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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
MEDTRONIC, INC.,
VIDAMED ACQUISITION CORP.
AND
VIDAMED, INC.
DATED AS OF DECEMBER 5, 2001
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TABLE OF CONTENTS
Page
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ARTICLE 1. THE MERGER .......................................................................... 1
1.1. The Merger ........................................................................... 1
1.2. The Closing .......................................................................... 1
1.3. Effective Time ....................................................................... 2
1.4. Effect of the Merger ................................................................. 2
ARTICLE 2. THE SURVIVING CORPORATION ........................................................... 2
2.1. Certificate of Incorporation of the Surviving Corporation ............................ 2
2.2. Bylaws of the Surviving Corporation .................................................. 2
2.3. Directors of the Surviving Corporation ............................................... 2
2.4. Officers of the Surviving Corporation ................................................ 2
ARTICLE 3. EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS;
CANCELLATION AND CONVERSION OF SECURITIES .................................................. 2
3.1. Capital Stock of Merger Sub .......................................................... 2
3.2. Cancellation of Treasury Stock and Parent Owned Stock ................................ 3
3.3. Conversion of Company Common Stock ................................................... 3
3.4. Exchange of Certificates ............................................................. 3
3.5. Stock Options ........................................................................ 5
3.6. Warrants ............................................................................. 5
3.7. Dissenting Shares .................................................................... 6
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY ....................................... 6
4.1. Company Disclosure Schedule .......................................................... 6
4.2. Organization and Qualification ....................................................... 6
4.3. Restated Certificate of Incorporation and Restated Bylaws ............................ 7
4.4. Capitalization ....................................................................... 7
4.5. Company SEC Reports; Financial Statements ............................................ 8
4.6. Information Supplied ................................................................. 9
4.7. Authorization and Enforceability ..................................................... 9
4.8. Absence of Certain Changes or Events ................................................. 10
4.9. Consents and Approvals ............................................................... 11
4.10. Permits .............................................................................. 11
4.11. Compliance with Laws ................................................................. 11
4.12. Litigation ........................................................................... 12
4.13. Employee Matters ..................................................................... 12
4.14. Labor Matters ........................................................................ 15
4.15. Real Property and Leases ............................................................. 15
4.16. Intellectual Property ................................................................ 15
4.17. Taxes ................................................................................ 17
4.18. Material Contracts ................................................................... 17
4.19. Suppliers ............................................................................ 18
4.20. Environmental Matters ................................................................ 18
4.21. Company Products; Regulation ......................................................... 18
4.22. Interested Party Transactions ........................................................ 19
4.23. Company Rights Agreement ............................................................. 19
4.24. Officers, Directors and Employees .................................................... 19
4.25. Board Recommendation ........................................................... 19
4.26. Vote Required .................................................................. 19
4.27. Fairness Opinion ............................................................... 20
4.28. No Finders ..................................................................... 20
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB ....................... 20
5.1. Organization and Qualification ................................................. 20
5.2. Ownership of Merger Sub ........................................................ 20
5.3. Authorization .................................................................. 20
5.4. Consents and Approvals ......................................................... 21
5.5. Information Supplied ........................................................... 21
5.6. Litigation ..................................................................... 21
5.7. Interim Operations of Merger Sub ............................................... 22
5.8. No Finders ..................................................................... 22
5.9. Financing ...................................................................... 22
ARTICLE 6. COVENANTS ..................................................................... 22
6.1. Conduct of Business of the Company ............................................. 22
6.2. Conduct of Business of the Parent .............................................. 24
6.3. No Solicitation ................................................................ 24
6.4. Company Stockholders Meeting ................................................... 26
6.5. Proxy Statement and Schedule 13E-3 ............................................. 27
6.6. Confidentiality ................................................................ 28
6.7. Access to Information .......................................................... 28
6.8. Approvals and Consents; Cooperation ............................................ 29
6.9. Employee Benefits and Employee Matters ......................................... 30
6.10. Company Employee Stock Purchase Plan ........................................... 30
6.11. Expenses ....................................................................... 30
6.12. Further Actions ................................................................ 30
6.13. Officers' and Directors' Indemnification ....................................... 30
6.14. Notification of Certain Matters ................................................ 31
6.15. Term Loan ...................................................................... 32
ARTICLE 7. CLOSING CONDITIONS ............................................................ 32
7.1. Conditions to Obligations of the Parent, Merger Sub and the Company ............ 32
7.2. Conditions to Obligations of the Parent and Merger Sub ......................... 32
7.3. Conditions to Obligations of the Company ....................................... 33
ARTICLE 8. TERMINATION AND ABANDONMENT ................................................... 34
8.1. Termination .................................................................... 34
8.2. Effect of Termination .......................................................... 35
8.3. Termination Fees ............................................................... 35
8.4. No Penalty; Costs of Collection ................................................ 36
ARTICLE 9. GENERAL PROVISIONS ............................................................ 36
9.1. Non-Survival of Representations, Warranties and Covenants ...................... 36
9.2. Amendment and Modification ..................................................... 36
9.3. Waiver ......................................................................... 36
9.4. Notices ........................................................................ 37
9.5. Specific Performance ........................................................... 37
9.6. Assignment ..................................................................... 38
9.7. Governing Law .................................................................. 38
9.8. Submission to Jurisdiction; Waivers ............................................ 38
9.9. Knowledge ................................................................ 38
9.10. Interpretation ........................................................... 38
9.11. Publicity ................................................................ 38
9.12. Entire Agreement ......................................................... 39
9.13. Severability ............................................................. 39
9.14. Counterparts ............................................................. 39
EXHIBITS:
Exhibit A: Certificate of Incorporation of the Surviving Corporation
Exhibit B: Form of Non-Negotiable, Secured Promissory Note
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is dated as of
December 5, 2001, by and among MEDTRONIC, INC., a Minnesota corporation (the
"Parent"), VIDAMED ACQUISITION CORP., a Delaware corporation and wholly-owned
subsidiary of the Parent ("Merger Sub"), and VIDAMED, INC., a Delaware
corporation (the "Company").
WHEREAS, the respective Boards of Directors of the Parent, Merger Sub
and the Company have each determined that an acquisition of the Company by the
Parent is advisable and in the best interests of their respective stockholders;
WHEREAS, in furtherance of the acquisition of the Company by the
Parent, the respective Boards of Directors of the Parent, Merger Sub and the
Company have each approved and declared advisable the merger of Merger Sub with
and into the Company (the "Merger") upon the terms and subject to the conditions
set forth in this Agreement, whereby each share of common stock, par value
$0.001 per share, of the Company (the "Company Common Stock") issued and
outstanding immediately prior to the effective time of the Merger, other than
shares owned directly or indirectly by the Parent or by the Company, will be
converted into the right to receive the Merger Consideration (as defined in
Section 3.3) in accordance with the provisions of Article 3 of this Agreement;
WHEREAS, upon execution of this Agreement, the Parent will agree to
loan the Company $5 million pursuant to a non-negotiable, secured promissory
note; and
WHEREAS, the Parent, Merger 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 foregoing premises and the
mutual representations, warranties, covenants and agreements contained herein
and intending to be legally bound hereby, the Parent, Merger Sub and the Company
hereby agree as follows:
ARTICLE 1.
THE MERGER
1.1. The Merger. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the General Corporation Law of the
State of Delaware ("DGCL"), at the Effective Time (as defined in Section 1.3),
Merger Sub will be merged with and into Company, whereupon the separate
corporate existence of Merger Sub will cease, and the Company will continue as
the surviving corporation in the Merger (the "Surviving Corporation") under the
laws of the State of Delaware under the name "Medtronic VidaMed, Inc.".
1.2. The Closing. The closing of the Merger (the "Closing") will take
place at 10:00 a.m., Pacific Standard Time, on a date to be specified by the
parties which will be no later than the second Business Day (as defined below)
after the satisfaction or waiver (subject to applicable law) of the conditions
(excluding conditions that, by their nature, cannot be satisfied until the
Closing Date (as defined below)), set forth in Article 7, unless this Agreement
has been theretofore terminated pursuant to its terms or unless another time or
date is agreed to in writing by the parties hereto (the actual time and date of
the Closing being referred to herein as the "Closing Date"). The Closing will
take place by telecopy exchange of signature pages with originals to follow by
overnight delivery, or in such other manner or at such place as the parties
hereto may agree. The Company will as promptly as practicable notify the Parent,
and the Parent and Merger Sub will as promptly as practicable notify the
Company,
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when the conditions to such party's obligation to effect the Merger contained in
Article 7 will have been satisfied. For purposes of this Agreement, a "Business
Day" will mean any day that is not a Saturday, a Sunday or other day on which
the offices of the Secretary of State of the State of Delaware is closed.
1.3. Effective Time. At the Closing, the Company, the Parent and Merger
Sub will file, or cause to be filed, with the Secretary of State of the State of
Delaware, a certificate of merger (the "Certificate of Merger") in accordance
with the DGCL, in such form as is required by, and executed in accordance with,
the relevant provisions of, the DGCL. The parties will take such other and
further actions as may be required by law to make the Merger effective. The
Merger will become effective at the time of such filing or, if agreed to by the
Parent and the Company, at such later time or date as is set forth in the
Certificate of Merger (the "Effective Time").
1.4. Effect of the Merger. At and after the Effective Time, the Merger
will have the effects set forth in the DGCL. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time, all the property,
rights, privileges, powers and franchises of the Company and Merger Sub will
vest in the Surviving Corporation, and all debts, liabilities, obligations,
restrictions, disabilities and duties of the Company and Merger Sub will become
the debts, liabilities, obligations, restrictions, disabilities and duties of
the Surviving Corporation.
ARTICLE 2.
THE SURVIVING CORPORATION
2.1. Certificate of Incorporation of the Surviving Corporation. At the
Effective Time, the Certificate of Incorporation of the Company, as in effect
immediately prior to the Effective Time, will be amended as of the Effective
Time to read as set forth in Exhibit A to this Agreement.
2.2. Bylaws of the Surviving Corporation. At the Effective Time, the
Bylaws of Merger Sub, as in effect immediately prior to the Effective Time, will
be the Bylaws of the Surviving Corporation until thereafter amended in
accordance with applicable law, the provisions of the Certificate of
Incorporation of the Surviving Corporation and the provisions of such Bylaws.
2.3. Directors of the Surviving Corporation. The directors of Merger
Sub immediately prior to the Effective Time will be the directors of the
Surviving Corporation until the earlier of their respective deaths, resignations
or removals or until their respective successors are duly elected and qualified,
as the case may be.
2.4. Officers of the Surviving Corporation. The officers of the Company
immediately prior to the Effective Time will be the officers of the Surviving
Corporation until the earlier of their respective deaths, resignations or
removals or until their respective successors are duly elected or appointed and
qualified, as the case may be.
ARTICLE 3.
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; CANCELLATION AND CONVERSION OF SECURITIES
3.1. Capital Stock of Merger Sub. At the Effective Time, automatically
by virtue of the Merger and without any further action on the part of Merger
Sub, the Company or any holder of any share of capital stock of the Company or
Merger Sub, each share of common stock, par value $0.01 per share, of Merger Sub
issued and outstanding immediately prior to the Effective Time will remain
outstanding as one share of common stock, par value $0.01 per share, of the
Surviving Corporation.
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3.2. Cancellation of Treasury Stock and Parent Owned Stock. At the
Effective Time, automatically by virtue of the Merger and without any further
action on the part of Merger Sub, the Company or any holder of any share of
capital stock of the Company or Merger Sub, each share of Company Common Stock
issued and held immediately prior to the Effective Time in the Company's
treasury and each share of Company Common Stock that is owned by the Parent,
Merger Sub or any other subsidiary of the Parent (the "Cancelled Shares") will
automatically be cancelled and retired and will cease to exist, and no
consideration will be delivered in exchange therefor.
3.3. Conversion of Company Common Stock. At the Effective Time, subject
to the provisions of this Agreement (including without limitation this Section
3.3 and Sections 3.4 and 3.7), automatically by virtue of the Merger and without
any further action on the part of Merger Sub, the Company or any holder of any
share of capital stock of the Company or Merger Sub, each share of Company
Common Stock issued and outstanding immediately prior to the Effective Time
(other than Cancelled Shares and Dissenting Shares (as defined in Section 3.7)),
together with the associated Company Rights (as defined in Section 4.4), will be
converted into the right to receive in cash from the Parent, without interest,
an amount equal to $7.91 (the "Merger Consideration"). At the Effective Time,
all such shares of Company Common Stock, together with the associated Company
Rights (as defined in Section 4.4), will no longer be outstanding and will
automatically be cancelled and retired and will cease to exist, and each holder
of a certificate representing any such shares of Company Common Stock will cease
to have any rights with respect thereto, except the right to receive, upon
surrender of such certificates in accordance with Section 3.4 the Merger
Consideration.
3.4. Exchange of Certificates.
(a) From time to time, as necessary, at or following the Effective
Time, the Parent must make available to Computershare Investor
Services, LLC or such other commercial bank or trust company designated
by the Parent and reasonably satisfactory to the Company (the "Paying
Agent"), for the benefit of the holders of shares of Company Common
Stock (other than Cancelled Shares and Dissenting Shares), cash in the
amount required to be exchanged for shares of Company Common Stock in
the Merger pursuant to Section 3.3 (such cash being hereinafter
referred to as the "Exchange Fund"). The Paying Agent must, pursuant to
irrevocable instructions, deliver the cash contemplated to be paid
pursuant to Section 3.3 out of the Exchange Fund. Except as
contemplated by Section 3.4(f), the Exchange Fund must not be used for
any other purpose.
(b) As promptly as reasonably practicable after the Effective
Time, the Parent must cause the Paying Agent to mail to each holder of
record of a certificate or certificates (to the extent such
certificates have not already been submitted to the Paying Agent) which
immediately prior to the Effective Time represented outstanding shares
(other than Cancelled Shares and Dissenting Shares) of Company Common
Stock (the "Certificates") (i) a letter of transmittal (which will be
in customary form and will specify that delivery will be effected, and
risk of loss and title to the Certificates will pass, only upon proper
delivery of the Certificates to the Paying Agent and will be in such
form and have such other provisions as the Parent and the Paying Agent
will reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for the Merger Consideration
into which the number of shares of Company Common Stock previously
represented by such certificates will have been converted into the
right to receive pursuant to this Agreement.
(c) Upon surrender to the Paying Agent of a Certificate for
cancellation, together with such letter of transmittal, duly executed
and completed in accordance with the instructions thereto, and such
other documents as may be reasonably required by the Paying Agent
pursuant to
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such instructions, the holder of such Certificate will be entitled to
receive in exchange therefor the Merger Consideration for each share of
Company Common Stock formerly represented by such Certificate, to be
distributed as soon as practicable after the Effective Time (after
giving effect to any required tax withholding) in each case without
interest, and the Certificate so surrendered will immediately be
cancelled. In the event of a transfer of ownership of shares of Company
Common Stock which is not registered in the transfer records of the
Company, the Merger Consideration may be issued to a transferee if the
Certificate representing such shares of Company Common Stock is
presented to the Paying Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable
stock transfer taxes have been paid. Until surrendered as contemplated
by this Section 3.4, each Certificate will be deemed at all times after
the Effective Time for all purposes to represent only the right to
receive upon such surrender the Merger Consideration with respect to
the shares of Company Common Stock formerly represented thereby.
(d) Cash paid upon conversion of the shares of Company Common
Stock in accordance with the terms hereof will be deemed to have been
issued in full satisfaction of all rights pertaining to such shares of
Company Common Stock and, following the Effective Time, there will be
no further registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of Company Common Stock that were
outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation
for any reason, they will be cancelled and exchanged as provided in
this Section 3.4. From and after the Effective Time, holders of
Certificates will cease to have any rights as stockholders of the
Company, except as provided by law.
(e) To the extent permitted by applicable law, any portion of the
Exchange Fund which remains undistributed to the holders of shares of
Company Common Stock six months after the Effective Time will be
delivered to the Parent, upon demand, and any holders of shares of
Company Common Stock who have not theretofore complied with this
Article 3 must thereafter look only, as general creditors, only to the
Parent for the Merger Consideration, without interest. Any portion of
the Exchange Fund remaining unclaimed by holders of shares of Company
Common Stock three years after the Effective Time (or such earlier
date, as is immediately prior to such time as such amounts would
otherwise escheat to or become property of any government entity) will,
to the extent permitted by applicable law, become the property of the
Parent free and clear of any claims or interest of any person
previously entitled thereto.
(f) Notwithstanding Section 3.3, none of the Paying Agent, the
Parent nor the Surviving Corporation will be liable to any holder of
shares of Company Common Stock for any cash delivered to a public
official pursuant to any applicable abandoned property, escheat or
similar law.
(g) The Paying Agent will be entitled to deduct and withhold from
the consideration otherwise payable pursuant to this Agreement to any
holder of shares of Company Common Stock such amounts as it 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 by the Surviving Corporation or the Parent, as
the case may be, such withheld amounts will be treated for all purposes
of this Agreement as having been paid to the holder of the shares of
Company Common Stock in respect of which such deduction and withholding
was made by the Surviving Corporation or the Parent, as the case may
be.
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(h) If any Certificate will have been lost, stolen or destroyed,
upon the delivery to the Paying Agent of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a
bond, in such reasonable amount as the Surviving Corporation may direct, as
indemnity against any claim that may be made against it with respect to
such Certificate, the Paying Agent will issue in exchange for such lost,
stolen or destroyed Certificate the Merger Consideration.
3.5. Stock Options.
(a) Not later than 30 days prior to the Effective Time, the Company
will send a notice (the "Option Notice") to all holders of outstanding
options to purchase shares of Company Common Stock (the "Company Options"):
(i) specifying that such options will not be assumed in connection with the
Merger, and (ii) specifying that any Company Options outstanding as of the
Effective Time will terminate and be cancelled at such time and represent
only the right to receive the consideration, if any, specified in Section
3.5(c) in accordance with this Agreement.
(b) The Company will permit each holder of a Company Option who
desires to exercise all or any portion of such Company Option following
receipt of the Option Notice to exercise such Company Option prior to the
Effective Time.
(c) Each Company Option outstanding as of the Effective Time will
by virtue of the Merger, and without any action on the part of the holder
thereof, be terminated and cancelled as of the Effective Time and converted
into, and represent only, the right to receive an amount in cash equal to
the excess, if any, of (i) the product of the Merger Consideration
multiplied by the number of shares of Company Common Stock which are
issuable upon exercise of such Company Option (regardless of whether such
Company Option is vested or not) immediately prior to the Effective Time
over (ii) the exercise price of those shares of Company Common Stock
subject to such Company Option. The aggregate amount payable pursuant to
this Section 3.5(c) will hereinafter be referred to as the "Option Cash-Out
Amount."
(d) Promptly following the Effective Time, the Parent will cause
the Paying Agent to mail to each holder (as of the Effective Time) of a
Company Option which was converted into the right to receive the Option
Cash-Out Amount pursuant to Section 3.5(c) hereof, (i) a letter of
transmittal (which will be in such form and have such other provisions as
the Parent may reasonably specify), and (ii) instructions for use in
receiving cash payable in respect of such Company Options. Upon the
delivery of such letter of transmittal, duly completed and validly executed
in accordance with the instructions thereto, together with the
documentation representing the Company Options surrendered thereby, to the
Paying Agent, the holders of Company Options will be entitled to receive
the Option Cash-Out Amount payable to them in respect of such Company
Options pursuant to Section 3.5(c).
3.6. Warrants.
(a) Not later than 30 days prior to the Effective Time, the Company
will send a notice to the holders of outstanding warrants to purchase
shares of Company Common Stock (the "Company Warrants"): (i) specifying
that such warrants will not be assumed in connection with the Merger, and
(ii) specifying that any Company Warrants outstanding as of the Effective
Time will terminate and be cancelled at such time and represent only the
right to receive the consideration, if any, specified in this Section
3.6(a) in accordance with this Agreement. At the Effective Time, each
Company Warrant will, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into, and represent only, the
right to receive, upon
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delivery thereof to the Company, an amount in cash equal to the excess,
if any, of (i) the product of the Merger Consideration multiplied by
the number of shares of Company Common Stock issuable upon exercise of
such Company Warrant immediately prior to the Effective Time over (ii)
the aggregate exercise price of all such shares of Company Common Stock
exercisable under such Company Warrant immediately prior to the
Effective Time. The aggregate amount payable pursuant to this Section
3.6(a) will hereinafter be referred to as the "Warrant Cash-Out
Amount."
(b) Promptly following the Effective Time, the Parent will cause
the Paying Agent to mail to each holder (as of the Effective Time) of a
Company Warrant if converted into the right to receive the Warrant
Cash-Out Amount pursuant to Section 3.6(a), (i) a letter of transmittal
(which will be in such form and have such other provisions as the
Parent may reasonably specify), and (ii) instructions for use in
receiving cash payable in respect of such Company Warrants. Upon the
delivery of such letter of transmittal, duly completed and validly
executed in accordance with the instructions thereto, together with the
documentation representing the Company Warrant surrendered thereby, to
the Paying Agent, the holders of Company Warrant will be entitled to
receive the Warrant Cash-Out Amount payable to them in respect of such
Company Warrants pursuant to Section 3.6(a).
3.7. Dissenting Shares. Notwithstanding Section 3.3, to the extent (if
at all) that holders of Common Stock are entitled to appraisal rights under
Section 262 of the DGCL, shares of Company Common Stock issued and outstanding
immediately prior to the Effective Time and held by a holder who has properly
exercised and perfected his or her demand for appraisal rights under Section 262
of the DGCL (the "Dissenting Shares"), will not be converted into the right to
receive the Merger Consideration, but the holders of Dissenting Shares will be
entitled to receive from the Company such consideration as will be determined
pursuant to Section 262 of the DGCL; provided, however, that if any such holder
will have failed to perfect or will effectively withdraw or lose his or her
right to appraisal and payment under the DGCL, such holder's shares of Company
Common Stock will thereupon be deemed to have been converted as of the Effective
Time into the right to receive the Merger Consideration, without any interest
thereon, and such shares will not be deemed to be Dissenting Shares. The Company
will give the Parent (i) prompt notice of any notices or demands for appraisal
or payment for shares of Company Common Stock received by the Company and (ii)
the opportunity to participate and direct all negotiations and proceedings with
respect to any such demands or notices. The Company will not, without the prior
written consent of the Parent, make any payment with respect to, or settle,
offer to settle or otherwise negotiate any demands.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Company Disclosure Schedule referred to in
Section 4.1 below, which identifies by section number the provision of this
Agreement to which such exception relates, the Company represents and warrants
to the Parent and Merger Sub as of the date hereof as follows:
4.1. Company Disclosure Schedule. The Company has heretofore delivered
to the Parent a disclosure schedule (the "Company Disclosure Schedule"), which
is divided into sections that correspond to the sections of this Article 4.
4.2. Organization and Qualification.
(a) The Company and each subsidiary of the Company (referred to
herein as a "Company Subsidiary") is a corporation duly organized,
validly existing, and in good standing under the laws of its respective
jurisdiction of incorporation and has all requisite corporate power
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and authority to own, lease, and operate its properties and to carry on
its business as now being conducted. The Company and each Company
Subsidiary is duly qualified and in good standing to do business in
each jurisdiction in which the property owned, leased, or operated by
it or the nature of the business conducted by it makes such
qualification necessary and where the failure to qualify could
reasonably be expected to have a Company Material Adverse Effect (as
defined below).
(b) "Company Material Adverse Effect" means any effect, change,
event, circumstance or condition that, individually or in the aggregate
with all similar effects, changes, events, circumstances or conditions,
is or would reasonably be expected to: (i) have a material adverse
effect on the business (including its prospects, current products or
products identified for development), operations, assets, properties,
results of operations, or financial condition of the Company and the
Company Subsidiaries, with the Company and the Company Subsidiaries
considered as a whole, (ii) prevent or materially delay the
consummation of the Merger or otherwise have a material adverse effect
on the ability of the Company to perform its obligations under this
Agreement, or (iii) unless resulting from or relating to any act or
omission of the Parent following the date hereof (other than an act or
omission required or reasonably contemplated by this Agreement), have a
material adverse effect on the ability of the Surviving Corporation or
the Parent to conduct such business (as presently conducted) following
the Effective Time or the ability of Parent to exercise full rights of
ownership of the Company or its assets or business; provided, however,
that there will be excluded from the definition of Company Material
Adverse Effect (x) any adverse effect, change, event, circumstance or
condition in the medical device industry or in the economy generally
(as opposed to the Company specifically), and (y) any adverse effect,
change, event, circumstance or condition that results from the Parent's
refusal to permit the Company upon the Company's request to the Parent
to take any of the actions itemized in Section 6.1 hereof.
(c) Except to the extent specifically disclosed on the Company
Disclosure Schedule, or any entity in which the Company owns, directly
or indirectly, an equity interest of less than 1% of the fair market
value of such entity's outstanding equity securities, neither the
Company nor any Company Subsidiary, directly or indirectly, owns or
controls or has any capital, equity, partnership, participation, or
other ownership interest in any corporation, partnership, joint
venture, or other business association or entity.
4.3. Restated Certificate of Incorporation and Restated Bylaws. The
Company has heretofore furnished or made available to the Parent a complete and
correct copy of the Restated Certificate of Incorporation and the Restated
Bylaws of the Company and the Certificate of Incorporation, Bylaws or equivalent
organizational documents of each Company Subsidiary, each as in full force and
effect as of the date hereof. Neither the Company nor any Company Subsidiary is
in violation of any of the provisions of its Certificate of Incorporation,
Bylaws or equivalent organizational documents, except where any such violation
could not reasonably be expected to have a Company Material Adverse Effect.
4.4 Capitalization. The authorized capital stock of the Company
consists of 60,000,000 shares of Company Common Stock and 5,000,000 shares of
preferred stock, par value $0.001 per share ("Company Preferred Stock"), 30,000
shares of which are designated as Series A Participating Preferred Stock (the
"Series A Preferred Stock"). As of the date hereof, (a) 36,115,627 shares of
Company Common Stock are issued and outstanding, all of which are validly
issued, fully paid and nonassessable, (b) no shares of Company Common Stock are
held in the treasury of the Company, (c) no shares of Company Common Stock are
held by the Company Subsidiaries, (d) 6,849,906 shares of Company Common Stock
are reserved for future issuance pursuant to outstanding Company Options and
Company Warrants, and (e) 89,988 shares of Company Common Stock are reserved for
future issuance pursuant to
7
the VidaMed, Inc. Amended and Restated 1995 Employee Stock Purchase Plan
("Company ESPP"). As of the date hereof, no shares of Company Preferred Stock
are issued and outstanding (including all of the Company Preferred Stock being
reserved for issuance in accordance with the Amended and Restated Rights
Agreement dated as of November 8, 2001, by and between the Company and
Computershare Trust Company, as amended (as amended, the "Company Rights
Agreement"), pursuant to which the Company had issued rights to purchase the
Series A Preferred Stock (the "Company Rights")). Except as set forth in this
Section 4.4 or as set forth in Section 4.4 of the Company Disclosure Schedule,
and except further for the Company Rights issued pursuant to the Company Rights
Agreement, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of the Company or any Company Subsidiary or obligating the Company
or any Company Subsidiary to issue or sell any shares of capital stock of, or
other equity interests in, the Company or any Company Subsidiary. Section 4.4 of
the Company Disclosure Schedule accurately sets forth information regarding the
holder, the exercise price, the date of grant or issuance, and the number of
underlying securities issuable in respect of each Company Warrant and Company
Option. All securities of the Company subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, will be duly authorized, validly issued, fully paid and
nonassessable. There are no outstanding contractual obligations of the Company
or any Company Subsidiary to repurchase, redeem or otherwise acquire any
securities of the Company or of any Company Subsidiary or to provide funds to,
or make any investment (in the form of a loan, capital contribution or
otherwise) in, any Company Subsidiary or any other person. Each outstanding
share of capital stock of each Company Subsidiary is duly authorized, validly
issued, fully paid and nonassessable, and except as set forth in Section 4.4 of
the Company Disclosure Schedule, each such share is owned by the Company or
another Company Subsidiary, free and clear of all security interests, liens,
claims, pledges, options, rights of first refusal, agreements, limitations on
the Company's or any Company Subsidiary's voting rights, charges and other
encumbrances of any nature whatsoever. To the knowledge of the Company, as of
the date of this Agreement and except as contemplated by this Agreement, there
are not any agreements that relate to the voting or control of any outstanding
shares of Company Common Stock. No consent of holders of any Company Options or
Company Warrants or of participants in the Company ESPP, is required to carry
out the provisions of Sections 3.5, 3.6 and 6.10. All actions, if any, required
on the part of the Company under the Company Options, Company Warrants and the
Company ESPP to allow for the treatment of Company Options, Company Warrants and
the Company ESPP as is provided in Section 3.5, 3.6 and 6.10, have been, or
prior to the Closing will be, validly taken by the Company. In no event will the
aggregate number of shares of Company Common Stock outstanding at the Effective
Time (including all shares subject to then outstanding Company Options, Company
Warrants or other rights to acquire or commitments to issue shares of Company
Common Stock ) exceed 43,055,521 plus that number of shares of Company Common
Stock equal to $30,774 divided by the closing sale price of a share of Company
Common Stock at the end of the regular trading session on December 14, 2001.
4.5. Company SEC Reports; Financial Statements.
(a) The Company has filed with the Securities and Exchange
Commission (the "SEC"), at or prior to the time due, and has heretofore
made available to the Parent true and complete copies of, all forms,
reports, schedules, registration statements and definitive proxy
statements (together with all information incorporated therein by
reference, the "Company SEC Reports") required to be filed by it with
the SEC since January 1, 1999. As of their respective dates, the
Company SEC Reports complied as to form in all material respects with
the requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") or the Securities Act, as the case may be, and the
rules and regulations of the SEC thereunder applicable to such Company
SEC Reports. As of their respective dates and as of the date any
information from such Company SEC Reports has been incorporated by
reference, the Company SEC Reports did not contain any untrue statement
of a material fact or omit, to state a material fact required to
8
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(b) Each of the financial statements of the Company (including the
related notes) included or incorporated by reference in the Company SEC
Reports (including any similar documents filed after the date of this
Agreement) comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with generally
accepted accounting principles ("GAAP") (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto) and fairly present the consolidated financial position of the
Company and its consolidated Company Subsidiaries as of the dates thereof
and the consolidated results of their operations and cash flows for the
periods then ended (subject to normal year-end adjustments in the case of
any unaudited interim financial statements). Except for liabilities and
obligations incurred in the ordinary course of business consistent with
past practice and which could not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, since
the date of the most recent consolidated balance sheet included in the
Company SEC Reports, neither the Company nor any of the Company
Subsidiaries has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) required by GAAP to be set
forth on a consolidated balance sheet of the Company and its consolidated
Company Subsidiaries or in the notes thereto.
