EXHIBIT 10.2
FIRST AMENDMENT
This FIRST AMENDMENT ("Amendment") made as of this 6th day of August,
1997, by and between United States Surgical Corporation, a Delaware corporation
("USSC"), USSC Del Medical, Inc., a Delaware corporation ("Transitory Sub"), and
Progressive Angioplasty Systems, Inc., a Delaware corporation ("PAS").
RECITALS
WHEREAS, USSC, Transitory Sub and PAS are parties to an Agreement and Plan
of Merger dated February 4, 1997 ("Merger Agreement").
WHEREAS, USSC, Transitory Sub and PAS desire to modify the Merger
Agreement as provided in this Amendment.
Intending to Be Legally Bound, and in consideration of the premises and
mutual covenants contained herein and in the Merger Agreement, the parties
hereto agree as follows:
1. ARTICLE II - THE MERGER. Article II of the Merger Agreement is hereby
amended and restated in its entirety as follows:
"ARTICLE II
2. THE MERGER
Section 2.01 MERGER. Subject to the terms and conditions of this
Agreement and of the Certificate of Merger in substantially the form
attached hereto as EXHIBIT A (the "Certificate of Merger"), Transitory Sub
will be merged with and into PAS (the "Merger") in accordance with
Delaware Law.
Section 2.02 EFFECTIVE TIME. Subject to the provisions of this
Agreement, a properly executed copy of the Certificate of Merger, together
with required officers' certificates, shall be filed with the Secretary of
State of the State of Delaware in accordance with Delaware Law (the
"Delaware Filing"). The Merger shall become effective upon the Delaware
Filing (the date of such filing being hereinafter referred to as the
"Effective Date" and the time of confirmation of such filing being
hereinafter referred to as the "Effective Time").
Section 2.03 EFFECTIVE DATE. The Effective Date shall occur on the
third business day after satisfaction or waiver of the latest to occur of
the conditions set forth in Article VII hereto. The closing on the
Effective Date shall occur at the offices of USSC, 000 Xxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxxxxx 00000, unless a different date or place is agreed to
in writing by the parties hereto.
Section 2.04 EFFECT OF THE MERGER. Subject to the terms and
conditions of this Agreement, at the Effective Time (i) the separate
existence of Transitory Sub shall cease and Transitory Sub shall be merged
with and into PAS (Transitory Sub and PAS are sometimes referred to herein
as the "Constituent Corporation", and PAS after the Merger is sometimes
referred to herein as the "Surviving Corporation"), (ii) the Certificate
of Incorporation of the Surviving Corporation shall be amended to read as
did the Certificate of Incorporation of the Transitory Sub immediately
prior to the Effective Time (except that the name of the Surviving
Corporation will remain unchanged), (iii) the Bylaws of the Surviving
Corporation shall be amended to read as did the Bylaws of the Transitory
Sub immediately prior to the Effective Time (except that the name of the
Surviving Corporation will remain unchanged), (iv) the directors and
officers of Transitory Sub shall be the directors and officers of the
Surviving Corporation (retaining their respective positions and terms of
office), and (v) the Merger shall have all the effects provided by
applicable law.
Section 2.05 EFFECT ON CAPITAL STOCK. Subject to the terms and
conditions of this Agreement, as of the Effective Time, by virtue of the
Merger and without any action on the part of the holders of any shares of
PAS Capital Stock.
(a) CANCELLATION OF PAS TREASURY STOCK; UNISSUED PAS CAPITAL STOCK.
All unissued shares of PAS Capital Stock, shares of PAS Capital Stock held
in PAS's treasury (if any), Shares of PAS Capital Stock held of record as
of the date of this Agreement by USSC and its Affiliates (whether or not
transferred after the date hereof) and all subscriptions, options,
warrants or other agreements, and conversion, exchange or other rights of
any kind other than pursuant to this Agreement entitling any Person to
purchase or otherwise acquire any PAS Capital Stock (other than PAS
Options) shall be canceled and no stock of USSC or other consideration
shall be delivered in exchange therefor.
(b) ISSUED AND OUTSTANDING PAS CAPITAL STOCK. At the Effective Time,
each issued and outstanding share of PAS Capital Stock (other than shares
to be canceled pursuant to Section 2.05(a) hereof and shares, if any, held
by Persons who have not voted such shares in favor of the Merger and with
respect to which such Person is entitled to exercise appraisal rights in
accordance with section 262 of the Delaware Law ("Dissenting Shares"))
shall be converted into the right to receive, without any action on the
part of the holders thereof, the consideration as set forth in this
Agreement.
(c) DISSENTERS' RIGHTS. Any Dissenting Shares shall not be converted
as described in subsection (b) above but instead shall be converted into
the right to receive such consideration as may be determined to be due
with respect to such Dissenting Shares pursuant to Delaware Law. If after
the Effective Time any Dissenting Shares shall lose their status as
Dissenting Shares, then as of the occurrence of the event which causes the
loss of such status, such shares shall be converted into the right to
receive the Aggregate Initial USSC Stock in accordance with this Article
II.
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(d) FRACTIONAL SHARES. In calculating the Aggregate Initial USSC
Stock, no fractional shares of USSC Common Stock shall be issued, but in
lieu thereof each holder of shares of PAS Capital Stock who would
otherwise be entitled to receive a fraction of a share of USSC Common
Stock shall be entitled to receive from USSC an amount of cash equal to
the Closing Price multiplied by the fraction of a share of USSC Common
Stock to which such holder would otherwise be entitled. The fractional
share interests of each PAS shareholder shall be aggregated, so that no
PAS shareholder shall receive cash in an amount greater than the value of
one full share of USSC Common Stock.
(e) INITIAL CONSIDERATION. Subject to Section 2.05(c), the number of
shares of USSC Common Stock which shall be issued and delivered at the
Effective Time to a holder of any shares of PAS Capital Stock (other than
as provided in Section 2.05(a)) immediately prior to the Effective Time
shall be that number which results from multiplying (x) the Aggregate
Initial USSC Stock (as defined below), by (y) such holder's Ownership
Percentage (as defined below).
(i) The Aggregate Initial USSC Stock is that number of shares
of USSC Common Stock which equals the result from dividing (A) Seventy
Five Million Dollars ($75,000,000), plus the "Aggregate Exercise Price of
PAS Options," minus the amount by which the cash reflected on the balance
sheet contained in the Final Interim Period Unaudited Financial
Statements, net of all outstanding loans and other indebtedness for money
borrowed ("Net Cash Closing Amount"), is less than Twelve Million Seven
Hundred Fifty Thousand Dollars ($12,750,000) (which amount shall be
reduced subsequent to August 1, 1997 at a pro rated rate of Seven Hundred
and Fifty Thousand Dollars ($750,000) per month), by (B) the Closing
Price. The Net Cash Closing Amount shall include, without limitation, cash
received upon exercise of the PAS Options prior to the Effective Time.
Payment by PAS prior to the Effective Date of up to One Million Dollars
($1,000,000) of Professional Fees shall not be deemed to reduce the
aforesaid Net Cash Closing Amount. The "Aggregate Exercise Price of PAS
Options" is the sum of the exercise prices for all PAS Options outstanding
as of the Effective Time.
(ii) A holder's Ownership Percentage is that fraction the
numerator of which is such holder's total PAS Common Stock Equivalents (as
defined below) calculated as of the Effective Time and the denominator of
which is the Aggregate PAS Common Stock Equivalents (as defined below)
calculated as of the Effective Time. A certificate showing each holder's
Ownership Percentage shall be available upon request by such holder from
PAS following the Effective Time.
(iii) A holder's total PAS Common Stock Equivalents are (a)
the aggregate number of shares of PAS Common Stock held by such holder
immediately prior to the Effective Time, plus (b) the aggregate number of
shares of PAS Common Stock into which the aggregate number of shares of
PAS Preferred Stock held by such holder immediately prior to the Effective
Time are convertible in accordance with the PAS Amended and Restated
Certificate of Incorporation and Bylaws then in effect, plus (c) the
aggregate number of shares of PAS Common Stock issuable upon payment of
the
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exercise price of PAS Options held by such holder immediately prior to the
Effective Time.
(iv) The Aggregate PAS Common Stock Equivalents are: (a) the
aggregate number of shares of PAS Common Stock issued and outstanding
immediately prior to the Effective Time, plus (b) the aggregate number of
shares of PAS Common Stock for which the aggregate number of shares of PAS
Preferred Stock issued and outstanding immediately prior to the Effective
Time, are convertible at the Effective Time in accordance with the PAS
Amended and Restated Certificate of Incorporation and Bylaws as then in
effect plus (c) the aggregate number of shares of PAS Common Stock
issuable upon payment of the Aggregate Exercise Price of PAS Options.
(v) The ratio of the Aggregate Initial USSC Stock to be the
Aggregate PAS Common Stock Equivalents is the "Exchange Ratio".
(f) STOCK OPTIONS. At the Effective Time, each PAS Option then
outstanding shall, by virtue of the Merger and without any further action
on the part of PAS or the holder of any such PAS Option, be exercisable
upon the same terms and conditions as under the applicable PAS stock
option plan and the applicable option agreement issued thereunder, except
that (i) each such assumed PAS Option (a "PAS Rollover Option") shall be
exercisable for that whole number of shares of USSC Common Stock (rounded
to the nearest whole share) into which the number of shares of PAS Common
Stock subject to such PAS Rollover Option immediately prior to the
Effective Time would be converted under this Article II, (ii) the option
price per share of USSC Common Stock shall be an amount equal to the
option price per share of PAS Common stock subject to such PAS Rollover
Option divided by the Exchange Ratio (the option price per share being
rounded to the nearest full cent), (iii) each PAS Rollover Option referred
to on Schedule 2.05(f)(1) shall, as a result of the Merger, be vested to
the extent of 50% of the shares of USSC Common Stock for which such option
shall be exercisable, (iv) each PAS Rollover Option referred to on
Schedule 2.05(f)(2) shall, as a result of the Merger, be vested to the
extent of 60% of the shares of USSC Common stock for which such option
shall be exercisable, (v) each PAS Rollover Option referred to on Schedule
2.05(f)(3) shall, as a result of the Merger, be vested to the extent of
75% of the shares of USSC Common Stock for which such option shall be
exercisable, (vi) each PAS Rollover Option referred to on Schedule
2.05(f)(4) shall, as a result of the Merger, be vested to the extent of
100% of the shares of USSC Common Stock for which such option shall be
exercisable, (vii) any PAS Rollover Option referred to on Schedule
2.05(f)(1), 2.05(f)(2) or 2.05(f)(3) held by a PAS employee whose
employment is terminated without cause after the Effective Time and prior
to the second anniversary of the Effective Time shall become fully vested
on the date of such termination, and (viii) except as stated in clause
(vii), all PAS Rollover Options referred to on Schedule 2.05(f)(1),
2.05(f)(2) and 2,05(f)(3), shall, to the extent not vested (pursuant to
the terms thereof or pursuant to the provisions of this Section 2.05(f))
as of the Effective Time, vest in equal monthly installments over the 24
month period following the Effective Time, PAS represents and warrants
that the remainder of the PAS Options (i.e., those not referred to on
Schedule 2.05(f)(1), (2), (3), or (4)) are referred to on Schedule
2.05(f)(5) and will not be affected by the transactions
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contemplated hereby except as provided in clauses (i) and (ii) of the
first sentence of this Section 2.05(f). No payment shall be made for
fractional interests, rather, the aggregate number of shares of USSC
Common Stock to be issued under any PAS Rollover Option shall be rounded
to the nearest whole number.
In the event any PAS Rollover Options shall expire without
having been exercised on or prior to the second anniversary of the
Effective Time, USSC shall calculate the value of such expired PAS
Rollover Options (which value shall be determined based upon the excess of
the then current fair market value for shares of USSC Common Stock, as
determined by reference to the average of the closing prices of a share of
USSC Common Stock, as reported by THE WALL STREET JOURNAL under the New
York Stock Exchange composite transactions for the seven (7) trading days
ending on one (1) business day prior to such second anniversary date, over
the exercise price, multiplied by the number of shares of USSC Common
Stock for which such lapsed PAS Rollover Options would have been
exercisable) and distribute the value thereof, in cash, pro rata to the
holders of PAS Capital Stock as of the Effective Time and the holders of
PAS Rollover Options as of the Effective Time (excluding the holder or
holders of lapsed PAS Rollover Options).
