AGREEMENT AND PLAN OF MERGER
BY AND AMONG
MEDTRONIC, INC.,
AC MERGER CORP.,
AND
AVECOR CARDIOVASCULAR, INC.
July 12, 1998
TABLE OF CONTENTS
ARTICLE 1 THE MERGER; CONVERSION OF SHARES . . . . . . . . . . . . . . . . . . 1
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Conversion of Shares . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5 Exchange of Company Common Stock . . . . . . . . . . . . . . . . . . . 4
1.6 Exchange of Merger Subsidiary Common Stock . . . . . . . . . . . . . . 6
1.7 Stock Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.8 Capitalization Changes . . . . . . . . . . . . . . . . . . . . . . . . 7
1.9 Articles of Incorporation of the Surviving Corporation . . . . . . . . 8
1.10 Bylaws of the Surviving Corporation . . . . . . . . . . . . . . . . . 8
1.11 Directors and Officers of the Surviving Corporation . . . . . . . . . 8
ARTICLE 2 CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.1 Time and Place . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.2 Filings at the Closing . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. . . . . . . . . . . . 9
3.1 Disclosure Schedule. . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.2 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.3 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
3.4 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
3.5 Reports and Financial Statements . . . . . . . . . . . . . . . . . . .11
3.6 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . .12
3.7 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . .12
3.8 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . .13
3.9 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
3.10 Absence of Material Adverse Changes . . . . . . . . . . . . . . . . .14
3.11 Environmental Laws and Regulations. . . . . . . . . . . . . . . . . .14
3.12 Officers, Directors and Employees . . . . . . . . . . . . . . . . . .16
3.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
3.14 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
3.15 Title to Properties; Liens. . . . . . . . . . . . . . . . . . . . . .18
3.16 Permits, Licenses, Etc. . . . . . . . . . . . . . . . . . . . . . . .18
3.17 Intellectual Property Rights. . . . . . . . . . . . . . . . . . . . .19
3.18 Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
3.19 Minute Books. . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
3.20 Insurance Policies. . . . . . . . . . . . . . . . . . . . . . . . . .22
3.21 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
3.22 Powers of Attorney. . . . . . . . . . . . . . . . . . . . . . . . . .22
3.23 Product Liability Claims. . . . . . . . . . . . . . . . . . . . . . .22
3.24 Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
3.25 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
3.26 Relations with Suppliers and Customers. . . . . . . . . . . . . . . .23
3.27 No Finders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
3.28 Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . .24
3.29 Merger Filings. . . . . . . . . . . . . . . . . . . . . . . . . . . .24
3.30 Fairness Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . .24
3.31 State Takeover Laws . . . . . . . . . . . . . . . . . . . . . . . . .24
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ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBSIDIARY . . .25
4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
4.2 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
4.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
4.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . .26
4.5 Reports; Financial Statements; Absence of Changes. . . . . . . . . . .27
4.6 Registration Statement . . . . . . . . . . . . . . . . . . . . . . . .28
4.7 Merger Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
4.8 No Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
ARTICLE 5 COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
5.1 Conduct of Business of the Company . . . . . . . . . . . . . . . . . .28
5.2 No Solicitation. . . . . . . . . . . . . . . . . . . . . . . . . . . .32
5.3 Access and Information . . . . . . . . . . . . . . . . . . . . . . . .32
5.4 Approval of Shareholders; Proxy Statement; Registration Statement. . .33
5.5 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
5.6 Affiliates' Letters. . . . . . . . . . . . . . . . . . . . . . . . . .34
5.7 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
5.8 Further Actions. . . . . . . . . . . . . . . . . . . . . . . . . . . .35
5.9 Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . .35
5.10 Certain Notifications . . . . . . . . . . . . . . . . . . . . . . . .36
5.11 Voting of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . .36
5.12 Noncompetition Agreements . . . . . . . . . . . . . . . . . . . . . .36
5.13 NYSE Listing Application. . . . . . . . . . . . . . . . . . . . . . .37
5.14 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . .37
5.15
5.16 Subsidiary Shares . . . . . . . . . . . . . . . . . . . . . . . . . .37
5.17 Stock Option Agreement. . . . . . . . . . . . . . . . . . . . . . . .37
5.18 Benefit Plans and Employee Matters. . . . . . . . . . . . . . . . . .38
5.19 Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
ARTICLE 6 CLOSING CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . .38
6.1 Conditions to Obligations of Parent, Merger Subsidiary, and
the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
6.2 Conditions to Obligations of Parent and Merger Subsidiary. . . . . . .39
6.3 Conditions to Obligations of the Company . . . . . . . . . . . . . . .40
ARTICLE 7 TERMINATION AND ABANDONMENT. . . . . . . . . . . . . . . . . . . . .41
7.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
7.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . .42
ARTICLE 8 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . .44
8.1 Amendment and Modification . . . . . . . . . . . . . . . . . . . . . .44
8.2 Waiver of Compliance; Consents . . . . . . . . . . . . . . . . . . . .44
8.3 Investigation; Survival of Representations and Warranties. . . . . . .44
8.4 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
8.5 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
8.6 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
8.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
8.8 Knowledge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
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8.9 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
8.10 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
8.11 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . .46
EXHIBITS:
Exhibit A: Form of Plan of Merger
Exhibit B: Form of Affiliate's Letter
Exhibit C: Form of Agreement to Facilitate Merger
Exhibit D: Form of Noncompetition Agreement
Exhibit E: Form of Stock Option Agreement
Exhibit F: Form of Opinion of the Company's Counsel
Exhibit G: Form of Opinion of Parent's Counsel
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT is dated as of July 12, 1998, by and among MEDTRONIC, INC.,
a Minnesota corporation ("Parent"), AC MERGER CORP., a Minnesota corporation and
wholly-owned subsidiary of Parent ("Merger Subsidiary"), and AVECOR
CARDIOVASCULAR, INC., a Minnesota corporation (the "Company").
WHEREAS, the Boards of Directors of Parent, Merger Subsidiary, and the
Company have approved the merger of Merger Subsidiary with and into the Company
(the "Merger") upon the terms and subject to the conditions set forth herein;
and
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a)(1)(A) and
(a)(2)(E) of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, prior to the execution of the Stock Option Agreement described in
Section 5.17, officers and directors of the Company have, to induce Parent to
execute this Agreement, executed and delivered to Parent the Agreements to
Facilitate Merger described in Section 5.11; and
WHEREAS, as a further and subsequent inducement to have Parent execute this
Agreement, Parent and the Company are entering into the Stock Option Agreement
described in Section 5.17 hereof after execution and delivery of the Agreements
to Facilitate Merger described in Section 5.11; and
WHEREAS, the parties hereto desire to make certain representations,
warranties, and agreements in connection with the Merger and also to prescribe
various conditions to the Merger;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
representations, warranties, covenants, and agreements contained herein, the
parties hereto agree as follows:
ARTICLE 1
THE MERGER; CONVERSION OF SHARES
1.1 THE MERGER. Subject to the terms and conditions of this Agreement,
at the Effective Time (as defined in Section 1.2 hereof), Merger Subsidiary
shall be merged with and into the Company in accordance with the provisions of
the Minnesota Business Corporation Act (the "MBCA"), whereupon the separate
corporate existence of Merger Subsidiary shall cease, and the Company shall
continue as the surviving corporation (the "Surviving Corporation"). From and
after the Effective Time, the Surviving Corporation shall possess all the
rights, privileges, powers, and franchises and be subject to all the
restrictions, disabilities, and duties of the Company and Merger Subsidiary, all
as more fully described in the MBCA.
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1.2 EFFECTIVE TIME. As soon as practicable after each of the
conditions set forth in Article 6 has been satisfied or waived, the Company and
Merger Subsidiary will file, or cause to be filed, with the Secretary of State
of the State of Minnesota Articles of Merger for the Merger, which Articles
shall be in the form required by and executed in accordance with the applicable
provisions of the MBCA and shall include as a part thereof a plan of merger (the
"Plan of Merger") substantially in the form attached hereto as EXHIBIT A. The
Merger shall become effective at the time such filing is made or, if agreed to
by Parent and the Company, such later time or date set forth in the Articles of
Merger (the "Effective Time").
1.3 CONVERSION OF SHARES. At the Effective Time, by virtue of the
Merger and without any action on the part of any holder of any share of capital
stock of the Company or Merger Subsidiary:
(a) Each share of common stock of the Company, par value $.01
per share ("Company Common Stock"), issued and outstanding immediately
prior thereto (except for Dissenting Shares, as defined in Section 1.4
hereof, and except for shares referred to in Section 1.3(b) hereof) shall
be converted into the right to receive the fraction of a share (subject to
adjustment as provided below, the "Conversion Fraction") of common stock of
Parent, par value $.10 per share ("Parent Common Stock"), equal to $11.125
divided by the Parent Average Stock Price. The "Parent Average Stock
Price" shall mean the average (rounded to the nearest full cent, with the
cents rounded up if the third decimal place is 5 or more) of the daily
closing sale prices of a share of Parent Common Stock as reported on the
New York Stock Exchange ("NYSE") Composite Tape, as reported in The Wall
Street Journal, for the 18 consecutive NYSE trading days ending on and
including the second NYSE trading day immediately preceding the Effective
Time.
Notwithstanding the foregoing, if the sum of the number of shares
of Company Common Stock outstanding immediately prior to the Effective Time
plus the number of shares subject to then outstanding options, warrants, or
other rights to acquire shares of Company Common Stock (collectively,
"Company Stock Acquisition Rights") is greater than 8,879,725 shares plus
that number of shares issuable pursuant to the current offering period in
process as of the date of this Agreement under the Company's Employee Stock
Purchase Plan or if the aggregate exercise price of all such Company Stock
Acquisition Rights then outstanding is less than the aggregate exercise
price reflected in Section 3.4 hereof, then the $11.125 amount per share of
Company Common Stock, as described above, shall be reduced to an amount, if
lower, equal to (i) $11.125 times [8,879,725 shares plus that number of
shares issuable pursuant to the current offering period in process as of
the date of this Agreement under the Company's Employee Stock Purchase
Plan] minus the aggregate exercise price reflected in Section 3.4 hereof
plus the aggregate amount received by the Company as a result of any
issuance of Company Common Stock after the date of this Agreement and prior
to the Effective Time plus the aggregate exercise price of all Company
Stock Acquisition Rights outstanding immediately prior to the Effective
Time divided by (ii) the sum of (A) the number of shares of Company
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Common Stock outstanding immediately prior to the Effective Time plus
(B) the number of shares subject to Company Stock Acquisition Rights then
outstanding.
An appropriate adjustment shall similarly be made in the event
that, prior to the Effective Time, the outstanding shares of Company Common
Stock, without new consideration, are changed into or exchanged for a
different kind of shares or securities through a reorganization,
reclassification, stock dividend, stock combination, or other like change
in the Company's capitalization. Notwithstanding the foregoing, nothing in
this section shall be deemed to constitute authorization or permission for
or consent from Parent or Merger Subsidiary to any increase in the number
of shares of Company Common Stock outstanding or subject to outstanding
Company Stock Acquisition Rights, to any decrease in the exercise price of
such Rights, or to any reorganization, reclassification, stock dividend,
stock combination, or other like change in capitalization.
(b) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time that is then owned beneficially or
of record by Parent, Merger Subsidiary, or any direct or indirect
subsidiary of Parent or the Company shall be cancelled without payment of
any consideration therefor and without any conversion thereof.
(c) Each share of any other class of capital stock of the
Company (other than Company Common Stock) shall be cancelled without
payment of any consideration therefor and without any conversion thereof.
(d) Each share of common stock of Merger Subsidiary, par value
$.01 per share ("Merger Subsidiary Common Stock"), issued and outstanding
immediately prior to the Effective Time shall be converted into one share
of the common stock of the Surviving Corporation, par value $.01 per share
("Surviving Corporation Common Stock").
1.4 DISSENTING SHARES. Notwithstanding any provision of this Agreement
to the contrary, each outstanding share of Company Common Stock, the holder of
which has demanded and perfected such holder's right to dissent from the Merger
and to be paid the fair value of such shares in accordance with Sections
302A.471 and 302A.473 of the MBCA and, as of the Effective Time, has not
effectively withdrawn or lost such dissenters' rights ("Dissenting Shares"),
shall not be converted into or represent a right to receive the Parent Common
Stock into which shares of Company Common Stock are converted pursuant to
Section 1.3 hereof, but the holder thereof shall be entitled only to such rights
as are granted by the MBCA. Parent shall cause the Company to make all payments
to holders of shares of Company Common Stock with respect to such demands in
accordance with the MBCA. The Company shall give Parent (i) prompt written
notice of any notice of intent to demand fair value for any shares of Company
Common Stock, withdrawals of such notices, and any other instruments served
pursuant to the MBCA and received by the Company, and (ii) the opportunity to
conduct jointly all negotiations and proceedings with respect to demands for
fair value for shares of Company Common Stock
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under the MBCA. The Company shall not, except with the prior written
consent of Parent or as otherwise required by law, voluntarily make any
payment with respect to any demands for fair value for shares of Company
Common Stock or offer to settle or settle any such demands.
1.5 EXCHANGE OF COMPANY COMMON STOCK.
(a) Promptly after the Effective Time, Parent shall cause
Parent's stock transfer agent or such other person as Parent may appoint to
act as exchange agent (the "Exchange Agent") to mail to each holder of
record (other than Parent, Merger Subsidiary, or any other subsidiary of
Parent or the Company) of a certificate or certificates that immediately
prior to the Effective Time represented outstanding shares of Company
Common Stock ("Company Certificates") a form letter of transmittal (which
shall specify that delivery shall be effective, and risk of loss and title
to the Company Certificate(s) shall pass, only upon delivery of the Company
Certificate(s) to the Exchange Agent) and instructions for such holder's
use in effecting the surrender of the Company Certificates in exchange for
certificates representing shares of Parent Common Stock.
(b) As soon as practicable after the Effective Time, the
Exchange Agent shall distribute to holders of shares of Company Common
Stock, upon surrender to the Exchange Agent of one or more Company
Certificates for cancellation, together with a duly-executed letter of
transmittal, (i) one or more Parent certificates representing the number of
whole shares of Parent Common Stock into which the shares represented by
the Company Certificate(s) shall have been converted pursuant to Section
1.3(a), and (ii) a bank check in the amount of cash into which the shares
represented by the Company Certificate(s) shall have been converted
pursuant to Section 1.5(f) (relating to fractional shares), and the Company
Certificate(s) so surrendered shall be cancelled. In the event of a
transfer of ownership of Company Common Stock that is not registered in the
transfer records of the Company, it shall be a condition to the issuance of
shares of Parent Common Stock that the Company Certificate(s) so
surrendered shall be properly endorsed or be otherwise in proper form for
transfer and that such transferee shall (i) pay to the Exchange Agent any
transfer or other taxes required, or (ii) establish to the satisfaction of
the Exchange Agent that such tax has been paid or is not payable.
