Exhibit 2.1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
Dated as of December 15, 2004
Among
XXXXXXX & XXXXXXX,
XXXXXX MERGER SUB, INC.
And
GUIDANT CORPORATION
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TABLE OF CONTENTS
Page
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ARTICLE I
The Merger
SECTION 1.01. The Merger...................................................1
SECTION 1.02. Closing......................................................1
SECTION 1.03. Effective Time...............................................2
SECTION 1.04. Effects of the Merger........................................2
SECTION 1.05. Articles of Incorporation and By-laws........................2
SECTION 1.06. Directors....................................................2
SECTION 1.07. Officers.....................................................2
ARTICLE II
Effect of the Merger on the Capital Stock of the Constituent
Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock......................................3
SECTION 2.02. Exchange of Certificates.....................................4
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of the Company................7
SECTION 3.02. Representations and Warranties of Parent and Sub............28
ARTICLE IV
Covenants Relating to Conduct of Business; No Solicitation
SECTION 4.01. Conduct of Business.........................................32
SECTION 4.02. No Solicitation.............................................37
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Form S-4 and the Proxy Statement;
Shareholders' Meeting.......................................40
SECTION 5.02. Access to Information; Confidentiality......................41
SECTION 5.03. Reasonable Best Efforts.....................................42
SECTION 5.04. Company Stock Options; ESPP.................................44
(i)
SECTION 5.05. Indemnification, Exculpation and Insurance..................45
SECTION 5.06. Fees and Expenses...........................................46
SECTION 5.07. Public Announcements........................................48
SECTION 5.08. Affiliates..................................................48
SECTION 5.09. Stock Exchange Listing......................................48
SECTION 5.10. Shareholder Litigation......................................48
SECTION 5.11. Employee Matters............................................48
SECTION 5.12. Company Notes...............................................50
SECTION 5.13. Rights Agreement............................................50
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation to Effect the Merger..50
SECTION 6.02. Conditions to Obligations of Parent and Sub.................51
SECTION 6.03. Conditions to Obligation of the Company.....................52
SECTION 6.04. Frustration of Closing Conditions...........................53
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination.................................................53
SECTION 7.02. Effect of Termination.......................................54
SECTION 7.03. Amendment...................................................54
SECTION 7.04. Extension; Waiver...........................................54
SECTION 7.05. Procedure for Termination or Amendment......................54
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and Warranties...............55
SECTION 8.02. Notices.....................................................55
SECTION 8.03. Definitions.................................................56
SECTION 8.04. Interpretation..............................................57
SECTION 8.05. Consents and Approvals......................................57
SECTION 8.06. Counterparts................................................58
SECTION 8.07. Entire Agreement; No Third-Party Beneficiaries..............58
SECTION 8.08. GOVERNING LAW...............................................58
SECTION 8.09. Assignment..................................................58
SECTION 8.10. Specific Enforcement; Consent to Jurisdiction...............58
SECTION 8.11. Waiver of Jury Trial........................................58
SECTION 8.12. Severability................................................59
(ii)
Annex I Index of Defined Terms
Exhibit A Restated Articles of Incorporation of the Surviving Corporation
Exhibit B Affiliate Letter
(iii)
AGREEMENT AND PLAN OF MERGER (this
"Agreement") dated as of December 15, 2004, among
XXXXXXX & XXXXXXX, a New Jersey corporation
("Parent"), SHELBY MERGER SUB, INC., an Indiana
corporation and a wholly owned Subsidiary of Parent
("Sub"), and GUIDANT CORPORATION, an Indiana
corporation (the "Company").
WHEREAS the Board of Directors of each of the Company and Sub has
adopted, and the Board of Directors of Parent has approved, this Agreement and
the merger of Sub with and into the Company (the "Merger"), upon the terms and
subject to the conditions set forth in this Agreement, whereby each issued and
outstanding share of common stock, without par value, of the Company ("Company
Common Stock"), other than shares of Company Common Stock directly owned by
Parent, Sub or the Company, will be converted into the right to receive (a) a
number of validly issued, fully paid and nonassessable shares of common stock,
par value $1.00 per share, of Parent ("Parent Common Stock") and (b) $30.40 in
cash, without interest; and
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, and subject to the
conditions set forth herein, the parties hereto agree as follows:
ARTICLE I
The Merger
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SECTION 1.01. The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the Business Corporation
Law of the State of Indiana (the "IBCL"), Sub shall be merged with and into the
Company at the Effective Time. Following the Effective Time, the separate
corporate existence of Sub shall cease and the Company shall continue as the
surviving corporation in the Merger (the "Surviving Corporation") and shall
succeed to and assume all the rights and obligations of Sub in accordance with
the IBCL.
SECTION 1.02. Closing. The closing of the Merger (the "Closing")
will take place at 10:00 a.m. on a date to be specified by the parties,
which shall be no later than the second business day after satisfaction or
(to the extent permitted by applicable Law) waiver of the conditions set
forth in Article VI (other than those conditions that by their terms are to
be satisfied at the Closing, but subject to the satisfaction or (to the
extent permitted by applicable Law) waiver of those conditions), at the
offices of Cravath, Swaine & Xxxxx LLP, Worldwide Plaza, 000 Xxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, unless another time, date or place is agreed to
in writing by Parent and the Company; provided, however, that if all the
conditions set forth in Article VI shall no longer be satisfied or (to the
extent permitted by applicable Law) waived on such second business day,
then the Closing shall take place on the first business day
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on which all such conditions shall again have been satisfied or (to the
extent permitted by applicable Law) waived unless another time is agreed to
in writing by Parent and the Company. The date on which the Closing occurs
is referred to in this Agreement as the "Closing Date".
SECTION 1.03. Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on the Closing Date, the parties shall file
with the Secretary of State of the State of Indiana articles of merger (the
"Articles of Merger") executed and acknowledged by the parties in accordance
with the relevant provisions of the IBCL and, as soon as practicable on or
after the Closing Date, shall make all other filings or recordings required
under the IBCL. The Merger shall become effective upon the filing of the
Articles of Merger with the Secretary of State of the State of Indiana, or at
such later time as Parent and the Company shall agree and shall specify in the
Articles of Merger (the time the Merger becomes effective being the "Effective
Time").
SECTION 1.04. Effects of the Merger. The Merger shall have the effects
set forth in Section 23-1-40-6 of the IBCL.
SECTION 1.05. Articles of Incorporation and By-laws. (a) The Articles
of Incorporation of the Company (the "Company Articles") shall be amended at
the Effective Time to be in the form of Exhibit A and, as so amended, such
Company Articles shall be the Restated Articles of Incorporation of the
Surviving Corporation until thereafter changed or amended as provided therein
or by applicable Law.
(b) The By-laws of Sub, as in effect immediately prior to the
Effective Time, shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable Law.
SECTION 1.06. Directors. The directors of Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation until the
earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
SECTION 1.07. Officers. The officers of the Company immediately prior
to the Effective Time shall be the officers of the Surviving Corporation until
the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
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ARTICLE II
Effect of the Merger on the Capital Stock of the
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Constituent Corporations; Exchange of Certificates
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SECTION 2.01. Effect on Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Company Common Stock or any shares of capital stock of Parent or Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
capital stock of Sub shall be converted into and become one validly
issued, fully paid and nonassessable share of common stock, without par
value, of the Surviving Corporation.
(b) Cancelation of Treasury Stock and Parent-Owned Stock. Each
share of Company Common Stock that is directly owned by the Company,
Parent or Sub immediately prior to the Effective Time shall automatically
be canceled and shall cease to exist, and no consideration shall be
delivered in exchange therefor.
(c) Conversion of Company Common Stock. Subject to Section
2.02(e), each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares to be
canceled in accordance with Section 2.01(b)) shall be converted into
the right to receive (i) that number (rounded to the nearest 1/10,000
of a share) (the "Exchange Ratio") of validly issued, fully paid and
nonassessable shares of Parent Common Stock (the "Stock Portion") equal
to the number determined by dividing $45.60 by the Average Parent Stock
Price; provided, however, that (x) if the number determined by dividing
$45.60 by the Average Parent Stock Price is less than or equal to
0.6797, the Exchange Ratio shall be 0.6797 and (y) if the number
determined by dividing $45.60 by the Average Parent Stock Price is
greater than or equal to 0.8224, the Exchange Ratio shall be 0.8224 and
(ii) $30.40 in cash, without interest (the "Cash Portion" and, together
with the Stock Portion, the "Merger Consideration"). At the Effective
Time, all such shares of Company Common Stock shall no longer be
outstanding and shall automatically be canceled and shall cease to
exist, and each holder of a certificate which immediately prior to the
Effective Time represented any such shares of Company Common Stock
(each, a "Certificate") shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration, any
dividends or other distributions payable pursuant to Section 2.02(c)
and cash in lieu of any fractional shares payable pursuant to Section
2.02(e), in each case to be issued or paid in consideration therefor
upon surrender of such Certificate in accordance with Section 2.02(b),
without interest. Notwithstanding the foregoing, if between the date of
this Agreement and the Effective Time, (A) the outstanding shares of
Parent Common Stock shall have been changed into a different number of
shares or a different class, by reason of the occurrence or record date
of any stock dividend, subdivision, reclassification, recapitalization,
split, combination, exchange of shares or similar transaction, (B)
Parent declares or pays cash dividends in any fiscal quarter in excess
of 200% of the amount of regularly quarterly dividends paid by the
Parent immediately prior to the date hereof or (C) Parent engages in
any spin-off or split-off, then in any such case the Exchange Ratio
shall be appropriately adjusted to reflect such action. The right
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of any holder of a Certificate to receive the Merger Consideration, any
dividends or other distributions payable pursuant to Section 2.02(c)
and cash in lieu of any fractional shares payable pursuant to Section
2.02(e) shall be subject to and reduced by the amount of any
withholding that is required under applicable tax Law. "Average Parent
Stock Price" means the average of the volume weighted averages of the
trading prices of Parent Common Stock, as such price is reported on the
New York Stock Exchange, Inc. (the "NYSE") Composite Transaction Tape
(as reported by Bloomberg Financial Markets or such other source as the
parties shall agree in writing), for the 15 trading days ending on the
third trading day immediately preceding the Effective Time.
SECTION 2.02. Exchange of Certificates. (a) Exchange Agent. Prior to
the Effective Time, Parent shall appoint EquiServe Trust Company or another
bank or trust company that is reasonably satisfactory to the Company to act as
exchange agent (the "Exchange Agent") for the payment of the Merger
Consideration. At the Effective Time, Parent shall deposit, or cause the
Surviving Corporation to deposit, with the Exchange Agent, for the benefit of
the holders of Certificates, certificates representing shares of Parent Common
Stock and cash in an amount sufficient to pay the aggregate Merger
Consideration required to be paid pursuant to Section 2.01(c). In addition,
Parent shall deposit with the Exchange Agent, as necessary from time to time
after the Effective Time, any dividends or other distributions payable pursuant
to Section 2.02(c) and cash in lieu of any fractional shares payable pursuant
to Section 2.02(e). All shares of Parent Common Stock, cash, dividends and
distributions deposited with the Exchange Agent pursuant to this Section
2.02(a) shall hereinafter be referred to as the "Exchange Fund".
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, Parent shall cause the Exchange Agent to mail to each holder
of record of a Certificate whose shares of Company Common Stock were converted
into the right to receive the Merger Consideration, any dividends or other
distributions payable pursuant to Section 2.02(c) and cash in lieu of any
fractional shares payable pursuant to Section 2.02(e) (i) a form of letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of
the Certificates to the Exchange Agent and which shall be in customary form
and contain customary provisions) and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for the Merger Consideration,
any dividends or other distributions payable pursuant to Section 2.02(c) and
cash in lieu of any fractional shares payable pursuant to Section 2.02(e).
Each holder of record of one or more Certificates shall, upon surrender to the
Exchange Agent of such Certificate or Certificates, together with such letter
of transmittal, duly executed, and such other documents as may reasonably be
required by the Exchange Agent, be entitled to receive in exchange therefor
(i) the amount of cash to which such holder is entitled pursuant to Section
2.01(c), (ii) a certificate or certificates representing that number of whole
shares of Parent Common Stock (after taking into account all Certificates
surrendered by such holder) to which such holder is entitled pursuant to
Section 2.01(c) (which shall be in uncertificated book entry form unless a
physical certificate is requested), (iii) any dividends or distributions
payable pursuant to Section 2.02(c) and (iv) cash in lieu of any fractional
shares payable pursuant to Section 2.02(e), and the Certificates so
surrendered shall forthwith be canceled. In the event of a transfer of
ownership of Company Common Stock which is not registered in the transfer
records of the Company, payment of the Merger Consideration in accordance with
this Section 2.02(b) may be made to a person other than the person in whose
name the Certificate so surrendered is registered if such Certificate
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shall be properly endorsed or otherwise be in proper form for transfer and the
person requesting such payment shall pay any transfer or other taxes required
by reason of the payment of the Merger Consideration, any dividends or other
distributions payable pursuant to Section 2.02(c) and cash in lieu of any
fractional shares payable pursuant to Section 2.02(e) to a person other than
the registered holder of such Certificate or establish to the reasonable
satisfaction of Parent that such taxes have been paid or are not applicable.
Until surrendered as contemplated by this Section 2.02(b), each Certificate
shall be deemed at any time after the Effective Time to represent only the
right to receive upon such surrender the Merger Consideration, any dividends or
other distributions payable pursuant to Section 2.02(c) and cash in lieu of any
fractional shares payable pursuant to Section 2.02(e). No interest shall be
paid or will accrue on any payment to holders of Certificates pursuant to the
provisions of this Article II.
(c) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions with respect to Parent Common Stock with a record date
after the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of Parent Common Stock that the holder
thereof has the right to receive upon the surrender thereof, and no cash
payment in lieu of fractional shares of Parent Common Stock shall be paid to
any such holder pursuant to Section 2.02(e), in each case until the holder of
such Certificate shall have surrendered such Certificate in accordance with
this Article II. Following the surrender of any Certificate, there shall be
paid to the record holder of the certificate representing whole shares of
Parent Common Stock issued in exchange therefor, without interest, (i) at the
time of such surrender, the amount of dividends or other distributions with a
record date after the Effective Time theretofore paid with respect to such
whole shares of Parent Common Stock and the amount of any cash payable in lieu
of a fractional share of Parent Common Stock to which such holder is entitled
pursuant to Section 2.02(e) and (ii) at the appropriate payment date, the
amount of dividends or other distributions with a record date after the
Effective Time but prior to such surrender and a payment date subsequent to
such surrender payable with respect to such whole shares of Parent Common
Stock.
(d) No Further Ownership Rights in Company Common Stock. The Merger
Consideration, any dividends or other distributions payable pursuant to
Section 2.02(c) and cash in lieu of any fractional shares payable pursuant to
Section 2.02(e) paid upon the surrender of Certificates in accordance with the
terms of this Article II shall be deemed to have been paid in full
satisfaction of all rights pertaining to the shares of Company Common Stock
formerly represented by such Certificates. At the close of business on the day
on which the Effective Time occurs, the share transfer books of the Company
shall be closed, and there shall be no further registration of transfers on
the share transfer books of the Surviving Corporation of the shares of Company
Common Stock that were outstanding immediately prior to the Effective Time.
If, after the Effective Time, any Certificate is presented to the Surviving
Corporation for transfer, it shall be canceled against delivery of the Merger
Consideration, any dividends or other distributions payable pursuant to
Section 2.02(c) and cash in lieu of any fractional shares payable pursuant to
Section 2.02(e) to the holder thereof as provided in this Article II.
(e) No Fractional Shares. (i) No certificates or scrip
representing fractional shares of Parent Common Stock shall be issued upon
the surrender for exchange of Certificates, no dividends or other
distributions of Parent shall relate to such fractional share interests and
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such fractional share interests will not entitle the owner thereof to vote
or to any rights of a shareholder of Parent.
(ii) In lieu of such fractional share interests, Parent shall pay
to each holder of a Certificate an amount in cash equal to the product obtained
by multiplying (A) the fractional share interest to which such holder (after
taking into account all shares of Company Common Stock formerly represented by
all Certificates surrendered by such holder) would otherwise be entitled by (B)
the per share closing price of Parent Common Stock on the Closing Date (the
"Closing Price"), as such price is reported on the NYSE Composite Transaction
Tape (as reported by Bloomberg Financial Markets or such other source as the
parties shall agree in writing).
(f) Termination of the Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the holders of the Certificates for six
months after the Effective Time shall be delivered to Parent, upon demand, and
any holders of the Certificates who have not theretofore complied with this
Article II shall thereafter look only to Parent for, and Parent shall remain
liable for, payment of their claim for the Merger Consideration, any dividends
or other distributions payable pursuant to Section 2.02(c) and cash in lieu of
any fractional shares payable pursuant to Section 2.02(e) in accordance with
this Article II.
(g) No Liability. None of Parent, Sub, the Company, the Surviving
Corporation or the Exchange Agent shall be liable to any person in respect of
any shares of Parent Common Stock, cash, dividends or other distributions from
the Exchange Fund properly delivered to a public official pursuant to any
applicable abandoned property, escheat or similar Law. If any Certificate shall
not have been surrendered prior to four years after the Effective Time (or
immediately prior to such earlier date on which any Merger Consideration (and
any dividends or other distributions payable with respect thereto pursuant to
Section 2.02(c) and cash in lieu of any fractional shares payable with respect
thereto pursuant to Section 2.02(e)) would otherwise escheat to or become the
property of any Governmental Entity), any such Merger Consideration (and any
dividends or other distributions payable with respect thereto pursuant to
Section 2.02(c) and cash in lieu of any fractional shares payable with respect
thereto pursuant to Section 2.02(e)) shall, to the extent permitted by
applicable Law, become the property of Parent, free and clear of all claims or
interest of any person previously entitled thereto.
(h) Investment of Exchange Fund. The Exchange Agent shall invest
the cash included in the Exchange Fund as directed by Parent. Any interest and
other income resulting from such investments shall be paid to and be income of
Parent. If for any reason (including losses) the cash in the Exchange Fund
shall be insufficient to fully satisfy all of the payment obligations to be
made in cash by the Exchange Agent hereunder, Parent shall promptly deposit
cash into the Exchange Fund in an amount which is equal to the deficiency in
the amount of cash required to fully satisfy such cash payment obligations.
(i) Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by Parent, the posting by such person of a bond in such reasonable
amount as Parent may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent shall
deliver in exchange for such lost,
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stolen or destroyed Certificate the Merger Consideration, any dividends or
other distributions payable pursuant to Section 2.02(c) and cash in lieu of
any fractional shares payable pursuant to Section 2.02(e), in each case
pursuant to this Article II.
(j) Withholding Rights. Parent, the Surviving Corporation or the
Exchange Agent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of Certificates such
amounts as Parent, the Surviving Corporation or the Exchange Agent is required
to deduct and withhold with respect to the making of such payment under the
Internal Revenue Code of 1986, as amended (the "Code"), or any provision of
state, local or foreign tax Law. To the extent that amounts are so withheld and
paid over to the appropriate taxing authority by Parent, the Surviving
Corporation or the Exchange Agent, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the holder of
Certificates in respect of which such deduction and withholding was made by
Parent, the Surviving Corporation or the Exchange Agent.
ARTICLE III
Representations and Warranties
------------------------------
SECTION 3.01. Representations and Warranties of the Company. Except
as disclosed in the Company SEC Documents filed by the Company and publicly
available prior to the date of this Agreement ("Filed Company SEC Documents")
and except as set forth in the disclosure schedule (with specific reference to
the particular Section or subsection of this Agreement to which the information
set forth in such disclosure schedule relates; provided, however, that any
information set forth in one section of the Company Disclosure Schedule shall
be deemed to apply to each other Section or subsection thereof to which its
relevance is readily apparent on its face) delivered by the Company to Parent
prior to the execution of this Agreement (the "Company Disclosure Schedule"),
the Company represents and warrants to Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. Each of the Company
and its Subsidiaries has been duly organized, and is validly existing and
in good standing (with respect to jurisdictions that recognize that
concept) under the Laws of the jurisdiction of its incorporation or
formation, as the case may be, and has all requisite power and authority
and possesses all governmental licenses, permits, authorizations and
approvals necessary to enable it to use its corporate or other name and to
own, lease or otherwise hold and operate its properties and other assets
and to carry on its business as currently conducted, except where the
failure to have such governmental licenses, permits, authorizations or
approvals individually or in the aggregate has not had and would not
reasonably be expected to have a Material
8
Adverse Effect. Each of the Company and its Subsidiaries is duly qualified
or licensed to do business and is in good standing (with respect to
jurisdictions that recognize that concept) in each jurisdiction in which
the nature of its business or the ownership, leasing or operation of its
properties makes such qualification, licensing or good standing necessary,
other than in such jurisdictions where the failure to be so qualified,
licensed or in good standing individually or in the aggregate has not had
and would not reasonably be expected to have a Material Adverse Effect.
The Company has made available to Parent, prior to the execution of this
Agreement, complete and accurate copies of the Company Articles and the
Company's By-laws (the "Company By-laws"), and the comparable
organizational documents of each Significant Subsidiary (as such term is
defined in Rule 12b-2 under the Exchange Act), in each case as amended to
the date hereof.
(b) Subsidiaries. Section 3.01(b) of the Company Disclosure
Schedule lists, as of the date hereof, (i) each Significant Subsidiary of
the Company (including its state of incorporation or formation) and (ii)
each other Subsidiary of the Company. All of the outstanding capital stock
of, or other equity interests in, each Significant Subsidiary of the
Company, is directly or indirectly owned by the Company. All the issued
and outstanding shares of capital stock of, or other equity interests in,
each such Subsidiary owned by the Company have been validly issued and are
fully paid and nonassessable and are owned directly or indirectly by the
Company free and clear of all pledges, liens, charges, encumbrances or
security interests of any kind or nature whatsoever (other than liens,
charges and encumbrances for current taxes not yet due and payable)
(collectively, "Liens"), and free of any restriction on the right to vote,
sell or otherwise dispose of such capital stock or other equity interests.
Except with respect to securities of non-Affiliates that, to the Knowledge
of the Company, do not constitute a 20% or greater interest in such
non-Affiliates (or a 5% or greater interest in such non-Affiliates if the
Company's investment therein is greater than $20,000,000), and except for
the capital stock of, or voting securities or equity interests in, its
Subsidiaries, the Company does not own, directly or indirectly, as of the
date hereof, any capital stock of, or other voting securities or equity
interests in, any corporation, partnership, joint venture, association or
other entity.
(c) Capital Structure. The authorized capital stock of the Company
consists of 1,000,000,000 shares of Company Common Stock and 50,000,000
shares of preferred stock, without par value ("Company Preferred Stock").
1,500,000 shares of Company Preferred Stock have been designated as Series
A Participating Preferred Stock, without par value (the "Company Series A
Preferred Stock"). At the close of business on December 14, 2004, (i)
321,485,774 shares of Company Common Stock were issued and outstanding
(which number includes (A) 535,645 shares of Company Common Stock held by
the Company in its treasury, (B) 1,934,116 shares of Company Common Stock
held by the trust established under The Guidant Employee Savings and Stock
Ownership Plan and (C) 919,276 shares of Company Common Stock subject to
vesting and restrictions on transfer ("Company Restricted Stock")), (ii)
41,590,880 shares of Company Common Stock were reserved and available for
issuance pursuant to the Company's 1994 Stock Plan, as amended, 1996
Nonemployee Director Stock Plan, as amended, 1998 Stock Plan, as amended,
and 2001 Employee Stock Purchase Plan (the "ESPP") (such plans,
collectively, the "Company Stock Plans"), of which 35,485,818 shares of
Company Common Stock were subject to outstanding Company Stock Options or
agreements to issue Company Stock Options, and (iii) no shares of Company
Preferred Stock (including Company Series A Preferred Stock) were issued
or outstanding or were held by the Company as treasury shares. Except as
set forth above in this Section 3.01(c), at the close of business on
December 14, 2004, no shares of capital stock or other voting securities
or equity interests of the Company were issued, reserved
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for issuance or outstanding. At the close of business on December 14,
2004, there were no outstanding stock appreciation rights, "phantom" stock
rights, restricted stock units, performance units, rights to receive
shares of Company Common Stock on a deferred basis or other rights (other
than Company Stock Options) that are linked to the value of Company Common
Stock (collectively, "Company Stock-Based Awards"). All outstanding
options to purchase shares of Company Common Stock exclusive of rights
under the ESPP (collectively, "Company Stock Options") and shares of
Company Restricted Stock are evidenced by stock option agreements,
restricted stock purchase agreements or other award agreements. All
outstanding shares of capital stock of the Company are, and all shares
which may be issued pursuant to the Company Stock Options or Company
Stock-Based Awards will be, when issued in accordance with the terms
thereof, duly authorized, validly issued, fully paid and nonassessable and
not subject to preemptive rights. There are no bonds, debentures, notes or
other indebtedness of the Company having the right to vote (or convertible
into, or exchangeable for, securities having the right to vote) on any
matters on which shareholders of the Company may vote. Except as set forth
above in this Section 3.01(c) and for issuances of shares of Company
Common Stock pursuant to the Company Stock Options set forth above in this
Section 3.01(c) and subject to Section 4.01(a), (x) there are not issued,
reserved for issuance or outstanding (A) any shares of capital stock or
other voting securities or equity interests of the Company, (B) any
securities of the Company convertible into or exchangeable or exercisable
for shares of capital stock or other voting securities or equity interests
of the Company, (C) any warrants, calls, options or other rights to
acquire from the Company or any of its Subsidiaries, and no obligation of
the Company or any of its Subsidiaries to issue, any capital stock, voting
securities, equity interests or securities convertible into or
exchangeable or exercisable for capital stock or voting securities of the
Company or (D) any Company Stock-Based Awards and (y) there are not any
outstanding obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any such securities or to issue,
deliver or sell, or cause to be issued, delivered or sold, any such
securities. Neither the Company nor any of its Subsidiaries is a party to
any voting Contract with respect to the voting of any such securities.
Except as set forth above in this Section 3.01(c) and subject to Section
4.01(a), there are no outstanding (1) securities of the Company or any of
its Subsidiaries convertible into or exchangeable or exercisable for
shares of capital stock or voting securities or equity interests of any
Subsidiary of the Company, (2) warrants, calls, options or other rights to
acquire from the Company or any of its Subsidiaries, and no obligation of
the Company or any of its Subsidiaries to issue, any capital stock, voting
securities, equity interests or securities convertible into or
exchangeable or exercisable for capital stock or voting securities of any
Subsidiary of the Company or (3) obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any such
outstanding securities or to issue, deliver or sell, or cause to be
issued, delivered or sold, any such securities.
(d) Authority; Noncontravention. The Company has all requisite
corporate power and authority to execute and deliver this Agreement and,
subject to receipt of the Shareholder Approval, to consummate the
transactions contemplated by this Agreement. The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated by this Agreement have been duly
10
authorized by all necessary corporate action on the part of the Company
and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the transactions
contemplated by this Agreement, subject, in the case of the consummation
of the Merger, to the obtaining of the Shareholder Approval. This
Agreement has been duly executed and delivered by the Company and,
assuming the due authorization, execution and delivery by each of the
other parties hereto, constitutes a legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, moratorium,
reorganization or similar Laws affecting the rights of creditors generally
and the availability of equitable remedies (regardless of whether such
enforceability is considered in a proceeding in equity or at law). The
Board of Directors of the Company, at a meeting duly called and held, duly
and unanimously adopted by all directors present, resolutions (i) adopting
this Agreement, the Merger and the other transactions contemplated by this
Agreement, (ii) declaring that it is in the best interests of the Company
and the shareholders of the Company that the Company enter into this
Agreement and consummate the Merger and the other transactions
contemplated by this Agreement on the terms and subject to the conditions
set forth in this Agreement, (iii) directing that the Company use its
reasonable best efforts to submit the approval of this Agreement to a vote
at a meeting of the shareholders of the Company within 120 days of the
date hereof and (iv) recommending that the shareholders of the Company
approve this Agreement, which resolutions, as of the date of this
Agreement, have not been subsequently rescinded, modified or withdrawn in
any way. The execution and delivery of this Agreement by the Company do
not, and the consummation by the Company of the Merger and the other
transactions contemplated by this Agreement and compliance by the Company
with the provisions of this Agreement will not, conflict with, or result
in any violation or breach of, or default (with or without notice or lapse
of time, or both) under, or give rise to a right of, or result in,
termination, cancelation or acceleration of any obligation or to the loss
of a benefit under, or result in the creation of any Lien in or upon any
of the properties or other assets of the Company or any of its
Subsidiaries under, (x) the Company Articles or the Company By-laws or the
comparable organizational documents of any of its Subsidiaries, (y) any
loan or credit agreement, bond, debenture, note, mortgage, indenture,
lease, supply agreement, license agreement, development agreement or other
contract, agreement, obligation, commitment or instrument that is intended
by the Company, Parent or any of their respective Subsidiaries, as
applicable, to be legally binding, (each, including all amendments
thereto, a "Contract"), to which the Company or any of its Subsidiaries is
a party or any of their respective properties or other assets is subject
or (z) subject to the obtaining of the Shareholder Approval and the
governmental filings and other matters referred to in the following
sentence, any (A) statute, law, ordinance, rule or regulation (each, a
"Law") applicable to the Company or any of its Subsidiaries or their
respective properties or other assets or (B) order, writ, injunction,
decree, judgment or stipulation (each, an "Order") applicable to the
Company or any of its Subsidiaries or their respective properties or other
assets, other than, in the case of clauses (y) and (z), any such
conflicts, violations, breaches, defaults, rights of termination,
cancelation or acceleration, losses or Liens that individually or in the
aggregate have not had and would not reasonably be expected to (x) have a
Material Adverse Effect, (y) impair in any material respect the
11
ability of the Company to perform its obligations under this Agreement or
(z) prevent or materially impede, interfere with, hinder or delay the
consummation of the transactions contemplated by this Agreement. No
consent, approval, order or authorization of, action by or in respect of,
or registration, declaration or filing with, any Federal, state, local or
foreign government, any court, administrative, regulatory or other
governmental agency, commission or authority or any organized securities
exchange (each, a "Governmental Entity") is required by or with respect to
the Company or any of its Subsidiaries in connection with the execution
and delivery of this Agreement by the Company or the consummation of the
Merger or the other transactions contemplated by this Agreement, except
for (1) (A) the filing of a premerger notification and report form by the
Company under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder (the "HSR Act") and the
termination of the waiting period required thereunder, (B) all required
notifications and filings by the Company under Article 4 of Council
Regulation 139/2004 of the European Community, as amended (the "EC Merger
Regulation"), and the receipt of a decision under Article 6(1)(b), 8(1) or
8(2) thereunder declaring the Merger compatible with the EC Common Market
and (C) the receipt, termination or expiration, as applicable, of
approvals or waiting periods required under any other applicable
competition, merger control, antitrust or similar Law, (2) the filing with
the Securities and Exchange Commission (the "SEC") of (X) a proxy
statement relating to the adoption by the shareholders of the Company of
this Agreement (as amended or supplemented from time to time, the "Proxy
Statement") and (Y) such reports under the Securities Exchange Act of
1934, as amended (including the rules and regulations promulgated
thereunder, the "Exchange Act"), as may be required in connection with
this Agreement and the transactions contemplated by this Agreement, (3)
the filing of the Articles of Merger with the Secretary of State of the
State of Indiana and appropriate documents with the relevant authorities
of other states in which the Company or any of its Subsidiaries is
qualified to do business, (4) any filings with and approvals of the NYSE
and (5) such other consents, approvals, orders, authorizations, actions,
registrations, declarations and filings the failure of which to be
obtained or made individually or in the aggregate has not had and would
not reasonably be expected to (x) have a Material Adverse Effect, (y)
impair in any material respect the ability of the Company to perform its
obligations under this Agreement or (z) prevent or materially impede,
interfere with, hinder or delay the consummation of the transactions
contemplated by this Agreement.
(e) Company SEC Documents. (i) The Company has filed all reports,
schedules, forms, statements and other documents (including exhibits and
other information incorporated therein) with the SEC required to be filed
by the Company since January 1, 2003 (such documents, together with any
documents filed during such period by the Company with the SEC on a
voluntary basis on Current Reports on Form 8-K, the "Company SEC
Documents"). As of their respective filing dates, the Company SEC
Documents complied in all material respects with, to the extent in effect
at the time of filing, the requirements of the Securities Act of 1933, as
amended (including the rules and regulations promulgated thereunder, the
"Securities Act"), the Exchange Act and the Xxxxxxxx-Xxxxx Act of 2002
(including the rules and regulations promulgated thereunder, "SOX")
applicable to such Company SEC Documents, and none of the Company SEC
Documents contained any untrue statement of a material fact or
12
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Except to the
extent that information contained in any Company SEC Document has been
revised, amended, supplemented or superseded by a later-filed Company SEC
Document, none of the Company SEC Documents contains any untrue statement
of a material fact or omits to state any material fact required to be
stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading,
which individually or in the aggregate would require an amendment,
supplement or corrective filing to such Company SEC Documents. Each of the
financial statements (including the related notes) of the Company included
in the Company SEC Documents complied at the time it was filed as to form
in all material respects with the applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto in
effect at the time of filing, had been prepared in accordance with
generally accepted accounting principles in the United States ("GAAP")
(except, in the case of unaudited statements, as permitted by the rules
and regulations of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and
fairly presented in all material respects the consolidated financial
position of the Company and its consolidated Subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments). Neither the Company nor any of its
Subsidiaries has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) which individually or in the
aggregate have had or would reasonably be expected to have a Material
Adverse Effect. None of the Subsidiaries of the Company are, or have at
any time since January 1, 2003 been, subject to the reporting requirements
of Section 13(a) or 15(d) of the Exchange Act.
(ii) Each of the principal executive officer of the Company and the
principal financial officer of the Company (or each former principal
executive officer of the Company and each former principal financial
officer of the Company, as applicable) has made all certifications
required by Rule 13a-14 or 15d-14 under the Exchange Act and Sections 302
and 906 of SOX with respect to the Company SEC Documents, and the
statements contained in such certifications are true and accurate. For
purposes of this Agreement, "principal executive officer" and "principal
financial officer" shall have the meanings given to such terms in SOX.
Neither the Company nor any of its Subsidiaries has outstanding, or has
arranged any outstanding, "extensions of credit" to directors or executive
officers within the meaning of Section 402 of SOX. (iii) The Company
maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (A) transactions are executed in accordance with
management's general or specific authorizations; (B) access to assets is
permitted only in accordance with management's general or specific
authorization; and (C) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(iv) The Company's "disclosure controls and procedures" (as
defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) are
reasonably designed to ensure
13
that all information (both financial and non-financial) required to be
disclosed by the Company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported within the
time periods specified in the rules and forms of the SEC, and that all
such information is accumulated and communicated to the Company's
management as appropriate to allow timely decisions regarding required
disclosure and to make the certifications of the chief executive officer
and chief financial officer of the Company required under the Exchange Act
with respect to such reports.
(f) Information Supplied. None of the information supplied or to be
supplied by or on behalf of the Company specifically for inclusion or
incorporation by reference in (i) the registration statement on Form S-4
to be filed with the SEC by Parent in connection with the issuance of
shares of Parent Common Stock in the Merger (as amended or supplemented
from time to time, the "Form S-4") will, at the time the Form S-4 is filed
with the SEC and at the time it becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are
made, not misleading or (ii) the Proxy Statement will, at the date it is
first mailed to the shareholders of the Company and at the time of the
Shareholders' Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they are made, not misleading, except that no representation
or warranty is made by the Company with respect to statements made or
incorporated by reference therein based on information supplied by or on
behalf of Parent or Sub specifically for inclusion or incorporation by
reference in the Form S-4 or the Proxy Statement. The Proxy Statement will
comply as to form in all material respects with the requirements of the
Exchange Act.
(g) Absence of Certain Changes or Events. Except for liabilities
incurred in connection with this Agreement or as expressly permitted
pursuant to Section 4.01(a)(i) through (xvi), since the date of the most
recent financial statements included in the Filed Company SEC Documents,
the Company and its Subsidiaries have conducted their respective
businesses only in the ordinary course consistent with past practice, and
there has not been any Material Adverse Change, and from such date until
the date hereof there has not been (i) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to any capital stock of the Company or any of its
Subsidiaries, other than (x) cash dividends payable by the Company in
respect of shares of Company Common Stock consistent with past practice
and not exceeding $0.10 per share of Company Common Stock per fiscal
quarter or (y) dividends or distributions by a direct or indirect wholly
owned Subsidiary of the Company to its shareholders, (ii) any purchase,
redemption or other acquisition by the Company or any of its Subsidiaries
of any shares of capital stock or any other securities of the Company or
any of its Subsidiaries or any options, warrants, calls or rights to
acquire such shares or other securities, other than in connection with net
share withholding in connection with the vesting of Company Restricted
Stock, (iii) any split, combination or reclassification of any capital
stock of the Company or any of its Subsidiaries or any issuance or the
authorization of any issuance of any other securities in respect of, in
lieu of or in substitution for shares of their respective capital stock,
14
(iv) (A) any granting by the Company or any of its Subsidiaries to any
current or former (1) director of the Company or any of its Subsidiaries
or (2) employee of the Company or any of its Subsidiaries who is treated
as a Tier I Employee (a "Tier I Employee") or Tier II Employee (a "Tier II
Employee") for purposes of the Company's Change in Control Severance Pay
Plan for Select Employees (all individuals described in the foregoing
clauses (1) and (2) of this clause (A), collectively, the "Key Personnel")
of any increase in compensation, bonus or fringe or other benefits, except
for normal increases in cash compensation (including cash bonuses) in the
ordinary course of business consistent with past practice or as was
required under any Company Benefit Agreement or Company Benefit Plan, (B)
any granting by the Company or any of its Subsidiaries to any Key
Personnel of (1) any increase in severance or termination pay or (2) any
right to receive any severance or termination pay except for severance or
termination pay received in the ordinary course of business consistent
with past practice or as was required under any Company Benefit Agreement
or Company Benefit Plan, (C) any entry by the Company or any of its
Subsidiaries into, or any amendments of, (1) any employment, deferred
compensation, consulting, severance, change of control, termination or
indemnification Contract with any Key Personnel or (2) any Contract with
any Key Personnel the benefits of which are contingent, or the terms of
which are materially altered, upon the occurrence of a transaction
involving the Company of a nature contemplated by this Agreement (all such
Contracts under this clause (C), collectively, "Company Benefit
Agreements"), (D) the removal or modification of any restrictions in any
Company Benefit Agreement or Company Benefit Plan or awards made
thereunder, except as required to comply with applicable Law or any
Company Benefit Agreement or Company Benefit Plan in effect as of the date
hereof or (E) the adoption, amendment or termination of any Company
Benefit Plan, other than, in the cases of clauses (A), (B), (C) and (D),
such increases, amendments, new agreements, removals, modifications or
terminations with respect to Tier II Employees that (1) do not provide for
any increase in compensation or benefits for any individual Tier II
Employee that is material in relation to such Tier II Employee's
compensation or benefits prior to such increase and (2) in the aggregate
do not result in any material increase in compensation, benefits or other
similar expenses of the Company and its Subsidiaries, (v) any damage,
destruction or loss, whether or not covered by insurance, that
individually or in the aggregate has had or would reasonably be expected
to have a Material Adverse Effect, (vi) any change in accounting methods,
principles or practices by the Company materially affecting its assets,
liabilities or businesses, except insofar as may have been required by a
change in GAAP or (vii) any material tax election or any settlement or
compromise of any material income tax liability.
(h) Litigation. Except with respect to taxes, which are the
subject of Section 3.01(n), there is no suit, action or proceeding
pending or, to the Knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries or any of their
respective assets that individually or in the aggregate has had or would
reasonably be expected to have a Material Adverse Effect, nor is there
any demand, letter or Order of any Governmental Entity or arbitrator
outstanding against, or, to the Knowledge of the Company, investigation
by any Governmental Entity involving, the Company or any of its
Subsidiaries or any of their respective assets that individually or in
15
the aggregate has had or would reasonably be expected to have a
Material Adverse Effect.
(i) Contracts. (1) As of the date hereof, neither the Company nor
any of its Subsidiaries is a party to, and none of their respective
properties or other assets is subject to, any Contract that is a
"material contract" (as such term is defined in Item 601(b)(10) of
Regulation S-K of the SEC) (a "Material Contract"). None of the Company,
any of its Subsidiaries or, to the Knowledge of the Company, any other
party thereto is in violation of or in default under (nor does there
exist any condition which upon the passage of time or the giving of
notice or both would cause such a violation of or default by the Company
or any of its Subsidiaries or, to the Knowledge of the Company, any other
party thereto under) any Contract to which it is a party or by which it
or any of its properties or other assets is bound, except for violations
or defaults that individually or in the aggregate have not had and would
not reasonably be expected to have a Material Adverse Effect. Neither the
Company nor any of its Subsidiaries has entered into any Contract that is
currently in effect that is required to be disclosed pursuant to Item 404
of Regulation S-K of the SEC.
(2) Section 3.01(i)(2) of the Company Disclosure Schedule contains
a complete and accurate list, as of the date hereof, of (A) each material
Contract restricting or purporting to restrict any of the Company's
Affiliates' ability to compete (other than each such Contract that only
restricts the Company's Subsidiaries' ability to compete) in any line of
business, geographic area or customer segment, (B) each material Contract
restricting the Company's or any of its Subsidiaries' ability to compete
in any line of business, geographic area or customer segment and (C) each
material Contract relating to distribution, sale, supply, licensing,
co-promotion or manufacturing of any products or services of the Company
or any of its Subsidiaries or any products licensed by the Company or any
of its Subsidiaries.
(j) Compliance with Laws; Environmental Matters. (i) Except with
respect to Environmental Laws, the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), taxes and regulatory compliance, which
are the subjects of Sections 3.01(j)(ii), 3.01(l), 3.01(n) and 3.01(u),
respectively, each of the Company and its Subsidiaries is in compliance
with all Laws and Orders (collectively, "Legal Provisions") applicable to
it, its properties or other assets or its business or operations, except
for failures to be in compliance that individually or in the aggregate
have not had and would not reasonably be expected to have a Material
Adverse Effect. Each of the Company and its Subsidiaries has in effect
all approvals, authorizations, certificates, filings, franchises,
licenses, notices and permits of or with all Governmental Entities
(collectively, "Permits"), including all Permits under the Federal Food,
Drug and Cosmetic Act of 1938, as amended (including the rules and
regulations promulgated thereunder, the "FDCA"), necessary for it to own,
lease or operate its properties and other assets and to carry on its
business and operations as currently conducted, except where the failure
to have such Permits individually or in the aggregate has not had and
would not reasonably be expected to have a Material Adverse Effect. Since
January 1, 2000, there has occurred no default under, or violation of,
any such Permit, except for any such default or violation that
individually or in the aggregate has not had and would not
16
reasonably be expected to have a Material Adverse Effect. The
consummation of the Merger, in and of itself, would not cause the
revocation or cancelation of any such Permit that individually or in the
aggregate would reasonably be expected to have a Material Adverse Effect.
(ii) Except for those matters that individually or in the
aggregate have not had and would not reasonably be expected to have a
Material Adverse Effect: (A) during the period of ownership or operation
by the Company or any of its Subsidiaries of any of its currently or
formerly owned, leased or operated properties, there have been no
Releases of Hazardous Materials in, on, under or affecting any properties
which would subject the Company or any of its Subsidiaries to any
liability under any Environmental Law or require any expenditure by the
Company or any of its Subsidiaries for remediation to meet applicable
standards thereunder; (B) prior to and after, as applicable, the period
of ownership or operation by the Company or any of its Subsidiaries of
any of its currently or formerly owned, leased or operated properties, to
the Knowledge of the Company, there were no Releases of Hazardous
Materials in, on, under or affecting any properties which would subject
the Company or any of its Subsidiaries to any liability under any
Environmental Law or require any expenditure by the Company or any of its
Subsidiaries for remediation to meet applicable standards thereunder; (C)
neither the Company nor any of its Subsidiaries is subject to any
indemnity obligation or other Contract with any person relating to
obligations or liabilities under Environmental Laws; and (D) to the
Knowledge of the Company, there are no facts, circumstances or conditions
that would reasonably be expected to form the basis for any
investigation, suit, claim, action, proceeding or liability against or
affecting the Company or any of its Subsidiaries relating to or arising
under Environmental Laws. The term "Environmental Laws" means all
applicable Federal, state, local and foreign Laws (including the common
law), Orders, notices, Permits or binding Contracts issued, promulgated
or entered into by any Governmental Entity, relating in any way to the
environment, preservation or reclamation of natural resources or the
presence, management, Release of, or exposure to, Hazardous Materials, or
to human health and safety. The term "Hazardous Materials" means (1)
petroleum products and by-products, asbestos and asbestos-containing
materials, urea formaldehyde foam insulation, medical or infectious
wastes, polychlorinated biphenyls, radon gas, radioactive substances,
chlorofluorocarbons and all other ozone-depleting substances and (2) any
other chemical, material, substance, waste, pollutant or contaminant that
is prohibited, limited or regulated by or pursuant to any Environmental
Law. The term "Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
disposing or migrating into or through the environment or any natural or
man-made structure.
(k) Labor Relations. From the date of the most recent financial
statements included in the Filed Company SEC Documents through the date
hereof, there has not been any adoption, material amendment or
termination by the Company or any of its Subsidiaries of any collective
bargaining or other labor union Contract to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound. There are no collective bargaining or other labor
union Contracts to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries is bound. As of
the date of this Agreement, none of the employees
17
of the Company or any of its Subsidiaries are represented by any
union with respect to their employment by the Company or such Subsidiary.
Since January 1, 2003, neither the Company nor any of its Subsidiaries
has experienced any material labor disputes, union organization attempts
or work stoppages, slowdowns or lockouts due to labor disagreements.
(l) ERISA Compliance. (i) Section 3.01(l)(i) of the Company
Disclosure Schedule contains a complete and accurate list of each
employment, bonus, pension, profit sharing, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock
appreciation, restricted stock, stock option, "phantom" stock,
performance, retirement, thrift, savings, stock bonus, paid time off,
perquisite, fringe benefit, vacation, severance, disability, death
benefit, hospitalization, medical, welfare benefit or other plan,
program, policy or Contract maintained, contributed to or required to be
maintained or contributed to by the Company or any of its Subsidiaries or
any other person or entity that, together with the Company, is treated as
a single employer under Section 414(b), (c), (m) or (o) of the Code
(each, a "Commonly Controlled Entity") (exclusive of any such plan,
program, policy or Contract mandated by and maintained solely pursuant to
applicable law), in each case providing benefits to any current or former
director, officer or employee of the Company or any of its Subsidiaries
(collectively, but exclusive of individual option and restricted award
agreements issued under the Company Stock Plans, the "Company Benefit
Plans") and each Company Benefit Agreement (exclusive of local offer
letters mandated under applicable non-U.S. law that do not impose any
severance obligations other than any mandatory statutory severance). Each
Company Benefit Plan that is an "employee pension benefit plan" (as
defined in Section 3(2) of ERISA) is sometimes referred to herein as a
"Company Pension Plan" and each Company Benefit Plan that is an "employee
welfare benefit plan" (as defined in Section 3(1) of ERISA) is sometimes
referred to herein as a "Company Welfare Plan".
(ii) The Company has provided to Parent complete and accurate
copies of (A) each Company Benefit Plan or, at the Company's option, in
the case of Company Benefit Plans maintained primarily for the benefit
of individuals regularly employed outside the United States, a summary
thereof (or, in either case, with respect to any unwritten Company
Benefit Plans, descriptions thereof) and Company Benefit Agreements
(exclusive of local offer letters mandated under applicable non-U.S. law
that do not impose any severance obligations other than any mandatory
statutory severance), (B) the two most recent annual reports on Form
5500 required to be filed with the Internal Revenue Service (the "IRS")
with respect to each Company Benefit Plan (if any such report was
required), (C) the most recent summary plan description for each Company
Benefit Plan for which such summary plan description is required and (D)
each trust Contract and insurance or group annuity Contract relating to
any Company Benefit Plan.
(iii) Each Company Benefit Plan has been administered in all
material respects in accordance with its terms. The Company, its
Subsidiaries and all the Company Benefit Plans are all in compliance in
all material respects with the applicable provisions of
18
ERISA, the Code and all other applicable Laws, including Laws of foreign
jurisdictions, and the terms of all collective bargaining Contracts.
(iv) All Company Pension Plans intended to be tax-qualified have
received favorable determination letters from the IRS with respect to
"TRA" (as defined in Section 1 of IRS Rev. Proc. 93-39), and have timely
filed with the IRS determination letter applications (or have received
such a determination letter) with respect to "GUST" (as defined in
Section 1 of IRS Notice 2001-42), to the effect that such Company
Pension Plans are qualified and exempt from Federal income taxes under
Sections 401(a) and 501(a), respectively, of the Code, no such
determination letter has been revoked (nor, to the Knowledge of the
Company, has revocation been threatened) and to the Knowledge of the
Company, no event has occurred since the date of the most recent
determination letter or application therefor relating to any such
Company Pension Plan that would reasonably be expected to adversely
affect the qualification of such Company Pension Plan or materially
increase the costs relating thereto or require security under Section
307 of ERISA. The Company has provided to Parent a complete and accurate
copy of the most recent determination letter received prior to the date
hereof with respect to each Company Pension Plan, as well as a complete
and accurate copy of each pending application for a determination
letter, if any. The Company has also provided to Parent a complete and
accurate list of all amendments to any Company Pension Plan as to which
a favorable determination letter has not yet been received.
(v) Neither the Company nor any Commonly Controlled Entity has,
during the six-year period ending on the date hereof, maintained,
contributed to or been required to contribute to any Company Pension
Plan that is subject to Title IV of ERISA or Section 412 of the Code, or
any "multiemployer plan" as defined in Section 3(37) or 4001(a)(3) of
ERISA. Except as has not had and would not reasonably be expected to
have a Material Adverse Effect, neither the Company nor any Commonly
Controlled Entity has any unsatisfied liability under Title IV of ERISA.
To the Knowledge of the Company, no condition exists that presents a
material risk to the Company or any Commonly Controlled Entity of
incurring a material liability under Title IV of ERISA. The Pension
Benefit Guaranty Corporation has not instituted proceedings under
Section 4042 of ERISA to terminate any Company Benefit Plan and, to the
Knowledge of the Company, no condition exists that presents a material
risk that such proceedings will be instituted.
(vi) Except as has not had and would not reasonably be expected to
have a Material Adverse Effect, (A) all reports, returns and similar
documents with respect to all Company Benefit Plans required to be filed
with any Governmental Entity or distributed to any Company Benefit Plan
participant have been duly and timely filed or distributed, (B) none of
the Company or any of its Subsidiaries has received notice of, and to the
Knowledge of the Company, there are no investigations by any Governmental
Entity with respect to, termination proceedings or other claims (except
claims for benefits payable in the normal operation of the Company Benefit
Plans), suits or proceedings against or involving any Company Benefit Plan
or asserting any rights or claims to benefits under any Company Benefit
Plan that could reasonably be expected to give rise to any material
19
liability and (C) to the Knowledge of the Company, there are not
any facts that could give rise to any liability in the event of any such
investigation, claim, suit or proceeding.
(vii) Except as has not had and would not reasonably be expected to
have a Material Adverse Effect, (A) all contributions, premiums and
benefit payments under or in connection with the Company Benefit Plans
that are required to have been made as of the date hereof in accordance
with the terms of the Company Benefit Plans have been timely made or have
been reflected on the most recent consolidated balance sheet filed or
incorporated by reference into the Filed Company SEC Documents and (B) no
Company Pension Plan has an "accumulated funding deficiency" (as such term
is defined in Section 302 of ERISA or Section 412 of the Code), whether or
not waived.
(viii) With respect to each Company Benefit Plan, except as has not
had and would not reasonably be expected to have a Material Adverse
Effect, (A) there has not occurred any prohibited transaction (within the
meaning of Section 406 of ERISA or Section 4975 of the Code) in which the
Company or any of its Subsidiaries or any of their respective employees,
or, to the Knowledge of the Company, any trustee, administrator or other
fiduciary of such Company Benefit Plan, or any agent of the foregoing, has
engaged that could reasonably be expected to subject the Company or any of
its Subsidiaries or any of their respective employees, or any such
trustee, administrator or other fiduciary, to the tax or penalty on
prohibited transactions imposed by Section 4975 of the Code or the
sanctions imposed under Title I of ERISA and (B) neither the Company, any
of its Subsidiaries or any of their respective employees nor, to the
Knowledge of the Company, any trustee, administrator or other fiduciary of
any Company Benefit Plan nor any agent of any of the foregoing, has
engaged in any transaction or acted in a manner, or failed to act in a
manner, that could reasonably be expected to subject the Company or any of
its Subsidiaries or any of their respective employees or, to the Knowledge
of the Company, any such trustee, administrator or other fiduciary, to any
liability for breach of fiduciary duty under ERISA or any other applicable
Law.
(ix) Each Company Welfare Plan may be amended or terminated
(including with respect to benefits provided to retirees and other former
employees) without material liability to the Company or any of its
Subsidiaries at any time after the Effective Time. Each of the Company and
its Subsidiaries complies in all material respects with the applicable
requirements of Section 4980B(f) of the Code, Sections 601-609 of ERISA or
any similar state or local Law with respect to each Company Benefit Plan
that is a group health plan, as such term is defined in Section 5000(b)(1)
of the Code or such state Law. Neither the Company nor any of its
Subsidiaries has any material obligations for health or life insurance
benefits following termination of employment under any Company Benefit
Plan (other than for continuation coverage required under Section
4980(B)(f) of the Code).
(x) None of the execution and delivery of this Agreement, the
obtaining of the Shareholder Approval or the consummation of the Merger or
any other transaction contemplated by this Agreement (alone or in
conjunction with any other event, including as a result of any termination
of employment on or following the Effective Time) will (A) entitle any
current or former director, officer, employee or consultant of the
20
Company or any of its Subsidiaries to severance or termination pay,
(B) accelerate the time of payment or vesting, or trigger any payment or
funding (through a grantor trust or otherwise) of, compensation or
benefits under, increase the amount payable or trigger any other material
obligation pursuant to, any Company Benefit Plan or Company Benefit
Agreement or (C) result in any breach or violation of, or a default under,
any Company Benefit Plan or Company Benefit Agreement.
(xi) Neither the Company nor any of its Subsidiaries has any
material liability or obligations, including under or on account of a
Company Benefit Plan, arising out of the hiring of persons to provide
services to the Company or any of its Subsidiaries and treating such
persons as consultants or independent contractors and not as employees of
the Company or any of its Subsidiaries. No current or former independent
contractor that provides or provided personal services to the Company or
its Subsidiaries (other than a current or former director) is entitled to
any material fringe or other benefits (other than cash consulting fees)
pursuant to any plan, program, policy or Contract to which the Company or
any of its Subsidiaries is a party or which is maintained, sponsored or
contributed to by the Company or any of its Subsidiaries.
(xii) No material deduction by the Company or any of its
Subsidiaries in respect of any "applicable employee remuneration" (within
the meaning of Section 162(m) of the Code) has been disallowed or is
subject to disallowance by reason of Section 162(m) of the Code. For each
of the Key Personnel, the Company has previously provided to Parent (A)
accurate Form W-2 information for the 1999, 2000, 2001, 2002 and 2003
calendar years, (B) annual base salary as of the date hereof, actual bonus
earned for the 2003 calendar year and target annual bonus for the 2004
calendar year and (C) a list, as of the date hereof, of all outstanding
Company Stock Options, Company Restricted Stock and Company Stock-Based
Awards granted under the Company Stock Plans or otherwise (other than
rights under the ESPP), together with (as applicable) the number of shares
of Company Common Stock subject thereto, and the grant dates, expiration
dates, exercise or base prices and vesting schedules thereof, (D)
estimated current annual cost of welfare benefits and (E) estimated cost
of the pension benefit enhancement under Section 8 of the Company's Change
in Control Severance Plan for Select Employees.
(m) No Parachute Gross Up. Except as provided in accordance with
the Company's Change in Control Severance Pay Plan for Select Employees,
no current or former employee or director of the Company or any of its
Subsidiaries is entitled to receive any additional payment from the
Company or any of its Subsidiaries or the Surviving Corporation by reason
of the excise tax required by Section 4999(a) of the Code being imposed on
such person by reason of the transactions contemplated by this Agreement.
(n) Taxes. Except as has not had and would not reasonably be
expected to have a Material Adverse Effect:
(i) All tax returns required by applicable Law to have been filed
with any taxing authority by, or on behalf of, the Company or any of its
Subsidiaries have been
21
filed in a timely manner (taking into account any valid extension)
in accordance with all applicable Laws, and all such tax returns are true
and complete in all material respects.
(ii) The Company and each of its Subsidiaries has paid (or has had
paid on its behalf) all taxes due and owing, and the Company's most recent
financial statements included in the Filed Company SEC Documents reflect
an adequate accrual for all taxes payable by Company and its Subsidiaries
for all taxable periods and portions thereof accrued through the date of
such financial statements.
(iii) There are no Liens or encumbrances for taxes on any of the
assets of the Company or any of its Subsidiaries other than for taxes not
yet due and payable.
(iv) The Company and its Subsidiaries have complied with all
applicable Laws relating to the payment and withholding of taxes.
(v) No written notification has been received by the Company or any
of its Subsidiaries that any federal, state, local or foreign audit,
examination or similar proceeding is pending, proposed or asserted with
regard to any taxes or tax returns of the Company or its Subsidiaries.
(vi) There is no currently effective Contract extending, or having
the effect of extending, the period of assessment or collection of any
federal, state and, to the Knowledge of the Company, foreign taxes with
respect to the Company or any of its Subsidiaries nor has any request been
made for any such extension.
(vii) No written notice of a claim of pending investigation has
been received from any state, local or other jurisdiction with which the
Company or any of its Subsidiaries currently does not file tax returns,
alleging that the Company or any of its Subsidiaries has a duty to file
tax returns and pay taxes or is otherwise subject to the taxing authority
of such jurisdiction.
(viii) Neither the Company nor any of its Subsidiaries joins or has
joined, for any taxable period during the eight years prior to the date of
this Agreement, in the filing of any affiliated, aggregate, consolidated,
combined or unitary federal, state, local and, to the Knowledge of the
Company, foreign tax return other than consolidated tax returns for the
consolidated group of which the Company is the common parent.
(ix) Neither the Company nor any of its Subsidiaries is a party to
or bound by any tax sharing agreement or tax indemnity agreement,
arrangement or practice (including any advance pricing agreement, closing
agreement or other agreement relating to taxes with any taxing authority).
(x) Neither the Company nor any of its Subsidiaries has constituted
either a "distributing corporation" or a "controlled corporation" in a
distribution of stock qualifying for tax-free treatment under Section 355
of the Code in the two years prior to the date of this Agreement.
22
(xi) Neither the Company nor any of its Subsidiaries will be
required to include in a taxable period ending after the Effective Time
taxable income attributable to income that accrued in a prior taxable
period (or portion of a taxable period) but was not recognized for tax
purposes in any prior taxable period as a result of (A) an open
transaction disposition made on or before the Effective Time, (B) a
prepaid amount received on or prior to the Effective Time, (C) the
installment method of accounting, (D) the long-term contract method of
accounting, (E) the cash method of accounting or Section 481 of the Code
or (F) any comparable provisions of state or local tax Law, domestic or
foreign, or for any other reason, other than any amounts that are
specifically reflected in a reserve for taxes on the most recent financial
statements of the Company included in the Filed Company SEC Documents.
(xii) Neither the Company nor any of its Subsidiaries has entered
into a "listed transaction" within the meaning of Treasury Regulation ss.
1.6011-4(b)(2)
(xiii) As used in this Agreement (A) "tax" means (i) any tax, duty,
governmental fee or other like assessment or charge of any kind whatsoever
(including withholding on amounts paid to or by any person and liabilities
with respect to unclaimed funds), together with any related interest,
penalty, addition to tax or additional amount, and any liability for any
of the foregoing as transferee, (ii) in the case of the Company or any of
its Subsidiaries, liability for the payment of any amount of the type
described in clause (i) as a result of being or having been before the
Effective Time a member of an affiliated, consolidated, combined or
unitary group, or a party to any Contract as a result of which liability
of the Company or any of its Subsidiaries is determined or taken into
account with reference to the activities of any other person and (iii) in
the case of the Company or any of its Subsidiaries, liability of the
Company or any of its Subsidiaries for the payment of any amount as a
result of being party to any tax sharing Contract or with respect to the
payment of any amount imposed on any person of the type described in (i)
or (ii) as a result of any existing Contract (including an indemnification
Contract); (B) "taxing authority" means any Federal, state, local or
foreign government, any subdivision, agency, commission or authority
thereof, or any quasi-governmental body exercising tax regulatory
authority; and (C) "tax return" means any report, return, document,
declaration or other information or filing required to be filed with
respect to taxes (whether or not a payment is required to be made with
respect to such filing), including information returns, any documents with
respect to or accompanying payments of estimated taxes, or with respect to
or accompanying requests for the extension of time in which to file any
such report, return, document, declaration or other information.
(o) Title to Properties. Each of the Company and its Subsidiaries
has valid title to, or valid leasehold or sublease interests or other
comparable contract rights in or relating to all of its real properties and
other tangible assets necessary for the conduct of its business as
currently conducted, except as have been disposed of in the ordinary course
of business and except for defects in title, easements, restrictive
covenants and similar encumbrances that individually or in the aggregate
have not had and would not reasonably be expected to have a Material
Adverse Effect. Each of the Company and its Subsidiaries has complied with
the terms of all leases or subleases to which it is a party and under which
it is in occupancy, and all leases to which the Company is a party and
23
under which it is in occupancy are in full force and effect, except
for such failure to comply or be in full force and effect that
individually or in the aggregate has not had and would not reasonably be
expected to have a Material Adverse Effect. Neither the Company nor any of
its Subsidiaries has received any written notice of any event or
occurrence that has resulted or could result (with or without the giving
of notice, the lapse of time or both) in a default with respect to any
lease or sublease to which it is a party, which defaults individually or
in the aggregate have had or would reasonably be expected to have a
Material Adverse Effect.
(p) Intellectual Property. (i) Section 3.01(p)(i) of the Company
Disclosure Schedule sets forth, as of the date hereof, a complete and
accurate list (in all material respects) of all patents and applications
therefor, registered trademarks and applications therefor, domain name
registrations and copyright registrations (if any) that, in each case, are
owned by or licensed to the Company or any of its Subsidiaries and are
material to the conduct of the business of the Company and its
Subsidiaries, taken as a whole, as currently conducted. Such intellectual
property rights required to be listed in Section 3.01(p)(i) of the Company
Disclosure Schedule, together with any tradename rights, trade secret or
know how rights, service xxxx rights, trademark rights, patent rights,
intellectual property rights in computer programs or software or other
type of intellectual property rights, in each case, that are owned or
licensed by the Company or any of its Subsidiaries and are material to the
conduct of the business of the Company and its Subsidiaries, taken as a
whole, as currently conducted, are collectively referred to herein as
"Intellectual Property Rights". All Intellectual Property Rights are
either (x) owned by the Company or a Subsidiary of the Company free and
clear of all Liens or (y) licensed to the Company or a Subsidiary of the
Company free and clear (to the Knowledge of the Company) of all Liens,
except where the failure to so own or license such Intellectual Property
Rights individually or in the aggregate has not had and would not
reasonably be expected to have a Material Adverse Effect. There are no
claims pending or, to the Knowledge of the Company, threatened with regard
to the ownership or, to the Knowledge of the Company, licensing by the
Company or any of its Subsidiaries of any Intellectual Property Rights
which individually or in the aggregate has had or would reasonably be
expected to have a Material Adverse Effect. Each of the Company and its
Subsidiaries owns, is validly licensed or otherwise has the right to use
all Intellectual Property Rights, except where the failure to own, have a
valid license or otherwise have rights to use individually or in the
aggregate has not had and would not reasonably be expected to have a
Material Adverse Effect. The execution and delivery of this Agreement by
the Company do not, and the consummation by the Company of the Merger and
the other transactions contemplated by this Agreement and compliance by
the Company with the provisions of this Agreement will not, conflict with,
or result in any violation or breach of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of, or
result in, termination, cancelation or acceleration of any obligation or
to the loss of a benefit under, or result in the creation of any Lien in
or upon, any Intellectual Property Right, in each case that individually
or in the aggregate has had or would reasonably be expected to have a
Material Adverse Effect. Section 3.01(p)(i) of the Company Disclosure
Schedule sets forth, as of the date hereof, all Contracts under which the
Company or any of its Subsidiaries is obligated to make payments to third
parties for use of any Intellectual Property Rights with respect to the
24
commercialization of any products that are, as of the date hereof,
being sold, manufactured by or under development by the Company or any of
its Subsidiaries and for which such payments are in excess of $2,000,000
per year for any single product. The aggregate amount of all such payments
that the Company and its Subsidiaries are obligated to make under any
Contract of the type described in the immediately preceding sentence that
are not required to be disclosed pursuant to such sentence does not exceed
$10,000,000 per year.
(ii) There are no pending or, to the Knowledge of the Company,
threatened claims that the Company or any of its Subsidiaries has
infringed or is infringing (including with respect to the manufacture, use
or sale by the Company or any of its Subsidiaries of any products or to
the operations of the Company and its Subsidiaries) any intellectual
property rights of any person which individually or in the aggregate has
had or would reasonably be expected to have a Material Adverse Effect. To
the Knowledge of the Company, as of the date of this Agreement, there are
no facts, circumstances or conditions that would reasonably be expected to
form the basis for any claim by a person to exclude or prevent the Company
or any of its Subsidiaries from freely using its Intellectual Property
Rights and that individually or in the aggregate would reasonably be
expected to have a Material Adverse Effect.
(iii) All patents required to be listed in Section 3.01(p)(i) of the
Company Disclosure Schedule that are owned by the Company or any of its
Subsidiaries have been duly registered and/or filed with or issued by each
appropriate Governmental Entity, all necessary affidavits of continuing use
have been timely filed, and all necessary maintenance fees have been timely
paid to continue all such rights in effect, other than failures to be duly
registered, filed, issued or paid which individually or in the aggregate
have not had and would not reasonably be expected to have a Material
Adverse Effect. None of the patents required to be listed in Section
3.01(p)(i) of the Company Disclosure Schedule that are owned by the Company
or any of its Subsidiaries has expired or been declared invalid, in whole
or in part, by any Governmental Entity, other than such expirations or
declarations of invalidity which individually or in the aggregate have not
had and would not reasonably be expected to have a Material Adverse Effect.
There are no ongoing interferences, oppositions, reissues, reexaminations
or other proceedings challenging any of the patents or patent applications
required to be listed in Section 3.01(p)(i) of the Company Disclosure
Schedule and owned by the Company or any of its Subsidiaries (or, to the
Company's Knowledge, challenging any such patents or patent applications
licensed to the Company or any of its Subsidiaries), including ex parte and
post-grant proceedings, in the United States Patent and Trademark Office or
in any foreign patent office or similar administrative agency, other than
such interferences, oppositions, reissues, reexaminations or proceedings
that individually or in the aggregate have not had and would not reasonably
be expected to have a Material Adverse Effect.
(iv) Except as has not had and would not reasonably be expected to
have a Material Adverse Effect, the Company and its Subsidiaries have used
commercially reasonable efforts to maintain their material trade secrets in
confidence.
25
(q) Voting Requirements. The affirmative vote of holders of a
majority of the outstanding shares of Company Common Stock at the
Shareholders' Meeting or any adjournment or postponement thereof to
approve this Agreement (the "Shareholder Approval") is the only vote of
the holders of any class or series of capital stock of the Company
necessary to approve this Agreement and the transactions contemplated by
this Agreement.
(r) State Takeover Laws; Company Articles Provisions. The Board of
Directors of the Company has unanimously adopted, by all directors
present, this Agreement, the terms of this Agreement and the consummation
of the Merger and the other transactions contemplated by this Agreement,
and such adoption represents all the actions necessary to render
inapplicable to this Agreement, the Merger and the other transactions
contemplated by this Agreement, the restrictions (i) on "business
combinations" (as defined in Section 23-1-43-5 of the IBCL) set forth in
Section 23-1-43-18 of the IBCL and (ii) on the actions or transactions set
forth in Paragraph 6 of the Company Articles ("Paragraph 6"), in each case
to the extent, if any, such restrictions would otherwise be applicable to
this Agreement, the Merger and the other transactions contemplated by this
Agreement. For purposes of Paragraph 6, the approval of the Board of
Directors of the Company referred to in the immediately preceding sentence
constitutes the approval of the Merger and the other transactions
contemplated by this Agreement by the "Continuing Directors" (as defined
in Paragraph 6) pursuant to clause (c) of Paragraph 6. No other similar
provision of the Company Articles or the Company By-laws or, to the
Knowledge of the Company, other state takeover Law or similar Law applies
or purports to apply to this Agreement, the Merger or the other
transactions contemplated by this Agreement.
(s) Brokers and Other Advisors. No broker, investment banker,
financial advisor or other person (other than X.X. Xxxxxx Securities Inc.
and Xxxxxx Xxxxxxx & Co. Incorporated), the fees and expenses of which
will be paid by the Company, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with
the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company. The Company has delivered to Parent
complete and accurate copies of all Contracts under which any such fees or
expenses are payable and all indemnification and other Contracts related
to the engagement of the persons to whom such fees are payable.
(t) Opinion of Financial Advisors. The Company has received the
opinions of each of X.X. Xxxxxx Securities Inc. and Xxxxxx Xxxxxxx & Co.
Incorporated, in each case dated the date hereof, to the effect that, as
of such date, the Merger Consideration is fair, from a financial point of
view, to the holders of shares of Company Common Stock, a signed copy of
which opinion has been, or will promptly be, delivered to Parent.
(u) Regulatory Compliance. (i) As to each product subject to the
FDCA or similar Legal Provisions in any foreign jurisdiction that are
developed, manufactured, tested, distributed and/or marketed by the
Company or any of its Subsidiaries (a "Medical Device"), each such Medical
Device is being developed, manufactured, tested, distributed and/or
marketed in compliance with all applicable requirements under the FDCA and
26
similar Legal Provisions, including those relating to investigational use,
premarket clearance or marketing approval to market a Medical Device, good
manufacturing practices, labeling, advertising, record keeping, filing of
reports and security, and in compliance with the Advanced Medical
Technology Association Code of Ethics on Interactions with Healthcare
Professionals and the American Medical Association's guidelines on gifts
to physicians, except for failures in compliance that individually or in
the aggregate have not had and would not reasonably be expected to have a
Material Adverse Effect. Neither the Company nor any of its Subsidiaries
has received any notice or other communication from the Federal Food and
Drug Administration (the "FDA") or any other Governmental Entity (A)
contesting the premarket clearance or approval of, the uses of or the
labeling and promotion of any products of the Company or any of its
Subsidiaries or (B) otherwise alleging any violation applicable to any
Medical Device of any Legal Provision, in the case of (A) and (B), that
individually or in the aggregate have had or would reasonably be expected
to have a Material Adverse Effect.
(ii) No Medical Device is under consideration by senior management
of the Company or any of its Subsidiaries for, or has been recalled,
withdrawn, suspended, seized or discontinued (other than for commercial or
other business reasons) by, the Company or any of its Subsidiaries in the
United States or outside the United States (whether voluntarily or
otherwise), in each case since January 1, 2002. No proceedings in the
United States or outside of the United States of which the Company has
Knowledge (whether completed or pending) seeking the recall, withdrawal,
suspension, seizure or discontinuance of any Medical Device are pending
against the Company or any of its Subsidiaries or any licensee of any
Medical Device which individually or in the aggregate have had or would
reasonably be expected to have a Material Adverse Effect.
(iii) As to each Medical Device of the Company or any of its
Subsidiaries for which a premarket approval application, premarket
notification, investigational device exemption or similar state or foreign
regulatory application has been approved, the Company and its Subsidiaries
are in compliance with 21 U.S.C. xx.xx. 360 and 360e or 21 C.F.R. Parts
812 or 814, respectively, and all similar Legal Provisions and all terms
and conditions of such licenses or applications, except for any such
failure or failures to be in compliance which individually or in the
aggregate have not had and would not reasonably be expected to have a
Material Adverse Effect. In addition, the Company and its Subsidiaries are
in substantial compliance with all applicable registration and listing
requirements set forth in 21 U.S.C. ss. 360 and 21 C.F.R. Part 807 and all
similar Legal Provisions, except for any such failures to be in compliance
which individually or in the aggregate have not had and would not
reasonably be expected to have a Material Adverse Effect.
(iv) No article of any Medical Device manufactured and/or
distributed by the Company or any of its Subsidiaries is (A) adulterated
within the meaning of 21 U.S.C. ss. 351 (or similar Legal Provisions), (B)
misbranded within the meaning of 21 U.S.C. ss. 352 (or similar Legal
Provisions) or (C) a product that is in violation of 21 U.S.C. ss. 360 or
ss. 360e (or similar Legal Provisions), except for failures to be in
compliance with the foregoing that individually or in the aggregate have
not had and would not reasonably be expected to have a Material Adverse
Effect.
27
(v) Neither the Company nor any of its Subsidiaries, nor, to the
Knowledge of the Company, any officer, employee or agent of the Company or
any of its Subsidiaries, has made an untrue statement of a material fact
or fraudulent statement to the FDA or any other Governmental Entity,
failed to disclose a material fact required to be disclosed to the FDA or
any other Governmental Entity, or committed an act, made a statement, or
failed to make a statement that, at the time such disclosure was made,
could reasonably be expected to provide a basis for the FDA or any other
Governmental Entity to invoke its policy respecting "Fraud, Untrue
Statements of Material Facts, Bribery, and Illegal Gratuities", set forth
in 56 Fed. Reg. 46191 (September 10, 1991) or any similar policy. Neither
the Company nor any of its Subsidiaries, nor, to the Knowledge of the
Company, any officer, employee or agent of the Company or any of its
Subsidiaries, has been convicted of any crime or engaged in any conduct
for which debarment is mandated by 21 U.S.C. ss. 335a(a) or any similar
Legal Provision or authorized by 21 U.S.C. ss. 335a(b) or any similar
Legal Provision. Neither the Company nor any of its Subsidiaries, nor, to
the Knowledge of the Company, any officer, employee or agent of the
Company or any of its Subsidiaries, has been convicted of any crime or
engaged in any conduct for which such person or entity could be excluded
from participating in the federal health care programs under Section 1128
of the Social Security Act of 1935, as amended (the "Social Security Act")
or any similar Legal Provision.
(vi) Since January 1, 2002, neither the Company nor any of its
Subsidiaries has received any written notice that the FDA or any other
Governmental Entity has (a) commenced, or threatened to initiate, any
action to withdraw its approval or request the recall of any Medical
Device, (b) commenced, or threatened to initiate, any action to enjoin
production of any Medical Device or (c) commenced, or threatened to
initiate, any action to enjoin the production of any medical device
produced at any facility where any Medical Device is manufactured, tested
or packaged, except for any such action that individually or in the
aggregate has not had and would not reasonably be expected to have a
Material Adverse Effect.
(vii) To the Knowledge of the Company, there are no facts,
circumstances or conditions that would reasonably be expected to form the
basis for any investigation, suit, claim, action or proceeding against or
affecting the Company or any of its Subsidiaries relating to or arising
under (a) the FDCA or (b) the Social Security Act or regulations of the
Office of the Inspector General of the Department of Health and Human
Services, in each case individually or in the aggregate that has had or
would reasonably be expected to have a Material Adverse Effect.
(v) Rights Agreement. The Company has taken all actions necessary
to cause the Rights Agreement dated as of December 15, 2004, between the
Company and EquiServe Trust Company, as rights agent (the "Rights
Agreement"), to (i) render the Rights Agreement inapplicable to this
Agreement, the Merger and the other transactions contemplated by this
Agreement, (ii) ensure that (x) none of Parent, Sub or any other
Subsidiary of Parent is an Acquiring Person (as defined in the Rights
Agreement) pursuant to the Rights Agreement, (y) a Distribution Date or a
Stock Acquisition Date (as such terms are defined in the Rights
Agreement) does not occur and (z) the rights (the "Company Rights") to
purchase Company Series A Preferred Stock issued under the
28
Rights Agreement do not become exercisable, in the case of clauses (x),
(y) and (z), solely by reason of the execution of this Agreement or the
consummation of the Merger or the other transactions contemplated by this
Agreement and (iii) provide that the Expiration Date (as defined in the
Rights Agreement) shall occur immediately prior to the Effective Time.
SECTION 3.02. Representations and Warranties of Parent and Sub. Except
as disclosed in the Parent SEC Documents filed by Parent and publicly available
prior to the date of this Agreement ("Filed Parent SEC Documents"), Parent and
Sub represent and warrant to the Company as follows:
(a) Organization, Standing and Corporate Power. Each of Parent and
Sub is a corporation duly organized, validly existing and in good
standing under the Laws of the jurisdiction in which it is incorporated
and has all requisite corporate power and authority and possesses all
governmental licenses, permits, authorizations and approvals necessary to
enable it to use its corporate or other name and to own, lease or
otherwise hold and operate its properties and other assets and to carry
on its business as now being conducted, except whether the failure to
have such governmental licenses, permits, authorizations and approvals
individually or in the aggregate has not had and would not reasonably be
expected to have a Parent Material Adverse Effect. Each of Parent and Sub
is duly qualified or licensed to do business and is in good standing
(with respect to jurisdictions that recognize that concept) in each
jurisdiction in which the nature of its business or the ownership,
leasing or operation of its properties makes such qualification,
licensing or good standing necessary, other than in such jurisdictions
where the failure to be so qualified, licensed or in good standing
individually or in the aggregate has not had and would not reasonably be
expected to have a Parent Material Adverse Effect. Parent has made
available to the Company complete and accurate copies of its Restated
Certificate of Incorporation and By-laws, the Articles of Incorporation
of Sub (the "Sub Articles") and the By-laws of Sub, in each case as
amended to the date hereof.
(b) Authority; Noncontravention. Each of Parent and Sub has all
requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement by Parent and
Sub and the consummation by Parent and Sub of the transactions
contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of Parent and Sub and no other
corporate proceedings on the part of Parent or Sub are necessary to
authorize this Agreement or to consummate the transactions contemplated
by this Agreement. This Agreement and the transactions contemplated by
this Agreement do not require approval of the holders of any shares of
capital stock of Parent. This Agreement has been duly executed and
delivered by each of Parent and Sub and, assuming the due authorization,
execution and delivery by the Company, constitutes a legal, valid and
binding obligation of Parent and Sub, as applicable, enforceable against
Parent and Sub, as applicable, in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization
or similar Laws affecting the rights of creditors generally and the
availability of equitable remedies (regardless of whether such
enforceability is considered in a proceeding at equity or at law). The
execution and delivery of this Agreement by Parent and Sub do
29
not, and the consummation by Parent and Sub of the Merger and the
other transactions contemplated by this Agreement and compliance by
Parent and Sub with the provisions of this Agreement will not, conflict
with, or result in any violation or breach of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right
of, or result in, termination, cancelation or acceleration of any
obligation or to the loss of a benefit under, or result in the creation
of any Lien in or upon any of the properties or other assets of Parent or
Sub under (x) the Restated Certificate of Incorporation or By-laws of
Parent, the Sub Articles or the By-laws of Sub, (y) any Contract to which
Parent or Sub is a party or any of their respective properties or other
assets is subject or (z) subject to the governmental filings and other
matters referred to in the following sentence, any Legal Provision
applicable to Parent or Sub or their respective properties or other
assets, other than, in the case of clauses (y) and (z), any such
conflicts, violations, breaches, defaults, rights of termination,
cancelation or acceleration, losses or Liens that individually or in the
aggregate have not had and would not reasonably be expected to (1) have a
Parent Material Adverse Effect, (2) impair in any material respect the
ability of Parent or Sub to perform its respective obligations under this
Agreement or (3) prevent or materially impede, interfere with, hinder or
delay the consummation of the transactions contemplated by this
Agreement. No consent, approval, order or authorization of, action by or
in respect of, or registration, declaration or filing with, any
Governmental Entity is required by or with respect to Parent or Sub in
connection with the execution and delivery of this Agreement by Parent
and Sub or the consummation by Parent and Sub of the Merger or the other
transactions contemplated by this Agreement, except for (1) (A) the
filing of a premerger notification and report form by Parent under the
HSR Act and the termination of the waiting period required thereunder,
(B) all required notifications and filings by Parent under Article 4 of
the EC Merger Regulation and the receipt of a decision under Article
6(1)(b), 8(1) or 8(2) thereunder declaring the Merger compatible with the
EC Common Market and (C) the receipt, termination or expiration, as
applicable, of approvals or waiting periods required under any other
applicable competition, merger control, antitrust or similar Law, (2) the
filing with the SEC of (X) the Form S-4 and (Y) such reports under the
Exchange Act as may be required in connection with this Agreement and the
transactions contemplated by this Agreement, (3) the filing of the
Articles of Merger with the Secretary of State of the State of Indiana,
(4) any filings with and approvals of the NYSE and (5) such other
consents, approvals, orders, authorizations, actions, registrations,
declarations and filings the failure of which to be obtained or made
individually or in the aggregate has not had and would not reasonably be
expected to (x) have a Parent Material Adverse Effect, (y) impair in any
material respect the ability of Parent or Sub to perform its respective
obligations under this Agreement or (z) prevent or materially impede,
interfere with, hinder or delay the consummation of the transactions
contemplated by this Agreement.
(c) Parent SEC Documents. Parent has filed all reports,
schedules, forms, statements and other documents (including exhibits
and other information incorporated therein) with the SEC required to
be filed by Parent since January 1, 2003 (such documents, together
with any documents filed during such period by Parent with the SEC on
a voluntary basis on Current Reports on Form 8-K, the "Parent SEC
Documents"). As of their respective filing dates, the Parent SEC
Documents complied in all material respects with, to the extent in
effect at the time of filing, the requirements of the
30
Securities Act, the Exchange Act and SOX applicable to such Parent SEC
Documents, and none of the Parent SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading. Except to the extent that information contained in
any Parent SEC Document has been revised, amended, supplemented or
superseded by a later-filed Parent SEC Document, none of the Parent SEC
Documents contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading, which individually or in the
aggregate would require an amendment, supplement or corrective filing to
such Parent SEC Documents. Each of the financial statements (including
the related notes) of Parent included in the Parent SEC Documents
complied at the time it was filed as to form in all material respects
with the applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto in effect at the time of
filing, had been prepared in accordance with GAAP (except, in the case
of unaudited statements, as permitted by the rules and regulations of
the SEC) applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly presented
in all material respects the consolidated financial position of Parent
and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments). Neither Parent nor any of its Subsidiaries
has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) which individually or in the
aggregate have had or would reasonably be expected to have a Parent
Material Adverse Effect.
(d) Information Supplied. None of the information supplied or to be
supplied by or on behalf of Parent or Sub specifically for inclusion or
incorporation by reference in (i) the Form S-4 will, at the time the Form
S-4 is filed with the SEC and at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they are
made, not misleading, or (ii) the Proxy Statement will, at the date it is
first mailed to the shareholders of the Company and at the time of the
Shareholders' Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they are made, not misleading, except that no representation
or warranty is made by Parent or Sub with respect to statements made or
incorporated by reference therein based on information supplied by or on
behalf of the Company specifically for inclusion or incorporation by
reference in the Form S-4 or the Proxy Statement. The Form S-4 will comply
as to form in all material respects with the requirements of the
Securities Act and the rules and regulations thereunder.
(e) Interim Operations of Sub. Sub was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement,
has engaged in no other business activities and has conducted its
operations only as contemplated hereby.
31
(f) Capital Resources. As of the Closing, Parent will have funds
that are sufficient to effect the Closing on the terms contemplated
hereby.
(g) Brokers. No broker, investment banker, financial advisor or
other person, other than Xxxxxxx, Xxxxx & Co., the fees and expenses of
which will be paid by Parent, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with
the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Parent or Sub.
(h) Capital Structure. The authorized capital stock of Parent
consists of 4,320,000,000 shares of Parent Common Stock and 2,000,000
shares of preferred stock, without par value, of Parent ("Parent Preferred
Stock"). At the close of business on December 13, 2004, (i) 3,119,842,548
shares of Parent Common Stock were issued and outstanding, (ii)
149,309,976 shares of Parent Common Stock were held by Parent in its
treasury, (iii) no shares of Parent Preferred Stock had been designated or
issued, (iv) 230,213,631 shares of Parent Common Stock were subject to
outstanding options to purchase shares of Parent Common Stock granted
under Parent's stock incentive plans and (v) 13,980,932 shares of Parent
Common Stock were reserved for issuance upon conversion of the 3% Zero
Coupon Convertible Subordinated Debentures of Alza Corporation, a Delaware
corporation and wholly-owned subsidiary of Parent ("Alza"), and the 5.25%
Zero Coupon Convertible Subordinated Debentures of Alza. Except as set
forth above in this Section 3.02(h), at the close of business on December
13, 2004, there were not issued, reserved for issuance or outstanding (A)
any shares of capital stock or other voting securities of Parent, (B) any
securities of Parent convertible into or exchangeable or exercisable for
shares of capital stock or voting securities of Parent or (C) any
warrants, calls, options or other rights to acquire from Parent, or any
obligation of Parent to issue, any shares of capital stock, voting
securities or securities convertible into or exchangeable or exercisable
for capital stock or voting securities of Parent. Except as set forth
above in this Section 3.02(h), at the close of business on December 13,
2004, no bonds, debentures, notes or other indebtedness of Parent having
the right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which the shareholders of
Parent may vote are issued or outstanding. The authorized capital stock of
Sub consists of 1,000 shares of common stock, without par value, of which
1,000 shares are issued and outstanding, all of which shares are
beneficially owned by Parent.
(i) Absence of Changes. Except for liabilities incurred in
connection with this Agreement, since the date of the most recent
financial statements included in the Filed Parent SEC Documents, there has
not been any Parent Material Adverse Change.
(j) Litigation. There is no suit, action or proceeding pending or,
to the Knowledge of Parent, threatened against or affecting Parent or any
of its Subsidiaries or any of their respective assets that individually or
in the aggregate has had or would reasonably be expected to have a Parent
Material Adverse Effect, nor is there any Order of any Governmental Entity
or arbitrator outstanding against, or, to the Knowledge of Parent,
investigation by any Governmental Entity involving, Parent or any of its
32
Subsidiaries or any of their respective assets that individually or in the
aggregate has had or would reasonably be expected to have a Parent
Material Adverse Effect.
(k) Intellectual Property Rights. Each of Parent and its
Subsidiaries owns or has the right to use all intellectual property rights
which are material to the conduct of the business of Parent and its
Subsidiaries, taken as a whole, in each case (i) with respect to such
intellectual property rights that are owned by Parent or any of its
Subsidiaries, free and clear of all Liens and (ii) with respect to such
intellectual property rights that are licensed by Parent or any of its
Subsidiaries, to the Knowledge of Parent, free and clear of all Liens,
except where the failure to so own or have such right to use such
intellectual property rights individually or in the aggregate has not had
and would not reasonably be expected to have a Parent Material Adverse
Effect. Neither the manufacture, marketing, license, sale or use by Parent
or any of its Subsidiaries of any product violates any license or
agreement between Parent or any of its Subsidiaries and any other person
and there is no pending or, to the Knowledge of Parent, threatened claim
or litigation contesting the validity, ownership or right to use, sell,
license or dispose of any such intellectual property rights relating to
any product or asserting that the proposed use, sale, license or
disposition thereof, or the manufacture, use or sale of any product by
Parent or any of its Subsidiaries, conflicts with the rights of any other
person, in each case which, individually or in the aggregate, has had or
would reasonably be expected to have a Parent Material Adverse Effect.
(l) Regulatory Compliance. To the Knowledge of Parent, the testing,
manufacture, storage, distribution, use, promotion and sale of products of
Parent or any of its Subsidiaries by Parent, such Subsidiary and their
respective contractors have been performed and is performed in compliance
with all applicable requirements under the FDCA and similar Legal
Provisions, including those relating to investigational use, premarket
clearance, good manufacturing practices, labeling, advertising, record
keeping, filing of reports and security, except for such instances of
noncompliance or possible noncompliance that individually or in the
aggregate have not had and would not reasonably be expected to have a
Parent Material Adverse Effect. Neither Parent nor any of its Subsidiaries
has received any adverse written notice within the past two years that the
FDA or any other similar foreign Governmental Entity has commenced, or
threatened to initiate, any action to withdraw its approval or request the
recall of any product of Parent or any of its Subsidiaries, or commenced,
or overtly threatened to initiate, any action to enjoin production of any
such product, except where such action has not had and would not
reasonably be expected to have a Parent Material Adverse Effect.
ARTICLE IV
Covenants Relating to Conduct of Business; No Solicitation
----------------------------------------------------------
SECTION 4.01. Conduct of Business. (a) Conduct of Business by the
Company. During the period from the date of this Agreement to the Effective
Time, except as set forth in Section 4.01(a) of the Company Disclosure
Schedule or as consented to in writing in advance by Parent or as otherwise
permitted or required by this Agreement, the Company shall, and shall
33
cause each of its Subsidiaries to, carry on its business in the ordinary
course consistent with past practice prior to the Closing and, to the extent
consistent therewith, use all commercially reasonable efforts to preserve
intact its current business organizations, keep available the services of its
current officers, employees and consultants and preserve its relationships
with customers, suppliers, licensors, licensees, distributors and others
having business dealings with it. In addition to and without limiting the
generality of the foregoing, during the period from the date of this
Agreement to the Effective Time, except as otherwise set forth in Section
4.01(a) of the Company Disclosure Schedule or as otherwise permitted or
required pursuant to this Agreement, the Company shall not, and shall not
permit any of its Subsidiaries to, without Parent's prior written consent:
(i) (x) declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, stock or property) in respect of,
any of its capital stock, other than (1) cash dividends payable by the
Company in respect of shares of Company Common Stock consistent with
past practice and not exceeding $0.10 per share of Company Common Stock
per fiscal quarter, (2) dividends and distributions in connection with
the Rights Agreement and (3) dividends or distributions by a direct or
indirect wholly owned Subsidiary of the Company to its shareholders, (y)
split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock or (z) purchase,
redeem or otherwise acquire any shares of its capital stock or any other
securities thereof or any rights, warrants or options to acquire any
such shares or other securities, except for purchases, redemptions or
other acquisitions of capital stock or other securities (1) required by
the terms of the Company Stock Plans or the ESPP or (2) required by the
terms of any plans, arrangements or Contracts existing on the date
hereof between the Company or any of its Subsidiaries and any director
or employee of the Company or any of its Subsidiaries (to the extent
complete and accurate copies of which have been heretofore delivered to
Parent);
(ii) issue, deliver, sell, grant, pledge or otherwise encumber
or subject to any Lien any shares of its capital stock, any other voting
securities or any securities convertible into, or any rights, warrants
or options to acquire, any such shares, voting securities or convertible
securities, or any "phantom" stock, "phantom" stock rights, stock
appreciation rights or stock based performance units, including pursuant
to Contracts as in effect on the date hereof (other than (x) the
issuance of shares of Company Common Stock upon the exercise of Company
Stock Options or in connection with Company Stock Based Awards, in each
case in accordance with their terms on the date hereof, and (y) the
issuance of Company Rights and shares of the Company's capital stock
pursuant to the Company Rights or the Rights Agreement);
(iii) amend (x) the Company Articles or the Company By-laws or
other comparable charter or organizational documents of any of the
Company's Subsidiaries or (y) the Indenture dated as of January 18, 1996
between the Company and Citibank, N.A., with respect to the 6.15% Senior
Unsecured Notes due February 15, 2006 of the Company (the "Company
Notes"), in each case except as may be required by applicable Law or the
rules and regulations of the SEC or the NYSE;
34
(iv) directly or indirectly acquire (x) by merging or
consolidating with, by purchasing a substantial portion of the assets
of, by making an investment in or capital contribution to, or by any
other manner, any person or division, business or equity interest of any
person or (y) any asset or assets, except for (1) capital expenditures,
which shall be subject to the limitations of clause (vii) below, (2)
purchases of components, raw materials or supplies in the ordinary
course of business consistent with past practice and (3) acquisitions of
material intellectual property rights in respect of cross-licenses
permitted in connection with the discharge, settlement or satisfaction
of claims and litigation under clause (viii) below;
(v) (x) sell, lease, license, mortgage, sell and leaseback or
otherwise encumber or subject to any Lien or otherwise dispose of any of
its material properties or other material assets or any interests
therein (including securitizations), except for (1) sales of inventory
and used equipment in the ordinary course of business consistent with
past practice and (2) licenses of Intellectual Property Rights permitted
in connection with the discharge, settlement or satisfaction of claims
and litigation under clause (viii) below, or (y) enter into, modify or
amend any lease of material property, except for modifications or
amendments that are not materially adverse to the Company and its
Subsidiaries, taken as a whole;
(vi) (x) incur any indebtedness for borrowed money or guarantee
any such indebtedness of another person, issue or sell any debt
securities or calls, options, warrants or other rights to acquire any
debt securities of the Company or any of its Subsidiaries, guarantee any
debt securities of another person, enter into any "keep well" or other
Contract to maintain any financial statement condition of another person
or enter into any arrangement having the economic effect of any of the
foregoing (other than short-term borrowings in the ordinary course of
business consistent with past practice under the Company's commercial
paper program, in an aggregate amount not to exceed $800,000,000 at any
time outstanding) or (y) make any loans or advances to any other person,
other than to employees in respect of travel expenses in the ordinary
course of business consistent with past practice, which would result in
the aggregate principal amount of all of the outstanding foregoing loans
and advances of the Company and its Subsidiaries exceeding $25,000,000;
(vii) make any new capital expenditure or expenditures exceeding
the amounts set forth in Section 4.01(a)(vii) of the Company Disclosure
Schedule;
(viii) except as required by Law or any judgment by a court of
competent jurisdiction, (v) pay, discharge, settle or satisfy any
material claims, liabilities, obligations or litigation (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge, settlement or satisfaction in the ordinary
course of business consistent with past practice or in accordance with
their terms, of liabilities disclosed, reflected or reserved against
in the most recent audited financial statements (or the notes thereto)
of the Company included in the Filed Company SEC Documents (for
amounts not in excess of such reserves) or incurred since the date of
such financial statements in the ordinary course of business
consistent with past practice, (w) cancel any material indebtedness,
(x) waive or assign any claims or rights of material
35
value, (y) waive any benefits of, or agree to modify in any
respect, or, subject to the terms hereof, knowingly fail to enforce, or
consent to any matter with respect to which consent is required under,
any standstill or similar Contract to which the Company or any of its
Subsidiaries is a party or (z) waive any material benefits of, or agree
to modify in any material respect, or, subject to the terms hereof,
knowingly fail to enforce in any material respect, or consent to any
matter with respect to which consent is required under, any material
confidentiality or similar Contract to which the Company or any of its
Subsidiaries is a party;
(ix) enter into (1) any material Contract that would be of a
type referred to in Section 3.01(i)(2)(A) or (2) any other material
Contract that would be of a type referred to in Section 3.01(i)(2)(B) or
(C) and, in the case of this clause (2), that (A) would reasonably be
expected to impair in any material respect the ability of the Company
and its Subsidiaries to conduct their business as currently conducted or
(B) would reasonably be expected to have a material adverse effect on
the reasonably expected benefits of the Merger to Parent;
(x) enter into, modify, amend or terminate any Contract or
waive, release or assign any material rights or claims thereunder,
which if so entered into, modified, amended, terminated, waived,
released or assigned would reasonably be expected to (A) have a
Material Adverse Effect, (B) impair in any material respect the
ability of the Company to perform its obligations under this Agreement
or (C) prevent or materially impede, interfere with, hinder or delay
the consummation of the transactions contemplated by this Agreement;
(xi) enter into any material Contract to the extent
consummation of the transactions contemplated by this Agreement or
compliance by the Company with the provisions of this Agreement could
reasonably be expected to conflict with, or result in a violation or
breach of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of, or result in, termination,
cancelation or acceleration of any obligation or to the loss of a
benefit under, or result in the creation of any Lien in or upon any of
the properties or other assets of the Company or any of its
Subsidiaries under, or require Parent to license or transfer any of
its Intellectual Property Rights or other material assets under, or
give rise to any increased, additional, accelerated, or guaranteed
right or entitlements of any third party under, or result in any
material alteration of, any provision of such Contract;
(xii) except as required to ensure that any Company Benefit Plan
or Company Benefit Agreement is not then out of compliance with applicable
Law or to comply with any Company Benefit Plan, Company Benefit Agreement
or other Contract entered into prior to the date hereof (to the extent
complete and accurate copies of which have been heretofore delivered to
Parent), (A) adopt, enter into, terminate or amend (I) any collective
bargaining Contract or Company Benefit Plan or (II) any Company Benefit
Agreement or other Contract, plan or policy involving the Company or any
of its Subsidiaries and Key Personnel, (B) increase in any manner the
compensation, bonus or fringe or other benefits of, or pay any
discretionary bonus of any kind or amount whatsoever to, any current or
former director, officer, employee or consultant, except in
36
the ordinary course of business consistent with past practice to employees
of the Company or its Subsidiaries other than Key Personnel, (C) grant or
pay any severance or termination pay, except for severance or termination
pay granted or paid in the ordinary course of business consistent with
past practice, to, or increase in any material manner the severance or
termination pay of, any current or former director, officer, employee or
consultant of the Company or any of its Subsidiaries other than Key
Personnel, (D) remove any existing restrictions in any Company Benefit
Agreements, Company Benefit Plans or awards made thereunder, (E) take any
action to fund or in any other way secure the payment of compensation or
benefits under any Company Benefit Plan or Company Benefit Agreement, (F)
take any action to accelerate the vesting or payment of any compensation
or benefit under any Company Benefit Plan or Company Benefit Agreement or
awards made thereunder or (G) materially change any actuarial or other
assumption used to calculate funding obligations with respect to any
Company Pension Plan or change the manner in which contributions to any
Company Pension Plan are made or the basis on which such contributions are
determined;
(xiii) except as required by GAAP, revalue any material assets of
the Company or any of its Subsidiaries or make any change in accounting
methods, principles or practices; or
(xiv) authorize any of, or commit, resolve, propose or agree to
take any of, the foregoing actions.
(b) Other Actions. The Company, Parent and Sub shall not, and
shall not permit any of their respective Subsidiaries to, take any action
that could reasonably be expected to result in any of the conditions to
the Merger set forth in Article VI not being satisfied.
(c) Advice of Changes; Filings. The Company and Parent shall
promptly advise the other party orally and in writing if (i) any
representation or warranty made by it (and, in the case of Parent, made by
Sub) contained in this Agreement becomes untrue or inaccurate in a manner
that would result in the failure of the condition set forth in Section
6.02(a) or Section 6.03(a) or (ii) it (and, in the case of Parent, Sub)
fails to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it (and, in the
case of Parent, Sub) under this Agreement; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties (or remedies with respect thereto) or the
conditions to the obligations of the parties under this Agreement. The
Company and Parent shall, to the extent permitted by Law, promptly provide
the other with copies of all filings made by such party with any
Governmental Entity in connection with this Agreement and the transactions
contemplated by this Agreement, other than the portions of such filings
that include confidential or proprietary information not directly related
to the transactions contemplated by this Agreement.
(d) Certain Tax Matters. (i) During the period from the date of
this Agreement to the Effective Time, the Company shall, and shall cause
each of its Subsidiaries to (A) timely file all material tax returns
(taking into account any applicable extensions) required to be filed by or
on behalf of each such entity ("Post-Signing Returns"); (B) timely pay all
material taxes due and payable; (C) accrue a reserve in the books and
records and financial statements of any such entity
37
in accordance with past practice for all taxes payable but not yet
due; (D) promptly notify Parent of any material suit, claim, action,
investigation, audit or similar proceeding (collectively, "Actions")
pending against or with respect to the Company or any of its Subsidiaries
in respect of any amount of tax and not settle or compromise any tax
liability in excess of $10 million for individual claims, or $50 million
in the aggregate, without Parent's prior written consent, which shall not
be unreasonably withheld; (E) not make any material tax election, other
than with Parent's prior written consent or other than in the ordinary
course of business consistent with past practice; and (F) cause all
existing tax sharing agreements, tax indemnity agreements and similar
agreements, arrangements or practices to which the Company or any of its
Subsidiaries is or may be a party or by which the Company or any of its
Subsidiaries is or may otherwise be bound to be terminated as of the
Closing Date so that after such date neither the Company nor any of its
Subsidiaries shall have any further rights or liabilities thereunder. Any
tax returns described in this Section 4.01(d) shall be complete and
correct in all material respects and shall be prepared on a basis
consistent with the past practice of the Company and in a manner that does
not distort taxable income, including by deferring income or accelerating
deductions. The Company shall notify Parent upon the filing of any such
material tax return and shall make such tax returns available to Parent.
(ii) Notwithstanding any other provision of this Agreement, the
Company shall not permit any of its Subsidiaries incorporated outside the
United States (a "Non-U.S. Subsidiary") to make a cash distribution to the
Company or any of the Company's Subsidiaries incorporated in the United
States in excess of amounts described in Section 965(b)(2)(B) of the Code
(an "Excess Distribution") except to the extent the Company has provided
Parent with substantiation, in a form reasonably satisfactory to Parent,
that the deduction described in Section 965(a) of the Code will apply to
the entire amount of the Excess Distribution. For purposes of this
Section, a written opinion of a nationally recognized law firm to the
effect that the deduction described in Section 965(a) of the Code should
apply to the entire amount of the Excess Distribution shall be a form of
substantiation deemed reasonably satisfactory to Parent. Furthermore,
notwithstanding any other provision of this Agreement, the Company shall
not permit any of its Non-U.S. Subsidiaries to increase its indebtedness
to any related person as described in Section 965(b)(3) of the Code
without the prior written consent of Parent, such consent not to be
unreasonably withheld. For purposes of the preceding sentence,
indebtedness of a Non-U.S. Subsidiary to a related person shall include
indebtedness of a Non-U.S. Subsidiary guaranteed by a related person.
SECTION 4.02. No Solicitation. (a) The Company shall not, nor shall it
authorize or permit any of its Subsidiaries or any of their respective
directors, officers or employees or any investment banker, financial advisor,
attorney, accountant or other advisor, agent or representative (collectively,
"Representatives") retained by it or any of its Subsidiaries to, directly or
indirectly through another person, (i) solicit, initiate or knowingly
encourage, or take any other action designed to, or which could reasonably be
expected to, facilitate, any Takeover Proposal or (ii) enter into, continue or
otherwise participate in any discussions or negotiations regarding, or furnish
to any person any information, or otherwise cooperate in any way with, any
Takeover Proposal. Without limiting the foregoing, it is agreed that any
violation of the restrictions set forth in the preceding sentence by any
Representative of the Company or any of its Subsidiaries shall be a breach of
this Section 4.02(a) by the Company. The Company shall, and shall cause its
Subsidiaries to, immediately cease and cause to be terminated all
38
existing discussions or negotiations with any person conducted heretofore with
respect to any Takeover Proposal and request the prompt return or destruction
of all confidential information previously furnished. Notwithstanding the
foregoing, at any time prior to obtaining the Shareholder Approval, in response
to a bona fide written Takeover Proposal that the Board of Directors of the
Company reasonably determines (after consultation with outside counsel and a
financial advisor of nationally recognized reputation) constitutes or is
reasonably likely to lead to a Superior Proposal, and which Takeover Proposal
was not solicited after the date hereof and was made after the date hereof and
did not otherwise result from a breach of this Section 4.02(a), the Company
may, subject to compliance with Section 4.02(c), (x) furnish information with
respect to the Company and its Subsidiaries to the person making such Takeover
Proposal (and its Representatives) pursuant to a customary confidentiality
agreement not less restrictive to such person than the confidentiality
provisions of the Confidentiality Agreement, provided that all such information
has previously been provided to Parent or is provided to Parent prior to or
substantially concurrent with the time it is provided to such person, and (y)
participate in discussions or negotiations with the person making such Takeover
Proposal (and its Representatives) regarding such Takeover Proposal.
The term "Takeover Proposal" means any inquiry, proposal or offer from
any person relating to, or that could reasonably be expected to lead to, any
direct or indirect acquisition or purchase, in one transaction or a series of
transactions, of assets (including equity securities of any Subsidiary of the
Company) or businesses that constitute 15% or more of the revenues, net income
or assets of the Company and its Subsidiaries, taken as a whole, or 15% or more
of any class of equity securities of the Company, any tender offer or exchange
offer that if consummated would result in any person beneficially owning 15% or
more of any class of equity securities of the Company, or any merger,
consolidation, business combination, recapitalization, liquidation,
dissolution, joint venture, binding share exchange or similar transaction
involving the Company or any of its Subsidiaries pursuant to which any person
or the shareholders of any person would own 15% or more of any class of equity
securities of the Company or of any resulting parent company of the Company, in
each case other than the transactions contemplated by this Agreement.
The term "Superior Proposal" means any bona fide offer made by a third
party that if consummated would result in such person (or its shareholders)
owning, directly or indirectly, more than 80% of the shares of Company Common
Stock then outstanding (or of the shares of the surviving entity in a merger or
the direct or indirect parent of the surviving entity in a merger) or all or
substantially all the assets of the Company, which the Board of Directors of
the Company reasonably determines (after consultation with a financial advisor
of nationally recognized reputation) to be (i) more favorable to the
shareholders of the Company from a financial point of view than the Merger
(taking into account all the terms and conditions of such proposal and this
Agreement (including any changes to the financial terms of this Agreement
proposed by Parent in response to such offer or otherwise)) and (ii) reasonably
capable of being completed, taking into account all financial, legal,
regulatory and other aspects of such proposal.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall (i) (A) withdraw (or modify in a manner adverse to Parent), or
publicly propose to withdraw (or modify in a manner adverse to Parent), the
adoption or recommendation by such Board of Directors or any such committee
thereof of this Agreement, the Merger or the other
39
transactions contemplated by this Agreement or (B) adopt or recommend, or
propose publicly to adopt or recommend, any Takeover Proposal (any action
described in this clause (i) being referred to as a "Company Adverse
Recommendation Change") or (ii) adopt or recommend, or publicly propose to
adopt or recommend, or allow the Company or any of its Subsidiaries to execute
or enter into, any letter of intent, memorandum of understanding, agreement in
principle, merger agreement, acquisition agreement, option agreement, joint
venture agreement, partnership agreement or other similar Contract constituting
or related to, or that is intended to or could reasonably be expected to lead
to, any Takeover Proposal (other than a confidentiality agreement referred to
in Section 4.02(a)) (an "Acquisition Agreement"). Notwithstanding the
foregoing, at any time prior to obtaining the Shareholder Approval and subject
to Section 4.02(c), the Board of Directors of the Company may (x) make a
Company Adverse Recommendation Change if the Board of Directors of the Company
determines in good faith (after consultation with outside counsel and a
financial advisor of nationally recognized reputation) that (A) a Parent
Material Adverse Effect has occurred and (B) as a result thereof such action is
consistent with their fiduciary duties under applicable Laws or (y) in response
to a Takeover Proposal that the Board reasonably determines (after consultation
with outside counsel and a financial advisor of nationally recognized
reputation) constitutes a Superior Proposal and that was unsolicited and made
after the date hereof and that did not otherwise result from a breach of this
Section 4.02, (1) make a Company Adverse Recommendation Change or (2) cause the
Company to terminate this Agreement and concurrently with or after such
termination enter into an Acquisition Agreement; provided, however, that the
Company shall not be entitled to exercise its right to make a Company Adverse
Recommendation Change or terminate this Agreement pursuant to clause (y) until
after the fifth business day following Parent's receipt of written notice (a
"Notice of Superior Proposal") from the Company advising Parent that the Board
of Directors of the Company intends to take such action and specifying the
reasons therefor, including the terms and conditions of any Superior Proposal
that is the basis of the proposed action by the Board of Directors (it being
understood and agreed that any amendment to the financial terms or any other
material term of such Superior Proposal shall require a new Notice of Superior
Proposal and a new five business day period). In determining whether to make a
Company Adverse Recommendation Change or to cause the Company to so terminate
this Agreement, the Board of Directors of the Company shall take into account
any changes to the financial terms of this Agreement proposed by Parent in
response to a Notice of Superior Proposal or otherwise.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 4.02, the Company shall promptly advise
Parent orally and in writing (i) of any Takeover Proposal, the material terms
and conditions of any such Takeover Proposal (including any changes thereto)
and the identity of the person making any such Takeover Proposal and (ii) if
the Board of Directors of the Company is considering, or has decided to
consider, whether any change, effect, event, occurrence, state of facts or
development constitutes a Parent Material Adverse Effect. The Company shall
(x) keep Parent fully informed in all material respects of the status and
details (including any change to the terms thereof) of any Takeover Proposal,
(y) provide to Parent as soon as practicable after receipt or delivery thereof
copies of all correspondence and other written material sent or provided to
the Company or any of its Subsidiaries from any person that describes any of
the terms or conditions of any Takeover Proposal and (z) keep Parent fully
informed in all material respects of the status and details of
40
any determination by the Company's Board of Directors with respect to a
potential Parent Material Adverse Effect.
(d) Nothing contained in this Section 4.02 shall prohibit the Company
from (x) taking and disclosing to its shareholders a position contemplated by
Rule 14e-2(a) under the Exchange Act or making a statement required under Rule
14a-9 under the Exchange Act or (y) making any disclosure to the shareholders
of the Company that is required by applicable Law; provided, however, that in
no event shall the Company or its Board of Directors or any committee thereof
take, or agree or resolve to take, any action prohibited by Section 4.02(b) (it
being understood that any accurate disclosure of factual information to the
shareholders of the Company that is required to be made to such shareholders
under applicable federal securities Laws shall not be considered a modification
prohibited by clause (i)(A) of Section 4.02(b)).
ARTICLE V
Additional Agreements
---------------------
SECTION 5.01. Preparation of the Form S-4 and the Proxy Statement;
Shareholders' Meeting. (a) As promptly as practicable following the date of
this Agreement, the Company and Parent shall prepare and Parent shall file
with the SEC the Form S-4, in which the Proxy Statement will be included as a
prospectus. Each of the Company and Parent shall use its reasonable best
efforts to have the Form S-4 declared effective under the Securities Act as
promptly as practicable after such filing. The Company shall use its
reasonable best efforts to cause the Proxy Statement to be mailed to the
shareholders of the Company as promptly as practicable after the Form S-4 is
declared effective under the Securities Act. Parent shall also take any action
(other than qualifying to do business in any jurisdiction in which it is not
now so qualified or filing a general consent to service of process) required
to be taken under any applicable state securities Laws in connection with the
issuance of shares of Parent Common Stock in the Merger, and each of Parent
and the Company shall furnish all information as may be reasonably requested
by the other in connection with any such action and the preparation, filing
and distribution of the Form S-4 and the Proxy Statement. No filing of, or
amendment or supplement to, the Form S-4 will be made by Parent, and no filing
of, or amendment or supplement to, the Proxy Statement will made by the
Company, in each case without providing the other party a reasonable
opportunity to review and comment thereon. If at any time prior to the
Effective Time any information relating to the Company or Parent, or any of
their respective Affiliates, directors or officers, should be discovered by
the Company or Parent which should be set forth in an amendment or supplement
to either the Form S-4 or the Proxy Statement, so that either such document
would not include any misstatement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading, the party which
discovers such information shall promptly notify the other parties hereto and
an appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by Law, disseminated
to the shareholders of the Company. The parties shall notify each other
promptly of the time when the Form S-4 has become effective, of the issuance
of any stop order or suspension of the qualification of the Parent Common
Stock issuable in connection with the Merger for offering or sale in any
jurisdiction, or of the receipt of any comments from the SEC
41
or the staff of the SEC and of any request by the SEC or the staff of the SEC
for amendments or supplements to the Proxy Statement or the Form S-4 or for
additional information and shall supply each other with copies of (i) all
correspondence between it or any of its Representatives, on the one hand, and
the SEC or the staff of the SEC, on the other hand, with respect to the Proxy
Statement, the Form S-4 or the Merger and (ii) all orders of the SEC relating
to the Form S-4.
(b) The Company shall use its reasonable best efforts to, within 120
days following the date of this Agreement, establish a record date for, duly
call, give notice of, convene and hold a meeting of its shareholders (the
"Shareholders' Meeting") solely for the purpose of obtaining the Shareholder
Approval. Subject to Section 4.02, the Company shall, through its Board of
Directors, recommend to its shareholders approval of this Agreement and shall
include such recommendation in the Proxy Statement. Without limiting the
generality of the foregoing, but subject to the terms of this Agreement, the
Company's obligations pursuant to the first sentence of this Section 5.01(b)
shall not be affected by the commencement, public proposal, public disclosure
or communication to the Company of any Takeover Proposal.
SECTION 5.02. Access to Information; Confidentiality.
(a) To the extent permitted by applicable Law, the Company shall
afford to Parent, and to Parent's officers, employees, accountants, counsel,
financial advisors and other Representatives, reasonable access (including
for the purpose of coordinating integration activities and transition
planning with the employees of the Company and its Subsidiaries) during
normal business hours and upon reasonable prior notice to the Company during
the period prior to the Effective Time or the termination of this Agreement
to all its and its Subsidiaries' properties, books, Contracts, commitments,
personnel and records, but only to the extent that such access does not
unreasonably interfere with the business or operations of the Company and its
Subsidiaries, and, during such period, the Company shall furnish promptly to
Parent (a) a copy of each report, schedule, registration statement and other
document filed by it during such period pursuant to the requirements of
Federal or state securities Laws and (b) all other information concerning its
and its Subsidiaries' business, properties and personnel as Parent may
reasonably request; provided, however, that the Company shall not be required
to (or to cause any of its Subsidiaries to) so confer, afford such access or
furnish such copies or other information to the extent that doing so would
result in the loss of attorney-client privilege (provided that the Company
shall use its reasonable best efforts to allow for such access or disclosure
in a manner that does not result in a loss of attorney-client privilege).
Except for disclosures expressly permitted by the terms of the
Confidentiality Agreement dated as of August 4, 2004 between Parent and the
Company (as it may be amended from time to time, the "Confidentiality
Agreement"), Parent shall hold, and shall cause its officers, employees,
accountants, counsel, financial advisors and other Representatives to hold,
all information received from the Company, directly or indirectly, in
confidence in accordance with the Confidentiality Agreement. The
Confidentiality Agreement shall survive any termination of this Agreement.
Notwithstanding the terms of the Confidentiality Agreement, Parent and the
Company agree that until the earlier of the consummation of this Agreement or
the six month anniversary of the date of the termination of this Agreement,
as applicable, each party and its respective Subsidiaries shall not, without
the other party's prior written consent, directly or indirectly solicit for
employment (other than through advertising in newspapers or periodicals of
42
general circulation or recruiters' searches, in each case not specifically
directed at the other party's employees) any person currently employed by the
other party or any of its Subsidiaries with whom it has contact or who is
identified to such party in connection with the transactions contemplated by
this Agreement. No investigation pursuant to this Section 5.02 or information
provided or received by any party hereto pursuant to this Agreement will
affect any of the representations or warranties of the parties hereto
contained in this Agreement or the conditions hereunder to the obligations of
the parties hereto.
(b) To the extent permitted by applicable Law, Parent shall afford to the
Company and its Representatives reasonable access to Parent's personnel and
records (i) on a basis consistent with the Company's access to such personnel
and records prior to the date hereof in connection with the Company's due
diligence review of Parent and its Subsidiaries in connection with the
transactions contemplated hereby and (ii) to the extent reasonably necessary
for the Company to determine whether the conditions set forth in Section 6.03
are satisfied.
SECTION 5.03. Reasonable Best Efforts. Upon the terms and subject
to the conditions set forth in this Agreement, each of the parties agrees to
use its reasonable best efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary to consummate and make effective, in
the most expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement, including using reasonable best efforts to
accomplish the following: (i) the taking of all acts necessary to cause the
conditions to Closing to be satisfied as promptly as practicable, (ii) the
obtaining of all necessary actions or nonactions, waivers, consents and
approvals from Governmental Entities and the making of all necessary
registrations and filings (including filings with Governmental Entities) and
the taking of all steps as may be necessary to obtain an approval or waiver
from, or to avoid an action or proceeding by, any Governmental Entity, (iii)
the avoidance of each and every impediment under any antitrust, merger
control, competition or trade regulation Law that may be asserted by any
Governmental Entity with respect to the Merger so as to enable the Closing to
occur as soon as reasonably possible and (iv) the obtaining of all necessary
consents, approvals or waivers from third parties, including any such
consents, approvals or waivers required in connection with any Divestiture. In
connection with and without limiting the foregoing, the Company and Parent
shall (A) duly file with the U.S. Federal Trade Commission and the Antitrust
Division of the Department of Justice the notification and report form (the
"HSR Filing") required under the HSR Act and (B) duly make all notifications
and other filings required (i) under the EC Merger Regulation (together with
the HSR Filings, the "Antitrust Filings") or (ii) under any other applicable
competition, merger control, antitrust or similar Law that the Company and
Parent deem advisable or appropriate, in each case with respect to the
transactions contemplated by this Agreement and as promptly as practicable.
The Antitrust Filings shall be in substantial compliance with the requirements
of the HSR Act, the EC Merger Regulation or other Laws, as applicable. Each
party shall cooperate with the other party to the extent necessary to assist
the other party in the preparation of its Antitrust Filings and, if requested,
to promptly amend or furnish additional information thereunder. Each party
shall use its reasonable best efforts to furnish to each other all information
required for any filing, form, declaration, notification, registration and
notice, other than confidential or proprietary information not directly
related to the transactions contemplated by this Agreement, and to keep the
other party reasonably informed with respect to the status of each clearance,
approval or waiver sought from a Governmental Entity in
43
connection with the transactions contemplated by this Agreement and the
material communications between such party and such Governmental Entity. Each
party shall consult with the other party, and consider in good faith the
views of the other party, prior to entering into any agreement with any
Antitrust Authority. Neither party shall, nor shall it permit any of its
Subsidiaries to, acquire or agree to acquire any business, person or division
thereof, or otherwise acquire or agree to acquire any assets if the entering
into of a definitive agreement relating to or the consummation of such
acquisition, could reasonably be expected to materially increase the risk of
not obtaining the applicable clearance, approval or waiver from an Antitrust
Authority with respect to the transactions contemplated by this Agreement.
The Company and its Board of Directors shall (1) use reasonable best efforts
to ensure that no state takeover Law or similar Law is or becomes applicable
to this Agreement, the Merger or any of the other transactions contemplated
by this Agreement and (2) if any state takeover Law or similar Law becomes
applicable to this Agreement, the Merger or any of the other transactions
contemplated by this Agreement, use reasonable best efforts to ensure that
the Merger and the other transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such Law on this Agreement,
the Merger and the other transactions contemplated by this Agreement.
Notwithstanding the foregoing or any other provision of this Agreement: (a)
with respect to the assets of the cardiac rhythm management businesses of
Parent, the Company and their respective Affiliates, Parent and its
Affiliates shall only be required to agree to Divestitures of such assets
that individually or in the aggregate would not reasonably be expected to
have greater than a de minimis adverse effect on the combined cardiac rhythm
management business of Parent, the Company and their respective Affiliates,
taken as a whole; (b) with respect to the assets of the coronary vascular
intervention business of Parent and its Affiliates, Parent and its Affiliates
shall only be required to agree to Divestitures of such assets that
individually or in the aggregate would not reasonably be expected to have
greater than a de minimis adverse effect on the drug eluting stent business
of Parent and its Affiliates, taken as a whole; (c) with respect to the
assets of the vascular intervention business of the Company and its
Affiliates, Parent and its Affiliates shall only be required to agree to
Divestitures of such assets that individually or in the aggregate would not
reasonably be expected to have a material adverse effect on the combined
vascular intervention business of Parent, the Company and their respective
Affiliates, taken as a whole; (d) none of Parent and its Affiliates shall be
required to agree to any Divestiture of any of their assets except as
provided in clauses (a) and (b) above and (e) if, but only if, directed by
Parent, the Company shall agree to any Divestiture of any of its assets or
the assets of any of its Affiliates if such Divestiture is conditioned on the
consummation of the Merger. For purposes of this Agreement, a "Divestiture"
of any asset shall mean (i) any sale, transfer, license, separate holding,
divestiture or other disposition, or any prohibition of, or any limitation
on, the acquisition, ownership, operation, effective control or exercise of
full rights of ownership, of such asset or (ii) the termination or amendment
of any existing relationships and contractual rights. It is agreed and
understood that, for purposes of this Agreement, a Divestiture of a business
unit, product line or development program may include (x) the transfer of any
and all assets primarily relating to that business unit or to the research,
development, manufacture, marketing or sale of that product line or
development program and (y) licensing or otherwise making available assets
that are related, but not primarily, to that business unit, product line or
development program; provided that Parent, the Company or their Affiliates
will be entitled to a license back or otherwise having made available
transferred assets to the extent that such assets
44
otherwise relate to other retained businesses, product lines or
development programs of Parent, the Company or any of their respective
Affiliates. It is understood and agreed by the parties that, for purposes of
this Agreement, the effect of any Divestiture required to be made pursuant to
this Section 5.03 shall not, directly or indirectly, be deemed to result in a
breach of the representations and warranties set forth herein.
SECTION 5.04. Company Stock Options; ESPP. (a) As soon as practicable
following the date of this Agreement, the Board of Directors of the Company
(or, if appropriate, any committee thereof administering the Company Stock
Plans) shall adopt such resolutions or take such other actions as may be
required to effect the following:
(i) each Company Stock Option outstanding immediately prior to the
Effective Time shall be amended and converted into an option to acquire, on
the same terms and conditions as were applicable under such Company Stock
Option, the number of shares of Parent Common Stock (rounded down to the
nearest whole share) equal to the sum of (x) the product of (A) the number of
shares of Company Common Stock subject to such Company Stock Option and (B)
the Exchange Ratio and (y) the product of (A) the number of shares of Company
Common Stock subject to such Company Stock Option and (B) the Cash Portion
Option Exchange Multiple, at an exercise price per share of Parent Common
Stock (rounded up to the nearest whole cent) equal to the quotient obtained by
dividing (1) the aggregate exercise price for the shares of Company Common
Stock subject to such Company Stock Option by (2) the aggregate number of
shares of Parent Common Stock to be subject to such Company Stock Option after
giving effect to the adjustments in this clause (i) (each, as so adjusted, an
"Adjusted Option"); and
(ii) make such other changes to the Company Stock Plans as Parent and
the Company may agree are appropriate to give effect to the Merger.
(b) As soon as practicable following the date of this Agreement, the
Board of Directors of the Company (or, if appropriate, any committee of the
Board of Directors of the Company administering the ESPP), shall adopt such
resolutions or take such other actions as may be required to provide that with
respect to the ESPP (i) participants may not increase their payroll deductions
or purchase elections from those in effect on the date of this Agreement, (ii)
each participant's outstanding right to purchase shares of Company Common Stock
under the ESPP shall terminate on the day immediately prior to the day on which
the Effective Time occurs, provided that all amounts allocated to each
participant's account under the ESPP as of such date shall thereupon be used to
purchase from the Company whole shares of Company Common Stock at the
applicable price determined under the terms of the ESPP for the then
outstanding offering periods using such date as the final purchase date for
each such offering period, and (iii) the ESPP shall terminate immediately
following such purchases of Company Common Stock.
(c) The Company shall ensure that following the Effective Time, no
holder of a Company Stock Option (or former holder of a Company Stock Option)
or any participant in any Company Stock Plan, Company Benefit Plan or Company
Benefit Agreement shall have any right thereunder to acquire any capital stock
of the Company or the Surviving Corporation or any other equity interest
therein (including "phantom" stock or stock appreciation rights).
45
(d) The adjustments provided in Section 5.04(a) with respect to any
Company Stock Option to which Section 421(a) of the Code applies shall be and
are intended to be effected in a manner which is consistent with Section 424(a)
of the Code. As soon as practicable following the Effective Time, Parent shall
deliver to the holders of Adjusted Options appropriate notices setting forth
such holders' rights pursuant to the respective Company Stock Plans and the
Contracts evidencing the grants of such Adjusted Options, which shall provide,
among other things, that such Adjusted Options and Contracts have been assumed
by Parent and shall continue in effect on the same terms and conditions
(subject to the adjustments required by this Section 5.04 after giving effect
to the Merger).
(e) Except as otherwise contemplated by this Section 5.04 and except
to the extent required under the respective terms of the Adjusted Options, all
restrictions or limitations on transfer and vesting with respect to Adjusted
Options, to the extent that such restrictions or limitations shall not have
already lapsed, and all other terms thereof, shall remain in full force and
effect with respect to such Adjusted Options after giving effect to the Merger
and the assumption by Parent as set forth above.
(f) As soon as practicable following the Effective Time, Parent shall
prepare and file with the SEC a registration statement on Form S-8 (or another
appropriate form) registering shares of Parent Common Stock subject to issuance
upon the exercise of the Adjusted Options. The Company shall cooperate with,
and assist Parent in the preparation of, such registration statement. Parent
shall keep such registration statement effective (and to maintain the current
status of the prospectus required thereby) for so long as any Adjusted Options
remain outstanding.
(g) For purposes of this Agreement, "Cash Portion Option Exchange
Multiple" means the quotient obtained by dividing (x) the Cash Portion by (y)
the Average Parent Stock Price.
(h) Prior to the Effective Time, each of Parent and the Company shall
use reasonable best efforts to cause any dispositions of Company Common Stock
(including derivative securities with respect to Company Common Stock) or
acquisitions of Parent Common Stock (including derivative securities with
respect to Parent Common Stock) resulting from the transactions contemplated by
this Agreement by each individual who is subject to the reporting requirements
of Section 16(a) of the Exchange Act with respect to the Company to be exempt
under Rule 16b-3 promulgated under the Exchange Act, such efforts to include
all steps required be taken in accordance with the No-Action Letter dated
January 12, 1999, issued by the SEC to Skadden, Arps, Slate, Xxxxxxx & Xxxx
LLP.
SECTION 5.05. Indemnification, Exculpation and Insurance. (a) Parent
shall cause the Surviving Corporation to assume the obligations with respect
to all rights to indemnification and exculpation from liabilities, including
advancement of expenses, for acts or omissions occurring at or prior to the
Effective Time now existing in favor of the current or former directors or
officers of the Company as provided in the Company Articles, the Company
By-laws or any indemnification Contract between such directors or officers
and the Company (in each case, as in effect on the date hereof), without
further action, as of the Effective Time and
46
such obligations shall survive the Merger and shall continue in full force and
effect in accordance with their terms.
(b) In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person and
is not the continuing or surviving corporation or entity of such consolidation
or merger or (ii) transfers or conveys all or substantially all of its
properties and other assets to any person, then, and in each such case, Parent
shall cause proper provision to be made so that the successors and assigns of
the Surviving Corporation shall expressly assume the obligations set forth in
this Section 5.05. In the event (A) the Surviving Corporation transfers any
material portion of its assets, in a single transaction or in a series of
transactions or (B) Parent takes any action to materially impair the financial
ability of the Surviving Corporation to satisfy the obligations referred to in
Section 5.05(a), Parent will either guarantee such obligations or take such
other action to insure that the ability of the Surviving Corporation, legal and
financial, to satisfy such obligations will not be diminished in any material
respect.
(c) For six years after the Effective Time, Parent shall maintain
(directly or indirectly through the Company's existing insurance programs) in
effect the Company's current directors' and officers' liability insurance in
respect of acts or omissions occurring at or prior to the Effective Time,
covering each person currently covered by the Company's directors' and
officers' liability insurance policy (a complete and accurate copy of which
has been heretofore delivered to Parent), on terms with respect to such
coverage and amounts no less favorable than those of such policy in effect on
the date hereof; provided, however, that Parent may (i) substitute therefor
policies of Parent containing terms with respect to coverage (including as
coverage relates to deductibles and exclusions) and amounts no less favorable
to such directors and officers or (ii) request that the Company obtain such
extended reporting period coverage under its existing insurance programs (to
be effective as of the Effective Time); provided further, however, that in
satisfying its obligation under this Section 5.05(c), neither the Company nor
Parent shall be obligated to pay more than in the aggregate the amount set
forth in Section 5.05(c) of the Company Disclosure Schedule to obtain such
coverage. It is understood and agreed that in the event such coverage cannot
be obtained for such amount or less in the aggregate, Parent shall only be
obligated to provide such coverage as may be obtained for such aggregate
amount.
(d) The provisions of this Section 5.05 (i) are intended to be for
the benefit of, and will be enforceable by, each indemnified party, his or
her heirs and his or her representatives and (ii) are in addition to, and not
in substitution for, any other rights to indemnification or contribution that
any such person may have by Contract or otherwise.
SECTION 5.06. Fees and Expenses. (a) Except as provided in
paragraphs (b), (c) and (d) of this Section 5.06, all fees and expenses
incurred in connection with this Agreement, the Merger and the other
transactions contemplated by this Agreement shall be paid by the party
incurring such fees or expenses, whether or not the Merger is consummated,
except that expenses incurred in connection with the printing and mailing of
the Form S-4 and the Proxy Statement shall be shared equally by Parent and
the Company.
47
(b) In the event that (i) this Agreement is terminated by Parent
pursuant to Section 7.01(e) (other than as a result of a Company Adverse
Recommendation Change following the occurrence of a Parent Material Adverse
Effect), (ii) this Agreement is terminated by the Company pursuant to Section
7.01(f) or (iii) (A) prior to the obtaining of the Shareholder Approval, a
Takeover Proposal shall have been made to the Company or shall have been made
directly to the shareholders of the Company generally or shall have otherwise
become publicly known or any person shall have publicly announced an
intention (whether or not conditional) to make a Takeover Proposal, (B)
thereafter this Agreement is terminated by either Parent or the Company
pursuant to Section 7.01(b)(i) (but only if a vote to obtain the Shareholder
Approval or the Shareholders' Meeting has not been held) or Section
7.01(b)(iii) and (C) within 12 months after such termination, the Company
enters into a definitive Contract to consummate, or consummates, the
transactions contemplated by any Takeover Proposal, then the Company shall
pay Parent a fee equal to $750,000,000 (the "Parent Termination Fee") by wire
transfer of same-day funds on the first business day following (x) in the
case of a payment required by clause (i) or (ii) above, the date of
termination of this Agreement and (y) in the case of a payment required by
clause (iii) above, the date of the first to occur of the events referred to
in clause (iii)(C). For purposes of clause (iii)(C) of the immediately
preceding sentence only, the term "Takeover Proposal" shall have the meaning
assigned to such term in Section 4.02(a) except that all references to "15%"
therein shall be deemed to be references to "35%".
(c) In the event that (i) this Agreement is terminated pursuant to
Section 7.01(b)(i), 7.01(b)(ii) or 7.01(c)(ii) and (ii) at the time of any
such termination all of the conditions set forth in Article VI have been
satisfied or waived except for any of the conditions set forth in Section
6.01(b), 6.01(c), 6.01(d), 6.02(c) or 6.02(d) (in the case of Sections
6.01(d), 6.02(c) and 6.02(d), only to the extent that the conditions set
forth therein have not been satisfied due to a suit, action or proceeding by
any national Governmental Entity or the imposition of a Restraint, in either
case relating to competition, merger control, antitrust or similar Laws),
then Parent shall pay to the Company a fee equal to $700 million (the
"Company Termination Fee") by wire transfer of same-day funds on the first
business day following the date of termination of this Agreement.
(d) The Company and Parent acknowledge and agree that the agreements
contained in Sections 5.06(b) and 5.06(c) are an integral part of the
transactions contemplated by this Agreement, and that, without these
agreements, the Company and Parent would not enter into this Agreement;
accordingly, (i) if the Company fails promptly to pay the amount due pursuant
to Section 5.06(b), and, in order to obtain such payment, Parent commences a
suit that results in a judgment against the Company for the Parent
Termination Fee, the Company shall pay to Parent its costs and expenses
(including attorneys' fees and expenses) in connection with such suit,
together with interest on the amount of the Parent Termination Fee from the
date such payment was required to be made until the date of payment at the
prime rate of Citibank, N.A., in effect on the date such payment was required
to be made.; and (ii) if Parent fails promptly to pay the amount due pursuant
to Section 5.06(c), and, in order to obtain such payment, the Company
commences a suit that results in a judgment against Parent for the Company
Termination Fee, Parent shall pay to the Company its costs and expenses
(including attorneys' fees and expenses) in connection with such suit,
together with interest on the amount of the Company Termination Fee from the
date such payment was required to be made until the date of payment at the
prime rate of Citibank, N.A., in effect on the date such payment was required
to be made.
48
SECTION 5.07. Public Announcements. Except with respect to any
Company Adverse Recommendation Change made in accordance with the terms of
this Agreement, Parent and the Company shall consult with each other before
issuing, and give each other the opportunity to review and comment upon, any
press release or other public statements with respect to the transactions
contemplated by this Agreement, including the Merger, and shall not issue any
such press release or make any such public statement prior to such
consultation, except as such party may reasonably conclude may be required by
applicable Law, court process or by obligations pursuant to any listing
agreement with any national securities exchange or national securities
quotation system. The parties agree that the initial press release to be
issued with respect to the transactions contemplated by this Agreement shall
be in the form heretofore agreed to by the parties.
SECTION 5.08. Affiliates. As soon as practicable after the date
hereof, the Company shall deliver to Parent a letter identifying all persons
who at the time this Agreement is submitted for adoption by the shareholders
of the Company may be deemed to be "affiliates" of the Company for purposes
of Rule 145 under the Securities Act. The Company shall use its reasonable
best efforts to cause each such person to deliver to Parent at least 30 days
prior to the Closing Date a written agreement substantially in the form
attached as Exhibit B hereto.
SECTION 5.09. Stock Exchange Listing. To the extent Parent does not
issue or intend to issue treasury shares in the Merger or to holders of
Adjusted Options that are already listed, Parent shall use its reasonable
best efforts to cause the shares of Parent Common Stock to be issued in the
Merger and to holders of Adjusted Options to be promptly approved for listing
on the NYSE, subject to official notice of issuance, prior to the Closing
Date.
SECTION 5.10. Shareholder Litigation. The Company shall give Parent
the opportunity to participate in the defense or settlement of any
shareholder litigation against the Company and/or its directors relating to
the transactions contemplated by this Agreement, and no such settlement shall
be agreed to without Parent's prior written consent.
SECTION 5.11. Employee Matters. (a) (i)For a period of twelve months
following the Effective Time, the employees of the Company and its Subsidiaries
who remain in the employment of the Surviving Corporation and its Subsidiaries
(the "Continuing Employees") shall receive employee benefits that in the
aggregate are substantially comparable to the employee benefits provided to
such employees immediately prior to the Effective Time; (ii) for the six-month
period immediately following the expiration of the twelve-month period
described in the preceding clause (i), the Continuing Employees shall receive
employee benefits that in the aggregate are substantially comparable to either
the employee benefits provided to such employees immediately prior to the
Effective Time or the employee benefits provided to similarly situated
employees of Parent and its Subsidiaries; and (iii) for a period of not less
than eighteen months following the Effective Time, the Continuing Employees
shall receive base salary or wage rates that are not less than those in effect
for such Continuing Employees immediately prior to the Effective Time; provided
that neither Parent nor the Surviving Corporation nor any of their Subsidiaries
shall have any obligation to issue, or adopt any plans or arrangements providing
for the issuance of, shares of capital stock, warrants, options, stock
appreciation rights or other rights in respect of any shares of capital stock
of any entity or any securities convertible or exchangeable into such shares
pursuant to any such plans or arrangements; provided, further, that no plans or
49
arrangements of the Company or any of its Subsidiaries providing for such
issuance shall be taken into account in determining whether employee benefits
are substantially comparable in the aggregate.
(b) Nothing contained herein shall be construed as requiring, and
the Company shall take no action that would have the effect of requiring,
Parent or the Surviving Corporation to continue any specific employee benefit
plans or to continue the employment of any specific person.
(c) Parent shall cause the Surviving Corporation to recognize the
service of each Continuing Employee as if such service had been performed
with Parent (i) for purposes of vesting (but not benefit accrual) under
Parent's defined benefit pension plan, (ii) for purposes of eligibility for
vacation under Parent's vacation program, (iii) for purposes of eligibility
and participation under any health or welfare plan maintained by Parent
(other than any post-employment health or post-employment welfare plan) ,
(iv) for purposes of eligibility for the company matching contribution under
Parent's 401(k) savings plan (it being understood that each Continuing
Employee who was participating in the Company's 401(k) savings plan
immediately prior to becoming eligible to participate in Parent's 401(k)
savings plan shall be immediately eligible for the company matching
contribution under Parent's 401(k) savings plan) and (v) unless covered under
another arrangement with or of the Company, for benefit accrual purposes
under Parent's severance plan (in the case of each of clauses (i), (ii),
(iii), (iv) and (v), solely to the extent that Parent makes such plan or
program available to employees of the Surviving Corporation, it being
Parent's current intention to do so), but not for purposes of any other
employee benefit plan of Parent.
(d) With respect to any welfare plan maintained by Parent in which
Continuing Employees are eligible to participate after the Effective Time,
Parent shall, and shall cause the Surviving Corporation to, (i) waive all
limitations as to preexisting conditions and exclusions with respect to
participation and coverage requirements applicable to such employees to the
extent such conditions and exclusions were satisfied or did not apply to such
employees under the welfare plans maintained by the Company prior to the
Effective Time and (ii) provide each Continuing Employee with credit for any
co-payments and deductibles paid prior to the Effective Time in satisfying any
analogous deductible or out-of-pocket requirements to the extent applicable
under any such plan.
(e) Subject to the provisions of Section 5.11(a) through (d), Parent
shall assume all obligations under and honor in accordance with their terms,
and shall cause the Surviving Corporation to honor in accordance with their
terms, the Company Benefit Plans and Company Benefit Agreements listed on
Section 5.11(e) of the Company Disclosure Schedule (as modified, if applicable,
as agreed between Parent and individual employees of the Company or its
Subsidiaries). Parent acknowledges and agrees that the Merger will constitute a
"change in control" within the meaning of the Company Benefit Plans and Company
Benefit Agreements which include a definition of such (or substantially
similar) concept, except to the extent otherwise agreed between Parent and
individual employees of the Company and its Subsidiaries.
(f) Notwithstanding the foregoing provisions of Section 5.11, the
provisions of Section 5.11(a), (c) and (d) shall apply only with respect to
Continuing Employees who are
50
covered under Company Benefit Plans that are maintained primarily for
the benefit of employees employed in the United States (including Continuing
Employees regularly employed outside the United States to the extent they
participate in such Company Benefit Plans). With respect to Continuing
Employees not described in the preceding sentence, Parent shall, and shall
cause the Surviving Corporation and its Subsidiaries to, comply with all
applicable laws, directives and regulations relating to employees and employee
benefits matters applicable to such employees.
SECTION 5.12. Company Notes. Each of the Company, Parent and Sub shall
take each action required to be taken by such party pursuant to the Indenture
dated as of January 18, 1996, between the Company and Citibank, N.A., with
respect to the Company Notes, as necessary to consummate the Merger and the
other transactions contemplated by this Agreement in compliance therewith.
SECTION 5.13. Rights Agreement. The Board of Directors of the Company
shall take all further actions (in addition to those referred to in Section
3.01(v)) requested by Parent in order to render the Company Rights inapplicable
to the Merger and the other transactions contemplated by this Agreement. Except
as provided above with respect to the Merger and the other transactions
contemplated by this Agreement, the Board of Directors of the Company shall
not, without the prior written consent of Parent, amend, take any action with
respect to, or make any determination under, the Rights Agreement (including a
redemption of the Company Rights) to facilitate a Takeover Proposal.
ARTICLE VI
Conditions Precedent
--------------------
SECTION 6.01. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger is subject
to the satisfaction or (to the extent permitted by Law) waiver by Parent and
the Company on or prior to the Closing Date of the following conditions:
(a) Shareholder Approval. The Shareholder Approval shall have been
obtained.
(b) NYSE Listing. The shares of Parent Common Stock issuable to
the shareholders of the Company and to holders of Adjusted Options as
contemplated by this Agreement shall have been approved for listing on the
NYSE, subject to official notice of issuance.
(c) Antitrust. (i) The waiting period (and any extension
thereof) applicable to the Merger under the HSR Act shall have been
terminated or shall have expired and (ii) the European Commission shall
have issued a decision under Article 6(1)(b), 8(1) or 8(2) of the EC
Merger Regulation (or shall have been deemed to have done so under
Article 10(6) of the EC Merger Regulation) declaring the Merger
compatible with the EC Common Market (and/or, as may be the case, any
national competition authority in the
51
EC to which all or part of the case may have been transferred shall
have issued a decision with similar effect or have been deemed to have
done so).
(d) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other judgment or order
issued by any court or agency of competent jurisdiction or other Law,
rule, legal restraint or prohibition (collectively, "Restraints") shall
be in effect preventing the consummation of the Merger.
(e) Form S-4. The Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order.
SECTION 6.02. Conditions to Obligations of Parent and Sub. The
obligations of Parent and Sub to effect the Merger are further subject to the
satisfaction or (to the extent permitted by Law) waiver by Parent on or prior
to the Closing Date of the following conditions:
(a) Representations and Warranties. (i) The representations and
warranties of the Company contained in Sections 3.01(c), 3.01(d),
3.01(g)(iv) (but only with respect to current and former directors and
Tier I Employees), 3.01(i)(2)(A), 3.01(q), 3.01(r) (but not with respect
to the last sentence thereof) and 3.01(v) of this Agreement that are
qualified as to materiality or by reference to Material Adverse Effect
or Material Adverse Change shall be true and correct, and such
representations and warranties of the Company that are not so qualified
shall be true and correct in all material respects, in each case as of
the date of this Agreement and as of the Closing Date as though made on
the Closing Date, except to the extent such representations and
warranties expressly relate to an earlier date, in which case as of such
earlier date, (ii) the representations and warranties of the Company
contained in Sections 3.01(i)(2)(B) and (C) shall be true and correct as
of the date of this Agreement as though made on the Closing Date, except
to the extent that the facts or matters as to which such representations
and warranties are not so true and correct as of such date, individually
or in the aggregate, would not reasonably be expected to have a material
adverse effect on the reasonably expected benefits of the Merger to
Parent and (iii) all other representations and warranties of the Company
contained in this Agreement shall be true and correct as of the date of
this Agreement and as of the Closing Date as though made on the Closing
Date, except to the extent such representations and warranties expressly
relate to a specified date, in which case as of such specified date, and
except further, in the case of this clause (iii), to the extent that the
facts or matters as to which such representations and warranties are not
so true and correct as of such dates (without giving effect to any
qualifications or limitations as to materiality or Material Adverse
Effect or Material Adverse Change set forth therein), individually or in
the aggregate, have not had and would not reasonably be expected to have
a Material Adverse Effect. Parent shall have received a certificate
signed on behalf of the Company by an executive officer of the Company
to such effect.
(b) Performance of Obligations of the Company. The Company shall
have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date,
and Parent shall have received a certificate signed on behalf of the
Company by the chief executive officer and the chief financial officer
of the Company to such effect.
52
(c) No Litigation. There shall not be pending any suit, action
or proceeding by any national Governmental Entity (i) seeking to
restrain or prohibit the consummation of the Merger or any other
transaction contemplated by this Agreement or seeking to obtain from the
Company, Parent, Sub or any other Affiliate of Parent any damages that
are material in relation to the Company, (ii) seeking to impose
limitations on the ability of Parent or any Affiliate of Parent to hold,
or exercise full rights of ownership of, any shares of capital stock of
the Surviving Corporation, including the right to vote such shares on
all matters properly presented to the shareholders of the Surviving
Corporation, (iii) seeking to prohibit Parent or any of its Affiliates
from effectively controlling in any material respect the business or
operations of the Company or any of its Affiliates, (iv) seeking any
Divestiture that is not required to be effected pursuant to the terms of
this Agreement or (v) that has had or would reasonably be expected to
have a Material Adverse Effect or Parent Material Adverse Effect.
(d) Restraints. No Restraint that would reasonably be expected
to result, directly or indirectly, in any of the effects referred to in
clauses (i) through (v) of paragraph (c) of this Section 6.02 shall be
in effect.
SECTION 6.03. Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is further subject to the
satisfaction or (to the extent permitted by Law) waiver by the Company on or
prior to the Closing Date of the following conditions:
(a) Representations and Warranties. (i) The representations and
warranties of Parent and Sub contained in Section 3.02(b) of this
Agreement that are qualified as to materiality or by reference to Parent
Material Adverse Effect or Parent Material Adverse Change shall be true
and correct, and such representations and warranties of Parent that are
not so qualified shall be true and correct in all material respects, in
each case as of the date of this Agreement and as of the Closing Date as
though made on the Closing Date, except to the extent such
representations and warranties expressly relate to an earlier date, in
which case as of such earlier date and (ii) all other representations
and warranties of Parent contained in this Agreement shall be true and
correct as of the date of this Agreement and as of the Closing Date as
though made on the Closing Date, except to the extent such
representations and warranties expressly relate to a specified date, in
which case as of such specified date, and except further, in the case of
this clause (ii), to the extent that the facts or matters as to which
such representations and warranties are not so true and correct as of
such dates (without giving effect to any qualifications or limitations
as to materiality or Parent Material Adverse Effect or Parent Material
Adverse Change set forth therein), individually or in the aggregate,
have not had and would not reasonably be expected to have a Parent
Material Adverse Effect. The Company shall have received a certificate
signed on behalf of Parent by an executive officer of Parent to such
effect.
(b) Performance of Obligations of Parent and Sub. Parent and Sub
shall have performed in all material respects all obligations required
to be performed by them under this Agreement at or prior to the Closing
Date, and the Company shall have received a certificate signed on behalf
of Parent by an executive officer of Parent to such effect.
53
SECTION 6.04. Frustration of Closing Conditions. None of the
Company, Parent or Sub may rely on the failure of any condition set forth in
Section 6.01, 6.02 or 6.03, as the case may be, to be satisfied if such
failure was caused by such party's failure to act in good faith or to use its
reasonable best efforts to consummate the Merger and the other transactions
contemplated by this Agreement, as required by and subject to Section 5.03.
ARTICLE VII
Termination, Amendment and Waiver
---------------------------------
SECTION 7.01. Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after receipt of the
Shareholder Approval:
(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company:
(i) if the Merger shall not have been consummated on or before
February 28, 2006; provided, however, that the right to terminate this
Agreement under this Section 7.01(b)(i) shall not be available to any
party whose wilful breach of a representation or warranty in this
Agreement or whose other action or failure to act has been a principal
cause of or resulted in the failure of the Merger to be consummated on or
before such date;
(ii) if any Restraint having any of the effects set forth in
Section 6.01(d) shall be in effect and shall have become final and
nonappealable; or
(iii) if the Shareholder Approval shall not have been obtained
at the Shareholders' Meeting duly convened therefor or at any adjournment
or postponement thereof;
(c) by Parent (i) if the Company shall have breached or failed to
perform any of its representations, warranties, covenants or agreements
set forth in this Agreement, which breach or failure to perform (A) would
give rise to the failure of a condition set forth in Section 6.02(a) or
6.02(b) and (B) is incapable of being cured by the Company within 30
calendar days following receipt of written notice of such breach or
failure to perform from Parent or (ii) if any Restraint having the effects
referred to in clauses (i) through (v) of Section 6.02(c) shall be in
effect and shall have become final and nonappealable;
(d) by the Company, if Parent shall have breached or failed to
perform any of its representations, warranties, covenants or agreements
set forth in this Agreement, which breach or failure to perform (A) would
give rise to the failure of a condition set forth in Section 6.03(a) or
6.03(b) and (B) is incapable of being cured by Parent within 30 calendar
days following receipt of written notice of such breach or failure to
perform from the Company;
54
(e) by Parent, in the event that prior to the obtaining of the
Shareholder Approval (i) a Company Adverse Recommendation Change shall
have occurred or (ii) the Board of Directors of the Company fails publicly
to reaffirm its adoption and recommendation of this Agreement, the Merger
or the other transactions contemplated by this Agreement within ten
business days of receipt of a written request by Parent to provide such
reaffirmation following a Takeover Proposal; or
(f) by the Company in accordance with the terms and subject to the
conditions of Section 4.02(b).
SECTION 7.02. Effect of Termination. In the event of termination of
this Agreement by either the Company or Parent as provided in Section 7.01,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Parent, Sub or the Company under this
Agreement, other than the provisions of Section 3.01(s) and 3.02(g), the
second, third and fourth sentences of Section 5.02(a), Section 5.06, this
Section 7.02 and Article VIII, which provisions shall survive such termination;
provided, however, that no such termination shall relieve any party hereto from
any liability or damages resulting from the wilful and material breach by a
party of any of its representations, warranties, covenants or agreements set
forth in this Agreement.
SECTION 7.03. Amendment. This Agreement may be amended by the parties
hereto at any time before or after receipt of the Shareholder Approval;
provided, however, that after such approval has been obtained, there shall be
made no amendment that by applicable Law requires further approval by the
shareholders of the Company without such approval having been obtained. This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
SECTION 7.04. Extension; Waiver. At any time prior to the Effective
Time, the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) to the extent permitted by
applicable Law, waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto or (c) subject to
the proviso to the first sentence of Section 7.03 and to the extent permitted
by applicable Law, waive compliance with any of the agreements or conditions
contained herein. Any agreement on the part of a party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party to this Agreement to assert any
of its rights under this Agreement or otherwise shall not constitute a waiver
of such rights nor shall any single or partial exercise by any party to this
Agreement of any of its rights under this Agreement preclude any other or
further exercise of such rights or any other rights under this Agreement.
SECTION 7.05. Procedure for Termination or Amendment. A termination of
this Agreement pursuant to Section 7.01 or an amendment of this Agreement
pursuant to Section 7.03 shall, in order to be effective, require, in the case
of Parent or the Company, action by its Board of Directors or, with respect to
any amendment of this Agreement pursuant to Section 7.03, the duly authorized
committee of its Board of Directors to the extent permitted by applicable Law.
55
ARTICLE VIII
General Provisions
------------------
SECTION 8.01. Nonsurvival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 8.01 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 8.02. Notices. Except for notices that are specifically
required by the terms of this Agreement to be delivered orally, all notices,
requests, claims, demands and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (which is
confirmed) or sent by overnight courier (providing proof of delivery) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
if to Parent or Sub, to:
Xxxxxxx & Xxxxxxx
Xxx Xxxxxxx & Xxxxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Office of General Counsel
with a copy to:
Cravath, Swaine & Xxxxx LLP
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, III, Esq.
if to the Company, to:
Guidant Corporation
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: General Counsel
56
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx, Xx., Esq.
SECTION 8.03. Definitions. For purposes of this Agreement:
(a) an "Affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person;
(b) "Knowledge" of any person that is not an individual means,
with respect to any matter in question, the actual knowledge of such
person's executive officers after making due inquiry of the current Tier I
Employees and Tier II Employees having primary responsibility for such
matter;
(c) "Material Adverse Change" or "Material Adverse Effect" means
any change, effect, event, occurrence, state of facts or development which
individually or in the aggregate would reasonably be expected to result in
any change or effect, that is materially adverse to the business,
financial condition or results of operations of the Company and its
Subsidiaries, taken as a whole; provided, that none of the following shall
be deemed, 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 Material Adverse Change or Material Adverse Effect: (A)
any change, effect, event, occurrence, state of facts or development (1)
in the financial or securities markets or the economy in general, (2) in
the industries in which the Company or any of its Subsidiaries operates in
general, to the extent that such change, effect, event, occurrence, state
of facts or development does not disproportionately impact the Company or
any of its Subsidiaries, or (3) resulting from any Divestiture required to
be effected pursuant to the terms of this Agreement or (B) any failure, in
and of itself, by the Company to meet any internal or published
projections, forecasts or revenue or earnings predictions (it being
understood that the facts or occurrences giving rise or contributing to
such failure may be deemed to constitute, or be taken into account in
determining whether there has been or would reasonably be expected to be,
a Material Adverse Effect or a Material Adverse Change);
(d) "Parent Material Adverse Change" or "Parent Material
Adverse Effect" means any change, effect, event, occurrence, state of
facts or development which individually or in the aggregate would
reasonably be expected to result in any change or effect, that is
materially adverse to the business, financial condition or results of
operations of Parent and its Subsidiaries, taken as a whole; provided,
that none of the following shall be deemed, 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
57
Parent Material Adverse Change or Parent Material Adverse Effect:
(A) any change, effect, event, occurrence, state of facts or development
(1) in the financial or securities markets or the economy in general, (2)
in the industries in which Parent or any of its Subsidiaries operates in
general, to the extent that such change, effect, event, occurrence, state
of facts or development does not disproportionately impact Parent or any
of its Subsidiaries or (3) resulting from any Divestiture required to be
effected pursuant to the terms of this Agreement or (B) any failure, in
and of itself, by Parent to meet any internal or published projections,
forecasts or revenue or earnings predictions (it being understood that the
facts or occurrences giving rise or contributing to such failure may be
deemed to constitute, or be taken into account in determining whether
there has been or would reasonably be expected to be, a Parent Material
Adverse Effect or a Parent Material Adverse Change);
(e) "person" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust,
unincorporated organization or other entity; and
(f) a "Subsidiary" of any person means another person, an amount
of the voting securities, other voting rights or voting partnership
interests of which is sufficient to elect at least a majority of its board
of directors or other governing body (or, if there are no such voting
interests, 50% or more of the equity interests of which) is owned directly
or indirectly by such first person.
SECTION 8.04. Interpretation. When a reference is made in this
Agreement to an Article, a Section, Exhibit or Schedule, such reference
shall be to an Article of, a Section of, or an Exhibit or Schedule to, this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include", "includes" or "including" are used in this Agreement,
they shall be deemed to be followed by the words "without limitation". The
words "hereof", "herein" and "hereunder" and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement. References to "this Agreement"
shall include the Company Disclosure Schedule. All terms defined in this
Agreement shall have the defined meanings when used in any certificate or
other document made or delivered pursuant hereto unless otherwise defined
therein. The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such term. Any Contract,
instrument or Law defined or referred to herein or in any Contract or
instrument that is referred to herein means such Contract, instrument or
Law as from time to time amended, modified or supplemented, including (in
the case of Contracts or instruments) by waiver or consent and (in the case
of Laws) by succession of comparable successor Laws and references to all
attachments thereto and instruments incorporated therein. References to a
person are also to its permitted successors and assigns.
SECTION 8.05. Consents and Approvals. For any matter under this
Agreement requiring the consent or approval of any party to be valid and
binding on the parties hereto, such consent or approval must be in writing.
58
SECTION 8.06. Counterparts. This Agreement may be executed in one or
more counterparts (including by facsimile), all of which shall be considered
one and the same agreement and shall become effective when one or more
counterparts have been signed by each of the parties and delivered to the
other parties.
SECTION 8.07. Entire Agreement; No Third-Party Beneficiaries. This
Agreement (including the Exhibits and Schedules) and the Confidentiality
Agreement and any agreements entered into contemporaneously herewith (a)
constitute the entire agreement, and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement and the Confidentiality Agreement and (b)
except for the provisions of Article II and Section 5.05, are not intended to
and do not confer upon any person other than the parties any legal or
equitable rights or remedies.
SECTION 8.08. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF INDIANA,
REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE
PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
SECTION 8.09. Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the
prior written consent of the other parties, and any assignment without such
consent shall be null and void, except that Sub, upon prior written notice to
the Company, may assign, in its sole discretion, any of or all its rights,
interests and obligations under this Agreement to Parent or to any direct or
indirect wholly owned Subsidiary of Parent, but no such assignment shall
relieve Parent or Sub of any of its obligations hereunder. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.
SECTION 8.10. Specific Enforcement; Consent to Jurisdiction. The
parties agree that irreparable damage would occur and that the parties would
not have any adequate remedy at law 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 an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in the
United States District Court for the Southern District of New York, this being
in addition to any other remedy to which they are entitled at law or in equity.
In addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of the United States District Court for the Southern
District of New York in the event any dispute arises out of this Agreement or
the transactions contemplated by this Agreement, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court and (c) agrees that it will not bring any action
relating to this Agreement or the transactions contemplated by this Agreement
in any court other than the United States District Court for the Southern
District of New York.
SECTION 8.11. Waiver of Jury Trial. Each party hereto hereby
waives, to the fullest extent permitted by applicable Law, any right it may
have to a trial by jury in respect of any suit, action or other proceeding
arising out of this Agreement or the transactions
59
contemplated hereby. Each party hereto (a) certifies that no
representative, agent or attorney of any other party has represented,
expressly or otherwise, that such party would not, in the event of any
action, suit or proceeding, seek to enforce the foregoing waiver and (b)
acknowledges that it and the other parties hereto have been induced to
enter into this Agreement, by, among other things, the mutual waiver and
certifications in this Section 8.11.
SECTION 8.12. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable Law in an acceptable manner to the end that the
transactions contemplated by this Agreement are fulfilled to the extent
possible.
60
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers hereunto duly authorized,
all as of the date first written above.
XXXXXXX & XXXXXXX
by
/s/ Xxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Worldwide Chairman, Medical
Devices
SHELBY MERGER SUB, INC.,
by
/s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
GUIDANT CORPORATION,
by
/s/ Xxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President and Chief
Executive Officer
ANNEX I
TO THE MERGER AGREEMENT
Index of Defined Terms
----------------------
Term
Acquisition Agreement...........................................Section 4.02(b)
Actions.........................................................Section 4.01(d)
Adjusted Option.................................................Section 5.04(a)
Affiliate.......................................................Section 8.03(a)
Agreement..............................................................Preamble
Alza............................................................Section 3.02(h)
Antitrust Filings..................................................Section 5.03
Articles of Merger.................................................Section 1.03
Average Parent Stock Price......................................Section 2.01(c)
Cash Portion....................................................Section 2.01(c)
Cash Portion Option Exchange Multiple...........................Section 5.04(h)
Certificate.....................................................Section 2.01(c)
Closing............................................................Section 1.02
Closing Date.......................................................Section 1.02
Closing Price...................................................Section 2.02(e)
Code....................................................................2.02(j)
Commonly Controlled Entity......................................Section 3.01(l)
Company................................................................Preamble
Company Adverse Recommendation Change...........................Section 4.02(b)
Company Articles...................................................Section 1.05
Company Benefit Agreements......................................Section 3.01(g)
Company Benefit Plans...........................................Section 3.01(l)
Company By-laws.................................................Section 3.01(a)
Company Common Stock...................................................Recitals
Company Disclosure Schedule........................................Section 3.01
Company Notes...................................................Section 4.01(a)
Company Pension Plan............................................Section 3.01(l)
Company Preferred Stock.........................................Section 3.01(c)
Company Restricted Stock........................................Section 3.01(c)
Company Rights..................................................Section 3.01(v)
Company SEC Documents...........................................Section 3.01(e)
Company Series A Preferred Stock................................Section 3.01(c)
Company Stock-Based Awards......................................Section 3.01(c)
Company Stock Options...........................................Section 3.01(c)
Company Stock Plans.............................................Section 3.01(c)
Company Termination Fee.........................................Section 5.06(c)
Company Welfare Plan............................................Section 3.01(l)
Confidentiality Agreement..........................................Section 5.02
Continuing Employees............................................Section 5.11(a)
Contract........................................................Section 3.01(d)
EC Merger Regulation............................................Section 3.01(d)
Effective Time.....................................................Section 1.03
Environmental Laws..............................................Section 3.01(j)
ERISA...........................................................Section 3.01(j)
ESPP............................................................Section 3.01(c)
Excess Distribution.............................................Section 4.01(d)
Exchange Act....................................................Section 3.01(d)
Exchange Agent..................................................Section 2.02(a)
Exchange Fund...................................................Section 2.02(a)
Exchange Ratio..................................................Section 2.01(c)
FDA.............................................................Section 3.01(u)
FDCA............................................................Section 3.01(j)
Filed Company SEC Documents........................................Section 3.01
Filed Parent SEC Documents ........................................Section 3.02
Form S-4........................................................Section 3.01(f)
GAAP............................................................Section 3.01(e)
Governmental Entity.............................................Section 3.01(d)
Hazardous Materials.............................................Section 3.01(j)
HSR Act.........................................................Section 3.01(d)
HSR Filing.........................................................Section 5.03
IBCL...............................................................Section 1.01
Intellectual Property Rights....................................Section 3.01(p)
IRS.............................................................Section 3.01(l)
Key Personnel...................................................Section 3.01(g)
Knowledge.......................................................Section 8.03(b)
Law.............................................................Section 3.01(d)
Legal Provisions................................................Section 3.01(j)
Liens...........................................................Section 3.01(b)
Material Adverse Change.........................................Section 8.03(c)
Material Adverse Effect.........................................Section 8.03(c)
Medical Device..................................................Section 3.01(u)
Merger.................................................................Recitals
Merger Consideration............................................Section 2.01(c)
New Rights Plan....................................................Section 5.13
Non-U.S. Subsidiary.............................................Section 4.01(d)
Notice of Superior Proposal.....................................Section 4.02(b)
NYSE....................................................................2.01(c)
Order...................................................................3.01(d)
Paragraph 6.............................................................3.01(r)
Parent.................................................................Preamble
Parent Common Stock....................................................Recitals
Parent Disclosure Schedule.........................................Section 3.02
Parent Material Adverse Change..................................Section 8.03(d)
Parent Material Adverse Effect..................................Section 8.03(d)
Parent Preferred Stock..........................................Section 3.02(h)
Parent SEC Documents............................................Section 3.02(c)
Parent Termination Fee..........................................Section 5.06(b)
Permits.........................................................Section 3.01(j)
Person..........................................................Section 8.03(e)
Post-Signing Returns............................................Section 4.01(d)
Primary Company Executives......................................Section 3.01(m)
Proxy Statement.................................................Section 3.01(d)
Representatives.................................................Section 4.02(a)
Release.........................................................Section 3.01(j)
Restraints......................................................Section 6.01(d)
Rights Agreement................................................Section 3.01(v)
SEC.............................................................Section 3.01(d)
Securities Act..................................................Section 3.01(e)
Shareholder Approval............................................Section 3.01(q)
Shareholders' Meeting...........................................Section 5.01(b)
Significant Subsidiary .........................................Section 3.01(a)
Social Security Act.............................................Section 3.01(u)
SOX.............................................................Section 3.01(e)
Stock Portion...................................................Section 2.01(c)
Sub....................................................................Preamble
Sub Articles....................................................Section 3.02(a)
Subsidiary......................................................Section 8.03(g)
Superior Proposal...............................................Section 4.02(a)
Surviving Corporation..............................................Section 1.01
Takeover Proposal...............................................Section 4.02(a)
tax.............................................................Section 3.01(n)
taxing authority................................................Section 3.01(n)
tax return......................................................Section 3.01(n)
Tier I Employee.................................................Section 3.01(g)
Tier II Employee................................................Section 3.01(g)
EXHIBIT A
TO THE MERGER AGREEMENT
Restated Articles of Incorporation
----------------------------------
of the Surviving Corporation
----------------------------
FIRST: The name of the corporation (hereinafter called the
"Corporation") is Guidant Corporation.
SECOND: The aggregate number of shares which the Corporation shall
have authority to issue is 1,000 shares of Common Stock, without par value.
THIRD: The street address of the Corporation's initial registered
office in Indiana is 000 Xxxx XxXxxxx Xxxxxx, Xxxxxxxxxxxx 00000 and the name
of its initial registered agent at that office is [Name of Agent].
FOURTH: The purpose of the Corporation is to engage in any lawful
act or activity for which corporations may be organized under the Business
Corporation Law of the State of Indiana.
FIFTH: In furtherance and not in limitation of the powers conferred
upon it by law, the Board of Directors of the Corporation is expressly
authorized to adopt, amend or repeal the By-laws of the Corporation.
SIXTH: To the fullest extent permitted by the Business Corporation
Law of the State of Indiana as it now exists and as it may hereafter be
amended, no director or officer of the Corporation shall be personally liable
to the Corporation or any of its shareholders for monetary damages for breach
of fiduciary duty as a director or officer.
SEVENTH: The Corporation shall, to the fullest extent permitted by
Section 23-1-37 of the Business Corporation Law of the State of Indiana, as the
same may be amended and supplemented, indemnify any and all persons whom it
shall have power to indemnify under said Section from and against any and all
of the expenses, liabilities, or other matters referred to in or covered by
said Section. Such indemnification shall be mandatory and not discretionary.
The indemnification provided for herein shall not be deemed exclusive of any
other rights to which those indemnified may be entitled under any by-law,
agreement, vote of shareholders or disinterested directors or otherwise, both
as to action in his or her official capacity and as to action in another
capacity while holding such office, and shall continue as to a person who has
ceased to be a director, officer, employee, or agent and shall inure to the
benefit of the heirs, executors, and administrators of such a person. Any
repeal or modification of this Article SEVENTH shall not adversely affect any
right to indemnification of any persons existing at the time of such repeal or
modification with respect to any matter occurring prior to such repeal or
modification.
The Corporation shall to the fullest extent permitted by the
Business Corporation Law of the State of Indiana advance all costs and
expenses (including, without limitation, attorneys' fees and expenses)
incurred by any director or officer within 15 days of the presentation of
same to the Corporation, with respect to any one or more actions, suits or
proceedings, whether civil, criminal, administrative or investigative, so
long as the Corporation receives from the director or officer a written
affirmation required by the Business Corporation
Law of the State of Indiana of his or her good faith belief that he or she has
met the applicable standard of conduct established by the Business Corporation
Law of the State of Indiana, together with an unsecured undertaking to repay
such expenses if it shall ultimately be determined that such director or
officer is not entitled to be indemnified by the Corporation under the Business
Corporation Law of the State of Indiana. Such obligation to advance costs and
expenses shall be mandatory, and not discretionary, and shall include, without
limitation, costs and expenses incurred in asserting affirmative defenses,
counterclaims and cross claims. Such undertaking to repay may, if first
requested in writing by the applicable director or officer, be on behalf of
(rather than by) such director or officer, provided that in such case the
Corporation shall have the right to approve the party making such undertaking.
EIGHTH: Unless and except to the extent that the By-laws of the
Corporation shall so require, the election of directors of the Corporation need
not be by written ballot.
EXHIBIT B
TO THE MERGER AGREEMENT
Form of Affiliate Letter
------------------------
Dear Sirs:
The undersigned, a holder of shares of common stock, without par
value ("Company Common Stock"), of Guidant Corporation, an Indiana
corporation (the "Company"), acknowledges that the undersigned may be deemed
an "affiliate" of the Company within the meaning of Rule 145 ("Rule 145")
promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), by the Securities and Exchange Commission (the "SEC"). Pursuant to the
terms of the Agreement and Plan of Merger dated as of December 15, 2004 (the
"Merger Agreement"), among Xxxxxxx & Xxxxxxx, a New Jersey corporation
("Parent"), Shelby Merger Sub, Inc., an Indiana corporation and a wholly
owned subsidiary of Parent ("Sub"), and the Company, Merger Sub will be
merged with and into the Company (the "Merger"), and in connection with the
Merger, the undersigned is entitled to receive a certain number of shares of
the common stock of Parent ("Parent Common Stock"), determined in accordance
with the Merger Agreement, and $30.40 in cash for each share of Company
Common Stock, without interest.
If in fact the undersigned were an affiliate under the Securities
Act, the undersigned's ability to sell, assign or transfer the shares of
Parent Common Stock received by the undersigned in exchange for any shares of
Company Common Stock in connection with the Merger may be restricted unless
such transaction is registered under the Securities Act or an exemption from
such registration is available. The undersigned understands that such
exemptions are limited and the undersigned has obtained or will obtain advice
of counsel as to the nature and conditions of such exemptions, including
information with respect to the applicability to the sale of such securities
of Rules 144 and 145(d) promulgated under the Securities Act. The undersigned
understands that Parent will not be required to maintain the effectiveness of
any registration statement under the Securities Act for the purposes of
resale of Parent Common Stock by the undersigned.
The undersigned hereby represents to and covenants with Parent
that the undersigned will not sell, assign or transfer any of the shares of
Parent Common Stock received by the undersigned in exchange for shares of
Company Common Stock in connection with the Merger except (i) pursuant to an
effective registration statement under the Securities Act, (ii) in conformity
with the volume and other limitations of Rule 145 or (iii) in a transaction
which, in the opinion of counsel to the undersigned, such counsel to be
reasonably satisfactory to Parent and such opinion to be in form and
substance reasonably satisfactory to Parent, or as described in a "no-action"
or interpretive letter from the Staff of the SEC specifically issued with
respect to a transaction to be engaged in by the undersigned, is not required
to be registered under the Securities Act.
In the event of a sale or other disposition by the undersigned
of the shares of Parent Common Stock pursuant to Rule 145, the undersigned
will supply Parent with evidence of compliance with such Rule, in the form
of a letter in the form of Annex I
hereto or the opinion of counsel or no-action letter referred to above. The
undersigned understands that Parent may instruct its transfer agent to
withhold the transfer of any shares of Parent Common Stock disposed of by the
undersigned, but that (provided such transfer is not prohibited by any other
provision of this letter agreement) upon receipt of such evidence of
compliance, Parent shall cause the transfer agent to effectuate the transfer
of the shares of Parent Common Stock sold as indicated in such letter.
Parent covenants that it will take all such actions as may be
reasonably available to it to permit the sale or other disposition of the
shares of Parent Common Stock by the undersigned under Rule 145 in
accordance with the terms thereof.
The undersigned acknowledges and agrees that the legend set
forth below will be placed on certificates representing the shares of
Parent Common Stock received by the undersigned in connection with the
Merger or held by a transferee thereof, which legend will be removed by
delivery of substitute certificates (i) if the undersigned provides
evidence of compliance with Rule 145 to Parent, in the form of a letter in
the form of Annex I hereto, or (ii) upon receipt of an opinion in form and
substance reasonably satisfactory to Parent from counsel reasonably
satisfactory to Parent to the effect that such legend is no longer required
for purposes of the Securities Act.
There will be placed on the certificates for Parent Common
Stock issued to the undersigned in connection with the Merger, or any
substitutions therefor, a legend stating in substance:
"The shares represented by this certificate were issued
pursuant to a transaction to which Rule 145 promulgated under the
Securities Act of 1933 applies. The shares have not been acquired by
the holder with a view to, or for resale in connection with, any
distribution thereof within the meaning of the Securities Act of 1933.
The shares may not be sold, pledged or otherwise transferred except in
accordance with Rule 145, pursuant to a Registration Statement under
the Securities Act of 1933 or in accordance with an exemption from the
registration requirements of the Securities Act of 1933."
The undersigned acknowledges that (i) the undersigned has
carefully read this letter and understands the requirements hereof and the
limitations imposed upon the distribution, sale, transfer or other
disposition of Parent Common Stock and (ii) the receipt by Parent of this
letter is an inducement to Parent's obligations to consummate the Merger.
Execution of this letter should not be considered an admission
on the part of the undersigned that the undersigned is an "affiliate" of
the Company as described in the first paragraph of this letter, or as a
waiver of any rights the undersigned may have to object to any claim that
the undersigned is such an affiliate on or after the date of this letter.
Very truly yours,
Dated:
ANNEX I TO
EXHIBIT B
[Name] [Date]
On , the undersigned sold the securities of Xxxxxxx & Xxxxxxx
("Parent") described below in the space provided for that purpose (the
"Securities"). The Securities were received by the undersigned in connection
with the merger of Shelby Merger Sub, Inc., an Indiana corporation, with and
into Guidant Corporation, an Indiana corporation.
Based upon the most recent report or statement filed by Parent with
the Securities and Exchange Commission, the Securities sold by the undersigned
were within the prescribed limitations set forth in paragraph (e) of Rule 144
promulgated under the Securities Act of 1933, as amended (the "Securities
Act").
The undersigned hereby represents that the Securities were sold in
"brokers' transactions" within the meaning of Section 4(4) of the Securities
Act or in transactions directly with a "market maker" as that term is defined
in Section 3(a)(38) of the Securities Exchange Act of 1934, as amended. The
undersigned further represents that the undersigned has not solicited or
arranged for the solicitation of orders to buy the Securities, and that the
undersigned has not made any payment in connection with the offer or sale of
the Securities to any person other than to the broker who executed the order in
respect of such sale.
Very truly yours,
Dated:
