1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
NEW IMAGE INDUSTRIES, INC.
(Name of subject company)
DENTSPLY INTERNATIONAL INC.
IMAGE ACQUISITION CORP.
(Bidder)
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COMMON STOCK, PAR VALUE $.001 PER SHARE
(Title of class of securities)
645639 10 5
(CUSIP number of class of securities)
John C. Miles II
Vice Chairman of the Board and Chief Executive Officer
DENTSPLY International Inc.
570 West College Avenue
P.O. Box 872
York, Pennsylvania 17405-0872
(717) 846-0256
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(Name, address and telephone number of person authorized
to receive notices and communications on behalf of bidders)
Copy to:
Marlee S. Myers, Esq.
Morgan, Lewis & Bockius LLP
One Oxford Centre, 32nd Floor
Pittsburgh, Pennsylvania 15219-1417
(412) 560-3300
Calculation of Filing Fee
- - --------------------------------------------------------------------------------
Transaction valuation* Amount of filing fee**
$10,959,822 $2,192
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* Estimated for purposes of the filing fee only. The amount assumes
the purchase of 5,479,911 shares of common stock, $.001 par value
(the "Shares"), of New Image Industries, Inc. (the "Company") at a
price per Share of $2.00 in cash (the "Offer Price"). Such number of
Shares represents all the Shares outstanding as of January 27, 1997.
** 1/50 of 1% of the transaction valuation.
[ ] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
Amount previously paid: None Filing party: N/A
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Form or registration no.: N/A Date filed: N/A
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14D-1 AND 13D
1. Names of Reporting Persons:
S.S. or I.R.S. Identification Nos. of Below Person:
Image Acquisition Corp.
- - -------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group (See Instructions).
[ x ] (a)
[ ] (b)
- - -------------------------------------------------------------------------------
3. SEC Use Only.
- - -------------------------------------------------------------------------------
4. Source of Funds. AF
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5. [ ] Check Box if Disclosure of Legal Proceedings is Required Pursuant
to Items 2(e) or 2(f).
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6. Citizenship or Place of Organization: Delaware
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7. Aggregate Amount Beneficially Owned by Each Reporting Person*: 537,795
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8. [ ] Check if the Aggregate Amount in Row 7 Excludes Certain Shares.
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9. Percent of Class Represented by Amount in Row 7. Approximately
9.8% of the Shares outstanding as of January 27, 1997.
- - -------------------------------------------------------------------------------
10. Type of Reporting Person (See Instructions). CO
- - -------------------------------------------------------------------------------
* See footnote on following page.
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14D-1 AND 13D
1. Names of Reporting Persons:
S.S. or I.R.S. Identification Nos. of Below Person:
DENTSPLY International Inc.
IRS Identification No. 391434669
- - -------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group (See Instructions).
[ x ] (a)
[ ] (b)
- - -------------------------------------------------------------------------------
3. SEC Use Only.
- - -------------------------------------------------------------------------------
4. Sources of Funds (See Instructions). WC or BK
- - -------------------------------------------------------------------------------
5. [ ] Check Box if Disclosure of Legal Proceedings is Required Pursuant
to Items 2(e) or 2(f).
- - -------------------------------------------------------------------------------
6. Citizenship or Place of Organization: Delaware
- - -------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person*: 537,795
- - -------------------------------------------------------------------------------
8. [ ] Check Box if the Aggregate Amount in Row 7 Excludes Certain
Shares.
- - -------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row 7. Approximately 9.8%
of the Shares outstanding as of January 27, 1997.
- - -------------------------------------------------------------------------------
10. Type of Reporting Person (See Instructions). CO
- - -------------------------------------------------------------------------------
* On January 27, 1997, DENTSPLY International Inc. ("Parent") and Image
Acquisition Corp., a wholly owned subsidiary of Parent, entered into
separate stockholder agreements (collectively, the "Stockholder
Agreements"), with each executive officer and director of the Company
who owns Shares or options or warrants to acquire Shares, and The
William W. Stevens and Virda J. Stevens Trust, a stockholder of the
Company (individually, a "Stockholder Party" and, collectively, the
"Stockholder Parties"). The Stockholder Parties own an aggregate of
537,795 Shares or approximately 9.8% of the Company's outstanding Shares
as of January 27, 1997. Pursuant to the Stockholder Agreements, the
Stockholder Parties have agreed to validly tender and not to withdraw,
pursuant to and in accordance with the terms of the Offer (as defined in
the Offer to Purchase dated January 31, 1997) the Shares owned by such
parties and any Shares acquired by such parties prior to the termination
of the Stockholder Agreements. The Stockholder Agreements are described
more fully in Section 13--"The Merger Agreement; the Stockholder
Agreements; the Employment Agreement" of the Offer to Purchase.
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This Tender Offer Statement on Schedule 14D-1 relates to the offer by Image
Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly owned
subsidiary of DENTSPLY International Inc., a Delaware corporation ("Parent"),
to purchase all of the then outstanding shares of Common Stock, par value
$.001 per share (the "Shares"), of New Image Industries, Inc., a Delaware
corporation (the "Company"), at a purchase price of $2.00 per Share, net to
the seller in cash, without interest thereon, upon the terms and subject
to the conditions set forth in the Offer to Purchase dated January 31, 1997
(the "Offer to Purchase"), a copy of which is attached hereto as Exhibit (a)(1),
and in the related Letter of Transmittal (which, together with the Offer to
Purchase, constitute the "Offer"), a copy of which is attached hereto as Exhibit
(a)(2). This Tender Offer Statement on Schedule 14D-1 also constitutes a
Statement on Schedule 13D with respect to the acquisition by Parent and the
Purchaser of beneficial ownership of the Shares subject to the Stockholder
Agreements. The item number and response thereto below are in accordance with
the requirements of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is New Image Industries, Inc. The
information set forth in Section 8 ("Certain Information Concerning the
Company") of the Offer to Purchase is incorporated herein by reference.
(b) The exact title of the class of equity securities being sought in
the Offer is Common Stock, par value $.001 per share. The information set forth
in the Introduction (the "Introduction") to the Offer to Purchase is
incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of the
Shares; Dividends on the Shares") of the Offer to Purchase is incorporated
herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a) - (d) and (g) This Statement is filed by the Purchaser and Parent.
The information set forth in Section 9 ("Certain Information Concerning the
Purchaser and Parent") of the Offer to Purchase and in Schedule I thereto is
incorporated herein by reference.
(e) and (f) During the last five years, neither the Purchaser nor
Parent nor, to the best knowledge of the Purchaser and Parent, any of the
persons listed in Schedule I to the Offer to Purchase (i) has been convicted in
a criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to
a judgment, decree or final order enjoining future violations of, or
prohibiting activities subject to, federal or state securities laws or finding
any violation of such laws.
(g) The Parent and the Purchaser are both incorporated in the state of
Delaware.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT
COMPANY.
(a) The information set forth in Section 9 ("Certain Information
Concerning the Purchaser and Parent") of the Offer to Purchase is incorporated
herein by reference. Except as set forth in Section 9 of the Offer to Purchase,
since June 30, 1993, there have been no transactions which would be required to
be disclosed under this Item 3(a) between either the Purchaser or Parent or, to
the best knowledge of the Purchaser and Parent, any of the persons listed in
Schedule I to the Offer to Purchase and the Company or any of its executive
officers, directors or affiliates.
(b) The information set forth in Section 9 ("Certain Information
Concerning the Purchaser and
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Parent") and Section 11 ("Contacts with the Company; Background of the Offer")
of the Offer to Purchase is incorporated herein by reference. Except as set
forth in Section 9 and Section 11 of the Offer to Purchase, since June 30,
1993, there have been no contacts, negotiations or transactions which would be
required to be disclosed under this Item 3(b) between either the Purchaser or
Parent or any of their respective subsidiaries or, to the best knowledge of the
Purchaser and Parent, any of the persons listed in Schedule I to the Offer to
Purchase and the Company or its affiliates concerning a merger, consolidation
or acquisition, a tender offer or other acquisition of securities, an election
of directors or a sale or other transfer of a material amount of assets.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b) The information set forth in Section 10 ("Source and
Amount of Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(g) The information set forth in the Introduction, Section 11
("Contacts with the Company; Background of the Offer"), Section 12 ("Purpose of
the Offer; Short Form Merger; Plans for the Company; Dissenters' Rights; Going
Private Transactions"), Section 13 ("The Merger Agreement; the Stockholder
Agreements; the Employment Agreement"); Section 14 ("Dividends and
Distributions") and Section 7 ("Effect of the Offer on the Market for the
Shares, Nasdaq Stock Quotation and Exchange Act Registration") of the Offer to
Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) The information set forth in the Introduction and Section 9
("Certain Information Concerning the Purchaser and Parent") of and Schedule I
to the Offer to Purchase is incorporated herein by reference. Except as set
forth in the Introduction and Section 9 of and Schedule I to the Offer to
Purchase, neither the Purchaser nor Parent nor, to the best knowledge of the
Purchaser and Parent, any of the persons listed in Schedule I to the Offer to
Purchase or any associate or majority-owned subsidiary of the Purchaser or
Parent or any of the persons so listed beneficially owns or has any right to
acquire, directly or indirectly, any Shares.
(b) The information set forth in the Introduction and Section 9
("Certain Information Concerning the Purchaser and Parent") of and Schedule I
to the Offer to Purchase is incorporated herein by reference. Except as set
forth in the Introduction and Section 9 of and Schedule I to the Offer to
Purchase, neither the Purchaser nor Parent nor, to the best knowledge of the
Purchaser and Parent, any of the persons or entities referred to above or any
executive officer, director or subsidiary of the foregoing has effected any
transactions in the Shares during the past sixty days.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction, Section 9 ("Certain
Information Concerning the Purchaser and Parent"), Section 10 ("Source and
Amount of Funds"), Section 11 ("Contacts with the Company; Background of the
Offer"), Section 12 ("Purpose of the Offer; Short Form Merger; Plans for the
Company; Dissenters' Rights; Going Private Transactions"), Section 13 ("The
Merger Agreement; the Stockholder Agreements; the Employment Agreement") and
Section 17 ("Fees and Expenses") of the Offer to Purchase is incorporated herein
by reference. Except as set forth in the Introduction and Sections 9, 10, 11,
12, 13 and 17 of the Offer to
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Purchase, neither the Purchaser nor Parent nor, to the best knowledge of the
Purchaser and Parent, any of the persons listed in Schedule I to the Offer to
Purchase has any contract, arrangement, understanding or relationship with any
other person with respect to any securities of the Company (including, but not
limited to, any contract, arrangement, understanding or relationship concerning
the transfer or the voting of any such securities, joint ventures, loans or
option arrangements, puts or calls, guarantees of loans, guarantee agreements
or any granting or withholding of proxies).
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction, Section 10 ("Source and
Amount of Funds") and Section 17 ("Fees and Expenses") of the Offer to Purchase
is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Although the Purchaser and Parent do not believe that their financial
condition or the financial condition of their affiliates is material to a
decision by a security holder of the Company whether to sell, tender or hold
Shares, selected consolidated financial information with respect to Parent is
included in Section 9 ("Certain Information Concerning the Purchaser and
Parent") of the Offer to Purchase and such information and the consolidated
financial statements of Parent in Parent's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 are incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Section 12 ("Purpose of the Offer;
Short Form Merger; Plans for the Company; Dissenters' Rights; Going Private
Transactions") and Section 13 ("The Merger Agreement; the Stockholder
Agreements; the Employment Agreement") of the Offer to Purchase is incorporated
herein by reference.
(b) and (c) The information set forth in Section 16 ("Certain Legal
Matters") of the Offer to Purchase is incorporated herein by reference.
(d) Not applicable.
(e) None.
(f) The information set forth in the Offer to Purchase, the Letter of
Transmittal, the Credit Agreement dated December 24, 1996, the Subordination and
Intercreditor Agreement dated December 24, 1996, the Forbearance Letter dated
December 24, 1996, the Agreement and Plan of Merger dated as of January 27,
1997, the Stockholder Agreements dated January 27, 1997, and the Form of
Employment Agreement by and among DENTSPLY International Inc., New Image
Industries, Inc. and Dewey F. Edmunds, copies of which are attached hereto as
Exhibits (a)(1), (a)(2), (b)(1), (b)(2),(b)(3), (c)(1), (c)(2) through (c)(14),
and (c)(15), respectively, is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase dated January 31, 1997.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter from the Dealer Manager to Brokers, Dealers, Banks,
Trust Companies and Other Nominees.
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(a)(5) Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9.
(a)(6) Summary Advertisement as published on January 31, 1997.
(a)(7) Press Release issued by DENTSPLY International Inc. on
January 28, 1997.
(b)(1) Credit Agreement, dated December 24, 1996, by and between New
Image Industries, Inc., Insight Imaging Systems, Inc. and
DENTSPLY International Inc.
(b)(2) Subordination and Intercreditor Agreement, dated December 24,
1996, by and among New Image Industries, Inc., Insight Imaging
Systems, Inc., Coast Business Credit, a division of Southern
Pacific Thrift & Loan Association, and DENTSPLY International
Inc.
(b)(3) Forbearance Letter, dated December 24, 1996, by and among New
Image Industries, Inc., Insight Imaging Systems, Inc., Coast
Business Credit a division of Southern Pacific Thrift & Loan
Association, and DENTSPLY International Inc.
(b)(4) Letter of Intent, dated December 24, 1996, by and between New
Image Industries, Inc. and DENTSPLY International Inc.
(b)(5) Mutual Confidential Non-Disclosure Agreement, dated October 8,
1996, between New Image Industries, Inc. and DENTSPLY
International Inc.
(c)(1) Agreement and Plan of Merger dated as of January 27, 1997 by
and among DENTSPLY International Inc., Image Acquisition Corp.
and New Image Industries, Inc.
(c)(2) Stockholder Agreement, dated as of January 27, 1997, by and
among DENTSPLY International Inc., Image Acquisition Corp.
and Robert S. Colman.
(c)(3) Stockholder Agreement, dated as of January 27, 1997, by and
among DENTSPLY International Inc., Image Acquisition Corp.
and David H. Cooper.
(c)(4) Stockholder Agreement, dated as of January 27, 1997, by and
among DENTSPLY International Inc., Image Acquisition Corp.
and Paul Devereaux.
(c)(5) Stockholder Agreement, dated as of January 27, 1997, by and
among DENTSPLY International Inc., Image Acquisition Corp.
and Dewey F. Edmunds.
(c)(6) Stockholder Agreement, dated as of January 27, 1997, by and
among DENTSPLY International Inc., Image Acquisition Corp.
and Richard P. Greenthal.
(c)(7) Stockholder Agreement, dated as of January 27, 1997, by and
among DENTSPLY International Inc., Image Acquisition Corp.
and Debra L. Jackson.
(c)(8) Stockholder Agreement, dated as of January 27, 1997, by and
among DENTSPLY International Inc., Image Acquisition Corp.
and Mike Lytle.
(c)(9) Stockholder Agreement, dated as of January 27, 1997, by and
among DENTSPLY International Inc., Image Acquisition Corp.
and Harold J. Meyers.
(c)(10) Stockholder Agreement, dated as of January 27, 1997, by and
among DENTSPLY International Inc., Image Acquisition Corp.
and Harold R. Orr.
(c)(11) Stockholder Agreement, dated as of January 27, 1997, by and
among DENTSPLY International Inc., Image Acquisition Corp.
and Ralph M. Richart.
(c)(12) Stockholder Agreement, dated as of January 27, 1997, by and
among DENTSPLY International Inc., Image Acquisition Corp.
and Kenneth B. Sawyer.
(c)(13) Stockholder Agreement, dated as of January 27, 1997, by and
among DENTSPLY International Inc., Image Acquisition Corp.
and Mark W. Stevens.
(c)(14) Stockholder Agreement, dated as of January 27, 1997, by and
among DENTSPLY International Inc., Image Acquisition Corp.
and The William W. Stevens and Virda J. Stevens Trust.
(c)(15) Form of Employment Agreement by and among DENTSPLY
International Inc., New Image Industries, Inc. and Dewey F.
Edmunds.
(d) None.
(e) Not applicable.
(f) None.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
DENTSPLY International Inc.
/s/ EDWARD D. YATES
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Name: Edward D. Yates
Title: Senior Vice President
Image Acquisition Corp.
/s/ EDWARD D. YATES
------------------------------
Name: Edward D. Yates
Title: Senior Vice President
Date: January 31, 1997
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EXHIBIT (a)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
NEW IMAGE INDUSTRIES, INC.
AT
$2.00 NET PER SHARE
BY
IMAGE ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
DENTSPLY INTERNATIONAL INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, MARCH 3, 1997,
UNLESS THE OFFER IS EXTENDED.
THE BOARD OF DIRECTORS OF NEW IMAGE INDUSTRIES, INC. HAS DETERMINED THAT
THE OFFER AND THE MERGER REFERRED TO HEREIN ARE FAIR TO, AND IN THE BEST
INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS, HAS UNANIMOUSLY APPROVED THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY AND UNANIMOUSLY
RECOMMENDS THAT ALL HOLDERS OF SHARES TENDER THEIR SHARES PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES WHICH REPRESENTS AT LEAST FIFTY-FIVE PERCENT (55%) OF ALL OUTSTANDING
SHARES AS OF THE DATE OF COMMENCEMENT OF THE OFFER.
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IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (1) complete and sign the Letter of Transmittal or a
facsimile copy thereof in accordance with the instructions in the Letter of
Transmittal, have such stockholder's signature thereon guaranteed if required by
Instruction 1 to the Letter of Transmittal, mail or deliver the Letter of
Transmittal or manually signed facsimile thereof and any other required
documents to the Depositary and either deliver the certificates for such Shares
to the Depositary along with the Letter of Transmittal or manually signed
facsimile thereof or tender such Shares pursuant to the procedure for book-entry
transfer set forth in Section 2 of this Offer to Purchase or (2) request such
stockholder's broker, dealer, bank, trust company or other nominee to effect the
transaction for such stockholder. A stockholder having Shares registered in the
name of a broker, dealer, bank, trust company or other nominee must contact such
broker, dealer, bank, trust company or other nominee if such stockholder desires
to tender such Shares.
A stockholder who desires to tender Shares and whose certificates for such
Shares are not immediately available or who cannot comply in a timely manner
with the procedure for book-entry transfer, or who cannot deliver all required
documents to the Depositary prior to the expiration of the Offer, may tender
such Shares by following the procedure for guaranteed delivery set forth in
Section 2 of this Offer to Purchase.
Inquiries with respect to the Offer should be addressed to Robert W. Baird
& Co. Incorporated, the Dealer Manager for the Offer, or D.F. King & Co., Inc.,
the Information Agent for the Offer, at their respective addresses and telephone
numbers set forth on the back cover of this Offer to Purchase. Requests for
copies of the enclosed materials may be directed to D.F. King & Co., Inc.
------------------
The Dealer Manager for the Offer is:
ROBERT W. BAIRD & CO.
INCORPORATED
JANUARY 31, 1997
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TABLE OF CONTENTS
PAGE
----
Introduction
1. Terms of the Offer............................................................... 2
2. Procedure for Tendering Shares................................................... 4
3. Withdrawal Rights................................................................ 6
4. Acceptance for Payment and Payment............................................... 7
5. Certain Federal Income Tax Consequences.......................................... 8
6. Price Range of the Shares; Dividends on the Shares............................... 8
7. Effect of the Offer on the Market for the Shares, Nasdaq Stock Quotation and
Exchange Act Registration........................................................ 9
8. Certain Information Concerning the Company....................................... 10
9. Certain Information Concerning the Purchaser and Parent.......................... 11
10. Source and Amount of Funds....................................................... 13
11. Contacts with the Company; Background of the Offer............................... 13
12. Purpose of the Offer; Short Form Merger; Plans for the Company; Dissenters'
Rights;
Going Private Transactions....................................................... 17
13. The Merger Agreement; the Stockholder Agreements; the Employment Agreement....... 18
14. Dividends and Distributions...................................................... 27
15. Certain Conditions of the Offer.................................................. 27
16. Certain Legal Matters............................................................ 28
17. Fees and Expenses................................................................ 30
18. Miscellaneous.................................................................... 30
Schedule I--Directors and Executive Officers............................................ S-1
12
To the Holders of Common Stock
of New Image Industries, Inc.:
INTRODUCTION
Image Acquisition Corp., a Delaware corporation (the "Purchaser") and a
wholly owned subsidiary of DENTSPLY International Inc., a Delaware corporation
("Parent"), hereby offers to purchase all outstanding shares of common stock,
par value $.001 per share (the "Shares" and, each, a "Share"), of New Image
Industries, Inc., a Delaware corporation (the "Company"), at a price of $2.00
per Share (the "Offer Price"), net to the seller in cash, without interest, upon
the terms and subject to the conditions set forth in this Offer to Purchase and
in the related Letter of Transmittal (which, together with any amendments or
supplements hereto or thereto, collectively constitute the "Offer").
Tendering stockholders will not be charged brokerage fees or commissions
or, except as set forth in Instruction 6 of the Letter of Transmittal, transfer
taxes on the purchase of Shares pursuant to the Offer. The Purchaser will pay
all fees and expenses of Robert W. Baird & Co. Incorporated, which is acting as
Dealer Manager (the "Dealer Manager"), Harris Trust and Savings Bank, which is
acting as the Depositary (the "Depositary"), and D.F. King & Co., Inc., which is
acting as Information Agent (the "Information Agent"), incurred in connection
with the Offer. See Section 17.
THE BOARD OF DIRECTORS OF THE COMPANY HAS DETERMINED THAT THE OFFER AND THE
MERGER (AS DEFINED BELOW) ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY
AND ITS STOCKHOLDERS, HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT (AS DEFINED
BELOW) AND THE TRANSACTIONS CONTEMPLATED THEREBY AND UNANIMOUSLY RECOMMENDS THAT
ALL HOLDERS OF SHARES TENDER THEIR SHARES PURSUANT TO THE OFFER.
CLEARY GULL REILAND & MCDEVITT INC. ("CLEARY GULL"), THE COMPANY'S
FINANCIAL ADVISOR, HAS DELIVERED TO THE BOARD OF DIRECTORS OF THE COMPANY ITS
WRITTEN OPINION DATED JANUARY 20, 1997, TO THE EFFECT THAT THE CONSIDERATION TO
BE RECEIVED BY HOLDERS OF SHARES IN EACH OF THE OFFER AND THE MERGER IS FAIR,
FROM A FINANCIAL POINT OF VIEW, TO SUCH HOLDERS AS OF THE DATE OF DELIVERY OF
SUCH OPINION. SUCH OPINION IS SET FORTH IN FULL AS AN EXHIBIT TO THE COMPANY'S
SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 (THE "SCHEDULE 14D-9"),
WHICH ACCOMPANIES THIS OFFER TO PURCHASE. CLEARY GULL HAS PREVIOUSLY PROVIDED
INVESTMENT BANKING AND FINANCIAL ADVISORY SERVICES TO PARENT. SEE SECTION 11.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN SECTION
1) THAT NUMBER OF SHARES WHICH REPRESENTS AT LEAST FIFTY-FIVE PERCENT (55%) OF
ALL OUTSTANDING SHARES AS OF THE DATE OF COMMENCEMENT OF THE OFFER (THE "MINIMUM
TENDER CONDITION"). SEE SECTIONS 1 AND 15.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of January 27, 1997 (the "Merger Agreement"), by and among Parent, the
Purchaser and the Company, pursuant to which, following the consummation of the
Offer and the satisfaction or waiver of certain conditions, the Purchaser will
be merged with and into the Company (the "Merger"), the separate existence of
the Purchaser (except as may be continued by operation of law) will cease, and
the Company will continue as the surviving corporation following the Merger (the
"Surviving Corporation"). At the Effective Time of the Merger (the "Effective
Time"), each outstanding Share (other than Shares held in the treasury of the
Company or owned by Parent or any direct or indirect subsidiary of Parent
(including the Purchaser) or by stockholders, if any, who are entitled to and
who properly exercise appraisal rights under the Delaware General Corporation
Law (the "DGCL")) will be converted into the right to receive the Offer Price in
cash, without interest (the "Merger Consideration").
The Merger is subject to a number of conditions, including approval by
stockholders of the Company, if such approval is required by applicable law. If
the Minimum Tender Condition is satisfied and the Purchaser accepts for payment
Shares tendered pursuant to the Offer, the Purchaser will be entitled to
designate all of the members of the Company's Board of Directors and to effect
the Merger without the affirmative vote of any other stockholder of the Company.
In the event the Purchaser acquires 90% or more of the Shares pursuant to
13
the Offer, the Purchaser would be able to effect the Merger pursuant to the
short-form merger provisions of the DGCL, without prior notice to, or any action
by, any other stockholder of the Company. See Section 12.
The Merger Agreement provides that, following the satisfaction or waiver of
the conditions of the Offer, the Purchaser will accept for payment, in
accordance with the terms of the Offer, all Shares validly tendered (and not
previously withdrawn) pursuant to the Offer as promptly as practicable following
the termination of the Offer, which is currently 12:00 Midnight, New York City
time, on Monday, March 3, 1997. The Merger Agreement provides that the Purchaser
may, under certain circumstances and from time to time, extend the period of
time during which the Offer is open. Also at the Effective Time, each option and
warrant to purchase Shares, whether or not then exercisable in accordance with
its terms, will be converted into the right to receive, upon the surrender of
the agreement evidencing such option or warrant and the delivery of an
acknowledgment in accordance with the terms of the Merger Agreement, an amount
in cash (net of applicable withholding) equal to the excess, if any, of the
Offer Price over the exercise price per Share subject to such option or warrant,
as the case may be, multiplied by the number of Shares previously subject to
such option or warrant. See Section 13.
The Purchaser and Parent have also entered into separate stockholder
agreements (the "Stockholder Agreements") with (i) each executive officer and
director of the Company who, in each case, beneficially owns Shares or options
or warrants to purchase Shares and (ii) The William W. Stevens and Virda J.
Stevens Trust, a stockholder of the Company (collectively, the "Stockholder
Parties"), pursuant to which such Stockholder Parties have agreed to tender all
Shares held by such Stockholder Parties into the Offer. Such Stockholder Parties
presently hold 537,795 Shares, or approximately 9.8% of the outstanding Shares.
In addition, Parent, the Company and Dewey F. Edmunds, the Company's current
President and Chief Executive Officer, will enter into an employment agreement
(the "Employment Agreement"), pursuant to which, subject to certain conditions,
Mr. Edmunds will be employed as Vice President and General Manager of the
Company following the purchase of Shares pursuant to the Offer. See Section 13.
The Company has represented and warranted to Parent and the Purchaser that,
as of January 27, 1997, there were 5,479,911 Shares issued and outstanding.
Accordingly, approximately 3,013,951 Shares constitute fifty-five percent (55%)
of the Shares outstanding as of the date of the commencement of the Offer.
The Purchaser and Parent estimate that the total funds required to purchase
all Shares validly tendered pursuant to the Offer, to consummate the Merger and
to pay all related costs and expenses will be approximately $12 million. The
Purchaser plans to obtain all funds needed for the Offer and the Merger through
a capital contribution or intercompany loan which will be made by Parent to the
Purchaser. Parent plans to obtain funds for such capital contribution or
intercompany loan from its available sources of cash, including its cash on
hand, its revolving loan facility or short-term bank borrowings.
Certain federal income tax consequences of the sale of Shares pursuant to
the Offer and the exchange of Shares for the Merger Consideration pursuant to
the Merger as they may affect stockholders are described in Section 5.
1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions of the Offer, the Purchaser
will accept for payment and pay for all Shares validly tendered prior to the
Expiration Date and not theretofore withdrawn. The term "Expiration Date" means
12:00 Midnight, New York City time, on March 3, 1997, unless the Purchaser shall
have extended the period of time during which the Offer is open, in which event
the term "Expiration Date" shall mean the latest time and date at which the
Offer, as so extended by the Purchaser, shall expire.
Subject to the applicable regulations of the Securities and Exchange
Commission (the "Commission"), the Purchaser also expressly reserves the right
(subject to the provisions of the Merger Agreement), in its sole discretion, at
any time or from time to time and regardless of whether or not any of the events
set forth in Section 15 hereof shall have occurred or shall have been determined
by the Purchaser to have occurred, to (i) extend the period of time during which
the Offer is open, and thereby delay acceptance for payment, and payment for,
Shares, by giving oral or written notice to the Depositary, and (ii) amend the
Offer in any other
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14
respect by giving oral or written notice of such amendment to the Depositary and
by making a public announcement thereof. The Purchaser shall not have any
obligation to pay interest on the purchase price for tendered Shares, whether or
not the Purchaser exercises its right to extend the Offer.
If by 12:00 Midnight, New York City time, on Monday, March 3, 1997 (or any
other date or time then set as the Expiration Date), any or all conditions of
the Offer have not been satisfied or waived, the Purchaser reserves the right
(but shall not be obligated), upon the terms and subject to the conditions
contained in the Merger Agreement and to the applicable rules and regulations of
the Commission, to (i) terminate the Offer and not accept for payment any Shares
and return all tendered Shares to tendering stockholders, (ii) waive all the
unsatisfied conditions and, subject to complying with the terms of the Merger
Agreement and the applicable rules and regulations of the Commission, accept for
payment and pay for all Shares validly tendered prior to the Expiration Date and
not theretofore withdrawn, (iii) extend the Offer and, subject to the right of
stockholders to withdraw Shares until the Expiration Date, retain the Shares
that have been tendered during the period or periods for which the Offer is
extended or (iv) amend the Offer. Under the terms of the Merger Agreement,
Parent may not, and will cause the Purchaser not to, without the prior written
consent of the Company, decrease the Offer Price, or change the form of
consideration payable, in the Offer, decrease the number of Shares sought in the
Offer, change the conditions of the Offer from those contained in the Appendix
to the Merger Agreement, impose additional conditions to the Offer, or amend any
material term of the Offer in a manner adverse to the holders of Shares.
Any extension, amendment or termination of the Offer will be followed as
promptly as practicable by public announcement. In the case of an extension,
Rule 14e-1(d) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires that the announcement be issued no later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date in accordance with the public announcement
requirements of Rule 14d-4(c) under the Exchange Act. Subject to applicable law
(including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require
that any material change in the information published, sent or given to
stockholders in connection with the Offer be promptly disseminated to
stockholders in a manner reasonably designed to inform stockholders of such
change), and without limiting the manner in which the Purchaser may choose to
make any public announcement, the Purchaser will not have any obligation to
publish, advertise or otherwise communicate any such public announcement other
than by making a release to the Dow Jones News Service.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer
(including a waiver of the Minimum Tender Condition), the Purchaser will
disseminate additional tender offer materials and extend the Offer to the extent
required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The
minimum period during which an offer must remain open following material changes
in the terms of the offer or information concerning the offer, other than a
change in price or a change in the percentage of securities sought, will depend
upon the facts and circumstances then existing, including the relative
materiality of the changed terms or information. With respect to a change in
price or a change in the percentage of securities sought, a minimum period of
ten business days is generally required to allow for adequate dissemination to
stockholders and investor response.
Consummation of the Offer is conditioned upon satisfaction of the Minimum
Tender Condition, the expiration or termination of all waiting periods imposed
by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
regulations thereunder (the "HSR Act") and the other conditions set forth in
Section 15. Upon the terms and subject to the conditions contained in the Merger
Agreement, the Purchaser reserves the right (but shall not be obligated) to
waive any or all such conditions. However, if the Purchaser waives or amends the
Minimum Tender Condition during the last five business days during which the
Offer is open, the Purchaser will be required to extend the Expiration Date so
that the Offer will remain open for at least five business days after the
announcement of such waiver or amendment is first published, sent or given to
holders of Shares.
The Company has provided the Purchaser with the Company's stockholder lists
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase, the related Letter of Transmittal and
other relevant materials will be mailed by the Purchaser to record holders of
Shares
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and will be furnished by the Purchaser to brokers, dealers, banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the stockholder lists or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares.
2. PROCEDURE FOR TENDERING SHARES.
Valid Tender. For a stockholder validly to tender Shares pursuant to the
Offer, either (i) a properly completed and duly executed Letter of Transmittal
(or manually signed facsimile thereof), together with any required signature
guarantees and any other required documents, must be received by the Depositary
at one of its addresses set forth on the back cover of this Offer to Purchase
and either certificates for tendered Shares must be received by the Depositary
at one of such addresses or such Shares must be delivered pursuant to the
procedure for book-entry transfer set forth below (and a "Book-Entry
Confirmation" (as defined below) received by the Depositary), in each case prior
to the Expiration Date, or (ii) the tendering stockholder must comply with the
guaranteed delivery procedure described below.
The Depositary will establish an account with respect to the Shares at The
Depository Trust Company and the Philadelphia Depository Trust Company (each a
"Book-Entry Transfer Facility" and, together, the "Book-Entry Transfer
Facilities") for purposes of the Offer within two business days after the date
of this Offer to Purchase. Any financial institution that is a participant in
any of the Book-Entry Transfer Facilities' systems may make book-entry delivery
of Shares by causing a Book-Entry Transfer Facility to transfer such Shares into
the Depositary's account in accordance with such Book-Entry Transfer Facility's
procedures for such transfer. However, although delivery of Shares may be
effected through book-entry transfer into the Depositary's account at a
Book-Entry Transfer Facility, the Letter of Transmittal (or manually signed
facsimile thereof), properly completed and duly executed, with any required
signature guarantees and any other required documents, must, in any case, be
transmitted to, and received by, the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date,
or the tendering stockholder must comply with the guaranteed delivery procedure
described below. The confirmation of a book-entry transfer of Shares into the
Depositary's account at a Book-Entry Transfer Facility as described above is
referred to herein as a "Book-Entry Confirmation." Delivery of documents to a
Book-Entry Transfer Facility in accordance with such Book-Entry Transfer
Facility's procedures does not constitute delivery to the Depositary.
The method of delivery of Shares, the Letter of Transmittal and all other
required documents is at the election and risk of the tendering stockholder. If
delivery is by mail, registered mail with return receipt requested, properly
insured, is recommended. In all cases, sufficient time should be allowed to
ensure timely delivery.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal if (i) the Letter of Transmittal is signed by the registered holder
of Shares (which term, for purposes of this Section, includes any participant in
any of the Book-Entry Transfer Facilities' systems whose name appears on a
security position listing as the owner of the Shares) tendered therewith and
such registered holder has not completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on the
Letter of Transmittal or (ii) such Shares are tendered for the account of a firm
that is a member of a registered national securities exchange or of the National
Association of Securities Dealers, Inc. (the "NASD"), or a commercial bank or
trust company having an office or correspondent in the United States or by any
other "eligible guarantor institution," as such term is defined in Rule 17Ad-15
under the Exchange Act (each, an "Eligible Institution"). In all other cases,
all signatures on the Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instructions 1 and 5 to the Letter of Transmittal. If the
certificates for Shares are registered in the name of a person other than the
signer of the Letter of Transmittal, or if payment is to be made or certificates
for Shares not tendered or not accepted for payment are to be issued to a person
other than the registered holder of the certificates surrendered, the tendered
certificates must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name or names of the registered holders or
owners appear on the certificates, with the signatures on the certificates or
stock powers guaranteed as aforesaid. See Instruction 5 to the Letter of
Transmittal.
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Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or the procedure for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such stockholder's tender may be
effected if all the following conditions are met:
(a) such tender is made by or through an Eligible Institution;
(b) a properly completed and duly executed Notice of Guaranteed
Delivery substantially in the form provided by the Purchaser is received by
the Depositary, as provided below, prior to the Expiration Date; and
(c) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation with respect to such Shares),
together with a properly completed and duly executed Letter of Transmittal
(or manually signed facsimile thereof), with any required signature
guarantees and any other documents required by the Letter of Transmittal,
are received by the Depositary within three trading days after the date of
execution of such Notice of Guaranteed Delivery. A "trading day" is any day
on which the New York Stock Exchange, Inc. (the "NYSE") is open for
business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (i) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (ii) a Letter of Transmittal (or
manually signed facsimile thereof), properly completed and duly executed, with
any required signature guarantees, and (iii) any other documents required by the
Letter of Transmittal. Accordingly, tendering stockholders may be paid at
different times depending upon when certificates for Shares or Book-Entry
Confirmations are actually received by the Depositary. Under no circumstances
will interest be paid on the purchase price of the Shares to be paid by the
Purchaser, regardless of any extension of the Offer or any delay in making such
payment.
The valid tender of Shares pursuant to one of the procedures described
above will constitute a binding agreement between the tendering stockholder and
the Purchaser upon the terms and subject to the conditions of the Offer.
Appointment. By executing a Letter of Transmittal as set forth above, the
tendering stockholder will irrevocably appoint designees of the Purchaser as
such stockholder's attorneys-in-fact and proxies in the manner set forth in the
Letter of Transmittal, each with full power of substitution, to the full extent
of such stockholder's rights with respect to the Shares tendered by such
stockholder and accepted for payment by the Purchaser and with respect to any
and all other Shares or other securities or rights issued or issuable in respect
of such Shares on or after the date of this Offer to Purchase. All such proxies
shall be considered coupled with an interest in the tendered Shares. Such
appointment will be effective when, and only to the extent that, the Purchaser
accepts for payment Shares tendered by such stockholder as provided herein. Upon
such appointment, all prior powers of attorney and proxies given by such
stockholder with respect to such Shares or other securities or rights will,
without further action, be revoked and no subsequent powers of attorney and
proxies may be given (and, if given, will not be deemed effective). The
designees of the Purchaser will thereby be empowered to exercise all voting and
other rights with respect to such Shares or other securities or rights in
respect of any annual, special or adjourned meeting of the Company's
stockholders, or otherwise, as they in their sole discretion deem proper. The
Purchaser reserves the right to require that, in order for Shares to be deemed
validly tendered, immediately upon the Purchaser's acceptance for payment of
such Shares, the Purchaser must be able to exercise full voting and other rights
with respect to such Shares and other securities or rights, including voting at
any meeting of stockholders then or thereafter scheduled.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by the Purchaser in its sole discretion, which determination
will be final and binding. The Purchaser reserves the absolute right to reject
any or all tenders determined by it not to be in proper form or the acceptance
for payment of or payment for which may, in the
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opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves the
absolute right to waive any defect or irregularity in any tender with respect to
any particular Shares, whether or not similar defects or irregularities are
waived in the case of other Shares. No tender of Shares will be deemed to have
been validly made until all defects or irregularities relating thereto have been
cured or waived. None of the Purchaser, Parent, the Depositary, the Information
Agent, the Dealer Manager or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification. The Purchaser's interpretation of the
terms and conditions of the Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding.
Backup Withholding. In order to avoid "backup withholding" of federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must provide the Depositary with such stockholder's correct
taxpayer identification number ("TIN") on a Substitute Form W-9 and certify
under penalties of perjury that such TIN is correct and that such stockholder is
not subject to backup withholding. Certain stockholders (including, among
others, all corporations and certain foreign individuals and entities) are not
subject to backup withholding. If a stockholder does not provide its correct TIN
or fails to provide the certifications described above, the Internal Revenue
Service ("IRS") may impose a penalty on such stockholder, and payment of cash to
such stockholder pursuant to the Offer may be subject to backup withholding of
31%. All stockholders surrendering Shares pursuant to the Offer should complete
and sign the main signature form and the Substitute Form W-9 included as part of
the Letter of Transmittal to provide the information and certification necessary
to avoid backup withholding (unless an applicable exemption exists and is proved
in a manner satisfactory to the Purchaser and the Depositary). Noncorporate
foreign stockholders should complete and sign the main signature form and a Form
W-8, Certificate of Foreign Status, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See Instruction 9 to the
Letter of Transmittal.
3. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 3, tenders of Shares are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant to
the procedures set forth below at any time prior to the Expiration Date and,
unless theretofore accepted for payment and paid for by the Purchaser pursuant
to the Offer, may also be withdrawn at any time after April 1, 1997.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase and
must specify the name of the person having tendered the Shares to be withdrawn,
the number of Shares to be withdrawn and the name of the registered holder of
the Shares to be withdrawn, if different from the name of the person who
tendered the Shares. If certificates for Shares have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such
certificates, the serial numbers shown on such certificates must be submitted to
the Depositary and, unless such Shares have been tendered by an Eligible
Institution, the signatures on the notice of withdrawal must be guaranteed by an
Eligible Institution. If Shares have been delivered pursuant to the procedure
for book-entry transfer as set forth in Section 2, any notice of withdrawal must
also specify the name and number of the account at the appropriate Book-Entry
Transfer Facility to be credited with the withdrawn Shares and otherwise comply
with such Book-Entry Transfer Facility's procedures. Withdrawals of tenders of
Shares may not be rescinded, and any Shares properly withdrawn will thereafter
be deemed not validly tendered for purposes of the Offer. However, withdrawn
Shares may be retendered by again following one of the procedures described in
Section 2 at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser in its sole
discretion, which determination will be final and binding. None of the
Purchaser, Parent, the Depositary, the Information Agent, the Dealer Manager or
any other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification.
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4. ACCEPTANCE FOR PAYMENT AND PAYMENT.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and will pay for all Shares
validly tendered prior to the Expiration Date (and not properly withdrawn in
accordance with Section 3) promptly after the Expiration Date. Any determination
concerning the satisfaction of such terms and conditions will be within the sole
discretion of the Purchaser, subject to rules and regulations of the Commission,
and such determination will be final and binding on all tendering stockholders.
The Purchaser expressly reserves the right, in its sole discretion, to delay
acceptance for payment of or payment for Shares in order to comply in whole or
in part with any applicable law, including, without limitation, the HSR Act. Any
such delays will be effected in compliance with Rule 14e-1(c) under the Exchange
Act (relating to the Purchaser's obligation to pay for or return tendered Shares
promptly after the termination or withdrawal of the Offer).
Parent filed a Notification and Report Form with respect to the Offer under
the HSR Act on January 29, 1997. The waiting period under the HSR Act with
respect to the Offer will expire at 11:59 p.m., New York City time, on February
13, 1997, unless early termination of the waiting period is granted. In
addition, the Antitrust Division of the Department of Justice (the "Antitrust
Division") or the Federal Trade Commission (the "FTC") may extend the waiting
period by requesting additional information or documentary material from Parent.
If such a request is made, such waiting period will expire at 11:59 p.m., New
York City time, on the tenth calendar day following the date of substantial
compliance with such request. See Section 16 hereof for additional information
concerning the HSR Act and the applicability of the antitrust laws to the Offer.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates for
such Shares (or timely Book-Entry Confirmation of a transfer of such Shares as
described in Section 2), (ii) a Letter of Transmittal (or manually signed
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, and (iii) any other documents required by the Letter of
Transmittal. The per Share consideration paid to any stockholder pursuant to the
Offer will be the highest per Share consideration paid to any other stockholder
pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares properly tendered to the Purchaser
and not withdrawn as, if and when the Purchaser gives oral or written notice to
the Depositary of the Purchaser's acceptance for payment of such Shares. Payment
for Shares accepted for payment pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from the Purchaser
and transmitting payment to tendering stockholders. Under no circumstances will
interest be paid on the purchase price of the Shares by the Purchaser,
regardless of any extension of the Offer or any delay in making such payment.
If the Purchaser is delayed in its acceptance for payment of or payment for
Shares or is unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer (but subject to compliance with Rule 14e-1(c) under the Exchange Act,
which requires that a tender offeror pay the consideration offered or return the
tendered securities promptly after the termination or withdrawal of a tender
offer), the Depositary may, nevertheless, on behalf of the Purchaser, retain
tendered Shares, and such Shares may not be withdrawn except to the extent
tendering stockholders are entitled to exercise, and duly exercise, withdrawal
rights as described in Section 3.
If any tendered Shares are not purchased pursuant to the Offer because of
an invalid tender or otherwise, certificates for any such Shares will be
returned, without expense to the tendering stockholder (or, in the case of
Shares delivered by book-entry transfer of such Shares into the Depositary's
account at a Book-Entry Transfer Facility pursuant to the procedure set forth in
Section 2, such Shares will be credited to an account maintained at the
appropriate Book-Entry Transfer Facility), as promptly as practicable after the
expiration or termination of the Offer.
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The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to Parent, or to one or more direct or indirect wholly
owned subsidiaries of Parent, the right to purchase Shares tendered pursuant to
the Offer, but any such transfer or assignment will not relieve the Purchaser of
its obligations under the Offer and will in no way prejudice the rights of
tendering stockholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
Sales of Shares pursuant to the Offer (and the receipt of the right to
receive cash by stockholders of the Company pursuant to the Merger) will be
taxable transactions for federal income tax purposes under the Internal Revenue
Code of 1986, as amended (the "Code"), and may also be taxable transactions
under applicable state, local, foreign and other tax laws. For federal income
tax purposes, a tendering stockholder will generally recognize gain or loss
equal to the difference between the amount of cash received by the stockholder
pursuant to the Offer (or to be received pursuant to the Merger) and the
aggregate tax basis in the Shares tendered by the stockholder and purchased
pursuant to the Offer (or canceled pursuant to the Merger). Under present law,
gain or loss will be calculated separately for each block of Shares tendered and
purchased pursuant to the Offer.
If tendered Shares are held by a tendering stockholder as capital assets,
gain or loss recognized by the tendering stockholder will be capital gain or
loss, which will be long-term capital gain or loss if the tendering
stockholder's holding period for the Shares exceeds one year. Under present law,
long-term capital gains recognized by a tendering individual stockholder will
generally be taxed at a maximum federal marginal tax rate of 28%, and long-term
capital gains recognized by a tendering corporate stockholder will be taxed at a
maximum federal marginal tax rate of 35%.
A stockholder (other than certain exempt stockholders including, among
others, all corporations and certain foreign individuals) that tenders Shares
may be subject to 31% backup withholding unless the stockholder provides its TIN
and certifies that such number is correct or properly certifies that it is
awaiting a TIN. A stockholder that does not furnish its TIN may be subject to a
penalty imposed by the IRS. Each stockholder should complete and sign the
Substitute Form W-9 included as part of the Letter of Transmittal so as to
provide the information and certification necessary to avoid backup withholding.
If backup withholding applies to a stockholder, the Depositary is required
to withhold 31% from payments to such stockholder. Backup withholding is not an
additional tax. Rather, the amount of the backup withholding can be credited
against the federal income tax liability of the person subject to the backup
withholding, provided that the required information is given to the IRS. If
backup withholding results in an overpayment of tax, a refund can be obtained by
the stockholder upon filing an income tax return.
The foregoing discussion may not be applicable with respect to Shares
received pursuant to the exercise of employee stock options or otherwise as
compensation or with respect to holders of Shares who are subject to special tax
treatment under the Code, such as non-U.S. persons, life insurance companies,
tax-exempt organizations and financial institutions, and may not apply to a
holder of Shares in light of its individual circumstances. Holders of Shares are
urged to consult their own tax advisors to determine the particular tax
consequences to them (including the application and effect of any state, local
or foreign income and other tax laws) of the Offer and the Merger.
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES.
The Shares were traded on the Nasdaq National Market until December 5,
1996. Effective on December 5, 1996, the Shares were delisted from the Nasdaq
National Market. Since being delisted from the Nasdaq National Market, the
Shares have traded on the OTC Bulletin Board.
The following table sets forth, for each of the indicated periods of the
Company's fiscal years ended June 30, 1994, 1995 and 1996, the fiscal quarter
ended September 30, 1996 and the second fiscal quarter
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through December 5, 1996, the high and low last reported sales prices per Share
as reported on the Nasdaq National Market.
SALES PRICE
-------------------
HIGH LOW
----- -------
Fiscal 1994
First Quarter.......................................................... $19 1/4 $11 3/4
Second Quarter......................................................... 16 5/8 11 3/4
Third Quarter.......................................................... 16 3/8 8 7/8
Fourth Quarter......................................................... 12 3/8 8 5/8
Fiscal 1995
First Quarter.......................................................... $15 1/8 $ 7 1/6
Second Quarter......................................................... 6 3/4 3 5/8
Third Quarter.......................................................... 5 1/4 3 5/8
Fourth Quarter......................................................... 4 3/8 2 13/16
Fiscal 1996
First Quarter.......................................................... $ 4 1/4 $ 1 7/8
Second Quarter......................................................... 3 1 1/2
Third Quarter.......................................................... 2 7/8 1 15/16
Fourth Quarter......................................................... 5 5/8 2
Fiscal Year 1997
First Quarter.......................................................... $ 3 1/8 $ 1 1/2
Second Quarter (through December 5, 1996).............................. 2 1/8 1 1/16
From the time period beginning on December 6, 1996 and ending on January
30, 1997,the range of the high and low last reported sales prices per Share as
reported on the OTC Bulletin Board has been $1 13/16 to $ 9/16. On December 23,
1996, the last full day of trading prior to the public announcement of the
Letter of Intent (as defined below) between the Company and Parent, the closing
per Share sales price on the OTC Bulletin Board was $1.00. On January 30, 1997,
the last full trading day prior to commencement of the Offer, the closing per
Share sales price on the OTC Bulletin Board was $1 13/16. Stockholders are urged
to obtain a current quotation for their Shares.
As reported by the Company, the Company has never paid any dividends on the
Shares.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, NASDAQ STOCK QUOTATION AND
EXCHANGE ACT REGISTRATION.
The Shares were previously traded on the Nasdaq National Market. The Shares
were delisted from the Nasdaq National Market on December 5, 1996 for failure to
meet the capital and surplus requirements set forth in the marketplace rules of
The Nasdaq Stock Market, Inc. Since being delisted from the Nasdaq National
Market, the Shares have traded on the OTC Bulletin Board.
Under the rules of The Nasdaq Stock Market, Inc., an issuer of securities
which has been delisted may again become eligible for listing on The Nasdaq
Stock Market ("Nasdaq") only if it satisfies the Nasdaq's quantitative
designation criteria for initial inclusion, including the requirements that an
issuer have capital and surplus of at least $2 million and have at least 100,000
publicly held shares with a market value of at least $1 million held by at least
300 stockholders. Shares held directly or indirectly by an officer or director
of the Company, or by any beneficial owner of more than 10% of the shares, will
not be considered as being publicly held for this purpose. There can be no
assurance that the Company will in the future satisfy the requirement that the
Company have capital and surplus of at least $2 million and again become
eligible for listing on Nasdaq in the event that the Offer is not consummated.
If the Offer is consummated, the Shares may not become eligible for listing
on Nasdaq, depending upon the aggregate market value and the per share price of
any Shares not purchased pursuant to the Offer, the number of publicly held
Shares, the number of stockholders and other applicable standards for initial
inclusion
9
21
on Nasdaq. In such event, quotations might still continue to be available from
the OTC Bulletin Board. The extent of the public market for the Shares and
availability of such quotations would, however, depend upon the number of
holders of Shares remaining at such time, the interest in maintaining a market
in the Shares on the part of securities firms, the possible termination of
registration under the Exchange Act, as described below, and other factors.
The Shares are currently registered under the Exchange Act. Registration of
the Shares under the Exchange Act may be terminated upon application of the
Company to the Commission if the Shares are not listed on a national securities
exchange or Nasdaq and there are fewer than 300 holders of record of the Shares.
According to the Company, as of January 28, 1997, there were approximately 620
holders of record of Shares. Termination of registration of the Shares under the
Exchange Act would reduce substantially the information required to be furnished
by the Company to its stockholders and to the Commission and would make certain
provisions of the Exchange Act no longer applicable to the Company. Furthermore,
if the registration of the Shares under the Exchange Act were to be terminated,
the ability of "affiliates" of the Company and persons holding "restricted
securities" of the Company to dispose of such securities pursuant to Rule 144
under the Securities Act of 1933, as amended, may be impaired or eliminated. It
is the present intention of the Purchaser to seek to cause the Company to make
an application for termination of registration of the Shares as soon as possible
following the consummation of the Offer if the requirements for termination of
registration are met.
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
The Company is a Delaware corporation with its principal executive offices
at 2283 Cosmos Court, Carlsbad, California 92009. As reported by the Company,
the Company's principal line of business is designing, developing, manufacturing
and distributing intraoral cameras and computer imaging systems and related
software exclusively to the dental marketplace.
The Company has informed Parent that it has experienced severe financial
difficulties which raised substantial doubts about its ability to continue as a
going concern. In each of its last three fiscal years, the Company had net
losses, totalling approximately $11.2 million, $11.9 million and $2.2 million in
fiscal 1996, 1995 and 1994, respectively. For the fiscal quarter ended September
30, 1996, the Company reported a net loss of approximately $1.3 million. The
Company has also informed Parent that it has experienced severe constraints on
its liquidity, has been unable to obtain sufficient infusions of equity or debt
capital either in a timely manner or on acceptable terms and has been delinquent
on certain payments to its vendors under the terms of applicable vendor invoices
and has suffered delays or interruptions in the receipt of needed components.
Set forth below is certain selected consolidated financial information with
respect to the Company and its subsidiaries excerpted or derived from the
information contained in the Company's Form 10-K for the fiscal year ended June
30, 1996 and its Form 10-Q for the quarterly period ended September 30, 1996.
More comprehensive financial information is included in such reports and other
documents filed by the Company with the Commission, and the following summary is
qualified in its entirety by reference to such reports and such other documents
and all the financial information (including any related notes) contained
therein. Such reports and other documents should be available for inspection and
copies thereof should be obtainable in the manner set forth below under
"Available Information."
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22
NEW IMAGE INDUSTRIES, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED
SEPTEMBER 30, FISCAL YEAR ENDED
(UNAUDITED) JUNE 30,
------------------- ---------------------
1996 1995 1996 1995
------- ------- -------- --------
STATEMENT OF OPERATIONS DATA:
Net revenues................................. $ 6,193 $ 7,313 $ 37,144 $ 44,579
Loss from operations......................... (1,195) (2,098) (11,066) (11,466)
Net loss..................................... (1,327) (2,229) (11,171) (11,850)
Net loss per share........................... (0.24) (0.41) (2.05) (2.19)
SEPTEMBER 30,
(UNAUDITED) JUNE 30,
------------------- ---------------------
1996 1995 1996 1995
------- ------- -------- --------
BALANCE SHEET DATA:
Working capital (deficit).................... $(3,392) $ 2,041 $ (2,291) $ 4,202
Total assets................................. 13,007 17,216 12,526 19,684
Long-term debt............................... 1,201 85 1,216 97
Total debt................................... 4,501 1,247 3,637 1,172
Stockholders' equity (deficit)............... (2,061) 5,516 (734) 7,788
Available Information. The Company is subject to the reporting
requirements of the Exchange Act and, in accordance therewith, is required to
file reports and other information with the Commission relating to its business,
financial condition and other matters. Information, as of particular dates,
concerning the Company's directors and officers, their remuneration, beneficial
ownership of Shares, the principal holders of the Company's securities and any
material interest of such persons in transactions with the Company is required
to be disclosed in proxy statements distributed to the Company's stockholders
and filed with the Commission. Such reports, proxy statements and other
information should be available for inspection at the public reference
facilities of the Commission located at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the Commission located at
Suite 1400, Citicorp Center, 500 West Madison Street, Chicago, Illinois
60661-2511 and at 7 World Trade Center, 13th Floor, New York, New York 10048.
The Commission maintains a site on the World Wide Web, and certain of the
reports, proxy statements and other information filed by the Company with the
Commission may be accessed electronically on the Web at http://www.sec.gov. In
addition, paper copies of such reports should be obtainable, by mail, upon
payment of the Commission's customary charges, by writing to the Commission's
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549.
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or based upon
publicly available documents on file with the Commission and other publicly
available information. Although the Purchaser and Parent do not have any
knowledge that any such information is untrue, neither the Purchaser nor Parent
takes any responsibility for the accuracy or completeness of such information or
for any failure by the Company to disclose events that may have occurred and may
affect the significance or accuracy of any such information.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT.
The Purchaser, a Delaware corporation and a wholly owned subsidiary of
Parent, was organized to acquire the Company and has not conducted any unrelated
activities since its organization. The principal offices of the Purchaser are
located at 570 West College Avenue, York, Pennsylvania 17405-0872. All
outstanding shares of capital stock of the Purchaser are owned by Parent.
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23
Parent designs, develops, manufactures and markets products in two
principal categories: dental consumable and laboratory products, and dental
equipment. Dental consumable and laboratory products include artificial teeth,
endodontic instruments and materials, impression materials, restorative
materials, crown and bridge materials, prophylaxis paste, dental sealants and
dental implants. Dental equipment includes dental x-ray systems, hand pieces,
cutting instruments, and ultrasonic sealers and polishers. Parent is a Delaware
corporation with its principal offices located at 570 West College Avenue, York,
Pennsylvania 17405-0872.
Set forth below is certain selected consolidated financial information with
respect to Parent and its subsidiaries excerpted or derived from the information
incorporated by reference in Parent's Annual Report on Form 10-K for the year
ended December 31, 1995 and set forth in Parent's Quarterly Reports on Form 10-Q
for the quarters ended September 30, 1996 and 1995. More comprehensive financial
information is included in such reports and other documents filed by Parent with
the Commission, and the following summary is qualified in its entirety by
reference to such reports and such other documents and all the financial
information (including any related notes) contained therein. Such reports and
other documents should be available for inspection and copies thereof should be
obtainable in the manner set forth below under "Available Information."
DENTSPLY INTERNATIONAL INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
(UNAUDITED) (UNAUDITED) YEAR ENDED DECEMBER 31,
-------------------- -------------------- --------------------------------
1996 1995 1996 1995 1995 1994 1993
-------- -------- -------- -------- -------- -------- --------
STATEMENT OF INCOME DATA:
Net sales.............. $155,327 $137,330 $476,266 $410,313 $572,028 $524,758 $503,820
Gross profit........... 74,472 62,919 233,040 199,517 280,852 257,724 246,113
Operating income from
continuing operations
before discretionary
ESOP contributions... 24,699 17,342 82,828 67,165 100,735 97,400 73,966
Net income............. 13,873 9,479 46,630 35,688 53,963(1) 61,998 14,052(2)
Net income per common
share................ .52 .35 1.73 1.32 2.00 2.23 .57
SEPTEMBER 30,
(UNAUDITED) DECEMBER 31,
-------------------- --------------------------------
1996 1995 1995 1994 1993
-------- -------- -------- -------- --------
BALANCE SHEET DATA:
Working capital............................. $121,462 $144,572 $122,706(3) $ 92,206(3) $ 82,779(3)
Total assets................................ 665,867 579,830 588,253 466,930 466,787
Total long-term debt........................ 95,976 90,104 68,675 12,789 95,356
Stockholders' equity........................ 349,700 299,148 315,922 299,337 236,397
- - ---------
(1) Includes certain unusual or non-recurring charges of approximately $3,100
(approximately $1,800 after tax).
(2) Includes certain unusual or non-recurring charges of approximately $21,800
(approximately $16,500 after tax) and an extraordinary charge of $14,018.
The effect of these unusual or non-recurring charges on operating income
from continuing operations before discretionary ESOP contributions was
approximately $17,900.
(3) Excludes net assets of discontinued operations.
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Except as described in this Offer to Purchase, none of the Purchaser,
Parent (together, the "Corporate Entities") or, to the best knowledge of the
Corporate Entities, any of the persons listed in Schedule I, or any affiliate or
majority-owned subsidiary of the Corporate Entities nor any of the persons so
listed, beneficially owns any equity security of the Company, and neither of the
Corporate Entities nor, to the best knowledge of the Corporate Entities, any of
the other persons referred to above, nor any of the respective directors,
executive officers or subsidiaries of any of the foregoing, has effected any
transaction in any equity security of the Company during the past 60 days.
Except as described in this Offer to Purchase, (i) there have not been any
contacts, transactions or negotiations between the Corporate Entities, any of
their respective subsidiaries or, to the best knowledge of the Corporate
Entities, any of the persons listed in Schedule I, on the one hand, and the
Company or any of its directors, officers or affiliates, on the other hand, that
are required to be disclosed pursuant to the rules and regulations of the
Commission and (ii) none of the Corporate Entities or, to the best knowledge of
the Corporate Entities, any of the persons listed in Schedule I has any
contract, arrangement, understanding or relationship with any person with
respect to any securities of the Company.
Except as described in this Offer to Purchase, during the last five years,
none of the Corporate Entities or, to the best knowledge of the Corporate
Entities, any of the persons listed in Schedule I (a) has been convicted in a
criminal proceeding (excluding traffic violations and similar misdemeanors) or
(b) was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any violation
of such laws. The name, business address, present principal occupation or
employment, five-year employment history and citizenship of each of the
directors and executive officers of the Purchaser and Parent are set forth in
Schedule I.
Available Information. Parent is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports and other information with the Commission relating to its business,
financial condition and other matters. Information, as of particular dates,
concerning Parent's directors and officers, their remuneration, their beneficial
ownership of Parent's securities, the principal holders of Parent's securities
and any material interest of such persons in transactions with Parent is
disclosed in proxy statements distributed to Parent's stockholders and filed
with the Commission. Such reports, proxy statements and other information should
be available for inspection at the Commission, and copies thereof should be
obtainable from the Commission, in the same manner as set forth with respect to
information concerning the Company in Section 8.
10. SOURCE AND AMOUNT OF FUNDS.
The Purchaser and Parent estimate that the total amount of funds required
to purchase all Shares validly tendered pursuant to the Offer, to consummate the
Merger and to pay all related fees and expenses will be approximately $12
million. The Purchaser plans to obtain all funds needed for the Offer and the
Merger through a capital contribution or intercompany loan which will be made by
Parent to the Purchaser. Parent plans to obtain funds for such capital
contribution or intercompany loan from its available sources of cash, including
its cash on hand, its revolving loan facility or short-term bank borrowings.
However, the Purchaser has not conditioned the Offer on obtaining financing.
11. CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER.
Parent designs, develops, manufactures and markets a broad range of
products for the dental market, and distributes its dental products worldwide.
As part of its business, Parent continually seeks to develop, either internally
or through acquisitions, new products for the dental market.
Executives of the Company approached Parent in September 1996 to inquire as
to Parent's interest in a possible acquisition of the Company. Parent decided to
pursue discussions with the Company in order to determine whether the Company's
intraoral cameras and computer imaging systems and related software for the
dental market would be a strategic fit for Parent's business.
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25
Parent had previously considered an acquisition of the Company in July
1994, at which time discussions had led to the execution of a letter of intent.
Under that letter of intent, subject to certain conditions, including Parent's
completion of a satisfactory due diligence investigation of the Company and the
negotiation and execution of definitive agreements, Parent agreed to acquire the
Company for a price of $16 3/8 per share in a cash transaction (the "Previous
Proposal"). No definitive agreements were executed in connection with the
Previous Proposal. In September 1994, Parent terminated the letter of intent
relating to the Previous Proposal because issues identified in its due diligence
investigation of the Company could not be resolved to Parent's satisfaction.
Although Parent discussed with the Company the possibility of negotiating a
transaction at a significantly lower price, the parties could not reach
agreement, and all discussions with respect to the Previous Proposal terminated
in September 1994.
In a meeting held on September 30, 1996, executives of the Company informed
Parent of the Company's operating losses since the end of the Company's fiscal
1994 and of the Company's financial difficulties and severe liquidity
constraints. The parties also discussed the Company's business and explored
whether Parent was willing to consider an acquisition of the Company. The
parties met again in October 1996 and signed a Mutual Confidential
Non-Disclosure Agreement dated October 8, 1996 (the "Mutual Confidential Non-
Disclosure Agreement") preceding Parent's review of certain confidential
information concerning the Company.
Executives of Parent and the Company met again in November 1996 and
discussed the deteriorating financial condition of the Company. Among other
matters, the parties discussed the fact that the Company was in default under
certain covenants in its senior credit agreement with Coast Business Credit, a
division of Southern Pacific Thrift & Loan Association ("Coast"), and its
subordinated credit agreement with Mercury Partners, LLC ("Mercury"), and did
not have sufficient cash to meet its current obligations. At that time, Parent
informed the Company that it would be prepared to consider acquiring the
Company, subject to certain conditions, at a purchase price of $2.00 per share
in cash, and, subject to reaching agreement with Coast and Mercury, to make
funds available to the Company to enable the Company to continue operations. In
December 1996, Mr. Edmunds, Chief Executive Officer and President of the
Company, informed Parent that the Company's Board of Directors had authorized
him to negotiate a letter of intent with Parent at the price Parent had
proposed, and that the Company would require up to $3 million to continue
operations in the period prior to consummation of a transaction.
Representatives of Parent and the Company had a series of meetings and
telephone conferences in December 1996 to negotiate a letter of intent and a
credit arrangement. Representatives of Parent also met with representatives of
Coast and Mercury to discuss the circumstances under which Coast and Mercury
would be willing to forbear from exercising default remedies against the Company
during the time period while Parent was completing a due diligence investigation
of the Company and pending the consummation of an acquisition transaction. Such
discussions included Parent's willingness to loan up to $3 million to the
Company because the Company could not continue operations for any significant
period of time without such funding.
Following these meetings, on December 11, 1996, the Board of Directors of
Parent approved in principle an acquisition transaction at $2.00 per share,
subject to final approval by the Executive Committee of such Board, and also
approved the Credit Agreement (as defined below). On December 24, 1996, Parent
and the Company signed a letter of intent (the "Letter of Intent") pursuant to
which Parent, subject to certain conditions, agreed to acquire the Company for
$2.00 per share in a cash transaction. On the same date, Parent, the Company and
Insight Imaging Systems, Inc., a wholly owned subsidiary of the Company
("Insight"), entered into a Credit Agreement (the "Credit Agreement"), and
certain security agreements ancillary to the Credit Agreement, which provided
for Parent to make available a line of credit of up to an aggregate principal
amount of $3 million to the Company. Parent loaned the Company $2.5 million
under the Credit Agreement on December 24, 1996; no further advances have been
made since such date. Also on the same date, Coast purchased from Mercury the
indebtedness owed to Mercury by the Company, and Coast agreed (as more fully
described below) to forbear from exercising its default rights and remedies
through the earlier of March 25, 1997 or the date on which the Letter of Intent
terminates other than by execution of a definitive merger agreement.
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26
Representatives of Parent and the Company held meetings and telephone
conferences in January 1997 to discuss the business and operations of the
Company and to negotiate the terms of the Merger Agreement and the transactions
contemplated thereby. During this time the Company's Board of Directors retained
the investment banking firm of Cleary Gull to consider the fairness from a
financial point of view of the Offer and the Merger. Cleary Gull has in the past
provided financial and/or investment banking services to Parent and was Parent's
financial advisor in connection with the Previous Proposal discussed above.
Except for certain trading activities relating to Parent's securities, Cleary
Gull has not rendered any financial advisory or investment banking services to
Parent since the termination of discussions relating to the Previous Proposal in
September 1994. In the ordinary course of its business, Cleary Gull may trade
securities of Parent and the Company for its own account and for the account of
its customers.
A meeting of the Company's Board of Directors was held on January 20, 1997
at which Cleary Gull delivered its oral opinion (which it subsequently confirmed
in writing) that as of the date thereof the consideration to be received by
holders of Shares in each of the Offer and the Merger is fair to such holders
from a financial point of view. The Board of Directors of the Company, by
unanimous written consent dated January 27, 1997, determined that the Offer and
the Merger are fair to, and in the best interests of, the Company and its
stockholders, and unanimously approved the Merger Agreement and the transactions
contemplated thereby and unanimously recommended that all holders of Shares
tender their Shares pursuant to the Offer and determined to recommend that
stockholders of the Company vote in favor of the approval and adoption of the
Merger Agreement if such approval is required by applicable law. On January 21,
1997, the Executive Committee of the Board of Directors of Parent and the Board
of Directors of the Purchaser approved the Merger Agreement, the Offer and the
transactions contemplated thereby.
Following such approvals, the parties executed the Merger Agreement on
January 27, 1997, and issued a press release announcing such execution on
January 28, 1997.
CREDIT AGREEMENT; SUBORDINATION AND INTERCREDITOR AGREEMENT; FORBEARANCE
LETTER.
The following summaries of the Credit Agreement, the Subordination and
Intercreditor Agreement (as defined below) and the Forbearance Letter (as
defined below) are qualified in their entirety by reference to the Credit
Agreement, the Subordination and Intercreditor Agreement and Forbearance Letter,
copies of which are filed as Exhibits (b)(1), (b)(2) and (b)(3), respectively,
to the Schedule 14D-1. The Credit Agreement, the Subordination and Intercreditor
Agreement and the Forbearance Letter should be read in their entirety for a more
complete description of the matters summarized below.
On December 24, 1996, the Company, Insight (together with the Company,
"Borrower"), and Parent entered into the Credit Agreement pursuant to which,
among other things, Parent agreed to make available to Borrower a line of credit
(the "Line") of up to an aggregate principal amount of $3 million (the "Maximum
Available Credit").
Upon execution and delivery of the Credit Agreement, Parent made an advance
to Borrower under the Line of $2.5 million to pay necessary and reasonable
operating expenses required to keep Borrower operating as a going concern
through the Termination Date (as defined below). Pursuant to the Credit
Agreement, at any time and from time to time during the term of the Credit
Agreement and until the Termination Date, Borrower may request an Advance (as
defined in the Credit Agreement), and Parent will make such Advance upon the
terms and subject to the conditions of the Credit Agreement if such Advance is
to be used as set forth in the preceding sentence. Parent may also in its sole
and absolute discretion make Advances to be used by Borrower for any other
purpose related to the operation of Borrower's business. Since December 24,
1996, Parent has made no additional Advances, so that the aggregate amount
loaned to the Company under the Credit Agreement is $2.5 million, and thus there
is, as of the date of this Offer to Purchase, $0.5 million additional borrowing
capacity available to Borrower under the Credit Agreement. Each outstanding
Advance is, and each future Advance will be, evidenced by a note (the "Note").
All of Borrower's indebtedness under the Credit Agreement is subordinated to the
extent provided in the Subordination and Intercreditor Agreement.
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Advances bear interest on the unpaid principal balance outstanding at any
time at the floating interest rate of 4% per annum in excess of the prime rate
of interest set forth in the Money Rates Section of The Wall Street Journal
rounded up to the nearest one-eighth (the "Line Interest Rate") or such lesser
rate permitted by applicable law if the Line Interest Rate would violate
applicable law. Except as otherwise provided in the Credit Agreement, Borrower
is obligated to pay in full all unpaid principal on the Line and all interest
accrued but unpaid thereon on March 25, 1997.
Pursuant to the Credit Agreement, Borrower granted to Parent a security
interest and lien on the Collateral (as defined in the Credit Agreement), which
includes, without limitation, all of Borrower's rights, title and interest in
and to all of its personal property, rights, interests and privileges. In
connection therewith, Borrower and Parent entered into certain security
agreements.
The Credit Agreement will terminate on the date (the "Termination Date") on
which (a) there is an Event of Default (as defined below) with respect to which
Parent has declared all principal and interest on the Note to be immediately due
and payable or with respect to which all principal and interest is immediately
due and payable without any declaration by Parent, or (b) the date of the
earliest to occur of (i) the termination of the Letter of Intent other than by
means of the execution and delivery of a definitive merger agreement as
contemplated therein, (ii) the termination of the Merger Agreement other than by
means of the consummation of the transactions contemplated therein or (iii)
March 25, 1997.
The Credit Agreement provides that the occurrence of any one or more of the
following events will constitute an Event of Default under the Credit Agreement
and the Note: (a) Borrower fails to pay as and when due any principal or
interest under the Credit Agreement or under the Note, or uses the proceeds of
Advances in violation of the terms thereof; (b) Borrower fails to observe or
perform any obligation or any covenant to be observed or performed by it under
the Credit Agreement or under the Note or in any other agreement between Parent
and Borrower; (c) Borrower defaults after December 24, 1996 in the payment or
performance of any material obligation or material indebtedness to another
person whether then existing or thereafter incurred including, without
limitation, any event of default as defined in the Coast Agreement (as defined
below) that is not then subject to Coast's forbearance under the terms of the
Forbearance Letter; (d) any material statement, certificate, report,
representation or warranty made or furnished by Borrower in the Credit Agreement
or in compliance with the provisions thereof proves to have been false or
misleading in any material respect at the time when made, deemed made or
furnished; (e) (i) any money judgment, writ or warrant of attachment or similar
process involving an amount in excess of $50,000 is entered or filed against
Borrower or any of its assets or properties and remains undischarged for a
period of 30 days, or (ii) any judgment or order of any court or administrative
agency awarding damages under the federal securities laws or in any action
seeking reimbursement, indemnification or contribution with respect to payment
of any such claim is filed against Borrower; (f) Borrower (i) applies for or
consents to the appointment of a receiver, trustee or liquidator of itself or of
its property, (ii) is unable, or admits in writing inability, to pay its debts
as they mature, (iii) makes a general assignment for the benefit of creditors,
(iv) is adjudicated a bankrupt or insolvent, (v) files a voluntary petition in
bankruptcy, or a petition or answer seeking reorganization or an arrangement
with creditors to take advantage of any insolvency law, or an answer admitting
the material allegations of a bankruptcy, reorganization or insolvency petition
filed against it, (vi) takes corporate action for the purpose of effecting any
of the foregoing, or (vii) has an order for relief entered against it in any
proceeding under the United States Bankruptcy Code; (g) an order, judgment or
decree is entered, without the application, approval or consent of Borrower, by
any court of competent jurisdiction, approving a petition seeking reorganization
of Borrower or appointing a receiver, trustee or liquidator of Borrower or of
all or a substantial part of its assets, and such order, judgment or decree
continues unstayed and in effect for any period of 30 consecutive days; (h) if
(i) subject to a proviso, any person or group within the meaning of Section
13(d)(3) of the Exchange Act and the rules and regulations promulgated
thereunder (other than Parent) acquires beneficial ownership (within the meaning
of Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the
Company (or other securities convertible into such securities) representing
twenty percent (20%) of the combined voting power of all securities of the
Company entitled to vote in the election of directors (hereinafter called a
"Controlling Person"); or (ii) a majority of the Board of Directors of the
Company ceases for any reason to consist of (A) individuals who on December 10,
1996 were serving as
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28
directors of the Company and (B) individuals who subsequently become members of
the Board if such individuals' nomination for election or election to the Board
is recommended or approved by a majority of the Board of Directors of the
Company; (i) the Credit Agreement ceases for any reason to be in full force and
effect or is declared to be null and void or unenforceable in whole or in part;
(j) there occurs any material adverse change in the business, properties,
operations or condition (financial or otherwise) of Borrower; (k) other than
Permitted Liens or Liens (as both such terms are defined in the Credit
Agreement) in favor of Parent or Liens otherwise consented to in writing by
Parent, any Lien or series of Liens is imposed against Borrower or any of the
Collateral whether by operation of law or by consent except where the result of
such Lien does not have a material adverse effect on the properties, operations,
profits or condition (financial or otherwise) of Borrower; or (l) Borrower
ceases to conduct its business substantially as it is conducted as of December
24, 1996, or Borrower changes the nature of its business.
Concurrently with the execution of the Credit Agreement, Parent, Borrower
and Coast entered into a Subordination and Intercreditor Agreement (the
"Subordination and Intercreditor Agreement"), pursuant to which Parent and
Borrower agreed, among other things, that the indebtedness of Borrower to Parent
under the Credit Agreement and the Note is subordinated, and the payment thereof
would be deferred if and when required pursuant to the terms thereof, to any and
all rights, claims, demands, indebtedness, action or causes of action of any
nature whatsoever that Coast might have against Borrower with respect to
Borrower's indebtedness to Coast pursuant to (a) that certain Amended and
Restated Loan Agreement, dated May 22, 1996, between Coast and Borrower (the
"Coast Agreement") and (b) the loan documents assigned to Coast by Mercury on
December 24, 1996 (the "Mercury Agreement"). In addition, Coast executed and
delivered to Parent and Borrower a letter (the "Forbearance Letter"), dated as
of December 24, 1996, in which Coast agreed to forbear from exercising any of
its default rights and remedies in connection with the violation of any and all
covenants of which Borrower may have been in breach as of the date of the
Forbearance Letter under the Coast Agreement and the Mercury Agreement, and any
and all covenants under the Coast Agreement and the Mercury Agreement that might
occur subsequent to the date of the Forbearance Letter through the earlier of
March 25, 1997 or the date on which the Letter of Intent terminates other than
by execution of a definitive merger agreement as contemplated therein.
12. PURPOSE OF THE OFFER; SHORT FORM MERGER; PLANS FOR THE COMPANY; DISSENTERS'
RIGHTS; GOING PRIVATE TRANSACTIONS.
Purpose. The purpose of the Offer is to acquire control of, and the entire
equity interest in, the Company. Following the Offer, the Purchaser and Parent
intend to acquire any remaining equity interest in the Company not acquired in
the Offer by consummating the Merger.
Vote Required to Approve Merger. The DGCL requires, among other things,
that the adoption of any plan of merger or consolidation of the Company must be
approved by the Board of Directors and generally by the holders of the Company's
outstanding voting securities. The Board of Directors of the Company has
approved the Offer and the Merger; consequently, the only additional action of
the Company that may be necessary to effect the Merger is approval by such
stockholders if the short-form merger procedure described below is not
available. Under the DGCL and pursuant to the Company's Bylaws, the affirmative
vote of holders of a majority of the outstanding Shares (including any Shares
owned by the Purchaser) is required to approve the Merger. If the Purchaser
acquires, through the Offer or otherwise, voting power with respect to at least
a majority of the outstanding Shares (which would be the case if the Minimum
Tender Condition were satisfied and the Purchaser were to accept for payment
Shares tendered pursuant to the Offer), it would have sufficient voting power to
effect the Merger without the vote of any other stockholder of the Company. The
Company would, however, be required to provide certain notice of the Merger to
stockholders, as required by law. However, the DGCL also provides that if a
parent company owns at least 90% of each class of stock of a subsidiary, the
parent company can effect a "short-form" merger with that subsidiary without the
action of the other stockholders of the subsidiary. Accordingly, if, as a result
of the Offer or otherwise, the Purchaser acquires or controls the voting power
of at least 90% of the outstanding Shares, the Purchaser could, and intends to,
effect the Merger without prior notice to, or any action by, any other
stockholder of the Company.
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Plans for the Company. Except as set forth in this Offer to Purchase, it
is expected that, initially following the Merger, the business and operations of
the Company will be continued by the Company as the corporation surviving the
Merger substantially as they are currently being conducted. The directors of the
Purchaser will be the initial directors of the Surviving Corporation, and the
officers of Purchaser and such other persons as are designated by Parent will be
the initial officers of the Surviving Corporation. Upon completion of the Offer
and the Merger, Parent intends to conduct a detailed review of the Company and
its assets, corporate structure, dividend policy, capitalization, operations,
properties, policies, management and personnel and to consider, subject to the
terms of the Merger Agreement, what, if any, changes would be desirable in light
of the circumstances then existing, and will take such actions or effect such
changes as it deems desirable.
Except as otherwise described in this Offer to Purchase, the Purchaser and
Parent have no current plans or proposals that would relate to, or result in,
any extraordinary corporate transaction involving the Company, such as a
reorganization or liquidation involving the Company or any of its subsidiaries,
a sale or transfer of a material amount of assets of the Company or any of its
subsidiaries, any change in the Company's capitalization or dividend policy or
any other material change in the Company's business, corporate structure or
personnel.
Dissenters' Rights. Holders of Shares do not have dissenters' rights as a
result of the Offer. However, if the Merger is consummated, holders of Shares
will have certain rights pursuant to the provisions of Section 262 of the DGCL
to dissent and demand appraisal of, and to receive payment in cash of the fair
value of, their Shares. If the statutory procedures were complied with, such
rights could lead to a judicial determination of the fair value required to be
paid in cash to such dissenting holders for their Shares. Any such judicial
determination of the fair value of Shares could be based upon considerations
other than, or in addition to, the Offer Price or the market value of the
Shares, including asset values and the investment value of the Shares. The value
so determined could be more or less than the Offer Price or the Merger
Consideration (as defined below).
If any holder of Shares who demands appraisal under Section 262 of the DGCL
fails to perfect, or effectively withdraws or loses his right to appraisal, as
provided in the DGCL, the Shares of such stockholder will be converted into the
right to receive the Merger Consideration in accordance with the Merger
Agreement. A stockholder may withdraw his demand for appraisal by delivery to
Parent of a written withdrawal of his demand for appraisal and acceptance of the
terms of the Merger.
A stockholder seeking to exercise dissenters' rights under Section 262 of
the DGCL may not tender Shares in the Offer and will be further advised by the
Company as to the steps necessary to exercise such rights. FAILURE TO FOLLOW THE
STEPS REQUIRED BY SECTION 262 OF THE DGCL FOR PERFECTING APPRAISAL RIGHTS MAY
RESULT IN THE LOSS OF SUCH RIGHTS.
Going Private Transactions. The Merger would have to comply with any
applicable federal law operative at the time of its consummation. Rule 13e-3
under the Exchange Act is applicable to certain "going private" transactions.
The Purchaser does not believe that Rule 13e-3 will be applicable to the Merger
unless the Merger is consummated more than one year after the termination of the
Offer. If applicable, Rule 13e-3 would require, among other things, that certain
financial information concerning the Company and certain information relating to
the fairness of the Merger and the consideration offered to minority
shareholders be filed with the Commission and disclosed to minority shareholders
prior to consummation of the Merger.
13. THE MERGER AGREEMENT; THE STOCKHOLDER AGREEMENTS; THE EMPLOYMENT AGREEMENT.
MERGER AGREEMENT.
The following summary of the Merger Agreement is qualified in its entirety
by reference to the Merger Agreement, a copy of which is filed as Exhibit (c)(1)
to the Schedule 14D-1. The Merger Agreement should be read in its entirety for a
more complete description of the matters summarized below.
The Offer. Pursuant to the Merger Agreement, the Purchaser has made the
Offer to purchase all the outstanding Shares at $2.00 per Share in cash, without
interest, upon the terms and subject to the conditions
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set forth in this Offer to Purchase. The Merger Agreement provides that the
obligation of Purchaser to consummate the Offer is subject to the satisfaction
of the Minimum Tender Condition and certain other conditions that are described
in Section 15 hereof. The Merger Agreement provides that Parent and Purchaser
will not, without the written consent of the Company, decrease the Offer Price,
change the form of consideration payable in the Offer, decrease the number of
Shares sought in the Offer, change the conditions of the Offer from those
contained in the Appendix thereto, impose additional conditions to the Offer, or
amend any material term of the Offer in a manner adverse to the holders of
Shares.
The Merger. Upon the terms and subject to the conditions of the Merger
Agreement, and in accordance with the DGCL, at the Effective Time the Purchaser
will be merged with and into the Company, the separate corporate existence of
the Purchaser will cease and the Company will continue as the Surviving
Corporation. Parent may elect at any time prior to the Merger to merge the
Company with and into the Purchaser, in which event the parties agree to execute
an appropriate amendment to the Merger Agreement to reflect the foregoing. The
Certificate of Incorporation and Bylaws of the Purchaser will be the Certificate
of Incorporation and Bylaws of the Surviving Corporation until amended as
provided therein or in the DGCL.
Conversion of Shares; Stock Options and Warrants. At the Effective Time,
each then outstanding Share (other than Shares owned by the Company, Parent, the
Purchaser, any other Subsidiary of Parent or by stockholders who are entitled to
and who properly exercise dissenters' rights under the DGCL) will be converted
into the right to receive $2.00 in cash, without interest (the "Merger
Consideration"). At the Effective Time, each option and each warrant, whether or
not then exercisable in accordance with its terms, will be converted into the
right to receive, upon the surrender of the agreement evidencing such stock
option or warrant and upon the delivery of a stock option acknowledgment or
warrant acknowledgment, in accordance with the terms of the Merger Agreement, an
amount in cash (net of applicable withholding) equal to the excess, if any, of
the Merger Consideration over the exercise price per share of the common stock
of the Company subject to such stock option or warrant, as the case may be,
multiplied by the number of shares previously subject to such stock option or
warrant.
Board Representation. The Merger Agreement provides that, upon the
acceptance for payment of, and payment for, any Shares by Purchaser pursuant to
the Offer which, when taken together with any Shares which Parent beneficially
owns (as such term is defined under the Exchange Act), represent at least a
majority of the then outstanding Shares, Purchaser will be entitled at such time
to designate the directors on the Board of Directors of the Company, and the
Company will, at such time, obtain resignations of all then-serving Directors
and, prior to such resignations, cause Purchaser's designees to be elected to,
and to constitute all of, the Board of Directors of the Company. The Merger
Agreement provides that the Company agrees to cooperate in permitting the
exercise by Purchaser of its rights set forth in this paragraph including,
without limitation, (x) cooperating in satisfying the requirements of Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, and (y)
amending, prior to the Expiration Date of the Offer, any provisions of the
Bylaws or any agreement by which the Company is bound that could delay or hinder
the ability of Purchaser or Parent to elect its designees to a majority of the
directorships constituting the Board of Directors of the Company. The Merger
Agreement provides that the Company will not take any action to delay or hinder
such election.
Directors' and Officers' Insurance Coverage. The Merger Agreement provides
that, for six years after the earlier of (i) the date on which the designees of
the Purchaser have been elected to the Board of Directors of the Company
pursuant to the provisions set forth in the preceding paragraph and constitute
all of the members thereof and (ii) the Effective Time, Parent and the Surviving
Corporation will indemnify, defend and hold harmless the present officers,
directors, employees and agents of the Company and its Subsidiaries (each an
"Indemnified Party") against all losses, claims, damages, liabilities, fees and
expenses (including reasonable fees and disbursements of counsel) and judgments,
fines, losses, claims, liabilities and amounts paid in settlement (provided that
any such settlement is effected with the prior written consent of Parent or the
Surviving Corporation (which consent shall not be unreasonably withheld))
arising out of actions or omissions occurring at or prior to the Effective Time
(including without limitation matters arising out of or pertaining to the
transactions contemplated by the Merger Agreement) to the full extent permitted
by the DGCL or the Company's Certificate of Incorporation or Bylaws as in effect
on the date of the Merger Agreement, including
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provisions therein relating to the advancement of expenses incurred in the
defense of any action or suit; provided, however, that in the event any claim or
claims are asserted or made within such six-year period, all rights to
indemnification in respect of any such claim or claims shall continue until
disposition of the claim to which such rights are applicable.
The Merger Agreement provides that, for two years after the Effective Time,
Parent and the Surviving Corporation will (i) maintain the current policies of
officers' and directors' liability insurance in respect of acts or omissions
(including without limitation matters arising out of or pertaining to the
transactions contemplated by the Merger Agreement) occurring at or prior to the
Effective Time covering each person who is an officer or director of the Company
on the date of the Merger Agreement and who is currently covered by the
Company's officers' and directors' liability insurance policy, or (ii)
substitute policies providing substantially similar coverage containing terms
and conditions that, taken together, are not materially less advantageous, and
provided that such substitution does not result in gaps or lapses in coverage.
The Merger Agreement provides that Parent and the Surviving Corporation
will pay all expenses (including attorneys' fees) that may be incurred by any
Indemnified Party or person having rights to coverage pursuant to the provisions
set forth under this caption "Directors' and Officers' Insurance Coverage"
(collectively, "Covered Persons") in enforcing the obligations of Parent and the
Surviving Corporation provided for therein, provided that no such expenses will
be payable if such Indemnified Party or person is found, in or as a result of
such enforcement action, not to have the rights to coverage claimed by such
Indemnified Party or person. The Merger Agreement provides for equitable
remedies including without limitation the right to specific performance for any
breach of the obligations under the indemnification provisions.
The Merger Agreement provides that the rights set forth under this caption
"Directors' and Officers' Insurance Coverage" are contingent upon the occurrence
of, and shall survive the consummation of, the Offer, are intended to benefit
the Company, the Surviving Corporation and each Covered Person, shall be binding
on all successors and assigns of Parent and the Surviving Corporation and shall
be enforceable by each Covered Person, each of whom shall be a third party
beneficiary of these provisions.
Benefit Plans and Certain Contracts. Pursuant to the Merger Agreement,
Parent agreed to cause the Surviving Corporation to pay, in accordance with
their terms as in effect on the date of the Merger Agreement, all amounts due
and payable under the terms of all written employment contracts, agreements,
plans, policies and written commitments of the Company and its subsidiaries (the
"Subsidiaries") with or with respect to its current employees, officers and
directors as such contracts, agreements, plans, policies and written commitments
are described in the disclosure schedule to the Merger Agreement. For at least
two years following the Effective Time, each employee of the Company and its
Subsidiaries (while such person remains an employee of the Company and its
Subsidiaries) shall be entitled to participate in all benefit plans maintained
or sponsored by the Company or in benefit plans providing substantially similar
benefits. Upon or prior to the consummation of the Offer, Parent and the Company
will enter into the Employment Agreement with Mr. Edmunds.
Stockholders' Meeting. The Merger Agreement provides that if the approval
of the Merger by the Company's stockholders (the "Company Stockholder Approval")
is required by law, the Company will, at Parent's request, as soon as
practicable following acceptance for payment of and payment for Shares, duly
call, give notice of, convene and hold a meeting of its stockholders (the
"Stockholders' Meeting") for the purpose of obtaining such Company Stockholder
Approval. The Merger Agreement provides that the Company will, through its Board
of Directors, recommend to its stockholders that such Company Stockholder
Approval be given. Notwithstanding the foregoing, the Merger Agreement provides
that if Parent, Purchaser or any other subsidiary of Parent shall acquire at
least 90% of the outstanding Shares, the parties will, at the request of Parent,
take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after the expiration of the Offer without a
Stockholders' Meeting in accordance with Section 253 of the DGCL. The Merger
Agreement provides that, without limiting the generality of the foregoing, the
Company agrees that its obligations pursuant to the first sentence of this
paragraph shall not be affected by (i) the commencement, public proposal, public
disclosure or communication to the Company of any
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"Acquisition Proposal" (as defined below) that is not a "Superior Acquisition
Proposal" (as defined below) or (ii) the withdrawal or modification by the Board
of Directors of the Company of its approval or recommendation of the Offer, the
Merger Agreement or the Merger. The Merger Agreement provides that Parent agrees
to cause all Shares purchased pursuant to the Offer and all other Shares owned
by Purchaser or any other subsidiary of Parent to be voted in favor of the
Merger.
Conditions to the Merger. The Merger Agreement provides that the
respective obligations of each party to effect the Merger is subject to the
fulfillment or waiver at or prior to the Effective Time of the following
conditions: (a) if required by the DGCL, the Merger Agreement has been approved
and adopted by the requisite vote of the stockholders of the Company; (b) no
statute, rule, regulation, executive order, decree, temporary restraining order,
preliminary injunction or other order or legal restraint or prohibition
preventing the consummation of the Merger has been issued by any federal, state
or local government or any court, administrative or regulatory agency, domestic
or foreign (a "Governmental Entity"); and (c) all authorizations, consents,
orders or approvals of, or declarations or filings with, or expiration of
waiting periods imposed by, any Governmental Entity necessary for the
consummation of the Merger and the transactions contemplated by the Merger
Agreement have been filed, occurred or been obtained and shall be in effect at
the Effective Time. The obligation of the Company to effect the Merger is also
subject to the condition that each of Parent and the Purchaser have made the
Offer and have consummated the Offer in accordance with its terms.
Representations and Warranties. Pursuant to the Merger Agreement, the
Company has made customary representations and warranties to Parent and the
Purchaser relating to the Company and its Subsidiaries, including, among other
things, with respect to: organization and qualification, capitalization,
authority relative to the Merger Agreement, filings with the Commission, the
absence of undisclosed liabilities, the absence of certain changes or events,
litigation, the absence of changes in benefit plans, compliance with the
Employee Retirement Income Security Act of 1974, as amended, payment of taxes,
the absence of "excess parachute payments" within the meaning of Section
280G(b)(1) of the Code, information supplied to Parent and the Purchaser,
compliance with applicable laws, the applicability of state takeover statutes,
brokers, contracts, title to properties, labor matters, insurance, intellectual
property matters, the absence of certain payments, certain suppliers and
customers and certain regulatory matters.
Parent has made representations and warranties to the Company with respect
to organization and qualification, authority relative to the Merger Agreement,
the availability of funds to consummate the Offer and the Merger, ownership of
Company securities, information supplied, capitalization and its relationship
with Cleary Gull, including the fact that it has not engaged Cleary Gull to
provide investment banking or financial advisory services since January 1995.
Conduct of Business by the Company. The Merger Agreement provides that,
prior to the Effective Time, unless expressly contemplated by the Merger
Agreement, (a) the Company and its Subsidiaries will conduct business only in
the ordinary course and consistent with past practice; (b) the Company will not,
and will not permit any of its Subsidiaries to: (i) sell or pledge or agree to
sell or pledge any stock owned by it in any of its Subsidiaries; (ii) amend its
Certificate of Incorporation or Bylaws; or (iii) split, combine or reclassify
any shares of its outstanding capital stock or declare, set aside or pay any
dividend or other distribution payable in cash, stock or property or redeem or
otherwise acquire any shares of its capital stock; (c) the Company will not, and
will cause each of its Subsidiaries not to: (i) authorize for issuance, issue or
sell any additional shares of, or rights of any kind to acquire any shares of,
its capital stock of any class (whether through the issuance or granting of
stock options, warrants, convertible securities, commitments, subscriptions,
rights to purchase or otherwise), except for unissued Shares reserved for
issuance upon the exercise of stock options or warrants outstanding on the date
of the Merger Agreement in accordance with their existing terms; (ii) acquire,
dispose of, transfer, lease, license, mortgage, pledge or encumber any fixed or
other substantial assets; (iii) incur, assume or prepay any indebtedness for
borrowed money or any other material liabilities, except accounts payable
incurred in the ordinary course of business consistent with past practice, or
issue or sell any debt securities or warrants or rights to acquire debt
securities of the Company or any of its Subsidiaries; (iv) assume, endorse
(other than in the ordinary course of business consistent with past practices),
guarantee or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the material
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obligations of any other person; (v) make any loans, advances or capital
contributions to, or investments in, any other person or otherwise enter into
any material contract other than in the ordinary course of business and
consistent with past practices; (vi) make any loans to employees, other than
travel advances in the ordinary course of business; (vii) fail to maintain
adequate insurance consistent with past practices for its business and
properties; (viii) undertake, make or commit to undertake or make any capital
expenditures in an amount greater than $10,000 per individual capital
expenditure and no more than $25,000 per month in the aggregate (on a combined
basis for the Company and the Subsidiaries); or (ix) enter into any contract,
agreement, commitment or arrangement with respect to any of the foregoing; (d)
the Company will use its reasonable efforts consistent with past practice to
preserve intact the business organization of the Company and its Subsidiaries,
keep available the services of its and their present officers and employees, and
preserve its existing relationships with customers, suppliers and others with
which it and its respective Subsidiaries have business dealings; (e) the Company
will not, and will cause its Subsidiaries not to, (i) enter into any new
agreements or amend or modify any existing agreements with any of its respective
officers, directors or employees or with any "disqualified individuals" (as
defined in Section 280G(c) of the Code), (ii) grant any increases in the
compensation of its respective directors, officers and employees or any
"disqualified individuals" (as defined in Section 280G(c) of the Code) other
than (A) pursuant to written agreements in effect at the date of the Merger
Agreement, or (B) increases in the ordinary course of business and consistent
with past practice to persons who are not directors or corporate officers of or
"disqualified individuals" with respect to the Company or any Subsidiary, (iii)
enter into, adopt, amend or terminate, or grant any new benefit not presently
provided for under, any employee benefit plan or arrangement, except as required
by law or to maintain the tax qualified status of the plan; provided, however,
that the Company or its Subsidiaries may terminate, to the extent permitted by
applicable law, any benefit or any employee benefit plan or arrangement, or (iv)
take any action with respect to the grant of any severance or termination pay
other than in the ordinary course of business and consistent with past practice
and pursuant to policies in effect on the date of the Merger Agreement; (f) the
Company will not, and will not permit any Subsidiary to, acquire or agree to
acquire by merging or consolidating with, or by purchasing a substantial portion
of the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof or
otherwise acquire or agree to acquire any assets (other than equipment,
inventory and supplies in the ordinary course of business); (g) the Company will
not, and will not permit any of its Subsidiaries to, sell, lease, license,
encumber or otherwise dispose of, or agree to sell, lease, license, encumber or
otherwise dispose of, any of its material assets; (h) the Company will take all
actions reasonably necessary so that the conditions set forth in the Appendix to
the Merger Agreement which require actions to be performed by the Company are
satisfied on a timely basis, except as contemplated by the Merger Agreement; (i)
unless the Company receives a Superior Acquisition Proposal, the Company will
not call any meeting of its stockholders to be held prior to March 25, 1997
other than as required by the Merger Agreement; (j) the Company shall not, and
shall not permit any Subsidiary to, make any tax election or settle (except to
settle reserved amounts for less than the amount so reserved) or compromise any
income tax liability; (k) the Company and each Subsidiary will make timely
payments, in accordance with the terms applicable thereto, of all currently due
liabilities for borrowed money; (l) the Company will not, and will not permit
any Subsidiary to, pay, discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge, settlement or satisfaction, in
the ordinary course of business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved against in the most
recent consolidated financial statements (or the notes thereto) of the Company
included in the SEC Documents (as defined in the Merger Agreement); (m) the
Company will not, and will not permit any Subsidiary to, modify, amend or
terminate any material contract, lease of real property or of a material amount
of assets, or agreement relating to indebtedness or the extension of credit, or
waive, release or assign any rights or claims thereunder; and (n) the Company
will maintain in full force and effect its current policies of directors' and
officers' liability insurance covering all persons who are presently covered by
such policies.
Actions by Parent and the Purchaser Pending the Merger. The Merger
Agreement provides that none of the provisions contained in the preceding
paragraph will prohibit Parent or the Purchaser (or any of their respective
subsidiaries), during the period between the payment for Shares pursuant to the
Offer and the
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Effective Time, from taking or causing to be taken any action with respect to
the business of the Company and its Subsidiaries that Parent or the Purchaser
(or any of their respective subsidiaries) would legally be permitted to take or
cause to be taken with respect to a majority owned subsidiary of Parent or the
Purchaser (or any of their respective subsidiaries), provided that Parent will
not take any action in violation of the terms of the Merger Agreement that would
cause Parent's obligations to effect the Merger hereunder to not be satisfied
and provided further that any such action taken by or at the direction of Parent
or the Purchaser (or any of their respective subsidiaries) will not cause a
breach by the Company of any of the provisions of the preceding paragraph.
Exclusive Dealing. The Merger Agreement provides that neither the Company
nor any of its Subsidiaries, officers, directors, or the directors and officers
of its Subsidiaries, nor any of its other affiliates (each, an "Affiliate")
will, and the Company will cause its and its respective Affiliates' employees,
agents and representatives (including, without limitation, any investment
banking, legal or accounting firm retained by the Company or any of its
Affiliates and any individual member or employee of the foregoing) (each, an
"Agent") not to: (i) initiate, solicit or seek, directly or indirectly, any
inquiries or the making or implementation of any proposal or offer (including,
without limitation, any proposal or offer to its stockholders or any of them)
with respect to a merger, acquisition, consolidation, recapitalization,
liquidation, dissolution or similar transaction involving, or any purchase of
all or a substantial portion of the assets or any equity securities of, the
Company or any of its Subsidiaries, except for the transactions contemplated by
the Merger Agreement (any such proposal or offer being hereinafter referred to
as an "Acquisition Proposal"); or (ii) engage in any negotiations concerning, or
provide any confidential information or data to, or have any discussions with,
any person relating to an Acquisition Proposal; or (iii) otherwise cooperate in
any effort or attempt to make, implement or accept an Acquisition Proposal;
provided, however, that the Company may, if it receives an Acquisition Proposal
which was not directly or indirectly initiated, solicited or otherwise sought by
the Company or by any of its Affiliates or its or their respective Agents, and
which is a Superior Acquisition Proposal, respond to such Superior Acquisition
Proposal by engaging in negotiations with respect thereto and providing
nonpublic information concerning the Company to the person making such Superior
Acquisition Proposal, provided that such person has entered into a written
confidentiality agreement on terms no more favorable to such person than the
Mutual Confidential Non-Disclosure Agreement is to Parent, and provided further
that the Company has received a written opinion of its outside counsel that such
response is required in order to satisfy the fiduciary duties imposed under
applicable law on its Board of Directors. The Company will take the necessary
steps to inform the individuals and entities referred to in the first sentence
hereof of the obligations undertaken in this paragraph.
The Merger Agreement provides that, unless it has theretofore been
terminated pursuant to clause (f) under the caption "Termination," neither the
Board of Directors of the Company nor any committee thereof will (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Parent or
Purchaser, the approval or recommendation by such Board of Directors or any such
committee of the Offer, the Merger Agreement or the Merger, (ii) approve or
recommend, or propose to approve or recommend, any Acquisition Proposal or (iii)
enter into any agreement with respect to any Acquisition Proposal. The Merger
Agreement provides that, notwithstanding the foregoing, in the event the Board
of Directors of the Company receives an Acquisition Proposal that constitutes a
Superior Acquisition Proposal, the Board of Directors may (subject to the
limitations contained in this paragraph) withdraw or modify its approval or
recommendation of the Offer, the Merger Agreement or the Merger, approve or
recommend any such Superior Acquisition Proposal, enter into an agreement with
respect to any such Superior Acquisition Proposal or terminate this Agreement in
each case at any time after 48 hours following Parent's receipt of written
notice (a "Notice of Superior Acquisition Proposal") advising Parent that the
Board of Directors has received a Superior Acquisition Proposal, specifying the
material terms and conditions of such Superior Acquisition Proposal and
identifying the person making such Superior Acquisition Proposal. For purposes
of the Merger Agreement, a "Superior Acquisition Proposal" means an Acquisition
Proposal received by the Company without violation of the provisions contained
in the preceding paragraph, having terms which the Board of Directors of the
Company determines, in the exercise of its fiduciary duties, after consultation
with outside counsel, and upon the written opinion of its outside financial
advisor, to be more favorable to the Company's stockholders from a financial
point of view than the Offer and the Merger.
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The Merger Agreement provides that, in addition to the obligations of the
Company set forth in the preceding paragraph, the Company will promptly advise
Parent orally and in writing of any request for nonpublic information relating
to the Company or by any person that, to the Company's knowledge, may be
considering making, or has made, an Acquisition Proposal or the receipt of any
Acquisition Proposal, or any inquiry with respect to any Acquisition Proposal,
the material terms and conditions of such request, Acquisition Proposal or
inquiry, and the identity of the person making any such Acquisition Proposal or
inquiry. The Company will keep Parent fully informed of the status and details
of any such request, Acquisition Proposal or inquiry.
Fees and Expenses. Except as provided below, the Merger Agreement provides
that, whether or not the Offer and/or the Merger are consummated, each of the
Company and Parent will separately bear its own expenses, including the fees and
disbursements of counsel, investment bankers and accountants, incurred in
connection with the Offer, the Merger, the Merger Agreement and the transactions
contemplated thereby.
The Merger Agreement also provides that if the Company or any affiliate or
agent of the Company fails to fulfill its obligations described above under the
caption "Exclusive Dealing," or enters into an agreement which contemplates the
sale of all or any material portion of the assets of, or any equity interest in,
the Company to a third party, or the parties to the Stockholder Agreements or
any of them enters into an agreement which contemplates such a transaction,
then, in any such case, the Company will promptly reimburse Parent for all its
out-of-pocket expenses incurred in connection with the Offer, the Merger, the
Merger Agreement, the Stockholder Agreements or any transactions contemplated by
the Merger Agreement or the Stockholder Agreements.
Termination. The Merger Agreement may be terminated at any time prior to
the Effective Time, whether prior to or after any approval by the stockholders
of the Company:
(a) by mutual written consent of the Boards of Directors of Parent and the
Company;
(b) by Parent, if (i) neither Parent nor any subsidiary of Parent has
accepted for payment any Shares pursuant to the Offer by the sixtieth day
following commencement of the Offer and such failure is not in breach of the
Offer or the Merger Agreement, or (ii) Parent has properly terminated the Offer
in accordance with its terms; provided that Parent may not terminate the Merger
Agreement pursuant to this provision if (A) the failure of Parent or the
Purchaser to fulfill any obligation under the Merger Agreement has been the
cause of, or resulted in, the circumstances described in clause (i), or (B) in
the case of clause (ii), Parent or the Purchaser has not exercised such right by
the close of business on or before the fifth business day following the
termination of the Offer in accordance with its terms;
(c) by Parent and the Purchaser prior to the purchase of Shares pursuant to
the Offer, if there has been any material breach of a material obligation of the
Company hereunder and such breach has not been remedied within five days after
receipt by the Company of notice in writing from Parent or the Purchaser
specifying such breach and requesting that it be remedied;
(d) by the Company prior to the purchase of Shares pursuant to the Offer,
if there has been any material breach of a material obligation of Parent or the
Purchaser hereunder and such breach has not been remedied within five days after
receipt by Parent or the Purchaser, as the case may be, of notice in writing
from the Company specifying such breach and requesting that it be remedied;
(e) by the Company, if (i) the Offer has not been commenced on or before
the fifth business day after the announcement to the public of the execution of
the Merger Agreement, (ii) the Offer is terminated without the purchase of any
Shares and such termination is in breach of the Offer or the Merger Agreement,
or (iii) Parent or the Purchaser has failed to pay or to cause another entity to
pay for Shares duly and properly tendered in the Offer within 10 business days
following expiration of the Offer, provided that the Company may not terminate
the Merger Agreement pursuant to this provision if the failure of the Company to
fulfill any obligation under the Merger Agreement has been the cause of, or
resulted in, the circumstances described in clauses (i), (ii) or (iii) above;
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(f) by the Company or by Parent and the Purchaser prior to the purchase of
Shares pursuant to the Offer, if a Superior Acquisition Proposal is received and
the Board of Directors of the Company withdraws or modifies its recommendation
of the Offer or recommends to the stockholders of the Company that such
stockholders tender their Shares into, or vote in favor of, such Superior
Acquisition Proposal, provided that such termination shall not affect the
Company's obligations to pay the expenses of Parent and the Purchaser set forth
above in the second paragraph under the caption "Fees and Expenses;" or
(g) by the Company or by Parent and the Purchaser if there is any law or
regulation that makes consummation of the Merger illegal or otherwise prohibited
or if any judgment, injunction, order or decree enjoining Parent, the Purchaser
or the Company from consummating the Merger is entered and such judgment,
injunction, order or decree becomes final and nonappealable.
The Merger Agreement provides that in the event of termination of the
Merger Agreement prior to the Purchase of Shares, the Merger Agreement will
forthwith become void and of no effect, and there will be no liability on the
part of Parent, the Purchaser or the Company, except as set forth in the second
paragraph under "Fees and Expenses" or as otherwise expressly provided in the
Merger Agreement, and (b) nothing in the Merger Agreement will relieve any party
from liability for any willful or grossly negligent breach of any representation
or warranty or any breach prior to such termination of any covenant or agreement
contained herein.
Entire Agreement. The Merger Agreement provides that the Merger Agreement
(including the Appendix thereto and the documents and instruments referred to
therein) constitutes the entire agreement and supersedes all other prior
agreements and undertakings, both written and oral, among the parties, or any of
them, with respect to the subject matter thereof, provided, however, that (i)
Paragraph 5 of the Letter of Intent, (ii) the Credit Agreement, (iii) the
Subordination and Intercreditor Agreement, and (iv) the Mutual Confidential
Non-Disclosure Agreement will remain in effect in accordance with their terms.
Amendment. The Merger Agreement provides that it may not be amended except
by an instrument in writing signed on behalf of each of the parties, and
provided that any amendment effected after obtaining the Company Stockholder
Approval may be subject to further approval of the Company's stockholders if
required by the DGCL.
STOCKHOLDER AGREEMENTS.
The following summary of the Stockholder Agreements is qualified in its
entirety by reference to the Stockholder Agreements, copies of which are filed
as Exhibits (c)(2) through (c)(14) to the Schedule 14D-1. The Stockholder
Agreements should be read in their entirety for a more complete description of
the matters summarized below.
Tender of Shares. In connection with the execution of the Merger
Agreement, Parent and the Purchaser entered into Stockholder Agreements with the
Stockholder Parties. Upon the terms and subject to the conditions of such
agreements, each Stockholder Party agreed to validly tender (or cause the record
holder of such Shares to validly tender) and not withdraw, pursuant to and in
accordance with the terms of the Offer, the number of Shares owned beneficially
by such Stockholder Party and any Shares acquired by such Stockholder Party in
any capacity after the date of the respective Stockholder Agreement. The
Stockholder Parties currently own a total of 537,795 Shares, representing
approximately 9.8% of the outstanding Shares as of January 27, 1997. Each
Stockholder Party also consented to the treatment of the stock options and the
warrants held by such party as described under "The Merger Agreement--Conversion
of Shares; Stock Options and Warrants" above.
Provisions Concerning Shares. Each Stockholder Party has agreed that
during the period commencing on the date of such party's Stockholder Agreement
and continuing until the termination of the Merger Agreement in accordance with
its terms, at any meeting of the Company's stockholders or in connection with
any written consent of the Company's stockholders, such Stockholder Party will
vote (or cause to be voted) the Shares held of record or beneficially owned by
such party: (i) in favor of the Merger, the execution and delivery by the
Company of the Merger Agreement and the approval of the terms thereof and each
of the
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other actions contemplated by the Merger Agreement and such Stockholder
Agreement and any actions required in furtherance thereof; and (ii) against any
Acquisition Proposal and against any action or agreement that would impede,
frustrate, prevent or nullify such Stockholder Agreement or result in a breach
in any respect of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger Agreement or which would
result in any of the conditions of the Offer or of the Merger not being
fulfilled. The Stockholder Agreements also provide that, notwithstanding
anything therein to the contrary, each Stockholder Party, in his or her capacity
as a director and/or officer of the Company, as the case may be, and in
accordance with the Merger Agreement, may exercise his or her fiduciary duties
with respect to the Company. Each Stockholder Party also agreed, among other
things, not to transfer such party's Shares and, in such party's capacity as a
stockholder of the Company, not to, directly or indirectly, encourage, solicit,
participate in or initiate discussions or negotiations with, or provide any
information to, any corporation, partnership, person or other entity or group
(other than Parent, any of its affiliates or representatives) concerning any
Acquisition Proposal.
EMPLOYMENT AGREEMENT.
The following summary of the Employment Agreement is qualified in its
entirety by reference to the form of Employment Agreement, a copy of which is
filed as Exhibit (c)(15) to the Schedule 14D-1. The Employment Agreement should
be read in its entirety for a more complete description of the matters
summarized below.
Upon or prior to consummation of the Offer, Parent, the Company and Mr.
Edmunds will enter into the Employment Agreement, pursuant to which Mr. Edmunds
will be employed as Vice President and General Manager of the Company or any
entity (including a division of Parent) that succeeds to all or any substantial
part of the business and operations of the Company for a term commencing on the
effective date of the Employment Agreement and expiring on February 28, 1999
(the "Term"), unless sooner terminated as described below. Thereafter Mr.
Edmunds will become an at-will employee of the Company.
Pursuant to the Employment Agreement, Mr. Edmunds will (i) receive an
initial base salary of not less than $180,000, or such larger amount as may from
time to time be fixed by Parent, (ii) be entitled to bonus compensation that is
comparable (in the manner in which it is determined and with respect to the
timing of payment) to that of Parent's domestic executive employees who perform
duties and have responsibilities comparable to those of Mr. Edmunds, (iii) be
entitled to participate in all plans and other benefits made available by Parent
generally to its domestic executive employees who perform duties and have
responsibilities comparable to those of Mr. Edmunds and (iv) be eligible to
participate in Parent's 1993 Stock Option Plan. Parent's management will
recommend to the Compensation Committee of Parent's Board of Directors that Mr.
Edmunds be granted options under such plan in an amount that is determined in a
manner comparable to the manner in which option grants are determined for
Parent's domestic executive employees who perform duties and have
responsibilities comparable to those of Mr. Edmunds.
The Employment Agreement provides that, upon termination of Mr. Edmunds'
employment for any reason, he will be entitled to receive the compensation
accrued and unpaid as of the date of his termination, including his pro rata
share of any bonus or other incentive payment to which he is otherwise entitled
that becomes payable with respect to the year in which termination of employment
occurred.
The Employment Agreement provides that Mr. Edmunds may terminate the
Employment Agreement at any time after the occurrence of certain events
specified therein (any such event, "Good Reason"). If the Employment Agreement
is terminated by Mr. Edmunds for "Good Reason" or by the Company for certain
reasons specified in the Employment Agreement, the Company will continue to pay
compensation and provide benefits for a period beginning on the date of the
termination notice and ending on the later of the second anniversary of such
date or February 28, 1999. Neither the Company nor Parent will be obligated to
continue to pay such compensation or provide benefits if Mr. Edmunds' employment
is terminated because of gross negligence or significant willful misconduct.
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If at any time during the Term after a Change of Control (as defined in the
Employment Agreement) Mr. Edmunds terminates his employment for Good Reason, or
Parent or the Company terminates or gives written notice of termination, then in
lieu of any periodic payments to which he is otherwise entitled, Mr. Edmunds
will receive, at his election, within five business days of such termination,
the present value of such periodic payments.
14. DIVIDENDS AND DISTRIBUTIONS.
Pursuant to the Merger Agreement, the Company has agreed that, from the
date of the Merger Agreement until the Effective Time, it will not, and will not
permit any of its Subsidiaries to, split, combine or reclassify any shares of
its outstanding capital stock or declare, set aside or pay any dividend or other
distribution payable in cash, stock or property or redeem or otherwise acquire
any shares of its capital stock. In addition, the Company has agreed that, for
such period, it will not, and will cause its Subsidiaries not to, authorize for
issuance, issue or sell any additional shares of, or rights of any kind to
acquire any shares of, its capital stock, of any class, except for unissued
Shares reserved for issuance upon the exercise of stock options or warrants
outstanding on the date of the Merger Agreement in accordance with their
existing terms.
15. CERTAIN CONDITIONS OF THE OFFER.
The Merger Agreement provides that, notwithstanding any other term of the
Offer or the Merger Agreement, Parent or the Purchaser shall not be required to
accept for payment or to pay for any Shares tendered pursuant to the Offer, and
may terminate or, subject to the provisions of the Merger Agreement, amend the
Offer and may postpone the acceptance for payment of Shares pursuant thereto,
unless (a) the Minimum Tender Condition has been met and, (b) any waiting period
under the HSR Act applicable to the purchase of Shares pursuant to the Offer
shall have expired or been terminated (the "HSR Condition"), provided, however,
that prior to March 25, 1997, Parent will not terminate the Offer by reason of
the nonsatisfaction of the HSR Condition and, if the HSR Condition is the only
condition that is not satisfied upon the expiration of the Offer, Parent shall
cause the Offer to be extended to March 24, 1997.
The Merger Agreement also provides that, notwithstanding any other term of
the Offer or the Merger Agreement, Parent or the Purchaser will not be required
to accept for payment or to pay for any Shares tendered pursuant to the Offer,
and may terminate or, subject to the provisions of the Merger Agreement, amend
the Offer and may postpone the acceptance for payment of Shares pursuant thereto
if, at any time on or after the date of the Merger Agreement and before the
acceptance of such Shares for payment or the payment therefor, any of the
following conditions exists:
(a) any statute, rule, regulation or order has been proposed, enacted,
entered or deemed applicable to the Offer or the Merger (i) making the purchase
of, or payment for, some or all of the Shares pursuant to the Offer or the
Merger Agreement illegal, or resulting in a material delay in the ability of
Parent to accept for payment or pay for some or all of the Shares, or to
consummate the Offer or Merger or seeking to obtain from the Company, Parent or
the Purchaser any damages that would have a Material Adverse Effect on the
Company or Parent, (ii) imposing material limitations on the ability of Parent
or the Purchaser effectively to acquire or hold or to exercise full rights of
ownership of the Shares acquired by it, including the right to vote the Shares
purchased by it on all matters properly presented to the stockholders of the
Company, (iii) which would require Parent or any direct or indirect subsidiary
of Parent to dispose of or hold separate any of the Shares or all or any
material portion of the assets or business of the Company and its Subsidiaries,
or (iv) prohibit or limit the ability of Parent or any direct or indirect
subsidiary of Parent to own, control or operate the Company or any of its
Subsidiaries or all or any material portion of the businesses, operations or
assets of the Company and its Subsidiaries, where such prohibition or limitation
would have a Material Adverse Effect on the Company; or
(b) any governmental or regulatory action or proceeding by or before any
Governmental Entity is instituted or pending, which would reasonably be expected
to result in any of the consequences referred to in clauses (i) through (iv) of
paragraph (a) above; or
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(c) the Company has not complied with its agreements and covenants in the
Merger Agreement, or any of its representations and warranties in the Merger
Agreement, when made or at and as of any time thereafter, are inaccurate or
incomplete, except (i) where such failure so to comply or such inaccuracy or
incompleteness would not reasonably be expected to have a Material Adverse
Effect on the Company, (ii) for changes specifically permitted by the Merger
Agreement or (iii) those representations and warranties that address matters
only as of a particular day must be accurate and complete as of such date; or
(d) there has occurred an event of default set forth in the Coast
Agreement, as to which event of default Coast has not given a written waiver or
is not required to forbear under the terms of the Forbearance Letter; or
(e) the Company commences a case under any chapter of Title XI of the
United States Code or any similar law or regulation; or a petition under any
chapter of Title XI of the United States Code or any similar law or regulation
is filed against the Company which is not dismissed within five business days;
or the Company applies for or consents to the appointment of a receiver, trustee
or liquidator of itself or of its property; or the Company makes a general
assignment for the benefit of creditors; or an order, judgment or decree is
entered, without the application, approval or consent of the Company by any
court of competent jurisdiction, approving a petition seeking a reorganization
of the Company or appointing a receiver, trustee or liquidator of the Company or
of all or a substantial part of its assets, and such order, judgment or decree
continues unstayed for a period of five business days; or the Company takes
corporate action for the purpose of effecting any of the foregoing; or
(f) there has occurred (i) the declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, (ii) the
commencement of a war, armed hostilities or other international or national
calamity directly or indirectly involving the United States, (iii) any
limitation by any governmental authority on the extension of credit by banks or
other financial institutions, or (iv) in the case of any of the foregoing
existing at the time of the commencement of the Offer, a material acceleration
or worsening thereof; or
(g) the Merger Agreement has been terminated in accordance with its terms;
which, in Parent's sole discretion, in any such case regardless of the
circumstances giving rise to any such conditions, makes it inadvisable to
proceed with such acceptance for payment or payment or makes it advisable to
terminate or amend the Offer.
The Merger Agreement provides that the foregoing conditions are for the
sole benefit of Parent and the Purchaser and may be asserted by Parent or the
Purchaser regardless of the circumstances giving rise to any such conditions or
may be waived by Parent or the Purchaser in whole or in part, at any time and
from time to time in their sole discretion. The failure by Parent or the
Purchaser at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right and each right shall be deemed an ongoing
right which may be asserted at any time and from time to time. Any determination
by Parent or the Purchaser concerning any events described in the above
conditions shall be final and binding on all parties.
16. CERTAIN LEGAL MATTERS.
Except as described in this Section 16, based on a review of publicly
available filings made by the Company with the Commission and other publicly
available information concerning the Company, neither the Purchaser nor Parent
is aware of any license or regulatory permit that appears to be material to the
business of the Company and its Subsidiaries, taken as a whole, that might be
adversely affected by the Purchaser's acquisition of Shares as contemplated
herein or of any approval or other action by any Governmental Entity that would
be required for the acquisition or ownership of Shares by the Purchaser as
contemplated herein other than pursuant to the HSR Act. Should any such approval
or other action be required, the Purchaser and Parent currently contemplate that
such approval or other action will be sought, except as described below under
"State Takeover Laws." While, except as otherwise expressly described in this
Section 16, the Purchaser does not currently intend to delay the acceptance for
payment of or payment for Shares tendered pursuant to the Offer pending the
outcome of any such matter, there can be no assurance that any such approval or
other action, if needed, would be obtained or would be obtained without
substantial conditions or
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that failure to obtain any such approval or other action might not result in
consequences adverse to the Company's business or that certain parts of the
Company's business might not have to be disposed of if such approvals were not
obtained or such other actions were not taken or in order to obtain any such
approval or other action. If certain types of adverse action are taken with
respect to the matters discussed below, the Purchaser could decline to accept
for payment or pay for any Shares tendered. See Section 15 "Certain Conditions
of the Offer."
State Takeover Laws. A number of states have enacted takeover statutes
that purport, in varying degrees, to be applicable to attempts to acquire
securities of corporations that are incorporated or have assets, stockholders,
executive offices or places of business in such states. In CTS Corp. v. Dynamics
Corp. of America, the Supreme Court of the United States held that a state may
constitutionally disqualify a potential acquiror from voting on the affairs of a
target corporation without prior approval of the remaining stockholders,
provided that such laws were applicable only under certain conditions.
Section 203 of the DGCL limits the ability of certain Delaware corporations
to engage in business combinations with "interested stockholders" (defined as
any beneficial owner of 15% or more of the outstanding voting stock of the
corporation) unless, among other things, the corporation's board of directors
has given its prior approval to either the business combination or the
transaction which resulted in the stockholder becoming an "interested
stockholder." The Company does not have a class of voting stock that is (i)
listed on a national securities exchange, (ii) authorized for quotation on The
Nasdaq Stock Market or (iii) held of record by more than 2,000 stockholders. In
addition, the Company's Board of Directors has approved the Merger Agreement,
the Stockholder Agreements and the Purchaser's acquisition of Shares pursuant to
the Offer. Therefore, Section 203 of the DGCL is inapplicable to the Merger.
Based on representations and warranties of the Company, the Purchaser does
not believe that any state takeover statutes purport to apply to the Offer or
the Merger. Neither the Purchaser nor Parent has currently complied with any
state takeover statute or regulation. The Purchaser reserves the right to
challenge the applicability or validity of any state law purportedly applicable
to the Offer or the Merger and nothing in this Offer to Purchase or any action
taken in connection with the Offer or the Merger is intended as a waiver of such
right. If it is asserted that any state takeover statute is applicable to the
Offer or the Merger and an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer or the Merger, the Purchaser
might be required to file certain information with, or to receive approvals
from, the relevant state authorities, and the Purchaser might be unable to
accept for payment or pay for Shares tendered pursuant to the Offer, or be
delayed in consummating the Offer or the Merger. In such case, the Purchaser may
not be obliged to accept for payment or pay for any Shares tendered pursuant to
the Offer.
Antitrust. Under the provisions of the HSR Act applicable to the Offer,
the purchase of Shares pursuant to the Offer may be consummated following the
expiration of a 15-calendar day waiting period following the filing by Parent of
a Notification and Report Form with respect to the Offer, unless Parent receives
a request for additional information or documentary material from the Antitrust
Division or the FTC or unless early termination of the waiting period is
granted. Parent made such filing on January 29, 1997. If, within the initial
15-day waiting period, either the Antitrust Division or the FTC requests
additional information or material from Parent concerning the Offer, the waiting
period will be extended and will expire at 11:59 p.m., New York City time, on
the tenth calendar day following the date of substantial compliance with such
request. Only one extension of the waiting period pursuant to a request for
additional information is authorized by the HSR Act. Thereafter, such waiting
period may be extended only by court order or with the consent of Parent.
Complying with a request for additional information or material can take a
significant amount of time. In addition, if the Antitrust Division or the FTC
raises substantive issues in connection with a proposed transaction, the parties
frequently engage in negotiations with the relevant governmental agency
concerning possible means of addressing those issues and may agree to delay
consummation of the transaction while such negotiations continue.
The Merger would not require an additional filing under the HSR Act if the
Purchaser owns 50% or more of the outstanding Shares at the time of the Merger
or if the Merger occurs within one year after the HSR Act waiting period
applicable to the Offer expires or is terminated.
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The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's proposed acquisition
of the Company. At any time before or after the Purchaser's purchase of Shares
pursuant to the Offer, the Antitrust Division or FTC could take such action
under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or the consummation of the Merger or seeking the divestiture of Shares
acquired by the Purchaser or the divestiture of substantial assets of Parent or
its subsidiaries, or the Company or its Subsidiaries. Private parties may also
bring legal action under the antitrust laws under certain circumstances. There
can be no assurance that a challenge to the Offer on antitrust grounds will not
be made or, if such a challenge is made, of the result thereof.
17. FEES AND EXPENSES.
Robert W. Baird & Co. Incorporated ("Baird") is acting as Dealer Manager in
connection with the Offer. Parent has agreed to pay Baird as compensation for
all such services a total of $90,000. In addition, Parent has agreed (i) to
reimburse Baird for its out-of-pocket expenses, including the reasonable fees
and expenses of its counsel, in connection with the Offer, and (ii) to indemnify
Baird and certain related persons against certain liabilities and expenses,
including certain liabilities under the federal securities laws.
The Purchaser has retained D.F. King & Co., Inc. to act as the Information
Agent and Harris Trust and Savings Bank to serve as the Depositary in connection
with the Offer. The Information Agent and the Depositary each will receive
reasonable and customary compensation for their services, be reimbursed for
certain reasonable out-of-pocket expenses and be indemnified against certain
liabilities and expenses in connection therewith, including certain liabilities
under the federal securities laws.
Neither the Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other person (other than the Dealer Manager and the
Information Agent) in connection with the solicitation of tenders of Shares
pursuant to the Offer. Brokers, dealers, banks and trust companies will be
reimbursed by the Purchaser upon request for customary mailing and handling
expenses incurred by them in forwarding material to their customers.
18. MISCELLANEOUS.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. Neither the Purchaser nor Parent is aware of any jurisdiction in
which the making of the Offer or the tender of Shares in connection therewith
would not be in compliance with the laws of such jurisdiction. To the extent the
Purchaser or Parent becomes aware of any state law that would limit the class of
offerees in the Offer, the Purchaser will amend the Offer and, depending on the
timing of such amendment, if any, will extend the Offer to provide adequate
dissemination of such information to holders of Shares prior to the expiration
of the Offer. In any jurisdiction the securities, "blue sky" or other laws of
which require the Offer to be made by a licensed broker or dealer, the Offer is
being made on behalf of the Purchaser by the Dealer Manager or one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR PARENT NOT CONTAINED HEREIN OR IN
THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
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The Purchaser and Parent have filed with the Commission a Schedule 14D-1
pursuant to Rule 14d-3 under the Exchange Act, furnishing certain additional
information with respect to the Offer. In addition, the Company has filed with
the Commission a Schedule 14D-9 pursuant to Rule 14d-9 under the Exchange Act,
setting forth its recommendation with respect to the Offer and the reasons for
such recommendation and furnishing certain additional related information. Such
Schedules and any amendments thereto, including exhibits, should be available
for inspection and copies should be obtainable in the manner set forth in
Section 8 (except that they will not be available at the regional offices of the
Commission).
IMAGE ACQUISITION CORP.
January 31, 1997
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND THE PURCHASER. The following
table sets forth the name, business address and present principal occupation or
employment, and material occupations, positions, offices or employments for the
past five years of each director and executive officer of Parent and the
Purchaser. Unless otherwise indicated, positions held shown in the following
table are positions with Parent. Positions held with the Purchaser are shown in
italics. Each such person is a citizen of the United States of America.
NAME AND TITLE BUSINESS ADDRESS PRINCIPAL OCCUPATION AND DIRECTORSHIPS
- - --------------------------- --------------------------- -----------------------------------------
Leslie A. Jones c/o Parent Mr. Jones was appointed Chairman of the
Chairman of the Board 570 West College Avenue Board of Parent in May 1996. Mr. Jones
of Parent York, PA 17405-0872 has served as a director of Parent since
the June 11, 1993 merger (the "Merger")
of Dentsply International Inc. ("Old
Dentsply") and GENDEX Corporation
("Gendex"), of which Parent is the
surviving corporation. Prior thereto he
served as a director of Old Dentsply. Mr.
Jones has been Chairman and a director of
OBOS Inc., a manufacturer of
communication devices, since August 1993.
From 1992 until August 1993 he was a
private investor. From January 1991 to
January 1992, he was a Senior Vice
President and Special Assistant to the
President of Old Dentsply.
John C. Miles II c/o Parent Mr. Miles was named Chief Executive
Vice Chairman of the Board, 570 West College Avenue Officer of Parent on January 1, 1996 and
Chief Executive Officer and York, PA 17405-0872 Vice Chairman of the Board on December
Director of Parent; 11, 1996. From the Merger until December
President and Director of 31, 1995, Mr. Miles served as President
the Purchaser and Chief Operating Officer of Parent.
Mr. Miles has served as a director of
Parent since the Merger. Prior to the
Merger, Mr. Miles served as President and
Chief Operating Officer and a director of
Old Dentsply commencing in January 1990.
Burton C. Borgelt c/o Parent Mr. Borgelt served as Chief Executive
Director of Parent 570 West College Avenue Officer of Parent from February 8, 1995
York, PA 17405-0872 until December 31, 1995 and as Chairman
of the Board of Parent from June 1993
until May 1996. Mr. Borgelt has served as
a director of Parent since the Merger.
Prior thereto, Mr. Borgelt served as
Chairman of the Board and Chief Executive
Officer of Old Dentsply commencing in
March 1989 and as the Chief Executive
Officer and a director of Old Dentsply
commencing in February 1981. Mr. Borgelt
also serves as a director of Mellon Bank
Corporation, De Vlieg Bullard, Inc. and
Quill Corporation.
S-1
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NAME AND TITLE BUSINESS ADDRESS PRINCIPAL OCCUPATION AND DIRECTORSHIPS
- - --------------------------- --------------------------- -----------------------------------------
Douglas K. Chapman c/o Parent Mr. Chapman has been retired since March
Director of Parent 570 West College Avenue 1993. From January 1978 to March 1993, he
York, PA 17405-0872 was Chairman and a director of ACCO World
Corporation, a company involved in the
manufacture and sale of office products.
Mr. Chapman has served as a director of
Parent since the Merger and prior thereto
served as a director of Old Dentsply.
Michael J. Coleman c/o Florida Today/ Mr. Coleman is the president of Cape
Director of Parent USA Today Publications and publisher of FLORIDA
1 Gannet Plaza TODAY, Melbourne, Florida, and has been
Melbourne, FL 32940 the President of the South Regional
Newspapers Group since 1991. Mr. Coleman
is a member of the American Newspaper
Publishers Association and the American
Society of Newspaper Editors. Mr. Coleman
has served as a director of Parent since
1991.
Arthur A. Dugoni, c/o University of the Dr. Dugoni has been Dean of the
D.D.S., M.S.D. Pacific School of Dentistry University of the Pacific School of
Director of Parent 2155 Webster Street Dentistry since 1978. He is President of
San Francisco, CA 94115 the American Association of Dental
Schools. Since 1992, Dr. Dugoni has been
Treasurer of the Federation Dentaire
Internationale, an international
organization representing over 85
countries in the areas of oral health and
education. From 1990 to 1993, he was
Director of the American Fund for Dental
Health, a foundation that raises money to
improve public health and the quality of
dental education. Dr. Dugoni has served
as a director of Parent since 1993.
C. Frederick Fetterolf c/o Aluminum Company Mr. Fetterolf has been retired since
Director of Parent of America August 1991. He currently serves as a
210 Overlook Drive director of Allegheny Teledyne
79 North Industrial Park Incorporated, Mellon Bank Corporation,
Sewickley, PA 15143 Union Carbide Corp., Praxair Inc.,
CasTech Aluminum Group, Urethane
Technologies, Inc. and Quaker State
Corporation. Mr. Fetterolf has served as
a director of Parent since December 1995.
Edgar H. Schollmaier c/o Alcon Laboratories Mr. Schollmaier is Chairman and Chief
Director of Parent 6201 South Freeway Executive Officer of Alcon Laboratories
Fort Worth, TX 76134 of Fort Worth, TX, a position which he
has held since 1977. Mr. Schollmaier has
served as a director of Parent since June
1996.
S-2
45
NAME AND TITLE BUSINESS ADDRESS PRINCIPAL OCCUPATION AND DIRECTORSHIPS
- - --------------------------- --------------------------- -----------------------------------------
W. Keith Smith c/o Mellon Bank Corporation Mr. Smith has been Vice Chairman and a
Director of Parent One Mellon Bank Center director of Mellon Bank Corporation and
Pittsburgh, PA 15258 Mellon Bank, N.A. since January 1990. He
has also served as Chairman and Chief
Executive Officer of The Boston Company
and Boston Safe Deposit & Trust Company
since May 1993. In addition, from August
1994 until January 1995, he served as
Chief Operating Officer of The Dreyfus
Corporation, and since January 1995 he
has served as Chairman of the Board of
The Dreyfus Corporation. Mr. Smith has
served as a director of Parent since the
Merger and prior thereto served as a
director of Old Dentsply.
J. Patrick Clark c/o Parent Mr. Clark has been Vice President,
Vice President, Secretary 570 West College Avenue Secretary and General Counsel of Parent
and General Counsel of York, PA 17405-0872 since the Merger and prior thereto served
Parent; as General Counsel and Secretary of Old
Vice President and Dentsply since 1986.
Secretary of the Purchaser
Michael R. Crane c/o Parent Mr. Crane was named Senior Vice
Senior Vice President, 570 West College Avenue President, North American Group,
North American Group, of York, PA 17405-0872 effective January 1, 1996. Prior thereto,
Parent he was Senior Vice President, Europe,
Mideast, Africa and Commonwealth of
Independent States, of Parent effective
in early 1995. Prior thereto he served as
Senior Vice President, International
Operations, of Parent since the Merger,
and in a similar capacity with Old
Dentsply commencing in November 1989.
Gerald K. Kunkle, Jr. c/o Parent Mr. Kunkle was named President and Chief
President and Chief 570 West College Avenue Operating Officer of Parent effective
Operating Officer of Parent York, PA 17405-0872 January 1, 1997. Prior thereto, Mr.
Kunkle served as President of Johnson and
Johnson's Vistakon Division, a
manufacturer and marketer of contact
lenses, from January 1994 and, from early
1992 until January 1994, was President of
Johnson and Johnson Orthopaedics, Inc., a
manufacturer of orthopaedic implants,
fracture management products and trauma
devices.
W. William Weston c/o Parent Mr. Weston was named Senior Vice
Senior Vice President, 570 West College Avenue President, European Group, of Parent
European Group, of Parent York, PA 17405-0872 effective January 1, 1996. Prior thereto,
Mr. Weston served as the Vice President
and General Manager of Parent's DeDent
Operations in Europe from October 1,
1990.
S-3
46
NAME AND TITLE BUSINESS ADDRESS PRINCIPAL OCCUPATION AND DIRECTORSHIPS
- - --------------------------- --------------------------- -----------------------------------------
Thomas L. Whiting c/o Parent Mr. Whiting was named Senior Vice
Senior Vice President, 570 West College Avenue President, Pacific Rim, Latin America,
Pacific Rim, Latin America, York, PA 17405-0872 Gendex and Tulsa Dental, of Parent in
Gendex and Tulsa Dental, of 1995. Prior to this appointment, Mr.
Parent; Director of the Whiting was Vice President and General
Purchaser Manager of Parent's L.D. Caulk Division
since the Merger, and prior thereto
served in the same capacity with Old
Dentsply since joining Old Dentsply in
1987.
Edward D. Yates c/o Parent Mr. Yates has been Senior Vice President
Senior Vice President and 570 West College Avenue and Chief Financial Officer of Parent
Chief Financial Officer of York, PA 17405-0872 since the Merger and prior thereto served
Parent; Senior Vice in a similar capacity with Old Dentsply
President and Chief commencing in March 1991. Mr. Yates is a
Financial Officer and Certified Public Accountant.
Director of the Purchaser
S-4
47
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each stockholder of the
Company or such stockholder's broker, dealer, bank, trust company or other
nominee to the Depositary at one of its addresses set forth below.
THE DEPOSITARY FOR THE OFFER IS:
Harris Trust and Savings Bank
c/o Harris Trust Company of New York
By Overnight Courier:
77 Water Street, 4th Floor
New York, NY 10005
By Mail: By Facsimile Transmission By Hand:
Wall Street Station (for Eligible Institutions only): Receive Window
P.O. Box 1010 Fax: (212) 701-7636 77 Water Street, 5th Floor
New York, NY 10268-1010 (212) 701-7637 New York, NY 10005
Confirm by Telephone:
(212) 701-7624
Inquiries with respect to the Offer should be addressed to Robert W. Baird
& Co. Incorporated, the Dealer Manager for the Offer, or D.F. King & Co., Inc.,
the Information Agent for the Offer, at their respective addresses and telephone
numbers below. Requests for copies of the enclosed materials may be directed to
D.F. King & Co., Inc.
THE INFORMATION AGENT FOR THE OFFER IS:
D.F. KING & CO., INC.
77 Water Street
New York, N.Y. 10005
CALL TOLL-FREE (800) 758-7358
THE DEALER MANAGER FOR THE OFFER IS:
ROBERT W. BAIRD & CO.
INCORPORATED
777 East Wisconsin
Milwaukee, WI 53202
CALL TOLL-FREE (800) 799-5770
48
EXHIBIT (a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
NEW IMAGE INDUSTRIES, INC.
PURSUANT TO THE OFFER TO PURCHASE DATED JANUARY 31, 1997
BY
IMAGE ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
DENTSPLY INTERNATIONAL INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, MARCH 3, 1997, UNLESS THE OFFER IS EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
HARRIS TRUST AND SAVINGS BANK
C/O HARRIS TRUST COMPANY OF NEW YORK
By Overnight Courier:
77 Water Street, 4th Floor
New York, NY 10005
By Mail: By Facsimile Transmission By Hand:
Wall Street Station (for Eligible Institutions only): Receive Window
P.O. Box 1010 Fax: (212) 701-7636 77 Water Street, 5th Floor
New York, NY 10268-1010 (212) 701-7637 New York, NY 10005
Confirm by Telephone:
(212) 701-7624
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE WILL NOT
CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by stockholders either if
certificates evidencing Shares (as defined below) are to be forwarded herewith
or if delivery of Shares is to be made by book-entry transfer to the
Depositary's account at The Depository Trust Company ("DTC") or the Philadelphia
Depository Trust Company ("PDTC") (each a "Book-Entry Transfer Facility" and
collectively, the "Book-Entry Transfer Facilities") pursuant to the book-entry
transfer procedure described in Section 2 of the Offer to Purchase (as defined
below). Delivery of documents to a Book-Entry Transfer Facility does not
constitute delivery to the Depositary. Stockholders whose certificates
evidencing Shares are not immediately available or who cannot deliver their
stock certificates and all other documents required hereby to the Depositary
prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase)
or who cannot complete the procedure for delivery by book-entry transfer on a
timely basis and who wish to tender their Shares must do so pursuant to the
guaranteed delivery procedure described in Section 2 of the Offer to Purchase.
See Instruction 2.
49
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution ________________________________________________
Check box of Book-Entry Transfer Facility:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number ______________________________________________________________
Transaction Code Number _____________________________________________________
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s) _______________________________________________
Window Ticket No. (If any) ___________________________________________________
Date of Execution of Notice of Guaranteed Delivery ___________________________
Name of Institution that Guaranteed Delivery _________________________________
If delivered by Book-Entry Transfer, check box of Book-Entry Transfer Facility:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number _______________________________________________________________
Transaction Code Number ______________________________________________________
50
- - --------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- - --------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) SHARES TENDERED
(PLEASE FILL-IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON (ATTACH ADDITIONAL SIGNED LIST, IF
CERTIFICATE(S)) NECESSARY)
- - --------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES
REPRESENTED NUMBER OF
CERTIFICATE BY SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
TOTAL
SHARES:
- - ----------------------------------------------------------------------------------------------------------------------
(1) Need not be completed by Book-Entry Stockholders.
(2) Unless otherwise indicated, it will be assumed that all Shares represented by any certificates
delivered to the Depositary are being tendered hereby. See Instruction 4.
- - --------------------------------------------------------------------------------
The names and addresses of the registered holders should be printed, if not
already printed above, exactly as they appear on the certificates representing
Shares tendered hereby. The certificates and number of Shares that the
undersigned wishes to tender should be indicated in the appropriate boxes.
51
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Image Acquisition Corp., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of DENTSPLY
International Inc., a Delaware corporation ("Parent"), the above-described
shares of common stock, par value $.001 per share (the "Shares"), of New Image
Industries, Inc., a Delaware corporation (the "Company"), pursuant to the
Purchaser's offer to purchase all outstanding Shares at a price of $2.00 per
Share, net to the seller in cash, without interest, in accordance with the terms
and conditions of the Purchaser's Offer to Purchase dated January 31, 1997 (the
"Offer to Purchase") and this Letter of Transmittal (which, together with any
amendments or supplements thereto or hereto, collectively constitute the
"Offer"), receipt of which is hereby acknowledged.
Subject to, and effective upon, acceptance for payment of and payment for
the Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms or conditions of any such extension or amendment), the undersigned hereby
sells, assigns and transfers to, or upon the order of, the Purchaser all right,
title and interest in and to all the Shares that are being tendered hereby (and
any and all other Shares or other securities or rights issued or issuable in
respect of such Shares on or after January 27, 1997) and irrevocably constitutes
and appoints the Depositary the true and lawful agent and attorney-in-fact of
the undersigned with respect to such Shares (and any such other Shares or
securities or rights) with full power of substitution (such power of attorney
being deemed to be an irrevocable power coupled with an interest), to (a)
deliver certificates for such Shares (and any such other Shares or securities or
rights) or transfer ownership of such Shares (and any such other Shares or
securities or rights) on the account books maintained by a Book-Entry Transfer
Facility together, in any such case, with all accompanying evidences of transfer
and authenticity to, or upon the order of, the Purchaser, (b) present such
Shares (and any such other Shares or securities or rights) for transfer on the
Company's books and (c) receive all benefits and otherwise exercise all rights
of beneficial ownership of such Shares (and any such other Shares or securities
or rights), all in accordance with the terms and subject to the conditions of
the Offer.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the tendered Shares
(and any and all Shares or other securities or rights issued or issuable in
respect of such Shares on or after January 27, 1997), and, when the same are
accepted for payment by the Purchaser, the Purchaser will acquire good title
thereto, free and clear of all liens, restrictions, claims and encumbrances.
The undersigned will, upon request, execute any additional documents deemed
by the Depositary or the Purchaser to be necessary or desirable to complete the
sale, assignment and transfer of the tendered Shares (and any such other Shares
or securities or rights).
All authority conferred or agreed to be conferred pursuant to this Letter of
Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators, trustees in bankruptcy and legal representatives of the
undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. Except as stated in the Offer to Purchase, this
tender is irrevocable.
The undersigned hereby irrevocably appoints J. Patrick Clark and Marcus K.
Dixon III, and each of them, and any other designees of the Purchaser, the
attorneys-in-fact and proxies of the undersigned, each with full power of
substitution, to vote at any annual, special or adjourned meeting of the
Company's stockholders or otherwise in such manner as each such attorney and
proxy or his substitute shall in his sole discretion deem proper with respect
to, to execute any written consent concerning any matter as each such attorney
and proxy or his substitute shall in his sole discretion deem proper with
respect to, and to otherwise act as each such attorney and proxy or his
substitute shall in his sole discretion deem proper with respect to, all the
Shares tendered hereby that have been accepted for payment by the Purchaser
prior to the time any such action is taken and with respect to which the
undersigned is entitled to vote (and with respect to any and all other Shares or
other securities or rights issued or issuable in respect of such Shares on or
after January 27, 1997). This appointment is effective when, and only to the
extent that, the Purchaser accepts for payment such Shares as provided in the
Offer to Purchase. This power of attorney and proxy are irrevocable and are
granted in consideration of the acceptance for payment of such Shares in
accordance with the terms and subject to the conditions of the Offer. Such
acceptance for payment shall, without further action, revoke all prior powers of
attorney and proxies appointed by the undersigned at any time with respect to
such Shares (and any such other Shares or securities or rights) and no
subsequent powers of attorney or proxies will be appointed by the undersigned,
or be effective, with respect thereto.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 2 of the Offer to Purchase and in the
Instructions hereto will constitute a binding agreement between the undersigned
and the Purchaser upon the terms and subject to the conditions of the Offer.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any certificates for
Shares not tendered or accepted for payment in the name(s) of the registered
holder(s) appearing under "Description of Shares Tendered." Similarly, unless
otherwise indicated under "Special Delivery Instructions," please mail the check
for the purchase price and/or return any certificates for Shares not tendered or
accepted for payment (and accompanying documents, as appropriate), to the
address(es) of the registered holder(s) appearing under "Description of Shares
Tendered." In the event that both the Special Delivery Instructions and the
Special Payment Instructions are completed, please issue the check for the
purchase price and/or return any certificates for Shares not tendered or
accepted for payment (and any accompanying documents, as appropriate) in the
name of, and deliver such check and/or return such certificates (and any
accompanying documents, as appropriate) to the person or persons so indicated.
The undersigned recognizes that the Purchaser has no obligation pursuant to the
Special Payment Instructions to transfer any Shares from the name of the
registered holder thereof if the Purchaser does not accept for payment any of
the Shares so tendered.
52
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares accepted
for payment are to be issued in the name of someone other than the undersigned.
Issue check and/or certificate(s) to:
Name _________________________________________________________________________
(PLEASE PRINT)
Address _______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
________________________________________________________________________________
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares accepted
for payment are to be sent to someone other than the undersigned or to the
undersigned at an address other than that indicated above.
Mail check and/or certificate(s) to:
Name _________________________________________________________________________
(PLEASE PRINT)
Address _______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
53
SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
________________________________________________________________________________
________________________________________________________________________________
(SIGNATURE(S) OF STOCKHOLDER(S) )
Dated: ______________________________ , 1997
(Must be signed by registered holder(s) as name(s) appear(s) on the
certificate(s) for the Shares or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustees, executors, administrators,
guardians, attorneys-in-fact, officers or corporations or others acting in a
fiduciary or representative capacity, please provide the following information
and see Instruction 5.)
Name(s) _______________________________________________________________________
(PLEASE PRINT)
Capacity (Full Title) __________________________________________________________
Address _______________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No. ____________________________________________________
Taxpayer Identification or Social Security No. _________________________________
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND 5)
Authorized Signature __________________________________________________________
Name __________________________________________________________________________
(PLEASE PRINT)
Name of Firm __________________________________________________________________
Address _______________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No. ___________________________________________________
Dated: ______________________________ , 1997
54
INSTRUCTIONS FORMING PART OF THE
TERMS AND CONDITIONS OF THE OFFER
1. SIGNATURE GUARANTEES. No signature guarantee is required on this Letter
of Transmittal (a) if this Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this document, shall include any
participant in a Book-Entry Transfer Facility whose name appears on a security
position listing as the owner of Shares) of Shares tendered herewith, unless
such holder(s) has completed either the box entitled "Special Delivery
Instructions" or the box entitled "Special Payment Instructions" on the reverse
hereof, or (b) if such Shares are tendered for the account of a firm that is a
member of a registered national securities exchange or of the National
Association of Securities Dealers, Inc. or a commercial bank or trust company
having an office or correspondent in the United States or by any other "eligible
guarantor institution," as such term is defined in Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended (each, an "Eligible Institution").
In all other cases, all signatures on this Letter of Transmittal must be
guaranteed by an Eligible Institution. See Instruction 5.
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed by
stockholders either if certificates are to be forwarded herewith or if delivery
of Shares is to be made pursuant to the procedures for book-entry transfer set
forth in Section 2 of the Offer to Purchase. For a stockholder validly to tender
Shares pursuant to the Offer, either (a) a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), together with any required
signature guarantees and any other required documents, must be received by the
Depositary at one of its addresses set forth herein prior to the Expiration Date
and either (i) certificates for tendered Shares must be received by the
Depositary at one of such addresses prior to the Expiration Date or (ii) Shares
must be delivered pursuant to the procedures for book-entry transfer set forth
herein and a Book-Entry Confirmation must be received by the Depositary prior to
the Expiration Date or (b) the tendering stockholder must comply with the
guaranteed delivery procedures set forth below and in Section 2 of the Offer to
Purchase.
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver their certificates and all other required documents to the
Depositary or complete the procedures for book-entry transfer prior to the
Expiration Date may tender their Shares by properly completing and duly
executing the Notice of Guaranteed Delivery pursuant to the guaranteed delivery
procedures set forth in Section 2 of the Offer to Purchase.
Pursuant to such procedures, (a) such tender must be made by or through an
Eligible Institution, (b) a properly completed and duly executed Notice of
Guaranteed Delivery substantially in the form provided by the Purchaser must be
received by the Depositary prior to the Expiration Date and (c) the certificates
for all physically delivered Shares or a Book-Entry Confirmation with respect to
all tendered Shares, as well as a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) with any required signature guarantees and
any other documents required by this Letter of Transmittal, must be received by
the Depositary within three New York Stock Exchange, Inc. trading days after the
date of execution of the Notice of Guaranteed Delivery.
THE METHOD OF DELIVERY OF SHARES, THIS LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal (or facsimile thereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
4. PARTIAL TENDERS (APPLICABLE TO CERTIFICATE STOCKHOLDERS ONLY). If fewer
than all the Shares evidenced by any certificate submitted are to be tendered,
fill in the number of Shares that are to be tendered in the box entitled "Number
of Shares Tendered." In any such case, new certificates (for the remainder of
the Shares that were evidenced by the old certificates) will be sent to the
registered holder, unless otherwise provided in the appropriate box on this
Letter of Transmittal, as soon as practicable after the expiration of the Offer.
All Shares represented by certificates delivered to the Depositary will be
deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTERS OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder of the Shares
tendered hereby, the signature must correspond with the name as written on the
face of the certificate(s) without any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal or any certificates or stock powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and proper evidence satisfactory to the
Purchaser of their authority to so act must be submitted.
55
When this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to or
certificates for Shares not tendered or accepted for payment are to be issued to
a person other than the registered holder(s). Signatures on such certificates or
stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of certificates listed, the certificates must be endorsed
or accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered owner or owners appear on the certificates.
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution.
6. STOCK TRANSFER TAXES. The Purchaser will pay any stock transfer taxes
with respect to the transfer and sale of Shares to it or its order pursuant to
the Offer. If, however, payment of the purchase price is to be made to, or if
certificates for Shares not tendered or accepted for payment are to be
registered in the name of, any persons other than the registered holder(s) or if
tendered certificates are registered in the name of any person other than the
person(s) signing this Letter of Transmittal, the amount of any stock transfer
taxes (whether imposed on the registered holder(s) or such person) payable on
account of the transfer to such person will be deducted from the purchase price
unless satisfactory evidence of the payment of such taxes or exemption therefrom
is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued in
the name of, and/or certificates for Shares not tendered or not accepted for
payment are to be issued to, a person other than the signer of this Letter of
Transmittal or if a check is to be sent and/or such certificates are to be
returned to a person other than the signer of this Letter of Transmittal or to
an address other than that shown above, the appropriate boxes on this Letter of
Transmittal should be completed.
8. WAIVER OF CONDITIONS. Subject to the terms of the Offer, the Purchaser
reserves the absolute right in its sole discretion to waive any of the specified
conditions of the Offer, in whole or in part, in the case of any Shares
tendered.
9. BACKUP WITHHOLDING. Under U.S. federal income tax law, a stockholder
whose tendered Shares are accepted for payment is required to provide the
Depositary with such stockholder's correct Taxpayer Identification Number
("TIN") on Substitute Form W-9 below and to certify whether the stockholder is
subject to backup withholding of federal income tax. Failure to provide the
information on the Substitute Form W-9 may subject the tendering stockholder to
31% federal income tax withholding on the payment of the purchase price.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, the stockholder must submit a Form W-8, signed under penalties of
perjury, attesting to that individual's exempt status. A Form W-8 can be
obtained from the Depositary. See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for more instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any such payments made to the stockholder or other payee. Backup withholding is
not an additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld, provided that the
required information is given to the Internal Revenue Service. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
The box in Part 3 of the Substitute Form W-9 may be checked if the tendering
stockholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future. If the box in Part 3 is checked, the
stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN is
provided to the Depositary. However, such amounts will be refunded to such
stockholder if a TIN is provided to the Depositary within 60 days.
The stockholder is required to give the Depositary the TIN (e.g., Social
Security Number or Employer Identification Number) of the record owner of the
Shares or of the last transferee appearing on the transfers attached to, or
endorsed on, the Shares. If the Shares are in more than one name or are not in
the name of the actual owner, consult the enclosed "Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9" for additional
guidance on which TIN to report.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for additional
copies of the Offer to Purchase, this Letter of Transmittal, the Notice of
Guaranteed Delivery and the Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 should be directed to the
Information Agent at its address set forth below. Questions or requests for
assistance may be directed to the Information Agent or the Dealer Manager.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE COPY
THEREOF (TOGETHER WITH CERTIFICATES FOR, OR A BOOK-ENTRY CONFIRMATION WITH
RESPECT TO, TENDERED SHARES WITH ANY REQUIRED SIGNATURE GUARANTEES AND ALL OTHER
REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE DEPOSITARY, OR THE NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY, PRIOR TO THE EXPIRATION
DATE.
56
PAYER'S NAME: HARRIS TRUST AND SAVINGS BANK
- - ---------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1: PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND
FORM W-9 CERTIFY BY SIGNING AND DATING BELOW. --------------------------
Social Security Number
OR Employer
Identification Number
--------------------------------------------------------------------------------------
DEPARTMENT OF THE PART 2: For Payees exempt from backup withholding, see PART 3: Awaiting TIN [ ]
TREASURY INTERNAL the enclosed Guidelines for Certification of Taxpayer
REVENUE SERVICE (IRS) Identification Number on Substitute Form W-9 and complete
as instructed therein.
--------------------------------------------------------------------------------------
PAYER'S REQUEST FOR CERTIFICATION--Under the penalties of perjury, I certify that:
TAXPAYER IDENTIFICATION
NUMBER (TIN) (1) the number shown on this Form is my correct TIN (or I am waiting for a TIN to be
issued to me); and
(2) I am not subject to backup withholding because (a) I am exempt from backup
withholding; or (b) I have not been notified by the IRS that I am subject to backup
withholding as a result of a failure to report all interest or dividends; or (c) the
IRS has notified me that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have been
notified by the IRS that you are currently subject to backup withholding because of
underreporting interest or dividends on your tax return.
The IRS does not require your consent to any provision of this document other than
the certifications required to avoid backup withholding.
SIGNATURE __________________________________________________________________________
SIGNATURE __________________________________________________________________________
(If joint account, both must sign)
DATE _______________________________________________________________________________
NAME _______________________________________________________________________________
(Please Print)
ADDRESS ___________________________________________________________________________
(Include Zip Code)
- - --------------------------------------------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE
BOX IN PART 3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number has
not been issued to me, and either (1) I have mailed or delivered an application
to receive a Taxpayer Identification Number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (2) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a Taxpayer Identification Number by the time of payment, 31% of all
reportable payments made to me will be withheld, but that such amounts will be
refunded to me if I then provide a Taxpayer Identification Number within sixty
days.
Signature ____________________________________ Date _________________________
57
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
Any inquiries with respect to the Offer should be addressed to Robert W. Baird &
Co. Incorporated, the Dealer Manager for the Offer, or D.F. King & Co., Inc.,
the Information Agent for the Offer, at the respective addresses and telephone
numbers set forth below. Requests for additional copies of the enclosed
materials may be directed to the Information Agent.
THE INFORMATION AGENT FOR THE OFFER IS:
D.F. KING & CO., INC.
77 Water Street
New York, N.Y. 10005
CALL TOLL-FREE (800) 758-7358
THE DEALER MANAGER FOR THE OFFER IS:
ROBERT W. BAIRD & CO.
INCORPORATED
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
CALL TOLL-FREE (800) 799-5770
58
EXHIBIT (a)(3)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
NEW IMAGE INDUSTRIES, INC.
As set forth in Section 2 of the Offer to Purchase (as defined below), this
form or one substantially equivalent hereto must be used to accept the Offer (as
defined below) if certificates representing shares of common stock, par value
$.001 per share (the "Shares"), of New Image Industries, Inc., a Delaware
corporation (the "Company"), are not immediately available or if the procedures
for book-entry transfer cannot be completed on a timely basis or time will not
permit all required documents to reach the Depositary prior to the Expiration
Date (as defined in Section 1 of the Offer to Purchase). Such form may be
delivered by hand or transmitted by telegram or facsimile transmission or mailed
to the Depositary and must include a guarantee by an Eligible Institution (as
defined in Section 2 of the Offer to Purchase). See Section 2 of the Offer to
Purchase.
THE DEPOSITARY FOR THE OFFER IS:
HARRIS TRUST AND SAVINGS BANK
C/O HARRIS TRUST COMPANY OF NEW YORK
By Overnight Courier:
77 Water Street, 4th Floor
New York, NY 10005
By Mail: By Facsimile Transmission By Hand:
Wall Street Station (for Eligible Institutions only): Receive Window
P.O. Box 1010 Fax: (212) 701-7636 77 Water Street, 5th
New York, NY 10268-1010 (212) 701-7637 Floor
New York, NY 10005
Confirm by Telephone:
(212) 701-7624
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS, OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
59
Ladies and Gentlemen:
The undersigned hereby tenders to Image Acquisition Corp., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of DENTSPLY
International Inc., a Delaware corporation, upon the terms and subject to the
conditions set forth in the Purchaser's Offer to Purchase dated January 31, 1997
(the "Offer to Purchase"), and in the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer"), receipt of which is hereby acknowledged, Shares pursuant to the
guaranteed delivery procedures set forth in Section 2 of the Offer to Purchase.
Number of Shares:
-------------------------------------
Certificate Nos. (If available):
- - ------------------------------------------------------
- - ------------------------------------------------------
- - ------------------------------------------------------
Name(s) of Record Holder(s):
- - ------------------------------------------------------
- - ------------------------------------------------------
(Please Print)
Address(es):
------------------------------------------
- - ------------------------------------------------------
(Zip Code)
Area Code and Tel. No.:
------------------------------
Check one box if Shares will be delivered
by book-entry transfer
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number:
--------------------------------------
Dated:
-----------------------------------------------
Signature(s):
-----------------------------------------
- - ------------------------------------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member of a registered national securities exchange or
of the National Association of Securities Dealers, Inc., a commercial bank or
trust company having an office or correspondent in the United States or an
"eligible guarantor institution" as such term is defined in Rule 17Ad-15 under
the Securities Exchange Act of 1934, as amended, hereby guarantees to deliver to
the Depositary either the certificates representing the Shares tendered hereby,
in proper form for transfer, or a Book-Entry Confirmation (as defined in Section
2 of the Offer to Purchase) of a transfer of such Shares, in any such case
together with a properly completed and duly executed Letter of Transmittal, or a
manually signed facsimile thereof, with any required signature guarantees, and
any other documents required by the Letter of Transmittal within three New York
Stock Exchange, Inc. trading days after the date hereof.
Name of Firm:
----------------------------------------
Address:
--------------------------------------------
- - ------------------------------------------------------
Area Code and Tel. No.:
------------------------------
- - ------------------------------------------------------
Authorized Signature
Title:
-----------------------------------------------
Name:
-----------------------------------------------
(Please type or print)
Dated:
-----------------------------------------------
DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. SHARE CERTIFICATES SHOULD
BE SENT WITH YOUR LETTER OF TRANSMITTAL.
60
ROBERT W. BAIRD & CO.
INCORPORATED
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
NEW IMAGE INDUSTRIES, INC.
AT
$2.00 NET PER SHARE
BY
IMAGE ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
DENTSPLY INTERNATIONAL INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, MARCH 3, 1997,
UNLESS THE OFFER IS EXTENDED.
January 31, 1997
To Brokers, Dealers, Banks, Trust Companies and Other Nominees:
We have been engaged by Image Acquisition Corp., a Delaware corporation
(the "Purchaser") and a wholly owned subsidiary of DENTSPLY International Inc.,
a Delaware corporation ("Parent"), to act as Dealer Manager in connection with
the Purchaser's offer to purchase all outstanding shares of common stock, par
value $.001 per share (the "Shares"), of New Image Industries, Inc., a Delaware
corporation (the "Company"), at $2.00 per Share, net to the seller in cash,
without interest, upon the terms and subject to the conditions set forth in the
Purchaser's Offer to Purchase dated January 31, 1997 (the "Offer to Purchase"),
and the related Letter of Transmittal (which, together with any supplements or
amendments thereto, collectively constitute the "Offer").
Please furnish copies of the enclosed materials to those of your clients
for whom you hold Shares registered in your name or in the name of your nominee.
Enclosed herewith are copies of the following documents:
1. Offer to Purchase dated January 31, 1997;
2. Letter of Transmittal to be used by stockholders of the Company
accepting the Offer;
3. The Letter to stockholders of the Company from the President and
Chief Executive Officer of the Company accompanied by the Company's
Solicitation/Recommendation Statement on Schedule 14D-9;
4. Notice of Guaranteed Delivery;
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
6. Return envelope addressed to the Depositary, Harris Trust and
Savings Bank.
WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY. PLEASE NOTE THAT THE OFFER
AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
MONDAY, MARCH 3, 1997, UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the Expiration Date (as defined in Section 1
of the Offer to Purchase) that number of Shares which represents at least
fifty-five percent (55%) of all outstanding Shares as of the date of
commencement of the Offer.
The Board of Directors of the Company has determined that the Offer and the
Merger
(as defined below) are fair to, and in the best interests of, the Company and
its stockholders, has unanimously
61
approved the Merger Agreement (as defined below) and the transactions
contemplated thereby and unanimously recommends that all holders of Shares
tender their Shares pursuant to the Offer.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of January 27, 1997 (the "Merger Agreement"), by and among the Parent, the
Purchaser and the Company pursuant to which, following the consummation of the
Offer and the satisfaction or waiver of certain conditions, the Purchaser will
be merged with and into the Company, with the Company surviving the merger as a
wholly owned subsidiary of Parent (the "Merger"). At the effective time of the
Merger, each outstanding Share (other than Shares held in the treasury of the
Company or owned by any direct or indirect subsidiary of Parent (including the
Purchaser) or by stockholders, if any, who are entitled to and who properly
exercise appraisal rights under the Delaware General Corporation Law) will be
converted into the right to receive $2.00, net to the seller in cash, without
interest, as set forth in the Merger Agreement and described in the Offer to
Purchase.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of certificates for
such Shares (or timely book-entry confirmation of a transfer of such Shares as
described in Section 2 of the Offer to Purchase), a properly completed and duly
executed Letter of Transmittal (or manually signed facsimile thereof) and any
other documents required by the Letter of Transmittal.
Neither the Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other person (other than the Dealer Manager and the
Information Agent as described in the Offer to Purchase) in connection with the
solicitation of tenders of Shares pursuant to the Offer. You will be reimbursed
upon request for customary mailing and handling expenses incurred by you in
forwarding the enclosed offering materials to your customers.
Any inquiries with respect to the Offer should be addressed to Robert W.
Baird & Co. Incorporated, the Dealer Manager for the Offer, or D.F. King & Co.,
Inc., the Information Agent for the Offer, at their respective addresses and
telephone numbers set forth on the back cover page of the Offer to Purchase.
Requests for copies of the enclosed materials may be directed to D.F. King &
Co., Inc.
Very truly yours,
ROBERT W. BAIRD & CO.
INCORPORATED
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON THE AGENT OF THE PURCHASER, PARENT, THE DEPOSITARY, THE
INFORMATION AGENT OR THE DEALER MANAGER OR ANY AFFILIATE OF ANY OF THEM OR
AUTHORIZE YOU OR ANY OTHER PERSON TO GIVE ANY INFORMATION OR USE ANY DOCUMENT OR
MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM WITH RESPECT TO THE OFFER OTHER
THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
-2-
62
EXHIBIT (a)(5)
GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give The
Payer.--Social Security Numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer Identification Numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
- - ------------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- - ------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals The actual owner of the
(joint account) account or, if combined
funds, the first
individual on the
account(1)
3. Husband and wife (joint The actual owner of the
account) account or, if joint
funds, either person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if the
account) minor is the only
contributor, the
minor(1)
6. Account in the name of The ward, minor, or
guardian or committee incompetent person(3)
for a designated ward,
minor, or incompetent
person
7. a. The usual revocable The grantor-trustee(1)
savings trust
account (grantor is
also trustee)
b. So-called trust The actual owner(1)
account that is not a
legal or valid trust
under State law
8. Sole proprietorship The owner(4)
account
- - ------------------------------------------------------
- - ------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- - ------------------------------------------------------
9. A valid trust, estate, The legal entity (Do
or pension trust not furnish the
identifying number of
the personal
representative or
trustee unless the
legal entity itself is
not designated in the
account title.)(5)
10. Corporate account The corporation
11. Religious, charitable, The organization
or educational
organization account
12. Partnership account The partnership
held in the name of the
business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or registered The broker or nominee
nominee
15. Account with the The public entity
Department of
Agriculture in the name
of a public entity
(such as a State or
local government,
school district, or
prison) that receives
agricultural program
payments
- - ------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's Social Security Number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's Social Security Number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
63
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
OBTAINING A NUMBER
If you don't have a Taxpayer Identification Number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number (for
businesses and all other entities), at the local office of the Social Security
Administration or the Internal Revenue Service (the "IRS") and apply for a
number.
PAYEES EXEMPT FROM BACKUP
WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under Section 501(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), or an individual retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof.
- An international organization or any agency or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under Section 584(a) of the Code.
- An exempt charitable remainder trust, or a nonexempt trust described in
Section 4947(a)(1) of the Code.
- An entity registered at all times during the tax year under the Investment
Company Act of 1940.
- A foreign central bank of issuance.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under Section 1441 of
the Code.
- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct Taxpayer Identification Number to the payer.
- Payments of tax-exempt interest (including exempt--interest dividends under
Section 852 of the Code).
- Payments described in Section 6049(b)(5) of the Code to nonresident aliens.
- Payments on tax-free covenant bonds under Section 1451 of the Code.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE FORM W-9 TO AVOID POSSIBLE ERRONEOUS
BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND DATE THE
FORM AND RETURN IT TO THE PAYER. IF YOU ARE A NON-RESIDENT ALIEN OR A FOREIGN
ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER A COMPLETED INTERNAL
REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see Sections 6041, 6041A(a), 6045, 6050A and 6050N of
the Code and the regulations promulgated thereunder.
PRIVACY ACT NOTICE. SECTION 6109 OF THE CODE REQUIRES MOST RECIPIENTS OF
DIVIDEND, INTEREST, OR OTHER PAYMENTS TO GIVE TAXPAYER IDENTIFICATION NUMBERS TO
PAYERS WHO MUST REPORT THE PAYMENTS TO THE IRS. THE IRS USES THE NUMBERS FOR
IDENTIFICATION PURPOSES. PAYERS MUST BE GIVEN THE NUMBERS WHETHER OR NOT
RECIPIENTS ARE REQUIRED TO FILE TAX RETURNS. PAYERS MUST GENERALLY WITHHOLD 31%
OF TAXABLE INTEREST, DIVIDEND, AND CERTAIN OTHER PAYMENTS TO A PAYEE WHO DOES
NOT FURNISH A TAXPAYER IDENTIFICATION NUMBER TO A PAYER. CERTAIN PENALTIES MAY
ALSO APPLY.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. IF YOU FAIL
TO FURNISH YOUR CORRECT TAXPAYER IDENTIFICATION NUMBER TO A PAYER, YOU ARE
SUBJECT TO A PENALTY OF $50 FOR EACH SUCH FAILURE UNLESS YOUR FAILURE IS DUE
TO REASONABLE CAUSE AND NOT TO WILLFUL NEGLECT.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS. IF YOU FAIL TO
INCLUDE ANY PORTION OF AN INCLUDIBLE PAYMENT FOR INTEREST, DIVIDENDS, OR
PATRONAGE DIVIDENDS IN GROSS INCOME, SUCH FAILURE WILL BE TREATED AS BEING
DUE TO NEGLIGENCE AND WILL BE SUBJECT TO A PENALTY OF 20% ON ANY PORTION OF
AN UNDERPAYMENT ATTRIBUTABLE TO THAT FAILURE UNLESS THERE IS CLEAR AND
CONVINCING EVIDENCE TO THE CONTRARY.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. IF YOU MAKE
A FALSE STATEMENT WITH NO REASONABLE BASIS WHICH RESULTS IN NO IMPOSITION OF
BACKUP WITHHOLDING, YOU ARE SUBJECT TO A PENALTY OF $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. WILLFULLY FALSIFYING
CERTIFICATIONS OR AFFIRMATIONS MAY SUBJECT YOU TO CRIMINAL PENALTIES
INCLUDING FINES AND/OR IMPRISONMENT.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE IRS.
64
EXHIBIT (a)(6)
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares. The Offer is made solely by the Offer to Purchase dated
January 31, 1997 and the related Letter of Transmittal and is being made to all
holders of Shares. The Offer is not being made to (nor will tenders be accepted
from or on behalf of) holders of Shares in any jurisdiction in which the making
of the Offer or the acceptance thereof would not be in compliance with the laws
of such jurisdiction. In any jurisdiction where the securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed made on behalf of the Purchaser by Robert W. Baird & Co.
Incorporated or one or more registered brokers or dealers licensed under the
laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
NEW IMAGE INDUSTRIES, INC.
AT
$2.00 NET PER SHARE
BY
IMAGE ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
DENTSPLY INTERNATIONAL INC.
Image Acquisition Corp., a Delaware corporation (the "Purchaser") and a
wholly owned subsidiary of DENTSPLY International Inc., a Delaware corporation
("Parent"), is offering to purchase all outstanding shares of common stock, par
value $.001 per share (the "Shares"), of New Image Industries, Inc., a Delaware
corporation (the "Company"), at $2.00 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set
forth in the Offer to Purchase dated January 31, 1997, and in the related
Letter of Transmittal (which collectively constitute the "Offer").
- - -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, MARCH 3, 1997,
UNLESS THE OFFER IS EXTENDED.
- - -------------------------------------------------------------------------------
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer that number of
Shares which would represent at least 55% of all outstanding Shares as of the
date of commencement of the Offer.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of January 27, 1997 (the "Merger Agreement"), among Parent, the Purchaser
and the Company pursuant to which, following the consummation of the Offer, the
Purchaser will be merged with and into the Company (the "Merger"). On the
effective date of the Merger, each outstanding Share (other than Shares held in
the treasury of the Company or owned by Parent or any direct or indirect
subsidiary of Parent (including the Purchaser)) will be converted into the
right to receive $2.00 in cash, without interest. The Purchaser and Parent have
also entered into stockholder agreements with each executive officer and
director of the Company who, in each case, beneficially owns Shares, and the
William W. Stevens and Virda J. Stevens Trust, a stockholder of the Company,
under which such stockholders have agreed to tender their Shares into the
Offer. As of the date of this notice, such stockholders own approximately 9.8%
of the outstanding Shares.
65
THE BOARD OF DIRECTORS OF THE COMPANY HAS DETERMINED THAT THE OFFER AND
THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS
STOCKHOLDERS, HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY AND UNANIMOUSLY RECOMMENDS THAT ALL HOLDERS
OF SHARES TENDER THEIR SHARES PURSUANT TO THE OFFER.
For purposes of the Offer, the Purchaser shall be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered and not properly
withdrawn as, if and when the Purchaser gives oral or written notice to the
Depositary (as defined in the Offer to Purchase) of the Purchaser's acceptance
for payment of such Shares. Upon the terms and subject to the conditions of the
Offer, payment for Shares purchased pursuant to the Offer will be made by
deposit of the purchase price therefor with the Depositary, which will act as
agent for tendering stockholders for the purpose of receiving payment from the
Purchaser and transmitting payment to stockholders whose Shares have been
accepted for payment. A stockholder desiring to tender such stockholder's
Shares must comply with the terms and conditions set forth in Section 2 of the
Offer to Purchase.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
March 3, 1997, unless and until the Purchaser, in its sole discretion (but
subject to the terms of the Merger Agreement), shall have extended the period
of time during which the Offer is open, in which event the term "Expiration
Date" shall mean the latest time and date on which the Offer, as so extended by
the Purchaser, shall expire. Any extension of the Offer will be followed by a
public announcement thereof no later than 9:00 A.M., New York City time, on the
next business day after the previously scheduled Expiration Date. During any
such extension, all Shares previously tendered and not withdrawn will remain
subject to the Offer, subject to the right of a tendering stockholder to
withdraw such stockholder's Shares.
Except as otherwise provided below, tenders of Shares are irrevocable.
Shares tendered pursuant to the Offer may be withdrawn at any time prior to
12:00 Midnight, New York City time, on March 3, 1997 (or, if the Purchaser
shall have extended the period of time during which the Offer is open, the
latest time and date at which the Offer, as so extended by the Purchaser, shall
expire), and, unless theretofore accepted for payment, may also be withdrawn at
any time after April 1, 1997. For a withdrawal to be effective, a written,
telegraphic or facsimile transmission notice of withdrawal must be timely
received by the Depositary at one of its addresses set forth in the Offer to
Purchase and must specify the name of the person having tendered the Shares to
be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder of the Shares to be withdrawn, if different from the name of
the person who tendered the Shares. If certificates for Shares have been
delivered or otherwise identified to the Depositary, then, prior to the
physical release of such certificates, the serial numbers shown on such
certificates must be submitted to the Depositary and, unless such Shares have
been tendered by any Eligible Institution (as defined in the Offer to
Purchase), the signature on the notice of withdrawal must be guaranteed by an
Eligible Institution. If Shares have been delivered pursuant to the procedures
for book-entry transfer as set forth in the Offer to Purchase, any notice of
withdrawal must also specify the name and number of the account at the
appropriate book-entry transfer facility to be credited with the withdrawn
Shares and otherwise comply with such book-entry transfer facility's
procedures. Withdrawals of tenders of Shares may not be rescinded, and any
Shares properly withdrawn will thereafter be deemed not validly tendered for
purposes of the Offer. However, withdrawn Shares may be retendered by again
following the applicable procedures described in Section 2 of the Offer to
Purchase at any time prior to the Expiration Date.
The Offer to Purchase and the related Letter of Transmittal and other
relevant materials will be mailed to record holders of Shares and furnished to
brokers, dealers, banks, trust companies and similar persons whose names,
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66
or the names of whose nominees, appear on the stockholder lists or, if
applicable, who are listed as participants in a clearing agency's security
position listing, for subsequent transmittal to beneficial owners of Shares. The
Offer to Purchase and Letter of Transmittal contain important information which
should be read before any decision is made with respect to the Offer.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) under
the Securities Exchange Act of 1934, as amended, is contained in the Offer to
Purchase and is incorporated herein by reference.
Any inquiries with respect to the Offer should be directed to Robert W.
Baird & Co. Incorporated, the Dealer Manager for the Offer, or D.F. King & Co.,
Inc., the Information Agent for the Offer, at their respective addresses and
telephone numbers set forth below. Requests for copies of the Offer to
Purchase and the Letter of Transmittal may be directed to D.F. King & Co., Inc.
and copies will be furnished promptly at the Purchaser's expense.
The Dealer Manager for the Offer is: The Information Agent for the Offer is:
Robert W. Baird & Co. Incorporated D.F. King & Co., Inc.
777 E. Wisconsin Avenue 77 Water Street
Milwaukee, Wisconsin 53202 New York, New York 10005-4495
Call Toll-Free (800) 799-5770 Call Toll-Free (800) 758-7358
January 31, 1997
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67
EXHIBIT (a)(7)
DENTSPLY DENTSPLY International
570 West College Avenue
P.O. Box 872
York, PA 17405-0872
(717) 845-7511
Fax (717) 848-3739
News
For further FOR IMMEDIATE RELEASE
information
contact
Edward D. Yates
Senior Vice President and
Chief Financial Officer
(717) 849-4243
DENTSPLY INTERNATIONAL INC. AND NEW IMAGE INDUSTRIES
SIGN MERGER AGREEMENT
York, Pa, -- (Business Wire) -- January 28, 1997. DENTSPLY International Inc.
(Nasdaq- XRAY) and New Image Industries, Inc. today announced that they have
entered into a definitive merger agreement under which DENTSPLY will commence a
cash tender offer for all of the outstanding shares of New Image at a price of
$2.00 per share. New Image, based in Carlsbad, California, designs, develops,
manufactures and distributes intra-oral cameras and computer imaging systems
and related software exclusively to the dental market. New Image's products
include the AcuCam, MultiCam, AcuCam Concept III, Plug N' Play, and Multilink
Video Operatory Network intra-oral camera systems as well as the dental
operatory software programs, Capture-It and Chart-It.
The terms and conditions of DENTSPLY's cash tender offer will be set forth in
the offering documents expected to be filed by February 3, 1997 with the
Securities and Exchange Commission. Conditions to DENTSPLY's purchase of shares
in the offer include the tender of at least 55% of all shares of New Image that
are outstanding as of the commencement of the offer, and expiration of the
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.
Under the merger agreement, which has been approved by the boards of directors
of each company, a newly created subsidiary of DENTSPLY will be merged into New
Image following completion of the tender offer and New Image will become a
wholly owned subsidiary of DENTSPLY. DENTSPLY has also entered into agreements
with certain stockholders of New Image, including its directors and senior
executive officers, and the William W. Stevens and Virda J. Stevens Trust, who
own in the aggregate 10% of New Image's shares outstanding, whereby each has
agreed to tender his or her shares in the offer. The net cash cost to DENTSPLY
of purchasing the outstanding equity of New Image (excluding transaction costs)
is expected to be approximately $11.4 million.
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Commenting on the transaction, John Miles, DENTSPLY's Vice Chairman and Chief
Executive Officer, said, "We are pleased to have signed a merger agreement with
New Image. We believe that New Image's intra-oral cameras and computer imaging
systems for the dental market will fit very well with our product lines." Dewey
Edmunds, Chief Executive Officer of New Image, commented, "We are excited about
becoming a part of DENTSPLY. We believe that this transaction is in the best
interest of all parties associated with New Image and DENTSPLY can provide the
resources and international distribution capabilities that will enable New
Image to grow."
DENTSPLY designs, develops, manufactures and markets a broad range of products
for the dental market. The company believes that it is the world's leading
manufacturer and distributor of artificial teeth, endodontic instruments and
materials, impression materials, prophylaxis paste, dental sealants, ultrasonic
scrapers, and crown and bridge materials; the leading United States
manufacturer and distributor of dental x-ray equipment, dental handpieces,
dental x-ray film holders and film mounts; and a leading United States
distributor of dental cutting instruments and dental implants.
The company distributes its dental products in over 100 countries under some of
the most well-established brand names in the industry. DENTSPLY is committed to
the development of innovative, high quality, cost-effective new products for
the dental market.
69
EXHIBIT (b)(1)
SUBJECT TO THAT CERTAIN SUBORDINATION AND INTERCREDITOR AGREEMENT EXECUTED
BY AND AMONG COAST BUSINESS CREDIT, DENTSPLY INTERNATIONAL INC., AND
NEW IMAGE INDUSTRIES, INC. AND INSIGHT IMAGING SYSTEMS, INC.,
DATED AS OF DECEMBER 24, 1996
=======================================
CREDIT AGREEMENT
DATED AS OF DECEMBER 24, 1996
BETWEEN
NEW IMAGE INDUSTRIES, INC.
AND
INSIGHT IMAGING SYSTEMS, INC.
AS BORROWER,
AND
DENTSPLY INTERNATIONAL INC.
AS LENDER
=======================================
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of December 24, 1996 (the "Agreement"), is
made by and between New Image Industries, Inc., a Delaware corporation, and
Insight Imaging Systems, Inc., a California corporation (together, "Borrower"),
and DENTSPLY International Inc., a Delaware corporation, as Lender ("Lender").
W I T N E S S E T H:
WHEREAS, Lender and Borrower have executed a letter of intent, dated
December 24, 1996, with respect to the acquisition of Borrower by Lender (the
"Letter of Intent");
WHEREAS, Borrower has requested that Lender make available to Borrower a
line of credit of up to an aggregate principal amount of $3,000,000 (the
"Line") and, as a condition precedent to Lender extending such credit, Borrower
has agreed to grant a security interest in favor of Lender in all of its right,
title and interest in, to and under the Collateral as described herein;
WHEREAS, concurrently herewith, Lender is entering into a Subordination
and Intercreditor Agreement with Coast Business Credit, a Division of Southern
Pacific Trust & Loan Association; and
WHEREAS, subject to the terms and conditions set forth herein, Lender
agrees to make the Line available to Borrower;
NOW, THEREFORE, in consideration of the mutual promises contained herein
and for other good and valuable consideration the receipt and sufficiency of
which is hereby acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:
ARTICLE 1 - DEFINITIONS
The following words and terms are used in this Agreement and have the
meanings ascribed to them in this Article 1 or at the locations in the
Agreement indicated below:
"1934 Act" is defined in Article 7.1(h).
"Advance" means any advance to Borrower by Lender under the Line.
"Affiliate" means and refers to, as applied to any Person, any other
Person directly or indirectly controlling, or through one or more Persons
controlled by, controlling or under common control with that Person (whether
through ownership of voting securities, by contract or otherwise).
71
"Agreement" is defined in the introduction to this Agreement.
"Bankruptcy Code" means Title 11 of the United States Code as now or
hereafter in effect, or any successor statute.
"Borrower" is defined in the introduction to this Agreement.
"Borrower Intellectual Property Rights" is defined in Article 5.14.
"Business" means design, manufacture, distribution and sale of intraoral
cameras and computer imaging systems exclusively to the dental marketplace.
"Business Day" means any day other than a Saturday, Sunday or day on which
banking institutions in the Commonwealth of Pennsylvania are authorized by law
or regulation to close.
"Coast" means Coast Business Credit, a Division of Southern Pacific Thrift
& Loan Association.
"Coast Agreement" means that certain Amended and Restated Loan and
Security Agreement, dated as of May 22, 1996, between Coast and Borrower.
"Collateral" means all personal property, rights, interests and privileges
of Borrower including, but not limited to, all accounts, inventory, chattel
paper, contracts, contract rights, documents, equipment, fixtures, general
intangibles, Borrower Intellectual Property Rights (including, but not limited
to, patents, copyrights, trademarks, service marks and applications therefor
and trade secrets and confidential information), goods, instruments, stock
rights, pledged deposits, insurance policies, cash, bank accounts, all customer
lists, credit files, computer files, programs, printouts and other computer
materials and records related to the foregoing, wherever located, whether now
existing or hereafter created or arising, in which Borrower now has or
hereafter acquire any right or interest, and the proceeds, insurance proceeds
and products thereof and documents of title evidencing or issued with respect
thereto, all accessories, substitutions, additions and replacements thereto and
thereof, together with all Liens and security instruments and agreements and
guarantees securing or relating to any of the foregoing, and all rights and
interests of Borrower as a seller of goods or services and rights to returned
or repossessed goods.
"Collection Date" means the date on which Borrower has satisfied and paid
all its Obligations to Lender hereunder and under the Note and Lender is under
no obligation to make Advances hereunder.
"Effective Date" means December 24, 1996.
"Environmental Laws" is defined in Article 5.12.
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72
"Event of Default" is defined in Article 7.
"Financing Statements" means any and all financing statements, amendments
or continuation statements required or appropriate to perfect and keep
perfected any security interest created hereby pursuant to the Uniform
Commercial Code.
"Forbearance Letter" means the letter agreement of even date herewith by
and among Coast, Borrower and Lender.
"Funding Date" means the date on which an Advance is made.
"Funding Request" is defined in Section 2.3(b).
"GAAP" means generally accepted accounting principles as set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board as in effect on the Effective Date or
in such other statements by such other Person as may be approved by a
significant segment of the accounting profession, which are applicable to the
circumstances as of the date of determination and which are applied on a
consistent basis.
"Governmental Entity" means any federal, state or local government or any
court, administrative or regulatory agency or commission or other governmental
authority or agency, domestic or foreign.
"Hazardous Material" is defined in Article 5.14(b).
"Indebtedness" is defined in Article 5.8(b).
"Initial Advance" is defined in Article 2.3.
"Lender" is defined in the introduction to this Agreement.
"Letter of Intent" is defined in the recitals to this Agreement.
"Lien" means any security interest, mortgage, pledge, lien, claim, charge,
encumbrance, title retention agreement in, of or on any Person's Properties in
favor of any other Person.
"Line" means the line of credit made available by Lender to Borrower up to
an aggregate principal amount of $3,000,000.
"Line Interest Rate" is defined in Article 2.2.
"Maximum Available Credit" means three million dollars ($3,000,000) of
principal
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73
outstanding at any time.
"Mercury Partners" means Mercury Partners, LLC, a California limited
liability company.
"Note" is defined in Article 2.3(c).
"Obligations" means the obligation of Borrower to pay the principal and
interest on the Advances in accordance with the terms hereof and the terms of
the Note and to satisfy all other liabilities to Lender hereunder and under the
Note and under any other document, agreement, instrument or certificate,
whether now existing or hereafter incurred, matured or unmatured, direct or
contingent, due or to become due, including any extensions, or renewals thereof
and substitutions therefor.
"Permits" is defined in Article 5.14.
"Permitted Liens" means the items listed on Schedule 5.5 hereto.
"Person" means any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization, joint venture, court
or government or political subdivision or agency thereof.
"Prime Rate" means the prime rate of interest set forth in the Money Rates
Section of the New York edition of the Wall Street Journal, rounded up to the
nearest one-eighth.
"Property" means any interest in any kind of personal property or asset,
whether tangible or intangible.
"Release" is defined in Article 5.14(c).
"SEC Filings" means any and all reports filed made by Borrower with the
Securities and Exchange Commission under the 1934 Act since January 1, 1995.
"Term" means the period commencing on the Effective Date and ending on the
Termination Date.
"Termination Date" means the date on which (i) there is an Event of
Default upon which Lender forthwith declares all principal and interest on the
Note to be immediately due and payable or on which all principal and interest
is immediately due and payable without any declaration by Lender, or (ii) the
date on which a Termination Event occurs.
"Termination Event" means the earliest to occur of (i) the termination of
the Letter of Intent other than by means of the execution and delivery of a
definitive merger agreement as contemplated therein, (ii) the termination of
such definitive merger agreement other than by means
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74
of the consummation of the transactions contemplated therein or (iii) March 25,
1997.
"Uniform Commercial Code" means the Uniform Commercial Code as adopted in
any state having jurisdiction over the Collateral.
"Unmatured Event of Default" means and refers to any event, act or
occurrence which with the passage of time or giving of notice or both would
become an Event of Default.
ARTICLE 2 - LINE OF CREDIT
2.1 Line of Credit Established. Subject to the terms and conditions
hereof, and in reliance on the representations and warranties and covenants
herein, and provided that no Event of Default has occurred and is continuing
(not including any Event of Default which has been waived or is otherwise
subject to a forbearance agreement), commencing on the Effective Date and
expiring on the Termination Date, Lender hereby agrees, from time to time
during the Term, to extend one or more Advances, the aggregate of which at any
one time shall not exceed the Maximum Available Credit. From and after the
Termination Date, Lender shall have no obligation to make Advances.
2.2 Line Interest Rate. Advances shall bear interest on the unpaid
principal balance outstanding at any time from the Funding Date of each such
Advance to maturity (or repayment) at the floating interest rate of four
percent (4%) per annum in excess of the Prime Rate (the "Line Interest Rate")
or such lesser rate permitted by applicable law, if the Line Interest Rate
would violate applicable law. The Line Interest rate shall be changed
automatically on and as of the effective date of each change in the Prime Rate.
Interest shall be calculated on the basis of a 360-day year, but charged for
the actual number of days elapsed.
2.3 Funding Requests.
(a) Upon execution and delivery of this Agreement, subject to the
conditions set forth in Article 4.1, Lender will make an Advance (the "Initial
Advance") to Borrower in the amount of $2,500,000 to pay necessary and
reasonable operating expenses required to keep it operating as a going concern
through the Termination Date.
(b) At any time and from time to time during the Term until the
Termination Date, Borrower may request one or more Advances by submitting to
Lender a completed and executed Funding Request in the form attached hereto as
Schedule 2.3(b) ("Funding Request") no later than 11:00 a.m., Eastern Time, one
(1) day prior to the proposed Funding Date. Each Funding Request shall specify
(i) the proposed Funding Date (which shall be a Business Day), (ii) the amount
of the proposed Advance, and (iii) a detailed schedule of Borrower's proposed
use of the Advance. Subject to the provisions of Section 2 hereof and Lender's
approval of the Funding
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75
Request, Lender shall make the Advance requested on the proposed Funding Date
in accordance with Borrower's Funding Requests.
(c) Lender agrees that it shall approve the Advance set forth in a
Funding Request if the Advance requested thereby is to be used to pay necessary
and reasonable operating expenses of the Business required to keep it operating
as a going concern through the Termination Date including, without limitation,
accounts payable which are due as of the date of such request. Lender shall not
be required to, but in its sole and absolute discretion may, advance funds to
be used by Borrower for any other purpose related to the operation of the
Business. The Initial Advance and each subsequent Advance shall be evidenced
by the Note in the form attached hereto as Schedule 2.3(c). No third party is
intended to be a beneficiary of this provision (or of any other provision of
this Agreement).
2.4 Maximum Available Credit. The aggregate amount of principal which
Borrower may have outstanding under the Line at any time shall not exceed the
Maximum Available Credit. Borrower agrees, without notice or demand,
immediately to repay, any principal balance of the Line in excess of the
Maximum Available Credit.
2.5 Principal and Interest Payments.
(a) Interest shall accrue on the principal balance outstanding under
the Line at the Line Interest Rate. All unpaid principal on the Line and all
interest accrued but unpaid thereon shall be paid in full by Borrower on March
25, 1997 (or as otherwise provided herein or in the Note). Prior to the
Termination Date, accrued interest shall be calculated monthly and capitalized,
and constitute outstanding principal but such capitalized interest shall not be
considered principal for purposes of determining the Maximum Available Credit.
(b) Without in any way limiting Lender's rights and remedies hereunder
and under the Note in the case of Events of Default, any principal payments on
the Line not paid when due and, to the extent permitted by applicable law, any
interest payment on the Line not paid when due, and any other amount due to
Lender under this Agreement not paid when due, shall thereafter bear interest
payable upon demand at a rate which is three percent (3%) per annum in excess
of the applicable Line Interest Rate.
(c) Borrower may prepay the Advances, in whole or in part from time to
time, without penalty.
ARTICLE 3 - SECURITY
3.1 Grant of Security Interests. To secure the prompt and complete payment
when due of all of its Obligations and the performance by Borrower of all of
the covenants and obligations to be performed by it pursuant to this Agreement,
Borrower hereby assigns and pledges to Lender
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76
and grants to Lender a security interest in and lien on all of Borrower's
right, title and interest in and to all of the Collateral, wherever located,
whether now owned or existing or hereafter arising or acquired.
3.2 Continuing Liability of Borrower. The security interests described
above are granted as security only and shall not subject Lender, or transfer or
in way affect or modify, any obligation or liability of Borrower with respect
to, any of the Collateral or any transaction in connection therewith. Lender
shall not be required or obligated in any manner to make any inquiry as to the
nature or sufficiency of any payment received by it or the sufficiency of any
performance by any party under any such obligation, or to make any payment or
present or file any claim, or to take any action to collect or enforce any
performance or the payment of any amount thereunder to which any such Person
may be entitled at any time.
3.3 Filings; Further Assurances. Borrower will, from time to time, at its
expense and in such manner and form as Lender may reasonably require, execute,
deliver, file and record Financing Statements and any other statements,
continuation statement, specific assignment or other instrument or document and
take any other action that may be necessary or desirable, to create, preserve,
perfect or validate the security interests created hereunder or to enable
Lender to exercise and enforce its rights hereunder with respect to any of the
Collateral.
3.4 Power of Attorney. Borrower hereby authorizes Lender, and gives Lender
its irrevocable power of attorney (which authorization is coupled with an
interest), in the name of Borrower or otherwise, to execute, deliver, file and
record any financing statement, continuation statement, specific assignment or
other paper and to take any other action that Lender in its sole discretion may
deem necessary or appropriate to further perfect the security interests created
hereby. Borrower agrees that a carbon, photographic, photostatic, or other
reproduction of this Agreement or of a financing statement is sufficient as a
financing statement where permitted by applicable law.
3.5 Place of Business; Change of Name. As of the Effective Date, the chief
executive office of the Borrower and its chief place of business, the locations
of the Collateral and the location where it maintains all records relating to
the Collateral are listed on Schedule 3.5 hereto. Borrower will not (x) change
its principal place of business or chief executive office from the location
listed on such Schedule, (y) change its name, identity or corporate structure
or (z) change the location of the Collateral or its records relating to the
Collateral from those specified on Schedule 3.5 hereto, unless in any such
event Borrower shall have given Lender at least sixty (60) days' (or such
shorter period to which Lender may consent in writing) prior written notice
thereof and shall have taken all action necessary or reasonably requested
(including without limitation appropriate opinions of counsel) by Lender to
amend its existing financing statements and continuation statements so that
they are not misleading and to file additional financing statements in all
applicable jurisdictions to perfect the security interests of Lender in all of
the Collateral.
3.6 Maintenance of Collateral. If Borrower fails to do so, Lender may, at
its option,
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77
pay and discharge taxes, liens, security interests and other encumbrances
pertaining to the Collateral (except Permitted Liens), and may pay for the
maintenance and preservation of the Collateral to prevent a material
deterioration from its present condition and for insurance thereon in order to
keep the Collateral in salable condition. Borrower agrees to reimburse Lender
promptly after notice thereof for any payment so made.
ARTICLE 4 - CONDITIONS OF ADVANCES
The performance by Lender of its obligations hereunder are subject to the
following conditions precedent:
4.1 Closing. On the Effective Date Borrower shall deliver or cause to be
delivered to Lender, in form and substance satisfactory to Lender and its
counsel, in addition to this Agreement, the following documents and instruments
and the following conditions shall have been satisfied:
(a) Coast shall have purchased the Senior Subordinated Secured
Promissory Note, dated May 24, 1996, payable to Mercury Partners in the amount
of $500,000 and Mercury shall have assigned to Coast its rights under the
Trademark Security Agreement and Patent Security Agreement each dated May 24,
1996.
(b) Borrower shall have delivered to Lender a copy of the resolutions
of Borrower's Board of Directors, certified as of the Effective Date by the
Secretary of Borrower, with respect to the authorization, execution, delivery
and performance of this Agreement by Borrower;
(c) Borrower shall have delivered to Lender a certificate dated as of
the Effective Date as to the incumbency and signature of the President of
Borrower and/or any other authorized officer signing this Agreement or
authorized to execute and deliver the Note on behalf of Borrower;
(d) Borrower shall have executed and delivered the Note to Lender;
(e) Borrower shall have delivered to Lender appropriate Financing
Statements covering the Collateral, duly executed by Borrower for each
jurisdiction as Lender shall have specified, and security agreements and such
other documents and statements, duly executed by Borrower, as may be required
to perfect a security interest in the Collateral;
(f) Borrower shall have fulfilled and complied in all respects with
each and every obligation, covenant, term and condition of this Agreement which
are then required to be fulfilled and complied with by it;
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78
(g) Counsel to Borrower shall have delivered to Lender an opinion in
form and substance satisfactory to Lender;
(h) Borrower shall have delivered to Lender a certificate of good
standing from its state of incorporation and every jurisdiction in which
Borrower is required to be qualified as a foreign corporation to transact
business;
(i) The Forbearance Letter in form and substance satisfactory to
Lender shall have been executed and delivered to Lender.
4.2 Advances. The agreement of Lender to make any Advances after the
Effective Date hereunder is subject to satisfaction of the following conditions
precedent:
(a) Lender shall have timely received a Funding Request as required
under Article 2.3 hereof;
(b) Borrower shall have delivered to Lender a certificate, dated as of
the date of the Advance, of the President and Chief Financial Officer of
Borrower certifying compliance with all covenants and agreements herein then
required to be or to have been complied with by it, the absence of any Event of
Default which has occurred and is continuing (not including any Event of
Default which has been waived or is otherwise subject to a forbearance
agreement) and the truth of all representations and warranties herein with the
same effect as though made on and as of such date, except to the extent such
representations and warranties specifically relate to an earlier date; and
(d) There shall have been no material adverse change in the business,
financial condition, results or operations of Borrower since the Effective Date
and the Borrower shall have delivered to Lender a certificate to such effect,
dated the date of the Advance, executed on behalf of Borrower by its President
and Chief Financial Officer.
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF BORROWER
Except as disclosed in a document referring specifically to the
representations and warranties in this Agreement which reasonably identifies an
exception to a representation and warranty in this Agreement and which is
delivered by Borrower to Lender prior to the execution of this Agreement (the
"Borrower Disclosure Schedule"), Borrower represents and warrants to Lender as
of the Effective Date and the date of each Advance:
5.1 Due Incorporation and Good Standing. Borrower is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation. Borrower is duly qualified to do business as a
foreign corporation and is in good standing in every jurisdiction in which the
nature of its business requires it to be so qualified or where the ownership
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79
of its properties or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified would not materially
adversely affect the Business or the enforceability of this Agreement or the
Note or the ability of Borrower to perform its Obligations hereunder.
5.2 Due Authorization and No Conflict. The execution, delivery and
performance by Borrower of this Agreement and the transactions contemplated
hereby, including the Note and security interests contemplated hereunder, are
within Borrower's corporate powers, have been duly authorized by all necessary
corporate action, do not contravene Borrower's certificate of incorporation or
by-laws, any law, rule or regulation applicable to Borrower, any contractual
restriction contained in any indenture, loan or credit agreement, lease,
mortgage, security agreement, bond, note, or other agreement or instrument
binding on or affecting Borrower or its property or any order, writ, judgment,
award, injunction or decree binding on or affecting Borrower or its property.
This Agreement has been duly executed and delivered on behalf of Borrower.
5.3 Government and Other Consents. Except for (i) the filing of Financing
Statements required to perfect the security interests granted hereunder, or
(ii) the consent of Coast, which consent has been obtained, no authorization,
consent, approval or other action by, and no registration, qualification,
designation, declaration, notice to or filing with, any governmental authority
or other Person is or will be necessary in connection with the execution and
delivery of this Agreement or any of the other documents contemplated hereby,
the consummation of the transactions herein contemplated, or performance of or
compliance with the terms and conditions hereof, to ensure the legality,
validity or enforceability hereof.
5.4 Enforceability. This Agreement has been validly executed and delivered
by Borrower and constitutes the legal, valid and binding obligation of Borrower
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency or similar laws relating to or affecting
creditors' rights generally and by equitable principles.
5.5 Priority of Liens. Other than Permitted Liens listed on Schedule 5.5
hereto, Borrower owns the Collateral free and clear of all Liens subject to the
rights and interests granted Lender herein, and upon perfection of Lender's
security interest in the Collateral, Lender will have a security interest in
and lien on the Collateral superior in right of preference to all other Liens
other than Permitted Liens.
5.6 Financial Statements. The Financial Statements of Borrower contained
in the SEC Filings are true, complete and correct in all material respects,
have been prepared in accordance with GAAP, consistently applied, and present
fairly the financial condition of Borrower as of said dates and the results of
Borrower's operations for the periods then ended.
5.7 No Litigation. Other than as disclosed in the SEC Filings, there are
no actions, suits or proceedings at law or in equity or by or before any
governmental authority now pending or, to the knowledge of Borrower, threatened
against or affecting Borrower or any property or
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rights of Borrower which purport to challenge the legality, validity or
enforceability of this Agreement or which may materially impair the ability of
Borrower to carry on business substantially as now being conducted or which may
materially and adversely affect the condition (financial or otherwise),
operations or properties of Borrower.
5.8 Contracts; Indebtedness.
(a) True, complete and correct copies of all material contracts and
agreements of Borrower have heretofore been furnished or made available to
Lender. Other than as set forth in Schedule 5.8(a), all such material contracts
and agreements are in full force and effect and enforceable in accordance with
their respective terms, and, to Borrower's knowledge, the parties thereto other
than Borrower have complied, and are complying, with all of their material
obligations and are not in material violation or default under (nor does there
exist any condition which upon the passage of time or the giving of notice
would cause such a material violation of or default under) any of such material
contracts or agreements. Other than as set forth in Schedule 5.8(a), Borrower
is not in violation of or in default under (nor does there exist any condition
which upon the passage of time or the giving of notice would cause such a
violation of or default under) any material contract to which it is a party or
by which it or any of its properties or assets is bound. For purposes of this
Agreement, "material contract" means any material contract, whether or not made
within the ordinary course of business, within the meaning of Item 601 (10) of
Regulation S-K under the Securities Act of 1933, as amended, or which is
described in the SEC Filings.
(b) True, complete and correct copies of all loan or credit
agreements, notes, bonds, mortgages, indentures and other agreements and
instruments pursuant to which any Indebtedness of Borrower is outstanding or
may be incurred have heretofore been furnished to or made available to Lender.
"Indebtedness" shall mean, with respect to any person, without duplication, (a)
all obligations of such person for borrowed money, or with respect to deposits
or advances of any kind to such person, (b) all obligations of such person
evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such person upon which interest charges are customarily paid,
(d) all obligations of such person under conditional sale or other title
retention agreements relating to property purchased by such person, (e) all
obligations of such person issued or assumed as the deferred purchase price of
property or services (excluding obligations of such person to creditors for raw
materials, inventory, services and supplies incurred in the ordinary course of
such person's business), (f) all capitalized lease obligations of such person,
(g) all obligations of others secured by any lien on property or assets owned
or acquired by such person, whether or not the obligations secured thereby have
been assumed, (h) all obligations of such person under interest rate or
currency hedging transactions (valued at the termination value thereof), (i)
all letters of credit issued for the account of such person and (j) all
guarantees and arrangements having the economic effect of a guarantee of such
person of any indebtedness of any other person.
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5.9 Accuracy of Information. All certificates, reports, financial
statements and similar writings furnished by or on behalf of Borrower to Lender
at any time pursuant to any requirement of, or in response to any written
request of Lender or its agents under, this Agreement or any transaction
contemplated hereby, have been, and all such certificates, reports, financial
statements and similar writings hereafter furnished by Borrower to Lender will
be, true, complete and accurate in every respect material to the transactions
contemplated hereby on the date as of which any such certificate, report,
financial statement or similar writing was or will be delivered, and taken as a
whole, as of such date of delivery, such materials shall not omit to state any
material facts or any facts necessary to make the statements contained therein
not materially misleading.
5.10 Margin Regulations. Borrower is not engaged, principally or as one of
its important activities, in the business of extending credit for the purpose
of "purchasing" or "carrying" any "margin stock" (as each of the quoted terms
is defined or used in Regulation G, T, U or X). No part of the proceeds of any
of the Advances will be used for so purchasing or carrying margin stock or for
any purpose which violates, or which would be inconsistent with, the provisions
of Regulation G, T, U or X.
5.11 Taxes. Other than as disclosed in Schedule 5.11, Borrower has filed
or caused to be filed all federal, state and local tax returns which are
required to be filed by it, and has paid or caused to be paid all taxes shown
to be due and payable on such returns or on any assessments received by it,
other than any taxes or assessments, the validity of which are being contested
in good faith by appropriate proceedings and with respect to which the Borrower
has set aside adequate reserves on its books in accordance with GAAP.
5.12 ERISA. Other than as disclosed in Schedule 5.12, Borrower does not
currently maintain or contribute to, nor has it ever maintained or contributed
to, any "employee benefit plan," as such term is defined in Section 3 of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), with
respect to which the Company is required to file Internal Revenue Service Form
5500, and the Company does not currently contribute to, nor has it ever
contributed to, any "multiemployer plan," as that term is defined in Section 3
of ERISA.
5.13 Compliance with Applicable Laws.
(a) Borrower has in effect all federal, state, local and foreign
governmental approvals, authorizations, certificates, filings, franchises,
licenses, notices, permits and rights ("Permits") necessary for it to own,
lease or operate its properties and assets and to carry on its business as now
conducted, and there has occurred no material default under any such Permit.
Borrower is in material compliance with all applicable statutes, laws,
ordinances, rules, orders and regulations of any Governmental Entity.
(b) Borrower is, and has been, in material compliance with all
applicable "Environmental Laws". The term "Environmental Laws" means any
federal, state or local statute, code, ordinance, rule, regulation, policy,
guideline, permit, consent, approval, license, judgment,
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order, writ, decree, directive, injunction or other authorization, including
the requirement to register underground storage tanks, relating to: (i)
"Releases" (as defined below) or threatened Releases of "Hazardous Material"
(as defined below) into the environment, including into ambient air, soil,
sediments, land surface or subsurface, buildings or facilities, surface water,
groundwater, publicly-owned treatment works, septic systems or land; or (ii)
the generation, treatment, storage, disposal, use, handling, manufacturing,
transportation or shipment of Hazardous Material.
(c) During the period of ownership or operation by Borrower of any of
its current or previously owned or leased properties, there have been no
Releases of Hazardous Material in, on, under or affecting such properties or
any surrounding site, and Borrower has not disposed of any Hazardous Material
or any other substance in a manner that could reasonably be anticipated to lead
to a Release. To the best of the Borrower's knowledge, prior to the period of
ownership or operation by Borrower of any of its current or previously owned or
leased properties, no Hazardous Material was generated, treated, stored,
disposed of, used, handled or manufactured at, or transported, shipped or
disposed of from, such current or previously owned properties, and there were
no Releases of Hazardous Material in, on, under or affecting any such property
or any surrounding site. The term "Release" has the meaning set forth in 42
U.S.C. Section 9601(22). The term "Hazardous Material" means (i) hazardous
materials, pollutants, contaminants, constituents, medical or infectious
wastes, hazardous wastes and hazardous substances as those terms are defined in
the following statutes and their implementing regulations: the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801 et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq., the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended by the Superfund Amendments and Reauthorization Act, 42 U.S.C. Section
9601 et seq., the Clean Water Act, 33 U.S.C. Section 1251 et seq., the Toxic
Substances Control Act, 15 U.S.C. Section 2601 et seq. and the Clean Air Act,
42 U.S.C. Section 7401 et seq., (ii) petroleum, including crude oil and any
fractions thereof, (iii) natural gas, synthetic gas and any mixtures thereof,
(iv) asbestos and/or asbestos-containing material, (v) radon and (vi) PCBs, or
materials or fluids containing PCBs.
5.14 Intellectual Property Matters. Except as set forth in Schedule 5.14
or in the SEC Filings, (i) Borrower owns or has the right to use, free and
clear of all Liens, charges, claims and restrictions, all know-how, processes,
patents, patent applications, trade secrets, confidential information,
trademarks and service marks (and registrations and applications therefor),
trade names, copyrights (and registrations and applications therefor),
licenses, proprietary rights and other rights and information materially
necessary to its business as heretofore or now conducted or under development
(the "Borrower Intellectual Property Rights"), (ii) there is no litigation,
threatened or pending, related to the Borrower Intellectual Property Rights,
and (iii) the Borrower Intellectual Property have been properly maintained and
are valid and subsisting. Borrower is not infringing upon or otherwise acting
adversely to any actual or claimed know-how, process, patent, trade secret,
trademark, service mark, trade name, copyright, information, proprietary right
or other right of any person. There are no outstanding options, licenses or
agreements of any kind relating to any Borrower Intellectual Property Rights in
favor of any third party (other than license agreements on Borrower's standard
form entered into in the ordinary course of business).
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Borrower has not received any communications alleging that Borrower has
violated or, by conducting its business as now conducted or currently proposed
to be conducted by Borrower, would violate any patent, trade secret, trademark,
service mark, trade name, copyright, license, information, proprietary right or
other right of any other person or entity, and, to the best of Borrower's
knowledge, there is no basis for any such allegation. Borrower has taken
reasonable steps to protect its trade secrets and confidential information.
Other than as set forth in the SEC Filings, there is no actual or threatened
infringement or adverse use of Borrower's rights to or in any material
know-how, processes, trade secrets, trademarks, service marks, trade names,
copyrights, licenses, information, proprietary rights or other material rights
of Borrower. To the best of Borrower's knowledge, neither the execution nor
delivery of this Agreement, nor the carrying on of Borrower's business as now
conducted or under development by Borrower, will conflict with or result in a
material breach of the terms, conditions or provisions of, or constitute a
material default under or a material violation of, any fiduciary duty or any
contract, covenant or instrument under which any of Borrower's employees is now
obligated.
ARTICLE 6 - COVENANTS OF BORROWER
6.1 Affirmative Covenants. From the Effective Date until the Collection
Date, Borrower will, unless Lender shall otherwise consent in writing:
(a) Use of Proceeds. Use the proceeds of the Advances (i) as to the
Initial Advance, to pay necessary and reasonable operating expenses required to
keep it operating as a going concern through the Termination Date, and (ii) as
to any subsequent Advance, only for the purposes set forth in the applicable
Funding Request. Borrower shall deposit the proceeds of the Initial Advance and
any subsequent Advance at the bank, and in the account, set forth on Schedule
6.1(a) (the "Borrower Bank Account"). Borrower shall maintain the proceeds of
the Initial Advance and any subsequent Advance in the Borrower Bank Account
until such time as such proceeds are utilized in accordance with the purposes
set forth herein or in the applicable Funding Request, as the case may be.
(b) Compliance with Laws, Etc. Comply in all material respects with
all applicable laws, rules, regulations and orders with respect to it, its
business and properties.
(c) Preservation of Corporate Existence. Preserve and maintain its
corporate existence, rights, franchises and privileges in the jurisdiction of
its incorporation, and qualify and remain qualified in good standing as a
foreign corporation in each jurisdiction where the nature of its business
requires it to be so qualified or where the ownership of its properties or the
nature of its activities makes such qualification necessary, except where the
failure to be so qualified would not materially adversely affect the
enforceability of this Agreement and any Note, the business, properties,
operations, profits or condition (financial or otherwise) of Borrower or the
ability of Borrower to perform its obligations hereunder.
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(d) Keeping of Records and Books of Account. Maintain and implement
administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing accounts receivable in the event of the
destruction of the originals thereof) and keep and maintain, all documents,
books, records and other information reasonably necessary or advisable for the
collection of all accounts receivable (including, without limitation, records
adequate to permit the daily identification of all collections of and
adjustments to each account).
(e) Location of Records. Keep its chief place of business and chief
executive office, and the offices where it keeps the records, at the address of
Borrower referred to in Schedule 3.5 hereto and notify lender 60 days in
advance prior to a change of Borrower's principal executive office or in the
location of any Collateral.
(f) Accounts. Collect its accounts and sell its inventory only in the
ordinary course of business.
(g) Maintenance of Properties. Maintain its inventory, equipment, real
estate and other properties, whether owned or leased, in good condition and
repair (normal wear and tear excepted), and will pay and discharge or cause to
be paid and discharged, when due, the cost of repairs to or maintenance of the
same.
(h) Insurance. Insure and keep insured with reputable insurance
companies so much of its properties as presently maintained by Borrower.
(i) Taxes. File or cause to be filed all federal, state and local tax
returns which are required to be filed by it. Borrower shall pay or cause to be
paid all taxes shown to be due and payable on such returns or on any
assessments received by it, other than any taxes or assessments, the validity
of which are being contested in good faith by appropriate proceedings and with
respect to which Borrower shall have set aside adequate reserves on its books
in accordance with GAAP and which proceedings could not reasonably be expected
to have a material adverse effect on the ability of the Borrower to perform its
obligations hereunder.
(j) Reporting Requirements of Borrower. From the Effective Date until
the Collection Date, will furnish to Lender:
(i) as soon as available and in any event within 30 days after the
end of each fiscal quarter of Borrower, balance sheets of Borrower as of the
end of such quarter, and (to the extent available) statements of income and
retained earnings of Borrower for the period commencing at the end of the
previous fiscal quarter and ending with the end of such quarter, certified by
the chief financial officer, chief accounting officer or treasurer of Borrower;
(ii) as soon as possible and in any event within five Business Days
after the occurrence of each Event of Default or Unmatured Event of Default,
the statement of the chief financial officer, chief accounting officer or
treasurer of Borrower setting forth details of such
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Event of Default or Unmatured Event of Default and the action which the
Borrower proposes to make with respect thereto;
(iii) promptly from time to time, such other information,
documents, records or reports respecting the accounts or the conditions or
operations, financial or otherwise, of Borrower as Lender may from time to time
reasonably request in order to protect the interests of Lender under or as
contemplated by this Agreement.
(k) Performance of Obligations. Perform, pay and discharge, as and
when due, all of Borrower's obligations (both monetary and non-monetary) (i)
under this Agreement; and (ii) under any agreement that encumbers any part of
the Collateral if (as to ii) the failure to do so could result in a material
adverse effect on the properties, operations, profits or condition (financial
or otherwise) of Borrower.
(l) Material Adverse Changes. Immediately notify Lender of (i) the
occurrence or likely occurrence of any event which causes or could reasonably
be expected to cause (A) a material adverse effect on the properties,
operations, prospects, profits or condition (financial or otherwise) of
Borrower; (B) any representation, warranty made by Borrower hereunder to be
untrue, incomplete or misleading in any material respect; or (C) the occurrence
of any other Event of Default or Unmatured Event of Default hereunder or of any
other development, financial or otherwise, which might reasonably be expected
to materially adversely affect its Business, properties or affairs or the
ability of Borrower to repay the Obligations; (ii) the institution of, or the
issuance of any order, judgment, decree or other process in, any litigation,
investigation, prosecution, proceeding or other action by any governmental
authority or other Person against Borrower or related to the Business and that
does, or could reasonably be expected to, have a material adverse effect on the
properties, operations, profits or condition (financial or otherwise) of
Borrower; (iii) any material casualty to any property of Borrower, whether or
not insured; and (iv) any change of Borrower's directors.
(m) Business. Maintain the general character of Borrower's Business in
which it is engaged as of the Effective Date.
(n) Patents. As soon as practicable following the execution of this
Agreement, shall pay the maintenance fees with respect to, and take all other
necessary action to revive, U.S. Patent No.5,124,797. Borrower shall take all
necessary action to maintain the effectiveness of all patents owned by Borrower
or used or to be used in the Business.
(o) Indemnification. Borrower hereby indemnifies and agrees to
protect, defend and hold harmless Lender and Lender's directors, officers,
employees, agents, attorneys and shareholders from and against any and all
losses, damages, expenses or liabilities of any kind or nature from any suits,
claims, or demands, including counsel fees incurred in evaluating or defending
any such claim, suffered by any of them and caused by, relating to, arising out
of, resulting from, or in any way connected with this Agreement or the Note and
any transaction
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contemplated therein. If Borrower shall have knowledge of any claim or
liability hereby indemnified against, it shall promptly give written notice
thereof to Lender. Lender shall promptly give Borrower written notice of all
suits or actions instituted against Lender, and Borrower shall timely proceed
to defend any such suit or action. Lender shall also have the right, at the
expense of Borrower, to participate in, or at Lender's election, assume the
defense or prosecution of such suit, action or proceeding, and in the latter
event Borrower may employ counsel and participate therein. Lender shall have
the right to adjust, settle, or compromise any claim, suit, or judgment. The
right of Lender to indemnification under this Agreement shall extend to any
money paid by Lender in settlement or compromise of any such claims, suits, and
judgments in good faith. THIS COVENANT SHALL SURVIVE PAYMENT OF THE OBLIGATIONS
AND THE TERMINATION OR SATISFACTION OF THIS AGREEMENT.
6.2 Negative Covenants. From the Effective Date until the Collection Date,
Borrower will not, without the written consent of Lender:
(a) Debts, Liens and Encumbrances. Create, assume or permit to exist
any mortgage, lien, pledge, charge, security interest or other encumbrance upon
any of the Collateral, or any of its other properties or assets, whether now
owned or hereafter acquired other than (i) security interests with respect to
money borrowed from Lender; and (ii) Permitted Liens.
(b) Transfer of Collateral. Other than with respect to Permitted
Liens, transfers between the entities constituting Borrower and sales of assets
in the ordinary course of business, sell, enter into an agreement of sale for,
convey, lease, assign, transfer, pledge, grant a security interest, mortgage or
lien in, or otherwise dispose of the Collateral or its assets.
(c) Stock, Merger, Consolidation, Etc. Sell any shares of any class of
its capital stock to any Person other than Lender or consolidate with or merge
into or with any Person other than Lender, or purchase or otherwise acquire all
or substantially all of the assets or capital stock, or other ownership
interest of, any Person or sell, transfer, lease or otherwise dispose of all or
substantially all of its assets to any Person other than Lender, or enter into
any agreement or make any public announcement with respect to any of the
foregoing, except for the conveyances of a security interest in favor of Lender
as expressly permitted under the terms of this Agreement.
(d) Change in Corporate Name. Make any change to its corporate name or
use any trade name, fictitious names, assumed names or "doing business as"
names.
(e) Guarantees. Other than cross-guarantees between the entities
constituting Borrower, guarantee, endorse or otherwise be or become
contingently liable (including by agreement to maintain balance sheet tests) in
connection with the obligations of any other Person, except endorsements of
negotiable instruments for collection in the ordinary course of business and
reimbursement or indemnification obligations in favor of Lender as provided for
under this Agreement.
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(f) Limitation on Transactions with Affiliates. Other than
transactions between the entities constituting Borrower or transactions at
arms' length in the ordinary course of business, enter into, or be a party to,
any transaction with any Affiliate.
(g) Charter and By-Laws. Amend or otherwise modify its certificate of
incorporation or by-laws in any manner.
(h) Limitation on Investments. Other than investments between the
entities constituting Borrower, make or suffer to exist any loans or advances
to, or extend any credit to, or make any investments (by way of transfer of
property, contributions to capital, purchase of stock or securities or
evidences of indebtedness, acquisition of the business or assets, or otherwise)
in, any Affiliate or any other Person.
(i) Capital Expenditures. Expend, or be committed to expend, in excess
of $50,000 in the acquisition of fixed assets from the Effective Date until the
Collection Date.
(j) Licenses and Government Approvals. Fail to maintain in full force
and effect or fail to be in material compliance with (or permit its officers,
directors or shareholders to fail to maintain or fail to be in material
compliance with) any permit or license necessary or desirable in connection
with Borrower or the Business.
(k) Ordinary Course. Alter or amend any material provision of, or
terminate or permit termination of any agreement integral or necessary to the
Business, or in any manner conduct the Business other than in ordinary course.
(l) Indebtedness. Incur, create, assume, or permit to exist any
indebtedness except (i) the indebtedness under this Agreement and the Note,
(ii) the indebtedness existing on the dates shown on Schedule 6.2 hereto and
(iii) as between the entities constituting Borrower.
ARTICLE 7 - DEFAULT
7.1 Events of Default. The occurrence of any one or more of the following
events, conditions or state of affairs shall constitute an Event of Default
hereunder and under the Note:
(a) Borrower shall fail to pay as and when due any principal or
interest hereunder or under the Note, or use the proceeds of the Advances in
violation of Article 6.1(a);
(b) Borrower shall fail to observe or perform any Obligation or any
covenant to be observed or performed by it hereunder or under the Note or in
any other agreement between Lender and Borrower;
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(c) Borrower shall default after the date hereof in the payment or
performance of any material obligation or material Indebtedness to another
Person whether now existing or hereafter incurred including, without
limitation, any event of default as defined in the Coast Agreement which is not
then subject to Coast's forbearance under the terms of the Forbearance Letter;
(d) Any material statement, certificate, report, representation or
warranty made or furnished by Borrower in this Agreement or in compliance with
the provisions hereof shall prove to have been false or misleading in any
material respect at the time when made, deemed made or furnished;
(e) (i) Any money judgment, writ or warrant of attachment or similar
process involving an amount in excess of U.S. $50,000 shall be entered or filed
against Borrower or any of its assets or properties and shall remain
undischarged for a period of 30 days, or (ii) any judgment or order of any
court or administrative agency awarding damages under the federal securities
laws or in any action seeking reimbursement, indemnification or contribution
with respect to payment of any such claim;
(f) Borrower shall (i) apply for or consent to the appointment of a
receiver, trustee or liquidator of itself or of its property, (ii) be unable,
or admit in writing inability, to pay its debts as they mature, (iii) make a
general assignment for the benefit of creditors, (iv) be adjudicated a bankrupt
or insolvent, (v) file a voluntary petition in bankruptcy, or a petition or
answer seeking reorganization or an arrangement with creditors to take
advantage of any insolvency law, or an answer admitting the material
allegations of a bankruptcy, reorganization or insolvency petition filed
against it, (vi) take corporate action for the purpose of effecting any of the
foregoing, or (vii) have an order for relief entered against it in any
proceeding under the United States Bankruptcy Code;
(g) An order, judgment or decree shall be entered, without the
application, approval or consent of Borrower by any court of competent
jurisdiction, approving a petition seeking reorganization of Borrower or
appointing a receiver, trustee or liquidator of Borrower or of all or a
substantial part of its assets, and such order, judgment or decree shall
continue unstayed and in effect for any period of 30 consecutive days;
(h) If (i) any person or group within the meaning of Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended (the "1934 Act") and the
rules and regulations promulgated thereunder other than Lender shall have
acquired beneficial ownership (within the meaning of Rule 13d-3 of the 1934
Act), directly or indirectly, of securities of the Company (or other securities
convertible into such securities) representing twenty percent (20%) of the
combined voting power of all securities of the Company entitled to vote in the
election of directors (hereinafter called a "Controlling Person"); or (ii) a
majority of the Board of Directors of the Company shall cease for any reason to
consist of (A) individuals who on December 10, 1996 were serving as directors of
the Company and (B) individuals who subsequently become members of the Board if
such individuals' nomination for election or election to the Board is
recommended or approved by a majority of the
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Board of Directors of the Company. For purposes of clause (i) above, a person
or group shall not be a Controlling Person if such person or group holds voting
power in good faith and not for the purpose of circumventing this Section
7.1(h) as an agent, bank, broker, nominee, trustee, or holder of revocable
proxies given in response to a solicitation pursuant to the 1934 Act, for one
or more beneficial owners who do not individually, or, if they are a group
acting in concert, as a group have the voting power specified in clause (i);
(i) This Agreement shall cease for any reason to be in full force and
effect or shall be declared to be null and void or unenforceable in whole or in
part;
(j) There shall occur any material adverse change in the business,
properties, operations or condition (financial or otherwise) of Borrower;
(k) Other than Permitted Liens or Liens in favor of Lender or Liens
otherwise consented to in writing by Lender, imposition of any Lien or series
of Liens against Borrower or any of the Collateral whether by operation of law
or by consent except where the result of such Lien does not have a material
adverse effect on the properties, operations, profits or condition (financial
or otherwise) of Borrower; or
(l) Borrower shall cease to conduct its Business substantially as it
is conducted as of the Effective Date, or Borrower shall change the nature of
its Business.
7.2 Remedies on Default. Upon the occurrence of an Event of Default:
(a) In addition to the rights specifically granted hereunder or now or
hereafter existing in equity, at law, by virtue of statute or otherwise (each
of which rights may be exercised at any time and from time to time), Lender may
at its election forthwith declare all principal and interest to be immediately
due and payable, without protest, demand or other notice (which are hereby
expressly waived by Borrower). Upon the occurrence of an Event of Default
specified in Article 7.1(f) or (g) above, all obligations, including all
principal and interest, shall be immediately due and payable without any
declaration by Lender.
(b) Lender shall have all the rights of a secured creditor under the
Uniform Commercial Code.
(c) Borrower will pay, as part of the Obligations secured hereunder,
Lender's administrative fees and all other amounts (including but not limited
to Lender's attorneys' and other professional fees) paid by Lender: (i) for
taxes, levies and insurance on, or maintenance of, the Collateral; and (ii) in
taking possession of, disposing of, or preserving such Collateral.
(d) Borrower hereby designates and appoints Lender and its designees
or agents as attorneys-in-fact of Borrower upon the occurrence and continuation
of an Event of Default, irrevocably and with power of substitution, with
authority to sign Borrower's name on any
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Financing Statements relating to the Collateral; to endorse the name of
Borrower on any notes, acceptances, checks, drafts, money orders or other
evidence of payment or proceeds of the Collateral that come into Lender's
possession; to sign the name of Borrower on any invoices, documents, drafts
against and notices to account debtors of Borrower, assignments and request for
verification of accounts; to execute proofs of claim and loss; to execute any
endorsements, assignments or other instruments of conveyance or transfer; and
to do any and all acts and things necessary or advisable in the sole discretion
of Lender to carry out and enforce this Agreement. All acts of said attorney or
designee are hereby ratified and approved and said attorney or designee shall
not be liable for any acts of commission or omission, nor for any error of
judgment or mistake of fact or law. This power of attorney being coupled with
an interest is irrevocable while any of the Obligations shall remain unpaid or
Lender has any obligation or ability to make Advances hereunder.
(e) Any cash proceeds of sale, lease or other disposition of
Collateral upon an Event of Default shall be applied in the following order:
(i) to Lender's costs; (ii) to the payment of interest due pursuant to this
Agreement or the Note; (iii) to the payment of principal due pursuant to this
Agreement or the Note; and (iv) any surplus then remaining to Borrower or
whomever may be lawfully entitled thereto.
(f) The remedies provided herein or in the Note or otherwise available
to Lender at law or in equity shall be cumulative and concurrent, and may be
pursued singly, successively or together at the sole discretion of Lender, and
may be exercised as often as occasion therefor shall occur; and the failure to
exercise any such right or remedy shall in no event be construed as a waiver or
release of the same.
ARTICLE 8 - MISCELLANEOUS
8.1 Amendments, Etc. No amendment to or waiver of any provision of this
Agreement nor consent to any departure by Borrower, shall in any event be
effective unless (a) the same shall be in writing and signed by Lender and
Borrower (with respect to an amendment) or Lender (with respect to a waiver or
consent by it) or Borrower (with respect to a waiver or consent by it), as the
case may be, and such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. This Agreement contains
a final and complete integration of all prior expressions by the parties hereto
with respect to the subject matter hereof and shall constitute the entire
agreement (together with the Schedules hereto) among the parties hereto with
respect to the subject matter hereof, superseding all prior oral or written
understandings.
8.2 Notices, Etc. All notices and other communications provided for
hereunder shall, unless otherwise stated herein, be in writing (including
communication by facsimile copy) and mailed, return receipt requested,
transmitted or delivered, as to each party hereto, at its address or facsimile
number set forth under its name on the signature pages hereof or at such other
address
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as shall be designated by such party in a written notice to the other parties.
All such notices and communications shall be effective, upon receipt, or in the
case of delivery by mail, five days after being deposited in the mails, or, in
the case of notice by facsimile copy, when verbal communication of receipt is
obtained.
8.3 Binding Effect; Assignability. This Agreement shall be binding upon
and inure to the benefit of Borrower and Lender and their respective successors
and permitted assigns (which successors of Borrower shall include a trustee in
bankruptcy). Borrower may not assign any of its rights and obligations
hereunder or any interest herein without the prior written consent of Lender.
Lender may assign at any time its rights and obligations hereunder and
interests herein to any other Person without the consent of Borrower. Borrower
hereby consents to the foregoing and agrees to cooperate with any such Person
electing to exercise Lender's rights under this Agreement. This Agreement shall
create and constitute the continuing obligations of the parties hereto in
accordance with its terms, and shall remain in full force and effect until such
time as the Collection Date shall occur; provided, however, that the rights and
remedies with respect to any breach of any representation and warranty or
covenant made by the Borrower pursuant to Article 5 and Article 6 shall be
continuing and shall survive until all Obligations are satisfied in full.
8.4 GOVERNING LAW; WAIVER OF JURY TRIAL. THIS AGREEMENT AND THE NOTE SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH
OF PENNSYLVANIA WITHOUT REGARD TO CONFLICT OF LAWS. BORROWER HEREBY AGREES TO
THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE COMMONWEALTH OF PENNSYLVANIA
FOR THE COUNTY OF YORK AND THE UNITED STATES DISTRICT COURT OF THE MIDDLE
DISTRICT OF PENNSYLVANIA AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS
UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED
MAIL DIRECTED TO BORROWER AT THE ADDRESS SET FORTH ON THE SIGNATURE PAGE HEREOF
AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER THE
SAME SHALL HAVE BEEN DEPOSITED IN THE U.S. MAILS, POSTAGE PREPAID. BORROWER
HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE BETWEEN BORROWER AND LENDER
ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED
IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY. WITH RESPECT TO THE
FOREGOING CONSENT TO JURISDICTION, LENDER HEREBY WAIVES ANY OBJECTION BASED ON
FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED
HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS
DEEMED APPROPRIATE BY THE COURT. NOTHING IN THIS ARTICLE 8.4 SHALL AFFECT THE
RIGHT OF LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
AFFECT THE RIGHT OF LENDER TO
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BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR ITS PROPERTY IN THE COURTS
OF ANY OTHER JURISDICTION.
8.5 Execution in Counterparts; Severability. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
agreement. In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
8.6 Joint and Several Liability. Each entity constituting Borrower hereby
unconditionally and absolutely guarantees to and for the Lender the due
performance, including without limitation the prompt payment when due or within
any applicable grace period, whether at stated maturity, by acceleration or
otherwise and at all times thereafter, of any and all Obligations of Borrower
owed to the Lender irrespective of (a) any lack of enforceability of any
Obligation, (b) any change of the time, manner, place of payment, or any other
term of any Obligation, (c) any exchange, release or non-perfection of any
collateral securing payment of any Obligation, (d) any law, regulation or order
of any jurisdiction affecting the genuineness, validity, or rights of the
Lender with respect to the Obligations or any instruments evidencing any of the
Obligations, or (e) any other circumstance which might otherwise constitute a
defense to or discharge of an entity constituting Borrower. Each entity
constituting Borrower agrees that its obligations hereunder are irrevocable;
that a separate action or actions may be brought and prosecuted against it
regardless of whether the other entity constituting Borrower is joined in any
such action or actions; and that it waives the benefit of any statute of
limitations affecting its liabilities hereunder or the enforcement hereof.
Each entity constituting Borrower agrees that its obligations as a
guarantor shall not be impaired, modified, changed, released, or limited in any
manner whatsoever by any impairment, modification, change, release or
limitation of the liability of the other's estate in bankruptcy, resulting from
the operation of any present or future provision of the bankruptcy laws or
other similar statute, or from the decision of any court in a bankruptcy
proceeding.
This is a continuing guarantee and shall remain in full force and effect
and be binding upon each entity constituting Borrower, their respective
successors and assigns until payment in full of all of the Obligations and no
partial payment hereunder shall entitle either of them, by subrogation or
otherwise, to any payment by the other out of its property.
Each entity constituting Borrower hereby waives all notices of any
character whatsoever with respect to this guarantee and the Obligations,
including but not limited to notice of the acceptance hereof and reliance
hereon, of the present existence or future incurring of any Obligations, of the
amounts, terms and conditions thereof, and of any defaults thereon and further
waives the defenses of diligence, presentment for payment, protest, demand or
extensions of time for payment. Each entity constituting Borrower hereby
consents to the taking of, or failure to take, from time to time
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without notice to it, any such action of any nature whatsoever with respect to
the Obligations and with respect to any rights against any person or persons or
in any property, including but not limited to any renewals, extensions,
modifications, postponements, compromises, settlements, substitutions, refusals
or failures to exercise or enforce, indulgences, waivers, surrenders, exchanges
and releases, and each such entity will remain fully liable hereon
notwithstanding any of the foregoing. Each entity constituting Borrower hereby
waives the benefit of all laws now or hereafter in effect in any way limiting
or restricting the liability of such entity hereunder, including without
limitation (a) all defenses whatsoever to such entity's liability hereunder
except the defense of payment made on account of the Obligations to the Lender
and such entity's liability hereunder; and (b) all right to stay of execution
and exemption of property in any action to enforce the liability of such entity
hereunder; and (c) all rights accorded such entity under any other statutory
provisions of any other applicable jurisdiction affecting the rights of the
Lender to enforce the obligations of such guarantee under this guarantee.
Each entity constituting Borrower hereby consents and agrees that without
further notice to or assent from it, the time of payment of any or all of the
Obligations may be changed, any other term or condition relating to any or all
of the Obligations may be changed, the other entity constituting Borrower may
be discharged from any or all of the Obligations, any composition or settlement
relating thereto may be consummated and accepted, and that such entity will
remain bound upon this guarantee notwithstanding any or all of the foregoing.
No failure on the part of the Lender to exercise, and no delay in
exercising, any right, power or remedy shall operate as a waiver thereof, nor
shall any single or partial exercise by the Lender of any right, power or
remedy preclude any other further exercise thereof or the exercise of any other
right, power or remedy. The rights and remedies provided herein shall be in
addition to and not exclusive of any rights or remedies provided at law or in
equity.
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IN WITNESS WHEREOF, the parties below have caused this Agreement to be
duly executed by their duly authorized officers and delivered as of the day and
year first above written.
New Image Industries, Inc.
By: /s/ HAL ORR
--------------------------------
Title: CFO
Address: 2283 Cosmos Court
Carlsbad, California 92009
Telephone:
Facsimile:
Insight Imaging Systems, Inc.
By: /s/ HAL ORR
--------------------------------
Title: CFO
Address: 2283 Cosmos Court
Carlsbad, California 92009
Telephone:
Facsimile:
DENTSPLY International Inc.
By: /s/ EDWARD D. YATES
--------------------------------
Title: Senior Vice President
Address: 570 West College Avenue
York, Pennsylvania 17405
Telephone:
Facsimile:
95
SCHEDULE 2.3(b)
FORM OF FUNDING REQUEST
BY
NEW IMAGE INDUSTRIES, INC. AND INSIGHT IMAGING SYSTEMS, INC.
_________________, 199_
DENTSPLY International Inc.
570 West College Avenue
York, PA 17405
This Funding Request is provided to DENTSPLY International Inc. to evidence the
desire of New Image Industries, Inc. and Insight Imaging Systems, Inc. to
borrow funds under the Credit Agreement, dated as of December 24, 1996, by and
between Borrower and Lender (the "Agreement"). All capitalized terms not
defined herein shall have the same meaning ascribed to such terms in the
Agreement.
Please transfer the amount of $_____ to [account] on [date].
The Advance shall be used only for the specific purposes and in the particular
amounts as set forth on Exhibit A hereto.
Borrower hereby certifies that no Event of Default or Unmatured Event of
Default under the Agreement or the Note has occurred and is continuing (other
than events of default which have been waived or which are the subject of a
forbearance agreement).
New Image Industries, Inc. Insight Imaging Systems, Inc.
By:____________________ By:_____________________
Name: Name:
Title: Title:
96
SCHEDULE 2.3(c)
FORM OF NOTE
SUBJECT TO THAT CERTAIN SUBORDINATION AND INTERCREDITOR AGREEMENT EXECUTED
BY AND AMONG COAST BUSINESS CREDIT, DENTSPLY INTERNATIONAL INC., AND
NEW IMAGE INDUSTRIES, INC. AND INSIGHT IMAGING SYSTEMS, INC.,
DATED AS OF DECEMBER 24, 1996
U.S. $3,000,000 December 24, 1996
FOR VALUE RECEIVED, New Image Industries, Inc., a Delaware corporation, and
Insight Imaging Systems, Inc., a California corporation, with a principal place
of business at 2283 Cosmos Court, Carlsbad, California 92009 (collectively, the
"Maker"), hereby, promise to pay, jointly and severally, to the order of
DENTSPLY International Inc. (the "Payee") the principal sum of $3,000,000 or
such lesser amount as shall have been advanced and remain outstanding under the
terms of the Agreement defined below (the "Principal Sum"), together with
interest from the date of this Note on the unpaid balance of Principal Sum at
the floating interest rate of four percent (4%) per annum in excess of the
prime rate (the "Prime Rate") of interest set forth in the Money Rates Section
of the New York edition of the Wall Street Journal, rounded up to the nearest
one-eighth (the "Line Interest Rate") or such lesser rate permitted by
applicable law, if the Line Interest Rate would violate applicable law, as
follows:
1. Incorporation of the Credit Agreement. The Payee and the Maker are parties
to that certain Credit Agreement (the "Agreement") dated as of December 24,
1996. The terms and conditions of the Agreement are hereby incorporated in
this Note by reference and the Payee and the Maker are entitled to all rights
and benefits of the Agreement.
2. Payment of Principal and Interest. Subject to Section 6 hereof, the
Principal Sum shall be payable in full, together with any and all accrued
interest and unpaid interest thereon, on March 25, 1997. Interest shall accrue
on the principal balance of the Note from time to time at the Line Interest
Rate or such lesser rate permitted by applicable law, if the Line Interest Rate
would violate applicable law. All sums payable hereunder shall be payable in
lawful money of the United States and shall be applied first to accrued and
unpaid interest and then in payment of the Principal Sum. The Line Interest
Rate shall be changed automatically on and as of the effective date of each
change in the Prime Rate. Interest shall be calculated on the basis of a
360-day year, but charged for the actual number of days elapsed. Without in any
way limiting Lender's rights and remedies hereunder and under the Note in the
case of Events of Default, any principal payments on the Note not paid when due
and, to the extent permitted by applicable law, any interest payment on the
Note not paid when due, shall thereafter bear interest payable upon demand at a
rate which is three percent (3%) per annum in excess of the applicable Line
Interest Rate.
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3. Place of Payment. The Principal Sum together with and all accrued and unpaid
interest thereon shall be payable Payee's principal executive offices at 570
West College Avenue, York, PA 17405, or at such other place as Payee, from time
to time, may designate in writing.
4. Prepayment. Maker shall have the right to prepay, without notice and without
prepayment penalty or premium, at any time, the entire unpaid balance of the
Principal Sum or any part thereof. Each prepayment of the Principal Sum shall
be accompanied by accrued interest on the unpaid balance of the Principal Sum.
5. Presentment. Maker hereby waives diligence, demand, presentment for payment,
protest and notice of protest, notice of acceleration, and all other notices or
demands of any kind except as expressly provided herein.
6. Default and Termination Event. Upon the occurrence of any Event of Default
or upon the occurrence of a Termination Event (as such terms are defined in the
Agreement) prior to March 25, 1997, Payee may at its election, in addition to
any other rights it may have under the Agreement or hereunder, forthwith
declare all principal and interest to be immediately due and payable, without
protest, demand or other notice (which are hereby expressly waived by Maker).
7. Costs and Expenses. In addition to all other sums payable under this Note,
Maker also agrees to pay to Payee, on demand, all reasonable costs and expenses
(including attorneys' fees and legal expenses) incurred by Payee in the
enforcement of Maker's obligations under this Note.
8. Severability. If any provision of this Note is held to be invalid or
unenforceable by a court of competent jurisdiction, the other provisions of
this Note shall remain in full force and effect and shall be construed
liberally in favor of Payee in order to effectuate the purposes and intent of
this Note.
9. Governing Law. This instrument shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania, excluding its
conflicts of laws rules. MAKER HEREBY AGREES TO THE EXCLUSIVE JURISDICTION OF
THE COURTS OF THE COMMONWEALTH OF PENNSYLVANIA FOR THE COUNTY OF YORK AND THE
UNITED STATES DISTRICT COURT OF THE MIDDLE DISTRICT OF PENNSYLVANIA AND WAIVES
PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH
SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO BORROWER AT THE
ADDRESS SET FORTH ON THE SIGNATURE PAGE OF THE AGREEMENT AND SERVICE SO MADE
SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN
DEPOSITED IN THE U.S. MAILS, POSTAGE PREPAID.
10. Successors and Assigns. The provisions of this Note shall be binding upon
and inure to the benefit of Maker and Payee and their respective heirs,
executors or administrators and assigns. Maker may not assign any of its rights
and obligations hereunder and interests herein to any other person without the
consent of Payee. Payee may assign at any time its rights and obligations
hereunder and interests herein to any other person without the consent of
Maker. Maker hereby
98
consents to the foregoing and agrees to cooperate with any such person electing
to exercise Payee's rights hereunder.
IN WITNESS WHEREOF, the Maker has executed this Note as of the date first
above written.
New Image Industries, Inc.
By:_______________________
Name:
Title:
Insight Imaging Systems, Inc.
By:________________________
Name:
Title:
99
EXHIBIT (b)(2)
SUBORDINATION AND INTERCREDITOR AGREEMENT
THIS SUBORDINATION AND INTERCREDITOR AGREEMENT, dated as of December 24,
1996 (the "Agreement"), is entered into by and among COAST BUSINESS CREDIT, a
Division of Southern Pacific Thrift & Loan Association ("Coast"), DENTSPLY
INTERNATIONAL INC. ("Creditor"), and NEW IMAGE INDUSTRIES, INC., and INSIGHT
IMAGING SYSTEMS, INC. (together, "Debtor"), with respect to the Amended and
Restated Loan Agreement, dated May 22, 1996, between Coast and Debtor (the
"Coast Agreement"), and the Credit Agreement, of even date herewith, by and
between Creditor and Debtor (the "Credit Agreement") .
WHEREAS, Creditor and Debtor desire to enter into the Credit Agreement,
pursuant to which, upon the terms and subject to the conditions contained
therein, Creditor will make available to Debtor a line of credit up to an
aggregate principal amount of $3,000,000;
WHEREAS, subject to the execution and delivery of this Agreement, Coast,
to whom Debtor is indebted pursuant to the Coast Loan Documents (as hereinafter
defined), will consent to the execution and delivery by Debtor of the Credit
Agreement;
WHEREAS, by a letter of even date herewith (the "Forbearance Letter"),
Coast has agreed to forbear, through March 25, 1997 or such earlier date as set
forth in the Forbearance Letter (the "Forbearance Period"), from exercising any
of its default rights and remedies in connection with the violation of any and
all covenants of which Debtor is in breach as of the date hereof and any and
all covenants contained in the Coast Agreement and the Mercury Agreement which
may occur subsequent to the date hereof through the Forbearance Period, but not
including any default arising from failure to pay principal and interest due
and payable after the date hereof (other than any payment which may be or
become due as a result of a default of Debtor to comply with the Solvency
Covenant (as defined in the Forbearance Letter) or any non-payment covenant);
NOW, THEREFORE, in consideration of Coast's agreement to continue to
advance credit to Debtor under the Coast Agreement, the execution by Creditor
of the Credit Agreement and Coast's execution of the Forbearance Letter, Coast,
Creditor and Debtor, intending to be legally bound hereby, hereby agree as
follows:
1. In addition to the other words and terms defined herein, the following
words and terms used in this Agreement have the meanings ascribed to them in
this Section 1:
"Blockage Period" means the period commencing on the date of
Creditor's receipt of notice from Coast that a Triggering Event has occurred,
and expiring on the date which is the earliest to occur of (i) 120 days
thereafter, (ii) when the Triggering Event is no longer continuing or has been
waived in writing by Coast, and (iii) the termination of this Agreement in
accordance with Section 7 hereof; provided that Blockage Periods shall not
exceed a total of 120 days in the aggregate in any
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100
eight (8) month period.
"Coast Collateral" means the "Collateral" as defined in the Coast
Agreement.
"Coast Indebtedness" means any and all presently existing or hereafter
arising indebtedness, claims, debts, liabilities, and obligations of Debtor now
or hereafter owing to Coast pursuant to the Coast Loan Documents or the Mercury
Agreement, whether direct or indirect, whether contingent or of any other
nature, character, or description (including all interest accruing after
commencement of any case, proceeding, or other action relating to the
bankruptcy, insolvency, or reorganization of Debtor, whether or not such
interest is an allowable claim in any such proceeding).
"Coast Loan Documents" means, collectively, the Coast Agreement and
any and all other documents, instruments and agreements executed in connection
therewith.
"Creditor Agreements" means the agreements, instruments and documents
executed by and between Creditor and Debtor which are described on Exhibit A
hereto, and any and all present or future security agreements, deeds of trust
or other agreements, instruments and documents entered into by and between
Debtor and Creditor securing the same or encumbering any of Debtor's assets or
properties.
"Creditor Indebtedness" means the indebtedness of Debtor that, at any
time and from time to time following the execution of the Creditor Agreements,
may be owed by Debtor to Creditor pursuant to and/or evidenced by the Creditor
Agreements, not to exceed an aggregate principal amount of $3,000,000 plus
interest.
"Creditor Line Interest Rate" means the rate of four percent (4%) in
excess of the prime rate of interest set forth in the Money Rates Section of
the New York edition of the Wall Street Journal, rounded up to the nearest
one-eighth, or such lesser rate permitted by applicable law, if such rate would
violate applicable law.
"Letter of Intent" means the letter of intent, of even date herewith,
by and between New Image Industries, Inc. ("New Image") and Creditor with
respect to the acquisition of New Image by Creditor.
"Mercury Agreement" means the loan documents assigned to Coast by
Mercury on the date hereof.
"Triggering Event" means an event of default under the Coast Agreement
which has not been waived or which is not then subject to Coast's forbearance
under the terms of the Forbearance Letter.
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2. Creditor (as to (a) only) and Debtor (as to (a) and (b)) represent to
Coast that:
a. Creditor and Debtor are parties to the Credit Agreement pursuant to
which, upon the terms and subject to the conditions therein, Creditor
will make available to Debtor a line of credit up to the aggregate
principal amount of $3,000,000.
b. Debtor agrees, and Creditor consents and acknowledges, that the face of
any and all Creditor Agreements shall be permanently and conspicuously
marked with the following legend: "Subject to that certain
Subordination and Intercreditor Agreement executed by and among Coast
Business Credit, Dentsply International Inc., and New Image Industries,
Inc. and Insight Imaging Systems, Inc., dated as of December 24, 1996"
and, after being so marked, copies of said agreements and instruments
shall be promptly delivered to Coast. Creditor shall mark all of its
books and records in such manner as to indicate that the payment and
enforcement of the Creditor Indebtedness and the Creditor Agreements
are subject to the terms of this Agreement.
3. Creditor and Debtor agree with Coast that:
a. The Creditor Indebtedness shall be and hereby is subordinated to the
extent provided herein, and the payment therefor shall be deferred if
and when required pursuant to the terms hereof, to any and all rights,
claims, demands, indebtedness, action or causes of action of any nature
whatsoever that Coast may now have, or hereafter may have against
Debtor with respect to the Coast Indebtedness.
b. No scheduled payment of interest or principal shall be made prior to
the expiration of the Forbearance Period. In addition, upon the
commencement of a Blockage Period, (i) Creditor's right to receive any
and all payments of interest and principal on the Creditor Indebtedness
shall immediately cease, notwithstanding the terms of the Creditor
Indebtedness, for a period commencing on the first day of such Blockage
Period and continuing for the duration of such Blockage Period and (ii)
Coast shall have no obligation to make loans to Debtor under the Coast
Loan Documents from and after the commencement of such Blockage Period.
c. The Creditor Indebtedness may be secured by security interests and
liens in and upon the following assets of Debtor: such of the Coast
Collateral which is described in the Creditor Agreements, provided,
however, as set forth below, such security interests and liens in and
upon the Coast Priority Collateral (as hereinafter defined) shall be at
all times junior and subordinate to all security interests and liens of
Coast in and upon the Coast Priority Collateral.
As between Coast and Creditor, and notwithstanding the terms or time of
granting or perfection of any security interest or lien, the time of
filing or recording of any financing statements, assignments, or any
other documents, instruments, or
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102
agreements under the Uniform Commercial Code or any other applicable
law, Coast shall have a first priority security interest in and lien
upon the Coast Collateral (the "Coast Priority Collateral"). The lien
and security interest priority provided herein shall not be altered or
otherwise affected by any amendment, modification, supplement,
extension, renewal, restatement, or refinancing of any of the Creditor
Indebtedness or of any of the Coast Indebtedness, nor by any action or
inaction which Coast or Creditor may take or fail to take in respect of
any of the respective collateral.
d. If a Triggering Event has occurred and a Blockage Period has commenced,
Creditor agrees that it will not commence, prosecute or participate in
any administrative, legal or equitable action against Debtor or any of
the Coast Collateral or any other assets of the Debtor, or in any
administrative, legal, or equitable action that might adversely affect
Debtor or its interests, without Coast's prior written consent, which
consent may be withheld in Coast's sole discretion for any reason,
until the sooner to occur of (i) if a Triggering Event has occurred,
the first day after the expiration of the Blockage Period with respect
thereto, so long as on such date Coast has not yet commenced
enforcement of its rights and remedies with respect to the Coast
Priority Collateral; provided that if Coast has commenced enforcement
of its rights or remedies, Creditor may enforce its rights and remedies
at the end of the Blockage Period other than foreclosing on or
collecting any of the Coast Priority Collateral, and (ii) the date that
the Coast Loan Documents have been terminated and all of the Coast
Indebtedness has been paid in full; provided, however, Creditor shall
have the right (subject and subordinate to the Coast Loan Documents) to
file a claim in any voluntary or involuntary bankruptcy or insolvency
action or proceeding of Debtor.
e. Creditor shall give Coast a copy of any notice(s) of any default or
event of default under the Creditor Agreements or of any actions which
Creditor intends to take with respect thereto, concurrently with the
giving of such notice(s) to Debtor. Coast shall give Creditor a copy of
any notice(s) of any default or event of default under the Coast Loan
Documents or of any actions which Coast intends to take with respect
thereto, concurrently with the giving of such notice(s) to Debtor;
provided that the failure of Creditor or Coast to give such notice
shall not create any liability of such party to the other or affect
either party's rights under this Agreement.
4. If Creditor, in violation of this Agreement, shall commence, prosecute
or participate in any suit, action or proceeding against Debtor whenever
prohibited by the terms hereof, Debtor may interpose as a defense or dilatory
plea the making of this Agreement and Coast may intervene and interpose such
defense or plea in Coast's name or in the name of Debtor. If Creditor shall
attempt to enforce any of the Creditor Agreements whenever prohibited by the
terms hereof, Coast or Debtor may by virtue of this Agreement restrain the
enforcement thereof in Coast's name or in the name of Debtor. If Creditor shall
obtain any assets of Debtor or the proceeds thereof whenever prohibited by the
terms hereof as a result of any administrative, legal, or equitable action, or
otherwise, Creditor agrees to forthwith pay, deliver, and assign to Coast any
such assets or proceeds for application upon
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the Coast Indebtedness.
5. Except for scheduled payments of interest and principal as and to the
extent permitted by the terms of Section 3.b of this Agreement, Debtor agrees
with Coast that it will not, without Coast's prior written consent (which may
be withheld for any reason), pay to Creditor any sum on account of the Creditor
Indebtedness provided that notwithstanding the foregoing, Debtor may, following
the date on which the Letter of Intent is terminated, make principal
prepayments to Creditor so long as (i) no Blockage Period is then in effect,
(ii) no Event of Default has occurred and is continuing (under the criteria set
forth in Section 1 hereof under "Triggering Event") and (iii) Debtor has excess
borrowing availability pursuant to the borrowing formulas in the Coast
Agreement of not less than $100,000 both during the ten days prior to the
contemplated payment and on the date of payment after taking into account the
proposed payment.
6. Coast may grant extensions of the time of payment or performance of the
Coast Indebtedness and make compromises and settlements with Debtor and all
other persons with respect to the Coast Indebtedness, and release all or any
portion of the Coast Priority Collateral (subject to an obligation to use its
best efforts to realize the maximum proceeds from the disposition thereof), all
without the consent of Debtor or Creditor and all without affecting the
agreements of Creditor or Debtor hereunder.
7. Coast hereby consents to the Creditor Indebtedness subject to the terms
and conditions of this Agreement.
8. Coast agrees that the subordinations and relative priority agreements
set forth above are expressly conditioned upon the non-voidability and
perfection of the security interest to which another security interest is
subordinated and if the security interest to which another interest is
subordinated is not perfected or is voidable for any reason, then the
subordination provided for herein shall not be effective as to the particular
collateral; provided, however, that Creditor agrees that it shall not take any
action to void or attempt to void a security interest granted in favor of
Coast; provided further, however, notwithstanding anything to the contrary
contained herein, nothing shall prevent Creditor from serving on any creditors'
committee or filing a claim, or otherwise participating, in any voluntary or
involuntary bankruptcy or insolvency action or proceeding of Debtor.
9. If, at any time hereafter, Coast shall, in Coast's own judgment,
determine to discontinue the extension of credit to Debtor in accordance with
the terms of the Coast Loan Documents, Coast may do so. This Agreement shall
continue in full force and effect until the Coast Loan Documents have been
terminated and all of the Coast Indebtedness has been paid in full. Creditor
and Debtor agree that, if at any time all or any part of any payment previously
applied by Coast to the Coast Indebtedness is or must be returned by Coast, or
recovered from Coast for any reason (including the order of any bankruptcy
court), this Agreement shall automatically be reinstated to the same effect as
if the prior application had not been made, and, in addition, Debtor hereby
agrees to indemnify Coast against, and to save and hold Coast harmless from any
required return by
5
104
Coast or recovery from Coast, of any of such payments because of its being
deemed preferential under applicable bankruptcy, receivership or insolvency
laws, or for any other reason.
10. This Agreement shall be binding upon the successors and assigns of
Creditor and Debtor, and shall inure to the benefit of the successors and
assigns of Coast.
11. All notices, demands, requests, consents, approvals, declarations or
other communications from one party hereto to another relating to this
Agreement shall be in writing and shall be delivered either in person, with
receipt acknowledged, or by regular, registered, or certified United States
mail, postage prepaid, or by facsimile, addressed as follows:
If to Coast at:
Coast Business Credit
12121 Wilshire Boulevard, Suite 1111
Los Angeles, CA 90025
Attn: Manager
Facsimile: 310-826-2864
If to Creditor at:
Dentsply International Inc.
570 West College Avenue
York, PA 17405
Attn: Patrick Clark, Esq.
Facsimile: 717-843-6357
If to Debtor at:
New Image Industries, Inc.
2283 Cosmos Court
Carlsbad, California 92009
Attn: President
Facsimile: 619-930-9999
or at such other address as may be substituted by notice given as herein
provided. Giving or any notice required hereunder may be waived in writing by
the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly received on the date on which personally delivered, with
receipt acknowledged, or actually received via facsimile transmission, or three
(3) days after the same shall have been deposited in the United States mail.
12. The validity of this Agreement, its construction, interpretation and
enforcement, and
6
105
the rights of the parties hereunder, shall be determined under, governed by,
and construed in accordance with the internal laws of the State of California
without regard to principles of conflicts of laws.
13. This Agreement may be executed in one or more counterparts and by
different parties on separate counterparts, each of which when so executed and
delivered shall be deemed to be an original, and all of which, when taken
together, shall constitute but one and the same Agreement.
14. Should any provision, clause or condition of this Agreement be held by
any court of competent jurisdiction to be void or unenforceable, such defect
shall not affect the remainder of this Agreement.
15. This Agreement and such other agreements, documents and instruments as
may be executed in connection herewith shall be construed as the entire and
complete agreement among the parties hereto and shall supersede all prior
negotiations, all of which are merged and integrated herein.
7
106
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the date first above written.
("Creditor")
DENTSPLY INTERNATIONAL INC.
By /s/ EDWARD D. YATES
----------------------------------
Title: Senior Vice President
-------------------------------
("Debtor")
NEW IMAGE INDUSTRIES, INC.
By /s/ HAL ORR
-----------------------------------
Title: CFO
--------------------------------
INSIGHT IMAGING SYSTEMS, INC.
By /s/ HAL ORR
-----------------------------------
Title: CFO
--------------------------------
("Coast")
COAST BUSINESS CREDIT, a division of
Southern Pacific Thrift & Loan Association
By /s/ JOHN M. JAIMES
-----------------------------------
Title: Vice President
--------------------------------
8
107
EXHIBIT A TO SUBORDINATION AND INTERCREDITOR AGREEMENT
o Credit Agreement, dated as of December 24, 1996, by and between New Image
Industries, Inc. and Insight Imaging Systems, Inc. and Dentsply
International Inc. (the "Credit Agreement").
o Any and all other indebtedness and liabilities arising from or relating to
the Credit Agreement including, without limitation, the Notes (as defined in
the Credit Agreement).
108
EXHIBIT (b)(3)
DENTSPLY International Inc.
Re: New Image
---------
Gentlemen:
Reference is made to that certain Amended and Restated Loan and Security
Agreement dated May 22, 1996, as amended ("Loan Agreement") among Coast
Business Credit, a division of Southern Pacific Thrift & Loan Association
("Coast") on the one hand and New Image Industries, Inc. and Insight Imaging
Systems, Inc. (New Image Industries, Inc. and Insight Imaging Systems, Inc. is
hereinafter collectively referred to as, "Borrower") on the other hand.
Borrower is in violation of its covenant under the Loan Agreement to be and
continue to be solvent ("Solvency Covenant"). Coast has waived compliance by
Borrower with the Solvency Covenant through January 1, 1997.
Borrower has advised Coast that it proposes to enter into a letter of
intent with DENTSPLY International Inc. (the "Letter of Intent") with respect
to the acquisition of Borrower by a wholly-owned subsidiary of DENTSPLY
International Inc. ("DENTSPLY"). That Letter of Intent provides, among other
things, for DENTSPLY to loan to Borrower not less than $2,500,000 and not more
than $3,000,000 pending the negotiation and possible execution and closing of a
definitive merger agreement as contemplated in the Letter of Intent. In turn,
DENTSPLY requires a security interest in the assets of Borrower, junior only to
the security interest of Coast. In order for Borrower to provide the security
interest to DENTSPLY, Borrower has requested Coast to purchase the claim of
Mercury Partners, LLC ("Mercury") in the principal amount of $500,000. Borrower
confirms that the claim of Mercury Partners, LLC in the principal amount of
$500,000 is due and owing without offset, counterclaim, defense or offset.
In consideration of the above, including without limitation, the agreement
of DENTSPLY to loan not less than $2,500,000 to Borrower, Coast hereby agrees
to forbear from exercising any of its default rights and remedies in connection
with the violation of the Solvency Covenant and the violation of any and all
other covenants of which Borrower may be in breach as of the date hereof
whether contained in the Loan Agreement or in the loan documents assigned to
Coast by Mercury (the "Mercury Agreement"), and any and all other covenants,
whether contained in the Loan Agreement or in the Mercury Agreement documents
assigned to Coast by Mercury, which may occur subsequent to the date hereof
through the earlier of March 25, 1997 or (b) the date on which the Letter of
Intent terminates other than by execution of a definitive merger agreement as
contemplated therein ("Forbearance Period"). If for any reason the Letter of
Intent terminates, DENTSPLY agrees to give Coast prompt written notice of such
termination. Notwithstanding the foregoing, Coast is not forbearing from any
default arising from the failure of Borrower to make any required payment to
Coast of principal or interest due and payable after the date hereof (other
than a payment which may be or become due and payable as a result of a default
of Borrower to comply with the Solvency Covenant or any other non-payment
covenant). Nothing
109
herein shall affect the right of Coast to exercise any and all default rights
and remedies after the expiration of the Forbearance Period.
DENTSPLY confirms that in the event of a closing of a definitive merger
agreement as set forth in the Letter of Intent, DENTSPLY will cause the claim
of Coast against Borrower (including the claim of Mercury purchased by Coast)
to be paid in full, unless Coast shall agree otherwise in writing.
Coast acknowledges that concurrent with the execution of the Letter of
Intent, Borrower and DENTSPLY will enter into a credit agreement which will
provide for, among other things, the granting of a security interest in favor
of DENTSPLY junior to the security interest of Coast. Coast hereby consents to
the execution by Borrower of the credit agreement and the performance of its
obligations thereunder.
The obligations of Coast under this letter agreement are conditioned upon
the concurrent execution of a Subordination and Intercreditor Agreement among
DENTSPLY, Borrower and Coast in form and substance satisfactory to Coast and
confirmation that $2,500,000 will be loaned forthwith by DENTSPLY to Borrower.
Very truly yours,
Coast Business Credit
By: /s/ JOHN M. JAIMES
-------------------------
Its: Vice President
AGREED:
DENTSPLY INTERNATIONAL INC.
By: /s/ EDWARD D. YATES
------------------------
Its: Senior Vice President
New Image Industries, Inc.
By: /s/ HAL ORR
------------------------
Its: Chief Financial Officer
Insight Imaging Systems, Inc.
By: /s/ HAL ORR
------------------------
Its: Chief Financial Officer
110
EXHIBIT (b)(4)
DENTSPLY International Inc.
570 College Avenue
P.O. Box 872
York, PA 17405
December 24, 1996
Mr. Dewey Edmunds, President
New Image Industries, Inc.
2283 Cosmos Court
Carlsbad, CA 92009
Gentlemen:
This will confirm our discussions with respect to the proposed acquisition of
New Image Industries, Inc., a Delaware corporation ("New Image"), by DENTSPLY
International Inc., a Delaware corporation ("Dentsply").
1. Structure and Price. Subject to the conditions set forth below, the
transaction will be accomplished by means of either (i) a tender offer (the
"Tender Offer") to be made by a wholly-owned subsidiary of Dentsply (the
"Acquisition Subsidiary") for all of the issued and outstanding shares of
Common Stock of New Image (the "New Image Common Stock"), conditioned on the
tender of at least 51% of such shares, for a price of $2.00 per share in cash
(the "Offer Consideration"), and, following completion of the Tender Offer, the
merger of Acquisition Subsidiary with and into New Image pursuant to which each
share of the outstanding Common Stock of New Image then owned by Acquisition
Subsidiary will be exchanged for the Offer Consideration, and each option,
warrant and other right to acquire a share of the Common Stock of New Image
will be exchanged for the Offer Consideration less the exercise price of such
option, warrant or right; or (ii) an all-cash merger of Acquisition Subsidiary
with and into New Image for the price set forth above.
2. Certain Fundamental Conditions. Consummation of the proposed acquisition or
the proposed tender will be subject to the following fundamental conditions:
(i) There are on the date hereof and there will be, at all
times between the date hereof and the closing, no more than
5,479,908 outstanding shares of New Image Common Stock (plus
any shares issued upon the exercise of options or other
rights outstanding on the date hereof as set forth below),
and no outstanding shares or rights to acquire any other
class of New Image capital stock, and outstanding stock
options,
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New Image Industries, Inc.
Page 2
December 24, 1996
warrants and other rights to acquire no more than 2,045,201
shares of New Image Common Stock, and no more than 950,000 of
such options, warrants and rights having an exercise price of
less than $2.00, and the average of the exercise prices of
such 950,000 options, warrants and other rights being not
less than approximately $1 9/16;
(ii) due diligence review, to Dentsply's sole satisfaction,
by Dentsply and its legal and financial advisors, of the
business, assets, operations and liabilities of New Image,
including, without limitation, environmental conditions and
contingencies, pending or threatened patent and other
litigation matters, accounting matters, employee benefits and
other contingent liabilities;
(iii) negotiation and execution of definitive documentation
mutually acceptable in form and substance;
(iv) approval of such documentation by the Boards of
Directors of Dentsply and New Image;
(v) negotiation and execution of a Stockholder Agreement
between Dentsply and each of the directors and officers of
New Image who collectively own approximately 13.8% of the
outstanding New Image Common Stock and options (each, a
"Stockholder"), pursuant to which, among other things, such
Stockholder will agree to tender his or her shares of New
Image Common Stock in the Tender Offer or, if the acquisition
is accomplished by means of a merger without a Tender Offer
to vote such shares in favor of such merger, as the case may
be, and, pending consummation of the proposed acquisition,
not to sell or otherwise transfer shares of New Image Common
Stock owned of record or beneficially by him or her;
(vi) receipt of all approvals, consents or waivers from third
parties, the absence of which would, in Dentsply's reasonable
judgment, be reasonably likely to be materially adverse to
New Image or to the transactions contemplated by this letter;
(vii) receipt of all material regulatory and governmental
approvals and compliance with all applicable regulatory or
governmental requirements;
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New Image Industries, Inc.
Page 3
December 24, 1996
(viii) the business and operations of New Image are conducted
in the ordinary course between the date hereof and the
closing date; (ix) if the proposed acquisition is
accomplished by means of a Tender Offer, tender of no fewer
than the number of shares representing at least 51% of the
issued and outstanding shares of New Image Common Stock;
(x) there having been no dividends or other distributions
paid with respect to the New Image Common Stock, and no
increases in compensation, bonuses, loans or other payments
outside the ordinary course made to any officers, directors
or management employees of New Image, and no consulting,
brokers', finders' or investment banking or advisory fees
paid to any director or any person affiliated with New Image
or affiliated with any of its directors, officers or
management employees;
(xi) negotiation and execution of an employment agreement
with Dewey F. Edmunds, mutually acceptable in form and
substance;
(xii) the definitive documentation referred to in clause
(iii) above shall include covenants from Dentsply to continue
complying with the agreements covered by Paragraph 5 hereof
for the time period set forth therein; and
(xiii) the conditions set forth in subparagraphs (ii), (iii)
and (v) of this Paragraph 2 will be satisfied or waived at
the time the parties enter into definitive documentation.
3. Negotiation in Good Faith. Dentsply and New Image will negotiate in good
faith to execute definitive documentation evidencing the proposed transaction
as promptly as practicable and will cooperate fully with each other in
preparing all such documentation, obtaining all necessary approvals, consents
or waivers from third parties and taking reasonable steps to comply with all
governmental and regulatory requirements.
4. Regulatory Filings. Dentsply and New Image will cooperate in making as
promptly as practicable after the date hereof all filings and seeking all
approvals which may be determined to be necessary in connection with the
transactions contemplated hereby, including, without limitation, filings under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
5. Standstill. In the event that the proposed acquisition is not consummated,
Dentsply hereby agrees that, for a period of one year from the date of this
Agreement, unless New Image shall (i)
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New Image Industries, Inc.
Page 4
December 24, 1996
otherwise agree in writing, (ii) apply for or consent to the appointment of a
receiver, trustee or liquidator of itself or of its property, (iii) make a
general assignment for the benefit of creditors, (iv) be adjudicated a bankrupt
or insolvent, (v) file a voluntary petition in bankruptcy, or a petition or
answer seeking reorganization or an arrangement with creditors to take
advantage of any insolvency law, or an answer admitting the material
allegations of a bankruptcy, reorganization or insolvency petition filed
against it, (vi) take corporate action for the purpose of effecting any of the
foregoing, (vii) have an order for relief entered against it in any proceeding
under the United States Bankruptcy Code, (viii) have an order, judgment or
decree entered, without the application, approval or consent of New Image, by
any court of competent jurisdiction, approving a petition seeking
reorganization of New Image or appointing a receiver, trustee or liquidator of
New Image or of all or a substantial part of its assets, and such order,
judgment or decree shall continue unstayed and in effect for a period of 60
consecutive days, or (ix) solicit Acquisition Proposals (as defined in
Paragraph 7 hereof), neither Dentsply nor any of its affiliates (as such term
is defined under the Securities Exchange Act of 1934, as amended (the "1934
Act")) will in any manner, directly or indirectly, (a) effect or seek, offer or
propose (whether publicly otherwise) to effect, offer or participate in (A) any
acquisition of any securities (or beneficial ownership thereof) or assets of
New Image or any of its subsidiaries; (B) any tender or exchange offer, merger
or other business combination involving New Image or any of its subsidiaries;
(C) any recapitalization, restructuring, liquidation, dissolution or other
extraordinary transaction with respect to New Image or any of its subsidiaries;
or (D) any "solicitation" of "proxies" (as such terms are used in the proxy
rules of the Securities and Exchange Commission) or consents to vote any voting
securities of New Image; (b) form, join or in any way participate in a "group"
(as defined under the 1934 Act) formed to accomplish any of the foregoing; (c)
otherwise act, alone or in concert with others, to seek to control the
management or Board of Directors of New Image; (d) take any action which might
force New Image to make a public announcement regarding any of the types of
matters set forth in (a) above; or (e) enter into any discussions or
arrangements with any third party with respect to any of the foregoing.
Dentsply also agrees during such period not to request New Image (or its
directors, officers, employees or agents), directly or indirectly, to amend or
waive any provision of this paragraph (including this sentence).
6. Information. During the period from the date hereof and until the earlier of
the expiration of this letter as provided in Paragraph 11 below or its prior
termination, Dentsply shall be provided full opportunity to examine the
financial records and reports of New Image in connection with its due diligence
investigation (including, without limitation, the work papers of independent
certified public accountants, the financial statements for the fiscal year
ended June 30, 1996 and financial projections for fiscal year 1997), leases,
properties, books of account, corporate records, legal opinions and
litigation-related documents and other materials and information of any kind
relating to the business, assets, operations and liabilities of New Image, and
the officers and
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New Image Industries, Inc.
Page 5
December 24, 1996
employees of New Image shall cooperate with such examination. All information
delivered pursuant to this letter shall be subject to the Confidentiality
Agreement of even date herewith executed by the parties.
7. Exclusive Dealing. From the date hereof and until the earlier of the
expiration of this letter as provided in Paragraph 11 below or its prior
termination, New Image agrees that neither it nor any of its subsidiaries,
officers, directors, or the directors and officers of its subsidiaries, nor any
of its other affiliates (each, an "Affiliate") shall, and New Image shall cause
its and its respective subsidiaries' and Affiliates' employees, agents and
representatives (including, without limitation, any investment banking, legal
or accounting firm retained by New Image or any of its subsidiaries or
Affiliates and any individual member or employee of the foregoing) (each, an
"Agent") not to (a) initiate, solicit or seek, directly or indirectly, any
inquiries or the making or implementation of any proposal or offer (including,
without limitation, any proposal or offer to its stockholders or any of them)
with respect to a merger, acquisition, consolidation, recapitalization,
liquidation, dissolution or similar transaction involving, or any purchase of
all or a substantial portion of the assets or any equity securities of, it or
any of its subsidiaries (any such proposal or offer being hereinafter referred
to as an "Acquisition Proposal"), or (b) engage in any negotiations concerning,
or provide any confidential information or data to, or have any discussions
with, any person relating to an Acquisition Proposal, or (c) otherwise
cooperate in any effort or attempt to make, implement or accept an Acquisition
Proposal; provided, however, that New Image may, if it receives an Acquisition
Proposal which was not directly or indirectly initiated, solicited or otherwise
sought by New Image or by any of the individuals or entities referred to in the
first sentence of this Paragraph 7, and which in the written opinion of its
outside financial advisor, is superior from a financial point of view to the
transactions contemplated by this letter (a "Superior Acquisition Proposal"),
respond to such Superior Acquisition Proposal, if New Image has received a
written opinion of its outside counsel that such response is required in order
to satisfy the fiduciary duties imposed under applicable law on its Board of
Directors. New Image shall immediately cease and cause to be terminated any
existing activities, including discussions or negotiations with any parties,
conducted heretofore with respect to any of the foregoing and shall take the
necessary steps to inform the individuals and entities referred to in the first
sentence hereof of the obligations undertaken in this Paragraph 7. If New Image
or any of its Affiliates or Agents has provided any person (other than
Dentsply) with any confidential information or data relating to an Acquisition
Proposal, it shall request the immediate return thereof. New Image shall notify
Dentsply immediately if any inquiries, proposals or offers related to an
Acquisition Proposal are received by, any confidential information or data is
requested from, or any negotiations or discussions related to an Acquisition
Proposal are sought to be initiated or continued with, it or any individual or
entity referred to in the first sentence of this Paragraph 7, and of the terms
and other details of any such Acquisition Proposal or request.
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New Image Industries, Inc.
Page 6
December 24, 1996
8. Expenses. Except as provided below, each of New Image and Dentsply will
separately bear its own expenses, including the fees and disbursements of
counsel, investment bankers and accountants, incurred in connection with this
letter of intent and the transactions contemplated hereby. If New Image or any
Affiliate or Agent of New Image shall fail to fulfill the obligations under
Paragraph 7 above, and shall sell, or enter into an agreement which
contemplates the sale of, all or any material portion of the assets or equity
interests in, New Image to a third party, or the Stockholders or any of them
shall enter into an agreement which contemplates such a transaction, then, in
any such case, New Image shall immediately pay to Dentsply an amount equal to
the out-of-pocket expenses incurred by Dentsply in connection with the
transaction contemplated hereby.
9. Publicity. Upon the execution of this letter of intent, an appropriate
public announcement of the proposed transaction, the form and substance of
which shall have been agreed to by Dentsply and New Image, shall be made.
Neither party shall make any other press release or other written public
statement concerning the matters covered by this letter without the approval of
the other party hereto; provided, however, that either party may, without such
approval, make such press releases or other written public statements required
by law, and shall consult with the other party with respect to the form and
substance of such statements.
10. Non-Binding Nature. Other than Paragraphs 5, 6, 7, 8, 9, 10 and 11 hereof,
this letter does not constitute a binding agreement of the parties hereto. It
is understood that, promptly hereafter, the parties will strive to negotiate
and execute definitive and binding documentation which will contain such terms,
provisions, representations, warranties, covenants and conditions of each
party, in addition to those set forth herein, (including an agreement by
Dentsply to provide directors' and officers' insurance coverage for the current
directors and officers of New Image with coverage limits similar to those
currently in effect for the six-year period commencing on the closing of the
transactions contemplated hereby) as are appropriate and customary in
transactions of this nature and mutually satisfactory to Dentsply and New Image
and their respective counsel.
11. Termination. This letter shall terminate on March 25, 1997, or, if earlier,
on the occurrence of: (i) an event of default set forth in that certain Amended
and Restated Loan and Security Agreement, dated May 22, 1996 (the "Loan
Agreement"), between New Image and Coast Business Credit, a division of
Southern Pacific Thrift & Loan Association ("Coast"), as to which event of
default Coast has not given a written waiver or is not required to forbear
under the terms of a letter agreement of even date herewith between Dentsply
and Coast; (ii) the failure by New Image or any of its Affiliates or Agents to
comply with the obligations set forth in Paragraph 7 hereof; or (iii) the date
on which New Image shall (a) apply for or consent to the appointment of a
receiver, trustee or liquidator of itself or of its property, (b) make a
general assignment for the benefit of creditors, (c) be adjudicated a bankrupt
or insolvent, (d) file a voluntary petition in bankruptcy, or a petition or
answer seeking reorganization or an arrangement with creditors to
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New Image Industries, Inc.
Page 7
December 24, 1996
take advantage of any insolvency law, or an answer admitting the material
allegations of a bankruptcy, reorganization or insolvency petition filed
against it, (e) take corporate action for the purpose of effecting any of the
foregoing, or (f) have an order for relief entered against it in any proceeding
under the United States Bankruptcy Code; (iv) the date on which an order,
judgment or decree shall be entered, without the application, approval or
consent of New Image by any court of competent jurisdiction, approving a
petition seeking reorganization of New Image or appointing a receiver, trustee
or liquidator of New Image or of all or a substantial part of its assets, and
such order, judgment or decree shall continue unstayed and in effect for any
period of 30 consecutive days; or (v) the date on which Dentsply informs New
Image in writing that it is terminating this letter of intent because it is not
satisfied with its due diligence review of New Image.
12. Governing Law; Amendment. This letter shall be governed by the laws of the
State of Delaware applicable to contracts made therein, without giving effect
to the conflict of law provisions thereof. This letter of intent may be
amended, modified, or extended only by a written agreement signed by both of
the parties hereto.
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New Image Industries, Inc.
Page 8
December 24, 1996
This letter is submitted in duplicate and has been executed by Dentsply. If the
foregoing properly sets forth our understanding, please so indicate by signing
both copies of this letter in the space provided, then retain one executed copy
for your files and return the second copy to us.
Very truly yours,
DENTSPLY International Inc.
By: /s/ Edward Yates
---------------------------
Senior Vice President
Accepted and agreed to this 24th
day of December, 1996.
New Image Industries, Inc.
By: /s/ Dewey F. Edmunds
---------------------------
President and CEO
118
EXHIBIT (b)(5)
MUTUAL CONFIDENTIAL NON-DISCLOSURE AGREEMENT
This Mutual Confidential Non-Disclosure Agreement (hereinafter referred
to as the "Agreement") is made this 8th day of October 1996, by and between New
Image Industries, Inc. a Delaware corporation, and the other party to this
agreement identified in the signature block below (each hereinafter referred to
individually as "Party" or collectively as "Parties").
WHEREAS, the Parties are engaged in discussions in contemplation of a
possible business relationship; and
WHEREAS, the Parties recognize that they may be required to disclose
confidential information in such business discussions:
NOW THEREFORE, in consideration of the above and the mutual covenants
contained herein, the Parties hereto, intending to be legally bound, hereby
agreed as follows:
1. For the purpose of this Agreement, "Confidential Information"
shall include any information and data of a confidential nature, including but
not limited to proprietary, developmental, technical, marketing, sales,
operating, performance, costs, know-how, business and process information,
computer programming techniques, and all record bearing media continuing or
disclosing such information and techniques which is disclosed pursuant to this
Agreement.
2. The Parties agree that disclosure and receipt of Confidential
Information with one another is for the purposes set forth herein and for no
other purpose and that only those employees of each Party having a need-to-know
shall be privy to said Confidential Information and shall abide by the
obligations of this Agreement.
3. All Confidential Information exchanges between the Parties
pursuant to this Agreement:
(a) shall, if in written physical form, be marked "Confidential"
or similarly legended by the disclosing Party before being turned over to the
receiving Party;
(b) shall, if disclosed orally, be reduced in writing and sent to
the non-disclosing party within (10) working days of said disclosing;
(c) shall not be copied or distributed disclosed, or disseminated
in any way or form by the receiving Party to anyone except its own employees,
who have a reasonable need to know Confidential information;
119
(d) shall be treated by the receiving Party with the same degree of
care to avoid disclosure to any third Party as is used with respect to the
receiving Party's own information of like importance which is to be kept
confidential;
(e) shall not be used by the receiving Party for its own purposes
of any other purpose except the purpose set forth above, except as otherwise
expressly stated herein, without the express written permission of the
disclosing Party; and
(f) shall remain the property of and be returned to the disclosing
Party (along with all copies thereof) within thirty (30) days of receipt by the
receiving Party of a written request from the disclosing Party setting forth the
Confidential Information to be returned, or shall be destroyed and confirmed by
a certificate attesting the same.
4. The obligation of Paragraph 3 shall not apply however to any
information which:
(a) is already in the public domain or becomes available to the
public through no breach of this Agreement by the receiving Party.
(b) was, as between disclosing Party and receiving Party lawfully
in the receiving Party's possession prior to receipt from the disclosing Party;
(c) is received independently from a third Party free from any
obligation to keep said information confidential;
(d) is subsequently independently developed by the receiving party;
or
(e) is disclosed pursuant to government regulation or court order.
5. Unless otherwise mutually agreed in writing, the receiving
party's obligations hereunder with respect to each item of Confidential
Information shall terminate three (3) years from the date of receipt by the
receiving Party or at such earlier time when such Confidential Information
enters the public domain pursuant to Section 4(a) above.
6. Either party shall have the right to refuse to accept any
information under this Agreement and nothing herein shall obligate either Party
to disclose any particular information to the other party.
7. The parties hereto shall not be obligated to compensate each
other for exchanging any information under this Agreement and agree that no
warranties of any kind are given with respect to Confidential Information
disclosed under this Agreement as well as any use thereof, except as otherwise
expressly provided herein.
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8. Neither Party shall have any obligation to enter into any
further agreement with the other except as it, in its sole judgment, may deem
advisable. It is understood that no patent, copyright, trademark or other
proprietary right or license is granted by this Agreement. The disclosure of
Confidential information and material which may accompany the disclosure shall
not result in any obligation to grant the receiving Party rights therein.
9. The Parties hereto acknowledge that this Agreement is executed
and delivered in the State of California, and agree that the laws of the State
of California shall govern the interpretations and enforcement, and that any
legal action arising out of or in conjunction with this Agreement or any breech
thereof shall be brought and prosecuted in an appropriate court of competent
jurisdiction within the State of California.
10. This Agreement represents the entire understanding and
agreement of the Parties and supersedes all prior communications, agreements
and understandings relating to the subject matter hereof. The provisions of
this Agreement may not be modified, amended, nor waived, except by a written
instrument duly executed by both Parties.
IN WITNESS HEREOF, the Parties hereto, intending to be legally bound,
have caused this Agreement to be executed by their duly authorized
representative as of the date first above written.
Accept on Behalf of: Accepted on Behalf of:
DENTSPLY INTERNATIONAL, INC. NEW IMAGE INDUSTRIES, INC.
/s/ M.D. HANSON /s/ DEWEY F. EDMUNDS
- - ------------------------------ ------------------------------
Name: M.D. Hanson Name: Dewey F. Edmunds
Title: V.P. Corporate Planning Title: President
Date: October 8, 1996 Date: October 8, 1996
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EXHIBIT (c)(1)
Execution Copy
============================
AGREEMENT AND PLAN OF MERGER
dated as of January 27, 1997
by and among
DENTSPLY INTERNATIONAL INC.,
IMAGE ACQUISITION CORP.
and
NEW IMAGE INDUSTRIES, INC.
============================
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TABLE OF CONTENTS
ARTICLE 1 -- THE OFFER.................................................................2
1.1 The Offer............................................................2
1.2 Parent Action; Tender Offer Documents................................2
1.3 Company Action.......................................................3
ARTICLE 2 -- THE MERGER................................................................4
2.1 The Merger...........................................................4
2.2 Effective Time.......................................................4
2.3 Closing..............................................................5
2.4 Effects of the Merger................................................5
2.5 Certificate of Incorporation; By-Laws................................5
2.6 Directors and Officers of the Surviving Corporation..................5
2.7 Taking of Necessary Action; Further Action...........................5
2.8 Conversion of Securities.............................................5
2.9 Exchange of Certificates.............................................6
2.10 Transfer of Shares After Effective Date..............................7
2.11 Company Stock Options................................................7
2.12 Company Warrants.....................................................8
ARTICLE 3 -- REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................8
3.1 Organization and Qualification.......................................9
3.2 Certificate of Incorporation and By-Laws.............................9
3.3 Subsidiaries.........................................................9
3.4 Capitalization.......................................................9
3.5 Authority Relative to this Agreement................................10
3.6 Commission Filings..................................................11
3.7 No Undisclosed Liabilities..........................................12
3.8 Absence of Certain Changes or Events................................12
3.9 Litigation..........................................................13
3.10 Absence of Changes in Benefit Plans.................................13
3.11 ERISA Compliance....................................................13
3.12 Taxes...............................................................15
3.13 Information Supplied................................................16
3.14 Compliance with Applicable Laws.....................................16
3.15 State Takeover Statutes.............................................18
3.16 Brokers; Schedule of Fees and Expenses..............................18
3.17 Contracts; Debt Instruments.........................................18
3.18 Title to Properties.................................................19
3.19 Labor Matters.......................................................20
3.20 Insurance...........................................................20
(i)
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3.21 Intellectual Property Matters.......................................20
3.22 Payments............................................................21
3.23 Suppliers and Customers.............................................21
3.24 Regulatory Matters..................................................22
ARTICLE 4 -- REPRESENTATIONS AND WARRANTIES OF PARENT.................................22
4.1 Organization and Qualification......................................22
4.2 Authority Relative to this Agreement................................22
4.3 Financing...........................................................23
4.4 Ownership of Company Securities.....................................23
4.5 Information Supplied................................................23
4.6 Capitalization......................................................23
4.7 Financial Advisor...................................................23
ARTICLE 5 -- CONDUCT OF BUSINESS PENDING THE MERGER...................................24
5.1 Conduct of Business by the Company Pending the Merger...............24
5.2 Actions by Parent and Merger Sub Pending the Merger.................26
ARTICLE 6 -- ADDITIONAL AGREEMENTS....................................................26
6.1 Stockholder Approval; Preparation of Proxy Statement................26
6.2 Stock Options and Warrants..........................................27
6.3 Expenses............................................................27
6.4 Other Actions.......................................................28
6.5 Exclusive Dealing...................................................28
6.6 Notification of Certain Matters.....................................29
6.7 Access to Information...............................................30
6.8 Antitrust Laws......................................................30
6.9 Public Announcements................................................30
6.10 Directors...........................................................30
6.11 Directors' and Officers' Insurance Coverage.........................31
6.12 Benefit Plans and Certain Contracts.................................32
ARTICLE 7 -- CONDITIONS...............................................................32
7.1 Conditions to Obligation of each Party to Effect the Merger.........32
7.2 Additional Conditions to Obligation of the Company..................33
ARTICLE 8 -- TERMINATION, AMENDMENT AND WAIVER........................................33
8.1 Termination.........................................................33
8.2 Effect of Termination...............................................34
8.3 Amendment...........................................................34
8.4 Extension; Waiver...................................................34
(ii)
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ARTICLE 9 -- GENERAL PROVISIONS.......................................................35
9.1 Survival of Representations, Warranties and Agreements..............35
9.2 Notices.............................................................35
9.3 Interpretation......................................................36
9.4 Entire Agreement; No Third Party Beneficiaries......................36
9.5 Assignment..........................................................36
9.6 Governing Law.......................................................36
9.7 Counterparts........................................................36
9.8 Specific Performance................................................37
Appendix -- Conditions to the Offer............................................A-1
(iii)
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of
January 27, 1997, is by and among DENTSPLY International Inc., a Delaware
corporation ("Parent"), Image Acquisition Corp., a Delaware corporation and
wholly owned subsidiary of Parent ("Merger Sub"), and New Image Industries,
Inc., a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and
the Company have approved the acquisition of the Company by Parent upon the
terms and subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, Parent proposes to cause
Merger Sub to make a tender offer (as it may be amended from time to time as
permitted under Section 1.1 of this Agreement, the "Offer") to purchase all the
issued and outstanding shares of Common Stock, par value $.001 per share, of
the Company (the "Company Common Stock," the outstanding shares of Company
Common Stock being hereinafter referred to as the "Shares"), at a purchase
price of $2.00 per share (the "Offer Price"), net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set
forth in this Agreement; and the Board of Directors of the Company has adopted
resolutions approving the Offer and the Merger (as defined below), recommending
that the Company's stockholders accept the Offer;
WHEREAS, each of the respective Boards of Directors of Parent, Merger
Sub and the Company has approved the Offer and the merger of Merger Sub with
and into the Company (the "Merger") upon the terms and subject to the
conditions set forth in this Agreement, whereby each issued and outstanding
share of Company Common Stock, other than shares owned directly or indirectly
by Parent or the Company and "Dissenting Shares" (as defined in Section
2.8(d)), will be converted into the right to receive the Offer Price;
WHEREAS, concurrently with the execution of this Agreement and as an
inducement to Parent to enter into this Agreement, Parent, Merger Sub and each
executive officer (as defined in Rule 3b-7 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) and director of the
Company who, in each case, owns Shares or options or warrants to acquire shares
of the Company Common Stock and The William W. Stevens and Virda J. Stevens
Trust, a stockholder of the Company (collectively, the "Stockholder Parties"),
are entering into separate stockholder agreements (the "Stockholder
Agreements"), pursuant to which each such Stockholder Party is agreeing to
tender all Shares owned by such person in the Offer, upon the terms and subject
to the conditions set forth in such Stockholder Party's respective Stockholder
Agreement; and
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger;
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NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, intending to be legally bound hereby, Parent,
Merger Sub and the Company hereby agree as follows:
ARTICLE 1 -- THE OFFER
1.1 The Offer.
(a) Subject to the conditions set forth in the Appendix
hereto, as promptly as practicable but in no event later than five business
days after the date of the public announcement by Parent and the Company of the
execution of this Agreement, Merger Sub shall, and Parent shall cause Merger
Sub to, commence (within the meaning of Rule 14d-2 under the Exchange Act),
the Offer for any and all Shares at a price of $2.00 per share net to the
seller in cash, without interest thereon, and, subject to the conditions set
forth in the Appendix, consummate the Offer in accordance with its terms. The
Offer shall be made by means of an Offer to Purchase having the conditions set
forth in the Appendix (any of which may be waived by Merger Sub or Parent in
its sole discretion). The obligations of Merger Sub to commence the Offer and
to accept for payment and to pay for any Shares validly tendered on or prior to
the expiration of the Offer and not withdrawn shall be subject only to the
conditions set forth in the Appendix.
(b) Parent will not, and will cause Merger Sub not to,
without the prior written consent of the Company (which consent may be withheld
for any reason), decrease the price per Share, or change the form of
consideration payable, in the Offer, decrease the number of Shares sought in
the Offer, change the conditions to the Offer from those contained in the
Appendix hereto, impose additional conditions to the Offer, or amend any
material term of the Offer in a manner adverse to the holders of the Shares.
Subject to the terms and conditions of the Offer and this Agreement, Merger Sub
shall, and Parent shall cause Merger Sub to, accept for payment, and pay for,
all Shares validly tendered and not withdrawn pursuant to the Offer that Merger
Sub becomes obligated to accept for payment, and pay for, pursuant to the Offer
as soon as practicable after the expiration of the Offer.
1.2 Parent Action; Tender Offer Documents. As soon as
practicable but not later than the date of commencement of the Offer, Parent
shall file or cause to be filed with the Securities and Exchange Commission
(the "SEC") a Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1").
The Schedule 14D-1 filed with the SEC, which shall contain the Offer to
Purchase and a related letter of transmittal and summary advertisement (such
Schedule 14D-1 and the documents included therein pursuant to which the Offer
will be made, together with any supplement or amendment thereto, are hereafter
referred to as the "Offer Documents") shall comply as to form in all material
respects with the applicable provisions of the Exchange Act and the rules and
regulations promulgated thereunder, and shall not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that the foregoing representation shall not apply with respect to the accuracy
of information furnished in
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writing by the Company specifically for inclusion in the Offer Documents or
which is taken, after consultation with the Company, from reports filed by the
Company under the Exchange Act (provided that such information has not been
superseded by information contained in reports filed by the Company under the
Exchange Act subsequent thereto), which accuracy shall be the sole
responsibility of the Company. Parent, Merger Sub and the Company each agrees
promptly to correct any information provided by it for use in the Offer
Documents if and to the extent that it shall have become false or misleading in
any material respect, and Parent and Merger Sub further agree to take all steps
necessary to cause the Schedule 14D-1 as so corrected to be filed with the SEC
and the Offer Documents as so corrected to be disseminated to holders of
Shares, in each case as and to the extent required by applicable Federal
securities laws. The Company and its counsel shall be given reasonable
opportunity to review the Offer Documents prior to their filing with the SEC.
Parent and Merger Sub agree to provide the Company and its counsel in writing
any comments Parent, Merger Sub or its counsel may receive from the SEC or its
staff with respect to the Offer Documents promptly after receipt of such
comments.
1.3 Company Action.
(a) The Company hereby approves of and consents to the
Offer and represents that the Board of Directors of the Company, at a meeting
duly called and held, duly and unanimously adopted resolutions approving this
Agreement, the Offer and the Merger, determining that the terms of the Offer
and the Merger are fair, from a financial point of view, to, and in the best
interests of, the Company's stockholders and recommending that the Company's
stockholders approve and adopt this Agreement, and that the Company's
stockholders accept the Offer and tender their Shares pursuant to the Offer,
provided, however, that any such recommendation may be amended, withdrawn or
modified in accordance with the provisions of Section 6.5(b). The Company
represents that its Board of Directors has received the opinion of Cleary Gull
Reiland & McDevitt Inc. ("Cleary Gull") to the effect that the proposed
consideration to be received by the holders of Shares pursuant to the Offer and
the Merger is fair to such holders from a financial point of view, and a
complete and correct signed copy of such opinion has been delivered by the
Company to Parent. The Company understands that, concurrently with the
execution of this Agreement, each of the Company's directors and officers
intends to execute a Stockholder Agreement with Parent and/or Merger Sub and
intends to tender all Shares owned by such person pursuant to the Offer. The
Company hereby approves of and consents to the execution by each Stockholder
Party of such Stockholder Party's Stockholder Agreement and the consummation of
the transactions contemplated thereby, including the tender of such Shares, and
represents that the Board of Directors of the Company, at a meeting duly called
and held, duly and unanimously adopted resolutions approving the execution of
the Stockholder Agreements and the consummation of the transactions
contemplated thereby.
(b) On the date the Offer Documents are filed with the
SEC, the Company shall file with the SEC and mail to the holders of Shares a
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"),
which shall reflect the recommendations described in Section 1.3(a). The
Company agrees that the Schedule 14D-9, including all amendments and
supplements thereto, shall comply as to form in all material respects with the
applicable provisions of the Exchange Act and the rules and regulations
promulgated thereunder, and shall not contain any
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untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading;
provided, however, that the foregoing representation shall not apply with
respect to the accuracy of information furnished in writing by Parent
specifically for inclusion in the Schedule 14D-9 or taken from reports, after
consultation with the Company, filed by Parent under the Exchange Act (provided
that such information has not been superseded by information contained in
reports filed by Parent under the Exchange Act subsequent thereto). The
Company, Parent and Merger Sub each agrees promptly to correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that it shall
have become false or misleading in any material respect, and the Company
further agrees to take all steps necessary to cause the Schedule 14D-9 as so
amended or supplemented to be filed with the SEC and disseminated to the
Company's shareholders, in each case as and to the extent required by
applicable Federal securities laws. Parent and Merger Sub and their counsel
shall be given reasonable opportunity to review the Schedule 14D-9 prior to its
filing with the SEC. The Company agrees to provide Parent and its counsel in
writing any comments the Company or its counsel may receive from the SEC or its
staff with respect to the Schedule 14D-9 promptly after receipt of such
comments.
(c) The Company will promptly furnish Parent or cause
Parent to be furnished with mailing labels containing the names and addresses
of the record holders of Shares as of a recent date and of those persons
becoming record holders subsequent to such date, together with copies of all
lists of stockholders, security position listings and computer files and all
other information in the Company's possession or control regarding the
beneficial owners of Shares, and shall furnish Parent with such additional
information and assistance as Parent may reasonably request to communicate the
Offer to the stockholders of the Company.
ARTICLE 2 -- THE MERGER
2.1 The Merger. Upon the terms and subject to the conditions of
this Agreement and in accordance with the Delaware General Corporation Law (the
"DGCL"), at the "Effective Time" (as defined in Section 2.2 hereof), Merger Sub
shall be merged with and into the Company in the Merger, the separate existence
of Merger Sub (except as may be continued by operation of law) shall cease, and
the Company shall continue as the surviving corporation following the Merger
(the "Surviving Corporation"). Notwithstanding the foregoing, Parent may elect
at any time prior to the Merger to merge the Company with and into Merger Sub,
instead of merging Merger Sub with and into the Company, in which event the
parties agree to execute an appropriate amendment to this Agreement to reflect
the foregoing.
2.2 Effective Time. Upon the terms and subject to the conditions
hereof, the parties hereto will file a Certificate of Merger with the Secretary
of State of the State of Delaware, in such form as may be required by, and
executed in accordance with, the DGCL. The Merger shall become effective at
such time as such document is so filed or at such time as is set forth in the
Certificate of Merger, if different, which time is hereinafter referred to as
the "Effective Time."
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2.3 Closing. The closing of the Merger shall take place at the
offices of Morgan, Lewis & Bockius LLP, One Oxford Centre, Pittsburgh, PA 15219
at 10:00 a.m., Eastern Time, on a date (the "Closing Date") to be specified by
the parties, which shall be no later than the second business day after the
satisfaction or waiver of the conditions set forth in Article 7.
2.4 Effects of the Merger. The Merger shall have the effects set
forth in the applicable provisions of the DGCL and this Agreement.
2.5 Certificate of Incorporation; By-Laws. The Certificate of
Incorporation and By-Laws of Merger Sub at the Effective Time shall be the
Certificate of Incorporation and By-Laws of the Surviving Corporation until
amended as provided therein and under the DGCL.
2.6 Directors and Officers of the Surviving Corporation. The
directors and officers of Merger Sub at the Effective Time shall, from and
after the Effective Time, be the directors and officers of the Surviving
Corporation until their successors shall have been duly elected or appointed
and qualified or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's Certificate of Incorporation and
Bylaws.
2.7 Taking of Necessary Action; Further Action. If, at any time
after the Effective Time, any further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full rights and title to and possession of all assets, properties, rights,
privileges, immunities and franchises of either the Company or Merger Sub, the
officers and directors of each such corporation are fully authorized in the
name of such corporation or otherwise to take, and shall take, all such lawful
and necessary action.
2.8 Conversion of Securities. At the Effective Time, by virtue
of the Merger and without any action on the part of Merger Sub, the Company or
the holder of any of the securities of the Company or Merger Sub:
(a) Subject to Section 2.8(d) hereof, each Share issued
and outstanding immediately prior to the Effective Time (other than Shares to
be canceled pursuant to Section 2.8(b) hereof), shall be canceled and
extinguished and be converted into and represent the right to receive $2.00 in
cash, without interest (the "Merger Consideration"). All such Shares, by
virtue of the Merger and without any action on the part of the holders thereof,
shall no longer be outstanding and shall be canceled and retired and shall
cease to exist, and each holder of a certificate representing any such Shares
shall thereafter cease to have any rights with respect thereto, except the
right to receive the Merger Consideration for such Shares upon the surrender of
such certificate in accordance with Section 2.9.
(b) Each Share issued and outstanding immediately prior
to the Effective Time and held in the treasury of the Company or owned by
Parent or any direct or indirect subsidiary of Parent (including Merger Sub)
shall be canceled and retired and no payment shall be made with respect
thereto.
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(c) Each share of Common Stock, par value $.01 per
share, of Merger Sub issued and outstanding immediately prior to the Effective
Time shall be converted into and become one validly issued, fully paid and
nonassessable share of Common Stock, par value $.01 per share, of the Surviving
Corporation.
(d) Notwithstanding anything in this Agreement to the
contrary, any issued and outstanding Shares held by a person (a "Dissenting
Stockholder") who objects to the Merger and complies with all the provisions of
the DGCL concerning the right of holders of Shares to dissent from the Merger
and require appraisal of their Shares ("Dissenting Shares") shall not be
converted as described in Section 2.8(a) but shall become the right to receive
such consideration as may be determined to be due to such Dissenting
Stockholder pursuant to the laws of the State of Delaware. If, after the
Effective Time, such Dissenting Stockholder withdraws his demand for appraisal
or fails to perfect or otherwise loses his right of appraisal, in any case
pursuant to the DGCL, his Shares shall be deemed to be converted as of the
Effective Time into the right to receive the Merger Consideration. The Company
shall give Parent (i) prompt notice of any demands for appraisal of Shares
received by the Company and (ii) the opportunity to participate in and direct
all negotiations and proceedings with respect to any such demands. The Company
shall not, without the prior written consent of Parent, make any payment with
respect to, or settle, offer to settle or otherwise negotiate, any such
demands.
2.9 Exchange of Certificates.
(a) Prior to the Effective Time, Parent shall select a
bank or trust company to act as paying agent (the "Paying Agent") for the
payment of the Merger Consideration upon surrender of certificates representing
Shares.
(b) Parent shall, or shall cause the Surviving
Corporation to, provide to the Paying Agent on a timely basis, as and when
needed after the Effective Time, funds necessary to pay for the Shares as part
of the Merger pursuant to Section 2.8.
(c) As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding Shares (the "Certificates") whose Shares were converted
into the right to receive the Merger Consideration pursuant to Section 2.8, (i)
a letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon delivery
of the Certificates to the Paying Agent and shall be in a form and have such
other provisions as Parent may reasonably specify) and (ii) instructions for
use in effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to the Paying
Agent or to such other agent or agents as may be appointed by Parent, together
with such letter of transmittal, duly executed, and such other documents as may
reasonably be required by the Paying Agent, the holder of such Certificate
shall be entitled to receive in exchange therefor the amount of cash into which
the Shares theretofore represented by such Certificate shall have been
converted pursuant to Section 2.8, and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of Shares which
is not registered in the transfer
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records of the Company, payment may be made to a person other than the person
in whose name the Certificate so surrendered is registered, if such Certificate
shall be properly endorsed or otherwise be in proper form for transfer and the
person requesting such payment shall pay any transfer or other taxes required
by reason of the payment to a person other than the registered holder of such
Certificate or establish to the satisfaction of the Surviving Corporation that
such tax has been paid or is not applicable. Until surrendered as contemplated
by this Section 2.9, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender the
amount of cash, without interest, into which the Shares theretofore represented
by such Certificate shall have been converted pursuant to Section 2.8. No
interest will be paid or will accrue on the cash payable upon the surrender of
any Certificate. In the event any Certificate shall have been lost, stolen or
destroyed, Parent may, in its discretion and as a condition precedent to the
payment of the Merger Consideration in respect of shares represented by such
Certificate, require the owner of such lost, stolen or destroyed Certificate to
make an affidavit of that fact containing such indemnification provisions as
Parent may deem appropriate, including, without limitation, the posting of a
bond in such amount as Parent may reasonably direct as indemnity against any
claim that may be made against it, the Surviving Corporation or the Paying
Agent with respect to such Certificate.
(d) All cash paid upon the surrender of Certificates in
accordance with the terms of this Article 2 shall be deemed to have been paid
in full satisfaction of all rights pertaining to the Shares theretofore
represented by such Certificates, and there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the
Shares which were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation or the Paying Agent for any reason, they shall be canceled and
exchanged as provided in this Article 2.
(e) None of Parent, Merger Sub, the Company or the
Paying Agent shall be liable to any person in respect of any cash delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law. If any Certificates shall not have been surrendered prior to
seven years after the Effective Time (or immediately prior to such earlier date
on which any payment pursuant to this Article 2 would otherwise escheat to or
become the property of any federal, state or local government or any court,
administrative or regulatory agency or commission or other governmental
authority or agency, domestic or foreign (a "Governmental Entity")), the cash
payment in respect of such Certificate shall, to the extent permitted by
applicable law, become the property of the Surviving Corporation, free and
clear of all claims or interests of any person previously entitled thereto.
2.10 Transfer of Shares After Effective Date. No transfers of
Shares shall be made on the stock transfer books of the Surviving Corporation
at or after the Effective Time.
2.11 Company Stock Options. As of the Effective Time, each option
(a "Stock Option") to purchase Shares under the Company's 1989 Stock Incentive
Plan (the "1989 Plan"), 1992 Stock Incentive Plan (the "1992 Plan"), 1992
Director Incentive Plan (the "1992 Director Plan"), 1993 Stock Incentive Plan
(the "1993 Plan"), 1993 Director Incentive Plan (the "1993 Director Plan"), the
Insight Imaging Systems, Inc. 1994 Stock Option Plan (the "Insight Plan") and
the 1995 Stock
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Incentive Plan (the "1995 Plan" and together with the 1989 Plan, the 1992 Plan,
the 1992 Director Plan, the 1993 Plan, the 1993 Director Plan and the Insight
Plan, the "Stock Option Plans," true, complete and correct copies of which have
heretofore been furnished to Parent), whether or not then exercisable in
accordance with its terms, shall be converted into the right to receive, upon
the surrender of the agreement evidencing such Stock Option to the Paying Agent
in accordance with the provisions of Section 2.9 applicable to Certificates and
upon the delivery to the Paying Agent of the "Stock Option Acknowledgment"
referred to below, an amount in cash (net of applicable withholding) equal to
the excess, if any, of the Merger Consideration over the exercise price per
Share subject to such Stock Option (each, an "Option Share") multiplied by the
number of Option Shares previously subject to such Stock Option (assuming full
vesting of all Stock Options). Each holder of a Stock Option who surrenders
the agreement evidencing such Stock Option to the Paying Agent shall execute a
written acknowledgment, in form satisfactory to Parent (the "Stock Option
Acknowledgment"), that such holder's receipt of cash in exchange for such Stock
Option shall be in full settlement of such Stock Option and that such holder
understands that such Stock Option shall, as of the Effective Time, represent
only the right to receive cash in accordance with this Section 2.11 and shall
otherwise be canceled. Regardless of the number of Stock Options (if any) so
surrendered, all Stock Options shall be canceled at the Effective Time and
shall thereafter represent only the right to receive the amount of cash payable
under this Section 2.11 upon compliance with the terms hereof.
2.12 Company Warrants. As of the Effective Time, each warrant to
purchase Shares (a "Warrant"), whether or not then exercisable in accordance
with its terms, shall be converted into the right to receive, upon the
surrender of the agreement evidencing such Warrant to the Paying Agent in
accordance with the provisions of Section 2.9 applicable to Certificates and
upon the delivery to the Paying Agent of the "Warrant Acknowledgment" referred
to below, an amount in cash (net of applicable withholding) equal to the
excess, if any, of the Merger Consideration over the exercise price per share
of the Common Stock of the Company subject to such Warrant (each, a "Warrant
Share") multiplied by the number of Warrant Shares previously subject to such
Warrant. Each holder of a Warrant who surrenders the agreement evidencing such
Warrant to the Paying Agent shall execute a written acknowledgment, in form
satisfactory to Parent (the "Warrant Acknowledgment"), that such holder's
receipt of cash in exchange for such Warrant shall be in full settlement of
such Warrant and that such holder understands that such Warrant shall, as of
the Effective Time, represent only the right to receive cash in accordance with
this Section 2.12 and shall otherwise be canceled. Regardless of the number of
Warrants, if any, so surrendered, all Warrants shall be canceled at the
Effective Time and shall thereafter represent only the right to receive the
amount of cash payable under this Section 2.12 upon compliance with the terms
hereof.
ARTICLE 3 -- REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in a schedule attached to this Agreement (the
"Company Disclosure Schedule") which identifies with particularity an exception
to a representation and warranty in this Agreement, the Company represents and
warrants to Parent and Merger Sub as set forth below. A disclosure with
respect to a particular representation and warranty shall be deemed to apply to
any other representations and warranties to which it relates.
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3.1 Organization and Qualification. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power to carry on its
business as it is now being conducted and as it is proposed to be conducted.
The Company is duly qualified as a foreign corporation to do business, and is
in good standing, in each jurisdiction where the character of its properties
owned or leased or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified would not have a
"Material Adverse Effect" on the Company. As used in this Agreement, the term
"Material Adverse Effect" shall mean a material adverse effect upon the
business, financial condition, results of operations, properties, assets or
liabilities of the party affected thereby that is, or could reasonably be
expected to be, materially adverse to such party and its subsidiaries, taken as
a whole.
3.2 Certificate of Incorporation and By-Laws. The Certificate of
Incorporation and By-Laws of the Company in the forms attached to the Company
Disclosure Schedule are the Certificate of Incorporation and By-Laws of the
Company as in effect on the date of this Agreement.
3.3 Subsidiaries. The Company Disclosure Schedule lists each
subsidiary of the Company (each a "Subsidiary" and collectively the
"Subsidiaries"). Each Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has the requisite corporate power to carry on its business as
it is now being conducted. Each Subsidiary is duly qualified as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of its properties owned or leased or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
would not have a Material Adverse Effect on the Company. All of the
outstanding shares of capital stock of each of the Subsidiaries are validly
issued, fully paid and nonassessable and are owned by the Company or by a
wholly owned Subsidiary of the Company, free and clear of all liens, pledges,
claims, charges, encumbrances and security interests of any kind or nature
whatsoever ("Liens"), and there are no proxies outstanding with respect to such
shares. Except for the capital stock of its Subsidiaries, the Company does not
own, directly or indirectly, any capital stock or other ownership interest in
any other corporation, partnership, joint venture or other business association
or entity.
3.4 Capitalization. The authorized capital stock of the Company
consists of 10,000,000 Shares and 1,000,000 shares of preferred stock, par
value $.001 per share (the "Preferred Stock"). As of the date hereof:
(a) 5,479,911 Shares are outstanding;
(b) no shares of Company Common Stock are held in the
treasury of the Company or any of its Subsidiaries;
(c) (i) 58,450 shares of Company Common Stock are
reserved for issuance pursuant to the 1989 Plan, (ii) 261,000 shares of Company
Common Stock are reserved for issuance pursuant to the 1992 Plan, (iii) no
shares of Company Common Stock are reserved for issuance pursuant to the 1992
Director Plan, (iv) 480,000 shares of Company Common Stock are reserved for
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issuance pursuant to the 1993 Plan, (v) 255,000 shares of Company Common Stock
are reserved for issuance pursuant to the 1993 Director Plan (vi) 500,000
shares of Company Common Stock are reserved for issuance pursuant to the 1995
Stock Incentive Plan and (vii) 102,756 shares of Company Common Stock are
reserved for issuance pursuant to the Insight Plan and (viii) 565,284 shares of
Company Common Stock are reserved for issuance upon exercise of Warrants.
(d) Stock Options to purchase no more than 1,177,083
shares of Company Common Stock are outstanding pursuant to the Stock Option
Plans of which 263,644 Stock Options are held by persons other than Stockholder
Parties and are exercisable at a price less than $2.00;
(e) Warrants to purchase 565,284 shares of Company
Common Stock are outstanding of which no Warrants are held by persons other
than Stockholder Parties and are exercisable at a price less than $2.00;
(f) no shares of Preferred Stock are outstanding.
The Company Disclosure Schedule contains a true and complete listing of (i) all
Stock Options, the holder of each Stock Option, the number of Stock Options
held by each such holder and the exercise prices of all such Stock Options, and
(ii) all Warrants, the holders of each Warrant, the number of Warrants held by
each such holder and the exercise prices of all such Warrants.
All outstanding shares of capital stock of the Company are, and all
shares which may be issued upon the exercise of Stock Options or Warrants will,
when issued in accordance with the terms thereof against payment to the Company
of the consideration therefor specified in the applicable agreements, be duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. There are no bonds, debentures, notes or other indebtedness
of the Company having the right to vote (or convertible into, or exchangeable
for, securities having the right to vote) on any matters on which stockholders
of the Company may vote. Except as set forth above, as of the date of this
Agreement, there are no outstanding securities, options, warrants, calls,
rights, commitments, agreements, arrangements or undertakings of any kind to
which the Company or any of its Subsidiaries is a party, or by which any of
them is bound, obligating the Company or any of its Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock or other voting securities of the Company or of any of its
Subsidiaries or obligating the Company or any of its Subsidiaries to issue,
grant, extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. As of the date of this
Agreement, there are no outstanding contractual obligations (x) of the Company
or any of its Subsidiaries to repurchase, redeem or otherwise acquire any
shares of capital stock of the Company or any of its Subsidiaries or (y) of the
Company to vote or to dispose of any shares of the capital stock of any of its
Subsidiaries.
3.5 Authority Relative to this Agreement. The Company has the
requisite corporate power and authority to enter into this Agreement and to
perform its obligations hereunder. The execution and delivery of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly authorized by the Board of
Directors of the
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Company and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement and the transactions contemplated hereby,
except for any required approval of the Merger by the Company's stockholders as
set forth in Section 6.1. This Agreement has been duly executed and delivered
by the Company and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as limited
by applicable bankruptcy, insolvency, reorganization, moratorium and other laws
of general application affecting enforcement of creditors' rights generally.
Neither the Company nor any Subsidiary is subject to or obligated under any
provision of (a) its respective Certificate of Incorporation or By-Laws,
(b) any contract, (c) any license, franchise or permit, or (d) any law,
regulation, order, judgment or decree, which would be breached, violated or
defaulted (with or without due notice or lapse of time or both) or in respect
of which a right of termination or acceleration or a loss of a material benefit
or any encumbrance on any of its assets would be created or suffered by its
execution and performance of this Agreement, except (as to clauses (b), (c) or
(d) above) where such breach, violation, default, right of termination or
acceleration, loss or encumbrance, individually or in the aggregate, would not
have a Material Adverse Effect on the Company. The consummation of the Offer
and the Merger by the Company will not require the consent or approval of, or a
registration or filing with, any person or Governmental Entity, other than
(w) approval of the holders of Shares if required by applicable law or the
Company's Certificate of Incorporation or Bylaws, (x) applicable requirements,
if any, of the Exchange Act, state "blue sky" or takeover laws and the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"),
(y) filing and recordation of appropriate merger documents as required by the
DGCL and (z) where failure to obtain such consents or approvals or to make such
registration or filing would not have, individually or in the aggregate, a
Material Adverse Effect on the Company or prevent or materially delay the
Company from performing its obligations under this Agreement.
3.6 Commission Filings. The Company has filed all required
reports, schedules, forms, statements and other documents with the SEC since
June 30, 1993. The Company has heretofore delivered to Parent its (a) Annual
Reports on Form 10-K for each fiscal year of the Company beginning with the
fiscal year ended June 30, 1993, as filed with the SEC, (b) Quarterly Reports
on Form 10-Q for each fiscal quarter of the Company beginning with the fiscal
quarter ended September 30, 1993, as filed with the SEC, (c) proxy statements
relating to the Company's meetings of stockholders (whether annual or special)
during each fiscal year beginning with the fiscal year 1993 and (d) all other
reports filed by the Company with the SEC since June 30, 1993 (collectively,
the "SEC Documents"). As of their respective dates, the SEC Documents complied
as to form in all material respects with the requirements of the Exchange Act
and the rules and regulations of the SEC promulgated thereunder and applicable
to such SEC Documents, and none of the SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein , in light of the
circumstances under which they were made, not misleading, except for such
statements, if any, as have been modified by subsequent filings prior to the
date hereof and furnished to Parent. The financial statements of the Company
included in the SEC Documents comply with applicable accounting requirements
and the rules of the SEC with respect thereto, have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
(except as may be specifically indicated therein or in the notes thereto,
except for such statements, if any, as have been modified by subsequent filings
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prior to the date hereof and furnished to Parent or, in the case of the
unaudited statements, as permitted by Form 10-Q of the SEC) during the periods
involved and fairly present the consolidated financial position of the Company
and its consolidated Subsidiaries as of the dates thereof and the consolidated
results of their operations, changes in stockholders' equity and statements of
cash flows (or changes in financial position prior to the approval of FASB 95)
for the periods then ended, subject, in the case of the unaudited consolidated
interim financial statements, to normal year-end adjustments and any other
adjustments described therein.
3.7 No Undisclosed Liabilities. Neither the Company nor any of
its Subsidiaries has any liabilities, obligations or commitments of any nature
(whether absolute, accrued, contingent or otherwise), matured or unmatured
(herein "Liabilities"), except (a) Liabilities which are adequately reflected
or reserved against in the financial statements of the Company for the quarter
ended September 30, 1996, (b) Liabilities which have been incurred in the
ordinary course of business and consistent with past practice since September
30, 1996 which individually or in the aggregate would not have a Material
Adverse Effect on the Company and (c) Liabilities under this Agreement and fees
and expenses related thereto.
3.8 Absence of Certain Changes or Events. Except as heretofore
disclosed in the SEC Documents, since the date of the most recently audited
financial statements included in the SEC Documents, the Company has conducted
its business only in the ordinary course, and there has not been:
(a) any event, act, occurrence or omission to act or
occur having or which, insofar as reasonably can be foreseen, may have, a
Material Adverse Effect on the Company;
(b) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or property) with
respect to any of the Company's capital stock;
(c) any split, combination or reclassification of any of
its capital stock or any issuance or the authorization of any issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock;
(d) (i) any granting by the Company or any of its
Subsidiaries to any executive officer of the Company or any of its Subsidiaries
of any increase in compensation, except as required under employment agreements
in effect as of the date of the most recent audited financial statements
included in the SEC Documents, (ii) any granting by the Company or any of its
Subsidiaries to any such executive officer of any increase in severance or
termination pay, except as required under any employment, severance or
termination agreement in effect as of the date of the most recent audited
financial statements included in the SEC Documents (true, complete and correct
copies of all of which agreements have heretofore been furnished to Parent),
(iii) any entry by the Company or any of its Subsidiaries into any employment,
severance or termination agreement with any such executive officer, or (iv) any
grant, whether or not to an employee of the Company or any of its Subsidiaries,
of any Stock Option or other option, warrant or right to purchase or otherwise
acquire any shares
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of capital stock of the Company or any of its Subsidiaries (other than grants
included within subsections (d) and (e) of Section 3.4);
(e) any damage, destruction or loss, whether or not
covered by insurance, that has or could, insofar as reasonably can be foreseen,
have, a Material Adverse Effect on the Company; or
(f) any change in accounting methods or principles by
the Company.
3.9 Litigation. Except as disclosed in the SEC Documents, as of
the date of this Agreement, there is no suit, action or proceeding pending or,
to the knowledge of the Company, threatened against the Company or any of its
Subsidiaries that individually or in the aggregate could reasonably be expected
to (a) have a Material Adverse Effect on the Company, (b) materially impair the
ability of the Company to perform its obligations under this Agreement or (c)
prevent the consummation of any of the transactions contemplated by this
Agreement, nor is there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against the Company or any of its
Subsidiaries having, or which is reasonably likely to have, any effect referred
to in the foregoing clauses (a), (b) or (c) above.
3.10 Absence of Changes in Benefit Plans. Except as disclosed in
the SEC Documents, since the date of the most recent audited financial
statements included in the SEC Documents, there has not been any adoption or
amendment in any material respect by the Company or any of its Subsidiaries of
any bonus, pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom stock,
retirement, vacation, severance, disability, death benefit, hospitalization,
medical or other plan, arrangement or understanding (whether or not legally
binding) providing benefits to any current or former employee, officer or
director of the Company or any of its Subsidiaries; true, complete and correct
copies of all of such plans, arrangements and understandings have heretofore
been furnished to Parent. Except as disclosed in the SEC Documents, there are
no employment, consulting, severance, termination or indemnification
agreements, arrangements or understandings in effect (other than employment and
consulting agreements which are terminable at will without liability to the
Company) between the Company or any of its Subsidiaries and any current or
former employee, officer or director of the Company or any of its Subsidiaries.
3.11 ERISA Compliance.
(a) The Company Disclosure Schedule contains a list of
each "employee pension benefit plan" (as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
(sometimes referred to herein as a "Pension Plan"), each "employee welfare
benefit plan" (as defined in Section 3(1) of ERISA) and each stock option,
stock purchase, deferred compensation plan or arrangement and each other
employee fringe benefit plan (as defined in Section 6039D(d) of the Internal
Revenue Code of 1986, as amended (the "Code")) maintained, contributed to or
required to be maintained or contributed to by the Company, any of its
Subsidiaries or any other person or entity that, together with the Company, is
treated as a single employer under Section 414(b), (c), (m) or (o) of the Code,
(each, a "Commonly Controlled Entity"), for the benefit of any
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current or former employees, officers, directors or independent contractors of
the Company or any of its Subsidiaries (collectively, "Benefit Plans"). The
Company has delivered to Parent true, complete and correct copies of (i) each
Benefit Plan (or, in the case of any unwritten Benefit Plans, descriptions
thereof), (ii) the most recent annual report on Form 5500 filed with the
Internal Revenue Service with respect to each Benefit Plan (if any such report
was required), (iii) the most recent summary plan description for each Benefit
Plan for which such summary plan description is required and (iv) each
currently effective trust agreement and insurance or group annuity contract
relating to any Benefit Plan.
(b) To the knowledge of the Company, there has been no
failure to administer any Benefit Plan in all material respects in accordance
with its terms, and no failure of the Company, its Subsidiaries or any Benefit
Plan to comply in all material respects with ERISA or the Code.
(c) All Pension Plans intended to be qualified under
Section 401(a) of the Code have been the subject of determination letters from
the Internal Revenue Service to the effect that such Pension Plans are
qualified and exempt from federal income taxes under Sections 401(a) and
501(a), respectively, of the Code and no such determination letter has been
revoked nor, to the knowledge of the Company, has revocation been threatened,
nor has any such Pension Plan been amended since the date of its most recent
determination letter or application therefor in any respect that would
adversely affect its qualification or materially increase its costs.
(d) No Pension Plan that the Company or any of its
Subsidiaries maintains, or to which the Company or any of its Subsidiaries is
obligated to contribute, other than any Pension Plan that is a "multiemployer
plan" (as such term is defined in Section 4001(a)(3) of ERISA; collectively,
the "Multiemployer Pension Plans"), had, as of the respective last annual
valuation date for each such Pension Plan, an "unfunded benefit liability" (as
such term is defined in Section 4001(a)(18) of ERISA), based on actuarial
assumptions which have been furnished to Parent, and neither the Company nor
any of its Subsidiaries is aware of any facts or circumstances that would
materially change the funded status of any such Benefit Plans. None of the
Pension Plans has an "accumulated funding deficiency" (as such term is defined
in Section 302 of ERISA or Section 412 of the Code), and there has been no
application for a waiver of the minimum funding standards imposed by Section
412 of the Code with respect to any Benefit Plan that is a Pension Plan.
(e) None of the Company, any of its Subsidiaries, any
officer of the Company or any of its Subsidiaries or any of the Benefit Plans
which are subject to ERISA, including the Pension Plans, any trusts created
thereunder or any trustee or administrator thereof, has engaged in a nonexempt
"prohibited transaction" (as such term is defined in Section 406 of ERISA or
Section 4975 of the Code) or any other breach of fiduciary responsibility that
could subject the Company, any of its Subsidiaries or any officer of the
Company or any of its Subsidiaries to tax or penalty under ERISA, the Code or
other applicable law that has not been corrected or that individually or in the
aggregate would have a Material Adverse Effect on the Company (determined
assuming that the tax under Section 4975(b) of the Code is imposed with respect
to such prohibited transaction). Any taxes or penalties arising from
prohibited transactions referred to in this Section 3.11(e) that have been
corrected have been paid in full. Neither any of such Benefit Plans nor any of
such trusts that
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are subject to Title IV of ERISA has been terminated, nor has there been any
"reportable event" (as that term is defined in Section 4043 of ERISA) with
respect thereto, during the last three years.
(f) Neither the Company nor any Commonly Controlled
Entity has suffered or otherwise caused a "complete withdrawal" or a "partial
withdrawal" (as such terms are defined in Section 4203 and Section 4205,
respectively, of ERISA) with respect to any of the Multiemployer Pension Plans
that could lead to the imposition of any withdrawal liability under Section
4201 of ERISA; and no action has been taken that alone or with the passage of
time could result in either a partial or complete withdrawal by any Commonly
Controlled Entity in respect of any such plan.
(g) With respect to any Benefit Plan that is an employee
welfare benefit plan, (i) no such Benefit Plan is funded through a "welfare
benefit fund," as such term is defined in Section 419(e) of the Code, (ii) each
such Benefit Plan that is a "group health plan," as such term is defined in
Section 5000(b)(1) of the Code, complies in all material respects with the
applicable requirements of Section 4980B(f) of the Code and (iii) each such
Benefit Plan (including any such Plan covering retirees or other former
employees) may be amended or terminated without material liability to the
Company or any of its Subsidiaries on or at any time after the consummation of
the Offer, after giving any notice required by ERISA or the Code.
(h) No Commonly Controlled Entity has incurred any
material liability to a Pension Plan (other than for contributions not yet
due).
3.12 Taxes.
(a) Each of the Company and each of its Subsidiaries has
filed all material tax returns and reports required to be filed by it
("Returns"). All such Returns are complete and correct in all material
respects. Each of the Company and each of its Subsidiaries has paid (or the
Company has paid on its behalf or made provision for) all material taxes
required to be paid by it, and the most recent financial statements contained
in the SEC Documents properly reflect in accordance with generally accepted
accounting principles all material taxes payable by the Company and its
Subsidiaries for all taxable periods and portions thereof through the date of
such financial statements.
(b) No material deficiencies for any taxes have been
proposed, asserted or assessed against the Company or any of its Subsidiaries
that have not been fully paid or are not properly reflected in accordance with
generally accepted accounting principles in the most recent financial
statements contained in the SEC Documents, other than those taxes being
contested in good faith, and no requests for waivers of the time to assess any
such taxes are pending. The Company has not agreed with any tax authority to
extend the time to assess any such taxes. The Company has not entered into any
closing agreement with respect to any taxable year.
(c) The Company Disclosure Schedule sets forth (i) the
taxable years of the Company or any of its Subsidiaries as to which the
respective statutes of limitations with respect to federal income taxes have
not yet expired, and (ii) those taxable years and taxes as to which the Company
has agreed to extend the applicable statute of limitations.
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(d) None of the Company or any of its Subsidiaries has,
and none of them has ever had, a permanent establishment in any non-U.S.
country, as defined in any applicable tax treaty or convention between the
United States and such non-U.S. country, or any presence in a non-U.S. country
with which the United States does not have a tax treaty or convention that
could subject the Company or any Subsidiary to the tax laws of such non-U.S.
country.
(e) As used in this Agreement, "taxes" shall include all
federal, state, local and foreign income, property, sales, excise and other
taxes, tariffs or duties of any nature whatsoever.
(f) The Company is not a party to any agreements that
could reasonably be expected to result in any payments that would be
characterized as "excess parachute payments" (as such term is defined in
Section 280G(b)(1) of the Code.
3.13 Information Supplied. None of the information supplied or to
be supplied by the Company in writing specifically for inclusion in, and none
of the information specifically to be incorporated by reference in, (a) the
Offer Documents, (b) the Schedule 14D-9, (c) the information statement to be
filed by the Company in connection with the Offer pursuant to Rule 14f-1
promulgated under the Exchange Act (the "Information Statement"), if any, or
(d) any proxy statement (the "Proxy Statement") relating to the "Stockholders
Meeting" (as defined in Section 6.1(a)), will, in the case of the Offer
Documents, the Schedule 14D-9 and the Information Statement, at the respective
times that the Offer Documents, the Schedule 14D-9 and the Information
Statement are filed with the SEC or first published, sent or given to the
Company's stockholders, or, in the case of the Proxy Statement, at the time the
Proxy Statement is first mailed to the Company's stockholders or at the time of
the Stockholders Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Schedule 14D- 9, the Information Statement
and the Proxy Statement will comply in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder,
except that no representation or warranty is made by the Company with respect
to statements made or incorporated by reference therein based on information
supplied in writing by Parent or Merger Sub specifically for inclusion or
incorporation by reference therein.
3.14 Compliance with Applicable Laws.
(a) Each of the Company and each of its Subsidiaries has
in effect all material federal, state, local and foreign governmental
approvals, authorizations, certificates, filings, franchises, licenses,
notices, permits and rights ("Permits") necessary for it to own, lease or
operate its properties and assets and to carry on its business as now
conducted, and there has occurred no default under any such Permit, except for
the lack of Permits and for defaults under Permits which lack or default
individually or in the aggregate would not have a Material Adverse Effect on
the Company.
(b) Except as disclosed in the SEC Documents, to the
knowledge of the Company, the businesses of the Company and its Subsidiaries
are not being conducted in violation of any law,
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ordinance or regulation of any Governmental Entity, except for violations that
would not have a Material Adverse Effect on the Company. As of the date of
this Agreement, no investigation or review by any Governmental Entity with
respect to the Company or any of its Subsidiaries is pending or, to Company's
knowledge, threatened, nor has any Governmental Entity communicated to the
Company an intention to conduct any such investigation or review.
(c) Except as disclosed in the SEC Documents, each of
the Company and its Subsidiaries is, and has been, and each of the Company's
former Subsidiaries, while Subsidiaries of the Company, was, in material
compliance with all applicable "Environmental Laws" (as defined below), except
for noncompliance that would not have a Material Adverse Effect on the
Company). The term "Environmental Laws" means any federal, state or local
statute, code, ordinance, rule, regulation, policy, guideline, permit, consent,
approval, license, judgment, order, writ, decree, directive or injunction now
in effect, including the requirement to register underground storage tanks,
relating to: (i) "Releases" (as defined below) or threatened Releases of
"Hazardous Material" (as defined below) into the environment, including into
ambient air, soil, sediments, land surface or subsurface, buildings or
facilities, surface water, groundwater, publicly-owned treatment works, septic
systems or land; or (ii) the generation, treatment, storage, disposal, use,
handling, manufacturing, transportation or shipment of Hazardous Material.
(d) During the period of ownership or operation by the
Company and its current and former Subsidiaries of any of their respective
current or previously owned or leased properties, the Company has no knowledge
of any Releases of Hazardous Material in, on, under or affecting such properties
that would trigger reporting or cleanup obligations on the part of the Company
or its Subsidiaries under applicable environmental laws, and none of the Company
or its current and former Subsidiaries has disposed of any Hazardous Material or
any other substance in a manner that could reasonably be anticipated to lead to
a Release in, on or affecting such properties. To the Company's knowledge,
prior to the period of ownership or operation by the Company and its current and
former Subsidiaries of any of their respective current or previously owned or
leased properties, no Hazardous Material was generated, treated, stored,
disposed of, used, handled or manufactured at, or transported, shipped or
disposed of from, such current or previously owned properties, and the Company
has no knowledge of any Releases of Hazardous Material in, on, under or
affecting any such property that would trigger reporting or cleanup obligations
on the part of the Company or its Subsidiaries under applicable environmental
laws. The term "Release" has the meaning set forth in 42 U.S.C. Section
9601(22). The term "Hazardous Material" means (i) hazardous materials,
pollutants, contaminants, constituents, medical or infectious wastes, hazardous
wastes and hazardous substances as those terms are defined in the following
statutes and their implementing regulations: the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801 et seq., the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901 et seq., the Comprehensive
Environmental Response, Compensation and Liability Act, as amended by the
Superfund Amendments and Reauthorization Act, 42 U.S.C. Section 9601 et seq.,
the Clean Water Act, 33 U.S.C. Section 1251 et seq., the Toxic Substances
Control Act, 15 U.S.C. Section 2601 et seq. and the Clean Air Act, 42 U.S.C.
Section 7401 et seq., (ii) petroleum, including crude oil and any fractions
thereof, (iii) natural gas, synthetic gas and any mixtures thereof, (iv)
asbestos and/or asbestos-containing material, (v) radon and (vi) PCBs, or
materials or fluids containing PCBs.
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3.15 State Takeover Statutes. The Board of Directors of the
Company has approved the Offer, the Merger, this Agreement and the
Stockholder Agreements, and such approval is sufficient to render inapplicable
to the Offer, the Merger, this Agreement and the Stockholder Agreements and the
transactions contemplated by this Agreement and the Stockholder Agreements the
provisions of Section 203 of the DGCL. No other state takeover statute or
similar statute or regulation applies or purports to apply to the Offer, the
Merger, this Agreement, the Stockholder Agreements or any of the transactions
contemplated by this Agreement or the Stockholder Agreements.
3.16 Brokers; Schedule of Fees and Expenses. No broker,
investment banker, financial advisor or other person, other than Cleary Gull
Reiland & McDevitt ("Cleary Gull"), the fees and expenses of which will be paid
by the Company and a signed copy of the Company's engagement letter with which
has been delivered to Parent, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company. A good faith estimate of the fees and expenses
incurred and to be incurred by the Company in connection with this Agreement
and the transactions contemplated by this Agreement (including the fees of the
Company's legal counsel) is set forth in the Company Disclosure Schedule. No
valid claim exists against the Company or the Surviving Corporation or, based
on any action by the Company or any Subsidiary, against Parent or Merger Sub
for payment of any "topping," "break-up" or "bust-up" fee or any similar
compensation or payment arrangement as a result of the transactions
contemplated hereby, including the Offer and the Merger.
3.17 Contracts; Debt Instruments.
(a) Except as disclosed in the SEC Documents, there is
no contract or agreement, written or oral that is material to the business,
condition (financial or otherwise), properties, assets, results of operations
of the Company or its Subsidiaries (a "Material Contract"); true, complete and
correct copies of all such Material Contracts, or written summaries of oral
agreements, have heretofore been furnished to Parent. For the purposes hereof,
"Material Contracts" shall mean (i) all contracts that are considered to be
"material" within the meaning of Item 601(b)(10) of Regulation S-K promulgated
under the Securities Act of 1933, as amended, and the Exchange Act and (ii) all
other agreements (whether or not material within the meaning of Regulation S-K)
that (A) limit the ability of the Company to engage or compete in any business,
whether or not such business is currently conducted by the Company, (B)
obligate the Company or the other party or parties thereto to pay an amount in
excess of $50,000 at one time or over a period of time, (C) provide for the
employment of any individual by the Company or any of its Subsidiaries, (D)
provide for the distribution of the Company's products, (E) provide for the
license by or from the Company of any patents, copyrights, trademarks or other
intellectual property, or (F) provide for the settlement or compromise of any
litigation. All such Material Contracts are in full force and effect, and, to
the Company's knowledge, the parties thereto other than the Company and its
Subsidiaries have complied and are complying with all of their obligations and
are not in default under (nor, to the Company's knowledge, does there exist any
condition which upon the passage of time or the giving of notice would
reasonably be expected to cause such a violation of or default under) any of
such Material Contracts. Neither the Company nor any of its Subsidiaries is in
violation of or in default under (nor
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does there exist any condition which upon the passage of time or the giving of
notice would reasonably be expected to cause such a violation of or default
under) any loan or credit agreement, note, bond, mortgage, indenture, lease,
permit, concession, franchise, license or any other contract, agreement,
arrangement or understanding to which it is a party or by which it or any of
its properties or assets is bound, except where such violation or default would
not have a Material Adverse Effect on the Company.
(b) Set forth on the Company Disclosure Schedule is (i)
a list of all loan or credit agreements, notes, bonds, mortgages, indentures
and other agreements and instruments (other than accounts payable) pursuant to
which any indebtedness of the Company or any of its Subsidiaries is outstanding
or may be incurred and (ii) the respective principal amounts currently
outstanding thereunder. For purposes of this Agreement, "indebtedness" shall
mean, with respect to any person, without duplication, (A) all obligations of
such person for borrowed money, or with respect to deposits or advances of any
kind to such person, (B) all obligations of such person evidenced by bonds,
debentures, notes or similar instruments, (C) all obligations of such person
upon which interest charges are customarily paid, (D) all obligations of such
person under conditional sale or other title retention agreements relating to
property purchased by such person, (E) all obligations of such person issued or
assumed as the deferred purchase price of property or services (excluding
obligations of such person to creditors for raw materials, inventory, services
and supplies incurred in the ordinary course of such person's business), (F)
all capitalized lease obligations of such person, (G) all obligations of others
secured by any lien on property or assets owned or acquired by such person,
whether or not the obligations secured thereby have been assumed, (H) all
obligations of such person under interest rate or currency hedging transactions
(valued at the termination value thereof), (I) all letters of credit issued for
the account of such person and (J) all guarantees and arrangements having the
economic effect of a guarantee of such person of any indebtedness of any other
person.
3.18 Title to Properties.
(a) Each of the Company and each of its Subsidiaries has
good and marketable title to, or valid leasehold interests in, all its
properties and assets, free and clear of all Liens, other than (i)
materialmen's, mechanics', carriers', workers', repairmen's and other similar
Liens arising or incurred in the ordinary course of business, or statutory
landlords' Liens under leases to which the Company is a party, with respect to
which the underlying obligation is not in default, (ii) the statutory rights of
third parties with respect to inventory or work in progress under orders or
contracts entered into by the Company in the ordinary course of business, (iii)
Liens that are immaterial in amount and do not materially impair the present
or contemplated use of the properties or assets subject thereto or affected
thereby, or otherwise materially impair present or contemplated business
operations in which such properties are used, (iv) as reflected in the
financial statements included in the Company's Form 10-Q for the fiscal quarter
ended September 30, 1996, (v) Liens for taxes not yet delinquent, and (vi)
claims consisting of leases with respect to which the underlying obligation is
not in default.
(b) Each of the Company and each of its Subsidiaries has
complied in all material respects with the terms of all leases of which it is a
party and under which it is in occupancy, all such leases are in full force and
effect and, to the Company's knowledge, the parties thereto other than the
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Company and its Subsidiaries have complied and are complying with all of their
obligations and are not in default under (nor does there exist any condition
which upon the passage of time or the giving of notice would reasonably be
expected to cause such a violation of or default under) any of such leases.
Each of the Company and each of its Subsidiaries enjoys peaceful and
undisturbed possession under all such leases.
3.19 Labor Matters. There are no collective bargaining or other
labor union agreements to which the Company or any of its Subsidiaries is a
party or by which any of them is bound. Neither the Company nor any of its
Subsidiaries has encountered any labor union organizing activity, or had any
actual or, to the Company's knowledge, threatened employee strikes, work
stoppages, slowdowns or lockouts.
3.20 Insurance. As of the date hereof, the Company and each of
its Subsidiaries are covered under insurance policies and programs which
provide coverage to the Company against such losses and risks and in such
amounts as are adequate and customary in the businesses in which they are
engaged; true, complete and correct copies of all such policies and programs
have heretofore been furnished to Parent. All material policies of insurance
and fidelity or surety bonds insuring the Company or any of its Subsidiaries or
their respective businesses, assets, employees, officers and directors are in
full force and effect. Except as otherwise disclosed pursuant to Section 3.9,
as of the date hereof, there are no material claims by the Company or any
Subsidiary under any such policy or instrument as to which any insurance
company is denying liability or defending under a reservation of rights clause.
All necessary notifications of claims have been made to insurance carriers.
3.21 Intellectual Property Matters.
(a) The Company owns or has the right to use, free and
clear of all Liens, charges, claims and restrictions, all know-how, processes,
patents, trade secrets, trademarks, service marks, trade names, copyrights,
licenses, proprietary rights and other intellectual property rights materially
necessary to its business as now conducted or contemplated (the "Company
Intellectual Property Rights"). Any license agreement by which any Company
Intellectual Property Right is licensed by the Company from a third party has
heretofore been furnished to Parent.
(b) To the Company's knowledge it is not infringing upon
or otherwise acting adversely to any actual or claimed know-how, process,
patent, trade secret, trademark, service mark, trade name, copyright, license,
information, proprietary right or other right of any person. The Company has
not received any communications alleging that the Company has violated or, by
conducting its business as now conducted or currently proposed to be conducted
by the Company, would violate any know-how, process, patent, trade secret,
trademark, service mark, trade name, copyright, license, or other proprietary
right of any person, and, to the Company's knowledge, there is no basis for any
such allegation.
(c) To the Company's knowledge, there is no actual or
threatened infringement or adverse use of the Company's Intellectual Property
Rights. There are no outstanding options, licenses or agreements of any kind
relating to any Company Intellectual Property Rights in favor of
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any third party (other than license agreements on the Company's standard form
entered into in the ordinary course of business).
(d) To the Company's knowledge, neither the execution
nor delivery of this Agreement, nor the carrying on of the Company's business
by the employees of the Company, nor the conduct of the Company's business as
now conducted or under development, will conflict with or result in a breach of
the terms, conditions or provisions of, or constitute a default under or a
violation of, any fiduciary duty or any contract, covenant or instrument under
which any of such employees is now obligated. To the Company's knowledge, it
is not, nor will it be necessary to, utilize any inventions of any of the
Company's employees made prior to their employment by the Company.
(e) No present or former employee of the Company or its
Subsidiaries and no other person owns or has any proprietary, financial or
other interest, direct or indirect, in whole or in part, in any Company
Intellectual Property Rights. The Company Disclosure Schedule lists all
confidentiality or non-disclosure agreements to which the Company or its
Subsidiaries or any of its or their employees is a party, other than customary
agreements on the Company's standard form with employees who are not officers
or directors.
3.22 Payments. Neither the Company nor any of its Subsidiaries
has paid or delivered any fee, commission or other sum of money or item of
property to any finder, agent, government official or other party, in the
United States or any other country, which is related to the business or
operations of the Company or any of its Subsidiaries, which the Company knows
or has reason to believe to have been illegal under any federal, state or local
laws of the United States or any other country having jurisdiction; and to the
Company's knowledge, neither the Company nor any of its Subsidiaries has
participated in any illegal boycotts or other similar practices affecting any
of its actual or potential customers. To the Company's knowledge, the Company
and its Subsidiaries are in compliance in all material respects with the
Foreign Corrupt Practices Act.
3.23 Suppliers and Customers. There are no material agreements
which commit the Company or any of its Subsidiaries to sell products or
purchase materials or components at fixed prices or prices determined by an
established formula, other than purchase orders on the Company's standard form
for normal commercial quantities entered into in the ordinary course. Except
as disclosed in the SEC Documents, no customer accounted for more than five
percent of the Company's or any of its Subsidiaries sales in either of the past
two fiscal years (any such customer being a "Material Customer") and no
supplier material to the business of the Company and its Subsidiaries, taken as
a whole, or Material Customer has terminated its relationship with the Company
or any of its Subsidiaries or has during the past fiscal year materially
decreased or delayed, or, to the Company's knowledge, threatened to materially
decrease or delay its services or supplies to the Company or any of its
Subsidiaries or decrease its usage of the Company's or any of its Subsidiaries'
products or services. None of the Company or any of its Subsidiaries is aware
of any facts or events which may reasonably be expected to form the basis for
such a decrease or delay. Set forth on the Company Disclosure Schedule is a
complete and accurate list of:
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(a) each supplier where purchases exceeded $74,000 for
the six months ended December 31, 1996;
(b) each customer to whom sales exceeded $42,000 for the
six months ended December 31, 1996 and the aggregate sales with respect to each
such customer; and
(c) each supplier who constitutes a single source of
supply to the Company or any of its Subsidiaries where purchases exceeded
$25,000 for the last fiscal year.
3.24 Regulatory Matters.
(a) None of the Company or any of its Subsidiaries sells
any products for which a premarket approval of or 510(k) notification to the
U.S. Food and Drug Administration ("FDA") or any other federal, state, local,
non-U.S. or other governmental authority is required, or for which applications
for premarket approval or premarket notification have been filed or granted,
and there are no products sold by the Company or any of its Subsidiaries which
are, and none of the Company or any of its Subsidiaries is, otherwise subject
to the jurisdiction of the FDA or any similar state, local, non-U.S. or other
governmental authority.
(b) To the Company's knowledge, there exists no set of
facts which would cause the Company or any of its Subsidiaries to recall any
product from the market or to restrict the marketing of any product or to
terminate or suspend testing of any product.
ARTICLE 4 -- REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company as follows:
4.1 Organization and Qualification. Each of Parent and Merger
Sub is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the requisite corporate power
to carry on its business as now conducted and as proposed to be conducted.
4.2 Authority Relative to this Agreement. Each of Parent and
Merger Sub has the requisite corporate power and authority to enter into this
Agreement and to carry out its respective obligations hereunder. The execution
and delivery of this Agreement by Parent and Merger Sub and the consummation by
Parent and Merger Sub of the transactions contemplated hereby have been duly
authorized by the respective Boards of Directors of Parent and Merger Sub and
by Parent as the sole stockholder of Merger Sub, and no other corporate
proceedings on the part of Parent or Merger Sub are necessary to authorize this
Agreement or the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Parent and Merger Sub and constitutes a valid
and binding obligation of each such company, enforceable against such company
in accordance with its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally. Neither Parent nor
Merger
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Sub is subject to or obligated under any provision of (a) its respective
Certificate of Incorporation or Bylaws, (b) any contract, (c) any license,
franchise or permit or (d) any law, regulation, order, judgment or decree,
which would be breached, or violated or defaulted (with or without due notice
or lapse of time or both) or in respect of which a right of termination or
acceleration or a loss of a material benefit or any encumbrance on any of its
assets would be created by its execution and performance of this Agreement,
except (as to (b), (c) or (d) above) where such breach, violation or right
would not, individually or in the aggregate have a Material Adverse Effect on
Parent or prevent or materially delay Parent or Merger Sub from performing its
obligations under this Agreement. The consummation of the Offer and the Merger
by Parent and Merger Sub will not require the consent or approval of any party
other than (x) applicable requirements, if any, of the Exchange Act, state
"blue sky" or takeover laws and the HSR Act, (y) filing and recordation of
appropriate merger documents as required by the DGCL and (z) where failure to
obtain such consents or approvals would not, individually or in the aggregate,
have a Material Adverse Effect on Parent or prevent or materially delay Parent
or Merger Sub from performing its obligations under this Agreement.
4.3 Financing. Parent has, or has the borrowing facilities to
obtain, all funds necessary for the payment of the aggregate purchase price of
the Shares in the Offer and the Merger and any and all amounts which may become
payable under Sections 2.11 and 2.12 hereof and to pay all of its related fees
and expenses pursuant to the Offer and the Merger.
4.4 Ownership of Company Securities. Parent is not now, and has
not during the three- year period ending on the date hereof been, the direct or
indirect owner of 15% or more of the outstanding voting securities of the
Company (for purposes of this representation, Parent shall not be deemed to own
any Shares by virtue of the execution of the Stockholder Agreements).
4.5 Information Supplied. None of the information supplied or to
be supplied by Parent or Merger Sub specifically for inclusion in, and none of
the information specifically to be incorporated by reference in, (a) the Offer
Documents, (b) the Schedule 14D-9, (c) the Information Statement, if any, or
(d) any Proxy Statement will, in the case of the Offer Documents, the Schedule
14D-9 and the Information Statement, at the respective times that the Offer
Documents, the Schedule 14D-9 and the Information Statement are filed with the
SEC or first published, sent or given to the Company's stockholders, or, in the
case of the Proxy Statement, at the time the Proxy Statement is first mailed to
the Company's stockholders or at the time of the Stockholders Meeting, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
4.6 Capitalization. The authorized capital stock of Merger Sub
consists of 1,000 shares of common stock. As of the date hereof, there are 100
shares of common stock of Merger Sub outstanding. All outstanding shares of
capital stock of Merger Sub are duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights.
4.7 Financial Advisor. Since January 1, 1995, Cleary Gull has
not been engaged by, has not provided any investment banking or other financial
advisory services to, and has not been paid
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for the provision of any such services by, Parent, Merger Sub or any of their
subsidiaries or affiliates; provided, however, Cleary Gull may have, since
January 1, 1995, made a market in and traded, and may in the future make a
market in and trade, securities of Parent in the ordinary course of its
business for its own account and the account of its customers. This
representation and warranty is intended to benefit the Company and each member
of its Board of Directors each of whom shall be a third party beneficiary of
this Section 4.7.
ARTICLE 5 -- CONDUCT OF BUSINESS PENDING THE MERGER
5.1 Conduct of Business by the Company Pending the Merger. The
Company covenants and agrees that, from the date hereof until the Effective
Time, unless expressly contemplated by this Agreement or as may be agreed to in
writing by Parent:
(a) The businesses of the Company and its Subsidiaries
shall be conducted only in the ordinary course of business and consistent with
past practice;
(b) the Company shall not, and shall not permit any of
its Subsidiaries to: (i) sell or pledge or agree to sell or pledge any stock
owned by it in any of its Subsidiaries; (ii) amend its Certificate of
Incorporation or By-Laws; or (iii) split, combine or reclassify any shares of
its outstanding capital stock or declare, set aside or pay any dividend or
other distribution payable in cash, stock or property or redeem or otherwise
acquire any shares of its capital stock;
(c) the Company shall not, and shall cause each of its
Subsidiaries not to: (i) authorize for issuance, issue or sell any additional
shares of, or rights of any kind to acquire any shares of, its capital stock of
any class (whether through the issuance or granting of stock options, warrants,
convertible securities, commitments, subscriptions, rights to purchase or
otherwise), except for unissued Shares reserved for issuance upon the exercise
of Stock Options or Warrants outstanding on the date hereof in accordance with
their existing terms; (ii) acquire, dispose of, transfer, lease, license,
mortgage, pledge or encumber any material assets; (iii) incur, assume or prepay
any indebtedness for borrowed money or any other material liabilities, except
accounts payable incurred in the ordinary course of business consistent with
past practice, or issue or sell any debt securities or warrants or rights to
acquire debt securities of the Company or any of its Subsidiaries; (iv) assume,
endorse (other than in the ordinary course of business consistent with past
practices), guarantee or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the material obligations of any other
person; (v) make any loans, advances or capital contributions to, or
investments in, any other person or otherwise enter into any Material Contract
other than in the ordinary course of business and consistent with past
practices; (vi) make any loans to employees, other than travel advances in the
ordinary course of business; (vii) fail to maintain adequate insurance
consistent with past practices for its business and properties;
(viii) undertake, make or commit to undertake or make any capital expenditures
in an amount greater than $10,000 per individual capital expenditure and no
more than $25,000 per month in the aggregate (on a combined basis for the
Company and the Subsidiaries); or (ix) enter into any contract, agreement,
commitment or arrangement with respect to any of the foregoing;
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(d) the Company shall use its reasonable best efforts
consistent with past practice to preserve intact the business organization of
the Company and its Subsidiaries, keep available the services of its and their
present officers and employees, and preserve its existing relationships with
customers, suppliers and others with which it and its respective Subsidiaries
have business dealings;
(e) the Company shall not, and shall cause its
Subsidiaries not to, (i) enter into any new agreements or amend or modify any
existing agreements with any of its respective officers, directors or employees
or with any "disqualified individuals" (as defined in Section 280G(c) of the
Code), (ii) grant any increases in the compensation of its respective
directors, officers and employees or any "disqualified individuals" (as defined
in Section 280G(c) of the Code) other than (A) pursuant to written agreements
in effect at the date hereof, true, complete and correct copies of all of which
have previously been furnished to Parent by the Company, or (B) increases in
the ordinary course of business and consistent with past practice to persons
who are not directors or corporate officers of or "disqualified individuals"
with respect to the Company or any Subsidiary, (iii) enter into, adopt, amend
or terminate, or grant any new benefit not presently provided for under, any
employee benefit plan or arrangement, except as required by law or to maintain
the tax qualified status of the plan; provided, however, that the Company or
its subsidiaries may terminate to the extent permitted by applicable law any
benefit or any employee benefit plan or arrangement or (iv) take any action
with respect to the grant of any severance or termination pay other than in the
ordinary course of business and consistent with past practice and pursuant to
policies in effect on the date of this Agreement;
(f) the Company shall not, and shall not permit any
Subsidiary to, acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, association or other business
organization or division thereof or otherwise acquire or agree to acquire any
assets (other than equipment, inventory and supplies in the ordinary course of
business);
(g) the Company shall not, and shall not permit any of
its Subsidiaries to, sell, lease, license, encumber or otherwise dispose of, or
agree to sell, lease, license, encumber or otherwise dispose of, any of its
material assets;
(h) the Company shall take all actions reasonably
necessary so that the conditions set forth in the Appendix which require
actions to be performed by the Company are satisfied on a timely basis, except
as contemplated by this Agreement;
(i) unless the Company receives a "Superior Acquisition
Proposal" (as defined in Section 6.5(b) hereof), the Company will not call any
meeting of its stockholders to be held prior to March 25, 1997 other than as
required by this Agreement;
(j) the Company shall not, and shall not permit any
Subsidiary to, make any tax election or settle (except to settle reserved
amounts for an amount equal to or less than the amount so reserved) or
compromise any income tax liability;
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(k) the Company and each Subsidiary shall make timely
payments, in accordance with the terms applicable thereto, of all currently due
liabilities for borrowed money;
(l) the Company shall not, and shall not permit any
Subsidiary to, pay, discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge, settlement or satisfaction, in
the ordinary course of business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved against in the most
recent consolidated financial statements (or the notes thereto) of the Company
included in the SEC Documents;
(m) the Company shall not, and shall not permit any
Subsidiary to, modify, amend or terminate any Material Contract, lease of real
property or of a material amount of assets, or agreement relating to
indebtedness or the extension of credit, or waive, release or assign any rights
or claims thereunder; and
(n) the Company shall maintain in full force and effect
its current policies of directors' and officers' liability insurance covering
all persons who are presently covered by such policies.
5.2 Actions by Parent and Merger Sub Pending the Merger. None of
the provisions contained in Section 5.1 of this Agreement shall prohibit Parent
or Merger Sub (or any of their respective subsidiaries), during the period
between the payment for Shares pursuant to the Offer and the Effective Time,
from taking or causing to be taken any action with respect to the business of
the Company and its Subsidiaries that Parent or Merger Sub (or any of their
respective subsidiaries) would legally be permitted to take or cause to be
taken with respect to a majority owned subsidiary of Parent or Merger Sub (or
any of their respective subsidiaries), provided that Parent shall not take any
action in violation of the terms of this Agreement that would cause Parent's
obligations to effect the Merger hereunder to not be satisfied and provided
further that any such action taken by or at the direction of Parent or Merger
Sub (or any of their respective subsidiaries) shall not cause a breach by the
Company of any of the provisions of Section 5.1 of this Agreement.
ARTICLE 6 -- ADDITIONAL AGREEMENTS
6.1 Stockholder Approval; Preparation of Proxy Statement.
(a) If the approval of the Merger by the Company's
Stockholders (the "Company Stockholder Approval") is required by law, the
Company will, at Parent's request, as soon as practicable in accordance with
applicable law following acceptance for payment of and payment for shares of
Company Common Stock, duly call, give notice of, convene and hold a meeting of
its stockholders (the "Stockholders' Meeting") for the purpose of obtaining
such Company Stockholder Approval. The Company will, through its Board of
Directors, subject to Section 6.5(b) hereof, recommend to its stockholders that
such Company Stockholder Approval be given. Notwithstanding the foregoing, if
Parent, Merger Sub or any other subsidiary of Parent shall acquire at least 90%
of
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the outstanding Shares, the parties shall, at the request of Parent, take all
necessary and appropriate action to cause the Merger to become effective as
soon as practicable after the expiration of the Offer without a Stockholders'
Meeting in accordance with Section 253 of the DGCL. Without limiting the
generality of the foregoing, the Company agrees that its obligations pursuant
to the first sentence of this Section 6.1(a) shall not be affected by (i) the
commencement, public proposal, public disclosure or communication to the
Company of any "Acquisition Proposal" (as defined in Section 6.5(a)) that is
not a "Superior Acquisition Proposal" (as defined in Section 6.5(b)) or (ii)
the withdrawal or modification by the Board of Directors of the Company of its
approval or recommendation of the Offer, this Agreement or the Merger.
(b) If the Company Stockholder Approval is required by law,
the Company will, at Parent's request, as soon as practicable following
acceptance for payment of and payment for shares of Company Common Stock,
prepare and file a preliminary Proxy Statement (or, if applicable, an
information statement in lieu of proxy statement pursuant to Rule 14C under the
Exchange Act, with all references herein to the Proxy Statement being deemed to
refer to such information statement, to the extent applicable) with the SEC and
will use its best efforts to respond to any comments of the SEC or its staff
and to cause the definitive Proxy Statement to be mailed to the Company's
stockholders as promptly as practicable after responding to all such comments
to the satisfaction of the SEC staff. The Company will notify Parent promptly
of the receipt of any comments from the SEC or its staff and of any request by
the SEC or its staff for amendments or supplements to the Proxy Statement or
for additional information and will supply Parent with true, complete and
correct copies of all correspondence between the Company or any of its
representatives, on the one hand, and the SEC or its staff, on the other hand,
with respect to the Proxy Statement or the Merger. If at any time prior to the
Stockholders' Meeting there shall occur any event that should be set forth in
an amendment or supplement to the Proxy Statement, the Company will promptly
prepare and mail to its stockholders such an amendment or supplement. The
Company will not mail any Proxy Statement, or any amendment or supplement
thereto, to which Parent reasonably objects, it being understood that Parent
may not reasonably object to the inclusion of information deemed necessary by
the Company, upon the written advice of its outside counsel, in order to comply
with the Exchange Act and the rules and regulations promulgated thereunder.
(c) Parent agrees to cause all Shares purchased pursuant to
the Offer and all other Shares owned by Merger Sub or any other subsidiary of
Parent to be voted in favor of the Company Stockholder Approval.
6.2 Stock Options and Warrants . Within five business days after
the commencement of the Offer, the Company will notify in writing each holder
of a Stock Option under the Stock Option Plans and each holder of a Warrant of
the effect of the Merger on the rights of the option holder and warrant holder
as described in Section 2.11 and Section 2.12, respectively.
6.3 Expenses.
(a) Except as provided in Section 6.3(b) below, whether or
not the Offer and/or the Merger are consummated, each of the Company and Parent
will separately bear its own expenses,
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including the fees and disbursements of counsel, investment bankers and
accountants, incurred in connection with the Offer, the Merger, this Agreement
and the transactions contemplated hereby.
(b) If the Company or any Affiliate or Agent (as defined
in Section 6.5) of the Company shall fail to fulfill its obligations under
Section 6.5, or shall enter into an agreement which contemplates the sale of
all or any material portion of the assets of, or any equity interest in, the
Company to a third party, or the parties to the Stockholder Agreements or any
of them shall enter into an agreement which contemplates such a transaction,
then, in any such case, the Company shall promptly reimburse Parent for all of
its out-of-pocket expenses incurred in connection with the Offer, the Merger,
this Agreement, the Stockholder Agreements or any transactions contemplated by
this Agreement or the Stockholder Agreements.
6.4 Other Actions. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by the Offer and this
Agreement, including (a) consummation of the Offer and payment for the Shares
duly and properly tendered therein, (b) filing the Certificate of Merger
referred to in Section 2.2, (c) removing any legal impediment to the
consummation or effectiveness of such transactions and (d) obtaining all
necessary waivers, consents and approvals and to effect all necessary
registrations and filings, including, but not limited to, filings under the HSR
Act and submissions of information requested by governmental authorities,
subject to the appropriate vote of stockholders of the Company required to so
vote as described in Section 6.1(a).
6.5 Exclusive Dealing.
(a) Neither the Company nor any of its Subsidiaries,
officers, directors, or the directors and officers of its Subsidiaries, nor any
of its other affiliates (each, an "Affiliate") shall, and the Company shall
cause its and its respective Affiliates' employees, agents and representatives
(including, without limitation, any investment banking, legal or accounting
firm retained by the Company or any of its Affiliates and any individual member
or employee of the foregoing) (each, an "Agent") not to: (i) initiate, solicit
or seek, directly or indirectly, any inquiries or the making or implementation
of any proposal or offer (including, without limitation, any proposal or offer
to its stockholders or any of them) with respect to a merger, acquisition,
consolidation, recapitalization, liquidation, dissolution or similar
transaction involving, or any purchase of all or a substantial portion of the
assets or any equity securities of, the Company or any of its Subsidiaries,
except for the transactions contemplated by this Agreement (any such proposal
or offer being hereinafter referred to as an "Acquisition Proposal"); or (ii)
engage in any negotiations concerning, or provide any confidential information
or data to, or have any discussions with, any person relating to an Acquisition
Proposal; or (iii) otherwise cooperate in any effort or attempt to make,
implement or accept an Acquisition Proposal; provided, however, that the
Company may, if it receives an Acquisition Proposal which was not directly or
indirectly initiated, solicited or otherwise sought by the Company or by any of
its Affiliates or its or their respective Agents, and which is a Superior
Acquisition Proposal (as defined below), respond to such Superior Acquisition
Proposal by engaging
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in negotiations with respect thereto and providing nonpublic information
concerning the Company to the person making such Superior Acquisition Proposal,
provided that such person has entered into a written confidentiality agreement
on terms no more favorable to such person than the Mutual Confidential
Non-Disclosure Agreement, dated October 8, 1996, between the Company and
Parent, is to Parent, and provided further that the Company has received a
written opinion of its outside counsel that such response is required in order
to satisfy the fiduciary duties imposed under applicable law on its Board of
Directors. The Company shall take the necessary steps to inform the
individuals and entities referred to in the first sentence hereof of the
obligations undertaken in this Section 6.5(a).
(b) Unless this Agreement has theretofore been
terminated pursuant to Section 8.1(f) hereof, neither the Board of Directors of
the Company nor any committee thereof shall (i) withdraw or modify, or propose
to withdraw or modify, in a manner adverse to Parent or Merger Sub, the
approval or recommendation by such Board of Directors or any such committee of
the Offer, this Agreement or the Merger, (ii) approve or recommend, or propose
to approve or recommend, any Acquisition Proposal, or (iii) enter into any
agreement with respect to any Acquisition Proposal. Notwithstanding the
foregoing, in the event the Board of Directors of the Company receives an
Acquisition Proposal that constitutes a "Superior Acquisition Proposal" (as
defined below), the Board of Directors may (subject to the limitations
contained in this Section) withdraw or modify its approval or recommendation of
the Offer, this Agreement or the Merger, approve or recommend any such Superior
Acquisition Proposal, enter into an agreement with respect to any such Superior
Acquisition Proposal or terminate this Agreement, in each case at any time
after 48 hours following Parent's receipt of written notice (a "Notice of
Superior Acquisition Proposal") advising Parent that the Board of Directors has
received a Superior Acquisition Proposal, specifying the material terms and
conditions of such Superior Acquisition Proposal and identifying the person
making such Superior Acquisition Proposal. For purposes of this Agreement, a
"Superior Acquisition Proposal" means an Acquisition Proposal received by the
Company without violation of the provisions of Section 6.5(a), having terms
which the Board of Directors of the Company determines, in the exercise of its
fiduciary duties, after consultation with outside counsel, and upon the written
opinion of its outside financial advisor to be more favorable to the Company's
stockholders from a financial point of view than the Offer and the Merger.
(c) In addition to the obligations of the Company set
forth in paragraph (b) of this Section 6.5, the Company shall promptly advise
Parent orally and in writing of any request for nonpublic information relating
to the Company or by any person that, to the Company's knowledge, may be
considering making, or has made, an Acquisition Proposal, or the receipt of any
Acquisition Proposal, or any inquiry with respect to any Acquisition Proposal,
the material terms and conditions of such request, Acquisition Proposal or
inquiry, and the identity of the person making any such Acquisition Proposal or
inquiry. The Company will keep Parent fully informed of the status and details
of any such request, Acquisition Proposal or inquiry.
6.6 Notification of Certain Matters. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(a) the occurrence, or failure to occur, of any event, which occurrence or
failure would be likely to cause any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect at any time
from the date hereof
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to the Effective Time, and (b) any material failure of the Company or Parent,
as the case may be, or any officer, director, employee or agent thereof, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder.
6.7 Access to Information. The Company shall, and shall cause
its Subsidiaries, officers, directors, employees and agents to, upon reasonable
notice, afford the officers, employees, agents and representatives of Parent
complete access at all reasonable times, from the date hereof to the Effective
Time, to its officers, employees, agents, properties, books and records, and
shall furnish Parent all financial, operating and other data and information as
Parent, through its officers, employees, agents or representatives, may
reasonably request.
6.8 Antitrust Laws. As promptly as practicable, the Company,
Parent and Merger Sub shall make all filings and submissions under the HSR Act
as may be reasonably required to be made in connection with this Agreement and
the transactions contemplated hereby. Subject to Section 6.7 hereof, the
Company will furnish to Parent and Merger Sub, and Parent and Merger Sub will
furnish to the Company, such information and assistance as the other may
reasonably request in connection with the preparation of any such filings or
submissions. Subject to Section 6.7 hereof and to the preservation of
attorney-client privilege and work-product doctrine, the Company will provide
Parent and Merger Sub, and Parent and Merger Sub will provide the Company, with
true, complete and correct copies of all correspondence, filings and
communications (or memoranda setting forth the substance thereof) between such
party or any of its representatives, on the one hand, and any governmental
agency or authority or members of their respective staffs, on the other hand,
with respect to this Agreement and the transactions contemplated hereby;
provided, however, that Parent and Merger Sub shall not be required to provide
the Company with copies of confidential documents or information included in
Parent's filings and submissions under the HSR Act.
6.9 Public Announcements. Upon execution of this Agreement, an
appropriate public announcement of the transactions contemplated hereby, the
form and substance of which shall have been agreed to by Parent and the
Company, shall be made; provided, that no such announcement shall be made
unless and until it shall comply with Rule 14d-2 under the Exchange Act. So
long as this Agreement is in effect and subject to Section 6.5(b), neither
Parent nor the Company shall make any other press release or other written
public statement concerning the transactions contemplated by this Agreement,
including the Offer and the Merger, without the approval of the other party
hereto; provided, however, that either Parent or the Company may, without such
approval, make such press releases or other written public statements as are
required by law, and shall consult with the other party with respect to the
form and substance of such statements.
6.10 Directors. The Company will comply with the requirements of
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, so
that, upon the acceptance for payment of, and payment for, any Shares by Merger
Sub pursuant to the Offer which, when taken together with any Shares which
Parent beneficially owns (as such term is defined under the Exchange Act),
represent at least a majority of the then outstanding Shares, Merger Sub shall
be entitled at such time to designate the directors on the Board of Directors
of the Company, and the Company shall, at such time, obtain resignations of
all then-serving Directors and, prior to such resignations, cause Merger
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Sub's designees to be elected to, and to constitute all of, the Board of
Directors of the Company. The Company agrees to cooperate in permitting the
exercise by Merger Sub of its rights under this Section 6.10, including,
without limitation, (x) cooperating in satisfying the requirements of
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, and
(y) amending, prior to the expiration date of the Offer, any provisions of the
By-Laws or any agreement by which the Company is bound that could delay or
hinder the ability of Merger Sub or Parent to elect its designees to a majority
of the directorships constituting the Board of Directors of the Company. The
Company will not take any action to delay or hinder such election.
6.11 Directors' and Officers' Insurance Coverage.
(a) For six years after the earlier of (i) the date on
which the designees of Merger Sub have been elected to the Board of Directors
of the Company pursuant to Section 6.10 hereof and constitute all the members
thereof and (ii) the Effective Time, Parent and the Surviving Corporation shall
indemnify, defend and hold harmless the present officers, directors, employees
and agents of the Company and its Subsidiaries (each an "Indemnified Party")
against all losses, claims, damages, liabilities, fees and expenses (including
reasonable fees and disbursements of counsel) and judgments, fines, losses,
claims, liabilities and amounts paid in settlement (provided that any such
settlement is effected with the prior written consent of Parent or the
Surviving Corporation, which consent shall not be unreasonably withheld))
arising out of actions or omissions occurring at or prior to the Effective Time
(including without limitation matters arising out of or pertaining to the
transactions contemplated by this Agreement) to the full extent permitted by
the DGCL or the Company's certificate of incorporation or bylaws as in effect
at the date hereof, including provisions therein relating to the advancement of
expenses incurred in the defense of any action or suit; provided, however, that
in the event any claim or claims are asserted or made within such six-year
period, all rights to indemnification in respect of any such claim or claims
shall continue until disposition of the claim to which such rights are
applicable.
(b) For two years after the Effective Time, Parent and
the Surviving Corporation will (i) maintain the current policies of officers'
and directors' liability insurance in respect of acts or omissions (including
without limitation matters arising out of or pertaining to the transactions
contemplated by this Agreement) occurring at or prior to the Effective Time
covering each person who is an officer or director of the Company on the date
hereof and who is currently covered by the Company's officers' and directors'
liability insurance policy, or (ii) substitute policies providing substantially
similar coverage containing terms and conditions that, taken together, are not
materially less advantageous, and provided that such substitution does not
result in gaps or lapses in coverage.
(c) Parent and the Surviving Corporation shall pay all
expenses (including attorneys' fees) that may be incurred by any Indemnified
Party or person having rights to coverage pursuant to this Section 6.11
(collectively, "Covered Persons") in enforcing the obligations of Parent and
the Surviving Corporation provided for in this Section 6.11, provided that no
such expenses shall be payable if such Indemnified Party or person is found, in
or as a result of such enforcement action, not to have the rights to coverage
claimed by such Indemnified Party or person. The parties hereto acknowledge
and agree that the remedy at law for any breach of the obligations under this
Section
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6.11 is and will be insufficient and inadequate and that the Covered Persons,
in addition to any remedies at law, shall be entitled to equitable relief.
Without limiting any remedies Covered Persons may otherwise have hereunder or
under applicable law, in the event of nonperformance of any obligation under
this Section 6.11, the Covered Persons shall have, in addition to any other
rights at law or equity, the right to specific performance.
(d) The rights under this Section 6.11 are contingent
upon, and shall survive, the consummation of the Offer, are intended to benefit
the Company, the Surviving Corporation and each Covered Person, shall be
binding on all successors and assigns of Parent and the Surviving Corporation
and shall be enforceable by each Covered Person, each of whom shall be a third
party beneficiary of this Section 6.11.
6.12 Benefit Plans and Certain Contracts.
(a) Parent hereby agrees to cause the Surviving
Corporation to pay, in accordance with their terms as in effect on the date
hereof, all amounts due and payable under the terms of all written employment
contracts, agreements, plans, policies and written commitments of the Company
and its Subsidiaries with or with respect to its current employees, officers
and directors as such contracts, agreements, plans, policies and written
commitments are described in the Company Disclosure Schedule. For at least two
years following the Effective Time, each employee of the Company and its
Subsidiaries (while such person remains an employee of the Company and its
Subsidiaries) shall be entitled to participate in all Benefit Plans maintained
or sponsored by the Company or in benefit plans providing substantially similar
benefits.
(b) Upon or prior to the consummation of the Offer,
Parent and the Company shall enter into an employment agreement with Dewey F.
Edmunds (the "Employment Agreement").
(c) Nothing contained in this Agreement (other than as
specifically provided in the Employment Agreement), including, without
limitation, this Section 6.12, shall confer on any person not a party to this
Agreement, or constitute or be evidence of any agreement or understanding,
express or implied, that any person has a right to be employed as an employee
of or consultant to Parent or the Surviving Corporation for any period of time
or at any specific rate of compensation, or that any employee or other person
shall have a right to participate in any benefit plans maintained by Parent, or
to receive any equity or options to acquire equity in the Company or Parent.
ARTICLE 7 -- CONDITIONS
7.1 Conditions to Obligation of each Party to Effect the Merger.
The respective obligations of each party to effect the Merger shall be subject
to the fulfillment or waiver at or prior to the Effective Time of the following
conditions:
(a) If required by the DGCL, the Company Stockholder
Approval shall have been obtained by the requisite vote of the stockholders of
the Company;
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(b) No statute, rule, regulation, executive order,
decree, temporary restraining order, preliminary injunction or permanent
injunction or other order or legal restraint or prohibition preventing the
consummation of the Merger shall have been issued by any Governmental Entity
and shall remain in effect; and
(c) All authorizations, consents, orders or approvals
of, or declarations or filings with, or expiration of waiting periods imposed
by, any Governmental Entity necessary for the consummation of the Merger and
the transactions contemplated by this Agreement shall have been filed, occurred
or been obtained and shall be in effect at the Effective Time.
7.2 Additional Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is also subject to the condition
that each of Parent and Merger Sub shall have made the Offer in accordance with
its terms as contemplated by Section 1.1 hereof and shall have consummated the
Offer in accordance with its terms.
ARTICLE 8 -- TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether prior to or after any approval by the
stockholders of the Company:
(a) by mutual written consent of the Boards of Directors
of Parent and the Company;
(b) by Parent if (i) neither Parent nor any subsidiary
of Parent shall have accepted for payment any Shares pursuant to the Offer by
the sixtieth day following commencement of the Offer and such failure is not in
breach of the Offer or this Agreement, or (ii) Parent has properly terminated
the Offer in accordance with its terms; provided that Parent may not terminate
this Agreement pursuant to this Section 8.1(b) if (A) the failure of Parent or
Merger Sub to fulfill any obligation under this Agreement has been the cause
of, or resulted in, the circumstances described in clause (i), or (B) in the
case of clause (ii), Parent or Merger Sub has not exercised such right by the
close of business on or before the fifth business day following the termination
of the Offer in accordance with its terms;
(c) by Parent and Merger Sub prior to the purchase of
Shares pursuant to the Offer if there shall have been any material breach of a
material obligation of the Company hereunder and such breach shall not have
been remedied within five days after receipt by the Company of notice in
writing from Parent or Merger Sub specifying such breach and requesting that it
be remedied;
(d) by the Company prior to the purchase of Shares
pursuant to the Offer, if there shall have been any material breach of a
material obligation of Parent or Merger Sub hereunder and such breach shall
have not been remedied within five days after receipt by Parent or Merger Sub,
as the case may be, of notice in writing from the Company specifying such
breach and requesting that it be remedied;
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(e) by the Company, if (i) the Offer shall not have been
commenced on or before the fifth business day after the announcement to the
public of the execution of this Agreement, (ii) the Offer is terminated without
the purchase of any Shares and such termination is in breach of the Offer or
this Agreement, or (iii) Parent or Merger Sub has failed to pay or to cause
another entity to pay for Shares duly and properly tendered in the Offer within
10 business days following expiration of the Offer, provided that the Company
may not terminate this Agreement pursuant to this Section 8.1(e) if the failure
of the Company to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the circumstances described in clauses (i), (ii) or
(iii) hereof;
(f) by the Company or by Parent and Merger Sub prior to
the purchase of Shares pursuant to the Offer, if a Superior Acquisition
Proposal is received and the Board of Directors of the Company, pursuant to
Section 6.5(b), withdraws or modifies its recommendation of the Offer or
recommends to the stockholders of the Company that such stockholders tender
their Shares into, or vote in favor of, such Superior Acquisition Proposal,
provided that termination pursuant to this Section 8.1(f) shall not affect the
Company's obligations under Section 6.3 hereof; or
(g) by the Company or by Parent and Merger Sub if there
shall be any law or regulation that make consummation of the Merger illegal or
otherwise prohibited or if any judgment, injunction, order or decree enjoining
Parent, Merger Sub or the Company from consummating the Merger is entered and
such judgment, injunction, order or decree shall become final and
nonappealable.
8.2 Effect of Termination. In the event of termination of this
Agreement prior to the purchase of Shares as provided in Section 8.1, this
Agreement shall forthwith become void and of no effect, and there shall be no
liability on the part of Parent, Merger Sub or the Company, except that (a) the
provisions of Section 6.3, this Section 8.2 and Article 9 hereof shall survive
any such termination, and (b) nothing herein will relieve any party from
liability for any willful or grossly negligent breach of any representation or
warranty or any breach prior to such termination of any covenant or agreement
contained herein. Except as set forth herein, the provisions of this Section
8.2 shall constitute the exclusive remedy of the parties in the event of
termination of this Agreement prior to the purchase of Shares.
8.3 Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties, and provided
that any amendment effected after obtaining the Company Stockholder Approval
may be subject to further approval of the Company's stockholders if required by
the DGCL.
8.4 Extension; Waiver. At any time prior to the Effective Time,
any party hereto may (a) extend the time for the performance of any of the
obligations or other acts of any other party hereto or (b) waive compliance
with any of the agreements of any other party or with any conditions to its own
obligations. Any agreement on the part of a party hereto to any such extension
or waiver shall be valid if set forth in an instrument in writing signed on
behalf of such party by a duly
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authorized officer. The failure of any party to this Agreement to assert any
of its rights under this Agreement or otherwise shall not constitute a waiver
of those rights.
ARTICLE 9 -- GENERAL PROVISIONS
9.1 Survival of Representations, Warranties and Agreements. No
representations or warranties contained herein shall survive beyond
consummation of the Offer, and no agreements contained herein shall survive
beyond the Effective Time except that the agreements contained in Article II
and Sections 6.11 and 6.12 hereof shall survive beyond the Effective Time.
9.2 Notices. All notices and other communications hereunder
shall be given by telephone and immediately confirmed in writing and shall be
deemed given if delivered personally or mailed by registered or certified mail
(return receipt requested) or overnight courier to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to Parent or Merger Sub:
DENTSPLY International Inc.
570 West College Avenue
P.O. Box 872
York, PA 17405
Attention: J. Patrick Clark
With a copy to:
Morgan, Lewis & Bockius LLP
One Oxford Centre, 32nd floor
Pittsburgh, PA 15219
Attention: Marlee S. Myers
(b) if to the Company:
New Image Industries, Inc.
2283 Cosmos Court
Carlsbad, California 92009
Attention: Dewey F. Edmunds
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With a copy to:
Irell & Manella LLP
333 South Hope St., Suite 3300
Los Angeles, California 90071-3042
Attention: Edmund M. Kaufman, Esq.
9.3 Interpretation. When a reference is made in this Agreement
to subsidiaries of Parent or the Company, the word "subsidiaries" or
"Subsidiaries" means any corporation more than fifty percent (50%) of whose
outstanding voting securities are directly or indirectly owned by Parent or the
Company, as the case may be. All references in this Agreement to the Company
conducting business in the ordinary course or in a manner consistent with past
practice shall be considered in light of the Company's financial condition
prior to and as of the date indicated in the applicable reference. The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
9.4 Entire Agreement; No Third Party Beneficiaries. This
Agreement (including the Appendix hereto and the documents and instruments
referred to herein) constitutes the entire agreement and supersedes all other
prior agreements and undertakings, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof, provided, however, that
(i) Paragraph 5 of the letter of intent dated December 24, 1996 between the
Company and Parent, (ii) the Credit Agreement, dated as of December 24, 1996,
by and among Parent, the Company and Insight Imaging Systems, Inc., (iii) the
Subordination and Intercreditor Agreement, dated December 24, 1996, by and
among Coast Business Credit, a division of Southern Pacific Thrift & Loan
Association, Parent, the Company and Insight Imaging Systems, Inc. and (iv) the
Mutual Confidential Non-Disclosure Agreement, dated October 8, 1996, between
Parent and the Company, shall remain in effect in accordance with their terms.
Except as provided in Section 4.7 and 6.11, there are no third party
beneficiaries of this Agreement and nothing in this Agreement, express or
implied, is intended to or shall confer upon any person other than the parties
hereto and their respective successors and permitted assigns, any rights,
remedies, obligations or liabilities.
9.5 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder may be assigned by operation of law or
otherwise, provided that Parent or Merger Sub may assign its rights and
obligations hereunder to a direct or indirect subsidiary of Parent, but no such
assignment shall relieve Parent or Merger Sub, as the case may be, of its
obligations hereunder. Subject to the foregoing sentence, this Agreement will
be binding upon, and inure to the benefit of, the parties and their respective
successors and assigns.
9.6 Governing Law. This Agreement shall be governed in all
respects, including validity, interpretation and effect, by the laws of the
State of Delaware, without giving effect to the conflicts of law principles
thereof.
9.7 Counterparts. This Agreement may be executed in one or more
counterparts which together shall constitute a single agreement.
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9.8 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any of the provisions of this
Agreement were not performed in accordance with the terms hereof and that the
parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or in equity.
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunder duly authorized.
DENTSPLY INTERNATIONAL INC.
By: /s/ EDWARD D. YATES
---------------------------
Edward D. Yates
Senior Vice President
IMAGE ACQUISITION CORP.
By: /s/ EDWARD D. YATES
---------------------------
Edward D. Yates
Senior Vice President
NEW IMAGE INDUSTRIES, INC.
By: /s/ DEWEY F. EDMUNDS
---------------------------
Name: Dewey F. Edmunds
Title: Chief Executive Officer
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APPENDIX
CONDITIONS TO THE OFFER
1. Notwithstanding any other term of the Offer or this
Agreement, Parent or Merger Sub shall not be required to accept for payment or
to pay for any Shares tendered pursuant to the Offer, and may terminate or,
subject to Section 1.1 of this Agreement, amend the Offer and may postpone the
acceptance for payment of Shares pursuant thereto, unless (a) there shall have
been validly tendered and not withdrawn prior to the expiration of the Offer
such number of Shares that would constitute fifty-five percent (55%) of the
outstanding Shares as of the date of the commencement of the Offer (the
"Minimum Tender Condition"), and (b) any waiting period under the HSR Act
applicable to the purchase of Shares pursuant to the Offer shall have expired
or been terminated (the "HSR Condition"), provided, however, that prior to
March 25, 1997, Parent shall not terminate the Offer by reason of the
nonsatisfaction of the HSR Condition and, if the HSR Condition is the only
condition that is not satisfied upon the expiration of the Offer, Parent shall
cause the Offer to be extended to March 24, 1997.
2. Furthermore, notwithstanding any other term of the Offer or
this Agreement, Parent or Merger Sub shall not be required to accept for
payment or to pay for any Shares tendered pursuant to the Offer, and may
terminate or, subject to Section 1.1 of this Agreement, amend the Offer and may
postpone the acceptance for payment of Shares pursuant thereto if, at any time
on or after the date of this Agreement and before the acceptance of such Shares
for payment or the payment therefor, any of the following conditions exists:
(a) any statute, rule, regulation or order shall be
proposed, enacted, entered or deemed applicable to the Offer or the Merger
(i) making the purchase of, or payment for, some or all of the Shares pursuant
to the Offer or the Agreement illegal, or resulting in a material delay in the
ability of Parent to accept for payment or pay for some or all of the Shares,
or to consummate the Offer or Merger or seeking to obtain from the Company,
Parent or Merger Sub any damages that would have a Material Adverse Effect on
the Company or Parent, (ii) imposing material limitations on the ability of
Parent or Merger Sub effectively to acquire or hold or to exercise full rights
of ownership of the Shares acquired by it, including the right to vote the
Shares purchased by it on all matters properly presented to the stockholders of
the Company, (iii) which would require Parent or any direct or indirect
subsidiary of Parent to dispose of or hold separate any of the Shares or all or
any material portion of the assets or business of the Company and the
Subsidiaries, or (iv) prohibit or limit the ability of Parent or any direct or
indirect subsidiary of Parent to own, control or operate the Company or any of
its Subsidiaries or all or any material portion of the businesses, operations
or assets of the Company and its Subsidiaries, where such prohibition or
limitation would have a Material Adverse Effect on the Company;
(b) any governmental or regulatory action or proceeding
by or before any Governmental Entity shall be instituted or pending, or any
action or proceeding by any other person, domestic or foreign, shall be
instituted or pending, which would reasonably be expected to result in any of
the consequences referred to in clauses (i) through (iv) of paragraph
2(a) above; or
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(c) the Company shall not have complied with its
agreements and covenants in the Agreement, or any of its representations and
warranties in the Agreement, when made or at and as of any time thereafter, are
inaccurate or incomplete, except (i) where such failure so to comply or such
inaccuracy or incompleteness would not reasonably be expected to have a
Material Adverse Effect on the Company, (ii) for changes specifically permitted
by this Agreement or (iii) those representations and warranties that address
matters only as of a particular day must be accurate and complete as of such
date; or
(d) there shall have an occurred an event of default set
forth in that certain Amended and Restated Loan and Security Agreement, dated
May 22, 1996, among the Company and Insight Imaging Systems, Inc. ("Insight")
and Coast Business Credit, a division of Southern Pacific Thrift & Loan
Association ("Coast"), as to which event of default Coast has not given a
written waiver or is not required to forbear under the terms of that certain
letter agreement, dated December 24, 1996, among Coast, the Company, Insight
and Parent; or
(e) the Company shall commence a case under any chapter
of Title XI of the United States Code or any similar law or regulation; or a
petition under any chapter of Title XI of the United States Code or any similar
law or regulation is filed against the Company which is not dismissed within
five business days; or the Company shall apply for or consent to the
appointment of a receiver, trustee or liquidator of itself or of its property;
or the Company shall make a general assignment for the benefit of creditors; or
an order, judgment or decree shall be entered, without the application,
approval or consent of the Company by any court of competent jurisdiction,
approving a petition seeking a reorganization of the Company or appointing a
receiver, trustee or liquidator of the Company or of all or a substantial part
of its assets, and such order, judgment or decree shall continue unstayed for a
period of five business days; or the Company shall take corporate action for
the purpose of effecting any of the foregoing; or
(f) there shall have occurred (i) the declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (ii) the commencement of a war, armed hostilities or other
international or national calamity directly or indirectly involving the United
States, (iii) any limitation by any governmental authority on the extension of
credit by banks or other financial institutions, or (iv) in the case of any of
the foregoing existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof; or
(g) the Agreement shall have been terminated in
accordance with its terms;
which, in Parent's sole discretion, in any such case regardless of the
circumstances giving rise to any such conditions, makes it inadvisable to
proceed with such acceptance for payment or payment or makes it advisable to
terminate or amend the Offer.
3. The foregoing conditions are for the sole benefit of Parent
and Merger Sub and may be asserted by Parent and Merger Sub regardless of the
circumstances giving rise to any such conditions or may be waived by Parent or
Merger Sub in whole or in part, at any time and from time to time in their sole
discretion. The failure by Parent or Merger Sub at any time to exercise any of
A-2
165
the foregoing rights shall not be deemed a waiver of any such right and each
right shall be deemed an ongoing right which may be asserted at any time and
from time to time. Any determination by Parent or Merger Sub concerning any
events described in the above conditions shall be final and binding on all
parties.
A-3
166
EXHIBIT (c)(2)
---------------------------------------------------------
STOCKHOLDER AGREEMENT
dated as of January 27, 1997
by and among
DENTSPLY International Inc.
Image Acquisition Corp.
and
Robert S. Colman
-------------------------------------------------------
167
STOCKHOLDER AGREEMENT
AGREEMENT, dated as of January 27, 1997 by and among DENTSPLY
International Inc. a Delaware corporation ("Parent"), Image Acquisition Corp, a
Delaware corporation and a wholly owned subsidiary of Parent (the "Merger
Sub"), and Robert S. Colman (the "Stockholder"). Except as otherwise defined
herein, capitalized terms shall have the respective meanings given to them in
the Merger Agreement.
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this Agreement,
Parent, the Merger Sub and New Image Industries, Inc., a Delaware corporation
(the "Company"), have entered into an Agreement and Plan of Merger (as such
agreement may hereafter be amended from time to time, the "Merger Agreement"),
pursuant to which Merger Sub will be merged with and into the Company (the
"Merger"); and
WHEREAS, the Stockholder is executing this Agreement as an inducement for
Parent and Merger Sub to enter into the Merger Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE 1 -- DEFINITIONS
1.1 For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of
the same securities by the same holder, securities Beneficially Owned by a
Person shall include securities Beneficially Owned by all other Persons with
whom such Person would constitute a "group" as within the meaning of Section
13(d)(3) of the Exchange Act.
(b) "Company Common Stock" shall mean the Common Stock, $.001 par
value, of the Company.
(c) "Person" shall mean an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
168
ARTICLE 2 -- TENDER OF SHARES
2.1 In order to induce Parent and Merger Sub to enter into the Merger
Agreement, the Stockholder hereby agrees to validly tender (or cause the record
owner of such shares to validly tender), and not to withdraw, pursuant to and
in accordance with the terms of the Offer, the number of shares of Company
Common Stock set forth opposite such Stockholder's name on Schedule I hereto
and any shares of Company Common Stock acquired by such Stockholder in any
capacity after the date hereof and prior to the termination of this Agreement
whether upon the exercise of Stock Options, subject to Section 2.11 of the
Merger Agreement, or Warrants, subject to Section 2.12 of the Merger Agreement,
or by means of purchase, dividend, distribution or otherwise (such shares being
referred to hereinafter collectively as the "Shares"), all of which are and
will be Beneficially Owned by such Stockholder. The Stockholder hereby
acknowledges and agrees that the obligation of Parent and Merger Sub to accept
for payment and pay for the Shares in the Offer, including the Shares
Beneficially Owned by such Stockholder, is subject to the terms and conditions
of the Offer.
2.2 The transfer by the Stockholder of the Shares to Merger Sub in the
Offer shall pass to, and unconditionally vest in, Merger Sub good and valid
title to the Shares, free and clear of all Liens.
2.3 The Stockholder hereby permits Parent and Merger Sub to publish and
disclose in the Offer Documents and, if approval or advisement of the Company's
stockholders is required under applicable law, the Proxy Statement or
Information Statement (including all documents and schedules filed with the
SEC) its identity and ownership of the Company Common Stock and the nature of
its commitments, arrangements and understandings under this Agreement.
ARTICLE 3 -- ADDITIONAL AGREEMENTS
3.1 Voting Agreement. The Stockholder shall, at any meeting of the holders
of Company Common Stock, however called, or in connection with any written
consent of the holders of Company Common Stock, vote (or cause to be voted) the
Shares (if any) then held of record or Beneficially Owned by such Stockholder,
(i) in favor of the Merger, the execution and delivery by the Company of the
Merger Agreement and the approval of the terms thereof and each of the other
actions contemplated by the Merger Agreement and this Agreement and any actions
required in furtherance thereof and hereof; and (ii) against any Acquisition
Proposal and against any action or agreement that would impede, frustrate,
prevent or nullify this Agreement, or result in a breach in any respect of any
covenant, representation or warranty or any other obligation or agreement of
the Company under the Merger Agreement or which would result in any of the
conditions set forth in Annex A to the Merger Agreement or set forth in Article
VI of the Merger Agreement not being fulfilled. Notwithstanding anything in
this Agreement to the contrary, the Stockholder, in his capacity as a director
and/or officer of the
2
169
Company, as the case may be, and in accordance with the Merger Agreement, may
exercise his fiduciary duties with respect to the Company.
3.2 No Inconsistent Arrangements. The Stockholder hereby covenants and
agrees that, except as contemplated by this Agreement and the Merger Agreement,
it shall not (i) transfer (which term shall include, without limitation, any
sale, gift, pledge or other disposition), or consent to any transfer of, any or
all of such Stockholder's Shares, Stock Options or Warrants or any interest
therein, (ii) enter into any contract, option or other agreement or
understanding with respect to any transfer of any or all of such Shares, Stock
Options or Warrants or any interest therein, (iii) grant any proxy,
power-of-attorney or other authorization in or with respect to such Shares,
Stock Options or Warrants, (iv) deposit such Shares, Stock Options or Warrants
into a voting trust or enter into a voting agreement or arrangement with
respect to such Shares, Stock Options or Warrants, or (v) take any other action
that would in any way restrict, limit or interfere with the performance of its
obligations hereunder or the transactions contemplated hereby or by the Merger
Agreement.
3.3 No Solicitation. The Stockholder hereby agrees, in its or his capacity
as a stockholder of the Company, that neither the Stockholder nor any of its
affiliates shall (and such Stockholder shall use its best efforts to cause its
officers, directors, employees, representatives and agents, including, but not
limited to, investment bankers, attorneys and accountants, not to), directly or
indirectly, encourage, solicit, participate in or initiate discussions or
negotiations with, or provide any information to, any corporation, partnership,
person or other entity or group (other than Parent, any of its affiliates or
representatives) concerning any Acquisition Proposal. The Stockholder will
immediately cease any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any Acquisition Proposal. The
Stockholder will immediately communicate to Parent the terms of any proposal,
discussion, negotiation or inquiry such Stockholder, in its or his capacity as
a stockholder of the Company, receives (and will disclose any written materials
received by such Stockholder, in its or his capacity as a stockholder of the
Company, in connection with such proposal, discussion, negotiation or inquiry)
and the identity of the party making such proposal or inquiry which it may
receive in respect of any such transaction.
3.4 Stock Options and Warrants. If the Stockholder holds Stock Options
and/or Warrants to acquire shares of Company Common Stock, he shall, if
requested by the Company, consent to the cancellation and conversion of his
Company Options and/or Warrants in accordance with the terms of the Merger
Agreement and shall execute all appropriate documentation in connection with
such cancellation and conversion.
3.5 Best Reasonable Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use its best reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement
and the Merger Agreement. Each party shall promptly consult
3
170
with the other and provide any necessary information and material with respect
to all filings made by such party with any Governmental Entity in connection
with this Agreement and the Merger Agreement and the transactions contemplated
hereby and thereby.
3.6 Waiver of Appraisal Rights. The Stockholder hereby waives any rights
of appraisal or rights to dissent from the Merger that it or he may have.
ARTICLE 4 -- REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDER
The Stockholder hereby represents and warrants to Parent and Merger Sub as
follows:
(a) Ownership of Shares. The Shares, as of the date hereof, constitute
all of the Shares Beneficially Owned by such Stockholder. With respect to the
Shares, the Stockholder has sole voting power and sole dispositive power, sole
power of conversion, sole power to demand appraisal rights and sole power to
agree to all of the matters set forth in this Agreement, in each case with
respect to all of the Shares with no limitations, qualifications or
restrictions on such rights, subject to applicable securities laws and the
terms of this Agreement.
(b) Power; Binding Agreement. The Stockholder has the legal capacity,
power and authority to enter into and perform all of the Stockholder's
obligations under this Agreement. The execution, delivery and performance of
this Agreement by the Stockholder will not violate any other agreement to which
such Stockholder is a party including, without limitation, any voting
agreement, proxy arrangement, pledge agreement, shareholders agreement or
voting trust. This Agreement has been duly and validly executed and delivered
by the Stockholder and constitutes a valid and binding agreement of the
Stockholder, enforceable against such Stockholder in accordance with its terms.
There is no beneficiary or holder of a voting trust certificate or other
interest of any trust of which the Stockholder is a trustee whose consent is
required for the execution and delivery of this Agreement or the consummation
by such Stockholder of the transactions contemplated hereby.
(c) No Liens. Except as permitted by this Agreement, the Shares and
the certificates representing such Shares are now, and at all times during the
term hereof will be, held by such Stockholder, or by a nominee or custodian for
the benefit of such Stockholder, free and clear of all Liens, proxies, voting
trusts or agreements, understandings or arrangements or any other rights
whatsoever.
(d) No Finder's Fees. No broker, investment banker, financial advisor
or other person is entitled to any broker's, finder's, financial adviser's or
other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of such
Stockholder.
4
171
(e) Reliance by Parent. The Stockholder understands and acknowledges
that Parent is entering into, and causing Merger Sub to enter into, the Merger
Agreement in reliance upon such Stockholder's execution and delivery of this
Agreement.
ARTICLE 5 -- STOP TRANSFER
The Stockholder shall not request that the Company register the transfer
(book-entry or otherwise) of any certificate or uncertificated interest
representing any of the Shares, unless such transfer is made in compliance with
this Agreement. In the event of a stock dividend or distribution, or any change
in the Company Common Stock by reason of any stock dividend, split-up,
recapitalization, combination, exchange of shares or the like, the term
"Shares" shall refer to and include the Shares as well as all such stock
dividends and distributions and any shares into which or for which any or all
of the Shares may be changed or exchanged.
ARTICLE 6 -- TERMINATION
The covenants and agreements set forth herein shall terminate upon the
termination of the Merger Agreement in accordance with its terms.
ARTICLE 7 -- MISCELLANEOUS
7.1 Notices. All notices and other communications hereunder shall be given
by telephone and immediately confirmed in writing and shall be deemed given if
delivered personally or mailed by registered or certified mail (return receipt
requested) or overnight courier to the parties at the following addresses (or
at such other address for a party as shall be specified by like notice):
(a) if to Parent or Merger Sub:
DENTSPLY International Inc.
570 West College Avenue
York, PA 17405
Attention: J. Patrick Clark, Esquire
With a copy to:
Morgan, Lewis & Bockius LLP
One Oxford Centre, 32nd Floor
Pittsburgh, PA 15219-1417
Attention: Marlee S. Myers, Esquire
5
172
(b) if to the Stockholder:
Robert S.Colman
54 Lower Crescent
Sausalito, CA 94965
With a copy to:
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, CA 90067-4276
Attn: Derrick Boston
7.2 Entire Agreement; No Third Party Beneficiaries. This Agreement
constitutes the entire agreement and supersedes all other prior agreements and
undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof. There are no third party beneficiaries of
this Agreement and nothing in this Agreement, express or implied, is intended
to or shall confer upon any person other than the parties hereto and their
respective successors and permitted assigns, any rights, remedies, obligations
or liabilities.
7.3 Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder may be assigned by operation of law or otherwise,
provided that Parent or Merger Sub may assign its rights and obligations
hereunder to a direct or indirect subsidiary of Parent, but no such assignment
shall relieve Parent or Merger Sub, as the case may be, of its obligations
hereunder. Subject to the foregoing sentence, this Agreement will be binding
upon, and inure to the benefit of, the parties and their respective successors
and assigns.
7.4 Governing Law. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of
Delaware, without giving effect to the conflicts of law principles thereof.
7.5 Counterparts. This Agreement may be executed in one or more
counterparts which together shall constitute a single agreement.
7.6 Specific Performance. The parties hereto agree that irreparable damage
would occur in the event any of the provisions of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
6
173
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunder duly authorized.
DENTSPLY INTERNATIONAL INC.
By: /s/ Edward D. Yates
-----------------------------
Edward D. Yates
Senior Vice President
IMAGE ACQUISITION CORP.
By: /s/ Edward D. Yates
-----------------------------
Edward D. Yates
Senior Vice President
Robert S. Colman
/s/ Robert S. Colman
--------------------------------
Robert S. Colman*
* in his individual capacity and as
Trustee of the following trusts:
Robert S. Colman Trust u/a dated 3/13/85
E. W. Colman Trust FBO Robert S. Colman
174
SCHEDULE I
NAME OF STOCKHOLDER SHARES BENEFICIALLY OWNED
Robert S. Colman common stock 105,000 Robert S. Colman
Trust u/a 3/13/85
4,000 E. W. Colman Trust
FBO Robert S.
Colman
-------
reissued 11/6/96 @ 1/9/16
stock options 2,500
warrants 45,000
exercise price greater than $2.00
warrants 137,500
175
EXHIBIT (c)(3)
---------------------------------------------------------
STOCKHOLDER AGREEMENT
dated as of January 27, 1997
by and among
DENTSPLY International Inc.
Image Acquisition Corp.
and
David H. Cooper
-------------------------------------------------------
176
STOCKHOLDER AGREEMENT
AGREEMENT, dated as of January 27, 1997 by and among DENTSPLY
International Inc. a Delaware corporation ("Parent"), Image Acquisition Corp, a
Delaware corporation and a wholly owned subsidiary of Parent (the "Merger
Sub"), and David H. Cooper (the "Stockholder"). Except as otherwise defined
herein, capitalized terms shall have the respective meanings given to them in
the Merger Agreement.
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this Agreement,
Parent, the Merger Sub and New Image Industries, Inc., a Delaware corporation
(the "Company"), have entered into an Agreement and Plan of Merger (as such
agreement may hereafter be amended from time to time, the "Merger Agreement"),
pursuant to which Merger Sub will be merged with and into the Company (the
"Merger"); and
WHEREAS, the Stockholder is executing this Agreement as an inducement for
Parent and Merger Sub to enter into the Merger Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE 1 -- DEFINITIONS
1.1 For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of
the same securities by the same holder, securities Beneficially Owned by a
Person shall include securities Beneficially Owned by all other Persons with
whom such Person would constitute a "group" as within the meaning of Section
13(d)(3) of the Exchange Act.
(b) "Company Common Stock" shall mean the Common Stock, $.001 par
value, of the Company.
(c) "Person" shall mean an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
177
ARTICLE 2 -- TENDER OF SHARES
2.1 In order to induce Parent and Merger Sub to enter into the Merger
Agreement, the Stockholder hereby agrees to validly tender (or cause the record
owner of such shares to validly tender), and not to withdraw, pursuant to and
in accordance with the terms of the Offer, the number of shares of Company
Common Stock set forth opposite such Stockholder's name on Schedule I hereto
and any shares of Company Common Stock acquired by such Stockholder in any
capacity after the date hereof and prior to the termination of this Agreement
whether upon the exercise of Stock Options, subject to Section 2.11 of the
Merger Agreement, or Warrants, subject to Section 2.12 of the Merger Agreement,
or by means of purchase, dividend, distribution or otherwise (such shares being
referred to hereinafter collectively as the "Shares"), all of which are and
will be Beneficially Owned by such Stockholder. The Stockholder hereby
acknowledges and agrees that the obligation of Parent and Merger Sub to accept
for payment and pay for the Shares in the Offer, including the Shares
Beneficially Owned by such Stockholder, is subject to the terms and conditions
of the Offer.
2.2 The transfer by the Stockholder of the Shares to Merger Sub in the
Offer shall pass to, and unconditionally vest in, Merger Sub good and valid
title to the Shares, free and clear of all Liens.
2.3 The Stockholder hereby permits Parent and Merger Sub to publish and
disclose in the Offer Documents and, if approval or advisement of the Company's
stockholders is required under applicable law, the Proxy Statement or
Information Statement (including all documents and schedules filed with the
SEC) its identity and ownership of the Company Common Stock and the nature of
its commitments, arrangements and understandings under this Agreement.
ARTICLE 3 -- ADDITIONAL AGREEMENTS
3.1 Voting Agreement. The Stockholder shall, at any meeting of the holders
of Company Common Stock, however called, or in connection with any written
consent of the holders of Company Common Stock, vote (or cause to be voted) the
Shares (if any) then held of record or Beneficially Owned by such Stockholder,
(i) in favor of the Merger, the execution and delivery by the Company of the
Merger Agreement and the approval of the terms thereof and each of the other
actions contemplated by the Merger Agreement and this Agreement and any actions
required in furtherance thereof and hereof; and (ii) against any Acquisition
Proposal and against any action or agreement that would impede, frustrate,
prevent or nullify this Agreement, or result in a breach in any respect of any
covenant, representation or warranty or any other obligation or agreement of
the Company under the Merger Agreement or which would result in any of the
conditions set forth in Annex A to the Merger Agreement or set forth in Article
VI of the Merger Agreement not being fulfilled. Notwithstanding anything in
this Agreement to the contrary, the Stockholder, in his capacity as a director
and/or officer of the
2
178
Company, as the case may be, and in accordance with the Merger Agreement, may
exercise his fiduciary duties with respect to the Company.
3.2 No Inconsistent Arrangements. The Stockholder hereby covenants and
agrees that, except as contemplated by this Agreement and the Merger Agreement,
it shall not (i) transfer (which term shall include, without limitation, any
sale, gift, pledge or other disposition), or consent to any transfer of, any or
all of such Stockholder's Shares, Stock Options or Warrants or any interest
therein, (ii) enter into any contract, option or other agreement or
understanding with respect to any transfer of any or all of such Shares, Stock
Options or Warrants or any interest therein, (iii) grant any proxy,
power-of-attorney or other authorization in or with respect to such Shares,
Stock Options or Warrants, (iv) deposit such Shares, Stock Options or Warrants
into a voting trust or enter into a voting agreement or arrangement with
respect to such Shares, Stock Options or Warrants, or (v) take any other action
that would in any way restrict, limit or interfere with the performance of its
obligations hereunder or the transactions contemplated hereby or by the Merger
Agreement.
3.3 No Solicitation. The Stockholder hereby agrees, in its or his capacity
as a stockholder of the Company, that neither the Stockholder nor any of its
affiliates shall (and such Stockholder shall use its best efforts to cause its
officers, directors, employees, representatives and agents, including, but not
limited to, investment bankers, attorneys and accountants, not to), directly or
indirectly, encourage, solicit, participate in or initiate discussions or
negotiations with, or provide any information to, any corporation, partnership,
person or other entity or group (other than Parent, any of its affiliates or
representatives) concerning any Acquisition Proposal. The Stockholder will
immediately cease any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any Acquisition Proposal. The
Stockholder will immediately communicate to Parent the terms of any proposal,
discussion, negotiation or inquiry such Stockholder, in its or his capacity as
a stockholder of the Company, receives (and will disclose any written materials
received by such Stockholder, in its or his capacity as a stockholder of the
Company, in connection with such proposal, discussion, negotiation or inquiry)
and the identity of the party making such proposal or inquiry which it may
receive in respect of any such transaction.
3.4 Stock Options and Warrants. If the Stockholder holds Stock Options
and/or Warrants to acquire shares of Company Common Stock, he shall, if
requested by the Company, consent to the cancellation and conversion of his
Company Options and/or Warrants in accordance with the terms of the Merger
Agreement and shall execute all appropriate documentation in connection with
such cancellation and conversion.
3.5 Best Reasonable Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use its best reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement
and the Merger Agreement. Each party shall promptly consult
3
179
with the other and provide any necessary information and material with respect
to all filings made by such party with any Governmental Entity in connection
with this Agreement and the Merger Agreement and the transactions contemplated
hereby and thereby.
3.6 Waiver of Appraisal Rights. The Stockholder hereby waives any rights
of appraisal or rights to dissent from the Merger that it or he may have.
ARTICLE 4 -- REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDER
The Stockholder hereby represents and warrants to Parent and Merger Sub as
follows:
(a) Ownership of Shares. The Shares, as of the date hereof, constitute
all of the Shares Beneficially Owned by such Stockholder. With respect to the
Shares, the Stockholder has sole voting power and sole dispositive power, sole
power of conversion, sole power to demand appraisal rights and sole power to
agree to all of the matters set forth in this Agreement, in each case with
respect to all of the Shares with no limitations, qualifications or
restrictions on such rights, subject to applicable securities laws and the
terms of this Agreement.
(b) Power; Binding Agreement. The Stockholder has the legal capacity,
power and authority to enter into and perform all of the Stockholder's
obligations under this Agreement. The execution, delivery and performance of
this Agreement by the Stockholder will not violate any other agreement to which
such Stockholder is a party including, without limitation, any voting
agreement, proxy arrangement, pledge agreement, shareholders agreement or
voting trust. This Agreement has been duly and validly executed and delivered
by the Stockholder and constitutes a valid and binding agreement of the
Stockholder, enforceable against such Stockholder in accordance with its terms.
There is no beneficiary or holder of a voting trust certificate or other
interest of any trust of which the Stockholder is a trustee whose consent is
required for the execution and delivery of this Agreement or the consummation
by such Stockholder of the transactions contemplated hereby.
(c) No Liens. Except as permitted by this Agreement, the Shares and
the certificates representing such Shares are now, and at all times during the
term hereof will be, held by such Stockholder, or by a nominee or custodian for
the benefit of such Stockholder, free and clear of all Liens, proxies, voting
trusts or agreements, understandings or arrangements or any other rights
whatsoever.
(d) No Finder's Fees. No broker, investment banker, financial advisor
or other person is entitled to any broker's, finder's, financial adviser's or
other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of such
Stockholder.
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180
(e) Reliance by Parent. The Stockholder understands and acknowledges
that Parent is entering into, and causing Merger Sub to enter into, the Merger
Agreement in reliance upon such Stockholder's execution and delivery of this
Agreement.
ARTICLE 5 -- STOP TRANSFER
The Stockholder shall not request that the Company register the transfer
(book-entry or otherwise) of any certificate or uncertificated interest
representing any of the Shares, unless such transfer is made in compliance with
this Agreement. In the event of a stock dividend or distribution, or any change
in the Company Common Stock by reason of any stock dividend, split-up,
recapitalization, combination, exchange of shares or the like, the term
"Shares" shall refer to and include the Shares as well as all such stock
dividends and distributions and any shares into which or for which any or all
of the Shares may be changed or exchanged.
ARTICLE 6 -- TERMINATION
The covenants and agreements set forth herein shall terminate upon the
termination of the Merger Agreement in accordance with its terms.
ARTICLE 7 -- MISCELLANEOUS
7.1 Notices. All notices and other communications hereunder shall be given
by telephone and immediately confirmed in writing and shall be deemed given if
delivered personally or mailed by registered or certified mail (return receipt
requested) or overnight courier to the parties at the following addresses (or
at such other address for a party as shall be specified by like notice):
(a) if to Parent or Merger Sub:
DENTSPLY International Inc.
570 West College Avenue
York, PA 17405
Attention: J. Patrick Clark, Esquire
With a copy to:
Morgan, Lewis & Bockius LLP
One Oxford Centre, 32nd Floor
Pittsburgh, PA 15219-1417
Attention: Marlee S. Myers, Esquire
5
181
(b) if to the Stockholder:
David H. Cooper
c/o New Image Industries, Inc.
2283 Cosmos Court
Carlsbad, CA 92009
With a copy to:
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, CA 90067-4276
Attn: Derrick Boston
7.2 Entire Agreement; No Third Party Beneficiaries. This Agreement
constitutes the entire agreement and supersedes all other prior agreements and
undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof. There are no third party beneficiaries of
this Agreement and nothing in this Agreement, express or implied, is intended
to or shall confer upon any person other than the parties hereto and their
respective successors and permitted assigns, any rights, remedies, obligations
or liabilities.
7.3 Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder may be assigned by operation of law or otherwise,
provided that Parent or Merger Sub may assign its rights and obligations
hereunder to a direct or indirect subsidiary of Parent, but no such assignment
shall relieve Parent or Merger Sub, as the case may be, of its obligations
hereunder. Subject to the foregoing sentence, this Agreement will be binding
upon, and inure to the benefit of, the parties and their respective successors
and assigns.
7.4 Governing Law. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of
Delaware, without giving effect to the conflicts of law principles thereof.
7.5 Counterparts. This Agreement may be executed in one or more
counterparts which together shall constitute a single agreement.
7.6 Specific Performance. The parties hereto agree that irreparable damage
would occur in the event any of the provisions of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
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182
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunder duly authorized.
DENTSPLY INTERNATIONAL INC.
By: /s/ Edward D. Yates
-----------------------------
Edward D. Yates
Senior Vice President
IMAGE ACQUISITION CORP.
By: /s/ Edward D. Yates
-----------------------------
Edward D. Yates
Senior Vice President
David H. Cooper
/s/ David H. Cooper
--------------------------------
David H. Cooper
183
SCHEDULE I
NAME OF STOCKHOLDER SHARES BENEFICIALLY OWNED
David H. Cooper 20,000 options vested
21,500 options vest on change of control
2,000 shares held in an IRA
184
EXHIBIT (c)(4)
---------------------------------------------------------
STOCKHOLDER AGREEMENT
dated as of January 27, 1997
by and among
DENTSPLY International Inc.
Image Acquisition Corp.
and
Paul Devereaux
-------------------------------------------------------
185
STOCKHOLDER AGREEMENT
AGREEMENT, dated as of January 27, 1997 by and among DENTSPLY
International Inc. a Delaware corporation ("Parent"), Image Acquisition Corp, a
Delaware corporation and a wholly owned subsidiary of Parent (the "Merger
Sub"), and Paul Devereaux (the "Stockholder"). Except as otherwise defined
herein, capitalized terms shall have the respective meanings given to them in
the Merger Agreement.
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this Agreement,
Parent, the Merger Sub and New Image Industries, Inc., a Delaware corporation
(the "Company"), have entered into an Agreement and Plan of Merger (as such
agreement may hereafter be amended from time to time, the "Merger Agreement"),
pursuant to which Merger Sub will be merged with and into the Company (the
"Merger"); and
WHEREAS, the Stockholder is executing this Agreement as an inducement for
Parent and Merger Sub to enter into the Merger Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE 1 -- DEFINITIONS
1.1 For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of
the same securities by the same holder, securities Beneficially Owned by a
Person shall include securities Beneficially Owned by all other Persons with
whom such Person would constitute a "group" as within the meaning of Section
13(d)(3) of the Exchange Act.
(b) "Company Common Stock" shall mean the Common Stock, $.001 par
value, of the Company.
(c) "Person" shall mean an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
186
ARTICLE 2 -- TENDER OF SHARES
2.1 In order to induce Parent and Merger Sub to enter into the Merger
Agreement, the Stockholder hereby agrees to validly tender (or cause the record
owner of such shares to validly tender), and not to withdraw, pursuant to and
in accordance with the terms of the Offer, the number of shares of Company
Common Stock set forth opposite such Stockholder's name on Schedule I hereto
and any shares of Company Common Stock acquired by such Stockholder in any
capacity after the date hereof and prior to the termination of this Agreement
whether upon the exercise of Stock Options, subject to Section 2.11 of the
Merger Agreement, or Warrants, subject to Section 2.12 of the Merger Agreement,
or by means of purchase, dividend, distribution or otherwise (such shares being
referred to hereinafter collectively as the "Shares"), all of which are and
will be Beneficially Owned by such Stockholder. The Stockholder hereby
acknowledges and agrees that the obligation of Parent and Merger Sub to accept
for payment and pay for the Shares in the Offer, including the Shares
Beneficially Owned by such Stockholder, is subject to the terms and conditions
of the Offer.
2.2 The transfer by the Stockholder of the Shares to Merger Sub in the
Offer shall pass to, and unconditionally vest in, Merger Sub good and valid
title to the Shares, free and clear of all Liens.
2.3 The Stockholder hereby permits Parent and Merger Sub to publish and
disclose in the Offer Documents and, if approval or advisement of the Company's
stockholders is required under applicable law, the Proxy Statement or
Information Statement (including all documents and schedules filed with the
SEC) its identity and ownership of the Company Common Stock and the nature of
its commitments, arrangements and understandings under this Agreement.
ARTICLE 3 -- ADDITIONAL AGREEMENTS
3.1 Voting Agreement. The Stockholder shall, at any meeting of the holders
of Company Common Stock, however called, or in connection with any written
consent of the holders of Company Common Stock, vote (or cause to be voted) the
Shares (if any) then held of record or Beneficially Owned by such Stockholder,
(i) in favor of the Merger, the execution and delivery by the Company of the
Merger Agreement and the approval of the terms thereof and each of the other
actions contemplated by the Merger Agreement and this Agreement and any actions
required in furtherance thereof and hereof; and (ii) against any Acquisition
Proposal and against any action or agreement that would impede, frustrate,
prevent or nullify this Agreement, or result in a breach in any respect of any
covenant, representation or warranty or any other obligation or agreement of
the Company under the Merger Agreement or which would result in any of the
conditions set forth in Annex A to the Merger Agreement or set forth in Article
VI of the Merger Agreement not being fulfilled. Notwithstanding anything in
this Agreement to the contrary, the Stockholder, in his capacity as a director
and/or officer of the
2
187
Company, as the case may be, and in accordance with the Merger Agreement, may
exercise his fiduciary duties with respect to the Company.
3.2 No Inconsistent Arrangements. The Stockholder hereby covenants and
agrees that, except as contemplated by this Agreement and the Merger Agreement,
it shall not (i) transfer (which term shall include, without limitation, any
sale, gift, pledge or other disposition), or consent to any transfer of, any or
all of such Stockholder's Shares, Stock Options or Warrants or any interest
therein, (ii) enter into any contract, option or other agreement or
understanding with respect to any transfer of any or all of such Shares, Stock
Options or Warrants or any interest therein, (iii) grant any proxy,
power-of-attorney or other authorization in or with respect to such Shares,
Stock Options or Warrants, (iv) deposit such Shares, Stock Options or Warrants
into a voting trust or enter into a voting agreement or arrangement with
respect to such Shares, Stock Options or Warrants, or (v) take any other action
that would in any way restrict, limit or interfere with the performance of its
obligations hereunder or the transactions contemplated hereby or by the Merger
Agreement.
3.3 No Solicitation. The Stockholder hereby agrees, in its or his capacity
as a stockholder of the Company, that neither the Stockholder nor any of its
affiliates shall (and such Stockholder shall use its best efforts to cause its
officers, directors, employees, representatives and agents, including, but not
limited to, investment bankers, attorneys and accountants, not to), directly or
indirectly, encourage, solicit, participate in or initiate discussions or
negotiations with, or provide any information to, any corporation, partnership,
person or other entity or group (other than Parent, any of its affiliates or
representatives) concerning any Acquisition Proposal. The Stockholder will
immediately cease any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any Acquisition Proposal. The
Stockholder will immediately communicate to Parent the terms of any proposal,
discussion, negotiation or inquiry such Stockholder, in its or his capacity as
a stockholder of the Company, receives (and will disclose any written materials
received by such Stockholder, in its or his capacity as a stockholder of the
Company, in connection with such proposal, discussion, negotiation or inquiry)
and the identity of the party making such proposal or inquiry which it may
receive in respect of any such transaction.
3.4 Stock Options and Warrants. If the Stockholder holds Stock Options
and/or Warrants to acquire shares of Company Common Stock, he shall, if
requested by the Company, consent to the cancellation and conversion of his
Company Options and/or Warrants in accordance with the terms of the Merger
Agreement and shall execute all appropriate documentation in connection with
such cancellation and conversion.
3.5 Best Reasonable Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use its best reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement
and the Merger Agreement. Each party shall promptly consult
3
188
with the other and provide any necessary information and material with respect
to all filings made by such party with any Governmental Entity in connection
with this Agreement and the Merger Agreement and the transactions contemplated
hereby and thereby.
3.6 Waiver of Appraisal Rights. The Stockholder hereby waives any rights
of appraisal or rights to dissent from the Merger that it or he may have.
ARTICLE 4 -- REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDER
The Stockholder hereby represents and warrants to Parent and Merger Sub as
follows:
(a) Ownership of Shares. The Shares, as of the date hereof, constitute
all of the Shares Beneficially Owned by such Stockholder. With respect to the
Shares, the Stockholder has sole voting power and sole dispositive power, sole
power of conversion, sole power to demand appraisal rights and sole power to
agree to all of the matters set forth in this Agreement, in each case with
respect to all of the Shares with no limitations, qualifications or
restrictions on such rights, subject to applicable securities laws and the
terms of this Agreement.
(b) Power; Binding Agreement. The Stockholder has the legal capacity,
power and authority to enter into and perform all of the Stockholder's
obligations under this Agreement. The execution, delivery and performance of
this Agreement by the Stockholder will not violate any other agreement to which
such Stockholder is a party including, without limitation, any voting
agreement, proxy arrangement, pledge agreement, shareholders agreement or
voting trust. This Agreement has been duly and validly executed and delivered
by the Stockholder and constitutes a valid and binding agreement of the
Stockholder, enforceable against such Stockholder in accordance with its terms.
There is no beneficiary or holder of a voting trust certificate or other
interest of any trust of which the Stockholder is a trustee whose consent is
required for the execution and delivery of this Agreement or the consummation
by such Stockholder of the transactions contemplated hereby.
(c) No Liens. Except as permitted by this Agreement, the Shares and
the certificates representing such Shares are now, and at all times during the
term hereof will be, held by such Stockholder, or by a nominee or custodian for
the benefit of such Stockholder, free and clear of all Liens, proxies, voting
trusts or agreements, understandings or arrangements or any other rights
whatsoever.
(d) No Finder's Fees. No broker, investment banker, financial advisor
or other person is entitled to any broker's, finder's, financial adviser's or
other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of such
Stockholder.
4
189
(e) Reliance by Parent. The Stockholder understands and acknowledges
that Parent is entering into, and causing Merger Sub to enter into, the Merger
Agreement in reliance upon such Stockholder's execution and delivery of this
Agreement.
ARTICLE 5 -- STOP TRANSFER
The Stockholder shall not request that the Company register the transfer
(book-entry or otherwise) of any certificate or uncertificated interest
representing any of the Shares, unless such transfer is made in compliance with
this Agreement. In the event of a stock dividend or distribution, or any change
in the Company Common Stock by reason of any stock dividend, split-up,
recapitalization, combination, exchange of shares or the like, the term
"Shares" shall refer to and include the Shares as well as all such stock
dividends and distributions and any shares into which or for which any or all
of the Shares may be changed or exchanged.
ARTICLE 6 -- TERMINATION
The covenants and agreements set forth herein shall terminate upon the
termination of the Merger Agreement in accordance with its terms.
ARTICLE 7 -- MISCELLANEOUS
7.1 Notices. All notices and other communications hereunder shall be given
by telephone and immediately confirmed in writing and shall be deemed given if
delivered personally or mailed by registered or certified mail (return receipt
requested) or overnight courier to the parties at the following addresses (or
at such other address for a party as shall be specified by like notice):
(a) if to Parent or Merger Sub:
DENTSPLY International Inc.
570 West College Avenue
York, PA 17405
Attention: J. Patrick Clark, Esquire
With a copy to:
Morgan, Lewis & Bockius LLP
One Oxford Centre, 32nd Floor
Pittsburgh, PA 15219-1417
Attention: Marlee S. Myers, Esquire
5
190
(b) if to the Stockholder:
Paul Devereaux
c/o New Image Industries, Inc.
2283 Cosmos Court
Carlsbad, CA 92009
With a copy to:
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, CA 90067-4276
Attn: Derrick Boston
7.2 Entire Agreement; No Third Party Beneficiaries. This Agreement
constitutes the entire agreement and supersedes all other prior agreements and
undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof. There are no third party beneficiaries of
this Agreement and nothing in this Agreement, express or implied, is intended
to or shall confer upon any person other than the parties hereto and their
respective successors and permitted assigns, any rights, remedies, obligations
or liabilities.
7.3 Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder may be assigned by operation of law or otherwise,
provided that Parent or Merger Sub may assign its rights and obligations
hereunder to a direct or indirect subsidiary of Parent, but no such assignment
shall relieve Parent or Merger Sub, as the case may be, of its obligations
hereunder. Subject to the foregoing sentence, this Agreement will be binding
upon, and inure to the benefit of, the parties and their respective successors
and assigns.
7.4 Governing Law. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of
Delaware, without giving effect to the conflicts of law principles thereof.
7.5 Counterparts. This Agreement may be executed in one or more
counterparts which together shall constitute a single agreement.
7.6 Specific Performance. The parties hereto agree that irreparable damage
would occur in the event any of the provisions of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
6
191
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunder duly authorized.
DENTSPLY INTERNATIONAL INC.
By: /s/ Edward D. Yates
------------------------------
Edward D. Yates
Senior Vice President
IMAGE ACQUISITION CORP.
By: /s/ Edward D. Yates
------------------------------
Edward D. Yates
Senior Vice President
Paul Devereaux
/s/ Paul Devereaux
---------------------------------
Paul Devereaux
192
SCHEDULE I
NAME OF STOCKHOLDER SHARES BENEFICIALLY OWNED
Paul Devereaux 3909 options vested
25,000 options vest on change of control
193
EXHIBIT (c)(5)
---------------------------------------------------------
STOCKHOLDER AGREEMENT
dated as of January 27, 1997
by and among
DENTSPLY International Inc.
Image Acquisition Corp.
and
Dewey F. Edmunds
-------------------------------------------------------
194
STOCKHOLDER AGREEMENT
AGREEMENT, dated as of January 27, 1997 by and among DENTSPLY
International Inc. a Delaware corporation ("Parent"), Image Acquisition Corp, a
Delaware corporation and a wholly owned subsidiary of Parent (the "Merger
Sub"), and Dewey F. Edmunds (the "Stockholder"). Except as otherwise defined
herein, capitalized terms shall have the respective meanings given to them in
the Merger Agreement.
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this Agreement,
Parent, the Merger Sub and New Image Industries, Inc., a Delaware corporation
(the "Company"), have entered into an Agreement and Plan of Merger (as such
agreement may hereafter be amended from time to time, the "Merger Agreement"),
pursuant to which Merger Sub will be merged with and into the Company (the
"Merger"); and
WHEREAS, the Stockholder is executing this Agreement as an inducement for
Parent and Merger Sub to enter into the Merger Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE 1 -- DEFINITIONS
1.1 For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of
the same securities by the same holder, securities Beneficially Owned by a
Person shall include securities Beneficially Owned by all other Persons with
whom such Person would constitute a "group" as within the meaning of Section
13(d)(3) of the Exchange Act.
(b) "Company Common Stock" shall mean the Common Stock, $.001 par
value, of the Company.
(c) "Person" shall mean an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
195
ARTICLE 2 -- TENDER OF SHARES
2.1 In order to induce Parent and Merger Sub to enter into the Merger
Agreement, the Stockholder hereby agrees to validly tender (or cause the record
owner of such shares to validly tender), and not to withdraw, pursuant to and
in accordance with the terms of the Offer, the number of shares of Company
Common Stock set forth opposite such Stockholder's name on Schedule I hereto
and any shares of Company Common Stock acquired by such Stockholder in any
capacity after the date hereof and prior to the termination of this Agreement
whether upon the exercise of Stock Options, subject to Section 2.11 of the
Merger Agreement, or Warrants, subject to Section 2.12 of the Merger Agreement,
or by means of purchase, dividend, distribution or otherwise (such shares being
referred to hereinafter collectively as the "Shares"), all of which are and
will be Beneficially Owned by such Stockholder. The Stockholder hereby
acknowledges and agrees that the obligation of Parent and Merger Sub to accept
for payment and pay for the Shares in the Offer, including the Shares
Beneficially Owned by such Stockholder, is subject to the terms and conditions
of the Offer.
2.2 The transfer by the Stockholder of the Shares to Merger Sub in the
Offer shall pass to, and unconditionally vest in, Merger Sub good and valid
title to the Shares, free and clear of all Liens.
2.3 The Stockholder hereby permits Parent and Merger Sub to publish and
disclose in the Offer Documents and, if approval or advisement of the Company's
stockholders is required under applicable law, the Proxy Statement or
Information Statement (including all documents and schedules filed with the
SEC) its identity and ownership of the Company Common Stock and the nature of
its commitments, arrangements and understandings under this Agreement.
ARTICLE 3 -- ADDITIONAL AGREEMENTS
3.1 Voting Agreement. The Stockholder shall, at any meeting of the holders
of Company Common Stock, however called, or in connection with any written
consent of the holders of Company Common Stock, vote (or cause to be voted) the
Shares (if any) then held of record or Beneficially Owned by such Stockholder,
(i) in favor of the Merger, the execution and delivery by the Company of the
Merger Agreement and the approval of the terms thereof and each of the other
actions contemplated by the Merger Agreement and this Agreement and any actions
required in furtherance thereof and hereof; and (ii) against any Acquisition
Proposal and against any action or agreement that would impede, frustrate,
prevent or nullify this Agreement, or result in a breach in any respect of any
covenant, representation or warranty or any other obligation or agreement of
the Company under the Merger Agreement or which would result in any of the
conditions set forth in Annex A to the Merger Agreement or set forth in Article
VI of the Merger Agreement not being fulfilled. Notwithstanding anything in
this Agreement to the contrary, the Stockholder, in his capacity as a director
and/or officer of the
2
196
Company, as the case may be, and in accordance with the Merger Agreement, may
exercise his fiduciary duties with respect to the Company.
3.2 No Inconsistent Arrangements. The Stockholder hereby covenants and
agrees that, except as contemplated by this Agreement and the Merger Agreement,
it shall not (i) transfer (which term shall include, without limitation, any
sale, gift, pledge or other disposition), or consent to any transfer of, any or
all of such Stockholder's Shares, Stock Options or Warrants or any interest
therein, (ii) enter into any contract, option or other agreement or
understanding with respect to any transfer of any or all of such Shares, Stock
Options or Warrants or any interest therein, (iii) grant any proxy,
power-of-attorney or other authorization in or with respect to such Shares,
Stock Options or Warrants, (iv) deposit such Shares, Stock Options or Warrants
into a voting trust or enter into a voting agreement or arrangement with
respect to such Shares, Stock Options or Warrants, or (v) take any other action
that would in any way restrict, limit or interfere with the performance of its
obligations hereunder or the transactions contemplated hereby or by the Merger
Agreement.
3.3 No Solicitation. The Stockholder hereby agrees, in its or his capacity
as a stockholder of the Company, that neither the Stockholder nor any of its
affiliates shall (and such Stockholder shall use its best efforts to cause its
officers, directors, employees, representatives and agents, including, but not
limited to, investment bankers, attorneys and accountants, not to), directly or
indirectly, encourage, solicit, participate in or initiate discussions or
negotiations with, or provide any information to, any corporation, partnership,
person or other entity or group (other than Parent, any of its affiliates or
representatives) concerning any Acquisition Proposal. The Stockholder will
immediately cease any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any Acquisition Proposal. The
Stockholder will immediately communicate to Parent the terms of any proposal,
discussion, negotiation or inquiry such Stockholder, in its or his capacity as
a stockholder of the Company, receives (and will disclose any written materials
received by such Stockholder, in its or his capacity as a stockholder of the
Company, in connection with such proposal, discussion, negotiation or inquiry)
and the identity of the party making such proposal or inquiry which it may
receive in respect of any such transaction.
3.4 Stock Options and Warrants. If the Stockholder holds Stock Options
and/or Warrants to acquire shares of Company Common Stock, he shall, if
requested by the Company, consent to the cancellation and conversion of his
Company Options and/or Warrants in accordance with the terms of the Merger
Agreement and shall execute all appropriate documentation in connection with
such cancellation and conversion.
3.5 Best Reasonable Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use its best reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement
and the Merger Agreement. Each party shall promptly consult
3
197
with the other and provide any necessary information and material with respect
to all filings made by such party with any Governmental Entity in connection
with this Agreement and the Merger Agreement and the transactions contemplated
hereby and thereby.
3.6 Waiver of Appraisal Rights. The Stockholder hereby waives any rights
of appraisal or rights to dissent from the Merger that it or he may have.
ARTICLE 4 -- REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDER
The Stockholder hereby represents and warrants to Parent and Merger Sub as
follows:
(a) Ownership of Shares. The Shares, as of the date hereof, constitute
all of the Shares Beneficially Owned by such Stockholder. With respect to the
Shares, the Stockholder has sole voting power and sole dispositive power, sole
power of conversion, sole power to demand appraisal rights and sole power to
agree to all of the matters set forth in this Agreement, in each case with
respect to all of the Shares with no limitations, qualifications or
restrictions on such rights, subject to applicable securities laws and the
terms of this Agreement.
(b) Power; Binding Agreement. The Stockholder has the legal capacity,
power and authority to enter into and perform all of the Stockholder's
obligations under this Agreement. The execution, delivery and performance of
this Agreement by the Stockholder will not violate any other agreement to which
such Stockholder is a party including, without limitation, any voting
agreement, proxy arrangement, pledge agreement, shareholders agreement or
voting trust. This Agreement has been duly and validly executed and delivered
by the Stockholder and constitutes a valid and binding agreement of the
Stockholder, enforceable against such Stockholder in accordance with its terms.
There is no beneficiary or holder of a voting trust certificate or other
interest of any trust of which the Stockholder is a trustee whose consent is
required for the execution and delivery of this Agreement or the consummation
by such Stockholder of the transactions contemplated hereby.
(c) No Liens. Except as permitted by this Agreement, the Shares and
the certificates representing such Shares are now, and at all times during the
term hereof will be, held by such Stockholder, or by a nominee or custodian for
the benefit of such Stockholder, free and clear of all Liens, proxies, voting
trusts or agreements, understandings or arrangements or any other rights
whatsoever.
(d) No Finder's Fees. No broker, investment banker, financial advisor
or other person is entitled to any broker's, finder's, financial adviser's or
other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of such
Stockholder.
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198
(e) Reliance by Parent. The Stockholder understands and acknowledges
that Parent is entering into, and causing Merger Sub to enter into, the Merger
Agreement in reliance upon such Stockholder's execution and delivery of this
Agreement.
ARTICLE 5 -- STOP TRANSFER
The Stockholder shall not request that the Company register the transfer
(book-entry or otherwise) of any certificate or uncertificated interest
representing any of the Shares, unless such transfer is made in compliance with
this Agreement. In the event of a stock dividend or distribution, or any change
in the Company Common Stock by reason of any stock dividend, split-up,
recapitalization, combination, exchange of shares or the like, the term
"Shares" shall refer to and include the Shares as well as all such stock
dividends and distributions and any shares into which or for which any or all
of the Shares may be changed or exchanged.
ARTICLE 6 -- TERMINATION
The covenants and agreements set forth herein shall terminate upon the
termination of the Merger Agreement in accordance with its terms.
ARTICLE 7 -- MISCELLANEOUS
7.1 Notices. All notices and other communications hereunder shall be given
by telephone and immediately confirmed in writing and shall be deemed given if
delivered personally or mailed by registered or certified mail (return receipt
requested) or overnight courier to the parties at the following addresses (or
at such other address for a party as shall be specified by like notice):
(a) if to Parent or Merger Sub:
DENTSPLY International Inc.
570 West College Avenue
York, PA 17405
Attention: J. Patrick Clark, Esquire
With a copy to:
Morgan, Lewis & Bockius LLP
One Oxford Centre, 32nd Floor
Pittsburgh, PA 15219-1417
Attention: Marlee S. Myers, Esquire
5
199
(b) if to the Stockholder:
Dewey F. Edmunds, President
1318 Rancho Encinitas
Encinitas, CA 92024
With a copy to:
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, CA 90067-4276
Attn: Derrick Boston
7.2 Entire Agreement; No Third Party Beneficiaries. This Agreement
constitutes the entire agreement and supersedes all other prior agreements and
undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof. There are no third party beneficiaries of
this Agreement and nothing in this Agreement, express or implied, is intended
to or shall confer upon any person other than the parties hereto and their
respective successors and permitted assigns, any rights, remedies, obligations
or liabilities.
7.3 Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder may be assigned by operation of law or otherwise,
provided that Parent or Merger Sub may assign its rights and obligations
hereunder to a direct or indirect subsidiary of Parent, but no such assignment
shall relieve Parent or Merger Sub, as the case may be, of its obligations
hereunder. Subject to the foregoing sentence, this Agreement will be binding
upon, and inure to the benefit of, the parties and their respective successors
and assigns.
7.4 Governing Law. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of
Delaware, without giving effect to the conflicts of law principles thereof.
7.5 Counterparts. This Agreement may be executed in one or more
counterparts which together shall constitute a single agreement.
7.6 Specific Performance. The parties hereto agree that irreparable damage
would occur in the event any of the provisions of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
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200
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunder duly authorized.
DENTSPLY INTERNATIONAL INC.
By: /s/ Edward D. Yates
------------------------------
Edward D. Yates
Senior Vice President
IMAGE ACQUISITION CORP.
By: /s/ Edward D. Yates
------------------------------
Edward D. Yates
Senior Vice President
Dewey F. Edmunds
/s/ Dewey F. Edmunds
---------------------------------
Dewey F. Edmunds
201
SCHEDULE I
NAME OF STOCKHOLDER SHARES BENEFICIALLY OWNED
Dewey F. Edmunds 1. As of January 22, 1997, 67,500 shares
are benefically owned.
2. Upon a change of control, an
additional 200,000 shares will become
benefically owned.
202
EXHIBIT (c)(6)
---------------------------------------------------------
STOCKHOLDER AGREEMENT
dated as of January 27, 1997
by and among
DENTSPLY International Inc.
Image Acquisition Corp.
and
Richard P. Greenthal
-------------------------------------------------------
203
STOCKHOLDER AGREEMENT
AGREEMENT, dated as of January 27, 1997 by and among DENTSPLY
International Inc. a Delaware corporation ("Parent"), Image Acquisition Corp, a
Delaware corporation and a wholly owned subsidiary of Parent (the "Merger
Sub"), and Richard P. Greenthal (the "Stockholder"). Except as otherwise
defined herein, capitalized terms shall have the respective meanings given to
them in the Merger Agreement.
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this Agreement,
Parent, the Merger Sub and New Image Industries, Inc., a Delaware corporation
(the "Company"), have entered into an Agreement and Plan of Merger (as such
agreement may hereafter be amended from time to time, the "Merger Agreement"),
pursuant to which Merger Sub will be merged with and into the Company (the
"Merger"); and
WHEREAS, the Stockholder is executing this Agreement as an inducement for
Parent and Merger Sub to enter into the Merger Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE 1 -- DEFINITIONS
1.1 For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of
the same securities by the same holder, securities Beneficially Owned by a
Person shall include securities Beneficially Owned by all other Persons with
whom such Person would constitute a "group" as within the meaning of Section
13(d)(3) of the Exchange Act.
(b) "Company Common Stock" shall mean the Common Stock, $.001 par
value, of the Company.
(c) "Person" shall mean an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
204
ARTICLE 2 -- TENDER OF SHARES
2.1 In order to induce Parent and Merger Sub to enter into the Merger
Agreement, the Stockholder hereby agrees to validly tender (or cause the record
owner of such shares to validly tender), and not to withdraw, pursuant to and
in accordance with the terms of the Offer, the number of shares of Company
Common Stock set forth opposite such Stockholder's name on Schedule I hereto
and any shares of Company Common Stock acquired by such Stockholder in any
capacity after the date hereof and prior to the termination of this Agreement
whether upon the exercise of Stock Options, subject to Section 2.11 of the
Merger Agreement, or Warrants, subject to Section 2.12 of the Merger Agreement,
or by means of purchase, dividend, distribution or otherwise (such shares being
referred to hereinafter collectively as the "Shares"), all of which are and
will be Beneficially Owned by such Stockholder. The Stockholder hereby
acknowledges and agrees that the obligation of Parent and Merger Sub to accept
for payment and pay for the Shares in the Offer, including the Shares
Beneficially Owned by such Stockholder, is subject to the terms and conditions
of the Offer.
2.2 The transfer by the Stockholder of the Shares to Merger Sub in the
Offer shall pass to, and unconditionally vest in, Merger Sub good and valid
title to the Shares, free and clear of all Liens.
2.3 The Stockholder hereby permits Parent and Merger Sub to publish and
disclose in the Offer Documents and, if approval or advisement of the Company's
stockholders is required under applicable law, the Proxy Statement or
Information Statement (including all documents and schedules filed with the
SEC) its identity and ownership of the Company Common Stock and the nature of
its commitments, arrangements and understandings under this Agreement.
ARTICLE 3 -- ADDITIONAL AGREEMENTS
3.1 Voting Agreement. The Stockholder shall, at any meeting of the holders
of Company Common Stock, however called, or in connection with any written
consent of the holders of Company Common Stock, vote (or cause to be voted) the
Shares (if any) then held of record or Beneficially Owned by such Stockholder,
(i) in favor of the Merger, the execution and delivery by the Company of the
Merger Agreement and the approval of the terms thereof and each of the other
actions contemplated by the Merger Agreement and this Agreement and any actions
required in furtherance thereof and hereof; and (ii) against any Acquisition
Proposal and against any action or agreement that would impede, frustrate,
prevent or nullify this Agreement, or result in a breach in any respect of any
covenant, representation or warranty or any other obligation or agreement of
the Company under the Merger Agreement or which would result in any of the
conditions set forth in Annex A to the Merger Agreement or set forth in Article
VI of the Merger Agreement not being fulfilled. Notwithstanding anything in
this Agreement to the contrary, the Stockholder, in his capacity as a director
and/or officer of the
2
205
Company, as the case may be, and in accordance with the Merger Agreement, may
exercise his fiduciary duties with respect to the Company.
3.2 No Inconsistent Arrangements. The Stockholder hereby covenants and
agrees that, except as contemplated by this Agreement and the Merger Agreement,
it shall not (i) transfer (which term shall include, without limitation, any
sale, gift, pledge or other disposition), or consent to any transfer of, any or
all of such Stockholder's Shares, Stock Options or Warrants or any interest
therein, (ii) enter into any contract, option or other agreement or
understanding with respect to any transfer of any or all of such Shares, Stock
Options or Warrants or any interest therein, (iii) grant any proxy,
power-of-attorney or other authorization in or with respect to such Shares,
Stock Options or Warrants, (iv) deposit such Shares, Stock Options or Warrants
into a voting trust or enter into a voting agreement or arrangement with
respect to such Shares, Stock Options or Warrants, or (v) take any other action
that would in any way restrict, limit or interfere with the performance of its
obligations hereunder or the transactions contemplated hereby or by the Merger
Agreement.
3.3 No Solicitation. The Stockholder hereby agrees, in its or his capacity
as a stockholder of the Company, that neither the Stockholder nor any of its
affiliates shall (and such Stockholder shall use its best efforts to cause its
officers, directors, employees, representatives and agents, including, but not
limited to, investment bankers, attorneys and accountants, not to), directly or
indirectly, encourage, solicit, participate in or initiate discussions or
negotiations with, or provide any information to, any corporation, partnership,
person or other entity or group (other than Parent, any of its affiliates or
representatives) concerning any Acquisition Proposal. The Stockholder will
immediately cease any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any Acquisition Proposal. The
Stockholder will immediately communicate to Parent the terms of any proposal,
discussion, negotiation or inquiry such Stockholder, in its or his capacity as
a stockholder of the Company, receives (and will disclose any written materials
received by such Stockholder, in its or his capacity as a stockholder of the
Company, in connection with such proposal, discussion, negotiation or inquiry)
and the identity of the party making such proposal or inquiry which it may
receive in respect of any such transaction.
3.4 Stock Options and Warrants. If the Stockholder holds Stock Options
and/or Warrants to acquire shares of Company Common Stock, he shall, if
requested by the Company, consent to the cancellation and conversion of his
Company Options and/or Warrants in accordance with the terms of the Merger
Agreement and shall execute all appropriate documentation in connection with
such cancellation and conversion.
3.5 Best Reasonable Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use its best reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement
and the Merger Agreement. Each party shall promptly consult
3
206
with the other and provide any necessary information and material with respect
to all filings made by such party with any Governmental Entity in connection
with this Agreement and the Merger Agreement and the transactions contemplated
hereby and thereby.
3.6 Waiver of Appraisal Rights. The Stockholder hereby waives any rights
of appraisal or rights to dissent from the Merger that it or he may have.
ARTICLE 4 -- REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDER
The Stockholder hereby represents and warrants to Parent and Merger Sub as
follows:
(a) Ownership of Shares. The Shares, as of the date hereof, constitute
all of the Shares Beneficially Owned by such Stockholder. With respect to the
Shares, the Stockholder has sole voting power and sole dispositive power, sole
power of conversion, sole power to demand appraisal rights and sole power to
agree to all of the matters set forth in this Agreement, in each case with
respect to all of the Shares with no limitations, qualifications or
restrictions on such rights, subject to applicable securities laws and the
terms of this Agreement.
(b) Power; Binding Agreement. The Stockholder has the legal capacity,
power and authority to enter into and perform all of the Stockholder's
obligations under this Agreement. The execution, delivery and performance of
this Agreement by the Stockholder will not violate any other agreement to which
such Stockholder is a party including, without limitation, any voting
agreement, proxy arrangement, pledge agreement, shareholders agreement or
voting trust. This Agreement has been duly and validly executed and delivered
by the Stockholder and constitutes a valid and binding agreement of the
Stockholder, enforceable against such Stockholder in accordance with its terms.
There is no beneficiary or holder of a voting trust certificate or other
interest of any trust of which the Stockholder is a trustee whose consent is
required for the execution and delivery of this Agreement or the consummation
by such Stockholder of the transactions contemplated hereby.
(c) No Liens. Except as permitted by this Agreement, the Shares and
the certificates representing such Shares are now, and at all times during the
term hereof will be, held by such Stockholder, or by a nominee or custodian for
the benefit of such Stockholder, free and clear of all Liens, proxies, voting
trusts or agreements, understandings or arrangements or any other rights
whatsoever.
(d) No Finder's Fees. No broker, investment banker, financial advisor
or other person is entitled to any broker's, finder's, financial adviser's or
other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of such
Stockholder.
4
207
(e) Reliance by Parent. The Stockholder understands and acknowledges
that Parent is entering into, and causing Merger Sub to enter into, the Merger
Agreement in reliance upon such Stockholder's execution and delivery of this
Agreement.
ARTICLE 5 -- STOP TRANSFER
The Stockholder shall not request that the Company register the transfer
(book-entry or otherwise) of any certificate or uncertificated interest
representing any of the Shares, unless such transfer is made in compliance with
this Agreement. In the event of a stock dividend or distribution, or any change
in the Company Common Stock by reason of any stock dividend, split-up,
recapitalization, combination, exchange of shares or the like, the term
"Shares" shall refer to and include the Shares as well as all such stock
dividends and distributions and any shares into which or for which any or all
of the Shares may be changed or exchanged.
ARTICLE 6 -- TERMINATION
The covenants and agreements set forth herein shall terminate upon the
termination of the Merger Agreement in accordance with its terms.
ARTICLE 7 -- MISCELLANEOUS
7.1 Notices. All notices and other communications hereunder shall be given
by telephone and immediately confirmed in writing and shall be deemed given if
delivered personally or mailed by registered or certified mail (return receipt
requested) or overnight courier to the parties at the following addresses (or
at such other address for a party as shall be specified by like notice):
(a) if to Parent or Merger Sub:
DENTSPLY International Inc.
570 West College Avenue
York, PA 17405
Attention: J. Patrick Clark, Esquire
With a copy to:
Morgan, Lewis & Bockius LLP
One Oxford Centre, 32nd Floor
Pittsburgh, PA 15219-1417
Attention: Marlee S. Myers, Esquire
5
208
(b) if to the Stockholder:
Richard P. Greenthal
1122 La Altura Blvd.
Beverly Hills, CA 90210
With a copy to:
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, CA 90067-4276
Attn: Derrick Boston
7.2 Entire Agreement; No Third Party Beneficiaries. This Agreement
constitutes the entire agreement and supersedes all other prior agreements and
undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof. There are no third party beneficiaries of
this Agreement and nothing in this Agreement, express or implied, is intended
to or shall confer upon any person other than the parties hereto and their
respective successors and permitted assigns, any rights, remedies, obligations
or liabilities.
7.3 Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder may be assigned by operation of law or otherwise,
provided that Parent or Merger Sub may assign its rights and obligations
hereunder to a direct or indirect subsidiary of Parent, but no such assignment
shall relieve Parent or Merger Sub, as the case may be, of its obligations
hereunder. Subject to the foregoing sentence, this Agreement will be binding
upon, and inure to the benefit of, the parties and their respective successors
and assigns.
7.4 Governing Law. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of
Delaware, without giving effect to the conflicts of law principles thereof.
7.5 Counterparts. This Agreement may be executed in one or more
counterparts which together shall constitute a single agreement.
7.6 Specific Performance. The parties hereto agree that irreparable damage
would occur in the event any of the provisions of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
6
209
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunder duly authorized.
DENTSPLY INTERNATIONAL INC.
By: /s/ Edward D. Yates
------------------------------
Edward D. Yates
Senior Vice President
IMAGE ACQUISITION CORP.
By: /s/ Edward D. Yates
------------------------------
Edward D. Yates
Senior Vice President
Richard P. Greenthal
/s/ Richard P. Greenthal
---------------------------------
Richard P. Greenthal
210
SCHEDULE I
NAME OF STOCKHOLDER SHARES BENEFICIALLY OWNED
Richard P. Greenthal 6,499 vested options
13,001 options that will vest upon a
change of control.
211
EXHIBIT (c)(7)
---------------------------------------------------------
STOCKHOLDER AGREEMENT
dated as of January 27, 1997
by and among
DENTSPLY International Inc.
Image Acquisition Corp.
and
Debra L. Jackson
-------------------------------------------------------
212
STOCKHOLDER AGREEMENT
AGREEMENT, dated as of January 27, 1997 by and among DENTSPLY
International Inc. a Delaware corporation ("Parent"), Image Acquisition Corp, a
Delaware corporation and a wholly owned subsidiary of Parent (the "Merger
Sub"), and Debra L. Jackson (the "Stockholder"). Except as otherwise defined
herein, capitalized terms shall have the respective meanings given to them in
the Merger Agreement.
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this Agreement,
Parent, the Merger Sub and New Image Industries, Inc., a Delaware corporation
(the "Company"), have entered into an Agreement and Plan of Merger (as such
agreement may hereafter be amended from time to time, the "Merger Agreement"),
pursuant to which Merger Sub will be merged with and into the Company (the
"Merger"); and
WHEREAS, the Stockholder is executing this Agreement as an inducement for
Parent and Merger Sub to enter into the Merger Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE 1 -- DEFINITIONS
1.1 For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of
the same securities by the same holder, securities Beneficially Owned by a
Person shall include securities Beneficially Owned by all other Persons with
whom such Person would constitute a "group" as within the meaning of Section
13(d)(3) of the Exchange Act.
(b) "Company Common Stock" shall mean the Common Stock, $.001 par
value, of the Company.
(c) "Person" shall mean an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
213
ARTICLE 2 -- TENDER OF SHARES
2.1 In order to induce Parent and Merger Sub to enter into the Merger
Agreement, the Stockholder hereby agrees to validly tender (or cause the record
owner of such shares to validly tender), and not to withdraw, pursuant to and
in accordance with the terms of the Offer, the number of shares of Company
Common Stock set forth opposite such Stockholder's name on Schedule I hereto
and any shares of Company Common Stock acquired by such Stockholder in any
capacity after the date hereof and prior to the termination of this Agreement
whether upon the exercise of Stock Options, subject to Section 2.11 of the
Merger Agreement, or Warrants, subject to Section 2.12 of the Merger Agreement,
or by means of purchase, dividend, distribution or otherwise (such shares being
referred to hereinafter collectively as the "Shares"), all of which are and
will be Beneficially Owned by such Stockholder. The Stockholder hereby
acknowledges and agrees that the obligation of Parent and Merger Sub to accept
for payment and pay for the Shares in the Offer, including the Shares
Beneficially Owned by such Stockholder, is subject to the terms and conditions
of the Offer.
2.2 The transfer by the Stockholder of the Shares to Merger Sub in the
Offer shall pass to, and unconditionally vest in, Merger Sub good and valid
title to the Shares, free and clear of all Liens.
2.3 The Stockholder hereby permits Parent and Merger Sub to publish and
disclose in the Offer Documents and, if approval or advisement of the Company's
stockholders is required under applicable law, the Proxy Statement or
Information Statement (including all documents and schedules filed with the
SEC) its identity and ownership of the Company Common Stock and the nature of
its commitments, arrangements and understandings under this Agreement.
ARTICLE 3 -- ADDITIONAL AGREEMENTS
3.1 Voting Agreement. The Stockholder shall, at any meeting of the holders
of Company Common Stock, however called, or in connection with any written
consent of the holders of Company Common Stock, vote (or cause to be voted) the
Shares (if any) then held of record or Beneficially Owned by such Stockholder,
(i) in favor of the Merger, the execution and delivery by the Company of the
Merger Agreement and the approval of the terms thereof and each of the other
actions contemplated by the Merger Agreement and this Agreement and any actions
required in furtherance thereof and hereof; and (ii) against any Acquisition
Proposal and against any action or agreement that would impede, frustrate,
prevent or nullify this Agreement, or result in a breach in any respect of any
covenant, representation or warranty or any other obligation or agreement of
the Company under the Merger Agreement or which would result in any of the
conditions set forth in Annex A to the Merger Agreement or set forth in Article
VI of the Merger Agreement not being fulfilled. Notwithstanding anything in
this Agreement to the contrary, the Stockholder, in his capacity as a director
and/or officer of the
2
214
Company, as the case may be, and in accordance with the Merger Agreement, may
exercise his fiduciary duties with respect to the Company.
3.2 No Inconsistent Arrangements. The Stockholder hereby covenants and
agrees that, except as contemplated by this Agreement and the Merger Agreement,
it shall not (i) transfer (which term shall include, without limitation, any
sale, gift, pledge or other disposition), or consent to any transfer of, any or
all of such Stockholder's Shares, Stock Options or Warrants or any interest
therein, (ii) enter into any contract, option or other agreement or
understanding with respect to any transfer of any or all of such Shares, Stock
Options or Warrants or any interest therein, (iii) grant any proxy,
power-of-attorney or other authorization in or with respect to such Shares,
Stock Options or Warrants, (iv) deposit such Shares, Stock Options or Warrants
into a voting trust or enter into a voting agreement or arrangement with
respect to such Shares, Stock Options or Warrants, or (v) take any other action
that would in any way restrict, limit or interfere with the performance of its
obligations hereunder or the transactions contemplated hereby or by the Merger
Agreement.
3.3 No Solicitation. The Stockholder hereby agrees, in its or his capacity
as a stockholder of the Company, that neither the Stockholder nor any of its
affiliates shall (and such Stockholder shall use its best efforts to cause its
officers, directors, employees, representatives and agents, including, but not
limited to, investment bankers, attorneys and accountants, not to), directly or
indirectly, encourage, solicit, participate in or initiate discussions or
negotiations with, or provide any information to, any corporation, partnership,
person or other entity or group (other than Parent, any of its affiliates or
representatives) concerning any Acquisition Proposal. The Stockholder will
immediately cease any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any Acquisition Proposal. The
Stockholder will immediately communicate to Parent the terms of any proposal,
discussion, negotiation or inquiry such Stockholder, in its or his capacity as
a stockholder of the Company, receives (and will disclose any written materials
received by such Stockholder, in its or his capacity as a stockholder of the
Company, in connection with such proposal, discussion, negotiation or inquiry)
and the identity of the party making such proposal or inquiry which it may
receive in respect of any such transaction.
3.4 Stock Options and Warrants. If the Stockholder holds Stock Options
and/or Warrants to acquire shares of Company Common Stock, he shall, if
requested by the Company, consent to the cancellation and conversion of his
Company Options and/or Warrants in accordance with the terms of the Merger
Agreement and shall execute all appropriate documentation in connection with
such cancellation and conversion.
3.5 Best Reasonable Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use its best reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement
and the Merger Agreement. Each party shall promptly consult
3
215
with the other and provide any necessary information and material with respect
to all filings made by such party with any Governmental Entity in connection
with this Agreement and the Merger Agreement and the transactions contemplated
hereby and thereby.
3.6 Waiver of Appraisal Rights. The Stockholder hereby waives any rights
of appraisal or rights to dissent from the Merger that it or he may have.
ARTICLE 4 -- REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDER
The Stockholder hereby represents and warrants to Parent and Merger Sub as
follows:
(a) Ownership of Shares. The Shares, as of the date hereof, constitute
all of the Shares Beneficially Owned by such Stockholder. With respect to the
Shares, the Stockholder has sole voting power and sole dispositive power, sole
power of conversion, sole power to demand appraisal rights and sole power to
agree to all of the matters set forth in this Agreement, in each case with
respect to all of the Shares with no limitations, qualifications or
restrictions on such rights, subject to applicable securities laws and the
terms of this Agreement.
(b) Power; Binding Agreement. The Stockholder has the legal capacity,
power and authority to enter into and perform all of the Stockholder's
obligations under this Agreement. The execution, delivery and performance of
this Agreement by the Stockholder will not violate any other agreement to which
such Stockholder is a party including, without limitation, any voting
agreement, proxy arrangement, pledge agreement, shareholders agreement or
voting trust. This Agreement has been duly and validly executed and delivered
by the Stockholder and constitutes a valid and binding agreement of the
Stockholder, enforceable against such Stockholder in accordance with its terms.
There is no beneficiary or holder of a voting trust certificate or other
interest of any trust of which the Stockholder is a trustee whose consent is
required for the execution and delivery of this Agreement or the consummation
by such Stockholder of the transactions contemplated hereby.
(c) No Liens. Except as permitted by this Agreement, the Shares and
the certificates representing such Shares are now, and at all times during the
term hereof will be, held by such Stockholder, or by a nominee or custodian for
the benefit of such Stockholder, free and clear of all Liens, proxies, voting
trusts or agreements, understandings or arrangements or any other rights
whatsoever.
(d) No Finder's Fees. No broker, investment banker, financial advisor
or other person is entitled to any broker's, finder's, financial adviser's or
other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of such
Stockholder.
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216
(e) Reliance by Parent. The Stockholder understands and acknowledges
that Parent is entering into, and causing Merger Sub to enter into, the Merger
Agreement in reliance upon such Stockholder's execution and delivery of this
Agreement.
ARTICLE 5 -- STOP TRANSFER
The Stockholder shall not request that the Company register the transfer
(book-entry or otherwise) of any certificate or uncertificated interest
representing any of the Shares, unless such transfer is made in compliance with
this Agreement. In the event of a stock dividend or distribution, or any change
in the Company Common Stock by reason of any stock dividend, split-up,
recapitalization, combination, exchange of shares or the like, the term
"Shares" shall refer to and include the Shares as well as all such stock
dividends and distributions and any shares into which or for which any or all
of the Shares may be changed or exchanged.
ARTICLE 6 -- TERMINATION
The covenants and agreements set forth herein shall terminate upon the
termination of the Merger Agreement in accordance with its terms.
ARTICLE 7 -- MISCELLANEOUS
7.1 Notices. All notices and other communications hereunder shall be given
by telephone and immediately confirmed in writing and shall be deemed given if
delivered personally or mailed by registered or certified mail (return receipt
requested) or overnight courier to the parties at the following addresses (or
at such other address for a party as shall be specified by like notice):
(a) if to Parent or Merger Sub:
DENTSPLY International Inc.
570 West College Avenue
York, PA 17405
Attention: J. Patrick Clark, Esquire
With a copy to:
Morgan, Lewis & Bockius LLP
One Oxford Centre, 32nd Floor
Pittsburgh, PA 15219-1417
Attention: Marlee S. Myers, Esquire
5
217
(b) if to the Stockholder:
Debra L. Jackson
c/o New Image Industries, Inc.
2283 Cosmos Court
Carlsbad, CA 92009
With a copy to:
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, CA 90067-4276
Attn: Derrick Boston
7.2 Entire Agreement; No Third Party Beneficiaries. This Agreement
constitutes the entire agreement and supersedes all other prior agreements and
undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof. There are no third party beneficiaries of
this Agreement and nothing in this Agreement, express or implied, is intended
to or shall confer upon any person other than the parties hereto and their
respective successors and permitted assigns, any rights, remedies, obligations
or liabilities.
7.3 Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder may be assigned by operation of law or otherwise,
provided that Parent or Merger Sub may assign its rights and obligations
hereunder to a direct or indirect subsidiary of Parent, but no such assignment
shall relieve Parent or Merger Sub, as the case may be, of its obligations
hereunder. Subject to the foregoing sentence, this Agreement will be binding
upon, and inure to the benefit of, the parties and their respective successors
and assigns.
7.4 Governing Law. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of
Delaware, without giving effect to the conflicts of law principles thereof.
7.5 Counterparts. This Agreement may be executed in one or more
counterparts which together shall constitute a single agreement.
7.6 Specific Performance. The parties hereto agree that irreparable damage
would occur in the event any of the provisions of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
6
218
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunder duly authorized.
DENTSPLY INTERNATIONAL INC.
By: /s/ Edward D. Yates
------------------------------
Edward D. Yates
Senior Vice President
IMAGE ACQUISITION CORP.
By: /s/ Edward D. Yates
------------------------------
Edward D. Yates
Senior Vice President
Debra L. Jackson
/s/ Debra L. Jackson
---------------------------------
Debra L. Jackson
219
SCHEDULE I
NAME OF STOCKHOLDER SHARES BENEFICIALLY OWNED
Debra L. Jackson 0 options vested
26,000 options vest on change of control
220
EXHIBIT (c)(8)
---------------------------------------------------------
STOCKHOLDER AGREEMENT
dated as of January 27, 1997
by and among
DENTSPLY International Inc.
Image Acquisition Corp.
and
Mike Lytle
-------------------------------------------------------
221
STOCKHOLDER AGREEMENT
AGREEMENT, dated as of January 27, 1997 by and among DENTSPLY
International Inc. a Delaware corporation ("Parent"), Image Acquisition Corp, a
Delaware corporation and a wholly owned subsidiary of Parent (the "Merger
Sub"), and Mike Lytle (the "Stockholder"). Except as otherwise defined herein,
capitalized terms shall have the respective meanings given to them in the
Merger Agreement.
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this Agreement,
Parent, the Merger Sub and New Image Industries, Inc., a Delaware corporation
(the "Company"), have entered into an Agreement and Plan of Merger (as such
agreement may hereafter be amended from time to time, the "Merger Agreement"),
pursuant to which Merger Sub will be merged with and into the Company (the
"Merger"); and
WHEREAS, the Stockholder is executing this Agreement as an inducement for
Parent and Merger Sub to enter into the Merger Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE 1 -- DEFINITIONS
1.1 For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of
the same securities by the same holder, securities Beneficially Owned by a
Person shall include securities Beneficially Owned by all other Persons with
whom such Person would constitute a "group" as within the meaning of Section
13(d)(3) of the Exchange Act.
(b) "Company Common Stock" shall mean the Common Stock, $.001 par
value, of the Company.
(c) "Person" shall mean an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
222
ARTICLE 2 -- TENDER OF SHARES
2.1 In order to induce Parent and Merger Sub to enter into the Merger
Agreement, the Stockholder hereby agrees to validly tender (or cause the record
owner of such shares to validly tender), and not to withdraw, pursuant to and
in accordance with the terms of the Offer, the number of shares of Company
Common Stock set forth opposite such Stockholder's name on Schedule I hereto
and any shares of Company Common Stock acquired by such Stockholder in any
capacity after the date hereof and prior to the termination of this Agreement
whether upon the exercise of Stock Options, subject to Section 2.11 of the
Merger Agreement, or Warrants, subject to Section 2.12 of the Merger Agreement,
or by means of purchase, dividend, distribution or otherwise (such shares being
referred to hereinafter collectively as the "Shares"), all of which are and
will be Beneficially Owned by such Stockholder. The Stockholder hereby
acknowledges and agrees that the obligation of Parent and Merger Sub to accept
for payment and pay for the Shares in the Offer, including the Shares
Beneficially Owned by such Stockholder, is subject to the terms and conditions
of the Offer.
2.2 The transfer by the Stockholder of the Shares to Merger Sub in the
Offer shall pass to, and unconditionally vest in, Merger Sub good and valid
title to the Shares, free and clear of all Liens.
2.3 The Stockholder hereby permits Parent and Merger Sub to publish and
disclose in the Offer Documents and, if approval or advisement of the Company's
stockholders is required under applicable law, the Proxy Statement or
Information Statement (including all documents and schedules filed with the
SEC) its identity and ownership of the Company Common Stock and the nature of
its commitments, arrangements and understandings under this Agreement.
ARTICLE 3 -- ADDITIONAL AGREEMENTS
3.1 Voting Agreement. The Stockholder shall, at any meeting of the holders
of Company Common Stock, however called, or in connection with any written
consent of the holders of Company Common Stock, vote (or cause to be voted) the
Shares (if any) then held of record or Beneficially Owned by such Stockholder,
(i) in favor of the Merger, the execution and delivery by the Company of the
Merger Agreement and the approval of the terms thereof and each of the other
actions contemplated by the Merger Agreement and this Agreement and any actions
required in furtherance thereof and hereof; and (ii) against any Acquisition
Proposal and against any action or agreement that would impede, frustrate,
prevent or nullify this Agreement, or result in a breach in any respect of any
covenant, representation or warranty or any other obligation or agreement of
the Company under the Merger Agreement or which would result in any of the
conditions set forth in Annex A to the Merger Agreement or set forth in Article
VI of the Merger Agreement not being fulfilled. Notwithstanding anything in
this Agreement to the contrary, the Stockholder, in his capacity as a director
and/or officer of the
2
223
Company, as the case may be, and in accordance with the Merger Agreement, may
exercise his fiduciary duties with respect to the Company.
3.2 No Inconsistent Arrangements. The Stockholder hereby covenants and
agrees that, except as contemplated by this Agreement and the Merger Agreement,
it shall not (i) transfer (which term shall include, without limitation, any
sale, gift, pledge or other disposition), or consent to any transfer of, any or
all of such Stockholder's Shares, Stock Options or Warrants or any interest
therein, (ii) enter into any contract, option or other agreement or
understanding with respect to any transfer of any or all of such Shares, Stock
Options or Warrants or any interest therein, (iii) grant any proxy,
power-of-attorney or other authorization in or with respect to such Shares,
Stock Options or Warrants, (iv) deposit such Shares, Stock Options or Warrants
into a voting trust or enter into a voting agreement or arrangement with
respect to such Shares, Stock Options or Warrants, or (v) take any other action
that would in any way restrict, limit or interfere with the performance of its
obligations hereunder or the transactions contemplated hereby or by the Merger
Agreement.
3.3 No Solicitation. The Stockholder hereby agrees, in its or his capacity
as a stockholder of the Company, that neither the Stockholder nor any of its
affiliates shall (and such Stockholder shall use its best efforts to cause its
officers, directors, employees, representatives and agents, including, but not
limited to, investment bankers, attorneys and accountants, not to), directly or
indirectly, encourage, solicit, participate in or initiate discussions or
negotiations with, or provide any information to, any corporation, partnership,
person or other entity or group (other than Parent, any of its affiliates or
representatives) concerning any Acquisition Proposal. The Stockholder will
immediately cease any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any Acquisition Proposal. The
Stockholder will immediately communicate to Parent the terms of any proposal,
discussion, negotiation or inquiry such Stockholder, in its or his capacity as
a stockholder of the Company, receives (and will disclose any written materials
received by such Stockholder, in its or his capacity as a stockholder of the
Company, in connection with such proposal, discussion, negotiation or inquiry)
and the identity of the party making such proposal or inquiry which it may
receive in respect of any such transaction.
3.4 Stock Options and Warrants. If the Stockholder holds Stock Options
and/or Warrants to acquire shares of Company Common Stock, he shall, if
requested by the Company, consent to the cancellation and conversion of his
Company Options and/or Warrants in accordance with the terms of the Merger
Agreement and shall execute all appropriate documentation in connection with
such cancellation and conversion.
3.5 Best Reasonable Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use its best reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement
and the Merger Agreement. Each party shall promptly consult
3
224
with the other and provide any necessary information and material with respect
to all filings made by such party with any Governmental Entity in connection
with this Agreement and the Merger Agreement and the transactions contemplated
hereby and thereby.
3.6 Waiver of Appraisal Rights. The Stockholder hereby waives any rights
of appraisal or rights to dissent from the Merger that it or he may have.
ARTICLE 4 -- REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDER
The Stockholder hereby represents and warrants to Parent and Merger Sub as
follows:
(a) Ownership of Shares. The Shares, as of the date hereof, constitute
all of the Shares Beneficially Owned by such Stockholder. With respect to the
Shares, the Stockholder has sole voting power and sole dispositive power, sole
power of conversion, sole power to demand appraisal rights and sole power to
agree to all of the matters set forth in this Agreement, in each case with
respect to all of the Shares with no limitations, qualifications or
restrictions on such rights, subject to applicable securities laws and the
terms of this Agreement.
(b) Power; Binding Agreement. The Stockholder has the legal capacity,
power and authority to enter into and perform all of the Stockholder's
obligations under this Agreement. The execution, delivery and performance of
this Agreement by the Stockholder will not violate any other agreement to which
such Stockholder is a party including, without limitation, any voting
agreement, proxy arrangement, pledge agreement, shareholders agreement or
voting trust. This Agreement has been duly and validly executed and delivered
by the Stockholder and constitutes a valid and binding agreement of the
Stockholder, enforceable against such Stockholder in accordance with its terms.
There is no beneficiary or holder of a voting trust certificate or other
interest of any trust of which the Stockholder is a trustee whose consent is
required for the execution and delivery of this Agreement or the consummation
by such Stockholder of the transactions contemplated hereby.
(c) No Liens. Except as permitted by this Agreement, the Shares and
the certificates representing such Shares are now, and at all times during the
term hereof will be, held by such Stockholder, or by a nominee or custodian for
the benefit of such Stockholder, free and clear of all Liens, proxies, voting
trusts or agreements, understandings or arrangements or any other rights
whatsoever.
(d) No Finder's Fees. No broker, investment banker, financial advisor
or other person is entitled to any broker's, finder's, financial adviser's or
other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of such
Stockholder.
4
225
(e) Reliance by Parent. The Stockholder understands and acknowledges
that Parent is entering into, and causing Merger Sub to enter into, the Merger
Agreement in reliance upon such Stockholder's execution and delivery of this
Agreement.
ARTICLE 5 -- STOP TRANSFER
The Stockholder shall not request that the Company register the transfer
(book-entry or otherwise) of any certificate or uncertificated interest
representing any of the Shares, unless such transfer is made in compliance with
this Agreement. In the event of a stock dividend or distribution, or any change
in the Company Common Stock by reason of any stock dividend, split-up,
recapitalization, combination, exchange of shares or the like, the term
"Shares" shall refer to and include the Shares as well as all such stock
dividends and distributions and any shares into which or for which any or all
of the Shares may be changed or exchanged.
ARTICLE 6 -- TERMINATION
The covenants and agreements set forth herein shall terminate upon the
termination of the Merger Agreement in accordance with its terms.
ARTICLE 7 -- MISCELLANEOUS
7.1 Notices. All notices and other communications hereunder shall be given
by telephone and immediately confirmed in writing and shall be deemed given if
delivered personally or mailed by registered or certified mail (return receipt
requested) or overnight courier to the parties at the following addresses (or
at such other address for a party as shall be specified by like notice):
(a) if to Parent or Merger Sub:
DENTSPLY International Inc.
570 West College Avenue
York, PA 17405
Attention: J. Patrick Clark, Esquire
With a copy to:
Morgan, Lewis & Bockius LLP
One Oxford Centre, 32nd Floor
Pittsburgh, PA 15219-1417
Attention: Marlee S. Myers, Esquire
5
226
(b) if to the Stockholder:
Mike Lytle
c/o New Image Industries, Inc.
2283 Cosmos Court
Carlsbad, CA 92009
With a copy to:
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, CA 90067-4276
Attn: Derrick Boston
7.2 Entire Agreement; No Third Party Beneficiaries. This Agreement
constitutes the entire agreement and supersedes all other prior agreements and
undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof. There are no third party beneficiaries of
this Agreement and nothing in this Agreement, express or implied, is intended
to or shall confer upon any person other than the parties hereto and their
respective successors and permitted assigns, any rights, remedies, obligations
or liabilities.
7.3 Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder may be assigned by operation of law or otherwise,
provided that Parent or Merger Sub may assign its rights and obligations
hereunder to a direct or indirect subsidiary of Parent, but no such assignment
shall relieve Parent or Merger Sub, as the case may be, of its obligations
hereunder. Subject to the foregoing sentence, this Agreement will be binding
upon, and inure to the benefit of, the parties and their respective successors
and assigns.
7.4 Governing Law. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of
Delaware, without giving effect to the conflicts of law principles thereof.
7.5 Counterparts. This Agreement may be executed in one or more
counterparts which together shall constitute a single agreement.
7.6 Specific Performance. The parties hereto agree that irreparable damage
would occur in the event any of the provisions of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
6
227
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunder duly authorized.
DENTSPLY INTERNATIONAL INC.
By: /s/ Edward D. Yates
------------------------------
Edward D. Yates
Senior Vice President
IMAGE ACQUISITION CORP.
By: /s/ Edward D. Yates
------------------------------
Edward D. Yates
Senior Vice President
Mike Lytle
/s/ Mike Lytle
---------------------------------
Mike Lytle
228
SCHEDULE I
NAME OF STOCKHOLDER SHARES BENEFICIALLY OWNED
Mike Lytle 8,344 options vested
30,000 options vest on change of control
229
EXHIBIT (c)(9)
---------------------------------------------------------
STOCKHOLDER AGREEMENT
dated as of January 27, 1997
by and among
DENTSPLY International Inc.
Image Acquisition Corp.
and
Harold J. Meyers
-------------------------------------------------------
230
STOCKHOLDER AGREEMENT
AGREEMENT, dated as of January 27, 1997 by and among DENTSPLY
International Inc. a Delaware corporation ("Parent"), Image Acquisition Corp, a
Delaware corporation and a wholly owned subsidiary of Parent (the "Merger
Sub"), and Harold J. Meyers (the "Stockholder"). Except as otherwise defined
herein, capitalized terms shall have the respective meanings given to them in
the Merger Agreement.
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this Agreement,
Parent, the Merger Sub and New Image Industries, Inc., a Delaware corporation
(the "Company"), have entered into an Agreement and Plan of Merger (as such
agreement may hereafter be amended from time to time, the "Merger Agreement"),
pursuant to which Merger Sub will be merged with and into the Company (the
"Merger"); and
WHEREAS, the Stockholder is executing this Agreement as an inducement for
Parent and Merger Sub to enter into the Merger Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE 1 -- DEFINITIONS
1.1 For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of
the same securities by the same holder, securities Beneficially Owned by a
Person shall include securities Beneficially Owned by all other Persons with
whom such Person would constitute a "group" as within the meaning of Section
13(d)(3) of the Exchange Act.
(b) "Company Common Stock" shall mean the Common Stock, $.001 par
value, of the Company.
(c) "Person" shall mean an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
231
ARTICLE 2 -- TENDER OF SHARES
2.1 In order to induce Parent and Merger Sub to enter into the Merger
Agreement, the Stockholder hereby agrees to validly tender (or cause the record
owner of such shares to validly tender), and not to withdraw, pursuant to and
in accordance with the terms of the Offer, the number of shares of Company
Common Stock set forth opposite such Stockholder's name on Schedule I hereto
and any shares of Company Common Stock acquired by such Stockholder in any
capacity after the date hereof and prior to the termination of this Agreement
whether upon the exercise of Stock Options, subject to Section 2.11 of the
Merger Agreement, or Warrants, subject to Section 2.12 of the Merger Agreement,
or by means of purchase, dividend, distribution or otherwise (such shares being
referred to hereinafter collectively as the "Shares"), all of which are and
will be Beneficially Owned by such Stockholder. The Stockholder hereby
acknowledges and agrees that the obligation of Parent and Merger Sub to accept
for payment and pay for the Shares in the Offer, including the Shares
Beneficially Owned by such Stockholder, is subject to the terms and conditions
of the Offer.
2.2 The transfer by the Stockholder of the Shares to Merger Sub in the
Offer shall pass to, and unconditionally vest in, Merger Sub good and valid
title to the Shares, free and clear of all Liens.
2.3 The Stockholder hereby permits Parent and Merger Sub to publish and
disclose in the Offer Documents and, if approval or advisement of the Company's
stockholders is required under applicable law, the Proxy Statement or
Information Statement (including all documents and schedules filed with the
SEC) its identity and ownership of the Company Common Stock and the nature of
its commitments, arrangements and understandings under this Agreement.
ARTICLE 3 -- ADDITIONAL AGREEMENTS
3.1 Voting Agreement. The Stockholder shall, at any meeting of the holders
of Company Common Stock, however called, or in connection with any written
consent of the holders of Company Common Stock, vote (or cause to be voted) the
Shares (if any) then held of record or Beneficially Owned by such Stockholder,
(i) in favor of the Merger, the execution and delivery by the Company of the
Merger Agreement and the approval of the terms thereof and each of the other
actions contemplated by the Merger Agreement and this Agreement and any actions
required in furtherance thereof and hereof; and (ii) against any Acquisition
Proposal and against any action or agreement that would impede, frustrate,
prevent or nullify this Agreement, or result in a breach in any respect of any
covenant, representation or warranty or any other obligation or agreement of
the Company under the Merger Agreement or which would result in any of the
conditions set forth in Annex A to the Merger Agreement or set forth in Article
VI of the Merger Agreement not being fulfilled. Notwithstanding anything in
this Agreement to the contrary, the Stockholder, in his capacity as a director
and/or officer of the
2
232
Company, as the case may be, and in accordance with the Merger Agreement, may
exercise his fiduciary duties with respect to the Company.
3.2 No Inconsistent Arrangements. The Stockholder hereby covenants and
agrees that, except as contemplated by this Agreement and the Merger Agreement,
it shall not (i) transfer (which term shall include, without limitation, any
sale, gift, pledge or other disposition), or consent to any transfer of, any or
all of such Stockholder's Shares, Stock Options or Warrants or any interest
therein, (ii) enter into any contract, option or other agreement or
understanding with respect to any transfer of any or all of such Shares, Stock
Options or Warrants or any interest therein, (iii) grant any proxy,
power-of-attorney or other authorization in or with respect to such Shares,
Stock Options or Warrants, (iv) deposit such Shares, Stock Options or Warrants
into a voting trust or enter into a voting agreement or arrangement with
respect to such Shares, Stock Options or Warrants, or (v) take any other action
that would in any way restrict, limit or interfere with the performance of its
obligations hereunder or the transactions contemplated hereby or by the Merger
Agreement.
3.3 No Solicitation. The Stockholder hereby agrees, in its or his capacity
as a stockholder of the Company, that neither the Stockholder nor any of its
affiliates shall (and such Stockholder shall use its best efforts to cause its
officers, directors, employees, representatives and agents, including, but not
limited to, investment bankers, attorneys and accountants, not to), directly or
indirectly, encourage, solicit, participate in or initiate discussions or
negotiations with, or provide any information to, any corporation, partnership,
person or other entity or group (other than Parent, any of its affiliates or
representatives) concerning any Acquisition Proposal. The Stockholder will
immediately cease any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any Acquisition Proposal. The
Stockholder will immediately communicate to Parent the terms of any proposal,
discussion, negotiation or inquiry such Stockholder, in its or his capacity as
a stockholder of the Company, receives (and will disclose any written materials
received by such Stockholder, in its or his capacity as a stockholder of the
Company, in connection with such proposal, discussion, negotiation or inquiry)
and the identity of the party making such proposal or inquiry which it may
receive in respect of any such transaction.
3.4 Stock Options and Warrants. If the Stockholder holds Stock Options
and/or Warrants to acquire shares of Company Common Stock, he shall, if
requested by the Company, consent to the cancellation and conversion of his
Company Options and/or Warrants in accordance with the terms of the Merger
Agreement and shall execute all appropriate documentation in connection with
such cancellation and conversion.
3.5 Best Reasonable Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use its best reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement
and the Merger Agreement. Each party shall promptly consult
3
233
with the other and provide any necessary information and material with respect
to all filings made by such party with any Governmental Entity in connection
with this Agreement and the Merger Agreement and the transactions contemplated
hereby and thereby.
3.6 Waiver of Appraisal Rights. The Stockholder hereby waives any rights
of appraisal or rights to dissent from the Merger that it or he may have.
ARTICLE 4 -- REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDER
The Stockholder hereby represents and warrants to Parent and Merger Sub as
follows:
(a) Ownership of Shares. The Shares, as of the date hereof, constitute
all of the Shares Beneficially Owned by such Stockholder. With respect to the
Shares, the Stockholder has sole voting power and sole dispositive power, sole
power of conversion, sole power to demand appraisal rights and sole power to
agree to all of the matters set forth in this Agreement, in each case with
respect to all of the Shares with no limitations, qualifications or
restrictions on such rights, subject to applicable securities laws and the
terms of this Agreement.
(b) Power; Binding Agreement. The Stockholder has the legal capacity,
power and authority to enter into and perform all of the Stockholder's
obligations under this Agreement. The execution, delivery and performance of
this Agreement by the Stockholder will not violate any other agreement to which
such Stockholder is a party including, without limitation, any voting
agreement, proxy arrangement, pledge agreement, shareholders agreement or
voting trust. This Agreement has been duly and validly executed and delivered
by the Stockholder and constitutes a valid and binding agreement of the
Stockholder, enforceable against such Stockholder in accordance with its terms.
There is no beneficiary or holder of a voting trust certificate or other
interest of any trust of which the Stockholder is a trustee whose consent is
required for the execution and delivery of this Agreement or the consummation
by such Stockholder of the transactions contemplated hereby.
(c) No Liens. Except as permitted by this Agreement, the Shares and
the certificates representing such Shares are now, and at all times during the
term hereof will be, held by such Stockholder, or by a nominee or custodian for
the benefit of such Stockholder, free and clear of all Liens, proxies, voting
trusts or agreements, understandings or arrangements or any other rights
whatsoever.
(d) No Finder's Fees. No broker, investment banker, financial advisor
or other person is entitled to any broker's, finder's, financial adviser's or
other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of such
Stockholder.
4
234
(e) Reliance by Parent. The Stockholder understands and acknowledges
that Parent is entering into, and causing Merger Sub to enter into, the Merger
Agreement in reliance upon such Stockholder's execution and delivery of this
Agreement.
ARTICLE 5 -- STOP TRANSFER
The Stockholder shall not request that the Company register the transfer
(book-entry or otherwise) of any certificate or uncertificated interest
representing any of the Shares, unless such transfer is made in compliance with
this Agreement. In the event of a stock dividend or distribution, or any change
in the Company Common Stock by reason of any stock dividend, split-up,
recapitalization, combination, exchange of shares or the like, the term
"Shares" shall refer to and include the Shares as well as all such stock
dividends and distributions and any shares into which or for which any or all
of the Shares may be changed or exchanged.
ARTICLE 6 -- TERMINATION
The covenants and agreements set forth herein shall terminate upon the
termination of the Merger Agreement in accordance with its terms.
ARTICLE 7 -- MISCELLANEOUS
7.1 Notices. All notices and other communications hereunder shall be given
by telephone and immediately confirmed in writing and shall be deemed given if
delivered personally or mailed by registered or certified mail (return receipt
requested) or overnight courier to the parties at the following addresses (or
at such other address for a party as shall be specified by like notice):
(a) if to Parent or Merger Sub:
DENTSPLY International Inc.
570 West College Avenue
York, PA 17405
Attention: J. Patrick Clark, Esquire
With a copy to:
Morgan, Lewis & Bockius LLP
One Oxford Centre, 32nd Floor
Pittsburgh, PA 15219-1417
Attention: Marlee S. Myers, Esquire
5
235
(b) if to the Stockholder:
Harold J. Meyers
270 S. Canyon View Drive
Los Angeles, CA 90014
With a copy to:
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, CA 90067-4276
Attn: Derrick Boston
7.2 Entire Agreement; No Third Party Beneficiaries. This Agreement
constitutes the entire agreement and supersedes all other prior agreements and
undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof. There are no third party beneficiaries of
this Agreement and nothing in this Agreement, express or implied, is intended
to or shall confer upon any person other than the parties hereto and their
respective successors and permitted assigns, any rights, remedies, obligations
or liabilities.
7.3 Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder may be assigned by operation of law or otherwise,
provided that Parent or Merger Sub may assign its rights and obligations
hereunder to a direct or indirect subsidiary of Parent, but no such assignment
shall relieve Parent or Merger Sub, as the case may be, of its obligations
hereunder. Subject to the foregoing sentence, this Agreement will be binding
upon, and inure to the benefit of, the parties and their respective successors
and assigns.
7.4 Governing Law. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of
Delaware, without giving effect to the conflicts of law principles thereof.
7.5 Counterparts. This Agreement may be executed in one or more
counterparts which together shall constitute a single agreement.
7.6 Specific Performance. The parties hereto agree that irreparable damage
would occur in the event any of the provisions of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
6
236
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunder duly authorized.
DENTSPLY INTERNATIONAL INC.
By: /s/ Edward D. Yates
------------------------------
Edward D. Yates
Senior Vice President
IMAGE ACQUISITION CORP.
By: /s/ Edward D. Yates
------------------------------
Edward D. Yates
Senior Vice President
Harold J. Meyers
/s/ Harold J. Meyers
---------------------------------
Harold J. Meyers
237
SCHEDULE I
NAME OF STOCKHOLDER SHARES BENEFICIALLY OWNED
Harold J. Meyers 4,166 vested options
8,334 options that will vest upon a
change of control.
35,000 warrants
238
EXHIBIT (c)(10)
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STOCKHOLDER AGREEMENT
dated as of January 27, 1997
by and among
DENTSPLY International Inc.
Image Acquisition Corp.
and
Harold R. Orr
-------------------------------------------------------
239
STOCKHOLDER AGREEMENT
AGREEMENT, dated as of January 27, 1997 by and among DENTSPLY
International Inc. a Delaware corporation ("Parent"), Image Acquisition Corp, a
Delaware corporation and a wholly owned subsidiary of Parent (the "Merger
Sub"), and Harold R. Orr (the "Stockholder"). Except as otherwise defined
herein, capitalized terms shall have the respective meanings given to them in
the Merger Agreement.
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this Agreement,
Parent, the Merger Sub and New Image Industries, Inc., a Delaware corporation
(the "Company"), have entered into an Agreement and Plan of Merger (as such
agreement may hereafter be amended from time to time, the "Merger Agreement"),
pursuant to which Merger Sub will be merged with and into the Company (the
"Merger"); and
WHEREAS, the Stockholder is executing this Agreement as an inducement for
Parent and Merger Sub to enter into the Merger Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE 1 -- DEFINITIONS
1.1 For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of
the same securities by the same holder, securities Beneficially Owned by a
Person shall include securities Beneficially Owned by all other Persons with
whom such Person would constitute a "group" as within the meaning of Section
13(d)(3) of the Exchange Act.
(b) "Company Common Stock" shall mean the Common Stock, $.001 par
value, of the Company.
(c) "Person" shall mean an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
240
ARTICLE 2 -- TENDER OF SHARES
2.1 In order to induce Parent and Merger Sub to enter into the Merger
Agreement, the Stockholder hereby agrees to validly tender (or cause the record
owner of such shares to validly tender), and not to withdraw, pursuant to and
in accordance with the terms of the Offer, the number of shares of Company
Common Stock set forth opposite such Stockholder's name on Schedule I hereto
and any shares of Company Common Stock acquired by such Stockholder in any
capacity after the date hereof and prior to the termination of this Agreement
whether upon the exercise of Stock Options, subject to Section 2.11 of the
Merger Agreement, or Warrants, subject to Section 2.12 of the Merger Agreement,
or by means of purchase, dividend, distribution or otherwise (such shares being
referred to hereinafter collectively as the "Shares"), all of which are and
will be Beneficially Owned by such Stockholder. The Stockholder hereby
acknowledges and agrees that the obligation of Parent and Merger Sub to accept
for payment and pay for the Shares in the Offer, including the Shares
Beneficially Owned by such Stockholder, is subject to the terms and conditions
of the Offer.
2.2 The transfer by the Stockholder of the Shares to Merger Sub in the
Offer shall pass to, and unconditionally vest in, Merger Sub good and valid
title to the Shares, free and clear of all Liens.
2.3 The Stockholder hereby permits Parent and Merger Sub to publish and
disclose in the Offer Documents and, if approval or advisement of the Company's
stockholders is required under applicable law, the Proxy Statement or
Information Statement (including all documents and schedules filed with the
SEC) its identity and ownership of the Company Common Stock and the nature of
its commitments, arrangements and understandings under this Agreement.
ARTICLE 3 -- ADDITIONAL AGREEMENTS
3.1 Voting Agreement. The Stockholder shall, at any meeting of the holders
of Company Common Stock, however called, or in connection with any written
consent of the holders of Company Common Stock, vote (or cause to be voted) the
Shares (if any) then held of record or Beneficially Owned by such Stockholder,
(i) in favor of the Merger, the execution and delivery by the Company of the
Merger Agreement and the approval of the terms thereof and each of the other
actions contemplated by the Merger Agreement and this Agreement and any actions
required in furtherance thereof and hereof; and (ii) against any Acquisition
Proposal and against any action or agreement that would impede, frustrate,
prevent or nullify this Agreement, or result in a breach in any respect of any
covenant, representation or warranty or any other obligation or agreement of
the Company under the Merger Agreement or which would result in any of the
conditions set forth in Annex A to the Merger Agreement or set forth in Article
VI of the Merger Agreement not being fulfilled. Notwithstanding anything in
this Agreement to the contrary, the Stockholder, in his capacity as a director
and/or officer of the
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241
Company, as the case may be, and in accordance with the Merger Agreement, may
exercise his fiduciary duties with respect to the Company.
3.2 No Inconsistent Arrangements. The Stockholder hereby covenants and
agrees that, except as contemplated by this Agreement and the Merger Agreement,
it shall not (i) transfer (which term shall include, without limitation, any
sale, gift, pledge or other disposition), or consent to any transfer of, any or
all of such Stockholder's Shares, Stock Options or Warrants or any interest
therein, (ii) enter into any contract, option or other agreement or
understanding with respect to any transfer of any or all of such Shares, Stock
Options or Warrants or any interest therein, (iii) grant any proxy,
power-of-attorney or other authorization in or with respect to such Shares,
Stock Options or Warrants, (iv) deposit such Shares, Stock Options or Warrants
into a voting trust or enter into a voting agreement or arrangement with
respect to such Shares, Stock Options or Warrants, or (v) take any other action
that would in any way restrict, limit or interfere with the performance of its
obligations hereunder or the transactions contemplated hereby or by the Merger
Agreement.
3.3 No Solicitation. The Stockholder hereby agrees, in its or his capacity
as a stockholder of the Company, that neither the Stockholder nor any of its
affiliates shall (and such Stockholder shall use its best efforts to cause its
officers, directors, employees, representatives and agents, including, but not
limited to, investment bankers, attorneys and accountants, not to), directly or
indirectly, encourage, solicit, participate in or initiate discussions or
negotiations with, or provide any information to, any corporation, partnership,
person or other entity or group (other than Parent, any of its affiliates or
representatives) concerning any Acquisition Proposal. The Stockholder will
immediately cease any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any Acquisition Proposal. The
Stockholder will immediately communicate to Parent the terms of any proposal,
discussion, negotiation or inquiry such Stockholder, in its or his capacity as
a stockholder of the Company, receives (and will disclose any written materials
received by such Stockholder, in its or his capacity as a stockholder of the
Company, in connection with such proposal, discussion, negotiation or inquiry)
and the identity of the party making such proposal or inquiry which it may
receive in respect of any such transaction.
3.4 Stock Options and Warrants. If the Stockholder holds Stock Options
and/or Warrants to acquire shares of Company Common Stock, he shall, if
requested by the Company, consent to the cancellation and conversion of his
Company Options and/or Warrants in accordance with the terms of the Merger
Agreement and shall execute all appropriate documentation in connection with
such cancellation and conversion.
3.5 Best Reasonable Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use its best reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement
and the Merger Agreement. Each party shall promptly consult
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242
with the other and provide any necessary information and material with respect
to all filings made by such party with any Governmental Entity in connection
with this Agreement and the Merger Agreement and the transactions contemplated
hereby and thereby.
3.6 Waiver of Appraisal Rights. The Stockholder hereby waives any rights
of appraisal or rights to dissent from the Merger that it or he may have.
ARTICLE 4 -- REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDER
The Stockholder hereby represents and warrants to Parent and Merger Sub as
follows:
(a) Ownership of Shares. The Shares, as of the date hereof, constitute
all of the Shares Beneficially Owned by such Stockholder. With respect to the
Shares, the Stockholder has sole voting power and sole dispositive power, sole
power of conversion, sole power to demand appraisal rights and sole power to
agree to all of the matters set forth in this Agreement, in each case with
respect to all of the Shares with no limitations, qualifications or
restrictions on such rights, subject to applicable securities laws and the
terms of this Agreement.
(b) Power; Binding Agreement. The Stockholder has the legal capacity,
power and authority to enter into and perform all of the Stockholder's
obligations under this Agreement. The execution, delivery and performance of
this Agreement by the Stockholder will not violate any other agreement to which
such Stockholder is a party including, without limitation, any voting
agreement, proxy arrangement, pledge agreement, shareholders agreement or
voting trust. This Agreement has been duly and validly executed and delivered
by the Stockholder and constitutes a valid and binding agreement of the
Stockholder, enforceable against such Stockholder in accordance with its terms.
There is no beneficiary or holder of a voting trust certificate or other
interest of any trust of which the Stockholder is a trustee whose consent is
required for the execution and delivery of this Agreement or the consummation
by such Stockholder of the transactions contemplated hereby.
(c) No Liens. Except as permitted by this Agreement, the Shares and
the certificates representing such Shares are now, and at all times during the
term hereof will be, held by such Stockholder, or by a nominee or custodian for
the benefit of such Stockholder, free and clear of all Liens, proxies, voting
trusts or agreements, understandings or arrangements or any other rights
whatsoever.
(d) No Finder's Fees. No broker, investment banker, financial advisor
or other person is entitled to any broker's, finder's, financial adviser's or
other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of such
Stockholder.
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243
(e) Reliance by Parent. The Stockholder understands and acknowledges
that Parent is entering into, and causing Merger Sub to enter into, the Merger
Agreement in reliance upon such Stockholder's execution and delivery of this
Agreement.
ARTICLE 5 -- STOP TRANSFER
The Stockholder shall not request that the Company register the transfer
(book-entry or otherwise) of any certificate or uncertificated interest
representing any of the Shares, unless such transfer is made in compliance with
this Agreement. In the event of a stock dividend or distribution, or any change
in the Company Common Stock by reason of any stock dividend, split-up,
recapitalization, combination, exchange of shares or the like, the term
"Shares" shall refer to and include the Shares as well as all such stock
dividends and distributions and any shares into which or for which any or all
of the Shares may be changed or exchanged.
ARTICLE 6 -- TERMINATION
The covenants and agreements set forth herein shall terminate upon the
termination of the Merger Agreement in accordance with its terms.
ARTICLE 7 -- MISCELLANEOUS
7.1 Notices. All notices and other communications hereunder shall be given
by telephone and immediately confirmed in writing and shall be deemed given if
delivered personally or mailed by registered or certified mail (return receipt
requested) or overnight courier to the parties at the following addresses (or
at such other address for a party as shall be specified by like notice):
(a) if to Parent or Merger Sub:
DENTSPLY International Inc.
570 West College Avenue
York, PA 17405
Attention: J. Patrick Clark, Esquire
With a copy to:
Morgan, Lewis & Bockius LLP
One Oxford Centre, 32nd Floor
Pittsburgh, PA 15219-1417
Attention: Marlee S. Myers, Esquire
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244
(b) if to the Stockholder:
Harold R. Orr
c/o New Image Industries, Inc.
2283 Cosmos Court
Carlsbad, CA 92009
With a copy to:
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, CA 90067-4276
Attn: Derrick Boston
7.2 Entire Agreement; No Third Party Beneficiaries. This Agreement
constitutes the entire agreement and supersedes all other prior agreements and
undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof. There are no third party beneficiaries of
this Agreement and nothing in this Agreement, express or implied, is intended
to or shall confer upon any person other than the parties hereto and their
respective successors and permitted assigns, any rights, remedies, obligations
or liabilities.
7.3 Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder may be assigned by operation of law or otherwise,
provided that Parent or Merger Sub may assign its rights and obligations
hereunder to a direct or indirect subsidiary of Parent, but no such assignment
shall relieve Parent or Merger Sub, as the case may be, of its obligations
hereunder. Subject to the foregoing sentence, this Agreement will be binding
upon, and inure to the benefit of, the parties and their respective successors
and assigns.
7.4 Governing Law. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of
Delaware, without giving effect to the conflicts of law principles thereof.
7.5 Counterparts. This Agreement may be executed in one or more
counterparts which together shall constitute a single agreement.
7.6 Specific Performance. The parties hereto agree that irreparable damage
would occur in the event any of the provisions of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
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245
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunder duly authorized.
DENTSPLY INTERNATIONAL INC.
By: /s/ Edward D. Yates
------------------------------
Edward D. Yates
Senior Vice President
IMAGE ACQUISITION CORP.
By: /s/ Edward D. Yates
------------------------------
Edward D. Yates
Senior Vice President
Harold R. Orr
/s/ Harold R. Orr
---------------------------------
Harold R. Orr
246
SCHEDULE I
NAME OF STOCKHOLDER SHARES BENEFICIALLY OWNED
Harold R. Orr 3,000 owned
8,000 options vested
45,000 options vesting on change of
control
247
EXHIBIT (c)(11)
---------------------------------------------------------
STOCKHOLDER AGREEMENT
dated as of January 27, 1997
by and among
DENTSPLY International Inc.
Image Acquisition Corp.
and
Ralph M. Richart, M.D.
-------------------------------------------------------
248
STOCKHOLDER AGREEMENT
AGREEMENT, dated as of January 27, 1997 by and among DENTSPLY
International Inc. a Delaware corporation ("Parent"), Image Acquisition Corp, a
Delaware corporation and a wholly owned subsidiary of Parent (the "Merger
Sub"), and Ralph M. Richart, M.D. (the "Stockholder"). Except as otherwise
defined herein, capitalized terms shall have the respective meanings given to
them in the Merger Agreement.
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this Agreement,
Parent, the Merger Sub and New Image Industries, Inc., a Delaware corporation
(the "Company"), have entered into an Agreement and Plan of Merger (as such
agreement may hereafter be amended from time to time, the "Merger Agreement"),
pursuant to which Merger Sub will be merged with and into the Company (the
"Merger"); and
WHEREAS, the Stockholder is executing this Agreement as an inducement for
Parent and Merger Sub to enter into the Merger Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE 1 -- DEFINITIONS
1.1 For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of
the same securities by the same holder, securities Beneficially Owned by a
Person shall include securities Beneficially Owned by all other Persons with
whom such Person would constitute a "group" as within the meaning of Section
13(d)(3) of the Exchange Act.
(b) "Company Common Stock" shall mean the Common Stock, $.001 par
value, of the Company.
(c) "Person" shall mean an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
249
ARTICLE 2 -- TENDER OF SHARES
2.1 In order to induce Parent and Merger Sub to enter into the Merger
Agreement, the Stockholder hereby agrees to validly tender (or cause the record
owner of such shares to validly tender), and not to withdraw, pursuant to and
in accordance with the terms of the Offer, the number of shares of Company
Common Stock set forth opposite such Stockholder's name on Schedule I hereto
and any shares of Company Common Stock acquired by such Stockholder in any
capacity after the date hereof and prior to the termination of this Agreement
whether upon the exercise of Stock Options, subject to Section 2.11 of the
Merger Agreement, or Warrants, subject to Section 2.12 of the Merger Agreement,
or by means of purchase, dividend, distribution or otherwise (such shares being
referred to hereinafter collectively as the "Shares"), all of which are and
will be Beneficially Owned by such Stockholder. The Stockholder hereby
acknowledges and agrees that the obligation of Parent and Merger Sub to accept
for payment and pay for the Shares in the Offer, including the Shares
Beneficially Owned by such Stockholder, is subject to the terms and conditions
of the Offer.
2.2 The transfer by the Stockholder of the Shares to Merger Sub in the
Offer shall pass to, and unconditionally vest in, Merger Sub good and valid
title to the Shares, free and clear of all Liens.
2.3 The Stockholder hereby permits Parent and Merger Sub to publish and
disclose in the Offer Documents and, if approval or advisement of the Company's
stockholders is required under applicable law, the Proxy Statement or
Information Statement (including all documents and schedules filed with the
SEC) its identity and ownership of the Company Common Stock and the nature of
its commitments, arrangements and understandings under this Agreement.
ARTICLE 3 -- ADDITIONAL AGREEMENTS
3.1 Voting Agreement. The Stockholder shall, at any meeting of the holders
of Company Common Stock, however called, or in connection with any written
consent of the holders of Company Common Stock, vote (or cause to be voted) the
Shares (if any) then held of record or Beneficially Owned by such Stockholder,
(i) in favor of the Merger, the execution and delivery by the Company of the
Merger Agreement and the approval of the terms thereof and each of the other
actions contemplated by the Merger Agreement and this Agreement and any actions
required in furtherance thereof and hereof; and (ii) against any Acquisition
Proposal and against any action or agreement that would impede, frustrate,
prevent or nullify this Agreement, or result in a breach in any respect of any
covenant, representation or warranty or any other obligation or agreement of
the Company under the Merger Agreement or which would result in any of the
conditions set forth in Annex A to the Merger Agreement or set forth in Article
VI of the Merger Agreement not being fulfilled. Notwithstanding anything in
this Agreement to the contrary, the Stockholder, in his capacity as a director
and/or officer of the
2
250
Company, as the case may be, and in accordance with the Merger Agreement, may
exercise his fiduciary duties with respect to the Company.
3.2 No Inconsistent Arrangements. The Stockholder hereby covenants and
agrees that, except as contemplated by this Agreement and the Merger Agreement,
it shall not (i) transfer (which term shall include, without limitation, any
sale, gift, pledge or other disposition), or consent to any transfer of, any or
all of such Stockholder's Shares, Stock Options or Warrants or any interest
therein, (ii) enter into any contract, option or other agreement or
understanding with respect to any transfer of any or all of such Shares, Stock
Options or Warrants or any interest therein, (iii) grant any proxy,
power-of-attorney or other authorization in or with respect to such Shares,
Stock Options or Warrants, (iv) deposit such Shares, Stock Options or Warrants
into a voting trust or enter into a voting agreement or arrangement with
respect to such Shares, Stock Options or Warrants, or (v) take any other action
that would in any way restrict, limit or interfere with the performance of its
obligations hereunder or the transactions contemplated hereby or by the Merger
Agreement.
3.3 No Solicitation. The Stockholder hereby agrees, in its or his capacity
as a stockholder of the Company, that neither the Stockholder nor any of its
affiliates shall (and such Stockholder shall use its best efforts to cause its
officers, directors, employees, representatives and agents, including, but not
limited to, investment bankers, attorneys and accountants, not to), directly or
indirectly, encourage, solicit, participate in or initiate discussions or
negotiations with, or provide any information to, any corporation, partnership,
person or other entity or group (other than Parent, any of its affiliates or
representatives) concerning any Acquisition Proposal. The Stockholder will
immediately cease any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any Acquisition Proposal. The
Stockholder will immediately communicate to Parent the terms of any proposal,
discussion, negotiation or inquiry such Stockholder, in its or his capacity as
a stockholder of the Company, receives (and will disclose any written materials
received by such Stockholder, in its or his capacity as a stockholder of the
Company, in connection with such proposal, discussion, negotiation or inquiry)
and the identity of the party making such proposal or inquiry which it may
receive in respect of any such transaction.
3.4 Stock Options and Warrants. If the Stockholder holds Stock Options
and/or Warrants to acquire shares of Company Common Stock, he shall, if
requested by the Company, consent to the cancellation and conversion of his
Company Options and/or Warrants in accordance with the terms of the Merger
Agreement and shall execute all appropriate documentation in connection with
such cancellation and conversion.
3.5 Best Reasonable Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use its best reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement
and the Merger Agreement. Each party shall promptly consult
3
251
with the other and provide any necessary information and material with respect
to all filings made by such party with any Governmental Entity in connection
with this Agreement and the Merger Agreement and the transactions contemplated
hereby and thereby.
3.6 Waiver of Appraisal Rights. The Stockholder hereby waives any rights
of appraisal or rights to dissent from the Merger that it or he may have.
ARTICLE 4 -- REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDER
The Stockholder hereby represents and warrants to Parent and Merger Sub as
follows:
(a) Ownership of Shares. The Shares, as of the date hereof, constitute
all of the Shares Beneficially Owned by such Stockholder. With respect to the
Shares, the Stockholder has sole voting power and sole dispositive power, sole
power of conversion, sole power to demand appraisal rights and sole power to
agree to all of the matters set forth in this Agreement, in each case with
respect to all of the Shares with no limitations, qualifications or
restrictions on such rights, subject to applicable securities laws and the
terms of this Agreement.
(b) Power; Binding Agreement. The Stockholder has the legal capacity,
power and authority to enter into and perform all of the Stockholder's
obligations under this Agreement. The execution, delivery and performance of
this Agreement by the Stockholder will not violate any other agreement to which
such Stockholder is a party including, without limitation, any voting
agreement, proxy arrangement, pledge agreement, shareholders agreement or
voting trust. This Agreement has been duly and validly executed and delivered
by the Stockholder and constitutes a valid and binding agreement of the
Stockholder, enforceable against such Stockholder in accordance with its terms.
There is no beneficiary or holder of a voting trust certificate or other
interest of any trust of which the Stockholder is a trustee whose consent is
required for the execution and delivery of this Agreement or the consummation
by such Stockholder of the transactions contemplated hereby.
(c) No Liens. Except as permitted by this Agreement, the Shares and
the certificates representing such Shares are now, and at all times during the
term hereof will be, held by such Stockholder, or by a nominee or custodian for
the benefit of such Stockholder, free and clear of all Liens, proxies, voting
trusts or agreements, understandings or arrangements or any other rights
whatsoever.
(d) No Finder's Fees. No broker, investment banker, financial advisor
or other person is entitled to any broker's, finder's, financial adviser's or
other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of such
Stockholder.
4