(c) Holders of Company Common Stock will be entitled to any
dividends or other distributions pertaining to the Parent Common Stock
received in exchange therefor that become payable to persons who are
holders of record of Parent Common Stock as of a record date on the same
date as or after the Effective Time, but only after they have surrendered
their Company Certificates for exchange. Subject to the effect, if any, of
applicable law, the Exchange Agent shall receive, hold, and remit any such
dividends or other distributions to each such record holder entitled
thereto, without interest, at the time that such Company Certificates are
surrendered to the Exchange Agent for exchange. Holders of Company Common
Stock will not be entitled, however, to dividends or other distributions
that become payable before or after the Effective Time to persons who were
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holders of record of Parent Common Stock as of a record date that is prior
to the Effective Time.
(d) All shares of Parent Common Stock issued upon the surrender
for exchange of Company Common Stock in accordance with the terms hereof
(including any cash paid for fractional shares pursuant to Section 1.5(f)
hereof) shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of Company Common Stock.
(e) After the Effective Time, there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Company Common Stock that were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Company Certificates representing such shares are presented to the
Surviving Corporation, they shall be cancelled and exchanged as provided in
this Article 1. As of the Effective Time, the holders of Company
Certificates representing shares of Company Common Stock shall cease to
have any rights as shareholders of the Company, except such rights, if any,
as they may have pursuant to the MBCA. Except as provided above, until
such Company Certificates are surrendered for exchange, each such Company
Certificate shall, after the Effective Time, represent for all purposes
only the right to receive the number of whole shares of Parent Common Stock
into which the shares of Company Common Stock shall have been converted
pursuant to the Merger as provided in Section 1.3(a) hereof and the right
to receive the cash value of any fraction of a share of Parent Common Stock
as provided in Section 1.5(f) hereof.
(f) No fractional shares of Parent Common Stock and no
certificates or scrip therefor, or other evidence of ownership thereof,
shall be issued upon the surrender for exchange of Company Certificates, no
dividend or other distribution of Parent shall relate to any fractional
share, and such fractional share interests shall not entitle the owner
thereof to vote or to any rights of a shareholder of Parent. All
fractional shares of Parent Common Stock to which a holder of Company
Common Stock immediately prior to the Effective Time would otherwise be
entitled, at the Effective Time, shall be aggregated if and to the extent
multiple Company Certificates of such holder are submitted together to the
Exchange Agent. If a fractional share results from such aggregation, then
(in lieu of such fractional share) the Exchange Agent shall pay to each
holder of shares of Company Common Stock who otherwise would be entitled to
receive such fractional share of Parent Common Stock an amount of cash
(without interest) determined by multiplying (i) the Parent Average Stock
Price by (ii) the fractional share of Parent Common Stock to which such
holder would otherwise be entitled. Parent will make available to the
Exchange Agent any cash necessary for this purpose.
(g) In the event any Company Certificates shall have been lost,
stolen, or destroyed, the Exchange Agent shall issue in exchange for such
lost, stolen, or destroyed Company Certificates, upon the making of an
affidavit of that fact by the holder thereof, such shares of Parent Common
Stock and cash for fractional shares, if any, as may be
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required pursuant to this Article 1; provided, however, that Parent may,
in its discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen, or destroyed Company Certificate
to deliver a bond in such sum as Parent may direct as indemnity against
any claim that may be made against Parent or the Exchange Agent with
respect to such Company Certificate alleged to have been lost, stolen,
or destroyed.
(h) Each person entitled to receive shares of Parent Common
Stock pursuant to this Article 1 shall receive together with such shares
the number of Parent preferred share purchase rights (pursuant to the
Rights Agreement dated as of June 27, 1991, between Parent and Norwest Bank
Minnesota, N.A., the "Parent Rights Plan") per share of Parent Common Stock
equal to the number of Parent preferred share purchase rights associated
with one share of Parent Common Stock at the Effective Time.
1.6 EXCHANGE OF MERGER SUBSIDIARY COMMON STOCK. From and after the
Effective Time, each outstanding certificate previously representing shares of
Merger Subsidiary Common Stock shall be deemed for all purposes to evidence
ownership of and to represent the number of shares of Surviving Corporation
Common Stock into which such shares of Merger Subsidiary Common Stock shall have
been converted. Promptly after the Effective Time, the Surviving Corporation
shall issue to Parent a stock certificate or certificates representing such
shares of Surviving Corporation Common Stock in exchange for the certificate or
certificates that formerly represented shares of Merger Subsidiary Common Stock,
which shall be cancelled.
1.7 STOCK OPTIONS.
(a) Except as provided below with respect to the Company's
Employee Stock Purchase Plan, each option to purchase shares of Company
Common Stock that is outstanding at the Effective Time (a "Company Option")
shall, by virtue of the Merger and without any action on the part of the
holder thereof, be assumed by Parent (and a registration statement on Form
S-8 therefor shall be filed promptly after the Effective Time) in such
manner that Parent (i) is a corporation "assuming a stock option in a
transaction to which Section 424(a) applies" within the meaning of Section
424 of the Code and the regulations thereunder or (ii) to the extent that
Section 424 of the Code does not apply to any such Company Option, would be
such a corporation were Section 424 of the Code applicable to such Company
Option. From and after the Effective Time, all references to the Company
in the Company Options shall be deemed to refer to Parent (other than for
purposes of determining whether there has been a change in control of the
Company). The Company Options assumed by Parent shall be exercisable upon
the same terms and conditions as under the Company Options (including
provisions thereof, if any, relating to the acceleration of vesting upon a
change in control of the Company) except that (i) such Company Options
shall entitle the holder to purchase from Parent the number of shares of
Parent Common Stock (rounded to the nearest whole number of such shares)
that equals the product of the Conversion Fraction multiplied by the number
of shares of Company Common Stock subject to such option immediately prior
to the
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Effective Time, and (ii) the option exercise price per share of Parent
Common Stock shall be an amount (rounded to the nearest full cent) equal
to the option exercise price per share of Company Common Stock in effect
immediately prior to the Effective Time divided by the Conversion
Fraction; provided, however, that in the case of any Company Option to
which Section 421 of the Code applies by reason of its qualification
under Section 422 of the Code ("incentive stock options"), the option
price, the number of shares purchasable pursuant to such option and the
terms and conditions of exercise of such options shall be determined in
order to comply with Section 424(a) of the Code. As promptly as
practicable after the Effective Time, Parent shall issue to each holder
of a Company Option a written instrument informing such holder of the
assumption by Parent of such Company Option.
(b) The current offering period in process as of the date of
this Agreement under the Company's Employee Stock Purchase Plan shall
continue and shares shall be issued to participants thereunder as provided
under, and subject to the terms and conditions of, such Plan; provided,
however, that if the Effective Time occurs prior to the originally
scheduled expiration of such current offering period on September 30, 1998,
then immediately prior to the Effective Time, such current offering period
under the Company's Employee Stock Purchase Plan shall be ended, and each
participant shall be deemed to have purchased immediately prior to the
Effective Time, to the extent of payroll deductions accumulated by such
participant as of such offering period end, the number of whole shares of
Company Common Stock at a per share price determined pursuant to the
provisions of the Company's Employee Stock Purchase Plan, and each
participant shall receive a cash payment equal to the balance, if any, of
such accumulated payroll deductions remaining after such purchase of such
shares. As of the Effective Time, all such shares shall be converted in
the manner provided in Section 1.3. No offering periods under the
Company's Employee Stock Purchase Plan that are subsequent to the current
offering period in process as of the date of this Agreement shall be
commenced, and the Company's Employee Stock Purchase Plan and all purchase
rights thereunder shall terminate effective as of the Effective Time.
1.8 CAPITALIZATION CHANGES. If, between the date of this Agreement and
the Effective Time, the outstanding shares of Parent Common Stock shall have
been changed into a different number of shares or a different class by reason of
any reclassification, recapitalization, split-up, combination, exchange of
shares, or stock dividend, the Conversion Fraction and all per-share price
amounts and calculations set forth in this Agreement shall be appropriately
adjusted.
1.9 ARTICLES OF INCORPORATION OF THE SURVIVING CORPORATION. The
Articles of Incorporation of Merger Subsidiary, as in effect immediately prior
to the Effective Time, shall be the Articles of Incorporation of the Surviving
Corporation until thereafter amended in accordance with applicable law;
provided, however, that upon the Effective Time, Article 1 of the Articles of
Incorporation of the Surviving Corporation shall be amended to read in its
entirety as follows: "The name of the corporation shall be Medtronic AVECOR
Cardiovascular, Inc."
7
1.10 BYLAWS OF THE SURVIVING CORPORATION. The Bylaws of Merger
Subsidiary, as in effect immediately prior to the Effective Time, shall be the
Bylaws of the Surviving Corporation until thereafter amended in accordance with
applicable law.
1.11 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The directors
and officers of Merger Subsidiary immediately prior to the Effective Time shall
be the directors and officers, respectively, of the Surviving Corporation until
their respective successors shall be duly elected and qualified.
ARTICLE 2
CLOSING
2.1 TIME AND PLACE. Subject to the satisfaction or waiver of the
provisions of Article 6, the closing of the Merger (the "Closing") shall take
place at 10:00 a.m., local time, on the day the Merger is approved by the
shareholders of the Company at the Company Shareholders Meeting (as defined in
Section 5.4 hereof), or as soon thereafter as all conditions to Closing have
been satisfied or waived, or on such other date and/or at such other time as
Parent and the Company may mutually agree. The date on which the Closing
actually occurs is herein referred to as the "Closing Date." The Closing shall
take place at the corporate headquarters offices of Parent, or at such other
place or in such other manner (E.G., by telecopy exchange of signature pages
with originals to follow by overnight delivery) as the parties hereto may agree.
2.2 FILINGS AT THE CLOSING. At the Closing, subject to the provisions
of Article 6, Parent, Merger Subsidiary, and the Company shall cause Articles of
Merger to be filed in accordance with the provisions of Section 302A.615 of the
MBCA, and take any and all other lawful actions and do any and all other lawful
things necessary to cause the Merger to become effective.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Subsidiary as of
the date hereof as follows:
3.1 DISCLOSURE SCHEDULE. As of the date hereof, the Company has not
completed its internal investigation and review for purposes of confirming and
verifying the representations and warranties of the Company contained in this
Agreement. On or prior to the close of business on the tenth business day after
the date hereof, the Company shall deliver to Parent a disclosure schedule ( the
"Disclosure Schedule") with each disclosure therein set forth in the section or
subsection which corresponds by number for purposes of exceptions to a
representation or warranty to the applicable section or subsection of this
Article 3. In the event that Parent determines that the Disclosure Schedule
contains information which in Parent's good faith,
8
reasonable business judgment adversely affects the value of the Company's
business or prospects, then Parent shall have the right, within 10 business
days of the receipt of the full and complete Disclosure Schedule, to
terminate this Agreement as set forth in Section 7.1(i) hereto.
3.2 ORGANIZATION. The Company and each subsidiary of the Company
(referred to herein as a "Subsidiary") is a corporation duly organized, validly
existing, and in good standing under the laws of its respective jurisdiction of
incorporation and has all requisite corporate power and authority to own, lease,
and operate its properties and to carry on its business as now being conducted.
The Company and each Subsidiary is duly qualified and in good standing to do
business in each jurisdiction in which the property owned, leased, or operated
by it or the nature of the business conducted by it makes such qualification
necessary and where the failure to qualify could reasonably be expected to have
a Company Material Adverse Effect (as defined below). "Company Material Adverse
Effect" means any effect, change or event that, individually or in the aggregate
with all similar effects, changes or events, is or would reasonably be expected
to be material and adverse: (i) either before or immediately after the
Effective Time, to the business, properties, liabilities, results of operation,
or financial condition of the Company and its Subsidiaries, considered as a
whole; or (ii) to the Company's ability to perform any of its obligations under
this Agreement or to consummate the Merger; provided, however, that Company
Material Adverse Effect shall not be deemed to include the impact of actions or
omissions of the Company taken with the prior written consent of Parent in
contemplation of the transactions contemplated hereby, or the effects of the
Merger (or any announcement with respect thereto) and compliance with the
provisions of this Agreement on the operating performance or prospects of the
Company and its subsidiaries, including without limitation, any such loss of
customer or distributor relationships or employees following the announcement of
the Merger. The jurisdictions in which the Company and each Subsidiary are
qualified are listed on the Disclosure Schedule. The Company has heretofore
delivered to Parent complete and accurate copies of the Articles of
Incorporation and Bylaws of the Company and each Subsidiary, as currently in
effect. Except to the extent specifically disclosed on the Disclosure Schedule,
or any entity in which the Company owns, directly or indirectly, an equity
interest of less than 1% of the fair market value of such entity's outstanding
equity securities, neither the Company nor any Subsidiary, directly or
indirectly, owns or controls or has any capital, equity, partnership,
participation, or other ownership interest in any corporation, partnership,
joint venture, or other business association or entity.
3.3 AUTHORIZATION. The Company has the requisite corporate power and
authority to execute and deliver this Agreement and, subject to obtaining the
necessary approval of its shareholders, the requisite corporate power and
authority to consummate the transactions contemplated hereby, and to file and
distribute the Proxy Statement/Prospectus (as defined in Section 5.4 hereof).
The execution and delivery of this Agreement by the Company and the consummation
of the transactions contemplated hereby have been duly and validly authorized
and approved by the Company's Board of Directors and, in accordance with Section
302A.673 of the MBCA, by the required committee of such Board of Directors, no
other corporate proceedings on the part of the Company or any Subsidiary are
necessary to authorize this Agreement, and, subject to obtaining the approval of
the Company's shareholders, no other
9
corporate action on the part of the Company or any Subsidiary is necessary to
consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by the Company and constitutes the
valid and binding obligation of the Company, enforceable against the Company
in accordance with its terms, subject to laws of general application relating
to bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and rules of law governing specific
performance, injunctive relief, or other equitable remedies. To the
Company's knowledge, each Agreement to Facilitate Merger and Affiliate's
Letter (as described in Sections 5.11 and 5.6) has been duly and validly
executed and delivered by the Company shareholder who is a party thereto and
constitutes the valid and binding obligation of such shareholder, enforceable
in accordance with its terms, subject to laws of general application relating
to bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and rules of law governing specific
performance, injunctive relief, or other equitable remedies.