4.6. Information Supplied. None of the information supplied or to be
supplied by the Company or any of the Company Subsidiaries for inclusion or
incorporation by reference in the Proxy Statement (as defined in Section 6.5(a))
and the Schedule 13E-3 (as defined in Section 6.5(a)) will, (i) at the time the
Proxy Statement and the Schedule 13E-3 is filed with the SEC or at any time it
is amended or supplemented, (ii) on the date the Proxy Statement is first mailed
to the stockholders of the Company, and (iii) at the time of the Company
Stockholders' Meeting, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in 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 in or incorporated by reference
therein based on information supplied by the Parent or Merger Sub specifically
for inclusion or incorporation by reference therein. The Proxy Statement and
Schedule 13E-3 will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder.
4.7 Authorization and Enforceability. The Company has the requisite
corporate power and authority to execute and deliver this Agreement and, subject
to obtaining the necessary approval of its stockholders, the requisite corporate
power and authority to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by the Company and the consummation of
the transactions contemplated hereby have been duly and validly authorized and
approved by the Company's Board of Directors and, no other corporate proceedings
on the part of the Company (other than stockholder approval) or any Company
Subsidiary are necessary to authorize this Agreement, and, subject to obtaining
the approval of the Company's stockholders, no other corporate action on the
part of the Company or any Company Subsidiary is necessary to consummate the
transactions contemplated hereby. As of the date of this Agreement, the Board of
Directors of the Company has declared the advisability of this Agreement. This
Agreement has been duly and validly executed and delivered by the Company and
constitutes the valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, subject to laws of general application
relating to bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and rules of law governing specific
performance, injunctive relief, or other equitable remedies. The Company's Board
of Directors has approved this Agreement and the transactions contemplated
hereby and such approvals are
9
sufficient so that neither the restrictions on "business combinations" set forth
in Section 203(a) of DGCL nor the provisions of any other "fair price,"
"moratorium," "control share acquisition," or other similar anti-takeover
statute or regulation nor the provisions of any applicable anti-takeover
provisions in the Restated Certificate of Incorporation or Restated Bylaws of
the Company will apply to this Agreement or any of the transactions contemplated
by this Agreement. Under applicable law, the current Restated Certificate of
Incorporation of the Company and the rules of The Nasdaq Stock Market, the
affirmative vote of the holders of a majority of the shares of Common Stock
outstanding on the record date, established by the Board of Directors of the
Company in accordance with the Restated Bylaws of the Company, applicable law
and this Agreement, is the vote required for the stockholders of the Company to
adopt this Agreement.
4.8. Absence of Certain Changes or Events. Except as contemplated hereby
or as disclosed in Section 4.8 of the Company Disclosure Schedule, since
December 31, 2000, there has not been any change, effect, event, occurrence,
state of facts or development known to the Company that individually or in the
aggregate, has had or could reasonably be expected to have a Company Material
Adverse Effect. Without limiting the foregoing, except as contemplated hereby or
as disclosed in Section 4.8 of the Company Disclosure Schedule, since December
31, 2000, and except as permitted by Section 6.1, (i) the Company and the
Company Subsidiaries have conducted their business in the ordinary course of
business and consistent with past practice and (ii) there has not been:
(a) any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock of the
Company, or any repurchase, redemption or other acquisition by the Company
or any Company Subsidiary (other than any wholly-owned Subsidiary) of any
outstanding shares of capital stock or other equity or debt securities of,
or other ownership interests in, the Company;
(b) any amendment of any provision of the Certificate of
Incorporation or Bylaws of, or of any material term of any outstanding
security issued by, the Company or any Company Subsidiary (other than any
wholly-owned Subsidiary);
(c) any incurrence, assumption or guarantee by the Company or any
Company Subsidiary of any indebtedness for borrowed money other than
borrowings under existing short term credit facilities;
(d) any change in any method of accounting or accounting practice
by the Company or any Company Subsidiary, except for any such change
required by reason of a change in GAAP and concurred with by the Company's
independent public accountants;
(e) issuance of any equity or debt securities of the Company other
than (i) pursuant to Company Options or Company Warrants outstanding as of
December 31, 2000 and the issuance of Company Options after such date in
the ordinary course of business and consistent with past practice (and the
issuance of Company Common Stock pursuant thereto), (ii) shares of Company
Common Stock issued pursuant to the Company ESPP, and (iii) corresponding
issuances of Company Rights pursuant to the Company Rights Agreement;
(f) acquisition or disposition of assets material to the Company
and the Company Subsidiaries, except for sales of inventory in the ordinary
course of business consistent with past practice, or any acquisition or
disposition of capital stock of any third party (other than acquisitions or
dispositions of non-controlling equity interests of third parties in the
ordinary course of business) or any merger or consolidation with any third
party, by the Company or any Company Subsidiary;
10
(g) entry by the Company into any joint venture, partnership or
similar agreement with any person other than a Company Subsidiary; or
(h) any authorization of, or commitment or agreement to take any
of, the foregoing actions except as otherwise permitted by this Agreement.
4.9. Consents and Approvals. Except for (i) any applicable requirements
of the Securities Act, the Exchange Act, state takeover or securities laws, the
rules of the Nasdaq Stock Market ("Nasdaq") and the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976 and the regulations thereunder (the "HSR Act"), (ii)
approval by the Company's stockholders, (iii) the filing and recordation of the
Certificate of Merger as required by the DGCL, the NYSE or Nasdaq, (iv)
compliance with Section 262 of the DGCL regarding appraisal rights, and (v) any
items disclosed on the Company Disclosure Schedule, the execution and delivery
of this Agreement by the Company and the consummation of the transactions
contemplated hereby will not: (a) violate any provision of the Certificate of
Incorporation or Bylaws of the Company or any Company Subsidiary; (b) violate
any statute, rule, regulation, order, or decree of any federal, state, local, or
foreign body or authority by which the Company or any Company Subsidiary or any
of their respective properties or assets may be bound; (c) require any filing
with or permit, consent, or approval of any federal, state, local, or foreign
administrative, governmental or regulatory body or authority (a "Governmental
Entity"); or (d) result in any violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default under, result in the loss
of any material benefit under, or give rise to any right of termination,
cancellation, increased payments, or acceleration under, or result in the
creation of any lien, charge, security interest, pledge or encumbrance of any
kind or nature (any of the foregoing being a "Lien") on any of the properties or
assets of the Company or any Company Subsidiary under, any of the terms,
conditions, or provisions of any note, bond, mortgage, indenture, license,
franchise, permit, authorization, agreement, or other instrument or obligation
to which the Company or any Company Subsidiary is a party, or by which it or any
of its properties or assets may be bound, except, (x) in the cases of clauses
(b) or (c), where such violation, failure to make any such filing or failure to
obtain such permit, consent or approval, could not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect, and
(y) in the case of clause (d), for any such violations, breaches, defaults, or
other occurrences that could not reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect.
4.10. Permits. Each of the Company and the Company Subsidiaries is in
possession of all registrations, franchises, grants, authorizations (including
marketing authorizations), licenses, permits, easements, variances, exceptions,
consents, certificates, approvals and orders of any Governmental Entity
necessary for each of the Company or the Company Subsidiaries to manufacture,
market, sell, or distribute the Company's products or to own, lease and operate
its properties or to carry on its business as it is now being conducted (the
"Permits"), except where the failure to have, or the suspension or cancellation
of, any of the Permits could not reasonably be expected to have a Company
Material Adverse Effect. As of the date hereof, no suspension or cancellation of
any of the Permits is pending or, to the knowledge of the Company, threatened,
except where the failure to have, or the suspension or cancellation of, any of
the Permits could not reasonably be expected to have a Company Material Adverse
Effect.
4.11 Compliance with Laws. Except to the extent specifically disclosed on
Section 4.11 of the Company Disclosure Schedule, all activities of the Company
and each Company Subsidiary have been, and are currently being, conducted in
compliance with all applicable federal, state, local, and foreign laws,
ordinances, regulations, interpretations, judgments, decrees, injunctions,
permits, licenses, certificates, governmental requirements, orders, and other
similar items of any court or other Governmental Entity (and including those of
any nongovernmental self-regulatory agency and including environmental laws or
regulations), the failure to comply with which could reasonably be expected to
11
have a Company Material Adverse Effect. The Company and each Company Subsidiary
has timely filed or otherwise provided all registrations, reports, data, and
other information and applications with respect to its medical device,
pharmaceutical, consumer, health care, and other governmentally regulated
products (the "Regulated Products") required to be filed with or otherwise
provided to the FDA or any other Governmental Entity with jurisdiction over the
manufacture, use, or sale of the Regulated Products, has complied with all
applicable requirements of the FDA or other Governmental Entity with respect to
the Regulated Products, and all regulatory licenses or approvals in respect
thereof are in full force and effect, except where the failure to file timely
such registrations, reports, data, information, and applications or to be in
compliance or the failure to have such licenses and approvals in full force and
effect could not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. All documentation, correspondence,
reports, data, analyses and certifications relating to or regarding any medical
devices of the Company or any Company Subsidiary, filed with or delivered by or
on behalf of the Company or any Company Subsidiary to any Governmental Entity
was in all material respects true and accurate when so filed or delivered, and
nothing has come to the attention of the Company that causes the Company to
conclude that such documentation, correspondence, reports, data, analyses and
certifications do not remain true and correct.
4.12. Litigation. Except as disclosed in Section 4.12 of the Company
Disclosure Schedule, there are no suits, actions or proceedings pending or, to
the knowledge of the Company, threatened against or affecting the Company or any
of the Company Subsidiaries that, has had or could reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect.
Neither the Company nor any of the Company Subsidiaries is subject to any
outstanding order, writ, injunction or decree that has had or could reasonably
be expected to have a Company Material Adverse Effect.
4.13. Employee Matters. Except as set forth in Section 4.13 of the Company
Disclosure Schedule:
(a) None of the Company, any Company Subsidiary or any other
"person" within the meaning of Section 7701(a)(1) of the Code, that
together with the Company or any Company Subsidiary is considered a single
employer (an "Affiliated Organization") pursuant to Section 414(b), (c),
(m) or (o) of the Code or Section 3(5) or 4001(b)(1) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), sponsors,
maintains, contributes to, is required to contribute to or has or could
have any liability of any nature, whether known or unknown, direct or
indirect, fixed or contingent, with respect to, any "employee pension
benefit plan" ("Pension Plan"), as such term is defined in Section 3(2) of
ERISA, including, without limitation, any such plan that is excluded from
coverage by Section 4 of ERISA or is a "Multiemployer Plan" within the
meaning of Section 3(37) or 4001(a)(3) of ERISA. To the knowledge of the
Company, each such Pension Plan that is a Multiemployer Plan has been
operated in all material respects in accordance with its terms and in
compliance in all material respects with the applicable provisions of
ERISA, the Code and other applicable law. Each such other Pension Plan has
been operated in all material respects in accordance with its terms and in
compliance in all material respects with the applicable provisions of
ERISA, the Code and all other applicable law. All Pensions Plans which the
Company operates as plans that are qualified under the provisions of
Section 401(a) of the Code satisfy in form and operation all applicable
qualification requirements.
(b) Neither the Company nor any Affiliated Organization has or
could have any liability of any nature, whether known or unknown, direct or
indirect, fixed or contingent, to any Pension Plan, the Pension Benefit
Guaranty Corporation ("PBGC") or any other person, arising directly or
indirectly under Title IV of ERISA other than liability pursuant to Section
4007 for premiums which are not yet due (without regard to any waiver). No
"reportable event," within
12
the meaning of Section 4043 of ERISA, has occurred with respect to any
Pension Plan subject to Title IV of ERISA. Neither the Company nor any
Affiliated Organization has ceased operations at any facility or
withdrawn from any Pension Plan in a manner which could subject the
Company or Affiliated Organization to liability under Section 4062(e),
4063 or 4064 of ERISA. Neither the Company nor any Affiliated
Organization maintains, contributes to or has participated in or agreed
to participate in any Pension Plan that is a Multiemployer Plan.
Neither the Company nor any Affiliated Organization has been a party to
a sale of assets to which Section 4204 of ERISA applied with respect to
which it could incur any withdrawal liability (including any contingent
or secondary withdrawal liability) to any Multiemployer Plan. Neither
the Company nor any Affiliated Organization has incurred, or has
experienced an event that will, within the ensuing 12 months, result
in, a "complete withdrawal" or "partial withdrawal," as such terms are
defined respectively in Sections 4203 and 4205 of ERISA, with respect
to a Pension Plan which is a Multiemployer Plan, and nothing has
occurred that could result in such a complete or partial withdrawal.
Neither the Company nor any Affiliated Organization has incurred a
decline in contributions to any Multiemployer Plan such that, if the
current rate of contributions continues, a 70 percent decline in
contributions (as defined in Section 4205 of ERISA) will occur within
the next three plan years.
(c) Neither the Company nor any Affiliated Organization
sponsors, maintains, contributes to, is required to contribute to, or
has or could have any liability of any nature, whether known or
unknown, direct or indirect, fixed or contingent, with respect to any
"employee welfare benefit plan" ("Welfare Plan"), as such term is
defined in Section 3(1) of ERISA, whether insured or otherwise,
including, without limitation, any such plan that is excluded from
coverage by Section 4 of ERISA or is a Multiemployer Plan within the
meaning of Section 3(37) of ERISA. To the knowledge of the Company,
each such Welfare Plan that is a Multiemployer Plan has been operated
in all material respects in accordance with its terms and in compliance
in all material respects with applicable provisions of ERISA, the Code
and other applicable law. Each such other Welfare Plan has been
operated in all material respects in accordance with its terms and in
compliance in all material respects with the applicable provisions of
ERISA, the Code and all other applicable law. Benefits under each
Welfare Plan are fully insured by an insurance company unrelated to the
Company or any Affiliated Organization. No insurance policy or contract
requires or permits retroactive increase in premiums or payments due
thereunder. Neither the Company nor any Affiliated Organization has
established or contributed to, is required to contribute to or has or
could have any liability of any nature, whether known or unknown,
direct or indirect, fixed or contingent, with respect to any "voluntary
employees' beneficiary association" within the meaning of Section
501(c)(9) of the Code, "welfare benefit fund" within the meaning of
Section 419 of the Code, "qualified asset account" within the meaning
of Section 419A of the Code or "multiple employer welfare arrangement"
within the meaning of Section 3(40) of ERISA. No Welfare Plan which is
a Multiemployer Plan imposes any post-withdrawal liability or
contribution obligations upon the Company or any Affiliated
Organization. Neither the Company nor any Affiliated Organization
maintains, contributes to or has or could have any liability of any
nature, whether known or unknown, direct or indirect, fixed or
contingent, with respect to medical, health, life or other welfare
benefits for present or future terminated employees or their spouses or
dependents other than as required by Part 6 of Subtitle B of Title I of
ERISA or any comparable state law.
(d) Neither the Company nor any Affiliated Organization is a
party to, maintains, contributes to, is required to contribute to or
has or could have any liability of any nature, whether known or
unknown, direct or indirect, fixed or contingent, with respect to any
bonus plan, incentive plan, stock plan or any other current or deferred
compensation (other than current salary or wages paid in the form of
cash), separation, retention, severance, paid time off, or similar
13
agreement, arrangement or policy, or any individual employment,
consulting or personal service agreement other than a Pension Plan or
Welfare Plan ("Compensation Plans"). Each Compensation Plan has been
operated in all material respects in accordance with its terms and in
compliance in all material respects with the applicable provisions of
all applicable law.
(e) There are no facts or circumstances which could, directly or
indirectly, subject the Company or any Affiliated Organization to any
(1) excise tax or other liability under Chapters 43, 46 or 47 of
Subtitle D of the Code, (2) penalty tax or other liability under
Chapter 68 of Subtitle F of the Code or (3) civil penalty, damages or
other liabilities arising under Section 502 of ERISA.
(f) Full payment has been made of all amounts which the Company
or any Affiliated Organization is required, under applicable law, the
terms of any Pension Plan, Welfare Plan or Compensation Plan (each, a
"Plan" and, collectively, "Plans"), or any agreement relating to any
Plan, to have paid as a contribution, premium or other remittance
thereto or benefit thereunder. Each Pension Plan that is subject to the
minimum funding standards of Section 412 of the Code and/or Section 302
of ERISA meets those standards and has not incurred any accumulated
funding deficiency within the meaning of Section 412 or 418B of the
Code or Section 302 of ERISA and no waiver of any minimum funding
requirements has been applied for or obtained with respect to any
Pension Plan. The Company and each Affiliated Organization has made
adequate provisions for reserves or accruals in accordance with GAAP to
meet contribution, benefit or funding obligations arising under
applicable law or the terms of any Plan or related agreement. There
will be no change on or before Closing Date in the operation of any
Plan or any documents with respect thereto which will result in an
increase in the benefit liabilities under such Plans, except as may be
required by law.
(g) The Company and each Affiliated Organization has timely
complied in all material respects with all reporting and disclosure
obligations with respect to the Plans imposed by the Code, ERISA or
other applicable law.
(h) There are no pending or, to the Company's knowledge,
threatened audits, investigations, claims, suits, grievances or other
proceedings, and there are no facts that could give rise thereto,
involving, directly or indirectly, any Plan, or any rights or benefits
thereunder, other than the ordinary and usual claims for benefits by
participants, dependents or beneficiaries.
(i) The transactions contemplated herein do not result in any
payment (whether of severance pay or otherwise), forgiveness of debt,
distribution, increase in benefits, obligation to fund, or the
acceleration of accrual, vesting, funding or payment of any
contribution or benefit under any Plan. Except to the extent
specifically disclosed on Section 4.13 of the Company Disclosure
Schedule, no amount that could be received (whether in cash or property
or the vesting of property) as a result of any of the transactions
contemplated by this Agreement by any employee, officer, or director of
the Company or any of its affiliates who is a "disqualified individual"
(as such term is defined in proposed Treasury Regulation Section
1.280G-1) under any Plan currently in effect would be an "excess
parachute payment" (as such term is defined in Section 280G(b)(1) of
the Code).
(j) No action or omission of the Company, any Company Subsidiary
or any director, officer, employee, or agent thereof in any way
restricts, impairs or prohibits the Parent or the Surviving Corporation
or the Company, any Company Subsidiary or any successor from amending,
merging, or terminating any Plan in accordance with the express terms
of any such plan and applicable law.
14
(k) Section 4.13 of the Company Disclosure Schedule lists and
the Company has delivered or made available to the Parent true and
complete copies of: (i) all Plans and related trust agreements or other
agreements or contracts evidencing any funding vehicle with respect
thereto; (ii) the three most recent annual reports on Treasury Form
5500, including all schedules and attachments thereto, with respect to
any Plan for which such a report is required; (iii) the three most
recent actuarial reports with respect to any Pension Plan that is a
"defined benefit plan" within the meaning of Section 414(j) of the
Code; (iv) the form of summary plan description, including any summary
of material modifications thereto or other modifications communicated
to participants, currently in effect with respect to each Plan; (v) the
most recent determination letter with respect to each Pension Plan
intended to qualify under Section 401(a) of the Code and the full and
complete application therefor submitted to the Internal Revenue
Service; and (vi) all professional opinions, material internal
memoranda, material correspondence with regulatory authorities and
administrative policies, manuals, interpretations and the like with
respect to each Plan.
4.14. Labor Matters. Neither the Company nor any Company Subsidiary is
a party to any collective bargaining agreement or other labor union contract
applicable to persons employed by the Company or any of the Company
Subsidiaries. There is no labor dispute, strike, work stoppage or lockout, or,
to the knowledge of the Company, threat thereof, by or with respect to any
employee of the Company or any of the Company Subsidiaries.
4.15. Real Property and Leases.
(a) The Company and the Company Subsidiaries have sufficient
title or leasehold interests to all their properties and assets to
conduct their respective businesses as currently conducted, with only
such exceptions as, individually or in the aggregate, could not
reasonably be expected to have a Company Material Adverse Effect.
(b) All leases of real property leased for the use or benefit of
the Company or any Company Subsidiary to which the Company or any
Company Subsidiary is a party, and all amendments and modifications
thereto are in full force and effect, and there exists no material
default under any such lease by the Company or any Company Subsidiary,
nor any event which with notice or lapse of time or both would
constitute a material default thereunder by the Company or any Company
Subsidiary, which would permit any such lease to be terminated by the
other party thereto.
4.16. Intellectual Property.
(a) Except as set forth in Section 4.16 of the Company
Disclosure Schedule, to the Company's knowledge, the Company and the
Company Subsidiaries own, free and clear of any Lien, or are licensed
to use, all Intellectual Property (as defined hereafter) reasonably
necessary for the Company and the Company Subsidiaries to conduct their
business as it is currently conducted (the "Company Intellectual
Property"), except as could not reasonably be expected to have a
Company Material Adverse Effect. Section 4.16 of the Company Disclosure
Schedule sets forth a true and complete list of all (i) issued or
pending non-expired patent applications, patents, design applications,
design patents or registered industrial designs, utility model
applications and utility model registrations owned by the Company, (ii)
trademark applications, registered, pending and material unregistered
trademarks for the Company, and (iii) registered copyrights, copyright
applications, and domain names. Except as set forth in Section 4.16 of
the Company Disclosure Schedule, the Company and the Company
Subsidiaries own, free and clear of any Lien all patent applications,
patents, design applications, design patents or registered industrial
15
designs, utility model applications, utility model registrations,
trademark applications and trademark registrations listed in Section
4.16(a) of the Company Disclosure Schedule.
(b) (i) All of the registrations relating to Company
Intellectual Property are subsisting and unexpired, and have not been
abandoned, except as set forth in Section 4.16 of the Disclosure
Schedule or as could not reasonably be expected to have a Company
Material Adverse Effect; (ii) to the knowledge of the Company, neither
the use of the Company Intellectual Property by the Company or any
Company Subsidiary in the present conduct of its business or as
proposed to be conducted as described in the Company's written business
plans presented to the Company's Board of Directors, nor the
manufacture, marketing, distribution, use or sale of any current
product or service of the Company or any Company Subsidiary or any
proposed product identified for development by the Company or any
Company Subsidiary in the Company's written business plans presented to
the Company's Board of Directors, infringes on the Intellectual
Property rights of any person; (iii) to the knowledge of the Company,
no judgment, decree, injunction, rule or order has been rendered by any
Governmental Entity which would limit, cancel or question the validity
of any Company Intellectual Property, or the Company's or the Company
Subsidiaries' rights in and to any Company Intellectual Property, in
any respect that could reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect; (iv) neither the
Company nor any Company Subsidiary has received notice of any pending
or threatened suit, action or adversarial proceeding that seeks to
limit, cancel or question the validity of any Company Intellectual
Property, or the Company's or its Subsidiaries' rights in and to any
Company Intellectual Property, which could reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse
Effect; and (v) neither the Company nor any Company Subsidiary has
received any notice or communication of any pending or threatened suit,
action or adversarial proceeding or claim that the manufacture,
marketing, distribution, use or sale of any current product or service
of the Company or any Company Subsidiary or any proposed product
identified for development by the Company or any Company Subsidiary in
the Company's written business plans presented to the Company's Board
of Directors, infringes on the Intellectual Property rights of any
person.
(c) For purposes of this Agreement "Intellectual Property" will
mean all rights, privileges and priorities provided under U.S., state
and foreign law relating to intellectual property, including all (x)
(1) proprietary inventions, discoveries, processes, formulae, designs,
methods, techniques, procedures, concepts, developments, technology,
new and useful improvements thereof and proprietary know-how relating
thereto, whether or not patented or eligible for patent protection; (2)
copyrights and copyrightable works, including computer applications,
programs, software, databases and related items; (3) trademarks,
service marks, trade names, and trade dress, the goodwill of any
business symbolized thereby, and all common-law rights relating
thereto; (4) trade secrets and other confidential information; (y) all
registrations, applications, and recordings for, and amendments,
modifications and improvements to any of the foregoing and (z) licenses
or other similar agreements granting to the Company or any of the
Company Subsidiaries the rights to use any of the foregoing.
(d) To the knowledge of the Company, neither the Company nor any
Company Subsidiary has used or made use of any confidential or
proprietary information or trade secrets of any other person in breach
of any agreement to which the Company or any Company Subsidiary of the
Company is subject or in violation of any civil or criminal law, except
as could not reasonably be expected to have a Company Material Adverse
Effect.
16
(e) The Company and each Company Subsidiary has taken
commercially reasonable security measures to protect the secrecy,
confidentiality and value of its trade secrets, except as could not
reasonably be expected to have a Company Material Adverse Effect.
(f) To the knowledge of the Company, all employees of the
Company and each Company Subsidiary that have developed Intellectual
Property in connection with their employment with the Company or any
Company Subsidiary have executed written agreements with the Company or
such Company Subsidiary requiring the employee to assign to the Company
or such Company Subsidiary all rights to such Intellectual Property. To
the Company's knowledge, no employee of the Company or any Company
Subsidiary has entered into any agreement that restricts or limits in
any way the scope or type of work in which the employee may be engaged
or requires the employee to transfer, assign or disclose any
Intellectual Property or information concerning the employee's work to
anyone other than the Company or such Company Subsidiary, except as
could not reasonably be expected to have a Company Material Adverse
Effect.
4.17. Taxes. The Company and each Company Subsidiary (a) have properly
prepared and timely filed or will have prepared and filed all federal, state,
local and foreign tax returns and reports in respect of taxes required to be
filed by or with respect to the Company and each Company Subsidiary through the
Effective Time (taking into account any extension of time to file); (b) paid or
accrued all taxes shown to be due on such returns and reports (and all
applicable ad valorem and value added taxes as are due from the Company and each
Company Subsidiary have been paid); and (c) paid or accrued all taxes for which
a notice of assessment or collection has been received by the Company or any
Company Subsidiary (other than those being contested or which the Company
intends to contest in good faith by appropriate proceedings). Neither the
Internal Revenue Service nor any other taxing authority has asserted any claim
for taxes, or to the knowledge of the Company, is threatening to assert any
claims for taxes from the Company or any Company Subsidiary. The Company and
each Company Subsidiary have withheld or collected and paid over to appropriate
governmental authorities (or are properly holding for such payment) all taxes
required by law to be withheld or collected by them. There are no liens for
taxes upon the assets of the Company or any Company Subsidiary (other than liens
for taxes that are not yet due or that are being contested in good faith by
appropriate proceedings).
4.18. Material Contracts. As of the date hereof, except as disclosed
in Section 4.18 of the Company Disclosure Schedule, neither the Company nor any
of the Company Subsidiaries is a party to or bound by (i) any "material
contracts" (as such term is defined in Item 601(b)(10) of Regulation S-K); (ii)
any joint ventures, partnerships, or similar arrangements; (iii) other
agreements or arrangements that give rise to a right of the other parties
thereto to terminate such material contract or to a right of first refusal or
similar right thereunder as a result of the execution and delivery of this
Agreement and the consummation by the Company of the Merger and the other
transactions contemplated hereby; or (iv) any agreements, licenses or other
arrangements that contain exclusive grants of rights that could, after the
Effective Time, restrict the Parent or any of its affiliates or any successor
thereto, from engaging in or competing with any line of business or in any
geographic area (collectively, the "Company Material Contracts"). The Company
has provided or made available to the Parent a true and accurate copy of all
Company Material Contracts and all such Company Material Contracts are valid and
in full force and effect, except to the extent they have previously expired in
accordance with their terms or if the failure to be in full force and effect,
individually or in the aggregate, could not reasonably be expected to have a
Company Material Adverse Effect. Neither the Company nor any of the Company
Subsidiaries has violated any provision of, or committed or failed to perform
any act which, with or without notice, lapse of time or both, would constitute a
default under the provisions of any Company Material Contract, except in each
case for those violations and defaults which, individually or in the aggregate,
could not reasonably be expected to have a Company Material Adverse Effect.
17
4.19. Suppliers. Neither the Company nor any Company Subsidiary has
received any notice or has any reason to believe that any significant supplier
will not sell raw materials, supplies, merchandise and other goods to the
Company or any Company Subsidiary at any time after the Effective Time on terms
and conditions substantially similar to those used in its current sales to the
Company and the Company Subsidiaries, subject only to general and customary
price increases, unless comparable raw materials, supplies, merchandise or other
goods are readily available from other sources on comparable terms and
conditions.
4.20. Environmental Matters.
(a) The Company: (i) is in compliance with all applicable
Environmental Laws (which compliance includes, but is not limited to,
the possession by the Company and the Company Subsidiaries of all
permits and other governmental authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions
thereof), except for such non-compliance which could not reasonably be
expected, individually or in the aggregate, to have a Company Material
Adverse Effect; (ii) has not received any communication (written or
oral) from a Governmental Entity or third party that alleges that the
Company is not in compliance with applicable Environmental Laws; (iii)
has not owned or operated any property that is contaminated with any
Hazardous Material which may be expected to require remediation under
any Environmental Law; (iv) is not subject to liability for any
disposal or contamination (whether on-site or off-site) of any
Hazardous Material; and (v) is not subject to any other circumstances
in connection with any Environmental Law that could reasonably be
expected to have a Company Material Adverse Effect.
(b) "Environmental Laws" will mean any Federal, state, local or
foreign statutes, laws, rules, ordinances, codes, policies, rules of
common law and regulation relating to pollution or protection of human
or worker health or safety or the environment (including ambient air,
surface water, ground water, land surface or subsurface strata),
including laws and regulations relating to Environmental Releases or
threatened Environmental Releases of Hazardous Materials, or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials, as in
effect on the date hereof.
(c) "Hazardous Materials" will mean: (i) any petroleum or
petroleum products, radioactive materials, asbestos in any form that is
or could become friable, urea formaldehyde foam insulation, and
transformers or other equipment that contain dielectric fluid
containing polychlorinated biphenyls above regulated levels and radon
gas; and (ii) any chemicals, materials or substances which are now
defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous
wastes," "restricted hazardous wastes," "toxic substances," "toxic
pollutants," or words of similar import, under any Environmental Law;
and (iii) any other chemical, material, substance or waste, exposure to
which as of the date hereof is prohibited, limited or regulated by any
Governmental Entity.
(d) "Environmental Release" will mean any release, spill,
emission, leaking, injection, deposit, disposal, discharge, dispersal,
leaching or migration into the atmosphere, soil, surface water or
groundwater.
4.21. Company Products; Regulation. Except as disclosed in Section
4.21 of the Company Disclosure Schedule and except as could not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect, to the Company's knowledge, (a) since January 1, 2000 through the date
hereof there have been no written notices, citations or decisions by any
Governmental Entity that any product produced, manufactured, marketed or
distributed at any time by the Company or
18
any Company Subsidiary (the "Company Products") is defective or fails to meet
any applicable standards promulgated by any such Governmental Entity, (b) the
Company and the Company Subsidiaries have complied with the laws, regulations
and specifications with respect to the design, manufacture, labeling, testing
and inspection of products promulgated by the U.S. Food and Drug Administration,
and (c) since January 1, 2000 through the date hereof, there have been no
recalls, field notifications or seizures ordered or threatened by any such
Governmental Entity with respect to any of the Company Products.
4.22. Interested Party Transactions. Since January 1, 2000, except as
described in the Company's Definitive Proxy Statement for its Annual Meeting of
Shareholders on May 10, 2001 under the headings "Executive Compensation and
Other Benefits" and "Related Party Transactions," or except as described in
Section 4.22 of the Company Disclosure Schedule, no event has occurred that
would be required to be reported by the Company pursuant to Item 404 of
Regulation S-K promulgated by the SEC. Except as described in the Company's
Definitive Proxy Statement for its Annual Meeting of Shareholders on May 10,
2001 under the headings "Executive Compensation and Other Benefits" and "Related
Party Transactions," or in Section 4.22 of the Company Disclosure Schedule,
there are no existing contracts, agreements, business dealings, arrangements or
other understandings between (a) the Company or any Company Subsidiary, and (b)
any officer, director or beneficial owner of more than 5% of the outstanding
voting securities of the Company or any Company Subsidiary (or any entity of
which such person is an officer, director or beneficial owner of more than 5% of
such entity's outstanding voting securities) (a "Related Party"). There are no
assets of any Related Party that are used in or necessary to the conduct of the
business of the Company or any Company Subsidiary.
4.23. Company Rights Agreement. The Company Rights Agreement has been
amended so as to provide that neither the Parent nor Merger Sub will become an
"Acquiring Person" and that no "Share Acquisition Date" or "Distribution Date"
(as such terms are defined in the Company Rights Agreement) will occur as a
result of the approval, execution or delivery of this Agreement or the
consummation of any of the transactions contemplated hereby. Additionally, the
Board of Directors of the Company has taken such corporate action as is
necessary to amend the Company Rights Agreement so that the "Expiration Date"
(as such term is defined in the Company Rights Agreement) will occur immediately
prior to the Effective Time.
4.24. Officers, Directors and Employees. Section 4.24 of the Company
Disclosure Schedule completely and accurately sets forth (i) in all material
respects, the name, title and current annual salary rate of each employee of the
Company or of any Company Subsidiary, together with a summary of the bonuses,
commissions, additional compensation, and other like cash benefits, if any,
payable to such persons or proposed to be payable to such persons for the
current fiscal year; (ii) the names of all former officers of the Company or of
any Company Subsidiary whose employment with the Company or such Company
Subsidiary has terminated either voluntarily or involuntarily during the
preceding 12-month period; and (iii) the names of the officers (with all
positions and titles indicated) and directors of the Company and of each Company
Subsidiary
4.25. Board Recommendation. As of the date hereof, the Board of
Directors of the Company, at a meeting duly called and held, has unanimously
approved this Agreement and the transactions contemplated hereby and (i)
determined that this Agreement and the transactions contemplated hereby,
including the Merger, taken together are fair to and in the best interests of
the stockholders of the Company; and (ii) resolved to recommend that the
stockholders of the Company adopt this Agreement.
4.26. Vote Required. The affirmative vote of the holders of a majority
of the shares of Company Common Stock outstanding on the record date,
established by the Board of Directors of the Company in accordance with the
Restated Bylaws of the Company, applicable law and this Agreement, is
19
the only vote of the holders of any class or series of capital stock of the
Company necessary to approve the Merger.
4.27. Fairness Opinion. The Company has received a written opinion
from Banc of America Securities LLC, financial advisor to the Company, dated as
of the date hereof, to the effect that, subject to the qualifications and
limitations stated therein, the Merger Consideration to be received by the
holders of shares of the Company Common Stock in the Merger is fair to such
holders from a financial point of view.
4.28. No Finders. Except for the engagement letter between the Company
and Banc of America Securities LLC dated November 8, 2001, no act of the Company
or any Company Subsidiary has given or will give rise to any claim against any
of the parties hereto for a brokerage commission, finder's fee, or other like
payment in connection with the transactions contemplated herein. The Company has
provided or made available to the Parent or its advisors prior to the date of
this Agreement copies of all engagement letters or other agreements with Banc of
America Securities LLC.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB
The Parent and Merger Sub hereby jointly and severally represent and
warrant to the Company as of the date hereof as follows:
5.1. Organization and Qualification. Each of the Parent and Merger
Sub is a corporation duly organized, validly existing, and in good standing
under the laws of the state of its incorporation and has all requisite corporate
power and authority to own, lease, and operate its properties and to carry on
its business as now being conducted. Each of the Parent and Merger Sub and its
subsidiaries is duly qualified and in good standing to do business in each
jurisdiction in which the property owned, leased, or operated by it or the
nature of the business conducted by it makes such qualification necessary and
where the failure to qualify could reasonably be expected to have a Parent
Material Adverse Effect (as defined below). "Parent Material Adverse Effect"
means any effect, change, event, circumstance or condition that, individually or
in the aggregate with all similar effects, changes, events, circumstances or
conditions, is or would reasonably be expected to: (i) have a material adverse
effect on the business (including its prospects, current products or products
identified for development), operations, assets, properties, results of
operations, or financial condition of the Parent and its subsidiaries,
considered as a whole, or (ii) prevent or materially delay the consummation of
the Merger or otherwise have a material adverse effect on the ability of the
Parent to perform its obligations under this Agreement; provided, however, that
there will be excluded from the definition of Parent Material Adverse Effect any
adverse effect, change, event, circumstance or condition in the medical device
industry or in the economy generally (as opposed to the Parent specifically).
5.2. Ownership of Merger Sub. Merger Sub is a direct, wholly-owned
subsidiary of the Parent.
5.3. Authorization. Each of the Parent and Merger Sub has the
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by the Parent and Merger Sub and the consummation of
the transactions contemplated hereby have been duly and validly authorized and
approved by the Boards of Directors of the Parent and Merger Sub and by the
Parent as the sole stockholder of Merger Sub, and no other corporate proceedings
on the part of the Parent and Merger Sub are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. No vote of the
holders of any class
20
or series of the capital stock of the Parent is necessary to approve this
Agreement or the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by each of the Parent and Merger Sub and
constitutes the valid and binding obligation of the Parent and Merger Sub,
enforceable against each of them in accordance with its terms, subject to laws
of general application relating to bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and rules
of law governing specific performance, injunctive relief, or other equitable
remedies.
5.4. Consents and Approvals. Except for (i) compliance with any applicable
requirements of the Securities Act, the Exchange Act, state takeover and
securities laws and the HSR Act, (ii) the filing and recordation of the
Certificate of Merger as required by the DGCL and the rules of the NYSE and
Nasdaq, and (iii) compliance with Section 262 of the DGCL regarding appraisal
rights of the Company's stockholders, the execution and delivery of this
Agreement by the Parent and Merger Sub and the consummation of the transactions
contemplated hereby will not: (a) violate any provision of the Articles or
Certificate of Incorporation or Bylaws of the Parent or Merger Sub or the
comparable organizational documents any of the Parent's subsidiaries; (b)
violate any statute, rule, regulation, order, or decree of any federal, state,
local or foreign body or authority by which the Parent, Merger Sub or any of
their respective subsidiaries or any of their respective properties or assets
may be bound; (c) require any filing with or permit, consent, or approval of any
Governmental Entity; or (d) result in any violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default under, result in
the loss of any material benefit under, or give rise to any right of
termination, cancellation, increased payments, or acceleration under, or result
in the creation of any Lien on any of the properties or assets of the Parent,
Merger Sub or any of their respective subsidiaries under, any of the terms,
conditions, or provisions of any note, bond, mortgage, indenture, license,
franchise, permit, agreement, or other instrument or obligation to which the
Parent, Merger Sub or any of their respective subsidiaries is a party, or by
which any of them or any of their respective properties or assets may be bound,
except (x) in the cases of clauses (b) or (c), where such violation, failure to
make any such filing or failure to obtain such permit, consent or approval,
could not reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse Effect, and (y) in the case of clause (d), for any such
violations, breaches, defaults, or other occurrences that could not reasonably
be expected to have, individually or in the aggregate, a Parent Material Adverse
Effect.
5.5. Information Supplied. None of the information supplied or to be
supplied by the Parent or Merger Sub, or any of their subsidiaries, for
inclusion in, or incorporation by reference in, the Proxy Statement and the
Schedule 13E-3 will, (i) at the time the Proxy Statement and the Schedule 13E-3
is filed with the SEC or at any time it is amended and supplemented, (ii) on the
date the Proxy Statement is first mailed to the stockholders of the Company, and
(iii) at the time of the Company Stockholders' Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading, except that no
representation or warranty is made by the Parent or Merger Sub with respect to
statements made in or incorporated by reference therein based on information
supplied by the Company specifically for inclusion or incorporation by reference
therein. The Schedule 13E-3 and the portion of Proxy Statement based on
information supplied by the Parent or Merger Sub for inclusion or incorporation
by reference therein will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder.
5.6. Litigation. There are no suits, actions or proceedings pending or, to
the knowledge of the Parent or Merger Sub, threatened against or affecting the
Parent, Merger Sub or any of their respective subsidiaries that could reasonably
be expected to prevent, hinder or delay the timely completion of the transaction
contemplated by this Agreement.
21
5.7. Interim Operations of Merger Sub. Merger Sub was formed solely for
the purpose of engaging in the transactions contemplated by this Agreement and
has not engaged in any business activities or conducted any operations other
than in connection with the performance of its obligations hereunder.
5.8. No Finders. No act of the Parent or Merger Sub has given or will give
rise to any claim against any of the parties hereto for a brokerage commission,
finder's fee, or other like payment in connection with the transactions
contemplated herein.
5.9. Financing. The Parent has or at the Effective Time, the Parent will
have, and will make available to Merger Sub, the funds necessary to pay the
aggregate Merger Consideration and otherwise to consummate the Merger and the
transactions contemplated hereby.
ARTICLE 6.
COVENANTS
6.1. Conduct of Business of the Company. Except as contemplated by this
Agreement or to the extent that the Parent otherwise consents in writing, during
the period from the date of this Agreement to the Effective Time, the Company
and each Company Subsidiary will conduct their respective operations according
to their ordinary and usual course of business and consistent with past
practice, and the Company and each Company Subsidiary will use commercially
reasonable efforts to preserve intact in all material respects their respective
business organizations, to maintain in all material respects their present and
planned business, to keep available in all material respects the services of
their respective officers and employees and to maintain in all material respects
satisfactory relationships with licensors, licensees, suppliers, contractors,
distributors, consultants, customers, and others having business relationships
with them. Without limiting the generality of the foregoing, and except as
otherwise expressly provided in or contemplated by this Agreement, prior to the
Effective Time, neither the Company nor any Company Subsidiary will, without the
prior written consent of the Parent:
(a) amend or otherwise change its Certificate of Incorporation or
Bylaws or other organizational documents;
(b) except as set forth in Section 6.1(b) of the Company Disclosure
Schedule, issue, sell, pledge, dispose of, grant or encumber, or authorize
the issuance, sale, pledge, disposition, grant or encumbrance of, (i) any
shares of capital stock of any class of the Company or any Company
Subsidiary, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of such capital stock, or any
other ownership interest (including, without limitation, any phantom
interest), of the Company or any Company Subsidiary (except for the
issuance of shares of Company Common Stock pursuant to the exercise of
Company Options and Company Warrants outstanding on the date of this
Agreement or pursuant to the Company ESPP) or (ii) any assets of the
Company or any Company Subsidiary, except for sales of inventory in the
ordinary course of business and in a manner consistent with past practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock, except that a United States Company Subsidiary
may, after consultation with the Parent, declare and pay a dividend to the
Company;
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
22
(e) (i) acquire or agree to acquire (including, without limitation, by
merger, consolidation or acquisition of stock or assets) any corporation,
partnership, limited liability company, other business organization or any
division thereof, or any material amount of assets, except as set forth in
Section 6.1(e) of the Company Disclosure Schedule and except as provided in
clause (iii) below; (ii) except as set forth in Section 6.1(e) of the Company
Disclosure Schedule and except for trade payables incurred in the ordinary
course of business and consistent with past practice, create, incur or assume
any indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse, or otherwise as an accommodation become responsible for,
the obligations of any person, or make any loans, advances or capital
contributions to, or investments in, any other person, or create, incur or
assume any material Lien on any material asset; or (iii) authorize, make or
agree to make capital expenditure or expenditures, except for capital
expenditures of $250,000 in the aggregate;
(f) except as otherwise provided in this Agreement or as set forth in
Section 6.1(f) of the Company Disclosure Schedule, (i) increase in any manner
the compensation of any of its directors, officers, employees, or consultants,
or accelerate the payment of any such compensation, except anniversary date
salary increases for employees in the ordinary course of business and in a
manner consistent with past practices or as required by existing contractual
commitments or applicable law; (ii) pay or accelerate or otherwise modify the
payment, vesting, exercisability, or other feature or requirement of any
pension, retirement allowance, severance, change of control, stock option, or
other employee benefit to any such director, officer, employee or consultant; or
(iii) except as required by existing contractual commitments or applicable laws,
commit itself to any additional or increased pension, profit-sharing, bonus,
incentive, deferred compensation, group insurance, severance, change of control,
retirement or other benefit, plan, agreement, or arrangement, or any employment
or consulting agreement, with or for the benefit of any person, or amend any of
such plans or any of such agreements in existence on the date hereof (except any
amendment required by law or that would not materially increase benefits under
the relevant plan);
(g) alter or revise its accounting principles, procedures, methods or
practices in any material respect (including, without limitation, procedures
with respect to the payment of accounts payable and collection of accounts
receivable) except as required by applicable law or regulation or by a change in
GAAP and concurred with by the Company's independent public accountants;
(h) pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise) in an
amount in excess of $500,000 in the aggregate, other than the payment, discharge
or satisfaction, in the ordinary course of business and consistent in all
material respects with past practice, of liabilities reflected or reserved
against in the Company's balance sheet as of September 30, 2001 or subsequently
incurred in the ordinary course of business and consistent in all material
respects with past practice;
(i) except as set forth in Section 6.1(i) of the Company Disclosure
Schedule, enter into or terminate, or amend, extend, renew, or otherwise modify
in any material respect (including, but not limited to, by default or by failure
to act) any joint ventures or any other agreements, protocols or work plans
pursuant to agreements with third parties, commitments, or contracts that are
material to the Company and the Company Subsidiaries, considered as a whole
(except agreements, commitments, or contracts expressly provided for or
contemplated by this Agreement or for the purchase, sale, or lease of goods,
services, or properties in the ordinary course of business consistent with past
practice);
23
(j) except as set forth in Section 6.1(j) of the Company
Disclosure Schedule, enter into or terminate, or amend, extend, renew,
or otherwise modify in any material respect (including, but not limited
to, by default or by failure to act) any distribution, OEM, independent
sales representative, noncompetition, licensing, franchise, research
and development, supply, or similar contract, agreement, or
understanding (except contracts, agreements or understandings expressly
provided for or contemplated by this Agreement), or enter into any
contract, plan, agreement, understanding, arrangement or obligation
that restricts the Company's, or after the Merger would restrict the
Surviving Corporation's or the Parent's, ability to conduct any line of
business, or enter into any contract or arrangement of a type described
in Section 4.18;
(k) change in any material respect its general credit policy as
to sales of inventories or collection of receivables or its inventory
consignment practices;
(l) remove or permit to be removed from any building, facility,
or real property any material machinery, equipment, fixture, vehicle,
or other personal property or parts thereof, except in the ordinary
course of business consistent with past practice;
(m) institute, settle, or compromise any claim, action, suit, or
proceeding pending or threatened by or against it, at law or in equity
or before any Governmental Entity (including, but not limited to, the
FDA) or any nongovernmental self-regulatory agency;
(n) take, or agree to commit to take, or fail to take any action
that would make any representation, warranty, covenant or agreement of
the Company contained herein inaccurate or breached such that the
conditions in Section 7.2 will not be satisfied at, or as of any time
prior to, the Effective Time; or
(o) enter into, or publicly announce an intention to enter into,
any contract, agreement, commitment, plan or arrangement to, or
otherwise agree or consent to do any of the foregoing actions set forth
in this Section 6.1.
6.2. Conduct of Business of the Parent. From the date of this
Agreement to the Effective Time, the Parent will not take, or agree to commit to
take, or fail to take any action that would make any representation, warranty,
covenant or agreement of the Parent contained herein inaccurate or breached such
that the conditions in Section 7.3 will not be satisfied at, or as of any time
prior to, the Effective Time.
6.3. No Solicitation.
(a) The Company will not, and will cause its Company
Subsidiaries and its and their officers, directors, employees,
financial advisors, counsel, representatives and agents (collectively,
"Representatives") not to, (i) directly or indirectly, solicit,
initiate, knowingly encourage or otherwise facilitate the making of an
Acquisition Proposal (as defined below), (ii) engage in or knowingly
encourage in any way negotiations or discussions concerning, or provide
any non-public information to, any Third Party (as defined below)
relating to an Acquisition Proposal, or which may reasonably be
expected to lead to an Acquisition Proposal, or (iii) agree to or
endorse any Acquisition Proposal; provided, however, that nothing
contained in this Section 6.3 or in any other provision of this
Agreement will prohibit the Company or the Company's Board of Directors
from taking and disclosing to the Company's stockholders a position
contemplated by Rule 14e-2 promulgated under the Exchange Act or from
making any legally required disclosure to the Company's stockholders.
24
(b) As used in this Agreement, the term "Acquisition Proposal"
means any offer or proposal for (i) a transaction or series of related
transactions pursuant to which any person (or "group" of persons as
such term is defined under Section 13(d) of the Exchange Act) other
than the Parent or Merger Sub (a "Third Party") acquires 25% or more of
the outstanding shares of Company Common Stock, including without
limitation a tender offer or an exchange offer which, if consummated,
would result in a Third Party acquiring 25% or more of the outstanding
shares of Company Common Stock, (ii) a merger or other business
combination involving the Company pursuant to which any Third Party
acquires securities representing 25% or more of the aggregate voting
power of all outstanding securities of the company surviving the merger
or business combination, or (iii) any other transaction pursuant to
which any Third Party acquires control of assets (including for this
purpose the outstanding equity securities of any Company Subsidiary) of
the Company having a fair market value equal to 25% or more of the fair
value of all of the assets of the Company immediately prior to such a
transaction.
(c) As used in this Agreement, a "Superior Proposal" will mean a
bona fide Acquisition Proposal that the Board of Directors of the
Company has reasonably and in good faith determined after consultation
with, among other persons, its financial advisors and outside counsel,
to be more favorable to the Company's stockholders than the Merger,
taking into account all relevant factors (including whether, in the
good faith judgment of the Board of Directors of the Company, such
third party is reasonably able to finance the transaction and all
regulatory approvals required in such transaction could reasonably be
obtained).
(d) Notwithstanding the provisions of Section 6.3(a), this
Agreement will not prohibit the Company's Board of Directors from,
prior to the date on which the Company's stockholders adopt this
Agreement in accordance with the DGCL, furnishing nonpublic information
to or entering into discussions or negotiations with, any Third Party
that makes an unsolicited Superior Proposal, if, and only to the extent
that, (i) the failure of the Company's Board of Directors to take
action with respect to a Superior Proposal would be a breach of the
Board's fiduciary duties to its stockholders imposed by applicable law;
(ii) prior to first furnishing nonpublic information to, or first
entering into substantive discussions and negotiations with, such Third
Party after the date hereof, the Company (A) provides written notice of
at least five Business Days to the Parent to the effect that it intends
to furnish information to, or enter into discussions or negotiations
with, such Third Party, and naming and identifying the Third Party
making the Acquisition Proposal, and (B) receives from such Third Party
an executed confidentiality agreement with terms no less favorable to
the Company than the Confidentiality Agreement dated June 4, 2001
between the Company and the Parent; and (iii) the Company concurrently
provides the Parent with all non-public information to be provided to
such Third Party that the Parent has not previously received from the
Company, and the Company keeps Parent reasonably informed of the status
and the material terms and conditions and all other material
information with respect to any such discussions or negotiations.
(e) The Company agrees that it will notify the Parent within two
(2) Business Days if it or any of its Representatives receives an
Acquisition Proposal or any inquiry reasonably likely to lead to a
Acquisition Proposal or if any discussions or negotiations are sought
to be initiated or continued with the Company or its Representatives
concerning an Acquisition Proposal, and such notification will contain
the name of the Third Party involved and the material terms and
conditions of such an Acquisition Proposal.
(f) Upon execution of this Agreement, the Company will
immediately terminate all discussions with Third Parties concerning any
Acquisition Proposal, and will request that such Third Parties promptly
return any confidential information furnished by the Company in
25
connection with any Acquisition Proposal. The Company will not waive
any provision of any confidentiality, standstill or similar agreement
entered into with any Third Party regarding any Acquisition Proposal,
and prior to the Closing will enforce all such agreements in accordance
with their terms.
(g) Nothing contained in this Section 6.3 will (i) permit the
Company to terminate this Agreement (except as specifically provided in
Article 8 hereof), or (ii) permit the Company to enter into any
agreement providing for an Acquisition Proposal (other than the
confidentiality agreement as provided, and in the circumstances and
under the conditions set forth, above) for as long as this Agreement
remains in effect.
6.4. Company Stockholders Meeting.
(a) The Company will promptly take all action necessary in
accordance with the DGCL and the Company's Restated Certificate of
Incorporation and Restated Bylaws to cause a meeting of its
stockholders (the "Company Stockholders' Meeting") to be duly called
and held to consider and vote upon the approval and adoption of this
Agreement and the Merger and the Company will use its commercially
reasonable efforts to hold the Company Stockholders' Meeting as soon as
practicable after the date of this Agreement. The Board of Directors of
the Company will, subject to Section 6.4(b), recommend such approval
and adoption of this Agreement and the Merger and will take all lawful
action to solicit such approval, including, without limitation, timely
mailing the Proxy Statement, unless such recommendation or solicitation
would be a breach of the Company's Board of Directors' fiduciary duties
to its stockholders imposed by applicable law.
(b) The Board of Directors of the Company will not withdraw, or
modify in a manner adverse to the Parent, its recommendation to its
stockholders unless (i) the Company has complied with the terms of
Section 6.3 in all material respects, including, without limitation,
the requirement in Section 6.3 that it notify the Parent after its
receipt of any Acquisition Proposal, and (ii) such withdrawal or
modification is required under applicable law in order for the Board of
Directors of the Company to comply with its fiduciary duties to its
stockholders. Any withdrawal or modification of the recommendation of
the Company's Board of Directors in accordance with the previous
sentence will not constitute a breach of the Company's representations,
warranties, covenants or agreements contained in this Agreement. Unless
this Agreement is previously terminated in accordance with Article 8,
the Company will submit this Agreement to its stockholders at the
Company Stockholders' Meeting even if the Board of Directors of the
Company determines at any time after the date hereof that it is no
longer advisable or recommends that the Company stockholders reject it
(and not postpone or adjourn such meeting or the vote by the Company's
stockholders upon this Agreement and the Merger to another date without
the Parent's approval).
(c) The Parent will vote (or consent with respect to) any shares
of common stock of Merger Sub beneficially owned by it, or with respect
to which it has the power (by agreement, proxy or otherwise) to cause
to be voted (or to provide a consent), in favor of the adoption of this
Agreement at any meeting of the stockholders of Merger Sub at which
this Agreement will be submitted for adoption and at all adjournments
or postponements thereof (or, if applicable, by any action of the
stockholders of Merger Sub by consent in lieu of a meeting).
26
6.5. Proxy Statement and Schedule 13E-3
(a) As promptly as practicable after the execution of this
Agreement, the Company and the Parent will jointly prepare a Rule 13E-3
Transaction Statement (together with any amendments thereto, the
"Schedule 13E-3") and the Company will prepare and file with the SEC a
proxy statement (together with any amendments thereto, the "Proxy
Statement") relating to the Company Stockholders' Meeting. Both the
Parent and the Company will cause the Schedule 13E-3 to comply as to
form in all material respects with the applicable provisions of the
Exchange Act and the rules and regulations thereunder, the rules and
regulations of Nasdaq and the DGCL. The Company will cause the Proxy
Statement to comply as to form in all material respects with the
applicable provisions of the Exchange Act and the rules and regulations
thereunder, the rules and regulations of Nasdaq and the DGCL. Both the
Company and the Parent will furnish to each other all information
concerning the Company or the Parent each may reasonably request in
connection with such actions and the preparation of the Schedule 13E-3
and the Proxy Statement. All filings by the Company with the SEC in
connection with the transactions contemplated hereby, including the
Proxy Statement and any amendment or supplement thereto, will be
subject to the prior review of the Parent and all mailings to the
Company's stockholders in connection with the transaction contemplated
by this Agreement will be subject to the prior review of the Parent.
All filings by the Parent with the SEC in connection with the
transactions contemplated hereby, including the Schedule 13E-3 and any
amendment or supplement thereto, will be subject to the prior review of
the Company will be subject to the prior review of the Parent. The
Company, with the cooperation of the Parent, will use its reasonable
best efforts to cause the Proxy Statement to be mailed to each of the
Company's stockholders as promptly as practicable after the compliance
with SEC filing requirements and, if necessary, satisfactory resolution
of SEC comments. The Company will also promptly file, and, if required,
mail to the Company's stockholders, any amendment to the Proxy
Statement which may become necessary after the date the Proxy Statement
is first mailed to the Company's stockholders. The Company and the
Parent will also promptly file any amendment to the Schedule 13E-3
which may become necessary after the date the Schedule 13E-3 is first
filed with the SEC.
(b) No amendment or supplement to the Proxy Statement or the
Schedule 13E-3 will be made by the Company without the approval of the
Parent, which approval will not be unreasonably withheld or delayed.
The Company will advise the Parent promptly after it receives notice
thereof of any request by the SEC or Nasdaq for amendment of the Proxy
Statement or the Schedule 13E-3 or comments thereon and responses
thereto or requests by the SEC for additional information.
(c) The Proxy Statement will include the recommendation of the
Board of Directors of the Company to the stockholders of the Company
that they vote in favor of the adoption of this Agreement and the
Merger, except as otherwise provided in Section 6.3 or 6.4 of this
Agreement.
(d) The information supplied by the Company included in the Proxy
Statement and the Schedule 13E-3 will not, at (i) the time the Proxy
Statement and the Schedule 13E-3 is filed with the SEC; (ii) the time
the Proxy Statement (or any amendment thereof or supplement thereto) is
first mailed to the stockholders of the Company, (iii) the time of the
Company Stockholders' Meeting and (iv) the Effective Time, contain any
untrue statement of a material fact or fail to state any material fact
required to be stated therein, in light of the circumstances under
which they were made, or necessary in order to make the statements
therein not misleading. If at any time prior to the Effective Time any
event or circumstances relating to the Company or any of the Company
Subsidiaries, or their respective officers and directors, should be
discovered by the Company that should be set forth in an amendment or a
supplement to the Proxy Statement
27
or the Schedule 13E-3, the Company will promptly inform the Parent. All
documents that the Company is responsible for filing with the SEC in
connection with the transactions contemplated hereby will comply as to
form in all material respects with the applicable requirements of the
DGCL, the Securities Act, the Exchange Act and Nasdaq.
(e) The information supplied by the Parent included in the
Schedule 13E-3 or for inclusion in the Proxy Statement will not, at (i)
the time the Proxy Statement and the Schedule 13E-3 is filed with the
SEC; (ii) the time the Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to the stockholders of the Company,
(iii) the time of the Company Stockholders' Meeting and (iv) the
Effective Time, contain any untrue statement of a material fact or fail
to state any material fact required to be stated therein or necessary
in order to make the statements therein not misleading. If at any time
prior to the Effective Time any event or circumstance relating to the
Parent or any of its subsidiaries, or their respective officers and
directors, should be discovered by the Parent that should be set forth
in an amendment or a supplement to the Schedule 13E-3 or the Proxy
Statement, the Parent will promptly inform the Company. All documents
that the Parent is responsible for filing with the SEC in connection
with the transactions contemplated hereby will comply as to form in all
material respects with the applicable requirements of the DGCL, the
Securities Act, the Exchange Act, and Nasdaq.
6.6. Confidentiality. The Parent and the Company will comply with, and
will cause their respective representatives to comply with, in all respects, all
of their respective obligations under the confidentiality agreement between the
parties dated June 4, 2001 (the "Confidentiality Agreement"), and in no event,
will the negotiation, entering into or termination of this Agreement be deemed
to waive or otherwise adversely affect the rights and obligations of the parties
under the Confidentiality Agreement, which rights and obligations will continue
in full force and effect in accordance with their terms.
6.7. Access to Information.
(a) Except as required pursuant to any confidentiality agreement
or similar agreement or arrangement to which the Company or any of the
Company Subsidiaries is a party (in which case the Company will use all
commercially reasonable efforts to provide acceptable alternative
arrangements, not in violation of such agreement or arrangement, for
disclosure to the Parent or its advisors) or pursuant to applicable
law, the Company will afford to the Parent and to the Parent's
accountants, officers, directors, employees, counsel, and other
representatives reasonable access during normal business hours upon
reasonable prior notice, from the date hereof through the Effective
Time, to all of its properties, books, data, contracts, commitments,
and records, and, during such period, the Company will furnish promptly
to the Parent all information concerning the Company's and the Company
Subsidiaries' businesses, prospects, properties, liabilities, results
of operations, financial condition, product evaluations and testing,
pilot studies, clinical data and studies and evaluations, patient
results, regulatory compliance, officers, employees, third party
clinical investigators, consultants, distributors, customers,
suppliers, and others having dealings with the Company as the Parent
may reasonably request and reasonable opportunity to contact and obtain
information from such officers, employees, investigators, consultants,
distributors, customers, suppliers, and others having dealings with the
Company as the Parent may reasonably request. The Company's obligation
to afford access and provide information pursuant to the preceding
sentence will include, without limitation, such access and information
as the Parent will deem necessary to enable the Parent, or a third
party designated by the Parent, to conduct a full audit of the
Company's product performance and quality, pilot studies, clinical data
and results, patient results, compliance with FDA regulations, policies
and procedures, QSR compliance, manufacturing scale-up relations and
dealings with third party physicians and other clinical investigators
and consultants, and related performance,
28
manufacturing, and compliance matters concerning the Company's products. During
the period from the date hereof to the Effective Time, the parties will in good
faith meet and correspond on a regular basis for mutual consultation concerning
the conduct of the Company's and the Company Subsidiaries' businesses and, in
connection therewith, Parent will be entitled to be kept informed concerning,
the Company's and the Company Subsidiaries' operations and business planning.
(b) No investigation pursuant to this Section 6.7 will affect any
representation or warranty contained herein of any party hereto or any condition
to the obligations of the parties hereto.
6.8. Approvals and Consents; Cooperation.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to cooperate with each other and to use
all commercially reasonable efforts to promptly take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable, the Merger and
the other transactions contemplated by this Agreement, including, without
limitation, (i) the obtaining of all necessary actions or nonactions, waivers,
consents and approvals from Governmental Entities and the making of all
necessary registrations, submissions of information, applications and filings
(including filings with Governmental Entities) and the taking of all reasonable
steps as may be necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, any Governmental Entity, (ii) the obtaining and
maintenance of all necessary consents, approvals, permits, authorizations and
other confirmations or waivers from third parties, (iii) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
investigating or challenging this Agreement or the consummation of any of the
transactions contemplated by this Agreement, including seeking to have any stay
or temporary restraining order entered by any court or other Governmental Entity
vacated or reversed and (iv) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement.
(b) The Parent and the Company will file as soon as practicable after the
date of this Agreement notifications under the HSR Act, if required, and will
respond as promptly as practicable to all inquiries or requests received from
the Federal Trade Commission or the Antitrust Division of the Department of
Justice for additional information or documentation and will respond as promptly
as practicable to all inquiries and requests received from any State Attorney
General or other Governmental Entity in connection with the transactions
contemplated hereby. The parties will cooperate with each other in connection
with the making of all such filings or responses, including providing copies of
all such documents to the other party and its advisors prior to filing or
responding. The Parent and Merger Sub agree to use their respective reasonable
efforts to avoid the entry of (or, if entered, to lift, vacate or reverse) any
order, decree, judgment or ruling of any court or Governmental Entity
restraining or preventing the consummation of the Merger on the basis of any
federal, state or local antitrust laws or regulations. Concurrently with the
filing of notifications under the HSR Act or as soon thereafter as practicable,
the Company and the Parent will each request early termination of HSR Act
waiting period. Notwithstanding anything to the contrary in this Agreement, none
of Parent, any of its subsidiaries or the Surviving Corporation, will be
required (and the Company will not, without the prior written consent of Parent,
agree, but will, if so directed by Parent, agree, effective after the Effective
Time) to hold separate or divest any of their respective assets or operations or
enter into any consent decree or licensing or other arrangement with respect to
any of their assets or operations or to otherwise take or commit to take any
action that limits its
29
freedom of action with respect to, or its ability to retain, as of and
after the Effective Time any businesses or assets of the Company, the
Parent or any of their respective affiliates.
(c) Each of the Company and the Parent will promptly inform the
other party of any material communication received by such party from
the Federal Trade Commission, the Antitrust Division of the Department
of Justice or any other governmental or regulatory authority regarding
any of the transactions contemplated hereby.
6.9. Employee Benefits and Employee Matters. From and after the
Effective Time, the Parent will provide, or will cause the Surviving Corporation
to provide, employee benefits and programs ("Parent Employee Benefit Plans") to
the Company's employees that, in the aggregate, are substantially comparable or
more favorable, as a whole, than those in existence as of the date hereof and
provided or made available to the Parent prior to the execution hereof; provided
that stock-based compensation will be comparable to that offered by the Parent
and its subsidiaries generally. To the extent the Parent satisfies its
obligations under this Section 6.9 by maintaining Company benefit plans, the
Parent will not be required to include employees of the Company in Parent
Employee Benefit Plans. From and after the Effective Time, the Parent will, or
will cause the Surviving Corporation to, grant all employees of the Company and
any Company Subsidiaries credit under any Parent Employee Benefit Plans for
purposes of eligibility, level of participation and vesting under each employee
benefit plan or arrangement maintained by Parent or the Company for such
employees service with the Company (provided, however, that no such past service
credit will be granted to the extent it would result in duplicative accrual of
benefits for the same period of service). Under no circumstances shall employees
receive credit for service accrued or deemed accrued prior to the Effective Time
with the Company or a Company Subsidiary, as the case may be, for benefit
accruals under any employee pension benefit plan (as defined by Section 3(2) of
ERISA) or any retiree health plan. The Company will use commercially reasonable
best efforts to cause executives and other key employees of the Company
designated by the Parent to enter into agreements reasonably satisfactory to the
Parent with the Surviving Corporation as soon as practicable following the date
of this Agreement.
6.10. Company Employee Stock Purchase Plan. The Company will take all
actions necessary pursuant to the terms of the Company ESPP in order that (i) no
new Offering Periods (as defined in the Company ESPP) under such plan shall
commence following the expiration of the current Offering Period which ends on
December 31, 2001 and (ii) the Company ESPP will terminate immediately prior to
the Effective Time.
6.11. Expenses. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby will be paid by the party incurring such costs and expenses,
except that the Parent and the Company will share equally all the costs of the
filing fees required under the HSR Act and the filing fees required in
connection with the Proxy Statement and the Schedule 13E-3.
6.12. Further Actions. Subject to the terms and conditions herein
provided and without being required to waive any conditions herein (whether
absolute, discretionary, or otherwise), each of the parties hereto agrees to use
all commercially reasonable efforts to take, or cause to be taken, all action,
and to do, or cause to be done, all things necessary, proper, or advisable to
consummate and make effective the transactions contemplated by this Agreement.
In case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers and
directors of each party to this Agreement will take all such necessary action.
6.13. Officers' and Directors' Indemnification.
30
(a) The Parent and the Surviving Corporation agree that the
Surviving Corporation will provide to the directors and officers of the
Company indemnification to the fullest extent provided by its
Certificate of Incorporation and Bylaws with respect to matters
occurring prior to the Effective Time, including without limitation the
authorization of this Agreement and the transactions contemplated
hereby until the six year anniversary date of the Effective Time (or,
in case of matters occurring prior to the Effective Time giving rise to
claims that are made prior to but which have not been resolved by the
sixth anniversary of the Effective Time, until such matters are finally
resolved).
(b) For a period of six years after the Effective Time, the
Parent will, at its selection, either: (i) cause to be maintained in
effect the Company's current directors' and officers' liability
insurance policy (a copy of which has been heretofore delivered or made
available to the Parent or its advisors) with respect to claims arising
from facts or events that occurred at or prior to the Effective Time;
or (ii) extend the discovery or reporting period under the Company's
current policy for six years from the Effective Time to maintain in
effect directors' and officers' liability insurance with respect to
claims arising from facts or events that occurred at or prior to the
Effective Time for those persons who are currently covered by the
Company's directors' and officers' liability insurance policy on terms
no less favorable than the terms of such current insurance policy; or
(iii) substitute coverage under the Parent's directors' and officers'
liability insurance or coverage under other policies providing coverage
on terms and conditions that are no less advantageous to such persons
than the Company's current insurance with respect to claims arising
from facts or events that occurred at or prior to the Effective Time;
provided, however, that in no event will the Parent be required to
expend for any such coverage an amount per year in excess of 100% of
the annual premium currently paid by the Company for such insurance;
and provided further that if the cost per year of such coverage exceeds
such 100% amount, Parent will be obligated to obtain such coverage as
is available for a cost per year not exceeding such amount. The Company
represents that the Company Disclosure Schedule sets forth the annual
premium currently paid by the Company for such insurance.
(c) In addition to the other rights provided for in this Section
6.13 and not in limitation thereof (but without in any way limiting or
modifying the obligations of any insurance carrier contemplated by this
Section 6.13), the Parent will guarantee the obligations of the
Surviving Corporation to honor all indemnification obligations under
the Company's Restated Certificate of Incorporation, the Company's
Restated Bylaws and any indemnification agreements between the Company
and any person (all copies of which have been previously provided or
made available to Parent) as same exist, if at all, as of the date
hereof.
6.14. Notification of Certain Matters. The Company will give prompt
written notice to the Parent, and the Parent will give prompt written notice to
the Company, of (a) the occurrence, or nonoccurrence, of any event the
occurrence, or nonoccurrence, of which would be likely to cause any
representation or warranty contained herein to be untrue or inaccurate in any
material respect at or prior to the Effective Date and (b) any material failure
of the Company or the Parent, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 6.14 will not limit or otherwise affect the remedies available hereunder
to the party receiving such notice.
31
6.15. Term Loan. Upon execution of this Agreement, the Parent will
loan the Company $5 million pursuant to a non-negotiable, secured promissory
note in substantially the form of Exhibit B attached hereto (the "Note").
ARTICLE 7.
CLOSING CONDITIONS
7.1. Conditions to Obligations of the Parent, Merger Sub and the
Company. The respective obligations of each party to consummate the Merger and
to consummate the other transactions contemplated by this Agreement to occur on
the Closing Date will be subject to the satisfaction at or prior to the Closing
Date of the following conditions, any or all of which may be waived by the party
for whose benefit such conditions exist, in whole or in part, to the extent
permitted by applicable law:
(a) This Agreement will have been approved by the requisite
affirmative vote of the stockholders of the Company in accordance with
the Company's Restated Certificate of Incorporation, Restated Bylaws
and the DGCL.
(b) No Governmental Entity or court of competent jurisdiction
will have enacted, issued, promulgated, enforced or entered any law,
rule, regulation or order which is then in effect and has the effect of
making the Merger illegal or otherwise prohibiting consummation of the
Merger.
(c) The waiting periods applicable to the consummation of the
Merger under the HSR Act will have expired or been terminated.
(d) All consents, approvals, authorizations legally required to
be obtained to consummate the Merger will have been obtained from all
Governmental Entities or persons as applicable and will be final (in
the case of any consent or waiver from a Governmental Entity) and in
full force and effect as of the Closing, except for such consents,
approvals and authorizations the failure of which to obtain could not
reasonably be expected to have a Company Material Adverse Effect or a
Parent Material Adverse Effect, as applicable, or after the Effective
Time, a material adverse effect on the Surviving Corporation (assuming
for purposes of this paragraph (e) that the Merger will have been
effected).
7.2. Conditions to Obligations of the Parent and Merger Sub. The
obligation of the Parent and Merger Sub to consummate the Merger will be subject
to the fulfillment or waiver by the Parent at or prior to the Closing of the
following additional conditions:
(a) Each representation and warranty of the Company contained in
this Agreement is true and correct on the date hereof and as of the
Effective Time as though such representations and warranties were made
on such date (except those representations and warranties that address
matters only as of a particular date will remain true and correct as of
such date), except for any inaccuracies that have not had, and could
not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect; provided, however, notwithstanding the
foregoing, this Section 7.2(a) will not be considered fulfilled or
satisfied if the representation and warranty set forth in the last
sentence of Section 4.4 is incorrect by more than 1,000 shares as of
the Closing Date. For purposes of this Section 7.2(a), all
representations and warranties contained in Article 4 qualified by
"Company Material Adverse Effect" or reference to "material" or "in all
material respects" or like variations will not be deemed so qualified.
32
(b) The Company has performed and complied in all material respects
with all agreements, obligations and conditions required by this Agreement
to be performed or complied with by it on or prior to the Effective Time.
(c) The Company will have furnished the Parent with a certificate
dated the Closing Date signed on behalf of the Company by its President and
Chief Executive Officer or its Vice President, Finance and Chief Financial
Officer to the effect that the conditions set forth in Section 7.2(a) and
(b) have been satisfied.
(d) The Company will have obtained all permits, authorizations,
consents, and approvals required on its part to perform its obligations
under, and consummate the transactions contemplated by, this Agreement, in
form and substance satisfactory to the Parent, except for such permits,
authorizations, consents and approvals the failure of which to obtain could
not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect, and the Parent and Merger Sub will have
received evidence reasonably satisfactory to them of the receipt of such
permits, authorizations, consents, and approvals.
(e) Since the date of this Agreement, there will not have occurred or
come into existence any change, event, occurrence, state of facts or
development that has had, or could reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
7.3. Conditions to Obligations of the Company. The obligation of the
Company to consummate the Merger will be subject to the fulfillment or waiver by
the Company at or prior to the Closing of the following additional conditions:
(a) Each representation and warranty of each of the Parent and Merger
Sub contained in this Agreement is true and correct on the date of this
Agreement and as of the Effective time as though such representations and
warranties were made on such date (except those representations and
warranties that address matters only as of a particular date will remain
true and correct as of such date), except for any inaccuracies that have
not had, and could not reasonably be expected to have, individually or in
the aggregate, a Parent Material Adverse Effect. For purposes of this
Section 7.3(a), all representations and warranties contained in Article 5
qualified by "Parent Material Adverse Effect" or reference to "material" or
"in all material respects" or like variations will not be deemed so
qualified.
(b) Each of the Parent and Merger Sub has performed and complied in
all material respects with all agreements, obligations and conditions
required by this Agreement to be performed or complied with by the Parent
and Merger Sub on or prior to the Closing.
(c) The Parent will have furnished the Company with a certificate
dated the Closing Date signed on behalf of the Company by its Chief
Executive Officer or its Chief Financial Officer to the effect that the
conditions set forth in Section 7.3(a) and (b) have been satisfied.
(d) Since the date of this Agreement, there will not have occurred or
come into existence any change, event, occurrence, state of facts or
development that has had, or could reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect.
33
ARTICLE 8.
TERMINATION AND ABANDONMENT
8.1. Termination. This Agreement may be terminated and the Merger and the
other transactions contemplated hereby may be abandoned at any time prior to the
Effective Time, whether before or after approval by the stockholders of the
Company, only:
(a) by mutual written consent duly authorized by the Boards of
Directors of each of the Parent, Merger Sub and the Company;
(b) by either the Parent or the Company if the Merger has not been
consummated on or before May 31, 2002; provided, however, that the party
wishing to terminate under this Section 8.1(b) has not breached in any
material respect its obligations under this Agreement in any manner that
was the proximate cause of, or resulted in, the failure to consummate the
Merger by such date; and provided, further, that, if a request for
additional information is received from the U.S. Federal Trade Commission
("FTC") or Department of Justice ("DOJ") pursuant to the HSR Act, such date
will be extended to the 90th day following acknowledgment by the FTC or
DOJ, as applicable, that the Parent and the Company have complied with such
request, but in any event not later than July 31, 2002;
(c) by either the Parent or the Company if a court of competent
jurisdiction or an administrative, governmental, or regulatory authority
has issued a final nonappealable order, decree, or ruling, or taken any
other action, having the effect of permanently restraining, enjoining, or
otherwise prohibiting the Merger;
(d) by either the Parent or the Company if, at the Company
Stockholders' Meeting, the requisite vote of the Company's stockholders for
approval and adoption of this Agreement and the Merger is not obtained,
except that the right to terminate this Agreement under this Section 8.1(d)
will not be available to any party whose failure to perform any obligation
under this Agreement has been the proximate cause of, or resulted in, the
failure to obtain the requisite vote of the stockholders of the Company;
(e) by the Parent if (i) the Company has breached its obligations
under Section 6.3 hereof in any material respect, or (ii) the Board of
Directors of the Company has recommended to the stockholders of the Company
any Acquisition Proposal or will have resolved or announced an intention to
do so, or (iii) the Board of Directors of the Company has withdrawn or
modified in a manner adverse to the Parent its approval or recommendation
of the Merger or (iv) a tender offer or exchange offer for 25% or more of
the outstanding shares of Company Common Stock is announced or commenced,
and, either (A) the Board of Directors of the Company recommends acceptance
of such tender offer or exchange offer by its stockholders or (B) within 10
Business Days after such tender offer or exchange offer is so commenced,
the Board of Directors of the Company fails to recommend against acceptance
of such tender offer or exchange offer by its stockholders;
(f) by the Company prior to the Company Stockholders' Meeting if (i)
it is not in material breach of its obligations under this Agreement, (ii)
the Board of Directors of the Company has complied with, and continues to
comply with, all requirements, conditions and procedures of Section 6.3 in
all material respects and has authorized, subject to complying with the
terms of this Agreement, the Company to enter into a binding written
agreement concerning a transaction that constitutes a Superior Proposal and
the Company notifies the Parent in writing that it intends to enter into
such binding agreement, which notice must have attached to it the
34
most current version of such agreement ready for execution, and (iii) the
Parent does not make, within five (5) Business Days after receipt of such
notice from the Company, any offer that the Board of Directors of the
Company reasonably and in good faith determines, after consultation with
its financial and legal advisors, is at least as favorable to the
stockholders of the Company as the Superior Proposal and during such five
(5) business-day period the Company reasonably considers and discusses in
good faith all proposals submitted by the Parent and, without limiting the
foregoing, meets with, and causes its financial advisors and legal advisors
to meet with, the Parent and its advisors from time to time as requested by
the Parent to reasonably consider and discuss in good faith the Parent's
proposals. The Company agrees (x) that it will not enter into a binding
agreement referred to in clause (ii) above until at least the 6th Business
Day after the Parent has received the notice to the Parent required by
clause (ii) above, and (y) to notify the Parent promptly if its intention
to enter into the binding agreement included in its notice to the Parent
will change at any time after giving such notice;
(g) by the Parent if (i) the Parent is not in material breach of its
obligations under this Agreement and (ii) there has been a material breach
by the Company of any of its representations, warranties or obligations
under this Agreement such that the conditions in Section 7.2 hereof will
not be satisfied; provided, however, that if such a breach is curable by
the Company through its reasonable best efforts and such cure is reasonably
likely to be accomplished prior to the applicable date specified in Section
8.1(b), then, for so long as the Company continues to exercise such
reasonable best efforts, the Parent may not terminate this Agreement under
this Section 8.1(g); or
(h) by the Company if (i) the Company is not in material breach of its
obligations under this Agreement and (ii) there has been a material breach
by the Parent or Merger Sub of any of its representations, warranties or
obligations under this Agreement such that the conditions in Section 7.3
hereof will not be satisfied provided, however, that if such a breach is
curable by the Parent or Merger Sub through its reasonable best efforts and
such cure is reasonably likely to be accomplished prior to the applicable
date specified in Section 8.1(b), then, for so long as the Parent or Merger
Sub continues to exercise such reasonable best efforts, the Company may not
terminate this Agreement under this Section 8.1(h).
8.2. Effect of Termination. The party desiring to terminate this Agreement
will give written notice of such termination to the other party. Except for any
willful breach of this Agreement by any party hereto (which willful breach and
liability therefore will not be affected by the termination of this Agreement or
the payment of any Termination Fee (as defined in Section 8.3 hereof)), if this
Agreement is terminated pursuant to Section 8.1 hereof, then this Agreement will
become void and of no effect with no liability on the part of any party hereto;
provided, however that notwithstanding such termination the agreements contained
in Sections 6.6, 6.11, 8.2, 8.3, 8.4 and Article 9 hereof will survive the
termination hereof.
8.3. Termination Fees.(a) The Company agrees to pay the Parent in
immediately available funds by wire transfer to an account designated by
the Parent an amount equal to $13,040,000 (the "Termination Fee") if:
(i) this Agreement is terminated by Parent pursuant to Section
8.1(e) hereof; or
(ii) (A) this Agreement is terminated by Parent or the Company
pursuant to Section 8.1(b) or 8.1(d) hereof, (B) at or prior to the
time of such termination, an Acquisition Proposal with respect to the
Company will have been made public, and (C)
35
within 12 months after such termination, the Company will enter into a
definitive agreement with respect to any Acquisition Proposal or the
transaction contemplated by any Acquisition Proposal relating to the
Company will be consummated; or
(iii) this Agreement is terminated by the Company pursuant to
Section 8.1(f) hereof.
(b) The Company will pay the Termination Fee required to be paid
pursuant to Section 8.3(a) hereof (if all conditions thereto have been
satisfied) (i) on the date of termination of this Agreement by the Company,
(ii) not later than five Business Days after termination of this Agreement
by the Parent, or (iii) in the case of a fee payable pursuant to Section
8.3(a)(ii), prior to the earlier of the execution of the definitive
agreement with respect to, and the consummation of the transaction
contemplated by, the applicable Acquisition Proposal.
8.4. No Penalty; Costs of Collection. The Company acknowledges that the
agreements contained in Section 8.3 are an integral part of the transactions
contemplated by this Agreement and are not a penalty, and that, without these
agreements, the Parent would not enter into this Agreement. If the Company fails
to pay promptly the fee due pursuant to Section 8.3, the Company will also pay
to the Parent the Parent's reasonable costs and expenses (including legal fees
and expenses) in connection with any action, including the filing of any lawsuit
or other legal action, taken to collect payment, together with interest on the
amount of the unpaid fee under Section 8.3, accruing from its due date, at an
interest rate per annum equal to two percentage points in excess of the prime
commercial lending rate quoted by Xxxxx Fargo Bank Minnesota, N.A.; provided,
however, that the Parent will pay to the Company the Company's reasonable costs
and expenses (including legal fees and expenses) incurred in connection with any
such legal action if the Parent's claims against the Company in such legal
action do not prevail. Any change in the interest rate hereunder resulting from
a change in such prime rate will be effective at the beginning of the date of
such change in such prime rate.
ARTICLE 9.
GENERAL PROVISIONS
9.1. Non-Survival of Representations, Warranties and Covenants. The
representations, warranties, covenants and agreements contained in this
Agreement and in any certificate delivered pursuant to this Agreement by any
person will terminate at the Effective Time or upon the termination of this
Agreement pursuant to Section 8.1, as the case may be, except that this Section
9.1 will not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time or after termination of this
Agreement, including those contained in Sections 6.6, 6.11, 8.2, 8.3, 8.4 and
Article 9.
9.2. Amendment and Modification. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Time; provided, however, that,
after the adoption of this Agreement by the stockholders of the Company, no
amendment may be made which would reduce the amount or change the type of
consideration to be received by the stockholders of the Company pursuant to the
Merger or otherwise adversely affect the rights of the Company's stockholders.
This Agreement may not be amended except by an instrument in writing signed by
the parties hereto.
9.3 Waiver. At any time prior to the Effective Time, any party hereto may
(a) extend the time for the performance of any obligation or other act of any
other party hereto, (b) waive any inaccuracy in the representations and
warranties contained herein or in any document delivered pursuant hereto and (c)
waive compliance with any agreement or condition contained herein. Any such
extension
36
or waiver will be valid if set forth in an instrument in writing signed by the
party or parties to be bound thereby.
9.4. Notices. All notices and other communications hereunder will be in
writing and will be deemed given (a) on the date of delivery if delivered
personally, or by telecopy or facsimile, upon confirmation of receipt, (b) on
the first Business Day following the date of dispatch if delivered by a
recognized next-day courier service, or (c) on the fifth Business Day following
the date of mailing if delivered by registered or certified mail, return receipt
requested, postage prepaid. All notices hereunder must be delivered as set forth
below, or pursuant to instructions as may be designated in writing by the party
to receive such notice:
(a) if to the Parent or Merger Sub, to it at:
Medtronic, Inc.
World Headquarters
000 Xxxxxxxxx Xxxxxxx, X.X.
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
with separate copies thereof addressed to:
Attention: General Counsel
Fax: (000) 000-0000
And
Attention: Vice President and Chief Development Officer
Fax: (000) 000-0000
(b) If to the Company, to it at:
VidaMed, Inc.
00000 Xxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: President
with a copy (which will not constitute notice) to:
Xxxxxxxxxxx Xxxxx & Xxxxxxxx LLP
0000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxx X. Xxxxxx
9.5. Specific Performance. The parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
Accordingly, the parties further agree that each party will be entitled to an
injunction or restraining order to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having
37
jurisdiction, this being in addition to any other right or remedy to which such
party may be entitled under this Agreement, at law or in equity.
9.6. Assignment. This Agreement and all of the provisions hereof will be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests, or obligations hereunder will be assigned by any of the
parties hereto without the prior written consent of the other parties, nor is
this Agreement intended to confer upon any other person except the parties
hereto any rights or remedies hereunder, except that Article 3 and Section 6.13
of this Agreement will inure to the benefit of the persons identified therein.
9.7. Governing Law. This Agreement will be construed in accordance with
and governed by the law of the State of Delaware (without giving effect to
choice of law principles thereof).
9.8. Submission to Jurisdiction; Waivers. Each of the Parent, Merger Sub
and the Company irrevocably agrees that any legal action or proceeding with
respect to this Agreement or for recognition and enforcement of any judgment in
respect hereof brought by the other party hereto or its successors or assigns
will be brought and determined in the Chancery or other Courts of the State of
Delaware, and each of the Parent, Merger Sub and the Company hereby irrevocably
submits with regard to any such action or proceeding for itself and in respect
to its property, generally and unconditionally, to the exclusive jurisdiction of
the aforesaid courts. Each of the Parent, Merger Sub and the Company hereby
irrevocably waives, and agrees not to assert, by way of motion, as a defense,
counterclaim or otherwise, in any action or proceeding with respect to this
Agreement, (a) any claim that it is not personally subject to the jurisdiction
of the above-named courts for any reason other than the failure to lawfully
serve process, (b) that it or its property is exempt or immune from jurisdiction
of any such court or from any legal process commenced in such courts (whether
through service of notice, attachment prior to judgment, attachment in aid of
execution of judgment, execution of judgment or otherwise), (c) to the fullest
extent permitted by applicable law, that (i) the suit, action or proceeding in
any such court is brought in an inconvenient forum, (ii) the venue of such suit,
action or proceeding is improper and (iii) this Agreement, or the subject matter
hereof, may not be enforced in or by such courts and (d) any right to a trial by
jury.
9.9. Knowledge. As used in this Agreement or the instruments, certificates
or other documents required hereunder, the term "knowledge" of an entity will
mean knowledge actually possessed by any director or executive officer of such
entity.
9.10. Interpretation. The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement will refer to this Agreement
as a whole and not to any particular provision of this Agreement, and Section
references are to this Agreement unless otherwise specified. Whenever the words
"include," "includes" or "including" are used in this Agreement, they will be
deemed to be followed by the words "without limitation." The table of contents,
article and section headings contained in this Agreement are inserted for
reference purposes only and will not affect the meaning or interpretation of
this Agreement. This Agreement will be construed without regard to any
presumption or other rule requiring the resolution of any ambiguity regarding
the interpretation or construction hereof against the party causing this
Agreement to be drafted.
9.11. Publicity. Upon execution of this Agreement by the Parent, Merger
Sub, and the Company, the parties will jointly issue a press release, as agreed
upon by them. The parties intend that all future statements or communications to
the public or press regarding this Agreement or the Merger will be mutually
agreed upon by them and neither party will, without such mutual agreement or the
prior consent of the other, issue any statement or communication to the public
or to the press regarding this Agreement, or any of the terms, conditions, or
other matters with respect to this Agreement, except as required by law or the
rules of the NYSE or Nasdaq and then only (a) upon the advice of such party's
38
legal counsel; (b) to the extent required by law or the rules of the NYSE or
Nasdaq; and (c) following prior notice to the other party and an opportunity for
the other party to discuss with the disclosing party (which notice will include
a copy of the proposed statement or communication to be issued to the press or
public). The foregoing will not restrict the Parent's or the Company's
communications with their respective employees or customers in the ordinary
course of business.
9.12. Entire Agreement. This Agreement, including the exhibits and
schedules hereto, the Company Disclosure Schedule, the Note and the
Confidentiality Agreement referred to herein, embodies the entire agreement and
understanding of the parties hereto in respect of the subject matter contained
herein and supersede all prior agreements and the understandings between the
parties with respect to such subject matter. No discussions regarding or
exchange of drafts or comments in connection with the transactions contemplated
herein will constitute an agreement among the parties hereto. Any agreement
among the parties will exist only when the parties have fully executed and
delivered this Agreement.
9.13. 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 terms and provisions of this Agreement will nevertheless
remain in full force and effect so long as the economics or legal substance of
the transactions contemplated hereby are not affected in any manner materially
adverse to any party. Upon determination that any term or other provision hereof
is invalid, illegal or incapable of being enforced, the parties hereto will
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible to the fullest extent permitted by
applicable law in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
9.14. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, and all of which
together will constitute one and the same instrument.
[Remainder of page intentionally left blank]
39
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
MEDTRONIC, INC.
By: Xxxxxxx X. Xxxxxxx
------------------
Its: Vice President and Chief Development
------------------------------------
Officer
-------
VIDAMED ACQUISITION CORP.
By Xxxxxxx X. Xxxxxxx
------------------
Its: Vice President
--------------
VIDAMED, INC.
By Xxxxx X. Xxxxxxxx
-----------------
Its: Chairman, President and Chief Executive
---------------------------------------
Officer
-------
40
