SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|X| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
MEDJET INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|_| No fee required.
|X||_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
Common
Stock, par value $.001 per share
(2) Aggregate number of securities to which transaction applies: 3,901,431
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
$2.00
(4) Proposed maximum aggregate value of transaction:
$7,802,862
(5) Total fee paid:
$1,561
|_||X| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
MEDJET INC.
1090 KING GEORGES POST ROAD
SUITE 301
EDISON, NEW JERSEY 08837
,March 29, 2002
Dear Stockholder,
You are cordially invited to attend the annual meeting of stockholders
of Medjet Inc. to be held on , ,Wednesday, April 24, 2002, at 10:00 a.m., local
time, at 1090 King Georges Post Road, Suite 307, Edison, New Jersey 08837.
At the annual meeting, among other things, you will be asked to consider
and vote upon a proposal to approve and adopt an Agreement and Plan of Merger
and Reorganization, dated as of August 17, 2001, among Medjet, VISX,
Incorporated and Orion Acquisition Corp., a wholly-owned subsidiary of VISX. If
the proposed merger is consummated, under the merger agreement:
o Orion Acquisition Corp. will merge with and into Medjet;
o Medjet will continue as the corporation surviving the proposed
merger and will become a wholly-owned subsidiary of VISX; and
o each outstanding share of our common stock (other than shares
held by stockholders who perfect appraisal rights under Delaware
law) will be converted into the right to receive $2.00 in cash,
without interest.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY DETERMINED THAT THE MERGER
AGREEMENT, INCLUDING THE PRICE AND OTHER TERMS, AND THE TRANSACTIONS
CONTEMPLATED BY THE MERGER AGREEMENT, TAKEN AS A WHOLE, ARE FAIR AND REASONABLE,
AND IN THE BEST INTERESTS OF MEDJET AND OUR STOCKHOLDERS. YOUR BOARD UNANIMOUSLY
RECOMMENDS THAT ALL MEDJET STOCKHOLDERS VOTE FOR THE APPROVAL AND ADOPTION OF
THE MERGER AGREEMENT.
COMPLETION OF THE PROPOSED MERGER IS SUBJECT TO THE SATISFACTION OR
WAIVER OF A NUMBER OF CONDITIONS, INCLUDING, AMONG OTHERS, THE APPROVAL OF THE
MERGER AGREEMENT BY OUR STOCKHOLDERS, THE ABSENCE OF ANY LEGAL PROHIBITION ON
THE COMPLETION OF THE MERGER, THE RECEIPT OF ALL THIRD PARTY CONSENTS, WAIVERS
AND APPROVALS SPECIFIED IN THE MERGER AGREEMENT, THE ACCURACY OF THE
REPRESENTATIONS AND WARRANTIES IN THE MERGER AGREEMENT, ANDOUR COMPLIANCE WITH
COVENANTS AND THE ABSENCE OF ANY MATERIALLY ADVERSE EVENT OR CONDITION ARISING
AFTER THE DATE OF THE MERGER AGREEMENT. IN ANY EVENT, EVEN IF ALL OF THE
CONDITIONS TO THE COMPLETION OF THE MERGER ARE SATISFIED, VISX MAY DECIDE, IN
ITS SOLE DISCRETION, NOT TO PROCEED WITH THE MERGER. AS A RESULT, EVEN IF OUR
STOCKHOLDERS APPROVE THE MERGER AGREEMENT, WE CANNOT ASSURE YOU THAT THE
PROPOSED MERGER WILL BE COMPLETED.
The accompanying notice of annual meeting and proxy statement explain
the proposed merger and contain specific information concerning the annual
meeting. Please read these materials carefully, and please do not send any stock
certificates at this time.
Your vote is important, regardless of the number of shares you own.
Whether or not you plan to attend the annual meeting, please complete, sign,
date and properly returnsubmit your proxy
in accordance with the enclosed proxyinstructions provided to ensure that your shares will be
voted at the annual meeting. If you decide to attend the annual meeting, you may
withdraw your proxy at that time and vote your shares in person, if you wish.
Sincerely yours,
Eugene I. Gordon, Ph.D.
Chairman of the Board and
Chief Executive Officer
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE PROPOSED MERGER, PASSED UPON THE
MERITS OR FAIRNESS OF THE PROPOSED MERGER OR PASSED UPON THE ADEQUACY OR
ACCURACY OF THE DISCLOSURE IN THE ACCOMPANYING PROXY STATEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
MEDJET INC.
1090 KING GEORGES POST ROAD
SUITE 301
EDISON, NEW JERSEY 08837
------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON ,APRIL 24, 2002
------------
To the stockholders of Medjet Inc.:
NOTICE IS HEREBY GIVEN that the annual meeting of the stockholders of
Medjet Inc. will be held on , ,Wednesday, April 24, 2002, at 1090 King Georges Post
Road, Suite 307, Edison, New Jersey 08837, at 10:00 a.m., local time, for the
following purposes:
1. To elect six directors to hold office until the 2003 annual
meeting of stockholders;
2. To consider and vote upon a proposal to approve and adopt an
Agreement and Plan of Merger and Reorganization, dated as of
August 17, 2001, among Medjet, VISX, Incorporated and Orion
Acquisition Corp., a wholly-owned subsidiary of VISX, pursuant to
which, among other things, Orion Acquisition Corp. would be
merged with and into Medjet, and each outstanding share of our
common stock would be converted into the right to receive $2.00
in cash, without interest; and
3. To transact such other business as may properly be presented at
the annual meeting and at any adjournments or postponements
thereof.
Our board of directors has fixed the close of business on ,March 15, 2002
as the record date for the purpose of determining stockholders who are entitled
to notice of and to vote at the annual meeting and any adjournments or
postponements thereof. A list of these stockholders will be available during
regular business hours at our corporate offices, during the ten days prior to
the annual meeting, for inspection by any stockholder for any purpose germane to
the annual meeting.
Stockholders who do not vote in favor of the merger agreement will have
the right to seek appraisal of the fair value of their shares if the merger is
completed, but only if they comply with Delaware law as explained in the
accompanying proxy statement and the attached annexes.
By order of the Medjet Board of Directors,
Cheryl A. Blake
Corporate Secretary
Edison, New Jersey
,March 29, 2002
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY
IN THE RETURN ENVELOPE PROVIDED OR VOTE ELECTRONICALLY VIA THE INTERNET OR
TELEPHONE, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING. IF YOU ATTEND
THE MEETING, YOU MAY VOTE YOUR SHARES IN PERSON IF YOU WISH, EVEN IF YOU
PREVIOUSLY RETURNED OR GRANTED YOUR PROXY.
TABLE OF CONTENTS
PAGE
SUMMARY TERM SHEET.........................................................................................iii
QUESTIONS AND ANSWERS ABOUT THE PROPOSED MERGER..............................................................v
GENERAL......................................................................................................1
Record Date; Stock Entitled to Vote; Quorum.........................................................1
Votes Required......................................................................................1
Voting by Our Directors and Officers and by VISX....................................................2
Voting of Proxies...................................................................................2
How to Vote by Proxy................................................................................2
Revocability of Proxies.............................................................................2
Deadline for Voting by Proxy........................................................................2
Solicitation of Proxies.............................................................................3
SUMMARY......................................................................................................4
The Companies.......................................................................................4
The Merger..........................................................................................4
Recommendation of Our Board of Directors............................................................5
Interests of Our Directors and Officers in the Merger...............................................5
Conditions to the Completion of the Merger..........................................................5
Termination of the Merger Agreement.................................................................6
Effects of Termination..............................................................................7
Material U.S. Federal Income Tax Consequences of the Merger.........................................8
Appraisal Rights....................................................................................8
Price Range of Our Common Stock.....................................................................9
ELECTION OF DIRECTORS (Proposal 1)..........................................................................10
Board of Directors Committees and Meetings.........................................................11
Finance and Audit Committee Report.................................................................11
Compensation of Directors..........................................................................12
EXECUTIVE COMPENSATION......................................................................................13
Summary Compensation Table.........................................................................13
Option Grants......................................................................................13
Option Exercises and Year-End Option Values........................................................13
Employment Agreement...............................................................................13
SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT......................................................14
Section 16(a) Beneficial Ownership Reporting Compliance............................................15
THE MERGER (Proposal 2).....................................................................................16
Background of the Merger...........................................................................16
Our Reasons for the Merger; Recommendation of Our Board of Directors...............................18
Material U.S. Federal Income Tax Consequences of the Merger........................................19
Appraisal Rights...................................................................................20
Interests of Our Directors and Officers in the Merger..............................................22
THE MERGER AGREEMENT........................................................................................24
The Merger.........................................................................................24
Merger Consideration...............................................................................24
Treatment of Options and Warrants..................................................................24
Exchange Agent; Procedure for the Surrender of Stock Certificates..................................24
Representations and Warranties of Medjet...........................................................25
Representations and Warranties of VISX and Orion Acquisition Corp..................................26
Certain Covenants..................................................................................26
i
Additional Agreements..............................................................................27
Conditions to the Completion of the Merger.........................................................30
Termination of the Merger Agreement................................................................31
Other Expenses.....................................................................................34
Amendments.........................................................................................34
Research, Development and Experimental Cost Sharing Agreement......................................34
Share Transfer Agreement...........................................................................34
Omnibus Waiver and Amendment Agreement.............................................................34
First Amendment to the Registration Rights Agreement...............................................35
Second Amendment to the Registration Rights Agreement..............................................35
Voting and Stock Option Agreement..................................................................35
Non-Competition, Non-Solicitation and Non-Hire Agreement...........................................36
MEDJET......................................................................................................38
VISX........................................................................................................39
PRICE RANGE OF OUR COMMON STOCK.............................................................................40
OTHER MATTERS...............................................................................................41
INDEPENDENT AUDITORS........................................................................................41
Independent Auditors' Fees.........................................................................41
STOCKHOLDER PROPOSALS FOR 2003..............................................................................41
WHERE YOU CAN FIND MORE INFORMATION.........................................................................41
ANNEXES:
Annex A Agreement and Plan of Merger and Reorganization......................................A-1
Annex B Section 262 of the Delaware General Corporation Law..................................B-1
Annex C Finance and Audit Committee Charter..................................................C-1
-----------------
PAGE
----
SUMMARY TERM SHEET...........................................................iii
QUESTIONS AND ANSWERS ABOUT THE PROPOSED MERGER................................v
GENERAL........................................................................1
Record Date; Stock Entitled to Vote; Quorum............................1
Votes Required.........................................................1
Voting by Our Directors and Officers and by VISX.......................2
Voting of Proxies......................................................2
How to Vote by Proxy...................................................2
Revocability of Proxies................................................2
Deadline for Voting by Proxy...........................................3
Solicitation of Proxies................................................3
SUMMARY........................................................................4
The Companies..........................................................4
The Merger.............................................................5
Recommendation of Our Board of Directors...............................5
Interests of Our Directors and Officers in the Merger..................5
Conditions to the Completion of the Merger.............................5
Termination of the Merger Agreement....................................6
Effects of Termination.................................................7
Material U.S. Federal Income Tax Consequences of the Merger............9
Appraisal Rights.......................................................9
Price Range of Our Common Stock........................................9
ELECTION OF DIRECTORS (Proposal 1)............................................10
Board of Directors Committees and Meetings............................11
Finance and Audit Committee Report....................................11
Compensation of Directors.............................................12
EXECUTIVE COMPENSATION........................................................13
Summary Compensation Table............................................13
Option Grants.........................................................13
Option Exercises and Year-End Option Values...........................13
Employment Agreement..................................................13
SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT........................14
Section 16(a) Beneficial Ownership Reporting Compliance...............15
THE MERGER (Proposal 2).......................................................16
Background of the Merger..............................................16
Our Reasons for the Merger; Recommendation of Our Board of Directors..19
Material U.S. Federal Income Tax Consequences of the Merger...........20
Appraisal Rights......................................................21
Interests of Our Directors and Officers in the Merger.................23
THE MERGER AGREEMENT..........................................................25
The Merger............................................................25
Merger Consideration..................................................25
Treatment of Options and Warrants.....................................25
Exchange Agent; Procedure for the Surrender of Stock Certificates.....25
Representations and Warranties of Medjet..............................26
Representations and Warranties of VISX and Orion Acquisition Corp.....27
Certain Covenants.....................................................27
i
Additional Agreements.................................................28
Conditions to the Completion of the Merger............................31
Termination of the Merger Agreement...................................32
Other Expenses........................................................35
Amendments............................................................35
Research, Development and Experimental Cost Sharing Agreement.........35
Share Transfer Agreement..............................................36
Omnibus Waiver and Amendment Agreement................................36
First Amendment to the Registration Rights Agreement..................36
Second Amendment to the Registration Rights Agreement.................37
Voting and Stock Option Agreement.....................................37
Non-Competition, Non-Solicitation and Non-Hire Agreement..............38
MEDJET........................................................................39
VISX..........................................................................40
PRICE RANGE OF OUR COMMON STOCK...............................................41
OTHER MATTERS.................................................................42
INDEPENDENT AUDITORS..........................................................42
Independent Auditors' Fees............................................42
STOCKHOLDER PROPOSALS FOR 2003................................................42
WHERE YOU CAN FIND MORE INFORMATION...........................................42
ANNEXES:
Annex A Agreement and Plan of Merger and Reorganization............A-1
Annex B Section 262 of the Delaware General Corporation Law........B-1
Annex C Finance and Audit Committee Charter........................C-1
ii
SUMMARY TERM SHEET
This summary term sheet highlights selected information contained in
this proxy statement and may not contain all of the information that is
important to you. In addition to this summary term sheet, we urge you to read
this entire proxy statement carefully, including the attached annexes.
PARTIES--The parties to the merger agreement are Medjet Inc., VISX,
Incorporated and Orion Acquisition Corp. Orion Acquisition Corp. is a
newly-formed Delaware corporation that is wholly-owned by VISX. Orion
Acquisition Corp. was incorporated by VISX in order to acquire Medjet
in the proposed merger. See "SUMMARY--The Companies."
STOCKHOLDER VOTE--You are being asked to approve and adopt an
Agreement and Plan of Merger and Reorganization, dated as of August
17, 2001, among Medjet, VISX and Orion Acquisition Corp., by which
Orion Acquisition Corp. will be merged with and into Medjet. Medjet
would survive the proposed merger as a wholly-owned subsidiary of
VISX. The merger agreement must be approved by the holders of a
majority of the votes represented by the outstanding shares of our
common stock and the outstanding shares of our series B convertible
preferred stock, voting together as a single class. Each share of our
common stock is entitled to one vote and each share of our series B
convertible preferred stock is entitled to 100 votes. Together, our
directors and officers and VISX are entitled to an aggregate of
2,669,7872,685,787 votes, or approximately 54% of the voting power of our
capital stock. As a result, our directors and officers and VISX,
acting together, have the ability to control the outcome of the vote
to approve and adopt the merger agreement at the annual meeting. See
"GENERAL - Votes Required."
RECOMMENDATION--Our board of directors has unanimously determined
that the merger agreement, including the price and other terms, and
the transactions contemplated by the merger agreement, taken as a
whole, are fair and reasonable, and in the best interestinterests of Medjet
and our stockholders. Our board unanimously recommends that our
stockholders vote FOR the approval and adoption of the merger
agreement. See "THE MERGER - Our Reasons for the Merger;
Recommendation of Our Board of Directors."
PAYMENT--In the proposed merger, each outstanding share of our common
stock automatically will be canceled and converted into the right to
receive $2.00 in cash, without interest and less any applicable
withholding tax, except for shares held by stockholders who properly
perfect appraisal rights under Delaware law. You will not own any of
our common stock after completion of the merger, even if you demand
and perfect appraisal rights under Delaware law. See "THE MERGER
AGREEMENT - Merger Consideration."
TREATMENT OF OPTIONS AND WARRANTS--The merger agreement provides that
outstanding options and warrants to purchase shares of our common
stock not exercised prior to the effective time of the merger will be
canceled and extinguished. VISX will pay to the holder of an option
or warrant the difference between $2.00 and the exercise price per
share (if less than $2.00) of our common stock underlying the option
or warrant multiplied by the total number of shares of our common
stock underlying the option or warrant. VISX will not pay any amounts
with respect to any options or warrants that have an exercise price
equal to or greater than $2.00. See "THE MERGER AGREEMENT - Treatment
of Options and Warrants."
TAX CONSEQUENCES--The receipt of cash for shares of our common stock
in the merger will be a taxable transaction for U.S. federal income
tax purposes, and may also be a taxable
iii
transaction under applicable state, local, foreign or other tax laws.
Generally, you will recognize capital gain or loss for these purposes
equal to the difference between $2.00 per share and your adjusted tax
basis for the shares of our common stock you own immediately prior to
the merger. For U.S. federal income tax purposes, any capital gain or
loss generally will be long-term capital gain or loss if you held the
shares of our common stock for more than one year. See "THE MERGER -
Material U.S. Federal Income Tax Consequences of the Merger."
CONDITIONS TO THE MERGER--The obligations of the parties to complete
the merger are subject to the satisfaction or waiver of certain
conditions, including, among others, the approval of the merger
agreement by our stockholders, the absence of any legal prohibition
on the completion of the merger, the receipt of all third party
consents, waivers and approvals specified in the merger agreement,
the accuracy of the representations and warranties in the merger
agreement, andour compliance with covenants and the absence of any
materially adverse event or condition arising after the date of the
merger agreement. IN ANY EVENT, EVEN IF ALL OF THE CONDITIONS TO THE
COMPLETION OF THE MERGER ARE SATISFIED, VISX MAY DECIDE, IN ITS SOLE
DISCRETION, NOT TO PROCEED WITH THE MERGER. See "THE MERGER AGREEMENT
- Conditions to the Completion of the Merger."
APPRAISAL RIGHTS--Stockholders who do not vote in favor of the
approval and adoption of the merger agreement will be entitled to
seek an appraisal of the "fair value" of their shares under Delaware
law, exclusive of any element of value arising from the expectation
or completion of the merger. In order to perfect the right to an
appraisal, a stockholder must comply with the applicable requirements
of Delaware law. See "THE MERGER - Appraisal Rights."
iv
QUESTIONS AND ANSWERS ABOUT THE PROPOSED MERGER
At the annual meeting, one of the matters you will be asked to consider
and vote upon is a proposed merger with VISX. The following questions and
answers are for your convenience only, and briefly address some commonly asked
questions about the proposed merger and the annual meeting. You should still
carefully read this entire proxy statement, including each of the attached
annexes.
Q: WHAT AM I BEING ASKED TO VOTE ON?
A: Among other things, you are being asked to approve and adopt a merger
agreement that provides for the merger of Orion Acquisition Corp. with and
into Medjet. Orion is a newly-formed Delaware corporation that VISX formed
to acquire Medjet through the merger. If the merger is completed, Medjet
would become a wholly-owned subsidiary of VISX.
Q: WHAT VOTE IS REQUIRED TO APPROVE THE MERGER AGREEMENT?
A: The merger agreement must be approved by the holders of a majority of the
votes represented by the outstanding shares of our common stock and the
outstanding shares of our series B convertible preferred stock, voting
together as a single class. Each share of our common stock is entitled to
one vote and each share of our series B convertible preferred stock is
entitled to 100 votes. Together, our directors and officers and VISX are
entitled to an aggregate of 2,669,7872,685,787 votes, or approximately 54% of the
voting power of our capital stock. As a result, our directors and officers
and VISX, acting together, have the ability to control the outcome of the
vote to approve and adopt the merger agreement at the annual meeting.
Q: WHAT WILL I RECEIVE FOR MY COMMON STOCK IF THE PROPOSED MERGER IS
COMPLETED?
A: If the merger is completed, each issued and outstanding share of our common
stock automatically will be canceled and converted into the right to
receive $2.00 in cash, without interest and less any applicable withholding
tax, except for shares of our common stock held by stockholders who
properly perfect their appraisal rights under Delaware law, which shares
will be subject to appraisal to determine their "fair value" in accordance
with Delaware law, exclusive of any element of value arising from the
expectation or completion of the merger.
Q: WHAT IS THE VOTING RECOMMENDATION OF OUR BOARD OF DIRECTORS?
A: Our board of directors has unanimously determined that the merger
agreement, including the price and other terms, and the transactions
contemplated by the merger agreement, taken as a whole, are fair and
reasonable, and in the best interest of Medjet and our stockholders. Our
board unanimously recommends that all Medjet stockholders vote FORfor the
approval and adoption of the merger agreement.
Q: IS THE PROPOSED MERGER SUBJECT TO ANY CONDITIONS?
A: Yes. The obligation of VISX to complete the merger is subject to the
satisfaction or waiver of certain conditions, including, among others, the
approval of the merger agreement by our stockholders, the absence of any
legal prohibition on the completion of the merger, the receipt of all third
party consents, waivers and approvals specified in the merger agreement,
the accuracy of our representations and warranties, our compliance with
covenants and the absence of any materially adverse event or condition
arising after the date of the merger agreement. Our obligation to complete
the merger is subject to the satisfaction or waiver of certain conditions,
v
including, among others, the approval of the merger agreement by our
stockholders and the absence of any legal prohibition on the completion of
the merger.
In any event, even if all of the conditions to the completion of the merger
are satisfied, VISX may decide, in its sole discretion, not to proceed with
the merger.
Q: WHEN DO YOU EXPECT THE PROPOSED MERGER TO BE COMPLETED?
A: We and VISX are working to complete the merger prior to August 17, 2002.
However, because VISX may elect not to proceed with the merger for any or
no reason, we cannot predict the exact timing of the completion of the
merger or whether the merger will occur at all.
Q: WHEN CAN I EXPECT TO RECEIVE PAYMENT FOR MY COMMON STOCK IF THE PROPOSED
MERGER IS COMPLETED?
A: Soon after the merger is completed, an exchange agent to be selected by
VISX will send a letter to each of our stockholders. The letter will
contain instructions describing how to surrender your stock certificates in
exchange for the amounts payable pursuant to the merger agreement. The
exchange agent will send to you the amount payable pursuant to the merger
agreement promptly after its receipt of your stock certificates delivered
in accordance with the exchange agent's instructions.
Q: WILL I OWE ANY U.S. FEDERAL INCOME TAX AS A RESULT OF THE MERGER?
A: The receipt of cash for shares of our common stock in the merger will be a
taxable transaction for U.S. federal income tax purposes, and may also be a
taxable transaction under applicable state, local, foreign or other tax
laws. Generally, you will recognize capital gain or loss for these purposes
equal to the difference between $2.00 per share and your adjusted tax basis
for the shares of our common stock you own immediately prior to the merger.
For U.S. federal income tax purposes, any capital gain or loss generally
will be long-term capital gain or loss if you held the shares of our common
stock for more than one year.
Tax matters are very complicated and the tax consequences of the merger to
you will depend on the facts of your particular situation. You should
consult your tax and other advisors for a full understanding of the
consequences of the proposed merger to you.
Q: AM I ENTITLED TO DISSENTERS' OR APPRAISAL RIGHTS RELATING TO THE PROPOSED
MERGER?
A: Yes, under Delaware law, holders of our common stock are entitled to
dissenters' or appraisal rights in connection with the proposed merger. For
more information about appraisal rights and your ability to exercise these
rights, please see page 20.21.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. If the merger is completed, you will receive separate written
instructions for exchanging stock certificates for the cash consideration
payable in the merger.
Q: WHAT DO I NEED TO DO NOW?
A: We urge you to read this proxy statement carefully and to consider how the
proposed merger affects you. Then, just mailvote your completed and signed
proxy card inshares using one of the enclosed return envelopethree
methods described below as soon as
vi
possible so that your shares can be voted at the annual meeting.
Q: DO I NEED TO ATTEND THE ANNUAL MEETING?
A: No. You can vote by completing and signingusing one of the proxy card and returning it
in the enclosed postage-paid return envelope.three methods described below. We
anticipate that most of our stockholders will not attend the annual meeting
in person.
vi
Q: HOW CAN I VOTE MY SHARES?
A. You may vote your shares by the Internet, by telephone or by mail, each as
described in more detail on your proxy card.
Q: WHAT IF I DO NOT VOTE?
A: If you sign and return the enclosedsubmit a proxy card but do not indicate how you vote, your proxy will be
counted as a vote "FOR" the proposed merger. If you do not sign and return the enclosedsubmit a proxy card
and you do not otherwise signsubmit a proxy from your broker (for any shares
held in "street name") or vote your shares in person at the annual meeting,
your shares will not be voted. If your shares are not voted, it will have
the same effect as a vote "AGAINST" the proposed merger.
Q: MAY I VOTE IN PERSON?
A: Yes. You may attend the annual meeting and vote your shares in person,
rather than sign and returnvote your shares using one of the proxy card.three methods provided.
Q: MAY I CHANGE MY VOTE AFTER I HAVE MAILEDSUBMITTED MY PROXY CARD?PROXY?
A: Yes. You may change your vote at any time before your proxy card is voted at the
annual meeting. You can do so in one of three ways. First, you can send a
written notice to our Corporate Secretary stating that you would like to
revoke your proxy. Second, you can complete and submit a new, later-datedtimely proxy card to our
Corporate Secretary.by the
Internet, telephone or mail. Third, you can attend the annual meeting and
vote in person. Your attendance alone will not revoke your proxy. If you
have instructed a broker to vote your shares, you must follow directions
received from your broker to change those instructions.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?
A: Your broker will vote your shares only if you provide instructions on how
to vote by following the information provided to you by your broker.
Q: WHO CAN HELP ANSWER MY QUESTIONS?
A: If you have more questions about the merger agreement or the transactions
contemplated by the merger agreement, you should contact Eugene I. Gordon,
Ph.D., Chairman of the Board and Chief Executive Officer, Medjet Inc., 1090
King Georges Post Road, Suite 301, Edison, New Jersey 08837, telephone:
(732) 738-3990.738-3990, ext. 17.
vii
MEDJET INC.
1090 KING GEORGES POST ROAD
SUITE 301
EDISON, NEW JERSEY 08837
-----------------------
PROXY STATEMENT
---------------------
GENERAL
This proxy statement is being furnished to our stockholders in
connection with the solicitation of proxies by our board of directors for use at
our annual meeting of stockholders. This proxy statement and the other enclosed
documents are first being mailed on or about ,March 29, 2002 to all stockholders
entitled to vote at the annual meeting. In addition to solicitation by mail, our
officers and directors may solicit proxies by telephone or personal interview.
RECORD DATE; STOCK ENTITLED TO VOTE; QUORUM
Only holders of record of our common stock and our series B convertible
preferred stock as of the close of business on ,March 15, 2002, the record date,
are entitled to notice of, and to vote at, the annual meeting. On the record
date, 3,901,431 shares of our common stock were issued and outstanding and held
by approximately 54 stockholders of record and 10,400 shares of our series B
convertible preferred stock were issued and outstanding and held by one
stockholder of record.
Holders of our common stock are entitled to one vote on each matter to
be considered and voted upon at the annual meeting for each share held. Holders
of our series B convertible preferred stock are entitled to cast the number of
votes equal to the number of shares of common stock into which their shares of
series B convertible preferred stock can be converted. Each share of our series
B convertible preferred stock is currently convertible into 100 shares of common
stock. Stockholders may not cumulate their votes for the election of directors.
A majority of the shares of our capital stock issued and outstanding and
entitled to vote on the record date must be represented in person or by proxy at
the annual meeting in order for a quorum to be present. Abstentions and broker
"non-votes" count as present for establishing a quorum.
VOTES REQUIRED
The election of our board of directors will require the affirmative vote
of a plurality of the votes represented by the outstanding shares of our common
stock and the outstanding shares of our series B convertible preferred stock
present in person or represented by proxy and entitled to vote and voting as a
single class.
Approval and adoption of the merger agreement will require the
affirmative vote of a majority of the votes represented by the outstanding
shares of our common stock and the outstanding shares of our series B
convertible preferred stock voting as a single class. As a result, abstentions
and broker non-votes will have the effect of votes against the merger agreement.
VOTING BY OUR DIRECTORS AND OFFICERS AND BY VISX
At the close of business on the record date, our directors and officers
owned and were entitled to vote 1,629,7871,645,787 shares of our common stock, which
represented approximately 42% of the shares of our common stock outstanding on
that date. Eugene I. Gordon, Ph.D., our Chairman of the Board and Chief
Executive Officer, has entered into a voting agreement with VISX to vote his
shares in favor of the merger agreement. On the record date, Dr. Gordon owned
1,596,787 shares of our common stock and held immediately exercisable options
and warrants to acquire an additional 209,176242,500 shares of our common stock. Each
of our directors and officers has indicated his or her present intention to
vote, or cause to be voted, their shares in favor of the merger agreement.
In addition, VISX currently owns all 10,400 shares of our series B
convertible preferred stock, which are entitled to an aggregate of 1,040,000
votes, or approximately 21% of the voting power of our capital stock. Together,
our directors and officers and VISX are entitled to an aggregate of 2,669,7872,685,787
votes, or approximately 54% of the voting power of our capital stock. AS A
RESULT, OUR DIRECTORS AND OFFICERS AND VISX, ACTING TOGETHER, HAVE THE ABILITY
TO CONTROL THE OUTCOME OF THE ELECTION OF DIRECTORS AND THE VOTE TO APPROVE AND
ADOPT THE MERGER AGREEMENT AT THE ANNUAL MEETING.
VOTING OF PROXIES
All shares of our common stock represented by properly executed proxies
received in time for the annual meeting will be voted at the annual meeting in
the manner specified in the proxies. If no instructions are indicated, shares
represented by proxy will be voted "FOR" the election of the six nominees named
in this proxy statement to serve on our board of directors until the 2003 annual
meeting, "FOR" the approval and adoption of the merger agreement and, in the
discretion of the proxyholders, as to any other matters which may properly be
presented at the annual meeting.
We do not expect that any matters other than the proposals to elect six
directors and approve and adopt the merger agreement will be brought before the
annual meeting. If, however, other matters are properly presented at the annual
meeting, the persons named as proxies will vote in accordance with their
judgment.
HOW TO VOTE BY PROXY
Complete, sign, date andYou may vote using one of the following methods:
o INTERNET. You may vote by the Internet by going to the website
for Internet voting listed on your proxy card. If you vote by the
Internet, you should not return your proxy card.
o TELEPHONE. You may vote by telephone by calling the enclosedtoll-free
telephone number on your proxy card. If you vote by telephone,
you should not return your proxy card.
o MAIL. You may vote by mail by marking your proxy card, dating and
signing it, and returning it in the enclosed
return envelope. Proxies must be received by us prior to the annual meeting.postage-paid envelope
provided.
REVOCABILITY OF PROXIES
The grant of a proxy on the enclosed proxy card does not preclude a
stockholderyou from voting in person at the
annual meeting. A stockholderYou may revoke a proxy at any time prior to the annual meeting
by filing withsending a written notice to our Corporate Secretary a duly executed revocation ofstating that you would
like to revoke your proxy, by submitting a new, duly executedtimely proxy by the Internet,
telephone or mail or by appearing atattending the annual meeting and voting in person.
Attendance at the
2
annual meeting will not, in and of itself, revoke a proxy. A stockholder whose
shares are held in the name of its broker, bank or other nominee must bring a
legal proxy from its broker, bank or other nominee to the annual meeting in
order to vote in person.
DEADLINE FOR VOTING BY PROXY
Votes cast by mail must be received prior to the annual meeting in order to be
counted. Revocations must be received by us prior to the annual meeting to be
effective.
2
SOLICITATION OF PROXIES
Pursuant to the merger agreement, VISX will bear all costs of the
solicitation of proxies. Brokerage firms will be reimbursed for their expenses
in forwarding proxy materials to beneficial owners of our common stock.
3
SUMMARY
This summary highlights selected information from this proxy statement
relating to the proposed merger and may not contain all of the information that
is important to you. To understand the proposed merger fully and for a more
complete description of the legal terms of the proposed merger, you should read
this document carefully as well as the documents to which we refer you. See
"Where You Can Find More Information" on page 41.42.
THE COMPANIES
MEDJET INC.
1090 King Georges Post Road
Suite 301
Edison, New Jersey 08837
Telephone: (732) 738-3990
Medjet Inc., a Delaware corporation, is a medical device company engaged
in the research and development of microjet technology, primarily for use in
ophthalmic surgery. We have developed a proprietary technology platform for
vision-correction surgery of the cornea. Our technology is based on
small-diameter, liquid microjets moving at supersonic speeds. We currently have
seveneight issued U.S. patents (and sixfour corresponding foreign patents) with
additional U.S. and foreign patents pending.
Our website is located at www.medjetinc.com. We refer you to our website
for informational purposes only, and the contents of our website shall not be
deemed to be included in this proxy statement.
VISX, INCORPORATED
3400 Central Expressway
Santa Clara, California 95051
Telephone: (408) 733-2020
VISX, a publicly traded company whose common stock is listed on the New
York Stock Exchange under the symbol "EYE," is the worldwide leader in the
development of technology for laser vision correction. VISX systems are
commercially available in the U.S. and markets throughout the world.
VISX's website is located at www.visx.com. We refer you to VISX's
website for informational purposes only, and the contents of VISX's website
shall not be deemed to be included in this proxy statement.
ORION ACQUISITION CORP.
3400 Central Expressway
Santa Clara, California 95051
Telephone: (408) 733-2020
Orion Acquisition Corp. is a newly-formed Delaware corporation that is
wholly-owned by VISX. Orion Acquisition Corp. was incorporated on August 14,
2001 in preparation for the proposed merger and has not conducted any business
activities to date.
4
THE MERGER
The merger agreement provides that Orion Acquisition Corp., a
wholly-owned subsidiary of VISX, will merge with and into us, and as a result,
we will become a wholly-owned subsidiary of VISX. As a result of the merger,
each outstanding share of our common stock automatically will be canceled and
4
converted into the right to receive $2.00 in cash, without interest and less any
applicable withholding tax, except for shares of our common stock held by
stockholders who properly perfect their appraisal rights under Delaware law,
which shares will be subject to appraisal to determine their "fair value" in
accordance with Delaware law, exclusive of any element of value arising from the
expectation or completion of the merger.
In addition, all outstanding options and warrants to purchase shares of
our common stock will become fully exercisable and will be automatically
converted into the right to receive an amount in cash equal to the difference
between $2.00 and the exercise price per share (if less than $2.00) of our
common stock underlying the option or warrant multiplied by the total number of
shares of our common stock underlying the option or warrant (other than warrants
held by VISX). VISX will not pay any amounts with respect to any options or
warrants that have an exercise price equal to or greater than $2.00. Options and
warrants not exercised before the effective time of the merger will be canceled
and extinguished.
The full text of the merger agreement is attached as Annex A to this
proxy statement. We encourage you to read the merger agreement as it is the
legal document that governs the proposed merger.
RECOMMENDATION OF OUR BOARD OF DIRECTORS
Our board of directors has unanimously determined that the merger
agreement, including the price and other terms, and the transactions
contemplated by the merger agreement, taken as a whole, are fair and reasonable,
and in the best interests of Medjet and our stockholders. Our board unanimously
recommends that all Medjet stockholders vote FORfor the approval and adoption of
the merger agreement.
INTERESTS OF OUR DIRECTORS AND OFFICERS IN THE MERGER
When you consider the recommendation of our board of directors that you
vote in favor of the approval and adoption of the merger agreement, you should
be aware that a number of our directors and officers have interests in the
merger that are in addition to the interests of stockholders generally. In
particular, certain of our directors and officers will benefit from the
accelerated vesting of their stock options as a result of the merger.
CONDITIONS TO THE COMPLETION OF THE MERGER
We and VISX will not complete the merger unless a number of conditions
are satisfied or waived. These include:
o the absence of any legal prohibition on the completion of the
merger;
o the approval of the merger agreement by our stockholders;
o the material accuracy, as of the closing date of the merger, of
all representations and warranties contained in the merger
agreement;
o the material performance by each of us, VISX and Orion
Acquisition Corp. of the agreements and covenants required to be
performed by each of us, VISX and Orion Acquisition Corp. at or
prior to the closing of the merger;
5
o the receipt of all requisite third party approvals, consents and
waivers;
o the resignation of each of our directors;
o the absence of any event or condition that has had or is
reasonably likely to have a material adverse effect on us since
the date of the merger agreement;
5
o the cancellation of all our outstanding stock options and
warrants; and
o the absence of all material liens on our property.
In any event, even if all of the conditions to the completion of the
merger are satisfied, VISX may decide, in its sole discretion, not to proceed
with the merger.
TERMINATION OF THE MERGER AGREEMENT
We and VISX may agree by mutual written consent to terminate the merger
agreement. In addition, we or VISX may terminate the merger agreement if:
o the merger has not been completed by August 17, 2002, except
that neither party may terminate the merger agreement under this
provision if the failure to complete the merger by that date was
due to any action or failure to act on the part of the party
seeking to terminate the merger agreement;
o a governmental authority takes a final action that prohibits the
merger from being completed; or
o our stockholders do not approve the merger agreement.
We may terminate the merger agreement if:
o our board of directors withdraws its recommendation of the
merger agreement in response to a superior proposal after
determining in good faith that the failure to withdraw the
recommendation would violate our board's fiduciary duty to our
stockholders and after complying with procedures set forth in
the merger agreement; or
o either VISX or Orion Acquisition Corp. breaches any of its
representations, warranties, covenants or agreements contained
in the merger agreement, or if any of their representations or
warranties become inaccurate, to the extent that the breach or
inaccuracy would result in our suffering a material adverse
effect, except that if VISX is capable of curing the inaccuracy,
we may not terminate the merger agreement if VISX cures the
breach within 30 days.
VISX may terminate the merger agreement if:
o VISX decides not to complete the merger for any or no reason;
o our board of directors withdraws or changes its recommendation
of the approval of the merger agreement whether or not it is
permitted to do so by the merger agreement;
o we fail to comply with the provisions in the merger agreement
prohibiting us from soliciting takeover proposals from third
parties;
o a takeover proposal is announced or becomes publicly known and,
within 10 days thereafter, our board of directors fails to
recommend against acceptance of the proposal, fails to
6
reconfirm its approval and recommendation of the merger
agreement, or resolves to take any of these actions; or
o if we breach any of our representations, warranties, covenants
or agreements contained in the merger agreement, or if any of
our representations or warranties becomes inaccurate, to the
extent that the breach or inaccuracy would result in VISX
suffering a material adverse effect, except that if we are
capable of curing the inaccuracy, VISX may not terminate the
merger agreement if we cure the breach within 30 days.
6
Although our board of directors may withdraw its recommendation of the
merger agreement in response to a superior proposal if our board determines in
good faith that the failure to withdraw the recommendation would violate our
board's fiduciary duty to our stockholders, we are still obligated to call, give
notice of, convene and hold the annual meeting. Through its ownership of our
series B convertible preferred stock and the written agreement of Dr. Gordon to
vote his shares in favor of the merger agreement, VISX will control
approximately 54% of the voting power of our capital stock at the annual
meeting. As a result, VISX will effectively control the outcome of the vote on
the approval and adoption of the merger agreement, even if our board of
directors determines in good faith that a superior proposal from a third party
exists.
EFFECTS OF TERMINATION
We have agreed to pay VISX a termination fee of $500,000 if:
o any person makes a takeover proposal to us or to our
stockholders, or publicly announces a takeover proposal
concerning us, the takeover proposal is not withdrawn, the
merger agreement is terminated for our failure to obtain
stockholder approval, and within one year after the merger
agreement is terminated, any acquisition transaction is
completed or we enter into any acquisition agreement with a
third party;
o VISX terminates the merger agreement because our board of
directors withdraws or changes its recommendation of the
approval of the merger agreement;
o VISX terminates the merger agreement because we fail to comply
with the provisions in the merger agreement prohibiting us from
soliciting takeover proposals from third parties;
o VISX terminates the merger agreement after a takeover proposal
is announced or becomes publicly known and, within 10 business
days thereafter, our board of directors fails to recommend
against acceptance of the proposal, fails to reconfirm its
approval and recommendation of the merger agreement, or resolves
to take any of these actions; or
o we terminate the merger agreement pursuant to the provision
allowing our board of directors to withdraw its recommendation
of the merger agreement in response to a superior proposal after
determining in good faith that the failure to withdraw the
recommendation would violate our board's fiduciary duty to our
stockholders.
Pursuant to a voting and stock option agreement, Dr. Gordon has granted
to VISX an option to purchase all shares of our common stock owned by Dr. Gordon
at a purchase price of $2.00 per share and all options to purchase shares of our
common stock held by Dr. Gordon at a purchase price equal to the difference
between $2.00 and the exercise price per share (if less than $2.00) of each
option. VISX may exercise this option if:
7
o the merger agreement is terminated pursuant to any of the
provisions listed in the five bullet points above on this page 7, any
of which will trigger our obligation to pay VISX a termination
fee; or
o prior to the termination of the merger agreement, VISX makes, or
indicates in writing its willingness to make, sufficient funds
available to complete the merger and attempts to complete the
merger pursuant to the merger agreement, but is unable to do so
for any reason.
This option will terminate upon the earliest of:
o the effective time of the merger;
7
o the termination of the merger agreement for reasons other than
those described in the five bullet points on page 7, any of
which will trigger our obligation to pay VISX a termination fee;
or
o 20 days following the termination of the merger agreement
pursuant to any of the provisions listed in the five bullet
points on page 7, any of which will trigger our obligation to
pay VISX a termination fee.
Notwithstanding any of the foregoing termination provisions, if the
option cannot be exercised because of any legal prohibition, it will remain
exercisable until the earlier of (1) the date on which the prohibition becomes
final, and (2) 5:00 p.m. Pacific time, on the tenth business day after the
prohibition has been removed.
VISX has agreed to pay us a termination fee if:
o VISX terminates the merger agreement pursuant to the provision
allowing it to do so for any or no reason; or
o VISX terminates the merger agreement pursuant to the provision
allowing it to do so if the merger has not been completed by
August 17, 2002 and the failure to complete the merger by that
date was not due to any action or failure to act on the part of
VISX; or
o we terminate the merger agreement pursuant to the provision
allowing us to do so if the merger has not been completed by
August 17, 2002 and the failure to complete the merger by that
date was not due to any action or failure to act on our part,
except that VISX has no obligation to pay us a termination fee
under this provision if VISX has given us written notice of
termination as a result of our breach of any representation,
warranty, covenant or agreement, prior to our termination of the
merger agreement pursuant to this provision, and any applicable
cure period has not yet expired.
The termination fee payable by VISX will be:
o $200,000, if the termination occurs anytime before May 17, 2002;
o $300,000, if the termination occurs anytime after May 17, 2002
and before June 17, 2002;
o $400,000, if the termination occurs anytime after June 17, 2002
and before July 17, 2002; and
o $500,000, if the termination occurs after July 17, 2002.
8
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
Our stockholders generally will recognize gain or loss, for U.S. federal
income tax purposes, in an amount equal to the difference between $2.00 per
share and a stockholder's adjusted tax basis for the shares of our common stock.
Generally, any capital gain or loss will be long-term if our common stock has
been held by a stockholder for more than one year. Our stockholders are urged to
consult their own tax and other advisors as to the tax consequences of the
proposed merger to them under federal, state, local or any other applicable law.
APPRAISAL RIGHTS
Under Delaware law, holders of our common stock who do not vote in favor
of the merger and who fully comply with the requirements of Delaware law will
have the right to an appraisal of their common stock and to receive a cash
payment for their shares.
8
PRICE RANGE OF OUR COMMON STOCK
Our common stock is quoted on the OTC Bulletin Board under the symbol
"MDJT.OB". On August 17, 2001, the last trading day before the public
announcement of the execution of the merger agreement, the high and low bid
quotations for our common stock, as reported on the OTC Bulletin Board, were
$1.01$1.23 and $0.90,$1.01, respectively, and the closing sale price was $0.95.$1.05. On ,March
25, 2002, the last trading day before the date of this proxy statement, the closing price for shares of our common stock, as reported on the
OTC Bulletin Board, was $ .
9
ELECTION OF DIRECTORS
(PROPOSAL 1)
Our board of directors has nominated each of the persons listed below as
a director to serve until our next annual meeting of stockholders and until his
successor is elected and qualified or until his earlier resignation or removal.
Each nominee is currently a member of our board of directors. All of the
nominees have indicated a willingness to serve as directors, but if for any
reason any nominee should be unavailable to serve as a director at the time of
the annual meeting, a contingency which we do not expect, the proxies will be
voted for a different person maynominee who shall be nominateddesignated by our board in his place.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT OUR STOCKHOLDERS VOTE
FOR SUCH NOMINEES.
The following sets forth biographical and other information about the
nominees.
EUGENE I. GORDON, PH.D., age 71, is our founder and has served as our
Chairman of the Board, Chief Executive Officer and a director since our
inception in December 1993. Dr. Gordon is an inventor of our hydro-epithelial
keratoplasty, hydro-therapeutic keratoplasty and hydro-refractive keratoplasty
keratome technology. Dr. Gordon has served as an adjunct professor in the
Department of Ophthalmology at the University of Medicine and Dentistry of New
Jersey since 1994, and served as a professor in the Department of Electrical and
Computer Engineering at the New Jersey Institute of Technology from 1990 to
1994. He is a member of the National Academy of Engineering.
EDWARD E. DAVID, JR., SC.D., age 77, has served as a director since
1998. Dr. David has been a business consultant specializing in research,
technology and innovation management and development since 1986 and is President
of Edward E. David, Inc. and Principal and Vice President of The Washington
Advisory Group, LLC, a consulting and advisory service for industry, academia
and governments. Dr. David currently serves on the board of directors of
Aquasearch, Inc.,
Intermagnetics General Corporation, InterVU, Inc., Protein Polymer Technologies
Inc. and Spacehab, Inc. He is a member of the National Academy of Engineering.
WILLIAM C. HITTINGER, age 79, has served as a director since 1999. Mr.
Hittinger has been a business consultant since his retirement in 1986 as an
Executive Vice President of RCA Corporation. Mr. Hittinger is a Fellow of the
Institute of Electrical and Electronics Engineers, a Fellow of the Royal Society
of Arts and a member of the National Academy of Engineering.
RONALD B. ODRICH, D.D.S., age 70, has served as a director since 1999.
Since 1963, Dr. Odrich has been engaged in the private practice of dentistry,
with a specialization in periodontology. Since 1997, Dr. Odrich has been a
director of Park Avenue Periodontal Associates, P.C., located in New York, New
York. Dr. Odrich has held several teaching appointments and has, since 1992,
served as a guest lecturer and associate professor in the Division of
Periodontics, School of Dental and Oral Surgery, Columbia University. Dr. Odrich
is a Diplomate of the American Academy of Periodontology and a member of the
Academy of Osseointegration, the American Academy of Implantology and the
American Dental Association.
ELIAS SNITZER, PH.D., age 76, has served as a director since 1999. Since
1989, Dr. Snitzer has served as a Professor and Professor Emeritus of Ceramic
Science and Engineering at Rutgers University. Since 1995, Dr. Snitzer has been
President of Photo Refractive Enterprises, Inc., an optical fiber waveguide
equipment developer and marketer. Dr. Snitzer is a member of the National
Academy of Engineering.
10
TIMOTHY R. MAIER, age 53, has served as a director since August 2001.
Mr. Maier has been Executive Vice President, Chief Financial Officer and
Treasurer of VISX since December 1999, prior to which he had been Vice
President, Chief Financial Officer and Treasurer since June 1995. From 1991 to
June 1995, he served as Vice President and Chief Financial Officer of GenPharm
International, Inc., a privately held international biotechnology company.
There are no family relationships among any of our directors or
officers. However, Dr. Ronald B. Odrich, one of our directors, is the father of
Dr. Marc Odrich, the Medical Director of VISX. Mr. Timothy Maier was appointed
to our board of directors pursuant to an agreement entered into between us and
VISX in connection with the execution of the merger agreement. There are no
other arrangements between any director and any other person pursuant to which
the director was selected.
BOARD OF DIRECTORS COMMITTEES AND MEETINGS
Our board of directors has two standing committees: the finance and
audit committee and the compensation committee. Our board does not have a
standing nominating committee. Neither the finance and audit committee nor the
compensation committee held any meetings during 2001.
The finance and audit committee currently consists of Dr. Edward E.
David, Jr. and William C. Hittinger. The finance and audit committee's purpose
is to oversee our internal and independent auditors and to assist our board of
directors in fulfilling its oversight responsibilities on matters relating to
accounting, financial reporting, internal controls and auditing.
The compensation committee currently consists of Dr. Ronald B. Odrich
and Dr. Elias Snitzer. The compensation committee's purpose is to advise and
consult with management and our board of directors in the review of the
compensation of our directors and officers and in the administration of our
stock option plan.
Our board of directors held eleven meetings in 2001. Each member of our
board of directors attended at least 75% of the aggregate number of meetings of
our board during 2001.
FINANCE AND AUDIT COMMITTEE REPORT
Our board of directors has appointed a finance and audit committee
consisting of two directors. Each of the members of the finance and audit
committee is "independent" as defined under the National Association of
Securities Dealers' listing standards. Our board of directors has adopted a
written charter with respect to the finance and audit committee's roles and
responsibilities. A copy of the charter is attached as Annex C to this proxy
statement.
All members of our board of directors, including the members of the
finance and audit committee, receive various financial statements and reports
from us on a monthly basis. This financial information is reviewed and discussed
at regularly scheduled meetings of our board of directors. However, due to our
severely limited financial resources and limited operations during the last
fiscal year,In addition, in
fulfilling its oversight responsibilities, the finance and audit committee
did not reviewreviewed and discussdiscussed our audited financial statements for the fiscal year
ended December 31, 20002001 with our management and Rosenberg Rich Baker Berman and
Company, our independent auditors. Similarly, ourThe finance and audit committee did not discussalso
discussed with Rosenberg Rich Baker Berman and Company the matters required to
be discussed by Statement on Auditing Standards No. 61, COMMUNICATIONS WITH
AUDIT COMMITTEES. This included a discussion of our independent auditors'
judgments as to the quality, not just the acceptability, of our accounting
principles and the other matters that generally accepted auditing standards
require to be discussed with the finance and audit committee. The finance and
audit committee did receivealso received the written disclosures and the letter from
Rosenberg Rich Baker Berman and Company
11
required by Independent Standards Board Standard No. 1, INDEPENDENCE DISCUSSION
WITH AUDIT COMMITTEES, but did not discussand discussed the independence of Rosenberg Rich Baker
Berman and Company with that firm.
11
As a result,Based on the finance and audit committee's review and the discussions
noted above, the finance and audit committee did not provide any
recommendationrecommended to our board of
directors regardingand our board approved, the inclusion of our audited financial
statements in our Annual Report on Form 10-KSB for the fiscal year ended
December 31, 20002001 for filing with the SEC.
FINANCE AND AUDIT COMMITTEE OF THE
BOARD OF DIRECTORS
Edward E. David, Jr.
William C. Hittinger
COMPENSATION OF DIRECTORS
Directors who are also our officers or employees receive no additional
compensation for service as members of our board of directors or any committee
of our board. Each director who is not an employee of us or VISX generally
receives an annual grant of non-qualified stock options to purchase 10,000
shares of our common stock. Each option is granted at an exercise price equal to
the fair market value per share of our common stock on the date of grant,
expires ten years from the date of grant, and vests upon the earlier of one year
from the date of grant or the day immediately preceding the subsequent annual
meeting of stockholders, provided that the director has served on our board
through that date. Non-employee directors are also reimbursed for out-of-pocket
expenses incurred in connection with attendance of meetings of our board. In
2000, Drs. David, Odrich and Snitzer and Mr. Hittinger each received options to
purchase 10,000 shares of our common stock at an exercise price of $0.74 per
share. In 2001, Drs. David, Odrich and Snitzer and Mr. Hittinger each received
options to purchase 10,000 shares of our common stock at an exercise price of
$0.25 per share.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information regarding the compensation
paid by us for the years ended December 31, 2001, 2000 and 1999 to our Chairman
of the Board and Chief Executive Officer. No other executive officer's salary
and bonus compensation exceeded $100,000 during the last fiscal year.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION SECURITIES ALL OTHER
----------------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS/(#) ($)(1)
- --------------------------- ---- ----------- ---------- ---------------- -------------
LONG TERM
COMPENSATION
------------
AWARDS
------------
ANNUAL COMPENSATION SECURITIES ALL OTHER
-------------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS/(#) ($)(1)
- --------------------------- ---- ---------- --------- ----------- ------------
Eugene I. Gordon, Ph.D. 2001 171,963 - - 1,174
Chairman of the Board and 2000 170,000 20,000 - 1,174
Chief Executive Officer 1999 141,667 20,000 150,000 1,524
- -------------
(1) Represents premiums paid for life insurance polices.
OPTION GRANTS
No options to purchase shares of our common stock were granted to Dr.
Gordon during 2001.
OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table sets forth certain information concerning option
holdings as of December 31, 2001 by Dr. Gordon.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED OPTIONS AT FY-END (#) AT FY-END ($)
ON VALUE --------------------------- --------------------------------------------------- -------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
Eugene I. Gordon, Ph.D. - - 175,844 16,656 - -
EMPLOYMENT AGREEMENT
In March 1999, we entered into a three-year employment agreement with
Dr. Gordon, our Chairman of the Board and Chief Executive Officer.Officer, which was
subsequently amended in March 2002 to extend the term of the agreement through
March 15, 2003. The agreement provides for base compensation of $170,000 per
year, bonuses aggregating a maximum of $60,000 per year based upon the
attainment of certain goals, and other additional compensation as may be
determined by our board of directors (without the participation of Dr. Gordon)
in its sole discretion. Our board of directors (without the participation of Dr.
Gordon) may increase such base compensation in its sole discretion. Under the
original agreement, we also issued to Dr. Gordon options to purchase 150,000
shares of our common stock at an exercise price of $0.89 per share, which was
the fair market value per share of our common
13
stock on the date of grant. These options vestvested ratably over the initial
three-year term of the employment agreement. In addition, in consideration for
extending the term of the agreement, as long as Dr. Gordon 13
remains our employee.will be paid an inducement bonus
of $60,000 payable no later than ten days after the proposed merger with VISX is
either completed or terminated. VISX has agreed to pay this inducement bonus to
Dr. Gordon. The agreement also provides for payment of up to one year's total
compensation if Dr. Gordon's employment with us is terminated for any reason
other than for cause, death or disability.
The employment agreement can be terminated for cause and contains
proprietary information, invention and non-competition provisions which prohibit
disclosure of any of our proprietary information and preclude Dr. Gordon from
competing with us for a period of two years after the termination of his
employment.
SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of our common stock as of the record date for the annual
meeting by (i) each person known by us to own beneficially more than 5% of our
common stock, (ii) each of our directors, (iii) our Chairman of the Board and
Chief Executive Officer, and (iv) all of our directors and executive officers as
a group. Except as indicated in the footnotes to this table, each beneficial
owner named in the table has sole voting and investment power with respect to
the shares set forth opposite the beneficial owner's name.
SHARES
BENEFICIALLY PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED CLASS
- ------------------------------------ ------------------- -----------
VISX, Incorporated............................................ 3,725,000 (1) 48.8%
3400 Central Expressway
Santa Clara, CA 95051
Eugene I. Gordon.............................................. 1,805,963 (2) 43.9%
1090 King Georges Post Road
Suite 301
Edison, NJ 08837
Edward E. David, Jr........................................... 40,000 (3) *
William C. Hittinger.......................................... 20,000 (3) *
Ronald B. Odrich.............................................. 28,000 (4) *
Elias Snitzer................................................. 20,000 (3) *
Timothy R. Maier.............................................. - -
All directors and officers as a group (7 persons)............. 1,943,963 (5) 46.1%
- -------------------------------------------------------------------------- ------------ ----------
VISX, Incorporated................................. 3,725,000 (1) 48.8%
3400 Central Expressway
Santa Clara, CA 95051
Eugene I. Gordon................................... 1,839,287 (2) 44.0%
1090 King Georges Post Road
Suite 301
Edison, NJ 08837
Edward E. David, Jr................................ 40,000 (3) *
William C. Hittinger............................... 20,000 (4) *
Ronald B. Odrich................................... 48,000 (5) *
Elias Snitzer...................................... 31,000 (5) *
Timothy R. Maier................................... - -
All directors and executive officers
as a group (7 persons)........................... 2,003,426 (6) 46.7%
- ---------
* Less than 1% of our common stock.
(1) Consists of 1,040,000 shares of our common stock issuable upon
conversion of 10,400 shares of our series B convertible preferred stock
and 2,685,000 shares issuable upon exercise of currently exercisable
warrants. Does not include an aggregate of 1,805,9631,839,287 shares beneficially
owned by Dr. Gordon that are subject to a voting and stock option
agreement between VISX and Dr. Gordon.
(2) Includes 209,176242,500 shares issuable upon exercise of currently exercisable
options and warrants. Dr. Gordon has entered into a voting and stock
option agreement with VISX pursuant to which, among other things, Dr.
14
Gordon has agreed to vote his shares of common stock in favor of the
approval and adoption of the merger agreement and has granted VISX a
proxy to vote his shares in this manner.
(3) Includes 30,000 shares issuable upon exercise of currently exercisable
options.
14
(4) Consists of shares issuable upon exercise of currently exercisable
options.
(5) Includes 20,000 shares issuable upon exercise of currently exercisable
options.
(5)(6) Includes 314,176357,639 shares issuable upon exercise of currently exercisable
options and warrants.warrants
exercisable within 60 days of the record date.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors, executive officers and persons who beneficially own more than 10% of
our common stock to file reports of ownership and changes in ownership with the
SEC and to furnish us with copies of all such reports they file. Based on our
review of the copies of such forms received by us, or written representations
from certain reporting persons, we believe that during 2001 all such reports
were timely filed.filed, except that a Form 3 for Cheryl Blake was filed late, the
grant of an option in each of 1999 and 2000, as well as the repricing of an
option in 2000, to Edward David were reported late, the grant of an option in
each of 1999 and 2000 to William Hittinger were reported late, the grant of an
option in 2000 to Ronald Odrich was reported late and the grant of an option in
2000 to Elias Snitzer was reported late.
15
THE MERGER
(PROPOSAL 2)
BACKGROUND OF THE MERGER
In late 1994, Dr. Marc Odrich, VISX's Medical Director, and Terry
Clapham, VISX's Vice President of Engineering, met with Dr. Eugene Gordon, our
Chairman and Chief Executive Officer, at an American Academy of Ophthalmology
meeting. Dr. Odrich had known Dr. Gordon as a former patient. Dr. Odrich is also
the son of Ronald Odrich, one of our directors. The three discussed our waterjet
technology and its application to making hinged flaps.vision correction surgery, particularly the
use of our technology in the first surgical step, which is the removal of a thin
circular layer of tissue from the front surface of the cornea. The informal
technical relationship between Dr. Odrich and Dr. Gordon continued with random
meetings, usually at major ophthalmology conferences.
In the fall of 1996, shortly after our initial public offering, Dr.
Gordon began having discussions with James McCollum, VISX's Vice President of
Marketing
for VISX.Marketing. Mr. McCollum visited us on December 1, 1996 and shortly thereafter
submitted a proposal to us for a licensing agreement and an investment by VISX
in Medjet. This proposal led to a series of cross visits between staff members
at VISX and Medjet. Discussions relating to a potential business relationship
among Mr. McCollum and Timothy R. Maier, VISX's Executive Vice President, Chief
Financial Officer and Treasurer, on the one hand and Dr. Gordon on the other
hand lasted into early 1998. Jane E. Jablons of Kelley Drye & Warren LLP, our
corporate counsel, also participated. Robert Donovan, a member of our board of
directors at the time, who had been interviewed by VISX earlier as a candidate
for a position as President of Pillar Point (the VISX - Summit Technology joint
venture) also interacted with VISX. WeHowever, we and VISX were unable to reach
mutually satisfactory terms.
In July 1998, we concluded a licensing agreement with Alcon Universal
Ltd. (successor by assignment from Nestle S.A.). This effectively ended the
interactionour
discussions with VISX.
Alcon terminated this licensing agreement in December 1999. Discussions1999, and
discussions with VISX started again. Dr. Steve Trokel, a VISX consultant, and
Dr. Odrich made a visit to us on January 21, 2000. At that point, the feedback from VISX wasindicated
that our technology was exciting and promising but that VISX would not commence
serious business discussions would not beginwith us until we hadcould demonstrate a complete
microkeratome, which is a medical device used to demonstrateproduce thin layers of tissue
in the cornea, that VISX could study in detail.
We had justDuring this timeframe, we received private financing from Adam Smith &
Company, Inc. and, as a result, we were able to undertake a serious development
effort. AWe achieved a credible working device was achieved by the summer of 2000. However,
the funding received, $1.3 million, was limited and the terms were dilutive. At
that point, our board of directors began to think positively about strategic
alternatives available to our company.
Dr. Odrich visited us on September 7, 2000 and the successful
demonstration was good enoughsufficient to continue VISX interest.VISX's interest in us. Thereafter, Dr.
Odrich visited us regularly, measuring progress, inputting human factors needs
and sharing his thinking on the requirements for the next generation device. He
asked that the device be modified so that no water left the device during a
procedure. Thisprocedure, which was achieved.
On November 27, 2000, Mark Logan, VISX's Chairman and Chief Executive
Officer, of VISX, Liz Davila, VISX's President, of VISX, and Dr. Odrich visited our facility and
discussed the various business possibilities open to VISX and to us. On February
5, 2001, Mr. Logan, Dr. Odrich and Dr. Gordon met in New York City. Mr. Logan
proposed that VISX would fund our research and development for six months, and
takewith
an option
16
to buyacquire us after the six-month trial period ended. The given
reasonMr. Logan expressed that
VISX's preference for thean option rather than an outright purchase was concern
about the compatibility of theour microkeratome device with laser photoablation.
Although Dr. Gordon was skeptical of the possibility for such a problem, he
could not 16
dismiss it. Dr. Gordon agreed to the option ideaconcept as a working
template and then serious negotiations began.
On February 27, 2001, a VISX group consisting of Joaquin Wolfe, Vice
President of Marketing, Derek Bertocci, Vice President/Controller, Mr. Clapham,
now a VISX consultant (the former Vice President of Engineering), and Dr.
Trokel, visited us for a demonstration of our microkeratome device.
On March 14, 2001, Mr. Bertocci and Mr. Maier visited us proposingand proposed a
transaction between VISX and us pursuant to which VISX would have a two-year
option to acquire Medjet through a merger involving the payment by VISX of an
aggregate consideration of $10 million in cash in exchange for all of our
outstanding securities. After deducting the portion of the purchase price
allocable to our shares of series B convertible preferred stock and our
outstanding options and warrants, this proposal effectively provided for the
payment of $1.88 per share of our common stock. VISX also proposed entering into
a research and development agreement anwith us whereby they would fund the
development of our microkeratome in the interim two-year period. Our board of
directors rejected this proposal on the basis of the effective offered price per
share of our common stock, the extended term of the option to buy us, and a standstill
agreement during which timecomplete the
details of the agreement would be negotiated.
There were several problems with the proposal, including the length of time of
VISX's option,transaction and VISX's ability to opt out of the proposed mergertransaction, leaving us with no
moneyworking capital and the potential of not obtainingbeing able to obtain further financing.
WithHowever, with that proposal as a beginning, Mr. Bertocci and Dr. Gordon entered
a period of intense negotiation. We and VISX entered into a term sheet on June
15, 2001.
During this period, we were operating with a loan provided by Dr.
Gordon, reduced salaries for our staff and incurred considerable debt. NoHowever,
no employees left us or were let go, preserving theand we were able to preserve our experience
and knowledge base. Moreover, we pursued alternative financing and explored
possible strategic alternatives through numerous discussions with a variety of
other serious alternatives forcompanies in the medical technology industry and with representatives of
private investment groups. We contacted most of these potential parties on our
own initiative. While our board of directors was informed of material
developments in these discussions, most of these discussions did not progress
beyond informal meetings with members of management of these various companies
and did not result in formal proposals. We received an informal proposal from
management of one publicly traded company in the medical device industry. This
proposal, however, was contingent upon the other company's stock price attaining
a certain level, which was never achieved. We also received an informal
financing were explored extensively but
to no avail including serious interactions with LASERSIGHT, Medtronic and
Johnson & Johnson. One offer for financing was received fromproposal made on behalf of a private investor group, but the proposed
price per share was based on our market price, which ranged from $0.63 to $0.90
during June 2001. Our board of directors did discuss this informal proposal but
rejected it, primarily because the proposed price per share was extremely dilutive.substantially
less than the $2.00 per share proposal we eventually received from VISX. With no
additional equity or debt financing available to us, the potential of bankruptcy
became a real concern.
DuringWe and VISX entered into a term sheet on June 15, 2001. Shortly
thereafter, during the negotiation of the definitive merger agreement, in June
2001, VISX provided fundingus with $200,000 of $200,000 to us as
preliminary payments for research and development. This alloweddevelopment funding in
order to enable us to continuemaintain our existing level of operations as we continued
to negotiate despite our lackthe terms of funds from other sources.the merger. During this time, VISX also negotiated the
purchase of our series B convertible preferred stock and related warrants from
the original purchasers.
VISX paid $1.25 per
share, the same amount paidAs contemplated by the original purchasers. Obtaining these shares
was important because of anti-dilution provisions associated with the warrants
attachedterm sheet, we agreed in principle to the shares. Independent ownership of the shares and warrants by
others could have been a major roadblock to any financing.
In addition, we would carry outcontinue
our research and development foractivities regarding our waterjet technology at the
direction of VISX for the one-year period following the execution of the option.merger
agreement, during which time VISX would have the sole option to decide whether
or not to complete the merger. This agreement would be set forth in a separate
research, development and experimental cost sharing agreement to be entered into
by VISX and us. This work
17
would provide VISX with the opportunity to evaluate theour waterjet technology in
detail. The optiondetail, while providing us with funding to maintain our existing level of
operations during the one-year period. VISX agreed that they would provide us
with this funding regardless of whether the merger was completed. In return, we
agreed to add a provision to the merger agreement providing for our grant to
VISX of warrants to purchase 1,320,000 shares of our common stock at an exercise
price of $0.75 per share.
VISX also agreed in principle to pay us an initial payment of $500,000
allowedupon execution of the merger agreement in consideration for VISX's right to
terminate the merger agreement for any or no reason during the one-year period
following the date of its execution. We believed that receipt of this payment
would allow us to pay various outstanding debts and, billstogether with the research
and get back on a normal financial footing.development funding to be received from VISX, to continue our business
operations.
On July 3, 2001, VISX's attorneys distributed first drafts of the merger
agreement and related agreements to us and our attorneys. From that point until
the signing of the agreements on August 17, 2001, we, VISX and Dr. Gordon
intensely negotiated the terms and conditions of the agreements between us and
VISX and between Dr. Gordon and VISX through a series of telephone conferences
and emails.
Throughout this period of negotiations, Dr. Gordon kept our board of
directors current with weekly written updates and one-on-one telephone
discussions with board members. Our board of directors met monthly and the
progress with VISX was described, discussed and evaluated, particularly in light
of our continuing financial problems. During this period, the material business
terms of the merger agreement remained unchanged and were not the subject of
further negotiation. Instead, the negotiations focused on the ability of our
board of directors to consider proposals from third parties during the one-year
period after the execution of the merger agreement.
On July 19, 2001, VISX management made a presentation to VISX's board of
directors regarding the proposed transaction and the proposed agreements with
Medjet. VISX's directors questioned VISX's management and discussed the proposed
transaction and agreements. The VISX board concluded that it would be advisable
and in the best interests of VISX to enter into the agreements. Accordingly, the
VISX 17
board authorized VISX's officers to take all actions necessary to enter
into and consummate the agreements, including such changes and modifications as
the officers deem appropriate.
On August 13, 2001, our board of directors met by telephone and reviewed
with John Capetta of Kelley Drye & Warren LLP, our corporate counsel, various
aspects and details of the agreements, including the implicationsprovisions of the merger
agreement setting forth the ability of our board to consider proposals from
third parties during the one-year period after the execution of the merger. The
board was advised in detail of the issues concerning the board's fiduciary
duties with respect to granting VISX the one-year option to purchase us. The board was advised in
detail of the unresolved issues. Dr.
Gordon also gave a detailed review of the attempts to find financing, and the
interactions with other companies in attempts to find a strategic partner or a
purchaser.
On August 16, 2001, our full board of directors met by telephonic
conference to review the various documents associated with the proposed merger.
Mr. Capetta gave a detailed discussion of each document. By unanimous vote, our
board of directors approved the merger and the related agreements to which we
would be a party.
On August 17, 2001, VISX entered into a share purchase agreement with
certain of our securityholders pursuant to which VISX purchased the outstanding
shares of our series B convertible preferred stock and related warrants on August 17, 2001. Theto
purchase an aggregate of 1,325,000 shares of our common stock at an exercise
price of $3.50 per share for the same consideration paid by those
securityholders. Simultaneously with the foregoing, we and VISX executed the
merger agreement, the research,
18
development and experimental cost sharing agreement and the various other
agreements associated with the merger and the research and development agreement were signed
immediately thereafter by us.merger.
OUR REASONS FOR THE MERGER; RECOMMENDATION OF OUR BOARD OF DIRECTORS
In reaching its decision to approve the merger agreement and to
recommend that our stockholders vote in favor of the approval and adoption of
the merger agreement, our board consulted with our management team and advisors
and independently considered a number of factors including the following:
o the opportunity for our stockholders to receive $2.00 per share
in cash, representing a significantan approximately 90% premium over the
market price for our common stock prevailingon the day prior to the public
announcement of the potential merger;
o the extended low rangeminimum $1.5 million of prices and lack of trading volume for
our common stock on the OTC Bulletin Board;
o the financingfunding to be provided to us by VISX
pursuant to the research, development and experimental cost
sharing agreement and the $500,000 initial payment to be made
upon execution of the merger agreement, at a time when other
sources of financing were not available to us;
o our inability to obtain equity financing on terms acceptable to
us as a result of the low price (less the $1.00 per share) of
and bankruptcy had become a real,
imminent possibility;
o information with respect tominimal daily trading volume (substantially less than 1% of
our financial condition, results of
operations, cash flow requirements, business and prospects, and
current industry, economic and market conditions;outstanding common stock) for our common stock on the OTC
Bulletin Board;
o the recommendationlack of our management that the merger agreement
with VISX be approved; and
o theacceptable financing alternatives to the financing by and potential
merger with VISX that might be available to us and our stockholders.stockholders; and
o our inability to generate significant revenue and to continue as
a going concern without obtaining financing to further our
product development efforts, thus causing bankruptcy to become
an imminent possibility.
Although our board considered obtaining an independent fairness opinion,
given the significant expense of obtaining a fairness opinion, the size of the
premium offered for our common stock and the absence of other viable financing
alternatives, the board decided not to obtain a fairness opinion. Furthermore,
although our board recognized that certain officers and directors would have
interests in the merger that would be in addition to or different from the
interests of our stockholder generally and considered these interests, these
interests were not a factor in our board's decision to recommend that our
stockholders vote in favor of the approval and adoption of the merger agreement.
Our board also identified and considered the following potentially
negative factors in its deliberations concerning the merger:
o the potential that the proposed merger with VISX might not occur
because VISX determines not to proceed with the merger, as VISX
is permitted to do for any reason or no reason, or because a
condition to the merger cannot be satisfied, and the impact that
might have on us, particularly if it comes at a time near or at
the end of the one-year term of the research, development and
cost sharing agreement, when VISX iswill not be obligated to
provide significant additional
18
funding to us and we have not been able to
negotiate with any third parties because of the restrictions
imposed by the merger agreement;
o the amountfact that VISX, through its ownership of continuingour series B
convertible preferred stock, would continue to own approximately
21% of the voting power of our capital stock, and through its
ownership of such stock as well as warrants to purchase an
aggregate of 2,685,000 shares of our common stock, would
continue to beneficially own approximately 49% of our common
19
stock and involvement VISX would have in uscontinue to hold a seat on our board even in the
event that the proposed merger did not occur and the negative
impact that might have on our ability to obtain financing from a
third party or find a third party willing to enter into a
business combination with us; and
o the access to our confidential information that would be
afforded to VISX in connection with the transaction, even though
such information is subject to the terms of a confidentiality
agreement between VISX and us.
The foregoing discussion of the information and factors considered by
our board is not intended to be exhaustive but includes all material factors
considered by our board. In view of the variety of factors considered in
connection with its evaluation of the merger agreement and the merger, our board
did not find it practicable to and did not quantify or otherwise assign relative
weight to the specific factors considered in reaching its determination. In
addition, individual members of our board may have given different weight to
different factors.
After careful consideration, our board of directors has unanimously
determined that the merger agreement, including the price and other terms, and
the transactions contemplated by the merger agreement, taken as a whole, are
fair and reasonable, and in the best interest of Medjet and our stockholders.
OUR BOARD UNANIMOUSLY RECOMMENDS THAT OUR STOCKHOLDERS VOTE FOR THE
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following discussion summarizes the material U.S. federal income tax
consequences of the merger. This discussion is based on the Internal Revenue
Code of 1986, applicable U.S. Treasury Regulations, administrative
interpretations and court decisions as in effect as of the date of this proxy
statement, all of which may change, possibly with retroactive effect.
This discussion does not address all aspects of U.S. federal income
taxation that may be important to a stockholder in light of that stockholder's
particular circumstances or to a stockholder subject to special rules, such as:
o a stockholder who is a foreign person;
o a financial institution or insurance company;
o a tax-exempt organization;
o a dealer or broker in securities;
o a stockholder that holds its common stock as part of a hedge,
appreciated financial position, straddle or conversion
transaction;
o a stockholder who acquired its common stock pursuant to the
exercise of employee stock options or otherwise as compensation;
or
o a stockholder that exercises its appraisal rights in connection
with the merger.
19
In addition, no information is provided in this proxy statement with
respect to the tax consequences of the merger under any applicable foreign,
state or local laws.
20
This discussion of material federal income tax consequences is intended
to provide only a general summary, and is not a complete analysis or description
of all potential U.S. federal income tax consequences of the merger. This
discussion does not address tax consequences that may vary with, or are
contingent on, individual circumstances. Accordingly, we strongly urge each
stockholder to consult the stockholder's own tax advisors to determine the
particular U.S. federal, state or local or foreign income or other tax
consequences to the stockholder of the merger.
The following will be the material U.S. federal income tax consequences
of the merger:
The receipt of cash by holders of our common stock in the merger or the
exercise of appraisal rights will be a taxable transaction for U.S. federal
income tax purposes. Assuming that shares of our common stock held by a
stockholder constitute capital assets, a holder of our common stock receiving
cash in the merger generally will recognize capital gain or loss in an amount
equal to the difference between $2.00 and the holder's adjusted tax basis in our
common stock. Any capital gain or loss generally will be long-term capital gain
or loss if our common stock has been held by the holder for more than one year.
If our common stock has been held by the holder for not more than one year, any
gain or loss will generally be taxed as short-term capital gain or loss.
Currently, long-term capital gain for non-corporate taxpayers is taxable at a
maximum federal rate of 20%. The deductibility of capital losses is subject to
limitations.
A non-corporate stockholder may be subject to backup withholding at a
rate of 30.5%, for payments made on or before December 31, 2001 and at a rate of
30% for payments made after December 31, 2001. However, backup withholding will
not apply to a stockholder who either furnishes a correct taxpayer
identification number and certifies that he or she is not subject to backup
withholding by completing the substitute Form W-9 that will be included as part
of the materials sent to our stockholders if the merger is completed or
otherwise proves to VISX and its payment agent that the stockholder is exempt
from backup withholding in accordance with applicable regulations.
APPRAISAL RIGHTS
Under Section 262 of the Delaware General Corporation Law, record
holders of our common stock who follow the procedures set forth in Section 262
and who have not voted in favor of approval and adoption of the merger agreement
will be entitled to a judicial appraisal of their shares of our common stock and
to receive payment of the fair value of their shares, exclusive of any element
of value arising from the expectation or completion of the merger, together with
a judicially determined fair rate of interest. The following discussion is not a
complete statement of the law regarding appraisal rights under Delaware law, and
is qualified in its entirety by reference to the full text of Section 262, a
copy of which is attached to this proxy statement as Annex B.
Pursuant to Section 262, at least 20 days before the annual meeting, we
must notify each record holder of our common stock that appraisal rights are
available under Section 262 and include a copy of Section 262 in the notice.
This proxy statement constitutes the required notice. Any stockholder who wishes
to exercise appraisal rights should read the following discussion and Annex B
carefully because the failure to comply timely and properly with the procedures
set forth in Section 262 will result in the complete loss of appraisal rights.
In order to exercise appraisal rights, a stockholder must deliver to us
a written demand for appraisal of his or her shares of common stock before the
vote on the merger agreement. The demand 20
will be sufficient if it reasonably
informs us of the identity of the stockholder and that the stockholder intends
to demand the appraisal of his or her shares. In addition, to be eligible for
appraisal rights, a stockholder must not vote in favor of approval and adoption
of the merger agreement. A vote against
21
approval and adoption of the merger agreement will not constitute a written
demand for the purposes of meeting the requirements of Section 262. All written
demands for appraisal of our common stock should be sent to the attention of our
corporate offices located at 1090 King Georges Post Road, Suite 301, Edison, New
Jersey 08837, so as to be received before the vote on the approval of the merger
agreement at the annual meeting.
If the merger is completed, within 10 days after the effective date of
the merger, we must, as the surviving corporation in the merger, send a notice
as to the completion of the merger to each person who has satisfied the
requirements of Section 262 and who has not voted in favor of the merger.
Within 120 days after the completion of the merger, we or any
stockholder who is entitled to appraisal rights under Section 262 and who has
complied with the requirements of Section 262, may file a petition in the
Delaware Court of Chancery demanding a determination of the fair value of the
stockholder's shares of our common stock. We are under no obligation, and have
no present intention, to file such a petition. Accordingly, it is the obligation
of the holders of our common stock to initiate all necessary action to perfect
their appraisal rights within the time period prescribed in Section 262.
Within 120 days after the effective date of the merger, any stockholder
of record who has complied with the requirements for the exercise of appraisal
rights under Section 262 will be entitled, upon written request, to receive from
us, as the surviving corporation of the merger, a statement setting forth the
aggregate number of shares not voted in favor of approval and adoption of the
merger agreement and with respect to which demands for appraisal have been
received and the aggregate number of holders of the shares. We must mail this
statement within 10 days after we receive a written request for the statement or
within 10 days after the expiration of the period for delivery of demands for
appraisal, whichever is later.
If a holder of our common stock timely files a petition for appraisal
and serves a copy of the petition upon us, we will be obligated, within 20 days,
to file in the office of the Register in Chancery a duly verified list
containing the names and addresses of all record holders of our common stock who
have demanded payment for their shares and with whom agreements as to the value
of their shares have not been reached. After notice to these stockholders is
given as required by the Court, the Delaware Court of Chancery is empowered to
hold a hearing on the petition for the purpose of determining those stockholders
who have complied with the requirements of Section 262 and who have become
entitled to appraisal rights. The Court may require the holders of our common
stock who have demanded an appraisal for their shares of our common stock
represented by certificates to submit their certificates to the Register in
Chancery for notation thereon of the pendency of the appraisal proceeding. If
any holder of our common stock fails to comply with the direction, the Delaware
Court of Chancery may dismiss the proceeding as to that holder.
After determining the holders of our common stock entitled to an
appraisal, the Delaware Court of Chancery will appraise the fair value of the
shares, exclusive of any element of value arising from the expectation or
completion of the merger, together with a fair rate of interest, if any, to be
paid upon the amount determined to be fair value. Holders of our common stock
seeking appraisal should be aware that the fair value of their shares as
determined by the Court could be more than, the same as or less than the $2.00
per share that they would otherwise receive if they did not seek appraisal of
their shares of our common stock. The Delaware Supreme Court has stated that
"proof of value by any techniques or methods which are generally considered
acceptable in the financial community and otherwise admissible in court" should
be considered in the appraisal proceedings. In addition, Delaware courts have
decided 21
that the statutory appraisal remedy, depending on factual circumstances,
may be a dissenter's exclusive remedy. The Delaware Court of Chancery will also
determine the amount of interest, if any, to be paid upon the amounts to be
received by persons whose shares of our common stock have been appraised. The
22
costs of the proceeding may be determined by the Court and taxed upon the
parties as the Court deems equitable. The Court may also order that all or a
portion of the expenses incurred by any stockholder in connection with an
appraisal, including, without limitation, reasonable attorneys' fees and the
fees and expenses of experts utilized in the appraisal proceeding, be charged
pro rata against the value of all of the shares of our common stock entitled to
appraisal.
Any stockholder who has duly demanded an appraisal of his or her shares
in compliance with Section 262 will not, after the effective time of the merger,
be entitled to vote the shares of our common stock subject to the demand for any
purpose or be entitled to the payment of dividends or other distributions on
those shares of our common stock (except dividends or other distributions
payable to holders of record of shares of our common stock as of a record date
which is prior to the effective time of the merger).
If any stockholder who demands appraisal of shares under Section 262
fails to perfect, or effectively withdraws or loses, the right to appraisal, the
shares of our common stock of the holder will be deemed to have been converted,
at the effective time of the merger, into the right to receive $2.00 per share
in accordance with the merger agreement, without interest. A stockholder will
fail to perfect, or effectively withdraw or lose, the right to appraisal if no
petition for appraisal is filed within 120 calendar days after the effective
time of the merger. A stockholder may withdraw a demand for appraisal by
delivering to us a written withdrawal of the demand for appraisal and an
acceptance of the merger, except that any attempt to withdraw made more than 60
days after the effective time of the merger will require our written approval.
Once a petition for appraisal has been filed, the appraisal proceeding may not
be dismissed as to any stockholder without the approval of the Delaware Court of
Chancery.
INTERESTS OF OUR DIRECTORS AND OFFICERS IN THE MERGER
In considering the recommendation of our board of directors that our
stockholders vote in favor of the approval and adoption of the merger agreement,
our stockholders should be aware that certain members of our management and
board of directors have certain interests in the merger that are in addition to
or different from the interests of our stockholders generally. The board of
directors was aware of these interests and considered them, among other matters,
in approving and adopting the merger agreement.
All of our directors and officers (other than Mr. Maier) hold options
under our 1994 stock option plan. Pursuant to the merger agreement, all
outstanding options will automatically be converted into the right to receive an
amount in cash equal to the difference between $2.00 and the exercise price per
share (if less than $2.00) of our common stock underlying the option multiplied
by the total number of shares of our common stock underlying the option, payable
without interest at the effective time of the merger, and each option will be
canceled. As a result, we expect that each of our directors and executive
officers will receive the following amounts in consideration for their
outstanding options:
Eugene I. Gordon, Ph.D. $209,000
Edward E. David, Jr., Sc.D. 41,100
William C. Hittinger 36,400
Ronald B. Odrich, D.D.S. 36,400
Elias Snitzer, Ph.D. 36,400
Timothy R. Maier -
Cheryl A. Blake 53,938
--------
Total $413,238
========
23
In addition, pursuant to the merger agreement, all outstanding warrants
will automatically be converted into the right to receive an amount in cash
equal to the difference between $2.00 and the exercise price per share (if less
than $2.00) of our common stock underlying the warrant multiplied by the total
number of shares of our common stock underlying the warrant. Dr. Gordon
currently holds warrants to purchase 50,000 shares of common stock at an
exercise price of $1.00 per share. Dr. Gordon, therefore will receive an
aggregate of $50,000 in consideration for his warrants. We also expect that at
or prior to the closing of the merger agreement, we will repay our outstanding
indebtedness to Dr. Gordon, which as of the date of this proxy statement
consists of $160,000 in principal and $770 in accrued and unpaid interest.
Finally, we currently expect that Dr. Gordon's employment with us will terminate
upon completion of the merger. In that event, Dr. Gordon would be entitled to
receive a severance payment equal to the amount of base salary that otherwise
would have been payable to him from the date of such termination through March
15, 2003, pursuant to the terms of Dr. Gordon's employment agreement with us.
In addition, Mr. Maier is the Executive Vice President and Chief
Financial Officer of VISX, and he was appointed to our board of directors in
connection with, and concurrently with the signing of, the merger agreement. Mr.
Maier did not participate in our decision to recommend that you vote for the
merger agreement and the transactions contemplated by the merger agreement.
Pursuant to the merger agreement, we will honor and fulfill those
indemnification provisions now existing in our certificate of incorporation,
bylaws or indemnification and employment agreements, for a period equal to six
years from the effective time of the merger, with respect to any individual who
served 22
as our director or officer at any time prior to the effective time of the
merger (except as may be required by applicable law). The merger agreement also
provides that VISX will pay us approximately $244,800 in respect of premiums for
a six-year run-out of our $5 million directors' and officers' liability policy.
2324
THE MERGER AGREEMENT
THIS SECTION IS A SUMMARY OF THE MATERIAL TERMS OF THE MERGER AGREEMENT
AND OTHER RELATED AGREEMENTS. A COPY OF THE MERGER AGREEMENT IS ATTACHED AS
ANNEX A TO THIS PROXY STATEMENT. THE FOLLOWING DESCRIPTION DOES NOT PURPORT TO
BE COMPLETE AND IS QUALIFIED BY REFERENCE TO THE MERGER AGREEMENT. WE ENCOURAGE
YOU TO READ THE FULL TEXT OF THE MERGER AGREEMENT FOR DETAILS OF THE MERGER AND
THE TERMS AND CONDITIONS OF THE MERGER AGREEMENT.
THE MERGER
If all of the conditions to the merger are satisfied or waived in
accordance with the merger agreement, and if VISX chooses to go forward with the
merger, Orion Acquisition Corp., a wholly-owned subsidiary of VISX, will be
merged with and into us and we will be the surviving corporation. Upon
completion of the merger, we will become a wholly-owned subsidiary of VISX. The
merger will become effective when a certificate of merger is filed with the
Delaware Secretary of State. The certificate of incorporation and bylaws of
Orion Acquisition Corp. will become our certificate of incorporation and bylaws.
The directors and officers of Orion Acquisition Corp. will become our directors
and officers until their respective successors have been duly elected or
appointed and qualified.
MERGER CONSIDERATION
Under the terms of the merger agreement, if VISX elects to proceed with
the merger, each outstanding share of our common stock automatically will be
canceled and converted into the right to receive $2.00 in cash, without interest
and less any applicable withholding tax, at the effective time of the merger,
except for shares of our common stock held by stockholders who properly perfect
their appraisal rights under Delaware law, which shares will be subject to
appraisal to determine their "fair value" in accordance with Delaware law,
exclusive of any element of value arising from the expectation or completion of
the merger. VISX intends to fund the proposed merger with available cash
reserves and general working capital.
TREATMENT OF OPTIONS AND WARRANTS
The merger agreement provides that each outstanding option to purchase
shares of our common stock under our 1994 stock option plan and each outstanding
warrant to purchase shares of our common stock not exercised prior to the
effective time of the merger will be canceled and extinguished. VISX will pay to
the holder of an option or warrant the difference between $2.00 and the exercise
price per share (if less than $2.00) of our common stock underlying the option
or warrant multiplied by the total number of shares of our common stock
underlying the option or warrant (other than warrants held by VISX). VISX will
not pay any amounts with respect to any options or warrants that have an
exercise price equal to or greater than $2.00.
EXCHANGE AGENT; PROCEDURE FOR THE SURRENDER OF STOCK CERTIFICATES
VISX will select a bank or trust company to act as the exchange agent in
the merger. Soon after the effective time of the merger, VISX will deposit with
the exchange agent the aggregate consideration payable pursuant to the merger
agreement in exchange for outstanding shares of our common stock. The exchange
agent will then send a letter to each stockholder whose shares were converted
into the right to receive the amounts payable under the merger agreement. The
letter will contain instructions describing how to surrender your stock
certificates in exchange for the amounts payable pursuant to the merger
agreement. As of the effective date of the merger and until you surrender your
stock certificates, the certificates will represent only the right to receive
the amounts payable pursuant to the merger agreement.
2425
REPRESENTATIONS AND WARRANTIES OF MEDJET
Under the merger agreement, we made representations and warranties to
VISX with respect to the following:
o our organization and qualification to do business;
o the absence of subsidiaries;
o the absence of violations under our certificate of incorporation
and bylaws;
o our capitalization;
o our power and authority to enter into the merger agreement and
to consummate the transactions contemplated by the merger
agreement;
o the absence of conflicts between our certificate of
incorporation, bylaws, laws and agreements and the transactions
contemplated by the merger agreement;
o required consents and approvals;
o our compliance with applicable laws;
o our SEC filings;
o the preparation of our financial statements;
o the absence of undisclosed material liabilities required to be
disclosed under generally accepted accounting principles;
o the absence of certain changes in our business since March 31,
2001;
o the absence of litigation;
o certain matters relating to our employee benefit plans;
o certain labor matters;
o the accuracy of information supplied by us for inclusion in this
proxy statement;
o the absence of any restrictions on our business activities;
o our title to property;
o our compliance with tax laws;
o our compliance with environmental laws;
o the absence of brokers' or finders' fees in connection with the
merger;
o the right to use, and absence of infringement of, our
intellectual property;
o the nature of our agreements, contracts and commitments;
o our insurance policies;
o the approval of our board of directors of the merger agreement
and the merger;
o the vote required to approve the merger agreement and the
transactions contemplated by the merger agreement; and
o the inapplicability of state takeover statutes to the merger
agreement and the transactions contemplated by the merger
agreement.
2526
REPRESENTATIONS AND WARRANTIES OF VISX AND ORION ACQUISITION CORP.
Under the merger agreement, VISX and Orion Acquisition Corp. made
representations and warranties to us with respect to the following:
o their organization, qualification to do business and
subsidiaries;
o their power and authority to enter into the merger agreement and
to consummate the transactions contemplated by the merger
agreement;
o the absence of conflicts between their certificate of
incorporation, bylaws, laws and agreements and the transactions
contemplated by the merger agreement;
o required consents and approvals; and
o the ownership of Orion Acquisition Corp. and the nature of its
prior activities.
CERTAIN COVENANTS
We are subject to restrictions on our conduct and operations until the
merger is completed. Pursuant to the merger agreement, we have agreed that,
during the period from the date of the merger agreement until the effective time
of the merger, with limited exceptions, we will operate our business only in the
ordinary course consistent with past practices, and use our commercially
reasonable efforts to maintain our present business organization, retain our
present officers and employees and preserve our relationships with customers,
suppliers, distributors and others having business dealings with us.
We have also agreed, with limited exceptions, that we will not do any of
the following, except as permitted by the merger agreement or if VISX agrees in
writing:
o accelerate or amend the period of exercisability of options, or
reprice options granted under our stock option plan or authorize
cash payments in exchange for any options granted under our
plan;
o grant any severance or termination pay to any officer or
employee or adopt any new severance plan;
o transfer or license any rights to our intellectual property;
o declare or pay any dividends or make any other distributions in
respect of our capital stock;
o split, combine, reclassify or repurchase any shares of our
capital stock;
o issue any shares of our capital stock or any securities
exercisable for or convertible into any shares of our capital
stock;
o amend our certificate of incorporation or bylaws;
o acquire any business or assets other than in the ordinary course
of business;
o enter into any joint ventures, strategic partnerships or
alliances;
o sell or encumber any of our properties or assets which
individually or in the aggregate are material to us, other than
sales of inventory and the grant of end-user licenses in the
ordinary course of business consistent with past practice;
27
o incur any indebtedness other than in connection with the
financing of trade payables in the ordinary course of business
consistent with past practice or in a principal amount not to
exceed $150,000 in the aggregate;
26
o enter into or amend any employee benefit plan or any employment
contract or collective bargaining agreement, pay any special
bonus to any director or employee, or increase the compensation
or fringe benefits of our directors, officers, employees or
consultants, other than increases in the ordinary course of
business for non-officer employees;
o (1) pay or settle any claims, liabilities, obligations or
litigation, except payment or settlement, in the ordinary course
of business consistent with past practice or in accordance with
their terms, of liabilities recognized or disclosed in our most
recent consolidated financial statements included in our SEC
reports or incurred since the date of these financial
statements, or (2) waive the benefits of or agree to modify,
terminate or release any person from or fail to enforce any
confidentiality or similar agreement to which we are a party;
o except in the ordinary course of business, make any individual
or series of related payments in excess of $100,000 per month
(except that the limit is $500,000 for the first month following
the execution of the merger agreement and the $100,000 does not
apply to amounts owed to Dr. Gordon or for legal services
performed through August 17, 2001);
o except in the ordinary course of business consistent with past
practice, materially modify or terminate any material agreement
to which we are a party, or waive or assign any material rights
or claims under any such agreements;
o enter into or amend any agreement relating to the sale, license
or marketing of our products by third parties;
o revalue any of our assets or change our methods of accounting,
except as required or permitted by generally accepted accounting
principles;
o except in the ordinary course of business, incur or enter into
any agreement, contract or commitment requiring us to make
individual payments in excess of $100,000;
o make any tax election that, individually or in the aggregate, is
reasonably likely to adversely affect in any material respect
our tax liability or tax attributes or settle or compromise any
material income tax liability, except that we may sell state tax
losses as may be permitted by applicable taxing authorities; or
o amend or terminate any or all of the agreements contemplated by
the merger agreement.
ADDITIONAL AGREEMENTS
INITIAL PAYMENT. Pursuant to the merger agreement, and in order to
induce us to enter the merger agreement, VISX paid us $500,000.$500,000 upon execution of
the merger agreement on August 17, 2001. We used these proceeds to pay current
liabilities owed to our vendors and back salary owed to our employees.
ISSUANCE OF WARRANT. Pursuant to the merger agreement and in order to
induce VISX to enter the merger agreement, on August 17, 2001, we issued a
three-year warrant to VISX to purchase a total of 1,320,000 shares of our common
stock at an exercise price of $0.75 per share. On August 17, 2001, the closing
sale price of our common stock, as reported on the OTC Bulletin Board, was $1.05
per share.
NO SOLICITATION BY US OF ANY TAKEOVER PROPOSAL. We have agreed that,
except as described below, until the effective time of the merger or the
termination of the merger agreement pursuant to its terms, neither we nor any of
our representatives will:
28
o solicit or encourage the making of any takeover proposal (as
defined below);
o participate in any discussions, furnish any information with
respect to any takeover proposal or take any action to
facilitate the making of any takeover proposal;
o approve or recommend any takeover proposal; or
27
o enter into any letter of intent or any agreement relating to any
takeover proposal.
The foregoing provisions will not prevent us from:
o furnishing information to, or participating in discussions with,
a third party who makes an unsolicited bona fide takeover
proposal, so long as our board of directors determines in good
faith that the proposal is a superior proposal (as defined
below); or
o complying with Rule 14e-2 and with Item 1012(a) of Regulation
M-A under the Securities Exchange Act of 1934 (which require a
company to disclose to its stockholders its position in response
to a tender offer by a third party), so long as our board of
directors concludes, in good faith, that the failure to disclose
would constitute a violation of applicable law or regulation.
In addition, except as set forth below, we have agreed that our board of
directors will not take any of the following actions that constitute an "adverse
recommendation change" under the merger agreement:
o recommend, adopt or approve, or publicly propose to recommend,
adopt or approve, any takeover proposal or superior proposal; or
o approve or recommend, or propose to approve or recommend, or
allow us to enter into any letter of intent, merger agreement or
other similar agreement that constitutes a takeover proposal.
Our board of directors, however, may make an adverse recommendation
change, but only if:
o our board of directors determines in good faith that it is
required to do so by its fiduciary duties to our stockholders
under applicable law; and
o we send to VISX a written notice advising it that our board
intends to make an adverse recommendation change, the notice
specifies the terms and conditions of the applicable superior
proposal, and we delay making any adverse recommendation change
until five business days after VISX has received the notice.
If we do send a notice to VISX, VISX will then have the opportunity to
present revised terms to our board of directors, including any proposed
amendments or modifications to the merger agreement, which our board of
directors must then consider in good faith.
In addition, under the merger agreement, we have agreed that, in
determining whether to make an adverse recommendation change in response to a
superior proposal, our board of directors will take into account any revised
terms and proposed changes to the merger agreement proposed by VISX in response
to our notice. Moreover, before our board of directors makes any adverse
recommendation change, we have agreed that our board will consider whether
VISX's revised terms are reasonably equivalent or superior (based on the
definition of superior proposal set forth below) to the terms of the superior
proposal from a financial point of view to our stockholders. If our board of
directors determines that the terms of VISX's revised proposal are reasonably
equivalent or superior to the superior proposal, our board will duly adopt
resolutions approving the terms of VISX's revised proposal and recommending that
29
our stockholders approve and adopt the terms of VISX's revised proposal and any
definitive agreement proposed in connection with it.
If our board of directors elects to make an adverse recommendation
change after receiving a superior proposal, and complies with the provisions of
the merger agreement allowing it to make an adverse recommendation change, and
after the board has determined that the terms of VISX's revised proposal are not
reasonably equivalent or superior to the superior proposal, we must notify VISX
of our
28
termination of the merger agreement pursuant to the provision of the
merger agreement allowing our board of directors to make an adverse
recommendation change.
A "takeover proposal" means any offer or proposal with respect to any
transaction or series of related transactions involving:
o any acquisition or purchase from us by a person or group of more
than a 15% interest in our total outstanding securities or any
tender offer or exchange offer that would result in any person
or group beneficially owning 15% or more of our total
outstanding voting securities or any merger, consolidation,
business combination or similar transaction involving us
pursuant to which our stockholders immediately before the
transaction hold less than 85% of the equity interests in the
surviving or resulting entity of such transaction;
o any sale, lease (other than in the ordinary course of business),
exchange, transfer, license (other than in the ordinary course
of business), acquisition or disposition of more than 15% of our
assets; or
o any liquidation, dissolution, recapitalization or other
significant reorganization of us.
A "superior proposal" means any bona fide, written takeover proposal
from a third party that our board of directors has determined in good faith:
o to be superior to the merger from a financial point of view to
our stockholders (taking into account all of the terms and
conditions of the proposal and the merger agreement including
any changes to the financial terms of the merger agreement
proposed by VISX in response to the third party's offer);
o that financing for the proposal, to the extent any is required,
is committed or is reasonably capable of being obtained (in the
good faith judgment of our board of directors); and
o is reasonably capable of being completed.