3.4 CAPITALIZATION. The authorized capital stock of the Company
consists of (i) 20,000,000 shares of Company Common Stock, par value $.01 per
share, of which 8,044,475 shares are issued and outstanding, and (ii) 2,000,000
shares of Company Preferred Stock, par value $.01 per share, including 200,000
shares of Series A Junior Preferred Stock, none of which are issued or
outstanding. Except as set forth on the Disclosure Schedule, all issued and
outstanding shares of capital stock of each Subsidiary are owned, beneficially
and of record, by the Company, free and clear of any Liens (as defined in
Section 3.15). All issued and outstanding shares of Company Common Stock have
been validly issued, are fully paid and nonassessable, and have not been issued
in violation of and are not currently subject to any preemptive rights. Except
as set forth on the Disclosure Schedule and except for options to purchase an
aggregate 832,250 shares of Company Common Stock at an aggregate exercise price
of $8,005,782 granted pursuant to the Company's 1991 Stock Incentive Plan and
1995 Non-Employee Director Option Plan (collectively, the "Company Option
Plans") listed, together with their respective exercise prices, on the
Disclosure Schedule, and except for the rights to purchase under the Company's
Employee Stock Purchase Plan shares of Company Common Stock (estimated to be
approximately 10,000 shares, at a per share price of $7.44, based on the current
contribution rates of the participants, as listed on the Disclosure Schedule,
and assuming the current Plan offering period in process as of the date of this
Agreement is ended on September 30, 1998 for this purpose), there are not any
outstanding or authorized subscriptions, options, warrants, calls, rights,
convertible securities, commitments, restrictions, arrangements, or any other
agreements of any character to which the Company or any Subsidiary is a party
that, directly or indirectly, (i) obligate the Company or any Subsidiary to
issue any shares of capital stock or any securities convertible into, or
exercisable or exchangeable for, or evidencing the right to subscribe for, any
shares of capital stock, (ii) call for or relate to the sale, pledge, transfer,
or other disposition or encumbrance by the Company or any Subsidiary of any
shares of its capital stock, or (iii) to the knowledge of the Company, relate to
the voting or control of such capital stock. The Disclosure Schedule sets forth
a complete and accurate list of all stock options, warrants, and other rights to
acquire Company Common Stock, including the name of the holder, the date of
grant, acquisition price, expiration date, number of shares, exercisability
schedule, and, in the case of options, the type of option under the Code. The
Disclosure
10
Schedule also sets forth the contractual restrictions to which any shares of
Company Common Stock issued pursuant to the Company Option Plans or otherwise
are currently subject and also sets forth the restrictions to which such
shares will be subject immediately after the Effective Time, other than as
set forth in the Company Option Plans or stock option agreements thereunder.
No consent of holders or participants under the Company Option Plans or
Employee Stock Purchase Plan is required to carry out the provisions of
Section 1.7. All actions, if any, required on the part of the Company under
the Company Option Plans or Employee Stock Purchase Plan to allow for the
treatment of Company Options and the Employee Stock Purchase Plan as is
provided in Section 1.7, has been, or prior to the Closing will be, validly
taken by the Company, and the Company will not from and after the date hereof
allow any increase in the rate of a participant's contributions to the
Employee Stock Purchase Plan, any new enrollments or re-enrollments in the
current offering period in process as of the date of this Agreement under
such Plan or the commencement of any offering periods under such Plan
subsequent to the current offering period in process as of the date of this
Agreement.
3.5 REPORTS AND FINANCIAL STATEMENTS. The Company has filed all forms,
reports, registration statements, and documents required to be filed by it with
the Securities and Exchange Commission ("SEC") since January 1, 1995 (such
forms, reports, registration statements, and documents, together with any
amendments thereto, are referred to as the "Company SEC Filings"). As of their
respective dates, the Company SEC Filings (i) complied as to form in all
material respects with the applicable requirements of the Securities Act of 1933
and the rules and regulations thereunder (the "1933 Act") and the Securities
Exchange Act of 1934 and the rules and regulations thereunder (the "1934 Act"),
as the case may be, and (ii) did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements made therein, in light of the circumstances under which
they were made, not misleading. The audited financial statements and unaudited
interim financial statements included or incorporated by reference in the
Company SEC Filings, including but not limited to the Company's audited
financial statements at and for the year ended December 31, 1997 (the "Company
1997 Financials"), (i) were prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated therein or in the notes thereto), subject, in the
case of unaudited interim financial statements, to the absence of notes and to
year-end adjustments, (ii) complied as of their respective dates in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, and (iii) fairly presented the
consolidated financial position of the Company as of the dates thereof and the
income, cash flows, and changes in shareholders' equity for the periods
involved. The statements of earnings included in the audited or unaudited
interim financial statements in the Company SEC Filings do not contain any items
of special or nonrecurring income or any other income not earned in the ordinary
course of business, except as expressly specified in the applicable statement of
operations or notes thereto. Prior to the date hereof, the Company has
delivered to Parent complete and accurate copies of all Company SEC Filings
since January 1, 1995. The Company has also delivered to Parent complete and
accurate copies of all statements on Schedule 13D and Schedule 13G known to the
Company to have been filed with the SEC since January 1, 1997, with respect to
capital stock of the Company. Since January 1, 1997, the
11
Company has filed in a timely manner all reports required to be filed by it
pursuant to Sections 13, 14, or 15(d) of the ▇▇▇▇ ▇▇▇.
3.6 ABSENCE OF UNDISCLOSED LIABILITIES. Except to the extent
specifically disclosed on the Disclosure Schedule, neither the Company nor any
Subsidiary has any liabilities or obligations of any nature (whether absolute,
accrued, contingent, or otherwise) which would have a Company Material Adverse
Effect except (a) liabilities or obligations that are accrued or reserved
against in the audited consolidated balance sheet of the Company as of December
31, 1997 contained in the Company 1997 Financials (the "Company Audited Balance
Sheet") or in the unaudited consolidated balance sheet of the Company as of
March 31, 1998 contained in the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 1998 (the "Company Interim Balance Sheet"), and
(b) liabilities or obligations disclosed in this Agreement.
3.7 CONSENTS AND APPROVALS. Except for (i) any applicable
requirements of the 1933 Act, the 1934 Act, state securities laws, the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976 and the regulations
thereunder (the "HSR Act"), and the antitrust, competition, foreign
investment, or similar laws of any foreign countries or supranational
commissions or boards that require pre-merger notifications or filings with
respect to the Merger (collectively, "Foreign Merger Laws"), (ii) approval by
the Company's shareholders, (iii) the filing and recordation of appropriate
merger documents as required by the MBCA, (iv) compliance with Sections
302A.471 and 302A.473 of the MBCA regarding dissenters' rights, or (v) any
items disclosed on the Disclosure Schedule, the execution and delivery of
this Agreement and the Stock Option Agreement by the Company, and, to the
Company's knowledge, the execution and delivery of the Agreements to
Facilitate Merger, and the consummation of the transactions contemplated
hereby and thereby will not: (a) violate any provision of the Articles of
Incorporation or Bylaws of the Company or any Subsidiary; (b) violate any
statute, rule, regulation, order, or decree of any federal, state, local, or
foreign body or authority (including, but not limited to, the Food and Drug
Administration (the "FDA") or any nongovernmental self-regulatory agency) by
which the Company or any Subsidiary or any of their respective properties or
assets may be bound; (c) require any filing with or permit, consent, or
approval of any federal, state, local, or foreign public body or authority
(including, but not limited to, the FDA or any nongovernmental
self-regulatory agency); or (d) result in any violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default
under, result in the loss of any material benefit under, or give rise to any
right of termination, cancellation, increased payments, or acceleration
under, or result in the creation of any Lien (as defined in Section 3.15) on
any of the properties or assets of the Company or any Subsidiary under, any
of the terms, conditions, or provisions of any note, bond, mortgage,
indenture, license, franchise, permit, authorization, agreement, or other
instrument or obligation to which the Company or any Subsidiary is a party,
or by which it or any of its properties or assets may be bound, except, (x)
in the cases of clauses (b) or (c), where such violation, failure to make any
such filing or failure to obtain such permit, consent or approval, would not
prevent or delay consummation of this Merger or otherwise prevent the Company
from performing its obligations under this Agreement and would not have a
Company Material Adverse Effect, and (y) in the case of clause (d), for any
such violations, breaches, defaults, or other occurrences that would not
prevent or delay consummation of any of the
12
transactions contemplated hereby in any material respect, or otherwise
prevent the Company from performing its obligations under this Agreement in
any material respect, and would not have a Company Material Adverse Effect.
3.8 COMPLIANCE WITH LAWS. Except to the extent specifically disclosed
on the Disclosure Schedule, all activities of the Company and each Subsidiary
have been, and are currently being, conducted in compliance with all applicable
federal, state, local, and foreign laws, ordinances, regulations,
interpretations, judgments, decrees, injunctions, permits, licenses,
certificates, governmental requirements (including, but not limited to FDA Good
Manufacturing Practices), orders, and other similar items of any court or other
governmental entity (including, but not limited to, those of the FDA or any
nongovernmental self-regulatory agency), the failure to comply with which could
reasonably be expected to have a Company Material Adverse Effect. The Company
and each Subsidiary has timely filed or otherwise provided all registrations,
reports, data, and other information and applications with respect to its
medical device, pharmaceutical, consumer, health care, and other governmentally
regulated products (the "Regulated Products") required to be filed with or
otherwise provided to the FDA or any other federal, state, local, or foreign
governmental authorities with jurisdiction over the manufacture, use, or sale of
the Regulated Products, and all regulatory licenses or approvals in respect
thereof are in full force and effect, except where the failure to file timely
such registrations, reports, data, information, and applications or the failure
to have such licenses and approvals in full force and effect would not have a
Company Material Adverse Effect.
3.9 LITIGATION. Except to the extent specifically disclosed on the
Disclosure Schedule, to the Company's knowledge, no investigation or review by
any federal, state, local, or foreign body or authority (including, but not
limited to, the FDA or any nongovernmental self-regulatory agency) with respect
to the Company or any Subsidiary is pending or threatened, nor has any such body
or authority (including, but not limited to, the FDA or any nongovernmental
self-regulatory agency) indicated to the Company or any Subsidiary an intention
to conduct the same. Except to the extent specifically disclosed on the
Disclosure Schedule, there are no claims, actions, suits, or proceedings by any
private party that could reasonably be expected to involve individually an
amount in excess of $50,000 or collectively an aggregate amount in excess of
$200,000, or by any governmental body or authority (including, but not limited
to, the FDA or any nongovernmental self-regulatory agency), against or affecting
the Company or any Subsidiary, pending or, to the knowledge of the Company,
threatened at law or in equity, or before any federal, state, local, foreign, or
other governmental department, commission, board, bureau, agency, or
instrumentality (including, but not limited to, the FDA or any nongovernmental
self-regulatory agency).
3.10 ABSENCE OF MATERIAL ADVERSE CHANGES. Except to the extent
specifically disclosed in the Disclosure Schedule, since December 31, 1997 there
has not been any (a) change or circumstance that could reasonably be expected to
have a Company Material Adverse Effect; (b) action by the Company or any
Subsidiary that, if taken on or after the date of this Agreement, would require
the consent or approval of Parent pursuant to Section 5.1 hereof, except for
actions as to which consent or approval has been given as provided therein or
actions prior to March 31,
13
1998; (c) damage, destruction, or loss, whether or not covered by insurance,
that could reasonably be expected to have a Company Material Adverse Effect;
(d) change by the Company or any Subsidiary in accounting methods or
principles used for financial reporting purposes, except as required by a
change in generally accepted accounting principles and concurred with by the
Company's independent public accountants; or (e) agreement, whether in
writing or otherwise, to take any action described or referenced in this
Section 3.10.
3.11 ENVIRONMENTAL LAWS AND REGULATIONS. The Disclosure Schedule
completely and accurately sets forth the following: (a) a list of all
above-ground storage tanks or underground storage tanks for Hazardous
Materials (as defined below) on real property now or at any time in the past
owned, leased, or occupied by the Company or any Subsidiary (such real
property referred to in this section as the "Real Property"); (b) the
identity of any Hazardous Materials (as defined below) used, generated,
transported or disposed of by the Company or any Subsidiary now or at any
time in the past, together with a brief description and location of each
activity using such Hazardous Materials; (c) a summary of the identity of, to
the Company's knowledge, any Hazardous Materials that have been disposed of
or found on, above or below any Real Property; and (d) a list of all reports,
studies, and tests in the possession of the Company or any Subsidiary or
initiated by the Company or any Subsidiary pertaining to the existence of
Hazardous Materials on, above, or below any Real Property or any property
adjoining or which could reasonably be expected to affect the Real Property,
or concerning compliance with or liability under the Regulations (as defined
below). The Company has heretofore delivered to Parent complete and accurate
copies of such reports, studies, and tests.
The Company and each Subsidiary have obtained, and maintained in full force
and effect, all required environmental permits and other governmental approvals
and are in compliance with all applicable Regulations (as defined below), except
where the failure to so obtain and maintain or to be in compliance would not
have a Company Material Adverse Effect. Neither the Company nor any Subsidiary
(i) has received a written notice or Claim (as defined below) alleging potential
liability under any of the Regulations or alleging a violation of the
Regulations or (ii) has any knowledge that such a notice or Claim may be issued
in the future. Neither the Company nor any Subsidiary has any knowledge of any
notices to or Claims against any persons, alleging potential liability under any
of the Regulations with respect to the Real Property or any adjoining properties
or which could reasonably be expected to affect the Real Property. Neither the
Company nor any Subsidiary (i) has been or is presently subject to or, to the
knowledge of the Company, threatened with any administrative or judicial
proceeding pursuant to the Regulations, or (ii) has any information that it may
be subject to or, to the knowledge of the Company, threatened with such a
proceeding in the future. Neither the Company nor any Subsidiary has knowledge
of any conditions or circumstances that could reasonably be expected to result
in the determination of liability against the Company or any Subsidiary relating
to environmental matters that would have a Company Material Adverse Effect,
including, but not limited to, any Claim arising from past or present
environmental practices with respect to Hazardous Materials, the Real Property,
or any disposal sites. To the knowledge of the Company, and except as allowed
under applicable Laws or Regulations, no Hazardous Materials
14
have been or are threatened to be discharged, emitted, or released into the
air, water, soil, or subsurface at or from the Real Property by the Company.
For purposes of this Section 3.11, the following terms shall have the
following meanings: (i) "Hazardous Materials" means asbestos, urea
formaldehyde, polychlorinated biphenyls, nuclear fuel or materials, chemical
waste, radioactive materials, explosives, known human carcinogens, petroleum
products or other substances or materials listed, identified, or designated as
toxic or hazardous or as a pollutant or contaminant in, or the use, release or
disposal of which is regulated by, the Regulations; (ii) "Regulations" means the
Comprehensive Environmental Response Compensation and Liability Act ("CERCLA")
as amended by the Superfund Amendments and Reauthorization Act of 1986 ("▇▇▇▇"),
42 U.S.C. Sections 9601 ET SEQ.; the Federal Resource Conservation and Recovery
Act of 1976 ("RCRA"), 42 U.S.C. Sections 6901 ET SEQ.; the Clean Water Act, 33
U.S.C. Sections 1321 ET SEQ.; the Clean Air Act, 42 U.S.C. Sections 7401 ET
SEQ., and any other federal, state, county, local, foreign, or other
governmental statute, regulation, or ordinance, as adopted and in effect as of
the date hereof, that relates to or deals with employee safety and human health,
pollution, health, or the environment including, but not limited to, the use,
generation, discharge, transportation, disposal, recordkeeping, notification,
and reporting of Hazardous Materials; and (iii) "Claim" means any and all
claims, demands, causes of actions, suits, proceedings, administrative
proceedings, losses, judgments, decrees, debts, damages, liabilities, court
costs, penalties, attorneys' fees, and any other expenses incurred, assessed,
sustained or alleged by or against the Company or any Subsidiary.
