EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
among
BOSTON SCIENTIFIC CORPORATION,
CHARGER ACQUISITION CORP.,
INTERVENTIONAL TECHNOLOGIES, INC.
and
Xxxxxx Xxxxx, Xxxxxx Xxxxxxxx and Xxxxxxx Xxxxx,
each as a member of the
MERGER COMMITTEE
Dated as of February 15, 2001
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TABLE OF CONTENTS
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Page
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ARTICLE I
THE MERGER
SECTION 1.01. The Merger......................................................2
SECTION 1.02. Effective Time; Closing.........................................2
SECTION 1.03. Effect of the Merger............................................2
SECTION 1.04. Articles of Incorporation; By-laws..............................2
SECTION 1.05. Directors and Officers..........................................3
ARTICLE II
MERGER CONSIDERATION; EXCHANGE OF CERTIFICATES
SECTION 2.01. Merger Consideration............................................3
SECTION 2.02. Payment of Merger Consideration.................................9
SECTION 2.03. Additional Payments............................................11
SECTION 2.04. Company Stock Options..........................................18
SECTION 2.05. Dissenting Shares..............................................18
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01. Organization and Qualification; Company Subsidiaries...........19
SECTION 3.02. Articles of Incorporation and By-laws..........................20
SECTION 3.03. Capitalization.................................................20
SECTION 3.04. Authority Relative to this Agreement...........................21
SECTION 3.05. No Conflict; Required Filings and Consents.....................21
SECTION 3.06. Permits; Compliance............................................22
SECTION 3.07. Financial Statements...........................................23
SECTION 3.08. Absence of Certain Changes or Events...........................23
SECTION 3.09. Absence of Litigation..........................................24
SECTION 3.10. Employee Benefit Plans; Labor Matters..........................24
SECTION 3.11. Contracts......................................................27
SECTION 3.12. Environmental Matters..........................................30
SECTION 3.13. Intellectual Property..........................................30
SECTION 3.14. Taxes..........................................................33
SECTION 3.15. Assets.........................................................34
SECTION 3.16. Certain Interests..............................................34
SECTION 3.17. Insurance Policies.............................................35
SECTION 3.18. Brokers........................................................35
SECTION 3.19. No Misstatements...............................................36
SECTION 3.20. Vote Required..................................................36
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
SECTION 4.01. Organization and Qualification.................................36
SECTION 4.02. Authority Relative to this Agreement...........................37
SECTION 4.03. No Conflict; Required Filings and Consents.....................37
SECTION 4.04. Financing......................................................38
SECTION 4.05. Ownership of Merger Sub; No Prior Activities...................38
SECTION 4.06. Brokers........................................................38
ARTICLE V
CONDUCT OF BUSINESSES PENDING THE MERGER
SECTION 5.01. Conduct of Business by the Company Pending the Merger..........38
SECTION 5.02. Conduct of Business by Parent Pending the Merger...............40
SECTION 5.03. Notification of Certain Matters................................41
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Company Shareholders' Meeting..................................42
SECTION 6.02. Access to Information; Confidentiality.........................42
SECTION 6.03. No Solicitation of Transactions................................42
SECTION 6.04. Employee Benefits Matters......................................43
SECTION 6.05. Further Action; Consents; Filings..............................46
SECTION 6.06. Public Announcements...........................................46
SECTION 6.07. Expenses.......................................................46
SECTION 6.08. Company Loans..................................................47
SECTION 6.09. Director and Officer Indemnification...........................48
SECTION 6.10. French Valley Contract.........................................49
SECTION 6.11. Foreign Governmental Approvals.................................49
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. Conditions to the Obligations of Each Party....................49
SECTION 7.02. Conditions to the Obligations of Parent and Merger Sub.........50
SECTION 7.03. Conditions to the Obligations of the Company...................51
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination....................................................51
SECTION 8.02. Notice of Termination; Effect of Termination...................52
SECTION 8.03. Amendment......................................................52
SECTION 8.04. Extension; Waiver..............................................53
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ARTICLE IX
INDEMNIFICATION
SECTION 9.01. Survival of Representations and Warranties.....................53
SECTION 9.02. Indemnification by the Company Shareholders....................53
SECTION 9.03. Indemnification by Parent......................................55
SECTION 9.04. Indemnification Procedures.....................................55
SECTION 9.05. Merger Committee...............................................56
ARTICLE X
POST-MERGER OPERATIONS
SECTION 10.01. Operation of Business.........................................57
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01. Notices.......................................................58
SECTION 11.02. Certain Definitions...........................................59
SECTION 11.03. Severability..................................................65
SECTION 11.04. Assignment; Binding Effect; Benefit...........................65
SECTION 11.05. Incorporation of Exhibits.....................................66
SECTION 11.06. Specific Performance..........................................66
SECTION 11.07. Governing Law; Forum..........................................66
SECTION 11.08. Headings......................................................66
SECTION 11.09. Counterparts..................................................66
SECTION 11.10. Entire Agreement..............................................66
Exhibit A Form of Voting Agreement
Exhibit B Form of Employment Agreement
Exhibit C Form of IP License
Exhibit D Form of Opinion of Counsel to the Company
Exhibit E Form of Opinion of Counsel to Parent
Schedule 1.01 Principal Shareholders
Schedule 2.03(k)(i) List of Patents relating to Company Covered Products
Schedule 2.03(k)(iv) Sales Price of Company Covered Products to Xxxxxxx
under the Xxxxxxx Agreement
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Agreement And Plan Of Merger, dated as of February 15, 2001
(this "Agreement"), among BOSTON SCIENTIFIC CORPORATION, a Delaware corporation
("Parent"), CHARGER Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of Parent ("Merger Sub"), INTERVENTIONAL TECHNOLOGIES, INC., a
California corporation (the "Company"), and, for the purposes of Section 2.03,
Article IX and Article XI only, Xxxxxx Xxxxx, Xxxxxx Palesfky and Xxxxxxx Xxxxx,
each as a member of the MERGER COMMITTEE (as defined in Section 2.03(k)).
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions of this
Agreement and in accordance with the General Corporations Law of the State of
Delaware (the "DGCL") and the California Corporations Code ("California Law"),
Parent and the Company will enter into a business combination transaction
pursuant to which Merger Sub will merge with and into the Company (the
"Merger");
WHEREAS, the Board of Directors of the Company (i) has
determined that the Merger is in the best interests of the Company and its
shareholders and has approved this Agreement, the Merger and the other
transactions contemplated by this Agreement and (ii) will recommend the approval
of this Agreement by the shareholders of the Company;
WHEREAS, certain shareholders of the Company own such number
of shares of common stock, no par value, of the Company (the "Company Common
Stock"), such number of shares of Series A Preferred Stock, no par value, of the
Company (the "Company Series A Stock"), such number of shares of Series B
Preferred Stock, no par value, of the Company (the "Company Series B Stock"),
such number of shares of Series C Preferred Stock, no par value, of the Company
(the "Company Series C Stock"), such number of shares of Series E Preferred
Stock, no par value, of the Company (the "Company Series E Stock"), such number
of shares of Series F Preferred Stock, no par value, of the Company (the
"Company Series F Stock"), such number of shares of Series G Preferred Stock, no
par value, of the Company (the "Company Series G Stock"), and such number of
shares of Series H Preferred Stock, no par value, of the Company (the "Company
Series H Stock", and together with the Company Series A Stock, the Company
Series B Stock, the Company Series C Stock, the Company Series E Stock, the
Company Series F Stock and the Company Series G Stock, the "Company Preferred
Stock"; and the Company Preferred Stock and the Company Common Stock is referred
to herein collectively as the "Company Stock"), as is set forth in Schedule 1.01
hereto (such shareholders being referred to herein as the "Principal
Shareholders");
WHEREAS, as a condition and inducement to Parent's and Merger
Sub's entering into this Agreement and incurring the obligations set forth
herein, concurrently with the execution and delivery of this Agreement, Parent
is entering into a voting agreement with each of the Principal Shareholders,
dated the date hereof (a "Voting Agreement") and substantially in the form
attached hereto as Exhibit A;
WHEREAS, in connection with the Merger, certain employees of
the Company will enter into employment agreements with the Company (the
"Employment Agreements"), substantially in the form attached hereto as Exhibit
B; and
WHEREAS, certain capitalized terms used in this Agreement are
defined in Section 11.02 of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, the parties hereto hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in Article VII, and in accordance with the DGCL and
California Law, at the Effective Time (as defined in Section 1.02), Merger Sub
shall be merged with and into the Company. As a result of the Merger, the
separate corporate existence of Merger Sub shall cease and the Company shall
continue as the surviving corporation of the Merger (the "Surviving
Corporation").
SECTION 1.02. Effective Time; Closing. As promptly as
practicable following the satisfaction or, if permissible, waiver of the
conditions set forth in Article VII (or such other date as may be agreed upon by
each of the parties hereto), the parties hereto shall cause the Merger to be
consummated by filing (i) a certificate of merger (the "Certificate of Merger")
with the Secretary of State of the State of Delaware and (ii) an agreement of
merger (the "Agreement of Merger") with the Secretary of State of the State of
California, in each case, in such form as is required by, and executed in
accordance with, the relevant provisions of the DGCL or California Law,
respectively. The term "Effective Time" means the date and time of (a) the later
of (i) the filing of the Agreement of Merger with the Secretary of State of the
State of California and (ii) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware or (b) such later time as may be
agreed upon by each of the parties hereto and specified in the Certificate of
Merger and the Agreement of Merger. Immediately prior to the filing of the
Agreement of Merger, a closing (the "Closing") will be held at the offices of
Shearman & Sterling, 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 (or
such other place as the parties may agree). The date on which the Closing shall
occur is referred to herein as the "Closing Date".
SECTION 1.03. Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of
California Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the property, rights, privileges, powers and
franchises of each of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities, obligations, restrictions, disabilities
and duties of each of the Company and Merger Sub shall become the debts,
liabilities, obligations, restrictions, disabilities and duties of the Surviving
Corporation.
SECTION 1.04. Articles of Incorporation; By-laws. (a) At the
Effective Time, the Articles of Incorporation of the Surviving Corporation shall
be amended to contain only the provisions of the Certificate of Incorporation of
Merger Sub, as in effect immediately prior to the
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Effective Time, and such amended Articles of Incorporation shall be the Articles
of Incorporation of the Surviving Corporation until thereafter amended as
provided by law and such Articles of Incorporation; provided, however, that such
Articles of Incorporation of the Surviving Corporation shall contain provisions
with respect to exculpation and indemnification which are at least as favorable
to the Company Indemnified Parties (as defined in Section 6.09 hereof) as the
Articles of Incorporation of the Company in effect on the date hereof, and
provided further that such Articles of Incorporation may only be amended in
accordance with the terms of Section 6.09 hereof.
(b) At the Effective Time, the By-laws of Merger Sub, as in
effect immediately prior to the Effective Time, shall be the By-laws of the
Surviving Corporation until thereafter amended as provided by law, the Articles
of Incorporation of the Surviving Corporation and such By-laws; provided,
however, that such By-laws of the Surviving Corporation shall contain provisions
with respect to exculpation and indemnification which are at least as favorable
to the Company Indemnified Parties (as defined in Section 6.09 hereof) as the
By-laws of the Company in effect on the date hereof, and provided further that
such By-laws may only be amended in accordance with the terms of Section 6.09
hereof.
SECTION 1.05. Directors and Officers. The directors of Merger
Sub immediately prior to the Effective Time shall be the initial directors of
the Surviving Corporation, each to hold office in accordance with the Articles
of Incorporation and By-laws of the Surviving Corporation, and the officers of
Merger Sub immediately prior to the Effective Time shall be the initial officers
of the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
ARTICLE II
MERGER CONSIDERATION; EXCHANGE OF CERTIFICATES
SECTION 2.01. Merger Consideration. (a) At the Effective Time,
by virtue of the Merger and without any action on the part of Parent, Merger
Sub, the Company, the Merger Committee or the holders of any of the following
securities, pursuant to this Agreement, the Agreement of Merger, California Law
and the DGCL:
(i) each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than any shares of
Company Common Stock to be cancelled pursuant to Section 2.01(a)(ix)
and any Dissenting Shares (as defined in Section 2.05)) shall be
converted into the right to receive the Common Stock Merger
Consideration (as defined in Section 2.01(b)) payable, without
interest, except as provided by Section 2.03(d)(ii) and Section
9.02(c), to the holder of such share of Company Common Stock, upon
surrender, in the manner provided in Section 2.02, of the certificate
that formerly evidenced such share;
(ii) each share of Company Series A Stock issued and
outstanding immediately prior to the Effective Time (other than any
share of Company Series A Stock to be cancelled pursuant to Section
2.01(a)(ix) and any Dissenting Shares) shall be
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converted into the right to receive the Series A Merger Consideration
(as defined in Section 2.01(b)), payable, without interest, except as
provided by Section 2.03(d)(ii) and Section 9.02(c), to the holder of
such share of Company Series A Stock, upon surrender, in the manner
provided in Section 2.02, of the certificate that formerly evidenced
such share;
(iii) each share of Company Series B Stock issued and
outstanding immediately prior to the Effective Time (other than any
share of Company Series B Stock to be cancelled pursuant to Section
2.01(a)(ix) and any Dissenting Shares) shall be converted into the
right to receive the Series B Merger Consideration (as defined in
Section 2.01(b)), payable, without interest, except as provided by
Section 2.03(d)(ii) and Section 9.02(c), to the holder of such share of
Company Series B Stock, upon surrender, in the manner provided in
Section 2.02, of the certificate that formerly evidenced such share;
(iv) each share of Company Series C Stock issued and
outstanding immediately prior to the Effective Time (other than any
share of Company Series C Stock to be cancelled pursuant to Section
2.01(a)(ix) and any Dissenting Shares) shall be converted into the
right to receive the Series C Merger Consideration (as defined in
Section 2.01(b)), payable, without interest, except as provided by
Section 2.03(d)(ii) and Section 9.02(c), to the holder of such share of
Company Series C Stock, upon surrender, in the manner provided in
Section 2.02, of the certificate that formerly evidenced such share;
(v) each share of Company Series E Stock issued and
outstanding immediately prior to the Effective Time (other than any
share of Company Series E Stock to be cancelled pursuant to Section
2.01(a)(ix) and any Dissenting Shares) shall be converted into the
right to receive the Series E Merger Consideration (as defined in
Section 2.01(b)), payable, without interest, except as provided by
Section 2.03(d)(ii) and Section 9.02(c), to the holder of such share of
Company Series E Stock, upon surrender, in the manner provided in
Section 2.02, of the certificate that formerly evidenced such share;
(vi) each share of Company Series F Stock issued and
outstanding immediately prior to the Effective Time (other than any
share of Company Series F Stock to be cancelled pursuant to Section
2.01(a)(ix) and any Dissenting Shares) shall be converted into the
right to receive the Series F Merger Consideration (as defined in
Section 2.01(b)), payable, without interest, except as provided by
Section 2.03(d)(ii) and Section 9.02(c), to the holder of such share of
Company Series F Stock, upon surrender, in the manner provided in
Section 2.02, of the certificate that formerly evidenced such share;
(vii) each share of Company Series G Stock issued and
outstanding immediately prior to the Effective Time (other than any
share of Company Series G Stock to be cancelled pursuant to Section
2.01(a)(ix) and any Dissenting Shares) shall be converted into the
right to receive the Series G Merger Consideration (as defined in
Section 2.01(b)), payable, without interest, except as provided by
Section 2.03(d)(ii) and
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Section 9.02(c), to the holder of such share of Company Series G Stock,
upon surrender, in the manner provided in Section 2.02, of the
certificate that formerly evidenced such share;
(viii) each share of Company Series H Stock issued and
outstanding immediately prior to the Effective Time (other than any
share of Company Series H Stock to be cancelled pursuant to Section
2.01(a)(ix) and any Dissenting Shares) shall be converted into the
right to receive the Series H Merger Consideration (as defined in
Section 2.01(b)), payable, without interest, except as provided by
Section 2.03(d)(ii) and Section 9.02(c), to the holder of such share of
Company Series H Stock, upon surrender, in the manner provided in
Section 2.02, of the certificate that formerly evidenced such share;
(ix) each share of Company Stock held in the treasury of the
Company and each share of Company Stock owned by Parent or any direct
or indirect wholly owned subsidiary of Parent or of the Company
immediately prior to the Effective Time shall be cancelled and
extinguished without any conversion thereof and no payment or
distribution shall be made with respect thereto; and
(x) each share of common stock, par value $0.01 per share, of
Merger Sub issued and outstanding immediately prior to the Effective
Time shall be converted into and exchanged for one validly issued,
fully paid and nonassessable share of common stock, par value $0.01 per
share, of the Surviving Corporation.
(b) As used in this Agreement, the following terms shall have
the following meanings:
(i) "Actual Performance Stock Amount" means the number of
shares of Company Common Stock subject to the Performance-Based Options
(as defined in Section 2.04) which would have actually vested (assuming
that the Performance Option Plan (as defined in Section 2.04) had not
been cancelled pursuant to Section 2.04 and that the Performance-Based
Options had not been exchanged pursuant to Section 2.04) under the
terms of such Performance-Based Options as of October 31, 2001.
(ii) "Aggregate Merger Consideration" means the Initial Merger
Consideration plus the Contingent Payments (as defined in Section
2.03(a)), if earned pursuant to Section 2.03 and subject to setoff
pursuant to Section 9.02(c).
(iii) "Common Stock Merger Consideration" means the amount
equal to the quotient of the Aggregate Merger Consideration divided by
the Fully Diluted Company Stock Amount.
(iv) "Contingent Per Share Payment" means, with respect to
each Contingent Payment, (A) with respect to the Company Common Stock,
an amount equal to the applicable Contingent Payment amount divided by
the Fully Diluted Company Stock Amount (the "Base Contingent Amount");
(B) with respect to the Series A Preferred Stock, an amount equal to
the Series A Conversion Ratio multiplied by the Base Contingent Amount,
(C) with respect to the Series B Preferred Stock, an amount equal to
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the Series B Conversion Ratio multiplied by the Base Contingent Amount,
(D) with respect to the Series C Preferred Stock, an amount equal to
the Series C Conversion Ratio multiplied by the Base Contingent Amount,
(E) with respect to the Series E Preferred Stock, an amount equal to
the Series E Conversion Ratio multiplied by the Base Contingent Amount,
(F) with respect to the Series F Preferred Stock, an amount equal to
the Series F Conversion Ratio multiplied by the Base Contingent Amount,
(G) with respect to the Series G Preferred Stock, an amount equal to
the Series G Conversion Ratio multiplied by the Base Contingent Amount,
and (H) with respect to the Series H Preferred Stock, an amount equal
to the Series H Conversion Ratio multiplied by the Base Contingent
Amount.
(v) "Fully Diluted Company Stock Amount" means the number of
shares of Company Common Stock equal to the sum of (A) the number of
shares of Company Common Stock issued and outstanding immediately prior
to the Effective Time and (B) the number of shares of Company Common
Stock issuable upon exercise, conversion or exchange of all securities
issued and outstanding immediately prior to the Effective Time that are
exercisable, convertible or exchangeable for shares of Company Common
Stock, including, without limitation, the Company Stock Options (as
defined in Section 2.04), whether or not exercisable and whether or not
vested, subject to Section 6.04(e)(ii), but excluding, however,(i) the
Company Loans (as defined in Section 6.08(d)), and (ii) 104,100 shares
of Company Common Stock which would have been issuable upon the
exercise of outstanding Performance-Based Options (representing the
number of duplicative shares granted to more than one Company
Optionholder pursuant to Performance-Based Options (as defined in
Section 2.04 below) that can only vest, by their terms, for one such
Company Optionholder (the "Duplicative Options")).
(vi) "Initial Merger Consideration" means $330 million in
cash, less any deductions pursuant to Section 6.07 and any adjustments
made pursuant to Section 6.04(e)(iii), plus an additional cash amount
equal to sum of the aggregate exercise price (A) paid or payable by the
holders of Company Stock Options to the Company pursuant to Section
2.04 upon the exercise of all the Time-Vested Stock Options (as defined
in Section 2.04) outstanding on the date of this Agreement or granted
after the date of this Agreement but before the Effective Time
(assuming the exercise in full of all such Time-Vested Stock Options,
but excluding any such Time-Vested Stock Options which are cancelled
between the date hereof and the Effective Time) and (B) that would have
been payable by the Performance Optionees (as defined in Section
6.04(d)) to the Company pursuant to Section 6.04(d) upon the exercise
of all the Performance-Based Options other than the Duplicative Options
(assuming the exercise in full of all such Performance-Based Options),
provided, however, that Parent shall not be required to transfer more
than $330 million to the Paying Agent (as defined in Section 2.02(a))
to satisfy its obligations hereunder to pay the Initial Merger
Consideration.
(vii) "Initial Per Share Common Payment" means an amount equal
to the Initial Merger Consideration divided by the Fully Diluted Common
Stock Amount.
(viii) "Initial Per Share Payment" shall mean: (A) with
respect to the Company Common Stock, an amount equal to the Initial Per
Share Common Payment, (B) with
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respect to the Series A Preferred Stock, an amount equal to the Series
A Conversion Ratio multiplied by the Initial Per Share Common Payment,
(C) with respect to the Series B Preferred Stock, an amount equal to
the Series B Conversion Ratio multiplied by the Initial Per Share
Common Payment, (D) with respect to the Series C Preferred Stock, an
amount equal to the Series C Conversion Ratio multiplied by the Initial
Per Share Common Payment, (E) with respect to the Series E Preferred
Stock, an amount equal to the Series E Conversion Ratio multiplied by
the Initial Per Share Common Payment, (F) with respect to the Series F
Preferred Stock, an amount equal to the Series F Conversion Ratio
multiplied by the Initial Per Share Common Payment, (G) with respect to
the Series G Preferred Stock, an amount equal to the Series G
Conversion Ratio multiplied by the Initial Per Share Common Payment,
and (H) with respect to the Series H Preferred Stock, an amount equal
to the Series H Conversion Ratio multiplied by the Initial Per Share
Common Payment.
(ix) "Maximum Performance Stock Amount" means (assuming that
the Performance Option Plan (as defined in Section 2.04) had not been
cancelled pursuant to Section 2.04 and that the Performance-Based
Options had not been exchanged pursuant to Section 2.04) the maximum
number of shares of Company Common Stock which would have been issuable
upon exercise of all Performance-Based Options (excluding all
Duplicative Options) pursuant to the Performance Option Plan had the
performance targets set forth in such Performance-Based Options been
met as of the Effective Time.
