CONVERTIBLE PREFERRED
SHARES PURCHASE AGREEMENT
by and between
XXXXXXX LIFESCIENCES (US) INC.
and
WORLD HEART CORPORATION
Dated as of
May 24, 2000
CONVERTIBLE PREFERRED
SHARES PURCHASE AGREEMENT
CONVERTIBLE PREFERRED SHARES PURCHASE AGREEMENT, dated as of May 24,
2000 (this "Agreement"), by and between Xxxxxxx Lifesciences (US) Inc., a
Delaware corporation ("Xxxxxxx US"), and World Heart Corporation, an Ontario
corporation ("World Heart").
WHEREAS, World Heart desires to sell to Xxxxxxx US 1,374,570 shares
(the "Shares") of Series A convertible preferred shares of World Heart (the
"World Heart Preferred") having the rights, privileges, restrictions and
conditions set forth in Exhibit I attached hereto, and upon the terms and
subject to the conditions set forth herein;
WHEREAS, Xxxxxxx US desires to purchase the Shares;
WHEREAS, Xxxxxxx LLC, a Delaware limited liability company, Xxxxxxx
Novacor LLC, a Delaware limited liability company, World Heart and Valentine
Acquisition Corp., a Delaware corporation ("Newco"), have entered into a
contribution agreement, dated May 24, 2000 (the "Contribution Agreement"); and
WHEREAS, Xxxxxxx US and World Heart have entered into an exchange
agreement, dated May 24, 2000 (the "Exchange Agreement");
NOW, THEREFORE, in consideration of the mutual agreements and
covenants contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
"accredited investor" shall have the meaning set forth in Section
3.1(c) below.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
day when banks in the city of New York, New York are authorized by law to be
closed.
"Canadian Securities Commissions" shall have the meaning set forth in
Section 3.2(f) below.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Closing" shall mean the closing of the purchase and sale contemplated
by Section 2.2.
"Closing Date" shall have the meaning set forth in Section 2.2(a).
"Confidentiality Agreement" shall have the meaning set forth in
Section 4.2(b) below.
"Contract" shall have the meaning set forth in Section 3.2(e) below.
"Contribution Agreement" shall have the meaning set forth in the
Recitals.
"controlled foreign corporation" shall have the meaning set forth in
Section 3.2(m) below.
"Damages" shall have the meaning set forth in Section 6.2 below.
"Environmental Laws" shall have the meaning set forth in Section
3.2(k) below.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC thereunder.
"Exchange Agreement" shall have the meaning set forth in the Recitals.
"foreign personal holding company" shall have the meaning set forth in
Section 3.2(m) below.
"GAAP" shall have the meaning set forth in Section 3.2(f) below.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, and applicable rules and regulations and any similar state
acts.
"Indemnified Party" shall have the meaning set forth in Section 6.3
below.
"Indemnifying Party" shall have the meaning set forth in Section 6.3
below.
"Liens" shall have the meaning set forth in Section 3.2(b) below.
"Newco" shall have the meaning set forth in the Recitals.
"PFIC Annual Information Statement" shall have the meaning set forth
in Section 4.7 below.
"Person" shall mean any individual, partnership, corporation, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or agency or political subdivision
thereof, or other entity.
"Purchase Price" shall mean Twenty Million Dollars ($20,000,000).
Unless otherwise indicated, all references to "dollars" or "$" shall mean the
lawful currency of the United States.
"SEC" shall have the meaning set forth in Section 3.2(f) below.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the SEC thereunder..
"Shares" shall have the meaning set forth in the Recitals.
"Taxes" shall mean all United States federal, state, local and foreign
taxes, assessments, levies, duties, imports or similar charges (whether imposed
directly or through withholding), including any interest, additions to tax or
penalties applicable thereto.
"Tax Returns" shall mean all United States federal, state, local and
foreign tax returns, declarations, statements, reports, schedules, forms and
information returns relating to Taxes, including any amendments thereof.
"Transactions" shall have the meaning set forth in the Contribution
Agreement.
"Transaction Agreements" shall have the meaning set forth in the
Contribution Agreement.
"World Heart Balance Sheet Date" shall have the meaning set forth in
Section 3.2(g) below.
"World Heart Common Shares" shall have the meaning set forth in
Section 4.1(c) below.
"World Heart Intellectual Property" shall have the meaning set forth
in Section 3.2(n) below.
"World Heart Option" shall mean options to purchase common shares of
World Heart granted by the Board of Directors.
"World Heart Preferred" shall have the meaning set forth in the
Recitals.
"World Heart Reports" shall have the meaning set forth in Section
3.2(f) below.
"World Heart Subsidiaries" shall have the meaning set forth in Section
3.2(b) below.
"World Heart Material Adverse Effect" shall have the meaning set forth
in Section 3.2(a) below.
"Xxxxxxx US Material Adverse Effect" shall have the meaning set forth
in Section 3.1(a) below.
"Voting Debt" means bonds, debentures, notes or other indebtedness
having general voting rights (or convertible into securities having such
rights).
ARTICLE II
SALE AND PURCHASE
SECTION II.1. Agreement to Sell and to Purchase. On the Closing Date,
upon the terms and subject to the conditions set forth in this Agreement and in
reliance on the representations and warranties contained herein and other
actions being taken by Xxxxxxx US and World Heart hereunder at the Closing
described in Section 2.2 hereof, World Heart shall issue and sell to Xxxxxxx US,
and Xxxxxxx US shall purchase and accept from World Heart, the Shares, for a
purchase price, payable in immediately available funds, equal to the Purchase
Price.
SECTION II.2. Closing.
(a) The consummation of the transactions contemplated under this
Agreement, (the "Closing") shall take place at the offices of Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP, 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx,
Xxxxxxxxxx 00000, or such other place as the parties hereto shall mutually
agree, at 10:00 a.m. (local time) on the fifth Business Day after the conditions
set forth in Article V shall have been satisfied or waived, or such other time
and date upon which the parties hereto may agree (the "Closing Date").
(b) At the Closing:
(i) Xxxxxxx US shall deliver to World Heart:
(A) against delivery of a certificate or certificates
representing the Shares, an amount equal to the Purchase Price via
wire transfer of immediately available funds to the bank account that
World Heart shall have designated at least three Business Days prior
to the Closing Date; and
(B) the other documents required by Article V hereof.
(ii) World Heart shall deliver to Xxxxxxx US:
(A) against payment of the Purchase Price therefor, a
certificate or certificates representing the Shares, which shall be in
definitive form and registered in the name of Xxxxxxx US or its
nominee or designee and in a single certificate or in such other
denominations as Xxxxxxx US has requested;
(B) an opinion of XxXxxxxx Xxxxxxxx, counsel to World Heart,
dated as of the Closing Date attached hereto as Exhibit II;
(C) a certificate of the Secretary of World Heart in form
and substance reasonably satisfactory to Xxxxxxx US;
(D) a certificate of status for World Heart dated the
Closing Date, issued by the Ministry of Consumer and Commercial
Relations (Ontario); and
(E) a certified copy of the articles of World Heart,
including, without limitation, the articles of amendment creating the
Shares; and
(F) the other documents required by Article V hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION III.1. Representations and Warranties of Xxxxxxx US. Xxxxxxx
US represents and warrants to World Heart as follows:
(a) Organization, Standing and Power. Xxxxxxx US (i) is a corporation
duly formed and in good standing under the laws of the State of Delaware, (ii)
has all requisite power and authority to own, lease or operate the assets it now
owns, leases or operates and (iii) is duly qualified or licensed to do business
in each jurisdiction in which the ownership or use of its assets or conduct of
its business requires it to be so qualified, in each case except for such
failures that would not reasonably be expected, individually or in the
aggregate, to result in a material adverse effect on the business or financial
condition of Xxxxxxx US (a "Xxxxxxx US Material Adverse Effect").
(b) Authority. The execution and delivery of this Agreement, and the
performance by Xxxxxxx US of its obligations hereunder, have been duly
authorized by all necessary action on the part of Xxxxxxx US. This Agreement has
been duly executed and delivered by Xxxxxxx US and, assuming the due execution
and delivery hereof by World Heart, this Agreement constitutes a valid and
binding obligation of Xxxxxxx US, enforceable against Xxxxxxx US in accordance
with its terms, except as such enforcement may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium (whether general or specific) or similar
laws now or hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity (regardless of whether such enforcement is sought
in a proceeding in equity or at law).
(c) Purchase For Investment. Xxxxxxx US is acquiring the Shares
hereunder for investment (for its own account or for accounts over which it
exercises investment control), and not with a view to, or for offer or sale in
connection with, any distribution thereof, which would be in violation of the
Securities Act of 1933, as amended (the "Securities Act"), or any applicable
state securities law. Xxxxxxx US is (i) knowledgeable, sophisticated and
experienced in business and financial matters and fully understands the
limitations on transfer described above; and (ii) an "accredited investor" as
such term is defined in Rule 501(a) of Regulation D under the Securities Act.
(d) Brokers, Finders, etc. Except for Credit Suisse First Boston
Corporation, Xxxxxxx US is not subject to any valid claim of any broker,
investment banker, finder or other intermediary in connection with the
transactions contemplated by this Agreement. Xxxxxxx US is solely responsible
for any payment, fee or commission that may be due to Credit Suisse First Boston
in connection with the transactions contemplated hereby.
SECTION III.2. Representations and Warranties of World Heart. World
Heart hereby represents and warrants to Xxxxxxx US as follows:
(a) Organization and Standing. World Heart (i) is a corporation duly
organized, validly existing and in good standing under the laws of the Province
of Ontario, (ii) has all requisite power and authority to own, lease or operate
the assets it now owns, leases or operates and (iii) is duly qualified or
licensed to do business in each jurisdiction in which the ownership or use of
its assets or conduct of its business requires it to be so qualified, in each
case except for such failures that would not reasonably be expected,
individually or in the aggregate, to result in (i) a material adverse effect on
the business or financial condition of World Heart and the World Heart
Subsidiaries (as defined herein), taken as a whole or (ii) a material impairment
of the ability of World Heart to perform its obligations under this Agreement
(each, a "World Heart Material Adverse Effect").
(b) Subsidiaries. The only direct or indirect subsidiaries of World
Heart is Newco. Except as set forth on Schedule 3.2(b), neither World Heart nor
Newco owns, directly or indirectly, any of the capital stock or other equity
securities of any other Person. All of the issued and outstanding shares of
capital stock of Newco are duly authorized, have been validly issued, are fully
paid and nonassessable, and are owned by World Heart free and clear of all
liens, pledges and encumbrances (collectively, "Liens").
(c) Authority. The execution and delivery of this Agreement, and the
performance by World Heart of its obligations hereunder, have been duly
authorized by all necessary action on the part of World Heart. This Agreement
has been duly executed and delivered by World Heart and, assuming the due
execution and delivery hereof by Xxxxxxx US, this Agreement constitutes a valid
and binding obligation of World Heart, enforceable against World Heart in
accordance with its terms, except as such enforcement may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to creditors' rights generally and (ii) general
principles of equity (regardless of whether such enforcement is sought in a
proceeding in equity or at law).
(d) Capital Stock. (i) The capitalization of World Heart is as set
forth on Schedule 3.2(d) and there are no shares of World Heart authorized,
issued or outstanding other than as set forth on Schedule 3.2(d)(i). The
outstanding World Heart Common Shares are duly authorized, have been validly
issued and are fully paid and nonassessable and have not been issued in
violation of, and are not subject to, any preemptive rights.
(ii) Except as set forth in Section 3.2(d)(ii), there are no
existing options, warrants, calls, preemptive rights, Voting Debt or
subscriptions or other rights, agreements, arrangements or commitments of any
character, relating to the issued or unissued capital stock of World Heart
obligating World Heart to issue, transfer or sell or cause to be issued,
transferred or sold any shares or Voting Debt of, or other equity interest in,
World Heart or securities convertible into or exchangeable for such shares or
equity interests, or obligating World Heart to grant, extend or enter into any
such option, warrant, call, subscription or other right, agreement, arrangement
or commitment.
(iii) There are no outstanding contractual obligations of World
Heart to repurchase, redeem or otherwise acquire any shares of capital stock of
World Heart, or to provide funds to make any investment (in the form of a loan,
capital contribution or otherwise) in any other entity.
(iv) Except as set forth in Section 3.2(d)(iv), there are no
voting trusts or other agreements, or understandings to which World Heart is a
party or of which World Heart has knowledge with respect to the voting of the
capital stock of World Heart.
(e) Consents; No Conflict. The consummation of the transactions
hereunder will not require the consent of any party to any material contract,
lease, agreement, mortgage or indenture ("Contract") to which World Heart, or
any of its affiliates, is a party or by which any of them is bound, or, to the
knowledge of World Heart, the consent, approval, order or authorization of, or
the registration, declaration or filing with, any governmental authority, except
for those (i) set forth on Schedule 3.2(e) or (ii) that become applicable solely
as a result of the actions or status of Xxxxxxx US and its affiliates. Except as
set forth on Schedule 3.2(e), assuming the consents, approvals, orders,
authorizations, registrations, declarations and filings contemplated by the
immediately preceding sentence are obtained or made, as applicable, the
execution, delivery and performance by World Heart of this Agreement will not
(i) violate any material law applicable to World Heart or any of their
respective affiliates, (ii) result in a breach or violation of any material
provision of, or constitute a material default under, any such Contract or (iii)
conflict with any provision of the articles or by-laws of World Heart.
(f) SEC Reports and Financial Statements. Each form, report, schedule,
registration statement, definitive proxy statement or other document filed by
World Heart with the Securities and Exchange Commission (the "SEC") or a
Canadian provincial securities regulatory authority (the "Canadian Securities
Commissions") since October 8, 1996 (as such documents have since the time of
their filing been amended, the "World Heart Reports"), which include all the
documents (other than preliminary material) that World Heart was required to
file with the SEC or the Canadian Securities Commissions since such date, as of
their respective dates, complied in all material respects with the requirements
of the Securities Act or the Exchange Act or applicable Canadian securities
legislation (as such term is defined in National Instrument 14-101 issued by the
Canadian Securities Commissions), as the case may be, and the rules and
regulations of the SEC thereunder applicable to such World Heart Reports. None
of the World Heart Reports and Canadian Securities directions (as such term is
defined in National Instrument 14-101) contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, except for such statements, if any, as
have been modified by subsequent filings prior to the date hereof. The financial
statements of World Heart included in such reports comply as to form in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC and the Canadian Securities Commissions with
respect thereto, have been prepared in accordance with Canadian generally
accepted accounting principles applied on a consistent basis ("GAAP") during the
periods involved (except as may be indicated in the notes thereto or, in the
case of the unaudited statements, as permitted by the Securities Act or the
Exchange Act) and reconciled to U.S. GAAP and fairly present (subject in the
case of the unaudited statements, to normal, recurring audit adjustments) the
financial position of World Heart as at the dates thereof and the results of its
operations and cash flows for the periods then ended.
(g) No Undisclosed Liabilities. As of the date hereof, neither World
Heart nor Newco has any liabilities of a nature required by Canadian or U.S.
GAAP, as applicable, to be reflected on a balance sheet or in notes thereto,
except (i) as set forth or reflected in the World Heart Reports (or described in
the notes thereto), (ii) as disclosed in the Schedules hereto, or (iii) for
liabilities incurred in the ordinary course of business since the date of the
last audited balance sheet filed with the SEC and the Canadian Securities
Commissions (the "World Heart Balance Sheet Date").
(h) Absence of Certain Changes or Events. Since the World Heart
Balance Sheet Date, there has been no loss, occurrence or event that, after
taking into account any insurance recoveries payable in respect thereof, would
reasonably be expected to result in a World Heart Material Adverse Effect.
(i) Compliance with Applicable Laws. Since the World Heart Balance
Sheet Date, World Heart and Newco have complied in all material respects with
all statutes, laws, regulations and ordinances applicable to them, except where
the failure to so comply would not reasonably be expected to result in a World
Heart Material Adverse Effect.
(j) Litigation; Decrees. Except as set forth on Schedule 3.2(j), as of
the date hereof (i) there is no suit, action or proceeding pending or, to the
knowledge of World Heart, threatened against World Heart in any federal, state,
provincial or local court or agency that seeks (A) more than $250,000 in
damages, or (B) any material injunctive relief, and World Heart has not received
written notice that any such suit, action or proceeding is threatened and (ii)
neither World Heart nor any of its Subsidiaries is in default under any
judgment, order or decree of any governmental authority applicable to it, except
for any such default which would not reasonably be expected to result in a World
Heart Material Adverse Effect.
(k) Environmental Matters. To the knowledge of World Heart, World
Heart is in substantial compliance with all Canadian federal and provincial laws
governing pollution or the protection of human health or the environment (the
"Environmental Laws"), except where the failure to comply with the Environmental
Laws would not reasonably be expected to result in a World Heart Material
Adverse Effect.
(l) Government Regulations. World Heart is not subject to regulation
under the Investment Company Act of 1940, as amended, the Public Utility Holding
Company Act of 1935, as amended, the Federal Power Act, the Interstate Commerce
Act or any federal or state statute or regulation limiting its ability to incur
or assume indebtedness for borrowed money.
(m) Taxes.
(i) World Heart is not, and will not become as a result of the
transactions contemplated under this Agreement or other Transaction Agreements,
a "controlled foreign corporation" within the meaning of section 957 of the
Code.
(ii) World Heart is not, and will not become as a result of the
transactions contemplated under this Agreement or other Transaction Agreements,
a "foreign personal holding company" within the meaning of section 552 of the
Code.
(iii) World Heart has duly filed on a timely basis all Tax
Returns required to be filed by it and has paid all Taxes due and payable by it.
All such Tax Returns properly reflect and do not in any material respect
understate the income, taxable income or the liability for Taxes. Without
limiting the generality of the foregoing, World Heart is in compliance with all
registration, timely reporting and remittance (including remittance of
installments) obligations in respect of all such Taxes. World Heart has not
incurred any undisclosed liability for Taxes in excess of the amounts reserved
therefor in the books and records of World Heart. World Heart has not incurred
any liability for Taxes other than Taxes directly arising from the operation of
its business in the ordinary course.
(iv) There are no actions, suits, proceedings, investigations or
claims pending or threatened against World Heart in respect of Taxes, nor are
any material matters under discussion with any governmental authority relating
to Taxes asserted by any such authority, and there are no agreements, waivers or
other arrangements providing for an extension of time with respect to the filing
of any Tax Return by, or payment of any Taxes, governmental charge or deficiency
against, World Heart.
(v) World Heart has withheld from each payment made to any of its
past or present employees, officers or directors, and to any non-resident of
Canada, the amount of all applicable Taxes and other deductions required to be
withheld therefrom and has paid the same to the proper tax or other receiving
officers within the time required under any applicable legislation. (vi) World
Heart has remitted to the appropriate tax authority when required by law to do
so all amounts collected by it on account of goods and services or other sales
or use taxes.
(n) Intellectual Property. Except as set forth in Section 3.2(n),
there are no existing, or, to the knowledge of World Heart, threatened, claims
based on the use by, or challenging the ownership of, World Heart of any
material trademarks, copyrights and other intellectual property rights used or
held for use primarily in World Heart's business (the "World Heart Intellectual
Property"), owned, or licensed for use, by World Heart as of the date hereof
that would reasonably be expected to result in a World Heart Material Adverse
Effect. Except as set forth on Schedule 3.2(n), World Heart does not have any
knowledge of any infringing use of any World Heart Intellectual Property by any
other Person.
(o) Stockholder Approval. All actions required to be taken by the
shareholders of World Heart to approve the transactions contemplated by this
Agreement, the Transaction Agreements and the Transactions (each, as defined in
the Contribution Agreement) have been taken or will be taken prior to Closing.
(p) Brokers, Finders, etc. Except for Xxxxxxx Xxxxx & Co., World Heart
is not subject to any valid claim of any broker, investment banker, finder or
other intermediary in connection with the transactions contemplated by this
Agreement. World Heart is solely responsible for any payment, fee or commission
that may be due to Xxxxxxx Xxxxx & Co. in connection with the transactions
contemplated hereby.
(q) Labor Matters. World Heart has no knowledge of any actionable
violation of any Canadian federal or provincial law relating to employment and
employment practices, discrimination in the hiring, promotion or pay of
employees, nor any applicable wage or hour laws, which, individually or in the
aggregate, would result in a World Heart Material Adverse Effect.
ARTICLE IV
COVENANTS
SECTION IV.1. Conduct of Business of World Heart. From the date of
this Agreement through the Closing, World Heart agrees that, except (i) as
disclosed in Schedule 4.1 hereof or (ii) as approved by Xxxxxxx US:
(a) the business of World Heart shall be conducted only in the
ordinary and usual course consistent with past practice, and World Heart shall
use its reasonable commercial efforts to preserve intact the present business
organization, to keep available the services of its present officers and key
employees, and preserve the goodwill of those having business relationships with
it;
(b) World Heart shall not (i) amend its articles or by-laws except to
create the Shares by filing the articles of amendment; (ii) split, combine or
reclassify any shares of its outstanding capital stock; or (iii) declare, set
aside or pay any dividend or other distribution payable in cash, stock or
property; and
(c) World Heart shall not authorize for issuance, issue or sell or
agree to issue or sell any shares of, or rights to acquire or instruments
convertible into any shares of, its capital stock, except for (i) the issuance
of common shares of World Heart ("World Heart Common Shares") (x) upon the
exercise of World Heart stock options or other rights outstanding on the date of
this Agreement (y) upon the exercise of rights described in the immediately
following clause, and (ii) the issuance of rights pursuant to existing employee
benefit plans or arrangements in a manner consistent with past practice.
SECTION IV.2. Access to Information.
(a) During the period prior to the Closing Date, World Heart shall
afford to the representatives of Xxxxxxx US and counsel, accountants, financial
advisors and lenders, reasonable access during normal business hours during the
period prior to the Closing Date to all the properties, books, Contracts and
records of World Heart. Xxxxxxx US shall indemnify and hold harmless World Heart
with respect to all liabilities, and for all losses, arising out of their
respective representatives' acts or omissions in connection with such access
and, after making any investigation of such properties, books, Contracts or
records, Xxxxxxx US shall promptly restore such properties, books, Contracts and
records to their condition prior to such investigation.
(b) Each of World Heart and Xxxxxxx US acknowledges that the
information being provided hereunder is subject to the terms of a
confidentiality agreement between Xxxxxxx US and World Heart, dated February 15,
2000 (the "Confidentiality Agreement"), which terms are incorporated herein by
reference.
SECTION IV.3. Transaction Agreements; Consents. Subject to the terms
and conditions hereof, each of Xxxxxxx US and World Heart agree to use their
reasonable commercial efforts to take, or cause to be taken, all actions and to
do, or cause to be done, all things necessary, proper or advisable to consummate
and make effective as promptly as practicable the transactions contemplated by
this Agreement and to cooperate with each party hereto in connection with the
foregoing, including, without limitation, (a) the execution of the Transaction
Agreements and (b) using its reasonable commercial efforts (i) to obtain all
necessary waivers, consents and approvals from other parties to contracts
material to World Heart, (ii) to obtain all consents, approvals and
authorizations that are required to be obtained under any federal, state, local
or foreign law or regulations, (iii) to prevent the entry, enactment or
promulgation of any threatened or pending injunction or order that would
adversely affect the ability of the parties hereto to consummate the
transactions contemplated hereby, (iv) to lift or rescind any injunction or
order adversely affecting the ability of the parties hereto to consummate the
transactions contemplated hereby and (v) to effect all necessary registrations
and filings, including filings under the HSR Act, and submissions of information
requested by governmental authorities.
SECTION IV.4. Further Assurances. From time to time, whether before,
at, or after the Closing, each party hereto, shall execute and deliver, or cause
to be executed and delivered, all such documents and instruments and shall take,
or cause to be taken, all such other actions as may be reasonably necessary to
consummate the transactions contemplated by this Agreement.
SECTION IV.5. Publicity. Xxxxxxx US and World Heart agree that, prior
to the Closing, no public release or announcement concerning the Transactions
shall be issued by any party without the prior written consent (which consent
shall not be unreasonably withheld) of the other party, except as such release
or announcement may be required by law. Xxxxxxx US and World Heart agree that,
prior to the Closing, no disclosure (other than a public release or announcement
pursuant to the previous sentence) of the terms or provisions of the Transaction
Agreements shall be made without the prior written consent (which consent shall
not be unreasonably withheld) of the other party, except to representatives,
advisors, counsel, and lenders to the parties hereto who acknowledge the
confidentiality hereof, and except as required by law.
SECTION IV.6. Required Notices. Between the date of this Agreement and
the Closing Date, World Heart will notify Xxxxxxx US of any event of which World
Heart obtains knowledge (i) which would reasonably be expected to result in a
World Heart Material Adverse Effect (ii) which, if known as of the date hereof,
would have been required under this Agreement to be disclosed to Xxxxxxx US or
(iii) which constitutes notice from any third person alleging that the consent
of such third person is or may be required in connection with the transactions
contemplated by this Agreement.
SECTION IV.7. Qualified Electing Fund. World Heart shall furnish at
its own expense prior to April 30 of each year in respect of the preceding full
year to Xxxxxxx US an annual information statement (the "PFIC Annual Information
Statement") for such taxable year consistent with the requirements set forth in
Treasury Regulation Section 1.1295-1 and any successor provision that is
prepared by PricewaterhouseCoopers LLP or a similar accounting firm of
international reputation with comparable United States tax expertise. Without
limiting the foregoing, the PFIC Annual Information Statement shall set forth
(A) the first and last days of the taxable year of World Heart to which the
information statement applies, (B) sufficient information to enable Xxxxxxx US
to calculate its pro rata share of the ordinary earnings and net capital gain of
World Heart, and (C) the amount of cash and the fair market value of other
property distributed or deemed distributed on a per share basis during the
taxable year of World Heart, and shall include a statement that World Heart will
permit Xxxxxxx US to inspect and copy World Heart's permanent books of account,
records, and such other documents as may be maintained by World Heart that are
necessary to establish that the ordinary earnings and net capital gain referred
to in (B) above are computed in accordance with United States income tax
principles and to verify these amounts and Xxxxxxx US's pro rata share thereof.
World Heart shall also provide such other information as (i) is reasonably
requested by Xxxxxxx US and (ii) as required by the United States Internal
Revenue Service to enable Xxxxxxx US to make a "qualified electing fund"
election under Section 1295 of the Code.
ARTICLE V
CONDITIONS PRECEDENT
SECTION V.1. Conditions Precedent to Obligations of World Heart. The
obligation of World Heart to issue the Shares shall be subject to the
satisfaction or waiver on the Closing Date of the following conditions
precedent:
(a) No Injunctions or Restraints. No temporary restraining order or
preliminary or permanent injunction of any court or administrative agency of
competent jurisdiction prohibiting the transactions contemplated by this
Agreement shall be in effect.
(b) Representations and Warranties. The representations and warranties
of Xxxxxxx US set forth in this Agreement (i) which are qualified by materiality
shall be true and correct in all respects or (ii) which are not so qualified
shall be true and correct in all material respects, in each case, as of the
Closing Date with the same effect as though made on and as of the Closing Date
and without giving effect to notifications made pursuant to Section 4.6.
(c) Performance of Obligations of Xxxxxxx US. Xxxxxxx US shall have
performed in all material respects its obligations under the Transaction
Agreements on or prior to the Closing Date.
(d) Certificate. Xxxxxxx US shall have delivered to World Heart a
certificate, dated the Closing Date and signed by a duly authorized executive
officer of Xxxxxxx US, to the effect that the conditions set forth in Section
5.1(b) and (c) have been satisfied.
(e) Transaction Agreements. Xxxxxxx US shall have entered into each of
the Transaction Agreements.
SECTION V.2. Conditions Precedent to Xxxxxxx US's Obligation. The
obligation of Xxxxxxx US to consummate the transactions contemplated hereunder
is subject to the satisfaction or waiver on the Closing Date of each of the
following conditions precedent:
(a) No Injunctions or Restraints. No temporary restraining order or
preliminary or permanent injunction of any court or administrative agency of
competent jurisdiction prohibiting the consummation of the transactions
contemplated hereunder shall be in effect.
(b) Consents. All consents, approvals and waivers from third parties
and governmental authorities and other parties set forth on Schedule 3.2(e)
shall have been obtained, except where the failure to obtain any such consent,
approval or waiver would not reasonably be expected to result in a World Heart
Material Adverse Effect.
(c) Representations and Warranties. The representations and warranties
of World Heart set forth in this Agreement (i) which are qualified by
materiality shall be true and correct in all respects or (ii) which are not so
qualified shall be true and correct in all material respects, in each case, as
of the Closing Date with the same effect as though made on and as of the Closing
Date.
(d) Performance of Obligations of World Heart. World Heart shall have
performed in all material respects its obligations under this Agreement on or
prior to the Closing Date.
(e) Certificate. World Heart shall have delivered to Xxxxxxx US a
certificate, dated the Closing Date and signed by a duly authorized executive
officer, to the effect that the conditions set forth in Section 5.2(b), (c) and
(d) have been satisfied.
(f) Transaction Agreements. World Heart shall have entered into the
Transaction Agreements and the transactions contemplated thereby shall be
consummated on the Closing Date.
(g) Listing. The World Heart Common Shares to be issued upon
conversion of the World Heart Preferred shall have been reserved for issuance
and approved for listing on The Nasdaq National Market System and The Toronto
Stock Exchange, subject to official notice of issuance, the delivery of final
documentation and similar customary listing conditions.
ARTICLE VI
SURVIVAL; INDEMNIFICATION
SECTION VI.1. Survival. The representations and warranties contained
in or made pursuant to this Agreement shall survive for a period of 12 months
after the Closing Date; provided, however that the representations and
warranties set forth in Section 3.2(m) shall survive until 60 days after the
expiration of the statute of limitations applicable thereto. From and after the
Closing, World Heart hereby agrees to indemnify and hold harmless Xxxxxxx US, in
each case against certain liabilities, in accordance with the terms of this
Article VI. The Indemnifying Party (as defined below) shall not be obligated to
provide such indemnification with respect to representations and warranties to
the Indemnified Party (as defined below) unless the Indemnifying Party shall
have received written notice thereof (including a reasonably detailed
description of the basis of the claim) within the applicable time period for
survival of such representations or warranty, as set forth above.
SECTION VI.2. Indemnification. Subject to the other provisions of this
Article VI, from and after the Closing, World Heart shall indemnify and hold
harmless Xxxxxxx US and its employees, directors and agents, in each case from
and against any costs or expenses (including, without limitation, reasonable
attorneys' fees, and the reasonable out-of-pocket expenses of testifying and
preparing for testimony and responding to document and other information
requests, whether or not a party to such litigation), judgments, fines, losses,
claims (whether or not meritorious) and damages (collectively, "Damages"), as
incurred, to the extent they relate to, arise out of or are the result of any
breach or alleged breach of any representation, warranty or covenant.
SECTION VI.3. Claims.
(a) If an indemnified party (an "Indemnified Party") intends to seek
indemnification pursuant to this Article VI, such Indemnified Party shall
promptly notify the indemnifying party (the "Indemnifying Party"), in writing,
of such claim describing such claim in reasonable detail, provided, that the
failure to provide such notice shall not affect the obligations of the
Indemnifying Party unless and only to the extent it is actually prejudiced
thereby, subject, however, to the time periods specified in Section 6.1 hereof.
In the event that such claim involves a claim by a third party against an
Indemnified Party, the Indemnifying Party shall have 30 days after receipt of
such notice to decide whether it will undertake, conduct and control, through
counsel of its own choosing and at its own expense, the settlement or defense
thereof, and if it so decides, the Indemnified Party shall cooperate with it in
connection therewith, provided, that the Indemnified Party may participate in
such settlement or defense through counsel chosen by it, and provided further,
that the reasonable fees and expenses of such counsel shall be borne by the
Indemnified Party. The Indemnifying Party shall not, without the written consent
of the Indemnified Party (which consent shall not be unreasonably withheld),
settle or compromise any action. If the Indemnifying Party does not notify the
Indemnified Party within 30 days after the receipt of notice of a claim of
indemnity hereunder that it elects to undertake the defense thereof, the
Indemnified Party shall have the right to contest, settle or compromise the
claim but shall not pay or settle any such claim without the consent of the
Indemnifying Party (which consent shall not be unreasonably withheld).
(b) Xxxxxxx US and World Heart shall cooperate fully in all aspects of
any investigation, defense, pre-trial activities, trial, compromise, settlement
or discharge of any claim in respect of which indemnity is sought pursuant to
Article VI, including, but not limited to, by providing the other party with
reasonable access to employees and officers (including as witnesses) and other
information.
SECTION VI.4. Duplication. Any liability for indemnification hereunder
shall be determined without duplication of recovery by reason of the state of
facts giving rise to such liability constituting a breach of more than one
representation, warranty, covenant or agreement; provided, however, that subject
to there being no duplication of recovery, the Indemnified Party shall be
entitled to recover to the maximum extent provided in this Agreement.
ARTICLE VII
MISCELLANEOUS
SECTION VII.1. Governing Law. This agreement shall be governed by,
interpreted under, and construed in accordance with the internal laws of the
State of New York, including, without limitation, Sections 5-1401, 5-1402 of the
New York General Obligations Law and New York Civil Practice Laws and Rules
327(b).
SECTION VII.2. Jurisdiction and Consent to Service. In accordance with
the laws of the State of New York, and without limiting the jurisdiction or
venue of any other court, the parties (a) agree that any suit, action or
proceeding arising out of or relating to this Agreement may be brought in the
state or federal courts of New York; (b) consent to the non-exclusive
jurisdiction of each such court in any suit, action or proceeding relating to or
arising out of this Agreement; (c) waive any objection which any of them may
have to the laying of venue in any such suit, action or proceeding in any such
court and waive any defense of forum non conveniens; and (d) agree that service
of any court paper in any such suit, action or proceeding may be made in the
same manner in which notices may be given pursuant to Section 7.3 of this
Agreement.
SECTION VII.3. Notices. All notices, demands, requests, consents,
approvals or other communications required or permitted to be given hereunder or
which are given with respect to this Agreement shall be in writing and shall be
delivered (charges prepaid, receipt confirmed or return receipt requested (if
available)) by hand, by nationally recognized air courier service, by certified
mail or facsimile, addressed as set forth below or to such other address as such
party shall have specified most recently by written notice. Notice shall be
deemed given and effective (i) if delivered by hand or by nationally recognized
courier service, when delivered at the address specified in this Section 7.3 (or
in accordance with the latest unrevoked written direction from such party), (ii)
if by certified mail, upon mailing or (iii) if given by facsimile when such
facsimile is transmitted to the fax number specified in this Section 7.3 (or in
accordance with the latest unrevoked written direction from such party),
provided the appropriate confirmation is received.
To World Heart:
World Heart Corporation
0 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxx
X0X 0X0
Attn: Chief Financial Officer
Fax: (000) 000-0000
with a copy (which shall not constitute notice) to:
XxXxxxxx Xxxxxxxx
The Xxxxxxxx
0000-00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxx X0X 0X0
Attn: Xxxxxx X. Xxxxxxx
Fax: (000) 000-0000
To Xxxxxxx US:
Xxxxxxx Lifesciences (US) Inc.
Xxx Xxxxxxx Xxx
Xxxxxx, Xxxxxxxxxx 00000
Attn: Associate General Counsel
Fax: (000) 000-0000
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
SECTION VII.4. Interpretation. When a reference is made in this
Agreement to a Section, Schedule or Exhibit, such reference shall be to a
Section, Schedule or Exhibit of this Agreement unless otherwise indicated. When
a reference is made in this Agreement to a specific Schedule, such reference
shall be deemed to include, to the extent applicable, all the other Schedules.
The table of contents, table of definitions, titles and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. When the words "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." All accounting terms not defined in this
Agreement shall have the meanings determined by generally accepted accounting
principles as of the date hereof. All capitalized terms defined herein are
equally applicable to both the singular and plural forms of such terms.
SECTION VII.5. Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
parties shall negotiate in good faith with a view to the substitution therefor
of a suitable and equitable solution in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid provision;
provided, however, that the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be in any way impaired thereby, it being intended that all of
the rights and privileges of the parties hereto shall be enforceable to the
fullest extent permitted by law.
SECTION VII.6. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original and all of which
shall, taken together, be considered one and the same agreement, it being
understood that both parties need not sign the same counterpart.
SECTION VII.7. Entire Agreement; No Third Party Beneficiaries. This
Agreement and the other Transaction Agreements, including all exhibits hereto
and thereto, by and between Xxxxxxx US and World Heart,
(a) constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede all prior and contemporaneous agreements,
representations, understandings, negotiations and discussions between the
parties, whether oral or written, with respect to the subject matter hereof; and
(b) this Agreement and the provisions hereof shall be binding upon and
shall inure to the benefit of each of the parties and their respective
successors and permitted assigns and is not intended to confer any rights,
remedies or benefits on any Persons other than as expressly set forth in this
Section 7.7.
SECTION VII.8. Further Assurances. Each party hereto shall do all such
further acts and execute, acknowledge, deliver and file all such further
instruments and documents as may be necessary or desirable to give effect to and
carry out the transactions contemplated by this Agreement, including, in the
case of World Heart, such acts, instruments and documents as may be necessary or
desirable to convey and transfer to Xxxxxxx US the Shares to be purchased
hereunder.
SECTION VII.9. Amendments and Modifications; Waivers and Extensions.
(a) No amendment, modification or termination of this Agreement shall
be binding upon any other party unless executed in writing by the parties hereto
intending to be bound thereby.
(b) Any party to this Agreement may waive any right, breach or default
which such party has the right to waive; provided that such waiver will not be
effective against the waiving party unless it is in writing, is signed by such
party, and specifically refers to this Agreement. Waivers may be made in advance
or after the right waived has arisen or the breach or default waived has
occurred. Any waiver may be conditional. No waiver of any breach of any
agreement or provision herein contained shall be deemed a waiver of any
preceding or succeeding breach thereof nor of any other agreement or provision
herein contained. No failure or delay in exercising any right, power or
privilege hereunder shall be deemed a waiver or extension of the time for
performance of any other obligations or acts nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.
SECTION VII.10. Assignment. Neither this Agreement nor any of the
rights, duties or obligations hereunder may be assigned or delegated by any of
the parties hereto without the prior written consent of World Heart or Xxxxxxx
US, as the case may be, which may be withheld in its sole discretion except that
Xxxxxxx US may assign all its rights and obligations to (a) the acquiror of all
or substantially all of the assets of Xxxxxxx US including an acquisition
through merger, provided that Xxxxxxx US shall in no event be released from its
obligations hereunder without the prior written consent of World Heart and (b)
the transferee of any of the Shares. Any attempted assignment or delegation of
rights, duties or obligations hereunder in contravention hereof shall be void
and of no effect.
SECTION VII.11. Remedies Cumulative. The remedies provided herein
shall be cumulative and shall not preclude the assertion by any party hereto of
any other rights or the seeking of any other remedies against the other party
hereto.
SECTION VII.12. Exhibits. Each of the exhibits referred to herein and
attached hereto is an integral part of this Agreement and is incorporated herein
by reference.
SECTION VII.13. Expenses. Except as otherwise provided in this
Agreement, each party to this Agreement shall bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the transactions contemplated hereby, including all fees and
expenses of agents, representations, counsel and accountants; provided, however,
the prevailing party in any legal action brought by one party against the other
party and arising out of this Agreement shall be entitled, in addition to any
other rights and remedies it may have, to reimbursement for its expenses,
including court costs and reasonable attorneys' fees.
SECTION VII.14. Press Releases and Public Announcements. All public
announcements or disclosures relating to the transactions contemplated hereby
shall be made only if mutually agreed upon by World Heart and Xxxxxxx US, except
to the extent such disclosure is, in the opinion of counsel, required by
applicable law; provided that any such required disclosure shall only be made,
to the extent consistent with applicable law, after consultation with the other
party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
WORLD HEART CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxx
------------------------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
XXXXXXX LIFESCIENCES (US) INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: President and Chief Executive Officer
Schedule 3.2(b)
WorldHeart and/or Newco Subsidiaries (other than Newco)
None.
Schedule 3.2(d)
Capital Stock
Capitalization of WorldHeart (In Canadian S)
March 31, 2000
(Unaudited)
Shareholders' equity
Common shares - unlimited number authorized 72,879,220
(15,023,402
common shares)
Preferred shares - issuable in series, unlimited
number authorized, none issued
Schedule Schedule 3.2(d)(i)
Common shares authorized, issued and outstanding
(a) Authorized
Authorized capital stock of the Corporation consists of an unlimited number of
common shares and an unlimited number of preferred shares issuable in series.
(b) Outstanding
There are 15,023,751 common shares outstanding.
Schedule Schedule 3.2(d)(ii)
Options, Warrants, Calls, Pre-emptive rights, Voting debts, or other
arrangements
Warrants
Issued Exercised Balance
IPO-1996
Cdn Underwriter 75,000 75,000
US Underwriter 200,000 (50,729) 149,271
Special Warrants - 1998
US IPO Underwriter 35,000 35,000
Cdn. Underwriter 83,720 (83,720) 0
Cdn. Underwriter 125,580 (36,400) 89,180
Bought deal - 2000
Cdn Underwriter 85,000 85,000
519,300 (170,849) 348,451
Stock Options
1996 37,800
1997 36,500
1998 140,002
1999 258,901
2000 182,288
-------
655,491
-------
No other arrangements exist relating to the issued or unissued capital stock of
WorldHeart.
Schedule 3.2(d)(iv)
Voting Trusts or other agreements
Shareholders Agreement dated April 1, 1996 among Xxxxxxxx X. Xxxxxx, Xxxxxxx
X.X. Xxxxxxxx, Dr. Tofy Mussivand, Ottawa Heart Institute Research Corporation,
and World Heart Corporation.
Schedule 3.2(e)
Material Contracts re - consent
None.
Schedule 3.2(j)
Litigation
The Corporation filed a complaint against Abiomed, Inc. in the Federal District
Court for the District of Delaware on January 20, 1998. The complaint was based
on alleged breach of contract, misappropriation of trade secrets, conversion of
trade secrets and patent infringement relating to the Corporation's patented
transcutaneous energy transfer technology. Abiomed, Inc. filed a motion to
include a counterclaim alleging that the Corporation misappropriated its trade
secrets. Prior to the trial, the Corporation dropped its claim against Abiomed,
Inc. for patent infringement. On February 4, 2000, the trial of the
Corporation's complaint concluded with the jury finding in favour of Abiomed,
Inc. The effect of the decision is to determine that Abiomed, Inc.'s
transcutaneous energy transfer system does not incorporate or rely upon trade
secrets which belong to the Corporation. The decision does not affect the
Corporation's ownership of its own TET technology. The Corporation has filed a
motion to set aside the decision, sanction Abiomed, Inc. and seek a new trial.
As of March 3, 2000, Abiomed, Inc. has withdrawn all counterclaims against the
Corporation.
Schedule 3.2(n)
Infringement of intellectual property
See schedule 3.2(j).
Schedule 4.1
Conduct of Business of WorldHeart
Special grant of 150,000 options for common shares to WorldHeart and Novacor LLC
employees.