3.12 OFFICERS, DIRECTORS AND EMPLOYEES. Prior to the date hereof, the
Company has provided to Parent a list that completely and accurately sets forth
the name and current annual salary rate of each officer or exempt employee of
the Company or any Subsidiary whose total remuneration for the last fiscal year
was, or for the current fiscal year has been set at, in excess of $50,000,
together with a summary of the bonuses, commissions and additional compensation,
if any, paid or payable to such persons for the last fiscal year and proposed
for the current fiscal year. The Disclosure Schedule completely and accurately
sets forth (i) the names of all former employees whose employment with the
Company or any Subsidiary has terminated either voluntarily or involuntarily
during the preceding 12-month period; and (ii) the names of the officers (with
all positions and titles indicated) and directors of the Company and each
Subsidiary. No unfair labor practice complaint against the Company or any
Subsidiary is pending before the National Labor Relations Board, and there is no
labor strike, slowdown or stoppage pending or, to the knowledge of the Company,
threatened against or involving the Company or any Subsidiary. Since January 1,
1995, no unionizing efforts have, to the knowledge of the Company, been made by
employees of the Company or any Subsidiary, neither the Company nor any
Subsidiary is a party to or subject to any collective bargaining agreement, and
no collective bargaining agreement is currently being negotiated by the Company
or any Subsidiary. There is no material labor dispute pending or, to the
knowledge of the Company, threatened between the Company or any Subsidiary and
its employees.
3.13 TAXES. The Company has previously furnished to Parent complete and
accurate copies of all tax or assessment reports and tax returns (including any
applicable information
15
returns) required by any law or regulation (whether United States, foreign,
state, local, or other jurisdiction) and filed by the Company for each of the
three fiscal years ended December 31, 1995, 1996, and 1997 and of all such
returns filed separately by any Subsidiary for fiscal years ended during or
after 1995. The Company and each Subsidiary has filed, or has obtained
extensions to file (which extensions have not expired without filing), all
state, local, United States, foreign, or other tax reports and returns
required to be filed by any of them. The Company and each Subsidiary has
duly paid, or accrued on its books of account, all taxes (including estimated
taxes) shown as due on such reports and returns (or such extension requests),
or assessed against it, or that it is obligated to withhold from amounts owed
by it to any person. The liabilities and reserves for taxes reflected on the
Company Audited Balance Sheet or the Company Interim Balance Sheet are
adequate to cover all taxes payable by the Company and its Subsidiaries for
all taxable periods and portions thereof ending on or before the dates
thereof. There are no Liens (as defined in Section 3.14) for taxes upon any
property or asset of the Company or any Subsidiary. Neither the Company nor
any Subsidiary is delinquent in the payment of any tax assessment (including,
but not limited to, any applicable withholding taxes). None of the tax
returns or reports for the tax periods ended December 31, 1995, 1996, and
1997 have been audited by the Internal Revenue Service (the "IRS") or by any
other taxing authority. Further, to the knowledge of the Company, except as
set forth in the Disclosure Schedule, no state of facts exists or has existed
that could reasonably be expected to subject the Company or any Subsidiary to
an additional tax liability for any taxes assessable by either the IRS or any
separate state, local, foreign, or other taxing authority with respect to any
reports or returns filed on or before the date hereof (other than extension
requests for which returns have not been filed as of the date hereof) that
would have a Company Material Adverse Effect. Neither the Company nor any
Subsidiary has, with regard to any assets or property held, acquired or to be
acquired by any of them, filed a consent to the application of Section
341(f)(2) of the Code. Except to the extent specifically disclosed on the
Disclosure Schedule, neither the Company nor any Subsidiary has (i) received
notification of any pending or proposed examination by either the IRS or any
state, local, foreign, or other taxing authority, (ii) received notification
of any pending or proposed deficiency by either the IRS or any state, local,
foreign, or other taxing authority, or (iii) granted any extension of the
limitations period applicable to any claim for taxes.
For the purposes of this Section 3.12, "tax" shall mean and include taxes,
additions to tax, penalties, interest, fines, duties, withholdings, assessments,
and charges assessed or imposed by any governmental authority, including but not
limited to all federal, state, county, local, and foreign income, profits, gross
receipts, import, ad valorem, real and personal property, franchise, license,
sales, use, value added, stamp, transfer, withholding, payroll, employment,
excise, custom, duty, and any other taxes, obligations and assessments of any
kind whatsoever; "tax" shall also include any liability arising as a result of
being (or ceasing to be) a member of any affiliated, consolidated, combined, or
unitary group as well as any liability under any tax allocation, tax sharing,
tax indemnity, or similar agreement.
3.14 CONTRACTS. Except as set forth on the Disclosure Schedule, neither
the Company nor any Subsidiary (i) is a party to any collective bargaining
agreement or contract with any labor
16
union, (ii) is a party to any written or oral contract for the employment of
any officer, individual employee or other person on a full-time or consulting
basis, or relating to severance pay for any such person, (iii) is a party to
any (A) written or oral agreement or understanding to repurchase assets
previously sold (or to indemnify or otherwise compensate the purchaser in
respect of such assets) or (B) agreement for the sale of any capital asset,
(iv) is a party to any contract, arrangement, commitment or understanding
(whether written or oral) which provides for future payments by the Company
in excess of $50,000 and is not terminable by the Company nor any Subsidiary
within 60 days without payment of a penalty or premium, other than employment
contracts, benefit plans and leases otherwise disclosed in the Disclosure
Schedule or listed as an exhibit in the Company SEC Filings, (v) is a party
to any independent sales representative, OEM, supply, distribution,
manufacturers' representative, dealer, licensing (except for immaterial
licenses, which include without limitation, licenses for off-the-shelf
software) joint development, joint venture, research and development, or
similar contract, (vi) is a party to any contract, arrangement, commitment or
understanding which is a material contract (as defined in Item 601(b)(10) of
Regulation S-K of the SEC) to be performed after the date of this Agreement
that has not been filed or incorporated by reference in the Company SEC
Filings, (vii) is a party to any confidentiality agreement or any agreement
which prohibits the Company or the Subsidiary from freely engaging in any
business anywhere in the world, (viii) is a party to any agreement or
indenture relating to the borrowing of money, (ix) has guaranteed any
obligation for borrowed money, or (x) is a party to any agreement or contract
that obligates the Company to pay consequential damages. The Company and
each Subsidiary has performed all obligations required to be performed by it
under any listed or material contract, plan, agreement, understanding, or
arrangement made or obligation owed by or to the Company or any Subsidiary,
except where the failure would not have a Company Material Adverse Effect;
there has not been any event of default (or any event or condition which with
notice or the lapse of time, both or otherwise, would constitute an event of
default) thereunder on the part of the Company, any Subsidiary, or, to the
Company's knowledge, any other party to any thereof that would have a Company
Material Adverse Effect; the same are in full force and effect and valid and
enforceable by the Company or its Subsidiaries in accordance with their
respective terms subject to laws of general application relating to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and rules or law governing specific
performance, injunctive relief, and other equitable remedies; and the
performance of any such contracts, plans, agreements, understandings,
arrangements, or obligations would not have a Company Material Adverse Effect.
3.15 TITLE TO PROPERTIES; LIENS. The Company and/or its Subsidiaries
have good and marketable title to all properties and assets reflected on the
Company Audited Balance Sheet or the Company Interim Balance Sheet or acquired
after the dates thereof (except for properties and assets sold or otherwise
disposed of in the ordinary course of business since the dates thereof), which
includes each asset the absence or unavailability of which would have a Company
Material Adverse Effect, subject only to (a) statutory Liens arising or incurred
in the ordinary course of business with respect to which the underlying
obligations are not delinquent, (b) with respect to personal property, the
rights of customers of the Company or any Subsidiary with respect to inventory
or work in progress under orders or contracts entered into by the Company
17
or any Subsidiary in the ordinary course of business, (c) Liens reflected on
the Company Audited Balance Sheet or the Company Interim Balance Sheet, (d)
Liens for taxes not yet delinquent, and (e) and defects in title that would
not have a Company Material Adverse Effect. The term "Lien" as used in this
Agreement means any mortgage, pledge, security interest, encumbrance, lien,
claim, or charge of any kind. All properties and assets purported to be
leased by the Company or any Subsidiary are subject to valid and effective
leases that are in full force and effect, and there does not exist, and the
Merger will not result in, any default or event that with notice or lapse of
time, or both or otherwise, would constitute a default under any such leases
which would have a Company Material Adverse Effect. The properties and
assets of the Company and each Subsidiary are in good working condition.
3.16 PERMITS, LICENSES, ETC. Except as specifically disclosed on the
Disclosure Schedule, the Company and each Subsidiary has all rights, permits,
certificates, licenses, consents, franchises, approvals, registrations, and
other authorizations necessary to sell its products and services and otherwise
carry on and conduct its business and to own, lease, use, and operate its
properties and assets at the places and in the manner now conducted and
operated, except those the absence of which would not have a Company Material
Adverse Effect. Neither the Company nor any Subsidiary has received any notice
or claim pertaining to the failure to obtain any permit, certificate, license,
franchise, approval, registration, or other authorization required by any
federal, state, local, or foreign body or authority (including, but not limited
to, any nongovernmental self-regulatory agency) except for any such notice or
claim regarding any such failure that would not have a Company Material Adverse
Effect, nor has the Company or any Subsidiary received any notice or claim
pertaining to the failure to obtain any permit, certificate, license, franchise,
approval, registration, or other authorization from the FDA or any similar
foreign regulatory agency.
3.17 INTELLECTUAL PROPERTY RIGHTS. The Disclosure Schedule contains a
complete and accurate list of all patents, trademarks, trade names, service
marks, and all applications for or registrations of any of the foregoing that
the Company uses in its business (other than generally available computer
software) as to which the Company or any Subsidiary is the owner or a licensee
(indicating whether such license is exclusive or nonexclusive). To the
knowledge of the Company and except as disclosed on the Disclosure Schedule, the
Company and each Subsidiary exclusively owns, free and clear of any Lien (as
defined in Section 3.14), or is exclusively (unless otherwise indicated in the
Disclosure Schedule) licensed to use, all patents, trademarks, trade names,
service marks, applications for or registrations of any of the foregoing,
processes, inventions, designs, technology, formulas, computer software
programs, know-how, and trade secrets used in or necessary for the conduct of
its respective business as currently conducted or proposed to be conducted and
where the lack of ownership or such license would have a Company Material
Adverse Effect (the "Company Intellectual Property"). Except to the extent
specifically disclosed on the Disclosure Schedule, no claim has been asserted
or, to the knowledge of the Company, threatened by any person, and, to the
Company's knowledge, its patent counsel has not concluded that any claim exists,
with respect to the Company's ownership of the Company Intellectual Property or
challenging or questioning the validity or effectiveness of any license or
agreement to which the Company is a party with respect thereto. To the
18
knowledge of the Company, neither the use of the Company Intellectual Property
by the Company or any Subsidiary in the present or planned conduct of its
business nor any product or service of the Company or any Subsidiary infringes
on the intellectual property rights of any person. No current or former
shareholder, employee, or consultant of the Company or any Subsidiary has any
material rights in or to any of the Company Intellectual Property. All Company
Intellectual Property listed on the Disclosure Schedule has the status indicated
therein and all applications are still pending in good standing and have not
been abandoned. Except to the extent disclosed on the Disclosure Schedule:
(i) to the Company's knowledge, patents included within the Company Intellectual
Property are valid and have not been challenged in any judicial or
administrative proceeding; (ii) the Company and each Subsidiary have made all
statutorily required filings, if any, to record their interests, and taken
reasonable actions to protect their rights, in the Company Intellectual
Property, where the failure to make any such filing, record such interest or
take such other actions could reasonably be expected to have a Company Material
Adverse Effect; (iii) to the knowledge of the Company, no person or entity nor
such person's or entity's business or products has infringed or misappropriated
any Company Intellectual Property or currently is infringing or misappropriating
any Company Intellectual Property; and (iv) no other person or entity has any
right to receive or any obligation to pay a royalty with respect to any Company
Intellectual Property or any product or service of the Company or any
Subsidiary.
3.18 BENEFIT PLANS.
(a) Except to the extent specifically disclosed on the
Disclosure Schedule, neither the Company nor any Subsidiary sponsors,
maintains, contributes to, or has sponsored, maintained, or contributed to
or been required to contribute to, any "employee pension benefit plan"
("Pension Plan"), as such term is defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), including,
solely for the purpose of this subsection, a plan excluded from coverage by
Section 4(b)(5) of ERISA. No failure to comply with applicable provisions
of ERISA, the Code and other applicable law in connection with any Pension
Plan presently maintained by the Company or any Subsidiary could reasonably
be expected to have a Company Material Adverse Effect.
(b) Neither the Company nor any Subsidiary sponsors, maintains,
contributes to, or has sponsored, maintained, or contributed to or been
required to contribute to, any Pension Plan that is a "Multiemployer Plan"
within the meaning of Section 4001(a)(3) of ERISA.
(c) Except to the extent specifically disclosed on the
Disclosure Schedule, neither the Company nor any Subsidiary sponsors,
maintains, contributes to, or has sponsored, maintained, contributed to, or
been required to contribute to, any "employee welfare benefit plan"
("Welfare Plan"), as such term is defined in Section 3(1) of ERISA, whether
insured or otherwise. No failure to comply with applicable provisions of
ERISA, the Code and other applicable law, including, but not limited to,
Section 4980B of the
19
Code and Part 6 of Subtitle B of Title I of ERISA, in connection with
any Welfare Plan presently maintained by the Company or any Subsidiary
could reasonably be expected to have a Company Material Adverse Effect.
Neither the Company nor any Subsidiary has established or contributed to
any "voluntary employees' beneficiary association" within the meaning of
Section 501(c)(9) of the Code.
(d) Except to the extent specifically disclosed on the
Disclosure Schedule, neither the Company nor any Subsidiary sponsors,
maintains, or contributes to, or has sponsored, maintained, or contributed
to, a "self-insured medical reimbursement plan" within the meaning of
Section 105(h) of the Code and the regulations thereunder.
(e) Except to the extent specifically disclosed on the
Disclosure Schedule, neither the Company nor any Subsidiary currently
maintains or contributes to any oral or written bonus, profit-sharing,
compensation (incentive or otherwise), commission, stock option, or other
stock-based compensation, retirement, severance, change of control,
vacation, sick or parental leave, dependent care, deferred compensation,
cafeteria, disability, hospitalization, medical, death, retiree, insurance,
or other benefit or welfare or other similar plan, policy, agreement,
trust, fund, or arrangement providing for the remuneration or benefit of
all or any employees or shareholders or any other person, that is neither a
Pension Plan nor a Welfare Plan (collectively, the "Compensation Plans").
(f) To the knowledge of the Company, neither any Pension Plans
or Welfare Plans nor any trust created or insurance contract issued
thereunder nor any trustee, fiduciary, custodian, or administrator thereof,
nor any officer, director, or employee of the Company or any Subsidiary,
custodian, or any other "disqualified person" within the meaning of Section
4975(e)(2) of the Code, or "party in interest" within the meaning of
Section 3(14) of ERISA, with respect to any such plan has engaged in any
act or omission that could reasonably be expected to result in a Company
Material Adverse Effect in connection with a liability for breach of
fiduciary duties under ERISA or a tax or penalty imposed by Section 502 of
ERISA.
(g) Except to the extent specifically disclosed on the
Disclosure Schedule, (i) full and timely payment has been made of all
amounts that the Company or any Subsidiary is required, under applicable
law, with respect to any Pension Plan, Welfare Plan, or Compensation Plan,
or any agreement relating to any Pension Plan, Welfare Plan, or
Compensation Plan, to have paid as a contribution to each Pension Plan,
Welfare Plan, or Compensation Plan, (ii) to the extent required by
generally accepted accounting principles, the Company has made adequate
provisions for reserves to meet contributions that have not been made
because they are not yet due under the terms of any Pension Plan, Welfare
Plan, or Compensation Plan or related agreements, (iii) there will be no
change on or before the Closing Date in the operation of any Pension Plan,
Welfare Plan, or Compensation Plan or documents under which any such plan
is maintained that will result in an increase in the benefit liabilities
under such plan, except as may be required by law or as provided by the
terms of the Pension Plan, Welfare Plan, Compensation Plan
20
or document in effect on the date of this Agreement, to the extent
disclosed in or attached to the Disclosure Schedule, (iv) the IRS has
issued favorable determination letters with respect to all Company and
Subsidiary Pension Plans that are intended to be qualified under Section
401(a) of the Code, and (v) the Company has made available to Parent
complete and accurate copies of all Pension Plans, Welfare Plans,
Compensation Plans, and related agreements, annual reports (Form 5500),
favorable determination letters, current summary plan descriptions, and
all employee handbooks or manuals.
(h) Except to the extent specifically disclosed on the
Disclosure Schedule, the execution of, and performance of the transactions
contemplated in, this Agreement will not (either alone or upon the
occurrence of any additional or subsequent events) result in forgiveness of
indebtedness or an increase in benefits or result in the acceleration of
vesting, funding, benefit accruals or benefit payments under any Pension
Plan, Welfare Plan or Compensation Plan. Except to the extent specifically
disclosed on the Disclosure Schedule, no amount that could reasonably be
expected to be received (whether in cash or property or the vesting of
property) by any employee, officer, or director of the Company or any of
its affiliates who is a "disqualified individual" (as such term is defined
in proposed Treasury Regulation Section 1.280G-1) under any Pension Plan,
Welfare Plan, or Compensation Plan currently in effect as a result of any
of the transactions contemplated by this Agreement would be an "excess
parachute payment" (as such term is defined in Section 280G(b)(1) of the
Code).
3.19 MINUTE BOOKS. The minute books of the Company and the
Subsidiaries, as previously made available to Parent and its representatives,
contain records of all actions taken at all meetings of and corporate actions or
written consents by the shareholders, Boards of Directors, and committees of the
Boards of Directors of the Company and the Subsidiaries, except for the absence
of such records as would not have a Company Material Adverse Effect.
3.20 INSURANCE POLICIES. The Disclosure Schedule sets forth a complete
and accurate list of all policies of insurance (with copies attached) maintained
by the Company or any Subsidiary with respect to any of its officers, directors,
employees, shareholders, agents, properties, buildings, machinery, equipment,
furniture, fixtures or operations and a description of each claim made in excess
of $5,000 by the Company or any Subsidiary during the three-year period
preceding the date hereof under any such policy of insurance. All such policies
of insurance are in full force and effect.
3.21 BANK ACCOUNTS. The Disclosure Schedule sets forth a list of each
bank, broker, or other depository with which the Company or any Subsidiary has
an account or safe deposit box, the names and numbers of such accounts or boxes
and the names of all persons authorized to draw thereon or execute transactions.
3.22 POWERS OF ATTORNEY. The Disclosure Schedule sets forth the names
of all persons, if any, holding powers of attorney from the Company or any
Subsidiary and a description of the
21
scope of each such power of attorney. The Company has delivered to Parent
prior to the date hereof complete and accurate copies of all such powers of
attorney.
3.23 PRODUCT LIABILITY CLAIMS. Except to the extent specifically
disclosed on the Disclosure Schedule, during the three-year period preceding the
date hereof neither the Company nor any Subsidiary has received a claim for or
based upon breach of product warranty (other than warranty service and repair
claims in the ordinary course of business not material in amount or
significance), strict liability in tort, negligent manufacture of product,
negligent provision of services or any other allegation of liability, including
or resulting in, but not limited to, product recalls, arising from the
materials, design, testing, manufacture, packaging, labeling (including
instructions for use), or sale of its products or from the provision of services
(hereafter collectively referred to as "Product Liability").
3.24 WARRANTIES. The terms of all product and service warranties and
product return, sales credit, discount, warehouse allowance, advertising
allowance, demo sales, and credit policies of the Company and each Subsidiary
are specifically set forth on the Disclosure Schedule. The Company has attached
to the Disclosure Schedule complete and accurate copies of all such warranties
and policies.
3.25 INVENTORIES. Except as specifically set forth on the Disclosure
Schedule, all inventories of the Company and its Subsidiaries consist of items
of merchantable quality and quantity usable or salable in the ordinary course of
business, are salable at prevailing market prices that are not less than the
book value amounts thereof or the price customarily charged by the Company or
the applicable Subsidiary therefor, conform to the specifications established
therefor, and have been manufactured in accordance with applicable regulatory
requirements, except to the extent that the failure of such inventories so to
consist, be saleable, conform, or be manufactured would not have a Company
Material Adverse Effect. Except as specifically set forth on the Disclosure
Schedule, the quantities of all inventories, materials, and supplies of the
Company and each Subsidiary (net of the obsolescence reserve therefor shown on
the Company Interim Balance Sheet and determined in the ordinary course of
business consistent with past practice) are not obsolete, damaged, slow-moving,
defective, or excessive, and are reasonable and balanced in the circumstances of
the Company and its Subsidiaries, except to the extent that the failure of such
inventories to be in such conditions would not have a Company Material Adverse
Effect. The Disclosure Schedule sets forth a true and complete list of the
addresses of all warehouses or other facilities in which inventories of the
Company or any Subsidiary are located.
3.26 RELATIONS WITH SUPPLIERS AND CUSTOMERS. Since January 1, 1995, no
current supplier of the Company or any Subsidiary has cancelled any contract or
order for provision of, and, to the knowledge of the Company, there has been no
threat by any such supplier not to provide, raw materials, products, supplies,
or services to the businesses of the Company and its Subsidiaries either prior
to or following the Merger except for any cancellation or threat which would not
have a Company Material Adverse Effect. Except as specifically set forth on the
Disclosure Schedule, neither the Company nor any Subsidiary has, to the
knowledge of the
22
Company, received any information from any customer that accounted for more
than 5% of the revenues of the Company and its Subsidiaries during the last
full fiscal year reasonably to the effect that such customer intends to
materially decrease the amount of business it does with the businesses of the
Company and its Subsidiaries either prior to or following the Merger. The
Disclosure Schedule lists each supplier to the Company or any Subsidiary that
is the sole source of a particular raw material, product, supply, or service.
3.27 NO FINDERS. No act of the Company or any Subsidiary has given or
will give rise to any claim against any of the parties hereto for a brokerage
commission, finder's fee, or other like payment in connection with the
transactions contemplated herein, except payments in the amounts specified on
the Disclosure Schedule to those parties identified thereon who have acted as a
finder for the Company or have been retained by the Company as financial
advisors pursuant to the agreements or other documents described in the
Disclosure Schedule, copies of which have been provided to Parent prior to the
date of this Agreement.
3.28 PROXY STATEMENT. The Proxy Statement/Prospectus (as defined in
Section 5.4 hereof) and any amendments or supplements thereto will comply as to
form in all material respects with the provisions of the 1934 Act as amended,
and the rules and regulations promulgated thereunder, and none of the
information relating to the Company or its affiliates included or incorporated
therein or in any amendments or supplements thereto, or any schedules required
to be filed with the SEC in connection therewith, will, as of the date mailed to
the Company's shareholders and at the time of the Company Shareholders Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that no representation or warranty is made by the
Company with respect to information relating to Parent or any affiliate of
Parent.
3.29 MERGER FILINGS. The information as to the Company and the
Subsidiaries or any of their affiliates or shareholders included in the
Company's filing, or submitted to Parent for inclusion in its filing, if any,
required to be submitted under the HSR Act or under any Foreign Merger Laws
shall be true, correct, and complete in all material respects and shall comply
in all material respects with the applicable requirements of the HSR Act, the
rules and regulations issued by the Federal Trade Commission pursuant thereto,
and the Foreign Merger Laws.
3.30 FAIRNESS OPINION. The Company has received a written opinion from
▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc. to the effect that, as of the date hereof, the consideration
to be received by the holders of Company Common Stock in the Merger is fair to
such holders from a financial point of view, and the Company will promptly
deliver a copy of such opinion to Parent.
3.31 STATE TAKEOVER LAWS; RIGHTS AGREEMENT.
(a) The Board of Directors of the Company and, in accordance
with Section 302A.673 of the MBCA, the required committee of such Board of
Directors have approved the transactions contemplated by this Agreement,
the Agreements to Facilitate
23
Merger described in Section 5.11 hereof, and the Stock Option Agreement
described in Section 5.17 hereof such that the provisions of Sections
302A.671 and 302A.673 of the MBCA will not apply to this Agreement or
the Agreements to Facilitate Merger or the Stock Option Agreement or any
of the transactions contemplated hereby or thereby.
(b) The Company has taken all action and completed all
amendments, if any, necessary or appropriate so that (i) the Rights
Agreement dated as of June 26, 1996, as amended, between the Company and
Northwest Bank Minnesota, N.A. (the "Company Rights Agreement"), is
inapplicable to the transactions contemplated by the Agreements to
Facilitate Merger, the Stock Option Agreement and this Agreement, (ii) the
execution of this Agreement, the Stock Option Agreement, and the Agreements
to Facilitate Merger, and the consummation of the transactions contemplated
hereby and thereby, do not and will not result in the ability of any person
to exercise any Rights under the Company Rights Agreement or enable or
require the Rights to separate from the shares of Company Common Stock to
which they are attached or to be triggered or become exercisable, or
otherwise result in the occurrence of a "Distribution Date" or "Stock
Acquisition Date" (as such terms are defined in the Company Rights
Agreement), and (iii) immediately prior to the Effective Time, the Rights
under the Company Rights Agreement shall, without any payment by the
Company or Parent, expire with neither the Company nor Parent having any
obligations under, and no holder of Rights having any rights under, the
Rights or the Company Rights Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUBSIDIARY
Parent and Merger Subsidiary hereby jointly and severally represent and
warrant to the Company as of the date hereof as follows:
4.1 ORGANIZATION. Each of Parent and Merger Subsidiary is a
corporation duly organized, validly existing, and in good standing under the
laws of the state of Minnesota and has all requisite corporate power and
authority to own, lease, and operate its properties and to carry on its business
as now being conducted. Each of Parent and Merger Subsidiary is duly qualified
and in good standing to do business in each jurisdiction in which the property
owned, leased, or operated by it or the nature of the business conducted by it
makes such qualification necessary and where the failure to qualify could
reasonably be expected to have a Parent Material Adverse Effect (as defined
below). "Parent Material Adverse Effect" means any effect, change or event
that, individually or in the aggregate with all similar effects, changes or
events, is or would reasonably be expected to be material and adverse: (i) to
the business, properties, liabilities, results of operation, or financial
condition of Parent and its subsidiaries, considered as a whole, or (ii) to
Parent's ability to perform any of its obligations under this Agreement or to
consummate the Merger.
24
4.2 AUTHORIZATION. Each of Parent and Merger Subsidiary has the
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby, and Parent has full
corporate power and authority to prepare, file, and distribute the Registration
Statement (as defined in Section 5.4 hereof). The execution and delivery of
this Agreement by Parent and Merger Subsidiary and the consummation of the
transactions contemplated hereby have been duly and validly authorized and
approved by the Boards of Directors of Parent and Merger Subsidiary and by
Parent as the sole shareholder of Merger Subsidiary, and no other corporate
proceedings on the part of Parent and Merger Subsidiary are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by each of
Parent and Merger Subsidiary and constitutes the valid and binding obligation of
Parent and Merger Subsidiary, enforceable against each of them in accordance
with its terms, subject to laws of general application relating to bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and rules of law governing specific performance,
injunctive relief, or other equitable remedies.
4.3 CAPITALIZATION. As of July 2, 1998, the authorized capital stock
of Parent consisted of (a) 800,000,000 shares of Common Stock with a par value
of $.10 per share, of which there were 469,350,541 shares issued and outstanding
and no shares held in Parent's treasury, and (b) 2,500,000 shares of Preferred
Stock with a par value of $1.00 per share, of which there were no shares issued
and outstanding. The authorized capital stock of Merger Subsidiary consists of
2,500 shares of Merger Subsidiary Common Stock, 100 of which are issued and
outstanding and owned by Parent. All issued and outstanding shares of Parent
Common Stock and Merger Subsidiary Common Stock are, and the shares of Parent
Common Stock to be issued and delivered in the Merger pursuant to Article 1
hereof shall be, at the time of issuance and delivery, validly issued, fully
paid, nonassessable, and free of preemptive rights. The shares of Parent Common
Stock to be issued and delivered in the Merger pursuant to Article 1 hereof
shall be registered under the 1933 Act and duly listed for trading on the NYSE,
subject to official notice of issuance.
4.4 CONSENTS AND APPROVALS. Except for (i) any applicable
requirements of the 1933 Act, the 1934 Act, state securities laws, the NYSE,
the HSR Act, and Foreign Merger Laws, (ii) the filing and recordation of
appropriate merger documents as required by the MBCA, and (iii) compliance
with Sections 302A.471 and 302A.473 of the MBCA regarding dissenters' rights
of the Company's shareholders, the execution and delivery of this Agreement
by Parent and Merger Subsidiary and the consummation of the transactions
contemplated hereby will not: (a) violate any provision of the Articles of
Incorporation or Bylaws of Parent or Merger Subsidiary; (b) violate any
statute, rule, regulation, order, or decree of any public body or authority
(including, but not limited to, the FDA or any nongovernmental
self-regulatory agency) by which Parent or any of its subsidiaries or any of
their respective properties or assets may be bound; (c) require any filing
with or permit, consent, or approval of any public body or authority
(including, but not limited to, the FDA or any nongovernmental
self-regulatory agency); or (d) result in any violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default
under, result in the loss of any material benefit under, or give rise to any
right of
25
termination, cancellation, increased payments, or acceleration under, or
result in the creation of any Lien on any of the properties or assets of
Parent or its subsidiaries under, any of the terms, conditions, or provisions
of any note, bond, mortgage, indenture, license, franchise, permit,
agreement, or other instrument or obligation to which Parent or any of its
subsidiaries is a party, or by which any of them or any of their respective
properties or assets may be bound, except (x) in the cases of clauses (b) or
(c), where such violation, failure to make any such filing or failure to
obtain such permit, consent or approval, would not prevent or delay
consummation of this Merger or otherwise prevent Parent from performing its
obligations under the Agreement and would not have a Parent Material Adverse
Effect, and (y) in the case of clause (d), for any such violations, breaches,
defaults, or other occurrences that would not prevent or delay consummation
of any of the transaction contemplated hereby in any material respect, or
otherwise prevent Parent from performing its obligations under this Agreement
in any material respect, and would not have a Parent Material Adverse Effect.
4.5 REPORTS; FINANCIAL STATEMENTS; ABSENCE OF CHANGES. Parent has
filed all forms, reports, registration statements, and documents required to be
filed by it with the SEC since January 1, 1995 (such forms, reports,
registration statements and documents, together with any amendments thereto, are
referred to as the "Parent SEC Filings"). As of their respective dates, the
Parent SEC Filings (i) complied as to form in all material respects with the
applicable requirements of the 1933 Act and the 1934 Act, as the case may be,
and (ii) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. The audited financial statements and unaudited interim
financial statements included or incorporated by reference in the Parent SEC
Filings (i) were prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (except as
may be indicated therein or in the notes thereto), (ii) complied as of their
respective dates in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, and (iii) fairly present the consolidated financial position of Parent
as of the dates thereof and the income, cash flows, and changes in shareholders'
equity for the periods involved. Except to the extent disclosed in Parent's
subsequent filings with the SEC or specifically disclosed on SCHEDULE 4.5, since
April 30, 1997, there has not been any change or circumstance that would have a
Parent Material Adverse Effect or as of the date hereof any liabilities or
obligations of any nature (whether absolute, accrued, contingent or otherwise)
that would have a Parent Material Adverse Effect. Except to the extent
disclosed in the Parent SEC Filings or on SCHEDULE 4.5, (i) to Parent's
knowledge, there is no investigation, review, claim, action, suit or proceeding
by any federal, state, local or foreign body or authority (including, but not
limited to, the FDA or any nongovernmental self-regulatory agency) or private
party with respect to Parent that could reasonably be expected to have a Parent
Material Adverse Effect, (ii) all activities of Parent and its subsidiaries have
been, and are currently being, conducted in compliance with all applicable
federal, state, local, and foreign laws, ordinances, regulations,
interpretations, judgments, decrees, injunctions, permits, licenses,
certificates, governmental requirements, orders and other similar items of any
court or other governmental entity (including, but not limited to, those of the
FDA or any nongovernmental self-regulatory agency), the failure to comply with
which could
26
reasonably be expected to have a Parent Material Adverse Effect, (iii) Parent
and each of its subsidiaries has timely filed or otherwise provided all
registrations, reports, data, and other information and applications with
respect to its Regulated Products required to be filed with or otherwise
provided to the FDA or any other federal, state, local, or foreign
governmental authorities with jurisdiction over the manufacture, use or sale
of the Regulated Products, and all regulatory licenses or approvals in
respect thereof are in full force and effect, except for the failure to file
timely such registrations, reports, data, information, and applications or
the failure to have such licenses and approvals in full force and effect
would not have a Parent Material Adverse Effect.
4.6 REGISTRATION STATEMENT. The Registration Statement (as defined in
Section 5.4 hereof) and any amendments or supplements thereto will comply in all
material respects as to form with the 1933 Act, and none of the information
relating to Parent or its affiliates included or incorporated therein or in any
amendments or supplements thereto, or any schedules required to be filed with
the SEC in connection therewith, will, at the time the Registration Statement
becomes effective or as of the date of the Company Shareholders Meeting, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that no representation or warranty is made by
Parent with respect to information relating to the Company or any affiliate of
the Company.
4.7 MERGER FILINGS. The information as to Parent and Merger Subsidiary
or any of their affiliates or shareholders included in Parent's filing, or
submitted to the Company for inclusion in its filing, if any, required to be
submitted under the HSR Act or under any Foreign Merger Laws shall be true,
correct, and complete in all material respects and shall comply in all material
respects with the applicable requirements of the HSR Act, the rules and
regulations issued by the Federal Trade Commission pursuant thereto, and Foreign
Merger Laws.
4.8 NO FINDERS. No act of Parent or Merger Subsidiary has given or
will give rise to any claim against any of the parties hereto for a brokerage
commission, finder's fee, or other like payment in connection with the
transactions contemplated herein.
ARTICLE 5
COVENANTS
5.1 CONDUCT OF BUSINESS OF THE COMPANY. Except as contemplated by this
Agreement or to the extent that Parent otherwise consents in writing, during the
period from the date of this Agreement to the Effective Time, the Company and
each Subsidiary will conduct its respective operations according to its ordinary
and usual course of business and consistent with past practice, and the Company
and each Subsidiary will use all reasonable efforts to preserve intact in all
material respects its respective business organizations, to maintain its present
and planned business, to keep available the services of its respective officers
and employees and to maintain satisfactory relationships with licensors,
licensees, suppliers, contractors, distributors, physicians,
27
consultants, customers, and others having business relationships with it;
provided, however, that the Company will not be required to make any payments
or enter into or amend any contractual arrangements or understandings to
satisfy the foregoing obligations. Without limiting the generality of the
foregoing, and except as otherwise expressly provided in or contemplated by
this Agreement, prior to the Effective Time, neither the Company nor any
Subsidiary will, without the prior written consent of Parent:
(a) amend its Articles of Incorporation or Bylaws;
(b) authorize for issuance, issue, sell, pledge, or deliver
(whether through the issuance or granting of additional options, warrants,
commitments, subscriptions, rights to purchase, or otherwise) any stock of
any class or any securities convertible into shares of stock of any class
(other than the issuance of the number of shares of Company Common Stock
indicated in Section 3.4 hereof upon the exercise in accordance with the
current terms of the stock options and other rights listed in the
Disclosure Schedule hereof as outstanding on the date of this Agreement,
and the actual number of shares issued for the final offering period under
the Company's Employee Stock Purchase Plan in accordance with the Section
3.3 hereof);
(c) split, combine, or reclassify any shares of its capital
stock, declare, set aside, or pay any dividend or other distribution
(whether in cash, stock, or property or any combination thereof) in respect
of its capital stock; or redeem or otherwise acquire any shares of its
capital stock or other securities; or amend or alter any material term of
any of its outstanding securities;
(d) other than in the ordinary course of business and consistent
with past practice, create, incur, or assume any indebtedness for borrowed
money, or assume, guarantee, endorse, or otherwise become liable or
responsible (whether directly, contingently, or otherwise) for the
obligations of any other person, or make any loans, advances or capital
contributions to, or investments in, any other person; or create, incur or
assume any Lien on any material asset;
(e) knowingly take any action that would have the effect of
jeopardizing the qualification of the Merger as a reorganization within the
meaning of Section 368(a)(2)(E) of the Code;
(f) (i) increase in any manner the compensation of any of its
directors, officers, employees, shareholders, or consultants, except in the
ordinary course of business and consistent with past practice or consistent
with existing contractual commitments, in each case to the extent disclosed
in the Disclosure Schedule or accelerate the payment of any such
compensation (whether or not any such acceleration is consistent with past
practice) other than as required by existing contractual commitments to the
extent disclosed in the Disclosure Schedule; (ii) pay or accelerate or
otherwise
28
modify the payment, vesting, exercisability, Company matching amount, or
other feature or requirement of any pension, retirement allowance,
severance, change of control, stock option, or other employee benefit
not required by any existing plan, agreement, or arrangement or by
applicable law to any such director, officer, employee, shareholder, or
consultant, whether past or present, except as determined by the Company
to be necessary to comply with applicable law or maintain tax-favored
status (and any nonmaterial changes incidental thereto); or (iii) except
for normal increases in the ordinary course of business in accordance
with its customary past practices or consistent with existing
contractual commitments, in each case to the extent disclosed in the
Disclosure Schedule, commit itself to any additional or increased
pension, profit-sharing, bonus, incentive, deferred compensation, stock
purchase, stock option, stock appreciation right, group insurance,
severance, change of control, retirement or other benefit, plan,
agreement, or arrangement, or to any employment or consulting agreement,
with or for the benefit of any person, or amend any of such plans or any
of such agreements in existence on the date hereof;
(g) except in the ordinary course of business and consistent
with past practice or pursuant to contractual obligations existing on the
date hereof, (i) sell, transfer, mortgage, or otherwise dispose of or
encumber any real or personal property, (ii) pay, discharge, or satisfy any
material claim, liability, or obligation (absolute, accrued, contingent, or
otherwise), or (iii) cancel any debts or waive any claims or rights, which
involve payments or commitments to make payments that individually exceed
$50,000 or, in the aggregate, exceed $100,000;
(h) acquire or agree to acquire (i) by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by any
other manner, any portion of the assets of, or by any other manner, any
business of any corporation, partnership, joint venture, association, or
other business organization or division thereof or (ii) any assets that are
material, individually or in the aggregate, to the Company, except as
provided in subsection (i) below and except purchases of inventory in the
ordinary course of business consistent with past practice;
(i) make or agree to make any new capital expenditure or
expenditures that, individually, is in excess of $50,000 or, in the
aggregate, are in excess of $100,000;
(j) enter into, amend, or terminate any joint ventures or any
other agreements, commitments, or contracts that, individually or in the
aggregate, are material to the Company or any Subsidiary (except
agreements, commitments, or contracts expressly provided for or
contemplated by this Agreement or for the purchase, sale, or lease of
goods, services, or properties in the ordinary course of business,
consistent with past practice), or otherwise make any material change in
the conduct of the business or operations of the Company or any Subsidiary;
29
(k) enter into or terminate, or amend, extend, renew, or
otherwise modify (including, but not limited to, by default or by failure
to act) any distribution, OEM, independent sales representative,
noncompetition, licensing, franchise, research and development, supply, or
similar contract, agreement, or understanding (except agreements,
commitments, or contracts expressly provided for or contemplated by this
Agreement or for the purchase, sale, or lease of goods, services, or
properties in the ordinary course of business, consistent with past
practice);
(l) change in any material respect its credit policy as to sales
of inventories or collection of receivables or its inventory consignment
practices;
(m) remove or permit to be removed from any building, facility,
or real property any machinery, equipment, fixture, vehicle, or other
personal property or parts thereof, except in the ordinary course of
business;
(n) alter or revise its accounting principles, procedures,
methods, or practices, except as required by a change in generally accepted
accounting principles and concurred with by the Company's independent
public accountants;
(o) institute, settle, or compromise any claim, action, suit, or
proceeding pending or threatened by or against it involving amounts in
excess of $100,000, at law or in equity or before any federal, state,
local, foreign, or other governmental department, commission, board,
bureau, agency, or instrumentality (including, but not limited to, the FDA
or any nongovernmental self-regulatory agency);
(p) distribute or otherwise circulate any notices, directives,
or other communications directed to all or groups of customers, vendors,
employees, distributors, or others associated with its business relating to
the transactions contemplated hereby or to the operation of business after
completion of the Merger without consulting with Parent, giving Parent
reasonable opportunity to comment thereon, and obtaining prior to
distribution Parent's approval thereof, which shall not unreasonably be
withheld;
(q) knowingly take any action that would cause the condition set
forth in Section 6.2(a) not to be met; or
(r) agree, whether in writing or otherwise, to do any of the
foregoing.
provided, however, that in the event that the Company or any of its Subsidiaries
would be prohibited from taking any action by reason of this Section 5.1 without
the prior written consent of Parent, such action may nevertheless be taken if
the Company or any of its Subsidiaries is expressly required to do so by law and
the Company prior to taking such action informs Parent in writing of such
requirement.
30
5.2 NO SOLICITATION. From the date hereof until the termination of
this Agreement, the Company will not and will cause its Subsidiaries and its and
their respective officers, directors, employees, representatives, agents, or
affiliates (including, but not limited to any investment banker, attorney, or
accountant retained by the Company or any Subsidiary), to not, directly or
indirectly, solicit, encourage, initiate, or participate in any way in
discussions or negotiations with, or knowingly provide any information to, any
corporation, partnership, person, or other entity or group (other than Parent or
any affiliate or agent of Parent) concerning any merger, sale or licensing of
any significant portion of the assets, sale of shares of capital stock
(including without limitation any proposal or offer to the Company's
shareholders), or similar transactions involving the Company or any Subsidiary
(an "Alternative Proposal"), or otherwise facilitate any effort or attempt to
make or implement an Alternative Proposal. The Company will promptly
communicate to Parent the terms of any proposal or inquiry that it has received
or may receive in respect of any such transaction or of any such information
requested from it or of any such negotiations or discussions being sought to be
initiated with the Company and may inform any third party who contacts the
Company on an unsolicited basis concerning an Alternative Proposal that the
Company is obligated hereunder to disclose such to Parent. Notwithstanding the
foregoing, this section shall not prohibit the Board of Directors of the Company
from (i) furnishing information to or entering into discussions or negotiations
with, any person or entity that makes an unsolicited bona fide Alternative
Proposal, if, and only to the extent that, (a) the Board of Directors of the
Company determines in good faith, after receipt of advice to such effect from
outside legal counsel, that such action is so required for the board of
Directors to comply with its fiduciary duties to shareholders imposed by law,
(b) prior to furnishing information to, or entering into discussions and
negotiations with, such person or entity, the Company promptly provides written
notice to Parent to the effect that it is furnishing information to, or entering
into discussions or negotiations with, such person or entity, and (c) the
Company keeps Parent informed of the status and all material terms and events
with respect to any such Alternative Proposal; and (ii) to the extent
applicable, complying with Rules 14d-9 and 14e-2 promulgated under the 1934 Act,
as amended, with regard to an Alternative Proposal. Nothing in this section
shall (x) permit the Company to terminate this Agreement (except as specifically
provided in Article 7 hereof), (y) permit the Company to enter into any
agreement with respect to an Alternative Proposal for as long as this Agreement
remains in effect (it being agreed that for as long as this Agreement remains in
effect, the Company shall not enter into any agreement with any person that
provides for, or in any way facilitates, an Alternative Proposal), or (z) affect
any other obligation of the Company under this Agreement while this Agreement
remains in effect.
5.3 ACCESS AND INFORMATION. The Company shall afford to Parent, and
to Parent's accountants, officers, directors, employees, counsel, and other
representatives, reasonable access during normal business hours, from the
date hereof through the Effective Time, to all of its properties, books,
contracts, commitments, and records, and, during such period, the Company
shall furnish promptly to Parent all information concerning the Company's and
its Subsidiaries' businesses, prospects, properties, liabilities, results of
operations, financial condition, testing, clinicals, officers, employees,
investigators, distributors, customers, suppliers, and others having dealings
with the Company as Parent may reasonably request and reasonable opportunity
to contact and obtain information from such officers, employees,
investigators, distributors,
31
customers, suppliers, and others having dealings with the Company as Parent
may reasonably request, subject, however, to limitations under existing
confidentiality agreements with other bidders with respect to prior offers.
During the period from the date hereof to the Effective Time, the parties
shall in good faith meet and correspond on a regular basis for mutual
consultation concerning the conduct of the Company's and the Subsidiaries'
businesses and, in connection therewith, Parent shall be entitled to have
employees or other representatives present at the offices of the Company and
its Subsidiaries to observe, and be kept informed concerning, the Company's
and the Subsidiaries' operations and business planning. Parent shall hold in
confidence all such nonpublic information as required and in accordance with
the confidentiality letter agreement dated June 2, 1998, between Parent and
the Company, as amended by the amendment to confidentiality letter agreement
dated the same date (the "Confidentiality Agreement").