(x) "Per Share Merger Consideration" means, as applicable, the
Common Stock Merger Consideration, the Series A Merger Consideration,
the Series B Merger Consideration, the Series C Merger Consideration,
the Series E Merger Consideration, the Series F Merger Consideration,
the Series G Merger Consideration or the Series H Merger Consideration.
(xi) "Performance Remainder Per Share Payment" shall mean,
with respect to the Initial Performance Bonus Remainder (as defined in
Section 6.04(d)) or a Subsequent Performance Bonus Remainder (as
defined in Section 6.04(d)), as the case may be (each of the Initial
Performance Bonus Remainder and the Subsequent Performance Bonus
Remainders being hereinafter referred to as a "Performance Bonus
Remainder"), (A) with respect to the Company Common Stock, an amount,
in cash, equal to (x) the Performance Bonus Remainder divided by (y)
the Fully Diluted Company Stock Amount minus the Unearned Performance
Stock Amount (such cash amount, the "Base Remainder Amount"); (B) with
respect to the Series A Preferred Stock, an amount, in cash, equal to
the Series A Conversion Ratio multiplied by the Base Remainder Amount;
(C) with respect to the Series B Preferred Stock, an amount, in cash,
equal to the Series B Conversion Ratio multiplied by the Base Remainder
Amount; (D) with respect to the Series C Preferred Stock, an amount, in
cash, equal to the Series C Conversion Ratio multiplied by the Base
Remainder Amount; (E) with respect to the Series E Preferred Stock, an
amount, in cash, equal to the Series E Conversion Ratio multiplied by
the Base Remainder Amount; (F) with respect to the Series F Preferred
Stock, an amount, in cash, equal to the Series F Conversion Ratio
multiplied by the Base Remainder Amount; (G) with respect to the Series
G Preferred Stock, an amount, in cash, equal to the Series G Conversion
Ratio multiplied by the Base Remainder Amount; and (H) with respect to
the
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Series H Preferred Stock, an amount, in cash, equal to the Series H
Conversion Ratio multiplied by the Base Remainder Amount.
(xii) "Series A Conversion Ratio" means the number of shares
of Company Common Stock issuable upon conversion of a share of Company
Series A Stock pursuant to the terms of the Company's Articles of
Incorporation, which as of the date hereof is 0.2500 and which is
subject to adjustment pursuant to the provisions of the Company's
Articles of Incorporation.
(xiii) "Series B Conversion Ratio" means the number of shares
of Company Common Stock issuable upon conversion of a share of Company
Series B Stock pursuant to the terms of the Company's Articles of
Incorporation, which as of the date hereof is 0.4638 and which is
subject to adjustment pursuant to the provisions of the Company's
Articles of Incorporation.
(xiv) "Series C Conversion Ratio" means the number of shares
of Company Common Stock issuable upon conversion of a share of Company
Series C Stock pursuant to the terms of the Company's Articles of
Incorporation, which as of the date hereof is 0.6046 and which is
subject to adjustment pursuant to the provisions of the Company's
Articles of Incorporation.
(xv) "Series E Conversion Ratio" means the number of shares of
Company Common Stock issuable upon conversion of a share of Company
Series E Stock pursuant to the terms of the Company's Articles of
Incorporation, which as of the date hereof is 0.2500 and which is
subject to adjustment pursuant to the provisions of the Company's
Articles of Incorporation.
(xvi) "Series F Conversion Ratio" means the number of shares
of Company Common Stock issuable upon conversion of a share of Company
Series F Stock pursuant to the terms of the Company's Articles of
Incorporation, which as of the date hereof is 1.0000 and which is
subject to adjustment pursuant to the provisions of the Company's
Articles of Incorporation.
(xvii) "Series G Conversion Ratio" means the number of shares
of Company Common Stock issuable upon conversion of a share of Company
Series G Stock pursuant to the terms of the Company's Articles of
Incorporation, which as of the date hereof is 1.176 and which is
subject to adjustment pursuant to the provisions of the Company's
Articles of Incorporation.
(xviii) "Series H Conversion Ratio" means the number of shares
of Company Common Stock issuable upon conversion of a share of Company
Series H Stock pursuant to the terms of the Company's Articles of
Incorporation, which as of the date hereof is 1.0000 and which is
subject to adjustment pursuant to the provisions of the Company's
Articles of Incorporation.
(xix) "Series A Merger Consideration" means the amount equal
to the Common Stock Merger Consideration multiplied by the Series A
Conversion Ratio.
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(xx) "Series B Merger Consideration" means the amount equal to
the Common Stock Merger Consideration multiplied by the Series B
Conversion Ratio.
(xxi) "Series C Merger Consideration" means the amount equal
to the Common Stock Merger Consideration multiplied by the Series C
Conversion Ratio.
(xxii) "Series E Merger Consideration" means the amount equal
to the Common Stock Merger Consideration multiplied by the Series E
Conversion Ratio.
(xxiii) "Series F Merger Consideration" means the amount equal
to the Common Stock Merger Consideration multiplied by the Series F
Conversion Ratio.
(xxiv) "Series G Merger Consideration" means the amount equal
to the Common Stock Merger Consideration multiplied by the Series G
Conversion Ratio.
(xxv) "Series H Merger Consideration" means the amount equal
to the Common Stock Merger Consideration multiplied by the Series H
Conversion Ratio.
(xxvi) "Unearned Performance Stock Amount" means the number of
shares determined by subtracting the Actual Performance Stock Amount
from the Maximum Performance Stock Amount.
SECTION 2.02. Payment of Merger Consideration. (a) Prior to
the Effective Time, Parent shall designate a bank or trust company to act as
agent (the "Paying Agent") for the holders of shares of Company Stock to receive
the funds to which holders of Company Stock shall become entitled hereunder.
Promptly after the Closing Date (but in any event within five days thereof),
Parent shall transfer to the Paying Agent the cash, subject to Section 2.02(f),
necessary to pay the Initial Merger Consideration. Parent shall transfer to the
Paying Agent the cash (subject to Section 2.02(f)) necessary to pay (i) the
Contingent Payments, if earned, in accordance with Section 2.03(b) or (d), as
the case may be (a portion of which may be subject to offset pursuant to the
terms of Section 9.02(c) and a portion of which may be used to fund the
Performance Bonus Plan in accordance with Section 6.04(d) and the 280G Plan in
accordance with Section 6.04(e)(iv)); (ii) the Initial Performance Bonus
Remainder (as defined in Section 6.04(d)), if any, owing to Company Shareholders
pursuant to Section 6.04(d) on the earlier to occur of (A) the date Parent is
obligated to transfer to the Paying Agent the next Contingent Payment pursuant
to Section 2.03(b) or (d) after October 31, 2001 or (B) the first anniversary of
the Closing Date; and (iii) the Subsequent Performance Bonus Remainders (as
defined in Section 6.04(d)), if any, owing to Company Shareholders pursuant to
Section 6.04(d) on the later to occur of (A) October 31, 2001 or (B) the date on
which the Contingent Payment to which such Subsequent Performance Bonus
Remainder relates is due pursuant to Section 2.03(b) or (d), as the case may be.
Such funds shall be invested by the Paying Agent as directed by Parent. Parent
shall pay the fees and expenses of the Paying Agent.
(b) Promptly after the Effective Time, Parent shall cause to
be mailed to each person who was, at the Effective Time, a holder of record of
shares of Company Stock entitled to receive the applicable Per Share Merger
Consideration pursuant to Section 2.01(a) a form of letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title
9
to the certificates evidencing such shares of Company Stock (the "Certificates")
shall pass, only upon proper delivery of the Certificates to the Paying Agent)
and instructions for use in effecting the surrender of the Certificates pursuant
to such letter of transmittal. Upon surrender to the Paying Agent of a
Certificate, together with such letter of transmittal, duly completed and
validly executed in accordance with the instructions thereto, and such other
documents as may be required pursuant to such instructions, the holder of such
Certificate shall be entitled to receive in exchange therefor the applicable Per
Share Merger Consideration and any Performance Remainder Per Share Payments (of
which (i) the Initial Per Share Payment shall be due and payable promptly
following surrender of such Certificate pursuant to this Section 2.02(b), (ii)
each Contingent Per Share Payment, if earned, shall be due and payable promptly
following receipt by the Paying Agent of such Contingent Payments from Parent in
accordance with Section 2.03(b) or (d), as the case may be, and (iii) the
Performance Remainder Per Share Payment, if any, shall be due and payable
promptly following receipt by the Paying Agent of such Performance Remainder Per
Share Payment) for each share of Company Stock formerly evidenced by such
Certificate, and such Certificate shall then be cancelled. No interest, except
as provided by Section 2.03(d)(ii) and Section 9.02(c), shall accrue or be paid
on the applicable Per Share Merger Consideration or any Performance Remainder
Per Share Payment. If the payment equal to the applicable Per Share Merger
Consideration or any Performance Remainder Per Share Payment is to be made to a
person other than the person in whose name the surrendered Certificate formerly
evidencing shares of Company Stock is registered on the stock transfer books of
the Company, it shall be a condition of payment that the Certificate so
surrendered shall be endorsed properly or otherwise be in proper form for
transfer and that the person requesting such payment shall have paid all
transfer and other taxes required by reason of the payment of the applicable Per
Share Merger Consideration or any Performance Remainder Per Share Payment to a
person other than the registered holder of the Certificate surrendered, or shall
have established to the satisfaction of Parent that such taxes either have been
paid or are not applicable.
(c) At any time following the sixth month after the Initial
Merger Consideration, a Contingent Payment or any portion of a Performance Bonus
Remainder, as the case may be, has been transferred to the Paying Agent, the
Parent shall be entitled to require the Paying Agent to deliver to it any funds
which had been made available to the Paying Agent and not disbursed to holders
of shares of Company Stock (including, without limitation, all interest and
other income received by the Paying Agent in respect of all funds made available
to it). Thereafter, such holders shall be entitled to look to Parent (subject to
abandoned property, escheat and other similar laws) only as general creditors
thereof with respect to any applicable Per Share Merger Consideration or any
Performance Remainder Per Share Payment that may be payable upon due surrender
of the Certificates held by them; provided, however, that in no event shall the
amount paid to such holders exceed the amount returned to Parent pursuant to the
first sentence of this Section 2.02(c). Notwithstanding the foregoing, neither
the Surviving Corporation nor the Paying Agent shall be liable to any holder of
a share of Company Stock for any applicable Per Share Merger Consideration or
any Performance Remainder Per Share Payment delivered in respect of such share
of Company Stock to a public official pursuant to any abandoned property,
escheat or other similar law.
(d) At the close of business on the day of the Effective Time,
the stock transfer books of the Company shall be closed and thereafter there
shall be no further registration
10
of transfers of shares of Company Stock on the records of the Company. From and
after the Effective Time, the holders of shares of Company Stock outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such shares of Company Stock, except as otherwise provided herein or
by applicable law, and shall be deemed to represent only the right to receive
upon surrender of the applicable Per Share Merger Consideration or any
Performance Remainder Per Share Payment. After the Effective Time, no dividends,
interest or other distributions shall be paid to the holder of any unsurrendered
shares of Company Stock. The applicable Per Share Merger Consideration or any
Performance Remainder Per Share Payment paid pursuant to this Agreement shall be
deemed to have been paid in full satisfaction of all rights pertaining to the
surrendered Company Stock.
(e) Each of the Surviving Corporation and Parent shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any Company Shareholder (as defined in Section
3.03(d)) such amounts as it is required to deduct and withhold with respect to
the making of such payment under the Internal Revenue Code of 1986, as amended
(the "Code"), or any provision of state, local or foreign tax law. To the extent
that amounts are so withheld by the Surviving Corporation or Parent, as the case
may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the Company Shareholder in respect of which
such deduction and withholding was made by the Surviving Corporation or Parent,
as the case may be.
(f) All cash amounts, including the Contingent Per Share
Payments, if earned, and the Performance Remainder Per Share Payments, if any,
payable to a holder of Certificates shall be rounded upward to the nearest whole
cent and shall be paid to the Company Shareholders by the Paying Agent by check
or wire transfer in immediately available funds (in accordance with the Paying
Agent's customary practice) pursuant to the written payment instructions
delivered by each Company Shareholder to the Paying Agent upon surrender of such
Company Shareholder's Certificate.
(g) In the event any Certificate shall have been lost, stolen
or destroyed, the Paying Agent, subject to such other conditions as the Paying
Agent may reasonably impose (including the posting of an indemnity bond or other
surety in favor of Parent with respect to the Certificate alleged to be lost,
stolen or destroyed, provided, however, that the cost to a Company Shareholder
of such indemnity bond shall not exceed 2% of the value of the shares
represented by such Certificate), shall be authorized to accept an affidavit
from the record holder of such Certificate in a form reasonably satisfactory to
the Paying Agent and upon receipt of such affidavit issue in exchange for such
lost, stolen or destroyed Certificates, the applicable Per Share Merger
Consideration and any Performance Remainder Per Share Payments in respect
thereof pursuant to this Agreement.
SECTION 2.03. Additional Payments. (a) Contingent Payments.
Parent shall pay to the Company Shareholders (as defined in Section 3.03(d)) as
additional consideration for the shares of Company Stock (collectively, the
"Contingent Payments", and each, a "Contingent Payment") additional amounts, if
earned, in accordance with the following terms (a portion of which may be
subject to offset pursuant to the terms of Section 9.02(c)):
11
(i) an additional payment of $68 million (the "License
Contingent Payment") in the event that (A) within 12 months from the
Closing Date the parties thereto, other than Parent or any affiliate of
Parent, execute, or indicate in writing their willingness to execute
(conditioned only on the similar execution by Parent or an affiliate of
Parent), a license with respect to certain Intellectual Property
substantially in the form attached hereto as Exhibit C (the "IP
License"), or (B) following the 12 month anniversary of the Closing
Date, Parent or any affiliate of Parent executes the IP License;
(ii) at the end of the first consecutive six-month period
during the Earn-Out Period in which Six-Month Net Sales exceeds $50
million (the "Six-Month Target Amount"), an additional amount equal to
$70 million (the "Six-Month Contingent Payment"); and
(iii) at the end of the first consecutive 12-month period
during the Earn-Out Period in which Twelve-Month Net Sales exceeds $150
million (the "Twelve-Month Target Amount"), an additional amount equal
to $150 million (the "Twelve-Month Contingent Payment", and together
with the Six-Month Contingent Payment, the "Net Sales Contingent
Payments").
(b) License Contingent Payment. Upon receipt of the IP License
by the Company in the form contemplated by Section 2.03(a)(i), the Merger
Committee shall deliver a written notice (the "License Notice") to Parent
stating that the IP License has been received by the Company and providing a
copy of such license for Parent's review. Within 30 days after the License
Notice has been received by Parent, Parent shall pay the License Contingent
Payment by transferring to the Paying Agent the cash (subject to Section
2.02(f)) necessary to pay the License Contingent Payment.
(c) Net Sales Statements. (i) From the Closing Date through
the end of the Earn-Out Period (as defined in Section 2.03(k)), for each
calendar month Parent shall deliver to the Merger Committee a statement setting
forth for each of the Company Covered Products the Net Sales (as defined in
Section 2.03(k)) (which statement shall also list unit quantities and the Net
Sales amount of Company Covered Products shipped by Parent and its affiliates by
product family in the United States, Japan and Europe, assuming standard foreign
exchange rates and with a weighted average exchange rate for such currencies
during such calendar month) for the preceding calendar month (each, a "Net Sales
Statement") within thirty calendar days following the end of the preceding
calendar month. Each party hereto agrees to, and (if applicable) shall use its
reasonable efforts to cause its agents, representatives, affiliates,
shareholders, employees, officers and directors, to treat and hold as
confidential (and not disclose or provide access to any person except to the
arbitrator, if necessary pursuant to Section 2.03(f) or the accounting firm, if
any, retained by the Merger Committee pursuant to Section 2.03(c)(ii)) all
information contained and relating to the Net Sales Statements.
(ii) After receipt of each Net Sales Statement, the Merger
Committee shall have 20 days to review such Net Sales Statement and
request a copy of any materials that are reasonably necessary to verify
the Net Sales Statement (the later of the date such 20 day period
expires and the date when the Merger Committee receives all such
requested additional materials, if any, being the "Net Sales Review
Date"). If the Merger
12
Committee deems it necessary, it shall further consult with a
nationally recognized accounting firm (which shall enter into a
customary confidentiality agreement with Parent) selected by the Merger
Committee and which shall be reasonably acceptable to Parent. The
reasonable fees and expenses of the accounting firm retained by the
Merger Committee in conducting its review pursuant to this Section
2.03(c)(ii) shall be paid in accordance with Section 2.03(j) below. The
Merger Committee shall make such further investigations as it deems
appropriate.
(iii) The Merger Committee may dispute any amounts reflected
on any Net Sales Statement, but only on the basis that (A) the amounts
reflected on such Net Sales Statement were not arrived at in accordance
with GAAP applied on a basis consistent with the preparation of
Parent's consolidated financial statements or (B) such amounts do not
properly reflect the gross revenue from sales, credits, refunds,
allowances, discounts, rebates, charges, taxes or duties attributable
to the Company Covered Products; provided, however, that the Merger
Committee must notify Parent in writing of each disputed item,
specifying the amount in dispute and setting forth, in reasonable
detail, the basis of such dispute. Parent and the Merger Committee
shall in good faith, within 15 days (or such longer period as the
parties may agree) following such notice (the "Net Sales Resolution
Period"), attempt to resolve their differences.
(iv) Any amount remaining in dispute at the conclusion of the
Net Sales Resolution Period (the "Unresolved Net Sales Items") shall be
immediately submitted to the dispute resolution and arbitration process
set forth in Section 2.03(f). Any such amount submitted by Parent shall
be deemed the "Final Parent Amount" and any such amount submitted by
the Merger Committee shall be deemed the "Final Merger Committee
Amount," provided, however, that, after all discovery and not less than
five days prior to any arbitration hearing, Parent shall be entitled to
adjust the Final Parent Amount and the Merger Committee shall be
entitled to adjust the Final Merger Committee Amount in the event that
subsequent events come to light which would show greater or lesser Net
Sales than originally considered by Parent or the Merger Committee in
their original calculations. The term "Final Net Sales Calculations",
as used in this Agreement, shall mean the definitive Net Sales agreed
to (or deemed agreed to) by Parent and the Merger Committee under
Section 2.03(c)(iii) or, if Unresolved Net Sales Items are submitted to
arbitration, such definitive Net Sales as adjusted to reflect the
determination of the dispute resolution and arbitration process set
forth in Section 2.03(f).
(v) During the calculation of the monthly Net Sales and the
period of any review or dispute within the contemplation of this
Agreement, (A) each party hereto shall provide, or cause to be
provided, to the other parties and their authorized representatives,
access to all relevant books, records, workpapers and employees of
Parent and the Merger Committee, as the case may be, to the extent such
materials or persons are within their possession or control and (B)
Parent and the Merger Committee shall cooperate fully with each other
and their authorized representatives, including the provision, on a
timely basis, of all information necessary or useful.
(d) Net Sales Contingent Payment.
13
(i) Parent shall be obligated to pay a Net Sales Contingent
Payment within 40 days following any calendar month in which the
Six-Month Target Amount or the Twelve-Month Target Amount, as the case
may be, was earned in accordance with Section 2.03(a)(ii) or (iii)
(such payment date being a "Net Sales Contingent Payment Date"), by
transferring to the Paying Agent the cash (subject to Section 2.02(f)),
without interest, necessary to pay the applicable Net Sales Contingent
Payment.
(ii) In the event that (A) Parent has delivered a Net Sales
Statement to the Merger Committee in accordance with Section 2.03(c)(i)
and such Net Sales Statement indicates Net Sales during the month
covered by such Net Sales Statement that, together with the aggregate
Net Sales in the preceding five-month or eleven-month period, as the
case may be, are less than the Six-Month Target Amount or the
Twelve-Month Target Amount, as the case may be, and (B) the Merger
Committee has successfully disputed such Net Sales Statement in
accordance with Section 2.03(c)(iii) or Section 2.03(f) resulting in
the determination of a Final Net Sales Calculation for such month (such
determination date being a "Determination Date") which, when aggregated
with the Net Sales for the preceding five-month or eleven-month period,
as the case may be, equals or exceeds the Six-Month Target Amount or
the Twelve-Month Target Amount, as the case may be, then in such event
Parent shall pay, within ten days after such Determination Date, the
Six-Month Contingent Payment or Twelve-Month Contingent Payment, as the
case may be, by transferring to the Paying Agent the cash (subject to
Section 2.02(f) and Section 2.03(j)) necessary to pay the applicable
Net Sales Contingent Payment, together with interest on such Net Sales
Contingent Payment calculated from the Net Sales Contingent Payment
Date at the rate announced by X.X. Xxxxxx Xxxxx & Co. at its principal
office as its prime commercial lending rate as of the first of January
of the year in which the interest accrues.
(iii) In the event a Net Sales Contingent Payment is paid, a
letter from Parent shall accompany the applicable payments to the
Company Shareholders indicating all amounts, if any, withheld pursuant
to Section 9.02(c) below. In the event that Parent determines according
to this Section 2.03 that a Net Sales Contingent Payment is not to be
paid during the Earn-Out Period, Parent shall as promptly as
practicable notify the Merger Committee in writing of such fact, which
notice shall describe the basis of Parent's determination, and Parent
and the Merger Committee shall issue a joint letter to the Company
Shareholders notifying them of such fact.
(e) Assignability. The right of each Company Shareholder to
receive payments pursuant to this Article II may be assigned (i) to such Company
Shareholder's spouse, parents or parents-in-law, siblings or sibling's in law,
or such Company Shareholder's or such Company Shareholder's spouse's ancestors,
lineal descendants or descendants by virtue of adoption, (ii) to a trust for the
benefit of the Company Shareholder or any person named in the preceding clause
(i), (iii) to another person, if, on the Effective Date, such other person was
the beneficial owner of the shares of Company Stock held of record by the
Company Shareholder, or (iv) by operation of law or by will.
(f) Dispute Resolution; Arbitration. In the event that any
dispute, controversy or claim that arises in connection with this Section 2.03
or the actions, determinations or
14
calculations contemplated hereby has not been resolved by the conclusion of the
Net Sales Resolution Period in accordance with Section 2.03(c)(iii), such
dispute, controversy or claim shall be settled by arbitration by a single
arbitrator, who shall be experienced in the sales and marketing of medical
devices, to be appointed pursuant to the rules of the American Arbitration
Association and said arbitration shall be conducted in accordance with the rules
of such association. The arbitration shall be held in San Francisco, California.
The arbitrator will be instructed that his or her determination cannot be lower
than the Final Parent Amount (as adjusted, if at all) or higher than the Final
Merger Committee Amount (as adjusted, if at all) and the determination of the
arbitrator shall be final and binding on the parties. The expense of the
arbitration and any expenses incurred by the Merger Committee shall be paid in
accordance with Section 2.03(j) below. Judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction. Approval of this
Agreement shall constitute the appointment of the Merger Committee and its duly
appointed designees as the authorized representatives of the Company
Shareholders in any arbitration conducted pursuant to this Section 2.03(f).
(g) Termination Payment. Parent may at any time propose to the
Merger Committee that a payment (the "Termination Payment") be made to the
Company Shareholders which, upon payment thereof, shall fully release and
discharge Parent, its successors and assigns from any further liability or
obligation pursuant to Section 2.03 and Article X hereof and shall fully release
and discharge the Company Shareholders, their successors and assigns from any
further liability or obligation pursuant to Section 9.02 hereof. If a majority
of the members of the Merger Committee determines that the proposed Termination
Payment is fair and reasonable, taking into account the risk that the Contingent
Payments may not be earned and the present value of the Contingent Payments
which have not been paid at such time, then subject to approval thereof by the
Company Shareholders to the extent required by law, the Merger Committee shall
so notify Parent in writing, and, within 30 days of receipt of such notice,
Parent shall make the Termination Payment to the Company Shareholders in
accordance with the payment provisions of Section 2.02 hereof. Parent and the
Company Shareholders may similarly be released from any such liabilities or
obligations at any time after the Effective Date if Parent shall elect to make a
Termination Payment to the Company Shareholders in an amount equal to the
maximum aggregate amount that could thereafter become payable as Contingent
Payments if all performance criteria were fully met.
(h) Interpretation; Amendment. Any ambiguities or
inconsistencies in the provisions of Section 2.03 or Article X may be resolved
by written agreement of Parent and a majority of the Merger Committee. Also,
subject to approval of the Company Shareholders to the extent required by law,
any or all of the provisions of Section 2.03 or Article X hereof may be amended,
modified or supplemented after the Effective Date with the written approval of
Parent and a majority of the Merger Committee.
(i) Contingent Payments Not Royalties. The Contingent Payments
provided for pursuant to Section 2.03 are provided as a result of bona fide
difficulties in determining the value of the Company. The Contingent Payments
represent additional consideration for the Company Stock and are not intended to
be royalty payments.
(j) Fees and Expenses. Except as set forth in Section 9.05,
any reasonable fees and expenses incurred by any party in connection with
resolving any dispute under this
15
Section 2.03, including, without limitation, any fees and expenses incurred by
any accounting firm retained by the Merger Committee pursuant to Section
2.03(c)(ii) or in connection with any arbitration proceeding held pursuant to
Section 2.03(f), shall be borne by the Company Shareholders; provided, however,
if the dispute by the Merger Committee in accordance with Section 2.03(c)(iii)
or Section 2.03(f) results in the determination that a Net Sales Contingent
Payment is due, Parent shall bear such fees and expenses.
(k) Certain Terms. As used in this Agreement, the following
terms shall have the following meanings:
(i) "Company Covered Products" means the following products,
components, methods or technologies or the manufacture, use, import or
sale (including offers for sale) thereof: (A) the Cutting Balloon(TM)
atherotomy catheter; the TrackWire(R)guidewire; the Infiltrator(R)drug
delivery catheter; the LP Stent(R) stent; the TEC(R)atherectomy
catheter; and the Crossfinder angioplasty catheter produced, sold, or
licensed by the Company; and any modifications, improvements or
derivatives of any of the foregoing; (B) the Company's
photo-mask-and-etch-on-a-tube technology, enhanced x-ray opacity metals
technology, 70/30 gold/platinum alloy technology, fine-grain-size
stent-tube material technology, urethane balloon technology, and the
ultrasonic probe tip technology, as those technologies are described
and specified in Schedule 2.03(k)(i), together with any modifications,
improvements or derivatives thereof and any product or component
employing any of the foregoing items set forth in this subsection (B);
(C) any trade secrets and know-how reflected in the Company's
manufacturing documentation as it exists as of the date hereof that is
maintained in the ordinary course of business and any modifications,
improvements or derivatives thereof; (D) any product, component, method
or technology that would infringe any valid and enforceable claim or
any claim that is reasonably expected to issue from (i) any Owned
Intellectual Property or Licensed Intellectual Property listed in
either Schedule 2.03(k)(i) or Sections 3.13(a)(i) or 3.13(a)(ii) of the
Company Disclosure Schedule, (ii) any patent applications filed between
the date hereof and the Closing Date, (iii) any continuation,
substitution, divisional, continuation-in-part, or foreign counterpart
applications of (i) or (ii) filed after the Closing Date where, for
this subsection (D), the product, component, method or technology is
combined with the products, components, methods or technologies set
forth in (A), (B) or (C) above, and (iv) patents issuing on any of the
preceding applications described in (i), (ii) or (iii) (including
extensions, reissues and re-examinations); and (E) copyrights in any of
the items set forth in (A), (B) or (C) above.
(ii) "Earn-Out Period" means the period commencing on the
Closing Date and ending on the third anniversary of the Closing Date.
(iii) "Merger Committee" shall be a committee having the
duties set forth in this Article II and in Article IX hereof and
consisting of three members who are Company Shareholders or general
partners, officers, directors or employees of Company Shareholders (the
"Merger Committee Members"). The initial Merger Committee Members shall
be Xxxxxx Xxxxx, Xxxxxx Xxxxxxxx and Xxxxxxx Xxxxx. Any vacancy in the
Merger Committee caused by the death, resignation or incapacity of a
Merger Committee Member shall be filled by the affirmative vote or
written consent of the
16
remaining Merger Committee Members or, if no such Members remain, by
the affirmative vote or written consent of a majority in interest of
the Company Shareholders, voting in accordance with the terms of the
Company's Articles of Incorporation in effect prior to the Effective
Time. Any person elected to fill a vacancy shall be a Company
Shareholder or a general partner, officer, director or employee of a
Company Shareholder, but, if no such person is willing or qualified to
serve, then any other person may be elected and serve as a Merger
Committee Member. Any action required or permitted to be taken by the
Merger Committee may be taken upon approval by a majority of the
members of the Merger Committee.
(iv) "Net Sales" means net sales, as determined in accordance
with generally accepted accounting principles ("GAAP"), applied on a
basis consistent with the preparation of Parent's consolidated
financial statements, derived from the sale of Company Covered Products
by Parent, or its affiliates (including, without limitation, the
Surviving Corporation and the Company Subsidiary (as defined in Section
3.01(a))), directly or indirectly, to unaffiliated third parties;
provided, however, that in the event that the Second Amended
International Distribution Agreement, dated as of September 25, 1997
(the "Xxxxxxx Agreement"), among the Company, Interventional
Technologies Europe Ltd., a corporation organized under the laws of
Ireland and a wholly owned subsidiary of the Company ("Charger
Europe"), and Xxxxxxx Co. Ltd., a corporation organized under the laws
of Japan ("Xxxxxxx"), is terminated prior to the termination of the
Earn-Out Period, the Net Sales of the Company Covered Products sold in
the territory covered by the Xxxxxxx Agreement shall be adjusted to
reflect the sales price of the Company Covered Products to Xxxxxxx as
in effect on the date hereof and as referenced in Schedule 2.03(k)(iv)
attached hereto and not Parent's direct price of the Company Covered
Products to end users in the territory covered by the Xxxxxxx Agreement
subsequent to such termination; and, provided further that Net Sales
shall be based on (A) 100% of the gross revenue from the sale or
license of Company Covered Products other than those set forth in (B)
or (C) below, (B) 100% of the gross revenue from the sale or license of
any modified version of the Cutting Balloon(TM)atherotomy catheter or
the Infiltrator(R)drug delivery catheter made, conceived and reduced to
practice after the Closing Date, including without limitation
improvements or derivatives of the Cutting Balloon(TM)atherotomy
catheter or the Infiltrator(R)drug delivery catheter or any product,
component, or technology which combines the Cutting Balloon(TM)
atherotomy catheter or the Infiltrator(R)drug delivery catheter with
any other product, component, or technology, and (C) 50% of the gross
revenue from the sale or license of any modified version of a Company
Covered Product made, conceived and reduced to practice after the
Closing Date or any product, component, or technology which combines a
Company Covered Product (other than the Cutting Balloon(TM) atherotomy
catheter or the Infiltrator(R)drug delivery catheter) with any other
product, component or technology that is not a Company Covered Product.
(v) "Six-Month Net Sales" means Net Sales during any
consecutive six-calendar-month period.
(l) "Twelve-Month Net Sales" means Net Sales during any
consecutive 12-calendar-month period.
17
SECTION 2.04. Company Stock Options. Subject to the
consummation of the Merger, prior to the Effective Time, the Company shall take
all necessary action, including obtaining the consent of the individual option
holders (each, a "Company Optionholder") (i) to terminate the Company's 1992
Incentive Stock Plan and any other plan, program, agreement or arrangement
providing for the issuance, grant or purchase of any other interest in respect
of the capital stock of the Company (collectively, the "Company Stock Plans"),
(ii) to provide that all shares subject to outstanding options to purchase
Company Stock granted under the Company Stock Plans (each, a "Time-Vested Stock
Option"), other than shares subject to outstanding options to purchase Company
Stock granted to the Company's sales personnel under the Company Stock Plans
that vest based on Company performance targets and which are not vested by their
own terms as of the Effective Time (each, a "Performance-Based Option", and
together with a Time-Vested Stock Option, a "Company Stock Option"; and the
program pursuant to which the Performance-Based Options were granted, being
referred to herein as the "Performance Option Plan"), shall become fully vested
and exercisable, whether or not previously vested and exercisable prior to the
Effective Time, (iii) to exchange all Performance-Based Options prior to the
Effective Time for the opportunity to participate in the Performance Bonus Plan
(as defined in Section 6.04(d)), and (iv) to permit each Company Optionholder to
exercise all of his Company Stock Options which are vested prior to the
Effective Time and to take all action necessary, including, without limitation,
obtaining consents of the Company Optionholder to the extent necessary, to
provide that all vested Company Stock Options not so exercised shall be
cancelled and that no Company Stock Options will be outstanding after the
Effective Time. Prior to the Effective Time, the Company shall cause the
administrator of the Company Stock Plan to permit the Company Optionholder to
pay the exercise price in respect of his Time-Vested Stock Option by borrowing
such amount against the Company Optionholder's respective Initial Merger
Consideration as is necessary to pay the exercise price such that the Initial
Merger Consideration to be received by the Company Optionholder shall be reduced
by the amount borrowed to pay the exercise price.
SECTION 2.05. Dissenting Shares. (a) Notwithstanding any
provision of this Agreement to the contrary, shares of Company Stock that are
outstanding immediately prior to the Effective Time and that are held by Company
Shareholders who have exercised and perfected appraisal rights for such shares
of Company Stock in accordance with California Law and who, as of the Effective
Time, have neither effectively withdrawn nor lost their right to such appraisal
(collectively, the "Dissenting Shares") shall not be converted into or represent
the right to receive the consideration provided by Section 2.01. Such Company
Shareholders shall be entitled to receive payment of the appraised value of such
shares of Company Stock held by them in accordance with California Law, except
that all Dissenting Shares held by Company Shareholders who shall have failed to
perfect or who effectively shall have withdrawn or lost their rights to
appraisal of such shares of Company Stock under California Law shall thereupon
be deemed to have been converted into, and to have become exchangeable for, as
of the Effective Time, the right to receive the consideration provided by
Section 2.01, without any interest thereon, upon surrender, in the manner
provided in Section 2.02, of the Certificates that formerly evidenced such
shares of Company Stock.
(b) The Company shall give Parent (i) prompt notice of any
demands for appraisal received by the Company, withdrawals of such demands, and
any other related instruments served pursuant to California Law and received by
the Company and (ii) the
18
opportunity to participate in all negotiations and proceedings with respect to
demands for appraisal under California Law. The Company shall not, except with
the prior written consent of Parent, voluntarily make any payment with respect
to any demands for appraisal or offer to settle or settle any such demands.
Holders of Dissenting Shares shall not be entitled to receive their Per Share
Merger Consideration and such Per Share Merger Consideration shall be retained
by Parent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedule delivered by
the Company to Parent and Merger Sub concurrently with the execution of this
Agreement (the "Company Disclosure Schedule") and which provides an exception to
or otherwise qualifies in reasonable detail and with specific Section
references, the representations or warranties of the Company specifically
referred to therein, except where readily apparent from the language in the
Company Disclosure Schedule that such disclosure also applies to another
Section, the Company hereby represents and warrants to Parent and Merger Sub
that:
SECTION 3.01. Organization and Qualification; Company
Subsidiaries. (a) Each of the Company and each subsidiary of the Company (each,
a "Company Subsidiary") 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
properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power and authority would not prevent or materially delay consummation of
the Merger and the other transactions contemplated by this Agreement
(collectively, the "Transactions"), and would not, individually or in the
aggregate, result in a Company Material Adverse Effect. Each of the Company and
each Company Subsidiary is duly qualified or licensed as a foreign corporation
to do business, and is in good standing, in each jurisdiction in which the
character of the properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary, except for such
failures to be so qualified or licensed and in good standing that have not had,
and would not, individually or in the aggregate, have a Company Material Adverse
Effect. The term "Company Material Adverse Effect" means any circumstance,
change or effect that is, or is reasonably likely to be, materially adverse to
the business, operations, financial condition and results of operations of the
Company and the Company Subsidiaries taken as a whole; provided, however, that
none of the following shall be deemed, singly or in the aggregate, to
constitute, or be considered in determining whether there exists, a Company
Material Adverse Effect: any circumstance, change or effect (i) resulting from
the announcement or pendency of the Transactions or (ii) resulting from any
change in the healthcare or cardiovascular disease treatment industry, or in
general economic conditions, in each case that are not specifically related to
the Company, any Company Subsidiary or its business.
(b) A true and complete list of all the Company Subsidiaries,
together with the jurisdiction of incorporation of each Company Subsidiary and
the percentage of the outstanding capital stock of each Company Subsidiary owned
by the Company and each other Company
19
Subsidiary, is set forth in Section 3.01(b) of the Company Disclosure Schedule.
Except as disclosed in Section 3.01(b) of the Disclosure Schedule, the Company
does not directly or indirectly own any equity or similar interest in, or any
interest convertible into or exchangeable or exercisable for any equity or
similar interest in, any corporation, partnership, joint venture or other
business association or entity.
SECTION 3.02. Articles of Incorporation and By-laws. The
Company has heretofore furnished to Parent a complete and correct copy of the
Articles of Incorporation and the By-laws, or equivalent organizational
documents, each as amended to date, of the Company and each Company Subsidiary.
Such Articles of Incorporation, By-laws, or equivalent organizational documents
are in full force and effect. Neither the Company nor any Company Subsidiary is
in violation of any of the provisions of its Articles of Incorporation, By-laws,
or equivalent organizational documents.
SECTION 3.03. Capitalization. (a) The authorized capital stock
of the Company consists of (a) 40,000,000 shares of Company Common Stock, (b)
1,853,750 shares of Company Series A Stock, (c) 1,600,000 shares of Company
Series B Stock, (d) 540,000 shares of Company Series C Stock, (e) 14,000,000
shares of Company Series E Stock, (f) 1,250,000 shares of Company Series F
Stock, (g) 600,000 shares of Company Series G Stock, and (h) 3,500,000 shares of
Company Series H Stock. As of the date hereof, (i) 1,252,056 shares of Company
Common Stock are issued and outstanding, all of which are validly issued, fully
paid and nonassessable, (ii) no shares of Company Common Stock are held in the
treasury of the Company, (iii) 2,202,196 shares of Company Common Stock are
reserved for future issuance upon exercise of outstanding stock options or
outstanding stock incentive rights granted pursuant to the Company Stock Plans,
and (iv) 507 shares of Company Common Stock remain available for future grant
under the Company Stock Plans.
(b) As of the date hereof, (A) 1,853,750 shares of Company
Series A Stock are issued and outstanding, (B) 1,474,600 shares of Company
Series B Stock are issued and outstanding, (C) 470,499 shares of Company Series
C Stock are issued and outstanding, (D) 13,053,533 shares of Company Series E
Stock are issued and outstanding, (E) 1,250,000 shares of Company Series F Stock
are issued and outstanding, (F) 600,000 shares of Company Series G Stock are
issued and outstanding, and (G) 3,500,000 shares of Company Series H Stock are
issued and outstanding, all of which are validly issued, fully paid and
nonassessable. There are no other shares of Company Preferred Stock outstanding
or reserved for future issuance.
(c) Except as set forth in this Section 3.03, there are no
options, warrants or other rights, agreements, arrangements or commitments of
any character relating to the issued or unissued capital stock of the Company or
any Company Subsidiary or obligating the Company or any Company Subsidiary to
issue or sell any shares of capital stock of, or other equity interests in, the
Company or any Company Subsidiary. All shares of Company Stock subject to
issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. There are no outstanding
contractual obligations of the Company or any Company Subsidiary to repurchase,
redeem or otherwise acquire any shares of Company Stock or any capital stock of
20
any Company Subsidiary or to provide funds to, or make any investment (in the
form of a loan, capital contribution or otherwise) in, any Company Subsidiary or
any other person.
(d) Section 3.03 of the Company Disclosure Schedule sets
forth, as of the date hereof, a complete list of the shareholders of the Company
(the "Company Shareholders") and the outstanding shares of Company Stock owned
by each Company Shareholder.
(e) Each outstanding share of capital stock of each Company
Subsidiary is duly authorized, validly issued, fully paid and nonassessable, and
each such share is owned by the Company or a Company Subsidiary, to the
Company's knowledge (as defined in Section 10.02), free and clear of all
security interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on the Company's or any Company Subsidiary's voting
rights, charges and other encumbrances of any nature whatsoever.
SECTION 3.04. Authority Relative to this Agreement. (a) The
Company has all necessary corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and, subject to the
approval by the Company Shareholders, to consummate the Transactions. The
execution and delivery of this Agreement by the Company and the consummation by
the Company of the Transactions have been duly and validly authorized by all
necessary corporate action, and no other corporate proceedings on the part of
the Company are necessary to authorize this Agreement or to consummate the
Transactions (other than, with respect to the Merger, the approval and adoption
of this Agreement by the holders of a majority of the then-outstanding shares of
each of the Company Common Stock, voting as a separate class, and Company
Preferred Stock, voting as separate class, the filing and recordation of
appropriate merger documents as required by the DGCL and California Law and, if
necessary, the HSR Act filing (as described in Section 3.05)). This Agreement
has been duly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by the other parties hereto, constitutes
legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with its terms, subject to the effect of any applicable
bankruptcy, reorganization, insolvency, moratorium or similar laws affecting
creditors' rights generally and subject, as to enforceability, to the effect of
general principles of equity.
(b) The Board of Directors of the Company, by unanimous
written consent or at a meeting duly called and held, has (i) determined that
the Merger is in the best interest of the Company and the Company Shareholders,
(ii) approved the Merger and this Agreement in accordance with the provisions of
California Law, and (iii) directed that this Agreement and the Merger be
submitted to the Company Shareholders for their approval and resolved to
recommend that the Company Shareholders vote in favor of this Agreement and the
Merger.
SECTION 3.05. No Conflict; Required Filings and Consents. (a)
The execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement by the Company will not, (i) conflict with or
violate the Articles of Incorporation or By-laws or equivalent organizational
documents of the Company or any Company Subsidiary, (ii) assuming that all
consents, approvals, authorizations and other actions described in Section
3.05(b) have been obtained and all filings and obligations described in Section
3.05(b) have been made, conflict with or violate, in any respect, any foreign or
domestic statute, law, ordinance, regulation, rule, code, executive order,
injunction, judgment, decree or other order ("Law")
21
applicable to the Company or any Company Subsidiary or by which any property or
asset of the Company or any Company Subsidiary is bound or affected, or (iii)
result in any breach of or constitute a default (or an event which, with notice
or lapse of time or both, would become a default) under, or give to others any
right of termination, amendment, acceleration or cancellation of, or result in
the creation of a lien or other encumbrance on any property or asset of the
Company or any Company Subsidiary pursuant to, any Material Contract (as defined
in Section 3.11(a)), except, with respect to clauses (ii) and (iii), for any
such conflicts, violations, breaches, defaults or other occurrences which would
not prevent or materially delay consummation of the Transactions, or otherwise
prevent or materially delay the Company from performing its obligations under
this Agreement and would not, individually or in the aggregate, have a Company
Material Adverse Effect.
(b) The execution and delivery of this Agreement by the
Company do not, and the performance of this Agreement by the Company will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any United States federal, state, county or local or any
foreign government, governmental, regulatory or administrative authority,
agency, instrumentality or commission or any court, tribunal, or judicial or
arbitral body (a "Governmental Authority"), except (i) for the pre-merger
notification requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act"), and filing and recordation of appropriate
merger documents as required by the DGCL and California Law, and (ii) where the
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not prevent or materially delay
consummation of the Transactions, or otherwise prevent or materially delay the
Company from performing its obligations under this Agreement and would not
individually or in the aggregate, have a Company Material Adverse Effect.
SECTION 3.06. Permits; Compliance. (a) The Company and the
Company Subsidiaries are in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances, exceptions, consents,
certificates, approvals and orders of any Governmental Authority necessary for
the Company or any Company Subsidiary to own, lease and operate its properties
as it is now being operated or to carry on its business as it is now being
conducted, other than those, the absence of which would not, individually or in
the aggregate, have a Company Material Adverse Effect (the "Company Permits"),
and no suspension or cancellation of any of the Company Permits is pending or,
to the Company's knowledge, threatened.
(b) The Company and the Company Subsidiaries are not in
conflict with, or in default, breach or violation of, in each case, in any
respect, (i) any Law applicable to the Company, to any Company Subsidiary or by
which any property or asset of the Company or any Company Subsidiary is bound or
affected, (ii) any Material Contract to which the Company or any Company
Subsidiary is a party or by which the Company, any Company Subsidiary or any
property or asset of the Company or any Company Subsidiary is bound or affected,
or (iii) any Company Permits, except for any such conflicts, defaults, breaches
or violations that would not (A) prevent or materially delay consummation of the
Transactions, (B) prevent or materially delay the Company from performing its
obligations under this Agreement or (C) individually or in the aggregate, have a
Company Material Adverse Effect.
