SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No ___ )*
CYBERONICS, INC.
(Name of Issuer)
Common Stock, $0.01 par value
(Title of Class of Securities)
23251P-10-2
(CUSIP Number)
Kevin T. O'Malley
Vice President and General Counsel
St. Jude Medical, Inc.
One Lillehei Plaza
St. Paul, MN 55117
Telephone: (612) 483-2000
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
July 23, 1996
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acqusition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box. [ ]
Check the following box if a fee is being paid with this statement |X| . (A fee
is not required only if the reporting person: (1) Has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page. The information required in the
remainder of this cover page shall not be deemed to be "filed" for the purpose
of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise
subject to the liabilities of that section of the Act but shall be subject to
all other provisions of the Act (however, see the Notes).
CUSIP No. 23251P-10-2
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
ST. JUDE MEDICAL, INC., 41-1276891
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) (a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS (See instructions) WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT [ ]
TO ITEMS 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION MINNESOTA
7 SOLE VOTING POWER 2,181,818
NUMBER OF
SHARES
BENEFICIALLY 8 SHARED VOTING POWER 0
OWNED BY
EACH
REPORTING 9 SOLE DISPOSITIVE POWER 2,181,818
PERSON
WITH
10 SHARED DISPOSITIVE POWER 0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,181,818
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
(See instructions)
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
18.6%
14 TYPE OF REPORTING PERSON (See instructions)
CO
Item 1. Security and Issuer.
This Schedule 13D (the "Schedule") under the Securities Exchange Act of
1934, as amended, relates to the acquisition of beneficial ownership of shares
of the Common Stock, $0.01 par value per share, of Cyberonics, Inc., a Delaware
corporation ("Cyberonics" and "Cyberonics Common Stock").
The principal executive offices of Cyberonics are located at 17448
Highway 3, Suite 100, Webster, TX 77598-4138.
Item 2. Identity and Background.
(a) This Schedule is being filed by St. Jude Medical, Inc., a Minnesota
corporation ("SJM").
(b) and (c) SJM develops, manufactures and markets medical device
products for cardiovascular applications. SJM's products are distributed
worldwide through a combination of direct sales personnel and independent
manufacturers' representatives. The mailing address for the principal executive
offices is One Lillehei Plaza, St. Paul, Minnesota 55117.
(d) and (e) SJM has not, during the last five years, been the subject of
any criminal proceeding. SJM has not, during the last five years, been a party
to a civil proceeding of a judicial or administrative body which resulted in a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
The attached Schedule 1 provides certain information concerning each
executive officer, director and controlling person of SJM. None of the persons
named in the attached Schedule 1 has, during the last five years, been convicted
in or been the subject of any criminal proceeding (excluding traffic violations
or similar misdemeanors). None of the persons named in the attached Schedule 1
has, during the last five years, been a party to a civil proceeding of a
judicial or administrative body which resulted in a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
An aggregate of $11,999,999 was paid for the beneficial ownership of the
Cyberonics Common Stock which is the subject of this Schedule. The source of the
funds used by SJM to acquire the Cyberonics Common Stock was the working capital
of SJM.
Item 4. Purpose of Transaction.
On April 8, 1996, officers of SJM and Cyberonics signed an Agreement and
Plan of Merger ("Merger Agreement"), a Stockholders' Agreement and a Common
Stock Purchase Agreement. Pursuant to the terms of the Common Stock Purchase
Agreement, SJM agreed to acquire 2,181,818 shares of Cyberonics Common Stock if
the Merger was approved by the stockholders of Cyberonics. On July 23, 1996, the
stockholders of Cyberonics approved the Merger Agreement and SJM purchased the
Cyberonics Common Stock for a total consideration of $11,999,999. The purchase
of Cyberonics Common Stock by SJM is intended to provide Cyberonics with needed
capital to fund its operations.
The Merger Agreement provides that a wholly-owned subsidiary of SJM
("Merger Sub") will be merged with and into Cyberonics, subject to the approval
of the stockholders of Cyberonics (which has occurred), regulatory approvals and
various other closing conditions. The Merger Agreement further provides that SJM
may terminate the Merger Agreement at any time, with or without cause, and
without liability to Cyberonics. The effect of this provision is that SJM has
the option, but not the obligation, to consummate the Merger. SJM's option to
acquire Cyberonics would be exercised by SJM electing to consummate the Merger,
and it effectively expires on October 19, 1996. Upon consummation of the
proposed Merger, and except for dissenting shares and shares held by SJM and
Cyberonics (which shall be cancelled), each share of Cyberonics Common Stock
outstanding shall be converted into the right to receive an amount in cash equal
to $72,090,669 divided by the number of shares of Cyberonics Common Stock
outstanding immediately prior to the Merger, excluding any shares held by SJM,
Merger Sub or their subsidiaries, but including any shares acquired by the
treasury of Cyberonics after April 1, 1996, pursuant to the exercise of
Cyberonics stock options. If the Merger is consummated, the consummation is not
currently anticipated to occur until October, 1996.
It is presently contemplated that, after the Merger, the business
currently operated by Cyberonics will be operated as a subsidiary of SJM. The
officers of Merger Sub will initially be the officers of the surviving
corporation, and the directors of Merger Sub will initially be the directors of
the surviving corporation. SJM will continue to review the business, operations
and management of the surviving company and will make such changes as it deems
appropriate.
After consummation of the Merger, Cyberonics Common Stock will cease to
be designated for quotation on the Nasdaq National Market and will become
eligible for termination of registration pursuant to Section 12(g)(4) of the
Securities Exchange Act of 1934, as amended.
SJM does not have any present plans or proposals relating to or which
would result in:
(a) the sale or transfer of a material amount of assets of Cyberonics
or any of its subsidiaries;
(b) any material change in the business of Cyberonics; or
(c) any action similar to those enumerated above.
Item 5. Interest in Securities of the Issuer.
(a) SJM beneficially owns a total of 2,181,818 shares of the Cyberonics
Common Stock, representing approximately 18.6% of the outstanding shares of
Cyberonics Common Stock.
(b) SJM has sole power to vote and direct the disposition of all of the
reported shares.
(c) Except as described herein, SJM has not engaged in any transactions
involving Cyberonics Common Stock in the preceding 60-day period.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer.
1. Agreement and Plan of Merger dated April 8, 1996 by and among SJM,
Cyberonics and SJM Acquisition Corp. (the "Merger Agreement"). See
Item 4 for a description of the Merger Agreement.
2. Common Stock Purchase Agreement dated April 8, 1996 between SJM
and Cyberonics (the "Common Stock Purchase Agreement"). See Item 4
for a description of the Common Stock Purchase Agreement.
3. Stockholders' Agreement dated April 8, 1996 by and between SJM and
Cyberonics (the "Stockholders' Agreement"). Pursuant to the
Stockholders' Agreement, Cyberonics granted to SJM certain demand
and piggy-back registration rights with respect to any shares of
Cyberonics Common Stock purchased pursuant to the Common Stock
Purchase Agreement and board observer rights. The Stockholders'
Agreement also provides for a right of first refusal in favor of
Cyberonics with respect to certain proposed transfers of
Cyberonics Common Stock by SJM, restricts the holdings of
Cyberonics Common Stock by SJM to 19% of the total outstanding
shares of Cyberonics Common Stock, and provides for SJM, or its
transferees, to vote its shares of Cyberonics Common Stock (i) for
nominees to the Board of Directors of Cyberonics in accordance
with the recommendation of the Cyberonics Board of Directors
through July 1, 1998, and (ii) on other matters, as recommended by
the Cyberonics Board of Directors or in the same proportions as
other shareholders vote on a matter.
Item 7. Material to Be Filed as Exhibits.
2.1 Merger Agreement.
2.2 Common Stock Purchase Agreement.
2.3 Stockholders' Agreement.
Signatures
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Dated: July 26, 1996
ST. JUDE MEDICAL, INC.
By /S/ Kevin T. O'Malley
Kevin T. O'Malley
Vice President and General Counsel
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF ST. JUDE MEDICAL, INC.
The name and position of each of the executive officers and members of
the Board of Directors of St. Jude Medical, Inc. are set forth below. Except for
John P. Berdusco, who is a citizen of Canada, William R. Miller, who is a
citizen of the United Kingdom, and Patrick P. Fourteau, who is a citizen of
France, each of these persons is a citizen of the United States.
POSITION WITH
ST. JUDE MEDICAL, INC. AND
PRINCIPAL
NAME OCCUPATION BUSINESS ADDRESS
- -------------------- -------------------------- -----------------------
EXECUTIVE OFFICERS:
Ronald A. Matricaria Chairman of the Board, One Lillehei Plaza
President, CEO and St. Paul, MN 55117
Director
Patrick P. Fourteau President, Pacesetter, Inc. 15900 Valley View Court
P.O. Box 9221
Sylmar, CA 91392-9221
Terry L. Shepherd President, St. Jude Medical One Lillehei Plaza
Division St. Paul, MN 55117
John P. Berdusco Vice President, One Lillehei Plaza
Administration St. Paul, MN 55117
Kevin T. O'Malley Vice President and General One Lillehei Plaza
Counsel St. Paul, MN 55117
Stephen L. Wilson Vice President, Finance and One Lillehei Plaza
Chief Financial Officer St. Paul, MN 55117
Peter L. Gove Vice President One Lillehei Plaza
Corporate Relations St. Paul, MN 55117
Daniel J. Starks President, Daig Corporation 14901 DeVeau Place
Minnetonka, MN 55345
<TABLE>
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POSITION WITH
ST. JUDE MEDICAL, INC. AND
PRINCIPAL
NAME OCCUPATION BUSINESS ADDRESS
- ----------------------- --------------------------- -----------------------
DIRECTORS
<S> <C> <C>
Ronald A. Matricaria Chairman of the Board, One Lillehei Plaza
President, CEO and St. Paul, MN 55117
Director
Gail R. Wilensky, Ph.D. Director; Senior Fellow 7500 Old Georgetown Road
Project Hope Suite 600
Bethesda, MD 20814
Thomas H. Garrett, III Director; Attorney 4200 IDS Center
Minneapolis, MN 55402
Kenneth G. Langone Director; Managing 375 Park Avenue
Director, Invemed Suite 2205
Associates, Inc. New York, NY 10152
William R. Miller Director; Director of 150 East 52nd St.
various companies Floor 12
New York, NY 10022
Charles V. Owens, Jr. Director; Chairman of the 2625 Greenleaf Blvd.
Board, Genesis Labs, Inc. Elkhart, IN 46514
(Residence address)
Walter L. Sembrowich, Director; Founder and 80 South 8th Street
Ph.D. Director of various medical Suite 266
device companies Minneapolis, MN 55402
Daniel J. Starks Director, President of Daig 14901 DeVeau Place
Corporation, a wholly Minnetonka, MN 55345
owned subsidiary of St.
Jude Medical, Inc.
Roger G. Stoll, Director; CEO and 110 Allen Road
Ph.D. President, OHMEDA, Inc., P.O. Box 804
wholly owned subsidiary of Liberty Corner, NJ 07938-0804
BOC Group
</TABLE>
EXHIBIT INDEX
Exhibit No. Description
2.1 Agreement and Plan of Merger dated as of April 8, 1996, by
and among St. Jude Medical, Inc., SJM Acquisition Corp. and
Cyberonics, Inc.
2.2 Common Stock Purchase Agreement dated April 8, 1996,
between St. Jude Medical, Inc. and Cyberonics, Inc.
2.3 Stockholders' Agreement dated April 8, 1996, by and between
St. Jude Medical, Inc. and Cyberonics, Inc.
- ---------------------------
*SJM has omitted the schedules and exhibits to the Agreement and Plan of Merger
and agrees to furnish supplementally a copy of any such omitted schedule or
exhibit to the Commission upon request.
AGREEMENT AND PLAN OF MERGER
DATED
APRIL 8, 1996
AMONG
ST. JUDE MEDICAL, INC.,
SJM ACQUISITION CORP.
AND
CYBERONICS, INC.
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TABLE OF CONTENTS
Page
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ARTICLE 1 - THE MERGER ................................................................1
1.1 The Merger...........................................................1
1.2 Conversion of Merger Subsidiary Shares...............................2
1.3 Conversion of CYBX Shares............................................2
1.4 Exchange of Shares. ................................................2
1.5 Dissenting Shares....................................................3
ARTICLE 2 - CLOSING; CLOSING DATE .....................................................4
2.1 Closing Date and Location............................................4
2.3 Closing Deliverables of CYBX.........................................4
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF CYBX ....................................5
3.1 Corporate Existence and Power. .....................................5
3.2 Corporate Authorization..............................................5
3.3 Governmental Authorization; Consents.................................6
3.4 Non-Contravention....................................................6
3.5 Binding Effect.......................................................6
3.6 Capitalization.......................................................6
3.7 Financial Statements and SEC Filings.................................7
3.8 Material Events......................................................8
3.9 Properties; Liens...................................................10
3.10 Litigation. .......................................................10
3.11 Taxes. ............................................................10
3.12 ERISA...............................................................11
3.13 Compliance With Laws; Permits.......................................13
3.14 Finders' Fees.......................................................14
3.15 Patents, Trademarks, Trade Names, Service Marks and Copyrights .....14
3.16 Environmental Matters; OSHA.........................................15
3.17 Contracts ..........................................................17
3.18 Material Obligations................................................18
3.19 CYBX Products; Regulation...........................................18
3.20 Inventory...........................................................19
3.21 Accounts and Notes Receivable.......................................19
3.22 Employee Relations..................................................19
3.23 Insurance...........................................................19
3.24 Potential Conflicts of Interest.....................................20
3.25 Bank Accounts.......................................................20
3.26 Acquisition Proposal................................................20
3.27 Full Disclosure.....................................................20
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF ST. JUDE AND
MERGER SUBSIDIARY ..................................................21
4.1 Corporate Existence and Power. ....................................21
4.2 Corporate Authorization.............................................21
4.3 Governmental Authorization; Consents ...............................21
4.4 Non-Contravention...................................................22
4.5 Binding Effect......................................................22
4.6 Financial Statements and SEC Filings................................22
4.7 Full Disclosure.....................................................22
ARTICLE 5 - COVENANTS OF CYBX ........................................................23
5.1 Conduct of CYBX.....................................................23
5.2 CYBX's Shareholders' Meeting; Proxy Material........................25
5.3 Access to Information...............................................25
5.4 Notices of Certain Events...........................................26
5.5 Consents, Approvals and Filings.....................................26
5.6 Commercially Reasonable Efforts.....................................26
5.7 Exclusivity.........................................................26
5.8 Return of Confidential Information..................................27
5.9 Further Assurances..................................................27
ARTICLE 6 - COVENANTS OF ST. JUDE ....................................................28
6.1 Commercially Reasonable Efforts. ..................................28
6.2 Consents, Approvals and Filings.....................................28
6.3 Advice of Changes...................................................28
6.4 Director and Officer Liability......................................28
6.5 Employee Benefit Matters............................................29
ARTICLE 7 - CONDITIONS TO THE MERGER .................................................29
7.1 Conditions to the Obligations of CYBX...............................29
ARTICLE 8 - TERMINATION ..............................................................30
8.1 Termination by Mutual Consent.......................................30
8.2 Termination by St. Jude.............................................30
8.3 Termination by CYBX.................................................31
8.4 Effects of Termination. ...........................................32
ARTICLE 9 - MISCELLANEOUS ............................................................33
9.1 Notices.............................................................33
9.2 Amendment and Modification..........................................34
9.3 Waiver of Compliance................................................34
9.4 No Survival of Representations and Warranties.......................34
9.5 No Third Party Rights...............................................34
9.6 Confidentiality. ..................................................35
9.7 Expenses............................................................35
9.8 Assignment..........................................................35
9.9 GOVERNING LAWS......................................................35
9.10 Counterparts........................................................35
9.11 Headings and References.............................................35
9.12 Entire Agreement....................................................35
9.13 Exchange of Documents...............................................36
9.14 Publicity...........................................................36
9.15 Interpretation......................................................36
9.16 Further Assurance...................................................36
9.17 Severability........................................................36
</TABLE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT dated April 8, 1996, among Cyberonics, Inc., a Delaware
corporation ("CYBX"), St. Jude Medical, Inc., a Minnesota corporation ("St.
Jude"), and SJM Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of St. Jude ("Merger Subsidiary").
WHEREAS, the Board of Directors of CYBX has determined that it is in the
best interests of its stockholders for CYBX to be acquired by St. Jude upon the
terms and subject to the conditions set forth herein;
WHEREAS, in furtherance of such acquisition, the Boards of Directors of
St. Jude, Merger Subsidiary and CYBX have each approved the merger of Merger
Subsidiary with and into CYBX in accordance with the Delaware Business
Corporation Act ("Delaware Law") and upon the terms and subject to the
conditions set forth herein;
WHEREAS, as a result of the Merger, each outstanding share of common
stock, $.01 par value, of CYBX ("CYBX Common Stock") will be converted into the
right to receive cash in the amount determined as set forth herein; and
WHEREAS, the parties hereto intend that St. Jude shall have the absolute
right, exercisable in its sole discretion, to terminate this Agreement without
liability at any time, including after CYBX has obtained stockholder approval
hereof, for any reason (or for no reason);
The parties hereto agree as follows:
ARTICLE 1
THE MERGER
1.1 The Merger.
1.1.1 Subject to the terms and conditions of this Agreement, at
the Effective Time (as defined in Section 1.1.2), Merger Subsidiary shall be
merged with and into CYBX (the "Merger") in accordance with Delaware Law,
whereupon the separate existence of Merger Subsidiary shall cease, and CYBX
shall continue as the surviving corporation (the "Surviving Corporation") under
the name of CYBX.
1.1.2 Subject to the St. Jude's right to terminate this Agreement
at any time pursuant to Section 8.2 hereof, as soon as practicable after
satisfaction of, or to the extent permitted hereunder, waiver of, all conditions
to the Merger, the parties hereto shall cause the Merger to be consummated by
filing Articles of Merger with the Secretary of State of Delaware, in such form
as required by, and executed in accordance with the relevant provisions of,
Delaware Law and the parties hereto shall make all other filings or recordings
required by Delaware Law in connection with the Merger. The Merger shall become
effective at such time as the Articles of Merger are duly filed with the
Secretary of State of the State of Delaware or such later date set forth in the
Articles of Merger (the "Effective Time").
1.1.3 At the Effective Time, (i) the separate existence of Merger
Subsidiary shall cease and Merger Subsidiary shall be merged with and into CYBX,
which shall be the Surviving Corporation; (ii) the officers of the Surviving
Corporation shall initially be the officers of Merger Subsidiary immediately
prior to the Merger; (iii) the directors of the Surviving Corporation shall
initially be the same as the directors of Merger Subsidiary immediately prior to
the Merger; (iv) the Certificate of Incorporation and Bylaws of the Surviving
Corporation shall initially be the same as the Certificate of Incorporation and
Bylaws, respectively, of Merger Subsidiary immediately prior to the Merger; and
(v) the Merger shall, from and after the Effective Time, have all of the effects
provided by applicable law. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time all the property, rights, privileges,
powers and franchises of the Merger Subsidiary and CYBX shall vest in the
Surviving Corporation, and all debts, liabilities and duties of the Merger
Subsidiary and CYBX shall become the debts, liabilities and duties of the
Surviving Corporation.
1.2 Conversion of Merger Subsidiary Shares. At the Effective Time by
virtue of the Merger, each share of capital stock of Merger Subsidiary
outstanding immediately prior to the Effective Time shall remain outstanding as
shares of the Surviving Corporation, which shares shall be owned by St. Jude.
1.3 Conversion of CYBX Shares.
1.3.1 Any shares of CYBX's Common Stock held in the treasury of
the CYBX, and any shares of CYBX Common Stock issued and outstanding immediately
prior to the Effective Time of the Merger which are owned by St. Jude, Merger
Subsidiary or any other entity owned by St. Jude or Merger Subsidiary, shall be
canceled and retired. No cash, securities or other consideration shall be paid
or delivered in exchange for such CYBX Common Stock under this Agreement.
