GOVERNANCE ARRANGEMENTS Enforceability of the Agreement
Governance Matters (a) The Company shall cause the Investor Designated Director to be elected or appointed on the Closing Date to the Board of Directors as well as the board of directors of the Bank (the “Bank Board”), subject to satisfaction of all legal and governance requirements regarding service as a member of the Board of Directors and the Bank Board. The Company shall recommend to its shareholders the election of the Investor Designated Director to the Board of Directors at the Company’s annual meeting, subject to satisfaction of all legal and governance requirements regarding service as a director of the Company. If the Investor no longer has the Qualifying Ownership Interest, it shall have no further rights under Sections 3.4(a), 3.4(b), 3.4(c) and 3.4(d) and, in each case, at the written request of the Board of Directors, the Investor shall use all reasonable best efforts to cause the Investor Designated Director to resign from the Board of Directors and the Bank Board as promptly as possible thereafter. The Board of Directors and the Bank Board shall cause the Investor Designated Director to be appointed to the committees of the Board of Directors and the Bank Board, as applicable, identified by the Investor, so long as the Investor Designated Director qualifies to serve on such committees subject to satisfaction of all legal and governance requirements regarding service as a committee member.
(b) For so long as the Investor owns, in the aggregate with its Affiliates, ten percent (10%) or more of the outstanding shares of Common Stock (as adjusted from time to time for any reorganization, recapitalization, stock dividend, stock split, reverse stock split, or other like changes in the Company’s capitalization) (the “Qualifying Ownership Interest”), the Investor Designated Director shall, subject to applicable Law, be the nominee of the Company and the Nominating Committee of the Board of Directors (the “Nominating Committee”) to serve on the Board of Directors and on the Bank Board. The Company shall use its reasonable best efforts to have the Investor Designated Director elected as director of the Company by the shareholders of the Company and the Company shall solicit proxies for the Investor Designated Director to the same extent as it does for any of its other nominees to the Board of Directors.
(c) For so long as the Investor owns, in the aggregate with its Affiliates, the Qualifying Ownership Interest, the Investor Designated Director shall, subject to applicable Law (including the applicable rules of the NYSE), be appointed to the committees of the Board of Directors and the Bank Board (or any other committees performing similar functions of the foregoing committees) identified by the Investor.
(d) Subject to Section 3.4(a), upon the death, disability, resignation, retirement, disqualification or removal from office of a Designated Investor Director, the Investor shall have the right to designate the replacement for the Investor Designated Director, which replacement shall be reasonably acceptable to the Company and shall satisfy all legal and governance requirements regarding service as a member of the Board of Directors and the Bank Board, as applicable. The Board of Directors shall use its reasonable best efforts to take all action required to fill the vacancy resulting therefrom with such person (including such person, subject to applicable Law, being the Company’s and the Nominating Committee’s nominee to serve on the Board of Directors, calling a special meeting of shareholders to vote on such person, using all reasonable best efforts to have such person elected as director of the Company by the shareholders of the Company and the Company soliciting proxies for such person to the same extent as it does for any of its other nominees to the Board of Directors).
(e) For so long the Investor with its Affiliates owns, in the aggregate with its Affiliates, five percent (5%) or more of the aggregate number of outstanding shares of Common Stock (as adjusted from time to time for any reorganization, recapitalization, stock dividend, stock split, reverse stock split, or other like changes in the Company’s capitalization), the Company shall, subject to applicable Law, invite a person designated by the Investor and reasonably acceptable to the Board of Directors (the “Observer”) to attend all meetings of the Board of Directors and the Bank Board (including any meetings of committees thereof which the Investor Designated Director is a member) in a nonvoting observer capacity. If the Investor no longer beneficially owns the minimum number of Common Shares as specified in the first sentence of this Section 3.4(e), the Investor shall have no further rights under this Section 3.4(e). The Investor shall cause the Observer to agree to hold in confidence and trust and to act in a fiduciary manner with respect to all information provided to such Observer and the Company, the Board of Directors, the Bank Board and any committees thereof shall have the right to withhold any information and to exclude the Observer from any meeting or portion thereof (i) if doing so is, in the opinion of counsel to the Company, necessary to protect the attorney-client privilege between the Company and counsel or (ii) if the Board of Directors, the Bank Board or any committee thereof determines in good faith, after consultation with counsel, that fiduciary requirements under applicable Law would make attendance by the Observer inappropriate. The Observer shall have no right to vote on any matters presented to the Board of Directors, the Bank Board or any committee thereof.
(f) The Investor Designated Director shall be entitled to the same compensation, including fees, and the same indemnification and insurance coverage in connection with his or her role as a director as the other members of the Board of Directors or the Bank Board, as applicable, and the Investor Designated Director shall be entitled to reimbursement for documented, reasonable out-of-pocket expenses incurred in attending meetings of the Board of Directors or the Bank Board, or any committee thereof, to the same extent as the other members of the Board of Directors or the Bank Board, as applicable. The Company shall notify the Investor Designated Director of all regular meetings and special meetings of the Board of Directors or the Bank Board and of all regular and special meetings of any committee of the Board of Directors or the Bank Board of which the Investor Designated Director is a member in accordance with the applicable bylaws. The Company and the Bank shall provide the Investor Designated Director with copies of all notices, minutes, consents and other material that they provide to all other members of their respective boards of directors concurrently as such materials are provided to the other members.
(g) Each of the Company and the Bank acknowledges that the Designated Investor Director may have certain rights to indemnification, advancement of expenses and/or insurance provided by the Investor and/or certain of its Affiliates (collectively, the “Investor Indemnitors”). Each of the Company and the Bank hereby agrees (1) that it is the indemnitor of first resort (i.e., its obligations to the Designated Investor Director are primary and any obligation of the Investor Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by the Designated Investor Director are secondary), and (2) that it shall be required to advance the full amount of expenses incurred by the Designated Investor Director and shall be liable for the full amount of all expenses and liabilities incurred by the Designated Investor Director, in each case to the extent legally permitted and as required by the terms of this Agreement and the articles of incorporation and bylaws of the Company and the Bank (and any other agreement regarding indemnification between the Company and/or the Bank, on the one hand, and the Designated Investor Director, on the other hand), without regard to any rights the Designated Investor Director may have against any Investor Indemnitor. The Company further agrees that no advancement or payment by any Investor Indemnitor on behalf of the Designated Investor Director with respect to any claim for which the Designated Investor Director has sought indemnification from the Company shall affect the foregoing and the Investor Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of the Designated Investor Director against the Company. The Company agrees that the Investor Indemnitors are express third party beneficiaries of the terms of this Section 3.4(g).
(h) For the purposes of the definition of “Change in Control” under the Benefit Plans, the Company acknowledges and agrees that the Investor Designated Director shall be deemed to be an “Incumbent Director” as defined in the applicable Benefit Plans.
Approval by Limited Partners of Merger or Consolidation (a) Except as provided in Section 14.3(d), the General Partner, upon its approval of the Merger Agreement, shall direct that the Merger Agreement be submitted to a vote of Limited Partners, whether at a special meeting or by written consent, in either case in accordance with the requirements of Article XIII. A copy or a summary of the Merger Agreement shall be included in or enclosed with the notice of a special meeting or the written consent.
(b) Except as provided in Section 14.3(d), the Merger Agreement shall be approved upon receiving the affirmative vote or consent of the holders of a Unit Majority unless the Merger Agreement contains any provision that, if contained in an amendment to this Agreement, the provisions of this Agreement or the Delaware Act would require for its approval the vote or consent of a greater percentage of the Outstanding Units or of any class of Limited Partners, in which case such greater percentage vote or consent shall be required for approval of the Merger Agreement.
(c) Except as provided in Section 14.3(d), after such approval by vote or consent of the Limited Partners, and at any time prior to the filing of the certificate of merger pursuant to Section 14.4, the merger or consolidation may be abandoned pursuant to provisions therefor, if any, set forth in the Merger Agreement.
(d) Notwithstanding anything else contained in this Article XIV or in this Agreement, the General Partner is permitted, in its discretion, without Limited Partner approval, to merge the Partnership or any Group Member into, or convey all of the Partnership’s assets to, another limited liability entity which shall be newly formed and shall have no assets, liabilities or operations at the time of such Merger other than those it receives from the Partnership or other Group Member if (i) the General Partner has received an Opinion of Counsel that the merger or conveyance, as the case may be, would not result in the loss of the limited liability of any Limited Partner or any Group Member or cause the Partnership or any Group Member to be treated as an association taxable as a corporation or otherwise to be taxed as an entity for federal income tax purposes (to the extent not previously treated as such), (ii) the sole purpose of such merger or conveyance is to effect a mere change in the legal form of the Partnership into another limited liability entity and (iii) the governing instruments of the new entity provide the Limited Partners and the General Partner with the same rights and obligations as are herein contained.