USSC shall either include the shares of USSC Common Stock
subject to the PAS Rollover Options in the Form S-3 to be filed pursuant
to Section 6.01 hereof, or as promptly as reasonably practicable following
the Effective Time, file a Form S-8 registration statement with the
Securities and Exchange Commission registering the issuance of such shares
upon exercise of the PAS Rollover Options.
Section 2.06 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. Prior to the Effective Time, USSC shall have
entered into an agreement ("Exchange Agreement") with First Chicago Trust
Company of New York, its transfer agent, or another entity at its option,
to act as exchange agent (the "Exchange Agent") in the Merger.
(b) USSC TO PROVIDE THE AGGREGATE INITIAL USSC STOCK. As soon as
practicable after the Effective Time, but in no event later than five (5)
business days after the Effective Date, USSC shall make available in
accordance with the provisions of this Article II, through such reasonable
procedures as USSC may adopt, the Aggregate Initial USSC Stock payable
pursuant to Section 2.05 and the provisions of this Agreement in exchange
for outstanding shares of PAS Capital Stock.
(c) EXCHANGE PROCEDURES. As soon as practicable after the Effective
Time, but in no event later than five (5) business days after the
Effective Time, the Exchange Agent shall mail to each holder of record of
a certificate or certificates ("Certificates") which immediately prior to
the Effective Time represented outstanding shares of PAS Capital Stock
(other than Dissenting Shares which continue to have the status of
Dissenting Shares) whose shares are being converted into the Aggregate
Initial USSC Stock pursuant to this Agreement, (i) a letter of transmittal
(which shall specify that
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delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Exchange Agent
and shall be in such form and have such other provisions as USSC may
reasonably specify), and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for the Aggregate Initial USSC
Stock. Upon surrender of a Certificate for cancellation to the Exchange
Agent, together with such letter of transmittal, duly executed, the holder
of such Certificate shall be entitled to receive in exchange therefor the
Aggregate Initial USSC Stock to which the holder of PAS Capital Stock is
entitled pursuant to section 2.05 hereof, along with a check representing
the value of any fractional shares as determined pursuant to Section
2.05(d) hereof. The Certificate so surrendered shall forthwith be
canceled. Until surrendered as contemplated by this Section 2.06, each
Certificate shall be deemed at any time after the Effective Time solely to
represent the right to receive upon such surrender such whole number of
shares of USSC Common Stock and cash as provided by this Article II and
the provisions of Delaware Law as of the Effective Time. Upon payment of
the per share exercise price specified in each PAS Rollover Option, the
holder of such PAS Rollover Option shall be entitled to receive the
Aggregate Initial USSC Stock to which the holder of the PAS Rollover
Option is entitled pursuant to Section 2.05 hereof, together with a check
representing the value of any fractional shares as determined pursuant to
Section 2.05(d) hereof.
(d) PAYMENTS OF DIVIDENDS WITH RESPECT TO UNEXCHANGED PAS COMMON
STOCK. No dividends on PAS Common Stock have heretofore been paid with
respect to the PAS Common Stock and no dividends shall be paid to the
holder of any surrendered or unsurrendered Certificate, except for the
distribution of the Distributed Assets as contemplated by this Agreement.
(e) NO FURTHER OWNERSHIP RIGHTS IN PAS CAPITAL STOCK. All PAS Common
Stock delivered upon the surrender for exchange of shares of USSC Capital
Stock in accordance with the terms hereof shall be deemed to have been
delivered in full satisfaction of all rights pertaining to such shares of
PAS Capital Stock. There shall be no further registration of transfers on
the stock transfer books of the Surviving Corporation of the shares of PAS
Capital Stock which were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be canceled and have no
rights except to receive the consideration to the extent provided in this
Article II.
(f) OWNERSHIP RIGHTS IN THE USSC COMMON STOCK. Unless and until the
Merger shall become effective at the Effective Time in accordance with
this Agreement and the PAS Capital Stock of a shareholder is tendered and
the Certificate is issued to such shareholder, such Shareholder shall not
have or be entitled to exercise any of the rights, preferences or
privileges pertaining to any shares of USSC Common Stock constituting the
Aggregate Initial USSC Stock otherwise payable to such Shareholder, nor
any dividend or other distribution which may be paid or payable on or
after the date hereof with respect to the USSC Common Stock constituting
the Aggregate Initial USSC Stock otherwise payable to such Shareholder.
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(g) TRANSFER RIGHTS IN THE USSC COMMON STOCK. The issuance and
delivery of USSC Stock as Aggregate Initial USSC Stock pursuant to this
Agreement has not been registered under the Act, and no transfer thereof
may be made unless and until such USSC Stock is registered under the Act
(as contemplated by this Agreement) or an exemption from such registration
is available. USSC need not recognize any Person other than the
Shareholders as having an interest in such USSC Stock unless the
acquisition thereof has been made in compliance with the Act. The
certificates for such USSC Stock shall bear a legend, in form and
substance designated by the General Counsel of USSC, to reflect the
provisions of this Section 2.06(g).
Section 2.07 MILESTONE CONSIDERATION.
(a) CALCULATION OF MILESTONE CONSIDERATION. Subject to Section 2.09A
below, Shareholders who receive Aggregate Initial USSC Stock in accordance
with Section 2.05 above or pursuant to the Stock Option Agreement or
pursuant to the exercise of a PAS Rollover Option, shall, in addition, be
entitled to receive USSC Common Stock based upon the achievement by USSC,
PAS or any of their Affiliates, as the case may be, subsequent to the
Effective Date of each milestone set forth in EXHIBIT 2.07 (each, a
"Milestone" and collectively, the "Milestones"), provided, however, if any
such Milestone shall have been achieved prior to the payment of the
Aggregate Initial USSC Stock then payment in respect of such Milestone
shall be paid concurrently with payment of the Aggregate Initial USSC
Stock. The Aggregate USSC Stock payable with respect to achievement of a
Milestone as aforesaid is that number of shares of USSC Common Stock
("Aggregate Milestone USSC Stock") which equals the result from dividing
(A) the dollar amount of the milestone payment set forth opposite such
Milestone on EXHIBIT 2.07 attached hereto (each a "Milestone Dollar
Amount" and, collectively, the "Aggregate Milestone Dollar Amount"), by
(B) the Closing Price, calculated with reference to the date such
Milestone is achieved by USSC, PAS or any of their Affiliates, as the case
may be, as of or subsequent to the Effective Date (a "Milestone
Achievement Date"). The number of shares of USSC Common Stock which shall
be issued and delivered to a holder who receives Aggregate Initial USSC
Stock under Section 2.05 above or upon the exercise of a PAS Rollover
Option with respect to the achievement by USSC, PAS or any of their
Affiliates, as the case may be, of a Milestone shall be equal to that
number which results from multiplying (x) the Aggregate Milestone USSC
Stock, by (y) such holder's Ownership Percentage. Notwithstanding the
foregoing or anything else in this Agreement to the contrary, the parties
recognize that although the Aggregate Milestone Dollar Amount set forth on
EXHIBIT 2.07 would be Thirty Eight Million Five Hundred Thousand Dollars
($38,500,000) if all of the Milestones were to be achieved as aforesaid,
it is hereby understood and agreed that, regardless of the number of
Milestones which may become achieved as aforesaid, in no event shall the
Aggregate Milestone Dollar Amount in respect of all Milestones exceed an
aggregate of Twenty Five Million Dollars ($25,000,000), and such amount
shall be paid pro rata to PAS Shareholders and holders of PAS Rollover
Options (upon exercise thereof) in accordance with this Agreement. Payment
under this Agreement with respect to a Milestone shall be paid soon as
practicable following the achievement of such Milestone.
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(b) PAYMENT OF MILESTONE CONSIDERATION. As soon as practicable after
the achievement of a Milestone, USSC shall make available to the Exchange
Agent, through such reasonable procedures as USSC may adopt, the
applicable Milestone Consideration payable to the Shareholders pursuant to
Section 2.07(a) above. The provisions of Sections 2.05(d) (Fractional
Shares) and 2.06(g) (Transfer Rights in the USSC Common Stock) shall apply
to each distribution of USSC Common Stock constituting the Aggregate
Milestone USSC Stock with respect to a Milestone. Unless and until (i) the
Merger shall become effective on the Effective Date in accordance with
this Agreement and the Plan of Merger, (ii) the PAS Capital Stock is
tendered in accordance with Section 2.06 above, and (iii) a Milestone has
been achieved by USSC or PAS and stock issued, as the case may be, none of
the Shareholders or optionholders shall have or be entitled to exercise
any of the rights, preferences or privileges pertaining to any shares of
USSC Common Stock constituting the Aggregate Milestone USSC Stock with
respect to such Milestone, nor any dividends or other distribution which
may be paid or payable on or after the date hereof with respect to the
USSC Common stock constituting the Aggregate Milestone USSC Stock with
respect to such Milestone.
Section 2.08 EARN OUT CONSIDERATION.
(a) CALCULATION OF EARN OUT CONSIDERATION. Subject to Section 2.08A
below, holders who receive Aggregate Initial USSC Stock in accordance with
Section 2.05 above or pursuant to the exercise of a PAS Rollover Option
shall, in addition, be entitled to receive USSC Common Stock
(collectively, the "Earn Out Consideration") based upon Net Sales of
Products during the Earn Out Period calculated under the earn out formula
set forth in EXHIBIT 2.08 attached hereto (the "Earn Out Formula"). The
Aggregate USSC Stock payable with respect to Earn Out Consideration during
each calendar quarter during the Earn Out Period is that number of shares
of USSC Common Stock ("Aggregate Earn Out USSC Stock") which equals the
result from dividing (A) the dollar amount of the Earn Out Consideration
earned under the Earn Out Formula during such calendar quarter (each an
"Earn Out Dollar Amount" and, collectively, the "Aggregate Earn Out Dollar
Amount"), by (B) the Closing Price, calculated as of the last day of such
calendar quarter (an "Earn Out Calculation Date"). The number of shares of
USSC Common Stock which shall be issued and delivered to a holder who
receives Aggregate Initial USSC Stock under Section 2.05 above or pursuant
to the exercise of a PAS Rollover Option with respect to Earn Out
Consideration shall be equal to that number which results from multiplying
(x) the Aggregate Earn Out USSC Stock, by (y) such holder's Ownership
Percentage. Notwithstanding the foregoing or anything else in this
Agreement to the contrary, it is hereby understood and agreed that in no
event shall the Aggregate Earn Out Dollar Amount in respect of all Net
Sales of Products exceed an aggregate of Fifty Million Dollars
($50,000,000).
(b) PAYMENT OF EARN OUT CONSIDERATION. Provided that the Effective
Date shall have occurred, or the Option pursuant to the Stock Option
Agreement shall have been exercised, then within sixty (60) days following
the end of each calendar quarter during the Earn Out Period, USSC shall
make available to the Exchange Agent, through such reasonable procedures
as USSC may adopt, the Earn Out Consideration payable to
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the Shareholders pursuant to Section 2.08(a) above. The provisions of
Section 2.05(d) (Fractional Shares) and 2.06(g) (Transfer Rights in the
USSC Common Stock) shall apply to each distribution of USSC Common Stock
constituting the Aggregate Earn Out USSC Stock with respect to a calendar
quarter during the Earn Out Period. Unless and until (i) the Merger shall
become effective on the Effective Date in accordance with this Agreement
and the Plan of Merger, (ii) the PAS Capital Stock is tendered in
accordance with Section 2.06 above, and (iii) Net Sales of Products have
occurred, none of the Shareholders or optionholders shall have or be
entitled to exercise any of the rights, preferences or privileges
pertaining to any shares of USSC Common Stock constituting the Aggregate
Earn Out USSC Stock, nor any dividends or other distribution which may be
paid or payable on or after the date hereof with respect to the USSC
Common Stock constituting the Aggregate Earn Out USSC Stock.
Section 2.08A REALLOCATION OF MILESTONES AND EARN OUT CONSIDERATION.
Pursuant to the Stock Option Agreement, those certain Shareholders of PAS
listed on Exhibit A thereto (collectively, the "Indemnifying
Shareholders"), having agreed, among other things, to indemnify USSC with
respect to losses arising from any breach by PAS of a representation,
warranty, covenant or agreement contained herein. To the extent any
Indemnifying Shareholders shall have made any such indemnification payment
to USSC prior to any Milestone Achievement Date or any Earn Out
Calculation Date (and if and to the extent such Shareholder shall not have
already received a compensating distribution with respect to such
indemnification payment under this Section 2.08a) then the Milestone or
Earn Out payment payable as of such Date shall be reallocated to, and paid
to, such Indemnifying Shareholder (or, if more than one Indemnifying
Shareholder shall have made such a payment, pro rata among such
Indemnifying Shareholders) to the extent of such indemnification payment,
and the balance (if any) of such Milestone or Earn Out payment shall be
payable pro rata among the Shareholders and optionholders (including the
Indemnifying Shareholders) in accordance with their Ownership Percentages
in PAS and who are otherwise entitled thereto under Section 2.07 or 2.08
hereinabove.
Section 2.08B INSPECTION OF BOOKS AND RECORDS REGARDING EARN-OUT
CONSIDERATION. USSC shall provide each Indemnifying Shareholder, at the
address set forth in the Stock Option Agreement or such other address as
such Indemnifying Shareholder shall provide to USSC in the manner set
forth in Section 25(d) of the Stock Option Agreement, with a certificate
from the accounting firm employed by USSC to conduct its regular annual
audit as soon as reasonably practicable following such regular annual
audit, such certificate to set forth such accounting firm's determination
concerning the Earn-Out Consideration earned in the prior fiscal year (the
"Certificate"). In addition, USSC shall maintain records in sufficient
detail and, upon reasonable notice, allow an independent certified public
accounting firm of nationally recognized standing, appointed by the
holders of a majority in interest of the PAS Capital Stock as of the
Effective Date ("Majority Shareholders"), and reasonably acceptable to
USSC (the "Auditors"), to examine its consolidated books and records, and
the books and records of its Sublicensees and permitted assigns pertaining
to the Products, which examination must be requested within 30 days of
mailing of the Certificate and must be completed within 10 days of USSC
furnishing the access and information required to be furnished. Such
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examinations shall occur on or after February 15 of any calendar year,
only during business hours, and not more than once a year, and shall be
solely for the purpose of verifying the calculation of Earn-Out
Consideration due under this Agreement. A final such examination may occur
once during the year immediately succeeding termination of the Earn-Out
Period. The fees and expenses of the Auditors performing the examination
shall be borne pro-rata by the Majority Shareholders. Unless written
objection (the "Objection") is made by the Majority Shareholders and
delivered to USSC within 10 days after completion of such examination by
the Auditors, the calculation of Earn-Out Consideration paid by USSC prior
to the date of such examination shall be final and binding on the parties,
except insofar as adjusted or corrected as a result of USSC's regular
annual audit. It is understood that USSC shall not be required to furnish
or permit the examination of the identities, at any time, of customers or
prices or other information as to specific sales. Any information provided
to the Majority Shareholders or the Auditors pursuant hereto shall be
treated as USSC's confidential information subject to Section 5.08,
provided that such information shall be held in confidence for five (5)
years following disclosure to the Majority Shareholders or the Auditors.
Section 2.09 EXTRAORDINARY TRANSACTION CONSIDERATION.
(a) CALCULATION OF EXTRAORDINARY TRANSACTION CONSIDERATION. If at
any time after the date of this Agreement (i) USSC shall become acquired
by, or merge with, a company whose name is set forth on EXHIBIT 2.09
attached hereto, or any successor to such company (each, an "Extraordinary
Transaction"), and (ii) either (A) USSC has exercised the Option under the
Stock Option Agreement, or (B) consummated the Merger contemplated
hereunder, then, in such event, USSC shall notify the Shareholders that an
Extraordinary Transaction has occurred and USSC, or the entity resulting
from such Extraordinary Transaction, as the case may be, shall make
available to the Exchange Agent upon the later to occur of such
Extraordinary Transaction or the Merger contemplated hereunder, or the
exercise of the Option under the Stock Option Agreement or the exercise of
a PAS Rollover Option, as the case may be, through such reasonable
procedures as may be adopted by USSC, or the entity resulting from such
Extraordinary Transaction, as the case may be, USSC Common Stock, or an
equivalent amount of common stock of the entity resulting from such
Extraordinary Transaction, as the case may be ("Aggregate Extraordinary
Transaction USSC Stock") for distribution to the Shareholders and the
holders of PAS Rollover Options, equal to (i) Aggregate Milestone
Consideration in an amount equal to (x) Twenty Five Million Dollars
($25,000,000), less (y) the sum of (A) the amount of Aggregate Milestone
Stock theretofore paid, and (B) the amount of Aggregate Milestone Stock
then actually due and payable under Section 2.08 above, plus (ii)
Aggregate Earn Out Consideration in an amount equal to (x) Fifty Million
Dollars ($50,000,000), less (y) the sum of (A) the amounts of Aggregate
Earn Out Stock then actually due and payable under Section 2.08 above. The
number of shares of USSC Common Stock which shall be issued and delivered
to a Shareholder or optionholder who receives Aggregate Initial USSC Stock
under Section 2.05 above with respect to Aggregate Extraordinary
Transaction USSC Stock, or the common stock of the entity resulting from
such Extraordinary Transaction, as the case may be, shall be equal to the
number which results from multiplying (x) the Aggregate Extraordinary
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Transaction USSC Stock by (y) such holder's Ownership Percentage. In no
event shall the amount payable under this Section 2.10 exceed Seventy Five
Million Dollars ($75,000,000).
(b) PAYMENT OF EXTRAORDINARY TRANSACTION CONSIDERATION. As soon as
practicable following the Extraordinary Transaction, USSC, or the
resulting entity, as the case may be, shall make available to the Exchange
Agent, through such reasonable procedures as shall be adopted by USSC, or
the resulting entity, as the case may be, the Aggregate Extraordinary
Transaction Consideration payable to Shareholders pursuant to Section
2.09(a) above. The provisions of Sections 2.05(d) (Fractional Shares) and
2.06(g) (Transfer Rights in the USSC Common Stock) shall apply to each
distribution of USSC Common Stock, constituting the Aggregate
Extraordinary Transaction Stock. Unless and until (i) the Merger shall
become effective on the Effective Date in accordance with this Agreement
and the Plan of Merger, (ii) the PAS Capital Stock is tendered in
accordance with Section 2.06 above, and (iii) an Extraordinary Transaction
shall have occurred, none of the Shareholders or optionholders shall have
or be entitled to exercise any of the rights, preferences or privileges
pertaining to any shares of USSC Common Stock constituting the Aggregate
Extraordinary Transaction USSC Stock, nor any dividends or other
distribution which may be paid or payable on or after the date hereof with
respect to the USSC Common Stock constituting the Aggregate Extraordinary
Transaction USSC Stock.
Section 2.10 ADVANCE. Incident to and in contemplation of the
consummation of the transactions set forth herein, and subject to the
terms of this Agreement, USSC will advance to PAS the sum of Fifteen
Million Dollars ($15,000,000) (the "Advance") promptly following USSC's
determination to proceed with the transactions contemplated hereby not
later than one (1) business day following USSC's receipt of the PAS
Supplemental Disclosure Schedule. If USSC determines to proceed with the
transactions after receipt of the PAS Supplemental Disclosure Schedule
from PAS, such payment shall be made on such date or the next succeeding
business day."
2. NO OTHER AMENDMENTS. Except as expressly set forth in this Amendment,
the Merger Agreement is not amended, modified or supplemented in any respect and
remain in full force and effect.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date and year first written above.
UNITED STATES SURGICAL CORPORATION
By:_______________________________________
Name:_____________________________________
Title:____________________________________
Address: 000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
XXXX DEL MEDICAL, INC.
By:_______________________________________
Name:_____________________________________
Title:____________________________________
Address: 000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
PROGRESSIVE ANGIOPLASTY SYSTEMS, INC.
By:_______________________________________
Name:_____________________________________
Title:____________________________________
Address: 0000 Xxxxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
[SIGNATURE PAGE TO FIRST AMENDMENT]
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