Certificates to the Exchange Agent and shall contain such other
\nprovisions as Parent may reasonably specify) and (ii) instructions for use in
\neffecting the surrender of the Certificates in exchange for the amounts payable
\npursuant to Section 1.6. Upon surrender of Certificates for cancellation to the
\nExchange Agent or to such other agent or agents as may be appointed by Parent,
\ntogether with such letter of transmittal, duly completed and validly executed in
\naccordance with the instructions thereto, the holders of such Certificates shall
\nbe entitled to receive the amounts payable pursuant to Section 1.6, and the
\nCertificates so surrendered shall forthwith be canceled. Until so surrendered,
\nthe outstanding Certificates will be deemed from and after the Effective Time,
\nfor all corporate purposes to evidence only the right to receive the amounts
\npayable pursuant to Section 1.6.<\/p>\n
(d) Required Withholding. Any of the Exchange Agent, Parent or
\nthe Surviving Corporation, as the case may be, shall be entitled to deduct and
\nwithhold from any consideration payable or otherwise deliverable pursuant to
\nthis Agreement to any holder or former holder of Company Common Stock such
\namounts as may be required to be deducted or withheld therefrom under the
\nInternal Revenue Code of 1986, as amended (the “Code”) or under any provision of
\nstate, local or foreign tax law or under any other applicable legal requirement.
\nTo the extent such amounts are so deducted or withheld, such amounts shall be
\ntreated for all purposes under this Agreement as having been paid to the person
\nto whom such amounts would otherwise have been paid.<\/p>\n
(e) No Liability. Notwithstanding anything to the contrary in
\nthis Section 1.8, neither the Exchange Agent, Parent, the Surviving Corporation
\nnor any party shall be liable to a<\/p>\n
-5-
\n 10<\/p>\n
holder of shares of Company Common Stock for any amount properly paid to a
\npublic official pursuant to any applicable abandoned property, escheat or
\nsimilar law.<\/p>\n
1.9 No Further Ownership Rights in Company Common Stock. The Aggregate
\nConsideration shall be deemed to have been paid in full satisfaction of all
\nrights pertaining to shares of Company Common Stock, and there shall be no
\nfurther registration of transfers on the records of the Surviving Corporation of
\nshares of Company Common Stock that were outstanding immediately prior to the
\nEffective Time. If, after the Effective Time, Certificates are presented to the
\nSurviving Corporation for any reason, they shall be canceled and exchanged as
\nprovided in this Article I.<\/p>\n
1.10 Lost, Stolen or Destroyed Certificates. In the event that any
\nCertificates shall have been lost, stolen or destroyed, the Exchange Agent shall
\npay the amounts payable pursuant to Section 1.6 in exchange for such lost,
\nstolen or destroyed Certificates, upon the making of an affidavit of that fact
\nby the holder thereof; provided, however, that Parent may, in its reasonable
\ndiscretion and as a condition precedent to the payment of the amounts payable
\npursuant to Section 1.6, require the owner of such lost, stolen or destroyed
\nCertificates to deliver a bond in such sum as it may reasonably direct as
\nindemnity against any claim that may be made against Parent, the Surviving
\nCorporation or the Exchange Agent with respect to the Certificates alleged to
\nhave been lost, stolen or destroyed.<\/p>\n
1.11 Taking of Necessary Action; Further Action. If, at any time after
\nthe Effective Time, any further action is necessary or desirable to carry out
\nthe purposes of this Agreement and to vest the Surviving Corporation with full
\nright, title and possession to all assets, property, rights, privileges, powers
\nand franchises of the Company and Merger Sub, the current officers and directors
\nof the Company and Merger Sub will, to the extent reasonable and at the sole
\nexpense of the Surviving Corporation, take all such lawful and necessary action.<\/p>\n
ARTICLE II
\n REPRESENTATIONS AND WARRANTIES OF COMPANY<\/p>\n
The Company represents and warrants to Parent and Merger Sub as follows,
\nsubject to such exceptions as are specifically disclosed in writing in the
\ndisclosure schedule supplied by the Company to Parent dated as of the date
\nhereof (the “Company Schedule”). The Company Schedule shall be arranged in
\nsections corresponding to the numbered and lettered paragraphs contained in this
\nArticle II, and the disclosure of any section of the Company Schedule shall
\nqualify other paragraphs in this Article II only to the extent that it is
\nreasonably apparent from a reading of such disclosure that it also qualifies or
\napplies to such other paragraph.<\/p>\n
2.1 Organization and Qualification; Subsidiaries.<\/p>\n
(a) The Company is a corporation duly organized, validly
\nexisting and in good standing under the laws of the jurisdiction of its
\nincorporation and has the requisite corporate power and authority to own, lease
\nand operate its assets and properties and to carry on its business as it is now
\nbeing conducted. The Company is in possession of all franchises, grants,
\nauthorizations, licenses, permits, easements, consents, certificates, approvals
\nand orders (“Approvals”) necessary to own, lease and operate the properties it
\npurports to own, operate or lease and to carry on its business<\/p>\n
-6-
\n 11<\/p>\n
as it is now being conducted, except where the failure to have such Approvals
\nwould not, individually or in the aggregate, be material to the Company. The
\nCompany is duly qualified or licensed as a foreign corporation to do business,
\nand is in good standing, in each jurisdiction where the character of the
\nproperties owned, leased or operated by it or the nature of its activities makes
\nsuch qualification or licensing necessary, except for such failures to be so
\nduly qualified or licensed and in good standing that would not, either
\nindividually or in the aggregate, have a Material Adverse Effect on the Company.<\/p>\n
(b) The Company has no subsidiaries. The Company has not agreed
\nnor is obligated to make nor be bound by any written, oral or other agreement,
\ncontract, subcontract, lease, binding understanding, instrument, note, option,
\nwarranty, purchase order, license, sublicense, insurance policy, benefit plan,
\ncommitment or undertaking of any nature, as of the date hereof or as may
\nhereafter be in effect (a “Contract”) under which it may become obligated to
\nmake, any future investment in or capital contribution to any other entity. The
\nCompany does not directly or indirectly own any equity or similar interest in or
\nany interest convertible, exchangeable or exercisable for, any equity or similar
\ninterest in, any corporation, partnership, joint venture or other business,
\nassociation or entity.<\/p>\n
2.2 Certificate of Incorporation and Bylaws. The Company has previously
\nfurnished to Parent a complete and correct copy of its certificate of
\nincorporation and bylaws as amended to date (together, the “Company Charter
\nDocuments”). Such Company Charter Documents are in full force and effect. The
\nCompany is not in violation of any of the provisions of the Company Charter
\nDocuments.<\/p>\n
2.3 Capitalization.<\/p>\n
(a) The authorized capital stock of the Company consists of:
\n30,000,000 shares of Company Common Stock, and 1,000,000 shares of Preferred
\nStock (“Company Preferred Stock”), which may be designated as Series A Preferred
\nStock, Series B Preferred Stock, Series C Preferred Stock, and Series B
\nConvertible Preferred Stock. The Series A Preferred Stock, Series B Preferred
\nStock and Series C Preferred Stock consist of an aggregate of not more than
\n400,000 shares, of which 110,000 are designated as Series A Preferred Stock. In
\naddition, 16,000 shares of Company Preferred Stock are designated as Series B
\nConvertible Preferred Stock, each having par value $0.01 per share. At the close
\nof business on August 14, 2001:<\/p>\n
(i) 3,901,431 shares of Company Common Stock were issued
\nand outstanding, all of which are validly issued, fully paid and nonassessable;<\/p>\n
(ii) no shares of Series A Preferred Stock were issued
\nor outstanding;<\/p>\n
(iii) no shares of Series B Preferred Stock were issued
\nor outstanding;<\/p>\n
(iv) no shares of Series C Preferred Stock were issued
\nor outstanding;<\/p>\n
(v) 10,400 shares of Series B Convertible Preferred
\nStock were issued and outstanding, all of which are validly issued, fully paid
\nand nonassessable;<\/p>\n
-7-
\n 12<\/p>\n
(vi) 33,789 shares of Company Common Stock were held in
\ntreasury by the Company;<\/p>\n
(vii) 513,046 shares of Company Common Stock were
\nreserved for issuance upon the exercise of outstanding options to purchase
\nCompany Common Stock under the Company Option Plan;<\/p>\n
(viii) no shares of Company Common Stock were reserved
\nfor issuance upon the exercise of other outstanding options to purchase Company
\nCommon Stock;<\/p>\n
(ix) 133,531 shares of Company Common Stock were
\navailable for future grant under the Company Option Plan;<\/p>\n
(x) 1,440,772 shares of Company Common Stock were
\nreserved for future issuance upon conversion of warrants of the Company.<\/p>\n
(b) Section 2.3(b) of the Company Schedule sets forth the
\nfollowing information with respect to each Company Stock Option outstanding as
\nof August 14, 2001: (i) the name of the optionee; (ii) the particular plan
\npursuant to which such Company Stock Option was granted; (iii) the number of
\nshares of Company Common Stock subject to such Company Stock Option; (iv) the
\nexercise price of such Company Stock Option; (v) the date on which such Company
\nStock Option was granted; (vi) the applicable vesting schedule; and (vii) the
\ndate on which such Company Stock Option expires. The Company has made available
\nto Parent accurate and complete copies of all stock option plans pursuant to
\nwhich the Company has granted such Company Stock Options that are currently
\noutstanding and the form of all stock option agreements evidencing such Company
\nStock Options. Section 2.3(b) of the Company Schedule also sets forth the
\nfollowing information with respect to each Company Warrant outstanding as of
\nAugust 14, 2001: (i) the name of the warrant holder; (ii) the number of shares
\nof Company Common Stock subject to such Company Warrant; (iii) the exercise
\nprice of such Company Warrant; (iv) the date on which such Company Warrant was
\ngranted; (v) any applicable performance based provisions of such Company
\nWarrant; (vi) the date on which such Company Warrant expires. All shares of
\nCompany Common Stock subject to issuance as aforesaid, upon issuance on the
\nterms and conditions specified in the instrument pursuant to which they are
\nissuable, would be duly authorized, validly issued, fully paid and
\nnonassessable. Except as set forth in Section 2.3(b) of the Company Schedule,
\nthere are no commitments or agreements of any character to which the Company is
\nbound obligating the Company to accelerate the vesting of any Company Stock
\nOption or Company Warrants as a result of the Merger. All outstanding shares of
\nCompany Common Stock and all outstanding Company Stock Options have been issued
\nand granted in compliance with (i) all applicable securities laws and other
\napplicable Legal Requirements (as defined below) and (ii) all requirements set
\nforth in applicable Contracts. For the purposes of this Agreement, “Legal
\nRequirements” means any federal, state, local, municipal, foreign or other law,
\nstatute, constitution, principle of common law, resolution, ordinance, code,
\nedict, decree, rule, regulation, ruling or requirement issued, enacted, adopted,
\npromulgated, implemented or otherwise put into effect by or under the authority
\nof any Governmental Entity (as defined below).<\/p>\n
(c) Except as set forth in Section 2.3(b) of the Company
\nSchedule, there are no subscriptions, options, warrants, equity securities,
\npartnership interests or similar ownership<\/p>\n
-8-
\n 13<\/p>\n
interests, calls, rights (including preemptive rights), commitments or
\nagreements of any character to which the Company is a party or by which it is
\nbound obligating the Company to issue, deliver or sell, or cause to be issued,
\ndelivered or sold, or repurchase, redeem or otherwise acquire, or cause the
\nrepurchase, redemption or acquisition of, any shares of capital stock,
\npartnership interests or similar ownership interests of the Company or
\nobligating the Company to grant, extend, accelerate the vesting of or enter into
\nany such subscription, option, warrant, equity security, call, right, commitment
\nor agreement. As of the date of this Agreement, there are no registration rights
\nand there is, except for the Voting Agreement, no voting trust, proxy, rights
\nplan, antitakeover plan or other agreement or understanding to which the Company
\nis a party or by which it is bound with respect to any equity security of any
\nclass of the Company.<\/p>\n
2.4 Authority Relative to this Agreement. The Company has all necessary
\ncorporate power and authority to execute and deliver this Agreement and the
\nRelated Agreements and to perform its obligations hereunder and thereunder,
\nsubject to obtaining the approval of the stockholders of the Company of the
\nMerger and this Agreement, to consummate the transactions contemplated hereby
\nand thereby. The execution and delivery of this Agreement by the Company and the
\nconsummation by the Company of the transactions contemplated hereby and the
\nexecution and delivery of the Related Agreements by the Company and the
\nconsummation by the Company of the transactions contemplated thereby have been
\nduly and validly authorized by all necessary corporate action on the part of the
\nCompany, and no other corporate proceedings on the part of the Company are
\nnecessary to authorize this Agreement and the Related Agreements, or to
\nconsummate the transactions so contemplated (other than, with respect to the
\nMerger, the approval and adoption of the Merger and this Agreement by a majority
\nof the votes entitled to be cast by the holders of the Company Common Stock and
\nSeries B Convertible Preferred Stock (voting on an as-converted to Company
\nCommon Stock basis), voting together as a single class, in accordance with
\nDelaware Law and the Company Charter Documents). This Agreement and the Related
\nAgreements have been duly and validly executed and delivered by the Company and,
\nassuming the due authorization, execution and delivery by Parent and Merger Sub,
\nand subject to obtaining the approval of the Company’s stockholders of the
\nMerger and this Agreement, constitute legal and binding obligations of the
\nCompany, enforceable against the Company in accordance with their terms except
\nas enforceability may be limited by applicable bankruptcy, insolvency,
\nreorganization, moratorium or similar laws affecting creditors’ and contracting
\nparties’ rights generally and except as enforceability may be subject to general
\nprinciples of equity (regardless of whether such enforceability is considered in
\na proceeding in equity or at law).<\/p>\n
2.5 No Conflict; Required Filings and Consents.<\/p>\n
(a) The execution and delivery of this Agreement and the Related
\nAgreements by the Company do not, and the performance of this Agreement and the
\nRelated Agreements by the Company shall not, (i) conflict with or violate the
\nCompany Charter Documents, (ii) subject to obtaining the approval of the
\nCompany’s stockholders of the Merger and this Agreement and compliance with the
\nrequirements set forth in Section 2.5(b) below, conflict with or violate any
\nlaw, rule, regulation, order, judgment or decree applicable to the Company by
\nwhich its properties is bound or affected, or (iii) result in any breach of or
\nconstitute a default (or an event that with notice or lapse of time or both
\nwould become a default) under, or impair the Company’s rights or alter the
\nrights or obligations of any third party under, or give to others any rights of
\ntermination, amendment,<\/p>\n
-9-
\n 14<\/p>\n
acceleration or cancellation of, or result in the creation of a lien or
\nencumbrance on any of the properties or assets of the Company pursuant to, any
\nmaterial note, bond, mortgage, indenture, contract, agreement, lease, license,
\npermit, franchise or other instrument or obligation to which the Company is a
\nparty or by which the Company or its respective properties are bound or
\naffected, except to the extent such conflict, violation, breach, default,
\nimpairment or other effect could not in the case of clauses (ii) or (iii),
\nindividually or in the aggregate, reasonably be expected to have a Material
\nAdverse Effect on the Company.<\/p>\n
(b) The execution and delivery of this Agreement and the Related
\nAgreements by the Company do not, and the performance of this Agreement and the
\nRelated Agreements by the Company shall not, require any consent, approval,
\nauthorization or permit of, or filing with or notification to, any court,
\nadministrative agency, commission, governmental or regulatory authority,
\ndomestic or foreign (a “Governmental Entity”), except (A) for applicable
\nrequirements, if any, of the Securities Act of 1933, as amended (the “Securities
\nAct”), the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
\nstate securities laws (“Blue Sky Laws”), the pre-merger notification
\nrequirements (the “HSR Approval”) of the Hart-Scott-Rodino Antitrust
\nImprovements Act of 1976, as amended (the “HSR Act”), the rules and regulations
\nof Nasdaq, and the filing and recordation of the Certificate of Merger as
\nrequired by Delaware Law and (B) where the failure to obtain such consents,
\napprovals, authorizations or permits, or to make such filings or notifications,
\nwould not have a material adverse effect on the Company’s ability to consummate
\nthe Merger or perform its obligations under this Agreement or the Related
\nAgreements.<\/p>\n
2.6 Compliance; Permits.<\/p>\n
(a) The Company is not in default or violation of, (i) any law,
\nrule, regulation, order, judgment or decree (each, a “Law”) applicable to the
\nCompany or by which its properties is bound or affected, or (ii) any material
\nnote, bond, mortgage, indenture, contract, agreement, lease, license, permit,
\nfranchise or other instrument or obligation to which the Company is a party or
\nby which the Company or its properties is bound or affected, except for any
\ndefaults or violations that (individually or in the aggregate) would not have a
\nMaterial Adverse Effect on the Company. To the Company’s knowledge no
\ninvestigation or review by any governmental or regulatory body or authority is
\npending or threatened against the Company, nor has any governmental or
\nregulatory body or authority indicated an intention to conduct the same, other
\nthan, in each such case, those the outcome of which could not, individually or
\nin the aggregate, reasonably be expected to have the effect of prohibiting or
\nmaterially impairing any business practice of the Company, any acquisition of
\nmaterial property by the Company or the conduct of business by the Company in
\nany material way.<\/p>\n
(b) The Company holds all permits, licenses, variances,
\nexemptions, orders and approvals from governmental authorities (“Permits”) that
\nare material to operation of the business of the Company as currently conducted
\n(collectively, the “Company Permits”); provided, however, that Permits that may
\nbe required for the future operation of the business have not been granted by
\nthe Food and Drug Administration or any comparable foreign governmental entity.
