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EXHIBIT A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
PERCUSURGE, INC.
ARTICLE 1 - NAME
The name of the corporation shall be Medtronic PercuSurge, Inc.
ARTICLE 2 - REGISTERED OFFICE AND AGENT
The registered office of the corporation in the State of Delaware is 1209
Orange Street, in the City of Wilmington, County of New Castle, Delaware, 19801.
The name of its registered agent at such address is The Corporation Trust
Company.
ARTICLE 3 - PURPOSES
The nature of the business or purposes to be conducted or promoted by the
corporation is to engage in any lawful acts and activities for which
corporations may be organized under the General Corporation Law of Delaware.
ARTICLE 4 - STOCK
The aggregate number of shares the corporation has authority to issue shall
be 2,500 shares of Common Stock, $.01 par value. Holders of Common Stock shall
be entitled to one vote for each share of Common Stock held of record.
ARTICLE 5 - RIGHTS OF STOCKHOLDERS
5.1) NO PREEMPTIVE RIGHTS. No holder of shares of the corporation of any
class now or hereafter authorized has any preferential or preemptive right to
subscribe for, purchase or receive any shares of the corporation of any class
now or hereafter authorized, or any options or warrants for such shares, which
may at any time be issued, sold or offered for sale by the corporation.
5.2) NO CUMULATIVE VOTING RIGHTS. No holder of shares of the corporation of
any class now or hereafter authorized shall be entitled to cumulative voting.
ARTICLE 6 - MEETINGS AND BOOKS
6.1) MEETINGS OF STOCKHOLDERS AND ELECTION OF DIRECTORS. Meetings of
stockholders may be held within or outside the State of Delaware, as the Bylaws
may provide. Elections of directors need not be by written ballot unless and
except to the extent that the Bylaws so provide.
6.2) CORPORATE BOOKS. The books of the corporation may be kept within or
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of the corporation.
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ARTICLE 7 - LIMITATION OF DIRECTOR LIABILITY
To the fullest extent permitted by the Delaware General Corporation Law, as
the same exists or may hereafter be amended, a director of this corporation
shall not be personally liable to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director. The corporation
shall indemnify, to the fullest extent permitted by law, any person made or
threatened to be made a party to any action or proceeding, whether criminal,
civil, administrative or investigative, by reason of the fact that he or she, or
his or her testator or intestate, is or was a director or officer of the
corporation or any predecessor of the corporation, or serves or served at any
other enterprise as a director or officer at the request of the corporation or
any predecessor to the corporation. Any repeal or modification of the foregoing
provisions of this Article 7 by the stockholders of the corporation shall not
adversely affect any right or protection of a director of the corporation
existing at the time of such repeal or modification.
ARTICLE 8 - BYLAWS
The Board of Directors is expressly authorized to make and alter Bylaws of
this corporation, subject to the power of the stockholders to change or repeal
such Bylaws and subject to any other limitations on such authority provided by
the General Corporation Law of Delaware.
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EXHIBIT B
AFFILIATE'S LETTER
Medtronic, Inc.
7000 Central Avenue, N.E.
Minneapolis, Minnesota 55432
Ladies and Gentlemen:
The undersigned officer, director and/or shareholder having the right to
designate a director of PercuSurge, Inc. (the "Company") has been advised that
the undersigned may be deemed by the Company to be an "affiliate" of the
Company, as that term is used in paragraphs (c) and (d) of Rule 145 under the
Securities Act of 1933, as amended (the "Securities Act") (such rule, as amended
or replaced by any successor rule, referred to herein as "Rule 145") and for
purposes of Accounting Series Releases 130 and 135, as amended, of the
Securities and Exchange Commission (the "SEC"). Pursuant to the terms of the
Agreement and Plan of Merger dated on or about the date hereof (the "Merger
Agreement"), among Medtronic, Inc. ("Parent"), Trojan Merger Corp. ("Merger
Subsidiary"), and the Company, Merger Subsidiary will be merged with and into
the Company (the "Merger"). As a result of the Merger, outstanding shares of
common stock, $.001 par value per share, of the Company ("Company Common Stock")
and outstanding shares of preferred stock, $.001 par value per share, of the
Company ("Company Preferred Stock") will be converted into the right to receive
shares of common stock, $.10 par value per share, of Parent ("Parent Common
Stock"), as determined pursuant to the Merger Agreement.
In order to induce Parent and the Company to enter into the Merger Agreement,
the undersigned (referred to herein as "Affiliate") represents, warrants and
agrees as follows:
1. Affiliate will not directly or indirectly take any action that would have
the effect of jeopardizing the treatment of the Merger as a "pooling of
interests," sell, transfer, pledge, dispose of, or otherwise reduce
Affiliate's risk relative to, any Parent Common Stock, Company Common
Stock, or Company Preferred Stock during the period commencing 30 days
prior to the effective time of the Merger and ending at such time as
financial results covering at least 30 days of the post-Merger combined
operations of Parent and the Company have been published by Parent, in the
form of a quarterly earnings report, an effective registration statement
filed with the SEC, a report to the SEC on Form 10-K, 10-Q or 8-K, or any
other public filing or announcement which includes the combined results of
operations.
2. Affiliate has been advised that the issuance of the Parent Common Stock, if
any, to Affiliate pursuant to the Merger is being registered with the SEC
under the Securities Act and the rules and regulations promulgated
thereunder on a Registration Statement on Form S-4. However, Affiliate has
also been advised that, because Affiliate may be
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deemed to be an "affiliate" of the Company (as that term is used in
paragraphs (c) and (d) of Rule 145), any sale, transfer or other
disposition by Affiliate of any Parent Common Stock issued pursuant to the
Merger will, under current law, require either (a) further registration
under the Securities Act of the Parent Common Stock to be sold,
transferred, or otherwise disposed of, (b) compliance with Rule 145, or (c)
the availability of another exemption from such registration.
3. Affiliate will not offer to sell, sell, or otherwise dispose of any Parent
Common Stock issued pursuant to the Merger except pursuant to an effective
registration statement or in compliance with Rule 145 or another exemption
from the registration requirements of the Securities Act (the compliance
with Rule 145 or the availability of such other exemption to be established
by Affiliate to the reasonable satisfaction of Parent's counsel).
4. Affiliate consents to the placement of a stop transfer order with the
Company's and Parent's stock transfer agent and registrar, and to the
placement of the following legend on certificates representing the Company
Common Stock, Company Preferred Stock, or Parent Common Stock issued or to
be issued to Affiliate:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH AN AFFILIATE'S
LETTER FROM THE UNDERSIGNED TO MEDTRONIC, INC. AND PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT OR IN COMPLIANCE WITH RULE
145 OF THE SECURITIES ACT OF 1933 OR ANOTHER EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933."
5. Affiliate has carefully read this letter and has discussed with counsel for
Affiliate or counsel for the Company, to the extent Affiliate felt
necessary, the requirements of this letter and other applicable limitations
on the Affiliate's ability to sell, transfer, or otherwise dispose of
Company Common Stock, Company Preferred Stock, and Parent Common Stock.
6. The Company agrees to take all reasonable actions up to the date of the
Merger, including but not limited to the placement of a stop transfer order
with the Company's stock transfer agent and registrar, to ensure compliance
by Affiliate with the provisions of this letter.
7. Execution of this letter should not be considered an admission on the part
of Affiliate that Affiliate is an "affiliate" of the Company as described
in the first paragraph of this letter, nor as a waiver of any rights that
Affiliate may have to object to any claim that Affiliate is such an
affiliate on or after the date of this letter.
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Very truly yours,
[If Affiliate is an individual,
sign here]
-------------------------------
[Signature]
-------------------------------
[Print Name]
[If Affiliate is an
entity, sign here]
---------------------------------
[Print Name of Entity]
By:------------------------------
Its:-------------------------
PERCUSURGE, INC.
By:-----------------------------
Its:--------------------------
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ACCEPTANCE
Medtronic, Inc. hereby accepts the foregoing Affiliate's Letter delivered
pursuant to Section 6.7 of the Agreement and Plan of Merger dated October ___,
2000, by and among Medtronic, Inc., Trojan Merger Corp., and PercuSurge, Inc.
MEDTRONIC, INC.
By:_____________________________
Its:__________________________
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EXHIBIT C
AGREEMENT TO FACILITATE MERGER
DATE: October ____, 2000
PARTIES:
Medtronic, Inc., (hereinafter "Parent")
a Minnesota corporation
and
---------------------------,
an individual officer, director
and/or shareholder having the
right to designate a director
of PercuSurge, Inc. (hereinafter "Security Holder")
RECITALS:
A. Security Holder is the legal or beneficial owner of shares of Common
Stock or Preferred Stock of PercuSurge, Inc., a Delaware corporation (the
"Company"), and/or the holder of options, warrants, or other rights to acquire
shares of Company Common Stock or Company Preferred Stock.
B. Parent, the Company, and a wholly-owned subsidiary of Parent are
entering, or have entered, into an Agreement and Plan of Merger (the "Merger
Agreement") pursuant to which it is proposed that Parent's subsidiary will merge
with and into the Company (the "Merger") and as a result of which the
outstanding shares of Company Common Stock shall be converted into Parent Common
Stock.
C. Security Holder deems it to be in Security Holder's best interest and in
the best interests of the Company and all other stockholders of the Company that
the Merger Agreement be approved, ratified, and confirmed by the stockholders of
the Company, and it is a condition to Parent's obligations under the Merger
Agreement that Security Holder enter into this Agreement.
D. It is understood and acknowledged by Security Holder that Parent's
execution of the Merger Agreement is being done in reliance, in part, upon the
contemporaneous execution and delivery of this Agreement, that Parent will incur
substantial expenses proceeding toward consummation of the Merger as
contemplated by the Merger Agreement, and that such expenses will be undertaken,
in part, in reliance upon and as a result of the agreements and undertakings of
Security Holder set forth herein.
NOW, THEREFORE, in consideration of the foregoing, and in order to induce
Parent to execute the Merger Agreement and to proceed as contemplated by the
Merger Agreement toward
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the consummation of the Merger, and for other good and valuable consideration,
the receipt and adequacy of which is hereby acknowledged, the parties hereto
agree as follows:
AGREEMENTS:
1. VOTE IN FAVOR OF MERGER. During the period commencing on the date hereof
and terminating upon the earlier of (i) the effective time of the Merger, and
(ii) the termination of the Merger Agreement in accordance with its terms,
Security Holder agrees to vote (or cause to be voted) all shares of Company
Common Stock and Company Preferred Stock presently beneficially owned by
Security Holder, and all shares of Company Common Stock and Company Preferred
Stock with respect to which Security Holder in the future acquires beneficial
ownership, at any meeting of the stockholders of the Company, and in any action
by written consent of the stockholders of the Company, in favor of the approval,
consent, and ratification of the Merger Agreement and the Merger. To the extent
inconsistent with the foregoing provisions of this Section 1, Security Holder
hereby revokes any and all previous proxies with respect to any shares of
Company Common Stock or Company Preferred Stock that Security Holder owns or has
the right to vote. Nothing in this Agreement shall be deemed to restrict or
limit Security Holder's right to act in his capacity as an officer or director
of the Company consistent with his fiduciary obligations in such capacity.
2. REPRESENTATIONS AND WARRANTIES OF SECURITY HOLDER. Security Holder
represents and warrants to Parent that Security Holder has the legal capacity to
enter into and perform all of Security Holder's obligations under this
Agreement. The execution, delivery, and performance of this Agreement by
Security Holder will not violate any other agreement to which Security Holder is
a party, including, without limitation, any voting agreement, stockholders
agreement, or voting trust. This Agreement has been duly executed and delivered
by Security Holder and constitutes a legal, valid, and binding agreement of
Security Holder, enforceable in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, and similar laws, now or hereafter in
effect.
3. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon any
purchasers, donees, pledgees, and other transferees of Company Common Stock or
Company Preferred Stock legally or beneficially owned by Security Holder. During
the period commencing on the date hereof and terminating upon the earlier of the
effective time of the Merger and the termination of the Merger Agreement in
accordance with its terms, Security Holder agrees not to make any sales, gifts,
transfers, pledges, or other dispositions of Company Common Stock or Company
Preferred Stock without first making any such transferee or pledgee fully aware
of Security Holder's obligations under this Agreement and obtaining such
transferee's or pledgee's written agreement to comply with all terms hereof.
4. INJUNCTIVE RELIEF. Security Holder agrees that in the event of Security
Holder's breach of any provision of this Agreement, Parent may be without an
adequate remedy at law. Security Holder therefore agrees that in the event of
Security Holder's breach of any provision of this Agreement, Parent may elect to
institute and prosecute proceedings in any court of competent jurisdiction to
enforce specific performance or to enjoin the continuing breach of such
provision, as well as to obtain damages for breach of this Agreement. By seeking
or obtaining
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any such relief, Parent will not be precluded from seeking or obtaining any
other relief to which it may be entitled.
5. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and
all of which together shall constitute one and the same document.
6. FURTHER ASSURANCES. Security Holder shall execute and deliver such
additional documents and take such further action as may be
necessary or desirable to consummate the transactions contemplated by this
Agreement.
7. THIRD-PARTY BENEFICIARIES. Nothing in this Agreement, expressed or
implied, shall be construed to give any person other than the parties hereto any
legal or equitable right, remedy, or claim under or by reason of this Agreement
or any provision contained herein.
8. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware (regardless of
the laws that might otherwise govern under applicable Delaware principles of
conflicts of laws).
9. EFFECTIVENESS. If this Agreement is executed by Security Holder prior to
the approval of the Merger Agreement by the Company's Board of Directors, then
this Agreement shall be subject to, and shall become effective only upon, the
approval of the Merger Agreement by the Company's Board of Directors and the
execution and delivery of the Merger Agreement by the Company, Parent and
Parent's subsidiary. This Agreement shall terminate upon termination of the
Merger Agreement in accordance with its terms.
IN WITNESS WHEREOF, Parent has caused this Agreement to Facilitate Merger
to be executed by its duly authorized officer, and Security Holder has executed
this Agreement, as of the date and year first above written.
Medtronic, Inc.
By:------------------------------
Its:--------------------------
[If Security Holder is an
individual, sign here]
---------------------------------
[Signature]
[Print Name of Natural Person]
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[If Security Holder is
an entity, sign here]
--------------------------------
[Print Name of Entity]
By:------------------------------
Its:----------------------------
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EXHIBIT D
STOCK OPTION AGREEMENT
THIS AGREEMENT is dated as of October ___, 2000, between Medtronic, Inc., a
Minnesota corporation ("Grantee"), and PercuSurge, Inc., a Delaware corporation
("Issuer").
RECITALS
A. Grantee, Issuer, and Trojan Merger Corp., a Delaware corporation and
wholly-owned subsidiary of Grantee ("Merger Subsidiary"), have entered into an
Agreement and Plan of Merger (the "Merger Agreement") which provides, among
other things, that, upon the terms and subject to the conditions thereof, Merger
Subsidiary will be merged with and into Issuer (the "Merger").
B. As a condition to its willingness to enter into the Merger Agreement,
Grantee has required that Issuer enter into this Agreement, which provides,
among other things, that Issuer grant to Grantee an option to purchase shares of
Issuer's Common Stock, par value $.001 per share ("Issuer Common Stock"), upon
the terms and subject to the conditions provided for herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements contained in this Agreement and the Merger Agreement, the parties
agree as follows:
1. GRANT OF OPTION. Subject to the terms and conditions of this Agreement,
Issuer hereby grants to Grantee an irrevocable option (the "Option") to purchase
Twelve Million Nine Hundred Twenty-Five Thousand Eight Hundred Sixty-Five
(12,925,865) shares of Issuer Common Stock (the "Option Shares"), in the manner
set forth below, at an exercise price of $4.32 per share of Issuer Common Stock,
subject to adjustment as provided below (the "Option Price"). Issuer represents
that the Option Shares represent 19.9% of the number of shares of Issuer Common
Stock (on a fully-diluted basis) outstanding on the date hereof. Capitalized
terms used herein but not defined herein shall have the meanings set forth in
the Merger Agreement.
2. EXERCISE OF OPTION.
(a) Subject to the terms and conditions of this Agreement, Grantee or
its designee (which shall be a wholly-owned subsidiary of Grantee) may,
prior to the Expiration Date (as defined in Section 11), exercise the
option, in whole or in part, at any time or from time to time on or after
the occurrence of an Exercise Event (as defined below). As used herein, an
"Exercise Event" shall mean (i) the occurrence of a termination specified
in Section 8.2(a)(i) or Section 8.2(a)(ii) of the Merger Agreement or (ii)
immediately prior to consummation of an Alternative Control Transaction
after the occurrence of all of the events and circumstances specified in
Section 8.2(a)(iii) of the Merger Agreement. This Option shall not be
exercisable unless and until an Exercise Event shall occur.
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(b) In the event Grantee wishes to exercise the Option at such time as
the Option is exercisable, Grantee shall deliver written notice (the
"Exercise Notice") to Issuer specifying its intention to exercise the
Option, the total number of Option Shares it wishes to purchase, and a date
and time for the closing of such purchase (a "Closing") not less than three
nor more than ten business days after the later of (i) the date such
Exercise Notice is given and (ii) the expiration or termination of any
applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"). When this Option is
exercisable, Grantee, in lieu of exercising the Option, shall have the
right at any time thereafter prior to the Expiration Date to request in
writing (the "Cash Cancellation Notice") that Issuer pay, and promptly (but
in any event not more than five business days) after Grantee makes such
request, Issuer shall, subject to Section 2(c) below, pay to Grantee by
certified check, official bank check or wire transfer pursuant to Grantee's
instructions, in cancellation of the Option, an amount in cash (the
"Cancellation Amount") equal to (i) the lesser of
(x) the excess, if any, over the Option Price of the greater of
(A) the highest price per share of Issuer Common Stock offered to be
paid or paid in connection with the Alternative Transaction giving
rise to such Cash Cancellation Notice, and (B) if the Alternative
Transaction giving rise to such Cash Cancellation Notice is structured
as an asset acquisition, the highest aggregate consideration offered
to be paid or paid in such transaction or proposed transaction,
divided by the number of shares of Issuer Common Stock then
outstanding, and
(y) $7,000,000 divided by the initial number of Option Shares
covered by the Option,
multiplied by (ii) the number of Option Shares then covered by the
Option; provided, however, that the Cancellation Amount shall be
reduced (but not below zero) to the extent necessary so that the sum of
the termination fee described in Section 8.2(a) of the Merger Agreement
(the "Termination Fee") paid to Grantee, the Option Share Profit (as
defined below) not remitted to Issuer pursuant to Section 2(c) hereof,
and the Cancellation Amount shall not exceed $7,000,000. If all or a
portion of the price per share of Issuer Common Stock offered, paid, or
payable or the aggregate consideration offered, paid, or payable for
the assets of Issuer, each as contemplated by the preceding sentence,
consists of noncash consideration, the amount described in clause (x)
of the preceding sentence shall equal the excess, if any, over the
Option Price of the Last Sale Price. In no event shall (i) the
Cancellation Amount exceed $7,000,000 or (ii) the sum of the
Termination Fee paid, the Option Share Profit not remitted to Issuer
pursuant to Section 2(c) hereof, and the Cancellation Amount paid
exceed $7,000,000.
(c) In the event that Grantee sells, pledges, or otherwise
disposes of (including, without limitation, by merger or exchange) any
Option Shares (such sale or disposition of Option Shares within six
months after acquisition referred to as a "Sale"), or in the event
that any Cancellation Amount is paid to Grantee or any Option Share
Profit is received by Grantee (and not required to be remitted to
Issuer pursuant to this
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Section 2(c)), then any Termination Fee due and payable by Issuer
shall be reduced to the extent necessary so that the sum of
(w) the Termination Fee;
(x) any Cancellation Amount paid to Grantee;
(y) the amount received (whether in cash, loan
proceeds, securities, or otherwise) by Grantee in such Sale
less the exercise price of such Option Shares sold in the
Sale (the "Option Share Profit") and not remitted to Issuer
pursuant to this Section 2(c); and
(z) Option Share Profit received in connection with any
prior Sales of Option Shares and not remitted to Issuer pursuant
to this Section 2(c),
Shall not exceed $7,000,000. Grantee shall remit to Issuer,
within five business days after completion of any Sale, the
amount, if any, by which the Option Share Profit from such Sale,
when added to the Termination Fee previously paid, the
Cancellation Amount previously paid, and the Option Share Profit
from prior Sales of Option Shares not remitted to Issuer pursuant
to this Section 2(c), exceeds $7,000,000.
3. PAYMENT OF OPTION PRICE AND DELIVERY OF CERTIFICATE. Any Closings under
Section 2 of this Agreement shall be held at the principal executive offices of
Issuer, or at such other place as Issuer and Grantee may agree. At any Closing
hereunder, (a) Grantee or its designee will make payment to Issuer of the
aggregate price for the Option Shares being so purchased by delivery of a
certified check, official bank check, or wire transfer of funds pursuant to
Issuer's instructions payable to Issuer in an amount equal to the product
obtained by multiplying the Option Price by the number of Option Shares to be
purchased, and (b) upon receipt of such payment Issuer will deliver to Grantee
or its designee (which shall be a wholly-owned subsidiary of Grantee) a
certificate or certificates representing the number of validly issued, fully
paid, and nonassessable Option Shares so purchased, in the denominations and
registered in such names (which shall be Grantee or a wholly-owned subsidiary of
Grantee) designated in writing to Issuer by Grantee.
4. REGISTRATION OF OPTION SHARES. The Company shall use its commercially
reasonable best efforts to cause Grantee to be granted registration rights with
respect to the Option Shares pursuant to the certain Amended and Restated
Stockholder Rights Agreement dated March 17, 2000 among the Company and certain
shareholders of the Company.
5. REPRESENTATIONS AND WARRANTIES OF ISSUER. Issuer hereby represents and
warrants to Grantee as follows:
(a) Issuer is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware and has requisite
corporate power and authority to enter into and perform this Agreement.
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(b) The execution and delivery of this Agreement by Issuer and the
consummation by Issuer of the transactions contemplated hereby have been
duly and validly authorized by the Board of Directors of Issuer, and no
other corporate proceedings on the part of Issuer are necessary to
authorize this Agreement or to consummate the transactions contemplated
hereby. The Board of Directors of Issuer has duly approved the issuance and
sale of the Option Shares, upon the terms and subject to the conditions
contained in this Agreement, and the consummation of the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Issuer and, assuming this Agreement has been duly and validly
authorized, executed, and delivered by Grantee, constitutes a valid and
binding obligation of Issuer enforceable against Issuer in accordance with
its terms, subject to bankruptcy, insolvency, reorganization, moratorium,
or other similar laws affecting or relating to creditors' rights generally;
the availability of injunctive relief and other equitable remedies; and
limitations imposed by law on indemnification for liability under federal
securities laws.
(c) Issuer has taken all necessary action to authorize and reserve for
issuance and to permit it to issue, and at all times from the date of this
Agreement through the date of expiration of the Option will have reserved
for issuance upon exercise of the Option, such number of authorized shares
of Issuer Common Stock as is equal to the number of Option Shares (or such
other amount as may be required pursuant to Section 10 hereof), each of
which, upon issuance pursuant to this Agreement and when paid for as
provided herein, will be validly issued, fully paid, and nonassessable, and
shall be delivered free and clear of all claims, liens, charges,
encumbrances, and security interests and not subject to any preemptive
rights.
(d) The execution, delivery, and performance of this Agreement by
Issuer and the consummation by it of the transactions contemplated hereby
except as required by the HSR Act (if applicable), and, with respect to
Section 4, compliance with the provisions of the 1933 Act and any
applicable state securities laws, do not require the consent, waiver,
approval, license, or authorization of or result in the acceleration of any
obligation under, or constitute a default under, any term, condition, or
provision of any charter or bylaw, or any indenture, mortgage, lien, lease,
agreement, contract, instrument, order, judgment, ordinance, regulation, or
decree or any restriction to which Issuer or any property of Issuer or its
subsidiaries is bound, except where the failure to obtain such consents,
waivers, approvals, licenses, or authorizations or where such acceleration
or defaults would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
6. REPRESENTATIONS AND WARRANTIES OF GRANTEE. Grantee hereby represents and
warrants to Issuer that:
(a) Grantee is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Minnesota and has requisite
corporate power and authority to enter into and perform this Agreement.
(b) The execution and delivery of this Agreement by Grantee and the
consummation of the transactions contemplated hereby have been duly and
validly
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authorized by the Board of Directors of Grantee, and no other
corporate proceedings on the part of Grantee are necessary to authorize
this Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Grantee and,
assuming this Agreement has been duly executed and delivered by Issuer,
constitutes a valid and binding obligation of Grantee enforceable against
Grantee in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium, or other similar laws affecting or relating to
creditors' rights generally; the availability of injunctive relief and
other equitable remedies; and limitations imposed by law on indemnification
for liability under federal securities laws, including, without limitation,
the 1933 Act.
(c) Grantee or its designee is acquiring the Option and it will
acquire the Option Shares issuable upon the exercise thereof for its own
account and not with a view to the distribution or resale thereof in any
manner not in accordance with applicable law.
7. COVENANTS OF GRANTEE. Grantee agrees not to transfer or otherwise
dispose of the Option Shares, or any interest therein, except in compliance with
the 1933 Act and any applicable state securities law. Grantee further agrees to
the placement of the following legend on the certificates representing the
Option Shares (in addition to any legend required under applicable state
securities laws):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER EITHER (1) THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR (2) ANY APPLICABLE STATE LAW GOVERNING THE OFFER AND SALE OF
SECURITIES. NO TRANSFER OR OTHER DISPOSITION OF THESE SHARES, OR OF
ANY INTEREST THEREIN, MAY BE MADE EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND SUCH OTHER STATE LAWS OR
PURSUANT TO EXEMPTIONS FROM REGISTRATION UNDER THE ACT, SUCH OTHER
STATE LAWS, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER."
8. REASONABLE BEST EFFORTS. Grantee and Issuer shall take, or cause to be
taken, all reasonable action to consummate and make effective the transactions
contemplated by this Agreement, including, without limitation, reasonable best
efforts to obtain any necessary consents of third parties and governmental
agencies and the filing by Grantee and Issuer promptly after the date hereof of
any required HSR Act notification forms and the documents required to comply
with the HSR Act.
9. CERTAIN CONDITIONS. The obligation of Issuer to issue Option Shares
under this Agreement upon exercise of the Option shall be
subject to the satisfaction or waiver of the following conditions:
(a) any waiting periods applicable to the acquisition of the Option
Shares by Grantee pursuant to this Agreement under the HSR Act shall have
expired or been terminated;
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(b) the representations and warranties of Grantee made in Section 6 of
this Agreement shall be true and correct in all material respects as of the
date of the Closing for the issuance of such Option Shares; and
(c) no order, decree, or injunction entered by any court of competent
jurisdiction or governmental, regulatory, or administrative agency or
commission in the United States shall be in effect that prohibits the
exercise of the option or acquisition of Option Shares pursuant to this
Agreement.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of any change
in the number of issued and outstanding shares of Issuer Common Stock by reason
of any stock dividend, stock split, recapitalization, merger, rights offering,
share exchange, or other change in the corporate or capital structure of Issuer,
Grantee shall receive, upon exercise of the Option, the stock or other
securities, cash, or property to which Grantee would have been entitled if
Grantee had exercised the Option and had been a holder of record of shares of
Issuer Common Stock on the record date fixed for determination of holders of
shares of Issuer Common Stock entitled to receive such stock or other
securities, cash, or property at the same aggregate price as the aggregate
Option Price of the Option Shares.
11. LIMITATION ON EXERCISE. Notwithstanding any other provision of this
Agreement, the Option may not be exercised for a number of Option Shares as
would, as of the date of the Exercise Notice, result in a Notional Total Profit
(as defined below) of more than $7,000,000 and, if exercise of the Option
otherwise would exceed such amount, Grantee, at its discretion, may increase the
Option Price for that number of Option Shares set forth in the Exercise Notice
so that the Notional Total Profit shall not exceed $7,000,000; provided, that
nothing in this sentence shall restrict any exercise of the Option permitted
hereby on any subsequent date at the Option Price set forth in Section 1.
As used herein, "Notional Total Profit" with respect to any number of
Option Shares as to which Grantee may propose to exercise the Option means the
Total Profit determined as of the date of the Exercise Notice assuming, for
purposes of clause (iii) of the definition of Total Profit, that (x) the Option
were exercised on such date for such number of Option Shares and (y) such Option
Shares, together with all other Option Shares held by Grantee and its affiliates
as of such date, were sold for cash at the closing market price for Issuer
Common Stock as of the close of business on the preceding trading day (less
customary brokerage commissions).
As used herein, "Total Profit" means the aggregate amount (before taxes) of
the following: (i) the Termination Fee paid to Grantee; (ii) any Cancellation
Amount paid to Grantee; and (iii) all Option Share Profits received in
connection with Sales of Option Shares and not remitted to Issuer pursuant to
Section 2(c).
12. EXPIRATION. The Option shall expire at the earlier of (a) the Effective
Time (as defined in the Merger Agreement), (b) six months after the termination
of the Merger Agreement in accordance with the terms thereof in the event
Section 8.2(a)(i) or Section 8.2(a)(ii) of the Merger Agreement applies, or six
months after the date of consummation of the Alternative Control Transaction in
the event Section 8.2(a)(iii) of the Merger Agreement applies, or (c)
termination of the Merger Agreement in accordance with the terms thereof in
circumstances
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under which the fee specified in Section 8.2 thereof cannot in any circumstances
become payable (such expiration date is referred to as the "Expiration Date").
13. GENERAL PROVISIONS.
(a) SURVIVAL. All of the representations, warranties, and covenants
contained herein shall survive each Closing and shall be deemed to have
been made as of the date hereof and as of the date of each Closing.
(b) FURTHER ASSURANCES. If Grantee exercises the Option, or any
portion thereof, in accordance with the terms of this Agreement, Issuer and
Grantee will execute and deliver all such further documents and instruments
and use their reasonable best efforts to take all such further action as
may be necessary in order to consummate the transactions contemplated
thereby.
(c) SEVERABILITY. It is the desire and intent of the parties that the
provisions of this Agreement be enforced to the fullest extent permissible
under the law and public policies applied in each jurisdiction in which
enforcement is sought. Accordingly, in the event that any provision of this
Agreement would be held in any jurisdiction to be invalid, prohibited, or
unenforceable for any reason, such provision, as to such jurisdiction,
shall be ineffective, without invalidating the remaining provisions of this
Agreement or affecting the validity or enforceability of such provision in
any other jurisdiction. Notwithstanding the foregoing, if such provision
could be more narrowly drawn so as not be invalid, prohibited, or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be
so narrowly drawn, without invalidating the remaining provisions of this
Agreement or affecting the validity or enforceability of such provision in
any other jurisdiction.
(d) ASSIGNMENT. This Agreement shall be binding on and inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that Issuer shall not be entitled to assign or otherwise
transfer any of its rights or obligations hereunder, and Grantee shall not
be entitled to assign or otherwise transfer any of its rights or
obligations hereunder, other than Grantee's rights under Section 4 which
may be assigned to a transferee of Option Shares.
(e) SPECIFIC PERFORMANCE. The parties agree and acknowledge that in
the event of a breach of any provision of this Agreement, the aggrieved
party would be without an adequate remedy at law. The parties therefore
agree that in the event of a breach of any provision of this Agreement, the
aggrieved party may elect to institute and prosecute proceedings in any
court of competent jurisdiction to enforce specific performance or to
enjoin the continuing breach of such provision, as well as to obtain
damages for breach of this Agreement. By seeking or obtaining any such
relief, the aggrieved party will not be precluded from seeking or obtaining
any other relief to which it may be entitled.
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(f) AMENDMENTS. This Agreement may not be modified, amended, altered,
or supplemented except upon the execution and delivery of a
written agreement executed by Grantee and Issuer.
(g) NOTICES. All notices, requests, claims, demands, and other
communications hereunder shall be in writing and shall be deemed to be
sufficient if contained in a written instrument and shall be deemed given
if delivered personally, telecopied, sent by nationally-recognized
overnight courier or mailed by registered or certified mail (return receipt
requested), postage prepaid, to the other party at the following addresses
(or such other address for a party as shall be specified by like notice):
If to Grantee:
Medtronic, Inc.
7900 Central Avenue, N.E.
Minneapolis, MN 55432
with separate copies thereof addressed to
Attention: General Counsel
FAX: (763) 572-5459
and
Attention: Vice President and Chief
Development Officer
FAX: (763) 572-5404
If to Issuer:
PercuSurge, Inc.
540 Oakmead Parkway
Sunnyvale, CA 94085
FAX: ( )
-----------------------------
Attention: Chief Executive Officer
with a copy to:
Wilson, Sonsini, Goodrich &. Rosati
650 Page Mill Road
Palo Alto, CA 94304
FAX: (650) 493-6811
Attention: Michael J. O'Donnell, Esq.
(h) HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
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(i) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
(j) GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Delaware (regardless of the laws that might otherwise govern under
applicable Delaware principles of conflicts of law).
(k) ENTIRE AGREEMENT. This Agreement, the Confidentiality Agreement,
and the Merger Agreement and any documents and instruments referred to
herein and therein constitute the entire agreement between the parties
hereto and thereto with respect to the subject matter hereof and thereof
and supersede all other prior agreements and understandings, both written
and oral, between the parties with respect to the subject matter hereof and
thereof. This Agreement shall be binding upon, inure to the benefit of, and
be enforceable by the successors and permitted assigns of the parties
hereto. Nothing in this Agreement shall be construed to give any person
other than the parties to this Agreement or their respective successors or
permitted assigns any legal or equitable right, remedy, or claim under or
in respect of this Agreement or any provision contained herein.
(l) EXPENSES. Except as otherwise provided in this Agreement or the
Merger Agreement, each party shall pay its own expenses incurred in
connection with this Agreement.
(m) MARKET STAND OFF. Grantee agrees, in connection with the Issuer's
initial public offering of its equity securities, and upon request of the
Issuer or the underwriters managing such offering, (i) not to sell, make
any short sale of, loan, grant any option for the purchase of or otherwise
dispose of any shares of Issuer Common Stock without the prior written
consent of the Issuer or such underwriters, as the case may be, for such
period of time (not to exceed the lesser of one hundred eighty (180) days
or such number of days as to which the Company's officers and directors are
subject to the same restriction) from the effective date of such
registration as may be requested by the Issuer or such underwriters and
(ii) to execute any agreement regarding (i) above as may reasonably be
requested by the Issuer or underwriters at the time of the public offering;
provided, that the officers and directors of the Issuer who own stock of
the Company also agree to such restrictions.
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IN WITNESS WHEREOF, the parties have caused this Stock Option Agreement to
be signed by their respective officers thereunto duly authorized as of the date
first written above.
MEDTRONIC, INC.
By:-----------------------------
Its:-------------------------
PERCUSURGE, INC.
By:-----------------------------
Its:------------------------
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EXHIBIT E
NONCOMPETITION AGREEMENT
THIS AGREEMENT is entered into by and between _________________
("Individual") and Medtronic, Inc., a Minnesota corporation ("Parent"), as of
October __, 2000, but effective commencing on the date of the consummation of
the Merger described in the Merger Agreement referred to herein (the "Effective
Date").
RECITALS:
WHEREAS, Individual is an employee of PercuSurge, Inc., a Delaware
corporation (the "Company"); and
WHEREAS, Parent, the Company, and a wholly-owned subsidiary of Parent
("Merger Subsidiary") propose to enter, or have entered, into an Agreement and
Plan of Merger on or about October 19, 2000 (the "Merger Agreement"), pursuant
to which, on the Effective Date, Parent will acquire the capital stock and
business (including goodwill, trade secrets, and other confidential or
proprietary business information) of the Company by the merger of Merger
Subsidiary with and into the Company (the "Merger"); and
WHEREAS, Individual holds common stock, and/or options to purchase common
stock, of the Company, which in the Merger will be converted into common stock,
and/or options to purchase common stock, of Parent; and
WHEREAS, Individual desires to induce Parent to enter into the Merger
Agreement and consummate the transactions contemplated thereby and acknowledges
that this Agreement is ancillary to the Merger Agreement, and it is a condition
to Parent's execution or consummation of the Merger Agreement that Individual
enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and to induce Parent to
enter into the Merger Agreement and to consummate the Merger, and subject to the
terms and conditions set forth herein, the parties hereto agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall have
the meanings set forth or referenced below:
"COMPANY PRODUCT" means any product, product line, or service (including
any component thereof or research to develop information useful in connection
therewith that is proprietary to the Company): (i) that as of the Effective Date
is being designed, developed, manufactured, marketed, or sold by the Company; or
(ii) that is a distal protection product used to contain or remove emboli,
thrombus and/or vaso-constrictive chemical constituents that result from
angioplasty or stenting procedures.
"COMPETITIVE PRODUCT" means any product, product line or service (including
any component thereof or research to develop information useful in connection
therewith that is proprietary to the Company) that is designed, developed,
manufactured, marketed, or sold by anyone other than the Parent Entities and
that is a distal protection product used to contain or
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remove emboli, thrombus and/or vaso-constrictive chemical constituents that
result from angioplasty or stenting procedures.
"PARENT ENTITIES" means Medtronic, Inc. and all of its subsidiary and
affiliated corporations and the operating divisions of any of
them (including but not limited to the Company from and after the Merger).
2. NONCOMPETITION COVENANT. From and after the Effective Date until the
three-year anniversary of the Effective Date, Individual
will not:
(a) directly or indirectly design, develop, manufacture, market, or
sell any Competitive Product;
(b) directly or indirectly own any interest in, control, be employed
by, or render advisory, consulting or other services (including but not
limited to services in research) to any person or entity, or subsidiary,
subdivision, division, or joint venture of such entity (except Parent) in
connection with the design, development, manufacture, marketing, or sale of
a Competitive Product; PROVIDED, HOWEVER, that the foregoing shall not
prohibit Individual from holding a passive equity ownership interest of
less than 5% in any entity and, if Individual is an employee of the Parent
Entities, only to the extent such ownership is permitted by Parent's
conflict policies as generally applied; or
(c) directly or indirectly solicit or interfere with the Company's or
the Parent Entities' relationship with existing customers for Company
Products, on behalf of Individual or any other person or entity engaged in
the design, development, manufacture, marketing, or sale of a Competitive
Product.
From and after the Effective Date until the 18-month anniversary of the
Effective Date, Individual will not directly or indirectly solicit or hire any
of the Company's or the Parent Entities' employees for the purpose of hiring
them or inducing them to leave their employment with the Company or the Parent
Entities, on behalf of Individual or another person or entity; PROVIDED,
HOWEVER, that that the foregoing shall not prohibit the soliciting or hiring of
any employee (i) who has not been employed by the Company or the Parent Entities
during the preceding six months, or (ii) whose employment was terminated by the
Company or the Parent Entities other than for cause.
3. GEOGRAPHIC SCOPE. Individual acknowledges that each of the Company and
the Parent Entities operate throughout the world and that the market for Company
Products is worldwide. Individual therefore agrees that the covenants contained
in Section 2 shall apply within all counties of the State of California, all
states of the United States and within all counties, provinces, districts,
and/or other comparable legal boundaries elsewhere throughout the world.
4. INJUNCTIVE RELIEF. In addition to any other relief or remedies afforded
by law or in equity, if Individual breaches this Agreement, Individual agrees
that Parent shall be entitled, as a matter of right, to injunctive relief in any
court of competent jurisdiction plus reasonable attorneys' fees if successful in
securing such relief. Individual recognizes that products and inventions
generated by Individual while an employee of the Company or the Parent Entities
or
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in connection with consulting services rendered by Individual to the Company or
the Parent Entities are the property of the Company or the Parent Entities,
respectively, the value of which would be adversely affected by Individual's
violation of this Agreement, and Individual hereby admits that irreparable
damage will result to the Company and Parent if Individual violates or threatens
to violate the terms of this Agreement. This Section 4 shall not preclude the
granting of any other appropriate relief including, without limitation, money
damages against Individual for breach of this Agreement.
5. SEVERABILITY. If it is determined by a court of competent jurisdiction
that any term or provision of this Agreement is invalid or unenforceable, then
(i) the remaining terms and provisions hereof shall be unimpaired, and (ii) the
invalid or unenforceable term or provision shall be deemed replaced by a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision.
6. AUTHORITY. Individual represents and warrants to Parent as follows: (a)
Individual has full capacity and authority to enter into this Agreement and to
perform Individual's obligations hereunder; (b) this Agreement has been duly
executed and delivered by Individual and constitutes a legal, valid, and binding
agreement of Individual, enforceable against Individual 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; and (c) neither the
execution and delivery of this Agreement nor compliance by Individual with its
terms and provisions will violate (i) any permit or license of Individual, or
(ii) any law, statute, regulation, injunction, order, or decree of any
government agency or authority or court to which Individual is subject.
7. COMPLETE AGREEMENT; EFFECTIVENESS. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements between the parties, whether written or
oral, relating hereto. Notwithstanding any contrary provisions of this
Agreement, the effectiveness of this Agreement is conditioned upon and subject
to the occurrence of the Merger; and this Agreement shall be null and void if
the Merger Agreement is terminated in accordance with Article 8 thereof.
8. WAIVER, DISCHARGE, AMENDMENT, ETC. The failure of any party hereto to
enforce at any time any of the provisions of this Agreement shall in no way be
construed to be a waiver of any such provision, nor in any way to affect the
validity of this Agreement or any part thereof or the right of the party
thereafter to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to be a waiver of any other or subsequent breach.
Any amendment to this Agreement shall be in writing and signed by the parties
hereto. This Agreement shall not be superseded by any future agreement entered
into between Individual and Parent unless such future agreement specifically
refers to this Agreement by date and states specifically by section reference
the portions of this Agreement that such future agreement is intended to
supersede.
9. TITLES AND HEADINGS; CONSTRUCTION. The titles and headings to sections
herein are inserted for the convenience of reference only and are not intended
to be a part of or to affect the meaning or interpretation of this Agreement.
Individual acknowledges that Individual and Parent have jointly participated in
the negotiation and drafting of this Agreement, and the parties
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agree that this Agreement shall be construed without regard to any presumption
or other rule requiring construction hereof against the party causing this
Agreement to be drafted.
10. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns; provided, however, this Agreement may not be assigned without the
express written consent of all parties. Notwithstanding the foregoing, Parent
may assign this Agreement to a subsidiary of Parent or to such business
organization that shall succeed to the business of Parent or of such subsidiary
to which this Agreement relates.
11. GOVERNING LAW. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of California, including all matters of
construction, validity, performance, and enforcement, without giving effect to
principles of conflict of laws. The parties hereby (i) agree and consent to be
subject to the jurisdiction of any state or federal court in San Francisco
County, California, with respect to all actions and proceedings arising out of
or relating to this Agreement (although each party reserves the right to bring
such action or proceedings in any other jurisdiction to which the other party is
subject); (ii) agree that all claims with respect to any such action or
proceeding may be heard and determined in such court; (iii) irrevocably waive
any defense of an inconvenient forum to the maintenance of any action or
proceeding in such court; (iii) irrevocably waive any defense of an inconvenient
forum to the maintenance of any action or proceeding in such court; (iv) consent
to service of process by mailing or delivering such service to the party at its
respective principal business address; and (v) agree that a final judgment in
any such action or proceeding from which there is no further appeal shall be
conclusive and may be enforced in any other jurisdictions by suit on the
judgment or in any manner provided by law.
12. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of
which together shall constitute one instrument.
IN WITNESS WHEREOF, each of the parties has caused this Noncompetition
Agreement to be executed in the manner appropriate to each, as of the date first
above written.
---------------------------------------
[Individual]
MEDTRONIC, INC.
By:------------------------------------
Its:--------------------------------
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EMPLOYEES TO SIGN NONCOMPETITION AGREEMENTS
Peter Rule President & CEO
Henry Nita VP R & D
Gary Mistlin VP and CFO
Richard Geoffrion VP Marketing & OUS
Adlai Howe VP US Sales
Bill Dippel VP Operations
Debra Hinman Sr. Director, Reg Affrs
Colleen McQueen Director, Clinical Research
Celso Bagaosian R & D Director
Jeff Bleam R & D Manager
Ketan Muni R & D Manager
Mukund Patel R & D Manager
George Tsai R & D Manager
Richard Spano Director, Manufacturing
Scott Blood Process Engineering Mgr
Jennifer Bromm Director, QA
<PAGE>
EXHIBIT F
ESCROW AGREEMENT
This ESCROW AGREEMENT (the "Escrow Agreement"), is dated as of , 2000,
among Medtronic, Inc., a Minnesota corporation ("Parent"), PercuSurge, Inc., a
Delaware corporation (the "Company"), Peter Rule and Bruce Cozadd (the
"Shareholder Representatives"), and Wells Fargo Bank Minnesota, National
Association, as escrow agent (the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, the Company, Trojan Merger Corp., a Delaware corporation
("Sub"), and Parent are parties to that certain Agreement and Plan of Merger,
dated as of October 19, 2000 (the "Merger Agreement"), pursuant to which Sub
will be merged with and into the Company (the "Merger"), with the Company
surviving as a wholly owned subsidiary of Parent (as such, the "Surviving
Corporation"); and
WHEREAS, under the Merger Agreement, the Parent Indemnified Parties (as
defined in the Merger Agreement) shall be indemnified, held harmless and
reimbursed as provided in Article 9 of the Merger Agreement; and
WHEREAS, to ensure that funds will be available to indemnify, hold
harmless and reimburse the Parent Indemnified Parties as required by Article 9
of the Merger Agreement, Section 9.1 of the Merger Agreement provides that in
connection with the Merger, Escrow Shares (as defined below) shall be deposited
with the Escrow Agent in an escrow account established pursuant to this Escrow
Agreement and held and subsequently disbursed in accordance with the terms of
this Escrow Agreement; and
WHEREAS, the Merger Agreement provides for the Shareholder
Representatives to act in accordance herewith in connection with this Escrow
Agreement and the indemnification obligations contained in the Merger Agreement;
and
WHEREAS, the Escrow Agent has agreed to hold the Escrow Fund pursuant
to the terms of this Escrow Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINED TERMS
1.1) DEFINED TERMS. Capitalized terms used and not otherwise defined in
this Agreement shall have the meanings assigned to them in the Merger Agreement.
1.2) ADDITIONAL DEFINITIONS. The following terms shall have the
following meanings:
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"AVERAGE MARKET PRICE" means $___________ per share of Parent Common
Stock. [AMOUNT TO BE CALCULATED PER MERGER AGREEMENT AND INSERTED AT SIGNING]
"CLAIM AMOUNT" means as defined in Section 4.1.
"CLAIM NOTICE" means as defined in Section 4.1.
"COMPANY SHAREHOLDERS" means persons who, as of immediately prior to
the Effective Time, were shareholders of the Company and whose shares of Company
Common Stock and/or Company Preferred Stock were converted into Parent Common
Stock pursuant to the Merger (excluding holders of Dissenting Shares).
"CURRENT MARKET VALUE" means, with respect to shares of Parent Common
Stock in the Escrow Fund as of any date, the Average Market Price. In the event
of any reclassification, stock split or stock divided with respect to Parent
Common Stock or any change or conversion of Parent Common Stock into other
securities, appropriate and proportionate adjustments, if any, shall be made to
the Average Market Price. "CURRENT MARKET VALUE" with respect to any other
security, including any Permitted Investment, in the Escrow Fund means the
average of the closing prices of such security for each of the ten trading days
immediately preceding such date. The closing price of any such security on any
trading day shall be: (i) if such security is listed on a national market
securities exchange or quoted in The Nasdaq Stock Market's National Market
System, the last reported sale price, or if no sale occurred on that day the
mean between the closing bid and asked prices, of such security on such exchange
(or the principal exchange if listed on more than one) or in The Nasdaq Stock
Market's National Market System, as the case may be, (ii) if such security is
not listed or quoted as described in clause (i), the mean between the reported
high bid and low asked prices of such security on such date as reported in the
financial press or by the National Quotation Bureau Incorporated, or (ii) if
neither clause (i) nor clause (ii) applies, the market value of such security on
such day as determined in good faith by the Board of Directors of Parent.
"DAMAGES" mean any loss, liability, claim, damage or expense (including
costs of investigation and defense and reasonable attorneys' fees), whether or
not involving a third-party claim, directly or indirectly arising or resulting
from or in connection with (i) any breach of any representation or warranty made
by the Company or the Shareholder Representatives (on behalf of the Company
Shareholders) in the Merger Agreement or in any certificate delivered by the
Company pursuant to the Merger Agreement, (ii) any breach by the Company of any
covenant or obligation of the Company in the Merger Agreement, (iii) aggregate
Third Party Expenses incurred by the Company in excess of the Estimated Third
Party Expenses, or (iv) claims of wrongful termination by any employees whose
stock is repurchased by the Company; provided that for purposes of determining
whether any breach of any representation or warranty that is qualified by
"material," "Company Material Adverse Effect," or similar variations thereof has
occurred, such qualifier contained in such representation or warranty shall be
disregarded (i.e., such occurrence, event or condition shall be deemed to be
"material") if the Damages resulting therefrom exceed $10,000.
"DISPUTED AMOUNT" means as defined in Section 4.2.
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"DISTRIBUTION AMOUNT" means as defined in Section 5.1.
"EARNINGS" means as defined in Section 2.8.
"ESCROW FUND" means the Escrow Shares, together with any cash in lieu
of fractional shares with respect to such Escrow Shares, any dividends or other
distributions with respect to such Escrow Shares that become payable to holders
of record of record of Parent Common Stock as of a date after the Effective
Time, and any Sale Proceeds or other cash generated pursuant to Section 3.2 or
Section 3.3.
"ESCROW SHARES" means 7% of the aggregate number of shares of Parent
Common Stock into which the Company Common Stock and Company Preferred Stock
outstanding as of immediately prior to the Effective Time of the Merger
(excluding Dissenting Shares) are converted in accordance with Article 2 of the
Merger Agreement.
"PERMITTED INVESTMENT" means as defined in Section 3.1.
"SALE NOTICE" means as defined in Section 3.2.
"SALE PROCEEDS" means as defined in Section 3.2.
"SHAREHOLDER REPRESENTATIVES' EXPENSES" means as defined in Section
7.2.
"SUBACCOUNT" means as defined in Section 2.3.
"SURVIVAL PERIOD" means until the earlier of (i) with respect to
representations and warranties addressing matters anticipated to be reviewed in
the independent audit of Parent's consolidated financial statements (and not
excluded from the scope of such review on the basis of immateriality), the date
of issuance of the first independent audit report after the Effective Time
covering the consolidated results of Parent and the Surviving Corporation, or
(ii) with respect to all other matters, one year after the Effective Time.
ARTICLE II
ESCROW
2.1) SHARES TO BE PLACED IN ESCROW. Promptly after the Effective Time,
Parent shall issue and deliver to the Escrow Agent a certificate in the name of
the Escrow Agent, or its nominee, evidencing the Escrow Shares. The Escrow Agent
shall acknowledge receipt of such certificate in writing to Parent and the
Shareholder Representatives. The Escrow Agent agrees to accept delivery of the
Escrow Shares and to hold them in an escrow account (the "Escrow Account"),
subject to the terms and conditions of this Agreement and the Merger Agreement.
The Escrow Account shall be a trust fund and shall not be subject to any lien,
attachment, trustee process or any other judicial process of any creditor of any
party to this Agreement.
2.2) INDEMNIFICATION. Pursuant to the Merger Agreement, the Escrow
Shares shall be held in the Escrow Account for the duration of the Survival
Period for the sole purpose of
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satisfying claims brought pursuant to Article 9 of the Merger Agreement. The
Escrow Shares shall be used to compensate and reimburse Parent Indemnified
Parties for indemnifiable claims as set forth in Article 9 of the Merger
Agreement, or thereafter released to the Company Shareholders. The Escrow
Shares shall be security for the Company Shareholders' indemnity obligations,
subject to the limitations set forth in this Agreement and the Merger
Agreement.
2.3) SUBACCOUNTS OF SHAREHOLDERS. As soon as practicable after the
Effective Time, Parent shall deliver or cause to be delivered to the Escrow
Agent a list of the name, address, and tax identification number of each Company
Shareholder, together with the number of Escrow Shares (rounded to the nearest
thousandth of a share) and the amount of any cash (representing dividends or
other distributions with respect to such Escrow Shares that have been become
payable to holders of record of record of Parent Common Stock as of a date after
the Effective Time with respect to such Escrow Shares) allocable to each Company
Shareholder (such allocable portion of the Escrow Fund, based on the amount of
Escrow Shares and cash initially allocated to such Company Shareholder as a
percentage of the total amount of Escrow Shares and cash initially deposited
with the Escrow Agent hereunder, referred to as the "Initial Allocable
Percentage"). References in this Agreement to a "Subaccount" shall mean each
Company Shareholder's Initial Allocable Percentage; provided that, with respect
to each Company Shareholder who directs the Escrow Agent to sell Escrow Shares
pursuant to Section 3.2, "Subaccount" shall mean a separate subaccount
established by the Escrow Agent at the time of such sale and maintained with to
such Company Shareholder thereafter until termination of this Agreement.
2.4) VOTING OF ESCROW SHARES. Each Company Shareholder shall have the
right to vote all Escrow Shares (rounded down to the nearest whole share)
credited to such Company Shareholder's Subaccount. The Escrow Agent will forward
to each Company Shareholder to whose Subaccount any Escrow Shares are credited
all notices of Parent shareholders' meetings, proxy statements and reports to
shareholders received by the Escrow Agent in respect thereof. The Escrow Agent
will either (i) vote the Escrow Shares credited to such Company Shareholder's
Subaccount in accordance with written instructions received from such Company
Shareholder, or (ii) forward to such Company Shareholder a signed proxy enabling
the Company Shareholder to vote such Escrow Shares. The Escrow Agent shall be
reimbursed for the cost of such forwarding in accordance with Section 6.4.
2.5) DIVIDENDS, ETC. Any shares of Parent Common Stock or other equity
securities issued or distributed by Parent (including shares issued upon a stock
split, stock dividend, recapitalization or other similar event) ("New Shares")
in respect to the Escrow Shares which have not been released from the Escrow
Fund shall be added to the Escrow Fund and become a part thereof and credited
proportionately to the Subaccounts to which the Escrow Shares are credited. New
Shares issued in respect of shares of Parent Common Stock which have been
released from the Escrow Fund shall not be added to the Escrow Fund but shall be
distributed to the recordholders thereof.
2.6) TRANSFERABILITY. The interests of the Company Shareholders in the
Escrow Fund are an integral part of the consideration in the Merger, and shall
not be assignable or transferable. Notwithstanding the foregoing, any gift by a
Company Shareholder to relative by blood, marriage or adoption (each a member of
a Company Shareholder's "Immediate Family") or to a
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trust established by such Company Shareholder for the benefit of one or more
members of such Company Shareholder's Immediate Family shall be permitted;
provided, in each case, that the recipient of such shares of Parent Common
Stock shall receive and hold such shares subject to the provisions of this
Agreement and the Merger Agreement.
2.7) FRACTIONAL ESCROW SHARES. Although each Company Shareholder's
Subaccount shall specify the number of Escrow Shares rounded to the nearest
thousandth of a share, no fractional shares of Parent Common Stock shall be
issued by Parent or released from the Escrow Account pursuant to this
Agreement. In connection with any release of Escrow Shares from the Escrow
Account, the Escrow Agent shall be permitted to "round down" or to follow
such other rounding procedures as the Escrow Agent reasonably determines to
be appropriate in order to avoid releasing any fractional shares from the
Escrow Account.
2.8) TAXES. All dividends, distributions, interest and gains earned
or realized on the Escrow Fund ("Earnings") and credited to a Subaccount
shall be accounted for by the Escrow Agent separately from the Escrow Fund
and, notwithstanding any provisions of this Agreement, shall be treated as
having been received by the Company Shareholders to whose Subaccount the
Earnings are credited for tax purposes. The Escrow Agent annually shall file
information returns with the United States Internal Revenue Service and payee
statements with the Company Shareholders, documenting such Earnings. The
Company Shareholders shall provide to the Escrow Agent all forms and
information necessary to complete such information returns and payee
statements. In the event the Escrow Agent becomes liable for the payment of
taxes, including withholding taxes, relating to Earnings or any payment made
hereunder, the Escrow Agent may deduct such taxes from the Escrow Fund.
ARTICLE III
INVESTMENT OF FUND; SALE OF ESCROW SHARES
3.1) PERMITTED INVESTMENTS; INTEREST. From the date hereof until the
date of disbursement of the Escrow Fund pursuant to Section 5.1 of this
Escrow Agreement, the Escrow Agent is authorized and directed to invest and
reinvest the cash portion, if any, of the Escrow Fund in any of the following
investments (each a "Permitted Investment") in each case pursuant to joint
written instructions of the Shareholder Representatives, with the consent of
the Parent, which consent shall not be unreasonably withheld: (i) readily
marketable obligations maturing within six (6) months after the date of
acquisition thereof issued by the United States of America or any agency or
instrumentality thereof; (ii) readily marketable obligations maturing within
six (6) months after the date of acquisition thereof issued by any state or
municipality within the United States of America, or any political
subdivision, agency or instrumentality thereof, rated "A" or better by either
Standard & Poor's Corporation or Moody's Investors Service Inc.; (iii)
readily marketable commercial paper maturing within one hundred eighty (180)
days after the date of issuance thereof which has the highest credit rating
of either Standard & Poor's Corporation or Moody's Investors Service, Inc.;
or (iv) 6 month certificates of deposit issued by any bank incorporated and
doing business pursuant to the laws of the United States of America or any
state thereof having combined capital and surplus of at least $500,000,000.
In the event the Escrow Agent does not receive joint written instructions
from the Shareholder Representatives to invest or reinvest the cash portion
of the Escrow Fund, the Escrow Agent agrees to invest and reinvest such funds
in Wells Fargo Bank Investment Money Market Mutual
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Fund, or a successor or similar fund agreed to by Parent and the Shareholder
Representatives in writing, which invests in direct obligations of, or
obligations fully guaranteed as to principal and interest by the United
States Government and repurchase agreements with respect to such securities.
Permitted Investments and interest accruing on, and any profit resulting
from, such investments shall be added to, and become a part of, the Escrow
Fund pursuant to this Escrow Agreement and shall be allocated among the
Subaccounts of the Company Shareholders based on the Permitted Investments
credited to the Subaccount of each. For purposes of this Escrow Agreement,
"interest" on the Escrow Fund shall include all proceeds thereof and
investment earnings with respect thereto. All Permitted Investments shall be
registered in the name of the Escrow Agent. The Escrow Agent shall have full
power and authority to sell any and all Permitted Investments held by it
under this Escrow Agreement as necessary to make disbursements under this
Escrow Agreement, and may use its bond department to effect such sales. The
Escrow Agent, Parent, the Surviving Corporation and the Shareholder
Representatives shall not be responsible for any unrealized profit or
realized loss realized on such investments.
3.2) RELEASE OF ESCROW SHARES FOR SALE. Subject to Section 3.5, a
Company Shareholder may deliver to the Escrow Agent and to Parent a written
notice (a "Sale Notice") directing the Escrow Agent to deliver all (rounded
down to the nearest whole share) or a specified whole number of the Escrow
Shares (the "Sold Shares") credited to such Company Shareholder's Subaccount
to a broker or dealer for purposes of sale, against receipt by the Escrow
Agent of the proceeds of such sale, after deducting the commissions and other
charges of the broker or dealer effecting such sale (the "Sale Proceeds").
The Sale Notice shall state: (i) that a specified number of Escrow Shares
have been sold to or through the broker-dealer named therein, (ii) the sale
price per share and the aggregate Sale Proceeds, and (iii) the date of
payment for and delivery of the Sold Shares, which shall not be less than
five business days after delivery of the Sale Notice.
3.3) SHORTAGE OF SALE PROCEEDS. If the Sale Proceeds, after
deducting the commissions and other charges of the broker or dealer effecting
such sale, as set forth in the Sale Notice, are less than 100% of the Current
Market Value of the Sold Shares as of the date of sale, the Escrow Agent
shall not deliver the Sold Shares unless it receives, in addition to the Sale
Proceeds, after deducting the commissions and other charges of the broker or
dealer effecting such sale, cash in an amount equal to the excess of 100% of
the Current Market Value of the Sold Shares as of the date of sale over such
Sale Proceeds.
3.4) RETENTION OF SALE PROCEEDS. The Sale Proceeds and additional
cash, if any, received by the Escrow Agent in respect of Sold Shares shall be
retained in the Escrow Fund and credited to the Subaccount of the selling
Company Shareholder.
3.5) RESTRICTIONS ON SALES. Escrow Shares allocated to the
Subaccounts of Company Shareholders who were, as the date of the Merger
Agreement, affiliates of the Company shall be subject to transfer
restrictions in connection with the accounting for the Merger as a pooling of
interests and under Rule 145 of the Securities Exchange Act of 1934. Such
Escrow Shares shall not be transferred pursuant to Section 3.2 except in
accordance with the Affiliate's Letter executed by the Company Shareholder
requesting such sale and in accordance with such Rule 145.
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ARTICLE IV
CLAIM PROCEDURES AND PAYMENTS
4.1) CLAIM NOTICE. If Parent determines in good faith that a Parent
Indemnified Party is entitled to indemnification or reimbursement for Damages
under Article 9 of the Merger Agreement, then Parent may deliver to both the
Shareholder Representatives and the Escrow Agent a written notice of such
claim (a "Claim Notice") setting forth (i) a description in reasonable detail
(to the extent reasonably available to Parent) of the facts, circumstances or
events giving rise to the Damages based on Parent's good faith belief
thereof, including, without limitation, the identity and address of any
third-party claimant (to the extent reasonably available to Parent) and
copies of any formal demand or complaint and other related correspondence or
communications, and (ii) Parent's non-binding, preliminary, good faith
estimate of the reasonably foreseeable maximum amount of the alleged Damages
(which amount may be the amount of damages claimed by a third party plaintiff
in an action brought against Parent or the Company based on alleged facts,
which if true, would constitute a breach of the Company's representations and
warranties) (such aggregate amount being referred to as the "Claim Amount").
Such Claim Notice must be delivered on or before the termination of the
Survival Period. The Shareholder Representatives shall be entitled to control
the defense of such Third Party claims as provided in Section 9.5 of the
Merger Agreement.
4.2) RESPONSE NOTICE. Within thirty (30) days after the delivery of
a Claim Notice to the Shareholder Representatives, the Shareholder
Representatives shall deliver to the Escrow Agent and Parent, a written
notice (the "Response Notice") containing: (i) instructions to the effect
that entire Claim Amount set forth in such Claim Notice is to be paid from
the Escrow Fund to Parent; or (ii) instructions to the effect that a
specified portion (but not the entire amount) of the Claim Amount set forth
in such Claim Notice is to paid from the Escrow Fund to Parent, together with
a statement that the remaining portion of such Claim Amount is being
disputed; or (iii) a statement that the entire Claim Amount set forth in such
Claim Notice is being disputed.
(a) If no Response Notice is received by the Escrow Agent and
Parent from the Shareholder Representatives within thirty (30) days
after the delivery of a Claim Notice to the Company Shareholders, then
the Company Shareholders shall be deemed to have given instructions
that the entire Claim Amount set forth in such Claim Notice shall be
paid to Parent.
(b) If the Company Shareholders give (or are deemed to have
given) instructions that the entire Claim Amount set forth in a Claim
Notice may be paid from the Escrow Fund to Parent, then the Escrow
Agent shall promptly, following the required delivery date for the
Response Notice, transfer or pay to Parent the amount of such Claim
from the Escrow Fund (or such lesser amount as is then held in the
Escrow Fund).
(c) If a Response Notice delivered by the Shareholder
Representatives in response to a Claim Notice contains instructions to
the effect that a specified amount (but not the entire amount) of the
Claim Amount set forth in such Claim Notice may be paid from the Escrow
Fund to Parent, then (i) the Escrow Agent shall promptly, following the
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required delivery date for the Response Notice, pay to Parent such
specified amount from the Escrow Fund, and (ii) the procedures set
forth in Section 4.5 of this Agreement shall be followed with respect
to the remaining portion of such Claim Amount.
(d) If a Response Notice delivered by the Shareholder
Representatives in response to a Claim Notice contains a statement that
all or a portion of the Claim Amount set forth in such Claim Notice is
being disputed (such Claim Amount or the disputed portion thereof being
referred to as the "Disputed Amount"), then such Disputed Amount shall
not be paid until (i) delivery of a written notice executed by Parent
and the Shareholder Representatives setting forth instructions to the
Escrow Agent regarding the payment of such Disputed Amount, or (ii)
delivery of a copy of a final and non-appealable judgment of a court
setting forth instructions to the Escrow Agent as to the payment of
such Disputed Amount. The Escrow Agent shall thereupon pay such
Disputed Amount in accordance with the instructions set forth in such
notice.
4.3) PAYMENT OF CLAIMS. Payments, deliveries or designations from
the Escrow Fund made pursuant to any Claim Notice or as reimbursement for
expenses of the Shareholder Representatives as set forth in Section 7.2
hereof shall be made, on a Subaccount by Subaccount basis, first from Escrow
Shares, second from any cash, and third from any Permitted Investments. For
purposes of such payment, delivery or designation, Escrow Shares and
Permitted Investments shall be valued at their Current Market Value. To the
extent that any payment, delivery or designation is made pursuant to this
Escrow Agreement in the form of securities, such payment, delivery or
designation shall be rounded to the nearest whole number of such securities,
and no fractional securities shall be paid, delivered or designated.
4.4) ALLOCATION AMONG SUBACCOUNTS. Payments and deliveries pursuant
to a Claim Notice or as reimbursement for expenses of the Shareholder
Representatives as set forth in Section 7.2 hereof shall be charged to and
withdrawn from each Subaccount in proportion to the respective Initial
Allocable Percentage of each, unless the Escrow Agent is restrained, enjoined
or stayed by law or court order from withdrawing assets from a Subaccount, in
which case the amount which would have been drawn from such Subaccount shall
be allocated pro rata among and withdrawn from the remaining Subaccounts as
to which the Escrow Agent is not so restrained, enjoined or stayed.
4.5) DISPUTE RESOLUTION. In the event that any Response Notice
indicates that there is a Disputed Amount, the Shareholder Representatives
and Parent shall, for a period of sixty (60) days, attempt in good faith to
resolve the rights of the respective parties with respect to such Disputed
Amount. If the Shareholder Representatives and Parent should so agree, a
notice setting forth such agreement shall be signed by both Shareholder
Representatives and by Parent and sent to the Escrow Agent who shall
thereupon pay to Parent from the Escrow Fund such agreed upon amount (or such
lesser amount as is then held in the Escrow Fund).
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ARTICLE V
RELEASE OF ESCROW ACCOUNT TO
COMPANY SHAREHOLDERS
5.1) EXPIRATION OF SURVIVAL PERIOD. Promptly after the one-year
anniversary of the Effective Time, Escrow Agent shall disburse (or deliver to
the Exchange Agent for disbursement) to the Company Shareholders an aggregate
amount (the "Distribution Amount") equal to (A) the amount remaining in the
Escrow Fund, less (B) any Disputed Amount, and less (C) any Shareholder
Representatives' Expenses (to the extent the Escrow Agent has received
written notice from the Shareholder Representatives to such effect in
accordance with Section 7.2). The Escrow Agent shall, or Parent shall cause
the Exchange Agent to, disburse the Distribution Amount to the Company
Shareholders based on each Company Shareholder's respective Subaccount
balance. No certificates or scrip representing fractional shares of Parent
Common Stock or any other security shall be issued upon the disbursement of
the Distribution Amount. In lieu of any such fractional share, each Company
Shareholder who would otherwise have been entitled to a fraction of a share
of Parent Common Stock or other security upon disbursement of the
Distribution Amount will be paid an amount in cash (without interest),
rounded to the nearest cent, determined by multiplying (i) the Current Market
Value of such Parent Common Stock or such other securities (in the case of
such other securities, as of the Distribution Date) by (ii) the fractional
interest to which such holder would otherwise be entitled.
5.2) REMAINING DISBURSEMENTS. Any amounts retained in the Escrow
Fund after the Distribution Date shall be held by the Escrow Agent and shall
first be used to indemnify the Parent Indemnified Parties, subject to the
terms and conditions of this Escrow Agreement, and upon resolution and
payment out of the Escrow Fund of all pending Claims, any remaining amounts
in escrow shall be transferred to the Shareholder Representatives with
respect to any remaining unpaid Shareholder Representatives' Expenses (to the
extent the Escrow Agent has received written notice from the Shareholder
Representatives to such effect in accordance with Section 7.2), and any
remaining amounts shall be disbursed in the manner set forth in Section 5.1.
ARTICLE VI
LIABILITY AND COMPENSATION OF ESCROW AGENT
6.1) NO IMPLIED DUTIES. The duties and obligations of the Escrow
Agent hereunder shall be determined solely by the express provisions of this
Escrow Agreement, and no implied duties or obligations shall be read into
this Escrow Agreement against the Escrow Agent. The Escrow Agent shall, in
determining its duties hereunder, be under no obligation to refer to any
other documents between or among the parties related in any way to this
Escrow Agreement (except to the extent that this Escrow Agreement
specifically refers to or incorporates by reference provisions of any other
document).
6.2) INDEMNIFICATION OF ESCROW AGENT. Parent shall indemnify and
hold the Escrow Agent harmless from and against any and all liability and
expense which may arise out of any action taken or omitted by the Escrow
Agent in accordance with this Escrow Agreement, except such liability and
expense as may result from the gross negligence or willful misconduct of the
Escrow Agent. The reasonable costs and expenses, including reasonable
attorney fees, of the
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Escrow Agent to enforce its indemnification rights under this Section 6.2
shall also be paid by Parent. Parent shall be entitled to be reimbursed out
of the Escrow Fund for fifty percent (50%) of any amount that Parent is
required to pay to the Escrow Agent pursuant to this Section 6.2, payable in
the manner set forth in Section 5.1 hereof. This right to indemnification
shall survive the termination of this Escrow Agreement and removal or
resignation of the Escrow Agent. With respect to any claims or actions
against the Escrow Agent which are indemnified by Parent under this Section
6.2, Parent shall have the right to retain sole control over the defense,
settlement, investigation and preparation related to such claims or actions;
provided that (i) the Escrow Agent may employ its own counsel to defend such
a claim or action if it reasonably concludes, based on the advice of counsel,
that there are defenses available to it which are different from or
additional to those available to Parent and (ii) neither Parent nor the
Escrow Agent shall settle or compromise any such claim or action without the
consent of the other, which consent shall not be unreasonably withheld or
delayed.
6.3) STANDARD OF CARE; RELIANCE. The Escrow Agent shall not be liable
to any person by reason of any error of judgment or for any act done or step
taken or omitted by it, or for any mistake of fact or law or anything which it
may do or refrain from doing in connection herewith unless caused by or arising
out of its own gross negligence or willful misconduct. The Escrow Agent shall be
entitled to rely on, and shall be protected in acting in reliance upon, any
instructions or directions furnished to it in writing signed by both Parent and
all the then Shareholder Representatives pursuant to any provision of this
Escrow Agreement and shall be entitled to treat as genuine, and as the document
it purports to be, any letter, paper or other document furnished to it by any
Parent Indemnified Party or the Shareholder Representatives, and believed by the
Escrow Agent to be genuine and to have been signed and presented by the proper
party or parties. In performing its obligations hereunder, the Escrow Agent may
consult with counsel to the Escrow Agent and shall be entitled to rely on, and
shall be protected in acting in reliance upon, the advice or opinion of such
counsel.
6.4) COMPENSATION OF ESCROW AGENT. The Escrow Agent shall be entitled
to its customary fee for the performance of services by the Escrow Agent
hereunder for each year or portion thereof that any portion of the Escrow Fund
remains in escrow and shall be reimbursed for reasonable costs and expenses
incurred by it in connection with the performance of such services (such fees,
costs and expenses are hereinafter referred to as the "Escrow Agent's
Compensation"). A schedule of the Escrow Agent's fees is attached hereto as
Exhibit ____. The Escrow Agent shall render statements to Parent setting forth
in detail the Escrow Agent's Compensation and the basis upon which the Escrow
Agent's Compensation was computed. The Escrow Agent's Compensation shall be paid
by Parent. To the extent the Escrow Agent's Compensation is not paid by Parent,
the foregoing shall be paid from the Escrow Fund after written notice from the
Escrow Agent to Parent. Parent shall be entitled to be reimbursed out of the
Escrow Fund for fifty percent (50%) of any amount that Parent is required to pay
to the Escrow Agent pursuant to such reimbursement obligation, payable in the
manner set forth in Section 5.1 hereof.
6.5) RESIGNATION AND SUCCESSOR. The Escrow Agent may resign at any
time by giving sixty (60) days written notice to Parent and the Shareholder
Representatives; provided that such resignation shall not be effective unless
and until a successor Escrow Agent has been appointed and accepts such
position pursuant to the terms of this Section 6.5. In such event, Parent and
the
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Shareholder Representatives shall appoint a successor Escrow Agent or, if
Parent and the Shareholder Representatives are unable to agree upon a
successor Escrow Agent within sixty (60) days after such notice, the Escrow
Agent shall be entitled to (i) appoint its own successor, provided that such
successor is a reputable national banking association or (ii) at the equal
expense of Parent and the Shareholder Representatives, petition any court of
competent jurisdiction for the appointment of a successor Escrow Agent. Such
appointment, whether by Parent and the Shareholder Representatives, on the
one hand, or the Escrow Agent, on the other hand, shall be effective on the
effective date of the aforesaid resignation (the "Escrow Transfer Date"). On
the Escrow Transfer Date, all right title and interest to the Escrow Fund,
including interest thereon, shall be transferred to the successor Escrow
Agent and this Escrow Agreement shall be assigned by the Escrow Agent to such
successor Escrow Agent, and thereafter, the resigning Escrow Agent shall be
released from any further obligations hereunder. The Escrow Agent shall
continue to serve until its successor is appointed, accepts the Escrow and
receives the transferred Escrow Fund.
6.6) DISPUTES. It is understood and agreed that in the event any
disagreement among Parent and the Shareholder Representatives results in
adverse claims or demands being made in connection with the Escrow Fund, or
in the event the Escrow Agent in good faith is in doubt as to what action it
should take hereunder, the Escrow Agent shall retain the Escrow Fund until
the Escrow Agent shall have received (i) an enforceable final order of a
court of competent jurisdiction which is not subject to further appeal
directing delivery of the Escrow Fund or (ii) a written agreement executed by
Parent and the Shareholder Representatives directing delivery of the Escrow
Fund, in which event Escrow Agent shall disburse the Escrow Fund in
accordance with such order or agreement. Any court order referred to in
clause (i) immediately above shall be accompanied by a legal opinion of
counsel for the presenting party satisfactory to the Escrow Agent to the
effect that said court order or judgment is final and enforceable and is not
subject to further appeal. The Escrow Agent shall act on such court order and
legal opinion without further question.
6.7) LIMITATION ON DAMAGES. In no event shall the Escrow Agent be
liable in connection with this Escrow Agreement for any special, indirect or
consequential loss or damage of any kind whatsoever, even if the Escrow Agent
has been previously advised of such loss or damage.
ARTICLE VII
SHAREHOLDER REPRESENTATIVES
7.1) APPOINTMENT. Pursuant to the Merger Agreement, the Shareholder
Representatives shall jointly act as agent and attorney-in-fact for the
Company Shareholders and are entitled to give and receive notices and
communications, to authorize delivery to the Parent Indemnified Parties of
the Parent Common Stock or other property from the Escrow Fund in
satisfaction of claims by the Parent Indemnified Parties, to object to such
deliveries in accordance with the terms of this Escrow Agreement, to agree
to, negotiate, enter into settlements and compromises of, and demand
arbitration and comply with orders of courts and awards of arbitrators with
respect to such claims, to retain legal counsel, accountants, expert
witnesses, consultants and other third parties (collectively, "Outside
Parties") to assist the Shareholder Representatives with their duties under
the Merger Agreement and hereunder, and to
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take all actions necessary or appropriate in the judgment of the Shareholder
Representatives for the accomplishment of the foregoing. All actions of the
Shareholder Representatives shall be in writing signed by both of the
above-named individuals, or their successors, acting in their capacity as
Shareholder Representatives. The persons designated to be the Shareholder
Representatives may be changed in accordance with the provisions set forth in
Section 10.12 of the Merger Agreement.
7.2) EXPENSES. At any time or from time to time prior to the final
distribution of all Escrow Shares out of Escrow, the Shareholder Representatives
may deliver notice to the Escrow Agent and Parent setting forth the amount of
the out-of-pocket expenses incurred by the Shareholder Representatives in
connection with their duties under the Merger Agreement and hereunder,
including, but not limited to the fees and expenses of Outside Parties, plus an
hourly rate of $250 per hour for time spent by the Shareholder Representatives
in excess of 6 hours per month per Shareholder Representative in rendering
services under the Merger Agreement and hereunder (the "Shareholder
Representatives' Expenses"), which expenses shall be reimbursed from the Escrow
Fund promptly after receipt of each such notice.
7.3) AUTHORITY AND RELIANCE. Neither Parent, any Parent Indemnified
Party, the Company, nor the Escrow Agent shall be responsible or liable for any
acts or omissions of the Shareholder Representatives in such Shareholder
Representatives' capacity as such. A decision, act, consent or instruction of
the Shareholder Representatives shall constitute a decision of all Company
Shareholders for whom shares of Parent Common Stock otherwise issuable to them
are deposited in the Escrow Fund and shall be final, binding and conclusive upon
each such Company Shareholder, and the Escrow Agent and Parent may rely upon any
decision, act, consent or instruction of the Shareholder Representatives as
being the decision, act, consent or instruction of each and every such Company
Shareholder. The Escrow Agent and each Parent Indemnified Party are hereby
relieved from any liability to any person for any acts done by them in
accordance with such decision, act, consent or instruction of the Shareholder
Representatives. For purposes of this Escrow Agreement any action by all of the
then Shareholder Representatives shall be deemed to be the action of and binding
upon all of the Shareholder Representatives.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
8.1) REPRESENTATIONS BY PARENT, THE COMPANY AND ESCROW AGENT. Each of
Parent, the Company and the Escrow Agent represents and warrants to each of the
other parties hereto that it is duly organized, validly existing and in good
standing under the laws of its jurisdiction of formation; that it has the power
and authority to execute and deliver this Escrow Agreement and to perform its
obligations hereunder; that the execution, delivery and performance of this
Escrow Agreement by it has been duly authorized and approved by all necessary
action; that this Escrow Agreement constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms; and that the
execution, delivery and performance of this Escrow Agreement by it will not
result in a breach of or loss of rights under or constitute a default under or a
violation of any trust (constructive or other), agreement, judgment, decree,
order or other instrument to which it is a party or it or its properties or
assets may be bound.
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8.2) REPRESENTATIONS BY SHAREHOLDER REPRESENTATIVES. Each
Shareholder Representative represents to each of the other parties hereto
that such Shareholder Representative has the power and authority to execute
and deliver this Escrow Agreement and to perform his obligations hereunder;
that this Escrow Agreement constitutes his legal, valid and binding
obligation, enforceable against him in accordance with its terms; and that
the execution, delivery and performance of this Escrow Agreement by him will
not result in a breach of or loss of rights under or constitute a default
under or a violation of any trust (constructive or other), agreement,
judgment, decree, order or other instrument to which he is a party or by
which his properties or assets may be bound.
ARTICLE IX
TERMINATION
9.1) PRIOR TO THE EFFECTIVE TIME. This Escrow Agreement may be
terminated prior to the Effective Time on the occurrence of either the following
events:
(a) the mutual written agreement of each of the parties
hereto; or
(b) the termination of the Merger Agreement as evidenced to
the Escrow Agent in a written notice signed by Parent, the
Company and the Shareholder Representatives.
9.2) AFTER EFFECTIVE TIME. Following the Effective Time, this Escrow
Agreement may only be terminated following the delivery of all amounts held
in the Escrow Fund and the delivery of notice by the Escrow Agent as
contemplated by Article V hereof.
ARTICLE X
GENERAL
10.1) OTHER AGREEMENTS. Nothing in this Agreement is intended to
limit any of the Company's, Parent's or the Company Shareholders' rights, or
any obligation of the Company Shareholders, or of Parent under the Merger
Agreement (or any agreement entered into in connection with the transactions
contemplated by the Merger Agreement).
10.2) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
giving effect to the conflict of laws provisions thereunder.
10.3) BENEFIT; SUCCESSOR AND ASSIGNS. This Escrow Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns but shall not be assignable by
any party hereto without the written consent of all of the other parties
hereto; provided, however, that Parent may assign its rights and delegate its
obligations hereunder to any successor corporation in the event of a merger,
consolidation or transfer or sale of all or substantially all of Parent's
stock or assets and that the Escrow Agent may assign its rights hereunder to
a successor Escrow Agent appointed hereunder. Except for the persons
specified in the preceding sentence, this Escrow Agreement is not intended to
confer on any person not a party hereto any rights or remedies hereunder.
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10.4) SEVERABILITY. If any provision of this Agreement, or the
application of such a provision, is for any reason and to any extent invalid
or unenforceable, the remainder of this Agreement and application of such
provision to other circumstances shall be interpreted so as reasonably to
effect the intent of the parties to this Agreement. The parties shall replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that shall achieve, to the greatest extent possible,
the economic, business and other purposes of the void or unenforceable
provision.
10.5) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of
which shall constitute one and the same instrument. This Agreement shall
become binding when one or more counterparts of it, individually or taken
together, whether delivered via facsimile or otherwise, bear the signatures
of all the parties reflected hereon as signatories.
10.6) AMENDMENT AND WAIVERS. Any term or provision of this Agreement
may be amended, and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively
or prospectively) only by a writing signed by the party to be bound thereby.
Notwithstanding any rights that may be created in any third party under the
terms of this Agreement, no such amendment or waiver shall require the
consent of such third party to be effective. The waiver by a party of any
breach of this Agreement or default in the performance of any obligations
under this Agreement shall not be deemed to constitute a waiver of any other
default or any succeeding breach or default.
10.7) ATTORNEYS' FEES. Should suit be brought to enforce or
interpret any part of this Agreement, the prevailing party shall be entitled
to recover, as an element of the costs of suit and not as damages, reasonable
attorneys' fees to be fixed by the court (including, without limitation,
costs, expenses and fees on any appeal), provided that Parent's sole recourse
for such attorneys fees under the Merger Agreement and hereunder against the
Company Shareholders or the Shareholder Representatives acting as their
representatives shall be against the Escrow Shares. The prevailing party
shall be entitled to recover such party's costs of suit, regardless of
whether such suit proceeds to final judgment.
10.8) NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given when delivered personally by
commercial courier service or otherwise, or by telecopier, or three days
after such notice is mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent or the Company, to it at:
Medtronic, Inc.
7000 Central Avenue N.E.
Minneapolis, MN 55432
14
<PAGE>
with separate copies thereof addressed to:
Attention: General Counsel
FAX: (763) 572-5404
and
Attention: Vice President and Chief Development
Officer
FAX: (763) 572-5404
(b) If to the Shareholder Representatives, to them at:
Peter Rule
24183 Hillview Road
Los Altos, CA 94024
FAX: (650) 947-0577
and
Bruce Cozadd
c/o Alza Corporation
1900 Charleston Road
Mountain View CA 94043
FAX: (650) 564-5630
with a copy to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
FAX: (650) 493-6811
Attention: Michael J. O'Donnell, Esq.
(c) If to the Escrow Agent:
Wells Fargo Bank Minnesota, National Association
Corporate Trust Services
Sixth & Marquette
MAC N9303-120
Minneapolis, MN 55404
FAX: (___)_______________________
Attention: _______________________
All such notices and other communications shall be deemed to have
been received (a) in the case of personal delivery, on the date of such
delivery, (b) in the case of a telecopy, when the party receiving such copy
shall have confirmed receipt of the communication, and (c) in the case of
delivery by nationally recognized overnight courier, on the business day
following dispatch.
15
<PAGE>
10.9) CONSTRUCTION OF AGREEMENT. This Agreement has been negotiated
by the respective parties hereto and their attorneys and the language of this
Agreement shall not be construed for or against any party. A reference to a
Section shall mean a Section in this Agreement unless otherwise explicitly
set forth. The titles and headings in this Agreement are for reference
purposes only and shall not in any manner limit the construction of this
Agreement, which shall be considered as a whole.
10.10) FURTHER ASSURANCES. Each party agrees to cooperate fully with
the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances as may be reasonably
requested by any other party to evidence and reflect the transactions
described in this Agreement and contemplated by it and to carry into effect
the intents and purposes of this Agreement.
10.11) ABSENCE OF THIRD PARTY BENEFICIARY RIGHTS. No provisions of
this Agreement are intended, nor shall be interpreted, to provide or create
any third party beneficiary rights or any other rights of any kind in any
client, customer, affiliate, stockholder or partner of any party to this
Agreement or any other person or entity unless specifically provided
otherwise in it, and, except as so provided, all provisions of this Agreement
shall be personal solely among the parties to this Agreement.
10.12) ENTIRE AGREEMENT. This Agreement and the Merger Agreement and
the exhibits and schedules to this Agreement and to the Merger Agreement
constitute the entire understanding and agreement of the parties to this
Agreement with respect to the subject matter of this Agreement and supersede
all prior and contemporaneous agreements or understandings, inducements or
conditions, express or implied, written or oral, between the parties with
respect hereto. The express terms of this Agreement control and supersede any
course of performance or usage of trade inconsistent with any of the terms of
this Agreement.
IN WITNESS WHEREOF, the parties have executed this Escrow Agreement
as of the date first above written.
MEDTRONIC, INC.
By:
____________________________________
Its:
______________________________
PERCUSURGE, INC.
By:
____________________________________
Its:
______________________________
16
<PAGE>
WELLS FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION
By:
____________________________________
Its:
______________________________
_______________________________________
Peter Rule
_______________________________________
Bruce Cozadd
17
<PAGE>
EXHIBIT G
KEY EMPLOYEE LIST
Peter Rule President & CEO
Henry Nita VP R & D
Gary Mistlin VP and CFO
Richard Geoffrion VP Marketing & OUS
Adlai Howe VP US Sales
Bill Dippel VP Operations
Debra Hinman Sr. Director, Reg Affrs
Colleen McQueen Director, Clinical Research
Celso Bagaosian R & D Director
Jeff Bleam R & D Manager
Ketan Muni R & D Manager
Mukund Patel R & D Manager
George Tsai R & D Manager
Richard Spano Director, Manufacturing
Scott Blood Process Engineering Mgr
Jennifer Bromm Director, QA
<PAGE>
EXHIBIT H
_______________, 200__
Medtronic, Inc.
Corporate Center
7000 Central Avenue, N.E.
Minneapolis, MN 55432
Ladies and Gentlemen:
We have acted as counsel to PercuSurge, Inc., a Delaware corporation
("PercuSurge" or the "Company"), in connection with the merger (the "Merger") of
Trojan Merger Corp., a Delaware corporation ("Merger Subsidiary") and
wholly-owned subsidiary of Medtronic, Inc. ("Medtronic" or "Parent"), with and
into PercuSurge pursuant to the Agreement and Plan of Merger among PercuSurge,
Merger Subsidiary and Medtronic dated as of October __, 2000 (the "Merger
Agreement"), and the related Stock Option Agreement, Affiliate's Letters,
Agreements to Facilitate Merger, Escrow Agreement and other documents and
instruments being entered into in connection with the Merger to which PercuSurge
is a party, as applicable (collectively, the "Ancillary Agreements"). This
opinion is furnished to you pursuant to Section 7.2(h) of the Merger Agreement.
Unless otherwise defined herein, the capitalized terms used in this opinion have
the meaning given to them in the Merger Agreement.
As counsel for the Company, we have made such legal and factual
examinations and inquiries as we have deemed advisable or necessary for the
purpose of rendering this opinion. In addition, we have examined originals or
copies of such corporate records of the Company, certificates of public
officials and such other documents which we consider necessary or advisable for
the purpose of rendering this opinion. In such examination we have assumed the
genuineness of all signatures on original documents, the authenticity and
completeness of all documents submitted to us as originals, the conformity to
original documents of all copies submitted to us and the due execution and
delivery of all documents (except as to due execution and delivery by the
Company) where due execution and delivery are a prerequisite to the
effectiveness thereof.
As used in this opinion, the expression "to our knowledge," "known to us"
or similar language with reference to matters of fact means that, after an
examination of documents made available to us by the Company, and after
inquiries of officers of the Company, but without any
<PAGE>
further independent factual investigation, we find no reason to believe that the
opinions expressed herein are factually incorrect. Further, the expression "to
our knowledge," "known to us" or similar language with reference to matters of
fact refers to the current actual knowledge of the attorneys of this firm who
have worked on matters for the Company. Except to the extent expressly set forth
herein or as we otherwise believe to be necessary to our opinion, we have not
undertaken any independent investigation to determine the existence or absence
of any fact, and no inference as to our knowledge of the existence or absence of
any fact should be drawn from our representation of the Company or the rendering
of the opinion set forth below.
For purposes of this opinion, we are assuming that you have all requisite
power and authority, and have taken any and all necessary corporate or
partnership action, to execute and deliver the Merger Agreement, and we are
assuming that the representations and warranties made by Parent in the Merger
Agreement and pursuant thereto are true and correct.
The opinions hereinafter expressed are subject to the following
qualifications:
(a) We express no opinion as to the effect of applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other similar
federal or state laws affecting the rights of creditors;
(b) We express no opinion as to the effect of general principles of
equity, including, without limitation, concepts of materiality, reasonableness,
good faith and fair dealing;
(c) We express no opinion as to the effect of rules of law governing
specific performance, injunctive relief or other equitable remedies (regardless
of whether any such remedy is considered in a proceeding at law or in equity);
(d) We express no opinion as to the effect of patent, trademark or
copyright laws;
(e) We express no opinion as to compliance with the anti-fraud
provisions of applicable securities laws;
(f) We express no opinion as to the effect, if any, of federal and
state laws and regulations dealing with antitrust and unfair competition matters
and filing and notice requirements (including, but not limited to, the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended);
(g) We express no opinion as to the enforceability of the
indemnification provisions contained in the Merger Agreement to the extent the
provisions thereof may be subject to limitations of public policy and the effect
of applicable statutes and judicial decisions;
<PAGE>
(h) We are members of the Bar of the State of California and we
express no opinion as to any matter relating to the laws of any jurisdiction
other than the federal laws of the United States of America, the laws of the
State of California, and the general corporate laws of the State of Delaware. To
the extent this opinion addresses applicable securities laws of states other
than the State of California, we have not retained nor relied on the opinion of
counsel admitted to the bar of such states, but rather have relied on
compilations of the securities laws of such states contained in reporting
services presently available to us.
With respect to our opinion in paragraph 6 below regarding the number of
shares of PercuSurge capital stock outstanding and the due authorization and
valid issuance of all outstanding shares, and the fully paid and non-assessable
nature of all outstanding shares, of capital stock, and options and warrants
exercisable for shares of capital stock, as well as the conversion rate and
applicable "Conversion Price" of each series of Preferred Stock, of PercuSurge,
we have examined and relied solely upon an examination of the minutes of the
Company's Board of Directors and committees thereof, stock books and stock
option records supplied to us by PercuSurge and upon representations in the
Officer's Certificate addressed to us by PercuSurge of even date herewith a copy
of which has been provided to you, and we have undertaken no other verification
with respect thereto.
Except as otherwise indicated, all opinions herein are rendered as of the
time immediately preceding the Effective Time. We do not undertake to advise you
of changes in the law, facts, or circumstances that may hereafter occur.
Based upon and subject to the foregoing, we are of the opinion that:
1. PercuSurge is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite corporate
power to own, lease and operate its properties and to carry on its business as
presently conducted.
2. PercuSurge has full corporate power and authority to enter into the
Merger Agreement, Stock Option Agreement, Affiliate's Letters, and Escrow
Agreement, and to consummate the transactions contemplated thereby. The
execution, delivery and performance by PercuSurge of the Merger Agreement, Stock
Option Agreement, Affiliate's Letters, and Escrow Agreement, and the
consummation by PercuSurge of the transactions contemplated thereby have been
duly authorized by the Board of Directors and stockholders of PercuSurge, and no
other corporate action on the part of PercuSurge is necessary to authorize the
execution, delivery and performance by PercuSurge of the Merger Agreement, Stock
Option Agreement, Affiliate's Letters, and Escrow Agreement, and the
consummation by PercuSurge of the transactions contemplated thereby.
<PAGE>
3. The Merger Agreement, Stock Option Agreement, Affiliate's Letters, and
Escrow Agreement have been duly executed and delivered by PercuSurge, and
assuming due authorization, execution and delivery by the other parties to such
agreements, constitute valid and binding obligations of PercuSurge, enforceable
against PercuSurge in accordance with their respective terms.
4. Except as disclosed in the Merger Agreement or the Company Disclosure
Schedule, the execution, delivery and performance by PercuSurge of the Merger
Agreement and the Stock Option Agreement, the compliance by PercuSurge with the
provisions thereof, and the consummation by PercuSurge of the transactions
contemplated thereby, will not: (i) violate any provision of the Certificate of
Incorporation or Bylaws of PercuSurge or any Subsidiary; (ii) violate any
governmental statute, rule, or regulation applicable to the Company which a
lawyer in the State of California exercising customary diligence would
reasonably recognize as applicable to transactions of the type contemplated by
the Merger Agreement (without our having made any investigation concerning the
applicability of any other law) or (iii) result in any material violation or
breach of, or constitute a default under, or give rise to any right of
termination, cancellation, or acceleration under, or result in the creation of
any material Lien on any of the properties or assets of PercuSurge or any
Subsidiary under, any of the terms, conditions or provisions of any contract,
indenture, mortgage, lease, loan, or other agreement to which PercuSurge or any
Subsidiary is a party which is listed in the Company Disclosure Schedule.
5. Except as set forth in the Merger Agreement or the Company Disclosure
Schedule and except for (a) filing and recordation of the Certificate of Merger
with the Secretary of State of Delaware; (b) such consents, approvals, permits,
registrations and filings as may be required under applicable federal and state
securities laws; and (c) such other consents, approvals, permits, registrations
and filings, which, if not made, would not prevent or materially alter or delay
any of the transactions contemplated by the Merger Agreement, no consent,
approval, permit, registration, or filing with any federal or state governmental
authority is required by, or with respect to, the Company in connection with the
execution and delivery of the Merger Agreement, Stock Option Agreement,
Affiliate's Letters or Escrow Agreement, or the consummation of the transactions
contemplated thereby.
6. PercuSurge has duly authorized capital stock consisting solely of (i)
50,000,000 shares of PercuSurge Common Stock, par value $.001 per share, of
which _________ shares are issued and outstanding and no shares are held in the
PercuSurge's treasury, and (ii) 41,569,957 shares of PercuSurge Preferred Stock,
par value $.001 per share, of which: (A) 8,352,642 shares are designated Series
A Preferred Stock and ____ of which are issued and outstanding; (B) 9,428,296
shares are designated Series B Preferred Stock and ____ of which are issued and
outstanding; (C) 4,334,211 shares are designated Series C Preferred Stock and
___ of which are issued and outstanding; (D) 11,219,513 shares are designated
Series D Preferred Stock and ___ of which are issued and outstanding; and (E)
8,235,295 shares are designated Series E Preferred
<PAGE>
Stock and ___ of which are issued and outstanding. To our knowledge each share
of outstanding PercuSurge Preferred Stock is convertible into one share of
PercuSurge Common Stock, and the respective "Conversion Price" of each series of
PercuSurge Preferred Stock has not been adjusted pursuant to Section 3(e) of
PercuSurge's Certificate of Incorporation. To our knowledge all issued and
outstanding shares of capital stock of each Subsidiary are owned, beneficially
and of record, by PercuSurge. All issued and outstanding shares of PercuSurge
Common Stock and PercuSurge Preferred Stock have been validly issued, and are
(assuming receipt by PercuSurge of the consideration therefor recited in the
PercuSurge Board of Directors minutes with respect to such issuance) fully paid
and nonassessable. Except for options to purchase an aggregate _______ shares of
PercuSurge Common Stock granted pursuant to the PercuSurge's 1995 Stock Option
Plan (the "PercuSurge Option Plan") or otherwise and warrants to purchase an
aggregate _____ shares of PercuSurge Preferred Stock, to our knowledge there are
not any outstanding subscriptions, options, warrants, calls, rights, convertible
securities, or any other agreements to which PercuSurge is a party that,
directly or indirectly, obligate PercuSurge to issue any shares of capital stock
or any securities convertible into, or exercisable or exchangeable for, or
evidencing the right to subscribe for, any shares of capital stock.
This opinion is intended solely for your use in connection with
transactions contemplated by the Agreement, and may not be relied upon by any
other persons or entities or for any other purpose without our prior written
consent.
Very truly yours,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
<PAGE>
EXHIBIT I
DRAFT
__________________, 200__
PercuSurge, Inc.
540 Oakmead Parkway
Sunnyvale, CA 94085
Ladies and Gentlemen:
We have acted as counsel to Medtronic, Inc., a Minnesota corporation
("Medtronic"), and its wholly-owned subsidiary, Trojan Merger Corp., a Delaware
corporation ("Merger Subsidiary"), in connection with the preparation of the
Agreement and Plan of Merger dated October ___, 2000 (the "Merger Agreement"),
among Medtronic, Merger Subsidiary, and PercuSurge, Inc. a Delaware corporation
("PercuSurge"), and the preparation of the related Affiliate's Letters and
Escrow Agreement contemplated thereby (the "Ancillary Agreements"). This opinion
is given pursuant to Section 7.3(e) of the Merger Agreement. Capitalized terms
used herein without definition have the same meaning as in the Merger Agreement.
As to various matters of fact material to this opinion, we have relied upon
certificates of public officials and upon the representations of Medtronic or
its officers or directors, including those made in the Merger Agreement and in
documents or certificates executed in connection therewith. We have also
examined the Articles or Certificate of Incorporation and Bylaws of each of
Medtronic and Merger Subsidiary, each as amended to date as presented to us by
Medtronic, and originals or copies of such other corporate documents and records
and other certificates and instruments and have made such other investigation as
we have deemed necessary in connection with the opinions hereafter set forth. We
have not independently or through third parties verified such certificates,
representations, or statements or made any independent investigation as to the
existence of agreements, instruments, corporate records, or other documents,
orders, judgments, or decrees by which Medtronic or any of its properties may be
bound.
We have examined the laws of the State of Minnesota, the Delaware General
Corporation Law, and federal laws of the United States as we have deemed
relevant for the purpose of this opinion, but we have not made an independent
review of the laws of any other state or jurisdiction. We are members of the bar
of the State of Minnesota and, accordingly, our opinions are limited solely to
the laws of the United States, the Delaware General Corporation Law, and the
State of Minnesota (including, without limitation, laws dealing with choice or
conflict of laws), and we express no opinion concerning the laws of any other
jurisdiction. To the extent that the laws of other jurisdictions may govern the
Merger Agreement or any agreements or instruments related thereto or any other
matters as to which we express an opinion herein, we have assumed without any
independent investigation whatsoever that such laws are the same as those of the
State of Minnesota; to the extent that the laws of such other jurisdictions
differ from
<PAGE>
PercuSurge,Inc.
___________________,200__
Page 2
those of the State of Minnesota with respect to any matters contained in this
opinion, our opinion as to such matters is thereby limited to Minnesota law
without regard to the parties' choice of law.
For purposes of this opinion, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as copies, and
that the information in the certificates, representations, and statements
referred to above remains true and complete as of the date hereof. In examining
documents executed by parties other than Medtronic or Merger Subsidiary, we have
assumed that such parties have all necessary power to enter into and perform all
of their obligations thereunder and that such parties have duly executed and
delivered such documents. We have also assumed, as to each such party, the due
authorization by all requisite action of the execution, delivery and performance
of such documents by such parties and that such documents are legal, valid,
binding on and enforceable against such parties in accordance with their
respective terms. We have also assumed that each natural person executing any of
the documents and agreements involved in the matters covered by this opinion has
the capacity and is legally competent to do so.
References in this opinion to "our knowledge," "known to us," or the like
mean that in the course of our representation of Medtronic no information has
come to the attention of any attorney within the firm who has given substantive
attention to Medtronic's legal matters within the last 12 months that gives such
attorney actual knowledge that such opinion is not accurate.
Based upon and subject to the foregoing, and subject to the qualifications
hereinafter set forth, it is our opinion as of this date that:
1. Each of Medtronic and Merger Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation and has all requisite corporate power to own,
lease and operate its properties and to carry on its business as presently
conducted.
2. Each of Medtronic and Merger Subsidiary has the requisite corporate
power to execute, deliver, and perform the Merger Agreement and the Ancillary
Agreements to which it is a party, and to consummate the transactions
contemplated thereby.
3. The execution, delivery and performance by Medtronic and Merger
Subsidiary of the Merger Agreement and the Ancillary Agreements to which it is a
party, and the consummation by them of the transactions contemplated thereby
(including the issuance of the shares of Common Stock of Medtronic to the
shareholders of PercuSurge pursuant to the Merger) have been duly authorized by
the Board of Directors of Medtronic and the shareholder and the Board of
Directors of Merger Subsidiary, and no other corporate action on the part of
Medtronic or Merger Subsidiary is necessary to authorize the execution, delivery
and
<PAGE>
PercuSurge,Inc.
__________________,200__
Page 3
performance by Medtronic and Merger Subsidiary of the Merger Agreement and the
Ancillary Agreements to which it is a party, and the consummation by them of the
transactions contemplated thereby (including the issuance of the shares of
Common Stock of Medtronic to the shareholders of PercuSurge pursuant to the
Merger).
4. The Merger Agreement and the Ancillary Agreements to which they are a
party has been duly and validly executed and delivered by Medtronic and Merger
Subsidiary and constitutes a valid and binding obligation of them, enforceable
in accordance with its terms.
5. Except as specifically disclosed in Section 5.4 of the Merger Agreement
or in the Parent Disclosure Schedule, the execution, delivery and performance by
Medtronic and Merger Subsidiary of the Merger Agreement and the Ancillary
Agreements to which they are a party, the compliance by them with the provisions
thereof, and the consummation by them of the transactions contemplated thereby
will not: (i) violate any provision of the Articles or Certificate of
Incorporation or Bylaws of Medtronic or Merger Subsidiary; (ii) violate any
governmental statute, rule, regulation applicable to Medtronic or Merger
Subsidiary which a lawyer in the State of Minnesota exercising customary
diligence would reasonably recognize as applicable to transactions of the type
contemplated by the Merger Agreement (without our having made any investigation
concerning the applicability of any other law); or (iii) to our knowledge,
result in any violation or breach of, or constitute a default under, or give
rise to any right of termination, cancellation, increased payments, or
acceleration under, or result in the creation of any lien on any of the
properties or assets of Medtronic or Merger Subsidiary under, any of the terms,
conditions, or provisions of any contract, indenture, mortgage, lease, loan, or
other agreement to which Medtronic or Merger Subsidiary is a party filed with
(or incorporated by reference into) the Registration Statement as a "material
contract" pursuant to Item 601 of Regulation S-K.
6. Except as set forth in the Merger Agreement or the Parent Disclosure
Schedule and except for (a) filing and recordation of the Certificate of Merger
with the Secretary of State of Delaware; (b) such consents, approvals, permits,
registrations and filings as may be required under applicable federal and state
securities laws; and (c) such other consents, approvals, permits, registrations
and filings, which, if not made, would not prevent or materially alter or delay
any of the transactions contemplated by the Merger Agreement, no consent,
approval, permit, registration, or filing with any federal or state governmental
authority is required by, or with respect to, Medtronic or Merger Subsidiary in
connection with the execution and delivery of the Merger Agreement and the
Ancillary Agreements to which they are a party, or the consummation of the
transactions contemplated thereby.
7. The shares of Common Stock of Medtronic to be issued to the shareholders
of PercuSurge in the Merger will be duly and validly issued and, subject to the
Escrow Agreement, fully paid and non-assessable.
<PAGE>
PercuSurge,Inc.
____________________,200__
Page 4
In addition to the qualifications set forth above with respect to the
opinions expressed herein, all of our opinions expressed herein are subject to
the following additional qualifications:
A. The opinions expressed above are qualified to the extent that the
validity or enforceability of any provisions of the Merger Agreement or any
related agreement, document, or instrument or of any rights granted to
PercuSurge or any other party pursuant to the Merger Agreement or any related
agreement, document, or instrument may be subject to or affected or limited by
(i) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent or
preferential transfer or conveyance, equitable subordination, or similar laws or
decisions relating to or affecting the rights of creditors generally, (ii)
general principles of equity, including (without limitation) concepts of
materiality, reasonableness, good faith, and fair dealing, and the rules of law
governing, and discretion of a court (at law or in equity) in granting, specific
performance, injunctive relief, or any equitable or other particular remedy, and
(iii) our assumption that there exist no other agreements (other than the Merger
Agreement or other agreements or instruments specifically referred to therein),
understandings, or negotiations among the parties to the Merger Agreement that
would modify the terms of the Merger Agreement, the Ancillary Agreements, or any
related documents or instruments or the respective rights or obligations of the
parties thereunder.
B. The opinions expressed above are further subject to limitations arising
from state and federal court decisions involving statutes, public policy, or
principles of equity holding that (i) purported waivers of the benefits of
statutory provisions or common law rights and broadly or vaguely stated
provisions waiving rights or waivers of unknown future rights or duties imposed
by law are or may be unenforceable, and (ii) under certain circumstances,
provisions declaring that the failure to exercise or delay in exercising rights
or remedies will not operate as a waiver of any such right or remedy are
invalid.
C. We express no opinion respecting compliance with, or the applicability
or effect of, any state or federal antitrust laws, rules, or regulations.
D. This opinion is limited to the present laws of the State of Minnesota,
the Delaware General Corporation Law and the federal laws of the United States
of America, to present judicial interpretation thereof, and to the facts as they
presently exist. In rendering this opinion, we assume no obligation to revise or
supplement this opinion if the present laws of any jurisdiction mentioned above
are changed by legislative action, judicial decision, or otherwise; if the facts
as they presently exist change; or if matters not presently known to us
hereafter come to our attention.
The opinions expressed herein are expressed solely to the addressee hereof,
and this opinion shall not be deemed to be extended to any other person, firm,
or entity and shall not be delivered to any person, firm, or entity, or quoted
or summarized in whole or in part, or
<PAGE>
PercuSurge,Inc.
___________________,200__
Page 5
otherwise referred to, filed with, disclosed to, or relied upon by the
governmental agency or other person without our express prior written consent.
Very truly yours,
FREDRIKSON & BYRON, P.A.
