AGREEMENT AND PLAN OF MERGER AND REORGANIZATION among: Replidyne, Inc., a Delaware corporation; Responder Merger Sub, Inc., a Minnesota corporation; and Cardiovascular Systems, Inc., a Minnesota corporation Dated as of November 3, 2008
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among:
Replidyne, Inc.,
a Delaware corporation;
a Delaware corporation;
Responder Merger Sub, Inc.,
a Minnesota corporation; and
a Minnesota corporation; and
Cardiovascular Systems, Inc.,
a Minnesota corporation
a Minnesota corporation
Dated as of November 3, 2008
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (this “Agreement”) is made and
entered into as of November 3, 2008, by and among Replidyne, Inc., a Delaware corporation
(“Replidyne”); Responder Merger Sub, Inc., a Minnesota corporation and wholly owned
subsidiary of Replidyne (“Merger Sub”); and Cardiovascular Systems, Inc., a Minnesota
corporation (the “Company”). Certain capitalized terms used in this Agreement are defined
in Exhibit A. For purposes of this Agreement, reference to the “Company” shall include
each Subsidiary of the Company unless the context requires otherwise.
RECITALS
A. Replidyne and the Company intend to enter into a business combination transaction pursuant
to which Merger Sub will merge with and into the Company (the “Merger”) in accordance with
and subject to the terms of this Agreement and the MBCA.
B. Replidyne and the Company intend that the Merger qualify as a tax-free reorganization
within the meaning of Section 368 of the Code.
C. The board of directors of Replidyne (i) has determined that the Merger is fair to, and in
the best interests of, Replidyne and its stockholders, (ii) has approved this Agreement, the
Merger, the issuance of shares of Replidyne Common Stock to the stockholders of the Company
pursuant to the terms of this Agreement, and the other actions contemplated by this Agreement and
(iii) has determined to recommend that the stockholders of Replidyne vote to approve the issuance
of shares of Replidyne Common Stock to the stockholders of the Company pursuant to the terms of
this Agreement and such other actions as contemplated by this Agreement.
D. Each of the board of directors of the Company and the Special Committee (i) has unanimously
determined that the Merger is advisable and fair to, and in the best interests of, the Company and
its stockholders, (ii) has unanimously approved this Agreement, the Merger and the other actions
contemplated by this Agreement and has deemed this Agreement advisable and (iii) has unanimously
approved and determined to recommend the adoption of this Agreement to the stockholders of the
Company.
E. In order to induce Replidyne to enter into this Agreement and to cause the Merger to be
consummated, (i) the stockholders of the Company listed on Schedule 1A hereto are executing voting
agreements and irrevocable proxies in favor of Replidyne concurrently with the execution and
delivery of this Agreement pursuant to which such stockholders have agreed to vote in favor of the
adoption of the Merger Agreement at the Company Stockholders’ Meeting (the “Company Stockholder
Voting Agreements”) and (ii) the stockholders of the Company listed on Schedule 1B hereto are
executing lock-up agreements in favor of Replidyne and the Company concurrently with the execution
and delivery of this Agreement pursuant to which such stockholders have agreed not to sell,
transfer or otherwise dispose of any securities of Replidyne or the Company until the date that is
90 days after the closing of the Merger (the “Company Stockholder Lock-up Agreements”).
F. In order to induce the Company to enter into this Agreement and to cause the Merger to be
consummated, (i) the stockholders of Replidyne listed on Schedule 2A hereto are executing voting
agreements and irrevocable proxies in favor of the Company concurrently with the execution and
delivery of this Agreement pursuant to which such stockholders have agreed to vote certain shares
held by them in favor of the issuance of Replidyne Common Stock pursuant to the Merger and the
approval of the Replidyne Certificate of Amendment at the Replidyne Stockholders’ Meeting (the
“Replidyne
1.
Stockholder Voting Agreements”) and (ii) the stockholders of Replidyne listed on
Schedule 2B hereto are executing lock-up agreements in favor of Replidyne and the Company
concurrently with the execution and delivery of this Agreement pursuant to which such stockholders
have agreed not to sell, transfer or otherwise dispose of any securities of Replidyne or the
Company until the date that is 90 days after the closing of the Merger (the “Replidyne
Stockholder Lock-up Agreements”).
G. Concurrently with the execution and delivery of this Agreement, the holders of a majority
of the outstanding shares of Company Preferred Stock (including the shares of Company Preferred
Stock held by Easton and Maverick) have delivered an agreement to convert all of the outstanding
shares of Company Preferred Stock into shares of Company Common Stock, effective as of immediately
prior to the Effective Time (the “Company Stockholder Conversion Agreement”).
AGREEMENT
The Parties to this Agreement, intending to be legally bound, agree as follows:
1. DESCRIPTION OF TRANSACTION
1.1 The Merger. Upon the terms and subject to the conditions set forth in this
Agreement, at the Effective Time (as defined in Section 1.3), Merger Sub shall be merged with and
into the Company, the separate existence of Merger Sub shall cease, and the Company shall continue
as the surviving corporation in the Merger (the “Surviving Corporation”).
1.2 Effects of the Merger. The Merger shall have the effects set forth in this
Agreement and in the applicable provisions of the MBCA. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the property, rights, privileges, powers
and franchises of the Company and Merger Sub shall vest in the Surviving Corporation, and all
debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation.
1.3 Closing; Effective Time. Unless this Agreement is earlier terminated pursuant to
the provisions of Section 9.1 of this Agreement, and subject to the satisfaction or waiver of the
conditions set forth in Sections 6, 7 and 8 of this Agreement, the consummation of the Merger (the
“Closing”) shall take place at the offices of Xxxxxxxxxx & Xxxxx, P.A., 000 Xxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000, as promptly as practicable (but in no event later than the
fifth Business Day) following the satisfaction or waiver of the last to be satisfied or waived of
the conditions set forth in Sections 6, 7 and 8 (other than those conditions that by their nature
are to be satisfied at the Closing, but subject to the satisfaction or waiver of each of such
conditions) or at such other time, date and place as the Company and Replidyne may mutually agree
in writing. The date on which the Closing actually takes place is referred to as the “Closing
Date.” At the Closing, the Parties hereto shall cause the Merger to be consummated by executing
and filing with the Secretary of State of the State of Minnesota Articles of Merger with respect to
the Merger, satisfying the applicable requirements of the MBCA and in a form reasonably acceptable
to Replidyne and the Company (the “Articles of Merger”). The Merger shall become effective
at the time of the filing of such Articles of Merger with the Secretary of State of the State of
Minnesota or at such later time as may be agreed upon by Replidyne and the Company and specified in
such Articles of Merger (the time as of which the Merger becomes effective being referred to as the
“Effective Time”).
1.4 Articles of Incorporation and Bylaws. At the Effective Time:
(a) the Articles of Incorporation of the Surviving Corporation shall be amended and restated
as of the Effective Time to be identical to the Articles of Incorporation of Merger Sub as in
effect immediately prior to the Effective Time, until thereafter amended in accordance with the
MBCA and as
2.
provided in such Articles of Incorporation; provided, however, that, at the Effective Time,
Article I of the Articles of Incorporation of the Surviving Corporation shall be amended and
restated in its entirety to read as follows: “The name of the corporation is CSI Minnesota, Inc.”;
and
(b) The Bylaws of Merger Sub, as in effect immediately prior to the Effective Time, shall be
the Bylaws of the Surviving Corporation at the Effective Time until thereafter amended in
accordance with the MBCA and as provided in the Articles of Incorporation of the Surviving
Corporation and such Bylaws.
1.5 Recapitalization of Replidyne Common Stock; Amendments to Certificate of
Incorporation and Bylaws.
(a) Immediately prior to the Effective Time, and subject to receipt of the requisite
stockholder approval at the Replidyne Stockholders’ Meeting (as defined in Section 5.3(a) below),
Replidyne shall cause to be filed a Certificate of Amendment to its Certificate of Incorporation,
substantially in the form attached hereto as Exhibit B (the “Replidyne Certificate of
Amendment”), whereby without any further action on the part of Replidyne, the Company or any
stockholder of Replidyne:
(i) each share of Replidyne Common Stock issued and outstanding immediately prior to the
filing of the Replidyne Certificate of Amendment shall be automatically combined into and become a
fractional number of fully paid and non-assessable shares of Replidyne Common Stock to be
determined by Replidyne and the Company by mutual agreement (the “Reverse Stock Split”);
and
(ii) any shares of Replidyne Common Stock held as treasury stock or held or owned by Replidyne
immediately prior to the filing of the Replidyne Certificate of Amendment shall each be converted
into and become an identical fractional number of shares of Replidyne Common Stock as provided in
the Reverse Stock Split.
(b) No fractional shares of Replidyne Common Stock shall be issued in connection with the
Reverse Stock Split, and no certificates or scrip for any such fractional shares shall be issued.
Any holder of Replidyne Common Stock who would otherwise be entitled to receive a fraction of a
share of Replidyne Common Stock (after aggregating all fractional shares of Replidyne Common Stock
issuable to such holder) shall, in lieu of such fraction of a share and upon surrender of such
holder’s certificate representing such fractional shares of Replidyne Common Stock, be paid in cash
the dollar amount (provided to the nearest whole cent), without interest, determined by multiplying
such fraction by the closing price of a share of Replidyne Common Stock on the Nasdaq Global Market
on the date immediately preceding the effective date of the Reverse Stock Split.
(c) Replidyne shall use commercially reasonable efforts to amend and restate its Bylaws in a
form reasonably acceptable to Replidyne and the Company (the “Replidyne Bylaws Amendment”),
provided that the failure to mutually agree upon the form of the Replidyne Bylaws Amendment shall
not be deemed a breach of any covenant or obligation pursuant to this Agreement or give rise to any
Party’s rights or remedies hereunder.
1.6 Conversion of Company Shares.
(a) At the Effective Time, by virtue of the Merger and without any further action on the part
of Replidyne, the Company or any stockholder of the Company:
3.
(i) any shares of Company Common Stock held as treasury stock or held or owned by the Company
immediately prior to the Effective Time shall be canceled and shall cease to exist, and no
consideration shall be delivered in exchange therefor; and
(ii) subject to Section 1.6(c), each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (including shares issued as a result of the conversion
described in the Company Stockholder Conversion Agreement but excluding shares to be canceled
pursuant to Section 1.6(a)(i) and excluding Dissenting Shares) shall be converted solely into the
right to receive a number of shares of Replidyne Common Stock equal to the Company Share Conversion
Factor.
(b) If any shares of Company Common Stock outstanding immediately prior to the Effective Time
are unvested or are subject to a repurchase option or the risk of forfeiture or under any
applicable restricted stock purchase agreement or other agreement with the Company, then the shares
of Replidyne Common Stock issued in exchange for such shares of Company Common Stock will, to the
same extent, be unvested and subject to the same repurchase option or risk of forfeiture, and the
certificates representing such shares of Replidyne Common Stock shall accordingly be marked with
appropriate legends. The Company shall take all action that may be necessary to ensure that, from
and after the Effective Time, Replidyne is entitled to exercise any such repurchase option or other
right set forth in any such restricted stock purchase agreement or other agreement.
(c) No fractional shares of Replidyne Common Stock shall be issued in connection with the
Merger, and no certificates or scrip for any such fractional shares shall be issued. Any holder of
Company Common Stock who would otherwise be entitled to receive a fraction of a share of Replidyne
Common Stock (after aggregating all fractional shares of Replidyne Common Stock issuable to such
holder) shall, in lieu of such fraction of a share and upon surrender of such holder’s Company
Stock Certificate(s) (as defined in Section 1.9), be paid in cash the dollar amount (rounded to the
nearest whole cent), without interest, determined by multiplying such fraction by the closing price
of a share of Replidyne Common Stock on the Nasdaq Global Market on the date the Merger becomes
effective. The aggregate of cash necessary to effect the provisions of this Section 1.6(c) shall
be referred to as the “Fractional Cash Amount”.
(d) All Company Options outstanding immediately prior to the Effective Time under the Company
Stock Option Plans and all Company Warrants outstanding immediately prior to the Effective Time
(including any Company Warrants issued pursuant to the Company Stockholder Conversion Agreement)
shall be converted into options to purchase Replidyne Common Stock or warrants to purchase
Replidyne Common Stock, as applicable, in accordance with Section 5.5.
(e) Each share of Common Stock, no par value 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 non-assessable share of Common Stock, no par value per share, of the
Surviving Corporation. Each stock certificate of Merger Sub evidencing ownership of any such shares
shall, as of the Effective Time, evidence ownership of such shares of Common Stock of the Surviving
Corporation.
(f) For purposes of this Agreement:
(i) “Company Pre-Closing Equity Valuation” shall mean $195,000,000.
(ii) “Company Share Conversion Factor” shall mean (A) (x) the number of Surviving
Replidyne Securities divided by the Replidyne Post-Closing Stockholder Ownership
4.
Percentage minus (y) the number of Surviving Replidyne Securities divided by (B) the number of
Converting Company Securities.
(iii) “Converting Company Securities” shall mean, as of immediately prior to the
Effective Time, the sum of (A) the issued and outstanding shares of Company Common Stock (including
shares issued as a result of the conversion described in the Company Stockholder Conversion
Agreement) as of such time and (B) shares of Company Common Stock (including shares reserved as a
result of the conversion described in the Company Stockholder Conversion Agreement) that are
subject to any issued and outstanding subscription, option, call, warrant, right or other
convertible security (whether or not currently vested) exchangeable or exercisable for any shares
of Company Common Stock (including without limitation the Company Options and the Company Warrants)
as of such time (excluding shares to be canceled pursuant to Section 1.6(a)(i) and Dissenting
Shares but including any Company Warrants issued pursuant to the terms of the Company Stockholder
Conversion Agreement), calculated in accordance with the treasury method of accounting for options
and warrants based on an implied share price using the Company Pre-Closing Equity Valuation.
(iv) “Replidyne Post-Closing Equity Valuation” shall mean (x) the Replidyne
Pre-Closing Equity Valuation plus (y) the Company Pre-Closing Equity Valuation.
(v) “Replidyne Post-Closing Stockholder Ownership Percentage” shall mean the Replidyne
Pre-Closing Equity Valuation divided by the Replidyne Post-Closing Equity Valuation.
(vi) “Replidyne Pre-Closing Equity Valuation” shall mean Net Assets at Closing plus,
to the extent that Net Assets at Closing are less than $40,000,000 (the “Base Net Assets”),
the lesser of (A) the difference between Base Net Assets and Net Assets at Closing and (B)
$3,000,000.
(vii) “Surviving Replidyne Securities” shall mean, as of immediately prior to the
Effective Time and following the Reverse Stock Split, the sum of (A) the issued and outstanding
shares of Replidyne Common Stock as of such time and (B) shares of Replidyne Common Stock that are
subject to any issued and outstanding subscription, option, call, warrant, right or other
convertible security (whether or not currently vested, provided that in the event that the vesting
of any such shares shall cease upon the Effective Time as a result of the Contemplated Transactions
or the termination of the employment of the holder as of the Effective Time, any such unvested
shares shall be excluded from the calculation of Surviving Replidyne Securities) exchangeable or
exercisable for any shares of Replidyne Common Stock (including, without limitation, any Replidyne
Options and Replidyne Warrants) as of such time, calculated in accordance with the treasury method
of accounting for options and warrants based on an implied share price using the Replidyne
Pre-Closing Equity Valuation.
1.7 Calculation of Net Assets.
(a) Replidyne and the Company shall agree upon an anticipated date for Closing (the “First
Anticipated Closing Date”) at least 10 Business Days prior to the Replidyne Stockholders’
Meeting. At least five Business Days prior to the First Anticipated Closing Date, but not more
than 10 Business Days prior to such date, Replidyne shall deliver to the Company a schedule (a
“Net Assets Schedule”) setting forth, in reasonable detail, Replidyne’s estimate of Net
Assets (the “Net Assets Estimation”) as of the First Anticipated Closing Date. Replidyne
shall provide the Company with the work papers and back-up materials used in preparing the
applicable Net Assets Schedule and shall make available to the Company and its accountants, counsel
and other advisors additional supporting documentation as may be reasonably requested.
5.
(b) Within ten Business Days after Replidyne delivers the applicable Net Assets Schedule (a
“Lapse Date”), the Company shall have the right to dispute any part of such Net Assets
Schedule by delivering a written notice to that effect to Replidyne (a “Dispute Notice”).
Any Dispute Notice shall identify in reasonable detail the nature of the objection and identify any
applicable proposed revisions to the applicable Net Assets Estimation.
(c) If on or prior to any Lapse Date, (i) the Company notifies Replidyne that it has no
objections to the applicable Net Assets Estimation or (ii) the Company fails to deliver a Dispute
Notice as provided above, then the Net Assets Estimation as set forth in the Net Assets Schedule
shall be deemed, on the date of such notification (in the case of (i) above) or on the applicable
Lapse Date (in the case of (ii) above) (the applicable date being referred to herein as the
“Non-Dispute Net Assets Determination Date”), to have been finally determined for purposes
of this Agreement and to represent the Net Assets at Closing for purposes of Sections 1.6 and
1.7(a), so long as the Closing occurs within five Business Days after the applicable Non-Dispute
Net Assets Determination Date.
(d) If the Company delivers a Dispute Notice on or prior to the applicable Lapse Date, then
Representatives of Replidyne and the Company shall promptly meet and attempt in good faith to
resolve the disputed item(s) and negotiate an agreed-upon determination of Net Assets as of a
particular date to be agreed to by Replidyne and the Company, which Net Assets amount shall be
deemed, on the date of agreement between Replidyne and the Company as to such amount (a
“Dispute Net Assets Determination Date”), as the final determination for purposes of this
Agreement of Net Assets at Closing for purposes of Sections 1.6 and 1.7(a), so long as the Closing
occurs within five Business Days after the applicable Dispute Net Assets Determination Date.
(e) If Representatives of Replidyne and the Company pursuant to clause (d) above are unable to
negotiate an agreed-upon determination of Net Assets as of a particular date within five days, then
any items in dispute shall be submitted to an accounting firm of national standing other than KPMG
LLP or PricewaterhouseCoopers LLP (the “Neutral Accountant”). The Representatives of
Replidyne and the Company shall cooperate with the Neutral Accountant so that the Neutral
Accountant shall be able to make a determination of Net Assets within 10 days, provided that any
delay by the Neutral Accountant in delivering such determination shall not invalidate such
determination or deprive the Neutral Accountant of its authority to resolve the items in dispute.
All determinations pursuant to this Section 1.7(e) shall be in writing and shall be delivered to
Replidyne and the Company. The determination of the Neutral Accountant as to the determination of
Net Assets shall be binding and conclusive on Replidyne and the Company. A judgment on the
determination made by the Neutral Accountant pursuant to this Section 1.7(e) may be entered in and
enforced by any court having jurisdiction thereover. The fees and expenses of the Neutral
Accountant shall be shared equally by Replidyne and the Company; provided, that, if the Neutral
Accountant determines that one such Party has adopted a position or positions with respect to the
Net Assets calculation that is frivolous or clearly without merit, the Neutral Accountant may, in
its discretion, assign a greater portion of any such fees and expenses to such Party.
(f) If Closing does not occur within five Business Days after determination of the Net Assets
(whether pursuant to Section 1.7(c), 1.7(d) or 1.7(e) hereof), then Replidyne and the Company shall
agree upon a new date for Closing (a “Subsequent Anticipated Closing Date”) and thereafter
follow the procedures set forth in Sections 1.7(a) through 1.7(e) above (and replacing the First
Anticipated Closing Date with the Subsequent Anticipated Closing Date).
6.
1.8 Determination of Deemed Value.
(a) In the event that Replidyne will consummate the closing of a Pipeline Transaction on or
before the Closing Date, Replidyne shall deliver to the Company, at least 20 days prior to the
First Anticipated Closing Date, a notice of such fact and a description of the terms of such
Pipeline Transaction (the date of the delivery of such notice, the “Pipeline Transaction Notice
Date”). Representatives of Replidyne and the Company shall promptly meet and attempt in good
faith to agree on the value of any non-cash consideration to be paid to Replidyne before the
Closing in connection with such Pipeline Transaction (the “Pre-Closing Consideration”) as
of the First Anticipated Closing Date (it being understood that the value of any cash consideration
to be paid to Replidyne before the Closing shall be such cash consideration).
(b) If Representatives of Replidyne and the Company pursuant to clause (a) above are unable to
agree on the value of the Pre-Closing Consideration of such Pipeline Transaction within five days
of the Pipeline Transaction Notice Date (the “Valuation Period”), each of Replidyne and the
Company shall, within two days of the end of the Valuation Period, appoint an independent
investment bank of national standing (each, a “Valuation Party”) to complete a good faith
analysis of the value of the Pre-Closing Consideration of such Pipeline Transaction as of the First
Anticipated Closing Date. The Representatives of Replidyne and the Company shall cooperate with
each Valuation Party so that each such Valuation Party shall be able to make a determination of the
value of the Pre-Closing Consideration within 10 days, provided that any delay by a Valuation Party
in delivering such determination shall not invalidate such determination or deprive such Valuation
Party of its authority to resolve the items in dispute. All determinations made by the Valuation
Parties pursuant to this Section 1.8(b) shall be in writing and shall be delivered to Replidyne and
the Company. The value of the Pre-Closing Consideration of such Pipeline Transaction shall be
deemed for purposes of this Agreement to be the average of the respective valuations determined by
such Valuation Parties. The determination of the value of the Pre-Closing Consideration of such
Pipeline Transaction set forth in the preceding sentence shall be binding and conclusive on
Replidyne and the Company. A judgment on the determination of the value of the Pre-Closing
Consideration of such Pipeline Transaction made pursuant to this Section 1.8(b) may be entered in
and enforced by any court having jurisdiction thereover. The fees and expenses of the Valuation
Parties shall be shared equally by Replidyne and the Company.
(c) If Closing does not occur on the First Anticipated Closing Date, Replidyne and the Company
shall thereafter follow the procedures set forth in this Section 1.8 (and replacing the First
Anticipated Closing Date with the Subsequent Anticipated Closing Date).
(d) Any value of the Pre-Closing Consideration of a Pipeline Transaction determined in
accordance with the provisions of this Section 1.8 (whether pursuant to Section 1.8(a) or 1.8(b)
hereof) shall be referred to for purposes of this Agreement as the “Deemed Value” of the
Pre-Closing Consideration of such Pipeline Transaction.
1.9 Closing of the Company’s Transfer Books. At the Effective Time: (a) all shares
of Company Common Stock and Company Preferred Stock outstanding immediately prior to the Effective
Time shall automatically be canceled and shall cease to exist, and all holders of certificates
representing shares of Company Common Stock or Company Preferred Stock that were outstanding
immediately prior to the Effective Time shall cease to have any rights as stockholders of the
Company except as otherwise provided herein; and (b) the stock transfer books of the Company shall
be closed with respect to all shares of Company Common Stock and Company Preferred Stock
outstanding immediately prior to the Effective Time. No further transfer of any such shares of
Company Common Stock or Company Preferred Stock shall be made on such stock transfer books after
the Effective Time. If, after the Effective Time, a valid certificate previously representing any
shares of Company Common Stock or Company Preferred Stock outstanding immediately prior to the
Effective Time (a “Company Stock Certificate”) is presented to the Exchange Agent (as
defined in Section 1.10) or to the Surviving
7.
Corporation, such Company Stock Certificate shall be canceled and shall be exchanged as
provided in Section 1.10.
1.10 Surrender of Certificates.
(a) On or prior to the Closing Date, Replidyne and the Company shall agree upon and select a
reputable bank, transfer agent or trust company to act as exchange agent in the Merger (the
“Exchange Agent”). At the Effective Time, Replidyne shall deposit with the Exchange Agent:
(i) certificates representing the shares of Replidyne Common Stock issuable pursuant to Section
1.6; and (ii) cash sufficient to make payments in lieu of fractional shares in accordance with
Sections 1.5(b) and 1.6(c). The shares of Replidyne Common Stock and cash amounts to satisfy
payment obligations in lieu of fractional shares so deposited with the Exchange Agent, together
with any dividends or distributions received by the Exchange Agent with respect to such shares, are
referred to collectively as the “Exchange Fund.”
(b) Promptly after the Effective Time, but in no event more than five Business Days after the
Effective Time, the Parties shall cause the Exchange Agent to mail to the Persons who were record
holders of Company Stock Certificates immediately prior to the Effective Time: (i) a letter of
transmittal in customary form and containing such provisions as Replidyne may reasonably specify
(including a provision confirming that delivery of Company Stock Certificates shall be effected,
and risk of loss and title to Company Stock Certificates shall pass, only upon delivery of such
Company Stock Certificates to the Exchange Agent); and (ii) instructions for use in effecting the
surrender of Company Stock Certificates in exchange for certificates representing Replidyne Common
Stock. Upon surrender of a Company Stock Certificate to the Exchange Agent for exchange, together
with a duly executed letter of transmittal and such other documents as may be reasonably required
by the Exchange Agent or Replidyne: (A) the holder of such Company Stock Certificate shall be
entitled to receive in exchange therefor a certificate representing the number of whole shares of
Replidyne Common Stock that such holder has the right to receive pursuant to the provisions of
Section 1.6 (and cash in lieu of any fractional share of Replidyne Common Stock pursuant to Section
1.6(c)); and (B) the Company Stock Certificate so surrendered shall be canceled. In the event of a
transfer of ownership of Company Common Stock or Company Preferred Stock which is not registered in
the transfer records of the Company, a certificate representing the proper number of shares of
Replidyne Common Stock plus cash in lieu of fractional shares pursuant to Section 1.6(c) may be
issued or paid to a Person other than the Person in whose name the applicable Company Stock
Certificate so surrendered is registered, if such Company Stock Certificate is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect such transfer and by
evidence that any applicable stock transfer taxes have been paid, along with an applicable
affidavit with respect to such Company Stock Certificate and such bond indemnifying Replidyne
against any claims suffered by Replidyne related to such Company Stock Certificate or any Replidyne
Common Stock issued in exchange therefor as Replidyne may reasonably request. Until surrendered as
contemplated by this Section 1.10(b), each Company Stock Certificate shall be deemed, from and
after the Effective Time, to represent only the right to receive shares of Replidyne Common Stock
(and cash in lieu of any fractional share of Replidyne Common Stock pursuant to Section 1.6(c)) as
contemplated by Section 1.6. If any Company Stock Certificate shall have been lost, stolen or
destroyed, Replidyne may, in its discretion and as a condition precedent to the delivery of any
shares of Replidyne Common Stock with respect to the shares of Company Common Stock previously
represented by such Company Stock Certificate, require the owner of such lost, stolen or destroyed
Company Stock Certificate to provide an applicable affidavit with respect to such Company Stock
Certificate and post a bond indemnifying Replidyne against any claim suffered by Replidyne related
to the lost, stolen or destroyed Company Stock Certificate or any Replidyne Common Stock issued in
exchange therefor as Replidyne may reasonably request.
8.
(c) No dividends or other distributions declared or made with respect to Replidyne Common
Stock with a record date after the Effective Time shall be paid to the holder of any unsurrendered
Company Stock Certificate with respect to the shares of Replidyne Common Stock that such holder has
the right to receive pursuant to the Merger until such holder surrenders such Company Stock
Certificate (or, with respect to any lost, stolen or destroyed Company Stock Certificate, an
affidavit and bond in lieu thereof) in accordance with this Section 1.10 (at which time such holder
shall be entitled, subject to the effect of applicable abandoned property, escheat or similar laws,
to receive all such dividends and distributions, without interest).
(d) Any portion of the Exchange Fund that remains undistributed to holders of Company Stock
Certificates as of the date 180 days after the Closing Date shall be delivered or made available to
Replidyne upon demand, and any holders of Company Stock Certificates who have not theretofore
surrendered their Company Stock Certificates in accordance with this Section 1.10 shall thereafter
look only to Replidyne for satisfaction of their claims for Replidyne Common Stock, cash in lieu of
fractional shares of Replidyne Common Stock and any dividends or distributions with respect to
shares of Replidyne Common Stock.
(e) Each of the Exchange Agent and Replidyne shall be entitled to deduct and withhold from any
consideration deliverable pursuant to this Agreement to any holder of any Company Stock Certificate
such amounts as Replidyne determines in good faith are required to be deducted or withheld from
such consideration under the Code or any provision of state, local or foreign tax law or under any
other applicable Legal Requirement. To the extent such amounts are so deducted or withheld, such
amounts shall be treated for all purposes under this Agreement as having been paid to the Person to
whom such amounts would otherwise have been paid.
(f) No party to this Agreement shall be liable to any holder of any Company Stock Certificate
or to any other Person with respect to any shares of Replidyne Common Stock (or dividends or
distributions with respect thereto), or for any cash amounts, delivered to any public official
pursuant to any applicable abandoned property law, escheat law or similar Legal Requirement.
1.11 Dissenters’ Rights.
(a) Notwithstanding any provision of this Agreement to the contrary, shares of Company Common
Stock (including shares issued as a result of the conversion described in the Company Stockholder
Conversion Agreement) that are outstanding immediately prior to the Effective Time and that are
held by stockholders who have exercised and perfected dissenters’ rights for such shares of Company
Common Stock in accordance with the MBCA (collectively, the “Dissenting Shares”) shall not
be converted into or represent the right to receive the per share amount of the merger
consideration described in Section 1.6 attributable to such Dissenting Shares. Such stockholders
shall instead be entitled to receive payment of the appraised value of such shares of Company
Common Stock held by them in accordance with the MBCA, unless and until such stockholders fail to
perfect or effectively withdraw or otherwise lose their dissenters’ rights under the MBCA. All
Dissenting Shares held by stockholders who shall have failed to perfect or who effectively shall
have withdrawn or lost their dissenters’ rights under the MBCA shall thereupon be deemed to be
converted into and to have become exchangeable for, as of the Effective Time, the right to receive
the per share amount of the merger consideration described in Section 1.6 attributable to such
Dissenting Shares upon their surrender in the manner provided in Section 1.10.
(b) The Company shall give Replidyne prompt written notice of any demands by dissenting
stockholders received by the Company, withdrawals of such demands and any other instruments served
on the Company and any material correspondence received by the Company in connection with such
demands.
9.
1.12 Further Action. If, at any time after the Effective Time, any further action is
determined by the Surviving Corporation to be necessary or desirable to carry out the purposes of
this Agreement or to vest the Surviving Corporation with full right, title and possession of and to
all rights and property of the Company, then the officers and directors of the Surviving
Corporation shall be fully authorized, and shall use their commercially reasonable efforts (in the
name of the Company and otherwise) to take such action.
1.13 Tax Consequences. For federal income tax purposes, the Merger is intended to
constitute a reorganization within the meaning of Section 368(a) of the Code. The Parties to this
Agreement adopt this Agreement as a “plan of reorganization” within the meaning of Sections
1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Replidyne as follows, except as set forth in the written
disclosure schedule delivered by the Company to Replidyne concurrently with the execution of this
Agreement (the “Company Disclosure Schedule”). The Company Disclosure Schedule shall be
arranged in sections and subsections corresponding to the numbered and lettered sections and
subsections contained in this Section 2. The disclosure in any section or subsection of the Company
Disclosure Schedule shall qualify other sections and subsections in this Section 2 if the
applicability of the disclosure contained in such section or subsection of the Company Disclosure
Schedule to the other representations in this Section 2 is readily apparent on its face.
2.1 Due Organization; Subsidiaries; Etc.
(a) The Company is a corporation duly incorporated, validly existing and in good standing
under the laws of the State of Minnesota and has all necessary corporate power and authority: (i)
to conduct its business in the manner in which its business is currently being conducted and as its
business is presently proposed to be conducted; (ii) to own and use its assets in the manner in
which its assets are currently owned and used; and (iii) to perform its obligations under all
Company Contracts.
(b) The Company has not conducted any business under or otherwise used, for any purpose or in
any jurisdiction, any fictitious name, assumed name, trade name or other name, other than the names
“Cardiovascular Systems, Inc.”, “CSI”, “Shturman Cardiology Systems, Inc.”, and “Laser Cardiology
Systems, Inc.”