\nThe Company is in compliance in all material respects with the terms of the
\nCompany Permits.<\/p>\n
2.7 SEC Filings; Financial Statements.<\/p>\n
-10-
\n 15<\/p>\n
(a) The Company has made available to Parent a correct and
\ncomplete copy of each report, schedule, registration statement and definitive
\nproxy statement filed by the Company with the Securities and Exchange Commission
\n(“SEC”) after January 1, 1999 (the “Company SEC Reports”), which are all the
\nforms, reports and documents required to be filed by the Company with the SEC
\nafter January 1, 1999. The Company SEC Reports (A) were prepared in accordance
\nwith the requirements of the Securities Act or the Exchange Act, as the case may
\nbe, and filed on a timely basis and (B) did not at the time they were filed (and
\nif amended or superseded by a filing prior to the date of this Agreement then on
\nthe date of such filing) contain any untrue statement of a material fact or omit
\nto state a material fact required to be stated therein or necessary in order to
\nmake the statements therein, in light of the circumstances under which they were
\nmade, not misleading.<\/p>\n
(b) Each set of consolidated financial statements (including, in
\neach case, any related notes thereto) contained in the Company SEC Reports was
\nprepared in accordance with generally accepted accounting principles (“GAAP”)
\napplied on a consistent basis throughout the periods involved (except as may be
\nindicated in the notes thereto or, in the case of unaudited statements, for the
\nabsence of footnotes) and each fairly presents in all material respects the
\nfinancial position of the Company at the respective dates thereof and the
\nresults of its operations and cash flows for the periods indicated, except that
\nthe unaudited interim financial statements were or are subject to normal
\nadjustments and lack footnotes.<\/p>\n
2.8 No Undisclosed Liabilities. The Company has no liabilities
\n(absolute, accrued, contingent or otherwise) which are, individually or in the
\naggregate, material to the business, results of operations or financial
\ncondition of the Company taken as a whole, except (i) liabilities provided for
\nin the Company’s balance sheet as of December 31, 2000 (or described in the
\nfootnotes thereto), (ii) liabilities incurred since December 31, 2000 in the
\nordinary course of business, (iii) contractual and other liabilities incurred in
\nthe ordinary course of business which are not required by GAAP to be reflected
\non a balance sheet, and (iv) liabilities permitted under this Agreement and the
\ntransactions related to the Merger, and liabilities incurred pursuant to or in
\nconnection with any other agreement between the parties.<\/p>\n
2.9 Absence of Certain Changes or Events. Since March 31, 2001, there
\nhas not been: (i) any declaration, setting aside or payment of any dividend on,
\nor other distribution (whether in cash, stock or property) in respect of, any of
\nthe Company’s capital stock, (ii) any purchase, redemption or other acquisition
\nby the Company of (a) the Company’s capital stock, (b) any other securities of
\nthe Company or (c) any options, warrants, calls or rights to acquire any such
\nshares or other securities, except for repurchases from employees following
\ntheir termination pursuant to the terms of their pre-existing stock option or
\npurchase agreements, (iii) any split, combination or reclassification of any of
\nthe Company’s capital stock, (iv) any granting by the Company of any increase in
\ncompensation or fringe benefits, except for normal increases of cash
\ncompensation to non-officer employees in the ordinary course of business
\nconsistent with past practice, or any payment by the Company of any bonus,
\nexcept for bonuses made to non-officer employees in the ordinary course of
\nbusiness consistent with past practice, or any granting by the Company of any
\nincrease in severance or termination pay or any entry by the Company into any
\ncurrently effective employment, severance, termination or indemnification
\nagreement or any agreement the benefits of which are contingent or the terms of
\nwhich are materially altered upon the occurrence of a transaction involving the
\nCompany of the nature contemplated hereby, (v) except for any agreements<\/p>\n
-11-
\n 16<\/p>\n
between Parent and the Company, entry by the Company into any licensing or other
\nagreement with regard to the acquisition or disposition of any Company
\nIntellectual Property (as defined in Section 2.19) other than any amendment or
\nconsent with respect to any licensing agreement filed or required to be filed by
\nthe Company with the SEC, (vi) any material change by the Company in its
\naccounting methods, principles or practices, except as required by concurrent
\nchanges in GAAP, or (vii) any revaluation by the Company of any of its assets,
\nincluding, without limitation, writing down the value of capitalized inventory
\nor writing off notes or accounts receivable or any sale of assets of the Company
\nother than in the ordinary course of business.<\/p>\n
2.10 Absence of Litigation. There are no claims, actions, suits or
\nproceedings (“Claims”) pending or, to the knowledge of the Company, threatened
\nagainst the Company or any properties or rights of the Company, before any
\ncourt, arbitrator or administrative, governmental or regulatory authority or
\nbody, domestic or foreign, except for Claims that, individually or in the
\naggregate, would not have a Material Adverse Effect on the Company.<\/p>\n
2.11 Employee Benefit Plans.<\/p>\n
(a) All employee compensation, incentive, fringe or benefit
\nplans, programs, policies, commitments or other arrangements (whether or not set
\nforth in a written document and including, without limitation, all “employee
\nbenefit plans” within the meaning of Section 3(3) of the Employee Retirement
\nIncome Security Act of 1974, as amended (“ERISA”)) covering any active or former
\nemployee, director or consultant of the Company or any trade or business
\n(whether or not incorporated) which is a member of a controlled group or which
\nis under common control with the Company within the meaning of Section 414 of
\nthe Code (an “Affiliate”), or with respect to which the Company has or may in
\nthe future have liability, are listed in Section 2.11(a) of the Company Schedule
\n(the “Plans”). The Company has provided to Parent: (i) correct and complete
\ncopies of all documents embodying each Plan, and management, employment,
\nseverance, consulting, relocation, repatriation, expatriation, visa, work permit
\nor other agreement, contract or understanding between the Company and any
\nEmployee (“Employment Agreement”), including (without limitation) all amendments
\nthereto, all related trust documents, and all material written agreements and
\ncontracts relating to each such Plan; (ii) the three (3) most recent annual
\nreports (Form Series 5500 and all schedules and financial statements, if any,
\nrequired to be attached thereto), if any, required under ERISA or the Code in
\nconnection with each Plan; (iii) the most recent summary plan description
\ntogether with the summary(ies) of material modifications thereto, if any,
\nrequired under ERISA with respect to each Plan; (iv) all IRS or DOL
\ndetermination, opinion, notification and advisory letters; (v) all material
\ncorrespondence to or from any governmental agency relating to any Plan; (vi) all
\nCOBRA forms and related notices; (vii) all discrimination tests for each Plan
\nfor the most recent three (3) plan years; (viii) the most recent annual
\nactuarial valuations, if any required, prepared for each Plan; (ix) if the Plan
\nis funded, the most recent annual and periodic accounting of Plan assets; (x)
\nall material written agreements and contracts relating to each Plan, including,
\nbut not limited to, administrative service agreements, group annuity contracts
\nand group insurance contracts; (xi) all material communications to employees or
\nformer employees regarding in each case, relating to any amendments,
\nterminations, establishments, increases or decreases in benefits, acceleration
\nof payments or vesting schedules or other events which would result in any
\nmaterial liability under any Plan or proposed Plan; (xii) all policies
\npertaining to fiduciary liability insurance covering the<\/p>\n
-12-
\n 17<\/p>\n
fiduciaries for each Plan; and (xiii) all registration statements, annual
\nreports (Form 11-K and all attachments thereto) and prospectuses prepared in
\nconnection with any Plan.<\/p>\n
(b) The Company has performed in all material respects all
\nobligations required to be performed by it under, is not in default or violation
\nof, and has no knowledge of any default or violation by any other party to, each
\nPlan, and each Plan has been maintained and administered in all material
\nrespects in compliance with its terms and with the requirements prescribed by
\nany and all statutes, orders, rules and regulations (foreign or domestic),
\nincluding but not limited to ERISA and the Code, which are applicable to such
\nPlans. No suit, action or other litigation (excluding claims for benefits
\nincurred in the ordinary course of Plan activities) has been brought, or to the
\nknowledge of the Company is threatened, against or with respect to any such
\nPlan. There are no audits, inquiries or proceedings pending or, to the knowledge
\nof the Company, threatened by the Internal Revenue Service (the “IRS”) or
\nDepartment of Labor (the “DOL”) with respect to any Plans. All contributions,
\nreserves or premium payments required to be made or accrued as of the date
\nhereof to the Plans have been timely made or accrued. Any Plan intended to be
\nqualified under Section 401(a) of the Code and each trust intended to qualify
\nunder Section 501(a) of the Code (i) has either obtained a favorable
\ndetermination, notification, advisory and\/or opinion letter, as applicable, as
\nto its qualified status from the IRS or still has a remaining period of time
\nunder applicable Treasury Regulations or IRS pronouncements in which to apply
\nfor such letter and to make any amendments necessary to obtain a favorable
\ndetermination, and (ii) incorporates or has been amended to incorporate all
\nprovisions required to comply with the Tax Reform Act of 1986 and subsequent
\nlegislation. The Company does not have any plan or commitment to establish any
\nnew Plan, to modify any Plan (except to the extent required by law or to conform
\nany such Plan to the requirements of any applicable law, in each case as
\npreviously disclosed to Parent in writing, or as required by this Agreement), or
\nto enter into any new Plan. Each Plan can be amended, terminated or otherwise
\ndiscontinued after the Effective Time in accordance with its terms, without
\nliability to Parent, the Company or any of its Affiliates (other than ordinary
\nadministration expenses and expenses for benefits accrued but not yet paid).<\/p>\n
(c) Neither the Company nor any of its Affiliates has at any
\ntime ever maintained, established, sponsored, participated in, or contributed to
\nany plan subject to Title IV of ERISA or Section 412 of the Code, and at no time
\nhas the Company contributed to or been requested to contribute to any
\n“multiemployer plan,” as such term is defined in ERISA or to any plan described
\nin Section 413(c) of the Code. Neither the Company nor any officer or director
\nof the Company is subject to any liability or penalty under Section 4975 through
\n4980B of the Code or Title I of ERISA. No “prohibited transaction,” within the
\nmeaning of Section 4975 of the Code or Sections 406 and 407 of ERISA, and not
\notherwise exempt under Section 408 of ERISA, has occurred with respect to any
\nPlan.<\/p>\n
(d) Neither the Company nor any of its Affiliates has, prior to
\nthe Effective Time and in any material respect, violated any of the health
\ncontinuation requirements of the Consolidated Omnibus Budget Reconciliation Act
\nof 1985, as amended (“COBRA”), the requirements of the Family Medical Leave Act
\nof 1993, as amended, the requirements of the Women’s Health and Cancer Rights
\nAct, as amended, the requirements of the Newborns’ and Mothers’ Health
\nProtection Act of 1996, as amended, or any similar provisions of state law
\napplicable to employees of the Company. None of the Plans promises or provides
\nretiree medical or other retiree welfare benefits to<\/p>\n
-13-
\n 18<\/p>\n
any person except as required by applicable law, and the Company has not
\nrepresented, promised or contracted (whether in oral or written form) to provide
\nsuch retiree benefits to any employee, former employee, director, consultant or
\nother person, except to the extent required by statute.<\/p>\n
(e) Except as disclosed in Section 2.11(e) of the Company
\nSchedule, neither the execution and delivery of this Agreement, nor the
\nconsummation of the transactions contemplated hereby will (either alone or upon
\nthe occurrence of any additional or subsequent events) (i) constitute an event
\nunder any Plan, Employment Agreement, trust or loan that will or may result in
\nany payment (whether of severance pay or otherwise), acceleration, forgiveness
\nof indebtedness, vesting, distribution, increase in benefits or obligation to
\nfund benefits with respect to any Employee; or (ii) result in any payment or
\nbenefit which will or may be made by the Company or its Affiliates with respect
\nto any Employee will be characterized as a “parachute payment,” within the
\nmeaning of Section 280G(b)(2) of the Code.<\/p>\n
(f) The Company has no employees outside the United States.<\/p>\n
2.12 Labor Matters. (i) There are no material controversies pending or,
\nto the knowledge of the Company, threatened, between the Company and any of its
\nemployees; (ii) the Company is not a party to any collective bargaining
\nagreement or other labor union contract or arrangement with any labor union
\napplicable to persons employed by the Company nor does the Company know of any
\nactivities or proceedings of any labor union to organize any such employees; and
\n(iii) the Company has no knowledge of any labor disputes, strikes, slowdowns,
\nwork stoppages or lockouts, or threats thereof, by or with respect to any
\nemployees of the Company, and the Company has not experienced any labor
\ninterruptions over the past three (3) years. The Company is in compliance in all
\nmaterial respects with all applicable material foreign, federal, state and local
\nlaws, rules and regulations respecting employment, employment practices, terms
\nand conditions of employment and wages and hours.<\/p>\n
2.13 Proxy Statement. None of the information supplied or to be supplied
\nby the Company for inclusion or incorporation by reference in the proxy
\nstatement to be filed with the SEC by the Company pursuant to Section 5.4
\nhereof, as the same may be amended from time to time (the “Proxy Statement”)
\nwill, at the dates mailed to the stockholders of the Company and at the time of
\nthe stockholders meeting of the Company (the “Company Stockholders’ Meeting”) in
\nconnection with the transactions contemplated hereby, contain any untrue
\nstatement of a material fact or omit to state any material fact required to be
\nstated therein or necessary in order to make the statements therein, in light of
\nthe circumstances under which they are made, not misleading. The Proxy Statement
\nwill comply as to form in all material respects with the provisions of the
\nExchange Act and the rules and regulations promulgated by the SEC thereunder.