1.3.2 Except as provided herein with respect to Dissenting Shares
(as defined below in Section 1.6.1) and shares canceled pursuant to Section
1.3.1 hereof, at the Effective Time of the Merger each share of CYBX Common
Stock outstanding shall be canceled and converted into the right to receive cash
in the amount determined by dividing $72,090,669 by the number of shares of CYBX
Common Stock outstanding immediately prior to the Effective Time, excluding
shares of CYBX Common Stock to be canceled pursuant to Section 1.3.1 hereof, but
including those shares of CYBX Common Stock acquired by the treasury of CYBX
after April 1, 1996 pursuant to the exercise of CYBX stock options (the "Merger
Consideration").
1.4 Cancellation of CYBX Options. Any option, warrant or other right
to acquire any CYBX securities which are outstanding as of immediately prior to
the Effective Time will, without any action on the part of any party, be
cancelled and of no further force or effect.
1.5 Exchange of Shares.
1.5.1 After the Effective Time of the Merger, each holder of an
outstanding certificate or certificates theretofore representing shares of CYBX
Common Stock ("CYBX Stock Certificates"), upon surrender thereof to American
Stock Transfer & Trust Company, or such other banking institution as shall be
designated by St. Jude, as exchange agent (the "Exchange Agent"), shall be
entitled to receive the Merger Consideration. Until so surrendered, each
outstanding CYBX Stock Certificate shall be deemed for all purposes to represent
a right to receive the Merger Consideration. Whether or not a CYBX Stock
Certificate is surrendered, from and after the Effective Time such certificate
shall under no circumstances evidence, represent or otherwise constitute any
stock or other interest whatsoever in the St. Jude, the Surviving Corporation or
any other person, firm or corporation.
1.5.2 Any funds deposited with the Exchange Agent that remain
unclaimed by the holders of shares of CYBX Common Stock twelve months after the
Effective Time shall be returned to St. Jude upon demand, and any such holder
who has not exchanged his shares of CYBX Common Stock for the Merger
Consideration prior to that time shall thereafter look only to St. Jude for his
claim for Merger Consideration. Notwithstanding the foregoing, St. Jude shall
not be liable to any holder of shares of St. Jude Common Stock for any amount
paid to a public official pursuant to applicable abandoned property laws.
1.6 Dissenting Shares.
1.6.1 Notwithstanding any provision of this Agreement to the
contrary, any shares of capital stock of CYBX held by a holder which has
demanded and perfected its right for appraisal of such shares in accordance with
Delaware Law (the "Dissenters' Rights") and who, as of the Effective Time, has
not effectively withdrawn or lost such right to appraisal ("Dissenting Shares"),
shall not be converted into or represent a right to receive the Merger
Consideration pursuant to Section 1.3, but the holder thereof shall only be
entitled to such rights as are granted by the Dissenters' Rights.
1.6.2 Notwithstanding the provisions of Section 1.6.1, if any
holder of shares of capital stock of CYBX who demands appraisal of such shares
under the Dissenters' Rights shall effectively withdraw or lose (through failure
to perfect or otherwise) its right to appraisal, then, as of the later of the
Effective Time or the occurrence of such event, such holder's shares shall
automatically be converted into and represent only the right to receive the
Merger Consideration as provided in Section 1.3.2, without interest thereon,
upon surrender of the certificate or certificates representing such shares.
1.6.3 CYBX shall give St. Jude (i) prompt written notice of any
notice of intent to demand fair value for any shares of capital stock of CYBX,
withdrawals of such notices, and any other instruments served pursuant to the
Dissenters' Rights or any other provisions of Delaware Law and received by CYBX
and (ii) the opportunity to direct and carry on all negotiations and proceedings
with respect to demands for fair value for shares of capital stock of CYBX under
the Dissenters' Rights. CYBX shall not, except with the prior written consent of
St. Jude, voluntarily make any payment with respect to any demands for fair
value for Shares of capital stock of CYBX or offer to settle or settle any such
demands other than by operation of law or pursuant to a final order of a court
of competent jurisdiction.
ARTICLE 2
CLOSING; CLOSING DATE
2.1 Closing Date and Location. Unless this Agreement shall have been
terminated and the Merger herein contemplated shall have been abandoned pursuant
to a provision of Section 8 below, a closing (the "Closing") will be held on a
date mutually acceptable to St. Jude and CYBX, but in no event later than
October 18, 1996, at the offices of CYBX's legal counsel, commencing at 10:00
A.M. St. Jude agrees that it will give notice at least ten days prior to the
date on which it desires to close the Merger.
2.2 Closing Date and Location. At Closing, the documents referred to
in Sections 2.3 and 7 hereof will be exchanged by the parties and, immediately
thereafter, the Articles of Merger will be filed by Merger Subsidiary and CYBX
with the Secretary of State of the State of Delaware. The date on which the
Closing occurs is hereinafter referred to as the Closing Date.
2.3 Closing Deliverables of CYBX. At the Closing, CYBX will deliver
the following to St. Jude:
2.3.1 A certificate, signed by the President of CYBX, to the
effect that (i) CYBX has performed in all material respects all of its
obligations hereunder required to be performed by it at or prior to the
Effective Time; and (ii) the representations and warranties of CYBX contained in
this Agreement and in any certificate or other writing delivered by CYBX
pursuant hereto are true in all respects at and as of the Effective Time as if
made at and as of such time, except for such changes between the date of signing
and date of closing which (A) are contemplated by this Agreement or (B) have not
had, and are not reasonably expected to have, in the aggregate, a Material
Adverse Effect.
2.3.2 A Certificate of Good Standing relating to CYBX from the
Secretary of State of Delaware, a Certificate of Qualification of CYBX to do
business in the State of Texas as a foreign corporation, and copies of
resolutions of CYBX's Board of Directors authorizing this Agreement, as
certified by the Secretary of CYBX.
2.3.3 Executed originals of any and all consents, approvals,
waivers and/or acknowledgments required under any agreement identified in
Section 3.17.2 of the Disclosure Schedule, in order to permit the consummation
of the transactions provided for herein without causing or resulting in a
default, event of default, acceleration event or termination event under any of
such documents and without entitling any party to any of such documents to
exercise any other right or remedy adverse to the interests of St. Jude
thereunder. Each such consent, approval and/or waiver shall be in form
satisfactory to counsel for St. Jude.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF CYBX
CYBX represents and warrants to St. Jude that, except as set forth in the
schedule of exceptions to representations and warranties attached hereto as
Schedule 3 (the "Disclosure Schedule"):
3.1 Corporate Existence and Power.
3.1.1 Each of CYBX and its subsidiary, referenced in Section 3.1
of the Disclosure Schedule, is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation, and
has all corporate powers required to carry on its business as now conducted.
Each of CYBX and its subsidiary is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the character of
the property owned or leased by it or the nature of its activities makes such
qualification necessary, except for those jurisdictions where the failure to be
so qualified would not, individually or in the aggregate, have a Material
Adverse Effect. CYBX has heretofore delivered to St. Jude true and complete
copies of CYBX's and its subsidiary's Certificate of Incorporation and Bylaws,
as currently in effect. CYBX has one subsidiary and, except with respect to such
subsidiary, does not, directly or indirectly, own or have the power to vote, or
to exercise a controlling influence with respect to, any securities of any class
of any person, the holders of which class are entitled to vote for the election
of directors (or persons serving similar functions) of such person.
3.1.2 For purposes of this Agreement, a "Material Adverse Effect,"
when used with respect to CYBX shall mean a material adverse change in the
financial condition, business, assets, liabilities, capitalization, financial
position compared to the financial statements as of December 31, 1995,
operations or results of operations of CYBX and its subsidiary taken as a whole
in excess of $100,000 or any event which could, so far as can reasonably be
foreseen, have such an effect; provided, however, that CYBX's continuing losses
from operations (and resulting impact on CYBX's balance sheet) consistent with
CYBX's results of operations for the fiscal quarter ended December 31, 1995,
shall not constitute a Material Adverse Effect.
3.2 Corporate Authorization. CYBX 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 have been duly and validly
authorized by CYBX's Board of Directors and no other corporate proceedings on
the part of CYBX are necessary to authorize the execution and delivery of this
Agreement or to consummate the transactions so contemplated (subject to the
approval and adoption of this Agreement and the transactions contemplated hereby
by the Shareholders of CYBX required in accordance with Delaware Law and the
Certificate of Incorporation and Bylaws of CYBX).
3.3 Governmental Authorization; Consents. The execution, delivery and
performance by CYBX of this Agreement and the consummation of the Merger by CYBX
require no action by or in respect of, or filing with, any governmental body,
agency, official or authority other than (i) the filing of Articles of Merger in
accordance with Delaware Law; (ii) compliance with any applicable requirements
of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act");
(iii) compliance with any applicable requirements of the Securities Act of 1933
(the "1933 Act") and the Securities Exchange Act of 1934 (the "1934 Act"); (iv)
compliance with the rules and regulations of the NASDAQ National Market System;
(v) compliance with any applicable state securities laws; and (vi) any action or
filing, the failure to obtain or make would not, individually or in the
aggregate, have a Material Adverse Effect.
3.4 Non-Contravention. The execution, delivery and performance by CYBX of
this Agreement and the consummation by CYBX of the transactions contemplated
hereby do not and will not (i) contravene or constitute a default under or give
rise to a right of termination, cancellation or acceleration of any right or
obligation of CYBX or to a loss of any benefit to which CYBX is entitled under
(A) any provision of applicable law or regulation (assuming compliance with the
matters referred to in Section 3.3.1); (B) the Certificate of Incorporation or
Bylaws of CYBX; (C) any material agreement, contract, plan, lease, arrangement
or commitment; or (D) any judgment, injunction, order, decree, administrative
interpretation, award or other instrument binding upon CYBX, or (ii) result in
the creation or imposition of any Lien on any asset of CYBX. For purposes of
this Agreement, "Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest, restriction on transfer or encumbrance of any
kind in respect of such asset, provided, however, "Lien" does not include (i)
statutory liens not delinquent or the validity of which is being contested in
good faith by appropriate proceedings; and(ii) liens for taxes not yet
delinquent or the validity of which is being contested in good faith by
appropriate proceedings.
3.5 Binding Effect. This Agreement constitutes a legal, valid and binding
agreement of CYBX enforceable against CYBX in accordance with its terms, except
to the extent that the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by principles of equity regarding
the availability of remedies.
3.6 Capitalization. The authorized capital stock of CYBX consists of
25,000,000 shares of CYBX Common Stock and 2,500,000 shares of CYBX preferred
stock, $.01 par value, ("CYBX Preferred Stock"). As of March 31, 1996 (i)
9,509,345 shares of CYBX Common Stock were outstanding, (ii) -0- shares of CYBX
Preferred Stock were outstanding, (iii) stock options and warrants to purchase
an aggregate of 831,322 Shares were outstanding, and (iv) no shares of CYBX
Common Stock or CYBX Preferred Stock were held in treasury. All outstanding
shares of capital stock of CYBX have been duly authorized and validly issued and
are fully paid and nonassessable. Except for the 1988 Incentive Stock Plan and
the 1991 Employee Stock Purchase Plan (collectively the "Stock Option Plans"),
there are no plans, agreements or other arrangements pursuant to which any
options, warrants or other rights to acquire Shares from CYBX are outstanding.
True and complete copies of the Stock Option Plans have been delivered to St.
Jude. All outstanding options and warrants will expire at the Effective Time if
not previously exercised. Except as set forth in this Section and except for
stock options issued or issuable subsequent to January 31, 1995, pursuant to the
Stock Option Plans, there are outstanding (i) no shares of capital stock or
other voting securities of CYBX, (ii) no securities of CYBX convertible into or
exchangeable for shares of capital stock or voting securities of CYBX, and (iii)
no options or other rights to acquire from CYBX, and no obligation of CYBX to
issue, any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of CYBX (collectively "CYBX
Securities"). There are no outstanding obligations of CYBX to repurchase, redeem
or otherwise acquire any CYBX Securities.
3.7 Financial Statements and SEC Filings. CYBX has delivered to St. Jude
true and complete copies of (i) its annual reports on Form 10-K for its fiscal
years ended June 30, 1993, 1994 and 1995, (ii) its quarterly reports on Form
10-Q for its fiscal quarters commencing March 31, 1993, (iii) its proxy or
information statements relating to all meetings of, or actions taken without a
meeting by, the shareholders of CYBX held since March 1, 1993, and (iv) its
registration statement filed with the Securities and Exchange Commission (the
"SEC") on Form S-1 which became effective in 1993. The reports and statements so
delivered are referred to collectively in this Agreement as the "SEC Filings."
As of their respective dates, the SEC Filings (including all exhibits and
schedules thereto and documents incorporated by reference therein) did not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading. CYBX has delivered to St. Jude's
counsel copies of all statements on Schedule 13D and Schedule 13G known to CYBX
which had been filed with the SEC with respect to capital stock of CYBX pursuant
to the Securities Exchange Act of 1934. Without limiting the generality of the
foregoing, St. Jude has delivered to CYBX its audited financial statements
included within the SEC Filings for fiscal years ended June 30, 1993, 1994 and
1995, its most recently completed fiscal years (the "Audited Financial
Statements") and all interim quarterly financial statements for fiscal year to
date 1996 (the "Interim Financial Statements") (collectively, the "Financial
Statements"). The audited financial statements and unaudited interim financial
statements of CYBX included or incorporated by reference in the SEC Filings (i)
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto); (ii) complied as of their respective dates in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto; and (iii) fairly present
the financial position of CYBX as of the dates thereof and the income and cash
flows for the periods then ended (subject, in the case of any unaudited interim
financial statements, to normal year-end adjustments).
3.8 Material Events. Except as set forth in the Financial Statements,
after June 30, 1995, there has not been:
3.8.1 Any discharge or satisfaction of any Lien, charge or
encumbrance other than those then required to be discharged or satisfied, or
paid any obligation or liability, absolute, accrued, contingent or otherwise,
whether due or to become due, other than current liabilities shown on the
Financial Statements and current liabilities incurred since June 30, 1995, in
the ordinary course of business and consistent with its prior practice.
3.8.2 Any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock of CYBX, or any
repurchase, redemption or other acquisition by CYBX of any outstanding shares of
capital stock or other ownership interests in or other securities of CYBX.
3.8.3 Any alteration in any material term of any outstanding
security of CYBX.
3.8.4 Any damage, destruction or other casualty loss (whether or
not covered by insurance) affecting the business or assets of CYBX which, in the
aggregate, has resulted in or might reasonably be expected to result in a
Material Adverse Effect.
3.8.5 Any change in any method of accounting or accounting
practice by CYBX, except for any such change required by reason of a concurrent
change in generally accepted accounting principles.
3.8.6 Any labor dispute, other than routine individual grievances,
or, to CYBX's knowledge, any activity or proceeding by a labor union or
representative thereof to organize any employees of CYBX or any lockouts,
strikes, slowdowns, work stoppages or, to CYBX's knowledge, threats thereof by
or with respect to such employees. For purposes of this Agreement, "knowledge"
of a party means, unless otherwise specifically qualified in the Agreement, the
actual knowledge of the officers and directors of that party, as such knowledge
has been obtained in the normal conduct of the business, and also includes such
knowledge as a reasonably prudent officer would have obtained upon the exercise
of reasonable diligence under the same or similar circumstances; "known" or
"aware" shall have a correlative meaning.
3.8.7 Any transaction or commitment made by CYBX relating to its
assets or business (including the acquisition or disposition of any assets), or
any relinquishment of any contract or other right material to CYBX taken as a
whole, other than transactions and commitments in the ordinary course of
business, those contemplated by this Agreement or those constituting an
Acquisition Proposal (as defined in Section 5.7).
3.8.8 Any (i) incurrence, assumption or guarantee by CYBX of any
indebtedness other than in the ordinary course of business in amounts and on
terms consistent with past practices, (ii) issuance or sale of any securities
convertible into or exchangeable for debt securities of CYBX, or (iii) issuance
or sale of options or other rights to acquire from CYBX, directly or indirectly,
debt securities of CYBX or any securities convertible into or exchangeable for
any such debt securities.
3.8.9 Any creation or assumption of any Lien by CYBX on any asset
of CYBX.
3.8.10 Any grant of any severance or termination pay to, any
entering into of any employment, deferred compensation or other similar
agreement with, or any increase in benefits payable under any existing severance
or termination pay policies or employment agreements, or any increase in
compensation, bonus or other benefits payable to any current or former
shareholder, officer, director, salesperson, distributor, agent or employee of
CYBX, other than any grants or increases in the ordinary course of business
consistent with past practice.
3.8.11 Any acceleration of vesting provisions of outstanding
options and shares granted under CYBX's Stock Option Plans, except pursuant to
the terms of such outstanding options and plans.
3.8.12 Any mortgage, pledge or grant of a Lien, charge, security
interest or any other encumbrance or restriction any of its property, business
or assets, tangible or intangible otherwise than in the ordinary course of
business.
3.8.13 Any sale, transfer, lease to others or other disposition of
any assets of CYBX, except for inventory sold in the ordinary course of
business, or canceled or compromised any debt or claim, or waived or released
any right.
3.8.14 Any notice or threat of termination of any material
contract (including without limitation, any distributorship agreement), lease or
other agreement.
3.8.15 Any transfer or grant of any rights under, or entered into
any settlement regarding the breach or infringement of, any United States or
foreign license, patent, copyright, trademark, trade name, invention or similar
rights, or modified any existing rights with respect thereto.
3.8.16 Any material increase or decrease in the quantity of items
of inventory not consistent with its prior practice and prudent business
practices prevailing in the industry, or any purchase commitment in excess of
the normal, ordinary and usual requirements of CYBX's business, or any change in
CYBX's selling, pricing or advertising practices inconsistent with its prior
practice.
3.8.17 Any agreement or any commitment to take any of the types of
action described in subparagraphs 3.8.1 through 3.8.17 above.
3.9 Properties; Liens. Except for those assets addressed in Section 3.15,
CYBX has good title to all of its assets material to the business, results of
operation, financial condition or prospects of CYBX, subject, in each case, only
to (i) statutory liens not delinquent or the validity of which is being
contested in good faith by appropriate proceedings; (ii) liens disclosed or
reflected in the Financial Statements; (iii) liens for taxes not yet delinquent
or the validity of which is being contested in good faith by appropriate
proceedings; and (iv) liens and imperfections of title and encumbrances, if any,
which, individually or in the aggregate, do not have a Material Adverse Effect.
Section 3.9 of the Disclosure Schedule sets forth a summary description of all
real property (including warehouses) leased by CYBX together with any
encumbrances on CYBX's interest. Such leases, subleases and other agreements are
in full force and effect and CYBX is not in default thereunder and has received
no notice of default thereunder. To the knowledge of CYBX, no other party
thereto is in default thereunder. CYBX does not own any real property or
buildings or structures located on real property. The real estate interests of
CYBX are not subject to any Lien or other encumbrance, and CYBX enjoys a right
of quiet possession as against any Lien or other encumbrance on the property. To
CYBX's knowledge, all buildings and other structures leased by CYBX are (i) in
good operating condition and repair, normal wear and tear excepted and (ii)
adequate for the uses to which they are being put. CYBX has not received any
notice nor has any knowledge of any pending, threatened or contemplated
condemnation proceeding affecting the real property leased by CYBX or any part
thereof or of any sale or other disposition of such real property or any part
thereof in lieu of condemnation.
3.10 Litigation. There is no action, suit, proceeding or, to the
knowledge of CYBX any investigation pending against, or, to the knowledge of
CYBX, threatened against or affecting, CYBX or any of its respective properties
before any court or arbitrator or any governmental body, agency or official.
None of the actions, suits, claims, proceedings or investigations set forth in
Section 3.10 of the Disclosure Schedule (except as specifically stated thereon),
individually or together with any other, will have a Material Adverse Effect or
will result in any order, judgment, injunction, award or decree of any court,
governmental or regulatory body or arbitration tribunal that is not adequately
reserved against on the Financial Statements. The matters set forth in Section
3.10 of the Disclosure Schedule include all trademark infringement or other
intellectual property claims, and all product liability claims or claims related
to products made, sold or purportedly sold by CYBX, against or involving CYBX
and any products or product lines CYBX sells. CYBX does not act as a distributor
or manufacturer's representative. All such product liability claims currently
pending or, to CYBX's knowledge, threatened against CYBX are fully covered by
insurance.
3.11 Taxes. Except as set forth in paragraph (a) of Schedule 3.11, the
statute of limitations for the assessment of federal income taxes has expired
for all federal income tax returns of CYBX or its predecessor through the fiscal
year ended June 30, 1991. Through the date hereof, CYBX has never been audited
by any tax authority. (a) CYBX has filed all returns for Taxes, as defined
below, that it is required to file through the date hereof, and shall, on or
before the Effective Time, prepare and file, in a manner consistent with prior
years, all returns for Taxes that it is required to file on or before the
Effective Time. (b) Each of the federal, state, and local income tax returns
heretofore filed by CYBX is true and correct in all material respects. (c) CYBX
has timely paid or made provision for all Taxes that have been shown as due and
payable on the returns that have been filed. (d) The charges, accruals and
reserves for taxes reflected on the books of CYBX are adequate to cover the Tax
liabilities accruing or payable by CYBX in respect of periods covered by such
books. (e) CYBX is not delinquent in the payment of any Taxes, nor has CYBX
requested any extension of time within which to file or send any return, which
return has not since been filed or sent. (f) No deficiency for any Taxes has
been proposed, asserted or assessed in writing against CYBX and CYBX does not
know of any other unassessed Tax deficiency threatened or proposed against CYBX.
(g) CYBX has not been granted any extension of the limitation period applicable
to any Tax claims. (h) CYBX is not, nor has CYBX been, a party to any tax
sharing agreement with any corporation. (i) Section 3.11 of the Disclosure
Schedule sets forth all federal tax elections under the Internal Revenue Code of
1986, as amended (the "Code") that are or will be in effect with respect to any
tax year of CYBX, including without limitation the tax year ended June 30, 1994,
and ending at the Effective Time. "Tax" means with respect to any person (i) any
net income, gross income, gross receipts, sales, use, ad valorem, franchise,
profits, license, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property or windfall profit tax, custom duty or other tax,
governmental fee, or other like assessment or charge of any kind whatsoever,
together with any interest and any penalty, addition to tax or additional amount
imposed by any taxing authority (domestic or foreign) on such person and (ii)
any liability of CYBX for the payment of any amount of the type described in the
immediately preceding clause (i) as a result of being a member of an affiliated
or combined group, or as a result of any spin off, distribution or other
reorganization related to the disposition of any assets or business of CYBX.
CYBX has not, for the 5-year period preceding the Effective Time, been a United
States real property holding corporation within the meaning of Section 897(c)(2)
of the Code. CYBX will deliver to St. Jude at the time of Closing a properly
executed FIRPTA exemption certificate which meets the requirements of Section
1.1445-2 of the Treasury Regulations.
3.12 ERISA.
3.12.1 Section 3.12 of the Disclosure Schedule sets forth a list
identifying each "employee benefit plan", as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974 ("ERISA"), which is or was
subject to any provision of ERISA and with respect to which CYBX or any
affiliate (as defined below) has any direct or indirect, fixed or contingent
liability as of the Effective Time. Copies of such plans (and, if applicable,
related trust agreements or insurance contracts) and all written amendments
thereto, summary plan descriptions thereof and any material written employee
communications with respect to them have been furnished to St. Jude, together
with the three most recent annual reports (Form 5500 including, if applicable,
Schedule B thereto) and any annual accounting of plan assets prepared in
connection with any such plan. Such plans are hereinafter referred to
collectively as the "Employee Plans". For purposes of this Section, "affiliate"
of any person means any other person which, together with CYBX, is treated as a
single employer under Section 414 of the Code. The only Employee Plans which,
individually or collectively, would constitute an "employee pension benefit
plan" as defined in Section 3(2) of ERISA (the "Pension Plans") are identified
as such in Section 3.12 of the Disclosure Schedule. Neither CYBX nor any
affiliate has terminated or caused to be terminated in whole or in part or
merged any Employee Plan during the period since September 30, 1990. CYBX has
provided St. Jude with complete age, salary, service and related data as of
November 9, 1995, for employees and former employees of CYBX and any affiliate
covered as of the Effective Time under the Pension Plans.
3.12.2 No Employee Plan constitutes a "multi-employer plan," as
defined in Section 3(37) of ERISA (a "Multi-employer Plan"); with respect to
insurance arrangements, there are no reserves, assets, surpluses or prepaid
premiums; and no Employee Plan is subject to Title IV of ERISA. Neither CYBX
nor, to the knowledge of CYBX, any disqualified person, as defined in Section
4975 of the Code, has engaged in any "prohibited transaction", as defined in
Section 406 of ERISA or Section 4975 of the Code, with respect to any Employee
Plan which is covered by Title I of ERISA, excluding transactions effected
pursuant to a statutory or administrative exemption.
3.12.3 Each Employee Plan which is intended to be qualified under
Section 401(a) of the Code is or was the subject of a favorable Internal Revenue
Service determination with respect to such qualification, and CYBX has furnished
to St. Jude copies of the most recent such determination letters, and nothing
has occurred since the date thereof that would have an adverse effect on such
qualification. There are no accrued liabilities under any Employee Plan which
have not been fully provided for by contributions to such Employee Plans or
which are not provided for on the Financial Statements. Each Employee Plan has
been maintained in substantial compliance with its terms and with the
requirements prescribed by any and all statutes, orders, rules and regulations,
including but not limited to ERISA and the Code, which are applicable to such
Employee Plans, including without limitation those requirements necessary to
maintain its qualification and the continuation of coverage requirements of Code
Section 4980B. Other than for claims in the ordinary course for benefits under
the Employee Plans, there are no suits, actions, claims or proceedings pending
or, to the knowledge of CYBX, threatened which would result in any liability
with respect to any such Employee Plan.
3.12.4 There is no contract, agreement, plan or arrangement
covering any employee or former employee of CYBX or any affiliate that,
individually or collectively, could give rise to the payment of any amount that
would not be deductible pursuant to the terms of Section 280G or Section 162(m)
of the Code.
3.12.5 Section 3.12 of the Disclosure Schedule sets forth a list
of each material employment, severance or other similar contract, arrangement or
policy and each plan or arrangement (written or oral) providing for insurance
coverage (including any self-insured arrangements), workers' compensation,
disability benefits, supplemental unemployment benefits, vacation benefits,
retirement benefits or for deferred compensation, profit-sharing, bonuses, stock
options, stock appreciation or other forms of incentive compensation or
post-retirement insurance, compensation or benefits in effect at the Effective
Time which (i) is not an Employee Plan (as defined in Section 3.12.1), (ii) is
entered into, maintained or contributed to, as the case may be, by CYBX or any
of its subsidiaries and (iii) covers any employee or former employee of CYBX or
any of its affiliates (as defined in Section 3.12.1). Such contracts, plans and
arrangements as are described above, copies or descriptions of all of which have
been furnished previously to St. Jude are hereinafter referred to collectively
as the "Benefit Arrangements." Each Benefit Arrangement has been maintained in
substantial compliance with its terms and with the requirements prescribed by
any and all statutes, orders, rules and regulations which are applicable to such
Benefit Arrangement. CYBX has no liability with respect to post-retirement
medical or death benefits for retired employees other than coverage mandated by
law or death benefits under any Pension Plan.
3.12.6 There has been no amendment to, written interpretation or
announcement (whether or not written) by CYBX or any of its affiliates relating
to, or change in employee participation or coverage under, any Employee Plan or
Benefit Arrangement which would increase the expense (whether or not such
expense is recognized under generally accepted accounting principles) of
maintaining such Employee Plan or Benefit Arrangement above the level of the
expense incurred in respect thereof for the fiscal year ended on June 30, 1995.
3.12.7 With respect to any Employee Plan or Benefit Arrangement,
no event has occurred, and there exists no condition or set of circumstances in
connection with which CYBX or any such plan, directly or indirectly, could
reasonably be expected to be subject to any liability under ERISA, the Code or
any other law, regulation or governmental order. With respect to each Employee
Plan and Benefit Arrangement: (i) CYBX has made all payments due from it to date
or has established a reasonable reserve therefore and all amounts properly
accrued to date as liabilities of CYBX which have not been paid have been
properly recorded on the books of CYBX (including without limitation the
Financial Statements); (ii) no Pension Plan which is subject to ERISA section
302 or Code section 412 has incurred any "accumulated funding deficiency" (as
defined in either such section), whether or not waived; and (iii) to the St.
Jude's knowledge, there are no unfunded benefit obligations that are not subject
to United States law which are not accounted for by reserves shown on the
Financial Statements and established under generally accepted accounting
principles or otherwise noted on such Financial Statements.
3.12.8 The consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former employee of CYBX or any
affiliate to severance pay, supplementary unemployment compensation or any
similar payment, (ii) accelerate the time of payment or vesting, or increase the
amount, of any compensation due to any such employee or former employee, or
(iii) constitute or involve a prohibited transaction (as defined in ERISA
section 406 or Code section 4975) that is not otherwise covered by a statutory
or administrative exemption.
3.13 Compliance With Laws; Permits. Except for violations which do not
and will not have individually or in the aggregate a Material Adverse Effect,
CYBX (i) is not in violation of any applicable provision of any law, statute,
ordinance or regulation and (ii) would not, to the knowledge of CYBX, be in
violation of any provision of any law, statute, ordinance or regulation that has
been enacted or adopted but is not yet effective if it were effective at the
date hereof. CYBX has not made any illegal payment to any officer or employee of
any governmental or regulatory body, or made any payment to any customer for the
illegal sharing of fees or to any customer or supplier for illegal rebating of
charges, or engaged in any other illegal reciprocal practices, or made any
illegal payment or given any other illegal consideration to any purchasing agent
or other representative of customers in respect of sales made or to be made by
CYBX. CYBX has all licenses, permits, orders and approvals of any federal,
state, local or foreign governmental or regulatory body (collectively,
"Permits") that are material to or necessary for the conduct of the business of
CYBX, except where the failure to hold any such Permit would not result in or be
reasonably expected to result in a Material Adverse Effect; such Permits are in
full force and effect; no violations are or have been recorded in respect of any
Permit; and no proceeding is pending or, to the knowledge of CYBX, threatened to
revoke or limit any Permit. Section 3.13 of the Disclosure Schedule lists all of
CYBX's Permits.
3.14 Finders' Fees. There is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to act on behalf
of, CYBX who might be entitled to any fee or commission from CYBX or St. Jude or
any of its affiliates upon consummation of the transactions contemplated by this
Agreement.
3.15 Patents, Trademarks, Trade Names, Service Marks and Copyrights.
3.15.1 Section 3.15 of the Disclosure Schedule lists all
trademarks, patents, copyrights, service marks, applications therefor, logos,
trade names and CYBX developed computer software and firmware (collectively the
"Proprietary Rights") owned by CYBX, specifying as to each, as applicable (i)
the nature of such Proprietary Right; (ii) the owner of such Proprietary Right;
(iii) the jurisdiction by or in which such Proprietary Right has been issued or
registered or in which an application for such issuance or registration has been
filed, including the respective registration or application number; and (iv)
licenses, sublicenses or other agreements as to which CYBX is a party pursuant
to which any person is authorized to use such Proprietary Right, including the
identity of all parties thereto. CYBX has previously furnished or made available
to St. Jude, copies of all such licenses, sublicenses or other agreements.
Section 3.15 of the Disclosure Schedule sets forth all material licenses held by
CYBX other than off-the-shelf software licenses. Subject to the rights of third
parties under contracts listed on Section 3.17 of the Disclosure Schedule, or
Section 3.15 of the Disclosure Schedule, all trade secrets (if any) of CYBX
("Proprietary Information") have been developed independently by CYBX, or on
behalf of CYBX by independent contractors, under circumstances and arrangements
which vest in CYBX the exclusive and unencumbered rights to such proprietary
information (subject only to such rights as a third party may have due to its
independent development of such information or obtaining such information in a
manner which does not constitute or involve an act of misappropriation). To the
knowledge of CYBX, the research, development and manufacture of products of CYBX
do not constitute or involve the misappropriation of trade secrets of any third
party. CYBX's rights, title and interest in and to the Proprietary Rights and
Proprietary Information are free and clear of all encumbrance, Liens and rights
of third parties. To CYBX's knowledge, there are no other parties infringing the
Proprietary Rights. CYBX has not granted, conveyed, licensed or assigned any
rights in the Proprietary Rights or Proprietary Information to any third party.
3.15.2 All trademarks, copyrights and U.S. patents included in the
Proprietary Rights are believed to be valid and enforceable, to CYBX's
knowledge. CYBX is not aware of any material fact which would result in any of
the Proprietary Rights being declared invalid or unenforceable.
3.15.3 None of the features, components, configurations, uses or
operations (whether developed or under development) of CYBX's products or
processes are, to the knowledge of CYBX, believed to infringe, nor has any claim
been made that they may infringe, the intellectual property rights of any other
party. CYBX has not been sued or charged in writing with, or been a defendant in
any claim, suit, action or proceeding relating to CYBX's assets or business
which has not been finally determined prior to the date hereof and which
involves a claim of infringement of any patents, trademarks, service marks or
copyrights, or claim of unfair competition.
3.15.4 None of the Proprietary Rights or Proprietary Information
are subject to any outstanding order, judgment, decree, stipulation or agreement
restricting the use thereof by CYBX or restricting the licensing thereof by CYBX
to any person.
3.15.5 CYBX has not entered into any agreement to indemnify any
person against any charge of infringement of any patent, trademark, service mark
or copyright.
3.15.6 CYBX has established reasonable safeguards to maintain the
secrecy of all the Proprietary Information. To the knowledge of CYBX, CYBX has
executed agreements respecting the non-disclosure of Proprietary Information,
and the assignment of inventions with each of its employees, excluding clerical,
janitorial and similar employees. To the knowledge of CYBX, the information
which CYBX believes is Proprietary Information has not been disclosed by CYBX or
any of its employees or affiliates to any person, entity or governmental
agencies other than to employees, representatives or agencies of CYBX and
certain governmental agencies except pursuant to confidentiality agreements,
protective orders or non-disclosure rules or policies adopted by governmental
agencies (as appropriate).
3.16 Environmental Matters; OSHA.
3.16.1 The following terms used in this section are defined as
follows:
(a) "Environmental Laws" is defined as any and all federal, state
and local laws, regulations, ordinances, codes, orders or decrees of any
government agency, entity, organization or authority, or of any
jurisdiction where CYBX is located or conducts business pertaining to the
pollution of or protection of the environment, including but not limited
to those related to the air, water, noise, odor, pesticide, land, soil,
hazardous or toxic substances and wastes and specifically including the
Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA") as amended by Superfund Amendments and Re-authorization Act of
1986 ("SARA"), 42 U.S.C. ss.9601 et seq., the Resource Conservation and
Recovery Act as amended ("RCRA"), 42 U.S.C. ss.6901 et seq., the Federal
Water Pollution Control Act, 33 U.S.C. ss.1251 et seq., the Toxic
Substances Control Act ("TSCA"), 15 U.S.C. ss.2601 et seq, and the
Emergency Planning and Community Right to Know Act, 42 U.S.C. ss.11001 et
seq.
(b) "Regulated Substances" is defined as toxic, radioactive or
hazardous substances or wastes, pollutants or contaminants, including but
not limited to asbestos, urea formaldehyde; the group of organic
compounds known as polychlorinated biphenyls; petroleum products
including gasoline, fuel oil, crude oil and the various constituents of
such products; and any substance or material the generation, storage,
handling, release or disposal of which is regulated by any Environmental
Law.
(c) "Property" is defined as all real estate and property now
owned, leased or used by CYBX and any real estate and property that has
been previously owned, leased or used by CYBX.
3.16.2 CYBX is and at all times has been in material compliance
with any and all applicable Environmental Laws.
3.16.3 CYBX has all governmental licenses, permits and other
authorizations required by any and all Environmental Laws necessary to conduct
and operate the business of CYBX as currently conducted or operated, except
where the failure to hold such licenses, permits or authorizations would not,
individually or in the aggregate, have a Material Adverse Effect.
3.16.4 The Property is not presently utilized by CYBX, and has not
in the past been utilized by CYBX, for the generation, storage, handling,
transportation or disposal of any Regulated Substance and, to CYBX's knowledge,
the Property has not been used by prior owners, lessees or operators or others
for the generation, storage, handling, transportation or disposal of any
Regulated Substance.
3.16.5 CYBX has not caused any release or threatened release of
any Regulated Substance on the Property and, to CYBX's knowledge, the Property
has not been subject to any release or threatened release of any Regulated
Substance and it does not otherwise contain any condition which may result in a
claim, right of action or recovery by any person or entity under any
Environmental Laws.
3.16.6 CYBX has not transported for disposal or treatment,
arranged for transportation for disposal or treatment or disposed of any
Regulated Substances at any site where, to CYBX's knowledge, there has been a
release or threatened release of Regulated Substances or in a manner which
could, to CYBX's knowledge, create liability to any party under any
Environmental Law. CYBX has not received nor does it have knowledge of any
notice, request for response action, administrative or other order, judgment,
complaint, claim, investigation, request for information or any other request
for relief whatsoever relating to any site where a Regulated Substance, came to
be disposed of, placed or located, which was generated, transported for disposal
or treatment or arranged for transportation by CYBX.
3.16.7 CYBX has not installed and, to CYBX's knowledge, there are,
and have been, no above-ground or underground storage tanks located on the
Property.
3.16.8 CYBX is not operating its business in material violation of
the Occupational Safety and Health Act of 1970, or the regulations promulgated
thereunder or any similar laws or regulations of any other country. CYBX is not,
nor will it become, liable for any retroactive workers' compensation insurance
premiums relating to the period of time prior to the date of this Agreement in
excess of the reserves shown on its Financial Statements.
3.17 Contracts.
3.17.1 Section 3.17.1 of the Disclosure Schedule sets forth all of
the following contracts and other agreements to which CYBX is a party or by
which CYBX or its assets or properties are bound or subject: (i) customer
contracts and agreements for the sale by CYBX of materials or products which by
their terms exceed one year or under which the executory portion involves dollar
amounts in excess of $25,000; (ii) supply contracts, distributorship agreements
and manufacturer's representative agreements which are material to CYBX and its
subsidiary taken as a whole; (iii) research and development agreements; (iv)
employment, consulting, independent contractor, severance and indemnification
agreements, arrangements or understandings, and any other agreements,
arrangements or understandings, between CYBX and any current or former
stockholder, officer, director, employee, consultant, agent or other
representative; (v) contracts and other agreements with any labor union or
association representing any employee of CYBX; (vi) joint venture agreements;
(vii) contracts or other agreements under which CYBX agrees to indemnify any
party or to share tax liability of any party; (viii) contracts and other
agreements relating to the borrowing of money; (ix) any equipment leases
requiring payment by CYBX of at least $25,000 within a given year which are not
cancelable without penalty upon 90 days notice; or (x) any other material
contract not required to be disclosed by any other section of this Agreement,
whether or not made in the ordinary course of business. There have been
delivered or made available to St. Jude true and complete copies of all such
contracts and other agreements set forth in Section 3.17 of the Disclosure
Schedule. All of such contracts and other agreements are in full force and
effect and CYBX is not in default under any of them, nor, to the knowledge of
CYBX, is any other party to any such contract or other agreement in default
thereunder, nor does any condition exist that with notice or lapse of time or
both would constitute a default thereunder, except for any such defaults that
would not, individually or in the aggregate, have a Material Adverse Effect.
Other than products provided in connection with clinical trials, CYBX is not a
party to any material contract to sell products or to provide services to third
parties which is to be performed at a price which is less than CYBX's full cost.
The relationships of CYBX with its suppliers, distributors, customers,
licensors, licensees and researchers are good commercial working relationships.
No customer or supplier has canceled or otherwise terminated its relationship
with CYBX during the last twelve months, except for such cancellations or
terminations which would not, individually or in the aggregate, have a Material
Adverse Effect.
3.17.2 Section 3.17.2 of the Disclosure Schedule identifies those
contracts and agreements to which CYBX (or its subsidiary) is a party which (i)
require the consent of the other party in order that such contracts or
agreements continue in full force and effect following the consummation of the
transactions contemplated by this Agreement and (ii) the termination or
discontinuation of which would have a Material Adverse Effect.
3.18 Material Obligations. CYBX does not have any material liabilities or
obligations, absolute or contingent (individually or in the aggregate) except
(i) the liabilities and obligations set forth in the Financial Statements; (ii)
liabilities and obligations which have been incurred subsequent to June 30,
1995, in the ordinary course of business which are usual and normal in amount,
both individually and in the aggregate; and (iii) liabilities and obligations
under a lease for its principal offices and leases for equipment, and
liabilities and obligations under sales, procurement and other contracts and
arrangements entered into in the ordinary course of business.
3.19 CYBX Products; Regulation.
3.19.1 There are no statements, citations, warning letters, FDA
Forms 483, or decisions by any governmental or regulatory body that any product
produced, manufactured, marketed or distributed at any time by CYBX ("CYBX
Product") is defective or fails to meet any applicable standards promulgated by
any such governmental or regulatory body. There have been no recalls ordered by
any such governmental or regulatory body with respect to any CYBX Product. To
the knowledge of CYBX, there is (i) no fact relating to any CYBX Product that
may give rise to a recall of any CYBX Product or a duty to warn of a defect in
any CYBX Product; and (ii) no latent or overt design, manufacturing or other
defect in any CYBX Product.
3.19.2 All CYBX Products used, marketed or distributed by CYBX in
clinical investigations are subject to all applicable licenses, registrations,
approvals, clearances, and authorizations required by local, state, and federal
agencies, foreign or domestic, regulating the safety, effectiveness, and market
clearance of medical devices, which licenses, registrations, approval,
clearances and authorizations are held by CYBX and were obtained by CYBX on or
before the date when same were required. Those licenses, registrations,
approvals, clearances, and authorizations will not be affected or impaired by
the Merger. Section 3.19.2 to the Disclosure Schedule lists all such licenses,
registrations, approvals, clearances and authorizations obtained or held by CYBX
in its own name.
3.19.3 CYBX is in possession of all supportive materials and data
substantiating representations made to the FDA in its material filings
therewith, including any and all testing data in the possession or under the
control of CYBX, whether or not submitted to the FDA. CYBX further represents
and warrants that CYBX Products perform in compliance with the representations
and performance specifications as contained in said filings.
3.19.4 There is no proceeding by the FDA or any other governmental
agency, including but not limited to a grand jury investigation, a 405 hearing,
a civil penalty proceeding pending, or to CYBX's knowledge threatened, against
CYBX, and no such proceedings have been brought at any time in the past relating
to the safety or efficacy of CYBX's products and, to CYBX's knowledge, there is
no basis for such a proceeding.
3.20 Inventory. The inventory (including, without limitation, finished
goods, parts and supplies) of CYBX (including that reflected on the latest
Financial Statements and that acquired after the date of the latest Financial
Statements) is or was, prior to the sale thereof, (i) in good and merchantable
condition, and suitable and usable or salable in the ordinary course of business
for the purposes for which intended, (ii) is not obsolete, damaged or defective,
and (iii) has been reflected on the Financial Statements and carried on the
books of account of CYBX in accordance with generally accepted accounting
principles consistently applied.
3.21 Accounts and Notes Receivable. All accounts and notes receivable
reflected on the Financial Statements, and all accounts and notes receivable
arising subsequent to June 30, 1995, (i) have arisen in the ordinary course of
business of CYBX; (ii) represent valid obligations due to CYBX; and (iii)
subject only to a reserve for bad debts computed in a manner consistent with
past practice, have been collected or are collectible in the ordinary course of
business of CYBX in the aggregate recorded amounts thereof in accordance with
their terms. All items that are required by generally accepted accounting
principles to be reflected as accounts and notes receivable on the Financial
Statements and on the books of account of CYBX are so reflected.
3.22 Employee Relations. CYBX has heretofore provided St. Jude with a
complete list of all employees of CYBX stating position, salary and dates of
service. None of CYBX's employees are union members. No union organizing efforts
have been conducted within the last five years or to the knowledge of CYBX are
now being conducted with respect to the employees of CYBX. CYBX is not aware of
any pending or threatened union activity, strike, work stoppage or other labor
trouble with respect to the employees of any of the suppliers or customers of
CYBX. CYBX is in substantial compliance with all applicable laws respecting
employment and employment practices, terms and conditions of employment, wages
and hours, equal opportunity, civil rights and payroll taxes, including without
limitation, the Immigration and Reform Control Act, Title VII of the Civil
Rights Act of 1964, the Civil Rights Act of 1991, the Americans with
Disabilities Act, the Federal Age Discrimination in Employment Act, the Family
and Medical Leave Act, the Workers Adjustment and Retraining Notification Act
and any state human rights act. CYBX is not in receipt of a complaint, demand
letter or charge issued by a federal, state or local agency which alleges a
violation by CYBX of any federal, state or local law or regulation respecting
employment and employment practices, terms and conditions of employment or wages
and hours. CYBX has no knowledge of any pending or threatened claims by
employees or former employees for any contract claims, intentional infliction of
emotional distress, defamation or any other tort, or any claims arising from any
federal, state or local law or ordinance.
3.23 Insurance. Section 3.23 of the Disclosure Schedule sets forth a list
and brief description of all policies or binders of fire, liability, product
liability, worker's compensation, vehicular, directors' and officers' and other
insurance held by or on behalf of CYBX. Such policies and binders are valid and
enforceable in accordance with their terms, are in full force and effect, and
insure against risks and liabilities to the extent and in the manner indicated.
CYBX is not in default with respect to any provision contained in any such
policy or binder and has not failed to give any notice or present any claim
under any such policy or binder in due and timely fashion. CYBX has received no
notice of cancellation or non-renewal of any such policy or binder. CYBX has no
knowledge of any inaccuracy in any application for such policies or binders, any
failure to pay premiums when due or any similar state of facts that might form
the basis for termination of any such insurance. The consummation of the Merger
will not constitute a default under any of such policy or binder or grounds for
the termination thereof.
3.24 Potential Conflicts of Interest. No officer or director of CYBX, no
entity controlled by any such officer or director and no relative or spouse (or
relative of such spouse) of any such officer or director:
3.24.1 owns, directly or indirectly, any interest in (excepting
not more than 1% stock holdings for investment purposes in securities of
publicly held and traded companies), or is an officer, director, employee or
consultant of, any person which is, or is engaged in business as, a competitor,
lessor, lessee, customer or supplier of CYBX;
3.24.2 owns, directly or indirectly, in whole or in part, any
tangible or intangible property that CYBX uses or the use of which is necessary
or desirable for the conduct of business of CYBX;
3.24.3 has any cause of action or other claim whatsoever against,
or owes any amount to, CYBX, except for claims in the ordinary course of
business, such as for accrued vacation pay, accrued benefits under employee
benefit plans, stock options, and similar matters and agreements existing on the
date hereof; or
3.24.4 has made any payment of or commitment to pay any
commission, fee or other amount to, or purchase or obtain or otherwise contract
to purchase or obtain any goods or services from, any corporation or other
person of which any officer or director of CYBX, or a relative of any of the
foregoing, is a CYBX or stockholder (excepting stock holdings solely for
investment purposes in securities of publicly held and traded companies).
3.25 Bank Accounts. Section 3.25 of the Disclosure Schedule sets forth a
complete list of all the bank accounts or safe deposit boxes of CYBX, together
with the names of the persons authorized to draw thereon or to have access
thereto.
3.26 Acquisition Proposal. During the period from September 30, 1993
through the date of this Agreement, neither CYBX nor any agent of CYBX has
received any written proposal or offer which, if received after the execution of
this Agreement would be required to be disclosed to St. Jude pursuant to Section
5.7 hereof.
3.27 Full Disclosure. To the knowledge of CYBX, all documents, contracts,
instruments, certificates, notices, consents, affidavits, letters, telegrams,
telexes, statements, schedules (including Schedules to this Agreement), exhibits
(including Exhibits to this Agreement) and any other papers whatsoever
(collectively, "Documents") delivered by or on behalf of CYBX in connection with
this Agreement and the transactions contemplated thereby are true, complete and
authentic. The representations and warranties of CYBX contained in this
Agreement, as modified by the Disclosure Schedule, contain no untrue statements
of any material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not false or misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF ST. JUDE AND MERGER SUBSIDIARY
St. Jude and Merger Subsidiary each represents, warrants and covenants to
CYBX that:
4.1 Corporate Existence and Power. Each of St. Jude and Merger Subsidiary
is a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation, and has all corporate powers required
to carry on its business as now conducted. Each of St. Jude and Merger
Subsidiary is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction where the character of the property owned or
leased by it or the nature of its activities makes such qualification necessary,
except for those jurisdictions where the failure to be so qualified would not,
individually or in the aggregate, have an effect on the condition, financial or
otherwise, business, assets, liability, capitalization, financial position,
operations or results of operations of St. Jude and its subsidiaries taken as a
whole.
4.2 Corporate Authorization. Each of St. Jude and Merger Subsidiary 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 have
been duly and validly authorized by St. Jude's Board of Directors and Merger
Subsidiary's Board of Directors and no other corporate proceedings on the part
of either St. Jude or Merger Subsidiary are necessary to authorize the execution
and delivery of this Agreement or to consummate the transactions so
contemplated.
4.3 Governmental Authorization; Consents.
4.3.1 The execution, delivery and performance by St. Jude and
Merger Subsidiary of this Agreement and the consummation of the Merger by St.
Jude and Merger Subsidiary require no action by or in respect of, or filing
with, any governmental body, agency, official or authority other than (i) the
filing of Articles of Merger in accordance with Delaware Law; (ii) compliance
with any applicable requirements of the HSR Act; and (iii) any action or filing,
the failure to obtain or make would not, individually or in the aggregate, have
a material adverse effect.
4.3.2 No consent, approval, waiver or other action by any person
under any contract, agreement, indenture, lease, instrument or other document to
which St. Jude or Merger Subsidiary is a party or by which it is bound is
required or necessary for the execution, delivery and performance of this
Agreement by St. Jude or Merger Subsidiary or the consummation of the
transactions contemplated hereby.
4.4 Non-Contravention. The execution, delivery and performance by St.
Jude and Merger Subsidiary of this Agreement and the consummation by St. Jude of
the transactions contemplated hereby do not and will not (i) contravene or
constitute a default under or give rise to a right of termination, cancellation
or acceleration of any right or obligation of St. Jude and Merger Subsidiary or
to a loss of any benefit to which St. Jude and Merger Subsidiary is entitled
under (A) any provision of applicable law or regulation (assuming compliance
with the matters referred to in Section 4.2.1); (B) the Articles of
Incorporation or Bylaws of St. Jude or the Certificate of Incorporation or
Bylaws of Merger Subsidiary; (C) any agreement, contract, plan, lease,
arrangement or commitment; or (D) any judgment, injunction, order, decree,
administrative interpretation, award or other instrument binding upon St. Jude
or Merger Subsidiary, or (ii) result in the creation or imposition of any Lien
on any asset of St. Jude or Merger Subsidiary.
4.5 Binding Effect. This Agreement constitutes a legal, valid and binding
agreement of St. Jude and Merger Subsidiary enforceable against St. Jude and
Merger Subsidiary in accordance with its terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and by principles of equity regarding the availability of
remedies.
4.6 Financial Statements and SEC Filings. St. Jude has delivered to CYBX
true and complete copies of (i) its annual reports on Form 10-K for its fiscal
years ended December 31, 1993 and 1994; (ii) its quarterly reports on Form 10-Q
for its fiscal quarters ended March 31, June 30 and September 30, 1995; (iii)
its proxy or information statements relating to all meetings of, or actions
taken without a meeting by, the shareholders of St. Jude held since December 31,
1994; and (iv) all of its other 8-K reports filed with the SEC since December
31, 1994. The reports and statements so delivered are referred to collectively
in this Agreement as the "St. Jude SEC Filings." As of their respective dates,
the St. Jude SEC Filings (including all exhibits and schedules thereto and
documents incorporated by reference therein) did not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made, in light of the circumstances under which they were
made, not misleading. The audited financial statements and unaudited interim
financial statements of St. Jude included or incorporated by reference in the
St. Jude SEC Filings (i) have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto); (ii) complied as of
their respective dates in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto; and (iii) fairly present the financial position of St. Jude as of the
dates thereof and the income and cash flows for the periods then ended (subject,
in the case of any unaudited interim financial statements, to normal year-end
adjustments).
4.7 Full Disclosure. To the knowledge of St. Jude, all documents,
contracts, instruments, certificates, notices, consents, affidavits, letters,
telegrams, telexes, statements, schedules (including Schedules to this
Agreement), exhibits (including Exhibits to this Agreement) and any other papers
whatsoever (collectively, "Documents") delivered by or on behalf of St. Jude in
connection with this Agreement and the transactions contemplated thereby are
true, complete and authentic. The representations and warranties of St. Jude
contained in this Agreement contain no untrue statements of any material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not false or misleading.
ARTICLE 5
COVENANTS OF CYBX
CYBX agrees that:
5.1 Conduct of CYBX. Except as set forth in Section 5 of the Disclosure
Schedule, from the date hereof until the Effective Time, CYBX shall conduct its
business in the ordinary course consistent with past practice and will use its
best efforts to preserve intact its business organization and relationships with
third parties and to keep available the services of its present officers and
employees. Without limiting the generality of the foregoing, from the date
hereof until the Effective Time without the prior written consent of the St.
Jude:
5.1.1 CYBX will not declare, set aside or pay any dividend or
other distribution with respect to any shares of capital stock of CYBX.
5.1.2 CYBX will not amend or alter any term of any outstanding
CYBX securities.
5.1.3 CYBX will not, without the consent of St. Jude, (i) incur,
assume or guarantee any debt other than in the ordinary course of business
consistent with historic practices; (ii) issue or sell any securities
convertible into or exchangeable for debt securities of CYBX; or (iii) issue or
sell any options or other rights to acquire from CYBX, directly or indirectly,
any debt securities of CYBX or any securities convertible into or exchangeable
for any such debt securities.
5.1.4 CYBX will not create, assume or incur any Lien on any
material asset of CYBX.
5.1.5 CYBX will not relinquish any material contract or other
material right of CYBX, make any payment (direct or indirect) of any liability
of CYBX before the same becomes due in accordance with its terms or make any
change in its operations that is in any such case material to CYBX taken as a
whole.
5.1.6 CYBX will not adopt any change in any method of accounting
or accounting practice used by CYBX other than by reason of a concurrent change
in generally accepted accounting principles and upon the recommendation of
CYBX's independent public accountants.
5.1.7 CYBX will not, without the prior written consent of St. Jude
(i) grant or make any severance or termination payments to any officer, director
or employee of CYBX, except pursuant to written agreements in effect on the date
hereof and set forth in the Disclosure Schedule; (ii) enter into any employment,
deferred compensation or other similar agreement (or enter into any amendment to
any such existing agreement) with any officer, director or employee of CYBX;
(iii) increase benefits payable under any existing severance or termination pay
policies or employment agreements; or (iv) pay or provide for any increase in
compensation, bonus, or other benefits payable to officers, directors or
employees of CYBX except for normal increases to non-managerial employees
consistent with past practice or to the extent required under existing
employment and labor agreements.
5.1.8 CYBX will not amend its Certificate of Incorporation or
Bylaws.
5.1.9 CYBX will not merge or consolidate with any person, acquire
any stock or other ownership interest in any person or the assets of any
business as an entity or liquidate, dissolve or otherwise reorganize or seek
protection from creditors.
5.1.10 Except for those transactions which constitute an
Acquisition Proposal, CYBX will not take any action, the taking of which, or
omit to take any action, the omission of which, would reasonably be expected to
cause any of the representations and warranties in Section 3 to be inaccurate in
any respect at or as of any time prior to the Effective Time.
5.1.11 Except for the sale of inventory and the disposition of
obsolete or defective equipment, CYBX will not without the prior written consent
of St. Jude sell, transfer, mortgage, or otherwise dispose of, or encumber, or
agree to sell, transfer, mortgage or otherwise dispose of or encumber, any
assets or properties, real, personal or mixed.
5.1.12 CYBX will not (a) enter into any other agreements,
commitments or contracts (including without limitation joint venture agreements
or material license agreements) which, individually or in the aggregate, are
material to CYBX, except agreements, commitments or contracts for the purchase,
sale or lease of goods or services, consistent with past practice or
contemplated by the disclosures set forth in Section 5 of the Disclosure
Schedule; or (b) otherwise make any material change in any existing material
agreement, commitment or arrangement.
5.1.13 Except with the prior written consent of St. Jude, CYBX
will not make any investment of a capital nature with a maturity in excess of 90
days either by purchase of stock or securities, contributions to capital,
property transfers or otherwise, or by the purchase of any property or assets of
any other individual, firm or corporation.
5.1.14 Except with the prior written consent of St. Jude, CYBX
will not purchase any capital items which singly have an installed purchase
price greater than $5,000, or in the aggregate have a purchase price in excess
of $50,000.
5.1.15 Except with respect to the issuance of shares pursuant to
the exercise of stock options outstanding on the date hereof granted under the
Stock Option Plans, CYBX will not redeem, repurchase or otherwise acquire any
CYBX securities.
5.1.16 CYBX will not agree or commit to do any of the matters set
forth in Sections 5.1.1 through 5.1.15.
5.2 CYBX's Shareholders' Meeting; Proxy Material.
5.2.1 CYBX agrees that it shall prepare and file with the SEC
under the 1934 Act, and shall use all reasonable efforts to have cleared by the
SEC, and promptly thereafter shall mail to shareholders of CYBX, a proxy
statement (the "Proxy Statement"). The Proxy Statement shall be in form and
substance reasonably satisfactory to CYBX and St. Jude and shall contain the
recommendation of the Board of Directors of CYBX in favor of the Merger. CYBX
shall promptly take all action necessary in accordance with Delaware Law
(including notice of dissenters' rights) and its Certificate of Incorporation
and Bylaws to convene, a meeting of its shareholders (the "CYBX Shareholders
Meeting"). The shareholder vote or consent required for approval of the Merger
shall be no greater than that set forth in the Delaware Law. CYBX shall use its
commercially reasonable efforts to solicit from shareholders of CYBX proxies in
favor of the Merger.
5.2.2 CYBX represents and warrants to St. Jude that the Proxy
Statement, insofar as it contains or incorporates by reference information
pertaining to CYBX, will comply in all material respects with the requirements
of the 1934 Act, and the applicable rules and regulations adopted under said
Act, and tha t such information will contain no untrue statements of any
material fact and will not omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading. CYBX will
promptly advise St. Jude in writing if at any time prior to the Effective Time
of the Merger it shall obtain knowledge of any facts that might make it
necessary or appropriate to amend or supplement the Proxy Statement in order to
make the statements contained or incorporated by reference therein not
misleading or to comply with applicable law.
5.2.3 After the Proxy Statement has cleared SEC review (or a
determination of "No Review" has been communicated by the SEC), CYBX shall,
subject to approval by St. Jude and its counsel, cause the Proxy Statement to be
mailed to its shareholders at such time as St. Jude shall reasonably request and
in accordance with applicable federal and state law. CYBX will not, without
giving prior notice to, and without the prior approval (which shall not be
unreasonably withheld) of, St. Jude, use any proxy material other than the Proxy
Statement and any other proxy material filed with the SEC prior to or
concurrently with the filing of the Proxy Statement.
5.3 Access to Information. CYBX will give St. Jude, its counsel,
financial advisors, auditors and other authorized representatives full access to
the offices, properties, books and records of CYBX, will promptly furnish to St.
