AGREEMENT AND PLAN OF MERGER
BY AND AMONG
MEDTRONIC, INC.,
PC MERGER CORP.,
AND
PHYSIO-CONTROL INTERNATIONAL CORPORATION
JUNE 27, 1998
TABLE OF CONTENTS
ARTICLE 1 THE MERGER; CONVERSION OF SHARES . . . . . . . . . . . . . . . . . . 1
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Conversion of Shares . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5 Exchange of Company Common Stock . . . . . . . . . . . . . . . . . 4
1.6 Exchange of Merger Subsidiary Common Stock . . . . . . . . . . . . 6
1.7 Stock Options. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.8 Capitalization Changes . . . . . . . . . . . . . . . . . . . . . . 7
1.9 Articles of Incorporation of the Surviving Corporation . . . . . . 7
1.10 Bylaws of the Surviving Corporation. . . . . . . . . . . . . . . . 7
1.11 Directors and Officers of the Surviving Corporation. . . . . . . . 7
ARTICLE 2 CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1 Time and Place . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2 Filings at the Closing . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. . . . . . . . . . . . 8
3.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.4 Reports and Financial Statements . . . . . . . . . . . . . . . . .10
3.5 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . .11
3.6 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . .11
3.7 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . .12
3.8 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
3.9 Absence of Material Adverse Changes. . . . . . . . . . . . . . . .12
3.10 Environmental Laws and Regulations . . . . . . . . . . . . . . . .13
3.11 Officers, Directors and Employees. . . . . . . . . . . . . . . . .14
3.12 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
3.13 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
3.14 Title to Properties; Liens . . . . . . . . . . . . . . . . . . . .16
3.15 Permits, Licenses, Etc.. . . . . . . . . . . . . . . . . . . . . .17
3.16 Intellectual Property Rights . . . . . . . . . . . . . . . . . . .17
3.17 Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . . .18
3.18 Minute Books . . . . . . . . . . . . . . . . . . . . . . . . . . .20
3.19 Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . .20
3.20 Bank Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . .20
3.21 Powers of Attorney . . . . . . . . . . . . . . . . . . . . . . . .20
3.22 Product Liability Claims . . . . . . . . . . . . . . . . . . . . .21
3.23 Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
3.24 Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . .21
3.25 Relations with Suppliers and Customers . . . . . . . . . . . . . .22
3.26 No Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
3.27 Proxy Statement. . . . . . . . . . . . . . . . . . . . . . . . . .22
3.28 Merger Filings . . . . . . . . . . . . . . . . . . . . . . . . . .22
3.29 Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . .23
3.30 State Takeover Laws. . . . . . . . . . . . . . . . . . . . . . . .23
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ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER
SUBSIDIARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . .23
4.2 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . .23
4.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . .24
4.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . .24
4.5 Reports; Financial Statements; Absence of Changes;
Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
4.6 Registration Statement . . . . . . . . . . . . . . . . . . . . . .25
4.7 Merger Filings . . . . . . . . . . . . . . . . . . . . . . . . . .25
4.8 No Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
ARTICLE 5 COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
5.1 Conduct of Business of the Company . . . . . . . . . . . . . . . .26
5.2 No Solicitation. . . . . . . . . . . . . . . . . . . . . . . . . .29
5.3 Access and Information . . . . . . . . . . . . . . . . . . . . . .30
5.4 Approval of Shareholders; Proxy Statement; Registration
Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
5.5 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
5.6 Affiliates' Letters. . . . . . . . . . . . . . . . . . . . . . . .32
5.7 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
5.8 Reasonable Efforts; Further Actions. . . . . . . . . . . . . . . .32
5.9 Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . .33
5.10 Certain Notifications. . . . . . . . . . . . . . . . . . . . . . .33
5.11 Voting of Shares . . . . . . . . . . . . . . . . . . . . . . . . .33
5.12 Noncompetition Agreements. . . . . . . . . . . . . . . . . . . . .33
5.13 NYSE Listing Application . . . . . . . . . . . . . . . . . . . . .33
5.14 Indemnification, Exculpation and Insurance . . . . . . . . . . . .33
5.15 Letters of the Company's and Parent's Accountants. . . . . . . . .34
5.16 Subsidiary Shares. . . . . . . . . . . . . . . . . . . . . . . . .35
5.17 Stock Option Agreement . . . . . . . . . . . . . . . . . . . . . .35
5.18 Conduct of Business by Parent. . . . . . . . . . . . . . . . . . .35
5.19 Benefit Plans and Employee Matters . . . . . . . . . . . . . . . .36
5.20 Delivery of Specified Documents. . . . . . . . . . . . . . . . . .36
ARTICLE 6 CLOSING CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . .37
6.1 Conditions to Obligations of Parent, Merger Subsidiary,
and the Company. . . . . . . . . . . . . . . . . . . . . . . . . .37
6.2 Conditions to Obligations of Parent and Merger Subsidiary. . . . .37
6.3 Conditions to Obligations of the Company . . . . . . . . . . . . .39
ARTICLE 7 TERMINATION AND ABANDONMENT. . . . . . . . . . . . . . . . . . . . .40
7.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . .40
7.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . .41
ARTICLE 8 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . .42
8.1 Amendment and Modification . . . . . . . . . . . . . . . . . . . .42
8.2 Waiver of Compliance; Consents . . . . . . . . . . . . . . . . . .43
8.3 Investigation; Survival of Representations and Warranties. . . . .43
8.4 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
8.5 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
8.6 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . .44
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8.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . .44
8.8 Knowledge. . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
8.9 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . .44
8.10 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
8.11 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . .45
EXHIBITS:
Exhibit A: Form of Plan of Merger
Exhibit B: Form of Affiliate's Letter
Exhibit C: Form of Agreement to Facilitate Merger
Exhibit D: Form of Noncompetition Agreement
Exhibit E: Form of Stock Option Agreement
Exhibit F: Form of Opinion of the Company's Counsel
Exhibit G: Form of Opinion of Parent's Counsel
Exhibit H: Form of Company's Certificate (regarding tax opinion
representations)
Exhibit I: Form of Parent's Certificate (regarding tax opinion
representations)
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT is dated as of June 27, 1998, by and among MEDTRONIC, INC.,
a Minnesota corporation ("Parent"), PC MERGER CORP., a Washington corporation
and wholly-owned subsidiary of Parent ("Merger Subsidiary"), and PHYSIO-CONTROL
INTERNATIONAL CORPORATION, a Washington corporation (the "Company").
WHEREAS, the Boards of Directors of Parent, Merger Subsidiary, and the
Company have approved the merger of Merger Subsidiary with and into the Company
(the "Merger") upon the terms and subject to the conditions set forth herein;
and
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a)(1)(A) and
(a)(2)(E) of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, for accounting purposes, it is intended that the Merger shall be
recorded as a "pooling of interests" within the meaning of Accounting Principles
Board Opinion No. 16, and the rules and regulations of the Securities and
Exchange Commission (the "SEC"); and
WHEREAS, as a condition to, and upon or immediately following the execution
of, this Agreement, Parent and the Company are entering into the Stock Option
Agreement described in Section 5.17 hereof; and
WHEREAS, the parties hereto desire to make certain representations,
warranties, and agreements in connection with the Merger and also to prescribe
various conditions to the Merger;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
representations, warranties, covenants, and agreements contained herein, the
parties hereto agree as follows:
ARTICLE 1
THE MERGER; CONVERSION OF SHARES
1.1 THE MERGER. Subject to the terms and conditions of this Agreement, at
the Effective Time (as defined in Section 1.2 hereof), Merger Subsidiary shall
be merged with and into the Company in accordance with the provisions of the
Washington Business Corporation Act (the "WBCA"), whereupon the separate
corporate existence of Merger Subsidiary shall cease, and the Company shall
continue as the surviving corporation (the "Surviving Corporation"). From and
after the Effective Time, the Surviving Corporation shall possess all the
rights, privileges, powers, and franchises and be subject to all the
restrictions, disabilities, and duties of the Company and Merger Subsidiary, all
as more fully described in the WBCA.
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1.2 EFFECTIVE TIME. As soon as practicable after each of the conditions
set forth in Article 6 has been satisfied or waived, the Company and Merger
Subsidiary will file, or cause to be filed, with the Secretary of State of the
State of Washington Articles of Merger for the Merger, which Articles shall be
in the form required by and executed in accordance with the applicable
provisions of the WBCA and shall include as a part thereof a plan of merger (the
"Plan of Merger") substantially in the form attached hereto as EXHIBIT A. The
Merger shall become effective at the time such filing is made or, if agreed to
by Parent and the Company, such later time or date set forth in the Articles of
Merger (the "Effective Time").
1.3 CONVERSION OF SHARES. At the Effective Time, by virtue of the Merger
and without any action on the part of any holder of any share of capital stock
of the Company or Merger Subsidiary:
(a) Each share of common stock of the Company, par value $.01 per
share ("Company Common Stock"), issued and outstanding immediately prior
thereto (except for Dissenting Shares, as defined in Section 1.4 hereof,
and except for shares referred to in Section 1.3(b) hereof) shall be
converted into the right to receive the fraction of a share (subject to
adjustment as provided below, the "Conversion Fraction") of common stock of
Parent, par value $.10 per share ("Parent Common Stock"), equal to $27.50
divided by the Parent Average Stock Price. The "Parent Average Stock
Price" shall mean the average (rounded to the nearest full cent, with the
cents rounded up if the third decimal place is 5 or more) of the daily
closing sale prices of a share of Parent Common Stock as reported on the
New York Stock Exchange ("NYSE") Composite Tape, as reported in The Wall
Street Journal, for the 19 consecutive NYSE trading days ending on and
including the first NYSE trading day immediately preceding the Effective
Time.
Notwithstanding the foregoing, if the sum of the number of shares of
Company Common Stock outstanding immediately prior to the Effective Time
plus the number of shares subject to then outstanding options, warrants, or
other rights to acquire shares of Company Common Stock (collectively,
"Company Stock Acquisition Rights") is greater than 20,693,456 shares plus
that number of shares issuable under the Company's Employee Share Purchase
Plan and Team Savings Plan or if the aggregate exercise price of all such
Company Stock Acquisition Rights then outstanding is less than the
aggregate exercise price reflected in Section 3.3 of the Company Disclosure
Schedule, then the $27.50 amount per share of Company Common Stock, as
described above, shall be reduced to an amount equal to (i) [$27.50 times
20,693,456 shares plus that number of shares issuable under the Company's
Employee Share Purchase Plan and Team Savings Plan] minus the aggregate
exercise price reflected in Section 3.3 of the Company Disclosure Schedule
plus the aggregate amount received by the Company as a result of any
issuance of Company Common Stock after the date of this Agreement and prior
to the Effective Time plus the aggregate exercise price of all Company
Stock Acquisition Rights outstanding immediately prior to the Effective
Time divided by (ii) the sum of (A) the number of shares of Company Common
Stock outstanding immediately prior to the
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Effective Time plus (B) the number of shares subject to Company Stock
Acquisition Rights then outstanding.
An appropriate adjustment shall similarly be made in the event that,
prior to the Effective Time, the outstanding shares of Company Common
Stock, without new consideration, are changed into or exchanged for a
different kind of shares or securities through a reorganization,
reclassification, stock dividend, stock combination, or other like change
in the Company's capitalization. Notwithstanding the foregoing, nothing in
this section shall be deemed to constitute authorization or permission for
or consent from Parent or Merger Subsidiary to any increase in the number
of shares of Company Common Stock outstanding or subject to outstanding
Company Stock Acquisition Rights, to any decrease in the exercise price of
such Rights, or to any reorganization, reclassification, stock dividend,
stock combination, or other like change in capitalization.
(b) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time that is held in the treasury of the
Company or is then owned beneficially or of record by Parent, Merger
Subsidiary, or any direct or indirect subsidiary of Parent or the Company
shall be cancelled without payment of any consideration therefor and
without any conversion thereof.
(c) Each share of any other class of capital stock of the Company
(other than Company Common Stock) shall be cancelled without payment of any
consideration therefor and without any conversion thereof.
(d) Each share of common stock of Merger Subsidiary, par value $.01
per share ("Merger Subsidiary Common Stock"), issued and outstanding
immediately prior to the Effective Time shall be converted into one share
of the common stock of the Surviving Corporation, par value $.01 per share
("Surviving Corporation Common Stock").
1.4 DISSENTING SHARES. Notwithstanding any provision of this Agreement to
the contrary, each outstanding share of Company Common Stock, the holder of
which has demanded and perfected such holder's right to dissent from the Merger
and to be paid the fair value of such shares in accordance with Sections
23B.13.020 ET SEQ. of the WBCA and, as of the Effective Time, has not
effectively withdrawn or lost such dissenters' rights ("Dissenting Shares"),
shall not be converted into or represent a right to receive the Parent Common
Stock into which shares of Company Common Stock are converted pursuant to
Section 1.3 hereof, but the holder thereof shall be entitled only to such rights
as are granted by the WBCA. The Company shall give Parent (i) prompt written
notice of any notice of intent to demand fair value for any shares of Company
Common Stock, withdrawals of such notices, and any other instruments served
pursuant to the WBCA or any other provisions of Washington law and received by
the Company, and (ii) the opportunity to conduct jointly all negotiations and
proceedings with respect to demands for fair value for shares of Company Common
Stock under the WBCA. The Company shall not, except with the prior written
consent of Parent, voluntarily make any payment with
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respect to any demands for fair value for shares of Company Common Stock or
offer to settle or settle any such demands.
1.5 EXCHANGE OF COMPANY COMMON STOCK.
(a) Promptly after the Effective Time, Parent shall cause Parent's
stock transfer agent or such other person as Parent may appoint to act as
exchange agent (the "Exchange Agent") to mail to each holder of record
(other than Parent, Merger Subsidiary, the Company, or any subsidiary of
Parent or the Company) of a certificate or certificates that immediately
prior to the Effective Time represented outstanding shares of Company
Common Stock ("Company Certificates") a form letter of transmittal (which
shall specify that delivery shall be effective, and risk of loss and title
to the Company Certificate(s) shall pass, only upon delivery of the Company
Certificate(s) to the Exchange Agent) and instructions for such holder's
use in effecting the surrender of the Company Certificates in exchange for
certificates representing shares of Parent Common Stock.
(b) As soon as practicable after the Effective Time, the Exchange
Agent shall distribute to holders of shares of Company Common Stock, upon
surrender to the Exchange Agent of one or more Company Certificates for
cancellation, together with a duly-executed letter of transmittal, (i) one
or more Parent certificates representing the number of whole shares of
Parent Common Stock into which the shares represented by the Company
Certificate(s) shall have been converted pursuant to Section 1.3(a), and
(ii) a bank check in the amount of cash into which the shares represented
by the Company Certificate(s) shall have been converted pursuant to Section
1.5(f) (relating to fractional shares), and the Company Certificate(s) so
surrendered shall be cancelled. In the event of a transfer of ownership of
Company Common Stock that is not registered in the transfer records of the
Company, it shall be a condition to the issuance of shares of Parent Common
Stock that the Company Certificate(s) so surrendered shall be properly
endorsed or be otherwise in proper form for transfer and that such
transferee shall (i) pay to the Exchange Agent any transfer or other taxes
required or (ii) establish to the satisfaction of the Exchange Agent that
such tax has been paid or is not payable.
(c) Holders of Company Common Stock will be entitled to any dividends
or other distributions pertaining to the Parent Common Stock received in
exchange therefor that become payable to persons who are holders of record
of Parent Common Stock as of a record date that follows the Effective Time,
but only after they have surrendered their Company Certificates for
exchange. Subject to the effect, if any, of applicable law, the Exchange
Agent shall receive, hold, and remit any such dividends or other
distributions to each such record holder entitled thereto, without
interest, at the time that such Company Certificates are surrendered to the
Exchange Agent for exchange. Holders of Company Common Stock will not be
entitled, however, to dividends or other distributions that become payable
before or after the Effective Time to persons who were
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holders of record of Parent Common Stock as of a record date that is prior
to the Effective Time.
(d) All shares of Parent Common Stock issued upon the surrender for
exchange of Company Common Stock in accordance with the terms hereof
(including any cash paid for fractional shares pursuant to Section 1.5(f)
hereof) shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of Company Common Stock.
(e) After the Effective Time, 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, Company Certificates
representing such shares are presented to the Surviving Corporation, they
shall be cancelled and exchanged as provided in this Article 1. As of the
Effective Time, the holders of Company Certificates representing shares of
Company Common Stock shall cease to have any rights as shareholders of the
Company, except such rights, if any, as they may have pursuant to the WBCA.
Except as provided above, until such Company Certificates are surrendered
for exchange, each such Company Certificate shall, after the Effective
Time, represent for all purposes only the right to receive the number of
whole shares of Parent Common Stock into which the shares of Company Common
Stock shall have been converted pursuant to the Merger as provided in
Section 1.3(a) hereof and the right to receive the cash value of any
fraction of a share of Parent Common Stock as provided in Section 1.5(f)
hereof.
(f) No fractional shares of Parent Common Stock and no certificates
or scrip therefor, or other evidence of ownership thereof, shall be issued
upon the surrender for exchange of Company Certificates, no dividend or
other distribution of Parent shall relate to any fractional share, and such
fractional share interests shall not entitle the owner thereof to vote or
to any rights of a shareholder of Parent. All fractional shares of Parent
Common Stock to which a holder of Company Common Stock immediately prior to
the Effective Time would otherwise be entitled, at the Effective Time,
shall be aggregated if and to the extent multiple Company Certificates of
such holder are submitted together to the Exchange Agent. If a fractional
share results from such aggregation, then (in lieu of such fractional
share) the Exchange Agent shall pay to each holder of shares of Company
Common Stock who otherwise would be entitled to receive such fractional
share of Parent Common Stock an amount of cash (without interest)
determined by multiplying (i) the Parent Average Stock Price by (ii) the
fractional share of Parent Common Stock to which such holder would
otherwise be entitled. Parent will make available to the Exchange Agent
any cash necessary for this purpose.
(g) In the event any Company Certificates shall have been lost,
stolen, or destroyed, the Exchange Agent shall issue in exchange for such
lost, stolen, or destroyed Company Certificates, upon the making of an
affidavit of that fact by the holder thereof, such shares of Parent Common
Stock and cash for fractional shares, if any, as may be
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required pursuant to this Article 1; provided, however, that Parent may,
in its discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen, or destroyed Company Certificate
to deliver a bond in such sum as Parent may direct as indemnity against
any claim that may be made against Parent or the Exchange Agent with
respect to such Company Certificate alleged to have been lost, stolen,
or destroyed.
(h) Each person entitled to receive shares of Parent Common Stock
pursuant to this Article 1 shall receive together with such shares the
number of Parent preferred share purchase rights (pursuant to the Rights
Agreement dated as of June 27, 1991, between Parent and Norwest Bank
Minnesota, N.A., the "Parent Rights Plan") per share of Parent Common Stock
equal to the number of Parent preferred share purchase rights associated
with one share of Parent Common Stock at the Effective Time.
1.6 EXCHANGE OF MERGER SUBSIDIARY COMMON STOCK. From and after the
Effective Time, each outstanding certificate previously representing shares of
Merger Subsidiary Common Stock shall be deemed for all purposes to evidence
ownership of and to represent the number of shares of Surviving Corporation
Common Stock into which such shares of Merger Subsidiary Common Stock shall have
been converted. Promptly after the Effective Time, the Surviving Corporation
shall issue to Parent a stock certificate or certificates representing such
shares of Surviving Corporation Common Stock in exchange for the certificate or
certificates that formerly represented shares of Merger Subsidiary Common Stock,
which shall be cancelled.
1.7 STOCK OPTIONS.
(a) Except as provided below with respect to the Company's Employee
Share Purchase Plan, each option to purchase shares of Company Common Stock
that is outstanding at the Effective Time (a "Company Option") shall, by
virtue of the Merger and without any action on the part of the holder
thereof, be assumed by Parent in such manner that Parent (i) is a
corporation "assuming a stock option in a transaction to which Section
424(a) applies" within the meaning of Section 424 of the Code and the
regulations thereunder or (ii) to the extent that Section 424 of the Code
does not apply to any such Company Option, would be such a corporation were
Section 424 of the Code applicable to such Company Option. From and after
the Effective Time, all references to the Company in the Company Options
shall be deemed to refer to Parent. The Company Options assumed by Parent
shall be exercisable upon the same terms and conditions as under the
Company Options except that (i) such Company Options shall entitle the
holder to purchase from Parent the number of shares of Parent Common Stock
(rounded down to the nearest whole number of such shares) that equals the
product of the Conversion Fraction multiplied by the number of shares of
Company Common Stock subject to such option immediately prior to the
Effective Time, and (ii) the option exercise price per share of Parent
Common Stock shall be an amount (rounded up to the nearest full cent) equal
to the option exercise price per share of Company Common Stock in effect
immediately prior to the Effective Time divided by the Conversion Fraction.
As
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promptly as practicable after the Effective Time, Parent shall issue to
each holder of a Company Option a written instrument informing such holder
of the assumption by Parent of such Company Option.
(b) Immediately prior to the Effective Time, the current Plan Period
under the Company's Employee Share Purchase Plan shall be ended, and each
participant shall be deemed to have purchased immediately prior to the
Effective Time, to the extent of payroll deductions accumulated by such
participant as of such Plan Period end, the number of whole shares of
Company Common Stock at a per share price determined pursuant to the
provisions of the Company's Employee Share Purchase Plan, and each
participant shall receive a cash payment equal to the balance, if any, of
such accumulated payroll deductions remaining after such purchase of such
shares. As of the Effective Time, each participant shall receive by virtue
of the Merger, for each share of Company Common Stock such participant has
so purchased under the Employee Share Purchase Plan, a fraction of a share
of Parent Common Stock equal to the Conversion Fraction. The Company's
Employee Share Purchase Plan and all purchase rights thereunder shall
terminate effective as of the Effective Time.
1.8 CAPITALIZATION CHANGES. If, 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
any reclassification, recapitalization, split-up, combination, exchange of
shares, or stock dividend, the Conversion Fraction and all per-share price
amounts and calculations set forth in this Agreement shall be appropriately
adjusted.
1.9 ARTICLES OF INCORPORATION OF THE SURVIVING CORPORATION. The Articles
of Incorporation of Merger Subsidiary, as in effect immediately prior to the
Effective Time, shall be the Articles of Incorporation of the Surviving
Corporation until thereafter amended in accordance with applicable law;
provided, however, that upon the Effective Time, Article 1 of the Articles of
Incorporation of the Surviving Corporation shall be amended to read in its
entirety as follows: "The name of the corporation shall be Medtronic
Physio-Control, Inc."
1.10 BYLAWS OF THE SURVIVING CORPORATION. The Bylaws of Merger Subsidiary,
as in effect immediately prior to the Effective Time, shall be the Bylaws of the
Surviving Corporation until thereafter amended in accordance with applicable
law.
1.11 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The directors
and officers of Merger Subsidiary immediately prior to the Effective Time shall
be the directors and officers, respectively, of the Surviving Corporation until
their respective successors shall be duly elected and qualified.
7
ARTICLE 2
CLOSING
2.1 TIME AND PLACE. Subject to the satisfaction or waiver of the
provisions of Article 6, the closing of the Merger (the "Closing") shall take
place at 3:00 p.m., local time, on the day the Merger is approved by the
shareholders of the Company at the Company Shareholders Meeting (as defined in
Section 5.4 hereof), or as soon thereafter as all conditions to Closing have
been satisfied or waived, or on such other date and/or at such other time as
Parent and the Company may mutually agree. The date on which the Closing
actually occurs is herein referred to as the "Closing Date." The Closing shall
take place at the corporate headquarters offices of the Company, or at such
other place or in such other manner (E.G., by telecopy exchange of signature
pages with originals to follow by overnight delivery) as the parties hereto may
agree.
2.2 FILINGS AT THE CLOSING. At the Closing, subject to the provisions of
Article 6, Parent, Merger Subsidiary, and the Company shall cause Articles of
Merger to be filed in accordance with the provisions of Section 23B.11.050 of
the WBCA, and take any and all other lawful actions and do any and all other
lawful things necessary to cause the Merger to become effective.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in a document of even date herewith, referring
specifically to the representations and warranties in this Agreement which
identifies by section number to which such disclosure relates (the "Company
Disclosure Schedule"), the Company hereby makes the following representations
and warranties to Parent and Merger Subsidiary:
3.1 ORGANIZATION. The Company and each subsidiary of the Company
(referred to herein as a "Subsidiary") is a corporation duly organized and
validly existing under the laws of its respective jurisdiction of incorporation
and has all requisite corporate power and authority to own, lease, and operate
its properties and to carry on its business as now being conducted. The Company
and each Subsidiary is duly qualified and in good standing to do business in
each jurisdiction in which the property owned, leased, or operated by it or the
nature of the business conducted by it makes such qualification necessary and
where the failure to qualify could reasonably be expected to have a Company
Material Adverse Effect (as defined below). "Company Material Adverse Effect"
means an effect that, individually or in the aggregate with other effects, is or
would reasonably be expected to be materially adverse: (i) to the present or
specifically planned business, properties, liabilities, results of operation, or
financial condition of the Company and its Subsidiaries, considered as a whole;
(ii) to the ability of Parent or the Surviving Corporation to conduct such
businesses, as presently conducted, following the Effective Time; or (iii) to
the Company's ability to perform any of its obligations under this Agreement or
to consummate the Merger. The jurisdictions in which the Company and each
Subsidiary are qualified are listed on the Company Disclosure Schedule. The
Company has
8
heretofore delivered to Parent complete and accurate copies of the Articles
of Incorporation and Bylaws of the Company and each Subsidiary, as currently
in effect. Except to the extent specifically disclosed on the Company
Disclosure Schedule, neither the Company nor any Subsidiary, directly or
indirectly, owns or controls or has any capital, equity, partnership,
participation, or other ownership interest in any corporation, partnership,
joint venture, or other business association or entity.
3.2 AUTHORIZATION. The Company has full corporate power and authority to
execute and deliver this Agreement and, subject to obtaining the necessary
approval of its shareholders, to consummate the transactions contemplated
hereby, and to file and distribute the Proxy Statement/Prospectus (as defined in
Section 5.4 hereof). The execution and delivery of this Agreement by the
Company and the consummation of the transactions contemplated hereby have been
duly and validly authorized and approved by the Company's Board of Directors, no
other corporate proceedings on the part of the Company or any Subsidiary are
necessary to recommend and submit this Agreement to the Company's shareholders,
and, subject to obtaining the approval of the Company's shareholders, no other
corporate action on the part of the Company or any Subsidiary is necessary to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by the Company and constitutes the valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, subject to laws of general application relating to bankruptcy,
insolvency, and the relief of debtors and rules of law governing specific
performance, injunctive relief, or other equitable remedies. To the Company's
knowledge, each Agreement to Facilitate Merger and Affiliate's Letter (as
described in Sections 5.11 and 5.6) has been duly and validly executed and
delivered by the Company shareholder who is a party thereto and constitutes the
valid and binding obligation of such shareholder, enforceable in accordance with
its terms, subject to laws of general application relating to bankruptcy,
insolvency, and the relief of debtors and rules of law governing specific
performance, injunctive relief, or other equitable remedies.
3.3 CAPITALIZATION. As of June 24, 1998, the authorized capital stock of
the Company consists of (i) 40,000,000 shares of Company Common Stock, par value
$.01 per share, of which 17,722,021 shares are issued and outstanding and no
shares are held in the Company's treasury, and (ii) 5,000,000 shares of Company
Preferred Stock, par value $.01 per share, none of which are issued or
outstanding. Except as set forth on the Company Disclosure Schedule, all issued
and outstanding shares of capital stock of each Subsidiary are owned,
beneficially and of record, by the Company, free and clear of any Liens (as
defined in Section 3.14). All issued and outstanding shares of Company Common
Stock have been validly issued, are fully paid and nonassessable, and have not
been issued in violation of and are not currently subject to any preemptive
rights. Except for options to purchase an aggregate 2,971,435 shares of Company
Common Stock granted pursuant to the Company 1994 Stock Purchase and Option Plan
and the 1997 Stock and Incentive Plan (collectively, the "Company Option Plans")
listed, together with their respective exercise prices, in Section 3.3 of the
Company Disclosure Schedule, and except for the rights to purchase under the
Company's Team Savings Plan shares of Company Common Stock (estimated to be the
number of shares equal to approximately $105,000 of matching contributions per
quarter divided by the trading price of the Company Common Stock at the end
9
of any such quarter, based on the current match rates, as listed in Section
3.3 of the Company Disclosure Schedule) and except for the rights to purchase
under the Company's Employee Share Purchase Plan shares of Company Common
Stock (estimated to be approximately 50,000 shares, at a per share price of
$13.4938, based on the current contribution rates of the participants, as
listed in Section 3.3 of the Company Disclosure Schedule, and assuming the
current Plan Period is ended at the Effective Time (which is assumed to be
not later than September 30, 1998 for this purpose)), there are not any
outstanding or authorized subscriptions, options, warrants, calls, rights,
convertible securities, commitments, restrictions, arrangements, or any other
agreements of any character to which the Company or any Subsidiary is a party
that, directly or indirectly, (i) obligate the Company or any Subsidiary to
issue any shares of capital stock or any securities convertible into, or
exercisable or exchangeable for, or evidencing the right to subscribe for,
any shares of capital stock, (ii) call for or relate to the sale, pledge,
transfer, or other disposition or encumbrance by the Company or any
Subsidiary of any shares of its capital stock, or (iii) to the knowledge of
the Company, relate to the voting or control of such capital stock. The
Company Disclosure Schedule sets forth a complete and accurate list of all
stock options, warrants, and other rights to acquire Company Common Stock,
including the name of the holder, the date of grant, acquisition price,
expiration date, number of shares, exercisability schedule, and, in the case
of options, the type of option under the Code. The Company Disclosure
Schedule also sets forth the restrictions to which any shares of Company
Common Stock issued pursuant to the Company Option Plans or otherwise are
currently subject and also sets forth the restrictions to which such shares
will be subject immediately after the Effective Time. No consent of holders
or participants under the Company Option Plans or Employee Share Purchase
Plan is required to carry out the provisions of Section 1.7. All actions, if
any, required on the part of the Company under the Company Option Plans or
Employee Share Purchase Plan to allow for the treatment of Company Options
and the Employee Share Purchase Plan as is provided in Section 1.7, has been,
or prior to the Closing will be, validly taken by the Company, and the
Company will not from and after the date hereof allow any increase in the
rate of a participant's contributions to the Employee Share Purchase Plan or
any enrollments or re-enrollments in such Plan.
3.4 REPORTS AND FINANCIAL STATEMENTS. The Company has filed all forms,
reports, registration statements, and documents required to be filed by it with
the Securities and Exchange Commission ("SEC") since January 1, 1996 (such
forms, reports, registration statements, and documents, together with any
amendments thereto, are referred to as the "Company SEC Filings"). As of their
respective dates, the Company SEC Filings (i) complied as to form in all
material respects with the applicable requirements of the Securities Act of 1933
and the rules and regulations thereunder (the "1933 Act") and the Securities
Exchange Act of 1934 and the rules and regulations thereunder (the "1934 Act"),
as the case may be, and (ii) did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements made therein, in light of the circumstances under which
they were made, not misleading. The audited financial statements and unaudited
interim financial statements included or incorporated by reference in the
Company SEC Filings, including but not limited to the Company's audited
financial statements at and for the year ended December 31, 1997 (the "Company
1997 Financials"), (i) were prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods
10
involved (except as may be indicated therein or in the notes thereto), (ii)
complied as of their respective dates in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, and (iii) fairly present the consolidated
financial position of the Company as of the dates thereof and the income,
cash flows, and changes in shareholders' equity for the periods involved.
The statements of earnings included in the audited or unaudited interim
financial statements in the Company SEC Filings do not contain any items of
special or nonrecurring income or any other income not earned in the ordinary
course of business, except as expressly specified in the applicable statement
of operations or notes thereto. Prior to the date hereof, the Company has
delivered to Parent complete and accurate copies of all Company SEC Filings
since January 1, 1995. The Company has filed in a timely manner all reports
required to be filed by it pursuant to Sections 13, 14, or 15(d) of the 0000
Xxx.
3.5 ABSENCE OF UNDISCLOSED LIABILITIES. Except to the extent specifically
disclosed on the Company Disclosure Schedule, neither the Company nor any
Subsidiary has any liabilities or obligations of any nature (whether absolute,
accrued, contingent, or otherwise) except (a) liabilities or obligations
required by generally accepted accounting principles to be recognized or
disclosed on a consolidated balance sheet of Company and its consolidated
subsidiaries or in the notes thereto that are accrued or reserved against in the
audited consolidated balance sheet of the Company as of December 31, 1997
contained in the Company 1997 Financials (the "Company Audited Balance Sheet")
or in the unaudited consolidated balance sheet of the Company as of March 31,
1998 contained in the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1998 (the "Company Interim Balance Sheet"), and (b)
liabilities or obligations arising since March 31, 1998 in the ordinary course
of business and consistent with past practice that would not have a Company
Material Adverse Effect.
3.6 CONSENTS AND APPROVALS. Except for (i) any applicable requirements of
the 1933 Act, the 1934 Act, state securities laws, the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976 and the regulations thereunder (the "HSR
Act"), and the antitrust, competition, foreign investment, or similar laws of
any foreign countries or supranational commissions or boards that require
pre-merger notifications or filings with respect to the Merger (collectively,
"Foreign Merger Laws"), (ii) approval by the Company's shareholders, (iii) the
filing and recordation of appropriate merger documents as required by the WBCA,
(iv) compliance with Chapter 13 of the WBCA regarding dissenters' rights, and
(v) any items disclosed on the Company Disclosure Schedule, the execution and
delivery of this Agreement by the Company, and, to the Company's knowledge, the
execution and delivery of the Agreements to Facilitate Merger, and the
consummation of the transactions contemplated hereby and thereby will not:
(a) violate any provision of the Articles of Incorporation or Bylaws of the
Company or any Subsidiary; (b) violate any statute, rule, regulation, order, or
decree of any federal, state, local, or foreign body or authority (including,
but not limited to, the Food and Drug Administration (the "FDA") or any
nongovernmental self-regulatory agency) by which the Company or any Subsidiary
or any of their respective properties or assets may be bound; (c) require any
filing with or permit, consent, or approval of any federal, state, local, or
foreign public body or authority (including, but not limited to, the FDA or any
nongovernmental self-regulatory agency); or (d) result in any
11
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default under, result in the loss of any material benefit
under, or give rise to any right of termination, cancellation, increased
payments, or acceleration under, or result in the creation of any Lien (as
defined in Section 3.14) on any of the properties or assets of the Company or
any Subsidiary under, any of the terms, conditions, or provisions of any
note, bond, mortgage, indenture, license, franchise, permit, authorization,
agreement, or other instrument or obligation to which the Company or any
Subsidiary is a party, or by which it or any of its properties or assets may
be bound, except, in the case of clause (d), for any such violations,
breaches, defaults, or other occurrences that would not prevent or delay
consummation of any of the transactions contemplated hereby in any material
respect, or otherwise prevent the Company from performing its obligations
under this Agreement in any material respect, and would not have a Company
Material Adverse Effect.
3.7 COMPLIANCE WITH LAWS. Except to the extent specifically described on
the Company Disclosure Schedule, all activities of the Company and each
Subsidiary have been, and are currently being, conducted in compliance with all
applicable federal, state, local, and foreign laws, ordinances, regulations,
interpretations, judgments, decrees, injunctions, permits, licenses,
certificates, governmental requirements, orders, and other similar items of any
court or other governmental entity (including, but not limited to, those of the
FDA or any nongovernmental self-regulatory agency), the failure to comply with
which could reasonably be expected to have a Company Material Adverse Effect.
The Company and each Subsidiary has timely filed or otherwise provided all
registrations, reports, data, and other information and applications with
respect to its medical device, pharmaceutical, consumer, health care, and other
governmentally regulated products (the "Regulated Products") required to be
filed with or otherwise provided to the FDA or any other federal, state, local,
or foreign governmental authorities with jurisdiction over the manufacture, use,
or sale of the Regulated Products, and all regulatory licenses or approvals in
respect thereof are in full force and effect, except where the failure to file
timely such registrations, reports, data, information, and applications or the
failure to have such licenses and approvals in full force and effect would not
have a Company Material Adverse Effect.
3.8 LITIGATION. Except to the extent specifically disclosed on the
Company Disclosure Schedule, to the Company's knowledge, no investigation or
review by any federal, state, local, or foreign body or authority (including,
but not limited to, the FDA or any nongovernmental self-regulatory agency) with
respect to the Company or any Subsidiary is pending or threatened, nor has any
such body or authority (including, but not limited to, the FDA or any
nongovernmental self-regulatory agency) indicated to the Company or any
Subsidiary an intention to conduct the same. Except to the extent specifically
disclosed on the Company Disclosure Schedule, there are no claims, actions,
suits, or proceedings by any private party that could reasonably be expected to
involve individually an amount in excess of $50,000 or collectively an aggregate
amount in excess of $200,000, or by any governmental body or authority
(including, but not limited to, the FDA or any nongovernmental self-regulatory
agency), against or affecting the Company or any Subsidiary, pending or, to the
knowledge of the Company, threatened at law or in equity, or before any federal,
state, local, foreign, or other governmental department, commission, board,
bureau, agency, or instrumentality (including, but not limited to, the FDA or
any
12
nongovernmental self-regulatory agency), and, to the knowledge of the
Company, there is no basis for any such investigation, review, claim, action,
suit, or proceeding that could reasonably be expected to have a Company
Material Adverse Effect.
3.9 ABSENCE OF MATERIAL ADVERSE CHANGES. Except to the extent
specifically disclosed on the Company Disclosure Schedule, since December 31,
1997 there has not been any (a) change or circumstance that could reasonably be
expected to have a Company Material Adverse Effect; (b) action by the Company or
any Subsidiary that, if taken on or after the date of this Agreement, would
require the consent or approval of Parent pursuant to Section 5.1 hereof, except
for actions as to which consent or approval has been given as provided therein;
(c) damage, destruction, or loss, whether or not covered by insurance, that
could reasonably be expected to have a Company Material Adverse Effect;
(d) change by the Company or any Subsidiary in accounting methods or principles
used for financial reporting purposes, except as required by a change in
generally accepted accounting principles and concurred with by the Company's
independent public accountants; or (e) agreement, whether in writing or
otherwise, to take any action described or referenced in this Section 3.9.
3.10 ENVIRONMENTAL LAWS AND REGULATIONS. The Company Disclosure Schedule
completely and accurately sets forth the following: (a) a list of all above-
ground storage tanks or underground storage tanks for Hazardous Materials (as
defined below) on the Company's principal facility located at 00000 Xxxxxxx Xxxx
X.X., Xxxxxxx, XX 00000 (the "Principal Facility"); (b) the identity of any
Hazardous Materials (as defined below) used, generated, transported or disposed
of by the Company or any Subsidiary now or at any time in the past, together
with a brief description and location of each activity using such Hazardous
Materials (with respect to sites other than Redmond, only to the extent of
material Hazardous Materials); (c) a summary of the identity of, to the
Company's knowledge, any Hazardous Materials that have been disposed of or found
on, above or below the Principal Facility; and (d) a list of all reports,
studies, and tests in the possession of the Company or any Subsidiary or
initiated by the Company or any Subsidiary pertaining to the existence of
Hazardous Materials on, above, or below real property now or at any time owned,
leased or occupied by the Company or any Subsidiary (such real property referred
to in this Section as the "Real Property") or any property adjoining or which
could reasonably be expected to affect the Real Property, or concerning
compliance with or liability under the Regulations (as defined below). The
Company has heretofore delivered to Parent complete and accurate copies of such
reports, studies, and tests.
The Company and each Subsidiary have obtained, and maintained in full force
and effect, all required environmental permits and other governmental approvals
and are in compliance with all applicable Regulations (as defined below), except
where the failure to so obtain and maintain or to be in compliance would not
have a Company Material Adverse Effect. Neither the Company nor any Subsidiary
(i) has received a written notice or Claim (as defined below) alleging potential
liability under any of the Regulations or alleging a violation of the
Regulations or (ii) has any knowledge that such a notice or Claim may be issued
in the future. Neither the Company nor any Subsidiary has any knowledge of any
notices to or Claims against any persons, or reasonable basis therefor, alleging
potential liability under any of the Regulations with respect
13
to the Real Property or any adjoining properties or which could reasonably be
expected to affect the Real Property. Neither the Company nor any Subsidiary
(i) has been or is presently subject to or, to the knowledge of the Company,
threatened with any administrative or judicial proceeding pursuant to the
Regulations, or (ii) has any information that it may be subject to or, to the
knowledge of the Company, threatened with such a proceeding in the future.
Neither the Company nor any Subsidiary has knowledge of any conditions or
circumstances that could reasonably be expected to result in the
determination of liability against the Company or any Subsidiary relating to
environmental matters that would have a Company Material Adverse Effect,
including, but not limited to, any Claim arising from past or present
environmental practices with respect to Hazardous Materials, the Real
Property, or any disposal sites. No Hazardous Materials have been or are
threatened to be discharged, emitted, or released into the air, water, soil,
or subsurface at or from the Real Property by the Company or, to the
Company's knowledge, by any other person.
For purposes of this Section 3.10, the following terms shall have the
following meanings: (i) "Hazardous Materials" means asbestos, urea
formaldehyde, polychlorinated biphenyls, nuclear fuel or materials, chemical
waste, radioactive materials, explosives, known human carcinogens, petroleum
products or other substances or materials listed, identified, or designated as
toxic or hazardous or as a pollutant or contaminant in, or the use, release or
disposal of which is regulated by, the Regulations; (ii) "Regulations" means the
Comprehensive Environmental Response Compensation and Liability Act ("CERCLA")
as amended by the Superfund Amendments and Reauthorization Act of 1986 ("XXXX"),
42 U.S.C. Sections 9601 ET SEQ.; the Federal Resource Conservation and Recovery
Act of 1976 ("RCRA"), 42 U.S.C. Sections 6901 ET SEQ.; the Clean Water Act, 33
U.S.C. Sections 1321 ET SEQ.; the Clean Air Act, 42 U.S.C. Sections 7401 ET
SEQ., and any other federal, state, county, local, foreign, or other
governmental statute, regulation, or ordinance, as now in existence, that
relates to or deals with employee safety and human health, pollution, health, or
the environment including, but not limited to, the use, generation, discharge,
transportation, disposal, recordkeeping, notification, and reporting of
Hazardous Materials; and (iii) "Claim" means any and all claims, demands, causes
of actions, suits, proceedings, administrative proceedings, losses, judgments,
decrees, debts, damages, liabilities, court costs, penalties, attorneys' fees,
and any other expenses incurred, assessed, sustained or alleged by or against
the Company or any Subsidiary.
3.11 OFFICERS, DIRECTORS AND EMPLOYEES. Prior to the date hereof, the
Company has provided to Parent a list that completely and accurately sets forth
the name and current annual salary rate of each officer or employee of the
Company or any Subsidiary whose total remuneration for the last fiscal year was,
or for the current fiscal year has been set at, in excess of $50,000, together
with a summary of the bonuses, commissions, additional compensation, and other
like benefits, if any, paid or payable to such persons for the last fiscal year
and proposed for the current fiscal year. The Company Disclosure Schedule
completely and accurately sets forth the names of the officers (with all
positions and titles indicated) and directors of the Company and each
Subsidiary. No unfair labor practice complaint against the Company or any
Subsidiary is pending before the National Labor Relations Board, and there is no
labor strike, slowdown or stoppage pending or, to the knowledge of the Company,
threatened against or involving the
14
Company or any Subsidiary. No unionizing efforts have, to the knowledge of
the Company, been made by employees of the Company or any Subsidiary, neither
the Company nor any Subsidiary is a party to or subject to any collective
bargaining agreement, and no collective bargaining agreement is currently
being negotiated by the Company or any Subsidiary. There is no labor dispute
pending or, to the knowledge of the Company, threatened between the Company
or any Subsidiary and its employees. During the 12-month period preceding
the date of this Agreement there has not been any material increase in the
rate of turnover of employees of the Company or any Subsidiary over
historical rates.
3.12 TAXES. The Company has previously furnished to Parent complete and
accurate copies of all federal income tax returns actually filed by the Company
for each of the fiscal years ended December 31, 1995 and 1996 and has made
available for review by Parent (or, with respect to those that are not available
at the Company's Principal Facility, will make available for review by Parent
within 15 days after execution of this Agreement) complete and accurate copies
of all other tax or assessment reports and tax returns (including any applicable
information returns) required by any law or regulation (whether United States,
foreign, state, local or other jurisdiction) and filed by the Company for the
fiscal years ended December 31, 1995, 1996 or 1997, and of all such returns
filed separately by any Subsidiary for fiscal years ended during or after 1995.
The Company and each Subsidiary has filed, or has obtained extensions to file
(which extensions have not expired without filing), all state, local, United
States, foreign, or other tax reports and returns required to be filed by any of
them. The Company and each Subsidiary has duly paid, or accrued on its books of
account, all taxes (including estimated taxes) shown as due on such reports and
returns (or such extension requests), or assessed against it, or that it is
obligated to withhold from amounts owed by it to any person. The liabilities
and reserves for taxes reflected on the Company Audited Balance Sheet or the
Company Interim Balance Sheet are adequate to cover all taxes payable by the
Company and its Subsidiaries for all taxable periods and portions thereof ending
on or before the dates thereof. There are no Liens (as defined in Section 3.14)
for taxes upon any property or asset of the Company or any Subsidiary. Neither
the Company nor any Subsidiary is delinquent in the payment of any tax
assessment (including, but not limited to, any applicable withholding taxes).
None of the tax returns or reports for the tax periods ended December 31, 1995,
1996, and 1997 have been audited by the Internal Revenue Service (the "IRS") or
by any other taxing authority. Further, to the knowledge of the Company, except
to the extent specifically disclosed on the Company Disclosure Schedule, no
state of facts exists or has existed that would subject the Company or any
Subsidiary to an additional material tax liability for any taxes assessable by
either the IRS or any separate state, local, foreign, or other taxing authority
with respect to any reports or returns filed on or before the date hereof (other
than extension requests for which returns have not been filed as of the date
hereof). Neither the Company nor any Subsidiary has, with regard to any assets
or property held, acquired or to be acquired by any of them, filed a consent to
the application of Section 341(f)(2) of the Code. Except to the extent
specifically disclosed on the Company Disclosure Schedule, neither the Company
nor any Subsidiary has (i) received notification of any pending or proposed
examination by either the IRS or any state, local, foreign, or other taxing
authority, (ii) received notification of any pending or proposed deficiency by
either the IRS or
15
any state, local, foreign, or other taxing authority, or (iii) granted any
extension of the limitations period applicable to any claim for taxes.
For the purposes of this Section 3.12, "tax" shall mean and include taxes,
additions to tax, penalties, interest, fines, duties, withholdings, assessments,
and charges assessed or imposed by any governmental authority, including but not
limited to all federal, state, county, local, and foreign income, profits, gross
receipts, import, ad valorem, real and personal property, franchise, license,
sales, use, value added, stamp, transfer, withholding, payroll, employment,
excise, custom, duty, and any other taxes, obligations and assessments of any
kind whatsoever; "tax" shall also include any liability arising as a result of
being (or ceasing to be) a member of any affiliated, consolidated, combined, or
unitary group as well as any liability under any tax allocation, tax sharing,
tax indemnity, or similar agreement.
3.13 CONTRACTS. The Company Disclosure Schedule lists, and the Company has
heretofore furnished to Parent complete and accurate copies of (or, if oral, the
Company Disclosure Schedule states all material provisions of), (a) every
independent sales representative, noncompetition (except only for standard
noncompetition agreements entered into with the Company's employees, the forms
of which have been provided to Parent), loan, credit, escrow, security,
mortgage, guaranty, pledge, buy-sell, letter of credit, OEM, supply,
distribution, manufacturers' representative, dealer, agency, lease (except for
immaterial personal property leases), licensing (except for immaterial licenses,
which include, without limitation, licenses for off-the-shelf software),
franchise, development, joint development, joint venture, research and
development, or similar contract, agreement, or understanding material to the
Company and to which the Company or any Subsidiary is a party or may be bound,
(b) every material employment or consulting agreement or arrangement with or for
the benefit of any director, officer, employee, other person or shareholder of
the Company or any Subsidiary or any affiliate thereof, (c) every contract,
agreement, or understanding to which the Company or any Subsidiary is a party
that could reasonably be expected to involve payments by or to the Company or
any Subsidiary in excess of $150,000 during the Company's current 1998 fiscal
year or in excess of $250,000 in the aggregate during the Company's 1998, 1999
and 2000 fiscal years, or would have a Company Material Adverse Effect, or that
was not made in the ordinary course of business, (d) every agreement or contract
between the Company or any Subsidiary and any of the Company's officers,
directors, or more than 5% shareholders or any entity in which any of the
Company's officers, directors, or more than 5% shareholders has a greater than
2% equity interest, and (e) every other contract, plan, agreement, or
understanding to which the Company or any Subsidiary is a party or may be bound
and which would be required to be filed with the SEC in a filing to which
paragraph (b)(10) of Item 601 of Regulation S-K of the Rules and Regulations of
the SEC would be applicable. The Company and each Subsidiary has performed all
obligations required to be performed by it under any listed or material
contract, plan, agreement, understanding, or arrangement made or obligation owed
by or to the Company or any Subsidiary, except where the failure would not have
a Company Material Adverse Effect; to the Company's knowledge, there has not
been any event of default (or any event or condition which with notice or the
lapse of time, both or otherwise, would constitute an event of default)
thereunder on the part of the Company, any Subsidiary, or any other party to any
thereof that
16
would have a Company Material Adverse Effect; the same are in full force and
effect and valid and enforceable by the Company or its Subsidiaries in
accordance with their respective terms subject to laws of general application
relating to bankruptcy, insolvency, and the relief of debtors and rules or
law governing specific performance, injunctive relief, and other equitable
remedies; and the performance of any such contracts, plans, agreements,
understandings, arrangements, or obligations would not have a Company
Material Adverse Effect.
3.14 TITLE TO PROPERTIES; LIENS. The Company and/or its Subsidiaries have
good and marketable title to all properties and assets reflected on the Company
Audited Balance Sheet or the Company Interim Balance Sheet or acquired after the
dates thereof (except for properties and assets sold or otherwise disposed of in
the ordinary course of business since the dates thereof), which includes each
asset the absence or unavailability of which would have a Company Material
Adverse Effect, subject only to (a) statutory Liens arising or incurred in the
ordinary course of business with respect to which the underlying obligations are
not delinquent, (b) with respect to personal property, the rights of customers
of the Company or any Subsidiary with respect to inventory or work in progress
under orders or contracts entered into by the Company or any Subsidiary in the
ordinary course of business, (c) Liens reflected on the Company Audited Balance
Sheet or the Company Interim Balance Sheet, (d) Liens for taxes not yet
delinquent, and (e) and defects in title that would not have a Company Material
Adverse Effect. The term "Lien" as used in this Agreement means any mortgage,
pledge, security interest, encumbrance, lien, claim, or charge of any kind. All
properties and assets purported to be leased by the Company or any Subsidiary
are subject to valid and effective leases that are in full force and effect, and
there does not exist, and the Merger will not result in, any default or event
that with notice or lapse of time, or both or otherwise, would constitute a
default under any such leases which would have a Company Material Adverse
Effect. The properties and assets of the Company and each Subsidiary have been
kept in good condition and repair in the ordinary course of business.
3.15 PERMITS, LICENSES, ETC.. Except as set forth on the Company
Disclosure Schedule, the Company and each Subsidiary has all rights, permits,
certificates, licenses, consents, franchises, approvals, registrations, and
other authorizations necessary to sell its products and services and otherwise
carry on and conduct its business and to own, lease, use, and operate its
properties and assets at the places and in the manner now conducted and
operated, except those the absence of which would not have a Company Material
Adverse Effect. Neither the Company nor any Subsidiary has received any notice
or claim pertaining to the failure to obtain any permit, certificate, license,
franchise, approval, registration, or other authorization required by any
federal, state, local, or foreign body or authority (including, but not limited
to, the FDA or any nongovernmental self-regulatory agency).
3.16 INTELLECTUAL PROPERTY RIGHTS. The Company Disclosure Schedule
contains a complete and accurate list of all material patents, trademarks, trade
names, service marks, copyrights, and all applications for or registrations of
any of the foregoing as to which the Company or any Subsidiary is the owner or a
licensee (indicating whether such license is exclusive or nonexclusive). The
Company and each Subsidiary exclusively owns, free and clear of any Lien (as
defined in Section 3.14), or is exclusively (unless otherwise indicated in the
17
Company Disclosure Schedule) licensed to use, all patents, trademarks, trade
names, service marks, copyrights, applications for or registrations of any of
the foregoing, processes, inventions, designs, technology, formulas, computer
software programs, know-how, and trade secrets used in or necessary for the
conduct of its respective business as currently conducted or proposed to be
conducted (the "Company Intellectual Property"). Except to the extent
specifically disclosed on the Company Disclosure Schedule, no claim has been
asserted or, to the knowledge of the Company, threatened by any person with
respect to the use of the Company Intellectual Property or challenging or
questioning the validity or effectiveness of any license or agreement with
respect thereto. To the knowledge of the Company, neither the use of the
Company Intellectual Property by the Company or any Subsidiary in the present or
planned conduct of its business nor any product or service of the Company or any
Subsidiary infringes on the intellectual property rights of any person. No
current or former shareholder, employee, or consultant of the Company or any
Subsidiary has any rights in or to any of the Company Intellectual Property.
All Company Intellectual Property listed on the Company Disclosure Schedule has
the status indicated therein and all applications are still pending in good
standing and have not been abandoned. Except to the extent specifically
disclosed on the Company Disclosure Schedule: (i) the Company Intellectual
Property is valid and has not been challenged in any judicial or administrative
proceeding; (ii) the Company and each Subsidiary have made all statutorily
required filings, if any, to record their interests, and taken reasonable
actions to protect their rights, in the Company Intellectual Property; (iii) to
the knowledge of the Company, no person or entity nor such person's or entity's
business or products has infringed, misused, or misappropriated any Company
Intellectual Property or currently is infringing, misusing, or misappropriating
any Company Intellectual Property; and (iv) no other person or entity has any
right to receive or any obligation to pay a royalty with respect to any Company
Intellectual Property or any product or service of the Company or any
Subsidiary.
3.17 BENEFIT PLANS. Except as set forth in the Company Disclosure
Schedule:
(a) Neither the Company nor any Subsidiary sponsors, maintains,
contributes to, or has sponsored, maintained, or contributed to or been
required to contribute to, any "employee pension benefit plan" ("Pension
Plan"), as such term is defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), including, solely for
the purpose of this subsection, a plan excluded from coverage by Section
4(b)(5) of ERISA. Each such Pension Plan presently maintained by the
Company or any Subsidiary is, in all material respects, in compliance with
applicable provisions of ERISA, the Code, and other applicable law.
(b) Neither the Company nor any Subsidiary sponsors, maintains,
contributes to, or has sponsored, maintained, or contributed to or been
required to contribute to, any Pension Plan that is a "Multiemployer Plan"
within the meaning of Section 4001(a)(3) of ERISA.
(c) Neither the Company nor any Subsidiary sponsors, maintains,
contributes to, or has sponsored, maintained, contributed to, or been
required to contribute to, any
18
"employee welfare benefit plan" ("Welfare Plan"), as such term is
defined in Section 3(1) of ERISA, whether insured or otherwise, and any
such Welfare Plan presently maintained by the Company or any Subsidiary
is, in all material respects, in compliance with the provisions of
ERISA, the Code, and all other applicable laws, including, but not
limited to, Section 4980B of the Code and the regulations thereunder,
and Part 6 of Title I of ERISA. Neither the Company nor any Subsidiary
has established or contributed to any "voluntary employees' beneficiary
association" within the meaning of Section 501(c)(9) of the Code.
(d) Neither the Company nor any Subsidiary sponsors, maintains, or
contributes to, or has sponsored, maintained, or contributed to, a "self-
insured medical reimbursement plan" within the meaning of Section 105(h)
of the Code and the regulations thereunder.
(e) Neither the Company nor any Subsidiary currently maintains or
contributes to any oral or written bonus, profit-sharing, compensation
(incentive or otherwise), commission, stock option, or other stock-based
compensation, retirement, severance, change of control, vacation, sick or
parental leave, dependent care, deferred compensation, cafeteria,
disability, hospitalization, medical, death, retiree, insurance, or other
benefit or welfare or other similar plan, policy, agreement, trust, fund,
or arrangement providing for the remuneration or benefit of all or any
employees or shareholders or any other person, that is neither a Pension
Plan nor a Welfare Plan (collectively, the "Compensation Plans").
(f) To the knowledge of the Company, neither any Pension Plans or
Welfare Plans nor any trust created or insurance contract issued thereunder
nor any trustee, fiduciary, custodian, or administrator thereof, nor any
officer, director, or employee of the Company or any Subsidiary, custodian,
or any other "disqualified person" within the meaning of Section 4975(e)(2)
of the Code, or "party in interest" within the meaning of Section 3(14) of
ERISA, with respect to any such plan has engaged in any act or omission
that could reasonably be expected to subject the Company or any Subsidiary,
either directly or indirectly, to a liability for breach of fiduciary
duties under ERISA or a tax or penalty imposed by Section 502 of ERISA.
(g) Full and timely payment has been made of all amounts that the
Company or any Subsidiary is required, under applicable law, with respect
to any Pension Plan, Welfare Plan, or Compensation Plan, or any agreement
relating to any Pension Plan, Welfare Plan, or Compensation Plan, to have
paid as a contribution to each Pension Plan, Welfare Plan, or Compensation
Plan. To the extent required by generally accepted accounting principles,
the Company has made adequate provisions for reserves to meet contributions
that have not been made because they are not yet due under the terms of any
Pension Plan, Welfare Plan, or Compensation Plan or related agreements.
There will be no change on or before the Closing Date in the operation of
any Pension Plan, Welfare Plan, or Compensation Plan or documents under
which any such plan is maintained that
19
will result in an increase in the benefit liabilities under such plan,
except as may be required by law. The IRS has issued favorable
determination letters with respect to all Company and Subsidiary Pension
Plans that are intended to be qualified under Section 401(a) of the
Code. The Company has provided to Parent complete and accurate copies
of all Pension Plans, Welfare Plans, Compensation Plans, and related
agreements, annual reports (Form 5500), favorable determination letters,
current summary plan descriptions, and all employee handbooks or manuals.
(h) The execution of, and performance of the transactions
contemplated in, this Agreement will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event
under any Pension Plan, Welfare Plan, Compensation Plan, or other
arrangement that will or may result in any payment (whether of severance
pay or otherwise), acceleration, forgiveness of indebtedness, vesting,
distribution, increase in benefits, or obligation to fund benefits. No
amount that could be received (whether in cash or property or the vesting
of property) as a result of any of the transactions contemplated by this
Agreement by any employee, officer, or director 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 Pension Plan,
Welfare Plan, or Compensation Plan currently in effect would be an "excess
parachute payment" (as such term is defined in Section 280G(b)(1) of the
Code).
3.18 MINUTE BOOKS. The minute books of the Company and the Subsidiaries,
as previously made available to Parent and its representatives, contain, in all
material respects, complete and accurate records of all meetings of and
corporate actions or written consents by the shareholders, Boards of Directors,
and committees of the Boards of Directors of the Company and the Subsidiaries.
3.19 INSURANCE POLICIES. The Company Disclosure Schedule sets forth a
complete and accurate list, including the term, coverages, premium rates, limits
and deductibles thereof, of all material policies of insurance maintained by the
Company or any Subsidiary with respect to any of its officers, directors,
employees, shareholders, agents, properties, buildings, machinery, equipment,
furniture, fixtures or operations and a description of each claim made by the
Company or any Subsidiary during the three-year period preceding the date hereof
under any such policy of insurance. The Company has previously delivered to
Parent complete and accurate copies of all such policies of insurance and
complete and accurate copies of all documentation regarding claims made
thereunder. All such policies of insurance are in full force and effect, have
been issued for the benefit of the Company, its Subsidiaries, and/or their
respective directors, officers and employees by properly licensed insurance
carriers, and are adequate and customary for the assets, business, and
operations of the Company and its Subsidiaries. The Company has promptly and
properly notified its insurance carriers of any and all claims known to it with
respect to its operations or products for which it is insured.
3.20 BANK ACCOUNTS. The Company Disclosure Schedule sets forth a list of
each bank, broker, or other depository with which the Company or any Subsidiary
has an account or safe
20
deposit box (other than those having a balance or value not exceeding $25,000
individually or $250,000 in the aggregate), the names and numbers of such
accounts or boxes and the names of all persons authorized to draw thereon or
execute transactions.
3.21 POWERS OF ATTORNEY. The Company Disclosure Schedule sets forth the
names of all persons, if any, holding powers of attorney from the Company or any
Subsidiary relating to authority for actions taken in the United States and a
description of the scope of each such power of attorney. The Company has
delivered to Parent prior to the date hereof complete and accurate copies of all
such powers of attorney. Within 15 days after execution of this Agreement, the
Company shall provide Parent with a list setting forth the names of all persons
holding any other powers of attorney from the Company or any Subsidiary not
included in the Company Disclosure Schedule and a description of the scope of
each such other power of attorney (other than powers of attorney granted in the
ordinary course of business for the prosecution of intellectual property filing
matters).
3.22 PRODUCT LIABILITY CLAIMS. During the three-year period preceding the
date hereof, neither the Company nor any Subsidiary has ever received a claim,
or incurred any uninsured or insured liability, for or based upon breach of
product warranty (other than warranty service, repair claims and MDR's in the
ordinary course of business not material in amount or significance), strict
liability in tort, negligent manufacture of product, negligent provision of
services or any other allegation of liability, including or resulting in, but
not limited to, product recalls, arising from the materials, design, testing,
manufacture, packaging, labeling (including instructions for use), or sale of
its products or from the provision of services (hereafter collectively referred
to as "Product Liability"). To the knowledge of the Company, no basis for any
claim based upon alleged Product Liability exists that would have a Company
Material Adverse Effect.
3.23 WARRANTIES. To the knowledge of the Company, all products
manufactured or sold, and all services provided, by the Company or any
Subsidiary have complied, and are in compliance, in all material respects with
all contractual requirements, warranties or covenants, express or implied,
applicable thereto, and with all applicable governmental, trade association or
regulatory specifications therefor or applicable thereto, including, to the
extent applicable, FDA Good Manufacturing Practices. The terms of all product
and service warranties of the Company and each Subsidiary are specifically set
forth on the Company Disclosure Schedule. The Company has delivered to Parent
prior to the date hereof complete and accurate copies of the forms of all such
warranties and policies used by the Company in the last twenty (20) months, and
no warranties with terms of more than twelve (12) months have been used by the
Company other than those used in the last twenty (20) months.
3.24 INVENTORIES. Except as specifically set forth on the Company
Disclosure Schedule, all inventories owned by the Company and its Subsidiaries
consist of items of merchantable quality and quantity usable or salable in the
ordinary course of business, are salable at prevailing market prices that are
not less than the book value amounts thereof or the price customarily charged by
the Company or the applicable Subsidiary therefor, conform to the
21
specifications established therefor, and have been manufactured in accordance
with applicable regulatory requirements, except to the extent that the
failure of such inventories so to consist, be saleable, conform, or be
manufactured would not have a Company Material Adverse Effect. Except as
specifically set forth on the Company Disclosure Schedule, the quantities of
all inventories, materials, and supplies of the Company and each Subsidiary
(net of the obsolescence reserve therefor shown on the Company Interim
Balance Sheet and determined in the ordinary course of business consistent
with past practice) are not obsolete, damaged, slow-moving, defective, or
excessive, and are reasonable and balanced in the circumstances of the
Company and its Subsidiaries, except to the extent that the failure of such
inventories to be in such conditions would not have a Company Material
Adverse Effect. The Company Disclosure Schedule sets forth a true and
complete list of the addresses of all warehouses or other facilities in which
inventories of the Company or any Subsidiary are located.
3.25 RELATIONS WITH SUPPLIERS AND CUSTOMERS. No material current supplier
of the Company or any Subsidiary has cancelled any contract or order for
provision of, and, to the knowledge of the Company, there has been no threat by
or basis for any such supplier not to provide, raw materials, products,
supplies, or services to the businesses of the Company and its Subsidiaries
either prior to or following the Merger. Except as specifically set forth on
the Company Disclosure Schedule, neither the Company nor any Subsidiary has, to
the knowledge of the Company, received any information from any customer that
accounted for more than 5% of the revenues of the Company and its Subsidiaries
during the last full fiscal year to the effect that such customer intends to
materially decrease the amount of business it does with the businesses of the
Company and its Subsidiaries either prior to or following the Merger. The
Company Disclosure Schedule lists each supplier to the Company or any Subsidiary
that is the sole source of a particular raw material, product, supply, or
service.
3.26 NO FINDERS. No act of the Company or any Subsidiary has given or will
give rise to any claim against any of the parties hereto for a brokerage
commission, finder's fee, or other like payment in connection with the
transactions contemplated herein, except payments in the amounts specified on
the Company Disclosure Schedule to those parties identified thereon who have
acted as a finder for the Company or have been retained by the Company as
financial advisors pursuant to the agreements or other documents described in
the Company Disclosure Schedule, copies of which have been provided to Parent
prior to the date of this Agreement.
3.27 PROXY STATEMENT. The Proxy Statement/Prospectus (as defined in
Section 5.4 hereof) and any amendments or supplements thereto will comply in all
material respects with all applicable laws, and none of the information relating
to the Company or its affiliates included or incorporated therein or in any
amendments or supplements thereto, or any schedules required to be filed with
the SEC in connection therewith, will, at any time during the period beginning
at the time it is mailed to shareholders and ending at the time of the Company
Shareholders Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that no representation or warranty is
made by the Company with respect to information relating to Parent
22
or any affiliate of Parent supplied by Parent specifically for inclusion in
the Proxy Statement/Prospectus.
3.28 MERGER FILINGS. The information as to the Company and the
Subsidiaries or any of their affiliates or shareholders included in the
Company's filing, or submitted to Parent for inclusion in its filing, if any,
required to be submitted under the HSR Act or under any Foreign Merger Laws
shall be true, correct, and complete in all material respects and shall comply
in all material respects with the applicable requirements of the HSR Act, the
rules and regulations issued by the Federal Trade Commission pursuant thereto,
and the Foreign Merger Laws.
3.29 FAIRNESS OPINION. The Company has received an opinion from Xxxxxx
Xxxxxxx & Co. Incorporated to the effect that, as of the date hereof, the
consideration to be received by the holders of Company Common Stock in the
Merger is fair to such holders from a financial point of view, and the Company
will promptly deliver a copy of such opinion to Parent.
3.30 STATE TAKEOVER LAWS. The Board of Directors of the Company has
approved the transactions contemplated by this Agreement, the Agreements to
Facilitate Merger described in Section 5.11 hereof, and the Stock Option
Agreement described in Section 5.17 hereof such that the provisions of Section
23B.19.040 of the WBCA will not apply to this Agreement or the Agreements to
Facilitate Merger or the Stock Option Agreement or any of the transactions
contemplated hereby or thereby.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUBSIDIARY
Except as set forth in a document of even date herewith, referring
specifically to the representations and warranties in this Agreement which
identifies by section number to which such disclosure relates (the "Parent
Disclosure Schedule"), Parent and Merger Subsidiary hereby jointly and severally
make the following representations and warranties to the Company:
4.1 ORGANIZATION. Parent is a corporation duly organized, validly
existing, and in good standing under the laws of the state of Minnesota. Merger
Subsidiary is a corporation duly organized and validly existing under the laws
of the state of Washington. Each of Parent and Merger Subsidiary has all
requisite corporate power and authority to own, lease, and operate its
properties and to carry on its business as now being conducted. Each of Parent
and Merger Subsidiary is duly qualified and in good standing to do business in
each jurisdiction in which the property owned, leased, or operated by it or the
nature of the business conducted by it makes such qualification necessary and
where the failure to qualify could reasonably be expected to have a Parent
Material Adverse Effect (as defined below). "Parent Material Adverse Effect"
means an effect that, individually or in the aggregate with other effects, is or
would reasonably be expected to be materially adverse: (i) to the present or
planned business, properties, liabilities, results of operation, or financial
condition of Parent and its subsidiaries, considered as a whole,
23
or (ii) to Parent's ability to perform any of its obligations under this
Agreement or to consummate the Merger.
4.2 AUTHORIZATION. Each of Parent and Merger Subsidiary has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby, and Parent has full corporate
power and authority to prepare, file, and distribute the Registration Statement
(as defined in Section 5.4 hereof). The execution and delivery of this
Agreement by Parent and Merger Subsidiary and the consummation of the
transactions contemplated hereby have been duly and validly authorized and
approved by the Boards of Directors of Parent and Merger Subsidiary and by
Parent as the sole shareholder of Merger Subsidiary, and no other corporate
proceedings on the part of Parent and Merger Subsidiary are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by each of
Parent and Merger Subsidiary and constitutes the valid and binding obligation of
Parent and Merger Subsidiary, enforceable against each of them in accordance
with its terms, subject to laws of general application relating to bankruptcy,
insolvency, and the relief of debtors and rules of law governing specific
performance, injunctive relief, or other equitable remedies.
4.3 CAPITALIZATION. As of June 12, 1998, the authorized capital stock of
Parent consisted of (a) 800,000,000 shares of Common Stock with a par value of
$.10 per share, of which there were 469,344,895 shares issued and outstanding
and no shares held in Parent's treasury, and (b) 2,500,000 shares of Preferred
Stock with a par value of $1.00 per share, of which there were no shares issued
and outstanding. The authorized capital stock of Merger Subsidiary consists of
2,500 shares of Merger Subsidiary Common Stock, 100 of which are issued and
outstanding and owned by Parent. All issued and outstanding shares of Parent
Common Stock and Merger Subsidiary Common Stock are, and the shares of Parent
Common Stock to be issued and delivered in the Merger pursuant to Article 1
hereof shall be, at the time of issuance and delivery, validly issued, fully
paid, nonassessable, and free of preemptive rights. The shares of Parent Common
Stock to be issued and delivered in the Merger pursuant to Article 1 hereof
shall be registered under the 1933 Act and duly listed for trading on the NYSE,
subject to official notice of issuance.
4.4 CONSENTS AND APPROVALS. Except for (i) any applicable requirements of
the 1933 Act, the 1934 Act, state securities laws, the NYSE, the HSR Act, and
Foreign Merger Laws, (ii) the filing and recordation of appropriate merger
documents as required by the WBCA, and (iii) compliance with Chapter 13 of the
WBCA regarding dissenters' rights of the Company's shareholders, the execution
and delivery of this Agreement by Parent and Merger Subsidiary and the
consummation of the transactions contemplated hereby will not: (a) violate any
provision of the Articles of Incorporation or Bylaws of Parent or Merger
Subsidiary; (b) violate any statute, rule, regulation, order, or decree of any
public body or authority (including, but not limited to, the FDA or any
nongovernmental self-regulatory agency) by which Parent or any of its
subsidiaries or any of their respective properties or assets may be bound;
(c) require any filing with or permit, consent, or approval of any public body
or authority (including, but not limited to, the FDA or any nongovernmental
self-regulatory agency); or (d) result in any violation or
24
breach of, or constitute (with or without due notice or lapse of time or
both) a default under, result in the loss of any material benefit under, or
give rise to any right of termination, cancellation, increased payments, or
acceleration under, or result in the creation of any Lien on any of the
properties or assets of Parent or its subsidiaries under, any of the terms,
conditions, or provisions of any note, bond, mortgage, indenture, license,
franchise, permit, agreement, or other instrument or obligation to which
Parent or any of its subsidiaries is a party, or by which any of them or any
of their respective properties or assets may be bound, except, in the case of
clause (d), for any such violations, breaches, defaults, or other occurrences
that would not prevent or delay consummation of any of the transaction
contemplated hereby in any material respect, or otherwise prevent Parent from
performing its obligations under this Agreement in any material respect, and
would not have a Parent Material Adverse Effect.
4.5 REPORTS; FINANCIAL STATEMENTS; ABSENCE OF CHANGES; LITIGATION. Parent
has filed all forms, reports, registration statements, and documents required to
be filed by it with the SEC since May 1, 1995 (such forms, reports, registration
statements and documents, together with any amendments thereto, are referred to
as the "Parent SEC Filings"). As of their respective dates, the Parent SEC
Filings (i) complied as to form in all material respects with the applicable
requirements of the 1933 Act and the 1934 Act, as the case may be, and (ii) did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. The audited financial statements and unaudited interim financial
statements included or incorporated by reference in the Parent SEC Filings
(i) were prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except as may be
indicated therein or in the notes thereto), (ii) complied as of their respective
dates in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, and
(iii) fairly present the consolidated financial position of Parent as of the
dates thereof and the income, cash flows, and changes in shareholders' equity
for the periods involved. Except to the extent disclosed in Parent's subsequent
filings with the SEC or specifically disclosed in the Parent Disclosure
Schedule, since April 30, 1997, there has not been any change or circumstance
that would have a Parent Material Adverse Effect. Except to the extent
disclosed in the Parent SEC Filings or in the Parent Disclosure Schedule, to
Parent's knowledge, there is no investigation, review, claim, action, suit or
proceeding by any federal, state, local or foreign body or authority (including,
but not limited to, the FDA or any non-governmental self-regulatory agency) or
private party with respect to Parent that could reasonably be expected to have a
Parent Material Adverse Effect.
4.6 REGISTRATION STATEMENT. The Registration Statement (as defined in
Section 5.4 hereof) and any amendments or supplements thereto will comply in all
material respects with the 1933 Act, and none of the information relating to
Parent or its affiliates included or incorporated therein or in any amendments
or supplements thereto, or any schedules required to be filed with the SEC in
connection therewith, will, at the time the Registration Statement becomes
effective or at the Effective Time, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading; provided, however, that
25
no representation or warranty is made by Parent with respect to information
supplied by the Company or any affiliate of the Company specifically for
inclusion in the Registration Statement.
4.7 MERGER FILINGS. The information as to Parent and Merger Subsidiary or
any of their affiliates or shareholders included in Parent's filing, or
submitted to the Company for inclusion in its filing, if any, required to be
submitted under the HSR Act or under any Foreign Merger Laws shall be true,
correct, and complete in all material respects and shall comply in all material
respects with the applicable requirements of the HSR Act, the rules and
regulations issued by the Federal Trade Commission pursuant thereto, and Foreign
Merger Laws.
4.8 NO FINDERS. No act of Parent or Merger Subsidiary has given or will
give rise to any claim against any of the parties hereto for a brokerage
commission, finder's fee, or other like payment in connection with the
transactions contemplated herein, except payments to Xxxxxxx, Xxxxx & Co., who
has been retained by Parent as its financial advisor.
ARTICLE 5
COVENANTS
5.1 CONDUCT OF BUSINESS OF THE COMPANY. Except as contemplated by this
Agreement, during the period from the date of this Agreement to the Effective
Time, the Company and each Subsidiary will conduct its respective operations
according to its ordinary and usual course of business and consistent with past
practice, and the Company and each Subsidiary will use all reasonable efforts to
preserve intact its respective business organizations, to maintain its present
and planned business, to keep available the services of its respective officers
and employees and to maintain satisfactory relationships with licensors,
licensees, suppliers, contractors, distributors, physicians, consultants,
customers, and others having business relationships with it. The Company will
promptly advise Parent orally and in writing of any material change in the
management, present or planned business, properties, liabilities, results of
operations, or financial condition of the Company or any Subsidiary. Without
limiting the generality of the foregoing, and except as otherwise expressly
provided in or contemplated by this Agreement, prior to the Effective Time,
neither the Company nor any Subsidiary will, without the prior written consent
of Parent:
(a) amend its Articles of Incorporation or Bylaws;
(b) authorize for issuance, issue, sell, pledge, or deliver (whether
through the issuance or granting of additional options, warrants,
commitments, subscriptions, rights to purchase, or otherwise other than in
the ordinary course of business consistent with past new hire practices)
any stock of any class or any securities convertible into shares of stock
of any class (other than the issuance of the number of shares of Company
Common Stock indicated in Section 3.3 hereof upon the exercise in
accordance with the current
26
terms of the stock options listed in Schedule 3.3 hereof as outstanding
on the date of this Agreement);
(c) split, combine, or reclassify any shares of its capital stock,
declare, set aside, or pay any dividend or other distribution (whether in
cash, stock, or property or any combination thereof) in respect of its
capital stock; or redeem or otherwise acquire any shares of its capital
stock or other securities; or amend or alter any material term of any of
its outstanding securities;
(d) other than in the ordinary course of business and consistent with
past practice, create, incur, or assume any indebtedness for borrowed
money, or assume, guarantee, endorse, or otherwise become liable or
responsible (whether directly, contingently, or otherwise) for the
obligations of any other person; or make any loans, advances or capital
contributions to, or investments in, any other person; or create, incur or
assume any Lien on any material asset;
(e) knowingly take any action that would have the effect of
(i) jeopardizing the treatment of the acquisition of the Company by Parent
as a "pooling of interests" for accounting purposes, or (ii) jeopardizing
the qualification of the Merger as a reorganization within the meaning of
Section 368(a)(2)(E) of the Code;
(f) (i) increase in any manner the compensation of any of its
directors, officers, employees, shareholders, or consultants, except in the
ordinary course of business and consistent with past practice or consistent
with existing contractual commitments, in each case to the extent disclosed
in writing to Parent prior to the date hereof, or accelerate the payment of
any such compensation (whether or not any such acceleration is consistent
with past practice); (ii) pay or accelerate or otherwise modify the
payment, vesting, exercisability, increase in matching amount, or other
feature or requirement of any pension, retirement allowance, severance,
change of control, stock option, or other employee benefit not required by
any existing plan, agreement, or arrangement to any such director, officer,
employee, shareholder, or consultant, whether past or present; or
(iii) except for normal increases in the ordinary course of business in
accordance with its customary past practices or consistent with existing
contractual commitments, in each case to the extent disclosed in writing to
the Parent prior to the date hereof, commit itself to any additional or
increased pension, profit-sharing, bonus, incentive, deferred compensation,
stock purchase, stock option, stock appreciation right, group insurance,
severance, change of control, retirement or other benefit, plan, agreement,
or arrangement, or to any employment or consulting agreement, with or for
the benefit of any person, or amend any of such plans or any of such
agreements in existence on the date hereof;
(g) except in the ordinary course of business and consistent with
past practice, or pursuant to contractual obligations existing on the date
hereof, (i) sell, transfer, mortgage, or otherwise dispose of or encumber
any real or personal property, (ii) pay,
27
discharge, or satisfy claims, liabilities, or obligations (absolute,
accrued, contingent, or otherwise), or (iii) cancel any debts or waive
any claims or rights, which involve payments or commitments to make
payments that individually exceed $50,000 or, in the aggregate, exceed
$100,000;
(h) acquire or agree to acquire (i) by merging or consolidating with,
or by purchasing a substantial portion of the assets of, or by any other
manner, any portion of the assets of, or by any other manner, any business
of any corporation, partnership, joint venture, association, or other
business organization or division thereof or (ii) any assets that are
material, individually or in the aggregate, to the Company, except as
provided in subsection (i) below and except purchases of inventory in the
ordinary course of business consistent with past practice or consistent
with the Company's 1998 budget delivered to Parent prior to the execution
of this Agreement (the "1998 Budget");
(i) make or agree to make any new capital expenditure or expenditures
that, individually, is in excess of $50,000 or, in the aggregate, are in
excess of $100,000 unless in the ordinary course of business consistent
with the Company's 1998 Budget;
(j) enter into, amend, or terminate any joint ventures or any other
agreements, commitments, or contracts that, individually or in the
aggregate, are material to the Company or any Subsidiary (except
agreements, commitments, or contracts expressly provided for or
contemplated by this Agreement or for the purchase, sale, or lease of
goods, services, or properties in the ordinary course of business,
consistent with past practice or capital expenditures or inventory
purchases consistent with the 1998 Budget), or otherwise make any material
change in the conduct of the business or operations of the Company or any
Subsidiary;
(k) enter into or terminate, or amend, extend, renew, or otherwise
modify (including, but not limited to, by default or by failure to act) any
distribution, OEM, independent sales representative, noncompetition,
licensing, franchise, research and development, supply, or similar
contract, agreement, or understanding (except agreements, commitments, or
contracts expressly provided for or contemplated by this Agreement or for
the purchase, sale, or lease of goods, services, or properties in the
ordinary course of business, consistent with past practice or capital
expenditures or inventory purchases consistent with the Company's 1998
Budget);
(l) change in any material respect its credit policy as to sales of
inventories or collection of receivables or its inventory consignment
practices;
(m) remove or permit to be removed from any building, facility, or
real property any machinery, equipment, fixture, vehicle, or other personal
property or parts thereof, except in the ordinary course of business;
28
(n) alter or revise its accounting principles, procedures, methods,
or practices, except as required by a change in generally accepted
accounting principles and concurred with by the Company's independent
public accountants;
(o) institute, settle, or compromise any claim, action, suit, or
proceeding pending or threatened by or against it involving amounts in
excess of $100,000 (limited to the Company's retention amount, if insured),
at law or in equity or before any federal, state, local, foreign, or other
governmental department, commission, board, bureau, agency, or
instrumentality (including, but not limited to, the FDA or any
nongovernmental self-regulatory agency);
(p) distribute or otherwise circulate any notices, directives, or
other communications directed to all or groups of customers, vendors,
employees, distributors, or others associated with its business relating to
the transactions contemplated hereby or to the operation of business after
consummation of such transactions without consulting with Parent, giving
Parent reasonable opportunity to comment thereon, and obtaining prior to
distribution Parent's approval thereof, which shall not unreasonably be
withheld;
(q) knowingly take any action that would render any representation,
warranty, covenant, or agreement of the Company in this Agreement
inaccurate or breached as of the Closing Date; or
(r) agree, whether in writing or otherwise, to do any of the
foregoing.
5.2 NO SOLICITATION. Neither the Company nor any Subsidiary, nor any of
their respective officers, directors, employees, representatives, agents, or
affiliates (including, but not limited to any investment banker, attorney, or
accountant retained by the Company or any Subsidiary), shall, directly or
indirectly, solicit, encourage, initiate, or participate in any way in
discussions or negotiations with, or knowingly provide any information to, any
corporation, partnership, person, or other entity or group (other than Parent or
any affiliate or agent of Parent) concerning any merger, sale or licensing of
any significant portion of the assets, sale of shares of capital stock
(including without limitation any proposal or offer to the Company's
shareholders), or similar transactions involving the Company or any Subsidiary
(an "Alternative Proposal"), or otherwise facilitate any effort or attempt to
make or implement an Alternative Proposal; provided, however, that this section
shall not prohibit the Board of Directors of the Company from (i) furnishing
information to or entering into discussions or negotiations with, any person or
entity that makes an unsolicited bona fide Alternative Proposal, if, and only to
the extent that, (a) the Board of Directors of the Company determines in good
faith that such action is so required for the Board of Directors to comply with
its fiduciary duties to shareholders imposed by law, the Board has been so
advised in writing by outside counsel, in its judgment and opinion, as being so
required and the Board so represents to Parent that the Board has been so
advised, (b) prior to furnishing information to, or entering into discussions
and negotiations with, such person or entity, the Company promptly provides
written notice to Parent to the effect that it is furnishing information to, or
entering into discussions or negotiations with, such person or entity,
29
and (c) the Company keeps Parent informed of all material terms and events
with respect to any such Alternative Proposal; and (ii) to the extent
applicable, complying with Rule 14e-2 promulgated under the 1934 Act with
regard to an Alternative Proposal. Nothing in this section shall (x) permit
the Company to terminate this Agreement (except as specifically provided in
Article 7 hereof), (y) permit the Company to enter into any agreement with
respect to an Alternative Proposal for as long as this Agreement remains in
effect (it being agreed that for as long as this Agreement remains in effect,
the Company shall not enter into any agreement with any person that provides
for, or in any way facilitates, an Alternative Proposal), or (z) affect any
other obligation of the Company under this Agreement.
5.3 ACCESS AND INFORMATION. The Company shall afford to Parent, and to
Parent's accountants, officers, directors, employees, counsel, and other
representatives, reasonable access during normal business hours, from the date
hereof through the Effective Time, to all of its properties, books, contracts,
commitments, and records, and, during such period, the Company shall furnish
promptly to Parent all information concerning the Company's and its
Subsidiaries' businesses, prospects, properties, liabilities, results of
operations, financial condition, testing, clinicals, officers, employees,
investigators, distributors, customers, suppliers, and others having dealings
with the Company as Parent may reasonably request and reasonable opportunity to
contact and obtain information from such officers, employees, investigators,
distributors, customers, suppliers, and others having dealings with the Company
as Parent may reasonably request; provided, with respect to certain designated
matters subject to existing confidentiality agreements as referenced in separate
disclosure letters dated June 1 and 26, 1998, access for Parent shall be
provided as set forth in such separate disclosure letter. During the period
from the date hereof to the Effective Time, the parties shall in good faith meet
and correspond on a regular basis for mutual consultation concerning the conduct
of the Company's and the Subsidiaries' businesses and, in connection therewith,
Parent shall be entitled to have employees or other representatives present at
the offices of the Company and its Subsidiaries to observe, and be kept informed
concerning, the Company's and the Subsidiaries' operations and business
planning. Parent shall hold in confidence all such nonpublic information as
required and in accordance with the confidentiality agreement dated April 16,
1998, between Parent and the Company (the "Confidentiality Agreement").
5.4 APPROVAL OF SHAREHOLDERS; PROXY STATEMENT; REGISTRATION STATEMENT.
(a) The Company shall promptly take all action necessary in
accordance with Washington law and the Company's Articles of Incorporation
and Bylaws to cause a special meeting of the Company's shareholders (the
"Company Shareholders Meeting") to be duly called and held as soon as
reasonably practicable following the date upon which the Registration
Statement (as defined below) becomes effective for the purpose of voting
upon the Merger. The shareholder vote or consent required for approval of
the Plan of Merger and the Merger shall be no greater than that set forth
in the WBCA and the Company's Articles of Incorporation as previously
provided to Parent. Accordingly, the Company represents and warrants that
the affirmative vote of the holders of record of two-thirds of the
outstanding shares of Company Common Stock is all that is necessary
31
to obtain shareholder approval of the Plan of Merger and the Merger. The
Company shall use all reasonable efforts to obtain the approval by the
Company's shareholders of this Agreement, the Plan of Merger, and the
Merger. In accordance therewith, the Company shall, with the cooperation
of Parent, prepare and file, as soon as reasonably practicable, a proxy
statement/prospectus included as part of the Registration Statement (such
proxy statement/prospectus, together with notice of meeting, form of proxy,
and any letter or other materials to the Company's shareholders included
therein are referred to in this Agreement as the "Proxy
Statement/Prospectus"). The Company shall use all reasonable efforts to
cause the definitive Proxy Statement/Prospectus to be mailed to the
shareholders of the Company, as soon as reasonably practicable following
its effectiveness, with the date of mailing as mutually determined by the
Company and Parent. The Company will, through its Board of Directors,
recommend to its shareholders approval of the Merger in the definitive
Proxy Statement/Prospectus.
(b) Parent shall, with the cooperation of the Company, prepare and
file, as soon as reasonably practicable, a registration statement under the
1933 Act registering the shares of Parent Common Stock to be issued in the
Merger (the "Registration Statement"), which Registration Statement shall
include the Proxy Statement/Prospectus. Parent will use all reasonable
efforts to have the Registration Statement declared effective by the SEC as
promptly thereafter as practicable. Parent shall also take any action
required to be taken under state blue sky or securities laws in connection
with the issuance of Parent Common Stock pursuant to the Merger. The
Company shall furnish to Parent all information concerning the Company and
its Subsidiaries and the holders of its capital stock, and shall take such
other action and otherwise cooperate, as Parent may reasonably request in
connection with any such action.
(c) Parent shall notify the Company promptly of the receipt of the
comments of the SEC and of any request by the SEC for amendments or
supplements to the Registration Statement and shall supply the Company with
copies of all correspondence with the SEC with respect to the Registration
Statement.
(d) If at any time prior to the Company Shareholders Meeting, any
event should occur relating to the Company, any Subsidiary, or the
Company's officers or directors that is required to be described in an
amendment or supplement to the definitive Proxy Statement/Prospectus or the
Registration Statement, the Company shall promptly inform Parent. If at
any time prior to the Company Shareholders Meeting, any event shall occur
relating to Parent or Merger Subsidiary or their respective officers or
directors that is required to be described in an amendment or supplement to
the definitive Proxy Statement/Prospectus or the Registration Statement,
Parent shall promptly inform the Company. Whenever any event occurs that
should be described in an amendment of, or supplement to, the definitive
Proxy Statement/Prospectus or the Registration Statement, the Company or
Parent, as the case may be, shall, upon learning of such event, promptly
notify the other and consult and cooperate with the other in connection
with the preparation of a mutually acceptable amendment or supplement. The
parties shall
31
promptly file such amendment or supplement with the SEC and mail such
amendment or supplement as soon as practicable after it is cleared by
the SEC.
5.5 CONSENTS. The Company will, at its cost and expense, use all
reasonable efforts to obtain all approvals and consents of all third parties
necessary on the part of the Company or its Subsidiaries to consummate the
transactions contemplated hereby. Parent agrees to cooperate with the Company
in connection with obtaining such approvals and consents. Parent will, at its
cost and expense, use all reasonable efforts to obtain all approvals and
consents of all third parties necessary on the part of Parent to consummate the
transactions contemplated hereby. The Company agrees to cooperate with Parent
in connection with obtaining such approvals and consents.
5.6 AFFILIATES' LETTERS.
(a) The Company has delivered to Parent a list of names of those
persons, in the Company's reasonable judgment after consultation with
outside legal counsel, who, as of the date hereof, are affiliates within
the meaning of Rule 145 of the rules and regulations promulgated under the
Securities Act or otherwise applicable SEC accounting releases with respect
to pooling-of-interests accounting treatment (each such person, an
"Affiliate") of the Company. The Company shall provide Parent such
information and documents as Parent shall reasonably request for purposes
of reviewing such list and shall promptly update such list to reflect any
changes thereto. The Company has caused to be delivered to Parent an
affiliate's letter in the form attached hereto as EXHIBIT B, executed by
each of the Affiliates of the Company identified in the foregoing list, and
shall use all reasonable efforts to deliver or cause to be delivered to
Parent prior to the Effective Time such an affiliate's letter executed by
any additional persons who become Affiliates after the date hereof. Parent
shall be entitled to place legends as specified in such affiliates' letters
on the certificates evidencing any of the Parent Common Stock to be
received by such Affiliates pursuant to the terms of this Agreement, and to
issue appropriate stop transfer instructions to the transfer agent for the
Parent Common Stock, consistent with the terms of such letters.
(b) For so long as resales of shares of Parent Common Stock issued
pursuant to the Merger are subject to the resale restrictions set forth in
Rule 145 under the Securities Act, Parent will use all reasonable efforts
to comply with Rule 144(c)(1) under the Securities Act.
5.7 EXPENSES. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement, the transactions
contemplated hereby, the Proxy Statement/Prospectus, and the Registration
Statement will be paid by the party incurring such costs and expenses, except
that the Company and Parent will share equally the cost of printing and filing
with the SEC the Proxy Statement/Prospectus and the Registration Statement, the
filing fees required under the HSR Act or any Foreign Merger Laws, and the fees
charged by Price Waterhouse LLP for the letters described in Section 5.15 (the
"Shared Expenses").
32
5.8 REASONABLE EFFORTS; FURTHER ACTIONS. Subject to the terms and
conditions herein provided and without being required to waive any conditions
herein (whether absolute, discretionary, or otherwise), each of the parties
hereto agrees to use commercially reasonable efforts to take, or cause to be
taken, all action, and to do, or cause to be done, all things necessary, proper,
or advisable to consummate and make effective the transactions contemplated by
this Agreement within 90 days of the date of this Agreement. In case at any
time after the Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement, the proper officers and directors of
each party to this Agreement shall take all such necessary action.
5.9 REGULATORY APPROVALS. The Company and Parent will take all reasonable
action as may be necessary under federal or state securities laws or the HSR Act
or Foreign Merger Laws applicable to or necessary for, and will file as soon as
reasonably practicable and, if appropriate, use all reasonable efforts to have
declared effective or approved all documents and notifications with the SEC and
other governmental or regulatory bodies (including, without limitation, the FDA
and equivalent foreign regulatory bodies, and other foreign regulatory bodies
that administer Foreign Merger Laws, and any foreign labor councils or bodies as
may be required) that they deem necessary or appropriate for, the consummation
of the Merger and the transactions contemplated hereby, and each party shall
give the other information reasonably requested by such other party pertaining
to it and its subsidiaries and affiliates to enable such other party to take
such actions. Notwithstanding the foregoing or anything herein to the contrary,
neither Parent nor Merger Subsidiary shall be required to make arrangements for
or to effect the cessation, sale, or other disposition of particular assets or
categories of assets or businesses of Parent, Merger Subsidiary, the Company, or
any of their affiliates.
5.10 CERTAIN NOTIFICATIONS. The Company shall promptly notify Parent in
writing of the occurrence of any event that will or could reasonably be expected
to result in the failure by the Company or its affiliates to satisfy any of the
conditions specified in Section 6.1 or 6.2. Parent shall promptly notify the
Company in writing of the occurrence of any event that will or could reasonably
be expected to result in the failure by Parent or its affiliates to satisfy any
of the conditions specified in Section 6.1 or 6.3.
5.11 VOTING OF SHARES. To induce Parent to execute this Agreement, all of
the officers and directors of the Company have executed and delivered as of the
date hereof Agreements to Facilitate Merger in the form attached hereto as
EXHIBIT C, pursuant to which each such person has agreed to vote his or her
shares of Company Common Stock in favor of the Merger at the Company
Shareholders Meeting.
5.12 NONCOMPETITION AGREEMENTS. To induce Parent to execute this
Agreement, the Company has caused the executives who, as of the date hereof, are
the Company's Chief Executive Officer, Chief Operating Officer, Chief Financial
Officer and General Counsel to execute and deliver to Parent as of the date
hereof (but expressly contingent upon the Closing of the Merger) noncompetition
agreements substantially in the form of EXHIBIT D hereto.
33
5.13 NYSE LISTING APPLICATION. Parent shall prepare and submit to the NYSE
a listing application for the Parent Common Stock to be issued in the Merger
pursuant to Article 1 of this Agreement. The Company shall cooperate with
Parent in such listing application.
5.14 INDEMNIFICATION, EXCULPATION AND INSURANCE.
(a) The articles of incorporation and the bylaws of the Surviving
Corporation shall contain the provisions with respect to indemnification
and exculpation from liability set forth in the Company's articles of
incorporation and bylaws on the date of this Agreement, which provisions
shall not be amended, repealed or otherwise modified for a period of six
years from the Effective Time in any manner that would adversely affect the
rights thereunder of individuals who on or prior to the Effective Time were
directors, officers, employees or agents of the Company, unless such
modification is required by law. Parent shall guarantee the obligations of
the Surviving Corporation with respect to the indemnification provisions
contained in the Surviving Corporation's articles of incorporation and
bylaws.
(b) To the extent coverage is reasonably available under the
Company's current directors' and officers' liability insurance policy or
otherwise, Parent will extend the discovery or reporting period under such
policy for up to three years from the Effective Time to maintain in effect
directors' and officers' liability insurance covering pre-acquisition acts
for those persons who are currently covered by the Company's directors' and
officers' liability insurance policy (a copy of which has been heretofore
delivered to Parent) (the "INDEMNIFICATION PARTIES") on terms no less
favorable than the terms of such current insurance coverage; PROVIDED,
HOWEVER, that in no event shall Parent be required to expend for such
three-year extension an amount in excess of 150% of the annual premium
currently paid by the Company for such insurance; and PROVIDED FURTHER that
if the cost of such three-year extension exceeds such 150% amount, Parent
shall be obligated to obtain such extension as is available for a cost not
exceeding such amount.
(c) In the event Parent, the Surviving Corporation or any of their
successors or assigns (i) consolidates with or merges into any other person
and shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then and in each such case, proper
provisions shall be made so that the successors and assigns of Parent or
the Surviving Corporation, as the case may be, shall assume the obligations
set forth in this Section 5.14.
(d) This Section 5.14 shall survive the consummation of the Merger at
the Effective Time, is intended to benefit the Company, Parent, the
Surviving Corporation and the Indemnified Parties, and shall be binding on
all successors and assigns of Parent and the Surviving Corporation.
34
5.15 LETTERS OF THE COMPANY'S AND PARENT'S ACCOUNTANTS. (A) The Company
shall cooperate with Parent and use all reasonable efforts to cause to be
delivered to Parent the following letters from Price Waterhouse LLP ("PW")
addressed to the Company and Parent: (i) a letter dated the date of this
Agreement, stating that after appropriate review and based on its familiarity
with the Company, neither the Company nor any of its shareholders who are
affiliates has taken or agreed to take any action that would prevent Parent from
accounting for the Merger as a pooling of interests transaction under Opinion 16
of the Accounting Principles Board and applicable SEC rules and regulations; and
(ii) a letter dated as of the Closing Date stating that after appropriate review
and based on its familiarity with the Company, neither the Company nor any of
its shareholders has taken or agreed to take any action that would prevent
Parent from accounting for the Merger as a pooling of interests under Opinion 16
of the Accounting Principles Board and applicable SEC rules and regulations.
(B) The Company shall cooperate with Parent and Parent shall use all reasonable
means to cause to be delivered to the Company the following letters from PW
addressed to Parent and the Company: (i) a letter dated the date of this
Agreement, stating that after appropriate review of this Agreement and a letter
from the Parent describing the transaction and describing actions to be taken by
Parent with respect to the sale of certain shares of Parent Common Stock, the
Merger will qualify as a pooling of interests transaction under Opinion 16 of
the Accounting Principles Board and applicable SEC rules and regulations; and
(ii) a letter dated as of the Closing Date confirming as of the Closing Date
that the Merger will qualify as a pooling of interests transaction under Opinion
16 of the Accounting Principles Board and applicable SEC rules and regulations.
The fees charged by PW for such letters shall be shared equally by Parent and
the Company.
5.16 SUBSIDIARY SHARES. At or prior to the Closing, the Company shall
cause all issued and outstanding Subsidiary shares owned by any person other
than the Company to be transferred for no or nominal consideration to such
person or persons designated by Parent.
5.17 STOCK OPTION AGREEMENT. To induce Parent to execute this Agreement,
the Company has executed and delivered to Parent as of the date hereof a Stock
Option Agreement in the form attached hereto as EXHIBIT E, pursuant to which the
Company has granted to Parent an option to acquire from the Company such number
of shares of Company Common Stock as equals 19.9% of the aggregate number of
outstanding shares of Company Common Stock, at an exercise price equal to $27.50
per share or such lesser amount as is described in the second paragraph of
Section 1.3(a) hereof. Such option shall become exercisable only in the events
described in the Stock Option Agreement.
5.18 CONDUCT OF BUSINESS BY PARENT. During the period from the date of
this Agreement to the Effective Time, Parent shall, and shall cause its
subsidiaries to, carry on their respective businesses in the ordinary course and
use all reasonable efforts to preserve their relationships with customers,
suppliers and others having business dealings with them; PROVIDED that the
foregoing shall not prevent Parent or any of its subsidiaries from discounting
or disposing of any part of its assets or business or from acquiring any assets
or businesses or from entering into any financing transactions if such action
is, in the judgment of Parent, desirable in the conduct of the business of
Parent and its subsidiaries. Without limiting the generality of the
35
foregoing, during the period from the date of this Agreement to the Effective
Time, except as (i) contemplated by this Agreement or (ii) as set forth in a
writing delivered to the Company prior to the execution hereof, Parent shall
not, and shall not permit any of its subsidiaries to:
(a) (i) declare, set aside or pay (whether in cash or property) any
dividends on, or make any other distributions in respect of, any capital
stock other than dividends and distributions by any direct or indirect
wholly owned subsidiary of Parent to its parent and except for regular
quarterly cash dividends (in an amount determined in a manner consistent
with Parent's past practice) declared by the Board of Directors of Parent
with customary record and payment dates and except distributions pursuant
to the Parent Rights Plan, (ii) 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 Parent's capital stock (other than
pursuant to the Parent Rights Plan);
(b) amend its articles of incorporation (except for the purpose of
increasing its authorized capitalization), bylaws or other comparable
charter or organizational documents in a manner which would reasonably be
expected to be materially adverse to the stockholders of the Company; or
(c) authorize, or commit or agree to take any of, the foregoing
actions.
5.19 BENEFIT PLANS AND EMPLOYEE MATTERS. From and after the Effective
Time, Parent shall to the extent practicable cause the Surviving Corporation to
provide employee benefits and programs to the Company's employees that, in the
aggregate, are substantially comparable or more favorable than those in
existence as of the date hereof and disclosed in writing to Parent prior to the
date hereof.
5.20 DELIVERY OF SPECIFIED DOCUMENTS.
(a) Notwithstanding anything contained in this Agreement to the
contrary, the parties acknowledge that the affiliates' letters described in
Section 5.6, the Agreements to Facilitate Merger described in Section 5.11,
the noncompetition agreements described in Section 5.12, and the letters of
PW dated the date of this Agreement (as opposed to the letter of PW to be
dated as of the Closing Date) described in Section 5.15 have not been
delivered as of the date hereof. The Company agrees that it will use best
efforts to deliver all such documents and agreements within two business
days after the execution of this Agreement on the date hereof.
(b) Notwithstanding anything contained in this Agreement to the
contrary, the parties acknowledge that portions of Sections 3.6, 3.10,
3.13, and 3.17 of the Company Disclosure Schedule have not been delivered
as of the date hereof. The Company agrees that it will use best efforts to
deliver all such portions of the Company Disclosure Schedule within three
business days (or, as to any particular item, such greater number of days
specified in the above-referenced sections of the Company Disclosure
Schedule)
36
after the execution of this Agreement on the date hereof. Following the
Company's delivery of all such portions of the Company Disclosure
Schedule, Parent shall have three business days thereafter to object in
writing to the Company if any of the information set forth therein is
materially different from the information previously provided to Parent
in its due diligence review of the Company. If Parent so objects, the
Company shall have three business days thereafter to resolve with Parent
each of the matters to which Parent so objected. If Parent and the
Company cannot resolve all such matters, the Chairman of each of Parent
and the Company shall have five business days thereafter to resolve all
such matters. If the Chairmen cannot do so, then, if the aggregate
impact of such matters as to which Parent and the Company disagree could
reasonably be expected to be equal in amount to at least one percent of
the aggregate value of the Parent Common Stock delivered to the
Company's shareholders in the Merger (based on the Parent Average Stock
Price), then the provisions of Section 6.2(k) shall apply.
ARTICLE 6
CLOSING CONDITIONS
6.1 CONDITIONS TO OBLIGATIONS OF PARENT, MERGER SUBSIDIARY, AND THE
COMPANY. The respective obligations of each party to consummate the Merger
shall be subject to the fulfillment at or prior to the Closing of the following
conditions:
(a) NO INJUNCTION. None of Parent, Merger Subsidiary, or the Company
shall be subject to any final order, decree, or injunction of a court of
competent jurisdiction within the United States that (i) prevents or
materially delays the consummation of the Merger, or (ii) would impose any
material limitation on the ability of Parent effectively to exercise full
rights of ownership of the Company or the assets or business of the
Company.
(b) SHAREHOLDER APPROVAL. The approval of the shareholders of the
Company referred to in Section 5.4 hereof shall have been obtained, in
accordance with the WBCA and the Company's Articles of Incorporation and
Bylaws.
(c) REGISTRATION STATEMENT. The Registration Statement (as amended
or supplemented) shall have become effective under the 1933 Act and shall
not be subject to any "stop order," and no action, suit, proceeding, or
investigation by the SEC to suspend the effectiveness or qualification
thereof shall have been initiated and be continuing or have been threatened
and be unresolved. Parent shall also have received all state securities
law or blue sky authorizations necessary to carry out the transactions
contemplated hereby.
(d) NYSE LISTING. The shares of Parent Common Stock to be delivered
pursuant to the Merger shall have been duly listed on the NYSE, subject to
official notice of issuance.
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(e) WAITING PERIODS. The waiting periods applicable to the
consummation of the Merger under the HSR Act and any Foreign Merger Laws
shall have expired or been terminated.
6.2 CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUBSIDIARY. The
respective obligations of Parent and Merger Subsidiary to consummate the Merger
shall be subject to the fulfillment at or prior to the Closing of the following
additional conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. Each representation and
warranty of the Company contained in this Agreement, without regard to any
qualification or reference to immateriality or "Company Material Adverse
Effect," shall be true and correct on the date hereof and on the Closing
Date as though such representations and warranties were made on such date
(except those representations and warranties that address matters only as
of a particular date shall remain true and correct as of such date), except
for any inaccuracies that, individually or in the aggregate, have not had,
and would not have, a Company Material Adverse Effect.
(b) PERFORMANCE. The Company shall have performed and complied in
all material respects with all agreements, obligations, and conditions
required by this Agreement to be performed or complied with by it on or
prior to the Closing, and Parent shall have received a certificate to such
effect signed by the Chief Executive Officer of the Company.
(c) CONSENTS. The Company shall have obtained all permits,
authorizations, consents, and approvals required on its part to perform its
obligations under, and consummate the transactions contemplated by, this
Agreement, in form and substance satisfactory to Parent, and Parent and
Merger Subsidiary shall have received evidence satisfactory to them of the
receipt of such permits, authorizations, consents, and approvals.
(d) OPINION OF COUNSEL FOR THE COMPANY. Parent and Merger Subsidiary
shall have received an opinion of Xxxxxxx Xxxxx & Xxxxx LLP, counsel to the
Company, dated the Closing Date, in form and substance reasonably
satisfactory to Parent, to the effect set forth in EXHIBIT F hereto.