\nNotwithstanding the foregoing, the Company makes no representation or warranty
\nwith respect to any information supplied by Parent or Merger Sub that is
\ncontained in any of the foregoing documents.<\/p>\n
2.14 Restrictions on Business Activities. There is no agreement,
\ncommitment, judgment, injunction, order or decree binding upon the Company or to
\nwhich the Company is a party which has or could reasonably be expected to have
\nthe effect of prohibiting or materially impairing any business practice of the
\nCompany (including but not limited to research and development, sales,
\nmanufacturing, marketing and employment) or the conduct of business by the
\nCompany as such<\/p>\n
-14-
\n 19<\/p>\n
practice or business is currently conducted or presently anticipated by the
\nCompany to be conducted or pursued under any agreement between Parent and the
\nCompany.<\/p>\n
2.15 Title to Property. The Company does not own any material real
\nproperty. The Company has good and defensible title to all of its material
\nproperties and assets it purports to own, free and clear of all liens, charges
\nand encumbrances except liens for taxes not yet due and payable, and such liens
\nor other imperfections of title, if any, as do not materially detract from the
\nvalue of or interfere with the present use of the property affected thereby. All
\nleases pursuant to which the Company lease from others material real or personal
\nproperty are in good standing, valid and effective in accordance with their
\nrespective terms, and there is not, under any of such leases, any existing
\nmaterial default or event of default (or any event which with notice or lapse of
\ntime, or both, would constitute a material default and in respect of which the
\nCompany has not taken adequate steps to prevent such default from occurring).
\nAll the plants, structures and equipment of the Company, except such as may be
\nunder construction, are in good operating condition and repair, in all material
\nrespects, subject to normal wear and tear.<\/p>\n
2.16 Taxes.<\/p>\n
(a) For the purposes of this Agreement, “Tax” or “Taxes” “means
\n(i) any and all federal, state, local and foreign taxes, including taxes based
\nupon or measured by gross receipts, income, profits, sales, use and occupation,
\nand value added, ad valorem, transfer, franchise, withholding, payroll,
\nrecapture, employment, excise and property taxes, together with all interest,
\npenalties and additions imposed with respect to such amounts, (ii) any liability
\nfor the payment of any amounts of the type described in clause (i) as a result
\nof being or ceasing to be a member of an affiliated, consolidated, combined or
\nunitary group for any period (including, without limitation, any liability under
\nTreasury Regulation Section 1.1502-6 or any comparable provision of foreign,
\nstate or local law), and (iii) any liability for the payment of any amounts of
\nthe type described in clause (i) or (ii) as a result of any express or implied
\nobligation to indemnify any other person or as a result of any obligations under
\nany agreements or arrangements with any other person with respect to such
\namounts and including any liability for taxes of a predecessor entity.<\/p>\n
(b)<\/p>\n
(i) The Company has timely filed (taking into account
\nextensions) all federal, state, local and foreign returns, estimates,
\ninformation statements and reports (“Returns”) relating to Taxes required to be
\nfiled by the Company with any Tax authority, except such Returns which are not
\nmaterial to the Company. All such Returns were correct and complete in all
\nmaterial respects. The Company has paid all Taxes shown to be due on such
\nReturns.<\/p>\n
(ii) The Company as of the Effective Time will have
\nwithheld with respect to its employees all federal and state income Taxes, Taxes
\npursuant to the Federal Insurance Contribution Act and other Taxes, if any,
\nrequired to be withheld as of the Effective Time, except such Taxes which are
\nnot material to the Company, and have timely paid over to the proper
\ngovernmental authorities all amounts required to be withheld and paid over under
\nall applicable laws and will have paid all then due Taxes required to be paid
\npursuant to the Federal Unemployment Tax Act with respect to compensation paid
\nto its employees.<\/p>\n
-15-
\n 20<\/p>\n
(iii) Except as disclosed in Section 2.16(b)(iii) of the
\nCompany Schedule, the Company has not been delinquent in the payment of any
\nmaterial Tax nor is there any material Tax deficiency outstanding, proposed or
\nassessed against the Company, nor has the Company executed any unexpired waiver
\nof any statute of limitations on or extending the period for the assessment or
\ncollection of any Tax.<\/p>\n
(iv) No audit or other examination of any Return of the
\nCompany by any Tax authority is presently in progress, nor has the Company been
\nnotified in writing of any request for such an audit or other examination.<\/p>\n
(v) No adjustment relating to any Returns filed by the
\nCompany has been proposed in writing by any Tax authority to the Company or any
\nrepresentative thereof.<\/p>\n
(vi) The Company has no liability for any material
\nunpaid Taxes which has not been accrued for or reserved on the Company balance
\nsheet dated December 31, 2000 in accordance with GAAP, whether asserted or
\nunasserted, contingent or otherwise, which is material to the Company, other
\nthan any liability for unpaid Taxes that may have accrued since December 31,
\n2000 in connection with the operation of the business of the Company in the
\nordinary course.<\/p>\n
(vii) There is no contract, agreement, plan or
\narrangement to which the Company is a party as of the date of this Agreement,
\nincluding but not limited to the provisions of this Agreement, covering any
\nemployee or former employee of the Company that, individually or collectively,
\nwould reasonably be expected to give rise to the payment of any amount that
\nwould not be deductible pursuant to Sections 280G, 404 or 162(m) of the Code.
\nThere is no contract, agreement, plan or arrangement to which the Company is a
\nparty or by which it is bound to compensate any individual for excise taxes paid
\npursuant to Section 4999 of the Code.<\/p>\n
(viii) The Company has not filed any consent agreement
\nunder Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code
\napply to any disposition of a subsection (f) asset (as defined in Section
\n341(f)(4) of the Code) owned by the Company.<\/p>\n
(ix) The Company is not party to and does not have any
\nobligation under any tax-sharing, tax indemnity or tax allocation agreement or
\narrangement.<\/p>\n
(x) None of the Company’s assets are tax exempt use
\nproperty within the meaning of Section 168(h) of the Code.<\/p>\n
(xi) The Company has not constituted either a
\n“distributing corporation” or a “controlled corporation” in a distribution of
\nstock qualifying for tax-free treatment under Section 355 of the Code (i) in the
\ntwo years prior to the date of this Agreement or (ii) in a distribution which
\ncould otherwise constitute part of a “plan” or “series of related transactions”
\n(within the meaning of Section 355(e) of the Code) in conjunction with the
\nMerger.<\/p>\n
(xii) Except as disclosed in Section 2.16(b)(xii) of the
\nCompany Schedule, the Company has not granted any power of attorney with respect
\nto Taxes.<\/p>\n
-16-
\n 21<\/p>\n
(xiii) The Company is not, and has not been at any time,
\na “United States real property holding corporation” within the meaning of
\nsection 897(c) of the Code.<\/p>\n
2.17 Environmental Matters. The Company (i) has obtained all applicable
\npermits, licenses and other authorizations that are required under Environmental
\nLaws the absence of which would have a Material Adverse Effect on the Company;
\n(ii) is in compliance in all material respects with all material terms and
\nconditions of such required permits, licenses and authorizations, and also is in
\ncompliance in all material respects with all other material limitations,
\nrestrictions, conditions, standards, prohibitions, requirements, obligations,
\nschedules and timetables contained in such laws or contained in any regulation,
\ncode, plan, order, decree, judgment, notice or demand letter issued, entered,
\npromulgated or approved thereunder; and (iii) has no knowledge of and has not
\nreceived any written notice of any event, condition, circumstance, activity,
\npractice, incident, action or plan that is reasonably foreseeably likely to
\ninterfere with or prevent continued compliance with any Environmental Law or
\nthat would give rise to any common law or statutory liability pursuant to any
\nEnvironmental Law, except to the extent such non-compliance, liability or
\nEnvironmental Claim could not reasonably be expected to have a Material Adverse
\nEffect on the Company. To the Company’s knowledge, no Hazardous Materials are
\npresent in, on or under any real properties owned, leased or used at any time
\n(including both land and improvements thereon) by the Company, in such manner as
\nwould give rise to any liability or corrective or remedial obligation under any
\nEnvironmental Laws. “Environmental Claim” means any written notice, claim, act,
\ncause of action or investigation by any person alleging potential liability
\n(including potential liability for investigatory costs, cleanup costs,
\ngovernmental response costs, natural resources damages, property damages,
\npersonal injuries or penalties) arising out of, based on or resulting from (i)
\nthe presence, or release into the environment, of any Hazardous Materials or
\n(ii) any violation, or alleged violation, of any Environmental Laws.
\n“Environmental Laws” means all Federal, state, local and foreign laws and
\nregulations in effect on the date hereof relating to pollution of the
\nenvironment (including ambient air, surface water, ground water, land surface or
\nsubsurface strata) or the protection of human health and worker safety,
\nincluding, without limitation, laws and regulations relating to emissions,
\ndischarges, releases or threatened releases of Hazardous Materials, or otherwise
\nrelating to the manufacture, processing, distribution, use, treatment, storage,
\ndisposal, transport or handling of Hazardous Materials. “Hazardous Materials”
\nmeans chemicals, pollutants, contaminants, wastes, toxic substances, radioactive
\nand biological materials, asbestos-containing materials, hazardous substances,
\npetroleum and petroleum products or any fraction thereof, excluding, however,
\nHazardous Materials contained in products typically used for office, janitorial
\nand\/or landscaping purposes properly and safely maintained in accordance with
\nEnvironmental Laws.<\/p>\n
2.18 Brokers. The Company has not incurred, nor will it incur, directly
\nor indirectly, any liability for brokerage or finders’ fees or agents’
\ncommissions or any similar charges in connection with this Agreement or any
\ntransaction contemplated hereby based upon arrangements made by or on behalf of
\nthe Company.<\/p>\n
2.19 Intellectual Property. For the purposes of this Agreement, the
\nfollowing terms have the following definitions:<\/p>\n
“Intellectual Property” shall mean: (i) all United States and foreign
\n patents and applications therefor and all reissues, divisions, renewals,
\n extensions, provisionals, continuations and<\/p>\n
-17-
\n 22<\/p>\n
continuations-in-part thereof (“Patents”); (ii) all inventions (whether
\n patentable or not), invention disclosures, improvements, trade secrets,
\n proprietary information, know how, technology, technical data and
\n customer lists, and all documentation (or in the case of know how,
\n proprietary documentation) relating to any of the foregoing; (iii) all
\n copyrights, copyright registrations and applications therefor and all
\n other rights corresponding thereto throughout the world; (iv) all
\n industrial designs and any registrations and applications therefor
\n throughout the world; (v) all trade names, logos, common law trademarks
\n and service marks; trademark and service mark registrations and
\n applications therefor and all goodwill associated therewith throughout
\n the world; (vi) all databases and data collections and all rights
\n therein throughout the world related to research, design and development
\n of the Company’s Products; (vii) all computer software including all
\n source code, object code, firmware, development tools, files, records
\n and data, all media on which any of the foregoing is recorded, all Web
\n addresses, sites and domain names; and (viii) any similar, corresponding
\n or equivalent rights to any of the foregoing.<\/p>\n
“Company Intellectual Property” shall mean any Intellectual Property
\n that is owned by or exclusively licensed to the Company. Without in any
\n way limiting the generality of the foregoing, Company Intellectual
\n Property includes all Intellectual Property owned by or exclusively
\n licensed to the Company related to or necessary to develop, market or
\n otherwise exploit the Company’s products.<\/p>\n
“Registered Intellectual Property” shall mean all United States,
\n international and foreign: (i) patents and patent applications
\n (including provisional applications); (ii) registered trademarks,
\n applications to register trademarks, intent-to-use applications, or
\n other registrations or applications related to trademarks; (iii)
\n registered copyrights and applications for copyright registration; (iv)
\n domain name registrations; and (v) any other application, certificate,
\n filing, registration or other document issued by, filed with, or
\n recorded by, any state, government or other public legal authority.<\/p>\n
“Company Registered Intellectual Property” means all of the Registered
\n Intellectual Property owned by, or filed in the name of, the Company.<\/p>\n
(a) Section 2.19(a) of the Company Schedule is a complete and
\naccurate list of all Company Registered Intellectual Property and specifies,
\nwhere applicable, the jurisdictions in which each such item of Company
\nRegistered Intellectual Property has been issued or registered and lists any
\nproceedings or actions before any court, tribunal (including the United States
\nPatent and Trademark Office (the “PTO”) or equivalent authority anywhere in the
\nworld) related to any of the Company Registered Intellectual Property, and any
\nactions with respect thereto that should be taken within one hundred twenty
\n(120) days after the date of this Agreement.<\/p>\n
(b) Section 2.19(b) of the Company Schedule is a complete and
\naccurate list (by name and version number, if applicable) of all products or
\nservice offerings of the Company (“Company Products”) that have been distributed
\nor provided in the five (5) year period preceding the date hereof or which the
\nCompany presently intends to distribute or provide in the next three (3) years,
\nincluding any products or service offerings under development.<\/p>\n
-18-
\n 23<\/p>\n
(c) No Company Intellectual Property owned by the Company, no
\nCompany Product, and to the Company’s knowledge, no Company Intellectual
\nProperty exclusively licensed by the Company, is subject to any proceeding or
\noutstanding decree, order, judgment, contract, license, agreement, or
\nstipulation restricting in any manner the use (in accordance with the Company’s
\ncurrent practices), transfer, or licensing thereof by the Company, or which may
\nadversely affect the use (in accordance with the Company’s current practices) or
\nenforceability of such Company Intellectual Property or Company Product.<\/p>\n
(d) To the Company’s knowledge, each item of Company Registered
\nIntellectual Property is valid and subsisting, all necessary registration,
\nmaintenance and renewal fees currently due in connection with such Company
\nRegistered Intellectual Property have been made and all necessary documents,
\nrecordations and certificates in connection with such Company Registered
\nIntellectual Property have been filed with the relevant patent, copyright,
\ntrademark or other authorities in the United States or foreign jurisdictions, as
\nthe case may be, for the purposes of maintaining such Company Registered
\nIntellectual Property.<\/p>\n
(e) The Company owns and has good and exclusive title to, or
\nexclusively licenses, each item of Company Intellectual Property free and clear
\nof any lien or encumbrance on such owned Company Intellectual Property or on any
\nlicense to such licensed Company Intellectual Property. Without limiting the
\nforegoing: (i) the Company is the exclusive owner of all trademarks and trade
\nnames used in connection with the operation or conduct of the business of the
\nCompany, including the sale, distribution or provision of any Company Products
\nby the Company; (ii) the Company owns exclusively, and has good title to, all
\ncopyrighted works that are Company Products or which the Company otherwise
\npurports to own; and (iii) to the extent that any Patents would be infringed by
\nany Company Products currently under development or currently proposed, to the
\nCompany’s knowledge the Company is the exclusive owner of such Patents.<\/p>\n
(f) To the extent that any technology, hardware, software or
\nIntellectual Property has been developed or created in whole or in part by a
\nthird party specifically for the Company or to the extent any Intellectual
\nProperty is incorporated into or necessary to make, use or sell any of the
\nCompany Products, the Company owns or has the unrestricted perpetual,
\nnon-terminable (except for breach) license to use such third party’s
\nIntellectual Property in such work, material or invention to the extent required
\nfor or incident to the development, manufacture, operation or sale of the
\nCompany Products.<\/p>\n
(g) Except as contemplated by any agreement between the Company
\nand Parent, the Company has not transferred ownership of, or granted any
\nexclusive license with respect to, any Intellectual Property that is Company
\nIntellectual Property, to any third party, or permitted the Company’s rights in
\nsuch Company Intellectual Property to lapse or enter the public domain.<\/p>\n
(h) Section 2.19(h) of the Company Schedule lists all contracts,
\nlicenses and agreements to which the Company is a party: (i) with respect to
\nCompany Intellectual Property currently licensed or transferred to any third
\nparty; or (ii) pursuant to which a third party licenses or has transferred any
\nIntellectual Property to the Company.<\/p>\n
-19-
\n 24<\/p>\n
(i) All contracts, licenses and agreements relating to either
\n(i) Company Intellectual Property (other than end-user licenses in the ordinary
\ncourse) or (ii) Intellectual Property of a third party licensed to the Company
\nor used in the business of the Company in the manner currently contemplated, are
\nin full force and effect. The consummation of the transactions contemplated by
\nthis Agreement will neither violate nor result in the breach, modification,
