Exhibit 9
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered into as
of this 23(rd) day of February, 2000, by and among GYRUS GROUP PLC, a public
limited company incorporated and existing under the laws of England and Wales
("Parent"), GOLDEN ACQUISITION CORP., a Delaware corporation, and a direct
wholly-owned subsidiary of Parent ("Newco"), and EVEREST MEDICAL CORPORATION, a
Minnesota corporation ("Company").
RECITALS
WHEREAS, Parent and Company have agreed that Parent shall acquire Company by
causing Newco, which has been formed for the express purpose of consummating the
transactions contemplated hereby, to merge with Company (the "Merger"), with
Newco as the surviving corporation of the Merger, upon the terms and subject to
the conditions set forth herein, all in accordance with the Delaware General
Corporation Law (the "DGCL") and the Minnesota Business Corporation Act (the
"MBCA").
WHEREAS, in furtherance of the acquisition of Company, Parent may complete
the acquisition of Company by causing Newco to make a tender offer (as it may be
amended from time to time, the "Tender Offer") to purchase all of the
outstanding shares of Company Common Stock and Company Preferred Stock, at a
purchase price of at least $4.85 per share (the "Offer Price"), without interest
thereon; provided, that, in the event that Parent does not elect to cause Newco
to make the Tender Offer, subject to the terms and conditions of this Agreement,
including the terms and conditions described in Articles VI and VII hereof,
Parent shall otherwise be obligated to complete the Merger in accordance with
the terms of this Agreement.
WHEREAS, the Boards of Directors of Parent and Newco and the Board of
Directors and a special committee (the "Special Committee") of the Board of
Directors of Company have determined that this Agreement and the Merger are
advisable and in the best interests of Parent, Newco and Company and their
respective shareholders. The Boards of Directors of Parent and Newco and the
Board of Directors and Special Committee of Company have approved this Agreement
and the Merger. The Board of Directors of Company has resolved to recommend to
the shareholders of Company to vote in favor of this Agreement and the
transactions contemplated hereby, including the Merger.
NOW, THEREFORE, in consideration of these premises and the mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Parent, Newco and Company hereby
agree as follows:
ARTICLE I
THE TENDER OFFER
After the date hereof, Parent may elect to cause Newco to make the Tender
Offer, upon the terms and subject to the conditions set forth in this Agreement.
The decision by Parent to cause Newco to make the Tender Offer shall be in the
sole discretion of Parent and neither Parent nor Newco shall have any obligation
to make or commence the Tender Offer; PROVIDED THAT, if Parent elects not to
cause Newco to make the Tender Offer, Parent shall otherwise remain obligated to
complete the Merger in accordance with and subject to the terms and conditions
of this Agreement, including without limitation those terms and conditions
described in Articles VI and VII hereof. In the event that Parent elects to
cause Newco to make the Tender Offer, the provisions of Sections 1.01 and 1.02
shall govern such Tender Offer and the obligations of Parent, Newco and Company
with respect thereto. Company acknowledges that regardless of whether Parent
elects to cause Newco to make the Tender Offer, the obligations of Company
contained in Sections 1.02(a) and (c) have been or shall be satisfied.
1.01. THE TENDER OFFER.
(a) Subject to the provisions of this Agreement, in the event that Parent
elects to cause Newco to make the Tender Offer, as promptly as practicable
thereafter, Newco shall commence the Tender Offer in accordance with the rules
and regulations of the Securities and Exchange Commission (the "SEC"). The
obligation of Newco to accept for payment, and pay for, any shares of Company
Common Stock and Company Preferred Stock tendered pursuant to the Tender Offer
shall be subject to those terms and conditions determined by Parent and Newco in
their discretion in connection with such Tender Offer (any of which may be
waived in whole or in part by Newco in its sole discretion) (the "TENDER OFFER
CONDITIONS").
(b) Newco may, without the consent of Company, (A) extend the Tender Offer,
if at the scheduled or extended expiration date of the Tender Offer any of the
Tender Offer Conditions shall not be satisfied or waived, until such time as
such conditions are satisfied or waived, (B) extend the Tender Offer for any
period required by any rule, regulation, interpretation or position of the SEC
or the staff thereof applicable to the Tender Offer or any period required by
applicable law, (C) extend the Tender Offer on one or more occasions for an
aggregate period of not more than ten (10) business days beyond the latest
expiration date described in clauses (A) and (B) of this sentence, if on such
expiration date there shall not have been tendered at least 90% of the
outstanding shares of each class of Company Common Stock and Company Preferred
Stock, or (D) extend the Tender Offer beyond the initial expiration date to
include a "SUBSEQUENT OFFERING PERIOD" as such term is defined in Rule 14d-11 of
the rules and regulations of the SEC; PROVIDED HOWEVER, that Newco may not
extend the Tender Offer beyond July 31, 2000 without the consent of Company.
Subject to the terms and conditions of the Tender Offer and this Agreement,
Newco shall accept for payment, and pay for, all shares of Company Common Stock
and Company Preferred Stock validly tendered and not withdrawn pursuant to the
Tender Offer that Newco becomes obligated to accept for payment and pay for,
pursuant to the Tender Offer.
(c) On the date of commencement of the Tender Offer, as determined pursuant
to Rule 14d-2 of the rules and regulations of the SEC, Newco shall file with the
SEC a Tender Offer Statement on Schedule TO (the "SCHEDULE TO") with respect to
the Tender Offer, which shall contain an offer to purchase and a related letter
of transmittal and summary advertisement (such Schedule TO and the documents
included therein pursuant to which the Tender Offer shall be made, together with
any supplements or amendments thereto, are referred to collectively, as the
"TENDER OFFER DOCUMENTS"). The Tender Offer Documents shall comply as to form in
all material respects with the requirements of the Exchange Act (as defined
herein) and the rules and regulations promulgated thereunder and the Tender
Offer Documents, on the date first published, sent or given to the holders of
shares of Company Common Stock and Company Preferred Stock, shall not 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. Each of Parent, Newco and Company agree promptly to correct any
information provided by it for use in the Tender Offer Documents if and to the
extent that such information shall have become false or misleading in any
material respect, and Newco shall take all steps
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necessary to cause the Schedule TO as so corrected to be filed with the SEC and
the other Tender Offer Documents as so corrected to be disseminated to holders
of Company Common Stock and Company Preferred Stock, in each case as and to the
extent required by applicable federal securities laws. Company and its counsel
shall be given reasonable opportunity to review and comment upon the Tender
Offer Documents prior to their filing with the SEC or dissemination to the
holders of Company Common Stock and Company Preferred Stock. Newco shall provide
Company and its counsel any comments Parent, Newco or their counsel may receive
from the SEC or its staff with respect to the Tender Offer Documents promptly
after the receipt of such comments.
1.02. COMPANY ACTIONS.
(a) Company hereby approves of, and consents to, the Tender Offer and
represents that each of the Special Committee and the Board of Directors of
Company, at a meeting duly called and held, duly and unanimously adopted
resolutions approving this Agreement, the Tender Offer and the Merger,
determining, as of the date of such resolutions, that the terms of the Tender
Offer are fair to, and in the best interests of, each of the holders of Company
Common Stock and Company Preferred Stock, recommending that the holders of
Company Common Stock and Company Preferred Stock accept the Tender Offer, tender
their shares of Company Common Stock and Company Preferred Stock, as the case
may be, pursuant to the Tender Offer and approve this Agreement (if required)
and approving the acquisition of shares of Company Common Stock and Company
Preferred Stock by Newco pursuant to the Tender Offer and the other transactions
contemplated by this Agreement, including the Merger.
(b) On the date the Schedule TO is filed with the SEC, Company shall file
with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 with
respect to the Tender Offer (such Schedule 14D-9, as supplemented or amended
from time to time is referred to herein as, the "SCHEDULE 14D-9") containing,
subject to the terms of this Agreement, the recommendation described in
paragraph (a) and shall mail the Schedule 14D-9 to each holder of shares of
Company Common Stock and Company Preferred Stock. The Schedule 14D-9 shall
comply as to form in all material respects with the requirements of the Exchange
Act and the rules and regulations promulgated thereunder and, on the date filed
with the SEC and on the date first published, sent or given to the holders of
Company Common Stock and Company Preferred Stock, shall not 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. Each of Parent,
Newco and Company agrees promptly to correct any information provided by it for
use in the Schedule 14D-9 if and to the extent that such information shall have
become false or misleading in any material respect, and Company further agrees
to take all steps necessary to amend or supplement the Schedule 14D-9 and to
cause the Schedule 14D-9 as so amended or supplemented to be filed with the SEC
and disseminated to the holders of shares of Company Common Stock and Company
Preferred Stock, in each case as and to the extent required by applicable
federal securities laws. Parent, Newco and their counsel shall be given
reasonable opportunity to review and comment upon the Schedule 14D-9 prior to
its filing with the SEC or dissemination to the holders of Company Common Stock
and Company Preferred Stock. Company agrees to provide Parent, Newco and their
counsel any comments Company or its counsel may receive from the SEC or its
staff with respect to the Schedule 14D-9 promptly after the receipt of such
comments.
(c) In connection with the Tender Offer and the Merger, Company shall cause
its transfer agent to furnish Newco promptly with mailing labels containing the
names and addresses of the record holders of Company Common Stock and Company
Preferred Stock (including non-objecting beneficial owners who are not record
holders) as of a recent date and of those persons becoming record holders
subsequent to such date, together with copies of all lists of shareholders,
security position listings and computer files and all other information in
Company's possession or control regarding the beneficial owners of shares of
Company Common Stock and Company Preferred Stock, and shall furnish to Newco
such information and assistance (including updated lists of shareholders,
security position listings and computer files) as Newco may reasonably request
in communicating the Tender Offer to the holders of shares of Company Common
Stock and Company Preferred Stock. Subject to the requirements of applicable
law, and except for such steps as are necessary to disseminate the Tender Offer
Documents and any other documents necessary to
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consummate the Merger, Newco and each of its agents shall hold in confidence the
information contained in any such labels, listings and files, will use such
information only in connection with the Tender Offer and the Merger and, if this
Agreement shall be terminated, will deliver, and will use their best efforts to
cause their agents to deliver, to Company all copies and any extracts or
summaries from such information then in their possession or control.
ARTICLE II
THE MERGER
2.01. THE MERGER. At the Effective Time (as defined in Section 2.03
hereof), in accordance with this Agreement, the DGCL and the MBCA, Company shall
be merged with and into Newco, the separate existence of Company (except as may
be continued by operation of law) shall cease, and Newco shall continue as the
surviving corporation. Newco after the Merger hereinafter sometimes is referred
to as the "SURVIVING CORPORATION."
2.02. EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of this Agreement, the
DGCL and the MBCA. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the rights and property of Company and Newco
(the "CONSTITUENT CORPORATIONS") shall vest in the Surviving Corporation, and
all debts and liabilities of Company and Newco shall become the debts and
liabilities of the Surviving Corporation.
2.03. CONSUMMATION OF THE MERGER. In the event of, and as soon as is
practicable after, the satisfaction or waiver of the conditions set forth in
Article VI hereof, the parties hereto will cause the Merger to be consummated by
filing with (a) the Secretary of State of Delaware, a Certificate of Merger, and
(b) the Secretary of State of Minnesota, Articles of Merger (the time of
confirmation of such filings or such later time as is specified in such
Certificate of Merger and Articles of Merger being the "EFFECTIVE TIME").
Contemporaneous with the filings referred to in this Section 2.03, a closing
(the "CLOSING") will be held at the offices of Xxxxxxx Xxxx LLP, 000 Xxxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 or at such other location as the parties may
establish for the purpose of confirming all the foregoing. The date and the time
of such Closing are referred to as the "CLOSING DATE."
2.04. CHARTER; BYLAWS; DIRECTORS AND OFFICERS. Unless otherwise determined
by Parent prior to the Effective Time, the Certificate of Incorporation and
Bylaws of the Surviving Corporation shall be the Certificate of Incorporation
and Bylaws of Newco, as in effect immediately prior to the Effective Time;
PROVIDED, HOWEVER, that Article I of the Certificate of Incorporation of the
Surviving Corporation shall be amended to read as follows: "The name of the
corporation is Everest Medical Corporation." The directors of Newco immediately
prior to the Effective Time will be the initial directors of the Surviving
Corporation, and the officers of Newco immediately prior to the Effective Time
will be the initial officers of the Surviving Corporation, in each case until
their successors are elected and qualified.
2.05. EFFECT ON OUTSTANDING SECURITIES.
(a) NEWCO COMMON STOCK. By virtue of the Merger, automatically and without
any action on the part of any Person, including without limitation the holder
thereof, each share of common stock, par value $.01 per share, of Newco ("NEWCO
COMMON STOCK") issued and outstanding immediately prior to the Effective Time
shall remain issued and outstanding after the Merger as shares of the Surviving
Corporation, and thereafter, until changed, shall constitute all of the issued
and outstanding shares of capital stock of the Surviving Corporation.
(b) COMPANY COMMON STOCK. By virtue of the Merger, automatically and
without any action on the part of any Person, including without limitation the
holder thereof, each of the shares of Company Common Stock issued and
outstanding immediately prior to the Effective Time (other than any Dissenting
Shares (as defined in Section 2.08)), shall be cancelled and extinguished and be
automatically converted into and become a right to receive an amount per share
in cash (the "COMMON STOCK MERGER CONSIDERATION") equal to $4.85, upon surrender
in the manner provided in Section 2.09 of the certificate that evidenced the
shares of Company Common Stock (a "COMMON STOCK CERTIFICATE").
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(c) COMPANY PREFERRED STOCK.
(i) By virtue of the Merger, automatically and without any action on the
part of any Person, including without limitation the holder thereof, each of
the shares of Convertible preferred stock series A of Company ("SERIES A
PREFERRED STOCK") issued and outstanding immediately prior to the Effective
Time (other than any Dissenting Shares), shall be cancelled and extinguished
and be automatically converted into and become a right to receive an amount
per share in cash (the "SERIES A PREFERRED STOCK MERGER CONSIDERATION"),
equal to the product of (i) the number of shares of Company Common Stock
into which such share of Series A Preferred Stock is convertible MULTIPLIED
BY (ii) the Common Stock Merger Consideration, upon surrender in the manner
provided in Section 2.09 of the certificate that evidenced the shares of
Series A Preferred Stock (a "SERIES A PREFERRED STOCK CERTIFICATE").
(ii) By virtue of the Merger, automatically and without any action on
the part of any Person, including without limitation the holder thereof,
each of the shares of Convertible preferred stock series B of Company
("SERIES B PREFERRED STOCK") issued and outstanding immediately prior to the
Effective Time (other than any Dissenting Shares), shall be cancelled and
extinguished and be automatically converted into and become a right to
receive an amount per share in cash (the "SERIES B PREFERRED STOCK MERGER
CONSIDERATION"), equal to the product of (i) the number of shares of Company
Common Stock into which such share of Series B Preferred Stock is
convertible MULTIPLIED BY (ii) the Common Stock Merger Consideration, upon
surrender in the manner provided in Section 2.09 of the certificate that
evidenced the shares of Series B Preferred Stock (a "SERIES B PREFERRED
STOCK CERTIFICATE").
(iii) By virtue of the Merger, automatically and without any action on
the part of any Person, including without limitation the holder thereof,
each of the shares of Convertible preferred stock series C of Company
("SERIES C PREFERRED STOCK") issued and outstanding immediately prior to the
Effective Time (other than any Dissenting Shares), shall be cancelled and
extinguished and be automatically converted into and become a right to
receive an amount per share in cash (the "SERIES C PREFERRED STOCK MERGER
CONSIDERATION"), equal to the product of (i) the number of shares of Company
Common Stock into which such share of Series C Preferred Stock is
convertible MULTIPLIED BY (ii) the Common Stock Merger Consideration, upon
surrender in the manner provided in Section 2.09 of the certificate that
evidenced the shares of Series C Preferred Stock (a "SERIES C PREFERRED
STOCK CERTIFICATE").
(iv) By virtue of the Merger, automatically and without any action on
the part of any Person, including without limitation the holder thereof,
each of the shares of Convertible preferred stock series D of Company
("SERIES D PREFERRED STOCK") issued and outstanding immediately prior to the
Effective Time (other than any Dissenting Shares), shall be cancelled and
extinguished and be automatically converted into and become a right to
receive an amount per share in cash (the "SERIES D PREFERRED STOCK MERGER
CONSIDERATION"), equal to the product of (i) the number of shares of Company
Common Stock into which such share of Series D Preferred Stock is
convertible multiplied by (ii) the Common Stock Merger Consideration, upon
surrender in the manner provided in Section 2.09 of the certificate that
evidenced the shares of Series D Preferred Stock (a "SERIES D PREFERRED
STOCK CERTIFICATE").
(v) The Series A Preferred Stock, the Series B Preferred Stock, the
Series C Preferred Stock and the Series D Preferred Stock are hereinafter
referred to together as the "COMPANY PREFERRED STOCK". The Series A
Preferred Stock Merger Consideration, the Series B Preferred Stock Merger
Consideration, the Series C Preferred Stock Merger Consideration and the
Series D Preferred Stock Merger Consideration are hereinafter referred to
together as the "PREFERRED STOCK MERGER CONSIDERATION" and, together with
the Common Stock Merger Consideration, as the "MERGER CONSIDERATION". The
Series A Preferred Stock Certificates, the Series B Preferred Stock
Certificates, the Series C Preferred Stock Certificates and the Series D
Preferred Stock Certificates are hereinafter
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referred to together as the "PREFERRED STOCK CERTIFICATES" and, together
with the Common Stock Certificates, as the "CERTIFICATES".
(vi) Promptly after the date hereof, Company shall take all actions
necessary to procure, on or before the expiration of the Tender Offer, in
the event that Parent elects to cause Newco to make the Tender Offer, or, on
or before the Effective Time, in the event that Parent does not elect to
cause Newco to make the Tender Offer, from each holder of shares of Company
Preferred Stock an agreement, in form and substance satisfactory to Parent,
that, immediately prior to the Effective Time, such shares of Company
Preferred Stock shall be converted into a right of such holder to receive
from Parent the consideration described in this Section 2.05(c).
(d) DISSENTING SHARES. The holders of Dissenting Shares, if any, shall be
entitled to payment for such shares only to the extent permitted by and in
accordance with the provisions of the MBCA; PROVIDED, HOWEVER, that if, in
accordance with the applicable provisions of the MBCA, any holder of Dissenting
Shares shall forfeit such right to payment of the fair cash value of such
shares, such shares shall thereupon be deemed to have been converted into and to
have become exchangeable for, as of the Effective Time, the right to receive the
Merger Consideration applicable thereto as provided in Section 2.05(b) or (c),
as the case may be.
2.06. COMPANY EQUITY PLANS. Prior to the Effective Time, Company shall
terminate Company's 1986 Incentive Stock Option Plan, 1986 Non-Statutory Stock
Option Plan, 1992 Stock Option Plan and 1997 Stock Option Plan (collectively,
the "COMPANY EQUITY PLANS"), and, in connection therewith, shall provide written
notice to each holder of a then outstanding stock option or other right (each,
an "OPTION") to purchase shares of Company Common Stock pursuant to the Company
Equity Plans (whether or not such Option is then vested or exercisable), that
such Option shall be, as of the date of such notice, fully vested and
exercisable in full and that such Option shall terminate at the Effective Time
and that, if such Option is not exercised or otherwise terminated before the
Effective Time, such holder shall be entitled to receive in cancellation of such
Option a cash payment from Parent promptly after the Effective Time, in an
amount equal to the excess of the Common Stock Merger Consideration over the per
share exercise price of such Option, if any, multiplied by the number of shares
covered by such Option (the "OPTION SETTLEMENT AMOUNT"), subject to tax
withholding as required by applicable law. The Company Disclosure Schedule
includes a complete listing of Options held by each optionee (including the date
of grant, the number of shares issuable upon exercise of the Option, the
exercise price per share, and the Option Settlement Amount to which the Optionee
is entitled). Except as otherwise provided in this Section 2.06, Company shall
not grant or amend any Option after the date hereof. Company hereby represents
and warrants to Parent that the number of shares of Company Common Stock subject
to issuance pursuant to the exercise of Options issued and outstanding under the
Company Equity Plans is, and shall be as of the Effective Time, not in excess of
1,386,154. To the extent that the cancellation of any Option pursuant to this
Section 2.06(a) requires the agreement of the holder of such Option under a
Company Equity Plan, Company shall enter into an agreement with such holder
providing for the cancellation of such Option in consideration for the receipt
by such holder of the applicable Option Settlement Amount with respect to such
Option.
2.07. WARRANTS. Prior to the Effective Time, Company shall take all
actions necessary to procure, on or before the expiration of the Tender Offer,
in the event that Parent elects to cause Newco to make the Tender Offer, or, on
or before the Effective Time, in the event that Parent does not elect to cause
Newco to make the Tender Offer, from each holder of an outstanding warrant
(each, a "WARRANT") to purchase shares of Company Common Stock an agreement
that, as of the Effective Time, such Warrant shall be converted into a right of
such holder to receive from Parent promptly after the Effective Time the
consideration set forth in the next sentence. Each holder of a Warrant shall be
entitled to receive from Parent in respect of the shares of Company Common Stock
to be issued upon the exercise of such Warrant, an amount in cash, without
interest (the "WARRANT CONSIDERATION"), equal to the product of (i) the number
of shares of Company Common Stock subject to such Warrant immediately prior to
the Effective Time and (ii) the excess, if any, by which the Common Stock Merger
Consideration exceeds the exercise price per share applicable to such Warrant.
Company hereby represents and warrants to Parent that the number of
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shares of Company Common Stock subject to issuance pursuant to the Warrants is,
and shall be as of the Effective Time, 577,897.
2.08. DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the contrary, holders
of Company Common Stock and Company Preferred Stock which are entitled to
dissenter's rights in connection with the Merger under the MBCA (collectively,
the "DISSENTING SHARES") shall not be converted into or represent the right to
receive the Merger Consideration applicable to such shares. Such shareholders
shall be entitled to receive payment of the fair market value of such Dissenting
Shares held by them in accordance with the provisions of the MBCA, except that
all Dissenting Shares held by shareholders who shall have failed to perfect or
who effectively shall have withdrawn or lost their rights to the payment of fair
market value for such shares under the MBCA shall thereupon be deemed to have
been converted into and to have become exchangeable for, as of the Effective
Time, the right to receive the Merger Consideration applicable to such shares,
without any interest thereon, upon surrender, in the manner provided in
Section 2.09, of the certificate or certificates that formerly evidenced such
shares.
(b) Company shall give Parent (i) prompt notice of any demand for payment of
fair market value received by Company, the withdrawals of any such demand, and
any other instrument served pursuant to the MBCA and received by Company and
(ii) the opportunity to direct all negotiations and proceedings with respect to
demands for payment of fair market value under the MBCA. Company shall not,
except with the prior written consent of Parent, make any payment with respect
to any demands for payment of fair market value or offer to settle or settle any
such demands.
2.09. EXCHANGE OF CERTIFICATES.
(a) From and after the Effective Time, a bank or trust company to be
designated by Parent (the "EXCHANGE AGENT") shall act as exchange agent in
effecting the exchange of the Merger Consideration for Certificates which, prior
to the Effective Time, represented shares of Company Common Stock or Company
Preferred Stock, as the case may be, entitled to payment pursuant to
Section 2.05 hereof. At or immediately prior to the Effective Time, Parent shall
deposit with the Exchange Agent the aggregate Merger Consideration necessary to
make the payments to be made as contemplated by Section 2.05 hereof on a timely
basis (the "DEPOSIT AMOUNT") in trust for the benefit of the holders of
Certificates. Upon the surrender of each such Certificate and the issuance and
delivery by the Exchange Agent of the Merger Consideration applicable thereto in
exchange therefor, such Certificate shall forthwith be cancelled. Until so
surrendered and exchanged, each such Certificate (other than Certificates
representing shares held by Parent or Company or any direct or indirect
Subsidiary of Parent and Dissenting Shares) shall represent solely the right to
receive the Merger Consideration applicable thereto, without interest,
multiplied by the number of shares represented by such Certificate. Promptly
after the Effective Time, the Exchange Agent shall mail to each record holder of
Certificates which immediately prior to the Effective Time represented shares a
form of letter of transmittal and instructions for use in surrendering such
Certificates and receiving the Merger Consideration applicable thereto. Upon the
surrender to the Exchange Agent of such an outstanding Certificate together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, and such other documents as may be required
pursuant to such instructions, the holder shall receive the Merger Consideration
applicable thereto, without any interest thereon and such Certificate shall be
cancelled. If any Merger Consideration is to be paid to a name other than the
name in which the Certificate representing shares surrendered in exchange
therefor is registered, it shall be a condition to such payment or exchange that
the Person requesting such payment or exchange shall pay to the Exchange Agent
any transfer or other taxes required by reason of the payment of such Merger
Consideration to a name other than that of the registered holder of the
Certificate surrendered, or such Person shall establish to the satisfaction of
the Exchange Agent that such tax has been paid or is not applicable.
Notwithstanding the foregoing, neither the Exchange Agent nor any party hereto
shall be liable to a holder of shares for any Merger Consideration delivered to
a public official pursuant to applicable abandoned property, escheat or similar
laws.
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(b) Parent shall not be entitled to the return of any of the Deposit Amount
in the possession of the Exchange Agent relating to the transactions described
in this Agreement until the date which is 180 days after the Effective Time.
Thereafter, each holder of a Certificate representing a share may surrender such
Certificate to the Surviving Corporation and (subject to applicable abandoned
property, escheat and similar laws) receive in exchange therefor the Merger
Consideration applicable thereto, without any interest thereon, but shall have
no greater rights against the Surviving Corporation than may be accorded to
general creditors of the Surviving Corporation.
(c) At and after the Effective Time, the holders of Certificates to be
exchanged for the Merger Consideration applicable thereto pursuant to this
Agreement shall cease to have any rights as shareholders of Company except for
the right to surrender such holder's Certificates in exchange for payment of the
Merger Consideration applicable thereto, and after the Effective Time there
shall be no transfers on the stock transfer books of the Surviving Corporation
of the shares which were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Certificates are presented to the Surviving
Corporation or the Exchange Agent, they shall be cancelled and exchanged for the
Merger Consideration applicable thereto, as provided in this Article II, subject
to applicable law in the case of Dissenting Shares.
(d) If any Certificate shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the Person claiming such Certificate to
be lost, stolen or destroyed and subject to such other conditions as the Parent
may impose, the Exchange Agent shall pay in exchange for such lost, stolen or
destroyed Certificate the Merger Consideration deliverable in respect of such
Certificate as determined in accordance herewith. When authorizing such payment
of the Merger Consideration in exchange for such Certificate, the Parent (or any
authorized officer thereof) may, in its reasonable discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed Certificate to deliver to the Surviving Corporation a bond in such sum
as the Surviving Corporation may reasonably require as indemnity against any
claim that may be made against Parent, the Surviving Corporation or the Exchange
Agent with respect to the Certificate alleged to have been lost, stolen or
destroyed.
(e) The provisions of this Section 2.09 shall also apply to Dissenting
Shares that lose their status as such, except that the obligations of Exchange
Agent under this Section 2.09 shall commence on the date of loss of such status.
2.10. SUPPLEMENTARY ACTION. If, at any time after the Effective Time, any
further assignments or assurances in law or any other things are necessary or
desirable to vest or to perfect or confirm of record in the Surviving
Corporation the title to any property or rights of either Company or Newco, or
otherwise to carry out the provisions of this Agreement, the officers and
directors of the Surviving Corporation are hereby authorized and empowered, in
the name of and on behalf of Company and Newco, to execute and deliver any and
all things necessary or proper to vest or to perfect or confirm title to such
property or rights in the Surviving Corporation, and otherwise to carry out the
purposes and provisions of this Agreement.
2.11. POSSIBLE ALTERNATIVE STRUCTURE. Notwithstanding any other provision
of this Agreement to the contrary, prior to the Effective Time, Parent shall be
entitled to revise the structure of the transaction to provide that Newco shall
be merged with and into Company at the Effective Time, with Company as the
surviving corporation of the Merger. Notwithstanding the foregoing or any other
provision of this Agreement to the contrary, Parent and Company may jointly
elect prior to the Effective Time, to substitute an alternative structure for
the accomplishment of the transactions contemplated by this Agreement. Parent
and Company agree that this Agreement shall be appropriately amended in order to
reflect any alternative structure.
8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company represents and warrants to Parent and Newco that, except as
described in the applicable section of the Company Disclosure Schedule furnished
by Company to Parent prior to the execution of this Agreement (the "COMPANY
DISCLOSURE SCHEDULE") corresponding to the Sections set forth below:
3.01. ORGANIZATION AND QUALIFICATION. Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Minnesota. Company has all requisite corporate power and authority to own,
operate and lease its properties and to carry on its business as it is now being
conducted. Company is duly qualified as a foreign corporation, and is in good
standing, in each jurisdiction where the character of its properties owned or
held under lease or the nature of its activities makes such qualification
necessary, other than in jurisdictions where the failure to be so qualified,
individually and in the aggregate, has not had and would not reasonably be
expected to have a Material Adverse Effect. Company has no Subsidiaries and no
direct or indirect equity or related interest in any partnership, corporation,
limited liability company, joint venture, business association or other entity.
3.02. ARTICLES OF ORGANIZATION; BYLAWS; AND STOCK TRANSFER
RECORDS. Company has made available to Parent prior to the date of this
Agreement complete and correct copies of (i) the Articles of Organization (or
other charter document) and By-laws of Company, and (ii) a list of all holders
of capital stock of Company, in each case such copies are or will be accurate
and complete as of the date of this Agreement or when furnished.
3.03. CAPITALIZATION OF COMPANY.
(a) On the date of this Agreement, the authorized capital stock of Company
consists of (i) 11,987,594 shares of Company Common Stock, of which 7,728,965
shares are issued and outstanding and (ii) 3,012,406 shares of Company Preferred
Stock, of which (A) 1,400,000 shares have been designated Series A Preferred
Stock, of which 462,937 shares are issued and outstanding, (B) 730,000 shares
have been designated Series B Preferred Stock, of which 597,273 shares are
issued and outstanding, (C) 410,906 shares have been designated Series C
Preferred Stock, all of which are issued and outstanding, and (D) 471,500 shares
are designated Series D Preferred Stock, of which 466,500 are issued and
outstanding. Company Preferred Stock is convertible into Company Common Stock on
a one-for-one basis, and such conversion ratio has not required adjustment
(whether pursuant to the terms of such Company Preferred Stock or otherwise)
since the original issuance of such Company Preferred Stock.
(b) Except for (i) Options listed in the Company Disclosure Schedule which
were granted under the Company Equity Plans, (ii) 52,058 shares of Company
Common Stock reserved for issuance pursuant to the Company Employee Stock
Purchase Plan, (iii) the rights created pursuant to this Agreement, (iv) rights
created pursuant to the Warrants, (v) rights created pursuant to the Guidant
Stock Purchase Agreement, and (vi) those matters set forth in Section 3.03(b) of
Company Disclosure Schedule, there are no options, warrants, calls, rights,
commitments or agreements of any character to which Company is a party or by
which it is bound obligating Company to issue, sell, deliver, repurchase or
redeem or cause to be issued, sold, delivered, repurchased or redeemed any
shares of capital stock of, or equity interests in, Company. Except as set forth
in Section 3.03(b) of the Company Disclosure Schedule, all outstanding shares
are, and all shares subject to issuance as aforesaid, upon issuance on the terms
and conditions specified in the instruments pursuant to which they are issuable,
will be, duly authorized, validly issued, fully paid and nonassessable and free
of preemptive rights or rights of first refusal. Company is not required to
redeem, repurchase or otherwise acquire shares of capital stock of Company.
Company has no shareholder rights plan or agreement in force providing for the
issuance to holders of shares of Company Common Stock or Company Preferred Stock
of rights to purchase or receive stock, cash or other assets upon the
acquisition or proposed acquisition of shares of Company Common Stock or Company
Preferred Stock by a Person (a "RIGHTS PLAN"), nor has Company's Board of
Directors or shareholders ever adopted a Rights Plan. Except as set forth in
Section 3.03(b) of the Company Disclosure Schedule, there are no voting trusts
or other agreements or understandings to which Company is a party or by which
Company may be bound with respect to the voting of the capital stock of Company.
All of the outstanding Company
9
Common Stock and Company Preferred Stock was issued in compliance with
applicable federal and state securities laws and regulations.
(c) Company has never affected a stock split, stock dividend, reverse stock
split, combination, reclassification or other change to its capital stock since
the closing of its initial public offering of Company Common Stock, and Company
has never changed its corporate name since that date.
3.04. CORPORATE POWER, AUTHORIZATION AND ENFORCEABILITY. Company has all
requisite corporate power and authority to enter into this Agreement and to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Company,
the performance by Company of its obligations hereunder and the consummation by
Company of the transactions contemplated hereby have been duly and validly
authorized by the Special Committee and Board of Directors of Company and no
other corporate action on the part of Company is necessary to authorize this
Agreement or to consummate the transactions contemplated hereby (other than,
with respect to the Merger, the approval and adoption of this Agreement by
holders of a majority of Company Common Stock and Company Preferred Stock,
voting together as a single class). This Agreement has been duly executed and
delivered by Company and is a legal, valid and binding obligation of Company,
enforceable against Company in accordance with its terms. The affirmative vote
of the holders of a majority of the outstanding shares of Company Common Stock
and Company Preferred Stock (voting as if such Company Preferred Stock had been
converted to Company Common Stock) entitled to vote thereon, voting together as
a single class, is the only vote of any class of capital stock of Company
required by the MBCA, the Articles of Organization of Company or the Bylaws to
adopt this Agreement and approve the Merger.
3.05. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Assuming satisfaction of any applicable requirements referred to in
Section 3.05(b) below, the execution and delivery by Company of this Agreement,
the compliance by Company with the provisions hereof and the consummation by
Company of the transactions contemplated hereby:
(A) will not conflict with or violate any statute, law, ordinance, rule,
regulation, order, writ, judgment, award, injunction, decree or ruling
applicable to Company or any of its properties, or conflict with, violate or
result in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, cancellation or acceleration
of, or the loss of a benefit under, or result in the creation of a lien,
security interest, charge or encumbrance on any of the properties or assets
of Company pursuant to (i) the Articles of Organization (or other charter
document) or Bylaws of Company, or (ii) any contract, lease, agreement,
note, bond, mortgage, indenture, deed of trust, or other instrument or
obligation, or any license, authorization, permit, certificate or other
franchise, other than such conflicts, violations, breaches, defaults,
losses, rights of termination, amendment, cancellation or acceleration,
liens, security interests, charges or encumbrances as to which requisite
waivers have been obtained or which individually or in the aggregate would
not have a Material Adverse Effect; and
(B) do not and will not result in any grant of rights to any other party
under the Articles of Organization (or other charter document) or Bylaws of
Company or restrict or impair the ability of the Parent or any of its
Subsidiaries to vote, or otherwise exercise the rights of a shareholder with
respect to shares of Company that may be directly or indirectly acquired or
controlled by them.
(b) Other than in connection with or in compliance with the provisions of
the DGCL, the MBCA, state securities or "blue sky" laws, Chapter 80B of the
Minnesota statutes, NASDAQ and the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), (i) Company is not required to submit any notice, report,
registration, declaration or other filing with any foreign, federal, state or
local government, court, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign (collectively,
"GOVERNMENTAL ENTITIES"), in connection with the execution or delivery of this
Agreement by Company or the performance by Company of its obligations hereunder
or the consummation by Company of the transactions contemplated by this
Agreement and (ii) no waiver, consent, approval, order or authorization of any
Governmental Entity is required to be obtained in
10
connection with the execution or delivery of this Agreement by Company or the
performance by Company of its obligations hereunder or the consummation by
Company of the transactions contemplated by this Agreement, other than such
notices, reports, registrations, declarations, filings, waivers, consents,
approvals, orders, or authorizations, the absence of which would not,
individually and in the aggregate, subject Company to any criminal penalties or
otherwise reasonably be expected to have a Material Adverse Effect.
3.06. SEC REPORTS; FINANCIAL STATEMENTS. Company has filed all required
reports, schedules, forms, statements, exhibits and other documents with the SEC
since December 6, 1990 (collectively, the "SEC REPORTS"). Company has delivered
to Parent copies of the consolidated balance sheets of Company as of
December 31 for the fiscal years 1998 and 1999, and the related consolidated
statements of income, changes in shareholders' equity and cash flows for the
fiscal years 1997 through 1999, inclusive, as reported in Company's Form 10-KSB
for the fiscal year ended December 31, 1999 filed with the SEC under the
Exchange Act, accompanied by the audit report of Ernst & Young LLP. The
December 31, 1999 consolidated balance sheet (the "COMPANY BALANCE SHEET") of
Company (including the related notes, where applicable) and the other financial
statements referred to herein were prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved ("GAAP") (except as may be indicated in the notes or schedules
thereto) and present fairly in all material respects the consolidated financial
position of Company as of the dates thereof and the consolidated results of
their operations and cash flows as of the dates and for the fiscal periods
indicated therein. The books and records of Company have been, and are being,
maintained in accordance with GAAP and applicable legal and regulatory
requirements. Each SEC Report filed with the SEC complied in all material
respects with the then applicable requirements of the Exchange Act and the
Securities Act of 1933, as amended (the "SECURITIES ACT"), and the rules and
regulations of the SEC promulgated thereunder and as of the date of each such
SEC Report 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 therein, in light of the circumstances under which they were made,
not misleading.
3.07. NO DEFAULT. Company is not in default or violation (and no event has
occurred which with or without notice, the lapse of time or the happening or
occurrence of any other event would constitute a default or violation) of any
term, condition or provision of (i) its Articles of Organization (or other
charter document) or Bylaws, or (ii) any contract, lease, agreement, license,
note, bond, mortgage, indenture, deed of trust or other instrument or obligation
to which Company is a party or by which Company or any of its properties or
assets may be bound (nor to the knowledge of Company is any other party thereto
in breach thereof or default thereunder), except for defaults, violations or
breaches that would not, individually or in the aggregate, have a Material
Adverse Effect.
3.08. COMPLIANCE WITH LAW. Except as set forth in Section 3.08 of the
Company Disclosure Schedule, Company is in compliance, and has conducted its
business so as to comply with, all statutes, laws, ordinances, rules,
regulations, permits and approvals applicable to its operations, whether
domestic or foreign, except where the failure to be in compliance would not have
a Material Adverse Effect. Except as set forth in Section 3.08 of the Company
Disclosure Schedule or disclosed in the SEC Reports, as of the date hereof no
investigation or review by any Governmental Entity with respect to Company or
any property owned or leased by Company is pending or, to the knowledge of
Company, threatened.
3.09. PERMITS. Company has all permits, authorizations, licenses and
franchises from Governmental Entities required to conduct its business as now
being conducted, except where the failure to have any such permits,
authorizations, licenses or franchises would not have a Material Adverse Effect.
Section 3.09 of the Company Disclosure Schedule lists as of the date of this
Agreement all of Company's licenses and permits (collectively, the "LICENSES").
To the best of Company's knowledge, the Licenses are the only permits and
licenses required by Company to operate its business as currently conducted.
Company is not in material default with respect to any of the Licenses. The
consummation of the transactions contemplated by this Agreement will not cause
any default, cancellation or loss of a benefit under, or require any approval of
a Governmental Authority with respect to, any of the Licenses.
11
3.10. ABSENCE OF CERTAIN CHANGES. Except as disclosed in the 1999 10-KSB,
in Section 3.10 of the Company Disclosure Schedule, or incurred hereinafter in
the ordinary course of business consistent with past practice and with
Section 5.01 hereof, since December 31, 1999, (i) the business of Company has
been conducted only in the ordinary course consistent with past practices,
(ii) there has not been any change in the business, assets, financial condition
or results of operations of Company which has had or could reasonably be
expected to have a Material Adverse Effect, (iii) there has not been any change
in any policy or practice followed by Company in the ordinary course of business
except for changes which have not had and are not likely to have a Material
Adverse Effect, (iv) there has not been any material agreement, contract or
commitment entered into, or agreed to be entered into, except for those in the
ordinary course of business; (v) there has not been any increase in or
establishment of any bonus, insurance, severance (including severance after a
change in control), deferred compensation, pension, retirement, profit sharing,
life insurance or split dollar life insurance, retiree medical or life
insurance, or other employee benefit plan, or any other increase in the
compensation payable or to become payable to any officers or key employees of
Company, except with respect to cash compensation, in the ordinary course of
business consistent with past practice; (vi) there has not been any change in
any of the accounting methods or practices of Company other than changes
required by applicable law or applicable accounting policies; and (vii) Company
has not declared, paid or set aside for payment any dividend or other
distribution in respect of its capital stock or redeemed, purchased or otherwise
acquired, directly or indirectly, any shares of capital stock or other
securities of Company.
3.11. NO UNDISCLOSED LIABILITIES. Except for liabilities and obligations
incurred since December 31, 1999 in the ordinary course of business, incurred in
connection with this Agreement or identified in Section 3.11 of the Company
Disclosure Schedule, Company has no liabilities or obligations of any nature
whatsoever (whether absolute, accrued, fixed, contingent, liquidated,
unliquidated or otherwise), required by generally accepted accounting principles
to be recognized or disclosed on a consolidated balance sheet of Company or in
the notes thereto, other than those recognized or disclosed in the Company
Balance Sheet or disclosed in the 1999 10-KSB.
3.12. LITIGATION. Except as set forth in Section 3.12 of the Company
Disclosure Schedule, there is no action, suit, investigation or proceeding
pending against, or to the knowledge of Company, threatened against or
affecting, Company or any of its properties as to which there is a reasonable
possibility of an adverse determination and which if determined adversely to
Company could be expected to have a Material Adverse Effect and there is no
judgment, decree, writ, injunction, award, ruling or order of any Governmental
Entity or arbitrator outstanding against Company having, or which, insofar as
can reasonably be foreseen, in the future would have, a Material Adverse Effect.
Section 3.12 of the Company Disclosure Schedule includes a list of all
litigation pending against Company as of the date of this Agreement. Company has
made available to Parent correct and complete copies of all correspondence
prepared by its counsel for Company's auditors in connection with the last
completed audit of Company's financial statements and any such correspondence
since the date of the last such audit. As of the date of this Agreement, there
are no actions, suits or proceedings pending or, to the knowledge of Company,
threatened against Company arising out of or in any way related to this
Agreement, the Tender Offer, the Merger or any of the transactions contemplated
hereby or thereby.
3.13. ERISA.
(a) Section 3.13 of the Company Disclosure Schedule lists each "employee
benefit plan," as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and all other written or oral plans
or agreements involving direct or indirect compensation (including any
employment agreements entered into between Company and any employee or former
employee of Company, but excluding worker's compensation, unemployment
compensation and other government-mandated programs) currently or previously
maintained, contributed to or entered into by Company or any ERISA Affiliate
thereof for the benefit of any employee or former employee of Company under
which Company or any ERISA Affiliate thereof has or may have any present or
future obligation or liability (collectively, the "COMPANY EMPLOYEE PLANS"). For
purposes of this Section 3.13, "ERISA AFFILIATE" shall mean any entity which is
a member of (i) a "controlled group of corporations," as defined in
12
Section 414(b) of the Internal Revenue Code of 1986, as amended (the "CODE"),
(ii) a group of entities under "common control," as defined in Section 414(c) of
the Code or (iii) an "affiliated service group," as defined in Section 414(m) of
the Code or treasury regulations promulgated under Section 414(o) of the Code,
any of which includes Company. Section 3.13 of Company Disclosure Schedule
identifies the only Company Employee Plans which individually or collectively
would constitute an "employee pension benefit plan," as defined in Section 3(2)
of ERISA (collectively, the "COMPANY PENSION PLANS").
