1
CONFORMED COPY
Exhibit 2.1
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AGREEMENT AND PLAN OF MERGER
Dated as of January 26, 2001
Among
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
HP MERGER SUB, INC.
And
HEARTPORT, INC.
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TABLE OF CONTENTS
Page
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ARTICLE I
The Merger
SECTION 1.01. The Merger .................................................. 2
SECTION 1.02. Closing ..................................................... 2
SECTION 1.03. Effective Time .............................................. 2
SECTION 1.04. Effects of the Merger ....................................... 2
SECTION 1.05. Certificate of Incorporation and By-laws .................... 3
SECTION 1.06. Directors ................................................... 3
SECTION 1.07. Officers ..................................................... 3
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 .............................................. 9
SECTION 3.02. Representations and Warranties of
Parent and Sub. .......................................... 31
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business ......................................... 35
SECTION 4.02. No Solicitation ............................................. 40
ARTICLE V
Additional Agreements
(i)
3
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SECTION 5.01. Preparation of the Form S-4 and the
Proxy Statement; Stockholders'
Meeting .................................................. 44
SECTION 5.02. Access to Information; Confidentiality ...................... 45
SECTION 5.03. Commercially Reasonable Efforts ............................. 46
SECTION 5.04. Stock Options ............................................... 47
SECTION 5.05. Indemnification, Exculpation and
Insurance ................................................ 48
SECTION 5.06. Fees and Expenses ........................................... 49
SECTION 5.07. Public Announcements ........................................ 50
SECTION 5.08. Affiliates .................................................. 50
SECTION 5.09. Stock Exchange Listing ...................................... 50
SECTION 5.10. Tax Treatment ............................................... 50
SECTION 5.11. Stockholder Litigation ...................................... 51
SECTION 5.12. Rights Agreement ............................................ 51
SECTION 5.13. Convertible Notes ........................................... 51
SECTION 5.14. Employee Matters ............................................ 52
SECTION 5.15. Stockholder Agreement Legend ................................ 53
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation
to Effect the Merger ..................................... 53
SECTION 6.02. Conditions to Obligations of Parent
and Sub. ................................................. 54
SECTION 6.03. Conditions to Obligation of the Company ..................... 55
SECTION 6.04. Frustration of Closing Conditions ........................... 56
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination ................................................. 56
SECTION 7.02. Effect of Termination ....................................... 57
SECTION 7.03. Amendment ................................................... 58
SECTION 7.04. Extension; Waiver ........................................... 58
ARTICLE VIII
General Provisions
(ii)
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SECTION 8.01. Nonsurvival of Representations and
Warranties ............................................... 58
SECTION 8.02. Notices ..................................................... 58
SECTION 8.03. Definitions ................................................. 60
SECTION 8.04. Interpretation .............................................. 61
SECTION 8.05. Counterparts ................................................ 62
SECTION 8.06. Entire Agreement; No Third-Party
Beneficiaries ............................................ 62
SECTION 8.07. Governing Law ............................................... 62
SECTION 8.08. Assignment .................................................. 62
SECTION 8.09. Specific Enforcement ........................................ 62
SECTION 8.10. Severability ................................................ 63
Annex I Index of Defined Terms
Exhibit A Form of Certificate of Incorporation of the
Surviving Corporation
Exhibit B Form of Affiliate Letter
(iii)
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AGREEMENT AND PLAN OF MERGER (this
"Agreement") dated as of January 26, 2001, among
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, a New Jersey corporation
("Parent"), HP MERGER SUB, INC., a Delaware
corporation and a wholly owned subsidiary of
Parent ("Sub"), and HEARTPORT, INC., a Delaware
corporation (the "Company").
WHEREAS the respective Boards of Directors of Parent, Sub and the
Company have approved and declared advisable 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, par value $.001 per share, of the Company ("Company
Common Stock"), other than Company Common Stock owned by Parent, Sub or the
Company, will be converted into the right to receive common stock, par value
$1.00 per share, of Parent ("Parent Common Stock");
WHEREAS, simultaneously with the execution and delivery of this
Agreement and as a condition and inducement to Parent's willingness to enter
into this Agreement, Parent and certain stockholders of the Company (the
"Principal Stockholders") are entering into an agreement (the "Stockholder
Agreement") pursuant to which the Principal Stockholders will agree to vote,
approve and adopt this Agreement and to take certain other actions in
furtherance of the consummation of the Merger upon the terms and subject to the
conditions set forth in the Stockholder Agreement;
WHEREAS, for Federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code") and that this Agreement
constitutes a plan of reorganization; and
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agree ments in connection with the
Merger and also to prescribe various conditions to the Merger.
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NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties hereto agree
as follows:
ARTICLE I
The Merger
SECTION 1.01. The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the General Corporation Law
of the State of Delaware (the "DGCL"), 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 DGCL.
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 (the "Closing
Date"), which shall be no later than the second business day after satisfaction
or 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 waiver of those conditions), at the offices of Cravath, Swaine &
▇▇▇▇▇, Worldwide Plaza, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇, unless another
date or place is agreed to in writing by the parties hereto.
SECTION 1.03. Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on the Closing Date, the parties shall file a
certificate of merger (the "Certificate of Merger") executed in accordance with
the relevant provisions of the DGCL and, as soon as practicable on or after the
Closing Date, shall make all other filings or recordings required under the
DGCL. The Merger shall become effective at such time as the Certificate of
Merger is duly filed with the Secretary of State of the State of Delaware, or at
such other time as Parent and the Company shall agree should be specified in
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the Certificate 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 259 of the DGCL.
SECTION 1.05. Certificate of Incorporation and By-laws. (a) The
Certificate of Incorporation of the Surviving Corporation shall be amended at
the Effective Time to be in the form of Exhibit A and, as so amended, such
Certificate of Incorporation shall be the Certificate 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 suc cessors
are duly elected and qualified, as the case may be.
SECTION 1.07. Officers. The officers of Sub 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.
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock. As of 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 Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
capital stock of Sub shall be
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converted into and become one validly issued, fully paid and
nonassessable share of common stock, par value $0.01 per share, of the
Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent- Owned Stock. Each
share of Company Common Stock that is owned by the Company, Parent or
Sub shall automatically be canceled and retired and shall cease to
exist, and no Parent Common Stock or other 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 that number of validly issued, fully paid and
nonassessable shares of Parent Common Stock equal to the Exchange Ratio
(the "Merger Consideration"). The "Exchange Ratio" means the quotient
obtained by dividing $2.72 by the Average Closing Price and rounding to
the nearest 1/10,000. The "Average Closing Price" shall be an amount
equal to the average per share closing price of Parent Common Stock, as
reported on the New York Stock Exchange, Inc. (the "NYSE") Composite
Transactions Tape (as reported by The Wall Street Journal (Northeast
edition), or, if not reported thereby, any other authoritative source)
(the "NYSE Composite Transactions Tape") for the 20 trading days ending
with the second trading day immediately preceding the Closing Date. As
of the Effective Time, all such shares of Company Common Stock shall no
longer be outstanding and shall automatically be canceled and retired
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 to which such holder
is entitled pursuant to Section 2.02(c) and any cash in lieu of
fractional shares of Parent Common Stock to be issued or paid in
consideration therefor upon surrender of such Certificate in accordance
with Section 2.02(e), without interest. Notwithstanding the foregoing,
if
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between the date of this Agreement and the Effective Time 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, the Exchange Ratio shall be appropriately
adjusted to reflect such stock dividend, subdivision, reclassifi cation,
recapitalization, split, combination, exchange of shares or similar
transaction.
SECTION 2.02. Exchange of Certificates. (a) Exchange Agent. As of the
Effective Time, Parent shall deposit with First Chicago Trust Company of New
York or such other bank or trust company of similar size as may be designated by
Parent (the "Exchange Agent"), for the benefit of the holders of shares of
Company Common Stock, for exchange in accordance with this Article II, through
the Exchange Agent, certificates representing the shares of Parent Common Stock
issuable pursuant to Section 2.01 in exchange for outstanding shares of Company
Common Stock (such shares of Parent Common Stock, together with any dividends or
distributions with respect thereto with a record date after the Effective Time
and any cash payments in lieu of any fractional shares of Parent Common Stock,
being hereinafter referred to as the "Exchange Fund"). Subject to Section
2.02(f), the Exchange Agent shall, pursuant to irrevocable instructions, deliver
the Parent Common Stock contemplated to be issued pursuant to Section 2.01 out
of the Exchange Fund. Except as contemplated by this Article II, the Exchange
Fund shall not be used for any other purpose.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, but in any event within 10 business days thereafter, Parent
shall cause the Exchange Agent to mail to each holder of record of a Certificate
whose shares were converted into the right to receive the Merger Consideration
pursuant to Section 2.01(c), (i) a letter of transmittal (which shall be in
customary form and shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent) and (ii) instructions for use in
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surrendering the Certificates in exchange for certificates representing the
Merger Consideration and cash in lieu of any fractional shares. Upon surrender
of a Certificate for cancellation to the Exchange Agent, together with such
letter of transmittal, duly executed, and such other documents as may reasonably
be required by the Exchange Agent, the holder of such Certificate shall be
entitled to receive in exchange therefor a certificate representing that number
of whole shares of Parent Common Stock which such holder has the right to
receive pursuant to the provisions of this Article II after taking into account
all the shares of Company Common Stock then held by such holder under all such
Certificates so surrendered, cash in lieu of fractional shares of Parent Common
Stock to which such holder is entitled pursuant to Section 2.02(e) and any
dividends or other distributions to which such holder is entitled pursuant to
Section 2.02(c), and the Certificate 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, a certificate representing
the proper number of shares of Parent Common Stock, cash in lieu of fractional
shares of Parent Common Stock to which such holder is entitled pursuant to
Section 2.02(e) and any dividends or other distributions to which such holder is
entitled pursuant to Section 2.02(c), may be issued to a person other than the
person in whose name the Certificate so surrendered is registered, if, upon
presentation to the Exchange Agent, such Certificate shall be properly endorsed
or otherwise be in proper form for transfer and the person requesting such
issuance shall pay any transfer or other taxes required by reason of the
issuance of shares of Parent Common Stock to a person other than the registered
holder of such Certificate or establish to the reasonable satisfaction of Parent
that such tax has been paid or is 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 to
which such holder is entitled pursuant to Section 2.02(c) and cash in lieu of
any fractional shares of Parent Common Stock as contemplated by Section 2.02(e).
No interest will be paid or will accrue on any cash payable to holders of
Certificates pursuant to Section 2.02(c) or 2.02(e).
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(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 represented thereby, and no
cash payment in lieu of fractional shares shall be paid to any such holder
pursuant to Section 2.02(e) until the holder of record of such Certificate shall
surrender such Certificate in accordance with this Article II. Following
surrender of any such 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 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 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
(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. All shares of
Parent Common Stock issued upon the surrender for exchange of Certificates in
accordance with the terms of this Article II (including any cash paid pursuant
to Section 2.02(c) or 2.02(e)) shall be deemed to have been issued (and paid) in
full satisfaction of all rights pertaining to the shares of Company Common Stock
previously represented by such Certificates, and there shall be no further
registration of transfers on the stock 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,
Certificates are presented to the Surviving Corporation or the Exchange Agent
for any reason, they shall be canceled and exchanged 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 dividend or distribution of Parent shall
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relate to such fractional share interests and such fractional share interests
will not entitle the owner thereof to vote or to any rights of a stockholder of
Parent.
(ii) In lieu of such fractional share interests, Parent shall pay to
each former holder of Company Common Stock an amount in cash equal to the
product obtained by multiplying (A) the fractional share interest to which such
former holder (after taking into account all shares of Company Common Stock held
at the Effective Time by such holder) would otherwise be entitled by (B) the per
share closing price of Parent Common Stock on the Closing Date, as such price is
reported on the NYSE Composite Transactions Tape.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund that
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 Merger Consideration, any cash in lieu of fractional shares
of Parent Common Stock and any dividends or distributions with respect to Parent
Common Stock in accordance with this Article II. If any Certificates shall not
have been surrendered prior to three years after the Effective Time (or
immediately prior to such earlier date on which any Merger Consideration would
otherwise escheat to or became the property of any Governmental Entity), any
such Merger Consideration in respect thereof 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.
(g) No Liability. None of Parent, Sub, the Company or the Exchange Agent
shall be liable to any person in respect of any shares of Parent Common Stock
(or dividends or distributions with respect thereto) or cash in lieu of
fractional shares of Parent Common Stock or cash from the Exchange Fund, in each
case delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
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(h) Investment of Exchange Fund. The Exchange Agent shall invest any
cash included in the Exchange Fund, as directed by Parent, on a daily basis. Any
interest and other income resulting from such investments shall be paid to
Parent.
(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 will issue in exchange for such
lost, stolen or destroyed Certificate the Merger Consideration and any cash in
lieu of fractional shares and unpaid dividends and distributions on shares of
Parent Common Stock deliverable in respect thereof, in each case pursuant to
this Agreement.