22
SECTION 3.07. Financial Statements. (a)True and complete
copies of (i) the audited consolidated balance sheets of the Company and the
Company Subsidiaries as of August 1, 1998, July 31, 1999 and July 29, 2000, and
the related audited statements of income, changes in shareholders' equity and
cash flows for the fiscal years ended August 1, 1998, July 31, 1999 and July 29,
2000, together with all related notes and schedules thereto (collectively
referred to herein as the "Audited Financial Statements"), and (ii) the
unaudited consolidated balance sheet of the Company as of December 31, 2000 (the
"Reference Balance Sheet"), and the related statements of income and cash flows
of the Company for the month ended December 31, 2000 (collectively referred to
herein as the "Interim Financial Statements"), have been delivered to Parent.
Except as set forth in the notes to the Audited Financial Statements or the
Interim Financial Statements, the Audited Financial Statements and the Interim
Financial Statements (including, in each case, any notes thereto) were prepared
in accordance with GAAP applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto or, in the case of
unaudited statements, as permitted by GAAP) and each present fairly, in all
material respects, the consolidated financial position of the Company as at the
respective dates thereof and for the respective periods indicated therein,
except as otherwise noted therein (subject, in the case of unaudited statements,
to normal and recurring year-end adjustments which were not and are not
expected, individually or in the aggregate, to be material).
(b) There are no debts, liabilities or obligations, whether
accrued or fixed, absolute or contingent, matured or unmatured or determined or
determinable ("Liabilities") of the Company or any Company Subsidiary that are
not fully reflected or reserved against on the Reference Balance Sheet and that
would be required under GAAP to be reflected or reserved thereon, except
Liabilities incurred since the date of the Reference Balance Sheet in the
ordinary course of the business, consistent with the past practice of the
Company, which have not had, and would not, individually or in the aggregate,
have a Company Material Adverse Effect. There are no outstanding warranty claims
against the Company.
SECTION 3.08. Absence of Certain Changes or Events. Since July
30, 2000, except as contemplated by or as disclosed in this Agreement, the
Company and the Company Subsidiaries have conducted their business only in the
ordinary course and in a manner consistent with past practice, and since such
date (a) there has not been any Company Material Adverse Effect and (b) the
Company and the Company Subsidiaries have not taken any of the actions specified
below:
(a) amended or otherwise changed its organizational documents;
(b) issued, sold, pledged, disposed of, granted, encumbered,
or authorized the issuance, sale, pledge, disposition, grant or encumbrance of
any shares of its capital stock of any class, or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of such
capital stock, or any other ownership interest (including, without limitation,
any phantom interest), of the Company or any Company Subsidiary, except pursuant
to shares reserved for issuance under the Company Stock Plans;
(c) declared, set aside, made or paid any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock;
23
(d) reclassified, combined, split, subdivided or redeemed,
purchased or otherwise acquired, directly or indirectly, any of its capital
stock, except that the Company may have repurchased, at cost, any shares of its
capital stock that were subject to a right of repurchase;
(e) acquired (including, without limitation, by merger,
consolidation or acquisition of stock or assets) any interest in any
corporation, partnership, other business organization or any division thereof
or, except in the ordinary course of business and consistent with past practice,
any assets in excess of $50,000 individually, or $250,000 in the aggregate;
(f) incurred any indebtedness for borrowed money or issued any
debt securities or assumed, guaranteed or endorsed, or otherwise as an
accommodation become responsible for, the obligations of any person, or made any
loans or advances, except in the ordinary course of business and consistent with
past practice;
(g) taken any action, other than reasonable and usual actions
in the ordinary course of business and consistent with past practice, with
respect to accounting policies or procedures; or
(h) increased the compensation payable or to become payable to
its officers or employees, granted any severance or termination pay, or right
thereto, to, or entered into any employment or severance agreement with, any
director, officer or other employee of the Company or any Company Subsidiary,
entered into any employment or consulting arrangements with any person who
provides services to the Company or any Company Subsidiary, in either case, that
provide for compensation amounts that are not in accordance with past practice
or established, adopted, entered into or amended any collective bargaining,
bonus, profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement for the benefit of
any director, officer or employee.
SECTION 3.09. Absence of Litigation. There is no litigation,
suit, claim, action, proceeding or investigation pending or, to the knowledge of
the Company, threatened against the Company or any Company Subsidiary, or any
property or asset of the Company or any Company Subsidiary, before any court,
arbitrator or Governmental Authority, which could reasonably be expected, if
resolved adversely to the Company or any Company Subsidiary, to (i) result in
losses to the Company or any Company Subsidiary in excess of $100,000, (ii)
prevent the consummation of the Transactions contemplated by this Agreement, or
(iii) result in a Company Material Adverse Effect. None of the Company, any
Company Subsidiary or any material property or assets of the Company or any
Company Subsidiary, is subject to any continuing order of, consent decree,
settlement agreement or other similar written agreement with, or, to the
knowledge of the Company, continuing investigation by, any Governmental
Authority, or any order, writ, judgment, injunction, decree, determination or
award of any court, arbitrator or Governmental Authority.
SECTION 3.10. Employee Benefit Plans; Labor Matters. (a)
Section 3.10(a) of the Company Disclosure Schedule lists (i) all employee
benefit plans (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) and all
24
bonus, stock option, stock purchase, restricted stock, incentive, deferred
compensation, retiree medical, disability or life insurance, supplemental
retirement, severance or other benefit plans, programs or arrangements, and all
employment, termination, severance or other contracts or agreements pursuant to
which services are provided to the Company, whether legally enforceable or not,
to which the Company or any Company Subsidiary is a party, with respect to which
the Company or any Company Subsidiary has any obligation or which are
maintained, contributed to or sponsored by the Company or any Company Subsidiary
for the benefit of any current or former employee, officer or director of the
Company or any Company Subsidiary, (ii) each employee benefit plan for which the
Company or any Company Subsidiary could incur liability under Section 4069 of
ERISA in the event such plan has been or were to be terminated, and (iii) any
plan in respect of which the Company or any Company Subsidiary could incur
liability under Section 4212(c) of ERISA (collectively, the "Company Benefit
Plans").
(b) Each Company Benefit Plan is in writing, the Company has
furnished Parent with a true and complete copy of each Company Benefit Plan and
a true and complete copy of each material document, if any, prepared in
connection with each such Company Benefit Plan, including, without limitation,
(i) a copy of each trust or other funding arrangement, (ii) each summary plan
description and summary of material modifications, (iii) the most recently filed
Internal Revenue Service ("IRS") Form 5500, (iv) the most recently received IRS
determination letter for each such Company Benefit Plan, (v) the most recently
prepared actuarial report and financial statement in connection with each such
Company Benefit Plan, and (vi) any material correspondence with the IRS or the
Department of Labor with respect to each such Company Benefit Plan.
(c) None of the Company Benefit Plans is a multiemployer plan
(within the meaning of Section 3(37) or 4001(a)(3) of ERISA) (a "Multiemployer
Plan") or a single employer pension plan (within the meaning of Section
4001(a)(15) of ERISA) for which the Company or any Company Subsidiary could
incur liability under Section 4063 or 4064 of ERISA (a "Multiple Employer
Plan"). None of the Company Benefit Plans provides for or promises retiree
medical, disability or life insurance benefits to any current or former
employee, officer or director of the Company or any Company Subsidiary.
(d) None of the Company Benefit Plans provides for the payment
of separation, severance, termination or similar-type benefits to any person or
obligates the Company or any Company Subsidiary to pay separation, severance,
termination or similar-type benefits solely or partially as a result of any
transaction contemplated by this Agreement or as a result of a "change in
control", within the meaning of such term under any Company Benefit Plan or
Section 280G of the Code. Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby, either alone or
together with another event, will (i) result in any payment (including, without
limitation, severance, unemployment compensation, golden parachute, forgiveness
of indebtedness or otherwise) becoming due under any Company Benefit Plan, (ii)
increase any benefits otherwise payable under any Company Benefit Plan or other
arrangement, (iii) result in the acceleration of the time of payment, vesting or
funding of any benefits, or (iv) affect in any respects any Company Benefit
Plan's current treatment under any Laws, including any tax or social
contribution law.
25
(e) Each Company Benefit Plan is now and always has been
operated in all material respects in accordance with its terms and the
requirements of all applicable laws (including the regulations and rules
promulgated thereunder), including, without limitation, ERISA and the Code. The
Company and the Company Subsidiaries have performed all material obligations
required to be performed by them under, are not in any material respect in
default under or in violation of, any Company Benefit Plan. No action, claim or
proceeding is pending or, to the Company's knowledge, threatened with respect to
any Company Benefit Plan (other than claims for benefits in the ordinary course)
and, to the Company's knowledge, no fact or event exists that could give rise to
any such action, claim or proceeding. None of the Company, any Company
Subsidiary or any person that is a member of the same controlled group as the
Company, any Company Subsidiary, or under common control with the Company or any
Company Subsidiary within the meaning of Section 414 of the Code (each, an
"ERISA Affiliate") is subject to any penalty or tax with respect to any Plan
under Section 402(i) of ERISA or Sections 4975 through 4980 of the Code.
(f) Each Company Benefit Plan that is intended to be qualified
under Section 401(a) or Section 401(k) of the Code has timely received a
favorable determination letter from the IRS covering all of the provisions
applicable to the Company Benefit Plan for which determination letters are
currently available that the Company Benefit Plan is so qualified and each trust
established in connection with any Company Benefit Plan that is intended to be
exempt from federal income taxation under Section 501(a) of the Code has
received a determination letter from the IRS that it is so exempt, and no fact
or event has occurred since the date of such determination letter or letters
from the IRS to adversely affect the qualified status of any such Company
Benefit Plan or the exempt status of any such trust.
(g) The Company and the Company Subsidiaries have not incurred
any liability under, arising out of or by operation of Title IV of ERISA (other
than liability for premiums to the Pension Benefit Guaranty Corporation arising
in the ordinary course), including, without limitation, any liability in
connection with (i) the termination or reorganization of any employee benefit
plan subject to Title IV of ERISA or (ii) the withdrawal from any Multiemployer
Plan or Multiple Employer Plan, and no fact or event exists which could give
rise to any such liability.
(h) All contributions, premiums or payments required to be
made or accrued with respect to any Company Benefit Plan prior to the date
hereof have been made on or before their due dates. All such contributions have
been fully deducted for income tax purposes and no such deduction has been
challenged or disallowed by any Governmental Authority and, to the Company's
knowledge, no fact or event exists which could give rise to any such challenge
or disallowance.
(i) The Company does not have any Company Benefit Plan that is
not subject to United States Law.
(j) The Company and the Company Subsidiaries are not a party
to any collective bargaining agreement or other labor union contract applicable
to persons employed by the Company or any Company Subsidiary or in the Company's
or any Company Subsidiary's business, and currently, to the Company's knowledge,
there are no organizational campaigns,
26
petitions or other unionization activities seeking recognition of a collective
bargaining unit which could affect the Company or any Company Subsidiary; (ii)
there are no controversies, strikes, slowdowns or work stoppages pending or, to
the Company's knowledge, threatened between the Company or any Company
Subsidiary and any of their employees, and the Company and the Company
Subsidiaries have not experienced any such controversy, strike, slowdown or work
stoppage within the past three years; (iii) the Company and the Company
Subsidiaries have not breached or otherwise failed to comply with the provisions
of any collective bargaining or union contract and there are no grievances
outstanding against the Company and the Company Subsidiaries under any such
agreement or contract; (iv) there are no unfair labor practice complaints
pending against the Company and the Company Subsidiaries before the National
Labor Relations Board or any other Governmental Authority or, to the Company's
knowledge, any current union representation questions involving employees of the
Company or any Company Subsidiary; (v) the Company and the Company Subsidiaries
are currently in material compliance with all applicable laws relating to the
employment of labor, including those related to wages, hours, worker
classification, collective bargaining and the payment and withholding of taxes
and other sums as required by the appropriate Governmental Authority and have
withheld and paid to the appropriate governmental authority or are holding for
payment not yet due to such governmental authority all amounts required to be
withheld from employees of the Company or any Company Subsidiary and are not
liable for any arrears of wages, taxes, penalties or other sums for failure to
comply with any of the foregoing; (vi) the Company and the Company Subsidiaries
have paid in full to all employees or adequately accrued for in accordance with
GAAP consistently applied all wages, salaries, commissions, bonuses, benefits
and other compensation due to or on behalf of such employees; (vii) there is no
claim with respect to payment of wages, salary or overtime pay that has been
asserted or is now pending or, to the Company's knowledge, threatened before any
Governmental Authority with respect to any persons currently or formerly
employed by the Company or any Company Subsidiary; (viii) the Company and the
Company Subsidiaries are not a party to, or otherwise bound by, any consent
decree with, or citation by, any governmental authority relating to employees or
employment practices; (ix) there is no charge or proceeding with respect to a
violation of any occupational safety or health standards that has been asserted
or is now pending or, to the Company's knowledge, threatened with respect to the
Company or any Company Subsidiary; and (x) there is no charge of discrimination
in employment or employment practices, for any reason, including, without
limitation, age, gender, race, religion or other legally protected category,
which has been asserted or is now pending or, to the Company's knowledge,
threatened before the United States Equal Employment Opportunity Commission, or
any other Governmental Authority in any jurisdiction in which the Company or any
Company Subsidiary has employed or currently employs any person.
(k) Section 3.10(k) of the Company Disclosure Schedule sets
forth a true and complete list as of the date hereof of (i) the names, titles,
annual salaries and other compensation of all officers of the Company and all
other employees of the Company or any of the Company Subsidiaries whose annual
compensation exceeds $75,000 and (ii) the compensation rights for non-exempt
employees of the Company or any of the Company Subsidiaries (by classification).
SECTION 3.11. Contracts. (a) Section 3.11(a) of the Company
Disclosure Schedule lists each of the following written contracts and agreements
of the Company or any Company Subsidiary (such contracts and agreements being
"Material Contracts"):
27
(i) each contract and agreement which (A) involved
consideration of more than $100,000, in the aggregate, during the
calendar year ended December 31, 2000 that continues to be executory,
(B) is likely to involve consideration of more than $100,000, in the
aggregate, during the calendar year ending December 31, 2001, or (C) is
likely to involve consideration of more than $250,000, in the
aggregate, over the remaining term of such contract, and which, in
either case, cannot be canceled by the Company or any Company
Subsidiary without penalty or further payment and without more than 90
days' notice;
(ii) all broker, distributor, dealer, manufacturer's
representative, franchise, physician consulting, clinical study, data
management, research, agency and sales promotion contracts and
agreements to which the Company or any Company Subsidiary is a party;
(iii) all market research, market consulting and advertising
contracts and agreements, management contracts (excluding contracts for
employment), contracts with other consultants and any contracts and
agreements involving the payment of royalties or other amounts
calculated based upon the revenues or income of the Company or any
Company Subsidiary or income or revenues related to any product of the
Company or any Company Subsidiary to which the Company or any Company
Subsidiary is a party and, in each case, which is likely to involve
consideration of more than $100,000, in the aggregate, during the
calendar year ending December 31, 2001;
(iv) all contracts and agreements evidencing indebtedness in
excess of $100,000;
(v) all leases and subleases of real property;
(vi) all contracts and agreements with any Governmental
Authority to which the Company or any Company Subsidiary is a party
other than in the ordinary course of the Company's business;
(vii) all contracts and agreements that limit or purport to
limit the ability of the Company or any Company Subsidiary to compete
in any line of business or with any person or in any geographic area or
during any period of time;
(viii) all contracts containing confidentiality requirements
(including all nondisclosure agreements), which require the Company or
any Company Subsidiary to keep confidential information belonging to
third parties;
(ix) all non-arm's length contracts and agreements in excess
of $10,000 individually between or among the Company or any Company
Subsidiary and any shareholder or, to the Company's knowledge, any
affiliate of such person;
(x) any other material agreement of the Company or any Company
Subsidiary which is terminable upon or prohibits a change of ownership
or control of the Company or any Company Subsidiary;
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(xi) all contracts and agreements for Owned Intellectual
Property or Licenses, other than (A) any sublicense implicit as a
result of a sale or transfer to an end-user of any Company product and
(B) any confidentiality or nondisclosure agreements, in each case
entered into in the ordinary course of the Company's business;
(xii) all material contracts and agreements providing for
benefits under any Company Benefit Plan;
(xiii) all material contracts or arrangements (excluding
contracts with customs brokers or legal counsel prosecuting patents on
behalf of the Company) that, to the Company's knowledge, result in any
person or entity holding a power of attorney from the Company or any
Subsidiary that relates to the Company, any Subsidiary or their
respective businesses;
(xiv) all contracts for employment for persons required to be
listed in Section 3.10(k) of the Disclosure Schedule;
(xv) all contracts and agreements with Group Purchasing
Organizations (as defined in Section 11.02(a)) pursuant to which the
Company or any Company Subsidiary sells products or pursuant to which
the Company or any Company Subsidiary has agreed to utilize a
electronic business-to-business exchange to sell its products; and
(xvi) all other contracts and agreements, whether or not made
in the ordinary course of business, which are material to the Company
and the Company Subsidiaries, taken as a whole, or to the conduct of
their respective businesses, or the absence of which would prevent or
materially delay consummation of the Merger or otherwise prevent or
materially delay the Company from performing its obligations under this
Agreement.
(b) (i) Each Material Contract is valid and binding on the
Company or any Company Subsidiary, as the case may be, and, to the knowledge of
the Company, on the other parties thereto (subject, in each case, to the effect
of any applicable bankruptcy, reorganization, insolvency, moratorium or similar
laws affecting creditor's rights generally and subject, in each case as to
enforceability, to the effect of general principles of equity) and is in full
force and effect and represents, together with any other contracts listed on the
Company Disclosure Schedule that relate to the same subject matter, the entire
agreement between the respective parties with respect to the subject matter of
such Material Contract;
(ii) The Company and the Company Subsidiaries have not (A)
received any notice of termination or cancellation under any Material
Contract, (B) received any notice of breach or default under any
Material Contract, which breach has not been cured, and (C) granted to
any other third party any rights, adverse or otherwise, under any
Material Contract that would constitute a breach of such Material
Contract; and
(iii) The Company, the Company Subsidiaries, and, to the
Company's knowledge, any other party to each Material Contract, are not
in breach or default thereof in any material respect, and no event has
occurred that, with notice or lapse of time, would constitute such a
breach or default or permit termination, modification or acceleration
under such Material Contract.
29
SECTION 3.12. Environmental Matters. The Company and the
Company Subsidiaries (a) are in compliance with all Environmental Laws (as
defined in Section 11.02(a)) applicable to the conduct of the business as
presently conducted or to the assets and properties owned by the Company, except
where noncompliance will not have a Company Material Adverse Effect, (b) hold
all Environmental Permits (as defined in Section 11.02(a)) material to the
conduct of the Company's and the Company Subsidiaries' businesses as presently
conducted, except where the failure to have the Environmental Permit would not
have a Company Material Adverse Effect and (c) are in compliance with their
respective Environmental Permits for the conduct of their respective businesses
presently conducted, except where noncompliance would not have a Company
Material Adverse Effect. Neither the Company nor any Company Subsidiary has
received any written request for information, or been notified that it is a
potentially responsible party, under CERCLA (as defined in Section 11.02(a)) or
any similar Law of any state, locality or any other jurisdiction. Neither the
Company nor any Company Subsidiary has entered into or agreed in writing to any
consent decree or order or is subject to such judgment, decree or judicial order
relating to compliance by the Company or the Company Subsidiary with
Environmental Laws, Environmental Permits or the investigation, sampling,
monitoring, treatment, remediation, removal or cleanup of Hazardous Materials
(as defined in Section 11.02(a)) and no such investigation, litigation or other
proceeding is pending or, to the knowledge of the Company, threatened in writing
against the Company, any Company Subsidiary, or, with respect to matters arising
out of the Company's operations only, any Principal Shareholder with respect
thereto.
SECTION 3.13. Intellectual Property. (a) Section 3.13(a)(i) of
the Company Disclosure Schedule sets forth a true and complete list of all U.S.
and foreign patents and patent applications, all Registered Proprietary Names
and all Unregistered Proprietary Names in all countries of the world, all
copyright registrations and applications for registration of copyrights, all
domain names and applications for registration of domain names, all Company
Software (as defined in Section 11.02(v)) included in the Owned Intellectual
Property (as defined in Section 11.02(xiv)) and Licensed Intellectual Property
(as defined in Section 11.02(xii)), and Licenses (as defined in Section
11.02(xiii)) (other than licenses of commercial off-the-shelf or shrink-wrap
computer software) that are owned or controlled (in the sense of having the
right to license others) by the Company, the Company Subsidiaries or any of
their affiliate entities.
(b) Except as disclosed to Parent's outside patent counsel in
meetings with the Company's patent counsel on February 6, 2001 and February 12,
2001, to the Company's knowledge (i) (A) the use of the Owned Intellectual
Property, the Licensed Intellectual Property or the know-how owned or licensed
by the Company in connection with the operation of the business of the Company
or any Company Subsidiary as currently conducted, and (B) the manufacture, use,
offer for sale, and sale of the Cutting Balloon(TM) atherotomy catheter, the
TrackWire(R) guidewire, the Infiltrator(R) drug delivery catheter, the LP
Stent(R) stent, the TEC(R) atherectomy catheter, and the Crossfinder angioplasty
catheter (as such products exist as of the date hereof and, with respect to
products currently under development, when commercialized in the United States,
as currently contemplated) do not infringe or misappropriate or otherwise
violate the Intellectual Property rights of any third party, and no claim is
pending or threatened against the Company or any Company Subsidiary alleging any
of the foregoing; and (ii) for the conduct of the business of the Company or any
Company Subsidiary as presently conducted, no right, license, lease, consent, or
other agreement is or will be required with respect to any patent,
30
invention, know-how, technology, or the like, and any Proprietary Name,
copyright, domain name, Company Software or other Intellectual Property other
than those described in the schedule to this Section. None of the patents or
patent applications listed in Section 3.13(a)(i) of the Company Disclosure
Schedule is involved in any interference, reexamination, conflict or opposition
proceeding, and there has been no threat or other indication that any such
proceeding will hereafter be commenced. None of the Proprietary Names or
registrations or applications to use or register such Proprietary Names listed
in the schedule to this Section is involved in any opposition, cancellation,
nullification, interference, conflict or concurrent use proceeding, and to the
Company's knowledge, there has been no threat or other indication that any such
proceeding will hereafter be commenced.
(c) The Company or a Company Subsidiary is the exclusive owner
of the entire and unencumbered right, title and interest in and to each item of
the Owned Intellectual Property, and, to the Company's knowledge, is entitled to
use the Owned Intellectual Property and Licensed Intellectual Property in the
ordinary course of its business as presently conducted, subject only to the
terms of the Licenses.