\ncancellation, termination or suspension of such contracts, licenses and
\nagreements. The Company is in material compliance with, and has not materially
\nbreached any term of any such contracts, licenses and agreements and, to the
\nknowledge of the Company, all other parties to such contracts, licenses and
\nagreements are in compliance with, and have not materially breached any term of,
\nsuch contracts, licenses and agreements. Following the Closing Date, the
\nSurviving Corporation will be permitted to exercise all of the Company’s rights
\nunder such contracts, licenses and agreements to the same extent the Company
\nwould have been able to had the transactions contemplated by this Agreement not
\noccurred and without the payment of any additional amounts or consideration
\nother than ongoing fees, royalties or payments which the Company would otherwise
\nbe required to pay. Neither this Agreement nor the transactions contemplated by
\nthis Agreement will (as a result of agreements or commitments to which the
\nCompany is a party) result in (i) either Parent’s or the Merger Sub’s granting
\nto any third party any right to or with respect to any Intellectual Property
\nright owned by, or licensed to, either of them, (ii) either the Parent’s or the
\nMerger Sub’s being bound by, or subject to, any non-compete or other restriction
\non the operation or scope of their respective businesses, or (iii) either the
\nParent’s or the Merger Sub’s being obligated to pay any royalties or other
\namounts to any third party in excess of those payable by Parent or Merger Sub,
\nrespectively, prior to the Closing.<\/p>\n
(j) To the Company’s knowledge, the operation of the business of
\nthe Company as such business currently is conducted, including (i) the Company’s
\ndesign, development, manufacture, distribution, reproduction, marketing or sale
\nof the products or services of the Company (including Company Products) and (ii)
\nthe Company’s use of any product, device or process, has not and does not
\ninfringe or misappropriate the Intellectual Property of any third party or
\nconstitute unfair competition or trade practices under the laws of any
\njurisdiction.<\/p>\n
(k) The Company has not received notice from any third party
\nthat the operation of the business of the Company or any act, product or service
\nof the Company, infringes or misappropriates the Intellectual Property of any
\nthird party or constitutes unfair competition or trade practices under the laws
\nof any jurisdiction.<\/p>\n
(l) To the knowledge of the Company, no person has infringed or
\nmisappropriated or is infringing or misappropriating any Company Intellectual
\nProperty.<\/p>\n
(m) The Company has taken reasonable steps to protect the
\nCompany’s rights in the Company’s confidential information and trade secrets
\nthat it wishes to protect or any trade secrets or confidential information of
\nthird parties provided to the Company, and, without limiting the foregoing, the
\nCompany has and enforces a policy requiring each employee and consultant to
\nexecute a proprietary information\/confidentiality agreement substantially in the
\nform provided to Parent and all current and former employees and consultants of
\nthe Company have executed such an agreement.<\/p>\n
-20-
\n 25<\/p>\n
2.20 Agreements, Contracts and Commitments. As of the date hereof,
\nexcept as set forth in Section 2.20 of the Company Schedule, the Company is not
\na party to or is bound by:<\/p>\n
(a) any employment or consulting agreement, contract or
\ncommitment with any officer or director of the Company, other than those that
\nare terminable by the Company on no more than thirty (30) days’ notice without
\nliability or financial obligation to the Company;<\/p>\n
(b) any agreement of indemnification or any guaranty other than
\nany agreement of indemnification entered into in connection with the purchase or
\nlicense for use by the Company of software products or services in the ordinary
\ncourse of business;<\/p>\n
(c) any agreement, contract or commitment containing any
\ncovenant limiting in any respect the right of the Company to engage in any line
\nof business or to compete with any person or granting any exclusive distribution
\nrights;<\/p>\n
(d) any agreement, contract or commitment currently in force
\nrelating to the disposition or acquisition by the Company after the date of this
\nAgreement of a material amount of assets not in the ordinary course of business
\nor pursuant to which the Company has any material ownership interest in any
\ncorporation, partnership, joint venture or other business enterprise;<\/p>\n
(e) any dealer, distributor, joint marketing or development
\nagreement currently in force under which the Company has continuing material
\nobligations to jointly market any product, technology or service and which may
\nnot be canceled without penalty upon notice of ninety (90) days or less, or any
\nmaterial agreement pursuant to which the Company has continuing material
\nobligations to jointly develop any intellectual property that will not be owned,
\nin whole or in part, by the Company and which may not be canceled without
\npenalty upon notice of ninety (90) days or less;<\/p>\n
(f) any agreement, contract or commitment currently in force to
\nprovide source code to any third party for any product or technology that is
\nmaterial to the Company taken as a whole;<\/p>\n
(g) any agreement, contract or commitment currently in force to
\nlicense any third party to manufacture or reproduce any Company product, service
\nor technology or any agreement, contract or commitment currently in force to
\nsell or distribute any Company products, service or technology except agreements
\nwith distributors or sales representatives in the normal course of business
\ncancelable without penalty upon notice of ninety (90) days or less and
\nsubstantially in the form previously provided to Parent;<\/p>\n
(h) any mortgages, indentures, guarantees, loans or credit
\nagreements, security agreements or other agreements or instruments relating to
\nthe borrowing of money or extension of credit;<\/p>\n
(i) any material settlement agreement entered into within five
\n(5) years prior to the date of this Agreement; or<\/p>\n
(j) any other agreement, contract or commitment under which the
\nCompany is contractually obligated to make or entitled to receive payments of
\n$100,000 or more individually.<\/p>\n
-21-
\n 26<\/p>\n
The Company, nor to the Company’s knowledge any other party to a Company
\nContract (as defined below), is not in breach, violation or default under, and
\nthe Company has not received written notice that it has breached, violated or
\ndefaulted under, any of the material terms or conditions of any of the
\nagreements, contracts or commitments to which the Company is a party or by which
\nit is bound that are required to be disclosed in the Company Schedule (any such
\nagreement, contract or commitment, a “Company Contract”) in such a manner as
\nwould permit any other party to cancel or terminate any such Company Contract,
\nor would permit any other party to seek material damages or other remedies (for
\nany or all of such breaches, violations or defaults, in the aggregate).<\/p>\n
2.21 Insurance. The Company maintains insurance policies and fidelity
\nbonds covering the assets, business, equipment, properties, operations,
\nemployees, officers and directors of the Company (collectively, the “Insurance
\nPolicies”) which are of the type and in amounts customarily carried by persons
\nconducting businesses similar to those of the Company. There is no material
\nclaim by the Company pending under any of the material Insurance Policies as to
\nwhich coverage has been questioned, denied or disputed by the underwriters of
\nsuch policies or bonds.<\/p>\n
2.22 Board Approval. The Board of Directors of the Company has, as of
\nthe date of this Agreement, unanimously (i) approved and declared advisable this
\nAgreement and the Related Agreements and has approved the Merger and the other
\ntransactions contemplated hereby and thereby, (ii) determined that the Merger is
\nfair to, and in the best interests of, the Company and its stockholders and
\n(iii) determined to recommend that the stockholders of the Company adopt and
\napprove this Agreement and approve the Merger.<\/p>\n
2.23 Vote Required. The affirmative vote of the holders of a majority of
\nthe votes entitled to be cast with respect to the Merger by the holders of the
\nCompany Common Stock and Series B Convertible Preferred Stock (voting on an
\nas-converted to Company Common Stock basis), voting together as a single class,
\nis the only vote of the holders of any class or series of the Company’s capital
\nstock necessary to approve this Agreement and the transactions contemplated
\nhereby.<\/p>\n
2.24 State Takeover Statutes. Neither Section 203 of the Delaware Law
\nnor, to the Company’s knowledge, any other state takeover statute or similar
\nstatute or regulation applies to the Merger, this Agreement, the Related
\nAgreements or the transactions contemplated hereby and thereby.<\/p>\n
ARTICLE III
\n REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB<\/p>\n
Parent and Merger Sub represent and warrant to the Company, subject to
\nsuch exceptions as are specifically disclosed in writing in the disclosure
\nschedule supplied by Parent to the Company dated as of the date hereof (the
\n“Parent Schedule”) as follows. The Parent Schedule shall be arranged in sections
\ncorresponding to the numbered and lettered paragraphs contained in this Article
\nIII and the disclosure in any section of the Parent Schedule shall qualify other
\nparagraphs in this Article III only to the extent that it is reasonably apparent
\nfrom a reading of such disclosure that it also qualifies or applies to such
\nother paragraph.<\/p>\n
-22-
\n 27<\/p>\n
3.1 Organization and Qualification; Subsidiaries. Each of Parent and its
\nsubsidiaries is a corporation duly organized, validly existing and in good
\nstanding under the laws of the jurisdiction of its incorporation and has the
\nrequisite corporate power and authority to own, lease and operate its assets and
\nproperties and to carry on its business as it is now being conducted, except
\nwhere the failure to do so would not, individually or in the aggregate, have a
\nMaterial Adverse Effect on Parent or Merger Sub. Each of Parent and its
\nsubsidiaries is in possession of all Approvals necessary to own, lease and
\noperate the properties it purports to own, operate or lease and to carry on its
\nbusiness as it is now being conducted, except where the failure to have such
\nApprovals would not, individually or in the aggregate, be material to Parent or
\nMerger Sub. Each of Parent and its subsidiaries is duly qualified or licensed as
\na foreign corporation to do business, and is in good standing, in each
\njurisdiction where the character of the properties owned, leased or operated by
\nit or the nature of its activities makes such qualification or licensing
\nnecessary, except for such failures to be so duly qualified or licensed and in
\ngood standing that would not, either individually or in the aggregate, have a
\nMaterial Adverse Effect on Parent or Merger Sub.<\/p>\n
3.2 Authority Relative to this Agreement. Each of Parent and Merger Sub
\nhas all necessary corporate power and authority to execute and deliver this
\nAgreement and the applicable Related Agreements and to perform its obligations
\nhereunder and thereunder, and to consummate the transactions contemplated hereby
\nand thereby. The execution and delivery of this Agreement by Parent and Merger
\nSub and the consummation by Parent and Merger Sub of the transactions
\ncontemplated hereby and the execution and delivery of the applicable Related
\nAgreements by Parent and the consummation by Parent of the transactions
\ncontemplated thereby have been duly and validly authorized by all necessary
\ncorporate action on the part of Parent and Merger Sub, and no other corporate
\nproceedings on the part of Parent or Merger Sub are necessary to authorize this
\nAgreement and the applicable Related Agreements, or to consummate the
\ntransactions so contemplated. This Agreement and the Related Agreements have
\nbeen duly and validly executed and delivered by Parent and Merger Sub and,
\nassuming the due authorization, execution and delivery by the Company,
\nconstitute legal and binding obligations of Parent and Merger Sub, enforceable
\nagainst Parent and Merger Sub in accordance with their terms.<\/p>\n
3.3 No Conflict; Required Filings and Consents.<\/p>\n
(a) The execution and delivery of this Agreement and the
\napplicable Related Agreements by Parent and Merger Sub do not, and the
\nperformance of this Agreement and the applicable Related Agreements by Parent
\nand Merger Sub shall not, (i) conflict with or violate the Certificate of
\nIncorporation, Bylaws or equivalent organizational documents of Parent or any of
\nits subsidiaries, (ii) subject to compliance with the requirements set forth in
\nSection 3.3(b) below, conflict with or violate any Law applicable to Parent or
\nany of its subsidiaries or by which its or any of their respective properties
\nare bound or affected, or (iii) result in any breach of or constitute a default
\n(or an event that with notice or lapse of time or both would become a default)
\nunder, or impair Parent’s or any of its subsidiaries’ rights or alter the rights
\nor obligations of any third party under, or give to others any rights of
\ntermination, amendment, acceleration or cancellation of, or result in the
\ncreation of a lien or encumbrance on any of the properties or assets of Parent
\nor any of its subsidiaries pursuant to, any material note, bond, mortgage,
\nindenture, contract, agreement, lease, license, permit, franchise or other
\ninstrument or obligation to which Parent or any of its subsidiaries is a party
\nor by which Parent or any of its subsidiaries or its or any of their respective
\nproperties are<\/p>\n
-23-
\n 28<\/p>\n
bound or affected, except to the extent such conflict, violation, breach,
\ndefault, impairment or other effect would not in the case of clauses (ii) or
\n(iii), individually or in the aggregate, reasonably be expected to have a
\nMaterial Adverse Effect on Parent or Merger Sub.<\/p>\n
(b) The execution and delivery of this Agreement and the
\napplicable Related Agreements by Parent and Merger Sub do not, and the
\nperformance of this Agreement and the applicable Related Agreements by Parent
\nand Merger Sub shall not, require any consent, approval, authorization or permit
\nof, or filing with or notification to, any Governmental Entity except (i) for
\napplicable requirements, if any, of the Securities Act, the Exchange Act, Blue
\nSky Laws, the pre-merger notification requirements of the HSR Act, the rules and
\nregulations of Nasdaq, and the filing and recordation of the Certificate of
\nMerger as required by Delaware Law and (ii) where the failure to obtain such
\nconsents, approvals, authorizations or permits, or to make such filings or
\nnotifications, would not have a Material Adverse Effect on the Parent’s or
\nMerger Sub’s ability to consummate the Merger or perform their obligations under
\nthis Agreement and the Related Agreements.<\/p>\n
3.4 Ownership of Merger Sub; No Prior Activities. The Merger Sub is a
\ndirect, wholly-owned subsidiary of Parent and was formed solely for the purpose
\nof engaging in the transactions contemplated by this Agreement. Except for
\nobligations or liabilities incurred in connection with its incorporation or
\norganization and the transactions contemplated by this Agreement and except for
\nthis Agreement and any other agreements or arrangements contemplated by this
\nAgreement, the Merger Sub has not and will not have incurred, directly or
\nindirectly, through any subsidiary or affiliate, any obligations or liabilities
\nor engaged in any business activities of any type or kind whatsoever or entered
\ninto any agreements or arrangements with any person or entity which could
\nadversely affect the ability of Merger Sub or Parent to consummate the
\ntransactions contemplated hereby.<\/p>\n
ARTICLE IV
\n CONDUCT PRIOR TO THE EFFECTIVE TIME<\/p>\n
4.1 Conduct of Business by the Company. Except as expressly permitted by
\nthis Section 4.1 or required by the terms of this Agreement, and except as
\nprovided in Section 4.1 of the Company Schedule, without the prior written
\nconsent of Parent, during the period from the date of this Agreement and
\ncontinuing until the earlier of the termination of this Agreement pursuant to
\nits terms or the Effective Time, the Company shall carry on its business, in the
\nordinary course, in substantially the same manner as previously conducted and in
\nmaterial compliance with all applicable laws and regulations, pay its material
\ndebts and taxes when due subject to good faith disputes over such debts or
\ntaxes, pay or perform other material obligations when due, and use its
\ncommercially reasonable efforts consistent with past practices and policies to
\n(i) preserve intact its present business organization, (ii) keep available the
\nservices of its present officers and employees and (iii) preserve its
\nrelationships with customers, suppliers, distributors, licensors, licensees, and
\nothers with which it has business dealings. In addition, except as expressly
\npermitted or contemplated by the terms of this Agreement, and except as provided
\nin Section 4.1 of the Company Schedule, without the prior written consent of
\nParent, during the period from the date of this Agreement and continuing until
\nthe earlier of the termination of this Agreement pursuant to its terms or the
\nEffective Time, the Company shall not do any of the following:<\/p>\n
-24-
\n 29<\/p>\n
(a) Waive any stock repurchase rights, accelerate (except in
\nconnection with the termination of the Company Option Plan), amend or change the
\nperiod of exercisability of options or restricted stock, or reprice options
\ngranted under any employee, consultant, director or other stock plans or
\nauthorize cash payments in exchange for any options granted under any of such
\nplans;<\/p>\n
(b) Grant any severance or termination pay to any officer or
\nemployee except pursuant to written agreements outstanding, or policies
\nexisting, on the date hereof and as previously disclosed in writing or made
\navailable to Parent, or adopt any new severance plan;<\/p>\n
(c) Transfer or license to any person or entity or otherwise
\nextend, amend or modify any rights to the Company Intellectual Property, or
\nenter into grants to transfer or license to any person future patent rights;<\/p>\n
(d) Declare, set aside or pay any dividends on or make any other
\ndistributions (whether in cash, stock, equity securities or property) in respect
\nof any capital stock or split, combine or reclassify any capital stock or issue
\nor authorize the issuance of any other securities in respect of, in lieu of or
\nin substitution for any capital stock;<\/p>\n
(e) Purchase, redeem or otherwise acquire, directly or
\nindirectly, any shares of capital stock of the Company, except repurchases of
\nunvested shares at cost in connection with the termination of the employment
\nrelationship with any employee pursuant to stock option or purchase agreements
\nin effect on the date hereof or granted hereafter;<\/p>\n
(f) Issue, deliver, sell, authorize, pledge or otherwise
\nencumber any shares of capital stock or any securities convertible into shares
\nof capital stock, or subscriptions, rights, warrants or options to acquire any
\nshares of capital stock or any securities convertible into shares of capital
\nstock, or enter into other agreements or commitments of any character obligating
\nit to issue any such shares or convertible securities, other than: (x) the
\nissuance, delivery and\/or sale of shares of Company Common Stock pursuant to the
\nexercise of Company Stock Options or Company Warrants outstanding as of the date
\nof this Agreement or granted pursuant to clause (y) hereof; and (y) the granting
\nof stock options to purchase up to seventy-five thousand (75,000) shares in the
\naggregate (and the issuance of Company Common Stock upon exercise thereof), in
\nthe ordinary course of business and consistent with past practices;<\/p>\n
(g) Cause, permit or propose any amendments to the Company
\nCharter Documents;<\/p>\n
(h) Acquire or agree to acquire by merging or consolidating
\nwith, or by purchasing any equity interest in or a portion of the assets of, or
\nby any other manner, any business or any corporation, partnership, association
\nor other business organization or division thereof, or otherwise acquire or
\nagree to acquire any assets (other than in the ordinary course of business) or
\nenter into any joint ventures, strategic partnerships or alliances;<\/p>\n
(i) Sell, lease, license, encumber or otherwise dispose of any
\nproperties or assets except sales of inventory and the grant of end-user
\nlicenses in the ordinary course of business consistent with past practice,
\nexcept for the sale, lease or disposition (other than through licensing)<\/p>\n
-25-
\n 30<\/p>\n
of property or assets which are not material, individually or in the aggregate,
\nto the business of the Company;<\/p>\n
(j) Incur any indebtedness for borrowed money or guarantee any
\nsuch indebtedness of another person, issue or sell any debt securities or
\noptions, warrants, calls or other rights to acquire any debt securities of the
\nCompany, enter into any “keep well” or other agreement to maintain any financial
\nstatement condition or enter into any arrangement having the economic effect of
\nany of the foregoing other than (i) in connection with the financing of ordinary
\ncourse trade payables consistent with past practice or (ii) in a principal
\namount not to exceed $150,000 in the aggregate;<\/p>\n
(k) Adopt or amend any employee benefit plan, policy or
\narrangement, any employee stock purchase or employee stock option plan, or enter
\ninto any employment contract or collective bargaining agreement (other than
\noffer letters and letter agreements entered into in the ordinary course of
\nbusiness consistent with past practice with employees who are terminable “at
\nwill”), pay any special bonus or special remuneration to any director or
\nemployee, or increase the salaries or wage rates (except for increases in the
\nordinary course of business for non-officer employees) or fringe benefits
\n(including rights to severance or indemnification) of its directors, officers,
\nemployees or consultants;<\/p>\n
(l) (i) pay, discharge, settle or satisfy any claims,
\nliabilities or obligations (absolute, accrued, asserted or unasserted,
\ncontingent or otherwise) or litigation (whether or not commenced prior to the
\ndate of this Agreement), other than the payment, discharge, settlement or
\nsatisfaction, in the ordinary course of business consistent with past practice
\nor in accordance with their terms, of liabilities recognized or disclosed in the
\nmost recent consolidated financial statements (or the notes thereto) of the
\nCompany included in the Company SEC Reports or incurred since the date of such
\nfinancial statements, or (ii) waive the benefits of, agree to modify in any
\nmanner, terminate, release any person from or fail to enforce (without resorting
\nto litigation) any confidentiality or similar agreement to which the Company is
\na party or of which the Company is a beneficiary;<\/p>\n
(m) Make any individual or series of related payments outside of
\nthe ordinary course of business (including payments to financial, legal,
\naccounting or other professional service advisors) in excess of $100,000 per
\nmonth (except that such limit shall be $500,000 for the first month following
\nthe execution of this Agreement and except that the $100,000 limit shall not
\napply to amounts owed to the Principal Shareholder or for legal services
\nperformed through the date of this Agreement);<\/p>\n
(n) Except in the ordinary course of business consistent with
\npast practice, materially modify, amend or terminate any material contract or
\nagreement to which the Company is a party or waive, delay the exercise of,
\nrelease or assign any material rights or claims thereunder;<\/p>\n
(o) Enter into or materially modify any contracts, agreements,
\nor obligations relating to the distribution, sale, license or marketing by third
\nparties of the Company’s products or products licensed by the Company;<\/p>\n
-26-
\n 31<\/p>\n
(p) Revalue any of its assets or, except as required or
\npermitted by GAAP, make any change in accounting methods, principles or
\npractices;<\/p>\n
(q) Incur or enter into any agreement, contract or commitment
\noutside of the ordinary course of business requiring payments by the Company in
\nexcess of $100,000 individually;<\/p>\n
(r) Make any tax election that, individually or in the
\naggregate, is reasonably likely to adversely affect in any material respect the
\ntax liability or tax attributes of the Company or settle or compromise any
\nmaterial income tax liability; provided, however, that nothing in this Section
\n4.1(r) or elsewhere in this Agreement shall prohibit the Company from selling
\nstate tax losses to the extent permitted by applicable taxing authorities.<\/p>\n
(s) Amend or terminate any or all of the Related Agreements; or<\/p>\n
(t) Agree in writing or otherwise to take any of the actions
\ndescribed in Section 4.1(a) through Section 4.1(s) above.<\/p>\n
In the event the Company shall request Parent to consent in writing to
\nan action pursuant to this Section 4.1, Parent shall not unreasonably delay its
\ndetermination as to whether to withhold such consent.<\/p>\n
ARTICLE V
\n ADDITIONAL AGREEMENTS<\/p>\n
5.1 Initial Payment. Concurrently with the execution and delivery of
\nthis Agreement, and as a material inducement to the Company to enter into this
\nAgreement, Parent shall pay to the Company, by wire transfer, an amount equal to
\nFive Hundred Thousand Dollars ($500,000.00) (the “Initial Payment”). Without
\nlimiting the Company’s obligations pursuant to Section 7.3, in no event shall
\nthe Company be required to repay the Initial Payment to Parent, including
\nwithout limitation regardless of whether the Agreement is terminated and the
\nMerger is abandoned.<\/p>\n
5.2 Related Agreements. Concurrently with the execution and delivery of
\nthis Agreement, and as a material inducement to Parent and Merger Sub to enter
\ninto this Agreement, (i) the Principal Shareholder is entering into a Voting
\nAgreement, in substantially the form attached as Exhibit A; (ii) the Principal
\nShareholder is entering into a Non-Competition Agreement, in substantially the
\nform attached as Exhibit B; (iii) Parent and the Company are entering into a
\nLicense Agreement, in substantially the form attached as Exhibit C; and (iv)
\nParent and the Company are entering into an Omnibus Waiver and Amendment
\nAgreement, in substantially the form attached as Exhibit D.<\/p>\n
5.3 Parent Warrant. Concurrently with the execution of this Agreement,
\nand as a material inducement to Parent and Merger Sub to enter into this
\nAgreement, the Company shall issue and deliver to Parent the Parent Warrant, in
\nthe form attached as Exhibit E. In connection with the issuance of the Parent
\nWarrant, Parent hereby waives on behalf of itself and all future holders of the
\nSeries B Convertible Preferred Stock, the ASC Warrant and the Common Stock
\nWarrants and the shares issued or issuable thereunder any and all
\n“anti-dilution” provisions set forth in Section 5.D of the Certificate of
\nDesignations of Series B Convertible Preferred Stock of Medjet Inc. (the<\/p>\n
-27-
\n 32<\/p>\n
“Certificate of Designations”), Sections 7.1, 7.2 and 7.3 of the Common Stock
\nWarrants and Sections 7.1, 7.2 and 7.3 of the ASC Warrant that might be
\ntriggered by the issuance of the Parent Warrant and the shares issued or
\nissuable thereunder.<\/p>\n
5.4 Proxy Statement.<\/p>\n
(a) As promptly as practicable after the execution of this
\nAgreement, the Company shall prepare and file with the SEC the Proxy Statement.
\nParent shall have the right to review and comment thereon, but in all cases
\nsubject to the control of the Company except with respect to information
\nrelating to the Parent or Merger Sub. Parent shall furnish all information
\nconcerning Parent as the Company may reasonably request in connection with such
\nactions and the preparation of the Proxy Statement. As promptly as practicable
\nafter the filing of the definitive Proxy Statement, the Proxy Statement shall be
\nmailed to the stockholders of the Company. The Company shall cause the Proxy
\nStatement to comply as to form and substance in all material respects with the
\napplicable requirements of (i) the Exchange Act, (ii) the Securities Act, and
\n(iii) the rules and regulations of the Nasdaq (applicable to the
\nOver-The-Counter market).<\/p>\n
(b) The Proxy Statement shall solicit the approval of this
\nAgreement and the Merger, and subject to the right of the Board of Directors to
\nchange its recommendation if it determines in good faith (after consultation
\nwith outside counsel) it is required to do so by its fiduciary duties to the
\nstockholders of the Company under applicable law, shall include the
\nrecommendation of the Board of Directors of the Company to the Company’s
\nstockholders that they vote in favor of approval of this Agreement and the
\nMerger. Without limiting the generality of the foregoing, the Company’s
\nobligations pursuant to the first sentence of this Section 5.4(b) shall not be
\naffected by the commencement, public proposal, public disclosure or
\ncommunication to the Company of any Takeover Proposal (as defined in Section
\n5.7).<\/p>\n
(c) Whenever any event occurs that is required to be set forth
\nin an amendment or supplement to the Proxy Statement, Parent or the Company, as
\nthe case may be, will promptly inform the other party of such occurrence and
\ncooperate in filing with the SEC or its staff or any other government officials,
\nand\/or mailing to stockholders of the Company, such amendment or supplement, at
\nthe expense of Parent. The Company shall promptly amend or supplement, at the
\nexpense of Parent, the Proxy Statement to the extent required by law to do so,
\nand Parent shall cooperate with respect to any amendment or supplement. Parent
\nshall have the right to review and comment on any amendment or supplement, but
\nin all cases subject to the control of the Company except with respect to
\ninformation relating to the Parent or Merger Sub. Each of the parties shall
\nadvise the other parties, promptly after it receives notice thereof, of any
\nrequest by the SEC for amendment of the Proxy Statement or comments thereon and
\nresponses thereto or requests by the SEC for additional information.<\/p>\n
5.5 Stockholder Meeting. The Company shall call and hold the Company
\nStockholders’ Meeting as promptly as practicable after the date hereof for the
\npurpose of voting upon the approval of this Agreement and the Merger pursuant to
\nthe Proxy Statement. Subject to Section 5.7(b), the Company shall use all
\ncommercially reasonable efforts to solicit from its stockholders proxies in
\nfavor of the approval of this Agreement and the Merger pursuant to the Proxy
\nStatement and shall take all other action necessary or advisable to secure the
\nvote or consent of stockholders required by<\/p>\n
-28-
\n 33<\/p>\n
Delaware Law or applicable stock exchange requirements to obtain such approval.
\nThe Company shall take all other action, at the expense of Parent, necessary or
\nadvisable to promptly and expeditiously secure any vote or consent of
\nstockholders required by applicable Law and the Company’s Certificate of
\nIncorporation and Bylaws to effect the Merger. Notwithstanding the foregoing,
\nthe obligation of the Company to call, give notice of, convene and hold the
\nCompany Stockholders’ Meeting in accordance with this Section 5.5 shall not be
\nlimited or otherwise affected by the disclosure, announcement or submission to
\nthe Company of any Takeover Proposal or by the withdrawal, amendment or
\nmodification of the recommendation of the Board of the Directors of the Company
\nwith respect to the Merger. The obligations set forth in this Section 5.5 shall
\nin no event require the Company’s Board of Directors to recommend the
\ntransactions contemplated by this Agreement to the Company’s stockholders under
\ncircumstances in which the Board of Directors has changed its recommendation in
\naccordance with Section 5.4(b).<\/p>\n
5.6 Confidentiality; Access to Information.<\/p>\n
(a) The parties acknowledge that the Company and Parent have
\npreviously executed a Mutual Nondisclosure Agreement, dated as of May 25, 2001
\n(the “Nondisclosure Agreement”), which Nondisclosure Agreement will continue in
\nfull force and effect in accordance with its terms.<\/p>\n
(b) The Company will afford Parent and Parent’s accountants,
\ncounsel and employees reasonable access to its properties, books, records and
\npersonnel during the period prior to the Effective Time to obtain all
\ninformation concerning its business as Parent may reasonably request.<\/p>\n
5.7 No Solicitation.<\/p>\n
(a) From and after the date of this Agreement until the
\nEffective Time or termination of this Agreement pursuant to Article VII, the
\nCompany will not, nor will it authorize or permit any of its officers,
\ndirectors, affiliates or employees or any investment banker, attorney or other
\nadvisor or representative retained by it to, directly or indirectly, (i)
\nsolicit, initiate, encourage or induce the making, submission or announcement of
\nany Takeover Proposal (as defined below), (ii) participate in any discussions or
\nnegotiations regarding, or furnish to any person any information with respect
\nto, or take any other action to facilitate any inquiries or the making of any
\nproposal that constitutes or may reasonably be expected to lead to, any Takeover
\nProposal, (iii) engage in discussions with any person with respect to any
\nTakeover Proposal, (iv) approve, endorse or recommend any Takeover Proposal or
\n(v) enter into any letter of intent or similar document or any contract,
\nagreement or commitment contemplating or otherwise relating to any Acquisition
\nTransaction (as defined below). The Company will immediately cease any and all
\nexisting activities, discussions or negotiations with any parties conducted
\nheretofore with respect to any Takeover Proposal. Without limiting the
\nforegoing, it is understood that any violation of the restrictions set forth in
\nthis Section 5.7 by any officer, director or employee of the Company or any
\ninvestment banker acting on behalf of the Company, attorney or other advisor or
\nrepresentative of the Company shall be deemed to be a breach of this Section 5.7
\nby the Company. Notwithstanding the foregoing, in response to a Takeover
\nProposal that the Board of Directors of the Company determines in good faith
\n(after consultation with outside counsel) constitutes a Superior Proposal (as
\ndefined below) and<\/p>\n
-29-
\n 34<\/p>\n
which Takeover Proposal was unsolicited and made after the date hereof and did
\nnot otherwise occur as a result of a breach of this Section 5.7, the Company
\nmay, subject to compliance with Section 5.7(c) and only to the extent in any
\nsuch case the Board of Directors of the Company determines in good faith (after
\nconsultation with outside counsel) that the failure to take such actions are
\nreasonably likely to constitute a breach of the Board’s fiduciary duties to the
\nstockholders of the Company under applicable law, (x) furnish information with
\nrespect to the Company to the person making such Takeover Proposal (and its
\nrepresentatives) pursuant to a customary confidentiality agreement containing
\nprovisions not less restrictive of such person than the Nondisclosure Agreement,
\nprovided that all such information has previously been provided to Parent or is
\nprovided to Parent prior to or at the time it is provided to such person and (y)
\nparticipate in discussions or negotiations with the person making such Takeover
\nProposal (and its representatives) regarding such Takeover Proposal.<\/p>\n
(b) Neither the Board of Directors of the Company nor any
\ncommittee thereof shall (i) recommend, adopt or approve, or propose publicly to
\nrecommend, adopt or approve, any Takeover Proposal or Superior Proposal or (ii)
\napprove or recommend, or propose to approve or recommend, or allow the Company
\nto execute or enter into, any letter of intent, memorandum of understanding,
\nagreement in principle, merger agreement, acquisition agreement, option
\nagreement, joint venture agreement, partnership agreement or other similar
\nagreement (each, an “Acquisition Agreement”) constituting or related to any
\nTakeover Proposal (any action described in the foregoing clauses (i) or (ii) of
\nthis Section 5.7(b) being referred to as a “Company Adverse Recommendation
\nChange”). Notwithstanding the foregoing, the Board of Directors of the Company
\nmay make a Company Adverse Recommendation Change, if such Board of Directors
\ndetermines in good faith (after consultation with outside counsel) it is
\nrequired to do so by its fiduciary duties to the stockholders of the Company
\nunder applicable law; provided, however, that no Company Adverse Recommendation
\nChange may be made until after five business days following Parent’s receipt of
\nwritten notice (a “Notice of Adverse Recommendation”) from the Company advising
\nParent that the Board of Directors of the Company intends to make such a Company
\nAdverse Recommendation Change and specifying the terms and conditions of the
\napplicable Superior Proposal (it being understood and agreed that any amendment
\nto the financial terms or any other material term of such Superior Proposal
\nshall require a new Notice of Adverse Recommendation and a new five-day period).