(b) No Company Pension Plan is subject to Title IV of ERISA, Part 3 of Title
I of ERISA or Section 412 of the Code. No Company Pension Plan constitutes or
has since the enactment of ERISA constituted a "multiemployer plan," as defined
in Section 3(37) of ERISA. To the best of Company's knowledge, nothing done or
omitted to be done and no transaction or holding of any asset under or in
connection with any Company Employee Plan has or is likely to make Company or
any officer or director of Company subject to any material liability under Title
I of ERISA or liable for any material tax pursuant to Section 4975 of the Code.
(c) Each Company Pension Plan which is intended to be qualified under
Section 401(a) of the Code is so qualified and has been so qualified during the
period from its adoption to date. To the best of Company's knowledge, nothing
has occurred prior to or since the adoption of the Company Pension Plan to cause
the loss of such qualification under the Code, but such Plan has not been
resubmitted to the Internal Revenue Service with respect to any amendments
reflecting changes in the applicable law or other changes for which the remedial
amendment period has not expired as of the Closing Date. Each trust forming a
part of a Company Pension Plan is exempt from tax pursuant to Section 501(a) of
the Code. Each Company Employee Plan has been maintained in material compliance
with its terms and with the applicable requirements of ERISA and the Code.
(d) Each employment, severance or other similar contract, arrangement or
policy and each plan or arrangement (written or oral) providing for insurance
coverage (including any self-insured arrangements), vacation benefits, severance
or severance-type benefits, disability benefits, death benefits, hospitalization
benefits, retirement benefits, deferred compensation, profit-sharing, bonuses,
stock options, stock purchase, phantom stock, stock appreciation or other forms
of incentive compensation or post-retirement insurance, compensation or benefits
which (i) is not a Company Employee Plan, (ii) is entered into, maintained or
contributed to, as the case may be, by Company, and (iii) covers any employee or
former employee of Company, is herein referred to as a "COMPANY BENEFIT
ARRANGEMENT" and collectively as the "COMPANY BENEFIT ARRANGEMENTS." All Company
Benefit Arrangements are listed in Section 3.13 of the Company Disclosure
Schedule. Each Company Benefit Arrangement has been maintained in material
compliance with its terms and with the requirements prescribed by any and all
statutes (including but not limited to the Code), orders, rules and regulations
which are applicable to such Company Benefit Arrangements.
(e) There has been no amendment to, written interpretation or announcement
(whether or not written) by Company relating to, or change in employee
participation or coverage (other than as required under the terms of any such
plan) under, any Company Employee Plan or Company Benefit Arrangement which
would increase the expense of maintaining such Company Employee Plan or Company
Benefit Arrangement above the level of the expense incurred in respect thereof
for the fiscal year ended December 31, 1999.
(f) The Company has complied with the requirements of Section 4980B of the
Code with respect to any "qualifying event" (as defined in Section 4980B(f)(3)
of the Code) occurring prior to and including the Closing Date, except where
failure to be in compliance individually and in the aggregate has not had and
would not reasonably be expected to have a Material Adverse Effect and, to
Company's knowledge, no tax payable on account of Section 4980B of the Code has
been incurred with respect to any current or former employees of Company.
(g) There is no term of any Company Employee Plan or Company Benefit
Arrangement covering a "disqualified individual" (as defined in Section 280G(c)
of the Code), or of any contract, instrument, agreement or arrangement with any
such disqualified individual, that individually or collectively could
13
result in a disallowance of the deduction for any "excess parachute payment" (as
defined in Section 280G(b)(i) of the Code) or the imposition of the excise tax
provided in Section 4999 of the Code. The consummation of the transactions
contemplated by this Agreement will not result in any "excess parachute payment"
or the imposition of any such excise tax.
(h) Company has heretofore delivered to Parent copies of all of Company
Employee Plans, Company Pension Plans and Company Benefit Arrangements listed in
Section 3.13 of Company Disclosure Schedule.
(i) There is no pending or, to Company's knowledge, threatened legal action,
proceeding or investigation, other than routine claims for benefits, concerning
any Company Employee Plan, Company Pension Plan or Company Benefit Arrangement
or, to the knowledge of Company any fiduciary or service provider thereof and,
to the knowledge of Company, there is no basis for any such legal action or
proceeding.
(j) No Company Employee Plan or Company Benefit Arrangement provides health,
life or other similar welfare coverages after termination of employment except
to the extent required by applicable state insurance laws and Code
Section 4980B and Title I, Part 6 of ERISA.
(k) With respect to each Company Employee Plan, Company Pension Plan or
Company Benefit Arrangement for which a separate fund of assets is or is
required to be maintained, full payment has been made of all amounts required of
Company and ERISA Affiliates under the terms of each such Plan or Arrangement or
applicable law, through the Closing Date.
(l) Company has the power and authority under the terms of the Company
Employee Stock Purchase Plan to terminate that plan prior to the Effective Time
(as provided in Section 5.08) without the consent of any employee.
3.14. LABOR MATTERS. There is no labor strike, dispute, slowdown, stoppage
or lockout actually pending, or threatened against Company. Company is not a
party to or bound by any collective bargaining agreement with any labor
organization applicable to employees of Company. Company has not experienced any
material work stoppage or other material labor difficulty during the two-year
period ending on the date hereof.
3.15. TAX RETURNS AND REPORTS.
(a) Company has timely filed in correct form with the appropriate taxing
authorities all federal, state, county, local and foreign returns, estimates,
information statements, reports and other documents in respect of Taxes (as
defined in Article VIII) required to be filed by Company. All amounts shown due
on such returns have been paid as required by law.
(b) No assessment that has not been settled or otherwise resolved has been
made with respect to Taxes not shown on the Tax returns, other than such
additional Taxes as are being contested in good faith or which if determined
adversely to Company would not have a Material Adverse Effect. There are no
material disputes pending or written claims asserted for Taxes or assessments
upon Company, nor has Company been requested to give any currently effective
waivers extending the statutory period of limitation applicable to any Federal,
state, county, foreign or local income tax return for any period. No deficiency
in Taxes or other proposed adjustment that has not been settled or otherwise
resolved has been asserted in writing by any taxing authority against any of
Company. No Tax return of Company is now under examination by any applicable
taxing authority. There are no material liens for Taxes (other than current
Taxes not yet due and payable) on any of the assets of Company, except for such
liens for Taxes that would not have a Material Adverse Effect. During the past
five years, no jurisdiction has made any written claim or allegation, or made
any written inquiry pursuant to such a written claim or allegation, that Company
is required to file Tax returns in such jurisdiction for any Tax for which
Company does not presently filed Tax returns in such jurisdiction.
(c) Adequate provision has been made on the Company Balance Sheet for all
Taxes of Company in respect of all periods through the date hereof.
14
(d) As of the date of this Agreement, Company has no ruling requests
currently pending with the Internal Revenue Service.
(e) Except as set forth in the SEC Reports, Company is not a party to (or
obligated under) any Tax allocation, tax sharing or tax indemnity agreement
which has as a party any Person other than Company.
(f) Company has withheld and paid all Taxes required to have been withheld
and paid in connection with amounts paid or owing to any employee, consultant,
independent contractor, creditor, shareholder or other party.
3.16. COMPANY DEBT. Section 3.16 of the Company Disclosure Schedule lists
all outstanding Indebtedness of Company as of the date hereof, except for
individual items of indebtedness the principal amount of which do not exceed
$50,000. Section 3.16 of the Company Disclosure Schedule sets forth the amount
of principal and unpaid interest outstanding under each instrument evidencing
Indebtedness of Company, if any, that will accelerate or become due or result in
a right on the part of the holder of such indebtedness (with or without due
notice or lapse of time) to require prepayment, redemption or repurchase as a
result of the execution of this Agreement or the consummation of the
transactions contemplated hereby.
3.17. TRADEMARKS, PATENTS AND COPYRIGHTS.
(a) Section 3.17 of the Company Disclosure Schedule contains a true and
complete list of Company Intellectual Property and includes details of all due
dates for further filings, maintenance, payments or other actions falling due on
or before May 1, 2001. All of Company's patents, patent applications, registered
trademarks, trademark applications, and registered copyrights remain in good
standing with all fees and filings due as of May 1, 2000 duly made and the due
dates specified in the Company Disclosure Schedule are accurate and complete.
(b) The Company Intellectual Property consists solely of items and rights
which are: (i) owned by Company; or (ii) rightfully used by Company pursuant to
a valid license ("COMPANY LICENSED INTELLECTUAL PROPERTY"), the parties and date
of each such license agreement and each material agreement in which Company is
the licensor or owner of the subject rights in the agreement being set forth on
Section 3.17(b) of the Company Disclosure Schedule. To Company's best knowledge,
except as set forth in Section 3.17(b) of the Company Disclosure Schedule,
Company has all rights in Company Intellectual Property necessary to carry out
Company's current activities (and had all rights necessary to carry out its
former activities at the time such activities were being conducted), including
without limitation, rights to make, use, reproduce, modify, adopt, create
derivative works based on, translate, distribute (directly and indirectly),
transmit, display and perform publicly, license, rent and lease and, other than
with respect to the Company Licensed Intellectual Property, assign and sell, the
Company Intellectual Property.
(c) To Company's best knowledge, except for Company Licensed Intellectual
Property and except as set forth in Section 3.17(c) of the Company Disclosure
Schedule, the reproduction, development, manufacturing, distribution, licensing,
sublicensing or sale of any Company Intellectual Property, now used or offered
or proposed for use, licensing or sale by Company does not infringe on any
patent, copyright, trademark, service xxxx, trade name, trade dress, firm name,
Internet domain name, logo, trade dress, of any person and does not constitute a
misappropriation of any trade secret. Except as set forth in Section 3.17(c) of
the Company Disclosure Schedule, no claims (i) challenging the validity,
effectiveness or ownership by Company of any of the Company Intellectual
Property, or (ii) to the effect that the use, distribution, licensing,
sublicensing or sale of the Company Intellectual Property as now used or offered
or proposed for use, licensing, sublicensing or sale by Company infringes or
will infringe on any intellectual property or other proprietary right of any
person have been asserted or, to the knowledge of Company, are threatened by any
person or have been made or threatened by any person against the Company's
distributors. To the knowledge of Company, there is no unauthorized use,
infringement or misappropriation of any of the Company Intellectual Property by
any third party, employee or former employee.
(d) Except as set forth in Section 3.17(d) of the Company Disclosure
Schedule, all Company Intellectual Property has been solely developed by full
time employees and consultants within the scope of
15
his or her employment or consulting agreement with the Company. All employee
contribution or participation in the conception and development of the Company
Intellectual Property on behalf of Company constitutes work prepared by an
employee within the scope of his or her employment or by a consultant in the
scope of his or her consulting agreement, in each case, in accordance with
applicable federal and state law that has accorded Company ownership of all
tangible and intangible property thereby arising.
(e) Except for externally-developed software programs, Company is not, nor
as a result of the execution or delivery of this Agreement, performance of
Company's obligations hereunder, or consummation of the Merger, will Company or
the Surviving Corporation be, in violation of any material license, sublicense,
agreement or instrument to which Company is a party or otherwise bound, nor will
execution or delivery of this Agreement, or performance of Company's obligations
hereunder, cause the diminution, termination or forfeiture of any right to use,
license, sell, assign or any other rights with respect to any material Company
Intellectual Property.
(f) Section 3.17(f) of the Company Disclosure Schedule contains a true and
complete list of all of Company's internally-developed software programs
("COMPANY SOFTWARE PROGRAMS"). Except for Company Licensed Intellectual Property
and except as set forth in Section 3.17(f) of the Company Disclosure Schedule,
Company owns full and unencumbered right and good, valid and marketable title to
such Company Software Programs and all Company Intellectual Property free and
clear of all mortgages, pledges, liens, security interests, conditional sales
agreements or encumbrances.
3.18. MATERIAL AGREEMENTS. Except as set forth in the 1999 10-KSB,
described in Section 3.18 of the Company Disclosure Schedule and except for this
Agreement and the agreements specifically referred to herein, Company is not a
party to or bound by any of the following agreements (with the following
agreements, and the agreements included as exhibits to the SEC Reports,
collectively referred to as the "MATERIAL AGREEMENTS"):
(a) any contract or agreement or amendment thereto that would be
required to be filed as an exhibit to a registration statement on Form S-1
filed by Company as of the date hereof;
(b) any confidentiality agreement, non-competition agreement or other
contract or agreement that contains covenants limiting Company's freedom to
compete in any line of business or in any location or with any Person; and
(c) any loan agreement, indenture, note, bond, debenture or any other
document or agreement evidencing a capitalized lease obligation or other
Indebtedness (as defined in Article VIII) to any Person, other than any
Indebtedness in a principal amount less than $50,000 individually or
$100,000 in the aggregate.
Company has delivered to Parent a correct and complete copy of each
Material Agreement and a written summary setting forth the terms and
conditions of each oral agreement, if any, referred to in the Company
Disclosure Schedule. Each such Material Agreement constitutes the legal,
valid and binding obligation of Company, and to the knowledge of Company,
the other party thereto, enforceable against such parties in accordance with
the terms thereof (except as enforcement may be limited by general
principles of equity whether applied in a court of law or equity and by
bankruptcy, insolvency and similar laws affecting creditors' rights and
remedies generally). Company is not in default under, or with the giving of
notice or the lapse of time, or both, would be in default under, any of the
material terms or conditions of any Material Agreement. To the knowledge of
Company, there has occurred no material default or event which, with the
giving of notice or the lapse of time, or both, would constitute a material
default by any other party to any Material Agreement.
3.19. INSURANCE. Company is presently insured, and during each of the past
five calendar years has been insured, against such risks as companies engaged in
a similar business would, in accordance with good business practice, customarily
be insured. The policies of fire, theft, liability and other insurance
maintained with respect to the assets or businesses of Company provide
reasonably adequate coverage against loss. Company has heretofore furnished to
Parent a complete and correct list as of the date hereof of all insurance
policies maintained by Company, and has made available to Parent complete and
correct
16
copies of all such policies, together with all riders and amendments thereto.
All such policies are in full force and effect and all premiums due thereon have
been paid to the date hereof. Company has complied in all material respects with
the terms of such policies.
3.20. PROPERTIES. Except as set forth in Section 3.20 of the Company
Disclosure Schedule, Company does not own any real property. Company has good
and valid title, free and clear of all Encumbrances to all of its material
properties and assets, whether tangible or intangible, real, personal or mixed,
reflected in the 1999 10KSB as being owned by Company as of the date thereof,
other than (i) any properties or assets that have been sold or otherwise
disposed of in the ordinary course of business since the date of the Company
Balance Sheet, (ii) liens disclosed in the notes to the Company Balance Sheet
and (iii) liens arising in the ordinary course of business after the date of the
Company Balance Sheet. All buildings, and all fixtures, equipment and other
property and assets that are material to its business on a consolidated basis,
held under leases or sub-leases by Company are held under valid instruments
enforceable in accordance with their respective terms, subject to applicable
laws of bankruptcy, insolvency or similar laws relating to creditors' rights
generally and to general principles of equity (whether applied in a proceeding
in law or equity). Substantially all of Company's equipment in regular use has
been reasonably maintained and is in serviceable condition, reasonable wear and
tear excepted.
3.21. LEASES. Section 3.21 of the Company Disclosure Schedule lists all
outstanding leases, both capital and operating, or licenses, pursuant to which
Company has (i) obtained the right to use or occupy any real or tangible
personal property under arrangements where the remaining obligation is more than
$50,000, inclusive of any renewal rights or (ii) granted to any other Person the
right to use any material item of machinery, equipment, furniture, vehicle or
other personal property of Company having an original cost of $50,000 or more.
3.22. BUSINESS ACTIVITY RESTRICTION. Except as set forth in Section 3.22
of the Company Disclosure Schedule, there is no non-competition or other similar
agreement, commitment, judgment, injunction, order or decree to which Company is
a party or subject to that has or is expected to prohibit or impair the conduct
of business by Company. Company has not entered into any agreement under which
Company is restricted from selling, licensing or otherwise distributing any of
the Company Intellectual Property (other than Company Licensed Intellectual
Property) or any of its products to, or providing services to, customers or
potential customers or any class of customers, in any geographic area, during
any period of time or in any segment of the market or line of business.
3.23. ACCOUNTS RECEIVABLE; INVENTORY.
(a) Except as specifically set forth in Section 3.23(a) of the Company
Disclosure Schedule, hereto, all accounts and notes receivable reflected in the
Company Balance Sheet, and all accounts and notes receivable arising subsequent
to the date of the Company Balance Sheet, have arisen in the ordinary course of
business, represent valid obligations to Company and, subject only to an amount
of bad debts reasonable in the industry and not materially different than
Company's past experience, have been collected or are collectible in the
aggregate recorded amounts thereof in accordance with their terms.
(b) The inventories (and any reserves established with respect thereto) of
Company as of December 31, 1999 are described in Section 3.23(b) of the Company
Disclosure Schedule. Except as set forth in Section 3.23(b) of the Company
Disclosure Schedule, all such inventories (net of any such reserves) are
properly reflected on the Company Balance Sheet in accordance with GAAP and, to
the best knowledge of Company, are of such quality as to be useable and saleable
in the ordinary course of business (subject, in the case of work-in-process
inventory, to completion in the ordinary course of business).
3.24. CUSTOMERS AND SUPPLIERS. To the best of Company's knowledge, none of
Company's customers which individually accounted for more than 5% of Company's
gross revenues during the 12-month period preceding the date hereof has
terminated or threatened or indicated an intention to terminate any agreement
with Company. Except as set forth in Section 3.24 of the Company Disclosure
Schedule, as of the date hereof, no material supplier of Company has notified
Company in writing that it will stop, or decrease the rate of, supplying
materials, products or services to Company.
17
3.25. GUIDANT AGREEMENT. Company has complied in all respects with the
terms of the Guidant Agreement in connection with the execution and delivery of
this Agreement and consummation of the Tender Offer and the Merger. Company is
not in breach of any other provision of the Guidant Agreement and to Company's
knowledge, no claim exists or may be asserted against Company by Guidant in
connection with the execution and delivery of this Agreement and consummation of
the Tender Offer and the Merger or for any other reason.
3.26. ENVIRONMENTAL MATTERS. Except as would not reasonably be expected to
have a Material Adverse Effect, (a) Company is in compliance with all applicable
Environmental Laws, (b) Company has not received any written notice with respect
to the business of, or any property owned or leased by, Company from any
governmental entity or third party alleging that Company is not in compliance
with any Environmental Law, and (c) there has been no "release" of a "hazardous
substance", as those terms are defined in the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., in
excess of a reportable quantity on any real property owned by Company that is
used for the business of Company.
3.27. PRIOR ACQUISITIONS AND DISPOSITIONS. Except as set forth in the 1999
10-KSB or in Section 3.27 of the Company Disclosure Schedule, no claims, amounts
owed, liabilities (contingent or otherwise), encumbrances, legal proceedings or
any other obligations of any kind are due or were incurred or outstanding in
connection with any acquisitions or dispositions made by Company prior to the
date of this Agreement.
3.28. ABSENCE OF CERTAIN BUSINESS PRACTICES. To the best of Company's
knowledge, no employee, consultant, agent or other representative of Company has
directly or indirectly within the past five years given or agreed to give any
gift or similar benefit to any customer, supplier, governmental employee or
other Person who is or may be in a position to help or hinder the business of
Company in connection with any actual or proposed transaction which (a) would
reasonably be expected to subject Company to any material damage or penalty in
any civil, criminal or governmental litigation or proceeding, (b) if not given
in the past, would reasonably be expected to have had a Material Adverse Effect,
or (c) if not continued in the future, would reasonably be expected to have a
Material Adverse Effect. Without limiting the generality of the foregoing,
Company has not committed, been charged with or to the knowledge of Company been
under investigation with respect to, nor does there exist, any violation by
Company of the Foreign Corrupt Practices Act, as amended (the "FCPA").
3.29. TAKEOVER LAWS. Except as described in Section 3.29 of the Company
Disclosure Schedule, no "fair price," "moratorium," "control share acquisition"
or other similar anti-takeover statute or regulation enacted under Minnesota or
federal laws in the United States including, without limitation, applicable to
Company is applicable to the execution, delivery and performance of this
Agreement or the consummation of the Tender Offer or the Merger.
3.30. OPINION OF FINANCIAL ADVISOR. Company has received the opinion of
Company's Financial Advisor, as of the date of this Agreement, to the effect
that the Merger Consideration is fair, from a financial point of view, to
Company's shareholders.
3.31. DISCLOSURE. To Company's knowledge, as of the date of this
Agreement, no representation or warranty by Company in this Agreement contains
any untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not false or
misleading.
3.32. BROKERS AND FINDERS. Company has furnished to Parent or its counsel
a true and complete copy of that certain letter agreement (the "XXXXXXXXX &
COMPANY ENGAGEMENT LETTER") between Company and Xxxxxxxxx & Company, LLC (the
"COMPANY'S FINANCIAL ADVISOR"), such letter agreement being the only agreement
pursuant to which such firm would be entitled to any payment relating to the
transactions contemplated hereunder. No broker, finder or investment banker
other than Company's Financial Advisor is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Company.
18
3.33. PROXY STATEMENT, SCHEDULE TO AND SCHEDULE 14D-9. None of the
information supplied by Company for inclusion in the Proxy Statement, the
Schedule TO and Schedule 14D-9 will, at the respective time that the Proxy
Statement, the Schedule TO and Schedule 14D-9 or any amendments or supplements
thereto are filed with the SEC and are first published or sent to or given to
Company's shareholders, and in the case of the Proxy Statement, at the time that
any amendment or supplement thereto is mailed to the Company's shareholders and
at the time of the Company Special Meeting, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made not misleading. The Proxy Statement and
Schedule 14D-9 will comply in all material respects as to form with the
requirements of the Exchange Act and the rules and regulations thereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND BIDDER
Parent and Newco, jointly and severally, represent and warrant to Company
that:
4.01. ORGANIZATION AND QUALIFICATION. Each of Parent and Newco is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, and has all requisite corporate power
and authority to own, operate and lease its properties and to carry on its
business as it is now being conducted. Newco is a new corporation that was
formed for the purpose of consummating the transactions contemplated by this
Agreement and has conducted no business and engaged in no activities unrelated
to the transactions contemplated by this Agreement.
4.02. CORPORATE POWER, AUTHORIZATION AND ENFORCEABILITY. Each of Parent
and Newco has full corporate power and authority to enter into this Agreement
and to perform its obligations hereunder and to consummate all the transactions
contemplated hereby. The execution and delivery of this Agreement by Parent and
Newco, the performance by each of Parent and Newco of their respective
obligations hereunder and the consummation by Parent and Newco of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of Newco and the Board of Directors of the Parent and no
other corporate action on the part of Parent or Newco is necessary to authorize
this Agreement or to consummate the transactions contemplated hereby (other than
the approval of the Merger by the shareholders of Parent and Newco and the
approval of the financing plan for the Merger by the shareholders of Parent).
This Agreement has been duly executed and delivered by each of Parent and Newco
and is a legal, valid and binding obligation of each of Parent and Newco,
enforceable against Parent and Newco in accordance with its terms.
4.03. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Assuming satisfaction of all applicable requirements referred to in
Section 4.03(b) below, the execution and delivery of this Agreement by Parent
and Newco, the compliance by Parent and Newco with the provisions hereof and the
consummation by Parent and Newco of the transactions contemplated hereby will
not conflict with or violate any statute, law, ordinance, rule, regulation,
order, writ, judgment, award, injunction, decree or ruling applicable to the
Parent or any of its Subsidiaries or any of their properties, or conflict with,
violate or result in any breach of or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, cancellation or acceleration of, or
the loss of a benefit under, or result in the creation of a lien, security
interest, charge or encumbrance on any of the properties or assets of the Parent
or any of its Subsidiaries pursuant to (i) the organizational documents of the
Parent or any of its Subsidiaries or (ii) any contract, lease, agreement, note,
bond, mortgage, indenture, deed of trust, or other instrument or obligation, or
any license, authorization, permit, certificate or other franchise, other than
such conflicts, violations, breaches, defaults, losses, rights of termination,
amendment, cancellation or acceleration, liens, security interests, charges or
encumbrances as to which requisite waivers have been obtained or which
individually or in the aggregate would not have a material adverse effect on the
ability of the Parent and Newco to perform their obligations under this
Agreement.
19
(b) Other than in connection with or in compliance with the provisions of
the DGCL, the MBCA, the Companies Xxx 0000 (as amended), the Financial Services
Xxx 0000 (as amended) and the Listing Rules of the London Stock Exchange
Limited, (i) neither Parent nor Newco is required to submit any notice, report,
registration, declaration or other filing with any Governmental Entity in
connection with the execution or delivery of this Agreement by Parent and Newco
or the performance by Parent and Newco of their obligations hereunder or the
consummation by Parent and Newco of the transactions contemplated by this
Agreement and (ii) no waiver, consent, approval, order or authorization of any
Governmental Entity is required to be obtained by Parent or Newco in connection
with the execution or delivery of this Agreement by Parent and Newco or the
performance by Parent and Newco of their obligations hereunder or the
consummation by Parent and Newco of the transactions contemplated by this
Agreement.
4.04. BROKERS AND FINDERS. No broker, finder or investment banker other
than Nomura International plc and West LB Panmure, the fees and expenses of
which will be paid by Parent, is entitled to any brokerage, finder's or other
fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Parent or any of
its Subsidiaries.
4.05. FINANCING. Parent or Newco has or will have at the Effective Time,
upon completion of the Share Issuance (as defined herein) sufficient funds to
consummate the transactions contemplated by this Agreement, including (i) the
payment by Parent or Newco of the aggregate Merger Consideration to be paid
pursuant to Section 2.05, and (ii) the payment by Parent or Newco of the amounts
to be paid with respect to outstanding Options and Warrants pursuant to Sections
2.06 and 2.07 (the amounts referred to in (i) and (ii) are hereinafter referred
to together as, the "AGGREGATE TRANSACTION CONSIDERATION").
4.06. PROXY STATEMENT, SCHEDULE TO AND SCHEDULE 14D-9. None of the
information supplied by Parent or Newco for inclusion in the Proxy Statement,
the Schedule TO or the Schedule 14D-9 will, at the respective time that the
Proxy Statement, the Schedule TO or the Schedule 14D-9 or any amendments or
supplements thereto are filed with the SEC and are first published or sent to or
given to Company's shareholders, and in the case of the Proxy Statement, at the
time that any amendment or supplement thereto is mailed to the Company's
shareholders and at the time of the Company Special Meeting, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made not misleading. The Schedule TO
will comply in all material respects as to form with the requirements of the
Exchange Act and the rules and regulations thereunder.
ARTICLE V
COVENANTS
5.01. CONDUCT OF BUSINESS BY COMPANY. Except as required or permitted by
this Agreement or as disclosed in Section 5.01 of the Company Disclosure
Schedule, during the period from the date of this Agreement until the Effective
Time, Company agrees that (except to the extent that Parent shall otherwise
consent in writing) Company shall conduct its operations in the ordinary course
of business consistent with past practice, and Company will use its reasonable
efforts to preserve intact its present business organization, to keep available
the services of its present officers and employees and to maintain satisfactory
relationships with licensors, licensees, suppliers, contractors, distributors,
customers and others having business relationships with it. Without limiting the
generality of the foregoing, during the period from the date of this Agreement
to the Effective Time, Company shall not, without the prior written consent of
Parent (which consent will be given or denied within a reasonable time after any
request for such consent):
(a) amend its Articles of Organization or other charter document or Bylaws;
(b) authorize for issuance, issue, sell, deliver, pledge or agree or commit
to issue, sell, deliver or pledge (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or otherwise)
any capital stock of any class or any debt or other securities convertible into
capital stock or equivalents (including, without limitation, stock appreciation
rights), or amend any of the
20
terms of any of the foregoing, other than the issuance of shares of capital
stock upon the exercise of options or rights outstanding on the date hereof
under the Company Equity Plans;
(c) (i) split, combine or reclassify any shares of its capital stock, or
authorize or propose the issuance or authorization of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock, or
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,
adopt or approve any Rights Plan, or repurchase, redeem or otherwise acquire any
of its securities, or (ii) make any payment of cash or other property to
terminate, cancel or otherwise settle any outstanding Options, other than in the
case of clauses (i) or (ii) above for the issuance of shares of Company Common
Stock in connection with the exercise of options or rights outstanding on the
date hereof under the Company Equity Plans;
(d) (i) incur or assume any long-term Indebtedness or increase any amounts
outstanding under long-term credit facilities existing as of the date of this
Agreement or grant, extend or increase the amount of a mortgage lien on any
leasehold or fee simple interest of Company; or, except in the ordinary course
of business consistent with past practice in the case of clauses (ii) through
(vi) below, (ii) incur or assume any short-term debt or increase amounts
outstanding under short-term credit facilities existing as of December 31, 1999;
(iii) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any other
Person, except for obligations of Company; (iv) make any loans, advances or
capital contributions to, or investments in, any other Person; (v) pledge or
otherwise encumber shares of capital stock of Company; or (vi) mortgage or
pledge any of its assets, tangible or intangible, or create or suffer to exist
any lien thereon except as existing on the date of this Agreement or as may be
required under agreements outstanding on the date of this Agreement to which
Company is party;
(e) except as expressly provided in this Agreement, including the
acceleration of vesting of outstanding Options under the Company Equity Plans
and termination of the Company's Employee Stock Purchase Plan, enter into, adopt
or amend in any manner or terminate any bonus, profit sharing, compensation,
severance, termination, stock option, stock appreciation right, restricted
stock, performance unit, stock equivalent, stock purchase agreement, pension,
retirement, deferred compensation, employment, severance, change-in-control or
other employee benefit agreement, trust, plan, fund or other arrangement for the
benefit or welfare of any director, officer or employee, or increase in any
manner the compensation or fringe benefits of any director, officer or employee
or pay any benefit not required by any plan or arrangement as in effect as of
the date of this Agreement or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing;
(f) sell, lease, license, pledge or otherwise dispose of or encumber any
material assets except in the ordinary course of business consistent with past
practice (including without limitation any indebtedness owed to it or any claims
held by it);
(g) acquire or agree to acquire by merging or consolidating with or by
purchasing any portion of the capital stock or assets of, or by any other
manner, any business or any corporation, partnership, limited liability company,
association or other business organization or division thereof, other than in
the ordinary course of business consistent with past practice;
(h) change any of the accounting principles or practices used by it
affecting its assets, liabilities or business, except for such changes required
by a change in generally accepted accounting principles;
(i) pay, discharge or satisfy any claims, liabilities or obligations
(whether absolute, accrued, fixed, contingent, liquidated, unliquidated or
otherwise), other than the payment, discharge or satisfaction of liabilities
(i) in the ordinary course of business consistent with past practices,
(ii) with notice to Parent, in an amount which does not exceed $50,000 in the
aggregate, (iii) incurred pursuant to the terms of the Xxxxxxxxx & Company
Engagement Letter, in an amount not to exceed $90,000, or (iv) incurred in
connection with the transactions contemplated hereby, not to exceed the amounts
specified in Section 5.01(i) of the Company Disclosure Schedule;
21
(j) except as required by their terms, enter into, terminate or breach (or
take or fail to take any action, that, with or without notice or lapse of time
or both, would become a breach) or materially amend any contract which is or
would be a Material Agreement;
(k) without prior consultation with Parent (in addition to the consent
requirement described above) commence any litigation or arbitration other than
in accordance with past practice or settle any litigation or arbitration for
money damages or other relief in excess of $50,000 or if as part of such
settlement Company would agree to any restrictions on its operations;
(l) grant any license with respect to or otherwise convey any Company
Intellectual Property or take any action or fail to take any action which would
cause the representations and warranties of Company set forth in Section 3.17
hereof to become untrue in any respect;
(m) elect or appoint any new directors or officers of Company;
(n) waive, release or amend its rights under any confidentiality,
"standstill" or similar agreement that Company entered into in connection with
its consideration of a potential strategic transaction; provided, however, that
Company may waive, release or amend its rights under any such confidentiality,
"standstill" or similar agreement if Company's Board determines, based on the
advice of independent legal counsel, that failure to do so would be reasonably
likely to constitute a breach of its fiduciary duties to Company's shareholders
under applicable law;
(o) make or change any election, request permission of any Tax authority or
to change any accounting method, file any amended Tax return, enter into any
closing agreement, settle any Tax claim or assessment relating to Company,
surrender any right to claim a refund of Taxes, or consent to any extension or
waiver of the limitation period applicable to any Tax claim or assessment
relating to Company;
(p) settle or comprise any pending or threatened suit, action or claim which
is material or which relates to any of the transactions contemplated by this
Agreement;
(q) take any action that would reasonably be expected to result in (i) any
of the representations and warranties of Company set forth in this Agreement
becoming untrue or (ii) any of the Tender Offer Conditions not being satisfied;
or
(r) take, or agree in writing or otherwise to take, any of the actions
described in Sections 5.01(a) through 5.01(q).
5.02. ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) Subject to and in accordance with the terms and conditions of that
certain letter agreement between Parent and Company regarding the
confidentiality of information exchanged by the parties prior to the date hereof
(the "CONFIDENTIALITY AGREEMENT"), from the date of this Agreement to the
Effective Time, Company shall, and shall cause its officers, directors,
employees and agents to, afford the officers, employees and agents of Parent and
its affiliates and the attorneys, accountants, banks, other financial
institutions and investment banks working with Parent and its officers,
employees and agents, reasonable access, at all reasonable times upon reasonable
notice and in such manner as will not unreasonably interfere with the conduct of
Company's business, to its officers, employees, agents, properties, books,
records and contracts, and shall furnish Parent and its affiliates and the
attorneys, banks, other financial institutions and investment banks working with
Parent, all financial, operating and other data and information as they
reasonably request.
(b) Subject to the requirements of law, Parent shall, and shall cause its
officers, employees, agents, consultants and affiliates and the attorneys,
banks, other financial institutions and investment banks who obtain such
information to, hold all information obtained pursuant to this Agreement or the
Confidentiality Agreement in confidence in accordance with the terms and
conditions of the Confidentiality Agreement and in the event of termination of
this Agreement for any reason, Parent shall promptly return or destroy all
nonpublic documents obtained from Company and any copies made of such
22
documents for Parent and all documentation and other material prepared by Parent
or its advisors based on written nonpublic information furnished by Company or
its advisors shall be destroyed.
5.03. PROXY STATEMENT.
(a) Promptly after execution and delivery of this Agreement, Company shall
prepare and shall file with the SEC as soon as is reasonably practicable a
preliminary Proxy Statement, together with a form of proxy, with respect to the
Company Special Meeting (as defined in Section 5.04) and shall use all
reasonable efforts to have the Proxy Statement and form of proxy cleared by the
SEC as promptly as practicable, and promptly after request by Parent shall mail
the definitive Proxy Statement and form of proxy to shareholders of Company.
Subject to its fiduciary duties under applicable law, the Proxy Statement shall
contain the recommendation of the Board of Directors that the shareholders of
Company vote to adopt and approve the Merger and this Agreement. Parent, Newco
and their counsel shall be given reasonable opportunity to review and comment
upon the Proxy Statement prior to its filing with the SEC. Company agrees to
provide Parent, Newco and their counsel any comments Company or its counsel may
receive from the SEC or its staff with respect to the Proxy Statement promptly
after the receipt of such comments. The term "Proxy Statement" shall mean such
proxy or information statement at the time it initially is mailed to Company's
shareholders and all amendments or supplements thereto, if any, similarly filed
and mailed.
(b) Parent will provide Company with all information concerning Parent (or
its Affiliates) required to be included in, or otherwise reasonably requested by
Company in connection with the preparation of, the Proxy Statement. The
information provided and to be provided by Parent and Company, respectively, for
use in the Proxy Statement shall, on the date the Proxy Statement is first
mailed to Company's shareholders and on the date of the Company Special Meeting
(as hereinafter defined), not contain an untrue statement of a material fact or
omit to state any material fact necessary in order to make such information, in
light of the circumstances under which it was provided, not misleading, and
Company and Parent each agree to correct any information provided by it for use
in the Proxy Statement which shall have become false or misleading in any
material respect. The Proxy Statement shall comply as to form in all material
respects with all applicable requirements of federal securities laws.
5.04. MEETING OF SHAREHOLDERS OF COMPANY. If required under the MBCA and
Company's Articles of Incorporation, Company shall, as soon as practicable after
the date hereof, duly call, give notice of, convene and hold a meeting of its
shareholders (the "COMPANY SPECIAL MEETING") to consider and vote upon this
Agreement and the Merger and shall, through its Board of Directors, recommend to
its shareholders the approval and adoption of this Agreement, the Merger and the
other transactions contemplated hereby. Without limiting the generality of the
foregoing but subject to its rights to terminate this Agreement pursuant to
Section 7.01(d), Company agrees that its obligations pursuant to the first
sentence of this Section 5.04 shall not be affected by the commencement, public
proposal, public disclosure or communication to Company of any Acquisition
Proposal. Notwithstanding the foregoing, if Newco shall acquire at least 90% of
the outstanding shares of each class of Company Common Stock and Company
Preferred Stock in the Tender Offer, if Parent elects to cause Newco to commence
the Tender Offer, the parties shall take all necessary and appropriate action to
cause the Merger to become effective as soon as practicable after the completion
of the Tender Offer without a Company Special Meeting in accordance with the
DGCL and the MBCA.
5.05. NO SOLICITATION BY COMPANY.
(a) Except as provided in Section 5.05(b), Company agrees that, from the
date of this Agreement until the earlier of the Effective Time or the
termination of this Agreement pursuant to Section 7.01, Company shall not, nor
shall it authorize or permit any of its directors, officers or employees or any
representative retained by it (including Company's Financial Advisor) to,
directly or indirectly through another Person, (i) solicit, initiate, entertain
or encourage (including by way of furnishing non-public information) any
inquiries or the making of an Acquisition Proposal, or (ii) participate in any
discussions or negotiations regarding any Acquisition Proposal; PROVIDED,
HOWEVER, that if, at any time, the Board of Directors of Company determines in
good faith, after consultation with and receipt of advice from outside
23
counsel, that it is necessary to do so in order to act in a manner consistent
with its fiduciary duties to Company's shareholders under applicable law,
Company may, in response to a Superior Proposal (as defined below) and subject
to delivering a Company Notice (as defined in paragraph (c) below) and
compliance with the other provisions of paragraph (c) below, following delivery
of Company Notice (x) furnish information with respect to Company to any Person
making such Acquisition Proposal pursuant to a confidentiality agreement entered
into between such Person and Company with terms no less favorable to Company
than those contained in the Confidentiality Agreement and (y) participate in
discussions or negotiations regarding such Acquisition Proposal. For purposes of
this Agreement, an "Acquisition Proposal" means any inquiry, proposal or offer
from any Person (i) relating to any direct or indirect acquisition or purchase
of (A) a business that constitutes 15% or more of the net revenues, net income
or the assets of Company, or (B) 20% or more of any class of equity securities
of Company, (ii) relating to any tender offer or exchange offer that if
consummated would result in any Person beneficially owning 20% or more of any
class of equity securities of Company, or (iii) relating to any merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving Company, in each case, other than the
transactions contemplated by this Agreement. Immediately following the execution
and delivery of this Agreement by the parties hereto, Company will cease and
cause to be terminated any existing activities, discussions or negotiations with
any parties conducted with respect to the foregoing. Promptly following the
execution of this Agreement by the parties hereto, Company will request each
Person that has, prior to the date of this Agreement, executed a confidentiality
agreement in connection with its consideration of an Acquisition Proposal to
return or destroy all confidential information heretofore furnished to such
Person by or on behalf of Company.
(b) Except as expressly permitted by this Section 5.05, the Board of
Directors of Company shall not (i) withdraw or modify, or propose publicly to
withdraw or modify, in a manner adverse to Parent, the approval or
recommendation by such Board of Directors of the Merger, the Tender Offer (if
Parent elects to cause Newco to make the Tender Offer) or this Agreement,
(ii) approve or recommend, or propose publicly to approve or recommend, any
Acquisition Proposal, or (iii) cause Company to enter into any letter of intent,
agreement in principle, acquisition agreement or other similar agreement (each,
a "COMPANY ACQUISITION AGREEMENT") related to any Acquisition Proposal, other
than any such agreement entered into concurrently with a termination pursuant to
the next sentence to facilitate such action. Notwithstanding the foregoing, if
at any time the Board of Directors of Company determines in good faith, after
consultation with and receipt of advice from outside counsel, that it is
necessary to do so in order to act in a manner consistent with its fiduciary
duties to Company's shareholders under applicable law, subject to compliance
with paragraph (c) below, the Board of Directors of Company may, in response to
a Superior Proposal which was not solicited by Company and which did not
otherwise result from a breach of this Section 5.05 (subject to this and the
following sentences of this Section 5.05), terminate this Agreement in
accordance with Section 7.01(d) (and concurrently with or after such
termination, if it so chooses, cause Company to enter into any Company
Acquisition Agreement with respect to any Superior Proposal) but only at a time
that is at least after the third business day after delivery of a Company
Notice. For purposes of this Agreement, a "Superior Proposal" means any proposal
made by a third party to acquire, directly or indirectly, including pursuant to
a tender offer, exchange offer, merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction, for
consideration consisting of cash and/or securities or other property, more than
50% of the combined voting power of the shares of Company Common Stock and
Company Preferred Stock then outstanding or all or substantially all the assets
of Company which (i) the Board of Directors of Company determines in good faith
is reasonably likely to be consummated, taking into account the Person making
the proposal and all legal, financial and regulatory aspects of the proposal,
including any break-up fees, expense reimbursement provisions and conditions to
consummation, and (ii) the Board of Directors of Company determines in good
faith (after consultation with and based upon the advice of its outside
financial advisors) would, if consummated, provide greater value to Company's
shareholders than the transactions contemplated by this Agreement.
(c) In addition to the obligations of Company as set forth in paragraphs
(a) and (b) of this Section 5.05, Company shall advise the Parent orally and in
writing of any request for non-public
24
information, any Acquisition Proposal, including all of the material proposed
terms of such Acquisition Proposal, the identity of the third party, or any
decision by Company to take any of the actions permitted in clauses (x) or
(y) of paragraph (a) above (with any such notice referred to as a "COMPANY
NOTICE"). Any such Company Notice will be delivered promptly after (and in no
event later than 24 hours after) receipt of any request for non-public
information or of any Acquisition Proposal and prior to Company taking any of
the actions permitted in clauses (x) or (y) of paragraph (a) above. In addition,
in the event Company intends to enter into a Company Acquisition Agreement
relating to a Superior Proposal, Company will deliver a Company Notice at least
24 hours prior to entering into such Company Acquisition Agreement, which
Company Notice will identify the third party and the material proposed terms of
such Superior Proposal. Company will keep Parent reasonably informed of the
status of any such request or Acquisition Proposal and will update the
information required to be provided in each Company Notice upon the request of
Parent.
5.06. PUBLIC ANNOUNCEMENTS. Parent and Company will consult with each
other before, but will not be required to obtain the other party's consent with
respect to, issuing any press release, any filing with the SEC on Form 8-K or
otherwise making any public statements with respect to this Agreement or the
Merger or the other transactions contemplated hereby, and shall not issue any
such press release, SEC Form 8-K filing or make any such public statement prior
to such consultation, except to the extent that compliance with legal
requirements requires a party to issue a press release or public announcement or
make an 8-K filing prior to such consultation. This Section 5.06 shall supersede
any conflicting provisions in the Confidentiality Agreement.
5.07. NOTIFICATION OF CERTAIN MATTERS.
(a) Company shall give prompt notice (which notice shall state that it is
delivered pursuant to Section 5.07 of this Agreement) in writing to Parent and
Parent shall give prompt notice in writing to Company, of (i) the occurrence, or
failure to occur, of any event which occurrence or failure would be likely to
cause any representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date of this Agreement
through the Effective Time and (ii) any material failure of Company or Parent,
as the case may be, or of any officer, director, employee or agent thereof, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it under this Agreement; provided, however, no such notification
shall affect the representations or warranties of the parties or the conditions
to the obligations of the parties hereunder.
(b) Company shall give prompt notice in writing (which notice shall state
that it is delivered pursuant to Section 5.07 of this Agreement) to Parent of
any occurrence that has had or is expected to have a Material Adverse Effect.
5.08. EMPLOYMENT AND BENEFIT MATTERS.
(a) From and after the Effective Time, Parent agrees to cause the Surviving
Corporation to provide the employees of Company (the "COMPANY EMPLOYEES") who
remain employed after the Effective Time with the types and levels of employee
benefits which are in the aggregate at least as favorable as those maintained by
Company prior to the Effective Time; PROVIDED, that this obligation shall not
include the Company Employee Stock Purchase Plan or the Company Equity Plans.
Parent will treat, and cause its applicable benefit plans to treat, the service
of Company Employees with Company as service rendered to the Surviving
Corporation for purposes of eligibility to participate, vesting and for other
appropriate benefits but not for benefit accrual.
(b) Company shall use its reasonable best efforts to cause the employees set
forth on Section 5.08 of the Company Disclosure Schedule (the "DESIGNATED
COMPANY EMPLOYEES") to enter into employment agreements with Parent and the
Surviving Corporation on the terms and conditions set forth in EXHIBIT A hereto
(the "EMPLOYMENT AGREEMENTS").
(c) The Company Employee Stock Purchase Plan shall be terminated prior to
the Effective Date and Company shall deliver evidence of such termination to
Parent.
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(d) Notwithstanding anything to the contrary contained herein, Parent shall
have sole discretion with respect to the determination as to whether or when to
terminate, merge or continue any employee benefit plans and programs of Company
after the Effective Time.
5.09. OFFICERS' AND DIRECTORS' INDEMNIFICATION; INSURANCE.
(a) The Surviving Corporation agrees that for a period ending on the sixth
anniversary of the Effective Time, the Surviving Corporation will maintain all
rights to indemnification (including with respect to the advancement of expenses
incurred in the defense of any action or suit) existing on the date of this
Agreement in favor of the present and former directors, officers, employees and
agents of Company as provided in Company's Articles of Incorporation and
By-laws, in each case as in effect on the date of this Agreement, and that
during such period, neither the Articles of Incorporation nor the By-laws of the
Surviving Corporation shall be amended to reduce or limit the rights of
indemnity afforded to the present and former directors, officers, employees and
agents of Company, or the ability of the Surviving Corporation to indemnify
them, nor to hinder, delay or make more difficult the exercise of such rights or
indemnity or the ability to indemnify.
(b) The Surviving Corporation agrees to indemnify to the fullest extent
permitted under its Certificate of Incorporation, its By-laws, and applicable
law the present and former directors, officers, employees and agents of Company
against all losses, damages, liabilities or claims made against them arising
from their service in such capacities prior to and including the Effective Time,
to at least the same extent as such persons are currently permitted to be
indemnified pursuant to Company's Articles of Incorporation and By-laws for a
period ending on the sixth anniversary of the Effective Time.
(c) Parent will cause to be maintained for a period of four years from the
Effective Time Company's current directors' and officers' insurance and
indemnification policy to the extent that it provides coverage for events
occurring prior to the Effective Time (the "D&O INSURANCE") for all persons who
are directors and officers of Company on the date of this Agreement, so long as
such insurance is available on commercially reasonable terms and the annual
premium therefor would not be in excess of 200% of the last annual premium paid
prior to the date of this Agreement (the "MAXIMUM PREMIUM"). If the existing D&O
Insurance expires, is terminated or cancelled during such three-year period,
Parent will use all reasonable efforts to cause to be obtained as much D&O
Insurance as can be obtained for the remainder of such period for an annualized
premium not in excess of the Maximum Premium, on terms and conditions no less
advantageous than the existing D&O Insurance.
5.10. ADDITIONAL AGREEMENTS.
(a) Subject to the terms and conditions hereof, and Company's and Parent's
respective Board of Directors' fiduciary duties to their respective shareholders
under applicable law, each of the parties to this Agreement agrees to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement (including consummation of the Merger) and to
cooperate with each other in connection with the foregoing.
(b) Subject to the terms and conditions hereof, each of the parties to this
Agreement agrees to use commercially reasonable efforts to: (i) obtain all
necessary waivers, consents and approvals from other parties to loan agreements,
leases, licenses and other contracts, (ii) obtain all necessary consents,
approvals and authorizations as required to be obtained under any federal, state
or foreign law or regulations, (iii) defend all lawsuits or other legal
proceedings challenging this Agreement or the consummation of the transactions
contemplated hereby, (iv) lift or rescind any injunction or restraining order or
other order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby, (v) effect all necessary registrations and
filings, including, but not limited to, submissions of information requested by
Governmental Entities, and (vi) fulfill all conditions to this Agreement.
(c) In connection with and without limiting the foregoing, Company and its
Board of Directors shall (i) take all action necessary to ensure that no state
takeover statute or similar statute or regulation is or becomes applicable to
the Tender Offer, the Merger, this Agreement or any of the other transactions
26
contemplated by this Agreement or the other agreements referred to herein and
(ii) if any state takeover statute or similar statute or regulation becomes
applicable to the Tender Offer, the Merger, this Agreement or any of the other
transactions contemplated by this Agreement or the other agreements referred to
herein, take all action necessary to ensure that the Tender Offer, the Merger,
this Agreement, and any of the other transactions contemplated by this Agreement
or the other agreements referred to herein may be consummated as promptly as
practicable on the terms contemplated by the Tender Offer and this Agreement and
otherwise to minimize the effect of such statute or regulation on the Tender
Offer, the Merger, this Agreement or any of the other transactions contemplated
by this Agreement or the other agreements referred to herein.
5.11. COMPANY INDEBTEDNESS. Prior to the Effective Time, Company shall
cooperate with Parent in taking such actions requested by Parent as are
reasonably appropriate or necessary in connection with the redemption,
prepayment, modification, satisfaction or elimination of any outstanding
Indebtedness of Company with respect to which a consent is required to be
obtained to effectuate the Merger and the transactions contemplated by this
Agreement and has not been so obtained.
5.12. UPDATE OF DISCLOSURE SCHEDULES. Each party agrees that, with respect
to the representations and warranties of such party contained in this Agreement,
such party shall have the continuing obligation (for notification purposes only)
until the Closing to supplement or amend promptly the Schedules hereto with
respect to any matter hereafter arising or discovered which, if existing or
known at the date of this Agreement, would have been required to be set forth or
described in the Schedules. For all purposes of this Agreement, including
without limitation for purposes of determining whether the conditions set forth
in Section 6.02(a) and 6.03(a) have been fulfilled, the Schedules shall be
deemed to include only that information contained therein on the date of this
Agreement and shall be deemed to exclude all information contained in any
supplement or amendment thereto.
5.13. FUTURE FILINGS. Company will deliver to Parent as soon as they
become available true and complete copies of any report or statement mailed by
it to its shareholders generally or filed by it with the SEC subsequent to the
date of this Agreement and prior to the Effective Time. As of their respective
dates, such reports and statements (excluding any information therein provided
by Parent, as to which Company makes no representation) will 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 therein, in light of the
circumstances under which they are made, not misleading and will comply as to
form in all material respects with all applicable requirements of law. The
consolidated financial statements of Company to be included in such reports and
statements (excluding any information therein provided by Parent, as to which
Company makes no representation) will be prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved (except (i) as otherwise indicated in such financial statements
and the notes thereto or (ii) in the case of unaudited interim statements, to
the extent permitted under Form 10-QSB under the Exchange Act) and will present
fairly the consolidated financial position, results of operations and cash flows
of Company as of the dates thereof and for the periods indicated therein
(subject, in the case of any unaudited interim financial statements, to normal
year-end audit adjustments). Parent shall deliver to Company as soon as they
become available, true and complete copies of any report or statement mailed by
it to Company's shareholders generally or filed by it with the SEC subsequent to
the date of this Agreement and prior to the Effective Time.
5.14. FINANCING.
(a) Promptly upon execution, Parent will provide to Company a true and
correct copy of the Placing Agreement, between Parent and Nomura International
plc (the "PLACING AGREEMENT"), pursuant to which, prior to the Effective Time,
Parent will use its best efforts to complete a placing of ordinary shares ("NEW
PARENT SHARES") in Parent (the "SHARE ISSUANCE"), which placing is being
underwritten by Nomura International plc, and, which, if consummated shall
provide sufficient funds to consummate the transactions contemplated by this
Agreement, including the payment by Parent or Newco of the Aggregate Transaction
Consideration. Parent shall use its best efforts to execute and deliver the
Placing Agreement as soon as practicable after the date hereof. As soon as
practicable after the execution of the Placing
27
Agreement, Parent shall use its best efforts to complete the Share Issuance
pursuant to which the New Parent Shares will be offered for sale to the public
in accordance with the Placing Agreement. Parent shall use its best efforts to
cause the New Parent Shares to be admitted to the London Stock Exchange's
Official List.
(b) Company will provide Parent with all information concerning Company
required to be included in, or otherwise reasonably requested by Parent in
connection with the preparation of, the press announcement of Parent in the
United Kingdom concerning the Merger and the Listing Particulars and Prospectus
and Investor Presentation for use by Parent in connection with the Share
Issuance; PROVIDED, THAT, Company shall not be required to provide any such
information which is beyond that which is required to be publicly disclosed by
Company under the Securities Act, the Exchange Act, rules and regulations of the
SEC under such acts and under the rules and regulations of NASDAQ. The
information provided and to be provided by Company for use in such press
release, Listing Particulars and Prospectus and Investor Presentation shall, on
the date such materials are first made publicly available and on the date of the
Parent Special Meeting (as defined below), not contain an untrue statement of a
material fact or omit to state any material fact necessary in order to make such
information, in light of the circumstances under which it was provided, not
misleading, and Company agrees to correct any information provided by it for use
in such materials which shall have become false or misleading in any material
respect.
5.15. MEETING OF SHAREHOLDERS OF PARENT. Promptly after the execution and
delivery of this Agreement, Parent shall duly call, give notice of, convene and
hold an extraordinary general meeting of its shareholders (the "PARENT SPECIAL
MEETING") to consider and vote upon this Agreement, the Merger and the Share
Issuance, and shall, through its Board of Directors, recommend to its
shareholders the approval and adoption of the Merger, this Agreement, and the
Share Issuance. Parent shall use its best efforts to solicit from shareholders
of Parent proxies in favor of such adoption and approval and, subject to the
rules of the London Stock Exchange and the duties of the directors of Parent
under applicable law, to take all other action necessary to secure the vote or
consent of shareholders required by the Companies Act of 1985 to effect the
Merger and the Share Issuance.
5.16. DIRECTORS. Promptly upon the acceptance for payment of shares of
Company Common Stock and Company Preferred Stock by Newco pursuant to the Tender
Offer, in the event that Parent elects to cause Newco to commence the Tender
Offer, Newco shall be entitled to designate such number of directors on the
Board of Directors of Company as will give Newco, subject to compliance with
Section 14(f) of the Exchange Act, representation on Company's Board of
Directors equal to the product of (i) the total number of directors on Company's
Board of Directors and (ii) the percentage that the number of shares of Company
Common Stock and Company Preferred Stock purchased by Newco in the Tender Offer
bears to the number of shares of Company Common Stock and Company Preferred
Stock outstanding at such time, and Company shall, at such time, cause Newco's
designees to be so elected by its existing Board of Directors; provided, that in
the event that Newco's designees are elected to the Board of Directors of
Company, until the Effective Time such Board of Directors shall have at least
two directors who are directors of Company on the date of this Agreement and who
are not officers or employees of Company (the "INDEPENDENT DIRECTORS") and;
provided further that, in such event, if the number of Independent Directors
shall be reduced below two for any reason whatsoever, the remaining Independent
Director shall designate a person to fill such vacancy who shall be deemed to be
an Independent Director for purposes of this Agreement or, if no Independent
Directors then remain, the other directors of Company on the date hereof shall
designate two persons to fill such vacancies who shall not be officers or
employees of Company, or officers or affiliates of Newco, and such persons shall
be deemed to be Independent Directors for purposes of this Agreement. Subject to
applicable law, Company shall take all action requested by Newco necessary to
effect any such election, including mailing to its shareholders the information
statement containing the information required by Section 14(f) of the Exchange
Act and Rule 14f-1 promulgated thereunder. In connection with the foregoing,
Company will promptly, at the option of Newco, either increase the size of the
Company's Board of Directors and/or obtain the resignation of such number of its
current directors as is necessary to enable Newco's designees to be elected or
appointed to, and to constitute a majority of, Company's Board of Directors as
provided above.
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ARTICLE VI
CONDITIONS OF MERGER
6.01. CONDITIONS TO THE OBLIGATIONS OF EACH PARTY TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of each of the
following conditions:
(a) COMPANY SHAREHOLDER APPROVAL. This Agreement and the Merger shall have
been approved and adopted by the requisite vote of the shareholders of Company
in accordance with the MBCA.
(b) PARENT SHAREHOLDER APPROVAL. This Agreement, the Merger and the Share
Issuance shall have been approved and adopted by the requisite vote of the
shareholders of Parent in accordance with the Companies Act of 1985 (as amended)
and Parent's Articles of Association.
(c) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary restraining
order, preliminary or permanent injunction, judgment or other order, decree or
ruling of any applicable court or regulatory authority nor any statute, rule,
regulation or order shall be in effect which prevents the consummation of the
Merger.
6.02. CONDITIONS PRECEDENT TO PARENT'S AND NEWCO'S OBLIGATIONS. Parent and
Newco shall be obligated to effect the Merger only if each of the following
conditions is satisfied at or prior to the Closing Date, unless any such
condition is waived in writing by Parent and Newco:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Company set forth in this Agreement shall be true and correct in all material
respects (without giving duplicative effect to any materiality qualification
contained in the applicable representation or warranty) as of the Closing Date
with the same force and effect as though made again at and as of the Closing
Date, except for any representations and warranties that address matters only as
of a particular date (which shall remain true and correct in all material
respects (without giving duplicative effect to any materiality qualification
contained in the applicable representation or warranty) as of such date). Parent
shall have received a certificate to the foregoing effect signed by the
president and chief executive officer and chief financial officer of Company.
(b) PERFORMANCE OF OBLIGATIONS OF COMPANY. Company shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date. Parent shall have received a
certificate to the foregoing effect signed by the president and chief executive
officer and chief financial officer of Company.
(c) ABSENCE OF MATERIAL ADVERSE CHANGES. There shall not have occurred any
change in the business, assets, financial condition or results of operations of
Company which has had, or is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect.
(d) CONSENTS. Company shall have received all necessary consents or waivers
relating to the Merger, in form and substance satisfactory to Parent, from the
other parties to each contract, lease or agreement to which Company is a party,
except where the failure to obtain such consent or waiver would not reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Effect.
(e) SHARE ISSUANCE. Parent shall either have received the funds, or shall
have the unconditional right to draw the funds, from the Share Issuance.
(f) ADMITTANCE OF NEW PARENT SHARES. The New Parent Shares shall have been
admitted to the London Stock Exchange's Official List, subject to notice of
admittance.
(g) EMPLOYMENT AGREEMENTS. The Designated Company Employees shall have
executed and delivered the Employment Agreements.
29
6.03. CONDITIONS TO OBLIGATION OF COMPANY. Company shall be obligated to
effect the Merger only if each of the following conditions is satisfied at or
prior to the Closing Date, unless any such condition is waived in writing by
Company:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Parent set forth in this Agreement shall be true and correct in all material
respects (without giving duplicative effect to any materiality qualification
contained in the applicable representation or warranty) as of the Closing Date
with the same force and effect as though made again at and as of the Closing
Date, except for any representations and warranties that address matters only as
of a particular date (which shall remain true and correct in all material
respects (without giving duplicative effect to any materiality qualification
contained in the applicable representation or warranty) as of such date).
Company shall have received a certificate to the foregoing effect signed by the
president and chief executive officer and chief financial officer of Parent.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT. Parent shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date. Company shall have received a
certificate to the foregoing effect signed by the president and chief executive
officer and chief financial officer of Parent.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.01 TERMINATION. This Agreement may be terminated, at any time prior to the
Effective Time, whether before or after approval by the shareholders of Company:
(a) by mutual written agreement of the Boards of Directors of Parent and
Company;
(b) by either Parent or Company:
(i) if any court of competent jurisdiction in the United States or other
United States governmental body shall have issued an order, decree
or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the Merger and such order, decree, ruling or
other action shall have become final and nonappealable;
(ii) if there has been a material breach by the other party of any
representation, warranty, covenant or agreement set forth in this
Agreement unless such breach is capable of being cured and is cured
prior to the Closing Date;
(iii) if the shareholders of Parent shall fail to approve the Merger and
the Share Issuance at the Parent Special Meeting; or
(iv) if the shareholders of Company shall fail to approve the Agreement
and the Merger at the Company Special Meeting;
(c) by Parent:
(i) if Company or any of its directors or officers shall participate in
discussions or negotiations in breach of Section 5.05 or if the
Board of Directors of Company shall have approved or recommended an
Acquisition Proposal by a third party, or withdrawn or modified in a
manner adverse to Parent its approval or recommendation of this
Agreement or the transactions contemplated hereby, or failed to mail
the Proxy Statement to its shareholders or failed to include in such
Proxy Statement such recommendation (including the recommendation
that the shareholders of Company vote in favor of the Merger), or
publicly resolved to do any of the foregoing; or
(ii) if the Parent Share Issuance or the Placing Agreement shall have
been terminated without Parent having received the proceeds of the
Parent Share Issuance or any alternative financing;
30
(d) by Company, pursuant to Section 5.05(b); provided, that, in order for
the termination of this Agreement pursuant to this paragraph (d) to be
deemed effective, Company shall have complied with all provisions of
Section 5.05, including the notice provisions therein, and with
applicable requirements, including the payment of the Company Break-Up
Fee; and
(e) by either Company or Parent in the event the Effective Time has not
occurred by the latest to occur of (i) July 31, 2000 or (ii) 60 days
after the clearance by the SEC of the Proxy Statement (with such date, as
it may thereafter be extended by mutual written agreement of Parent and
Company, referred to as the "OUTSIDE DATE").
7.02. PROCEDURE AND EFFECT OF TERMINATION. In the event of the termination
of this Agreement by Company or Parent or both of them pursuant to
Section 7.01, the terminating party shall provide written notice of such
termination to the other party and this Agreement shall forthwith terminate and
there shall be no liability on the part of Parent, Newco or Company, except as
set forth in this Section 7.02 and in Sections 5.02(b) and 7.03 of this
Agreement. The foregoing shall not relieve any party for liability for damages
actually incurred as a result of any breach of this Agreement. The
Confidentiality Agreement and Sections 5.02(b), 7.02 and 7.03 of this Agreement
shall survive the termination of this Agreement.
7.03. FEES AND EXPENSES.
(a) Except as otherwise provided in this Agreement and whether or not the
transactions contemplated by this Agreement are consummated, all costs
and expenses incurred in connection with the transactions contemplated by
this Agreement shall be paid by the party incurring such expenses.
(b) In the event that Parent terminates this Agreement pursuant to
Section 7.01(b)(ii), (b)(iv), or (c)(i), or Company terminates this
Agreement pursuant to Section 7.01(b)(iv) or (d), then Company shall pay
to Parent the amount of 7.0% of the Total Aggregate Consideration as
reimbursement of Parent's expenses and as liquidated damages (the
"Company Break-Up Fee"); provided, however, that, in the case of a
termination pursuant to Section 7.01(b)(iv) hereof, the Company Break-Up
Fee shall be payable only if Company consummates an Acquisition
Transaction within twelve (12) months after such termination. Any such
payment shall be made within three (3) business days after a termination,
except in the case of a termination pursuant to Section 7.01(b)(iv), in
which case the Company Break-Up Fee shall be payable within three
(3) business days after consummation of such Acquisition Transaction.
7.04. AMENDMENT. This Agreement may be amended by each of the parties by
action taken by or on behalf of their respective Boards of Directors at any time
prior to the Effective Time; provided, however, that (i) such amendment shall be
in writing signed by all of the parties, and (ii) after adoption of this
Agreement and the Merger by the shareholders of Company, no amendment may be
made without the further approval of the shareholders of Company to the extent
such approval is required by applicable law.
7.05. WAIVER. Subject to the requirements of applicable law, at any time
prior to the Effective Time, whether before or after the Company Special
Meeting, any party hereto, by action taken by its Board of Directors (or, in the
case of Parent, any similar body), may (i) extend the time for the performance
of any of the obligations or other acts of any other party hereto or (ii) waive
compliance with any of the agreements of any other party or with any conditions
to its own obligations. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party by a duly authorized officer of such party.
Notwithstanding the above, any waiver given shall not apply to any subsequent
failure of compliance with agreements of the other party or conditions to its
own obligations.
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ARTICLE VIII
DEFINITIONS
As used herein the following terms not otherwise defined have the following
respective meanings:
"ACQUISITION TRANSACTION" means any transaction, other than as contemplated
by this Agreement, pursuant to which a third party acquires, directly or
indirectly, including pursuant to a tender offer, exchange offer, merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction, for consideration consisting of cash and/or securities
or other property, more than 50% of the combined voting power of Company or all
or substantially all the assets of Company.
"AFFILIATE" means, with respect to any specified Person, any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person. As used
in this definition the term "CONTROL" (including the terms "CONTROLLED BY" and
"UNDER COMMON CONTROL WITH") means, with respect to the relationship between or
among two or more Persons, the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the affairs or
management of a Person, whether through the ownership of voting securities, as
trustee or executor, by contract or otherwise, including, without limitation,
the ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the affairs of such
Person.
"COMPANY INTELLECTUAL PROPERTY" means all trademarks, trade names, service
marks, trade dress, and all goodwill associated with any of the foregoing,
patents, Internet domain names, copyrights and any renewal rights therefor,
inventions, supplier lists, trade secrets, know-how, computer software programs
or applications in both source and object code form, technical documentation of
such software programs, registrations and applications for any of the foregoing
and all other tangible or intangible proprietary information or materials that
are or have been used in Company's business and/or in any product or process
(i) currently being or formerly manufactured, published or marketed by Company
or (ii) previously or currently under active development for possible future
manufacturing, publication, marketing or other use by Company.
"ENCUMBRANCES" shall mean any and all liens, charges, security interests,
options, claims, mortgages, pledges, proxies, voting trusts or agreements,
obligations, understandings or arrangements or other restrictions on title or
transfer of any nature whatsoever.
"ENVIRONMENTAL LAW" shall mean all foreign, federal, state or local laws
governing pollution or the protection of the environment.
"GUIDANT" shall mean Guidant Corporation.
"GUIDANT STOCK PURCHASE AGREEMENT" shall mean that certain Stock Purchase
Agreement, by and between Guidant and Company, dated as of March 6, 1998,
pursuant to which Company issued to Guidant, and Guidant purchased from Company,
shares of Company Common Stock.
"INDEBTEDNESS" as applied to any Person, means (i) all indebtedness of
Company for borrowed money, whether current or funded, or secured or unsecured,
(ii) all indebtedness of Company for the deferred purchase price of property or
services represented by a note or other security, (iii) all indebtedness of
Company created or arising under any conditional sale or other title retention
agreement with respect to property acquired by Company (even though the rights
and remedies of the Company or lender under such agreement in the event of
default are limited to repossession or sale of such property), (iv) all
indebtedness of Company secured by a purchase money mortgage or other lien to
secure all or part of the purchase price of property subject to such mortgage or
lien, (v) all obligations under leases which shall have been or must be, in
accordance with generally accepted accounting principles, recorded as capital
leases in respect of which Company is liable as lessee, (vi) any liability of
Company in respect of banker's acceptances or letters of credit, (vii) all
interest, fees and other expenses owed with respect to the indebtedness referred
to in clause (i), (ii), (iii), (iv), (v) or (vi) above, and (viii) all
indebtedness referred to in clause (i), (ii), (iii), (iv), (v), (vi) or
(vii) above which is directly or indirectly guaranteed by Company or which
Company has
32
agreed (contingently or otherwise) to purchase or otherwise acquire or in
respect of which it has otherwise assured a creditor against loss.
"MATERIAL ADVERSE EFFECT" means a change or effect that is materially
adverse to (a) the business, properties, assets, results of operations or
condition (financial or otherwise) of Company taken as a whole or (b) Company's
ability to perform any of its obligations under this Agreement or which is
expected to impede Company's ability to consummate the Merger.
"NASDAQ" means the National Association of Securities Dealers Automated
Quotation System.
"PERSON" means any corporation, association, partnership, limited liability
company, organization, business, individual, government or political subdivision
thereof or governmental agency.
"SUBSIDIARY" means, with respect to any Person, any corporation, limited
liability company, partnership, joint venture or other legal entity of which
such Person (either alone or through or together with any other subsidiary of
such person) owns, directly or indirectly, a majority of the stock or other
equity interests, the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such corporation
or other legal entity.
"TAX" means any federal, state, local or foreign income, gross receipts,
franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer,
registration, value added, excise, natural resources, severance, stamp,
occupation, premium, windfall profit, environmental, customs, duties, real
property, personal property, capital stock, intangibles, social security,
unemployment, disability, payroll, license, employee or other tax or levy, of
any kind whatsoever, including any interest, penalties or additions to tax in
respect of any of the foregoing.
ARTICLE IX
MISCELLANEOUS
9.01. SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by rule of law or public policy,
all other conditions and provisions of this Agreement shall nevertheless remain
in full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
9.02. NOTICES. All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duly given, or made
as of the date delivered if sent via telecopier or delivered personally
(including, without limitation, delivery by commercial carrier warranting
next-day delivery) to the parties at the following addresses (or at such other
address for a party as shall be specified by similar notice, except that notices
of changes of address shall be effective upon receipt):
(a) If to Company:
Everest Medical Corporation
00000 Xxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxxxx
Chairman, President and Chief Executive Officer
Telecopy: (000) 000-0000
With copies to:
Xxxxxxxxxxx & Xxxxx, P.A.
1100 International Centre
000 Xxxxxx Xxxxxx Xxxxx
00
Xxxxxxxxxxx, XX 00000-0000
Attention: Xxxxxx Xxxx, Esq.
and
Xxxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
(b) If to Parent or Newco:
Gyrus Group Plc
Xxxxxxx Xxxx, Xx. Xxxxxxx
Xxxxxxx XX0 0XX
Xxxxxxx
Attention: Xx. Xxxx Xxxxx
Managing Director
Telecopy: 011-44-1222-776384
With copies to:
Xxxxxxx Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
9.03. HEADINGS. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
9.04. REPRESENTATIONS AND WARRANTIES, ETC. The respective representations
and warranties of Company, Parent and Newco contained herein shall survive
until, and shall expire with, and be terminated and extinguished upon the
earlier to occur of (a) the termination of this Agreement pursuant to
Section 7.01 and (b) the Closing Date. This Section 9.04 shall have no effect
upon any other obligation of the parties hereto, whether to be performed before
or after the consummation of the Merger.
9.05. MISCELLANEOUS. This Agreement, the documents delivered pursuant hereto
or in connection herewith and the Confidentiality Agreement (i) constitute the
entire agreement and supersede all other prior agreements and undertakings, both
written and oral (including, without limitation, any agreement or proposed
agreement relating to the timing of execution of this Agreement and the payment
of any amount in connection therewith), among the parties, or any of them, with
respect to the subject matter hereof, (ii) are not intended to confer upon any
Person other than the parties hereto any rights or remedies hereunder,
(iii) may not be assigned without the prior written consent of the other parties
hereto, except that Newco may assign its rights hereunder in whole or in part to
one or more direct or indirect Subsidiaries or affiliates of Parent which, in
written instruments reasonably satisfactory to Company, shall agree to make all
representations and warranties of Newco set forth herein and shall agree to
assume all of such party's obligations hereunder and be bound by all of the
terms and conditions of this Agreement and Newco and Parent may assign this
Agreement to their lenders as collateral security; PROVIDED, HOWEVER, that no
such assignment shall relieve the assignor of its obligations hereunder, and
(iv) shall be governed by and construed in accordance with the laws of the State
of Minnesota (without reference to choice of law rules). This Agreement may be
executed in one or more counterparts which together shall constitute a single
agreement.
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IN WITNESS WHEREOF, Parent, Newco and Company have caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
GYRUS GROUP PLC
By: /s/ XXXX XXXXX
-----------------------------------------
Name: Xxxx Xxxxx
----------------------------------
Title: Group Managing Director
----------------------------------
GOLDEN ACQUISITION CORP.
By: /s/ XXXX XXXXX
-----------------------------------------
Name: Xxxx Xxxxx
----------------------------------
Title: President
----------------------------------
EVEREST MEDICAL CORPORATION
By: /s/ XXXX X. XXXXXXX, XX.
-----------------------------------------
Name: Xxxx X. Xxxxxxx, Xx.
----------------------------------
Title: Chairman, President and
Chief Executive Officer
----------------------------------
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