(c) The Company is not and has not been required to be qualified, authorized, registered or
licensed to do business as a foreign corporation in any jurisdiction other than the jurisdictions
identified in Part 2.1(c) of the Company Disclosure Schedule, except where the failure to be so
qualified, authorized, registered or licensed, individually or in the aggregate, has not had, and
would not reasonably be expected to have, a Company Material Adverse Effect. The Company is in good
standing as a foreign corporation in each of the jurisdictions identified in Part 2.1(c) of the
Company Disclosure Schedule.
(d) Part 2.1(d) of the Company Disclosure Schedule accurately sets forth (i) the names of the
members of the board of directors of the Company, (ii) the names of the members of each committee
of the board of directors of the Company and (iii) the names and titles of the officers of the
Company.
(e) The Company has no Subsidiaries except for the Entities identified in Part 2.1(e) of the
Company Disclosure Schedule. Except as set forth in Part 2.1(e) of the Company Disclosure
10.
Schedule, each Company Subsidiary is duly organized, validly existing and in good standing in
its jurisdiction of organization and has the requisite power and authority: (i) to conduct its
business in the manner in which its business is currently being conducted and as its business is
presently proposed to be conducted; (ii) to own and use its assets in the manner in which its
assets are currently owned and used; and (iii) to perform its obligations under all Company
Contracts. Each Company Subsidiary is in good standing as a foreign corporation or other
organization in each of the jurisdictions identified in Part 2.1(e) of the Company Disclosure
Schedule. Except as set forth in Part 2.1(e) of the Company Disclosure Schedule, the Company owns
all of the capital stock of each Company Subsidiary free from liens, encumbrances and defects.
There is no: (i) outstanding subscription, option, call, warrant or right (whether or not currently
exercisable) to acquire any shares of capital stock or other securities of any Company Subsidiary;
(ii) outstanding security, instrument or obligation that is or may become convertible into or
exchangeable for any shares of capital stock or other securities of any Company Subsidiary; (iii)
Contract under which any Company Subsidiary is or may become obligated to sell or otherwise issue
any shares of its capital stock or any other securities of any Company Subsidiary; or (iv)
condition or circumstance that would give rise to or provide a basis for the assertion of a claim
by any Person to the effect that such Person is entitled to acquire or receive any shares of
capital stock or other securities of any Company Subsidiary. No Company Subsidiary has issued any
debt securities which grant the holder thereof any right to vote on, or veto, any action of any
Company Subsidiary.
(f) Except with respect to the Company Subsidiaries identified on Part 2.1(e) of the Company
Disclosure Schedule or as set forth in Part 2.1(f) of the Company Disclosure Schedule, the Company
does not own any controlling interest in any Entity, and the Company has never owned, beneficially
or otherwise, any shares or other securities of, or any direct or indirect equity or other
financial interest in, any Entity. The Company has not agreed and is not obligated to make any
future investment in or capital contribution to any Entity. Neither the Company nor any of its
stockholders has ever approved, or commenced any proceeding or made any election contemplating, the
dissolution or liquidation of the business or affairs of the Company. The Company has not
guaranteed and is not responsible or liable for any obligation of any of the Entities in which it
owns or has owned any equity or other financial interest.
2.2 Articles of Incorporation and Bylaws; Records. Except as set forth in Part 2.2 of
the Company Disclosure Schedule, the Company has delivered or made available to Replidyne accurate
and complete copies of: (a) the Articles of Incorporation (as amended and restated, the
“Company Articles of Incorporation”) and Bylaws, including all amendments thereto, of the
Company; (b) the stock records of the Company; and (c) the minutes and other records of the
meetings and other proceedings (including any actions taken by written consent or otherwise without
a meeting) of the stockholders of the Company, the board of directors of the Company and all
committees of the board of directors of the Company (the items described in (a) and (b) above,
collectively, the “Company Constituent Documents”). Except as set forth in Part 2.2 of the
Company Disclosure Schedule, there have been no formal meetings or actions taken by written consent
or otherwise without a meeting of the stockholders of the Company, the board of directors of the
Company or any committee of the board of directors of the Company that are not fully reflected in
the minutes and other records delivered or made available to Replidyne pursuant to clause (c)
above. There has not been any violation of the Company Constituent Documents, and the Company has
not taken any action that is inconsistent with the Company Constituent Documents. Except as set
forth in Part 2.2 of the Company Disclosure Schedule, the books of account, stock records, minute
books and other records of the Company are accurate, up to date and complete in all material
respects and have been maintained in accordance with prudent business practices.
11.
2.3 Capitalization, Etc.
(a) The authorized capital stock of the Company consists of 70,000,000 shares of Company
Common Stock, 5,400,000 shares of Company Series A Preferred Stock, 2,188,425 shares of Company
Series A-1 Preferred Stock, 2,175,162 shares of Company Series B Preferred Stock and 5,000,000
undesignated shares. As of the date of this Agreement, 7,724,137 shares of Company Common Stock,
4,737,561 shares of Company Series A Preferred Stock, 2,188,425 shares of Company Series A-1
Preferred Stock and 2,162,150 shares of Company Series B Preferred Stock are issued and
outstanding. All of the outstanding shares of Company Common Stock and Company Preferred Stock have
been duly authorized and validly issued, and are fully paid and non assessable. As of the date of
this Agreement, Part 2.3(a) of the Company Disclosure Schedule sets forth the names of the
Company’s stockholders and the class, series and number of shares of the Company’s capital stock
owned of record by such stockholders. All outstanding shares of Company Common Stock and Company
Preferred Stock have been issued and granted in compliance with (i) all applicable federal and
state securities laws, (ii) all other applicable Legal Requirements, except as would not reasonably
be expected to have a Company Material Adverse Effect, and (iii) all requirements set forth in
Company Constituent Documents and applicable Contracts. Part 2.3(a) of the Company Disclosure
Schedule provides an accurate and complete description of the terms of each repurchase option which
is held by the Company and to which any shares of capital stock of the Company is subject and
identifies the Contract underlying such right. The Company has no authorized shares other than as
set forth in this Section 2.3(a) and as of the date of this Agreement there are no issued and
outstanding shares of the Company’s capital stock other than the shares of Company Common Stock and
Company Preferred Stock as set forth in this Section 2.3(a). Except as set forth in Part 2.3(a) of
the Company Disclosure Schedule, each share of Company Preferred Stock is convertible into Company
Common Stock on a one-for-one basis. There are no declared but unpaid dividends with respect to
any shares of capital stock of the Company. There are no shares of capital stock of the Company
held in the Company’s treasury.
(b) The Company has reserved 7,929,397 shares of Company Common Stock for issuance under the
Company Stock Option Plans, of which options to purchase 5,711,475 shares of Company Common Stock
granted under the Company Stock Option Plans are outstanding as of the date of this Agreement.
Options to purchase an additional 130,000 shares of Company Common Stock granted outside of the
Company Stock Option Plans are outstanding as of the date of this Agreement. No shares of Company
Common Stock remain available for future issuance under the Company’s 1991 Stock Option Plan and
2003 Stock Option Plan, and 279,848 shares of Company Common Stock remain available for future
issuance under the Company’s 2007 Equity Incentive Plan. Part 2.3(b) of the Company Disclosure
Schedule accurately sets forth, with respect to each Company Option that is outstanding as of the
date of this Agreement: (i) the name of the holder of such Company Option; (ii) the total number of
shares of Company Common Stock that are subject to such Company Option and the number of shares of
Company Common Stock with respect to which such Company Option is immediately exercisable; (iii)
the date on which such Company Option was granted and the term of such Company Option; and (iv) the
exercise price per share of Company Common Stock purchasable under such Company Option. Each grant
of a Company Option was duly authorized no later than the date on which the grant of such Company
Option was by its terms to be effective (the “Grant Date”) by all necessary corporate
action, including, as applicable, approval by the board of directors or compensation committee of
the Company and any required stockholder approval by the necessary number of votes or written
consents, and the award agreement governing such grant (if any) was duly executed and delivered by
each party thereto, each such grant was made in accordance with the terms of the Company Stock
Option Plans and all other applicable Legal Requirements and, except as set forth in Part 2.3(b) of
the Company Disclosure Schedule, the per share exercise price of each Company Option was equal to
the fair market value of a share of Company Common Stock on the applicable Grant Date.
(c) Except as described in Section 2.3(b) or in Part 2.3(c) of the Company Disclosure
Schedule, there is no: (i) outstanding subscription, option, call, warrant or right (whether or not
currently
12.
exercisable) to acquire any shares of capital stock or other securities of the Company; (ii)
outstanding security, instrument or obligation that is or may become convertible into or
exchangeable for any shares of capital stock or other securities of the Company; (iii) Contract
under which the Company is or may become obligated to sell or otherwise issue any shares of its
capital stock or any other securities of the Company; or (iv) condition or circumstance that would
give rise to or provide a basis for the assertion of a claim by any Person to the effect that such
Person is entitled to acquire or receive any shares of capital stock or other securities of the
Company. Except as set forth in Part 2.3(c) of the Company Disclosure Schedule, the Company has not
issued any debt securities which grant the holder thereof any right to vote on, or veto, any action
of the Company.
(d) Except for repurchases of securities made pursuant to their terms or as set forth in Part
2.3(d) of the Company Disclosure Schedule, the Company has never repurchased, redeemed or otherwise
reacquired any shares of capital stock or other securities of the Company.
2.4 Financial Statements.
(a) The Company has delivered or made available to Replidyne the following financial
statements (collectively, the “Company Financial Statements”):
(i) the audited consolidated balance sheets of the Company as of June 30, 2006, 2007 and 2008
and the related audited consolidated statements of operations, statements of changes in
shareholders’ deficiency (equity) and comprehensive (loss) income and statements of cash flows of
the Company for each of the three years in the period ended June 30, 2008, together with the notes
thereto and the reports and opinions of PricewaterhouseCoopers LLP relating thereto; and
(ii) the unaudited consolidated balance sheet of the Company as of September 30, 2008 (the
“Company Balance Sheet”) and the related unaudited consolidated statement of operations,
statement of changes in shareholders’ deficiency (equity) and comprehensive (loss) income and
statement of cash flows of the Company for the three months then ended.
(b) The Company Financial Statements fairly present in all material respects the consolidated
financial position of the Company as of the respective dates thereof and the consolidated results
of operations and cash flows of the Company for the periods covered thereby. To the extent
contained in the Company SEC Documents, the Company Financial Statements complied as to form in all
material respects with the published rules and regulations of the SEC applicable thereto. Except
as may be indicated in the notes to the Company Financial Statements, the Company Financial
Statements have been prepared in accordance with generally accepted accounting principles
(“GAAP”) applied on a consistent basis throughout the periods covered.
2.5 Absence of Changes. Except as set forth in Part 2.5 of the Company Disclosure
Schedule, from September 30, 2008 through the date of this Agreement:
(a) there has not been any Company Material Adverse Effect, and no event has occurred that
will, or would reasonably be expected to, cause a Company Material Adverse Effect;
(b) there has not been any material loss, damage or destruction to, or any material
interruption in the use of, any of the assets of the Company (whether or not covered by insurance);
(c) the Company has not declared, accrued, set aside or paid any dividend or made any other
distribution in respect of any shares of its capital stock, and has not repurchased, redeemed or
otherwise reacquired any shares of its capital stock or other securities;
13.
(d) the Company has not sold, issued, granted or authorized the issuance of (i) any capital
stock or other securities of the Company (other than upon the exercise of outstanding Company
Options or Company Warrants or pursuant to the Company Stock Option Plans); (ii) any option, call
or right to acquire any capital stock or any other security of the Company (other than pursuant to
the Company Stock Option Plans); (iii) any instrument convertible into or exchangeable for any
capital stock or other security of the Company; or (iv) reserved for issuance any additional grants
or shares under the Company Stock Option Plans;
(e) the Company has not amended or waived any of its rights under, or permitted the
acceleration of vesting under, the Company Stock Option Plans, any Company Option or agreement
evidencing or relating to any outstanding stock option or warrant, any restricted stock purchase
agreement, or any other Contract evidencing or relating to any equity award;
(f) there has been no amendment to any Company Constituent Document and the Company has not
effected or been a party to any Acquisition Transaction, recapitalization, reclassification of
shares, stock split, reverse stock split or similar transaction;
(g) the Company has not formed any Company Subsidiary or acquired any equity interest or other
interest in any other Entity;
(h) the Company has not made any capital expenditure which, when added to all other capital
expenditures made on behalf of the Company, exceeds $100,000;
(i) the Company has not (i) entered into, or permitted any of the assets owned or used by it
to become bound by, any Contract that contemplates or involves (A) the payment or delivery of cash
or other consideration in an amount or having a value in excess of $100,000 in the aggregate, or
(B) the purchase or sale of any product, or performance of services by or to the Company outside
the Ordinary Course of Business having a value in excess of $100,000 in the aggregate, or (ii)
waived any right or remedy under any Contract other than in the Ordinary Course of Business, or
amended or prematurely terminated any Contract;
(j) the Company has not (i) acquired, leased or licensed any right or other asset from any
other Person, (ii) sold or otherwise disposed of, or leased or licensed, any right or other asset
to any other Person, or (iii) waived or relinquished any right, except for immaterial rights or
immaterial assets acquired, leased, licensed or disposed of in the Ordinary Course of Business;
(k) the Company has not written off as uncollectible, or established any extraordinary reserve
with respect to, any account receivable or other indebtedness;
(l) the Company has not made any pledge of any of its assets or otherwise permitted any of its
assets to become subject to any Encumbrance, except for pledges of immaterial assets made in the
Ordinary Course of Business;
(m) the Company has not (i) lent money to any Person (other than pursuant to routine travel
advances made to employees in the Ordinary Course of Business) or (ii) incurred or guaranteed any
indebtedness for borrowed money in the aggregate in excess of $100,000 (other than draws under the
Company’s credit facilities in effect on the date of this Agreement) or (iii) issued or sold any
debt securities or options, warrants, calls or similar rights to acquire any debt securities of the
Company;
(n) the Company has not (i) established or adopted any employee benefit plan, (ii) paid any
bonus or made any profit sharing, incentive compensation or similar payment to, or increased the
14.
amount of the wages, salary, commissions, fringe benefits or other compensation or
remuneration payable to, any of its directors or Key Employees with an annual salary in excess of
$100,000, except for payments made pursuant to any compensation plans in effect on the date of this
Agreement, or (iii) hired any new employee having an annual salary in excess of $100,000;
(o) the Company has not changed any of its personnel policies or other business policies, or
any of its methods of accounting or accounting practices in any respect;
(p) the Company has not made any material Tax election;
(q) the Company has not changed any of its methods of accounting or accounting practices in
any respect;
(r) the Company has not threatened, commenced, settled or become subject to any Legal
Proceeding;
(s) the Company has not entered into any transaction or taken any other action outside the
Ordinary Course of Business, other than entering into this Agreement and the Contemplated
Transactions;
(t) the Company has not paid, discharged or satisfied any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise) other than the payment,
discharge or satisfaction of non-material amounts in the Ordinary Course of Business or as required
by any Company Contract or Legal Requirement;
(u) the Company has not amended or prematurely terminated, or waived any material right or
remedy under, any Company Contract; and
(v) the Company has not agreed to take, or committed to take, any of the actions referred to
in clauses “(c)” through “(u)” above.
2.6 [Reserved].
2.7 Equipment; Leasehold.
(a) Except as set forth in Part 2.7(a) of the Company Disclosure Schedule, the Company owns,
and has good and valid title to, all equipment and other tangible assets purported to be owned by
it, free and clear of any liens or other Encumbrances. All items of equipment and other tangible
assets owned by or leased to the Company (i) are adequate for the uses to which they are being put
and (ii) are adequate for the conduct of the Company’s business in the manner in which such
business is currently being conducted and as it is proposed to be conducted.
(b) The Company does not own any real property or any interest in real property, except for
the leasehold interest created under the real property leases identified in Part 2.7(b) of the
Company Disclosure Schedule. All premises leased or subleased by the Company are supplied with
utilities and other services necessary for the operation of their respective businesses.
2.8 Intellectual Property.
(a) Part 2.8(a) of the Company Disclosure Schedule accurately identifies (i) each item of
Company Registered IP and (ii) the jurisdiction in which such item of Company Registered IP has
15.
been registered or filed and the applicable registration or serial number. The Company has
delivered or made available to Replidyne complete and accurate copies of all applications,
correspondence, and other material documents related to each such item of Company Registered IP.
(b) Part 2.8(b) of the Company Disclosure Schedule accurately identifies (i) each Company
Contract pursuant to which any Person has been granted any license under, or otherwise has received
or acquired any right (whether or not currently exercisable) or interest in, any Company IP Rights
and (ii) each Company Contract involving Company IP Rights licensed to the Company (other than any
non-customized software that is so licensed solely in executable or object code form pursuant to a
non-exclusive, internal use, software license granted in the Ordinary Course of Business). The
Company is not bound by, and no Company IP Rights are subject to, any Contract containing any
covenant or other provision that in any way limits or restricts the ability of the Company to use,
exploit, assert, or enforce any Company IP Rights anywhere in the world.
(c) Part 2.8(c) of the Company Disclosure Schedule accurately identifies all Contracts in
which Intellectual Property Rights or Intellectual Property embodied or incorporated in the Company
Products are licensed to the Company (other than any non-customized software that (i) is so
licensed solely in executable or object code form pursuant to a non-exclusive, internal use
software license, (ii) is not incorporated into, or used directly in the development,
manufacturing, or distribution of, any of the Company’s products or services, and (iii) was
licensed to the Company in the Ordinary Course of Business).
(d) The Company has delivered or made available to Replidyne a complete and accurate copy of
each standard form of Company IP Rights Agreement used by the Company, including each standard form
of (i) license agreement; (ii) distribution or reseller agreement, (iii) employee agreement
containing intellectual property assignment or license of Company IP Rights or any confidentiality
provision; (iv) consulting or independent contractor agreement containing intellectual property
assignment or license of Company IP Rights or any confidentiality provision; and (v)
confidentiality or nondisclosure agreement, and no Company IP Rights Agreement deviates in any
material respect from the corresponding standard form agreement delivered or made available to
Replidyne.
(e) Except as set forth in Part 2.8(e) of the Company Disclosure Schedule, the Company
exclusively owns all right, title, and interest to and in Company IP Rights (other than Company IP
Rights exclusively licensed to the Company, as identified in Part 2.8(b) of the Company Disclosure
Schedule) free and clear of any Encumbrances (other than non-exclusive licenses granted pursuant to
the Company Contracts listed in Part 2.8(b) of the Company Disclosure Schedule). Without limiting
the generality of the foregoing:
(i) To the Knowledge of the Company, all documents and instruments necessary to register or
apply for or renew registration of Company Registered IP have been validly executed, delivered, and
filed in a timely manner with the appropriate Governmental Body.
(ii) Each Person who is or was an employee or contractor of the Company and who is or was
involved in the creation or development of any Company IP Rights has signed a valid, enforceable
agreement containing an assignment of Intellectual Property Rights to the Company and
confidentiality provisions protecting trade secrets and confidential information of the Company.
No current or former stockholder, officer, director, or employee of the Company has any claim,
right (whether or not currently exercisable), or interest to or in any Company IP Rights. Except as
set forth in Part 2.8(e) of the Company Disclosure Schedule, no employee of the Company is (a)
bound by or otherwise subject to any Contract restricting him or her from performing his or her
duties for the
16.
Company or (b) in breach of any Contract with any former employer or other Person concerning
Company IP Rights or confidentiality obligations due to his or her activities as an employee of the
Company.
(iii) No funding, facilities, or personnel of any Governmental Body were used, directly or
indirectly, to develop or create, in whole or in part, any Company IP Rights in which the Company
has an ownership interest.
(iv) The Company has taken all reasonable steps to maintain the confidentiality of and
otherwise protect and enforce their rights in all proprietary information that the Company holds,
or purports to hold, as a trade secret.
(v) The Company has not assigned or otherwise transferred ownership of, or agreed to assign or
otherwise transfer ownership of, any Company IP Rights to any other Person.
(vi) The Company is not now nor has it ever been a member or promoter of, or a contributor to,
any industry standards body or similar organization that could require or obligate the Company to
grant or offer to any other Person any license or right to any Company IP Rights.
(vii) The Company IP Rights constitute all Intellectual Property Rights necessary for the
Company to conduct its business as currently conducted and planned to be conducted.
(f) To the Company’s Knowledge, all Company Registered IP is valid and enforceable. Without
limiting the generality of the foregoing:
(i) Each U.S. patent application and U.S. patent in which the Company has or purports to have
an ownership interest was filed within one year of the first printed publication, public use, or
offer for sale of each invention described in the U.S. patent application or U.S. patent. Each
foreign patent application and foreign patent in which the Company has or purports to have an
ownership interest was filed or claims priority to a patent application filed prior to each
invention described in the foreign patent application or foreign patent being first made available
to the public.
(ii) To the Company’s Knowledge, no trademark (whether registered or unregistered) or trade
name owned, used, or applied for by the Company conflicts or interferes with any trademark (whether
registered or unregistered) or trade name owned, used, or applied for by any other Person. None of
the goodwill associated with or inherent in any trademark (whether registered or unregistered) in
which the Company has or purports to have an ownership interest has been impaired.
(iii) Each item of Company IP Rights that is Company Registered IP is and at all times has
been filed and maintained in compliance with all applicable Legal Requirements and all filings,
payments, and other actions required to be made or taken to maintain such item of Company
Registered IP in full force and effect have been made by the applicable deadline.
(iv) No interference, opposition, reissue, reexamination, or other proceeding is pending or,
to the Company’s Knowledge, threatened, in which the scope, validity, or enforceability of any
Company IP Rights is being, has been, or could reasonably be expected to be contested or
challenged. To the Company’s Knowledge, there is no basis for a claim that any Company IP Rights
are invalid or, excluding pending patent applications, unenforceable.
(g) To the Company’s Knowledge, no Person has infringed, misappropriated, or otherwise
violated, and no Person is currently infringing, misappropriating, or otherwise violating, any
17.
Company IP Rights, except as set forth in Part 2.8(g) of the Company Disclosure Schedule. Part
2.8(g) of the Company Disclosure Schedule accurately identifies, and, except as set forth in Part
2.8(g) of the Company Disclosure Schedule, the Company has delivered or made available to Replidyne
a complete and accurate copy of, each letter or other written or electronic communication or
correspondence that has been sent or otherwise delivered in the last five (5) years by or to the
Company or any Representative of the Company regarding any actual, alleged, or suspected
infringement or misappropriation of any Company IP Rights, and provides a brief description of the
current status of the matter referred to in such letter, communication, or correspondence.
(h) Neither the execution, delivery, or performance of this Agreement (or any of the
agreements contemplated by this Agreement) nor the consummation of any of the Contemplated
Transactions will, with or without notice or lapse of time, result in, or give any other Person the
right or option to cause or declare, (a) a loss of, or Encumbrance on, any Company IP Rights; (b) a
breach by the Company of any Company IP Rights Agreement; (c) the release, disclosure, or delivery
of any Company IP Rights by or to any escrow agent or other Person; or (d) the grant, assignment,
or transfer to any other Person of any license or other right or interest under, to, or in any of
Company IP Rights.
(i) To the Company’s Knowledge, the Company has never infringed (directly, contributorily, by
inducement, or otherwise), misappropriated, or otherwise violated any Intellectual Property Right
of any other Person. Without limiting the generality of the foregoing:
(i) No infringement, misappropriation, or similar claim or Legal Proceeding is pending or, to
the Company’s Knowledge, threatened against the Company or against any other Person who may be
entitled to be indemnified, defended, held harmless, or reimbursed by the Company with respect to
such claim or Legal Proceeding. The Company has never received any notice or other communication
(in writing or otherwise) alleging any actual, alleged, or suspected infringement,
misappropriation, or violation of any Intellectual Property Rights of another Person.
(ii) Except in connection with customary indemnification obligations to the Company’s
directors and officers, the Company is not bound by any Contract to indemnify, defend, hold
harmless, or reimburse any other Person with respect to any intellectual property infringement,
misappropriation, or similar claim. The Company has never assumed, or agreed to discharge or
otherwise take responsibility for, any existing or potential liability of another Person for
infringement, misappropriation, or violation of any Intellectual Property Right.
(j) No claim or Legal Proceeding involving any Company IP Rights is pending or, to the
Company’s Knowledge, has been threatened, except for any such claim or Legal Proceeding that, if
adversely determined, would not adversely affect (i) the use or exploitation of Company IP Rights
by the Company, or (ii) the design, development, manufacturing, distribution, licensing, or sale of
any product or service being developed by the Company, or that is being commercially sold by the
Company.
2.9 Contracts.
(a) Part 2.9(a) of the Company Disclosure Schedule identifies, as of the date of this
Agreement:
(i) (A) each Company Contract relating to the employment of, or the performance of
employment-related services by, any Person, including any employee, consultant or independent
contractor; (B) each Company Contract pursuant to which the Company is or may become obligated to
make any severance, termination, change in control or similar payment to any director, officer or
employee of the Company; and (C) any Company Contract pursuant to which the Company is
18.
or may become obligated to make any bonus or similar payment (other than payment in respect of
salary) to any director, officer or employee of the Company;
(ii) each Company Contract that provides for indemnification of any officer, director,
employee or agent of the Company;
(iii) each Company Contract relating to the voting and any other rights or obligations of a
stockholder of the Company;
(iv) each Company Contract relating to the merger, consolidation, reorganization or any
similar transaction with respect to the Company;
(v) each Company Contract relating to the acquisition, transfer, use, development, sharing or
license of any technology or any Intellectual Property or Company IP Rights;
(vi) each Company Contract imposing any restriction on the Company’s right or ability (A) to
compete with any other Person, (B) to acquire any product or other asset or any services from any
other Person, to sell any product or other asset to, or perform any services for, any other Person
or to transact business or deal in any other manner with any other Person, or (C) develop or
distribute any technology or product;
(vii) each Company Contract creating or involving any agency relationship, distribution
arrangement or franchise relationship;
(viii) each Company Contract relating to the creation of any Encumbrance with respect to any
asset of the Company;
(ix) each Company Contract involving or incorporating any guaranty, any pledge, any
performance or completion bond, any indemnity or any surety arrangement;
(x) each Company Contract creating or relating to any collaboration or joint venture or any
sharing of technology, revenues, profits, losses, costs or liabilities, including Company Contracts
involving investments by the Company in, or loans by the Company to, any other Entity;
(xi) each Company Contract relating to the purchase or sale of any product or other asset by
or to, or the performance of any services by or for, or otherwise involving as a counterparty, any
Related Party of the Company;
(xii) each Company Contract relating to indebtedness for borrowed money;
(xiii) each Company Contract related to the acquisition or disposition of material assets of
the Company or any other Person;
(xiv) any other material Company Contract that has a term of more than 30 days and that may
not be terminated by the Company (without penalty) within 30 days after the delivery of a
termination notice by the Company;
(xv) any other Company Contract that contemplates or involves (A) the payment or delivery of
cash or other consideration in an amount or having a value in excess of $100,000 in the aggregate,
or (B) the purchase or sale of any product, or performance of services by or to the Company outside
the Ordinary Course of Business having a value in excess of $100,000 in the aggregate;
19.
(xvi) each Company Contract constituting a commitment of any Person to purchase products
(including products in development) of the Company;
(xvii) each Company Contract regarding the acquisition, issuance or transfer of any securities
and each Company Contract affecting or dealing with any securities of the Company including any
restricted share agreements or escrow agreements; and
(xviii) each Company Contract with any Person, including without limitation any financial
advisor, broker, finder, investment banker or other Person, providing advisory services to the
Company in connection with the Contemplated Transactions.
(b) The Company has delivered or made available to Replidyne accurate and complete (except for
applicable redactions thereto) copies of all Company Contracts set forth on Parts 2.9(a)(i) through
(xviii) of the Company Disclosure Schedule, including all amendments thereto (collectively, the
“Material Company Contracts”). There are no Material Company Contracts that are not in
written form. Each Material Company Contract is valid and in full force and effect, is enforceable
by the Company in accordance with its terms, and, after the Effective Time, will continue to be
legal, valid, binding and enforceable on identical terms. The consummation of the Contemplated
Transactions shall not (either alone or upon the occurrence of additional acts or events) result in
any payment or payments becoming due from the Company, the Surviving Corporation or Replidyne to
any Person under any Material Company Contract or give any Person the right to terminate or alter
the provisions of any Material Company Contract.
(c) The Company has not materially violated or breached, or committed any material default
under, any Material Company Contract, and, to the Knowledge of the Company, no other Person has
violated or breached, or committed any default under, any Material Company Contract.
(d) Except as set forth in Part 2.9(d) of the Company Disclosure Schedule, to the Company’s
Knowledge, no event has occurred, and no circumstance or condition exists, that (with or without
notice or lapse of time) will, or would reasonably be expected to, (i) result in a material
violation or breach of any of the provisions of any Material Company Contract, (ii) give any Person
the right to declare a default or exercise any remedy under any Material Company Contract, (iii)
give any Person the right to accelerate the maturity or performance of any Material Company
Contract, or (iv) give any Person the right to cancel, terminate or modify any Material Company
Contract.
(e) The Company has not received any written notice or other communication regarding any
actual or possible violation or breach of, or default under, any Material Company Contract.
(f) The Company has not waived any rights under any Material Company Contract.
(g) No Person is renegotiating, or has a right pursuant to the terms of any Material Company
Contract to renegotiate, any amount paid or payable to the Company under any Material Company
Contract or any other material term or provision of any Material Company Contract.
(h) Part 2.9(h) of the Company Disclosure Schedule provides an accurate and complete list of
all Consents required under any Company Contract to consummate the Merger and the other
Contemplated Transactions.
20.
2.10 Liabilities; Fees, Costs and Expenses.
(a) The Company does not have any accrued, contingent or other liabilities of any nature,
either matured or unmatured and whether due or to become due, that are required to be reflected in
financial statements in accordance with GAAP, except for: (i) liabilities identified as such in the
“liabilities” column of the Company Balance Sheet; (ii) current liabilities that have arisen since
the date of the Company Balance Sheet in the Ordinary Course of Business; and (iii) liabilities for
legal, accounting and other expenses in connection with the Contemplated Transactions.
(b) The Company has never effected or otherwise been involved in any “off-balance sheet
arrangements” (as defined in Item 303(a)(4)(ii) of Regulation S-K under the Exchange Act).
2.11 Compliance with Legal Requirements. The Company is, and has at all times been, in
compliance with all applicable Legal Requirements, except where the failure to be so in compliance,
individually or in the aggregate, has not had, and would not reasonably be expected to have, a
Company Material Adverse Effect. No event has occurred, and no condition or circumstance exists,
that will (with or without notice or lapse of time) constitute or result in a violation by the
Company of, or a failure on the part of the Company to comply with, any Legal Requirement. The
Company has not received any written notice or other communication from any Governmental Body or
any other Person regarding (a) any actual, alleged, possible or potential violation of, or failure
to comply with, any Legal Requirement, or (b) any actual, alleged, possible or potential obligation
on the part of the Company to undertake, or to bear all or any portion of the cost of, any cleanup
or any remedial, corrective or responsive action of any nature. To the Knowledge of the Company,
no Governmental Body has proposed or is considering any Legal Requirement that, if adopted or
otherwise put into effect, (a) will, or would reasonably be expected to, cause a Company Material
Adverse Effect, (b) would be reasonably expected to have an adverse effect on the Company’s ability
to comply with or perform any covenant or obligation under this Agreement or any of the Related
Agreements, or (c) would reasonably be expected to have the effect of preventing, delaying, making
illegal or otherwise interfering with the Merger or any of the Contemplated Transactions.
2.12 Governmental Authorizations. Part 2.12 of the Company Disclosure Schedule
identifies each material Governmental Authorization held by the Company, and the Company has
delivered or made available to Replidyne accurate and complete copies of all Governmental
Authorizations identified in Part 2.12 of the Company Disclosure Schedule. The Governmental
Authorizations identified in Part 2.12 of the Company Disclosure Schedule are valid and in full
force and effect, and collectively constitute all Governmental Authorizations necessary to enable
the Company to conduct its business in the manner in which its business is currently being
conducted and is proposed to be conducted. The Company is in compliance in all material respects
with the terms and requirements of the respective Governmental Authorizations identified in Part
2.12 of the Company Disclosure Schedule. The Company has not received any notice or other
communication from any Governmental Body regarding (a) any actual or possible violation of or
failure to comply with any term or requirement of any Governmental Authorization, or (b) any actual
or possible revocation, withdrawal, suspension, cancellation, termination or modification of any
Governmental Authorization.
2.13 Tax Matters.
(a) All Tax Returns required to be filed by or on behalf of the Company with any Governmental
Body with respect to any taxable period ending on or before the Closing Date (the “Company
Returns”) (i) have been or will be filed on or before the applicable due date (including any
extensions of such due date), and (ii) have been, or will be when filed, accurately and completely
prepared in all material respects. All Taxes due on or before the Closing Date (whether or not
shown on the Company Returns) have been or will be paid on or before the Closing Date. The Company
has delivered or made available to Replidyne accurate and complete copies of all Company Returns
filed
21.
which have been requested by Replidyne. The Company shall establish in its books and records,
in the Ordinary Course of Business, reserves adequate for the payment of all unpaid Taxes by the
Company for the period from January 1, 2008 through the Closing Date.
(b) All Taxes that the Company was required by law to withhold or collect have been duly
withheld or collected and, to the extent required, have been properly paid to the appropriate
Governmental Body.
(c) No Company Return has ever been examined or audited by any Governmental Body and no
examination or audit of any Company Return is currently in progress or, to the Knowledge of the
Company, threatened or contemplated. The Company has delivered or made available to Replidyne
accurate and complete copies of all audit reports, private letter rulings, revenue agent reports,
information document requests, notices of proposed deficiencies, deficiency notices, protests,
petitions, closing agreements, settlement agreements, pending ruling requests and any similar
documents submitted by, received by, or agreed to by or on behalf of the Company relating to the
Company Returns. No extension or waiver of the limitation period applicable to any of the Company
Returns has been granted (by the Company or any other Person), no such extension or waiver has been
requested from the Company and the Company has not executed or filed any power of attorney with any
taxing authority.
(d) The Company (i) has never been a member of an affiliated group (within the meaning of
Section 1504(a) of the Code) filing (or which it has been required to file) a consolidated federal
income Tax Return (other than a group the common parent of which was the Company), (ii) does not
have any liability for the Taxes of any person under Section 1.1502-6 of the Treasury Regulations
(or any similar provision of state, local or foreign law), as a transferee or successor, or
otherwise, and (iii) has never been a party to any joint venture, collaboration, partnership or
other agreement that could be treated as a partnership for Tax purposes. The Company is not, and
has never been, a party to or bound by any tax indemnity agreement, tax-sharing agreement, tax
allocation agreement or similar Contract. The Company has not been either a “distributing
corporation” or a “controlled corporation” in a distribution of stock intended to qualify for
tax-free treatment under Section 355 of the Code (y) in the two years prior to the date of this
Agreement or (z) which could otherwise constitute part of a “plan” or “series of related
transactions” (within the meaning of Section 355(e) of the Code) in conjunction with the Merger.
(e) No Company Subsidiary is or has been a passive foreign investment company within the
meaning of Sections 1291-1297 of the Code.
(f) The Company has not incurred (or been allocated) an “overall foreign loss” as defined in
Section 904(f)(2) of the Code which has not been previously recaptured in full as provided in
Sections 904(f)(1) and/or 904(f)(3) of the Code.
(g) The Company is not a party to a gain recognition agreement under Section 367 of the Code.
(h) No claim or Legal Proceeding is pending or has been threatened against or with respect to
the Company in respect of any Tax. There are no unsatisfied liabilities for Taxes with respect to
any notice of deficiency or similar document received by the Company with respect to any Tax (other
than liabilities for Taxes asserted under any such notice of deficiency or similar document which
are being contested in good faith by the Company and with respect to which adequate reserves for
payment have been established). There are no liens for Taxes upon any of the assets of the Company
except liens for current Taxes not yet due and payable.
22.
(i) The Company will not be required to include any item of income in, or exclude any item of
deduction from, taxable income for any period (or any portion thereof) ending after the Closing
Date as a result of any (i) deferred intercompany gain or any excess loss account described in
Treasury Regulations under Section 1502 of the Code (or any corresponding provision of state, local
or foreign Tax law), (ii) closing agreement as described in Section 7121 of the Code (or any
corresponding or similar provision of state, local or foreign Tax law) executed on or prior to the
Closing Date, (iii) installment sale or other open transaction disposition made on or prior to the
Closing Date, (iv) prepaid amount received on or prior to the Closing Date, or (v) any adjustment
pursuant to Section 481(a) of the Code in its current or in any future taxable period by reason of
a change in accounting method. To the Knowledge of the Company, the Internal Revenue Service (or
other taxing authority) has not proposed nor is considering proposing any such change in accounting
method and the Company does not have an application pending with any taxing authority requesting
permission for any change in accounting method.
(j) The Company is not, and has never been, a party to a transaction or agreement that is in
conflict with the Tax rules on transfer pricing in any relevant jurisdiction.
(k) Part 2.13(k) of the Company Disclosure Schedule sets forth a complete and accurate list of
any Company Subsidiaries for which a “check-the-box” election under Section 7701 has been made.
(l) The Company has not engaged in any “listed transaction” for purposes of Treasury
Regulation sections 1.6011-4(b)(2) or 301.6111-2(b)(2) or any analogous provision of state or local
law.
2.14 Employee and Labor Matters; Benefit Plans.
(a) Part 2.14(a) of the Company Disclosure Schedule accurately sets forth, as of the date of
this Agreement:
(i) with respect to each Key Employee of the Company, the name of such employee and the date
as of which such employee was originally hired by the Company;
(ii) with respect to each Key Employee of the Company, such employee’s title;
(iii) the base salary and potential bonus payable for 2008 for each Key Employee of the
Company as of the date of this Agreement;
(iv) any Governmental Authorization that is held by each Key Employee of the Company and that
is used in the Company’s business;
(v) the citizenship status of each Key Employee of the Company (whether such employee is a
U.S. citizen or otherwise) and, with respect to non U.S. citizens, identifies the visa or other
similar permit under which such employee is working for the Company and the dates of issuance and
expiration of such visa or other permit; and
(vi) with respect to all employees of the Company who are not Key Employees, the aggregate
number of such employees and the aggregate base salary of such employees in effect as of the date
of this Agreement.
23.
(b) The employment of the Company’s employees is terminable by the Company at will. The
Company has delivered or made available to Replidyne accurate and complete copies of all employee
manuals and handbooks, disclosure materials, policy statements and other materials governing the
terms and conditions of employment of the employees of the Company.
(c) To the Knowledge of the Company:
(i) no Key Employee of the Company intends to terminate his employment with the Company;
(ii) no Key Employee of the Company has received an offer that remains outstanding to join a
business that may be competitive with the Company’s business; and
(iii) no employee of the Company is a party to or is bound by any confidentiality agreement,
noncompetition agreement or other Contract (with any Person) that would be reasonably expected to
have an adverse effect on: (A) the performance by such employee of any of his duties or
responsibilities as an employee of the Company; or (B) the Company’s business or operations.
(d) The Company is not a party to or bound by, and the Company has never been a party to or
bound by, any union contract, collective bargaining agreement or similar Contract.
(e) The Company is not engaged, and the Company has never been engaged, in any unfair labor
practice of any nature. There has never been any slowdown, work stoppage, labor dispute or union
organizing activity, or any similar activity or dispute, affecting the Company. To the Company’s
Knowledge, no event has occurred, and no condition or circumstance exists, that might directly or
indirectly give rise to the commencement of any such slowdown, work stoppage, labor dispute or
union organizing activity or any similar activity or dispute. There are no actions, suits, claims,
labor disputes or grievances pending or, to the Knowledge of the Company, threatened or reasonably
anticipated relating to any labor, safety or discrimination matters involving any employee of the
Company, including, without limitation, charges of unfair labor practices or discrimination
complaints. The Company has good labor relations, and no reason to believe that the consummation of
the Merger or any of the other Contemplated Transactions will have a material adverse effect on the
Company’s labor relations.
(f) Except as set forth on Part 2.14(f) of the Company Disclosure Schedule, since January 1,
2006, there have not been any independent contractors who have provided services to the Company for
a period of six consecutive months or longer.
(g) Part 2.14(g) of the Company Disclosure Schedule identifies each Company Plan sponsored,
maintained, contributed to or required to be contributed to by the Company for the benefit of any
employee of the Company. Except to the extent required to comply with Legal Requirements, the
Company does not intend nor has it committed to establish or enter into any new Company Plan (as
defined in paragraph (s) below), or to modify any Company Plan.
(h) The Company has delivered or made available to Replidyne: (i) correct and complete copies
of all documents setting forth the terms of each Company Plan, including all amendments thereto and
all related trust documents; (ii) the three most recent annual reports (Form Series 5500 and all
schedules and financial statements attached thereto), if any, required under ERISA or the Code in
connection with each Company Plan; (iii) if the Company Plan is subject to the minimum funding
standards of Section 302 of ERISA, the most recent annual and periodic accounting of Company Plan
assets; (iv) the most recent summary plan description together with the summaries of material
modifications thereto, if any, required under ERISA with respect to each Company Plan; (v) all
material
24.
written Contracts relating to each Company Plan, including administrative service agreements
and group insurance contracts; (vi) all written materials provided to any employee of the Company
relating to any Company Plan and any proposed Company Plans, in each case, relating to any
amendments, terminations, establishments, increases or decreases in benefits, acceleration of
payments or vesting schedules or other events that would result in any liability to the Company;
(vii) all material correspondence from the last six years to or from any Governmental Body relating
to any Plan; (viii) the form of all COBRA forms and related notices; (ix) all insurance policies in
the possession of the Company pertaining to fiduciary liability insurance covering the fiduciaries
for each Company Plan; and (x) the most recent Internal Revenue Service determination or opinion
letter issued with respect to each Company Plan intended to be qualified under Section 401(a) of
the Code.
(i) Each Company Plan has been established and maintained substantially in accordance with its
terms and in substantial compliance with all applicable Legal Requirements, including ERISA and the
Code. Any Company Plan intended to be qualified under Section 401(a) of the Code has obtained a
favorable determination letter (or opinion letter, if applicable) as to its qualified status under
the Code or has remaining a period of time under applicable Treasury regulations or Internal
Revenue Service pronouncements in which to apply for such a letter and make any amendments
necessary to obtain a favorable determination as to the qualified status of that Company Plan. To
the Knowledge of the Company, no “prohibited transaction,” within the meaning of Section 4975 of
the Code or Sections 406 and 407 of ERISA, and not otherwise exempt under Section 408 of ERISA, has
occurred with respect to any Company Plan subject to ERISA or Section 4975 of the Code. There are
no claims or Legal Proceedings pending, or, to the Knowledge of the Company, threatened or
reasonably anticipated (other than routine claims for benefits), against any Company Plan or
against the assets of any Company Plan. Each Company Plan (other than any Company Plan to be
terminated prior to the Closing in accordance with this Agreement) can be amended, terminated or
otherwise discontinued after the Closing in accordance with its terms, without liability to
Replidyne, the Company or the Surviving Corporation (other than ordinary administration expenses).
There are no audits, inquiries or Legal Proceedings pending or, to the Knowledge of the Company,
threatened by any Governmental Body with respect to any Company Plan. The Company has never
incurred any penalty or tax with respect to any Company Plan under Section 502(i) of ERISA or
Sections 4975 through 4980 of the Code. The Company has made all contributions and other payments
required by and due under the terms of each Company Plan.
(j) The Company has never maintained, established, sponsored, participated in, or contributed
to any: (i) employee benefit pension plan (as defined in Section 3(2) of ERISA) (“Pension
Plan”) subject to Title IV of ERISA; or (ii) “multiemployer plan” within the meaning of Section
(3)(37)(A) of ERISA. The Company has never maintained, established, sponsored, participated in or
contributed to, any Pension Plan in which stock of the Company is or was held as a plan asset. The
Company has never maintained a Pension Plan or multiemployer plan, or the equivalent thereof, in a
foreign jurisdiction.
(k) No Company Plan provides (except at no cost to the Company), or reflects or represents any
liability of the Company to provide retiree life insurance, retiree health benefits or other
retiree employee welfare benefits to any Person for any reason, except as may be required by COBRA
or other applicable Legal Requirements, or any deferred compensation other than tax-qualified
“employee benefit pension plans” (as defined under ERISA), (such welfare and deferred compensation
benefits, collectively, “Post-Retirement Benefits”). Other than commitments made that
involve no future costs to the Company, the Company has never represented, promised or contracted
(whether in oral or written form) to any employee of the Company (either individually or to
employees of the Company as a group) or any other Person that such employee(s) or other Person
would be provided with Post-Retirement Benefits, except to the extent required by applicable Legal
Requirements. Part 2.14(k) of the Company Disclosure Schedule accurately identifies each former
employee of the Company who is receiving or is
25.
scheduled to receive (or whose spouse or other dependent is receiving or is scheduled to
receive) any benefits.
(l) Except as set forth in Part 2.14(l) of the Company Disclosure Schedule, neither the
execution of this Agreement nor the consummation of the Contemplated Transactions will (either
alone or upon the occurrence of any additional or subsequent events) constitute an event under any
Company Plan, Company Contract, trust or loan that will or may result (either alone or in
connection with any other circumstance or event) in any payment (whether of severance pay or
otherwise), acceleration, forgiveness of indebtedness, vesting, distribution, increase in benefits
or obligation to fund benefits with respect to any employees of the Company.
(m) The Company: (i) is, and at all times has been, in substantial compliance with all
applicable Legal Requirements respecting employment, employment practices, terms and conditions of
employment and wages and hours, in each case, with respect to their employees, including the
requirements of FMLA and any similar provision of state law; (ii) have withheld and reported all
amounts required by applicable Legal Requirements or by Contract to be withheld and reported with
respect to wages, salaries and other payments to their employees; (iii) is not liable for any
arrears of wages or any taxes or any penalty for failure to comply with the Legal Requirements
applicable to the foregoing; and (iv) is not liable for any payment to any trust or other fund
governed by or maintained by or on behalf of any Governmental Body with respect to unemployment
compensation benefits, social security or other benefits or obligations for their employees (other
than routine payments to be made in the normal course of business and consistent with past
practice). There are no pending or, to the Knowledge of the Company, threatened or reasonably
anticipated claims or Legal Proceedings against the Company under any worker’s compensation policy
or long-term disability policy.
(n) The Company is not required to be, and, to the Knowledge of the Company, has never been
required to be, treated as a single employer with any other Person under Section 4001(b)(1) of
ERISA or Section 414(b), (c), (m) or (o) of the Code. The Company has never been a member of an
“affiliated service group” within the meaning of Section 414(m) of the Code.
(o) There is no agreement, plan, arrangement or other Contract covering any employee or
independent contractor or former employee or independent contractor of the Company that, considered
individually or considered collectively with any other such Contracts and/or other events, will, or
could reasonably be expected to, give rise directly or indirectly to the payment of any amount that
would not be deductible pursuant to Section 280G or Section 162(m) of the Code. The Company is not
a party to any Contract, nor does the Company have any obligation (current or contingent), to
compensate any individual for excise taxes paid pursuant to Section 4999 of the Code.
(p) Any employee plan of the Company, which includes any and all employment agreements, change
in control agreements and any other similar individual agreements with employees or consultants,
salary, bonus, deferred compensation, incentive compensation, stock purchase, stock option,
severance pay, termination pay, hospitalization, medical, life or other insurance, supplemental
unemployment benefits, profit-sharing, pension or retirement plan, any other material program or
agreement, whether or not subject to ERISA (collectively, the “Company Plans”) sponsored,
maintained, contributed to or required to be contributed to by the Company for the benefit of any
employee of the Company and which is a “nonqualified deferred compensation plan” (as defined in
Section 409A(d)(1) of the Code) has been operated since January 1, 2006 in good faith compliance
with Section 409A of the Code and the proposed regulations and other guidance issued with respect
thereto as to avoid any additional Tax pursuant to Section 409A(a)(1)(B)(i)(II) of the Code.
26.
2.15 Environmental Matters. The Company is in compliance in all material respects with
all applicable Environmental Laws, which compliance includes the possession by the Company of all
permits and other Governmental Authorizations required under applicable Environmental Laws, and
compliance with the terms and conditions thereof. The Company has not received any written notice
or other communication (in writing or otherwise), whether from a Governmental Body, citizens group,
employee or otherwise, that alleges that the Company is not in compliance with any Environmental
Law, and, to the Knowledge of the Company, there are no circumstances that may prevent or interfere
with the Company’s compliance with any Environmental Law in the future. To the Knowledge of the
Company: (i) no current or prior owner of any property leased or controlled by the Company has
received any written notice or other communication relating to property owned or leased at any time
by the Company, whether from a Governmental Body, citizens group, employee or otherwise, that
alleges that such current or prior owner or the Company is not in compliance with or violated any
Environmental Law relating to such property and (ii) it has no liability under any Environmental
Law (including without limitation corrective, investigatory or remedial obligations). All
Governmental Authorizations currently held by the Company pursuant to Environmental Laws are
identified in Part 2.15 of the Company Disclosure Schedule.
2.16 Insurance. The Company maintains insurance policies with reputable insurance
carriers against all risks of a character as usually insured against, and in such coverage amounts
as are usually maintained, by similarly situated companies in the same or similar businesses. Each
such insurance policy is in full force and effect. Since January 1, 2006, the Company has not made
any claim under any insurance policy or received any written notice or other communication
regarding any actual or possible (a) cancellation or invalidation of any insurance policy, (b)
refusal of any coverage or rejection of any claim under any insurance policy, or (c) material
adjustment in the amount of the premiums payable with respect to any insurance policy.
2.17 Related Party Transactions. Except as set forth in Part 2.17 of the Company
Disclosure Schedule, (a) no Company Related Party has, and no Company Related Party has at any time
since January 1, 2006 had, any direct or indirect interest in any asset used in or otherwise
relating to the business of the Company; (b) no Company Related Party is, or has been, indebted to
the Company; (c) since January 1, 2006, no Company Related Party has entered into, or has had any
direct or indirect financial interest in, any Company Contract, transaction or business dealing
involving the Company; (d) no Company Related Party is competing, or has at any time since January
1, 2006 competed, directly or indirectly, with the Company; and (e) no Company Related Party has
any claim or right against the Company (other than rights under capital stock of the Company and
rights to receive compensation for services performed as an employee of the Company).
2.18 Legal Proceedings; Orders.
(a) Except as set forth in Part 2.18(a) of the Company Disclosure Schedule, there is no
pending Legal Proceeding, and to the Knowledge of the Company, no Person has threatened to commence
any Legal Proceeding: (i) that involves the Company or any of its directors or officers (in their
capacities as such) or any of the assets owned, used or controlled by the Company; or (ii) that
challenges, or that may have the effect of preventing, delaying, making illegal or otherwise
interfering with, the Merger or any of the other Contemplated Transactions. To the Knowledge of the
Company, no event has occurred, and no claim, dispute or other condition or circumstance exists,
that will, or that would reasonably be expected to, give rise to or serve as a basis for the
commencement of any such Legal Proceeding.
(b) There is no order, writ, injunction, judgment or decree to which the Company or any of the
assets owned or used by the Company, is subject. To the Knowledge of the Company, none of
27.
its Related Parties is subject to any order, writ, injunction, judgment or decree that relates
to the Company’s business or to any assets owned or used by the Company.
2.19 Authority; Binding Nature of Agreement. The Company has the absolute and
unrestricted corporate right, power and authority to enter into and to perform its obligations
under this Agreement and the Related Agreements to which it is a party; and the execution, delivery
and performance by the Company of this Agreement and the Related Agreements to which it is a party
have been duly authorized by all necessary corporate action on the part of the Company, the Special
Committee and the board of directors and stockholders of the Company, subject only to obtaining the
Required Company Stockholder Vote and the filing and recordation of the Articles of Merger pursuant
to the MBCA. This Agreement and each of the Related Agreements to which the Company is a party has
been duly executed and delivered by the Company, and assuming due authorization, execution and
delivery by the other Parties thereto, constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, subject to (a) laws of
general application relating to bankruptcy, insolvency and the relief of debtors, and (b) rules of
law governing specific performance, injunctive relief and other equitable remedies.
2.20 Non-Contravention; Consents. Subject to compliance with the applicable
requirements of the HSR Act, obtaining the Required Company Stockholder Vote for the applicable
Contemplated Transactions and obtaining the Company Consents, and the filing of Articles of Merger
as required by MBCA, neither (a) the execution, delivery or performance of this Agreement or any of
the Related Agreements, nor (b) the consummation of the Merger or any of the other Contemplated
Transactions, will directly or indirectly (with or without notice or lapse of time):
(a) contravene, conflict with or result in a violation of any of the provisions of the Company
Constituent Documents;
(b) contravene, conflict with or result in a violation of, or give any Governmental Body or
other Person the right to challenge any of the Contemplated Transactions or to exercise any remedy
or obtain any relief under, any Legal Requirement or any order, writ, injunction, judgment or
decree to which the Company, or any of the assets owned or used by the Company, is subject;
(c) contravene, conflict with or result in a violation of any of the terms or requirements of,
or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate or modify,
any Governmental Authorization that is held by the Company or that otherwise relates to the
Company’s business or to any of the assets owned or used by the Company;
(d) result in a material conflict, violation or breach of, or result in a material default
under, any provision of any Material Company Contract, or give any Person the right to (i) declare
a default or exercise any remedy under any such Material Company Contract, (ii) accelerate the
maturity or performance of any such Material Company Contract, or (iii) cancel, terminate or modify
any such Material Company Contract; or
(e) result in the imposition or creation of any Encumbrance upon or with respect to any asset
owned or used by the Company (except for minor liens that will not, in any case or in the
aggregate, materially detract from the value of the assets subject thereto or materially impair the
operations of the Company).
Except for those filings, notices or Consents disclosed in Part 2.20 of the Company Disclosure
Schedule (the “Company Consents”), no filing with, notice to or Consent from any Person is
required in connection
28.
with (y) the execution, delivery or performance of this Agreement or any of the Related Agreements,
or (z) the consummation of the Merger or any of the other Contemplated Transactions.
2.21 Vote Required. The affirmative vote of (i) the holders of a majority of the
outstanding shares of Company Common Stock and Company Preferred Stock entitled to vote thereon,
voting as a single class on an as-converted basis, and (ii) the holders of a majority of the
outstanding shares of Company Preferred Stock entitled to vote thereon, voting as a single class on
an as-converted basis and including the shares of Company Preferred Stock held by Easton and
Maverick (the “Required Company Stockholder Vote”), are the only votes of the holders of
any class or series of capital stock of the Company necessary to adopt this Agreement and approve
the consummation of the Merger and the other Contemplated Transactions.
2.22 Regulatory Compliance. All Company Products that are subject to the jurisdiction
of any Governmental Body are being manufactured, labeled, stored, tested, developed, distributed,
and marketed in compliance in all material respects with all applicable Legal Requirements.
2.23 Anti-Takeover Law. Each of the board of directors of the Company and the Special
Committee has taken all action necessary or required to render inapplicable to the Merger, this
Agreement or any agreement contemplated hereby and the Contemplated Transactions (a) any takeover
provision in the Company Constituent Documents, (b) any takeover provision in any Company Contract,
and (c) any takeover provision in any applicable state law.
2.24 No Financial Advisor. No broker, finder or investment banker is entitled to any
brokerage fee, finder’s fee, opinion fee, success fee, transaction fee or other fee or commission
in connection with the Merger or any of the other Contemplated Transactions based upon arrangements
made by or on behalf of the Company.
2.25 Certain Payments. Neither the Company nor to the Company’s Knowledge any officer,
employee, agent or other Person associated with or acting for or on behalf of the Company, has at
any time, directly or indirectly:
(a) used any corporate funds (i) to make any unlawful political contribution or gift or for
any other unlawful purpose relating to any political activity, (ii) to make any unlawful payment to
any governmental official or employee, or (iii) to establish or maintain any unlawful or unrecorded
fund or account of any nature;
(b) made any false or fictitious entry, or failed to make any entry that should have been
made, in any of the books of account or other records of the Company;
(c) made any payoff, influence payment, bribe, rebate, kickback or unlawful payment to any
Person;
(d) performed any favor or given any gift which was not deductible for federal income tax
purposes;
(e) made any payment (whether or not lawful) to any Person, or provided (whether lawfully or
unlawfully) any favor or anything of value (whether in the form of property or services, or in any
other form) to any Person, for the purpose of obtaining or paying for (i) favorable treatment in
securing business, or (ii) any other special concession; or
29.
(f) agreed or committed to take any of the actions described in clauses “(a)” through “(e)”
above.
2.26 SEC Filings.
(a) The Company has made all filings with the SEC required under the applicable requirements
of the Securities Act and the Exchange Act. The Company has delivered or made available (including
through XXXXX) to the Company accurate and complete copies (excluding copies of exhibits) of each
report, schedule, registration statement and definitive proxy statement filed by the Company with
the SEC on or after September 30, 2008 (the “Company SEC Documents”). All Company SEC
Documents (x) were filed on a timely basis, (y) at the time filed (or, if amended or superseded by
a later filing prior to the date of this Agreement, than on the date of such later filing), were
prepared in compliance in all material respects with the applicable requirements of the Securities
Act or the Exchange Act, as the case may be, and the rules and regulations of the SEC thereunder
applicable to such Company SEC Documents, and (z) did not at the time they were filed contain any
untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the circumstances in which they
were made, not misleading.
(b) PricewaterhouseCoopers LLP, the Company’s auditors are, and have been at all times during
their engagement by the Company (i) “independent” with respect to the Company within the meaning of
Regulation S-X and (ii) to the Knowledge of the Company, in compliance with subsections (g) through
(l) of Section 10A of the Exchange Act (to the extent applicable) and the related rules of the SEC
and the public company accounting oversight board, in each case as such subsections and rules apply
to PricewaterhouseCoopers LLP’s engagement with the Company.
2.27 Controls and Procedures, Certifications and Other Matters Relating to the
Xxxxxxxx-Xxxxx Act.
(a) The Company maintains internal control over financial reporting that provide assurance
that (i) records are maintained in reasonable detail and accurately and fairly reflect the
transactions and dispositions of the Company’s assets, (ii) transactions are executed with
management’s authorization, and (iii) transactions are recorded as necessary to permit preparation
of the consolidated financial statements of the Company and to maintain accountability for the
Company’s consolidated assets.
(b) The Company maintains disclosure controls and procedures required by Rules 13a-15 or
15d-15 under the Exchange Act, and such controls and procedures are effective to ensure that all
material information concerning the Company is made known on a timely basis to the individuals
responsible for the preparation of the Company’s filings with the SEC and other public disclosure
documents.
(c) Neither the Company nor any of its officers has received notice from any Governmental
Entity questioning or challenging the accuracy, completeness or manner of filing or submission of
any filing with the SEC, including without limitation any certifications required by Section 906 of
the Xxxxxxxx-Xxxxx Act.
(d) The Company has not, since September 30, 2008, extended or maintained credit, arranged for
the extension of credit, modified or renewed an extension of credit, in the form of a personal loan
or otherwise, to or for any director or officer of the Company.
30.
2.28 Disclosure.
(a) This Agreement (including the Company Disclosure Schedule) does not, and the certificate
to be delivered pursuant to Section 7.4(a) will not: (i) contain any representation, warranty or
information that is inaccurate or misleading with respect to any material facts; or (ii) omit to
state any material fact necessary in order to make the representations, warranties and information
contained and to be contained herein, in the light of the circumstances under which such
representations, warranties and information were or will be made or provided, not false or
misleading.
(b) The information supplied by or on behalf of the Company for inclusion or incorporation by
reference in the Form S-4 Registration Statement (including any Company Financial Statements) will
not, as of the time the Form S-4 Registration Statement is filed with the SEC or at the time it
becomes effective under the Securities Act, (i) contain any statement that is inaccurate or
misleading with respect to any material facts, or (ii) omit to state any material fact necessary in
order to make such information, in the light of the circumstances under which such information will
be provided, not false or misleading. The information supplied by or on behalf of the Company for
inclusion or incorporation by reference in the Joint Proxy Statement/Prospectus (including any
Company Financial Statements) will not, as of the date the Joint Proxy Statement/Prospectus is
mailed to the stockholders of Replidyne or the Company or at the time of the Replidyne
Stockholders’ Meeting or the Company Stockholders’ Meeting, (i) contain any statement that is
inaccurate or misleading with respect to any material facts, or (ii) omit to state any material
fact necessary in order to make such information, in the light of the circumstances under which
such information will be provided, not false or misleading.
3. REPRESENTATIONS AND WARRANTIES OF REPLIDYNE AND MERGER SUB
Replidyne and Merger Sub represent and warrant to the Company as follows, except as set forth in
the written disclosure schedule delivered or made available by Replidyne to the Company (the
“Replidyne Disclosure Schedule”). The Replidyne Disclosure Schedule shall be arranged in
sections and subsections corresponding to the numbered and lettered sections and subsections
contained in this Section 3. The disclosure in any section or subsection of the Replidyne
Disclosure Schedule shall qualify other sections and subsections in this Section 3 if the
applicability of the disclosure contained in such section or subsection of the Replidyne Disclosure
Schedule to the other representations in this Section 3 is readily apparent on its face.
3.1 Due Organization; Subsidiaries; Etc.
(a) Replidyne is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware, with the corporate power and authority to carry on its business
as now being conducted and as currently proposed to be conducted. Merger Sub is a corporation duly
organized, validly existing and in good standing under the laws of the State of Minnesota, with the
corporate power and authority to carry on its business as now being conducted and as currently
proposed to be conducted.
(b) Replidyne has not conducted any business under or otherwise used, for any purpose or in
any jurisdiction, any fictitious name, assumed name, trade name or other name, other than the name
“Replidyne, Inc.”
(c) Replidyne and Merger Sub are not and have not been required to be qualified, authorized,
registered or licensed to do business as a foreign corporation in any jurisdiction other than the
jurisdictions identified in Part 3.1(c) of the Replidyne Disclosure Schedule, except where the
failure to be so qualified, authorized, registered or licensed has not had, and would not
reasonably be expected to have, a Replidyne Material Adverse Effect. Replidyne and Merger Sub and
each of their respective Subsidiaries
31.
are each in good standing as a foreign corporation in each of the jurisdictions identified in
Part 3.1(c) of the Replidyne Disclosure Schedule.
(d) Part 3.1(d) of the Replidyne Disclosure Schedule accurately sets forth (i) the names of
the members of the board of directors of Replidyne, (ii) the names of the members of each committee
of the board of directors of Replidyne and (iii) the names and titles of Replidyne’s officers.
(e) Replidyne has no Subsidiaries (other than Merger Sub). Replidyne has not agreed and is not
obligated to make any future investment in or capital contribution to any Entity. Replidyne has
not guaranteed and is not responsible or liable for any obligation of any of the Entities in which
it owns or has owned any equity or other financial interest.
3.2 Certificate of Incorporation and Bylaws; Records. Replidyne and Merger Sub have
delivered or made available to the Company accurate and complete copies of: (a) Replidyne’s
Certificate of Incorporation and Bylaws, and the Articles of Incorporation and Bylaws of Merger
Sub, in each case including all amendments thereto; (b) the stock records of Replidyne and Merger
Sub; and (c) the minutes and other records of the meetings and other proceedings (including any
actions taken by written consent or otherwise without a meeting) of the stockholders, the boards of
directors and all committees of the boards of directors of Replidyne and Merger Sub (the items
described in (a) and (b) above, collectively, the “Replidyne Constituent Documents”).
There have been no formal meetings or actions taken by written consent or otherwise without a
meeting of the stockholders of Replidyne or Merger Sub, the board of directors of Replidyne or
Merger Sub or any committee of the board of directors of Replidyne or Merger Sub that are not fully
reflected in the minutes and other records delivered or made available to the Company pursuant to
clause (c) above. There has not been any violation of the Replidyne Constituent Documents, and
Replidyne has not taken any action that is inconsistent with the Replidyne Constituent Documents.
Except as set forth in Part 3.2 to the Replidyne Disclosure Schedule, the books of account, stock
records, minute books and other records of Replidyne are accurate, up to date and complete in all
material respects, and have been maintained in accordance with prudent business practices.
3.3 Capitalization, Etc.
(a) As of the date of this Agreement, the authorized capital stock of Replidyne consists of:
100,000,000 shares of Replidyne Common Stock and 5,000,000 shares of Preferred Stock, par value
$0.001 per share. As of the date of this Agreement, 27,109,545 shares of Replidyne Common Stock and
no shares of Replidyne Preferred Stock are issued and outstanding. All of the outstanding shares of
Replidyne Common Stock have been duly authorized and validly issued, and are fully paid and non
assessable. Part 3.3(a) of the Replidyne Disclosure Schedule provides an accurate and complete
description of the terms of each repurchase option which is held by Replidyne and to which any
shares of capital stock of Replidyne is subject and identifies the Contract underlying such right.
Except as provided in the Replidyne Certificate of Amendment, Replidyne has not authorized shares
other than as set forth in this Section 3.3(a) and as of the date of this Agreement there are no
issued and outstanding shares of Replidyne’s capital stock other than the shares of Replidyne
Common Stock as set forth in this Section 3.3(a). There are no declared but unpaid dividends with
respect to any shares of capital stock of Replidyne. As of the date of this Agreement, there are
49,882 shares of capital stock of Replidyne held in Replidyne’s treasury.
(b) As of the date of this Agreement, Replidyne has reserved 7,946,405 shares of Replidyne
Common Stock for issuance under the Replidyne 2006 Equity Incentive Plan, of which options to
purchase 3,385,617 shares of Replidyne Common Stock are outstanding as of the date of this
Agreement. Each grant of a Replidyne Option was duly authorized no later than the date on which
the grant of such Replidyne Option was by its terms to be effective by all necessary corporate
action,
32.
including, as applicable, approval by the board of directors or compensation committee of
Replidyne and any required stockholder approval by the necessary number of votes or written
consents, and the award agreement governing such grant (if any) was duly executed and delivered by
each party thereto, each such grant was made in accordance with the terms of the Replidyne 2006
Equity Incentive Plan and all other applicable Legal Requirements and the per share exercise price
of each Replidyne Option was equal to the fair market value of a share of Replidyne Common Stock on
the applicable date of grant. As of the date of this Agreement, Replidyne has reserved 305,872
shares of Replidyne Common Stock for issuance under its Replidyne 2006 Employee Stock Purchase
Plan, of which 139,584 shares of Replidyne Common Stock are outstanding as of the date of this
Agreement. Except as set forth in this Section 3.3(b) or in Part 3.3(b) of the Replidyne Disclosure
Schedule, there is no: (i) outstanding subscription, option, call, warrant or right (whether or not
currently exercisable) to acquire any shares of capital stock or other securities of Replidyne;
(ii) outstanding security, instrument or obligation that is or may become convertible into or
exchangeable for any shares of capital stock or other securities of Replidyne; (iii) Contract under
which Replidyne is or may become obligated to sell or otherwise issue any shares of its capital
stock or any other securities of Replidyne; or (iv) condition or circumstance that would give rise
to or provide a basis for the assertion of a claim by any Person to the effect that such Person is
entitled to acquire or receive any shares of capital stock or other securities of Replidyne.
Replidyne has not issued any debt securities which grant the holder thereof any right to vote on,
or veto, any action of Replidyne.
(c) Except as set forth in Part 3.3(c) of the Replidyne Disclosure Schedule, all outstanding
shares of Replidyne Common Stock, and all outstanding Replidyne Options, have been issued and
granted in compliance with (i) all applicable federal and state securities laws, (ii) all other
applicable Legal Requirements, except as would not reasonably be expected to have a Replidyne
Material Adverse Effect, and (iii) all requirements set forth in Replidyne Constituent Documents
and applicable Contracts.
3.4 SEC Filings; Financial Statements.
(a) Replidyne has made all filings with the SEC required under the applicable requirements of
the Securities Act and the Exchange Act. Replidyne has delivered or made available (including
through XXXXX) to the Company accurate and complete copies (excluding copies of exhibits) of each
report, schedule, registration statement and definitive proxy statement filed by Replidyne with the
SEC on or after January 1, 2006 (the “Replidyne SEC Documents”). Replidyne has resolved
with the staff of the SEC any comments it may have received since January 1, 2006 and prior to the
date of this Agreement with respect to the Replidyne SEC Documents in comment letters to Replidyne
from the staff of the SEC or, to the extent such comments are unresolved, has disclosed such
unresolved comments in the Replidyne SEC Documents. All Replidyne SEC Documents (x) were filed on
a timely basis, (y) at the time filed (or, if amended or superseded by a later filing prior to the
date of this Agreement, than on the date of such later filing), were prepared in compliance in all
material respects with the applicable requirements of the Securities Act or the Exchange Act, as
the case may be, and the rules and regulations of the SEC thereunder applicable to such Replidyne
SEC Documents, and (z) did not at the time they were filed contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances in which they were made, not
misleading.
(b) The financial statements contained in the Replidyne SEC Documents (including, in each
case, any related notes thereto): (i) complied as to form in all material respects with the
published rules and regulations of the SEC applicable thereto; (ii) were prepared in accordance
with GAAP applied on a consistent basis throughout the periods covered, except as may be indicated
in the notes to such financial statements and except that the unaudited interim financial
statements contained in the Replidyne SEC Documents do not contain footnotes as permitted by Form
10-Q of the Exchange Act; and (iii) fairly present in all material respects the financial position
of Replidyne as of the respective dates thereof and
33.
the results of operations and cash flows of Replidyne for the periods covered thereby, except
that the unaudited interim consolidated financial statements contained in the Replidyne SEC
Documents were or are subject to normal year-end audit adjustments.
(c) KPMG LLP, Replidyne’s auditors are, and have been at all times during their engagement by
Replidyne (i) “independent” with respect to Replidyne within the meaning of Regulation S-X and (ii)
to the Knowledge of Replidyne, in compliance with subsections (g) through (l) of Section 10A of the
Exchange Act (to the extent applicable) and the related rules of the SEC and the public company
accounting oversight board, in each case as such subsections and rules apply to KPMG LLP’s
engagement with Replidyne.
3.5 Absence of Changes. Except as set forth in Part 3.5 of the Replidyne Disclosure
Schedule, from June 30, 2008 through the date of this Agreement:
(a) there has not been any Replidyne Material Adverse Effect, and no event has occurred that
will, or would reasonably be expected to, cause a Replidyne Material Adverse Effect;
(b) there has not been any material loss, damage or destruction to, or any material
interruption in the use of, any of the assets of Replidyne (whether or not covered by insurance);
(c) Replidyne has not declared, accrued, set aside or paid any dividend or made any other
distribution in respect of any shares of its capital stock, and has not repurchased, redeemed or
otherwise reacquired any shares of its capital stock or other securities;
(d) Replidyne has not sold, issued, granted or authorized the issuance of (i) any capital
stock or other securities of Replidyne (other than upon the exercise of outstanding Replidyne
Options or Replidyne Warrants); (ii) any option, call or right to acquire any capital stock or any
other security of Replidyne; (iii) any instrument convertible into or exchangeable for any capital
stock or other security of Replidyne; or (iv) reserved for issuance any additional grants or shares
under the Replidyne 2006 Equity Incentive Plan or the Replidyne 2006 Employee Stock Purchase Plan;
(e) Replidyne has not amended or waived any of its rights under, or permitted the acceleration
of vesting under, the Replidyne 2006 Equity Incentive Plan, the Replidyne 2006 Employee Stock
Purchase Plan, any Replidyne Option or agreement evidencing or relating to any outstanding stock
option or warrant, any restricted stock purchase agreement, or any other Contract evidencing or
relating to any equity award;
(f) there has been no amendment to any Replidyne Constituent Document and Replidyne has not
effected or been a party to any Acquisition Transaction, recapitalization, reclassification of
shares, stock split, reverse stock split or similar transaction;
(g) Replidyne has not formed any Replidyne Subsidiary or acquired any equity interest or other
interest in any other Entity;
(h) Replidyne has not made any capital expenditure which, when added to all other capital
expenditures made on behalf of Replidyne, exceeds $100,000;
(i) Replidyne has not (i) entered into or permitted any of the assets owned or used by it to
become bound by any Contract that contemplates or involves (A) the payment or delivery of cash or
other consideration in an amount or having a value in excess of $100,000 in the aggregate, or (B)
the purchase or sale of any product, or performance of services by or to Replidyne having a value
in excess of
34.
$100,000 in the aggregate, or (ii) waived any right or remedy under any Contract, or amended
or prematurely terminated any Contract;
(j) Replidyne has not (i) acquired, leased or licensed any right or other asset from any other
Person, (ii) sold or otherwise disposed of, or leased or licensed, any right or other asset to any
other Person, or (iii) waived or relinquished any right;
(k) Replidyne has not written off as uncollectible, or established any extraordinary reserve
with respect to, any account receivable or other indebtedness;
(l) Replidyne has not made any pledge of any of its assets or otherwise permitted any of its
assets to become subject to any Encumbrance;
(m) Replidyne has not (i) lent money to any Person (other than pursuant to routine travel
advances made to employees in the Ordinary Course of Business or otherwise in accordance with its
normal operations and consistent with its past practices), or (ii) incurred or guaranteed any
indebtedness for borrowed money or (iii) issued or sold any debt securities or options, warrants,
calls or similar rights to acquire any debt securities of Replidyne;
(n) Replidyne has not (i) established or adopted any employee benefit plan, (ii) paid any
bonus or made any profit sharing, incentive compensation or similar payment to, or increased the
amount of the wages, salary, commissions, fringe benefits or other compensation or remuneration
payable to, any of its directors, officers or employees, or (iii) hired any new employee;
(o) Replidyne has not changed any of its personnel policies or other business policies, or any
of its methods of accounting or accounting practices in any respect;
(p) Replidyne has not made any material Tax election;
(q) Replidyne has not changed any of its methods of accounting or accounting practices in any
respect;
(r) Replidyne has not threatened, commenced, settled or become subject to any Legal
Proceeding;
(s) Replidyne has not paid, discharged or satisfied any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise) other than the payment,
discharge or satisfaction of non-material amounts as required by any Replidyne Contract or Legal
Requirement;
(t) Replidyne has not entered into any transaction or taken any other action outside of the
sale or disposition of assets and payment of liabilities in connection with winding up its
business, other than entering into this Agreement and the Contemplated Transactions;
(u) Replidyne has not amended or prematurely terminated, or waived any material right or
remedy under, any Replidyne Contract; and
(v) Replidyne has not agreed to take, or committed to take, any of the actions referred to in
clauses “(c)” through “(u)” above.
35.
3.6 Liabilities; Fees, Costs and Expenses.
(a) Except as set forth on Part 3.6(a) of the Replidyne Disclosure Schedule, Replidyne does
not have any accrued, contingent or other liabilities of any nature, either matured or unmatured
and whether due or to become due, that are required to be reflected in financial statements in
accordance with GAAP, except for: (i) liabilities identified as such in the “liabilities” column of
the unaudited balance sheet of Replidyne as of June 30, 2008 (the “Replidyne Balance
Sheet”); (ii) current liabilities that have arisen since the date of the Replidyne Balance
Sheet in the Ordinary Course of Business or otherwise in accordance with its normal operations and
consistent with its past practices; and (iii) liabilities for legal, accounting and other expenses
in connection with the Contemplated Transactions.
(b) Replidyne has never effected or otherwise been involved in any “off-balance sheet
arrangements” (as defined in Item 303(a)(4)(ii) of Regulation S-K under the Exchange Act).
3.7 Compliance with Legal Requirements. Replidyne is and at all times has been in
compliance with all applicable Legal Requirements, except where the failure to be so in compliance,
individually or in the aggregate, has not had, and would not reasonably be expected to have, a
Replidyne Material Adverse Effect. No event has occurred, and no condition or circumstance exists,
that will (with our without notice or lapse of time) constitute or result in a violation by
Replidyne of, or a failure on the party of Replidyne to comply with, any Legal Requirement. Except
as set forth in Part 3.7 of the Replidyne Disclosure Schedule, Replidyne has not received any
written notice or other communication from any Governmental Body or any other person regarding (a)
any actual, alleged, possible or potential violation of, or failure to comply with, any Legal
Requirement, or (b) any actual, alleged, possible or potential obligation on the part of Replidyne
to undertake, or to bear all, or any portion of the cost of, any cleanup or any remedial,
corrective or responsive action of any nature. To the Knowledge of Replidyne, no Governmental Body
has proposed or is considering any Legal Requirement that, if adopted or otherwise put into effect,
(a) will, or would reasonably be expected to, cause a Replidyne Material Adverse Effect, (b) would
be reasonably expected to have an adverse effect on Replidyne’s ability to comply with or perform
any covenant or obligation under this Agreement or the Related Agreements, or (c) would be
reasonably expected to have the effect of preventing, delaying, making illegal or otherwise
interfering with the Merger or any of the Contemplated Transactions.
3.8 Equipment; Leasehold.
(a) Except as set forth in Part 3.8(a) of the Replidyne Disclosure Schedule, Replidyne owns,
and has good and valid title to, all equipment and other tangible assets purported to be owned by
it, free and clear of any liens or other Encumbrances. All items of equipment and other tangible
assets owned by or leased to Replidyne (i) are adequate for the uses to which they are being put
and (ii) are adequate for the conduct of Replidyne’s business in the manner in which such business
is currently being conducted and as it is proposed to be conducted.
(b) Replidyne does not own any real property or any interest in real property, except for the
leasehold interest created under the real property leases identified in Part 3.8(b) of the
Replidyne Disclosure Schedule. All premises leased or subleased by Replidyne are supplied with
utilities and other services necessary for the operation of their respective businesses.
3.9 Intellectual Property.
(a) Part 3.9(a) of the Replidyne Disclosure Schedule accurately identifies (i) each item of
Replidyne Registered IP; and (ii) the jurisdiction in which such item of Replidyne Registered IP
has been registered or filed and the applicable registration or serial number. Replidyne has
delivered or made available to the Company complete and accurate copies of all applications,
correspondence, and other material documents related to each such item of Replidyne Registered IP.
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(b) Part 3.9(b) of the Replidyne Disclosure Schedule accurately identifies (i) each Replidyne
contract pursuant to which any Person has been granted any license under, or otherwise has received
or acquired any right (whether or not currently exercisable) or interest in, any Replidyne IP
Rights; and (ii) each Replidyne contract involving Replidyne IP Rights licensed to Replidyne (other
than any non-customized software that is so licensed solely in executable or object code form
pursuant to a non-exclusive, internal use, software license granted in the Ordinary Course of
Business or otherwise in accordance with its normal operations and consistent with its past
practices). Replidyne is not bound by, and no Replidyne IP Rights are subject to, any Contract
containing any covenant or other provision that in any way limits or restricts the ability of
Replidyne to use, exploit, assert, or enforce any Replidyne IP Rights anywhere in the world.
(c) Part 3.9(c) of the Replidyne Disclosure Schedule accurately identifies all Contracts in
which Intellectual Property Rights or Intellectual Property embodied or incorporated in the
Replidyne Products are licensed to Replidyne (other than any non-customized software that (i) is so
licensed solely in executable or object code form pursuant to a non-exclusive, internal use
software license, (ii) is not incorporated into, or used directly in the development,
manufacturing, or distribution of, any of Replidyne’s products or services, and (iii) was licensed
to Replidyne in the Ordinary Course of Business or otherwise in accordance with its normal
operations and consistent with its past practices).
(d) Replidyne has delivered or made available to the Company a complete and accurate copy of
each standard form of Replidyne IP Rights Agreement used by Replidyne, including each standard form
of (i) license agreement; (ii) distribution or reseller agreement; (iii) employee agreement
containing intellectual property assignment or license of Replidyne IP Rights or any
confidentiality provision; (iv) consulting or independent contractor agreement containing
intellectual property assignment or license of Replidyne IP Rights or any confidentiality
provision; and (v) confidentiality or nondisclosure agreement, and no Replidyne IP Rights Agreement
deviates in any material respect from the corresponding standard form agreement delivered or made
available to the Company.
(e) Replidyne and Replidyne’s Subsidiaries exclusively own all right, title, and interest to
and in Replidyne IP Rights (other than Replidyne IP Rights exclusively licensed to Replidyne or
Replidyne’s Subsidiaries) free and clear of any Encumbrances (other than non-exclusive licenses of
Replidyne IP Rights). Without limiting the generality of the foregoing:
(i) To the Knowledge of Replidyne, all documents and instruments necessary to register or
apply for or renew registration of Replidyne in Replidyne Registered IP have been validly executed,
delivered, and filed in a timely manner with the appropriate Governmental Body.
(ii) Each Person who is or was an employee or contractor of Replidyne and who is or was
involved in the creation or development of any Replidyne IP Rights has signed a valid, enforceable
agreement containing an assignment of Intellectual Property Rights to Replidyne and confidentiality
provisions protecting trade secrets and confidential information of Replidyne. No current or former
stockholder, officer, director, or employee of Replidyne has any claim, right (whether or not
currently exercisable), or interest to or in any Replidyne IP Rights. No employee of Replidyne is
(a) bound by or otherwise subject to any Contract restricting him or her from performing his or her
duties for Replidyne or (b) in breach of any Contract with any former employer or other Person
concerning Replidyne IP Rights or confidentiality obligations due to his or her activities as an
employee of Replidyne.
(iii) No funding, facilities, or personnel of any Governmental Body were used, directly or
indirectly, to develop or create, in whole or in part, any Replidyne IP Rights in which
Replidyne has an ownership interest.
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(iv) Replidyne has taken all reasonable steps to maintain the confidentiality of and otherwise
protect and enforce their rights in all proprietary information that Replidyne holds, or purports
to hold, as a trade secret.
(v) Replidyne has not assigned or otherwise transferred ownership of, or agreed to assign or
otherwise transfer ownership of, any Replidyne IP Rights to any other Person.
(vi) Replidyne is not now and has never been a member or promoter of, or a contributor to, any
industry standards body or similar organization that could require or obligate Replidyne to grant
or offer to any other Person any license or right to any Replidyne IP Rights.
(vii) The Replidyne IP Rights constitute all Intellectual Property Rights necessary for
Replidyne to conduct its business as currently conducted and planned to be conducted.
(f) To Replidyne’s Knowledge, all Replidyne Registered IP is valid and enforceable. Without
limiting the generality of the foregoing:
(i) Each U.S. patent application and U.S. patent in which Replidyne has or purports to have an
ownership interest was filed within one year of the first printed publication, public use, or offer
for sale of each invention described in the U.S. patent application or U.S. patent. Each foreign
patent application and foreign patent in which Replidyne has or purports to have an ownership
interest was filed or claims priority to a patent application filed prior to each invention
described in the foreign patent application or foreign patent being first made available to the
public.
(ii) To Replidyne’s Knowledge, no trademark (whether registered or unregistered) or trade name
owned, used, or applied for by Replidyne or any Replidyne conflicts or interferes with any
trademark (whether registered or unregistered) or trade name owned, used, or applied for by any
other Person. None of the goodwill associated with or inherent in any trademark (whether registered
or unregistered) in which Replidyne has or purports to have an ownership interest has been
impaired.
(iii) Each item of Replidyne IP Rights that is Replidyne Registered IP is and at all times has
been filed and maintained in compliance with all applicable Legal Requirements and all filings,
payments, and other actions required to be made or taken to maintain such item of Replidyne
Registered IP in full force and effect have been made by the applicable deadline.
(iv) No interference, opposition, reissue, reexamination, or other proceeding is pending or,
to Replidyne’s Knowledge, threatened, in which the scope, validity, or enforceability of any
Replidyne IP Rights is being, has been or could reasonably be expected to be contested or
challenged. To Replidyne’s Knowledge, there is no basis for a claim that any Replidyne IP Rights
are invalid or, excluding pending patent applications, unenforceable.
(g) To Replidyne’s Knowledge, no Person has infringed, misappropriated, or otherwise violated,
and no Person is currently infringing, misappropriating, or otherwise violating, any Replidyne IP
Rights. Replidyne has delivered or made available to the Company a complete and accurate copy of,
each letter or other written or electronic communication or correspondence that has been sent or
otherwise delivered in the last five (5) years by or to Replidyne or any Representative of
Replidyne regarding any actual, alleged, or suspected infringement or misappropriation of any
Replidyne IP Rights,
38.
and provides a brief description of the current status of the matter referred to in such
letter, communication, or correspondence.
(h) Neither the execution, delivery, or performance of this Agreement (or any of the
agreements contemplated by this Agreement) nor the consummation of any of the Contemplated
Transactions will, with or without notice or lapse of time, result in, or give any other Person the
right or option to cause or declare, (i) a loss of, or Encumbrance on, any Replidyne IP Rights;
(ii) a breach by Replidyne of any Replidyne IP Rights Agreement; (iii) the release, disclosure, or
delivery of any Replidyne IP Rights by or to any escrow agent or other Person; or (iv) the grant,
assignment, or transfer to any other Person of any license or other right or interest under, to, or
in any of Replidyne IP Rights.
(i) To Replidyne’s Knowledge, Replidyne has never infringed (directly, contributorily, by
inducement, or otherwise), misappropriated, or otherwise violated any Intellectual Property Right
of any other Person. Without limiting the generality of the foregoing:
(i) No infringement, misappropriation, or similar claim or Legal Proceeding is pending or, to
Replidyne’s Knowledge, threatened against Replidyne or against any other Person who may be entitled
to be indemnified, defended, held harmless, or reimbursed by Replidyne with respect to such claim
or Legal Proceeding. Replidyne and Replidyne’s Subsidiaries have never received any notice or other
communication (in writing or otherwise) alleging any actual, alleged, or suspected infringement,
misappropriation, or violation of any Intellectual Property Right of another Person.
(ii) Except as set forth in Part 3.9(i)(ii) of the Replidyne Disclosure Schedule or in
connection with customary indemnification obligations to Replidyne’s directors and officers,
Replidyne is not bound by any Contract to indemnify, defend, hold harmless, or reimburse any other
Person with respect to any intellectual property infringement, misappropriation, or similar claim.
Replidyne and Replidyne’s Subsidiaries have never assumed, or agreed to discharge or otherwise take
responsibility for, any existing or potential liability of another Person for infringement,
misappropriation, or violation of any Intellectual Property Right.
(j) No claim or Legal Proceeding involving any Replidyne IP Rights is pending or, to
Replidyne’s Knowledge, has been threatened, except for any such claim or Legal Proceeding that, if
adversely determined, would not adversely affect (i) the use or exploitation of Replidyne IP Rights
by Replidyne, or (ii) the design, development, manufacturing, distribution, licensing, or sale of
any product or service being developed by Replidyne, or that is being commercially sold by
Replidyne.
3.10 Contracts.
(a) Part 3.10(a) of the Replidyne Disclosure Schedule identifies, as of the date of this
Agreement:
(i) (A) each Replidyne Contract relating to the employment of, or the performance of
employment-related services by, any Person, including any employee, consultant or independent
contractor; (B) each Replidyne Contract pursuant to which Replidyne is or may become obligated to
make any severance, termination, change in control or similar payment to any director, officer or
employee of Replidyne; and (C) any Replidyne Contract pursuant to which Replidyne is or may become
obligated to make any bonus or similar payment (other than payment in respect of salary) to any
director, officer or employee of Replidyne;
(ii) each Replidyne Contract that provides for indemnification of any officer, director,
employee or agent of Replidyne;
39.
(iii) each Replidyne Contract relating to the voting and any other rights or obligations of a
stockholder of Replidyne;
(iv) each Replidyne Contract relating to the merger, consolidation, reorganization or any
similar transaction with respect to Replidyne;
(v) each Replidyne Contract relating to the acquisition, transfer, use, development, sharing
or license of any technology or any Intellectual Property or Replidyne IP Rights;
(vi) each Replidyne Contract imposing any restriction on Replidyne’s right or ability (A) to
compete with any other Person, (B) to acquire any product or other asset or any services from any
other Person, to sell any product or other asset to, or perform any services for, any other Person
or to transact business or deal in any other manner with any other Person, or (C) develop or
distribute any technology or product;
(vii) each Replidyne Contract creating or involving any agency relationship, distribution
arrangement or franchise relationship;
(viii) each Replidyne Contract relating to the creation of any Encumbrance with respect to any
asset of Replidyne;
(ix) each Replidyne Contract involving or incorporating any guaranty, any pledge, any
performance or completion bond, any indemnity or any surety arrangement;
(x) each Replidyne Contract creating or relating to any collaboration or joint venture or any
sharing of technology, revenues, profits, losses, costs or liabilities, including Replidyne
Contracts involving investments by Replidyne in, or loans by Replidyne to, any other Entity;
(xi) each Replidyne contract relating to the purchase or sale of any product or other asset by
or to, or the performance of any services by or for, or otherwise involving as a counterparty, any
Replidyne Related Party;
(xii) each Replidyne Contract relating to indebtedness for borrowed money;
(xiii) each Replidyne Contract related to the acquisition or disposition of material assets of
Replidyne or any other Person;
(xiv) any other material Replidyne Contract that has a term of more than 30 days and that may
not be terminated by Replidyne (without penalty) within 30 days after the delivery of a termination
notice by Replidyne;
(xv) any other Replidyne Contract pursuant to which Replidyne is actively performing as of the
date hereof that contemplates or involves (A) the payment or delivery of cash or other
consideration, or (B) the purchase or sale of any product, or performance of services by or to
Replidyne;
(xvi) each Replidyne Contract constituting a commitment of any Person to purchase products
(including products in development) of Replidyne;
(xvii) each Replidyne Contract regarding the acquisition, issuance or transfer of any
securities and each Replidyne Contract affecting or dealing with any securities of Replidyne
including any restricted share agreements or escrow agreements; and
40.
(xviii) each Replidyne Contract with any Person, including without limitation any financial
advisor, broker, finder, investment banker or other Person, providing advisory services to
Replidyne in connection with the Contemplated Transactions.
(b) Replidyne has delivered or made available to the Company accurate and complete (except for
applicable redactions thereto) copies of all Replidyne Contracts set forth on Parts 3.10(a)(i)
through (xviii) of the Replidyne Disclosure Schedule, including all amendments thereto
(collectively, the “Material Replidyne Contracts”). There are no Material Replidyne
Contracts that are not in written form. Each Material Replidyne Contract is valid and in full
force and effect, is enforceable by Replidyne in accordance with its terms, and, after the
Effective Time, will continue to be legal, valid, binding and enforceable on identical terms. The
consummation of the Contemplated Transactions hereby shall not (either alone or upon the occurrence
of additional acts or events) result in any payment or payments becoming due from Replidyne, the
Surviving Corporation or the Company to any Person under any Material Replidyne Contract or give
any Person the right to terminate or alter the provisions of any Material Replidyne Contract.
(c) Replidyne has not materially violated or breached, or committed any material default
under, any Material Replidyne Contract, and, except as set forth in Part 3.10(c) of the Replidyne
Disclosure Schedule, to the Knowledge of Replidyne, no other Person has violated or breached, or
committed any default under, any Material Replidyne Contract.
(d) Except as set forth in Part 3.10(d) of the Replidyne Disclosure Schedule, to Replidyne’s
Knowledge, no event has occurred, and no circumstance or condition exists, that (with or without
notice or lapse of time) will, or would reasonably be expected to, (i) result in a material
violation or breach of any of the provisions of any Material Replidyne Contract, (ii) give any
Person the right to declare a default or exercise any remedy under any Material Replidyne Contract,
(iii) give any Person the right to accelerate the maturity or performance of any Material Replidyne
Contract, or (iv) give any Person the right to cancel, terminate or modify any Material Replidyne
Contract.
(e) Except as set forth in Part 3.10(e) of the Replidyne Disclosure Schedule, Replidyne has
not received any written notice or other communication regarding any actual or possible violation
or breach of, or default under, any Material Replidyne Contract.
(f) Replidyne has not waived any rights under any Material Replidyne Contract.
(g) Except as set forth in Part 3.10(g) of the Replidyne Disclosure Schedule, no Person is
renegotiating, or has a right pursuant to the terms of any Material Replidyne Contract to
renegotiate, any amount paid or payable to Replidyne under any Material Replidyne Contract or any
other material term or provision of any Material Replidyne Contract.
(h) Part 3.10(h) of the Replidyne Disclosure Schedule provides an accurate and complete list
of all Consents required under any Replidyne Contract to consummate the Merger and the other
Contemplated Transactions.
3.11 Tax Matters.
(a) All Tax Returns required to be filed by or on behalf of Replidyne with any Governmental
Body with respect to any taxable period ending on or before the Closing Date (the “Replidyne
Returns”) (i) have been or will be filed on or before the applicable due date (including any
41.
extensions of such due date), and (ii) have been, or will be when filed, accurately and
completely prepared in all material respects. All Taxes due on or before the Closing Date (whether
or not shown on the Replidyne Returns) have been or will be paid on or before the Closing Date.
Replidyne has delivered or made available to the Company accurate and complete copies of all
Replidyne Returns filed which the Company has requested. Replidyne shall establish in its books and
records, in the Ordinary Course of Business or otherwise in accordance with its normal operations
and consistent with its past practices, reserves adequate for the payment of all unpaid Taxes by
Replidyne for the period from January 1, 2008 through the Closing Date.
(b) All Taxes that Replidyne was required by law to withhold or collect have been duly
withheld or collected and, to the extent required, have been properly paid to the appropriate
Governmental Body.
(c) Except as set forth in Part 3.11(c) of the Replidyne Disclosure Schedule, no Replidyne
Return has ever been examined or audited by any Governmental Body and no examination or audit of
any Replidyne Return is currently in progress or, to the Knowledge of Replidyne, threatened or
contemplated. Replidyne has delivered or made available to the Company accurate and complete
copies of all audit reports, private letter rulings, revenue agent reports, information document
requests, notices of proposed deficiencies, deficiency notices, protests, petitions, closing
agreements, settlement agreements, pending ruling requests and any similar documents submitted by,
received by, or agreed to by or on behalf of Replidyne relating to the Replidyne Returns. No
extension or waiver of the limitation period applicable to any of the Replidyne Returns has been
granted (by Replidyne or any other Person), no such extension or waiver has been requested from
Replidyne and Replidyne has not executed or filed any power of attorney with any taxing authority.
(d) No claim or Legal Proceeding is pending or, to the Knowledge of Replidyne, has been
threatened against or with respect to Replidyne in respect of any Tax. There are no unsatisfied
liabilities for Taxes with respect to any notice of deficiency or similar document received by
Replidyne with respect to any Tax (other than liabilities for Taxes asserted under any such notice
of deficiency or similar document which are being contested in good faith by Replidyne and with
respect to which adequate reserves for payment have been established). There are no liens for Taxes
upon any of the assets of Replidyne except liens for current Taxes not yet due and payable.
(e) Replidyne (i) has never been a member of an affiliated group (within the meaning of
Section 1504(a) of the Code) filing (or which it has been required to file) a consolidated federal
income Tax Return (other than a group the common parent of which was Replidyne), (ii) does not have
any liability for the Taxes of any person under Section 1.1502-6 of the Treasury Regulations (or
any similar provision of state, local or foreign law), as a transferee or successor, or otherwise,
and (iii) has never been a party to any joint venture, collaboration, partnership or other
agreement that could be treated as a partnership for Tax purposes. Replidyne is not, and never has
been, a party to or bound by any Tax indemnity agreement, Tax-sharing agreement, Tax allocation
agreement or similar Contract. Replidyne has not been either a “distributing corporation” or a
“controlled corporation” in a distribution of stock intended to qualify for tax-free treatment
under Section 355 of the Code (y) in the two years prior to the date of this Agreement or (z) which
could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning
of Section 355(e) of the Code) in conjunction with the Merger.
(f) Replidyne has not incurred (or been allocated) an “overall foreign loss” as defined in
Section 904(f)(2) of the Code which has not been previously recaptured in full as provided in
Sections 904(f)(1) and/or 904(f)(3) of the Code.
42.
(g) Replidyne is not a party to a gain recognition agreement under Section 367 of the Code.
(h) Replidyne will not be required to include any item of income in, or exclude any item of
deduction from, taxable income for any period (or any portion thereof) ending after the Closing
Date as a result of any (i) deferred intercompany gain or any excess loss account described in
Treasury Regulations under Section 1502 of the Code (or any corresponding provision of state, local
or foreign Tax law), (ii) closing agreement as described in Section 7121 of the Code (or any
corresponding or similar provision of state, local or foreign Tax law) executed on or prior to the
Closing Date, (iii) installment sale or other open transaction disposition made on or prior to the
Closing Date, (iv) prepaid amount received on or prior to the Closing Date, or (v) any adjustment
pursuant to Section 481(a) of the Code in its current or in any future taxable period by reason of
a change in accounting method. To the Knowledge of Replidyne, the Internal Revenue Service (or
other taxing authority) has not proposed nor is considering proposing any such change in accounting
method and Replidyne does not have an application pending with any taxing authority requesting
permission for any change in accounting method.
(i) Replidyne is not, and has never been, a party to a transaction or agreement that is in
conflict with the Tax rules on transfer pricing in any relevant jurisdiction.
(j) Replidyne has never engaged in any “listed transaction” for purposes of Treasury
Regulation sections 1.6011-4(b)(2) or 301.6111-2(b)(2) or any analogous provision of state or local
law.
3.12 Employee and Labor Matters; Benefit Plans.
(a) Part 3.12(a) of the Replidyne Disclosure Schedule accurately sets forth, with respect to
each employee of Replidyne, as of the date of this Agreement:
(i) the name of such employee;
(ii) such employee’s title; and
(iii) the base salary for such employee and any other compensatory agreements or arrangements
pursuant to which Replidyne may be obligated to pay additional compensation to such employee.
(b) The employment of Replidyne’s employees is terminable by Replidyne at will. Replidyne has
delivered or made available to the Company accurate and complete copies of all employee manuals and
handbooks, disclosure materials, policy statements and other materials governing the terms and
conditions of the employment of the employees of Replidyne.
(c) To the Knowledge of Replidyne, no Key Employee of Replidyne has received an offer that
remains outstanding to join a business that may be competitive with Replidyne’s business.
(d) Replidyne is not a party to or bound by, and Replidyne has never been a party to or bound
by, any union contract, collective bargaining agreement or similar Contract.
(e) Replidyne is not engaged, and Replidyne has never been engaged, in any unfair labor
practice of any nature. There has never been any slowdown, work stoppage, labor dispute or union
organizing activity, or any similar activity or dispute, affecting Replidyne. To Replidyne’s
Knowledge, no event has occurred, and no condition or circumstance exists, that might directly or
indirectly give rise to the commencement of any such slowdown, work stoppage, labor dispute or
union organizing activity or
43.
any similar activity or dispute. There are no actions, suits, claims, labor disputes or
grievances pending or, to the Knowledge of Replidyne, threatened or reasonably anticipated relating
to any labor, safety or discrimination matters involving any employee of Replidyne, including,
without limitation, charges of unfair labor practices or discrimination complaints. Replidyne has
good labor relations, and no reason to believe that the consummation of the Merger or any of the
other Contemplated Transactions will have a material adverse effect on Replidyne’s labor relations.
(f) Except as set forth on Part 3.12(f) of the Replidyne Disclosure Schedule, there are no
independent contractors who are providing services to Replidyne as of the date of this Agreement.
(g) Part 3.12(g) of the Replidyne Disclosure Schedule identifies each Replidyne Plan
sponsored, maintained, contributed to or required to be contributed to by Replidyne for the benefit
of any employee of Replidyne. Except to the extent required to comply with Legal Requirements,
Replidyne does not intend and has not committed to establish or enter into any new Replidyne Plan,
or to modify any Replidyne Plan.
(h) Replidyne has delivered or made available to the Company: (i) correct and complete copies
of all documents setting forth the terms of each Replidyne Plan, including all amendments thereto
and all related trust documents; (ii) the three most recent annual reports (Form Series 5500 and
all schedules and financial statements attached thereto), if any, required under ERISA or the Code
in connection with each Replidyne Plan; (iii) if the Replidyne Plan is subject to the minimum
funding standards of Section 302 of ERISA, the most recent annual and periodic accounting of
Replidyne Plan assets; (iv) the most recent summary plan description together with the summaries of
material modifications thereto, if any, required under ERISA with respect to each Replidyne Plan;
(v) all material written Contracts relating to each Replidyne Plan, including administrative
service agreements and group insurance contracts; (vi) all written materials provided to any
employee of Replidyne relating to any Replidyne Plan and any proposed Replidyne Plans, in each
case, relating to any amendments, terminations, establishments, increases or decreases in benefits,
acceleration of payments or vesting schedules or other events that would result in any liability to
Replidyne; (vii) all material correspondence from the last six years to or from any Governmental
Body relating to any Replidyne Plan; (viii) the form of all COBRA forms and related notices; (ix)
all insurance policies in the possession of Replidyne pertaining to fiduciary liability insurance
covering the fiduciaries for each Replidyne Plan; and (x) the most recent Internal Revenue Service
determination or opinion letter issued with respect to each Replidyne Plan intended to be qualified
under Section 401(a) of the Code.
(i) Each Replidyne Plan has been established and maintained substantially in accordance with
its terms and in substantial compliance with all applicable Legal Requirements, including ERISA and
the Code. Any Replidyne Plan intended to be qualified under Section 401(a) of the Code has obtained
a favorable determination letter (or opinion letter, if applicable) as to its qualified status
under the Code or has remaining a period of time under applicable Treasury regulations or Internal
Revenue Service pronouncements in which to apply for such a letter and make any amendments
necessary to obtain a favorable determination as to the qualified status of that Replidyne Plan.
To the Knowledge of Replidyne, no “prohibited transaction,” within the meaning of Section 4975 of
the Code or Sections 406 and 407 of ERISA, and not otherwise exempt under Section 408 of ERISA, has
occurred with respect to any Replidyne Plan subject to ERISA or Section 4975 of the Code. There
are no claims or Legal Proceedings pending, or, to the Knowledge of Replidyne, threatened or
reasonably anticipated (other than routine claims for benefits), against any Replidyne Plan or
against the assets of any Replidyne Plan. Each Replidyne Plan (other than any Replidyne Plan to be
terminated prior to the Closing in accordance with this Agreement) can be amended, terminated or
otherwise discontinued after the Closing in accordance with its terms, without liability to the
Company, Replidyne or the Surviving Corporation (other than ordinary administration expenses).
There are no audits, inquiries or Legal Proceedings pending or, to the
44.
Knowledge of Replidyne, threatened by any Governmental Body with respect to any Replidyne
Plan. Replidyne has never incurred any penalty or tax with respect to any Replidyne Plan under
Section 502(i) of ERISA or Sections 4975 through 4980 of the Code. Replidyne has made all
contributions and other payments required by and due under the terms of each Replidyne Plan.
(j) Replidyne has never maintained, established, sponsored, participated in, or contributed to
any: (i) Pension Plan subject to Title IV of ERISA; or (ii) “multiemployer plan” within the meaning
of Section (3)(37)(A) of ERISA. Replidyne has never maintained, established, sponsored,
participated in or contributed to, any Pension Plan in which stock of Replidyne is or was held as a
plan asset. The fair market value of the assets of each funded Pension Plan or multiemployer plan,
or the equivalent thereof, maintained by Replidyne in a foreign jurisdiction (a “Replidyne
Foreign Plan”) the liability of each insurer for any Replidyne Foreign Plan funded through
insurance, or the book reserve established for any Replidyne Foreign Plan, together with any
accrued contributions, is sufficient to procure or provide in full for the accrued benefit
obligations, with respect to all current and former participants in such Replidyne Foreign Plan
according to the actuarial assumptions and valuations most recently used to determine employer
contributions to and obligations under such Replidyne Foreign Plan, and none of the Contemplated
Transactions shall cause any such assets or insurance obligations to be less than such benefit
obligations.
(k) No Replidyne Plan provides (except at no cost to Replidyne) or reflects or represents any
liability of Replidyne to provide, retiree life insurance, retiree health benefits or other retiree
employee welfare benefits to any Person for any reason, except as may be required by COBRA or other
applicable Legal Requirements, or any deferred compensation other than tax-qualified “employee
pension benefit plans” (as defined under ERISA). Other than commitments made that involve no
future costs to Replidyne, Replidyne has never represented, promised or contracted (whether in oral
or written form) to any employee of Replidyne (either individually or to employees of Replidyne as
a group) or any other Person that such employee(s) or other Person would be provided with
Post-Retirement Benefits, except to the extent required by applicable Legal Requirements. Part
3.12(k) of the Replidyne Disclosure Schedule accurately identifies each former employee of
Replidyne who is receiving or is scheduled to receive (or whose spouse or other dependent is
receiving or is scheduled to receive) any benefits.
(l) Except as set forth in Part 3.12(l) of the Replidyne Disclosure Schedule, neither the
execution of this Agreement nor the consummation of the Contemplated Transactions hereby will
(either alone or upon the occurrence of any additional or subsequent events) constitute an event
under any Replidyne Plan, Replidyne Contract, trust or loan that will or may result (either alone
or in connection with any other circumstance or event) in any payment (whether of severance pay or
otherwise), acceleration, forgiveness of indebtedness, vesting, distribution, increase in benefits
or obligation to fund benefits with respect to any employees of Replidyne.
(m) Replidyne: (i) is, and at all times has been, in substantial compliance with all
applicable Legal Requirements respecting employment, employment practices, terms and conditions of
employment and wages and hours, in each case, with respect to its employees, including the
requirements of FMLA and any similar provisions of state law; (ii) has withheld and reported all
amounts required by applicable Legal Requirements or by Contract to be withheld and reported with
respect to wages, salaries and other payments to its employees; (iii) is not liable for any arrears
of wages or any taxes or any penalty for failure to comply with the Legal Requirements applicable
to the foregoing; and (iv) is not liable for any payment to any trust or other fund governed by or
maintained by or on behalf of any Governmental Body with respect to unemployment compensation
benefits, social security or other benefits or obligations for its employees (other than routine
payments to be made in the normal course of business and consistent with past practice). There are
no pending or, to the Knowledge of Replidyne, threatened or
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reasonably anticipated claims or Legal Proceedings against Replidyne under any worker’s
compensation policy or long-term disability policy.
(n) Replidyne is not required to be, and, to the Knowledge of Replidyne, has not ever been
required to be, treated as a single employer with any other Person under Section 4001(b)(1) of
ERISA or Section 414(b), (c), (m) or (o) of the Code. Replidyne has never been a member of an
“affiliated service group” within the meaning of Section 414(m) of the Code.
(o) There is no agreement, plan, arrangement or other Contract covering any employee or
independent contractor or former employee or independent contractor of Replidyne that, considered
individually or considered collectively with any other such Contracts and/or other events, will, or
could reasonably be expected to, give rise directly or indirectly to the payment of any amount that
would not be deductible pursuant to Section 280G or Section 162(m) of the Code. Replidyne is not a
party to any Contract, nor does Replidyne have any obligation (current or contingent), to
compensate any individual for excise taxes paid pursuant to Section 4999 of the Code.
(p) Any Replidyne employee plan, which includes any and all employment agreements, change in
control agreements and any other similar individual agreements with employees or consultants,
salary, bonus, deferred compensation, incentive compensation, stock purchase, stock option,
severance pay, termination pay, hospitalization, medical, life or other insurance, supplemental
unemployment benefits, profit-sharing, pension or retirement plan, any other material program or
agreement, whether or not subject to ERISA (collectively, the “Replidyne Plans”, and each
individually a “Replidyne Plan”) sponsored, maintained, contributed to or required to be
contributed to by Replidyne for the benefit of any employee of Replidyne and which is a
“nonqualified deferred compensation plan” (as defined in Section 409A(d)(1) of the Code) has been
operated since January 1, 2006 in good faith compliance with Section 409A of the Code and the
proposed regulations and other guidance issued with respect thereto so as to avoid any additional
Tax pursuant to Section 409A(a)(1)(B)(i)(II) of the Code.
3.13 Environmental Matters. Replidyne is in compliance in all material respects with
all applicable Environmental Laws, which compliance includes the possession by Replidyne of all
permits and other Governmental Authorizations required under applicable Environmental Laws, and
compliance with the terms and conditions thereof. Replidyne has not received any written notice or
other communication (in writing or otherwise), whether from a Governmental Body, citizens group,
employee or otherwise, that alleges that Replidyne is not in compliance with any Environmental Law,
and, to the Knowledge of Replidyne, there are no circumstances that may prevent or interfere with
Replidyne’s compliance with any Environmental Law in the future. To the Knowledge of Replidyne: (i)
no current or prior owner of any property leased or controlled by Replidyne has received any
written notice or other communication relating to property owned or leased at any time by
Replidyne, whether from a Governmental Body, citizens group, employee or otherwise, that alleges
that such current or prior owner or Replidyne is not in compliance with or violated any
Environmental law relating to such property and (ii) Replidyne does not have any liability under
any Environmental Laws (including without limitation corrective, investigatory or remedial
obligations). All Governmental Authorizations currently held by Replidyne pursuant to Environmental
Laws are identified in Part 3.13 of the Replidyne Disclosure Schedule.
3.14 Bank Accounts. Part 3.14 of the Replidyne Disclosure Schedule provides accurate
information with respect to each account maintained by or for the benefit of Replidyne at any bank
or other financial institution, including the name of the bank or financial institution, the type
of account, the account number, the balance as of the date hereof and the names of all individuals
authorized to draw on or make withdrawals from such accounts.
46.
3.15 Legal Proceedings; Orders.
(a) Except as described in the Replidyne SEC Documents, there is no pending Legal Proceeding,
and to the Knowledge of Replidyne, no Person has threatened to commence any Legal Proceeding: (i)
that involves Replidyne or any of its directors or officers (in their capacities as such) or any
assets owned or used by Replidyne; or (ii) that challenges, or that may have the effect of
preventing, delaying, making illegal or otherwise interfering with the Merger or any of the
Contemplated Transactions. To the Knowledge of Replidyne, no event has occurred, and no claim,
dispute or other condition or circumstance exists, that will, or that would reasonably be expected
to, give rise to or serve as a basis for the commencement of any such Legal Proceeding.
(b) There is no order, writ, injunction, judgment or decree to which Replidyne, or any of the
assets owned or used by Replidyne, is subject. To the Knowledge of Replidyne, no officer or other
employee of Replidyne is subject to any order, writ, injunction, judgment or decree that relates to
Replidyne’s business or to any assets owned or used by Replidyne.
3.16 Non-Contravention; Consents. Subject to compliance with the applicable
requirements of the HSR Act, obtaining the Required Replidyne Stockholder Vote for the applicable
Contemplated Transactions and obtaining the Replidyne Consents, adoption of this Agreement by
Replidyne as the sole stockholder of Merger Sub, the filing of the Replidyne Certificate of
Amendment, and the filing of Articles of Merger as required by the MBCA, neither (a) the execution,
delivery or performance of this Agreement or any of the Related Agreements, nor (b) the
consummation of the Merger or any of the other Contemplated Transactions, will (with or without
notice or lapse of time):
(a) contravene, conflict with or result in a violation of any of the provisions of the
Replidyne Constituent Documents;
(b) contravene, conflict with or result in a violation of, or give any Governmental Body or
other Person the right to challenge any of the Contemplated Transactions or to exercise any remedy
or obtain any relief under, any Legal Requirement or any order, writ, injunction, judgment or
decree to which Replidyne or the Merger Sub, or any of the assets owned or used by Replidyne, is
subject;
(c) contravene, conflict with or result in a violation of any of the terms or requirements of,
or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate or modify,
any Governmental Authorization that is held by Replidyne or Merger Sub or that otherwise relates to
Replidyne’s or Merger Sub’s business or to any of the assets owned or used by Replidyne or Merger
Sub;
(d) except as set forth in Part 3.16(d) of the Replidyne Disclosure Schedule, result in a
material conflict, violation or breach of, or result in a material default under, any provision of
any material Replidyne Contract, or give any Person the right to (i) declare a default or exercise
any remedy under any such Replidyne Contract, (ii) accelerate the maturity or performance of any
such Replidyne Contract, or (iii) cancel, terminate or modify any such Replidyne Contract; or
(e) result in the imposition or creation of any Encumbrance upon or with respect to any asset
owned or used by Replidyne or Merger Sub (except for minor liens that will not, in any case or in
the aggregate, materially detract from the value of the assets subject thereto or materially impair
the operations of Replidyne or Merger Sub).
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Except for those filings, notices or Consents disclosed in Part 3.16 of the Replidyne Disclosure
Schedule (the “Replidyne Consents”), Replidyne is not and will not be required to make any
filing with or give any notice to, or to obtain any Consent from, any Person in connection with (y)
the execution, delivery or performance of this Agreement or any of the Related Agreements, or (z)
the consummation of the Merger or any of the other Contemplated Transactions.
3.17 Vote Required. The affirmative vote of (i) the holders of a majority of the
Replidyne Common Stock casting votes in person or by proxy at the Replidyne Stockholders’ Meeting
is the only vote of the holders of any class or series of Replidyne capital stock necessary to
approve the issuance of Replidyne Common Stock in the Merger and (ii) the holders of a majority of
the Replidyne Common Stock entitled to vote thereon at the Replidyne Stockholders’ Meeting is the
only vote necessary to approve the Replidyne Certificate of Amendment ((i) and (ii) together, the
“Required Replidyne Stockholder Vote”).
3.18 No Financial Advisor. Except for Xxxxxx Xxxxxxx & Co. Incorporated, no broker,
finder or investment banker is entitled to any brokerage fee, finder’s fee, opinion fee, success
fee, transaction fee or other fee or commission in connection with the Merger or any of the other
Contemplated Transactions based upon arrangements made by or on behalf of Replidyne or Merger Sub.
3.19 Authority; Binding Nature of Agreement. Replidyne and Merger Sub have the
absolute and unrestricted corporate right, power and authority to enter into and perform their
obligations under this Agreement; and the execution, delivery and performance by Replidyne and
Merger Sub of this Agreement (including the contemplated issuance of Replidyne Common Stock
pursuant to the Merger in accordance with this Agreement and the effectuation of the Replidyne
Certificate of Amendment) have been duly authorized by all necessary corporate action on the part
of Replidyne and Merger Sub and their respective boards of directors and stockholders, subject only
to the adoption of this Agreement by Replidyne as the sole stockholder of Merger Sub, obtaining the
Required Replidyne Stockholder Vote for the applicable Contemplated Transactions, the filing of the
Replidyne Certificate of Amendment and the filing and recordation of Articles of Merger pursuant to
the MBCA. This Agreement has been duly executed and delivered by Replidyne and Merger Sub, and,
assuming due authorization, execution and delivery by the other Parties hereto, constitutes the
legal, valid and binding obligation of Replidyne and Merger Sub, enforceable against them in
accordance with its terms, subject to (a) laws of general application relating to bankruptcy,
insolvency and the relief of debtors, and (b) rules of law governing specific performance,
injunctive relief and other equitable remedies.
3.20 Anti-Takeover Law. The board of directors of Replidyne has taken all action
necessary and required to render inapplicable to the Merger, this Agreement or any agreement
contemplated hereby and the Contemplated Transactions any anti-takeover provision in Replidyne’s
Certificate of Incorporation or Bylaws, any takeover provision in any Replidyne Contract, and any
takeover provision in any applicable state law.
3.21 Valid Issuance. The Replidyne Common Stock to be issued pursuant to the Merger
will, when issued in accordance with the provisions of this Agreement, be validly issued, fully
paid and nonassessable.
3.22 Controls and Procedures, Certifications and Other Matters Relating to the
Xxxxxxxx-Xxxxx Act.
(a) Replidyne maintains internal control over financial reporting that provide assurance that
(i) records are maintained in reasonable detail and accurately and fairly reflect the transactions
and dispositions of Replidyne’s assets, (ii) transactions are executed with management’s
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authorization, and (iii) transactions are recorded as necessary to permit preparation of the
consolidated financial statements of Replidyne and to maintain accountability for Replidyne’s
consolidated assets.
(b) Replidyne maintains disclosure controls and procedures required by Rules 13a-15 or 15d-15
under the Exchange Act, and such controls and procedures are effective to ensure that all material
information concerning Replidyne is made known on a timely basis to the individuals responsible for
the preparation of Replidyne’s filings with the SEC and other public disclosure documents.
(c) Neither Replidyne nor any of its officers has received notice from any Governmental Entity
questioning or challenging the accuracy, completeness or manner of filing or submission of any
filing with the SEC, including without limitation any certifications required by Section 906 of the
Xxxxxxxx-Xxxxx Act.
(d) Replidyne has not, since June 28, 2006, extended or maintained credit, arranged for the
extension of credit, modified or renewed an extension of credit, in the form of a personal loan or
otherwise, to or for any director or executive officer of Replidyne.
3.23 Section 203 of the DGCL. The board of directors of Replidyne has taken all
actions necessary so that the restrictions contained in Section 203 of the DGCL applicable to a
“business combination” (as defined in Section 203) shall not apply to the execution, delivery or
performance of this Agreement or the consummation of the Merger or any other Contemplated
Transaction.
3.24 Governmental Authorizations. Part 3.24 of the Replidyne Disclosure Schedule
identifies each material Governmental Authorization held by Replidyne, and Replidyne has delivered
or made available to the Company accurate and complete copies of all Governmental Authorizations
identified in Part 3.24 of the Replidyne Disclosure Schedule. The Governmental Authorizations
identified in Part 3.24 of the Replidyne Disclosure Schedule are valid and in full force and
effect, and collectively constitute all Governmental Authorizations necessary to enable Replidyne
to conduct its business in the manner in which its business is currently being conducted and is
proposed to be conducted. Replidyne is in compliance in all material respects with the terms and
requirements of the respective Governmental Authorizations identified in Part 3.24 of the Replidyne
Disclosure Schedule. Replidyne has not received any notice or other communication from any
Governmental Body regarding (a) any actual or possible violation of or failure to comply with any
term or requirement of any Governmental Authorization, or (b) any actual or possible revocation,
withdrawal, suspension, cancellation, termination or modification of any Governmental
Authorization.
3.25 Insurance. Replidyne maintains insurance policies with reputable insurance
carriers against all risks of a character as usually insured against, and in such coverage amounts
as are usually maintained, by similarly situated companies in the same or similar businesses. Each
such insurance policy is in full force and effect. Since January 1, 2006, Replidyne has not made
any claim under any insurance policy or received any written notice or other communication
regarding any actual or possible (a) cancellation or invalidation of any insurance policy, (b)
refusal of any coverage or rejection of any claim under any insurance policy, or (c) material
adjustment in the amount of the premiums payable with respect to any insurance policy.
3.26 Related Party Transactions. Except as set forth in the Replidyne SEC Documents,
(a) no Replidyne Related Party has, and no Replidyne Related Party has at any time since January 1,
2006 had, any direct or indirect interest in any asset used in or otherwise relating to the
business of Replidyne; (b) no Replidyne Related Party is, or has been, indebted to Replidyne; (c)
since January 1, 2006, no Replidyne Related Party has entered into, or has had any direct or
indirect financial interest in, any
49.
Replidyne Contract, transaction or business dealing involving Replidyne; (d) no Replidyne
Related Party is competing, or has at any time since January 1, 2006 competed, directly or
indirectly, with Replidyne; and (e) no Replidyne Related Party has any claim or right against
Replidyne (other than rights under capital stock of Replidyne and rights to receive compensation
for services performed as an employee of Replidyne).
3.27 Certain Payments. Neither Replidyne nor to Replidyne’s Knowledge any officer,
employee, agent or other Person associated with or acting for or on behalf of Replidyne, has at any
time, directly or indirectly:
(a) used any corporate funds (i) to make any unlawful political contribution or gift or for
any other unlawful purpose relating to any political activity, (ii) to make any unlawful payment to
any governmental official or employee, or (iii) to establish or maintain any unlawful or unrecorded
fund or account of any nature;
(b) made any false or fictitious entry, or failed to make any entry that should have been
made, in any of the books of account or other records of Replidyne;
(c) made any payoff, influence payment, bribe, rebate, kickback or unlawful payment to any
Person;
(d) performed any favor or given any gift which was not deductible for federal income tax
purposes;
(e) made any payment (whether or not lawful) to any Person, or provided (whether lawfully or
unlawfully) any favor or anything of value (whether in the form of property or services, or in any
other form) to any Person, for the purpose of obtaining or paying for (i) favorable treatment in
securing business, or (ii) any other special concession; or
(f) agreed or committed to take any of the actions described in clauses “(a)” through “(e)”
above.
3.28 Disclosure.
(a) This Agreement (including the Replidyne Disclosure Schedule) does not, and the certificate
delivered pursuant to Section 8.4(a) will not: (i) contain any representation, warranty or
information that is inaccurate or misleading with respect to any material facts; or (ii) omit to
state any material fact necessary in order to make the representations, warranties and information
contained and to be contained herein, in the light of the circumstances under which such
representations, warranties and information were or will be made or provided, not false or
misleading.
(b) The information supplied by or on behalf of Replidyne for inclusion or incorporation by
reference in the Form S-4 Registration Statement (including any Replidyne Financial Statements)
will not, as of the time the Form S-4 Registration Statement is filed with the SEC or at the time
it becomes effective under the Securities Act, (i) contain any statement that is inaccurate or
misleading with respect to any material facts, or (ii) omit to state any material fact necessary in
order to make such information, in the light of the circumstances under which such information will
be provided, not false or misleading. The information supplied by or on behalf of Replidyne for
inclusion or incorporation by reference in the Joint Proxy Statement/Prospectus (including any
Replidyne Financial Statements) will not, as of the date the Joint Proxy Statement/Prospectus is
mailed to the stockholders of Replidyne or the Company or at the time of the Replidyne
Stockholders’ Meeting or the Company
50.
Stockholders’ Meeting, (i) contain any statement that is inaccurate or misleading with respect
to any material facts, or (ii) omit to state any material fact necessary in order to make such
information, in the light of the circumstances under which such information will be provided, not
false or misleading.
4. CERTAIN COVENANTS OF THE PARTIES
4.1 Access and Investigation. Subject to the terms of the Confidentiality Agreement
which the Parties agree will continue in full force following the date of this Agreement, during
the period commencing on the date of this Agreement and ending at the earlier of the termination of
this Agreement pursuant to Section 9.1 or the Effective Time (the “Pre-Closing Period”),
upon reasonable notice Replidyne and the Company shall, and shall cause such Party’s
Representatives to: (a) provide the other Party and such other Party’s Representatives with
reasonable access during normal business hours to such Party’s Representatives, personnel and
assets and to all existing books, records, Tax Returns, work papers and other documents and
information relating to such Party and its Subsidiaries; (b) provide the other Party and such other
Party’s Representatives with such copies of the existing books, records, Tax Returns, work papers,
product data, and other documents and information relating to such Party and its Subsidiaries, and
with such additional financial, operating and other data and information regarding such Party and
its Subsidiaries as the other Party may reasonably request; and (c) permit the other Party’s
officers and other employees to meet, upon reasonable notice and during normal business hours, with
the officers and managers of such Party responsible for such Party’s financial statements and the
internal controls of such Party to discuss such matters as the other Party may deem necessary or
appropriate in order to enable the other Party to satisfy its obligations under the Xxxxxxxx-Xxxxx
Act and the rules and regulations relating thereto. Without limiting the generality of any of the
foregoing, during the Pre-Closing Period, each of Replidyne and the Company shall promptly provide
the other Party with copies of:
(i) the unaudited monthly consolidated balance sheets of such Party as of the end of each
calendar month and the related unaudited monthly consolidated statements of operations, statements
of stockholders’ equity and statements of cash flows for such calendar month, which shall be
delivered within 20 days after the end of such calendar month;
(ii) all material operating and financial reports prepared by such Party for its senior
management, including sales forecasts, marketing plans, development plans, discount reports, write
off reports, hiring reports and capital expenditure reports prepared for its senior management;
(iii) any written materials or communications sent by or on behalf of a Party to its
stockholders;
(iv) any notice, document or other communication sent by or on behalf of a Party to any party
to any material Replidyne Contract or material Company Contract, as applicable, or sent to a Party
by any party to any material Replidyne Contract or material Company Contract, as applicable (other
than any communication that relates solely to routine commercial transactions between such Party
and the other party to any such material Replidyne Contract or material Company Contract, as
applicable, and that is of the type sent in the Ordinary Course of Business);
(v) any notice, report or other document filed with or otherwise furnished, submitted or sent
to any Governmental Body on behalf of a Party in connection with the Merger or any of the
Contemplated Transactions;
51.
(vi) any non-privileged notice, document or other communication sent by or on behalf of, or
sent to, a Party relating to any pending or threatened Legal Proceeding involving or affecting such
Party; and
(vii) any material notice, report or other document received by a Party from any Governmental
Body.
Notwithstanding the foregoing, any Party may restrict the foregoing access to the extent that any
Legal Requirement applicable to such Party requires such Party or its Subsidiaries to restrict or
prohibit access to any such properties or information.
4.2 Operation of Replidyne’s Business.
(a) Except as set forth on Part 4.2(a) of the Replidyne Disclosure Schedule, during the
Pre-Closing Period Replidyne shall conduct its business and operations (i) in the Ordinary Course
of Business or as otherwise necessary to maximize stockholder value and (ii) in compliance with all
applicable Legal Requirements and the requirements of all Contracts that constitute material
Contracts. In addition, during the Pre-Closing Period, Replidyne shall promptly notify the Company
of: (A) any notice or other communication from any Person alleging that the Consent of such Person
is or may be required in connection with any of the Contemplated Transactions; and (B) any Legal
Proceeding against, relating to, involving or otherwise affecting Replidyne that is commenced, or,
to the Knowledge of Replidyne, threatened against, Replidyne.
(b) Except as set forth in Part 4.2(b) of the Replidyne Disclosure Schedule, and subject to
any Legal Requirement applicable to Replidyne, during the Pre-Closing Period, Replidyne shall not,
without the prior written consent of the Company (which shall not be unreasonably withheld,
conditioned or delayed), take any action set forth in Section 3.5(c)-(u); provided that, for
purposes of this Section 4.2(b), all references to $100,000 in Section 3.5 (the “Dollar
Thresholds”) shall be disregarded and the provisions of Section 3.5 shall be read as if no such
Dollar Threshold qualified such provisions.
(c) Notwithstanding the provisions of Sections 4.2(a) and (b) hereof, during the Pre-Closing
Period, Replidyne shall be entitled to take all action it deems appropriate in order to divest
itself, whether by acquisition, liquidation or otherwise, of its pre-clinical programs and other
non-cash assets; provided that Replidyne shall not, without the written consent of the Company
(which may be withheld at the discretion of the Company), consummate or enter into any binding
agreement to consummate any transaction to divest itself of such programs or other assets if
Replidyne would incur any material obligations or liabilities that would survive the Closing Date.
4.3 Operation of the Company’s Business.
(a) Except as set forth on Part 4.3 of the Company Disclosure Schedule, during the Pre-Closing
Period: (i) the Company shall conduct its business and operations: (A) in the Ordinary Course of
Business; and (B) in compliance with all applicable Legal Requirements and the requirements of all
Contracts that constitute material Contracts; (ii) the Company shall preserve intact its current
business organization, keep available the services of its current officers and other employees and
maintain its relations and goodwill with all suppliers, customers, landlords, creditors, licensors,
licensees, employees and other Persons having business relationships with the Company; and (iii)
the Company shall promptly notify Replidyne of: (A) any notice or other communication from any
Person alleging that the Consent of such Person is or may be required in connection with any of the
Contemplated Transactions; and (B) any Legal Proceeding against, relating to, involving or
otherwise affecting the Company that is commenced, or, to the Knowledge of the Company, threatened
against, the Company.
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(b) Except as set forth in Part 4.3 of the Company Disclosure Schedule or in the Ordinary
Course of Business, and subject to any Legal Requirement applicable to the Company and its
Subsidiaries, during the Pre-Closing Period, the Company agrees that it shall not, without the
prior written consent of Replidyne (which shall not be unreasonably withheld, conditioned or
delayed), take any action set forth in Section 2.5(c)-(u); provided that, (i) for purposes of this
Section 4.3(b), all references to $100,000 in Section 2.5 shall be replaced with $250,000 and (ii)
notwithstanding the provisions of Section 2.5(e) or anything set forth in Part 4.3 of the Company
Disclosure Schedule (except for the issuance of Company Warrants contemplated in the Company
Stockholder Conversion Agreement), the Company shall not, without the prior written consent of
Replidyne, issue options, warrants or other rights to acquire any capital stock or other securities
of the Company, other than equity incentive awards issued under the Company’s 2007 Equity Incentive
Plan (the “Company 2007 Plan”) to employees of and consultants to the Company in the
Ordinary Course of Business that (i) do not cause the total number of shares subject to awards
under the Company 2007 Plan to exceed the number of shares reserved for issuance under the Company
2007 Plan as of the date hereof and (ii) if such award requires exercise by the holder, have an
exercise price not less than the fair market value of a share of Company Common Stock on the
applicable Grant Date. Notwithstanding the foregoing, in the event any of the Company Options
granted to the Company’s officers under the Company 2007 Plan set forth on Part 2.9(d) of the
Company Disclosure Schedule are terminated, the Company may grant replacement options to such
officers for the same number of shares and at the same exercise price (subject to appropriate
adjustments to shares and price for stock splits or combinations) as currently set forth in
agreements referenced on Part 2.9(d) without the approval of Replidyne.
(c) Notwithstanding the provisions of Sections 4.3(a) and (b) hereof, during the Pre-Closing
Period, the Company shall be entitled to consummate any Qualified Financing.
4.4 Disclosure Schedule Updates. During the Pre-Closing Period, the Company on the one
hand, and Replidyne on the other, shall promptly notify the other Party in writing, by delivery of
an updated Company Disclosure Schedule or Replidyne Disclosure Schedule, as the case may be, of:
(i) the discovery by such Party of any event, condition, fact or circumstance that occurred or
existed on or prior to the date of this Agreement and that caused or constitutes a material
inaccuracy in any representation or warranty made by such Party in this Agreement; (ii) any event,
condition, fact or circumstance that occurs, arises or exists after the date of this Agreement and
that would cause or constitute a material inaccuracy in any representation or warranty made by such
Party in this Agreement if: (A) such representation or warranty had been made as of the time of the
occurrence, existence or discovery of such event, condition, fact or circumstance; or (B) such
event, condition, fact or circumstance had occurred, arisen or existed on or prior to the date of
this Agreement; (iii) any material breach of any covenant or obligation of such Party; and (iv) any
event, condition, fact or circumstance that could reasonably be expected to make the timely
satisfaction of any of the conditions set forth in Sections 6, 7 or 8 impossible or materially less
likely. Without limiting the generality of the foregoing, the Company on the one hand, and
Replidyne on the other, shall promptly advise the other Party in writing of any Legal Proceeding or
claim threatened, commenced or asserted against or with respect to, or otherwise affecting, such
Party or (to the Knowledge of such Party) any director, officer or Key Employee of such Party.
Except as set forth in Section 8.1, no notification given pursuant to this Section 4.4 shall
change, limit or otherwise affect any of the representations, warranties, covenants or obligations
of the notifying Party contained in this Agreement or its Disclosure Schedule for purposes of
Section 7.1 or 7.2, in the case of the Company, or Section 8.1 or 8.2, in the case of Replidyne.
4.5 No Solicitation.
(a) Each Party agrees that neither it nor any of its Subsidiaries shall, nor shall it nor any
of its Subsidiaries authorize or permit any of the officers, directors, investment bankers,
attorneys or
53.
accountants retained by it or any of its Subsidiaries to, and that it shall use commercially
reasonable efforts to cause its and its Subsidiaries’ non-officer employees and other agents not to
(and shall not authorize any of them to) directly or indirectly: (i) solicit, initiate, knowingly
encourage, induce or knowingly facilitate the communication, making, submission or announcement of
any Acquisition Proposal or Acquisition Inquiry or take any action that could reasonably be
expected to lead to an Acquisition Proposal or Acquisition Inquiry; (ii) furnish any information
regarding such Party to any Person in connection with or in response to an Acquisition Proposal or
Acquisition Inquiry; (iii) engage in discussions or negotiations with any Person with respect to
any Acquisition Proposal or Acquisition Inquiry; (iv) approve, endorse or recommend any Acquisition
Proposal; or (v) execute or enter into any letter of intent or similar document or any Contract
contemplating or otherwise relating to any Acquisition Transaction; provided, however, that,
notwithstanding anything contained in this Section 4.5(a), prior to obtaining the Required
Replidyne Stockholder Vote or the Required Company Stockholder Vote, as applicable, each Party may
furnish information regarding such Party to, and enter into discussions or negotiations with, any
Person in response to a Superior Offer or a bona fide, unsolicited written Acquisition Proposal
made or received after the date of this Agreement that is reasonably likely to result in a Superior
Offer that is submitted to such Party by such Person (and not withdrawn) if : (A) neither such
Party nor any Representative of such Party shall have breached this Section 4.5 with respect to
that particular Superior Offer or Acquisition Proposal; (B) the board of directors of such Party
concludes in good faith, based on the advice of outside legal counsel, that such action is required
in order for such Party’s board of directors to comply with its fiduciary obligations to such
Party’s stockholders under applicable Legal Requirements; (C) at least three (3) Business Days
prior to furnishing any such information to, or entering into discussions with, such Person, such
Party gives the other Party written notice of the identity of such Person and of such Party’s
intention to furnish information to, or enter into discussions with, such Person; (D) such Party
receives from such Person an executed confidentiality agreement containing provisions (including
nondisclosure provisions, use restrictions, non-solicitation provisions, no hire provisions and
“standstill” provisions) at least as favorable to such Party as those contained in the
Confidentiality Agreement; and (E) at least three (3) Business Days prior to furnishing any such
nonpublic information to such Person, such Party furnishes such information to the other Party (to
the extent such nonpublic information has not been previously furnished by such Party to the other
Party). Without limiting the generality of the foregoing, each Party acknowledges and agrees that,
in the event any Representative of such Party (whether or not such Representative is purporting to
act on behalf of such Party) takes any action that, if taken by such Party, would constitute a
breach of this Section 4.5 by such Party, the taking of such action by such Representative shall be
deemed to constitute a breach of this Section 4.5 by such Party for purposes of this Agreement.
(b) If any Party or any Representative of such Party receives an Acquisition Proposal or
Acquisition Inquiry at any time during the Pre-Closing Period, then such Party shall promptly (and
in no event later than 24 hours after such Party becomes aware of such Acquisition Proposal or
Acquisition Inquiry) advise the other Party orally and in writing of such Acquisition Proposal or
Acquisition Inquiry (including the identity of the Person making or submitting such Acquisition
Proposal or Acquisition Inquiry and the terms thereof). Such Party shall keep the other Party fully
informed with respect to the status and terms of any such Acquisition Proposal or Acquisition
Inquiry and any modification or proposed modification thereto.
(c) Each Party shall immediately cease and cause to be terminated any existing discussions
with any Person that relate to any Acquisition Proposal or Acquisition Inquiry as of the date of
this Agreement.
(d) Each Party shall not release or permit the release of any Person from, or waive or permit
the waiver of any provision of or right under, any confidentiality, non-solicitation, no hire,
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“standstill” or similar agreement (whether entered into prior to or after the date of this
Agreement) to which such Party is a party or under which such Party has any rights, and shall
enforce or cause to be enforced each such agreement to the extent requested by the other Party.
Each Party shall promptly request each Person that has executed a confidentiality or similar
agreement in connection with its consideration of a possible Acquisition Transaction or equity
investment to return to such Party all confidential information heretofore furnished to such Person
by or on behalf of such Party.
5. ADDITIONAL AGREEMENTS OF THE PARTIES
5.1 Registration Statement; Joint Proxy Statement/Prospectus.
(a) As promptly as practicable after the date of this Agreement, the Parties shall prepare and
cause to be filed with the SEC the Joint Proxy Statement/Prospectus and Replidyne shall prepare and
cause to be filed with the SEC the Form S-4 Registration Statement, in which the Joint Proxy
Statement/Prospectus will be included as a prospectus. Each of the Parties shall use commercially
reasonable efforts to cause the Form S-4 Registration Statement and the Joint Proxy
Statement/Prospectus to comply with the applicable rules and regulations promulgated by the SEC, to
respond promptly to any comments of the SEC or its staff and to have the Form S-4 Registration
Statement declared effective under the Securities Act as promptly as practicable after it is filed
with the SEC. Prior to the Form S-4 Registration Statement being declared effective under the
Securities Act by the SEC, (a) Replidyne and Merger Sub shall execute and deliver to Xxxxxx Godward
Kronish LLP and to Xxxxxxxxxx & Xxxxx, P.A. tax representation letters in a form reasonably
acceptable to such counsel; and (b) the Company shall execute and deliver to Xxxxxxxxxx & Xxxxx,
P.A. and to Xxxxxx Godward Kronish LLP tax representation letters in a form reasonably acceptable
to such counsel. Following the delivery of the tax representation letters pursuant to the
preceding sentence, (x) Replidyne shall use its commercially reasonable efforts to cause Xxxxxx
Godward Kronish LLP to deliver to it a tax opinion satisfying the requirements of Item 601 of
Regulation S-K under the Securities Act; and (y) the Company shall use its commercially reasonable
efforts to cause Xxxxxxxxxx & Xxxxx, P.A. to deliver to it a tax opinion satisfying the
requirements of Item 601 of Regulation S-K under the Securities Act. In rendering such opinions,
each of such counsel shall be entitled to rely on the tax representation letters referred to in
this Section 5.1(a). Each of the Parties shall use commercially reasonable efforts to cause the
Joint Proxy Statement/Prospectus to be mailed to the stockholders of the Company and the
stockholders of Replidyne as promptly as practicable after the Form S-4 Registration Statement is
declared effective under the Securities Act. Each Party shall promptly furnish to the other Party
all information concerning such Party and such Party’s stockholders that may be required or
reasonably requested in connection with any action contemplated by this Section 5.1. If any event
relating to the Company occurs, or if the Company becomes aware of any information, that should be
disclosed in an amendment or supplement to the Form S-4 Registration Statement or the Joint Proxy
Statement/Prospectus, then the Company shall promptly inform Replidyne thereof and shall cooperate
with Replidyne in filing such amendment or supplement with the SEC and, if appropriate, in mailing
such amendment or supplement to the stockholders of the Company.
(b) Prior to the Effective Time, Replidyne shall use commercially reasonable efforts to obtain
all regulatory approvals needed to ensure that the Replidyne Common Stock to be issued pursuant to
the Merger will (to the extent required) be registered or qualified or exempt from registration or
qualification under the securities law of every jurisdiction of the United States in which any
registered holder of Company Common Stock or Company Preferred Stock has an address of record on
the record date applicable to the Required Company Stockholder Vote; provided, however, that
Replidyne shall not be required: (i) to qualify to do business as a foreign corporation in any
jurisdiction in which it is not now qualified; or (ii) to file a general consent to service of
process in any jurisdiction; or (iii) otherwise become subject to taxation in any jurisdiction.
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5.2 Company Stockholders’ Meeting.
(a) The Company shall take all action necessary under applicable Legal Requirements to call,
give notice of and hold a meeting of the holders of Company Common Stock and Company Preferred
Stock to vote on adopting this Agreement (such meeting, the “Company Stockholders’
Meeting”). The Company Stockholders’ Meeting shall be held as promptly as practicable after the
Form S-4 Registration Statement is declared effective under the Securities Act. The Company shall
ensure that all proxies solicited in connection with the Company Stockholders’ Meeting are
solicited in compliance with all applicable Legal Requirements.
(b) The Company agrees that, subject to Section 5.2(c): (i) the board of directors of the
Company and Special Committee shall each recommend that the holders of Company Common Stock and
Company Preferred Stock vote to adopt this Agreement, and shall use commercially reasonable efforts
to solicit such approval, (ii) the Joint Proxy Statement/Prospectus shall include a statement to
the effect that the board of directors of the Company and Special Committee each recommends that
the holders of Company Common Stock and Company Preferred Stock vote to adopt this Agreement (the
recommendation of the board of directors of the Company and Special Committee that the stockholders
of the Company vote to adopt this Agreement being referred to as the “Company Board
Recommendation”); and (iii) the Company Board Recommendation shall not be withdrawn or modified
in a manner adverse to Replidyne, and no resolution by the board of directors of the Company or any
committee thereof to withdraw or modify the Company Board Recommendation in a manner adverse to
Replidyne shall be adopted or proposed.
(c) Notwithstanding anything to the contrary contained in Section 5.2(b), at any time prior to
the adoption of this Agreement by the Required Company Stockholder Vote, the board of directors of
the Company and/or Special Committee may withhold, amend, withdraw or modify the Company Board
Recommendation in a manner adverse to Replidyne if the board of directors of the Company and/or
Special Committee determines in good faith, based on the advice of its outside legal counsel, that
such action is required in order for the Company’s board of directors to comply with its fiduciary
obligations to the Company’s stockholders under applicable Legal Requirements, provided, that
Replidyne must receive three (3) Business Days prior written notice from the Company confirming
that the Company’s board of directors and/or Special Committee has determined to change its
recommendation.
(d) The Company’s obligation to call, give notice of and hold the Company Stockholders’
Meeting in accordance with Section 5.2(a) shall not be limited or otherwise affected by the
commencement, disclosure, announcement or submission of any Superior Offer or other Acquisition
Proposal, or by any withdrawal or modification of the Company Board Recommendation.
5.3 Replidyne Stockholders’ Meeting.
(a) Replidyne shall take all action necessary under applicable Legal Requirements to call,
give notice of and hold a meeting of the holders of Replidyne Common Stock to vote on the issuance
of Replidyne Common Stock pursuant to the Merger and the approval of the Replidyne Certificate of
Amendment (such meeting, the “Replidyne Stockholders’ Meeting”). The Replidyne
Stockholders’ Meeting shall be held as promptly as practicable after the Form S-4 Registration
Statement is declared effective under the Securities Act. Replidyne shall ensure that all proxies
solicited in connection with the Replidyne Stockholders’ Meeting are solicited in compliance with
all applicable Legal Requirements.
(b) Replidyne agrees that, subject to Section 5.3(c): (i) the board of directors of Replidyne
shall recommend that the holders of Replidyne Common Stock vote to approve (A) the
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Replidyne Certificate of Amendment, and (B) the issuance of Replidyne Common Stock pursuant to
the Merger, and shall use commercially reasonable efforts to solicit such approval, (ii) the Joint
Proxy Statement/Prospectus shall include a statement to the effect that the board of directors of
Replidyne recommends that the stockholders of Replidyne vote to approve the Replidyne Certificate
of Amendment and the issuance of Replidyne Common Stock pursuant to the Merger (the recommendation
of the board of directors of Replidyne that the stockholders of Replidyne vote to approve (A) the
Replidyne Certificate of Amendment and (B) the issuance of Replidyne Common Stock pursuant to the
Merger being referred to as the “Replidyne Board Recommendation”); and (iii) the Replidyne
Board Recommendation shall not be withdrawn or modified in a manner adverse to the Company, and no
resolution by the board of directors of Replidyne or any committee thereof to withdraw or modify
the Replidyne Board Recommendation in a manner adverse to the Company shall be adopted or proposed.
(c) Notwithstanding anything to the contrary contained in Section 5.3(b), at any time prior to
the adoption of this Agreement by the Required Replidyne Stockholder Vote, the board of directors
of Replidyne may withhold, amend, withdraw or modify the Replidyne Board Recommendation in a manner
adverse to the Company if the board of directors of Replidyne determines in good faith, based on
the advice of its outside legal counsel, that such action is required in order for Replidyne’s
board of directors to comply with its fiduciary obligations to Replidyne’s stockholders under
applicable Legal Requirements, provided, that the Company must receive three (3) Business Days
prior written notice from Replidyne confirming that Replidyne’s board of directors has determined
to change its recommendation.
(d) Replidyne’s obligation to call, give notice of and hold the Replidyne Stockholders’
Meeting in accordance with Section 5.3(a) shall not be limited or otherwise affected by the
commencement, disclosure, announcement or submission of any Superior Offer or other Acquisition
Proposal, or by any withdrawal or modification of the Replidyne Board Recommendation.
5.4 Regulatory Approvals. Each Party shall use commercially reasonable efforts to file
or otherwise submit, as soon as practicable after the date of this Agreement, all applications,
notices, reports and other documents reasonably required to be filed by such Party with or
otherwise submitted by such Party to any Governmental Body with respect to the Merger and the other
Contemplated Transactions, and to submit promptly any additional information requested by any such
Governmental Body. Without limiting the generality of the foregoing, the Parties shall, promptly
after the date of this Agreement, prepare and file, if any, (a) the notification and report any
forms required to be filed under the HSR Act and (b) any notification or other document required to
be filed in connection with the Merger under any applicable foreign Legal Requirement relating to
antitrust or competition matters. The Company and Replidyne shall as promptly as practicable
respond in compliance with: (i) any inquiries or requests received from the Federal Trade
Commission or the Department of Justice for additional information or documentation; and (ii) any
inquiries or requests received from any state attorney general, foreign antitrust or competition
authority or other Governmental Body in connection with antitrust or competition matters.
5.5 Company Stock Options; Company Warrants.
(a) Subject to Section 5.5(e), at the Effective Time, each Company Option that is outstanding
and unexercised immediately prior to the Effective Time and following the conversion described in
the Company Stockholder Conversion Agreement, whether or not vested, shall be converted into and
become an option to purchase Replidyne Common Stock, and Replidyne shall assume each such Company
Option in accordance with the terms (as in effect as of the date of this Agreement) of the stock
option plan, if any, under which such Company Option was issued and the terms of the stock option
agreement by which such Company Option is evidenced. All rights with respect to Company Common
Stock under Company Options assumed by Replidyne shall thereupon be converted into rights with
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respect to Replidyne Common Stock. Accordingly, from and after the Effective Time: (i) each
Company Option assumed by Replidyne may be exercised solely for shares of Replidyne Common Stock;
(ii) the number of shares of Replidyne Common Stock subject to each Company Option assumed by
Replidyne shall be determined by multiplying (A) the number of shares of Company Common Stock that
were subject to such Company Option immediately prior to the Effective Time and following the
conversion described in the Company Stockholder Conversion Agreement by (B) the Company Share
Conversion Factor and rounding the resulting number down to the nearest whole number of shares of
Replidyne Common Stock; (iii) the per share exercise price for the Replidyne Common Stock issuable
upon exercise of each Company Option assumed by Replidyne shall be determined by dividing the
effective per share exercise price of Company Common Stock subject to such Company Option, as in
effect immediately prior to the Effective Time and following the conversion described in the
Company Stockholder Conversion Agreement, by the Company Share Conversion Factor and rounding the
resulting exercise price up to the nearest whole cent; and (iv) any restriction on the exercise of
any Company Option assumed by Replidyne shall continue in full force and effect and the term,
exercisability, vesting schedule and other provisions of such Company Options shall otherwise
remain unchanged including, with respect to Company Options that were intended to qualify as
“incentive stock options” under Section 422 of the Code, such provisions shall remain unchanged as
are necessary to ensure that such Company Options continue to qualify as “incentive stock options”
under Section 422 of the Code; provided, however, that: (A) each Company Option assumed by
Replidyne in accordance with this Section 5.5(a) shall, in accordance with its terms, be subject to
further adjustment as appropriate to reflect any stock split, division or subdivision of shares,
stock dividend, reverse stock split, consolidation of shares, reclassification, recapitalization or
other similar transaction with respect to Replidyne Common Stock subsequent to the Effective Time;
and (B) the board of directors of Replidyne or a committee thereof shall succeed to the authority
and responsibility of the board of directors of the Company or any committee thereof with respect
to each Company Option assumed by Replidyne.
(b) Subject to Section 5.5(e), at the Effective Time, each Company Warrant that is outstanding
and unexercised immediately prior to the Effective Time and following the conversion described in
the Company Stockholder Conversion Agreement (including without limitation each Company Warrant
issued pursuant to the Company Stockholder Conversion Agreement), shall become converted into and
become a warrant to purchase Replidyne Common Stock and Replidyne shall assume each such Company
Warrant in accordance with its terms. All rights with respect to Company Common Stock or Company
Preferred Stock under Company Warrants assumed by Replidyne shall thereupon be converted into
rights with respect to Replidyne Common Stock. Accordingly, from and after the Effective Time: (i)
each Company Warrant assumed by Replidyne may be exercised solely for shares of Replidyne Common
Stock; (ii) the number of shares of Replidyne Common Stock subject to each Company Warrant assumed
by Replidyne shall be determined by multiplying (A) the number of shares of Company Common Stock or
Company Preferred Stock, as the case may be, that were subject to such Company Warrant immediately
prior to the Effective Time and following the conversion described in the Company Stockholder
Conversion Agreement by (B) the Company Share Conversion Factor, and rounding the resulting number
down to the nearest whole number of shares of Replidyne Common Stock; (iii) the per share exercise
price for the Replidyne Common Stock issuable upon exercise of each Company Warrant assumed by
Replidyne shall be determined by dividing the effective per share exercise price of Company Common
Stock or Company Preferred Stock, as the case may be, that were subject to such Company Warrant, as
in effect immediately prior to the Effective Time and following the conversion described in the
Company Stockholder Conversion Agreement, by the Company Share Conversion Factor, and rounding the
resulting exercise price up to the nearest whole cent; and (iv) any restriction on any Company
Warrant assumed by Replidyne shall continue in full force and effect and the term and other
provisions of such Company Warrant shall otherwise remain unchanged.
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(c) Replidyne shall file with the SEC, no later than 30 days after the Effective Time, a
registration statement on Form S-8 relating to the shares of Replidyne Common Stock issuable with
respect to Company Options assumed by Replidyne in accordance with Section 5.5(a).
(d) Replidyne and the Company shall each use commercially reasonable efforts to submit to its
respective stockholders a proposal that Replidyne assume the Company Stock Option Plans from and
after the Effective Time, with such amendments as the Company may deem reasonably necessary to
effect the provisions of this Section 5.5 and an increase in the number of shares reserved for
issuance under the 2007 Equity Incentive Plan of the Company in an amount mutually agreed upon by
Replidyne and the Company.
(e) Prior to the Effective Time, Replidyne and the Company shall use commercially reasonable
efforts (under the Company Stock Option Plans and otherwise) to effectuate the provisions of this
Section 5.5 and to ensure that, from and after the Effective Time, holders of Company Options have
no rights with respect thereto other than those specifically provided in this Section 5.5.
5.6 Indemnification of Officers and Directors.
(a) From the Effective Time through the sixth anniversary of the date on which the Effective
Time occurs, each of Replidyne and the Surviving Corporation shall, jointly and severally,
indemnify and hold harmless each person who is now, or has been at any time prior to the date
hereof, or who becomes prior to the Effective Time, a director or officer of Replidyne or the
Company (the “D&O Indemnified Parties”), against all claims, losses, liabilities, damages,
judgments, fines and reasonable fees, costs and expenses, including attorneys’ fees and
disbursements (collectively, “Costs”), incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or investigative, arising out
of or pertaining to the fact that the D&O Indemnified Party is or was a director or officer of
Replidyne or the Company, whether asserted or claimed prior to, at or after the Effective Time, to
the fullest extent permitted under, as applicable, (i) the DGCL for directors or officers of
Delaware corporations and (ii) the MBCA for directors or officers of Minnesota corporations. Each
D&O Indemnified Party will be entitled to advancement of expenses incurred in the defense of any
such claim, action, suit, proceeding or investigation from each of Replidyne and the Surviving
Corporation, jointly and severally, upon receipt by Replidyne or the Surviving Corporation from the
D&O Indemnified Party of a request therefor; provided that any person to whom expenses are advanced
provides an undertaking, to the extent then required by the DGCL or MBCA, as applicable, to repay
such advances if it is ultimately determined that such person is not entitled to indemnification.
(b) The Certificate of Incorporation or Articles of Incorporation, as applicable, and Bylaws
of each of Replidyne and the Surviving Corporation shall contain, and Replidyne shall cause the
Articles of Incorporation and Bylaws of the Surviving Corporation to so contain, provisions no less
favorable with respect to indemnification, advancement of expenses and exculpation of present and
former directors and officers of each of Replidyne and the Company than are presently set forth in
the Certificate of Incorporation or Articles of Incorporation, as applicable, and Bylaws of
Replidyne and the Company, as applicable, which provisions shall not be amended, modified or
repealed for a period of six years time from the Effective Time in a manner that would adversely
affect the rights thereunder of individuals who, at or prior to the Effective Time, were officers
or directors of Replidyne or the Company.
(c) Replidyne shall purchase an insurance policy, with an effective date as of the Closing,
that maintains in effect for six years from the Closing the current directors’ and officers’
liability insurance policies maintained by the Company (provided that Replidyne may substitute
therefor policies
59.
of at least the same coverage containing terms and conditions that are not materially less
favorable) with respect to matters occurring prior to the Closing.
(d) Replidyne shall purchase an insurance policy, with an effective date as of the Closing,
that maintains in effect for six years from the Closing the current directors’ and officers’
liability insurance policies maintained by Replidyne with respect to matters occurring prior to the
Closing.
(e) Replidyne shall purchase directors’ and officers’ liability insurance policies, with an
effective date as of the Closing, on commercially available terms and conditions and with coverage
limits customary for U.S. public companies similarly situated to Replidyne.
(f) Replidyne shall pay all expenses, including reasonable attorneys’ fees, that may be
incurred by the persons referred to in this Section 5.6 in connection with their enforcement of
their rights provided in this Section 5.6.
(g) The provisions of this Section 5.6 are intended to be in addition to the rights otherwise
available to the current and former officers and directors of Replidyne and the Company by law,
charter, statute, by-law or agreement, and shall operate for the benefit of, and shall be
enforceable by, each of the D&O Indemnified Parties, their heirs and their representatives.
(h) In the event Replidyne or the Surviving Corporation or any of their respective successors
or assigns (i) consolidates with or merges into any other person and shall not be the continuing or
surviving corporation or entity of such consolidation or merger, or (ii) transfers all or
substantially all of its properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of Replidyne or the Surviving
Corporation, as the case may be, shall succeed to the obligations set forth in this Section 5.6.
(i) Replidyne shall cause the Surviving Corporation to perform all of the obligations of the
Surviving Corporation under this Section 5.6.
5.7 Additional Agreements.
(a) Subject to Section 5.7(b), the Parties shall use commercially reasonable efforts to cause
to be taken all actions necessary to consummate the Merger and make effective the other
Contemplated Transactions. Without limiting the generality of the foregoing, but subject to Section
5.7(b), each Party to this Agreement: (i) shall make all filings and other submissions (if any) and
give all notices (if any) required to be made and given by such Party in connection with the Merger
and the other Contemplated Transactions; (ii) shall use commercially reasonable efforts to obtain
each Consent (if any) reasonably required to be obtained (pursuant to any applicable Legal
Requirement or Contract, or otherwise) by such Party in connection with the Merger or any of the
other Contemplated Transactions or for such Contract to remain in full force and effect, (iii)
shall use commercially reasonable efforts to lift any injunction prohibiting, or any other legal
bar to, the Merger or any of the other Contemplated Transactions and (iv) shall use commercially
reasonable efforts to satisfy the conditions precedent to the consummation of this Agreement. Each
Party shall provide to the other Party a copy of each proposed filing with or other submission to
any Governmental Body relating to any of the Contemplated Transactions, and shall give the other
Party a reasonable time prior to making such filing or other submission in which to review and
comment on such proposed filing or other submission. Each Party shall promptly deliver to the other
Party a copy of each such filing or other submission made, each notice given and each Consent
obtained by such Party during the Pre-Closing Period.
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(b) Notwithstanding anything to the contrary contained in this Agreement, no Party shall have
any obligation under this Agreement: (i) to dispose of or transfer any assets; (ii) to discontinue
offering any product or service; (iii) to license or otherwise make available to any Person any
Intellectual Property; (iv) to hold separate any assets or operations (either before or after the
Closing Date); (v) to make any commitment (to any Governmental Body or otherwise) regarding its
future operations; or (vi) to contest any Legal Proceeding or any order, writ, injunction or decree
relating to the Merger or any of the other Contemplated Transactions if such Party determines in
good faith that contesting such Legal Proceeding or order, writ, injunction or decree might not be
advisable.
5.8 Disclosure. Without limiting any of either Party’s obligations under the
Confidentiality Agreement, each Party shall not, and shall not permit any of its Subsidiaries or
any Representative of such Party to, issue any press release or make any disclosure (to any
customers or employees of such Party, to the public or otherwise) regarding the Merger or any of
the other Contemplated Transactions unless: (a) the other Party shall have approved such press
release or disclosure in writing; or (b) such Party shall have determined in good faith, upon the
advice of outside legal counsel, that such disclosure is required by applicable Legal Requirements
and, to the extent practicable, before such press release or disclosure is issued or made, such
Party advises the other Party of, and consults with the other Party regarding, the text of such
press release or disclosure.
5.9 Listing. Replidyne shall promptly (i) to the extent required by the rules and
regulations of the Nasdaq Global Market, prepare and submit a notification form for the listing of
the shares of Replidyne Common Stock to be issued in the Merger and use its commercially reasonable
efforts to cause such shares to be approved for listing (subject to notice of issuance), and (ii)
to the extent required by Nasdaq Marketplace Rule 4340, file an initial listing for the Replidyne
Common Stock on the Nasdaq Global Market (the “Nasdaq Listing Application”) and use its
commercially reasonable efforts to cause such Nasdaq Listing Application to be conditionally
approved prior to the Effective Time with respect to the then-outstanding shares of Replidyne
Common Stock. The Company shall cooperate with Replidyne as reasonably requested by Replidyne to
cause the Nasdaq Listing Application to be approved and the shares of Replidyne Common Stock to be
issued in the Merger to be approved for listing on the Nasdaq Global Market and shall promptly
furnish to Replidyne all information concerning the Company and its stockholders that may be
required or reasonably requested in connection with any action contemplated by this Section 5.9.
5.10 Directors and Officers.
(a) Prior to the Effective Time, and subject to the receipt of any required stockholder vote,
Replidyne shall take all action necessary (i) to cause the number of members of the board of
directors of Replidyne to be fixed at ten and the persons identified on Schedule 3A, concurrently
with the Effective Time, to constitute the board of directors of Replidyne, with each such member
to be of the class of directors as shall be designated by the Company, which action will be
effective concurrently with the Effective Time, and (ii) to obtain the necessary resignations of
the directors of Replidyne serving immediately prior to the Effective Time, which resignations will
be effective concurrently with the effectiveness of the elections referred to in clause (i). If
any person so designated to be a director shall, prior to the Effective Time, be unable or
unwilling to hold office beginning concurrently with the Effective Time, a majority of the
directors of Replidyne immediately after the Effective Time shall designate another to be appointed
as a director in his or her place.
(b) At the Effective Time, Replidyne and the Surviving Corporation shall take all action
necessary (i) to cause the number of members of the Surviving Corporation’s board of directors to
be fixed at one and the person identified on Schedule 3B to be elected to the Surviving
Corporation’s board of directors, which action will be effective concurrently with the Effective
Time, and (ii) effective
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concurrently with such appointment, to obtain the resignations, or to cause the removal
without cause, of the directors identified on Schedule 3B. If any person so designated to be a
director shall prior to the Effective Time be unable or willing to hold office beginning
concurrently with the Effective Time, the Company (if such person is an Affiliate of the Company)
shall designate another person to be appointed as a director to his or her place.
(c) The board of directors of Replidyne, effective as of the Effective Time, shall appoint the
Persons set forth on Schedule 3C as officers of Replidyne to the offices set forth opposite their
respective names on Schedule 3C.
(d) Replidyne shall take all action necessary to obtain the resignations of all officers and
other employees of Replidyne that are serving as of immediately prior to the Effective Time, or
otherwise terminate the employment of such officers and other employees, which resignations or
terminations will be effective as of the Effective Time.
5.11 Tax Matters.
(a) Replidyne, Merger Sub and the Company each agree to use their respective commercially
reasonable efforts to cause the Merger to qualify, and will not take any actions that to their
Knowledge could reasonably be expected to prevent the Merger from qualifying, as a “reorganization”
under Section 368(a) of the Code.
(b) This Agreement is intended to constitute, and the Parties hereto hereby adopt this
Agreement as, a “plan or reorganization” within the meaning Treasury Regulation Sections 1.368-2(g)
and 1.368-3(a). Replidyne, Merger Sub and the Company shall report the Merger as a reorganization
within the meaning of Section 368(a) of the Code, unless otherwise required by applicable law.
(c) On or prior to the Closing, the Company shall deliver to Replidyne a notice that Company
Common Stock (including shares issued as a result of the conversion described in the Company
Stockholder Conversion Agreement) are not “U.S. real property interests” in accordance with
Treasury Regulations under Sections 897 and 1445 of the Code, together with evidence reasonably
satisfactory to Replidyne that the Company delivered or made available notice to the Internal
Revenue Service in accordance with the provisions of Section 1.897-2(h)(2) of the Treasury
Regulations. If Replidyne does not receive the notice described above on or before the Closing
Date, Replidyne shall be permitted to withhold from the payments to be made pursuant to this
Agreement any required withholding tax under Section 1445 of the Code.
(d) Replidyne, Merger Sub and the Company each agree to use their respective commercially
reasonable efforts to obtain the opinions referred to in Sections 7.4(d) and 8.4(c), respectively,
including by executing letters of representation as described in Section 5.1(a).
5.12 Registration Statement on Form S-1. Immediately following the execution and
delivery of this Agreement by the Parties, the Company shall take all necessary action to
permanently withdraw from consideration by the SEC its outstanding Registration Statement on Form
S-1 (registration no. 333-148798) originally filed with the SEC on January 22, 2008.
5.13 Amendment to Equity Agreements. The Company shall use commercially reasonable
efforts to obtain an acknowledgement in a form reasonably acceptable to Replidyne from the holders
of those Company Options and shares of Company Common Stock described on Part 2.9(d) of the Company
Disclosure Schedule (the “Non-Vesting Securities”) that the terms of the restricted stock
agreements and option agreements related thereto do not provide that the vesting of such
Non-Vesting Securities will
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accelerate, in whole or in part, in connection with or as a result of the consummation of the
Merger and the other Contemplated Transactions (the “Equity Acknowledgments”).
Notwithstanding the foregoing, the Company may allow the acceleration of vesting of up to 775,000
Company Options (as adjusted for any stock splits, combinations, recapitalizations and the like)
held by officers of the Company that were issued prior to the date of this Agreement pursuant to
the Company 2007 Plan and are identified on Part 2.9(d) of the Company Disclosure Schedule, and
such Company Options shall be deemed not to be “Non-Vesting Securities” for purposes of this
Agreement.
5.14 Termination of Agreements. Replidyne shall use commercially reasonable efforts
to terminate the agreements and employee benefit plans set forth on Schedule 4 hereto.
5.15 Replidyne Lease. Replidyne shall use commercially reasonable efforts to
terminate, sublease or otherwise assign to a third party its remaining obligations under that
certain Lease between Triumph 1450 LLC and Replidyne, dated October 25, 2005, as amended (the
“Replidyne Lease”). The Parties agree that Replidyne’s inability to complete any such
termination, sublease or assignment shall not constitute a breach of this Section 5.15, provided
that any future financial obligations owed by Replidyne in respect of the Replidyne Lease shall
constitute a liability for purposes of the definition of Net Assets.
5.16 Officer Lock-up Agreements. Replidyne and the Company shall each use
commercially reasonable efforts to cause its respective officers to enter into lock-up agreements
in favor of Replidyne and the Company pursuant to which such officers would agree not to sell,
transfer or otherwise dispose of any securities of Replidyne or the Company until the date that is
90 days after the closing of the Merger. Such lock-up agreements shall be in substantially the
same form of, and shall be considered for purposes of this Agreement to be, Replidyne Stockholder
Lock-up Agreements and the Company Stockholder Lock-up Agreements, respectively.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH PARTY
The obligations of each Party to effect the Merger and otherwise consummate the transactions to be
consummated at the Closing are subject to the satisfaction or, to the extent permitted by
applicable law, the written waiver by each of the Parties, at or prior to the Closing, of each of
the following conditions:
6.1 Effectiveness of Registration Statement. The Form S-4 Registration Statement shall
have become effective in accordance with the provisions of the Securities Act, and shall not be
subject to any stop order or proceeding (or threatened proceeding by the SEC) seeking a stop order
with respect to the Form S-4 Registration Statement.
6.2 No Restraints. No temporary restraining order, preliminary or permanent injunction
or other order preventing the consummation of the Merger shall have been issued by any court of
competent jurisdiction or other Governmental Body and remain in effect, and there shall not be any
Legal Requirement which has the effect of making the consummation of the Merger illegal.
6.3 Stockholder Approval. This Agreement shall have been duly adopted by the Required
Company Stockholder Vote, and the Replidyne Certificate of Amendment and the issuance of shares of
Replidyne Common Stock to the stockholders of the Company pursuant to the terms of this Agreement
shall have been duly approved by the Required Replidyne Stockholder Vote.
6.4 Governmental Authorization. Any Governmental Authorization or other Consent
required to be obtained by any of the Parties under any applicable antitrust or competition law or
regulation or other Legal Requirement shall have been obtained and shall remain in full force and
effect.
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6.5 Listing. The Nasdaq Listing Application shall have been conditionally approved,
and Replidyne shall have caused the shares of Replidyne Common Stock being issued in the Merger to
be conditionally approved for listing on the Nasdaq Global Market, both subject only to completion
of the Closing and completion by Replidyne of the Reverse Stock Split.
6.6 Regulatory Matters. Any waiting period applicable to the consummation of the
Merger under the HSR Act or any material applicable foreign antitrust requirements reasonably
determined to apply to the Merger shall have expired or been terminated, and there shall not be in
effect any voluntary agreement between Replidyne, Merger Sub or the Company and the Federal Trade
Commission, the Department of Justice or any foreign Governmental Body pursuant to which such Party
has agreed not to consummate the Merger for any period of time; provided, that neither the Company,
on the one hand, nor Replidyne on the other hand, shall enter into any such voluntary agreement
without the written consent of the other Party.
6.7 Legal Proceedings. There shall not be pending any Legal Proceeding, and neither
Replidyne nor the Company shall have received any written communication from any Governmental Body
or any other third party in which such Governmental Body or third party indicates a material
likelihood of commencing any Legal Proceeding or taking any other action: (a) challenging or
seeking to restrain or prohibit the consummation of the Merger or any of the other transactions
contemplated by this Agreement; (b) relating to the Merger or any of the other transactions
contemplated by this Agreement and seeking to obtain from the Company or Replidyne any damages or
other relief that may be material to the Company or Replidyne, respectively; (c) seeking to
prohibit or limit in any material respect Replidyne’s ability to vote, transfer, receive dividends
with respect to or otherwise exercise ownership rights with respect to the stock of the Surviving
Corporation; (d) that could materially and adversely affect the right or ability of the Company or
Replidyne to own the assets or operate the business of the Company; (e) seeking to compel any of
the Company or Replidyne or any Subsidiary of Replidyne to dispose of or hold separate any material
assets as a result of the Merger or any of the other transactions contemplated by this Agreement;
or (f) seeking to impose (or that could result in the imposition of) any criminal sanctions or
liability.
7. ADDITIONAL CONDITIONS PRECEDENT TO OBLIGATIONS OF REPLIDYNE AND MERGER SUB
The obligations of Replidyne and Merger Sub to effect the Merger and otherwise consummate the
transactions to be consummated at the Closing are subject to the satisfaction or the written waiver
by Replidyne, at or prior to the Closing, of each of the following conditions:
7.1 Accuracy of Representations. The representations and warranties of the Company
contained in this Agreement shall have been true and correct as of the date of this Agreement and
shall be true and correct on and as of the Closing Date with the same force and effect as if made
on the Closing Date except (A) in each case, or in the aggregate, where the failure to be true and
correct would not reasonably be expected to have a Company Material Adverse Effect, or (B) for
those representations and warranties that address matters only as of a particular date (which
representations shall have been true and correct, subject to the qualifications as set forth in the
preceding clause (A), as of such particular date) (it being understood that, for purposes of
determining the accuracy of such representations and warranties, (i) all “Company Material Adverse
Effect” qualifications and other qualifications based on the word “material” contained in such
representations and warranties shall be disregarded and (ii) any update of or modification to the
Company Disclosure Schedule made or purported to have been made after the date of this Agreement
shall be disregarded).
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7.2 Performance of Covenants. Each of the covenants and obligations in this Agreement
that the Company is required to comply with or to perform at or prior to the Closing shall have
been complied with and performed by the Company in all material respects.
7.3 Consents. All of the Consents set forth on Part 2.20 of the Company Disclosure
Schedule shall have been obtained and shall be in full force and effect.
7.4 Agreements and Other Documents. Replidyne shall have received the following
agreements and other documents, each of which shall be in full force and effect:
(a) a certificate executed by the Chief Executive Officer and Chief Financial Officer of the
Company confirming that the conditions set forth in Sections 7.1, 7.2, 7.3, 7.5 and 7.6 have been
duly satisfied and certifying, as of immediately prior to the Effective Time, (i) the number of
Converting Company Securities, (ii) the Company Share Conversion Factor (as determined in
accordance with the methodology as set forth in Section 1.6(f)), and (iii) the following
information with respect to each holder of Converting Company Securities: (A) such holder’s record
address, (B) the number of each of such securities and rights held by such holder and, if
applicable, the certificate numbers related thereto, (C) the exercise price(s) of each of such
holder’s Company Options and Company Warrants, (D) the number of shares of Replidyne Common Stock
such holder is entitled to receive pursuant to Section 1.6(a), (E) the amount of cash such holder
is entitled to receive pursuant to Section 1.6(c), and (F) the number of shares of Replidyne Common
Stock into which each of such holder’s Company Options and Company Warrants are convertible
pursuant to Sections 5.5 and 1.6(d) together with the adjusted exercise price with respect thereto.
(b) certificates of good standing (or equivalent documentation) of the Company in its
jurisdiction of organization and the various foreign jurisdictions in which it is qualified,
certified charter documents, certificates as to the incumbency of officers and the adoption of
resolutions of the board of directors of the Company authorizing the execution of this Agreement
and the consummation of the Contemplated Transactions to be performed by the Company;
(c) a written opinion dated as of the Closing Date from Xxxxxxxxxx & Xxxxx, P.A., addressed to
Replidyne, regarding the matters set forth on Exhibit C; and
(d) a written opinion dated as of the Closing Date from Xxxxxx Godward Kronish LLP, addressed
to Replidyne, to the effect that the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code (it being agreed that Replidyne and
the Company shall each provide reasonable cooperation, including making reasonable and customary
representations, to Xxxxxx Godward Kronish LLP to enable it to render such opinion and that counsel
shall be entitled to rely on such representations and such assumptions as they deem appropriate in
rendering such opinion).
7.5 No Material Adverse Effect. Since the date of this Agreement, there shall not
have occurred and be continuing any Company Material Adverse Effect, and no event shall have
occurred or circumstance shall exist that, in combination with any other events or circumstances,
would reasonably be expected to have or result in a Company Material Adverse Effect.
7.6 Accelerating Equity Agreements. The Company shall have received Equity
Acknowledgements in accordance with Section 5.13 relating to (i) any Non-Vesting Securities held by
any director or officer of the Company and (ii) not less than 80% of the Non-Vesting Securities
held by any Person that is not a director or officer of the Company.
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8. ADDITIONAL CONDITIONS PRECEDENT TO OBLIGATION OF THE COMPANY
The obligations of the Company to effect the Merger and otherwise consummate the transactions to be
consummated at the Closing are subject to the satisfaction or the written waiver by the Company, at
or prior to the Closing, of each of the following conditions:
8.1 Accuracy of Representations. The representations and warranties of Replidyne and
Merger Sub contained in this Agreement shall have been true and correct as of the date of this
Agreement and shall be true and correct on and as of the Closing Date with the same force and
effect as if made on the Closing Date except (A) in each case, or in the aggregate, where the
failure to be true and correct would not reasonably be expected to have a Replidyne Material
Adverse Effect, or (B) for those representations and warranties which address matters only as of a
particular date (which representations shall have been true and correct, subject to the
qualifications as set forth in the preceding clause (A), as of such particular date) (it being
understood that, for purposes of determining the accuracy of such representations and warranties,
(i) all “Replidyne Material Adverse Effect” qualifications and other qualifications based on the
word “material” contained in such representations and warranties shall be disregarded and (ii) any
update of or modification to the Replidyne Disclosure Schedule made or purported to have been made
after the date of this Agreement shall be disregarded, except that any update or modification that
relates to (x) the termination of any Replidyne Contract or (y) any action that Replidyne deems
appropriate in order to divest itself, whether by acquisition, liquidation or otherwise, of its
pre-clinical programs and other non-cash assets shall not be so disregarded and shall act to update
and modify the applicable representation or warranty).
8.2 Performance of Covenants. All of the covenants and obligations in this Agreement
that Replidyne or Merger Sub is required to comply with or to perform at or prior to the Closing
shall have been complied with and performed in all material respects.
8.3 Consents. All the Consents set forth on Part 8.3 of the Replidyne Disclosure
Schedule shall have been obtained and shall be in full force and effect.
8.4 Documents. The Company shall have received the following documents:
(a) a certificate executed by the Chief Executive Officer and Chief Financial Officer of
Replidyne confirming that the conditions set forth in Sections 8.1, 8.2, 8.3, 8.6 and 8.7 have been
duly satisfied and certifying, as of immediately prior to the Effective Time, the number of
Surviving Replidyne Securities; and
(b) certificates of good standing of each of Replidyne and Merger Sub in its jurisdiction of
organization and the various foreign jurisdictions in which it is qualified, certified charter
documents, certificates as to the incumbency of officers and the adoption of resolutions of its
board of directors authorizing the execution of this Agreement and the consummation of the
Contemplated Transactions to be performed by Replidyne and Merger Sub hereunder.
(c) the Company shall have received the opinion dated as of the Closing Date of Xxxxxxxxxx &
Xxxxx, P.A., addressed to the Company, to the effect that the Merger will be treated for federal
income tax purposes as a reorganization within the meaning of Section 368(a) of the Code (it being
agreed that Replidyne and the Company shall each provide reasonable cooperation, including making
reasonable and customary representations, to Xxxxxxxxxx & Xxxxx, P.A. to enable them to render such
opinion and that counsel shall be entitled to rely on such representations and such assumptions as
they deem appropriate in rendering such opinion).
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8.5 Certificate of Amendment. The Replidyne Certificate of Amendment shall have become
effective under the DGCL.
8.6 No Material Adverse Effect. Since the date of this Agreement, there shall not
have occurred and be continuing any Replidyne Material Adverse Effect, and no event shall have
occurred or circumstance shall exist that, in combination with any other events or circumstances,
would reasonably be expected to have or result in a Replidyne Material Adverse Effect.
8.7 Termination of Certain Agreements. Replidyne shall have taken all action
necessary to terminate the Replidyne Contracts and Encumbrances set forth on Schedule 5 and
provided confirmation thereof reasonably acceptable to the Company.
9. TERMINATION
9.1 Termination. This Agreement may be terminated prior to the Effective Time (whether
(except as set forth below) before or after adoption of this Agreement by the Company’s
stockholders and whether (except as set forth below) before or after approval of this Agreement and
the Replidyne Certificate of Amendment by Replidyne’s stockholders):
(a) by mutual written consent duly authorized by the boards of directors of Replidyne and the
Company;
(b) by either Replidyne or the Company if the Merger shall not have been consummated by April
30, 2009; provided, however, that a Party shall not be permitted to terminate this Agreement under
this Section 9.1(b) if the failure to consummate the Merger by such date is attributable to the
failure on the part of such Party to perform any covenant or obligation in this Agreement required
to be performed by such Party at or prior to the Effective Time;
(c) by either Replidyne or the Company if a court of competent jurisdiction or other
Governmental Body shall have issued a final and non-appealable order, decree or ruling, or shall
have taken any other final and non-appealable action, having the effect of permanently restraining,
enjoining or otherwise prohibiting the Merger;
(d) by either Replidyne or the Company if (i) the Replidyne Stockholders’ Meeting (including
any adjournments and postponements thereof) shall have been held and the stockholders of Replidyne
shall have taken a final vote to approve (A) the Replidyne Certificate of Amendment and (B) the
issuance of shares of Replidyne Common Stock in the Merger, and (ii) either or both of the
Replidyne Certificate of Amendment and the issuance of Replidyne Common Stock pursuant to the
Merger shall not have been approved at the Replidyne Stockholders’ Meeting (and shall not have been
approved at any adjournment or postponement thereof) by the applicable Required Replidyne
Stockholder Vote;
(e) by either Replidyne or the Company if (i) the Company Stockholders’ Meeting (including any
adjournments and postponements thereof) shall have been held and completed and the stockholders of
the Company shall have taken a final vote to approve the adoption of this Agreement (including the
consummation of the Merger) and (ii) the adoption of this Agreement (including the consummation of
the Merger) shall not have been approved at the Company Stockholders’ Meeting by the Required
Company Stockholder Vote;
(f) by either Replidyne or the Company if (i) the Replidyne Board Recommendation has been
withheld, withdrawn, amended or modified in accordance with Section 5.3(c) or (ii) Replidyne
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enters into a letter of intent, memorandum of understanding or definitive agreement with
respect to any Superior Offer;
(g) by either Replidyne or the Company if (i) the Company Board Recommendation has been
withheld, withdrawn, amended or modified in accordance with Section 5.2(c) or (ii) the Company
enters into a letter of intent, memorandum of understanding or definitive agreement with respect to
any Superior Offer;
(h) by the Company, if: (i) any of the representations and warranties of Replidyne or Merger
Sub set forth in this Agreement shall have been inaccurate as of the date of this Agreement or
shall have become inaccurate as of a date subsequent to the date of this Agreement (as if made on
such subsequent date), such that the condition set forth in Section 8.1 would not be satisfied; or
(ii) any of Replidyne’s or Merger Sub’s covenants or obligations set forth in this Agreement shall
have been breached such that the condition set forth in Section 8.2 would not be satisfied;
provided, that, if an inaccuracy in any of Replidyne’s or Merger Sub’s representations and
warranties as of date subsequent to the date of this Agreement or breach of a covenant or
obligation by Replidyne or Merger Sub is curable by Replidyne or Merger Sub, and Replidyne or
Merger Sub is continuing to exercise commercially reasonable efforts to cure such inaccuracy or
breach, then the Company may not terminate this Agreement pursuant to this Section 9.1(h) as a
result of such particular inaccuracy or breach unless such inaccuracy or breach shall remain
uncured for a period of 30 days commencing on the date that the Company gives Replidyne notice of
such inaccuracy or breach; or
(i) by Replidyne, if: (i) any of the representations and warranties of the Company set forth
in this Agreement shall have been inaccurate as of the date of this Agreement or shall have become
inaccurate as of a date subsequent to the date of this Agreement (as if made on such subsequent
date), such that the condition set forth in Section 7.1 would not be satisfied; or (ii) any of the
Company’s covenants or obligations set forth in this Agreement shall have been breached such that
the condition set forth in Section 7.2 would not be satisfied; provided, that, if an inaccuracy in
any of the Company’s representations and warranties as of date subsequent to the date of this
Agreement or breach of a covenant or obligation by the Company is curable by the Company, and the
Company is continuing to exercise commercially reasonable efforts to cure such inaccuracy or
breach, then Replidyne may not terminate this Agreement pursuant to this Section 9.1(i) as a result
of such particular inaccuracy or breach unless such inaccuracy or breach shall remain uncured for a
period of 30 days commencing on the date that Replidyne gives the Company notice of such inaccuracy
or breach.
9.2 Effect of Termination. In the event of the termination of this Agreement as
provided in Section 9.1, this Agreement shall be of no further force or effect; provided, however,
that (i) this Section 9.2, Section 9.3, and Section 10 shall survive the termination of this
Agreement and shall remain in full force and effect, and (ii) the termination of this Agreement
shall not relieve any Party from any liability for any material breach of any representation,
warranty, covenant, obligation or other provision contained in this Agreement.
9.3 Expenses; Termination Fees.
(a) Except as set forth in this Section 9.3, all fees and expenses incurred in connection with
this Agreement and the Contemplated Transactions shall be paid by the Party incurring such
expenses, whether or not the Merger is consummated. Notwithstanding the foregoing, the Parties
shall each pay 50% of the S-4 Expenses.
(b) If this Agreement is terminated (i) by Replidyne or the Company pursuant to Section 9.1(d)
and (A) at any time before the Replidyne Stockholders’ Meeting an Acquisition Proposal
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with respect to Replidyne shall have been publicly announced, disclosed or otherwise
communicated to the board of directors or stockholders of Replidyne and (B) within 12 months after
the termination of this Agreement, Replidyne enters into any agreement for an Acquisition
Transaction contemplated by such Acquisition Proposal or consummates an Acquisition Transaction
contemplated by such Acquisition Proposal, or (ii) by Replidyne or the Company pursuant to Section
9.1(f), in either case, without duplication, Replidyne shall, within 24 hours of the earlier of
entering into such agreement or such consummation, in the case of (i), or termination, in the case
of (ii), pay to the Company a non-refundable fee in an amount equal to $1,500,000 and reimburse the
Company for all actual out-of-pocket legal, accounting and investment advisory fees paid or payable
by the Company in connection with this Agreement and the Contemplated Transactions.
(c) If this Agreement is terminated (i) by Replidyne or the Company pursuant to Section 9.1(e)
and (A) at any time before the Company Stockholders’ Meeting an Acquisition Proposal with respect
to the Company shall have been publicly announced, disclosed or otherwise communicated to the board
of directors or stockholders of the Company and (B) within 12 months after the termination of this
Agreement, the Company enters into any agreement for an Acquisition Transaction contemplated by
such Acquisition Proposal or consummates an Acquisition Transaction contemplated by such
Acquisition Proposal, or (ii) by Replidyne or the Company pursuant to Section 9.1(g), in either
case, without duplication, the Company shall, within 24 hours after the earlier of entering into
such agreement or such consummation, in the case of (i), or termination, in the case of (ii), pay
to Replidyne a non-refundable fee in an amount equal to $1,500,000 and reimburse Replidyne for all
actual out-of-pocket legal, accounting and investment advisory fees paid or payable by Replidyne in
connection with this Agreement and the Contemplated Transactions.
(d) If either Party fails to pay when due any amount payable by such Party under Section 9.3,
then (i) such Party shall reimburse the other Party for reasonable costs and expenses (including
reasonable fees and disbursements of counsel) incurred in connection with the collection of such
overdue amount and the enforcement by the other Party of its rights under this Section 9.3, and
(ii) such Party shall pay to the other Party interest on such overdue amount (for the period
commencing as of the date such overdue amount was originally required to be paid and ending on the
date such overdue amount is actually paid to the other Party in full) at a rate per annum equal to
the “prime rate” (as announced by Bank of America or any successor thereto) in effect on the date
such overdue amount was originally required to be paid.
10. MISCELLANEOUS PROVISIONS
10.1 Non-Survival of Representations and Warranties. The representations and
warranties of the Company, Merger Sub and Replidyne contained in this Agreement or any certificate
or instrument delivered pursuant to this Agreement shall terminate at the Effective Time.
10.2 Amendment. This Agreement may be amended with the approval of the respective
boards of directors (or duly appointed committees thereof) of the Company and Replidyne at any time
(whether before or after the adoption of this Agreement by the stockholders of the Company or
before or after the approval of the Replidyne Certificate of Amendment or the issuance of shares of
Replidyne Common Stock to the stockholders of the Company pursuant to the terms of this Agreement
by the stockholders of Replidyne); provided, however, that after any such adoption of this
Agreement by the stockholders of the Company, no amendment shall be made that by law requires
further approval of the stockholders of the Company without the further approval of such
stockholders. This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the Company and Replidyne.
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10.3 Waiver.
(a) No failure on the part of any Party to exercise any power, right, privilege or remedy
under this Agreement, and no delay on the part of any Party in exercising any power, right,
privilege or remedy under this Agreement, shall operate as a waiver of such power, right, privilege
or remedy; and no single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right, privilege or remedy.
(b) No Party shall be deemed to have waived any claim arising out of this Agreement, or any
power, right, privilege or remedy under this Agreement, unless the waiver of such claim, power,
right, privilege or remedy is expressly set forth in a written instrument duly executed and
delivered on behalf of such Party; and any such waiver shall not be applicable or have any effect
except in the specific instance in which it is given.
10.4 Entire Agreement; Counterparts; Exchanges by Facsimile. This Agreement and the
other agreements referred to in this Agreement constitute the entire agreement and supersede all
prior agreements and understandings, both written and oral, among or between any of the Parties
with respect to the subject matter hereof and thereof; provided, however, that the Confidentiality
Agreement shall not be superseded and shall remain in full force and effect in accordance with its
terms. This Agreement may be executed in several counterparts, each of which shall be deemed an
original and all of which shall constitute one and the same instrument. The exchange of a fully
executed Agreement (in counterparts or otherwise) by all Parties by facsimile or electronic
transmission shall be sufficient to bind the Parties to the terms and conditions of this Agreement.
10.5 Applicable Law; Jurisdiction. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws. Each of the Parties to this Agreement (a)
consents to submit itself to the personal jurisdiction of the state and federal courts located in
the State of Delaware in any action or proceeding arising out of or relating to this Agreement or
any of the Contemplated Transactions, (b) agrees that all claims in respect of such action or
proceeding may be heard and determined in any such court, (c) agrees that it shall not attempt to
deny or defeat such personal jurisdiction by motion or other request for leave from any such court,
and (d) agrees not to bring any action or proceeding (including counter-claims) arising out of or
relating to this Agreement or any of the Contemplated Transactions in any other court. Each of the
Parties hereto waives any defense of inconvenient forum to the maintenance of any action or
proceeding so brought and waives any bond, surety or other security that might be required of any
other Party with respect thereto. Any Party hereto may make service on another Party by sending or
delivering a copy of the process to the Party to be served at the address and in the manner
provided for the giving of notices in Section 10.8. Nothing in this Section 10.5, however, shall
affect the right of any Party to serve legal process in any other manner permitted by law.
10.6 Attorneys’ Fees. In any action at law or suit in equity to enforce this Agreement
or the rights of any of the Parties under this Agreement, the prevailing Party in such action or
suit shall be entitled to receive a reasonable sum for its attorneys’ fees and all other reasonable
costs and expenses incurred in such action or suit.
10.7 Assignability; No Third Party Beneficiaries. This Agreement shall be binding
upon, and shall be enforceable by and inure solely to the benefit of, the Parties hereto and their
respective successors and assigns; provided, however, that neither this Agreement nor any of a
Party’s rights or obligations hereunder may be assigned or delegated by such Party without the
prior written consent of the other Party, and any attempted assignment or delegation of this
Agreement or any of such rights or obligations by such Party without the other Party’s prior
written consent shall be void and of no effect. Nothing in this Agreement, express or implied, is
intended to or shall confer upon any Person (other than: (a) the Parties
70.
hereto; (b) rights pursuant to Section 1, and (c) the D&O Indemnified Parties to the extent of
their respective rights pursuant to Section 5.6) any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
10.8 Notices. Any notice or other communication required or permitted to be delivered
to any Party under this Agreement shall be in writing and shall be deemed properly delivered, given
and received when delivered by hand, by registered mail, by courier or express delivery service or
by facsimile to the address or facsimile telephone number set forth beneath the name of such Party
below (or to such other address or facsimile telephone number as such Party shall have specified in
a written notice given to the other Parties hereto):
If to the Company, to:
| Cardiovascular Systems, Inc. | ||
| 000 Xxxxxx Xxxxx | ||
| Xx. Xxxx, XX 00000-0000 | ||
| Attention: Chief Executive Officer | ||
| Facsimile: 000-000-0000 |
with a copy to:
| Xxxxxxxxxx & Xxxxx, P.A. | ||
| 000 Xxxxx Xxxxx Xxxxxx | ||
| Xxxxx 0000 | ||
| Xxxxxxxxxxx, XX 00000 | ||
| Attention: Xxxxxx X. Xxxxx | ||
| Facsimile: 612-492-7077 |
If to Replidyne or Replidyne Merger Sub, to:
| Replidyne, Inc. | ||
| 0000 Xxxxxxxx Xxxxx, | ||
| Xxxxxxxxxx, XX 00000 | ||
| Attention: Chief Financial Officer | ||
| Facsimile: 000-000-0000 |
with a copy to:
| Xxxxxx Godward Kronish LLP | ||
| 000 Xxxxxxxxxxx Xxxxxxxx, Xxxxx 000 | ||
| Xxxxxxxxxx, XX 00000-0000 | ||
| Attention: Xxxxx C.T. Linfield | ||
| Facsimile: 000-000-0000 |
10.9 Cooperation. Each Party agrees to cooperate fully with the other Party and to
execute and deliver such further documents, certificates, agreements and instruments and to take
such other actions as may be reasonably requested by the other Party to evidence or reflect the
Contemplated Transactions and to carry out the intent and purposes of this Agreement.
10.10 Severability. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability
of the remaining terms and provisions of this Agreement or the validity or enforceability of the
offending term or provision in any other situation or in any other jurisdiction. If a final
judgment of a court of competent jurisdiction declares that any term or provision of this Agreement
is invalid or unenforceable, the Parties hereto agree that the
71.
court making such determination shall have the power to limit such term or provision, to
delete specific words or phrases or to replace such term or provision with a term or provision that
is valid and enforceable and that comes closest to expressing the intention of the invalid or
unenforceable term or provision, and this Agreement shall be valid and enforceable as so modified.
In the event such court does not exercise the power granted to it in the prior sentence, the
Parties hereto agree to replace such invalid or unenforceable term or provision with a valid and
enforceable term or provision that will achieve, to the extent possible, the economic, business and
other purposes of such invalid or unenforceable term or provision.
10.11 Other Remedies; Specific Performance. Except as otherwise provided herein, any
and all remedies herein expressly conferred upon a Party will be deemed cumulative with and not
exclusive of any other remedy conferred hereby, or by law or equity upon such Party, and the
exercise by a Party of any one remedy will not preclude the exercise of any other remedy. The
Parties hereto agree that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the Parties shall be entitled to seek an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or any state having jurisdiction, this being
the addition to any other remedy to which they are entitled at law or in equity.
10.12 Construction.
(a) For purposes of this Agreement, whenever the context requires: the singular number shall
include the plural, and vice versa; the masculine gender shall include the feminine and neuter
genders; the feminine gender shall include the masculine and neuter genders; and the neuter gender
shall include masculine and feminine genders.
(b) The Parties hereto agree that any rule of construction to the effect that ambiguities are
to be resolved against the drafting Party shall not be applied in the construction or
interpretation of this Agreement.
(c) As used in this Agreement, the words “include” and “including,” and variations thereof,
shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the
words “without limitation.”
(d) Except as otherwise indicated, all references in this Agreement to “Sections,” “Exhibits”
and “Schedules” are intended to refer to Sections of this Agreement and Exhibits and Schedules to
this Agreement.
(e) The bold-faced headings contained in this Agreement are for convenience of reference only,
shall not be deemed to be a part of this Agreement and shall not be referred to in connection with
the construction or interpretation of this Agreement.
[Remainder of page intentionally left blank]
72.
IN WITNESS WHEREOF, the Parties have caused this Agreement and Plan of Merger and
Reorganization to be executed as of the date first above written.
| REPLIDYNE, INC. | ||||||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |||||
| Name: | Xxxxxxx X. Xxxxxxx | |||||
| Title: | President and Chief Executive Officer | |||||
| RESPONDER MERGER SUB, INC. | ||||||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |||||
| Name: | Xxxxxxx X. Xxxxxxx | |||||
| Title: | President | |||||
| CARDIOVASCULAR SYSTEMS, INC. | ||||||
| By: | /s/ Xxxxx Xxxxxx | |||||
| Name: | Xxxxx Xxxxxx | |||||
| Title: | Chief Executive Officer | |||||
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER AND REORGANIZATION]
EXHIBITS AND SCHEDULES
Exhibit A—Defined Terms
Exhibit B—Form of Replidyne Certificate of Amendment
Exhibit C—Form of Xxxxxxxxxx & Xxxxx Opinion
Schedule 1A—Company Stockholders Delivering a Company Stockholder Voting Agreement
Schedule 1B—Company Stockholders Delivering a Company Stockholder Lock-up Agreement
Schedule 2A—Replidyne Stockholders Delivering a Replidyne Stockholder Voting Agreement
Schedule 2B—Replidyne Stockholders Delivering a Replidyne Stockholder Lock-up Agreement
Schedule 3A—Board of Directors of Replidyne
Schedule 3B—Board of Directors of Surviving Corporation
Schedule 3C—Officers of Replidyne
Schedule 4—Replidyne Agreements and Employee Benefit Plans that Replidyne Will Use Commercially
Reasonable Efforts to Terminate
Schedule 5—Replidyne Agreements and Encumbrances to be Terminated
Company Disclosure Schedule
Replidyne Disclosure Schedule
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
“Acquisition Inquiry” shall mean, with respect to a Party, an inquiry, indication of
interest or request for information (other than an inquiry, indication of interest or request for
information made or submitted by the Company, on the one hand or Replidyne, on the other hand, to
the other Party) that could reasonably be expected to lead to an Acquisition Proposal with such
Party; provided however, that any inquiry, indication of interest or request for information
related to the matters described on Part 4.2 of the Replidyne Disclosure Schedule or Part 4.3 of
the Company Disclosure Schedule or pursuant to the provisions of Section 4.2(c) and any
transactions undertaken, continued or consummated in connection with those matters will be deemed
not to be an “Acquisition Inquiry”.
“Acquisition Proposal” shall mean, with respect to a Party, any offer or proposal (other
than an offer or proposal made or submitted by the Company, on the one hand or Replidyne, on the
other hand to the other Party) contemplating or otherwise relating to any Acquisition Transaction
with such Party; provided however, that any offer or proposal related to the matters described on
Part 4.2 of the Replidyne Disclosure Schedule or Part 4.3 of the Company Disclosure Schedule or
pursuant to the provisions of Section 4.2(c) and any transactions undertaken, continued or
consummated in connection with those matters will be deemed not to be an “Acquisition Proposal”.
“Acquisition Transaction” shall mean any transaction or series of transactions involving:
(a) any merger, consolidation, amalgamation, share exchange, business combination, issuance of
securities, financing transaction, acquisition of securities, reorganization, recapitalization,
tender offer, exchange offer or other similar transaction: (i) in which a Party is a constituent
corporation; (ii) in which a Person or “group” (as defined in the Exchange Act and the rules
promulgated thereunder) of Persons acquires beneficial or record ownership of securities
representing more than 1% of the outstanding securities of any class of voting securities of a
Party or any of its Subsidiaries (provided that this shall not apply to Replidyne); or (iii) in
which a Party or any of its Subsidiaries issues any debt securities, incurs any indebtedness for
borrowed money or issues securities representing more than 1% of the outstanding securities of any
class of voting securities of such Party or any of its Subsidiaries (other than issuances of
Company Common Stock or Company Preferred Stock or Replidyne Common Stock pursuant to the exercise
of Company Options, Company Warrants, Replidyne Options or Replidyne Warrants, respectively);
(b) in the case of the Company, any sale, lease, exchange, transfer, license, acquisition or
disposition of any business or businesses or assets that constitute or account for: (i) 1% or more
of the consolidated net revenues of the Company and its Subsidiaries, taken as a whole,
consolidated net income of the Company and its Subsidiaries, taken as a whole, or consolidated book
value of the assets of the Company and its Subsidiaries, taken as a whole; or (ii) 1% or more of
the fair market value of the assets of the Company and its Subsidiaries, taken as a whole; or
(c) any liquidation or dissolution of a Party (other than Replidyne);
provided, however, that both (i) any Qualified Financing and (ii) any transaction or series of
transactions involving circumstances set forth in clauses (a)-(c) of this definition that relate to
the matters described on Part 4.2 of the Replidyne Disclosure Schedule or Part 4.3 of the Company
Disclosure Schedule or
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pursuant to the provisions of Section 4.2(c) and any transactions undertaken, continued or
consummated in connection with those matters will be deemed not to be an “Acquisition Transaction”.
“Affiliate” shall have the meaning set forth in Rule 12b-2 under the Securities Act.
“Agreement” shall mean the Agreement and Plan of Merger and Reorganization to which this
Exhibit A is attached, as it may be amended from time to time.
“Business Day” shall mean any day other than a day on which banks in the State of Colorado
or Minnesota are authorized or obligated to be closed.
“COBRA” shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.
“Code” shall mean the Internal Revenue Code of 1986, as amended.
“Company Common Stock” shall mean the Common Stock, no par value per share, of the Company.
“Company Contract” shall mean any Contract: (a) to which the Company is a Party; (b) by
which any of the Company or any Company IP Rights or any other asset of the Company is or may
become bound or under which the Company has, or may become subject to, any obligation; or (c) under
which the Company has or may acquire any right or interest.
“Company IP Rights” shall mean (a) all Intellectual Property Rights in the Company Products
and (b) all Intellectual Property Rights owned, licensed, or Controlled by the Company that are
necessary or used in the Company’s business as presently conducted.
“Company IP Rights Agreement” shall mean any Contract governing, related or pertaining to
any Company IP Rights.
“Company Material Adverse Effect” shall mean any effect, change, event, circumstance or
development (each such item, an “Effect”) that, considered together with all other Effects
that had occurred prior to the date of determination of the occurrence of the Company Material
Adverse Effect, is or would reasonably be expected to be or to become materially adverse to, or has
or would reasonably be expected to have or result in a material adverse effect on: (a) the
business, financial condition, capitalization, assets, operations or financial performance or
prospects of the Company; or (b) the ability of the Company to consummate the Merger or any of the
other Contemplated Transactions or to perform any of its covenants or obligations under the
Agreement; provided, however, that none of the following shall be deemed in themselves, either
alone or in combination, to constitute, and none of the following shall be taken into account in
determining whether there has been or will be a Company Material Adverse Effect: (i) any Effect on
the business, financial condition, capitalization, assets, operations or financial performance or
prospects of the Company caused by, related to or resulting from the Contemplated Transactions or
the announcement or pendency thereof; (ii) any failure by the Company to meet internal revenue
projections or forecasts for any period; provided that the actual results of the Company do not
deviate by more than 20% from the results anticipated by such projections or forecasts; (iii) any
adverse change, effect or occurrence attributable to the United States economy as a whole, provided
that such change, effect or occurrence does not affect the Company in a disproportionate manner;
(iv) any act or threat of terrorism or war anywhere in the world, any armed hostilities or
terrorist activities anywhere in the world, any threat or escalation or armed hostilities or
terrorist activities anywhere in the world or any governmental or other response or reaction to any
of the foregoing; or (v) any change in accounting requirements or principles or any change in
applicable accounting laws, rules or regulations or the interpretation thereof. For the avoidance
of doubt, (i) the entrance of any settlement, arbitration award or judgment that results
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or would result in any payment in excess of $5,000,000 by the Company, or (ii) the granting of any
injunctive relief against the Company that has or would reasonably be expected to have or result in
an adverse effect on the business, financial condition, capitalization, assets, operations or
financial performance or prospects of the Company, in connection in each case with any Legal
Proceeding to which the Company is a party, shall constitute a Company Material Adverse Effect.
“Company Options” shall mean options to purchase shares of Company Common Stock issued by
the Company.
“Company Preferred Stock” shall mean Company Series A Preferred Stock, Company Series A-1
Preferred Stock and Company Series B Preferred Stock.
“Company Products” shall mean all products being manufactured, distributed or developed by
or on behalf of the Company.
“Company Registered IP” shall mean all Company IP Rights that are registered, filed or
issued under the authority of, with or by any Governmental Body, including all patents, registered
copyrights and registered trademarks and all applications for any of the foregoing.
“Company Related Party” shall mean (i) each stockholder of the Company that is the holder
of greater than 5% of any class of the Company’s capital stock; (ii) each individual who is an
officer or director of the Company; (iii) each member of the immediate family of each of the
individuals referred to in clause (i) and (ii) above; and (iv) any trust or other Entity (other
than the Company) in which any one of the Persons referred to in clauses (i), (ii) or (iii) above
holds (or in which more than one of such Persons collectively hold), beneficially or otherwise, a
material voting, proprietary, equity or other financial interest.
“Company Series A Preferred Stock” shall mean shares of Company’s Series A Convertible
Preferred Stock, no par value per share.
“Company Series A-1 Preferred Stock” shall mean shares of Company’s Series A-1 Convertible
Preferred Stock, no par value per share.
“Company Series B Preferred Stock” shall mean shares of Company’s Series B Convertible
Preferred Stock, no par value per share.
“Company Stock Option Plans” shall mean, collectively, the 1991 Stock Option Plan, the 2003
Stock Option Plan and the 2007 Equity Incentive Plan of the Company.
“Company Warrants” shall mean warrants to purchase Company Common Stock or Company
Preferred Stock.
“Confidentiality Agreement” shall mean the Mutual Non-Disclosure Agreement dated August 22,
2008, between the Company and Replidyne.
“Consent” shall mean any approval, consent, ratification, permission, waiver or
authorization (including any Governmental Authorization).
“Contemplated Transactions” shall mean the Merger and the other transactions and actions
contemplated by the Agreement.
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“Contract” shall, with respect to any Person, mean any written, oral or other agreement,
contract, subcontract, lease (whether real or personal property), mortgage, understanding,
arrangement, instrument, note, option, warranty, purchase order, license, sublicense, insurance
policy, benefit plan or legally binding commitment or undertaking of any nature to which such
Person is a party or by which such Person or any of its assets are bound or affected under
applicable law.
“Controlled” means, with respect to any item of Intellectual Property or Intellectual
Property Right, that a Party owns or has a license to such item or right and has the ability to
disclose such item or grant to the other Party access to or a license or sublicense under such item
or right as provided for in this Agreement without violating the terms of any agreement or other
arrangement with any third party in existence at the time of such disclosure or grant, as
applicable.
“DGCL” shall mean the General Corporation Law of the State of Delaware.
“Easton” means, collectively, Easton Xxxx Capital Partners, L.P. and Easton Capital
Partners, L.P.
“Encumbrance” shall mean any lien, pledge, hypothecation, charge, mortgage, security
interest, encumbrance, claim, infringement, interference, option, right of first refusal,
preemptive right, community property interest or restriction of any nature (including any
restriction on the voting of any security, any restriction on the transfer of any security or other
asset, any restriction on the receipt of any income derived from any asset, any restriction on the
use of any asset and any restriction on the possession, exercise or transfer of any other attribute
of ownership of any asset) other than (a) mechanic’s, materialmen’s and similar liens, (b) liens
arising under worker’s compensation, unemployment insurance and similar legislation, and (c) liens
on goods in transit incurred pursuant to documentary letters of credit, in each case arising in the
Ordinary Course of Business.
“Entity” shall mean any corporation (including any non-profit corporation), partnership
(including any general partnership, limited partnership or limited liability partnership), joint
venture, estate, trust, company (including any company limited by shares, limited liability company
or joint stock company), firm, society or other enterprise, association, organization or entity.
“Environmental Law” shall mean any federal, state, local or foreign Legal Requirement
relating to pollution or protection of human health or the environment (including ambient air,
surface water, ground water, land surface or subsurface strata), including any law or regulation
relating to emissions, discharges, releases or threatened releases of Materials of Environmental
Concern, or otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Materials of Environmental Concern.
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
“FMLA” shall mean the Family Medical Leave Act of 1993, as amended.
“Form S-4 Registration Statement” shall mean the registration statement on Form S-4 to be
filed with the SEC by Replidyne in connection with issuance of Replidyne Common Stock pursuant to
the Merger, as said registration statement may be amended prior to the time it is declared
effective by the SEC.
“Governmental Authorization” shall mean any: (a) permit, license, certificate, franchise,
permission, variance, exceptions, orders, clearance, registration, qualification or authorization
issued, granted, given
A-4
or otherwise made available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement; or (b) right under any Contract with any Governmental Body.
“Governmental Body” shall mean any: (a) nation, state, commonwealth, province, territory,
county, municipality, district or other jurisdiction of any nature; (b) federal, state, local,
municipal, foreign or other government; (c) governmental or quasi-governmental authority of any
nature (including any governmental division, department, agency, commission, instrumentality,
official, ministry, fund, foundation, center, organization, unit, body or Entity and any court or
other tribunal, and for the avoidance of doubt, any Taxing authority); or (d) self-regulatory
organization (including the Nasdaq Global Market).
“HSR Act” shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended.
“Intellectual Property” shall mean and includes all software (in any form including source
code and executable or object code), algorithms, marks (including trade dress, brand names, logos,
and source identifiers), URLs, web sites, works of authorship, formulae, chemical compositions or
structures, assay components, biological materials, cell lines, clinical data, inventions (whether
or not patentable), know-how, methods, processes, protocols, specifications, techniques, and other
forms of technology (whether or not embodied in any tangible form and including all tangible
embodiments of the foregoing, such as laboratory notebooks, samples, studies and summaries).
“Intellectual Property Rights” shall mean and includes all rights of the following types,
which may exist or be created under the laws of any jurisdiction in the world: (a) patents, patent
applications, including provisional applications, statutory invention registrations, invention
disclosures, (b) trademarks and rights in service marks, trade names, domain names, URLs, trade
dress, logos and other source identifiers, (c) rights associated with works of authorship,
including copyrights, moral rights, and mask works, (d) trade secret rights, (e) other proprietary
rights in Intellectual Property of every kind, and (f) all registrations, renewals, extensions,
continuations, divisions, or reissues of and applications for, any of the rights referred to in
clauses (a) through (f) above.
“IRS” shall mean the United States Internal Revenue Service.
“Joint Proxy Statement/Prospectus” shall mean the joint proxy statement/prospectus to be
sent to the stockholders of Replidyne in connection with the Replidyne Stockholders’ Meeting and
the stockholders of the Company in connection with the Company Stockholders’ Meeting.
“Key Employee” shall mean an officer of the Company or Replidyne, as applicable, or any
employee that reports directly to the board of directors or chief executive officer of the Company
or Replidyne, as applicable.
“Knowledge” shall mean, with respect to an individual, that such individual is actually
aware of the relevant fact or such individual would reasonably be expected to know such fact in the
ordinary course of the performance of the individual’s employee or professional responsibility. Any
Person that is an Entity shall have Knowledge if any officer or director of such Person as of the
date such knowledge is imputed has Knowledge of such fact or other matter.
“Legal Proceeding” shall mean any action, suit, litigation, arbitration, proceeding
(including any civil, criminal, administrative, investigative or appellate proceeding), hearing,
inquiry, audit, examination or investigation commenced, brought, conducted or heard by or before,
or otherwise involving, any court or other Governmental Body or any arbitrator or arbitration
panel.
A-5
“Legal Requirement” shall mean any federal, state, foreign, material local or municipal or
other law, statute, constitution, principle of common law, resolution, ordinance, code, edict,
decree, rule, regulation, ruling or requirement issued, enacted, adopted, promulgated, implemented
or otherwise put into effect by or under the authority of any Governmental Body (or under the
authority of the Nasdaq Global Market or the Financial Industry Regulatory Authority).
“Materials of Environmental Concern” include chemicals, pollutants, contaminants, wastes,
toxic substances, petroleum and petroleum products and any other substance that is now or hereafter
regulated by any Environmental Law or that is otherwise a danger to health, reproduction or the
environment.
“Maverick” means, collectively, Maverick Fund LDC, Maverick Fund USA, Ltd. and Maverick
Fund II, Ltd.
“MBCA” means the Minnesota Business Corporation Act.
“Net Assets” shall mean, as of any particular date (actual or future), without repetition
or duplication: (a) Replidyne’s total current assets as of such date (as determined in accordance
with GAAP) plus (b) the Specified Assets minus (c) Replidyne’s total liabilities as of such date
(as determined in accordance with GAAP), including, to the extent not accrued as a liability and
not paid by Replidyne prior to such date, without duplication, (i) the cash cost of any change of
control payments, severance payments (including any obligations that Replidyne has to reimburse
COBRA costs of former employees) or payments under Section 280G of the Code that are payable or
expected to become payable as a result of the Merger and the Contemplated Transactions, (ii)
amounts owed or expected to become due to Replidyne’s legal counsel and financial advisor in
connection with this Agreement and the Contemplated Transactions and (iii) any outstanding and
future financial obligations owed by Replidyne in respect of the Replidyne Contracts and employee
benefit plans set forth on Schedule 4.
“Ordinary Course of Business” shall mean, in the case of the Company, such reasonable and
prudent actions taken in the ordinary course of its normal operations and consistent with its past
practices, and, in the case of Replidyne, any actions relating to the sale or disposition of assets
and payment of liabilities in connection with winding up its business.
“Party” or “Parties” shall mean the Company, Merger Sub and Replidyne.
“Person” shall mean any individual, Entity or Governmental Body.
“Pipeline Transaction” shall mean any transaction entered into in connection with the
divestment, whether by acquisition, liquidation or otherwise, by Replidyne of its pre-clinical
programs and other non-cash assets.
“Qualified Financing” shall mean any sale by the Company of debt or equity securities or
the incurrence by the Company of indebtedness for borrowed money in an amount not to exceed
$15,000,000 for all such issuances or incurrences in the aggregate, provided that the Company
provides notice to Replidyne within five days of the commencement of discussions regarding any
transaction that is reasonably likely to result in a Qualified Financing and continues to keep
Replidyne reasonably apprised of such discussions through the consummation of any such transaction,
and provided further that with respect to any issuance of equity securities (including, for the
avoidance of doubt, the issuance of any indebtedness that is convertible into other equity
securities of the Company) that values the Company at less than $181,000,000 prior to the
consummation of such issuance, the Company has obtained the consent of Replidyne to the
consummation of such issuance.
A-6
“Related Agreements” shall mean the Replidyne Certificate of Amendment, the Replidyne
Bylaws Amendment, the Replidyne Stockholder Voting Agreements, the Company Stockholder Voting
Agreements, the Company Stockholder Lock-up Agreements, the Replidyne Stockholder Lock-up
Agreements, the Company Stockholder Conversion Agreement, the Articles of Merger, the Joint Proxy
Statement/Prospectus and any other documents or agreements executed in connection with this
Agreement or the Contemplated Transactions.
“Replidyne Common Stock” shall mean the Common Stock, $0.001 par value per share, of
Replidyne.
“Replidyne Contract” shall mean any Contract: (a) to which Replidyne or any of its
Subsidiaries is a party; (b) by which Replidyne or any Replidyne IP Rights or any other asset of
Replidyne is or may become bound or under which Replidyne has, or may become subject to, any
obligation; or (c) under which Replidyne or any of its Subsidiaries has or may acquire any right or
interest.
“Replidyne IP Rights” shall mean (a) Intellectual Property Rights in the Replidyne Products
and (b) all Intellectual Property Rights owned, licensed, or Controlled by Replidyne and its
Subsidiaries that is necessary or used in Replidyne’s business as presently conducted.
“Replidyne IP Rights Agreement” shall mean any instrument or agreement governing any
Replidyne IP Rights.
“Replidyne Material Adverse Effect” shall mean any Effect that, considered together with
all other Effects that had occurred prior to the date of determination of the occurrence of the
Replidyne Material Adverse Effect, is or would reasonably be expected to be or to become materially
adverse to, or has or would reasonably be expected to have or result in a material adverse effect
on: (a) the financial condition or assets of Replidyne; or (b) the ability of Replidyne to
consummate the Merger or any of the other Contemplated Transactions or to perform any of its
covenants or obligations under the Agreement; provided, however, that none of the following shall
be deemed in themselves, either alone or in combination, to constitute, and none of the following
shall be taken into account in determining whether there has been or will be a Replidyne Material
Adverse Effect: (i) any Effect on the financial condition or assets of Replidyne caused by, related
to or resulting from the Contemplated Transactions or the announcement or pendency thereof or any
transactions undertaken, continued or consummated in connection with the matters described on Part
4.2 of the Replidyne Disclosure Schedule or as provided in Section 4.2(c); (ii) any adverse change,
effect or occurrence attributable to the United States economy as a whole, provided that such
change, effect or occurrence does not affect Replidyne in a disproportionate manner; (iii) any act
or threat of terrorism or war anywhere in the world, any armed hostilities or terrorist activities
anywhere in the world, any threat or escalation of armed hostilities or terrorist activities
anywhere in the world or any governmental or other response or reaction to any of the foregoing;
(iv) any change in accounting requirements or principles or any change in applicable accounting
laws, rules or regulations or the interpretation thereof; and (v) any change in the stock price or
trading volume of Replidyne independent of any other event that would be deemed to have a Replidyne
Material Adverse Effect. For the avoidance of doubt, (i) (A) the entrance of any settlement,
arbitration award or judgment that results or would result in any payment in excess of $5,000,000
by Replidyne, or (B) the granting of any injunctive relief against Replidyne that has or would
reasonably be expected to have or result in an adverse effect on the business, financial condition,
capitalization, assets, operations or financial performance or prospects of Replidyne, in
connection in each case with any Legal Proceeding to which Replidyne is a party, shall constitute a
Replidyne Material Adverse Effect, and (ii) the amount of Net Assets, or any increase or decrease
in Net Assets above or below a particular level, shall not constitute a Replidyne Material Adverse
Effect.
A-7
“Replidyne Options” shall mean options to purchase shares of Replidyne Common Stock issued
by Replidyne.
“Replidyne Preferred Stock” shall mean the Preferred Stock, $0.001 par value per share, of
Replidyne.
“Replidyne Products” shall mean all products being manufactured, distributed or developed
by or on behalf of Replidyne.
“Replidyne Registered IP” shall mean all Replidyne IP Rights that are registered, filed or
issued under the authority of, with or by any Governmental Body, including all patents, registered
copyrights and registered trademarks and all applications for any of the foregoing.
“Replidyne Related Party” shall mean any Affiliate of Replidyne.
“Replidyne Warrants” shall mean warrants to purchase shares of Replidyne Common Stock
issued by Replidyne.
“Representatives” shall mean directors, officers, other employees, agents, attorneys,
accountants, advisors and representatives.
“S-4 Expenses” shall mean all fees and expenses (other than attorneys’ and accountants’
fees and expenses) incurred in relation to the printing, mailing and filing with the SEC of the
Form S-4 Registration Statement (including any financial statements and exhibits) and the Joint
Proxy Statement/Prospectus (including any preliminary materials related thereto) and any amendments
or supplements thereto.
“Xxxxxxxx-Xxxxx Act” shall mean the Xxxxxxxx-Xxxxx Act of 2002, as it may be amended from
time to time.
“SEC” shall mean the United States Securities and Exchange Commission.
“Securities Act” shall mean the Securities Act of 1933, as amended.
“Special Committee” shall mean the special committee of the board of directors of the
Company formed in connection with the Contemplated Transactions.
“Specified Assets” means (a) the Deemed Value at such date of any Pre-Closing
Consideration pursuant to any Pipeline Transaction; (b) any amounts paid on or prior to such date
or payable after such date by Replidyne in satisfaction of its obligations under Sections 5.6(c),
(d) or (e); and (c) the Fractional Cash Amount to the extent paid on or prior to such date or
accrued as a total current liability of Replidyne as of such date.
“Subsidiary” shall mean, with respect to a given Person, any entity that the Person
directly or indirectly owns or purports to own, beneficially or of record, (a) an amount of voting
securities of other interests in such entity that is sufficient to enable such Person to elect at
least a majority of the members of such entity’s board of directors or other governing body, or (b)
at least 50% of the outstanding equity, voting, beneficial or financial interests in such Entity.
“Superior Offer” shall mean an unsolicited bona fide written offer by a third party to
enter into (i) a merger, consolidation, amalgamation, share exchange, business combination,
issuance of securities, acquisition of securities, reorganization, recapitalization, tender offer,
exchange offer or other similar
A-8
transaction as a result of which either (A) the Party’s stockholders prior to such transaction in
the aggregate cease to own at least 50% of the voting securities of the entity surviving or
resulting from such transaction (or the ultimate parent entity thereof) or (B) a Person or “group”
(as defined in the Exchange Act and the rules promulgated thereunder) directly or indirectly
acquires beneficial or record ownership of securities representing 50% or more of the Party’s
capital stock, or (ii) a sale, lease, exchange transfer, license, acquisition or disposition of any
business or other disposition of at least 50% of the assets of the Party or its Subsidiaries, taken
as a whole, in a single transaction or a series of related transactions that, in the case of either
clause (i) or (ii): (a) was not obtained or made as a direct or indirect result of a breach of (or
in violation of) the Agreement; and (b) is on terms and conditions that the board of directors of
Replidyne or the Company, as applicable, determines, in its good faith judgment, after obtaining
and taking into account such matters that its board of directors deems relevant following
consultation with its outside legal counsel and financial advisor: (x) is more favorable to
Replidyne’s stockholders or the Company’s stockholders, as applicable, than the terms of the
Merger; and (y) is reasonably capable of being consummated.
“Tax” shall mean any U.S. federal, state, local, foreign or other taxes, levies, charges
and fees or other similar assessments or liabilities in the nature of a tax, including, without
limitation, any income tax, franchise tax, capital gains tax, gross receipts tax, value-added tax,
surtax, estimated tax, unemployment tax, national health insurance tax, excise tax, ad valorem tax,
transfer tax, stamp tax, sales tax, use tax, property tax, business tax, withholding tax, payroll
tax, customs duty, alternative or add-on minimum or other tax of any kind whatsoever, and including
any penalty, assessment, addition to tax or interest, whether disputed or not.
“Tax Return” shall mean any return (including any information return), report, statement,
declaration, estimate, schedule, notice, notification, form, election, certificate or other
document or information, and any amendment or supplement to any of the foregoing, filed with or
submitted to, or required to be filed with or submitted to, any Governmental Body in connection
with the determination, assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of or compliance with any Legal Requirement relating
to any Tax.
A-9
EXHIBIT B
FORM OF REPLIDYNE CERTIFICATE OF AMENDMENT
CERTIFICATE OF AMENDMENT
OF THE
RESTATED CERTIFICATE OF INCORPORATION
OF
REPLIDYNE, INC.
OF THE
RESTATED CERTIFICATE OF INCORPORATION
OF
REPLIDYNE, INC.
REPLIDYNE, INC. (the “Corporation”), a corporation organized and existing under and by virtue
of the General Corporation Law of the State of Delaware (the “DGCL”), hereby certifies as follows:
FIRST: The name of the Corporation is Replidyne, Inc. A Certificate of Incorporation of the
Corporation originally was filed by the Corporation with the Secretary of State of Delaware on
December 6, 2000.
SECOND: This Certificate of Amendment amends the Restated Certificate of Incorporation of the
Corporation and was duly adopted by the board of directors of the Corporation in accordance with
the provisions of Sections 141 and 242 of the DGCL.
THIRD: The text of the Restated Certificate of Incorporation of the Corporation is hereby
amended as follows:
1. Article I of the Restated Certificate of Incorporation of the Corporation is hereby
amended and restated as follows:
“The name of this corporation is Cardiovascular Systems, Inc.”
2. Article IV of the Restated Certificate of Incorporation of the Corporation is hereby
amended and restated as follows:
“A. Without regard to any other provision of this Restated Certificate of
Incorporation, each one (1) share of Common Stock, either issued and outstanding or held by
the corporation as treasury stock, immediately prior to the time this Certificate of
Amendment becomes effective shall be and is hereby automatically reclassified and changed
(without any further act) into 1 of a fully-paid and nonassessable share
of Common Stock; provided, that no fractional shares shall be issued to any stockholder and
no certificates or scrip for any such fractional shares shall be issued, each stockholder
otherwise entitled to receive a fractional share shall receive the next lower whole number
of shares of Common Stock, and the corporation shall pay in cash the dollar amount of such
fractional shares (to the nearest whole cent), without interest, determined in each case by
multiplying such fraction by the closing price of a share of Common Stock on the Nasdaq
Global Market on the date immediately preceding the date on which this Certificate of
Amendment becomes effective.
B. This corporation is authorized to issue two classes of stock to be designated,
respectively, “Common Stock” and “Preferred Stock.” The total number of shares which the
corporation is authorized to issue is ( ) shares.
( ) shares shall be Common Stock, each having a par value of one-tenth of one cent
| 1 | Shall be a number less than one and equal to or greater than 0.02, the exact number within the range to be determined prior to the Effective Time in accordance with the Merger Agreement. |
B-1
($.001). ( ) shares shall be Preferred Stock, each having a par value
of one-tenth of one cent ($.001).
C. The Preferred Stock may be issued from time to time in one or more series. The
Board of Directors is hereby expressly authorized to provide for the issue of all or any of
the shares of the Preferred Stock in one or more series, and to fix the number of shares and
to determine or alter for each such series, such voting powers, full or limited, or no
voting powers, and such designation, preferences, and relative, participating, optional, or
other rights and such qualifications, limitations, or restrictions thereof, as shall be
stated and expressed in the resolution or resolutions adopted by the Board of Directors
providing for the issuance of such shares and as may be permitted by the DGCL. The Board of
Directors is also expressly authorized to increase or decrease the number of shares of any
series subsequent to the issuance of shares of that series, but not
below the number of shares of such series then outstanding. In case the number of shares of any series shall be
decreased in accordance with the foregoing sentence, the shares constituting such decrease
shall resume the status that they had prior to the adoption of the resolution originally
fixing the number of shares of such series. The number of authorized shares of Preferred
Stock may be increased or decreased (but not below the number of shares thereof then
outstanding) by the affirmative vote of the holders of a majority of the Common Stock,
without a vote of the holders of the Preferred Stock, or of any series thereof, unless a
vote of any such holders is required pursuant to the terms of any certificate of designation
filed with respect to any series of Preferred Stock.
D. Each outstanding share of Common Stock shall entitle the holder thereof to one vote
on each matter properly submitted to the stockholders of the Corporation for their vote;
provided, however, that, except as otherwise required by law, holders of Common Stock shall
not be entitled to vote on any amendment to this Certificate of Incorporation (including any
certificate of designation filed with respect to any series of Preferred Stock) that relates
solely to the terms of one or more outstanding series of Preferred Stock if the holders of
such affected series are entitled, either separately or together as a class with the holders
of one or more other such series, to vote thereon by law or pursuant to this Certificate of
Incorporation (including any certificate of designation filed with respect to any series of
Preferred Stock).”
FOURTH: Thereafter pursuant to a resolution of the board of directors of the Corporation,
this Certificate of Amendment was submitted to the stockholders of the Corporation for their
approval, and was duly adopted at a special meeting of the stockholders in accordance with the
provisions of Section 242 of the DGCL.
B-2
IN WITNESS WHEREOF, Replidyne, Inc. has caused this Certificate of Amendment
to be signed by its duly authorized officer this day of , .
| Replidyne, Inc. |
||||
| By: | ||||
| Xxxxxxx X. Xxxxxxx | ||||
| President and Chief Executive Officer | ||||
B-3
EXHIBIT C
FORM OF XXXXXXXXXX & XXXXX OPINION
Regarding the outstanding capital stock of the Company, we have relied upon certificates of the
Company’s officers stating: (i) that the Company’s stock, option and warrant registers reflect all
of the Company’s outstanding shares of capital stock, options and warrants, and (ii) the conversion
ratio applicable to each class of outstanding Preferred Stock. We have assumed for purposes of
this opinion that the conversion ratio of each class of Preferred Stock stated in the certificate
will continue to be effective at the time of conversion of all outstanding shares of Preferred
Stock in accordance with the terms of the Merger Agreement and the Company Stockholder Conversion
Agreement.
The Company’s authorized capital stock consists of (a) ( ) shares of Common Stock,
no par value, and (b) ( ) shares of Preferred Stock, no par value, of which (i)
( ) shares have been designated Series A Preferred Stock, no par value, (ii)
( ) shares have been designated Series A-1 Preferred Stock, no par value, and (iii)
( ) shares have been designated Series B Preferred Stock, no par value. As of
immediately prior to the Effective Time (but prior to the conversion of all outstanding Preferred
Stock in accordance with the terms of the Merger Agreement (the “Conversion”)), the Company’s
issued and outstanding capital stock consisted of ( ) shares of Common Stock,
( ) shares of Series A Preferred Stock,
( ) shares of Series A-1
Preferred Stock and ( ) shares of Series B Preferred Stock. Following the
effectiveness of the Conversion, the Company’s issued and outstanding capital stock consisted of
( ) shares of Common Stock and no shares of Preferred Stock. The outstanding shares
of Common Stock and of Preferred Stock have been duly authorized and validly issued and are fully
paid and nonassessable. To our knowledge, there are no options, warrants, conversion privileges,
preemptive rights or other rights presently outstanding to purchase any of the authorized but
unissued capital stock of the Company, other than as described in Section 2.3 of the Merger
Agreement or on the Company Disclosure Schedule.