VISX STANDSTILL. VISX has agreed that, until August 17, 2002, neither it
nor any of its affiliates will purchase, sell, hedge or otherwise transfer or
dispose of any of our shares or securities, other than in accordance with the
terms of the merger agreement or any of the transactions contemplated by the
merger agreement or with the prior consent of our board of directors. This
prohibition will not prevent VISX from exercising the warrant it received under
the merger agreement or any of the other warrants issued to VISX in connection
with the transactions contemplated by the merger agreement. In addition, the
standstill provision will not prevent VISX from converting its 10,400 shares of
our series B convertible preferred stock into our common stock in accordance
with the terms of the certificate of designations for the series B convertible
preferred stock. This standstill provision will not apply, however, if:
o VISX terminates the merger agreement because our board of
directors withdraws or changes its recommendation of the
approval of the merger agreement;
o VISX terminates the merger agreement because we fail to comply
with the provisions in the merger agreement prohibiting us from
soliciting takeover proposals from third parties;
30
o VISX terminates the merger agreement after a takeover proposal
is announced or becomes publicly known and, within 10 business
days thereafter, our board of directors fails to recommend
against acceptance of the proposal, fails to reconfirm its
approval and recommendation of the merger agreement, or resolves
to take any of these actions; or
o we terminate the merger agreement pursuant to the provision
allowing us to do so if our board of directors withdraws its
recommendation of the merger agreement in response to a
29
superior
proposal after determining in good faith that the failure to
withdraw the recommendation would violate our board's fiduciary
duty to our stockholders.
BENEFIT PLAN MATTERS. We have agreed to terminate our 401(k) plan
immediately prior to the closing of the merger, unless VISX agrees to sponsor
and maintain the plan.
DIRECTORS' AND OFFICERS' INSURANCE; INDEMNIFICATION. VISX has agreed to
pay us approximately $244,800 in respect of premiums for a six-year run-out of
our $5 million directors' and officers' liability insurance policy.
VISX has agreed, after the effective time of the merger, not to take any
action that would alter any exculpatory or indemnification provisions currently
existing in our certificate of incorporation, bylaws or indemnification and
employment agreements for the benefit of any individual who served as our
director or officer at any time before the effective time of the merger (except
as may be required by law), and for six years after the time the merger becomes
effective, to cause us, as the surviving corporation in the merger, to honor and
fulfill such provisions (except as may be required by law).
CONDITIONS TO THE COMPLETION OF THE MERGER
Our obligations to complete the merger are subject to the satisfaction
or waiver of the following conditions:
o the absence of any legal prohibition on the completion of the
merger;
o the approval of the merger agreement by our stockholders;
o the material accuracy, as of the closing date of the merger, of
the representations and warranties made by VISX and Orion
Acquisition Corp. in the merger agreement;
o the material performance by VISX and Orion Acquisition Corp. of
the agreements and covenants required to be performed by them at
or prior to the closing of the merger;
o the receipt by us of secretary certificates certifying as to the
valid adoption of resolutions of the board of directors of VISX
and Orion Acquisition Corp. approving the merger agreement and
the applicable related agreements and the consummation of the
transactions contemplated by the merger agreement; and
o the receipt by us of certificates of good standing of VISX and
Orion Acquisition Corp. from the Secretary of State of the State
of Delaware.
The obligations of VISX and Orion Acquisition Corp. to complete the
merger are subject to the satisfaction or waiver of the following conditions:
o the absence of any legal prohibition on the completion of the
merger;
o the approval of the merger agreement by our stockholders;
31
o the material accuracy, as of the closing date of the merger, of
the representations and warranties made by us in the merger
agreement;
o the material performance by us of the agreements and covenants
required to be performed by us at or prior to the closing of the
merger;
o the continuation of certain of our agreements;
o the receipt by us of all required approvals, consents and
waivers;
30
o the resignation of each of our directors;
o the absence of any event or condition that has had or is
reasonably likely to have a material adverse effect on us since
the date of the merger agreement;
o the termination of our 401(k) plan, unless VISX agrees to
maintain and sponsor the plan;
o the cancellation of all of our outstanding stock options and
warrants;
o the receipt by VISX of a secretary's certificate from us,
certifying as to the terms and effectiveness of our certificate
of incorporation and bylaws and the valid adoption of
resolutions of our board of directors and stockholders approving
the merger agreement and the transactions contemplated by the
merger agreement;
o the receipt by VISX of certificates of good standing of Medjet
from the Secretary of State of the State of Delaware, the
Secretary of State of the State of New Jersey and the Franchise
Tax Board of the State of New Jersey; and
o the absence of all material liens on our property.
NotwithstandingAs of the date of this proxy statement, we believe that we will satisfy
all of the foregoing conditions and that no further third party approvals are
required. However, notwithstanding any of the foregoing conditions, VISX may
decide, in its sole discretion, not to proceed with the merger, even if we
satisfy all of the conditions to closing.
We do not intend to resolicit the vote of our stockholders in the event
that any of the foregoing conditions are waived after the vote on the merger
agreement at the annual meeting.
TERMINATION OF THE MERGER AGREEMENT
RIGHT TO TERMINATE. We and VISX may agree by mutual written consent to
terminate the merger agreement at any time prior to the effective time of the
merger, whether before or after we have obtained the approval of our
stockholders of the merger and the merger agreement. The merger may also be
terminated by us or VISX if:
o the merger has not been completed by August 17, 2002, except
that neither party may terminate the merger agreement under this
provision if the failure to complete the merger by that date was
due to any action or failure to act on the part of the party
seeking to terminate the merger agreement;
o a governmental authority takes a final action that prohibits the
merger from being completed; or
o our stockholders do not approve the merger agreement.
We may terminate the merger agreement if:
32
o our board of directors withdraws its recommendation of the
merger agreement in response to a superior proposal after
determining in good faith that the failure to withdraw the
recommendation would violate our board's fiduciary duty to our
stockholders and after complying with procedures set forth in
the merger agreement; or
o either VISX or Orion Acquisition Corp. breaches any of its
representations, warranties, covenants or agreements contained
in the merger agreement, or if any of their representations or
warranties become inaccurate, to the extent that the breach or
inaccuracy would result in our suffering a material adverse
effect, except that if VISX is capable of curing the breach or
inaccuracy, we may not terminate the merger agreement if VISX
cures the breach or inaccuracy within 30 days.
31
VISX may terminate the merger agreement if:
o VISX decides not to complete the merger for any or no reason;
o our board of directors withdraws or changes its recommendation
of the approval of the merger agreement whether or not the board
is permitted to do so by the merger agreement;
o we fail to comply with the provisions in the merger agreement
prohibiting us from soliciting takeover proposals from third
parties;
o a takeover proposal is announced or becomes publicly known and,
within 10 business days thereafter, our board of directors fails
to recommend against acceptance of the proposal, fails to
reconfirm its approval and recommendation of the merger
agreement, or resolves to take any of these actions; or
o if we breach any of our representations, warranties, covenants
or agreements contained in the merger agreement, or if any of
our representations or warranties becomes inaccurate, to the
extent that the breach or inaccuracy would result in VISX
suffering a material adverse effect, except that if we are
capable of curing the breach or inaccuracy, VISX may not
terminate the merger agreement if we cure the breach or
inaccuracy within 30 days.
Although our board of directors may withdraw its recommendation of the
merger agreement in response to a superior proposal if our board determines in
good faith that the failure to withdraw the recommendation would violate our
board's fiduciary duty to our stockholders, we are still obligated to call, give
notice of, convene and hold the annual meeting. Through its ownership of our
series B convertible preferred stock and the written agreement of Dr. Gordon to
vote his shares in favor of the merger agreement, VISX will control
approximately 54% of the voting power of our capital stock at the annual
meeting. As a result, VISX will effectively control the outcome of the vote on
the approval and adoption of the merger agreement, even if our board of
directors determines in good faith that a superior proposal from a third party
exists.
If the merger agreement is validly terminated, the agreement will become
void without any liability on the part of either VISX or us. However, the
provisions of the merger agreement relating to termination fees, the initial
$500,000 payment by VISX to us, the warrants issued to VISX by us, the
confidentiality agreement entered into between us and VISX and fees and expenses
will continue in full force and effect notwithstanding termination of the merger
agreement.
TERMINATION FEES PAYABLE BY US. We have agreed to pay VISX a termination
fee of $500,000 if:
o any person makes a takeover proposal to us or to our
stockholders, or publicly announces a takeover proposal
concerning us, the takeover proposal is not withdrawn, the
merger
33
agreement is terminated for our failure to obtain stockholder
approval, and within one year after the merger agreement is
terminated, any acquisition transaction is completed or we enter
into any acquisition agreement with a third party;
o VISX terminates the merger agreement because our board of
directors withdraws or changes its recommendation of the
approval of the merger agreement;
o VISX terminates the merger agreement because we fail to comply
with the provisions in the merger agreement prohibiting us from
soliciting takeover proposals from third parties;
o VISX terminates the merger agreement after a takeover proposal
is announced or becomes publicly known and, within 10 business
days thereafter, our board of directors fails to recommend
against acceptance of the proposal, fails to reconfirm its
approval and recommendation of the merger agreement, or resolves
to take any of these actions; or
32
o we terminate the merger agreement pursuant to the provision
allowing our board of directors to withdraw its recommendation
of the merger agreement in response to a superior proposal after
determining in good faith that the failure to withdraw the
recommendation would violate our board's fiduciary duty to our
stockholders.
Pursuant to a voting and stock option agreement, Dr. Gordon granted to
VISX an option to purchase all shares of our common stock owned by Dr. Gordon at
a purchase price of $2.00 per share and all options to purchase shares of our
common stock held by Dr. Gordon at a purchase price equal to the difference
between $2.00 and the exercise price per share (if less than $2.00) of each
option. VISX may exercise this option if:
o the merger agreement is terminated pursuant to any of the
provisions listed in the five bullet points on pages 32-33, any
of which will trigger our obligation to pay VISX a termination
fee; or
o prior to the termination of the merger agreement, VISX makes, or
indicates in writing its willingness to make, sufficient funds
available to complete the merger, and attempts to complete the
merger pursuant to the merger agreement and Delaware law, but is
unable to do so for any reason.
This option will terminate upon the earliest of:
o the effective time of the merger;
o the termination of the merger agreement for reasons other than
those described in the five bullet points above on pages 32-33,
any of which will trigger our obligation to pay VISX a
termination fee; or
o 20 days following the termination of the merger agreement
pursuant to any of the provisions listed in the five bullet
points above on pages 32-33, any of which will trigger our
obligation to pay VISX a termination fee.
Notwithstanding any of the foregoing termination provisions, if the
option cannot be exercised because of any legal prohibition, it will remain
exercisable until the earlier of (1) the date on which the prohibition becomes
final, and (2) 5:00 p.m. Pacific time, on the tenth business day after the
prohibition has been removed.
34
TERMINATION FEES PAYABLE BY VISX. VISX has agreed to pay us a
termination fee if:
o VISX terminates the merger agreement pursuant to the provision
allowing it to do so for any or no reason;
o VISX terminates the merger agreement pursuant to the provision
allowing it to do so if the merger has not been completed by
August 17, 2002 and the failure to complete the merger by that
date was not due to any action or failure to act on the part of
VISX; or
o we terminate the merger agreement pursuant to the provision
allowing us to do so if the merger has not been completed by
August 17, 2002 and the failure to complete the merger by that
date was not due to any action or failure to act on our part,
except that VISX has no obligation to pay us a termination fee
under this provision if VISX has given us written notice of
termination as a result of our breach of any representation,
warranty, covenant or
33
agreement, prior to our termination of the
merger agreement pursuant to this provision, and any applicable
cure period has not yet expired.
The termination fee payable by VISX will be:
o $200,000, if the termination occurs any time before May 17,
2002;
o $300,000, if the termination occurs any time after May 17, 2002
and before June 17, 2002;
o $400,000, if the termination occurs any time after June 17, 2002
and before July 17, 2002; and
o $500,000, if the termination occurs after July 17, 2002.
OTHER EXPENSES
All expenses incurred by us and VISX in connection with the merger
agreement and the transactions contemplated by the merger agreement will be paid
by the party incurring the expenses, whether or not the merger is completed,
except that VISX has agreed to pay all fees and expenses (including reasonable
attorneys' and accountants' fees) incurred in relation to the printing and
filing of this proxy statement.
AMENDMENTS
Subject to compliance with applicable law, the merger agreement may be
amended in writing by the parties at any time.
RESEARCH, DEVELOPMENT AND EXPERIMENTAL COST SHARING AGREEMENT
Concurrently with the execution of the merger agreement, we also entered
into a one-year research, development and experimental cost sharing agreement
under which VISX has agreed to provide funding to us to pursue waterjet related
technologies and products.products, including our waterjet microkeratome. Under the terms
of this agreement, VISX has agreed to pay us a minimum monthly payment of no
less than $150,000 for the first six months of the agreement, and a minimum
monthly payment of no less than $100,000 for the second six months.
Notwithstanding the foregoing, VISX has agreed that it may, in its sole
discretion, provide additional funding to us. In return for the funding from
VISX, we have agreed to continue our research and development activities
regarding our waterjet technology at the direction of VISX and to endeavor to
design and develop waterjet related products to VISX's specifications. VISX has
committed to provide us with the minimum monthly payments for the term of the
agreement
35
regardless of whether the merger is completed. Through February 28, 2002, we
have received approximately $1,425,000 in funding from VISX under this
agreement.
SHARE TRANSFER AGREEMENT
Concurrently with the execution of the merger agreement, VISX entered
into a share transfer agreement with the original holders of our series B
convertible preferred stock. Under the terms of this agreement, VISX acquired
all 10,400 outstanding shares of our series B convertible preferred stock, each
of which is currently convertible into one hundred shares of our common stock
(or an aggregate of 1,040,000 shares of common stock), and warrants to purchase
a total of 1,365,000 shares of our common stock, at an exercise price of $3.50
per share. The total purchase price for the series B convertible preferred stock
and the warrants was $1,300,001. If the proposed merger is not completed, VISX,
through its ownership of our series B convertible preferred stock, would
continue to own approximately 21% of the voting power of our capital stock. In
addition, through its ownership of such stock and warrants acquired pursuant to
the share transfer agreement as well as the warrants to purchase 1,320,000
shares of our common stock acquired pursuant to the merger agreement, VISX will
continue to beneficially own approximately 49% of our common stock.
OMNIBUS WAIVER AND AMENDMENT AGREEMENT
We also entered into an omnibus waiver and amendment agreement with
VISX, under which VISX agreed to waive and amend certain rights and benefits of
the shares of our series B convertible preferred stock and warrants it purchased
pursuant to the share transfer agreement. The omnibus waiver and amendment
agreement will take effect only if the merger agreement is terminated pursuant
to any of the termination provisions contained in the merger agreement, other
than if VISX terminates the merger
34
agreement pursuant to any of the termination
events set forth in the five bullet points on pages 32-33, any of which will
trigger our obligation to pay VISX a termination fee.
Pursuant to the terms of the omnibus waiver and amendment agreement,
VISX has agreed to waive:
o at any time, the provision of the certificate of designations of
our series B convertible preferred stock that prohibits us from
issuing any class or series of equity securities which (1) are
convertible into our common stock at a rate related to the
market price of our common stock, or (2) in any transaction or
series of transactions over a 12 month period, constitute 15% or
more of our outstanding common stock (assuming conversion or
exercise in full of any convertible securities included in the
securities), to the extent that such provision would hinder us
from raising equity financing on terms reasonably acceptable to
us;
o for a period of one year following the commencement date of the
omnibus waiver and amendment agreement, the provision governing
demand registration rights under a registration rights
agreement, dated as of December 3, 1999, by and among us, Adam
Smith & Co., Inc. and certain stockholders, as amended (as
described below); and
o the provision regarding the increase in the number of shares of
our common stock that are purchasable by VISX due to the
application of the "anti-dilution" rights under warrants held by
VISX to purchase a total of 1,365,000 shares of our common
stock.
FIRST AMENDMENT TO THE REGISTRATION RIGHTS AGREEMENT
Under the terms of the first amendment to the registration rights
agreement, VISX agreed to be bound by the terms and conditions of a registration
rights agreement, dated as of December 3, 1999, by
36
and among us and the original holders of the securities VISX acquired pursuant
to the share transfer agreement. In addition, we and VISX agreed that VISX may,
at any time, transfer any of the registrable securities it owns to any of its
affiliates, and that on completion of any transfer, the registration rights
agreement will be binding on such transferee.
SECOND AMENDMENT TO THE REGISTRATION RIGHTS AGREEMENT
Pursuant to the second amendment to the registration rights agreement,
VISX agreed to waive any demand registration rights for a period beginning on
August 17, 2001 and ending one year after the termination of the merger
agreement, if the merger agreement is terminated. In addition, we agreed to
increase our board of directors from five members to six, and to fill any
vacancy on our board of directors by a nominee selected by VISX. Until the
merger agreement is terminated, if at all, we agreed to nominate and recommend
for stockholder approval, at each stockholder meeting in which the stockholders
will elect directors, a designee selected by VISX to serve on our board of
directors. We and VISX also agreed that any of the shares issued upon the
exercise or conversion of the three-year warrant that we granted to VISX to
purchase up to 1,320,000 shares of our common stock will be deemed to be
registrable securities under the registration rights agreement and will be
subject to all of the rights set forth in the registration rights agreement, as
amended.
VOTING AND STOCK OPTION AGREEMENT
In order to induce VISX to enter into the merger agreement, VISX and Dr.
Gordon entered into a voting and stock option agreement, dated as of August 17,
2001, under which Dr. Gordon has agreed:
35
o to appear at all of our stockholder meetings or otherwise cause
his shares of our common stock to be counted for purposes of
establishing a quorum;
o to vote, or cause his shares of our common stock to be voted, in
favor of the approval and adoption of the merger agreement; and
o to vote, or cause his shares of our common stock to be voted
against any takeover proposal or any amendment to our
certificate of incorporation or bylaws or any other proposal,
action or transaction that could reasonably be expected to
materially impede the completion of the merger or any of the
transactions contemplated by the merger agreement, or any change
to the voting rights of our common stock, presented to our
stockholders.
Dr. Gordon also agreed to grant to VISX an irrevocable proxy to vote his
shares in the foregoing manner.
Dr. Gordon has also granted to VISX an option to purchase all shares of
our common stock owned by Dr. Gordon at a purchase price of $2.00 per share and
all options to purchase shares of our common stock held by Dr. Gordon at a
purchase price equal to the difference between $2.00 and the exercise price per
share (if less than $2.00) of each option. VISX may exercise this option if:
o the merger agreement is terminated pursuant to any of the
provisions listed in the five bullet points on pages 32-33, any
of which will trigger our obligation to pay VISX a termination
fee; or
o prior to the termination of the merger agreement, VISX makes or
indicates its willingness to make, sufficient funds available to
complete the merger, and attempts to complete the merger
pursuant to the merger agreement and Delaware law, but is unable
to do so for any reason.
37
This option will terminate upon the earliest of:
o the effective time of the merger;
o the termination of the merger agreement for reasons other than
those described in the five bullet points on pages 32-33, any of
which will trigger our obligation to pay VISX a termination fee;
or
o 20 days following the termination of the merger agreement
pursuant to any of the provisions listed in the five bullet
points on pages 32-33, any of which will trigger our obligation
to pay VISX a termination fee.
Notwithstanding any of the foregoing termination provisions, if the
option cannot be exercised because of any legal prohibition, it will remain
exercisable until the earlier of (1) the date on which the prohibition becomes
final, and (2) 5:00 p.m. Pacific time, on the tenth business day after the
prohibition has been removed.
NON-COMPETITION, NON-SOLICITATION AND NON-HIRE AGREEMENT
As an inducement to VISX to enter into the merger agreement, Dr. Gordon
and VISX have agreed to enter into a non-competition, non-solicitation and
non-hire agreement, to be effective as of the closing date of the merger
agreement. Under the terms of this agreement, Dr. Gordon agreed that, for the
period beginning as of the closing date of the merger and ending on the later of
the second anniversary of 36
the closing date of the merger or eighteen months
following Dr. Gordon's termination of employment with either us or VISX, he will
not:
o engage in, manage or direct persons who engage in or participate
in any business activity related to the design, development,
manufacture, marketing, service, support or sale of any product,
service or application that uses or employs waterjet technology
in the health-care industry anywhere in the world, without
VISX's prior written consent;
o solicit, encourage or induce any of our employees to terminate
his or her employment with us or VISX (or any of its
subsidiaries); or
o hire any of our employees (other than employment with us, VISX
or any of its subsidiaries).
3738
MEDJET
We are a medical device company engaged in the research and development
of microjet technology, primarily for use in ophthalmic surgery. We have
developed a proprietary technology platform for vision-correction surgery of the
cornea. Our technology is based on small-diameter, liquid microjets moving at
supersonic speeds. We currently have seveneight issued U.S. patents (and sixfour
corresponding foreign patents) with additional U.S. and foreign patents pending.
We have been in the development stage and have not sold any products. To
date, our research and development activities have been limited to constructing
and testing experimental versions of microkeratomes for eye surgery and
conducting a limited number of feasibility studies, using enucleated porcine,
rabbit and human cadaver eyes, and live rabbit eyes to prove that a beam of
water can smoothly incise and shape the anterior surface of the cornea and that
the cornea will heal properly after the surgery.
We believe that our microjet technology used for tissue separation or
shaping in ophthalmic surgery produces less trauma and is potentially more
accurate than the blades or lasers currently used to perform these procedures.
We intend to further develop these applications as well as additional product
applications, including applications in the areas of ophthalmology and
dentistry. Although we have conducted only limited experiments to date, the use
of our microjet in the treatment of dental caries may have significant cost and
time saving advantages over traditional treatments.
3839
VISX
VISX develops proprietary technologies and systems for laser vision
correction, and currently owns over 180 U.S. and foreign patents and has more
than 100 patent applications pending. Laser vision correction relies on a
computerized laser to treat nearsightedness, astigmatism and farsightedness with
the goal of eliminating or reducing reliance on eyeglasses and contact lenses.
The VISX STAR Excimer Laser System(TM)SystemTM ablates, or removes, submicron layers of
tissue from the cornea to reshape the eye, thereby improving vision, which
reduces or eliminates the need for corrective eyewear.
The vision correction market in the U.S. represents over 157 million
people who experience some form of nearsightedness, astigmatism or
farsightedness. VISX estimates that in 2000, approximately 1.4 million eyes had
laser vision correction in the U.S. using FDA-approved laser systems. Typically,
the individual receiving laser vision correction pays for the treatment, and so
the industry is not reliant on reimbursement from governmental or private health
care payors. A secondary market for VISX's product is the treatment of corneal
pathologies.
VISX intends to continue developing and refining a substantial
proprietary position in technology for vision correction. VISX's strategy is to
commercialize this intellectual property and provide products and services for
customers around the world.
39VISX is a publicly traded company whose common stock is listed on the
New York Stock Exchange under the symbol "EYE."
VISX intends to fund the proposed merger with a available cash reserves
and general working capital.
40
PRICE RANGE OF OUR COMMON STOCK
Our common stock is currently quoted on the OTC Bulletin Board under the
symbol "MDJT.OB". The following table sets forth the range of high and low bid
quotations for shares of our common stock, as reported by the OTC Bulletin
Board, for the period listed. These quotations reflect interdealer prices,
without retail mark-up, markdown or commission, and may not represent actual
transactions.
HIGH LOW
---- ---
2000
----
First Quarter 2.25 0.75$2.25 $0.75
Second Quarter 1.31 0.75
Third Quarter 0.83 0.64
Fourth Quarter 0.78 0.39
2001
----
First Quarter 1.00 0.44
Second Quarter 1.00 0.20
Third Quarter 1.07 0.51
Fourth Quarter 0.64 0.51
2002
----
First Quarter (through ___,March 25, 2002) 1.45 0.55
On August 17, 2001, the last trading day before the public announcement
of the execution of the merger agreement, the high and low bid quotations for
our common stock, as reported on the OTC Bulletin Board, were $1.01$1.23 and $0.90,$1.01,
respectively, and the closing sale price was $0.95.$1.05. On ,March 25, 2002, the last
trading day before the date of this proxy statement, the
closing price for shares of our common stock, as reported on the OTC Bulletin
Board, was $ . You are urged to obtain current market quotes for our common
stock before making any decision regarding the merger.
40We have never paid dividends on our common stock and do not intend to
pay any such dividends in the foreseeable future.
41
OTHER MATTERS
Our board of directors knows of no other matters to be brought before
the annual meeting. In the event that any other matters should properly come
before the annual meeting, the persons named in the enclosed proxy will have
authority to vote such proxy in their discretion, unless they are directed by
the proxy to do otherwise.
INDEPENDENT AUDITORS
The firm of Rosenberg Rich Baker Berman and Company served as our
independent auditors for the fiscal year ended December 31, 20002001 and have been
selected by our board of directors to audit our financial statements for the
fiscal year ending December 31, 2001.2002. Representatives of Rosenberg Rich Baker
Berman and Company are expected to be present at the annual meeting, will have
an opportunity to make a statement if they desire to do so and will be available
to respond to appropriate questions.
INDEPENDENT AUDITORS' FEES
During 2000,2001, Rosenberg Rich Baker Berman and Company billed us for the
following professional services:
o AUDIT FEES rendered for the audit of our 20002001 financial
statements and quarterly reviews of our financial statements
included in our Form 10-QSB filings with the SEC: $14,495.$21,220.
o FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES:
$0.
o ALL OTHER FEES: $6,170.$5,155.
The finance and audit committee did not considerhas considered whether the provisions of
non-audit services is compatible with maintaining the independence of Rosenberg
Rich Baker Berman and Company.Company and has determined that, in its opinion, they are
compatible.
STOCKHOLDER PROPOSALS FOR 2003
Stockholder proposals submitted for inclusion in our proxy materials
relating to our 2003 annual meeting of stockholders must be received by us no
later than , 2003,November 29, 2002, if the date of the 2003 annual meeting is within
30 days of the first anniversary date of this annual meeting. Stockholder
proposals submitted to be considered at our 2003 annual meeting without
inclusion in next year's proxy materials must be received by us no later than
,February 12, 2003, if the date of the 2003 annual meeting is within 30 days of
the first anniversary date of this annual meeting. If we are not notified of a
stockholder proposal by this time, then proxies held by our management may
provide the discretion to vote against the stockholder proposal, even though the
proposal is not discussed in the proxy statement. If the date of the 2003 annual
meeting is changed by more than 30 days from the date of this annual meeting, we
will notify stockholders of new deadlines for the submission of stockholder
proposals by including a notice in our earliest possible Form 10-QSB.
Stockholder proposals should be mailed to our Corporate Secretary, Medjet Inc.,
1090 King Georges Post Road, Suite 301, Edison, New Jersey 08837.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read and copy any reports, statements or
other information filed by us at the SEC's public reference rooms which are
located at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington D.C.
20549, and at the SEC's regional offices. Copies of such materials are also
available from the
4142
Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates. Please call the SEC at 1-800-732-0330 for further
information on the operation of the public reference room. Our filings with the
SEC are also available to the public from commercial document retrieval services
and at the website maintained by the SEC located at http://www.sec.gov.
We will provide, without charge, a copy of our Annual Report on Form
10-KSB, including financial statements, filed with the SEC for the fiscal year
ended December 31, 20002001 to any beneficial owner of our common stock as of the
record date, upon written request to: Medjet Inc., 1090 King Georges Post Road,
Suite 301, Edison, New Jersey 08837, Attention: Corporate Secretary. You may
also call us at (732) 738-3990. We will furnish a beneficial owner with any
exhibit not contained in the Form 10-KSB upon payment of a reasonable fee.
You should rely only on the information contained in or attached as an
annex to this proxy statement to vote your shares of our common stock at the
annual meeting. We have not authorized anyone to provide you with information
that is different from what is contained in or attached as an annex to this
proxy statement.
This proxy statement is dated ,March 29, 2002. You should not assume that
the information contained in this proxy statement or any attached annex is
accurate as of any date other than such date, and the mailing of this proxy
statement will not create any implication to the contrary.
By Order of the Board of Directors
Cheryl A. Blake
CORPORATE SECRETARY
Edison, New Jersey
,March 29, 2002
4243
AnnexANNEX A
-------
================================================================================
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
BY AND AMONG
VISX, INCORPORATED,
ORION ACQUISITION CORP.
AND
MEDJET INC.
DATED AS OF AUGUST 17, 2001
================================================================================
A-1
Page
Article I THE MERGER...........................................................................................A-5
1.1 The Merger...................................................................................A-5
1.2 Effective Time; Closing......................................................................A-5
1.3 Effects of the Merger........................................................................A-5
1.4 Certificate of Incorporation; Bylaws.........................................................A-5
1.5 Directors and Officers.......................................................................A-6
1.6 Effect on Capital Stock......................................................................A-6
1.7 Dissenting Shares............................................................................A-7
1.8 Surrender of Certificates....................................................................A-7
1.9 No Further Ownership Rights in Company Common Stock..........................................A-8
1.10 Lost, Stolen or Destroyed Certificates.......................................................A-8
1.11 Taking of Necessary Action; Further Action...................................................A-8
Article II REPRESENTATIONS AND WARRANTIES OF COMPANY...........................................................A-8
2.1 Organization and Qualification; Subsidiaries.................................................A-9
2.2 Certificate of Incorporation and Bylaws......................................................A-9
2.3 Capitalization...............................................................................A-9
2.4 Authority Relative to this Agreement........................................................A-11
2.5 No Conflict; Required Filings and Consents..................................................A-11
2.6 Compliance; Permits.........................................................................A-12
2.7 SEC Filings; Financial Statements...........................................................A-12
2.8 No Undisclosed Liabilities..................................................................A-13
2.9 Absence of Certain Changes or Events........................................................A-13
2.10 Absence of Litigation.......................................................................A-13
2.11 Employee Benefit Plans......................................................................A-13
2.12 Labor Matters...............................................................................A-15
2.13 Proxy Statement.............................................................................A-15
2.14 Restrictions on Business Activities.........................................................A-16
2.15 Title to Property...........................................................................A-16
2.16 Taxes.......................................................................................A-16
2.17 Environmental Matters.......................................................................A-18
2.18 Brokers.....................................................................................A-18
2.19 Intellectual Property.......................................................................A-18
2.20 Agreements, Contracts and Commitments.......................................................A-21
2.21 Insurance...................................................................................A-22
2.22 Board Approval..............................................................................A-22
2.23 Vote Required...............................................................................A-22
2.24 State Takeover Statutes.....................................................................A-23
Article III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB...........................................A-23
3.1 Organization and Qualification; Subsidiaries................................................A-23
3.2 Authority Relative to this Agreement........................................................A-23
3.3 No Conflict; Required Filings and Consents..................................................A-23
3.4 Ownership of Merger Sub; No Prior Activities................................................A-24
Article IV CONDUCT PRIOR TO THE EFFECTIVE TIME................................................................A-24
A-2
4.1 Conduct of Business by the Company..........................................................A-24
Article V ADDITIONAL AGREEMENTS...............................................................................A-27
5.1 Initial Payment.............................................................................A-27
5.2 Related Agreements..........................................................................A-27
5.3 Parent Warrant..............................................................................A-27
5.4 Proxy Statement.............................................................................A-27
5.5 Stockholder Meeting.........................................................................A-28
5.6 Confidentiality; Access to Information......................................................A-28
5.7 No Solicitation.............................................................................A-28
5.8 Parent Standstill...........................................................................A-31
5.9 Public Disclosure...........................................................................A-31
5.10 Reasonable Efforts; Notification............................................................A-31
5.11 Third Party Consents........................................................................A-32
5.12 401(k) Plan.................................................................................A-32
5.13 Disclosure Supplements......................................................................A-32
5.14 Insurance; Indemnification..................................................................A-33
Article VI CONDITIONS TO THE MERGER...........................................................................A-33
6.1 Conditions to Obligations of Each Party to Effect the Merger................................A-33
6.2 Additional Conditions to Obligations of the Company.........................................A-33
6.3 Additional Conditions to the Obligations of Parent and Merger Sub...........................A-34
Article VII TERMINATION, AMENDMENT AND WAIVER.................................................................A-35
7.1 Termination.................................................................................A-35
7.2 Notice of Termination.......................................................................A-37
7.3 Effect of Termination.......................................................................A-37
7.4 Fees and Expenses...........................................................................A-39
7.5 Amendment...................................................................................A-39
7.6 Extension; Waiver...........................................................................A-39
Article VIII GENERAL PROVISIONS...............................................................................A-39
8.1 Survival of Representations and Warranties..................................................A-39
8.2 Notices.....................................................................................A-39
8.3 Interpretation; Definitions.................................................................A-40
8.4 Counterparts................................................................................A-41
8.5 Entire Agreement; Third Party Beneficiaries.................................................A-41
8.6 Severability................................................................................A-41
8.7 Other Remedies; Specific Performance........................................................A-41
8.8 Governing Law...............................................................................A-41
8.9 Rules of Construction.......................................................................A-42
8.10 Assignment..................................................................................A-42
TABLE OF CONTENTS
PAGE
Article I THE MERGER........................................................A-6
1.1 The Merger..........................................................A-6
1.2 Effective Time; Closing.............................................A-6
1.3 Effects of the Merger...............................................A-6
1.4 Certificate of Incorporation; Bylaws................................A-6
1.5 Directors and Officers..............................................A-7
1.6 Effect on Capital Stock.............................................A-7
1.7 Dissenting Shares...................................................A-8
1.8 Surrender of Certificates...........................................A-8
1.9 No Further Ownership Rights in Company Common Stock.................A-9
1.10 Lost, Stolen or Destroyed Certificates..............................A-9
1.11 Taking of Necessary Action; Further Action..........................A-9
Article II REPRESENTATIONS AND WARRANTIES OF COMPANY........................A-9
2.1 Organization and Qualification; Subsidiaries........................A-10
2.2 Certificate of Incorporation and Bylaws.............................A-10
2.3 Capitalization......................................................A-10
2.4 Authority Relative to this Agreement................................A-12
2.5 No Conflict; Required Filings and Consents..........................A-12
2.6 Compliance; Permits.................................................A-13
2.7 SEC Filings; Financial Statements...................................A-13
2.8 No Undisclosed Liabilities..........................................A-14
2.9 Absence of Certain Changes or Events................................A-14
2.10 Absence of Litigation...............................................A-14
2.11 Employee Benefit Plans..............................................A-14
2.12 Labor Matters.......................................................A-16
2.13 Proxy Statement.....................................................A-16
2.14 Restrictions on Business Activities.................................A-17
2.15 Title to Property...................................................A-17
2.16 Taxes...............................................................A-17
2.17 Environmental Matters...............................................A-19
2.18 Brokers.............................................................A-19
2.19 Intellectual Property...............................................A-19
2.20 Agreements, Contracts and Commitments...............................A-22
2.21 Insurance...........................................................A-23
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TABLE OF CONTENTS
(CONTINUED)
PAGE
2.22 Board Approval......................................................A-23
2.23 Vote Required.......................................................A-23
2.24 State Takeover Statutes.............................................A-23
Article III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.........A-24
3.1 Organization and Qualification; Subsidiaries........................A-24
3.2 Authority Relative to this Agreement................................A-24
3.3 No Conflict; Required Filings and Consents..........................A-24
3.4 Ownership of Merger Sub; No Prior Activities........................A-25
Article IV CONDUCT PRIOR TO THE EFFECTIVE TIME..............................A-25
4.1 Conduct of Business by the Company..................................A-25
Article V ADDITIONAL AGREEMENTS.............................................A-28
5.1 Initial Payment.....................................................A-28
5.2 Related Agreements..................................................A-28
5.3 Parent Warrant......................................................A-28
5.4 Proxy Statement.....................................................A-28
5.5 Stockholder Meeting.................................................A-29
5.6 Confidentiality; Access to Information..............................A-29
5.7 No Solicitation.....................................................A-29
5.8 Parent Standstill...................................................A-32
5.9 Public Disclosure...................................................A-32
5.10 Reasonable Efforts; Notification....................................A-32
5.11 Third Party Consents................................................A-33
5.12 401(k) Plan.........................................................A-33
5.13 Disclosure Supplements..............................................A-33
5.14 Insurance; Indemnification..........................................A-34
Article VI CONDITIONS TO THE MERGER.........................................A-34
6.1 Conditions to Obligations of Each Party to Effect the Merger........A-34
6.2 Additional Conditions to Obligations of the Company.................A-34
6.3 Additional Conditions to the Obligations of Parent and Merger Sub...A-35
Article VII TERMINATION, AMENDMENT AND WAIVER...............................A-36
7.1 Termination.........................................................A-36
7.2 Notice of Termination...............................................A-38
7.3 Effect of Termination...............................................A-38
7.4 Fees and Expenses...................................................A-40
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TABLE OF CONTENTS
(CONTINUED)
PAGE
7.5 Amendment...........................................................A-40
7.6 Extension; Waiver...................................................A-40
Article VIII GENERAL PROVISIONS.............................................A-40
8.1 Survival of Representations and Warranties..........................A-40
8.2 Notices.............................................................A-40
8.3 Interpretation; Definitions.........................................A-41
8.4 Counterparts........................................................A-42
8.5 Entire Agreement; Third Party Beneficiaries.........................A-42
8.6 Severability........................................................A-42
8.7 Other Remedies; Specific Performance................................A-42
8.8 Governing Law.......................................................A-42
8.9 Rules of Construction...............................................A-43
8.10 Assignment..........................................................A-43
INDEX OF EXHIBITS
Exhibit A Form of Voting Agreement
Exhibit B Form of Non-Competition Agreement
Exhibit C Form of License Agreement
Exhibit D Form of Omnibus Waiver and Amendment Agreement
Exhibit E Form of Parent Warrant
Exhibit F Form of Certificate of Merger
Exhibit G Form of Amended and Restated Certificate of Incorporation
of the Company
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
This AGREEMENT AND PLAN OF MERGER AND REORGANIZATION is made and entered
into as of August 17, 2001, by and among VISX, Incorporated, a Delaware
corporation ("PARENT"), Orion Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of Parent ("MERGER SUB"), and Medjet Inc., a Delaware
corporation (the "COMPANY").
BACKGROUND
----------
A. Upon the terms and subject to the conditions of this Agreement
(as defined in SECTION 1.2 below) and in accordance with the Delaware General
Corporation Law ("DELAWARE LAW"Law"), Parent and the Company intend to enter into a
business combination transaction.
B. The Board of Directors of the Company (i) has determined that the
Merger (as defined in SECTION 1.1) is advisable and in the best interests of the
Company and its stockholders, (ii) has approved and declared advisable this
Agreement, and has approved the Merger and the other transactions contemplated
by this Agreement and (iii) has determined to recommend that the stockholders of
the Company adopt and approve this Agreement and approve the Merger.
C. The Boards of Directors of each of Parent and Merger Sub (i) have
determined that the Merger is advisable and in the best interests of Parent,
Merger Sub and their respective stockholders, and (ii) have approved this
Agreement, the Merger and the other transactions contemplated by this Agreement.
D. Each of the respective Boards of Directors of the Company, Parent
and Merger Sub recognizes that it is a condition of this Agreement, as set forth
in SECTION 7.1(A) below, that Parent may terminate this Agreement at any time,
and for any reason or no reason. In consideration for such termination right,
and as a material inducement to the Company to enter into this Agreement, Parent
shall pay to the Company an amount equal to Five Hundred Thousand Dollars
($500,000.00), as described in SECTION 5.1 below, concurrently with the
execution and delivery of this Agreement.
E. Concurrent with the execution and delivery of this Agreement, as
a material inducement to Parent and Merger Sub to enter into this Agreement, (i)
Eugene I. Gordon (the "PRINCIPAL SHAREHOLDER") is entering into a Voting
Agreement, in substantially the form attached as EXHIBIT A (the "VOTING
AGREEMENT"); (ii) the Principal Shareholder is entering into a Non-Competition
Agreement, in substantially the form attached as EXHIBIT B (the "NON-COMPETITION
AGREEMENT"); (iii) Parent and the Company are entering into a License Agreement,
in substantially the form attached as EXHIBIT C (the "LICENSE AGREEMENT"); and
(iv) Parent and the Company are entering into an Omnibus Waiver and Amendment
Agreement, in substantially the form attached as EXHIBIT D (the "OMNIBUS WAIVER
AND AMENDMENT AGREEMENT"). The Voting Agreement, Non-Competition Agreement,
License Agreement and Omnibus Waiver and Amendment Agreement are collectively
referred to as the "RELATED AGREEMENTS."
F. Concurrent with the execution and delivery of this Agreement,
Parent is purchasing from entities affiliated with Adam Smith & Co. ("ASC"): (i)
10,400 shares of the Company's Series B Convertible Preferred Stock (the "SERIES
B PREFERRED"), which represent all of the Company's outstanding shares of
Preferred Stock, (ii) warrants to purchase a total of 1,040,000 shares of the
Company's Common Stock (the "COMMON STOCK WARRANTS"), and (iii) a warrant to
purchase a total of 325,000 shares of the Company's Common Stock (the "ASC
WARRANT"). At the Effective Time (as defined in SECTION 1.2 below), the 10,400
shares of Series B Preferred, the Common Stock Warrants and the ASC Warrant will
be canceled and extinguished without any conversion or exercise thereof. If this
Agreement is terminated
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pursuant to ARTICLE VII hereof, then certain of Parent's rights as the owner of
the Series B Preferred, the Common Stock Warrants and ASC Warrant will be
subject to certain limitations, as set forth more fully in SECTION 7.3 below.
G. Concurrent with the execution and delivery of this Agreement, as
a material inducement to Parent and Merger Sub to enter into this Agreement, the
Company is issuing and delivering to Parent a three-year warrant, in the form
attached as EXHIBIT E (the "PARENT WARRANT") to purchase 1,320,000 shares of
Company Common Stock at a per share exercise price of seventy-five cents
($0.75), as described more fully in SECTION 5.3 below. At the Effective Time (as
defined in SECTION 1.2 below), the Parent Warrant will be canceled and
extinguished without any conversion or exercise thereof.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
ARTICLE I
THE MERGER
1.1.1.1 THE MERGER. At the Effective Time (as defined in SECTION 1.2) and
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of Delaware Law, Merger Sub shall be merged with and into
the Company (the "MERGER"), the separate corporate existence of Merger Sub shall
cease and the Company shall continue as the surviving corporation. The Company
as the surviving corporation after the Merger is sometimes referred to as the
"SURVIVING CORPORATION."
1.2.1.2 EFFECTIVE TIME; CLOSING. Subject to the provisions of this
Agreement, the parties shall cause the Merger to be consummated by filing a
Certificate of Merger, in the form attached as EXHIBIT F with the Secretary of
State of the State of Delaware in accordance with the relevant provisions of
Delaware Law (the "CERTIFICATE OF MERGER") (the time of such filing (or such
later time, as may be agreed in writing by the Company and Parent and specified
in the Certificate of Merger) being the "EFFECTIVE TIME") as soon as practicable
on the Closing Date (as defined below). Unless the context otherwise requires,
the term "AGREEMENT" refers collectively to this Agreement and Plan of Merger
and Reorganization and the Certificate of Merger. The closing of the Merger (the
"CLOSING") shall take place at either (in Parent's option) the offices of Kelley
Drye & Warren LLP, 101 Park Avenue, New York, New York or Wilson Sonsini
Goodrich & Rosati, Professional Corporation, 245 Park Avenue, New York, New
York, after satisfaction or waiver of all conditions to Closing set forth in
ARTICLE VI, including without limitation satisfaction in Parent's sole
discretion of the closing condition set forth in SECTION 6.3(M); PROVIDED,
HOWEVER, that the Closing shall occur no sooner than five business days after
delivery of the written certificate referred to in such section (the "CLOSING
DATE").
1.3.1.3 EFFECTS OF THE MERGER. At the Effective Time, the effects of the
Merger shall be as provided in this Agreement and the applicable provisions of
Delaware Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the property, rights, privileges, powers and
franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
1.4.1.4 CERTIFICATE OF INCORPORATION; BYLAWS.
(a) At the Effective Time, the Certificate of Incorporation of
the Merger Sub, as in effect immediately prior to the Effective Time, shall be
the Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by law and such Certificate of Incorporation of the
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Surviving Corporation; PROVIDED, HOWEVER, that at the Effective Time the
Certificate of Incorporation of the Surviving Corporation shall be amended and
restated in the form attached as EXHIBIT G.
(b) The Bylaws of Merger Sub, as in effect immediately prior to
the Effective Time, shall be, at the Effective Time, the Bylaws of the Surviving
Corporation until thereafter amended.
1.5.1.5 DIRECTORS AND OFFICERS. The initial directors of the Surviving
Corporation shall be the directors of Merger Sub immediately prior to the
Effective Time, until their respective successors are duly elected or appointed
and qualified. The initial officers of the Surviving Corporation shall be the
officers of Merger Sub immediately prior to the Effective Time, until their
respective successors are duly appointed.
1.6.1.6 EFFECT ON CAPITAL STOCK. Subject to the terms and conditions of
this Agreement, at the Effective Time, by virtue of the Merger and without any
action on the part of Merger Sub, the Company or the holders of any of the
following securities, the following shall occur:
(a) CONVERSION OF COMPANY COMMON STOCK. At the Effective Time,
each outstanding share of common stock of the Company ("COMPANY COMMON STOCK"),
upon the terms and subject to the conditions set forth below and throughout this
Agreement, will be canceled and extinguished and be converted automatically into
the right to receive Two Dollars ($2.00) (the "PER SHARE PURCHASE PRICE"), upon
the terms and subject to conditions set forth in this SECTION 1.6 and throughout
this Agreement. The Per Share Purchase Price shall be appropriately adjusted to
reflect fully the effect of any stock split, reverse stock split, stock
dividend, reorganization, recapitalization or like change with respect to
Company Common Stock occurring after the date hereof and prior to the Effective
Time (a "RECAPITALIZATION").
(b) CANCELLATION OF PARENT-OWNED STOCK AND SECURITIES. Each share
of Company capital stock and all warrants to purchase Company capital stock held
by the Company or owned by Merger Sub, Parent or any direct or indirect
wholly-owned subsidiary of the Company or of Parent immediately prior to the
Effective Time shall be canceled and extinguished without any conversion
thereof.
(c) STOCK OPTIONS AND WARRANTS. At the Effective Time, each
outstanding option to purchase shares of Company Common Stock (each, a "COMPANY
STOCK OPTION") under the Company's 1994 Stock Option Plan (the "COMPANY OPTION
PLAN") or otherwise and each outstanding warrant to purchase shares of Company
Common Stock (each, a "COMPANY WARRANT") not exercised prior to the Effective
Time shall be canceled and extinguished. Parent will pay to each holder of a
Company Stock Option or a Company Warrant the difference between $2.00 and the
exercise price per share (if less than $2.00) of Company Common Stock underlying
such Company Stock Option or Company Warrant multiplied by the total number of
shares of Company Common Stock underlying such Company Stock Option or Company
Warrant (other than any Company Warrant held by Parent). Parent will not pay any
amounts with respect to Company Stock Options or Company Warrants that have an
exercise price of equal to or greater than $2.00.
(d) CAPITAL STOCK OF MERGER SUB. Each share of common stock of
Merger Sub (the "MERGER SUB COMMON STOCK") issued and outstanding immediately
prior to the Effective Time shall be converted into one validly issued, fully
paid and nonassessable share of common stock of the Surviving Corporation. Each
certificate evidencing ownership of shares of Merger Sub Common Stock shall
evidence ownership of such shares of capital stock of the Surviving Corporation.
Accordingly, as a result of the Merger, Parent (as the owner of all outstanding
shares of Merger Sub Common Stock immediately
A-6A-7
prior to the Effective Time) shall be the owner of all of the capital stock of
the Surviving Corporation immediately after the Effective Time.
(e) SHAREHOLDER LOANS. In the event that any holder of Company
Common Stock has outstanding loans owed to the Company as of the Effective Time,
the consideration payable to such holder of Company Common Stock pursuant to
this SECTION 1.6 shall be reduced by an amount equal to the outstanding
principal plus accrued interest of such holder's loans as of the Effective Time.
The reduction in the consideration contemplated in the preceding sentence is
intended to effect a payment mechanism for the satisfaction and not the
forgiveness of any such outstanding loan.
1.7.1.7 DISSENTING SHARES.
(a) Notwithstanding any other provisions of this Agreement to the
contrary, any shares of Company Common Stock held by a holder who has exercised
and perfected appraisal rights for such shares in accordance with Section 262 of
Delaware Law and who has not effectively withdrawn or lost such appraisal rights
("DISSENTING SHARES"), shall not be converted into or represent a right to
receive the consideration for Company Common Stock set forth in SECTION 1.6
hereof, but the holder thereof shall only be entitled to such rights as are
provided by Delaware Law.
(b) Notwithstanding the provisions of SECTION 1.7(A) hereof, if
any holder of Dissenting Shares shall effectively withdraw or lose (through
failure to perfect or otherwise) such holder's appraisal rights under Delaware
Law, then, as of the later of the Effective Time and the occurrence of such
event, such holder's shares shall automatically be converted into and represent
only the right to receive the consideration for Company Common Stock set forth
in SECTION 1.6 hereof, without interest thereon, upon surrender of the
certificate representing such shares.
(c) The Company shall give Parent (i) prompt notice of any written
demand for appraisal received by the Company pursuant to the applicable
provisions of Delaware Law, and (ii) the opportunity to participate in all
negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Parent, make any payment with
respect to any such demands or offer to settle or settle any such demands.
1.8.1.8 SURRENDER OF CERTIFICATES.
(a) EXCHANGE AGENT. Parent shall select a bank or trust company
reasonably acceptable to the Company to act as the exchange agent (the "EXCHANGE
AGENT") in the Merger.
(b) PARENT TO PROVIDE AGGREGATE CONSIDERATION. Promptly after the
Effective Time, Parent shall make available to the Exchange Agent for exchange
in accordance with this ARTICLE I, the Aggregate Consideration payable pursuant
to SECTION 1.6 in exchange for outstanding shares of Company Common Stock.
"AGGREGATE CONSIDERATION" shall mean the sum total of the amounts payable in
exchange for outstanding shares of Company Common Stock pursuant to SECTION 1.6.
(c) EXCHANGE PROCEDURES. As soon as practicable after the
Effective Time, Parent shall cause the Exchange Agent to mail to each holder of
record (as of the Effective Time) of a certificate or certificates (the
"CERTIFICATES"), which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock whose shares were converted into the
right to receive the amounts payable pursuant to SECTION 1.6, (i) a letter of
transmittal in customary form (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 Exchange Agent and shall contain such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the
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amounts payable pursuant to SECTION 1.6. Upon surrender of Certificates for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly completed
and validly executed in accordance with the instructions thereto, the holders of
such Certificates shall be entitled to receive the amounts payable pursuant to
SECTION 1.6, and the Certificates so surrendered shall forthwith be canceled.
Until so surrendered, the outstanding Certificates will be deemed from and after
the Effective Time, for all corporate purposes to evidence only the right to
receive the amounts payable pursuant to SECTION 1.6.
(d) REQUIRED WITHHOLDING. Any of the Exchange Agent, Parent or the
Surviving Corporation, as the case may be, shall be entitled to deduct and
withhold from any consideration payable or otherwise deliverable pursuant to
this Agreement to any holder or former holder of Company Common Stock such
amounts as may be required to be deducted or withheld therefrom under the
Internal Revenue Code of 1986, as amended (the "CODE") or under any provision of
state, local or foreign tax law or under any other applicable legal requirement.
To the extent such amounts are so deducted or withheld, such amounts shall be
treated for all purposes under this Agreement as having been paid to the person
to whom such amounts would otherwise have been paid.
(e) NO LIABILITY. Notwithstanding anything to the contrary in this
SECTION 1.8, neither the Exchange Agent, Parent, the Surviving Corporation nor
any party shall be liable to a holder of shares of Company Common Stock for any
amount properly paid to a public official pursuant to any applicable abandoned
property, escheat or similar law.
1.9.1.9 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. The Aggregate
Consideration shall be deemed to have been paid in full satisfaction of all
rights pertaining to shares of Company Common Stock, and there shall be no
further registration of transfers on the records of the Surviving Corporation of
shares of Company Common Stock that were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be canceled and exchanged as
provided in this ARTICLE I.
1.10 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event that any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
pay the amounts payable pursuant to SECTION 1.6 in exchange for such lost,
stolen or destroyed Certificates, upon the making of an affidavit of that fact
by the holder thereof; PROVIDED, HOWEVER, that Parent may, in its reasonable
discretion and as a condition precedent to the payment of the amounts payable
pursuant to SECTION 1.6, require the owner of such lost, stolen or destroyed
Certificates to deliver a bond in such sum as it may reasonably direct as
indemnity against any claim that may be made against Parent, the Surviving
Corporation or the Exchange Agent with respect to the Certificates alleged to
have been lost, stolen or destroyed.
1.11 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
right, title and possession to all assets, property, rights, privileges, powers
and franchises of the Company and Merger Sub, the current officers and directors
of the Company and Merger Sub will, to the extent reasonable and at the sole
expense of the Surviving Corporation, take all such lawful and necessary action.
Article II
REPRESENTATIONS AND WARRANTIES OF COMPANY
The Company represents and warrants to Parent and Merger Sub as follows,
subject to such exceptions as are specifically disclosed in writing in the
disclosure schedule supplied by the Company to Parent dated as of the date
hereof (the "COMPANY SCHEDULE"). The Company Schedule shall be arranged
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in sections corresponding to the numbered and lettered paragraphs contained in
this ARTICLE II, and the disclosure of any section of the Company Schedule shall
qualify other paragraphs in this ARTICLE II only to the extent that it is
reasonably apparent from a reading of such disclosure that it also qualifies or
applies to such other paragraph.
2.1.2.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
has the requisite corporate power and authority to own, lease and operate its
assets and properties and to carry on its business as it is now being conducted.
The Company is in possession of all franchises, grants, authorizations,
licenses, permits, easements, consents, certificates, approvals and orders
("APPROVALS") necessary to own, lease and operate the properties it purports to
own, operate or lease and to carry on its business as it is now being conducted,
except where the failure to have such Approvals would not, individually or in
the aggregate, be material to the Company. The Company is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its activities makes such qualification or
licensing necessary, except for such failures to be so duly qualified or
licensed and in good standing that would not, either individually or in the
aggregate, have a Material Adverse Effect on the Company.
(b) The Company has no subsidiaries. The Company has not agreed
nor is obligated to make nor be bound by any written, oral or other agreement,
contract, subcontract, lease, binding understanding, instrument, note, option,
warranty, purchase order, license, sublicense, insurance policy, benefit plan,
commitment or undertaking of any nature, as of the date hereof or as may
hereafter be in effect (a "CONTRACT") under which it may become obligated to
make, any future investment in or capital contribution to any other entity. The
Company does not directly or indirectly own any equity or similar interest in or
any interest convertible, exchangeable or exercisable for, any equity or similar
interest in, any corporation, partnership, joint venture or other business,
association or entity.
2.2.2.2 CERTIFICATE OF INCORPORATION AND BYLAWS. The Company has
previously furnished to Parent a complete and correct copy of its certificate of
incorporation and bylaws as amended to date (together, the "COMPANY CHARTER
DOCUMENTS"). Such Company Charter Documents are in full force and effect. The
Company is not in violation of any of the provisions of the Company Charter
Documents.
2.3.2.3 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of:
30,000,000 shares of Company Common Stock, and 1,000,000 shares of Preferred
Stock ("COMPANY PREFERRED STOCK"), which may be designated as Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, and Series B
Convertible Preferred Stock. The Series A Preferred Stock, Series B Preferred
Stock and Series C Preferred Stock consist of an aggregate of not more than
400,000 shares, of which 110,000 are designated as Series A Preferred Stock. In
addition, 16,000 shares of Company Preferred Stock are designated as Series B
Convertible Preferred Stock, each having par value $0.01 per share. At the close
of business on August 14, 2001:
(i) 3,901,431 shares of Company Common Stock were issued and
outstanding, all of which are validly issued, fully paid and nonassessable;
(ii) no shares of Series A Preferred Stock were issued or
outstanding;
(iii) no shares of Series B Preferred Stock were issued or
outstanding;
A-9A-10
(iv) no shares of Series C Preferred Stock were issued or
outstanding;
(v) 10,400 shares of Series B Convertible Preferred Stock
were issued and outstanding, all of which are validly issued, fully paid and
nonassessable;
(vi) 33,789 shares of Company Common Stock were held in
treasury by the Company;
(vii) 513,046 shares of Company Common Stock were reserved
for issuance upon the exercise of outstanding options to purchase Company Common
Stock under the Company Option Plan;
(viii) no shares of Company Common Stock were reserved for
issuance upon the exercise of other outstanding options to purchase Company
Common Stock;
(ix) 133,531 shares of Company Common Stock were available
for future grant under the Company Option Plan;
(x) 1,440,772 shares of Company Common Stock were reserved
for future issuance upon conversion of warrants of the CompanyCompany.
(b) SECTION 2.3(B) of the Company Schedule sets forth the
following information with respect to each Company Stock Option outstanding as
of August 14, 2001: (i) the name of the optionee; (ii) the particular plan
pursuant to which such Company Stock Option was granted; (iii) the number of
shares of Company Common Stock subject to such Company Stock Option; (iv) the
exercise price of such Company Stock Option; (v) the date on which such Company
Stock Option was granted; (vi) the applicable vesting schedule; and (vii) the
date on which such Company Stock Option expires. The Company has made available
to Parent accurate and complete copies of all stock option plans pursuant to
which the Company has granted such Company Stock Options that are currently
outstanding and the form of all stock option agreements evidencing such Company
Stock Options. SECTION 2.3(B) of the Company Schedule also sets forth the
following information with respect to each Company Warrant outstanding as of
August 14, 2001: (i) the name of the warrant holder; (ii) the number of shares
of Company Common Stock subject to such Company Warrant; (iii) the exercise
price of such Company Warrant; (iv) the date on which such Company Warrant was
granted; (v) any applicable performance based provisions of such Company
Warrant; (vi) the date on which such Company Warrant expires. All shares of
Company Common Stock subject to issuance as aforesaid, upon issuance on the
terms and conditions specified in the instrument pursuant to which they are
issuable, would be duly authorized, validly issued, fully paid and
nonassessable. Except as set forth in SECTION 2.3(B) of the Company Schedule,
there are no commitments or agreements of any character to which the Company is
bound obligating the Company to accelerate the vesting of any Company Stock
Option or Company Warrants as a result of the Merger. All outstanding shares of
Company Common Stock and all outstanding Company Stock Options have been issued
and granted in compliance with (i) all applicable securities laws and other
applicable Legal Requirements (as defined below) and (ii) all requirements set
forth in applicable Contracts. For the purposes of this Agreement, "LEGAL
REQUIREMENTS" means any federal, state, local, municipal, foreign or other law,
statute, constitution, principle of common law, resolution, ordinance, code,
edict, decree, rule, regulation, ruling or requirement issued, enacted, adopted,
promulgated, implemented or otherwise put into effect by or under the authority
of any Governmental Entity (as defined below).
(c) Except as set forth in SECTION 2.3(B) of the Company Schedule,
there are no subscriptions, options, warrants, equity securities, partnership
interests or similar ownership interests,
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calls, rights (including preemptive rights), commitments or agreements of any
character to which the Company is a party or by which it is bound obligating the
Company to issue, deliver or sell, or cause to be issued, delivered or sold, or
repurchase, redeem or otherwise acquire, or cause the repurchase, redemption or
acquisition of, any shares of capital stock, partnership interests or similar
ownership interests of the Company or obligating the Company to grant, extend,
accelerate the vesting of or enter into any such subscription, option, warrant,
equity security, call, right, commitment or agreement. As of the date of this
Agreement, there are no registration rights and there is, except for the Voting
Agreement, no voting trust, proxy, rights plan, antitakeover plan or other
agreement or understanding to which the Company is a party or by which it is
bound with respect to any equity security of any class of the Company.
2.4 AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has all
necessary corporate power and authority to execute and deliver this Agreement
and the Related Agreements and to perform its obligations hereunder and
thereunder, subject to obtaining the approval of the stockholders of the Company
of the Merger and this Agreement, to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement by the Company
and the consummation by the Company of the transactions contemplated hereby and
the execution and delivery of the Related Agreements by the Company and the
consummation by the Company of the transactions contemplated thereby have been
duly and validly authorized by all necessary corporate action on the part of the
Company, and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement and the Related Agreements, or to
consummate the transactions so contemplated (other than, with respect to the
Merger, the approval and adoption of the Merger and this Agreement by a majority
of the votes entitled to be cast by the holders of the Company Common Stock and
Series B Convertible Preferred Stock (voting on an as-converted to Company
Common Stock basis), voting together as a single class, in accordance with
Delaware Law and the Company Charter Documents). This Agreement and the Related
Agreements have been duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery by Parent and Merger Sub,
and subject to obtaining the approval of the Company's stockholders of the
Merger and this Agreement, constitute legal and binding obligations of the
Company, enforceable against the Company in accordance with their terms except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
2.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement and the Related
Agreements by the Company do not, and the performance of this Agreement and the
Related Agreements by the Company shall not, (i) conflict with or violate the
Company Charter Documents, (ii) subject to obtaining the approval of the
Company's stockholders of the Merger and this Agreement and compliance with the
requirements set forth in SECTION 2.5(B) below, conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to the Company by
which its properties is bound or affected, or (iii) result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or impair the Company's rights or alter the
rights or obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of the
Company pursuant to, any material note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company is a party or by which the Company or its respective
properties are bound or affected, except to the extent such conflict, violation,
breach, default, impairment or other effect could not in the case of clauses
(ii) or (iii), individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect on the Company.
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(b) The execution and delivery of this Agreement and the Related
Agreements by the Company do not, and the performance of this Agreement and the
Related Agreements by the Company shall not, require any consent, approval,
authorization or permit of, or filing with or notification to, any court,
administrative agency, commission, governmental or regulatory authority,
domestic or foreign (a "GOVERNMENTAL ENTITY"), except (A) for applicable
requirements, if any, of the Securities Act of 1933, as amended (the "SECURITIES
ACT"), the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"),
state securities laws ("BLUE SKY LAWS"), the pre-merger notification
requirements (the "HSR APPROVAL") of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR ACT"), the rules and regulations
of Nasdaq, and the filing and recordation of the Certificate of Merger as
required by Delaware Law and (B) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not have a material adverse effect on the Company's ability to consummate
the Merger or perform its obligations under this Agreement or the Related
Agreements.
2.6 COMPLIANCE; PERMITS.
(a) The Company is not in default or violation of, (i) any law,
rule, regulation, order, judgment or decree (each, a "LAW") applicable to the
Company or by which its properties is bound or affected, or (ii) any material
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company is a party or
by which the Company or its properties is bound or affected, except for any
defaults or violations that (individually or in the aggregate) would not have a
Material Adverse Effect on the Company. To the Company's knowledge no
investigation or review by any governmental or regulatory body or authority is
pending or threatened against the Company, nor has any governmental or
regulatory body or authority indicated an intention to conduct the same, other
than, in each such case, those the outcome of which could not, individually or
in the aggregate, reasonably be expected to have the effect of prohibiting or
materially impairing any business practice of the Company, any acquisition of
material property by the Company or the conduct of business by the Company in
any material way.
(b) The Company holds all permits, licenses, variances,
exemptions, orders and approvals from governmental authorities ("PERMITS") that
are material to operation of the business of the Company as currently conducted
(collectively, the "COMPANY PERMITS"); PROVIDED, HOWEVER, that Permits that may
be required for the future operation of the business have not been granted by
the Food and Drug Administration or any comparable foreign governmental entity.
The Company is in compliance in all material respects with the terms of the
Company Permits.
2.7 SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has made available to Parent a correct and
complete copy of each report, schedule, registration statement and definitive
proxy statement filed by the Company with the Securities and Exchange Commission
("SEC") after January 1, 1999 (the "COMPANY SEC REPORTS"), which are all the
forms, reports and documents required to be filed by the Company with the SEC
after January 1, 1999. The Company SEC Reports (A) were prepared in accordance
with the requirements of the Securities Act or the Exchange Act, as the case may
be, and filed on a timely basis and (B) did not at the time they were filed (and
if amended or superseded by a filing prior to the date of this Agreement then on
the date of such filing) contain any untrue statement of a material fact or omit
to state a 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.
(b) Each set of consolidated financial statements (including, in
each case, any related notes thereto) contained in the Company SEC Reports was
prepared in accordance with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods involved
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(except as may be indicated in the notes thereto or, in the case of unaudited
statements, for the absence of footnotes) and each fairly presents in all
material respects the financial position of the Company at the respective dates
thereof and the results of its operations and cash flows for the periods
indicated, except that the unaudited interim financial statements were or are
subject to normal adjustments and lack footnotes.
2.8 NO UNDISCLOSED LIABILITIES. The Company has no liabilities
(absolute, accrued, contingent or otherwise) which are, individually or in the
aggregate, material to the business, results of operations or financial
condition of the Company taken as a whole, except (i) liabilities provided for
in the Company's balance sheet as of December 31, 2000 (or described in the
footnotes thereto), (ii) liabilities incurred since December 31, 2000 in the
ordinary course of business, (iii) contractual and other liabilities incurred in
the ordinary course of business which are not required by GAAP to be reflected
on a balance sheet, and (iv) liabilities permitted under this Agreement and the
transactions related to the Merger, and liabilities incurred pursuant to or in
connection with any other agreement between the parties.
2.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since March 31, 2001, there
has not been: (i) any declaration, setting aside or payment of any dividend on,
or other distribution (whether in cash, stock or property) in respect of, any of
the Company's capital stock, (ii) any purchase, redemption or other acquisition
by the Company of (a) the Company's capital stock, (b) any other securities of
the Company or (c) any options, warrants, calls or rights to acquire any such
shares or other securities, except for repurchases from employees following
their termination pursuant to the terms of their pre-existing stock option or
purchase agreements, (iii) any split, combination or reclassification of any of
the Company's capital stock, (iv) any granting by the Company of any increase in
compensation or fringe benefits, except for normal increases of cash
compensation to non-officer employees in the ordinary course of business
consistent with past practice, or any payment by the Company of any bonus,
except for bonuses made to non-officer employees in the ordinary course of
business consistent with past practice, or any granting by the Company of any
increase in severance or termination pay or any entry by the Company into any
currently effective employment, severance, termination or indemnification
agreement or any agreement the benefits of which are contingent or the terms of
which are materially altered upon the occurrence of a transaction involving the
Company of the nature contemplated hereby, (v) except for any agreements between
Parent and the Company, entry by the Company into any licensing or other
agreement with regard to the acquisition or disposition of any Company
Intellectual Property (as defined in SECTION 2.19) other than any amendment or
consent with respect to any licensing agreement filed or required to be filed by
the Company with the SEC, (vi) any material change by the Company in its
accounting methods, principles or practices, except as required by concurrent
changes in GAAP, or (vii) any revaluation by the Company of any of its assets,
including, without limitation, writing down the value of capitalized inventory
or writing off notes or accounts receivable or any sale of assets of the Company
other than in the ordinary course of business.
2.10 ABSENCE OF LITIGATION. There are no claims, actions, suits or
proceedings ("CLAIMS") pending or, to the knowledge of the Company, threatened
against the Company or any properties or rights of the Company, before any
court, arbitrator or administrative, governmental or regulatory authority or
body, domestic or foreign, except for Claims that, individually or in the
aggregate, would not have a Material Adverse Effect on the Company.
2.11 EMPLOYEE BENEFIT PLANS.
(a) All employee compensation, incentive, fringe or benefit plans,
programs, policies, commitments or other arrangements (whether or not set forth
in a written document and including, without limitation, all "employee benefit
plans" within the meaning of Section 3(3) of the
A-13A-14
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) covering
any active or former employee, director or consultant of the Company or any
trade or business (whether or not incorporated) which is a member of a
controlled group or which is under common control with the Company within the
meaning of Section 414 of the Code (an "AFFILIATE"), or with respect to which
the Company has or may in the future have liability, are listed in SECTION
2.11(A) of the Company Schedule (the "PLANS"). The Company has provided to
Parent: (i) correct and complete copies of all documents embodying each Plan,
and management, employment, severance, consulting, relocation, repatriation,
expatriation, visa, work permit or other agreement, contract or understanding
between the Company and any Employee ("EMPLOYMENT AGREEMENT"), including
(without limitation) all amendments thereto, all related trust documents, and
all material written agreements and contracts relating to each such Plan; (ii)
the three (3) most recent annual reports (Form Series 5500 and all schedules and
financial statements, if any, required to be attached thereto), if any, required
under ERISA or the Code in connection with each Plan; (iii) the most recent
summary plan description together with the summary(ies) of material
modifications thereto, if any, required under ERISA with respect to each Plan;
(iv) all IRS or DOL determination, opinion, notification and advisory letters;
(v) all material correspondence to or from any governmental agency relating to
any Plan; (vi) all COBRA forms and related notices; (vii) all discrimination
tests for each Plan for the most recent three (3) plan years; (viii) the most
recent annual actuarial valuations, if any required, prepared for each Plan;
(ix) if the Plan is funded, the most recent annual and periodic accounting of
Plan assets; (x) all material written agreements and contracts relating to each
Plan, including, but not limited to, administrative service agreements, group
annuity contracts and group insurance contracts; (xi) all material
communications to employees or former employees regarding in each case, relating
to any amendments, terminations, establishments, increases or decreases in
benefits, acceleration of payments or vesting schedules or other events which
would result in any material liability under any Plan or proposed Plan; (xii)
all policies pertaining to fiduciary liability insurance covering the
fiduciaries for each Plan; and (xiii) all registration statements, annual
reports (Form 11-K and all attachments thereto) and prospectuses prepared in
connection with any Plan.
(b) The Company has performed in all material respects all
obligations required to be performed by it under, is not in default or violation
of, and has no knowledge of any default or violation by any other party to, each
Plan, and each Plan has been maintained and administered in all material
respects in compliance with its terms and with the requirements prescribed by
any and all statutes, orders, rules and regulations (foreign or domestic),
including but not limited to ERISA and the Code, which are applicable to such
Plans. No suit, action or other litigation (excluding claims for benefits
incurred in the ordinary course of Plan activities) has been brought, or to the
knowledge of the Company is threatened, against or with respect to any such
Plan. There are no audits, inquiries or proceedings pending or, to the knowledge
of the Company, threatened by the Internal Revenue Service (the "IRS") or
Department of Labor (the "DOL") with respect to any Plans. All contributions,
reserves or premium payments required to be made or accrued as of the date
hereof to the Plans have been timely made or accrued. Any Plan intended to be
qualified under Section 401(a) of the Code and each trust intended to qualify
under Section 501(a) of the Code (i) has either obtained a favorable
determination, notification, advisory and/or opinion letter, as applicable, as
to its qualified status from the IRS or still has a remaining period of time
under applicable Treasury Regulations or IRS pronouncements in which to apply
for such letter and to make any amendments necessary to obtain a favorable
determination, and (ii) incorporates or has been amended to incorporate all
provisions required to comply with the Tax Reform Act of 1986 and subsequent
legislation. The Company does not have any plan or commitment to establish any
new Plan, to modify any Plan (except to the extent required by law or to conform
any such Plan to the requirements of any applicable law, in each case as
previously disclosed to Parent in writing, or as required by this Agreement), or
to enter into any new Plan. Each Plan can be amended, terminated or otherwise
discontinued after the Effective Time in accordance with its terms, without
liability to Parent, the Company or any of its Affiliates (other than ordinary
administration expenses and expenses for benefits accrued but not yet paid).
A-14A-15
(c) Neither the Company nor any of its Affiliates has at any time
ever maintained, established, sponsored, participated in, or contributed to any
plan subject to Title IV of ERISA or Section 412 of the Code, and at no time has
the Company contributed to or been requested to contribute to any "multiemployer
plan," as such term is defined in ERISA or to any plan described in Section
413(c) of the Code. Neither the Company nor any officer or director of the
Company is subject to any liability or penalty under Section 4975 through 4980B
of the Code or Title I of ERISA. No "prohibited transaction," within the meaning
of Section 4975 of the Code or Sections 406 and 407 of ERISA, and not otherwise
exempt under Section 408 of ERISA, has occurred with respect to any Plan.
(d) Neither the Company nor any of its Affiliates has, prior to
the Effective Time and in any material respect, violated any of the health
continuation requirements of the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended ("COBRA"), the requirements of the Family Medical Leave Act
of 1993, as amended, the requirements of the Women's Health and Cancer Rights
Act, as amended, the requirements of the Newborns' and Mothers' Health
Protection Act of 1996, as amended, or any similar provisions of state law
applicable to employees of the Company. None of the Plans promises or provides
retiree medical or other retiree welfare benefits to any person except as
required by applicable law, and the Company has not represented, promised or
contracted (whether in oral or written form) to provide such retiree benefits to
any employee, former employee, director, consultant or other person, except to
the extent required by statute.
(e) Except as disclosed in SECTION 2.11(E) of the Company
Schedule, neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby will (either alone or upon
the occurrence of any additional or subsequent events) (i) constitute an event
under any Plan, Employment Agreement, trust or loan that will or may result in
any payment (whether of severance pay or otherwise), acceleration, forgiveness
of indebtedness, vesting, distribution, increase in benefits or obligation to
fund benefits with respect to any Employee; or (ii) result in any payment or
benefit which will or may be made by the Company or its Affiliates with respect
to any Employee will be characterized as a "parachute payment," within the
meaning of Section 280G(b)(2) of the Code.
(f) The Company has no employees outside the United States.
2.12 LABOR MATTERS. (i) There are no material controversies pending or,
to the knowledge of the Company, threatened, between the Company and any of its
employees; (ii) the Company is not a party to any collective bargaining
agreement or other labor union contract or arrangement with any labor union
applicable to persons employed by the Company nor does the Company know of any
activities or proceedings of any labor union to organize any such employees; and
(iii) the Company has no knowledge of any labor disputes, strikes, slowdowns,
work stoppages or lockouts, or threats thereof, by or with respect to any
employees of the Company, and the Company has not experienced any labor
interruptions over the past three (3) years. The Company is in compliance in all
material respects with all applicable material foreign, federal, state and local
laws, rules and regulations respecting employment, employment practices, terms
and conditions of employment and wages and hours.
2.13 PROXY STATEMENT. None of the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in the proxy
statement to be filed with the SEC by the Company pursuant to SECTION 5.4
hereof, as the same may be amended from time to time (the "PROXY STATEMENT")
will, at the dates mailed to the stockholders of the Company and at the time of
the stockholders meeting of the Company (the "COMPANY STOCKHOLDERS' MEETING") in
connection with the transactions contemplated hereby, 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 Proxy Statement
will comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations promulgated
A-15A-16
by the SEC thereunder. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information supplied by Parent or
Merger Sub that is contained in any of the foregoing documents.
2.14 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no agreement,
commitment, judgment, injunction, order or decree binding upon the Company or to
which the Company is a party which has or could reasonably be expected to have
the effect of prohibiting or materially impairing any business practice of the
Company (including but not limited to research and development, sales,
manufacturing, marketing and employment) or the conduct of business by the
Company as such practice or business is currently conducted or presently
anticipated by the Company to be conducted or pursued under any agreement
between Parent and the Company.
2.15 TITLE TO PROPERTY. The Company does not own any material real
property. The Company has good and defensible title to all of its material
properties and assets it purports to own, free and clear of all liens, charges
and encumbrances except liens for taxes not yet due and payable, and such liens
or other imperfections of title, if any, as do not materially detract from the
value of or interfere with the present use of the property affected thereby. All
leases pursuant to which the Company lease from others material real or personal
property are in good standing, valid and effective in accordance with their
respective terms, and there is not, under any of such leases, any existing
material default or event of default (or any event which with notice or lapse of
time, or both, would constitute a material default and in respect of which the
Company has not taken adequate steps to prevent such default from occurring).
All the plants, structures and equipment of the Company, except such as may be
under construction, are in good operating condition and repair, in all material
respects, subject to normal wear and tear.
2.16 TAXES.
(a) For the purposes of this Agreement, "TAX" or "TAXES" "means
(i) any and all federal, state, local and foreign taxes, including taxes based
upon or measured by gross receipts, income, profits, sales, use and occupation,
and value added, ad valorem, transfer, franchise, withholding, payroll,
recapture, employment, excise and property taxes, together with all interest,
penalties and additions imposed with respect to such amounts, (ii) any liability
for the payment of any amounts of the type described in clause (i) as a result
of being or ceasing to be a member of an affiliated, consolidated, combined or
unitary group for any period (including, without limitation, any liability under
Treasury Regulation Section 1.1502-6 or any comparable provision of foreign,
state or local law), and (iii) any liability for the payment of any amounts of
the type described in clause (i) or (ii) as a result of any express or implied
obligation to indemnify any other person or as a result of any obligations under
any agreements or arrangements with any other person with respect to such
amounts and including any liability for taxes of a predecessor entity.
(b)
(i) The Company has timely filed (taking into account
extensions) all federal, state, local and foreign returns, estimates,
information statements and reports ("RETURNS") relating to Taxes required to be
filed by the Company with any Tax authority, except such Returns which are not
material to the Company. All such Returns were correct and complete in all
material respects. The Company has paid all Taxes shown to be due on such
Returns.
(ii) The Company as of the Effective Time will have withheld
with respect to its employees all federal and state income Taxes, Taxes pursuant
to the Federal Insurance Contribution Act and other Taxes, if any, required to
be withheld as of the Effective Time, except such Taxes which are not material
to the Company, and have timely paid over to the proper governmental authorities
all
A-16A-17
amounts required to be withheld and paid over under all applicable laws and will
have paid all then due Taxes required to be paid pursuant to the Federal
Unemployment Tax Act with respect to compensation paid to its employees.
(iii) Except as disclosed in SECTION 2.16(B)(III) of the
Company Schedule, the Company has not been delinquent in the payment of any
material Tax nor is there any material Tax deficiency outstanding, proposed or
assessed against the Company, nor has the Company executed any unexpired waiver
of any statute of limitations on or extending the period for the assessment or
collection of any Tax.
(iv) No audit or other examination of any Return of the
Company by any Tax authority is presently in progress, nor has the Company been
notified in writing of any request for such an audit or other examination.
(v) No adjustment relating to any Returns filed by the
Company has been proposed in writing by any Tax authority to the Company or any
representative thereof.
(vi) The Company has no liability for any material unpaid
Taxes which has not been accrued for or reserved on the Company balance sheet
dated December 31, 2000 in accordance with GAAP, whether asserted or unasserted,
contingent or otherwise, which is material to the Company, other than any
liability for unpaid Taxes that may have accrued since December 31, 2000 in
connection with the operation of the business of the Company in the ordinary
course.
(vii) There is no contract, agreement, plan or arrangement to
which the Company is a party as of the date of this Agreement, including but not
limited to the provisions of this Agreement, covering any employee or former
employee of the Company that, individually or collectively, would reasonably be
expected to give rise to the payment of any amount that would not be deductible
pursuant to Sections 280G, 404 or 162(m) of the Code. There is no contract,
agreement, plan or arrangement to which the Company is a party or by which it is
bound to compensate any individual for excise taxes paid pursuant to Section
4999 of the Code.
(viii) The Company has not filed any consent agreement under
Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply
to any disposition of a subsection (f) asset (as defined in Section 341(f)(4) of
the Code) owned by the Company.
(ix) The Company is not party to and does not have any
obligation under any tax-sharing, tax indemnity or tax allocation agreement or
arrangement.
(x) None of the Company's assets are tax exempt use property
within the meaning of Section 168(h) of the Code.
(xi) The Company has not constituted either a "distributing
corporation" or a "controlled corporation" in a distribution of stock qualifying
for tax-free treatment under Section 355 of the Code (i) in the two years prior
to the date of this Agreement or (ii) in a distribution which could otherwise
constitute part of a "plan" or "series of related transactions" (within the
meaning of Section 355(e) of the Code) in conjunction with the Merger.
(xii) Except as disclosed in SECTION 2.16(B)(X99) of the
Company Schedule, the Company has not granted any power of attorney with respect
to Taxes.
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(xiii) The Company is not, and has not been at any time, a
"United States real property holding corporation" within the meaning of section
897(c) of the Code.
2.17 ENVIRONMENTAL MATTERS. The Company (i) has obtained all applicable
permits, licenses and other authorizations that are required under Environmental
Laws the absence of which would have a Material Adverse Effect on the Company;
(ii) is in compliance in all material respects with all material terms and
conditions of such required permits, licenses and authorizations, and also is in
compliance in all material respects with all other material limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in such laws or contained in any regulation,
code, plan, order, decree, judgment, notice or demand letter issued, entered,
promulgated or approved thereunder; and (iii) has no knowledge of and has not
received any written notice of any event, condition, circumstance, activity,
practice, incident, action or plan that is reasonably foreseeably likely to
interfere with or prevent continued compliance with any Environmental Law or
that would give rise to any common law or statutory liability pursuant to any
Environmental Law, except to the extent such non-compliance, liability or
Environmental Claim could not reasonably be expected to have a Material Adverse
Effect on the Company. To the Company's knowledge, no Hazardous Materials are
present in, on or under any real properties owned, leased or used at any time
(including both land and improvements thereon) by the Company, in such manner as
would give rise to any liability or corrective or remedial obligation under any
Environmental Laws. "ENVIRONMENTAL CLAIM" means any written notice, claim, act,
cause of action or investigation by any person alleging potential liability
(including potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries or penalties) arising out of, based on or resulting from (i)
the presence, or release into the environment, of any Hazardous Materials or
(ii) any violation, or alleged violation, of any Environmental Laws.
"ENVIRONMENTAL LAWS" means all Federal, state, local and foreign laws and
regulations in effect on the date hereof relating to pollution of the
environment (including ambient air, surface water, ground water, land surface or
subsurface strata) or the protection of human health and worker safety,
including, without limitation, laws and regulations relating to emissions,
discharges, releases or threatened releases of Hazardous Materials, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials. "HAZARDOUS MATERIALS"
means chemicals, pollutants, contaminants, wastes, toxic substances, radioactive
and biological materials, asbestos-containing materials, hazardous substances,
petroleum and petroleum products or any fraction thereof, excluding, however,
Hazardous Materials contained in products typically used for office, janitorial
and/or landscaping purposes properly and safely maintained in accordance with
Environmental Laws.
2.18 BROKERS. The Company has not incurred, nor will it incur, directly
or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement or any
transaction contemplated hereby based upon arrangements made by or on behalf of
the Company.
2.19 INTELLECTUAL PROPERTY. For the purposes of this Agreement, the
following terms have the following definitions:
"INTELLECTUAL PROPERTY" shall mean: (i) all United States and foreign
patents and applications therefor and all reissues, divisions, renewals,
extensions, provisionals, continuations and continuations-in-part
thereof ("PATENTS"); (ii) all inventions (whether patentable or not),
invention disclosures, improvements, trade secrets, proprietary
information, know how, technology, technical data and customer lists,
and all documentation (or in the case of know how, proprietary
documentation) relating to any of the foregoing; (iii) all copyrights,
copyright registrations and applications therefor and all other rights
corresponding thereto throughout the world; (iv) all A-18
industrial designs
and any registrations and applications therefor throughout the world;
(v) all
A-19
trade names, logos, common law trademarks and service marks;
trademark and service mark registrations and applications therefor and
all goodwill associated therewith throughout the world; (vi) all
databases and data collections and all rights therein throughout the
world related to research, design and development of the Company's
Products; (vii) all computer software including all source code, object
code, firmware, development tools, files, records and data, all media on
which any of the foregoing is recorded, all Web addresses, sites and
domain names; and (viii) any similar, corresponding or equivalent rights
to any of the foregoing.
"COMPANY INTELLECTUAL PROPERTY" shall mean any Intellectual Property
that is owned by or exclusively licensed to the Company. Without in any
way limiting the generality of the foregoing, Company Intellectual
Property includes all Intellectual Property owned by or exclusively
licensed to the Company related to or necessary to develop, market or
otherwise exploit the Company's products.
"REGISTERED INTELLECTUAL PROPERTY" shall mean all United States,
international and foreign: (i) patents and patent applications
(including provisional applications); (ii) registered trademarks,
applications to register trademarks, intent-to-use applications, or
other registrations or applications related to trademarks; (iii)
registered copyrights and applications for copyright registration; (iv)
domain name registrations; and (v) any other application, certificate,
filing, registration or other document issued by, filed with, or
recorded by, any state, government or other public legal authority.
"COMPANY REGISTERED INTELLECTUAL PROPERTY" means all of the Registered
Intellectual Property owned by, or filed in the name of, the Company.
(a) SECTION 2.19(A) of the Company Schedule is a complete and
accurate list of all Company Registered Intellectual Property and specifies,
where applicable, the jurisdictions in which each such item of Company
Registered Intellectual Property has been issued or registered and lists any
proceedings or actions before any court, tribunal (including the United States
Patent and Trademark Office (the "PTO") or equivalent authority anywhere in the
world) related to any of the Company Registered Intellectual Property, and any
actions with respect thereto that should be taken within one hundred twenty
(120) days after the date of this Agreement.
(b) SECTION 2.19(B) of the Company Schedule is a complete and
accurate list (by name and version number, if applicable) of all products or
service offerings of the Company ("COMPANY PRODUCTS") that have been distributed
or provided in the five (5) year period preceding the date hereof or which the
Company presently intends to distribute or provide in the next three (3) years,
including any products or service offerings under development.
(c) No Company Intellectual Property owned by the Company, no
Company Product, and to the Company's knowledge, no Company Intellectual
Property exclusively licensed by the Company, is subject to any proceeding or
outstanding decree, order, judgment, contract, license, agreement, or
stipulation restricting in any manner the use (in accordance with the Company's
current practices), transfer, or licensing thereof by the Company, or which may
adversely affect the use (in accordance with the Company's current practices) or
enforceability of such Company Intellectual Property or Company Product.
A-19
(d) To the Company's knowledge, each item of Company Registered
Intellectual Property is valid and subsisting, all necessary registration,
maintenance and renewal fees currently due in connection with such Company
Registered Intellectual
A-20
Property have been made and all necessary documents, recordations and
certificates in connection with such Company Registered Intellectual Property
have been filed with the relevant patent, copyright, trademark or other
authorities in the United States or foreign jurisdictions, as the case may be,
for the purposes of maintaining such Company Registered Intellectual Property.
(e) The Company owns and has good and exclusive title to, or
exclusively licenses, each item of Company Intellectual Property free and clear
of any lien or encumbrance on such owned Company Intellectual Property or on any
license to such licensed Company Intellectual Property. Without limiting the
foregoing: (i) the Company is the exclusive owner of all trademarks and trade
names used in connection with the operation or conduct of the business of the
Company, including the sale, distribution or provision of any Company Products
by the Company; (ii) the Company owns exclusively, and has good title to, all
copyrighted works that are Company Products or which the Company otherwise
purports to own; and (iii) to the extent that any Patents would be infringed by
any Company Products currently under development or currently proposed, to the
Company's knowledge the Company is the exclusive owner of such Patents.
(f) To the extent that any technology, hardware, software or
Intellectual Property has been developed or created in whole or in part by a
third party specifically for the Company or to the extent any Intellectual
Property is incorporated into or necessary to make, use or sell any of the
Company Products, the Company owns or has the unrestricted perpetual,
non-terminable (except for breach) license to use such third party's
Intellectual Property in such work, material or invention to the extent required
for or incident to the development, manufacture, operation or sale of the
Company Products.
(g) Except as contemplated by any agreement between the Company
and Parent, the Company has not transferred ownership of, or granted any
exclusive license with respect to, any Intellectual Property that is Company
Intellectual Property, to any third party, or permitted the Company's rights in
such Company Intellectual Property to lapse or enter the public domain.
(h) SECTION 2.19(H) of the Company Schedule lists all contracts,
licenses and agreements to which the Company is a party: (i) with respect to
Company Intellectual Property currently licensed or transferred to any third
party; or (ii) pursuant to which a third party licenses or has transferred any
Intellectual Property to the Company.
(i) All contracts, licenses and agreements relating to either (i)
Company Intellectual Property (other than end-user licenses in the ordinary
course) or (ii) Intellectual Property of a third party licensed to the Company
or used in the business of the Company in the manner currently contemplated, are
in full force and effect. The consummation of the transactions contemplated by
this Agreement will neither violate nor result in the breach, modification,
cancellation, termination or suspension of such contracts, licenses and
agreements. The Company is in material compliance with, and has not materially
breached any term of any such contracts, licenses and agreements and, to the
knowledge of the Company, all other parties to such contracts, licenses and
agreements are in compliance with, and have not materially breached any term of,
such contracts, licenses and agreements. Following the Closing Date, the
Surviving Corporation will be permitted to exercise all of the Company's rights
under such contracts, licenses and agreements to the same extent the Company
would have been able to had the transactions contemplated by this Agreement not
occurred and without the payment of any additional amounts or consideration
other than ongoing fees, royalties or payments which the Company would otherwise
be required to pay. Neither this Agreement nor the transactions contemplated by
this Agreement will (as a result of agreements or commitments to which the
Company is a party) result in (i) either Parent's or the A-20
Merger Sub's granting
to any third party any right to or with respect to any Intellectual Property
right owned by, or licensed to, either of them, (ii) either the Parent's or the
Merger Sub's being bound by, or subject to, any non-compete or other restriction
on the operation or scope of their respective businesses,
A-21
or (iii) either the Parent's or the Merger Sub's being obligated to pay any
royalties or other amounts to any third party in excess of those payable by
Parent or Merger Sub, respectively, prior to the Closing.
(j) To the Company's knowledge, the operation of the business of
the Company as such business currently is conducted, including (i) the Company's
design, development, manufacture, distribution, reproduction, marketing or sale
of the products or services of the Company (including Company Products) and (ii)
the Company's use of any product, device or process, has not and does not
infringe or misappropriate the Intellectual Property of any third party or
constitute unfair competition or trade practices under the laws of any
jurisdiction.
(k) The Company has not received notice from any third party that
the operation of the business of the Company or any act, product or service of
the Company, infringes or misappropriates the Intellectual Property of any third
party or constitutes unfair competition or trade practices under the laws of any
jurisdiction.
(l) To the knowledge of the Company, no person has infringed or
misappropriated or is infringing or misappropriating any Company Intellectual
Property.
(m) The Company has taken reasonable steps to protect the
Company's rights in the Company's confidential information and trade secrets
that it wishes to protect or any trade secrets or confidential information of
third parties provided to the Company, and, without limiting the foregoing, the
Company has and enforces a policy requiring each employee and consultant to
execute a proprietary information/confidentiality agreement substantially in the
form provided to Parent and all current and former employees and consultants of
the Company have executed such an agreement.
2.20 AGREEMENTS, CONTRACTS AND COMMITMENTS. As of the date hereof,
except as set forth in SECTION 2.20 of the Company Schedule, the Company is not
a party to or is bound by:
(a) any employment or consulting agreement, contract or commitment
with any officer or director of the Company, other than those that are
terminable by the Company on no more than thirty (30) days' notice without
liability or financial obligation to the Company;
(b) any agreement of indemnification or any guaranty other than
any agreement of indemnification entered into in connection with the purchase or
license for use by the Company of software products or services in the ordinary
course of business;
(c) any agreement, contract or commitment containing any covenant
limiting in any respect the right of the Company to engage in any line of
business or to compete with any person or granting any exclusive distribution
rights;
(d) any agreement, contract or commitment currently in force
relating to the disposition or acquisition by the Company after the date of this
Agreement of a material amount of assets not in the ordinary course of business
or pursuant to which the Company has any material ownership interest in any
corporation, partnership, joint venture or other business enterprise;
(e) any dealer, distributor, joint marketing or development
agreement currently in force under which the Company has continuing material
obligations to jointly market any product, technology or service and which may
not be canceled without penalty upon notice of ninety (90) days or A-21
less, or any
material agreement pursuant to which the Company has continuing material
obligations to jointly develop any intellectual property that will not be owned,
in whole or in part, by the Company and which may not be canceled without
penalty upon notice of ninety (90) days or less;
A-22
(f) any agreement, contract or commitment currently in force to
provide source code to any third party for any product or technology that is
material to the Company taken as a whole;
(g) any agreement, contract or commitment currently in force to
license any third party to manufacture or reproduce any Company product, service
or technology or any agreement, contract or commitment currently in force to
sell or distribute any Company products, service or technology except agreements
with distributors or sales representatives in the normal course of business
cancelable without penalty upon notice of ninety (90) days or less and
substantially in the form previously provided to Parent;
(h) any mortgages, indentures, guarantees, loans or credit
agreements, security agreements or other agreements or instruments relating to
the borrowing of money or extension of credit;
(i) any material settlement agreement entered into within five (5)
years prior to the date of this Agreement; or
(j) any other agreement, contract or commitment under which the
Company is contractually obligated to make or entitled to receive payments of
$100,000 or more individually.
The Company, nor to the Company's knowledge any other party to a Company
Contract (as defined below), is not in breach, violation or default under, and
the Company has not received written notice that it has breached, violated or
defaulted under, any of the material terms or conditions of any of the
agreements, contracts or commitments to which the Company is a party or by which
it is bound that are required to be disclosed in the Company Schedule (any such
agreement, contract or commitment, a "COMPANY CONTRACT") in such a manner as
would permit any other party to cancel or terminate any such Company Contract,
or would permit any other party to seek material damages or other remedies (for
any or all of such breaches, violations or defaults, in the aggregate).
2.21 INSURANCE. The Company maintains insurance policies and fidelity
bonds covering the assets, business, equipment, properties, operations,
employees, officers and directors of the Company (collectively, the "INSURANCE
POLICIES") which are of the type and in amounts customarily carried by persons
conducting businesses similar to those of the Company. There is no material
claim by the Company pending under any of the material Insurance Policies as to
which coverage has been questioned, denied or disputed by the underwriters of
such policies or bonds.
2.22 BOARD APPROVAL. The Board of Directors of the Company has, as of
the date of this Agreement, unanimously (i) approved and declared advisable this
Agreement and the Related Agreements and has approved the Merger and the other
transactions contemplated hereby and thereby, (ii) determined that the Merger is
fair to, and in the best interests of, the Company and its stockholders and
(iii) determined to recommend that the stockholders of the Company adopt and
approve this Agreement and approve the Merger.
2.23 VOTE REQUIRED. The affirmative vote of the holders of a majority
of the votes entitled to be cast with respect to the Merger by the holders of
the Company Common Stock and Series B Convertible Preferred Stock (voting on an
as-converted to Company Common Stock basis), voting together as a single class,
is the only vote of the holders of any class or series of the Company's capital
stock necessary to approve this Agreement and the transactions contemplated
hereby.
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2.24 STATE TAKEOVER STATUTES. Neither Section 203 of the Delaware Law
nor, to the Company's knowledge, any other state takeover statute or similar
statute or regulation applies to the Merger, this Agreement, the Related
Agreements or the transactions contemplated hereby and thereby.
A-23
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company, subject to
such exceptions as are specifically disclosed in writing in the disclosure
schedule supplied by Parent to the Company dated as of the date hereof (the
"PARENT SCHEDULE") as follows. The Parent Schedule shall be arranged in sections
corresponding to the numbered and lettered paragraphs contained in this ARTICLE
III and the disclosure in any section of the Parent Schedule shall qualify other
paragraphs in this ARTICLE III only to the extent that it is reasonably apparent
from a reading of such disclosure that it also qualifies or applies to such
other paragraph.
3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Each of Parent and
its subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
requisite corporate power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being conducted, except
where the failure to do so would not, individually or in the aggregate, have a
Material Adverse Effect on Parent or Merger Sub. Each of Parent and its
subsidiaries is in possession of all Approvals necessary to own, lease and
operate the properties it purports to own, operate or lease and to carry on its
business as it is now being conducted, except where the failure to have such
Approvals would not, individually or in the aggregate, be material to Parent or
Merger Sub. Each of Parent and its subsidiaries is duly qualified or licensed as
a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its activities makes such qualification or licensing
necessary, except for such failures to be so duly qualified or licensed and in
good standing that would not, either individually or in the aggregate, have a
Material Adverse Effect on Parent or Merger Sub.
3.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and Merger
Sub has all necessary corporate power and authority to execute and deliver this
Agreement and the applicable Related Agreements and to perform its obligations
hereunder and thereunder, and to consummate the transactions contemplated hereby
and thereby. 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 and the execution and delivery of the applicable Related
Agreements by Parent and the consummation by Parent of the transactions
contemplated thereby have been duly and validly authorized by all necessary
corporate action on the part of Parent and Merger Sub, and no other corporate
proceedings on the part of Parent or Merger Sub are necessary to authorize this
Agreement and the applicable Related Agreements, or to consummate the
transactions so contemplated. This Agreement and the Related Agreements have
been duly and validly executed and delivered by Parent and Merger Sub and,
assuming the due authorization, execution and delivery by the Company,
constitute legal and binding obligations of Parent and Merger Sub, enforceable
against Parent and Merger Sub in accordance with their terms.
3.3 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement and the
applicable Related Agreements by Parent and Merger Sub do not, and the
performance of this Agreement and the applicable Related Agreements by Parent
and Merger Sub shall not, (i) conflict with or violate the Certificate of
Incorporation, Bylaws or equivalent organizational documents of Parent or any of
its subsidiaries, (ii) subject to compliance with the requirements set forth in
SECTION 3.3(B) below, conflict with or violate A-23
any Law applicable to Parent or
any of its subsidiaries or by which its or any of their respective properties
are bound or affected, or (iii) result in any breach of or constitute a default
(or an event that with notice or lapse of time or both would become a default)
under, or impair Parent's or any of its subsidiaries' rights or alter the rights
or obligations of any third party under, or give to others any rights of
termination,
A-24
amendment, acceleration or cancellation of, or result in the creation of a lien
or encumbrance on any of the properties or assets of Parent or any of its
subsidiaries pursuant to, any material note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Parent or any of its subsidiaries is a party or by which
Parent or any of its subsidiaries or its or any of their respective properties
are bound or affected, except to the extent such conflict, violation, breach,
default, impairment or other effect would not in the case of clauses (ii) or
(iii), individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Parent or Merger Sub.
(b) The execution and delivery of this Agreement and the
applicable Related Agreements by Parent and Merger Sub do not, and the
performance of this Agreement and the applicable Related Agreements by Parent
and Merger Sub shall not, require any consent, approval, authorization or permit
of, or filing with or notification to, any Governmental Entity except (i) for
applicable requirements, if any, of the Securities Act, the Exchange Act, Blue
Sky Laws, the pre-merger notification requirements of the HSR Act, the rules and
regulations of Nasdaq, and the filing and recordation of the Certificate of
Merger as required by Delaware Law and (ii) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not have a Material Adverse Effect on the Parent's or
Merger Sub's ability to consummate the Merger or perform their obligations under
this Agreement and the Related Agreements.
3.4 OWNERSHIP OF MERGER SUB; NO PRIOR ACTIVITIES. The Merger Sub is a
direct, wholly-owned subsidiary of Parent and was formed solely for the purpose
of engaging in the transactions contemplated by this Agreement. Except for
obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated by this Agreement and except for
this Agreement and any other agreements or arrangements contemplated by this
Agreement, the Merger Sub has not and will not have incurred, directly or
indirectly, through any subsidiary or affiliate, any obligations or liabilities
or engaged in any business activities of any type or kind whatsoever or entered
into any agreements or arrangements with any person or entity which could
adversely affect the ability of Merger Sub or Parent to consummate the
transactions contemplated hereby.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 CONDUCT OF BUSINESS BY THE COMPANY. Except as expressly permitted
by this SECTION 4.1 or required by the terms of this Agreement, and except as
provided in SECTION 4.1 of the Company Schedule, without the prior written
consent of Parent, during the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement pursuant to
its terms or the Effective Time, the Company shall carry on its business, in the
ordinary course, in substantially the same manner as previously conducted and in
material compliance with all applicable laws and regulations, pay its material
debts and taxes when due subject to good faith disputes over such debts or
taxes, pay or perform other material obligations when due, and use its
commercially reasonable efforts consistent with past practices and policies to
(i) preserve intact its present business organization, (ii) keep available the
services of its present officers and employees and (iii) preserve its
relationships with customers, suppliers, distributors, licensors, licensees, and
others with which it has business dealings. In addition, except as expressly
permitted or contemplated by the terms of this Agreement, and except as provided
in SECTION 4.1 of the Company Schedule, without the prior written consent of
Parent, during the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement pursuant to its terms or the
Effective Time, the Company shall not do any of the following:
A-24
(a) Waive any stock repurchase rights, accelerate (except in
connection with the termination of the Company Option Plan), amend or change the
period of exercisability of options or
A-25
restricted stock, or reprice options granted under any employee, consultant,
director or other stock plans or authorize cash payments in exchange for any
options granted under any of such plans;
(b) Grant any severance or termination pay to any officer or
employee except pursuant to written agreements outstanding, or policies
existing, on the date hereof and as previously disclosed in writing or made
available to Parent, or adopt any new severance plan;
(c) Transfer or license to any person or entity or otherwise
extend, amend or modify any rights to the Company Intellectual Property, or
enter into grants to transfer or license to any person future patent rights;
(d) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in respect
of any capital stock or split, combine or reclassify any capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for any capital stock;
(e) Purchase, redeem or otherwise acquire, directly or indirectly,
any shares of capital stock of the Company, except repurchases of unvested
shares at cost in connection with the termination of the employment relationship
with any employee pursuant to stock option or purchase agreements in effect on
the date hereof or granted hereafter;
(f) Issue, deliver, sell, authorize, pledge or otherwise encumber
any shares of capital stock or any securities convertible into shares of capital
stock, or subscriptions, rights, warrants or options to acquire any shares of
capital stock or any securities convertible into shares of capital stock, or
enter into other agreements or commitments of any character obligating it to
issue any such shares or convertible securities, other than: (x) the issuance,
delivery and/or sale of shares of Company Common Stock pursuant to the exercise
of Company Stock Options or Company Warrants outstanding as of the date of this
Agreement or granted pursuant to clause (y) hereof; and (y) the granting of
stock options to purchase up to seventy-five thousand (75,000) shares in the
aggregate (and the issuance of Company Common Stock upon exercise thereof), in
the ordinary course of business and consistent with past practices;
(g) Cause, permit or propose any amendments to the Company Charter
Documents;
(h) Acquire or agree to acquire by merging or consolidating with,
or by purchasing any equity interest in or a portion of the assets of, or by any
other manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to
acquire any assets (other than in the ordinary course of business) or enter into
any joint ventures, strategic partnerships or alliances;
(i) Sell, lease, license, encumber or otherwise dispose of any
properties or assets except sales of inventory and the grant of end-user
licenses in the ordinary course of business consistent with past practice,
except for the sale, lease or disposition (other than through licensing) of
property or assets which are not material, individually or in the aggregate, to
the business of the Company;
(j) Incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
options, warrants, calls or other rights to acquire any debt securities of the
Company, enter into any "keep well" or other agreement to maintain any financial
statement condition or enter into any arrangement having the economic effect of
any of the foregoing A-25
other than (i) in connection with the financing of ordinary
course trade payables consistent with past practice or (ii) in a principal
amount not to exceed $150,000 in the aggregate;
A-26
(k) Adopt or amend any employee benefit plan, policy or
arrangement, any employee stock purchase or employee stock option plan, or enter
into any employment contract or collective bargaining agreement (other than
offer letters and letter agreements entered into in the ordinary course of
business consistent with past practice with employees who are terminable "at
will"), pay any special bonus or special remuneration to any director or
employee, or increase the salaries or wage rates (except for increases in the
ordinary course of business for non-officer employees) or fringe benefits
(including rights to severance or indemnification) of its directors, officers,
employees or consultants;
(l) (i) pay, discharge, settle or satisfy any claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise) or litigation (whether or not commenced prior to the date of this
Agreement), 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 recognized or disclosed in the most recent
consolidated financial statements (or the notes thereto) of the Company included
in the Company SEC Reports or incurred since the date of such financial
statements, or (ii) waive the benefits of, agree to modify in any manner,
terminate, release any person from or fail to enforce (without resorting to
litigation) any confidentiality or similar agreement to which the Company is a
party or of which the Company is a beneficiary;
(m) Make any individual or series of related payments outside of
the ordinary course of business (including payments to financial, legal,
accounting or other professional service advisors) in excess of $100,000 per
month (except that such limit shall be $500,000 for the first month following
the execution of this Agreement and except that the $100,000 limit shall not
apply to amounts owed to the Principal Shareholder or for legal services
performed through the date of this Agreement);
(n) Except in the ordinary course of business consistent with past
practice, materially modify, amend or terminate any material contract or
agreement to which the Company is a party or waive, delay the exercise of,
release or assign any material rights or claims thereunder;
(o) Enter into or materially modify any contracts, agreements, or
obligations relating to the distribution, sale, license or marketing by third
parties of the Company's products or products licensed by the Company;
(p) Revalue any of its assets or, except as required or permitted
by GAAP, make any change in accounting methods, principles or practices;
(q) Incur or enter into any agreement, contract or commitment
outside of the ordinary course of business requiring payments by the Company in
excess of $100,000 individually;
(r) Make any tax election that, individually or in the aggregate,
is reasonably likely to adversely affect in any material respect the tax
liability or tax attributes of the Company or settle or compromise any material
income tax liability; provided, however, that nothing in this SECTION 4.1(R) or
elsewhere in this Agreement shall prohibit the Company from selling state tax
losses to the extent permitted by applicable taxing authorities.
(s) Amend or terminate any or all of the Related Agreements; or
(t) Agree in writing or otherwise to take any of the actions
described in SECTION 4.1(A) through SECTION 4.1(S) above.
A-26
In the event the Company shall request Parent to consent in writing to
an action pursuant to this SECTION 4.1, Parent shall not unreasonably delay its
determination as to whether to withhold such consent.
A-27
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 INITIAL PAYMENT. Concurrently with the execution and delivery of
this Agreement, and as a material inducement to the Company to enter into this
Agreement, Parent shall pay to the Company, by wire transfer, an amount equal to
Five Hundred Thousand Dollars ($500,000.00) (the "INITIAL PAYMENT"). Without
limiting the Company's obligations pursuant to SECTION 7.3, in no event shall
the Company be required to repay the Initial Payment to Parent, including
without limitation regardless of whether the Agreement is terminated and the
Merger is abandoned.
5.2 RELATED AGREEMENTS. Concurrently with the execution and delivery
of this Agreement, and as a material inducement to Parent and Merger Sub to
enter into this Agreement, (i) the Principal Shareholder is entering into a
Voting Agreement, in substantially the form attached as EXHIBIT A; (ii) the
Principal Shareholder is entering into a Non-Competition Agreement, in
substantially the form attached as EXHIBIT B; (iii) Parent and the Company are
entering into a License Agreement, in substantially the form attached as EXHIBIT
C; and (iv) Parent and the Company are entering into an Omnibus Waiver and
Amendment Agreement, in substantially the form attached as EXHIBIT D.
5.3 PARENT WARRANT. Concurrently with the execution of this Agreement,
and as a material inducement to Parent and Merger Sub to enter into this
Agreement, the Company shall issue and deliver to Parent the Parent Warrant, in
the form attached as EXHIBIT E. In connection with the issuance of the Parent
Warrant, Parent hereby waives on behalf of itself and all future holders of the
Series B Convertible Preferred Stock, the ASC Warrant and the Common Stock
Warrants and the shares issued or issuable thereunder any and all
"anti-dilution" provisions set forth in Section 5.D of the Certificate of
Designations of Series B Convertible Preferred Stock of Medjet Inc. (the
"CERTIFICATE OF DESIGNATIONS"), Sections 7.1, 7.2 and 7.3 of the Common Stock
Warrants and Sections 7.1, 7.2 and 7.3 of the ASC Warrant that might be
triggered by the issuance of the Parent Warrant and the shares issued or
issuable thereunder.
5.4 PROXY STATEMENT.
(a) As promptly as practicable after the execution of this
Agreement, the Company shall prepare and file with the SEC the Proxy Statement.
Parent shall have the right to review and comment thereon, but in all cases
subject to the control of the Company except with respect to information
relating to the Parent or Merger Sub. Parent shall furnish all information
concerning Parent as the Company may reasonably request in connection with such
actions and the preparation of the Proxy Statement. As promptly as practicable
after the filing of the definitive Proxy Statement, the Proxy Statement shall be
mailed to the stockholders of the Company. The Company shall cause the Proxy
Statement to comply as to form and substance in all material respects with the
applicable requirements of (i) the Exchange Act, (ii) the Securities Act, and
(iii) the rules and regulations of the Nasdaq (applicable to the
Over-The-Counter market).
(b) The Proxy Statement shall solicit the approval of this
Agreement and the Merger, and subject to the right of the Board of Directors to
change its recommendation if it determines in good faith (after consultation
with outside counsel) it is required to do so by its fiduciary duties to the
stockholders of the Company under applicable law, shall include the
recommendation of the Board of Directors of the Company to the Company's
stockholders that they vote in favor of approval of this Agreement and the
Merger. Without limiting the generality of the foregoing, the Company's
obligations pursuant to the first sentence of this SECTION 5.4(B) shall not be
affected by the commencement, public A-27
proposal, public disclosure or
communication to the Company of any Takeover Proposal (as defined in SECTION
5.7).
A-28
(c) Whenever any event occurs that is required to be set forth in
an amendment or supplement to the Proxy Statement, Parent or the Company, as the
case may be, will promptly inform the other party of such occurrence and
cooperate in filing with the SEC or its staff or any other government officials,
and/or mailing to stockholders of the Company, such amendment or supplement, at
the expense of Parent. The Company shall promptly amend or supplement, at the
expense of Parent, the Proxy Statement to the extent required by law to do so,
and Parent shall cooperate with respect to any amendment or supplement. Parent
shall have the right to review and comment on any amendment or supplement, but
in all cases subject to the control of the Company except with respect to
information relating to the Parent or Merger Sub. Each of the parties shall
advise the other parties, promptly after it receives notice thereof, of any
request by the SEC for amendment of the Proxy Statement or comments thereon and
responses thereto or requests by the SEC for additional information.
5.5 STOCKHOLDER MEETING. The Company shall call and hold the Company
Stockholders' Meeting as promptly as practicable after the date hereof for the
purpose of voting upon the approval of this Agreement and the Merger pursuant to
the Proxy Statement. Subject to SECTION 5.7(B), the Company shall use all
commercially reasonable efforts to solicit from its stockholders proxies in
favor of the approval of this Agreement and the Merger pursuant to the Proxy
Statement and shall take all other action necessary or advisable to secure the
vote or consent of stockholders required by Delaware Law or applicable stock
exchange requirements to obtain such approval. The Company shall take all other
action, at the expense of Parent, necessary or advisable to promptly and
expeditiously secure any vote or consent of stockholders required by applicable
Law and the Company's Certificate of Incorporation and Bylaws to effect the
Merger. Notwithstanding the foregoing, the obligation of the Company to call,
give notice of, convene and hold the Company Stockholders' Meeting in accordance
with this SECTION 5.5 shall not be limited or otherwise affected by the
disclosure, announcement or submission to the Company of any Takeover Proposal
or by the withdrawal, amendment or modification of the recommendation of the
Board of the Directors of the Company with respect to the Merger. The
obligations set forth in this SECTION 5.5 shall in no event require the
Company's Board of Directors to recommend the transactions contemplated by this
Agreement to the Company's stockholders under circumstances in which the Board
of Directors has changed its recommendation in accordance with SECTION 5.4(B).
5.6 CONFIDENTIALITY; ACCESS TO INFORMATION.
(a) The parties acknowledge that the Company and Parent have
previously executed a Mutual Nondisclosure Agreement, dated as of May 25, 2001
(the "NONDISCLOSURE AGREEMENT"), which Nondisclosure Agreement will continue in
full force and effect in accordance with its terms.
(b) The Company will afford Parent and Parent's accountants,
counsel and employees reasonable access to its properties, books, records and
personnel during the period prior to the Effective Time to obtain all
information concerning its business as Parent may reasonably request.
5.7 NO SOLICITATION.
(a) From and after the date of this Agreement until the Effective
Time or termination of this Agreement pursuant to ARTICLE VII, the Company will
not, nor will it authorize or permit any of its officers, directors, affiliates
or employees or any investment banker, attorney or other advisor or
representative retained by it to, directly or indirectly, (i) solicit, initiate,
encourage or induce the making, submission or announcement of any Takeover
Proposal (as defined below), (ii) participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to, or take A-28
any
other action to facilitate any inquiries or the making of any proposal that
constitutes or may reasonably be expected to lead to, any Takeover Proposal,
(iii) engage in discussions with any person with respect to any Takeover
Proposal, (iv) approve, endorse or recommend any Takeover Proposal or (v)
A-29
enter into any letter of intent or similar document or any contract, agreement
or commitment contemplating or otherwise relating to any Acquisition Transaction
(as defined below). The Company will immediately cease any and all existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any Takeover Proposal. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in this SECTION 5.7
by any officer, director or employee of the Company or any investment banker
acting on behalf of the Company, attorney or other advisor or representative of
the Company shall be deemed to be a breach of this SECTION 5.7 by the Company.
Notwithstanding the foregoing, in response to a Takeover Proposal that the Board
of Directors of the Company determines in good faith (after consultation with
outside counsel) constitutes a Superior Proposal (as defined below) and which
Takeover Proposal was unsolicited and made after the date hereof and did not
otherwise occur as a result of a breach of this SECTION 5.7, the Company may,
subject to compliance with SECTION 5.7(C) and only to the extent in any such
case the Board of Directors of the Company determines in good faith (after
consultation with outside counsel) that the failure to take such actions are
reasonably likely to constitute a breach of the Board's fiduciary duties to the
stockholders of the Company under applicable law, (x) furnish information with
respect to the Company to the person making such Takeover Proposal (and its
representatives) pursuant to a customary confidentiality agreement containing
provisions not less restrictive of such person than the Nondisclosure Agreement,
provided that all such information has previously been provided to Parent or is
provided to Parent prior to or at the time it is provided to such person and (y)
participate in discussions or negotiations with the person making such Takeover
Proposal (and its representatives) regarding such Takeover Proposal.
(b) Neither the Board of Directors of the Company nor any
committee thereof shall (i) recommend, adopt or approve, or propose publicly to
recommend, adopt or approve, any Takeover Proposal or Superior Proposal or (ii)
approve or recommend, or propose to approve or recommend, or allow the Company
to execute or enter into, any letter of intent, memorandum of understanding,
agreement in principle, merger agreement, acquisition agreement, option
agreement, joint venture agreement, partnership agreement or other similar
agreement (each, an "ACQUISITION AGREEMENT") constituting or related to any
Takeover Proposal (any action described in the foregoing clauses (i) or (ii) of
this SECTION 5.7(B) being referred to as a "COMPANY ADVERSE RECOMMENDATION
CHANGE"). Notwithstanding the foregoing, the Board of Directors of the Company
may make a Company Adverse Recommendation Change, if such Board of Directors
determines in good faith (after consultation with outside counsel) it is
required to do so by its fiduciary duties to the stockholders of the Company
under applicable law; provided, however, that no Company Adverse Recommendation
Change may be made until after five business days following Parent's receipt of
written notice (a "NOTICE OF ADVERSE RECOMMENDATION") from the Company advising
Parent that the Board of Directors of the Company intends to make such a Company
Adverse Recommendation Change and specifying the terms and conditions of the
applicable Superior Proposal (it being understood and agreed that any amendment
to the financial terms or any other material term of such Superior Proposal
shall require a new Notice of Adverse Recommendation and a new five-day period).
Following receipt of a Notice of Adverse Recommendation, Parent shall have the
opportunity to present to the Board of Directors of the Company revised terms
for the consummation of the Merger, including any proposed amendments or
modifications to this Agreement in respect of such revised terms. The Board of
Directors of the Company shall consider in good faith any such revised terms and
amendments or modifications submitted to it by Parent. In determining whether to
make a Company Adverse Recommendation Change in response to a Superior Proposal,
the Board of Directors of the Company shall take into account Parent's revised
terms and any proposed changes to the terms of this Agreement proposed by Parent
in response to a Notice of Adverse Recommendation or otherwise. Before making
any Company Adverse Recommendation Change, the Board of Directors of the Company
shall consider whether the revised terms offered by Parent are A-29
reasonably
equivalent or superior (based upon the factors set forth in the definition of
Superior Proposal below) from the financial point of view of the Company's
stockholders to the terms of the Superior Proposal and, if such terms are
determined by a vote of the Board of Directors to be reasonably equivalent
A-30
or superior from the financial point of view of the Company's stockholders to
the terms of the Superior Proposal, the Board of Directors of the Company shall
accept at a meeting duly called and held, duly adopted resolutions (x) approving
and declaring advisable the terms of any such revised proposal by Parent and any
definitive agreement proposed in connection therewith, (y) directing that the
adoption of the terms of any such revised proposal by Parent and any definitive
agreement proposed in connection therewith be submitted to a vote at a meeting
of the stockholders of the Company and (z) recommending that the stockholders of
the Company approve and adopt the terms of any such revised proposal by Parent
and any definitive agreement proposed in connection therewith. If the Company
has elected to make a Company Adverse Recommendation Change following receipt of
a Superior Proposal and complying with the procedures set forth in this SECTION
5.7(B) and after determining by a vote of the Board of Directors that any
revised terms and proposed changes of Parent are not reasonably equivalent or
superior from the financial point of view of the Company's stockholders to the
terms of the Superior Proposal, the Company shall deliver to Parent (i) a
written notice of termination of this Agreement pursuant to this SECTION 5.7(B),
(ii) a wire transfer of immediately available funds in the amount of the
Termination Fee (as defined in SECTION 7.3(A)), (iii) the License Agreement (if
required pursuant to SECTION 7.3(A)) and (iv) a written acknowledgment that the
Company and the Board of Directors have complied with all of their covenants and
obligations pursuant to this SECTION 5.7(B) and that the Company is obligated to
pay the Termination Fee and effect the License Grant (if required).
(c) In addition to the obligations of the Company set forth in
SECTION 5.7(A) and SECTION 5.7(B), the Company as promptly as practicable, and
in any event within 24 hours, shall advise Parent in writing of: any request for
information which the Company reasonably believes would lead to a Takeover
Proposal; any request for information with respect to any Takeover Proposal; any
inquiry with respect to or which the Company reasonably should believe would
lead to any Takeover Proposal; the material terms and conditions of such
request, Takeover Proposal or inquiry; and the identity of the person or group
making any such request, Takeover Proposal or inquiry. The Company will keep
Parent informed in all material respects of the status and details (including
material amendments or proposed amendments) of any such request, Takeover
Proposal or inquiry.
(d) Nothing contained in this SECTION 5.7 shall prohibit the
Company from (i) taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) or Item 1012(a) of Regulation M-A promulgated
under the Exchange Act if, in the good faith judgment of the Board of Directors
of the Company (after consultation with outside counsel) failure to so disclose
would constitute a violation of applicable law or regulation; PROVIDED, HOWEVER,
that in no event as a result of this SECTION 5.7(D) shall the Company or its
Board of Directors or any committee thereof take, or agree or resolve to take,
any action prohibited by SECTION 5.7(B).
For purposes of this Agreement, "TAKEOVER PROPOSAL" shall mean any offer
or proposal (other than an offer or proposal by Parent) relating to any
Acquisition Transaction. For the purposes of this Agreement, "ACQUISITION
TRANSACTION" shall mean any transaction or series of related transactions other
than the transactions contemplated by this Agreement involving: (A) any
acquisition or purchase from the Company by any person or "group" (as defined
under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) of more than a 15% interest in the total outstanding voting
securities of the Company or any tender offer or exchange offer that if
consummated would result in any person or "group" (as defined under Section
13(d) of the Exchange Act and the rules and regulations thereunder) beneficially
owning 15% or more of the total outstanding voting securities of the Company or
any merger, consolidation, business combination or similar transaction involving
the Company pursuant to which the stockholders of the Company immediately
preceding such transaction hold less than 85% of the A-30
equity interests in the
surviving or resulting entity of such transaction; (B) any sale, lease (other
than in the ordinary course of
A-31
business), exchange, transfer, license (other than in the ordinary course of
business), acquisition or disposition of more than 15% of the assets of the
Company; or (C) any liquidation, dissolution, recapitalization or other
significant corporate reorganization of the Company.
For purposes of this Agreement, a "SUPERIOR PROPOSAL" means any bona
fide, written Takeover Proposal made by a third party if the proposal is on
terms which the Board of Directors of the Company, determines in its good faith
judgment to be (x) superior to the Company's stockholders from a financial point
of view to the Merger (taking into account all the terms and conditions of such
proposal and this Agreement (including any changes to the financial terms of
this Agreement proposed by Parent in response to such offer or otherwise)), (y)
for which financing, to the extent required, is then committed or which, in the
good faith judgment of the Board of Directors of the Company, is reasonably
capable of being obtained by such third party and (z) reasonably capable of
being completed, taking into account all financial, legal, regulatory and other
aspects (other than the need to perform customary due diligence) of such
proposal.
5.8 PARENT STANDSTILL. From the date of execution of this Agreement
until one year after the termination of this Agreement under SECTION 7.1,
neither Parent nor any of its affiliates will directly or indirectly purchase,
contract to purchase, purchase any option or contract to purchase, sell, offer
to purchase, contract to sell, make any short sale, sell any contract to
purchase, purchase any contract to sell, grant any option, right or warrant to
purchase, hedge or otherwise transfer or dispose of any share or securities of
the Company, other than on the terms set forth in and pursuant to the Agreement
and the Related Agreements or with the prior consent of the Board of Directors
of the Company; PROVIDED, HOWEVER, that Parent may exercise the Parent Warrant,
the Common Stock Warrants and the ASC Warrant in accordance with their
respective terms; and PROVIDED FURTHER, HOWEVER,however, that Parent may convert the
10,400 shares of Series B Convertible Preferred Stock into Company Common Stock
accordance with the terms of the Certificate of Designations. Notwithstanding
the foregoing, the SECTION 5.8 shall not apply if the Merger is terminated
pursuant to SECTION 7.1(E) or SECTION 7.1(G).
5.9 PUBLIC DISCLOSURE. Parent and the Company will consult with each
other and agree before issuing any press release or otherwise making any public
statement with respect to the Merger, this Agreement or a Takeover Proposal and
will not issue any such press release or make any such public statement prior to
such agreement, except as may be required by law or any listing agreement with a
national securities exchange or with Nasdaq, in which case reasonable efforts to
consult with the other party will be made prior to any such release or public
statement. The parties have agreed to the text of the joint press release
announcing the signing of this Agreement.
5.10 REASONABLE EFFORTS; NOTIFICATION.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use all commercially reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, and
to assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Merger and the other transactions contemplated by this
Agreement, including using commercially reasonable efforts to accomplish the
following: (i) the taking of all reasonable acts necessary to cause the
conditions precedent set forth in ARTICLE VI to be satisfied, (ii) the obtaining
of all necessary actions or nonactions, waivers, consents, approvals, orders and
authorizations from Governmental Entities and the making of all necessary
registrations, declarations and filings (including registrations, declarations
and filings with Governmental Entities, if any) and the taking of all
commercially reasonable steps as may be necessary to avoid any suit, claim,
action, investigation or proceeding by any Governmental Entity, (iii) the
obtaining of all necessary consents, approvals or waivers from third parties,
(iv) the defending, at A-31
Parent's expense, of any suits, claims, actions,
investigations or proceedings, whether judicial or administrative, challenging
this Agreement or the consummation of the transactions contemplated hereby,
A-32
including seeking to have any stay or temporary restraining order entered by any
court or other Governmental Entity vacated or reversed and (v) the execution or
delivery of any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement. In
connection with and without limiting the foregoing, the Company and its Board of
Directors shall, if any state takeover statute or similar statute or regulation
is or becomes applicable to the Merger, this Agreement or any of the
transactions contemplated by this Agreement, use all commercially reasonable
efforts to ensure that the Merger and the other transactions contemplated by
this Agreement may be consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise to minimize the effect of such
statute or regulation on the Merger, this Agreement and the transactions
contemplated hereby. Notwithstanding anything to the contrary in this Agreement,
nothing in this Agreement shall be deemed to require Parent or the Company or
any subsidiary or affiliate thereof to agree to any divestiture by itself or any
of its affiliates of shares of capital stock or of any business, assets or
property, or the imposition of any material limitation on the ability of any of
them to conduct their business or to own or exercise control of such assets,
properties and stock.
(b) The Company shall give prompt written notice to Parent of any
representation or warranty made by it contained in this Agreement becoming
untrue or inaccurate in any material respect, or any failure of the Company to
comply with or satisfy in any respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement; PROVIDED, HOWEVER, that
no such notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
(c) Parent shall give prompt written notice to the Company of any
representation or warranty made by it or Merger Sub contained in this Agreement
becoming untrue or inaccurate in any material respect, or any failure of Parent
or Merger Sub to comply with or satisfy in any respect any covenant, condition
or agreement to be complied with or satisfied by it under this Agreement;
PROVIDED, HOWEVER, that no such notification shall affect the representations,
warranties, covenants or agreements of the parties or the conditions to the
obligations of the parties under this Agreement.
5.11 THIRD PARTY CONSENTS. As soon as practicable following the date
hereof, Parent and the Company will each use its commercially reasonable efforts
to obtain any consents, waivers and approvals under any of its or its
subsidiaries' respective material agreements, contracts, licenses or leases
required to be obtained in connection with the consummation of the transactions
contemplated hereby.
5.12 401(K) PLAN. The Company agrees to terminate its 401(k) plan
immediately prior to Closing, unless the Parent, in its sole and absolute
discretion, agrees to sponsor and maintain such plan by providing the Company
with written notice of such election at least three (3) business days before the
Effective Time. Unless the Parent provides such notice to the Company, the
Parent shall receive from the Company evidence that the Company's 401(k) plan
has been terminated pursuant to resolution of the Company's Board of Directors
(the form and substance of which resolutions shall be subject to review and
approval of the Parent), effective as of the day immediately preceding the
Closing Date.
5.13 DISCLOSURE SUPPLEMENTS. From time to time prior to the Closing,
the Company may supplement or amend the Company Schedule with respect to any
matter arising or discovered after the date of this Agreement which, if existing
or occurring or discovered at or prior to the date of this Agreement, would have
been required to be set forth or described in the Company Schedule or which is
necessary to complete or correct any information in the Company Schedule or in
any representation or warranty of the Company which has been rendered inaccurate
thereby. Any such supplements or amendments of which Parent receives written
notice at or prior to the Closing shall not affect Parent's A-32
termination rights,
but if the Closing shall occur notwithstanding any such supplement or amendment,
A-33
each such supplement or amendment shall be deemed to modify the Company Schedule
for all purposes of this Agreement and the Merger.
5.14 INSURANCE; INDEMNIFICATION.
(a) Parent will pay to the Company approximately $244,800 in
respect of premiums for a six-year run out of the Company's $5 million
directors' and officers' liability insurance policy.
(b) After the Effective Time, Parent (i) will not take or permit
to be taken any action to alter or impair any exculpatory or indemnification
provisions now existing in the certificate of incorporation, by-laws or
indemnification and employment agreements of the Company or any of its
subsidiaries for the benefit of any individual who served as a director or
officer of the Company or any of its subsidiaries at any time prior to the
Effective Time (except as may be required by applicable law), and (ii) shall
cause the Surviving Corporation to honor and fulfill such provisions until the
date which is six years from the Effective Time (except as may be required by
applicable law); PROVIDED, HOWEVER, in the event any claim or claims are
asserted within such period, all rights to indemnification in respect of such
claim or claims shall continue until the final disposition thereof.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction (or waiver) at or prior to the Closing Date
of the following conditions:
(a) NO ORDER. No Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive order,
decree, injunction or other order (whether temporary, preliminary or permanent)
which is in effect and which has the effect of making the Merger illegal or
otherwise prohibiting consummation of the Merger.
(b) STOCKHOLDER APPROVAL. This Agreement shall have been approved
and adopted, and the Merger shall have been duly approved, by the requisite vote
under applicable law and the Company Charter Documents, by the stockholders of
the Company.
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
obligation of the Company to consummate and effect the Merger shall be subject
to the satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by the Company:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Parent and Merger Sub contained in this Agreement (i) shall have
been true and correct as of the date of this Agreement and (ii) shall be true
and correct on and as of the Closing Date with the same force and effect as if
made on the Closing Date, except for those representations and warranties which
address matters only as of a particular date (which representations shall have
been true and correct as of such particular date) and except, in all such cases,
where the failure to be so true and correct (without regard to any materiality
standards contained therein), individually or in the aggregate, have not had,
and are not reasonably likely to have, a Material Adverse Effect on Parent (it
being understood that for purposes of determining the accuracy of such
representations and warranties, any update of or modification to the Parent
Schedule made or purported to have been made after the date of this Agreement
shall be disregarded). The Company shall have received a certificate with
respect to the foregoing signed on behalf of Parent by a duly authorized officer
of Parent.
A-33A-34
(b) AGREEMENTS AND COVENANTS. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by them on or prior
to the Closing Date, and the Company shall have received a certificate to such
effect signed on behalf of Parent by a duly authorized officer of Parent.
(c) CERTIFICATE OF SECRETARY OF PARENT AND MERGER SUB. The Company
shall have received certificates, validly executed by the Secretary of Parent
and Merger Sub, certifying as to the valid adoption of resolutions of the Board
of Directors of Parent and Merger Sub approving this Agreement and the
applicable Related Agreements and the consummation of the transactions
contemplated hereby.
(d) CERTIFICATE OF GOOD STANDING. The Company shall have received
certificates of good standing of Parent and Merger Sub from the Secretary of
State of the State of Delaware, dated within a reasonable period prior to the
Closing.
(e) OMNIBUS WAIVER AND AMENDMENT AGREEMENT. Parent shall have
executed and delivered to the Company the Omnibus Waiver and Amendment
Agreement, in substantially the form attached as EXHIBIT D. The Omnibus Waiver
and Amendment Agreement shall be in full force and effect.
6.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGER SUB.
The obligations of Parent and Merger Sub to consummate and effect the Merger
shall be subject to the satisfaction at or prior to the Closing Date of each of
the following conditions, any of which may be waived, in writing, exclusively by
Parent:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in this Agreement (i) shall have been true
and correct as of the date of this Agreement and (ii) shall, as updated pursuant
to SECTION 5.13, be true and correct on and as of the Closing Date with the same
force and effect as if made on and as of the Closing Date, except for those
representations and warranties which address matters only as of a particular
date (which representations shall have been true and correct as of such
particular date) and except, in all such cases, where the failure to be so true
and correct (without regard to any materiality standards contained therein),
individually or in the aggregate, have not had, and are not reasonably likely to
have, a Material Adverse Effect on the Company. Parent shall have received a
certificate with respect to the foregoing signed on behalf of the Company by the
Chief Executive Officer of the Company.
(b) AGREEMENTS AND COVENANTS. The Company shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it at or prior to the Closing
Date, and Parent shall have received a certificate to such effect signed on
behalf of the Company by the Chief Executive Officer of the Company.
(c) CONTINUATION OF AGREEMENTS. Those agreements listed on
SCHEDULE 6.3(C) to this Agreement shall be unmodified in any manner from the
date of this Agreement and be in full force and effect.