Jude, its counsel, financial advisors, auditors and authorized representatives
such financial and operating data and other information as such persons may
reasonably request and will instruct CYBX's employees, counsel and financial
advisors to fully cooperate with the other party in its investigation of the
business of CYBX; provided that no investigation pursuant to this section shall
affect any representation or warranty given by CYBX to St. Jude hereunder. The
information obtained hereunder will be subject to the confidentiality agreements
set forth in Section 9.6 below.
5.4 Notices of Certain Events. CYBX shall promptly notify St. Jude of:
5.4.1 any notice or other communication from any person alleging
that the consent of such person is or may be required in connection with the
transactions contemplated by this Agreement;
5.4.2 any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions contemplated
by this Agreement;
5.4.3 any actions, suits, claims, investigations or proceedings
commenced or, to the best of CYBX's knowledge, threatened against, relating to
or involving or otherwise affecting CYBX which relate to the consummation of the
transactions contemplated by this Agreement or which, if pending on the date of
this Agreement, would have been required to have been disclosed in Section 3.10
of the Disclosure Schedule; and
5.4.4 any other event or change of fact or circumstance causing
any representation contained in Section 3 of this Agreement to be, as of the
date of such event or change, incorrect or misleading.
5.5 Consents, Approvals and Filings. CYBX will use its commercially
reasonable efforts to obtain as promptly as possible (i) all necessary
approvals, authorizations, consents, licenses, clearances or orders of
governmental and regulatory authorities required in order for CYBX to perform
its obligations hereunder; and (ii) all consents or approvals of third parties
required in connection with the contracts identified in Section 3.17.2 of the
Disclosure Schedule.
5.6 Commercially Reasonable Efforts. Subject to the fiduciary duties of
its Board of Directors, CYBX shall use its commercially reasonable efforts (i)
to cause to be fulfilled and satisfied all of the conditions to the Merger to be
fulfilled and satisfied by it; (ii) to cause to be performed all of the matters
required of it at or prior to the Effective Time; and (iii) to achieve full
compliance with applicable law. CYBX shall use its commercially reasonable
efforts to make all of its warranties and representations contained in this
Agreement true and correct in all material respects as at the Effective Time,
with the same effect as if the same had been made and this Agreement had been
dated as at the Effective Time.
5.7 Exclusivity. In order to induce St. Jude to enter into this
Agreement, CYBX agrees, on its own behalf and on behalf of its officers,
directors, employees and agents, subject to the fiduciary duties of the Board of
Directors of CYBX, that it will not, for so long as this Agreement remains in
effect, directly or indirectly, (a) take any further action to solicit, initiate
or encourage any offer or indication of interest from any person with respect to
any Acquisition Proposal (as hereinafter defined), including without limitation,
any such further action through any investment banker, broker, finder or other
intermediary previously engaged or which may be engaged for the purpose of
soliciting, initiating or encouraging such offer or indication of interest; or
(b) engage in negotiations with, or disclose any non-public information relating
to the businesses, assets or operations which are the subject of this Agreement
or afford access to the properties, books or records of CYBX to, any person that
has made, or that CYBX has good reason to believe may be considering making, an
Acquisition Proposal. CYBX will promptly notify St. Jude after receipt of any
Acquisition Proposal or indication that any person is considering making an
Acquisition Proposal or any request for non-public information relating to the
businesses, assets or operations or for access to the properties, books or
records of CYBX by any person that has made, or that CYBX has good reason to
believe may be considering making an Acquisition Proposal, and will keep St.
Jude informed of any such offer, indication or request. CYBX will not enter into
any agreement relating to any such Acquisition Proposal for a period of seven
(7) days following receipt by St. Jude of such notification by CYBX.
"Acquisition Proposal" means any proposal to (i) effect a merger or
consolidation or similar transaction involving CYBX or any of its subsidiaries,
(ii) purchase, lease, or otherwise acquire ten percent (10%) or more of the
assets of CYBX or any of its subsidiaries, (iii) purchase or otherwise acquire
(including by way of merger, consolidation, share exchange or similar
transaction) beneficial ownership (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934) of securities representing ten percent (10%) or more of
the voting power of CYBX or any of its subsidiaries, or (iv) the assignment,
transfer, licensing or other disposition of, in whole or in part, the patents,
patent rights, trade secrets or other technology of CYBX or any of its
subsidiaries, other than in the ordinary course of business.
5.8 Return of Confidential Information. Prior to the Effective Time, CYBX
shall exercise its right under all confidentiality or other non-disclosure
agreements entered into with parties approached by CYBX or its agents since
September 30, 1994 to retrieve any and all information provided by or on behalf
of CYBX to such parties.
5.9 Further Assurances. At and after the Effective Time, the officers and
directors of the Surviving Corporation will be authorized to execute and
deliver, in the name and on behalf of CYBX or Merger Subsidiary, any deeds,
bills of sale, assignments or assurances and to take and do, in the name and on
behalf of CYBX or Merger Subsidiary, any other actions and things to vest,
perfect or confirm of record or otherwise in the Surviving Corporation any and
all right, title and interest in, to and under any of the rights, properties or
assets of CYBX acquired or to be acquired by the Surviving Corporation as a
result of, or in connection with, the Merger.
ARTICLE 6
COVENANTS OF ST. JUDE
6.1 Commercially Reasonable Efforts. Subject to the fiduciary duties of
its Board of Directors, St. Jude shall use its commercially reasonable efforts
(a) to cause to be fulfilled and satisfied all of the conditions to the Merger
to be fulfilled and satisfied by it, (b) to cause to be performed all of the
matters required of it at or prior to the Effective Time and (c) to achieve full
compliance with applicable law. St. Jude shall use its commercially reasonable
efforts to make all of its warranties and representations contained in this
Agreement true and correct in all material respects as at the Effective Time,
with the same effect as if the same had been made and this Agreement had been
dated as at the Effective Time. The obligations of St. Jude pursuant to this
Section 6.1 shall in no way limit St. Jude's right to terminate this Agreement
pursuant to Section 8.2 hereof.
6.2 Consents, Approvals and Filings. St. Jude will use its commercially
reasonable efforts to obtain as promptly as possible all necessary approvals,
authorizations, consents, licenses, clearances or orders of governmental and
regulatory authorities required in order for St. Jude to perform its obligations
hereunder. The obligations of St. Jude pursuant to this Section 6.2 shall in no
way limit St. Jude's right to terminate this Agreement pursuant to Section 8.2
hereof.
6.3 Advice of Changes. St. Jude will promptly advise CYBX orally and in
writing of (i) any event occurring subsequent to the date of this Agreement
which would render any representation or warranty of St. Jude contained in this
Agreement, if made on or as of the date of such event or the Effective Time,
untrue, inaccurate or incomplete in any material respect; and (ii) any material
adverse change in the working capital, financial condition, assets, liabilities
(whether absolute, accrued, contingent or otherwise), operating profits,
business or prospects of St. Jude.
6.4 Director and Officer Liability. For six years after the Effective
Time, St. Jude will cause the Surviving Corporation to indemnify and hold
harmless the present and former officers and directors of CYBX in respect of
acts or omissions occurring prior to the Effective Time to the extent provided
under CYBX's Certificate of Incorporation, Bylaws and indemnification agreements
in effect on the date hereof; provided that in the event any claim or claims are
asserted or made within such six year period, all rights to indemnification in
respect of any such claim or claims shall continue until final disposition of
any and all such claims. For six years after the Effective Time, St. Jude will
cause the Surviving Corporation at the Surviving Corporation's expense to
provide officers and directors liability insurance in respect of acts or
omissions occurring prior to the Effective Time covering each such person
currently covered by each respective CYBX's officers' and directors' liability
insurance policy on terms with respect to coverage and amount no less favorable
than those of such policy in effect on the date hereof; provided, that in the
event any claim or claims are asserted or made within such six year period, all
rights to indemnification in respect of any such claim or claims shall continue
until final disposition of any and all such claims. If the annual premiums of
such insurance would exceed the premiums in effect as of the date of the
Agreement, St. Jude shall use its commercially reasonable efforts to procure
such level of insurance having the same coverage as in effect as of the date of
the Agreement for an annual premium equal to such current premium amount.
6.5 Employee Benefit Matters.
6.5.1 From and after the Closing Date, St. Jude shall or shall
cause the Surviving Corporation or another subsidiary of St. Jude to provide
employees of CYBX and its subsidiary ("Affected Employees") with comparable
compensation and benefits as those provided to employees with similar status and
tenure of St. Jude and its subsidiaries.
6.5.2 St. Jude or its subsidiaries shall give each Affected
Employee full credit for all service with CYBX and its affiliates for all
purposes (other than for benefit accumulation under a defined benefit pension
plan) under all employee benefit plans and arrangements (including, but not
limited to, any "employee benefit plan" as defined in Section 3(3) of ERISA)
maintained for such employees' benefit on and after the Closing Date.
6.5.3 For purposes of computing deductible amounts (or like
adjustments or limitations on coverage) under any "employee welfare benefit
plan" (as defined in Section 3(1) of ERISA), expenses and claims previously
recognized for similar purposes under the applicable employee welfare benefit
plan of CYBX or its subsidiary for the current plan year shall be credited or
recognized under the comparable plan maintained after the Closing by St. Jude or
its subsidiaries on behalf of Affected Employees. Medical plan coverage shall
not be denied to any Affected Employee with respect to a particular claim under
any plan maintained by St. Jude or its subsidiaries on the basis of the
existence of a pre-existing condition.
6.5.4 Notwithstanding anything to the contrary set forth in this
Section 6.5, St. Jude shall have no obligation to employ an employee of CYBX or
to continue the employment of any employee of CYBX offered employment or
employed by St. Jude or its subsidiaries.
ARTICLE 7
CONDITIONS TO THE MERGER
7.1 Conditions to the Obligations of CYBX. The obligation of CYBX to
consummate the Merger is subject to the satisfaction of the following further
conditions, unless waived by CYBX in its discretion:
7.1.1 St. Jude and Merger Subsidiary shall have performed in all
material respects all of their obligations hereunder required to be performed by
them at or prior to the Effective Time.
7.1.2 The representations and warranties of St. Jude and Merger
Subsidiary contained in this Agreement and in any certificate or other writing
delivered by St. Jude and Merger Subsidiary pursuant hereto shall be true in all
respects at and as of the Effective Time as if made at and as of such time.
7.1.3 Receipt by CYBX of a certificate signed by an officer of St.
Jude and Merger Subsidiary to the effect set forth in Sections 7.1.1 and 7.1.2.
7.1.4 Receipt by CYBX of all documents it may reasonably request
relating to the existence of St. Jude and Merger Subsidiary and their corporate
authority for this Agreement, all in form and substance satisfactory to CYBX.
7.1.5 No court of competent jurisdiction or an administrative,
governmental or regulatory authority has issued a final non-appealable order,
decree or ruling, or taken any other action, having the effect of permanently
restraining, enjoining or otherwise prohibiting the Merger.
7.1.6 Approval of the Merger by the shareholders of CYBX and all
approvals of applications to public authorities, Federal, state or local, the
granting of which is necessary for the consummation of the Merger, shall have
been obtained.
7.1.7 CYBX shall have received a written opinion of CYBX's
financial advisor, addressed to CYBX for inclusion in the Proxy Statement, that
the Merger is fair, from a financial point of view, to the shareholders of CYBX.
ARTICLE 8
TERMINATION
This Agreement may be terminated and the Merger contemplated by this
Agreement may be abandoned at any time prior to the Effective Time
(notwithstanding the adoption of this Agreement and approval of the Merger by
the shareholders of CYBX) under the following circumstances and in the following
manner:
8.1 Termination by Mutual Consent. By mutual written consent duly
authorized by the Board of Directors of St. Jude and by the Board of Directors
of CYBX.
8.2 Termination by St. Jude. St. Jude may terminate this Agreement at any
time, with or without cause.
8.3 Termination by CYBX. CYBX may terminate this Agreement in the
following circumstances:
8.3.1 If the closing of the sale by CYBX to St. Jude of shares of
CYBX Common Stock pursuant to that certain Common Stock Purchase Agreement
between CYBX and St. Jude dated of even date herewith has not occurred by the
time specified in Section 6.1 thereof; provided, however, that CYBX may not
terminate this Agreement where such failure is the result of acts of CYBX which
constitute a breach of CYBX's obligations or covenants set forth in this
Agreement or in the Common Stock Purchase Agreement.
8.3.2 If the Merger has not been consummated by October 18, 1996.
8.3.3 If a court of competent jurisdiction or an administrative,
governmental or regulatory authority has issued a final non-appealable order,
decree or ruling, or taken any other action, having the effect of permanently
restraining, enjoining or otherwise prohibiting the Merger.
8.3.4 If, at CYBX's Shareholders Meeting, as defined in Section
5.2 (including any adjournment or postponement thereof), the requisite vote of
the shareholders of CYBX is not obtained.
8.3.5 If prior to CYBX's Shareholders Meeting, as defined in
Section 5.2 (including any adjournment or postponement thereof), (i) the Board
of Directors of CYBX has recommended, approved, accepted or entered into a
definitive agreement regarding an Acquisition Proposal as defined in Section
5.7; or (ii) an Acquisition Proposal has been made and the Board of Directors of
CYBX has withdrawn or modified in a manner adverse to St. Jude its
recommendation of the Merger.
8.3.6 If (i) CYBX is not in material breach of its obligations
under this Agreement; and (ii) there has been (A) a material breach by St. Jude
of any of its representations and warranties under this Agreement such that the
conditions in Section 7.1.2 will not be satisfied, or (B) a material failure by
St. Jude to perform any of its obligations under this Agreement such that the
conditions in Section 7.1.1 will not be satisfied, and, in both case (A) and
(B), the breach or failure cannot, in the reasonable judgment of CYBX, be cured
by October 18, 1996 following receipt by St. Jude of notice of the breach or
such breach or failure is not in fact cured by such date.
8.3.7 If St. Jude materially breaches any of St. Jude's
obligations under Sections 6.1 or 6.2 and such breach is not cured by St. Jude
within 30 calendar days following receipt by St. Jude of notice of the breach.
8.4 Effects of Termination.
8.4.1 In the event of the termination of this Agreement pursuant
to Sections 8.1, 8.2 or 8.3, the following shall occur:
(a) the obligation of the parties to consummate the Merger
and the other actions and transactions contemplated hereby will expire;
(b) the provisions of this Section 8.4 shall survive and
the provisions of Section 9.6 of this Agreement (and of the
confidentiality agreements referred to therein) shall survive for a
period of seven years;
(c) each party will bear its own expenses incurred in
connection with this Agreement, and the St. Jude and CYBX will share
equally the Transaction Costs (as defined below), and will promptly upon
request reimburse the party which paid any such expenses; provided,
however, that if CYBX pays a Termination Fee pursuant to Section 8.4.2
each party will bear such Transaction Costs as it may have incurred and
payment pursuant to this Section 8.4.1(c) will not apply; and
(d) except as provided in Sections 8.4.2 and 8.4.3 or in
the event of a wilful breach hereof by CYBX, no party will have any
liability to any other party as a result of the termination of this
Agreement.
8.4.2 In addition to the provisions of Section 8.2.1, in
recognition of the efforts and expenses expended and incurred by St. Jude with
respect to CYBX, the opportunity CYBX presents to the St. Jude, and the
potential intangible damage to the St. Jude if (i) this Agreement is terminated
pursuant to Section 8.3.5 or (ii) (A) any third party makes an Acquisition
Proposal or acquires 50% or more of the outstanding CYBX Common Stock prior to
the CYBX Shareholders Meeting, (B) the requisite vote of the shareholders of
CYBX is not obtained, (C) this Agreement is terminated, and (D) within six
months after the execution of this Agreement, (x) CYBX enters into an agreement
relating to an Acquisition Proposal or (y) an Acquisition Proposal is
consummated, then, in either such event, CYBX will pay to St. Jude, within five
business days after demand by St. Jude, which may be made upon the earlier of
the events specified in clauses (i) or subclauses (x) and (y) of clause (ii) by
wire transfer of immediately available funds to an account designated by St.
Jude for such purpose, a termination fee (the "Termination Fee") equal to
$3,500,000. For purposes of this Section 8.4.2, the term Acquisition Proposal
shall not include any sale by CYBX of debt or equity securities (whether
pursuant to a private placement or public offering) effected for the sole
purpose of raising equity capital. A transaction will be deemed to have been
effected for the sole purpose of raising equity capital if the shareholders of
CYBX immediately prior to such transaction continue to own a majority of the
outstanding voting securities of CYBX immediately after such transaction unless
the transaction, by its express terms, results in, or is one step in a process
the completion of which would result in, (i) the acquisition by the acquiring
party of a majority of CYBX's outstanding voting stock, (ii) a merger or
consolidation or similar transaction involving CYBX or any of its subsidiaries,
(iii) a sale, lease, or other disposition by CYBX of 10% or more of the assets
of CYBX or any of its subsidiaries, or (iv) the assignment, transfer, licensing
or other disposition of, in whole or in part, the patents, patent rights, trade
secrets or other technology of CYBX or any of its subsidiaries, other than in
the ordinary course of business.
8.4.3 In the event that CYBX fails to make timely payment of the
Termination Fee to the St. Jude when due pursuant to Section 8.4.2 CYBX will
reimburse the other party for its legal and other expenses (including interest
on the Termination Fee from the date of demand at the rate of 10% per annum)
incurred in connection with the efforts to obtain said payment.
ARTICLE 9
MISCELLANEOUS
9.1 Notices. All notices, requests and other communications to any party
hereunder shall be in writing and shall be given,
if to St. Jude or Merger Subsidiary, to:
St. Jude Medical, Inc.
One Lillehei Plaza
St. Paul, MN 55117
Attn: President and Chief
Executive Officer
with a copy addressed as above, to the attention of the Vice President
and General Counsel.
with a copy to:
Lindquist & Vennum
4200 IDS Center
80 South 8th Street
Minneapolis, MN 55402
Attn: Thomas H. Garrett
612-371-3274(o)
612-688-8365(h)
if to CYBX, to:
Cyberonics, Inc.
17448 Highway 3, Suite 100
Webster, TX 77598-4138
Attn: President
with a copy to:
Kenneth M. Siegel
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94303
or such other address as such party may hereafter specify for the purpose by
notice to the other parties hereto. Each such notice, request or other
communication shall be effective if given by any other means, when delivered at
the address specified in this section.
9.2 Amendment and Modification. To the fullest extent permitted by
applicable law, this Agreement may be amended, modified and supplemented with
respect to any of the terms contained herein by mutual consent of the respective
Boards of Directors of CYBX, St. Jude and Merger Subsidiary, or by their
respective officers duly authorized by such Boards of Directors, by an
appropriate written instrument executed at any time prior to the Effective Time
of the Merger.
9.3 Waiver of Compliance. To the fullest extent permitted by law, each of
St. Jude, Merger Subsidiary and CYBX may, pursuant to action by its respective
Board of Directors, or its respective officers duly authorized by its Board of
Directors, by an instrument in writing extend the time for or waive the
performance of any of the obligations of the other or waive compliance by the
other with any of the covenants, or waive any of the conditions of its
obligations, contained herein; provided, however, that the obtaining of the
approval of the shareholders referred to in Section 7.1.6 hereof shall not be
waivable. No such extension of time or waiver shall operate as a waiver of, or
estoppel with respect to, any subsequent or other failure.
9.4 No Survival of Representations and Warranties. The respective
representations and warranties of each party hereto contained herein shall not
be deemed to be waived or otherwise affected by any investigation made by the
other parties hereto. The representations, warranties and agreements in this
Agreement will terminate at the Effective Time or upon termination of this
Agreement pursuant to Section 8.1, as the case may be, except for the agreements
set forth in Sections 6.4,8.4 and 9.6, to the extent set forth therein.
9.5 No Third Party Rights. Except as otherwise provided in this
Agreement, nothing herein expressed or implied is intended, nor shall be
construed, to confer upon or give any person, firm or corporation, other than
St. Jude, Merger Subsidiary and CYBX and their respective security holders, any
rights or remedies under or by reason of this Agreement.
9.6 Confidentiality. The confidentiality obligations of the parties set
forth in the confidentiality agreements between the parties dated as of June 6
and October 17, 1995 are incorporated herein by reference, and the parties agree
to honor and perform all obligations set forth therein.
9.7 Expenses.
9.7.1 Each party hereto will bear all expenses incurred by it in
connection with this Agreement and the transactions contemplated hereby.
9.7.2 St. Jude and CYBX shall share equally all expenses relating
to the printing and mailing of the Proxy Statement and all SEC registration fees
applicable to the Merger. The expenses referenced in this Section 9.7.2 shall be
referred to as the "Transaction Costs."
9.8 Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties; provided,
however, that Merger Subsidiary may assign this Agreement and its rights,
interests and obligations hereunder to another directly or indirectly
wholly-owned subsidiary of St. Jude without the consent of CYBX.
9.9 GOVERNING LAWS. THIS AGREEMENT AND THE LEGAL RELATIONS BETWEEN THE
PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF DELAWARE.
9.10 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts and by the different parties hereto on separate
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.11 Headings and References. The headings of the Sections and Articles
of this Agreement are inserted for convenience of reference only and shall not
constitute a part hereof. All references herein to Sections and Articles are to
sections and articles of this Agreement, unless otherwise indicated.
9.12 Entire Agreement. This Agreement (including the exhibits hereto, the
Disclosure Schedules and the documents referred to herein, all of which form a
part hereof) and the confidentiality agreements referenced in Section 9.6
contain the entire understanding of the parties hereto in respect of the subject
matter contained herein and supersede all prior agreements and understandings
between the parties with respect to such subject matter. There are no
restrictions, promises, representations, warranties, covenants, or undertakings,
other than those expressly set forth or referred to herein or therein.
9.13 Exchange of Documents. Counsel to St. Jude and counsel to CYBX have
exchanged lists which the parties agree accurately reflect the documents which
they have delivered and received in connection with the negotiation of this
Agreement.
9.14 Publicity. Upon execution of this Agreement by St. Jude, Merger
Subsidiary and CYBX, the parties shall jointly issue a press release, as agreed
upon by them. Neither party shall, without the prior written consent of the
other, issue any statement or communication to the public or to the press
regarding this Agreement, or any of the terms, conditions or other facts with
respect to the Agreement, except as required by law or the rules of NASDAQ and
then, only (a) upon receipt of a written opinion from such party's legal
counsel; (b) to the extent required by law or the rules of NASDAQ; and (c) upon
prior notice to the other party, which notice shall include a copy of the
issuing party's opinion of legal counsel, together with a copy of the proposed
statement or communication to be issued to the press or public.
9.15 Interpretation. This Agreement has been fully negotiated by the
parties through their legal counsel. Accordingly, in interpreting this
Agreement, the rule of interpretation requiring that documents be construed
against the draftsman shall be inapplicable.
9.16 Further Assurance. The parties hereto agree that each will execute
and deliver to the other any and all documents in addition to those expressly
provided for herein that may be necessary to carry out the provisions of this
Agreement, whether before, at or after the Closing.
9.17 Severability. The unenforceability or invalidity of any provision of
this Agreement shall not affect the enforceability or validity of any other
provision.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
ST. JUDE MEDICAL, INC.
/s/ Ronald A. Matricaria
------------------------
Ronald A. Matricaria
President and Chief Executive Officer
SJM ACQUISITION CORP.
/s/ Kevin T. O'Malley
---------------------
Kevin T. O'Malley
Director and Secretary
CYBERONICS, INC.
/s/ Robert P. Cummins
---------------------
Robert P. Cummins
President and Chief Executive Officer
COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is made as of
this 8th day of April, 1996, between Cyberonics, Inc., a Delaware corporation
("CYBX"), and St. Jude Medical, Inc., a Minnesota corporation ("St. Jude").
A. Concurrent with the execution hereof, the parties have executed and
delivered an Agreement and Plan of Merger (the "Merger Agreement") providing for
the acquisition of CYBX by St. Jude under the terms and conditions set forth
therein and a Stockholders' Agreement providing for certain rights and
obligations of the parties with respect to CYBX Common Stock (the "Stockholders'
Agreement");
B. In further consideration of CYBX's agreement to enter into and perform
the Merger Agreement, St. Jude has agreed to purchase and CYBX has agreed to
sell shares of CYBX Common Stock as set forth in this Agreement;
NOW, THEREFORE, The parties hereby agree as follows:
SECTION 1
Sale of Common Stock
1.1 Sale of Common Stock. Subject to the terms and conditions hereof,
CYBX will issue and sell to St. Jude, and St. Jude will purchase from CYBX, at
the Closing as defined below, 2,181,818 shares (the "Shares") of Common Stock,
$0.01 par value of CYBX (the "Common Stock") at a purchase price of $ 5.50 per
share (subject to adjustment for stock splits or the like), for a total purchase
price of $11,999,999.
1.2 Closing Date. Subject to the terms and conditions hereof, the closing
of the purchase and sale of the Shares (the "Closing") shall be held at the
offices of counsel to St. Jude at 10:00 a.m. on that date which is two business
days following the satisfaction of the conditions set forth in Sections 3 and 4
hereof, or at such other time and place upon which CYBX and St. Jude shall
mutually agree (the date of the Closing is hereinafter referred to as the
"Closing Date").
1.3 Delivery. At the Closing, CYBX will deliver to St. Jude a certificate
or certificates representing the Shares purchased by St. Jude, against payment
of the purchase price therefor, by wire transfer or certified or cashier's check
drawn on a United States bank.
1.4 Legends. The certificate or certificates for the Shares shall be
subject to legends (i) restricting transfer under the Securities Act of 1933, as
amended (the "Securities Act") and (ii) referring to the rights of first refusal
and other matters, each as set forth in the Stockholders' Agreement.
SECTION 2
Representations and Warranties.
2.1 Representations and Warranties of CYBX. CYBX hereby represents and
warrants to St. Jude as follows:
(a) Representations in Merger Agreement. The representations and
warranties of CYBX set forth in the Merger Agreement, as modified by CYBX's
Disclosure Schedule thereto, are true and correct in all material respects.
(b) Corporate Authorization. CYBX has all requisite legal and
corporate power and authority to execute and deliver this Agreement and the
Stockholders' Agreement, to sell and issue the Shares hereunder and to carry out
and perform its obligations under the terms of this Agreement and the
Stockholders' Agreement.
(c) Non-Contravention. Subject to obtaining any consent under the
Hart-ScottRodino Antitrust Improvements Act of 1976 (the "HSR Act"), the
execution and delivery by CYBX of this Agreement and the Stockholders' Agreement
does not, and the performance and consummation by CYBX of the transactions
contemplated thereby will not, result in any conflict with, breach or violation
of, or default under the terms of (i) the Certificate of Incorporation or Bylaws
of CYBX; (ii) any material agreement, lease or other instrument to which CYBX is
a party or by which any of its assets is subject; (iii) any provision of
applicable law or regulation; or (iv) any judgment, injunction, order, decree,
administrative interpretation, or other instrument binding upon CYBX.
(d) Shares. The Shares to be issued to St. Jude hereunder, when
issued, sold and delivered in accordance with the terms of this Agreement for
the consideration expressed herein, will be duly and validly issued, fully paid,
nonassessable and issued in compliance with all applicable securities laws.
(e) St. Jude Not an "Interested Stockholder". CYBX has taken all
action to approve the issuance of the Shares under Section 203 of the Delaware
General Corporation Law such that St. Jude is not and shall not be deemed an
"interested stockholder" as a result of the transactions contemplated by this
Agreement.
2.2 Representations and Warranties of St. Jude. St. Jude hereby
represents and warrants to CYBX as follows:
(a) Representations in Merger Agreement. The representations and
warranties of St. Jude set forth in the Merger Agreement, as modified by St.
Jude's Disclosure Schedule thereto, are true and correct in all material
respects.
(b) Experience. It has sufficient knowledge and experience in
investments of this type that it is capable of understanding and evaluating the
merits and risks of this investment and the ability to bear a complete loss of
its investment.
(c) Investment. It is acquiring the Shares for investment for its own
account and not with the view to, or for resale in connection with, any
distribution thereof. It understands that the Shares have not been registered
under the Securities Act in reliance on specific exemptions from the
registration provisions thereunder which depend upon, among other things, the
bona fide nature of the investment intent as expressed herein.
(d) Rule 144. It acknowledges that the Shares must be held
indefinitely unless subsequently registered under the Securities Act or an
exemption from such registration is available. It is aware of the provisions of
Rule 144 promulgated under the Securities Act which permit limited resale of
shares purchased in a private placement subject to the satisfaction of certain
conditions, including, among other things the existence of a public market for
the securities, the availability of certain current public information about
CYBX, the resale occurring not less than two years after a party has purchased
and paid for the security to be sold, the sale being made through a "broker's
transaction" or in transactions directly with a "market maker" (as provided by
Rule 144(f)) and the number of shares being sold during any three-month period
not exceeding specified limitations. It is further aware that Rule 144(k)
permits persons who have not been affiliates (as defined in Rule 144(a)) of CYBX
for at least three months and who have beneficially owned their shares for at
least three years after full payment for such shares, to sell such shares
without regard to the current public information, manner of sale and volume
limitations described above.
SECTION 3
Conditions to Obligations of St. Jude
St. Jude's obligation to purchase the Shares at the Closing is, at the
option of St. Jude (which may waive any such conditions) subject to the
fulfillment of the following conditions:
3.1 No Order Pending. There shall not then be in effect any order
enjoining or restraining the transactions contemplated by this Agreement or by
the Merger Agreement.
3.2 HSR Act. Both St. Jude and CYBX shall have filed such forms with the
United States Department of Justice and the Federal Trade Commission as shall be
required by the HSR Act with respect to the transactions contemplated by this
Agreement and the applicable waiting periods under such HSR Act shall have
expired or earlier been terminated without notice from such governmental
agencies that additional inquiries are being made.
3.3 No Law Prohibiting or Restricting Transactions. There shall not be in
effect any law, rule or regulation prohibiting or restricting the transactions
contemplated by this Agreement or consummation of the Merger, or requiring any
consent or approval of any Person which shall not have been obtained to issue
the Shares.
3.4 CYBX Stockholder Approval. The Merger Agreement and the transactions
contemplated thereby shall have been approved by the requisite vote of CYBX's
outstanding common stock.
3.5 Representations and Warranties. The representations and warranties of
CYBX set forth in Section 2.1(b) through (e) of this Agreement and Sections 3.1,
3.2, 3.3, 3.4 and 3.5 of the Merger Agreement shall be true and correct on the
Closing Date as if then made.
3.6 Compliance by CYBX. CYBX shall not be in material breach of Section
5.1 of the Merger Agreement.
SECTION 4
Conditions to Obligations of CYBX
CYBX's obligation to sell and issue the Shares at the Closing is, at the
option of CYBX (which may waive any such conditions), subject to the fulfillment
of the following conditions:
4.1 No Order Pending. There shall not then be in effect any order
enjoining or restraining the transactions contemplated by this Agreement or by
the Merger Agreement.
4.2 HSR Act. Both St. Jude and CYBX shall have filed such forms with the
United States Department of Justice and the Federal Trade Commission as shall be
required by the HSR Act with respect to the transactions contemplated by this
Agreement and the applicable waiting periods under such HSR Act shall have
expired or earlier been terminated without notice from such governmental
agencies that additional inquiries are being made.
4.3 No Law Prohibiting or Restricting Transactions. There shall not be in
effect any law, rule or regulation prohibiting or restricting the transactions
contemplated by this Agreement or consummation of the Merger, or requiring any
consent or approval of any Person which shall not have been obtained to issue
the Shares.
4.4 CYBX Stockholder Approval. The Merger Agreement and the transactions
contemplated thereby shall have been approved by the requisite vote of CYBX's
outstanding common stock.
SECTION 5
Termination
5.1 Termination of Agreement. This Agreement may be terminated as
follows:
(a) By the mutual consent of St. Jude and CYBX;
(b) By St. Jude upon notice given to CYBX in the event that the
conditions to closing set forth in Section 3 have not been satisfied by
September 30, 1996; provided, however, that St. Jude may not terminate this
Agreement where such failure is the result of acts of St. Jude which constitute
a breach of St. Jude's obligations or covenants set forth in this Agreement or
in the Merger Agreement; and
(c) By CYBX as set forth in Section 6.2.
5.2 Effects of Termination. In the event of a termination pursuant to
Sections 5.1(a) or 5.1(b), neither party will have any further obligation to the
other under or as a result of this Agreement. In the event of a termination
pursuant to Section 5.1(c), the provisions of Section 6 shall apply. The
provisions of this Section 5.2 shall survive any termination of this Agreement.
SECTION 6
CYBX's Remedies for St. Jude Breach
6.1 Breach. Unless waived in writing by CYBX, failure on the part of St.
Jude to consummate the transactions contemplated by this Agreement by that date
which is five business days following the satisfaction of the last of the
conditions to closing set forth in Sections 3 and 4 to be satisfied shall
constitute a material breach hereof by St. Jude.
6.2 Remedies. In the event of a breach described in Section 6.1, CYBX
may, at its option, terminate the Merger Agreement by giving notice thereof to
St. Jude and in addition may further select one of the following remedies:
(a) CYBX may seek specific performance hereunder, and St. Jude hereby
agrees to waive and not assert any argument or defense to the effect that
injunctive relief is not necessary or appropriate;
(b) CYBX may terminate this Agreement, and, in recognition of the
efforts and expenses expended and incurred by CYBX with respect to St.
Jude, the opportunity that the Merger Agreement and this Agreement
present to CYBX, and the potential intangible damage to the CYBX if this
Agreement is breached by St. Jude, St. Jude hereby agrees to pay to CYBX,
within five business days after demand by CYBX (which may be made at any
time following termination pursuant to this Section 6.2(b)) by wire
transfer of immediately available funds to an account designated by CYBX
for such purpose, a termination fee (the "Termination Fee") equal to
$3,500,000. In the event CYBX elects to pursue the remedy set forth in
this Section 6.2(b), St. Jude hereby agrees to waive any argument or
defense to the effect that the Termination Fee constitutes a penalty,
improper measure of CYBX's damages or is otherwise an inappropriate
method of compensating CYBX for the damages that would result from a
breach as described in Section 6.1.
(c) CYBX may pursue such other remedies as it may have at law or in
equity.
6.3 Other Breaches. In the event that St. Jude breaches this Agreement in
any manner other than as set forth in Section 6.1, CYBX may pursue such remedies
as it may have at law or in equity.
6.4 Survival of Section. The provisions of this Section 6 shall survive
any termination of this Agreement.
SECTION 7
Miscellaneous.
7.1 Best Efforts. Each of CYBX and St. Jude shall use its best efforts to
take all actions required under the HSR Act and under any law, rule or
regulation adopted subsequent to the date hereto in order that CYBX may sell the
Shares to St. Jude and St. Jude may purchase the Shares and to ensure that the
conditions to a Closing set forth herein are satisfied as promptly as possible.
7.2 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS BY
THE LAWS OF THE STATE OF DELAWARE AS APPLIED TO CON TRACTS ENTERED INTO SOLELY
BETWEEN RESIDENTS OF, AND TO BE PERFORMED ENTIRELY WITHIN, SUCH STATE.
7.3 Survival. The representations and warranties in Section 2 of this
Agreement shall survive any investigation made by St. Jude or CYBX and the
Closing; provided that such representations and warranties shall not be
construed so as to constitute representations and warranties concerning
circumstances existing after the date of this Agreement except as provided in
Section 3.5.
7.4 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns. This Agreement may not be assigned by a party without the prior
written consent of the other party provided, without the consent of CYBX, St.
Jude may assign this Agreement to any wholly-owned subsidiary of St. Jude.
7.5 Entire Agreement; Amendment. This Agreement and the other documents
explicitly referenced herein constitute the full and entire understanding and
agreement between the parties with regard to the subject matter hereof and
thereof and supersedes all prior agreements and understandings among the parties
relating to the subject matter hereof. Neither this Agreement nor any term
hereof may be amended, waived, discharged or terminated other than by a written
instrument signed by the party against which enforcement of any such amendment,
waiver, discharge or termination is sought.
7.6 Notices and Dates. Any notice or other communication given under this
Agreement shall be sufficient if in writing and sent by registered or certified
mail, return receipt requested, postage prepaid, to a party at its address set
forth below (or at such other address as shall be designated for such purpose by
such party in a written notice to the other party hereto):
(a) if to CYBX, to it at:
Cyberonics, Inc.
17448 Highway 3, Suite 100
Webster, Texas 77598-4138
Attention: President
with a copy to:
Kenneth M. Siegel
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
(b) if to St. Jude, to it at:
St. Jude Medical, Inc.
One Lillehei Plaza
St. Paul, MN 55117
with a copy addressed as set forth above but to the attention of: General
Counsel.
All such notices and communications shall be effective when received by
the addressee. In the event that any date provided for in this Agreement falls
on a Saturday, Sunday or legal holiday, such date shall be deemed extended to
the next business day.
7.7 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and restriction
of this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
7.8 Costs and Expenses. Each party hereto shall pay its own costs and
expenses incurred in connection herewith, including the fees of its counsel,
auditors and other representatives, whether or not the transactions contemplated
herein are consummated; provided, however, that CYBX shall be entitled to
reimbursement of the reasonable fees and expenses (including attorneys fees and
expenses) incurred by it in connection with any action to enforce its rights
under Section 6 hereof.
7.9 No Third Party Rights. Nothing in this Agreement shall create or be
deemed to create any rights in any person or entity not a party to this
Agreement.
7.10 Publicity. St. Jude and CYBX shall not issue any press release
concerning the transactions contemplated by this Agreement without the other
party's reasonable prior written consent; provided, however, that either party
may disclose the transaction or the terms hereof from time to time without the
other party's approval if such approval has been requested and not received and
such party concludes (after consulting with counsel) that it is required by law
to disclose the transaction or the terms hereof.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective authorized officers as of the date aforesaid.
CYBERONICS, INC.
By: /s/ Robert P. Cummins
---------------------
Robert P. Cummins
President and Chief Executive Officer
ST. JUDE MEDICAL, INC.
By: /s/ Ronald A. Matricaria
------------------------
Name: Ronald A. Matricaria
Title: President and
Chief Executive Officer
COMMON STOCK PURCHASE AGREEMENT
Dated as of April 8, 1996
Between
Cyberonics, Inc.
and
St. Jude Medical, Inc.
TABLE OF CONTENTS
Page
SECTION 1 Sale of Common Stock..................................-1-
1.1 Sale of Common Stock..................................-1-
1.2 Closing Date..........................................-1-
1.3 Delivery..............................................-1-
1.4 Legends...............................................-1-
SECTION 2 Representations and Warranties........................-2-
2.1 Representations and Warranties of CYBX................-2-
2.2 Representations and Warranties of St. Jude............-2-
SECTION 3 Conditions to Obligations of St. Jude.................-3-
3.1 No Order Pending......................................-3-
3.2 HSR Act...............................................-3-
3.3 No Law Prohibiting or Restricting Transactions........-4-
3.4 CYBX Stockholder Approval.............................-4-
SECTION 4 Conditions to Obligations of CYBX.....................-4-
4.1 No Order Pending......................................-4-
4.2 HSR Act...............................................-4-
4.3 No Law Prohibiting or Restricting Transactions........-4-
4.4 CYBX Stockholder Approval.............................-4-
SECTION 5 Termination...........................................-5-
5.1 Termination of Agreement..............................-5-
5.2 Effects of Termination................................-5-
SECTION 6 CYBX's Remedies for St. Jude Breach...................-5-
6.1 Breach................................................-5-
6.2 Remedies..............................................-5-
6.3 Other Breaches........................................-6-
6.4 Survival of Section...................................-6-
SECTION 7 Miscellaneous.........................................-6-
7.1 Best Efforts..........................................-6-
7.2 GOVERNING LAW.........................................-6-
7.3 Survival..............................................-6-
7.4 Successors and Assigns................................-6-
7.5 Entire Agreement; Amendment...........................-6-
7.6 Notices...............................................-7-
7.7 Severability..........................................-7-
7.8 Costs and Expenses....................................-7-
7.9 No Third Party Rights.................................-7-
7.10 Publicity.............................................-8-
STOCKHOLDERS' AGREEMENT
THIS STOCKHOLDERS' AGREEMENT (this "Agreement") is made as of this 8th
day of April, 1996, between Cyberonics, Inc, a Delaware corporation ("CYBX"),
and St. Jude Medical, Inc., a Minnesota corporation ("St. Jude").
A. Concurrent with the execution hereof, the parties have executed and
delivered an Agreement and Plan of Merger (the "Merger Agreement") providing for
the acquisition of CYBX by St. Jude under the terms and conditions set forth
therein;
B. Concurrent with the execution hereof, the parties have also executed
and delivered a Common Stock Purchase Agreement (the "Purchase Agreement")
pursuant to which St. Jude may acquire 2,181,818 shares of CYBX Common Stock
(the "Shares");
C. As a condition to the obligation of St. Jude to purchase and CYBX to
sell the Shares, the parties have agreed to the additional rights and
obligations with respect to the Shares and certain other matters as set forth in
this Agreement;
NOW, THEREFORE, The parties hereby agree as follows:
SECTION 1
Definitions
1.1 Certain Definitions. As used in this Agreement:
(a) "Commission" shall mean the United States Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
(b) "Controlled Corporation" shall mean a corporation of which 100%
of the stock entitled to participate in the election of directors is owned by
St. Jude.
(c) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(d) "Group" shall have the meaning comprehended by Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
(e) "Holder" shall mean the St. Jude, any Controlled Corporation
holding Restricted Stock and any transferee of Restricted Stock to whom any
rights hereunder have been transferred as provided herein.
(f) "Negotiated Purchase" means a transaction between CYBX and any
person or group pursuant to which such person or group acquires from CYBX (or
has the right to acquire from CYBX) CYBX Common Stock or any securities
convertible into or exchangeable for voting stock or any other right to acquire
voting stock. Notwithstanding the foregoing, the term "Negotiated Purchase"
shall not include (i) any agreement between CYBX and any underwriter(s) in
connection with a public offering, (ii) any agreement with any third party(ies)
pursuant to which CYBX shares are being issued to acquire the third party or its
business or assets where the number of shares of CYBX Common Stock to be issued
by CYBX represents no more than the then effective Ownership Ceiling (if the
issuance in an acquisition exceeds the then effective Ownership Ceiling, such
issuance shall constitute a "Negotiated Purchase"), or (iii) issuances of CYBX
Common Stock pursuant to any present or future compensatory stock or option plan
or other compensatory issuances to employees and/or consultants.
(g) "Person" shall mean any person, individual, corporation,
partnership, trust or other nongovernmental entity or any governmental agency,
court, authority or other body (whether foreign, federal, state, local or
otherwise).
(h) The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
(i) "Registration Expenses" shall mean all expenses, other than
Selling Expenses (as defined below), incurred by CYBX in complying with Section
3 hereof, including, without limitation, all registration, qualification and
filing fees, printing expenses, escrow fees, fees and disbursements of counsel
for CYBX, blue sky fees and expenses, the expense of any special audits incident
to or required by any such registration (but excluding the compensation of
regular employees of CYBX which shall be paid in any event by CYBX).
(j) "Restricted Stock" shall mean the Shares, any other shares of
CYBX Common Stock acquired by any Holder, including, without limitation, shares
acquired as the result of a stock split, stock dividend or the like.
(k) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(l) "Selling Expenses" shall mean all underwriting discounts selling
commissions and stock transfer taxes applicable to the St. Jude's securities
registered pursuant to this Agreement.
(m) "CYBX Common Stock" shall mean the Common Stock, $0.01 par value,
of CYBX.
(n) "Total Voting Power of CYBX" means the total number of votes
which may be cast in the election of directors of CYBX at any meeting of
stockholders of CYBX if all securities entitled to vote in the election of
directors of CYBX were present and voted at such meeting (other than votes that
may be cast only upon the happening of a contingency).
SECTION 2
Restrictions on Transfer; Right of First Refusal
2.1 Restrictions on Transferability.
(a) Covenant of Holders re: Transfers. Holders agree that they shall
not sell, transfer, pledge, hypothecate, or otherwise dispose of any Restricted
Stock now owned or hereafter acquired by them except as otherwise permitted by
this Agreement. Transfers by a Holder of Restricted Stock shall be subject to
CYBX's Right of First Refusal as described in Section 2.2 below. In addition, a
Holder shall not, without the prior written consent of CYBX, directly or
indirectly, sell or transfer any Restricted Stock except:
(i) to CYBX or any person or group approved by CYBX; or
(ii) to a Controlled Corporation, so long as such Controlled
Corporation agrees to hold such Restricted Stock subject to all the
provisions of this Agreement, including this Section 2.1, and agrees to
transfer such Restricted Stock to St. Jude or another Controlled
Corporation of St. Jude if it ceases to be a Controlled Corporation of
St. Jude; or
(iii) pursuant to a bona fide public offering registered under
the Securities Act, including without limitation a registration pursuant
to Section 3 hereof; or
(iv) pursuant to Rule 144 under the Securities Act; or
(v) in transactions not otherwise described herein so long as
such transactions do not, directly or indirectly, result, to the best
knowledge of a Holder, after reasonable inquiry, in any single person or
group owning or having the right to acquire Restricted Stock with
aggregate Voting Power of 5% or more of the Total Voting Power of CYBX
then in effect; or
(vi) in response to an offer to purchase or exchange for cash or
other consideration (a) which is made by or on behalf of CYBX, or (b)
which is made by another person or group and is supported or not opposed
by the Board of Directors of CYBX within the time such Board is required,
pursuant to regulations under the Exchange Act, to advise CYBX's
stockholders of such Board's position on such offer; or
(vii) in the event of a merger or consolidation in which the
holders of CYBX Common Stock prior to the merger or consolidation cease
to hold, solely as a result of their ownership of CYBX Common Stock, at
least 51% of the voting stock of the surviving entity, or pursuant to a
plan of liquidation of CYBX.
(b) Notices of Proposed Transfers. If a Holder wishes to sell
Restricted Stock (other than in a registered offering pursuant to Section 3
hereof as to which the notice provisions thereof shall apply), it shall give
notice (the "Transfer Notice") to CYBX in writing of such intention specifying
the approximate number of the proposed purchasers or transferees, the amount of
Restricted Stock proposed to be sold or transferred (the "Transfer Stock"), the
proposed price per share therefor (the "Transfer Price"), which may be stated as
"the market" price or a price tied to market price by a stated formula (e.g.,
"at a 10% discount from market price") and the other material terms upon which
such disposition is proposed to be made. In addition, unless there is in effect
a registration statement under the Securities Act covering the proposed
transfer, the Holder shall provide CYBX, at Holder's expense with either (i) a
written opinion of legal counsel who shall be, and whose legal opinion shall be,
reasonably satisfactory to CYBX, addressed to CYBX, to the effect that the
proposed transfer of the Transfer Stock may be effected without registration
under the Securities Act, or (ii) a "no action" letter from the Commission to
the effect that the transfer of the Transfer Stock without registration will not
result in a recommendation by the staff of the Commission that action be taken
with respect thereto.
2.2 Right of First Refusal. In the event of any proposed transfer of
Restricted Stock (other than transfers specified in Section 2.1(a)(i), (ii),
(iii), (iv), (vi) and (vii) above), CYBX shall have the right to purchase the
Transfer Stock on the terms set forth in this Section 2.2.
(a) Exercise of Right of First Refusal. Within 30 calendar days after
receipt of such Transfer Notice, CYBX shall give written notice to the Holder
which gave the Transfer Notice of CYBX's intention to exercise its right of
first refusal. CYBX's notice shall constitute an offer to purchase all but not
part (unless otherwise agreed) of the Transfer Stock for cash per share equal to
the Transfer Price, provided, that within such 30 day period CYBX shall also
provide such Holder with evidence satisfactory to such Holder (by written
commitment letter subject only to customary representations, diligence and
documentation, letter of credit or otherwise) of its ability to finance such
purchase.
(b) Closing Of Purchase By CYBX. If CYBX exercises its right of first
refusal hereunder, the closing of the purchase of the Restricted Stock with
respect to which such right has been exercised shall take place within 45
calendar days after receipt by CYBX of the Transfer Notice, which period of time
shall be extended in order to comply with applicable securities laws and
regulations. Upon exercise of its right of first refusal, CYBX and the selling
Holder shall be legally obligated to consummate the purchase contemplated
thereby and shall use their best efforts to secure any approvals required in
connection therewith.
(c) Holder's Right to Consummate Transfer. If CYBX does not exercise
its right of first refusal hereunder within the time specified for such
exercise, the Holder shall be free, during the period of 90 calendar days
following the expiration of such time for exercise, to sell the Transfer Stock
on terms no less favorable to Holder than the terms specified in such Transfer
Notice.
(d) Assignment of Rights. In the event that CYBX elects to exercise a
right of first refusal under this Section 2.2, CYBX may specify prior to closing
such purchase another person as its designee to purchase the Transfer Stock. The
designee selected by CYBX shall be one as to whom the transfer of the Transfer
Stock may be effected without violation of the Securities Act or any applicable
state securities laws; otherwise such attempted designation shall be void, and
CYBX shall effect the purchase. If CYBX shall designate another person as the
purchaser pursuant to this Section 2.2, the giving of notice of acceptance of
the right of first refusal by CYBX shall constitute a legally binding obligation
of CYBX to complete such purchase if such person shall fail to do so.
2.3 Restrictive Legends. Each certificate representing Restricted Stock
shall be stamped or otherwise imprinted with legends substantially in the
following form (in addition any legend required under applicable state
securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL
REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT
FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFER, INCLUDING ANY SALE, PLEDGE OR OTHER HYPOTHECATION, RIGHTS OF
FIRST REFUSAL AND VOTING OBLIGATIONS SET FORTH IN AN AGREEMENT DATED
APRIL ___, 1996 BETWEEN THE ISSUER AND THE REGISTERED HOLDER OF THIS
CERTIFICATE, A COPY OF WHICH AGREEMENT MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF THE ISSUER AT ISSUER'S PRINCIPAL EXECUTIVE OFFICES.
Holders consent to CYBX making a notation on its records and giving
instructions to any transfer agent of the Common Stock in order to implement the
restrictions on transfer established in this Agreement.
SECTION 3
Registration Rights
3.1 Requested Registration. The Holders shall have the right to request
registration pursuant to this Section 3.1. This shall be in addition to the
Holder's rights under Section 3.2. Any registration requested hereunder shall be
structured to distribute such shares through an underwriter or otherwise in such
a manner as should not result in a sale or sales of CYBX Common Stock with
aggregate Voting Power of 5% or more of the Total Voting Power of CYBX then in
effect being transferred to a single person or group.
(a) Registration. In case CYBX shall receive from Holder(s) a written
request that CYBX effect any registration, qualification or compliance with
respect to Restricted Stock which represents no less than the lesser of (A)15%
of CYBX Common Stock outstanding as of the date of the request (for purposes of
determining the number of outstanding shares of CYBX Common Stock, a Holder may
rely upon the number disclosed in CYBX's latest report filed under the Exchange
Act), or (B) 80% of the Shares. CYBX will, as soon as practicable, use its best
lawful efforts to effect such registration, qualification or compliance
(including, without limitation, appropriate qualification under applicable blue
sky or other state securities law and appropriate compliance with applicable
regulations issued under the Securities Act and any other governmental
requirements or regulations) as may be necessary or appropriate to permit or
facilitate the sale and distribution of all of such Restricted Stock as are
specified in such request; provided, however, that CYBX shall not be obligated
to take any action to effect any such registration, qualification or compliance
pursuant to this Section 3.1:
(i) Prior to the earlier of (A) February 14, 1997 or (B) the date
CYBX files its Quarterly Report on Form 10-Q for the quarter ended
December 31, 1996;
(ii) In any particular jurisdiction in which CYBX would be
required to execute a general consent to service of process in effecting
such registration, qualification or compliance unless CYBX is already
subject to service in such jurisdiction and except as may be required by
the Securities Act;
(iii) During the period starting with the date sixty (60) days
prior to CYBX's estimated date of filing of, and ending on the date three
(3) months immediately following the effective date of, any registration
statement pertaining to securities of CYBX (other than a registration of
securities in a Rule 145 transaction or with respect to an employee
benefit plan), providing that CYBX is actively employing in good faith
all reasonable efforts to cause such registration statement to become
effective (and provided, further, that CYBX cannot pursuant to this
Section 3.1(a)(iii) delay implementation of a demand for registration
more than once in any 24-month period);or
(iv) If CYBX shall furnish to such Holders a certificate signed
by the President of CYBX stating that in the good faith judgment of the
Board of Directors it would be seriously detrimental to CYBX or its
stockholders for a registration statement to be filed in the near future,
then CYBX's obligation to use its best lawful efforts to register,
qualify or comply under this Section 3.1 shall be deferred once (with
respect to any demand for registration hereunder) for a period not to
exceed ninety (90) days from the date of receipt of written request from
St. Jude.
Subject to the foregoing clauses (i) through (iv), CYBX shall file a
registration statement covering the Restricted Stock so requested to be
registered as soon as practicable, after receipt of the request of the
Holder(s).
(b) Underwriting.
(i) In the event that either CYBX or the selling Holder(s)
request that a registration be effected pursuant to an underwritten
offering, the right of a Holder to registration pursuant to this Section
3.1 shall be conditioned upon such Holder's participation in the
underwriting arrangements. CYBX shall (together with all Holders and
other holders proposing to distribute their securities through such
underwriting) enter into an underwriting agreement in customary form with
a nationally respected investment banking firm selected by CYBX and
reasonably acceptable to the selling Holder(s).
(ii) If any Holder disapproves of the terms of the underwriting,
such person may elect to withdraw therefrom by written notice to CYBX and
the managing underwriter. The Restricted Stock so withdrawn shall also be
withdrawn from registration, and such Restricted Stock shall not be
transferred in a public distribution prior to 180 days after the
effective date of such registration, or such other shorter period of time
as the underwriters may require.
(c) Inclusion of Other Shares of CYBX Common Stock. In connection
with any registration pursuant to this Section 3.1, CYBX and other holders of
CYBX Common Stock may include shares in such registration; provided, however,
that if, in connection with an underwritten offering, the managing underwriter
determines that marketing conditions require a limitation on the number of
shares to be sold, then shares shall be included in the following priority and
order:
(i) The Restricted Stock requested to be sold by Holder(s) shall
first be included;
(ii) If marketing conditions permit additional shares to be
included, then capacity shall be allocated among the other holders of
CYBX Common Stock pro rata based upon the number of shares requested to
be included in the registration (to facilitate the allocation of shares
in accordance with the above provisions, CYBX or the underwriters may
round the number of shares allocated to any holder to the nearest 100
shares);
(iii) If marketing conditions permit additional shares to be
included, then such remaining capacity shall be allocated to CYBX.
(d) Expenses of Registration. Registration Expenses incurred in
connection with the registration pursuant to this Section 3.1 shall be borne as
follows:
(i) If the registration relates solely to Restricted Stock being
registered on behalf of Holder(s), CYBX on the one hand and selling
Holder(s) on the other shall bear all of such expenses on a 50%/50% basis
as to the first such registration pursuant to this Section 3.1(a) and
selling Holder(s) shall bear all of such expenses in connection with any
subsequent registration(s) pursuant to this Section 3.1;
(ii) If the registration includes Restricted Stock being
registered on behalf of Holder(s) and stock being sold for the account of
other holders or the account of CYBX, then such Holder(s) shall bear a
pro rata portion of all of such expenses based upon the total number of
shares included in the registration.
All Selling Expenses relating to securities registered on behalf of
Holder(s) registering securities shall be borne by such Holder(s) pro rata on
the basis of the number of shares so registered regardless of whether any other
shares are included in the registration.
3.2 Piggy-Back Registration.
(a) Notice of Registration. If at any time or from time to time CYBX
shall determine to register any of its securities, either for its own account or
the account of a security holder or holders, other than (i) a registration
relating solely to employee benefit plans, or (ii) a registration relating
solely to a Commission Rule 145 transaction, CYBX will:
(i) promptly give to each Holder written notice thereof; and
(ii) include in such registration (and any related qualification
under blue sky laws or other compliance), and in any underwriting
involved therein, all the Restricted Stock specified in a written request
or requests, made within 20 days after receipt of such written notice
from CYBX, by any Holder.
(b) Underwriting.
(i) If the registration of which CYBX gives notice is for a
registered public offering involving an underwriting, CYBX shall so
advise the Holders as a part of the written notice given pursuant to
Section 3.2(a). In such event the right of any Holder to registration
pursuant to Section 3.2 shall be conditioned upon such Holder's
participation in such underwriting, and the inclusion of Restricted Stock
in the underwriting shall be limited to the extent provided herein. All
Holders proposing to distribute their securities through such
underwriting shall (together with CYBX and the other holders distributing
their securities through such underwriting) enter into an underwriting
agreement in customary form with the managing underwriter selected for
such underwriting by CYBX. Notwithstanding any other provision of this
Section 3.2, if the managing underwriter determines that marketing
factors require a limitation of the number of shares to be underwritten,
the managing underwriter may exclude some or all Restricted Stock from
such registration. In the event that the number of shares of Restricted
Stock to be included in a registration shall be limited pursuant to the
foregoing, CYBX shall so advise all Holders, and the number of shares of
Restricted Stock that may be included in the registration and
underwriting shall be allocated among all Holder(s) thereof (and other
holders of CYBX Common Stock who are contractually entitled to register
their shares of CYBX Common Stock) in proportion, as nearly as
practicable, to the respective amounts of securities then held by Holders
and such other holders requesting to have shares included in such
registration. To facilitate the allocation of shares in accordance with
the above provisions, CYBX may round the number of shares allocated to
any Holder to the nearest 100 shares.
(ii) If any Holder disapproves of the terms of the underwriting,
such person may elect to withdraw therefrom by written notice to CYBX and
the managing underwriter. The Restricted Stock so withdrawn shall also be
withdrawn from registration, and such Restricted Stock shall not be
transferred in a public distribution prior to 180 days (or such shorter
period of time as the underwriters may require) after the effective date
of such registration; provided, however, that the restriction provided
herein shall not exceed the duration of any similar restrictions required
of other CYBX stockholders.
(c) Right to Terminate Registration. CYBX shall have the right to
terminate or withdraw any registration initiated by it under this Section 3.2
prior to the effectiveness of such registration whether or not any Holder has
elected to include securities in such registration.
(d) Expenses of Registration. All Registration Expenses incurred in
connection with a registration pursuant to this Section 3.2 shall be borne by
CYBX. All Selling Expenses relating to securities registered on behalf of the
Holders or other holders registering securities shall be borne by the Holders or
holders of such securities pro rata on the basis of the number of shares so
registered.
3.3 Registration Procedures. In the case of each registration,
qualification or compliance effected by CYBX pursuant to this Agreement, CYBX
agrees as follows:
(a) Inform Holder(s). CYBX will keep each Holder advised in writing
as to the initiation of each registration, qualification and compliance and as
to the completion thereof.
(b) Prepare and File Registration Statement. CYBX will prepare and
file with the Commission a registration statement with respect to such
securities and use its best lawful efforts to cause such registration statement
to become and remain effective for one hundred and twenty (120) days or, if
earlier, until the distribution described in the Registration Statement has been
completed;
(c) Furnish Prospectuses. CYBX will furnish to each underwriter such
number of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other documents
as such underwriter may reasonably request in order to facilitate the public
sale of the shares by such underwriter, and promptly furnish to each underwriter
and Holder notice of any stop-order or similar notice issued by the Commission
or any state agency charged with the regulation of securities, and notice of any
NASDAQ listing;
(d) Comfort Letter. CYBX will furnish to each prospective seller a
signed "comfort" letters signed by the independent public accountants who have
certified CYBX's financial statements included in the registration statement,
covering substantially the same matters with respect to the registration
statement (and the prospectus included therein) and (in the case of the
"comfort" letter) with respect to events subsequent to the date of the financial
statements, as are customarily covered (at the time of such registration) in
opinions of issuers' counsel and in "comfort" letters delivered to the
underwriters in underwritten public offerings of securities.
3.4 Indemnification.
(a) Indemnification by CYBX. To the extent permitted by law, CYBX
will indemnify each Holder participating in a registration pursuant to this
Agreement, each of its officers and directors and partners, and each person
controlling such Holder within the meaning of Section 15 of the Securities Act,
with respect to which registration, qualification or compliance has been
effected pursuant to this Agreement, and each underwriter, if any, and each
person who controls any underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, claims, losses, damages or liabilities (or
actions in respect thereof), including any of the foregoing incurred in
settlement of any litigation, commenced or threatened, arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any registration statement, prospectus, offering circular or other
document, or any amendment or supplement thereto, incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading, or any violation by CYBX of the Securities Act
or any rule or regulation promulgated under the Securities Act applicable to
CYBX in connection with any such registration, qualification or compliance, and
CYBX will reimburse each such Holder, each of its officers and directors, and
each person controlling such Holder, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action, provided that CYBX will not be liable
in any such case to the extent that any such claim, loss, damage, liability or
expense arises out of or is based on any untrue statement or omission or alleged
untrue statement or omission, made in reliance upon and in conformity with
written information furnished to CYBX by such Holder, controlling person or
underwriter specifically for use therein. Notwithstanding the foregoing, insofar
as the foregoing indemnity relates to any such untrue statement (or alleged
untrue statement) or omission (or alleged omission) made in the preliminary
prospectus but eliminated or remedied in the amended prospectus on file with the
Commission at the time the registration statement becomes effective or in the
final prospectus filed with the Commission pursuant to Rule 424(b) of the
Commission, the indemnity agreement herein shall not inure to the benefit of any
underwriter or (if there is no underwriter) any Holder if a copy of the final
prospectus filed pursuant to Rule 424(b) was not furnished to the person or
entity asserting the loss, liability, claim or damage at or prior to the time
such furnishing is required by the Securities Act.
(b) Indemnification by Holders. To the extent permitted by law, each
Holder will, if Restricted Stock held by such Holder is included in the
securities as to which such registration, qualifi cation or compliance is being
effected, indemnify CYBX, each of its directors and officers, each underwriter,
if any, of CYBX's securities covered by such a registration statement, each
person who controls CYBX or such underwriter within the meaning of Section 15 of
the Securities Act, and each other such Holder or holder, each of its officers
and directors and each person controlling such other Holder or holder within the
meaning of Section 15 of the Securities Act, against all claims, losses, damages
and liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse CYBX, such Holders or holders, such directors,
officers, persons, underwriters or control persons for any legal or any other
expenses reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to CYBX by such Holder
specifically for use therein. Notwithstanding the foregoing, the liability of
each Holder under this subsection (b) shall be limited in an amount equal to the
net proceeds from the sale of the shares sold by such Holder, unless such
liability arises out of or is based on willful conduct by such Holder. In
addition, insofar as the foregoing indemnity relates to any such untrue
statement (or alleged untrue statement) or omission (or alleged omission) made
in the preliminary prospectus but eliminated or remedied in the amended
prospectus on file with the Commission at the time the registration statement
becomes effective or in the final prospectus filed pursuant to Rule 424(b) of
the Commission, the indemnity agreement herein shall not inure to the benefit of
CYBX, any underwriter or (if there is no underwriter) any Holder if a copy of
the final prospectus filed pursuant to Rule 424(b) was not furnished to the
person or entity asserting the loss, liability, claim or damage at or prior to
the time such furnishing is required by the Securities Act.
(c) Notice of Indemnification Claims. Each party entitled to
indemnification under this Section 3.4 (the "Indemnified Party") shall give
notice to the party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual knowledge of any claim
as to which indemnity may be sought, and shall permit the Indemnifying Party to
assume the defense of any such claim or any litigation resulting therefrom,
provided that counsel for the Indemnifying Party, who shall conduct the defense
of such claim or litigation, shall be approved by the Indemnified Party (whose
approval shall not unreasonably be withheld), and the Indemnified Party may
participate in such defense at such party's expense, and provided further that
the failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Agreement unless
the failure to give such notice is materially prejudicial to an Indemnifying
Party's ability to defend such action and provided further, that the
Indemnifying Party shall not assume the defense for matters as to which there is
a conflict of interest or separate or different defenses in which event the
Indemnified Party/Parties shall be entitled to engage a single separate counsel
to represent them in such matter and the Indemnifying Party shall reimburse the
Indemnified Party/Parties for the reasonable attorneys fees and expenses
incurred in connection with such defense. No Indemnifying Party, in the defense
of any such claim or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability
in respect to such claim or litigation. No Indemnified Party shall consent to
entry of any judgment or enter into any settlement without the consent of each
Indemnifying Party.
(d) Contribution. If the indemnification provided for in this Section
3.4 is unavailable to an indemnified party in respect of any losses, claims,
damages or liabilities referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims, damages
or liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by CYBX on the one hand and all stockholders offering
securities in the offering (the "Selling Stockholders") on the other from the
offering of CYBX securities, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of CYBX on the one hand and the Selling Stockholders on
the other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by CYBX on the one hand and the
Selling Stockholders on the other shall be the net proceeds from the offering
(before deducting expenses) received by CYBX on the one hand and the Selling
Stockholders on the other. The relative fault of CYBX on the one hand and the
Selling Stockholders on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of material fact or
the omission or alleged omission to state a material fact relates to information
supplied by CYBX or by the Selling Stockholders and the parties' relevant
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. CYBX and the Selling Stockholders agree that it
would not be just and equitable if contribution pursuant to this Section 3.4(d)
were based solely upon the number of entities from whom contribution was
requested or by any other method of allocation which does not take account of
the equitable considerations referred to above in this Section 3.4(d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to above in this Section 3.4(d) shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim, subject to the provisions of Section 3.4(c) hereof. Notwithstanding
the provisions of this Section 3.4(d), no Selling Stockholder shall be required
to contribute any amount or make any other payments under this Agreement which
in the aggregate exceed the proceeds received by such Selling Stockholder. No
person guilty of fraudulent misrepresentation shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
3.5 Information by Holders. The Holder(s) of Restricted Stock included in
any registration shall furnish to CYBX such information regarding such
Holder(s), the Restricted Stock and the distribution proposed by such Holder(s)
as CYBX may request and as shall be required in connection with any
registration, qualification or compliance referred to in Section 3. In the event
that a Holder fails to provide the information required by this Section,
Restricted Stock held by such Holder shall be excluded from such registration
and such Holder shall be deemed to have forever waived and terminated its rights
to registration under this Agreement.
3.6 Rule 144 Reporting. So long as a Holder owns any Restricted Stock,
CYBX agrees to furnish to such Holder forthwith upon request a written statement
by CYBX as to its compliance with the reporting requirements of said Rule 144
and of the Securities Act and the Securities Exchange Act of 1934, a copy of the
most recent annual or quarterly report of CYBX, and such other reports and
documents of CYBX and other information in the possession of or reasonably
obtainable by CYBX as a Holder may reasonably request in availing itself of any
rule or regulation of the Commission allowing such Holder to sell any such
securities without registration.
3.7 Transfer of Registration Rights. The rights granted to St. Jude under
Section 3 may be assigned to a Controlled Corporation or to any other transferee
acquiring shares of Restricted Stock in a transaction which has been effected in
compliance with Section 2 hereof in connection with any transfer or assignment
of Restricted Stock provided that transferee agrees in writing to be bound by
the provisions of this Agreement. Notwithstanding the foregoing, no registration
rights will transfer in connection with a transfer of Restricted Stock pursuant
to Rule 144 or pursuant to an effective registration statement under the
Securities Act.
3.8 Termination of Registration Rights. The registration rights granted
in this Section 3 shall terminate as to any shares of Restricted Stock at the
earlier of (i) the time such shares are transferred in a registered offering or
pursuant to Rule 144, (ii) at such time as the Holder thereof may legally sell
all Restricted Stock held by it in any single three month period or (iii) five
years from the date St. Jude first acquired the Shares.
SECTION 4
Covenants of St. Jude
4.1 Limitation on Ownership of CYBX Common Stock.
(a) Unless CYBX otherwise agrees in writing, Holder(s) shall not (and
shall not permit any subsidiary to directly or indirectly) acquire beneficial
ownership of any CYBX Common Stock, any securities convertible into or
exchangeable for CYBX Common Stock, or any other right to acquire CYBX Common
Stock or authorize or make a tender, exchange or other offer, except (i) by way
of stock dividends or other distributions or offerings made available to holders
of any CYBX Common Stock generally or (ii) pursuant to the Merger Agreement, if
the effect of such acquisition would be to increase the Voting Power of all CYBX
Common Stock then owned by Holders or which they have a right to acquire to more
than the percentage of the Total Voting Power of CYBX which Holders, in the
aggregate, are entitled to hold at such time as provided in this Section 4.1
(the "Ownership Ceiling"). The Ownership Ceiling shall initially be nineteen
percent (19%), subject to adjustment as provided in Section 4.1(b).
(b) Holders may acquire CYBX Common Stock without regard to the
limitations in this Section 4.1 if: (i) a tender offer is made (as evidenced by
the filing with the Commission of a Schedule 14D-1 (or any successor schedule or
form promulgated or adopted for such purpose by the Commission) and the actual
dissemination of tender offer materials to security holders) by another person
or group to purchase or exchange for cash or other consideration any CYBX Common
Stock which, if successful, would result in such person or group owning or
having the right to acquire shares of CYBX Common Stock with aggregate Voting
Power of at least a majority of the Total Voting Power of CYBX then in effect;
provided, this clause (i) shall not be effective until such time as St. Jude, in
the exercise of the reasonable judgment of its Board of Directors shall
reasonably conclude that such tender offeror can finance such tender offer; or
(ii) another entity or group (other than an entity or group not required to file
a Schedule 13D pursuant to Rule 13d-1(b)(1) under the Securities Exchange Act of
1934) acquires CYBX Common Stock with aggregate Voting Power of at least 25% of
the then Total Voting Power of CYBX, other than pursuant to a Negotiated
Purchase.
(c) If Holder(s) sell any CYBX Common Stock (other than a sale or
other transfer to a Controlled Corporation), the percentage ownership in the
Total Voting Power of CYBX which Holders are entitled to own as provided in this
Section 4.1 shall be reduced by the percentage amount of such sale; and
(d) Holders will not be obligated to dispose of any shares of CYBX
Common Stock if the aggregate percentage ownership of Holders is increased as a
result of a recapitalization of CYBX or a repurchase of securities by CYBX or
any other action taken by CYBX or its affiliates, but Holders shall not acquire
any additional CYBX Common Stock unless such acquisition would otherwise be
permitted under this Agreement. If, after Holders have acquired CYBX Common
Stock in response to the acquisition of CYBX Common Stock by another person or
group, as permitted by Section 4.1(b), then Holders shall not be obligated to
dispose of any shares of CYBX Common Stock, but will continue to be bound by the
restrictions on acquiring additional shares of CYBX Common Stock.
4.2 Voting.
(a) Holders shall take such action as may be required so that all
shares of CYBX Common Stock owned by Holders are voted for nominees to the Board
of Directors of CYBX in accor dance with the recommendation of the Board of
Directors. The provisions of this Section 4.2(a) shall terminate on July 1,
1998; provided, however, that the provisions of Section 4.4 shall remain in
effect for so long as any Holder continues to hold CYBX Common Stock.
(b) Unless CYBX otherwise consents in writing, Holders shall take
such action as may be required so that all shares of CYBX Common Stock owned by
Holders are voted in accordance with the recommendations of the Board of
Directors on all other matters to be voted on by holders of CYBX Common Stock,
or, if a Holder objects to the recommendation of CYBX's Board of Directors, then
such Holder shall vote its shares of CYBX Common Stock in the same proportion as
the stockholders (other than the other objecting Holders) have voted on the
matter. The provisions of this Section 4.2(b) shall remain in effect for so long
as any Holder continues to hold CYBX Common Stock.
(c) Holders, as the holders of shares of CYBX Common Stock, shall be
present, in person or by proxy, at all meetings of stockholders of CYBX so that
all shares of CYBX Common Stock beneficially owned by them may be counted for
the purposes of determining the presence of a quorum at such meetings and to
vote such CYBX Common Stock as provided herein.
4.3 Voting Trust, etc. Holders shall not deposit any shares of CYBX
Common Stock in a voting trust or, except as otherwise provided herein, subject
any CYBX Common Stock to any proxy, arrangement or agreement with respect to the
voting of such CYBX Common Stock other than a proxy granted to the proxy
holder(s) designated by CYBX's Board of Directors.
4.4 Solicitation of Proxies. Without CYBX's prior written consent,
Holders shall not solicit proxies with respect to any CYBX Common Stock, nor
shall it become a "participant" in any "election contest" (as such terms are
used in Rule 14a-11 of Regulation 14A under the Exchange Act) relating to the
election of directors of CYBX).
4.5 Acts in Concert with Others. Except as contemplated herein with
regard to the assignment of rights to Controlled Corporations, Holders shall not
join a partnership, limited partnership, syndicate or other group, or otherwise
act in concert with any third person, for the purpose of acquiring, holding, or
disposing of CYBX Common Stock.
SECTION 5
Other Agreements
5.1 Board Observer Rights. For so long as Holders hold Common Stock
representing at least 10% of the Total Voting Power of CYBX, St. Jude shall have
the right to have one representative observe all meetings of CYBX's Board of
Directors. St. Jude shall designate its representative who shall be reasonably
acceptable to CYBX. Except where the designated representative has left the
employ of St. Jude, St. Jude may not change its representative more than once in
any 12 month period. CYBX shall provide to the representative notice of meetings
of the Board, and copies of such materials as are provided to directors, at the
same time as given to directors. Notwithstanding the foregoing, if, in the
reasonable judgment of CYBX, a conflict may exist between CYBX and St. Jude with
respect to a matter to be considered by CYBX Board of Directors, CYBX may (i)
exclude St. Jude's representative from the portion(s) of any meeting at which
such matter(s) are to be discussed and (ii) omit from materials sent to the
representative any materials relating to such matter(s). St. Jude acknowledges
that, as a result of its participation in board meetings and receipt of board
materials, it will regularly have material nonpublic information about CYBX, and
thereby agrees that it will, and will cause any St. Jude personnel who have
access to such information, to adhere to CYBX's Insider Trading Policy, copies
of which have been provided to St. Jude and to comply with all applicable state
and federal securities laws relating to insider trading.
5.2 Confidential Information. CYBX may from time to time pursuant to this
Agreement disclose to St. Jude certain confidential information. St. Jude agrees
that the provisions of those certain confidentiality agreements between CYBX and
St. Jude dated as of June 6, 1995 and October 17, 1995 shall govern the use and
disclosure of confidential information received hereunder; provided, however,
that, notwithstanding the terms of such agreements, such agreements shall be
deemed to remain in effect for so long as St. Jude shall have a right to receive
information hereunder. St. Jude's obligation to hold confidential information in
confidence expires on the seventh anniversary of the date of disclosure.
SECTION 6
Miscellaneous.
6.1 Termination. This Agreement shall automatically terminate upon that
date which is one year after the later of: (i) termination of the Merger
Agreement; (ii) termination of the Purchase Agreement; or (iii) assuming that
St. Jude has purchased shares of CYBX Common Stock pursuant to the Purchase
Agreement, the date on which all Holders may sell all shares of Restricted Stock
held by them in a single three month period. The restrictions in this Agreement
shall not apply to any purchaser of Restricted Stock (other than a Controlled
Corporation or other affiliate of St. Jude or of any Controlled Corporation) to
whom none of the rights of a Holder are transferred as provided herein.
6.2 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS BY
THE LAWS OF THE STATE OF DELAWARE AS APPLIED TO CONTRACTS ENTERED INTO SOLELY
BETWEEN RESIDENTS OF, AND TO BE PERFORMED ENTIRELY WITHIN, SUCH STATE.
6.3 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns. This Agreement may not be assigned by a party without the prior
written consent of the other party provided, without the consent of CYBX, St.
Jude may assign this Agreement as provided herein to any Controlled Corporation.
6.4 Entire Agreement; Amendment. This Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subject matter hereof and
thereof and supersedes all prior agreements and understandings among the parties
relating to the subject matter hereof. Neither this Agreement nor any term
hereof may be amended, waived, discharged or terminated other than by a written
instrument signed by the party against which enforcement of any such amendment,
waiver, discharge or termination is sought.
6.5 Notices and Dates. Any notice or other communication given under this
Agreement shall be sufficient if in writing and sent by registered or certified
mail, return receipt requested, postage prepaid, to a party at its address set
forth below (or at such other address as shall be designated for such purpose by
such party in a written notice to the other party hereto):
(a) if to CYBX, to it at:
Cyberonics, Inc.
17448 Highway 3, Suite 100
Webster, TX 77598-4138
Attention: President
with a copy to:
Kenneth M. Siegel
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
(b) if to St. Jude, to it at:
St. Jude Medical, Inc.
One Lillehei Plaza
St. Paul, MN 55117
Attention: President
with a copy addressed as set forth above but to the attention of: General
Counsel.
All such notices and communications shall be effective when received by
the addressee. In the event that any date provided for in this Agreement falls
on a Saturday, Sunday or legal holiday, such date shall be deemed extended to
the next business day.
6.6 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and restriction
of this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
6.7 Costs and Expenses. Except as provided with respect to Registration
Expenses, each party hereto shall pay its own costs and expenses incurred in
connection herewith, including the fees of its counsel, auditors and other
representatives, whether or not the transactions contemplated herein are
consummated.
6.8 No Third Party Rights. Nothing in this Agreement shall create or be
deemed to create any rights in any person or entity not a party to this
Agreement.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective authorized officers as of the date aforesaid.
CYBERONICS, INC.
By: /s/ Robert P. Cummins
---------------------
Robert P. Cummins
President and Chief Executive Officer
ST. JUDE MEDICAL, INC.
By: /s/ Ronald A. Matricaria
------------------------
Name: Ronald A. Matricaria
Title: President and Chief Executive Officer
STOCKHOLDERS' AGREEMENT
Dated as of April 8, 1996
Between
Cyberonics, Inc
and
St. Jude Medical, Inc.
TABLE OF CONTENTS
Page
SECTION 1 - Definitions...................................................1
1.1 Certain Definitions..................................1
SECTION 2 - Restrictions on Transfer; Right of First Refusal..............3
2.1 Restrictions on Transferability......................3
2.2 Right of First Refusal...............................4
2.3 Restrictive Legends..................................5
SECTION 3 - Registration Rights...........................................5
3.1 Requested Registration...............................5
3.2 Piggy-Back Registration..............................8
3.3 Registration Procedures..............................9
3.4 Indemnification......................................9
3.5 Information by Holders..............................12
3.6 Rule 144 Reporting..................................12
3.7 Transfer of Registration Rights.....................12
3.8 Termination of Registration Rights..................12
SECTION 4 - Covenants of St. Jude........................................13
4.1 Limitation on Ownership of CYBX Common Stock........13
4.2 Voting..............................................14
4.3 Voting Trust, etc...................................14
4.4 Solicitation of Proxies.............................14
4.5 Acts in Concert with Others.........................14
SECTION 5 - Other Agreements.............................................14
5.1 Board Observer Rights...............................14
5.2 Confidential Information............................15
SECTION 6 - Miscellaneous................................................15
6.1 Governing Law.......................................15
6.2 Successors and Assigns..............................15
6.3 Entire Agreement; Amendment.........................15
6.4 Notices and Dates...................................15
6.5 Severability........................................16
6.6 Costs and Expenses..................................16
6.7 No Third Party Rights...............................16