EXHIBIT I
The first series of preferred shares shall be designated Cumulative
Redeemable Convertible Preferred Shares, Series A (the "Series A Shares") and
shall have attached thereto, in addition to the rights, privileges,
restrictions, conditions and limitations attaching to the Preferred Shares as a
class, the following rights, privileges, restrictions and conditions (the
"Series A Provisions"):
1 General
1.1 Definitions
Where used in these Series A Provisions, the following words and
phrases shall, unless there is something in the context otherwise inconsistent
therewith, have the following meanings, respectively:
(1) "business day" means a day other than a Saturday, Sunday or any
other day when banks in the municipality in Canada in which the
Corporation's registered office is then situated are authorized
by applicable laws to be closed;
(2) "Common Shares" means common shares of the Corporation as such
shares were constituted on o, 2000, or as such shares may be
changed from time to time, provided that any adjustment in the
Conversion Rate required by clause 3.5 hereof has been made;
(3) "close of business" means the normal closing hour of the
principal office of the transfer agent for the Common Shares
located nearest to the registered office of the Corporation;
(4) "Conversion Rate" at any time means the number of Common Shares
into which one Series A Share may be converted at such time in
accordance with the provisions of section 3;
(5) "Current Market Price" of the Common Shares on any date means the
arithmetic weighted average of board lot prices for sales of
Common Shares on The Toronto Stock Exchange and the Nasdaq
National Market (with prices on The Toronto Stock Exchange
converted into United States dollars at the noon buying rate
certified by the New York Federal Reserve Bank for customs
purposes on such date) or, if the Common Shares are not then
listed and posted for trading on The Toronto Stock Exchange or
the Nasdaq National Market, on such stock exchange on which such
shares are listed and posted for trading and on which such shares
are most actively traded, during the 20 consecutive trading days
ending on a date not earlier than the 5th trading day preceding
such date, provided that in the event the Common Shares are not
listed on any stock exchange the Current Market Price shall be
determined by an independent investment dealer selected by the
directors which determination shall be conclusive;
(6) "Deferred Dividend Amount" in respect of a Series A Share means
an amount calculated and compounded semi-annually on the dividend
payment dates determined at a rate of 5% per annum during the
Initial Dividend Period and at a rate 10% per annum during the
Subsequent Dividend Period on the aggregate of (i) the amount of
all preferential cumulative dividends that have not been paid on
such Series A Share on the scheduled dividend payment date or
dividend payment dates, whether or not such dividends were
declared, for so long as such dividends remain accrued and unpaid
from time to time and (ii) the Deferred Dividend Amount that has
accumulated in prior calculation periods and remains unpaid; the
period from and including a dividend payment date to, but not
including, the next dividend payment date is a "calculation
period" for the purposes of this definition;
(7) "director" means a director of the Corporation for the time being
and "directors" or "board of directors" means the board of
directors of the Corporation or, if duly constituted and
empowered, the executive committee of the board of directors of
the Corporation for the time being, and reference, without
further elaboration, to action by the directors means either
action by the directors of the Corporation as a board or action
by the said executive committee as such committee;
(8) "herein", "hereto", "hereunder", "hereof", "hereby" and similar
expressions mean or refer to these Series A Provisions and not to
any particular section, clause, subclause, subdivision or portion
hereof, and the expressions "section", "clause" and "subclause"
followed by a number or a letter mean and refer to the specified
section, clause or subclause hereof;
(9) "Initial Issue Date" means the first date on which any Series A
Shares are issued and outstanding;
(10) "Junior Shares" means any shares of the Corporation ranking after
or subordinate to the Series A Shares as to the payment of
dividends or the return of capital, including, without limiting
the generality of the foregoing, the Common Shares;
(11) "Liquidation Distribution" means the liquidation, dissolution or
winding-up of the Corporation, whether voluntary or involuntary,
or any other distribution of assets of the Corporation among its
shareholders for the purpose of winding up its affairs;
(12) "ranking as to capital" means ranking or priority with respect to
the distribution of assets in the event of a Liquidation
Distribution;
(13) "Series A Holder" means a person recorded on the securities
register of the Corporation as being the registered holder of one
or more Series A Shares;
(14) "trading day" means any day on which The Toronto Stock Exchange
or the Nasdaq National Market are open for business and on which
one or more board lots of the relevant class of shares of the
Corporation are traded on either or both such exchanges; and
(15) "transfer agent" means the corporation or corporations from time
to time appointed by the directors as the transfer agent for the
Series A Shares and, in the event that no such person is
appointed, "transfer agent" means the Corporation.
1.2 Gender, etc.
Words importing only the singular number include the plural and vice
versa and words importing any gender include all genders.
1.3 Currency
All monetary amounts referred to herein shall be in lawful money of
the United States of America.
1.4 Headings
The division of these Series A Provisions into sections, clauses,
subclauses or other subdivisions and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation hereof.
1.5 Business Day
In the event that any date upon which any dividends on the Series A
Shares are payable by the Corporation, or upon or by which any other action is
required to be taken by the Corporation or any Series A Holder hereunder, is not
a business day, then such dividend shall be payable or such other action shall
be required to be taken on or by the next succeeding day which is a business
day.
1.6 Business Corporations Act (Ontario)
These Series A Provisions shall be governed by and are subject to the
applicable provisions of the Business Corporations Act (Ontario), as such
statute may from time to time be amended, varied, replaced or re-enacted (the
"OBCA") and all other laws binding upon the Corporation and, except as otherwise
expressly provided herein, all terms used herein which are defined in the OBCA
shall have the respective meanings ascribed thereto in the said Act.
2 Dividends
2.1 Declaration and Payment of Dividends
2.2 The holders of Series A Shares shall be entitled to receive and the
Corporation shall pay thereon, as and when declared by the board of directors,
preferential cumulative cash dividends at the rate per Series A Share (a) during
the period from the Initial Issue Date to the third anniversary of the Initial
Issue Date (the "Initial Dividend Period") at a rate per annum equal to the
greater of (i) $0.7275 and (ii) the amount that would have been paid during such
period if such Series A Share had been converted into Common Shares at the
Conversion Rate immediately prior to the start of such period, and (b)
thereafter (the "Subsequent Dividend Period") at a rate per annum equal to the
greater of (iii) $1.455 and (iv) the amount that would have been paid during
such period if such Series A Share had been converted into Common Shares at the
Conversion Rate immediately prior to the start of such period. To the extent
that non-cash dividends have been paid on the Common Shares during a period, the
amount payable under (ii) and (iv) above shall include the cash equivalent value
of such non-cash dividends determined as of the date payment was made to the
holders of Common Shares. Such dividends shall accrue from and including the
date of issue of such shares and, subject as hereinafter provided, shall be
payable semi-annually on the o day of each of o and o in each year (each of
which dates is hereinafter referred to as a "dividend payment date"). The first
dividend payment date shall be ___, 2000.
2.3 Amount of Dividend
The amount of the dividend for any period which is less than a full
half-year with respect to any Series A Share:
(i) which is issued, redeemed or purchased; or
(ii) where assets of the Corporation are distributed to the Series A
Holders pursuant to section 7 hereof;
shall be equal to the amount calculated by multiplying the annual dividend
entitlement contemplated in section 2.1 for the relevant period by a fraction
the numerator of which is the number of days in such half-year for which such
share has been outstanding (including the dividend payment date at the beginning
of such half-year if such share was outstanding on that date and excluding the
next succeeding dividend payment date if such share was outstanding on that
date), and the denominator of which is 365.
The amount of the dividend payable in respect of each Series A Share
on the first dividend payment date following the Initial Issue Date shall be
that proportion of $0.36375 which the number of days from and including the
Initial Issue Date to but excluding such dividend payment date is to the total
number of days in the six month period immediately preceding such dividend
payment date.
2.4 Cumulation of Dividends
If on any dividend payment date a dividend accrued to and payable on
such date is not paid in full on the Series A Shares then issued and
outstanding, the dividend or the unpaid part thereof shall be paid on a
subsequent date as determined by the board of directors. The Series A Holders
shall not be entitled to any dividends other than or in excess of the
preferential cumulative dividends provided for in this section 2.
2.5 Method of Payment
Any dividends declared on the Series A Shares shall be paid by
forwarding by pre-paid first class mail, mailed on or before the dividend
payment date, addressed to each Series A Holder at its address as it appears on
the books of the Corporation or, in the case of joint holders, to the address of
that one of the joint holders whose name stands first in the books of the
Corporation, a cheque for such dividends (less the amount of any tax required to
be deducted or withheld by the Corporation) payable to or to the order of such
holder (or, in the case of joint holders, registered in the name of, all such
holders, failing written instructions from them to the contrary).
Notwithstanding the foregoing, any dividend cheque may be delivered to a Series
A Holder at its address as aforesaid. The mailing or delivery of any such cheque
in the foregoing manner shall satisfy such dividends to the extent of the sum
represented by such cheque (plus the amount of any tax required to be deducted
or withheld as aforesaid) unless such cheque is not paid on presentation. Each
dividend on the Series A Shares shall be paid to the registered holders
appearing on the registers at the close of business on such day (which shall not
be more than 30 days preceding the date fixed for payment of such dividend) as
may be determined in advance from time to time by the directors.
3 Conversion
3.1 Right to Convert
Upon and subject to the terms and conditions hereinafter set forth,
the holders of Series A Shares shall have the right, at any time and from time
to time, commencing on the earlier of (i) the sixth anniversary of the Initial
Issue Date and (ii) the third anniversary of the Initial Issue Date if a
take-over bid (as defined in the Securities Act (Ontario)) is announced for the
Common Shares or if the Corporation agrees to participate in a Capital
Reorganization (as defined in subclause 3.5.4. below), and ending up to the
close of business on ___, 2007, or, in the case of Series A Shares called for
redemption after the Series A Shares have become convertible, to the close of
business on the business day immediately preceding the date fixed for
redemption, whichever is earlier (provided, however, that if the Corporation
shall fail to redeem such Series A Shares in accordance with the notice of
redemption the right of conversion shall thereupon be restored as if such call
for redemption had not been made), to convert all or any part of their Series A
Shares into fully paid and non-assessable Common Shares, at the Conversion Rate
in effect on the date of conversion. Unless and until adjusted in accordance
with these Series A Provisions, the Conversion Rate shall be one Common Share
for each Series A Share to be converted.
3.2 Conversion Procedure
The conversion right provided for in clause 3.1 may be exercised by
completing and executing the notice of conversion on the certificate or
certificates representing the Series A Shares in respect of which the holder
thereof desires to exercise such right of conversion and by delivering the said
certificate or certificates to the transfer agent for the Series A Shares at any
office for the transfer of the Series A Shares. The said notice of conversion
shall be signed by such holder or by his duly authorized attorney or agent, with
signature guaranteed in a manner satisfactory to the transfer agent and shall
specify the number of Series A Shares which the Series A Holder desires to have
converted. The transfer form in the certificate or certificates in question need
not be endorsed, except in the circumstances contemplated by clause 3.3. If less
than all the Series A Shares represented by a certificate or certificates are to
be converted, the Series A Holder shall be entitled to receive, at the expense
of the Corporation, a new certificate representing the Series A Shares
represented by the certificate or certificates surrendered as aforesaid which
are not to be converted.
3.3 Person to Whom Common Shares Will be Issued
On any conversion of Series A Shares the share certificates for Common
Shares resulting therefrom shall be issued at the expense of the Corporation in
the name of the registered holder of the Series A Shares converted or in such
name or names as such registered holder may direct in writing, provided that
such registered holder shall pay any applicable security transfer taxes. In any
case where the Common Shares are to be issued in the name of a person other than
the holder of the converted Series A Shares, the transfer form on the back of
the certificates in question shall be endorsed by the registered holder of the
Series A Shares or its duly authorized attorney or agent, with signature
guaranteed in a manner satisfactory to the transfer agent.
3.4 Effective Date of Conversion
Each Series A Holder whose shares are to be converted in whole or in
part (or any other person or persons in whose name or names any certificates
representing Common Shares are issued as provided in clause 3.3) shall be deemed
to have become the holder of record of the Common Shares into which such Series
A Shares are converted, for all purposes, on the respective dates of receipt by
the transfer agent of the certificate or certificates representing the Series A
Shares to be converted as provided in clause 3.2, notwithstanding any delay in
the delivery of the certificate or certificates representing the Common Shares
into which such Series A Shares have been converted and, effective as of and
throughout such respective dates, the Series A Holder shall cease to be
registered as the holder of record of the Series A Shares so converted.
3.5 Adjustment of Conversion Rate
3.5.1 If and whenever at any time and from time to time the Corporation
shall: (i) subdivide, redivide or change its then outstanding Common Shares into
a greater number of Common Shares; (ii) reduce, combine or consolidate or change
its then outstanding Common Shares into a lesser number of Common Shares; or
(iii) issue Common Shares (or securities exchangeable or convertible into Common
Shares) to the holders of all or substantially all of its then outstanding
Common Shares by way of stock dividend or other distribution (other than a stock
dividend paid in the ordinary course) (any of such events being herein called a
"Common Share Reorganization"), the Conversion Rate shall be adjusted effective
immediately after the record date at which the holders of Common Shares are
determined for the purpose of the Common Share Reorganization by multiplying the
Conversion Rate in effect on such record date by the quotient obtained when:
(A) the number of Common Shares outstanding after the completion of
such Common Share Reorganization (but before giving effect to the
issue of any Common Shares issued after such record date
otherwise than as part of such Common Share Reorganization)
including, in the case where securities exchangeable or
convertible into Common Shares are distributed, the number of
Common Shares that would have been outstanding had such
securities been exchanged for or converted into Common Shares on
such record date, is divided by
(B) the number of Common Shares outstanding on such record date
before giving effect to the Common Share Reorganization.
3.5.2 If and whenever at any time the Corporation shall fix the record date
for the issuance of rights, options or warrants to the holders of all or
substantially all of its outstanding Common Shares entitling them for a period
expiring no more than 45 days after such record date to subscribe for or to
purchase Common Shares (or securities of the Corporation convertible into Common
Shares) at a price per Common Share (or having a conversion price per Common
Share) of less than 95% of the Current Market Price of a Common Share on such
record date (any such event being herein referred to as a "Rights Offering"),
then the Conversion Rate then in effect shall be adjusted immediately after such
record date by multiplying the Conversion Rate in effect on such record date by
the quotient obtained when:
(A) the sum of the number of Common Shares outstanding on such record
date and the number of additional Common Shares offered for
subscription or purchase under the Rights Offering (or the number
of Common Shares into which the securities so offered are
convertible) is divided by
(B) the sum of the number of Common Shares outstanding on such record
date and a number determined by dividing the aggregate price of
the total number of additional Common Shares offered for
subscription or purchase under the Rights Offering (or the
aggregate conversion price of the convertible securities so
offered) by the Current Market Price of a Common Shares on such
record date.
Any Common Shares owned by or held for the account of the Corporation
shall be deemed not to be outstanding for the purpose of any such computation.
If such rights, options or warrants are not so issued or if, at the date of
expiry of the rights, options or warrants subject to the Rights Offering, less
than all the rights, options or warrants have been exercised, then the
Conversion Rate shall be readjusted effective immediately after the date of
expiry to the Conversion Rate which would have been in effect if such record
date had not been fixed or to the Conversion Rate which would then be in effect
on the date of expiry if the only rights, options or warrants issued had been
those that were exercised, as the case may be.
3.5.3 If and whenever at any time the Corporation shall fix a record date
for the making of a distribution (including a distribution by way of stock
dividend) to the holders of all or substantially all its outstanding Common
Shares of: (i) shares of the Corporation of any class other than Common Shares
(and shares convertible into Common Shares referred to in subclause 3.5.1); (ii)
rights, options or warrants (excluding a Rights Offering, rights, options or
warrants exercisable within 45 days of the record date having a conversion price
per Common Share equal to or greater than 95% of the then Current Market Price);
(iii) evidences of its indebtedness (excluding indebtedness convertible into
Common Shares referred to in subclause 3.5.1); or (iv) assets (other than with
respect to (i), (ii), (iii) and (iv) above, dividends paid in the ordinary
course and a Common Share Reorganization) (any such event being herein referred
to as a "Special Distribution") then, in each such case, the Conversion Rate
shall be adjusted effective immediately after the record date at which the
holders of Common Shares are determined for the purposes of the Special
Distribution by multiplying the Conversion Rate in effect on such record date by
the quotient obtained when:
(A) the product obtained when the number of Common Shares outstanding
on the record date is multiplied by the Current Market Price of a
Common Share on such date, is divided by
(B) the difference obtained when the amount by which the aggregate
fair market value (as determined by the board of directors, which
determination shall be conclusive) of the shares, rights,
options, warrants, evidences of indebtedness or assets, as the
case may be, distributed in the Special Distribution exceeds the
fair market value (as determined by the board of directors, which
determination shall be conclusive) of the consideration, if any,
received therefor by the Corporation, is subtracted from the
product obtained when the number of Common Shares outstanding on
the record date is multiplied by the Current Market Price of a
Common Share on such date,
provided that no such adjustment shall be made if the result of such adjustment
would be to decrease the Conversion Rate in effect immediately before such
record date. Any Common Shares owned by or held for the account of the
Corporation shall be deemed not to be outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a record
date is fixed. To the extent that such distribution is not so made, the
Conversion Rate shall be readjusted effective immediately to the Conversion Rate
which would then be in effect based upon such shares or rights, options or
warrants or evidences of indebtedness or assets actually distributed.
3.5.4 If and whenever there is a capital reorganization of the Corporation
not otherwise provided for in this clause 3.5 or a consolidation, merger,
arrangement or amalgamation (statutory or otherwise) of the Corporation with or
into another body corporate (any such event being called a "Capital
Reorganization"), any Series A Holder who has not exercised its right of
conversion prior to the record date for such Capital Reorganization shall be
entitled to receive and shall accept, upon the exercise of such right at any
time after the record date for such Capital Reorganization, in lieu of the
number of Common Shares to which it was theretofore entitled upon conversion,
the aggregate number of shares or other securities of the Corporation or of the
corporation or body corporate resulting, surviving or continuing from the
Capital Reorganization that such holder would have been entitled to receive as a
result of such Capital Reorganization if, on the record date, it had been the
registered holder of the number of Common Shares to which he was theretofore
entitled upon conversion, subject to adjustment thereafter in accordance with
provisions the same, as nearly as may be possible, as those contained in clauses
3.5 and 3.6; provided that no such Capital Reorganization shall be carried into
effect unless all necessary steps shall have been taken so that the Series A
Holders shall thereafter be entitled to receive such number of shares or other
securities of the Corporation or of the corporation or body corporate resulting,
surviving or continuing from the Capital Reorganization.
3.5.5 In the case of any reclassification of, or other change in, the
outstanding Common Shares other than a Common Share Reorganization or a Capital
Reorganization, the right of conversion shall be adjusted immediately after the
record date for such reclassification or other change so that Series A Holders
shall be entitled to receive, upon the exercise of such right at any time after
the record date of such reclassification or other change, such shares,
securities or rights as they would have received had such Series A Shares been
converted into Common Shares immediately prior to such record date subject to
adjustment thereafter in accordance with provisions, the same as nearly may be
possible, as those contained in clauses 3.5 and 3.6.
3.5.6 In the event that one or more preferential cumulative dividends are
not paid on the Series A Shares on the scheduled dividend payment date, whether
or not such dividend or dividends were declared, and such dividend or dividends
remain accrued but unpaid or there is a Deferred Dividend Amount in respect of
such Series A Share, at the time that a Series A Holder exercises his right to
convert such Share, the Conversion Rate for each Series A Share so converted
shall be adjusted effective on the base of conversion by multiplying (a) the
Conversion Rate in effect immediately prior to the time of conversion by (b) the
quotient obtained when (i) the sum of (A)$14.55 plus (B) the amount of accrued
but unpaid dividends on such Series A Share plus (C) the Deferred Dividend
Amount in respect of such Series A Share, is divided by (ii) $14.55.
3.6 Rules for Adjustment of Conversion Rate
The following rules and procedures shall be applicable to the
adjustments of the Conversion Rate made pursuant to clause 3.5:
3.6.1 If the purchase price provided for in any rights, options or warrants
(the "Rights Offering Price") referred to in subclauses 3.5.2 or 3.5.3 is
decreased, the Conversion Rate shall forthwith be changed so as to increase the
Conversion Rate to such Conversion Rate as would have been obtained had the
adjustment to the Conversion Rate made pursuant to subclauses 3.5.2 or 3.5.3, as
the case may be with respect to such rights, options or warrants been made upon
the basis of the Rights Offering Price as so decreased, provided that the
provisions of this subclause 3.6.1 shall not apply to any decrease in the Rights
Offering Price resulting from provisions in any such rights, options or warrants
designed to prevent dilution if the resulting increase in the Conversion Rate
under this subclause 3.6.1 is not greater than the increase, if any, in the
Conversion Rate to be made pursuant to the provisions of this section 3 by
virtue of the occurrence of the event giving rise to such decrease in the Rights
Offering Price;
3.6.2 No adjustment in the Conversion Rate shall be required unless an
increase or decrease of at least one per cent of the prevailing Conversion Rate
would result; provided, however, that any adjustment which, except for the
provisions of this subclause 3.6.2 would otherwise have been required to be
made, shall be carried forward and taken into account in any subsequent
adjustment;
3.6.3 No adjustment in the Conversion Rate shall be made pursuant to
subclauses 3.5.2 or 3.5.3 in respect of any rights, options, warrants or
distributions if identical rights, options, warrants or shares are issued to the
holders of the Series A Shares as though and to the same effect as if they had
converted their Series A Shares into Common Shares prior to the issue of such
rights, options, warrants or shares;
3.6.4 In the absence of a resolution of the directors fixing a record date
for a Special Distribution or a Rights Offering, the Corporation shall be deemed
to have fixed as the record date therefor the date on which the Special
Distribution or Rights Offering is effected;
3.6.5 Forthwith after any adjustment in the Conversion Rate, the
Corporation shall file with the transfer agent of the Corporation for the Series
A Shares a certificate of an officer of the Corporation certifying as to the
amount of such adjustment and, in reasonable detail, the event requiring and the
manner of computing such adjustment; the Corporation shall also at such time
mail, by prepaid first class mail, a copy of such certificate to the Series A
Holders; and
3.6.6 Any question that at any time or from time to time arises with
respect to the Conversion Rate or any adjustment in the amount of the Conversion
Rate or the amount of any cash payment made in lieu of issuing a fractional
share shall be conclusively determined by the auditors from time to time of the
Corporation and shall be binding upon the Corporation and all shareholders,
transfer agents and registrars of Series A Shares and Common Shares.
3.7 Entitlement to Dividends
Each Series A Holder on the record date for any dividend declared
payable on the Series A Shares shall be entitled to such dividend
notwithstanding that any Series A Share owned by him is converted after such
record date and before the payment date of such dividend. The registered holder
of any Common Share resulting from any conversion effected pursuant to this
section 3 shall be entitled to rank equally with the registered holders of all
other Common Shares in respect of all dividends declared payable to holders of
Common Shares of record on or after the date of conversion. Except as provided
in clauses 3.5 and 3.7, no adjustment will be made on account of any dividend
declared or accrued prior to the date of conversion, on the Series A Shares
converted or the Common Shares resulting from any conversion.
3.8 Notice of Certain Events
If the Corporation intends to fix a record date for any Common Share
Reorganization (other than a subdivision, consolidation or reclassification),
Rights Offering, Special Distribution or Capital Reorganization, the Corporation
shall, not less than 21 days prior to such record date, notify each Series A
Holder of such intention by written notice setting forth the particulars of such
Common Share Reorganization, Rights Offering, Special Distribution or Capital
Reorganization in reasonable detail, to the extent that such particulars have
been determined at the time of giving of the notice.
3.9 Avoidance of Fractional Shares
In any case where a fraction of a Common Shares would otherwise be
issuable on conversion of one or more Series A Shares, the Corporation shall, at
its option, either: (i) adjust such fractional interest by payment by cheque in
an amount equal to the then current market value of such fractional interest; or
(ii) issue in respect of such fraction a scrip certificate transferable by
delivery entitling the holder thereof and of other similar certificates
aggregating one full Common Share, upon surrender of such certificates at such
place as may be designated therein, to obtain from the Corporation a full Common
Share and to receive a share certificate therefor; such cheques shall be payable
to the holders thereof in lawful money of the United States of America at par at
any branch of the Corporation's bankers for the time being and such scrip
certificates shall be in such form and shall be subject to such terms and
conditions as the directors may determine and shall provide that the holder
thereof shall not thereby be a shareholder and shall not be entitled to receive
dividends or to any other rights of a shareholder. The amount of any cash
adjustment shall equal the Current Market Price of such fractional interest.
When scrip certificates are issued such scrip certificates may contain, without
limitation, provisions to the effect that, after the expiration of one year from
their date of issuance, the Corporation may sell or cause to be sold all the
shares then represented by unsurrendered scrip certificates and the sole rights
of the holders of the scrip certificates after the expiration of said period
shall be, against surrender of their scrip certificates, to receive payment of
their proportionate amount of the net proceeds of such sale, less taxes and
costs of sale, payable by cheque in lawful money of the United States of America
at par at any branch of the Corporation's bankers for the time being. If a cash
adjustment or a proportionate amount of the net proceeds of a sale is to be paid
pursuant to the provisions of this clause 3.9, the mailing by prepaid first
class mail from the Corporation's registered office or any office of the
registrar for the Series A Shares to a Series A Holder who has exercised its
right to convert, at its last address as shown on the books of the Corporation,
shall be deemed to be payment of the cash adjustment or the proportionate amount
of the net proceeds of a sale, as the case may be, resulting from such
fractional interest, unless the cheque is not paid upon due presentation. Cash
adjustments or proportionate amounts that are represented by a cheque which has
not been presented to the Corporation's bankers for payment or that otherwise
remain unclaimed for a period of six years from the date on which the same
became payable shall be forfeited to the Corporation.
3.10 Postponement of Issuance of Shares upon Conversion
In any case where the application of the foregoing provisions results
in an increase of the Conversion Rate taking effect immediately after the record
date for a specific event, if any Series A Shares are converted after that
record date and prior to completion of the event, the Corporation may postpone
the issuance to the Series A Holder of the additional Common Shares to which it
is entitled by reason of the increase of the Conversion Rate but such additional
Common Shares shall be issued and delivered to that holder upon completion of
the event and the Corporation shall deliver to the holder an appropriate
instrument evidencing its right to receive such additional Common Shares.
3.11 Reservation of Common Shares
So long as any of the Series A Shares are outstanding and entitled to
the right of conversion herein provided, the Corporation will at all times
reserve and hold out of its unissued Common Shares a sufficient number of
unissued Common Shares to enable all of the Series A Shares outstanding to be
converted upon the basis and upon the terms and conditions herein provided in
this section 3; provided that nothing contained in this clause 3.11 shall affect
or restrict the right of the Corporation to issue Common Shares from time to
time.
4 Redemption
4.1 Optional and Mandatory Redemption
The Corporation, upon giving notice as hereinafter provided, may
redeem all at any time and part from time to time of the then outstanding Series
A Shares, and on o, 2007 the Corporation shall redeem all of the then
outstanding Series A Shares on payment for each share to be redeemed of $14.55
together in each case with an (i) amount equal to all accrued and unpaid
cumulative preferential dividends thereon calculated to but excluding the date
fixed for redemption and (ii) the Deferred Dividend Amount in respect of such
Series A Share, the whole constituting and herein referred to as the "Redemption
Price".
4.2 Partial Redemption
If less than all the Series A Shares are at any time to be redeemed,
the shares to be redeemed shall be selected on a pro rata basis, disregarding
fractions, according to the number of Series A Shares held by each of the
registered holders thereof. If less than all of the Series A Shares are at any
time to be redeemed and a Series A Holder has duly exercised his right to
convert into Common Shares all or any part of the number of Series A Shares held
by such holder which have been called for redemption, the number of Series A
Shares held by such Series A Holder to be redeemed shall be reduced by the
number (but not exceeding the number of Series A Shares held by such Series A
Holder called for redemption) of Series A Shares in respect of which such
registered holder has duly exercised its right to convert into Common Shares. If
a part only of the Series A Shares represented by any certificate shall be
redeemed, a new certificate representing the balance of such shares shall be
issued to the holder thereof at the expense of the Corporation upon presentation
and surrender of the first mentioned certificate.
4.3 Method of Redemption
4.3.1 In any case of redemption of Series A Shares, the Corporation shall
not less than 30 days and not more than 60 days before the date specified for
redemption send by prepaid first class mail or deliver to the registered address
of each person who at the date not more than seven days prior to the date of
mailing or delivery is a Series A Holder to be redeemed, a notice in writing of
the intention of the Corporation to redeem the Series A Shares registered in the
name of such holder. Accidental failure or omission to give such notice to one
or more holders shall not affect the validity of such redemption, but upon such
failure or omission being discovered notice shall be given forthwith to such
holder or holders and such notice shall have the same force and effect as if
given in due time. Such notice shall set out the number of Series A Shares held
by the person to whom it is addressed which are to be redeemed, the Redemption
Price, the date specified for redemption and the place or places within Canada
at which holders of Series A Shares may present and surrender such shares for
redemption. If the date specified for such redemption is a date on or after o,
2006, such notice shall also set forth the then applicable Conversion Rate (as
defined in section 3 hereof) and shall state that the right of the holder to
convert the shares so to be redeemed will cease and terminate at the close of
business on the business day immediately preceding the date specified for
redemption.
4.3.2 On and after the date so specified for redemption, the Corporation
shall pay or cause to be paid to or to the order of the Series A Holders to be
redeemed the Redemption Price of such shares on presentation and surrender of
the certificate or certificates representing the Series A called for redemption,
at the registered office of the Corporation or any other place or places within
Canada specified in the notice of redemption. Payment in respect of Series A
Shares being redeemed shall be made by cheque payable to the holder thereof in
lawful money of the United States of America at any branch of the Corporation's
bankers for the time being.
4.3.3 From and after the date specified for redemption in any such notice
of redemption, the Series A Shares called for redemption shall cease to be
entitled to dividends or any other participation in the assets of the
Corporation and the holders thereof shall not be entitled to exercise any of
their other rights as shareholders in respect thereof unless payment of the
Redemption Price shall not be made upon presentation and surrender of the
certificates in accordance with the foregoing provisions, in which case the
rights of the holders shall remain unaffected.
4.3.4 The Corporation shall have the right at any time on or after the
mailing or delivery of notice of its intention to redeem Series A Shares to
deposit the Redemption Price of the Series A Shares so called for redemption, or
of such of the Series A Shares which are represented by certificates which have
not at the date of such deposit been surrendered by the holders thereof in
connection with such redemption, to a special account in any specified Canadian
chartered bank named in such notice of redemption or in a subsequent notice to
the registered holders of the shares in respect of which the deposit is made, to
be paid without interest to or to the order of the respective Series A Holders
whose shares have been called for redemption, upon presentation and surrender to
such chartered bank of the certificates representing such shares. Upon such
deposit being made or upon the date specified for redemption in such notice,
whichever is later, the Series A Shares in respect of which such deposit shall
have been made shall be deemed to have been redeemed and the rights of the
holders thereof after such deposit or such redemption date, as the case may be
shall be limited to receiving their proportion (less any tax required to be
deducted or withheld therefrom) of the amount so deposited without interest,
upon presentation and surrender of the certificate or certificates representing
the Series A Shares being redeemed. Any interest allowed on any such deposit
shall belong to the Corporation.
4.3.5 Redemption moneys that are represented by a cheque which has not been
presented to the Corporation's bankers for payment or that otherwise remain
unclaimed (including moneys held on deposit in a special account as provided for
above) for a period of six years from the date specified for redemption shall be
forfeited to the Corporation.
5 Purchase for Cancellation
Subject to the provisions of section 5 hereof and the provisions
attaching to the Preferred Shares as a class, the Corporation may at any time
and from time to time purchase for cancellation all or any part of the then
outstanding Series A Shares in the open market (including purchases through or
from an investment dealer or a member of a recognized stock exchange) or by
invitation for tenders addressed to all of the holders of Series A Shares then
outstanding, at the lowest price or prices at which, in the opinion of the board
of directors, such shares are then obtainable, but not exceeding a price per
share equal to the then applicable Redemption Price. If, in response to an
invitation for tenders under the provisions of this section 5, more Series A
Shares are tendered at a price or prices acceptable to the Corporation than the
Corporation is prepared to purchase, the Series A Shares to be purchased by the
Corporation shall be purchased from holders tendering at the same price, as
nearly as may be possible, pro rata according to the number of shares tendered
by each holder who submits a tender to the Corporation, provided that when
shares are tendered at different prices, the pro rating shall be effected only
with respect to the shares tendered at the price at which more shares were
tendered than the Corporation is prepared to purchase after the Corporation has
purchased all the shares tendered at lower prices.
6 Restrictions on Dividends, Retirement and Issuance of Shares
While any Series A Shares are outstanding, the Corporation shall not,
without the approval of the holders of Series A Shares given as hereinafter
specified:
(a) call for redemption, redeem, purchase, retire or acquire for
value or distribute in respect of any Junior Shares (except to
the extent and out of net cash proceeds received by the
Corporation from a substantially concurrent issue of Junior
Shares); or
(b) except pursuant to any purchase obligation, sinking fund,
retraction privilege or mandatory redemption provisions attaching
to any series of Preferred Shares, call for redemption, redeem,
purchase or otherwise retire for value any other shares ranking
as to capital or dividends on a parity with the Series A Shares.
While any Series A Shares are outstanding, the Corporation shall not,
without the approval of the holders of Series A Shares given as hereinafter
provided:
(a) declare, set aside for payment or pay any dividends on or make
distributions on or in respect of any Junior Shares (other than
dividends consisting of Junior Shares);
(b) reserve, set aside, allot or issue any shares ranking as to
capital or dividends prior to or on a parity with the Series A
Shares or any securities convertible into or exchangeable for
such shares;
unless, in each such case, all dividends then payable on the Series A Shares
then outstanding accrued up to and including the dividends payable on the
immediately preceding respective date or dates for the payment of dividends
thereon shall have been declared and paid or set apart for payment or unless
such action has been approved by the Series A Holders.
7 Liquidation, Dissolution or Winding-Up
In the event of any Liquidation Distribution, each Series A Holder
shall be entitled to receive before any amount shall be paid by the Corporation
or any assets of the Corporation shall be distributed to registered holders of
shares ranking as to capital junior to the Series A Shares in connection with
the Liquidation Distribution, an amount equal to the greater of (a) the stated
capital per share of all Series A Shares held by such holder, together with (i)
an amount equal to all accrued but unpaid cumulative dividends thereon plus (ii)
the Deferred Dividend Amount and (b) the distribution which such Series A Holder
would have been entitled to receive if the Series A Holder's Series A Shares had
been converted into Common Shares at the Conversion Rate immediately prior to
the Liquidation Distribution. After payment to the Series A Holders of the
amount so payable to them, they shall not be entitled to share in any further
distribution of assets of the Corporation.
8 Voting Rights
8.1 The holders of Series A Shares shall be entitled to receive notice of and to
attend all meetings of the shareholders of the Corporation but shall not be
entitled (except as hereinafter specifically provided and except as otherwise
provided by the OBCA) to vote at any such meeting; provided, however, that the
holders of Series A Shares shall be entitled, voting exclusively and separately
as a class, to elect one director of the Corporation.
8.2 A meeting of the holders of the Series A Shares for the purpose of electing
a director may be held upon not less that 21 days' written notice to the holders
of the Series A Shares and such meeting shall be called by the Secretary of the
Corporation upon the written request of the holders of record of at least 10 per
cent of the issued and outstanding Series A Shares; in default of the calling of
such meeting by the Secretary within five days after the making of such request,
such meeting may be called by any holder of record of Series A Shares.
8.3 Any vacancy occurring in the director elected to represent the holders of
Series A Shares in accordance with the foregoing provisions of this section may
be filled by the board of directors of the Corporation with the consent and
approval of the holders of record of a majority of the Series A Shares. Whether
or not such vacancy is so filled by the board of directors, when there is no
director in office who has been elected to represent the holders of Series A
Shares the holders of record of at least ten per cent of the outstanding Series
A Shares shall have the right to require the Secretary of the Corporation to
call a meeting of the holders of Series A Shares for the purpose of filling the
vacancy or replacing the person filling such vacancy who has been appointed by
the board of directors and the provisions of the last preceding section shall
apply in respect of the calling of such meeting.
9 Amendments To Series A Provisions
These Series A Provisions may be repealed, altered, modified, amended
or varied only with the prior approval of the holders of the Series A Shares
given in the manner provided in section 10 hereof in addition to any other
approval required by the OBCA or any other statutory provision of like or
similar effect applicable to the Corporation, from time to time in force.
10 Consents and Approvals
10.1 The consent or approval of the Series A Holders with respect to any and all
matters may be given by one or more instruments signed by the holders of at
least two-thirds of the issued and outstanding Series A Shares or by a
resolution passed by at least two-thirds of the votes cast at a meeting of the
Series A Holders duly called for that purpose and held upon at least 21 days'
notice, at which the holders of a majority of the outstanding Series A Shares
are present or represented by proxy. If at any such meeting the holders of a
majority of the outstanding Series A Shares are not present or represented by
proxy within one-half hour after the time appointed for such meeting, then the
meeting may be adjourned to such date being not less than 30 days later and to
such time and place as may be appointed by the chairman of the meeting and not
less than 21 days' notice shall be given of such adjourned meeting. At such
adjourned meeting the holders of the Series A Shares present or represented by
proxy may transact the business for which the meeting was originally called and
the consent or approval of the holders of the Series A Shares with respect
thereto may be given by at least two-thirds of the votes cast at such adjourned
meeting.
10.2 The formalities to be observed with respect to the giving of notice of any
such meeting and the conduct thereof shall be those from time to time prescribed
by the OBCA and the by-laws of the Corporation with respect to meetings of
shareholders.
10.3 On every poll taken at every such meeting or adjourned meeting every Series
A Holder shall be entitled to one vote in respect of each Series A Share of
which he is the registered holder.
11 Notices
11.1 Any notice required or permitted to be given to any Series A Holder shall
be sent by first class mail, postage prepaid, or delivered to such holder at his
address as it appears on the records of the Corporation or, in the event of the
address of any such shareholder not so appearing, to the last known address of
such shareholder. The accidental failure to give notice to one or more of such
shareholders shall not affect the validity of any action requiring the giving of
notice by the Corporation. Any notice given as aforesaid shall be deemed to be
given on the date upon which it is mailed or delivered.
11.2 If the directors of the Corporation determine that mail service is or is
threatened to be interrupted at the time when the Corporation is required or
elects to give any notice hereunder, or is required to send any cheque or any
share certificate to any Series A Holder, whether in connection with the
redemption or conversion of Series A Shares or otherwise, the Corporation may,
notwithstanding the provisions hereof:
(a) give such notice by publication thereof once in a daily English
language newspaper of national circulation and once in a daily
French language newspaper published in Montreal and such notice
shall be deemed to have been validly given on the day next
succeeding its publication in all of such cities; or
(b) fulfill the requirement to send such cheque or such share
certificate by arranging for the delivery thereof to such holder
by the transfer agent for the Series A Shares at its principal
offices located nearest to the head office of the Corporation,
and such cheque and/or certificate shall be deemed to have been
sent on the date on which notice of such arrangement shall have
been given as provided in (a) above, provided that as soon as the
directors of the Corporation determine that mail service is no
longer interrupted or threatened to be interrupted such cheque or
share certificate, if not theretofore delivered to such holder,
shall be sent by mail as herein provided.
EXHIBIT II
OPINIONS TO BE GIVEN AT CLOSING BY XxXXXXXX XXXXXXXX
0. Due incorporation, valid existence and good standing of World Heart;
2. Due qualification in foreign jurisdictions of World Heart;
3. World Heart Preferred duly authorized, validly issued, fully paid and
non-assessable; and
4. Enforceability of Convertible Preferred Shares Purchase Agreement.
EXHIBIT III
CONTRIBUTION AGREEMENT
CONTRIBUTION AGREEMENT
by
and
among
XXXXXXX LIFESCIENCES LLC,
XXXXXXX NOVACOR LLC,
WORLD HEART CORPORATION
and
VALENTINE ACQUISITION CORP.
Dated as of May 24, 2000
TABLE OF DEFINITIONS
Defined Term Initial Section Reference
Affected Persons.........................................................3.1(n)
Amendment................................................................2.2(a)
Applicable Contracts.....................................................3.1(e)
Assignment Agreement...................................................Recitals
Balance Sheet Date.......................................................3.1(f)
Business Day................................................................2.1
Business License Agreements..........................................3.3(p)(ii)
Business Material Adverse Effect.........................................3.1(a)
Canadian Securities Commissions..........................................2.2(d)
Certificate of Designation.............................................Recitals
Closing.....................................................................2.1
Closing Date................................................................2.1
Code.....................................................................3.1(n)
Confidentiality Agreement................................................4.3(b)
Contribution................................................................2.1
Damages.....................................................................7.2
Distribution Agreement.................................................Recitals
Xxxxxxx................................................................Recitals
Xxxxxxx Option..............................................................1.3
Xxxxxxx'x Contribution...................................................1.1(a)
Employee Benefit Plans...................................................3.1(n)
Employees................................................................3.1(n)
Environmental Laws.......................................................3.1(r)
ERISA....................................................................3.1(n)
Exchange Agreement.....................................................Recitals
GAAP.....................................................................3.1(f)
HSR Act..................................................................3.1(e)
Indemnified Party..........................................................7.4
Indemnifying Party.........................................................7.4
Intellectual Property Rights..........................................2.3(p)(i)
Labor Dispute............................................................3.3(o)
Liens.................................................................3.3(d)(i)
LLC Interests..........................................................Recitals
Newco..................................................................Recitals
Newco Common Shares......................................................1.2(b)
Newco Common Stock.....................................................Recitals
Newco Plans..............................................................4.8(a)
Newco Preferred........................................................Recitals
Newco Preferred Shares...................................................1.2(a)
Newco Shares.............................................................1.2(b)
Novacor LLC............................................................Recitals
Novacor LLC Agreement....................................................2.2(a)
Novacor LLC Intellectual Property........................................3.1(p)
Novacor Patient...........................................................4.17
Other Shareholders....................................................Recitals
Overlap Period.......................................................4.9(e)(ii)
Payroll Taxes....................................... ....................4.8(e)
Person...................................................................3.1(b)
Pre-Closing Period...................................................3.3(m)(iv)
Pro Forma Balance Sheet..................................................3.1(f)
Purchase Agreement.....................................................Recitals
SEC......................................................................3.2(a)
Securities Act...........................................................3.2(d)
Shareholders Agreement.................................................Recitals
Sub Common Stock.......................................................Recitals
Supply Agreement.......................................................Recitals
Taxes....................................................................3.3(m)
Tax Matter..............................................................(4.9)b)
Tax Returns.............................................................4.10(a)
Transaction Agreements.................................................Recitals
Transactions...........................................................Recitals
Transfer Taxes..........................................................4.10(b)
Transferred Assets.......................................................3.1(a)
Transferred Business.....................................................3.1(a)
Transition Agreement...................................................Recitals
U.S. GAAP................................................................3.3(f)
Voting Debt..........................................................3.1(d)(ii)
WARN Act....................................................................4.9
World Heart............................................................Recitals
World Heart Contribution.................................................1.1(b)
World Heart Material Adverse Effect......................................3.2(a)
World Heart Preferred Agreement........................................Recitals
World Heart Reports......................................................3.2(d)
World Heart SEC Reports..................................................3.2(c)
World Heart Subsidiaries.................................................3.2(a)
CONTRIBUTION AGREEMENT
CONTRIBUTION AGREEMENT, dated as of May 24, 2000, by and among Xxxxxxx
Lifesciences LLC, a Delaware limited liability company ("Xxxxxxx"), Xxxxxxx
Novacor LLC, a Delaware limited liability company and wholly owned subsidiary of
Xxxxxxx ("Novacor LLC"), Valentine Acquisition Corp., a Delaware corporation
("Newco") and World Heart Corporation, an Ontario corporation ("World Heart").
WHEREAS, Xxxxxxx is the sole member of Novacor LLC;
WHEREAS, Xxxxxxx desires to contribute to Newco its equity interest in
Novacor LLC (the "LLC Interests") in exchange for Series A Participating
Preferred Stock of Newco (the "Newco Preferred") having the rights, preferences,
privileges and terms substantially as set forth in the Certificate of
Designation attached hereto as Exhibit A (the "Certificate of Designation"),
upon the terms and subject to the conditions set forth herein;
WHEREAS, Newco is a newly formed corporation organized and existing
under the laws of the State of Delaware;
WHEREAS, World Heart desires to contribute cash in exchange for the
issuance to World Heart, of common stock, of Newco (the "Newco Common Stock"),
upon the terms and subject to the conditions set forth herein;
WHEREAS, Xxxxxxx and World Heart have entered into, and, as a
condition to closing of the Transactions (as defined herein), shall consummate
the transactions contemplated by the exchange agreement, dated as of the date
hereof, substantially in the form attached hereto as Exhibit B (the "Exchange
Agreement");
WHEREAS, Xxxxxxx and World Heart have entered into, and as a condition
to closing of the Transactions, shall consummate the transactions contemplated
by the Series A convertible preferred shares purchase agreement, dated as of the
date hereof, substantially in the form attached hereto as Exhibit C (the "World
Heart Preferred Agreement");
WHEREAS, as a condition to closing of the Transactions, Xxxxxxx and
World Heart, Xxxxxxxx X. Xxxxxx, Tofy Mussivand and the Ottawa Heart Institute
Research Corporation (together with Xx. Xxxxxx and Dr. Mussivand, the "Other
Shareholders") shall enter into the shareholders agreement, substantially in the
form attached hereto as Exhibit D (the "Shareholders Agreement");
WHEREAS, as a condition to closing of the Transactions, Xxxxxxx and
Xxxxxxx Lifesciences Corporations ("Xxxxxxx Parent") and Novacor LLC shall have
entered into and consummated the transactions contemplated by the transfer,
assignment and assumption agreement substantially in the form attached hereto as
Exhibit E (the "Assignment Agreement").
WHEREAS, as a condition to closing of the Transactions, Xxxxxxx, World
Heart and Newco shall enter into the distribution agreement, substantially in
the form attached hereto as Exhibit F (the "Distribution Agreement"), the
transition services agreement substantially in the form attached hereto as
Exhibit G (the "Transition Agreement"), the supply agreement substantially in
the form attached hereto as Exhibit H (the "Supply Agreement") and the purchase
agreement substantially in the form attached hereto as Exhibit I (the "Purchase
Agreement");
WHEREAS, this Agreement, the Exchange Agreement, the Shareholders
Agreement, the Assignment Agreement, the Distribution Agreement, the Transition
Agreement, the Supply Agreement and the Purchase Agreement shall be referred to
collectively as the "Transaction Agreements" and the transactions contemplated
hereby and thereby as the "Transactions";
WHEREAS, the Board of Directors of each of Xxxxxxx, World Heart and
Newco deem it advisable and in the best interest of their respective
stockholders that Novacor LLC become a subsidiary of Newco; and
WHEREAS, it is intended that, for U.S. Federal income tax purposes,
the transaction contemplated by this Agreement shall constitute a tax-free
exchange described in section 351 of the Code (as defined herein).
NOW, THEREFORE, in consideration of the mutual agreements and
covenants contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
CONTRIBUTION
SECTION I.1 Contribution.
(a) Upon the terms and subject to the conditions set forth herein,
Xxxxxxx agrees to contribute to Newco, on the Closing Date (as defined below),
all of Xxxxxxx'x rights, title and interest in and to the LLC Interests (as
defined herein), constituting all of the outstanding equity interests in Novacor
LLC (the "Xxxxxxx Contribution");
(b) Upon the terms and subject to the conditions set forth herein,
World Heart agrees to contribute to Newco, on the Closing Date (as defined
below), cash in the amount of $3.5 million dollars (the "World Heart
Contribution"). Unless otherwise indicated, all references in this Agreement to
"dollars" or "$" shall mean the lawful currency of the United States.
SECTION I.2 Issuance of Capital Stock.
(a) In exchange for the Xxxxxxx Contribution, Newco shall (and World
Heart shall cause Newco to) issue to Xxxxxxx on the Closing Date 4,981,128
shares of Newco Preferred (the "Newco Preferred Shares"); and
(b) In exchange for the World Heart Contribution, Newco shall (and
World Heart shall cause Newco to) issue to World Heart on the Closing Date
shares of Newco Common Stock (the "Newco Common Shares" and, together with the
Newco Preferred Shares, the "Newco Shares").
SECTION I.3 Stock Options. World Heart and Xxxxxxx shall fully
cooperate to (i) obtain, effective as of the Closing Date, the consent of each
Employee to the termination of any option to purchase common stock of Xxxxxxx
Parent granted to such Employee pursuant to Xxxxxxx' Long-Term Stock Incentive
Compensation Plan (an "Xxxxxxx Option") (other than an Employee who qualifies
for retirement vesting under the terms of the Xxxxxxx "converted options" or the
Xxxxxxx "founder's options"), which is unvested as of the Closing Date, and (ii)
provide, effective as of the Closing Date, such Employee with an option to
purchase shares of World Heart in an amount to be determined in accordance with
the guidelines set forth in Schedule 1.3.
ARTICLE II
THE CLOSING
SECTION II.1 Closing Date. The consummation of the Xxxxxxx
Contribution, the World Heart Contribution (together, the "Contribution") and
the issuance of the Newco Shares (the "Closing") shall take place at the offices
of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000,
Xxx Xxxxxxx, Xxxxxxxxxx 00000, or such other place as the parties hereto shall
mutually agree, at 10:00 a.m. (local time) on the fifth day (other than any
Saturday, Sunday or day when banks in the city of Xxx Xxxx, Xxx Xxxx xx Xxxxxxx,
Xxxxxx are authorized by law to be closed (a "Business Day")) after the
conditions set forth in Article V shall have been satisfied or waived, or such
other time and date upon which the parties hereto may agree (the "Closing
Date").
SECTION II.2 Transactions To Be Effected at the Closing. At the
Closing:
(a) Xxxxxxx shall (i) execute Amendment No. 1 (the "Amendment") to the
limited liability company agreement (the "Novacor LLC Agreement") effecting the
substitution of Newco as the sole member and managing member of Novacor LLC and
(ii) deliver such other documents as provided in Section 5.1 hereof;
(b) World Heart shall pay $3.5 million to Newco by wire transfer or
otherwise in immediately available funds;
(c) Newco shall deliver to World Heart (i) certificates representing
the Newco Common Shares and (ii) such other documents as provided in Section 5.2
hereof; and
(d) Newco shall deliver to Xxxxxxx (i) certificates representing the
Newco Preferred Shares and (ii) such other documents as provided in Section 5.2
hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION III.1 Representations and Warranties of Xxxxxxx and Novacor
LLC. Each of Xxxxxxx and Novacor LLC jointly and severally represents and
warrants to World Heart and Newco as follows:
(a) Organization, Standing and Power. Novacor LLC (i) is a limited
liability company duly formed and in good standing under the laws of the State
of Delaware and has all requisite power and authority to own, lease or operate
the assets it will own, lease or operate as of the Closing Date and (ii) as of
the Closing Date, will be duly qualified or licensed to do business in each
jurisdiction in which the ownership or use of its assets or conduct of its
business require it to be so qualified, in each case except for such failures
that would not reasonably be expected, individually or in the aggregate, to
result in (i) a material adverse effect on the assets to be transferred to
Novacor LLC pursuant to the Assignment Agreement (the "Transferred Assets") or
the business related thereto (the "Transferred Business") or (ii) a material
impairment of the ability of Xxxxxxx or Novacor LLC to perform their respective
obligations under the Transaction Agreements (each, a "Business Material Adverse
Effect").
(b) Subsidiaries. Novacor LLC (i) will not have any direct or indirect
subsidiaries and (ii) will not own, directly or indirectly, any of the capital
stock or other equity securities of any other individual, partnership,
corporation, limited liability company, joint venture, association, joint-stock
company, trust, unincorporated organization, government or agency or political
subdivision thereof, or other entity (each, a "Person").
(c) Authority.
(i) The execution and delivery of the Transaction Agreements
to which Xxxxxxx is a party, and the performance by Xxxxxxx of its
obligations hereunder and thereunder, have been duly authorized by all
necessary action on the part of Xxxxxxx. This Agreement has been, and,
at the Closing, the Transaction Agreements to which Xxxxxxx is a party
shall have been, duly executed and delivered by Xxxxxxx and, assuming
the due execution and delivery hereof and thereof by the other parties
thereto, this Agreement constitutes and, at the Closing, each of the
Transaction Agreements to which Xxxxxxx is a party shall constitute, a
valid and binding obligation of Xxxxxxx, enforceable against Xxxxxxx
in accordance with its terms, except as such enforcement may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium
(whether general or specific) or similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general
principles of equity (regardless of whether such enforcement is sought
in a proceeding in equity or at law).
(ii) The execution and delivery of the Transaction
Agreements to which Novacor LLC is a party, and the performance by
Novacor LLC of its obligations hereunder and thereunder, shall have
been duly authorized by all necessary action on the part of Novacor
LLC. At the Closing, the Transaction Agreements to which Novacor LLC
is a party shall have been duly executed and delivered by Novacor LLC
and, assuming the due execution and delivery hereof and thereof by the
other parties thereto, each of the Transaction Agreements to which
Novacor LLC is a party shall constitute, a valid and binding
obligation of Novacor LLC, enforceable against Novacor LLC in
accordance with its terms, except as such enforcement may be limited
by (i) bankruptcy, insolvency, reorganization, moratorium (whether
general or specific) or similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of
equity (regardless of whether such enforcement is sought in a
proceeding in equity or at law.)
(d) Equity Interests.
(i) Xxxxxxx is the sole member of Novacor LLC and such
membership interest is subject to no liens, pledges or encumbrances
(collectively, "Liens").
(ii) There are no existing preemptive rights, indebtedness
having general voting rights or debt convertible into securities
having such rights ("Voting Debt") or subscriptions or other rights,
agreements, arrangements or commitments of any character, relating to
the equity interest of Novacor LLC obligating Novacor LLC to issue,
transfer or sell or cause to be issued, transferred or sold any equity
interests in or Voting Debt of Novacor LLC or securities convertible
into or exchangeable for such shares or equity interests, or
obligating Novacor LLC to grant, extend or enter into any such
subscription or other right, agreement, arrangement or commitment.
(iii) There are no outstanding contractual obligations of
Novacor LLC to make any investment (in the form of a loan, capital
contribution or otherwise) in any other entity.
(iv) There are no voting trusts or other agreements or
understandings to which Novacor LLC is a party or of which Novacor LLC
has knowledge with respect to the voting of the members of Novacor
LLC.
(e) Consents; No Conflict. The consummation of the Transactions by
Xxxxxxx and Novacor LLC will not require the consent of any party to any
contract, lease, agreement, mortgage or indenture ("Contracts") (i) listed on
Schedule 3.1(l) (the "Applicable Contracts") or (ii) any other contract to which
Xxxxxxx is a party the subject matter of which relates in whole or in
substantial part to the Transferred Business or the consent, approval, order or
authorization of, or the registration, declaration or filing with, any
governmental authority, except for those (i) required under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (ii) set forth on Schedule 3.1(e), (iii) that become applicable solely as
a result of the specific regulatory status of Newco, World Heart or their
respective affiliates or (iv) the failure of which to make or obtain would not
reasonably be expected to result in a Business Material Adverse Effect. Except
as set forth on Schedule 3.1(e), assuming the consents, approvals, orders,
authorizations, registrations, declarations and filings contemplated by the
immediately preceding sentence are obtained or made, as applicable, the
execution, delivery and performance by Xxxxxxx and Novacor LLC of this Agreement
will not (i) violate any material law applicable to Xxxxxxx or Novacor LLC, (ii)
result in a breach or violation of any material provision of, or constitute a
material default under, any Applicable Contract or (iii) conflict with any
provision of the certificate of incorporation or by-laws of Xxxxxxx or the
Certificate of Formation of Novacor LLC or the Novacor LLC Agreement, in each
case except for any such violation, breach, default or conflict which would not
reasonably be expected to result in a Business Material Adverse Effect.
(f) Pro Forma Balance Sheet. Attached hereto as Schedule 3.1(f) is a
copy of the unaudited pro forma balance sheet (the "Pro Forma Balance Sheet") of
Novacor LLC as of April 30, 2000 (the "Balance Sheet Date") which gives effect
to the transfer of assets and liabilities to Novacor LLC by Xxxxxxx and Xxxxxxx
Parent immediately prior to the Closing pursuant to the Assignment Agreement, as
if such transfer had occurred as of April 30, 2000. The Pro Forma Balance Sheet
presents fairly on a pro forma basis, in all material respects, the financial
position of Novacor LLC as of the Balance Sheet Date in accordance with U.S.
generally accepted accounting principles consistently applied ("U.S. GAAP")
except as otherwise indicated therein or in the notes thereto subject to normal
year-end audit adjustments (the effect of which would not reasonably be expected
to be materially adverse) and any other adjustments described therein and to the
lack of all notes thereto.
(g) No Undisclosed Liabilities. As of the Closing, Novacor LLC shall
have no liabilities of a nature required by U.S. GAAP to be reflected on a
balance sheet or in notes thereto, except (i) as set forth or reflected on the
Pro Forma Balance Sheet (or described in the notes thereto), (ii) as disclosed
in the Schedules hereto, or (iii) for liabilities incurred in the ordinary
course of business since the Balance Sheet Date.
(h) Absence of Certain Changes or Events. Since the Balance Sheet
Date, there has been no physical damage, destruction or loss with respect to the
Transferred Assets that, after taking into account any insurance recoveries
payable in respect thereof, would reasonably be expected to result in a Business
Material Adverse Effect.
(i) Compliance with Applicable Laws. Since March 31, 2000, Xxxxxxx has
and as of the Closing Novacor LLC shall have complied in all material respects
with all statutes, laws, regulations and ordinances applicable to the
Transferred Business of Novacor LLC, except where the failure to so comply would
not reasonably be expected to result in a Business Material Adverse Effect;
provided, however, Xxxxxxx makes no representation or warranty in this Section
3.1(i) with respect to laws relating to matters with respect to which
representations or warranties are made in Subsections (m) - Taxes, (n) -
Employee Benefit Plans, (o) - Labor Matters, (p) - Intellectual Property, (q) -
Environmental Matters and (r) - Government Relations of this Section 3.1.
(j) Litigation; Decrees. Except as set forth on Schedule 3.1(j), as of
the date hereof (i) there is no suit, action or proceeding pending, or, to the
knowledge of Xxxxxxx, threatened against Xxxxxxx relating to the Transferred
Business in any federal, state or local court or agency that seeks (A) more than
$250,000 in damages, or (B) any material injunctive relief, and Xxxxxxx has not
received written notice that any such suit, action or proceeding is threatened
and (ii) neither Xxxxxxx nor Novacor LLC is in default under any judgment, order
or decree of any governmental authority applicable to the Transferred Business,
except for any such default which would not reasonably be expected to result in
a Business Material Adverse Effect.
(k) Assets. As of the Closing, Novacor LLC shall have (i) title to all
the personal property (tangible, intangible or mixed) reflected in the Pro Forma
Balance Sheet and Transferred Assets as owned, free and clear of all Liens other
than with respect to all such personal property Liens shown on the Pro Forma
Balance Sheet as securing specified liabilities or obligations and liens
incurred in connection with the purchase of such property, if such purchase was
effected after the date of the Pro Forma Balance Sheet, with respect to which no
default exists, and (ii) an enforceable, valid and binding leasehold interest
under all leases of real property included in the Transferred Assets to which it
is a party as lessee. No personal property or asset, the value of which is
reflected in the Pro Forma Balance Sheet or Transferred Assets, is held or will
be held as of the Closing under any lease (other than a capitalized lease) or
under any conditional sale or other title retention agreement. Except for
leasehold interests described in clause (ii) in the second preceding sentence,
as of the Closing Novacor LLC shall own no real property. Except for such
assets, plants and facilities as are immaterial in the aggregate to the
Transferred Business, all tangible assets, plants and facilities owned or leased
by Novacor LLC as of the Closing shall be adequate for the uses to which they
are currently being put by Xxxxxxx or would be put in the ordinary course of
business and the Transferred Assets shall be sufficient to permit Novacor LLC to
carry on the Transferred Business, excluding the international operations to be
conducted by Xxxxxxx after the Closing Date, in the manner in which it has been
carried on by Xxxxxxx since January 1, 2000.
(l) Contracts. Except for the Applicable Contracts listed in Schedule
3.1(l), as of the Closing, Novacor LLC shall not be a party to or bound by or
entitled to the benefit of:
(i) any Contract relating to the borrowing or lending of $25,000
or more by Novacor LLC;
(ii) any employment agreement with any person requiring payments
of base compensation in excess of $50,000 per year unless terminable with
payment or penalty of less than $50,000 upon no more than 60 days' notice;
(iii) any Contract not made in the ordinary course of business
involving an estimated total future payment or payments in excess of
$25,000 unless terminable with payment or penalty of less than $25,000 upon
no more than 60 days' notice;
(iv) a Contract for the sale of any of Novacor LLC's assets
(other than inventory sales in the ordinary course of business), or the
grant of any preferential rights to purchase any of Novacor LLC's assets,
having a value in the aggregate in excess of $250,000; or
(v) a Contract relating to the Transferred Business and is
terminable by the other party thereto upon the occurrence of the
transactions contemplated hereby that, if terminated, would reasonably be
expected to result in a Business Material Adverse Effect.
Except as disclosed in Schedule 3.1(l), to the knowledge of Xxxxxxx,
as of the date hereof, no party is in breach or default in any material respect
under any Applicable Contract, except for such breaches and defaults which would
not reasonably be expected to result in a Business Material Adverse Effect.
Complete and correct copies of all Applicable Contracts, together with all
modifications and amendments thereto, have been delivered to World Heart;
provided, that to the extent any of such Contracts are items susceptible to
duplication and are either (i) used in connection with any of Xxxxxxx'x
businesses other than the Transferred Business or (ii) are required by law to be
retained by Xxxxxxx, Xxxxxxx may deliver photostatic copies or other
reproductions from which Xxxxxxx may delete information concerning Xxxxxxx'x
businesses other than the Transferred Business. For purposes of this subsection
3.1(l), the term "Contract" shall not include Employee Benefit Plans referred to
in Section 3.1(n).
(m) Taxes.
(i) Novacor LLC is a disregarded entity for U.S. Federal,
state and local income tax purposes in each state or locality in which
it is engaged in the conduct of a trade or business.
(ii) There are no Liens for Taxes (as defined below) on any
of the Transferred Assets, other than Liens for taxes not yet due and
payable and those being contested in good faith for which adequate
reserves have been established in accordance with U.S. GAAP.
(iii) Novacor LLC has timely filed with the appropriate
taxing authorities all Tax Returns that are required to be filed by
Novacor LLC on or prior to the Closing Date. Such Tax Returns
accurately reflect all of Novacor LLC's liabilities for Taxes with
regard to its assets and its business for the periods covered thereby.
(iv) All Tax liabilities of Novacor LLC for all taxable
years or periods that end on or before the Closing Date and, with
respect to any taxable year or period beginning before and ending
after the Closing Date, the portion of such taxable year or period
ending on and including the Closing Date ("Pre-Closing Period"),
whether or not shown on any Tax Return, have been timely paid in full
on or prior to the Closing Date or accrued and adequately disclosed
and fully provided for on the books and records of Novacor LLC in
accordance with GAAP.
(v) There is no action, suit, proceeding, investigation,
audit, or claim now pending or, to the knowledge of Novacor LLC,
threatened by any authority regarding any Taxes of Novacor LLC for any
Pre-Closing Period.
(vi) Novacor LLC (A) has not entered into an agreement or
waiver or been requested to enter into an agreement or waiver
extending any statute of limitation relating to the payment or
collection of Taxes, (B) is not presently contesting any Tax liability
before any court, tribunal or agency and (C) has not applied for
and/or received a ruling or determination from a taxing authority
regarding a past or prospective transaction.
(vii) All Taxes which Novacor LLC is (or was) required by
law to withhold or collect have been duly withheld or collected, and
have been timely paid over to the proper authorities to the extent due
and payable.
(viii) Except for this Agreement, there are no written or
other binding tax sharing, allocation, indemnification or similar
agreements or arrangements in effect as between Novacor LLC and any
other entity.
(ix) No claim has ever been made by any taxing authority in
a jurisdiction where Novacor LLC does not file Tax Returns that
Novacor LLC is or may be subject to taxation by that jurisdiction.
"Taxes" shall mean all United States federal, state, local and foreign
taxes assessments, levies, duties, imposts or similar charges (whether imposed
directly or through withholding), including any interest, additions to tax or
penalties applicable thereto.
"Tax Returns" shall mean all United States federal, state, local and
foreign tax returns, declarations, statements, reports, schedules, forms and
information returns relating to Taxes, including any amendments thereof.
(n) Employee Benefit Plans. Set forth on Schedule 3.1(n) is a list of
each material bonus, deferred compensation, pension, profit sharing, retirement,
stock purchase or stock option, hospitalization or other medical, life or other
insurance plan relating to the Transferred Business, including any policy, plan,
program or agreement that provides for the payment of severance benefits, salary
continuation, salary in lieu of notice or similar benefits (collectively, the
"Employee Benefit Plans"), maintained, sponsored or contributed to by Novacor
LLC or Xxxxxxx or under which Novacor LLC or Xxxxxxx has any present or future
material obligations or material liability on behalf of the employees who will
be assigned to work at Novacor LLC pursuant to the Assignment Agreement (the
"Employees") or former employees or their dependents or beneficiaries
(collectively, the "Affected Persons"). The Employee Benefit Plans that are
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or the Internal Revenue Code of 1986, as amended (the "Code"), are in
compliance in all material respects with ERISA and the Code and other applicable
law.
All contributions made or required to be made by Novacor LLC under any
Employee Benefit Plan meet the requirements for deductibility under the Code in
all material respects, and all contributions that are required but have not been
made have been properly recorded on the books of Novacor LLC and reflected in
the Pro Forma Balance Sheet to the extent required under U.S. GAAP.
No Employee Benefit Plan is a "multiemployer plan" (as defined in
section 4001(a)(3) of ERISA) or a "multiple employer plan" (within the meaning
of section 413(c) of the Code) or an "employee pension benefit plan" (within the
meaning of Section 3(2) of ERISA) subject to Section 412 of the Code or Section
302 of Title IV of ERISA. No event has occurred with respect to Novacor LLC or
any Employee Benefit Plan in connection with which Novacor LLC could be subject
to any material liability or Lien with respect to any Employee Benefit Plan
under ERISA or the Code.
Neither Xxxxxxx nor Novacor LLC maintains any Employee Benefit Plan
which is a "group health plan" (as such term is defined in Section 607(1) of
ERISA or Section 5000(b)(1) of the Code) that has not been administered and
operated in all respects in compliance with the applicable requirements of Part
6 of Subtitle B of Title I of ERISA and Section 4980B of the Code and neither
Xxxxxxx nor Novacor LLC is subject to any material liability, including, without
limitation, additional contributions, fines, taxes, penalties or loss of tax
deduction as a result of such administration and operation. No Employee Benefit
Plan which is such a group health plan is a "multiple employer welfare
arrangement," within the meaning of Section 3(40) of ERISA. Except as required
by law, neither Xxxxxxx nor Novacor LLC maintains any Employee Benefit Plan
(whether qualified or non-qualified under Section 401(a) of the Code) providing
for post-employment or retiree health, life insurance and/or other welfare
benefits and having unfunded liabilities, and neither Xxxxxxx nor Novacor LLC
have any obligation to provide any such benefits to any retired or former
employees or active employees following such employees' retirement or
termination of service.
Each Employee Benefit Plan intended to be qualified under Section
401(a) of the Code has, as currently in effect, been determined (or an
application for such determination has been filed) to be so qualified by the
Internal Revenue Service. Each trust established in connection with any Employee
Benefit Plan which is intended to be exempt from Federal income taxation under
Section 501(a) of the Code has been determined (or an application for such
determination has been filed) to be so exempt by the Internal Revenue Service.
Since the date of each most recent determination (or application for
determination) referred to in this paragraph, no event has occurred and no
condition or circumstance has existed that resulted or is likely to result in
the revocation of any such determination or that could adversely affect the
qualified status of any such Employee Benefit Plan.
Novacor LLC does not sponsor any Employee Benefit Plan.
(o) Labor Matters. Set forth on Schedule 3.1(o) are (i) the names of
the Employees, their salaries, wage rates (as of the date hereof), vacation pay
accrual schedule (as of May 31, 2000), positions and length of service with
Xxxxxxx, Novacor LLC and Xxxxxx International Inc. as applicable, and (ii) all
agreements with labor unions or associations representing the Employees in
effect as of the date hereof. As of the date hereof, there is and as of the
Closing Date there will be (i) no material unfair labor practice complaint
pending or threatened against Novacor LLC, or against Xxxxxxx which relates in
whole or in part to the Transferred Business before the National Labor Relations
Board or any state or local labor relations board, nor are any material
grievance or arbitration proceedings arising under any collective bargaining
agreement pending or threatened against Novacor LLC, or against Xxxxxxx which
relates in whole or in part to the Transferred Business, (ii) no labor strike,
dispute, slowdown or stoppage ("Labor Dispute") in which Novacor LLC or Xxxxxxx
is involved which relates in whole or in substantial part to the Transferred
Business, nor, to the knowledge of Xxxxxxx is any Labor Dispute imminent, other
than routine disciplinary and grievance matters, and (iii) no question
concerning union representation within the meaning of the National Labor
Relations Act existing with respect to the Employees of Novacor LLC or the
Transferred Business and, to the knowledge of Xxxxxxx, no union organizing
activities are taking place, which (with respect to any matter specified in
clauses (i), (ii) or (iii) above, singly or in the aggregate) would have a
Business Material Adverse Effect. Except as set forth on Schedule 3.1(o), as of
the date hereof, Xxxxxxx has no knowledge of any actionable violation of any
federal, state or local law relating to employment and employment practices,
discrimination in the hiring, promotion or pay of Employees, nor any applicable
wage or hour laws, which, individually or in the aggregate, would reasonably be
expected to result in a Business Material Adverse Effect.
(p) Intellectual Property.
(i) To Xxxxxxx' knowledge, Xxxxxxx or Xxxxxxx Parent has all
right, title and interest in, or a valid and binding license to use,
all patents and patent rights, trademarks and trademark rights, trade
names and trade name rights, service marks and service xxxx rights,
service names and service name rights, copyrights and copyright rights
and other proprietary intellectual property rights and all pending
applications for and registrations of any of the foregoing
individually or in the aggregate material to the conduct of the
Transferred Business ("Intellectual Property Rights"). To Xxxxxxx'
knowledge, neither Xxxxxxx nor Xxxxxxx Parent is in default (or with
the giving of notice or lapse of time or both would be in default),
under any license to use such Intellectual Property Rights and to its
knowledge such Intellectual Property Rights are not being infringed by
any third party.
(ii) Schedule 3.1(p)(ii) contains (or will be supplemented
prior to Closing to contain) an accurate and complete list as of the
date of this Agreement of all licenses, sublicenses, assignments and
other agreements under which Xxxxxxx or Xxxxxxx Parent is licensed to
use third party Intellectual Property Rights which are material to the
Transferred Business as currently conducted (the "Business License
Agreements").
(iii) Except as set forth in Schedule 3.1(p)(iii) (including
as it may be supplemented prior to Closing), Novacor LLC is not
required to pay any royalties, fees or other amounts to any Person in
connection with the Business License Agreements.
(iv) Schedule 3.1(p)(iv) contains an accurate and complete
list as of the date of this Agreement of all registered patents,
registered trademarks, trade names, registered service marks and
registered copyrights (in each case that are currently in use), as
well as all applications for any and all of the foregoing, included in
the Intellectual Property Rights (excluding third party Intellectual
Property Rights), including the jurisdiction in which each such
Intellectual Property Right has been issued or registered or in which
any such application for such issuance, approval or registration has
been filed. Except as set forth on Schedule 3.1(p)(iv), to its
knowledge, all registered patents, registered trademarks, trade names,
registered service marks and registered copyrights owned by Xxxxxxx or
Xxxxxxx Parent and which are material to the conduct of the
Transferred Business as currently conducted are valid and enforceable.
Except as set forth on Schedule 3.1(p)(vii), to Xxxxxxx' knowledge,
the products of the Transferred Business do not infringe the
intellectual property rights of any third party.
(v) Schedule 3.1(p)(v) contains an accurate and complete
list as of the date of this Agreement of all licenses and sublicenses
under which Xxxxxxx or Xxxxxxx Parent has granted the right to
manufacture, reproduce, market or exploit any material products of the
Transferred Business or any material adaptation, derivative or
reformulation based on any such product or any portion thereof.
(vi) To its knowledge, Xxxxxxx is not and will not be as a
result of the execution and delivery of this Agreement or the
performance of its obligations under this Agreement, in breach of any
Business License Agreements. To its knowledge, neither the execution
or delivery of this Agreement nor the consummation of the transactions
contemplated hereby will cause or will result in a material change to
the terms of any material license, sublicense or other similar
agreement.
(vii) Except as set forth in Schedule 3.1(p)(vii), neither
Xxxxxxx nor Xxxxxxx Parent has (A) to Xxxxxxx' knowledge, been named
as a party in any suit, action or proceeding which involves a claim of
infringement or violation of any Intellectual Property Right of any
third party or (B) has received any written claim or allegation that
the manufacturing, importation, marketing, licensing, sale, offer for
sale, or use of any of its products infringes Intellectual Property
Rights of any third party.
(viii) Xxxxxxx and Xxxxxxx Parent have taken reasonable
steps to protect and preserve the confidential information, trade
secrets and know-how of the Transferred Business, including
appropriate non-disclosure agreements with employees and third persons
having access to confidential information, trade secrets or know-how
of the Transferred Business.
(ix) Neither Xxxxxxx nor Xxxxxxx Parent has made any written
claim or allegation that any person has infringed, misappropriated,
breached or violated the rights of the Transferred Business in any of
the Intellectual Property Rights which are material to the Transferred
Business as currently conducted.
(q) Environmental Matters. To the knowledge of Xxxxxxx, Novacor LLC
and the Transferred Business is in substantial compliance with all federal,
state and local laws governing pollution or the protection of human health or
the environment (the "Environmental Laws"), except where the failure to comply
with the Environmental Laws would not reasonably be expected to result in a
Business Material Adverse Effect. Xxxxxxx is not aware of any notice or claim
received by Xxxxxxx from any governmental authority or third party alleging that
the Transferred Business is not currently in compliance with any Environmental
Law. To the knowledge of Xxxxxxx, there has been no release of a Hazardous
Substance, as that term is defined in the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. xx.xx. 9601 et seq., in excess of a
reportable quantity on any of the real properties comprising the Transferred
Business.
(r) Government Regulations and Approvals. As of the Closing Date,
Novacor LLC will not be subject to regulation under the Investment Company Act
of 1940, as amended, the Public Utility Holding Company Act of 1935, as amended,
the Federal Power Act, the Interstate Commerce Act, the Commodity Exchange Act
or any federal or state statute or regulation limiting its ability to incur or
assume indebtedness for borrowed money. As of the Closing Date, Novacor LLC will
have obtained all governmental approvals necessary to conduct the Transferred
Business as presently conducted and as it will be conducted on the Closing Date.
(s) Purchase For Investment. Xxxxxxx is acquiring the Newco Preferred
Shares hereunder for investment (for its own account or for accounts over which
it exercises investment control), and not with a view to, or for offer or sale
in connection with, any distribution thereof, which would be in violation of the
Securities Act, or any applicable state securities law. Xxxxxxx is (i)
knowledgeable, sophisticated and experienced in business and financial matters
and fully understands the limitations on transfer described above; and (ii) an
"accredited investor" as such term is defined in Rule 501(a) of Regulation D
under the Securities Act.
(t) Stockholder Approval. No action is required by the members of
Xxxxxxx to approve the Transactions contemplated by the Transaction Agreements.
(u) Brokers, Finders, etc. Except for Credit Suisse First Boston
Corporation, Xxxxxxx is not subject to any valid claim of any broker, investment
banker, finder or other intermediary in connection with the transactions
contemplated by this Agreement. Xxxxxxx is solely responsible for any payment,
fee or commission that may be due to Credit Suisse First Boston in connection
with the transactions contemplated hereby.
(v) Information Provided. All information provided to World Heart by
Xxxxxxx regarding the Transferred Business is true and correct in all material
respects and no material facts have been omitted therefrom which make such
information misleading as of the date hereof.
(w) Xxxxxxx. Xxxxxxx is the principal U.S. operating entity of Xxxxxxx
Lifesciences Corporation.
SECTION III.2 Representations and Warranties of World Heart. World
Heart hereby represents and warrants to Xxxxxxx as follows:
(a) Organization and Standing. World Heart (i) is a corporation duly
organized, validly existing and in good standing under the laws of the Province
of Ontario, (ii) has all requisite power and authority to own, lease or operate
the assets it now owns, leases or operates and (iii) is duly qualified or
licensed to do business in each jurisdiction in which the ownership or use of
its assets or conduct of its business requires it to be so qualified, in each
case except for such failures that would not reasonably be expected,
individually or in the aggregate, to result in (i) a material adverse effect on
the business or financial condition of World Heart and the direct and indirect
subsidiaries of World Heart (as set forth on Schedule 3.2(a)) (the "World Heart
Subsidiaries"), taken as a whole or (ii) a material impairment of the ability of
World Heart to perform its obligations under the Transaction Agreements (each, a
"World Heart Material Adverse Effect").
(b) Authority. The execution and delivery of the Transaction
Agreements, and the performance by World Heart of its obligations hereunder and
thereunder, have been duly authorized by all necessary action on the part of
World Heart. This Agreement has been and as of the Closing Date the Transaction
Agreements to which it is a party shall have been duly executed and delivered by
World Heart and, assuming the due execution and delivery hereof by Xxxxxxx, this
Agreement constitutes and, as of the Closing Date, each of the Transaction
Agreements shall constitute a valid and binding obligation of World Heart,
enforceable against World Heart in accordance with its terms, except as such
enforcement may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect relating to creditors'
rights generally and (ii) general principles of equity (regardless of whether
such enforcement is sought in a proceeding in equity or at law).
(c) Consents; No Conflict. The consummation of the transactions
hereunder will not require the consent of any party to any Contract to which
World Heart, or any of its affiliates, is a party or by which any of them is
bound, or the consent, approval, order or authorization of, or the registration,
declaration or filing with, any governmental authority, except for those (i)
required under the HSR Act, or (ii) that become applicable solely as a result of
the actions or status of Xxxxxxx or its affiliates. Except as set forth on
Schedule 3.2(c), assuming the consents, approvals, orders, authorizations,
registrations, declarations and filings contemplated by the immediately
preceding sentence are obtained or made, as applicable, the execution, delivery
and performance by World Heart of this Agreement will not (i) violate any
material law applicable to World Heart or Newco, (ii) result in a breach or
violation of any material provision of, or constitute a material default under,
any such Contract which is material, or (iii) conflict with any provision of the
articles or by-laws of World Heart, in each case except for any such violation,
breach, default or conflict which would not reasonably be expected to result in
a World Heart Material Adverse Effect.
(d) SEC Reports and Financial Statements. Each form, report, schedule,
registration statement, definitive proxy statement or other document filed by
World Heart with the Securities and Exchange Commission (the "SEC") or a
Canadian provincial securities regulatory authority (the "Canadian Securities
Commissions") since October 8, 1996 (as such documents have since the time of
their filing been amended, the "World Heart Reports"), which include all the
documents (other than preliminary material) that World Heart was required to
file with the SEC or the Canadian Securities Commissions since such date, as of
their respective dates, complied in all material respects with the requirements
of the Securities Act or the Exchange Act or applicable Canadian securities
legislation (as such term is defined in National Instrument 14-101 issued by the
Canadian Securities Commissions), as the case may be, and the rules and
regulations of the SEC and the Canadian Securities Commissions thereunder
applicable to such World Heart Reports. None of the World Heart Reports
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, except
for such statements, if any, as have been modified by subsequent filings prior
to the date hereof. The financial statements of World Heart included in the
World Heart reports comply as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with Canadian GAAP
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of the unaudited statements, as
permitted by the Securities Act or the Exchange Act) and reconciled to U.S. GAAP
and fairly present (subject in the case of the unaudited statements, to normal,
recurring audit adjustments) the financial position of World Heart as at the
dates thereof and the results of the its operations and cash flows for the
periods then ended.
(e) Purchase For Investment. World Heart is acquiring the Newco Common
Shares hereunder for investment (for its own account or for accounts over which
it exercises investment control), and not with a view to, or for offer or sale
in connection with, any distribution thereof, which would be in violation of the
Securities Act or any applicable state securities law. World Heart is (i)
knowledgeable, sophisticated and experienced in business and financial matters
and fully understands the limitations on transfer described above; and (ii) an
"accredited investor" as such term is defined in Rule 501(a) of Regulation D
under the Securities Act.
(f) Stockholder Approval. Each of the Other Shareholders and Xxxxxxx
X.X. Xxxxxxxx, who in the aggregate hold 41% of the voting power of World Heart,
have approved the Transaction Agreements and the Transactions and such approval
has not been withdrawn, terminated or amended in any manner whatsoever by any of
the Other Shareholders.
(g) Brokers, Finders, etc. Except for Xxxxxxx Xxxxx & Co., World Heart
is not subject to any valid claim of any broker, investment banker, finder or
other intermediary in connection with the transactions contemplated by this
Agreement. World Heart is solely responsible for any payment, fee or commission
that may be due to Xxxxxxx Xxxxx & Co. in connection with the transactions
contemplated hereby.
SECTION III.3 Representations and Warranties of Newco. Newco and World
Heart represent and warrant to Xxxxxxx as follows:
(a) Organization, Standing and Power. Newco is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
(b) Subsidiaries. Newco has no direct or indirect subsidiaries. Newco
does not own, directly or indirectly, any of the capital stock or other equity
securities of any other Person.
(c) Authority. The execution and delivery of the Transaction
Agreements, and the performance by Newco of its obligations hereunder, have been
duly authorized by all necessary action on the part of Newco. This Agreement has
been and, as of the Closing Date, the Transaction Agreements to which it is a
party shall have been, duly executed and delivered by Newco and, assuming the
due execution and delivery hereof by Xxxxxxx and Novacor LLC, this Agreement
constitutes and, as of the Closing Date, each of the Transaction Agreements to
which it is a party shall constitute a valid and binding obligation of Newco,
enforceable against Newco in accordance with its terms, except as such
enforcement may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium (whether general or specific) or similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general principles of
equity (regardless of whether such enforcement is sought in a proceeding in
equity or at law).
(d) Capital Stock. The capitalization of Newco is as set forth on
Schedule 3.3(d). All of the outstanding shares of Newco Common Stock are duly
authorized, have been validly issued and are fully paid and nonassessable. At
the Closing, the Newco Shares will be duly authorized, and, assuming payment
therefor in accordance with this Agreement, validly issued, fully paid and
nonassessable. The outstanding shares of Newco Common Stock have not been, and
the Newco Shares will not be, issued in violation of, and are not and will not
be, as the case may be, subject to, any preemptive rights. Upon consummation of
the Xxxxxxx Contribution, Xxxxxxx will acquire title to the Newco Preferred
Shares, free and clear of all Liens, other than those arising solely from the
actions or status of Xxxxxxx.
(e) No Prior Activities. Except for obligations or liabilities
incurred in connection with its incorporation or organization or the negotiation
and consummation of the Transaction Agreements and the Transactions, Newco has
not incurred any obligations or liabilities nor engaged in any business or
activities of any type or kind whatsoever or entered into any agreements or
arrangements with any person or entity.
ARTICLE IV
COVENANTS
SECTION IV.1 Conduct of Business by Xxxxxxx and Novacor LLC. From the
date of this Agreement through the Closing, each of Xxxxxxx and Novacor LLC
agrees that, except (i) as disclosed in Schedule 4.1 hereof or otherwise
provided for in, or contemplated by, the Transaction Agreements, (ii) the
execution and delivery of, and the consummation of the transactions contemplated
by, the Assignment Agreement or (iii) as approved by World Heart:
(a) Xxxxxxx shall conduct the Transferred Business only in the
ordinary and usual course consistent with past practice, and Xxxxxxx shall use
its reasonable commercial efforts to preserve intact the present business
organization of Novacor LLC, keep available the services of the present officers
and key employees of the Transferred Business, and preserve the goodwill of
those having business relationships with the Transferred Business;
(b) Xxxxxxx shall not (i) amend Novacor LLC's Certificate of Formation
or the Novacor LLC Agreement or (ii) declare, set aside or pay any dividend or
other distribution to its members payable in cash, equity interests or property;
(c) Novacor LLC shall not, nor shall Xxxxxxx permit Novacor LLC to,
(i) merge or consolidate with another entity; (ii) acquire or purchase an equity
interest in or a substantial portion of the assets of another corporation,
partnership or other business organization or otherwise acquire any assets
outside the ordinary and usual course of business and consistent with past
practice or otherwise enter into any material contract, commitment or
transaction outside the ordinary and usual course of business consistent with
past practice; (iii) sell, lease, license, waive, release, transfer, encumber or
otherwise dispose of any of its assets outside the ordinary and usual course of
business and consistent with past practice; (iv) incur, assume or prepay any
material indebtedness or any other material liabilities other than in the
ordinary course of business and consistent with past practice; (v) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person other than in
the ordinary course of business and consistent with past practice; (vi) make any
loans, advances or capital contributions to, or investments in, any other
person; (vii) authorize or make capital expenditures in excess of the amounts
currently budgeted therefor as set forth on Schedule 4.1(c); (viii) permit any
insurance policy relating to the Transferred Business naming Xxxxxxx as a
beneficiary or a loss payee to be cancelled or terminated other than in the
ordinary course of business; or (ix) enter into any contract, agreement,
commitment or arrangement with respect to any of the foregoing;
(d) Except in the ordinary course of business consistent with past
practice or otherwise as may be required by applicable law, Xxxxxxx shall not as
it relates to the Employees, nor shall Xxxxxxx permit Novacor LLC to, (i) adopt,
enter into, terminate or amend any plan or other arrangement for the current or
future benefit or welfare of any director, officer or current or former
employee, (ii) increase in any manner the compensation or fringe benefits of, or
pay any bonus to, any director, officer or employee, (iii) take any action to
fund or in any other way secure, or to accelerate or otherwise remove
restrictions with respect to, the payment of compensation or benefits under any
employee plan, agreement, contract, arrangement or other Xxxxxxx plan (including
Xxxxxxx stock options);
(e) Novacor LLC shall not, nor shall Xxxxxxx permit Novacor LLC to,
take any action with respect to, or make any material change in, its accounting
or tax policies or procedures, except as required by law or to comply with U.S.
GAAP; and
(f) Neither Novacor LLC nor Xxxxxxx shall take or allow to be taken
any action which would jeopardize qualification of the transaction contemplated
by this Agreement under section 351 of the Code.
(g) It is understood that Novacor LLC was formed solely for the
purpose of acquiring the Transferred Business, and that Novacor LLC will have no
material assets and no material liabilities prior to the consummation of the
transactions contemplated by the Assignment Agreement.
SECTION IV.2 Conduct of Business of Newco. During the period from the
date of this Agreement to the Closing, Newco shall not engage in any activities
of any nature except as provided in or contemplated by the Transaction
Agreements. It is understood that Newco was formed solely for the purpose of
effecting the Transactions, and that Newco will have no material assets and no
material liabilities prior to the consummation of the transactions contemplated
by the Assignment Agreement.
SECTION IV.3 Access to Information.