(d) To the Company's knowledge, the Owned Intellectual
Property and Licensed Intellectual Property include all of the Intellectual
Property used in the ordinary day-to-day conduct of the business of the Company
or any Company Subsidiary, and there are no other items of Intellectual Property
that are material to such ordinary day-to-day conduct of such business. The
Owned Intellectual Property and, to the knowledge of the Company, the Licensed
Intellectual Property are pending and in good standing, all without challenge of
any kind, and are valid and enforceable, and have not been adjudged invalid or
unenforceable (except for challenges to validity that may be received in the
ordinary course of the prosecution of patent applications in patent offices) in
whole or part.
(e) No legal proceedings are pending or, to the Company's
knowledge, are threatened against the Company or any Company Subsidiary (i)
based upon or challenging or seeking to deny or restrict the use by the Company
of any of the Owned Intellectual Property or Licensed Intellectual Property,
(ii) alleging that any services provided by, processes used by, or products
manufactured or sold by the Company or any Company Subsidiary infringe or
misappropriate any Intellectual Property right of any third party, or (iii)
alleging that the Licenses being licensed are in conflict with the terms of any
third party license or other agreement.
(f) To the Company's knowledge, no third party is engaging in
any activity that infringes or misappropriates the Owned Intellectual Property
or Licensed Intellectual Property. The Company and the Company Subsidiaries have
not granted any license or other right to any third party with respect to the
Owned Intellectual Property or Licensed Intellectual Property. To the Company's
knowledge, the consummation of the transactions contemplated by this Agreement
will not result in the termination or impairment of any of the Owned
Intellectual Property or Licensed Intellectual Property.
(g) The Company and the Company Subsidiaries have delivered or
made available to Parent, as requested by Parent, true and correct and complete
copies of patents, patent applications, license commitments and other agreements
listed or described in Section
31
3.13 of the Company Disclosure Schedule and all applications and registrations
for Proprietary Names and copyrights, licenses, leases, commitments and other
agreements listed or described in the schedule to this Section, other than
licenses of commercial off-the-shelf or shrink-wrap computer software.
(h) To the Company's knowledge, the Company Software is free
of all viruses, worms and trojan horses, and does not contain any bugs, errors,
or problems that materially disrupt its operation or have a material adverse
impact on the operation of other software programs or operating systems as used
in the Company's business as presently conducted. The Company and the Company
Subsidiaries have obtained all approvals necessary for exporting and importing
the Company Software into any country in which the Company Software is now sold
or licensed for use, and all such export and import approvals in the United
States and throughout the world are valid, current, outstanding and in full
force and effect. No rights in the Company Software have been transferred to any
third party, except to the customers of the Company or any Company Subsidiary to
whom the Company or any Company Subsidiary has licensed such Company Software in
the ordinary course of business.
(i) To the Company's knowledge, the Company and the Company
Subsidiaries have a license to use all software development tools, library
functions, compilers and other third-party software that are material to the
business of the Company or any Company Subsidiary as presently conducted, or
that are required to operate or modify the Company Software as used in the
Company's business as presently conducted.
(j) The Company and the Company Subsidiaries have taken
reasonable steps in accordance with normal industry practice to maintain the
confidentiality of their trade secrets and other confidential Intellectual
Property.
(k) To the knowledge of the Company, (i) there has been no
misappropriation of any material trade secrets or other material confidential
Intellectual Property of the Company or any Company Subsidiary by any person,
(ii) no employee, independent contractor or agent of the Company or any Company
Subsidiary has misappropriated any trade secrets of any other person in the
course of such performance as an employee, independent contractor or agent, and
(iii) no employee, independent contractor or agent of the Company or any Company
Subsidiary is in default or breach of any term of any employment agreement,
nondisclosure agreement, assignment of invention agreement or similar agreement
or contract relating in any way to the protection, ownership, development, use
or transfer of Intellectual Property.
(l) Each current director, officer, employee and consultant of
the Company or any Company Subsidiary whose annual compensation exceeds $50,000,
all current research and development personnel at the Company or any Company
Subsidiary and each person named as an inventor of the patents listed in Section
3.13(a)(i) of the Company Disclosure Schedule has executed an agreement with the
Company regarding confidentiality and proprietary information substantially in
the form provided to Parent. The Company is not aware that any of its employees
or consultants is in violation thereof. To the Company's knowledge, all
consultants to or vendors of the Company or any Company Subsidiary with access
to confidential information of the Company or any Company Subsidiary are parties
to written agreements substantially in the form provided to Parent under which,
among other things, each such
32
consultant or vendor is obligated to maintain the confidentiality of
confidential information of the Company or any Company Subsidiary. The Company
and the Company Subsidiaries are not aware that any of their consultants or
vendors are in violation thereof.
SECTION 3.14. Taxes. (a) (i) All returns and reports in
respect of Taxes required to be filed with respect to the Company and each
Company Subsidiary have been timely filed; (ii) all Taxes required to be shown
on such returns and reports or otherwise due have been timely paid; (iii)
accruals will be provided for all estimated Taxes (based on a reasonable
estimate of the Company's taxable income) for periods or portions thereof ending
on the Closing Date; (iv) all such returns and reports are true, correct and
complete in all material respects; (v) no adjustment relating to such returns or
reports has been proposed formally or informally by any Tax authority and, to
the best knowledge of the Company and the Company Subsidiaries, no basis exists
for any such adjustment; (vi) there are no pending or, to the best knowledge of
the Company and the Company Subsidiaries, threatened actions or proceedings for
the assessment or collection of Taxes against the Company or any Company
Subsidiary; (vii) no claim has been made by a Governmental Authority in a
jurisdiction where the Company or any Company Subsidiary does not file Tax
returns that the Company or any Company Subsidiary may be subject to Tax in such
jurisdiction; (viii) no consent under Section 341(f) of the Code has been filed
with respect to the Company or any Company Subsidiary; (ix) there are no tax
liens on any assets of the Company or any Company Subsidiary; (x) neither the
Company nor any Company Subsidiary is a party to any agreement or arrangement
that would result, separately or in the aggregate, in the actual or deemed
payment by the Company or a Company Subsidiary of any "excess parachute
payments" within the meaning of Section 280G of the Code (without regard to
Section 280G(b)(4) of the Code); (xi) except as provided in Section 2.04, no
acceleration of the vesting schedule for any property that is substantially
unvested within the meaning of the regulations under Section 83 of the Code will
occur in connection with the transactions contemplated by this Agreement; (xii)
neither the Company nor any Company Subsidiary has been a member of any
affiliated group (within the meaning of Section 1504(a)(1) of the Code), other
than the affiliated group for which the Company files a consolidated return as
the common parent, for any period for which the statute of limitations for any
Tax has not expired; (xiii) none of the Company or the Company Subsidiaries has
been at any time a member of any partnership or joint venture or the holder of a
beneficial interest in any trust for any period for which the statute of
limitations for any Tax has not expired; (xiv) none of the Company or the
Company Subsidiaries has been a United States real property holding corporation
within the meaning of Section 897(c)(2) of the Code during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code; (xv) none of the Company or
the Company Subsidiaries is subject to any accumulated earnings tax penalty or
personal holding company tax; (xvi) the Company has not been a party to a
transaction described in Section 355 of the Code, and (xvii) since July 31,
2000, none of the Company or the Company Subsidiaries has made, changed or
revoked any material Tax election, changed any annual Tax accounting period,
adopted or changed any method of Tax accounting, filed any amended Tax return,
entered into any closing agreement, settled any Tax claim or assessment,
surrendered any right to claim a Tax refund, consented to any extension or
waiver of the limitation period applicable to any Tax claim or assessment or
taken or omitted to take any other action with respect to Taxes, if any such
action or omission would have the effect of materially increasing the Tax
liability of the Company, any Company Subsidiary, Parent or any affiliate of
Parent.
33
(b) (i) There are no outstanding waivers or agreements
extending the statute of limitations for any period with respect to any Tax to
which the Company or any Company Subsidiary may be subject; (ii) none of the
Company or the Company Subsidiaries (A) has or is projected to have an amount
includible in its income for the current taxable year under Section 951 of the
Code, (B) has been a passive foreign investment company within the meaning of
Section 1296 of the Code, (C) has an unrecaptured overall foreign loss within
the meaning of Section 904(f) of the Code or (D) has participated in or
cooperated with an international boycott within the meaning of Section 999 of
the Code; (iii) there are no requests for information currently outstanding that
could affect the Taxes of the Company or any Company Subsidiary; (iv) there are
no proposed reassessments of any property owned by the Company or any Company
Subsidiary or other proposals that could increase the amount of any Tax to which
a Company would be subject; and (v) no power of attorney that is currently in
force has been granted with respect to any matter relating to Taxes that could
affect the Company or a Company Subsidiary.
(c) As used in this Agreement, "Taxes" shall mean any and all
taxes, fees, levies, duties, tariffs, imposts and other charges of any kind
(together with any and all interest, penalties, additions to tax and additional
amounts imposed with respect thereto) imposed by any government or taxing
authority, including, without limitation: taxes or other charges on or with
respect to income, franchises, windfall or other profits, gross receipts,
property, sales, use, capital stock, payroll, employment, social security,
workers' compensation, unemployment compensation or net worth; taxes or other
charges in the nature of excise, withholding, ad valorem, stamp, transfer,
value-added or gains taxes; license, registration and documentation fees; and
customs' duties, tariffs and similar charges.
SECTION 3.15. Assets. Except as would not individually or in
the aggregate, have a Company Material Adverse Effect, the Company or a Company
Subsidiary owns, leases or has the legal right to use all of the material
properties and assets, including, without limitation, real property and personal
property (other than Intellectual Property, which is covered by Section 3.13
hereof) used, in or necessary for the conduct of the business of the Company or
any Company Subsidiary as it is currently conducted and, with respect to
contract rights, is a party to and enjoys the right to the benefits of all
material contracts, agreements and other arrangements used or intended to be
used by the Company or any Company Subsidiary in or relating to the conduct of
the business of the Company or any Company Subsidiary (all such properties,
assets and contract rights being the "Assets"). The Company or a Company
Subsidiary has good and marketable title to, or, in the case of leased or
subleased Assets, valid and subsisting leasehold interests in, all the Assets,
free and clear of all encumbrances, except such encumbrances (i) arising in the
ordinary course of business, (ii) reflected in the Audited Financial Statements
or Interim Financial Statements or (iii) which have not had, and would not,
individually or in the aggregate, have a Company Material Adverse Effect.
SECTION 3.16. Certain Interests. (a) No Company Shareholder,
or, to the Company's knowledge, any affiliate thereof, who beneficially owns 5%
or more of the capital stock of the Company (on an as-converted basis) or 5% or
more of the capital stock of any Company Subsidiary and no officer or director
of the Company or any Company Subsidiary and, to the Company's knowledge, no
immediate relative or spouse (or immediate relative of such spouse) who resides
with, or is a dependent of, any such officer or director has any direct or
34
indirect (excluding interests of a venture capital fund affiliated with any
director of the Company) financial interest in any competitor, supplier or
customer of the Company or any Company Subsidiary; provided, however, that the
ownership of securities representing no more than 2% of the outstanding voting
power of any competitor, supplier or customer, and which are listed on any
national securities exchange or traded actively in the national over-the-counter
market, shall not be deemed to be a "financial interest" as long as the person
owning such securities has no other connection or relationship with such
competitor, supplier or customer.
(b) No Company Shareholder or, to the Company's knowledge,
their affiliates and no officer or director of the Company or any Company
Subsidiary and, to the knowledge of the Company, no immediate relative or spouse
(or immediate relative of such spouse) who resides with, or is a dependent of,
any such officer or director:
(i) owns, directly or indirectly, in whole or in part, or has
any other interest in any tangible or intangible property which the
Company or any Company Subsidiary uses in the conduct of its business
(except for any such ownership or interest resulting from the ownership
of securities in a public company); or
(ii) has outstanding any indebtedness to the Company or any
Company Subsidiary.
(b) Except for the payment of employee compensation in the
ordinary course of business, the Company and the Company Subsidiaries do not
have any liability or any other obligation of any nature whatsoever: (i) to any
shareholder, or, to the Company's knowledge, any affiliate thereof, who
beneficially owns 5% or more of the capital stock of the Company (on an
as-converted basis) or 5% or more of the capital stock of any Company
Subsidiary; (ii) to any officer or director of the Company or any Company
Subsidiary; (iii) to the knowledge of the Company, to any immediate relative or
spouse (or immediate relative of such spouse) of any such officer or director;
or (iv) to any other shareholder of the Company or any Company Subsidiary,
except, for the purposes of this clause (iv) only, for any arm's length
liability or obligation which does not exceed $10,000 individually.
SECTION 3.17. Insurance Policies. Section 3.17 of the Company
Disclosure Schedule sets forth a true and complete list of all insurance
policies held by the Company or any Company Subsidiary. True and complete copies
of all such policies have been provided or made available by the Company to
Parent. All premiums due to the date hereof on such policies have been paid. The
Company and the Company Subsidiaries have not failed to give any notice or
present any claim under any such policy in a timely fashion, except where such
failure would not prejudice the Company's or a Company Subsidiary's ability to
make a claim. Such insurance to the date hereof has (i) been maintained in full
force and effect and (ii) not been canceled or changed, except to extend the
maturity dates thereof.
SECTION 3.18. Brokers. No broker, finder or investment banker
(other than U.S. Bancorp Xxxxx Xxxxxxx ("Xxxxx Xxxxxxx")) is entitled to any
brokerage, finder's or other fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of the Company or any
Company Subsidiary. The Company has heretofore furnished to Parent a
35
complete and correct copy of all agreements between the Company and Xxxxx
Xxxxxxx pursuant to which such firm would be entitled to any payment relating to
the Transactions.
SECTION 3.19. No Misstatements. No representation or warranty
made by the Company in this Agreement or the Company Disclosure Schedule
contains any untrue statement of a material fact, or omits, when taken as a
whole, to state a material fact, necessary in order to make the statements made,
in light of the circumstances under which they were made, not misleading.
SECTION 3.20. Vote Required. The only votes of the holders of
any classes or series of capital stock of the Company necessary to approve this
Agreement and the Transactions is (a) the affirmative vote of the holders of at
least a majority of the outstanding shares of each of the Company Common Stock,
voting as a single class, and the Company Preferred Stock, voting as a single
class, in favor of the approval of this Agreement, and (b) the affirmative vote
of at least 75 percent of the shares held by "disinterested shareholders" to
satisfy the shareholder approval requirements of Section 280G of the Code.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as set forth in the disclosure schedule delivered by
Parent and Merger Sub to the Company concurrently with the execution of this
Agreement (the "Parent Disclosure Schedule") and which provides an exception to
or otherwise qualifies in reasonable detail with specific Section references,
the representations or warranties Parent and Merger Sub specifically referred to
therein, except where readily apparent from the language in the Parent
Disclosure Schedule that such disclosure also applies to another Section, Parent
and Merger Sub hereby jointly and severally represent and warrant to the Company
that:
SECTION 4.01. Organization and Qualification. Each of Parent,
Merger Sub and each of Parent's "significant subsidiaries" (within the meaning
of Rule 1-02 of Regulation S-X as promulgated by the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended) (collectively,
the "Parent Subsidiaries") is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its business
as it is now being conducted, except where the failure to be so organized,
existing or in good standing or to have such power, authority and governmental
approvals would not prevent or materially delay consummation of the
Transactions, and would not, individually or in the aggregate, result in a
Parent Material Adverse Effect (as defined below). Each of Parent, Merger Sub
and each of Parent Subsidiaries is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction in
each the character of the properties owned, leased or operated by it or the
nature of its business makes such qualification or licensing necessary, except
for such failures to be so qualified or licensed or in good standing that have
not had or would not, individually or in the aggregate, have a Parent Material
Adverse Effect. The term "Parent Material Adverse Effect" means any
circumstance, change or effect that is, or is reasonably likely to be,
materially adverse
36
to the business, operations, financial condition and results of operations of
Parent and Parent Subsidiaries taken as a whole; provided, however, that none of
the following shall be deemed, singly or in the aggregate, to constitute, or be
considered in determining whether there exists, a Parent Material Adverse
Effect: any circumstance, change or effect (i) resulting from the announcement
or pendency of the Transactions or (ii) resulting from any change in the
healthcare or cardiovascular disease treatment industry, or in general economic
conditions, in each case that are not specifically related to the Parent, the
Parent Subsidiaries or its business. Parent has heretofore furnished to the
Company a true and correct copy of the Certificate of Incorporation and By-laws
of Merger Sub and such Certificate of Incorporation and By-laws are in full
force and effect.
SECTION 4.02. Authority Relative to this Agreement. Each of
Parent and Merger Sub has all necessary corporate power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the Transactions. The execution and delivery of this Agreement by
each of Parent and Merger Sub and the consummation by each of Parent and Merger
Sub of the Transactions have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of Parent or
Merger Sub are necessary to authorize this Agreement or to consummate the
Transactions (other than, with respect to the Merger, the filing and recordation
of appropriate merger documents as required by the DGCL and California Law and,
if necessary, the HSR Act filing (as described in Section 3.05)). This Agreement
has been duly and validly executed and delivered by each of Parent and Merger
Sub and, assuming the due authorization, execution and delivery by the other
parties hereto, constitutes a legal, valid and binding obligation of each of
Parent and Merger Sub, enforceable against each of Parent and Merger Sub in
accordance with its terms, subject to the effect of any applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws affecting creditor's
rights generally and subject, as to enforceability, to the effect of general
principles of equity.
SECTION 4.03. No Conflict; Required Filings and Consents. (a)
The execution and delivery of this Agreement by each of Parent and Merger Sub do
not, and the performance of this Agreement by each of Parent and Merger Sub will
not (i) conflict with or violate their respective organizational documents, (ii)
assuming that all consents, approvals, authorizations and other actions
described in Section 4.03(b) have been obtained and all filings and obligations
described in Section 4.03(b) have been made, conflict with or violate in any
material respect any Law applicable to Parent or Merger Sub or by which any
property or asset of Parent or Merger Sub is bound or affected, or (iii) result
in any breach of or constitute a default (or an event which, with notice or
lapse of time or both, would become a default) under, or give to others any
right of termination, amendment, acceleration or cancellation of, or result in
the creation of a lien or other encumbrance on any property or asset of Parent
or Merger Sub pursuant to, any material note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation, except, with respect to clauses (ii) and (iii), for any such
conflicts, violations, breaches, defaults, or other occurrences which would not
prevent or materially delay consummation of the Transactions or otherwise
prevent or materially delay Parent and Merger Sub from performing its
obligations under this Agreement and would not, individually or in the
aggregate, have a Parent Material Adverse Effect.
37
(b) The execution and delivery of this Agreement by each of
Parent and Merger Sub do not, and the performance of this Agreement by each of
Parent and Merger Sub will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any Governmental Authority, except
(i) for the pre-merger notification requirements of the HSR Act and the filing
and recordation of appropriate merger documents as required by the DGCL and
California Law, and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent or materially delay consummation of the Transactions or otherwise
prevent or materially delay Parent and Merger Sub from performing its
obligations under this Agreement.
SECTION 4.04. Financing. Parent has, and shall have at the
Effective Time, funds available sufficient to permit Parent to pay the Initial
Merger Consideration and the License Contingent Payment pursuant to Sections
2.01 and 2.03, respectively.
SECTION 4.05. Ownership of Merger Sub; No Prior Activities.
Parent owns all of the outstanding capital stock of Merger Sub. Merger Sub was
formed by Parent solely for the purpose of engaging in the transactions
contemplated by this Agreement. As of the date of this Agreement and the
Effective Time, except for obligations or liabilities incurred in connection
with its incorporation or organization and this Agreement and the Transactions,
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.
SECTION 4.06. Brokers. No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of Parent or
Merger Sub.
ARTICLE V
CONDUCT OF BUSINESSES PENDING THE MERGER
SECTION 5.01. Conduct of Business by the Company Pending the
Merger. The Company agrees that, between the date of this Agreement and the
earlier to occur of the Effective Time and the termination of this Agreement,
except as set forth in Section 5.01 of the Company Disclosure Schedule or as
contemplated by any other provision of this Agreement, unless Parent shall
otherwise consent in writing (which consent shall not be unreasonably withheld
or delayed):
(i) the Company shall use its commercially reasonable efforts
to conduct the businesses of the Company and the Company Subsidiaries
shall be conducted only in, and the Company and the Company
Subsidiaries in the ordinary course of business and in a manner
consistent with past practice; and
(ii) the Company shall use its commercially reasonable efforts
to preserve substantially intact its business organization and the
business organization of the Company Subsidiaries, to keep available
the services of the current officers, employees
38
and consultants of the Company and the Company Subsidiaries and to
preserve the current relationships of the Company and the Company
Subsidiaries with customers, suppliers and other persons with which the
Company or any Company Subsidiary has significant business relations.
By way of amplification and not limitation, except as
otherwise contemplated by this Agreement or as set forth in Section 5.01 of the
Company Disclosure Schedule, the Company and the Company Subsidiaries shall not,
between the date of this Agreement and the earlier to occur of the Effective
Time and the termination of this Agreement, directly or indirectly, do, or
propose to do, any of the following without the prior written consent of Parent
(which consent shall not be unreasonably withheld or delayed):
(a) amend or otherwise change its organizational documents;
(b) issue, sell, pledge, dispose of, grant, encumber, or
authorize the issuance, sale, pledge, disposition, grant or encumbrance
of any shares of its capital stock of any class, or any options,
warrants, convertible securities or other rights of any kind to acquire
any shares of such capital stock, or any other ownership interest
(including, without limitation, any phantom interest), of the Company
or any Company Subsidiary, including, without limitation, any grant of
options to a "disqualified individual" within the meaning of Section
280G of the Code, except pursuant to the terms of options, warrants or
preferred stock outstanding on the date of this Agreement or pursuant
to shares reserved for issuance under the Company Stock Plans as of the
date hereof;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock;
(d) reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any of its capital stock,
except that the Company may repurchase, at cost, any shares of its
capital stock subject to a right of repurchase;
(e) acquire (including, without limitation, by merger,
consolidation or acquisition of stock or assets) any interest in any
corporation, partnership, other business organization or any division
thereof or, except in the ordinary course of business and consistent
with past practice, any assets in excess of $50,000 individually, or
$250,000 in the aggregate;
(f) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any person, or
make any loans or advances, except in the ordinary course of business
and consistent with past practice;
(g) authorize any capital expenditure in excess of $50,000
individually or $250,000 in the aggregate;
(h) increase the compensation payable or to become payable to
its officers or employees, grant any severance or termination pay, or
right thereto, to, or enter into any employment or severance agreement
with, any director, officer or other employee of the
39
Company or any Company Subsidiary, enter into any employment or
consulting arrangements with any person who provides services to the
Company or any Company Subsidiary that provides for compensation
amounts that are not in accordance with past practice or establish,
adopt, enter into or amend any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement for the
benefit of any director, officer or employee;
(i) enter into any contract or agreement in which the
obligation of the Company or any Company Subsidiary exceeds $50,000,
except in the ordinary course of business and consistent with past
practice;
(j) enter into, amend or terminate any contract, agreement,
commitment or arrangement that, if fully performed, would not be
permitted under this Section 5.01;
(k) other than in the ordinary course of business consistent
with past practice, enter into any contract, agreement or obligation
which shall not terminate or be subject to termination for convenience,
in each case, without cost, by the Company or any Company Subsidiary
upon notice of 30 days or less;
(l) take any action, other than reasonable and usual actions
in the ordinary course of business and consistent with past practice,
with respect to accounting policies or procedures;
(m) make, change or revoke any material Tax election, change
any annual Tax accounting period, adopt or change any method of Tax
accounting, file any amended Tax return, enter into any closing
agreement, settle any Tax claim or assessment, surrender any right to
claim a Tax refund, consent to any extension or waiver of the
limitation period applicable to any Tax claim or assessment or take or
omit to take any other action with respect to Taxes, if any such action
or omission would have the effect of materially increasing the Tax
liability of the Company, any Company Subsidiary, Parent or any
affiliate of Parent; or
(n) (i) sell, assign, lease, terminate, abandon, transfer or
otherwise dispose of or grant any security interest in and to any item
of the Owned Intellectual Property or Licensed Intellectual Property,
in whole or in part, (ii) grant any license with respect to any Owned
Intellectual Property, other than license of Company Software to
customers of the Company or any Company Subsidiary to whom the Company
or any Company Subsidiary licenses such Company Software in the
ordinary course of business, (iii) develop, create or invent any
Intellectual Property jointly with any third party not exclusively
assigned to the Company, or (iv) disclose, or allow to be disclosed,
any confidential Owned Intellectual Property, unless such Owned
Intellectual Property is subject to a confidentiality or nondisclosure
covenant protecting against disclosure thereof.
SECTION 5.02. Conduct of Business by Parent Pending the
Merger. Parent agrees that, between the date of this Agreement and the earlier
to occur of the Effective Time and
40
the termination of this Agreement, unless Company shall otherwise consent in
writing (which consent shall not be unreasonably withheld or delayed):
(i) Parent shall use all commercially reasonable efforts (A)
not to interfere with the Company's efforts to keep available the
services of the current officers, employees and consultants of the
Company and the Company Subsidiaries, and (B) to preserve the current
relationships of the Company and the Company Subsidiaries with their
respective customers, suppliers and other persons with which the
Company or any Company Subsidiary has significant business relations;
and
(ii) Parent shall use all commercially reasonable efforts to
instruct its employees or distributors not to (A) take any action which
would reasonably be expected to adversely affect the Company's sales of
the Company Covered Products, and (B) make any representations about
the Company's products or business, or Parent's intentions regarding
pricing or distribution of the Company's products after the Effective
Time.
By way of amplification and not limitation, except as
otherwise contemplated by this Agreement, Parent shall not, between the date of
this Agreement and the earlier to occur of the Effective Time and the
termination of this Agreement, directly or indirectly, do, or propose to do, any
of the following without the prior written consent of the Company (which consent
shall not be unreasonably withheld or delayed):
(a) with respect to the field of the Cutting Balloon(TM)
atherotomy catheter only, acquire (including, without limitation, by
merger, consolidation or acquisition of stock or assets) any interest
in any corporation, partnership, other business organization or any
division thereof, which would prevent the Company from meeting the
Six-Month Target Amount or Twelve-Month Target Amount; or
(b) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any person,
which would prevent Parent from paying the Initial Merger Consideration
or the License Contingent Payment.
SECTION 5.03. Notification of Certain Matters. Parent shall
give prompt notice to the Company, and the Company shall give prompt notice to
Parent, of (i) the occurrence, or non-occurrence, of any event the occurrence,
or non-occurrence, of which would be likely to cause (x) any representation or
warranty contained in this Agreement to be untrue or inaccurate or (y) any
covenant, condition or agreement contained in this Agreement not to be complied
with or satisfied, and (ii) any failure of Parent or the Company to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder, and which, in either (i) or (ii), in each case or when
aggregated with any other event or failure, could reasonably be expected to
provide the notified party the right to terminate this Agreement pursuant to
Section 8.01; provided, however, that the delivery of any notice pursuant to
this Section 5.03 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
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ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Company Shareholders' Meeting. (a) The Company
shall (i) in accordance with California Law and the Company's Articles of
Incorporation and By-laws, duly call, give notice of, convene and hold a meeting
of the Company Shareholders (the "Company Shareholders' Meeting") for the
purpose of voting upon the approval of the Merger and this Agreement and (ii)
recommend that the Company Shareholders vote in favor of the approval of the
Merger and this Agreement. The Company shall use best efforts to hold the
Company Shareholders' Meeting as soon as practicable after the date hereof, and
in any event within 40 days after the date hereof.
(b) The Company shall take all commercially reasonable efforts
to obtain a shareholder vote that satisfies the shareholder approval
requirements of Section 280G of the Code approving payments and benefits,
including, without limitation, the acceleration of the vesting and
exercisability of Company Stock Options, resulting, either alone or together
with another event, and either solely or partially, from the consummation of any
transaction contemplated by this Agreement or as a result of a "change in
control" within the meaning of such term under any Plan or Section 280G of the
Code.
(c) Not more than five business days after the Closing Date
the Company shall provide to Parent a schedule to be presented by Parent to the
Paying Agent that accurately sets forth (without rounding) on a Fully Diluted
Company Stock Amount basis for each Company Shareholder and each Company
Optionholder: (i) the name, address and social security number of each such
Company Shareholder or Company Optionholder and (ii) such Company Shareholder's
or Company Optionholder's participation interest (by percent ownership and
dollar value) in the Initial Merger Consideration and each Contingent Payment.
SECTION 6.02. Access to Information; Confidentiality. (a) From
the date of this Agreement to the Effective Time, the Company shall: (i) provide
to Parent (and its officers, directors, employees, accountants, consultants,
legal counsel, agents and other representatives, collectively,
"Representatives") access at reasonable times upon prior notice to the officers,
employees, agents, properties, offices and other facilities of the Company or
any Company Subsidiary and to the books and records thereof and (ii) furnish
promptly such information concerning the business, properties, contracts,
assets, liabilities, personnel and other aspects of the Company or any Company
Subsidiary as Parent or its Representatives may reasonably request.
(b) The parties shall comply with, and shall cause their
respective Representatives to comply with, all of their respective obligations
under the Confidentiality Agreement, dated as of October 27, 2000 (the
"Confidentiality Agreement"), between the Company and Parent. The
Confidentiality Agreement shall survive the execution and delivery of this
Agreement and the Effective Time.
SECTION 6.03. No Solicitation of Transactions. (a) The Company
shall not, directly or indirectly, and shall instruct its directors, officers,
shareholders, employees, agents,
42
affiliates, advisors or other representatives (including, without limitation,
any investment banker, attorney or accountant retained by it), not to, directly
or indirectly, solicit, initiate or encourage (including by way of furnishing
nonpublic information), or knowingly take any other action to facilitate, any
inquiries or the making of any proposal or offer (including, without limitation,
any proposal or offer to its shareholders) that constitutes, or may reasonably
be expected to lead to, any Competing Transaction (as defined below), or enter
into or maintain or continue discussions or negotiate with, or provide any
information to, any person or entity in furtherance of such inquiries or to
obtain a Competing Transaction, or agree to or endorse any Competing
Transaction, or authorize or knowingly permit any of the directors, officers,
shareholders or affiliates of the Company, or any investment banker, financial
advisor, attorney, accountant or other representative retained by the Company,
to take any such action directly or indirectly. The Company shall notify Parent
promptly, and in any event within one business day after receipt by the Company
(or any of its officers or directors, or, after the Company being made aware of
the receipt by any of its shareholders, employees, agents, affiliates, advisors
or other representatives) of any proposal for, or inquiry respecting, any
Competing Transaction, or any request for nonpublic information in connection
with such proposal or inquiry or for access to the properties, books or records
of the Company by any person or entity that informs or has informed the Company
that it is considering making or has made such a proposal or inquiry. Such
notice to Parent shall indicate in reasonable detail the identity of the person
making such proposal or inquiry and the terms and conditions of such proposal or
inquiry. The Company immediately shall cease and cause to be terminated all
existing discussions or negotiations with any parties conducted heretofore with
respect to a Competing Transaction. The Company agrees not to release any third
party from, or waive any provision of, any confidentiality or standstill
agreement to which it is a party.
(b) A "Competing Transaction" means any of the following
involving the Company (other than the Transactions): (i) a merger,
consolidation, share exchange, business combination or other similar transaction
after the consummation of which the Company Shareholders would own less than 85%
of the voting power in the surviving entity; (ii) any sale, lease, exchange,
transfer or other disposition of a material portion of the assets of such party
and its subsidiaries, taken as a whole; (iii) a tender offer or exchange offer
for 15% or more of the outstanding voting securities of such party; or (iv) the
sale or license of any Intellectual Property rights related to the Company
Covered Products.
SECTION 6.04. Employee Benefits Matters. (a) As soon as
practicable after the date hereof but in any event prior to the Effective Time,
the Company will use its best efforts to enter into the Employment Agreements
with the individuals set forth in Section 6.04(a) of the Company Disclosure
Schedule.
(b) Following the Effective Time, Parent shall either: (i)
adopt and maintain all Company Benefit Plans (other than the Company Stock
Plans), as in existence immediately prior to the Effective Time, and,
accordingly, such Company Benefit Plans shall thereby continue in full force and
effect and each such Company Benefit Plan shall be subject to the same terms and
conditions as in effect under the Company Benefit Plans and policies as in
existence immediately prior to the Effective Time for a period of at least one
year, or (ii) arrange for each employee of the Company or any Company Subsidiary
to participate in any "Parent Benefit Plan" maintained for similarly situated
employees of Parent (which shall mean all plans,
43
programs, and arrangements that are maintained by Parent from time to time) in
accordance with the eligibility criteria thereof, provided that (x) Company
employees participating in a Parent Benefit Plan shall receive full credit for
years of service with the Company or any Company Subsidiary prior to the
Effective Time (in addition to any other service otherwise credited by the
Company or any Company Subsidiary) for all purposes for which service was
recognized under the Company Benefit Plans, including, but not limited to,
eligibility to participate, vesting, and to the extent not duplicative of
benefits received under such Company Benefit Plan, the amount of benefits, (y)
Company employees participating in the Parent Benefit Plan, and such
participants' dependents shall participate in Parent Benefit Plan (to the extent
that the terms and conditions of each Parent Benefit Plan and each Company
Benefit Plan provide for coverage and/or benefits of eligible employees'
dependents) on terms in no way less favorable than those offered by Parent to
employees of Parent from time to time, and (z) Parent shall cause any and all
pre-existing condition limitations, eligibility waiting periods and evidence of
insurability requirements under any Parent Benefit Plan to be waived with
respect to such Company employees and their eligible dependents (if applicable)
and shall provide each such Company employees with credit for any co-payments
and deductibles owed prior to the Effective Time for purposes of satisfying any
applicable deductible, out-of-pocket, or similar requirements under all Parent
Benefit Plans in which such participants are eligible to participate in after
the Effective Time. Notwithstanding any of the foregoing to the contrary, none
of the provisions contained herein shall operate to duplicate any benefit
provided to any employee of the Company or the funding of any such benefit.
(c) Parent shall, and shall cause the Surviving Corporation
to, (i) maintain the Company's General Cash Bonus Program as modified by Section
3.10 of the Company Disclosure Schedule (the "Cash Bonus Program"), and to pay
such cash bonus to the participating Company employees in full in February 2002;
provided that the Company satisfies the performance objectives set forth in the
Cash Bonus Program, as modified by Section 3.10 of the Company Disclosure
Schedule; (ii) provide Company employees a fully-paid vacation for the entire
week beginning December 25, 2001 and ending on January 1, 2002, in addition to
all other vacations and vacation time currently provided to the Company's
employees; provided that the Company satisfies the performance objectives set
forth in the Cash Bonus Program; (iii) maintain the Company's sales commission
programs for the Clinical Team and the Sales Team for fiscal year ended July 31,
2001, as set forth in Section 3.10 of the Company Disclosure Schedule (the
"Sales Commissions"), and to pay such Sales Commissions to the participating
Company employees in full as they become due, and (iv) maintain the incentive
bonus program for Xx. Xxxxx as modified by Section 3.10 of the Company
Disclosure Schedule (the "Reiss Bonus Program"), and to pay such incentive bonus
to Xx. Xxxxx the sooner of February 1, 2002, or Xx. Xxxxx' last day of
employment with the Company; provided that Xx. Xxxxx satisfies the performance
objectives set forth in the Reiss Bonus Program, as modified by Section 3.10 of
the Company Disclosure Schedule.
(d) Parent shall, and shall cause the Surviving Corporation
to, establish a cash bonus program (the "Performance Bonus Plan") that is
designed to replace the cancelled Performance-Based Options, as contemplated in
Section 2.04, which shall provide those Company Optionholders who held such
Performance-Based Options (the "Performance Optionees") with the opportunity to
earn a cash bonus equal to the Common Stock Merger Consideration and any
Performance Remainder Per Share Payments and payable (after deducting
44
the exercise price that would have been payable by any such Company Optionholder
upon exercise of the applicable cancelled Performance-Based Option) in
accordance with all the terms and conditions of the Common Stock Merger
Consideration and the Performance Remainder Per Share Payments. At the Closing,
Parent shall fund the Performance Bonus Plan with an amount, in cash, equal to
(A) the Maximum Performance Stock Amount multiplied by the Initial Per Share
Common Payment less (B) the aggregate exercise price that would have been
payable by all such Company Optionholders upon exercise of the applicable
cancelled Performance-Based Option (the "Initial Performance Plan Fund Amount").
The amount of the Initial Performance Plan Fund Amount not earned by any
Performance Optionee (the "Initial Performance Bonus Remainder") pursuant to the
terms of the Performance Bonus Plan shall be paid to the Company Shareholders
and the other Performance Optionees in the form of a Performance Remainder Per
Share Payment pursuant to Section 2.02(b). In addition, on each date that a
Contingent Payment is due pursuant to Section 2.03, Parent shall fund the
Performance Bonus Plan with an additional amount, in cash, equal to the Maximum
Performance Stock Amount multiplied by the applicable Contingent Per Share
Payment (each, a "Subsequent Performance Plan Fund Amount"). The amount of the
Subsequent Performance Plan Fund Amount not so earned by any Performance
Optionee (each, a "Subsequent Performance Bonus Remainder") pursuant to the
terms of the Performance Bonus Plan shall be paid to the Company Shareholders
and the other Performance Optionees in the form of a Performance Remainder Per
Share Payment pursuant to Section 2.02(b).
(e) Notwithstanding anything to the contrary in this
Agreement, in the event that the shareholder approval referenced in Section
6.01(b) is not obtained, (i) the Company Stock Options, only to the extent the
vesting and exercisability of such Company Stock Options pursuant to Section
2.04, together with all other payments to any "disqualified individual" within
the meaning of Section 280G of the Code, would constitute "excess parachute
payments" within the meaning of Section 280G of the Code (the "Non-Accelerated
Options"), (A) shall not vest or become exercisable pursuant to Section 2.04 and
(B) shall be exchanged for the opportunity to participate in a cash bonus
program (the "280G Plan") that is no less favorable as to the amount and timing
of the payments thereunder than any payments that would have been made in
respect of the Non-Accelerated Options had such Non-Accelerated Options not been
so exchanged, (ii) the Fully Diluted Company Stock Amount shall be decreased to
exclude any Non-Accelerated Options, (iii) the Initial Merger Consideration
shall be reduced by, and Parent shall fund the 280 Plan with, an amount equal to
(A) the Non-Accelerated Options multiplied by the Initial Per Share Common
Payment (with the denominator as reduced pursuant to subsection (ii) above) less
(B) the aggregate exercise price that would have been payable by all such
holders of Non-Accelerated Options upon exercise of the applicable exchanged
Non-Accelerated Option (the "Initial 280G Plan Fund Amount"), (iv) on each date
that a Contingent Payment is due pursuant to Section 2.03, Parent shall fund the
280G Plan with an additional amount, in cash, equal to the Non-Accelerated
Options multiplied by the applicable Contingent Per Share Payment (each, a
"Subsequent 280G Plan Fund Amount"), and (v) the amount of the Initial 280G Plan
Fund Amount not earned by any holder of a Non-Accelerated Option (the "Initial
280G Remainder") and the amount of any Subsequent 280G Plan Fund Amount not
earned by any holder of a Non-Accelerated Option (each, a "Subsequent 280G
Remainder") pursuant to the terms of the 280G Plan shall be paid to the Company
Shareholders and the other holders of Non-Accelerated Options in the form of a
Performance Remainder Per Share Payment pursuant to Section 2.02(b).
45
SECTION 6.05. Further Action; Consents; Filings. Upon the
terms and subject to the conditions hereof, each of the parties hereto shall use
commercially reasonable efforts to (i) take, or cause to be taken, all
appropriate action and do, or cause to be done, all things necessary, proper or
advisable under applicable Law or otherwise to consummate and make effective the
Transactions, (ii) obtain from Governmental Authorities any consents, licenses,
permits, waivers, approvals, authorizations or orders required to be obtained or
made by Parent or the Company or any of their subsidiaries in connection with
the authorization, execution and delivery of this Agreement and the consummation
of the Transactions, (iii) make all necessary filings, and thereafter make any
other required submissions, with respect to this Agreement or the Transactions
required under applicable Law. The parties hereto shall cooperate with each
other in connection with the making of all such filings, including by providing
copies of all such documents to the nonfiling party and its advisors prior to
filing and, if requested, by accepting all reasonable additions, deletions or
changes suggested in connection therewith.
SECTION 6.06. Public Announcements. The initial press release
relating to this Agreement shall be a joint press release the text of which has
been agreed to by each of Parent and the Company. Thereafter until Closing,
unless otherwise required by applicable Law, Parent and the Company shall not
issue any press release or otherwise make any public statements with respect to
this Agreement, or the Transactions without the prior written consent of Parent
or the Company.
SECTION 6.07. Expenses. Other than as set forth in Section
2.03(j) and other than expenses incurred in connection with Article IX, all
costs and expenses incurred in connection with this Agreement and the
Transactions (including, without limitation, the fees and expenses of financial
advisors, accountants and legal counsel) (i) if incurred by Parent and Merger
Sub, shall be paid by Parent, and (ii) if incurred by the Company, shall be paid
by the Company, provided, however, that to the extent that the aggregate fees
and expenses of Xxxxx Xxxxxxx, the Company's accountants and the Company's legal
counsel incurred in connection with this Agreement and the Transactions exceed
$11,000,000 (the "Excess Fees") and invoices for such Excess Fees are presented
to Parent or the Company on or prior to the date any Initial Per Share Payments
are made to the Company Shareholders pursuant to Section 2.02 above, an amount
equal to such Excess Fees actually paid by Parent or the Company may be deducted
from the Initial Merger Consideration by Parent. To the extent that Excess Fees
are incurred by the Company and invoices for such Excess Fees are not presented
to Parent or the Company on or prior to the Closing Date and have not been
previously deducted from the Initial Merger Consideration as contemplated by the
preceding sentence, such Excess Fees may be deducted from the next Contingent
Payment, if any. In the event that such Excess Fees exceed the Contingent
Payments, if any, the Company Shareholders, severally and not jointly, shall
indemnify and hold harmless and reimburse Parent and its affiliates from and
against such Company Shareholder's ratable share of any and all such Excess Fees
actually paid by Parent; provided, that such indemnification shall be subject to
the same procedures and terms and conditions set forth in Sections 9.02(d), 9.04
and 9.05, and, prior to the Expiration Time (as defined in Section 9.01 below),
9.02(c) below assuming for such purpose that (i) such Excess Fees actually paid
by Parent shall constitute a "Loss", (ii) Parent and its affiliates are each an
"Indemnified Party," and (iii) the Company Shareholders are each an
"Indemnifying Party."
46
SECTION 6.08. Company Loans. (a) After the date hereof, the
Company shall use all commercially reasonable efforts to arrange for prepayment
on the Closing Date of the principal amounts outstanding, plus all accrued and
unpaid interest, under the Company Loan Agreements (as defined in Section
6.08(d)) as such amounts are set forth in Section 6.08(c) below (including any
interest which has accrued in accordance with the terms of the Company Loan
Agreements between the date hereof and such date of prepayment) (such aggregate
amount being the "Company Loans Amount") in full satisfaction of the Company's
obligations under the Company Loan Agreements. In the event that Xxxxxxx and
Cardion A.G. (formerly known as Cardiogene), a company organized under the laws
of Germany ("Cardion"), accept such prepayment of the Company Loans Amount as
full satisfaction of the Company's obligations under the Company Loan
Agreements, Parent shall pay the respective portion of the Company Loans Amount
to each of Xxxxxxx and Cardion on the Closing Date.
(b) Notwithstanding anything to the contrary in Article IX, in
the event that after the date hereof Xxxxxxx or Cardion make a claim in
connection with the Company Loan Agreements (a "Company Loans Claim") either (i)
to convert the aggregate principal and accrued interest under such Company Loan
Agreements into shares of Company Common Stock, or (ii) to receive a payment as
full satisfaction of the Company's obligations under the Company Loan
Agreements, in either case that would result in the payment to Xxxxxxx and
Cardion of an amount that exceeds the Company Loans Amount, the Company
Shareholders, severally and not jointly, shall indemnify and hold harmless and
reimburse Parent and its affiliates from and against any and all Losses (as
defined in Section 9.02(a)) in excess of the Company Loans Amount arising out of
or resulting from any such Company Loans Claim and the Company Shareholders
(through the Merger Committee) shall assume and control the defense of such
Company Loans Claim at their expense; provided, that to the extent not
inconsistent with the assumption and control of the defense of such Company
Loans Claim by the Company Shareholders, such indemnification shall be subject
to the same procedures and terms and conditions set forth in Sections 9.02(d),
9.04 and 9.05 below assuming for such purpose that Parent and its affiliates are
each an "Indemnified Party," and the Company Shareholders are each an
"Indemnifying Party." Notwithstanding anything to the contrary in this Section
6.08, the parties hereto hereby expressly acknowledge that (A) a Company Loans
Claim shall not include any Loss asserted by Xxxxxxx or its affiliates as
arising out of or resulting from the Xxxxxxx Agreement, and (B) the
indemnification by the Company Shareholders in this Section 6.08(b) shall not
apply in the event of any failure on the part of Parent or its affiliates to pay
or, at or prior to the Closing, fund the Company's payment of, the Company Loans
Amount to Xxxxxxx and Cardion.
(c) The Company represents and warrants that, as of the date
hereof:
(i) $15 million, plus approximately $2,221,000 in accrued
interest, is outstanding under the First Xxxxxxx Loan Agreement (as
defined in Section 6.08(d)),
(ii) $2 million, plus no accrued interest, is outstanding
under the Second Xxxxxxx Loan Agreement (as defined in Section
6.08(d)), and
(iii) $500,000, plus no accrued interest, is outstanding under
the Cardion Agreement (as defined in Section 6.08(d)).
47
(d) As used in this Agreement, the following terms shall have
the following meanings:
(i) "Cardion Agreement" means the Investment and Convertible
Debt Agreement, dated as of July 1, 1999, between the Company and
Cardion.
(ii) "Company Loans" means the debt outstanding pursuant to
the terms of the Company Loan Agreements.
(iii) "Company Loan Agreements" means, collectively, the
Xxxxxxx Loan Agreements and the Cardion Agreement.
(iv) "First Xxxxxxx Loan Agreement" means the Loan/Convertible
Debt Agreement, dated as of September 12, 1996, among the Company,
Charger Europe and Xxxxxxx.
(v) "Xxxxxxx Loan Agreements" means, collectively, the First
Xxxxxxx Loan Agreement and the Second Xxxxxxx Loan Agreement.
(vi) "Second Xxxxxxx Loan Agreement" means the
Loan/Convertible Debt Agreement, dated as of September 25, 1997, among
the Company, Charger Europe and Xxxxxxx.
SECTION 6.09. Director and Officer Indemnification. (a) From
and after the Effective Time, Parent will, and Parent will cause the Surviving
Corporation to, fulfill and honor in all respects the obligations of Company and
any Company Subsidiary pursuant to the indemnification agreements between the
Company or any Company Subsidiary and its respective current or past directors,
officers, employees or agents as of the Effective Time (the "Company Indemnified
Parties") listed in Section 6.09 of the Company Disclosure Schedule and any
indemnification provisions under Company's Articles of Incorporation or By-laws
as in effect on the date hereof. The Articles of Incorporation and By-laws of
the Surviving Corporation will contain provisions with respect to exculpation
and indemnification that are at least as favorable to the Company Indemnified
Parties as those contained in the Articles of Incorporation and By-laws of
Company as in effect on the date hereof, which provisions will not be amended,
repealed or otherwise modified for a period of six years from the Effective Time
in any manner that would adversely affect the rights thereunder of individuals
who, immediately prior to the Effective Time, were directors, officers,
employees or agents of Company, unless such modification is required by law.
(b) From the Effective Time until the sixth anniversary
thereof, the Parent shall cause the Surviving Corporation to maintain in effect,
for the benefit of the current or future directors and officers of the Company
with respect to acts or omissions occurring prior to the Effective Time, the
existing policy of directors' and officers' liability insurance maintained by
the Company and any Company Subsidiary as of the date of this Agreement (the
"Existing Policy"); provided, however, that the Surviving Corporation may
substitute for the Existing Policy a policy or policies of comparable coverage;
and provided further, that in no event shall Parent or the Surviving Corporation
be required to expend pursuant to this Section 6.09(b) more than an amount per
year equal to 150% of current annual premiums paid by the Company for such
48
insurance (which current annual premiums the Company represents and warrants to
be approximately $30,000 in the aggregate).
(c) Parent and the Surviving Corporation jointly and severally
agree to pay all expenses, including reasonable attorneys' fees, that may be
incurred by any Company Indemnified Party in enforcing the indemnity and other
obligations provided for in this Section 6.09 to the extent that such Company
Indemnified Party is determined to be entitled to indemnification under this
Section 6.09.
(d) This Section 6.09 shall survive the consummation of the
Merger at the Effective Time, is intended to be for the benefit of, and
enforceable by, each person entitled to indemnification pursuant hereto and each
such person's or entity's heirs and representatives, and shall be binding on all
successors and assigns of Parent and the Surviving Corporation.
SECTION 6.10. French Valley Contract. Parent shall fulfill all
of its obligations under the Contract of Sale dated the date hereof between
Reisung Enterprises, Inc., a California corporation and Parent (the "French
Valley Contract") in accordance with the terms and conditions therein.
SECTION 6.11. Foreign Governmental Approvals. The parties
hereto hereby agree that in the event that any consent, approval, authorization
or permit of, or filing with or notification to, any Governmental Authority of
any foreign jurisdiction is required in order to implement the Merger in such
foreign jurisdiction, the parties will negotiate in good faith to defer the
implementation of the Merger in such jurisdiction until such consent, approval,
authorization, permit, filing or notification is obtained or made
ARTICLE VII
CONDITIONS TO THE MERGER SECTION
7.01. Conditions to the Obligations of Each Party. The
obligations of the Company, Parent and Merger Sub to consummate the Merger are
subject to the satisfaction or waiver (where permissible) by Parent or the
Company of the following conditions:
(a) this Agreement shall have been approved and adopted by the
requisite affirmative vote of the Company Shareholders in accordance with
California Law and the Company's Articles of Incorporation;
(b) no Governmental Authority or court of competent
jurisdiction located or having jurisdiction in the United States shall have
enacted, issued, promulgated, enforced or entered any law, rule, regulation,
judgment, decree, executive order or award (an "Order") which is then in effect
and has the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger; and
(c) any waiting period (and any extension thereof) applicable
to the consummation of the Merger under the HSR Act shall have expired or been
terminated.
49
SECTION 7.02. Conditions to the Obligations of Parent and
Merger Sub. The obligations of Parent and Merger Sub to consummate the Merger
are subject to the satisfaction or waiver (where permissible) by Parent of the
following additional conditions:
(a) each of the representations and warranties of the Company
contained in this Agreement (without giving effect to any materiality
qualifications or limitations therein or any references therein to Company
Material Adverse Effect) shall be true and correct, in each case as of the
Effective Time as though made on and as of the Effective Time, except (i) for
such failures, individually or in the aggregate, to be true and correct that
would not have a Company Material Adverse Effect; (ii) that those
representations and warranties that address matters only as of a particular date
shall remain true and correct as of such date; and (iii) for changes expressly
permitted or contemplated by the terms of this Agreement, and Parent shall have
received a certificate of a duly authorized officer of the Company to such
effect;
(b) 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 the Company on or prior to the Effective
Time, and Parent shall have received a certificate of the Chief Executive
Officer of the Company to that effect;
(c) Parent shall have received, each in form and substance
reasonably satisfactory to Parent, (i) all required authorizations, consents,
orders and approvals of all Governmental Authorities and officials, if any, and
(ii) all third party consents set forth in Section 7.02(c) of the Company
Disclosure Schedule;
(d) no event or events shall have occurred, which,
individually or in the aggregate, have a Company Material Adverse Effect;
(e) the individuals who will enter into the Employment
Agreements shall remain employed by the Company;
(f) the Company shall have executed and delivered to Parent
counterparts of the Agreement of Merger to be filed with the Secretary of State
of the State of California and the Certificate of Merger to be filed with the
Secretary of State of the State of Delaware;
(g) there shall not be pending or threatened any suit, action,
investigation or proceeding to which a Governmental Authority is a party (i)
seeking to restrain or prohibit the consummation of the Transactions or seeking
to obtain from Parent or the Company any damages that are material or (ii)
seeking to prohibit or limit the ownership or operation by Parent or the Company
of any material portion of their respective businesses or assets;
(h) Parent shall have received the opinion of Xxxxxx Xxxxxxx
Xxxxxxxx & Xxxxxx, P.C., special counsel to the Company, or another counsel
reasonably satisfactory to Parent, and of Xxxxxxx Xxxxxxxx, counsel to the
Company, substantially in the form attached hereto as Exhibit D; and
(i) Dissenting Shares shall comprise not more than 15% of the
Company Stock outstanding immediately prior to the Effective Time.
50
SECTION 7.03. Conditions to the Obligations of the Company.
The obligations of the Company to consummate the Merger are subject to the
satisfaction or waiver (where permissible) by the Company following additional
conditions:
(a) each of the representations and warranties of Parent and
Merger Sub contained in this Agreement (without giving effect to any materiality
qualifications or limitations therein or any references therein to Parent
Material Adverse Effect) shall be true and correct, in each case as of the
Effective Time, as though made on and as of the Effective Time, except (i) for
such failures, individually or in the aggregate, to be true and correct that
would not have a Parent Material Adverse Effect; (ii) that those representations
and warranties that address matters only as of a particular date shall remain
true and correct as of such date; and (iii) for changes expressly permitted or
contemplated by the terms of this Agreement, and the Company shall have received
a certificate of a duly authorized officer of Parent to such effect;
(b) 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 Parent and Merger Sub on or prior
to the Effective Time, and the Company shall have received a certificate of a
duly authorized officer of Parent to that effect;
(c) Merger Sub shall have executed and delivered to the
Company counterparts of the Agreement of Merger to be filed with the Secretary
of State of the State of California and the Certificate of Merger to be filed
with the Secretary of State of the State of Delaware; and
(d) The Company shall have received the opinion of Shearman &
Sterling, special counsel to Parent and Merger Sub, or another counsel
reasonably satisfactory to the Company, substantially in the form attached
hereto as Exhibit E.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination. This Agreement may be terminated
and the Transactions may be abandoned at any time prior to the Effective Time,
notwithstanding any requisite approval and adoption of this Agreement and the
transactions contemplated by this Agreement, as follows:
(a) by mutual written consent duly authorized by the Board of
Directors of each of Parent and the Company;
(b) by Parent or the Company, if the Effective Time shall not
have occurred on or before the later of (i) 60 days from the date hereof, (ii)
ten days after the date of the Company Shareholders' Meeting, or (iii) if the
waiting period applicable to the consummation of the Merger under the HSR Act
has not expired or been terminated within 30 days after the submission by the
Company and Parent of the pre-merger notification requirements of the HSR Act,
then 120 days from the date hereof, provided, however, that the right to
terminate this Agreement under this Section 8.01(b) shall not be available to
any party whose failure to fulfill
51
any obligation under this Agreement has been the cause of, or resulted in, the
failure of the Effective Time to occur on or before May 31, 2001;
(c) by Parent or the Company, if there shall be any Order
which is final and nonappealable preventing the consummation of the Merger;
provided, however, that the right to terminate this Agreement under this Section
8.01(c) shall not be available to any party whose failure to fulfill any
obligation under this Agreement hereunder has been the cause of, or resulted in,
such Order;
(d) by Parent upon a breach of any material 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 Sections 7.02(a) or
7.02(b) would not be satisfied ("Terminating Company Breach"); provided,
however, that, if such Terminating Company Breach is curable by the Company
through the exercise of their best efforts and for so long as the Company
continues to exercise such best efforts, Parent may not terminate this Agreement
under this Section 8.01(d), unless such breach is not cured within 30 days after
notice thereof is provided by Parent to the Company; or
(e) by the Company upon a breach of any material
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 Sections 7.03(a) or 7.03(b) would not be satisfied ("Terminating
Parent Breach"); provided, however, that, if such Terminating Parent Breach is
curable by Parent and Merger Sub through the exercise of their respective best
efforts and for so long as Parent and Merger Sub continue to exercise such best
efforts, the Company may not terminate this Agreement under this Section
8.01(e), unless such breach is not cured within 30 days after notice thereof is
provided by the Company to Parent.
SECTION 8.02. Notice of Termination; Effect of Termination. In
the event the Company or Parent shall elect to terminate this Agreement pursuant
to Section 8.01, it shall give written notice of such termination to the other
party, which notice shall state the reasons for such termination. In the event
of termination of this Agreement pursuant to Section 8.01, this Agreement shall
forthwith become void, there shall be no liability under this Agreement on the
part of Parent, Merger Sub, or the Company or any of their respective
shareholders, officers or directors, and all rights and obligations of each
party hereto shall cease; provided, however, that nothing herein shall relieve
any party from liability for the willful breach of any of its representations,
warranties, or the breach of the covenants or agreements set forth in this
Agreement.
SECTION 8.03. Amendment. This Agreement may be amended by the
parties at any time before or after any required approval of matters presented
in connection with the Merger by the Company Shareholders by execution of an
instrument in writing signed on behalf of each of Parent and Company; provided,
however, that after any such approval, there shall be made no amendment that by
law requires further approval by such Company Shareholders without the further
approval of such Company Shareholders.
52
SECTION 8.04. Extension; Waiver. At any time prior to the
Effective Time, any party hereto may (a) extend the time for the performance of
any of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant to this Agreement or (c) waive
compliance with any of the agreements or conditions for the benefit of such
party contained in this Agreement. 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. The delay in or failure of any party to
this Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a wavier of such rights.
ARTICLE IX
INDEMNIFICATION
SECTION 9.01. Survival of Representations and Warranties. The
representations, warranties, covenants and agreements contained in this
Agreement shall survive the Effective Time but shall terminate on the earlier to
occur of (a) 18 months following the Effective Time and (b) the date on which
Parent shall transfer all of the Contingent Payments to the Paying Agent (the
"Expiration Time"); provided, however, that the representations and warranties
set forth in Section 3.14 shall survive until the end of the applicable statute
of limitations; and provided, further, that any such covenants and agreements
(including, without limitation, Section 6.09 and Article X) shall survive
indefinitely to the extent specifically contemplated by the terms thereof.
Notwithstanding anything to the contrary herein, the parties hereto expressly
acknowledge that no party hereto shall have any rights to indemnification under
this Agreement with respect to any representation or warranty of any other party
hereto that was true and correct as of the date hereof but was not true and
correct as of a later date. Neither the period of survival nor the liability of
a party hereto with respect to such party's representations and warranties shall
be reduced by any investigation made at any time by or on behalf of another
party hereto. If written notice of a claim has been given prior to the
expiration of the applicable representations and warranties by a party hereto to
another party hereto, then the relevant representations and warranties shall
survive as to such claim until such claim has been finally resolved.
SECTION 9.02. Indemnification by the Company Shareholders. (a)
Except as provided in Sections 6.07 and 6.08(b), after the Effective Time
through the Expiration Time, Parent and its affiliates (including, after the
Effective Time, the Surviving Corporation), officers, directors, employees,
agents, successors and assigns (collectively, the "Parent Indemnified Parties")
shall be indemnified and held harmless by the Company Shareholders, severally
and not jointly, for such Company Shareholder's ratable share of any and all
accrued, absolute, matured or determined liabilities, losses, damages, claims,
costs and expenses, interest, awards, judgments and penalties (including,
without limitation, reasonable attorneys' and consultants' fees and expenses and
other costs of defending, investigating or settling claims) actually suffered or
incurred by them (including, without limitation, in connection with any action
brought or otherwise initiated by any of them) (hereinafter, a "Loss"), arising
out of or resulting from:
53
(i) the breach of any representation or warranty made by the
Company in this Agreement; or
(ii) the breach of any covenant or agreement made by the
Company in this Agreement.
(b) Except as provided in Sections 6.07 and 6.08(b),
notwithstanding anything to the contrary contained in this Agreement, except
with respect to claims based on fraud, the sole remedy of the Parent Indemnified
Parties with respect to the matters contemplated by this Agreement shall be
indemnification pursuant to this Section 9.02, and:
(i) the maximum aggregate amount of indemnifiable Losses
arising out of or resulting from the causes enumerated in Section
9.02(a) that may be recovered from the Company Shareholders shall be
limited to $110,000,000 of the Net Sales Contingent Payments and the
set-off against the Net Sales Contingent Payments pursuant to Section
9.02(c) shall be the Parent Indemnified Parties' sole remedy to receive
any payments pursuant to this Section 9.02;
(ii) no indemnification payment by the Company Shareholders
with respect to any indemnifiable Loss otherwise payable under Section
9.02(a) and arising out of or resulting from the causes enumerated in
Section 9.02(a) shall be payable (A) unless the individual
indemnifiable Loss exceeds $10,000 (in which case such Loss shall only
count towards the $5,000,000 in subclause (B) below if such Loss can be
aggregated with another Loss which results from a similar event or
condition which gave rise to such Losses), and (B) until such time as
all such indemnifiable Losses shall aggregate to more than $5,000,000,
after which time the Company Shareholders shall be liable in full for
all indemnifiable Losses (including the first $5,000,000).
(c) Except as provided in Sections 6.07 and 6.08(b), any
indemnifiable Loss owed to any Parent Indemnified Party pursuant to this Section
9.02 may only be satisfied by offset against any Net Sales Contingent Payment
which may become payable to the Company Shareholders pursuant to Section
2.03(d). In the event that Parent claims an indemnification payment is due
pursuant to Section 9.02(a), Parent may withhold a portion of a Net Sales
Contingent Payment that is otherwise due pursuant to Section 2.03(d) until the
dispute with respect to the indemnifiable Loss is resolved, provided, however,
that in no event shall Parent withhold a portion of the Net Sales Contingent
Payment in excess of the amount of the indemnifiable Loss in dispute. In the
event that, upon resolution of such dispute in accordance with Section 9.04,
Parent is deemed to have incorrectly withheld a portion of a Net Sales
Contingent Payment, Parent shall promptly pay such incorrectly withheld portion
to the Paying Agent in cash (subject to Section 2.02(f)), together with interest
on such portion calculated from the date such withheld portion was originally
withheld and calculated at the rate announced by X.X. Xxxxxx Xxxxx & Co. at its
principal office as its prime commercial lending rate as of the first of January
of the year in which the interest accrues.
(d) Payments by the Company Shareholders pursuant to this
Section 9.02 shall be limited to the amount of any Loss that remains after
deducting therefrom any insurance proceeds or other similar payment recovered by
the Parent Indemnified Parties from any third
54
party with respect thereto. To the extent that any Parent Indemnified Party
receives any such insurance proceeds or similar payment after the date that a
Loss has been indemnified, Parent shall cause such Parent Indemnified Party to
deliver such amount to the Paying Agent for distribution to the Company
Shareholders pursuant to instructions delivered to the Paying Agent.
SECTION 9.03. Indemnification by Parent. (a) After the
Effective Time through the Expiration Time, the Company Shareholders and their
respective affiliates, officers, directors, employees, agents, successors and
assigns (collectively, the "Shareholder Indemnified Parties") shall be
indemnified and held harmless by Parent for any and all Losses, arising out of
or resulting from:
(i) the breach of any representation or warranty made by
Parent or Merger Sub in this Agreement; or
(ii) the breach of any covenant or agreement made by Parent or
Merger Sub in this Agreement.
(b) Notwithstanding anything to the contrary contained in this
Agreement, except with respect to claims based on fraud, the sole remedy of the
Shareholder Indemnified Parties with respect to the matters contemplated by this
Agreement shall be indemnification pursuant to this Section 9.03, and:
(i) the maximum aggregate amount of indemnifiable Losses
arising out of or resulting from the causes enumerated in Section
9.03(a) that may be recovered from the Parent shall be limited to
$110,000,000;
(ii) no indemnification payment by Parent with respect to any
indemnifiable Loss otherwise payment under Section 9.03(a) and arising
out of or resulting from the causes enumerated in Section 9.03(a) shall
be payable (A) unless the individual indemnifiable Loss exceeds $10,000
(in which case such Loss shall only count towards the $5,000,000 in
subclause (B) below if such Loss can be aggregated with another Loss
which results from a similar event or condition which gave rise to such
Losses), and (B) until such time as all such indemnifiable Losses shall
aggregate to more than $5,000,000, after which time Parent shall be
liable in full for all indemnifiable Losses (including the first
$5,000,000).
SECTION 9.04. Indemnification Procedures. (a) For purposes of
this Section 9.04, a party against which indemnification may be sought is
referred to as the "Indemnifying Party" and the party which may be entitled to
indemnification is referred to as the "Indemnified Party".
(b) The obligations and liabilities of Indemnifying Parties
under this Article IX with respect to Losses arising from claims of any third
party which are subject to the indemnification provided for in this Article IX
("Third Party Claims") shall be governed by and contingent upon the following
additional terms and conditions: (i) no claim may be asserted nor may any action
be commenced against any party for breach of any representation, warranty,
covenant or agreement contained herein, unless written notice of such claim or
action is received by the Indemnifying Party within the period set forth in
Section 9.01 above; and (ii) if an
55
Indemnified Party shall receive notice of any Third Party Claim, the Indemnified
Party shall give all Indemnifying Parties notice of such Third Party Claim
within 90 days of the receipt by the Indemnified Party of such notice; provided,
however, that the failure to provide such notice shall not release an
Indemnifying Party from any of its obligations under this Article IX, except to
the extent that such Indemnifying Party is materially prejudiced by such
failure. The notice of claim shall describe in reasonable detail the facts and
circumstances known to the Indemnified Party that gave rise to such
indemnification claim, and the amount or good faith estimate of the amount
arising therefrom.
(c) If the Indemnifying Party acknowledges in writing its
obligation to indemnify the Indemnified Party hereunder against any Losses that
may result from such Third Party Claim, then the Indemnifying Party shall be
entitled to assume and control the defense of such Third Party Claim at its
expense and through counsel of its choice if it gives notice of its intention to
do so to the Indemnified Party within ten days of the receipt of such notice
from the Indemnified Party; provided, however, that, if there exists or is
reasonably likely to exist a conflict of interest that would make it
inappropriate in the judgment of the Indemnified Party, in its reasonable
discretion, for the same counsel to represent both the Indemnified Party and the
Indemnifying Party, then the Indemnified Party shall be entitled to retain its
own counsel, in each jurisdiction for which the Indemnified Party determines
counsel is required, at the expense of the Indemnifying Party. In the event that
the Indemnifying Party exercises the right to undertake any such defense against
any such Third Party Claim as provided above, the Indemnified Party shall
cooperate with the Indemnifying Party in such defense and make available to the
Indemnifying Party, at the Indemnifying Party's expense, all witnesses,
pertinent records, materials and information in the Indemnified Party's
possession or under the Indemnified Party's control relating thereto as are
reasonably required by the Indemnifying Party. Similarly, in the event the
Indemnified Party is, directly or indirectly, conducting the defense against any
such Third Party Claim, the Indemnifying Party shall cooperate with the
Indemnified Party in such defense and make available to the Indemnified Party,
at the Indemnifying Party's expense, all such witnesses, records, materials and
information in the Indemnifying Party's possession or under the Indemnifying
Party's control relating thereto as are reasonably required by the Indemnified
Party. No such Third Party Claim may be settled by any party conducting the
defense against such claim without the prior written consent of the other party
unless the other party and its affiliates are released in full in connection
with such settlement.
SECTION 9.05. Merger Committee. The Company Shareholders
hereby appoint Xxxxxx Xxxxx, Xxxxxx Xxxxxxxx and Xxxxxxx Xxxxx to the Merger
Committee, and the Merger Committee shall act as the representative of the
Company Shareholders, with full authority to act on behalf of the Company
Shareholders and to take any and all actions required or permitted to be taken
by the Company Shareholders under this Agreement, with respect to any claims
(including the settlement thereof) made by Parent or the Company Shareholders
for indemnification pursuant to this Article IX and with respect to any actions
to be taken by the Merger Committee pursuant to Article II. The Company
Shareholders shall be bound by all actions taken by the Merger Committee in its
capacity thereof. The Merger Committee shall promptly, and in any event within
five business days, provide written notice to the Company Shareholders of any
action taken on their behalf by the Merger Committee pursuant to the authority
delegated to the Merger Committee under this Section 9.05. The Merger Committee
shall at all times act in a manner that the Merger Committee believes to be in
the best interest of
56
the Company Shareholders. Neither the Merger Committee nor any of its directors,
officers, agents or employees shall be liable to any person for any error of
judgment, or any action taken, suffered or omitted to be taken, under this
Agreement, except in the case of its gross negligence, bad faith or willful
misconduct. The Merger Committee may consult with legal counsel, independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants or experts. The Merger Committee shall
not have any duty to ascertain or to inquire as to the performance or observance
of any of the terms, covenants or conditions of this Agreement. As to any
matters not expressly provided for in this Agreement, the Merger Committee shall
not be required to exercise any discretion or take any action. Except as set
forth in Section 2.03(j), each Company Shareholder severally shall indemnify and
hold harmless and reimburse the Merger Committee from and against such Company
Shareholder's ratable share of any and all liabilities, losses, damages, claims,
costs or expenses suffered or incurred by the Merger Committee that arise out of
or result from any action taken or omitted to be taken by the Merger Committee
under this Agreement (other than such liabilities, losses, damages, claims,
costs or expenses arising out of or resulting from the Merger Committee's gross
negligence, bad faith or willful misconduct), provided, however, that from the
Effective Time to the earlier of (i) the first anniversary of the Earn-Out
Period or (ii) the date on which Parent shall transfer all of the Contingent
Payments to the Paying Agent, Parent shall reimburse the Merger Committee for up
to $10,000 per year for the costs and expenses incurred by the Merger Committee,
as contemplated by Section 2.03, in reviewing any Net Sales Statement, which
costs and expenses shall be documented to the reasonable satisfaction of Parent.
Notwithstanding anything to the contrary herein, the Merger Committee shall not,
in any manner, exercise, or seek to exercise, any voting power whatsoever with
respect to shares of capital stock of the Company or Parent now or hereafter
owned of record or beneficially by any Company Shareholder unless the Merger
Committee is expressly authorized to do so in a writing signed by such Company
Shareholder. In all matters relating to Article II or this Article IX, the
Merger Committee shall be the only party entitled to assert the rights of the
Company Shareholders, except to the extent that the Company Shareholders are
third-party beneficiaries under this Agreement pursuant to Section 11.04 below
and such rights have not been specifically delegated to the Merger Committee by
this Agreement, and the Merger Committee shall perform all of the obligations of
the Company Shareholders hereunder. Parent shall be entitled to rely on all
statements, representations and decisions of the Merger Committee.
ARTICLE X
POST-MERGER OPERATIONS
SECTION 10.01. Operation of Business. From the Effective Time
until the earlier of (a) the termination of the Earn-Out Period or (b) the date
of any Termination Payment pursuant to Section 2.03(g), Parent shall:
(i) use its commercially reasonable efforts to achieve Net
Sales that meet the Six-Month Target Amount and Twelve-Month Target
Amount; and
57
(ii) manage the pricing of the Company Covered Products in the
ordinary course of business.
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01. Notices. All notices, requests, claims, demands
and other communications hereunder shall be deemed given if given in writing and
delivered in person, or mailed by registered or certified mail (postage prepaid,
return receipt requested) or delivered by a nationally recognized overnight
courier service, or confirmed facsimile transmission to the respective parties
at the following addresses (or at such other address for a party as shall be
specified in a notice given in accordance with this Section 11.01):
if to Parent or Merger Sub or, after the Closing, the Company:
Boston Scientific Corporation
Xxx Xxxxxx Xxxxxxxxxx Xxxxx, X-00
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: General Counsel
with a copy to:
Shearman & Sterling
0000 Xx Xxxxxx Xxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxx Xxxxxxx
if to the Company before the Closing:
Interventional Technologies, Inc.
0000 Xxxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx Xxxxx
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C.
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
58
if to Merger Committee to:
Merger Committee
c/o Interventional Technologies, Inc.
0000 Xxxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx Xxxxx
All such notices and communications hereunder shall be deemed
given when received, as evidenced by the signed acknowledgement of receipt of
the person to whom such notice or communication shall have been personally
delivered, the acknowledgement of receipt returned to the sender by the
applicable postal authorities, the confirmation of delivery rendered by the
applicable overnight courier service, or the confirmation by the sender of a
successful facsimile transmission to the person to whom such notice was sent via
facsimile.
SECTION 11.02. Certain Definitions. (a) As used in this
Agreement, the following terms shall have the following meanings:
(i) "affiliate" of a specified person means a person who
directly, or indirectly, through one or more intermediaries, controls,
is controlled by or is under common control with such specified person.
(ii) "beneficial owner", with respect to any shares, means a
person who shall be deemed to be the beneficial owner of such shares
(A) which such person or any of its affiliates or associates (as such
term is defined in Rule 12b-2 promulgated under the Securities Exchange
Act of 1934, as amended (together with the rules and regulations
promulgated thereunder, the "Exchange Act"), beneficially owns,
directly or indirectly, (B) which such person or any of its affiliates
or associates has, directly or indirectly, (1) the right to acquire
(whether such right is exercisable immediately or subject only to the
passage of time), pursuant to any agreement, arrangement or
understanding or upon the exercise of consideration rights, exchange
rights, warrants or options, or otherwise, or (2) the right to vote
pursuant to any agreement, arrangement or understanding, or (C) which
are beneficially owned, directly or indirectly, by any other persons
with whom such person or any of its affiliates or associates or person
with whom such person or any of its affiliates or associates has any
agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares.
(iii) "business day" means any day on which banks are not
required or authorized to close in Natick, Massachusetts or San Diego,
California.
(iv) "CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended as of the date
hereof.
(v) "Company Software" means Software as it exists on the date
hereof that is either (A) material to the operation of the business of
the Company or any Company Subsidiary, or (B) manufactured,
distributed, sold, licensed or marketed by the Company or any Company
Subsidiary.
59
(vi) "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly or
as trustee or executor, of the power to direct or cause the direction
of the management and policies of a person, whether through the
ownership of voting securities, as trustee or executor, by contract or
credit arrangement or otherwise.
(vii) "Environmental Laws" means any federal, state or local
statute, law, ordinance, regulation, rule, code or order of the United
States, or any other jurisdiction and any enforceable judicial or
administrative interpretation thereof, including any legally
enforceable judicial or administrative order, consent decree or
judgment, relating to pollution or protection of the environment or
natural resources, including, without limitation, those relating to the
use, handling, transportation, treatment, storage, disposal, release or
discharge of Hazardous Materials, as in effect as of the date of this
Agreement.
(viii) "Environmental Permits" means any permit, approval,
identification number, license and other authorization required under
any applicable Environmental Law.
(ix) "Group Purchasing Organization" means an entity
authorized to act as a purchasing agent for a group of hospitals.
(x) "Hazardous Materials" means (a) any petroleum, petroleum
products, by-products or breakdown products, radioactive materials,
asbestos-containing materials or polychlorinated biphenyls or (b) any
chemical, material or substance defined or regulated as toxic or
hazardous or as a pollutant or contaminant or waste under any
applicable Environmental Law.
(xi) "Intellectual Property" means: (a) United States, foreign
and international patents, patent applications and statutory invention
registrations, (b) trademarks, service marks, domain names, trade
dress, logos and other source identifiers, including registrations and
applications for registration thereof, (c) copyrights, including
registrations and applications for registration thereof, (d) trade
secrets, and (e) rights of privacy, publicity and endorsement, and all
other rights associated therewith in any jurisdiction.
(xii) "knowledge of the Company" or "the Company's knowledge"
means the actual knowledge of Xxxxxx Xxxxx, Xxxxx Call, Xxxxx
Xxxxxxxxxxx, Xxxxxx Xxxxx, Xxxxxxx Xxxxxxxx, Xxxx Xxxxxx, Xxxxxxx
Xxxxxxx, Xxxxxxx Xxxxx and Xx Xxxxxx, in each case after due inquiry.
(xiii) "Licensed Intellectual Property" means all Intellectual
Property licensed to the Company or any Company Subsidiary pursuant to
the Licenses.
(xiv) "Licenses" mean (A) licenses of Owned Intellectual
Property by the Company or any Company Subsidiary to third parties, (B)
licenses of Intellectual Property by third parties to the Company or
any Company Subsidiary as of the date hereof, and (C) agreements
between the Company or any Company Subsidiary and third parties for the
development of Intellectual Property.
60
(xv) "Owned Intellectual Property" means all Intellectual
Property owned by the Company or any Company Subsidiary.
(xvi) "person" means an individual, corporation, partnership,
limited partnership, syndicate, person (including, without limitation,
a "person" as defined in section 13(d)(3) of the Exchange Act), trust,
association or entity or government, political subdivision, agency or
instrumentality of a government.
(xvii) "Registered Proprietary Name" means all trade marks,
trade names, brand names, and service marks registered by Company in
any country throughout the world.
(xviii) "Software" means computer software and programs in any
form, and all versions, updates, corrections, enhancements and
modifications thereof, and all related documentation.
(xix) "subsidiary" or "subsidiaries" of any person means any
corporation, partnership, joint venture or other legal entity of which
such person (either alone or through or together with any other
subsidiary) owns, directly or indirectly, more than 50% of the stock or
other equity interests, the holders of which are generally entitled to
vote for the election of the board of directors or other governing body
of such corporation or other legal entity.
(xx) "Unregistered Proprietary Name" means all trade marks,
trade names, brand names, and service marks used by the Company but not
registered in any country throughout the world.
(b) The following terms shall have the meanings defined for
such terms in the Sections of this Agreement set forth below:
Term Section
---- -------
Actual Performance Stock Amount............................. 2.01(b)
Affiliate................................................... 11.02(a)
Aggregate Merger Consideration.............................. 2.01(b)
Agreement................................................... Preamble
Agreement of Merger......................................... 1.02
Assets...................................................... 3.15
Audited Financial Statements................................ 3.07(a)
Base Contingent Amount...................................... 2.01(b)
Base Remainder Amount....................................... 2.01(b)
beneficial owner............................................ 11.02(a)
business day................................................ 11.02(a)
California Law.............................................. Recitals
Cardion..................................................... 6.08(a)
Cardion Agreement........................................... 6.08(d)
Cash Bonus Program.......................................... 6.04(c)
CERCLA...................................................... 11.02(a)
Certificates................................................ 2.02(b)
61
Term Section
---- -------
Certificate of Merger..................................... 1.02
Charger Europe............................................ 2.03(k)
Closing................................................... 1.02
Closing Date.............................................. 1.02
Code...................................................... 2.02(e)
Common Stock Merger Consideration......................... 2.01(b)
Company................................................... Preamble
Company Benefit Plans..................................... 3.10(a)
Company Common Stock...................................... Recitals
Company Covered Products.................................. 2.03(k)
Company Disclosure Schedule............................... Article III
Company Indemnified Parties............................... 6.09(a)
Company Loan Agreements................................... 6.08(d)
Company Loans............................................. 6.08(d)
Company Loans Amount...................................... 6.08(b)
Company Loans Claim....................................... 6.08(b)
Company Material Adverse Effect........................... 3.01(a)
Company Optionholder...................................... 2.04
Company Permits........................................... 3.06(a)
Company Preferred Stock................................... Recitals
Company Series A Stock.................................... Recitals
Company Series B Stock.................................... Recitals
Company Series C Stock.................................... Recitals
Company Series E Stock.................................... Recitals
Company Series F Stock.................................... Recitals
Company Series G Stock.................................... Recitals
Company Series H Stock.................................... Recitals
Company Shareholders...................................... 3.03(d)
Company Shareholders' Meeting............................. 6.01(a)
Company Software.......................................... 11.02(a)
Company Stock............................................. Recitals
Company Stock Option...................................... 2.04
Company Stock Plans....................................... 2.04
Company Subsidiary........................................ 3.01(a)
Competing Transaction..................................... 6.03(b)
Confidentiality Agreement................................. 6.02(b)
Contingent Payments....................................... 2.03(a)
Contingent Per Share Payment.............................. 2.01(b)
control................................................... 11.02(a)
DGCL...................................................... Recitals
Determination Date........................................ 2.03(d)
Dissenting Shares......................................... 2.05(a)
Duplicative Options....................................... 2.01(b)
Earn-Out Period........................................... 2.03(k)
Effective Time............................................ 1.02
62
Term Section
---- -------
Employment Agreements....................................... Recitals
Environmental Laws.......................................... 11.02(a)
Environmental Permits....................................... 11.02(a)
ERISA....................................................... 3.10(a)
ERISA Affiliate............................................. 3.10(e)
Excess Fees ................................................ 6.07
Existing Policy............................................. 6.09(b)
Final Merger Committee Amount............................... 2.03(c)
Final Net Sales Calculations................................ 2.03(c)
Final Parent Amount......................................... 2.03(c)
First Xxxxxxx Loan Agreement................................ 6.08(d)
French Valley Contract...................................... 6.10
Fully Diluted Company Stock Amount.......................... 2.01(b)
Determination Date.......................................... 2.03(d)
GAAP........................................................ 2.03(k)
Xxxxxxx..................................................... 2.03(k)
Xxxxxxx Agreement........................................... 2.03(k)
Xxxxxxx Loan Agreements..................................... 6.08(d)
Governmental Authority...................................... 3.05(b)
Group Purchasing Organization............................... 11.02(a)
Hazardous Materials......................................... 11.02(a)
HSR Act..................................................... 3.05(b)
Indemnified Party........................................... 9.04(a)
Indemnifying Party.......................................... 9.04(a)
Initial Merger Consideration................................ 2.01(b)
Initial Per Share Common Payment............................ 2.01(b)
Initial Per Share Payment................................... 2.01(b)
Initial Performance Bonus Remainder......................... 6.04(d)
Initial Performance Plan Fund Amount........................ 6.04(d)
Initial 280G Plan Fund Amount............................... 6.04(e)
Initial 280G Remainder...................................... 6.04(e)
Intellectual Property....................................... 11.02(a)
Interim Financial Statements................................ 3.07(a)
IP License.................................................. 2.03(a)
IRS......................................................... 3.10(b)
knowledge of the Company.................................... 11.02(a)
Law......................................................... 3.05(a)
Liabilities................................................. 3.07(b)
License Contingent Payment.................................. 2.03(a)
License Notice.............................................. 2.03(b)
Licensed Intellectual Property.............................. 11.02(a)
Licenses.................................................... 11.02(a)
Loss........................................................ 9.02(a)
Material Contracts.......................................... 3.11(a)
Maximum Performance Stock Amount............................ 2.01(b)
63
Term Section
---- -------
Merger...................................................... Recitals
Merger Committee............................................ 2.03(k)
Merger Committee Members.................................... 2.03(k)
Merger Sub.................................................. Preamble
Multiemployer Plan.......................................... 3.10(c)
Multiple Employer Plan...................................... 3.10(c)
Net Sales................................................... 2.03(k)
Net Sales Contingent Payment................................ 2.03(a)
Net Sales Contingent Payment Date........................... 2.03(d)
Net Sales Resolution Period................................. 2.03(c)
Net Sales Review Date....................................... 2.03(c)
Net Sales Statement......................................... 2.03(c)
Non-Accelerated Options..................................... 6.04(e)
Order....................................................... 7.01(b)
Owned Intellectual Property................................. 11.02(a)
Parent...................................................... Preamble
Parent Benefit Plan......................................... 6.04(b)
Parent Disclosure Schedule.................................. Article IV
Parent Indemnified Parties.................................. 9.02(a)
Parent Material Adverse Effect.............................. 4.01
Parent Subsidiaries......................................... 4.01
Paying Agent................................................ 2.02(a)
Performance-Based Option.................................... 2.04
Performance Bonus Plan...................................... 6.04(d)
Performance Bonus Remainder................................. 2.01(b)
Performance Optionees....................................... 6.04(d)
Performance Remainder Per Share Payment..................... 2.01(b)
Person...................................................... 11.02(a)
Per Share Merger Consideration.............................. 2.01(b)
Xxxxx Xxxxxxx............................................... 3.18
Principal Shareholders...................................... Recitals
Reference Balance Sheet..................................... 3.07(a)
Registered Proprietary Name................................. 11.02(a)
Representatives............................................. 6.02(a)
Reiss Bonus Plan ........................................... 6.04(c)
Sales Commissions........................................... 6.04(c)
Second Xxxxxxx Loan Agreement............................... 6.08(d)
Series A Conversion Ratio................................... 2.01(b)
Series A Merger Consideration............................... 2.01(b)
Series B Conversion Ratio................................... 2.01(b)
Series B Merger Consideration............................... 2.01(b)
Series C Conversion Ratio................................... 2.01(b)
Series C Merger Consideration............................... 2.01(b)
Series E Conversion Ratio................................... 2.01(b)
Series E Merger Consideration............................... 2.01(b)
64
Term Section
---- -------
Series F Conversion Ratio................................... 2.01(b)
Series F Merger Consideration............................... 2.01(b)
Series G Conversion Ratio................................... 2.01(b)
Series G Merger Consideration............................... 2.01(b)
Series H Conversion Ratio................................... 2.01(b)
Series H Merger Consideration............................... 2.01(b)
Shareholder Indemnified Parties............................. 9.03(a)
Six-Month Contingent Payment................................ 2.03(a)
Six-Month Net Sales......................................... 2.03(k)
Six-Month Target Amount..................................... 2.03(a)
Software.................................................... 11.02(a)
Subsequent Performance Bonus Remainder...................... 6.04(d)
Subsequent Performance Plan Fund Amount..................... 6.04(d)
Subsequent 280G Plan Fund Amount............................ 6.04(e)
Subsequent 280G Remainder................................... 6.04(e)
Subsidiary.................................................. 11.02(a)
Surviving Corporation....................................... 1.01
Taxes....................................................... 3.14(c)
Terminating Company Breach.................................. 8.01(d)
Terminating Parent Breach................................... 8.01(e)
Termination Payment......................................... 2.03(g)
Third Party Claims.......................................... 9.04(b)
Time-Vested Stock Option.................................... 2.04
Transactions................................................ 3.01(a)
Twelve-Month Contingent Payment............................. 2.03(a)
Twelve-Month Net Sales...................................... 2.03(k)
Twelve-Month Target Amount.................................. 2.03(a)
280G Plan .................................................. 6.04(e)
Unearned Performance Stock Amount........................... 2.01(b)
Unregistered Proprietary Name............................... 11.02(a)
Unresolved Net Sales Items.................................. 2.03(c)
Voting Agreement............................................ Recitals
SECTION 11.03. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
Law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect as long as the economic or
legal substance of the transactions contemplated by this Agreement is not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated by this Agreement be consummated as originally contemplated to the
fullest extent possible.
SECTION 11.04. Assignment; Binding Effect; Benefit. Neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties
65
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and assigns. Notwithstanding anything contained in
this Agreement to the contrary, nothing in this Agreement, expressed or implied,
is intended to confer on any person other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement; except to the Company
Shareholders with respect to Articles II and IX, the Performance Optionees with
respect to Section 6.04(d), the holders of Non-Accelerated Options, if any,
pursuant to Section 6.04(e), and the Company Indemnified Parties with respect to
Section 6.09, which, in each case, shall inure to the benefit of such parties
and their respective successors and assigns.
SECTION 11.05. Incorporation of Exhibits. The Company
Disclosure Schedule, the Parent Disclosure Schedule and all Exhibits attached
hereto and referred to herein are hereby incorporated herein and made a part
hereof for all purposes as if fully set forth herein.
SECTION 11.06. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
were not performed in accordance with the terms hereof and that the parties
shall be entitled to specific performance of the terms hereof, in addition to
any other remedy at law or in equity.
SECTION 11.07. Governing Law; Forum. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of Delaware
applicable to contracts executed in and to be performed in that state and
without regard to any applicable conflicts of law. Each of the parties hereto
submits to the exclusive jurisdiction of the state and federal courts of the
United States located in the City of Wilmington, State of Delaware with respect
to any claim or cause of action arising out of this Agreement or the
transactions contemplated hereby.
SECTION 11.08. Headings. The descriptive headings contained in
this Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
SECTION 11.09. Counterparts. This Agreement may be executed
and delivered (including by facsimile transmission) in one or more counterparts,
and by the different parties hereto in separate counterparts, each of which when
executed and delivered shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 11.10. Entire Agreement. This Agreement (including the
Exhibits, the Company Disclosure Schedule and the Parent Disclosure Schedule),
the Voting Agreements, and the Confidentiality Agreement constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings among the parties with respect
thereto.
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IN WITNESS WHEREOF, each of Parent, Merger Sub, the Company
and the Merger Committee has executed or has caused this Agreement to be
executed by its respective officers thereunto duly authorized as of the date
first written above.
BOSTON SCIENTIFIC CORPORATION
By: /s/ Xxxxx X. Xxxxx
----------------------------------
Name: Xxxxx X. Xxxxx
Title: President and Chief
Executive Officer
CHARGER ACQUISITION CORP.
By: /s/ Xxxxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Vice President, Legal
INTERVENTIONAL TECHNOLOGIES INC.
By: /s/ Xxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chairman
MERGER COMMITTEE
(For the purposes of Section 2.03,
Article IX and Article XI only)
/s/ Xxxxxx X. Xxxxx
--------------------------------------
Xxxxxx X. Xxxxx
/s/ Xxxxxx Xxxxxxxx
--------------------------------------
Xxxxxx Xxxxxxxx
/s/ Xxxxxxx Xxxxx
--------------------------------------
Xxxxxxx Xxxxx
67