(d) CONSENTS. The Company shall have obtained all consents,
waivers and approvals required in connection with the consummation of the
transactions contemplated hereby in connection with the agreements, contracts,
licenses or leases set forth on SCHEDULE 6.3(D).
(e) RESIGNATION OF DIRECTORS. Parent shall have received a written
resignation from each of the directors of the Company effective as of the
Effective Time.
A-34A-35
(f) NO MATERIAL ADVERSE CHANGE. There shall not have occurred any
event or condition of any character that has had or is reasonably likely to have
a Material Adverse Effect on the Company since the date of this Agreement.
(g) RELATED AGREEMENTS. The Principal Shareholder shall have
executed and delivered to Parent the Voting Agreement, in substantially the form
attached as EXHIBIT A, and the Non-Competition Agreement, in substantially the
form attached as EXHIBIT B. The Voting Agreement and the Non-Competition
Agreement shall be in full force and effect.
(h) TERMINATION OF 401(K) PLAN. To the extent required by SECTION
5.12, Parent shall have received from the Company evidence that the Company's
401(k) plan has been terminated pursuant to resolution of the Company's Board of
Directors (the form and substance of which shall have been subject to review and
approval of Parent), effective as of the day immediately preceding the Closing
Date.
(i) TERMINATION OF COMPANY STOCK OPTIONS AND COMPANY WARRANTS.
Parent shall have received from the Company evidence that the Company canceled
all outstanding Company Stock Options and Company Warrants in accordance with
the terms of SECTION 1.6(C).
(j) CERTIFICATE OF SECRETARY OF THE COMPANY. Parent shall have
received a certificate, validly executed by the Secretary of the Company,
certifying as to (i) the terms and effectiveness the articles of incorporation
and the bylaws of the Company, and (ii) the valid adoption of resolutions of the
Board of Directors of the Company and the holders of the Company's stockholders
approving this Agreement and the License Agreement and the consummation of the
transactions contemplated hereby.
(k) CERTIFICATE OF GOOD STANDING. Parent shall have received
certificates of good standing of the Company from (i) the Secretary of State of
the State of Delaware; (ii) the Secretary of State of the State of New Jersey;
and (iii) the Franchise Tax Board of the State of New Jersey, each dated within
a reasonable period prior to the Closing.
(l) REMOVAL OF LIENS. The Company shall have removed all material
Liens pursuant to the Uniform Commercial Code on the property of the Company.
(m) SOLE DISCRETION. Parent shall have elected, in its sole
discretion, to consummate the Merger and shall have delivered a certificate
signed by a duly authorized officer of the Parent that Parent elects to proceed
with the Merger. Notwithstanding the foregoing SECTION 6.3(A) through SECTION
6.3(L), Parent need not consummate and effect this Agreement and the
transactions contemplated hereby even if the conditions set forth in the
foregoing SECTION 6.3(A) through SECTION 6.3(L) are satisfied by the Company.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION. This Agreement may be terminated and the Merger may
be abandoned at any time prior to the Effective Time, whether before or after
the requisite approval of the stockholders of the Company:
(a) by Parent, for any reason or no reason;
(b) by mutual written agreement of Parent and the Company;
A-35A-36
(c) by Parent or the Company, if the Merger shall not have been
consummated by August 17, 2002 (the "OUTSIDE DATE") for any reason, unless the
parties agree to extend such date; PROVIDED, HOWEVER, that the right to
terminate this Agreement under this SECTION 7.1(C) shall not be available to any
party if any action or failure to act by that party has been a principal cause
of or resulted in the failure of the Merger to occur on or before such date and
such action or failure to act constitutes a material breach of any agreement or
covenant of such party pursuant to this Agreement (a "PREVENTING ACT"); and
PROVIDED FURTHER, HOWEVER, Parent will not be able to prevent the Company from
terminating this Agreement pursuant to this SECTION 7.1(C) based on a Preventing
Act by the Company without waiving the condition to closing set forth in SECTION
6.3(M) and waiving its right to terminate this Agreement based upon SECTION
7.1(A);
(d) by Parent or the Company, if a Governmental Entity shall have
issued an order, decree or ruling or taken any other action, in any case having
the effect of permanently restraining, enjoining or otherwise prohibiting the
Merger, which order, decree, ruling or other action is final and nonappealable;
(e) by Parent, if (i) the Board of Directors of Company, whether
or not permitted pursuant to the terms hereof, withdraws, modifies or changes
its recommendation of this Agreement or the Merger in a manner adverse to
Parent, (ii) the Board of Directors of Company, whether or not permitted
pursuant to the terms hereof, shall have made a Company Adverse Recommendation
Change, (iii) the Company fails to comply with SECTION 5.7 in all material
respects, (iv) a Takeover Proposal shall have been announced or otherwise become
publicly known and the Board of Directors of Company shall have, within ten
business days thereafter (A) failed to recommend against acceptance of such by
its stockholders (including by taking no position, or indicating its inability
to take a position, with respect to the acceptance by its stockholders of a
Takeover Proposal involving a tender offer or exchange offer) or (B) failed to
reconfirm its approval and recommendation of this Agreement and the transactions
contemplated hereby, or (v) the Board of Directors of Company resolves to take
any of the actions described above;
(f) by Parent or the Company at any time after the Company
Stockholders' Meeting in the event that the Company's stockholders do not
approve this Agreement and the Merger contemplated herein by the requisite vote
under applicable law and the Company Charter Documents; PROVIDED, HOWEVER, that
the right to terminate this Agreement pursuant to this SECTION 7.1(F) shall not
be available to the Company if Parent submits a notice in writing to the
Company, within ten (10) days after the Company Stockholders' Meeting (or within
ten (10) days of any other meeting of the Company's stockholders thereafter
convened to vote on this Agreement and the Merger), stating that it intends to
re-solicit a stockholder vote on this Agreement and the Merger; and PROVIDED
FURTHER, HOWEVER, that Parent's right to re-solicit such a stockholder vote
shall not be available to Parent after the Company's stockholders twice vote not
to approve this Agreement and the Merger;
(g) by the Company, in accordance with SECTION 5.7(B); PROVIDED,
HOWEVER, in order for the termination of this Agreement pursuant to this SECTION
7.1(G) to be deemed effective, the Company shall have complied in all material
respects with all provisions contained in SECTION 5.7, including the notice
provisions therein, and with applicable requirements of SECTION 7.3, including
the payment of the Termination Fee and the effectiveness of the License Grant
(if applicable);
(h) by the Company, upon a breach of any representation, warranty,
covenant or agreement on the part of Parent or Merger Sub set forth in this
Agreement, or if any representation or warranty of Parent or Merger Sub shall
have become untrue, in either case such that the conditions set forth in SECTION
6.2(A) or SECTION 6.2(B) would not be satisfied as of the time of such breach or
as of the time such representation or warranty shall have become untrue,
PROVIDED, HOWEVER, that if such
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inaccuracy in Parent's representations and warranties or breach by Parent is
curable by Parent, then the Company may not terminate this Agreement under this
SECTION 7.1(H) for thirty (30) days after delivery of written notice from the
Company to Parent of such breach, provided Parent continues to exercise best
efforts to cure such breach (it being understood that the Company may not
terminate this Agreement pursuant to this SECTION 7.1(H) if such breach by
Parent is cured during such thirty (30)-day period); or
(i) by Parent, upon a breach of any representation, warranty,
covenant or agreement on the part of the Company set forth in this Agreement, or
if any representation or warranty of the Company shall have become untrue, in
either case such that the conditions set forth in SECTION 6.3(A) or SECTION
6.3(B) would not be satisfied as of the time of such breach or as of the time
such representation or warranty shall have become untrue, PROVIDED, HOWEVER,
that if such inaccuracy in the Company's representations and warranties or
breach by the Company is curable by the Company, then Parent may not terminate
this Agreement under this SECTION 7.1(I) for thirty (30) days after delivery of
written notice from Parent to the Company of such breach, provided the Company
continues to exercise best efforts to cure such breach (it being understood that
Parent may not terminate this Agreement pursuant to this SECTION 7.1(I) if such
breach by the Company is cured during such thirty (30)-day period).
7.2 NOTICE OF TERMINATION. Any termination of this Agreement under
SECTION 7.1 above will be effective immediately upon the delivery of written
notice of the terminating party to the other parties (or such later time as may
be required by SECTION 7.1).
7.3 EFFECT OF TERMINATION.
(a) The Company shall (x) pay Parent a fee of $500,000 (the
"TERMINATION FEE"Fee"), which amount shall be payable by wire transfer of same day
funds to a bank account designated by Parent, and (y) subject to the proviso set
forth below, grant to Parent a non-exclusive license pursuant to the License
Agreement, in substantially the form attached hereto as EXHIBIT C (the "LICENSE
GRANT") (PROVIDED, HOWEVER, that the License Grant shall not come into force and
effect if, prior to the termination of the Merger Agreement, the restrictions on
transferability of, or the restrictive legends on, the shares of Company Common
Stock owned by the Principal Shareholder (the "SHARES"), are lifted or removed,
as the case may be, by the California Department of Corporations sufficient to
allow the transfer of interests in the Shares to Parent pursuant to the
transactions contemplated by this Agreement and pursuant to the Voting
Agreement), in the event that:
(i) (A) any Person shall have made a Takeover proposalProposal to the
Company or to its stockholders or publicly announces any Takeover Proposal
relating to the Company after the date hereof and such Takeover Proposal shall
not have been withdrawn and thereafter this Agreement is terminated by either
party pursuant to SECTION 7.1(F), and (B) within one year after the termination
of this Agreement any Acquisition Transaction involving the Company shall have
been consummated or any Acquisition Agreement with respect to an Acquisition
Transaction involving the Company shall have been entered into,
(ii) this Agreement is terminated by Parent pursuant to
SECTION 7.1(E) or
(iii) this Agreement is terminated by the Company pursuant to
SECTION 7.1(G).
(b) The Termination Fee shall be paid and the License Grant (if
applicable) shall be effected no later than (A) the date an Acquisition
Agreement is entered into with respect to an Acquisition Transaction involving
the Company, or if no such agreement is entered into, upon the date of
consummation of an Acquisition Transaction involving the Company, in the case of
a termination described in SECTION 7.3(A)(I), or (B) two days after such
termination, in the case of a termination
A-37A-38
described in SECTION 7.3(A)(II) or (C) concurrently with such termination, in
the case of a termination described in SECTION 7.3(A)(III).
(c) Parent shall pay to Company a fee of: (A) $200,000, if such
termination occurs within nine months after the date of this Agreement; (B)
$300,000, if such termination occurs between nine and ten months after the date
of this Agreement; (C) $400,000, if such termination occurs between ten and
eleven months after the date of this Agreement; and (D) $500,000, if such
termination occurs after the end of the eleventh month after the date of this
Agreement (which fee shall be payable immediately by wire transfer of same day
funds to a bank account designated by the Company), in the event that:
(i) Parent terminates this Agreement pursuant to SECTION
7.1(A);
(ii) Parent terminates this Agreement pursuant to SECTION
7.1(C); or
(iii) the Company terminates this Agreement pursuant to
SECTION 7.1(C)7.1(c); PROVIDED, HOWEVER, that Parent shall not be obligated to make
payment of such fee pursuant to this clause (iii) if Parent shall have given
notice of termination pursuant to SECTION 7.1(I) prior to the Company's
termination pursuant to SECTION 7.1(C) and the cure period in SECTION 7.1(I), if
a cure period is applicable, shall not have expired, unless the breach or
inaccuracy in respect of which such notice was given has been cured.
(d) Each of the parties acknowledges that the agreements contained
in this SECTION 7.3 are an integral part of the transactions contemplated in
this Agreement and that, without these agreements, the parties would not enter
into this Agreement; accordingly, if (i) the Company fails to promptly pay the
Termination Fee or effect the License Grant (if applicable), and in order to
obtain such Termination Fee or License Grant, the Parent commences a suit which
results in a judgment for the Termination Fee and/or the License Grant set forth
in this SECTION 7.3, the Company shall pay to Parent its costs and expenses
(including reasonable attorneys' fees) in connection with such suit or (ii)
Parent fails to promptly pay the amount provided for in SECTION 7.3(C), and in
order to obtain such amount, the Company commences a suit which results in a
judgment for such amount, Parent shall pay to the Company its costs and expenses
(including reasonable attorneys' fees) in connection with such suit.
(e) In the event of the termination of this Agreement as provided
in SECTION 7.1, this Agreement shall be of no further force or effect, and the
parties shall have no further liability or obligation hereunder, except (i) as
set forth in this SECTION 7.3, SECTION 5.1, SECTION 5.3, SECTION 5.6(A), SECTION
7.4 and ARTICLE VIII, each of which shall survive the termination of this
Agreement, and (ii) nothing in this Agreement shall relieve any party from
liability for fraud in connection with, or any willful breach of, this
Agreement.
(f) Effective upon the termination of this Agreement as provided
in any subsection of SECTION 7.1 except SECTION 7.1(E) and SECTION 7.1(G),
Parent hereby:
(i) waives Section 3.B(iv) of the Certificate of Designations
to the extent that such provision would hinder the Company from raising equity
financing;
(ii) waives any "demand" registration rights as set forth in
Section 2.1 of the Registration Rights Agreement, dated as of December 3, 1999,
by and among the Company, ASC and the Stockholders listed therein, as amended by
the First Amendment to the Registration Rights Agreement, dated as of August 17,
2001, by and among the Company, ASC, the Stockholders and Parent and the Second
Amendment to the Registration Rights Agreement, dated as of August 17, 2001, by
and between
A-38A-39
the Company and Parent (collectively, the "RIGHTS AGREEMENT"), for a period of
one year after such termination; and
(iii) amends Section 7 of the Common Stock Warrant and
Section 7 of the ASC Warrant to provide that upon an equity financing in which
the price per share (as determined in accordance with the applicable provisions
of the Common Stock Warrants and the ASC Warrant) is less than the "Purchase
Price per share" (as defined in the Common Stock Warrants and the ASC Warrant),
the "anti-dilution" rights contained in the Common Stock Warrants and the ASC
Warrant will be limited to decreasing the "Purchase Price per share" of the
Common Stock Warrants and the ASC Warrant to equal the lowest price per share at
which the additional equity financing is raised, but will not result in an
increase in the number of shares of Company Common Stock that can be purchased
pursuant to the Common Stock Warrants and the ASC Warrant;
such waiver and amendment to be effected pursuant to the Omnibus Waiver
and Amendment Agreement, in substantially the form attached as EXHIBIT D.
7.4 FEES AND EXPENSES. Except as set forth in this SECTION 7.4, all
fees and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses whether or not the Merger is consummated; PROVIDED, HOWEVER, that
Parent shall bear all fees and expenses (including without limitation the
Company's reasonable attorneys' and accountants' fees and expenses) incurred in
relation to the printing and filing of the Proxy Statement (including any
preliminary materials related thereto) and any amendments or supplements
thereto.
7.5 AMENDMENT. Subject to applicable law, this Agreement may be
amended by the parties at any time by execution of an instrument in writing
signed on behalf of each of Parent, Merger Sub and the Company.
7.6 EXTENSION; WAIVER. At any time prior to the Effective Time, any
party may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties, (ii)
waive any inaccuracies in the representations and warranties made to such party
contained in this Agreement or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions for the benefit
of such party contained herein. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. Delay in exercising any right under this
Agreement shall not constitute a waiver of such right.
ARTICLE VIII
GENERAL PROVISIONS
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Company, Parent and Merger Sub contained in this Agreement
shall terminate at the earlier of (a) the date of termination pursuant to
SECTION 7.1 or (b) the Effective Time, and only the covenants that by their
terms survive such date shall survive.
8.2 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at the
following addresses or telecopy numbers (or at such other address or telecopy
numbers for a party as shall be specified by like notice):
(a) if to Parent or Merger Sub, to:
VISX, Incorporated
A-39A-40
3400 Central Expressway
Santa Clara, California 95051-0703
Attention: Chief Financial Officer
Telephone No.: (408) 773-7003
Facsimile No.: (408) 773-7201
with a copy to:
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304
Attention: John V. Roos, Esq.
Telephone No.: (650) 493-9300
Facsimile No.: (650) 493-6811
(b) if to the Company, to:
Medjet Inc.
1090 King George Post Road, Suite 301
Edison, NJ 08837
Attention: Eugene I. Gordon
Telephone No.: (732) 738-3990
Facsimile No.: (732) 738-3984
with a copy to:
Kelley Drye & Warren LLP
101 Park Avenue
New York, NY 10178-0002
Attention: Jane E. Jablons, Esq.
Telephone No.: (212) 808-7800
Facsimile No.: (212) 808-7897
8.3 INTERPRETATION; DEFINITIONS.
(a) When a reference is made in this Agreement to Exhibits, such
reference shall be to an Exhibit to this Agreement unless otherwise indicated.
When a reference is made in this Agreement to Sections, such reference shall be
to a Section of this Agreement. Unless otherwise indicated the words "include,"
"includes" and "including" when used in this Agreement shall be deemed in each
case to be followed by the words "without limitation." The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. When
reference is made in this Agreement to "the business of" an entity, such
reference shall be deemed to include the business of all direct and indirect
subsidiaries of such entity. Reference to the subsidiaries of an entity shall be
deemed to include all direct and indirect subsidiaries of such entity.
(b) For purposes of this Agreement:
A-40A-41
(i) the term "KNOWLEDGE" means with respect to a party
hereto, with respect to any matter in question, the actual knowledge of the
executive officers of such party after reasonable inquiry;
(ii) the term "MATERIAL ADVERSE EFFECT" when used in
connection with an entity means any change, event, violation, inaccuracy,
circumstance or effect that is, or could reasonably be expected to be,
materially adverse to the business, assets, liabilities, financial or other
condition, or results of operations of such entity and its subsidiaries taken as
a whole;
(iii) the term "PERSON" shall mean any individual,
corporation (including any non-profit corporation), general partnership, limited
partnership, limited liability partnership, joint venture, estate, trust,
company (including any limited liability company or joint stock company), firm
or other enterprise, association, organization, entity or Governmental Entity.
8.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8.5 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This Agreement and
the documents and instruments and other agreements among the parties as
contemplated by or referred to in this Agreement, including the Related
Agreements, the Parent Warrant, the Company Schedule and the Parent Schedule:
(a) constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof, it being understood that the Nondisclosure Agreement shall continue in
full force and effect until the Closing and shall survive any termination of
this Agreement; and (b) are not intended to confer upon any other person any
rights or remedies hereunder (except as provided in SECTION 5.14 with respect to
the directors and officers of the Company).
8.6 SEVERABILITY. In the event that any provision of this Agreement,
or the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties. The parties further agree to replace such
void or unenforceable provision of this Agreement with a valid and enforceable
provision that will achieve, to the extent possible, the economic, business and
other purposes of such void or unenforceable provision.
8.7 OTHER REMEDIES; SPECIFIC PERFORMANCE. Except as otherwise provided
in this Agreement, any and all remedies expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to seek an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity.
8.8 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, regardless of the laws
that might otherwise govern under applicable principles of conflicts of law
thereof.
A-41A-42
8.9 RULES OF CONSTRUCTION. The parties agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
8.10 ASSIGNMENT. No party may assign either this Agreement or any of
its rights, interests, or obligations hereunder without the prior written
approval of the other parties. Any purported assignment without the consent
required pursuant to the preceding sentence shall be null and void. Subject to
the second preceding sentence, this Agreement shall be binding upon and shall
inure to the benefit of the parties and their respective successors and
permitted assigns.
[REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]
A-42A-43
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be signed, all as of the date first written above.
VISX, INCORPORATED
By: ---------------------------------------------------/S/ DEREK A. BERTOCCI
--------------------------------------------------
Name: Derek A. Bertocci
Title: Vice President, Controller
ORION ACQUISITION CORPORATION
By: ---------------------------------------------------/S/ DEREK A. BERTOCCI
--------------------------------------------------
Name: Derek A. Bertocci
Title: Vice President, Chief Financial Officer
MEDJET INC.
By: ---------------------------------------------------/S/ EUGENE I. GORDON
-------------------------------------------------
Name: Eugene I. Gordon
Title: Chief Executive Officer
A-43A-44
AnnexANNEX B
-------
DELAWARE CODE
TITLE 8 CORPORATIONS
CHAPTER 1. GENERAL CORPORATION LAW
SUBCHAPTER IX. MERGER, CONSOLIDATION OR CONVERSION
SS.262. APPRAISAL RIGHTS.
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to ss.228 of
this title shall be entitled to an appraisal by the Court of Chancery ofoF the
fair value of the stockholder's shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in this section,
the word "stockholder" means a holder of record of stock in a stock corporation
and also a member of record of a nonstock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock corporation; and the
words "depository receipt" mean a receipt or other instrument issued by a
depository representing an interest in one or more shares, or fractions thereof,
solely of stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to ss.251 (other than a merger effected pursuant to ss.251(g)
of this title), ss.252, ss.254, ss.257, ss.258, ss.263 or ss.264 of this title:
(1) Provided, however, that no appraisal rights under this
section shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or consolidation,
were either (i) listed on a national securities exchange or designated as a
national market system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc. or (ii) held of record by more
than 2,000 holders; and further provided that no appraisal rights shall be
available for any shares of stock of the constituent corporation surviving a
merger if the merger did not require for its approval the vote of the
stockholders of the surviving corporation as provided in subsection (f) of
ss.251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal
rights under this section shall be available for the shares of any class or
series of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to ss.ss.251,
252, 254, 257, 258, 263 and 264 of this title to accept for such stock anything
except:
a. Shares of stock of the corporation surviving or
resulting from such merger or consolidation, or depository receipts in respect
thereof;
b. Shares of stock of any other corporation or depository
receipts in respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository receipts at the effective date of the merger or
consolidation will be either listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or held of record
by more than 2,000 holders;
B-1
c. Cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository
receipts and cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware
corporation party to a merger effected under ss.253 of this title is not owned
by the parent corporation immediately prior to the merger, appraisal rights
shall be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal
rights are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to the
meeting, shall notify each of its stockholders who was such on the record date
for such meeting with respect to shares for which appraisal rights are available
pursuant to subsection (b) or (c) hereof that appraisal rights are available for
any or all of the shares of the constituent corporations, and shall include in
such notice a copy of this section. Each stockholder electing to demand the
appraisal of such stockholder's shares shall deliver to the corporation, before
the taking of the vote on the merger or consolidation, a written demand for
appraisal of such stockholder's shares. Such demand will be sufficient if it
reasonably informs the corporation of the identity of the stockholder and that
the stockholder intends thereby to demand the appraisal of such stockholder's
shares. A proxy or vote against the merger or consolidation shall not constitute
such a demand. A stockholder electing to take such action must do so by a
separate written demand as herein provided. Within 10 days after the effective
date of such merger or consolidation, the surviving or resulting corporation
shall notify each stockholder of each constituent corporation who has complied
with this subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become effective;
or
(2) If the merger or consolidation was approved pursuant to
ss.228 or ss.253 ofOF this title, then, either a constituent corporation before
the effective date of the merger or consolidation, or the surviving or resulting
corporation within ten days thereafter, shall notify each of the holders of any
class or series of stock of such constituent corporation who are entitled to
appraisal rights of the approval of the merger or consolidation and that
appraisal rights are available for any or all shares of such class or series of
stock of such constituent corporation, and shall include in such notice a copy
of this section. Such notice may, and, if given on or after the effective date
of the merger or consolidation, shall, also notify such stockholders of the
effective date of the merger or consolidation. Any stockholder entitled to
appraisal rights may, within 20 days after the date of mailing of such notice,
demand in writing from the surviving or resulting corporation the appraisal of
such holder's shares. Such demand will be sufficient if it reasonably informs
the corporation of the identity of the stockholder and that the stockholder
intends thereby to demand the appraisal of such holder's shares. If such notice
did not notify stockholders of the effective date of the merger or
consolidation, either (i) each such constituent corporation shall send a second
notice before the effective date of the merger or consolidation notifying each
of the holders of any
B-2
class or series of stock of such constituent corporation that are entitled to
appraisal rights of the effective date of the merger or consolidation or (ii)
the surviving or resulting corporation shall send such a second notice to all
such holders on or within 10 days after such effective date; provided, however,
that if such second notice is sent more than 20 days following the sending of
the first notice, such second notice need only be sent to each stockholder who
is entitled to appraisal rights and who has demanded appraisal of such holder's
shares in accordance with this subsection. An affidavit of the secretary or
assistant secretary or of the transfer agent of the corporation that is required
to give either notice that such notice has been given shall, in the absence of
fraud, be prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each constituent
corporation may fix, in advance, a record date that shall be not more than 10
days prior to the date the notice is given, provided, that if the notice is
given on or after the effective date of the merger or consolidation, the record
date shall be such effective date. If no record date is fixed and the notice is
given prior to the effective date, the record date shall be the close of
business on the day next preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw such stockholder's demand for appraisal and to accept the terms offered
upon the merger or consolidation. Within 120 days after the effective date of
the merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting from
the consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10 days
after such stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
B-3
(h) After determining the stockholders entitled to an appraisal, the
Court shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted
such stockholder's certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal rights under this
section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation, either
within 60 days after the effective date of the merger or consolidation as
provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court
of Chancery shall be dismissed as to any stockholder without the approval of the
Court, and such approval may be conditioned upon such terms as the Court deems
just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
B-4
AnnexANNEX C
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MEDJET INC.
FINANCE AND AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
I. PURPOSE
The Finance and Audit Committee shall assist the Board of Directors in
fulfilling its oversight responsibility relating to corporate accounting,
reporting practices of the Corporation and the quality and integrity of the
financial reports of the Corporation. The Finance and Audit Committee's primary
duties and responsibilities are to:
o Oversee that management has maintained the reliability and
integrity of the accounting policies and financial reporting and
disclosure practices of the Corporation.
o Oversee that management has established and maintained processes
to assure that an adequate system of internal control is
functioning with the Corporation.
o Oversee that management has established and maintained processes
to assure compliance by the Corporation with all applicable
laws, regulations and corporate policy.
The Finance and Audit Committee will fulfill these responsibilities primarily by
carrying out the activities enumerated in Section IV of this Charter.
II. COMPOSITION
The Finance and Audit Committee shall be appointed by the Board of
Directors and shall be comprised of at least two directors, each of whom shall
be an independent director, and free from any relationship that, in the opinion
of the Board, would interfere with the exercise of his or her independent
judgment as a member of the Finance and Audit Committee. All members of the
Finance and Audit Committee shall be able to read and understand basic financial
statements, or will become able to do so within a reasonable period of time
after his or her appointment to the Finance and Audit Committee.
III. MEETINGS
The Finance and Audit Committee will establish its meeting schedule. As
part of its job to foster open communication, the Finance and Audit Committee
should meet at least annually with management and the independent accountants
separately to discuss any matters that the Finance and Audit Committee or either
of these groups believe should be discussed privately. In addition, the Finance
and Audit Committee or at least its Chairperson should meet with the independent
accountants and management quarterly to review the Corporation's financials.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties, in addition to following
such other procedures as it deems appropriate, the Finance and Audit Committee
shall:
C-1
1. Review and reassess, at least annually, the adequacy of this Charter,
and make recommendations to the Board, as conditions dictate, to update
this Charter.
2. Review with management and the independent accountants the Corporation's
annual financial statements, including a discussion with the independent
accountants of the matters required to be discussed by Statement of
Auditing Standards No. 61 ("SAS No. 61").
3. Review with management and the independent accountants the Form 10-QSB
prior to its filing or prior to the release of earnings, including a
discussion with the independent accountants of the matters required to
be discussed by SAS No. 61. The Chairperson of the Finance and Audit
Committee may represent the entire Finance and Audit Committee for
purposes of this review.
4. Review the performance of the independent accountants and make
recommendations to the Board regarding the appointment or termination of
the independent accountants. On an annual basis, the Finance and Audit
Committee should review and discuss with the accountants all significant
relationships the accountants have with the Corporation to determine the
accountants' independence.
5. Oversee independence of the accountants by:
o receiving from the accountants, on a periodic basis, a formal
written statement delineating all relationships between the
accountants and the Corporation consistent with Independence
Standards Board Standard No. 1 ("ISB Standard No. 1");
o reviewing, and actively discussing with the Board, if necessary,
and the accountants, on a periodic basis, any disclosed
relationships or services between the accountants and the
Corporation or any other disclosed relationships or services
that may impact the objectivity and independence of the
accountants; and
o recommending, if necessary, that the Board take certain action
to satisfy itself of the auditor's independence.
6. Discuss with the independent accountants and management, the adequacy of
the Corporation's internal controls.
7. Review any significant disagreement among management and the independent
accountants in connection with the preparation of the financial
statements.
* * * *
Adopted October 26, 2001
C-2
PROXY MEDJET INC.
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 24, 2002
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL
MEETING OF STOCKHOLDERS TO BE HELD ON ______________, 2002.
The undersigned stockholder(s) of Medjet Inc., a Delaware corporation, hereby
revokesrevoke(s) all prior proxies and appointsappoint(s) Eugene I. Gordon, Ph.D., or and Cheryl A.
Blake, or either of them, as proxies, with full individual power of
substitution, to represent the undersigned and to vote all shares of Common
Stock and Series B Convertible Preferred Stock of the Company which the
undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Company to be held at 1090 King Georges Post Road, Suite 307, Edison, New Jersey
08837, on , ,Wednesday, April 24, 2002, at 10:00 a.m. and at any and all
adjournments and postponements thereof, on all matters set forth on the reverse
side:
PLEASE MARK, SIGN AND DATE THIS PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE
(Continued, and to be signed and dated, on the reverse side.)
VOTE BY PHONE: 1-800-690-6903
MEDJET INC. Use any touch-tone telephone to transmit your
C/O PROXY SERVICES voting instructions. Have your proxy card in
P.O. BOX 9141 hand when you call. You will be prompted to
FARMINGDALE, NY 11735 enter your 12-digit Control Number which is
located below and then follow the simple
instructions the Vote Voice provides you.
VOTE BY INTERNET: WWW.PROXYVOTE.COM Use the
Internet to transmit your voting instructions.
Have your proxy card in hand when you access the
web site. You will be prompted to enter your
12-digit Control Number which is located below
to obtain your records and create an electronic
voting instruction form.
VOTE BY MAIL
Mark sign and date your proxy card and return it
in the manner specified below. If this Proxy is returned
without direction being given, the Proxy will be voted FOR each proposal. The
Board of Directors recommends a vote FOR each proposal.postage-paid envelope we've provided or
return to MEDJET INC. c/o ADP, 51 Mercedes Way,
Edgewood, NY 11717.
MEDJET INC.
THE DIRECTORS RECOMMEND A VOTE "FOR" ITEMS 1 AND 2
VOTE ON PROPOSALS
1. ELECTION OF DIRECTORS
NOMINEES: Eugene I. Gordon, Ph.D. [ ] FOR all nominees listed
Edward E. David, Jr., Sc.D.
William C. Hittinger [ ] WITHHOLD AUTHORITY
Ronald B. Odrich, D.D.S. to vote for the following
Elias Snitzer, Ph.D. nominee(s):
Timothy R. Maier
[ ] ________________________-----------------------------
[ ] WITHHOLD AUTHORITY to
vote for all nominees
2. PROPOSAL TO APPROVE AND ADOPT THE AGREEMENT AND PLAN OF MERGER AND
REORGANIZATION BY AND AMONG VISX, INCORPORATED, ORION ACQUISITION CORP. AND
MEDJET INC. AND THE TRANSACTIONS CONTEMPLATED THEREBY, AS MORE PARTICULARLY
DESCRIBED IN THE PROXY STATEMENT.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
THIS PROXY, WHEN PROPERLY EXECUTED, SHALL BE VOTED AS DIRECTED.The shares represented by this proxy when properly executed will be voted in the
manner directed herein by the undersigned stockholder(s). IF NO DIRECTION IS
INDICATED,MADE, THIS PROXY WILL BE VOTED FOR EACH PROPOSAL. ShouldITEMS 1 AND 2. If any other matter requiring a vote ofmatters properly
come before the stockholders arise,meeting, or if cumulative voting is required, the personsperson named
in this Proxy or their substitutes shallproxy will vote in accordance with their best judgment in
the interest of the Company. The Board of Directors is not aware of any matter
that is to be presented for action at the meeting other than the matters set
forth herein.discretion.
Dated _____________,_______________________, 2002
_______________________________________________________________ _____________________________________
Signature
_________________________ Signature
Please sign the Proxy exactly as the name appears hereon. If shares are held by
joint tenants, both should sign. Executors, administrators, trustees or others
signing in a representative capacity should indicate the capacity in which
signed.
IF YOU PLAN TO ATTEND THE ANNUAL MEETING OF STOCKHOLDERS IN PERSON,
PLEASE SO INDICATE BY MARKING THE BOX. [ ]
PLEASE VOTE, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.