(j) Withholding Rights. The Exchange Agent shall be entitled to deduct
and withhold from the consideration otherwise payable to any holder of Company
Common Stock pursuant to this Agreement such amounts as may be required to be
deducted and withheld with respect to the making of such payment under the Code,
or under 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, the
Exchange Agent will be treated as though it withheld an appropriate amount of
the type of consideration otherwise payable pursuant to this Agreement to any
holder of Company Common Stock, sold such consideration for an amount of cash
equal to the fair market value of such consideration at the time of such deemed
sale and paid such cash proceeds to the appropriate taxing authority.
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of the Company. Except as
(i) set forth on the disclosure schedule (with specific reference to the
particular subsection of this Agreement to which the information set
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forth in such disclosure schedule relates; provided, however, that to the extent
it is readily apparent on the face of such exception that such exception also
relates to another subsection of this Section 3.01, each such other subsection
shall also be qualified by such exception) delivered by the Company to Parent
prior to the execution of this Agreement (the "Company Disclosure Schedule") or
(ii) described in any Company SEC Document filed and publicly available at least
three business days prior to the date of this Agreement, the Company represents
and warrants to Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. The Company is a
corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware 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
name and to own, lease or otherwise hold and operate its properties and
other assets and to carry on its business as presently conducted, except
where the failure to have such governmental licenses, permits,
authorizations or approvals, individually or in the aggregate, has not
had and could not reasonably be expected to have a Material Adverse
Effect. The Company is duly qualified or licensed to do business and is
in good standing in each jurisdiction in which the nature of its
business or the ownership, leasing or operation of its properties or
other assets makes such qualification or licensing necessary, other than
in such jurisdictions where the failure to be so qualified or licensed
individually or in the aggregate has not had and could not reasonably be
expected to have a Material Adverse Effect. The Company has delivered to
Parent prior to the execution of this Agreement true and correct copies
of its Restated Certificate of Incorporation (the "Company Certificate")
and Amended and Restated By-laws (the "Company By-laws"), in each case
as amended through the date hereof.
(b) Subsidiaries. The Company does not own any capital stock or
other ownership interest in any person other than short-term investments
that constitute cash equivalents.
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(c) Capital Structure. The authorized capital stock of the
Company consists of 100,000,000 shares of Company Common Stock and
20,000,000 shares of preferred stock, par value $.001 per share
("Preferred Stock"). At the close of business on January 23, 2001, (i)
26,379,821 shares of Company Common Stock were issued and outstanding,
(ii) 42,666 shares of Company Common Stock were held by the Company in
its treasury, (iii) 10,793,615 shares of Company Common Stock were
reserved for issuance pursuant to the Company Stock Plans (of which
6,415,233 shares of Company Common Stock were subject to outstanding
options to purchase shares of Company Common Stock granted under the
Company Stock Plans ("Stock Plan Options")), (iv) 1,109,530 shares of
Company Common Stock were reserved for issuance pursuant to options to
purchase shares of Company Common Stock outside of the Company Stock
Plans ("Non-Plan Stock Options" and, together with the Stock Plan
Options, "Stock Options") (all of which shares of Company Common Stock
are subject to outstanding Non- Plan Stock Options), (v) 1,652,393
shares of Company Common Stock were reserved for issuance upon
conversion of the Company's 7.25% Convertible Subordinated Notes due
2004 (the "Convertible Notes") (after giving effect to any conversion or
redemption prior to January 23, 2001), (vi) no shares of Preferred Stock
were issued or outstanding and (vii) 50,000 shares of Series A Junior
Participating Preferred Stock were reserved for issuance in connection
with the Rights issued pursuant to the Rights Agreement. Except as set
forth above in this Section 3.01(c), at the close of business on January
23, 2001, no shares of capital stock or other voting securities of the
Company were issued, reserved for issuance or outstanding. Except as set
forth above in this Section 3.01(c), there are no outstanding stock
appreciation rights, "phantom" stock rights, rights to receive shares of
Company Common Stock on a deferred basis or other similar rights,
granted under the Company Stock Plans or otherwise. Section 3.01(c) of
the Company Disclosure Schedule sets forth a complete and accurate list,
as of January 23, 2001, of all outstanding Stock Options or other rights
to purchase or receive Company Common Stock granted under the Company
Stock Plans or otherwise, the number of shares of Company Common Stock
subject thereto, expiration
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dates and exercise prices thereof and the names of the holders thereof.
All outstanding shares of capital stock of the Company are, and all
shares which may be issued pursuant to the Company Stock Plans will be,
when issued in accordance with the terms thereof, duly authorized,
validly issued, fully paid and nonassessable and not subject to
preemptive rights. Except as set forth above in this Section 3.01(c),
there are no issued or outstanding 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 stockholders of the Company may vote. Except as set
forth above in this Section 3.01(c) or resulting from the issuance of
shares of Company Common Stock pursuant to the exercise of Stock Options
outstanding as of the date hereof or purchase rights held by
participants under the Company ESPP outstanding as of the date hereof or
in accordance with Section 5.04(b), (x) there are not issued, reserved
for issuance or outstanding (A) any shares of capital stock or other
voting securities of the Company, (B) any securities of the Company
convertible into or exchangeable or exercisable for shares of capital
stock or voting securities of the Company, (C) any warrants, calls,
options or other rights to acquire from the Company, and no obligation
of the Company to issue, any capital stock, voting securities or
securities convertible into or exchangeable or exercisable for capital
stock or voting securities of the Company and (y) there are not any
outstanding obligations of the Company 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. The Company
is not a party to any voting agreement with respect to the voting of any
such securities.
(d) Authority; Noncontravention. The Company has the requisite
corporate power and authority to execute and deliver this Agreement and,
subject to receipt of the Stockholder 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
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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 hereby, subject, in the case of the Merger, to receipt of
the Stockholder Approval and the filing and acceptance for record of the
Certificate of Merger as required by the DGCL. 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.
The Board of Directors of the Company, at a meeting duly called and held
at which all directors of the Company were present, duly and unanimously
adopted resolutions (i) approving and declaring advisable this
Agreement, the Merger and the other transactions contemplated hereby,
(ii) declaring that it is in the best interests of the stockholders of
the Company that the Company enter into this Agreement and consummate
the Merger on the terms and subject to the conditions set forth in this
Agreement, (iii) directing that this Agreement be submitted to a vote at
a meeting of the stockholders of the Company and (iv) recommending that
the stockholders of the Company adopt this Agreement. The execution and
delivery of this Agreement do not, and the consummation of the Merger
and the other transactions contemplated by this Agreement and compliance
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 termination,
cancellation or acceleration of any obligation or the loss of a material
benefit under, or result in the creation of any pledge, claim, lien,
charge, encumbrance or security interest of any kind or nature
whatsoever (collectively, "Liens") in or upon any of the properties or
assets of the Company under, (x) the Company Certificate or Company
By-laws, (y) any loan or credit agreement, bond, debenture, note,
mortgage, indenture, lease or other contract, agreement, obligation,
commitment, arrangement, understanding, instrument, permit or license,
whether oral or written, to which the Company is a party or any
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of its properties or other assets is subject or (z) subject to
the governmental filings and other matters referred to in the following
sentence, any (A) statute, law, ordinance, rule or regulation or (B)
order, writ, injunction, decree, judgment or stipulation, in each case
applicable to the Company or its properties or other assets, other than,
in the case of clauses (y) and (z), any such conflicts, violations,
breaches, defaults, rights, losses or Liens that individually or in the
aggregate have not had and could not reasonably be expected to have a
Material Adverse Effect. 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 non-governmental self-regulatory agency, commission or
authority (each, a "Governmental Entity") is required by or with respect
to the Company in connection with the execution and delivery of this
Agreement by the Company or the consummation by the Company of the
Merger or the other transactions contemplated by this Agreement, except
for (1) the filing of a premerger notification and report form by the
Company under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as amended (together with the rules and regulations promulgated
thereunder, the "HSR Act"), (2) the filing with the Securities and
Exchange Commission (the "SEC") of (A) a proxy statement relating to the
adoption by the stockholders of the Company of this Agreement (as
amended or supplemented from time to time, the "Proxy Statement") and
(B) any such reports under Section 13(a), 13(d), 15(d) or 16(a) of the
Securities Exchange Act of 1934, as amended (together with 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) applicable requirements, if any, of
(A) the Securities Act of 1933, as amended (together with the rules and
regulations promulgated thereunder, the "Securities Act"), (B) state
securities or "blue sky" laws and (C) the rules and regulations of The
Nasdaq Stock Market, Inc., (4) the filing and recordation of the
Certificate of Merger with the Secretary of State of the State of
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15
Delaware and appropriate documents with the relevant authorities of
other states in which the Company is qualified to do business and (5)
such other consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made
individually or in the aggregate has not had and could not reasonably be
expected to have a Material Adverse Effect.
(e) Company SEC Documents. The Company has filed all reports,
schedules, forms, statements and other documents (including, in all
material respects, exhibits and other information incorporated therein)
with the SEC required to be filed by the Company since January 1, 1998
(the "Company SEC Documents"). As of their respective dates, the Company
SEC Documents complied in all material respects with the requirements of
the Securities Act or the Exchange Act, as the case may be, applicable
to such Company SEC Documents, and except to the extent that information
contained in any Company SEC Document has been revised, superseded or
updated 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 a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The financial statements
(including, in each case, any related notes thereto) of the Company
included in the Company SEC Documents comply as to form in all material
respects with applicable accounting requirements and the published rules
and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles ("GAAP")
(except, in the case of unaudited statements, as permitted by Form 10-Q
of the SEC) applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly present, in
all material respects, the financial position of the Company as of the
dates thereof and the results of its operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to
normal and recurring year-end audit adjustments). Except as set forth in
the most recent financial statements included in the
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16
Company SEC Documents filed by the Company and publicly available prior
to the date of this Agreement (the "Filed Company SEC Documents"), the
Company has no liabilities or obligations (whether accrued, absolute,
contingent or otherwise) (i) of a nature required to be disclosed on a
balance sheet or in the related notes to financial statements prepared
in accordance with GAAP or (ii) which, individually or in the aggregate,
have had or could reasonably be expected to have a Material Adverse
Effect.
(f) Information Supplied. None of the information supplied or to
be supplied by 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 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, at
any time it is amended or supplemented 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 in order to make the statements therein, in the
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
Company's stockholders and at the time of the Stockholders' 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 the light of the circumstances under
which they are made, not misleading. The Proxy Statement will comply as
to form in all material respects with the requirements of the Exchange
Act. Notwithstanding the foregoing, the Company makes no representation
or warranty with respect to statements made or incorporated by reference
in the Form S-4 or the Proxy Statement based on information supplied by
Parent or Sub specifically for inclusion or incorporation by reference
in the Form S-4 or the Proxy Statement, as the case may be.
(g) Absence of Certain Changes or Events. Except for liabilities
incurred in connection with this
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17
Agreement and except as disclosed in the Filed Company SEC Documents,
since the date of the most recent financial statements included in the
Filed Company SEC Documents, the Company has conducted its business only
in the ordinary course consistent with past practice, and there has not
been (i) any Material Adverse Change, (ii) any declaration, setting
aside or payment of any dividend or other distribution (whether in cash,
stock or property) with respect to any of the Company's capital stock,
(iii) any split, combination or reclassification of any of the Company's
capital stock 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 its capital stock, (iv) (A) any granting by the Company to any
current or former director, officer or employee of the Company of any
increase in compensation, bonus or other benefits, except for normal
increases in cash compensation in the ordinary course of business
consistent with past practice or as was required under employment
agreements in effect as of the date of the most recent audited financial
statements included in the Filed Company SEC Documents, (B) any granting
by the Company to any current or former director, officer or employee of
any increase in severance or termination pay, except as was required
under any employment, severance or termination agreements in effect as
of the date of the most recent financial statements included in the
Filed Company SEC Documents, (C) any entry by the Company into, or any
amendment of, (1) any employment, deferred compensation, consulting,
severance, termination or indemnification agreement, arrangement or
understanding with any current or former director, officer or employee
or (2) any agreement with any current or former director, officer or
employee 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 agreements
under this clause (C), collectively, "Benefit Agreements") or (D) any
amendment to, or modification of, any Stock Option, (v) 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
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a change in GAAP, or (vi) any material tax election or any settlement or
compromise of any material income tax liability.
(h) Litigation. Except as disclosed in the Filed Company SEC
Documents, there is no suit, action or proceeding pending or, to the
Knowledge of the Company, threatened against or affecting the Company
that individually or in the aggregate has had or could reasonably be
expected to have a Material Adverse Effect, nor is there any judgment,
decree, injunction, rule 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 that
individually or in the aggregate has had or could reasonably be expected
to have a Material Adverse Effect.
(i) Contracts. The Company is not a party to, and none of its
properties or other assets are subject to, any contract or agreement
that are of a nature required to be filed as an exhibit to a report or
filing under the Securities Act or the Exchange Act. The Company is not
in violation of or in default under (nor to the Knowledge of the Company
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
under) any loan or credit agreement, bond, debenture, note, mortgage,
indenture, lease or other contract, agreement, obligation, commitment,
arrangement, understanding, instrument, permit or license, whether oral
or written, to which the Company 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 could not
reasonably be expected to have a Material Adverse Effect. The Company
has not entered into any contract, agreement, obligation, commitment,
arrangement or understanding with any Affiliate of the Company that is
currently in effect other than any such agreements, obligations,
commitments, arrangements or understandings that, individually, has
aggregate future payment or other obligations of no greater than $50,000
and, in the aggregate, have future payment or other obligations of no
greater than $100,000 and other than
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agreements, obligations, commitments, arrangements or understandings
that are disclosed in the Filed Company SEC Documents. The Company is
not a party to or otherwise bound by any agreement or covenant not to
compete or by any agreement or covenant restricting in any material
respect the development, marketing or distribution of the Company's
products or services.
(j) Compliance with Laws. (i) The Company is in compliance with
all statutes, laws, ordinances, rules, regulations, judgments, orders
and decrees of any Governmental Entity applicable to it, its properties
or other assets or its business or operations (collectively, "Legal
Provisions"), except for instances of noncompliance or possible
noncompliance that individually or in the aggregate have not had and
could not reasonably be expected to have a Material Adverse Effect. The
Company has in effect all approvals, authorizations, certificates,
filings, franchises, licenses, notices, permits and rights of or with
all Governmental Entities, including all authorizations under
Environmental Laws (collectively, "Permits"), necessary for it to own,
lease or operate its properties and assets and to carry on its business
and operations as presently conducted, except for failures to have in
effect such Permits that individually or in the aggregate have not had
and could not reasonably be expected to have a Material Adverse Effect.
There has occurred no default under, or violation of, any such Permit,
except individually or in the aggregate as has not had and could not
reasonably be expected to have a Material Adverse Effect. The Merger, in
and of itself, would not cause the revocation or cancellation of any
such Permit that individually or in the aggregate could reasonably be
expected to have a Material Adverse Effect. No action, demand,
requirement or investigation by any Governmental Entity and no suit,
action or proceeding by any other person, in each case with respect to
the Company or any of its properties or other assets under any Legal
Provision, is pending or, to the Knowledge of the Company, threatened,
other than, in each case, those the outcome of which individually or in
the aggregate has not had and could not reasonably be expected to have a
Material Adverse Effect.
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(ii) Except for those matters disclosed in the Filed Company SEC
Documents or those matters that individually or in the aggregate have
not had and could not reasonably be expected to have a Material Adverse
Effect: (A) the Company is, and has been, in compliance with all
applicable Environmental Laws; (B) during the period of ownership or
operation by the Company of any of its currently or previously owned,
leased or operated properties, there have been no Releases or, to the
Knowledge of the Company, threatened Releases of Hazardous Material in,
on, under or affecting such properties or any surrounding sites; (C) to
the Knowledge of the Company, prior to the period of ownership or
operation by the Company of any of its currently or previously owned,
leased or operated properties, no Hazardous Material was generated,
treated, stored, disposed of, used, handled or manufactured at, or
transported or disposed of at or from, such properties, and there were
no Releases of Hazardous Material in, on, under or affecting any such
properties or any surrounding sites; (D) there is no investigation,
suit, claim, action or proceeding pending, or to the Knowledge of the
Company, threatened against or affecting the Company, relating to or
arising under Environmental Laws, and the Company has not received any
notice of, or entered into or assumed by contract or operation of law or
otherwise, any obligation, liability, order, settlement, judgment,
injunction or decree relating to or arising under Environmental Laws;
and (E) to the Knowledge of the Company, there are no facts,
circumstances or conditions which could reasonably be expected to form
the basis for a suit, investigation, claim, action or proceeding against
or affecting the Company relating to or arising under Environmental
Laws. The term "Environmental Laws" means any applicable and binding
Federal, state, local or foreign laws (including the common law), rules,
regulations, codes, ordinances, orders, decrees, judgments, injunctions,
notices or Permits relating to the environment, preservation or
reclamation of natural resources, the presence, management, Release or
threat of Release of, or exposure to, Hazardous Materials, or to human
health and safety. The term "Hazardous Material" means (A) petroleum
products and byproducts, asbestos, urea
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21
formaldehyde foam insulation, asbestos or asbestos- containing
materials, medical or infectious wastes, polychlorinated biphenyls,
radon gas, chlorofluorocarbons and all other ozone-depleting substances
or (B) any chemical, material, substance, waste, pollutant or
contaminant that is prohibited, limited or regulated by or pursuant to
any Environmental Law. The term "Release" shall be defined as in 42
U.S.C. Section 9601(22).
(k) Absence of Changes in Benefit Plans; Labor Relations. Except
as disclosed in the Filed Company SEC Documents, since the date of the
most recent financial statements included in the Filed Company SEC
Documents, there has not been any adoption or amendment (or, in the case
of any non-stock-based Benefit Plans, any amendment in any material
respect) by the Company of any collective bargaining agreement or any
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, arrangement or understanding (whether or not legally
binding) maintained, contributed to or required to be maintained or
contributed to by the Company 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"), in each case providing benefits to any current or former
officer, director or employee of the Company (collectively, the "Benefit
Plans"), or any material change in any actuarial or other assumption
used to calculate funding obligations with respect to any Pension Plans,
or any material change in the manner in which contributions to any
Pension Plans are made or the basis on which such contributions are
determined. Except for any Benefit Agreements that, individually, has
aggregate future payment or other obligations of no greater than $50,000
and, in the aggregate, have future payment or other obligations of no
greater than $100,000 and except as disclosed in the Filed Company
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SEC Documents, there exist no currently binding Benefit Agreements.
There are no collective bargaining or other labor union agreements to
which the Company is a party or by which it is bound. Since January 1,
1998, the Company has not encountered any labor union organizing
activity or had any actual or threatened employee strikes, work
stoppages, slowdowns or lockouts that individually or in the aggregate
has had or could reasonably be expected to have a Material Adverse
Effect.
(l) ERISA Compliance. (i) Section 3.01(l)(i) of the Company
Disclosure Schedule contains a complete and accurate list of each
"employee pension benefit plan" (as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
(sometimes referred to herein as a "Pension Plan"), "employee welfare
benefit plan" (as defined in Section 3(1) of ERISA) and all other
Benefit Plans. The Company has made available to Parent true, complete
and correct copies of (A) each Benefit Plan (or, in the case of any
unwritten Benefit Plans, descriptions thereof), (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 Benefit Plan (if any
such report was required), (C) the most recent summary plan description
for each Benefit Plan for which such summary plan description is
required and (D) each trust agreement and insurance or group annuity
contract relating to any Benefit Plan. To the Knowledge of the Company,
each Benefit Plan has been administered in all material respects in
accordance with its terms. The Benefit Plans have been administered in
compliance with the applicable provisions of ERISA, the Code and all
other applicable laws, including laws of foreign jurisdictions, except
for instances of noncompliance or possible noncompliance that
individually or in the aggregate have not had and could not reasonably
be expected to have a Material Adverse Effect.
(ii) All Pension Plans intended to be tax-qualified have been
the subject of determination letters from the IRS to the effect that
such Pension Plans are qualified and exempt from United States
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23
Federal income taxes under Sections 401(a) and 501(a), respectively, of
the Code; no such determination letter has been revoked (or, to the
Knowledge of the Company, has revocation been threatened) nor has any
event occurred since the date of the most recent determination letter or
application therefor relating to any such Pension Plan that would
adversely affect the qualification of such Pension Plan or materially
increase the costs relating thereto or require security under Section
307 of ERISA. All Pension Plans maintained or contributed to by the
Company required to have been approved by any foreign Governmental
Entity have been so approved; no such approval has been revoked (or, to
the Knowledge of the Company, has revocation been threatened) nor has
any event occurred since the date of the most recent approval or
application therefor relating to any such Pension Plan that would
materially affect any such approval relating thereto or materially
increase the costs relating thereto. The Company has delivered to Parent
a true and complete copy of the most recent determination letter
received with respect to each Pension Plan, as well as a true and
complete copy of each pending application for a determination letter, if
any. The Company has also provided to Parent a true and complete list of
all Pension Plan amendments as to which a favorable determination letter
has not yet been received.
(iii) Neither the Company nor any Commonly Controlled Entity has
(A) maintained, contributed or been obligated to contribute to any
Benefit Plan that is subject to Title IV of ERISA or (B) has any
unsatisfied liability under Title IV of ERISA.
(iv) All reports, returns and similar documents with respect to
all Benefit Plans required to be filed with any Governmental Entity or
distributed to any Benefit Plan participant have been duly and timely
filed or distributed, except for failures to file or distribute that
individually or in the aggregate have not had and could not reasonably
be expected to have a Material Adverse Effect. The Company has received
no notice of, and to the Knowledge of the Company, there are no
investigations by any Governmental Entity with
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respect to, termination proceedings or other claims (except claims for
benefits payable in the normal operation of the Benefit Plans), suits or
proceedings against or involving any Benefit Plan or asserting any
rights or claims to benefits under any Benefit Plan that could give rise
to any material liability, and, to the Knowledge of the Company, there
are not any facts that individually or in the aggregate have had or
could reasonably be expected to have a Material Adverse Effect.
(v) All contributions, premiums and benefit payments under or in
connection with the Benefit Plans that are required to have been made as
of the date hereof in accordance with the terms of the 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. No 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.
(vi) With respect to each Benefit Plan, (A) there has not
occurred any prohibited transaction in which the Company or any of its
employees has engaged that could subject the Company or any of its
employees, or, to the Knowledge of the Company, a trustee, administrator
or other fiduciary of any trust created under any Benefit Plan to the
tax or penalty on prohibited transactions imposed by Section 4975 of
ERISA or the sanctions imposed under Title I of ERISA and (B) neither
the Company nor, to the Knowledge of the Company, any trustee,
administrator or other fiduciary of any Benefit Plan nor any agent of
any of the foregoing has engaged in any transaction or acted in a manner
that could, or failed to act so as to, subject the Company or, to the
Knowledge of the Company, any trustee, administrator or other fiduciary
to any liability for breach of fiduciary duty under ERISA or any other
applicable law. No Benefit Plan or related trust has been terminated,
nor has there been any "reportable event" (as that term is defined in
Section 4043 of ERISA) for which the 30-day reporting requirement has
not been waived with respect to any
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Benefit Plan during the last five years, and no notice of a reportable
event will be required to be filed in connection with the transactions
contemplated hereby.
(vii) Section 3.01(l)(vii) of the Company Disclosure Schedule
discloses whether each Benefit Plan that is an employee welfare benefit
plan is (A) unfunded, (B) funded through a "welfare benefit fund", as
such term is defined in Section 419(e) of the Code, or other funding
mechanism or (C) insured. Each such employee welfare benefit plan may be
amended or terminated (including with respect to benefits provided to
retirees and other former employees) without material liability to the
Company at any time after the Effective Time. The Company complies in
all material respects with the applicable requirements of Section
4980B(f) of the Code with respect to each Benefit Plan that is a group
health plan, as such term is defined in Section 5000(b)(1) of the Code.
The Company does not have any material obligations for retiree health or
life insurance benefits under any Benefit Plan.
(viii) None of the execution and delivery of this Agreement, the
obtaining of the Stockholder Approval or the consummation of the Merger
or any other transaction contemplated by this Agreement (including as a
result of any termination of employment during a fixed period following
the Effective Time) will (A) entitle any current or former director,
officer or employee of the Company 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 Benefit Plan or (C) result in any
breach or violation of, or a default under, any Benefit Plan. The total
amount of all payments and the fair market value of all non-cash
benefits that may become payable or provided to any employee, officer,
director or consultant of the Company under the Benefit Agreements
(assuming for such purpose that such individuals' employment were
terminated immediately following the Effective Time) will not exceed the
amount set forth in
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Section 3.01(l)(viii) of the Company Disclosure Schedule.
(ix) The Company does not have any material liability or
obligations, including under or on account of a Benefit Plan, arising
out of the hiring of persons to provide services to the Company and
treating such persons as consultants or independent contractors and not
as employees of the Company.