(a) During the period prior to the Closing Date, Xxxxxxx shall afford
to representatives of World Heart, and World Heart shall afford to the
representatives of Xxxxxxx, including, in each case, their respective counsel,
accountants, financial advisors and lenders, reasonable access during normal
business hours during the period prior to the Closing Date to all the
properties, books, Contracts and records of the Transferred Business and World
Heart, respectively. World Heart shall indemnify and hold harmless Xxxxxxx and
Xxxxxxx shall indemnify and hold harmless World Heart with respect to all
liabilities, and for all losses, arising out of their respective
representatives' acts or omissions in connection with such access and, after
making any investigation of such properties, books, Contracts or records, World
Heart and Xxxxxxx shall promptly restore such properties, books, Contracts and
records to their condition prior to such investigation.
(b) Each of World Heart and Xxxxxxx acknowledges that the information
being provided hereunder is subject to the terms of a confidentiality agreement
between Xxxxxxx and World Heart, dated February 15, 2000 (the "Confidentiality
Agreement"), the terms of which are incorporated herein by reference.
SECTION IV.4 Transaction Agreements. At the Closing, each of Xxxxxxx,
Novacor LLC, Newco and World Heart will enter into the other Transaction
Agreements to which it is a party and, subject to the terms and conditions
hereof, each of Xxxxxxx, Newco and World Heart agrees to use its reasonable
commercial efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective as promptly as practicable the Transactions and to cooperate with
each party hereto in connection with the foregoing, including, without
limitation, (i) the execution of the other Transaction Agreements and (ii) using
its reasonable commercial efforts (v) to obtain all necessary waivers, consents
and approvals from other parties to material Contracts, (w) to obtain all
consents, approvals and authorizations that are required to be obtained under
any federal, state, provincial, local or foreign law or regulations, (x) to
prevent the entry, enactment or promulgation of any threatened or pending
injunction or order that would adversely affect the ability of the parties
hereto to consummate the transactions contemplated hereby, (y) to lift or
rescind any injunction or order adversely affecting the ability of the parties
hereto to consummate the transactions contemplated hereby and (z) to effect all
necessary registrations and filings, including filings under the HSR Act, and
submissions of information requested by governmental authorities.
SECTION IV.5 HSR Act. Each of Xxxxxxx, Novacor LLC, Newco and World
Heart agrees to use its reasonable commercial efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable to file as soon as practicable notifications under the HSR Act and
respond as promptly as practicable to any inquiries received from the Federal
Trade Commission and the Antitrust Division of the Department of Justice for
additional information or documentation and respond as promptly as practicable
to all inquiries and requests received from any state Attorney General or other
Governmental Entity in connection with antitrust matters. Concurrently with the
filing of notifications under the HSR Act or as soon thereafter as practicable,
Xxxxxxx, Novacor LLC, Newco and World Heart shall each request early termination
of the HSR Act waiting period.
SECTION IV.6 Further Assurances. From time to time, whether before,
at, or after the Closing, each party hereto, shall execute and deliver, or cause
to be executed and delivered, all such documents and instruments and shall take,
or cause to be taken, all such other actions as may be reasonably necessary to
consummate the Transactions. SECTION IV.7 Employee Benefit Plans.
(a) Except in accordance with applicable law (i) effective as of the
Closing Date, the Employees shall cease participation in the Employee Benefit
Plans as active employees and (ii) as soon as reasonably practicable following
the Closing Date, the Employees shall commence participation in the employee
benefits plans maintained or established by Newco (the "Newco Plans"). The Newco
Plans shall provide benefits which, together with total cash compensation
(including bonus) and options, shall be substantially similar in the aggregate
to those provided by Xxxxxxx and Novacor LLC to the Employees immediately prior
to the Closing Date.
(b) Newco and World Heart shall be responsible for, and fully
indemnify Xxxxxxx, Novacor LLC and their subsidiaries from any and all claims
made by or on behalf of any Employee in respect of (i) termination pay and
similar obligations relating to termination of employment on or after the
Closing Date, and (ii) accrued vacation pay, bonus and other liabilities arising
under the Employee Benefits Plans (other than liabilities arising in connection
with any "frozen vacation" entitlement and any payment under Xxxxxxx'
Performance Bonus Plan accrued by or otherwise payable to certain Employees
prior to the Closing Date as set forth on Schedule 4.7(b), which amounts shall
be fully paid by Xxxxxxx to such Employees prior to the Closing Date).
(c) Newco shall recognize all service by Employees with Novacor LLC,
Xxxxxxx, Xxxxxx International Inc. and its related subsidiaries, as applicable,
for purposes of vesting, eligibility and accrual of benefits under the Newco
Plans. The Newco Plans shall not, with respect to any Employee, limit or
otherwise restrict participation thereunder for reason of any preexisting
condition limitation in such plan to the extent that such Employee (i) is not
subject to any preexisting condition limitation under a similar Employee Benefit
Plan, or (ii) currently participates under a similar Employee Benefit Plan.
Newco shall credit the Employees with any amounts paid prior to the Closing Date
under any Employee Benefit Plan which is an "employee welfare plan" within the
meaning of Section 3(1) of ERISA with respect to satisfaction of any applicable
deductible amounts and copayment minimums under the Newco Plans.
(d) Xxxxxxx, Novacor LLC, Newco and World Heart agree to cooperate in
carrying out the duties and responsibilities contained in this Section 4.7. In
addition, Xxxxxxx and Novacor LLC agree to make available to Newco and World
Heart such information as Newco and World Heart may reasonably request to
facilitate the determination of (i) the period of service of any Employees with
Novacor LLC, Xxxxxxx, Xxxxxx International Inc. and its related subsidiaries, as
applicable, prior to the Closing Date, (ii) individual service accruals and
salary histories of Employees, and (iii) such other information as Newco or
World Heart may reasonably request to carry out the provisions of this Section
4.7.
SECTION IV.8 Employees.
(a) Offer of Employment. On or before the Closing Date but effective
as of the Closing Date, World Heart and/or Newco agrees to offer to continue to
employ each full-time or regular part-time active Employee of Novacor LLC on
such terms and conditions of employment that are substantially similar to the
terms and conditions of such Employees' employment with Novacor LLC, in a form
substantially similar to that set forth on Schedule 4.8. Moreover, Newco agrees
(i) to assume any and all liability with respect to each such Employee,
including, without limitation, any liability for earned but unpaid salary, wages
and benefits, and any other liability to the extent such liability is properly
accrued on the Pro Forma Balance Sheet of Novacor LLC or otherwise identified in
the Schedules to this Agreement, and (ii) to provide severance benefits in
accordance with Xxxxxxx'x Xxxxxxxxx Pay Plan in effect immediately prior to the
Closing in the event that the Employee's employment with Newco and/or World
Heart is terminated within one year of Closing;
(b) Non-Transferred Employees. Except with respect to any Employee on
an authorized leave of absence as of the Closing Date who does not return to
active employment with Xxxxxxx within one year following the Closing Date, World
Heart and/or Newco agrees to retain all liability, if any, for any Employee who
is not offered continued employment with Newco or who is offered a position with
Newco but rejects that employment offer. Any Employee on an authorized leave of
absence as of the Closing Date shall remain an employee of Xxxxxxx; provided,
however, that should such Employee return to active employment with Xxxxxxx
within one year following the Closing Date, Newco and/or World Heart (upon
receipt of written notice from Xxxxxxx advising that such Employee has returned
to active employment) shall offer to employ such Employee on terms and
conditions of employment that are substantially similar to the terms and
conditions of such Employee's employment with Xxxxxxx as of the Closing Date, in
a form substantially similar to that set forth on Schedule 4.8.
(c) WARN Act. During the ninety-day period following the Closing Date,
Newco shall not effectuate (i) a "plant closing" as defined in the Worker
Adjustment and Retraining Notification Act of 1988 ("WARN Act"), 29 U.S.C.
xx.xx. 2101 et seq., affecting any site of employment or one or more facilities
or operating units within any site of employment of the business of Novacor LLC,
or (ii) a "mass layoff" as defined in the WARN Act affecting any site of
employment of the business of Novacor LLC, without complying fully with the WARN
Act and any other applicable state or local law requiring notice to employees in
the event of a plant closing or layoff.
(d) Newco acknowledges and agrees that any employment loss within the
meaning of the WARN Act, suffered by any Employee immediately upon or within 90
days of the Closing, shall have been caused by Newco's decision not to continue
the employment of such Employee, and not by the transfer of Novacor LLC. In
addition, World Heart and Newco shall indemnify and hold Xxxxxxx, Novacor LLC
and their affiliates harmless from and against any and all claims, losses,
damages, expenses, obligations and liabilities (including costs of collection,
attorneys' fees and other costs of defense) which Xxxxxxx, Novacor LLC or their
affiliates may incur in connection with any suit or claim of violation brought
against Xxxxxxx, Novacor LLC or any of their affiliates under the WARN Act or
any similar state or local law that relates to actions taken by World Heart
and/or Newco on or after the Closing Date with regard to any site of employment
or one or more facilities or operating units within any site of employment of
the business of Novacor LLC. For purposes of the WARN Act and this Agreement,
the Closing Date is and shall be the same as the "effective date" within the
meaning of the WARN Act.
(e) Transferred Employees. Xxxxxxx shall transfer to Novacor LLC any
records (including, but not limited to, Internal Revenue Service Forms W-4 and
California Employee Withholding Allowance Certificates) relating to withholding
and payment of United States federal, state and local income, disability,
unemployment, FICA and similar taxes ("Payroll Taxes") with respect to wages
paid by Xxxxxxx during the 2000 calendar year to the Employees. In accordance
with Revenue Procedure 96-60, 1996-2 C.B.399, and comparable state and local
Payroll Tax laws, (i) Newco agrees to provide the Employees with Forms W-2, Wage
and Tax Statements, for the 2000 calendar year setting forth the aggregate
amount of wages paid, and Payroll Taxes withheld in respect thereof, to the
Employees for the 2000 taxable year by Xxxxxxx, Novacor LLC and Newco and (ii)
Xxxxxxx agrees to cooperate fully with Newco in connection therewith.
SECTION IV.9 Certain Tax Matters.
(a) Each of Xxxxxxx, World Heart, Newco and Novacor LLC shall, and
shall cause its subsidiaries to, cooperate with each other with regard to (i)
the preparation, execution and filing of Tax Returns and (ii) any tax audit,
administrative or court proceeding and any other matter relating to Taxes, in
each case, relating to or arising out of Novacor LLC, the Transferred Assets or
the Transferred Business or its assets or its business and the transactions
contemplated by this Agreement or any of the other Transaction Agreements. Such
cooperation shall include the provision of all relevant information to another
party, including the provision of reasonable access to employees, books, records
and other data with respect to Novacor LLC, the Transferred Assets and the
Transferred Business.
(b) World Heart shall promptly notify Xxxxxxx in writing upon receipt
by World Heart or any affiliate of World Heart (including Newco or Novacor LLC
after the Closing Date) of notice of any inquiries, claims, assessments, audits
or similar events with respect to Taxes relating to a taxable period ending on
or prior to the Closing Date for which Xxxxxxx may be liable under this
Agreement (any such inquiry, claim, assessment, audit or similar event, a "Tax
Matter"). Xxxxxxx, at its sole expense, shall have the sole authority to
represent the interests of Novacor LLC and Newco, as the case may be, with
respect to any Tax Matter before any taxing authority or any court and shall
have the sole right to control the defense, compromise or other resolution of
any Tax Matter, including responding to inquiries, filing Tax Returns and
settling audits. Xxxxxxx shall keep World Heart fully and timely informed with
respect to the commencement, status and nature of any Tax Matter. Xxxxxxx shall,
in good faith, allow World Heart to make comments to Xxxxxxx regarding the
conduct of or positions taken with respect to any Tax Matter. World Heart shall
have the sole right to control any audit or examination by any taxing authority,
initiate any claim for refund or amend any Tax Return, and contest, resolve and
defend against any assessment for additional Taxes, notice of Tax deficiency or
other adjustment of Taxes of, or relating to, the income, assets or operations
of Novacor LLC or Newco for all taxable periods ending after the Closing Date,
provided, however, that neither World Heart nor any of its affiliates shall
enter into any settlement of any contest or otherwise compromise any issue with
respect to the portion of the Overlap Period (as defined below) that ends on the
Closing Date without the prior written consent of Xxxxxxx, which consent shall
not be unreasonably withheld. World Heart shall keep Xxxxxxx fully and timely
informed with respect to the commencement, status and nature of any audit,
examination or other claim by a taxing authority with regard to an Overlap
Period. World Heart shall, in good faith, allow Xxxxxxx to make comments
regarding the conduct of or position taken with respect to any audit,
examination or other claim by a taxing authority, Tax Return and claim for
refund of Taxes, with regard to any Overlap Period. All Tax Returns of or with
respect to Novacor LLC for an Overlap Period shall be prepared and filed in a
manner consistent with the past practices of Xxxxxxx and its affiliates.
(c) Xxxxxxx shall furnish to World Heart, on or prior to the Closing
Date, a non-foreign person affidavit which complies with the requirements of
Code section 1445.
(d) Neither Xxxxxxx nor Novacor LLC shall take any action on or prior
to the Closing Date that would cause Novacor LLC to be treated as other than a
disregarded entity for U.S. federal, state or local tax purposes. (e) All Tax
liabilities with respect to the income, property or operations of Novacor LLC
that relate to taxable periods beginning before the Closing Date and ending
after the Closing Date (the "Overlap Period") shall be apportioned between
Xxxxxxx and World Heart as follows: (A) in the case of Taxes other than income,
sales and use and withholding Taxes, on a per diem basis, and (B) in the case of
income, sales and use and withholding Taxes, as determined from the books and
records of Novacor LLC as though the taxable year of Novacor LLC terminated at
the close of business on the Closing Date; provided, however, that Xxxxxxx shall
not be liable for any such Taxes incurred on the Closing Date due to any action
or inaction of or caused by World Heart, Newco or Novacor LLC after the Closing.
SECTION IV.10 Financial Information.
(a) Newco shall and World Heart shall cause Newco to, retain all of
the books and records of Novacor LLC for a period of ten years after the Closing
Date or such longer time as may be required by law. After the end of such
period, before disposing of such books or records, Newco shall give notice to
such effect to Xxxxxxx and give Xxxxxxx an opportunity to remove and retain all
or any part of such books or records as Xxxxxxx may select.
(b) After the Closing, and for so long as Xxxxxxx has any material
contingent or other obligation under any of the Contracts or owns any Newco
Shares, Newco shall and World Heart shall cause Newco to, provide to Xxxxxxx (i)
within 90 days after the end of each fiscal year of Newco, any financial
statements of Newco prepared for such fiscal year and (ii) within 45 days after
the end of each fiscal quarter (other than the last fiscal quarter of any fiscal
year) of Newco, any financial statements of Newco prepared for such fiscal
quarter. Xxxxxxx shall not disclose such information to any person other than
its affiliates, accountants, counsel or representatives or any lessor, mortgagee
or prospective purchaser who agrees to keep such information confidential. The
confidentiality restrictions of this Section 4.10(c) shall not apply to
information which (x) was or becomes generally available to the public other
than as a result of a disclosure by Xxxxxxx or (y) was or becomes available to
Xxxxxxx on a nonconfidential basis from a source other than Newco or its
affiliates, accountants, counsel or representatives or any person known by
Xxxxxxx to be bound by a confidentiality agreement with Newco.
(c) Within 60 days of the Closing Date, Xxxxxxx shall deliver to World
Heart audited balance sheets of Novacor LLC for December 31, 1997, 1998 and 1999
and the related statements of results of operations and statements of cash flows
for the periods then ended, including the notes thereto.
SECTION IV.11 Insurance. Newco shall secure insurance with respect to
Novacor LLC's business from the Closing Date covering general liability
(including, without limitation, premises liability), products liability and
workers compensation in amounts, determined by Newco acting reasonably,
customary for the industries in which Novacor LLC operates and satisfactory to
meet World Heart's obligations under the Distribution Agreement.
SECTION IV.12 Publicity. Xxxxxxx, World Heart and Newco agree that,
prior to the Closing, no public release or announcement concerning the
Transactions shall be issued by any party without the prior written consent
(which consent shall not be unreasonably withheld) of the other party, except as
such release or announcement may be required by law. Xxxxxxx, World Heart and
Newco agree that, prior to the Closing, no disclosure (other than a public
release or announcement pursuant to the previous sentence) of the terms or
provisions of the Transaction Agreements shall be made without the prior written
consent (which consent shall not be unreasonably withheld) of the other party,
except to representatives, advisors, counsel, and lenders to the parties hereto
who acknowledge the confidentiality hereof, and except as required by law.
SECTION IV.13 Certain Understandings.
(a) World Heart and Newco have received from Xxxxxxx certain
projections, forecasts and other forward-looking information relating to Novacor
LLC. Each of World Heart and Newco acknowledges that (i) there are uncertainties
inherent in attempting to make such projections and forecasts, (ii) each of
World Heart and Newco is familiar with such uncertainties and are taking full
responsibility for making their own evaluation of the adequacy and accuracy of
all projections, forecasts and other forward-looking information so furnished to
them and (iii) neither World Heart nor Newco shall have any claim against
Xxxxxxx or its agents with respect thereto. Accordingly, without derogation of
any of the representations and warranties of Xxxxxxx set forth herein, Xxxxxxx
makes no representation or warranty with respect to such projections, and other
forward-looking information.
(b) Each of World Heart and Newco acknowledges that, except as
expressly set forth herein, neither Xxxxxxx, nor any other person, has made any
representation or warranty, express or implied, as to the accuracy or
completeness of any information regarding Novacor LLC, the Transferred Business
or the Transferred Assets, and neither Xxxxxxx nor any other person will be
subject to any liability to World Heart or Newco or any other person resulting
from the distribution to World Heart or Newco, or the use of, any such
information. Each of World Heart and Newco acknowledges that, should the Closing
occur, Newco will acquire the Transferred Business in an "as is" condition and
on a "where is" basis, without any representation or warranty of any kind,
express or implied, except such representations and warranties expressly set
forth herein and subject to the indemnification obligations set forth in Article
VII of this Agreement.
(c) Each of World Heart and Newco acknowledges that, except as
expressly set forth herein, neither Xxxxxxx, nor any other person, has made any
representation or warranty, express or implied, as to (i) the physical condition
or state of repair of the real property included in the Transferred Assets, the
improvements constituting a part thereof or the equipment and fixtures
appurtenant thereto, (ii) the gross or net income derived therefrom, (iii) the
cost, book value or market value thereof, (iv) the use or potential use thereof,
or (v) any other matter affecting, or relating to, such property or the
operation or management thereof.
SECTION IV.14 Required Notices. (a) Between the date of this Agreement
and the Closing Date, Xxxxxxx will notify World Heart and Newco of any event of
which Xxxxxxx obtains knowledge (i) which would reasonably be expected to result
in a Business Material Adverse Effect (ii) which, if known as of the date
hereof, would have been required under this Agreement to be disclosed to World
Heart and Newco or (iii) which constitutes notice from any third person alleging
that the consent of such third person is or may be required in connection with
the Transactions other than those set forth on Schedule 3.1(e).
(b) Between the date of this Agreement and the Closing Date, World
Heart and Newco will notify Xxxxxxx of any event of which Newco or World Heart
obtains knowledge (i) which would reasonably be expected to result in a World
Heart Material Adverse Effect, (ii) which, if known as of the date hereof would
have been required under this Agreement to have been disclosed to Xxxxxxx and
(iii) which constitutes notice from any third person alleging that the consent
of such third person is or may be required in connection with the transactions
contemplated by the Transaction Agreements.
SECTION IV.15 Patient Service. Newco shall, and World Heart shall
cause Newco to, continue to provide service and support to (a) patients of
Xxxxxxx or Novacor LLC who have Novacor implants as of the date hereof or prior
to the Closing Date and (b) those patients who have a Novacor's left ventricle
assist device implanted after the Closing Date (each patient referred to as a
"Novacor Patient") in each case, in a manner at least as favorable to such
individuals, for so long as clinically necessary, as has been provided by
Xxxxxxx or Novacor LLC prior to the date hereof.
SECTION IV.16 Post Closing Capital Contribution Obligations. Until the
third anniversary of the Closing, World Heart shall acquire Newco Common Stock
and/or junior preferred stock of Newco for cash in such amounts and at such
times as necessary so that the sum of the common equity and any such junior
preferred equity remains at all times greater than zero under U.S. GAAP.
SECTION IV.17 Outstanding Consents. Xxxxxxx agrees to use its
reasonable commercial efforts to obtain the consents set forth on Schedule
3.1(e) hereto, none of which each of World Heart and Newco acknowledges have
been obtained as of the date hereof.
SECTION IV.18 Governmental Approvals. Xxxxxxx agrees to deliver to
World Heart prior to the Closing Date, copies of all governmental approvals
which Xxxxxxx currently has to conduct the Transferred Business, including
without limitation, FDA approvals.
SECTION IV.19 Transfer Restrictions. So long as Xxxxxxx holds Newco
Preferred Shares, Xxxxxxx shall not sell, transfer or otherwise dispose of any
Newco Preferred Shares, except in accordance with one of the following:
(a) pursuant to a merger, consolidation or other business combination
of Xxxxxxx, where Xxxxxxx is not the surviving entity, or a sale of all or
substantially all of Xxxxxxx'x assets; provided, however, that the surviving or
purchasing entity agrees in writing to be bound by the terms of this Agreement;
or
(b) pursuant to a transfer of Newco Preferred Shares, by Xxxxxxx to an
affiliate of Xxxxxxx, from an affiliate of Xxxxxxx to Xxxxxxx or between
affiliates of Xxxxxxx (any such transferee shall be referred to herein as a
"Permitted Transferee"), provided that in the case of any such transfer, Xxxxxxx
or a Permitted Transferee, as the case may be, shall have provided World Heart
with written notice of such proposed transfer at least five days prior to
consummating such transfer stating the name and the address of the Permitted
Transferee and the relationship between the transferring party and the Permitted
Transferee and the Permitted Transferee shall have agreed in writing to be bound
by the terms of this Agreement. If any Permitted Transferee to whom Series A
Preferred Stock have been transferred pursuant to this Section 4.19 ceases to be
a Permitted Transferee, such Series A Preferred Stock shall be transferred back
to the transferor or another Permitted Transferee immediately prior to the time
such Person ceases to be a Permitted Transferee. Xxxxxxx and any Permitted
Transferee shall be jointly and severally liable for any breach of this
Agreement by such Permitted Transferee.
