<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 7, 1997
FILE NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------
BAXTER INTERNATIONAL INC.
(Exact Name of the Registrant as Specified in its Charter)
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<S> <C> <C>
DELAWARE 2834 36-0781620
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>
BAXTER INTERNATIONAL INC.
ONE BAXTER PARKWAY
DEERFIELD, ILLINOIS 60015
(847) 948-2000
(Address, Including Zip Code, and Telephone Number,
Including Area Code of Registrant's Principal Executive Offices)
JAY P. WERTHEIM, ESQUIRE
ASSOCIATE GENERAL COUNSEL
BAXTER HEALTHCARE CORPORATION
17221 RED HILL AVENUE
IRVINE, CALIFORNIA 92614
(714) 250-2500
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code of Agent For Service)
------------------------------
WITH COPIES TO:
JOSEPH J. GIUNTA, ESQUIRE A. ROBERT THORUP, ESQUIRE
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP RAY, QUINNEY & NEBEKER
300 SOUTH GRAND AVENUE 79 SOUTH MAIN STREET
LOS ANGELES, CALIFORNIA 90071 SALT LAKE CITY, UTAH 84111
(213) 687-5000 (801) 323-3359
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
UPON CONSUMMATION OF THE MERGER (AS DEFINED HEREIN).
------------------------------
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: / /
------------------------------
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE REGISTRATION FEE
SECURITIES TO BE REGISTERED BE REGISTERED (2) PER SHARE OFFERING PRICE (3) (4)
<S> <C> <C> <C> <C>
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Common Stock ($1 par value per share) (1)... 5,641,649 Not applicable $223,349,397 $67,682
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</TABLE>
(1) This Registration Statement relates to securities of the Registrant,
including common stock and associated Baxter Rights (as defined herein), to
be issued to holders of common stock of Research Medical, Inc. ("RMI Common
Stock") in connection with the Merger (as herein described).
(2) Represents the number of shares of the Registrant's Common Stock issuable
upon consummation of the Merger, given an exchange ratio of .5857, which
assumes (i) a common stock price of the Registrant of $40.125, the lowest
closing price of the Registrant's Common Stock as reported by the New York
Stock Exchange (the "NYSE") from July 1, 1996 through February 3, 1997
(adjusted for stock dividends and stock splits), and (ii) a number of shares
of RMI Common Stock to be received by the Registrant in the Merger of
9,632,319, the number of shares outstanding, fully diluted, on February 3,
1997. This amount is estimated solely for the purpose of calculating the
Registration Fee.
(3) Pursuant to Rule 457(f)(1) under the Securities Act of 1933, as amended (the
"Securities Act"), this amount represents the maximum aggregate offering
price which would be computed by using the average of the high and low
prices for shares of RMI Common Stock as reported by the Nasdaq National
Market on February 3, 1997. This amount is estimated solely for the purpose
of calculating the Registration Fee.
(4) A fee of $45,108 was paid on December 23, 1996 pursuant to Rule 14a-6 and
Rule 0-11 promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), in respect of the Merger upon the filing by Research
Medical, Inc. of preliminary proxy statement materials relating thereto.
Pursuant to Rule 457(b) under the Securities Act and Section 14(g)(1)(B) of
the Exchange Act and Rule 0-11 promulgated thereunder, the amount of such
previously paid fee may be credited against the registration fee payable in
connection with this filing. Accordingly, only $22,574 of the total
registration fee of $67,682, equal to 1/33 of one percent of the estimated
Proposed Maximum Aggregate Offering Price of $223,349,397, as calculated in
accordance with Section 6(b) of the Securities Act, is required to be paid
with this Registration Statement.
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SECTION 8(a), MAY DETERMINE.
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<PAGE>
[LOGO]
February 7, 1997
Dear Shareholder:
You are cordially invited to attend a special meeting ("Special Meeting") of
the shareholders of Research Medical, Inc. ("RMI") to be held at
[ ], Salt Lake City, Utah, on March [ ], 1997, at 10:00 a.m.,
local time. At that Special Meeting, you will be asked to consider and vote on
an Amended and Restated Agreement and Plan of Merger, dated as of December 3,
1996, as amended and restated on February 4, 1997, (the "Merger Agreement"),
pursuant to which RMI will be acquired by Baxter International Inc. ("Baxter")
by means of a merger ("Merger") of Baxter CVG Services III, Inc., a wholly owned
subsidiary of Baxter, with and into RMI, resulting in RMI becoming a wholly
owned subsidiary of Baxter.
The Merger Agreement provides for the conversion and exchange of each and
every outstanding share of RMI common stock into a fraction of a share of Baxter
common stock, the numerator of such fraction being $23.50 and the denominator
being the Baxter Stock Price, as defined in the Merger Agreement.
In addition to describing the terms and conditions of the Merger Agreement,
the enclosed Proxy Statement/Prospectus sets forth information, including
summary financial data, about RMI and Baxter. The complete text of the Merger
Agreement appears as Annex A to the Proxy Statement/Prospectus. Please carefully
review all of these materials and consider the information contained in them.
Your vote on the Merger is important. APPROVAL OF THE MERGER AGREEMENT REQUIRES
THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES OF
RMI COMMON STOCK.
YOUR BOARD OF DIRECTORS BELIEVES THE MERGER IS IN THE BEST INTERESTS OF
RMI'S SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
APPROVAL OF THE MERGER AGREEMENT.
Regardless of the size of your holdings, it is important that your shares be
voted at the Special Meeting. Whether or not you plan to attend the Special
Meeting, please complete, sign, date, and mail, as soon as possible, the
enclosed proxy in the postage-paid envelope provided. We appreciate the
continued support of our shareholders and look forward to seeing you at the
Special Meeting.
Sincerely,
[SIG]
Gary L. Crocker
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
RESEARCH MEDICAL, INC.
----------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH [ ], 1997
------------------------
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of Research
Medical, Inc. ("RMI") will be held at [ ], Salt Lake City,
Utah, on March , 1997, at 10:00 a.m., local time (the "Special Meeting"), for
the following purposes, all of which are more fully described in the
accompanying Proxy Statement/Prospectus:
1. To consider and vote upon a proposal to approve the Amended and Restated
Agreement and Plan of Merger, dated as of December 3, 1996, as amended
and restated on February 4, 1997, (the "Merger Agreement"), by and among
Baxter International Inc. ("Baxter"), Baxter CVG Services III, Inc.
("Purchaser") and RMI and the transactions contemplated thereby,
including the merger (the "Merger") of Purchaser with and into RMI.
2. To transact such other business as may properly come before the Special
Meeting or any adjournments or postponements thereof.
The Merger Agreement is set forth in Annex A of the accompanying Proxy
Statement/Prospectus.
The RMI Board of Directors has fixed the close of business on January 29,
1997 as the record date for the determination of shareholders entitled to notice
of and to vote at the Special Meeting and any adjournments or postponements
thereof. Only shareholders of record at the close of business on such date are
entitled to notice of and to vote at the Special Meeting. A list of RMI
shareholders entitled to vote at the Special Meeting will be available for
examination, during ordinary business hours, at the corporate offices at 6864
South 300 West, Midvale, Utah during the 10 days prior to the Special Meeting.
Common Stock, par value, $0.50 per share, of RMI is the only security of RMI
whose holders are entitled to vote upon the proposals to be presented at the
Special Meeting.
Your vote is important regardless of the number of shares you own. Each
shareholder, even though he or she now plans to attend the Special Meeting, is
requested to sign, date and return the enclosed proxy without delay in the
enclosed postage-paid envelope. You may revoke your proxy at any time prior to
its exercise. Any shareholder present at the Special Meeting or at any
adjournments or postponements thereof may revoke his or her proxy and vote
personally on each matter brought before the Special Meeting.
By Order of the Board of Directors,
[SIG]
Mark W. Winn
SENIOR VICE PRESIDENT AND SECRETARY
February 7, 1997
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL
TO APPROVE THE MERGER AGREEMENT
PLEASE DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY
IN THE ENCLOSED POSTAGE-PAID RETURN ENVELOPE
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
RESEARCH MEDICAL, INC.
PROXY STATEMENT
------------------
BAXTER INTERNATIONAL INC.
PROSPECTUS
This Proxy Statement/Prospectus (this "Proxy Statement/Prospectus") is being
furnished to holders of common stock, par value $.50 per share ("Company Common
Stock"), of Research Medical, Inc., a Utah corporation ("RMI" or the "Company"),
in connection with the solicitation of proxies by the Board of Directors of the
Company for use at a special meeting of shareholders of the Company to be held
on March , 1997 at 10:00 a.m., local time, at [__________], Salt Lake City,
Utah and any adjournments or postponements thereof (the "Special Meeting"). At
the Special Meeting, shareholders of the Company will consider and vote upon a
proposal to approve and adopt the Amended and Restated Agreement and Plan of
Merger, dated as of December 3, 1996, as amended and restated on February 4,
1997, by and among Baxter International Inc., a Delaware corporation ("Baxter"),
Baxter CVG Services III, Inc., a Utah corporation and a wholly owned subsidiary
of Baxter ("Purchaser"), and the Company, a copy of which is attached hereto as
Annex A and is incorporated herein by reference (such agreement, as it may be
amended, modified, or supplemented from time to time, will be referred to as the
"Merger Agreement"). The Merger Agreement provides, subject to the satisfaction
or waiver of certain conditions, that Purchaser will be merged with and into the
Company (the "Merger"), with the Company surviving the Merger as a wholly owned
subsidiary of Baxter. Upon consummation of the Merger, each share of Company
Common Stock (excluding shares held by any wholly owned subsidiary of the
Company or by Baxter, or by any subsidiary of Baxter) shall be cancelled and
shall be converted into the right to receive (the "Merger Consideration") the
fraction of a share of common stock, par value $1 per share of Baxter ("Baxter
Shares"), the numerator of which fraction shall be $23.50 and the denominator of
which shall be the Baxter Stock Price (as defined below), with cash being paid
in lieu of any fractional share interest.
For purposes of calculating the Merger Consideration, the "Baxter Stock
Price" shall be an amount equal to the average closing sale price of a Baxter
Share on the New York Stock Exchange ("NYSE"), as such closing sale price shall
be reported in THE WALL STREET JOURNAL or, if not available, such other
authoritative publication as may be reasonably selected by Baxter, for the ten
(10) consecutive trading days ending on and including the second trading day
prior to the date of the Special Meeting at which the Merger Agreement is
approved. Because the number of shares of the common stock, $1.00 par value per
share, of Baxter ("Baxter Common Stock") to be received by shareholders of RMI
("Shareholders") will be determined based on the average closing price of Baxter
Common Stock over the ten trading day period ending on and including the second
trading day prior to the date of the Special Meeting, and because the price of
Baxter Common Stock is subject to fluctuation, the number of shares of Baxter
Common Stock that Shareholders will receive in the Merger may increase or
decrease from the number of shares such Shareholders would receive based on the
current market price for Baxter Common Stock. Moreover, the value of Baxter
Common Stock to be received by Shareholders through the Merger may fluctuate
following the Effective Time. There is no minimum or maximum fraction or number
of Baxter Shares that may be issued under the provisions of the Merger
Agreement.
FOLLOWING DETERMINATION OF THE BAXTER STOCK PRICE ON THE SECOND TRADING DAY
PRIOR TO THE SPECIAL MEETING, SHAREHOLDERS CAN OBTAIN THE BAXTER STOCK PRICE AND
THE SPECIFIC FRACTION OF A BAXTER SHARE INTO WHICH EACH SHARE OF RMI WILL BE
CONVERTED BY CONTACTING MORROW & CO., INC. (THE "SOLICITATION AGENT") AT (800)
662-5200 (TOLL FREE). PROXIES AND REVOCATIONS OF PROXIES MAY BE DELIVERED AT ANY
TIME PRIOR TO THE TAKING OF THE VOTE AT THE SPECIAL MEETING, INCLUDING BY
FACSIMILE TO THE SOLICITATION AGENT AT (212) 754-8300.
Each Baxter Share received also includes an associated Baxter Share Right to
purchase Baxter Preferred Stock at a purchase price of $70 per Unit, subject to
adjustment. The Baxter Rights, which only become exercisable in certain events,
were issued pursuant to a Rights Agreement dated March 20, 1989 between Baxter
and First National Bank of Chicago, its Rights Agent.
This Proxy Statement/Prospectus and the accompanying forms of proxy are
first being mailed to shareholders of the Company on or about February 11, 1997.
This Proxy Statement/Prospectus also constitutes Baxter's Prospectus, filed
with the Securities and Exchange Commission as part of a Registration Statement
on Form S-4 under the Securities Act of 1933, as amended ("Registration
Statement"), with respect to the Baxter Shares to be issued in connection with
the Merger. RMI has supplied all the information contained herein with respect
to itself and its subsidiaries, and Baxter has supplied all the information
contained herein with respect to itself, its subsidiaries, and Purchaser.
--------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------------
The date of this Proxy Statement/Prospectus is February 7, 1997.
<PAGE>
AVAILABLE INFORMATION
Baxter and RMI are subject to the informational reporting requirements of
the Securities Exchange Act of 1934, as amended ("Exchange Act"), and in
accordance therewith file periodic reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
Copies of such reports, proxy statements and other information can be obtained,
upon payment of prescribed fees, at the Public Reference Room of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549. Such reports, proxy
statements and other information can also be inspected at the Commission's
facilities referred to above and at the Commission's Regional Offices at Suite
1400, 500 West Madison Street, Chicago, Illinois 60621-2511, and at Room 1228,
75 Park Place, New York, New York 10007. Electronic copies of all such reports
are also available on the World Wide Web at http:// www.sec.gov/edgarhp.htm. In
addition, Baxter Common Stock is listed and traded on the New York Stock
Exchange ("NYSE"), and such reports, proxy statements and other information
concerning Baxter should be available for inspection and copying at the offices
of the NYSE, 20 Broad Street, New York, New York 10005. The RMI Common Stock is
listed and traded on the Nasdaq National Market, and such reports, proxy
statements and other information concerning RMI should be available for
inspection and copying at the National Association of Securities Dealers, Inc.,
1735 K Street, N.W., Washington, D.C. 20006.
Baxter has filed with the Commission a Registration Statement on Form S-4
(together with any amendments thereto, the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Baxter Common Stock to be issued pursuant to the Merger Agreement. This Proxy
Statement/Prospectus does not contain all the information set forth in the
Registration Statement and the exhibits thereto, certain portions of which are
omitted in accordance with the rules and regulations of the Commission. Such
additional information may be obtained from the Commission's principal office in
Washington, D.C. Statements contained in this Proxy Statement/Prospectus, in any
document incorporated by reference or deemed to be incorporated by reference
into this Proxy Statement/Prospectus, as to the contents of any contract or
other document referred to herein or therein are not necessarily complete, and,
in each case, reference is made to the copy of such contract or other document
filed as an exhibit to the Registration Statement or such other document, each
such statement being qualified in all respects by such reference.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF ANY SUCH DOCUMENTS,
OTHER THAN EXHIBITS TO SUCH DOCUMENTS, ARE AVAILABLE WITHOUT CHARGE TO ANY
PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS PROXY STATEMENT/PROSPECTUS
IS DELIVERED UPON WRITTEN OR ORAL REQUEST DIRECTED TO MORROW & CO., INC., 909
THIRD AVENUE, 20TH FLOOR, NEW YORK, NEW YORK 10022, TELEPHONE NUMBER: (800)
662-5200 (TOLL FREE). IN ORDER TO ASSURE TIMELY DELIVERY OF SUCH DOCUMENTS PRIOR
TO THE SPECIAL MEETING, ANY REQUEST SHOULD BE RECEIVED BY FEBRUARY 20, 1997.
COPIES OF SUCH DOCUMENTS WILL ALSO BE AVAILABLE UPON REQUEST THEREAFTER UNTIL
THE EFFECTIVE TIME (AS HEREINAFTER DEFINED).
Questions and requests for assistance, for additional copies of the Proxy
Statement/Prospectus or for copies of documents incorporated by reference herein
may be directed to the Company's Solicitation Agent as follows:
MORROW & CO., INC.
909 Third Avenue, 20th Floor
New York, New York 10022
Telephone: (800) 662-5200 (toll free)
Facsimile: (212) 754-8300
The Solicitation Agent will also be available to provide, beginning on the
second trading day prior to the Special Meeting, information to Shareholders
regarding the calculation of the specific fraction of a Baxter Share into which
each share of RMI Common Stock will be converted pursuant to the Merger
Agreement and to receive by facsimile proxies and revocations of proxies from
Shareholders.
No agent or officer of Baxter or RMI, nor any other person, has been
authorized to give any information or to make any representations other than as
contained herein; and, if given or made, such
ii
<PAGE>
information or representations should not be relied upon as having been
authorized by Baxter or RMI. Neither the delivery of this Proxy
Statement/Prospectus nor any sale or exchange made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs or operations of Baxter or RMI since the date of this Proxy
Statement/Prospectus, or that the information herein is correct as of any time
subsequent to such date.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed with the Commission pursuant to the
Exchange Act are incorporated herein by reference:
1. Baxter's Annual Report on Form 10-K for the year ended December 31,
1995 (File No. 1-4448);
2. Baxter's Quarterly Reports on Form 10-Q, for the quarters ended
March 31, June 30, and September 30, 1996 (File No. 1-4448);
3. Baxter's Current Reports on Form 8-K dated April 19, August 29,
October 7, and December 6, 1996 and January 29, 1997 (File No. 1-4448);
4. Description of Baxter Capital Stock and Baxter Rights as included in
Baxter Form 8-A filed with the Commission on March 21, 1989 (File No.
1-4448);
5. Information Concerning Baxter directors and executive officers as
included in sections entitled "Board of Directors," "Election of Directors,"
"Compensation of Named Executive Officers" and "Pension Plan, Excess Plans
and Supplemental Plans" on pages 2-5 and 8-16 of Baxter's Proxy Statement on
Schedule 14A dated March 22, 1996 (File No. 1-4448);
6. The Company's Annual Report on Form 10-K for the year ended June 30,
1996 (File No. 0-6944);
7. The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996 (File No. 0-6944);
8. Proxy Statement for RMI dated October 7, 1996 (File No. 0-6944); and
9. RMI's Current Reports on Form 8-K dated December 3, 1996 and January
8, 1997 (File No. 0-6944).
All documents filed by the Company and Baxter pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act, that indicate on the cover page thereof
that they are to be incorporated by reference, after the date of this Proxy
Statement/Prospectus and prior to the date of the Special Meeting shall be
deemed to be incorporated by reference into this Proxy Statement/Prospectus and
to be a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement herein (or in any other
subsequently filed document that is or is deemed to be incorporated by reference
herein) modifies or supersedes such previous statement. Any statement so
modified or superseded shall not be deemed to constitute a part hereof except as
so modified or superseded.
All information contained or incorporated by reference in this Proxy
Statement/Prospectus relating to the Company and its subsidiaries has been
supplied by the Company and all such information relating to Baxter and its
subsidiaries has been supplied by Baxter.
iii
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TABLE OF CONTENTS
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AVAILABLE INFORMATION..................................................... ii
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................... iii
NOTE REGARDING FORWARD-LOOKING INFORMATION................................ vi
GLOSSARY.................................................................. vii
SUMMARY................................................................... 1
The Companies........................................................... 1
The RMI Special Meeting................................................. 1
The Merger.............................................................. 2
No Dissenting Shareholders' Rights...................................... 4
Certain Federal Income Tax Consequences................................. 4
Market Price Data and Dividends......................................... 5
Selected Consolidated Financial Data.................................... 7
VOTING AND MANAGEMENT INFORMATION; THE RMI SPECIAL MEETING................ 11
General................................................................. 11
Shares Entitled to Vote; RMI Shareholder Approval....................... 11
Voting; Solicitation and Revocation of Proxies.......................... 12
THE MERGER................................................................ 13
General................................................................. 13
Background of the Merger................................................ 13
Baxter's Reasons for the Merger......................................... 17
Recommendation of the RMI Board of Directors; Reasons of RMI for the
Merger................................................................ 17
Opinion of RMI Financial Advisor........................................ 18
Governmental and Regulatory Approvals................................... 22
Anticipated Accounting Treatment........................................ 22
Certain Federal Income Tax Consequences................................. 23
No Dissenting Shareholders' Rights...................................... 24
Interests of Certain Persons in the Merger.............................. 24
CERTAIN TERMS OF THE MERGER AGREEMENT..................................... 25
Effective Time of the Merger............................................ 25
Conversion of Shares.................................................... 26
Exchange of Certificates Representing Shares............................ 27
Dividends............................................................... 27
No Fractional Shares.................................................... 28
Unclaimed Amounts....................................................... 28
Lost Certificates....................................................... 28
Representations and Warranties.......................................... 28
Ordinary Course......................................................... 28
Resales of Baxter Common Stock Received in the Merger; Restrictions on
Affiliates............................................................ 29
NYSE Listing............................................................ 30
No Solicitation......................................................... 30
Directors' and Officers' Indemnification and Insurance.................. 31
Continuation of Operations.............................................. 31
Employee Benefits....................................................... 31
Consents and Approvals.................................................. 32
Conditions to the Merger................................................ 32
</TABLE>
iv
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<TABLE>
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PAGE
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Termination, Amendment and Waiver....................................... 33
Fees and Expenses....................................................... 34
INFORMATION CONCERNING BAXTER............................................. 35
General................................................................. 35
Recent Developments..................................................... 35
Industry Overview....................................................... 36
Methods of Distribution................................................. 36
Raw Materials........................................................... 37
Patents and Trademarks.................................................. 37
Research and Development................................................ 37
Government Regulation................................................... 37
Employees............................................................... 38
Contractual Arrangements................................................ 38
Properties.............................................................. 38
INFORMATION CONCERNING RMI................................................ 39
General................................................................. 39
Recent Operating Results................................................ 39
Competition............................................................. 40
Government Regulation................................................... 41
Principal RMI Shareholders.............................................. 41
Stock Ownership by Management of RMI.................................... 42
Contracts Between Baxter and RMI........................................ 42
COMPARISON OF RIGHTS OF HOLDERS OF BAXTER COMMON STOCK AND HOLDERS OF RMI
COMMON STOCK............................................................ 43
Preemptive Rights....................................................... 43
Dividends and Other Distributions....................................... 43
Amendment of Certificate or Articles of Incorporation; Amendment of
Bylaws................................................................ 44
Action by Written Consent............................................... 45
Special Meeting of Shareholders......................................... 45
Voting in the Election of Directors..................................... 45
Number and Qualification of Directors................................... 46
Classification of Board................................................. 46
Removal of Directors.................................................... 46
Filling Vacancies on the Board of Directors............................. 47
Transactions Involving Officers or Directors or Interested
Shareholders.......................................................... 47
Indemnification and Limitation of Liability............................. 48
Mergers and Sales of Substantially All Corporate Assets................. 49
Dissenting Shareholder's Rights......................................... 50
Shareholder Approval of Certain Business Combinations................... 51
Inspection of Shareholder List, Books and Records....................... 52
Shareholder Derivative Suits............................................ 52
Duration of Proxies..................................................... 53
Dissolution............................................................. 53
LEGAL MATTERS............................................................. 53
EXPERTS................................................................... 53
SHAREHOLDER PROPOSALS..................................................... 54
ANNEXES
Amended and Restated Agreement and Plan of Merger....................... A-1
Opinion of William Blair & Company, L.L.C............................... B-1
</TABLE>
v
<PAGE>
NOTE REGARDING FORWARD-LOOKING INFORMATION
Certain statements contained herein and in the documents incorporated herein
by reference constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties or other factors which
may cause actual results, performance or achievements of the Company, Baxter or
the health care industry to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. Such factors include, among others, the rate of technological
change, the success of Baxter's acquisition strategy, the regulatory environment
under existing law and future acts of Congress. In addition to statements which
explicitly describe such risks and uncertainties, investors are urged to
consider statements labeled with the terms "believes," "belief," "expects,"
"plans," or "anticipates" to be uncertain and forward-looking.
vi
<PAGE>
GLOSSARY
As used in this Proxy Statement/Prospectus, the following are the meanings
for the terms set forth below:
<TABLE>
<S> <C>
"BAXTER" means Baxter International Inc., a Delaware
corporation.
"BAXTER COMMON STOCK" means shares of common stock, $1.00 par value per
share, of Baxter.
"BAXTER RIGHT" means a Right to purchase from Baxter a unit
consisting of one one-hundredth of a share (a
"Unit") of Series A Junior Participating Preferred
Stock, without par value (the "Preferred Stock").
"BAXTER STOCK PRICE" has the meaning set forth on the Cover Page of
this Proxy Statement/ Prospectus.
"BCA" means the Revised Utah Business Corporations Act.
"CLOSING" means the closing of the transactions contemplated
by the Merger Agreement.
"CLOSING DATE" means the date upon which the Closing occurs.
"CODE" means the Internal Revenue Code of 1986, as
amended, and the rules and regulations thereunder.
"COMMISSION" means the Securities and Exchange Commission.
"COMPANY" OR "RMI" means Research Medical, Inc., a Utah corporation.
"COMPANY COMMON STOCK" OR
"RMI COMMON STOCK" means Common Stock, par value $.50, of RMI.
"DELAWARE STATUTE" OR THE
"DGCL" means the Delaware General Corporation Law.
"EFFECTIVE TIME" means as the date on which the Merger will be
deemed effective under the laws of the State of
Utah.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
"EXCHANGE AGENT" means First Chicago Trust Company of New York or
such other qualified transfer agent designated by
Baxter and reasonably satisfactory to RMI to
perform the duties of exchange agent provided for
in the Merger Agreement.
"GAAP" means generally accepted accounting principles in
the United States.
"IRS" means the Internal Revenue Service.
"MATERIAL ADVERSE EFFECT" means, with respect to Baxter or RMI, as the case
may be, any event, circumstance, condition,
development or occurrence, individually or in the
aggregate, causing, resulting in or reasonably
likely to have a material adverse effect on the
condition (financial or otherwise), business,
assets, properties, prospects or results of
operation of Baxter or RMI, respectively, and its
subsidiaries, taken as a whole.
"MERGER" means the merger of Purchaser with and into RMI
pursuant to the Merger Agreement.
</TABLE>
vii
<PAGE>
<TABLE>
<S> <C>
"MERGER AGREEMENT" means the Amended and Restated Agreement and Plan
of Merger, dated as of December 3, 1996, as
amended and restated on February 4, 1997, by and
among Baxter, Purchaser and RMI.
"MERGER AGREEMENT OF
DECEMBER 3, 1996" means the Agreement and Plan of Merger, dated as
of December 3, 1996, by and among Baxter,
Purchaser and RMI, prior to the amendment of such
agreement on February 4, 1997.
"MERGER CONSIDERATION" has the meaning set forth on the Cover Page of
this Proxy Statement/ Prospectus.
"NYSE" means the New York Stock Exchange.
"PROXY" OR "PROXIES" means a form properly signed by a Shareholder
designating and authorizing another person to act
for and on behalf of that Shareholder in voting
that Shareholder's shares of RMI Common Stock at
the Special Meeting. (A form of Proxy to be used
for this purpose is being sent along with this
Proxy Statement/Prospectus.)
"PURCHASER" means Baxter CVG Services III, Inc., a Utah
corporation and a wholly owned subsidiary of
Baxter.
"RECORD DATE" means the close of business on January 29, 1997.
This date is set to determine the RMI shareholders
entitled to notice of and to vote at the Special
Meeting.
"REGISTRATION STATEMENT" means the registration statement of Baxter on Form
S-4 (together with any amendments thereto) filed
with the Commission under the Securities Act with
respect to the Baxter Common Stock issuable in
connection with the Merger.
"RMI BOARD" means the Board of Directors of RMI as duly
constituted at the time of the particular use of
this term in context in this Proxy Statement/
Prospectus.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and
the rules and regulations thereunder.
"SHAREHOLDER" when capitalized, refers to the holders of RMI
Common Stock.
"SOLICITATION AGENT" means Morrow & Co., Inc., which may be called toll
free at (800) 662-5200 and will accept proxies or
revocations of proxies by facsimile at (212)
754-8300 at any time prior to the taking of the
vote at the Special Meeting.
"SPECIAL MEETING" means the special meeting of RMI shareholders that
will be held to consider and vote upon the Merger
Agreement and any adjournments or postponements
thereof.
</TABLE>
viii
<PAGE>
SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE IN
THIS PROXY STATEMENT/PROSPECTUS. REFERENCE IS MADE TO, AND THIS SUMMARY IS
QUALIFIED IN ITS ENTIRETY BY, THE MORE DETAILED INFORMATION CONTAINED IN THIS
PROXY STATEMENT/PROSPECTUS, THE ANNEXES HERETO AND THE DOCUMENTS INCORPORATED BY
REFERENCE HEREIN. SHAREHOLDERS ARE URGED TO READ THIS PROXY STATEMENT/PROSPECTUS
AND THE ANNEXES HERETO IN THEIR ENTIRETY. CAPITALIZED TERMS USED HEREIN AND NOT
DEFINED SHALL HAVE THE MEANINGS ASCRIBED TO THEM ELSEWHERE IN THIS PROXY
STATEMENT/PROSPECTUS.
THE COMPANIES
BAXTER. Baxter International Inc. ("Baxter"), through its subsidiaries, is
a global medical-products company with a leading position in technologies
related to the blood and circulatory system. It has market-leading positions in
four global businesses: BIOTECHNOLOGY, which develops therapies and products in
transfusion medicine; CARDIOVASCULAR MEDICINE, which develops products and
expands services to treat late-stage cardiovascular disease; RENAL, which
develops products and services to improve therapies to fight kidney disease; and
INTRAVENOUS SYSTEMS AND MEDICAL PRODUCTS, which develops technologies and
systems to improve intravenous medication delivery, and distributes disposable
medical products overseas. Baxter's CardioVascular Group (the "CVG Group")
provides a wide range of products to treat late-stage cardiovascular disease,
encompassing perfusion products; critical-care; heart valve therapy; cardiac
assist; perfusion services and vascular systems. Baxter was incorporated in
Delaware in 1931. Baxter's principal executive offices are located at One Baxter
Parkway, Deerfield, Illinois 60015 and its telephone number is (847) 948-2000.
For further information concerning Baxter, see "--Selected Consolidated
Financial Data," "INFORMATION CONCERNING BAXTER," "AVAILABLE INFORMATION" and
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
RMI. Research Medical, Inc. (the "Company" or "RMI") is engaged in the
development, manufacture and distribution of a diversified line of health care
products, focusing on specialized cardiovascular, vascular and blood management
surgical devices and specialty pharmaceuticals. Products are manufactured by the
Company in two facilities located in the United States and sold in many
countries. The Company's more than 450 products are used principally by
hospitals, clinical and medical research laboratories, and doctors' offices. The
Company has real estate holdings remaining from its early years of operations,
including properties traded for such original properties. The Company is
liquidating its real estate assets in an orderly manner, contributing to the
Company's cash and investment position. RMI's principal executive offices are
located at 6864 South 300 West, Midvale, Utah 84047, and its telephone number is
(801) 562-0200. For further information concerning the Company, see "--Selected
Consolidated Financial Data," "INFORMATION CONCERNING RMI," "AVAILABLE
INFORMATION" and "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
THE RMI SPECIAL MEETING
A special meeting of the shareholders of RMI will be held at [
], Salt Lake City, Utah, on March [ ], 1997, at 10:00 a.m. local time.
At the Special Meeting, the Shareholders will consider and vote upon a proposal
to approve and adopt the Merger Agreement and the transactions contemplated
thereby and such other matters as may properly be brought before the meeting.
See "VOTING AND MANAGEMENT INFORMATION; THE RMI SPECIAL MEETING--General."
RECORD DATE
The Company's Board of Directors has established January 29, 1997 (the
"Record Date") as the Record Date for the Special Meeting. Only Shareholders of
record at the close of business on the Record Date are entitled to notice of,
and to vote at, the Special Meeting. See "VOTING AND MANAGEMENT
1
<PAGE>
INFORMATION; THE RMI SPECIAL MEETING--Shareholders Entitled to Vote; RMI
Shareholder Approval."
VOTE REQUIRED
The affirmative vote of the holders of a majority of the outstanding shares
of RMI Common Stock entitled to vote thereon is required to approve and adopt
the Merger Agreement. As of the Record Date, directors and executive officers of
RMI and their affiliates beneficially owned approximately 4.71% of the
outstanding shares of RMI Common Stock. See "INFORMATION CONCERNING RMI--Stock
Ownership by Management of RMI."
THE MERGER
Pursuant to the Merger Agreement, at the Effective Time, Purchaser will be
merged with and into RMI, and RMI, as the surviving corporation in the Merger,
will become a wholly owned subsidiary of Baxter, and the Shareholders will
become shareholders of Baxter. The Effective Time of the Merger will occur upon
the filing of the Articles of Merger with the Division of Corporations and
Commercial Code of the Utah Department of Commerce.
Upon consummation of the Merger, each issued and outstanding share of RMI
Common Stock will, without any action on the part of the holder thereof, be
cancelled and converted into the right to receive a fraction of a share of
Baxter Common Stock which fraction's numerator is $23.50 and its denominator is
the Baxter Stock Price. For further information on the Merger Consideration and
on the Baxter Stock Price, see "--Market Price Data and Dividends" and "THE
MERGER."
RECOMMENDATION OF THE RMI BOARD; REASONS FOR THE MERGER
The RMI Board believes that the terms of the Merger Agreement and the
transactions contemplated thereby are fair to and in the best interest of RMI
and the Shareholders and unanimously recommends that Shareholders vote to
approve the Merger Agreement and the transactions contemplated thereby.
In reaching its determination to enter into the Merger Agreement with
Baxter, the RMI Board consulted with William Blair & Company, L.L.C. ("William
Blair") and RMI's legal advisors, and considered a number of factors, including,
without limitation, the following: the oral opinion of William Blair, which was
subsequently confirmed in writing, that, as of December 3, 1996, the
consideration to be received by the shareholders of RMI pursuant to the Merger
Agreement is fair to such shareholders from a financial point of view; the
current and prospective economic environment and competitive constraints facing
small medical products companies, including RMI; the RMI Board's evaluation of
the risks to consummation of the Merger; the increased liquidity that the Merger
would provide to current RMI shareholders; and the RMI Board's review of
possible alternatives to the Merger. See "THE MERGER-- Recommendation of RMI
Board of Directors; Reasons of RMI for the Merger."
OPINION OF FINANCIAL ADVISOR
William Blair has served as financial advisor to RMI in connection with the
Merger and has rendered an opinion to the RMI Board that the consideration to be
received by the shareholders of RMI pursuant to the Merger Agreement is fair to
such shareholders from a financial point of view. See "THE MERGER-- Opinion of
RMI Financial Advisor" and the opinion of William Blair attached as Annex B to
this Proxy Statement/Prospectus.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of RMI's management and the RMI Board have certain interests
in the Merger that are in addition to their interests as shareholders of RMI
generally. These include the fee to be paid to
2
<PAGE>
William Blair, of which Mr. Edward Blair, Jr., a director of RMI, is a
principal, and an employment agreement between RMI and Mr. Gary Crocker, RMI's
Chairman of the Board, President and Chief Executive Officer. The Merger
Agreement also provides that Baxter will enter into employment agreements or
retention agreements with certain other executive officers of RMI. In addition,
as a result of the Merger, all holders of stock options under RMI's stock option
plans will receive cash in exchange for the cancellation of their options. See
"THE MERGER--Interests of Certain Persons in the Merger."
CONDITIONS; REGULATORY APPROVALS
Consummation of the Merger is subject to various conditions, including,
among others, receipt of the Shareholders' approval solicited hereby, receipt of
certain necessary regulatory approvals, and the receipt of opinions of counsel
regarding certain tax and other aspects of the Merger. In addition, RMI's
obligations under the Merger Agreement are conditioned upon the nonoccurrence of
an event constituting a Material Adverse Effect relating to Baxter. Baxter's
obligation to complete the Merger is similarly conditioned as to the
nonoccurrence of a Material Adverse Effect relating to RMI. See "CERTAIN TERMS
OF THE MERGER AGREEMENT--Conditions to the Merger."
CONSUMMATION OF THE MERGER
Baxter and RMI intend to consummate the Merger as soon as practicable after
approval of the Merger by the Shareholders and after all other conditions have
been met or waived. At present, Baxter and RMI anticipate that all such
conditions can be satisfied, and the Closing can occur promptly following the
Special Meeting. See "CERTAIN TERMS OF THE MERGER AGREEMENT--Effective Time of
the Merger."
NO SOLICITATION
RMI has agreed in the Merger Agreement that neither it nor any of its
officers or directors will initiate, solicit or encourage any inquiries or the
making of any proposal or offer (including with limitation any proposal or offer
to Shareholders) with respect to, or, subject to the fiduciary duties of its
Board of Directors (after consultation with its counsel), furnish any
confidential information relating to or engage in any negotiations or
discussions concerning, any acquisition or purchase of all or any significant
portion of its assets, or of any equity securities of, or any merger,
consolidation or any similar transaction involving it. RMI has agreed to
immediately cease and cause to be terminated any existing activities,
discussions or negotiations previously conducted with any parties other than
Baxter with respect to any of the foregoing, and to notify Baxter immediately if
any such inquiries or proposals are received by, any such information is
requested from, or any such negotiations or discussions are sought to be
initiated or continued with, it. See "CERTAIN TERMS OF THE MERGER AGREEMENT--No
Solicitation."
ANTICIPATED ACCOUNTING TREATMENT
RMI and Baxter expect to account for the Merger as a purchase, with
concomitant recognition of goodwill. However, it is expected that a substantial
portion of the purchase price will be allocated to RMI's in-process research and
development which, under GAAP, will be expensed by Baxter upon closing of the
transaction. RMI and Baxter have agreed, under certain conditions, that Baxter
may request, and RMI will make, certain adjustments to RMI's accounts prior to
Closing. See "--Selected Consolidated Financial Data" and "THE
MERGER--Anticipated Accounting Treatment."
CERTAIN DIFFERENCES IN SHAREHOLDERS' RIGHTS
At the Effective Time, shareholders of RMI automatically will become
shareholders of Baxter, and their rights as shareholders of Baxter will be
determined by the Delaware Statute and by Baxter's Certificate of Incorporation
and Bylaws. The rights of shareholders of RMI differ from rights of the
3
<PAGE>
shareholders of Baxter with respect to certain important matters, including
their rights to call special meetings; the procedure for proposals to approve
amendments to the Articles or Certificates of Incorporation; receipt of
dividends; the required shareholder votes as to certain matters; and statutory
and other restrictions on certain business combinations and control share
acquisitions. See "COMPARISON OF RIGHTS OF HOLDERS OF BAXTER COMMON STOCK AND
HOLDERS OF RMI COMMON STOCK."
NO DISSENTING SHAREHOLDERS' RIGHTS
Under the BCA, holders of RMI Common Stock outstanding and entitled to vote
at the RMI Special Meeting who vote against the Merger Agreement have no right
to have their RMI shares appraised and be cashed out as part of the Merger.
Every share of RMI, whether voted in favor or against the Merger, will be
exchanged for a fraction of a share of Baxter Common Stock once the needed
majority of all outstanding RMI shares is voted in favor of the Merger and the
other conditions of the Merger are satisfied. See "THE MERGER--No Dissenting
Shareholders' Rights".
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
It is intended that the Merger will be treated as a reorganization within
the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), and that, accordingly, for Federal income tax purposes: (i) no
gain or loss will be recognized by Baxter or RMI as a result of the Merger; (ii)
no gain or loss will be recognized by holders of RMI Common Stock upon the
receipt of Baxter Common Stock in exchange for RMI Common Stock pursuant to the
Merger, except with respect to cash received in lieu of a fractional share
interest in Baxter Common Stock; and (iii) the aggregate adjusted tax basis of
the shares of Baxter Common Stock to be received by the holders of RMI Common
Stock in the Merger will be the same as the aggregate adjusted tax basis of the
shares of RMI Common Stock surrendered in exchange therefor (reduced by the
amount allocable to fractional share interests for which cash is received).
Consummation of the Merger is conditioned upon receipt by RMI of an opinion of
Ray, Quinney & Nebeker, dated as of the Effective Time, that the Merger will be
treated as a reorganization within the meaning of Section 368(a) of the Code.
The foregoing summary of the effect for Federal income tax purposes of a
reorganization that comes within the meaning of Section 368(a) of the Code
reflects the opinion of Ray, Quinney & Nebeker, counsel to the Company, attached
as Exhibit 8.1 to the Registration Statement of which this Proxy
Statement/Prospectus forms a part, and is based upon the Code, applicable
Treasury Regulations thereunder and administrative rulings and judicial
authority as of the date hereof. See "THE MERGER--Certain Federal Income Tax
Consequences."
SHAREHOLDERS SHOULD CONSULT WITH THEIR TAX ADVISORS REGARDING THE TAX
CONSEQUENCES OF THE MERGER IN LIGHT OF THEIR OWN TAX SITUATIONS.
4
<PAGE>
MARKET PRICE DATA AND DIVIDENDS
The following table sets forth, for the periods indicated, the high and low
closing prices per share of Baxter Common Stock as reported by the NYSE, and the
high and low bid prices for RMI Common Stock as reported by the Nasdaq National
Market during the same periods of time.
Baxter Common Stock is publicly traded on the NYSE. The information
presented below with respect to Baxter Common Stock quotations was obtained from
the NYSE and reflects actual transactions.
RMI Common Stock is publicly traded through the Nasdaq National Market. The
information presented below with respect to RMI Common Stock was obtained from
the Nasdaq National Market, and represents the high and low bids posted by
market-makers during the period and may not reflect actual transactions.
The prices shown below do not include retail markup, markdown or
commissions.
<TABLE>
<CAPTION>
BAXTER RMI
COMMON STOCK COMMON STOCK
(CLOSING PRICE) (HIGH AND LOW BID)
-------------------- --------------------
CALENDAR QUARTER LOW HIGH LOW HIGH
----------------------------------------------------- --------- --------- --------- ---------
<C> <S> <C> <C> <C> <C>
1994 First................................................ $ 21.75 $ 24.75 $ 9.00 $ 11.75
Second............................................... 21.63 26.75 7.50 10.75
Third................................................ 25.25 29.75 7.75 11.75
Fourth............................................... 23.75 28.88 10.88 14.38
1995 First................................................ 26.75 34.88 13.00 18.63
Second............................................... 32.50 37.00 16.13 23.25
Third................................................ 33.75 41.38 21.88 30.50
Fourth............................................... 36.75 44.75 22.25 30.13
1996 First................................................ 40.00 47.13 16.75 27.50
Second............................................... 41.25 47.88 19.88 26.13
Third................................................ 41.38 47.75 13.88 23.25
Fourth............................................... 40.13(1) 46.25(1) 16.63 23.13
1997 First (through January 29, 1997)..................... 40.63(1) 44.00(1) 22.88 23.38
</TABLE>
- ------------------------
(1) On September 30, 1996 Baxter distributed to its stockholders of record as of
September 26, 1996 all of the outstanding stock of Allegiance Corporation in
the form of a dividend from Baxter. This market price is not adjusted for
this spin-off of Allegiance Corporation.
On December 3, 1996, the last trading day before the announcement of the
execution of the Merger Agreement of December 3, 1996, Baxter Common Stock
closed at $41.00 per share as reported by the NYSE, and RMI Common Stock closed
the day with a last sale at $20.00 per share as reported in the Nasdaq National
Market.
On February 3, 1997, the closing price for Baxter Common Stock as reported
on the NYSE was $45.50 per share and the closing price for RMI Common Stock was
$23.19 per share.
Shareholders are advised to obtain current market quotations for the Baxter
Common Stock and the RMI Common Stock. No assurance can be given concerning the
market price of the Baxter Common Stock before or after the date on which the
Merger is consummated. The market price of the Baxter Common Stock will
fluctuate between the date of this Proxy Statement/Prospectus and the date on
which the Merger is consummated and thereafter. Because the number of shares of
Baxter Common Stock to be received by Shareholders will be determined based on
the average closing price of Baxter Common Stock over the ten day period ending
on and including the second trading day prior to the date of the Special
5
<PAGE>
Meeting at which the Merger Agreement is approved, and because the price of
Baxter Common Stock is subject to fluctuation, the number of shares of Baxter
Common Stock that Shareholders will receive in the Merger may increase or
decrease from the number of shares such Shareholders would receive based on the
current market price for Baxter Common Stock. Moreover, the value of Baxter
Common Stock to be received by Shareholders through the Merger may fluctuate
following the Effective Time. There is no minimum or maximum fraction or number
of Baxter Shares that may be issued under the provisions of the Merger
Agreement.
FOLLOWING DETERMINATION OF THE BAXTER STOCK PRICE ON THE SECOND TRADING DAY
PRIOR TO THE SPECIAL MEETING, SHAREHOLDERS CAN OBTAIN THE BAXTER STOCK PRICE AND
THE SPECIFIC FRACTION OF A BAXTER SHARE INTO WHICH EACH SHARE OF RMI WILL BE
CONVERTED BY CONTACTING THE SOLICITATION AGENT AT (800) 662-5200 (TOLL FREE).
PROXIES AND REVOCATIONS OF PROXIES MAY BE DELIVERED AT ANY TIME PRIOR TO THE
TAKING OF THE VOTE AT THE SPECIAL MEETING, INCLUDING BY FACSIMILE TO THE
SOLICITATION AGENT AT (212) 754-8300.
On the Record Date, there were approximately 272,573,890 shares of Baxter
Common Stock issued and outstanding held by approximately 64,796 holders of
record; and on the same day there were 9,632,319 shares of RMI Common Stock
issued and outstanding held by approximately 1,200 holders of record.
Baxter currently pays regular quarterly dividends.
RMI has never paid dividends on shares of RMI Common Stock.
See "--Selected Consolidated Financial Data" and "Comparative Per Share Data
of Baxter and RMI."
6
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following tables present selected historical financial information for
Baxter and RMI which has been derived from year-end consolidated financial
statements of Baxter and RMI, certain of which are incorporated herein by
reference; and from the September 30, 1996 balance sheet and results of
operations of Baxter (nine months) and of RMI (three months), which information
is also incorporated by reference into this Proxy Statement/Prospectus.
The Merger Agreement provides that, prior to consummation of the Merger but
after all other conditions to consummation have been satisfied, RMI will,
consistent with GAAP and in a manner reasonably requested by Baxter and mutually
satisfactory to the parties, establish such additional accruals and reserves as
may be necessary to conform the Company's accounting reserve practices and
methods to those of Baxter and Baxter's plan with respect to the conduct of the
Company's business following the Merger and otherwise to reflect Merger-related
expenses and costs incurred by the Company. The data in the financial tables and
statements in this Proxy Statement/Prospectus does not reflect the amounts of
such accruals or reserves because such amounts have not as yet been determined,
and depend on the financial and economic conditions and other relevant factors
in existence at and prior to the Effective Time, nor does the table reflect
possible adjustments for restructuring charges and other expenses related to the
Merger.
All of the financial information included herein should be read in
conjunction with such financial statements and notes thereto which are
incorporated by reference, and the information set forth under the captions
"INFORMATION CONCERNING BAXTER" and "INFORMATION CONCERNING RMI," which discuss,
among other things, recent developments in the months following the most recent
filing of a quarterly report with the Commission.
7
<PAGE>
BAXTER INTERNATIONAL INC.
(in millions, except per share data)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER
30,
-----------
1995 (2)
YEAR ENDED DECEMBER 31, -----------
---------------------------------------------------------
1991 1992 1993 (1) 1994 1995 (2) (UNAUDITED)
--------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales......................................... $ 3,635 $ 3,857 $ 4,116 $ 4,479 $ 5,048 $ 3,695
Income (loss) from continuing operations.......... 302 373 (193) 406 371 223
Net income (loss)................................. 591 441 (198) 596 649 473
Per common share data
Income (loss) from continuing operations........ 1.08 1.34 (0.70) 1.45 1.34 0.80
Net income (loss)............................... 2.03 1.56 (0.72) 2.13 2.35 1.70
Cash dividends declared per common share.......... 0.74 0.86 1.00 1.025 1.11 0.83
<CAPTION>
1996
---------
<S> <C>
STATEMENT OF INCOME DATA:
Net sales......................................... $ 3,944
Income (loss) from continuing operations.......... 417
Net income (loss)................................. 511
Per common share data
Income (loss) from continuing operations........ 1.53
Net income (loss)............................... 1.88
Cash dividends declared per common share.......... 0.89
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------------------------
1991 1992 1993 (1) 1994 1995 (2)
--------- --------- ----------- --------- ----------- SEPTEMBER 30,
1996 (5)
-------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital...................................... $ 539 $ 347 $ 546 $ 502 $ 757 $ 1,279
Capital expenditures (3)............................. 306 362 332 380 399 255
Net property, plant and equipment.................... 1,337 1,469 1,434 1,642 1,749 1,771
Total assets......................................... 8,428 8,310 9,211 9,039 9,437 7,546
Net debt (4)......................................... 2,338 2,902 3,139 2,404 2,115 1,190
Long-term obligations................................ 2,246 2,433 2,800 2,341 2,372 1,692
Stockholders' equity................................. 4,373 3,795 3,185 3,720 3,704 2,577
Total capitalization................................. 6,619 6,228 5,985 6,061 6,076 4,269
</TABLE>
- ------------------------
(1) Results include a restructuring charge of a pretax amount of $216 million
and a net special charge for litigation of a pretax amount of $330 million.
(2) Results include a restructuring charge of a pretax amount of $103 million
and a net special charge for litigation of a pretax amount of $96 million.
(3) Includes additions to the pool of equipment leased or rented to customers.
(4) Total debt and lease obligations net of cash and equivalents.
(5) Amounts for Total assets, Net debt, Long-term obligations, Stockholders'
equity and Total capitalization are materially affected by the Allegiance
Corporation spin-off from Baxter which occurred on September 30, 1996.
8
<PAGE>
RESEARCH MEDICAL, INC. AND SUBSIDIARIES
(in thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED JUNE 30, SEPTEMBER 30,
----------------------------------------------------- --------------------
1992 1993 1994 1995 1996 1995 1996
--------- --------- --------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues
Health care............................. $ 15,859 $ 19,843 $ 22,362 $ 28,637 $ 33,312 $ 7,560 $ 9,068
Real estate............................. 1,709 2,921 5,137 5,387 6,718 1,237 1,227
Net revenues--total..................... 17,568 22,764 27,499 34,024 40,030 8,837 10,295
Operating income.......................... 5,466 7,632 8,280 11,082 13,573 2,855 3,317
Net income................................ 4,115 4,935 5,764 7,445 9,147 1,949 2,250
Net income per share...................... 0.44 0.54 0.62 0.81 0.96 0.20 0.23
</TABLE>
<TABLE>
<CAPTION>
JUNE 30,
----------------------------------------------------- SEPTEMBER 30,
1992 1993 1994 1995 1996 1996
--------- --------- --------- --------- --------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCK DATA:
Book value per share (period end).............. $ 2.56 $ 3.16 $ 3.74 $ 4.66 $ 5.85 $ 6.07
Common shares outstanding (period end)......... 9,125 9,257 9,207 9,408 9,627 9,629
BALANCE SHEET DATA:
Cash & investments (including short and long
term investments)............................ 8,240 8,560 9,915 8,500 13,261 12,915
Accounts receivable............................ 3,593 5,473 5,777 6,118 9,030 9,462
Inventories.................................... 3,126 4,088 4,577 8,085 10,747 10,466
Total assets................................... 25,185 31,753 38,600 46,545 58,972 61,735
Current assets................................. 12,667 16,010 17,105 25,559 31,926 33,255
Current liabilities............................ 1,222 1,605 3,289 2,034 2,122 2,752
Long term debt................................. -- 375 272 172 72 47
Stockholders' equity........................... 23,337 29,216 34,467 43,852 56,323 58,485
</TABLE>
9
<PAGE>
COMPARATIVE PER SHARE DATA OF BAXTER AND RMI
Presented below is historical comparative per share data of Baxter and RMI
for earnings from continuing operations, cash dividends and net book value. Also
presented below are the equivalent per share amounts for RMI which adjust the
historical Baxter amounts to reflect the exchange ratio of Baxter shares for RMI
shares contemplated in the Merger. For the purposes of the comparison below, the
exchange ratio was assumed to be 0.5595 shares of Baxter Common Stock for each
share of RMI. Pro forma amounts have been omitted because the effects of the
Merger on Baxter's earnings from continuing operations and net book value per
share are not significant.
BAXTER INTERNATIONAL INC.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1995
THREE MONTHS ENDED NINE MONTHS ENDED ------------
SEPTEMBER 30, SEPTEMBER 30,
1996 1996
------------------ -----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Per share amounts:
Earnings from continuing operations..................................... $ 0.50 $1.53 $ 1.34
Cash dividends.......................................................... 0.3025 0.89 1.11
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------------ ------------
<S> <C> <C> <C>
Net book value........................................................... $ 9.47(1) $13.39(1)
</TABLE>
RESEARCH MEDICAL, INC.
<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30,
1996
THREE MONTHS ENDED --------------
SEPTEMBER 30,
1996
-------------------
(UNAUDITED)
<S> <C> <C> <C>
Per share amounts:
Earnings from continuing operations...................... $ 0.23 $ 0.96
Earnings adjusted for exchange ratio..................... 0.28(2) 0.75(2)
Cash dividends........................................... -- --
Cash dividends adjusted for exchange ratio............... 0.17(2) 0.62(2)
<CAPTION>
SEPTEMBER 30, JUNE 30,
1996 1996
------------------- --------------
<S> <C> <C> <C>
Net book value........................................... $ 6.07 $ 5.85
Net book value adjusted for exchange ratio............... 5.29(2) 7.48(2)
</TABLE>
- ------------------------
(1) The comparability of Baxter's net book values per share at December 31, 1995
and September 30, 1996 is significantly affected by Baxter's spin-off of
Allegiance Corporation on September 30, 1996.
(2) Baxter amounts multiplied by 0.5595, the assumed exchange ratio using a
Baxter share value of $42. The actual exchange ratio may be different, as it
will be determined using the average closing prices of Baxter Common Stock
on the NYSE for the ten trading days ending on and including the second
trading day prior to the Special Meeting at which the Merger Agreement is
approved.
10
<PAGE>
VOTING AND MANAGEMENT INFORMATION;
THE RMI SPECIAL MEETING
GENERAL
This Proxy Statement/Prospectus is being furnished to Shareholders in
connection with the solicitation of proxies by the RMI Board, for use at the
Special Meeting of Shareholders of RMI (the "Special Meeting") to be held at
10:00 a.m., local time, on March [ ], 1997, at [ ], Salt Lake City, Utah
and at any adjournments or postponements thereof. This Proxy
Statement/Prospectus also constitutes a prospectus of Baxter with respect to the
Baxter Common Stock to be issued in the Merger.
At the Special Meeting, the Shareholders of RMI will be asked to approve and
adopt the Amended and Restated Agreement and Plan of Merger, dated as of
December 3, 1996, as amended and restated on February 4, 1997, (the "Merger
Agreement"), by and among Baxter, Purchaser and RMI attached as Annex A hereto
and more fully described herein. The Merger Agreement provides, among other
things, that Purchaser will merge with and into RMI, with RMI thus becoming a
wholly-owned subsidiary of Baxter (the "Merger") and, except as described below,
each share of RMI Common Stock will be converted into a fraction of a share of
Baxter Common Stock, the numerator of which fraction will be $23.50 and the
denominator will be the Baxter Share Price. Because the number of shares of
Baxter Common Stock to be received by Shareholders will be determined based on
the average closing price of Baxter Common Stock over the ten trading day period
ending on and including the second trading day prior to the date of the Special
Meeting, and because the price of Baxter Common Stock is subject to fluctuation,
the number of shares of Baxter Common Stock that Shareholders will receive in
the Merger may increase or decrease from the number of shares such Shareholders
would receive based on the current market price for Baxter Common Stock.
Moreover, the value of Baxter Common Stock to be received by Shareholders
through the Merger may fluctuate following the Effective Time.
FOLLOWING DETERMINATION OF THE BAXTER STOCK PRICE ON THE SECOND TRADING DAY
PRIOR TO THE SPECIAL MEETING, SHAREHOLDERS CAN OBTAIN THE BAXTER STOCK PRICE AND
THE SPECIFIC FRACTION OF A BAXTER SHARE INTO WHICH EACH SHARE OF RMI WILL BE
CONVERTED BY CONTACTING THE SOLICITATION AGENT AT (800) 662-5200 (TOLL FREE).
PROXIES AND REVOCATIONS OF PROXIES MAY BE DELIVERED AT ANY TIME PRIOR TO THE
TAKING OF THE VOTE AT THE SPECIAL MEETING, INCLUDING BY FACSIMILE TO THE
SOLICITATION AGENT AT (212) 754-8300.
The date on which this Proxy Statement/Prospectus is first being sent to
shareholders of RMI is on or about February 11, 1997.
SHARES ENTITLED TO VOTE; RMI SHAREHOLDER APPROVAL
The RMI Board has fixed January 29, 1997, as the Record Date for the
determination of those Shareholders entitled to notice of and to vote at the
Special Meeting. Only holders of record of RMI Common Stock at the close of
business on the Record Date will be entitled to notice of and to vote at the
Special Meeting. As of the Record Date, there were 9,632,319 shares of RMI
Common Stock outstanding, entitled to vote and held by approximately 1,200
holders of record. Each holder of record of shares of RMI Common Stock on the
Record Date is entitled to cast one vote per share on the proposal to approve
and adopt the Merger Agreement and any other matter properly submitted for the
vote of the RMI shareholders at the Special Meeting. The presence, either in
person or by properly executed proxy, of the holders of a majority of the
outstanding shares of RMI Common Stock entitled to vote at the Special Meeting
is necessary to constitute a quorum at the Special Meeting. Shares of RMI Common
Stock which are present in person or by proxy but abstain from voting with
respect to one or more proposals voted upon at the Special Meeting will be
included for purposes of determining a quorum at such meeting.
The approval and adoption of the Merger Agreement by the Shareholders will
require the affirmative vote of the holders of a majority of the outstanding
shares of RMI Common Stock. Under the BCA, in determining whether the proposal
has received the requisite number of affirmative votes, abstentions and broker
non-votes will be counted and will have the same effect as a vote against the
Merger. As described in "CERTAIN TERMS OF THE MERGER AGREEMENT--Conditions to
the Merger," such approval by the Shareholders is a condition to consummation of
the Merger.
11
<PAGE>
Approval and adoption of the Merger Agreement by the shareholders of Baxter
is not required under Delaware law. Baxter has caused the Merger Agreement to be
approved by all requisite corporate action to be taken by it or by the
Purchaser, by means of a written consent mechanism.
As of the Record Date, directors and executive officers of RMI and their
affiliates may be deemed to be beneficial owners of 453,611 shares of RMI Common
Stock, or approximately 4.71% of the shares of RMI Common Stock outstanding.
VOTING; SOLICITATION AND REVOCATION OF PROXIES
All shares of RMI Common Stock which are entitled to vote and are
represented at the Special Meeting by properly executed proxies received prior
to or at the meeting, and not revoked, will be voted at such meeting in
accordance with the instructions indicated on such proxies. If no instructions
are indicated, such signed and dated proxies will be voted FOR approval and
adoption of the Merger Agreement.
If any other matters are properly presented at the Special Meeting for
consideration, including, among other things, consideration of a motion to
adjourn the meeting to another time and/or place (including, without limitation,
for the purpose of soliciting additional proxies), the persons named in the
relevant form of proxy enclosed herewith and acting thereunder will have
discretion to vote on such matters in accordance with their best judgment. RMI
does not have any knowledge of any matters to be presented at the Special
Meeting other than the proposal to approve the Merger Agreement.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i)
delivering to the Solicitation Agent (as defined below) or the Secretary of RMI,
at or before the taking of the vote at the Special Meeting, a written notice of
revocation bearing a later date than the proxy, (ii) duly executing a
later-dated proxy relating to the same shares and delivering it to the
Solicitation Agent or Secretary of RMI before the taking of the vote at the
Special Meeting, or (iii) attending the Special Meeting and voting in person
(although attendance at the meeting will not in and of itself constitute a
revocation of a proxy). Any written notice of revocation or subsequent proxy may
be sent by facsimile to the Solicitation Agent, Morrow & Co., Inc., at (212)
754-8300 (confirmed by telephone at (800) 662-5200 (toll free)) or may be hand
delivered to, or sent so as to be delivered to Mark W. Winn, Secretary of
Research Medical, Inc., 6864 South 300 West, Midvale, Utah 84047 before the
taking of the vote at the Special Meeting.
All expenses of this solicitation, including the cost of preparing and
mailing this Proxy Statement/ Prospectus, will be borne by the party incurring
such expenses. In addition to solicitation by use of the mails, proxies may be
solicited by directors and officers of RMI in person or by telephone, telegram
or other means of communication. Such directors, officers and employees will not
be additionally compensated, but may be reimbursed for reasonable out-of-pocket
expenses in connection with such solicitation. In addition, the Company has
retained Morrow & Co., Inc. (the "Solicitation Agent") to assist it in
connection with the solicitation of proxies for the Special Meeting, to provide
prior to the Special Meeting information to Shareholders regarding the
calculation of the specific fraction of a Baxter Share into which each share of
RMI Common Stock will be converted, to receive by facsimile proxies and
revocations of proxies, and to tabulate the results of votes at the Special
Meeting. For providing such services, the Solicitation Agent will be paid a fee
of $8,250, plus reimbursement of out-of-pocket expenses.
Arrangements will also be made with brokerage houses, custodians, nominees
and fiduciaries for the forwarding of proxy solicitation materials to beneficial
owners of shares held of record by such persons, and the Company will reimburse
such persons for their reasonable expenses incurred in connection therewith.
SHAREHOLDERS SHOULD NOT SEND ANY STOCK CERTIFICATES WITH THEIR PROXY CARDS.
12
<PAGE>
THE MERGER
GENERAL
The RMI Board has approved the Merger Agreement, which provides for the
Merger at the Effective Time of Purchaser with and into RMI, with RMI as the
surviving corporation in the Merger. Pursuant to the terms of the Merger
Agreement, subject to the satisfaction or waiver (where permissible) of certain
conditions, including among others, the requisite approval of the Merger by
holders of Company Common Stock, RMI will become a wholly owned subsidiary of
Baxter through the merger of Purchaser with and into RMI.
As a result of the Merger, each issued and outstanding share of Company
Common Stock (other than shares owned, directly or indirectly, by Baxter or any
subsidiary of Baxter) will be converted into the right to receive a fraction of
a Baxter Share, the numerator of which is $23.50, and the denominator of which
is the Baxter Stock Price. Because the number of shares of Baxter Common Stock
to be received by Shareholders will be determined based on the average closing
price of Baxter Common Stock over the ten trading day period ending on and
including the second trading day prior to the date of the Special Meeting and
because the price of Baxter Common Stock is subject to fluctuation, the number
of shares of Baxter Common Stock that Shareholders will receive in the Merger
may increase or decrease from the number of shares such Shareholders would
receive based on the current market price for Baxter Common Stock. Moreover, the
value of Baxter Common Stock to be received by Shareholders through the Merger
may fluctuate following the Effective Time. There is no minimum or maximum
fraction or number of Baxter Shares that may be issued under the provisions of
the Merger Agreement.
FOLLOWING DETERMINATION OF THE BAXTER STOCK PRICE ON THE SECOND TRADING DAY
PRIOR TO THE SPECIAL MEETING, SHAREHOLDERS CAN OBTAIN THE BAXTER STOCK PRICE AND
THE SPECIFIC FRACTION OF A BAXTER SHARE INTO WHICH EACH SHARE OF RMI WILL BE
CONVERTED BY CONTACTING THE SOLICITATION AGENT AT (800) 662-5200 (TOLL FREE).
PROXIES AND REVOCATIONS OF PROXIES MAY BE DELIVERED AT ANY TIME PRIOR TO THE
TAKING OF THE VOTE AT THE SPECIAL MEETING, INCLUDING BY FACSIMILE TO THE
SOLICITATION AGENT AT (212) 754-8300.
No Baxter Shares will be issued for fractional interests. All shareholders
of RMI entitled to receive, as a result of the Merger, a fractional interest in
a Baxter Share will instead be entitled to receive an amount in cash determined
by multiplying (x) the fraction of a Baxter Share to which such holder would
otherwise be entitled times (y) the Baxter Stock Price.
Immediately prior to the Effective Time, pursuant to the Merger Agreement,
each employee and director option to acquire RMI Common Stock (individually, an
"Option") outstanding at the Effective Time under RMI's stock option plans will
be cancelled in consideration for payment by RMI to the holder of such Option of
an amount in cash equal to (i) the excess, if any, of $23.50 over the exercise
price of such Option, multiplied by (ii) the number of shares of RMI Common
Stock subject to such Option. Baxter's obligations under the Merger Agreement
are conditioned on the holders of such Options, as well as the holders of other
options, agreeing, where required, to receive the calculated amount in cash in
full settlement of such options, or to otherwise settle their options on terms
acceptable to Baxter.
The RMI Board has approved the Merger Agreement and has determined that the
Merger is fair and in the best interest of RMI and RMI's shareholders and
unanimously recommends that the shareholders of RMI vote FOR the Merger.
BACKGROUND OF THE MERGER
The RMI Board and management have from time to time considered RMI's various
strategic alternatives as part of their ongoing efforts to enhance shareholder
value. Among the alternatives explored have been (i) continuing to operate RMI's
businesses as currently operated, coupled with ongoing efforts to further
improve operating performance, (ii) changing the mix of RMI's core business
through internal growth and/or acquisition of other businesses or technology,
(iii) forming a strategic alliance with one or
13
<PAGE>
more other organizations in the medical products industry or (iv) merging with a
strategic buyer with significant resources to bring to the combination.
As part of RMI's exploration of strategies to maximize shareholder value, on
April 30, 1996, William Blair was retained to advise the RMI Board on various
strategic alternatives and to initiate contact with several potential strategic
partners for RMI. Prior to making such contacts, William Blair identified seven
potential strategic partners or acquirors from a large database of companies
involved in health care products or devices reviewed by William Blair as
potential strategic partners, which selection was approved by the RMI Board. The
selection of these companies was based on the then current product lines and
areas of focus and expertise, the sufficiency of the potential partners'
financial resources to partner with or acquire a company the size of RMI, and
what was perceived as each potential partner's general level of interest in
entering into strategic alliances or making strategic acquisitions. William
Blair did not contact any financial buyers because RMI believed that such buyers
would not value the RMI business at the level that strategic partners or
acquirors would value it, or at the level it was valued by the market.
As part of its work, William Blair prepared a descriptive information
memorandum describing RMI's products, sales and marketing, manufacturing and
facilities, research and development efforts, business strategy, and historical
financial information. Following the receipt of signed confidentiality
agreements, the descriptive information memorandum was sent to each of the
selected potential partners or acquirors. William Blair and/or RMI management
spoke with each of these organizations about RMI and its prospects for the
future.
On April 30, 1996, William Blair contacted Mr. John Kehl, Vice President,
Business Development, of Baxter Healthcare Corporation ("Baxter Healthcare")
Cardiovascular Group, a subsidiary of Baxter, to determine whether Baxter or its
affiliates had any interest in acquiring RMI. On May 7, 1996, Baxter executed a
confidentiality agreement with RMI to enable Baxter to obtain proprietary
non-public information concerning RMI. After reviewing the summary information
memorandum, management of Baxter Healthcare met with RMI's Chairman and Chief
Executive Officer on June 6, 1996 to discuss a possible business combination
including a purchase price range approved in principal by the RMI Board.
Following the review of certain information concerning RMI, in July, 1996 Baxter
engaged J.P. Morgan and Company, Inc. ("J.P. Morgan") to assist it in evaluating
any potential transaction. On July 19, 1996, Baxter submitted a preliminary
non-binding indication of interest for the acquisition of RMI. The indication of
interest was reviewed by the RMI Board and, based on a revision of certain terms
on July 25, the RMI Board decided to proceed with more detailed discussions with
Baxter.
Following delivery of the preliminary indication of interest,
representatives of Baxter met with representatives of the Company for the
purpose of conducting due diligence at the Company's facilities and reviewing
various business issues. During such review, on September 25, 1996, Baxter
Healthcare and the Company signed an agreement providing for an exclusive
negotiating period from that date through October 4, 1996 to be further extended
if Baxter submitted an offer to acquire the Company prior to such date.
On October 4, a representative of J.P. Morgan contacted the Company to
indicate that, based on Baxter's due diligence investigation to date, Baxter had
concluded that it would not be able to justify a purchase price within the range
previously indicated in its preliminary expression of interest. On October 11,
1996, a representative of J.P. Morgan contacted a representative of William
Blair to discuss assumptions that J.P. Morgan was using in its valuation of RMI
and later sent its valuation model to William Blair. On October 9, 1996 and
October 17, 1996 a representative of William Blair sent letters to a
representative of J.P. Morgan restating the Company's position on price and, in
its October 17, 1996 letter, commenting on certain parts of J.P. Morgan's
analysis. Following meetings between Baxter and its advisors, on October 25,
1996 Mr. Michael J. Mussallem, Group Vice President of Baxter Healthcare,
contacted Mr. Gary Crocker, Chief Executive Officer of the Company, to convey
Baxter's view that it continued to be unable to justify a purchase price in the
range previously indicated.
14
<PAGE>
Following further phone conversations between Messrs. Mussallem and Crocker,
on November 5, 1996, Messrs. Mussallem, Crocker and other representatives of
Baxter and the Company met in Irvine, California to discuss the status of open
issues with respect to the transaction. After such meetings, Messrs. Crocker and
Mussallem met privately to discuss the financial terms of any proposed
transaction and at which meeting Mr. Mussallem indicated a willingness to
propose a purchase price for RMI of $236 million, payable in Baxter Common
Stock. Mr. Crocker indicated a willingness to present such a proposal to the RMI
Board provided he promptly received a written offer outlining all terms of the
proposal consistent with their discussions.
On November 7, 1996, Baxter delivered to Mr. Crocker and representatives of
William Blair a written offer, addressed to the RMI Board, to purchase all of
the equity ownership of RMI through a merger with a subsidiary of Baxter for an
aggregate purchase price of $236 million, payable in the form of shares of
Baxter Common Stock. The offer letter stated that the specific aggregate number
of Baxter Shares to be delivered would be based on the average trading price for
such shares during a specified period prior to the execution of the definitive
merger agreement and that the $236 million amount included any payments to be
made to holders of outstanding options to acquire RMI common stock in
cancellation of such options. The offer letter also stated (i) that a definitive
merger agreement would include certain specified provisions, including
conditions to the obligation of Baxter to consummate the transaction relating to
the entering into of employment agreements with Mr. Crocker and certain other
key employees and the receipt by Baxter of a legal opinion from RMI's outside
counsel regarding various matters, (ii) that the offer would terminate if not
accepted, subject to the negotiation and execution of a definitive merger
agreement, prior to November 13, 1996 and (iii) that RMI would be required to
enter into an exclusive negotiating agreement with Baxter for approximately
three weeks, while the parties negotiated a definitive merger agreement.
Following receipt of the November 7, 1996 offer letter from Baxter,
management of RMI and its financial advisor contacted Baxter and its financial
advisor by telephone and by letter to discuss and clarify the terms of the offer
letter in preparation for an RMI Board meeting to discuss and consider such
offer letter.
A special meeting of the RMI Board was called for November 10, 1996 to
discuss the Baxter offer letter, and William Blair was instructed to prepare for
use by the RMI Board an analysis of the fairness from a financial point of view
to RMI Shareholders of the consideration offered by Baxter. At the November 10
special board meeting, Mr. Crocker and RMI Director, Mr. Edward Blair, Jr. (on
behalf of William Blair), described the contacts between RMI and its advisors on
the one hand and Baxter and its advisors on the other. Such persons also
described the terms of the November 7 offer letter from Baxter and the November
8 response letter to Baxter, and answered questions from RMI Board members
regarding the terms of the offer letter. A representative of Ray, Quinney &
Nebeker, counsel to RMI, described for the RMI Board the fiduciary duties of
board members under Utah law and various legal issues relating to the
consideration by the RMI Board of significant transactions, such as that
contemplated by the Baxter offer letter. The RMI Board determined to review the
Baxter offer letter in light of these discussions and to hold another special
meeting on November 13, 1996 at which it would receive a preliminary analysis
from William Blair of the fairness from a financial point of view to
Shareholders of the consideration offered by Baxter in the November 7 offer
letter and determine what action, if any, it would take in response to such
letter.
On November 13, 1996, the RMI Board convened to consider the Baxter offer
letter of November 7. At this meeting, the RMI Directors considered, among other
things, current industry trends of the portion of the medical products industry
in which the company competes, RMI's recent and projected operating results and
history of stock trading prices, the effect on shareholder value of continuing
as a stand-alone entity compared to the effect of a potential combination with
Baxter, the results of the contacts and discussions of RMI and its advisors with
various third parties, and the belief of RMI management and the RMI Board, that
the transaction proposed by Baxter offered the best value available to RMI and
its
15
<PAGE>
Shareholders. Representatives of Ray, Quinney & Nebeker, counsel to RMI, and of
Kirkland & Ellis, special transaction counsel to RMI, reviewed again certain
legal issues surrounding the review of the Baxter proposal by the RMI Board and
its fiduciary duties and discussed certain legal issues raised by Baxter in the
November 7 offer letter or expected to be raised in connection with any
negotiation of a definitive merger agreement. Representatives of William Blair
reviewed the financial terms proposed in the November 7 offer letter and
delivered its preliminary oral opinion that the consideration proposed in the
Baxter offer letter, as of that date, was fair from a financial point of view to
the holders of RMI Common Stock. See "--Opinion of RMI Financial Advisor." After
deliberating with respect to these matters, the RMI Board determined (i) to
authorize management to proceed with the negotiation of a definitive merger
agreement as contemplated by the November 7 Baxter offer letter and (ii) to
negotiate exclusively with Baxter (as required by the offer letter) until
December 6, 1996 toward the negotiation and execution of such an agreement and
not to solicit or initiate any other acquisition proposal involving RMI, or to
respond to any such proposal, unless the RMI Board determined that such a
response was required to discharge its fiduciary duties to RMI and its
shareholders. The RMI Board also determined that the exchange ratio of RMI
Common Stock for Baxter Common Stock under any definitive merger agreement
should be set shortly prior to the shareholders meeting to protect RMI
Shareholders from significant movements in the Baxter stock price between the
time of entering into any such agreement and the time of consummating the
Merger. Baxter was notified of the RMI Board determinations promptly following
the November 13, 1996 meeting.
On November 16, 1996, Baxter's counsel distributed an initial draft of a
definitive merger agreement. On November 18, 1996 Baxter's Board of Directors
discussed and approved the terms of the acquisition, subject to negotiation of a
definitive agreement approved by management.
During the period November 16, 1996 to and including December 3, 1996,
Baxter and its advisors and RMI and its advisors negotiated the terms of a
definitive merger agreement, including with respect to the exchange ratio for
Baxter shares, the representations, warranties and covenants of RMI and Baxter,
the conditions to the obligations of the parties to consummate the merger, the
operation of the termination fee and non-solicitation provisions of the
definitive merger agreement and the terms of the exhibits to the definitive
merger agreement, including the proposed employment contracts with certain
individuals. On the evening of December 2, 1996, a copy of the then current
draft of the definitive merger agreement together with all exhibits was
distributed to the members of the RMI Board.
On December 3, 1996, RMI and its advisors and Baxter and its advisors
continued to negotiate the terms of a definitive merger agreement, and on the
afternoon of December 3, 1996, the RMI Board held a special meeting to consider
the proposed agreement. At this meeting, the RMI Board reviewed its
deliberations and actions taken at the November 13, 1996 meeting and received a
report from Mr. Crocker on the negotiations with Baxter and the terms of the
proposed definitive merger agreement. The RMI Board also received a report from
representatives of Ray, Quinney & Nebeker, counsel to RMI, and of Kirkland &
Ellis, special transaction counsel to RMI, regarding the terms of the proposed
definitive merger agreement, and such persons answered various questions from
RMI Board member relating to the negotiations with Baxter and the Merger
Agreement. Next, representatives of William Blair reviewed the financial terms
of the Merger Agreement, updated the preliminary oral advice it had given at the
November 13, 1996 meeting, and William Blair delivered its oral opinion that the
consideration provided in the Merger Agreement, as of that date, was fair from a
financial point of view to the holders of RMI Common Stock. Following
deliberations, the RMI Board authorized RMI management to enter into the Merger
Agreement of December 3, 1996 on behalf of RMI and, after the close of business
on December 3, 1996, the Merger Agreement of December 3, 1996 was executed and
delivered by RMI. On February 4, 1997, the parties to the Merger Agreement of
December 3, 1996 agreed to and executed an amendment to effect technical changes
to provide that the Articles of Incorporation of the Surviving Corporation shall
continue to be the Articles of Incorporation of RMI and not those of the
Purchaser, and to provide that
16
<PAGE>
the Merger Consideration shall be calculated to four decimal places. The Merger
Agreement, as so amended, is attached hereto as Annex A.
BAXTER'S REASONS FOR THE MERGER
The CardioVascular Group ("CVG") of Baxter has implemented a business
strategy to become the global leader in the treatment of late-stage
cardiovascular disease. The treatment of late-stage cardiovascular disease often
involves open heart surgery as well as post surgery monitoring and care.
Minimally invasive surgical techniques and technologies, for which RMI has
developed several products, have become increasingly popular, and Baxter
believes these techniques and technologies have the potential to significantly
impact the treatment of late-stage cardiovascular disease in the future.
Baxter believes that RMI provides a unique acquisition opportunity in that
the acquisition of RMI will provide three major strategic benefits: first, an
additional product platform that fills a key gap in the current product offering
for open heart surgery; second, a strategic platform for participating in the
apparent shift to minimally invasive cardiovascular surgery; and, third, a
unique opportunity to create the leading cardiovascular device sales force in
the industry. All are expected to significantly improve CVG's potential for
long-term sales growth and profitability, although there can be no assurance
such improvements will materialize.
RECOMMENDATION OF THE RMI BOARD OF DIRECTORS; REASONS OF RMI FOR THE MERGER
On December 3, 1996, the RMI Board convened to consider the Merger and the
Merger Agreement of December 3, 1996. At this meeting, representatives of
William Blair reviewed the proposed financial terms of the Merger and delivered
its oral opinion (later confirmed in writing) that the consideration provided in
the Merger Agreement, as of that date, was fair from a financial point of view
to the holders of RMI Common Stock. See "--Opinion of RMI Financial Advisor."
After deliberating with respect to the Merger and the other transactions
contemplated by the Merger Agreement, the RMI Board unanimously approved the
Merger Agreement of December 3, 1996 as being fair to and in the best interests
of RMI and the holders of RMI Common Stock. ACCORDINGLY, THE RMI BOARD
UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THE MERGER AGREEMENT.
In reaching its conclusion to approve and recommend the Merger Agreement,
the RMI Board considered a number of supporting factors and reasons for the
Merger, including:
(i) The RMI Board analyzed information with respect to the financial
condition, results of operations, cash flow, businesses and prospects of
RMI. In this regard, the RMI Board noted the continuing consolidation in the
medical products industry and the increasing power of larger competitors and
the growing strength of large buying groups and other customers.
(ii) The RMI Board considered the opinion of William Blair that as of
December 3, 1996, the consideration to be received by holders of RMI common
stock under the Merger Agreement was fair from a financial point of view to
such holders. See "--Opinion of RMI Financial Advisor."
(iii) The RMI Board considered the recent market prices for RMI common
stock and for Baxter common stock, the relationship between such prices and
certain financial data relating to the companies and that the per share
consideration to be received by RMI Shareholders in the Merger would
represent a premium over recent prices for RMI common stock. See "--Opinion
of RMI Financial Advisor." See "SUMMARY--Comparative Per Share Data of
Baxter and the Company."
(iv) The RMI Board considered that Baxter was significantly more
diversified in product offerings and lines of business than RMI on a
stand-alone basis and that the combined company's vulnerability would, as a
result of such additional diversity, be less affected by adverse
developments in the markets for RMI's products.
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(v) The RMI Board considered that the Merger represents an alliance
between RMI and Baxter, that RMI Shareholders would have the opportunity to
participate as stockholders in Baxter which could be expected to have a
significant potential for growth, and that there were a number of benefits
that could reasonably be expected to be realized by RMI Shareholders from
their continuing interest in Baxter.
(vi) The RMI Board also considered that RMI's prospects were likely to
be enhanced as a result of the Merger because of the operational fit between
Baxter and RMI, including but not limited to the prospect for combining
Baxter's broader product lines and sales, marketing, distribution and
research and development capabilities with RMI's leadership in its focused
markets and product lines.
(vii) The RMI Board analyzed the financial condition, businesses and
prospects of Baxter, including, among other things, information with respect
to its recent and historical stock and earnings performance, its dividend,
and its position in the capital markets.
(viii) The RMI Board considered the matters described under "--Interests
of Certain Persons in the Merger."
(ix) The RMI Board considered the financial and other terms of the
Merger, including that (a) the Merger would generally be tax-free to RMI
Shareholders, (b) the Merger would be subject to approval by RMI's
Shareholders entitled to vote thereon, (c) while the Merger Agreement
contains a termination fee provision and a "no shop" clause, the Merger
Agreement permits RMI to provide information to and negotiate with third
parties under certain circumstances consistent with the fiduciary duties of
the RMI Board. See "THE MERGER--Certain Federal Income Tax Consequences" and
"CERTAIN TERMS OF THE MERGER AGREEMENT--No Solicitation;" "--Termination,
Amendment and Waiver;" and "--Fees and Expenses."
(x) The RMI Board considered the detailed financial analyses, and other
information with respect to RMI and Baxter presented by William Blair as
well as the RMI Board's own knowledge of RMI, Baxter and their respective
businesses.
(xi) The RMI Board considered the effect on shareholder value of RMI
continuing as a stand-alone entity compared to the effect of its combining
with Baxter in light of the factors summarized above, and the belief of the
RMI Board and management that the Merger offered the best transaction
available to RMI and its shareholders.
The foregoing discussion of the information and factors considered by the
RMI Board is not intended to be exhaustive but is believed to include all
material factors considered by the RMI Board. In reaching its determination to
approve and recommend the Merger, the RMI Board did not assign any relative or
specific weights to the foregoing factors and individual directors may have
given differing weights to different factors. The RMI Board is, however,
unanimous in its determination that the Merger is fair to and in the best
interests of RMI and the holders of RMI Common Stock and in its recommendation
to RMI's Shareholders that the Merger Agreement be approved.
OPINION OF RMI FINANCIAL ADVISOR
William Blair was retained by RMI to act as its exclusive financial advisor
in connection with RMI's consideration of the offer by Baxter to merge with RMI
and the terms of the Merger Agreement, including the exchange ratio for the
Baxter stock to be received in exchange for RMI stock. As part of its
engagement, RMI asked William Blair to render an opinion as to whether the
consideration to be received by RMI Shareholders pursuant to the Merger
Agreement, as determined by the exchange ratio for the Baxter stock to be
exchanged for RMI stock, is fair to RMI's Shareholders from a financial point of
view. William Blair is a nationally recognized firm and, as part of its
investment banking activities, is regularly engaged in the valuation of
businesses and their securities in connection with merger transactions and other
types of strategic combinations and acquisitions. RMI retained William Blair as
its financial advisor
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on the basis of William Blair's experience and expertise in transactions similar
to the Merger, its reputation in the investment banking community and its
existing investment banking relationship with RMI.
At the November 13, 1996 meeting of the RMI Board, William Blair delivered
its preliminary oral opinion, that, as of such date, and based upon and subject
to various factors and assumptions, including a review of the definitive merger
agreement, the consideration to be received by RMI's Shareholders in a merger
transaction of the type contemplated by the November 7, 1996 offer letter of
Baxter would be fair to RMI's Shareholders from a financial point of view. At
the December 3, 1996 meeting of the RMI Board, William Blair delivered its oral
opinion (confirmed in writing as of such date) that the consideration to be
received by the RMI Shareholders pursuant to the Merger Agreement, as determined
by the exchange ratio for the Baxter stock to be exchanged for RMI stock, as of
such date is fair to RMI's stockholders from a financial point of view. The
William Blair opinion is based upon and subject to the factors and assumptions
set forth in such opinion. The amount of such consideration was determined
pursuant to negotiations between Baxter and RMI and not pursuant to
recommendations of William Blair. The full text of William Blair's written
opinion to the RMI Board of directors dated as of December 3, 1996 is attached
hereto as Annex B and is incorporated herein by reference and should be read in
its entirety in connection with this Proxy Statement/Prospectus. The following
summary of William Blair's opinion is qualified in its entirety by reference to
the full text of such opinion. William Blair's opinion was addressed to the RMI
Board for the purposes of its evaluation of the Merger and does not constitute a
recommendation to any RMI Shareholders as to how such shareholder should vote at
the RMI Shareholders' meeting. Mr. Edward Blair, Jr., a Director of RMI, is a
principal of William Blair.
In connection with its opinion, William Blair reviewed a final draft of the
Merger Agreement of December 3, 1996, and certain financial and other
information that was publicly available or furnished to William Blair by RMI and
Baxter, including certain internal financial analyses, financial forecasts,
reports and other information prepared by management of RMI. William Blair held
discussions with members of management of RMI and Baxter concerning each
company's historical and current operations, financial conditions and prospects.
In addition, William Blair (i) compared the financial position and operating
results of RMI with those of publicly traded companies William Blair deemed
relevant for its opinion, (ii) compared certain financial terms of the Merger to
certain financial terms of other selected business combinations William Blair
deemed relevant for its opinion and (iii) conducted such other financial
studies, analyses and investigations and reviewed such other factors as William
Blair deemed appropriate for the purposes of rendering its opinion.
In rendering its opinion, William Blair relied upon and assumed the
accuracy, completeness and fairness of all of the financial and other
information that was available to it from public sources, and that was provided
to Blair by RMI. With respect to the financial projections supplied to William
Blair, William Blair assumed that they were reasonably prepared and reflected
the best currently available estimates and judgments of the management of RMI as
to the future operating and financial performance of RMI. William Blair did not
assume any responsibility for making any independent evaluation of RMI's assets
or liabilities or for making any independent verification of any of the
information reviewed by William Blair.
William Blair's opinion was necessarily based on economic, market, financial
and other conditions as they existed on November 13, 1996 and on December 3,
1996, the date of William Blair's opinion, and on the information made available
to William Blair as of such date. It should be understood that, although
subsequent developments may affect its opinion, William Blair does not have any
obligation to update, revise or reaffirm its opinion. William Blair has
expressed no opinion as to the prices at which Baxter securities will actually
trade at any time.
The following is a summary of the material factors considered and principal
financial analyses performed by William Blair to arrive at its opinion. William
Blair performed certain procedures, including each of the financial analyses
described below, and reviewed with the management of RMI the assumptions upon
which such analyses were based, and other factors. The summary set forth below
does not
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purport to be a complete description of the analyses performed or factors
considered by William Blair in this regard.