5.4 APPROVAL OF SHAREHOLDERS; PROXY STATEMENT; REGISTRATION STATEMENT.
(a) The Company shall take all action necessary in accordance
with Minnesota law and the Company's Articles of Incorporation and
Bylaws to cause a special meeting of the Company's shareholders (the
"Company Shareholders Meeting") to be duly called and held as soon as
reasonably practicable following the date upon which the Registration
Statement (as defined below) becomes effective for the purpose of voting
upon the Merger. The shareholder vote or consent required for approval
of the Plan of Merger and the Merger shall be no greater than that set
forth in the MBCA and the Company's Articles of Incorporation as
previously provided to Parent. Accordingly, the Company represents and
warrants that the affirmative vote of the holders of record of a
majority of the outstanding shares of Company Common Stock is all that
is necessary to obtain shareholder approval of the Plan of Merger and
the Merger. The Company shall use all reasonable efforts to obtain the
approval by the Company's shareholders of this Agreement, the Plan of
Merger, and the Merger. In accordance therewith, the Company shall,
with the cooperation of Parent, prepare and file, as soon as reasonably
practicable, a proxy statement/prospectus included as part of the
Registration Statement (such proxy statement/prospectus, together with
notice of meeting, form of proxy, and any letter or other materials to
the Company's shareholders included therein are referred to in this
Agreement as the "Proxy Statement/Prospectus"). The Company shall use
all reasonable efforts to cause the definitive Proxy Statement/Prospectus
to be mailed to the shareholders of the Company, as soon as reasonably
practicable following its effectiveness, with the date of mailing as
mutually determined by the Company and Parent. The Company will, through
its Board of Directors, recommend to its shareholders approval of the
Merger in the definitive Proxy Statement/Prospectus.
(b) Parent shall, with the cooperation of the Company, prepare
and file, as soon as reasonably practicable, a registration statement under
the 1933 Act registering the shares of Parent Common Stock to be issued in
the Merger (the "Registration Statement"), which Registration Statement
shall include the Proxy Statement/Prospectus. Parent will use all
reasonable efforts to have the Registration Statement declared effective
32
by the SEC as promptly thereafter as practicable. Parent shall also take
any action required to be taken under state blue sky or securities laws in
connection with the issuance of Parent Common Stock pursuant to the Merger.
The Company shall furnish to Parent all information concerning the Company
and its Subsidiaries and the holders of its capital stock, and shall take
such other action and otherwise cooperate, as Parent may reasonably request
in connection with any such action.
(c) Parent shall notify the Company promptly of the receipt of
the comments of the SEC and of any request by the SEC for amendments or
supplements to the Registration Statement and shall supply the Company with
copies of all correspondence with the SEC with respect to the Registration
Statement.
(d) If at any time prior to the Company Shareholders Meeting,
any event should occur relating to the Company, any Subsidiary, or the
Company's officers or directors that is required to be described in an
amendment or supplement to the definitive Proxy Statement/Prospectus or the
Registration Statement, the Company shall promptly inform Parent. If at
any time prior to the Company Shareholders Meeting, any event shall occur
relating to Parent or Merger Subsidiary or their respective officers or
directors that is required to be described in an amendment or supplement to
the definitive Proxy Statement/Prospectus or the Registration Statement,
Parent shall promptly inform the Company. Whenever any event occurs that
should be described in an amendment of, or supplement to, the definitive
Proxy Statement/Prospectus or the Registration Statement, the Company or
Parent, as the case may be, shall, upon learning of such event, promptly
notify the other and consult and cooperate with the other in connection
with the preparation of a mutually acceptable amendment or supplement. The
parties shall promptly file such amendment or supplement with the SEC and
mail such amendment or supplement as soon as practicable after it is
cleared by the SEC.
5.5 CONSENTS. The Company will, at its cost and expense, use all
reasonable efforts to obtain all approvals and consents of all third parties
necessary on the part of the Company or its Subsidiaries to consummate the
transactions contemplated hereby. Parent agrees to cooperate with the Company
in connection with obtaining such approvals and consents. Parent will, at its
cost and expense, use all reasonable efforts to obtain all approvals and
consents of all third parties necessary on the part of Parent to consummate the
transactions contemplated hereby. The Company agrees to cooperate with Parent
in connection with obtaining such approvals and consents.
5.6 AFFILIATES' LETTERS.
(a) The Company has delivered to Parent a list of names and
addresses of those persons, in the Company's reasonable judgment after
consultation with outside legal counsel, who, as of the date hereof, are
affiliates within the meaning of Rule 145 of the rules and regulations
promulgated under the Securities Act (each
33
such person, an "Affiliate") of the Company. The Company shall provide
Parent such information and documents as Parent shall reasonably request
for purposes of reviewing such list and shall promptly update such list
to reflect any changes thereto. The Company has caused to be delivered
to Parent an affiliate's letter in the form attached hereto as EXHIBIT
B, executed by each of the Affiliates of the Company identified in the
foregoing list who were available, and shall use all reasonable efforts
to deliver or cause to be delivered to Parent as soon as practicable
prior to the Effective Time such an affiliate's letter executed by any
Affiliate who was not available to sign and deliver such letter on or
prior to the date hereof and by any additional persons who become
Affiliates after the date hereof. Parent shall be entitled to place
legends as specified in such affiliates' letters on the certificates
evidencing any of the Parent Common Stock to be received by such
Affiliates pursuant to the terms of this Agreement, and to issue
appropriate stop transfer instructions to the transfer agent for the
Parent Common Stock, consistent with the terms of such letters.
(b) For so long as resales of shares of Parent Common Stock
issued pursuant to the Merger are subject to the resale restrictions set
forth in Rule 145 under the Securities Act, Parent will use all reasonable
efforts to comply with Rule 144(c)(1) under the Securities Act.
5.7 EXPENSES. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement, the transactions
contemplated hereby, the Proxy Statement/Prospectus, and the Registration
Statement will be paid by the party incurring such costs and expenses, except
that the Company and Parent will share equally the cost of printing and filing
with the SEC the Proxy Statement/Prospectus and the Registration Statement, the
filing fees required under the HSR Act or any Foreign Merger Laws, and the fees
charged by PricewaterhouseCoopers LLP for the letters described in Section 5.15
(the "Shared Expenses").
5.8 FURTHER ACTIONS. Subject to the terms and conditions herein
provided and without being required to waive any conditions herein (whether
absolute, discretionary, or otherwise), each of the parties hereto agrees to use
all commercially reasonable efforts to take, or cause to be taken, all action,
and to do, or cause to be done, all things necessary, proper, or advisable to
consummate and make effective the transactions contemplated by this Agreement.
In case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers and
directors of each party to this Agreement shall take all such necessary action.
5.9 REGULATORY APPROVALS. The Company and Parent will take all
reasonable action as may be necessary under federal or state securities laws or
the HSR Act or Foreign Merger Laws applicable to or necessary for, and will file
as soon as reasonably practicable and, if appropriate, use all reasonable
efforts to have declared effective or approved all documents and notifications
with the SEC and other governmental or regulatory bodies (including, without
limitation, the FDA and equivalent foreign regulatory bodies, and other foreign
regulatory bodies that administer Foreign Merger Laws, and any foreign labor
councils or bodies as may be
34
required) that they deem necessary or appropriate for, the consummation of
the Merger and the transactions contemplated hereby, and each party shall
give the other information reasonably requested by such other party
pertaining to it and its subsidiaries and affiliates to enable such other
party to take such actions. Notwithstanding the foregoing or anything herein
to the contrary, neither Parent nor Merger Subsidiary shall be required to
make arrangements for or to effect the cessation, sale, or other disposition
of particular assets or categories of assets or businesses of Parent, Merger
Subsidiary, the Company, or any of their affiliates.
5.10 CERTAIN NOTIFICATIONS. From time to time prior to the Effective
Time within 5 days of the end of each calendar month, the Company will provide
written notice to the Parent of any matter which, if existing, occurring or
known at the date of this Agreement, would have been required to be set forth or
described in the Disclosure Schedule or which is necessary to correct any
information in the Disclosure Schedule which has been rendered inaccurate
thereby, or (b) would constitute a breach of any covenant contained in this
Agreement. For purposes of determining the accuracy of the representations and
warranties of the Company contained in Article 3 of this Agreement in order to
determine the fulfillment of the conditions set forth in Section 6.2(a) and to
determine whether a breach has occurred for purposes of Section 6.2(b) or
pursuant to Section 7.1(g) hereof, the Disclosure Schedule delivered by Company
in accordance with Section 3.1 shall be deemed to include only the information
contained therein when delivered in accordance with Section 3.1 and shall be
deemed to exclude any information contained in any subsequent notifications
hereunder.
5.11 VOTING OF SHARES. To induce Parent to execute this Agreement,
certain officers and directors of the Company have executed and delivered as of
the date hereof (and prior to the Company's execution and delivery of the Stock
Option Agreement described in Section 5.17 below) Agreements to Facilitate
Merger in the form attached hereto as EXHIBIT C, pursuant to which each such
person has agreed to vote his or her shares of Company Common Stock in favor of
the Merger at the Company Shareholders Meeting. At the request of Parent, after
the execution of this Agreement the Company will use all reasonable efforts to
have other officers and directors of the Company also execute Agreements to
Facilitate Merger.
5.12 NONCOMPETITION AGREEMENTS. To induce Parent to execute this
Agreement, the Company has caused ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇ to execute and
deliver to Parent as of the date hereof (but expressly contingent upon the
Closing of the Merger), noncompetition agreements substantially in the form of
EXHIBIT D hereto each with a term of 42 months from the Effective Time, and the
Company shall use all reasonable efforts to cause ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ to execute and deliver to Parent within 30 days of
the date hereof (but expressly contingent upon the Closing of the Merger)
noncompetition agreements substantially in the form of EXHIBIT D hereto each
with a term of 24 months from the Effective Time.
5.13 NYSE LISTING APPLICATION. Parent shall prepare and submit to the
NYSE a listing application for the Parent Common Stock to be issued in the
Merger pursuant to Article 1 of this Agreement. The Company shall cooperate
with Parent in such listing application.
35
5.14 INDEMNIFICATION. Parent agrees that it will, after the Effective
Time, provide to those individuals who have served as directors or officers of
the Company or its Subsidiaries indemnification equivalent to that provided by
the Articles of Incorporation and Bylaws of the Company with respect to matters
occurring prior to the Effective Time, including without limitation the
authorization of this Agreement and the transactions contemplated hereby, for a
period of six years from the Effective Time (or, in the case of matters
occurring prior to the Effective Time which, have not been resolved prior to the
sixth anniversary, until such matters are finally resolved). To the extent
permitted by law, Parent will advance expenses in connection with the foregoing
indemnification. In the event the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person and
the Surviving Corporation shall not be the continuing or surviving corporation
or entity of such consolidation or merger or (ii) transfers all or substantially
all of its properties and assets to any person, then, and in each such case,
proper provision shall be made so that the successors and assigns of the
Surviving Corporation shall assume the obligations set forth in this Section
5.14. For a period of six years after the Effective Time, Parent will provide
that portion of directors' and officers' liability insurance that serves to
reimburse officers and directors of the Company and its Subsidiaries with
respect to claims against such officers and directors arising from facts or
events that occurred before the Effective Time of at least the same coverage and
amounts, and containing terms and conditions no less advantageous, as that
coverage currently provided by the Company and its Subsidiaries.
5.15 [Intentionally omitted]
5.16 SUBSIDIARY SHARES. At or prior to the Closing, the Company shall
cause all issued and outstanding Subsidiary shares owned by any person other
than the Company to be transferred for no or nominal consideration to such
person or persons designated by Parent.
5.17 STOCK OPTION AGREEMENT. To induce Parent to execute this
Agreement, the Company has executed and delivered to Parent as of the date
hereof (and after the execution and delivery of certain Agreements to Facilitate
Merger described in Section 5.11 above) a Stock Option Agreement in the form
attached hereto as EXHIBIT E, pursuant to which the Company has granted to
Parent an option to acquire from the Company such number of shares of Company
Common Stock as equals 19.9% of the aggregate number of outstanding shares of
Company Common Stock, at an exercise price equal to $11.125 per share or such
lesser amount as is described in the second paragraph of Section 1.3(a) hereof.
Such option shall become exercisable only in the events described in the Stock
Option Agreement.
5.18 BENEFIT PLANS AND EMPLOYEE MATTERS. From and after the Effective
Time, Parent shall to the extent practicable cause the Surviving Corporation to
provide employee benefits and programs to the Company's employees that, in the
aggregate, are substantially comparable or more favorable than those in
existence as of the date hereof and disclosed in writing to Parent prior to the
date hereof.
36
5.19 TAX. Parent agrees that it will not knowingly take any action that
would have the effect of jeopardizing the qualification of the Merger as a
reorganization within the meaning of Section 368(a)(2)(E) of the Code.
ARTICLE 6
CLOSING CONDITIONS
6.1 CONDITIONS TO OBLIGATIONS OF PARENT, MERGER SUBSIDIARY, AND THE
COMPANY. The respective obligations of each party to consummate the Merger
shall be subject to the fulfillment at or prior to the Closing of the following
conditions:
(a) NO INJUNCTION. None of Parent, Merger Subsidiary, or the
Company shall be subject to any final order, decree, or injunction of a
court of competent jurisdiction within the United States that (i) prevents
or materially delays the consummation of the Merger, or (ii) would impose
any material limitation on the ability of Parent effectively to exercise
full rights of ownership of the Company or the assets or business of the
Company.
(b) SHAREHOLDER APPROVAL. The approval of the shareholders of
the Company referred to in Section 5.4 hereof shall have been obtained, in
accordance with the MBCA and the Company's Articles of Incorporation and
Bylaws.
(c) REGISTRATION STATEMENT. The Registration Statement (as
amended or supplemented) shall have become effective under the 1933 Act and
shall not be subject to any "stop order," and no action, suit, proceeding,
or investigation by the SEC to suspend the effectiveness or qualification
thereof shall have been initiated and be continuing or have been threatened
and be unresolved. Parent shall also have received all state securities
law or blue sky authorizations necessary to carry out the transactions
contemplated hereby.
(d) NYSE LISTING. The shares of Parent Common Stock to be
delivered pursuant to the Merger shall have been duly listed on the NYSE,
subject to official notice of issuance.
(e) WAITING PERIODS. The waiting periods applicable to the
consummation of the Merger under the HSR Act and any Foreign Merger Laws
shall have expired or been terminated.
6.2 CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUBSIDIARY. The
respective obligations of Parent and Merger Subsidiary to consummate the Merger
shall be subject to the fulfillment at or prior to the Closing of the following
additional conditions:
37
(a) REPRESENTATIONS AND WARRANTIES TRUE. Each representation
and warranty of the Company contained in this Agreement, without regard to
any qualification or reference to immateriality or "Company Material
Adverse Effect," shall be true and correct on the date hereof and on the
Closing Date as though such representations and warranties were made on
such date (except those representations and warranties that address matters
only as of a particular date shall remain true and correct as of such
date), except for any inaccuracies that, individually or in the aggregate,
have not had, and would not have, a Company Material Adverse Effect.
(b) PERFORMANCE. The Company shall have performed and complied
in all material respects with all agreements, obligations, and conditions
required by this Agreement to be performed or complied with by it on or
prior to the Closing, and Parent shall have received a certificate to such
effect signed by the Chief Executive Officer of the Company.
(c) CONSENTS. The Company shall have obtained all permits,
authorizations, consents, and approvals required on its part to perform its
obligations under, and consummate the transactions contemplated by, this
Agreement, in form and substance reasonably satisfactory to Parent, and
Parent and Merger Subsidiary shall have received evidence reasonably
satisfactory to them of the receipt of such permits, authorizations,
consents, and approvals.
(d) OPINION OF COUNSEL FOR THE COMPANY. Parent and Merger
Subsidiary shall have received an opinion of ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
LLP, counsel to the Company, dated the Closing Date, in form and substance
reasonably satisfactory to Parent, to the effect set forth in EXHIBIT F
hereto.
(e) AFFILIATES' LETTERS. Parent shall have received a letter
from each of the Affiliates pursuant to Section 5.6 hereof.
(f) NONCOMPETITION AGREEMENTS. Parent shall have received
executed agreements from such persons, and in such form satisfactory to
Parent, as described in Section 5.12 hereof.
(g) RESIGNATIONS. Such officers and directors of the Company or
of any Subsidiary as shall have been specified Parent shall have tendered
their respective resignations effective as of the Effective Time.
(h) [Intentionally omitted]
38
(i) CONTINUED EMPLOYMENT OF CEO. The chief executive officer of
the Company shall have agreed to continue his employment with the Company
following the Merger on such terms as are mutually satisfactory to Parent
and such officer.
(j) SUBSIDIARY SHARES. The transfer of Subsidiary shares as
provided in Section 5.16 shall have occurred.
6.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligation of the
Company to consummate the Merger shall be subject to the fulfillment at or prior
to the Closing of the following additional conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. Each representation
and warranty of Parent contained in this Agreement, without regard to any
qualification or reference to immateriality or "Parent Material Adverse
Effect," shall be true and correct on the date of this Agreement and on the
Closing Date as though such representations and warranties were made on
such date (except those representations and warranties that address matters
only as of a particular date shall remain true and correct as of such
date), except for any inaccuracies that, individually or in the aggregate,
have not had, and would not have, a Parent Material Adverse Effect.
(b) PERFORMANCE. Parent and Merger Subsidiary shall have
performed and complied in all material respects with all agreements,
obligations, and conditions required by this Agreement to be performed or
complied with by them on or prior to the Closing.
(c) CONSENTS. Parent and Merger Subsidiary shall have obtained
all permits, authorizations, consents, and approvals required on their part
to perform their obligations under, and consummate the transactions
contemplated by, this Agreement, in form and substance satisfactory to the
Company, and the Company shall have received evidence satisfactory to it of
the receipt of such permits, authorizations, consents, and approvals.
(d) OPINION OF COUNSEL FOR PARENT. The Company shall have
received an opinion of ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.A., counsel to Parent, dated
the Closing Date, in form and substance reasonably satisfactory to the
Company, to the effect set forth in EXHIBIT G hereto.
(e) TAX OPINION. The Company shall have received an opinion of
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel to the Company, to the effect
that, subject to customary conditions and representations, the Merger will
be treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a)(2)(E) of the Code. This condition shall be
deemed waived in the event that such tax opinion is not rendered because
the Company or its shareholders have failed to provide such customary
representations.
39
ARTICLE 7
TERMINATION AND ABANDONMENT
7.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval by the shareholders of the
Company, only:
(a) by mutual written consent duly authorized by the Board of
Directors of Parent and the Board of Directors of the Company;
(b) by either Parent or the Company if the Merger shall not have
been consummated on or before the date that is six months after the date
hereof; provided, however, that the terminating party shall not have
breached in any material respect its obligations under this Agreement in
any manner that shall have been the proximate cause of, or resulted in, the
failure to consummate the Merger by such date and provided further,
however, that, if a request for additional information is received from the
U.S. Federal Trade Commission ("FTC") or Department of Justice ("DOJ")
pursuant to the HSR Act or additional information is requested by an
authority (a "Foreign Authority") pursuant to Foreign Merger Laws, such
date shall be extended to the 90th day following acknowledgment by the FTC,
DOJ, or Foreign Authority, as applicable, that Parent and the Company have
complied with such request, but in any event not later than nine months
from the date hereof;
(c) by either Parent or the Company if a court of competent
jurisdiction or an administrative, governmental, or regulatory authority
has issued a final nonappealable order, decree, or ruling, or taken any
other action, having the effect of permanently restraining, enjoining, or
otherwise prohibiting the Merger;
(d) by either Parent or the Company if, at the Company
Shareholders Meeting, the requisite vote of the shareholders of the Company
is not obtained, except that the right to terminate this Agreement under
this Section 7.1(d) will not be available to any party whose failure to
perform any material obligation under this Agreement has been the proximate
cause of, or resulted in, the failure to obtain the requisite vote of the
shareholders of the Company;
(e) by Parent if either (i) the Company has breached its
obligations under Section 5.2 in any material respect, (ii) the Board of
Directors of the Company has recommended, approved, accepted, or entered
into an agreement regarding, an Alternative Proposal, as defined in Section
5.2, (iii) the Board of Directors of the Company has withdrawn or modified
in a manner adverse to Parent its recommendation of the Merger, or (iv) a
tender offer or exchange offer for 15% or more of the outstanding shares of
Company Common Stock is commenced, and the Board of Directors of the
Company, within 10 business days after such tender offer or exchange offer
is so commenced, either fails to recommend against acceptance of such
tender offer or exchange offer by its
40
shareholders or takes no position with respect to the acceptance of such
tender offer or exchange offer by its shareholders;
(f) by the Company if (i) it is not in material breach of its
obligations under Section 5.2, (ii) the Board of Directors of the Company
has authorized acceptance of an Alternative Proposal, and (iii) the Company
has paid to Parent the fee required by Section 7.2 to be paid to Parent in
the manner therein provided;
(g) by Parent if (i) Parent is not in material breach of its
obligations under this Agreement and (ii) there has been a material breach
by the Company of any of its representations, warranties, or obligations
under this Agreement of by an Affiliate of the Company under such person's
affiliate's letter described in Section 5.6 or by an officer or director of
the Company under such person's Agreement to Facilitate Merger described in
Section 5.11 such that the conditions in Section 6.2 will not be satisfied,
and the breach is not curable or, if curable, is not cured by the Company
within 30 calendar days after receipt by the Company of written notice from
Parent of such breach;
(h) by the Company if (i) the Company is not in material breach
of its obligations under this Agreement and (ii) there has been a material
breach by Parent of any of its representations, warranties, or obligations
under this Agreement such that the conditions in Section 6.3 will not be
satisfied, and the breach is not curable or, if curable, is not cured by
Parent within 30 calendar days after receipt by Parent of written notice
from the Company of such breach.
(i) by Parent if, within 10 business days following receipt of
the Disclosure Schedule as described in Section 3.1, Parent determines that
the Disclosure Schedule contains information which in Parent's good faith,
reasonable business judgment adversely affects the value of the Company's
business or prospects.
7.2 EFFECT OF TERMINATION.
(a) In recognition of the time, efforts, and expenses expended
and incurred by Parent with respect to the Company and the opportunity that
the acquisition of the Company presents to Parent, if:
(i) this Agreement is terminated pursuant to Section 7.1(e)
or 7.1(f); or
(ii) any third party makes an Alternative Proposal to which
the Company has made a response or any third party acquires 15% or
more of the outstanding Company Common Stock prior to the Company
Shareholders Meeting, and either (A) the requisite vote of the
shareholders of the Company to approve the Merger is not obtained
or (B) this Agreement is terminated pursuant
41
to Section 7.1(g) where the Company's breach is willful and
intentional or is terminated pursuant to Section 7.1(d),
then, in any such event, the Company will pay to Parent, upon the
termination date in the event of termination pursuant to Section 7.1(f),
and immediately upon the date of entering into an agreement providing for
an Alternative Proposal (if such agreement is entered into within 12 months
of the termination of this Agreement), in the case of a termination
pursuant to Section 7.1(e) or in the case of the events specified in clause
(ii) above (by wire transfer of immediately available funds to an account
designated by Parent for such purpose), a fee equal to $2.75 million. The
Company acknowledges that the agreements contained in this Section 7.2 are
an integral part of the transactions contemplated by this Agreement and are
not a penalty, and that, without these agreements, Parent would not enter
into this Agreement. If the Company fails to pay promptly the fee due
pursuant to this Section 7.2, the Company shall also pay to Parent Parent's
costs and expenses (including legal fees and expenses) in connection with
any action, including the filing of any lawsuit or other legal action,
taken to collect payment, together with interest on the amount of the
unpaid fee under this section, accruing from its due date, at an interest
rate per annum equal to two percentage points in excess of the prime
commercial lending rate quoted by Norwest Bank Minnesota, N.A. Any change
in the interest rate hereunder resulting from a change in such prime rate
shall be effective at the beginning of the day of such change in such prime
rate.
(b) Except as provided in the next sentence of this paragraph,
in the event of the termination of this Agreement pursuant to any paragraph
of Section 7.1, the obligations of the parties to consummate the Merger
will expire, and none of the parties will have any further obligations
under this Agreement except pursuant to Sections 5.3, 5.7, and 7.2(a) and
which shall survive termination of this Agreement. In the event of the
termination of this Agreement pursuant to any paragraph of Section 7.1 that
is caused by a breach of a party, the party whose breach was the basis for
the termination will not be relieved from any liability for its breach or
its obligations pursuant to Section 7.2(a), and the other party will have
no further obligations under this Agreement except as provided in Sections
5.3 and 5.7 and Article 8.
ARTICLE 8
MISCELLANEOUS
8.1 AMENDMENT AND MODIFICATION. Subject to applicable law, this
Agreement may be amended, modified, or supplemented only by written agreement of
Parent, Merger Subsidiary, and the Company at any time prior to the Effective
Time with respect to any of the terms contained herein. This Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
parties hereto.
42
8.2 WAIVER OF COMPLIANCE; CONSENTS. Any failure of Parent or Merger
Subsidiary on the one hand, or the Company on the other hand, to comply with any
obligation, covenant, agreement, or condition herein may be waived by the
Company or Parent, respectively, only by a written instrument signed by an
officer of the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, covenant, agreement, or condition
shall not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure. Whenever this Agreement requires or permits consent by or on
behalf of any party hereto, such consent shall be given in writing. Merger
Subsidiary agrees that any consent or waiver of compliance given by Parent
hereunder shall be conclusively binding upon Merger Subsidiary, whether or not
given expressly on its behalf.
8.3 INVESTIGATION; SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
respective representations and warranties of Parent and the Company contained
herein or in any certificates or other documents delivered prior to or at the
Closing shall not be deemed waived or otherwise affected by any investigation
made by any party hereto. Each and every representation and warranty contained
herein shall be deemed to be conditions to the Merger and shall not survive the
Merger. This Section 8.3 shall have no effect upon any other obligation of the
parties hereto, whether to be performed before or after the Closing. Parent
acknowledges and agrees that (i) other than the representations and warranties
of the Company and its Subsidiaries specifically contained in this Agreement,
including for this purpose the Disclosure Schedule and other matters referred to
in this Agreement or the Disclosure Schedule, there are no representations or
warranties of the Company or its Subsidiaries either expressed or implied with
respect to the Company, its Subsidiaries or their respective assets, liabilities
and businesses, and (ii) other than as incorporated, referred to or repeated in
the representations and warranties of the Company made in this Agreement or in
the Disclosure Schedule, it shall have no claim or right to indemnification with
respect to any information (whether written or oral), documents or material
furnished by the Company, its Subsidiaries or any of their respective officers,
directors, employees, agents or advisors to Parent, including any information,
documents or material made available to Parent in certain "data rooms,"
management presentations or any other form in expectation of the transactions
contemplated by this Agreement
8.4 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given when delivered personally by commercial
courier service or otherwise, or by telecopier, or three days after such notice
is mailed by registered or certified mail (return receipt requested) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to Parent or Merger Subsidiary, to it at:
Medtronic, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
43
with separate copies thereof addressed to
Attention: General Counsel
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
and
Attention: Vice President and Chief Development Officer
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Company, to it at:
AVECOR Cardiovascular, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, CEO
with a copy to:
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
8.5 ASSIGNMENT. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests, or obligations hereunder shall be assigned by any of
the parties hereto without the prior written consent of the other parties, nor
is this Agreement intended to confer upon any other person except the parties
hereto any rights or remedies hereunder, except that Section 5.14 of this
Agreement shall inure to the benefit of the persons identified therein.
8.6 GOVERNING LAW. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of Minnesota (regardless of
the laws that might otherwise govern under applicable Minnesota principles of
conflicts of law).
8.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
44
8.8 KNOWLEDGE. As used in this Agreement or the instruments,
certificates or other documents required hereunder, the term "knowledge" of an
entity shall mean knowledge actually possessed by any director or officer of
such entity.
8.9 INTERPRETATION. The Table of Contents, article and section
headings contained in this Agreement are inserted for reference purposes only
and shall not affect the meaning or interpretation of this Agreement. This
Agreement shall be construed without regard to any presumption or other rule
requiring the resolution of any ambiguity regarding the interpretation or
construction hereof against the party causing this Agreement to be drafted.
8.10 PUBLICITY. Upon execution of this Agreement by Parent, Merger
Subsidiary, and the Company, the parties shall jointly issue a press release, as
agreed upon by them. The parties intend that all future statements or
communications to the public or press regarding this Agreement or the Merger
will be mutually agreed upon by them and neither party shall, without such
mutual agreement or the prior consent of the other, issue any statement or
communication to the public or to the press regarding this Agreement, or any of
the terms, conditions, or other matters with respect to this Agreement, except
as required by law or the rules of the NYSE or Nasdaq and then only (a) upon the
advice of such party's legal counsel; (b) to the extent required by law or the
rules of the NYSE or Nasdaq; and (c) following prior notice to the other party
and an opportunity for the other party to discuss with the disclosing party
(which notice shall include a copy of the proposed statement or communication to
be issued to the press or public). The foregoing shall not restrict Parent's or
the Company's communications with their employees or customers in the ordinary
course of business.
8.11 ENTIRE AGREEMENT. This Agreement, including the exhibits and
schedules hereto and the Confidentiality Agreement referred to herein, embodies
the entire agreement and understanding of the parties hereto in respect of the
subject matter contained herein. This Agreement and the Confidentiality
Agreement supersede all prior agreements and the understandings between the
parties with respect to such subject matter. No discussions regarding or
exchange of drafts or comments in connection with the transactions contemplated
herein shall constitute an agreement among the parties hereto. Any agreement
among the parties shall exist only when the parties have fully executed and
delivered this Agreement.
45
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
MEDTRONIC, INC.
By
----------------------------------
Its: Vice President
AC MERGER CORP.
By
----------------------------------
Its: President
AVECOR CARDIOVASCULAR, INC.
By
----------------------------------
Its: CEO
46