(e) AFFILIATES' LETTERS. Parent shall have received a letter from
each of the Affiliates pursuant to Section 5.6 hereof.
(f) NONCOMPETITION AGREEMENTS. Parent shall have received executed
agreements from such persons, and in such form satisfactory to Parent, as
described in Section 5.12 hereof.
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(g) RESIGNATIONS. Such officers and directors of the Company or of
any Subsidiary as shall have been specified Parent shall have tendered
their respective resignations effective as of the Effective Time.
(h) POOLING OPINION. Parent shall have received each of the letters
described in Section 5.15; provided, however, if within 10 business days
after the date on which all other closing conditions of Section 6.1 and 6.3
have been satisfied (including, but not limited to, receipt of the letters
described in Section 5.15(A)), Parent has not received the letter described
in Section 5.15(B)(ii) solely because of actions on the part of Parent or
its shareholders who are affiliates which prevent the Merger from
qualifying as a pooling of interests transaction, then the condition that
such letter be received shall be deemed waived by Parent.
(i) CONTINUED EMPLOYMENT OF KEY EXECUTIVES. The chief executive
officer and other executive employees of the Company designated in writing
by Parent on or before the date of this Agreement shall have agreed to
continue their employment with the Company following the Merger on such
terms as are mutually satisfactory to Parent and such employees.
(j) SUBSIDIARY SHARES. The transfer of Subsidiary shares as provided
in Section 5.16 shall have occurred.
(k) DELIVERY OF SPECIFIED DOCUMENTS. The Company shall have
delivered or caused to be delivered to Parent, within five business days
(or, as to any particular item, such greater number of days specified in
Sections 3.6, 3.10, 3.13, and 3.17 of the Company Disclosure Schedule)
after the execution of this Agreement on the date hereof, the above-
referenced sections of the Company Disclosure Schedule described in Article
3, the affiliates' letters described in Section 5.6, the noncompetition
agreements described in Section 5.12, and the letters of PW dated the date
of this Agreement described in Section 5.15. Further, each of the portions
of the Company Disclosure Schedule as so delivered shall not contain
information as to which Parent shall object and which cannot be resolved
between Parent and the Company in the manner described in Section 5.20(b)
and which has an aggregate impact at least equal to the amount described in
Section 5.20(b); provided, however, that the condition described in this
sentence shall expire unless Parent delivers written notice to the Company,
within one business day after expiration of the final five-business-day
period described in Section 5.20(b) for resolution of the matters in
dispute.
6.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligation of the
Company to consummate the Merger shall be subject to the fulfillment at or prior
to the Closing of the following additional conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. Each representation and
warranty of Parent contained in this Agreement, without regard to any
qualification or reference to
39
immateriality or "Parent Material Adverse Effect," shall be true and
correct on the date of this Agreement and on the Closing Date as though
such representations and warranties were made on such date (except those
representations and warranties that address matters only as of a
particular date shall remain true and correct as of such date), except
for any inaccuracies that, individually or in the aggregate, have not
had, and would not have, a Parent Material Adverse Effect.
(b) PERFORMANCE. Parent and Merger Subsidiary shall have performed
and complied in all material respects with all agreements, obligations, and
conditions required by this Agreement to be performed or complied with by
them on or prior to the Closing.
(c) CONSENTS. Parent and Merger Subsidiary shall have obtained all
permits, authorizations, consents, and approvals required on their part to
perform their obligations under, and consummate the transactions
contemplated by, this Agreement, in form and substance satisfactory to the
Company, and the Company shall have received evidence satisfactory to it of
the receipt of such permits, authorizations, consents, and approvals.
(d) OPINION OF COUNSEL FOR PARENT. The Company shall have received
an opinion of Xxxxxxxxxx & Xxxxx, P.A., counsel to Parent, dated the
Closing Date, in form and substance reasonably satisfactory to the Company,
to the effect set forth in EXHIBIT G hereto.
(e) TAX OPINION. The Company shall have received an opinion of
Xxxxxxx Xxxxx & Xxxxx LLP, counsel to the Company, to the effect that,
subject to customary conditions and representations, the Merger will be
treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a)(2)(E) of the Code. This condition shall be
deemed waived in the event that such tax opinion is not rendered because
the Company or its shareholders have failed to provide such customary
representations. The Company hereby agrees to provide to Parent a
certificate setting forth the representations set forth in EXHIBIT H hereto
which may be relied upon by such counsel in rendering such opinion, and
Parent hereby agrees to provide to the Company a certificate setting forth
the representations set forth in EXHIBIT I hereto which may be relied upon
by such counsel in rendering such opinion.
ARTICLE 7
TERMINATION AND ABANDONMENT
7.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval by the shareholders of the
Company, only:
(a) by mutual written consent duly authorized by the Board of
Directors of Parent and the Board of Directors of the Company;
40
(b) by either Parent or the Company if the Merger shall not have been
consummated on or before December 1, 1998; provided, however, that the
terminating party shall not have breached in any material respect its
obligations under this Agreement in any manner that shall have been the
proximate cause of, or resulted in, the failure to consummate the Merger by
such date;
(c) by either Parent or the Company if a court of competent
jurisdiction or an administrative, governmental, or regulatory authority
has issued a final nonappealable order, decree, or ruling, or taken any
other action, having the effect of permanently restraining, enjoining, or
otherwise prohibiting the Merger;
(d) by either Parent or the Company if, at the Company Shareholders
Meeting, the requisite vote of the shareholders of the Company is not
obtained, except that the right to terminate this Agreement under this
Section 7.1(d) will not be available to any party whose failure to perform
any material obligation under this Agreement has been the proximate cause
of, or resulted in, the failure to obtain the requisite vote of the
shareholders of the Company;
(e) by Parent if either (i) the Company has breached its obligations
under Section 5.2 in any material respect, (ii) the Board of Directors of
the Company has recommended, approved, accepted, or entered into an
agreement regarding, an Alternative Proposal, as defined in Section 5.2,
(iii) the Board of Directors of the Company has withdrawn or modified in a
manner adverse to Parent its recommendation of the Merger, or (iv) a tender
offer or exchange offer under Section 14 of the 1934 Act for 15% or more of
the outstanding shares of Company Common Stock is commenced, and the Board
of Directors of the Company, within 10 business days after such tender
offer or exchange offer is so commenced, either fails to recommend against
acceptance of such tender offer or exchange offer by its shareholders or
takes no position with respect to the acceptance of such tender offer or
exchange offer by its shareholders;
(f) by the Company if (i) it is not in material breach of its
obligations under this Agreement, (ii) the Board of Directors of the
Company has authorized acceptance of an Alternative Proposal, and (iii) the
Company has paid to Parent the fee required by Section 7.2 to be paid to
Parent in the manner therein provided;
(g) by Parent if (i) Parent is not in material breach of its
obligations under this Agreement and (ii) there has been a material breach
by the Company of any of its representations, warranties, or obligations
under this Agreement or by an Affiliate of the Company under the
Affiliate's letter described in Section 5.6 such that the conditions in
Section 6.2 will not be satisfied, and the breach is not curable or, if
curable, is not cured by the Company within 30 calendar days after receipt
by the Company of written notice from Parent of such breach;
41
(h) by the Company if (i) the Company is not in material breach of
its obligations under this Agreement and (ii) there has been a material
breach by Parent of any of its representations, warranties, or obligations
under this Agreement such that the conditions in Section 6.3 will not be
satisfied, and the breach is not curable or, if curable, is not cured by
Parent within 30 calendar days after receipt by Parent of written notice
from the Company of such breach.
7.2 EFFECT OF TERMINATION.
(a) In recognition of the time, efforts, and expenses expended and
incurred by Parent with respect to the Company and the opportunity that the
acquisition of the Company presents to Parent, if:
(i) this Agreement is terminated pursuant to Section 7.1(e) or
7.1(f); or
(ii) any third party makes an Alternative Proposal or acquires
15% or more of the outstanding Company Common Stock prior to the
Company Shareholders Meeting, and either (A) the requisite vote of the
shareholders of the Company to approve the Merger is not obtained or
(B) the number of shares of Company Common Stock for which notice of
exercise of dissenters' rights under WBCA has been given would prevent
the Merger from qualifying as a pooling of interests for accounting
purposes or (C) this Agreement is terminated (other than pursuant to
Section 7.1(a), (b), (c) or (h)),
then, in any such event, the Company will pay to Parent, upon the
termination date in the event of termination pursuant to Section 7.1(f),
within five business days after demand by Parent in the case of termination
pursuant to Section 7.1(e), and immediately upon the first to occur of the
failure to obtain the requisite shareholder vote or the termination of this
Agreement in the case of the events specified in clause (ii) above (by wire
transfer of immediately available funds to an account designated by Parent
for such purpose), a fee equal to $15 million. The Company acknowledges
that the agreements contained in this Section 7.2 are an integral part of
the transactions contemplated by this Agreement and are not a penalty, and
that, without these agreements, Parent would not enter into this Agreement.
If the Company fails to pay promptly the fee due pursuant to this Section
7.2, the Company shall also pay to Parent Parent's costs and expenses
(including legal fees and expenses) in connection with any action,
including the filing of any lawsuit or other legal action, taken to collect
payment, together with interest on the amount of the unpaid fee under this
section, accruing from its due date, at an interest rate per annum equal to
two percentage points in excess of the prime commercial lending rate quoted
by Norwest Bank Minnesota, N.A. Any change in the interest rate hereunder
resulting from a change in such prime rate shall be effective at the
beginning of the day of such change in such prime rate.
42
(b) Except as provided in the next sentence of this paragraph, in the
event of the termination of this Agreement pursuant to any paragraph of
Section 7.1, the obligations of the parties to consummate the Merger will
expire, and none of the parties will have any further obligations under
this Agreement except pursuant to Sections 5.3, 5.7, and 7.2(a) and
Article 8. In the event of the termination of this Agreement pursuant to
any paragraph of Section 7.1 that is caused by a breach of a party, the
party whose breach was the basis for the termination will not be relieved
from any liability for its breach or its obligations pursuant to Section
7.2(a), and the other party will have no further obligations under this
Agreement except as provided in Sections 5.3 and 5.7 and Article 8.
ARTICLE 8
MISCELLANEOUS
8.1 AMENDMENT AND MODIFICATION. Subject to applicable law, this Agreement
may be amended, modified, or supplemented only by written agreement of Parent,
Merger Subsidiary, and the Company at any time prior to the Effective Time with
respect to any of the terms contained herein. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
8.2 WAIVER OF COMPLIANCE; CONSENTS. Any failure of Parent or Merger
Subsidiary on the one hand, or the Company on the other hand, to comply with any
obligation, covenant, agreement, or condition herein may be waived by the
Company or Parent, respectively, only by a written instrument signed by an
officer of the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, covenant, agreement, or condition
shall not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure. Whenever this Agreement requires or permits consent by or on
behalf of any party hereto, such consent shall be given in writing. Merger
Subsidiary agrees that any consent or waiver of compliance given by Parent
hereunder shall be conclusively binding upon Merger Subsidiary, whether or not
given expressly on its behalf.
8.3 INVESTIGATION; SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
respective representations and warranties of Parent and the Company contained
herein or in any certificates or other documents delivered prior to or at the
Closing shall not be deemed waived or otherwise affected by any investigation
made by any party hereto. Each and every representation and warranty contained
herein shall be deemed to be conditions to the Merger and shall not survive the
Merger. This Section 8.3 shall have no effect upon any other obligation of the
parties hereto, whether to be performed before or after the Closing.
8.4 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given when delivered personally by commercial
courier service or otherwise, or by telecopier, or three days after such notice
is mailed by registered or certified mail (return
43
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent or Merger Subsidiary, to it at:
Medtronic, Inc.
0000 Xxxxxxx Xxxxxx, X.X.
Xxxxxxxxxxx, XX 00000
with separate copies thereof addressed to
Attention: General Counsel
FAX: (000) 000-0000
and
Attention: Vice President and Chief Development Officer
FAX: (000) 000-0000
(b) If to the Company, to it at:
Physio-Control International Corporation
00000 Xxxxxxx Xxxx X.X.
Xxxxxxx, XX 00000-0000
FAX: (000) 000-0000
Attention: Executive Vice President and General Counsel
with a copy to:
Xxxxxxx Xxxxx & Xxxxx XXX
0000 Xxxxxxxx Center
000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
FAX: (000) 000-0000
Attention: C. Xxxx Xxxxxxx
8.5 ASSIGNMENT. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests, or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties, nor is
this Agreement intended to confer upon any other person except the parties
hereto any rights or remedies hereunder.
8.6 GOVERNING LAW. Except to the extent that Washington law is
mandatorily applicable to the Merger and the rights of the shareholders of the
Company and Merger
44
Subsidiary, this Agreement shall be governed by the laws of the State of
Minnesota (regardless of the laws that might otherwise govern under applicable
Minnesota principles of conflicts of law).
8.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
8.8 KNOWLEDGE. As used in this Agreement or the instruments, certificates
or other documents required hereunder, the term "knowledge" shall mean actual
knowledge of a fact or the knowledge that such person or, if such person is a
corporation, its directors, officers, or other key employees could reasonably be
expected to have based on reasonable investigation and inquiry. The knowledge
of an entity shall be deemed to include the knowledge of its subsidiaries.
8.9 INTERPRETATION. The Table of Contents, article and section headings
contained in this Agreement are inserted for reference purposes only and shall
not affect the meaning or interpretation of this Agreement. This Agreement
shall be construed without regard to any presumption or other rule requiring the
resolution of any ambiguity regarding the interpretation or construction hereof
against the party causing this Agreement to be drafted.
8.10 PUBLICITY. Upon execution of this Agreement by Parent, Merger
Subsidiary, and the Company, the parties shall jointly issue a press release, as
agreed upon by them. The parties intend that all future statements or
communications to the public or press regarding this Agreement or the Merger
will be mutually agreed upon by them. Neither party shall, without such mutual
agreement or the prior consent of the other, issue any statement or
communication to the public or to the press regarding this Agreement, or any of
the terms, conditions, or other matters with respect to this Agreement, except
as required by law or the rules of the NYSE or Nasdaq and then only (a) upon the
advice of such party's legal counsel; (b) to the extent required by law or the
rules of the NYSE or Nasdaq; and (c) following prior notice to, and consultation
with, the other party (which notice shall include a copy of the proposed
statement or communication to be issued to the press or public). The foregoing
shall not restrict Parent's or the Company's communications with their employees
or customers in the ordinary course of business.
8.11 ENTIRE AGREEMENT. This Agreement, including the exhibits and
schedules hereto and the Confidentiality Agreement referred to herein, embodies
the entire agreement and understanding of the parties hereto in respect of the
subject matter contained herein. This Agreement and the Confidentiality
Agreement supersede all prior agreements and the understandings between the
parties with respect to such subject matter. Further, the provisions of this
Agreement supersede the provisions of the Confidentiality Agreement relating to
the 21-day exclusivity period described therein.
45
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
MEDTRONIC, INC.
By /s/ Xxxxxxx X. Xxxxxxx
-----------------------------
Its Vice President
PC MERGER CORP.
By /s/ Xxxxxxx X. Xxxxxxx
-----------------------------
Its President
PHYSIO-CONTROL INTERNATIONAL CORPORATION
By /s/ Xxxxxxx X. Xxxxxx
-----------------------------
Its Chairman/CEO
46