SUMMARIES OF VALUATION ANALYSES. In connection with its opinion and the
presentation of its opinion to the Board of Directors of RMI, William Blair
performed certain valuation analyses, including: (i) a comparison with
comparable publicly traded companies, (ii) a discounted cash flow analysis, and
(iii) an analysis of certain comparable acquisitions. In all cases, RMI's
remaining real estate assets were valued based on the estimated cash value of
such assets at the current time and revenues or earnings related to such real
estate assets were not included in the comparable RMI results of operations or
projections. Such analyses are summarized below.
ANALYSIS OF CERTAIN PUBLICLY TRADED COMPANIES. William Blair reviewed and
compared certain financial information relating to RMI to corresponding
financial information, ratios and public market multiples for twelve publicly
traded companies in the health care industry. The selected companies compared in
the health care industry were (i) Arrow International, Inc., (ii) Arterial
Vascular Engineering, Inc., (iii) AVECOR Cardiovascular Inc., (iv) Ballard
Medical Products, (v) CardioThoracic Systems, Inc., (vi) Guidant Corp., (vii)
Heartport, Inc., (viii) ICU Medical, Inc., (ix) Mentor Corp., (x) Quest Medical,
Inc., (xi) Thermo Cardiosystems Inc. and (xii) Vital Signs, Inc. William Blair
selected these companies because they are publicly traded companies which
William Blair deemed most comparable to RMI's operations and financial
conditions. Although William Blair compared the trading multiples of the
selected companies at November 13, 1996 to the implied purchase multiples of
RMI, none of the selected companies is identical to RMI.
Among the information considered were revenue, operating income ("EBIT"),
earnings before interest, taxes, depreciation and amortization ("EBITDA"), net
income, earnings per share ("EPS"), gross profit margins, EBIT margins and net
income margins; growth in revenues and net income; return on assets and equity;
and capital structure. The multiples and ratios for RMI and the comparable
companies were based on the most recent publicly available financial information
and used the closing share prices as of November 8, 1996.
William Blair observed that the multiples of total enterprise value to
revenues, EBIT and EBITDA and multiples of equity value to net income implied by
the terms of the Merger compared favorably, from RMI's perspective, to the
median of the corresponding multiples of the comparable companies. Specifically,
the terms of the Merger implied 5.33 times latest twelve month ("LTM") revenues,
15.71 times LTM EBIT and 14.34 times LTM EBITDA. By comparison, the analysis of
selected health care companies resulted in a median multiple of 3.02x for
Enterprise Value to LTM revenues, 13.91x for Enterprise Value to LTM EBIT and
12.93x for Enterprise Value to LTM EBITDA. The analysis of selected health care
companies also resulted in a median multiple of 22.4x for the common stock share
price ("Price") to LTM EPS, 18.2x for Price to fiscal 1996 EPS, and 16.0x for
Price to fiscal 1997 EPS. The terms of the Merger implied 25.8x for Price to LTM
EPS, 23.9x for Price to fiscal 1996 EPS and 19.6x for Price to fiscal 1997 EPS.
DISCOUNTED CASH FLOW ANALYSIS. Using a discounted cash flow ("DCF")
analysis, William Blair estimated the net present value of the unleveraged free
cash flows that RMI could produce on a stand-alone basis over a five-year period
from June 30, 1996 to June 30, 2001. In estimating these cash flows William
Blair and the management of RMI made certain assumptions about the operating
performance of RMI over the five-year period under two scenarios, (i) the base
case and (ii) the low case. The low case assumed slightly lower gross profit
margins for the projected period. In calculating the "terminal value," William
Blair assumed multiples of Enterprise Value to EBIT ranging from 6.0x to 10.0x,
which multiples William Blair believed to be appropriate for such an analysis.
The annual and terminal free cash flows were discounted to determine a net
present value of the unleveraged equity value of RMI. Discount rates in a range
of 11.0% to 15.0% were chosen based upon an analysis of the weighted average
cost of capital of the publicly traded comparable group of companies described
above. The DCF analysis for the base case
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indicated a valuation of the equity of RMI of $235.5 million, or $23.44 per
share. The DCF analysis for the low case indicated a valuation of the equity of
RMI of $220.9 million, or $22.04 per share. As a result, William Blair believes
that the Merger consideration compares favorably, from RMI's perspective, to the
values indicated by the DCF analysis.
COMPARABLE ACQUISITIONS. William Blair performed an analysis of selected
recent merger or acquisition transactions in the health care industry. The
companies chosen were primarily suppliers of surgical supplies. The selected
transactions were chosen based on William Blair's judgment that they were
generally comparable, in whole or in part, to the proposed transaction. In total
William Blair examined 66 transactions between February 10, 1994 and October 23,
1996 involving certain health care companies. The selected transactions were not
intended to be representative of the entire range of possible transactions in
the health care industry. Although William Blair compared the transaction
multiples of these companies to the implied purchase multiples of RMI, none of
the selected companies is identical to RMI.
William Blair reviewed the consideration paid in such transactions in terms
of the price paid for the common stock ("Equity Purchase Price"), plus total
debt (including minority interest and preferred stock) less cash and equivalents
("Total Transaction Value"), of such transactions as a multiple of revenues,
EBIT and EBITDA for the latest twelve months ("LTM") prior to the announcement
of such transactions. Additionally, William Blair reviewed the consideration
paid in such transactions, in terms of the Equity Purchase Price of such
transactions as a multiple of net income for the twelve months prior to the
announcement of such transactions. Finally, William Blair considered the premium
paid on the transactions based on each company's stock price prior to the
announcement of a transaction.
Such analysis of selected acquisitions resulted in a median multiple of
2.40x for Total Transaction Value to LTM revenues, 19.50x for Total Transaction
Value to LTM EBIT, 12.90x for Total Transaction Value to LTM EBITDA and 31.3x
for Equity Purchase Price to LTM net income. In contrast, the implied purchase
multiples for RMI were 5.33x for Total Transaction Value to LTM revenues, 15.71x
for Total Transaction Value to LTM EBIT, 14.34x for Total Transaction Value to
LTM EBITDA and 25.8x for Equity Purchase Price to LTM EPS.
The summary set forth above does not purport to be a complete description of
the analyses performed by William Blair. The preparation of a fairness opinion
involves various determinations as to the most appropriate and relevant methods
of financial analysis and the application of these methods to the particular
circumstances. Therefore, such an opinion is not readily susceptible to summary
description. The preparation of a fairness opinion does not involve a
mathematical evaluation or weighing of the results of the individual analyses
performed, but required William Blair to exercise its professional judgment,
based on its experience and expertise in considering a wide variety of analyses
taken as a whole. Each of the analyses conducted by William Blair was carried
out in order to provide a different perspective on the Merger and add to the
total mix of information available. William Blair did not form a conclusion as
to whether any individual analysis, considered in isolation, supported or failed
to support an opinion as to fairness. Rather, in reaching its conclusion,
William Blair considered the results of the analyses in light of each other and
ultimately reached its opinion based on the results of all analyses taken as a
whole. William Blair did not place particular reliance or weight on any
individual analysis, but instead concluded that its analyses, taken as a whole,
supported its determination. Accordingly, notwithstanding the separate factors
summarized above, William Blair believes that its analyses must be considered as
a whole and that selecting portions of its analyses and the factors considered
by it, without considering all analyses and factors, may create an incomplete
view of the evaluation process underlying its opinion. In performing its
analyses, William Blair made numerous assumptions with respect to industry
performance, business and economic conditions and other matters. The analyses
performed by William Blair are not necessarily indicative of actual values or
future results, which may be significantly more or less favorable than suggested
by such analyses.
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In connection with William Blair's engagement as financial advisor, RMI will
pay William Blair in cash a fee of 1% of the consideration received by RMI's
stockholders as specified in the Merger Agreement. In addition, RMI will
reimburse William Blair for all reasonable out-of-pocket expenses, including
attorneys' fees, incurred in connection with the services provided by William
Blair, and will indemnify William Blair against certain liabilities, including
certain liabilities under the federal securities laws. RMI estimates that
William Blair will receive a transaction fee of approximately $2.4 million in
connection with the consummation of the Merger and will receive reimbursement
for approximately $75,000 in out-of-pocket expenses.
GOVERNMENTAL AND REGULATORY APPROVALS
ANTITRUST. Under the Hart Scott Rodino Antitrust Improvements Act (the "HSR
Act") and the rules promulgated thereunder by the United States Federal Trade
Commission (the "FTC"), the Merger may not be consummated until notifications
have been given and certain information has been furnished to the Antitrust
Division of the United States Department of Justice (the "Antitrust Division")
and the FTC and specified waiting period requirements have been satisfied. All
appropriate parties filed the required HSR Act notification and report forms
with the Antitrust Division and the FTC with respect to the Merger. The waiting
period under the HSR Act expired on January 13, 1997 with respect to the Merger.
In addition, state and Federal antitrust authorities may also bring legal
action under state or Federal antitrust laws at any time before or after the
Effective Time, notwithstanding that the HSR Act waiting periods have expired or
been terminated. Such action could include seeking to enjoin the consummation of
the Merger or seeking divestiture of certain assets of the Company or Baxter.
Private parties may also seek to take legal action under the antitrust laws
under certain circumstances. There can be no assurance that a challenge to the
Merger on antitrust grounds will not be made or, if such a challenge is made,
with respect to the result thereof.
STATUS OF REGULATORY APPROVALS AND OTHER INFORMATION. The Company and
Baxter have filed applications with all applicable domestic regulatory agencies,
and have taken, or will take, other appropriate action with respect to any
requisite approvals or other action of any court, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign, whose consent, approval, order or authorization, or with whom
registration, declaration or filing of the Merger Agreement is required to
consummate the Merger and related transactions, subject to the provisions of the
Merger Agreement.
The Merger Agreement provides that the obligation of Baxter and the Company
to consummate the Merger is conditioned upon, among other things, the
termination of any applicable waiting period under the HSR Act and the absence
of any injunction restraining consummation of the Merger. See "CERTAIN TERMS OF
THE MERGER AGREEMENT--Conditions to the Merger." Notwithstanding the expiration
of the waiting period under the HSR Act, there can be no assurance that any
governmental agency will approve or take any other required action with respect
to the Merger, and, if approvals are received or action is taken, that such
approvals or action will not be conditioned upon matters that would cause the
parties to abandon the Merger. In addition, there can be no assurance that an
action will not be brought challenging such approvals or action, including a
challenge by the FTC or the Antitrust Division, or, if such a challenge is made,
with respect to the result thereof.
The Company and Baxter are not aware of any material governmental approvals
that may be required for consummation of the Merger other than as described
above. Should any other approval or action be required, it is presently
contemplated that such approval or action would be sought. There can be no
assurance, however, that any such approval or action, if needed, could be
obtained and would not be conditioned in a manner that would cause the parties
to abandon the Merger.
ANTICIPATED ACCOUNTING TREATMENT
The Merger is expected to be accounted for under the "purchase" method of
accounting for financial reporting purposes in accordance with GAAP, which
requires allocation of the purchase price based on the
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fair values of the Company's assets and liabilities. It is expected that a
substantial portion of the purchase price will be allocated to the Company's
in-process research and development which, under GAAP, will be expensed by
Baxter immediately following the Effective Time.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
THE FOLLOWING IS A SUMMARY DISCUSSION OF CERTAIN FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER. THE DISCUSSION IS INCLUDED FOR GENERAL INFORMATION
PURPOSES ONLY AND MAY NOT APPLY TO A PARTICULAR STOCKHOLDER IN LIGHT OF SUCH
STOCKHOLDER'S PARTICULAR CIRCUMSTANCES. STOCKHOLDERS SHOULD CONSULT THEIR TAX
ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE MERGER, INCLUDING
THE APPLICATION OF STATE, LOCAL AND FOREIGN TAX LAWS AND POSSIBLE FUTURE CHANGES
IN FEDERAL INCOME TAX LAWS AND THE INTERPRETATION THEREOF, WHICH CAN HAVE
RETROACTIVE EFFECTS.
The following summary discusses the material Federal income tax consequences
of the Merger. The summary reflects the opinion of Ray, Quinney & Nebeker,
counsel to the Company, attached as Exhibit 8.1 to the Registration Statement of
which this Proxy Statement/Prospectus forms a part, and is based upon the Code,
applicable Treasury Regulations thereunder and administrative rulings and
judicial authority as of the date hereof. The opinion is based on certain
assumptions and representations and is subject to certain limitations and
qualifications as noted therein. The Code, Treasury Regulations, administrative
rulings and judicial authority are subject to change, possibly with retroactive
effect, and any such change could affect the continuing validity of the
discussion. The discussion assumes that holders of shares of Company Common
Stock hold such shares as capital assets. Further, the discussion does not
address the tax consequences that may be relevant to a particular shareholder
subject to special treatment under Federal income tax law, such as dealers in
securities, financial institutions, insurance companies, tax-exempt
organizations, non-United States persons, and persons who hold shares in a
hedging transaction or as part of a straddle or conversion transaction. This
discussion, moreover, does not address any Federal income tax consequences of
the Merger to shareholders who acquired shares of Company Common Stock through
the exercise of employee stock options or rights or otherwise as compensation or
through the cashless exercise of the Company's warrants or to persons who hold
the Company's options, warrants, stock appreciation rights or convertible or
exchangeable debt instruments at the Effective Time. In addition, this
discussion does not address any tax consequences arising under the laws of any
state, local or foreign jurisdiction. Company shareholders are urged to consult
their tax advisors as to the specific tax consequences to them of the Merger,
including tax return reporting requirements, the applicability and effect of
Federal, state, local, and other applicable tax laws and the effect of any
proposed changes in the tax laws.
Neither the Company nor Baxter has requested a ruling from the Internal
Revenue Service ("IRS") with regard to any of the Federal income tax
consequences of the Merger and the opinions of counsel as to such Federal income
tax consequences set forth below will not be binding on the IRS.
HOLDERS OF COMPANY COMMON STOCK. The Merger has been structured with the
intent that it be tax-free to the Company and its shareholders for Federal
income tax purposes. Consummation of the Merger is conditioned upon, among other
things, the receipt by the Company of an opinion of its counsel, Ray, Quinney &
Nebeker, substantially to the effect that, based on certain facts and
representations of Baxter and RMI, the Merger will qualify as a reorganization
within the meaning of section 368(a) of the Code. Assuming that the Merger is
tax-free for Federal income tax purposes, the following are the general Federal
income tax consequences:
(i) No gain or loss will be recognized by holders of Company Common
Stock who exchange their Company stock for Baxter Common Stock pursuant to
the Merger;
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(ii) The aggregate tax basis of the shares of Baxter Common Stock
received in the Merger will be the same as the aggregate tax basis of the
Company Common Stock exchanged therefor;
(iii) The holding period of the Baxter Common Stock in the hands of the
Company stockholders will include the holding period of their Company Common
Stock exchanged therefor, provided such Company stock is held as a capital
asset at the Effective Time; and
(iv) No gain or loss will be recognized by the Company in connection
with the Merger.
NO DISSENTING SHAREHOLDERS' RIGHTS
Under the provisions of the BCA applicable to Shareholders who may choose to
vote AGAINST the Merger Agreement, such Shareholders are not entitled to assert
dissenters' rights with respect to the Merger nor are they entitled to receive
payment of the fair value of their shares of RMI Common Stock.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the RMI Board with respect to the
Merger Agreement, Shareholders should be aware that certain executive officers
and directors of RMI have certain interests in the Merger that are in addition
to the interests of the shareholders of RMI generally. The RMI Board was aware
of these interests and considered them, among other matters, in approving the
Merger Agreement and the transactions contemplated thereby.
William Blair was appointed the financial advisor to RMI prior to the
beginning of merger discussions with Baxter, and William Blair advised RMI
throughout the negotiations of the Merger Agreement and also assisted in the
preparation of this Proxy Statement/Prospectus. William Blair has also given its
written opinion, a copy of which is attached to this Proxy Statement/Prospectus
as Annex B, that the Merger is fair to the Shareholders from a financial point
of view. For these services, William Blair will be paid a significant fee, and
will be reimbursed for expenses associated with the services rendered to RMI.
Mr. Edward Blair, Jr., a Director of RMI, is a principal of William Blair, and
will benefit indirectly from the fees paid to his company by RMI in connection
with the Merger.
Gary Crocker, RMI's Chairman of the Board, President and Chief Executive
Officer, has entered into a one-year employment agreement with RMI pursuant to
which Mr. Crocker will serve as President of RMI. Mr. Crocker will receive an
annual salary of $234,000 per year, be eligible to receive bonuses in an amount
up to 45% of his base salary and receive options to acquire approximately 12,500
shares of Baxter Common Stock. Such compensation is consistent with the terms of
Mr. Crocker's former employment agreement with RMI.
Mark Winn, RMI's Chief Financial Officer, has entered into a retention bonus
agreement with RMI pursuant to which Mr. Winn will receive a lump sum cash
payment equal in value to six months of his base salary in the event that either
(i) he remains employed by RMI as its Chief Financial Officer for a period of
six months following the closing of the Merger or (ii) his employment is
actually or constructively terminated by RMI prior to the end of such six-month
period.
RMI has also entered into one-year employment agreements with two other
executive officers: Michael Kelly and Clyde Baker, and also with four other key
employees. These agreements generally provide for annual base salaries, bonus
opportunities and stock option grants consistent with their prior compensation
from RMI.
As of the Record Date, RMI's executive officers held options to purchase a
total of 339,940 shares of RMI Common Stock with exercise prices ranging from
$6.25 to $19.25 per share, all of which options are vested and exercisable as of
the date hereof. Immediately prior to consummation of the Merger, in exchange
for the cancellation of such options, RMI will make a cash payment to each
option holder in an amount equal to (i) the excess, if any, of $23.50 over the
exercise price of the option, multiplied by (ii) the number of shares of RMI
Common Stock subject to such option.
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Pursuant to RMI's Non-Employee Director Stock Option Plan, RMI's
non-employee directors have been granted and hold as of the Record Date options
to purchase a total of 142,834 shares of RMI Common Stock at an average exercise
price of $10.11 per share, originally scheduled to vest in equal installments
over a three-year period from the various dates of grant. Pursuant to
acceleration provisions in the Plan, immediately prior to consummation of the
Merger, in exchange for the cancellation of such options, the holders of such
options will receive cash in an amount determined as described in "--Employee
Stock Options."
Pursuant to the Merger Agreement, Baxter has agreed, among other things, to
(i) indemnify the members of the RMI Board and RMI's executive officers against
any claims, proceedings or investigations pertaining to the Merger Agreement or
any of the transactions contemplated thereby, whether asserted or threatened,
(ii) maintain the indemnification with respect to matters occurring before the
Effective Time for such officers and directors provided by RMI's Bylaws for a
period of six years, and (iii) maintain RMI's directors' and officers' liability
insurance policies (or policies containing terms which are substantially no less
advantageous) with respect to matters occurring before the Effective Time for a
period of six years following the Effective Time, provided that Baxter is not
required to spend more than 150% of the current amount spent by RMI to maintain
such policies.
All of RMI's directors and certain of its executive officers own shares of
RMI Common Stock. Such shares will be converted in the Merger on the same terms
and conditions as apply to all other RMI shareholders. As of the Record Date,
RMI's directors and executive officers, and their affiliates, beneficially own a
total of shares of RMI Common Stock, constituting approximately 4.71% of all
issued and outstanding shares of RMI Common Stock.
CERTAIN TERMS OF THE MERGER AGREEMENT
This section of the Proxy Statement/Prospectus describes certain aspects of
the Merger Agreement. The description does not purport to be complete and is
qualified by reference to the Merger Agreement, which is attached as Annex A
hereto and is incorporated by reference herein. All holders of Company Common
Stock are encouraged to read the Merger Agreement in its entirety.
EFFECTIVE TIME OF THE MERGER
The Merger Agreement provides that, upon the terms and subject to the
conditions of the Merger Agreement, Purchaser shall be merged with and into the
Company and the separate corporate existence of Purchaser shall thereupon cease,
and the Company shall be the surviving corporation in the Merger (the "Surviving
Corporation") and all of its rights, privileges, powers, immunities, purposes
and franchises shall continue unaffected by the Merger. The Merger shall have
the effects set forth in Section 16-10a-1106 of the Utah Business Corporation
Act (the "BCA").
The Merger shall become effective when properly executed Articles of Merger
meeting the requirements of Section 16-10a-1105 of the BCA are duly filed with
the Utah Division of Corporations and Commercial Code or at such later time as
the parties hereto shall have designated in such filing as the Effective Time
which filing shall be made as soon as practicable after the closing of the
transactions contemplated by this Agreement in accordance with Section 3.8
hereof. See "--Conditions to the Merger."
The Merger Agreement also provides that (i) the Articles of Incorporation of
the Company as in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation, (ii) the Bylaws of
Purchaser as in effect immediately prior to the Effective Time shall be the
Bylaws of the Surviving Corporation, (iii) the directors of Purchaser
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation as of the Effective Time, and (iv) the officers of the Company
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation as of the Effective Time and shall hold office from the Effective
Time until their respective successors are
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duly elected or appointed and qualify in the manner provided in the Articles of
Incorporation and Bylaws of the Surviving Corporation, or as otherwise provided
by law.
CONVERSION OF SHARES
The Merger Agreement provides that, as of the Effective Time, each share of
RMI Common Stock issued and outstanding immediately prior to the Effective Time
(the "RMI Shares") (other than RMI Shares held by any wholly owned subsidiary of
the Company, by Baxter, or by any subsidiary of Baxter) shall be converted into
the right to receive the fraction of a share (calculated and rounded to the
nearest ten-thousandth of one share) of Common Stock, par value $1 per share of
Baxter ("Baxter Shares"), the numerator of which fraction shall be $23.50 and
the denominator of which shall be the Baxter Stock Price. All such RMI Shares,
when so converted, shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist, and each holder of a certificate
formerly representing any such RMI Shares (each, a "Certificate") shall cease to
have any rights with respect thereto, except to receive the Merger
Consideration, without interest, upon surrender of such Certificates.
For purposes of calculating the Merger Consideration, the "Baxter Stock
Price" shall be an amount equal to the average closing sale price of a Baxter
Share on the NYSE, as such closing sale price shall be reported in THE WALL
STREET JOURNAL or, if not available, such other authoritative publication as may
be reasonably selected by Baxter, for the ten (10) consecutive trading days
ending on and including the second trading day prior to the date of the Special
Meeting (as defined herein) at which the Merger Agreement is approved. On
February 3, 1997, the last sale price of Baxter Common Stock as reported on the
NYSE was $45.50 per share. Because the number of shares of the common stock,
$1.00 par value per share, of Baxter ("Baxter Common Stock") to be received by
shareholders of RMI ("Shareholders") will be determined based on the average
closing price of Baxter Common Stock over the ten trading day period ending on
and including the second trading day prior to the date of the Special Meeting,
and because the price of Baxter Common Stock is subject to fluctuation, the
number of shares of Baxter Common Stock that Shareholders will receive in the
Merger may increase or decrease from the number of shares such Shareholders
would receive based on the current market price for Baxter Common Stock.
Moreover, the value of Baxter Common Stock to be received by Shareholders
through the Merger may fluctuate following the Effective Time. There is no
minimum or maximum fraction or number of Baxter Shares that may be issued under
the provisions of the Merger Agreement.
Under the foregoing provisions of the Merger Agreement, the specific
fraction of a Baxter Share into which each RMI Share will be converted will not
be known until shortly prior to the Special Meeting and will vary depending on
the Baxter Stock Price. For example, (1) if the Baxter Stock Price is $50, each
RMI Share will be converted into .4700 of a Baxter Share, (2) if the Baxter
Stock Price is $45, each RMI Share will be converted into .5222 of a Baxter
Share, and (3) if the Baxter Stock Price is $40, each RMI Share will be
converted into .5875 of a Baxter Share. The foregoing examples are for
illustrative purposes only. There can be no assurance that the Baxter Stock
Price will be equal to or near any of the foregoing amounts. Moreover, there can
be no assurance that the fraction of a Baxter Share into which each RMI Share is
converted will have a market value equal to $23.50 at the time of actual receipt
of Baxter Shares by a Shareholder.
FOLLOWING DETERMINATION OF THE BAXTER STOCK PRICE ON THE SECOND TRADING DAY
PRIOR TO THE SPECIAL MEETING, SHAREHOLDERS CAN OBTAIN THE BAXTER STOCK PRICE AND
THE SPECIFIC FRACTION OF A BAXTER SHARE INTO WHICH EACH SHARE OF RMI WILL BE
CONVERTED BY CONTACTING THE SOLICITATION AGENT AT (800) 662-5200 (TOLL FREE).
PROXIES AND REVOCATIONS OF PROXIES MAY BE DELIVERED AT ANY TIME PRIOR TO THE
TAKING OF THE VOTE AT THE SPECIAL MEETING, INCLUDING BY FACSIMILE TO THE
SOLICITATION AGENT AT (212) 754-8300.
Based upon the number of RMI shares and shares of Baxter Common Stock
outstanding as of the Record Date and assuming a Baxter Stock Price of $45.50,
approximately 277,548,988 shares of Baxter
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Common Stock will be outstanding immediately after the exchange contemplated by
the Merger, of which approximately 1.8% will be held by the former holders of
Company Common Stock.
The Merger Agreement also provides that, immediately prior to the Effective
Time, each Option outstanding under any RMI employee or director stock option
plan will, whether vested or unvested, by virtue of the Merger and without any
further action on the part of the Company or the holder of such Option, be
cancelled in consideration for payment by RMI to the holder of such Option of an
amount in cash equal to (i) the excess, if any, of $23.50 over the exercise
price of such Option, multiplied by (ii) the number of shares of RMI Common
Stock subject to such Option. Baxter's obligations under the Merger Agreement
are conditioned on the holders of such Options, as well as the holders of other
options, agreeing, where required, to receive the calculated amount in cash in
full settlement of such options, or to otherwise settle their options on terms
acceptable to Baxter.
The Merger Agreement provides that each share of common stock, par value
$.01 per share, of Purchaser issued and outstanding immediately prior to the
Effective Time shall be converted into and become one fully paid and
nonassessable share of Common Stock of the Surviving Corporation.
EXCHANGE OF CERTIFICATES REPRESENTING SHARES
The Merger Agreement provides that, on the date of the Effective Time,
Baxter shall deposit, or shall cause to be deposited, with an exchange agent
selected by Baxter and reasonably satisfactory to the Company (the "Exchange
Agent"), for the benefit of the holders of Shares, for exchange in accordance
with the Merger Agreement, (i) certificates representing the number of Baxter
Shares issuable as part of the Merger Consideration, and (ii) from time to time
as requested by the Exchange Agent, cash to be paid in lieu of the issuance of
fractional shares (such cash and certificates for Baxter Shares, if any,
together with dividends or distributions with respect thereto being hereinafter
referred to collectively as the "Exchange Fund").
At the Effective Time, Baxter shall cause the Exchange Agent to mail (or
deliver at its principal office) to each holder of record of Shares (i) a letter
of transmittal which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions, including appropriate provisions with respect to back-up
withholding, as Baxter may reasonably specify, and (ii) instructions for use in
effecting the surrender of the Certificates. Upon surrender of a Certificate for
cancellation to the Exchange Agent, together with such letter of transmittal,
duly executed and completed in accordance with the instructions thereto, the
holder thereof shall be entitled to receive in exchange therefor that portion of
the Exchange Fund which such holder has the right to receive, after giving
effect to any required withholding tax, and the Certificate so surrendered shall
forthwith be cancelled. No interest will be paid or accrued on the cash to be
paid as part of the Merger Consideration. In the event of any transfer of
ownership of Shares which has not been registered in the transfer records of the
Company, certificates representing the proper number of Baxter Shares, if any,
together with a check in an amount equal to the cash component of the Exchange
Fund, will be issued to the transferee of the Certificate presented to the
Exchange Agent, accompanied by all documents required to evidence and effect the
prior transfer thereof and to evidence that any applicable stock transfer taxes
associated with such transfer were paid. CERTIFICATES SHOULD NOT BE SURRENDERED
BY THE HOLDERS OF COMPANY COMMON STOCK UNTIL SUCH HOLDERS RECEIVE THE LETTER OF
TRANSMITTAL FROM THE EXCHANGE AGENT.
DIVIDENDS
The Merger Agreement provides that no dividends or other distributions with
respect to Baxter Shares constituting part of the Merger Consideration shall be
paid to the holder of any unsurrendered
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Certificates until such Certificates are surrendered. Upon such surrender, all
dividends and other distributions payable in respect of the Baxter Shares to be
issued in exchange therefor on a date subsequent to, and in respect of a record
date after the Effective Time, shall be paid, without interest, to the person in
whose name the certificates representing the Baxter Shares into which such
Shares were converted are registered or as otherwise directed by that person. In
no event shall the person entitled to receive such dividends or distributions be
entitled to receive interest on any such dividends or distributions.
NO FRACTIONAL SHARES
The Merger Agreement provides that no certificates or scrip representing
fractional Baxter Shares shall be issued upon the surrender of Certificates and
no dividend, stock split or other change in the capital structure of the Company
shall relate to any fractional interest, and such fractional interests shall not
entitle the owner thereof to vote or to any rights of a security holder. In lieu
of any such fractional interest, each holder of a Certificate who would
otherwise have been entitled to a fraction of a Baxter Share upon surrender of
Certificates shall be paid cash upon such surrender in an amount equal to the
product of such fraction multiplied by the Baxter Stock Price.
UNCLAIMED AMOUNTS
The Merger Agreement provides that any portion of the Exchange Fund which
remains unclaimed by the former stockholders of the Company six months after the
Effective Time shall be delivered by the Exchange Agent to Baxter. Any former
stockholders of the Company who have not theretofore complied with the exchange
provisions of the Merger Agreement shall thereafter look only to Baxter for
payment of the Merger Consideration, cash in lieu of fractional shares, and
unpaid dividends and distributions in respect of Baxter Shares deliverable as
part of the Merger Consideration, in all cases without any interest thereon.
None of Baxter, the Surviving Corporation, the Exchange Agent or any other
person will be liable to any former holder of Shares for any amount properly
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws.
LOST CERTIFICATES
The Merger Agreement provides that, in the event any certificate
representing shares of Company Common Stock (a "Certificate") shall have been
lost, stolen or destroyed, upon the making and delivery of an affidavit of that
fact by the person claiming such Certificate to have been lost, stolen or
destroyed and, if required by Baxter, the posting by such person of a bond in
such reasonable amount as Baxter may direct as indemnity against any claim that
would be made against the Company or Baxter with respect to such Certificate,
the Exchange Agent shall issue in exchange for such lost, stolen or destroyed
Certificate the portion of the Exchange Fund deliverable in respect thereof
pursuant to the Merger Agreement.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains customary representations and warranties of
Baxter, Purchaser and the Company relating to, among other things, certain
aspects of the respective businesses and financial statements of the parties and
certain other matters. The representations and warranties expire at the Closing.
ORDINARY COURSE
The Merger Agreement provides that, except as otherwise specifically
provided in the Merger Agreement or as otherwise consented to in writing by
Baxter and Purchaser, from the date of the Merger Agreement to the Effective
Time, the Company will, and will cause each of its subsidiaries ("Subsidiaries")
to, conduct its operations only in the ordinary and usual course of business and
consistent with past practices, and will cause each of its Subsidiaries to,
preserve intact its present business organization, take
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all reasonable efforts to keep available the services of its present officers,
employees and consultants and preserve its present relationships with licensors,
licensees, customers, suppliers, employees, labor organizations and others with
whom they have a significant business relationship.
Without limiting the generality of the foregoing, and except as otherwise
specifically provided in the Merger Agreement, the Company is not permitted,
without the prior written consent of Baxter and Purchaser, to (a) propose or
adopt any amendment to or otherwise change its Articles of Incorporation or
Bylaws or other organizational documents; (b) issue, sell, pledge, dispose of or
encumber (except pursuant to the exercise of options outstanding on the date of
the Merger Agreement) any of its shares or any securities convertible into or
exchangeable for, any of its other securities, or enter into any arrangement or
contract with respect to the purchase or voting of shares of its shares, or
adjust, split, reacquire, redeem, combine or reclassify any of its securities,
or make any other changes in its capital structure; (c) (i) incur (contingently
or otherwise) any liability or other obligation including, without limitation,
any indebtedness for borrowed money except in the ordinary course of business or
enter into any guarantee of any such obligation of another person or mortgage,
pledge or subject to any lien, charge or other encumbrance of their assets,
properties or business, or (ii) make any loans, advances or capital
contributions to, or investments in, any other person; (d) enter into, amend or
affirmatively renew any contract, commitment, lease or other transaction
(whether of real or personal property) except such contracts, commitments,
leases or other transactions that are not material or are in the ordinary course
of business and do not involve affiliates of the Company; (e) sell or otherwise
dispose of or lease any part of their respective properties or assets, including
but not limited to the sale or license of any real estate or intellectual
property, or purchase or otherwise acquire or lease properties or assets
(including real estate) except sales or purchases of inventory and purchases of
capital equipment in the ordinary course of business; (f) declare, set aside or
pay any dividends on, or make any distributions in respect of, its outstanding
shares; (g) (i) grant any general increase in wage or salary rates, except in
the ordinary course of business consistent with past practice; (ii) make any
change in the compensation payable or to become payable to any of its officers,
directors, employees, agents or consultants; (iii) enter into or amend any
employment, consulting, severance, termination or similar agreement; (iv) adopt
any new employee benefit plan or amend any existing such plan; (v) make any
loans to any of its officers, directors, employees, agents or consultants or any
changes in its existing borrowing or lending arrangements for or on behalf of
any of such persons, whether contingent on the Closing or otherwise; and (vi)
take any unpermitted action to cause to be exercisable any otherwise
unexercisable stock option; (h) make any material changes in the type or amount
of its insurance coverages; (i) make any material tax election (unless required
by law) or settle or compromise any material income tax liability of the Company
or any of its Subsidiaries except if such action is taken in the ordinary course
of business and Baxter or its affiliate shall have been provided reasonable
prior notice thereof; (j) cancel any debts or waive, release or relinquish any
material contract rights or other material rights other than in the ordinary
course of business and consistent with past practice; (k) take or agree or
commit to take any action that would result in any of the Company's
representations or warranties being untrue in any material respect; or (l) make,
or commit to make, any capital expenditure in excess of $100,000 including,
without limitation, for the purchase of real estate.
RESALES OF BAXTER COMMON STOCK RECEIVED IN THE MERGER; RESTRICTIONS ON
AFFILIATES
The shares of Baxter Common Stock to be issued in the Merger will be
registered under the Securities Act and will be freely transferable under the
Securities Act, except for shares issued to any shareholder who may be deemed to
be an "affiliate" of RMI for purposes of Rule 145 under the Securities Act. Such
persons may not sell their shares of Baxter Common Stock acquired in connection
with the Merger except pursuant to an effective registration statement under the
Securities Act covering such shares or in compliance with Rule 145 or another
applicable exemption from the registration requirements of the Securities Act.
Persons who may be deemed to be affiliates of RMI generally include individuals
or entities that control, are controlled by or are under common control with
RMI, and may include certain executive officers and directors of RMI as well as
principal Shareholders.
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RMI has agreed to use reasonable efforts to cause each person who is an
affiliate (for purposes of Rule 145) of RMI to deliver to Baxter a written
agreement intended to ensure compliance with the Securities Act.
NYSE LISTING
Baxter Common Stock is listed on the NYSE. Baxter has agreed to comply with
all requirements of the NYSE with respect to listing the new shares of Baxter
Common Stock to be issued to Shareholders in connection with the Merger. The
obligation of RMI to consummate the Merger is subject to the inclusion of the
new shares of Baxter Common Stock to be issued in the Merger for trading on the
NYSE. See "--Conditions to the Merger."
NO SOLICITATION
The Merger Agreement provides that the Company and its Subsidiaries and
affiliates will use their reasonable efforts to ensure that their respective
officers, directors, employees, investment bankers, attorneys, accountants and
other representatives and agents do not, directly or indirectly, initiate,
solicit, encourage or participate in, or provide any information to any Person
(as defined below) concerning, or take any action to facilitate the making of,
any offer or proposal which constitutes or is reasonably likely to lead to any
Acquisition Proposal (as defined below) of the Company or any Subsidiary or
affiliate or an inquiry with respect thereto. The Merger Agreement also provides
that the Company shall, and shall cause its Subsidiaries and affiliates, and
their respective officers, directors, employees, investment bankers, attorneys,
accountants and other agents to, immediately cease and cause to be terminated
all existing activities, discussions and negotiations, if any, with any parties
conducted heretofore with respect to any of the foregoing. Notwithstanding the
foregoing, the Company may, directly or indirectly, provide access and furnish
information concerning its business, properties or assets to any corporation,
partnership, person or other entity or group pursuant to an appropriate
confidentiality agreement, and may negotiate and participate in discussions and
negotiations with such entity or group concerning an Acquisition Proposal and
recommend to its shareholders an Acquisition Proposal that the Board of
Directors determines in good faith is more favorable to the Company's
shareholders than the Merger (x) if such entity or group has submitted a bona
fide written proposal to the Board of Directors of the Company relating to any
such transaction and (y) if, in the opinion of the Board of Directors of the
Company, after consultation with independent legal counsel to the Company (who
may be the Company's regularly engaged independent counsel), the failure to
provide such information or access or to engage in such discussions or
negotiations would be inconsistent with their fiduciary duties under applicable
law.
The Merger Agreement provides that the Company shall promptly notify Baxter
of any such offers, proposals or Acquisition Proposals (including without
limitation the terms and conditions thereof and the identity of the Person
making it), and will keep Baxter apprised of all developments with respect to
any such Acquisition Proposal. For purposes of the Merger Agreement, any
material modification of an Acquisition Proposal shall constitute a new
Acquisition Proposal.
As used in the Merger Agreement, "Acquisition Proposal" when used in
connection with any corporation, partnership, person or other entity or group
(including the Company and all affiliates and representatives, but excluding
Baxter or any of its affiliates or representatives) ("Person") includes any
tender or exchange offer involving such Person, any proposal for a merger,
consolidation or other business combination involving such Person or any
subsidiary of such Person, any proposal or offer to acquire in any manner a
substantial equity interest in, or a substantial portion of the business or
assets of, such Person or any subsidiary of such Person, any proposal or offer
with respect to any recapitalization or restructuring with respect to such
Person or any subsidiary of such Person or any proposal or offer with respect to
any other transaction similar to any of the foregoing with respect to such
Person, or any subsidiary of such Person.
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DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE
The Merger Agreement provides that Baxter and Purchaser acknowledge that all
rights to indemnification or exculpation now existing in favor of the directors,
officers, employees and agents of the Company and its Subsidiaries as provided
in their respective charters or Bylaws or otherwise in effect as of the date of
the Merger Agreement with respect to matters occurring prior to the Effective
Time shall survive the Merger and shall continue in full force and effect. The
Merger Agreement also provides that, after the Effective Time, Baxter shall, or
shall cause the Surviving Corporation to, indemnify, defend and hold harmless
the present and former officers, directors, employees and agents of the Company
and its Subsidiaries (each an "Indemnified Party") against all losses, claims,
damages, liabilities, fees and expenses (including reasonable fees and
disbursements of counsel and judgments, fines, losses, claims, liabilities and
amounts paid in settlement; provided that any such settlement is effected with
the prior written consent of Baxter or the Surviving Corporation) arising out of
actions or omissions occurring at or prior to the Effective Time to the full
extent permitted under Utah law, the Company's Articles of Incorporation or
Bylaws, in each case as in effect at the date hereof, including provisions
therein relating to the advancement of expenses incurred in the defense of any
action or suit; PROVIDED, that nothing in the Merger Agreement shall impair any
rights or obligations of any present or former directors or officers of the
Company.
The Merger Agreement provides that Baxter shall cause the Surviving
Corporation to maintain in effect for not fewer than six years from and after
the Effective Time the policies of directors' and officers' liability insurance
most recently maintained by the Company (provided that Baxter may cause the
Surviving Corporation to substitute therefor policies with reputable and
financially sound carriers of at least the same coverage and containing terms
and conditions no less advantageous as long as such substitution does not result
in gaps or lapses in coverage with respect to claims arising from or related to
matters occurring prior to the Effective Time); PROVIDED that in no event shall
the Surviving Corporation be required to expend more than an amount per year
equal to 150% of the current annual premiums paid by the Company (the "Premium
Amount") to maintain or procure such insurance coverage; PROVIDED, FURTHER, that
if the Surviving Corporation is unable to obtain such insurance, Baxter shall
cause the Surviving Corporation to obtain as much comparable insurance as is
available for the Premium Amount each year.
The Merger Agreement also provides that Baxter shall, or shall cause the
Surviving Corporation to, pay all expenses (including reasonable attorneys'
fees) that may reasonably be incurred by the Indemnified Party in successfully
enforcing the rights to which the Indemnified Party is entitled under the Merger
Agreement or the Surviving Corporation's Articles of Incorporation or Bylaws or
is otherwise entitled.
The Merger Agreement also provides that, in the event the Surviving
Corporation, Baxter or any of their successors or assigns (i) consolidates with
or merges into any other person and 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 provisions shall be made so that the successors and assigns of
the Surviving Corporation and/or Baxter, as the case may be, shall assume its
indemnification and insurance obligations as described above.
CONTINUATION OF OPERATIONS
The Merger Agreement provides that Baxter and Purchaser shall for a period
of not less than one year from the Effective Date maintain the location of the
Company's headquarters at the same location in Midvale, Utah.
EMPLOYEE BENEFITS
The Merger Agreement provides that, subject to the right of Baxter or the
Surviving Corporation to terminate at will any RMI employees, Baxter will cause
the Surviving Corporation (i) for a period of not less than one year after the
Effective Time, to provide during the term of their employment after the
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Effective Time any individuals employed by RMI immediately before the Merger
with salary, wages and other benefits at levels no less favorable in the
aggregate than those provided by RMI immediately before the Merger, and (ii) to
continue RMI's cash bonus plan as in effect as of the date of the Merger
Agreement (or a substitute plan providing substantially similar benefits)
through December 31, 1997.
CONSENTS AND APPROVALS
The Merger Agreement provides that each of the Company, Baxter and Purchaser
will take all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on it with respect to the Merger Agreement and
the transactions contemplated thereby (which actions shall include without
limitation furnishing all information required under the HSR Act and in
connection with approvals of or filings with any other governmental or
regulatory entity, and will promptly cooperate with and furnish information to
each other in connection with any such requirements imposed upon any of them or
any of their respective subsidiaries in connection with the Merger Agreement and
the transactions contemplated thereby. The Merger Agreement also provides that
each of the Company, Baxter and Purchaser will, and will cause its respective
subsidiaries to, (i) take all reasonable actions necessary to obtain (and will
cooperate with each other in obtaining) any consent, authorization, order or
approval of, or any exemption by, any governmental or regulatory entity or other
public or private third party required to be obtained or made by Baxter,
Purchaser, the Company or any of their respective subsidiaries in connection
with the Merger or the taking of any action contemplated thereby or by the
Merger Agreement and (ii) cooperate in maintaining good business relationships
with distributors of the Company products after the date thereof.