\nFollowing receipt of a Notice of Adverse Recommendation, Parent shall have the
\nopportunity to present to the Board of Directors of the Company revised terms
\nfor the consummation of the Merger, including any proposed amendments or
\nmodifications to this Agreement in respect of such revised terms. The Board of
\nDirectors of the Company shall consider in good faith any such revised terms and
\namendments or modifications submitted to it by Parent. In determining whether to
\nmake a Company Adverse Recommendation Change in response to a Superior Proposal,
\nthe Board of Directors of the Company shall take into account Parent’s revised
\nterms and any proposed changes to the terms of this Agreement proposed by Parent
\nin response to a Notice of Adverse Recommendation or otherwise. Before making
\nany Company Adverse Recommendation Change, the Board of Directors of the Company
\nshall consider whether the revised terms offered by Parent are reasonably
\nequivalent or superior (based upon the factors set forth in the definition of
\nSuperior Proposal below) from the financial point of view of the Company’s
\nstockholders to the terms of the Superior Proposal and, if such terms are
\ndetermined by a vote of the Board of Directors to be reasonably equivalent or
\nsuperior from the financial point of view of the Company’s stockholders to<\/p>\n
-30-
\n 35<\/p>\n
the terms of the Superior Proposal, the Board of Directors of the Company shall
\naccept at a meeting duly called and held, duly adopted resolutions (x) approving
\nand declaring advisable the terms of any such revised proposal by Parent and any
\ndefinitive agreement proposed in connection therewith, (y) directing that the
\nadoption of the terms of any such revised proposal by Parent and any definitive
\nagreement proposed in connection therewith be submitted to a vote at a meeting
\nof the stockholders of the Company and (z) recommending that the stockholders of
\nthe Company approve and adopt the terms of any such revised proposal by Parent
\nand any definitive agreement proposed in connection therewith. If the Company
\nhas elected to make a Company Adverse Recommendation Change following receipt of
\na Superior Proposal and complying with the procedures set forth in this Section
\n5.7(b) and after determining by a vote of the Board of Directors that any
\nrevised terms and proposed changes of Parent are not reasonably equivalent or
\nsuperior from the financial point of view of the Company’s stockholders to the
\nterms of the Superior Proposal, the Company shall deliver to Parent (i) a
\nwritten notice of termination of this Agreement pursuant to this Section 5.7(b),
\n(ii) a wire transfer of immediately available funds in the amount of the
\nTermination Fee (as defined in Section 7.3(a)), (iii) the License Agreement (if
\nrequired pursuant to Section 7.3(a)) and (iv) a written acknowledgment that the
\nCompany and the Board of Directors have complied with all of their covenants and
\nobligations pursuant to this Section 5.7(b) and that the Company is obligated to
\npay the Termination Fee and effect the License Grant (if required).<\/p>\n
(c) In addition to the obligations of the Company set forth in
\nSection 5.7(a) and Section 5.7(b), the Company as promptly as practicable, and
\nin any event within 24 hours, shall advise Parent in writing of: any request for
\ninformation which the Company reasonably believes would lead to a Takeover
\nProposal; any request for information with respect to any Takeover Proposal; any
\ninquiry with respect to or which the Company reasonably should believe would
\nlead to any Takeover Proposal; the material terms and conditions of such
\nrequest, Takeover Proposal or inquiry; and the identity of the person or group
\nmaking any such request, Takeover Proposal or inquiry. The Company will keep
\nParent informed in all material respects of the status and details (including
\nmaterial amendments or proposed amendments) of any such request, Takeover
\nProposal or inquiry.<\/p>\n
(d) Nothing contained in this Section 5.7 shall prohibit the
\nCompany from (i) taking and disclosing to its stockholders a position
\ncontemplated by Rule 14e-2(a) or Item 1012(a) of Regulation M-A promulgated
\nunder the Exchange Act if, in the good faith judgment of the Board of Directors
\nof the Company (after consultation with outside counsel) failure to so disclose
\nwould constitute a violation of applicable law or regulation; provided, however,
\nthat in no event as a result of this Section 5.7(d) shall the Company or its
\nBoard of Directors or any committee thereof take, or agree or resolve to take,
\nany action prohibited by Section 5.7(b).<\/p>\n
For purposes of this Agreement, “Takeover Proposal” shall mean any offer
\nor proposal (other than an offer or proposal by Parent) relating to any
\nAcquisition Transaction. For the purposes of this Agreement, “Acquisition
\nTransaction” shall mean any transaction or series of related transactions other
\nthan the transactions contemplated by this Agreement involving: (A) any
\nacquisition or purchase from the Company by any person or “group” (as defined
\nunder Section 13(d) of the Exchange Act and the rules and regulations
\nthereunder) of more than a 15% interest in the total outstanding voting
\nsecurities of the Company or any tender offer or exchange offer that if
\nconsummated would result in any person or “group” (as defined under Section
\n13(d) of the Exchange<\/p>\n
-31-
\n 36<\/p>\n
Act and the rules and regulations thereunder) beneficially owning 15% or more of
\nthe total outstanding voting securities of the Company or any merger,
\nconsolidation, business combination or similar transaction involving the Company
\npursuant to which the stockholders of the Company immediately preceding such
\ntransaction hold less than 85% of the equity interests in the surviving or
\nresulting entity of such transaction; (B) any sale, lease (other than in the
\nordinary course of business), exchange, transfer, license (other than in the
\nordinary course of business), acquisition or disposition of more than 15% of the
\nassets of the Company; or (C) any liquidation, dissolution, recapitalization or
\nother significant corporate reorganization of the Company.<\/p>\n
For purposes of this Agreement, a “Superior Proposal” means any bona
\nfide, written Takeover Proposal made by a third party if the proposal is on
\nterms which the Board of Directors of the Company, determines in its good faith
\njudgment to be (x) superior to the Company’s stockholders from a financial point
\nof view to the Merger (taking into account all the terms and conditions of such
\nproposal and this Agreement (including any changes to the financial terms of
\nthis Agreement proposed by Parent in response to such offer or otherwise)), (y)
\nfor which financing, to the extent required, is then committed or which, in the
\ngood faith judgment of the Board of Directors of the Company, is reasonably
\ncapable of being obtained by such third party and (z) reasonably capable of
\nbeing completed, taking into account all financial, legal, regulatory and other
\naspects (other than the need to perform customary due diligence) of such
\nproposal.<\/p>\n
5.8 Parent Standstill. From the date of execution of this Agreement
\nuntil one year after the termination of this Agreement under Section 7.1,
\nneither Parent nor any of its affiliates will directly or indirectly purchase,
\ncontract to purchase, purchase any option or contract to purchase, sell, offer
\nto purchase, contract to sell, make any short sale, sell any contract to
\npurchase, purchase any contract to sell, grant any option, right or warrant to
\npurchase, hedge or otherwise transfer or dispose of any share or securities of
\nthe Company, other than on the terms set forth in and pursuant to the Agreement
\nand the Related Agreements or with the prior consent of the Board of Directors
\nof the Company; provided, however, that Parent may exercise the Parent Warrant,
\nthe Common Stock Warrants and the ASC Warrant in accordance with their
\nrespective terms; and provided further, however, that Parent may convert the
\n10,400 shares of Series B Convertible Preferred Stock into Company Common Stock
\naccordance with the terms of the Certificate of Designations. Notwithstanding
\nthe foregoing, the Section 5.8 shall not apply if the Merger is terminated
\npursuant to Section 7.1(e) or Section 7.1(g).<\/p>\n
5.9 Public Disclosure. Parent and the Company will consult with each
\nother and agree before issuing any press release or otherwise making any public
\nstatement with respect to the Merger, this Agreement or a Takeover Proposal and
\nwill not issue any such press release or make any such public statement prior to
\nsuch agreement, except as may be required by law or any listing agreement with a
\nnational securities exchange or with Nasdaq, in which case reasonable efforts to
\nconsult with the other party will be made prior to any such release or public
\nstatement. The parties have agreed to the text of the joint press release
\nannouncing the signing of this Agreement.<\/p>\n
5.10 Reasonable Efforts; Notification.<\/p>\n
(a) Upon the terms and subject to the conditions set forth in
\nthis Agreement, each of the parties agrees to use all commercially reasonable
\nefforts to take, or cause to be taken, all<\/p>\n
-32-
\n 37<\/p>\n
actions, and to do, or cause to be done, and to assist and cooperate with the
\nother parties in doing, all things necessary, proper or advisable to consummate
\nand make effective, in the most expeditious manner practicable, the Merger and
\nthe other transactions contemplated by this Agreement, including using
\ncommercially reasonable efforts to accomplish the following: (i) the taking of
\nall reasonable acts necessary to cause the conditions precedent set forth in
\nArticle VI to be satisfied, (ii) the obtaining of all necessary actions or
\nnonactions, waivers, consents, approvals, orders and authorizations from
\nGovernmental Entities and the making of all necessary registrations,
\ndeclarations and filings (including registrations, declarations and filings with
\nGovernmental Entities, if any) and the taking of all commercially reasonable
\nsteps as may be necessary to avoid any suit, claim, action, investigation or
\nproceeding by any Governmental Entity, (iii) the obtaining of all necessary
\nconsents, approvals or waivers from third parties, (iv) the defending, at
\nParent’s expense, of any suits, claims, actions, investigations or proceedings,
\nwhether judicial or administrative, challenging this Agreement or the
\nconsummation of the transactions contemplated hereby, including seeking to have
\nany stay or temporary restraining order entered by any court or other
\nGovernmental Entity vacated or reversed and (v) the execution or delivery of any
\nadditional instruments necessary to consummate the transactions contemplated by,
\nand to fully carry out the purposes of, this Agreement. In connection with and
\nwithout limiting the foregoing, the Company and its Board of Directors shall, if
\nany state takeover statute or similar statute or regulation is or becomes
\napplicable to the Merger, this Agreement or any of the transactions contemplated
\nby this Agreement, use all commercially reasonable efforts to ensure that the
\nMerger and the other transactions contemplated by this Agreement may be
\nconsummated as promptly as practicable on the terms contemplated by this
\nAgreement and otherwise to minimize the effect of such statute or regulation on
\nthe Merger, this Agreement and the transactions contemplated hereby.
\nNotwithstanding anything to the contrary in this Agreement, nothing in this
\nAgreement shall be deemed to require Parent or the Company or any subsidiary or
\naffiliate thereof to agree to any divestiture by itself or any of its affiliates
\nof shares of capital stock or of any business, assets or property, or the
\nimposition of any material limitation on the ability of any of them to conduct
\ntheir business or to own or exercise control of such assets, properties and
\nstock.<\/p>\n
(b) The Company shall give prompt written notice to Parent of
\nany representation or warranty made by it contained in this Agreement becoming
\nuntrue or inaccurate in any material respect, or any failure of the Company to
\ncomply with or satisfy in any respect any covenant, condition or agreement to be
\ncomplied with or satisfied by it under this Agreement; provided, however, that
\nno such notification shall affect the representations, warranties, covenants or
\nagreements of the parties or the conditions to the obligations of the parties
\nunder this Agreement.<\/p>\n
(c) Parent shall give prompt written notice to the Company of
\nany representation or warranty made by it or Merger Sub contained in this
\nAgreement becoming untrue or inaccurate in any material respect, or any failure
\nof Parent or Merger Sub to comply with or satisfy in any respect any covenant,
\ncondition or agreement to be complied with or satisfied by it under this
\nAgreement; provided, however, that no such notification shall affect the
\nrepresentations, warranties, covenants or agreements of the parties or the
\nconditions to the obligations of the parties under this Agreement.<\/p>\n
5.11 Third Party Consents. As soon as practicable following the date
\nhereof, Parent and the Company will each use its commercially reasonable efforts
\nto obtain any consents, waivers and approvals under any of its or its
\nsubsidiaries’ respective material agreements, contracts, licenses or<\/p>\n
-33-
\n 38<\/p>\n
leases required to be obtained in connection with the consummation of the
\ntransactions contemplated hereby.<\/p>\n
5.12 401(k) Plan. The Company agrees to terminate its 401(k) plan
\nimmediately prior to Closing, unless the Parent, in its sole and absolute
\ndiscretion, agrees to sponsor and maintain such plan by providing the Company
\nwith written notice of such election at least three (3) business days before the
\nEffective Time. Unless the Parent provides such notice to the Company, the
\nParent shall receive from the Company evidence that the Company’s 401(k) plan
\nhas been terminated pursuant to resolution of the Company’s Board of Directors
\n(the form and substance of which resolutions shall be subject to review and
\napproval of the Parent), effective as of the day immediately preceding the
\nClosing Date.<\/p>\n
5.13 Disclosure Supplements. From time to time prior to the Closing, the
\nCompany may supplement or amend the Company Schedule with respect to any matter
\narising or discovered after the date of this Agreement which, if existing or
\noccurring or discovered at or prior to the date of this Agreement, would have
\nbeen required to be set forth or described in the Company Schedule or which is
\nnecessary to complete or correct any information in the Company Schedule or in
\nany representation or warranty of the Company which has been rendered inaccurate
\nthereby. Any such supplements or amendments of which Parent receives written
\nnotice at or prior to the Closing shall not affect Parent’s termination rights,
\nbut if the Closing shall occur notwithstanding any such supplement or amendment,
\neach such supplement or amendment shall be deemed to modify the Company Schedule
\nfor all purposes of this Agreement and the Merger.<\/p>\n
5.14 Insurance; Indemnification.<\/p>\n
(a) Parent will pay to the Company approximately $244,800 in
\nrespect of premiums for a six-year run out of the Company’s $5 million
\ndirectors’ and officers’ liability insurance policy.<\/p>\n
(b) After the Effective Time, Parent (i) will not take or permit
\nto be taken any action to alter or impair any exculpatory or indemnification
\nprovisions now existing in the certificate of incorporation, by-laws or
\nindemnification and employment agreements of the Company or any of its
\nsubsidiaries for the benefit of any individual who served as a director or
\nofficer of the Company or any of its subsidiaries at any time prior to the
\nEffective Time (except as may be required by applicable law), and (ii) shall
\ncause the Surviving Corporation to honor and fulfill such provisions until the
\ndate which is six years from the Effective Time (except as may be required by
\napplicable law); provided, however, in the event any claim or claims are
\nasserted within such period, all rights to indemnification in respect of such
\nclaim or claims shall continue until the final disposition thereof.<\/p>\n
ARTICLE VI
\n CONDITIONS TO THE MERGER<\/p>\n
6.1 Conditions to Obligations of Each Party to Effect the Merger. The
\nrespective obligations of each party to this Agreement to effect the Merger
\nshall be subject to the satisfaction (or waiver) at or prior to the Closing Date
\nof the following conditions:<\/p>\n
-34-
\n 39<\/p>\n
(a) No Order. No Governmental Entity shall have enacted, issued,
\npromulgated, enforced or entered any statute, rule, regulation, executive order,
\ndecree, injunction or other order (whether temporary, preliminary or permanent)
\nwhich is in effect and which has the effect of making the Merger illegal or
\notherwise prohibiting consummation of the Merger.<\/p>\n
(b) Stockholder Approval. This Agreement shall have been
\napproved and adopted, and the Merger shall have been duly approved, by the
\nrequisite vote under applicable law and the Company Charter Documents, by the
\nstockholders of the Company.<\/p>\n
6.2 Additional Conditions to Obligations of the Company. The obligation
\nof the Company to consummate and effect the Merger shall be subject to the
\nsatisfaction at or prior to the Closing Date of each of the following
\nconditions, any of which may be waived, in writing, exclusively by the Company:<\/p>\n
(a) Representations and Warranties. The representations and
\nwarranties of Parent and Merger Sub contained in this Agreement (i) shall have
\nbeen true and correct as of the date of this Agreement and (ii) shall be true
\nand correct on and as of the Closing Date with the same force and effect as if
\nmade on the Closing Date, except for those representations and warranties which
\naddress matters only as of a particular date (which representations shall have
\nbeen true and correct as of such particular date) and except, in all such cases,
\nwhere the failure to be so true and correct (without regard to any materiality
\nstandards contained therein), individually or in the aggregate, have not had,
\nand are not reasonably likely to have, a Material Adverse Effect on Parent (it
\nbeing understood that for purposes of determining the accuracy of such
\nrepresentations and warranties, any update of or modification to the Parent
\nSchedule made or purported to have been made after the date of this Agreement
\nshall be disregarded). The Company shall have received a certificate with
\nrespect to the foregoing signed on behalf of Parent by a duly authorized officer
\nof Parent.<\/p>\n
(b) Agreements and Covenants. Parent and Merger Sub shall have
\nperformed or complied in all material respects with all agreements and covenants
\nrequired by this Agreement to be performed or complied with by them on or prior
\nto the Closing Date, and the Company shall have received a certificate to such
\neffect signed on behalf of Parent by a duly authorized officer of Parent.<\/p>\n
(c) Certificate of Secretary of Parent and Merger Sub. The
\nCompany shall have received certificates, validly executed by the Secretary of
\nParent and Merger Sub, certifying as to the valid adoption of resolutions of the
\nBoard of Directors of Parent and Merger Sub approving this Agreement and the
\napplicable Related Agreements and the consummation of the transactions
\ncontemplated hereby.<\/p>\n
(d) Certificate of Good Standing. The Company shall have
\nreceived certificates of good standing of Parent and Merger Sub from the
\nSecretary of State of the State of Delaware, dated within a reasonable period
\nprior to the Closing.<\/p>\n
(e) Omnibus Waiver and Amendment Agreement. Parent shall have
\nexecuted and delivered to the Company the Omnibus Waiver and Amendment
\nAgreement, in substantially the form attached as Exhibit D. The Omnibus Waiver
\nand Amendment Agreement shall be in full force and effect.<\/p>\n
-35-
\n 40<\/p>\n
6.3 Additional Conditions to the Obligations of Parent and Merger Sub.
\nThe obligations of Parent and Merger Sub to consummate and effect the Merger
\nshall be subject to the satisfaction at or prior to the Closing Date of each of
\nthe following conditions, any of which may be waived, in writing, exclusively by
\nParent:<\/p>\n
(a) Representations and Warranties. The representations and
\nwarranties of the Company contained in this Agreement (i) shall have been true
\nand correct as of the date of this Agreement and (ii) shall, as updated pursuant
\nto Section 5.13, be true and correct on and as of the Closing Date with the same
\nforce and effect as if made on and as of the Closing Date, except for those
\nrepresentations and warranties which address matters only as of a particular
\ndate (which representations shall have been true and correct as of such
\nparticular date) and except, in all such cases, where the failure to be so true
\nand correct (without regard to any materiality standards contained therein),
\nindividually or in the aggregate, have not had, and are not reasonably likely to
\nhave, a Material Adverse Effect on the Company. Parent shall have received a
\ncertificate with respect to the foregoing signed on behalf of the Company by the
\nChief Executive Officer of the Company.<\/p>\n
(b) Agreements and Covenants. The Company shall have performed
\nor complied in all material respects with all agreements and covenants required
\nby this Agreement to be performed or complied with by it at or prior to the
\nClosing Date, and Parent shall have received a certificate to such effect signed
\non behalf of the Company by the Chief Executive Officer of the Company.<\/p>\n
(c) Continuation of Agreements. Those agreements listed on
\nSchedule 6.3(c) to this Agreement shall be unmodified in any manner from the
\ndate of this Agreement and be in full force and effect.<\/p>\n
(d) Consents. The Company shall have obtained all consents,
\nwaivers and approvals required in connection with the consummation of the
\ntransactions contemplated hereby in connection with the agreements, contracts,
\nlicenses or leases set forth on Schedule 6.3(d).<\/p>\n
(e) Resignation of Directors. Parent shall have received a
\nwritten resignation from each of the directors of the Company effective as of
\nthe Effective Time.<\/p>\n
(f) No Material Adverse Change. There shall not have occurred
\nany event or condition of any character that has had or is reasonably likely to
\nhave a Material Adverse Effect on the Company since the date of this Agreement.<\/p>\n
(g) Related Agreements. The Principal Shareholder shall have
\nexecuted and delivered to Parent the Voting Agreement, in substantially the form
\nattached as Exhibit A, and the Non-Competition Agreement, in substantially the
\nform attached as Exhibit B. The Voting Agreement and the Non-Competition
\nAgreement shall be in full force and effect.<\/p>\n
(h) Termination of 401(k) Plan. To the extent required by
\nSection 5.12, Parent shall have received from the Company evidence that the
\nCompany’s 401(k) plan has been terminated pursuant to resolution of the
\nCompany’s Board of Directors (the form and substance of which shall<\/p>\n
-36-
\n 41<\/p>\n
have been subject to review and approval of Parent), effective as of the day
\nimmediately preceding the Closing Date.<\/p>\n
(i) Termination of Company Stock Options and Company Warrants.
\nParent shall have received from the Company evidence that the Company canceled
\nall outstanding Company Stock Options and Company Warrants in accordance with
\nthe terms of Section 1.6(c).<\/p>\n
(j) Certificate of Secretary of the Company. Parent shall have
\nreceived a certificate, validly executed by the Secretary of the Company,
\ncertifying as to (i) the terms and effectiveness the articles of incorporation
\nand the bylaws of the Company, and (ii) the valid adoption of resolutions of the
\nBoard of Directors of the Company and the holders of the Company’s stockholders
\napproving this Agreement and the License Agreement and the consummation of the
\ntransactions contemplated hereby.<\/p>\n
(k) Certificate of Good Standing. Parent shall have received
\ncertificates of good standing of the Company from (i) the Secretary of State of
\nthe State of Delaware; (ii) the Secretary of State of the State of New Jersey;
\nand (iii) the Franchise Tax Board of the State of New Jersey, each dated within
\na reasonable period prior to the Closing.<\/p>\n
(l) Removal of Liens. The Company shall have removed all
\nmaterial Liens pursuant to the Uniform Commercial Code on the property of the
\nCompany.<\/p>\n
(m) Sole Discretion. Parent shall have elected, in its sole
\ndiscretion, to consummate the Merger and shall have delivered a certificate
\nsigned by a duly authorized officer of the Parent that Parent elects to proceed
\nwith the Merger. Notwithstanding the foregoing Section 6.3(a) through Section
\n6.3(l), Parent need not consummate and effect this Agreement and the
\ntransactions contemplated hereby even if the conditions set forth in the
\nforegoing Section 6.3(a) through Section 6.3(l) are satisfied by the Company.<\/p>\n
ARTICLE VII
\n TERMINATION, AMENDMENT AND WAIVER<\/p>\n
7.1 Termination. This Agreement may be terminated and the Merger may be
\nabandoned at any time prior to the Effective Time, whether before or after the
\nrequisite approval of the stockholders of the Company:<\/p>\n
(a) by Parent, for any reason or no reason;<\/p>\n
(b) by mutual written agreement of Parent and the Company;<\/p>\n
(c) by Parent or the Company, if the Merger shall not have been
\nconsummated by August 17, 2002 (the “Outside Date”) for any reason, unless the
\nparties agree to extend such date; provided, however, that the right to
\nterminate this Agreement under this Section 7.1(c) shall not be available to any
\nparty if any action or failure to act by that party has been a principal cause
\nof or resulted in the failure of the Merger to occur on or before such date and
\nsuch action or failure to act constitutes a material breach of any agreement or
\ncovenant of such party pursuant to this Agreement (a “Preventing Act”); and
\nprovided further, however, Parent will not be able to prevent the Company<\/p>\n
-37-
\n 42<\/p>\n
from terminating this Agreement pursuant to this Section 7.1(c) based on a
\nPreventing Act by the Company without waiving the condition to closing set forth
\nin Section 6.3(m) and waiving its right to terminate this Agreement based upon
\nSection 7.1(a);<\/p>\n
(d) by Parent or the Company, if a Governmental Entity shall
\nhave issued an order, decree or ruling or taken any other action, in any case
\nhaving the effect of permanently restraining, enjoining or otherwise prohibiting
\nthe Merger, which order, decree, ruling or other action is final and
\nnonappealable;<\/p>\n
(e) by Parent, if (i) the Board of Directors of Company, whether
\nor not permitted pursuant to the terms hereof, withdraws, modifies or changes
\nits recommendation of this Agreement or the Merger in a manner adverse to
\nParent, (ii) the Board of Directors of Company, whether or not permitted
\npursuant to the terms hereof, shall have made a Company Adverse Recommendation
\nChange, (iii) the Company fails to comply with Section 5.7 in all material
\nrespects, (iv) a Takeover Proposal shall have been announced or otherwise become
\npublicly known and the Board of Directors of Company shall have, within ten
\nbusiness days thereafter (A) failed to recommend against acceptance of such by
\nits stockholders (including by taking no position, or indicating its inability
\nto take a position, with respect to the acceptance by its stockholders of a
\nTakeover Proposal involving a tender offer or exchange offer) or (B) failed to
\nreconfirm its approval and recommendation of this Agreement and the transactions
\ncontemplated hereby, or (v) the Board of Directors of Company resolves to take
\nany of the actions described above;<\/p>\n
(f) by Parent or the Company at any time after the Company
\nStockholders’ Meeting in the event that the Company’s stockholders do not
\napprove this Agreement and the Merger contemplated herein by the requisite vote
\nunder applicable law and the Company Charter Documents; provided, however, that
\nthe right to terminate this Agreement pursuant to this Section 7.1(f) shall not
\nbe available to the Company if Parent submits a notice in writing to the
\nCompany, within ten (10) days after the Company Stockholders’ Meeting (or within
\nten (10) days of any other meeting of the Company’s stockholders thereafter
\nconvened to vote on this Agreement and the Merger), stating that it intends to
\nre-solicit a stockholder vote on this Agreement and the Merger; and provided
\nfurther, however, that Parent’s right to re-solicit such a stockholder vote
\nshall not be available to Parent after the Company’s stockholders twice vote not
\nto approve this Agreement and the Merger;<\/p>\n
(g) by the Company, in accordance with Section 5.7(b); provided,
\nhowever, in order for the termination of this Agreement pursuant to this Section
\n7.1(g) to be deemed effective, the Company shall have complied in all material
\nrespects with all provisions contained in Section 5.7, including the notice
\nprovisions therein, and with applicable requirements of Section 7.3, including
\nthe payment of the Termination Fee and the effectiveness of the License Grant
\n(if applicable);<\/p>\n
(h) by the Company, upon a breach of any representation,
\nwarranty, covenant or agreement on the part of Parent or Merger Sub set forth in
\nthis Agreement, or if any representation or warranty of Parent or Merger Sub
\nshall have become untrue, in either case such that the conditions set forth in
\nSection 6.2(a) or Section 6.2(b) would not be satisfied as of the time of such
\nbreach or as of the time such representation or warranty shall have become
\nuntrue, provided, however, that if such<\/p>\n
-38-
\n 43<\/p>\n
inaccuracy in Parent’s representations and warranties or breach by Parent is
\ncurable by Parent, then the Company may not terminate this Agreement under this
\nSection 7.1(h) for thirty (30) days after delivery of written notice from the
\nCompany to Parent of such breach, provided Parent continues to exercise best
\nefforts to cure such breach (it being understood that the Company may not
\nterminate this Agreement pursuant to this Section 7.1(h) if such breach by
\nParent is cured during such thirty (30)-day period); or<\/p>\n
(i) by Parent, upon a breach of any representation, warranty,
\ncovenant or agreement on the part of the Company set forth in this Agreement, or
\nif any representation or warranty of the Company shall have become untrue, in
\neither case such that the conditions set forth in Section 6.3(a) or Section
\n6.3(b) would not be satisfied as of the time of such breach or as of the time
\nsuch representation or warranty shall have become untrue, provided, however,
\nthat if such inaccuracy in the Company’s representations and warranties or
\nbreach by the Company is curable by the Company, then Parent may not terminate
\nthis Agreement under this Section 7.1(i) for thirty (30) days after delivery of
\nwritten notice from Parent to the Company of such breach, provided the Company
\ncontinues to exercise best efforts to cure such breach (it being understood that
\nParent may not terminate this Agreement pursuant to this Section 7.1(i) if such
\nbreach by the Company is cured during such thirty (30)-day period).<\/p>\n
7.2 Notice of Termination. Any termination of this Agreement under
\nSection 7.1 above will be effective immediately upon the delivery of written
\nnotice of the terminating party to the other parties (or such later time as may
\nbe required by Section 7.1).<\/p>\n
7.3 Effect of Termination.<\/p>\n
(a) The Company shall (x) pay Parent a fee of $500,000 (the
\n“Termination Fee”), which amount shall be payable by wire transfer of same day
\nfunds to a bank account designated by Parent, and (y) subject to the proviso set
\nforth below, grant to Parent a non-exclusive license pursuant to the License
\nAgreement, in substantially the form attached hereto as Exhibit C (the “License
\nGrant”) (provided, however, that the License Grant shall not come into force and
\neffect if, prior to the termination of the Merger Agreement, the restrictions on
\ntransferability of, or the restrictive legends on, the shares of Company Common
\nStock owned by the Principal Shareholder (the “Shares”), are lifted or removed,
\nas the case may be, by the California Department of Corporations sufficient to
\nallow the transfer of interests in the Shares to Parent pursuant to the
\ntransactions contemplated by this Agreement and pursuant to the Voting
\nAgreement), in the event that:<\/p>\n
(i) (A) any Person shall have made a Takeover Proposal
\nto the Company or to its stockholders or publicly announces any Takeover
\nProposal relating to the Company after the date hereof and such Takeover
\nProposal shall not have been withdrawn and thereafter this Agreement is
\nterminated by either party pursuant to Section 7.1(f), and (B) within one year
\nafter the termination of this Agreement any Acquisition Transaction involving
\nthe Company shall have been consummated or any Acquisition Agreement with
\nrespect to an Acquisition Transaction involving the Company shall have been
\nentered into,<\/p>\n
(ii) this Agreement is terminated by Parent pursuant to
\nSection 7.1(e) or<\/p>\n
-39-
\n 44<\/p>\n
(iii) this Agreement is terminated by the Company
\npursuant to Section 7.1(g).<\/p>\n
(b) The Termination Fee shall be paid and the License Grant (if
\napplicable) shall be effected no later than (A) the date an Acquisition
\nAgreement is entered into with respect to an Acquisition Transaction involving
\nthe Company, or if no such agreement is entered into, upon the date of
\nconsummation of an Acquisition Transaction involving the Company, in the case of
\na termination described in Section 7.3(a)(i), or (B) two days after such
\ntermination, in the case of a termination described in Section 7.3(a)(ii) or (C)
\nconcurrently with such termination, in the case of a termination described in
\nSection 7.3(a)(iii).<\/p>\n
(c) Parent shall pay to Company a fee of: (A) $200,000, if such
\ntermination occurs within nine months after the date of this Agreement; (B)
\n$300,000, if such termination occurs between nine and ten months after the date
\nof this Agreement; (C) $400,000, if such termination occurs between ten and
\neleven months after the date of this Agreement; and (D) $500,000, if such
\ntermination occurs after the end of the eleventh month after the date of this
\nAgreement (which fee shall be payable immediately by wire transfer of same day
\nfunds to a bank account designated by the Company), in the event that:<\/p>\n
(i) Parent terminates this Agreement pursuant to Section
\n7.1(a);<\/p>\n
(ii) Parent terminates this Agreement pursuant to
\nSection 7.1(c); or<\/p>\n
(iii) the Company terminates this Agreement pursuant to
\nSection 7.1(c); provided, however, that Parent shall not be obligated to make
\npayment of such fee pursuant to this clause (iii) if Parent shall have given
\nnotice of termination pursuant to Section 7.1(i) prior to the Company’s
\ntermination pursuant to Section 7.1(c) and the cure period in Section 7.1(i), if
\na cure period is applicable, shall not have expired, unless the breach or
\ninaccuracy in respect of which such notice was given has been cured.<\/p>\n
(d) Each of the parties acknowledges that the agreements
\ncontained in this Section 7.3 are an integral part of the transactions
\ncontemplated in this Agreement and that, without these agreements, the parties
\nwould not enter into this Agreement; accordingly, if (i) the Company fails to
\npromptly pay the Termination Fee or effect the License Grant (if applicable),
\nand in order to obtain such Termination Fee or License Grant, the Parent
\ncommences a suit which results in a judgment for the Termination Fee and\/or the
\nLicense Grant set forth in this Section 7.3, the Company shall pay to Parent its
\ncosts and expenses (including reasonable attorneys’ fees) in connection with
\nsuch suit or (ii) Parent fails to promptly pay the amount provided for in
\nSection 7.3(c), and in order to obtain such amount, the Company commences a suit
\nwhich results in a judgment for such amount, Parent shall pay to the Company its
\ncosts and expenses (including reasonable attorneys’ fees) in connection with
\nsuch suit.<\/p>\n
(e) In the event of the termination of this Agreement as
\nprovided in Section 7.1, this Agreement shall be of no further force or effect,
\nand the parties shall have no further liability or obligation hereunder, except
\n(i) as set forth in this Section 7.3, Section 5.1, Section 5.3, Section 5.6(a),
\nSection 7.4 and Article VIII, each of which shall survive the termination of
\nthis<\/p>\n
-40-
\n 45<\/p>\n
Agreement, and (ii) nothing in this Agreement shall relieve any party from
\nliability for fraud in connection with, or any willful breach of, this
\nAgreement.<\/p>\n
(f) Effective upon the termination of this Agreement as provided
\nin any subsection of Section 7.1 except Section 7.1(e) and Section 7.1(g),
\nParent hereby:<\/p>\n
(i) waives Section 3.B(iv) of the Certificate of
\nDesignations to the extent that such provision would hinder the Company from
\nraising equity financing;<\/p>\n
(ii) waives any “demand” registration rights as set
\nforth in Section 2.1 of the Registration Rights Agreement, dated as of December
\n3, 1999, by and among the Company, ASC and the Stockholders listed therein, as
\namended by the First Amendment to the Registration Rights Agreement, dated as of
\nAugust 17, 2001, by and among the Company, ASC, the Stockholders and Parent and
\nthe Second Amendment to the Registration Rights Agreement, dated as of August
\n17, 2001, by and between the Company and Parent (collectively, the “Rights
\nAgreement”), for a period of one year after such termination; and<\/p>\n
(iii) amends Section 7 of the Common Stock Warrant and
\nSection 7 of the ASC Warrant to provide that upon an equity financing in which
\nthe price per share (as determined in accordance with the applicable provisions
\nof the Common Stock Warrants and the ASC Warrant) is less than the “Purchase
\nPrice per share” (as defined in the Common Stock Warrants and the ASC Warrant),
\nthe “anti-dilution” rights contained in the Common Stock Warrants and the ASC
\nWarrant will be limited to decreasing the “Purchase Price per share” of the
\nCommon Stock Warrants and the ASC Warrant to equal the lowest price per share at
\nwhich the additional equity financing is raised, but will not result in an
\nincrease in the number of shares of Company Common Stock that can be purchased
\npursuant to the Common Stock Warrants and the ASC Warrant;<\/p>\n
such waiver and amendment to be effected pursuant to the Omnibus Waiver
\nand Amendment Agreement, in substantially the form attached as Exhibit D.<\/p>\n
7.4 Fees and Expenses. Except as set forth in this Section 7.4, all fees
\nand expenses incurred in connection with this Agreement and the transactions
\ncontemplated hereby shall be paid by the party incurring such expenses whether
\nor not the Merger is consummated; provided, however, that Parent shall bear all
\nfees and expenses (including without limitation the Company’s reasonable
\nattorneys’ and accountants’ fees and expenses) incurred in relation to the
\nprinting and filing of the Proxy Statement (including any preliminary materials
\nrelated thereto) and any amendments or supplements thereto.<\/p>\n
7.5 Amendment. Subject to applicable law, this Agreement may be amended
\nby the parties at any time by execution of an instrument in writing signed on
\nbehalf of each of Parent, Merger Sub and the Company.<\/p>\n
7.6 Extension; Waiver. At any time prior to the Effective Time, any
\nparty may, to the extent legally allowed, (i) extend the time for the
\nperformance of any of the obligations or other acts of the other parties, (ii)
\nwaive any inaccuracies in the representations and warranties made to such party
\ncontained in this Agreement or in any document delivered pursuant hereto and
\n(iii) waive<\/p>\n
-41-
\n 46<\/p>\n
compliance with any of the agreements or conditions for the benefit of such
\nparty contained herein. Any agreement on the part of a party to any such
\nextension or waiver shall be valid only if set forth in an instrument in writing
\nsigned on behalf of such party. Delay in exercising any right under this
\nAgreement shall not constitute a waiver of such right.<\/p>\n
ARTICLE VIII
\n GENERAL PROVISIONS<\/p>\n
8.1 Survival of Representations and Warranties. The representations and
\nwarranties of the Company, Parent and Merger Sub contained in this Agreement
\nshall terminate at the earlier of (a) the date of termination pursuant to
\nSection 7.1 or (b) the Effective Time, and only the covenants that by their
\nterms survive such date shall survive.<\/p>\n
8.2 Notices. All notices and other communications hereunder shall be in
\nwriting and shall be deemed given if delivered personally or by commercial
\ndelivery service, or sent via telecopy (receipt confirmed) to the parties at the
\nfollowing addresses or telecopy numbers (or at such other address or telecopy
\nnumbers for a party as shall be specified by like notice):<\/p>\n
(a) if to Parent or Merger Sub, to:
\n VISX, Incorporated
\n 3400 Central Expressway
\n Santa Clara, California 95051-0703
\n Attention: Chief Financial Officer
\n Telephone No.: (408) 773-7003
\n Facsimile No.: (408) 773-7201<\/p>\n
with a copy to:<\/p>\n
Wilson Sonsini Goodrich & Rosati
\n Professional Corporation
\n 650 Page Mill Road
\n Palo Alto, California 94304
\n Attention: John V. Roos, Esq.
\n Telephone No.: (650) 493-9300
\n Facsimile No.: (650) 493-6811<\/p>\n
(b) if to the Company, to:<\/p>\n
Medjet Inc.
\n 1090 King George Post Road, Suite 301
\n Edison, NJ 08837
\n Attention: Eugene I. Gordon
\n Telephone No.: (732) 738-3990
\n Facsimile No.: (732) 738-3984<\/p>\n
with a copy to:<\/p>\n
-42-
\n 47<\/p>\n
Kelley Drye & Warren LLP
\n 101 Park Avenue
\n New York, NY 10178-0002
\n Attention: Jane E. Jablons, Esq.
\n Telephone No.: (212) 808-7800
\n Facsimile No.: (212) 808-7897<\/p>\n
8.3 Interpretation; Definitions.<\/p>\n
(a) When a reference is made in this Agreement to Exhibits, such
\nreference shall be to an Exhibit to this Agreement unless otherwise indicated.
\nWhen a reference is made in this Agreement to Sections, such reference shall be
\nto a Section of this Agreement. Unless otherwise indicated the words “include,”
\n“includes” and “including” when used in this Agreement shall be deemed in each
\ncase to be followed by the words “without limitation.” The table of contents and
\nheadings contained in this Agreement are for reference purposes only and shall
\nnot affect in any way the meaning or interpretation of this Agreement. When
\nreference is made in this Agreement to “the business of” an entity, such
\nreference shall be deemed to include the business of all direct and indirect
\nsubsidiaries of such entity. Reference to the subsidiaries of an entity shall be
\ndeemed to include all direct and indirect subsidiaries of such entity.<\/p>\n
(b) For purposes of this Agreement:<\/p>\n
(i) the term “knowledge” means with respect to a party
\nhereto, with respect to any matter in question, the actual knowledge of the
\nexecutive officers of such party after reasonable inquiry;<\/p>\n
(ii) the term “Material Adverse Effect” when used in
\nconnection with an entity means any change, event, violation, inaccuracy,
\ncircumstance or effect that is, or could reasonably be expected to be,
\nmaterially adverse to the business, assets, liabilities, financial or other
\ncondition, or results of operations of such entity and its subsidiaries taken as
\na whole;<\/p>\n
(iii) the term “person” shall mean any individual,
\ncorporation (including any non-profit corporation), general partnership, limited
\npartnership, limited liability partnership, joint venture, estate, trust,
\ncompany (including any limited liability company or joint stock company), firm
\nor other enterprise, association, organization, entity or Governmental Entity.<\/p>\n
8.4 Counterparts. This Agreement may be executed in one or more
\ncounterparts, all of which shall be considered one and the same agreement and
\nshall become effective when one or more counterparts have been signed by each of
\nthe parties and delivered to the other party, it being understood that all
\nparties need not sign the same counterpart.<\/p>\n
8.5 Entire Agreement; Third Party Beneficiaries. This Agreement and the
\ndocuments and instruments and other agreements among the parties as contemplated
\nby or referred to in this Agreement, including the Related Agreements, the
\nParent Warrant, the Company Schedule and the Parent Schedule: (a) constitute the
\nentire agreement among the parties with respect to the subject<\/p>\n
-43-
\n 48<\/p>\n
matter hereof and supersede all prior agreements and understandings, both
\nwritten and oral, among the parties with respect to the subject matter hereof,
\nit being understood that the Nondisclosure Agreement shall continue in full
\nforce and effect until the Closing and shall survive any termination of this
\nAgreement; and (b) are not intended to confer upon any other person any rights
\nor remedies hereunder (except as provided in Section 5.14 with respect to the
\ndirectors and officers of the Company).<\/p>\n
8.6 Severability. In the event that any provision of this Agreement, or
\nthe application thereof, becomes or is declared by a court of competent
\njurisdiction to be illegal, void or unenforceable, the remainder of this
\nAgreement will continue in full force and effect and the application of such
\nprovision to other persons or circumstances will be interpreted so as reasonably
\nto effect the intent of the parties. The parties further agree to replace such
\nvoid or unenforceable provision of this Agreement with a valid and enforceable
\nprovision that will achieve, to the extent possible, the economic, business and
\nother purposes of such void or unenforceable provision.<\/p>\n
8.7 Other Remedies; Specific Performance. Except as otherwise provided
\nin this Agreement, any and all remedies expressly conferred upon a party will be
\ndeemed cumulative with and not exclusive of any other remedy conferred hereby,
\nor by law or equity upon such party, and the exercise by a party of any one
\nremedy will not preclude the exercise of any other remedy. The parties agree
\nthat irreparable damage would occur in the event that any of the provisions of
\nthis Agreement were not performed in accordance with their specific terms or
\nwere otherwise breached. It is accordingly agreed that the parties shall be
\nentitled to seek an injunction or injunctions to prevent breaches of this
\nAgreement and to enforce specifically the terms and provisions hereof in any
\ncourt of the United States or any state having jurisdiction, this being in
\naddition to any other remedy to which they are entitled at law or in equity.<\/p>\n
8.8 Governing Law. This Agreement shall be governed by and construed in
\naccordance with the laws of the State of Delaware, regardless of the laws that
\nmight otherwise govern under applicable principles of conflicts of law thereof.<\/p>\n
8.9 Rules of Construction. The parties agree that they have been
\nrepresented by counsel during the negotiation and execution of this Agreement
\nand, therefore, waive the application of any law, regulation, holding or rule of
\nconstruction providing that ambiguities in an agreement or other document will
\nbe construed against the party drafting such agreement or document.<\/p>\n
8.10 Assignment. No party may assign either this Agreement or any of its
\nrights, interests, or obligations hereunder without the prior written approval
\nof the other parties. Any purported assignment without the consent required
\npursuant to the preceding sentence shall be null and void. Subject to the second
\npreceding sentence, this Agreement shall be binding upon and shall inure to the
\nbenefit of the parties and their respective successors and permitted assigns.<\/p>\n
[remainder of the page intentionally left blank]<\/p>\n
-44-
\n 49<\/p>\n
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
\nAgreement to be signed, all as of the date first written above.<\/p>\n
VISX, INCORPORATED<\/p>\n
By:
\n ————————————–
\n Name: Derek A. Bertocci
\n Title: Vice President, Controller<\/p>\n
ORION ACQUISITION CORPORATION<\/p>\n
By:
\n ————————————–
\n Name: Derek A. Bertocci
\n Title: Vice President, Chief
\n Financial Officer<\/p>\n
MEDJET INC.<\/p>\n
By:
\n ————————————–
\n Name: Eugene I. Gordon
\n Title: Chief Executive Officer<\/p>\n
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER AND REORGANIZATION]<\/p>\n
50<\/p>\n
INDEX OF EXHIBITS<\/p>\n
\n\n EXHIBIT DESCRIPTION
\n ——- ———–
\n
\n Exhibit A Form of Voting Agreement<\/p>\n Exhibit B Form of Non-Competition Agreement<\/p>\n
Exhibit C Form of License Agreement<\/p>\n
Exhibit D Form of Omnibus Waiver and Amendment Agreement<\/p>\n
Exhibit E Form of Parent Warrant<\/p>\n
Exhibit F Form of Certificate of Merger<\/p>\n
Exhibit G Form of Amended and Restated Certificate of
\n Incorporation of the Company
\n<\/c><\/s><\/caption>\n<\/table>\n
51<\/p>\n
EXHIBIT A<\/p>\n
FORM OF VOTING AGREEMENT<\/p>\n
52<\/p>\n
EXHIBIT B<\/p>\n
FORM OF NON-COMPETITION AGREEMENT<\/p>\n
53<\/p>\n
EXHIBIT C<\/p>\n
FORM OF LICENSE AGREEMENT<\/p>\n
54<\/p>\n
EXHIBIT D<\/p>\n
FORM OF OMNIBUS WAIVER AND AMENDMENT AGREEMENT<\/p>\n
55<\/p>\n
EXHIBIT E<\/p>\n
FORM OF PARENT WARRANT<\/p>\n
56<\/p>\n
EXHIBIT F<\/p>\n
FORM OF CERTIFICATE OF MERGER<\/p>\n
57<\/p>\n
EXHIBIT G<\/p>\n
FORM OF AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
\n OF THE COMPANY<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[8178,9266],"corporate_contracts_industries":[9436],"corporate_contracts_types":[9622,9626],"class_list":["post-43026","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-medjet-inc","corporate_contracts_companies-visx-inc","corporate_contracts_industries-health__instruments","corporate_contracts_types-planning","corporate_contracts_types-planning__merger"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43026","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43026"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43026"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43026"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43026"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}