Corporate Governance Matters (a) Holdco and Sorin shall take all actions within their power as may be necessary to cause (i) for a period beginning as of the Cyberonics Merger Effective Time and ending on the date of the first annual meeting of the members of Holdco following the completion of the second full fiscal year of Holdco (such period, the “Initial Period”) the number of directors constituting the Holdco board of directors as of the Effective Times to be nine (9) and (ii) the Holdco board of directors during the Initial Period to be composed as follows: (A) four (4) individuals designated by Cyberonics prior to the Closing Date (each, a “Cyberonics Designee”), (B) four individuals designated by Sorin prior to the Closing Date (each, a “Sorin Designee”) and (C) one (1) director mutually agreed to by Sorin and Cyberonics, who shall meet the independence standards of the NASDAQ applicable to non-controlled domestic U.S. issuers.
(b) Sorin and Holdco shall take all corporate actions as may be necessary to cause, effective as of the Sorin Merger Effective Time and Cyberonics Merger Effective Time, as the case may be: (i) the Chief Executive Officer of Sorin as of immediately prior to the Sorin Merger Effective Time to serve as the Chief Executive Officer of the Sorin Merger Surviving Company immediately following the Sorin Merger Effective Time until the end of the Initial Period, (ii) the Chief Executive Officer of Cyberonics as of immediately prior to the Cyberonics Merger Effective Time to serve as the Chairman of the Holdco board of directors for the Initial Period, (iii) a Cyberonics Designee to serve as the Chairman of the audit and compensation committees of the Holdco board of directors for the Initial Period, (iv) each committee of the Holdco board of directors to have at least three (3) members and (v) a Sorin Designee to serve as a member of each committee of the Holdco board of directors during the Initial Period.
(c) For as long as the Holdco Shares are listed on the NASDAQ, Holdco shall comply with all NASDAQ corporate governance standards set forth in Rule 5600 of the NASDAQ Stock Market Rules applicable to non-controlled domestic U.S. issuers, regardless of whether Holdco is a foreign private issuer. For as long as the Holdco Shares are listed on the LSE, Holdco shall comply with all Listing Rules and any other Laws applicable to it.
(d) Prior to the Closing Date, Sorin and Holdco shall procure the passing of resolutions of the shareholders of Holdco providing for the reregistration of Holdco as a public limited company.
(e) Subject to applicable Law, Sorin and Cyberonics shall take all requisite action to cause the organizational documents of those entities that will be Subsidiaries of Holdco to be substantially in such form as agreed by Cyberonics and Sorin, effective as of the Cyberonics Merger Effective Time.
(f) As promptly as practicable after the Effective Times, the Sorin Merger Surviving Company shall take all requisite action to cause the composition of the board of directors or other governing body of each of the Subsidiaries of the Sorin Merger Surviving Company to reflect representation by directors designated by Cyberonics immediately prior to the Effective Times, on the one hand, and directors designated by Sorin immediately prior to the Effective Times, on the other hand, that is proportionate to the relative representation of directors designated by such party on the Holdco board of directors as of the Effective Times as provided in Section 5.18(a), unless otherwise mutually agreed by Sorin and Cyberonics.
(g) The Cyberonics Designees, the Sorin Designees and each of their respective successors on the Holdco board of directors during the first three (3) years following the Effective Times are express third-party beneficiaries of Sections 5.18(a) and 5.18(b).
Liquidations, Mergers, Consolidations, Acquisitions Holdings shall not, and shall not permit any of its Material Subsidiaries to, dissolve, liquidate, or wind-up its affairs, or become a party to any amalgamation, merger or consolidation, or acquire by purchase, lease, or otherwise all or substantially all of the assets or capital stock of or other ownership interest in any other Person, provided that
(1) any Material Subsidiary may consolidate, amalgamate or merge into Holdings or any other Material Subsidiary provided that the Company may not merge, amalgamate or consolidate with Holdings, and the Company may only merge, amalgamate or consolidate with another Material Subsidiary if the Company is the surviving entity of such merger, amalgamation or consolidation; and
(2) Holdings or any Material Subsidiary may acquire, whether by purchase, by amalgamation or by merger, (A) all of the ownership interests of another Person or (B) substantially all of the assets of another Person or of a business or division of another Person (each a “Permitted Acquisition”), provided that each of the following requirements is met:
(i) if Holdings or any Material Subsidiary is acquiring the ownership interests in such Person and such Person meets the criteria for a Material Subsidiary set forth in the definition of such term at Section 1.01, such Person shall execute a Guarantor Joinder and join this Agreement as a Guarantor pursuant to Section 10.18 [Joinder of Guarantors] on or before the date of such Permitted Acquisition;
(ii) the board of directors or other equivalent governing body of such Person shall have approved such Permitted Acquisition and Holdings or the relevant Material Subsidiary shall have delivered to the Banks written evidence of such approval of the board of directors (or equivalent body) of such Person for such Permitted Acquisition;
(iii) the business acquired, or the business conducted by the Person whose ownership interests are being acquired, as applicable, shall be substantially the same as, or otherwise complementary or related to, one or more lines of business conducted by Holdings or any Material Subsidiary, or otherwise incidental to the business of a financial services company, and shall comply with Section 7.02(j) [Continuation of or Change in Business];
(iv) no Potential Default or Event of Default shall exist immediately prior to and after giving effect to such Permitted Acquisition; and
(v) upon the reasonable request of Agent, Holdings or the relevant Material Subsidiary shall deliver to the Agent at least five (5) Business Days before such Permitted Acquisition such information about such Person or its assets as Agent may reasonably require.
Powers of General Partner Notwithstanding any provision of this Agreement to the contrary, the General Partner's discretion and authority are subject to the limitations imposed by law, and by the Certificate of Incorporation and bylaws. Subject to the foregoing and to other limitations imposed by this Agreement, the General Partner shall have full, complete and exclusive discretion to manage and control the business and affairs of the Partnership and make all decisions affecting the business and assets of the Partnership. Without limiting the generality of the foregoing (but subject to the restrictions specifically contained in this Agreement), the General Partner shall have the power and authority to take the following actions on behalf of the Partnership:
(a) to acquire, purchase, own, manage, operate, lease and dispose of any real property and any other property or assets that the General Partner determines are necessary or appropriate or in the best interests of conducting the business of the Partnership in each case not inconsistent with the Company's qualification as a REIT;
(b) to construct buildings and make other improvements (including renovations) on or to the properties owned or leased directly or indirectly by the Partnership;
(c) to borrow money for the Partnership, issue evidences of indebtedness in connection therewith, refinance, guarantee, increase the amount of, modify, amend or change the terms of, or extend the time for the payment of, any indebtedness or obligation of or to the Partnership, and secure such indebtedness by mortgage, deed of trust, pledge or other lien on the Partnership's assets;
(d) to pay, either directly or by reimbursement, for all Operating Expenses to third parties or to the General Partner (as set forth in this Agreement);
(e) to lease all or any portion of any of the Partnership's assets, whether or not the terms of such leases extend beyond the termination date of the Partnership and whether or not any portion of the Partnership's assets so leased are to be occupied by the lessee, or, in turn, subleased in whole or in part to others, for such consideration and on such terms as the General Partner may determine;
(f) to prosecute, defend, arbitrate, or compromise any and all claims or liabilities in favor of or against the Partnership, on such terms and in such manner as the General Partner may reasonably determine, and similarly to prosecute, settle or defend litigation with respect to the Partners, the Partnership, or the Partnership's assets;
(g) to file applications, communicate, and otherwise deal with any and all governmental agencies having jurisdiction over, or in any way affecting, the Partnership's assets or any other aspect of the Partnership business;
(h) to make or revoke any election permitted or required of the Partnership by any taxing authority;
(i) to maintain such insurance coverage for public liability, fire and casualty, and any and all other insurance for the protection of the Partnership, for the conservation of Partnership assets, or for any other purpose convenient or beneficial to the Partnership, in such amounts and such types as the General Partner shall determine from time to time;
(j) to determine whether or not to apply any insurance proceeds for any Property to the restoration of such Property or to distribute the same;
(k) to retain providers of services of any kind or nature in connection with the Partnership business and to pay therefor such reasonable remuneration as the General Partner may deem proper;
(l) to negotiate and conclude agreements on behalf of the Partnership with respect to any of the rights, powers and authority conferred upon the General Partner, including, without limitation, management agreements, development agreements and agreements with public and private colleges and universities;
(m) to maintain accurate accounting records and to file promptly all federal, state and local income tax returns on behalf of the Partnership;
(n) to form or acquire an interest in, and contribute property to, any further limited or general partnerships, joint ventures or other relationships that it deems desirable (including, without limitation, the acquisition of interests in, and the contributions of property to, its Subsidiaries and any other Person in which it has an equity interest from time to time);
(o) to distribute Partnership cash or other Partnership assets in accordance with this Agreement;
(p) to establish Partnership reserves for working capital, capital expenditures, contingent liabilities or any other valid Partnership purpose;
(q) to authorize, issue, sell, redeem or otherwise purchase any Partnership Interests or any securities (including secured and unsecured debt obligations of the Partnership, debt obligations of the Partnership convertible into any class or series of Partnership Interests, or options, rights, warrants or appreciation rights relating to any Partnership Interests) of the Partnership;
(r) subject to the provisions of Section 9.1, to merge, consolidate or combine the Partnership with or into another Person (to the extent permitted by applicable law);
(s) to do any and all acts and things necessary or prudent to ensure that the Partnership will not be classified as a "publicly traded partnership" for purposes of Section 7704 of the Code;
(t) to issue additional Partnership Interests pursuant to Section 4.3 hereof;
(u) to pay cash to redeem Partnership Units held by a Limited Partner in connection with a Limited Partner's exercise of its Redemption Right under Section 7.4 hereof;
(v) to amend and restate Exhibit A hereto to reflect accurately at all times the Capital Contributions, Common Percentage Interests and Preferred Percentage Interests of the Partners as the same are adjusted from time to time to the extent necessary to reflect redemptions, Capital Contributions, the issuance of Partnership Units, the admission of any Additional Limited Partner or any Substitute Limited Partner or otherwise, which amendment and restatement, notwithstanding anything in this Agreement to the contrary, shall not be deemed an amendment to this Agreement, as long as the matter or event being reflected in Exhibit A hereto otherwise is authorized by this Agreement;
(w) to take whatever action the General Partner deems appropriate to maintain the economic equivalency of Common Partnership Units and REIT Common Shares and Preferred Partnership Units and REIT Preferred Shares, respectively; and
(x) to take such other action, execute, acknowledge, swear to or deliver such other documents and instruments, and perform any and all other acts the General Partner deems necessary or appropriate for the formation, continuation and conduct of the business and affairs of the Partnership (including, without limitation, all actions consistent with qualification of the Company as a REIT) and to possess and enjoy all of the rights and powers of a general partner as provided by the Act. Each of the Limited Partners agrees that the General Partner is authorized to execute, deliver and perform the above-mentioned agreements and transactions on behalf of the Partnership without any further act, approval or vote of the Partners, notwithstanding any other provision of this Agreement (except as provided in this Section 6.1(r), Section 9.1 or Article XI), the Act or any applicable law, rule or regulation to the fullest extent permitted under the Act or other applicable law, rule or regulation. The execution, delivery or performance by the General Partner or the Partnership of any agreement authorized or permitted under this Agreement shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other persons under this Agreement or of any duty stated or implied by law or equity. Except as otherwise provided herein, to the extent the duties of the General Partner require expenditures of funds to be paid to third parties, the General Partner shall not have any obligations hereunder except to the extent that Partnership funds are reasonably available to it for the performance of such duties, and nothing herein contained shall be deemed to authorize or require the General Partner, in its capacity as such, to expend its individual funds for payment to third parties or to undertake any individual liability or obligation on behalf of the Partnership.
Sub-Divisions If after the date hereof, and subject to the provisions of Section 4.6 below, the number of issued and outstanding Ordinary Shares is increased by a capitalization or share dividend of Ordinary Shares, or by a sub-division of Ordinary Shares or other similar event, then, on the effective date of such share capitalization, sub-division or similar event, the number of Ordinary Shares issuable on exercise of each Warrant shall be increased in proportion to such increase in the issued and outstanding Ordinary Shares. A rights offering made to all or substantially all holders of Ordinary Shares entitling holders to purchase Ordinary Shares at a price less than the “Historical Fair Market Value” (as defined below) shall be deemed a capitalization of a number of Ordinary Shares equal to the product of (i) the number of Ordinary Shares actually sold in such rights offering (or issuable under any other equity securities sold in such rights offering that are convertible into or exercisable for the Ordinary Shares) multiplied by (ii) one (1) minus the quotient of (x) the price per Ordinary Share paid in such rights offering divided by (y) the Historical Fair Market Value. For purposes of this subsection 4.1.1, (i) if the rights offering is for securities convertible into or exercisable for Ordinary Shares, in determining the price payable for Ordinary Shares, there shall be taken into account any consideration received for such rights, as well as any additional amount payable upon exercise or conversion and (ii) “Historical Fair Market Value” means the volume weighted average price of the Ordinary Shares during the ten (10) trading day period ending on the trading day prior to the first date on which the Ordinary Shares trade on the applicable exchange or in the applicable market, regular way, without the right to receive such rights. No Ordinary Shares shall be issued at less than their par value.
Organizational Matters The Partners agree as follows:
Operations of Merger Sub Merger Sub is a direct, wholly owned subsidiary of Parent, was formed solely for the purpose of engaging in the transactions contemplated by this Agreement, has engaged in no other business activities and has conducted its operations only as contemplated by this Agreement.
Interim Operations of Merger Sub Merger Sub was formed solely for the purpose of engaging in the transactions contemplated by this Agreement, has engaged in no other business activities and has conducted its operations only as contemplated by this Agreement.
