EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
Dated as of December 15, 2004
Among
XXXXXXX & XXXXXXX,
XXXXXX MERGER SUB, INC.
And
GUIDANT CORPORATION
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TABLE OF CONTENTS
Page
SECTION 1.01 The Merger................................................. 1
SECTION 1.02. Closing.................................................... 1
SECTION 1.03. Effective Time............................................. 1
SECTION 1.04. Effects of the Merger...................................... 2
SECTION 1.05. Articles of Incorporation and By-laws...................... 2
SECTION 1.06. Directors.................................................. 2
SECTION 1.07. Officers................................................... 2
ARTICLE II
Effect of the Merger on the Capital Stock of the Constituent Corporations;
Exchange of Certificates
SECTION 2.01. Effect on Capital Stock.................................... 3
SECTION 2.02. Exchange of Certificates................................... 4
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of the Company.............. 7
SECTION 3.02. Representations and Warranties of Parent and Sub...........28
ARTICLE IV
Covenants Relating to Conduct of Business; No Solicitation
SECTION 4.01. Conduct of Business........................................32
SECTION 4.02. No Solicitation............................................37
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Form S-4 and the Proxy Statement;
Shareholders' Meeting....................................40
SECTION 5.02. Access to Information; Confidentiality.....................41
SECTION 5.03. Reasonable Best Efforts....................................42
SECTION 5.04. Company Stock Options; ESPP................................44
(i)
SECTION 5.05. Indemnification, Exculpation and Insurance.................45
SECTION 5.06. Fees and Expenses..........................................46
SECTION 5.07. Public Announcements.......................................48
SECTION 5.08. Affiliates.................................................48
SECTION 5.09. Stock Exchange Listing.....................................48
SECTION 5.10. Shareholder Litigation.....................................48
SECTION 5.11. Employee Matters...........................................48
SECTION 5.12. Company Notes..............................................50
SECTION 5.13. Rights Agreement...........................................50
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation to Effect the Merger.50
SECTION 6.02. Conditions to Obligations of Parent and Sub................51
SECTION 6.03. Conditions to Obligation of the Company....................52
SECTION 6.04. Frustration of Closing Conditions..........................53
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination................................................53
SECTION 7.02. Effect of Termination......................................54
SECTION 7.03. Amendment..................................................54
SECTION 7.04. Extension; Waiver..........................................54
SECTION 7.05. Procedure for Termination or Amendment.....................54
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and Warranties..............55
SECTION 8.02. Notices....................................................55
SECTION 8.03. Definitions................................................56
SECTION 8.04. Interpretation.............................................57
SECTION 8.05. Consents and Approvals.....................................57
SECTION 8.06. Counterparts...............................................58
SECTION 8.07. Entire Agreement; No Third-Party Beneficiaries.............58
SECTION 8.08. GOVERNING LAW..............................................58
SECTION 8.09. Assignment.................................................58
SECTION 8.10. Specific Enforcement; Consent to Jurisdiction..............58
SECTION 8.11. Waiver of Jury Trial.......................................58
SECTION 8.12. Severability...............................................59
(ii)
Annex I Index of Defined Terms
Exhibit A Restated Articles of Incorporation of the Surviving Corporation
Exhibit B Affiliate Letter
(iii)
AGREEMENT AND PLAN OF MERGER (this "Agreement") dated
as of December 15, 2004, among XXXXXXX & XXXXXXX, a
New Jersey corporation ("Parent"), SHELBY MERGER SUB, INC.,
an Indiana corporation and a wholly owned Subsidiary of
Parent ("Sub"), and GUIDANT CORPORATION, an Indiana
corporation (the "Company").
WHEREAS the Board of Directors of each of the Company and Sub has
adopted, and the Board of Directors of Parent has approved, this Agreement and
the merger of Sub with and into the Company (the "Merger"), upon the terms and
subject to the conditions set forth in this Agreement, whereby each issued and
outstanding share of common stock, without par value, of the Company ("Company
Common Stock"), other than shares of Company Common Stock directly owned by
Parent, Sub or the Company, will be converted into the right to receive (a) a
number of validly issued, fully paid and nonassessable shares of common stock,
par value $1.00 per share, of Parent ("Parent Common Stock") and (b) $30.40 in
cash, without interest; and
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, and subject to the
conditions set forth herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. THE MERGER. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Business
Corporation Law of the State of Indiana (the "IBCL"), Sub shall be merged with
and into the Company at the Effective Time. Following the Effective Time, the
separate corporate existence of Sub shall cease and the Company shall continue
as the surviving corporation in the Merger (the "Surviving Corporation") and
shall succeed to and assume all the rights and obligations of Sub in
accordance with the IBCL.
SECTION 1.02. CLOSING. The closing of the Merger (the "Closing") will
take place at 10:00 a.m. on a date to be specified by the parties, which shall
be no later than the second business day after satisfaction or (to the extent
permitted by applicable Law) waiver of the conditions set forth in Article VI
(other than those conditions that by their terms are to be satisfied at the
Closing, but subject to the satisfaction or (to the extent permitted by
applicable Law) waiver of those conditions), at the offices of Cravath, Swaine
& Xxxxx LLP, Worldwide Plaza, 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
unless another time, date or place is agreed to in writing by Parent and the
Company; provided, however, that if all the conditions set forth in Article VI
shall no longer be satisfied or (to the extent permitted by applicable Law)
waived on such second business day, then the Closing shall take place on the
first business day
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on which all such conditions shall again have been satisfied or (to the extent
permitted by applicable Law) waived unless another time is agreed to in
writing by Parent and the Company. The date on which the Closing occurs is
referred to in this Agreement as the "Closing Date".
SECTION 1.03. EFFECTIVE TIME. Subject to the provisions of this
Agreement, as soon as practicable on the Closing Date, the parties shall file
with the Secretary of State of the State of Indiana articles of merger (the
"Articles of Merger") executed and acknowledged by the parties in accordance
with the relevant provisions of the IBCL and, as soon as practicable on or
after the Closing Date, shall make all other filings or recordings required
under the IBCL. The Merger shall become effective upon the filing of the
Articles of Merger with the Secretary of State of the State of Indiana, or at
such later time as Parent and the Company shall agree and shall specify in the
Articles of Merger (the time the Merger becomes effective being the "Effective
Time").
SECTION 1.04. EFFECTS OF THE MERGER. The Merger shall have the
effects set forth in Section 23-1-40-6 of the IBCL.
SECTION 1.05. ARTICLES OF INCORPORATION AND BY-LAWS. (a) The
Articles of Incorporation of the Company (the "Company Articles") shall be
amended at the Effective Time to be in the form of Exhibit A and, as so
amended, such Company Articles shall be the Restated Articles of Incorporation
of the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable Law.
(b) The By-laws of Sub, as in effect immediately prior to the
Effective Time, shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable Law.
SECTION 1.06. DIRECTORS. The directors of Sub immediately prior to
the Effective Time shall be the directors of the Surviving Corporation until
the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
SECTION 1.07. OFFICERS. The officers of the Company immediately prior
to the Effective Time shall be the officers of the Surviving Corporation until
the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
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ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.01. EFFECT ON CAPITAL STOCK. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Company Common Stock or any shares of capital stock of Parent or
Sub:
(a) CAPITAL STOCK OF SUB. Each issued and outstanding share of
capital stock of Sub shall be converted into and become one validly
issued, fully paid and nonassessable share of common stock, without par
value, of the Surviving Corporation.
(b) CANCELATION OF TREASURY STOCK AND PARENT-OWNED STOCK. Each share
of Company Common Stock that is directly owned by the Company, Parent or
Sub immediately prior to the Effective Time shall automatically be
canceled and shall cease to exist, and no consideration shall be
delivered in exchange therefor.
(c) CONVERSION OF COMPANY COMMON STOCK. Subject to Section 2.02(e),
each share of Company Common Stock issued and outstanding immediately
prior to the Effective Time (other than shares to be canceled in
accordance with Section 2.01(b)) shall be converted into the right to
receive (i) that number (rounded to the nearest 1/10,000 of a share) (the
"Exchange Ratio") of validly issued, fully paid and nonassessable shares
of Parent Common Stock (the "Stock Portion") equal to the number
determined by dividing $45.60 by the Average Parent Stock Price;
provided, however, that (x) if the number determined by dividing $45.60
by the Average Parent Stock Price is less than or equal to 0.6797, the
Exchange Ratio shall be 0.6797 and (y) if the number determined by
dividing $45.60 by the Average Parent Stock Price is greater than or
equal to 0.8224, the Exchange Ratio shall be 0.8224 and (ii) $30.40 in
cash, without interest (the "Cash Portion" and, together with the Stock
Portion, the "Merger Consideration"). At the Effective Time, all such
shares of Company Common Stock shall no longer be outstanding and shall
automatically be canceled and shall cease to exist, and each holder of a
certificate which immediately prior to the Effective Time represented any
such shares of Company Common Stock (each, a "Certificate") shall cease
to have any rights with respect thereto, except the right to receive the
Merger Consideration, any dividends or other distributions payable
pursuant to Section 2.02(c) and cash in lieu of any fractional shares
payable pursuant to Section 2.02(e), in each case to be issued or paid in
consideration therefor upon surrender of such Certificate in accordance
with Section 2.02(b), without interest. Notwithstanding the foregoing, if
between the date of this Agreement and the Effective Time, (A) the
outstanding shares of Parent Common Stock shall have been changed into a
different number of shares or a different class, by reason of the
occurrence or record date of any stock dividend, subdivision,
reclassification, recapitalization, split, combination, exchange of
shares or similar transaction, (B) Parent declares or pays cash dividends
in any fiscal quarter in excess of 200% of the amount of regularly
quarterly dividends paid by the Parent immediately prior to the date
hereof or (C) Parent engages in any spin-off or split-off, then in any
such case the Exchange Ratio shall be appropriately adjusted to reflect
such action. The right
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of any holder of a Certificate to receive the Merger Consideration, any
dividends or other distributions payable pursuant to Section 2.02(c) and
cash in lieu of any fractional shares payable pursuant to Section 2.02(e)
shall be subject to and reduced by the amount of any withholding that is
required under applicable tax Law. "Average Parent Stock Price" means the
average of the volume weighted averages of the trading prices of Parent
Common Stock, as such price is reported on the New York Stock Exchange,
Inc. (the "NYSE") Composite Transaction Tape (as reported by Bloomberg
Financial Markets or such other source as the parties shall agree in
writing), for the 15 trading days ending on the third trading day
immediately preceding the Effective Time.
SECTION 2.02. EXCHANGE OF CERTIFICATES. (a) EXCHANGE AGENT. Prior to
the Effective Time, Parent shall appoint EquiServe Trust Company or another
bank or trust company that is reasonably satisfactory to the Company to act as
exchange agent (the "Exchange Agent") for the payment of the Merger
Consideration. At the Effective Time, Parent shall deposit, or cause the
Surviving Corporation to deposit, with the Exchange Agent, for the benefit of
the holders of Certificates, certificates representing shares of Parent Common
Stock and cash in an amount sufficient to pay the aggregate Merger
Consideration required to be paid pursuant to Section 2.01(c). In addition,
Parent shall deposit with the Exchange Agent, as necessary from time to time
after the Effective Time, any dividends or other distributions payable
pursuant to Section 2.02(c) and cash in lieu of any fractional shares payable
pursuant to Section 2.02(e). All shares of Parent Common Stock, cash,
dividends and distributions deposited with the Exchange Agent pursuant to this
Section 2.02(a) shall hereinafter be referred to as the "Exchange Fund".
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, Parent shall cause the Exchange Agent to mail to each holder
of record of a Certificate whose shares of Company Common Stock were converted
into the right to receive the Merger Consideration, any dividends or other
distributions payable pursuant to Section 2.02(c) and cash in lieu of any
fractional shares payable pursuant to Section 2.02(e) (i) a form of letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of
the Certificates to the Exchange Agent and which shall be in customary form
and contain customary provisions) and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for the Merger Consideration,
any dividends or other distributions payable pursuant to Section 2.02(c) and
cash in lieu of any fractional shares payable pursuant to Section 2.02(e).
Each holder of record of one or more Certificates shall, upon surrender to the
Exchange Agent of such Certificate or Certificates, together with such letter
of transmittal, duly executed, and such other documents as may reasonably be
required by the Exchange Agent, be entitled to receive in exchange therefor
(i) the amount of cash to which such holder is entitled pursuant to Section
2.01(c), (ii) a certificate or certificates representing that number of whole
shares of Parent Common Stock (after taking into account all Certificates
surrendered by such holder) to which such holder is entitled pursuant to
Section 2.01(c) (which shall be in uncertificated book entry form unless a
physical certificate is requested), (iii) any dividends or distributions
payable pursuant to Section 2.02(c) and (iv) cash in lieu of any fractional
shares payable pursuant to Section 2.02(e), and the Certificates so
surrendered shall forthwith be canceled. In the event of a transfer of
ownership of Company Common Stock which is not registered in the transfer
records of the Company, payment of the Merger Consideration in accordance with
this Section 2.02(b) may be made to a person other than the person in whose
name the Certificate so surrendered is registered if such Certificate
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shall be properly endorsed or otherwise be in proper form for transfer and the
person requesting such payment shall pay any transfer or other taxes required
by reason of the payment of the Merger Consideration, any dividends or other
distributions payable pursuant to Section 2.02(c) and cash in lieu of any
fractional shares payable pursuant to Section 2.02(e) to a person other than
the registered holder of such Certificate or establish to the reasonable
satisfaction of Parent that such taxes have been paid or are not applicable.
Until surrendered as contemplated by this Section 2.02(b), each Certificate
shall be deemed at any time after the Effective Time to represent only the
right to receive upon such surrender the Merger Consideration, any dividends
or other distributions payable pursuant to Section 2.02(c) and cash in lieu of
any fractional shares payable pursuant to Section 2.02(e). No interest shall
be paid or will accrue on any payment to holders of Certificates pursuant to
the provisions of this Article II.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends
or other distributions with respect to Parent Common Stock with a record date
after the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of Parent Common Stock that the holder
thereof has the right to receive upon the surrender thereof, and no cash
payment in lieu of fractional shares of Parent Common Stock shall be paid to
any such holder pursuant to Section 2.02(e), in each case until the holder of
such Certificate shall have surrendered such Certificate in accordance with
this Article II. Following the surrender of any Certificate, there shall be
paid to the record holder of the certificate representing whole shares of
Parent Common Stock issued in exchange therefor, without interest, (i) at the
time of such surrender, the amount of dividends or other distributions with a
record date after the Effective Time theretofore paid with respect to such
whole shares of Parent Common Stock and the amount of any cash payable in lieu
of a fractional share of Parent Common Stock to which such holder is entitled
pursuant to Section 2.02(e) and (ii) at the appropriate payment date, the
amount of dividends or other distributions with a record date after the
Effective Time but prior to such surrender and a payment date subsequent to
such surrender payable with respect to such whole shares of Parent Common
Stock.
(d) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. The Merger
Consideration, any dividends or other distributions payable pursuant to
Section 2.02(c) and cash in lieu of any fractional shares payable pursuant to
Section 2.02(e) paid upon the surrender of Certificates in accordance with the
terms of this Article II shall be deemed to have been paid in full
satisfaction of all rights pertaining to the shares of Company Common Stock
formerly represented by such Certificates. At the close of business on the day
on which the Effective Time occurs, the share transfer books of the Company
shall be closed, and there shall be no further registration of transfers on
the share transfer books of the Surviving Corporation of the shares of Company
Common Stock that were outstanding immediately prior to the Effective Time.
If, after the Effective Time, any Certificate is presented to the Surviving
Corporation for transfer, it shall be canceled against delivery of the Merger
Consideration, any dividends or other distributions payable pursuant to
Section 2.02(c) and cash in lieu of any fractional shares payable pursuant to
Section 2.02(e) to the holder thereof as provided in this Article II.
(e) NO FRACTIONAL SHARES. (i) No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued upon the surrender
for exchange of Certificates, no dividends or other distributions of Parent
shall relate to such fractional share interests and
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such fractional share interests will not entitle the owner thereof to vote or
to any rights of a shareholder of Parent.
(ii) In lieu of such fractional share interests, Parent shall pay to
each holder of a Certificate an amount in cash equal to the product obtained
by multiplying (A) the fractional share interest to which such holder (after
taking into account all shares of Company Common Stock formerly represented by
all Certificates surrendered by such holder) would otherwise be entitled by
(B) the per share closing price of Parent Common Stock on the Closing Date
(the "Closing Price"), as such price is reported on the NYSE Composite
Transaction Tape (as reported by Bloomberg Financial Markets or such other
source as the parties shall agree in writing).
(f) TERMINATION OF THE EXCHANGE FUND. Any portion of the Exchange
Fund which remains undistributed to the holders of the Certificates for six
months after the Effective Time shall be delivered to Parent, upon demand, and
any holders of the Certificates who have not theretofore complied with this
Article II shall thereafter look only to Parent for, and Parent shall remain
liable for, payment of their claim for the Merger Consideration, any dividends
or other distributions payable pursuant to Section 2.02(c) and cash in lieu of
any fractional shares payable pursuant to Section 2.02(e) in accordance with
this Article II.
(g) NO LIABILITY. None of Parent, Sub, the Company, the Surviving
Corporation or the Exchange Agent shall be liable to any person in respect of
any shares of Parent Common Stock, cash, dividends or other distributions from
the Exchange Fund properly delivered to a public official pursuant to any
applicable abandoned property, escheat or similar Law. If any Certificate
shall not have been surrendered prior to four years after the Effective Time
(or immediately prior to such earlier date on which any Merger Consideration
(and any dividends or other distributions payable with respect thereto
pursuant to Section 2.02(c) and cash in lieu of any fractional shares payable
with respect thereto pursuant to Section 2.02(e)) would otherwise escheat to
or become the property of any Governmental Entity), any such Merger
Consideration (and any dividends or other distributions payable with respect
thereto pursuant to Section 2.02(c) and cash in lieu of any fractional shares
payable with respect thereto pursuant to Section 2.02(e)) shall, to the extent
permitted by applicable Law, become the property of Parent, free and clear of
all claims or interest of any person previously entitled thereto.
(h) INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall invest the
cash included in the Exchange Fund as directed by Xxxxxx. Any interest and
other income resulting from such investments shall be paid to and be income of
Parent. If for any reason (including losses) the cash in the Exchange Fund
shall be insufficient to fully satisfy all of the payment obligations to be
made in cash by the Exchange Agent hereunder, Parent shall promptly deposit
cash into the Exchange Fund in an amount which is equal to the deficiency in
the amount of cash required to fully satisfy such cash payment obligations.
(i) LOST CERTIFICATES. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by Parent, the posting by such person of a bond in such reasonable
amount as Parent may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent shall deliver
in exchange for such lost,
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stolen or destroyed Certificate the Merger Consideration, any dividends or
other distributions payable pursuant to Section 2.02(c) and cash in lieu of
any fractional shares payable pursuant to Section 2.02(e), in each case
pursuant to this Article II.
(j) WITHHOLDING RIGHTS. Parent, the Surviving Corporation or the
Exchange Agent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of Certificates
such amounts as Parent, the Surviving Corporation or the Exchange Agent is
required to deduct and withhold with respect to the making of such payment
under the Internal Revenue Code of 1986, as amended (the "Code"), or any
provision of state, local or foreign tax Law. To the extent that amounts are
so withheld and paid over to the appropriate taxing authority by Parent, the
Surviving Corporation or the Exchange Agent, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder
of Certificates in respect of which such deduction and withholding was made by
Parent, the Surviving Corporation or the Exchange Agent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except
as disclosed in the Company SEC Documents filed by the Company and publicly
available prior to the date of this Agreement ("Filed Company SEC Documents")
and except as set forth in the disclosure schedule (with specific reference to
the particular Section or subsection of this Agreement to which the
information set forth in such disclosure schedule relates; provided, however,
that any information set forth in one section of the Company Disclosure
Schedule shall be deemed to apply to each other Section or subsection thereof
to which its relevance is readily apparent on its face) delivered by the
Company to Parent prior to the execution of this Agreement (the "Company
Disclosure Schedule"), the Company represents and warrants to Parent and Sub
as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of the Company
and its Subsidiaries has been duly organized, and is validly existing and
in good standing (with respect to jurisdictions that recognize that
concept) under the Laws of the jurisdiction of its incorporation or
formation, as the case may be, and has all requisite power and authority
and possesses all governmental licenses, permits, authorizations and
approvals necessary to enable it to use its corporate or other name and
to own, lease or otherwise hold and operate its properties and other
assets and to carry on its business as currently conducted, except where
the failure to have such governmental licenses, permits, authorizations
or approvals individually or in the aggregate has not had and would not
reasonably be expected to have a Material Adverse Effect. Each of the
Company and its Subsidiaries is duly qualified or licensed to do business
and is in good standing (with respect to jurisdictions that recognize
that concept) in each jurisdiction in which the nature of its business or
the ownership, leasing or operation of its properties makes such
qualification, licensing or good standing necessary, other than in such
jurisdictions where the failure to be so qualified, licensed or in good
standing individually or in the aggregate has not had and would not
reasonably be expected to have a Material
8
Adverse Effect. The Company has made available to Parent, prior to the
execution of this Agreement, complete and accurate copies of the Company
Articles and the Company's By-laws (the "Company By-laws"), and the
comparable organizational documents of each Significant Subsidiary (as
such term is defined in Rule 12b-2 under the Exchange Act), in each case
as amended to the date hereof.
(b) SUBSIDIARIES. Section 3.01(b) of the Company Disclosure Schedule
lists, as of the date hereof, (i) each Significant Subsidiary of the
Company (including its state of incorporation or formation) and (ii) each
other Subsidiary of the Company. All of the outstanding capital stock of,
or other equity interests in, each Significant Subsidiary of the Company,
is directly or indirectly owned by the Company. All the issued and
outstanding shares of capital stock of, or other equity interests in,
each such Subsidiary owned by the Company have been validly issued and
are fully paid and nonassessable and are owned directly or indirectly by
the Company free and clear of all pledges, liens, charges, encumbrances
or security interests of any kind or nature whatsoever (other than liens,
charges and encumbrances for current taxes not yet due and payable)
(collectively, "Liens"), and free of any restriction on the right to
vote, sell or otherwise dispose of such capital stock or other equity
interests. Except with respect to securities of non-Affiliates that, to
the Knowledge of the Company, do not constitute a 20% or greater interest
in such non-Affiliates (or a 5% or greater interest in such
non-Affiliates if the Company's investment therein is greater than
$20,000,000), and except for the capital stock of, or voting securities
or equity interests in, its Subsidiaries, the Company does not own,
directly or indirectly, as of the date hereof, any capital stock of, or
other voting securities or equity interests in, any corporation,
partnership, joint venture, association or other entity.
(c) CAPITAL STRUCTURE. The authorized capital stock of the Company
consists of 1,000,000,000 shares of Company Common Stock and 50,000,000
shares of preferred stock, without par value ("Company Preferred Stock").
1,500,000 shares of Company Preferred Stock have been designated as
Series A Participating Preferred Stock, without par value (the "Company
Series A Preferred Stock"). At the close of business on December 14,
2004, (i) 321,485,774 shares of Company Common Stock were issued and
outstanding (which number includes (A) 535,645 shares of Company Common
Stock held by the Company in its treasury, (B) 1,934,116 shares of
Company Common Stock held by the trust established under The Guidant
Employee Savings and Stock Ownership Plan and (C) 919,276 shares of
Company Common Stock subject to vesting and restrictions on transfer
("Company Restricted Stock")), (ii) 41,590,880 shares of
Company Common Stock were reserved and available for issuance pursuant to
the Company's 1994 Stock Plan, as amended, 1996 Nonemployee Director
Stock Plan, as amended, 1998 Stock Plan, as amended, and 2001 Employee
Stock Purchase Plan (the "ESPP") (such plans, collectively, the "Company
Stock Plans"), of which 35,485,818 shares of Company Common Stock were
subject to outstanding Company Stock Options or agreements to issue
Company Stock Options, and (iii) no shares of Company Preferred Stock
(including Company Series A Preferred Stock) were issued or outstanding
or were held by the Company as treasury shares. Except as set forth above
in this Section 3.01(c), at the close of business on December 14, 2004,
no shares of capital stock or other voting securities or equity interests
of the Company were
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issued, reserved for issuance or outstanding. At the close of business on
December 14, 2004, there were no outstanding stock appreciation rights,
"phantom" stock rights, restricted stock units, performance units, rights
to receive shares of Company Common Stock on a deferred basis or other
rights (other than Company Stock Options) that are linked to the value of
Company Common Stock (collectively, "Company Stock-Based Awards"). All
outstanding options to purchase shares of Company Common Stock exclusive
of rights under the ESPP (collectively, "Company Stock Options") and
shares of Company Restricted Stock are evidenced by stock option
agreements, restricted stock purchase agreements or other award
agreements. All outstanding shares of capital stock of the Company are,
and all shares which may be issued pursuant to the Company Stock Options
or Company Stock-Based Awards will be, when issued in accordance with the
terms thereof, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. There are no bonds,
debentures, notes or other indebtedness of the Company having the right
to vote (or convertible into, or exchangeable for, securities having the
right to vote) on any matters on which shareholders of the Company may
vote. Except as set forth above in this Section 3.01(c) and for issuances
of shares of Company Common Stock pursuant to the Company Stock Options
set forth above in this Section 3.01(c) and subject to Section 4.01(a),
(x) there are not issued, reserved for issuance or outstanding (A) any
shares of capital stock or other voting securities or equity interests of
the Company, (B) any securities of the Company convertible into or
exchangeable or exercisable for shares of capital stock or other voting
securities or equity interests of the Company, (C) any warrants, calls,
options or other rights to acquire from the Company or any of its
Subsidiaries, and no obligation of the Company or any of its Subsidiaries
to issue, any capital stock, voting securities, equity interests or
securities convertible into or exchangeable or exercisable for capital
stock or voting securities of the Company or (D) any Company Stock-Based
Awards and (y) there are not any outstanding obligations of the Company
or any of its Subsidiaries to repurchase, redeem or otherwise acquire any
such securities or to issue, deliver or sell, or cause to be issued,
delivered or sold, any such securities. Neither the Company nor any of
its Subsidiaries is a party to any voting Contract with respect to the
voting of any such securities. Except as set forth above in this Section
3.01(c) and subject to Section 4.01(a), there are no outstanding (1)
securities of the Company or any of its Subsidiaries convertible into or
exchangeable or exercisable for shares of capital stock or voting
securities or equity interests of any Subsidiary of the Company, (2)
warrants, calls, options or other rights to acquire from the Company or
any of its Subsidiaries, and no obligation of the Company or any of its
Subsidiaries to issue, any capital stock, voting securities, equity
interests or securities convertible into or exchangeable or exercisable
for capital stock or voting securities of any Subsidiary of the Company
or (3) obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any such outstanding securities
or to issue, deliver or sell, or cause to be issued, delivered or sold,
any such securities.
(d) AUTHORITY; NONCONTRAVENTION. The Company has all requisite
corporate power and authority to execute and deliver this Agreement and,
subject to receipt of the Shareholder Approval, to consummate the
transactions contemplated by this Agreement. The execution and delivery
of this Agreement by the Company and the consummation by the Company of
the transactions contemplated by this Agreement have been duly
10
authorized by all necessary corporate action on the part of the Company
and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the transactions
contemplated by this Agreement, subject, in the case of the consummation
of the Merger, to the obtaining of the Shareholder Approval. This
Agreement has been duly executed and delivered by the Company and,
assuming the due authorization, execution and delivery by each of the
other parties hereto, constitutes a legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer,
moratorium, reorganization or similar Laws affecting the rights of
creditors generally and the availability of equitable remedies
(regardless of whether such enforceability is considered in a proceeding
in equity or at law). The Board of Directors of the Company, at a meeting
duly called and held, duly and unanimously adopted by all directors
present, resolutions (i) adopting this Agreement, the Merger and the
other transactions contemplated by this Agreement, (ii) declaring that it
is in the best interests of the Company and the shareholders of the
Company that the Company enter into this Agreement and consummate the
Merger and the other transactions contemplated by this Agreement on the
terms and subject to the conditions set forth in this Agreement, (iii)
directing that the Company use its reasonable best efforts to submit the
approval of this Agreement to a vote at a meeting of the shareholders of
the Company within 120 days of the date hereof and (iv) recommending that
the shareholders of the Company approve this Agreement, which
resolutions, as of the date of this Agreement, have not been subsequently
rescinded, modified or withdrawn in any way. The execution and delivery
of this Agreement by the Company do not, and the consummation by the
Company of the Merger and the other transactions contemplated by this
Agreement and compliance by the Company with the provisions of this
Agreement will not, conflict with, or result in any violation or breach
of, or default (with or without notice or lapse of time, or both) under,
or give rise to a right of, or result in, termination, cancelation or
acceleration of any obligation or to the loss of a benefit under, or
result in the creation of any Lien in or upon any of the properties or
other assets of the Company or any of its Subsidiaries under, (x) the
Company Articles or the Company By-laws or the comparable organizational
documents of any of its Subsidiaries, (y) any loan or credit agreement,
bond, debenture, note, mortgage, indenture, lease, supply agreement,
license agreement, development agreement or other contract, agreement,
obligation, commitment or instrument that is intended by the Company,
Parent or any of their respective Subsidiaries, as applicable, to be
legally binding, (each, including all amendments thereto, a "Contract"),
to which the Company or any of its Subsidiaries is a party or any of
their respective properties or other assets is subject or (z) subject to
the obtaining of the Shareholder Approval and the governmental filings
and other matters referred to in the following sentence, any (A) statute,
law, ordinance, rule or regulation (each, a "Law") applicable to the
Company or any of its Subsidiaries or their respective properties or
other assets or (B) order, writ, injunction, decree, judgment or
stipulation (each, an "Order") applicable to the Company or any of its
Subsidiaries or their respective properties or other assets, other than,
in the case of clauses (y) and (z), any such conflicts, violations,
breaches, defaults, rights of termination, cancelation or acceleration,
losses or Liens that individually or in the aggregate have not had and
would not reasonably be expected to (x) have a Material Adverse Effect,
(y) impair in any material respect the
11
ability of the Company to perform its obligations under this Agreement or
(z) prevent or materially impede, interfere with, hinder or delay the
consummation of the transactions contemplated by this Agreement. No
consent, approval, order or authorization of, action by or in respect of,
or registration, declaration or filing with, any Federal, state, local or
foreign government, any court, administrative, regulatory or other
governmental agency, commission or authority or any organized securities
exchange (each, a "Governmental Entity") is required by or with respect
to the Company or any of its Subsidiaries in connection with the
execution and delivery of this Agreement by the Company or the
consummation of the Merger or the other transactions contemplated by this
Agreement, except for (1) (A) the filing of a premerger notification and
report form by the Company under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and the rules and regulations
thereunder (the "HSR Act") and the termination of the waiting period
required thereunder, (B) all required notifications and filings by the
Company under Article 4 of Council Regulation 139/2004 of the European
Community, as amended (the "EC Merger Regulation"), and the receipt of a
decision under Article 6(1)(b), 8(1) or 8(2) thereunder declaring the
Merger compatible with the EC Common Market and (C) the receipt,
termination or expiration, as applicable, of approvals or waiting periods
required under any other applicable competition, merger control,
antitrust or similar Law, (2) the filing with the Securities and Exchange
Commission (the "SEC") of (X) a proxy statement relating to the adoption
by the shareholders of the Company of this Agreement (as amended or
supplemented from time to time, the "Proxy Statement") and (Y) such
reports under the Securities Exchange Act of 1934, as amended (including
the rules and regulations promulgated thereunder, the "Exchange Act"), as
may be required in connection with this Agreement and the transactions
contemplated by this Agreement, (3) the filing of the Articles of Merger
with the Secretary of State of the State of Indiana and appropriate
documents with the relevant authorities of other states in which the
Company or any of its Subsidiaries is qualified to do business, (4) any
filings with and approvals of the NYSE and (5) such other consents,
approvals, orders, authorizations, actions, registrations, declarations
and filings the failure of which to be obtained or made individually or
in the aggregate has not had and would not reasonably be expected to (x)
have a Material Adverse Effect, (y) impair in any material respect the
ability of the Company to perform its obligations under this Agreement or
(z) prevent or materially impede, interfere with, hinder or delay the
consummation of the transactions contemplated by this Agreement.
(e) COMPANY SEC DOCUMENTS. (i) The Company has filed all reports,
schedules, forms, statements and other documents (including exhibits and
other information incorporated therein) with the SEC required to be filed
by the Company since January 1, 2003 (such documents, together with any
documents filed during such period by the Company with the SEC on a
voluntary basis on Current Reports on Form 8-K, the "Company SEC
Documents"). As of their respective filing dates, the Company SEC
Documents complied in all material respects with, to the extent in effect
at the time of filing, the requirements of the Securities Act of 1933, as
amended (including the rules and regulations promulgated thereunder, the
"Securities Act"), the Exchange Act and the Xxxxxxxx-Xxxxx Act of 2002
(including the rules and regulations promulgated thereunder, "SOX")
applicable to such Company SEC Documents, and none of the Company SEC
Documents contained any untrue statement of a material fact or
12
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Except to the
extent that information contained in any Company SEC Document has been
revised, amended, supplemented or superseded by a later-filed Company SEC
Document, none of the Company SEC Documents contains any untrue statement
of a material fact or omits to state any material fact required to be
stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading,
which individually or in the aggregate would require an amendment,
supplement or corrective filing to such Company SEC Documents. Each of
the financial statements (including the related notes) of the Company
included in the Company SEC Documents complied at the time it was filed
as to form in all material respects with the applicable accounting
requirements and the published rules and regulations of the SEC with
respect thereto in effect at the time of filing, had been prepared in
accordance with generally accepted accounting principles in the United
States ("GAAP") (except, in the case of unaudited statements, as
permitted by the rules and regulations of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated
in the notes thereto) and fairly presented in all material respects the
consolidated financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and the consolidated results of
their operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end audit adjustments).
Neither the Company nor any of its Subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or
otherwise) which individually or in the aggregate have had or would
reasonably be expected to have a Material Adverse Effect. None of the
Subsidiaries of the Company are, or have at any time since January 1,
2003 been, subject to the reporting requirements of Section 13(a) or
15(d) of the Exchange Act.
(ii) Each of the principal executive officer of the Company and the
principal financial officer of the Company (or each former principal
executive officer of the Company and each former principal financial
officer of the Company, as applicable) has made all certifications
required by Rule 13a-14 or 15d-14 under the Exchange Act and Sections 302
and 906 of SOX with respect to the Company SEC Documents, and the
statements contained in such certifications are true and accurate. For
purposes of this Agreement, "principal executive officer" and "principal
financial officer" shall have the meanings given to such terms in SOX.
Neither the Company nor any of its Subsidiaries has outstanding, or has
arranged any outstanding, "extensions of credit" to directors or
executive officers within the meaning of Section 402 of SOX.
(iii) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (A) transactions are
executed in accordance with management's general or specific
authorizations; (B) access to assets is permitted only in accordance with
management's general or specific authorization; and (C) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(iv) The Company's "disclosure controls and procedures" (as defined
in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) are reasonably
designed to ensure
13
that all information (both financial and non-financial) required to be
disclosed by the Company in the reports that it files or submits under
the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the rules and forms of the SEC, and that
all such information is accumulated and communicated to the Company's
management as appropriate to allow timely decisions regarding required
disclosure and to make the certifications of the chief executive officer
and chief financial officer of the Company required under the Exchange
Act with respect to such reports.
(f) INFORMATION SUPPLIED. None of the information supplied or to be
supplied by or on behalf of the Company specifically for inclusion or
incorporation by reference in (i) the registration statement on Form S-4
to be filed with the SEC by Parent in connection with the issuance of
shares of Parent Common Stock in the Merger (as amended or supplemented
from time to time, the "Form S-4") will, at the time the Form S-4 is
filed with the SEC and at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they are made, not misleading or (ii) the Proxy Statement will, at the
date it is first mailed to the shareholders of the Company and at the
time of the Shareholders' Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading, except that
no representation or warranty is made by the Company with respect to
statements made or incorporated by reference therein based on information
supplied by or on behalf of Parent or Sub specifically for inclusion or
incorporation by reference in the Form S-4 or the Proxy Statement. The
Proxy Statement will comply as to form in all material respects with the
requirements of the Exchange Act.
(g) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except for liabilities
incurred in connection with this Agreement or as expressly permitted
pursuant to Section 4.01(a)(i) through (xvi), since the date of the most
recent financial statements included in the Filed Company SEC Documents,
the Company and its Subsidiaries have conducted their respective
businesses only in the ordinary course consistent with past practice, and
there has not been any Material Adverse Change, and from such date until
the date hereof there has not been (i) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to any capital stock of the Company or any of its
Subsidiaries, other than (x) cash dividends payable by the Company in
respect of shares of Company Common Stock consistent with past practice
and not exceeding $0.10 per share of Company Common Stock per fiscal
quarter or (y) dividends or distributions by a direct or indirect wholly
owned Subsidiary of the Company to its shareholders, (ii) any purchase,
redemption or other acquisition by the Company or any of its Subsidiaries
of any shares of capital stock or any other securities of the Company or
any of its Subsidiaries or any options, warrants, calls or rights to
acquire such shares or other securities, other than in connection with
net share withholding in connection with the vesting of Company
Restricted Stock, (iii) any split, combination or reclassification of any
capital stock of the Company or any of its Subsidiaries or any issuance
or the authorization of any issuance of any other securities in respect
of, in lieu of or in substitution for shares of their respective capital
stock,
14
(iv) (A) any granting by the Company or any of its Subsidiaries to any
current or former (1) director of the Company or any of its Subsidiaries
or (2) employee of the Company or any of its Subsidiaries who is treated
as a Tier I Employee (a "Tier I Employee") or Tier II Employee (a "Tier
II Employee") for purposes of the Company's Change in Control Severance
Pay Plan for Select Employees (all individuals described in the foregoing
clauses (1) and (2) of this clause (A), collectively, the "Key
Personnel") of any increase in compensation, bonus or fringe or other
benefits, except for normal increases in cash compensation (including
cash bonuses) in the ordinary course of business consistent with past
practice or as was required under any Company Benefit Agreement or
Company Benefit Plan, (B) any granting by the Company or any of its
Subsidiaries to any Key Personnel of (1) any increase in severance or
termination pay or (2) any right to receive any severance or termination
pay except for severance or termination pay received in the ordinary
course of business consistent with past practice or as was required under
any Company Benefit Agreement or Company Benefit Plan, (C) any entry by
the Company or any of its Subsidiaries into, or any amendments of, (1)
any employment, deferred compensation, consulting, severance, change of
control, termination or indemnification Contract with any Key Personnel
or (2) any Contract with any Key Personnel the benefits of which are
contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving the Company of a nature
contemplated by this Agreement (all such Contracts under this clause (C),
collectively, "Company Benefit Agreements"), (D) the removal or
modification of any restrictions in any Company Benefit Agreement or
Company Benefit Plan or awards made thereunder, except as required to
comply with applicable Law or any Company Benefit Agreement or Company
Benefit Plan in effect as of the date hereof or (E) the adoption,
amendment or termination of any Company Benefit Plan, other than, in the
cases of clauses (A), (B), (C) and (D), such increases, amendments, new
agreements, removals, modifications or terminations with respect to Tier
II Employees that (1) do not provide for any increase in compensation or
benefits for any individual Tier II Employee that is material in relation
to such Tier II Employee's compensation or benefits prior to such
increase and (2) in the aggregate do not result in any material increase
in compensation, benefits or other similar expenses of the Company and
its Subsidiaries, (v) any damage, destruction or loss, whether or not
covered by insurance, that individually or in the aggregate has had or
would reasonably be expected to have a Material Adverse Effect, (vi) any
change in accounting methods, principles or practices by the Company
materially affecting its assets, liabilities or businesses, except
insofar as may have been required by a change in GAAP or (vii) any
material tax election or any settlement or compromise of any material
income tax liability.
(h) LITIGATION. Except with respect to taxes, which are the subject
of Section 3.01(n), there is no suit, action or proceeding pending or, to
the Knowledge of the Company, threatened against or affecting the Company
or any of its Subsidiaries or any of their respective assets that
individually or in the aggregate has had or would reasonably be expected
to have a Material Adverse Effect, nor is there any demand, letter or
Order of any Governmental Entity or arbitrator outstanding against, or,
to the Knowledge of the Company, investigation by any Governmental Entity
involving, the Company or any of its Subsidiaries or any of their
respective assets that individually or in
15
the aggregate has had or would reasonably be expected to have a Material
Adverse Effect.
(i) CONTRACTS. (1) As of the date hereof, neither the Company nor
any of its Subsidiaries is a party to, and none of their respective
properties or other assets is subject to, any Contract that is a
"material contract" (as such term is defined in Item 601(b)(10) of
Regulation S-K of the SEC) (a "Material Contract"). None of the Company,
any of its Subsidiaries or, to the Knowledge of the Company, any other
party thereto is in violation of or in default under (nor does there
exist any condition which upon the passage of time or the giving of
notice or both would cause such a violation of or default by the Company
or any of its Subsidiaries or, to the Knowledge of the Company, any other
party thereto under) any Contract to which it is a party or by which it
or any of its properties or other assets is bound, except for violations
or defaults that individually or in the aggregate have not had and would
not reasonably be expected to have a Material Adverse Effect. Neither the
Company nor any of its Subsidiaries has entered into any Contract that is
currently in effect that is required to be disclosed pursuant to Item 404
of Regulation S-K of the SEC.
(2) Section 3.01(i)(2) of the Company Disclosure Schedule contains a
complete and accurate list, as of the date hereof, of (A) each material
Contract restricting or purporting to restrict any of the Company's
Affiliates' ability to compete (other than each such Contract that only
restricts the Company's Subsidiaries' ability to compete) in any line of
business, geographic area or customer segment, (B) each material Contract
restricting the Company's or any of its Subsidiaries' ability to compete
in any line of business, geographic area or customer segment and (C) each
material Contract relating to distribution, sale, supply, licensing,
co-promotion or manufacturing of any products or services of the Company
or any of its Subsidiaries or any products licensed by the Company or any
of its Subsidiaries.
(j) COMPLIANCE WITH LAWS; ENVIRONMENTAL MATTERS. (i) Except with
respect to Environmental Laws, the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), taxes and regulatory compliance, which
are the subjects of Sections 3.01(j)(ii), 3.01(l), 3.01(n) and 3.01(u),
respectively, each of the Company and its Subsidiaries is in compliance
with all Laws and Orders (collectively, "Legal Provisions") applicable to
it, its properties or other assets or its business or operations, except
for failures to be in compliance that individually or in the aggregate
have not had and would not reasonably be expected to have a Material
Adverse Effect. Each of the Company and its Subsidiaries has in effect
all approvals, authorizations, certificates, filings, franchises,
licenses, notices and permits of or with all Governmental Entities
(collectively, "Permits"), including all Permits under the Federal Food,
Drug and Cosmetic Act of 1938, as amended (including the rules and
regulations promulgated thereunder, the "FDCA"), necessary for it to own,
lease or operate its properties and other assets and to carry on its
business and operations as currently conducted, except where the failure
to have such Permits individually or in the aggregate has not had and
would not reasonably be expected to have a Material Adverse Effect. Since
January 1, 2000, there has occurred no default under, or violation of,
any such Permit, except for any such default or violation that
individually or in the aggregate has not had and would not
16
reasonably be expected to have a Material Adverse Effect. The
consummation of the Merger, in and of itself, would not cause the
revocation or cancelation of any such Permit that individually or in the
aggregate would reasonably be expected to have a Material Adverse Effect.
(ii) Except for those matters that individually or in the aggregate
have not had and would not reasonably be expected to have a Material
Adverse Effect: (A) during the period of ownership or operation by the
Company or any of its Subsidiaries of any of its currently or formerly
owned, leased or operated properties, there have been no Releases of
Hazardous Materials in, on, under or affecting any properties which would
subject the Company or any of its Subsidiaries to any liability under any
Environmental Law or require any expenditure by the Company or any of its
Subsidiaries for remediation to meet applicable standards thereunder; (B)
prior to and after, as applicable, the period of ownership or operation
by the Company or any of its Subsidiaries of any of its currently or
formerly owned, leased or operated properties, to the Knowledge of the
Company, there were no Releases of Hazardous Materials in, on, under or
affecting any properties which would subject the Company or any of its
Subsidiaries to any liability under any Environmental Law or require any
expenditure by the Company or any of its Subsidiaries for remediation to
meet applicable standards thereunder; (C) neither the Company nor any of
its Subsidiaries is subject to any indemnity obligation or other Contract
with any person relating to obligations or liabilities under
Environmental Laws; and (D) to the Knowledge of the Company, there are no
facts, circumstances or conditions that would reasonably be expected to
form the basis for any investigation, suit, claim, action, proceeding or
liability against or affecting the Company or any of its Subsidiaries
relating to or arising under Environmental Laws. The term "Environmental
Laws" means all applicable Federal, state, local and foreign Laws
(including the common law), Orders, notices, Permits or binding Contracts
issued, promulgated or entered into by any Governmental Entity, relating
in any way to the environment, preservation or reclamation of natural
resources or the presence, management, Release of, or exposure to,
Hazardous Materials, or to human health and safety. The term "Hazardous
Materials" means (1) petroleum products and by-products, asbestos and
asbestos-containing materials, urea formaldehyde foam insulation, medical
or infectious wastes, polychlorinated biphenyls, radon gas, radioactive
substances, chlorofluorocarbons and all other ozone-depleting substances
and (2) any other chemical, material, substance, waste, pollutant or
contaminant that is prohibited, limited or regulated by or pursuant to
any Environmental Law. The term "Release" means any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping, disposing or migrating into or through the environment
or any natural or man-made structure.
(k) LABOR RELATIONS. From the date of the most recent financial
statements included in the Filed Company SEC Documents through the date
hereof, there has not been any adoption, material amendment or
termination by the Company or any of its Subsidiaries of any collective
bargaining or other labor union Contract to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound. There are no collective bargaining or other labor
union Contracts to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries is bound. As of
the date of this Agreement, none of the employees
17
of the Company or any of its Subsidiaries are represented by any union
with respect to their employment by the Company or such Subsidiary. Since
January 1, 2003, neither the Company nor any of its Subsidiaries has
experienced any material labor disputes, union organization attempts or
work stoppages, slowdowns or lockouts due to labor disagreements.
(l) ERISA COMPLIANCE. (i) Section 3.01(l)(i) of the Company
Disclosure Schedule contains a complete and accurate list of each
employment, bonus, pension, profit sharing, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock
appreciation, restricted stock, stock option, "phantom" stock,
performance, retirement, thrift, savings, stock bonus, paid time off,
perquisite, fringe benefit, vacation, severance, disability, death
benefit, hospitalization, medical, welfare benefit or other plan,
program, policy or Contract maintained, contributed to or required to be
maintained or contributed to by the Company or any of its Subsidiaries or
any other person or entity that, together with the Company, is treated as
a single employer under Section 414(b), (c), (m) or (o) of the Code
(each, a "Commonly Controlled Entity") (exclusive of any such plan,
program, policy or Contract mandated by and maintained solely pursuant to
applicable law), in each case providing benefits to any current or former
director, officer or employee of the Company or any of its Subsidiaries
(collectively, but exclusive of individual option and restricted award
agreements issued under the Company Stock Plans, the "Company Benefit
Plans") and each Company Benefit Agreement (exclusive of local offer
letters mandated under applicable non-U.S. law that do not impose any
severance obligations other than any mandatory statutory severance). Each
Company Benefit Plan that is an "employee pension benefit plan" (as
defined in Section 3(2) of ERISA) is sometimes referred to herein as a
"Company Pension Plan" and each Company Benefit Plan that is an "employee
welfare benefit plan" (as defined in Section 3(1) of ERISA) is sometimes
referred to herein as a "Company Welfare Plan".
(ii) The Company has provided to Parent complete and accurate copies
of (A) each Company Benefit Plan or, at the Company's option, in the case
of Company Benefit Plans maintained primarily for the benefit of
individuals regularly employed outside the United States, a summary
thereof (or, in either case, with respect to any unwritten Company
Benefit Plans, descriptions thereof) and Company Benefit Agreements
(exclusive of local offer letters mandated under applicable non-U.S. law
that do not impose any severance obligations other than any mandatory
statutory severance), (B) the two most recent annual reports on Form 5500
required to be filed with the Internal Revenue Service (the "IRS") with
respect to each Company Benefit Plan (if any such report was required),
(C) the most recent summary plan description for each Company Benefit
Plan for which such summary plan description is required and (D) each
trust Contract and insurance or group annuity Contract relating to any
Company Benefit Plan.
(iii) Each Company Benefit Plan has been administered in all
material respects in accordance with its terms. The Company, its
Subsidiaries and all the Company Benefit Plans are all in compliance in
all material respects with the applicable provisions of
18
ERISA, the Code and all other applicable Laws, including Laws of foreign
jurisdictions, and the terms of all collective bargaining Contracts.
(iv) All Company Pension Plans intended to be tax-qualified have
received favorable determination letters from the IRS with respect to
"TRA" (as defined in Section 1 of IRS Rev. Proc. 93-39), and have timely
filed with the IRS determination letter applications (or have received
such a determination letter) with respect to "GUST" (as defined in
Section 1 of IRS Notice 2001-42), to the effect that such Company Pension
Plans are qualified and exempt from Federal income taxes under Sections
401(a) and 501(a), respectively, of the Code, no such determination
letter has been revoked (nor, to the Knowledge of the Company, has
revocation been threatened) and to the Knowledge of the Company, no event
has occurred since the date of the most recent determination letter or
application therefor relating to any such Company Pension Plan that would
reasonably be expected to adversely affect the qualification of such
Company Pension Plan or materially increase the costs relating thereto or
require security under Section 307 of ERISA. The Company has provided to
Parent a complete and accurate copy of the most recent determination
letter received prior to the date hereof with respect to each Company
Pension Plan, as well as a complete and accurate copy of each pending
application for a determination letter, if any. The Company has also
provided to Parent a complete and accurate list of all amendments to any
Company Pension Plan as to which a favorable determination letter has not
yet been received.
(v) Neither the Company nor any Commonly Controlled Entity has,
during the six-year period ending on the date hereof, maintained,
contributed to or been required to contribute to any Company Pension Plan
that is subject to Title IV of ERISA or Section 412 of the Code, or any
"multiemployer plan" as defined in Section 3(37) or 4001(a)(3) of ERISA.
Except as has not had and would not reasonably be expected to have a
Material Adverse Effect, neither the Company nor any Commonly Controlled
Entity has any unsatisfied liability under Title IV of ERISA. To the
Knowledge of the Company, no condition exists that presents a material
risk to the Company or any Commonly Controlled Entity of incurring a
material liability under Title IV of ERISA. The Pension Benefit Guaranty
Corporation has not instituted proceedings under Section 4042 of ERISA to
terminate any Company Benefit Plan and, to the Knowledge of the Company,
no condition exists that presents a material risk that such proceedings
will be instituted.
(vi) Except as has not had and would not reasonably be expected to
have a Material Adverse Effect, (A) all reports, returns and similar
documents with respect to all Company Benefit Plans required to be filed
with any Governmental Entity or distributed to any Company Benefit Plan
participant have been duly and timely filed or distributed, (B) none of
the Company or any of its Subsidiaries has received notice of, and to the
Knowledge of the Company, there are no investigations by any Governmental
Entity with respect to, termination proceedings or other claims (except
claims for benefits payable in the normal operation of the Company
Benefit Plans), suits or proceedings against or involving any Company
Benefit Plan or asserting any rights or claims to benefits under any
Company Benefit Plan that could reasonably be expected to give rise to
any material
19
liability and (C) to the Knowledge of the Company, there are not any
facts that could give rise to any liability in the event of any such
investigation, claim, suit or proceeding.
(vii) Except as has not had and would not reasonably be expected to
have a Material Adverse Effect, (A) all contributions, premiums and
benefit payments under or in connection with the Company Benefit Plans
that are required to have been made as of the date hereof in accordance
with the terms of the Company Benefit Plans have been timely made or have
been reflected on the most recent consolidated balance sheet filed or
incorporated by reference into the Filed Company SEC Documents and (B) no
Company Pension Plan has an "accumulated funding deficiency" (as such
term is defined in Section 302 of ERISA or Section 412 of the Code),
whether or not waived.
(viii) With respect to each Company Benefit Plan, except as has not
had and would not reasonably be expected to have a Material Adverse
Effect, (A) there has not occurred any prohibited transaction (within the
meaning of Section 406 of ERISA or Section 4975 of the Code) in which the
Company or any of its Subsidiaries or any of their respective employees,
or, to the Knowledge of the Company, any trustee, administrator or other
fiduciary of such Company Benefit Plan, or any agent of the foregoing,
has engaged that could reasonably be expected to subject the Company or
any of its Subsidiaries or any of their respective employees, or any such
trustee, administrator or other fiduciary, to the tax or penalty on
prohibited transactions imposed by Section 4975 of the Code or the
sanctions imposed under Title I of ERISA and (B) neither the Company, any
of its Subsidiaries or any of their respective employees nor, to the
Knowledge of the Company, any trustee, administrator or other fiduciary
of any Company Benefit Plan nor any agent of any of the foregoing, has
engaged in any transaction or acted in a manner, or failed to act in a
manner, that could reasonably be expected to subject the Company or any
of its Subsidiaries or any of their respective employees or, to the
Knowledge of the Company, any such trustee, administrator or other
fiduciary, to any liability for breach of fiduciary duty under ERISA or
any other applicable Law.
(ix) Each Company Welfare Plan may be amended or terminated
(including with respect to benefits provided to retirees and other former
employees) without material liability to the Company or any of its
Subsidiaries at any time after the Effective Time. Each of the Company
and its Subsidiaries complies in all material respects with the
applicable requirements of Section 4980B(f) of the Code, Sections 601-
609 of ERISA or any similar state or local Law with respect to each
Company Benefit Plan that is a group health plan, as such term is defined
in Section 5000(b)(1) of the Code or such state Law. Neither the Company
nor any of its Subsidiaries has any material obligations for health or
life insurance benefits following termination of employment under any
Company Benefit Plan (other than for continuation coverage required under
Section 4980(B)(f) of the Code).
(x) None of the execution and delivery of this Agreement, the
obtaining of the Shareholder Approval or the consummation of the Merger
or any other transaction contemplated by this Agreement (alone or in
conjunction with any other event, including as a result of any
termination of employment on or following the Effective Time) will (A)
entitle any current or former director, officer, employee or consultant
of the
20
Company or any of its Subsidiaries to severance or termination pay, (B)
accelerate the time of payment or vesting, or trigger any payment or
funding (through a grantor trust or otherwise) of, compensation or
benefits under, increase the amount payable or trigger any other material
obligation pursuant to, any Company Benefit Plan or Company Benefit
Agreement or (C) result in any breach or violation of, or a default
under, any Company Benefit Plan or Company Benefit Agreement.
(xi) Neither the Company nor any of its Subsidiaries has any
material liability or obligations, including under or on account of a
Company Benefit Plan, arising out of the hiring of persons to provide
services to the Company or any of its Subsidiaries and treating such
persons as consultants or independent contractors and not as employees of
the Company or any of its Subsidiaries. No current or former independent
contractor that provides or provided personal services to the Company or
its Subsidiaries (other than a current or former director) is entitled to
any material fringe or other benefits (other than cash consulting fees)
pursuant to any plan, program, policy or Contract to which the Company or
any of its Subsidiaries is a party or which is maintained, sponsored or
contributed to by the Company or any of its Subsidiaries.
(xii) No material deduction by the Company or any of its
Subsidiaries in respect of any "applicable employee remuneration" (within
the meaning of Section 162(m) of the Code) has been disallowed or is
subject to disallowance by reason of Section 162(m) of the Code. For each
of the Key Personnel, the Company has previously provided to Parent (A)
accurate Form W-2 information for the 1999, 2000, 2001, 2002 and 2003
calendar years, (B) annual base salary as of the date hereof, actual
bonus earned for the 2003 calendar year and target annual bonus for the
2004 calendar year and (C) a list, as of the date hereof, of all
outstanding Company Stock Options, Company Restricted Stock and Company
Stock-Based Awards granted under the Company Stock Plans or otherwise
(other than rights under the ESPP), together with (as applicable) the
number of shares of Company Common Stock subject thereto, and the grant
dates, expiration dates, exercise or base prices and vesting schedules
thereof, (D) estimated current annual cost of welfare benefits and (E)
estimated cost of the pension benefit enhancement under Section 8 of the
Company's Change in Control Severance Plan for Select Employees.
(m) NO PARACHUTE GROSS UP. Except as provided in accordance with the
Company's Change in Control Severance Pay Plan for Select Employees, no
current or former employee or director of the Company or any of its
Subsidiaries is entitled to receive any additional payment from the
Company or any of its Subsidiaries or the Surviving Corporation by reason
of the excise tax required by Section 4999(a) of the Code being imposed
on such person by reason of the transactions contemplated by this
Agreement.
(n) TAXES. Except as has not had and would not reasonably be
expected to have a Material Adverse Effect:
(i) All tax returns required by applicable Law to have been filed
with any taxing authority by, or on behalf of, the Company or any of its
Subsidiaries have been
21
filed in a timely manner (taking into account any valid extension) in
accordance with all applicable Laws, and all such tax returns are true
and complete in all material respects.
(ii) The Company and each of its Subsidiaries has paid (or has had
paid on its behalf) all taxes due and owing, and the Company's most
recent financial statements included in the Filed Company SEC Documents
reflect an adequate accrual for all taxes payable by Company and its
Subsidiaries for all taxable periods and portions thereof accrued through
the date of such financial statements.
(iii) There are no Liens or encumbrances for taxes on any of the
assets of the Company or any of its Subsidiaries other than for taxes not
yet due and payable.
(iv) The Company and its Subsidiaries have complied with all
applicable Laws relating to the payment and withholding of taxes.
(v) No written notification has been received by the Company or any
of its Subsidiaries that any federal, state, local or foreign audit,
examination or similar proceeding is pending, proposed or asserted with
regard to any taxes or tax returns of the Company or its Subsidiaries.
(vi) There is no currently effective Contract extending, or having
the effect of extending, the period of assessment or collection of any
federal, state and, to the Knowledge of the Company, foreign taxes with
respect to the Company or any of its Subsidiaries nor has any request
been made for any such extension.
(vii) No written notice of a claim of pending investigation has been
received from any state, local or other jurisdiction with which the
Company or any of its Subsidiaries currently does not file tax returns,
alleging that the Company or any of its Subsidiaries has a duty to file
tax returns and pay taxes or is otherwise subject to the taxing authority
of such jurisdiction.
(viii) Neither the Company nor any of its Subsidiaries joins or has
joined, for any taxable period during the eight years prior to the date
of this Agreement, in the filing of any affiliated, aggregate,
consolidated, combined or unitary federal, state, local and, to the
Knowledge of the Company, foreign tax return other than consolidated tax
returns for the consolidated group of which the Company is the common
parent.
(ix) Neither the Company nor any of its Subsidiaries is a party to
or bound by any tax sharing agreement or tax indemnity agreement,
arrangement or practice (including any advance pricing agreement, closing
agreement or other agreement relating to taxes with any taxing
authority).
(x) Neither the Company nor any of its Subsidiaries has constituted
either a "distributing corporation" or a "controlled corporation" in a
distribution of stock qualifying for tax-free treatment under Section 355
of the Code in the two years prior to the date of this Agreement.
22
(xi) Neither the Company nor any of its Subsidiaries will be
required to include in a taxable period ending after the Effective Time
taxable income attributable to income that accrued in a prior taxable
period (or portion of a taxable period) but was not recognized for tax
purposes in any prior taxable period as a result of (A) an open
transaction disposition made on or before the Effective Time, (B) a
prepaid amount received on or prior to the Effective Time, (C) the
installment method of accounting, (D) the long-term contract method of
accounting, (E) the cash method of accounting or Section 481 of the Code
or (F) any comparable provisions of state or local tax Law, domestic or
foreign, or for any other reason, other than any amounts that are
specifically reflected in a reserve for taxes on the most recent
financial statements of the Company included in the Filed Company SEC
Documents.
(xii) Neither the Company nor any of its Subsidiaries has entered
into a "listed transaction" within the meaning of Treasury Regulation
{section} 1.6011-4(b)(2)
(xiii) As used in this Agreement (A) "tax" means (i) any tax, duty,
governmental fee or other like assessment or charge of any kind
whatsoever (including withholding on amounts paid to or by any person and
liabilities with respect to unclaimed funds), together with any related
interest, penalty, addition to tax or additional amount, and any
liability for any of the foregoing as transferee, (ii) in the case of the
Company or any of its Subsidiaries, liability for the payment of any
amount of the type described in clause (i) as a result of being or having
been before the Effective Time a member of an affiliated, consolidated,
combined or unitary group, or a party to any Contract as a result of
which liability of the Company or any of its Subsidiaries is determined
or taken into account with reference to the activities of any other
person and (iii) in the case of the Company or any of its Subsidiaries,
liability of the Company or any of its Subsidiaries for the payment of
any amount as a result of being party to any tax sharing Contract or with
respect to the payment of any amount imposed on any person of the type
described in (i) or (ii) as a result of any existing Contract (including
an indemnification Contract); (B) "taxing authority" means any Federal,
state, local or foreign government, any subdivision, agency, commission
or authority thereof, or any quasi-governmental body exercising tax
regulatory authority; and (C) "tax return" means any report, return,
document, declaration or other information or filing required to be filed
with respect to taxes (whether or not a payment is required to be made
with respect to such filing), including information returns, any
documents with respect to or accompanying payments of estimated taxes, or
with respect to or accompanying requests for the extension of time in
which to file any such report, return, document, declaration or other
information.
(o) TITLE TO PROPERTIES. Each of the Company and its Subsidiaries
has valid title to, or valid leasehold or sublease interests or other
comparable contract rights in or relating to all of its real properties
and other tangible assets necessary for the conduct of its business as
currently conducted, except as have been disposed of in the ordinary
course of business and except for defects in title, easements,
restrictive covenants and similar encumbrances that individually or in
the aggregate have not had and would not reasonably be expected to have a
Material Adverse Effect. Each of the Company and its Subsidiaries has
complied with the terms of all leases or subleases to which it is a party
and under which it is in occupancy, and all leases to which the Company
is a party and
23
under which it is in occupancy are in full force and effect, except for
such failure to comply or be in full force and effect that individually
or in the aggregate has not had and would not reasonably be expected to
have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries has received any written notice of any event or occurrence
that has resulted or could result (with or without the giving of notice,
the lapse of time or both) in a default with respect to any lease or
sublease to which it is a party, which defaults individually or in the
aggregate have had or would reasonably be expected to have a Material
Adverse Effect.
(p) INTELLECTUAL PROPERTY. (i) Section 3.01(p)(i) of the Company
Disclosure Schedule sets forth, as of the date hereof, a complete and
accurate list (in all material respects) of all patents and applications
therefor, registered trademarks and applications therefor, domain name
registrations and copyright registrations (if any) that, in each case,
are owned by or licensed to the Company or any of its Subsidiaries and
are material to the conduct of the business of the Company and its
Subsidiaries, taken as a whole, as currently conducted. Such intellectual
property rights required to be listed in Section 3.01(p)(i) of the
Company Disclosure Schedule, together with any tradename rights, trade
secret or know how rights, service mark rights, trademark rights, patent
rights, intellectual property rights in computer programs or software or
other type of intellectual property rights, in each case, that are owned
or licensed by the Company or any of its Subsidiaries and are material to
the conduct of the business of the Company and its Subsidiaries, taken as
a whole, as currently conducted, are collectively referred to herein as
"Intellectual Property Rights". All Intellectual Property Rights are
either (x) owned by the Company or a Subsidiary of the Company free and
clear of all Liens or (y) licensed to the Company or a Subsidiary of the
Company free and clear (to the Knowledge of the Company) of all Liens,
except where the failure to so own or license such Intellectual Property
Rights individually or in the aggregate has not had and would not
reasonably be expected to have a Material Adverse Effect. There are no
claims pending or, to the Knowledge of the Company, threatened with
regard to the ownership or, to the Knowledge of the Company, licensing by
the Company or any of its Subsidiaries of any Intellectual Property
Rights which individually or in the aggregate has had or would reasonably
be expected to have a Material Adverse Effect. Each of the Company and
its Subsidiaries owns, is validly licensed or otherwise has the right to
use all Intellectual Property Rights, except where the failure to own,
have a valid license or otherwise have rights to use individually or in
the aggregate has not had and would not reasonably be expected to have a
Material Adverse Effect. The execution and delivery of this Agreement by
the Company do not, and the consummation by the Company of the Merger and
the other transactions contemplated by this Agreement and compliance by
the Company with the provisions of this Agreement will not, conflict
with, or result in any violation or breach of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right
of, or result in, termination, cancelation or acceleration of any
obligation or to the loss of a benefit under, or result in the creation
of any Lien in or upon, any Intellectual Property Right, in each case
that individually or in the aggregate has had or would reasonably be
expected to have a Material Adverse Effect. Section 3.01(p)(i) of the
Company Disclosure Schedule sets forth, as of the date hereof, all
Contracts under which the Company or any of its Subsidiaries is obligated
to make payments to third parties for use of any Intellectual Property
Rights with respect to the
24
commercialization of any products that are, as of the date hereof, being
sold, manufactured by or under development by the Company or any of its
Subsidiaries and for which such payments are in excess of $2,000,000 per
year for any single product. The aggregate amount of all such payments
that the Company and its Subsidiaries are obligated to make under any
Contract of the type described in the immediately preceding sentence that
are not required to be disclosed pursuant to such sentence does not
exceed $10,000,000 per year.
(ii) There are no pending or, to the Knowledge of the Company,
threatened claims that the Company or any of its Subsidiaries has
infringed or is infringing (including with respect to the manufacture,
use or sale by the Company or any of its Subsidiaries of any products or
to the operations of the Company and its Subsidiaries) any intellectual
property rights of any person which individually or in the aggregate has
had or would reasonably be expected to have a Material Adverse Effect. To
the Knowledge of the Company, as of the date of this Agreement, there are
no facts, circumstances or conditions that would reasonably be expected
to form the basis for any claim by a person to exclude or prevent the
Company or any of its Subsidiaries from freely using its Intellectual
Property Rights and that individually or in the aggregate would
reasonably be expected to have a Material Adverse Effect.
(iii) All patents required to be listed in Section 3.01(p)(i) of the
Company Disclosure Schedule that are owned by the Company or any of its
Subsidiaries have been duly registered and/or filed with or issued by
each appropriate Governmental Entity, all necessary affidavits of
continuing use have been timely filed, and all necessary maintenance fees
have been timely paid to continue all such rights in effect, other than
failures to be duly registered, filed, issued or paid which individually
or in the aggregate have not had and would not reasonably be expected to
have a Material Adverse Effect. None of the patents required to be listed
in Section 3.01(p)(i) of the Company Disclosure Schedule that are owned
by the Company or any of its Subsidiaries has expired or been declared
invalid, in whole or in part, by any Governmental Entity, other than such
expirations or declarations of invalidity which individually or in the
aggregate have not had and would not reasonably be expected to have a
Material Adverse Effect. There are no ongoing interferences, oppositions,
reissues, reexaminations or other proceedings challenging any of the
patents or patent applications required to be listed in Section
3.01(p)(i) of the Company Disclosure Schedule and owned by the Company or
any of its Subsidiaries (or, to the Company's Knowledge, challenging any
such patents or patent applications licensed to the Company or any of its
Subsidiaries), including ex parte and post-grant proceedings, in the
United States Patent and Trademark Office or in any foreign patent office
or similar administrative agency, other than such interferences,
oppositions, reissues, reexaminations or proceedings that individually or
in the aggregate have not had and would not reasonably be expected to
have a Material Adverse Effect.
(iv) Except as has not had and would not reasonably be expected to
have a Material Adverse Effect, the Company and its Subsidiaries have
used commercially reasonable efforts to maintain their material trade
secrets in confidence.
25
(q) VOTING REQUIREMENTS. The affirmative vote of holders of a
majority of the outstanding shares of Company Common Stock at the
Shareholders' Meeting or any adjournment or postponement thereof to
approve this Agreement (the "Shareholder Approval") is the only vote of
the holders of any class or series of capital stock of the Company
necessary to approve this Agreement and the transactions contemplated by
this Agreement.
(r) STATE TAKEOVER LAWS; COMPANY ARTICLES PROVISIONS. The Board of
Directors of the Company has unanimously adopted, by all directors
present, this Agreement, the terms of this Agreement and the consummation
of the Merger and the other transactions contemplated by this Agreement,
and such adoption represents all the actions necessary to render
inapplicable to this Agreement, the Merger and the other transactions
contemplated by this Agreement, the restrictions (i) on "business
combinations" (as defined in Section 23-1-43-5 of the IBCL) set forth in
Section 23-1-43-18 of the IBCL and (ii) on the actions or transactions
set forth in Paragraph 6 of the Company Articles ("Paragraph 6"), in each
case to the extent, if any, such restrictions would otherwise be
applicable to this Agreement, the Merger and the other transactions
contemplated by this Agreement. For purposes of Paragraph 6, the approval
of the Board of Directors of the Company referred to in the immediately
preceding sentence constitutes the approval of the Merger and the other
transactions contemplated by this Agreement by the "Continuing Directors"
(as defined in Paragraph 6) pursuant to clause (c) of Paragraph 6. No
other similar provision of the Company Articles or the Company By-laws
or, to the Knowledge of the Company, other state takeover Law or similar
Law applies or purports to apply to this Agreement, the Merger or the
other transactions contemplated by this Agreement.
(s) BROKERS AND OTHER ADVISORS. No broker, investment banker,
financial advisor or other person (other than X.X. Xxxxxx Securities Inc.
and Xxxxxx Xxxxxxx & Co. Incorporated), the fees and expenses of which
will be paid by the Company, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with
the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company. The Company has delivered to Parent
complete and accurate copies of all Contracts under which any such fees
or expenses are payable and all indemnification and other Contracts
related to the engagement of the persons to whom such fees are payable.
(t) OPINION OF FINANCIAL ADVISORS. The Company has received the
opinions of each of X.X. Xxxxxx Securities Inc. and Xxxxxx Xxxxxxx & Co.
Incorporated, in each case dated the date hereof, to the effect that, as
of such date, the Merger Consideration is fair, from a financial point of
view, to the holders of shares of Company Common Stock, a signed copy of
which opinion has been, or will promptly be, delivered to Parent.
(u) REGULATORY COMPLIANCE. (i) As to each product subject to the
FDCA or similar Legal Provisions in any foreign jurisdiction that are
developed, manufactured, tested, distributed and/or marketed by the
Company or any of its Subsidiaries (a "Medical Device"), each such
Medical Device is being developed, manufactured, tested, distributed
and/or marketed in compliance with all applicable requirements under the
FDCA and
26
similar Legal Provisions, including those relating to investigational
use, premarket clearance or marketing approval to market a Medical
Device, good manufacturing practices, labeling, advertising, record
keeping, filing of reports and security, and in compliance with the
Advanced Medical Technology Association Code of Ethics on Interactions
with Healthcare Professionals and the American Medical Association's
guidelines on gifts to physicians, except for failures in compliance that
individually or in the aggregate have not had and would not reasonably be
expected to have a Material Adverse Effect. Neither the Company nor any
of its Subsidiaries has received any notice or other communication from
the Federal Food and Drug Administration (the "FDA") or any other
Governmental Entity (A) contesting the premarket clearance or approval
of, the uses of or the labeling and promotion of any products of the
Company or any of its Subsidiaries or (B) otherwise alleging any
violation applicable to any Medical Device of any Legal Provision, in the
case of (A) and (B), that individually or in the aggregate have had or
would reasonably be expected to have a Material Adverse Effect.
(ii) No Medical Device is under consideration by senior management
of the Company or any of its Subsidiaries for, or has been recalled,
withdrawn, suspended, seized or discontinued (other than for commercial
or other business reasons) by, the Company or any of its Subsidiaries in
the United States or outside the United States (whether voluntarily or
otherwise), in each case since January 1, 2002. No proceedings in the
United States or outside of the United States of which the Company has
Knowledge (whether completed or pending) seeking the recall, withdrawal,
suspension, seizure or discontinuance of any Medical Device are pending
against the Company or any of its Subsidiaries or any licensee of any
Medical Device which individually or in the aggregate have had or would
reasonably be expected to have a Material Adverse Effect.
(iii) As to each Medical Device of the Company or any of its
Subsidiaries for which a premarket approval application, premarket
notification, investigational device exemption or similar state or
foreign regulatory application has been approved, the Company and its
Subsidiaries are in compliance with 21 U.S.C. {section}{section} 360 and
360e or 21 C.F.R. Parts 812 or 814, respectively, and all similar Legal
Provisions and all terms and conditions of such licenses or applications,
except for any such failure or failures to be in compliance which
individually or in the aggregate have not had and would not reasonably be
expected to have a Material Adverse Effect. In addition, the Company and
its Subsidiaries are in substantial compliance with all applicable
registration and listing requirements set forth in 21 U.S.C. {section}
360 and 21 C.F.R. Part 807 and all similar Legal Provisions, except for
any such failures to be in compliance which individually or in the
aggregate have not had and would not reasonably be expected to have a
Material Adverse Effect.
(iv) No article of any Medical Device manufactured and/or
distributed by the Company or any of its Subsidiaries is (A) adulterated
within the meaning of 21 U.S.C. {section} 351 (or similar Legal
Provisions), (B) misbranded within the meaning of 21 U.S.C. {section} 352
(or similar Legal Provisions) or (C) a product that is in violation of 21
U.S.C. {section} 360 or {section} 360e (or similar Legal Provisions),
except for failures to be in compliance with the foregoing that
individually or in the aggregate have not had and would not reasonably be
expected to have a Material Adverse Effect.
27
(v) Neither the Company nor any of its Subsidiaries, nor, to the
Knowledge of the Company, any officer, employee or agent of the Company
or any of its Subsidiaries, has made an untrue statement of a material
fact or fraudulent statement to the FDA or any other Governmental Entity,
failed to disclose a material fact required to be disclosed to the FDA or
any other Governmental Entity, or committed an act, made a statement, or
failed to make a statement that, at the time such disclosure was made,
could reasonably be expected to provide a basis for the FDA or any other
Governmental Entity to invoke its policy respecting "Fraud, Untrue
Statements of Material Facts, Bribery, and Illegal Gratuities", set forth
in 56 Fed. Reg. 46191 (September 10, 1991) or any similar policy. Neither
the Company nor any of its Subsidiaries, nor, to the Knowledge of the
Company, any officer, employee or agent of the Company or any of its
Subsidiaries, has been convicted of any crime or engaged in any conduct
for which debarment is mandated by 21 U.S.C. {section} 335a(a) or any
similar Legal Provision or authorized by 21 U.S.C. {section} 335a(b) or
any similar Legal Provision. Neither the Company nor any of its
Subsidiaries, nor, to the Knowledge of the Company, any officer, employee
or agent of the Company or any of its Subsidiaries, has been convicted of
any crime or engaged in any conduct for which such person or entity could
be excluded from participating in the federal health care programs under
Section 1128 of the Social Security Act of 1935, as amended (the "Social
Security Act") or any similar Legal Provision.
(vi) Since January 1, 2002, neither the Company nor any of its
Subsidiaries has received any written notice that the FDA or any other
Governmental Entity has (a) commenced, or threatened to initiate, any
action to withdraw its approval or request the recall of any Medical
Device, (b) commenced, or threatened to initiate, any action to enjoin
production of any Medical Device or (c) commenced, or threatened to
initiate, any action to enjoin the production of any medical device
produced at any facility where any Medical Device is manufactured, tested
or packaged, except for any such action that individually or in the
aggregate has not had and would not reasonably be expected to have a
Material Adverse Effect.
(vii) To the Knowledge of the Company, there are no facts,
circumstances or conditions that would reasonably be expected to form the
basis for any investigation, suit, claim, action or proceeding against or
affecting the Company or any of its Subsidiaries relating to or arising
under (a) the FDCA or (b) the Social Security Act or regulations of the
Office of the Inspector General of the Department of Health and Human
Services, in each case individually or in the aggregate that has had or
would reasonably be expected to have a Material Adverse Effect.
(v) RIGHTS AGREEMENT. The Company has taken all actions necessary to
cause the Rights Agreement dated as of December 15, 2004, between the
Company and EquiServe Trust Company, as rights agent (the "Rights
Agreement"), to (i) render the Rights Agreement inapplicable to this
Agreement, the Merger and the other transactions contemplated by this
Agreement, (ii) ensure that (x) none of Parent, Sub or any other
Subsidiary of Parent is an Acquiring Person (as defined in the Rights
Agreement) pursuant to the Rights Agreement, (y) a Distribution Date or a
Stock Acquisition Date (as such terms are defined in the Rights
Agreement) does not occur and (z) the rights (the "Company Rights") to
purchase Company Series A Preferred Stock issued under the
28
Rights Agreement do not become exercisable, in the case of clauses (x),
(y) and (z), solely by reason of the execution of this Agreement or the
consummation of the Merger or the other transactions contemplated by this
Agreement and (iii) provide that the Expiration Date (as defined in the
Rights Agreement) shall occur immediately prior to the Effective Time.
SECTION 3.2. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB.
Except as disclosed in the Parent SEC Documents filed by Parent and publicly
available prior to the date of this Agreement ("Filed Parent SEC Documents"),
Parent and Sub represent and warrant to the Company as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of Parent and
Sub is a corporation duly organized, validly existing and in good
standing under the Laws of the jurisdiction in which it is incorporated
and has all requisite corporate power and authority and possesses all
governmental licenses, permits, authorizations and approvals necessary to
enable it to use its corporate or other name and to own, lease or
otherwise hold and operate its properties and other assets and to carry
on its business as now being conducted, except whether the failure to
have such governmental licenses, permits, authorizations and approvals
individually or in the aggregate has not had and would not reasonably be
expected to have a Parent Material Adverse Effect. Each of Parent and Sub
is duly qualified or licensed to do business and is in good standing
(with respect to jurisdictions that recognize that concept) in each
jurisdiction in which the nature of its business or the ownership,
leasing or operation of its properties makes such qualification,
licensing or good standing necessary, other than in such jurisdictions
where the failure to be so qualified, licensed or in good standing
individually or in the aggregate has not had and would not reasonably be
expected to have a Parent Material Adverse Effect. Parent has made
available to the Company complete and accurate copies of its Restated
Certificate of Incorporation and By-laws, the Articles of Incorporation
of Sub (the "Sub Articles") and the By-laws of Sub, in each case as
amended to the date hereof.
(b) AUTHORITY; NONCONTRAVENTION. Each of Parent and Sub has all
requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement by Parent and Sub
and the consummation by Parent and Sub of the transactions contemplated
by this Agreement have been duly authorized by all necessary corporate
action on the part of Parent and Sub and no other corporate proceedings
on the part of Parent or Sub are necessary to authorize this Agreement or
to consummate the transactions contemplated by this Agreement. This
Agreement and the transactions contemplated by this Agreement do not
require approval of the holders of any shares of capital stock of Parent.
This Agreement has been duly executed and delivered by each of Parent and
Sub and, assuming the due authorization, execution and delivery by the
Company, constitutes a legal, valid and binding obligation of Parent and
Sub, as applicable, enforceable against Parent and Sub, as applicable, in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, moratorium, reorganization or similar Laws affecting the rights
of creditors generally and the availability of equitable remedies
(regardless of whether such enforceability is considered in a proceeding
at equity or at law). The execution and delivery of this Agreement by
Parent and Sub do
29
not, and the consummation by Parent and Sub of the Merger and the other
transactions contemplated by this Agreement and compliance by Parent and
Sub with the provisions of this Agreement will not, conflict with, or
result in any violation or breach of, or default (with or without notice
or lapse of time, or both) under, or give rise to a right of, or result
in, termination, cancelation or acceleration of any obligation or to the
loss of a benefit under, or result in the creation of any Lien in or upon
any of the properties or other assets of Parent or Sub under (x) the
Restated Certificate of Incorporation or By-laws of Parent, the Sub
Articles or the By-laws of Sub, (y) any Contract to which Parent or Sub
is a party or any of their respective properties or other assets is
subject or (z) subject to the governmental filings and other matters
referred to in the following sentence, any Legal Provision applicable to
Parent or Sub or their respective properties or other assets, other than,
in the case of clauses (y) and (z), any such conflicts, violations,
breaches, defaults, rights of termination, cancelation or acceleration,
losses or Liens that individually or in the aggregate have not had and
would not reasonably be expected to (1) have a Parent Material Adverse
Effect, (2) impair in any material respect the ability of Parent or Sub
to perform its respective obligations under this Agreement or (3) prevent
or materially impede, interfere with, hinder or delay the consummation of
the transactions contemplated by this Agreement. No consent, approval,
order or authorization of, action by or in respect of, or registration,
declaration or filing with, any Governmental Entity is required by or
with respect to Parent or Sub in connection with the execution and
delivery of this Agreement by Parent and Sub or the consummation by
Parent and Sub of the Merger or the other transactions contemplated by
this Agreement, except for (1) (A) the filing of a premerger notification
and report form by Parent under the HSR Act and the termination of the
waiting period required thereunder, (B) all required notifications and
filings by Parent under Article 4 of the EC Merger Regulation and the
receipt of a decision under Article 6(1)(b), 8(1) or 8(2) thereunder
declaring the Merger compatible with the EC Common Market and (C) the
receipt, termination or expiration, as applicable, of approvals or
waiting periods required under any other applicable competition, merger
control, antitrust or similar Law, (2) the filing with the SEC of (X) the
Form S-4 and (Y) such reports under the Exchange Act as may be required
in connection with this Agreement and the transactions contemplated by
this Agreement, (3) the filing of the Articles of Merger with the
Secretary of State of the State of Indiana, (4) any filings with and
approvals of the NYSE and (5) such other consents, approvals, orders,
authorizations, actions, registrations, declarations and filings the
failure of which to be obtained or made individually or in the aggregate
has not had and would not reasonably be expected to (x) have a Parent
Material Adverse Effect, (y) impair in any material respect the ability
of Parent or Sub to perform its respective obligations under this
Agreement or (z) prevent or materially impede, interfere with, hinder or
delay the consummation of the transactions contemplated by this
Agreement.
(c) PARENT SEC DOCUMENTS. Parent has filed all reports, schedules,
forms, statements and other documents (including exhibits and other
information incorporated therein) with the SEC required to be filed by
Parent since January 1, 2003 (such documents, together with any documents
filed during such period by Parent with the SEC on a voluntary basis on
Current Reports on Form 8-K, the "Parent SEC Documents"). As of their
respective filing dates, the Parent SEC Documents complied in all
material respects with, to the extent in effect at the time of filing,
the requirements of the
30
Securities Act, the Exchange Act and SOX applicable to such Parent SEC
Documents, and none of the Parent SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Except to the extent that information contained in any Parent
SEC Document has been revised, amended, supplemented or superseded by a
later-filed Parent SEC Document, none of the Parent SEC Documents
contains any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they
were made, not misleading, which individually or in the aggregate would
require an amendment, supplement or corrective filing to such Parent SEC
Documents. Each of the financial statements (including the related notes)
of Parent included in the Parent SEC Documents complied at the time it
was filed as to form in all material respects with the applicable
accounting requirements and the published rules and regulations of the
SEC with respect thereto in effect at the time of filing, had been
prepared in accordance with GAAP (except, in the case of unaudited
statements, as permitted by the rules and regulations of the SEC) applied
on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly presented in all material
respects the consolidated financial position of Parent and its
consolidated Subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). Neither Parent nor any of its Subsidiaries has any
liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) which individually or in the aggregate have had
or would reasonably be expected to have a Parent Material Adverse Effect.
(d) INFORMATION SUPPLIED. None of the information supplied or to be
supplied by or on behalf of Parent or Sub specifically for inclusion or
incorporation by reference in (i) the Form S-4 will, at the time the Form
S-4 is filed with the SEC and at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they are made, not misleading, or (ii) the Proxy Statement will, at the
date it is first mailed to the shareholders of the Company and at the
time of the Shareholders' Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading, except that
no representation or warranty is made by Parent or Sub with respect to
statements made or incorporated by reference therein based on information
supplied by or on behalf of the Company specifically for inclusion or
incorporation by reference in the Form S-4 or the Proxy Statement. The
Form S-4 will comply as to form in all material respects with the
requirements of the Securities Act and the rules and regulations
thereunder.
(e) INTERIM OPERATIONS OF SUB. Sub was formed solely for the purpose
of engaging in the transactions contemplated by this Agreement, has
engaged in no other business activities and has conducted its operations
only as contemplated hereby.
31
(f) CAPITAL RESOURCES. As of the Closing, Parent will have funds
that are sufficient to effect the Closing on the terms contemplated
hereby.
(g) BROKERS. No broker, investment banker, financial advisor or
other person, other than Xxxxxxx, Xxxxx & Co., the fees and expenses of
which will be paid by Xxxxxx, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with
the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Parent or Sub.
(h) CAPITAL STRUCTURE. The authorized capital stock of Parent
consists of 4,320,000,000 shares of Parent Common Stock and 2,000,000
shares of preferred stock, without par value, of Parent ("Parent
Preferred Stock"). At the close of business on December 13, 2004, (i)
3,119,842,548 shares of Parent Common Stock were issued and outstanding,
(ii) 149,309,976 shares of Parent Common Stock were held by Parent in its
treasury, (iii) no shares of Parent Preferred Stock had been designated
or issued, (iv) 230,213,631 shares of Parent Common Stock were subject to
outstanding options to purchase shares of Parent Common Stock granted
under Parent's stock incentive plans and (v) 13,980,932 shares of Parent
Common Stock were reserved for issuance upon conversion of the 3% Zero
Coupon Convertible Subordinated Debentures of Alza Corporation, a
Delaware corporation and wholly-owned subsidiary of Parent ("Alza"), and
the 5.25% Zero Coupon Convertible Subordinated Debentures of Alza. Except
as set forth above in this Section 3.02(h), at the close of business on
December 13, 2004, there were not issued, reserved for issuance or
outstanding (A) any shares of capital stock or other voting securities of
Parent, (B) any securities of Parent convertible into or exchangeable or
exercisable for shares of capital stock or voting securities of Parent or
(C) any warrants, calls, options or other rights to acquire from Parent,
or any obligation of Parent to issue, any shares of capital stock, voting
securities or securities convertible into or exchangeable or exercisable
for capital stock or voting securities of Parent. Except as set forth
above in this Section 3.02(h), at the close of business on December 13,
2004, no bonds, debentures, notes or other indebtedness of Parent having
the right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which the shareholders of
Parent may vote are issued or outstanding. The authorized capital stock
of Sub consists of 1,000 shares of common stock, without par value, of
which 1,000 shares are issued and outstanding, all of which shares are
beneficially owned by Parent.
(i) ABSENCE OF CHANGES. Except for liabilities incurred in
connection with this Agreement, since the date of the most recent
financial statements included in the Filed Parent SEC Documents, there
has not been any Parent Material Adverse Change.
(j) LITIGATION. There is no suit, action or proceeding pending or,
to the Knowledge of Parent, threatened against or affecting Parent or any
of its Subsidiaries or any of their respective assets that individually
or in the aggregate has had or would reasonably be expected to have a
Parent Material Adverse Effect, nor is there any Order of any
Governmental Entity or arbitrator outstanding against, or, to the
Knowledge of Parent, investigation by any Governmental Entity involving,
Parent or any of its
32
Subsidiaries or any of their respective assets that individually or in
the aggregate has had or would reasonably be expected to have a Parent
Material Adverse Effect.
(k) INTELLECTUAL PROPERTY RIGHTS. Each of Parent and its
Subsidiaries owns or has the right to use all intellectual property
rights which are material to the conduct of the business of Parent and
its Subsidiaries, taken as a whole, in each case (i) with respect to such
intellectual property rights that are owned by Parent or any of its
Subsidiaries, free and clear of all Liens and (ii) with respect to such
intellectual property rights that are licensed by Parent or any of its
Subsidiaries, to the Knowledge of Parent, free and clear of all Liens,
except where the failure to so own or have such right to use such
intellectual property rights individually or in the aggregate has not had
and would not reasonably be expected to have a Parent Material Adverse
Effect. Neither the manufacture, marketing, license, sale or use by
Parent or any of its Subsidiaries of any product violates any license or
agreement between Parent or any of its Subsidiaries and any other person
and there is no pending or, to the Knowledge of Parent, threatened claim
or litigation contesting the validity, ownership or right to use, sell,
license or dispose of any such intellectual property rights relating to
any product or asserting that the proposed use, sale, license or
disposition thereof, or the manufacture, use or sale of any product by
Parent or any of its Subsidiaries, conflicts with the rights of any other
person, in each case which, individually or in the aggregate, has had or
would reasonably be expected to have a Parent Material Adverse Effect.
(l) REGULATORY COMPLIANCE. To the Knowledge of Parent, the testing,
manufacture, storage, distribution, use, promotion and sale of products
of Parent or any of its Subsidiaries by Parent, such Subsidiary and their
respective contractors have been performed and is performed in compliance
with all applicable requirements under the FDCA and similar Legal
Provisions, including those relating to investigational use, premarket
clearance, good manufacturing practices, labeling, advertising, record
keeping, filing of reports and security, except for such instances of
noncompliance or possible noncompliance that individually or in the
aggregate have not had and would not reasonably be expected to have a
Parent Material Adverse Effect. Neither Parent nor any of its
Subsidiaries has received any adverse written notice within the past two
years that the FDA or any other similar foreign Governmental Entity has
commenced, or threatened to initiate, any action to withdraw its approval
or request the recall of any product of Parent or any of its
Subsidiaries, or commenced, or overtly threatened to initiate, any action
to enjoin production of any such product, except where such action has
not had and would not reasonably be expected to have a Parent Material
Adverse Effect.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS; NO SOLICITATION
SECTION 4.01. CONDUCT OF BUSINESS. (a) CONDUCT OF BUSINESS BY THE
COMPANY. During the period from the date of this Agreement to the Effective
Time, except as set forth in Section 4.01(a) of the Company Disclosure
Schedule or as consented to in writing in advance by Parent or as otherwise
permitted or required by this Agreement, the Company shall, and shall
33
cause each of its Subsidiaries to, carry on its business in the ordinary
course consistent with past practice prior to the Closing and, to the extent
consistent therewith, use all commercially reasonable efforts to preserve
intact its current business organizations, keep available the services of its
current officers, employees and consultants and preserve its relationships
with customers, suppliers, licensors, licensees, distributors and others
having business dealings with it. In addition to and without limiting the
generality of the foregoing, during the period from the date of this Agreement
to the Effective Time, except as otherwise set forth in Section 4.01(a) of the
Company Disclosure Schedule or as otherwise permitted or required pursuant to
this Agreement, the Company shall not, and shall not permit any of its
Subsidiaries to, without Parent's prior written consent:
(i) (x) declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, stock or property) in respect of,
any of its capital stock, other than (1) cash dividends payable by the
Company in respect of shares of Company Common Stock consistent with past
practice and not exceeding $0.10 per share of Company Common Stock per
fiscal quarter, (2) dividends and distributions in connection with the
Rights Agreement and (3) dividends or distributions by a direct or
indirect wholly owned Subsidiary of the Company to its shareholders, (y)
split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock or (z) purchase,
redeem or otherwise acquire any shares of its capital stock or any other
securities thereof or any rights, warrants or options to acquire any such
shares or other securities, except for purchases, redemptions or other
acquisitions of capital stock or other securities (1) required by the
terms of the Company Stock Plans or the ESPP or (2) required by the terms
of any plans, arrangements or Contracts existing on the date hereof
between the Company or any of its Subsidiaries and any director or
employee of the Company or any of its Subsidiaries (to the extent
complete and accurate copies of which have been heretofore delivered to
Parent);
(ii) issue, deliver, sell, grant, pledge or otherwise encumber or
subject to any Lien any shares of its capital stock, any other voting
securities or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, voting securities or convertible
securities, or any "phantom" stock, "phantom" stock rights, stock
appreciation rights or stock based performance units, including pursuant
to Contracts as in effect on the date hereof (other than (x) the issuance
of shares of Company Common Stock upon the exercise of Company Stock
Options or in connection with Company Stock Based Awards, in each case in
accordance with their terms on the date hereof, and (y) the issuance of
Company Rights and shares of the Company's capital stock pursuant to the
Company Rights or the Rights Agreement);
(iii) amend (x) the Company Articles or the Company By-laws or other
comparable charter or organizational documents of any of the Company's
Subsidiaries or (y) the Indenture dated as of January 18, 1996 between
the Company and Citibank, N.A., with respect to the 6.15% Senior
Unsecured Notes due February 15, 2006 of the Company (the "Company
Notes"), in each case except as may be required by applicable Law or the
rules and regulations of the SEC or the NYSE;
34
(iv) directly or indirectly acquire (x) by merging or consolidating
with, by purchasing a substantial portion of the assets of, by making an
investment in or capital contribution to, or by any other manner, any
person or division, business or equity interest of any person or (y) any
asset or assets, except for (1) capital expenditures, which shall be
subject to the limitations of clause (vii) below, (2) purchases of
components, raw materials or supplies in the ordinary course of business
consistent with past practice and (3) acquisitions of material
intellectual property rights in respect of cross-licenses permitted in
connection with the discharge, settlement or satisfaction of claims and
litigation under clause (viii) below;
(v) (x) sell, lease, license, mortgage, sell and leaseback or
otherwise encumber or subject to any Lien or otherwise dispose of any of
its material properties or other material assets or any interests therein
(including securitizations), except for (1) sales of inventory and used
equipment in the ordinary course of business consistent with past
practice and (2) licenses of Intellectual Property Rights permitted in
connection with the discharge, settlement or satisfaction of claims and
litigation under clause (viii) below, or (y) enter into, modify or amend
any lease of material property, except for modifications or amendments
that are not materially adverse to the Company and its Subsidiaries,
taken as a whole;
(vi) (x) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
calls, options, warrants or other rights to acquire any debt securities
of the Company or any of its Subsidiaries, guarantee any debt securities
of another person, enter into any "keep well" or other Contract to
maintain any financial statement condition of another person or enter
into any arrangement having the economic effect of any of the foregoing
(other than short-term borrowings in the ordinary course of business
consistent with past practice under the Company's commercial paper
program, in an aggregate amount not to exceed $800,000,000 at any time
outstanding) or (y) make any loans or advances to any other person, other
than to employees in respect of travel expenses in the ordinary course of
business consistent with past practice, which would result in the
aggregate principal amount of all of the outstanding foregoing loans and
advances of the Company and its Subsidiaries exceeding $25,000,000;
(vii) make any new capital expenditure or expenditures exceeding the
amounts set forth in Section 4.01(a)(vii) of the Company Disclosure
Schedule;
(viii) except as required by Law or any judgment by a court of
competent jurisdiction, (v) pay, discharge, settle or satisfy any
material claims, liabilities, obligations or litigation (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge, settlement or satisfaction in the ordinary course of
business consistent with past practice or in accordance with their terms,
of liabilities disclosed, reflected or reserved against in the most
recent audited financial statements (or the notes thereto) of the Company
included in the Filed Company SEC Documents (for amounts not in excess of
such reserves) or incurred since the date of such financial statements in
the ordinary course of business consistent with past practice, (w) cancel
any material indebtedness, (x) waive or assign any claims or rights of
material
35
value, (y) waive any benefits of, or agree to modify in any respect, or,
subject to the terms hereof, knowingly fail to enforce, or consent to any
matter with respect to which consent is required under, any standstill or
similar Contract to which the Company or any of its Subsidiaries is a
party or (z) waive any material benefits of, or agree to modify in any
material respect, or, subject to the terms hereof, knowingly fail to
enforce in any material respect, or consent to any matter with respect to
which consent is required under, any material confidentiality or similar
Contract to which the Company or any of its Subsidiaries is a party;
(ix) enter into (1) any material Contract that would be of a type
referred to in Section 3.01(i)(2)(A) or (2) any other material Contract
that would be of a type referred to in Section 3.01(i)(2)(B) or (C) and,
in the case of this clause (2), that (A) would reasonably be expected to
impair in any material respect the ability of the Company and its
Subsidiaries to conduct their business as currently conducted or (B)
would reasonably be expected to have a material adverse effect on the
reasonably expected benefits of the Merger to Parent;
(x) enter into, modify, amend or terminate any Contract or waive,
release or assign any material rights or claims thereunder, which if so
entered into, modified, amended, terminated, waived, released or assigned
would reasonably be expected to (A) have a Material Adverse Effect, (B)
impair in any material respect the ability of the Company to perform its
obligations under this Agreement or (C) prevent or materially impede,
interfere with, hinder or delay the consummation of the transactions
contemplated by this Agreement;
(xi) enter into any material Contract to the extent consummation of
the transactions contemplated by this Agreement or compliance by the
Company with the provisions of this Agreement could reasonably be
expected to conflict with, or result in a violation or breach of, or
default (with or without notice or lapse of time, or both) under, or give
rise to a right of, or result in, termination, cancelation or
acceleration of any obligation or to the loss of a benefit under, or
result in the creation of any Lien in or upon any of the properties or
other assets of the Company or any of its Subsidiaries under, or require
Parent to license or transfer any of its Intellectual Property Rights or
other material assets under, or give rise to any increased, additional,
accelerated, or guaranteed right or entitlements of any third party
under, or result in any material alteration of, any provision of such
Contract;
(xii) except as required to ensure that any Company Benefit Plan or
Company Benefit Agreement is not then out of compliance with applicable
Law or to comply with any Company Benefit Plan, Company Benefit Agreement
or other Contract entered into prior to the date hereof (to the extent
complete and accurate copies of which have been heretofore delivered to
Parent), (A) adopt, enter into, terminate or amend (I) any collective
bargaining Contract or Company Benefit Plan or (II) any Company Benefit
Agreement or other Contract, plan or policy involving the Company or any
of its Subsidiaries and Key Personnel, (B) increase in any manner the
compensation, bonus or fringe or other benefits of, or pay any
discretionary bonus of any kind or amount whatsoever to, any current or
former director, officer, employee or consultant, except in
36
the ordinary course of business consistent with past practice to
employees of the Company or its Subsidiaries other than Key Personnel,
(C) grant or pay any severance or termination pay, except for severance
or termination pay granted or paid in the ordinary course of business
consistent with past practice, to, or increase in any material manner the
severance or termination pay of, any current or former director, officer,
employee or consultant of the Company or any of its Subsidiaries other
than Key Personnel, (D) remove any existing restrictions in any Company
Benefit Agreements, Company Benefit Plans or awards made thereunder, (E)
take any action to fund or in any other way secure the payment of
compensation or benefits under any Company Benefit Plan or Company
Benefit Agreement, (F) take any action to accelerate the vesting or
payment of any compensation or benefit under any Company Benefit Plan or
Company Benefit Agreement or awards made thereunder or (G) materially
change any actuarial or other assumption used to calculate funding
obligations with respect to any Company Pension Plan or change the manner
in which contributions to any Company Pension Plan are made or the basis
on which such contributions are determined;
(xiii) except as required by GAAP, revalue any material assets of
the Company or any of its Subsidiaries or make any change in accounting
methods, principles or practices; or
(xiv) authorize any of, or commit, resolve, propose or agree to take
any of, the foregoing actions.
(b) OTHER ACTIONS. The Company, Parent and Sub shall not, and shall
not permit any of their respective Subsidiaries to, take any action that could
reasonably be expected to result in any of the conditions to the Merger set
forth in Article VI not being satisfied.
(c) ADVICE OF CHANGES; FILINGS. The Company and Parent shall
promptly advise the other party orally and in writing if (i) any
representation or warranty made by it (and, in the case of Parent, made by
Sub) contained in this Agreement becomes untrue or inaccurate in a manner that
would result in the failure of the condition set forth in Section 6.02(a) or
Section 6.03(a) or (ii) it (and, in the case of Parent, Sub) fails to comply
with or satisfy in any material respect any covenant, condition or agreement
to be complied with or satisfied by it (and, in the case of Parent, Sub) under
this Agreement; provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties (or
remedies with respect thereto) or the conditions to the obligations of the
parties under this Agreement. The Company and Parent shall, to the extent
permitted by Law, promptly provide the other with copies of all filings made
by such party with any Governmental Entity in connection with this Agreement
and the transactions contemplated by this Agreement, other than the portions
of such filings that include confidential or proprietary information not
directly related to the transactions contemplated by this Agreement.
(d) CERTAIN TAX MATTERS. (i) During the period from the date of this
Agreement to the Effective Time, the Company shall, and shall cause each of
its Subsidiaries to (A) timely file all material tax returns (taking into
account any applicable extensions) required to be filed by or on behalf of
each such entity ("Post-Signing Returns"); (B) timely pay all material taxes
due and payable; (C) accrue a reserve in the books and records and financial
statements of any such entity
37
in accordance with past practice for all taxes payable but not yet due; (D)
promptly notify Parent of any material suit, claim, action, investigation,
audit or similar proceeding (collectively, "Actions") pending against or with
respect to the Company or any of its Subsidiaries in respect of any amount of
tax and not settle or compromise any tax liability in excess of $10 million
for individual claims, or $50 million in the aggregate, without Parent's prior
written consent, which shall not be unreasonably withheld; (E) not make any
material tax election, other than with Parent's prior written consent or other
than in the ordinary course of business consistent with past practice; and (F)
cause all existing tax sharing agreements, tax indemnity agreements and
similar agreements, arrangements or practices to which the Company or any of
its Subsidiaries is or may be a party or by which the Company or any of its
Subsidiaries is or may otherwise be bound to be terminated as of the Closing
Date so that after such date neither the Company nor any of its Subsidiaries
shall have any further rights or liabilities thereunder. Any tax returns
described in this Section 4.01(d) shall be complete and correct in all
material respects and shall be prepared on a basis consistent with the past
practice of the Company and in a manner that does not distort taxable income,
including by deferring income or accelerating deductions. The Company shall
notify Parent upon the filing of any such material tax return and shall make
such tax returns available to Parent.
(ii) Notwithstanding any other provision of this Agreement, the
Company shall not permit any of its Subsidiaries incorporated outside the
United States (a "Non-U.S. Subsidiary") to make a cash distribution to the
Company or any of the Company's Subsidiaries incorporated in the United States
in excess of amounts described in Section 965(b)(2)(B) of the Code (an "Excess
Distribution") except to the extent the Company has provided Parent with
substantiation, in a form reasonably satisfactory to Parent, that the
deduction described in Section 965(a) of the Code will apply to the entire
amount of the Excess Distribution. For purposes of this Section, a written
opinion of a nationally recognized law firm to the effect that the deduction
described in Section 965(a) of the Code should apply to the entire amount of
the Excess Distribution shall be a form of substantiation deemed reasonably
satisfactory to Parent. Furthermore, notwithstanding any other provision of
this Agreement, the Company shall not permit any of its Non-U.S. Subsidiaries
to increase its indebtedness to any related person as described in Section
965(b)(3) of the Code without the prior written consent of Parent, such
consent not to be unreasonably withheld. For purposes of the preceding
sentence, indebtedness of a Non-U.S. Subsidiary to a related person shall
include indebtedness of a Non-U.S. Subsidiary guaranteed by a related person.
SECTION 4.02. NO SOLICITATION. (a) The Company shall not, nor shall
it authorize or permit any of its Subsidiaries or any of their respective
directors, officers or employees or any investment banker, financial advisor,
attorney, accountant or other advisor, agent or representative (collectively,
"Representatives") retained by it or any of its Subsidiaries to, directly or
indirectly through another person, (i) solicit, initiate or knowingly
encourage, or take any other action designed to, or which could reasonably be
expected to, facilitate, any Takeover Proposal or (ii) enter into, continue or
otherwise participate in any discussions or negotiations regarding, or furnish
to any person any information, or otherwise cooperate in any way with, any
Takeover Proposal. Without limiting the foregoing, it is agreed that any
violation of the restrictions set forth in the preceding sentence by any
Representative of the Company or any of its Subsidiaries shall be a breach of
this Section 4.02(a) by the Company. The Company shall, and shall cause its
Subsidiaries to, immediately cease and cause to be terminated all
38
existing discussions or negotiations with any person conducted heretofore with
respect to any Takeover Proposal and request the prompt return or destruction
of all confidential information previously furnished. Notwithstanding the
foregoing, at any time prior to obtaining the Shareholder Approval, in
response to a bona fide written Takeover Proposal that the Board of Directors
of the Company reasonably determines (after consultation with outside counsel
and a financial advisor of nationally recognized reputation) constitutes or is
reasonably likely to lead to a Superior Proposal, and which Takeover Proposal
was not solicited after the date hereof and was made after the date hereof and
did not otherwise result from a breach of this Section 4.02(a), the Company
may, subject to compliance with Section 4.02(c), (x) furnish information with
respect to the Company and its Subsidiaries to the person making such Takeover
Proposal (and its Representatives) pursuant to a customary confidentiality
agreement not less restrictive to such person than the confidentiality
provisions of the Confidentiality Agreement, provided that all such
information has previously been provided to Parent or is provided to Parent
prior to or substantially concurrent with the time it is provided to such
person, and (y) participate in discussions or negotiations with the person
making such Takeover Proposal (and its Representatives) regarding such
Takeover Proposal.
The term "Takeover Proposal" means any inquiry, proposal or offer
from any person relating to, or that could reasonably be expected to lead to,
any direct or indirect acquisition or purchase, in one transaction or a series
of transactions, of assets (including equity securities of any Subsidiary of
the Company) or businesses that constitute 15% or more of the revenues, net
income or assets of the Company and its Subsidiaries, taken as a whole, or 15%
or more of any class of equity securities of the Company, any tender offer or
exchange offer that if consummated would result in any person beneficially
owning 15% or more of any class of equity securities of the Company, or any
merger, consolidation, business combination, recapitalization, liquidation,
dissolution, joint venture, binding share exchange or similar transaction
involving the Company or any of its Subsidiaries pursuant to which any person
or the shareholders of any person would own 15% or more of any class of equity
securities of the Company or of any resulting parent company of the Company,
in each case other than the transactions contemplated by this Agreement.
The term "Superior Proposal" means any bona fide offer made by a
third party that if consummated would result in such person (or its
shareholders) owning, directly or indirectly, more than 80% of the shares of
Company Common Stock then outstanding (or of the shares of the surviving
entity in a merger or the direct or indirect parent of the surviving entity in
a merger) or all or substantially all the assets of the Company, which the
Board of Directors of the Company reasonably determines (after consultation
with a financial advisor of nationally recognized reputation) to be (i) more
favorable to the shareholders of the Company from a financial point of view
than the Merger (taking into account all the terms and conditions of such
proposal and this Agreement (including any changes to the financial terms of
this Agreement proposed by Parent in response to such offer or otherwise)) and
(ii) reasonably capable of being completed, taking into account all financial,
legal, regulatory and other aspects of such proposal.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall (i) (A) withdraw (or modify in a manner adverse to Parent), or
publicly propose to withdraw (or modify in a manner adverse to Parent), the
adoption or recommendation by such Board of Directors or any such committee
thereof of this Agreement, the Merger or the other
39
transactions contemplated by this Agreement or (B) adopt or recommend, or
propose publicly to adopt or recommend, any Takeover Proposal (any action
described in this clause (i) being referred to as a "Company Adverse
Recommendation Change") or (ii) adopt or recommend, or publicly propose to
adopt or recommend, or allow the Company or any of its Subsidiaries to execute
or enter into, any letter of intent, memorandum of understanding, agreement in
principle, merger agreement, acquisition agreement, option agreement, joint
venture agreement, partnership agreement or other similar Contract
constituting or related to, or that is intended to or could reasonably be
expected to lead to, any Takeover Proposal (other than a confidentiality
agreement referred to in Section 4.02(a)) (an "Acquisition Agreement").
Notwithstanding the foregoing, at any time prior to obtaining the Shareholder
Approval and subject to Section 4.02(c), the Board of Directors of the Company
may (x) make a Company Adverse Recommendation Change if the Board of Directors
of the Company determines in good faith (after consultation with outside
counsel and a financial advisor of nationally recognized reputation) that (A)
a Parent Material Adverse Effect has occurred and (B) as a result thereof such
action is consistent with their fiduciary duties under applicable Laws or (y)
in response to a Takeover Proposal that the Board reasonably determines (after
consultation with outside counsel and a financial advisor of nationally
recognized reputation) constitutes a Superior Proposal and that was
unsolicited and made after the date hereof and that did not otherwise result
from a breach of this Section 4.02, (1) make a Company Adverse Recommendation
Change or (2) cause the Company to terminate this Agreement and concurrently
with or after such termination enter into an Acquisition Agreement; provided,
however, that the Company shall not be entitled to exercise its right to make
a Company Adverse Recommendation Change or terminate this Agreement pursuant
to clause (y) until after the fifth business day following Parent's receipt of
written notice (a "Notice of Superior Proposal") from the Company advising
Parent that the Board of Directors of the Company intends to take such action
and specifying the reasons therefor, including the terms and conditions of any
Superior Proposal that is the basis of the proposed action by the Board of
Directors (it being understood and agreed that any amendment to the financial
terms or any other material term of such Superior Proposal shall require a new
Notice of Superior Proposal and a new five business day period). In
determining whether to make a Company Adverse Recommendation Change or to
cause the Company to so terminate this Agreement, the Board of Directors of
the Company shall take into account any changes to the financial terms of this
Agreement proposed by Parent in response to a Notice of Superior Proposal or
otherwise.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 4.02, the Company shall promptly advise
Parent orally and in writing (i) of any Takeover Proposal, the material terms
and conditions of any such Takeover Proposal (including any changes thereto)
and the identity of the person making any such Takeover Proposal and (ii) if
the Board of Directors of the Company is considering, or has decided to
consider, whether any change, effect, event, occurrence, state of facts or
development constitutes a Parent Material Adverse Effect. The Company shall
(x) keep Parent fully informed in all material respects of the status and
details (including any change to the terms thereof) of any Takeover Proposal,
(y) provide to Parent as soon as practicable after receipt or delivery thereof
copies of all correspondence and other written material sent or provided to
the Company or any of its Subsidiaries from any person that describes any of
the terms or conditions of any Takeover Proposal and (z) keep Parent fully
informed in all material respects of the status and details of
40
any determination by the Company's Board of Directors with respect to a
potential Parent Material Adverse Effect.
(d) Nothing contained in this Section 4.02 shall prohibit the
Company from (x) taking and disclosing to its shareholders a position
contemplated by Rule 14e-2(a) under the Exchange Act or making a statement
required under Rule 14a-9 under the Exchange Act or (y) making any disclosure
to the shareholders of the Company that is required by applicable Law;
provided, however, that in no event shall the Company or its Board of
Directors or any committee thereof take, or agree or resolve to take, any
action prohibited by Section 4.02(b) (it being understood that any accurate
disclosure of factual information to the shareholders of the Company that is
required to be made to such shareholders under applicable federal securities
Laws shall not be considered a modification prohibited by clause (i)(A) of
Section 4.02(b)).
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. PREPARATION OF THE FORM S-4 AND THE PROXY STATEMENT;
SHAREHOLDERS' MEETING. (a) As promptly as practicable following the date of
this Agreement, the Company and Parent shall prepare and Parent shall file
with the SEC the Form S-4, in which the Proxy Statement will be included as a
prospectus. Each of the Company and Parent shall use its reasonable best
efforts to have the Form S-4 declared effective under the Securities Act as
promptly as practicable after such filing. The Company shall use its
reasonable best efforts to cause the Proxy Statement to be mailed to the
shareholders of the Company as promptly as practicable after the Form S-4 is
declared effective under the Securities Act. Parent shall also take any action
(other than qualifying to do business in any jurisdiction in which it is not
now so qualified or filing a general consent to service of process) required
to be taken under any applicable state securities Laws in connection with the
issuance of shares of Parent Common Stock in the Merger, and each of Parent
and the Company shall furnish all information as may be reasonably requested
by the other in connection with any such action and the preparation, filing
and distribution of the Form S-4 and the Proxy Statement. No filing of, or
amendment or supplement to, the Form S-4 will be made by Parent, and no filing
of, or amendment or supplement to, the Proxy Statement will made by the
Company, in each case without providing the other party a reasonable
opportunity to review and comment thereon. If at any time prior to the
Effective Time any information relating to the Company or Parent, or any of
their respective Affiliates, directors or officers, should be discovered by
the Company or Parent which should be set forth in an amendment or supplement
to either the Form S-4 or the Proxy Statement, so that either such document
would not include any misstatement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading, the party which
discovers such information shall promptly notify the other parties hereto and
an appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by Law, disseminated
to the shareholders of the Company. The parties shall notify each other
promptly of the time when the Form S-4 has become effective, of the issuance
of any stop order or suspension of the qualification of the Parent Common
Stock issuable in connection with the Merger for offering or sale in any
jurisdiction, or of the receipt of any comments from the SEC
41
or the staff of the SEC and of any request by the SEC or the staff of the SEC
for amendments or supplements to the Proxy Statement or the Form S-4 or for
additional information and shall supply each other with copies of (i) all
correspondence between it or any of its Representatives, on the one hand, and
the SEC or the staff of the SEC, on the other hand, with respect to the Proxy
Statement, the Form S-4 or the Merger and (ii) all orders of the SEC relating
to the Form S-4.
(b) The Company shall use its reasonable best efforts to, within 120
days following the date of this Agreement, establish a record date for, duly
call, give notice of, convene and hold a meeting of its shareholders (the
"Shareholders' Meeting") solely for the purpose of obtaining the Shareholder
Approval. Subject to Section 4.02, the Company shall, through its Board of
Directors, recommend to its shareholders approval of this Agreement and shall
include such recommendation in the Proxy Statement. Without limiting the
generality of the foregoing, but subject to the terms of this Agreement, the
Company's obligations pursuant to the first sentence of this Section 5.01(b)
shall not be affected by the commencement, public proposal, public disclosure
or communication to the Company of any Takeover Proposal.
SECTION 5.02. ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) To the extent permitted by applicable Law, the Company shall
afford to Parent, and to Parent's officers, employees, accountants, counsel,
financial advisors and other Representatives, reasonable access (including for
the purpose of coordinating integration activities and transition planning
with the employees of the Company and its Subsidiaries) during normal business
hours and upon reasonable prior notice to the Company during the period prior
to the Effective Time or the termination of this Agreement to all its and its
Subsidiaries' properties, books, Contracts, commitments, personnel and
records, but only to the extent that such access does not unreasonably
interfere with the business or operations of the Company and its Subsidiaries,
and, during such period, the Company shall furnish promptly to Parent (a) a
copy of each report, schedule, registration statement and other document filed
by it during such period pursuant to the requirements of Federal or state
securities Laws and (b) all other information concerning its and its
Subsidiaries' business, properties and personnel as Parent may reasonably
request; provided, however, that the Company shall not be required to (or to
cause any of its Subsidiaries to) so confer, afford such access or furnish
such copies or other information to the extent that doing so would result in
the loss of attorney-client privilege (provided that the Company shall use its
reasonable best efforts to allow for such access or disclosure in a manner
that does not result in a loss of attorney-client privilege). Except for
disclosures expressly permitted by the terms of the Confidentiality Agreement
dated as of August 4, 2004 between Parent and the Company (as it may be
amended from time to time, the "Confidentiality Agreement"), Parent shall
hold, and shall cause its officers, employees, accountants, counsel, financial
advisors and other Representatives to hold, all information received from the
Company, directly or indirectly, in confidence in accordance with the
Confidentiality Agreement. The Confidentiality Agreement shall survive any
termination of this Agreement. Notwithstanding the terms of the
Confidentiality Agreement, Parent and the Company agree that until the earlier
of the consummation of this Agreement or the six month anniversary of the date
of the termination of this Agreement, as applicable, each party and its
respective Subsidiaries shall not, without the other party's prior written
consent, directly or indirectly solicit for employment (other than through
advertising in newspapers or periodicals of
42
general circulation or recruiters' searches, in each case not specifically
directed at the other party's employees) any person currently employed by the
other party or any of its Subsidiaries with whom it has contact or who is
identified to such party in connection with the transactions contemplated by
this Agreement. No investigation pursuant to this Section 5.02 or information
provided or received by any party hereto pursuant to this Agreement will
affect any of the representations or warranties of the parties hereto
contained in this Agreement or the conditions hereunder to the obligations of
the parties hereto.
(b) To the extent permitted by applicable Law, Parent shall afford
to the Company and its Representatives reasonable access to Parent's personnel
and records (i) on a basis consistent with the Company's access to such
personnel and records prior to the date hereof in connection with the
Company's due diligence review of Parent and its Subsidiaries in connection
with the transactions contemplated hereby and (ii) to the extent reasonably
necessary for the Company to determine whether the conditions set forth in
Section 6.03 are satisfied.
SECTION 5.03. REASONABLE BEST EFFORTS. Upon the terms and subject to
the conditions set forth in this Agreement, each of the parties agrees to use
its reasonable best efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement, including using reasonable best efforts to
accomplish the following: (i) the taking of all acts necessary to cause the
conditions to Closing to be satisfied as promptly as practicable, (ii) the
obtaining of all necessary actions or nonactions, waivers, consents and
approvals from Governmental Entities and the making of all necessary
registrations and filings (including filings with Governmental Entities) and
the taking of all steps as may be necessary to obtain an approval or waiver
from, or to avoid an action or proceeding by, any Governmental Entity, (iii)
the avoidance of each and every impediment under any antitrust, merger
control, competition or trade regulation Law that may be asserted by any
Governmental Entity with respect to the Merger so as to enable the Closing to
occur as soon as reasonably possible and (iv) the obtaining of all necessary
consents, approvals or waivers from third parties, including any such
consents, approvals or waivers required in connection with any Divestiture. In
connection with and without limiting the foregoing, the Company and Parent
shall (A) duly file with the U.S. Federal Trade Commission and the Antitrust
Division of the Department of Justice the notification and report form (the
"HSR Filing") required under the HSR Act and (B) duly make all notifications
and other filings required (i) under the EC Merger Regulation (together with
the HSR Filings, the "Antitrust Filings") or (ii) under any other applicable
competition, merger control, antitrust or similar Law that the Company and
Parent deem advisable or appropriate, in each case with respect to the
transactions contemplated by this Agreement and as promptly as practicable.
The Antitrust Filings shall be in substantial compliance with the requirements
of the HSR Act, the EC Merger Regulation or other Laws, as applicable. Each
party shall cooperate with the other party to the extent necessary to assist
the other party in the preparation of its Antitrust Filings and, if requested,
to promptly amend or furnish additional information thereunder. Each party
shall use its reasonable best efforts to furnish to each other all information
required for any filing, form, declaration, notification, registration and
notice, other than confidential or proprietary information not directly
related to the transactions contemplated by this Agreement, and to keep the
other party reasonably informed with respect to the status of each clearance,
approval or waiver sought from a Governmental Entity in
43
connection with the transactions contemplated by this Agreement and the
material communications between such party and such Governmental Entity. Each
party shall consult with the other party, and consider in good faith the views
of the other party, prior to entering into any agreement with any Antitrust
Authority. Neither party shall, nor shall it permit any of its Subsidiaries
to, acquire or agree to acquire any business, person or division thereof, or
otherwise acquire or agree to acquire any assets if the entering into of a
definitive agreement relating to or the consummation of such acquisition,
could reasonably be expected to materially increase the risk of not obtaining
the applicable clearance, approval or waiver from an Antitrust Authority with
respect to the transactions contemplated by this Agreement. The Company and
its Board of Directors shall (1) use reasonable best efforts to ensure that no
state takeover Law or similar Law is or becomes applicable to this Agreement,
the Merger or any of the other transactions contemplated by this Agreement and
(2) if any state takeover Law or similar Law becomes applicable to this
Agreement, the Merger or any of the other transactions contemplated by this
Agreement, use reasonable best efforts to ensure that the Merger and the other
transactions contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such Law on this Agreement, the Merger and the other
transactions contemplated by this Agreement. Notwithstanding the foregoing or
any other provision of this Agreement: (a) with respect to the assets of the
cardiac rhythm management businesses of Parent, the Company and their
respective Affiliates, Parent and its Affiliates shall only be required to
agree to Divestitures of such assets that individually or in the aggregate
would not reasonably be expected to have greater than a de minimis adverse
effect on the combined cardiac rhythm management business of Parent, the
Company and their respective Affiliates, taken as a whole; (b) with respect to
the assets of the coronary vascular intervention business of Parent and its
Affiliates, Parent and its Affiliates shall only be required to agree to
Divestitures of such assets that individually or in the aggregate would not
reasonably be expected to have greater than a de minimis adverse effect on the
drug eluting stent business of Parent and its Affiliates, taken as a whole;
(c) with respect to the assets of the vascular intervention business of the
Company and its Affiliates, Parent and its Affiliates shall only be required
to agree to Divestitures of such assets that individually or in the aggregate
would not reasonably be expected to have a material adverse effect on the
combined vascular intervention business of Parent, the Company and their
respective Affiliates, taken as a whole; (d) none of Parent and its Affiliates
shall be required to agree to any Divestiture of any of their assets except as
provided in clauses (a) and (b) above and (e) if, but only if, directed by
Parent, the Company shall agree to any Divestiture of any of its assets or the
assets of any of its Affiliates if such Divestiture is conditioned on the
consummation of the Merger. For purposes of this Agreement, a "Divestiture" of
any asset shall mean (i) any sale, transfer, license, separate holding,
divestiture or other disposition, or any prohibition of, or any limitation on,
the acquisition, ownership, operation, effective control or exercise of full
rights of ownership, of such asset or (ii) the termination or amendment of any
existing relationships and contractual rights. It is agreed and understood
that, for purposes of this Agreement, a Divestiture of a business unit,
product line or development program may include (x) the transfer of any and
all assets primarily relating to that business unit or to the research,
development, manufacture, marketing or sale of that product line or
development program and (y) licensing or otherwise making available assets
that are related, but not primarily, to that business unit, product line or
development program; provided that Parent, the Company or their Affiliates
will be entitled to a license back or otherwise having made available
transferred assets to the extent that such assets
44
otherwise relate to other retained businesses, product lines or development
programs of Parent, the Company or any of their respective Affiliates. It is
understood and agreed by the parties that, for purposes of this Agreement, the
effect of any Divestiture required to be made pursuant to this Section 5.03
shall not, directly or indirectly, be deemed to result in a breach of the
representations and warranties set forth herein.
SECTION 5.04. COMPANY STOCK OPTIONS; ESPP. (a) As soon as
practicable following the date of this Agreement, the Board of Directors of
the Company (or, if appropriate, any committee thereof administering the
Company Stock Plans) shall adopt such resolutions or take such other actions
as may be required to effect the following:
(i) each Company Stock Option outstanding immediately prior to the
Effective Time shall be amended and converted into an option to acquire, on
the same terms and conditions as were applicable under such Company Stock
Option, the number of shares of Parent Common Stock (rounded down to the
nearest whole share) equal to the sum of (x) the product of (A) the number of
shares of Company Common Stock subject to such Company Stock Option and (B)
the Exchange Ratio and (y) the product of (A) the number of shares of Company
Common Stock subject to such Company Stock Option and (B) the Cash Portion
Option Exchange Multiple, at an exercise price per share of Parent Common
Stock (rounded up to the nearest whole cent) equal to the quotient obtained by
dividing (1) the aggregate exercise price for the shares of Company Common
Stock subject to such Company Stock Option by (2) the aggregate number of
shares of Parent Common Stock to be subject to such Company Stock Option after
giving effect to the adjustments in this clause (i) (each, as so adjusted, an
"Adjusted Option"); and
(ii) make such other changes to the Company Stock Plans as Parent
and the Company may agree are appropriate to give effect to the Merger.
(b) As soon as practicable following the date of this Agreement, the
Board of Directors of the Company (or, if appropriate, any committee of the
Board of Directors of the Company administering the ESPP), shall adopt such
resolutions or take such other actions as may be required to provide that with
respect to the ESPP (i) participants may not increase their payroll deductions
or purchase elections from those in effect on the date of this Agreement, (ii)
each participant's outstanding right to purchase shares of Company Common
Stock under the ESPP shall terminate on the day immediately prior to the day
on which the Effective Time occurs, provided that all amounts allocated to
each participant's account under the ESPP as of such date shall thereupon be
used to purchase from the Company whole shares of Company Common Stock at the
applicable price determined under the terms of the ESPP for the then
outstanding offering periods using such date as the final purchase date for
each such offering period, and (iii) the ESPP shall terminate immediately
following such purchases of Company Common Stock.
(c) The Company shall ensure that following the Effective Time, no
holder of a Company Stock Option (or former holder of a Company Stock Option)
or any participant in any Company Stock Plan, Company Benefit Plan or Company
Benefit Agreement shall have any right thereunder to acquire any capital stock
of the Company or the Surviving Corporation or any other equity interest
therein (including "phantom" stock or stock appreciation rights).
45
(d) The adjustments provided in Section 5.04(a) with respect to any
Company Stock Option to which Section 421(a) of the Code applies shall be and
are intended to be effected in a manner which is consistent with Section
424(a) of the Code. As soon as practicable following the Effective Time,
Parent shall deliver to the holders of Adjusted Options appropriate notices
setting forth such holders' rights pursuant to the respective Company Stock
Plans and the Contracts evidencing the grants of such Adjusted Options, which
shall provide, among other things, that such Adjusted Options and Contracts
have been assumed by Parent and shall continue in effect on the same terms and
conditions (subject to the adjustments required by this Section 5.04 after
giving effect to the Merger).
(e) Except as otherwise contemplated by this Section 5.04 and except
to the extent required under the respective terms of the Adjusted Options, all
restrictions or limitations on transfer and vesting with respect to Adjusted
Options, to the extent that such restrictions or limitations shall not have
already lapsed, and all other terms thereof, shall remain in full force and
effect with respect to such Adjusted Options after giving effect to the Merger
and the assumption by Parent as set forth above.
(f) As soon as practicable following the Effective Time, Parent
shall prepare and file with the SEC a registration statement on Form S-8 (or
another appropriate form) registering shares of Parent Common Stock subject to
issuance upon the exercise of the Adjusted Options. The Company shall
cooperate with, and assist Parent in the preparation of, such registration
statement. Parent shall keep such registration statement effective (and to
maintain the current status of the prospectus required thereby) for so long as
any Adjusted Options remain outstanding.
(g) For purposes of this Agreement, "Cash Portion Option Exchange
Multiple" means the quotient obtained by dividing (x) the Cash Portion by (y)
the Average Parent Stock Price.
(h) Prior to the Effective Time, each of Parent and the Company
shall use reasonable best efforts to cause any dispositions of Company Common
Stock (including derivative securities with respect to Company Common Stock)
or acquisitions of Parent Common Stock (including derivative securities with
respect to Parent Common Stock) resulting from the transactions contemplated
by this Agreement by each individual who is subject to the reporting
requirements of Section 16(a) of the Exchange Act with respect to the Company
to be exempt under Rule 16b-3 promulgated under the Exchange Act, such efforts
to include all steps required be taken in accordance with the No-Action Letter
dated January 12, 1999, issued by the SEC to Skadden, Arps, Slate, Xxxxxxx &
Xxxx LLP.
SECTION 5.05. INDEMNIFICATION, EXCULPATION AND INSURANCE. (a) Parent
shall cause the Surviving Corporation to assume the obligations with respect
to all rights to indemnification and exculpation from liabilities, including
advancement of expenses, for acts or omissions occurring at or prior to the
Effective Time now existing in favor of the current or former directors or
officers of the Company as provided in the Company Articles, the Company By-
laws or any indemnification Contract between such directors or officers and
the Company (in each case, as in effect on the date hereof), without further
action, as of the Effective Time and
46
such obligations shall survive the Merger and shall continue in full force and
effect in accordance with their terms.
(b) In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person
and is not the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially all
of its properties and other assets to any person, then, and in each such case,
Parent shall cause proper provision to be made so that the successors and
assigns of the Surviving Corporation shall expressly assume the obligations
set forth in this Section 5.05. In the event (A) the Surviving Corporation
transfers any material portion of its assets, in a single transaction or in a
series of transactions or (B) Parent takes any action to materially impair the
financial ability of the Surviving Corporation to satisfy the obligations
referred to in Section 5.05(a), Parent will either guarantee such obligations
or take such other action to insure that the ability of the Surviving
Corporation, legal and financial, to satisfy such obligations will not be
diminished in any material respect.
(c) For six years after the Effective Time, Parent shall maintain
(directly or indirectly through the Company's existing insurance programs) in
effect the Company's current directors' and officers' liability insurance in
respect of acts or omissions occurring at or prior to the Effective Time,
covering each person currently covered by the Company's directors' and
officers' liability insurance policy (a complete and accurate copy of which
has been heretofore delivered to Parent), on terms with respect to such
coverage and amounts no less favorable than those of such policy in effect on
the date hereof; provided, however, that Parent may (i) substitute therefor
policies of Parent containing terms with respect to coverage (including as
coverage relates to deductibles and exclusions) and amounts no less favorable
to such directors and officers or (ii) request that the Company obtain such
extended reporting period coverage under its existing insurance programs (to
be effective as of the Effective Time); provided further, however, that in
satisfying its obligation under this Section 5.05(c), neither the Company nor
Parent shall be obligated to pay more than in the aggregate the amount set
forth in Section 5.05(c) of the Company Disclosure Schedule to obtain such
coverage. It is understood and agreed that in the event such coverage cannot
be obtained for such amount or less in the aggregate, Parent shall only be
obligated to provide such coverage as may be obtained for such aggregate
amount.
(d) The provisions of this Section 5.05 (i) are intended to be for
the benefit of, and will be enforceable by, each indemnified party, his or her
heirs and his or her representatives and (ii) are in addition to, and not in
substitution for, any other rights to indemnification or contribution that any
such person may have by Contract or otherwise.
SECTION 5.06. FEES AND EXPENSES. (a) Except as provided in
paragraphs (b), (c) and (d) of this Section 5.06, all fees and expenses
incurred in connection with this Agreement, the Merger and the other
transactions contemplated by this Agreement shall be paid by the party
incurring such fees or expenses, whether or not the Merger is consummated,
except that expenses incurred in connection with the printing and mailing of
the Form S-4 and the Proxy Statement shall be shared equally by Parent and the
Company.
47
(b) In the event that (i) this Agreement is terminated by Parent
pursuant to Section 7.01(e) (other than as a result of a Company Adverse
Recommendation Change following the occurrence of a Parent Material Adverse
Effect), (ii) this Agreement is terminated by the Company pursuant to Section
7.01(f) or (iii) (A) prior to the obtaining of the Shareholder Approval, a
Takeover Proposal shall have been made to the Company or shall have been made
directly to the shareholders of the Company generally or shall have otherwise
become publicly known or any person shall have publicly announced an intention
(whether or not conditional) to make a Takeover Proposal, (B) thereafter this
Agreement is terminated by either Parent or the Company pursuant to Section
7.01(b)(i) (but only if a vote to obtain the Shareholder Approval or the
Shareholders' Meeting has not been held) or Section 7.01(b)(iii) and (C)
within 12 months after such termination, the Company enters into a definitive
Contract to consummate, or consummates, the transactions contemplated by any
Takeover Proposal, then the Company shall pay Parent a fee equal to
$750,000,000 (the "Parent Termination Fee") by wire transfer of same-day funds
on the first business day following (x) in the case of a payment required by
clause (i) or (ii) above, the date of termination of this Agreement and (y) in
the case of a payment required by clause (iii) above, the date of the first to
occur of the events referred to in clause (iii)(C). For purposes of clause
(iii)(C) of the immediately preceding sentence only, the term "Takeover
Proposal" shall have the meaning assigned to such term in Section 4.02(a)
except that all references to "15%" therein shall be deemed to be references
to "35%".
(c) In the event that (i) this Agreement is terminated pursuant to
Section 7.01(b)(i), 7.01(b)(ii) or 7.01(c)(ii) and (ii) at the time of any
such termination all of the conditions set forth in Article VI have been
satisfied or waived except for any of the conditions set forth in Section
6.01(b), 6.01(c), 6.01(d), 6.02(c) or 6.02(d) (in the case of Sections
6.01(d), 6.02(c) and 6.02(d), only to the extent that the conditions set forth
therein have not been satisfied due to a suit, action or proceeding by any
national Governmental Entity or the imposition of a Restraint, in either case
relating to competition, merger control, antitrust or similar Laws), then
Parent shall pay to the Company a fee equal to $700 million (the "Company
Termination Fee") by wire transfer of same-day funds on the first business day
following the date of termination of this Agreement.
(d) The Company and Parent acknowledge and agree that the agreements
contained in Sections 5.06(b) and 5.06(c) are an integral part of the
transactions contemplated by this Agreement, and that, without these
agreements, the Company and Parent would not enter into this Agreement;
accordingly, (i) if the Company fails promptly to pay the amount due pursuant
to Section 5.06(b), and, in order to obtain such payment, Parent commences a
suit that results in a judgment against the Company for the Parent Termination
Fee, the Company shall pay to Parent its costs and expenses (including
attorneys' fees and expenses) in connection with such suit, together with
interest on the amount of the Parent Termination Fee from the date such
payment was required to be made until the date of payment at the prime rate of
Citibank, N.A., in effect on the date such payment was required to be made.;
and (ii) if Parent fails promptly to pay the amount due pursuant to Section
5.06(c), and, in order to obtain such payment, the Company commences a suit
that results in a judgment against Parent for the Company Termination Fee,
Parent shall pay to the Company its costs and expenses (including attorneys'
fees and expenses) in connection with such suit, together with interest on the
amount of the Company Termination Fee from the date such payment was required
to be made until the date of payment at the prime rate of Citibank, N.A., in
effect on the date such payment was required to be made.
48
SECTION 5.07. PUBLIC ANNOUNCEMENTS. Except with respect to any
Company Adverse Recommendation Change made in accordance with the terms of
this Agreement, Parent and the Company shall consult with each other before
issuing, and give each other the opportunity to review and comment upon, any
press release or other public statements with respect to the transactions
contemplated by this Agreement, including the Merger, and shall not issue any
such press release or make any such public statement prior to such
consultation, except as such party may reasonably conclude may be required by
applicable Law, court process or by obligations pursuant to any listing
agreement with any national securities exchange or national securities
quotation system. The parties agree that the initial press release to be
issued with respect to the transactions contemplated by this Agreement shall
be in the form heretofore agreed to by the parties.
SECTION 5.08. AFFILIATES. As soon as practicable after the date
hereof, the Company shall deliver to Parent a letter identifying all persons
who at the time this Agreement is submitted for adoption by the shareholders
of the Company may be deemed to be "affiliates" of the Company for purposes of
Rule 145 under the Securities Act. The Company shall use its reasonable best
efforts to cause each such person to deliver to Parent at least 30 days prior
to the Closing Date a written agreement substantially in the form attached as
Exhibit B hereto.
SECTION 5.09. STOCK EXCHANGE LISTING. To the extent Parent does not
issue or intend to issue treasury shares in the Merger or to holders of
Adjusted Options that are already listed, Parent shall use its reasonable best
efforts to cause the shares of Parent Common Stock to be issued in the Merger
and to holders of Adjusted Options to be promptly approved for listing on the
NYSE, subject to official notice of issuance, prior to the Closing Date.
SECTION 5.10. SHAREHOLDER LITIGATION. The Company shall give Parent
the opportunity to participate in the defense or settlement of any shareholder
litigation against the Company and/or its directors relating to the
transactions contemplated by this Agreement, and no such settlement shall be
agreed to without Parent's prior written consent.
SECTION 5.11. EMPLOYEE MATTERS. (a) (i) For a period of twelve
months following the Effective Time, the employees of the Company and its
Subsidiaries who remain in the employment of the Surviving Corporation and its
Subsidiaries (the "Continuing Employees") shall receive employee benefits that
in the aggregate are substantially comparable to the employee benefits
provided to such employees immediately prior to the Effective Time; (ii) for
the six-month period immediately following the expiration of the twelve-month
period described in the preceding clause (i), the Continuing Employees shall
receive employee benefits that in the aggregate are substantially comparable
to either the employee benefits provided to such employees immediately prior
to the Effective Time or the employee benefits provided to similarly situated
employees of Parent and its Subsidiaries; and (iii) for a period of not less
than eighteen months following the Effective Time, the Continuing Employees
shall receive base salary or wage rates that are not less than those in effect
for such Continuing Employees immediately prior to the Effective Time;
provided that neither Parent nor the Surviving Corporation nor any of their
Subsidiaries shall have any obligation to issue, or adopt any plans or
arrangements providing for the issuance of, shares of capital stock, warrants,
options, stock appreciation rights or other rights in respect of any shares of
capital stock of any entity or any securities convertible or exchangeable into
such shares pursuant to any such plans or
49
arrangements; provided, further, that no plans or arrangements of the Company
or any of its Subsidiaries providing for such issuance shall be taken into
account in determining whether employee benefits are substantially comparable
in the aggregate.
(b) Nothing contained herein shall be construed as requiring, and
the Company shall take no action that would have the effect of requiring,
Parent or the Surviving Corporation to continue any specific employee benefit
plans or to continue the employment of any specific person.
(c) Parent shall cause the Surviving Corporation to recognize the
service of each Continuing Employee as if such service had been performed with
Parent (i) for purposes of vesting (but not benefit accrual) under Parent's
defined benefit pension plan, (ii) for purposes of eligibility for vacation
under Parent's vacation program, (iii) for purposes of eligibility and
participation under any health or welfare plan maintained by Parent (other
than any post-employment health or post-employment welfare plan) , (iv) for
purposes of eligibility for the company matching contribution under Parent's
401(k) savings plan (it being understood that each Continuing Employee who was
participating in the Company's 401(k) savings plan immediately prior to
becoming eligible to participate in Parent's 401(k) savings plan shall be
immediately eligible for the company matching contribution under Parent's
401(k) savings plan) and (v) unless covered under another arrangement with or
of the Company, for benefit accrual purposes under Xxxxxx's severance plan (in
the case of each of clauses (i), (ii), (iii), (iv) and (v), solely to the
extent that Parent makes such plan or program available to employees of the
Surviving Corporation, it being Parent's current intention to do so), but not
for purposes of any other employee benefit plan of Parent.
(d) With respect to any welfare plan maintained by Parent in which
Continuing Employees are eligible to participate after the Effective Time,
Parent shall, and shall cause the Surviving Corporation to, (i) waive all
limitations as to preexisting conditions and exclusions with respect to
participation and coverage requirements applicable to such employees to the
extent such conditions and exclusions were satisfied or did not apply to such
employees under the welfare plans maintained by the Company prior to the
Effective Time and (ii) provide each Continuing Employee with credit for any
co-payments and deductibles paid prior to the Effective Time in satisfying any
analogous deductible or out-of-pocket requirements to the extent applicable
under any such plan.
(e) Subject to the provisions of Section 5.11(a) through (d), Parent
shall assume all obligations under and honor in accordance with their terms,
and shall cause the Surviving Corporation to honor in accordance with their
terms, the Company Benefit Plans and Company Benefit Agreements listed on
Section 5.11(e) of the Company Disclosure Schedule (as modified, if
applicable, as agreed between Parent and individual employees of the Company
or its Subsidiaries). Parent acknowledges and agrees that the Merger will
constitute a "change in control" within the meaning of the Company Benefit
Plans and Company Benefit Agreements which include a definition of such (or
substantially similar) concept, except to the extent otherwise agreed between
Parent and individual employees of the Company and its Subsidiaries.
(f) Notwithstanding the foregoing provisions of Section 5.11, the
provisions of Section 5.11(a), (c) and (d) shall apply only with respect to
Continuing Employees who are
49
covered under Company Benefit Plans that are maintained primarily for the
benefit of employees employed in the United States (including Continuing
Employees regularly employed outside the United States to the extent they
participate in such Company Benefit Plans). With respect to Continuing
Employees not described in the preceding sentence, Parent shall, and shall
cause the Surviving Corporation and its Subsidiaries to, comply with all
applicable laws, directives and regulations relating to employees and employee
benefits matters applicable to such employees.
SECTION 5.12. COMPANY NOTES. Each of the Company, Parent and Sub
shall take each action required to be taken by such party pursuant to the
Indenture dated as of January 18, 1996, between the Company and Citibank,
N.A., with respect to the Company Notes, as necessary to consummate the Merger
and the other transactions contemplated by this Agreement in compliance
therewith.
SECTION 5.13. RIGHTS AGREEMENT. The Board of Directors of the
Company shall take all further actions (in addition to those referred to in
Section 3.01(v)) requested by Parent in order to render the Company Rights
inapplicable to the Merger and the other transactions contemplated by this
Agreement. Except as provided above with respect to the Merger and the other
transactions contemplated by this Agreement, the Board of Directors of the
Company shall not, without the prior written consent of Parent, amend, take
any action with respect to, or make any determination under, the Rights
Agreement (including a redemption of the Company Rights) to facilitate a
Takeover Proposal.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of each party to effect the Merger is
subject to the satisfaction or (to the extent permitted by Law) waiver by
Parent and the Company on or prior to the Closing Date of the following
conditions:
(a) SHAREHOLDER APPROVAL. The Shareholder Approval shall have been
obtained.
(b) NYSE LISTING. The shares of Parent Common Stock issuable to the
shareholders of the Company and to holders of Adjusted Options as
contemplated by this Agreement shall have been approved for listing on
the NYSE, subject to official notice of issuance.
(c) ANTITRUST. (i) The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or
shall have expired and (ii) the European Commission shall have issued a
decision under Article 6(1)(b), 8(1) or 8(2) of the EC Merger Regulation
(or shall have been deemed to have done so under Article 10(6) of the EC
Merger Regulation) declaring the Merger compatible with the EC Common
Market (and/or, as may be the case, any national competition authority in
the
50
EC to which all or part of the case may have been transferred shall have
issued a decision with similar effect or have been deemed to have done
so).
(d) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction or other judgment or order issued by
any court or agency of competent jurisdiction or other Law, rule, legal
restraint or prohibition (collectively, "Restraints") shall be in effect
preventing the consummation of the Merger.
(e) FORM S-4. The Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order.
SECTION 6.02. CONDITIONS TO OBLIGATIONS OF PARENT AND SUB. The
obligations of Parent and Sub to effect the Merger are further subject to the
satisfaction or (to the extent permitted by Law) waiver by Parent on or prior
to the Closing Date of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. (i) The representations and
warranties of the Company contained in Sections 3.01(c), 3.01(d),
3.01(g)(iv) (but only with respect to current and former directors and
Tier I Employees), 3.01(i)(2)(A), 3.01(q), 3.01(r) (but not with respect
to the last sentence thereof) and 3.01(v) of this Agreement that are
qualified as to materiality or by reference to Material Adverse Effect or
Material Adverse Change shall be true and correct, and such
representations and warranties of the Company that are not so qualified
shall be true and correct in all material respects, in each case as of
the date of this Agreement and as of the Closing Date as though made on
the Closing Date, except to the extent such representations and
warranties expressly relate to an earlier date, in which case as of such
earlier date, (ii) the representations and warranties of the Company
contained in Sections 3.01(i)(2)(B) and (C) shall be true and correct as
of the date of this Agreement as though made on the Closing Date, except
to the extent that the facts or matters as to which such representations
and warranties are not so true and correct as of such date, individually
or in the aggregate, would not reasonably be expected to have a material
adverse effect on the reasonably expected benefits of the Merger to
Parent and (iii) all other representations and warranties of the Company
contained in this Agreement shall be true and correct as of the date of
this Agreement and as of the Closing Date as though made on the Closing
Date, except to the extent such representations and warranties expressly
relate to a specified date, in which case as of such specified date, and
except further, in the case of this clause (iii), to the extent that the
facts or matters as to which such representations and warranties are not
so true and correct as of such dates (without giving effect to any
qualifications or limitations as to materiality or Material Adverse
Effect or Material Adverse Change set forth therein), individually or in
the aggregate, have not had and would not reasonably be expected to have
a Material Adverse Effect. Parent shall have received a certificate
signed on behalf of the Company by an executive officer of the Company to
such effect.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall
have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and
Parent shall have received a certificate signed on behalf of the Company
by the chief executive officer and the chief financial officer of the
Company to such effect.
52
(c) NO LITIGATION. There shall not be pending any suit, action or
proceeding by any national Governmental Entity (i) seeking to restrain or
prohibit the consummation of the Merger or any other transaction
contemplated by this Agreement or seeking to obtain from the Company,
Parent, Sub or any other Affiliate of Parent any damages that are
material in relation to the Company, (ii) seeking to impose limitations
on the ability of Parent or any Affiliate of Parent to hold, or exercise
full rights of ownership of, any shares of capital stock of the Surviving
Corporation, including the right to vote such shares on all matters
properly presented to the shareholders of the Surviving Corporation,
(iii) seeking to prohibit Parent or any of its Affiliates from
effectively controlling in any material respect the business or
operations of the Company or any of its Affiliates, (iv) seeking any
Divestiture that is not required to be effected pursuant to the terms of
this Agreement or (v) that has had or would reasonably be expected to
have a Material Adverse Effect or Parent Material Adverse Effect.
(d) RESTRAINTS. No Restraint that would reasonably be expected to
result, directly or indirectly, in any of the effects referred to in
clauses (i) through (v) of paragraph (c) of this Section 6.02 shall be in
effect.
SECTION 6.03. CONDITIONS TO OBLIGATION OF THE COMPANY. The obligation
of the Company to effect the Merger is further subject to the satisfaction or
(to the extent permitted by Law) waiver by the Company on or prior to the
Closing Date of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. (i) The representations and
warranties of Parent and Sub contained in Section 3.02(b) of this
Agreement that are qualified as to materiality or by reference to Parent
Material Adverse Effect or Parent Material Adverse Change shall be true
and correct, and such representations and warranties of Parent that are
not so qualified shall be true and correct in all material respects, in
each case as of the date of this Agreement and as of the Closing Date as
though made on the Closing Date, except to the extent such
representations and warranties expressly relate to an earlier date, in
which case as of such earlier date and (ii) all other representations and
warranties of Parent contained in this Agreement shall be true and
correct as of the date of this Agreement and as of the Closing Date as
though made on the Closing Date, except to the extent such
representations and warranties expressly relate to a specified date, in
which case as of such specified date, and except further, in the case of
this clause (ii), to the extent that the facts or matters as to which
such representations and warranties are not so true and correct as of
such dates (without giving effect to any qualifications or limitations as
to materiality or Parent Material Adverse Effect or Parent Material
Adverse Change set forth therein), individually or in the aggregate, have
not had and would not reasonably be expected to have a Parent Material
Adverse Effect. The Company shall have received a certificate signed on
behalf of Parent by an executive officer of Parent to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT AND SUB. Parent and Sub
shall have performed in all material respects all obligations required to
be performed by them under this Agreement at or prior to the Closing
Date, and the Company shall have received a certificate signed on behalf
of Parent by an executive officer of Parent to such effect.
53
SECTION 6.04. FRUSTRATION OF CLOSING CONDITIONS. None of the Company,
Parent or Sub may rely on the failure of any condition set forth in Section
6.01, 6.02 or 6.03, as the case may be, to be satisfied if such failure was
caused by such party's failure to act in good faith or to use its reasonable
best efforts to consummate the Merger and the other transactions contemplated
by this Agreement, as required by and subject to Section 5.03.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. TERMINATION. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after receipt of the
Shareholder Approval:
(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company:
(i) if the Merger shall not have been consummated on or before
February 28, 2006; provided, however, that the right to terminate
this Agreement under this Section 7.01(b)(i) shall not be available
to any party whose wilful breach of a representation or warranty in
this Agreement or whose other action or failure to act has been a
principal cause of or resulted in the failure of the Merger to be
consummated on or before such date;
(ii) if any Restraint having any of the effects set forth in
Section 6.01(d) shall be in effect and shall have become final and
nonappealable; or
(iii) if the Shareholder Approval shall not have been obtained
at the Shareholders' Meeting duly convened therefor or at any
adjournment or postponement thereof;
(c) by Parent (i) if the Company shall have breached or failed to
perform any of its representations, warranties, covenants or agreements
set forth in this Agreement, which breach or failure to perform (A) would
give rise to the failure of a condition set forth in Section 6.02(a) or
6.02(b) and (B) is incapable of being cured by the Company within 30
calendar days following receipt of written notice of such breach or
failure to perform from Parent or (ii) if any Restraint having the
effects referred to in clauses (i) through (v) of Section 6.02(c) shall
be in effect and shall have become final and nonappealable;
(d) by the Company, if Parent shall have breached or failed to
perform any of its representations, warranties, covenants or agreements
set forth in this Agreement, which breach or failure to perform (A) would
give rise to the failure of a condition set forth in Section 6.03(a) or
6.03(b) and (B) is incapable of being cured by Parent within 30 calendar
days following receipt of written notice of such breach or failure to
perform from the Company;
54
(e) by Parent, in the event that prior to the obtaining of the
Shareholder Approval (i) a Company Adverse Recommendation Change shall
have occurred or (ii) the Board of Directors of the Company fails
publicly to reaffirm its adoption and recommendation of this Agreement,
the Merger or the other transactions contemplated by this Agreement
within ten business days of receipt of a written request by Parent to
provide such reaffirmation following a Takeover Proposal; or
(f) by the Company in accordance with the terms and subject to the
conditions of Section 4.02(b).
SECTION 7.02. EFFECT OF TERMINATION. In the event of termination of
this Agreement by either the Company or Parent as provided in Section 7.01,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Parent, Sub or the Company under this
Agreement, other than the provisions of Section 3.01(s) and 3.02(g), the
second, third and fourth sentences of Section 5.02(a), Section 5.06, this
Section 7.02 and Article VIII, which provisions shall survive such
termination; provided, however, that no such termination shall relieve any
party hereto from any liability or damages resulting from the wilful and
material breach by a party of any of its representations, warranties,
covenants or agreements set forth in this Agreement.
SECTION 7.03. AMENDMENT. This Agreement may be amended by the parties
hereto at any time before or after receipt of the Shareholder Approval;
provided, however, that after such approval has been obtained, there shall be
made no amendment that by applicable Law requires further approval by the
shareholders of the Company without such approval having been obtained. This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
SECTION 7.04. EXTENSION; WAIVER. At any time prior to the Effective
Time, the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) to the extent permitted by
applicable Law, waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto or (c) subject
to the proviso to the first sentence of Section 7.03 and to the extent
permitted by applicable Law, waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of such rights nor shall any single or partial
exercise by any party to this Agreement of any of its rights under this
Agreement preclude any other or further exercise of such rights or any other
rights under this Agreement.
SECTION 7.05. PROCEDURE FOR TERMINATION OR AMENDMENT. A termination
of this Agreement pursuant to Section 7.01 or an amendment of this Agreement
pursuant to Section 7.03 shall, in order to be effective, require, in the case
of Parent or the Company, action by its Board of Directors or, with respect to
any amendment of this Agreement pursuant to Section 7.03, the duly authorized
committee of its Board of Directors to the extent permitted by applicable Law.
55
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 8.01 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 8.02. NOTICES. Except for notices that are specifically
required by the terms of this Agreement to be delivered orally, all notices,
requests, claims, demands and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (which is
confirmed) or sent by overnight courier (providing proof of delivery) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
if to Parent or Sub, to:
Xxxxxxx & Xxxxxxx One
Xxxxxxx & Xxxxxxx Plaza
New Brunswick, NJ 08933
Telecopy No.: (000) 000-0000
Attention: Office of General Counsel
with a copy to:
Xxxxxxx, Swaine & Xxxxx LLP
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, III, Esq.
if to the Company, to:
Guidant Corporation
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: General Counsel
56
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx, Xx., Esq.
SECTION 8.03. DEFINITIONS. For purposes of this Agreement:
(a) an "Affiliate" of any person means another person that directly
or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person;
(b) "Knowledge" of any person that is not an individual means, with
respect to any matter in question, the actual knowledge of such person's
executive officers after making due inquiry of the current Tier I
Employees and Tier II Employees having primary responsibility for such
matter;
(c) "Material Adverse Change" or "Material Adverse Effect" means any
change, effect, event, occurrence, state of facts or development which
individually or in the aggregate would reasonably be expected to result
in any change or effect, that is materially adverse to the business,
financial condition or results of operations of the Company and its
Subsidiaries, taken as a whole; provided, that none of the following
shall be deemed, either alone or in combination, to constitute, and none
of the following shall be taken into account in determining whether there
has been or will be, a Material Adverse Change or Material Adverse
Effect: (A) any change, effect, event, occurrence, state of facts or
development (1) in the financial or securities markets or the economy in
general, (2) in the industries in which the Company or any of its
Subsidiaries operates in general, to the extent that such change, effect,
event, occurrence, state of facts or development does not
disproportionately impact the Company or any of its Subsidiaries, or (3)
resulting from any Divestiture required to be effected pursuant to the
terms of this Agreement or (B) any failure, in and of itself, by the
Company to meet any internal or published projections, forecasts or
revenue or earnings predictions (it being understood that the facts or
occurrences giving rise or contributing to such failure may be deemed to
constitute, or be taken into account in determining whether there has
been or would reasonably be expected to be, a Material Adverse Effect or
a Material Adverse Change);
(d) "Parent Material Adverse Change" or "Parent Material Adverse
Effect" means any change, effect, event, occurrence, state of facts or
development which individually or in the aggregate would reasonably be
expected to result in any change or effect, that is materially adverse to
the business, financial condition or results of operations of Parent and
its Subsidiaries, taken as a whole; provided, that none of the following
shall be deemed, either alone or in combination, to constitute, and none
of the following shall be taken into account in determining whether there
has been or will be, a
57
Parent Material Adverse Change or Parent Material Adverse Effect: (A) any
change, effect, event, occurrence, state of facts or development (1) in
the financial or securities markets or the economy in general, (2) in the
industries in which Parent or any of its Subsidiaries operates in
general, to the extent that such change, effect, event, occurrence, state
of facts or development does not disproportionately impact Parent or any
of its Subsidiaries or (3) resulting from any Divestiture required to be
effected pursuant to the terms of this Agreement or (B) any failure, in
and of itself, by Parent to meet any internal or published projections,
forecasts or revenue or earnings predictions (it being understood that
the facts or occurrences giving rise or contributing to such failure may
be deemed to constitute, or be taken into account in determining whether
there has been or would reasonably be expected to be, a Parent Material
Adverse Effect or a Parent Material Adverse Change);
(e) "person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity; and
(f) a "Subsidiary" of any person means another person, an amount of
the voting securities, other voting rights or voting partnership
interests of which is sufficient to elect at least a majority of its
board of directors or other governing body (or, if there are no such
voting interests, 50% or more of the equity interests of which) is owned
directly or indirectly by such first person.
SECTION 8.04. INTERPRETATION. When a reference is made in this
Agreement to an Article, a Section, Exhibit or Schedule, such reference shall
be to an Article of, a Section of, or an Exhibit or Schedule to, this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include", "includes" or "including" are used in this Agreement,
they shall be deemed to be followed by the words "without limitation". The
words "hereof", "herein" and "hereunder" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. References to "this Agreement" shall
include the Company Disclosure Schedule. All terms defined in this Agreement
shall have the defined meanings when used in any certificate or other document
made or delivered pursuant hereto unless otherwise defined therein. The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such term. Any Contract, instrument or Law
defined or referred to herein or in any Contract or instrument that is
referred to herein means such Contract, instrument or Law as from time to time
amended, modified or supplemented, including (in the case of Contracts or
instruments) by waiver or consent and (in the case of Laws) by succession of
comparable successor Laws and references to all attachments thereto and
instruments incorporated therein. References to a person are also to its
permitted successors and assigns.
SECTION 8.05. CONSENTS AND APPROVALS. For any matter under this
Agreement requiring the consent or approval of any party to be valid and
binding on the parties hereto, such consent or approval must be in writing.
58
SECTION 8.06. COUNTERPARTS. This Agreement may be executed in one or
more counterparts (including by facsimile), all of which shall be considered
one and the same agreement and shall become effective when one or more
counterparts have been signed by each of the parties and delivered to the
other parties.
SECTION 8.07. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement (including the Exhibits and Schedules) and the Confidentiality
Agreement and any agreements entered into contemporaneously herewith (a)
constitute the entire agreement, and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement and the Confidentiality Agreement and (b)
except for the provisions of Article II and Section 5.05, are not intended to
and do not confer upon any person other than the parties any legal or
equitable rights or remedies.
SECTION 8.08. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF INDIANA, REGARDLESS OF
THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS
OF LAWS THEREOF.
SECTION 8.09. ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties, and any assignment without such consent
shall be null and void, except that Sub, upon prior written notice to the
Company, may assign, in its sole discretion, any of or all its rights,
interests and obligations under this Agreement to Parent or to any direct or
indirect wholly owned Subsidiary of Parent, but no such assignment shall
relieve Parent or Sub of any of its obligations hereunder. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.
SECTION 8.10. SPECIFIC ENFORCEMENT; CONSENT TO JURISDICTION. The
parties agree that irreparable damage would occur and that the parties would
not have any adequate remedy at law in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in the
United States District Court for the Southern District of New York, this being
in addition to any other remedy to which they are entitled at law or in
equity. In addition, each of the parties hereto (a) consents to submit itself
to the personal jurisdiction of the United States District Court for the
Southern District of New York in the event any dispute arises out of this
Agreement or the transactions contemplated by this Agreement, (b) agrees that
it will not attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court and (c) agrees that it will not
bring any action relating to this Agreement or the transactions contemplated
by this Agreement in any court other than the United States District Court for
the Southern District of New York.
SECTION 8.11. WAIVER OF JURY TRIAL. Each party hereto hereby waives,
to the fullest extent permitted by applicable Law, any right it may have to a
trial by jury in respect of any suit, action or other proceeding arising out
of this Agreement or the transactions
59
contemplated hereby. Each party hereto (a) certifies that no representative,
agent or attorney of any other party has represented, expressly or otherwise,
that such party would not, in the event of any action, suit or proceeding,
seek to enforce the foregoing waiver and (b) acknowledges that it and the
other parties hereto have been induced to enter into this Agreement, by, among
other things, the mutual waiver and certifications in this Section 8.11.
SECTION 8.12. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible to the fullest extent permitted by applicable Law in an acceptable
manner to the end that the transactions contemplated by this Agreement are
fulfilled to the extent possible.
60
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers hereunto duly authorized,
all as of the date first written above.
XXXXXXX & XXXXXXX,
by /s/ Xxxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Worldwide Chairman, Medical Devices
SHELBY MERGER SUB, INC.,
by /s Xxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
GUIDANT CORPORATION,
by /s/ Xxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
ANNEX I
TO THE MERGER AGREEMENT
INDEX OF DEFINED TERMS
Term
Acquisition Agreement...........................................Section 4.02(b)
Actions.........................................................Section 4.01(d)
Adjusted Option.................................................Section 5.04(a)
Affiliate.......................................................Section 8.03(a)
Agreement..............................................................Preamble
Alza............................................................Section 3.02(h)
Antitrust Filings..................................................Section 5.03
Articles of Merger.................................................Section 1.03
Average Parent Stock Price......................................Section 2.01(c)
Cash Portion....................................................Section 2.01(c)
Cash Portion Option Exchange Multiple...........................Section 5.04(h)
Certificate.....................................................Section 2.01(c)
Closing............................................................Section 1.02
Closing Date.......................................................Section 1.02
Closing Price...................................................Section 2.02(e)
Code....................................................................2.02(j)
Commonly Controlled Entity......................................Section 3.01(l)
Company................................................................Preamble
Company Adverse Recommendation Change...........................Section 4.02(b)
Company Articles...................................................Section 1.05
Company Benefit Agreements......................................Section 3.01(g)
Company Benefit Plans...........................................Section 3.01(l)
Company By-laws.................................................Section 3.01(a)
Company Common Stock...................................................Recitals
Company Disclosure Schedule........................................Section 3.01
Company Notes...................................................Section 4.01(a)
Company Pension Plan............................................Section 3.01(l)
Company Preferred Stock.........................................Section 3.01(c)
Company Restricted Stock........................................Section 3.01(c)
Company Rights..................................................Section 3.01(v)
Company SEC Documents...........................................Section 3.01(e)
Company Series A Preferred Stock................................Section 3.01(c)
Company Stock-Based Awards......................................Section 3.01(c)
Company Stock Options...........................................Section 3.01(c)
Company Stock Plans.............................................Section 3.01(c)
Company Termination Fee.........................................Section 5.06(c)
Company Welfare Plan............................................Section 3.01(l)
Confidentiality Agreement..........................................Section 5.02
Continuing Employees............................................Section 5.11(a)
Contract........................................................Section 3.01(d)
EC Merger Regulation............................................Section 3.01(d)
Effective Time.....................................................Section 1.03
Environmental Laws..............................................Section 3.01(j)
ERISA...........................................................Section 3.01(j)
ESPP............................................................Section 3.01(c)
Excess Distribution.............................................Section 4.01(d)
Exchange Act....................................................Section 3.01(d)
Exchange Agent..................................................Section 2.02(a)
Exchange Fund...................................................Section 2.02(a)
Exchange Ratio..................................................Section 2.01(c)
FDA.............................................................Section 3.01(u)
FDCA............................................................Section 3.01(j)
Filed Company SEC Documents........................................Section 3.01
Filed Parent SEC Documents ........................................Section 3.02
Form S-4........................................................Section 3.01(f)
GAAP............................................................Section 3.01(e)
Governmental Entity.............................................Section 3.01(d)
Hazardous Materials.............................................Section 3.01(j)
HSR Act.........................................................Section 3.01(d)
HSR Filing.........................................................Section 5.03
IBCL...............................................................Section 1.01
Intellectual Property Rights....................................Section 3.01(p)
IRS.............................................................Section 3.01(l)
Key Personnel...................................................Section 3.01(g)
Knowledge.......................................................Section 8.03(b)
Law.............................................................Section 3.01(d)
Legal Provisions................................................Section 3.01(j)
Liens...........................................................Section 3.01(b)
Material Adverse Change.........................................Section 8.03(c)
Material Adverse Effect.........................................Section 8.03(c)
Medical Device..................................................Section 3.01(u)
Merger.................................................................Recitals
Merger Consideration............................................Section 2.01(c)
New Rights Plan....................................................Section 5.13
Non-U.S. Subsidiary.............................................Section 4.01(d)
Notice of Superior Proposal.....................................Section 4.02(b)
NYSE....................................................................2.01(c)
Order...................................................................3.01(d)
Paragraph 6.............................................................3.01(r)
Parent.................................................................Preamble
Parent Common Stock....................................................Recitals
Parent Disclosure Schedule.........................................Section 3.02
Parent Material Adverse Change..................................Section 8.03(d)
Parent Material Adverse Effect..................................Section 8.03(d)
Parent Preferred Stock..........................................Section 3.02(h)
Parent SEC Documents............................................Section 3.02(c)
Parent Termination Fee..........................................Section 5.06(b)
Permits.........................................................Section 3.01(j)
Person..........................................................Section 8.03(e)
Post-Signing Returns............................................Section 4.01(d)
Primary Company Executives......................................Section 3.01(m)
Proxy Statement.................................................Section 3.01(d)
Representatives.................................................Section 4.02(a)
Release.........................................................Section 3.01(j)
Restraints......................................................Section 6.01(d)
Rights Agreement................................................Section 3.01(v)
SEC.............................................................Section 3.01(d)
Securities Act..................................................Section 3.01(e)
Shareholder Approval............................................Section 3.01(q)
Shareholders' Meeting...........................................Section 5.01(b)
Significant Subsidiary .........................................Section 3.01(a)
Social Security Act.............................................Section 3.01(u)
SOX.............................................................Section 3.01(e)
Stock Portion...................................................Section 2.01(c)
Sub....................................................................Preamble
Sub Articles....................................................Section 3.02(a)
Subsidiary......................................................Section 8.03(g)
Superior Proposal...............................................Section 4.02(a)
Surviving Corporation..............................................Section 1.01
Takeover Proposal...............................................Section 4.02(a)
tax.............................................................Section 3.01(n)
taxing authority................................................Section 3.01(n)
tax return......................................................Section 3.01(n)
Tier I Employee.................................................Section 3.01(g)
Tier II Employee................................................Section 3.01(g)
EXHIBIT A
TO THE MERGER AGREEMENT
RESTATED ARTICLES OF INCORPORATION
OF THE SURVIVING CORPORATION
FIRST: The name of the corporation (hereinafter called the
"Corporation") is Guidant Corporation.
SECOND: The aggregate number of shares which the Corporation shall
have authority to issue is 1,000 shares of Common Stock, without par value.
THIRD: The street address of the Corporation's initial registered
office in Indiana is 000 Xxxx XxXxxxx Xxxxxx, Xxxxxxxxxxxx 00000 and the name
of its initial registered agent at that office is [Name of Agent].
FOURTH: The purpose of the Corporation is to engage in any lawful
act or activity for which corporations may be organized under the Business
Corporation Law of the State of Indiana.
FIFTH: In furtherance and not in limitation of the powers conferred
upon it by law, the Board of Directors of the Corporation is expressly
authorized to adopt, amend or repeal the By-laws of the Corporation.
SIXTH: To the fullest extent permitted by the Business Corporation
Law of the State of Indiana as it now exists and as it may hereafter be
amended, no director or officer of the Corporation shall be personally liable
to the Corporation or any of its shareholders for monetary damages for breach
of fiduciary duty as a director or officer.
SEVENTH: The Corporation shall, to the fullest extent permitted by
Section 23-1-37 of the Business Corporation Law of the State of Indiana, as
the same may be amended and supplemented, indemnify any and all persons whom
it shall have power to indemnify under said Section from and against any and
all of the expenses, liabilities, or other matters referred to in or covered
by said Section. Such indemnification shall be mandatory and not
discretionary. The indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any by-law, agreement, vote of shareholders or disinterested directors or
otherwise, both as to action in his or her official capacity and as to action
in another capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee, or agent and shall
inure to the benefit of the heirs, executors, and administrators of such a
person. Any repeal or modification of this Article SEVENTH shall not adversely
affect any right to indemnification of any persons existing at the time of
such repeal or modification with respect to any matter occurring prior to such
repeal or modification.
The Corporation shall to the fullest extent permitted by the
Business Corporation Law of the State of Indiana advance all costs and
expenses (including, without limitation, attorneys' fees and expenses)
incurred by any director or officer within 15 days of the presentation of same
to the Corporation, with respect to any one or more actions, suits or
proceedings, whether civil, criminal, administrative or investigative, so long
as the Corporation receives from the director or officer a written affirmation
required by the Business Corporation
2
Law of the State of Indiana of his or her good faith belief that he or she has
met the applicable standard of conduct established by the Business Corporation
Law of the State of Indiana, together with an unsecured undertaking to repay
such expenses if it shall ultimately be determined that such director or
officer is not entitled to be indemnified by the Corporation under the
Business Corporation Law of the State of Indiana. Such obligation to advance
costs and expenses shall be mandatory, and not discretionary, and shall
include, without limitation, costs and expenses incurred in asserting
affirmative defenses, counterclaims and cross claims. Such undertaking to
repay may, if first requested in writing by the applicable director or
officer, be on behalf of (rather than by) such director or officer, provided
that in such case the Corporation shall have the right to approve the party
making such undertaking.
EIGHTH: Unless and except to the extent that the By-laws of the
Corporation shall so require, the election of directors of the Corporation
need not be by written ballot.
EXHIBIT B
TO THE MERGER AGREEMENT
Form of Affiliate Letter
------------------------
Dear Sirs:
The undersigned, a holder of shares of common stock, without par
value ("Company Common Stock"), of Guidant Corporation, an Indiana corporation
(the "Company"), acknowledges that the undersigned may be deemed an
"affiliate" of the Company within the meaning of Rule 145 ("Rule 145")
promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), by the Securities and Exchange Commission (the "SEC"). Pursuant to the
terms of the Agreement and Plan of Merger dated as of December 15, 2004 (the
"Merger Agreement"), among Xxxxxxx & Xxxxxxx, a New Jersey corporation
("Parent"), Xxxxxx Xxxxxx Sub, Inc., an Indiana corporation and a wholly owned
subsidiary of Parent ("Sub"), and the Company, Merger Sub will be merged with
and into the Company (the "Merger"), and in connection with the Merger, the
undersigned is entitled to receive a certain number of shares of the common
stock of Parent ("Parent Common Stock"), determined in accordance with the
Merger Agreement, and $30.40 in cash for each share of Company Common Stock,
without interest.
If in fact the undersigned were an affiliate under the Securities
Act, the undersigned's ability to sell, assign or transfer the shares of
Parent Common Stock received by the undersigned in exchange for any shares of
Company Common Stock in connection with the Merger may be restricted unless
such transaction is registered under the Securities Act or an exemption from
such registration is available. The undersigned understands that such
exemptions are limited and the undersigned has obtained or will obtain advice
of counsel as to the nature and conditions of such exemptions, including
information with respect to the applicability to the sale of such securities
of Rules 144 and 145(d) promulgated under the Securities Act. The undersigned
understands that Parent will not be required to maintain the effectiveness of
any registration statement under the Securities Act for the purposes of resale
of Parent Common Stock by the undersigned.
The undersigned hereby represents to and covenants with Parent that
the undersigned will not sell, assign or transfer any of the shares of Parent
Common Stock received by the undersigned in exchange for shares of Company
Common Stock in connection with the Merger except (i) pursuant to an effective
registration statement under the Securities Act, (ii) in conformity with the
volume and other limitations of Rule 145 or (iii) in a transaction which, in
the opinion of counsel to the undersigned, such counsel to be reasonably
satisfactory to Parent and such opinion to be in form and substance reasonably
satisfactory to Parent, or as described in a "no-action" or interpretive
letter from the Staff of the SEC specifically issued with respect to a
transaction to be engaged in by the undersigned, is not required to be
registered under the Securities Act.
In the event of a sale or other disposition by the undersigned of
the shares of Parent Common Stock pursuant to Rule 145, the undersigned will
supply Parent with evidence of compliance with such Rule, in the form of a
letter in the form of Xxxxx X
2
hereto or the opinion of counsel or no-action letter referred to above. The
undersigned understands that Parent may instruct its transfer agent to
withhold the transfer of any shares of Parent Common Stock disposed of by the
undersigned, but that (provided such transfer is not prohibited by any other
provision of this letter agreement) upon receipt of such evidence of
compliance, Parent shall cause the transfer agent to effectuate the transfer
of the shares of Parent Common Stock sold as indicated in such letter.
Parent covenants that it will take all such actions as may be
reasonably available to it to permit the sale or other disposition of the
shares of Parent Common Stock by the undersigned under Rule 145 in accordance
with the terms thereof.
The undersigned acknowledges and agrees that the legend set forth
below will be placed on certificates representing the shares of Parent Common
Stock received by the undersigned in connection with the Merger or held by a
transferee thereof, which legend will be removed by delivery of substitute
certificates (i) if the undersigned provides evidence of compliance with Rule
145 to Parent, in the form of a letter in the form of Annex I hereto, or (ii)
upon receipt of an opinion in form and substance reasonably satisfactory to
Parent from counsel reasonably satisfactory to Parent to the effect that such
legend is no longer required for purposes of the Securities Act.
There will be placed on the certificates for Parent Common Stock
issued to the undersigned in connection with the Merger, or any substitutions
therefor, a legend stating in substance:
"The shares represented by this certificate were issued pursuant to
a transaction to which Rule 145 promulgated under the Securities Act of
1933 applies. The shares have not been acquired by the holder with a view
to, or for resale in connection with, any distribution thereof within the
meaning of the Securities Act of 1933. The shares may not be sold,
pledged or otherwise transferred except in accordance with Rule 145,
pursuant to a Registration Statement under the Securities Act of 1933 or
in accordance with an exemption from the registration requirements of the
Securities Act of 1933."
The undersigned acknowledges that (i) the undersigned has carefully
read this letter and understands the requirements hereof and the limitations
imposed upon the distribution, sale, transfer or other disposition of Parent
Common Stock and (ii) the receipt by Parent of this letter is an inducement to
Parent's obligations to consummate the Merger.
3
Execution of this letter should not be considered an admission on
the part of the undersigned that the undersigned is an "affiliate" of the
Company as described in the first paragraph of this letter, or as a waiver of
any rights the undersigned may have to object to any claim that the
undersigned is such an affiliate on or after the date of this letter.
Very truly yours,
Dated:
ANNEX I
TO EXHIBIT B
[Name]
[Date]
On , the undersigned sold the securities of Xxxxxxx & Xxxxxxx
("Parent") described below in the space provided for that purpose (the
"Securities"). The Securities were received by the undersigned in connection
with the merger of Shelby Merger Sub, Inc., an Indiana corporation, with and
into Guidant Corporation, an Indiana corporation.
Based upon the most recent report or statement filed by Parent with
the Securities and Exchange Commission, the Securities sold by the undersigned
were within the prescribed limitations set forth in paragraph (e) of Rule 144
promulgated under the Securities Act of 1933, as amended (the "Securities
Act").
The undersigned hereby represents that the Securities were sold in
"brokers' transactions" within the meaning of Section 4(4) of the Securities
Act or in transactions directly with a "market maker" as that term is defined
in Section 3(a)(38) of the Securities Exchange Act of 1934, as amended. The
undersigned further represents that the undersigned has not solicited or
arranged for the solicitation of orders to buy the Securities, and that the
undersigned has not made any payment in connection with the offer or sale of
the Securities to any person other than to the broker who executed the order
in respect of such sale.
Very truly yours,
Dated:
