UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
VENTRITEX, INC.
(Name of Issuer)
Common Stock, $0.001 par value
(Title of Class of Securities)
922814
(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
Persons Authorized to Receive Notices and
Communications)
October 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 acquisition 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 ].
EXHIBIT INDEX IS ON PAGE 10.
(1) Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
ST. JUDE MEDICAL, INC.
41-1276891
(2) Check the Appropriate Box if a Member of Group (See Instructions).
[ ] (a)
[X] (b)
(3) SEC Use Only
(4) Sources 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
Number of Shares (7) Sole Voting Power 0
Beneficially
Owned by Each (8) Shared Voting Power 0
Reporting Person
With (9) Sole Dispositive Power 0
(10) Shared Dispositive Power 0
(11) Aggregate Amount Beneficially Owned by Each Reporting Person 0
(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) 0%
(14) Type of Reporting Person (See Instructions)
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, $0.001 par value per share, of Ventritex, Inc., a Delaware
corporation ("Ventritex" and "Ventritex Common Stock").
The principal executive offices of Ventritex are located at 701 E.
Evelyn Avenue, Sunnyvale, California 94086.
ITEM 2. IDENTITY AND BACKGROUND.
This Schedule is being filed by St. Jude Medical, Inc., a Minnesota
corporation ("SJM").
SJM develops, manufactures, and markets medical device products for
cardiovascular applications. The Company'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.
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.
No funds or other considerations were paid or given for the beneficial
ownership which is the subject of this Schedule.
On October 23, 1996, SJM and Ventritex executed an Agreement and Plan
of Merger (the "Merger Agreement"). A copy of the Merger Agreement is attached
to this Schedule as Exhibit 1 and incorporated by reference herein. Under the
terms of the Merger Agreement, Ventritex will be merged into a wholly owned
subsidiary of SJM and this subsidiary will continue as the surviving corporation
(the "Merger").
Pursuant to the Merger Agreement, SJM will issue .6 of a share of its
Common Stock, $.1 par value ("SJM Common Stock") in exchange for each share of
Ventritex Common Stock outstanding upon the effectiveness of the Merger. The
shares of SJM Common Stock so issued will be newly issued shares. Ventritex is
presently authorized to issue up to 35,000,000 shares of Ventritex Common Stock,
of which 20,959,260 shares were outstanding on October 23, 1996. SJM will assume
the rights and obligations of the Ventritex convertible subordinated debenture.
Under this debenture, Ventritex may be obligated to issue 3,345,455 shares of
Ventritex Common Stock. As of October 23, 1996, Ventritex had 2,782,116
outstanding options. These Ventritex options will be converted to SJM options.
In addition, SJM will make cash payments in lieu of issuing fractional shares of
SJM Common Stock. SJM presently intends to finance all such cash payments with
internally generated corporate funds. SJM does not currently intend to purchase
any shares of Ventritex Common Stock on the market or otherwise prior to the
consummation of the Merger.
ITEM 4. PURPOSE OF TRANSACTION.
Officers of SJM and Ventritex signed the Agreement and Plan of Merger
on October 23, 1996. The Merger Agreement provides that each issued and
outstanding share of the Ventritex Common Stock will be converted into and
exchanged for .6 of a share of SJM Common Stock, except that cash will be paid
in lieu of issuing fractional shares. The transaction is intended to be tax-free
reorganization and to qualify for accounting purposes as a pooling-of-interests.
The Merger Agreement, which has been approved by the boards of
directors of both companies, is subject to the approval of the stockholders of
Ventritex, regulatory approvals, and various other closing conditions. It is
anticipated that the Merger will be consummated during the first quarter of
calendar 1997.
After the consummation of the Merger, Ventritex 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
Ventritex or any of its subsidiaries;
(b) any material change in the business of Ventritex; or
(c) any action similar to those enumerated above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
SJM has not engaged in any transaction involving any securities issued
by Ventritex within the sixty-day period immediately preceding the date of this
Schedule.
Neither SJM nor any of the other persons named in Item 2 beneficially
owns any securities issued by Ventritex.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS, OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
None of the persons named in Item 2 is a party to any contracts,
arrangements, understanding, or relationships (legal or otherwise) with respect
to any securities of Ventritex.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
1. Agreement and Plan of Merger dated as of October 23, 1996;
among SJM, Pacesetter, Inc. and Ventritex.
2. Form of Affiliate 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: November 15, 1996
ST. JUDE MEDICAL, INC.
By /s/ Kevin T. O'Malley
Kevin T. O'Malley
Vice President and General Counsel
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF ST. JUDE MEDICAL, INC.
POSITION WITH
ST. JUDE MEDICAL, INC. AND
PRINCIPAL OCCUPATION
NAME BUSINESS ADDRESS
EXECUTIVE OFFICERS:
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Ronald A. Matricaria Chairman of the Board, President, One Lillehei Plaza
CEO, and Director St. Paul, MN 55117
Patrick P. Forteau President, Pacesetter Division 15900 Valley View Court
Sylmar, CA 91393-9221
Terry L. Shepherd President, St. Jude Medical Division One Lillehei Plaza
St. Paul, MN 55117
John P. Berdusco Vice President, Administration One Lillehei Plaza
St. Paul, MN 55117
Kevin T. O'Malley Vice President and General Counsel One Lillehei Plaza
St. Paul, MN 55117
Stephen L. Wilson Vice President, Finance and Chief One Lillehei Plaza
Financial Officer St. Paul, MN 55117
Peter L. Gove Vice President, Corporate Relations One Lillehei Plaza
St. Paul, MN 55117
DIRECTORS:
Ronald A. Matricaria Chairman of the Board, President, One Lillehei Plaza
CEO, and Director St. Paul, MN 55117
Gail R. Wilensky, Ph.D. Director; Senior Fellow Project Hope 7500 Old Georgetown Road
Suite 600
Bethesda, MD 20814
Thomas H. Garrett III Director; Attorney/Business 4200 IDS Center
Consultant Minneapolis, MN 55402
Kenneth G. Langone Director; Managing Director, 375 Park Avenue
Invemed Associates, Inc. Suite 2205
New York, NY 10152
William R. Miller Director; Director of various 150 East 52nd Street
companies Floor 12
New York, NY 10022
Charles V. Owens, Jr. Director; Chairman of the Board, 2625 Greenleaf Blvd.
Genesis Labs, Inc. Elkhart, IN 46514
(Residence address)
Walter L. Sembrowich, Ph.D. Director; Founder and Director of 80 South 8th Street
various medical device companies Suite 266
Minneapolis, MN 55402
Roger G. Stoll, Ph.D. Director; CEO and President, 110 Allen Road
OHMEDA, Inc. wholly owned P.O. Box 804
subsidiary of BOC Group Liberty Corner, NJ 07938-0804
Daniel J. Starks President, Daig Corporation 14901 DeVeau Place
Minnetonka, MN 55345
Paul J. Chiapparone Executive Vice President, 5400 Legacy Drive
Electronic Data Systems Corporation Plano, Texas 75024
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EXHIBIT INDEX
Exhibit No. Description Page No.
1 Agreement and Plan of Merger dated Electronic transmission
October 23, 1996*
2 Form of Affiliate Agreement dated Electronic transmission
October 23, 1996
- -------------------------
* 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
Among
Ventritex, Inc.
St. Jude Medical, Inc.
And
Pacesetter, Inc.
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TABLE OF CONTENTS
ARTICLE 1
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THE MERGER................................................................................ 1
SECTION 1.2. Effective Time..................................................... 1
SECTION 1.3. Closing of the Merger.............................................. 2
SECTION 1.4. Effects of the Merger.............................................. 2
SECTION 1.5. Certificate of Incorporation and Bylaws............................ 2
SECTION 1.6. Directors.......................................................... 2
SECTION 1.7. Officers........................................................... 2
SECTION 1.8. Conversion of Shares............................................... 2
SECTION 1.9. Exchange of Certificates........................................... 3
SECTION 1.10. Stock Options..................................................... 5
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................................. 7
SECTION 2.1. Organization and Qualification; Subsidiaries....................... 7
SECTION 2.2. Capitalization of the Company and its Subsidiaries................. 8
SECTION 2.3. Authority Relative to this Agreement............................... 9
SECTION 2.4. SEC Reports; Financial Statements.................................. 9
SECTION 2.5. Information Supplied............................................... 10
SECTION 2.6. Consents and Approvals; No Violations.............................. 11
SECTION 2.7. No Default......................................................... 11
SECTION 2.8. No Undisclosed Liabilities; Absence of Changes..................... 12
SECTION 2.9. Litigation......................................................... 12
SECTION 2.10. Compliance with Applicable Law.................................... 12
SECTION 2.11. Employee Plans.................................................... 13
SECTION 2.12. Environmental Laws and Regulations................................ 14
SECTION 2.13. Tax Matters....................................................... 15
SECTION 2.14. Intangible Property............................................... 17
SECTION 2.15. Opinion of Financial Advisor...................................... 17
SECTION 2.16. Brokers........................................................... 17
SECTION 2.17. Accounting Matters................................................ 17
SECTION 2.18. Material Contracts................................................ 18
SECTION 2.19. Products.......................................................... 18
SECTION 2.20. Amendment to Rights Agreement..................................... 19
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF PARENT AND ACQUISITION................................................................. 20
SECTION 3.1. Organization....................................................... 20
SECTION 3.2. Capitalization of Parent and its Subsidiaries...................... 21
SECTION 3.3. Authority Relative to this Agreement............................... 21
SECTION 3.4. SEC Reports; Financial Statements.................................. 22
SECTION 3.5. Information Supplied............................................... 22
SECTION 3.6. Consents and Approvals; No Violations.............................. 23
SECTION 3.7. No Default......................................................... 24
SECTION 3.8. No Undisclosed Liabilities; Absence of Changes..................... 24
SECTION 3.9. Litigation......................................................... 24
SECTION 3.10. Compliance with Applicable Law.................................... 25
SECTION 3.11. Tax Matters....................................................... 25
SECTION 3.12. Products.......................................................... 25
SECTION 3.13. Intangible Property............................................... 26
SECTION 3.14. Brokers........................................................... 26
SECTION 3.15. Accounting Matters................................................ 26
SECTION 3.16. Telectronics Agreements........................................... 27
SECTION 3.17. Medtronic Agreement............................................... 27
ARTICLE 4
COVENANTS................................................................................. 27
SECTION 4.1. Conduct of Business of the Company and Parent...................... 27
SECTION 4.2. Preparation of S-4 and the Proxy Statement......................... 31
SECTION 4.3. No Solicitation.................................................... 31
SECTION 4.4. Intentionally omitted.............................................. 33
SECTION 4.5. Stockholder Meeting................................................ 33
SECTION 4.6. Access to Information.............................................. 33
SECTION 4.7. Additional Agreements; Best Efforts................................ 34
SECTION 4.9. Public Announcements............................................... 35
SECTION 4.10. Indemnification; Directors' and Officers' Insurance............... 35
SECTION 4.11. Notification of Certain Matters................................... 36
SECTION 4.12. Pooling........................................................... 37
SECTION 4.13. Tax-Free Reorganization Treatment................................. 37
SECTION 4.14. Employee Matters.................................................. 38
SECTION 4.15. Company Affiliates................................................ 38
SECTION 4.16. SEC Filings....................................................... 39
SECTION 4.17. Guarantee of Performance.......................................... 39
ARTICLE 5
CONDITIONS TO CONSUMMATION OF THE MERGER.................................................. 39
SECTION 5.1. Conditions to Each Party's Obligations to Effect the Merger........ 39
SECTION 5.2. Conditions to the Obligations of the Company....................... 40
SECTION 5.3. Conditions to the Obligations of Parent and Acquisition............ 42
ARTICLE 6
TERMINATION; AMENDMENT; WAIVER............................................................ 43
SECTION 6.1. Termination........................................................ 43
SECTION 6.2. Effect of Termination.............................................. 44
SECTION 6.3. Fees and Expenses.................................................. 44
SECTION 6.4. Amendment.......................................................... 45
SECTION 6.5. Extension; Waiver.................................................. 45
ARTICLE 7
MISCELLANEOUS............................................................................. 45
SECTION 7.1. Nonsurvival of Representations and Warranties...................... 45
SECTION 7.2. Entire Agreement; Assignment....................................... 45
SECTION 7.3. Validity........................................................... 46
SECTION 7.4. Notices............................................................ 46
SECTION 7.5. Governing Law...................................................... 47
SECTION 7.6. Descriptive Headings............................................... 47
SECTION 7.7. Parties in Interest................................................ 47
SECTION 7.8. Severability....................................................... 47
SECTION 7.9. Specific Performance............................................... 47
SECTION 7.10. Subsidiaries...................................................... 47
SECTION 7.11. Counterparts...................................................... 47
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of October 23,
1996, is among VENTRITEX, INC.,a Delaware corporation (the "Company"), ST. JUDE
MEDICAL, INC., a Minnesota corporation ("Parent"), and PACESETTER, INC., a
Delaware corporation and a direct wholly-owned subsidiary of Parent
("Acquisition").
WHEREAS, the Boards of Directors of the Company, Parent and
Acquisition each have, in light of and subject to the terms and conditions set
forth herein, (i) determined that the Merger (as defined in Section 1.1) is fair
to their respective stockholders and in the best interests of such stockholders
and (ii) approved the Merger in accordance with this Agreement;
WHEREAS, for federal income tax purposes, it is intended that
the Merger shall qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, it is intended that the Merger shall be recorded for
accounting purposes as a "pooling-of-interests".
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the Company, Parent and Acquisition hereby
agree as follows:
ARTICLE 1
THE MERGER
SECTION 1.1. The Merger. At the Effective Time and upon the
terms and subject to the conditions of this Agreement and in accordance with the
Delaware General Corporation Law (the "DGCL"), the Company shall be merged with
and into Acquisition (the "Merger"). Following the Merger, Acquisition shall
continue as the surviving corporation (the "Surviving Corporation") and the
separate corporate existence of the Company shall cease.
SECTION 1.2. Effective Time. Subject to the provisions of this
Agreement, Parent, Acquisition and the Company shall cause the Merger to be
consummated by filing an appropriate Certificate of Merger or other appropriate
documents (the"Certificate of Merger") with the Secretary of State of the State
of Delaware in such form as required by, and executed in accordance with, the
relevant provisions of the DGCL, as soon as practicable on or after the Closing
Date (as defined in Section 1.3). The Merger shall become effective upon such
filing or at such time thereafter as is provided in the Certificate of Merger
(the "Effective Time").
SECTION 1.3. Closing of the Merger. The closing of the Merger
(the "Closing") will take place at a time and on a date to be specified by the
parties, which shall be no later than the second business day after satisfaction
or waiver of the conditions set forth in Article 5, other than those conditions
that by their nature are to be satisfied at the Closing, but subject to the
fulfillment or waiver of those conditions (the "Closing Date"), at the offices
of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York 10153,
unless another time, date or place is agreed to in writing by the parties
hereto.
SECTION 1.4. Effects of the Merger. The Merger shall have the
effects set forth in the DGCL. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time, all the properties, rights,
privileges, powers and franchises of the Company and Acquisition shall vest in
the Surviving Corporation, and all debts, liabilities and duties of the Company
and Acquisition shall become the debts, liabilities and duties of the Surviving
Corporation.
SECTION 1.5. Certificate of Incorporation and Bylaws. The
certificate of incorporation of Acquisition in effect at the Effective Time
shall be the certificate of incorporation of the Surviving Corporation until
amended in accordance with applicable law. The bylaws of Acquisition in effect
at the Effective Time shall be the bylaws of the Surviving Corporation until
amended in accordance with applicable law.
SECTION 1.6. Directors. The directors of Acquisition at the
Effective Time shall be the initial directors of the Surviving Corporation, each
to hold office in accordance with the certificate of incorporation and bylaws of
the Surviving Corporation until such director's successor is duly elected or
appointed and qualified.
SECTION 1.7. Officers. The officers of Acquisition at the
Effective Time shall be the initial officers of the Surviving Corporation, each
to hold office in accordance with the certificate of incorporation and bylaws of
the Surviving Corporation until such officer's successor is duly elected or
appointed and qualified. The officers of the Company at the Effective Time shall
be the initial officers of the Ventritex division of the Surviving Corporation,
each to hold such position in accordance with the certificate of incorporation
and bylaws of the Surviving Corporation until such person's successor is duly
appointed and qualified.
SECTION 1.8. Conversion of Shares.
(a) At the Effective Time, each share of common stock, par
value $0.001 per share, of the Company ("Company Common Stock") issued and
outstanding immediately prior to the Effective Time (individually a "Share" and
collectively, the Shares") (other than Shares held by Parent, Acquisition or any
other subsidiary of Parent) shall, by virtue of the Merger and without any
action on the part of Acquisition, the Company or the holder thereof, be
converted into and shall become exchangeable for 0.6 of a fully paid and
nonassessable share of common stock, par value $0.10 per share, of Parent
("Parent Common Stock") (the "Exchange Ratio"). If between the date of this
Agreement and the Effective Time the outstanding shares of Parent Common Stock
shall have been changed into a different number of shares or a different class
by reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, the amount of shares
of Parent Common Stock constituting the Exchange Ratio shall be correspondingly
adjusted to reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination, exchange of shares or other similar
transaction.
(b) At the Effective Time, each outstanding share of the
common stock, par value $1.00 per share, of Acquisition shall remain outstanding
as one share of common stock, par value $1.00 per share, of the Surviving
Corporation.
(c) At the Effective Time, each Share held by Parent,
Acquisition or any subsidiary of Parent or Acquisition immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
of Acquisition, the Company or the holder thereof, be canceled, retired and
cease to exist and no payment shall be made with respect thereto.
(d) In accordance with Section 262 of the DGCL, no appraisal
rights shall be available to holders of Shares in connection with the Merger.
SECTION 1.9. Exchange of Certificates.
(a) As of the Effective Time, Parent shall make available to
American Stock Transfer & Trust Company (the "Exchange Agent"), for the benefit
of the holders of Shares, for exchange in accordance with this Article 1,
through the Exchange Agent: (i) certificates representing the appropriate number
of shares of Parent Common Stock issuable pursuant to Section 1.8 in exchange
for outstanding Shares and (ii) cash to be paid in lieu of fractional shares of
Parent Common Stock pursuant to Section 1.9(f) (such shares of Parent Common
Stock and such cash are hereinafter referred to as the "Exchange Fund").
(b) As soon as reasonably practicable after the Effective
Time, the Exchange Agent shall mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding Shares (the "Certificates") whose Shares were converted into the
right to receive shares of Parent Common Stock pursuant to Section 1.8: (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as Parent and the Company may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for certificates representing shares of Parent Common Stock. Upon surrender of a
Certificate for cancellation to the Exchange Agent or to such other agent or
agents as may be appointed by Parent and Acquisition, together with such letter
of transmittal, duly executed, the holder of such Certificate shall be entitled
to receive in exchange therefor a certificate representing that number of whole
shares of Parent Common Stock and, if applicable, a check representing the cash
consideration to which such holder may be entitled pursuant to Section 1.9(f) on
account of a fractional share of Parent Common Stock, which such holder has the
right to receive pursuant to the provisions of this Article 1, and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Shares which is not registered in the transfer records
of the Company, a certificate representing the proper number of shares of Parent
Common Stock may be issued to a transferee if the Certificate representing such
Shares is presented to the Exchange Agent, accompanied by all documents required
to evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this Section
1.9, each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the certificate
representing shares of Parent Common Stock and cash in lieu of any fractional
shares of Parent Common Stock as contemplated by this Section 1.9. Holders of
unsurrendered Certificates shall be entitled to vote after the Effective Time at
any meeting of Parent stockholders the number of whole shares of Parent Common
Stock represented by such Certificates, regardless of whether such holders have
exchanged their Certificates.
(c) No dividends or other distributions declared or made after
the Effective Time with respect to Parent Common Stock with a record date after
the Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect to the shares of Parent Common Stock represented thereby and no
cash payment in lieu of fractional shares shall be paid to any such holder
pursuant to Section 1.9(f) until the holder of record of such Certificate shall
surrender such Certificate. Subject to the effect of applicable laws, following
surrender of any such Certificate, there shall be paid to the record holder of
the certificates representing whole shares of Parent Common Stock issued in
exchange therefor, without interest, (i) at the time of such surrender, the
amount of any cash payable in lieu of a fractional share of Parent Common Stock
to which such holder is entitled pursuant to Section 1.9(f) and the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole shares of Parent Common Stock, and
(ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to surrender
and a payment date subsequent to surrender payable with respect to such whole
shares of Parent Common Stock.
(d) In the event that any Certificate for Shares shall have
been lost, stolen or destroyed, the Exchange Agent shall issue in exchange
therefor, upon the making of an affidavit of that fact by the holder thereof,
such shares of Parent Common Stock and cash in lieu of fractional shares, if
any, as may be required pursuant to this Agreement; PROVIDED, HOWEVER, that
Parent may, in its discretion, require the delivery of a suitable bond or
indemnity.
(e) All shares of Parent Common Stock issued upon the
surrender for exchange of Shares in accordance with the terms hereof (including
any cash paid pursuant to Section 1.9(c) or 1.9(f)) shall be deemed to have been
issued in full satisfaction of all rights pertaining to such Shares, and there
shall be no further registration of transfers on the stock transfer books of the
Surviving Corporation of the Shares which were outstanding immediately prior to
the Effective Time. If, after the Effective Time, Certificates are presented to
the Surviving Corporation for any reason, they shall be canceled and exchanged
as provided in this Article I.
(f) No fractions of a share of Parent Common Stock shall be
issued in the Merger, but in lieu thereof each holder of Shares otherwise
entitled to a fraction of a share of Parent Common Stock shall, upon surrender
of his or her Certificate or Certificates, be entitled to receive an amount of
cash (without interest) determined by multiplying the average closing price for
Parent Common Stock as reported on the Nasdaq Stock Market (or any subsequent
national securities exchange on which shares of Parent Common Stock are listed
for trading) for the five trading days immediately preceding the date of the
meeting of the Company's stockholders held in connection with the Merger by the
fractional share interest to which such holder would otherwise be entitled. The
parties acknowledge that payment of the cash consideration in lieu of issuing
fractional shares was not separately bargained for consideration but merely
represents a mechanical rounding off for purposes of simplifying the corporate
and accounting problems which would otherwise be caused by the issuance of
fractional shares.
(g) Any portion of the Exchange Fund which remains
undistributed to the stockholders of the Company for six months after the
Effective Time shall be delivered to Parent, upon demand, and any stockholders
of the Company who have not theretofore complied with this Article I shall
thereafter look only to Parent for payment of their claim for Parent Common
Stock for any cash in lieu of fractional shares of Parent Common Stock and any
dividends or distributions with respect to Parent Common Stock, as the case may
be.
(h) Neither Parent nor the Company shall be liable to any
holder of Shares, or Parent Common Stock, as the case may be, for such shares
(or dividends or distributions with respect thereto) or cash from the Exchange
Fund delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
SECTION 1.10. Stock Options.
(a) At the Effective Time, each outstanding option to purchase
shares of Company Common Stock (a "Company Stock Option" or, collectively,
"Company Stock Options") issued pursuant to the Company's stock option plans
listed on Schedule 1.10 hereto (the "Company Plans"), whether vested or
unvested, shall be cancelled and, in lieu thereof, Parent shall issue to each
holder of a Company Stock Option an option (each, a "Parent Option"), to
acquire, on substantially the same terms and subject to substantially the same
conditions as were applicable under such Company Stock Option, including,
without limitation, term, exercisability, vesting schedule, status as an
"incentive stock option" under Section 422 of the Code, acceleration and
termination provisions, the same number of shares of Parent Common Stock as the
holder of such Company Stock Option would have been entitled to receive pursuant
to the Merger had such holder exercised such option in full immediately prior to
the Effective Time, at a price per share equal to (y) the aggregate exercise
price for the shares of Company Common Stock otherwise purchasable pursuant to
such Company Stock Option divided by (z) the number of full shares of Parent
Common Stock deemed purchasable pursuant to such Company Stock Option; provided,
however, that in the case of any option to which Section 421 of the Code applies
by reason of its qualification under any of Sections 422 through 424 of the
Code, the exercise price, the number of shares purchasable pursuant to such
option and the terms and conditions of exercise of such option shall be
adjusted, if necessary, in order to comply with Section 424 of the Code and
provided, further, however, that the number of shares of Parent Common Stock
that may be purchased upon exercise of any such Parent Option shall not include
any fractional share and, upon exercise of the Parent Option, a cash payment
shall be made for any fractional share based upon the average closing price for
Parent Common Stock as reported on the Nasdaq Stock Market (or any subsequent
national securities exchange on which shares of Parent Common Stock are listed
for trading) for the five trading days immediately preceding the date of
exercise. Employment with the Company shall be credited to the optionees for
purposes of determining the number of vested shares of Parent Common Stock
subject to exercise under converted Company Options after the Effective Time.
None of the Company Stock Options that are unvested at the Effective Time shall
become vested as a result of the execution and delivery of this Agreement or the
consummation of the Merger.
(b) As soon as practicable after the Effective Time, but no
later than 30 days thereafter, Parent shall deliver to the holders of Company
Stock Options appropriate notices setting forth such holders' rights pursuant to
the respective Company Plans and stating that the holders will receive Parent
Options exercisable for shares of Parent Common Stock on substantially the same
terms and conditions as their Company Stock Options (subject to the adjustments
required by this Section 1.10 after giving effect to the Merger). At or prior to
the Effective Time, Parent shall take all corporate action necessary to reserve
for issuance a sufficient number of shares of Parent Common Stock for delivery
upon exercise of Parent Options issued by it in accordance with this Section
1.10. As soon as practicable after the Effective Time, to the extent the Parent
Common Stock issuable upon exercise of the Parent Options issued in accordance
with this Section 1.10 has not previously been registered under the Securities
Act of 1933, as amended (the "Securities Act"), then Parent shall file a
registration statement on Form S-3 or Form S-8, as the case may be (or any
successor or other appropriate forms), or another appropriate form with respect
to the Parent Common Stock subject to such Parent Options, and shall use its
best efforts to maintain the effectiveness of such registration statements (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as the Parent Options remain outstanding.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each of Parent
and Acquisition as follows:
SECTION 2.1. Organization and Qualification; Subsidiaries.
(a) The Company and each of its subsidiaries (as defined in
Section 7.10), is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its businesses as now being conducted, except where the failure
to be so organized, existing and in good standing or to have such power and
authority would not have a Company Material Adverse Effect (as defined below).
When used in connection with the Company or its subsidiaries, the term "Company
Material Adverse Effect" means any change or effect (i) that is materially
adverse to the properties, business, results of operations or financial
condition of the Company and its subsidiaries, taken as whole, other than any
change or effect arising out of general economic conditions or conditions
generally affecting the cardiovascular medical device market or (ii) that would
impair the ability of the Company to consummate the transactions contemplated
hereby.
(b) Except as set forth in Section 2.1(b) of the Disclosure
Schedule previously delivered by the Company to Parent (the "Company Disclosure
Schedule"), the Company has no subsidiaries and does not own, directly or
indirectly, beneficially or of record, any shares of capital stock or other
security of any other entity or any other investment in any other entity.
(c) Each of the Company and its subsidiaries is duly qualified
or licensed and in good standing to do business in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing would not have a Company Material Adverse Effect.
(d) The Company has heretofore delivered to Parent accurate
and complete copies of the certificate of incorporation and by-laws, as
currently in effect, of each of the Company and each of its subsidiaries.
SECTION 2.2. Capitalization of the Company and its
Subsidiaries.
(a) The authorized capital stock of the Company consists of:
35,000,000 Shares, of which, as of October 15, 1996, 20,959,260 Shares were
issued and outstanding, and 5,000,000 shares of preferred stock, par value
$0.001 per share (the "Company Preferred Stock"), of which, as of the date
hereof, none are issued and outstanding. All of the issued and outstanding
Shares have been validly issued, and are fully paid, nonassessable and free of
preemptive rights. As of October 15, 1996, 2,782,116 Shares were reserved for
issuance and issuable upon or otherwise deliverable in connection with the
exercise of outstanding Company Stock Options issued pursuant to the Company
Plans, 78,813 Shares were reserved for issuance under the Company's 1991
Employee Stock Purchase Plan (the "ESPP") and 3,345,455 Shares were reserved for
issuance pursuant to the conversion of the Company's 5-3/4% Convertible
Subordinated Notes due August 15, 2001 (the "Convertible Notes"). The final
purchase by participants under the ESPP will occur no later than the business
day immediately preceding the Effective Time. The ESPP will terminate at the
Effective Time. A total of 35,000 shares of Preferred Stock have been designated
as Series A Participating Preferred Stock and reserved for issuance in
connection with the exercise of the Rights (as defined in Section 2.20). Except
as set forth in Section 2.2(a) of the Company Disclosure Schedule, since October
15, 1996, no shares of the Company's capital stock have been issued other than
pursuant to stock options already in existence on October 15, 1996, and no stock
options have been granted. Except as set forth above or as set forth in Section
2.2(a) of the Company Disclosure Schedule, as of the date hereof, there are
outstanding (i) no shares of capital stock or other voting securities of the
Company, (ii) no securities of the Company or its subsidiaries convertible into
or exchangeable for shares of capital stock or voting securities of the Company,
(iii) no options or other rights to acquire from the Company or its
subsidiaries, and no obligations of the Company or its subsidiaries to issue,
any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of the Company, and (iv) no
equity equivalents, interests in the ownership or earnings of the Company or its
subsidiaries or other similar rights (including stock appreciation rights)
(collectively, "Company Securities"). There are no outstanding obligations of
the Company or its subsidiaries to repurchase, redeem or otherwise acquire any
Company Securities. Except as set forth in Section 2.2(a) of the Company
Disclosure Schedule, there are no stockholder agreements, voting trusts or other
agreements or understandings to which the Company is a party or to which it is
bound relating to the voting of any shares of capital stock of the Company.
(b) All of the outstanding capital stock of the Company's
subsidiaries is owned by the Company, directly or indirectly, free and clear of
any Lien (as defined below) or any other limitation or restriction (including
any restriction on the right to vote or sell the same, except as may be provided
as a matter of law). There are no securities of the Company or its subsidiaries
convertible into or exchangeable for, no options or other rights to acquire from
the Company or its subsidiaries, and no other contract, understanding,
arrangement or obligation (whether or not contingent) providing for the issuance
or sale, directly or indirectly, of any capital stock or other ownership
interests in, or any other securities of, any subsidiary of the Company. There
are no outstanding contractual obligations of the Company or its subsidiaries to
repurchase, redeem or otherwise acquire any outstanding shares of capital stock
or other ownership interests in any subsidiary of the Company. For purposes of
this Agreement, "Lien" means, with respect to any asset (including, without
limitation, any security) any mortgage, lien, pledge, charge, security interest
or encumbrance of any kind in respect of such asset.
SECTION 2.3. Authority Relative to this Agreement.
(a) The Company has all necessary 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 the Board of Directors of the Company (the "Company
Board") and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby (other than, with respect to the Merger, the approval and
adoption of this Agreement by the holders of a majority of the then outstanding
shares of Company Common Stock). This Agreement has been duly and validly
executed and delivered by the Company and constitutes a valid, legal and binding
agreement of the Company, enforceable against the Company in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles (the "Bankruptcy and Equity
Exception").
(b) The Company Board has, by unanimous vote of those present,
duly and validly approved, and taken all corporate actions required to be taken
by the Company Board for the consummation of, the transactions, including the
Merger, contemplated hereby and resolved to recommend that the stockholders of
the Company approve and adopt this Agreement.
SECTION 2.4. SEC Reports; Financial Statements.
(a) The Company has filed all required forms, reports and
documents with the Securities and Exchange Commission (the "SEC") since January
1, 1995, each of which has complied in all material respects with all applicable
requirements of the Securities Act and the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), each as in effect on the dates such forms, reports
and documents were filed. The Company has heretofore delivered to Parent, in the
form filed with the SEC (including any amendments thereto), (i) its Annual
Report on Form 10-K for the fiscal year ended June 30, 1996, (ii) all definitive
proxy statements relating to the Company's meetings of stockholders (whether
annual or special) held since July 1, 1995 and (iii) all other reports or
registration statements filed by the Company with the SEC since January 1, 1995
(the "Company SEC Reports"). As of their respective dates, none of such Company
SEC Reports contained any untrue statement of a material fact or omitted to
state a material fact required to be stated or incorporated by reference therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The consolidated
financial statements of the Company included in the Company SEC Reports complied
as to form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto and fairly
present, in conformity with generally accepted accounting principles ("GAAP")
applied on a consistent basis (except as may be indicated in the notes thereto),
the consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and their consolidated results of
operations and changes in financial position for the periods then ended
(subject, in the case of the unaudited interim financial statements, to normal
year-end adjustments). Since June 30, 1996, except as set forth in the Company
SEC Reports, there has not been any change, or any application or request for
any change, by the Company or any of its subsidiaries in accounting principles,
methods or policies for financial accounting or tax purposes (subject, in the
case of the unaudited interim financial statements, to normal year-end
adjustments).
(b) The Company has heretofore made available to Parent a
complete and correct copy of any material amendments or modifications, which
have not yet been filed with the SEC, to agreements, documents or other
instruments which previously had been filed by the Company with the SEC pursuant
to the Exchange Act.
SECTION 2.5. Information Supplied. None of the information
supplied or to be supplied by the Company for inclusion or incorporation by
reference in (i) the registration statement on Form S-4 to be filed with the SEC
by Parent in connection with the issuance of shares of Parent Common Stock in
the Merger (the "S-4") will, at the time the S-4 is filed with the SEC and at
the time it becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
(ii) the proxy statement relating to the meeting of the Company's stockholders
to be held in connection with the Merger (the "Proxy Statement"), will, at the
date mailed to stockholders and at the time of the meeting of stockholders of
the Company to be held in connection with the Merger, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. If at any time
prior to the Effective Time any event with respect to the Company, its officers
and directors or any of its subsidiaries should occur which is required to be
described in an amendment of, or a supplement to, the S-4 or the Proxy
Statement, the Company shall promptly so advise Parent and such event shall be
so described, and such amendment or supplement (which Parent shall have a
reasonable opportunity to review) shall be promptly filed with the SEC and, as
required by law, disseminated to the stockholders of the Company. The Proxy
Statement, insofar as it relates to the meeting of the Company's stockholders to
vote on the Merger, will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder.
SECTION 2.6. Consents and Approvals; No Violations. Except for
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Securities Act, the Exchange
Act, state securities or blue sky laws, the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), the filing and recordation
of the Certificate of Merger as required by the DGCL and as otherwise set forth
in Section 2.6 to the Company Disclosure Schedule, no filing or registration
with or notice to, and no permit, authorization, consent or approval of, any
court or tribunal or administrative, governmental or regulatory body, agency,
commission or authority (a "Governmental Entity") is necessary for the execution
and delivery by the Company of this Agreement or the consummation by the Company
of the transactions contemplated hereby, except where the failure to obtain such
permits, authorizations, consents or approvals or to make such filings or give
such notice would not have a Company Material Adverse Effect. Except as set
forth in Section 2.6 to the Company Disclosure Schedule, neither the execution,
delivery and performance of this Agreement by the Company nor the consummation
by the Company of the transactions contemplated hereby will (i) conflict with or
result in any breach of any provision of the respective certificate or articles
of incorporation or bylaws (or similar governing documents) of the Company or
any of its subsidiaries, (ii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, amendment, cancellation or acceleration or Lien)
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which the Company or any of its subsidiaries is a party or by which any of
them or any of their respective properties or assets may be bound, or (iii)
violate any order, writ, injunction, decree, law, statute, rule or regulation
applicable to the Company or any of its subsidiaries or any of their respective
properties or assets, except in the case of (ii) or (iii) for violations,
breaches or defaults which would not have a Company Material Adverse Effect.
SECTION 2.7. No Default. None of the Company or its
subsidiaries is in default or violation (and no event has occurred which with
notice or the lapse of time or both would constitute a default or violation) of
any term, condition or provision of (i) its certificate or articles of
incorporation or bylaws (or similar governing documents), (ii) any note, bond,
mortgage, indenture, lease, license, contract, agreement or other instrument or
obligation to which the Company or any of its subsidiaries is now a party or by
which any of them or any of their respective properties or assets may be bound
or (iii) any order, writ, injunction, decree, law, statute, rule or regulation
applicable to the Company, its subsidiaries or any of their respective
properties or assets, except in the case of (ii) or (iii) for violations,
breaches or defaults that would not have a Company Material Adverse Effect.
SECTION 2.8. No Undisclosed Liabilities; Absence of Changes.
Except as and to the extent publicly disclosed by the Company in the Company SEC
Reports, as of June 30, 1996, none of the Company or its subsidiaries had any
liabilities or obligations of any nature, whether or not accrued, contingent or
otherwise, and whether due or to become due or asserted or unasserted, which
would be required by GAAP to be reflected in, reserved against or otherwise
described in the consolidated balance sheet of the Company (including the notes
thereto) as of such date. Except as publicly disclosed by the Company in the
Company SEC Reports, since the date of the end of the period covered by the
latest Company SEC Report, (i) the business of the Company and its subsidiaries
has been carried on only in the ordinary and usual course, and (ii) to the
knowledge of the Company, none of the Company or its subsidiaries has incurred
any liabilities of any nature, whether or not accrued, contingent or otherwise,
and there have been no events, changes or effects with respect to the Company or
its subsidiaries, which would have a Company Material Adverse Effect. For
purposes of this Agreement, "knowledge of the Company" means the actual
knowledge of any executive officer or member of the Company Board as listed in
Section 2.8 of the Company Disclosure Schedule.
SECTION 2.9. Litigation. Except as publicly disclosed by the
Company in the Company SEC Reports or disclosed in Section 2.9 of the Company
Disclosure Schedule, there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of the Company, threatened against
the Company or any of its subsidiaries or any of their respective properties or
assets which (i) would have, individually or in the aggregate, a Company
Material Adverse Effect or (ii) as of the date hereof, questions the validity of
this Agreement or any action to be taken by the Company in connection with the
consummation of the transactions contemplated hereby or could otherwise prevent
or delay the consummation of the transactions contemplated by this Agreement.
Except as publicly disclosed by the Company, none of the Company or its
subsidiaries is subject to any outstanding order, writ, injunction or decree
which would have a Company Material Adverse Effect or would prevent or delay the
consummation of the transactions contemplated hereby.
SECTION 2.10. Compliance with Applicable Law. Except as
publicly disclosed by the Company in the Company SEC Reports, the Company and
its subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities necessary for the conduct of their
respective businesses as presently conducted (the "Company Permits"), except for
failures to hold such permits, licenses, variances, exemptions, orders and
approvals which would not have a Company Material Adverse Effect. Except as
publicly disclosed by the Company in the Company SEC Reports, the Company and
its subsidiaries are in compliance with the terms of the Company Permits, except
where the failure so to comply would have a Company Material Adverse Effect.
Except as publicly disclosed by the Company in the Company SEC Reports, the
businesses of the Company and its subsidiaries are not being conducted in
violation of any law, ordinance or regulation of any Governmental Entity except
that no representation or warranty is made in this Section 2.10 with respect to
Environmental Laws (as defined in Section 2.12(a)) and except for violations or
possible violations which would not have a Company Material Adverse Effect.
Except as publicly disclosed by the Company in the Company SEC Reports or as
disclosed in Section 2.10 of the Company Disclosure Schedule, to the knowledge
of the Company, no investigation or review by any Governmental Entity with
respect to the Company or its subsidiaries is pending or threatened, nor, to the
knowledge of the Company, has any Governmental Entity indicated an intention to
conduct the same, other than, in each case, those which would not have a Company
Material Adverse Effect.
SECTION 2.11. Employee Plans.
(a) Section 2.11(a) of the Company Disclosure Schedule lists
all "employee benefit plans," as defined in Section 3(3) of ERISA, and all other
employee benefit plans or other benefit arrangements, including executive
compensation, directors' benefit, bonus or other incentive compensation,
severance and deferred compensation plans and practices which the Company or any
of its subsidiaries maintains, contributes to or has any obligation to or
liability for (each an "Employee Benefit Plan" and collectively, the "Employee
Benefit Plans").
(b) True, correct and complete copies or descriptions of each
Employee Benefit Plan (and, where applicable, the most recent summary plan
description, actuarial report, determination letter, most recent Form 5500 and
trust agreement) have been delivered or made available to Parent for review
prior to the date hereof.
(c) As of the date hereof, except as disclosed on Section
2.11(c) of the Company Disclosure Schedule, (i) all material payments required
to be made by or under any Employee Benefit Plan or any related trusts have been
made; (ii) the Company and its subsidiaries have performed all material
obligations required to be performed by them under any Employee Benefit Plan;
(iii) the Employee Benefit Plans, have been administered in material compliance
with their terms and the requirements of ERISA, the Code and other applicable
laws; (iv) there are no material actions, suits, arbitrations or claims (other
than routine claims for benefit) pending or threatened with respect to any
Employee Benefit Plan; and (v) the Company and its subsidiaries have no material
liability as a result of any "prohibited transaction" (as defined in Section 406
of ERISA and Section 4975 of the Code) for any excise tax or civil penalty.
(d) Except as disclosed on Section 2.11(d) of the Company
Disclosure, none of the Employee Benefit Plans is subject to Title IV of ERISA.
(e) Except as set forth on Section 2.11(e) of the Company
Disclosure Schedule, the Company and its subsidiaries have not incurred any
unsatisfied withdrawal liability with respect to any Multiemployer Plan.
(f) Except as set forth on Section 2.11(f) of the Company
Disclosure Schedule, each of the Employee Benefit Plans which is intended to be
"qualified" within the meaning of Section 401(a) of the Code has been determined
by the Internal Revenue Service to be so "qualified" and the Company knows of no
fact which would adversely affect the qualified status of any such Employee
Benefit Plan.
(g) Except as set forth on Section 2.11(g) of the Company
Disclosure Schedule, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (i) result in any
material payment becoming due, or materially increase the amount of compensation
due, to any current or former employee of the Company or any of its
subsidiaries; (ii) materially increase any benefits otherwise payable under any
Employee Benefit Plan; or (iii) result in the acceleration of the time of
payment or vesting of any such material benefits.
SECTION 2.12. Environmental Laws and Regulations.
(a) Except as publicly disclosed by the Company in the Company
SEC Reports, (i) each of the Company and its subsidiaries is in compliance with
all applicable federal, state and local laws and regulations relating to
pollution, the protection of human health from the effects of pollution or the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata) (collectively, "Environmental Laws"),
except for non-compliance that would not have a Company Material Adverse Effect,
which compliance includes, but is not limited to, the possession by the Company
and its subsidiaries of all material permits and other governmental
authorizations required under applicable Environmental Laws necessary for the
operation of its business as presently conducted, and compliance with the terms
and conditions thereof; (ii) none of the Company or its subsidiaries has
received written notice of, or, to the knowledge of the Company, is the subject
of, any action, cause of action, claim, investigation, demand or notice by any
person or entity alleging liability under or non-compliance with any
Environmental Law (an "Environmental Claim") that would have a Company Material
Adverse Effect; and (iii) to the knowledge of the Company, there are no
circumstances that are reasonably likely to prevent or interfere with such
material compliance in the future.
(b) Except as publicly disclosed by the Company in the Company
SEC Reports, there are no Environmental Claims which would have a Company
Material Adverse Effect that are pending or, to the knowledge of the Company,
threatened against the Company or its subsidiaries or, to the knowledge of the
Company, against any person or entity whose liability for any Environmental
Claim the Company or any of its subsidiaries has or may have retained or assumed
either contractually or by operation of law.
SECTION 2.13. Tax Matters.
(a) The Company and each of its subsidiaries has timely filed
all Federal income tax returns and all other material tax returns and reports
required to be filed by it. All such tax returns are complete and correct in all
material respects. The Company and each of its subsidiaries has paid (or the
Company has paid on its subsidiaries' behalf) all taxes shown due on such tax
returns. The most recent consolidated financial statements contained in the
Company SEC Reports reflect an adequate reserve for all taxes payable by the
Company and its subsidiaries for all taxable periods and portions thereof
through the date of such financial statements. The Company has previously
delivered to Parent copies of the Federal and California income tax returns
filed by the Company for its taxable years ended in 1993, 1994 and 1995. For
purposes of this Agreement, "tax" or "taxes" shall mean all taxes, charges,
fees, imposts, levies, gaming or other assessments, including, without
limitation, all net income, gross receipts, capital, sales, use, ad valorem,
value added, transfer, franchise, profits, inventory, capital stock, license,
withholding, payroll, employment, social security, unemployment, excise,
severance, stamp, occupation, property and estimated taxes, customs duties,
fees, assessments and charges of any kind whatsoever, together with any interest
and any penalties, fines, additions to tax or additional amounts imposed by any
taxing authority (domestic or foreign). "Tax returns" shall mean any report,
return, document, declaration or any other information or filing required to be
supplied to any taxing authority or jurisdiction (foreign or domestic) with
respect to taxes, including without limitation, information returns, any
document with respect to or accompanying payments or estimated taxes, or with
respect to or accompanying requests for the extension of time in which to file
any such report, return document, declaration or other information.
(b) Except as disclosed on Section 2.13 of the Company
Disclosure Schedule, no material deficiencies for any taxes have been proposed,
asserted or assessed against the Company or any of its subsidiaries that have
not been fully paid or adequately provided for in the appropriate financial
statements of the Company and its subsidiaries, no requests for waivers of the
time to assess any taxes are pending, and no power of attorney with respect to
any taxes has been executed or filed with any taxing authority. No material
issues relating to taxes have been raised in writing by the relevant taxing
authority during any presently pending audit or examination. None of the Federal
income tax returns of the Company or any of its subsidiaries consolidated in
such tax returns has been examined by the Internal Revenue Service.
(c) No material liens for taxes exist with respect to any
assets or properties of the Company or any of its subsidiaries, except for
statutory liens for taxes not yet due.
(d) Except as disclosed on Section 2.13 of the Company
Disclosure Schedule and other than with respect to contractual tax indemnity
obligations of the Company and its subsidiaries involving claims for state and
local taxes which are not material in amount, none of the Company or any of its
subsidiaries is a party to or is bound by any tax sharing agreement, tax
indemnity obligation or similar agreement, arrangement or practice with respect
to taxes (including any advance pricing agreement, closing agreement or other
agreement relating to taxes with any taxing authority).
(e) None of the Company or any of its subsidiaries has taken
or agreed to take any action that would prevent the Merger from constituting a
reorganization qualifying under the provisions of Section 368(a) of the Code.
(f) Except as disclosed in Section 2.13 of the Company
Disclosure Schedule, there are no employment, severance or termination
agreements, other compensation arrangements or Employee Benefit Plans currently
in effect which provide for the payment of any amount (whether in cash or
property or the vesting of property) as a result of any of the transactions
contemplated by this Agreement to any employee, officer or director of the
Company or any of its affiliates who is a "disqualified individual" (as such
term is defined in Section 280G(c) of the Code), that would be characterized as
an "excess parachute payment" (as such term is defined in Section 280G(b)(1) of
the Code).
(g) Except as disclosed in Section 2.13 of the Company
Disclosure Schedule, no Federal, state, local or foreign audits or other
administrative proceedings or court proceedings are presently pending with
regard to any Federal income or material state, local or foreign taxes or tax
returns of the Company or any of its subsidiaries and neither the Company nor
any of its subsidiaries has received a written notice of any pending audit or
proceeding with regard to any federal income or material state, local or foreign
taxes or tax returns of the Company or any of its subsidiaries.
(h) Neither the Company nor any of its subsidiaries has agreed
to or is required to make any adjustment under Section 481(a) of the Code.
(i) Neither the Company nor any of its subsidiaries has (i)
with regard to any assets or property held or acquired by any of them, filed a
consent to the application of Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as such term is defined in Section 341(f)(4) of the Code) owned by the Company
or any of its subsidiaries or (ii) received, or filed any requests for, rulings
or determinations in respect of any taxes within the last five years.
(j) No property owned by the Company or any of its
subsidiaries (i) is property required to be treated as being owned by another
Person pursuant to the provisions of Section 168(f)(8) of the Internal Revenue
Code of 1954, as amended and in effect immediately prior to the enactment of the
Tax Reform Act of 1986; (ii) constitutes "tax exempt use property" within the
meaning of Section 168(h)(1) of the Code; or (iii) is "tax exempt bond financed
property" within the meaning of Section 168(g) of the Code.
(k) The Company and each of its subsidiaries are not
currently, have not been within the last five years, and do not anticipate
becoming a "United States real property holding company" within the meaning of
Section 897(c) of the Code.
(l) No subsidiary of the Company owns any Shares.
SECTION 2.14. Intangible Property. To the Company's knowledge,
the Company and its subsidiaries own or possess adequate licenses or other valid
rights to use all patents, patent rights, trademarks, trademark rights, trade
names, trade name rights, copyrights, service marks, trade secrets, applications
for trademarks and for service marks, know-how and other proprietary rights and
information used or held for use in connection with the business of the Company
and its subsidiaries as currently conducted, except for failures to own or
possess adequate licenses or other valid rights to use any of the foregoing
which would not have a Company Material Adverse Effect, and, except as set forth
in the Company SEC Reports or Section 2.14 of the Company Disclosure Schedule,
to the knowledge of the Company there are no pending assertions or claims
challenging the validity of any of the foregoing which would have a Company
Material Adverse Effect. Except as disclosed in Section 2.14 of the Company
Disclosure Schedule, to the Company's knowledge, there are no current claims or
notices that the manufacture and sale of the Company's products infringes the
patents of any third party.
SECTION 2.15. Opinion of Financial Advisor. Goldman, Sachs &
Co. (the "Financial Advisor") has delivered to the Company Board its opinion to
the effect that, as of the date of such opinion, the Exchange Ratio is fair to
the holders of Shares, and such opinion has not been withdrawn.
SECTION 2.16. Brokers. No broker, finder or investment banker
(other than the Financial Advisor, a true and correct copy of whose engagement
agreement has been provided to Parent) is entitled to any brokerage, finder's or
other fee or commission or expense reimbursement in connection with the
transactions contemplated by this Agreement based upon arrangements made by and
on behalf of the Company or any of its affiliates.
SECTION 2.17. Accounting Matters. Neither the Company nor, to
the best of its knowledge, any of its affiliates or stockholders (including the
Company Affiliates), has taken or agreed to take any action that would prevent
Parent from accounting for the business combination to be effected by the Merger
as a "pooling-of-interests." The Company has not failed to bring to the
attention of Parent any actions, or agreements or understandings, whether
written or oral, to act that would be reasonably likely to prevent Parent from
accounting for the Merger as a "pooling-of-interests."
SECTION 2.18. Material Contracts.
(a) The Company has filed as an exhibit to an Annual Report on
Form 10- K or another document filed pursuant to the Securities Act or the
Exchange Act, or has delivered or otherwise made available to Parent true,
correct and complete copies of all contracts and agreements to which the Company
or any of its subsidiaries is a party that are required to be filed in an
exhibit to an Annual Report on Form 10-K filed by the Company with the SEC as of
the date of this Agreement (the "Contracts"). The Contracts include any
severance or other agreement with any employee or consultant pursuant to which
such person would be entitled to receive any additional compensation or an
accelerated payment of compensation as a result of the consummation of the
transactions contemplated hereby.
(b) Each of the Contracts is valid and enforceable in
accordance with its terms, and there is no default under any Contract so listed
either by the Company or, to the knowledge of the Company, by any other party
thereto, and no event has occurred that with the lapse of time or the giving of
notice or both would constitute a default thereunder by the Company or, to the
knowledge of the Company, any other party, in any such case in which such
default or event would have a Company Material Adverse Effect.
(c) No party to any such Contract has given notice to the
Company of or made a claim against the Company with respect to any breach or
default thereunder, in any such case in which such breach or default would have
a Company Material Adverse Effect.
SECTION 2.19. Products. Except as disclosed in the Company SEC
Reports:
(a) Each of the products currently being produced or sold by
the Company and its subsidiaries (i) is in compliance in all material respects
with all applicable U.S. federal, state and local laws and regulations and (ii)
conforms in all material respects to any promises or affirmations of fact made
on the container or label for such product or in connection with its sale;
(b) To the knowledge of the Company, no facts exist which
would reasonably be expected to furnish a substantial basis for the recall,
withdrawal or suspension by the Company or any of its subsidiaries of any such
product as a result of, or in order to comply with, any U.S. federal, state or
local law, regulation or rule or order of any Governmental Entity, except for
such recalls, withdrawals or suspensions as would not have a Company Material
Adverse Effect;
(c) Section 2.19 of the Company Disclosure Schedule sets forth
a list of all licenses and approvals granted by or pending with any Governmental
Entity in any country to market any product of the Company and its subsidiaries
(the "Company Product Registrations"). All products sold under the Company
Product Registrations are manufactured and marketed in all material respects in
accordance with the specifications and standards contained in the Company
Product Registrations. The Company and its subsidiaries have the sole rights
under the Company Product Registrations and such registrations are in full force
and effect; and
(d) Except as disclosed in Section 2.19 of the Company
Disclosure Schedule, since January 1, 1993, there have been no statements,
citations, warning letters, FDA Forms 483, or decisions by any Governmental
Entity that any product produced, manufactured, marketed or distributed at any
time by the Company or any of its subsidiaries is defective or fails to meet any
applicable standards promulgated by any such Governmental Entity. Except as
disclosed in Section 2.19 of the Company Disclosure Schedule, there is no
proceeding by the FDA or any other Governmental Entity, including, but not
limited to, a grand jury investigation, a 405 hearing or a civil penalty
proceeding, pending, or to the Company's knowledge threatened, against the
Company or any of its subsidiaries, and no such proceedings have been brought at
any time in the past relating to the safety or efficacy of the products of the
Company and its subsidiaries and, to the Company's knowledge, there is no basis
for such a proceeding.
SECTION 2.20. Amendment to Rights Agreement. The Company Board
has taken all necessary action to amend the Rights Agreement, dated as of August
16, 1994, as amended, between the Company and Chemical Trust Company of
California, as Rights Agent (the "Rights Agreement") so that none of the
execution or delivery of this Agreement, the exchange of Parent Common Stock for
the Shares in accordance with Article I, or any other transaction contemplated
hereby will cause (i) the rights (the "Rights") issued pursuant to the Rights
Agreement to become exercisable under the Rights Agreement, (ii) Parent or
Acquisition to be deemed an "Acquiring Person" (as defined in the Rights
Agreement), or (iii) the "Shares Acquisition Date" (as defined in the Rights
Agreement) to occur upon any such event. The "Expiration Date" (as defined in
the Rights Agreement) of the Rights shall occur immediately prior to the
Effective Time.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF PARENT AND ACQUISITION
Parent and Acquisition hereby represent and warrant to the
Company as follows:
SECTION 3.1. Organization.
(a) Each of Parent and its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
businesses as now being conducted, except where the failure to be so organized,
existing and in good standing or to have such power and authority would not have
a Parent Material Adverse Effect (as defined below). When used in connection
with Parent or Acquisition, the term "Parent Material Adverse Effect" means any
change or effect that is (i) materially adverse to the properties, business,
results of operations or financial condition of Parent and its subsidiaries,
taken as a whole, other than any change or effect arising out of general
economic conditions unrelated to any businesses in which Parent and its
subsidiaries are engaged or (ii) that would impair the ability of Parent and/or
Acquisition to consummate the transactions contemplated hereby. The parties
acknowledge and agree that a decrease in the market value of the Parent Common
Stock will not, in and of itself, constitute a Parent Material Adverse Effect.
(b) Except as set forth in Section 3.1(b) of the Disclosure
Schedule previously delivered by Parent to the Company (the "Parent Disclosure
Schedule"), Parent has no subsidiaries and does not own, directly or indirectly,
beneficially or of record, any shares of capital stock or other security of any
other entity or any other investment in any other entity.
(c) Each of Parent and its subsidiaries is duly qualified or
licensed and in good standing to do business in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing would not have a Parent Material Adverse Effect.
(d) Parent has heretofore delivered to the Company accurate
and complete copies of the articles of incorporation and by-laws, as currently
in effect, of Parent.
SECTION 3.2. Capitalization of Parent and its Subsidiaries.
(a) The authorized capital stock of Parent consists of (i)
250,000,000 shares of Parent Common Stock, of which, as of September 30, 1996,
80,976,337 shares of Parent Common Stock were issued and outstanding, and (ii)
25,000,000 shares of preferred stock, $.01 par value per share, of which, as of
the date hereof, none are issued and outstanding. All of the shares of Parent
Common Stock have been validly issued, and are fully paid, nonassessable and
free of preemptive rights. As of September 30, 1996, 5,155,986 shares of Parent
Common Stock were reserved for issuance and issuable upon or otherwise
deliverable in connection with the exercise of outstanding options and 494,442
shares of Parent Common Stock were reserved for issuance in connection with
Parent's employee stock purchase savings plan. Except as set forth in Section
3.2 of the Parent Disclosure Schedule since September 30, 1996, no shares of
Parent's capital stock have been issued other than pursuant to stock options
already in existence on September 30, 1996, and no stock options have been
granted. Except as set forth above or as described in Section 3.2 of the Parent
Disclosure Schedule, as of the date hereof, there are outstanding (i) no shares
of capital stock or other voting securities of Parent, (ii) no securities of
Parent or its subsidiaries convertible into or exchangeable for shares of
capital stock or voting securities of Parent, (iii) no options or other rights
to acquire from Parent or its subsidiaries, and no obligations of Parent or its
subsidiaries to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of
Parent, and (iv) no equity equivalents, interests in the ownership or earnings
of Parent or its subsidiaries or other similar rights (including stock
appreciation rights) (collectively, "Parent Securities"). There are no
outstanding obligations of Parent or any of its subsidiaries to repurchase,
redeem or otherwise acquire any Parent Securities. Except as set forth in
Section 3.2 of the Parent Disclosure Schedule, there are no stockholder
agreements, voting trusts or other agreements or understandings to which Parent
is a party or to which it is bound relating to the voting of any shares of
capital stock of Parent.
(b) All of the outstanding capital stock of Parent's
subsidiaries (including Acquisition) is owned by Parent, directly or indirectly,
free and clear of any Lien or any other limitation or restriction (including any
restriction on the right to vote or sell the same, except as may be provided as
a matter of law). There are no securities of Parent or its subsidiaries
convertible into or exchangeable for, no options or other rights to acquire from
Parent or its subsidiaries, and no other contract, understanding, arrangement or
obligation (whether or not contingent) providing for the issuance or sale,
directly or indirectly, of any capital stock or other ownership interests in, or
any other securities of, any subsidiary of Parent. There are no outstanding
contractual obligations of Parent or its subsidiaries to repurchase, redeem or
otherwise acquire any outstanding shares of capital stock or other ownership
interests in any subsidiary of Parent.
SECTION 3.3. Authority Relative to this Agreement. Each of
Parent and Acquisition has all necessary 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 the boards of directors of Parent and Acquisition and by Parent as
the sole stockholder of Acquisition, and no other corporate proceedings on the
part of Parent or Acquisition are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by each of Parent and Acquisition and
constitutes a valid, legal and binding agreement of each of Parent and
Acquisition, enforceable against each of Parent and Acquisition in accordance
with its terms, subject to the Bankruptcy and Equity Exception.
SECTION 3.4. SEC Reports; Financial Statements.
(a) Parent has filed all required forms, reports and documents
with the SEC since January 1, 1995, each of which has complied in all material
respects with all applicable requirements of the Securities Act and the Exchange
Act, each as in effect on the dates such forms, reports and documents were
filed. Parent has heretofore delivered to the Company, in the form filed with
the SEC (including any amendments thereto), (i) its Annual Reports on Form 10-K
for the fiscal year ended December 31, 1995, (ii) all definitive proxy
statements relating to Parent's meetings of stockholders (whether annual or
special) held since January 1, 1996 and (iii) all other reports or registration
statements filed by Parent with the SEC since January 1, 1995 (the "Parent SEC
Reports"). As of their respective dates, none of such Parent SEC Reports
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated or incorporated by reference therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The consolidated financial statements of Parent
included in the Parent SEC Reports complied as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto and fairly present, in conformity with GAAP
applied on a consistent basis (except as may be indicated in the notes thereto),
the consolidated financial position of Parent and its consolidated subsidiaries
as of the dates thereof and their consolidated results of operations and changes
in financial position for the periods then ended (subject, in the case of the
unaudited interim financial statements, to normal year-end adjustments). Since
December 31, 1995, except as set forth in the Parent SEC Reports, there has not
been any change, or any application or request for any change, by Parent or any
of its subsidiaries in accounting principles, methods or policies for financial
accounting or tax purposes.
(b) Parent has heretofore made available to the Company a
complete and correct copy of any material amendments or modifications, which
have not yet been filed with the SEC, to agreements, documents or other
instruments which previously had been filed by Parent with the SEC pursuant to
the Exchange Act.
SECTION 3.5. Information Supplied. None of the information
supplied or to be supplied by Parent or Acquisition for inclusion or
incorporation by reference in (i) the S-4 will, at the time the S-4 is filed
with the SEC and at the time it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading and (ii) the Proxy Statement will, at the date mailed to
stockholders and at the time of the meeting of stockholders of the Company to be
held in connection with the Merger, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. If at any time prior to the Effective
Time any event with respect to Parent, its officers and directors or any of its
subsidiaries should occur which is required to be described in an amendment of,
or a supplement to, the S-4 or the Proxy Statement, Parent shall promptly so
advise the Company and such event shall be so described, and such amendment or
supplement (which the Company shall have a reasonable opportunity to review)
shall be promptly filed with the SEC. The S-4 will comply as to form in all
material respects with the provisions of the Securities Act and the rules and
regulations thereunder.
SECTION 3.6. Consents and Approvals; No Violations. Except for
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Securities Act, the Exchange
Act, state securities or blue sky laws, the HSR Act, the filing and recordation
of the Certificate of Merger as required by the DGCL and as otherwise set forth
in Section 3.6 to the Parent Disclosure Schedule, no filing or registration with
or notice to, and no permit, authorization, consent or approval of, any
Governmental Entity is necessary for the execution and delivery by Parent or
Acquisition of this Agreement or the consummation by Parent or Acquisition of
the transactions contemplated hereby, except where the failure to obtain such
permits, authorizations, consents or approvals or to make such filings or give
such notice would not have a Parent Material Adverse Effect. Except as set forth
in Section 3.6 of the Parent Disclosure Schedule, neither the execution,
delivery and performance of this Agreement by Parent or Acquisition nor the
consummation by Parent or Acquisition of the transactions contemplated hereby
will (i) conflict with or result in any breach of any provision of the
respective articles of incorporation or bylaws (or similar governing documents)
of Parent or Acquisition or any of Parent's subsidiaries, (ii) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration or Lien) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which Parent or Acquisition or
any of Parent's subsidiaries is a party or by which any of them or any of their
respective properties or assets may be bound or (iii) violate any order, writ,
injunction, decree, law, statute, rule or regulation applicable to Parent or
Acquisition or any of Parent's subsidiaries or any of their respective
properties or assets, except in the case of (ii) or (iii) for violations,
breaches or defaults which would not have a Parent Material Adverse Effect.
SECTION 3.7. No Default. None of the Parent or its
subsidiaries is in default or violation (and no event has occurred which with
notice or the lapse of time or both would constitute a default or violation) of
any term, condition or provision of (i) its certificate or articles of
incorporation or bylaws (or similar governing documents), (ii) any note, bond,
mortgage, indenture, lease, license, contract, agreement or other instrument or
obligation to which Parent or any of its subsidiaries is now a party or by which
any of them or any of their respective properties or assets may be bound or
(iii) any order, writ, injunction, decree, law, statute, rule or regulation
applicable to Parent, its subsidiaries or any of their respective properties or
assets, except in the case of (ii) or (iii) for violations, breaches or defaults
that would not have a Parent Material Adverse Effect.
SECTION 3.8. No Undisclosed Liabilities; Absence of Changes.
Except as and to the extent publicly disclosed by Parent in the Parent SEC
Reports, as of June 30, 1996, none of Parent or its subsidiaries had any
liabilities or obligations of any nature, whether or not accrued, contingent or
otherwise, and whether due or to become due or asserted or unasserted, which
would be required by GAAP to be reflected in, reserved against or otherwise
described in the consolidated balance sheet of Parent (including the notes
thereto) as of such date. Except as publicly disclosed by Parent in the Parent
SEC Reports and except for the execution by Parent, Acquisition and certain
affiliates of Parent of that certain Asset Purchase Agreement (United States),
dated as of September 24, 1996, among Acquisition, Telectronics Pacing Systems,
Inc. and TPLC, Inc., the International Purchase Agreements referred to in such
Asset Purchase Agreement (United States) and the other agreements to be executed
pursuant to such Asset Purchase Agreement (United States) and International
Purchase Agreements (collectively, the "Telectronics Agreements"), since the
date of the end of the period covered by the latest Parent SEC Report, (i) the
business of Parent and its subsidiaries has been carried on only in the ordinary
and usual course, and (ii) to the knowledge of Parent, none of Parent or its
subsidiaries has incurred any liabilities of any nature, whether or not accrued,
contingent or otherwise, which would have, and there have been no events,
changes or effects with respect to Parent or its subsidiaries which would have,
a Parent Material Adverse Effect. For purposes of this Agreement, "knowledge of
the Parent" means the actual knowledge of any executive officer or member of the
Board of Directors of the Parent as listed in Section 3.8 of the Parent
Disclosure Schedule.
SECTION 3.9. Litigation. Except as publicly disclosed by
Parent in the Company SEC Reports or disclosed in Section 3.9 of the Parent
Disclosure Schedule, there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of Parent, threatened against Parent
or any of its subsidiaries or any of their respective properties or assets which
(i) would have, individually or in the aggregate, a Parent Material Adverse
Effect or (ii) as of the date hereof, questions the validity of this Agreement
or any action to be taken by Parent in connection with the consummation of the
transactions contemplated hereby or could otherwise prevent or delay the
consummation of the transactions contemplated by this Agreement. Except as
publicly disclosed by Parent, none of Parent or its subsidiaries is subject to
any outstanding order, writ, injunction or decree which would have a Parent
Material Adverse Effect or would prevent or delay the consummation of the
transactions contemplated hereby.
SECTION 3.10. Compliance with Applicable Law. Except as
publicly disclosed by Parent in the Parent SEC Reports, Parent and its
subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities necessary for the conduct of their
respective businesses as presently conducted (the "Parent Permits"), except for
failures to hold such permits, licenses, variances, exemptions, orders and
approvals which would have a Parent Material Adverse Effect. Except as publicly
disclosed by Parent in the Parent SEC Reports, Parent and its subsidiaries are
in compliance with the terms of the Parent Permits, except where the failure so
to comply would not have a Parent Material Adverse Effect. Except as publicly
disclosed by Parent in the Parent SEC Reports, the businesses of Parent and its
subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any Governmental Entity, except for violations or possible
violations which would not have a Parent Material Adverse Effect. Except as
publicly disclosed by Parent in the Parent SEC Reports, to the knowledge of
Parent, no investigation or review by any Governmental Entity with respect to
Parent or its subsidiaries is pending or threatened, nor, to the knowledge of
Parent, has any Governmental Entity indicated an intention to conduct the same,
other than, in each case, those which would not have a Parent Material Adverse
Effect.
SECTION 3.11. Tax Matters. Neither Parent nor any of its
affiliates has taken or agreed to take any action that would prevent the Merger
from constituting a reorganization qualifying under the provisions of Section
368(a) of the Code.
SECTION 3.12. Products. Except as disclosed in the Parent SEC
Reports and except for the products to be acquired pursuant to the Telectronics
Agreements, as to which no representation or warranty is being made hereunder:
(a) Each of the products currently being produced or sold by
Parent and its subsidiaries (i) is in compliance in all material respects with
all applicable U.S. federal, state and local laws and regulations and (ii)
conforms in all material respects to any promises or affirmations of fact made
on the container or label for such product or in connection with its sale;
(b) To the knowledge of Parent, no facts exist which would
reasonably be expected to furnish a substantial basis for the recall, withdrawal
or suspension by Parent or any of its subsidiaries of any such product as a
result of, or in order to comply with, any U.S. federal, state or local law,
regulation or rule or order of any Governmental Entity, except for such recalls,
withdrawals or suspensions as would not have a Parent Material Adverse Effect;
(c) All products sold under all licenses and approvals granted
by or pending with any Governmental Entity in any country to market any product
of Parent and it subsidiaries (the "Parent Product Registrations") are
manufactured and marketed in all material respects in accordance with the
specifications and standards contained in the Parent Product Registrations.
Parent and its subsidiaries have the sole rights under the Parent Product
Registrations in the United States and such registrations are in full force and
effect; and
(d) As of the date hereof, there are no pending and
unsatisfied statements, citations, warning letters, FDA Forms 483, or decisions
by any United States Governmental Entity that any product produced,
manufactured, marketed or distributed by Parent or any of its subsidiaries is
defective or fails to meet any applicable standards promulgated by any such
United States Governmental Entity. There is no proceeding by the FDA or any
other United States Governmental Agency, including, but not limited to, a grand
jury investigation, a 405 hearing or a civil penalty proceeding, pending, or to
Parent's knowledge threatened, against Parent or any of its subsidiaries,
relating to the safety or efficacy of the products of Parent and its
subsidiaries and, to Parent's knowledge, there is no basis for such a
proceeding.
SECTION 3.13. Intangible Property. To Parent's knowledge,
Parent and its subsidiaries own or possess adequate licenses or other valid
rights to use all patents, patent rights, trademarks, trademark rights, trade
names, trade name rights, copyrights, service marks, trade secrets, applications
for trademarks and for service marks, know-how and other proprietary rights and
information used or held for use in connection with the business of Parent and
its subsidiaries as currently conducted, except for failures to own or possess
adequate licenses or other valid rights to use any of the foregoing which would
not have a Parent Material Adverse Effect, and, except as set forth in the
Parent SEC Reports or Section 3.13 of the Parent Disclosure Schedule, to the
knowledge of Parent there are no pending assertions or claims challenging the
validity of any of the foregoing which would have a Parent Material Adverse
Effect. Except as disclosed in Section 3.13 of the Parent Disclosure Schedule,
to Parent's knowledge, there are no pending claims or notices that the
manufacture and sale of Parent's products infringes the patents of any third
party.
SECTION 3.14. Brokers. No broker, finder or investment banker
(other than CS First Boston) is entitled to any brokerage, finder's or other fee
or commission or expense reimbursement in connection with the transactions
contemplated by this Agreement based upon arrangements made by and on behalf of
Parent or Acquisition or any of their affiliates.
SECTION 3.15. Accounting Matters. Neither Parent nor, to the
best of its knowledge, any of its affiliates, has taken or agreed to take any
action that would prevent Parent from accounting for the business combination to
be effected by the Merger as a "pooling-of-interests." Parent has not failed to
bring to the attention of the Company any actions, or agreements or
understandings, whether written or oral, to act that would be reasonably likely
to prevent Parent from accounting for the Merger as a "pooling-of- interests."
SECTION 3.16. Telectronics Agreements. Parent has furnished to
counsel to the Company true, complete and correct copies of all Telectronics
Agreements in effect as of the date of this Agreement and any written documents,
instruments or other arrangements executed by the parties thereto in connection
therewith.
SECTION 3.17. Medtronic Agreement. The License Agreement,
dated August 26, 1992, between Medtronic Inc. and Siemens AG as assigned to
Parent on August 23, 1994 is in full force and effect and will not by its terms
terminate by reason of the Merger.
ARTICLE 4
COVENANTS
SECTION 4.1. Conduct of Business of the Company and Parent.
(a) Except as contemplated by this Agreement or Section 4.1 of
the Company Disclosure Schedule, during the period from the date hereof to the
Effective Time, the Company will, and will cause each of its subsidiaries to,
conduct its operations in the ordinary course of business consistent with past
practice and, to the extent consistent therewith, with no less diligence and
effort than would be applied in the absence of this Agreement, seek to preserve
intact its current business organizations, seek to keep available the service of
its current officers and employees and seek to preserve its relationships with
customers, suppliers and others having business dealings with it. Without
limiting the generality of the foregoing, and except as otherwise expressly
provided in this Agreement, prior to the Effective Time, neither the Company nor
any of its subsidiaries will, without the prior written consent of Parent, which
consent shall not be unreasonably withheld:
(i) amend its certificate of incorporation
or bylaws (or other similar governing instrument);
(ii) authorize for issuance, issue, sell,
deliver or agree or commit to issue, sell or deliver (whether
through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise)
any stock of any class or any other securities or equity
equivalents (including, without limitation, any stock options
or stock appreciation rights), except for the sale of up to
78,813 shares of Company Common Stock to employees under the
ESPP, the issuance of shares of Company Common Stock pursuant
to the conversion of the Convertible Notes in accordance with
the terms thereof and the issuance or sale of shares of
Company Common Stock pursuant to outstanding options granted
prior to the date hereof under the Company Plans (in each
case, in the ordinary course of business and consistent with
past practice);
(iii) split, combine or reclassify any
shares of its capital stock, declare, set aside or pay any
dividend or other distribution (whether in cash, stock or
property or any combination thereof) in respect of its capital
stock, make any other actual, constructive or deemed
distribution in respect of any shares of its capital stock or
otherwise make any payments to stockholders in their capacity
as such, or, except as set forth in Section 4.1(c) below,
redeem or otherwise acquire any of its securities or any
securities of any of its subsidiaries;
(iv) adopt a plan of complete or partial
liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the
Company or any of its subsidiaries (other than the Merger);
(v) alter through merger, liquidation,
reorganization, restructuring or in any other fashion the
corporate structure or ownership of any subsidiary in a manner
that would have a Company Material Adverse Effect;
(vi) (A) incur or assume any long-term or
short-term debt or issue any debt securities except for
borrowings under existing lines of credit in the ordinary
course of business and in amounts not material to the Company
and its subsidiaries taken as a whole; (B) assume, guarantee,
endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of
any other person except in the ordinary course of business
consistent with past practice and in amounts not material to
the Company and its subsidiaries, taken as a whole, and except
for obligations of the wholly owned subsidiaries of the
Company; (C) make any loans, advances or capital contributions
to, or investments in, any other person (other than to the
wholly owned subsidiaries of the Company or customary loans or
advances to employees in the ordinary course of business
consistent with past practice and in amounts not material to
the maker of such loan or advance); (D) pledge or otherwise
encumber shares of capital stock of the Company or its
subsidiaries; or (E) mortgage or pledge any of its material
assets, tangible or intangible, or create, grant or incur any
material Lien thereupon;
(vii) except as may be required by law or as
contemplated by this Agreement, enter into, adopt or amend or
terminate any bonus, profit sharing, compensation, severance,
termination, stock option (except for normal grants to newly
hired or current employees, consistent with past practice),
stock appreciation right, restricted stock, performance unit,
stock equivalent, stock purchase agreement, pension,
retirement, deferred compensation, employment, severance or
other employee benefit agreement, trust, plan, fund, award or
other arrangement for the benefit or welfare of any director,
officer or employee in any manner, or (except for normal
increases in the ordinary course of business consistent with
past practice that, in the aggregate, do not result in a
material increase in benefits or compensation expense to the
Company, and as required under existing agreements or in the
ordinary course of business generally consistent with past
practice) increase in any manner the compensation or fringe
benefits of any director, officer or employee or pay any
benefit not required by any plan and arrangement as in effect
as of the date hereof (including, without limitation, the
granting of stock appreciation rights or performance units);
(viii) acquire, sell, lease or dispose of
any assets outside the ordinary course of business or any
assets which in the aggregate are material to the Company and
its subsidiaries taken as a whole, enter into any commitment
or transaction outside the ordinary course of business or
grant any exclusive distribution rights;
(ix) except as may be required as a result
of a change in law or in generally accepted accounting
principles, change any of the accounting principles or
practices used by it;
(x) revalue in any material respect any of
its assets, including, without limitation, writing down the
value of inventory or writing-off notes or accounts receivable
other than in the ordinary course of business or as required
by generally accepted accounting principles;
(xi) (A) acquire (by merger, consolidation,
or acquisition of stock or assets) any corporation,
partnership or other business organization or division thereof
or any equity interest therein; (B) enter into any contract or
agreement, other than in the ordinary course of business or
amend in any material respect any of the Contracts or the
agreements referred to in Section 2.18; (C) authorize any new
capital expenditure or expenditures which, individually, is in
excess of $500,000 or, in the aggregate, are in excess of $5
million; PROVIDED, that none of the foregoing shall limit any
capital expenditure already included in the Company's fiscal
1996 or fiscal 1997 capital expenditure budget provided to
Parent prior to the date hereof; or (D) enter into or amend
any contract, agreement, commitment or arrangement providing
for the taking of any action that would be prohibited
hereunder;
(xii) make or revoke any tax election or
settle or compromise any tax liability in a manner that
involves the payment of a sum of money in excess of $100,000
or change (or make a request to any taxing authority to
change) any material aspect of its method of accounting for
tax purposes;
(xiii) pay, discharge or satisfy any
material claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction in the
ordinary course of business of liabilities reflected or
reserved against in, or contemplated by, the consolidated
financial statements (or the notes thereto) of the Company and
its subsidiaries or incurred in the ordinary course of
business consistent with past practice;
(xiv) settle or compromise any pending or
threatened suit, action or claim relating to the transactions
contemplated hereby in a manner that involves the payment of a
sum of money in excess of $100,000 or that imposes material
non-monetary obligations on the Company; or
(xv) take, propose to take, or agree in
writing or otherwise to take, any of the actions described
above or any action which would make any of the
representations or warranties of the Company contained in this
Agreement untrue or incorrect in any material respect.
(b) Except as otherwise expressly provided in this Agreement,
prior to the Effective Time, neither Parent nor any of its subsidiaries will,
without the prior written consent of the Company, which consent shall not be
unreasonably withheld:
(i) amend its certificate of incorporation
or bylaws (or other similar governing instrument);
(ii) authorize for issuance, issue, sell,
deliver or agree or commit to issue, sell or deliver (whether
through the issuance or granting of warrants, commitments,
subscriptions, rights to purchase or otherwise) any stock of
any class or any other securities or equity equivalents,
except for the sale of shares of Parent Common Stock to
employees under the Parent's employee stock purchase savings
plan, the issuance of shares of Parent Common Stock pursuant
to outstanding options granted prior to the date hereof under
the Parent's employee stock option plans and the grant of
options after the date hereof (and the issuance of shares
pursuant thereto) pursuant to such plans (in each case, in the
ordinary course of business and consistent with past
practice);
(iii) split, combine or reclassify any
shares of its capital stock, declare, set aside or pay any
dividend or other distribution (whether in cash, stock or
property or any combination thereof) in respect of its capital
stock (other than in respect of periodic regular cash
dividends), make any other actual, constructive or deemed
distribution in respect of any shares of its capital stock or
otherwise make any payments to stockholders in their capacity
as such, or redeem or otherwise acquire any of its securities
or any securities of any of its subsidiaries;
(iv) adopt a plan of complete or partial
liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of
Parent or any of its subsidiaries (other than the Merger);
(v) alter through merger, liquidation,
reorganization, restructuring or in any other fashion the
corporate structure or ownership of any subsidiary in a manner
that would have a Parent Material Adverse Effect;
(vi) except as may be required as a result
of a change in law or in generally accepted accounting
principles, change any of the accounting principles or
practices used by it; or
(vii) take, propose to take, or agree in
writing or otherwise to take, any of the actions described
above or any actions which would make any of the
representations or warranties of the Company contained in this
Agreement untrue or incorrect in any material respect.
(c) Notwithstanding the provisions of Section 4.1(a) hereof,
following the public announcement of the execution of this Agreement and prior
to the Effective Time, the Company shall repurchase in open market transactions
200,000 shares of Company Common Stock outstanding on the date hereof.
SECTION 4.2. Preparation of S-4 and the Proxy Statement. The
Company will, as promptly as practicable, prepare and file with the SEC the
Proxy Statement in connection with the vote of the stockholders of the Company
with respect to the Merger. Parent will, as promptly as practicable, prepare,
following receipt of notification from the SEC that it has no further comments
on the Proxy Statement, and file with the SEC the S-4, containing a proxy
statement/prospectus and form of proxy, in connection with the registration
under the Securities Act of the shares of Parent Common Stock issuable upon
conversion of the Shares and the other transactions contemplated hereby. Parent
and the Company will, and will cause their accountants and lawyers to, use all
reasonable best efforts to have or cause the S-4 declared effective as promptly
as practicable, including, without limitation, causing their accountants to
deliver necessary or required instruments such as opinions, consents and
certificates, and will take any other action required or necessary to be taken
under federal or state securities laws or otherwise in connection with the
registration process. The Company will use its reasonable best efforts to cause
the Proxy Statement to be mailed to its stockholders at the earliest practicable
date.
SECTION 4.3. No Solicitation.
(a) Until the earlier of the Effective Time or the termination
of this Agreement, the Company agrees that neither it nor any of its
subsidiaries, nor any of the officers, directors or employees of it or its
subsidiaries shall, and it shall direct and use its best efforts to cause its
and its subsidiaries' representatives and agents (including, without limitation,
any investment banker, attorney or accountant retained by the Company or any of
its subsidiaries), not to, directly or indirectly, initiate, solicit or
knowingly encourage (including by way of furnishing non-public information or
assistance), or take any other action knowingly to facilitate, any inquiries or
the making of any proposal that constitutes, or may reasonably be expected to
lead to, an Acquisition Proposal (as defined below), or enter into or maintain
or continue discussions or negotiate with any person or entity in furtherance of
such inquiries or to obtain an Acquisition Proposal or agree to or endorse any
Acquisition Proposal; provided, however, that nothing in this Agreement shall
prohibit the Company Board from (i) complying with Rule 14e-2 promulgated under
the Exchange Act with regard to an Acquisition Proposal or (ii) furnishing
information to, or entering into discussions or negotiations with, any person or
entity that makes an unsolicited Acquisition Proposal after the date of this
Agreement, if, in the case referred to in clause (ii) above, the Company Board,
after consultation with and based upon the advice of independent legal counsel,
determines in good faith that such action is likely to be required for the
Company Board to comply with its fiduciary duties to stockholders under
applicable law and, prior to taking such action, the Company receives from such
person or entity an executed confidentiality agreement in reasonably customary
form. For purposes of this Agreement, "Acquisition Proposal" means an inquiry,
offer or proposal regarding any of the following (other than the transactions
contemplated by this Agreement) involving the Company or any of its
subsidiaries: (w) any merger, consolidation, share exchange, recapitalization,
business combination or other similar transaction; (x) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of all or
substantially all the assets of the Company and its subsidiaries, taken as a
whole, in a single transaction or series of related transactions; (y) any tender
offer or exchange offer for 20 percent or more of the outstanding shares of
Company Common Stock or the filing of a registration statement under the
Securities Act in connection therewith; or (z) any public announcement of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.
(b) Except as set forth in this Section 4.3(b), the Company
Board shall not (i) withdraw or modify, or propose to withdraw or modify, in a
manner adverse to Parent, the approval or recommendation by the Company Board,
(ii) approve or recommend, or propose to approve or recommend, any Acquisition
Proposal or (iii) cause the Company to enter into any agreement with respect to
any Acquisition Proposal. Notwithstanding the foregoing, if the Board of
Directors of the Company, after consultation with and based upon the advice of
independent legal counsel, determines in good faith that it is necessary to do
so in order to comply with its fiduciary duties to stockholders under applicable
law, the Company Board may approve or recommend a Superior Proposal (as defined
below) or cause the Company to enter into an agreement with respect to a
Superior Proposal, but in each case only (i) after providing reasonable written
notice to Parent (a "Notice of Superior Proposal") advising Parent that the
Company Board has received a Superior Proposal, specifying the material terms
and conditions of such Superior Proposal and identifying the person making such
Superior Proposal and (ii) if Parent does not make within 48 hours of Parent's
receipt of the Notice of Superior Proposal, an offer which the Company Board,
after consultation with its financial advisors, determines is superior to such
Superior Proposal. For purposes of this Agreement, a "Superior Proposal" means
any bona fide Acquisition Proposal that the Company Board determines in its good
faith judgment (based on the advice of a financial advisor of nationally
recognized reputation) to be more favorable to the Company's stockholders than
the Merger.
SECTION 4.4. Intentionally omitted.
SECTION 4.5. Stockholder Meeting. The Company shall call a
meeting of its stockholders to be held as promptly as practicable for the
purpose of voting upon this Agreement and related matters. The Company will,
through the Company Board recommend to its stockholders approval of such
matters; PROVIDED, HOWEVER, that the Company Board may withdraw its
recommendation if the Company Board by a majority vote determines in its good
faith judgment, after consultation with and based upon the advice of independent
legal counsel, that it is necessary to do so to comply with its fiduciary duties
to stockholders under applicable law.
SECTION 4.6. Access to Information.
(a) Between the date hereof and the Effective Time, upon
reasonable notice and except as may be otherwise required by applicable law,
each party (for these purposes, Parent and Acquisition shall be deemed to be one
party) will give to the other party and the other party's authorized
representatives reasonable access during normal business hours to its employees,
plants, offices, warehouses and other facilities and to all of its books and
records, will permit the other party to make such inspections as the other party
may reasonably require and will cause its officers and those of its subsidiaries
to furnish the other party with such financial and operating data and other
information with respect to its business, properties and personnel as the other
party may from time to time reasonably request, provided that no investigation
pursuant to this Section 4.6(a) shall affect or be deemed to modify any of the
representations or warranties made herein and provided, further, that the
foregoing shall not require either party to permit any inspection, or to
disclose any information, that in its reasonable judgment would result in the
violation of any of its obligations to a third party with respect to
confidentiality if it shall have used best efforts to obtain the consent of such
third party to such inspection or disclosure.
(b) Between the date hereof and the Effective Time, the
Company shall furnish to Parent and Acquisition within five business days after
the delivery thereof to management, such monthly financial statements and data
as are regularly prepared for distribution to Company management. At the
earliest time they are available, each party shall furnish to the other party
such quarterly and annual financial statements as are prepared for its SEC
filings, which shall be in accordance with its books and records.
(c) Parent will furnish to counsel to the Company true,
complete and correct copies of all Telectronics Agreements (and any written
documents, instruments or other arrangements executed by the parties thereto in
connection therewith) executed following the date hereof and on or prior to the
Effective Time.
(d) Each party will hold and will cause its consultants and
advisors to hold in confidence all documents and information concerning the
other party furnished to it in connection with the transactions contemplated by
this Agreement pursuant to the terms of the Confidentiality Agreements entered
into between the Company and Parent dated August 30, 1996.
SECTION 4.7. Additional Agreements; Best Efforts. Subject to
the terms and conditions herein provided, each of the parties hereto agrees to
use its best efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement and the Telectronics Agreements as soon as
practicable, including, without limitation, (i) cooperation in the preparation
and filing of the Proxy Statement and the S-4 and any amendments to any thereof;
(ii) the taking of all action necessary, proper or advisable to secure any
necessary consents of all third parties and Governmental Entities; (iii)
contesting and resisting any legal proceeding relating to the Merger or the
Telectronics Agreements and having vacated, lifted, reversed or overturned any
decree, judgment or other order that restricts, prevents or prohibits the Merger
or any other transaction contemplated hereby or by the Telectronics Agreements;
and (iv) the execution of any additional instruments, including the Certificate
of Merger, necessary to consummate the transactions contemplated hereby. In case
at any time after the Effective Time any further action is necessary to carry
out the purposes of this Agreement, the proper officers and directors of each
party hereto shall take all such necessary action. Notwithstanding the
provisions of this Section 4.7, except for contractual arrangements in effect on
the date hereof, neither party shall be required to pay any amounts of money to
third parties to secure any consent or approval or to agree to any request or
requirement of any Governmental Entity that would materially impair or diminish
the benefits or ownership rights expected to be derived by Parent or the Company
from the transactions contemplated by this Agreement and the Telectronics
Agreements.
SECTION 4.8. Antitrust Reviews. Each party hereto will use its
best efforts (a) to file with the US Department of Justice and US Federal Trade
Commission, as soon as practicable after the date hereof, the Notification and
Report Form under the HSR Act and any supplemental information or material
requested pursuant to the HSR Act, and (b) to comply as soon as practicable
after the date hereof with any other laws of any country and the European Union
under which any consent, authorization, registration, declaration or other
action with respect to the transactions contemplated herein may be required.
Each party hereto shall furnish to the other such information and assistance as
the other may reasonably request in connection with any filing or other act
undertaken in compliance with the HSR Act or other such laws, and shall keep
each other timely apprised of the status of any communications with, and any
inquiries or requests for additional information from, any Governmental Entity
under the HSR Act or other such laws.
SECTION 4.9. Public Announcements. Each of Parent, Acquisition
and the Company will consult with one another before issuing any press release
or otherwise making any public statements with respect to the transactions
contemplated by this Agreement, including, without limitation, the Merger, and
shall not issue any such press release or make any such public statement or any
filing with any third party or Governmental Entity prior to such consultation.
SECTION 4.10. Indemnification; Directors' and Officers'
Insurance.
(a) Indemnification. From and after the Effective Time, Parent
shall, to the fullest extent permitted by applicable law, indemnify, defend and
hold harmless each person who is now, or has been at any time prior to the date
hereof, or who becomes prior to the Effective Time, a director, officer or
employee of the Company or any subsidiary thereof (each an "Indemnified Party"
and, collectively, the "Indemnified Parties") against all losses, expenses and
costs (including reasonable attorneys' fees and expenses), claims, damages or
liabilities or, subject to the proviso of the next succeeding sentence, amounts
paid in settlement, arising out of actions or omissions occurring at or prior to
the Effective Time and whether asserted or claimed prior to, at or after the
Effective Time that are in whole or in part (i) based on, or arising out of the
fact that such person is or was a director, officer or employee of the Company
or one or more of its subsidiaries or (ii) based on, arising out of or
pertaining to the transactions contemplated by this Agreement. Parent hereby
agrees that any loss, expense, cost (including reasonable attorneys' fees and
expenses), claims, damages or liability suffered by any director, officer or
employee of the Company arising out of any claim initiated by Intermedics, Inc.,
Peter Dorflinger or any other officer or employee of Intermedics, Inc. shall be
deemed to be a loss, expense, cost, claim, damage or liability arising out of
the fact that such person is or was a director, officer or employee of the
Company or one or more of its subsidiaries. In the event of any loss, expense,
claim, damage or liability (whether or not arising before the Effective Time)
described in the first sentence of this Section 4.10(a), (i) Parent shall pay
the reasonable fees and expenses of counsel selected by the Indemnified Parties,
which counsel shall be reasonably satisfactory to Parent, promptly after
statements therefor are received and otherwise advance to such Indemnified Party
upon request reimbursement of documented expenses reasonably incurred, in either
case to the extent not prohibited by the DGCL and upon receipt of any
affirmation and undertaking required by the DGCL, (ii) Parent will cooperate in
the defense of any such matter and (iii) any determination required to be made
with respect to whether an Indemnified Party's conduct complies with the
standards set forth under the DGCL and Parent's articles of incorporation or
bylaws shall be made by independent counsel mutually acceptable to Parent and
the Indemnified Party; PROVIDED, HOWEVER, that Parent shall not be liable for
any settlement effected without its written consent (which consent shall not be
reasonably withheld). The Indemnified Parties as a group may retain only one law
firm with respect to each related matter except to the extent there is, in the
opinion of counsel to an Indemnified Party, under applicable standards of
professional conduct, a conflict on any significant issue between positions of
any two or more Indemnified Parties.
(b) Insurance. For a period of three years after the Effective
Time, Parent shall cause to be maintained in effect the policies of directors'
and officers' liability insurance maintained by the Company for the benefit of
those persons who are covered by such policies at the Effective Time (or Parent
may substitute therefor policies of at least the same coverage with respect to
matters occurring prior to the Effective Time), to the extent that such
liability insurance can be maintained annually at a cost to Parent not greater
than 150 percent of the premium for the current Company directors' and officers'
liability insurance; provided that if such insurance cannot be so maintained or
obtained at such costs, Parent shall maintain or obtain as much of such
insurance as can be so maintained or obtained at a cost equal to 150 percent of
the current annual premiums of the Company for such insurance.
(c) Successors. In the event Parent or any of its successors
or assigns (i) consolidates with or merges into any other person and shall not
be the continuing or surviving corporation or entity or such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any person, then and in either such case, proper provision shall be made so
that the successors and assigns of Parent shall assume the obligations set for
in this Section 4.10.
(d) Survival of Indemnification. To the fullest extent
permitted by law, from and after the Effective Time, all rights to
indemnification now existing in favor of the employees, agents, directors or
officers of the Company and its subsidiaries with respect to their activities as
such prior to the Effective Time, as provided in the Company's certificate of
incorporation or bylaws, in effect on the date thereof or otherwise in effect on
the date hereof, shall survive the Merger and shall continue in full force and
effect for a period of not less than six years from the Effective Time.
(e) Benefit. The provisions of this Section 4.10 are intended
to be for the benefit of, and shall be enforceable by, each Indemnified Party,
his or her heirs and his or her representatives.
SECTION 4.11. Notification of Certain Matters. The Company
shall give prompt notice to Parent and Acquisition, and Parent and Acquisition
shall give prompt notice to the Company, of the status of matters relating to
completion of the transactions contemplated hereby, including (i) the occurrence
or nonoccurrence of any event the occurrence or nonoccurrence of which would be
likely to cause any representation or warranty contained in this Agreement to be
untrue or inaccurate in any material respect at or prior to the Effective Time,
(ii) any material failure of the Company, Parent or Acquisition, as the case may
be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder, (iii) any notice of, or other
communication relating to, a default or event which, with notice or lapse of
time or both, would become a default, received by it or any of its subsidiaries
subsequent to the date of this Agreement and prior to the Effective Time, under
any contract or agreement material to the financial condition, properties,
businesses or results of operations of it and its subsidiaries taken as a whole
to which it or any of its subsidiaries is a party or is subject, (iv) any notice
or other communication from any third party or Governmental Entity with respect
to the Merger or the other transactions contemplated hereby or alleging that the
consent of such third party or Governmental Entity is or may be required in
connection with the Merger or the other transactions contemplated by this
Agreement, or (v) any material adverse change in their respective financial
condition, properties, businesses or results of operations, taken as a whole,
other than changes resulting from general economic conditions; PROVIDED,
HOWEVER, that the delivery of any notice pursuant to this Section 4.11 shall not
cure such breach or non-compliance or limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
SECTION 4.12. Pooling. The Company and Parent each agrees that
it will not take any action which could prevent the Merger from being accounted
for as a "pooling-of-interests" for accounting purposes, and the Company will
bring to the attention of Parent, and Parent will bring to the attention of the
Company, any actions, or agreements or understandings, whether written or oral,
that could be reasonably likely to prevent Parent from accounting for the Merger
as a "pooling-of-interests." The Company and Parent shall use their best efforts
to cause Ernst & Young LLP ("E&Y") to deliver to Parent and the Company a
letter, addressed to the Company and Parent, stating that after appropriate
review of this Agreement and based upon its familiarity with the Company and
Parent, following the Merger the Company and Parent are entities that qualify as
parties to a pooling of interests transaction under Opinion 16 of the Accounting
Principles Board and applicable SEC rules and regulations. Each party will
inform all Company Affiliates (as hereinafter defined in Section 4.15) and other
relevant affiliates and employees of the parties as to those actions that should
or should not be taken by such persons so that the Merger will be accounted for
as a "pooling-of-interests" and will use its best efforts to cause such
affiliates and persons employed by it to take or not take such actions as either
party may be informed by any Governmental Entity are necessary to be taken or
not to be taken so that the Merger will be accounted for as a
"pooling-of-interests."
SECTION 4.13. Tax-Free Reorganization Treatment. The Company,
Parent and Acquisition shall execute and deliver to Sullivan & Cromwell, counsel
to the Company, and Weil, Gotshal & Manges LLP, counsel to Parent, certificates
containing customary representations, at such time or times as reasonably
requested by such law firms in connection with their respective deliveries of
opinions with respect to the transactions contemplated hereby.
SECTION 4.14. Employee Matters.
(a) For the period commencing with the Effective Time and
ending on June 30, 1998, Parent shall and shall cause its subsidiaries to
maintain with respect to their employees who had been employed by the Company or
any of its subsidiaries (i) base salary or regular hourly wage rates for each
such employee at not less than the rate applicable immediately prior to the
Merger to such employee, and (ii) benefits under employee benefit plans (as
defined for purposes of Section 3(3) of ERISA), other than employee benefits as
to which the employees' interests are based upon the Shares, which are
substantially comparable in the aggregate to such benefits provided by the
Company and its subsidiaries immediately prior to the Merger. Thereafter, in
Parent's discretion, either (i) the provisions of the preceding sentence shall
be complied with by Parent or (ii) employees of the Company and its subsidiaries
shall be treated no less favorably under the compensation and benefits programs
of Parent than other similarly situated employees of Parent and its
subsidiaries.
(b) Parent and its subsidiaries shall credit employees of the
Company and its subsidiaries with their service prior to the Merger with the
Company and its subsidiaries to the same extent such service was counted under
the Company ERISA Plans for all purposes other than benefit accruals under the
defined benefit pension plans of Parent and its subsidiaries.
(c) Parent will, and will cause the Surviving Corporation to,
honor the employment and severance agreements and all other obligations of the
Surviving Corporation listed on Section 4.14(c) of the Company Disclosure
Schedule. Nothing contained herein shall be construed as requiring Parent or the
Surviving Corporation to continue any specific plans or to continue the
employment of any specific person.
SECTION 4.15. Company Affiliates. Prior to the Effective Time,
each of the Company and Parent will deliver to the other a letter identifying
all persons who, at the time of the meeting of the Company's stockholders
referred to in Section 4.5, it believes are its "affiliates" for purposes of
Rule 145 under the Securities Act and for the purposes of applicable
interpretations regarding the pooling-of-interests method of accounting (the
persons identified in the Company's letter are each hereinafter referred to as a
"Company Affiliate" and the persons identified in Parent's letter are each
hereinafter referred to as a "Parent Affiliate"). The Company shall use its best
efforts to obtain a written agreement on or prior to the Effective Time from
each person who is identified as a Company Affiliate providing that (i) such
Company Affiliate will not sell, pledge, transfer or otherwise dispose of any
shares of Parent Common Stock issued to such Company Affiliate pursuant to the
Merger, except in compliance with Rule 145 promulgated under the Securities Act
or an exemption from the registration requirements of the Securities Act. Each
of the Company and Parent shall use its best efforts to obtain a written
agreement on or prior to the Effective Time from each Company Affiliate and
Parent Affiliate, respectively, providing that (ii) on or prior to the earlier
of (x) the mailing of the Proxy Statement or (y) the thirtieth day prior to the
Effective Time such person will not thereafter sell or in any other way reduce
such person's risk relative to any shares of Parent Common Stock (within the
meaning of the SEC's Financial Reporting Release No. 1, "Codification of
Financing Reporting Policies," ss. 201.01 47 F.R. 21028 (April 15, 1982)), until
such time as financial results (including combined sales and net income)
covering at least 30 days of post-merger operations have been published, except
as permitted by Staff Accounting Bulletin No. 76 issued by the SEC.
SECTION 4.16. SEC Filings. Each of Parent and the Company
shall promptly provide the other party (or its counsel) with copies of all
filings made by the other party or any of its subsidiaries with the SEC or any
other state or federal Governmental Entity in connection with this Agreement and
the transactions contemplated hereby.
SECTION 4.17. Guarantee of Performance. Parent hereby
guarantees the performance by Acquisition of its obligations under this
Agreement.
ARTICLE 5
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 5.1. Conditions to Each Party's Obligations to Effect
the Merger. The respective obligations of each party hereto to effect the Merger
are subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) this Agreement shall have been approved and adopted by the
requisite vote of the stockholders of the Company;
(b) no statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or enforced
by any court or other Governmental Entity and continued in effect which
prohibits, restrains, enjoins or restricts the consummation of the Merger;
(c) any waiting period applicable to the Merger under the HSR
Act shall have terminated or expired, and any other governmental or regulatory
notices or approvals required with respect to the transactions contemplated
hereby shall have been either filed or received;
(d) the S-4 shall have become effective under the Securities
Act and shall not be the subject of any stop order or proceedings seeking a stop
order, and Parent shall have received all state securities laws or "blue sky"
permits and authorizations necessary to issue shares of Parent Common Stock in
exchange for the Shares in the Merger;
(e) the Company and Parent each shall have received from E&Y a
letter stating that after appropriate review of this Agreement and based upon
its familiarity with the Company and Parent, following the Merger the Company
and Parent are entities that qualify as parties to a pooling of interests
transaction under Opinion 16 of the Accounting Principles Board and applicable
SEC rules and regulations and such letter shall not have been withdrawn or
modified in any material respect;
(f) [intentionally omitted]; and
(g) the closing contemplated by the Asset Purchase Agreement
(United States), dated as of September 24, 1996, by and among Acquisition,
Telectronics Pacing Systems, Inc. and TPLC, Inc. shall have occurred.
SECTION 5.2. Conditions to the Obligations of the Company. The
obligation of the Company to effect the Merger is subject to the satisfaction at
or prior to the Effective Time of the following conditions:
(a) the representations and warranties of Parent and
Acquisition contained in this Agreement or in any other document delivered
pursuant hereto shall be true and correct in all material respects at and as of
the Effective Time with the same effect as if made at and as of the Effective
Time (except for the representation and warranty made in the first sentence of
Section 3.12(d), which is being made only as of the date of this Agreement), and
at the Closing Parent and Acquisition shall have delivered to the Company a
certificate to that effect;
(b) each of the obligations of Parent and Acquisition to be
performed at or before the Effective Time pursuant to the terms of this
Agreement shall have been duly performed in all material respects at or before
the Effective Time, and at the Closing Parent and Acquisition shall have
delivered to the Company a certificate to that effect;
(c) each Parent Affiliate shall have delivered and performed
his or her obligations under the letter referenced in Section 4.15;
(d) the shares of Parent Common Stock issuable to the Company
stockholders pursuant to this Agreement and such other shares required to be
reserved for issuance in connection with the Merger shall have been authorized
for listing on the Nasdaq Stock Market (or any subsequent national securities
exchange on which shares of Parent Common Stock are then listed for trading)
upon official notice of issuance;
(e) the opinion of Sullivan & Cromwell, counsel to the
Company, addressed to the Company substantially to the effect that (i) the
Merger will be treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code; (ii) each of Parent,
Acquisition and the Company will be a party to the reorganization within the
meaning of Section 368(b) of the Code; and (iii) no gain or loss will be
recognized by a stockholder of the Company as a result of the Merger with
respect to Shares converted into shares of Parent Common Stock (other than with
respect to cash received in lieu of fractional shares of Parent Common Stock),
dated the Closing Date, shall have been delivered and such opinion shall not
have been withdrawn or modified in any material respect;
(f) there shall have been no events, changes or effects with
respect to Parent or its subsidiaries (other than such events, changes or
effects that arise out of or result from the execution of this Agreement or the
proposed consummation of the Merger and the other transactions contemplated
hereby) having or which would have a Parent Material Adverse Effect;
(g) Parent and Acquisition shall have executed with State
Street Bank and Trust Company a supplemental indenture with respect to the
Convertible Notes, which supplemental indenture shall provide that upon
consummation of the Merger, (i) Acquisition shall assume the due and punctual
payment of the principal of and interest on all the Convertible Notes and the
performance and observance of every covenant to be performed or observed by the
Company under the Indenture under which such Convertible Notes were issued, (ii)
the holder of each Convertible Note outstanding immediately following the Merger
thereafter shall have the right to convert such Convertible Note into Parent
Common Stock at the rate of 34.90908 shares of Parent Common Stock for each
$1,000 principal amount of the Convertible Notes and (iii) Parent shall assume
as a joint obligor Acquisition's obligations to pay the principal of and
premium, if any, and interest on the Convertible Notes;
(h) the Agreement, dated the date hereof, between Intermedics,
Inc. and Acquisition (the "Intermedics Consent") shall be in full force and
effect without any modification or amendment that would materially and adversely
affect the ability of the Surviving Corporation following the Effective Time to
conduct the operations of the Company as such operations are conducted by the
Company on the date of this Agreement;
(i) Acquisition shall have offered to enter into an employment
agreement in the form annexed hereto as Exhibit A with each of the persons
listed in Section 5.2(i) of the Company Disclosure Schedule; and
(j) Intermedics, Inc. and Acquisition shall have entered into
the 1996 License Agreement referred to in the Intermedics Consent, such 1996
License Agreement to be in substance as described in the Intermedics Consent as
determined in the reasonable judgment of the Company.
SECTION 5.3. Conditions to the Obligations of Parent and
Acquisition. The respective obligations of Parent and Acquisition to effect the
Merger are subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) the representations and warranties of the Company
contained in this Agreement or in any other document delivered pursuant hereto
shall be true and correct in all material respects at and as of the Effective
Time with the same effect as if made at and as of the Effective Time, and at the
Closing the Company shall have delivered to Parent and Acquisition a certificate
to that effect;
(b) each of the obligations of the Company to be performed at
or before the Effective Time pursuant to the terms of this Agreement shall have
been duly performed in all material respects at or before the Effective Time,
and at the Closing the Company shall have delivered to Parent and Acquisition a
certificate to that effect;
(c) each Company Affiliate shall have delivered and performed
his or her obligations under the letter referenced in Section 4.15;
(d) there shall have been no events, changes or effects with
respect to the Company or its subsidiaries (other than such events, changes or
effects that arise out of or result from the execution of this Agreement or the
proposed consummation of the Merger and the other transactions contemplated
hereby) having or which would have a Company Material Adverse Effect;
(e) the opinion of Weil, Gotshal & Manges LLP, addressed to
Parent, substantially to the effect that (i) the Merger will be treated for
federal income tax purposes as a reorganization within the meaning of Section
368(a) of the Code; (ii) each of Parent, Acquisition and the Company will be a
party to the reorganization within the meaning of Section 368(b) of the Code;
and (iii) no gain or loss will be recognized by Parent, Acquisition or the
Company as a result of the Merger, dated the Closing Date, shall have been
delivered and such opinion shall not have been withdrawn or modified in any
material respect; and
(f) the Surviving Corporation shall have entered into an
employment agreement with each of the persons listed in Section 5.3(f) of the
Parent Disclosure Schedule.
ARTICLE 6
TERMINATION; AMENDMENT; WAIVER
SECTION 6.1. Termination. This Agreement may be terminated and
the Merger may be abandoned at any time, but prior to the Effective Time:
(a) by mutual written consent of Parent, Acquisition and the
Company;
(b) by Parent and Acquisition or the Company if (i) the Merger
has not been consummated by May 1, 1997, PROVIDED that no party may terminate
this Agreement pursuant to this clause (i) if such party's failure to fulfill
any of its obligations under this Agreement shall have been the reason that the
Effective Time shall not have occurred on or before said date, or (ii) the
Company or Parent shall have convened a meeting of its respective stockholders
and failed to obtain the requisite vote of its respective stockholders; or
(c) by the Company if (i) there shall have been a breach of
any representation or warranty on the part of Parent or Acquisition set forth in
this Agreement, or if any representation or warranty of Parent or Acquisition
shall have become untrue, in either case such that the conditions set forth in
Section 5.2(a) would be incapable of being satisfied by May 1, 1997 (or as
otherwise extended), (ii) there shall have been a breach by Parent or
Acquisition of any of their respective covenants or agreements hereunder having
a Parent Material Adverse Effect or materially adversely affecting the
consummation of the Merger, and Parent or Acquisition, as the case may be, has
not cured such breach within 20 business days after notice by the Company
thereof, or (iii) the Company enters into a definitive agreement relating to a
Superior Proposal in accordance with Section 4.3(b) (provided that such
termination shall not be effective until payment of the amount required under
Section 6.3(a)).
(d) by Parent and Acquisition if (i) there shall have been a
breach of any representation or warranty on the part of the Company set forth in
this Agreement, or if any representation or warranty of the Company shall have
become untrue, in either case such that the conditions set forth in Section
5.3(a) would be incapable of being satisfied by May 1, 1997 (or as otherwise
extended), (ii) there shall have been a breach by the Company of its covenants
or agreements hereunder having a Company Material Adverse Effect or materially
adversely affecting the consummation of the Merger, and the Company has not
cured such breach within 20 business days after notice by Parent or Acquisition
thereof, or (iii) the Company Board shall have withdrawn, modified or changed
its approval or recommendation of this Agreement or the Merger, shall have
recommended to the Company's stockholders any Acquisition Proposal (other than
the Merger), shall have failed to call, give notice of, convene or hold a
stockholders' meeting to vote upon the Merger, or shall have adopted any
resolution to effect any of the foregoing, or the Company shall have entered
into a definitive agreement relating to a Superior Proposal.
SECTION 6.2. Effect of Termination. In the event of the
termination and abandonment of this Agreement pursuant to Section 6.1, this
Agreement shall forthwith become void and have no effect, without any liability
on the part of any party hereto or its affiliates, directors, officers or
shareholders, other than the provisions of this Section 6.2 and Sections 4.6(c)
and 6.3. Nothing contained in this Section 6.2 shall relieve any party from
liability for any wilful breach of this Agreement.
SECTION 6.3. Fees and Expenses.
(a) In the event that this Agreement shall be terminated
pursuant to:
(i) Sections 6.1(d)(i) or 6.1(d)(ii) as a result of a
wilful breach by the Company and, within twelve months thereafter, the Company
enters into an agreement with respect to any Acquisition Proposal (other than
the Merger)), or
(ii) Sections 6.1(c)(iii) or 6.1(d)(iii),
then Parent and Acquisition would suffer direct and substantial damages, which
damages cannot be determined with reasonable certainty. To compensate Parent and
Acquisition for such damages, and in full satisfaction and settlement of any
claims that Parent otherwise might have against the Company in respect of any
such termination of this Agreement, the Company shall pay to Parent the amount
of Fourteen Million Five Hundred Thousand Dollars ($14,500,000) (and not as a
penalty) as follows: (i) in the case of a termination under Section 6.1(d)(i) or
6.1(d)(ii), such amount shall be paid on the date the Company consummates an
Acquisition Proposal and (ii) in the case of a termination under Section
6.1(c)(iii) or 6.1(d)(iii), such amount shall be paid on the date of such
termination. Notwithstanding the immediately preceding sentence, any payment as
a result of a termination of this Agreement pursuant to Section 6.1(d)(i) or
6.1(d)(ii) shall be reduced by the amount of any damages actually recovered by
Parent or Acquisition in respect thereof.
(b) If the Company Board withdraws its recommendation to
Company stockholders that they vote to approve this Agreement and related
matters by reason of changes to the market prices of Parent Common Stock (in the
absence of any occurrences that had or would have a Parent Material Adverse
Effect) following the date hereof and the Merger is not consummated by reason of
such withdrawal, then the Company shall pay to Parent the amount of Fourteen
Million Five Hundred Thousand Dollars ($14,500,000). Such payment shall not be
deemed to be the exclusive remedy or remedies for any breach of this Agreement
by the Company, but shall be in addition to all other remedies available to
Parent at law or equity. Nothing contained in this Section 6.3(b) shall be an
admission by Parent that a change in the market prices of Parent Common Stock
(in the absence of any occurrences that had or would have a Parent Material
Adverse Effect) following the date hereof is an appropriate basis for the
Company Board to withdraw its recommendation to Company stockholders pursuant to
Section 4.5 hereof.
(c) Each party shall bear its own expenses in connection with
this Agreement and the transactions contemplated hereby. The cost of printing
the S-4 and the Proxy Statement shall be borne equally by the Company and
Parent.
SECTION 6.4. Amendment. This Agreement may be amended by
action taken by the Company, Parent and Acquisition at any time before or after
approval of this Agreement by the stockholders of the Company but, after any
such approval, no amendment shall be made which requires the approval of such
stockholders under applicable law without such approval. This Agreement may not
be amended except by an instrument in writing signed on behalf of the parties
hereto.
SECTION 6.5. Extension; Waiver. At any time prior to the
Effective Time, each party hereto (for these purposes, Parent and Acquisition
shall together be deemed one party and the Company shall be deemed the other
party) may (i) extend the time for the performance of any of the obligations or
other acts of the other party, (ii) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document, certificate or writing delivered pursuant hereto or (iii) waive
compliance by the other party with any of the agreements or conditions contained
herein. Any agreement on the part of either party hereto to any such extension
or waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of either party hereto to assert any of its
rights hereunder shall not constitute a waiver of such rights.
ARTICLE 7
MISCELLANEOUS
SECTION 7.1. Nonsurvival of Representations and Warranties.
The representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement.
SECTION 7.2. Entire Agreement; Assignment. This Agreement
(a) constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and supersedes all other prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof; and
(b) shall not be assigned by operation of law or otherwise;
PROVIDED, HOWEVER, that Acquisition may assign any or all of its rights and
obligations under this Agreement to any direct wholly-owned subsidiary of
Parent, but no such assignment shall relieve Acquisition of its obligations
hereunder if such assignee does not perform such obligations.
SECTION 7.3. Validity. If any provision of this Agreement, or
the application thereof to any person or circumstance, is held invalid or
unenforceable, the remainder of this Agreement, and the application of such
provision to other persons or circumstances, shall not be affected thereby, and
to such end, the provisions of this Agreement are agreed to be severable.
SECTION 7.4. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person, by
cable, telegram, facsimile or telex, or by registered or certified mail (postage
prepaid, return receipt requested), to the other party as follows:
if to Parent or
to Acquisition to: St. Jude Medical, Inc.
One Lillehei Plaza
St. Paul, MN 55117
Attention: General Counsel
Facsimile: (612) 490-4333
with a copy to: Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: Dennis J. Block, Esq.
Facsimile: (212) 310-8007
if to the Company to: Ventritex, Inc.
701 East Evelyn Avenue
Sunnyvale, CA 94086
Attention: Mr. Frank M. Fischer
Facsimile: (408) 738-0285
with a copy to: Sullivan & Cromwell
125 Broad Street
New York, NY 10004
Attention: Benjamin F. Stapleton, Esq.
Facsimile: (212) 558-3588
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above.
SECTION 7.5. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware, without
regard to the principles of conflicts of law thereof.
SECTION 7.6. Descriptive Headings. The descriptive headings
herein are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
SECTION 7.7. Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto and its
successors and permitted assigns, and except as provided in Sections 4.10 and
7.2 nothing in this Agreement, express or implied, is intended to or shall
confer upon any other person any rights, benefits or remedies of any nature
whatsoever under or by reason of this Agreement.
SECTION 7.8. Severability. If any term or other provision of
this Agreement is invalid, illegal or unenforceable, all other provisions of
this Agreement shall remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party.
SECTION 7.9. Specific Performance. The parties hereto
acknowledge that irreparable damage would result if this Agreement were not
specifically enforced, and they therefore consent that the rights and
obligations of the parties under this Agreement may be enforced by a decree of
specific performance issued by a court of competent jurisdiction. Such remedy
shall, however, not be exclusive and, shall be in addition to any other remedies
which any party may have under this Agreement or otherwise.
SECTION 7.10. Subsidiaries. The term "subsidiary" shall mean,
when used with reference to any entity, any entity more than fifty percent (50%)
of the outstanding voting securities or interests (including membership
interests) of which are owned directly or indirectly by such former entity.
SECTION 7.11. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an original, but
all of which shall constitute one and the same agreement.
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be duly executed on its behalf as of the day and year first above
written.
ST. JUDE MEDICAL, INC.
By:
Name:
Title:
PACESETTER, INC.
By:
Name:
Title:
VENTRITEX, INC.
By:
Name:
Title:
Exhibit A
EMPLOYMENT AGREEMENT
AGREEMENT made as of the __ day of __________, 19__ between
Pacesetter, Inc., a corporation organized and existing under the laws of
Delaware (the "Company"), and _______________, with his residence located at
_______________________________ (the "Employee").
W I T N E S S E T H :
WHEREAS, the Company and its parent corporation,
St. Jude Medical, Inc. ("Parent"), are parties to an
Agreement and Plan of Merger (the "Merger Agreement"), dated
as of October 23, 1996, with Ventritex, Inc. pursuant to
which, among other things, Ventritex, Inc. will merge (the
"Merger") with and into the Company, with the Company being
the surviving corporation in the Merger; and
WHEREAS, effective with the consummation of the Merger, the
Company desires that the Employee shall be employed by the Company, and the
Employee is desirous of such employment, upon the terms and conditions set forth
in this Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements hereinafter contained, the parties hereby agree
as follows:
1. Definitions. For purposes of this Agreement, the following terms
shall have the meanings set forth below:
a. Base Pay. "Base Pay" shall mean the annual compensation
specified in Paragraph 5 hereof, together with any increases in such
compensation that may accrue from time to time.
b. Cause. "Cause" shall mean: (i) any act of personal
dishonesty taken by the Employee in connection with his responsibilities as an
employee and intended to result in substantial personal enrichment of the
Employee; (ii) the conviction of a felony; (iii) a willful act by the Employee
which constitutes gross misconduct (including, without limitation, any violation
of law or written Company policies relating to compliance with such law) and
which is injurious to the Company; and (iv) continued substantial violations by
the Employee of the Employee's employment duties which are demonstrably willful
and deliberate on the Employee's part after there has been delivered to the
Employee a written demand for performance from the Company which specifically
sets forth the factual basis for the Company's belief that the Employee has not
substantially performed his duties.
c. Code. "Code" shall mean the Internal Revenue Code of 1986,
as amended.
d. Disability. "Disability" shall mean that the Employee has
been unable to perform his duties as an employee as the result of his incapacity
due to physical or mental illness, and such inability, at least 26 weeks after
its commencement, is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to the Employee or the
Employee's legal representative (such agreement as to acceptability not to be
unreasonably withheld). Termination resulting from Disability may only be
effected after at least 30 days' written notice by the Company of its intention
to terminate the Employee's employment. In the event that the Employee resumes
the performance of substantially all of his duties hereunder before the
termination of his employment becomes effective, the notice of intent to
terminate shall automatically be deemed to have been revoked.
e. Good Reason. "Good Reason" shall mean: (i) without the
Employee's express written consent, the assignment to the Employee of any duties
or the significant reduction of the Employee's duties, authority or
responsibilities, which is inconsistent with the Employee's duties, authority or
responsibilities in effect immediately prior to the execution of this Agreement,
or the removal of the Employee from such duties, authority or responsibilities;
(ii) without the Employee's express written consent, a substantial reduction,
without good business reasons, of the facilities and perquisites (including
office space and location) available to the Employee immediately prior to the
execution of this Agreement; (iii) a reduction by the Company in the Base Pay or
Target Bonus of the Employee as in effect immediately prior to the execution of
the Agreement; (iv) a material reduction by the Company in the kind or level of
employee benefits to which the Employee is entitled immediately prior to the
execution of the Agreement with the result that the Employee's overall benefits
package is significantly reduced; (v) the relocation of the Employee to a
facility or a location more than 25 miles from the Employee's then present
location, without the Employee's express written consent; (vi) any purported
termination of the Employee by the Company which is not effected for Disability
or for Cause, or any purported termination for which the grounds relied upon are
not valid; (vii) the failure of the Company to obtain the assumption of the
Agreement by any successors contemplated in Paragraph 13 below; or (viii) any
act or set of facts or circumstances which would, under California case law or
statute constitute a constructive termination of the Employee. Notwithstanding
the foregoing, any change in the terms or conditions of the Employee's
employment that directly results from the fact that, upon consummation of the
Merger, the Employee will be employed by a privately owned company under the
supervision of the officers and directors of its parent company that owns
businesses in addition to those conducted by the Employee's former employer will
not be considered "Good Reason."
f. Target Bonus. "Target Bonus" shall mean the maximum annual
target bonus for the Employee under the bonus plan of Ventritex, Inc. in effect
immediately prior to the date hereof (or any successor bonus plan of the Company
or Ventritex (as hereinafter defined) applicable to the Employee, provided the
payments to be made pursuant thereto are not less than the payments that
otherwise would have been made pursuant to the Ventritex, Inc. bonus plan)
determined without regard to any vesting or performance limitations set forth in
the Company's bonus plan.
2. Employment. The Company shall employ the Employee, and the Employee
shall serve the Company, upon the terms and conditions hereinafter set forth.
3. Term. The employment of the Employee by the Company hereunder shall
commence as of the consummation of the Merger (the "Commencement Date") and,
unless sooner terminated on an earlier date in the manner as hereinafter
provided, shall terminate on the second anniversary of the Commencement Date
(such second anniversary or earlier date is referred to herein as the
"Termination Date"). Any continued employment of the Employee with the Company
after the Termination Date shall be employment at will unless otherwise provided
in writing by an extension of this Agreement or the execution by the Employee
and the Company of a subsequent employment agreement.
4. Duties. During the term of his employment hereunder, the Employee
shall:
a. serve as _________________ of Ventritex, a division of the
Company ("Ventritex"), faithfully and to the best of his ability, under the
direction and supervision of the ________________ of [the Company] [Ventritex]
(the "Supervising Officer") and the Board of Directors of the Company (the
"Board");
b. devote his full business time, energy and skill to such
employment and shall not, without the prior written approval of the Board,
directly or indirectly, engage or participate in, or become employed by, or
become a director, officer or partner of, or render advisory services to or
provide other services in connection with, any business activity other than that
of the Company; provided, however, that the Employee shall be permitted to
personally invest in any publicly-owned corporation, partnership or other
entity, so long as any such investment does not require or involve the active
participation of the Employee in the management of the business of any such
corporation, partnership or other entity, does not interfere with the execution
of the employee's duties hereunder and does not otherwise violate any provision
of this Agreement. The Employee represents and warrants to the Company that the
execution by the Employee of this Agreement and the performance by the Employee
of his duties hereunder do not conflict with or constitute a breach of any
contract or other agreement to which the Employee is bound; and
c. comply with all laws, regulations, company policies and
codes of conduct in effect during the term of this Agreement.
5. Salary. During the term of this Agreement the Company shall pay to
the Employee a salary for his services initially at the rate of $_______ per
year, payable in accordance with the regular payroll practices of the Company.
The salary shall be subject to annual review by the Board; provided, however,
that such salary may be increased, but not decreased, in the sole discretion of
the Board. Subject to the Company's obligations under the Merger Agreement, the
Employee also shall participate in such bonus programs as are made available
during the term of his employment hereunder to employees of the Company of the
Employee's rank, as determined by the Board in its sole discretion.
6. Expenses. It is contemplated that in connection with his employment
hereunder, the Employee may be required to incur reasonable and necessary
travel, business entertainment and other business expenses. The Company agrees
to reimburse the Employee for all reasonable and necessary travel, business
entertainment and other business expenses incurred or expended by him incident
to the performance of his duties in accordance with the policies of the Company
in effect during the term of the Employee's employment hereunder, upon
submission by the Employee to the Company of vouchers or expense statements
satisfactorily evidencing such expenses.
7. Employee Benefits. Subject to the Company's obligations under the
Merger Agreement, the Employee shall be entitled to participate in any and all
life insurance, medical insurance, disability insurance, and other employee
benefit plans which are made available during the term of his employment
hereunder by the Company to employees of the Company of the Employee's rank, to
the extent that the Employee qualifies under the eligibility provisions of such
plan or plans. The Employee shall be entitled to vacations in accordance with
the Company's policy relating thereto.
8. Disability. In the event of the Disability of the Employee during
the term of his employment hereunder, the Company shall have the right, upon
written notice to the Employee (the "Disability Notice"), to terminate his
employment hereunder, effective 30 days following the giving of such Disability
Notice. Upon such termination, the Company shall be discharged and released from
any further obligations under this Agreement. Disability benefits, if any, due
under applicable plans and programs of the Company shall be determined under the
provisions of such plans and programs.
9. Death. In the event of the death of the Employee during the term of
his employment hereunder, the salary to which the Employee is entitled pursuant
to Paragraph 5 hereof shall continue to be paid through the end of the month in
which death occurs, on the date otherwise payable hereunder, to the last
beneficiary designated by the Employee by written notice to the Company, or,
failing such designation, to his estate. The Employee shall have the right to
name, from time to time, any one person as beneficiary hereunder or, with the
consent of the Company, to make other forms of designation of beneficiary or
beneficiaries. The Employee's designated beneficiary or personal representative,
as the case may be, shall accept the payments provided for in this Paragraph 9
in full discharge and release of the Company of and from any further obligations
under this Agreement. Any other benefits due under applicable plans and programs
of the Company shall be determined under the provisions of such plans and
programs.
10. Termination.
a. The Employee's employment hereunder may be terminated by
the Company for Cause at any time. In the event the Company elects to terminate
the employment of the Employee for Cause pursuant to this Paragraph 10(a), the
Company shall send written notice to the Employee (the "Termination Notice")
terminating such employment (which termination shall be effective no earlier
than 30 days following the date of the Termination Notice) and describing the
action of the Employee constituting Cause for termination. Upon the effective
time of such termination for Cause, the Company shall have no further
obligations under this Agreement.
b. The Company may terminate the employment of the Employee
during the term of this Agreement other than for Cause. In such event, the
Employee shall be entitled to receive, as severance, no later than 10 days after
the termination of employment, a lump sum cash payment equal to the sum of (i)
[200%] [300%] of the annual rate of the Employee's Base Pay for the year
coinciding with the year of termination, (ii) [200%] [300%] of the Employee's
maximum Target Bonus for the Company's fiscal year in which such termination
occurs and (iii) [$25,000] [$12,500] (collectively, the "Severance Payment"). In
addition, the Employee shall be entitled to receive an additional payment for
the Company's fiscal year in which the Employee's employment terminates equal to
the product of (x) the Employee's Target Bonus for such year and (y) a fraction,
the numerator of which is the number of days the Employee was employed by the
Company during the fiscal year, and the denominator of which is the number of
days in such fiscal year. In the event of such termination without "Cause," the
Employee also shall be entitled to a continuation of the health and insurance
benefits in which he is participating at the time of such termination through
the end of the scheduled term of employment hereunder. The Employee shall accept
such payments and benefits in full discharge of the Company for any further
obligations under this Agreement.
(c) The Employee may terminate his employment at any time
hereunder for Good Reason. In such event, the Employee shall be entitled to
receive, as severance, no later than 10 days after the termination of
employment, the Severance Payments provided for in Paragraph 10(b) hereof. In
addition, the Employee shall be entitled to receive an additional payment for
the Company's fiscal year in which the Employee's employment terminates equal to
the product of (x) the Employee's Target Bonus for such year and (y) a fraction,
the numerator of which is the number of days the Employee was employed by the
Company during the fiscal year, and the denominator of which is the number of
days in such fiscal year. In the event of such termination for Good Reason, the
Employee also shall be entitled to a continuation of the health and insurance
benefits in which he is participating at the time of such termination through
the end of the scheduled term of employment hereunder. The Employee shall accept
such payments and benefits in full discharge of the Company for any further
obligations under this Agreement.
(d) In the event that any Severance Payment and/or any other
payments made pursuant to Paragraphs 10(b) or 10(c) of this Agreement,
aggregated with any other payments or benefits received by the Employee, would
(i) constitute "parachute payments" within the meaning of Section 280G of the
Code and (ii) but for this Paragraph 10(d), would be subject to the excise tax
imposed by Section 4999 of the Code, then the Employee's Severance Payment
hereunder shall either (A) be reduced to such lesser amount which would result
in no portion of such severance benefits being subject to excise tax under
Section 4999 of the Code or (B) be payable in full, whichever of the foregoing
amounts, taking into account all applicable federal, state, and local taxes and
the 20% excise tax imposed by Section 4999 of the Code, results in the greatest
amount to be received by the Employee on an after-tax basis. Unless the Company
and the Employee otherwise agree in writing, any determination required under
this Paragraph 10(d) shall be made in writing by the Company's independent
public accountants (the "Accountants"), whose determination shall be conclusive
and binding upon the Employee and the Company for all purposes. For purposes of
making the calculations required by this Paragraph 10(d), the Accountants may
make reasonable assumptions and approximations concerning applicable taxes and
may rely on reasonable, good faith interpretations concerning the application of
Sections 280G and 4999 of the Code. The Company and the Employee shall furnish
to the Accountants such information and documents as the Accountants may
reasonably request in order to make a determination under this Paragraph 10(d).
The Company shall bear all costs the Accountants may reasonably incur in
connection with any calculations contemplated by this Paragraph 10(d).
11. Deductions and Withholding. The Employee agrees that the Company
shall withhold from any and all payments required to be made to the Employee
pursuant to this Agreement, all Federal, state, local and/or other taxes which
the Company determines are required to be withheld in accordance with applicable
statutes and/or regulations from time to time in effect.
12. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be delivered personally or sent by
registered or certified mail, return receipt requested, to the other party
hereto at his or its address as set forth at the beginning of this Agreement.
Either party may change the address to which notices, requests, demands and
other communications hereunder shall be sent by sending written notice of such
change of address to the other party.
13. Assignability, Binding Effect and Survival. This Agreement shall
inure to the benefit of and shall be binding upon the heirs, executors,
administrators, successors and legal representatives of the Employee, and shall
inure to the benefit of and be binding upon the Company and its successors and
permitted assigns. Any successor to the Company to all or substantially all of
the Company's business and/or assets (by purchase, merger, consolidation or
otherwise) shall assume the obligations of the Company hereunder. This Agreement
may be assigned by the Company to any direct wholly-owned subsidiary of Parent
which has succeeded to the rights of the Company under the Merger Agreement.
Notwithstanding the foregoing, the obligations of the Employee may not be
delegated and, except as expressly provided in Paragraph 9 hereof relating to
the designation of beneficiaries, the Employee may not assign, transfer, pledge,
encumber, hypothecate or otherwise dispose of this Agreement, or any of his
rights hereunder, and any such attempted delegation or disposition shall be null
and void and without effect.
14. Complete Understanding; Amendment. This Agreement constitutes the
complete understanding between the parties with respect to the employment of the
Employee hereunder, and no statement, representation, warranty or covenant has
been made by either party with respect thereto except as expressly set forth
herein. This Agreement shall not be altered, modified, amended or terminated
except by written instrument signed by each of the parties hereto. Waiver by
either party hereto of any breach hereunder by the other party shall not operate
as a waiver of any other breach, whether similar to or different from the breach
waived. The Employee acknowledge and agrees that this Agreement was executed by
the Company in part as consideration for the Employee's consent to the
termination of his rights under the Ventritex, Inc. Employee Change of Control
Severance Plan. Notwithstanding the foregoing, this Agreement shall not
supersede or affect the obligations of the Employee pursuant to any agreement or
instrument executed by him relating to confidentiality, non-solicitation of
employees and/or similar matters.
15. Governing Law. This Agreement shall be governed by the laws of the
state of California.
16. Paragraph Headings. The paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
17. Severability. If any provision of this Agreement or the application
of any such provision to any party or circumstances shall be determined by any
court of competent jurisdiction to be invalid and unenforceable to any extent,
the remainder of this Agreement or the application of such provision to such
person or circumstances other than those to which it is so determined to be
invalid and unenforceable, shall not be affected thereby, and each provision
hereof shall be validated and shall be enforced to the fullest extent permitted
by law.
18. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled by arbitration in accordance
with the rules of the American Arbitration Association then in effect, conducted
before a panel of three arbitrators sitting in a location selected by the
Employee within fifty (50) miles from the location of his or her job with the
Company. In consideration for the Employee's waiver of his right to litigate any
such dispute or controversy in a court of law, and notwithstanding any contrary
provisions of California law regarding allocation of attorney fees, costs and
expenses in arbitration proceedings, the Company agrees to pay the reasonable
attorney fees, costs and expenses (as determined by the arbitrator) incurred in
good faith by the Employee in connection with any such arbitration in which the
Employee prevails. Any attorney fees, costs and expenses incurred by the
Employee in connection with an arbitration in which the Company prevails shall
be borne by the Employee.
19. Mitigation. The Employee shall not be required to mitigate the
amount of any payment contemplated by this Agreement, nor shall any such payment
be reduced by any earnings that the Employee may receive from any other source.
IN WITNESS WHEREOF, the parties hereto set their hands as of
the day and year first above written.
PACESETTER, INC.
By: ______________________________________
Name:
Title:
__________________________________________
[Employee]
H.R.M.
October ___, 1996
Ventritex, Inc.
701 E. Evelyn Avenue
Sunnyvale, CA 94086
Dear Sirs:
Reference is made to the provisions of the Agreement and Plan
of Merger, dated as of October 23, 1996 (together with any amendments thereto,
the "Merger Agreement"), among VENTRITEX, INC., a Delaware corporation (the
"Company"); ST. JUDE MEDICAL, INC., a Minnesota corporation ("Parent"); and
PACESETTER, INC., a Delaware corporation and a wholly owned subsidiary of Parent
("Acquisition"), pursuant to which the Company will be merged with and into
Acquisition, with Acquisition continuing as the surviving corporation (the
"Merger"). This letter constitutes the undertakings of the undersigned
contemplated by the Merger Agreement.
I hereby represent, warrant, and covenant to the Company that:
(a) I will not (i) sell, pledge, transfer or otherwise dispose
of any shares of common stock, par value $.001 per share, of the Company
("Company Shares") prior to the Effective Time (as defined in the Merger
Agreement) or (ii) sell or otherwise reduce my risk (within the meaning of the
Securities and Exchange Commission's Financial Reporting Release No. 1.,
"Codification of Financial Reporting Policies," Section 201.01 47 F.R. 21028
(April 15, 1982) relative to any shares of common stock, par value $.10 per
share, of the Parent ("Parent Shares") until after such time as consolidated
financial results (including combined sales and net income) covering at least 30
days of post-merger combined operations of Parent and the Company have been
published by Parent, except as permitted by Staff Accounting Bulletin No. 76
issued by the Securities and Exchange Commission; and
(b) I have not knowingly taken and will not knowingly take or
agree to take any action that would prevent the Merger from qualifying, or being
accounted for, as a pooling-of-interests.
I agree that, from time to time, at the Company's reasonable
request and without further consideration, I shall execute and deliver such
additional documents and shall use my reasonable best efforts to take all such
further lawful action as may be reasonably necessary or desirable to consummate
and make effective, in the most expeditious manner practicable, the transactions
contemplated by the Merger Agreement.
The term Parent Shares as used in this letter shall mean and
include not only the common stock of Parent as presently constituted, but also
any other stock which may be issued in exchange for, in lieu of, or in addition
to, all or any part of such Parent Shares.
I hereby acknowledge that the Company and its independent
public accountants will be relying upon this letter in connection with the
determination that the Merger will qualify or be accounted for as a
pooling-of-interests, and that I understand the requirements of this letter and
the limitations imposed upon the transfer, sale, or other disposition of the
Parent Shares.
Very truly yours,
cc: General Counsel
St. Jude Medical, Inc.