CONDITIONS TO THE MERGER
The respective obligations of each party to effect the Merger shall be
subject to the satisfaction or waiver, on or prior to the Effective Time, of the
following conditions: (a) the Merger Agreement and the transactions contemplated
hereby shall have been approved and adopted by the requisite vote of the
stockholders of the Company in accordance with and subject to applicable law;
(b) all authorizations, consents, orders or approvals of, or declarations or
filings with, or expiration of waiting periods imposed by, any Federal, state,
local or foreign governmental or regulatory authority necessary for the
consummation of the Merger and the transactions contemplated by the Merger
Agreement shall have been filed, occurred or been obtained and shall be in
effect at the Effective Time; (c) no temporary restraining order, preliminary
injunction or permanent injunction or other order precluding, restraining,
enjoining, preventing or prohibiting the consummation of the Merger shall have
been issued by an Federal, state or foreign court or other governmental or
regulatory authority and remain in effect; (d) no Federal, state, local or
foreign statute, rule or regulation shall have been enacted which prohibits the
consummation of the Merger or would make the consummation of the Merger illegal;
(e) the Registration Statement shall have been declared effective under the
Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order; and (f) the Baxter Shares shall have been listed on the
NYSE, subject to official notice of issuance.
The obligation of Baxter and Purchaser to effect the Merger is further
subject to the satisfaction at or prior to the Effective Time of the following
conditions, unless waived by Baxter and Purchaser: (a) the representations and
warranties of the Company set forth in the Merger Agreement shall be true and
correct in all material respects as of the date of the Merger Agreement and as
of the Effective Time, as if made of such time; (b) the Company shall have
performed and complied, in all material respects, with all obligations and
covenants required to be performed or complied with by it under the Merger
Agreement at or prior to the Effective Time; (c) the Company shall have obtained
all consents, approvals, authorizations and permits required from third parties
and any governmental or regulatory entity (applicable to the Company and its
subsidiaries) necessary for the consummation by the Company of the transactions
contemplated by the Merger Agreement; (d) from the date of the Merger Agreement
through the
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Effective Time, no event shall have occurred which shall be reasonably likely to
result or shall have resulted in a Material Adverse Effect in relation to RMI;
(e) Baxter and the Purchaser shall have received opinions of counsel to RMI and
a letter from Workman, Nydegger & Seeley, special patent counsel to RMI, in the
forms contemplated by the Merger Agreement; (f) Mr. Crocker and those other
persons identified in the Merger Agreement shall have entered into employment or
other agreements for the periods and on such other terms substantially as
contemplated by the Merger Agreement; and (g) the parties (other than the
Company or its affiliates) to outstanding stock options (with one exception)
shall have agreed to receive cash payments in cancellation of such options in
full prior to the Effective Time in the amounts set forth in the Merger
Agreement.
The obligations of the Company to effect the Merger are further subject to
the satisfaction at or prior to the Effective Time of the following conditions,
unless waived by the Company: (a) the representations and warranties of Baxter
and the Purchaser set forth in the Merger Agreement shall be true and correct in
all material respects as of the date of the Merger Agreement and as of the
Effective Time, as if made as of such time; (b) Baxter and the Purchaser shall
have performed and complied with, in all material respects, all obligations and
covenants required to be performed or complied with by it under the Merger
Agreement at or prior to the Effective Time; (c) Baxter and the Purchaser shall
have obtained all consents, approvals, authorizations and permits required from
third parties and any Governmental Entity (applicable to Baxter and the
Purchaser and their subsidiaries) necessary for the consummation by Baxter and
Purchaser of the transactions contemplated by this Agreement; (d) the Company
shall have received opinions from counsel to Baxter and the Purchaser
substantially in the forms contemplated by the Merger Agreement; (e) the Company
shall have received a written opinion from Ray, Quinney & Nebeker, counsel to
the Company, to the effect that the Merger will be treated for Federal income
tax purposes as a reorganization under Section 368(a) of the Code; and (f) from
the date of the Merger Agreement through the Effective Time, no event shall have
occurred which shall be reasonably likely to result or shall have resulted in a
Material Adverse Effect in relation to Baxter.
TERMINATION, AMENDMENT AND WAIVER
The Merger Agreement provides that the Merger Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, whether
before or after shareholder approval thereof: (a) by mutual consent of the Board
of Directors of Baxter and the Board of Directors of the Company; or (b) by
either the Board of Directors of Baxter or the Board of Directors of the
Company: (i) if the Merger shall not have been consummated on or prior to June
30, 1997; or (ii) if a court of competent jurisdiction or other governmental or
regulatory authority shall have issued an order, decree or ruling or taken any
other action (which order, decree, ruling or other action the parties hereto
shall use their reasonable efforts to lift), in each case permanently
restraining, enjoining, or otherwise prohibiting the transactions contemplated
by the Merger Agreement and such order, decree, ruling or other action shall
have become final and nonappealable.
The Merger Agreement may also be terminated by the Board of Directors of the
Company: (i) if, prior to June 30, 1997, the Company shall have (A) accepted an
Acquisition Proposal and (B) paid or caused to be paid the fees provided for in
the Merger Agreement; or (ii) if, prior to the Effective Time, Baxter or the
Purchaser breaches or fails in any material respect to perform or comply with
any of its material covenants and agreements contained herein or breaches its
representations and warranties in any material respect.
The Board of Directors of Baxter may also terminate the Merger Agreement:
(i) if Baxter or the Purchaser is not in material breach of the Agreement and
(A) prior to the Effective Time, the Company shall have received an Acquisition
Proposal and not rejected such Acquisition Proposal within 20 days of its
receipt or the Board of Directors of the Company shall have withdrawn, or
modified or changed (including by amendment to the Company Proxy
Statement/Prospectus) in a manner adverse to Baxter or
33
<PAGE>
the Purchaser its approval or recommendation of the Merger or this Agreement, or
shall have recommended an Acquisition Proposal; or (B) prior to the Effective
Time, it shall have been publicly disclosed or Baxter or the Purchaser shall
have learned that any person entity or "group" (as that term is defined in
Section 13(d)(3) of the Exchange Act), other than Baxter or its affiliates or
any group of which any of them is a member shall have acquired beneficial
ownership (determined pursuant to Rule 13d-3 promulgated under the Exchange Act)
of more than 19.9% of any class or series of shares of the Company, through the
acquisition of stock, the formation of a group or otherwise, or shall have been
granted an option, right, or warrant, conditional or otherwise, to acquire
beneficial ownership of more than 19.9% of any class or series of shares of the
Company or (ii) if prior to the Effective Time, the Company breaches or fails in
any material respect to perform or comply with any of its material covenants and
agreements contained herein or breaches its representations and warranties in
any material respect.
Subject to applicable law, the Merger Agreement may be amended, modified and
supplemented in any and all respects, whether before or after any vote of the
shareholders of the Company contemplated thereby, by written agreement of the
parties, by action taken by their respective Boards of Directors, at any time
prior to the Effective Time with respect to any of the terms contained therein;
PROVIDED, HOWEVER, that after the approval of the Merger Agreement by the
shareholders of the Company, no such amendment, modification or supplement shall
reduce or change the Merger Consideration. Under applicable law, any amendment
subsequent to the adoption of the Merger Agreement by the Company shareholders
that alters any contractual rights of the Company shareholders in connection
with the Merger, such as a change in the amount or kind of securities to be
received in exchange for Company Common Stock in the Merger, or that otherwise
adversely affects the Company shareholders would require the further approval of
the Company shareholders.
FEES AND EXPENSES
The Merger Agreement provides that all costs and expenses incurred in
connection with the Agreement are to be borne by the party incurring such
expenses. In addition, if the Company terminates the Merger Agreement in order
to accept an Acquisition Proposal, or if Baxter terminates the agreement because
of one of the circumstances described in the third paragraph under
"--Termination, Amendment and Waiver" above, and within six months of such
termination the Company consummates an Acquisition Proposal, the Company shall
pay a termination fee (which will be the sole and exclusive remedy in such event
of Baxter and Purchaser) in the amount of $7 million.
34
<PAGE>
INFORMATION CONCERNING BAXTER
GENERAL
Baxter was incorporated under Delaware law in 1931 and is engaged in the
worldwide development, distribution and manufacture of a diversified line of
products, systems and services used primarily in the health care field. Products
are manufactured by Baxter in 23 countries and sold in approximately 100
countries. Baxter's health care operations are concerned with the preservation
of health and with the diagnosis, cure, mitigation and treatment of disease and
body defects and deficiencies.
With the exception of historical information, the matters discussed or
incorporated by reference in this Proxy Statement/Prospectus related to Baxter
are forward-looking statements that involve risks and uncertainties, including,
but not limited to, technological advances in the medical field, economic
conditions, product demand and industry acceptance of the company's new
products, competitive products and pricing, manufacturing efficiencies, new
product development, ability to enforce patents, availability of raw materials
and manufacturing capacity, new plant startups, the United States and global
regulatory and trade environment, and other risks outlined in Baxter's Form 10-K
for the year ended December 31, 1995, filed with the Securities and Exchange
Commission.
RECENT DEVELOPMENTS
SPIN-OFF OF HEALTH CARE COST MANAGEMENT BUSINESS
On September 30, 1996 Baxter distributed to its stockholders all of the
outstanding stock of Allegiance Corporation, its health care cost management
business, in a tax-free spin-off transaction. As a result of the spin-off Baxter
was separated into two independent companies which will enable Baxter and the
new company to devote management time, attention and investments directly to the
core strategies of each business.
For additional information on the effects of the spin-off on Baxter, see
Baxter's Quarterly Report on Form 10-Q for the quarterly period ended September
30, 1996, which is incorporated herein by reference.
RESTRUCTURING PROGRAMS
Baxter currently has two restructuring programs in process. In November
1993, Baxter initiated a restructuring program designed to accelerate growth and
reduce costs in Baxter's businesses worldwide, including reorganizations and
consolidations in the United States, Europe, Japan and Canada. In the third
quarter of 1995, Baxter initiated a second restructuring program to consolidate
manufacturing operations in Puerto Rico in order to eliminate excess capacity
and reduce manufacturing costs.
Since the announcement of the 1993 restructuring program, Baxter has
implemented or is in the process of implementing all of the major strategic
actions associated therewith and believes that the program is progressing on
schedule and will meet previously established financial targets. Baxter utilized
$42 million of restructuring reserves during the nine months ended September 30
1996, including $32 million in cash payments. Baxter has eliminated
approximately 1,600 positions of the approximately 1,640 positions affected by
the program. The majority of the remaining reductions will occur during the
period from October 1, 1996 to December 31, 1997, as facility closures and
consolidations are completed as planned. During 1996, Baxter anticipates that it
will realize approximately $110 million in pretax savings for 1996, which is
consistent with its original savings target, although there can be no assurances
that the full amount of such savings will be realized. Management anticipates
that these savings will be partially invested in research and development and
expansion into growing international markets. Management believes that its
remaining restructuring reserves are adequate to complete the actions
contemplated by the 1993 restructuring program.
35
<PAGE>
With respect to the 1995 restructuring program, as of September 30, 1996,
Baxter had eliminated 322 positions of the 1,450 positions affected by the
program, with most of the remaining reductions expected to be completed by the
end of 1998. Baxter utilized $13 million of restructuring reserves for the nine
months ended September 30, 1996. The plant closures and consolidations will
lower Baxter's manufacturing costs. Management believes that these actions will
help mitigate Baxter's exposure to future price erosion arising from pricing
pressure, primarily in the United States.
Management anticipates that future cash expenditures related to both the
1993 and 1995 restructuring programs will be funded from cash generated from
operations.
IMMUNO INTERNATIONAL ALLIANCE
On August 29, 1996, Baxter announced its intention to form a strategic
alliance with Immuno International AG (Immuno), a European manufacturer of
biopharmaceutical products and services for transfusion medicine. The
acquisition is valued at approximately $623 million, using an assumed exchange
rate of $1 for each 1.31 Swiss francs, such assumed exchange rate being subject
to fluctuation prior to the completion of this transaction. The transaction has
cleared review by the Commission of the European Communities and antitrust
authorities in the United States.
On December 19, 1996, Baxter acquired bearer and registered shares of Immuno
that represent 54% of the voting interest and 37% of the capital interest. This
is the first step in a three-part transaction that will result in Baxter fully
acquiring Immuno. With clearance from the FTC and EC and the completion of the
first part of the transaction, both Baxter and Immuno will be able to proceed
with their previously announced tender offers, the second step in the three-part
transaction, which is expected to begin in early 1997. The third step in the
three-part transaction is being accelerated and will be completed by June 30,
1997.
The Baxter/Immuno alliance is consistent with Baxter's strategy to expand
globally and to bring new technologies and products to market. It will create
one of the world's leading providers of products and services for transfusion
medicine, including biopharmaceuticals, with a leading market and research
position, and manufacturing facilities in the U.S. and Europe.
INDUSTRY OVERVIEW
Baxter operates in a single industry segment as a world leader in providing
health care products for use in hospitals and other health care settings. On a
global basis, Baxter develops, manufactures and markets intravenous solutions
and related administration equipment, and highly specialized medical products
for treating kidney and heart disease, blood disorders, and for collecting and
processing blood. These products include intravenous solutions and pumps;
dialysis equipment and supplies; prosthetic heart valves and cardiac catheters;
blood-clotting therapies; and machines and supplies for collecting, separating
and storing blood. These products require extensive research and development and
investment in worldwide manufacturing, marketing and administrative
infrastructure.
METHODS OF DISTRIBUTION
Baxter conducts its selling efforts through its subsidiaries and divisions.
Many subsidiaries and divisions have their own sales forces and direct their own
sales efforts. In addition, sales are made to independent distributors, dealers
and sales agents. Distribution centers, which may serve more than one division,
are stocked with adequate inventories to facilitate prompt customer service.
Sales and distribution methods include frequent contact by sales
representatives, automated communications via various electronic purchasing
systems, circulation of catalogs and merchandising bulletins, direct mail
campaigns, trade publications and advertising.
36
<PAGE>
RAW MATERIALS
Raw materials essential to Baxter's business are purchased worldwide in the
ordinary course of business from numerous suppliers. The vast majority of these
materials are generally available, and no serious shortages or delays have been
encountered. Certain raw materials used in producing some of Baxter's products
are available only from a small number of suppliers. In addition, certain
biomaterials for medical implant applications (primarily polymers) are becoming
more difficult to obtain due to market withdrawals by biomaterial suppliers,
primarily as a result of perceived exposures to liability in the United States.
PATENTS AND TRADEMARKS
Baxter owns a number of patents and trademarks throughout the world and is
licensed under patents owned by others. While it seeks patents on new
developments whenever feasible, Baxter does not consider any one or more of its
patents, or the licenses granted to or by it, to be essential to its business.
Products manufactured by Baxter are sold primarily under its own trademarks
and trade names. Some products purchased and resold by Baxter are sold under
Baxter's trade names while others are sold under trade names owned by its
suppliers.
RESEARCH AND DEVELOPMENT
Baxter is actively engaged in research and development programs to develop
and improve products, systems and manufacturing methods. These activities are
performed at 21 research and development centers located around the world and
include facilities in Australia, Belgium, Germany, Italy, Japan, Malta, the
Netherlands, Sweden, the United Kingdom and the United States. Expenditures for
Company-sponsored research and development activities related to continuing
operations were $250 million for the nine months ended September 30, 1996, $345
million in 1995, $303 million in 1994 and $280 million in 1993.
Baxter's research efforts emphasize self-manufactured product development,
and portions of that research relate to multiple product lines. For example,
many product categories benefit from Baxter's research effort as applied to the
human body's circulatory systems. In addition, research relating to the
performance and purity of plastic materials has resulted in advances that are
applicable to a large number of Baxter's products. Principal areas of strategic
focus for research are biotechnology, renal therapy and transplantation, blood
disorders and cardiovascular disease.
GOVERNMENT REGULATION
Most products manufactured or sold by Baxter in the United States are
subject to regulation by the Food and Drug Administration ("FDA"), as well as by
other federal and state agencies. The FDA regulates the introduction and
advertising of new drugs and devices as well as manufacturing procedures,
labeling and record keeping with respect to drugs and devices. The FDA has the
power to seize adulterated or misbranded drugs and devices or to require the
manufacturer to remove them from the market and the power to publicize relevant
facts. From time to time, Baxter has removed products from the market that were
found not to meet acceptable standards. This may occur in the future. Product
regulatory laws exist in most other countries where Baxter does business.
Environmental policies of Baxter mandate compliance with all applicable
regulatory requirements concerning environmental quality and contemplate, among
other things, appropriate capital expenditures for environmental protection.
Various non-material capital expenditures for environmental protection were made
by Baxter during 1995 and 1996.
37
<PAGE>
EMPLOYEES
As of October 1, 1996, Baxter employed approximately 32,000 people.
CONTRACTUAL ARRANGEMENTS
A substantial portion of Baxter's products are sold through contracts with
purchasers, both international and domestic. Some of these contracts are for
terms of more than one year and include limits on price increases. In the case
of hospitals, clinical laboratories and other facilities, these contracts may
specify minimum quantities of a particular product or categories of products to
be purchased by the customer.
PROPERTIES
Baxter owns or has long-term leases on substantially all of its major
manufacturing facilities. Baxter maintains 19 manufacturing facilities in the
United States, including seven in Puerto Rico, and also manufactures in
Australia, Belgium, Brazil, Canada, Chile, China, Colombia, Costa Rica, the
Dominican Republic, France, Indonesia, Ireland, Italy, Japan, Malta, Mexico, the
Netherlands, Russia, Singapore, Spain, Switzerland, Turkey and the United
Kingdom.
Baxter owns or operates distribution centers throughout the world, including
66 located in 22 foreign countries.
Baxter maintains a continuing program for improving its properties,
including the retirement or improvement of older facilities and the construction
of new facilities. This program includes improvement of manufacturing facilities
to enable production and quality control programs to conform with the current
state of technology and government regulations.
38
<PAGE>
INFORMATION CONCERNING RMI
GENERAL
RMI is a Utah corporation engaged in the development, manufacture and
distribution of a diversified line of health care products, focusing on
specialized cardiovascular, vascular and blood management surgical devices and
specialty pharmaceuticals. Originally incorporated as "Research Industries
Corporation," RMI was originally engaged in the manufacture and sale of
specialty pharmaceuticals and in real estate development. In 1983 RMI formed a
wholly-owned subsidiary called "Research Medical, Inc." for the purpose of
entering the cardiovascular, vascular and blood management surgical devices
business. This new business has grown dramatically in the interim, and in 1995
RMI, then named Research Industries Corporation, changed its name to "Research
Medical, Inc." (and changed the name of its subsidiary to "Research Industries
Corporation") in order to better reflect in the name of the company its major
business.
Products are manufactured by the Company in two facilities located in the
United States and sold in many countries. The Company's more than 450 products
are used principally by hospitals, clinical and medical research laboratories,
and doctors' offices. The Company has concentrated on disposable devices used in
surgery procedures.
RMI has valuable real estate holdings remaining from its early years of
operations, including properties traded for original properties in tax-driven
exchanges. RMI also has advanced funds to purchasers of certain of its
properties to assist in the development of those properties, resulting in higher
purchase prices realized by the Company for such properties. Since the
mid-1980's RMI has been in a mode of carefully liquidating its real estate
assets in an orderly manner. In past years, the Company's real estate activities
provided start-up financing to health care division operations.
RMI's executive offices are located at 6864 South 300 West, Midvale, Utah
84047, and its telephone number is (801) 562-0200.
RECENT OPERATING RESULTS
RMI's earnings were $2,249,802 for the first quarter of fiscal 1997, ended
September 30, 1996, a 15% increase over net income of $1,948,592 recorded in the
same quarter of the prior year. Earnings per share were $.23 and $.20 for these
two periods, respectively. Total revenues increased from $8,836,760 in the first
quarter of fiscal 1996 to $10,294,834 in the same quarter of fiscal 1997, which
represents a growth rate of 17%. The total growth rate is comprised of a 19%
increase in health care revenues and a 1% decrease in real estate revenues over
the comparable period in 1996.
HEALTH CARE
Net health care sales were $9,067,600 in the first quarter of 1997 compared
to $7,599,971 in the same quarter of 1996, which represents a 19% increase.
Medical device and solution sales increased by 12% and proprietary
pharmaceuticals and sterile solution product sales increased by 44% for the
quarter. The growth in medical device and solution revenues reflects an increase
in domestic and international open-heart surgeries as well as market share gains
for bypass circuitry cannulae, balloon cardioplegia delivery catheters,
cardiac-assist devices. Additionally, the Company experienced significant
increases in the sales of its Biofilter hemoconcentrator as well as its vascular
shunt product line.
As in the prior year, the growth in proprietary pharmaceuticals resulted
from more units sold, particularly to distributors in anticipation of an October
1 price increase. Also, increased purchases by foreign distributors contributed
to the growth. Sterile solutions sales directly attributable to OEM customer
orders have been higher during the current period. Growth in sterile solutions
sales is not expected to continue and tend to fluctuate from quarter to quarter.
The Company has new products in various stages of development and approval which
it believes will contribute to sales growth in the future.
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<PAGE>
Management also believes that it will continue to experience growth in the sales
of its existing cardiovascular surgical products.
Although the Company does not have foreign operations, it does sell
worldwide to specialized cardiovascular distributors and other customers in
foreign markets. Foreign sales decreased by 11% in the first quarter over the
same quarter of the prior year. Generally, international sales have increased
faster than domestic sales in recent years; however, foreign sales revenues in
any given quarter fluctuate due to the timing of large distributor bid
purchases. These sales represented 17% of sales in the first quarter of 1997
compared to 23% in 1996.
Gross margins were 62% in the first quarter of fiscal 1997 compared to 61%
for the same quarter in the prior year. Gross margins improved primarily as a
result of the Company s efforts to automate portions of the manufacturing
process as well as from an improved sales mix of higher margin products.
The Company continues to invest resources in research and product
development to introduce new products. Royalty costs, which in many respects
represent the cost of acquired research and development technologies, are
recorded as a component of cost of sales. All R&D expenses relate to the health
care segment. These expenditures increased 21% from $421,181 in the first
quarter of 1996 to $510,328 in the first quarter of fiscal 1997. This increase
reflects the Company s preparation for new products, including a broad range of
minimally invasive heart surgery products, the embolectomy catheter with viewing
capability, several new vascular catheters, the Autologous Fibrinogen Delivery
Kit, and the Heparin Removal Device.
REAL ESTATE
In past years the Company s real estate activities were used to help finance
the Company's start-up of health care operations. The Company continues to
divest real estate assets as reasonable offers are received. Real estate sales
in the first quarter of 1997 include the sale of industrial land, interest on
real estate contracts and revenue from the sale of the Company s interests in
other real estate projects.
Gross margins for real estate were 25% for the first quarter of 1997
compared to 36% for the same period in 1996. The gross margins are reflective of
the Company's cost basis in the specific properties sold and the related selling
prices. The gross margins, therefore, may vary significantly between specific
pieces of property sold.
BALANCE SHEET
The Company's balance sheet continued to strengthen during the first quarter
of fiscal 1997. The following key measurements are indicative of the excellent
liquidity and strong financial position of the Company:
<TABLE>
<CAPTION>
JUNE 30, SEPT. 30,
1996 1996
--------- ---------
(IN THOUSANDS EXCEPT
RATIOS)
<S> <C> <C>
Cash and investments................................................. $ 13,261 $ 12,915
Working capital...................................................... 29,805 30,503
Shareholders' equity................................................. 56,323 58,485
Current ratio........................................................ 15:1 12:1
</TABLE>
COMPETITION
Although the health care products market in the United States and globally
is highly competitive and populated with numerous large and small general
competitors, RMI believes that it is a significant and growing factor in the
manufacture and distribution of products in the markets in which it competes.
40
<PAGE>
Although no single company competes with RMI in all of its product lines, RMI is
faced with competition in all of its markets, including increasing competition
from larger and better capitalized competitors. This is a result of ongoing
consolidation at all levels in the medical services and products market in the
United States and elsewhere.
Historically competition in the health products industry has been
characterized as a search for technological and therapeutic innovations. RMI
believes that it has benefited from the technological advantages of certain of
its products. While competitors have introduced and will continue to introduce
new products in competition with those of RMI, RMI believes it can continue to
effectively and efficiently use its research and development abilities to remain
innovative and competitive.
RMI continually examines its costs of production for ways to reduce such
costs and thus become more competitive in its markets. Innovations in its
production systems have allowed RMI to effect competitive price reductions on
certain of its products as needed to meet and beat competitive threats.
GOVERNMENT REGULATION
Products manufactured or sold by the Company in the United States are
subject to regulation by the FDA, as well as by other federal and state
agencies. The FDA's approval process for new drugs and devices is complex and
often requires long-term and sustained investment with no reliable basis for
predicting the FDA's eventual decision regarding market approval, nor how long
the approval process may continue. The FDA has the power to seize drugs or
devices which it considers to be adulterated or misbranded or to require the
manufacturer to remove them from the market and the power to publicize relevant
facts.
Recent political and regulatory changes and uncertainties relating to the
health care industry may affect both the underlying demand for health care
products and the pricing of such products.
PRINCIPAL RMI SHAREHOLDERS
The following table sets forth the name and address of each person known to
management of RMI who owns beneficially more than five percent of the
outstanding shares of RMI Common Stock, together with certain information with
respect to such ownership, as of the Record Date.
<TABLE>
<CAPTION>
SHARES OWNED PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY CLASS
- ------------------------------------------------------------------- ------------- ------------
<S> <C> <C>
Michael A. Roth and Brian J. Stark................................. 633,800 6.58%
1500 West Market Street
Mequon, Wisconsin 53092
</TABLE>
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<PAGE>
STOCK OWNERSHIP BY MANAGEMENT OF RMI
The following table sets forth certain information as to the shares of RMI
Common Stock beneficially owned by each Director and each Executive Officer of
RMI and by all Directors and Executive Officers of RMI, as a group, as of the
Record Date.
<TABLE>
<CAPTION>
PRO FORMA
OWNERSHIP OF
RMI SHARES OWNED BAXTER SHARES (1)
---------------------------- ------------------------------
AMOUNT & AMOUNT &
NATURE OF PERCENT OF NATURE OF PERCENT OF
BENEFICIAL COMMON STOCK BENEFICIAL COMMON STOCK
NAME OWNERSHIP OUTSTANDING OWNERSHIP OUTSTANDING(2)
- --------------------------------------------------------- ----------- --------------- ----------- -----------------
<S> <C> <C> <C> <C>
Gary L. Crocker.......................................... 286,492 2.97% 158,888 0.00%
Louis M. Haynie.......................................... 49,213 0.51 27,293 0.00
Edward McC. Blair, Jr.................................... 49,184 0.51 27,277 0.00
Sterling D. Sessions..................................... 1,009 0.01 559 0.00
Charles J. Aschauer, Jr.................................. 28,166 0.29 15,620 0.00
William A. Gay, Jr....................................... 11,482 0.12 6,367 0.00
Clyde H. Baker........................................... 4,058 0.04 2,250 0.00
Michael N. Kelly......................................... 19,974 0.21 11,077 0.00
James C. McRae........................................... 3,433 0.04 1,903 0.00
Mark W. Winn............................................. 225 0.00 124 0.00
J. Steven Johnson........................................ 371 0.00 205 0.00
All directors & executive officers as a group (11
persons)............................................... 453,611 4.71 251,563 0.00
</TABLE>
- ------------------------
(1) After giving effect to the Merger and assuming a Baxter Stock Price of
$42.375, based on the closing market price of Baxter Common Stock on January
29, 1997.
(2) Based on the number of shares of Baxter Common Stock outstanding as of the
Record Date.
CONTRACTS BETWEEN BAXTER AND RMI
In the ordinary course of business, Baxter and its affiliates have engaged
in transactions with RMI and its affiliates in the last two years, including
sales by RMI to Baxter amounting to an aggregate of less than $2.5 million and
sales by Baxter to RMI amounting to an aggregate of less than $300,000.
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<PAGE>
COMPARISON OF RIGHTS OF HOLDERS OF BAXTER COMMON STOCK
AND HOLDERS OF RMI COMMON STOCK
Upon consummation of the Merger, the former shareholders of the Company, a
Utah corporation, will become stockholders of Baxter, a Delaware corporation.
The rights of such stockholders will be governed by applicable Delaware law,
including the Delaware General Corporation Law (the "DGCL"), and by the Restated
Certificate of Incorporation and Bylaws of Baxter (the "Baxter Certificate" and
"Baxter Bylaws," respectively). The following is a summary of the material
differences between the DGCL and the BCA, and between the Baxter Certificate and
Baxter Bylaws, on the one hand, and the Articles of Incorporation and Bylaws of
the Company (the "Company Articles" or "RMI Articles" and "the Company Bylaws"
or "RMI Bylaws," respectively), on the other hand, that may affect the rights of
the Company shareholders who become stockholders of Baxter. The following
discussion does not purport to be a complete discussion of, and is qualified in
its entirety by reference to, the DGCL, the BCA, the Baxter Certificate, the
Baxter Bylaws, the Company Articles and the Company Bylaws.
PREEMPTIVE RIGHTS
Under both the DGCL and the BCA, security holders of a corporation have only
such preemptive rights as may be provided in the corporation's certificate or
articles of incorporation. The Baxter Certificate grants no preemptive rights to
its stockholders. The RMI Articles specifically deny preemptive rights to its
shareholders.
DIVIDENDS AND OTHER DISTRIBUTIONS
Under the BCA, a corporation may make distributions to shareholders so long
as such action would not (a) make the corporation unable to pay its debts as
they become due in the usual course of business or (b) cause the corporation's
total assets to be less than the sum of its total liabilities plus (unless the
articles of incorporation permit otherwise) the amount that would be needed to
satisfy preferential rights of shareholders senior to those receiving the
distribution. A Utah corporation may acquire its own shares, and such shares are
either returned to the status of "authorized but unissued" or removed from the
authorized number of shares, whichever is specified in the articles of
incorporation. Limitations on payment of dividends also apply to redemptions of
stock.
The DGCL permits a corporation, subject to any restrictions in its
certificate of incorporation, to declare and pay dividends out of surplus
(defined as net assets minus capital) or, if there is no surplus, out of net
profits for the fiscal year in which the dividend is declared and/or for the
preceding fiscal year as long as the amount of capital of the corporation is not
less than the aggregate amount of the capital represented by the issued and
outstanding stock of all classes having a preference upon the distribution of
assets. In addition, subject to certain limitations, the DGCL generally provides
that a corporation may redeem or repurchase its shares if the capital of the
corporation is not impaired or such redemption or repurchase would not impair
the capital of the corporation.
The RMI Articles and RMI Bylaws contain no restrictions on the payment of
dividends or the repurchase of shares. The Baxter Certificate also contains no
restrictions on the payment of dividends or the repurchase of shares. The Baxter
Bylaws provide that the Board of Directors may declare dividends upon the
capital stock of the Corporation as and when they deem expedient, but that the
Directors may set apart out of any funds available for dividends sums for
working capital or other reserves. The Baxter Bylaws contain provisions relating
to purchases by the corporation of outstanding shares of common stock at a price
above the market price for those shares. See "--Shareholder Approval Of Certain
Business Combinations."
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<PAGE>
AMENDMENT OF CERTIFICATE OR ARTICLES OF INCORPORATION; AMENDMENT OF BYLAWS
Under the BCA, a corporation's articles of incorporation may be amended by
resolution of the board of directors and approval by the holders of a majority
of the outstanding shares of capital stock entitled to vote thereon. The Board
of Directors may adopt without shareholder action amendments which delete the
names and addresses of the initial registered agent or office; change issued and
unissued authorized shares of a class into a greater number of whole shares if
the corporation has only shares of that class outstanding; change the
corporation's name by adding "Corporation," "Incorporated" or abbreviations; and
making other changes allowed by the BCA. If any particular class of shares has a
right to vote on any amendment to the articles of incorporation, a majority of
such shares must be voted in favor of the amendment. The holders of outstanding
shares of a class are entitled to vote as a class upon a proposed amendment if
it would have certain specified effects, such as changing the preferential
rights of such shares, altering rights regarding redemption of such shares,
altering preemptive rights of such shares, altering voting rights on such shares
or reducing such shares to fractional shares that may be redeemed for cash. In
addition, outstanding shares of a class are entitled to vote as a class on
proposed amendments which would increase or decrease the aggregate number of
authorized shares in the class; effect a reclassification of such shares into
another class; effect an exchange of other shares into the class; change shares
into a different number of the same class; and affect rights to distributions
that have accumulated but not yet been declared. Approval of all affected
shareholders is required for any amendment that would impose personal liability
on such shareholders for the debts of a corporation. Supermajority voting
requirements may be imposed and maintained by the articles of incorporation.
Under the BCA, the bylaws of a corporation may be amended at any time by the
corporation's board of directors, except to the extent that the articles of
incorporation or bylaws reserve this power exclusively to the shareholders, in
whole or in part. However, the board of directors (without shareholder approval)
may not change a bylaw regarding quorum or voting requirements applicable to
approvals by shareholders once such a bylaw is adopted by shareholders, and may
not change a bylaw regarding quorum or voting requirements applicable to
approvals by directors if such a bylaw was adopted by shareholders or the
articles of incorporation or bylaws require shareholder approval. Conferring
power to amend the bylaws upon the directors does not divest shareholders of the
power to amend the bylaws.
Under the DGCL, an amendment to a corporation's certificate of incorporation
must be approved by a resolution of the Board of Directors declaring the
advisability of the amendment and by the affirmative vote of a majority of the
outstanding stock entitled to vote thereon and by a majority of the outstanding
stock of each class entitled to vote thereon as a class. Under the DGCL, the
holders of the outstanding shares of a class are entitled to vote as a separate
class on a proposed amendment that would increase or decrease the aggregate
number of authorized shares of such class, increase or decrease the par value of
the shares of such class or alter or change the powers, preferences or special
rights of the shares of such class so as to affect them adversely. If any
proposed amendment would alter or change the powers, preferences or special
rights of one or more series of any class so as to affect them adversely, but
would not so affect the entire class, then only the shares of the series so
affected by the amendment will be considered a separate class for purposes of
voting by classes. Under the DGCL, a provision in a corporation's certificate of
incorporation requiring a super-majority vote of the board of directors,
stockholders or holders of any other securities having voting power may be
amended only by such super-majority vote.
The DGCL provides that stockholders may amend the bylaws of a corporation,
provided that the corporation may, in its certificate of incorporation, also
confer such power upon the board of directors.
The Baxter Bylaws provide that a majority vote of stockholders, or a
majority vote of the directors present at any meeting, may amend or alter any of
the Bylaws. The RMI Articles together with the RMI Bylaws reserve to the Board
of Directors the power to alter, amend or repeal the Bylaws or to adopt a new
code of bylaws, subject to the prior unanimous approval and recommendation for
adoption by the
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Executive Committee which consists of two members of the Board of Directors and
the President of the corporation.
ACTION BY WRITTEN CONSENT
Under the DGCL, unless otherwise provided in a corporation's certificate of
incorporation, any action that may be taken at any annual or special meeting of
stockholders may be taken without a meeting without prior notice and without a
vote, if a consent or consents in writing, setting forth the action so taken, is
signed by the holders of outstanding shares having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Utah has a similar provision but requires that for corporations in existence
prior to July 1, 1992, the consent must be by all shareholders unless a
resolution providing for a majority of shareholders is adopted. Even in such
case, the BCA prohibits the election of directors by written consent of the
shareholders unless the consent is unanimous.
The Baxter Certificate provides that no action which requires the vote or
consent of stockholders of the corporation may be taken without a meeting and
vote of stockholders, and specifically denies the power of stockholders to
consent in writing without a meeting to the taking of any action. The RMI
Articles contain no restriction on the ability of the shareholders of the
corporation to take action by written consent. The RMI Bylaws provide that
action by the written consent of all shareholders shall be as valid as if such
action had been taken at a meeting regularly called and noticed.
SPECIAL MEETING OF SHAREHOLDERS
The BCA provides that a special meeting of shareholders may be called by the
board of directors, the holders of shares representing at least 10% of the votes
at such meeting or such other persons as are authorized by the bylaws. Under the
DGCL, a special meeting of stockholders may be called by the board of directors
or by any other person authorized to do so in the certificate of incorporation
or the bylaws. Notice of a stockholders' meeting generally must be given to all
stockholders of record entitled to vote thereat not less than 10 nor more than
60 days prior to the meeting.
The Baxter Bylaws provide that special meetings of the stockholders for any
purpose may be called only by (a) the Chairman of the Board and Chief Executive
Officer or Secretary, and shall be done so upon a request in writing therefor
signed by a majority of the Directors or (b) by resolution of the Directors. The
RMI Bylaws contain a provision concerning special meetings consistent with the
provisions of the BCA described above, authorizing the Chairman of the Board and
the President, the Board of Directors, the holders of not less than one-tenth of
all the shares entitled to vote at the meeting, or any three Directors, to call
a special meeting.
VOTING IN THE ELECTION OF DIRECTORS
In an election of directors under cumulative voting, each share of stock is
entitled to a number of votes equal to the number of votes the holder of such
stock ordinarily would be entitled to cast for the election of directors
multiplied by the number of directors to be elected. A shareholder may then cast
all such votes for a single candidate or may allocate them among as many
candidates as the shareholder may choose.
Under the BCA, unless otherwise provided in the articles of incorporation,
every shareholder entitled to vote at the election of directors has the right to
cast, in person or by proxy, all of the votes to which the shareholder's shares
are entitled for as many persons as there are directors to be elected and for
whose election the shareholder has the right to vote. Directors are elected by a
plurality of votes cast by the shares entitled to vote in the election at a
meeting of shareholders at which a quorum is present. Shareholders do not have
the right to cumulate their votes for the election of directors unless the
articles of incorporation so provide.
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Under the DGCL, cumulative voting rights must be provided in a corporation's
certificate of incorporation if stockholders are to be entitled to cumulative
voting rights. The DGCL requires that elections of directors be by written
ballot, unless otherwise provided in a corporation's certificate of
incorporation.
Neither the Baxter Certificate nor the RMI Bylaws provides for cumulative
voting.
NUMBER AND QUALIFICATION OF DIRECTORS
The BCA permits the board of directors to change the authorized number of
directors by amendment to the bylaws unless the number of directors is fixed
(and not allowed to be changed) by the articles of incorporation, in which case
a change in the number of directors may be made only by amendment to the
articles of incorporation. Shareholders may also change the number of Directors.
The minimum number of individuals on a board of directors is three unless there
are only one or two shareholders. No decrease in the number of directors is
permitted to shorten the term of any incumbent director.
Under the DGCL, the minimum number of directors is one. The DGCL provides
that the number of directors shall be fixed by, or in the manner provided in,
the bylaws of a corporation unless the number of directors is fixed in the
corporation's certificate of incorporation, in which case a change in the number
of directors can be made only if the stockholders approve an amendment to the
certificate of incorporation.
The Baxter Certificate, together with the Baxter Bylaws, provides for a
variable number of Directors between 12 and 20 as fixed from time to time by the
Board of Directors. The Baxter Bylaws provide that no person shall be eligible
for reelection or appointment as a Director who, at the time of his election or
appointment is 72 years old, or older. The RMI Bylaws provide for a number of
Directors between three and seven, as the Board may from time to time determine,
who need not be shareholders of the Company. RMI has no age restrictions on its
Directors.
CLASSIFICATION OF BOARD
A classified board is one in which a certain number, but not all, of the
directors are elected on a rotating basis each year. This method of electing
directors makes changes in the composition of the board of directors, and thus a
potential change in control of a corporation, a lengthier and more difficult
process.
The BCA and the DGCL permit, but do not require, a classified board of
directors, with staggered terms under which one-half or one-third of the
directors are elected for terms of two or three years, respectively.
The Baxter Certificate provides that the Board of Directors shall be divided
into three classes, each to be elected at every third annual board meeting.
Neither the RMI Articles nor the RMI Bylaws provide for a classified Board of
Directors.
REMOVAL OF DIRECTORS
Under the BCA, directors may generally be removed, with or without cause, by
holders of a majority of the shares entitled to vote at an election of
directors, unless the articles of incorporation provide otherwise. However, in
the case of a corporation having cumulative voting, a director may not be
removed if the number of votes sufficient to elect the director under cumulative
voting is voted against removal.
Under the DGCL, a director of a corporation that does not have a classified
board of directors or cumulative voting may be removed, with or without cause,
by the holders of a majority of the outstanding shares entitled to vote at an
election of directors. In the case of a corporation having cumulative voting, if
less than the entire board is to be removed, a director may not be removed
without cause if the number of votes cast against such removal would be
sufficient to elect the director under cumulative voting. A director of a
corporation, such as Baxter, with a classified board of directors may be removed
only for
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cause, unless the certificate of incorporation otherwise provides. Neither the
Baxter Certificate nor the RMI Articles alters the statutory means by which
directors may be removed by shareholders.
FILLING VACANCIES ON THE BOARD OF DIRECTORS
Under the BCA, vacancies or new positions in the board of directors of a
corporation may be filled by vote of the shareholders or an affirmative vote of
a majority of the remaining directors (even though less than a quorum of the
board of directors). Unless the articles of incorporation provide otherwise, if
one or more directors are elected by a particular class of shareholders, only
such shareholders or the directors elected by such shareholders may fill the
vacancy. The RMI Articles do not provide otherwise.
Under the DGCL, vacancies and newly created directorships may be filled by a
majority of the directors then in office, although less than a quorum, or by a
sole remaining director, unless otherwise provided in the certificate of
incorporation or bylaws. Neither the Baxter Certificate nor the Baxter Bylaws
provide otherwise. However, if the certificate of incorporation directs that a
particular class is to elect such director, such vacancy may be filled by the
other directors elected by such class. If, at the time of filling any vacancy or
newly created directorship, the directors then in office constitute less than a
majority of the whole board as constituted immediately prior to such increase,
the Delaware Court of Chancery may, upon application of stockholders holding at
least ten percent of the total number of shares outstanding having the right to
vote for such directors, order an election to be held to fill any such vacancies
or newly created directorships or to replace the directors chosen by the
directors then in office.
TRANSACTIONS INVOLVING OFFICERS OR DIRECTORS OR INTERESTED SHAREHOLDERS
Under the BCA, a transaction between a corporation and a party related to a
director in some way may not be enjoined, set aside or create a cause of action
solely because such party has an interest in the transaction unless the
director's relationship to such party would constitute a statutory "conflicting
interest transaction." "Conflicting interest transactions" relate to beneficial
financial interests of a director or persons or entities associated with the
director so as to influence the director's decisions. A director's conflicting
interest transaction may be protected against future challenge if approved by a
majority of the disinterested directors, even if not otherwise a quorum, or if
approved by disinterested shareholders holding a majority of the shares entitled
to vote upon the matter, in each case after full disclosure.
Under the DGCL, no contract or transaction between a corporation and one or
more of its directors or officers, or between a corporation and any other entity
in which one or more of its directors or officers are directors or officers or
have a financial interest, is void or voidable solely for this reason, or solely
because the director or officer is present at or participates in the meeting of
the board or committee which authorizes the contract or transaction, or solely
because the vote of the director or officer was counted for such purpose, if (i)
the material facts as to the director's or officer's relationship or interest
and as to the contract or transaction are disclosed or known to the board of
directors or committee which in good faith authorizes the contract or
transaction by the affirmative vote of a majority of the disinterested
directors, even though the disinterested directors be less than a quorum; (ii)
the material facts as to the director's or officer's relationship or interest
and as to the contract or transaction are disclosed or known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or (iii) the contract or
transaction is fair as to the corporation as of the time it is authorized,
approved or ratified by the board of directors, a committee thereof, or the
stockholders. A corporation may make loans to, guarantee the obligations of or
otherwise assist its officers or other employees and those of its subsidiaries,
including directors who are also officers or employees, when such action, in the
judgment of the directors, may reasonably be expected to benefit the
corporation. Any such loan, guaranty or other assistance may be with or without
interest, and may be unsecured, or secured in such manner as approved by the
Board of Directors, including with a pledge of stock of the corporation.
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The RMI Articles provide for an 85% majority vote and majority vote on the
shares other than interested shareholder shares in the event a transaction with
an interested shareholder (which is defined as a 10% or greater shareholder) is
entered. Such transactions include mergers, a sale, license, mortgage, pledge,
transfer or other disposition of any substantial part of the corporation's
assets; the issuance of $1,000,000 or more of equity to such interested
shareholder; and liquidation or dissolution or any reclassification or
combination that would increase the proportional shares of the corporation held
by the interested shareholder. There are exceptions to this requirement if
protective provisions relating to the price and terms of the transaction and
disclosure are met.
INDEMNIFICATION AND LIMITATION OF LIABILITY
The BCA generally permits indemnification of a director against liability
provided there is a determination by a disinterested quorum of the directors, by
a disinterested committee of the board of directors consisting of at least two
directors, by special legal counsel or by a majority vote of a quorum of the
shareholders that the person seeking indemnification acted in good faith and in
a manner reasonably believed to be in or not opposed to the best interests of
the corporation and, in the case of any criminal proceeding, such person had no
reasonable cause to believe his conduct was unlawful. However, indemnification
in connection with a shareholder derivative suit is limited to reasonable
expenses, and a director may not be indemnified in a derivative suit in which
the director was found liable to the corporation or in connection with any other
proceeding in which the director is found liable on a charge that he derived an
improper personal benefit. Unless otherwise provided in the articles of
incorporation, indemnification is mandatory to a director who is successful in
defending an action on the merits or otherwise.
The BCA permits a corporation to adopt a provision in its charter documents
or by resolution eliminating or limiting the personal liability of a director to
the corporation or its shareholders for monetary damages for acts or failures to
act in the director's capacity as a director, except liability for financial
benefits to which the director was not entitled, intentional infliction of harm
to the corporation or shareholders, unlawful distributions or intentional
violation of criminal laws.
Under the DGCL, a corporation has the power to indemnify any person who was
or is a party, or is threatened to be made a party, to any threatened, pending
or completed action, suit or proceeding by reason of the fact that the person is
or was a director, officer, employee or agent of the corporation against
expenses, judgments, fines and settlements incurred in any such action, suit or
proceeding, other than an action by or in the right of the corporation, if the
person acted in good faith and in a manner that the person reasonably believed
to be in or not opposed to the best interests of the corporation and, in the
case of a criminal proceeding, had no reasonable cause to believe that such
person's conduct was unlawful. In the case of an action by or in the right of
the corporation, the corporation has the power to indemnify any person who was
or is a party, or is threatened to be made a party, to any threatened, pending
or completed action, suit or proceeding by reason of the fact that the person is
or was a director, officer, employee or agent of the corporation against
expenses incurred in defending or settling the action if such person acted in
good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the corporation; provided, however, that no
indemnification may be made when a person is adjudged liable to the corporation,
unless a court of competent jurisdiction determines such person is entitled to
indemnity for expenses, and then such indemnification may be made only to the
extent that such court shall determine. The DGCL requires that, to the extent an
officer, director, employee or agent of a corporation is successful on the
merits or otherwise in defense of any proceeding referred to within this
paragraph, or in defense of any claim, issue or matter therein, the corporation
must indemnify such person against expenses incurred in connection therewith.
Under the DGCL, a corporation may advance expenses incurred by an officer or
director prior to final disposition of the action, suit or proceeding upon an
undertaking by the officer or director to repay such amount if it is ultimately
determined that such officer or director is not entitled to be indemnified by
the
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corporation. Expenses of employees and agents may be advanced by the corporation
upon such terms and conditions, if any, as the board of directors deems
appropriate.
The rights to indemnification and advancement of expenses provided by the
DGCL are not exclusive of any other such rights that may be provided under a
corporation's charter or by-laws, by contract or otherwise.
Under the DGCL, a corporation may adopt a provision in its certificate of
incorporation eliminating or limiting the personal liability of a director to
the corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for (i) breaches of the director's duty of loyalty to
the corporation or its stockholders; (ii) acts or omissions not in good faith or
involving intentional misconduct or knowing violations of law; (iii) the payment
of unlawful dividends or unlawful stock repurchases or redemptions; or (iv) any
transaction in which the director received an improper personal benefit.
The Baxter Certificate provides that, to the fullest extent permitted under
Delaware law, a director of the corporation shall not be liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director. The Baxter Certificate provides that the corporation shall
indemnify officers and directors to the fullest extent permitted by Delaware
law, except with respect to an action commenced by such director or officer
against the corporation or by such director or officer as a derivative action by
or in the right of the corporation.
The RMI Articles provide for indemnification of directors, officers and
employees for reasonable expenses, including attorney's fees and amounts paid in
satisfaction or judgment or in settlement, other than amounts paid to the
corporation by him, except in relation to matters as to which it is adjudged
that such person is liable by reason of willful malfeasance, bad faith, gross
negligence or reckless disregard of duties. The RMI Articles also limit the
personal liability of directors unless there is a breach of duty of loyalty to
the corporation or its shareholders or there are acts or omissions not in good
faith or which involve intentional or knowing violations of law or where the
director has derived improper personal benefit.
MERGERS AND SALES OF SUBSTANTIALLY ALL CORPORATE ASSETS
The BCA generally requires that a majority of the shareholders of both the
acquiring and the target corporation approve statutory mergers. However, the BCA
does not require a shareholder vote of the surviving corporation in a merger if
(a) the merger occurs between a parent and its subsidiary, if the parent owns at
least 90% of the total outstanding stock of the subsidiary and certain other
provisions of the BCA are met, (b) the articles of incorporation of the
surviving corporation are not amended, (c) each shareholder of the surviving
corporation holds the same number of identical shares immediately after the
merger and (d) the number of shares issued by the surviving corporation in the
merger does not represent an increase by more than 20% of (i) the voting shares
of the corporation or (ii) the shares that would participate without limitation
in distributions unless otherwise provided in the corporation's articles of
incorporation. The board of directors may sell, lease, exchange or otherwise
dispose of all, or substantially all, of the corporation's assets without
consent or approval of the shareholders when done in the regular course of its
business and may mortgage or pledge such property whether or not in the regular
course of its business. When not done in the regular course of the corporation's
business, the disposition of all or substantially all of the corporation's
assets requires the approval of a majority of the outstanding shares of each
class.
Under the DGCL, mergers must be approved by a corporation's board of
directors and generally require the approval of the holders of a majority of the
outstanding stock of each of the merging corporations entitled to vote thereon.
Unless otherwise required in a corporation's certificate of incorporation, the
DGCL does not require a stockholder vote of the surviving corporation in a
merger if (i) the merger agreement does not amend the existing certificate of
incorporation, (ii) each share of the surviving corporation outstanding before
the merger is an identical outstanding or treasury share after the merger
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and (iii) either no shares of common stock of the surviving corporation and no
securities convertible into such stock are to be issued in the merger or the
number of shares to be issued by the surviving corporation in the merger plus
those initially issuable upon conversion of any other securities does not exceed
20% of the shares outstanding immediately prior to the merger. The DGCL also
permits a Delaware corporation to engage in a merger transaction to effect a
reorganization into a holding company structure without stockholder approval,
provided the corporation's charter does not specifically require a stockholder
vote on such a transaction and provided the various substantive and procedural
requirements of the DGCL are satisfied.
A disposition of all or substantially all of a corporation's assets must be
approved by a corporation's board of directors and requires the approval of the
holders of a majority of the outstanding stock of the corporation entitled to
vote thereon.
None of the Baxter Certificate, the Baxter Bylaws, the RMI Articles nor the
RMI Bylaws contain any additional provisions relating to mergers or sales of
substantially all corporate assets other than as set forth above under
"Transaction Involving Officers, Directors or Interested Shareholders."
DISSENTING SHAREHOLDER'S RIGHTS
Under the BCA, a shareholder is entitled to dissent from, and obtain payment
of the fair value of shares held by him, in the event of certain corporate
actions, including (i) a merger of the corporation if shareholder approval is
required or if the corporation is a subsidiary that is merged with its parent;
(ii) a share exchange to which the corporation is a party as the corporation
whose shares will be acquired; (iii) a sale of all or substantially all of the
property of a corporation other than in the regular course of the corporation's
business; and (iv) any other corporate action to the extent provided in the
articles of incorporation, bylaws or a resolution of the board of directors.
Unless otherwise provided in the charter documents or by resolutions of the
directors, dissenters' rights of appraisal are not available for any shares
which either were listed on a national securities exchange or on the Nasdaq
National Market or were held of record by more than 2,000 shareholders unless
such shareholders are to receive anything other than (i) shares of the surviving
corporation, (ii) shares which either will be listed on a national securities
exchange or on the Nasdaq National Market or will be held of record by more than
2,000 shareholders, or (iii) cash in lieu of fractional shares.
Under the DGCL, holders of shares have the right, in certain circumstances,
to dissent from certain merger or consolidation transactions and seek an
appraisal of the fair value of such shares (exclusive of any value arising from
the accomplishment or expectation of the merger or consolidation), as determined
by the Delaware Court of Chancery in an action timely brought by the corporation
or such holders. The DGCL grants appraisal rights to the shares of any class of
a constituent corporation in a statutory merger or consolidation subject to the
appraisal statute, except that such rights are not available (i) for shares of
stock of the surviving corporation if no vote of its stockholders is required
for such transaction under the DGCL and (ii) for shares of stock listed on a
national securities exchange or designated as a national market system security
on the Nasdaq National Market or held of record by more than 2,000 stockholders,
provided stockholders are not required by the terms of the merger or
consolidation to accept anything in consideration other than (i) shares of stock
of the surviving corporation, (ii) shares of stock of another corporation which
are listed on a national securities exchange or designated by Nasdaq or held of
record by more than 2,000 stockholders or (iii) cash in lieu of fractional
shares of such stock, or any combination thereof. Delaware law also permits a
corporation to grant in its certificate of incorporation appraisal rights in
connection with transactions other than statutory mergers and consolidations
otherwise subject to the foregoing provisions.
None of the Baxter Articles, the Baxter Bylaws, the RMI Articles nor the RMI
Bylaws contain any additional provision relating to dissenters' rights of
appraisal.
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SHAREHOLDER APPROVAL OF CERTAIN BUSINESS COMBINATIONS
Under the Utah Control Shares Acquisitions Act (the "CSAA"), acquisition (on
a cumulative basis) of 20% or more of the voting power of certain publicly held
Utah corporations in a "control shares acquisition" prohibits such shares, known
as "control shares," from being voted on any matter unless and until a
resolution allowing such shares to be voted is approved by a majority of the
outstanding shares of each class excluding "interested shares." "Interested
shares" are those held by the control share acquiror and all officers and
employee-directors of the Utah corporation. A corporation may "opt out" of the
CSAA in its charter documents at any time prior to a control share acquisition.
The CSAA defines "control shares" as shares of a publicly traded corporation
that, when combined with all other shares of that company owned or controlled by
one shareholder or group of shareholders acting in concert, represents 20% or
more of the voting power of the corporation in an election of directors. The
definition of "control shares acquisition" contains exceptions to the list of
transactions that would trigger application of the CSAA, including (a)
transactions entered into or agreed upon in writing before the CSAA's 1987
adoption, (b) pursuant to laws of descent and distribution, (c) pursuant to a
pledge arrangement made in good faith and not intended to circumvent the CSAA,
(d) pursuant to a merger or share exchange approved by shareholders under the
BCA and (e) in certain cases, if the shares are acquired from a shareholder that
had received approval under the CSAA or whose shares would have been outside of
the definition of control share acquisition under one of the exemptions
mentioned.
The CSAA applies only to shares of a corporation formed under the laws of
the State of Utah that has (a) 100 or more shareholders, (b) its principal
office or place of business, or substantial assets, located in Utah and (c) (i)
more than 10% of its shareholders are resident in Utah, (ii) more than 10% of
its shares are owned by Utah residents or (iii) 10,000 shareholders are Utah
residents. Shares held by banks, depositories (except as trustees), brokers or
nominees are disregarded for purposes of calculating the above percentages or
numbers. The CSAA does not state that the corporation's shares must be traded on
a stock exchange or national trading system in order to be considered an
"issuing public corporation."
Upon an acquiror obtaining a majority interest in a corporation subject to
the CSAA, other shareholders obtain dissenter's rights to appraisal and cash
payment in return for their shares, if desired, and such amount must not be less
than the amount paid for the shares acquired in the control shares acquisition.
The CSAA also contains provisions allowing the corporation to provide in its
charter documents for the ability to redeem the acquiror's shares at fair market
value under certain conditions for up to 60 days after the control share
acquisition; however, the corporation may not redeem the shares if the acquiror
files a notice with the corporation unless the shareholders refuse to grant full
voting rights.
Section 203 of the DGCL ("Section 203") prohibits a Delaware corporation
from engaging in a "business combination" with an "interested stockholder" for
three years following the time that such person becomes an interested
stockholder, subject to certain exceptions contained in Section 203. As defined
in Section 203, a business combination generally includes mergers,
consolidations, sales of 10% or more of a corporation's assets, certain stock
issuances or other transactions benefitting the interested stockholder, and
interested stockholders include, among others, persons who beneficially own 15%
or more of the outstanding voting stock of a corporation.
The three-year moratorium imposed on business combinations by Section 203
does not apply if (i) prior to the time that such stockholder becomes an
interested stockholder, the board of directors approves either the business
combination or the transaction which resulted in the person becoming an
interested stockholder; (ii) upon consummation of the transaction which made him
an interested stockholder, the interested stockholder owns at least 85% of the
corporation's voting stock outstanding at the time the transaction commenced
(excluding from the 85% calculation shares owned by directors who are also
officers of the corporation and shares held by employee stock plans which do not
permit employees to decide confidentially whether to accept a tender or exchange
offer); or (iii) at or after the time such person becomes an interested
stockholder, the board approves the business combination and it is also approved
at
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a stockholder meeting (and not by written consent) by at least 66 2/3% of the
outstanding voting stock not owned by the interested stockholder.
Section 203 only applies to Delaware corporations which have a class of
voting stock that is listed on a national securities exchange, are authorized
for quotation on the NASDAQ Stock Market or are held of record by more than
2,000 stockholders. However, a Delaware corporation may elect not to be governed
by Section 203 by a provision in its original certificate of incorporation or an
amendment thereto or to the bylaws, which amendment must be approved by the
holders of a majority of shares entitled to vote and any such by-law amendment
may not be further amended by the board of directors. Neither the Baxter
Certificate nor the Baxter Bylaws contains such a provision.
The Baxter Bylaws require the affirmative vote of the holders of not less
than a majority of the voting stock of Baxter before Baxter may purchase any
outstanding shares of common stock at a price above the market price from a
selling stockholder, except with respect to purchases made as part of a tender
or exchange offer by the corporation or any purchaser or acquisition made
pursuant to an open market purchase program approved by the board of directors.
Neither the RMI Articles nor the RMI Bylaws contain any additional provisions
relating to transactions with interested shareholders or other takeover
situations, other than as provided above.
INSPECTION OF SHAREHOLDER LIST, BOOKS AND RECORDS
Both the BCA and the DGCL allow any shareholder to inspect and copy a
corporation's shareholder list for a purpose reasonably related to such person's
interest as a shareholder.
The BCA allows any director or shareholder to inspect and copy for any
purpose the corporation's charter documents; list of officers and directors;
most recent annual report; and, for the past three years, financial statements
and minutes of shareholder meetings, actions and written communications. In
addition, any director or shareholder may inspect and copy minutes of board of
directors and shareholders meetings and actions, accounting records and
shareholder lists upon demand made in good faith for a purpose reasonably
related to the demanding shareholder's or director's interest as a shareholder
or director. Such information may not be used for other purposes.
The DGCL allows any stockholder complying with the procedural requirements
of the statute to inspect a corporation's stock ledger, stockholders' list and
other books and records for a purpose reasonably related to such person's
interest as a stockholder. Directors, whether or not stockholders, have a
similar right for purposes reasonably related to their positions as directors.
None of the Baxter Articles, the Baxter Bylaws, the RMI Articles, nor the
RMI Bylaws contain any additional provisions relating to the inspection of the
shareholder list, books and records.
SHAREHOLDER DERIVATIVE SUITS
Under the BCA, a shareholder may only bring a derivative action on behalf of
the corporation if the shareholder was a shareholder when the transaction
complained of occurred or he became a shareholder through transfer by operation
of law from someone who was a shareholder at that time. The suing shareholder
must explain what request, if any, was made to the board of directors and that
the request was refused or ignored or why the shareholder did not make such a
demand. Dismissal of such a proceeding requires court approval.
Under the DGCL, a stockholder may bring a derivative action on behalf of the
corporation only if the stockholder was a stockholder of the corporation at the
time of the matter in question or the stockholder's stock thereafter devolved
upon the stockholder by operation of law.
Neither the Baxter Certificate nor the Baxter Bylaws contain any additional
provision relating to shareholder derivative suits, except with respect to
limiting the indemnification of directors and officers
52
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who bring derivative actions against the corporation. Neither the RMI Articles
nor the RMI Bylaws contain any additional provision relating to shareholder
derivative suits.
DURATION OF PROXIES
Under the BCA, a proxy appointment is ordinarily valid only for 11 months.
Proxies may be given by facsimile or other electronic transmission.
Under the DGCL, proxies may not have a duration of more than three years,
unless the proxy provides for a longer period. Proxies may be given by facsimile
or other electronic transmission.
The Baxter Bylaws and the RMI Bylaws contain provisions consistent with the
provisions of the DGCL and the BCA, respectively, regarding the duration of
proxies.
DISSOLUTION
Under the BCA, the Board of Directors of the corporation must recommend
dissolution (unless there are conflicts or other special circumstances and the
Board communicates such to the shareholders) and a majority of all votes
entitled to be cast in each voting group must authorize such dissolution unless
a greater vote is required by the charter documents or the board of directors.
Under the DGCL, unless the board of directors approves a proposal to
dissolve a corporation, the dissolution must be approved by stockholders holding
100% of the shares entitled to vote upon the dissolution. If the dissolution is
initiated by the board of directors, it need only be approved by the
stockholders holding a majority of the shares entitled to vote upon the
dissolution.
LEGAL MATTERS
The legality of the Baxter Common Stock offered hereby and certain other
matters with respect to the Merger will be passed upon for Baxter by Skadden,
Arps, Slate, Meagher & Flom LLP. Legal issues related to the Merger Agreement
will be passed on for RMI by Ray, Quinney & Nebeker. As of the Record Date,
attorneys at Ray, Quinney & Nebeker, as a group, were beneficial owners of 2,400
RMI shares and no Baxter shares.
EXPERTS
The consolidated financial statements as of December 31, 1995 and 1994, and
for each of the three years in the three-year period ended December 31, 1995,
incorporated in this Proxy Statement/Prospectus by reference from Baxter's
Annual Report on Form 10-K have been so incorporated in reliance on the report
of Price Waterhouse LLP, independent accountants, and have been given on the
authority of that firm as experts in auditing and accounting.
The consolidated financial statements of RMI and subsidiaries as of June 30,
1996 and 1995, and for each of the years in the three-year period ended June 30,
1996, have been incorporated by reference in this Proxy Statement/Prospectus in
reliance on the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference in this Proxy Statement/Prospectus, and
upon the authority of said firm as experts in accounting and auditing.
With respect to the unaudited consolidated financial information of Baxter
for the three-month periods ended March 31, 1996 and 1995, the three-month and
six month periods ended June 30, 1996 and 1995 and the nine-month periods ended
September 30, 1996 and 1995, all incorporated by reference in this Proxy
Statement/Prospectus, Price Waterhouse LLP reported that they have applied
limited procedures in accordance with professional standards for a review of
such information. However, their separate reports dated May 14, 1996, August 13,
1996 and November 11, 1996, incorporated by reference herein, state that
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they did not audit and they do not express an opinion on such unaudited
consolidated financial information. Price Waterhouse LLP has not carried out any
significant or additional audit tests beyond those which would have been
necessary if their reports had not been included. Accordingly, the degree of
reliance on their reports on such information should be restricted in light of
the limited nature of the review procedures applied. Price Waterhouse LLP is not
subject to the liability provisions of section 11 of the Securities Act of 1933
for their reports on the unaudited consolidated financial information because
those reports are not a "report" or a "part" of the registration statement
prepared or certified by Price Waterhouse LLP within the meaning of sections 7
and 11 of the Act.
SHAREHOLDER PROPOSALS
If the Merger is consummated, RMI will not hold an annual meeting of
shareholders in 1997. In the event the Merger is not consummated, any
shareholder of RMI who wishes to present a proposal at the 1997 annual meeting
of shareholders of the Company and who wishes to have such proposal included in
the Company's proxy material for that meeting must deliver a copy of such
proposal to RMI at 6864 South 300 West, Salt Lake City, Utah 84047, Attention
Mark W. Winn, Secretary, for receipt not later than July 31, 1997.
From time to time Baxter stockholders present proposals which may be proper
subjects for inclusion in Baxter's proxy statement and for consideration at
Baxter's annual meeting. The deadline for submission of stockholder proposals
for inclusion in Baxter's proxy statement for Baxter's 1997 annual meeting has
already passed.
However, stockholders may present proposals which are proper subjects for
consideration at an annual meeting, even if the proposal is not submitted by the
deadline for inclusion in the proxy statement. To do so, the stockholder must
comply with the procedures specified in the Baxter Bylaws. The Baxter Bylaws
require all stockholders who intend to make proposals at an annual stockholders
meeting to submit their proposals to Baxter 60 to 90 days before the anniversary
date of the previous year's annual meeting. To be eligible for consideration at
the 1997 annual meeting, proposals which have not been submitted by the deadline
for inclusion in the proxy statement must be received by Baxter between February
6 and March 7, 1997. The provision is intended to allow all stockholders to have
an opportunity to consider business expected to be raised at the meeting.
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ANNEX A
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
BAXTER INTERNATIONAL INC.,
BAXTER CVG SERVICES III, INC.
AND
RESEARCH MEDICAL, INC.
DATED AS OF DECEMBER 3, 1996
AMENDED AND RESTATED AS OF FEBRUARY 4, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
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<S> <C> <C>
ARTICLE I THE MERGER..................................................................................... A-1
Section 1.1 The Merger............................................................................. A-1
Section 1.2 Effective Time of the Merger........................................................... A-1
ARTICLE II THE SURVIVING CORPORATION..................................................................... A-1
Section 2.1 Articles of Incorporation.............................................................. A-1
Section 2.2 Bylaws................................................................................. A-1
Section 2.3 Directors and Officers of Surviving Corporation........................................ A-2
ARTICLE III CONVERSION OF SHARES......................................................................... A-2
Section 3.1 Merger Consideration................................................................... A-2
Section 3.2 Exchange of Certificates Representing Shares........................................... A-3
Section 3.3 Dividends.............................................................................. A-3
Section 3.4 No Fractional Shares................................................................... A-3
Section 3.5 Closing of Company Transfer Books...................................................... A-3
Section 3.6 Unclaimed Amounts...................................................................... A-3
Section 3.7 Lost Certificates...................................................................... A-4
Section 3.8 Closing................................................................................ A-4
Section 3.9 Shareholders' Meeting.................................................................. A-4
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................................. A-4
Section 4.1 Organization and Qualification; Subsidiaries........................................... A-5
Section 4.2 Capitalization......................................................................... A-5
Section 4.3 Authority.............................................................................. A-6
Section 4.4 Consents and Approvals; No Violation................................................... A-6
Section 4.5 Company SEC Reports.................................................................... A-7
Section 4.6 Financial Statements................................................................... A-7
Section 4.7 Absence of Undisclosed Liabilities..................................................... A-8
Section 4.8 Absence of Certain Changes............................................................. A-8
Section 4.9 Taxes.................................................................................. A-9
Section 4.10 Litigation............................................................................. A-9
Section 4.11 Employee Benefit Plans; ERISA.......................................................... A-9
Section 4.12 Environmental Matters.................................................................. A-11
Section 4.13 Compliance with Applicable Laws........................................................ A-12
Section 4.14 Material Contracts..................................................................... A-12
Section 4.15 Intellectual Property Rights........................................................... A-13
Section 4.16 Fraud and Abuse........................................................................ A-14
Section 4.17 Insurance.............................................................................. A-15
Section 4.18 Opinion of Financial Advisor........................................................... A-15
Section 4.19 Utah Law............................................................................... A-15
Section 4.20 Company Disclosure..................................................................... A-15
Section 4.21 Patent Opinion......................................................................... A-15
Section 4.22 Labor Matters.......................................................................... A-15
Section 4.23 WARN Act............................................................................... A-16
Section 4.24 Transactions with Related Parties...................................................... A-16
Section 4.25 Suppliers and Customers................................................................ A-16
Section 4.26 Accounts Receivable.................................................................... A-16
Section 4.27 Absence of Certain Payments............................................................ A-16
</TABLE>
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Section 4.28 Title to Properties; Absence of Liens and Encumbrances; Condition of Equipment;
Condition of Inventory............................................................... A-17
Section 4.29 FDA Matters............................................................................ A-17
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BAXTER AND PURCHASER.........................................
A-17
Section 5.1 Organization........................................................................... A-18
Section 5.2 Capitalization; Registration Rights.................................................... A-18
Section 5.3 Authority.............................................................................. A-18
Section 5.4 Consent and Approvals; No Violation.................................................... A-18
Section 5.5 Purchaser's Operations................................................................. A-19
Section 5.6 No Shares Owned by Baxter, Purchaser or Affiliates..................................... A-19
Section 5.7 Baxter SEC Reports..................................................................... A-19
Section 5.8 Baxter Disclosure...................................................................... A-19
Section 5.9 Baxter Financial Statements............................................................ A-20
ARTICLE VI COVENANTS OF THE COMPANY...................................................................... A-20
Section 6.1 Ordinary Course........................................................................ A-20
Section 6.2 Advice of Changes...................................................................... A-21
Section 6.3 Rule 145 Affiliates.................................................................... A-22
Section 6.4 No Solicitation........................................................................ A-22
Section 6.5 No WARN Act Activities................................................................. A-22
Section 6.6 Termination of Employee Stock Purchase Plan............................................ A-23
ARTICLE VII COVENANTS OF BAXTER AND PURCHASER............................................................ A-23
Section 7.1 Directors' and Officers' Indemnification and Insurance................................. A-23
Section 7.2 Continuation of Operations............................................................. A-24
Section 7.3 NYSE Listing........................................................................... A-24
Section 7.4 Baxter Public Information.............................................................. A-24
Section 7.5 Employee Benefits...................................................................... A-24
Section 7.6 Third Party Beneficiaries.............................................................. A-24
Section 7.7 Employment Offer....................................................................... A-24
ARTICLE VIII MUTUAL COVENANTS............................................................................ A-24
Section 8.1 Access to Information; Confidentiality................................................. A-24
Section 8.2 HSR Act................................................................................ A-25
Section 8.3 Consents and Approvals................................................................. A-25
Section 8.4 Notification of Certain Matters........................................................ A-26
Section 8.5 Brokers or Finders..................................................................... A-26
Section 8.6 Publicity.............................................................................. A-26
Section 8.7 Registration Statement................................................................. A-26
Section 8.8 Additional Agreements.................................................................. A-27
Section 8.9 Tax-Free Reorganization................................................................ A-27
Section 8.10 Pre-Closing Adjustments................................................................ A-27
ARTICLE IX CONDITIONS TO CONSUMMATION OF THE MERGER...................................................... A-28
Section 9.1 Conditions to Each Party's Obligation to Effect the Merger............................. A-28
Section 9.2 Conditions of Obligations of Baxter and Purchaser...................................... A-28
Section 9.3 Conditions of Obligations of the Company............................................... A-29
</TABLE>
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ARTICLE X TERMINATION, AMENDMENT AND WAIVER.............................................................. A-30
Section 10.1 Termination............................................................................ A-30
Section 10.2 Effect of Termination and Abandonment.................................................. A-31
ARTICLE XI GENERAL PROVISIONS............................................................................ A-31
Section 11.1 Fees and Expenses...................................................................... A-31
Section 11.2 Amendment and Modification............................................................. A-31
Section 11.3 Nonsurvival of Representations and Warranties.......................................... A-31
Section 11.4 Notices................................................................................ A-31
Section 11.5 Definitions; Interpretation............................................................ A-32
Section 11.6 Counterparts........................................................................... A-32
Section 11.7 Entire Agreement; No Third Party Beneficiaries......................................... A-32
Section 11.8 Severability........................................................................... A-33
Section 11.9 Governing Law.......................................................................... A-33
Section 11.10 Assignment............................................................................. A-33
EXHIBIT 4.21--Patent Opinion
EXHIBIT 6.3--Rule 145 Affiliate Agreement
EXHIBIT 9.2(d)(i)--Company Officers Certificate
EXHIBIT 9.2(d)(ii)--Company Secretary's Certificate
EXHIBIT 9.2(f)(i)--Company In-House Counsel Opinion
EXHIBIT 9.2(f)(ii)--Ray, Quinney & Nebeker Opinion
SCHEDULE 9.2(g)--Employment Agreements
EXHIBIT 9.2(g).A--Employment Agreement of Gary L. Crocker
EXHIBIT 9.2(g).B--Employment Agreement of Other Executives
EXHIBIT 9.2(g).C--Retention Bonus Agreement of Mark Winn
SCHEDULE 9.2(h)--Stock Options
EXHIBIT 9.3(d)(i)--Baxter Officer's Certificate
EXHIBIT 9.3(d)(ii)--Baxter Secretary's Certificate
EXHIBIT 9.3(e)(i)--Baxter In-House Counsel Opinion
EXHIBIT 9.3(e)(ii)--SASMF Opinion
</TABLE>
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AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated as of December 3,
1996, as amended and restated on February 4, 1997 (the "Agreement"), by and
among Baxter International Inc., a Delaware corporation ("Baxter"), Baxter CVG
Services III, Inc., a Utah corporation and a wholly owned subsidiary of Baxter
("Purchaser"), and Research Medical, Inc., a Utah corporation (the "Company").
WHEREAS, the respective Boards of Directors of Baxter, Purchaser and the
Company have previously approved the merger (the "Merger") of Purchaser into the
Company, upon the terms and subject to the conditions set forth in the Agreement
and Plan of Merger, dated as of December 3, 1996 (the "Original Agreement"), by
and among Baxter, Purchaser and the Company;
WHEREAS, Baxter, Purchaser and the Company have previously entered into
AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER, dated as of February 4, 1997
(the "Amendment"); and
WHEREAS, Baxter, Purchaser and the Company desire to restate the Original
Agreement so as to incorporate certain technical changes to Sections 2.1 and
3.1(b) of the Original Agreement, such changes having been agreed to by the
parties in the Amendment.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 THE MERGER. Upon the terms and subject to the conditions
hereof, at the Effective Time (as defined in Section 1.2 hereof), Purchaser
shall be merged with and into the Company and the separate corporate existence
of Purchaser shall thereupon cease, and the Company shall be the surviving
corporation in the Merger (the "Surviving Corporation") and all of its rights,
privileges, powers, immunities, purposes and franchises shall continue
unaffected by the Merger. The Merger shall have the effects set forth in Section
16-10a-1106 of the Utah Business Corporation Act (the "UBCA").
Section 1.2 EFFECTIVE TIME OF THE MERGER. The Merger shall become
effective when properly executed Articles of Merger meeting the requirements of
Section 16-10a-1105 of the UBCA are duly filed with the Utah Division of
Corporations and Commercial Code or at such later time as the parties hereto
shall have designated in such filing as the Effective Time of the Merger (the
"Effective Time"), which filing shall be made as soon as practicable after the
closing of the transactions contemplated by this Agreement in accordance with
Section 3.8 hereof.
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 ARTICLES OF INCORPORATION. The Articles of Incorporation of
the Company as in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation.
Section 2.2 BYLAWS. The Bylaws of Purchaser as in effect immediately prior
to the Effective Time shall be the Bylaws of the Surviving Corporation.
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Section 2.3 DIRECTORS AND OFFICERS OF SURVIVING CORPORATION. (a) The
directors of Purchaser immediately prior to the Effective Time shall be the
directors of the Surviving Corporation as of the Effective Time.
(b) The officers of the Company immediately prior to the Effective Time
shall be the officers of the Surviving Corporation as of the Effective Time and
shall hold office from the Effective Time until their respective successors are
duly elected or appointed and qualify in the manner provided in the Articles of
Incorporation and Bylaws of the Surviving Corporation, or as otherwise provided
by law.
ARTICLE III
CONVERSION OF SHARES
Section 3.1 MERGER CONSIDERATION. As of the Effective Time, by virtue of
the Merger and without any action on the part of the holder thereof:
(a) Each share of Company Common Stock (as hereinafter defined) owned by any
wholly owned subsidiary of the Company and each share of Company Common Stock
held by Baxter, or any subsidiary of Baxter shall be cancelled and retired and
cease to exist and no consideration shall be delivered in exchange therefor.
(b) Each share of Company Common Stock issued and outstanding immediately
prior to the Effective Time, other than Company Common Stock to be cancelled in
accordance with Section 3.1(a) (the "Shares") shall be converted into the right
to receive (the "Merger Consideration") the fraction of a share (calculated and
rounded to the nearest ten-thousandth of one share) of Common Stock, par value
$1 per share of Baxter ("Baxter Shares"), the numerator of which fraction shall
be (i) $23.50, and the denominator of which shall be (ii) the Baxter Stock Price
(as defined herein). All such Shares, when so converted, shall no longer be
outstanding and shall automatically be cancelled and retired and shall cease to
exist, and each holder of a certificate formerly representing any such Shares
(each, a "Certificate") shall cease to have any rights with respect thereto,
except to receive the Merger Consideration, without interest upon surrender of
such Certificates.
(c) For purposes of calculating the Merger Consideration, the "Baxter Stock
Price" shall be an amount equal to the average closing sale price of a Baxter
Share on the New York Stock Exchange ("NYSE"), as such closing sale price shall
be reported in THE WALL STREET JOURNAL or, if not available, such other
authoritative publication as may be reasonably selected by Baxter, for the ten
(10) consecutive trading days ending on and including the second trading day
prior to the date of the Special Meeting (as defined herein) at which this
Agreement is approved.
(d) Immediately prior to the Effective Time, each outstanding employee and
director option (individually, an "Option") outstanding at the Effective Time
granted under the Company's (i) Long-Term Equity Based Incentive Plan, (ii)
Non-Employee Director Stock Option and SAR Plan, (iii) 1994 Supplemental Equity
Based Incentive Plan and (iv) any other stock option plan or arrangement of the
Company or any Subsidiary (as defined herein) of the Company (collectively, the
"Company Stock Option Plans"), shall, whether vested or unvested, by virtue of
the Merger and without any further action on the part of the Company or the
holder of such Option, be cancelled in consideration for payment by the Company,
at or immediately prior to the Effective Time, to the holder of such Option an
amount in cash equal to (i) the product of (A) the Merger Consideration
(expressed as a fraction), (B) the Baxter Stock Price, and (C) the number of
Shares subject to such Option, less (ii) the aggregate exercise price of such
Option.
(e) Each share of common stock, par value $.01 per share, of Purchaser
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one fully paid and nonassessable share of Common Stock
of the Surviving Corporation.
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Section 3.2 EXCHANGE OF CERTIFICATES REPRESENTING SHARES. (a) On the date
of the Effective Time, Baxter shall deposit, or shall cause to be deposited,
with an exchange agent selected by Baxter and reasonably satisfactory to the
Company (the "Exchange Agent"), for the benefit of the holders of Shares, for
exchange in accordance with this Article III, (i) certificates representing the
number of Baxter Shares issuable as part of the Merger Consideration (exclusive
of shares to be cancelled pursuant to Section 3.1(a)), and (ii) from time to
time as requested by the Exchange Agent, cash to be paid in lieu of the issuance
of fractional shares as provided in Section 3.4 hereof (such cash and
certificates for Baxter Shares, if any, together with dividends or distributions
with respect thereto being hereinafter referred to collectively as the "Exchange
Fund").
(b) At the Effective Time, Baxter shall cause the Exchange Agent to mail (or
deliver at its principal office) to each holder of record of Shares (i) a letter
of transmittal which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions, including appropriate provisions with respect to back-up
withholding, as Baxter may reasonably specify, and (ii) instructions for use in
effecting the surrender of the Certificates. Upon surrender of a Certificate for
cancellation to the Exchange Agent, together with such letter of transmittal,
duly executed and completed in accordance with the instructions thereto, the
holder thereof shall be entitled to receive in exchange therefor that portion of
the Exchange Fund which such holder has the right to receive pursuant to the
provisions of this Article III, after giving effect to any required withholding
tax, and the Certificate so surrendered shall forthwith be cancelled. No
interest will be paid or accrued on the cash to be paid as part of the Merger
Consideration. In the event of any transfer of ownership of Shares which has not
been registered in the transfer records of the Company, certificates
representing the proper number of Baxter Shares, if any, together with a check
in an amount equal to the cash component of the Exchange Fund, will be issued to
the transferee of the Certificate presented to the Exchange Agent, accompanied
by all documents required to evidence and effect the prior transfer thereof and
to evidence that any applicable stock transfer taxes associated with such
transfer were paid.
Section 3.3 DIVIDENDS. No dividends or other distributions with respect to
Baxter Shares constituting part of the Merger Consideration shall be paid to the
holder of any unsurrendered Certificates until such Certificates are surrendered
as provided in Section 3.1. Upon such surrender, all dividends and other
distributions payable in respect of the Baxter Shares to be issued in exchange
therefor on a date subsequent to, and in respect of a record date after the
Effective Time, shall be paid, without interest, to the person in whose name the
certificates representing the Baxter Shares into which such Shares were
converted are registered or as otherwise directed by that person. In no event
shall the person entitled to receive such dividends or distributions be entitled
to receive interest on any such dividends or distributions.
Section 3.4 NO FRACTIONAL SHARES. No certificates or scrip representing
fractional Baxter Shares shall be issued upon the surrender of Certificates
pursuant to this Article III and no dividend, stock split or other change in the
capital structure of the Company shall relate to any fractional interest, and
such fractional interests shall not entitle the owner thereof to vote or to any
rights of a security holder. In lieu of any such fractional interest, each
holder of a Certificate who would otherwise have been entitled to a fraction of
a Baxter Share upon surrender of Certificates pursuant to this Article III shall
be paid cash upon such surrender in an amount equal to the product of such
fraction multiplied by the Baxter Stock Price.
Section 3.5 CLOSING OF COMPANY TRANSFER BOOKS. At the Effective Time, the
stock transfer books of the Company shall be closed and no transfer of Shares
shall thereafter be made. If, after the Effective Time, Certificates are
presented to the Surviving Corporation, they shall be cancelled and exchanged as
provided in this Article III.
Section 3.6 UNCLAIMED AMOUNTS. Any portion of the Exchange Fund which
remains unclaimed by the former stockholders of the Company six months after the
Effective Time shall be delivered by the
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Exchange Agent to Baxter. Any former stockholders of the Company who have not
theretofore complied with this Article III shall thereafter look only to Baxter
for payment of the Merger Consideration, cash in lieu of fractional shares, and
unpaid dividends and distributions in respect of Baxter Shares deliverable as
part of the Merger Consideration as determined pursuant to this Agreement, in
all cases without any interest thereon. None of Baxter, the Surviving
Corporation, the Exchange Agent or any other person will be liable to any former
holder of Shares for any amount properly delivered to a public official pursuant
to applicable abandoned property, escheat or similar laws.
Section 3.7 LOST CERTIFICATES. In the event any Certificate shall have
been lost, stolen or destroyed, upon the making and delivery of an affidavit of
that fact by the person claiming such Certificate to have been lost, stolen or
destroyed and, if required by Baxter, the posting by such person of a bond in
such reasonable amount as Baxter may direct as indemnity against any claim that
would be made against the Company or Baxter with respect to such Certificate,
the Exchange Agent shall issue in exchange for such lost, stolen or destroyed
Certificate the portion of the Exchange Fund deliverable in respect thereof
pursuant to this Agreement.
Section 3.8 CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Skadden, Arps,
Slate, Meagher & Flom LLP 10 a.m., local time, on the later of (a) twenty (20)
business days after the mailing of the Company Proxy Statement/Prospectus (as
defined in Section 8.7 below) and (b) the business day on which all of the
conditions set forth in Article IX hereof are satisfied or waived, or at such
other date, time and place as Baxter and the Company shall agree (the "Closing
Date").
Section 3.9 SHAREHOLDERS' MEETING. If required by applicable law in order
to consummate the Merger, the Company, acting through its Board of Directors,
shall, in accordance with applicable law:
(a) duly call, give notice of, convene and hold a special meeting of its
shareholders (the "Special Meeting") as soon as practicable following the
execution of this Agreement, such notice shall indicate that one of the purposes
of the Special Meeting is to consider the Merger;
(b) prepare and file with the Securities and Exchange Commission (the "SEC")
a preliminary proxy or information statement relating to the Merger and this
Agreement and use its reasonable efforts (x) to obtain and furnish the
information required to be included by the SEC in the Company Proxy Statement/
Prospectus and, after consultation with Baxter, to respond promptly to any
comments made by the SEC with respect to the preliminary proxy or information
statement and cause a definitive proxy or information statement (the "Company
Proxy Statement") to be mailed to its shareholders and (y) to obtain the
necessary approvals of the Merger and this Agreement by its shareholders; and
(c) include in the Company Proxy Statement/Prospectus (x) a summary of the
plan of merger contemplated by the Agreement and (y) the recommendation of the
Board of Directors that the shareholders of the Company vote in favor of the
approval of the Merger and the adoption of this Agreement unless the Board of
Directors determines after consultation with independent counsel that because of
a conflict of interest or other special circumstances it should make no
recommendation and the Board of Directors communicates the basis for such
determination in the Company Proxy Statement/ Prospectus.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as otherwise disclosed to Baxter and Purchaser in a letter delivered
to them prior to the execution hereof (which letter shall contain appropriate
references to identify the representations and warranties herein to which the
information in such letter relates) (the "Company Disclosure Letter"), the
Company represents and warrants to Baxter and Purchaser as follows:
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Section 4.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. (a) The Company
is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Utah, is duly qualified to do business as a foreign corporation and is in good
standing in the jurisdictions listed on Section 4.1(a) of the Company Disclosure
Letter, which include each jurisdiction in which the character of the Company's
properties or the nature of its business makes such qualification necessary,
except in jurisdictions, if any, where the failure to be so qualified would not
result in a Material Adverse Effect (as defined below). The Company has all
requisite corporate or other power and authority to own, use or lease its
properties and to carry on its business as it is now being conducted and as it
is now proposed to be conducted. The Company has delivered to Baxter or its
affiliate a complete and correct copy of its Articles of Incorporation and
Bylaws, each as currently in effect. The Company is not in default in any
respect in the performance, observation or fulfillment of any provision of its
Articles of Incorporation or Bylaws.
(b) Section 4.1(b) of the Company Disclosure Letter lists the name and
jurisdiction of organization of each Subsidiary (as defined below) and the
jurisdictions in which each such Subsidiary is qualified or holds licenses to do
business as a foreign corporation as of the date hereof. Each of the
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, is duly qualified
to do business as a foreign corporation and is in good standing in the
jurisdictions listed on Section 4.1(b) of the Company Disclosure Letter, which
include each jurisdiction in which the character of such Subsidiary's properties
or the nature of its business makes such qualification necessary, except in
jurisdictions, if any, where the failure to be so qualified would not result in
a Material Adverse Effect. Each of the Subsidiaries has the requisite corporate
or other power and authority to own, use or lease its properties and to carry on
its business as it is now being conducted and as it is now proposed to be
conducted. Each of such Subsidiaries is operating in accordance with all
applicable laws and regulations of its jurisdiction of incorporation, except
where the failure so to operate would not result in a Material Adverse Effect.
The Company has delivered to Baxter or its affiliate a complete and correct copy
of the Articles of Incorporation and Bylaws (or similar charter documents) of
each of the Subsidiaries, each as currently in effect. No Subsidiary is in
default in any respect in the performance, observation or fulfillment of any
provision of its Articles of Incorporation or Bylaws (or similar charter
documents).
(c) For purposes of this Agreement, (i) a "Material Adverse Effect" shall
mean any event, circumstance, condition, development or occurrence, individually
or in the aggregate, causing, resulting in or reasonably likely to have a
material adverse effect on the condition (financial or otherwise), business,
assets, properties, prospects or results of operations of the Company and its
Subsidiaries taken as a whole, (ii) "subsidiary" shall mean, with respect to any
party, any corporation or other organization, whether incorporated or
unincorporated, of which (x) at least 50 percent or more of the securities or
other interests having voting power to elect a majority of the Board of
Directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled
by such party or by any one or more of its subsidiaries, or by such party and
one or more of its subsidiaries, or (y) such party or any other subsidiary of
such party is a general partner (excluding such partnerships where such party or
any subsidiary of such party do not have a majority of the voting interest in
such partnership); and (iii) "Subsidiary" shall mean any subsidiary of the
Company.
Section 4.2 CAPITALIZATION. (a) The authorized capital shares of the
Company consists solely of 20,000,000 common shares $.50 par value per share
(the "Company Common Stock"), of which (i) 9,628,706 shares are issued and
outstanding; (ii) no shares are issued and held in the treasury of the Company;
(iii) 687,660 shares are reserved for issuance upon exercise of outstanding
Options under the Company Stock Plans; (iv) no shares are reserved for issuance
under the Employee Stock Purchase Plan; and (v) 170,000 shares are reserved for
issuance under non-employee stock option agreements. No agreement or other
document grants or imposes on any shares of the Company Common Stock any right,
preference, privilege or restriction with respect to the transaction
contemplated hereby (including, without limitation, any rights of first refusal)
other than the right to vote on the Merger. All of the issued and outstanding
shares of the Company Common Stock are, and all shares that may be issued
pursuant to the
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exercise of outstanding Options will be, when issued in accordance with the
terms thereof, duly authorized, validly issued, fully paid, nonassessable and
free of preemptive rights. There are no bonds, debentures, notes or other
indebtedness having general voting rights (or convertible into securities having
such rights) ("Voting Debt") of the Company or any of its Subsidiaries issued
and outstanding. There are no employee or director stock appreciation rights
with respect to the Shares (each, an "SAR") of the Company or any of its
Subsidiaries issued and outstanding. Except as set forth above, (i) there are no
shares of the Company authorized, issued or outstanding and (ii) there are no
existing options, warrants, calls, preemptive rights, subscriptions or other
rights, agreements, arrangements or commitments of any character (including
without limitation "earn-out" arrangements) obligating the Company or any of its
Subsidiaries to issue, transfer or sell or cause to be issued, transferred or
sold any shares of or Voting Debt of, or other equity interest in, or any
interest relating to or whose value is dependent on the value of the equity
interest in, the Company or any of its Subsidiaries or securities convertible
into or exchangeable for such shares or equity interests or obligations of the
Company or any of its Subsidiaries to grant, extend or enter into any such
option, warrant, call, subscription or other right, agreement, arrangement or
commitment. There are no outstanding contractual obligations of the Company or
any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of
the Company or any Subsidiary or affiliate of the Company or to provide funds to
make any investment (in the form of a loan, capital contribution or otherwise)
in any Subsidiary or any other entity.
(b) There are no voting trusts or other agreements or understandings to
which the Company or any of its Subsidiaries is a party with respect to the
voting of the shares of the Company or any of the Subsidiaries. None of the
Company or its Subsidiaries will be required to redeem, repurchase or otherwise
acquire shares of capital stock of the Company or any of its Subsidiaries,
respectively, as a result of the transactions contemplated by this Agreement.
(c) All of the issued and outstanding shares of capital stock of each
Subsidiary are owned beneficially and of record by the Company or a wholly owned
subsidiary of the Company, free and clear of all liens, charges, pledges,
encumbrances, equities, voting restrictions, claims and options of any nature,
and all such shares have been duly authorized, validly issued and are fully
paid, nonassessable and free of preemptive rights. The Company has not made,
directly or indirectly, any material investment in, advance to or purchase or
guaranty of any obligations of, any entity other than such Subsidiaries.
Section 4.3 AUTHORITY. The Company has full corporate power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby on the part of the Company
have been duly and validly authorized by the Company's Board of Directors, and
no other corporate proceedings on the part of the Company are necessary, as a
matter of law or otherwise for the consummation of the transactions contemplated
hereby other than the approval of the Merger by the Company's shareholders at
the Special Meeting. This Agreement has been duly and validly executed and
delivered by the Company and is a valid and binding agreement of the Company,
enforceable against it in accordance with its terms. The Merger will not entitle
any shareholder of the Company to Dissenter's rights under Part 13 of the UBCA.
Section 4.4 CONSENTS AND APPROVALS; NO VIOLATION. The execution and
delivery of this Agreement, the consummation of the transactions contemplated
hereby and the performance by the Company of its obligations hereunder will not:
(a) conflict with or result in any breach of any provision of the Company's
Articles of Incorporation or Bylaws or the Articles of Incorporation or Bylaws
(or other similar charter documents) of any of its Subsidiaries;
(b) require any consent, approval, order, authorization or permit of, or
registration, filing with or notification to, any governmental or regulatory
authority or agency (a "Governmental Entity") or any private third party, except
for (i) the filing of a pre-merger notification and report form by the Company
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under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), (ii) the filing with the SEC of the Company Proxy
Statement/Prospectus relating to the approval by the Company's shareholders of
this Agreement, if such approval is required by law and such reports under
Section 13(a) of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act") as may be required in connection with this Agreement and the
transactions contemplated hereby and (iii) the filing of the Articles of Merger
with the Utah Division of Corporations and Commercial Code;
(c) result in any violation of or the breach of or constitute a default
(with notice or lapse of time or both) under (or give rise to any right of
termination, cancellation or acceleration or guaranteed payments under or to a
loss of a material benefit or result in the creation or imposition of a lien
under) any of the terms, conditions or provisions of any note, lease, mortgage,
indenture, license, agreement or other instrument or obligation to which the
Company or any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries or any of their respective properties or assets may be bound,
except for such violations, breaches, defaults, or rights of termination,
cancellation or acceleration, or losses as to which requisite waivers or
consents have been obtained or will be obtained prior to the Effective Time or
which, individually or in the aggregate, would not (i) result in a Material
Adverse Effect, (ii) materially impair the ability of the Company to perform its
obligations under this Agreement or (iii) prevent the consummation of any of the
transactions contemplated by this Agreement;
(d) violate the provisions of any order, writ, injunction, judgment, decree,
statute, rule or regulation applicable to the Company or any Subsidiary, in such
a manner as to (i) result in a Material Adverse Effect, (ii) materially impair
the ability of the Company to perform its obligations under this Agreement or
(iii) prevent the consummation of any of the transactions contemplated by this
Agreement; or
(e) result in the creation of any lien, charge or encumbrance upon any
shares of capital stock, properties or assets of the Company or its Subsidiaries
under any agreement or instrument to which the Company or its Subsidiaries is a
party or by which the Company or its Subsidiaries is bound.
Section 4.5 COMPANY SEC REPORTS. The Company has filed with the SEC, and
has heretofore made available to Baxter or its affiliate true and complete
copies of, each form, registration statement, report, schedule, proxy or
information statement and other document (including exhibits and amendments
thereto), including without limitation its Annual Reports to Shareholders
incorporated by reference in certain of such reports, required to be filed with
the SEC since June 30, 1993 under the Securities Act of 1933, as amended (the
"Securities Act"), or the Exchange Act, each of which is identified on Section
4.5 of the Company Disclosure Letter (collectively, the "Company SEC Reports").
As of the respective dates such Company SEC Reports were filed or, if any such
Company SEC Reports were amended, as of the date such amendment was filed, each
of the Company SEC Reports, including without limitation any financial
statements or schedules included therein, (a) complied in all material respects
with all applicable requirements of the Securities Act and the Exchange Act, as
the case may be, and the applicable rules and regulations promulgated
thereunder, and (b) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. None of the Subsidiaries is required to file any
forms, reports or other documents with the SEC pursuant to Section 12 or 15 of
the Exchange Act.
Section 4.6 FINANCIAL STATEMENTS. Each of the audited consolidated
financial statements and unaudited consolidated interim financial statements of
the Company (including any related notes and schedules) included (or
incorporated by reference) in its Annual Reports on Form 10-K for each of the
three fiscal years ended June 30, 1994, 1995 and 1996 and its Quarterly Reports
on Form 10-Q for all interim periods during such period and subsequent thereto
(collectively, the "Financial Statements") have been prepared from, and are in
accordance with, the books and records of the Company and its consolidated
Subsidiaries, comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in
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accordance with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis (except as may be indicated in the notes thereto
and subject, in the case of quarterly financial statements, to normal and
recurring year-end adjustments) and fairly present, in conformity with GAAP
applied on a consistent basis (except as may be indicated in the notes thereto),
the consolidated financial position of the Company and its Subsidiaries as of
the date thereof and the consolidated results of operations and cash flows (and
changes in financial position, if any) of the Company and its Subsidiaries for
the periods presented therein (subject to normal year-end adjustments and the
absence of financial footnotes in the case of any unaudited interim financial
statements).
Section 4.7 ABSENCE OF UNDISCLOSED LIABILITIES. Except (a) as specifically
disclosed in the Company SEC Reports and (b) for liabilities and obligations
incurred in the ordinary course of business and consistent with past practice
since September 30, 1996, the Company and any of its Subsidiaries have not
incurred any liabilities or obligations of any nature (contingent or otherwise)
which individually or in the aggregate would be reasonably likely to have a
Material Adverse Effect.
Section 4.8 ABSENCE OF CERTAIN CHANGES. Except as disclosed in the Company
SEC Reports, since September 30, 1996 the Company and its Subsidiaries have
conducted their respective businesses only in, and have not engaged in any
transaction other than according to, the ordinary and usual course, and there
has not been, nor has the Company or any of its Subsidiaries agreed, whether in
writing or otherwise, to take any action that would result in, (a) any Material
Adverse Effect; (b) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to the
capital stock of the Company or any of its Subsidiaries or any redemption,
repurchase or other acquisition of any shares of capital stock of the Company;
(c) any change by the Company in tax or financial accounting principles,
practices or methods; (d) any labor dispute or difficulty which would reasonably
be likely to result in any Material Adverse Effect, and to the Company's
knowledge no such dispute or difficulty is now threatened; (e) any material
asset damaged, sold, disposed of (except inventory sold in the ordinary course
of business), mortgaged, pledged or subjected to any lien, charge or other
encumbrance; (f) any increase in the compensation payable or which could become
payable by the Company or any of its Subsidiaries to their directors, officers,
employees, agents, consultants, distributors, dealers or sales representatives;
(g) any adoption or amendment of any Plan (as defined in Section 4.11(a)
herein); (h) any issuance, transfer, sale or pledge by the Company or its
Subsidiaries of any shares of stock or other securities or stock appreciation
rights or of any commitments, options, rights or privileges under which the
Company or its Subsidiaries is or may become obligated to issue any shares of
stock or other securities, except for issuances of stock pursuant to the
exercise of options outstanding on such date; (i) any indebtedness incurred by
the Company or its Subsidiaries, except such as may have been incurred in the
ordinary course of business and consistent with past practice; (j) any loan made
or agreed to be made by the Company or its Subsidiaries, nor has the Company or
its Subsidiaries become liable or agreed to become liable as a guarantor with
respect to any indebtedness; (k) any waiver by the Company or its Subsidiaries
of any right or rights of material value or any payment, direct or indirect, of
any material debt, liability or other obligation; (l) any change in or amendment
to the articles of incorporation or bylaws (or similar charter documents) of the
Company or its Subsidiaries; (m) any payment, loan or advance of any amount to
or in respect of, or the sale, transfer or lease of any properties or assets
(whether real, personal or mixed, tangible or intangible) to, or entering into
of any agreement arrangement or transaction with any officer or director of the
Company or its Subsidiaries or any affiliate thereof, or any business or entity
in which the Company or its Subsidiaries or any affiliate thereof, or relative
of any such person, has any direct or material indirect interest (collectively,
"Related Parties") except for (i) directors' fees and (ii) compensation to the
officers and employees of the Company in the ordinary course of business; (n)
any material adverse change or any overt threat of any material adverse change
in the Company's relations with, or any loss or threat of loss of, any of the
Company's or any Subsidiary's important suppliers, clients or customers; (o) any
material modification or change, or any modification or change that would result
in a diminishment of coverage, to insurance policies; (p) any write-offs as
uncollectible of any notes or accounts receivable of the Company or any
Subsidiary or write-downs of the value of any assets or inventory by the
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Company and its Subsidiaries other than in immaterial amounts or in the ordinary
course of business consistent with past practice; or (q) any material adverse
change to a material contract.
Section 4.9 TAXES. (a) The Company and each of its Subsidiaries have
timely filed (or have had timely filed on their behalf) or will file or cause to
be timely filed, all material Tax Returns (as defined below) required by
applicable law to be filed by any of them prior to or as of the Closing Date.
All such Tax Returns and amendments thereto are or will be true, complete and
correct in all material respects.
(b) The Company and each of its Subsidiaries have paid (or have had paid on
their behalf), or where payment is not yet due, have established (or have had
established on their behalf and for their sole benefit and recourse), or will
establish or cause to be established on or before the Closing Date, an adequate
accrual for the payment of all material Taxes (as defined below) due with
respect to any period ending prior to or as of the Closing Date.
(c) No Audit (as defined below) by a Tax Authority (as defined below) is
pending or threatened with respect to any Tax Returns filed by, or Taxes due
from, the Company or any Subsidiary. No issue has been raised by any Tax
Authority in any Audit of the Company or any of its Subsidiaries that if raised
with respect to any other period not so audited could be expected to result in a
material proposed deficiency for any period not so audited. No material
deficiency or adjustment for any Taxes has been threatened, proposed, asserted
or assessed against the Company or any of its Subsidiaries. There are no liens
for Taxes upon the assets of the Company or any of its Subsidiaries, except
liens for current Taxes not yet due.
(d) Neither the Company nor any of its Subsidiaries has given or been
requested to give any waiver of statutes of limitations relating to the payment
of Taxes or have executed powers of attorney with respect to Tax matters, which
will be outstanding as of the Closing Date.
(e) Prior to the date hereof, the Company and its Subsidiaries have
disclosed all material Tax sharing, Tax indemnity, or similar agreements to
which the Company or any of its Subsidiaries are a party to, is bound by, or has
any obligation or liability for Taxes.
(f) As used in this Agreement, (i) "Audit" shall mean any audit, assessment
of Taxes, other examination by any Tax Authority, proceeding or appeal of such
proceeding relating to Taxes; (ii) "Taxes" shall mean all Federal, state, local
and foreign taxes, payroll and employment taxes and other assessments of a
similar nature (whether imposed directly or through withholding), including any
interest, additions to tax, or penalties applicable thereto; (iii) "Tax
Authority" shall mean the Internal Revenue Service and any other domestic or
foreign governmental authority responsible for the administration of any Taxes;
and (iv) "Tax Returns" shall mean all Federal, state, local and foreign tax
returns, declarations, statements, reports, schedules, forms and information
returns and any amended Tax Return relating to Taxes.
Section 4.10 LITIGATION. There is no suit, claim, action, proceeding or
investigation pending or, to the Company's knowledge, threatened against or
affecting the Company, any of its Subsidiaries or any of the directors or
officers of the Company or any of its Subsidiaries in their capacity as such.
Neither the Company nor any of its Subsidiaries, nor any officer, director or
employee of the Company or any of its Subsidiaries, has been permanently or
temporarily enjoined by any order, judgment or decree of any court or any other
Governmental Entity from engaging in or continuing any conduct or practice in
connection with the business, assets or properties of the Company or such
Subsidiary nor, to the knowledge of the Company, is the Company, any Subsidiary
or any officer, director or employee of the Company or its Subsidiaries under
investigation by any Governmental Entity related to the conduct of the Company's
business. There is not in existence any order, judgment or decree of any court
or other tribunal or other agency enjoining or requiring the Company or any of
its Subsidiaries to take any action of any kind with respect to its business,
assets or properties.
Section 4.11 EMPLOYEE BENEFIT PLANS; ERISA.
(a) Section 4.11(a) of the Company Disclosure Letter contains a true and
complete list of each employment, bonus, deferred compensation, incentive
compensation, stock purchase, stock option, stock
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appreciation right or stock-based incentive, severance or termination pay,
hospitalization or other medical, life or other insurance, supplemental
unemployment benefits, profit-sharing, pension, or retirement plan, program,
agreement or arrangement, and each other employee benefit plan, program,
agreement or arrangement, sponsored, maintained or contributed to or required to
be contributed to by the Company or by any trade or business, whether or not
incorporated (an "ERISA Affiliate"), that together with the Company would be
deemed a "single employer" within the meaning of section 4001(b)(1) of the
Employee Retirement Income Security Act of 1974, as amended, and the rules and
regulations promulgated thereunder ("ERISA"), for the benefit of any current or
former employee or director of the Company, whether formal or informal and
whether legally binding or not (the "Plans"). Section 4.11(a) of the Company
Disclosure Letter identifies each of the Plans that is an "employee welfare
benefit plan," or "employee pension benefit plan" as such terms are defined in
sections 3(1) and 3(2) of ERISA (such plans being hereinafter referred to
collectively as the "ERISA Plans"). Neither the Company nor any ERISA Affiliate
has any formal plan or commitment, whether legally binding or not, to create any
additional Plan or modify or change any existing Plan that would affect any
current or former employee or director of the Company.
(b) With respect to each of the Plans, the Company has heretofore delivered
to Purchaser true and complete copies of each of the following documents:
(i) a copy of the Plan (including all amendments thereto) or a written
description of any Plan that is not otherwise in writing;
(ii) a copy of the annual report, if required under ERISA, with respect
to each ERISA Plan for the last three years;
(iii) a copy of the actuarial report, if required under ERISA, with
respect to each ERISA Plan for the last three years;
(iv) a copy of the most recent Summary Plan Description ("SPD"),
together with all Summaries of Material Modification issued with respect to
such SPD, if required under ERISA, with respect to each ERISA Plan, and all
other material employee communications relating to each ERISA Plan;
(v) if the Plan is funded through a trust or any other funding vehicle,
a copy of the trust or other funding agreement (including all amendments
thereto) and the latest financial statements thereof;
(vi) all contracts relating to the Plans with respect to which the
Company or any ERISA Affiliate may have any liability, including, without
limitation, insurance contracts, investment management agreements,
subscription and participation agreements and record keeping agreements; and
(vii) the most recent determination letter received from the Internal
Revenue Service with respect to each Plan that is intended to be qualified
under section 401(a) of the Internal Revenue Code of 1986, as from time to
time amended (the "Code").
(c) Neither the Company nor any current or former ERISA Affiliate is
currently or has ever been the sponsor of or required to make contributions to
any "employee benefit plan" (as defined in Section 3(3) of ERISA) subject to
Title IV of ERISA (including without limitation any "multiemployer plan" (as
defined in Section 3(37) of ERISA)), and neither the Company nor any ERISA
Affiliate has at any time incurred any liability with respect to any such
employee benefit plan.
(d) Neither the Company, any ERISA Affiliate, any of the ERISA Plans, any
trust created thereunder nor any trustee or administrator thereof has engaged in
a transaction or has taken or failed to take any action in connection with which
the Company, any ERISA Affiliate, any of the ERISA Plans, any such trust, any
trustee or administrator thereof, or any party dealing with the ERISA Plans or
any such trust could be subject to either a civil penalty assessed pursuant to
section 409 or 502(i) of ERISA or a tax imposed pursuant to section 4975, 4976
or 4980B of the Code.
(e) Full payment has been made, or will be made in accordance with section
404(a)(6) of the Code, of all amounts which the Company or any ERISA Affiliate
is required to pay under the terms of each of
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the ERISA Plans, and all such amounts properly accrued through the Closing with
respect to the current plan year thereof will be paid by the Company on or prior
to the Closing or will be properly recorded on the Company's balance sheet.
(f) Each of the Plans has been operated and administered in all material
respects in accordance with applicable laws, including but not limited to ERISA
and the Code.
(g) Each of the ERISA Plans that is intended to be "qualified" within the
meaning of section 401(a) of the Code is so qualified. The Company has timely
applied for and received a currently effective determination letter from the
Internal Revenue Service with respect to each such plan.
(h) Each of the ERISA Plans that is intended to satisfy the requirements of
section 501(c)(9) of the Code has so satisfied such requirements.
(i) No amounts payable under any of the Plans or any other agreement or
arrangement with respect to which the Company has or may have any liability
could give rise to the payment of any amount that would fail to be deductible
for Federal income tax purposes by virtue of Section 162(m) or Section 280G of
the Code.
(j) No "leased employee" (as is defined in section 414(n) of the Code)
performs services for the Company or any ERISA Affiliate.
(k) No Plan provides benefits, including without limitation death or medical
benefits (whether or not insured), with respect to current or former employees
after retirement or other termination of service other than (i) coverage
mandated by applicable law, (ii) death benefits or retirement benefits under any
"employee pension plan," as that term is defined in section 3(2) of ERISA, (iii)
deferred compensation benefits accrued as liabilities on the books of the
Company or the ERISA Affiliates, or (iv) benefits, the full cost of which is
borne by the current or former employee (or his beneficiary).
(l) With respect to each Plan that is funded wholly or partially through an
insurance policy, there will be no liability of the Company or any ERISA
Affiliate, as of the Closing Date, under any such insurance policy or ancillary
agreement with respect to such insurance policy in the nature of a retroactive
rate adjustment, loss sharing arrangement or other actual or contingent
liability arising wholly or partially out of events occurring prior to the
Closing Date.
(m) The consummation of the transactions contemplated hereunder will not
result in the payment, vesting, acceleration or enhancement of any benefit under
any Plan.
(n) The Company has no severance and termination policy and the Company's
employees are not entitled to severance pay under any current Company
arrangement.
(o) The Current Plan Year under the Company's Employee Stock Purchase Plan
will end on December 31, 1996, and there are no outstanding rights to acquire
Company Common Stock under the Employee Stock Purchase Plan.
(p) No options intended to qualify as "incentive stock options" under
Section 422 of the Code have at any time been granted under the Company's 1991
Long Term Equity Based Incentive Plan.
Section 4.12 ENVIRONMENTAL MATTERS.
(a) The businesses of the Company and its Subsidiaries have been and are in
full compliance with all federal, state, local and foreign laws and regulations
relating to pollution or protection of human health or the environment,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act and the Resource Conservation and Recovery Act,
ambient air, surface water, ground water, land surface or subsurface strata
(together "Environmental Laws" and including, without limitation, laws and
regulations relating to emissions, discharges, releases or threatened releases
of chemicals, pollutants, contaminants, wastes, toxic or hazardous substances or
wastes, petroleum and petroleum products, polychlorinated biphenyls (PCBs), or
asbestos or asbestos-containing materials
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("Materials of Environmental Concern")), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern; such compliance
includes, but is not limited to, the possession by the Company and its
Subsidiaries of all permits and other governmental authorizations required under
all applicable Environmental Laws, and compliance with the terms and conditions
thereof.
(b) Neither the Company nor any of its Subsidiaries has received any
communication (written or oral), whether from a governmental authority, citizens
group, employee or otherwise, that alleges that the Company or any of its
Subsidiaries are not in compliance with any Environmental Laws, and, to the best
knowledge of the Company after due inquiry, there are no circumstances that may
prevent or interfere with such compliance in the future. The Company has
provided to Baxter or its affiliate all information that is in the possession of
or reasonably available to the Company or any of its Subsidiaries regarding
environmental matters pertaining to or the environmental condition of the
business or real property of the Company or any of its Subsidiaries, or the
Company's or any of its Subsidiaries' compliance (or noncompliance) with any
Environmental Laws.
(c) There is no claim, action, cause of action, investigation or notice
(written or oral) (together, "Environmental Claim") by any person or entity
alleging potential liability (including, without limitation, potential liability
for investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, person injuries, or penalties) arising out
of, based on or resulting from (i) the presence, or release into the
environment, of any Material of Environmental Concern at any location, whether
or not owned or operated by the Company or any of its Subsidiaries, or (ii)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law, that in either case is pending or, to the best knowledge of
the Company after due inquiry, threatened against the Company or any of its
Subsidiaries or against any person or entity whose liability for any
Environmental Claim the Company or any of its Subsidiaries has retained or
assumed either contractually or by operation of law.
(d) There are no past or present actions, activities, circumstances,
conditions, events or incidents, including, without limitation, the release,
emission, discharge, presence or disposal of any Material of Environmental
Concern, that, to the best knowledge of the Company after due inquiry, could
reasonably be expected to form the basis of any Environmental Claim against the
Company or any of its Subsidiaries, against any person or entity whose liability
for any Environmental Claim the Company or any of its Subsidiaries has retained
or assumed either contractually or by operation of law.
(e) Without in any way limiting the generality of the foregoing, (i) all
on-site and off-site locations where the Company or any of its Subsidiaries has
(previously or currently) stored, disposed or arranged for the disposal of
Materials of Environmental Concern are identified in Section 4.12 of the Company
Disclosure Letter, (ii) all underground storage tanks, and the capacity and
contents of such tanks, located on any property owned, leased, operated or
controlled by the Company or any of its Subsidiaries are identified in Section
4.12 of the Company Disclosure Letter, (iii) there is no asbestos contained in
or forming part of any building, building component, structure or office space
owned, leased, operated or controlled by the Company or any of its Subsidiaries,
and (iv) no PCBs or PCB-containing items are used or stored at any property
owned, leased, operated or controlled by the Company or any of its Subsidiaries.
Section 4.13 COMPLIANCE WITH APPLICABLE LAWS. The Company and each of its
Subsidiaries hold all licenses, permits and authorizations necessary for the
lawful conduct of its respective businesses, as now conducted, and such
businesses are not being, and the Company has not received any notice from any
authority or person that such businesses have been or are being, conducted in
violation of any law, ordinance or regulation, including without limitation any
law, ordinance or regulation relating to (a) the protection of the environment,
(b) the provision of medical supplies and services, or (c) occupational health
and safety, except for possible violations which either singly or in the
aggregate have not resulted and are not reasonably expected to result in a
Material Adverse Effect.
Section 4.14 MATERIAL CONTRACTS. Section 4.14 of the Company Disclosure
Letter hereto sets forth a true and correct list of any and all agreements,
contracts, purchase or installment agreements, indentures,
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leases, mortgages, licenses, plans, arrangements, commitments (whether written
or oral) and instruments (collectively, "contracts") that are material to the
Company and its Subsidiaries (the "Material Contracts") (other than such
contracts that are specifically filed with the Company's SEC Reports), including
without limitation the following types of contracts to which the Company or any
of its Subsidiaries is a party:
(a) any contract which is not terminable by the Company or any of its
Subsidiaries upon 30 days' or less notice and which involves outstanding
payments of more than $50,000;
(b) any customer contract between the Company or its Subsidiaries and any
party to whom the Company or its Subsidiaries provides goods or services which
represent annual payments by the Company of $50,000 or more;
(c) any contract for the purchase or sale of supplies, raw materials,
commodities or similar products used by the Company or its Subsidiaries and
which call for performance over a period of more than one year or represent
annual payments by the Company of $50,000 or more;
(d) any contract with third party payors, including Medicaid, health
maintenance organizations, preferred provider organizations, insurance companies
and other payment sources;
(e) any contract for the employment of any director, officer, employee,
consultant or other person or entity on a full-time, part-time, consulting or
other basis, including any severance or other termination provisions with
respect to such employment;
(f) any noncompetition agreement, other than customary agreements with
employees who are not officers, directors or key employees, or any other
contract that in any way restricts the Company or any of its Subsidiaries from
carrying on their business any place in the world; and
(g) any contract between the Company and any of its Subsidiaries or any of
their affiliates or with any officers, directors or key employees of the Company
or any of its Subsidiaries.
True and complete copies of each written Material Contract, or form thereof and
true and complete written summaries of each oral Material Contract have been
made available to Baxter and its affiliate by the Company prior to the date
hereof. In addition:
(i) Each of the Material Contracts is a valid, binding and enforceable
agreement of the Company or its Subsidiaries and, to the knowledge of the
Company, the other parties thereto and will, subject to the satisfaction of
the conditions in Article IX, continue to be valid, binding and enforceable
immediately after the Closing, except (x) as such enforcement may be subject
to bankruptcy, insolvency or similar laws now or hereafter in effect
relating to creditors' rights, and (y) as the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought;
(ii) The Company has no reason to believe that the Company or the
relevant Subsidiary will not be able to fulfill in all material respects all
of its obligations under the Material Contracts which remain to be performed
after the date hereof; and
(iii) There has not occurred (i) since June 30, 1993 any material default
(or event which upon provision of notice or lapse of time or both would
become such a default) or (ii) prior to June 30, 1993 any uncured material
default (or event which upon provision of notice or lapse of time or both
would become such a default) under any of the Material Contracts on the part
of the Company or the relevant Subsidiary party thereto.
Section 4.15 INTELLECTUAL PROPERTY RIGHTS. (a) The Company owns or
possesses adequate rights to use all intellectual and similar property of every
kind and nature relating to or used or necessary in the operation of the Company
business, including, without limitation, (i) patents,trademarks associated with
the Company business (including all Governmental Entity trademarks, service
marks, logos and designs, all registrations and recordings thereof, and all
applications in the United States or any other Governmental
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Entity, all goodwill symbolized thereby or associated therewith and all
extensions or renewals thereof which are set forth on Schedule 4.15 of the
Company Disclosure Letter), (iii) copyrights associated solely with the Company
business, including all copyrights, United States and foreign copyright
registrations, and applications to register copyrights which are set forth on
Schedule 4.15 of the Company Disclosure Letter, (iv) inventions, formulae,
processes, designs, know-how, showq-how or other data or information, (v)
confidential or proprietary technical and business information, processes and
trade secrets, (vi) Computer Software, (vii) technical manuals and documentation
made or used in connection with any of the foregoing, and (viii) licenses and
rights with respect to the foregoing or property of like nature (collectively,
"Intellectual Property").
(b) (i) Schedule 4.15 of the Company Disclosure Letter sets forth a
complete and accurate list of all registered copyrights, patents and trademarks
owned by or under obligation of assignment to the Company, currently used in the
conduct of the Company business;
(ii) each owner, listed on Schedule 4.15 of the Company Disclosure
Letter is listed in the records of the appropriate Governmental Entity as
the sole owner of record (except as otherwise indicated in such Schedule
4.15 of the Company Disclosure Letter);
(iii) Schedule 4.15 of the Company Disclosure Letter sets forth a
complete and accurate list of all agreements between the Company, on the one
hand, and any Person, on the other hand, granting any right to use or
practice any rights under any Intellectual Property (collectively,
"Intellectual Property Licenses");
(iv) there is no Encumbrance on the right of the Company, to transfer to
Purchaser any of the Intellectual Property, as herein contemplated;
(v) no trade secret, formula, process, invention, design, know-how or
any other information has been disclosed or authorized to be disclosed to
any corporation, individual, limited liability company, joint stock company,
joint venture, partnership, unincorporated association, governmental
regulatory entity, country, state or political subdivision thereof, trust,
municipality or other entity (any of the foregoing, a "Person"), except in
the ordinary course of business or pursuant to an obligation of
confidentiality binding upon said Person;
(vi) there are no pending proceedings by or before Governmental Bodies,
including oppositions, interferences, proceedings or suits, relating to such
Intellectual Property, and no such proceedings are threatened;
(vii) the conduct of the Company business and the exercise of rights
relating to patents contained within the Intellectual Property does not
infringe upon or otherwise violate, Intellectual Property Rights of any
Person;
(viii) based on the Company's actual knowledge, no Person is infringing
upon or otherwise violating any patents contained within Intellectual
property;
(ix) the Company has not received notice of any claims, obligations or
liabilities and there are no pending claims, obligations or liabilities, of
any Persons relating to the scope, ownership or use of any of the
Intellectual Property; and
(x) each copyright registration, patent and registered trademark and
application therefor listed on Schedule 4.15 of the Company Disclosure
Letter is in proper form, not disclaimed and has been duly maintained,
including the submission of all necessary filings in accordance with the
legal and administrative requirements of the appropriate jurisdictions
except with respect to use requirements as to trademarks.
Section 4.16 FRAUD AND ABUSE. The Company and its Subsidiaries are not
regulated under federal Medicare and Medicaid statutes, including without
limitation, 42 U.S.C. Section1320a-7b and 42 U.S.C. Section1395nn or related
state or local statutes or regulations.
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Section 4.17 INSURANCE. Section 4.17(a) of the Company Disclosure Letter
lists each of the insurance policies relating to the Company or its Subsidiaries
which are currently in effect. The Company has provided Parent and Purchaser
with a true, complete and correct copy of each such policy or the binder
therefor. With respect to each such insurance policy or binder none of the
Company, any of its Subsidiaries or any other party to the policy is in breach
or default thereunder (including with respect to the payment of premiums or the
giving of notices), and the Company does not know of any occurrence or any event
which (with notice or the lapse of time or both) would constitute such a breach
or default or permit termination, modification or acceleration under the policy,
except for such breaches or defaults which, individually or in the aggregate,
would not result in a Material Adverse Effect. Section 4.17(b) of the Company
Disclosure Letter describes any self-insurance arrangements affecting the
Company or its Subsidiaries. The insurance policies listed on Section 4.17(a) of
the Company Disclosure Letter include all policies which are required in
connection with the operation of the business of the Company and its
Subsidiaries as currently conducted by applicable laws and all agreements
relating to the Company and its Subsidiaries. All such policies provide coverage
in reasonably sufficient amounts to insure against all risks usually insured
against by companies operating similar businesses or owning property in the
location where the Company and the Subsidiaries operate their businesses. All
such policies are in full force and effect, all premiums due with respect
thereto covering all periods up to and including the Closing Date will have been
paid as of such date and no notice of cancellation or termination has been
received with respect to any such policy. All policies of insurance will remain
in full force and effect through the Closing Date without the payment of
additional premiums.
Section 4.18 OPINION OF FINANCIAL ADVISOR. The Company has received, and
delivered to Baxter or its affiliate a copy of, the opinion of William Blair &
Company, LLC, the Company's financial advisor, to the effect that the Merger
Consideration to be received by the Company's shareholders in the Merger, taken
as a whole, is fair to the Company's shareholders from a financial point of
view.
Section 4.19 UTAH LAW. The provisions of Sections 61-6-1 to 61-6-12 of the
Utah Code will not apply to the transactions contemplated by this Agreement.
Section 4.20 COMPANY DISCLOSURE. No representation or warranty by the
Company in this Agreement (including, without limitation, Company SEC Reports),
schedule or certificate furnished or to be furnished by the Company or any of
its representatives pursuant to the provisions hereof or in connection with the
transactions contemplated hereby, contains as of the date hereof any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements herein or therein, in the light of the
circumstances under which they were made, not misleading.
Section 4.21 PATENT OPINION. The Company has received, and delivered to
Baxter or its affiliate a copy of the opinions of Workman Nydegger & Seeley,
special counsel to the Company, substantially in the form of Exhibit 4.21
attached hereto.
Section 4.22 LABOR MATTERS. There is no labor strike, dispute, slowdown,
work stoppage or lockout actually pending or, to the knowledge of the Company
(which term, for purposes of this Section 4.22, includes each of the Company's
Subsidiaries and Affiliates), threatened against or affecting the Company and,
during the past five years, there has not been any such action; (i) no union,
guild or other labor organization represents or claims to represent the
employees of the Company and no union, guild or other labor organizing activity
currently is occurring among and no question of representation exists concerning
such employees; (ii) the Company is neither a party to nor bound by any
collective bargaining, guild or similar agreement with any labor organization,
or work rules or practices agreed to with any labor organization or employee
association applicable to employees of the Company; (iii) there are no written
personnel policies, rules or procedures applicable to employees of the Company;
(iv) the Company has at all times been in material compliance with all
applicable laws respecting employment and employment practices, terms and
conditions of employment, wages, hours of work and occupational safety and
health, and are not engaged in any unfair labor practices as defined in the
National Labor Relations Act or other
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applicable law, ordinance or regulation; (v) there is no grievance or
arbitration proceeding arising out of any collective bargaining or guild
agreement or other grievance procedure relating to the Company; (vi) to the
knowledge of the Company, no charges or complaints relating to the Company are
pending before the Equal Employment Opportunity Commission, the Utah Industrial
Commission or any other corresponding state or foreign agency; and (vii) to the
knowledge of the Company, no federal, state, local or foreign agency responsible
for the enforcement of labor or employment laws, immigration laws, occupational
health and safety laws or any other law affecting the employees of the Company
intends to conduct or currently is conducting an investigation with respect to
or relating to the Company, and no such agencies have threatened to or have
filed any claims, charges, complaints or citations against the Company.
Section 4.23 WARN ACT. Since the enactment of the Worker Adjustment and
Retraining Notification Act of 1988 ("WARN Act"), neither the Company nor any of
its Subsidiaries have effectuated (i) a "plant closing" (as defined in the WARN
Act) affecting any site of employment or one or more operating units within any
site of employment of the Company or any of its Subsidiaries, or (ii) a "mass
layoff" (as defined in the WARN Act) affecting the Company or any of its
Subsidiaries; nor has the Company been affected by any transaction or engaged in
layoffs or employment terminations sufficient in number to trigger application
of any similar state or local law. None of the employees of any of the Company
or its Subsidiaries has suffered an "employment loss" (as defined in the WARN
Act) during the ninety-day period prior to the Effective Date of this Agreement.
Section 4.24 TRANSACTIONS WITH RELATED PARTIES. No Related Party:
(a) has borrowed money or loaned money to the Company or any Subsidiary;
(b) has made or threatened any contractual or other claim of any kind
whatsoever against the Company or any Subsidiary;
(c) has any interest in any property or assets used by the Company or any
Subsidiary in its business; or
(d) has been engaged in any other transaction with the Company or any
Subsidiary (other than employment relationships disclosed in Section 4.14).
Section 4.25 SUPPLIERS AND CUSTOMERS. No supplier or customer accounted
for more than five percent of the Company's and its Subsidiaries' sales or
purchases in either of the past two years and no other supplier or customer
material to the business of the Company and its Subsidiaries, taken as a whole,
has materially decreased its supplies or orders, as the case may be, or
terminated its relationship with the Company or any Subsidiary.
Section 4.26 ACCOUNTS RECEIVABLE. All of the accounts and notes receivable
of the Company and each Subsidiary represent amounts receivable for merchandise
actually delivered or services actually provided (or in the case of non-trade
accounts or notes, represent amounts receivable in respect of other bona fide
business transactions) and have arisen in the ordinary course of business. To
the Company's knowledge, the allowances for doubtful accounts reflected on the
Company's audited consolidated balance sheets for the years ended June 30, 1996
and 1995 were adequate, and the Company knows of no facts or liabilities which
would cause uncollected debts to exceed those allowances.
Section 4.27 ABSENCE OF CERTAIN PAYMENTS. Neither the Company nor any of
the Subsidiaries nor any of their affiliates nor any of their respective
officers, directors, employees or agents or their people acting on behalf of any
of them have (i) engaged in any activity prohibited by the United States Foreign
Corrupt Practices Act of 1977 or any other similar law, regulation, decree,
directive or order of any other country and (ii) without limiting the generality
of the preceding clause (i), used any corporate or other funds for unlawful
contributions, payments, gifts or entertainment, or made any unlawful
expenditures relating to political activity to government officials or others.
None of the Company nor any of the Subsidiaries nor any of their affiliates or
any of their respective directors, officers, employees or agents of
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other persons acting on behalf of any of them, has accepted or received any
unlawful contributions, payments, gifts or expenditures.
Section 4.28 TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES;
CONDITION OF EQUIPMENT; CONDITION OF INVENTORY.
(a) The Company and the Subsidiaries have good and valid title to, or in the
case of leased properties and assets, valid leasehold interests in, all of their
tangible properties and assets, real, personal and mixed, used in their
business, free and clear of any liens, charges, pledges, security interests or
other encumbrances, except as reflected in the Company's audited financial
statements or except for such imperfections of title and encumbrances, if any
which are not substantial in character, amount or extend, and which do not
materially detract from the value as reflected in the Company's September 30,
1996 balance sheet, or interfere with the present use, of the property subject
thereto or affected thereby.
(b) The equipment owned or leased by the Company or the Subsidiaries is,
taken as a whole, (A) adequate for the conduct of the businesses consistent with
their past practice, (B) suitable for the uses to which it is currently
employed, (C) in good operating condition, (D) regularly and properly
maintained, (E) not obsolete, dangerous or in need of renewal or replacement,
except for renewal or replacement in the ordinary course of business, and (F)
free from any defects, except, with respect to clauses (B) through (E) above, as
would not have a Material Adverse Effect.
(c) The inventories of raw materials, work in process and finished goods
(collectively called "Inventories") shown on the Company's audited financial
statements included in the SEC Reports, consist of items of a quality and
quantity useable and salable in the ordinary course of business by the Company,
except for obsolete and slow moving items and items below standard quality, all
of which have been written down on the books of the Company to estimated net
realizable value or have been provided for by adequate reserves. All items
included in the Inventories are the property of the Company and in its
possession. No items included in the Inventories have been pledged as collateral
or are held by the Company or any Subsidiary on consignment from others. The
Inventories shown on the Company's consolidated balance sheets included in the
SEC Reports are based on quantities determined by physical count or measurement,
taken within the preceding twelve months, and are valued at the lower of cost
(determined on a first-in, first-out basis) or market value and on a basis
consistent with that of prior years.
Section 4.29 FDA MATTERS. The Company is in full compliance with all
statutes, rules and regulations of the U.S. Food and Drug Administration or
similar domestic state authority ("FDA") with respect to the manufacturing,
marketing and sale of all of its products. The Company has all requisite FDA
permits, approvals or the like to sell or manufacture such products in the
United States. The Company has previously delivered to Baxter summary
information concerning all 510(k) applications, Premarket Approvals and
Investigational Device Exemptions obtained by the Company from the FDA or
required in connection with the manufacturing, marketing and sale of any product
of the Company. There are no pending or threatened actions, proceedings or
complaints by the FDA, the Consumer Product Safety Commission or the Better
Business Bureau, as applicable, which would prohibit or impede the sale of any
product currently manufactured or sold, or currently contemplated to be
manufactured or sold, by the Company into any market. The Company has received
no notice or communication from the FDA since September 30, 1996. No product
sold or leased by the Company or any Subsidiary within the past five years has
been the subject of any product recall order by the manufacturer thereof, the
FDA or any similar body.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BAXTER AND PURCHASER
Except as otherwise disclosed to the Company in a letter delivered to it
prior to the execution hereof (which letter shall contain appropriate references
to identify the representations and warranties herein to
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which the information in such letter relates) (the "Baxter Disclosure Letter"),
Baxter and Purchaser represent and warrant to the Company as follows:
Section 5.1 ORGANIZATION. Each of Baxter and Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation and has the requisite corporate power
and authority to own, use or lease properties and to carry on its business as it
is now being conducted and as it is now proposed to be conducted. Purchaser has
delivered to the Company a complete and correct copy of its Articles of
Incorporation and Bylaws, each as currently in effect. Each of Baxter and
Purchaser is not in default in any material respect in the performance,
observation or fulfillment of any provision of its Articles of Incorporation or
Bylaws.
Section 5.2 CAPITALIZATION; REGISTRATION RIGHTS. The authorized capital
stock of Baxter consists of 350,000,000 Baxter Shares and 100,000,000 shares of
preferred stock, par value $0 per share ("Baxter Preferred Stock"), including,
3,500,000 shares of Series A Junior Participating Stock, par value $0 per share
("Series A Preferred"). As of September 30, 1996, (i) 287,701,247 Baxter Shares
were issued and outstanding, of which 13,608,765 Baxter Shares were held in
treasury and no shares of Series A Preferred were outstanding, and (ii)
31,137,613 Baxter Shares were reserved under all employee stock option plans of
Baxter. All of the issued and outstanding Baxter Shares are validly issued,
fully paid and nonassessable and free of preemptive rights. All of the Baxter
Shares reserved for issuance in exchange for Shares at the Effective Time in
accordance with this Agreement will be, when so issued, duly authorized, validly
issued, fully paid and nonassessable and free of preemptive rights. The
authorized capital stock of Purchaser consists of 1000 shares of common stock,
par value $.01 per share, 100 of which shares are validly issued and
outstanding, fully paid and nonassessable and are owned by Baxter. Except as set
forth above or as specified in Section 5.2 of the Baxter Disclosure Letter, as
of the date of this Agreement there are no shares of capital stock of Baxter
issued or outstanding or any options, warrants, subscriptions, calls, rights,
convertible securities or other agreements or commitments obligating Baxter to
issue, transfer, sell, redeem, repurchase or otherwise acquire any shares of the
capital stock or securities or any interests relating to or whose value is
dependent on the value of any equity interest, in Baxter or Purchaser. Except as
provided in this Agreement or as disclosed in Section 5.2 of the Baxter
Disclosure Letter, after the Effective Time Baxter will have no obligation to
issue, transfer or sell any shares of its capital stock pursuant to any employee
benefit plan or otherwise.
Section 5.3 AUTHORITY. Each of Baxter and Purchaser has all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby on
the part of Baxter and Purchaser have been duly and validly authorized by the
Boards of Directors of Baxter and of Purchaser and by Baxter as the sole
shareholder of Purchaser and no other corporate proceedings on the part of
Baxter and Purchaser as a matter of law or otherwise are necessary to authorize
this Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Baxter and
Purchaser and constitutes a valid and binding agreement of each of Baxter and
Purchaser, enforceable against each of them in accordance with its terms.
Section 5.4 CONSENT AND APPROVALS; NO VIOLATION. The execution and
delivery of this Agreement, the consummation of the transactions contemplated
hereby, and the performance by Baxter and Purchaser of their obligations
hereunder will not:
(a) conflict with or result in a breach of any provision of the Certificate
of Incorporation or Bylaws of Baxter or the Articles of Incorporation or Bylaws
of Purchaser;
(b) require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory authority, except (i)
the filing of a pre-merger notification and report form by Baxter or Purchaser
under the HSR Act, (ii) the filing with the SEC of (x) the Company Proxy
Statement/ Prospectus relating to the approval by the Company's shareholders of
the Agreement as contemplated by Section 3.9 of the Agreement, if such approval
is required by law, and (y) the filing of a Registration
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Statement relating to the issuance of Baxter Shares as contemplated in Section
8.7 of the Agreement, if such filing is required by law, and (iii) the filing of
the Articles of Merger and Share Exchange with the Utah Division of Corporations
and Commercial Code;
(c) result in any violation of or the breach of or constitute a default
(with notice or lapse of time or both) under (or give rise to any right of
termination, cancellation or acceleration or guaranteed payments under or to a
loss of a material benefit or result in the creation or imposition of a lien
under) any of the terms, conditions or provisions of any note, lease, mortgage,
indenture, license, agreement or other instrument or obligation to which Baxter
or Purchaser is a party or by which Baxter or Purchaser or any of their
respective properties or assets may be bound, except for such violations,
breaches, defaults, or rights of termination, cancellation or acceleration, or
losses as to which requisite waivers or consents have been obtained or will be
obtained prior to the Effective Time or which, individually or in the aggregate,
would not (i) have a material adverse effect on the condition (financial or
otherwise), business, assets, properties, prospects or results of operations of
Baxter, Purchaser and their subsidiaries, taken as a whole (a "Baxter Material
Adverse Effect"), (ii) materially impair the ability of Baxter or Purchaser to
perform its obligations under this Agreement or (iii) prevent the consummation
of any of the transactions contemplated by this Agreement;
(d) violate the provisions of any order, writ, injunction, judgment, decree,
statute, rule or regulation applicable to Baxter or Purchaser, in such a manner
as to (i) have a Baxter Material Adverse Effect, (ii) materially impair the
ability of Baxter or Purchaser to perform its obligations under this Agreement
or (iii) prevent the consummation of any of the transactions contemplated by
this Agreement; or
(e) result in the creation of any lien, charge or encumbrance upon any
shares of capital stock, properties or assets of Baxter or Purchaser under any
agreement or instrument to which Baxter or Purchaser is a party or by which
Baxter or Purchaser is bound.
Section 5.5 PURCHASER'S OPERATIONS. The Purchaser was formed solely for
the purpose of engaging in the transactions contemplated hereby and has not
engaged in any business activities or conducted any operations other than in
connection with the transactions contemplated hereby.
Section 5.6 NO SHARES OWNED BY PURCHASER OR AFFILIATES. As of the date
hereof neither Baxter nor Purchaser nor any of their affiliates owns any Shares.
Section 5.7 BAXTER SEC REPORTS. Baxter has filed with the SEC, and has
heretofore made available to the Company true and complete copies of, each form,
registration statement, report, schedule, proxy or information statement and
other document (including exhibits and amendments thereto), including without
limitation its Annual Reports to Shareholders incorporated by reference in
certain of such reports, required to be filed with the SEC since December 31,
1993 under the Securities Act, or the Exchange Act (collectively, the "Baxter
SEC Reports"). As of the respective dates such Baxter SEC Reports were filed or,
if any such Baxter SEC Reports were amended, as of the date such amendment was
filed, each of the Baxter SEC Reports, including without limitation any
financial statements or schedules included therein, (a) complied in all material
respects with all applicable requirements of the Securities Act and the Exchange
Act, as the case may be, and the applicable rules and regulations promulgated
thereunder, and (b) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
Section 5.8 BAXTER DISCLOSURE. No representation or warranty by Baxter or
Purchaser in this Agreement and no statement contained in any document
(including, without limitation, Baxter SEC Reports), schedule or certificate
furnished or to be furnished by Baxter or Purchaser to the Company or any of its
representatives pursuant to the provisions hereof or in connection with the
transactions contemplated hereby, contains as of the date hereof any untrue
statement of material fact or omits to state
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any material fact necessary in order to make the statements herein or therein,
in the light of the circumstances under which they were made, not misleading.
Section 5.9 BAXTER FINANCIAL STATEMENTS. Each of the audited consolidated
financial statements and unaudited consolidated interim financial statements of
Baxter (including any related notes and schedules) included (or incorporated by
reference) in its Annual Reports on Form 10-K for each of the three fiscal years
ended December 31, 1993, 1994 and 1995 and its Quarterly Reports on Form 10-Q
for all interim periods during such period and subsequent thereto (collectively,
the "Financial Statements") have been prepared from, and are in accordance with,
the books and records of Baxter and its consolidated subsidiaries, comply in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis (except as may be indicated in the notes thereto
and subject, in the case of quarterly financial statements, to normal and
recurring year-end adjustments) and fairly present, in conformity with GAAP
applied on a consistent basis (except as may be indicated in the notes thereto),
the consolidated financial position of Baxter and its subsidiaries as of the
date thereof and the consolidated results of operations and cash flows (and
changes in financial position, if any) of Baxter and its subsidiaries for the
periods presented therein (subject to normal year-end adjustments and the
absence of financial footnotes in the case of any unaudited interim financial
statements).
ARTICLE VI
COVENANTS OF THE COMPANY
Section 6.1 ORDINARY COURSE. Except as otherwise specifically provided in
this Agreement or as otherwise consented to in writing by Baxter and Purchaser,
from the date of this Agreement to the Effective Time, the Company will, and
will cause each of its Subsidiaries to, conduct its operations only in the
ordinary and usual course of business and consistent with past practices and
will, and will cause each of its Subsidiaries to, preserve intact its present
business organization, take all reasonable efforts to keep available the
services of its present officers, employees and consultants and preserve its
present relationships with licensors, licensees, customers, suppliers,
employees, labor organizations and others with whom they have a significant
business relationship. Without limiting the generality of the foregoing, and
except as otherwise specifically provided in this Agreement or as set forth in
Section 6.1 of the Company Disclosure Letter, the Company will not, and will not
permit any Subsidiary to, directly or indirectly, from the date of this
Agreement to the Effective Time, without the prior written consent of Baxter and
Purchaser:
(a) propose or adopt any amendment to or otherwise change its Articles of
Incorporation or Bylaws or other organizational documents;
(b) authorize for issuance, sale, pledge, disposition or encumbrance, or
issue, sell, pledge, dispose of or encumber (except pursuant to the exercise of
Options under the Company Stock Option Plans or pursuant to options disclosed in
Section 4.2 of the Company Disclosure Letter that are outstanding on the date
hereof) any of its shares or any of its other securities or any interest
relating to or whose value is dependent on the value of any equity interest in
the Company or the Subsidiaries or issue any securities convertible into or
exchangeable for, options, warrants to purchase, scrip, rights to subscribe for,
calls or commitments of any character whatsoever relating to, or enter into any
contract, understanding or arrangement with respect to the issuance of, any of
its shares or any of its other securities, or enter into any arrangement or
contract with respect to the purchase or voting of shares of its shares, or
adjust, split, reacquire, redeem, combine or reclassify any of its securities,
or make any other changes in its capital structure;
(c) (i) incur (contingently or otherwise) any liability or other obligation
including, without limitation, any indebtedness for borrowed money except in the
ordinary course of business or enter into any guarantee of any such obligation
of another person or mortgage, pledge or subject to any lien, charge or
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other encumbrance of their assets, properties or business, or (ii) make any
loans, advances or capital contributions to, or investments in, any other
person;
(d) enter into, amend or affirmatively renew any contract, commitment, lease
or other transaction (whether of real or personal property) except such
contracts, commitments, leases or other transactions that are not material or
are in the ordinary course of business and do not involve affiliates of the
Company;
(e) sell or otherwise dispose of or lease any part of their respective
properties or assets, including but not limited to the sale or license of any
real estate or intellectual property, or purchase or otherwise acquire or lease
properties or assets (including real estate) except sales or purchases of
inventory and purchases of capital equipment in the ordinary course of business,
or acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets of, or by any other manner, any
business or any corporation, partnership, joint venture, association or other
business organization or division thereof;
(f) declare, set aside or pay any dividends on, or make any distributions in
respect of, its outstanding shares;
(g) (i) grant any general increase in wage or salary rates, except in the
ordinary course of business consistent with past practice; (ii) make any change
in the compensation payable or to become payable to any of its officers,
directors, employees, agents or consultants; (iii) enter into or amend any
employment,
consulting, severance, termination or similar agreement (except as contemplated
by Section 7.7); (iv) adopt any new Plan or amend any existing Plan; (v) make
any loans to any of its officers, directors, employees, agents or consultants or
any changes in its existing borrowing or lending arrangements for or on behalf
of any of such persons, whether contingent on the Closing or otherwise; or (vi)
except to the extent permitted by Section 3.1(b) hereof, take any action to
cause to be exercisable any otherwise unexercisable Option under the Company
Stock Option Plans;
(h) make any material changes in the type or amount of its insurance
coverages;
(i) make any material tax election (unless required by law) or settle or
compromise any material income tax liability of the Company or any of its
Subsidiaries except if such action is taken in the ordinary course of business
and Baxter or its affiliate shall have been provided reasonable prior notice
thereof. The Company shall consult with Baxter or its affiliate before filing or
causing to be filed any material Tax Return of the Company or any of the
Subsidiaries or before executing or causing to be executed any agreement or
waiver extending the period for assessment or collection of any Taxes of the
Company or any of its Subsidiaries;
(j) cancel any debts or waive, release or relinquish any material contract
rights or other material rights other than in the ordinary course of business
and consistent with past practice;
(k) take or agree or commit to take any action that would result in any of
the Company's representations or warranties hereunder qualified as to
materiality being untrue and any such representations and warranties that are
not so qualified being untrue in any material respect; and
(l) make, or commit to make, any capital expenditure in excess of $100,000
including, without limitation, for the purchase of real estate.
Section 6.2 ADVICE OF CHANGES. The Company shall promptly give notice to
Baxter or its affiliate upon becoming aware of (i) any representation or
warranty of the Company contained in this Agreement that is qualified as to
materiality becoming untrue or inaccurate in any respect or any such
representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect, or (ii) the failure by the Company to comply
with or satisfy in any material respect any covenant, condition or agreement to
be complied with or satisfied by it under this Agreement and shall use its
reasonable best efforts to prevent or promptly remedy same.
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Section 6.3 RULE 145 AFFILIATES. At least 30 days prior to the Effective
Time, the Company shall cause to be delivered to Baxter a letter identifying all
Persons who, at the time of the Shareholder Meeting described in Section 3.9,
may be deemed to be "affiliates" of the Company for purposes of Rule 145 under
the Securities Act (the "Securities Act Affiliates"). The Company shall use its
reasonable efforts to cause each person who is identified as a Securities Act
Affiliate to deliver to Baxter at least 15 days prior to the Effective Time an
agreement substantially in the form of Exhibit 6.3 to this Agreement.
Section 6.4 NO SOLICITATION. (a) The Company and its Subsidiaries and
affiliates will not, and the Company and its Subsidiaries and affiliates will
use their reasonable efforts to ensure that their respective officers,
directors, employees, investment bankers, attorneys, accountants and other
representatives and agents do not, directly or indirectly, initiate, solicit,
encourage or participate in, or provide any information to any Person (as
defined below) concerning, or take any action to facilitate the making of, any
offer or proposal which constitutes or is reasonably likely to lead to any
Acquisition Proposal (as defined below) of the Company or any Subsidiary or
affiliate or an inquiry with respect thereto. The Company shall, and shall cause
its Subsidiaries and affiliates, and their respective officers, directors,
employees, investment bankers, attorneys, accountants and other agents to,
immediately cease and cause to be terminated all existing activities,
discussions and negotiations, if any, with any parties conducted heretofore with
respect to any of the foregoing. Notwithstanding the foregoing, the Company may,
directly or indirectly, provide access and furnish information concerning its
business, properties or assets to any corporation, partnership, person or other
entity or group pursuant to an appropriate confidentiality agreement, and may
negotiate and participate in discussions and negotiations with such entity or
group concerning an Acquisition Proposal and recommend to its shareholders an
Acquisition Proposal that the Board of Directors determines in good faith is
more favorable to the Company's shareholders than the Merger (x) if such entity
or group has submitted a bona fide written proposal to the Board of Directors of
the Company relating to any such transaction and (y) if, in the opinion of the
Board of Directors of the Company, after consultation with independent legal
counsel to the Company (who may be the Company's regularly engaged independent
counsel), the failure to provide such information or access or to engage in such
discussions or negotiations would be inconsistent with their fiduciary duties
under applicable law.
(b) The Company shall promptly notify Baxter of any such offers, proposals
or Acquisition Proposals (including without limitation the terms and conditions
thereof and the identity of the Person making it), and will keep Baxter apprised
of all developments with respect to any such Acquisition Proposal. For purposes
hereof, any material modification of an Acquisition Proposal shall constitute a
new Acquisition Proposal.
(c) As used in this Agreement, "Acquisition Proposal" when used in
connection with any Person shall mean any tender or exchange offer involving
such Person, any proposal for a merger, consolidation or other business
combination involving such Person or any subsidiary of such Person, any proposal
or offer to acquire in any manner a substantial equity interest in, or a
substantial portion of the business or assets of, such Person or any subsidiary
of such Person, any proposal or offer with respect to any recapitalization or
restructuring with respect to such Person or any subsidiary of such Person or
any proposal or offer with respect to any other transaction similar to any of
the foregoing with respect to such Person, or any subsidiary of such Person;
PROVIDED, HOWEVER, that, as used in this Agreement, the term "Acquisition
Proposal" shall not apply to any transaction of the type described in this
subsection (c) involving Baxter, Purchaser or their affiliates. As used in this
Agreement, "Person" shall mean any corporation, partnership, person or other
entity or group (including the Company and its affiliates and representatives,
but excluding Baxter or any of its affiliates or representatives).
Section 6.5 NO WARN ACT ACTIVITIES. From the date hereof through the
Closing Date, the Company shall not effectuate i) a "plant closing" (as defined
in the WARN Act) affecting any site of employment or one or more facilities or
operating units within any site of employment or facility of the Company's or
the Subsidiaries' business, or ii) a "mass layoff" (as defined in the WARN Act)
affecting any site of employment or facility of the Company's or the
Subsidiaries' business without giving all notices required by
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the WARN Act, or any similar state law or regulation and Seller shall assume all
liability for any alleged failure to give such notice and indemnify and hold
harmless Baxter and its affiliates for any and all claims asserted under the
WARN Act or any similar state law or regulation because of a "plant closing" or
a "mass layoff" occurring on or before the Closing Date. For purposes of this
Agreement, the Closing Date is the "effective date" for purposes of the WARN
Act.
Section 6.6 TERMINATION OF EMPLOYEE STOCK PURCHASE PLAN. The Company shall
suspend indefinitely its Employee Stock Purchase Plan effective as of December
31, 1996, and the Company shall not issue any rights to acquire Company Common
Stock under such plan prior to such date.
ARTICLE VII
COVENANTS OF BAXTER AND PURCHASER
Section 7.1 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE.
(a) Baxter and Purchaser acknowledge that all rights to indemnification or
exculpation now existing in favor of the directors, officers, employees and
agents of the Company and its Subsidiaries as provided in their respective
charters or Bylaws or otherwise in effect as of the date hereof with respect to
matters occurring prior to the Effective Time shall survive the Merger and shall
continue in full force and effect. After the Effective Time, Baxter shall, or
shall cause the Surviving Corporation to, indemnify, defend and hold harmless
the present and former officers, directors, employees and agents of the Company
and its Subsidiaries (each an "Indemnified Party") against all losses, claims,
damages, liabilities, fees and expenses (including reasonable fees and
disbursements of counsel and judgments, fines, losses, claims, liabilities and
amounts paid in settlement (provided that any such settlement is effected with
the prior written consent of Baxter or the Surviving Corporation)) arising out
of actions or omissions occurring at or prior to the Effective Time to the full
extent permitted under Utah law, the Company's Articles of Incorporation or
Bylaws, in each case as in effect at the date hereof, including provisions
therein relating to the advancement of expenses incurred in the defense of any
action or suit; PROVIDED, that nothing herein shall impair any rights or
obligations of any present or former directors or officers of the Company.
(b) Baxter shall cause the Surviving Corporation to maintain in effect for
not fewer than six years from and after the Effective Time the policies of
directors' and officers' liability insurance most recently maintained by the
Company (provided that Baxter may cause the Surviving Corporation to substitute
therefor policies with reputable and financially sound carriers of at least the
same coverage and containing terms and conditions no less advantageous as long
as such substitution does not result in gaps or lapses in coverage with respect
to claims arising from or related to matters occurring prior to the Effective
Time); PROVIDED that in no event shall the Surviving Corporation be required to
expend more than an amount per year equal to 150% of the current annual premiums
paid by the Company (the "Premium Amount") to maintain or procure insurance
coverage pursuant to this Section 7.1(b); PROVIDED, FURTHER, that if the
Surviving Corporation is unable to obtain the insurance called for this Section
7.1(b), Baxter shall cause the Surviving Corporation to obtain as much
comparable insurance as is available for the Premium Amount per year.
(c) Baxter shall, or shall cause the Surviving Corporation to, pay all
expenses (including reasonable attorneys' fees that may reasonably be incurred
by the Indemnified Party in successfully enforcing the rights to which the
Indemnified Party is entitled under this Agreement or the Surviving
Corporation's Articles of Incorporation or Bylaws or is otherwise entitled.
(d) In the event the Surviving Corporation, Baxter or any of their
successors or assigns (i) consolidates with or merges into any other person and
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
provisions shall be made so that
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the successors and assigns of the Surviving Corporation and/or Baxter, as the
case may be, shall assume its obligations set forth in this Section 7.1.
Section 7.2 CONTINUATION OF OPERATIONS. Baxter and Purchaser shall for a
period of not less than one year from the Effective Date maintain the location
of the Company's headquarters at the same location from which the Company
conducted its headquarters immediately prior to the Effective Time.
Section 7.3 NYSE LISTING. Baxter shall use its reasonable efforts to cause
the Baxter Shares to be issued in the Merger in accordance with this Agreement
to be listed on the NYSE and on each national securities exchange on which
shares of Baxter Common Stock may at such time to be admitted for trading or
listed, subject to official notice of issuance, prior to the Effective Time.
Section 7.4 BAXTER PUBLIC INFORMATION. Baxter shall, for a period of at
least three years after the Effective Time, file on a timely basis all reports
required to be filed pursuant to Section 13 of the Exchange Act, so that current
information regarding Baxter is available as contemplated by Rule 144(c), or any
successor rule thereto, of the Securities Act
Section 7.5 EMPLOYEE BENEFITS. Subject to the right of Baxter or the
Surviving Corporation to terminate at will any Employees, Baxter shall cause the
Surviving Corporation (i) for a period of not less than one (1) year after the
Effective Time, to provide during the term of their employment after the
Effective Time any individuals employed by the Company immediately before the
Merger ("Employees") with salary, wages and other benefits at levels no less
favorable in the aggregate than those provided by the Company immediately before
the Merger, and (ii) continue the Company's current cash bonus plan (or a
substitute plan with substantially similar benefits) through December 31, 1997.
Section 7.6 THIRD PARTY BENEFICIARIES. The provisions of Section 7.1 are
intended to be for the benefit of, and shall be enforceable by, each Indemnified
Party, his or her heirs and his or her personal representatives.
Section 7.7 EMPLOYMENT OFFER. Baxter shall cause the Surviving Corporation
to offer employment to the persons specified in Exhibit 9.2(g) attached hereto
on the terms specified therein.
ARTICLE VIII
MUTUAL COVENANTS
Section 8.1 ACCESS TO INFORMATION; CONFIDENTIALITY. (a) Between the date
of this Agreement and the Effective Time, upon reasonable notice the Company
shall (and shall cause each of its Subsidiaries to) (i) give Baxter, its
affiliates and their respective officers, employees, accountants, counsel,
financing sources and other agents and representatives full access to all
plants, offices, warehouses and other facilities and to all contracts, internal
reports, data processing files and records, Federal, state, local and foreign
tax returns and records, commitments, books, records and affairs of the Company
and its Subsidiaries, whether located on the premises of the Company or one of
its Subsidiaries or at another location during normal business hours; (ii)
furnish promptly to Baxter or its affiliates a copy of each report, schedule,
registration statement and other document filed or received by it during such
period pursuant to the requirements of Federal securities laws or regulations;
(iii) permit Baxter or its affiliates to make such inspections as they may
reasonably require; (iv) cause its officers and the officers of its Subsidiaries
to furnish Baxter and its affiliates such financial, operating, technical and
product data and other information with respect to the business and properties
of the Company and its Subsidiaries as Baxter or its affiliates from time to
time may request, including without limitation financial statements and
schedules; (v) allow Baxter and its affiliates the opportunity to interview such
employees, vendors, customers, sales representatives, distributors and other
personnel of the Company with the Company's prior written consent, which consent
shall not be unreasonably withheld; and (vi) assist and cooperate with Baxter
and its affiliates in the development of integration plans for implementation by
Baxter and its affiliates and the Surviving Corporation following the Effective
Time; PROVIDED, HOWEVER, that no investigation pursuant to this
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Section 8.1 shall affect or be deemed to modify any representation or warranty
made by the Company herein. Until the Effective Time, materials furnished to
Baxter or its affiliates pursuant to this Section 8.1 may be used by Baxter or
its affiliates solely for strategic and integration planning purposes relating
to accomplishing the transactions contemplated hereby and for compliance with
the applicable securities laws.
(b) Except as otherwise provided below, until the Effective Time, Baxter and
Purchaser shall, and shall cause their affiliates, agents and representatives
to, keep secret and retain in confidence, and not use for the benefit of any
such person or others (other than in connection with this Agreement and the
transactions contemplated hereby), any confidential information of the Company
which Baxter or Purchaser or other affiliates obtained from the Company pursuant
to this Section 8.1. The restrictions on use and disclosure contained herein
shall not apply if and to the extent any such information (i) is publicly
available or becomes publicly available (through no action or fault of Baxter or
Purchaser or other affiliates), (ii) was or is obtained by Baxter or Purchaser
or other affiliates from a third party, PROVIDED that to the recipient's
knowledge, after reasonable inquiry, such third party was not bound by a
contractual, legal or fiduciary obligation of confidentiality to the Company or
any other party with respect to such information or material, (iii) was already
in the possession of Baxter or Purchaser or other affiliates or known to Baxter,
Purchaser or other affiliates prior to being disclosed or provided to them by or
on behalf of the Company, PROVIDED, that, to the recipient's knowledge, after
reasonable inquiry, the source of such information or material was not bound by
a contractual, legal or fiduciary obligation of confidentiality to the Company
or any other party with respect thereto, or (iv) is required to be disclosed in
a legal proceeding or pursuant to applicable law or the rules or regulations of
any national securities exchange or over-the-counter market. In the event that
Baxter, Purchaser or its affiliates is requested or required (by oral questions,
interrogatories, request for information or documents in legal proceedings,
subpoena, civil investigative demand or other similar process) to disclose any
of the confidential information provided under this Section 8.1, such party
shall provide the Company with prompt written notice of any such request or
requirement so that the Company may seek a protective order or other appropriate
remedy and/ or waive compliance with the provisions of this Section 8.1. If, in
the absence of a protective order or other remedy or the receipt of a waiver by
the Company, Baxter or Purchaser is nonetheless, based on advice of its outside
counsel, legally compelled to disclose the confidential information to any
tribunal or else stand liable to contempt or suffer other censure or penalty,
such party may, without liability hereunder, disclose to such tribunal only that
portion of the confidential information which such counsel advises such party is
legally required to be disclosed, provided that such party shall use its
reasonable efforts to preserve the confidentiality of the confidential
information, including without limitation by cooperating with the Company to
obtain an appropriate protective order or other reliable assurance that
confidential treatment will be afforded the confidential information by such
tribunal. The restrictions on use and disclosure of confidential information
under this Section 8.1 shall expire three years from the date hereof.
Section 8.2 HSR ACT. The Company, Baxter and Purchaser shall take all
reasonable actions necessary to file as soon as practicable notifications under
the HSR Act and to respond as promptly as practicable to any inquiries received
from the Federal Trade Commission and the Antitrust Divisions of the Department
of Justice for additional information or documentation and to respond as
promptly as practicable to all inquiries and requests received from any state
attorney general or other Governmental Entity in connection with antitrust
matters.
Section 8.3 CONSENTS AND APPROVALS. Each of the Company, Baxter and
Purchaser will take all reasonable actions necessary to comply promptly with all
legal requirements which may be imposed on it with respect to this Agreement and
the transactions contemplated hereby (which actions shall include without
limitation furnishing all information required under the HSR Act and in
connection with approvals of or filings with any other (Governmental Entity) and
will promptly cooperate with and furnish information to each other in connection
with any such requirements imposed upon any of them or any of their respective
subsidiaries in connection with this Agreement and the transactions contemplated
hereby.
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Each of the Company, Baxter and Purchaser will, and will cause its respective
subsidiaries to, (i) take all reasonable actions necessary to obtain (and will
cooperate with each other in obtaining) any consent, authorization, order or
approval of, or any exemption by, any Governmental Entity or other public or
private third party required to be obtained or made by Baxter, Purchaser, the
Company or any of their respective subsidiaries in connection with the Merger or
the taking of any action contemplated thereby or by this Agreement and (ii)
cooperate in maintaining good business relationships with distributors of the
Company products after the date hereof.
Section 8.4 NOTIFICATION OF CERTAIN MATTERS. The Company will give prompt
notice to Baxter or Purchaser, and Baxter and Purchaser will give prompt notice
to the Company, of (a) any notice of default received by either of them or any
of their subsidiaries subsequent to the date of this Agreement and prior to the
Effective Time under any material instrument or material agreement to which
either of them, or any of their subsidiaries, is a party or by which either is
bound, which default would, if not remedied, result in a Material Adverse Effect
or a Baxter Material Effect as the case may be or which would render materially
incomplete or untrue any representation made herein, (b) any suit, action or
proceeding instituted or, to the knowledge of any of them, threatened against or
affecting any of them subsequent to the date of this Agreement and prior to the
Effective Time which, if adversely determined, would result in a Baxter Material
Adverse Effect or result in a Material Adverse Effect in the Company and its
Subsidiaries or which would render materially incorrect any representation made
herein and (c) any material breach of the Company's, or Baxter's or Purchaser's,
as the case may be, covenants hereunder or the occurrence of any event that is
reasonably likely to cause any of its representations and warranties hereunder
to become incomplete or untrue in any material respect.
Section 8.5 BROKERS OR FINDERS. Each of Baxter and the Company represents,
as to itself, its subsidiaries and its affiliates, that no agent, broker,
investment banker, financial advisor or other firm or person is or will be
entitled to any brokers' or finders' fee or any other commission or similar fee
in connection with any of the transactions contemplated by this Agreement except
J.P. Morgan & Co. Incorporated and William Blair & Company LLC, whose fees and
expenses will be paid by Baxter and the Company, respectively, in accordance
with the agreements with such firms (copies of which have been delivered by each
of the Company and Baxter to the other prior to the date of this Agreement), and
each of Baxter and the Company agrees to indemnify and hold the other harmless
from and against any and all claims, liabilities or obligations with respect to
any other fees, commissions or expenses asserted by any person on the basis of
any act or statement alleged to have been made by such party or its affiliates.
Section 8.6 PUBLICITY. So long as this Agreement is in effect and subject
to Section 6.4 hereof, neither the Company, Baxter nor any of their respective
affiliates shall issue or cause the publication of any press release or other
announcement with respect to the Merger, this Agreement or the other
transactions contemplated hereby without the prior consultation of the other
party, except as may be required by law or by any listing agreement with a
national securities exchange.
Section 8.7 REGISTRATION STATEMENT. As promptly as practicable, Baxter and
the Company shall cooperate and promptly prepare and file with the SEC the
Company Proxy Statement, which shall include a summary of the plan of merger
contemplated by this Agreement, and Baxter shall prepare and file with the SEC
the Registration Statement (collectively, such Company Proxy Statement and
Registration Statement, being the "Company Proxy Statement/Prospectus"). Baxter
shall use its reasonable efforts, and the Company will cooperate with Baxter, to
have the Registration Statement declared effective by the SEC as promptly as
practicable. Baxter shall also use its reasonable efforts to take any action
required to be taken under state securities or blue sky laws in connection with
the issuance of the Baxter Shares pursuant hereto. The Company shall furnish
Baxter with all information concerning the Company and the holders of its shares
and shall take such other action as Baxter reasonably may request in connection
with such Company Proxy Statement/Prospectus and issuance of the Baxter Shares
hereunder. Baxter agrees that the Company Proxy Statement/Prospectus and each
amendment or supplement thereto at the time of mailing thereof through twenty
(20) business days thereafter, or, in the case of the Registration Statement and
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each amendment or supplement thereto, at the time it is filed or becomes
effective, will not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; PROVIDED, HOWEVER, that the foregoing shall not apply to
the extent that any such untrue statement of a material fact or omission to
state a material fact was made by Baxter in reliance upon and in conformity with
written information concerning the Company furnished to Baxter by the Company
specifically for use in the Company Proxy Statement/Prospectus. The Company
agrees that the information provided by it for inclusion in the Company Proxy
Statement/Prospectus and each amendment or supplement thereto, at the time of
mailing thereof through twenty (20) business days thereafter, or, in the case of
information provided by the Company for inclusion in the Registration Statement
or any amendment or supplement thereto, at the time it is filed or becomes
effective, will not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; PROVIDED, HOWEVER, that the foregoing shall not apply to
the extent that any such untrue statement of a material fact or omission to
state a material fact was made by the Company in reliance upon and in conformity
with written information concerning Baxter or Purchaser furnished to the Company
by Baxter or Purchaser specifically for use in the Company Proxy
Statement/Prospectus. Except as otherwise required by law, no amendment or
supplement to the Company Proxy Statement/Prospectus will be made by Baxter or
the Company without the approval of the other party, which approval will not be
unreasonably withheld. Baxter will advise the Company, promptly after it
receives notice thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, the issuance of any
stop order, the suspension of the qualification of Baxter Shares issuable in
connection with the Merger for offering or sale in any jurisdiction, or any
request by the SEC for amendment of the Company Proxy Statement/Prospectus or
the Registration Statement or comments thereon and responses thereto or requests
by the SEC for additional information.
Section 8.8 ADDITIONAL AGREEMENTS. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use all 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 under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including using all reasonable efforts to obtain all necessary waivers, consents
and approvals in connection with any governmental requirements set forth in
Section 4.4 of the Agreement, to effect all necessary registrations and filings
and to obtain all necessary financing. 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/or directors of Baxter, Purchaser and
the Company shall take all such necessary action.
Section 8.9 TAX-FREE REORGANIZATION. Baxter and the Company shall each use
its reasonable efforts to cause the Merger to be treated as a reorganization
under Section 368(a) of the Code.
Section 8.10 PRE-CLOSING ADJUSTMENTS. At or before the Effective Time, the
Company shall, consistent with GAAP and in a manner reasonably requested by
Baxter and mutually satisfactory to the parties, establish such additional
accruals and reserves as may be necessary to conform the Company's accounting
reserve practices and methods (including credit loss practices and methods) to
those of Baxter (as such practices and methods are to be applied to the Company
from and after the Effective Time) and Baxter's plan with respect to the conduct
of the Company's business following the Merger and otherwise to reflect
Merger-related expenses and costs incurred by the Company, PROVIDED, HOWEVER,
that the Company shall not be required to take such action (a) more than five
days prior to the Effective Time and (b) unless Baxter agrees that all
conditions to Closing set forth in Section 9.2 which can be satisfied prior to
the Effective Time have been satisfied or waived, and no accrual or reserve made
by the Company or any Company subsidiary pursuant to this Section 8.10, or any
litigation or regulatory proceeding arising out of any such accrual or reserve,
shall constitute or be deemed to be a breach, violation of or failure to satisfy
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any representation, warranty, covenant, condition or other provision of this
Agreement or otherwise be considered in determining whether any such breach,
violation or failure to satisfy shall have occurred.
ARTICLE IX
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 9.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction or waiver, on or prior to the Effective Time, of the
following conditions:
(a) GOVERNMENTAL APPROVALS. All authorizations, consents, orders or
approvals of, or declarations or filings with, or expiration of waiting periods
imposed by, and Federal, state, local or foreign governmental or regulatory
authority necessary for the consummation of the Merger and the transactions
contemplated by this Agreement shall have been filed, occurred or been obtained
and shall be in effect at the Effective Time.
(b) LEGAL ACTION. No temporary restraining order, preliminary injunction
or permanent injunction or other order precluding, restraining, enjoining,
preventing or prohibiting the consummation of the Merger shall have been issued
by an Federal, state or foreign court or other governmental or regulatory
authority and remain in effect.
(c) STATUTES. No Federal, state, local or foreign statute, rule or
regulation shall have been enacted which prohibits the consummation of the
Merger or would make the consummation of the Merger illegal.
(d) SHAREHOLDER APPROVAL. This Agreement and the transactions contemplated
hereby shall have been approved and adopted by the requisite vote of the
stockholders of the Company respectively in accordance with and subject to
applicable law.
(e) REGISTRATION STATEMENT. The Registration Statement shall have been
declared effective under the Securities Act and shall not be the subject of any
stop order or proceedings seeking a stop order.
(f) LISTING. The Baxter Shares shall have been listed on the New York
Stock Exchange ("NYSE"), subject to official notice of issuance.
Section 9.2 CONDITIONS OF OBLIGATIONS OF BAXTER AND PURCHASER. The
obligation of Baxter and Purchaser to effect the Merger is further subject to
the satisfaction at or prior to the Effective Time of the following conditions,
unless waived by Baxter and Purchaser:
(a) The representations and warranties of the Company set forth in this
Agreement shall be true and correct in all material respects as of the date of
this Agreement and as of the Effective Time, as if made of such time.
(b) The Company shall have performed and complied, in all material respects,
with all obligations and covenants required to be performed or complied with by
it under this Agreement at or prior to the Effective Time.
(c) The Company shall have obtained all consents, approvals, authorizations
and permits required from third parties and any Governmental Entity (applicable
to the Company and its subsidiaries) necessary for the consummation of the
transactions by the Company of the transactions contemplated by this Agreement.
(d) Baxter and Purchaser shall have received from the Company an officer's
certificate substantially in the form of Exhibit 9.2(d)(i) attached hereto and a
Secretary's certificate substantially in the form of Exhibit 9.2(d)(ii) attached
hereto.
(e) From the date of this Agreement through the Effective Time, no event
shall have occurred which shall be reasonably likely to result or shall have
resulted in a Material Adverse Effect.
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<PAGE>
(f) Baxter and Purchaser shall have received (i) an opinion from Louis M.
Haynie, Esq., counsel to the Company, substantially in the form of Exhibit
9.2(f)(i) attached hereto, (ii) an opinion from Ray, Quinney & Nebeker, counsel
to the Company, substantially in the form of Exhibit 9.2(f)(ii) and (iii) a
letter dated the date hereof from Workman, Nydegger & Seeley, special counsel to
the Company, affirming the statements set forth in their opinions previously
delivered pursuant to Section 4.21 of the Agreement.
(g) Gary L. Crocker and those other persons specified in Schedule 9.2(g)
attached hereto shall have entered into employment or other agreements for the
periods and on such other terms substantially as set forth in Exhibits 9.2(g).A,
9.2(g).B and 9.2(g).C, provided, however that no person listed on Schedule
9.2(g) will be required by Baxter or Purchaser to relocate outside of the State
of Utah.
(h) The parties (other than the Company or its affiliates) to the options
listed in Schedule 9.2(h) attached hereto shall have agreed to receive cash
payments as calculated by Section 3.1(d) in cancellation of such options in full
prior to the Effective Time.
Section 9.3 CONDITIONS OF OBLIGATIONS OF THE COMPANY. The obligations of
the Company to effect the Merger are further subject to the satisfaction at or
prior to the Effective Time of the following conditions, unless waived by the
Company:
(a) The representations and warranties of Baxter and Purchaser set forth in
this Agreement shall be true and correct in all material respects as of the date
of this Agreement and as of the Effective Time, as if made as of such time.
(b) Baxter and Purchaser shall have performed and complied with, in all
material respects, all obligations and covenants required to be performed or
complied with by it under this Agreement at or prior to the Effective Time.
(c) Baxter and Purchaser shall have obtained all consents, approvals,
authorizations and permits required from third parties and any Governmental
Entity (applicable to Baxter and Purchaser and their subsidiaries) necessary for
the consummation of the transactions by Baxter and Purchaser of the transactions
contemplated by this Agreement.
(d) The Company shall have received from Baxter and Purchaser (i) an
officer's certificate substantially in the form of Exhibit 9.3(d)(i) attached
hereto and (ii) a Secretary's certificate substantially in the form of Exhibit
9.3(d)(ii)
(e) The Company shall have received an opinion (i) from Jay P. Wertheim,
Esq., in-house counsel to Baxter, substantially in the form of Exhibit 9.3(e)(i)
attached hereto and (ii) an opinion from Skadden, Arps, Slate, Meagher & Flom
LLP, counsel to Baxter and Purchaser substantially in the form of Exhibit
9.3(e)(ii) attached hereto.
(f) The Company shall have received a written opinion from Ray, Quinney &
Nebeker, counsel to the Company, to the effect that the Merger will be treated
for Federal income tax purposes as a reorganization under Section 368(a) of the
Code.
(g) From the date of this Agreement through the Effective Time, no event
shall have occurred which shall be reasonably likely to result or shall have
resulted in a Baxter Material Adverse Effect.
A-29
<PAGE>
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
Section 10.1 TERMINATION. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
shareholder approval thereof:
(a) BY MUTUAL CONSENT. By mutual consent of the Board of Directors of
Parent and the Board of Directors of the Company.
(b) BY BAXTER AND PURCHASER OR THE COMPANY. By either the Board of
Directors of Baxter or the Board of Directors of the Company:
(i) if the Merger shall not have been consummated on or prior to June
30, 1997; PROVIDED, HOWEVER, that the right to terminate this Agreement
under Section 10.1(b)(i) shall not be available to any party whose failure
to fulfill any material obligation under this Agreement has been the cause
of or resulted in, the failure of the Merger to be consummated on or prior
to such date; or
(ii) if a court of competent jurisdiction or other governmental or
regulatory authority shall have issued an order, decree or ruling or taken
any other action (which order, decree, ruling or other action the parties
hereto shall use their reasonable efforts to lift), in each case permanently
restraining, enjoining, or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or other
action shall have become final and non-appealable.
(c) BY THE COMPANY. By the Board of Directors of the Company:
(i) if, prior to June 30, 1997, the Company shall have (A) accepted an
Acquisition Proposal in compliance with the terms of Section 6.4 hereof and
(B) paid or caused to be paid the fees provided for in Section 11.1(b)
hereof; or
(ii) if, prior to the Effective Time, Baxter or Purchaser breaches or
fails in any material respect to perform or comply with any of its material
covenants and agreements contained herein or breaches its representations
and warranties in any material respect.
(d) BY BAXTER AND PURCHASER. By the Board of Directors of Baxter:
(i) if Baxter or Purchaser is not in material breach of the Agreement
and (A) prior to the Effective Time, the Company shall have received an
Acquisition Proposal and not rejected such Acquisition Proposal within 20
days of its receipt or the Board of Directors of the Company shall have
withdrawn, or modified or changed (including by amendment to the Company
Proxy Statement/ Prospectus) in a manner adverse to Baxter or Purchaser its
approval or recommendation of the Merger or this Agreement, or shall have
recommended an Acquisition Proposal; or (B) prior to the Effective Time, it
shall have been publicly disclosed or Baxter or Purchaser shall have learned
that any person entity or "group" (as that term is defined in Section
13(d)(3) of the Exchange Act), other than Baxter or its affiliates or any
group of which any of them is a member shall have acquired beneficial
ownership (determined pursuant to Rule 13d-3 promulgated under the Exchange
Act) of more than 19.9% of any class or series of shares of the Company
(including the Shares), through the acquisition of stock, the formation of a
group or otherwise, or shall have been granted an option, right, or warrant,
conditional or otherwise, to acquire beneficial ownership of more than 19.9%
of any class or series of shares of the Company (including the Shares); or
(ii) if prior to the Effective Time, the Company breaches or fails in
any material respect to perform or comply with any of its material covenants
and agreements contained herein or breaches its representations and
warranties in any material respect.
A-30
<PAGE>
Section 10.2 EFFECT OF TERMINATION AND ABANDONMENT. In the event of
termination of this Agreement as provided in Section 10.1 above, written notice
thereof shall forthwith be given to the other party or parties specifying the
provision hereof pursuant to which such termination is made, and this Agreement
shall forthwith become null and void and there shall be no liability or
obligation on the part of Baxter and Purchaser, or any of them, or the Company,
or their respective officers, directors or employees, except (a) for fraud or
for material breach of this Agreement and (b) as set forth in this Section 10.2,
Sections 8.1(b) and 11.1 hereof.
ARTICLE XI
GENERAL PROVISIONS
Section 11.1 FEES AND EXPENSES. (a) Except as contemplated by this
Agreement, including Section 11.1(b) hereof, all costs and expenses incurred in
connection with this Agreement and the consummation of the transactions
contemplated hereby shall be paid by the party incurring such expenses.
(b) If (i) the Board of Directors of the Company shall terminate this
Agreement pursuant to Section 10.1(c)(i) hereof or (ii) the Board of Directors
of Baxter shall terminate this Agreement pursuant to either of Section
10.1(d)(i) or 10.1(d)(ii) hereof after receipt by the Company of an Acquisition
Proposal, the Company shall pay or cause to be paid to Baxter (concurrently with
the termination of this Agreement in the case of termination referred to in
Section 10.1(c)(i) hereof, or the earlier of (i) entering into an agreement to
consummate an Acquisition Proposal or (ii) upon consummation of an Acquisition
Proposal which existed at the time of termination, in either case within six
months of a termination referred to in either of Sections 10(d)(i) or 10(d)(ii)
hereof), an amount equal to $7,000,000.
(c) The Company's payment of a termination fee pursuant to this subsection
shall be the sole and exclusive remedy of Baxter and Purchaser against the
Company and any of its Subsidiaries and their respective directors, officers,
employees, agents, advisors or other representatives with respect to the
occurrences giving rise to such payment; provided that this limitation shall not
apply in the event of a willful breach of this Agreement by the Company with
respect to such occurrence.
Section 11.2 AMENDMENT AND MODIFICATION. Subject to applicable law, this
Agreement may be amended, modified and supplemented in any and all respects,
whether before or after any vote of the shareholders of the Company contemplated
hereby, by written agreement of the parties hereto, by action taken by their
respective Boards of Directors, at any time prior to the Effective Time with
respect to any of the terms contained herein; PROVIDED, HOWEVER, that after the
approval of this Agreement by the shareholders of the Company, no such
amendment, modification or supplement shall reduce or change the Merger
Consideration.
Section 11.3 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement shall survive the termination
of this Agreement in accordance with Article X or the Effective Time.
Section 11.4 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given upon personal delivery, facsimile
transmission (which is confirmed), telex or delivery by an overnight express
courier service (delivery, postage or freight charges prepaid), or on the fourth
day following deposit in the United States mail (if sent by registered or
certified mail, return receipt requested,
A-31
<PAGE>
delivery, postage or freight charges prepaid), addressed 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 Baxter or Purchaser, to:
c/o Baxter Healthcare Corporation
17221 Red Hill Avenue
Irvine, California 92614
Telecopy No.: (714) 474-6445
Attention: Jay P. Wertheim, Esq.,
Vice President, Law
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Telecopy No.: (213) 687-5600
Attention: Joseph J. Giunta, Esq.
(b) if to the Company, to:
Research Medical, Inc.
6864 South 300 West
Midvale, Utah 84047
Telecopy No.: (801) 562-1122
Attention: Gary L. Crocker
with a copy to:
Ray, Quinney & Nebeker
79 South Main Street
Salt Lake City, Utah 84111
Telecopy No.: (801) 532-7543
Attention: A.R. Thorup
Section 11.5 DEFINITIONS; INTERPRETATION. As used in this Agreement, the
term "affiliate(s)" shall have the meaning set forth in Rule 12b-2 of the
Exchange Act. When a reference is made in this Agreement to an Article, Section,
Exhibit or Schedule, such reference shall be to an Article, Section, Exhibit or
Schedule to this Agreement unless otherwise indicated. The words "include,"
"includes" and "including" when used herein shall be deemed in each case to be
followed by the words "without limitation." The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
Section 11.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
Section 11.7 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement and the Confidentiality Agreement dated May 7, 1996 by and between
Baxter Healthcare Corporation and the Company (including the documents and the
instruments referred to herein and therein) (a) constitute the entire agreement
and supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof, and (b) except as
provided in Section 7.6 hereof are not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
A-32
<PAGE>
Section 11.8 SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or to her
authority to be invalid, void, unenforceable or against its regulatory policy,
the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
Section 11.9 GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws of the State of Utah (without giving effect to the
principles of conflicts of law thereof).
Section 11.10 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Purchaser may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Baxter or to any direct or indirect wholly owned subsidiary of Baxter. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
IN WITNESS WHEREOF, each of Baxter, Purchaser and the Company has caused
this Agreement to be executed on its behalf by its duly authorized officers
hereunder all as of the date first above written.
BAXTER INTERNATIONAL INC.
By: /s/ HARRY M. JANSEN KRAEMER, JR.
-------------------------------------------
Name: Harry M. Jansen Kraemer, Jr.
Title: Senior Vice President and
Chief Financial Officer
BAXTER CVG SERVICES III, INC.
By: /s/ MICHAEL A. MUSSALLEM
-------------------------------------------
Name: Michael A. Mussallem
Title: President
RESEARCH MEDICAL, INC.
By: /s/ GARY L. CROCKER
-------------------------------------------
Name: Gary L. Crocker
Title: President and
Chief Executive Officer
A-33
<PAGE>
ANNEX B
[WILLIAM BLAIR & COMPANY LETTERHEAD]
December 3, 1996
Board of Directors
Research Medical, Inc.
6864 South 300 West
Midvale, UT 84047
Gentlemen:
You have requested our opinion as to the fairness, from a financial point of
view, to the shareholders (the "Shareholders") of Research Medical, Inc. (the
"Company") of the consideration to be received pursuant to the terms of the
Merger Agreement dated as of December 3, 1996 (the "Merger Agreement") by and
among Baxter International Inc. ("Baxter") and the Company.
Pursuant to the terms of the Merger Agreement, the Company will be merged
with a newly formed wholly-owned subsidiary of Baxter (the "Merger"), with such
Baxter subsidiary surviving the Merger. The Merger Agreement provides, among
other things, that each share of common stock of the Company will be converted
into that number of shares of Baxter common stock equal to the quotient arrived
at by dividing $23.50 by the market value of Baxter common stock (as defined in
the Merger Agreement).
We have acted as financial advisor to the Company in connection with the
Merger. In connection with our review of the Merger and the preparation of our
opinion herein, we have: (a) reviewed the terms and conditions of the Merger
Agreement and the financial terms of the Merger as set forth in the Merger
Agreement; (b) analyzed certain historical financial statements and other
information regarding the Company; (c) analyzed certain financial and other
information relating to the prospects of the Company provided to us by the
Company's management, including financial projections; (d) discussed the past
and current operations and financial condition and prospects of the Company with
senior executives of the Company; (e) reviewed the financial terms, to the
extent publicly available, of selected actual business combinations we believe
to be relevant; and (f) performed such other analyses as we have deemed
appropriate.
We have assumed the accuracy and completeness of all such information and
have not attempted to verify independently any of such information, nor have we
made or obtained an independent valuation or appraisal of any of the assets or
liabilities of the Company. With respect to financial information, we have
assumed that it has been reasonably prepared on bases reflecting the best
currently available estimates and judgments of the Company's management, as to
the future financial performance of the Company. We assume no responsibility
for, and express no view as to, such forecasts or the assumptions on which they
are based. Our opinion is necessarily based solely upon information available to
us and business, market, economic and other conditions as they exist on, and can
be evaluated as of the date hereof.
In rendering our opinion, we have assumed that the Merger will be
consummated on the terms described in the Merger Agreement, without any waiver
of any material terms or conditions by the Company and that obtaining the
necessary regulatory approvals for the Merger will not have an adverse effect on
the Company.
B-1
<PAGE>
William Blair & Company has been engaged in the investment banking business
since 1935. We undertake the valuation of investment securities in connection
with public offerings, private placements, business combinations, estate and
gift tax valuations and similar transactions. For our services, including the
rendering of this opinion, the Company will pay us a fee and indemnify us
against certain liabilities.
We have been retained by the board of directors of the Company, and this
letter is furnished for the use and benefit of the board of directors and is not
a recommendation to the Company's shareholders with respect to the Merger. It is
understood that this letter may not be disclosed or otherwise referred to
without our prior written consent, except that it may be included in a proxy
statement mailed to shareholders by the Company with respect to the Merger.
Based upon and subject to the foregoing, it is our opinion as investment
bankers that, as of December 3, 1996, the consideration to be paid to the
Shareholders of the Company in the Merger pursuant to the Merger Agreement is
fair, from a financial point of view, to such Shareholders.
Very truly yours,
/s/ WILLIAM BLAIR & COMPANY, L.L.C.
B-2
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The registrant, a Delaware corporation, is empowered by section 145 of the
Delaware General Corporation Law, subject to the procedures and limitations
stated therein, to indemnify any person against expenses (including attorney's
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in the defense of any threatened, pending or completed
action, suit or proceeding in which such person is made a party by reason of his
or her being or having been a director or officer of the registrant. The statute
provides that indemnification pursuant to its provisions is not exclusive of
other rights of indemnification to which a person may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors, or otherwise.
The Restated Certificate of Incorporation of the registrant provides that the
registrant shall indemnify its directors and officers substantially to the
fullest extent permitted by the Delaware General Corporation Law.
The registrant is also empowered by section 102(b) of the Delaware General
Corporation Law to include a provision in its certificate of incorporation to
limit a director's liability to the registrant or its stockholders for monetary
damages for breaches of fiduciary duty as a director. Article Eighth of the
Restated Certificate of Incorporation states that directors of the registrant
shall not be liable for monetary damages for breach of fiduciary duty "to the
fullest extent permitted by the General Corporation Law of Delaware as the same
exists or may hereafter be amended." As Delaware law now exists, directors will
remain liable for damages for (i) a breach of their duty of loyalty to the
registrant and its stockholders; (ii) their failure to act in good faith; (iii)
their intentional misconduct or knowing violation of law; (iv) improper dividend
payments, stock repurchases or redemptions; and (v) any transaction from which
the director derived an improper personal benefit.
Policies of insurance are maintained by the registrant under which the
directors and officers of the registrant are insured, within the limits and
subject to the limitations of the policies, against certain expenses in
connection with the defense of actions, suits or proceedings, and certain
liabilities which might be imposed as a result of such actions, suits or
proceedings, to which they are parties by reason of being or having been such
directors or officers.
The registrant has entered into indemnification agreements with its officers
and directors, which its stockholders have approved or ratified. These
agreements provide for full indemnification, including indemnification for
judgments or settlements against an officer or director in favor of the
registrant, with certain exceptions.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) EXHIBITS
The exhibits to this registration statement are listed in the Exhibit Index
and are incorporated herein by reference.
(b) FINANCIAL STATEMENT SCHEDULES
The information required of Baxter by Schedule II, Schedule of Valuation and
Qualifying Accounts, for the three years ended December 31, 1995 is incorporated
herein by reference to Baxter's Annual Report on Form 10-K filed with the
Securities and Exchange Commission for the fiscal year ended December 31, 1995,
file No. 1-4448.
(c) REPORTS, OPINIONS OR APPRAISALS
Opinion of William Blair & Company, L.L.C. (Included as Annex B to the Proxy
Statement/ Prospectus included in this registration statement, (the "Proxy
Statement/Prospectus")).
II-1
<PAGE>
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
(c) The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.
(d) The registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (c) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
II-2
<PAGE>
(e) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit of proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(f) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(g) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Township of West Deerfield, State
of Illinois, on the 7th day of February, 1997.
BAXTER INTERNATIONAL INC.
By: /s/ VERNON R. LOUCKS JR.
-----------------------------------------
Vernon R. Loucks Jr.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 7th day of February, 1997.
(i) Principal Executive Officer
/s/ VERNON R. LOUCKS JR.
- ------------------------------
Vernon R. Loucks Jr.
CHAIRMAN AND CHIEF EXECUTIVE
OFFICER
(ii) Principal Financial
Officer
/s/ HARRY M. JANSEN KRAEMER,
JR.
- ------------------------------
Harry M. Jansen Kraemer, Jr.
SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL
OFFICER AND A DIRECTOR
(iii) Principal Accounting
Officer
/s/ BRIAN P. ANDERSON
- ------------------------------
Brian P. Anderson
CONTROLLER
(iv) A Majority of the Board of Directors
Pei-yuan Chia
John W. Colloton
Susan Crown
Mary Johnston Evans
Frank R. Frame
Martha R. Ingram
Harry M. Jansen Kraemer, Jr.
Arnold J. Levine, Ph.D.
Georges C. St. Laurent, Jr.
Monroe E. Trout, M.D.
Reed V. Tuckson, M.D.
Fred L. Turner
By: /s/ VERNON R. LOUCKS
JR.
-------------------------
Vernon R. Loucks Jr.
DIRECTOR AND
ATTORNEY-IN-FACT
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENTS
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<C> <S> <C>
2.1* Amended and Restated Agreement and Plan of Merger, dated as of December 3, 1996, as
amended and restated on February 4, 1997, (the "Merger Agreement") by and among Baxter
International Inc. ("Baxter"), Baxter CVG Services III, Inc. and Research Medical, Inc.
("RMI") (Included as Annex A to the Proxy Statement/Prospectus) (exhibits to the Merger
Agreement omitted, but will be filed by Baxter with the Commission upon request).
4.1* Certificate of Designation of Series A Junior Participating Preferred Stock, filed under
the Securities Act of 1933 as Exhibit 4.3 to Baxter's registration statement on Form S-8
(No. 33-28428).
4.2* Rights Agreement dated as of March 20, 1989 between Baxter International Inc. and the
First National Bank of Chicago, as Rights Agent, filed as Exhibit 1 to Baxter's
registration statement on Form 8-A dated March 21, 1989 (file No. 1-4448).
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.
8.1 Opinion of Ray, Quinney & Nebeker regarding tax matters.
12.1* Statements re computation of ratios filed as Exhibit 12 to Baxter's Annual Report on Form
10-K for the year ended December 31, 1995 (file No. 1-4448).
15.1 Awareness Letter of Price Waterhouse LLP.
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of KPMG Peat Marwick LLP.
23.3 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (Included in Exhibit 5.1 hereto).
23.4 Consent of Ray, Quinney & Nebeker.
23.5 Consent of Workman, Nydegger & Seeley.
23.6 Consent of William Blair & Company L.L.C. (Included in Annex B to the Proxy
Statement/Prospectus)
24.1 Power of Attorney of Pei-yuan Chia.
24.2 Power of Attorney of John W. Colloton.
24.3 Power of Attorney of Susan Crown.
24.4 Power of Attorney of Mary Johnston Evans.
24.5 Power of Attorney of Frank R. Frame.
24.6 Power of Attorney of Martha R. Ingram.
24.7 Power of Attorney of Harry M. Jansen Kraemer, Jr.
24.8 Power of Attorney of Arnold J. Levine, Ph.D.
24.9 Power of Attorney of Georges C. St. Laurent, Jr.
24.10 Power of Attorney of Monroe E. Trout, M.D.
24.11 Power of Attorney of Reed V. Tuckson, M.D.
24.12 Power of Attorney of Fred L. Turner.
99.1 Form of RMI proxy card.
</TABLE>
- ------------------------
* Incorporated by reference.
II-5
<PAGE>
[SASM&F LLP Letterhead]
EXHIBIT 5.1
February 7, 1997
Baxter International Inc.
c/o Baxter Healthcare Corporation
17221 Red Hill Avenue
Irvine, California 92614
Re: Baxter International Inc.
Registration on Form S-4
Ladies and Gentlemen:
We have acted as special counsel to Baxter International Inc., a Delaware
corporation ("Baxter"), in connection with the offering by Baxter of up to
5,641,649 shares (the "Baxter Shares") of Common Stock, par value $1 per share,
of Baxter (the "Baxter Common Stock"), pursuant to the Amended and Restated
Agreement and Plan of Merger, dated as of December 3, 1996, as amended and
restated on February 7, 1997, (the "Merger Agreement"), by and among Baxter,
Baxter CVG Services III, Inc., a Utah corporation and a wholly owned subsidiary
of Baxter, and Research Medical, Inc., a Utah corporation ("RMI").
This opinion is being furnished in accordance with the requirements of Item
601(b)(5) of Regulation S-K under the Securities Act of 1933, as amended (the
"Act").
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of (i) the Registration
Statement on Form S-4 (File No. 333- ) as filed with the Securities and
Exchange Commission (the "Commission") on February 7, 1997 under the Act, (such
Registration Statement being hereinafter referred to as the "Registration
Statement"); (ii) the Merger Agreement, filed as an exhibit to the Registration
Statement; (iii) a specimen certificate representing the Baxter Common Stock;
(iv) the Restated Certificate of Incorporation of Baxter, as presently in
effect; (v) the By-Laws of Baxter, as presently in effect; and (vi) certain
resolutions of the Board of Directors of Baxter relating to the transactions
contemplated by the Merger Agreement. We have also examined originals or copies,
certified or otherwise identified to our satisfaction, of such records of Baxter
and such agreements, certificates of public officials, certificates of officers
or other representatives of Baxter and others, and such other documents,
certificates and records as we have deemed necessary or appropriate as a basis
for the opinions set forth herein.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified, conformed or photostatic copies and the
authenticity of the originals of such latter documents. In making our
examination of documents executed or to be executed by parties other than
Baxter, we have assumed that such parties had or will have the power, corporate
or other, to enter into and perform all obligations thereunder and have also
assumed the due authorization by all requisite action, corporate or other, and
execution and delivery by such parties of such documents and the validity and
binding effect thereof. As to any facts material to the opinions expressed
herein which we have not independently established or verified, we have relied
upon statements and representations of officers and other representatives of
Baxter and others.
We do not express any opinion as to the laws of any jurisdiction other than
the General Corporation Law of the State of Delaware.
<PAGE>
Baxter International Inc.
February 7, 1997
Page 2
Based upon and subject to the foregoing, we are of the opinion that when (i)
the Merger becomes effective under applicable law; and (ii) certificates
representing the Baxter Shares in the form of the specimen certificates examined
by us have been properly signed by an authorized officer of the transfer agent
and registrar for the Baxter Common Stock and registered by such transfer agent
and registrar in the names of the shareholders of RMI, and delivered to the
Exchange Agent (as defined in the Merger Agreement) in accordance with the terms
of the Merger Agreement, the issuance and sale of the Baxter Shares will have
been duly authorized, and the Baxter Shares will be validly issued, fully paid
and non-assessable.
We hereby consent to the filing of this opinion with the Commission as an
exhibit to the Registration Statement. We also consent to the reference to our
firm under the caption "Legal Matters" in the Registration Statement. In giving
this consent, we do not thereby admit that we are included in the category of
persons whose consent is required under Section 7 of the Act or the rules and
regulations of the Commission.
Very truly yours,
/s/SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
<PAGE>
EXHIBIT 8.1
[RAY, QUINNEY & NEBEKER LETTERHEAD]
February 7, 1997
Research Medical, Inc.
6864 South 300 West
Midvale, Utah 84047
Gentlemen:
We have acted as counsel to Research Medical, Inc., a Utah corporation
("RMI"), in connection with the merger (the "Merger") of Baxter CVG Services
III, Inc., a Utah corporation ("CVG"), a wholly owned subsidiary of Baxter
International Inc., a Delaware corporation ("Baxter"), with and into RMI, with
RMI being the surviving corporation, as more fully described in that certain
Amended and Restated Agreement and Plan of Merger, dated December 3, 1996, as
amended and restated on February 4, 1997 (the "Agreement"), by and among RMI,
Baxter and CVG, and in that certain draft of S-4 Registration Statement dated as
of February 7, 1997 (the "Registration Statement"), to be filed with the
Securities and Exchange Commission. This opinion is delivered to you pursuant to
Section 9.3(f) of the Agreement. Unless otherwise defined herein, capitalized
terms shall have the meanings given them in the Agreement. Further, all
references to the Code are to the Internal Revenue Code of 1986, as amended.
In connection with this opinion, we have reviewed a signed copy of the
Agreement, the Registration Statement and all other documents we have deemed
necessary or appropriate for purposes of this opinion. In addition, we expressly
rely upon the representations and facts set forth in the Agreement and the
Registration Statement. If any of the representations and facts set forth in the
Agreement and the Registration Statement upon which this opinion is based are
not true and accurate, both on the date of this letter and at the effective date
of the Merger, then we express no opinion. Further, our opinion assumes that the
Merger will occur fully in accordance with the terms and provisions of the
Agreement insofar as they are pertinent to this opinion. If it does not, then
the continuing validity of this opinion may be affected.
Based on the foregoing, and subject to the qualifications and exceptions
heretofore and hereafter set forth, it is our opinion that for Federal income
tax purposes:
1. The Merger as outlined in the Agreement will constitute a tax free
reorganization within the meaning of Code Section 368(a)(1)(A) and
368(a)(2)(E).
2. Baxter, CVG and RMI will each be "a party to the reorganization," within
the meaning of Code Section 368(b), with respect to the Merger.
3. No gain or loss will be recognized by the shareholders of RMI Common
Stock upon the exchange of their stock for Baxter Common Stock pursuant
to the Merger.
4. Any cash received by the shareholders of RMI Common Stock in lieu of a
fractional share of Baxter Common Stock will be treated as having been
received in redemption of the fractional share so cashed out and will
result in taxable gain or loss. The amount of such gain or loss will be
the difference between the cash received and the basis of the fractional
share interest surrendered in exchange therefor. Provided the fractional
share interest was held as a capital asset at the time of redemption,
such gain or loss will constitute capital gain or loss.
5. The basis of Baxter Common Stock received by the Shareholders of RMI
Common Stock in the Merger will be the same as the basis of the RMI
Common Stock surrendered in exchange therefor, after appropriate
reduction for the basis of any fractional share for which cash is
received.
6. The holding period of Baxter Common Stock received by the shareholders
of RMI Common Stock in the Merger will include the holding period of the
RMI Common Stock surrendered in exchange therefor, provided that the RMI
Common Stock surrendered was held as a capital asset at the time of the
exchange.
7. No gain or loss will be recognized by RMI in connection with the Merger.
The opinions set forth above are predicated upon and are limited by the
assumptions set forth herein and are further subject to the qualifications,
assumptions, exceptions, and limitations set forth below:
(a) The opinions and conclusions set forth herein are based upon the
Federal income tax laws of the United States, including the Code, Treasury
Regulations and judicial and administrative interpretations
<PAGE>
thereof, as they exist on the date of this letter. There can be no assurance
that the legal authorities upon which our opinion is based will not be modified,
revoked, supplemented or otherwise changed, with possible retroactive effect. A
material change in the legal authorities or the facts, information, covenants,
statements, representations or assumptions upon which our opinion is based could
affect our conclusions. However, we undertake no obligation to reexamine or
revise our opinion in the light of any such changes.
(b) The opinions set forth herein are limited to those Federal income tax
consequences of the Merger which are specifically addressed in the seven
numbered paragraphs above. In particular, no opinion is expressed with respect
to the tax consequences of the Merger under Code Sections 55 through 59 and the
Regulations thereunder (providing for alternative minimum tax). We also express
no opinion or conclusion with regard to foreign, state or local income tax
consequences.
(c) In rendering the opinions set forth above, we have assumed that the
shareholders of RMI Common Stock have no plan or intention to sell, exchange or
otherwise dispose of an amount of shares of Baxter Common Stock to be received
in the Merger that would reduce their ownership of Baxter Common Stock to a
number of shares having in the aggregate a value as of the effective date of the
Merger of less than fifty percent (50%) of the total value of all Common Stock
of RMI outstanding immediately prior to the Merger. For purposes of this
assumption, shares of RMI Common Stock exchanged for cash or other property,
surrendered by dissenters or exchanged for cash in lieu of fractional shares of
Baxter Common Stock will be treated as RMI Common Stock outstanding immediately
prior to the Merger.
(d) We have also assumed that, following the Merger, RMI will hold at least
ninety percent (90%) of the fair market value of its net assets and at least
seventy percent (70%) of the fair market value of its gross assets and at lease
ninety percent (90%) of the fair market value of CVG's net assets and at least
seventy percent (70%) of the fair market value of CVG's gross assets held
immediately prior to the Merger. For purposes of this assumption, amounts paid
by RMI or CVG to shareholders who receive cash or other property, amounts used
by RMI or CVG to pay reorganization expenses, and all redemptions and
distributions (except for regular, normal dividends) made by RMI, will be
included as assets of RMI or CVG, respectively, immediately prior to the Merger.
(e) We have further assumed that neither Baxter, CVG nor RMI will take any
actions, either prior to or after the Merger, which would cause the Merger not
to be a tax free reorganization within the meaning of Code Section 368(a)(1)(A)
and 368(a)(2)(E); that prior to the Merger Baxter will be in control of CVG
within the meaning of Code Section 368(c); that in the Merger shares of RMI
stock representing control of RMI, as defined in Code Section 368(c), will be
exchanged solely for voting stock of Baxter; that none of the parties to the
Merger is an investment company as defined in Code Section 368(a)(2)(F)(iii) and
(iv); that RMI is not under the jurisdiction of a court in a Title 11 or similar
case within the meaning of Code Section 368(a)(3)(A); that there is no
intercorporate indebtedness between any of the parties that was issued, acquired
or will be settled at a discount; and that each of the parties will pay its own
expenses in connection with the Merger.
(f) We have further assumed that the sole consideration to be received by
the shareholders of RMI in exchange for their RMI stock will consist of Baxter
stock and cash in lieu of fractional shares of Baxter stock and that such
consideration is the result of arm's length bargaining between the parties.
(g) We have further assumed that, following the Merger, Baxter will
continue the historic business of RMI and that prior to the Merger no assets of
RMI will have been sold, transferred or otherwise disposed of which would
prevent Baxter from continuing the historic business of RMI.
(h) We have further assumed the authenticity of all documents submitted to
us as originals and the conformity with the original documents of all documents
submitted to us as copies and the legal capacity of the signing parties to
execute and deliver such documents.
(i) The opinions set forth herein are given only as of the date hereof. We
undertake no obligation to advise you of changes of law or fact that occur after
the date of this opinion letter.
(j) The opinions set forth herein are given solely to RMI for its benefit
and the benefit of its shareholders and are given solely in connection with the
Merger and shall not be deemed binding for any other purpose, and you shall not
have the right to rely thereon for any other purpose.
Very truly yours,
RAY, QUINNEY & NEBEKER
/s/ Gerald T. Snow
<PAGE>
[PRICE WATERHOUSE LLP CHICAGO LETTERHEAD]
EXHIBIT 15.1
January 27, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
We are aware that Baxter International Inc. has included our reports dated May
14, 1996, August 13, 1996 and November 11, 1996 (issued pursuant to the
provisions of Statement on Auditing Standards No. 71) in the Proxy
Statement/Prospectus constituting part of this Registration Statement on Form
S-4. We are also aware of our responsibilities under the Securities Act of 1933.
Yours very truly,
/s/ Price Waterhouse LLP
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Proxy
Statement/Prospectus constituting part of this Registration Statement on Form
S-4 of Baxter International Inc. ("Baxter") of our report dated February 14,
1996, which appears on page 45 of the 1995 Annual Report to Stockholders of
Baxter, which is incorporated by reference in Baxter's Annual Report on Form
10-K for the fiscal year ended December 31, 1995. We also consent to the
incorporation by reference of our report on the Financial Statement Schedule,
which appears on page 15 of such Annual Report on Form 10-K. We also consent to
the reference to us under the heading "Experts" in such Proxy
Statement/Prospectus.
/s/ PRICE WATERHOUSE LLP
Chicago, Illinois
January 27, 1997
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
To the Board of Directors and Shareholders
Research Medical, Inc.
We consent to the incorporation by reference in the Proxy Statement/Prospectus
constituting part of this Registration Statement on Form S-4 of Baxter
International Inc. of our report dated August 7, 1996, with respect to the
consolidated balance sheets of Research Medical, Inc. and subsidiaries as of
June 30, 1996 and 1995 and the related consolidated statements of income,
shareholders' equity and cash flows for each of the years in the three-year
period ended June 30, 1996, included in Research Medical, Inc.'s Annual Report
on Form 10-K for the year ended June 30, 1996, and to the reference to our firm
under the caption "Experts" in such Proxy Statement/Prospectus.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Salt Lake City, Utah
January 27, 1997
<PAGE>
EXHIBIT 23.4
CONSENT OF RAY, QUINNEY & NEBEKER
We hereby consent to the filing of our opinion regarding tax matters as an
exhibit to this Registration Statement on Form S-4. We also consent to the
reference to our firm under the caption "Legal Matters" in the Registration
Statement. In giving this consent, we do not thereby admit that we are included
in the category of persons whose consent is required under Section 7 of the Act
or the rules and regulations of the Commission.
RAY, QUINNEY & NEBEKER
By: /s/ A. ROBERT THORUP
--------------------------------------
SHAREHOLDER AND DIRECTOR
Salt Lake City, Utah
January 30, 1997
<PAGE>
EXHIBIT 23.5
CONSENT OF WORKMAN, NYDEGGER & SEELEY
We hereby consent to the references to our firm in this Registration
Statement on Form S-4. In giving this consent, we do not thereby admit that we
are included in the category of persons whose consent is required under Section
7 of the Act or the rules and regulations of the Commission.
WORKMAN, NYDEGGER & SEELEY
By: /s/ DAVID O. SEELEY
--------------------------------------
DAVID O. SEELEY
VICE PRESIDENT
Dated: January 28, 1997
Salt Lake City, Utah
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
REGISTRATION STATEMENT ON FORM S-4
The undersigned director of Baxter International Inc. a Delaware corporation
(the "Company"), which proposes to file with the Securities and Exchange
Commission a registration statement on Form S-4 to register shares of the
Company's Common Stock, $1 par value, under the Securities Act of 1933, as
approved by the Company's board of directors, hereby appoints Vernon R. Loucks
Jr. for him and in his name to be his lawful attorney-in-fact, with full power
(i) to sign and file with the Securities and Exchange Commission the proposed
registration statement and any amendments, including post-effective amendments,
which such attorney-in-fact may deem necessary or proper and (ii) to perform
every other act which such attorney-ion-fact may deem necessary or proper in
connection with such registration statement or any amendments thereto.
<TABLE>
<S> <C>
/s/ PEI-YUAN CHIA
Date: December 31, 1996 PEI-YUAN CHIA
</TABLE>
<PAGE>
EXHIBIT 24.2
POWER OF ATTORNEY
REGISTRATION STATEMENT ON FORM S-4
The undersigned director of Baxter International Inc. a Delaware corporation
(the "Company"), which proposes to file with the Securities and Exchange
Commission a registration statement on Form S-4 to register shares of the
Company's Common Stock, $1 par value, under the Securities Act of 1933, as
approved by the Company's board of directors, hereby appoints Vernon R. Loucks
Jr. for him and in his name to be his lawful attorney-in-fact, with full power
(i) to sign and file with the Securities and Exchange Commission the proposed
registration statement and any amendments, including post-effective amendments,
which such attorney-in-fact may deem necessary or proper and (ii) to perform
every other act which such attorney-in-fact may deem necessary or proper in
connection with such registration statement or any amendments thereto.
<TABLE>
<S> <C>
/s/ JOHN W. COLLOTON
Date: December 27, 1996 JOHN W. COLLOTON
</TABLE>
<PAGE>
EXHIBIT 24.3
POWER OF ATTORNEY
REGISTRATION STATEMENT ON FORM S-4
The undersigned director of Baxter International Inc. a Delaware corporation
(the "Company"), which proposes to file with the Securities and Exchange
Commission a registration statement on Form S-4 to register shares of the
Company's Common Stock, $1 par value, under the Securities Act of 1933, as
approved by the Company's board of directors, hereby appoints Vernon R. Loucks
Jr. for her and in her name to be her lawful attorney-in-fact, with full power
(i) to sign and file with the Securities and Exchange Commission the proposed
registration statement and any amendments, including post-effective amendments,
which such attorney-in-fact may deem necessary or proper and (ii) to perform
every other act which such attorney-in-fact may deem necessary or proper in
connection with such registration statement or any amendments thereto.
<TABLE>
<S> <C>
/s/ SUSAN CROWN
Date: December 24, 1996 SUSAN CROWN
</TABLE>
<PAGE>
EXHIBIT 24.4
POWER OF ATTORNEY
REGISTRATION STATEMENT ON FORM S-4
The undersigned director of Baxter International Inc. a Delaware corporation
(the "Company"), which proposes to file with the Securities and Exchange
Commission a registration statement on Form S-4 to register shares of the
Company's Common Stock, $1 par value, under the Securities Act of 1933, as
approved by the Company's board of directors, hereby appoints Vernon R. Loucks
Jr. for her and in her name to be her lawful attorney-in-fact, with full power
(i) to sign and file with the Securities and Exchange Commission the proposed
registration statement and any amendments, including post-effective amendments,
which such attorney-in-fact may deem necessary or proper and (ii) to perform
every other act which such attorney-in-fact may deem necessary or proper in
connection with such registration statement or any amendments thereto.
<TABLE>
<S> <C>
/s/ MARY JOHNSTON EVANS
Date: December 24, 1996 MARY JOHNSTON EVANS
</TABLE>
<PAGE>
EXHIBIT 24.5
POWER OF ATTORNEY
REGISTRATION STATEMENT ON FORM S-4
The undersigned director of Baxter International Inc. a Delaware corporation
(the "Company"), which proposes to file with the Securities and Exchange
Commission a registration statement on Form S-4 to register shares of the
Company's Common Stock, $1 par value, under the Securities Act of 1933, as
approved by the Company's board of directors, hereby appoints Vernon R. Loucks
Jr. for him and in his name to be his lawful attorney-in-fact, with full power
(i) to sign and file with the Securities and Exchange Commission the proposed
registration statement and any amendments, including post-effective amendments,
which such attorney-in-fact may deem necessary or proper and (ii) to perform
every other act which such attorney-in-fact may deem necessary or proper in
connection with such registration statement or any amendments thereto.
<TABLE>
<S> <C>
/s/ FRANK R. FRAME
Date: December 27, 1996 FRANK R. FRAME
</TABLE>
<PAGE>
EXHIBIT 24.6
POWER OF ATTORNEY
REGISTRATION STATEMENT ON FORM S-4
The undersigned director of Baxter International Inc. a Delaware corporation
(the "Company"), which proposes to file with the Securities and Exchange
Commission a registration statement on Form S-4 to register shares of the
Company's Common Stock, $1 par value, under the Securities Act of 1933, as
approved by the Company's board of directors, hereby appoints Vernon R. Loucks
Jr. for her and in her name to be her lawful attorney-in-fact, with full power
(i) to sign and file with the Securities and Exchange Commission the proposed
registration statement and any amendments, including post-effective amendments,
which such attorney-in-fact may deem necessary or proper and (ii) to perform
every other act which such attorney-in-fact may deem necessary or proper in
connection with such registration statement or any amendments thereto.
<TABLE>
<S> <C>
/s/ MARTHA R. INGRAM
Date: December 24, 1996 MARTHA R. INGRAM
</TABLE>
<PAGE>
EXHIBIT 24.7
POWER OF ATTORNEY
REGISTRATION STATEMENT ON FORM S-4
The undersigned director of Baxter International Inc. a Delaware corporation
(the "Company"), which proposes to file with the Securities and Exchange
Commission a registration statement on Form S-4 to register shares of the
Company's Common Stock, $1 par value, under the Securities Act of 1933, as
approved by the Company's board of directors, hereby appoints Vernon R. Loucks
Jr. for him and in his name to be his lawful attorney-in-fact, with full power
(i) to sign and file with the Securities and Exchange Commission the proposed
registration statement and any amendments, including post-effective amendments,
which such attorney-in-fact may deem necessary or proper and (ii) to perform
every other act which such attorney-in-fact may deem necessary or proper in
connection with such registration statement or any amendments thereto.
<TABLE>
<S> <C>
/s/ HARRY M. JANSEN KRAEMER, JR.
Date: December 26, 1996 HARRY M. JANSEN KRAEMER, JR.
</TABLE>
<PAGE>
EXHIBIT 24.8
POWER OF ATTORNEY
REGISTRATION STATEMENT ON FORM S-4
The undersigned director of Baxter International Inc. a Delaware corporation
(the "Company"), which proposes to file with the Securities and Exchange
Commission a registration statement on Form S-4 to register shares of the
Company's Common Stock, $1 par value, under the Securities Act of 1933, as
approved by the Company's board of directors, hereby appoints Vernon R. Loucks
Jr. for him and in his name to be his lawful attorney-in-fact, with full power
(i) to sign and file with the Securities and Exchange Commission the proposed
registration statement and any amendments, including post-effective amendments,
which such attorney-in-fact may deem necessary or proper and (ii) to perform
every other act which such attorney-in-fact may deem necessary or proper in
connection with such registration statement or any amendments thereto.
<TABLE>
<S> <C>
/s/ ARNOLD J. LEVINE, PH.D.
Date: December 26, 1996 ARNOLD J. LEVINE, PH.D.
</TABLE>
<PAGE>
EXHIBIT 24.9
POWER OF ATTORNEY
REGISTRATION STATEMENT ON FORM S-4
The undersigned director of Baxter International Inc. a Delaware corporation
(the "Company"), which proposes to file with the Securities and Exchange
Commission a registration statement on Form S-4 to register shares of the
Company's Common Stock, $1 par value, under the Securities Act of 1933, as
approved by the Company's board of directors, hereby appoints Vernon R. Loucks
Jr. for him and in his name to be his lawful attorney-in-fact, with full power
(i) to sign and file with the Securities and Exchange Commission the proposed
registration statement and any amendments, including post-effective amendments,
which such attorney-in-fact may deem necessary or proper and (ii) to perform
every other act which such attorney-in-fact may deem necessary or proper in
connection with such registration statement or any amendments thereto.
<TABLE>
<S> <C>
/s/ GEORGES C. ST. LAURENT, JR.
Date: December 24, 1996 GEORGES C. ST. LAURENT, JR.
</TABLE>
<PAGE>
EXHIBIT 24.10
POWER OF ATTORNEY
REGISTRATION STATEMENT ON FORM S-4
The undersigned director of Baxter International Inc. a Delaware corporation
(the "Company"), which proposes to file with the Securities and Exchange
Commission a registration statement on Form S-4 to register shares of the
Company's Common Stock, $1 par value, under the Securities Act of 1933, as
approved by the Company's board of directors, hereby appoints Vernon R. Loucks
Jr. for him and in his name to be his lawful attorney-in-fact, with full power
(i) to sign and file with the Securities and Exchange Commission the proposed
registration statement and any amendments, including post-effective amendments,
which such attorney-in-fact may deem necessary or proper and (ii) to perform
every other act which such attorney-in-fact may deem necessary or proper in
connection with such registration statement or any amendments thereto.
<TABLE>
<S> <C>
/s/ MONROE E. TROUT, M.D.
Date: December 29, 1996 MONROE E. TROUT, M.D.
</TABLE>
<PAGE>
EXHIBIT 24.11
POWER OF ATTORNEY
REGISTRATION STATEMENT ON FORM S-4
The undersigned director of Baxter International Inc. a Delaware corporation
(the "Company"), which proposes to file with the Securities and Exchange
Commission a registration statement on Form S-4 to register shares of the
Company's Common Stock, $1 par value, under the Securities Act of 1933, as
approved by the Company's board of directors, hereby appoints Vernon R. Loucks
Jr. for him and in his name to be his lawful attorney-in-fact, with full power
(i) to sign and file with the Securities and Exchange Commission the proposed
registration statement and any amendments, including post-effective amendments,
which such attorney-in-fact may deem necessary or proper and (ii) to perform
every other act which such attorney-in-fact may deem necessary or proper in
connection with such registration statement or any amendments thereto.
<TABLE>
<S> <C>
/s/ REED V. TUCKSON, M.D.
Date: December 28, 1996 REED V. TUCKSON, M.D.
</TABLE>
<PAGE>
EXHIBIT 24.12
POWER OF ATTORNEY
REGISTRATION STATEMENT ON FORM S-4
The undersigned director of Baxter International Inc. a Delaware corporation
(the "Company"), which proposes to file with the Securities and Exchange
Commission a registration statement on Form S-4 to register shares of the
Company's Common Stock, $1 par value, under the Securities Act of 1933, as
approved by the Company's board of directors, hereby appoints Vernon R. Loucks
Jr. for him and in his name to be his lawful attorney-in-fact, with full power
(i) to sign and file with the Securities and Exchange Commission the proposed
registration statement and any amendments, including post-effective amendments,
which such attorney-in-fact may deem necessary or proper and (ii) to perform
every other act which such attorney-in-fact may deem necessary or proper in
connection with such registration statement or any amendments thereto.
<TABLE>
<S> <C>
/s/ FRED L. TURNER
Date: December 26, 1996 FRED L. TURNER
</TABLE>
<PAGE>
EXHIBIT 99.1
RESEARCH MEDICAL, INC.
PROXY DESIGNATION AND INSTRUCTION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Louis M. Haynie, Sterling D. Sessions and
William A. Gay, Jr. and each of them, with full power of substitution, to vote
as designated below, all shares of Research Medical, Inc. ("RMI") common stock
owned of record by the undersigned at the Special Meeting of Shareholders of
Research Medical, Inc. to be held on , 1997 at 10:00 a.m. (local time)
at , , Salt Lake City, Utah (the "Special
Meeting"), or at any adjournment thereof, on the proposal to merge Baxter CVG
Services III, Inc. ("Purchaser") a wholly-owned subsidiary of Baxter
International Inc. ("Baxter"), with and into RMI (the "Merger"), and on all
other matters that may properly come before the Special Meeting. However, RMI
will not use such discretionary authority in connection with voting on
adjournment of the Special Meeting to solicit additional proxies. (Each
Shareholder of Record should have received a Proxy Statement/Prospectus with
this Proxy Designation and Instruction describing the proposed Merger.)
IN THE ABSENCE OF DIRECTIONS TO THE CONTRARY, THE DESIGNATED PROXIES WILL
VOTE FOR THE PROPOSED MERGER.
On the proposal to approve the Amended and Restated Agreement and Plan of
Merger, dated as of December 3, 1996, as amended and restated on February 4,
1997, pursuant to which RMI will be acquired by Baxter by means of a merger of
Purchaser with and into RMI.
For / / Against / / Abstain / /
(THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE MERGER)
- --------------------------------------------------------
<PAGE>
DATE OF THIS PROXY DESIGNATION AND INSTRUCTION:
- --------------------- , 1997
<TABLE>
<S> <C>
------------------------------------------
Signature
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Print Name
------------------------------------------
Joint Tenant (if any)
------------------------------------------
Print Name
</TABLE>
(When signing as a Trustee, Executor Corporate Office, or General Partner,
please give full title on the "joint tenant" line.)
- -------------------------------------------------------------
THIS PROXY DESIGNATION AND INSTRUCTION MAY BE REVOKED BY A MORE RECENTLY DATED
PROXY DESIGNATION AND INSTRUCTION, OR BY WRITTEN NOTICE TO THE SECRETARY OF RMI
TO THE SPECIAL MEETING, OR BY APPEARING AT THE SPECIAL MEETING AND VOTING IN
PERSON.