(m) No Excess Parachute Payments. Other than payments or
benefits that may be made to the persons listed in Section 3.01(m) of
the Company Disclosure Schedule ("Primary Company Executives"), no
amount or other entitlement or economic benefit that could be received
(whether in cash or property or the vesting of property) by or for the
benefit of any officer, director or employee of the Company or any of
its Affiliates who is a "disqualified individual" (as such term is
defined in proposed Treasury Regulation Section 1.280G-1) under any
Benefit Plan, Benefit Agreement or otherwise would be characterized as
an "excess parachute payment" (as such term is defined in Section
280G(b)(1) of the Code). No such person is entitled to receive any
additional payment from the Company, the Surviving Corporation or any
other person (a "Parachute Gross Up Payment") in the event that the
excise tax required by Section 4999(a) of the Code is imposed on such
person. The Board of Directors of the Company has not granted to any
officer, director or employee of the Company any right to receive any
Parachute Gross Up Payment. Section 3.01(m) of the Company Disclosure
Schedule sets forth (i) the "base amount" (as such term is defined in
Section 280G(b)(3) of the Code) for each Primary Company Executive and
each other disqualified individual (defined as set forth above) whose
Stock Options will vest pursuant to their terms in connection with this
Agreement or the Merger and (ii) the estimated maximum amount that could
be paid or provided to each Primary Company Executive as a result of the
Merger or the other transactions contemplated by this Agreement
(including as a result of any termination of employment during a fixed
period following the Effective Time).
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(n) Taxes. The Company has timely filed all tax returns and
reports required to be filed by it, and all taxes required to be paid by
the Company have either been paid by it or are reflected in accordance
with GAAP as a reserve for taxes on the most recent financial statements
included in the Filed Company SEC Documents, and all such returns and
reports are complete and correct in all material respects (provided,
that no such return or report shall be considered to be incorrect or
incomplete on account of an amount of unpaid taxes for which a reserve
for taxes on the aforementioned financial statements has been
established), or requests for extensions to file such returns or reports
have been timely filed, granted and have not expired, except to the
extent that such failures to file, to pay or to have extensions granted
that remain in effect individually or in the aggregate have not had and
could not reasonably be expected to have a Material Adverse Effect, and
the most recent financial statements contained in the Filed Company SEC
Documents reflect an adequate reserve for all taxes payable by the
Company for all taxable periods and portions thereof through the date of
such financial statements. All taxes required to be withheld by the
Company have been withheld and have been (or will be) duly and timely
paid to the proper governmental authority. No deficiencies for any taxes
have been proposed, asserted or assessed against the Company, and no
requests for waivers of the time to assess any such taxes are pending.
The Federal income tax returns of the Company have not been examined by
the IRS. All assessments for material taxes due with respect to any
concluded litigation have been fully paid or have been adequately
reserved on the Company's financial statements in accordance with GAAP.
Neither the Company nor any of its Affiliates has taken or agreed to
take any action or knows of any fact or circumstance that is reasonably
likely to prevent the Merger from qualifying as a reorganization within
the meaning of Section 368(a) of the Code. The Benefit Plans and other
Company employee compensation arrangements in effect as of the date of
this Agreement have been designed so that the disallowance of a
deduction under Section 162(m) of the Code for employee remuneration
will not apply to any material amounts paid or payable
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by the Company under any such plan or arrangement and, to the Knowledge
of the Company, no fact or circumstance exists that is reasonably likely
to cause such disallowance to apply to any such amounts. The Company has
not constituted either a "distributing corporation" or a "controlled
corporation" (within the meaning of Section 355(a)(1)(A) of the Code) in
a distribution of stock qualifying for tax-free treatment under Section
355 of the Code (x) in the two years prior to the date of this Agreement
or (y) in a distribution which could otherwise constitute part of a
"plan" or "series of related transactions" (within the meaning of
Section 355(e) of the Code) in conjunction with the Merger. As used in
this Agreement, "taxes" shall include all Federal, state and local,
domestic and foreign, income, property, sales, excise and other taxes,
tariffs or governmental charges of any nature whatsoever, including any
interest, penalties or additions with respect thereto, imposed by any
Governmental Entity or any obligation to pay taxes imposed on any entity
for which the Company is liable as a result of any indemnification
provision or other contractual obligation.
(o) Title to Properties. (i) The Company has good and marketable
title to, or valid leasehold interests in, all its material properties
and assets except for such as are no longer used or useful in the
conduct of its businesses or 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 would not materially interfere with its ability to conduct
its business as presently conducted and as currently proposed by
management of the Company to be conducted. All such material assets and
properties, other than assets and properties in which the Company has a
leasehold interest, are free and clear of all Liens, except for Liens
that individually or in the aggregate would not materially interfere
with the ability of the Company to conduct its business as presently
conducted and as currently proposed by management of the Company to be
conducted.
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(ii) The Company has complied with the terms of all material
leases to which it is a party and under which it is in occupancy, and
all such leases are in full force and effect, except for such
noncompliance or failure to be in full force and effect that
individually or in the aggregate has not had and could not reasonably be
expected to have a Material Adverse Effect. The Company enjoys peaceful
and undisturbed possession under all such leases in all material
respects.
(p) Intellectual Property. (i) Subject to Section 3.01(p)(ii),
the Company owns, or is validly licensed or otherwise has the right to
use (without any obligation to make any fixed or contingent payments,
including royalty payments) all patents, patent applications,
trademarks, trademark rights, trade names, trade name rights, service
marks, service ▇▇▇▇ rights, copyrights, technical know-how and other
proprietary intellectual property rights and computer programs
(collectively, "Intellectual Property Rights") which are material to the
conduct of the business of the Company free and clear of all Liens.
(ii) No claims are pending or, to the Knowledge of the Company,
threatened that the Company is infringing (including with respect to the
manufacture, use or sale by the Company of its commercial products) the
rights of any person with regard to any Intellectual Property Right
which, individually or in the aggregate, have had or could reasonably be
expected to have a Material Adverse Effect. To the Knowledge of the
Company, no person or persons are infringing the rights of the Company
with respect to any Intellectual Property Right in a manner which,
individually or in the aggregate, has had or could reasonably be
expected to have a Material Adverse Effect.
(iii) No claims are pending or, to the Knowledge of the Company,
threatened with regard to the Company's ownership of any of its
Intellectual Property Rights which, individually or in the aggregate,
have had or could reasonably be expected to have a Material Adverse
Effect.
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(iv) Section 3.01(p)(iv) of the Company Disclosure Schedule sets
forth, as of the date hereof, a complete and accurate list of all
patents, registered trademarks and applications therefor owned by or
licensed to the Company. All patents and patent applications listed in
Section 3.01(p)(iv) of the Company Disclosure Schedule are owned by the
Company free and clear of all Liens. The patent applications listed in
Section 3.01(p)(iv) of the Company Disclosure Schedule are pending and
have not been abandoned, and have been and continue to be timely
prosecuted. All patents, registered trademarks and applications therefor
owned by or licensed to the Company have been duly registered and/or
filed with or issued by each appropriate Governmental Entity in the
jurisdiction indicated in Section 3.01(p)(iv) of the Company Disclosure
Schedule, all necessary affidavits of continuing use have been filed,
and all necessary maintenance fees have been timely paid to continue all
such rights in effect. None of the patents listed in Section 3.01(p)(iv)
of the Company Disclosure Schedule has expired or has been declared
invalid, in whole or in part, by any Governmental Entity. There are no
ongoing interferences, oppositions, reissues, reexaminations or other
proceedings involving any of the patents or patent applications listed
in Section 3.01(p)(iv) of the Company Disclosure Schedule, 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 as have not had or could not
reasonably be expected to have a Material Adverse Effect. To the
Knowledge of the Company, there are no published patents, patent
applications, articles or other prior art references that could affect
the validity of any patent listed in Section 3.01(p)(iv) of the Company
Disclosure Schedule. Each of the patents and patent applications listed
in Section 3.01(p)(iv) of the Company Disclosure Schedule properly
identifies each and every inventor of the claims thereof as determined
in accordance with the laws of the jurisdiction in which such patent is
issued or such patent application is pending. Each inventor named on the
patents and patent applications listed in Section 3.01(p)(iv) of the
Company Disclosure Schedule has executed an agreement assigning his, her
or its entire right, title and interest in and to such patent or patent
application, and the inventions embodied and claimed therein, to the
Company. Each inventor of the patents and patent applications listed in
Section 3.01(p)(iv) of the Company Disclosure Schedule has executed an
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agreement with the Company obligating such inventor to assign the entire
right, title and interest in and to such patent or patent application,
and inventions embodied and claimed therein, to the Company, and, to the
Knowledge of the Company, no such inventor has any contractual or other
obligation that would preclude any such assignment or otherwise conflict
with the obligations of such inventor to the Company under such
agreement with the Company.
(v) Section 3.01(p)(v) of the Company Disclosure Schedule sets
forth a complete and accurate list of all options, rights, licenses or
interests of any kind relating to Intellectual Property Rights (i)
granted to the Company (other than software licenses for generally
available software and except pursuant to employee proprietary
inventions agreements (or similar employee agreements), non-disclosure
agreements and consulting agreements entered into by the Company in the
ordinary course of business), or (ii) granted by the Company to any
other person.
(vi) No material trade secret of the Company has been published
or disclosed by the Company or, to the Knowledge of the Company, by any
other person to any person except pursuant to licenses or contracts
requiring such other persons to keep such trade secrets confidential.
(q) Voting Requirements. The affirmative vote of a majority of
the votes that holders of the outstanding shares of Company Common Stock
are entitled to vote at the Stockholders' Meeting or any adjournment or
postponement thereof to adopt this Agreement (the "Stockholder
Approval") is the only vote of the holders of any class or series of the
Company's capital stock necessary to adopt this Agreement and approve
the transactions contemplated hereby.
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(r) State Takeover Statutes. The Board of Directors of the
Company has unanimously approved the terms of this Agreement and the
Stockholder Agreement and the consummation of the Merger and the other
transactions contemplated by this Agreement and the Stockholder
Agreement, and such approval represents all the action necessary to
render inapplicable to this Agreement, the Stockholder Agreement, the
Merger and the other transactions contemplated by this Agreement and the
Stockholder Agreement, the provisions of Section 203 of the DGCL to the
extent, if any, such Section would otherwise be applicable to this
Agreement, the Stockholder Agreement, the Merger and the other
transactions contemplated by this Agreement and the Stockholder
Agreement. To the Knowledge of the Company, no other state takeover
statute or similar statute or regulation applies or purports to apply to
this Agreement, the Stockholder Agreement, the Merger or the other
transactions contemplated by this Agreement and the Stockholder
Agreement.
(s) Brokers. No broker, investment banker, financial advisor or
other person, other than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ & Co., 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 true and complete copies of all
agreements under which any such fees or expenses are payable and all
indemnification and other agreements related to the engagement of the
persons to whom such fees are payable. The fees and expenses of any
accountant, broker, financial advisor, legal counsel or other person
retained by the Company in connection with this Agreement or the
Stockholder Agreement or the transactions contemplated hereby or thereby
incurred or to be incurred by the Company will not exceed the fees and
expenses set forth in Section 3.01(s) of the Company Disclosure
Schedule.
(t) Opinion of Financial Advisor. The Company has received the
opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ & Co. dated the date hereof, to
the effect that,
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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 delivered to Parent.
(u) Development, Distribution, Marketing, Supply and
Manufacturing Agreements. Section 3.01(u) of the Company Disclosure
Schedule sets forth a complete and accurate list of all contracts or
agreements (whether or not in written form), to which the Company is a
party as of the date hereof or with respect to which the Company has any
ongoing obligations as of the date hereof, in each case relating to the
research, development, distribution, training, sale, license, marketing
and supply of components for, and manufacturing by third parties of, the
Company's products or products licensed by the Company, other than any
such agreements or contracts that, individually, has aggregate future
payment or other obligations of no greater than $75,000 and, in the
aggregate, have future payment or other obligations of no greater than
$150,000, none of which has a remaining term of greater than one year.
The Company has made available to Parent true and complete copies of all
such contracts.
(v) Rights Agreement. The Company has taken all actions
necessary to cause the Rights Agreement, dated as of April 25, 1996, as
amended, between the Company and Boston Equiserve Limited Partnership,
formerly The First National Bank of Boston, as rights agent (the "Rights
Agreement") to be amended to (i) render the Rights Agreement
inapplicable to this Agreement, the Stockholder Agreement, the Merger
and the other transactions contemplated by this Agreement and the
Stockholder Agreement, (ii) ensure that (y) 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 and (z) a
Distribution Date or a Shares Acquisition Date (as such terms are
defined in the Rights Agreement) does not occur, in either case of (y)
and (z), solely by reason of the execution of this Agreement or the
Stockholder Agreement or the consummation of the Merger or the other
transactions contemplated by this Agreement and
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the Stockholder Agreement and (iii) provide that the Final Expiration
Date (as defined in the Rights Agreement) shall occur immediately prior
to the Effective Time.
(w) Regulatory Compliance. (i) As to each product subject to the
Federal Food, Drug, and Cosmetic Act of 1938, as amended ("FDCA"), and
the regulations of the Federal Food and Drug Administration (the "FDA")
promulgated thereunder, or similar Legal Provisions in any foreign
jurisdiction (each such product, a "Medical Device") that is
manufactured, tested, distributed and/or marketed by the Company, such
Medical Device is being manufactured, tested, distributed and/or
marketed in compliance with all applicable requirements under FDCA, the
FDA regulations promulgated thereunder, and such 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 failures to be in
compliance which, individually or in the aggregate, have not had and
could not reasonably be expected to have a Material Adverse Effect. The
Company has not received any notice or other communication from 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 of the
Company's products or (B) otherwise alleging any violation of any Legal
Provision by the Company.
(ii) No Medical Devices have been recalled, withdrawn, suspended
or discontinued by the Company in the United States or outside the
United States (whether voluntarily or otherwise), other than any such
recalls, withdrawals, suspensions or discontinuations that, individually
or in the aggregate, have not had and could not reasonably be expected
to have a Material Adverse Effect. No proceedings in the United States
and outside of the United States of which the Company has Knowledge
(whether completed or pending) seeking the recall, withdrawal,
suspension or seizure of any Medical Devices are pending against the
Company, nor have any such proceedings been pending at any prior time.
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(iii) Neither the Company nor any officer, employee nor, to the
Knowledge of the Company, agent of the Company, in each case acting on
behalf of the Company, 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 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 for any other Governmental Entity to invoke any
similar policy. Neither the Company nor, to the Knowledge of the
Company, any officer, employee or agent of the Company, 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.
(iv) The Company has not received any written notice that the
FDA or any other Governmental Entity has commenced, or threatened to
initiate, any action to withdraw its approval or request the recall of
any product of the Company, or commenced, or threatened to initiate, any
action to enjoin production at any facility of the Company which has had
or could reasonably be expected to have a Material Adverse Effect.
SECTION 3.02. Representations and Warranties of Parent and Sub.
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 name and to own, lease or otherwise
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hold and operate its properties and other assets and to carry on its
business as now being conducted, except where the failure to have such
governmental licenses, permits, authorizations or approvals,
individually or in the aggregate, has not had and could 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
in each jurisdiction in which the nature of its business or the
ownership, leasing or operation of its properties makes such
qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed individually or in the
aggregate has not had and could not reasonably be expected to have a
Parent Material Adverse Effect. Parent has made available to the Company
prior to the execution of this Agreement true and correct copies of its
Restated Certificate of Incorporation and By-laws and the Certificate of
Incorporation and 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 of the transactions contemplated by this
Agreement by Parent and Sub 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 hereby. This
Agreement and the transactions contemplated hereby, including the
issuance of shares of Parent Common Stock pursuant to Article II hereof,
does not require the approval of the holders of any shares of capital
stock of Parent. All outstanding shares of Parent Common Stock are (and
all shares of Parent Common Stock which may be issued pursuant to this
Agreement, when issued in accordance with this Agreement, will be) duly
authorized, validly issued, fully paid and nonassessable and, in the
case of shares of Parent Common Stock which may be issued pursuant to
this Agreement, will not be subject to any restrictions on resale under
the Securities Act, other
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than restrictions imposed by Rule 145 under the Securities Act. This
Agreement has been duly executed and delivered by Parent and Sub, as
applicable, 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. The execution and delivery of
this Agreement does not, and the consummation of the Merger and the
other transactions contemplated by this Agreement and compliance 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 termination,
cancellation or acceleration of any obligation or the loss of a material
benefit under, or result in the creation of any Lien in or upon any of
the properties or assets of Parent or Sub under (x) the Restated
Certificate of Incorporation or Bylaws of Parent or the Certificate of
Incorporation or By-laws of Sub, (y) any loan or credit agreement, bond,
debenture, note, mortgage, indenture, lease or other contract,
agreement, obligation, commitment, arrangement, understanding,
instrument, permit or license, whether oral or written, 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 (A) statute, law, ordinance,
rule or regulation or (B) order, writ, injunction, decree, judgment or
stipulation, in each case 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, losses or Liens that individually or in the aggregate have not
had and could not reasonably be expected to have a Parent Material
Adverse Effect. No consent, approval, order or authorization of, action
by or in respect of, or registration, declaration or filings 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,
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except for (1) the filing of a premerger notification and report form by
Parent under the HSR Act, (2) the filing with the SEC of (A) the Form
S-4 and (B) any such reports under Section 13(a), 13(d), 15(d) or 16(a)
of the Exchange Act as may be required in connection with this Agreement
and the transactions contemplated by this Agreement, (3) the filing and
recordation of the Certificate of Merger with the Secretary of State of
the State of Delaware, (4) filings with the NYSE and (5) such other
consents, approvals, orders, authorizations, registrations, declarations
and filings the failure of which to be obtained or made, individually or
in the aggregate, has not had and could not reasonably be expected to
have a Parent Material Adverse Effect.
(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, 1998 (the "Parent SEC Documents"). As
of their respective dates, the Parent SEC Documents complied in all
material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, applicable to such Parent SEC
Documents, and except to the extent that information contained in any
Parent SEC Document has been revised, superseded or updated 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 a
material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(d) Information Supplied. None of the information supplied or to
be supplied by 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, at any time it is amended or supplemented 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 the
light
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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
Company's stockholders and at the time of the Stockholders' 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 the light of the circumstances under
which they are made, not misleading. The Form S-4 will comply as to form
in all material respects with the requirements of the Securities Act,
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 the Company specifically for inclusion or
incorporation by reference in the Form S-4.
(e) Interim Operations of Sub. Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby, has engaged
in no other business activities and has conducted its operations only as
contemplated hereby.
(f) Tax Matters. Neither Parent, Sub nor any Affiliate of Parent
has taken or agreed to take any action or knows of any fact or
circumstance that is reasonably likely to prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of
the Code.
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business. (a) Conduct of Business by
the Company. During the period from the date of this Agreement and continuing
until the earlier of the termination of this Agreement pursuant to its terms or
the Effective Time, the Company shall, except (x) as set forth in Section
4.01(a) of the Company Disclosure Schedule, (y) as specifically contemplated by
any other provision of this Agreement or (z) to the extent that Parent shall
otherwise consent in advance in writing, carry on its businesses in the ordinary
course consistent with past practice (including
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in respect of research and development activities and programs) and in
compliance with all applicable laws and regulations 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 and employees and preserve its relationships with customers, suppliers,
licensors, licensees, distributors and others having business dealings with it
with the intention that its goodwill and ongoing business shall be unimpaired at
the Effective Time. Without limiting the generality of the foregoing, during the
period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement pursuant to its terms or the Effective Time, the
Company shall not, 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, (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
repurchases of unvested shares at cost in connection with the
termination of any employee or service provider as permitted by stock
option or purchase agreements in effect on the date hereof;
(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 (other than (x) the
issuance, delivery and/or sale of shares of Company Common Stock
pursuant to the exercise of Stock Options outstanding on the date hereof
and in accordance with their terms on the date hereof and (y) the
issuance of
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shares of Company Common Stock pursuant to the Company ESPP in
accordance with Section 5.04(b));
(iii) amend or propose to amend the Company Certificate or the
Company By-laws;
(iv) directly or indirectly acquire (x) by merging or
consolidating with, or by purchasing assets of, or by any other manner,
any person or division, business or equity interest of any person or (y)
any assets that, individually, have a purchase price in excess of
$75,000 or, in the aggregate, have a purchase price in excess of
$150,000, except for purchases of components or supplies in the ordinary
course of business consistent with past practice;
(v) sell, lease, license, mortgage, sell and leaseback or
otherwise encumber or subject to any Lien or otherwise dispose of any of
its properties or other assets or any interests therein (including
securitizations), except sales of inventory and used equipment in the
ordinary course of business consistent with past practice; provided,
however, that the Company shall be allowed to sublease its leasehold
interests without the prior consent of Parent;
(vi) (x) incur any indebtedness for borrowed money or guarantee
any such indebtedness of another person, issue or sell any debt
securities or warrants or other rights to acquire any debt securities of
the Company, guarantee any debt securities of another person, enter into
any "keep well" or other agreement to maintain any financial statement
condition of another person or enter into any arrangement having the
economic effect of any of the foregoing, except for short-term
borrowings incurred in the ordinary course of business consistent with
past practice not to exceed $100,000 at any time outstanding, or (y)
make any loans, advances or capital contributions to, or investments in,
any other person, other than to employees in the ordinary course of
business consistent with past practice;
(vii) make any new capital expenditure or expenditures which,
individually, is in excess of
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$75,000 or, in the aggregate, are in excess of $150,000;
(viii) (w) pay, discharge, settle or satisfy any 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 financial
statements (or the notes thereto) of the Company included in the Filed
Company SEC Documents or incurred since the date of such financial
statements in the ordinary course of business consistent with past
practice, (x) cancel any indebtedness, (y) waive or assign any claims or
rights of substantial value or (z) waive any benefits of, or agree to
modify in any respect any confidentiality, standstill or similar
agreements to which the Company is a party;
(ix) except in the ordinary course of business consistent with
past practice, modify, amend or terminate any material contract or
agreement to which the Company is a party or waive, release or assign
any material rights or claims thereunder;
(x) enter into any contracts, agreements, binding arrangements
or understandings relating to the research, development, distribution,
training, sale, license, marketing and supply of components for, or
manufacturing by third parties of, the Company's products or products
licensed by the Company, other than any such contracts, agreements,
arrangements or understandings that, individually, has aggregate future
payment or other obligations of no greater than $75,000 and, in the
aggregate, have future payment or other obligations of no greater than
$150,000, all of which have a term of no greater than one year or are
terminable by the Company by notice of not more than 60 days without
payment of any penalty and other than pursuant to any such contracts,
agreements, arrangements or understandings currently in place (that have
been disclosed in writing to Parent prior to the
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date hereof) in accordance with their terms as of the date hereof;
(xi) except as otherwise contemplated by this Agreement or as
required to comply with applicable law, (A) adopt, enter into, terminate
or amend in any material respect (I) any collective bargaining agreement
or Benefit Plan or (II) any other agreement, plan or policy involving
the Company and one or more of its current or former directors,
officers, employees or consultants, (B) increase in any manner the
compensation, bonus or fringe or other benefits of, or pay any bonus to,
any current or former officer, director or employee (except for normal
increases of cash compensation or cash bonuses in the ordinary course of
business consistent with past practice that, in the aggregate, do not
materially increase the benefits or compensation expenses of the
Company), (C) pay any benefit or amount not required under any Benefit
Plan or Benefit Agreement or any other benefit plan or arrangement of
the Company as in effect on the date of this Agreement, (D) increase in
any manner the severance or termination pay of any current or former
director, officer or employee, (E) enter into or amend any Benefit
Agreement, (F) grant any awards under any bonus, incentive, performance
or other compensation plan or arrangement or Benefit Plan (including the
grant of stock options, "phantom" stock, stock appreciation rights,
"phantom" stock rights, stock based or stock related awards, performance
units or restricted stock or the removal of existing restrictions in any
Benefit Plans or agreements or awards made thereunder), (G) amend or
modify any Stock Option, (H) take any action to fund or in any other way
secure the payment of compensation or benefits under any employee plan,
agreement, contract or arrangement or Benefit Plan, (I) other than as
contemplated in Section 5.04, take any action to accelerate the vesting
of payment of any compensation or benefit under any Benefit Plan or (J)
materially change any actuarial or other assumption used to calculate
funding obligations with respect to any Pension Plan or change the
manner in which contributions to any Pension Plan are made or the basis
on which such contributions are determined;
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(xii) except as otherwise contemplated by this Agreement, enter
into any agreement of a nature that would be required to be filed as an
exhibit to Form 10-K under the Exchange Act, other than contracts for
the sale of the Company's products in the ordinary course of business
consistent with past practice;
(xiii) form any subsidiary of the Company;
(xiv) revalue any material assets of the Company or, except as
required by GAAP, make any change in accounting methods, principles or
practices;
(xv) sell, transfer or license to any person or otherwise
extend, amend or modify any rights to the Intellectual Property Rights
of the Company; or
(xvi) authorize any of, or commit or agree to take any of, the
actions described in Section 4.01(a)(i) through (xv).
(b) Other Actions. The Company, Parent and Sub shall not take
any action that would, or that could reasonably be expected to, result in (i)
any of the representations and warranties of such party set forth in this
Agreement that are qualified by materiality becoming untrue, (ii) any of such
representations and warranties that are not so qualified becoming untrue in any
material respect or (iii) 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 in writing of (i) any representation or warranty
made by it (and, in the case of Parent, made by Sub) contained in this Agreement
that is qualified as to materiality becoming untrue or inaccurate in any respect
or any such representation or warranty that is not so qualified becoming untrue
or inaccurate in any material respect or (ii) the failure of it (and, in the
case of Parent, by Sub) to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement; provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties (or remedies
with respect thereto)
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or the conditions to the obligations of the parties under this Agreement. The
Company and Parent shall promptly provide the other copies of all filings made
by such party with any Governmental Entity in connection with this Agreement and
the transactions contemplated hereby, other than the portions of such filings
that include confidential information not directly related to the transactions
contemplated by this Agreement.
(d) Certain Tax Matters. From the date of this Agreement and
continuing until the earlier of the termination of this Agreement pursuant to
its terms or the Effective Time, (i) the Company will file all tax returns and
reports ("Post-Signing Returns") required to be filed by it (after taking into
account any applicable extensions); (ii) the Company will timely pay all taxes
due and payable with respect to such Post-Signing Returns that are so filed;
(iii) the Company will make provision for all taxes payable by the Company for
which no Post-Signing Return is due prior to the Effective Time; (iv) the
Company will promptly notify Parent of any material action, suit, proceeding,
claim or audit (collectively, "Actions") pending against or with respect to the
Company in respect of any tax and will not settle or compromise any such Action
without Parent's prior written consent; and (v) the Company will not make any
material tax election without Parent's prior written consent; provided, that
Parent shall use reasonable efforts to timely respond to a written request by
the Company to make any such material tax election.
SECTION 4.02. No Solicitation. (a) The Company shall not, nor
shall it authorize or permit any officer, director or employee of the Company or
any investment banker, financial advisor, attorney, accountant or other advisor,
agent or representative retained by the Company (collectively,
"Representatives") to, directly or indirectly through another person (i)
solicit, initiate or encourage, or take any other action intended to, or which
could reasonably be expected to, facilitate, any inquiries or the making of any
proposal that constitutes or could reasonably be expected to lead to a Takeover
Proposal or (ii) 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
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violation of the restrictions set forth in the preceding sentence by any
Representative of the Company, whether or not such person is purporting to act
on behalf of the Company or otherwise, shall be a breach of this Section 4.02(a)
by the Company. The Company shall immediately cease and cause to be terminated
all 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 Stockholder
Approval, in response to a bona fide written Takeover Proposal that the Board of
Directors of the Company determines in good faith (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 unsolicited and made after the date hereof and did not
otherwise result from a breach of this Section 4.02(a), the Company may, if its
Board of Directors determines in good faith (after consultation with outside
counsel who may be the Company's independent legal counsel acting with respect
to this Agreement) that it is required to do so in order to comply with its
fiduciary duties to the Company's stockholders under applicable law, and subject
to compliance with Section 4.02(c) and after giving Parent written notice of
such determination, (x) furnish information with respect to the Company to the
person making such Takeover Proposal (and its Representatives) pursuant to a
customary confidentiality agreement 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 is reasonably likely to lead to, any
direct or indirect acquisition or purchase, in one transaction or a series of
related transactions, of a business that constitutes 15% or more of the
revenues, net income, or the assets of the Company, or 15% or more of the
Company Common Stock, any tender offer or exchange offer that if consummated
would result in any person beneficially owning 15% or more of the Company Common
Stock, or any merger, consolidation, business combination, recapitalization,
liquidation, dissolution,
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joint venture, binding share exchange or similar transaction involving the
Company pursuant to which any person or the shareholders of any person would own
15% or more of the Company or any resulting parent company of the Company, other
than the transactions contemplated by this Agreement or the Stockholder
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, 75% or more of the shares of
Company Common Stock then outstanding (or of the surviving entity in a merger or
the direct or indirect parent of the surviving entity in a merger) or 75% or
more of the assets of the Company, which the Board of Directors of the Company
determines in good faith (after consultation with a financial advisor of
nationally recognized reputation) (i) to be more favorable to the Company's
stockholders 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) that is 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 propose to withdraw (or modify in a manner adverse to Parent), the
approval, recommendation, or declaration of advisability by such Board of
Directors or any such committee thereof of this Agreement or the Merger, or (B)
recommend, adopt or approve, or propose publicly to recommend, adopt or approve,
any Takeover Proposal (any action described in this clause (i) being referred to
as a "Company Adverse Recommendation Change") or (ii) approve or recommend, or
propose to approve or recommend, or allow the Company to execute or enter into,
any letter of intent, memorandum of understanding, agreement in principle,
merger agreement, acquisition agreement, option agreement, joint venture
agreement, partnership agreement or other similar agreement constituting or
related to, or that is intended to or is reasonably likely to lead to, any
Takeover Proposal. Notwithstanding the foregoing, at any time prior to obtaining
the Stockholder Approval, the
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Board of Directors of the Company may, in response to a Superior Proposal that
was unsolicited and made after the date hereof and that did not otherwise result
from a breach of this Section 4.02, make a Company Adverse Recommendation Change
if such Board of Directors determines in good faith (after consultation with
outside counsel who may be the Company's independent legal counsel acting with
respect to this Agreement) that it is required to do so in order to comply with
its fiduciary duties to the Company's stockholders under applicable law;
provided, however, that (i) no Company Adverse Recommendation Change may be made
until after the fifth business day following Parent's receipt of written notice
(a "Notice of Adverse Recommendation") from the Company advising Parent that the
Board of Directors of the Company intends to make a Company Adverse
Recommendation Change and specifying the terms and conditions of such Superior
Proposal (it being understood and agreed that any amendment to the financial
terms or any other material term of such Superior Proposal shall require a new
Notice of Adverse Recommendation and a new five business day period). In
determining whether to make a Company Adverse Recommendation Change, 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 Adverse
Recommendation 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 of any Takeover Proposal or any inquiry with
respect to or that could reasonably be expected to lead to any Takeover
Proposal, the material terms and conditions of any such Takeover Proposal or
inquiry (including any changes thereto) and the identity of the person making
any such Takeover Proposal or inquiry. The Company shall (i) keep Parent fully
informed of the status and material details (including any change to the terms
thereof) of any such Takeover Proposal or inquiry and (ii) provide to Parent as
soon as practicable after receipt or delivery thereof with copies of all
correspondence and other written material sent or provided to the Company from
any person that describes any of the terms or conditions of any Takeover
Proposal.
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(d) Nothing contained in this Section 4.02 shall prohibit the
Company from (x) taking and disclosing to its stockholders a position
contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act or
(y) making any required disclosure to the Company's stockholders if, in the good
faith judgment of the Board of Directors of the Company (after consultation with
outside counsel) failure to so disclose would constitute a violation of
applicable law; 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).
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Form S-4 and the Proxy
Statement; Stockholders' Meeting. (a) As soon as practicable following the date
of this Agreement, the Company and Parent shall prepare and the Company shall
file with the SEC the Proxy Statement and Parent shall prepare and file with the
SEC the Form S-4, in which the Proxy Statement will be included as a prospectus.
Parent shall use its commercially reasonable efforts to have the Form S-4
declared effective under the Securities Act as promptly as practicable after
such filing and to keep the Form S-4 effective as long as is necessary to
consummate the Merger. The Company shall use its commercially reasonable efforts
to cause the Proxy Statement to be mailed to the Company's stockholders 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 to file a
general consent to service of process) required to be taken under any applicable
state securities laws in connection with the issuance of Parent Common Stock in
the Merger, and the Company shall furnish all information concerning the Company
and the holders of Company Common Stock as may be reasonably requested in
connection with any such action and the preparation, filing and distribution of
the Proxy Statement. If at any time prior to the Effective Time any information
relating to the Company or Parent, or any of their respective Affiliates,
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officers or directors, 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 the light of the circumstances under which they were
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 stockholders of the Company. The
parties shall notify each other promptly of the receipt of any comments from the
SEC or its staff and of any request by the SEC or its staff 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 all correspondence between any of
their respective advisors and representatives, on the one hand, and the SEC or
its staff on the other hand, with respect to the Proxy Statement, the Form S-4
or the Merger.
(b) The Company shall, as soon as practicable following the date
of this Agreement, establish a record date following the date of this Agreement
for, duly call, give notice of, convene and hold a meeting of its stockholders
(the "Stockholders' Meeting") solely for the purpose of obtaining the
Stockholder Approval. Subject to Section 4.02(b), the Company shall, through its
Board of Directors, recommend to its stockholders approval and adoption of this
Agreement, the Merger and the other transactions contemplated hereby. Without
limiting the generality of the foregoing, the Company's obligations pursuant to
the first sentence of this Section 5.01(b) shall not be affected by (i) the
commencement, public proposal, public disclosure or communication to the Company
of any Takeover Proposal or (ii) the withdrawal or modification by the Board of
Directors of the Company or any committee thereof of such Board of Directors' or
such committee's approval or recommendation of the Merger or this Agreement.
SECTION 5.02. Access to Information; Confidentiality. The
Company shall afford to Parent, and to Parent's officers, employees,
accountants, counsel, financial advisors and other representatives, reasonable
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access during normal business hours during the period prior to the Effective
Time or the termination of this Agreement to all its properties, books,
contracts, commitments, personnel and records 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 business, properties and personnel as Parent
may reasonably request. Except for disclosures expressly permitted by the terms
of the Secrecy Agreement dated as of September 22, 1999, between Parent and the
Company (as it may be amended from time to time, the "Confidentiality
Agreement"), Parent shall hold, and shall cause it officers, employees,
accountants, counsel, financial advisors and other representatives and
controlled Affiliates to hold, all information received from the Company,
directly or indirectly, in confidence in accordance with the Confidentiality
Agreement. No investigation pursuant to this Section 5.04 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.
SECTION 5.03. Commercially Reasonable Efforts. Upon the terms
and subject to the conditions set forth in this Agreement, each of the parties
agrees to use its commercially reasonable efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, and to assist and cooperate with
the other parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner practicable, the
Merger and the other transactions contemplated by this Agreement and the
Stockholder Agreement, including using commercially reasonable 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, if any)
and the taking of all steps as may be necessary to obtain an approval or waiver
from, or to avoid an action or proceeding
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by any Governmental Entity, (iii) the obtaining of all necessary consents,
approvals or waivers from third parties, (iv) the defending of any lawsuits or
other legal proceedings, whether judicial or administrative, challenging this
Agreement or the Stockholder Agreement, or the consummation of the transactions
contemplated hereby or thereby, including seeking to have any stay or temporary
restraining order entered by any court or other Governmental Entity vacated or
reversed and (v) the execution and delivery of any additional instruments
necessary to consummate the transactions contemplated by, and to fully carry out
the purposes of, this Agreement and the Stockholder Agreement. In connection
with and without limiting the foregoing, the Company and its Board of Directors
shall (1) take all action necessary to ensure that no state takeover statute or
similar statute or regulation is or becomes applicable to this Agreement, the
Stockholder Agreement, the Merger or any of the other transactions contemplated
by this Agreement and the Stockholder Agreement and (2) if any state takeover
statute or similar statute becomes applicable to this Agreement, the Stockholder
Agreement, the Merger or any other transactions contemplated by this Agreement
and the Stockholder Agreement, take all action necessary to ensure that the
Merger and the other transactions contemplated by this Agreement and the
Stockholder Agreement may be consummated as promptly as practicable on the terms
contemplated by this Agreement and the Stockholder Agreement and otherwise to
minimize the effect of such statute or regulation on this Agreement, the
Stockholder Agreement, the Merger and the other transactions contemplated by
this Agreement and the Stockholder Agreement. Nothing in this Agreement shall be
deemed to require Parent to agree to, or proffer to, divest or hold separate any
assets or any portion of any business of Parent or its subsidiaries or the
Company.
SECTION 5.04. Stock Options. (a) Neither Parent nor the
Surviving Corporation shall assume any Stock Options in connection with the
transactions contemplated by this Agreement. Accordingly, pursuant to the terms
of the Company's 1993 Stock Option Plan, 1996 Stock Option Plan and 1999
Supplemental Stock Option Plan (collectively, and together with the Company
ESPP, the "Company Stock Plans"), (i) each outstanding Stock Plan Option shall
automatically accelerate so that each such Stock Plan Option shall,
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immediately prior to the Effective Time, become fully exercisable for all of the
shares of Company Common Stock at the time subject to such Stock Plan Option and
may be exercised by the holder thereof for any or all of such shares as
fully-vested shares of Company Common Stock and (ii) upon the Effective Time,
all outstanding Stock Plan Options, to the extent not exercised prior to the
Effective Time, shall terminate and shall cease to be outstanding. In addition,
as soon as practicable following the date of this Agreement, the Board of
Directors of the Company (or, if applicable, the person or persons with the
requisite authority under the Non-Plan Stock Options) shall adopt such
resolutions or take such other actions (including, if necessary, obtaining any
required consents from holders) as may be required to cause (i) each outstanding
Non-Plan Stock Option to be, immediately prior to the Effective Time, fully
exercisable for all of the shares of Company Common Stock at the time subject to
such Non-Plan Stock Option, and exercisable by the holder thereof for any or all
of such shares as fully-vested shares of Company Common Stock and (ii) upon the
Effective Time, all outstanding Non-Plan Stock Options, to the extent not
exercised prior to the Effective Time, shall terminate and shall cease to be
outstanding.
(b) The rights of participants in the Company's Employee Stock
Purchase Plan (the "Company ESPP") with respect to any offering underway
immediately prior to the Effective Time shall be determined in accordance with
the provisions of Section VII.G. of the Company ESPP as in effect as of the date
of this Agreement. Each share of Company Common Stock purchased under such
offering shall, by virtue of the Merger, and without any action on the part of
the holder thereof, be converted into the right to receive a number of shares of
Parent Common Stock equal to the Exchange Ratio, without issuance of
certificates representing issued and outstanding shares of Company Common Stock
to participants under the Company ESPP. As of the Effective Time, the Company
ESPP shall be automatically terminated in accordance with Section IX.B.(iii) of
the Company ESPP.
SECTION 5.05. Indemnification, Exculpation and Insurance. (a)
Parent agrees that all rights to indemnification and exculpation from
liabilities for acts or omissions occurring at or prior to the Effective Time
now
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existing in favor of the current or former directors or officers of the Company
as provided in the Company Certificate, the Company By-laws or any
indemnification agreement between such directors or officers and the Company (in
each case, as in effect on the date hereof) shall be assumed in all respects by
the Surviving Corporation in the Merger, without further action, as of the
Effective Time and 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 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.
(c) For six years after the Effective Time, Parent shall
maintain in effect the Company's current officers' and directors' 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 officers' and
directors' liability insurance policy (a true and complete copy of which has
been heretofore delivered to Parent), on terms with respect to such coverage and
amount no less favorable than those of such policy in effect on the date hereof;
provided, however, that Parent may substitute therefor policies of Parent
containing terms with respect to coverage and amount no less favorable in any
material respect to such directors and officers; provided further, however, that
in satisfying its obligation under this Section 5.05(c) Parent shall not be
obligated to pay aggregate premiums in excess of 200% of the amount paid by the
Company in its last full fiscal year (which premiums are hereby represented and
warranted by the Company to be $115,139), it being understood and agreed that
Parent shall nevertheless be obligated to provide such coverage as may be
obtained for such 200% amount.
(d) The provisions of this Section 5.05 (i) are intended to be
for the benefit of, and will be enforceable
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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
paragraph (b) 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 each of Parent and the Company shall
bear and pay one-half of (i) the costs and expenses incurred in connection with
filing, printing and mailing the Proxy Statement and the Form S-4 and (ii) the
filing fees for the premerger notification and report forms under the HSR Act.
(b) In the event that (i) this Agreement is terminated by Parent
pursuant to Section 7.01(e) or (ii) (A) a Takeover Proposal shall have been made
to the Company or shall have been made directly to the stockholders 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) this Agreement is terminated by either Parent or the
Company pursuant to either Section 7.01(b)(i) without a vote at the
Stockholders' Meeting having been taken or Section 7.01(b)(iii) and (C) within
12 months after such termination, the Company enters into a definitive agreement
to consummate, or consummates, transactions contemplated by any Takeover
Proposal, then the Company shall pay Parent a fee equal to $5.75 million (the
"Termination Fee") by wire transfer of same-day funds (x) in the case of a
payment required by clause (i) above, on the date of termination of this
Agreement and (y) in the case of a payment required by clause (ii) above, on the
date of the first to occur of such events referred to in clause (ii)(C).
(c) The Company acknowledges and agrees that the agreements
contained in Section 5.06(b) are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, Parent would
not enter into this Agreement; accordingly, if the Company fails promptly to pay
the amount due pursuant to Section 5.06(b), and, in
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order to obtain such payment, Parent commences a suit that results in a judgment
against the Company for the 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 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.
SECTION 5.07. Public Announcements. Parent and the Company will
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 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
are at the time this Agreement is submitted for adoption by the stockholders of
the Company, "affiliates" of the Company for purposes of Rule 145 under the
Securities Act. The Company shall use its commercially reasonable efforts to
cause each such person to deliver to Parent at least 15 days prior to the
Closing Date a written agreement substantially in the form attached as Exhibit B
hereto.
SECTION 5.09. Stock Exchange Listing. Parent shall use its
commercially reasonable efforts to cause the shares of Parent Common Stock to be
issued in the Merger to be approved for listing on the NYSE, subject to official
notice of issuance, prior to the Closing Date.
SECTION 5.10. Tax Treatment. Each of Parent, Sub and the Company
shall use commercially reasonable efforts to cause the Merger to qualify as a
reorganization within the
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meaning of Section 368(a) of the Code and to obtain the opinions of counsel
referred to in Sections 6.02(d) and 6.03(c), including by executing the letters
of representation referred to therein. Neither Parent, Sub nor the Company is
presently aware of any condition or circumstance that would make it unable to
deliver the letters of representation referred to therein in customary form and
substance.
SECTION 5.11. Stockholder Litigation. The Company shall give
Parent the opportunity to participate in the defense or settlement of any
stockholder litigation against the Company and/or its directors relating to the
transactions contemplated by this Agreement or the Stockholder Agreement;
provided, however, that no such settlement shall be agreed to without Parent's
prior written consent, which consent shall not be unreasonably withheld.
SECTION 5.12. Rights Agreement. The Board of Directors of the
Company shall take all further action (in addition to that referred to in
Section 3.01(v)) requested by Parent in order to render the rights (the
"Rights") issued pursuant to the Rights Agreement to purchase Series A Junior
Participating Preferred Stock of the Company, inapplicable to the Merger and the
other transactions contemplated by this Agreement and the Stockholder Agreement.
Except as provided above with respect to the Merger and the other transactions
contemplated by this Agreement and the Stockholder Agreement, the Board of
Directors of the Company shall not, without the prior written consent of Parent,
(a) amend the Rights Agreement or (b) take any action with respect to, or make
any determination under, the Rights Agreement, including a redemption of the
Rights or any action to facilitate a Takeover Proposal.
SECTION 5.13. Convertible Notes. (a) The Company shall deliver,
or shall cause to be delivered, in accordance with the terms of the Indenture
dated as of April 15, 1997 (the "Indenture"), between the Company and The Bank
of New York, as trustee (the "Trustee"), relating to the Convertible Notes, to
the Trustee and to each Noteholder (as defined in the Indenture) as promptly as
practicable after the date hereof but in no event less than 15 days prior to
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the Effective Time, the notice required by Section 15.10 of the Indenture.
(b) The Company shall, as promptly as possible after the
Effective Time, execute a supplemental indenture to the Indenture, that shall
give effect to the provisions of Sections 3.5(e) and 15.6 of the Indenture. The
Company shall cause notice of the execution of such supplemental indenture to be
mailed to each Noteholder within 20 days after the execution thereof in
accordance with the terms of Section 15.6 of the Indenture.
(c) The Company shall take all such further actions as may be
necessary to comply with all of the terms and conditions of the Indenture.
SECTION 5.14. Employee Matters. (a) For a period of not less
than one year after the Effective Time, employees of the Company who continue
their employment after the Effective Time shall be provided base salary or
hourly wage rates and employee benefits which are substantially comparable in
the aggregate to those provided for such employees as of the date hereof.
Neither Parent nor the Surviving Corporation 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. Any plans or arrangements of the Company providing for such
issuance shall be disregarded in determining whether employee benefits are
substantially comparable in the aggregate.
(b) Parent shall cause the Surviving Corporation to recognize
the service of each employee of the Company who continues employment through the
Effective Time as if such service had been performed with Parent (i) for
purposes of eligibility and vesting (but not benefit accrual) under Parent's
defined benefit pension plan, (ii) for purposes of eligibility for vacation
under Parent's vacation program and (iii) for benefit accrual purposes under
Parent's severance plan (in the case of each of clauses (i), (ii) and (iii),
solely to the extent that Parent makes such plan or program available to
employees of the Surviving Corporation), but
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not for purposes of any other employee benefit plan of Parent.
(c) The Company shall not take any action on or prior to the
Effective Time in relation to any contract or understanding with any
European-based employees that could result in any liability for redundancy or
unfair dismissal as of the Effective Time.
(d) The Company shall comply with all obligations to notify and
consult with recognized employee representatives in connection with the
transactions contemplated by this Agreement.
(e) Prior to the Effective Time, the Company shall take all such
steps as may be required to cause the transactions contemplated by Section 5.04
and any other dispositions of Company equity securities (including derivative
securities) in connection with this Agreement or the transactions contemplated
hereby by each individual who is a director or officer of the Company, to be
exempt under Rule 16b-3 promulgated under the Exchange Act, such steps to be
taken in accordance with the interpretive letter dated January 12, 1999, issued
by the SEC to Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP.
(f) Nothing contained herein shall be construed as requiring
Parent or the Surviving Corporation to continue any specific plans or to
continue the employment of any specific person.
SECTION 5.15. Stockholder Agreement Legend. The Company will
inscribe upon any Certificate representing Subject Shares tendered by a
Stockholder (as such terms are defined in the Stockholder Agreement) for such
purpose the following legend: "THE SHARES OF COMMON STOCK, PAR VALUE $.001 PER
SHARE, OF HEARTPORT, INC. REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCKHOLDER AGREEMENT DATED AS OF JANUARY 26, 2001, AND ARE SUBJECT TO TERMS
THEREOF. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT THE PRINCIPAL EXECUTIVE
OFFICES OF HEARTPORT, INC.".
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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 waiver on or prior to the Closing Date of the
following conditions:
(a) Stockholder Approval. The Stockholder Approval shall have
been obtained.
(b) NYSE Listing. The shares of Parent Company Stock issuable to
the Company's stockholders as contemplated by this Agreement shall have
been approved for listing on the NYSE, subject to official notice of
issuance.
(c) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or
shall have expired.
(d) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other judgment or order
issued by any court of competent jurisdiction or other statute, law,
rule, legal restraint or prohibition (collectively, "Restraints") shall
be in effect preventing the consummation of the Merger; provided,
however, that each of the parties that have used its commercially
reasonable efforts to prevent the entry of any such Restraints and to
appeal as promptly as possible any such Restraints that may be entered.
(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 waiver on or prior to the Closing Date of the following
conditions:
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(a) Representations and Warranties. The representations and
warranties of the Company contained in this Agreement that are qualified
as to materiality shall be true and correct, and the representations and
warranties of the Company contained in this Agreement that are not so
qualified shall be true and correct in all material respects, in each
case 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. 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.
(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.
(c) No Litigation. There shall not be pending or threatened any
suit, action or proceeding by any Governmental Entity (i) challenging
the acquisition by Parent or Sub of any shares of Company Common Stock,
seeking to restrain or prohibit the consummation of the Merger, or
seeking to place limitations on the ownership of shares of Company
Common Stock (or shares of common stock of the Surviving Corporation) by
Parent or Sub or seeking to obtain from the Company, Parent or Sub any
damages that are material in relation to the Company, (ii) seeking to
prohibit or materially limit the ownership or operation by the Company,
Parent or any of Parent's subsidiaries of any material portion of any
business or of any assets of the Company, Parent or any of Parent's
subsidiaries, or to compel the Company, Parent or any of Parent's
subsidiaries to divest or hold separate any business or any assets of
the Company, Parent or any of Parent's subsidiaries, as a result of the
Merger, (iii) seeking to prohibit Parent or any of Parent's subsidiaries
from effectively controlling in any material respect the business or
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operations of the Company or (iv) otherwise having, or being reasonably
expected to have, a Material Adverse Effect.
(d) Tax Opinion. Parent shall have received from Cravath, Swaine
& ▇▇▇▇▇, counsel to Parent, on the Closing Date, an opinion dated as of
the Closing Date and stating that the Merger will be treated for United
States Federal income tax purposes as a "reorganization" within the
meaning of Section 368(a) of the Code. The issuance of such opinion
shall be conditioned upon the receipt by such counsel of customary
representation letters from each of Parent and the Company, in each case
in form and substance reasonably satisfactory to such counsel.
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 waiver on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Sub contained in this Agreement that are
qualified as to materiality shall be true and correct, and the
representations and warranties of Parent and Sub contained in this
Agreement that are not so qualified shall be true and correct in all
material respects, in each case 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. 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.
(c) Tax Opinion. The Company shall have received from ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
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▇▇▇▇▇▇▇▇▇, LLP, tax counsel to the Company, on the Closing Date, an
opinion dated as of the Closing Date and stating that the Merger will be
treated for United States Federal income tax purposes as a
"reorganization" within the meaning of Section 368(a) of the Code. The
issuance of such opinion shall be conditioned upon the receipt by such
tax counsel of customary representation letters from each of the Company
and Parent, in each case in form and substance reasonably satisfactory
to such counsel. In the event that ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP does not render such opinion, such condition
shall nevertheless be deemed satisfied if Cravath, Swaine & ▇▇▇▇▇,
counsel to Parent, delivers such opinion to the Company.
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 use commercially reasonable 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
Stockholder 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 July 26, 2001 (the "Outside Date"); provided, however,
that the right to terminate this Agreement under this Section
7.01(b)(i) shall not be available to any party whose action or
failure to act has been a
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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 Stockholder Approval shall not have been
obtained at the Stockholders' Meeting duly convened therefor or
at any adjournment or postponement thereof;
(c) by Parent, if (i) the Company shall have breached any of its
representations and warranties set forth in this Agreement, which breach
(A) would give rise to a failure of the condition set forth in Section
6.02(a) and (B) cannot be or has not been cured by the date that is 30
calendar days prior to the Outside Date or (ii) the Company shall have
breached or failed to perform any of its covenants or agreements set
forth in this Agreement, which breach or failure to perform (A) would
give rise to a failure of the condition set forth in Section 6.02(b),
and (B) cannot be or has not been cured by the Company within 30
calendar days following receipt of written notice of such breach or
failure to perform from Parent;
(d) by the Company, if (i) Parent shall have breached any of its
representations and warranties set forth in this Agreement, which breach
(A) would give rise to a failure of the condition set forth in Section
6.03(a) and (B) cannot be or has not been cured by the date that is 30
calendar days prior to the Outside Date or (ii) Parent shall have
breached or failed to perform any of its covenants or agreements set
forth in this Agreement, which breach or failure to perform (A) would
give rise to a failure of the condition set forth in Section 6.03(b),
and (B) cannot be or has not been cured by Parent within 30 calendar
days following receipt of written notice of such breach or failure to
perform from the Company; or
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(e) by Parent, in the event that a Company Adverse
Recommendation Change shall have occurred.
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, other than
the provisions of Section 3.01(s), the penultimate sentence of Section 5.02,
Section 5.06, this Section 7.02 and Article VIII, which provisions shall survive
such termination, and except to the extent that such termination results 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 the Stockholder Approval; provided,
however, that after any such approval, there shall be made no amendment that by
law requires further approval by the stockholders of the Company or by law
requires the approval of the stockholders of Parent without such approval. 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) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto or (c) subject to the proviso of Section
7.03, 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.
ARTICLE VIII
General Provisions
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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. 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:
▇/▇ ▇▇▇▇▇▇▇, ▇▇▇.
▇.▇. ▇▇▇▇▇ #▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
with copies to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Office of General Counsel
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and
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III, Esq.
if to the Company, to:
Heartport, Inc.
▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, 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 and other employees having primary
responsibility for such matter;
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(c) "Material Adverse Change" or "Material Adverse Effect" means
any change, effect, event, occurrence or state of facts (or any
development or developments which, individually or in the aggregate,
could reasonably be expected to result in any change or effect) that is
materially adverse to the business, properties, assets, liabilities
(contingent or otherwise), financial condition or results of operations
of the Company provided, however, that in no event shall (A) changes
affecting the medical devices industry generally and not specifically
relating to the Company, (B) changes affecting the United States economy
generally, (C) a decrease in the price of the Company Common Stock or
the failure by the Company to meet or exceed Wall Street research
analysts' or the Company's internal earnings or other estimates or
projections, in each case in and of itself, (D) any adverse change or
effect resulting from compliance by the Company with the terms of this
Agreement or (E) any adverse change or effect resulting from the matters
set forth in Section 8.03 of the Company Disclosure Schedule, constitute
a Material Adverse Change or Material Adverse Effect;
(d) "Parent Material Adverse Effect" means any change, effect,
event, occurrence or state of facts (or any development or developments
which, individually or in the aggregate, could reasonably be expected to
result in any change or effect) that is materially adverse to the
business, properties, assets, liabilities (contingent or otherwise),
financial condition or results of operations of Parent and its
subsidiaries, taken as a whole; provided, however, that in no event
shall (A) changes affecting the industries in which Parent operates
generally and not specifically relating to Parent or (B) changes
affecting the United States economy generally constitute a Parent
Material Adverse Effect;
(e) "person" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust,
unincorporated organization or other entity; and
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(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. 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
agreement, instrument or statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes 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. Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties.
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SECTION 8.06. Entire Agreement; No Third-Party Beneficiaries.
This Agreement, the Stockholder Agreement and the Confidentiality Agreement (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, the Stockholder Agreement and the
Confidentiality Agreement and (b) except for the provisions of Article II and
Section 5.05, are not intended to confer upon any person other than the parties
any rights or remedies.
SECTION 8.07. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
SECTION 8.08. 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, except that Sub 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 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 8.09. Specific Enforcement. 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 any Federal court located in the
State of Delaware in any state court in the State of Delaware, 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
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of any Federal court located in the State of Delaware or of any state court
located in the State of Delaware 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 a Federal court located in the State of
Delaware or a state court located in the State of Delaware.
SECTION 8.10. 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 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 hereby are fulfilled to the extent possible.
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
by: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President, Finance
and Chief Financial Officer
HP MERGER SUB, INC.,
by: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President
HEARTPORT, INC.,
by: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief
Executive Officer
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ANNEX I
TO THE MERGER AGREEMENT
Index of Defined Terms
Term
----
Actions.................................................................Section 4.01(d)
Affiliate...............................................................Section 8.03(a)
Agreement......................................................................Preamble
Average Closing Price...................................................Section 2.01(c)
Benefit Agreements......................................................Section 3.01(g)
Benefit Plans...........................................................Section 3.01(k)
Certificate.............................................................Section 2.01(c)
Certificate of Merger......................................................Section 1.03
Closing....................................................................Section 1.02
Closing Date...............................................................Section 1.02
Code...........................................................................Preamble
Commonly Controlled Entity..............................................Section 3.01(k)
Company........................................................................Preamble
Company Adverse Recommendation Change...................................Section 4.02(b)
Company By-laws.........................................................Section 3.01(a)
Company Certificate.....................................................Section 3.01(a)
Company Common Stock...........................................................Preamble
Company Disclosure Schedule................................................Section 3.01
Company ESPP............................................................Section 5.04(b)
Company SEC Documents...................................................Section 3.01(e)
Company Stock Plans.....................................................Section 5.04(a)
Confidentiality Agreement..................................................Section 5.02
Convertible Notes.......................................................Section 3.01(c)
DGCL.......................................................................Section 1.01
Effective Time.............................................................Section 1.03
Environmental Laws......................................................Section 3.01(j)
ERISA...................................................................Section 3.01(l)
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(w)
FDCA....................................................................Section 3.01(w)
Filed Company SEC Documents.............................................Section 3.01(e)
Form S-4................................................................Section 3.01(f)
GAAP....................................................................Section 3.01(e)
Governmental Entity.....................................................Section 3.01(d)
Hazardous Material......................................................Section 3.01(j)
HSR Act.................................................................Section 3.01(d)
Indenture...............................................................Section 5.13(a)
Intellectual Property Rights............................................Section 3.01(p)
IRS.....................................................................Section 3.01(l)
Knowledge...............................................................Section 8.03(b)
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Legal Provisions........................................................Section 3.01(j)
Liens...................................................................Section 3.01(d)
79
Term
----
Material Adverse Change.................................................Section 8.03(c)
Material Adverse Effect.................................................Section 8.03(c)
Medical Device..........................................................Section 3.01(w)
Merger.........................................................................Preamble
Merger Consideration....................................................Section 2.01(c)
Non-Plan Stock Options..................................................Section 3.01(c)
Notice of Adverse Recommendation........................................Section 4.02(b)
NYSE....................................................................Section 2.01(c)
NYSE Composite Transactions Tape........................................Section 2.01(c)
Outside Date............................................................Section 7.01(b)
Parachute Gross Up Payment..............................................Section 3.01(m)
Parent.........................................................................Preamble
Parent Common Stock............................................................Preamble
Parent Disclosure Schedule.................................................Section 3.02
Parent Material Adverse Effect..........................................Section 8.03(d)
Parent SEC Documents....................................................Section 3.02(c)
Pension Plan............................................................Section 3.01(l)
Permits.................................................................Section 3.01(j)
person..................................................................Section 8.03(e)
Post-Signing Returns....................................................Section 4.01(d)
Preferred Stock.........................................................Section 3.01(c)
Primary Company Executives..............................................Section 3.01(m)
Principal Stockholders.........................................................Preamble
Proxy Statement.........................................................Section 3.01(d)
Representatives.........................................................Section 4.02(a)
Release.................................................................Section 3.01(j)
Restraints..............................................................Section 6.01(d)
Rights.....................................................................Section 5.12
Rights Agreement........................................................Section 3.01(v)
SEC.....................................................................Section 3.01(d)
Securities Act..........................................................Section 3.01(e)
Stockholder Agreement..........................................................Preamble
Stockholder Approval....................................................Section 3.01(q)
Stockholders' Meeting...................................................Section 5.01(b)
Stock Options...........................................................Section 3.01(c)
Stock Plan Options......................................................Section 3.01(c)
Sub............................................................................Preamble
subsidiary..............................................................Section 8.03(f)
Superior Proposal.......................................................Section 4.02(a)
Surviving Corporation......................................................Section 1.01
Takeover Proposal.......................................................Section 4.02(a)
taxes...................................................................Section 3.01(n)
Termination Fee.........................................................Section 5.06(b)
Trustee.................................................................Section 5.13(a)
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EXHIBIT A
TO THE MERGER AGREEMENT
Form of Certificate of Incorporation of the Surviving
Corporation
FIRST: The name of the corporation (hereinafter called the
"Corporation") is Heartport, Inc.
SECOND: The address, including street, number, city, and county, of the
registered office of the Corporation in the State of Delaware is ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, County of New Castle;
and the name of the registered agent of the Corporation in the State of Delaware
at such address is Corporation Service Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The aggregate number of shares which the Corporation shall have
authority to issue is 1,000 shares of Common Stock, par value $0.01 per share.
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 General Corporation Law of
the State of Delaware as it now exists and as it may hereafter be amended, no
director shall be personally liable to the Corporation or any of its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
pursuant to Section 174 of the General Corporation Law of the State of Delaware
or (iv) for any transaction from which the director derived an improper personal
benefit. Any repeal or modification of this Article SIXTH shall not adversely
affect any right or
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protection of a director of the Corporation existing at the time of such repeal
or modification with respect to acts or omissions occurring prior to such repeal
or modification.
SEVENTH: The Corporation shall, to the fullest extent permitted by the
provisions of Section 145 of the General Corporation Law of the State of
Delaware, 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, and 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 stockholders or disinterested
directors or otherwise 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 such repeal or modification
with respect to any matter occurring prior to such repeal or modification.
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.
82
EXHIBIT B
TO THE MERGER AGREEMENT
Form of Affiliate Letter
Dear Sirs:
The undersigned, a holder of shares of common stock, par value
$.001 per share ("Company Common Stock"), of Heartport, Inc., a Delaware
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"), although nothing
contained herein should be construed as an admission of either such fact.
Pursuant to the terms of the Agreement and Plan of Merger dated as of January
26, 2001, among ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, a New Jersey corporation ("Parent"), HP
Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent
("Sub"), and the Company, Sub will be merged with and into the Company (the
"Merger"), and in connection with the Merger, the undersigned is entitled to
receive common stock, par value $1.00 per share ("Parent Common Stock"), of
Parent.
If in fact the undersigned were an affiliate under the
Securities Act, the undersigned's ability to sell, assign or transfer the 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 Parent Common
Stock received by the undersigned in exchange for shares of Company Common Stock
83
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 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 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 and 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 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 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 Parent
Common Stock by the undersigned under Rule 145 in accordance with the terms
thereof, including filing, on a timely basis, all reports and data required to
be filed by it with the SEC pursuant to Section 13 of the Exchange Act, and
furnish to the undersigned upon request a written statement as to whether or not
Parent has complied with such reporting requirements during the twelve months
preceding any proposed sale of the Parent Common Stock by the undersigned
pursuant to Rule 145. Parent hereby represents to the undersigned that it has
filed all reports required to be filed with the SEC under Section 13 of the
Exchange Act during the preceding twelve months.
The undersigned acknowledges and agrees that the legends set
forth below will be placed on certificates representing Parent Common Stock
received by the undersigned in connection with the Merger or held by a
transferee
84
thereof, which legends will be removed by delivery of substitute certificates
upon receipt of an opinion in form and substance reasonably satisfactory to
Parent from counsel reasonably satisfactory to Parent to the effect that such
legends are 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 in 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 (i) until such time as ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ shall have published financial results covering at least 30 days
of combined operations after the Effective Time and (ii) except in
accordance with an exemption from the registration requirements of the
Securities Act of 1933."
It is understood and agreed that certificates with the legend
set forth above will be substituted by delivery of certificates without such
legends if (i) one year shall have elapsed from the date the undersigned
acquired the Parent Common Stock received in the Merger and the provisions of
Rule 145(d)(2) are then available, (ii) two years shall have elapsed from the
date the undersigned acquired the Parent Common Stock received in the Merger and
the provisions of Rule 145(d)(3) are then available or (iii) Parent has received
either a written opinion of counsel, which opinion of counsel shall be
reasonably satisfactory to Parent, or a "no action" letter obtained by the
undersigned from the SEC, to the effect that the restrictions imposed by Rule
145 under the Securities Act no longer apply to the undersigned.
The undersigned acknowledges that (i) the undersigned has
carefully read this letter and understands
85
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.
Very truly yours,
Dated:
86
ANNEX I
TO EXHIBIT B
[Name] [Date]
On , the undersigned sold the securities of
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, a New Jersey corporation ("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 HP Merger Sub, Inc., a
Delaware corporation, with and into Heartport, Inc., a Delaware 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,
[Space to be provided for description of the Securities.]