(c) Legends on Shares. Xxxxxxx agrees that the certificates
representing the Newco Preferred Shares may bear a legend referring to the
transfer restrictions of this Section 4.19.
SECTION IV.20 Shareholder Approval. World Heart shall (a) take all
actions necessary or prudent to obtain the approval of the Transactions and
Transaction Agreements by the requisite vote of the holders of voting shares of
World Heart (b) if necessary, acting through its Board of Directors, promptly
and duly call, give notice of, convene and hold as soon as practicable a meeting
of the holders of voting shares of World Heart for the purpose of voting to
approve and adopt the Transaction Agreements and the Transactions and recommend
approval and adoption of the Transaction Agreements and the Transactions, by the
stockholders of World Heart and include in any public disclosure statement in
connection therewith such recommendation and (c) take all reasonable and lawful
action to solicit and obtain such approval.
ARTICLE V
CONDITIONS PRECEDENT
SECTION V.1 Conditions Precedent to Obligations of Newco and World
Heart. The obligation of World Heart to consummate the World Heart Contribution
and of Newco to issue the Newco Shares shall be subject to the satisfaction or
waiver on the Closing Date of the following conditions precedent:
(a) HSR Act. The waiting period under the HSR Act, if applicable,
shall have expired or been terminated.
(b) No Injunctions or Restraints. No temporary restraining order or
preliminary or permanent injunction of any court or administrative agency of
competent jurisdiction prohibiting any of the Transactions shall be in effect.
(c) Consents. All consents, approvals and waivers from third parties
and governmental authorities and other parties set forth on Schedule 3.1(e) or
necessary to permit the consummation of the Transactions, shall have been
obtained, except where the failure to obtain any such consent, approval or
waiver would not reasonably be expected to result in a Xxxxxxx Material Adverse
Effect.
(d) Representations and Warranties. The representations and warranties
of Xxxxxxx set forth in this Agreement (i) which are qualified by materiality
shall be true and correct in all respects or (ii) which are not so qualified
shall be true and correct in all material respects, in each case, as of the
Closing Date with the same effect as though made on and as of the Closing Date
and without giving effect to notifications made pursuant to Section 4.14.
(e) Performance of Obligations of Xxxxxxx and Novacor LLC. Xxxxxxx and
Novacor LLC shall have performed in all material respects their respective
obligations under the Transaction Agreements on or prior to the Closing Date.
(f) Certificate. Xxxxxxx shall have delivered to World Heart a
certificate, dated the Closing Date and signed by a duly authorized executive
officer of Xxxxxxx, to the effect that the conditions set forth in Sections
5.1(d), (e) and (f) have been satisfied.
(g) Transaction Agreements. Xxxxxxx shall have entered into each of
the other Transaction Agreements to which it is a party and Xxxxxxx and Novacor
LLC shall have entered into the Assignment Agreement and the Transactions
contemplated thereby shall have been consummated.
(h) Legal Opinion. Counsel to Xxxxxxx (which may be an Xxxxxxx
employee) shall have delivered a legal opinion as to the matters set forth in
Exhibit J hereto, subject to usual qualifications and exceptions.
SECTION V.2 Conditions Precedent to Xxxxxxx'x Obligation. The
obligation of Xxxxxxx to make the Xxxxxxx Contribution is subject to the
satisfaction or waiver on the Closing Date of each of the following conditions
precedent:
(a) Stockholder Approval. The Transaction Agreements and the
Transactions shall have been approved and adopted by the requisite vote of the
holders of outstanding capital stock of World Heart entitled to vote thereon;
(b) HSR Act. The waiting period under the HSR Act, if applicable,
shall have expired or been terminated.
(c) No Injunctions or Restraints. No temporary restraining order or
preliminary or permanent injunction of any court or administrative agency of
competent jurisdiction prohibiting any of the Transactions shall be in effect.
(d) Consents. All consents, approvals and waivers from third parties
and governmental authorities and other parties set forth on Schedule 3.2(c) or
necessary (i) to permit Xxxxxxx to contribute the LLC Interests to Newco and
(ii) World Heart to contribute cash to Newco as contemplated hereby shall have
been obtained, except where the failure to obtain any such consent, approval or
waiver would not reasonably be expected to result in a World Heart Material
Adverse Effect.
(e) Representations and Warranties. The representations and warranties
of Newco and World Heart set forth in this Agreement (i) which are qualified by
materiality shall be true and correct in all respects or (ii) which are not so
qualified shall be true and correct in all material respects, in each case, as
of the Closing Date with the same effect as though made on and as of the Closing
Date.
(f) Performance of Obligations of Newco and World Heart. Newco and
World Heart shall have performed in all material respects their respective
obligations under the Transaction Agreements on or prior to the Closing Date.
(g) Certificate. Each of Newco and World Heart shall have delivered to
Xxxxxxx a certificate, dated the Closing Date and signed by a duly authorized
executive officer, (i) to the effect that the conditions set forth in Sections
5.2(d), (e) and (f) have been satisfied and (ii) certifying to and attaching
evidence of the insurance obtained in compliance with Section 4.12 hereof.
(h) Transaction Agreements. Newco and World Heart shall have entered
into the other Transaction Agreements and the Transactions and the transactions
contemplated by the World Heart Preferred Agreement shall be consummated on the
Closing Date.
(i) Listing. The World Heart Common shares to be issued upon Xxxxxxx'x
exercise of its rights under the Exchange Agreement shall have been reserved for
issuance and approved for listing on The Nasdaq National Market System and The
Toronto Stock Exchange, subject to official notice of issuance, the delivery of
final documentation and similar customary listing conditions.
(j) Legal Opinion. Counsel to World Heart (which may be a World Heart
employee) shall have delivered an opinion as to the matters set forth in Exhibit
K hereto, subject to usual qualifications and exceptions.
ARTICLE VI
TERMINATION AND AMENDMENT
SECTION VI.1 Termination. This Agreement may be terminated and the
Transactions may be abandoned at any time prior to the Closing:
(a) by mutual written consent of Xxxxxxx and World Heart;
(b) by either Xxxxxxx or by World Heart, by written notice to the
other, if there has been a material violation or breach of the covenants,
agreements, or representations or warranties of World Heart or Newco on the one
hand or Xxxxxxx on the other (if such representation or warranty is not
qualified by materiality) or any violation or breach of such other the
representations or warranties of World Heart or Newco on the one hand or Xxxxxxx
on the other (if so qualified) or if there has been a failure on a scheduled
Closing Date of satisfaction of any of the conditions to the obligations of the
terminating party or parties which has not been cured within 20 days after
written notice thereof by the terminating party to World Heart or Xxxxxxx, as
the case may be;
(c) by either Xxxxxxx or World Heart, by written notice to the other,
if the Transactions and the transactions contemplated by the World Heart
Preferred Agreement have not been consummated by July 31, 2000 (or such later
date, as is agreed to by Xxxxxxx and World Heart), and such failure to
consummate is not caused by a breach of this Agreement (or any representation,
warranty, covenant, or agreement included herein) by the party or parties
electing to terminate pursuant to this clause (c); or
(d) by either Xxxxxxx or World Heart, by written notice to the other,
if there shall be any law or regulation that makes consummation of the
Transactions or the transactions contemplated by the World Heart Preferred
Agreement illegal or otherwise prohibited or if any judgment, injunction, order
or decree enjoining Xxxxxxx or Newco or World Heart from consummating the
Transactions or the transactions contemplated by the World Heart Preferred
Agreement is entered and such judgment, injunction, order or decree shall become
final and nonappealable.
SECTION VI.2 Effect of Termination. In the event of termination of
this Agreement in accordance with Section 6.1, this Agreement shall forthwith
become void and have no effect, except (a) to the extent that such termination
results from the material breach by a party hereto of its obligations hereunder
(in which case such breaching party shall be liable for all damages allowable at
law and any relief available at equity), (b) as otherwise set forth in any
written termination agreement and (c) that Sections 4.3(b), 4.12, 6.2, 8.1, 8.2,
8.11 and 8.12 shall survive termination of this Agreement.
ARTICLE VII
SURVIVAL; INDEMNIFICATION
SECTION VII.1 Survival. The representations and warranties contained
in or made pursuant to this Agreement shall survive for a period of 12 months
after the Closing Date; provided, however, that the representations and
warranties contained in Section 3.1(m) of this Agreement shall survive until 60
days after the expiration of the applicable statute of limitations. From and
after the Closing, Xxxxxxx hereby agrees to indemnify and hold harmless World
Heart, Newco, and Novacor LLC, and World Heart hereby agrees to indemnify and
hold harmless Xxxxxxx, in each case against certain liabilities, in accordance
with the terms of this Article VII. The Indemnifying Party (as defined below)
shall not be obligated to provide such indemnification with respect to
representations and warranties to the Indemnified Party (as defined below)
unless the Indemnifying Party shall have received written notice thereof
(including a reasonably detailed description of the basis of the claim) within
the applicable time period for survival of such representations or warranty, as
set forth above.
SECTION VII.2 Indemnification.
(a) Subject to the other provisions of this Article VII, from and
after the Closing, Xxxxxxx shall indemnify and hold harmless World Heart, Newco
and Novacor LLC, and their respective employees, directors and agents (i) from
and against any costs or expenses (including, without limitation, reasonable
attorneys' fees, and the reasonable out-of-pocket expenses of testifying and
preparing for testimony and responding to document and other information
requests, whether or not a party to such litigation), judgments, fines, losses,
claims (whether or not meritorious) and damages (collectively, "Damages"), as
incurred, to the extent they relate to, arise out of or are the result of any
breach or alleged breach of any representation, warranty or pre-Closing covenant
of Xxxxxxx or Novacor LLC, and any post-Closing covenant of Xxxxxxx, (ii) for
any liabilities arising from actions of Xxxxxxx or Novacor LLC prior to Closing
which are not disclosed on the Pro Forma Balance Sheet, the Schedules hereto or
in the notifications provided under Section 4.14 hereof except those incurred in
the ordinary course of business, (iii) any failure by Xxxxxxx to obtain consents
of third parties to the Transactions required by the Applicable Contracts, or
(iv) for any and all Taxes, including, without limitation, transfer,
documentary, sales, use, stamp, registration and other similar Taxes, imposed on
or with respect to Novacor LLC, the Transferred Assets and the Transferred
Business, including, without limitation, as a result of the transaction
contemplated by this Agreement, for all Pre-Closing Periods; provided, however,
that Xxxxxxx shall not be liable for any such Taxes incurred on the Closing Date
after the Closing due to any action or inaction of, or caused by, World Heart,
Newco or Novacor LLC. For purposes of clarification of the preceding sentence
and Section 3.1(g), "liabilities ... incurred in the ordinary course of
business" shall not include liabilities arising from tort claims or claims for
breach of contract.
(b) Subject to the other provisions of this Article VII, from and
after the Closing, World Heart shall indemnify and hold harmless Xxxxxxx and
Novacor LLC and Newco and their respective employees, directors and agents from
and against any Damages, as incurred, to the extent they relate to, arise out of
or are the result of (i) any breach or alleged breach of any representation,
warranty or covenant of World Heart or Newco (ii) any action or inaction on the
part of World Heart or Newco (or Novacor LLC post-Closing) relating to a Novacor
Patient.
SECTION VII.3 Indemnification Amounts. Except for any indemnification
with respect to Taxes, notwithstanding any provision to the contrary contained
in this Agreement, Xxxxxxx shall not be obligated to indemnify World Heart or
Newco or Novacor LLC and World Heart and Newco shall not be obligated to
indemnify Xxxxxxx, in each case for any Damages with respect to the matters set
forth in Section 7.2(a) and (b) hereof (i) unless and until the amount of all
such respective Damages shall equal $250,000 in the aggregate, and then only to
the extent of such excess or (ii) to the extent such Damages exceed $10 million.
SECTION VII.4 Claims. (a) If an indemnified party (an "Indemnified
Party") intends to seek indemnification pursuant to this Article VII, such
Indemnified Party shall promptly notify the indemnifying party (the
"Indemnifying Party"), in writing, of such claim describing such claim in
reasonable detail, provided, that the failure to provide such notice shall not
affect the obligations of the Indemnifying Party unless and only to the extent
it is actually prejudiced thereby, subject, however, to the time periods
specified in Section 7.1 hereof. Except for claims with respect to Taxes, which
shall be governed by Section 4.9(a), (i) in the event that such claim involves a
claim by a third party against an Indemnified Party, the Indemnifying Party
shall have 30 days after receipt of such notice to decide whether it will
undertake, conduct and control, through counsel of its own choosing and at its
own expense, the settlement or defense thereof, and if it so decides, the
Indemnified Party shall cooperate with it in connection therewith, provided,
that the Indemnified Party may participate in such settlement or defense through
counsel chosen by it, and provided further, that the reasonable fees and
expenses of such counsel shall be borne by the Indemnified Party. The
Indemnifying Party shall not, without the written consent of the Indemnified
Party (which consent shall not be unreasonably withheld), settle or compromise
any action. If the Indemnifying Party does not notify the Indemnified Party
within 30 days after the receipt of notice of a claim of indemnity hereunder
that it elects to undertake the defense thereof, the Indemnified Party shall
have the right to contest, settle or compromise the claim but shall not pay or
settle any such claim without the consent of the Indemnifying Party (which
consent shall not be unreasonably withheld).
(b) Xxxxxxx, Novacor LLC, Newco and World Heart shall cooperate fully
in all aspects of any investigation, defense, pre-trial activities, trial,
compromise, settlement or discharge of any claim in respect of which indemnity
is sought pursuant to Article VII, including, but not limited to, by providing
the other party with reasonable access to employees and officers (including as
witnesses) and other information.
SECTION VII.5 Exclusive Remedy. Absent fraud, the indemnification
provisions of this Article VII shall be the exclusive remedy following the
Closing for any breaches or alleged breaches of any representation or warranty
contained in the Transaction Agreements. Neither party shall have the right to
set-off against any payments to be made by such party pursuant to this Agreement
or the other Transaction Agreements or otherwise. Each of the parties hereto
agrees not to bring any actions or proceedings, at law, equity or otherwise,
against any other party or its direct or indirect partners or securityholders in
respect of any breaches or alleged breaches of any representation or warranty
except pursuant to the express provisions of this Article VII. The parties
hereby agree that no party has made any representations or warranties, express
or implied, with respect to this Agreement or the matters contemplated hereby,
except as explicitly set forth in this Agreement or the other Transaction
Agreements.
SECTION VII.6 Duplication. Any liability for indemnification hereunder
shall be determined without duplication of recovery by reason of the state of
facts giving rise to such liability constituting a breach of more than one
representation, warranty, covenant or agreement; provided, however, that subject
to there being no duplication of recovery, the Indemnified Party shall be
entitled to recover to the maximum extent provided in this Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION VIII.1 Governing Law. This agreement shall be governed by,
interpreted under, and construed in accordance with the internal laws of the
State of New York, including, without limitation, Sections 5-1401 and 5-1402 of
the New York General Obligations Law and New York Civil Practice Laws and Rules
327(b).
SECTION VIII.2 Jurisdiction and Consent to Service. In accordance with
the laws of the State of New York, and without limiting the jurisdiction or
venue of any other court, the parties (a) agree that any suit, action or
proceeding arising out of or relating to this Agreement may be brought in the
state or federal courts of New York; (b) consent to the non-exclusive
jurisdiction of each such court in any suit, action or proceeding relating to or
arising out of the Transaction Agreements; (c) waive any objection which any of
them may have to the laying of venue in any such suit, action or proceeding in
any such court and waive any defense of forum non conveniens; and (d) agree that
service of any court paper in any such suit, action or proceeding may be made in
the same manner in which notices may be given pursuant to Section 8.3 of this
Agreement.
SECTION VIII.3 Notices. All notices, demands, requests, consents,
approvals or other communications required or permitted to be given hereunder or
which are given with respect to this Agreement shall be in writing and shall be
delivered (charges prepaid, receipt confirmed or return receipt requested (if
available)) by hand, by nationally recognized air courier service, by certified
mail or facsimile, addressed as set forth below or to such other address as such
party shall have specified most recently by written notice. Notice shall be
deemed given and effective (i) if delivered by hand or by nationally recognized
courier service, when delivered at the address specified in this Section 8.3 (or
in accordance with the latest unrevoked written direction from such party), (ii)
if by certified mail, upon mailing or (iii) if given by facsimile when such
facsimile is transmitted to the fax number specified in this Section 8.3 (or in
accordance with the latest unrevoked written direction from such party),
provided the appropriate confirmation is received.
(a) if to World Heart, to
World Heart Corporation
0 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxx
X0X 0X0
Attn: Chief Financial Officer
Fax: (000) 000-0000
with a copy (which shall not constitute notice) to:
XxXxxxxx Xxxxxxxx
The Xxxxxxxx
0000-00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxx X0X 0X0
Attn: Xxxxxx X. Xxxxxxx
Fax: (000) 000-0000
(b) if to Xxxxxxx, to
Xxxxxxx Lifesciences LLC
Xxx Xxxxxxx Xxx
Xxxxxx, Xxxxxxxxxx 00000
Attn: Associate General Counsel
Fax: (000) 000-0000
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
SECTION VIII.4 Interpretation. When a reference is made in this
Agreement to a Section, Schedule or Exhibit, such reference shall be to a
Section, Schedule or Exhibit of this Agreement unless otherwise indicated. When
a reference is made in this Agreement to a specific Schedule, such reference
shall be deemed to include, to the extent applicable, all the other Schedules.
The table of contents, table of definitions and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. When the words "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." All accounting terms not defined in this
Agreement shall have the meanings determined by generally accepted accounting
principles as of the date hereof. All capitalized terms defined herein are
equally applicable to both the singular and plural forms of such terms.
SECTION VIII.5 Severability. If any provision of this Agreement or the
application of any such provision shall be held invalid, illegal or
unenforceable in any respect for any reason, the parties shall negotiate in good
faith with a view to the substitution therefor of a suitable and equitable
solution in order to carry out, so far as may be valid and enforceable, the
intent and purpose of such invalid provision; provided, however, that the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.
SECTION VIII.6 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original and all of which
shall, taken together, be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other parties.
SECTION VIII.7 Entire Agreement; No Third Party Beneficiaries. This
Agreement and the other Transaction Agreements, including all exhibits hereto
and thereto and the Confidentiality Agreement,
(a) constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede all prior and contemporaneous agreements,
representations, understandings, negotiations and discussions between the
parties, whether oral or written, with respect to the subject matter hereof; and
(b) shall be binding upon and shall inure to the benefit of each of
the parties and their respective successors and permitted assigns and are not
intended to confer any rights, remedies or benefits on any Persons other than as
expressly set forth in this Section 8.7.
SECTION VIII.8 Further Assurances. Each party hereto shall do all such
further acts and execute, acknowledge, deliver and file all such further
instruments and documents as may be necessary or desirable to give effect to and
carry out the transactions contemplated by this Agreement.
SECTION VIII.9 Amendments and Modifications; Waivers and Extensions.
(a) No amendment, modification or termination of this Agreement shall
be binding upon any other party unless executed in writing by the parties hereto
intending to be bound thereby.
(b) Any party to this Agreement may waive any right, breach or default
which such party has the right to waive; provided that such waiver will not be
effective against the waiving party unless it is in writing, is signed by such
party, and specifically refers to this Agreement. Waivers may be made in advance
or after the right waived has arisen or the breach or default waived has
occurred. Any waiver may be conditional. No waiver of any breach of any
agreement or provision herein contained shall be deemed a waiver of any
preceding or succeeding breach thereof nor of any other agreement or provision
herein contained. No failure or delay in exercising any right, power or
privilege hereunder shall be deemed a waiver or extension of the time for
performance of any other obligations or acts nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.
SECTION VIII.10 Assignment. Neither this Agreement nor any of the
rights or obligations hereunder shall be assigned by any of the parties hereto
without the prior written consent of the other parties, except that any party
may assign all its rights and obligations to the assignee of all or
substantially all of the assets of such party including an acquisition through
merger, provided that such party shall in no event be released from its
obligations hereunder without the prior written consent of the other parties.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns. Any attempted assignment in contravention hereof shall be null and
void.
SECTION VIII.11 Equitable Remedies. 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. It is accordingly agreed that the parties hereto shall be
entitled to equitable relief, including in the form of injunctions, in order to
enforce specifically the provisions of this Agreement, in addition to any other
remedy to which they are entitled at law or in equity.
SECTION VIII.12 Expenses. Except as otherwise provided in this
Agreement, whether or not the Closing takes place, each party to this Agreement
shall bear its respective expenses incurred in connection with the preparation,
execution, and performance of this Agreement and the transactions contemplated
hereby, including all fees and expenses of agents, representations, counsel and
accountants; provided, however, that each of Xxxxxxx and World Heart shall pay
one-half of the costs incurred by Xxxxxxx in connection with the preparation of
the financial statements, pursuant to Section 4.10(c); and provided, further
that the prevailing party in any legal action brought by one party against the
other party and arising out of this Agreement shall be entitled, in addition to
any other rights and remedies it may have, to reimbursement for its expenses,
including court costs and reasonable attorneys' fees.
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of
Xxxxxxx and World Heart, all as of the date first written above.
XXXXXXX LIFESCIENCES LLC
By:___________________________________
Name:
Title:
XXXXXXX NOVACOR LLC
By:___________________________________
Name:
Title:
WORLD HEART CORPORATION
By:___________________________________
Name:
Title:
VALENTINE ACQUISITION CORP.
By:___________________________________
Name:
Title:
